1996 TANF Legislation

pdf Conference Report on TANF Bill-104-725

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” HOUSE OF REPRESENTATIVES\” ! 104TH CONGRESS 2d Session REPORT 104 725 PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996 CONFERENCE REPORT TO ACCOMPANY H.R. 3734 JULY 30, 1996.\u2014Ordered to be printed P E R S O N A L R E S P O N S IB IL IT Y A N D W O R K O P P O R T U N IT Y R E C O N C IL IA T IO N A C T O F 1996 U.S. GOVERNMENT PRINTING OFFICE WASHINGTON : 1 26 206 HOUSE OF REPRESENTATIVES\” ! 104TH CONGRESS 2d Session REPORT 1996 104 725 PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996 CONFERENCE REPORT TO ACCOMPANY H.R. 3734 JULY 30, 1996.\u2014Ordered to be printed 104TH CONGRESS REPORT \” !HOUSE OF REPRESENTATIVES2d Session 104 725 PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996 JULY 30, 1996.\u2014Ordered to be printed Mr. KASICH, from the committee of conference, submitted the following CONFERENCE REPORT [To accompany H.R. 3734] The committee of conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 3734), to provide for reconciliation pursuant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997, having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows: That the House recede from its disagreement to the amend- ment of the Senate and agree to the same with an amendment as follows: In lieu of the matter proposed to be inserted by the Senate amendment, insert the following: SECTION 1. SHORT TITLE. This Act may be cited as the ”Personal Responsibility and Work Opportunity Reconciliation Act of 1996”. SEC. 2. TABLE OF CONTENTS. The table of contents for this Act is as follows: TITLE I\u2014BLOCK GRANTS FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES Sec. 101. Findings. Sec. 102. Reference to Social Security Act. Sec. 103. Block grants to States. Sec. 104. Services provided by charitable, religious, or private organizations. Sec. 105. Census data on grandparents as primary caregivers for their grand- children. Sec. 106. Report on data processing. Sec. 107. Study on alternative outcomes measures. Sec. 108. Conforming amendments to the Social Security Act. Sec. 109. Conforming amendments to the Food Stamp Act of 1977 and related provi- sions. Sec. 110. Conforming amendments to other laws. 2 Sec. 111. Development of prototype of counterfeit-resistant social security card re- quired. Sec. 112. Modifications to the job opportunities for certain low-income individuals program. Sec. 113. Secretarial submission of legislative proposal for technical and conforming amendments. Sec. 114. Assuring medicaid coverage for low-income families. Sec. 115. Denial of assistance and benefits for certain drug-related convictions. Sec. 116. Effective date; transition rule. TITLE II\u2014SUPPLEMENTAL SECURITY INCOME Sec. 200. Reference to Social Security Act. Subtitle A\u2014Eligibility Restrictions Sec. 201. Denial of SSI benefits for 10 years to individuals found to have fraudu- lently misrepresented residence in order to obtain benefits simulta- neously in 2 or more States. Sec. 202. Denial of SSI benefits for fugitive felons and probation and parole viola- tors. Sec. 203. Treatment of prisoners. Sec. 204. Effective date of application for benefits. Subtitle B\u2014Benefits for Disabled Children Sec. 211. Definition and eligibility rules. Sec. 212. Eligibility redeterminations and continuing disability reviews. Sec. 213. Additional accountability requirements. Sec. 214. Reduction in cash benefits payable to institutionalized individuals whose medical costs are covered by private insurance. Sec. 215. Regulations. Subtitle C\u2014Additional Enforcement Provision Sec. 221. Installment payment of large past-due supplemental security income bene- fits. Sec. 222. Regulations. Subtitle D\u2014Studies Regarding Supplemental Security Income Program Sec. 231. Annual report on the supplemental security income program. Sec. 232. Study by General Accounting Office. TITLE III\u2014CHILD SUPPORT Sec. 300. Reference to Social Security Act. Subtitle A\u2014Eligibility for Services; Distribution of Payments Sec. 301. State obligation to provide child support enforcement services. Sec. 302. Distribution of child support collections. Sec. 303. Privacy safeguards. Sec. 304. Rights to notification of hearings. Subtitle B\u2014Locate and Case Tracking Sec. 311. State case registry. Sec. 312. Collection and disbursement of support payments. Sec. 313. State directory of new hires. Sec. 314. Amendments concerning income withholding. Sec. 315. Locator information from interstate networks. Sec. 316. Expansion of the Federal parent locator service. Sec. 317. Collection and use of social security numbers for use in child support en- forcement. Subtitle C\u2014Streamlining and Uniformity of Procedures Sec. 321. Adoption of uniform State laws. Sec. 322. Improvements to full faith and credit for child support orders. Sec. 323. Administrative enforcement in interstate cases. Sec. 324. Use of forms in interstate enforcement. Sec. 325. State laws providing expedited procedures. 3 Subtitle D\u2014Paternity Establishment Sec. 331. State laws concerning paternity establishment. Sec. 332. Outreach for voluntary paternity establishment. Sec. 333. Cooperation by applicants for and recipients of part A assistance. Subtitle E\u2014Program Administration and Funding Sec. 341. Performance-based incentives and penalties. Sec. 342. Federal and State reviews and audits. Sec. 343. Required reporting procedures. Sec. 344. Automated data processing requirements. Sec. 345. Technical assistance. Sec. 346. Reports and data collection by the Secretary. Subtitle F\u2014Establishment and Modification of Support Orders Sec. 351. Simplified process for review and adjustment of child support orders. Sec. 352. Furnishing consumer reports for certain purposes relating to child support. Sec. 353. Nonliability for financial institutions providing financial records to State child support enforcement agencies in child support cases. Subtitle G\u2014Enforcement of Support Orders Sec. 361. Internal Revenue Service collection of arrearages. Sec. 362. Authority to collect support from Federal employees. Sec. 363. Enforcement of child support obligations of members of the Armed Forces. Sec. 364. Voiding of fraudulent transfers. Sec. 365. Work requirement for persons owing past-due child support. Sec. 366. Definition of support order. Sec. 367. Reporting arrearages to credit bureaus. Sec. 368. Liens. Sec. 369. State law authorizing suspension of licenses. Sec. 370. Denial of passports for nonpayment of child support. Sec. 371. International support enforcement. Sec. 372. Financial institution data matches. Sec. 373. Enforcement of orders against paternal or maternal grandparents in cases of minor parents. Sec. 374. Nondischargeability in bankruptcy of certain debts for the support of a child. Sec. 375. Child support enforcement for Indian tribes. Subtitle H\u2014Medical Support Sec. 381. Correction to ERISA definition of medical child support order. Sec. 382. Enforcement of orders for health care coverage. Subtitle I\u2014Enhancing Responsibility and Opportunity for Non-Residential Parents Sec. 391. Grants to States for access and visitation programs. Subtitle J\u2014Effective Dates and Conforming Amendments Sec. 395. Effective dates and conforming amendments. TITLE IV\u2014RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS Sec. 400. Statements of national policy concerning welfare and immigration. Subtitle A\u2014Eligibility for Federal Benefits Sec. 401. Aliens who are not qualified aliens ineligible for Federal public benefits. Sec. 402. Limited eligibility of qualified aliens for certain Federal programs. Sec. 403. Five-year limited eligibility of qualified aliens for Federal means-tested public benefit. Sec. 404. Notification and information reporting. Subtitle B\u2014Eligibility for State and Local Public Benefits Programs Sec. 411. Aliens who are not qualified aliens or nonimmigrants ineligible for State and local public benefits. Sec. 412. State authority to limit eligibility of qualified aliens for State public bene- fits. 4 Subtitle C\u2014Attribution of Income and Affidavits of Support Sec. 421. Federal attribution of sponsor’s income and resources to alien. Sec. 422. Authority for States to provide for attribution of sponsors income and re- sources to the alien with respect to State programs. Sec. 423. Requirements for sponsor’s affidavit of support. Subtitle D\u2014General Provisions Sec. 431. Definitions. Sec. 432. Verification of eligibility for Federal public benefits. Sec. 433. Statutory construction. Sec. 434. Communication between State and local government agencies and the Im- migration and Naturalization Service. Sec. 435. Qualifying quarters. Subtitle E\u2014Conforming Amendments Relating to Assisted Housing Sec. 441. Conforming amendments relating to assisted housing. Subtitle F\u2014Earning Income Credit Denied to Unauthorized Employees Sec. 451. Earned income credit denied to individuals not authorized to be employed in the United States. TITLE V\u2014CHILD PROTECTION Sec. 501. Authority of States to make foster care maintenance payments on behalf of children in any private child care institution. Sec. 502. Extension of enhanced match for implementation of statewide automated child welfare information systems. Sec. 503. National random sample study of child welfare. Sec. 504. Redesignation of section 1123. Sec. 505. Kinship care. TITLE VI\u2014CHILD CARE Sec. 601. Short title and references. Sec. 602. Goals. Sec. 603. Authorization of appropriations and entitlement authority. Sec. 604. Lead agency. Sec. 605. Application and plan. Sec. 606. Limitation on State allotments. Sec. 607. Activities to improve the quality of child care. Sec. 608. Repeal of early childhood development and before- and after-school care requirement. Sec. 609. Administration and enforcement. Sec. 610. Payments. Sec. 611. Annual report and audits. Sec. 612. Report by the Secretary. Sec. 613. Allotments. Sec. 614. Definitions. Sec. 615. Effective date. TITLE VII\u2014CHILD NUTRITION PROGRAMS Subtitle A\u2014National School Lunch Act Sec. 701. State disbursement to schools. Sec. 702. Nutritional and other program requirements. Sec. 703. Free and reduced price policy statement. Sec. 704. Special assistance. Sec. 705. Miscellaneous provisions and definitions. Sec. 706. Summer food service program for children. Sec. 707. Commodity distribution. Sec. 708. Child and adult care food program. Sec. 709. Pilot projects. Sec. 710. Reduction of paperwork. Sec. 711. Information on income eligibility. Sec. 712. Nutrition guidance for child nutrition programs. Subtitle B\u2014Child Nutrition Act of 1966 Sec. 721. Special milk program. 5 Sec. 722. Free and reduced price policy statement. Sec. 723. School breakfast program authorization. Sec. 724. State administrative expenses. Sec. 725. Regulations. Sec. 726. Prohibitions. Sec. 727. Miscellaneous provisions and definitions. Sec. 728. Accounts and records. Sec. 729. Special supplemental nutrition program for women, infants, and children. Sec. 730. Cash grants for nutrition education. Sec. 731. Nutrition education and training. Subtitle C\u2014Miscellaneous Provisions Sec. 741. Coordination of school lunch, school breakfast, and summer food service programs. Sec. 742. Requirements relating to provision of benefits based on citizenship, alienage, or immigration status under the National School Lunch Act, the Child Nutrition Act of 1966, and certain other acts. TITLE VIII\u2014FOOD STAMPS AND COMMODITY DISTRIBUTION Subtitle A\u2014Food Stamp Program Sec. 801. Definition of certification period. Sec. 802. Definition of coupon. Sec. 803. Treatment of children living at home. Sec. 804. Adjustment of thrifty food plan. Sec. 805. Definition of homeless individual. Sec. 806. State option for eligibility standards. Sec. 807. Earnings of students. Sec. 808. Energy assistance. Sec. 809. Deductions from income. Sec. 810. Vehicle allowance. Sec. 811. Vendor payments for transitional housing counted as income. Sec. 812. Simplified calculation of income for the self-employed. Sec. 813. Doubled penalties for violating food stamp program requirements. Sec. 814. Disqualification of convicted individuals. Sec. 815. Disqualification. Sec. 816. Caretaker exemption. Sec. 817. Employment and training. Sec. 818. Food stamp eligibility. Sec. 819. Comparable treatment for disqualification. Sec. 820. Disqualification for receipt of multiple food stamp benefits. Sec. 821. Disqualification of fleeing felons. Sec. 822. Cooperation with child support agencies. Sec. 823. Disqualification relating to child support arrears. Sec. 824. Work requirement. Sec. 825. Encouragement of electronic benefit transfer systems. Sec. 826. Value of minimum allotment. Sec. 827. Benefits on recertification. Sec. 828. Optional combined allotment for expedited households. Sec. 829. Failure to comply with other means-tested public assistance programs. Sec. 830. Allotments for households residing in centers. Sec. 831. Condition precedent for approval of retail food stores and wholesale food concerns. Sec. 832. Authority to establish authorization periods. Sec. 833. Information for verifying eligibility for authorization. Sec. 834. Waiting period for stores that fail to meet authorization criteria. Sec. 835. Operation of food stamp offices. Sec. 836. State employee and training standards. Sec. 837. Exchange of law enforcement information. Sec. 838. Expedited coupon service. Sec. 839. Withdrawing fair hearing requests. Sec. 840. Income, eligibility, and immigration status verification systems. Sec. 841. Investigations. Sec. 842. Disqualification of retailers who intentionally submit falsified applica- tions. Sec. 843. Disqualification of retailers who are disqualified under the WIC program. Sec. 844. Collection of overissuances. 6 Sec. 845. Authority to suspend stores violating program requirements pending ad- ministrative and judicial review. Sec. 846. Expanded criminal forfeiture for violations. Sec. 847. Limitation on Federal match. Sec. 848. Standards for administration. Sec. 849. Work supplementation or support program. Sec. 850. Waiver authority. Sec. 851. Response to waivers. Sec. 852. Employment initiatives program. Sec. 853. Reauthorization. Sec. 854. Simplified food stamp program. Sec. 855. Study of the use of food stamps to purchase vitamins and minerals. Sec. 856. Deficit reduction. Subtitle B\u2014Commodity Distribution Programs Sec. 871. Emergency food assistance program. Sec. 872. Food bank demonstration project. Sec. 873. Hunger prevention programs. Sec. 874. Report on entitlement commodity processing. Subtitle C\u2014Electronic Benefit Transfer Systems Sec. 891. Provisions to encourage electronic benefit transfer systems. TITLE IX\u2014MISCELLANEOUS Sec. 901. Appropriation by State legislatures. Sec. 902. Sanctioning for testing positive for controlled substances. Sec. 903. Elimination of housing assistance with respect to fugitive felons and pro- bation and parole violators. Sec. 904. Sense of the Senate regarding the inability of the noncustodial parent to pay child support. Sec. 905. Establishing national goals to prevent teenage pregnancies. Sec. 906. Sense of the Senate regarding enforcement of statutory rape laws. Sec. 907. Provisions to encourage electronic benefit transfer systems. Sec. 908. Reduction of block grants to States for social services; use of vouchers. Sec. 909. Rules relating to denial of earned income credit on basis of disqualified income. Sec. 910. Modification of adjusted gross income definition for earned income credit. Sec. 911. Fraud under means-tested welfare and public assistance programs. Sec. 912. Abstinence education. Sec. 913. Change in reference. TITLE I\u2014BLOCK GRANTS FOR TEM- PORARY ASSISTANCE FOR NEEDY FAMILIES SEC. 101. FINDINGS. The Congress makes the following findings: (1) Marriage is the foundation of a successful society. (2) Marriage is an essential institution of a successful soci- ety which promotes the interests of children. (3) Promotion of responsible fatherhood and motherhood is integral to successful child rearing and the well-being of chil- dren. (4) In 1992, only 54 percent of single-parent families with children had a child support order established and, of that 54 percent, only about one-half received the full amount due. Of the cases enforced through the public child support enforcement system, only 18 percent of the caseload has a collection. (5) The number of individuals receiving aid to families with dependent children (in this section referred to as ”AFDC”) 7 has more than tripled since 1965. More than two-thirds of these recipients are children. Eighty-nine percent of children receiving AFDC benefits now live in homes in which no father is present. (A)(i) The average monthly number of children receiv- ing AFDC benefits\u2014 (I) was 3,300,000 in 1965; (II) was 6,200,000 in 1970; (III) was 7,400,000 in 1980; and (IV) was 9,300,000 in 1992. (ii) While the number of children receiving AFDC bene- fits increased nearly threefold between 1965 and 1992, the total number of children in the United States aged 0 to 18 has declined by 5.5 percent. (B) The Department of Health and Human Services has estimated that 12,000,000 children will receive AFDC benefits within 10 years. (C) The increase in the number of children receiving public assistance is closely related to the increase in births to unmarried women. Between 1970 and 1991, the percent- age of live births to unmarried women increased nearly threefold, from 10.7 percent to 29.5 percent. (6) The increase of out-of-wedlock pregnancies and births is well documented as follows: (A) It is estimated that the rate of nonmarital teen pregnancy rose 23 percent from 54 pregnancies per 1,000 unmarried teenagers in 1976 to 66.7 pregnancies in 1991. The overall rate of nonmarital pregnancy rose 14 percent from 90.8 pregnancies per 1,000 unmarried women in 1980 to 103 in both 1991 and 1992. In contrast, the overall preg- nancy rate for married couples decreased 7.3 percent be- tween 1980 and 1991, from 126.9 pregnancies per 1,000 married women in 1980 to 117.6 pregnancies in 1991. (B) The total of all out-of-wedlock births between 1970 and 1991 has risen from 10.7 percent to 29.5 percent and if the current trend continues, 50 percent of all births by the year 2015 will be out-of-wedlock. (7) An effective strategy to combat teenage pregnancy must address the issue of male responsibility, including statutory rape culpability and prevention. The increase of teenage preg- nancies among the youngest girls is particularly severe and is linked to predatory sexual practices by men who are signifi- cantly older. (A) It is estimated that in the late 1980’s, the rate for girls age 14 and under giving birth increased 26 percent. (B) Data indicates that at least half of the children born to teenage mothers are fathered by adult men. Avail- able data suggests that almost 70 percent of births to teen- age girls are fathered by men over age 20. (C) Surveys of teen mothers have revealed that a ma- jority of such mothers have histories of sexual and physical abuse, primarily with older adult men. (8) The negative consequences of an out-of-wedlock birth on the mother, the child, the family, and society are well docu- mented as follows: 8 (A) Young women 17 and under who give birth outside of marriage are more likely to go on public assistance and to spend more years on welfare once enrolled. These com- bined effects of ”younger and longer” increase total AFDC costs per household by 25 percent to 30 percent for 17-year- olds. (B) Children born out-of-wedlock have a substantially higher risk of being born at a very low or moderately low birth weight. (C) Children born out-of-wedlock are more likely to ex- perience low verbal cognitive attainment, as well as more child abuse, and neglect. (D) Children born out-of-wedlock were more likely to have lower cognitive scores, lower educational aspirations, and a greater likelihood of becoming teenage parents them- selves. (E) Being born out-of-wedlock significantly reduces the chances of the child growing up to have an intact marriage. (F) Children born out-of-wedlock are 3 times more like- ly to be on welfare when they grow up. (9) Currently 35 percent of children in single-parent homes were born out-of-wedlock, nearly the same percentage as that of children in single-parent homes whose parents are divorced (37 percent). While many parents find themselves, through divorce or tragic circumstances beyond their control, facing the difficult task of raising children alone, nevertheless, the negative con- sequences of raising children in single-parent homes are well documented as follows: (A) Only 9 percent of married-couple families with chil- dren under 18 years of age have income below the national poverty level. In contrast, 46 percent of female-headed households with children under 18 years of age are below the national poverty level. (B) Among single-parent families, nearly 1\u20442 of the mothers who never married received AFDC while only 1\u20445 of divorced mothers received AFDC. (C) Children born into families receiving welfare assist- ance are 3 times more likely to be on welfare when they reach adulthood than children not born into families re- ceiving welfare. (D) Mothers under 20 years of age are at the greatest risk of bearing low-birth-weight babies. (E) The younger the single parent mother, the less like- ly she is to finish high school. (F) Young women who have children before finishing high school are more likely to receive welfare assistance for a longer period of time. (G) Between 1985 and 1990, the public cost of births to teenage mothers under the aid to families with dependent children program, the food stamp program, and the medic- aid program has been estimated at $120,000,000,000. (H) The absence of a father in the life of a child has a negative effect on school performance and peer adjust- ment. 9 (I) Children of teenage single parents have lower cog- nitive scores, lower educational aspirations, and a greater likelihood of becoming teenage parents themselves. (J) Children of single-parent homes are 3 times more likely to fail and repeat a year in grade school than are children from intact 2-parent families. (K) Children from single-parent homes are almost 4 times more likely to be expelled or suspended from school. (L) Neighborhoods with larger percentages of youth aged 12 through 20 and areas with higher percentages of single-parent households have higher rates of violent crime. (M) Of those youth held for criminal offenses within the State juvenile justice system, only 29.8 percent lived pri- marily in a home with both parents. In contrast to these in- carcerated youth, 73.9 percent of the 62,800,000 children in the Nation’s resident population were living with both par- ents. (10) Therefore, in light of this demonstration of the crisis in our Nation, it is the sense of the Congress that prevention of out-of-wedlock pregnancy and reduction in out-of-wedlock birth are very important Government interests and the policy con- tained in part A of title IV of the Social Security Act (as amend- ed by section 103(a) of this Act) is intended to address the cri- sis. SEC. 102. REFERENCE TO SOCIAL SECURITY ACT. Except as otherwise specifically provided, wherever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. SEC. 103. BLOCK GRANTS TO STATES. (a) IN GENERAL.\u2014Part A of title IV (42 U.S.C. 601 et seq.) is amended\u2014 (1) by striking all that precedes section 418 (as added by section 603(b)(2) of this Act) and inserting the following: ”PART A\u2014BLOCK GRANTS TO STATES FOR TEMPORARY ASSISTANCE FOR NEEDY FAMI- LIES ”SEC. 401. PURPOSE. ”(a) IN GENERAL.\u2014The purpose of this part is to increase the flexibility of States in operating a program designed to\u2014 ”(1) provide assistance to needy families so that children may be cared for in their own homes or in the homes of rel- atives; ”(2) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; ”(3) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for prevent- ing and reducing the incidence of these pregnancies; and ”(4) encourage the formation and maintenance of two-par- ent families. 10 ”(b) NO INDIVIDUAL ENTITLEMENT.\u2014This part shall not be in- terpreted to entitle any individual or family to assistance under any State program funded under this part. ”SEC. 402. ELIGIBLE STATES; STATE PLAN. ”(a) IN GENERAL.\u2014As used in this part, the term ‘eligible State’ means, with respect to a fiscal year, a State that, during the 2-year period immediately preceding the fiscal year, has submitted to the Secretary a plan that the Secretary has found includes the follow- ing: ”(1) OUTLINE OF FAMILY ASSISTANCE PROGRAM.\u2014 ”(A) GENERAL PROVISIONS.\u2014A written document that outlines how the State intends to do the following: ”(i) Conduct a program, designed to serve all polit- ical subdivisions in the State (not necessarily in a uni- form manner), that provides assistance to needy fami- lies with (or expecting) children and provides parents with job preparation, work, and support services to en- able them to leave the program and become self-suffi- cient. ”(ii) Require a parent or caretaker receiving assist- ance under the program to engage in work (as defined by the State) once the State determines the parent or caretaker is ready to engage in work, or once the parent or caretaker has received assistance under the program for 24 months (whether or not consecutive), whichever is earlier. ”(iii) Ensure that parents and caretakers receiving assistance under the program engage in work activities in accordance with section 407. ”(iv) Take such reasonable steps as the State deems necessary to restrict the use and disclosure of informa- tion about individuals and families receiving assist- ance under the program attributable to funds provided by the Federal Government. ”(v) Establish goals and take action to prevent and reduce the incidence of out-of-wedlock pregnancies, with special emphasis on teenage pregnancies, and es- tablish numerical goals for reducing the illegitimacy ratio of the State (as defined in section 403(a)(2)(B)) for calendar years 1996 through 2005. ”(vi) Conduct a program, designed to reach State and local law enforcement officials, the education sys- tem, and relevant counseling services, that provides education and training on the problem of statutory rape so that teenage pregnancy prevention programs may be expanded in scope to include men. ”(B) SPECIAL PROVISIONS.\u2014 ”(i) The document shall indicate whether the State intends to treat families moving into the State from an- other State differently than other families under the program, and if so, how the State intends to treat such families under the program. ”(ii) The document shall indicate whether the State intends to provide assistance under the program to in- 11 dividuals who are not citizens of the United States, and if so, shall include an overview of such assistance. ”(iii) The document shall set forth objective criteria for the delivery of benefits and the determination of eli- gibility and for fair and equitable treatment, including an explanation of how the State will provide opportuni- ties for recipients who have been adversely affected to be heard in a State administrative or appeal process. ”(iv) Not later than 1 year after the date of enact- ment of this Act, unless the chief executive officer of the State opts out of this provision by notifying the Sec- retary, a State shall, consistent with the exception pro- vided in section 407(e)(2), require a parent or caretaker receiving assistance under the program who, after re- ceiving such assistance for 2 months is not exempt from work requirements and is not engaged in work, as determined under section 407(c), to participate in com- munity service employment, with minimum hours per week and tasks to be determined by the State. ”(2) CERTIFICATION THAT THE STATE WILL OPERATE A CHILD SUPPORT ENFORCEMENT PROGRAM.\u2014A certification by the chief executive officer of the State that, during the fiscal year, the State will operate a child support enforcement program under the State plan approved under part D. ”(3) CERTIFICATION THAT THE STATE WILL OPERATE A FOS- TER CARE AND ADOPTION ASSISTANCE PROGRAM.\u2014A certification by the chief executive officer of the State that, during the fiscal year, the State will operate a foster care and adoption assist- ance program under the State plan approved under part E, and that the State will take such actions as are necessary to ensure that children receiving assistance under such part are eligible for medical assistance under the State plan under title XIX. ”(4) CERTIFICATION OF THE ADMINISTRATION OF THE PRO- GRAM.\u2014A certification by the chief executive officer of the State specifying which State agency or agencies will administer and supervise the program referred to in paragraph (1) for the fiscal year, which shall include assurances that local governments and private sector organizations\u2014 ”(A) have been consulted regarding the plan and design of welfare services in the State so that services are provided in a manner appropriate to local populations; and ”(B) have had at least 45 days to submit comments on the plan and the design of such services. ”(5) CERTIFICATION THAT THE STATE WILL PROVIDE INDIANS WITH EQUITABLE ACCESS TO ASSISTANCE.\u2014A certification by the chief executive officer of the State that, during the fiscal year, the State will provide each member of an Indian tribe, who is domiciled in the State and is not eligible for assistance under a tribal family assistance plan approved under section 412, with equitable access to assistance under the State program funded under this part attributable to funds provided by the Federal Government. ”(6) CERTIFICATION OF STANDARDS AND PROCEDURES TO EN- SURE AGAINST PROGRAM FRAUD AND ABUSE.\u2014A certification by 12 the chief executive officer of the State that the State has estab- lished and is enforcing standards and procedures to ensure against program fraud and abuse, including standards and procedures concerning nepotism, conflicts of interest among in- dividuals responsible for the administration and supervision of the State program, kickbacks, and the use of political patron- age. ”(7) OPTIONAL CERTIFICATION OF STANDARDS AND PROCE- DURES TO ENSURE THAT THE STATE WILL SCREEN FOR AND IDEN- TIFY DOMESTIC VIOLENCE.\u2014 ”(A) IN GENERAL.\u2014At the option of the State, a certifi- cation by the chief executive officer of the State that the State has established and is enforcing standards and pro- cedures to\u2014 ”(i) screen and identify individuals receiving as- sistance under this part with a history of domestic vio- lence while maintaining the confidentiality of such in- dividuals; ”(ii) refer such individuals to counseling and sup- portive services; and ”(iii) waive, pursuant to a determination of good cause, other program requirements such as time limits (for so long as necessary) for individuals receiving as- sistance, residency requirements, child support coopera- tion requirements, and family cap provisions, in cases where compliance with such requirements would make it more difficult for individuals receiving assistance under this part to escape domestic violence or unfairly penalize such individuals who are or have been victim- ized by such violence, or individuals who are at risk of further domestic violence. ”(B) DOMESTIC VIOLENCE DEFINED.\u2014For purposes of this paragraph, the term ‘domestic violence’ has the same meaning as the term ‘battered or subjected to extreme cru- elty’, as defined in section 408(a)(7)(C)(iii). ”(b) PUBLIC AVAILABILITY OF STATE PLAN SUMMARY.\u2014The State shall make available to the public a summary of any plan submit- ted by the State under this section. ”SEC. 403. GRANTS TO STATES. ”(a) GRANTS.\u2014 ”(1) FAMILY ASSISTANCE GRANT.\u2014 ”(A) IN GENERAL.\u2014Each eligible State shall be entitled to receive from the Secretary, for each of fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002, a grant in an amount equal to the State family assistance grant. ”(B) STATE FAMILY ASSISTANCE GRANT DEFINED.\u2014As used in this part, the term ‘State family assistance grant’ means the greatest of\u2014 ”(i) 1\u20443 of the total amount required to be paid to the State under former section 403 (as in effect on Sep- tember 30, 1995) for fiscal years 1992, 1993, and 1994 (other than with respect to amounts expended by the State for child care under subsection (g) or (i) of former section 402 (as so in effect)); 13 ”(ii)(I) the total amount required to be paid to the State under former section 403 for fiscal year 1994 (other than with respect to amounts expended by the State for child care under subsection (g) or (i) of former section 402 (as so in effect)); plus ”(II) an amount equal to 85 percent of the amount (if any) by which the total amount required to be paid to the State under former section 403(a)(5) for emer- gency assistance for fiscal year 1995 exceeds the total amount required to be paid to the State under former section 403(a)(5) for fiscal year 1994, if, during fiscal year 1994 or 1995, the Secretary approved under former section 402 an amendment to the former State plan with respect to the provision of emergency assist- ance; or ”(iii) 3\u20444 of the total amount required to be paid to the State under former section 403 (as in effect on Sep- tember 30, 1995) for the 1st 3 quarters of fiscal year 1995 (other than with respect to amounts expended by the State under the State plan approved under part F (as so in effect) or for child care under subsection (g) or (i) of former section 402 (as so in effect)), plus the total amount required to be paid to the State for fiscal year 1995 under former section 403(l) (as so in effect). ”(C) TOTAL AMOUNT REQUIRED TO BE PAID TO THE STATE UNDER FORMER SECTION 403 DEFINED.\u2014As used in this part, the term ‘total amount required to be paid to the State under former section 403’ means, with respect to a fis- cal year\u2014 ”(i) in the case of a State to which section 1108 does not apply, the sum of\u2014 ”(I) the Federal share of maintenance assist- ance expenditures for the fiscal year, before reduc- tion pursuant to subparagraph (B) or (C) of section 403(b)(2) (as in effect on September 30, 1995), as reported by the State on ACF Form 231; ”(II) the Federal share of administrative ex- penditures (including administrative expenditures for the development of management information systems) for the fiscal year, as reported by the State on ACF Form 231; ”(III) the Federal share of emergency assist- ance expenditures for the fiscal year, as reported by the State on ACF Form 231; ”(IV) the Federal share of expenditures for the fiscal year with respect to child care pursuant to subsections (g) and (i) of former section 402 (as in effect on September 30, 1995), as reported by the State on ACF Form 231; and ”(V) the Federal obligations made to the State under section 403 for the fiscal year with respect to the State program operated under part F (as in ef- fect on September 30, 1995), as determined by the Secretary, including additional obligations or re- 14 ductions in obligations made after the close of the fiscal year; and ”(ii) in the case of a State to which section 1108 applies, the lesser of\u2014 ”(I) the sum described in clause (i); or ”(II) the total amount certified by the Secretary under former section 403 (as in effect during the fiscal year) with respect to the territory. ”(D) INFORMATION TO BE USED IN DETERMINING AMOUNTS.\u2014 ”(i) FOR FISCAL YEARS 1992 AND 1993.\u2014 ”(I) In determining the amounts described in subclauses (I) through (IV) of subparagraph (C)(i) for any State for each of fiscal years 1992 and 1993, the Secretary shall use information available as of April 28, 1995. ”(II) In determining the amount described in subparagraph (C)(i)(V) for any State for each of fiscal years 1992 and 1993, the Secretary shall use information available as of January 6, 1995. ”(ii) FOR FISCAL YEAR 1994.\u2014In determining the amounts described in subparagraph (C)(i) for any State for fiscal year 1994, the Secretary shall use infor- mation available as of April 28, 1995. ”(iii) FOR FISCAL YEAR 1995.\u2014 ”(I) In determining the amount described in subparagraph (B)(ii)(II) for any State for fiscal year 1995, the Secretary shall use the information which was reported by the States and estimates made by the States with respect to emergency as- sistance expenditures and was available as of Au- gust 11, 1995. ”(II) In determining the amounts described in subclauses (I) through (III) of subparagraph (C)(i) for any State for fiscal year 1995, the Secretary shall use information available as of October 2, 1995. ”(III) In determining the amount described in subparagraph (C)(i)(IV) for any State for fiscal year 1995, the Secretary shall use information available as of February 28, 1996. ”(IV) In determining the amount described in subparagraph (C)(i)(V) for any State for fiscal year 1995, the Secretary shall use information available as of October 5, 1995. ”(E) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002 such sums as are necessary for grants under this paragraph. ”(2) BONUS TO REWARD DECREASE IN ILLEGITIMACY.\u2014 ”(A) IN GENERAL.\u2014Each eligible State shall be entitled to receive from the Secretary a grant for each bonus year 15 for which the State demonstrates a net decrease in out-of- wedlock births. ”(B) AMOUNT OF GRANT.\u2014 ”(i) IF 5 ELIGIBLE STATES.\u2014If there are 5 eligible States for a bonus year, the amount of the grant shall be $20,000,000. ”(ii) IF FEWER THAN 5 ELIGIBLE STATES.\u2014If there are fewer than 5 eligible States for a bonus year, the amount of the grant shall be $25,000,000. ”(C) DEFINITIONS.\u2014As used in this paragraph: ”(i) ELIGIBLE STATE.\u2014 ”(I) IN GENERAL.\u2014The term ‘eligible State’ means a State that the Secretary determines meets the following requirements: ”(aa) The State demonstrates that the number of out-of-wedlock births that occurred in the State during the most recent 2-year pe- riod for which such information is available decreased as compared to the number of such births that occurred during the previous 2- year period, and the magnitude of the decrease for the State for the period is not exceeded by the magnitude of the corresponding decrease for 5 or more other States for the period. ”(bb) The rate of induced pregnancy termi- nations in the State for the fiscal year is less than the rate of induced pregnancy termi- nations in the State for fiscal year 1995. ”(II) DISREGARD OF CHANGES IN DATA DUE TO CHANGED REPORTING METHODS.\u2014In making the determination required by subclause (I), the Sec- retary shall disregard\u2014 ”(aa) any difference between the number of out-of-wedlock births that occurred in a State for a fiscal year and the number of out-of-wed- lock births that occurred in a State for fiscal year 1995 which is attributable to a change in State methods of reporting data used to cal- culate the number of out-of-wedlock births; and ”(bb) any difference between the rate of in- duced pregnancy terminations in a State for a fiscal year and such rate for fiscal year 1995 which is attributable to a change in State methods of reporting data used to calculate such rate. ”(ii) BONUS YEAR.\u2014The term ‘bonus year’ means fiscal years 1999, 2000, 2001, and 2002. ”(D) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1999 through 2002, such sums as are necessary for grants under this paragraph. ”(3) SUPPLEMENTAL GRANT FOR POPULATION INCREASES IN CERTAIN STATES.\u2014 16 ”(A) IN GENERAL.\u2014Each qualifying State shall, subject to subparagraph (F), be entitled to receive from the Sec- retary\u2014 ”(i) for fiscal year 1998 a grant in an amount equal to 2.5 percent of the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and ”(ii) for each of fiscal years 1999, 2000, and 2001, a grant in an amount equal to the sum of\u2014 ”(I) the amount (if any) required to be paid to the State under this paragraph for the imme- diately preceding fiscal year; and ”(II) 2.5 percent of the sum of\u2014 ”(aa) the total amount required to be paid to the State under former section 403 (as in ef- fect during fiscal year 1994) for fiscal year 1994; and ”(bb) the amount (if any) required to be paid to the State under this paragraph for the fiscal year preceding the fiscal year for which the grant is to be made. ”(B) PRESERVATION OF GRANT WITHOUT INCREASES FOR STATES FAILING TO REMAIN QUALIFYING STATES.\u2014Each State that is not a qualifying State for a fiscal year speci- fied in subparagraph (A)(ii) but was a qualifying State for a prior fiscal year shall, subject to subparagraph (F), be en- titled to receive from the Secretary for the specified fiscal year, a grant in an amount equal to the amount required to be paid to the State under this paragraph for the most recent fiscal year for which the State was a qualifying State. ”(C) QUALIFYING STATE.\u2014 ”(i) IN GENERAL.\u2014For purposes of this paragraph, a State is a qualifying State for a fiscal year if\u2014 ”(I) the level of welfare spending per poor per- son by the State for the immediately preceding fis- cal year is less than the national average level of State welfare spending per poor person for such preceding fiscal year; and ”(II) the population growth rate of the State (as determined by the Bureau of the Census) for the most recent fiscal year for which information is available exceeds the average population growth rate for all States (as so determined) for such most recent fiscal year. ”(ii) STATE MUST QUALIFY IN FISCAL YEAR 1997.\u2014 Notwithstanding clause (i), a State shall not be a qualifying State for any fiscal year after 1998 by rea- son of clause (i) if the State is not a qualifying State for fiscal year 1998 by reason of clause (i). ”(iii) CERTAIN STATES DEEMED QUALIFYING STATES.\u2014For purposes of this paragraph, a State is deemed to be a qualifying State for fiscal years 1998, 1999, 2000, and 2001 if\u2014 17 ”(I) the level of welfare spending per poor per- son by the State for fiscal year 1994 is less than 35 percent of the national average level of State welfare spending per poor person for fiscal year 1994; or ”(II) the population of the State increased by more than 10 percent from April 1, 1990 to July 1, 1994, according to the population estimates in publication CB94 204 of the Bureau of the Census. ”(D) DEFINITIONS.\u2014As used in this paragraph: ”(i) LEVEL OF WELFARE SPENDING PER POOR PER- SON.\u2014The term ‘level of State welfare spending per poor person’ means, with respect to a State and a fiscal year\u2014 ”(I) the sum of\u2014 ”(aa) the total amount required to be paid to the State under former section 403 (as in ef- fect during fiscal year 1994) for fiscal year 1994; and ”(bb) the amount (if any) paid to the State under this paragraph for the immediately pre- ceding fiscal year; divided by ”(II) the number of individuals, according to the 1990 decennial census, who were residents of the State and whose income was below the poverty line. ”(ii) NATIONAL AVERAGE LEVEL OF STATE WELFARE SPENDING PER POOR PERSON.\u2014The term ‘national aver- age level of State welfare spending per poor person’ means, with respect to a fiscal year, an amount equal to\u2014 ”(I) the total amount required to be paid to the States under former section 403 (as in effect dur- ing fiscal year 1994) for fiscal year 1994; divided by ”(II) the number of individuals, according to the 1990 decennial census, who were residents of any State and whose income was below the poverty line. ”(iii) STATE.\u2014The term ‘State’ means each of the 50 States of the United States and the District of Co- lumbia. ”(E) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1998, 1999, 2000, and 2001 such sums as are necessary for grants under this paragraph, in a total amount not to exceed $800,000,000. ”(F) GRANTS REDUCED PRO RATA IF INSUFFICIENT AP- PROPRIATIONS.\u2014If the amount appropriated pursuant to this paragraph for a fiscal year is less than the total amount of payments otherwise required to be made under this paragraph for the fiscal year, then the amount other- wise payable to any State for the fiscal year under this 18 paragraph shall be reduced by a percentage equal to the amount so appropriated divided by such total amount. ”(G) BUDGET SCORING.\u2014Notwithstanding section 257(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985, the baseline shall assume that no grant shall be made under this paragraph after fiscal year 2001. ”(4) BONUS TO REWARD HIGH PERFORMANCE STATES.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall make a grant pursuant to this paragraph to each State for each bonus year for which the State is a high performing State. ”(B) AMOUNT OF GRANT.\u2014 ”(i) IN GENERAL.\u2014Subject to clause (ii) of this sub- paragraph, the Secretary shall determine the amount of the grant payable under this paragraph to a high performing State for a bonus year, which shall be based on the score assigned to the State under sub- paragraph (D)(i) for the fiscal year that immediately precedes the bonus year. ”(ii) LIMITATION.\u2014The amount payable to a State under this paragraph for a bonus year shall not exceed 5 percent of the State family assistance grant. ”(C) FORMULA FOR MEASURING STATE PERFORMANCE.\u2014 Not later than 1 year after the date of the enactment of the Personal Responsibility and Work Opportunity Reconcili- ation Act of 1996, the Secretary, in consultation with the National Governors’ Association and the American Public Welfare Association, shall develop a formula for measuring State performance in operating the State program funded under this part so as to achieve the goals set forth in sec- tion 401(a). ”(D) SCORING OF STATE PERFORMANCE; SETTING OF PERFORMANCE THRESHOLDS.\u2014For each bonus year, the Sec- retary shall\u2014 ”(i) use the formula developed under subparagraph (C) to assign a score to each eligible State for the fiscal year that immediately precedes the bonus year; and ”(ii) prescribe a performance threshold in such a manner so as to ensure that\u2014 ”(I) the average annual total amount of grants to be made under this paragraph for each bonus year equals $200,000,000; and ”(II) the total amount of grants to be made under this paragraph for all bonus years equals $1,000,000,000. ”(E) DEFINITIONS.\u2014As used in this paragraph: ”(i) BONUS YEAR.\u2014The term ‘bonus year’ means fiscal years 1999, 2000, 2001, 2002, and 2003. ”(ii) HIGH PERFORMING STATE.\u2014The term ‘high performing State’ means, with respect a bonus year, an eligible State whose score assigned pursuant to sub- paragraph (D)(i) for the fiscal year immediately preced- ing the bonus year equals or exceeds the performance 19 threshold prescribed under subparagraph (D)(ii) for such preceding fiscal year. ”(F) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1999 through 2003 $1,000,000,000 for grants under this paragraph. ”(b) CONTINGENCY FUND.\u2014 ”(1) ESTABLISHMENT.\u2014There is hereby established in the Treasury of the United States a fund which shall be known as the ‘Contingency Fund for State Welfare Programs’ (in this sec- tion referred to as the ‘Fund’). ”(2) DEPOSITS INTO FUND.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1997, 1998, 1999, 2000, and 2001 such sums as are necessary for payment to the Fund in a total amount not to exceed $2,000,000,000. ”(3) GRANTS.\u2014 ”(A) PROVISIONAL PAYMENTS.\u2014If an eligible State sub- mits to the Secretary a request for funds under this para- graph during an eligible month, the Secretary shall, subject to this paragraph, pay to the State, from amounts appro- priated pursuant to paragraph (2), an amount equal to the amount of funds so requested. ”(B) PAYMENT PRIORITY.\u2014The Secretary shall make payments under subparagraph (A) in the order in which the Secretary receives requests for such payments. ”(C) LIMITATIONS.\u2014 ”(i) MONTHLY PAYMENT TO A STATE.\u2014The total amount paid to a single State under subparagraph (A) during a month shall not exceed 1\u204412 of 20 percent of the State family assistance grant. ”(ii) PAYMENTS TO ALL STATES.\u2014The total amount paid to all States under subparagraph (A) during fis- cal years 1997 through 2001 shall not exceed the total amount appropriated pursuant to paragraph (2). ”(4) ANNUAL RECONCILIATION.\u2014Notwithstanding para- graph (3), at the end of each fiscal year, each State shall remit to the Secretary an amount equal to the amount (if any) by which the total amount paid to the State under paragraph (3) during the fiscal year exceeds\u2014 ”(A) the Federal medical assistance percentage for the State for the fiscal year (as defined in section 1905(b), as in effect on September 30, 1995) of the amount (if any) by which\u2014 ”(i) if the Secretary makes a payment to the State under section 418(a)(2) in the fiscal year\u2014 ”(I) the expenditures under the State program funded under this part for the fiscal year, exclud- ing any amounts made available by the Federal Government (except amounts paid to the State under paragraph (3) during the fiscal year that have been expended by the State) and any amounts expended by the State during the fiscal year for child care; exceeds 20 ”(II) historic State expenditures (as defined in section 409(a)(7)(B)(iii)), excluding the expendi- tures by the State for child care under subsection (g) or (i) of section 402 (as in effect during fiscal year 1994) for fiscal year 1994 minus any Federal payment with respect to such child care expendi- tures; or ”(ii) if the Secretary does not make a payment to the State under section 418(a)(2) in the fiscal year\u2014 ”(I) the expenditures under the State program funded under this part for the fiscal year (exclud- ing any amounts made available by the Federal Government, except amounts paid to the State under paragraph (3) during the fiscal year that have been expended by the State); exceeds ”(II) historic State expenditures (as defined in section 409(a)(7)(B)(iii)); multiplied by ”(B) 1\u204412 times the number of months during the fiscal year for which the Secretary makes a payment to the State under this subsection. ”(5) ELIGIBLE MONTH.\u2014As used in paragraph (3)(A), the term ‘eligible month’ means, with respect to a State, a month in the 2-month period that begins with any month for which the State is a needy State. ”(6) NEEDY STATE.\u2014For purposes of paragraph (5), a State is a needy State for a month if\u2014 ”(A) the average rate of\u2014 ”(i) total unemployment in such State (seasonally adjusted) for the period consisting of the most recent 3 months for which data for all States are published equals or exceeds 6.5 percent; and ”(ii) total unemployment in such State (seasonally adjusted) for the 3-month period equals or exceeds 110 percent of such average rate for either (or both) of the corresponding 3-month periods ending in the 2 preced- ing calendar years; or ”(B) as determined by the Secretary of Agriculture (in the discretion of the Secretary of Agriculture), the monthly average number of individuals (as of the last day of each month) participating in the food stamp program in the State in the then most recently concluded 3-month period for which data are available exceeds by not less than 10 percent the lesser of\u2014 ”(i) the monthly average number of individuals (as of the last day of each month) in the State that would have participated in the food stamp program in the corresponding 3-month period in fiscal year 1994 if the amendments made by titles IV and VIII of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 had been in effect throughout fiscal year 1994; or ”(ii) the monthly average number of individuals (as of the last day of each month) in the State that would have participated in the food stamp program in 21 the corresponding 3-month period in fiscal year 1995 if the amendments made by titles IV and VIII of the Per- sonal Responsibility and Work Opportunity Reconcili- ation Act of 1996 had been in effect throughout fiscal year 1995. ”(7) OTHER TERMS DEFINED.\u2014As used in this subsection: ”(A) STATE.\u2014The term ‘State’ means each of the 50 States of the United States and the District of Columbia. ”(B) SECRETARY.\u2014The term ‘Secretary’ means the Sec- retary of the Treasury. ”(8) ANNUAL REPORTS.\u2014The Secretary shall annually re- port to the Congress on the status of the Fund. ”SEC. 404. USE OF GRANTS. ”(a) GENERAL RULES.\u2014Subject to this part, a State to which a grant is made under section 403 may use the grant\u2014 ”(1) in any manner that is reasonably calculated to accom- plish the purpose of this part, including to provide low income households with assistance in meeting home heating and cool- ing costs; or ”(2) in any manner that the State was authorized to use amounts received under part A or F, as such parts were in effect on September 30, 1995. ”(b) LIMITATION ON USE OF GRANT FOR ADMINISTRATIVE PUR- POSES.\u2014 ”(1) LIMITATION.\u2014A State to which a grant is made under section 403 shall not expend more than 15 percent of the grant for administrative purposes. ”(2) EXCEPTION.\u2014Paragraph (1) shall not apply to the use of a grant for information technology and computerization needed for tracking or monitoring required by or under this part. ”(c) AUTHORITY TO TREAT INTERSTATE IMMIGRANTS UNDER RULES OF FORMER STATE.\u2014A State operating a program funded under this part may apply to a family the rules (including benefit amounts) of the program funded under this part of another State if the family has moved to the State from the other State and has resided in the State for less than 12 months. ”(d) AUTHORITY TO USE PORTION OF GRANT FOR OTHER PUR- POSES.\u2014 ”(1) IN GENERAL.\u2014A State may use not more than 30 per- cent of the amount of any grant made to the State under section 403(a) for a fiscal year to carry out a State program pursuant to any or all of the following provisions of law: ”(A) Title XX of this Act. ”(B) The Child Care and Development Block Grant Act of 1990. ”(2) LIMITATION ON AMOUNT TRANSFERABLE TO TITLE XX PROGRAMS.\u2014Notwithstanding paragraph (1), not more than 1\u20443 of the total amount paid to a State under this part for a fiscal year that is used to carry out State programs pursuant to provi- sions of law specified in paragraph (1) may be used to carry out State programs pursuant to title XX. ”(3) APPLICABLE RULES.\u2014 22 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B) of this paragraph, any amount paid to a State under this part that is used to carry out a State program pursu- ant to a provision of law specified in paragraph (1) shall not be subject to the requirements of this part, but shall be subject to the requirements that apply to Federal funds pro- vided directly under the provision of law to carry out the program, and the expenditure of any amount so used shall not be considered to be an expenditure under this part. ”(B) EXCEPTION RELATING TO TITLE XX PROGRAMS.\u2014All amounts paid to a State under this part that are used to carry out State programs pursuant to title XX shall be used only for programs and services to children or their families whose income is less than 200 percent of the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation Act of 1981) applicable to a family of the size involved. ”(e) AUTHORITY TO RESERVE CERTAIN AMOUNTS FOR ASSIST- ANCE.\u2014A State may reserve amounts paid to the State under this part for any fiscal year for the purpose of providing, without fiscal year limitation, assistance under the State program funded under this part. ”(f) AUTHORITY TO OPERATE EMPLOYMENT PLACEMENT PRO- GRAM.\u2014A State to which a grant is made under section 403 may use the grant to make payments (or provide job placement vouchers) to State-approved public and private job placement agencies that provide employment placement services to individuals who receive assistance under the State program funded under this part. ”(g) IMPLEMENTATION OF ELECTRONIC BENEFIT TRANSFER SYS- TEM.\u2014A State to which a grant is made under section 403 is en- couraged to implement an electronic benefit transfer system for pro- viding assistance under the State program funded under this part, and may use the grant for such purpose. ”(h) USE OF FUNDS FOR INDIVIDUAL DEVELOPMENT AC- COUNTS.\u2014 ”(1) IN GENERAL.\u2014A State to which a grant is made under section 403 may use the grant to carry out a program to fund individual development accounts (as defined in paragraph (2)) established by individuals eligible for assistance under the State program funded under this part. ”(2) INDIVIDUAL DEVELOPMENT ACCOUNTS.\u2014 ”(A) ESTABLISHMENT.\u2014Under a State program carried out under paragraph (1), an individual development ac- count may be established by or on behalf of an individual eligible for assistance under the State program operated under this part for the purpose of enabling the individual to accumulate funds for a qualified purpose described in subparagraph (B). ”(B) QUALIFIED PURPOSE.\u2014A qualified purpose de- scribed in this subparagraph is 1 or more of the following, as provided by the qualified entity providing assistance to the individual under this subsection: 23 ”(i) POSTSECONDARY EDUCATIONAL EXPENSES.\u2014 Postsecondary educational expenses paid from an indi- vidual development account directly to an eligible edu- cational institution. ”(ii) FIRST HOME PURCHASE.\u2014Qualified acquisition costs with respect to a qualified principal residence for a qualified first-time homebuyer, if paid from an indi- vidual development account directly to the persons to whom the amounts are due. ”(iii) BUSINESS CAPITALIZATION.\u2014Amounts paid from an individual development account directly to a business capitalization account which is established in a federally insured financial institution and is re- stricted to use solely for qualified business capitaliza- tion expenses. ”(C) CONTRIBUTIONS TO BE FROM EARNED INCOME.\u2014An individual may only contribute to an individual develop- ment account such amounts as are derived from earned in- come, as defined in section 911(d)(2) of the Internal Reve- nue Code of 1986. ”(D) WITHDRAWAL OF FUNDS.\u2014The Secretary shall es- tablish such regulations as may be necessary to ensure that funds held in an individual development account are not withdrawn except for 1 or more of the qualified purposes described in subparagraph (B). ”(3) REQUIREMENTS.\u2014 ”(A) IN GENERAL.\u2014An individual development account established under this subsection shall be a trust created or organized in the United States and funded through peri- odic contributions by the establishing individual and matched by or through a qualified entity for a qualified purpose (as described in paragraph (2)(B)). ”(B) QUALIFIED ENTITY.\u2014As used in this subsection, the term ‘qualified entity’ means\u2014 ”(i) a not-for-profit organization described in sec- tion 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code; or ”(ii) a State or local government agency acting in cooperation with an organization described in clause (i). ”(4) NO REDUCTION IN BENEFITS.\u2014Notwithstanding any other provision of Federal law (other than the Internal Revenue Code of 1986) that requires consideration of 1 or more financial circumstances of an individual, for the purpose of determining eligibility to receive, or the amount of, any assistance or benefit authorized by such law to be provided to or for the benefit of such individual, funds (including interest accruing) in an indi- vidual development account under this subsection shall be dis- regarded for such purpose with respect to any period during which such individual maintains or makes contributions into such an account. ”(5) DEFINITIONS.\u2014As used in this subsection\u2014 24 ”(A) ELIGIBLE EDUCATIONAL INSTITUTION.\u2014The term ‘eligible educational institution’ means the following: ”(i) An institution described in section 481(a)(1) or 1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1088(a)(1) or 1141(a)), as such sections are in effect on the date of the enactment of this subsection. ”(ii) An area vocational education school (as de- fined in subparagraph (C) or (D) of section 521(4) of the Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2471(4))) which is in any State (as defined in section 521(33) of such Act), as such sections are in effect on the date of the enactment of this subsection. ”(B) POST-SECONDARY EDUCATIONAL EXPENSES.\u2014The term ‘post-secondary educational expenses’ means\u2014 ”(i) tuition and fees required for the enrollment or attendance of a student at an eligible educational insti- tution, and ”(ii) fees, books, supplies, and equipment required for courses of instruction at an eligible educational in- stitution. ”(C) QUALIFIED ACQUISITION COSTS.\u2014The term ‘quali- fied acquisition costs’ means the costs of acquiring, con- structing, or reconstructing a residence. The term includes any usual or reasonable settlement, financing, or other clos- ing costs. ”(D) QUALIFIED BUSINESS.\u2014The term ‘qualified busi- ness’ means any business that does not contravene any law or public policy (as determined by the Secretary). ”(E) QUALIFIED BUSINESS CAPITALIZATION EXPENSES.\u2014 The term ‘qualified business capitalization expenses’ means qualified expenditures for the capitalization of a qualified business pursuant to a qualified plan. ”(F) QUALIFIED EXPENDITURES.\u2014The term ‘qualified expenditures’ means expenditures included in a qualified plan, including capital, plant, equipment, working capital, and inventory expenses. ”(G) QUALIFIED FIRST-TIME HOMEBUYER.\u2014 ”(i) IN GENERAL.\u2014The term ‘qualified first-time homebuyer’ means a taxpayer (and, if married, the tax- payer’s spouse) who has no present ownership interest in a principal residence during the 3-year period end- ing on the date of acquisition of the principal residence to which this subsection applies. ”(ii) DATE OF ACQUISITION.\u2014The term ‘date of ac- quisition’ means the date on which a binding contract to acquire, construct, or reconstruct the principal resi- dence to which this subparagraph applies is entered into. ”(H) QUALIFIED PLAN.\u2014The term ‘qualified plan’ means a business plan which\u2014 ”(i) is approved by a financial institution, or by a nonprofit loan fund having demonstrated fiduciary in- tegrity, 25 ”(ii) includes a description of services or goods to be sold, a marketing plan, and projected financial statements, and ”(iii) may require the eligible individual to obtain the assistance of an experienced entrepreneurial advi- sor. ”(I) QUALIFIED PRINCIPAL RESIDENCE.\u2014The term ‘qualified principal residence’ means a principal residence (within the meaning of section 1034 of the Internal Revenue Code of 1986), the qualified acquisition costs of which do not exceed 100 percent of the average area purchase price applicable to such residence (determined in accordance with paragraphs (2) and (3) of section 143(e) of such Code). ”(i) SANCTION WELFARE RECIPIENTS FOR FAILING TO ENSURE THAT MINOR DEPENDENT CHILDREN ATTEND SCHOOL.\u2014A State to which a grant is made under section 403 shall not be prohibited from sanctioning a family that includes an adult who has received assistance under any State program funded under this part attrib- utable to funds provided by the Federal Government or under the food stamp program, as defined in section 3(h) of the Food Stamp Act of 1977, if such adult fails to ensure that the minor dependent children of such adult attend school as required by the law of the State in which the minor children reside. ”(j) REQUIREMENT FOR HIGH SCHOOL DIPLOMA OR EQUIVA- LENT.\u2014A State to which a grant is made under section 403 shall not be prohibited from sanctioning a family that includes an adult who is older than age 20 and younger than age 51 and who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government or under the food stamp program, as defined in section 3(h) of the Food Stamp Act of 1977, if such adult does not have, or is not working toward attaining, a secondary school diploma or its recognized equivalent unless such adult has been determined in the judgment of medical, psychiatric, or other appropriate professionals to lack the requisite capacity to complete successfully a course of study that would lead to a secondary school diploma or its recognized equiva- lent. ”SEC. 405. ADMINISTRATIVE PROVISIONS. ”(a) QUARTERLY.\u2014The Secretary shall pay each grant payable to a State under section 403 in quarterly installments, subject to this section. ”(b) NOTIFICATION.\u2014Not later than 3 months before the pay- ment of any such quarterly installment to a State, the Secretary shall notify the State of the amount of any reduction determined under section 412(a)(1)(B) with respect to the State. ”(c) COMPUTATION AND CERTIFICATION OF PAYMENTS TO STATES.\u2014 ”(1) COMPUTATION.\u2014The Secretary shall estimate the amount to be paid to each eligible State for each quarter under this part, such estimate to be based on a report filed by the State containing an estimate by the State of the total sum to be expended by the State in the quarter under the State program funded under this part and such other information as the Sec- retary may find necessary. 26 ”(2) CERTIFICATION.\u2014The Secretary of Health and Human Services shall certify to the Secretary of the Treasury the amount estimated under paragraph (1) with respect to a State, reduced or increased to the extent of any overpayment or under- payment which the Secretary of Health and Human Services determines was made under this part to the State for any prior quarter and with respect to which adjustment has not been made under this paragraph. ”(d) PAYMENT METHOD.\u2014Upon receipt of a certification under subsection (c)(2) with respect to a State, the Secretary of the Treas- ury shall, through the Fiscal Service of the Department of the Treas- ury and before audit or settlement by the General Accounting Office, pay to the State, at the time or times fixed by the Secretary of Health and Human Services, the amount so certified. ”SEC. 406. FEDERAL LOANS FOR STATE WELFARE PROGRAMS. ”(a) LOAN AUTHORITY.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall make loans to any loan-eligible State, for a period to maturity of not more than 3 years. ”(2) LOAN-ELIGIBLE STATE.\u2014As used in paragraph (1), the term ‘loan-eligible State’ means a State against which a penalty has not been imposed under section 409(a)(1). ”(b) RATE OF INTEREST.\u2014The Secretary shall charge and collect interest on any loan made under this section at a rate equal to the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the period to maturity of the loan. ”(c) USE OF LOAN.\u2014A State shall use a loan made to the State under this section only for any purpose for which grant amounts re- ceived by the State under section 403(a) may be used, including\u2014 ”(1) welfare anti-fraud activities; and ”(2) the provision of assistance under the State program to Indian families that have moved from the service area of an In- dian tribe with a tribal family assistance plan approved under section 412. ”(d) LIMITATION ON TOTAL AMOUNT OF LOANS TO A STATE.\u2014 The cumulative dollar amount of all loans made to a State under this section during fiscal years 1997 through 2002 shall not exceed 10 percent of the State family assistance grant. ”(e) LIMITATION ON TOTAL AMOUNT OF OUTSTANDING LOANS.\u2014 The total dollar amount of loans outstanding under this section may not exceed $1,700,000,000. ”(f) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated such sums as may be necessary for the cost of loans under this sec- tion. ”SEC. 407. MANDATORY WORK REQUIREMENTS. ”(a) PARTICIPATION RATE REQUIREMENTS.\u2014 ”(1) ALL FAMILIES.\u2014A State to which a grant is made under section 403 for a fiscal year shall achieve the minimum participation rate specified in the following table for the fiscal year with respect to all families receiving assistance under the State program funded under this part: 27 The minimum participation ”If the fiscal year is: rate is: 1997 ……………………………………………………………………….. 25 1998 ……………………………………………………………………….. 30 1999 ……………………………………………………………………….. 35 2000 ……………………………………………………………………….. 40 2001 ……………………………………………………………………….. 45 2002 or thereafter ……………………………………………………. 50. ”(2) 2-PARENT FAMILIES.\u2014A State to which a grant is made under section 403 for a fiscal year shall achieve the minimum participation rate specified in the following table for the fiscal year with respect to 2-parent families receiving assistance under the State program funded under this part: The minimum participation ”If the fiscal year is: rate is: 1997 ……………………………………………………………………….. 75 1998 ……………………………………………………………………….. 75 1999 or thereafter ……………………………………………………. 90. ”(b) CALCULATION OF PARTICIPATION RATES.\u2014 ”(1) ALL FAMILIES.\u2014 ”(A) AVERAGE MONTHLY RATE.\u2014For purposes of sub- section (a)(1), the participation rate for all families of a State for a fiscal year is the average of the participation rates for all families of the State for each month in the fis- cal year. ”(B) MONTHLY PARTICIPATION RATES.\u2014The participa- tion rate of a State for all families of the State for a month, expressed as a percentage, is\u2014 ”(i) the number of families receiving assistance under the State program funded under this part that include an adult or a minor child head of household who is engaged in work for the month; divided by ”(ii) the amount by which\u2014 ”(I) the number of families receiving such as- sistance during the month that include an adult or a minor child head of household receiving such as- sistance; exceeds ”(II) the number of families receiving such as- sistance that are subject in such month to a pen- alty described in subsection (e)(1) but have not been subject to such penalty for more than 3 months within the preceding 12-month period (whether or not consecutive). ”(2) 2-PARENT FAMILIES.\u2014 ”(A) AVERAGE MONTHLY RATE.\u2014For purposes of sub- section (a)(2), the participation rate for 2-parent families of a State for a fiscal year is the average of the participation rates for 2-parent families of the State for each month in the fiscal year. ”(B) MONTHLY PARTICIPATION RATES.\u2014The participa- tion rate of a State for 2-parent families of the State for a month shall be calculated by use of the formula set forth in paragraph (1)(B), except that in the formula the term ‘number of 2-parent families’ shall be substituted for the 28 term ‘number of families’ each place such latter term ap- pears. ”(3) PRO RATA REDUCTION OF PARTICIPATION RATE DUE TO CASELOAD REDUCTIONS NOT REQUIRED BY FEDERAL LAW.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall prescribe regu- lations for reducing the minimum participation rate other- wise required by this section for a fiscal year by the number of percentage points equal to the number of percentage points (if any) by which\u2014 ”(i) the average monthly number of families receiv- ing assistance during the immediately preceding fiscal year under the State program funded under this part is less than ”(ii) the average monthly number of families that received aid under the State plan approved under part A (as in effect on September 30, 1995) during fiscal year 1995. The minimum participation rate shall not be reduced to the extent that the Secretary determines that the reduction in the number of families receiving such assistance is required by Federal law. ”(B) ELIGIBILITY CHANGES NOT COUNTED.\u2014The regula- tions required by subparagraph (A) shall not take into ac- count families that are diverted from a State program funded under this part as a result of differences in eligi- bility criteria under a State program funded under this part and eligibility criteria under the State program oper- ated under the State plan approved under part A (as such plan and such part were in effect on September 30, 1995). Such regulations shall place the burden on the Secretary to prove that such families were diverted as a direct result of differences in such eligibility criteria. ”(4) STATE OPTION TO INCLUDE INDIVIDUALS RECEIVING AS- SISTANCE UNDER A TRIBAL FAMILY ASSISTANCE PLAN.\u2014For pur- poses of paragraphs (1)(B) and (2)(B), a State may, at its op- tion, include families in the State that are receiving assistance under a tribal family assistance plan approved under section 412. ”(5) STATE OPTION FOR PARTICIPATION REQUIREMENT EX- EMPTIONS.\u2014For any fiscal year, a State may, at its option, not require an individual who is a single custodial parent caring for a child who has not attained 12 months of age to engage in work, and may disregard such an individual in determining the participation rates under subsection (a) for not more than 12 months. ”(c) ENGAGED IN WORK.\u2014 ”(1) GENERAL RULES.\u2014 ”(A) ALL FAMILIES.\u2014For purposes of subsection (b)(1)(B)(i), a recipient is engaged in work for a month in a fiscal year if the recipient is participating in work activi- ties for at least the minimum average number of hours per week specified in the following table during the month, not fewer than 20 hours per week of which are attributable to 29 an activity described in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of subsection (d), subject to this subsection: The minimum ”If the month is average number of in fiscal year: hours per week is: 1997 ……………………………………………………………………. 20 1998 ……………………………………………………………………. 20 1999 ……………………………………………………………………. 25 2000 or thereafter …………………………………………………. 30. ”(B) 2-PARENT FAMILIES.\u2014For purposes of subsection (b)(2)(B), an individual is engaged in work for a month in a fiscal year if\u2014 ”(i) the individual is making progress in work ac- tivities for at least 35 hours per week during the month, not fewer than 30 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of subsection (d), subject to this subsection; and ”(ii) if the family of the individual receives feder- ally-funded child care assistance and an adult in the family is not disabled or caring for a severely disabled child, the individual’s spouse is making progress in work activities during the month, not fewer than 20 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), or (7) of subsection (d). ”(2) LIMITATIONS AND SPECIAL RULES.\u2014 ”(A) NUMBER OF WEEKS FOR WHICH JOB SEARCH COUNTS AS WORK.\u2014 ”(i) LIMITATION.\u2014Notwithstanding paragraph (1) of this subsection, an individual shall not be consid- ered to be engaged in work by virtue of participation in an activity described in subsection (d)(6) of a State program funded under this part, after the individual has participated in such an activity for 6 weeks (or, if the unemployment rate of the State is at least 50 per- cent greater than the unemployment rate of the United States, 12 weeks), or if the participation is for a week that immediately follows 4 consecutive weeks of such participation. ”(ii) LIMITED AUTHORITY TO COUNT LESS THAN FULL WEEK OF PARTICIPATION.\u2014For purposes of clause (i) of this subparagraph, on not more than 1 occasion per individual, the State shall consider participation of the individual in an activity described in subsection (d)(6) for 3 or 4 days during a week as a week of par- ticipation in the activity by the individual. ”(B) SINGLE PARENT WITH CHILD UNDER AGE 6 DEEMED TO BE MEETING WORK PARTICIPATION REQUIREMENTS IF PARENT IS ENGAGED IN WORK FOR 20 HOURS PER WEEK.\u2014 For purposes of determining monthly participation rates under subsection (b)(1)(B)(i), a recipient in a 1-parent fam- ily who is the parent of a child who has not attained 6 years of age is deemed to be engaged in work for a month 30 if the recipient is engaged in work for an average of at least 20 hours per week during the month. ”(C) TEEN HEAD OF HOUSEHOLD WHO MAINTAINS SATIS- FACTORY SCHOOL ATTENDANCE DEEMED TO BE MEETING WORK PARTICIPATION REQUIREMENTS.\u2014For purposes of de- termining monthly participation rates under subsection (b)(1)(B)(i), a recipient who is a single head of household and has not attained 20 years of age is deemed, subject to subparagraph (D) of this paragraph, to be engaged in work for a month in a fiscal year if the recipient\u2014 ”(i) maintains satisfactory attendance at secondary school or the equivalent during the month; or ”(ii) participates in education directly related to employment for at least the minimum average number of hours per week specified in the table set forth in paragraph (1)(A) of this subsection. ”(D) NUMBER OF PERSONS THAT MAY BE TREATED AS ENGAGED IN WORK BY VIRTUE OF PARTICIPATION IN VOCA- TIONAL EDUCATION ACTIVITIES OR BEING A TEEN HEAD OF HOUSEHOLD WHO MAINTAINS SATISFACTORY SCHOOL AT- TENDANCE.\u2014For purposes of determining monthly partici- pation rates under paragraphs (1)(B)(i) and (2)(B) of sub- section (b), not more than 20 percent of individuals in all families and in 2-parent families may be determined to be engaged in work in the State for a month by reason of par- ticipation in vocational educational training or deemed to be engaged in work by reason of subparagraph (C) of this paragraph. ”(d) WORK ACTIVITIES DEFINED.\u2014As used in this section, the term ‘work activities’ means\u2014 ”(1) unsubsidized employment; ”(2) subsidized private sector employment; ”(3) subsidized public sector employment; ”(4) work experience (including work associated with the re- furbishing of publicly assisted housing) if sufficient private sec- tor employment is not available; ”(5) on-the-job training; ”(6) job search and job readiness assistance; ”(7) community service programs; ”(8) vocational educational training (not to exceed 12 months with respect to any individual); ”(9) job skills training directly related to employment; ”(10) education directly related to employment, in the case of a recipient who has not received a high school diploma or a certificate of high school equivalency; ”(11) satisfactory attendance at secondary school or in a course of study leading to a certificate of general equivalence, in the case of a recipient who has not completed secondary school or received such a certificate; and ”(12) the provision of child care services to an individual who is participating in a community service program. ”(e) PENALTIES AGAINST INDIVIDUALS.\u2014 ”(1) IN GENERAL.\u2014Except as provided in paragraph (2), if an individual in a family receiving assistance under the State 31 program funded under this part refuses to engage in work re- quired in accordance with this section, the State shall\u2014 ”(A) reduce the amount of assistance otherwise payable to the family pro rata (or more, at the option of the State) with respect to any period during a month in which the in- dividual so refuses; or ”(B) terminate such assistance, subject to such good cause and other exceptions as the State may establish. ”(2) EXCEPTION.\u2014Notwithstanding paragraph (1), a State may not reduce or terminate assistance under the State pro- gram funded under this part based on a refusal of an individ- ual to work if the individual is a single custodial parent caring for a child who has not attained 6 years of age, and the indi- vidual proves that the individual has a demonstrated inability (as determined by the State) to obtain needed child care, for 1 or more of the following reasons: ”(A) Unavailability of appropriate child care within a reasonable distance from the individual’s home or work site. ”(B) Unavailability or unsuitability of informal child care by a relative or under other arrangements. ”(C) Unavailability of appropriate and affordable for- mal child care arrangements. ”(f) NONDISPLACEMENT IN WORK ACTIVITIES.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2), an adult in a family receiving assistance under a State program funded under this part attributable to funds provided by the Federal Government may fill a vacant employment position in order to engage in a work activity described in subsection (d). ”(2) NO FILLING OF CERTAIN VACANCIES.\u2014No adult in a work activity described in subsection (d) which is funded, in whole or in part, by funds provided by the Federal Government shall be employed or assigned\u2014 ”(A) when any other individual is on layoff from the same or any substantially equivalent job; or ”(B) if the employer has terminated the employment of any regular employee or otherwise caused an involuntary reduction of its workforce in order to fill the vacancy so cre- ated with an adult described in paragraph (1). ”(3) GRIEVANCE PROCEDURE.\u2014A State with a program funded under this part shall establish and maintain a griev- ance procedure for resolving complaints of alleged violations of paragraph (2). ”(4) NO PREEMPTION.\u2014Nothing in this subsection shall pre- empt or supersede any provision of State or local law that pro- vides greater protection for employees from displacement. ”(g) SENSE OF THE CONGRESS.\u2014It is the sense of the Congress that in complying with this section, each State that operates a pro- gram funded under this part is encouraged to assign the highest priority to requiring adults in 2-parent families and adults in sin- gle-parent families that include older preschool or school-age chil- dren to be engaged in work activities. 32 ”(h) SENSE OF THE CONGRESS THAT STATES SHOULD IMPOSE CERTAIN REQUIREMENTS ON NONCUSTODIAL, NONSUPPORTING MINOR PARENTS.\u2014It is the sense of the Congress that the States should require noncustodial, nonsupporting parents who have not attained 18 years of age to fulfill community work obligations and attend appropriate parenting or money management classes after school. ”(i) REVIEW OF IMPLEMENTATION OF STATE WORK PROGRAMS.\u2014 During fiscal year 1999, the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Sen- ate shall hold hearings and engage in other appropriate activities to review the implementation of this section by the States, and shall invite the Governors of the States to testify before them regarding such implementation. Based on such hearings, such Committees may introduce such legislation as may be appropriate to remedy any problems with the State programs operated pursuant to this section. ”SEC. 408. PROHIBITIONS; REQUIREMENTS. ”(a) IN GENERAL.\u2014 ”(1) NO ASSISTANCE FOR FAMILIES WITHOUT A MINOR CHILD.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to a family\u2014 ”(A) unless the family includes\u2014 ”(i) a minor child who resides with a custodial parent or other adult caretaker relative of the child; or ”(ii) a pregnant individual; and ”(B) if the family includes an adult who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government, for 60 months (whether or not consecutive) after the date the State program funded under this part commences (un- less an exception described in subparagraph (B), (C), or (D) of paragraph (7) applies). ”(2) REDUCTION OR ELIMINATION OF ASSISTANCE FOR NON- COOPERATION IN ESTABLISHING PATERNITY OR OBTAINING CHILD SUPPORT.\u2014If the agency responsible for administering the State plan approved under part D determines that an individual is not cooperating with the State in establishing paternity or in es- tablishing, modifying, or enforcing a support order with respect to a child of the individual, and the individual does not qualify for any good cause or other exception established by the State pursuant to section 454(29), then the State\u2014 ”(A) shall deduct from the assistance that would other- wise be provided to the family of the individual under the State program funded under this part an amount equal to not less than 25 percent of the amount of such assistance; and ”(B) may deny the family any assistance under the State program. ”(3) NO ASSISTANCE FOR FAMILIES NOT ASSIGNING CERTAIN SUPPORT RIGHTS TO THE STATE.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall require, as a condition of providing assistance to a family under the State program funded 33 under this part, that a member of the family assign to the State any rights the family member may have (on behalf of the family member or of any other person for whom the family member has applied for or is receiving such assist- ance) to support from any other person, not exceeding the total amount of assistance so provided to the family, which accrue (or have accrued) before the date the family leaves the program, which assignment, on and after the date the family leaves the program, shall not apply with respect to any support (other than support collected pursuant to sec- tion 464) which accrued before the family received such as- sistance and which the State has not collected by\u2014 ”(i) September 30, 2000, if the assignment is exe- cuted on or after October 1, 1997, and before October 1, 2000; or ”(ii) the date the family leaves the program, if the assignment is executed on or after October 1, 2000. ”(B) LIMITATION.\u2014A State to which a grant is made under section 403 shall not require, as a condition of pro- viding assistance to any family under the State program funded under this part, that a member of the family assign to the State any rights to support described in subpara- graph (A) which accrue after the date the family leaves the program. ”(4) NO ASSISTANCE FOR TEENAGE PARENTS WHO DO NOT ATTEND HIGH SCHOOL OR OTHER EQUIVALENT TRAINING PRO- GRAM.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to an individual who has not attained 18 years of age, is not married, has a minor child at least 12 weeks of age in his or her care, and has not successfully completed a high-school education (or its equivalent), if the individual does not participate in\u2014 ”(A) educational activities directed toward the attain- ment of a high school diploma or its equivalent; or ”(B) an alternative educational or training program that has been approved by the State. ”(5) NO ASSISTANCE FOR TEENAGE PARENTS NOT LIVING IN ADULT-SUPERVISED SETTINGS.\u2014 ”(A) IN GENERAL.\u2014 ”(i) REQUIREMENT.\u2014Except as provided in sub- paragraph (B), a State to which a grant is made under section 403 shall not use any part of the grant to pro- vide assistance to an individual described in clause (ii) of this subparagraph if the individual and the minor child referred to in clause (ii)(II) do not reside in a place of residence maintained by a parent, legal guard- ian, or other adult relative of the individual as such parent’s, guardian’s, or adult relative’s own home. ”(ii) INDIVIDUAL DESCRIBED.\u2014For purposes of clause (i), an individual described in this clause is an individual who\u2014 ”(I) has not attained 18 years of age; and ”(II) is not married, and has a minor child in his or her care. 34 ”(B) EXCEPTION.\u2014 ”(i) PROVISION OF, OR ASSISTANCE IN LOCATING, ADULT-SUPERVISED LIVING ARRANGEMENT.\u2014In the case of an individual who is described in clause (ii), the State agency referred to in section 402(a)(4) shall pro- vide, or assist the individual in locating, a second chance home, maternity home, or other appropriate adult-supervised supportive living arrangement, taking into consideration the needs and concerns of the indi- vidual, unless the State agency determines that the in- dividual’s current living arrangement is appropriate, and thereafter shall require that the individual and the minor child referred to in subparagraph (A)(ii)(II) reside in such living arrangement as a condition of the continued receipt of assistance under the State pro- gram funded under this part attributable to funds pro- vided by the Federal Government (or in an alternative appropriate arrangement, should circumstances change and the current arrangement cease to be appropriate). ”(ii) INDIVIDUAL DESCRIBED.\u2014For purposes of clause (i), an individual is described in this clause if the individual is described in subparagraph (A)(ii), and\u2014 ”(I) the individual has no parent, legal guard- ian or other appropriate adult relative described in subclause (II) of his or her own who is living or whose whereabouts are known; ”(II) no living parent, legal guardian, or other appropriate adult relative, who would otherwise meet applicable State criteria to act as the individ- ual’s legal guardian, of such individual allows the individual to live in the home of such parent, guardian, or relative; ”(III) the State agency determines that\u2014 ”(aa) the individual or the minor child re- ferred to in subparagraph (A)(ii)(II) is being or has been subjected to serious physical or emo- tional harm, sexual abuse, or exploitation in the residence of the individual’s own parent or legal guardian; or ”(bb) substantial evidence exists of an act or failure to act that presents an imminent or serious harm if the individual and the minor child lived in the same residence with the in- dividual’s own parent or legal guardian; or ”(IV) the State agency otherwise determines that it is in the best interest of the minor child to waive the requirement of subparagraph (A) with respect to the individual or the minor child. ”(iii) SECOND-CHANCE HOME.\u2014For purposes of this subparagraph, the term ‘second-chance home’ means an entity that provides individuals described in clause (ii) with a supportive and supervised living arrange- ment in which such individuals are required to learn 35 parenting skills, including child development, family budgeting, health and nutrition, and other skills to promote their long-term economic independence and the well-being of their children. ”(6) NO MEDICAL SERVICES.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide medical services. ”(B) EXCEPTION FOR PREPREGNANCY FAMILY PLANNING SERVICES.\u2014As used in subparagraph (A), the term ‘medical services’ does not include prepregnancy family planning services. ”(7) NO ASSISTANCE FOR MORE THAN 5 YEARS.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to a family that includes an adult who has received assistance under any State program funded under this part attributable to funds provided by the Fed- eral Government, for 60 months (whether or not consecu- tive) after the date the State program funded under this part commences, subject to this paragraph. ”(B) MINOR CHILD EXCEPTION.\u2014In determining the number of months for which an individual who is a parent or pregnant has received assistance under the State pro- gram funded under this part, the State shall disregard any month for which such assistance was provided with respect to the individual and during which the individual was\u2014 ”(i) a minor child; and ”(ii) not the head of a household or married to the head of a household. ”(C) HARDSHIP EXCEPTION.\u2014 ”(i) IN GENERAL.\u2014The State may exempt a family from the application of subparagraph (A) by reason of hardship or if the family includes an individual who has been battered or subjected to extreme cruelty. ”(ii) LIMITATION.\u2014The number of families with re- spect to which an exemption made by a State under clause (i) is in effect for a fiscal year shall not exceed 20 percent of the average monthly number of families to which assistance is provided under the State pro- gram funded under this part. ”(iii) BATTERED OR SUBJECT TO EXTREME CRUELTY DEFINED.\u2014For purposes of clause (i), an individual has been battered or subjected to extreme cruelty if the indi- vidual has been subjected to\u2014 ”(I) physical acts that resulted in, or threat- ened to result in, physical injury to the individual; ”(II) sexual abuse; ”(III) sexual activity involving a dependent child; ”(IV) being forced as the caretaker relative of a dependent child to engage in nonconsensual sex- ual acts or activities; 36 ”(V) threats of, or attempts at, physical or sex- ual abuse; ”(VI) mental abuse; or ”(VII) neglect or deprivation of medical care. ”(D) DISREGARD OF MONTHS OF ASSISTANCE RECEIVED BY ADULT WHILE LIVING ON AN INDIAN RESERVATION OR IN AN ALASKAN NATIVE VILLAGE WITH 50 PERCENT UNEMPLOY- MENT.\u2014In determining the number of months for which an adult has received assistance under the State program funded under this part, the State shall disregard any month during which the adult lived on an Indian reserva- tion or in an Alaskan Native village if, during the month\u2014 ”(i) at least 1,000 individuals were living on the reservation or in the village; and ”(ii) at least 50 percent of the adults living on the reservation or in the village were unemployed. ”(E) RULE OF INTERPRETATION.\u2014Subparagraph (A) shall not be interpreted to require any State to provide as- sistance to any individual for any period of time under the State program funded under this part. ”(F) RULE OF INTERPRETATION.\u2014This part shall not be interpreted to prohibit any State from expending State funds not originating with the Federal Government on ben- efits for children or families that have become ineligible for assistance under the State program funded under this part by reason of subparagraph (A). ”(8) DENIAL OF ASSISTANCE FOR 10 YEARS TO A PERSON FOUND TO HAVE FRAUDULENTLY MISREPRESENTED RESIDENCE IN ORDER TO OBTAIN ASSISTANCE IN 2 OR MORE STATES.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide cash assistance to an individual during the 10-year period that begins on the date the individual is convicted in Federal or State court of having made a fraudu- lent statement or representation with respect to the place of resi- dence of the individual in order to receive assistance simulta- neously from 2 or more States under programs that are funded under this title, title XIX, or the Food Stamp Act of 1977, or benefits in 2 or more States under the supplemental security in- come program under title XVI. The preceding sentence shall not apply with respect to a conviction of an individual, for any month beginning after the President of the United States grants a pardon with respect to the conduct which was the subject of the conviction. ”(9) DENIAL OF ASSISTANCE FOR FUGITIVE FELONS AND PRO- BATION AND PAROLE VIOLATORS.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to any individual who is\u2014 ”(i) fleeing to avoid prosecution, or custody or con- finement after conviction, under the laws of the place from which the individual flees, for a crime, or an at- tempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or 37 which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(ii) violating a condition of probation or parole imposed under Federal or State law. The preceding sentence shall not apply with respect to conduct of an individual, for any month beginning after the President of the Unit- ed States grants a pardon with respect to the conduct. ”(B) EXCHANGE OF INFORMATION WITH LAW ENFORCE- MENT AGENCIES.\u2014If a State to which a grant is made under section 403 establishes safeguards against the use or disclosure of information about applicants or recipients of assistance under the State program funded under this part, the safeguards shall not prevent the State agency admin- istering the program from furnishing a Federal, State, or local law enforcement officer, upon the request of the offi- cer, with the current address of any recipient if the officer furnishes the agency with the name of the recipient and no- tifies the agency that\u2014 ”(i) the recipient\u2014 ”(I) is described in subparagraph (A); or ”(II) has information that is necessary for the officer to conduct the official duties of the officer; and ”(ii) the location or apprehension of the recipient is within such official duties. ”(10) DENIAL OF ASSISTANCE FOR MINOR CHILDREN WHO ARE ABSENT FROM THE HOME FOR A SIGNIFICANT PERIOD.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance for a minor child who has been, or is ex- pected by a parent (or other caretaker relative) of the child to be, absent from the home for a period of 45 consecutive days or, at the option of the State, such period of not less than 30 and not more than 180 consecutive days as the State may provide for in the State plan submitted pursuant to section 402. ”(B) STATE AUTHORITY TO ESTABLISH GOOD CAUSE EX- CEPTIONS.\u2014The State may establish such good cause excep- tions to subparagraph (A) as the State considers appro- priate if such exceptions are provided for in the State plan submitted pursuant to section 402. ”(C) DENIAL OF ASSISTANCE FOR RELATIVE WHO FAILS TO NOTIFY STATE AGENCY OF ABSENCE OF CHILD.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance for an individ- ual who is a parent (or other caretaker relative) of a minor child and who fails to notify the agency administering the State program funded under this part of the absence of the minor child from the home for the period specified in or provided for pursuant to subparagraph (A), by the end of the 5-day period that begins with the date that it becomes clear to the parent (or relative) that the minor child will be absent for such period so specified or provided for. 38 ”(11) MEDICAL ASSISTANCE REQUIRED TO BE PROVIDED FOR CERTAIN FAMILIES HAVING EARNINGS FROM EMPLOYMENT OR CHILD SUPPORT.\u2014 ”(A) EARNINGS FROM EMPLOYMENT.\u2014A State to which a grant is made under section 403 and which has a State plan approved under title XIX shall provide that in the case of a family that is treated (under section 1931(b)(1)(A) for purposes of title XIX) as receiving aid under a State plan approved under this part (as in effect on July 16, 1996), that would become ineligible for such aid because of hours of or income from employment of the caretaker rel- ative (as defined under this part as in effect on such date) or because of section 402(a)(8)(B)(ii)(II) (as so in effect), and that was so treated as receiving such aid in at least 3 of the 6 months immediately preceding the month in which such ineligibility begins, the family shall remain eligible for medical assistance under the State’s plan approved under title XIX for an extended period or periods as pro- vided in section 1925 or 1902(e)(1) (as applicable), and that the family will be appropriately notified of such extension as required by section 1925(a)(2). ”(B) CHILD SUPPORT.\u2014A State to which a grant is made under section 403 and which has a State plan ap- proved under title XIX shall provide that in the case of a family that is treated (under section 1931(b)(1)(A) for pur- poses of title XIX) as receiving aid under a State plan ap- proved under this part (as in effect on July 16, 1996), that would become ineligible for such aid as a result (wholly or partly) of the collection of child or spousal support under part D and that was so treated as receiving such aid in at least 3 of the 6 months immediately preceding the month in which such ineligibility begins, the family shall remain eligible for medical assistance under the State’s plan ap- proved under title XIX for an extended period or periods as provided in section 1931(c)(1). ”(b) INDIVIDUAL RESPONSIBILITY PLANS.\u2014 ”(1) ASSESSMENT.\u2014The State agency responsible for ad- ministering the State program funded under this part shall make an initial assessment of the skills, prior work experience, and employability of each recipient of assistance under the pro- gram who\u2014 ”(A) has attained 18 years of age; or ”(B) has not completed high school or obtained a cer- tificate of high school equivalency, and is not attending sec- ondary school. ”(2) CONTENTS OF PLANS.\u2014 ”(A) IN GENERAL.\u2014On the basis of the assessment made under subsection (a) with respect to an individual, the State agency, in consultation with the individual, may develop an individual responsibility plan for the individ- ual, which\u2014 ”(i) sets forth an employment goal for the individ- ual and a plan for moving the individual immediately into private sector employment; 39 ”(ii) sets forth the obligations of the individual, which may include a requirement that the individual attend school, maintain certain grades and attendance, keep school age children of the individual in school, immunize children, attend parenting and money man- agement classes, or do other things that will help the individual become and remain employed in the private sector; ”(iii) to the greatest extent possible is designed to move the individual into whatever private sector em- ployment the individual is capable of handling as quickly as possible, and to increase the responsibility and amount of work the individual is to handle over time; ”(iv) describes the services the State will provide the individual so that the individual will be able to ob- tain and keep employment in the private sector, and describe the job counseling and other services that will be provided by the State; and ”(v) may require the individual to undergo appro- priate substance abuse treatment. ”(B) TIMING.\u2014The State agency may comply with para- graph (1) with respect to an individual\u2014 ”(i) within 90 days (or, at the option of the State, 180 days) after the effective date of this part, in the case of an individual who, as of such effective date, is a recipient of aid under the State plan approved under part A (as in effect immediately before such effective date); or ”(ii) within 30 days (or, at the option of the State, 90 days) after the individual is determined to be eligi- ble for such assistance, in the case of any other individ- ual. ”(3) PENALTY FOR NONCOMPLIANCE BY INDIVIDUAL.\u2014In ad- dition to any other penalties required under the State program funded under this part, the State may reduce, by such amount as the State considers appropriate, the amount of assistance otherwise payable under the State program to a family that in- cludes an individual who fails without good cause to comply with an individual responsibility plan signed by the individual. ”(4) STATE DISCRETION.\u2014The exercise of the authority of this subsection shall be within the sole discretion of the State. ”(c) NONDISCRIMINATION PROVISIONS.\u2014The following provisions of law shall apply to any program or activity which receives funds provided under this part: ”(1) The Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.). ”(2) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794). ”(3) The Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.). ”(4) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.). 40 ”(d) ALIENS.\u2014For special rules relating to the treatment of aliens, see section 402 of the Personal Responsibility and Work Op- portunity Reconciliation Act of 1996. ”SEC. 409. PENALTIES. ”(a) IN GENERAL.\u2014Subject to this section: ”(1) USE OF GRANT IN VIOLATION OF THIS PART.\u2014 ”(A) GENERAL PENALTY.\u2014If an audit conducted under chapter 75 of title 31, United States Code, finds that an amount paid to a State under section 403 for a fiscal year has been used in violation of this part, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter by the amount so used. ”(B) ENHANCED PENALTY FOR INTENTIONAL VIOLA- TIONS.\u2014If the State does not prove to the satisfaction of the Secretary that the State did not intend to use the amount in violation of this part, the Secretary shall further reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter by an amount equal to 5 percent of the State family assistance grant. ”(2) FAILURE TO SUBMIT REQUIRED REPORT.\u2014 ”(A) IN GENERAL.\u2014If the Secretary determines that a State has not, within 1 month after the end of a fiscal quarter, submitted the report required by section 411(a) for the quarter, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately suc- ceeding fiscal year by an amount equal to 4 percent of the State family assistance grant. ”(B) RESCISSION OF PENALTY.\u2014The Secretary shall re- scind a penalty imposed on a State under subparagraph (A) with respect to a report if the State submits the report before the end of the fiscal quarter that immediately suc- ceeds the fiscal quarter for which the report was required. ”(3) FAILURE TO SATISFY MINIMUM PARTICIPATION RATES.\u2014 ”(A) IN GENERAL.\u2014If the Secretary determines that a State to which a grant is made under section 403 for a fis- cal year has failed to comply with section 407(a) for the fis- cal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeed- ing fiscal year by an amount equal to not more than the ap- plicable percentage of the State family assistance grant. ”(B) APPLICABLE PERCENTAGE DEFINED.\u2014As used in subparagraph (A), the term ‘applicable percentage’ means, with respect to a State\u2014 ”(i) if a penalty was not imposed on the State under subparagraph (A) for the immediately preceding fiscal year, 5 percent; or ”(ii) if a penalty was imposed on the State under subparagraph (A) for the immediately preceding fiscal year, the lesser of\u2014 ”(I) the percentage by which the grant payable to the State under section 403(a)(1) was reduced 41 for such preceding fiscal year, increased by 2 per- centage points; or ”(II) 21 percent. ”(C) PENALTY BASED ON SEVERITY OF FAILURE.\u2014The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of non- compliance, and may reduce the penalty if the noncompli- ance is due to circumstances that caused the State to be- come a needy State (as defined in section 403(b)(6)) during the fiscal year. ”(4) FAILURE TO PARTICIPATE IN THE INCOME AND ELIGI- BILITY VERIFICATION SYSTEM.\u2014If the Secretary determines that a State program funded under this part is not participating during a fiscal year in the income and eligibility verification system required by section 1137, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the imme- diately succeeding fiscal year by an amount equal to not more than 2 percent of the State family assistance grant. ”(5) FAILURE TO COMPLY WITH PATERNITY ESTABLISHMENT AND CHILD SUPPORT ENFORCEMENT REQUIREMENTS UNDER PART D.\u2014Notwithstanding any other provision of this Act, if the Sec- retary determines that the State agency that administers a pro- gram funded under this part does not enforce the penalties re- quested by the agency administering part D against recipients of assistance under the State program who fail to cooperate in establishing paternity or in establishing, modifying, or enforc- ing a child support order in accordance with such part and who do not qualify for any good cause or other exception estab- lished by the State under section 454(29), the Secretary shall re- duce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year (without regard to this section) by not more than 5 percent. ”(6) FAILURE TO TIMELY REPAY A FEDERAL LOAN FUND FOR STATE WELFARE PROGRAMS.\u2014If the Secretary determines that a State has failed to repay any amount borrowed from the Fed- eral Loan Fund for State Welfare Programs established under section 406 within the period of maturity applicable to the loan, plus any interest owed on the loan, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter (without regard to this section) by the outstanding loan amount, plus the interest owed on the outstanding amount. The Secretary shall not for- give any outstanding loan amount or interest owed on the out- standing amount. ”(7) FAILURE OF ANY STATE TO MAINTAIN CERTAIN LEVEL OF HISTORIC EFFORT.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall reduce the grant payable to the State under section 403(a)(1) for fiscal year 1998, 1999, 2000, 2001, 2002, or 2003 by the amount (if any) by which qualified State expenditures for the then immediately preceding fiscal year are less than the applica- ble percentage of historic State expenditures with respect to such preceding fiscal year. ”(B) DEFINITIONS.\u2014As used in this paragraph: 42 ”(i) QUALIFIED STATE EXPENDITURES.\u2014 ”(I) IN GENERAL.\u2014The term ‘qualified State ex- penditures’ means, with respect to a State and a fiscal year, the total expenditures by the State dur- ing the fiscal year, under all State programs, for any of the following with respect to eligible fami- lies: ”(aa) Cash assistance. ”(bb) Child care assistance. ”(cc) Educational activities designed to in- crease self-sufficiency, job training, and work, excluding any expenditure for public education in the State except expenditures which involve the provision of services or assistance to a member of an eligible family which is not gen- erally available to persons who are not mem- bers of an eligible family. ”(dd) Administrative costs in connection with the matters described in items (aa), (bb), (cc), and (ee), but only to the extent that such costs do not exceed 15 percent of the total amount of qualified State expenditures for the fiscal year. ”(ee) Any other use of funds allowable under section 404(a)(1). ”(II) EXCLUSION OF TRANSFERS FROM OTHER STATE AND LOCAL PROGRAMS.\u2014Such term does not include expenditures under any State or local pro- gram during a fiscal year, except to the extent that\u2014 ”(aa) the expenditures exceed the amount expended under the State or local program in the fiscal year most recently ending before the date of the enactment of this part; or ”(bb) the State is entitled to a payment under former section 403 (as in effect imme- diately before such date of enactment) with re- spect to the expenditures. ”(III) ELIGIBLE FAMILIES.\u2014As used in sub- clause (I), the term ‘eligible families’ means fami- lies eligible for assistance under the State program funded under this part, and families that would be eligible for such assistance but for the application of section 408(a)(7) of this Act or section 402 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. ”(ii) APPLICABLE PERCENTAGE.\u2014The term ‘applica- ble percentage’ means for fiscal years 1997 through 2002, 80 percent (or, if the State meets the require- ments of section 407(a) for the fiscal year, 75 percent) reduced (if appropriate) in accordance with subpara- graph (C)(ii). 43 ”(iii) HISTORIC STATE EXPENDITURES.\u2014The term ‘historic State expenditures’ means, with respect to a State, the lesser of\u2014 ”(I) the expenditures by the State under parts A and F (as in effect during fiscal year 1994) for fiscal year 1994; or ”(II) the amount which bears the same ratio to the amount described in subclause (I) as\u2014 ”(aa) the State family assistance grant, plus the total amount required to be paid to the State under former section 403 for fiscal year 1994 with respect to amounts expended by the State for child care under subsection (g) or (i) of section 402 (as in effect during fiscal year 1994); bears to ”(bb) the total amount required to be paid to the State under former section 403 (as in ef- fect during fiscal year 1994) for fiscal year 1994. Such term does not include any expenditures under the State plan approved under part A (as so in effect) on behalf of individuals covered by a tribal family assist- ance plan approved under section 412, as determined by the Secretary. ”(iv) EXPENDITURES BY THE STATE.\u2014The term ‘ex- penditures by the State’ does not include\u2014 ”(I) any expenditures from amounts made available by the Federal Government; ”(II) any State funds expended for the medic- aid program under title XIX; ”(III) any State funds which are used to match Federal funds; or ”(IV) any State funds which are expended as a condition of receiving Federal funds under Fed- eral programs other than under this part. Notwithstanding subclause (IV) of the preceding sen- tence, such term includes expenditures by a State for child care in a fiscal year to the extent that the total amount of such expenditures does not exceed an amount equal to the amount of State expenditures in fiscal year 1994 or 1995 (whichever is greater) that equal the non-Federal share for the programs described in section 418(a)(1)(A). ”(8) SUBSTANTIAL NONCOMPLIANCE OF STATE CHILD SUP- PORT ENFORCEMENT PROGRAM WITH REQUIREMENTS OF PART D.\u2014 ”(A) IN GENERAL.\u2014If a State program operated under part D is found as a result of a review conducted under sec- tion 452(a)(4) not to have complied substantially with the requirements of such part for any quarter, and the Sec- retary determines that the program is not complying sub- stantially with such requirements at the time the finding is made, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the quarter and each sub- 44 sequent quarter that ends before the 1st quarter throughout which the program is found to be in substantial compliance with such requirements by\u2014 ”(i) not less than 1 nor more than 2 percent; ”(ii) not less than 2 nor more than 3 percent, if the finding is the 2nd consecutive such finding made as a result of such a review; or ”(iii) not less than 3 nor more than 5 percent, if the finding is the 3rd or a subsequent consecutive such finding made as a result of such a review. ”(B) DISREGARD OF NONCOMPLIANCE WHICH IS OF A TECHNICAL NATURE.\u2014For purposes of subparagraph (A) and section 452(a)(4), a State which is not in full compli- ance with the requirements of this part shall be determined to be in substantial compliance with such requirements only if the Secretary determines that any noncompliance with such requirements is of a technical nature which does not adversely affect the performance of the State’s program operated under part D. ”(9) FAILURE TO COMPLY WITH 5-YEAR LIMIT ON ASSIST- ANCE.\u2014If the Secretary determines that a State has not com- plied with section 408(a)(1)(B) during a fiscal year, the Sec- retary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to 5 percent of the State family assistance grant. ”(10) FAILURE OF STATE RECEIVING AMOUNTS FROM CONTIN- GENCY FUND TO MAINTAIN 100 PERCENT OF HISTORIC EFFORT.\u2014 If, at the end of any fiscal year during which amounts from the Contingency Fund for State Welfare Programs have been paid to a State, the Secretary finds that the expenditures under the State program funded under this part for the fiscal year (ex- cluding any amounts made available by the Federal Govern- ment) are less than 100 percent of historic State expenditures (as defined in paragraph (7)(B)(iii) of this subsection), the Sec- retary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by the total of the amounts so paid to the State. ”(11) FAILURE TO MAINTAIN ASSISTANCE TO ADULT SINGLE CUSTODIAL PARENT WHO CANNOT OBTAIN CHILD CARE FOR CHILD UNDER AGE 6.\u2014 ”(A) IN GENERAL.\u2014If the Secretary determines that a State to which a grant is made under section 403 for a fis- cal year has violated section 407(e)(2) during the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeed- ing fiscal year by an amount equal to not more than 5 per- cent of the State family assistance grant. ”(B) PENALTY BASED ON SEVERITY OF FAILURE.\u2014The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of non- compliance. ”(12) FAILURE TO EXPEND ADDITIONAL STATE FUNDS TO RE- PLACE GRANT REDUCTIONS.\u2014If the grant payable to a State under section 403(a)(1) for a fiscal year is reduced by reason of 45 this subsection, the State shall, during the immediately succeed- ing fiscal year, expend under the State program funded under this part an amount equal to the total amount of such reduc- tions. ”(b) REASONABLE CAUSE EXCEPTION.\u2014 ”(1) IN GENERAL.\u2014The Secretary may not impose a penalty on a State under subsection (a) with respect to a requirement if the Secretary determines that the State has reasonable cause for failing to comply with the requirement. ”(2) EXCEPTION.\u2014Paragraph (1) of this subsection shall not apply to any penalty under paragraph (7) or (8) of subsection (a). ”(c) CORRECTIVE COMPLIANCE PLAN.\u2014 ”(1) IN GENERAL.\u2014 ”(A) NOTIFICATION OF VIOLATION.\u2014Before imposing a penalty against a State under subsection (a) with respect to a violation of this part, the Secretary shall notify the State of the violation and allow the State the opportunity to enter into a corrective compliance plan in accordance with this subsection which outlines how the State will correct the vio- lation and how the State will insure continuing compliance with this part. ”(B) 60-DAY PERIOD TO PROPOSE A CORRECTIVE COMPLI- ANCE PLAN.\u2014During the 60-day period that begins on the date the State receives a notice provided under subpara- graph (A) with respect to a violation, the State may submit to the Federal Government a corrective compliance plan to correct the violation. ”(C) CONSULTATION ABOUT MODIFICATIONS.\u2014During the 60-day period that begins with the date the Secretary receives a corrective compliance plan submitted by a State in accordance with subparagraph (B), the Secretary may consult with the State on modifications to the plan. ”(D) ACCEPTANCE OF PLAN.\u2014 A corrective compliance plan submitted by a State in accordance with subpara- graph (B) is deemed to be accepted by the Secretary if the Secretary does not accept or reject the plan during 60-day period that begins on the date the plan is submitted. ”(2) EFFECT OF CORRECTING VIOLATION.\u2014The Secretary may not impose any penalty under subsection (a) with respect to any violation covered by a State corrective compliance plan accepted by the Secretary if the State corrects the violation pur- suant to the plan. ”(3) EFFECT OF FAILING TO CORRECT VIOLATION.\u2014The Sec- retary shall assess some or all of a penalty imposed on a State under subsection (a) with respect to a violation if the State does not, in a timely manner, correct the violation pursuant to a State corrective compliance plan accepted by the Secretary. ”(4) INAPPLICABILITY TO FAILURE TO TIMELY REPAY A FED- ERAL LOAN FUND FOR A STATE WELFARE PROGRAM.\u2014This sub- section shall not apply to the imposition of a penalty against a State under subsection (a)(6). ”(d) LIMITATION ON AMOUNT OF PENALTIES.\u2014 46 ”(1) IN GENERAL.\u2014In imposing the penalties described in subsection (a), the Secretary shall not reduce any quarterly pay- ment to a State by more than 25 percent. ”(2) CARRYFORWARD OF UNRECOVERED PENALTIES.\u2014To the extent that paragraph (1) of this subsection prevents the Sec- retary from recovering during a fiscal year the full amount of penalties imposed on a State under subsection (a) of this section for a prior fiscal year, the Secretary shall apply any remaining amount of such penalties to the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year. ”SEC. 410. APPEAL OF ADVERSE DECISION. ”(a) IN GENERAL.\u2014Within 5 days after the date the Secretary takes any adverse action under this part with respect to a State, the Secretary shall notify the chief executive officer of the State of the adverse action, including any action with respect to the State plan submitted under section 402 or the imposition of a penalty under section 409. ”(b) ADMINISTRATIVE REVIEW.\u2014 ”(1) IN GENERAL.\u2014Within 60 days after the date a State re- ceives notice under subsection (a) of an adverse action, the State may appeal the action, in whole or in part, to the Departmental Appeals Board established in the Department of Health and Human Services (in this section referred to as the ‘Board’) by filing an appeal with the Board. ”(2) PROCEDURAL RULES.\u2014The Board shall consider an ap- peal filed by a State under paragraph (1) on the basis of such documentation as the State may submit and as the Board may require to support the final decision of the Board. In deciding whether to uphold an adverse action or any portion of such an action, the Board shall conduct a thorough review of the issues and take into account all relevant evidence. The Board shall make a final determination with respect to an appeal filed under paragraph (1) not less than 60 days after the date the ap- peal is filed. ”(c) JUDICIAL REVIEW OF ADVERSE DECISION.\u2014 ”(1) IN GENERAL.\u2014Within 90 days after the date of a final decision by the Board under this section with respect to an ad- verse action taken against a State, the State may obtain judi- cial review of the final decision (and the findings incorporated into the final decision) by filing an action in\u2014 ”(A) the district court of the United States for the judi- cial district in which the principal or headquarters office of the State agency is located; or ”(B) the United States District Court for the District of Columbia. ”(2) PROCEDURAL RULES.\u2014The district court in which an action is filed under paragraph (1) shall review the final deci- sion of the Board on the record established in the administra- tive proceeding, in accordance with the standards of review pre- scribed by subparagraphs (A) through (E) of section 706(2) of title 5, United States Code. The review shall be on the basis of the documents and supporting data submitted to the Board. 47 ”SEC. 411. DATA COLLECTION AND REPORTING. ”(a) QUARTERLY REPORTS BY STATES.\u2014 ”(1) GENERAL REPORTING REQUIREMENT.\u2014 ”(A) CONTENTS OF REPORT.\u2014Each eligible State shall collect on a monthly basis, and report to the Secretary on a quarterly basis, the following disaggregated case record information on the families receiving assistance under the State program funded under this part: ”(i) The county of residence of the family. ”(ii) Whether a child receiving such assistance or an adult in the family is disabled. ”(iii) The ages of the members of such families. ”(iv) The number of individuals in the family, and the relation of each family member to the youngest child in the family. ”(v) The employment status and earnings of the employed adult in the family. ”(vi) The marital status of the adults in the family, including whether such adults have never married, are widowed, or are divorced. ”(vii) The race and educational status of each adult in the family. ”(viii) The race and educational status of each child in the family. ”(ix) Whether the family received subsidized hous- ing, medical assistance under the State plan approved under title XIX, food stamps, or subsidized child care, and if the latter 2, the amount received. ”(x) The number of months that the family has re- ceived each type of assistance under the program. ”(xi) If the adults participated in, and the number of hours per week of participation in, the following ac- tivities: ”(I) Education. ”(II) Subsidized private sector employment. ”(III) Unsubsidized employment. ”(IV) Public sector employment, work experi- ence, or community service. ”(V) Job search. ”(VI) Job skills training or on-the-job training. ”(VII) Vocational education. ”(xii) Information necessary to calculate participa- tion rates under section 407. ”(xiii) The type and amount of assistance received under the program, including the amount of and rea- son for any reduction of assistance (including sanc- tions). ”(xiv) Any amount of unearned income received by any member of the family. ”(xv) The citizenship of the members of the family. ”(xvi) From a sample of closed cases, whether the family left the program, and if so, whether the family left due to\u2014 ”(I) employment; 48 ”(II) marriage; ”(III) the prohibition set forth in section 408(a)(7); ”(IV) sanction; or ”(V) State policy. ”(B) USE OF ESTIMATES.\u2014 ”(i) AUTHORITY.\u2014A State may comply with sub- paragraph (A) by submitting an estimate which is ob- tained through the use of scientifically acceptable sam- pling methods approved by the Secretary. ”(ii) SAMPLING AND OTHER METHODS.\u2014The Sec- retary shall provide the States with such case sampling plans and data collection procedures as the Secretary deems necessary to produce statistically valid estimates of the performance of State programs funded under this part. The Secretary may develop and implement procedures for verifying the quality of data submitted by the States. ”(2) REPORT ON USE OF FEDERAL FUNDS TO COVER ADMINIS- TRATIVE COSTS AND OVERHEAD.\u2014The report required by para- graph (1) for a fiscal quarter shall include a statement of the percentage of the funds paid to the State under this part for the quarter that are used to cover administrative costs or overhead. ”(3) REPORT ON STATE EXPENDITURES ON PROGRAMS FOR NEEDY FAMILIES.\u2014The report required by paragraph (1) for a fiscal quarter shall include a statement of the total amount ex- pended by the State during the quarter on programs for needy families. ”(4) REPORT ON NONCUSTODIAL PARENTS PARTICIPATING IN WORK ACTIVITIES.\u2014The report required by paragraph (1) for a fiscal quarter shall include the number of noncustodial parents in the State who participated in work activities (as defined in section 407(d)) during the quarter. ”(5) REPORT ON TRANSITIONAL SERVICES.\u2014The report re- quired by paragraph (1) for a fiscal quarter shall include the total amount expended by the State during the quarter to pro- vide transitional services to a family that has ceased to receive assistance under this part because of employment, along with a description of such services. ”(6) REGULATIONS.\u2014The Secretary shall prescribe such reg- ulations as may be necessary to define the data elements with respect to which reports are required by this subsection. ”(b) ANNUAL REPORTS TO THE CONGRESS BY THE SECRETARY.\u2014 Not later than 6 months after the end of fiscal year 1997, and each fiscal year thereafter, the Secretary shall transmit to the Congress a report describing\u2014 ”(1) whether the States are meeting\u2014 ”(A) the participation rates described in section 407(a); and ”(B) the objectives of\u2014 ”(i) increasing employment and earnings of needy families, and child support collections; and ”(ii) decreasing out-of-wedlock pregnancies and child poverty; 49 ”(2) the demographic and financial characteristics of fami- lies applying for assistance, families receiving assistance, and families that become ineligible to receive assistance; ”(3) the characteristics of each State program funded under this part; and ”(4) the trends in employment and earnings of needy fami- lies with minor children living at home. ”SEC. 412. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES. ”(a) GRANTS FOR INDIAN TRIBES.\u2014 ”(1) TRIBAL FAMILY ASSISTANCE GRANT.\u2014 ”(A) IN GENERAL.\u2014For each of fiscal years 1997, 1998, 1999, 2000, 2001, and 2002, the Secretary shall pay to each Indian tribe that has an approved tribal family assistance plan a tribal family assistance grant for the fiscal year in an amount equal to the amount determined under subpara- graph (B), and shall reduce the grant payable under section 403(a)(1) to any State in which lies the service area or areas of the Indian tribe by that portion of the amount so determined that is attributable to expenditures by the State. ”(B) AMOUNT DETERMINED.\u2014 ”(i) IN GENERAL.\u2014The amount determined under this subparagraph is an amount equal to the total amount of the Federal payments to a State or States under section 403 (as in effect during such fiscal year) for fiscal year 1994 attributable to expenditures (other than child care expenditures) by the State or States under parts A and F (as so in effect) for fiscal year 1994 for Indian families residing in the service area or areas identified by the Indian tribe pursuant to sub- section (b)(1)(C) of this section. ”(ii) USE OF STATE SUBMITTED DATA.\u2014 ”(I) IN GENERAL.\u2014The Secretary shall use State submitted data to make each determination under clause (i). ”(II) DISAGREEMENT WITH DETERMINATION.\u2014If an Indian tribe or tribal organization disagrees with State submitted data described under sub- clause (I), the Indian tribe or tribal organization may submit to the Secretary such additional infor- mation as may be relevant to making the deter- mination under clause (i) and the Secretary may consider such information before making such de- termination. ”(2) GRANTS FOR INDIAN TRIBES THAT RECEIVED JOBS FUNDS.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall pay to each eli- gible Indian tribe for each of fiscal years 1997, 1998, 1999, 2000, 2001, and 2002 a grant in an amount equal to the amount received by the Indian tribe in fiscal year 1994 under section 482(i) (as in effect during fiscal year 1994). ”(B) ELIGIBLE INDIAN TRIBE.\u2014For purposes of subpara- graph (A), the term ‘eligible Indian tribe’ means an Indian tribe or Alaska Native organization that conducted a job 50 opportunities and basic skills training program in fiscal year 1995 under section 482(i) (as in effect during fiscal year 1995). ”(C) USE OF GRANT.\u2014Each Indian tribe to which a grant is made under this paragraph shall use the grant for the purpose of operating a program to make work activities available to members of the Indian tribe. ”(D) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated $7,638,474 for each fiscal year specified in subparagraph (A) for grants under subparagraph (A). ”(b) 3-YEAR TRIBAL FAMILY ASSISTANCE PLAN.\u2014 ”(1) IN GENERAL.\u2014Any Indian tribe that desires to receive a tribal family assistance grant shall submit to the Secretary a 3-year tribal family assistance plan that\u2014 ”(A) outlines the Indian tribe’s approach to providing welfare-related services for the 3-year period, consistent with this section; ”(B) specifies whether the welfare-related services pro- vided under the plan will be provided by the Indian tribe or through agreements, contracts, or compacts with inter- tribal consortia, States, or other entities; ”(C) identifies the population and service area or areas to be served by such plan; ”(D) provides that a family receiving assistance under the plan may not receive duplicative assistance from other State or tribal programs funded under this part; ”(E) identifies the employment opportunities in or near the service area or areas of the Indian tribe and the man- ner in which the Indian tribe will cooperate and participate in enhancing such opportunities for recipients of assistance under the plan consistent with any applicable State stand- ards; and ”(F) applies the fiscal accountability provisions of sec- tion 5(f)(1) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450c(f)(1)), relating to the sub- mission of a single-agency audit report required by chapter 75 of title 31, United States Code. ”(2) APPROVAL.\u2014The Secretary shall approve each tribal family assistance plan submitted in accordance with paragraph (1). ”(3) CONSORTIUM OF TRIBES.\u2014Nothing in this section shall preclude the development and submission of a single tribal fam- ily assistance plan by the participating Indian tribes of an intertribal consortium. ”(c) MINIMUM WORK PARTICIPATION REQUIREMENTS AND TIME LIMITS.\u2014The Secretary, with the participation of Indian tribes, shall establish for each Indian tribe receiving a grant under this section minimum work participation requirements, appropriate time limits for receipt of welfare-related services under the grant, and penalties against individuals\u2014 ”(1) consistent with the purposes of this section; ”(2) consistent with the economic conditions and resources available to each tribe; and 51 ”(3) similar to comparable provisions in section 407(e). ”(d) EMERGENCY ASSISTANCE.\u2014Nothing in this section shall preclude an Indian tribe from seeking emergency assistance from any Federal loan program or emergency fund. ”(e) ACCOUNTABILITY.\u2014Nothing in this section shall be con- strued to limit the ability of the Secretary to maintain program funding accountability consistent with\u2014 ”(1) generally accepted accounting principles; and ”(2) the requirements of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450 et seq.). ”(f) PENALTIES.\u2014 ”(1) Subsections (a)(1), (a)(6), and (b) of section 409, shall apply to an Indian tribe with an approved tribal assistance plan in the same manner as such subsections apply to a State. ”(2) Section 409(a)(3) shall apply to an Indian tribe with an approved tribal assistance plan by substituting ‘meet mini- mum work participation requirements established under section 412(c)’ for ‘comply with section 407(a)’. ”(g) DATA COLLECTION AND REPORTING.\u2014Section 411 shall apply to an Indian tribe with an approved tribal family assistance plan. ”(h) SPECIAL RULE FOR INDIAN TRIBES IN ALASKA.\u2014 ”(1) IN GENERAL.\u2014Notwithstanding any other provision of this section, and except as provided in paragraph (2), an Indian tribe in the State of Alaska that receives a tribal family assist- ance grant under this section shall use the grant to operate a program in accordance with requirements comparable to the re- quirements applicable to the program of the State of Alaska funded under this part. Comparability of programs shall be es- tablished on the basis of program criteria developed by the Sec- retary in consultation with the State of Alaska and such Indian tribes. ”(2) WAIVER.\u2014An Indian tribe described in paragraph (1) may apply to the appropriate State authority to receive a waiver of the requirement of paragraph (1). ”SEC. 413. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES. ”(a) RESEARCH.\u2014The Secretary shall conduct research on the benefits, effects, and costs of operating different State programs funded under this part, including time limits relating to eligibility for assistance. The research shall include studies on the effects of different programs and the operation of such programs on welfare dependency, illegitimacy, teen pregnancy, employment rates, child well-being, and any other area the Secretary deems appropriate. The Secretary shall also conduct research on the costs and benefits of State activities under section 409. ”(b) DEVELOPMENT AND EVALUATION OF INNOVATIVE AP- PROACHES TO REDUCING WELFARE DEPENDENCY AND INCREASING CHILD WELL-BEING.\u2014 ”(1) IN GENERAL.\u2014The Secretary may assist States in devel- oping, and shall evaluate, innovative approaches for reducing welfare dependency and increasing the well-being of minor chil- dren living at home with respect to recipients of assistance under programs funded under this part. The Secretary may 52 provide funds for training and technical assistance to carry out the approaches developed pursuant to this paragraph. ”(2) EVALUATIONS.\u2014In performing the evaluations under paragraph (1), the Secretary shall, to the maximum extent fea- sible, use random assignment as an evaluation methodology. ”(c) DISSEMINATION OF INFORMATION.\u2014The Secretary shall de- velop innovative methods of disseminating information on any re- search, evaluations, and studies conducted under this section, in- cluding the facilitation of the sharing of information and best prac- tices among States and localities through the use of computers and other technologies. ”(d) ANNUAL RANKING OF STATES AND REVIEW OF MOST AND LEAST SUCCESSFUL WORK PROGRAMS.\u2014 ”(1) ANNUAL RANKING OF STATES.\u2014The Secretary shall rank annually the States to which grants are paid under sec- tion 403 in the order of their success in placing recipients of as- sistance under the State program funded under this part into long-term private sector jobs, reducing the overall welfare case- load, and, when a practicable method for calculating this infor- mation becomes available, diverting individuals from formally applying to the State program and receiving assistance. In ranking States under this subsection, the Secretary shall take into account the average number of minor children living at home in families in the State that have incomes below the pov- erty line and the amount of funding provided each State for such families. ”(2) ANNUAL REVIEW OF MOST AND LEAST SUCCESSFUL WORK PROGRAMS.\u2014The Secretary shall review the programs of the 3 States most recently ranked highest under paragraph (1) and the 3 States most recently ranked lowest under paragraph (1) that provide parents with work experience, assistance in finding employment, and other work preparation activities and support services to enable the families of such parents to leave the program and become self-sufficient. ”(e) ANNUAL RANKING OF STATES AND REVIEW OF ISSUES RE- LATING TO OUT-OF-WEDLOCK BIRTHS.\u2014 ”(1) ANNUAL RANKING OF STATES.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall annually rank States to which grants are made under section 403 based on the following ranking factors: ”(i) ABSOLUTE OUT-OF-WEDLOCK RATIOS.\u2014The ratio represented by\u2014 ”(I) the total number of out-of-wedlock births in families receiving assistance under the State program under this part in the State for the most recent fiscal year for which information is avail- able; over ”(II) the total number of births in families re- ceiving assistance under the State program under this part in the State for such year. ”(ii) NET CHANGES IN THE OUT-OF-WEDLOCK RATIO.\u2014The difference between the ratio described in subparagraph (A)(i) with respect to a State for the most recent fiscal year for which such information is avail- 53 able and the ratio with respect to the State for the im- mediately preceding year. ”(2) ANNUAL REVIEW.\u2014The Secretary shall review the pro- grams of the 5 States most recently ranked highest under para- graph (1) and the 5 States most recently ranked the lowest under paragraph (1). ”(f) STATE-INITIATED EVALUATIONS.\u2014A State shall be eligible to receive funding to evaluate the State program funded under this part if\u2014 ”(1) the State submits a proposal to the Secretary for the evaluation; ”(2) the Secretary determines that the design and approach of the evaluation is rigorous and is likely to yield information that is credible and will be useful to other States, and ”(3) unless otherwise waived by the Secretary, the State contributes to the cost of the evaluation, from non-Federal sources, an amount equal to at least 10 percent of the cost of the evaluation. ”(g) REPORT ON CIRCUMSTANCES OF CERTAIN CHILDREN AND FAMILIES.\u2014 ”(1) IN GENERAL.\u2014Beginning 3 years after the date of the enactment of this Act, the Secretary of Health and Human Serv- ices shall prepare and submit to the Committees on Ways and Means and on Economic and Educational Opportunities of the House of Representatives and to the Committees on Finance and on Labor and Resources of the Senate annual reports that examine in detail the matters described in paragraph (2) with respect to each of the following groups for the period after such enactment: ”(A) Individuals who were children in families that have become ineligible for assistance under a State pro- gram funded under this part by reason of having reached a time limit on the provision of such assistance. ”(B) Children born after such date of enactment to par- ents who, at the time of such birth, had not attained 20 years of age. ”(C) Individuals who, after such date of enactment, be- came parents before attaining 20 years of age. ”(2) MATTERS DESCRIBED.\u2014The matters described in this paragraph are the following: ”(A) The percentage of each group that has dropped out of secondary school (or the equivalent), and the percentage of each group at each level of educational attainment. ”(B) The percentage of each group that is employed. ”(C) The percentage of each group that has been con- victed of a crime or has been adjudicated as a delinquent. ”(D) The rate at which the members of each group are born, or have children, out-of-wedlock, and the percentage of each group that is married. ”(E) The percentage of each group that continues to participate in State programs funded under this part. ”(F) The percentage of each group that has health in- surance provided by a private entity (broken down by whether the insurance is provided through an employer or 54 otherwise), the percentage that has health insurance pro- vided by an agency of government, and the percentage that does not have health insurance. ”(G) The average income of the families of the members of each group. ”(H) Such other matters as the Secretary deems appro- priate. ”(h) FUNDING OF STUDIES AND DEMONSTRATIONS.\u2014 ”(1) IN GENERAL.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appro- priated $15,000,000 for each of fiscal years 1997 through 2002 for the purpose of paying\u2014 ”(A) the cost of conducting the research described in subsection (a); ”(B) the cost of developing and evaluating innovative approaches for reducing welfare dependency and increasing the well-being of minor children under subsection (b); ”(C) the Federal share of any State-initiated study ap- proved under subsection (f); and ”(D) an amount determined by the Secretary to be nec- essary to operate and evaluate demonstration projects, re- lating to this part, that are in effect or approved under sec- tion 1115 as of September 30, 1995, and are continued after such date. ”(2) ALLOCATION.\u2014Of the amount appropriated under paragraph (1) for a fiscal year\u2014 ”(A) 50 percent shall be allocated for the purposes de- scribed in subparagraphs (A) and (B) of paragraph (1), and ”(B) 50 percent shall be allocated for the purposes de- scribed in subparagraphs (C) and (D) of paragraph (1). ”(3) DEMONSTRATIONS OF INNOVATIVE STRATEGIES.\u2014The Secretary may implement and evaluate demonstrations of inno- vative and promising strategies which\u2014 ”(A) provide one-time capital funds to establish, ex- pand, or replicate programs; ”(B) test performance-based grant-to-loan financing in which programs meeting performance targets receive grants while programs not meeting such targets repay funding on a prorated basis; and ”(C) test strategies in multiple States and types of com- munities. ”(i) CHILD POVERTY RATES.\u2014 ”(1) IN GENERAL.\u2014Not later than 90 days after the date of the enactment of this part, and annually thereafter, the chief ex- ecutive officer of each State shall submit to the Secretary a statement of the child poverty rate in the State as of such date of enactment or the date of the most recent prior statement under this paragraph. ”(2) SUBMISSION OF CORRECTIVE ACTION PLAN.\u2014Not later than 90 days after the date a State submits a statement under paragraph (1) which indicates that, as a result of the amend- ments made by section 103 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the child poverty rate of the State has increased by 5 percent or more since the 55 most recent prior statement under paragraph (1), the State shall prepare and submit to the Secretary a corrective action plan in accordance with paragraph (3). ”(3) CONTENTS OF PLAN.\u2014A corrective action plan submit- ted under paragraph (2) shall outline that manner in which the State will reduce the child poverty rate in the State. The plan shall include a description of the actions to be taken by the State under such plan. ”(4) COMPLIANCE WITH PLAN.\u2014A State that submits a cor- rective action plan that the Secretary has found contains the in- formation required by this subsection shall implement the cor- rective action plan until the State determines that the child pov- erty rate in the State is less than the lowest child poverty rate on the basis of which the State was required to submit the cor- rective action plan. ”(5) METHODOLOGY.\u2014The Secretary shall prescribe regula- tions establishing the methodology by which a State shall deter- mine the child poverty rate in the State. The methodology shall take into account factors including the number of children who receive free or reduced-price lunches, the number of food stamp households, and the county-by-county estimates of children in poverty as determined by the Census Bureau. ”SEC. 414. STUDY BY THE CENSUS BUREAU. ”(a) IN GENERAL.\u2014The Bureau of the Census shall continue to collect data on the 1992 and 1993 panels of the Survey of Income and Program Participation as necessary to obtain such information as will enable interested persons to evaluate the impact of the amendments made by title I of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 on a random national sample of recipients of assistance under State programs funded under this part and (as appropriate) other low income families, and in doing so, shall pay particular attention to the issues of out-of- wedlock birth, welfare dependency, the beginning and end of welfare spells, and the causes of repeat welfare spells, and shall obtain in- formation about the status of children participating in such panels. ”(b) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated $10,000,000 for each of fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002 for payment to the Bureau of the Census to carry out subsection (a). ”SEC. 415. WAIVERS. ”(a) CONTINUATION OF WAIVERS.\u2014 ”(1) WAIVERS IN EFFECT ON DATE OF ENACTMENT OF WEL- FARE REFORM.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B), if any waiver granted to a State under section 1115 of this Act or otherwise which relates to the provision of as- sistance under a State plan under this part (as in effect on September 30, 1996) is in effect as of the date of the enact- ment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the amendments made by the Personal Responsibility and Work Opportunity Reconcili- ation Act of 1996 (other than by section 103(c) of the Per- 56 sonal Responsibility and Work Opportunity Reconciliation Act of 1996) shall not apply with respect to the State before the expiration (determined without regard to any exten- sions) of the waiver to the extent such amendments are in- consistent with the waiver. ”(B) FINANCING LIMITATION.\u2014Notwithstanding any other provision of law, beginning with fiscal year 1996, a State operating under a waiver described in subparagraph (A) shall be entitled to payment under section 403 for the fiscal year, in lieu of any other payment provided for in the waiver. ”(2) WAIVERS GRANTED SUBSEQUENTLY.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B), if any waiver granted to a State under section 1115 of this Act or otherwise which relates to the provision of as- sistance under a State plan under this part (as in effect on September 30, 1996) is submitted to the Secretary before the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and approved by the Secretary on or before July 1, 1997, and the State demonstrates to the satisfaction of the Secretary that the waiver will not result in Federal expenditures under title IV of this Act (as in effect without regard to the amend- ments made by the Personal Responsibility and Work Op- portunity Reconciliation Act of 1996) that are greater than would occur in the absence of the waiver, the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (other than by section 103(c) of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996) shall not apply with respect to the State before the expiration (determined without regard to any extensions) of the waiver to the extent the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 are inconsistent with the waiver. ”(B) NO EFFECT ON NEW WORK REQUIREMENTS.\u2014Not- withstanding subparagraph (A), a waiver granted under section 1115 or otherwise which relates to the provision of assistance under a State program funded under this part (as in effect on September 30, 1996) shall not affect the ap- plicability of section 407 to the State. ”(b) STATE OPTION TO TERMINATE WAIVER.\u2014 ”(1) IN GENERAL.\u2014A State may terminate a waiver de- scribed in subsection (a) before the expiration of the waiver. ”(2) REPORT.\u2014A State which terminates a waiver under paragraph (1) shall submit a report to the Secretary summariz- ing the waiver and any available information concerning the re- sult or effect of the waiver. ”(3) HOLD HARMLESS PROVISION.\u2014 ”(A) IN GENERAL.\u2014Notwithstanding any other provi- sion of law, a State that, not later than the date described in subparagraph (B) of this paragraph, submits a written request to terminate a waiver described in subsection (a) shall be held harmless for accrued cost neutrality liabilities incurred under the waiver. 57 ”(B) DATE DESCRIBED.\u2014The date described in this sub- paragraph is 90 days following the adjournment of the first regular session of the State legislature that begins after the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. ”(c) SECRETARIAL ENCOURAGEMENT OF CURRENT WAIVERS.\u2014 The Secretary shall encourage any State operating a waiver de- scribed in subsection (a) to continue the waiver and to evaluate, using random sampling and other characteristics of accepted sci- entific evaluations, the result or effect of the waiver. ”(d) CONTINUATION OF INDIVIDUAL WAIVERS.\u2014A State may elect to continue 1 or more individual waivers described in subsection (a). ”SEC. 416. ADMINISTRATION. ”The programs under this part and part D shall be adminis- tered by an Assistant Secretary for Family Support within the De- partment of Health and Human Services, who shall be appointed by the President, by and with the advice and consent of the Senate, and who shall be in addition to any other Assistant Secretary of Health and Human Services provided for by law, and the Secretary shall reduce the Federal workforce within the Department of Health and Human Services by an amount equal to the sum of 75 percent of the full-time equivalent positions at such Department that relate to any direct spending program, or any program funded through discretionary spending, that has been converted into a block grant program under the Personal Responsibility and Work Opportunity Act of 1996 and the amendments made by such Act, and by an amount equal to 75 percent of that portion of the total full-time equivalent departmental management positions at such Department that bears the same relationship to the amount appropriated for any direct spending program, or any program funded through discre- tionary spending, that has been converted into a block grant pro- gram under the Personal Responsibility and Work Opportunity Act of 1996 and the amendments made by such Act, as such amount re- lates to the total amount appropriated for use by such Department, and, notwithstanding any other provision of law, the Secretary shall take such actions as may be necessary, including reductions in force actions, consistent with sections 3502 and 3595 of title 5, United States Code, to reduce the full-time equivalent positions within the Department of Health and Human Services by 245 full-time equiva- lent positions related to the program converted into a block grant under the amendment made by section 2103 of the Personal Respon- sibility and Work Opportunity Act of 1996, and by 60 full-time equivalent managerial positions in the Department. ”SEC. 417. LIMITATION ON FEDERAL AUTHORITY. ”No officer or employee of the Federal Government may regulate the conduct of States under this part or enforce any provision of this part, except to the extent expressly provided in this part.”; and (2) by inserting after such section 418 the following: ”SEC. 419. DEFINITIONS. ”As used in this part: ”(1) ADULT.\u2014The term ‘adult’ means an individual who is not a minor child. 58 ”(2) MINOR CHILD.\u2014The term ‘minor child’ means an indi- vidual who\u2014 ”(A) has not attained 18 years of age; or ”(B) has not attained 19 years of age and is a full-time student in a secondary school (or in the equivalent level of vocational or technical training). ”(3) FISCAL YEAR.\u2014The term ‘fiscal year’ means any 12- month period ending on September 30 of a calendar year. ”(4) INDIAN, INDIAN TRIBE, AND TRIBAL ORGANIZATION.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B), the terms ‘Indian’, ‘Indian tribe’, and ‘tribal organiza- tion’ have the meaning given such terms by section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b). ”(B) SPECIAL RULE FOR INDIAN TRIBES IN ALASKA.\u2014The term ‘Indian tribe’ means, with respect to the State of Alas- ka, only the Metlakatla Indian Community of the Annette Islands Reserve and the following Alaska Native regional nonprofit corporations: ”(i) Arctic Slope Native Association. ”(ii) Kawerak, Inc. ”(iii) Maniilaq Association. ”(iv) Association of Village Council Presidents. ”(v) Tanana Chiefs Conference. ”(vi) Cook Inlet Tribal Council. ”(vii) Bristol Bay Native Association. ”(viii) Aleutian and Pribilof Island Association. ”(ix) Chugachmuit. ”(x) Tlingit Haida Central Council. ”(xi) Kodiak Area Native Association. ”(xii) Copper River Native Association. ”(5) STATE.\u2014Except as otherwise specifically provided, the term ‘State’ means the 50 States of the United States, the Dis- trict of Columbia, the Commonwealth of Puerto Rico, the Unit- ed States Virgin Islands, Guam, and American Samoa.”. (b) GRANTS TO OUTLYING AREAS.\u2014Section 1108 (42 U.S.C. 1308) is amended\u2014 (1) by striking subsections (d) and (e); (2) by redesignating subsection (c) as subsection (f); and (3) by striking all that precedes subsection (c) and inserting the following: ”SEC. 1108. ADDITIONAL GRANTS TO PUERTO RICO, THE VIRGIN IS- LANDS, GUAM, AND AMERICAN SAMOA; LIMITATION ON TOTAL PAYMENTS. ”(a) LIMITATION ON TOTAL PAYMENTS TO EACH TERRITORY.\u2014 Notwithstanding any other provision of this Act, the total amount certified by the Secretary of Health and Human Services under ti- tles I, X, XIV, and XVI, under parts A and E of title IV, and under subsection (b) of this section, for payment to any territory for a fiscal year shall not exceed the ceiling amount for the territory for the fis- cal year. ”(b) ENTITLEMENT TO MATCHING GRANT.\u2014 59 ”(1) IN GENERAL.\u2014Each territory shall be entitled to receive from the Secretary for each fiscal year a grant in an amount equal to 75 percent of the amount (if any) by which\u2014 ”(A) the total expenditures of the territory during the fiscal year under the territory programs funded under parts A and E of title IV; exceeds ”(B) the sum of\u2014 ”(i) the amount of the family assistance grant pay- able to the territory without regard to section 409; and ”(ii) the total amount expended by the territory during fiscal year 1995 pursuant to parts A and F of title IV (as so in effect), other than for child care. ”(2) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appro- priated for fiscal years 1997 through 2002, such sums as are necessary for grants under this paragraph. ”(c) DEFINITIONS.\u2014As used in this section: ”(1) TERRITORY.\u2014The term ‘territory’ means Puerto Rico, the Virgin Islands, Guam, and American Samoa. ”(2) CEILING AMOUNT.\u2014The term ‘ceiling amount’ means, with respect to a territory and a fiscal year, the mandatory ceil- ing amount with respect to the territory, reduced for the fiscal year in accordance with subsection (e), and reduced by the amount of any penalty imposed on the territory under any pro- vision of law specified in subsection (a) during the fiscal year. ”(3) FAMILY ASSISTANCE GRANT.\u2014The term ‘family assist- ance grant’ has the meaning given such term by section 403(a)(1)(B). ”(4) MANDATORY CEILING AMOUNT.\u2014The term ‘mandatory ceiling amount’ means\u2014 ”(A) $107,255,000 with respect to Puerto Rico; ”(B) $4,686,000 with respect to Guam; ”(C) $3,554,000 with respect to the Virgin Islands; and ”(D) $1,000,000 with respect to American Samoa. ”(5) TOTAL AMOUNT EXPENDED BY THE TERRITORY.\u2014The term ‘total amount expended by the territory’\u2014 ”(A) does not include expenditures during the fiscal year from amounts made available by the Federal Govern- ment; and ”(B) when used with respect to fiscal year 1995, also does not include\u2014 ”(i) expenditures during fiscal year 1995 under subsection (g) or (i) of section 402 (as in effect on Sep- tember 30, 1995); or ”(ii) any expenditures during fiscal year 1995 for which the territory (but for section 1108, as in effect on September 30, 1995) would have received reimburse- ment from the Federal Government. ”(d) AUTHORITY TO TRANSFER FUNDS TO CERTAIN PROGRAMS.\u2014 A territory to which an amount is paid under subsection (b) of this section may use the amount in accordance with section 404(d). ”(e) MAINTENANCE OF EFFORT.\u2014The ceiling amount with re- spect to a territory shall be reduced for a fiscal year by an amount equal to the amount (if any) by which\u2014 60 ”(1) the total amount expended by the territory under all programs of the territory operated pursuant to the provisions of law specified in subsection (a) (as such provisions were in effect for fiscal year 1995) for fiscal year 1995; exceeds ”(2) the total amount expended by the territory under all programs of the territory that are funded under the provisions of law specified in subsection (a) for the fiscal year that imme- diately precedes the fiscal year referred to in the matter preced- ing paragraph (1).”. (c) ELIMINATION OF CHILD CARE PROGRAMS UNDER THE SOCIAL SECURITY ACT.\u2014 (1) AFDC AND TRANSITIONAL CHILD CARE PROGRAMS.\u2014Sec- tion 402 (42 U.S.C. 602) is amended by striking subsection (g). (2) AT-RISK CHILD CARE PROGRAM.\u2014 (A) AUTHORIZATION.\u2014Section 402 (42 U.S.C. 602) is amended by striking subsection (i). (B) FUNDING PROVISIONS.\u2014Section 403 (42 U.S.C. 603) is amended by striking subsection (n). SEC. 104. SERVICES PROVIDED BY CHARITABLE, RELIGIOUS, OR PRI- VATE ORGANIZATIONS. (a) IN GENERAL.\u2014 (1) STATE OPTIONS.\u2014A State may\u2014 (A) administer and provide services under the pro- grams described in subparagraphs (A) and (B)(i) of para- graph (2) through contracts with charitable, religious, or private organizations; and (B) provide beneficiaries of assistance under the pro- grams described in subparagraphs (A) and (B)(ii) of para- graph (2) with certificates, vouchers, or other forms of dis- bursement which are redeemable with such organizations. (2) PROGRAMS DESCRIBED.\u2014The programs described in this paragraph are the following programs: (A) A State program funded under part A of title IV of the Social Security Act (as amended by section 103(a) of this Act). (B) Any other program established or modified under title I or II of this Act, that\u2014 (i) permits contracts with organizations; or (ii) permits certificates, vouchers, or other forms of disbursement to be provided to beneficiaries, as a means of providing assistance. (b) RELIGIOUS ORGANIZATIONS.\u2014The purpose of this section is to allow States to contract with religious organizations, or to allow religious organizations to accept certificates, vouchers, or other forms of disbursement under any program described in subsection (a)(2), on the same basis as any other nongovernmental provider without impairing the religious character of such organizations, and without diminishing the religious freedom of beneficiaries of as- sistance funded under such program. (c) NONDISCRIMINATION AGAINST RELIGIOUS ORGANIZATIONS.\u2014 In the event a State exercises its authority under subsection (a), reli- gious organizations are eligible, on the same basis as any other pri- vate organization, as contractors to provide assistance, or to accept certificates, vouchers, or other forms of disbursement, under any 61 program described in subsection (a)(2) so long as the programs are implemented consistent with the Establishment Clause of the United States Constitution. Except as provided in subsection (k), neither the Federal Government nor a State receiving funds under such pro- grams shall discriminate against an organization which is or ap- plies to be a contractor to provide assistance, or which accepts cer- tificates, vouchers, or other forms of disbursement, on the basis that the organization has a religious character. (d) RELIGIOUS CHARACTER AND FREEDOM.\u2014 (1) RELIGIOUS ORGANIZATIONS.\u2014A religious organization with a contract described in subsection (a)(1)(A), or which ac- cepts certificates, vouchers, or other forms of disbursement under subsection (a)(1)(B), shall retain its independence from Federal, State, and local governments, including such organiza- tion’s control over the definition, development, practice, and ex- pression of its religious beliefs. (2) ADDITIONAL SAFEGUARDS.\u2014Neither the Federal Govern- ment nor a State shall require a religious organization to\u2014 (A) alter its form of internal governance; or (B) remove religious art, icons, scripture, or other sym- bols; in order to be eligible to contract to provide assistance, or to ac- cept certificates, vouchers, or other forms of disbursement, fund- ed under a program described in subsection (a)(2). (e) RIGHTS OF BENEFICIARIES OF ASSISTANCE.\u2014 (1) IN GENERAL.\u2014If an individual described in paragraph (2) has an objection to the religious character of the organiza- tion or institution from which the individual receives, or would receive, assistance funded under any program described in sub- section (a)(2), the State in which the individual resides shall provide such individual (if otherwise eligible for such assist- ance) within a reasonable period of time after the date of such objection with assistance from an alternative provider that is accessible to the individual and the value of which is not less than the value of the assistance which the individual would have received from such organization. (2) INDIVIDUAL DESCRIBED.\u2014An individual described in this paragraph is an individual who receives, applies for, or re- quests to apply for, assistance under a program described in subsection (a)(2). (f) EMPLOYMENT PRACTICES.\u2014A religious organization’s exemp- tion provided under section 702 of the Civil Rights Act of 1964 (42 U.S.C. 2000e 1a) regarding employment practices shall not be af- fected by its participation in, or receipt of funds from, programs de- scribed in subsection (a)(2). (g) NONDISCRIMINATION AGAINST BENEFICIARIES.\u2014Except as otherwise provided in law, a religious organization shall not dis- criminate against an individual in regard to rendering assistance funded under any program described in subsection (a)(2) on the basis of religion, a religious belief, or refusal to actively participate in a religious practice. (h) FISCAL ACCOUNTABILITY.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), any religious organization contracting to provide assistance funded 62 under any program described in subsection (a)(2) shall be sub- ject to the same regulations as other contractors to account in accord with generally accepted auditing principles for the use of such funds provided under such programs. (2) LIMITED AUDIT.\u2014If such organization segregates Fed- eral funds provided under such programs into separate ac- counts, then only the financial assistance provided with such funds shall be subject to audit. (i) COMPLIANCE.\u2014Any party which seeks to enforce its rights under this section may assert a civil action for injunctive relief ex- clusively in an appropriate State court against the entity or agency that allegedly commits such violation. (j) LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES.\u2014 No funds provided directly to institutions or organizations to pro- vide services and administer programs under subsection (a)(1)(A) shall be expended for sectarian worship, instruction, or proselytiza- tion. (k) PREEMPTION.\u2014Nothing in this section shall be construed to preempt any provision of a State constitution or State statute that prohibits or restricts the expenditure of State funds in or by reli- gious organizations. SEC. 105. CENSUS DATA ON GRANDPARENTS AS PRIMARY CAREGIVERS FOR THEIR GRANDCHILDREN. (a) IN GENERAL.\u2014Not later than 90 days after the date of the enactment of this Act, the Secretary of Commerce, in carrying out section 141 of title 13, United States Code, shall expand the data collection efforts of the Bureau of the Census (in this section referred to as the ”Bureau”) to enable the Bureau to collect statistically sig- nificant data, in connection with its decennial census and its mid- decade census, concerning the growing trend of grandparents who are the primary caregivers for their grandchildren. (b) EXPANDED CENSUS QUESTION.\u2014In carrying out subsection (a), the Secretary of Commerce shall expand the Bureau’s census question that details households which include both grandparents and their grandchildren. The expanded question shall be formu- lated to distinguish between the following households: (1) A household in which a grandparent temporarily pro- vides a home for a grandchild for a period of weeks or months during periods of parental distress. (2) A household in which a grandparent provides a home for a grandchild and serves as the primary caregiver for the grandchild. SEC. 106. REPORT ON DATA PROCESSING. (a) IN GENERAL.\u2014Within 6 months after the date of the enact- ment of this Act, the Secretary of Health and Human Services shall prepare and submit to the Congress a report on\u2014 (1) the status of the automated data processing systems op- erated by the States to assist management in the administra- tion of State programs under part A of title IV of the Social Se- curity Act (whether in effect before or after October 1, 1995); and (2) what would be required to establish a system capable of\u2014 63 (A) tracking participants in public programs over time; and (B) checking case records of the States to determine whether individuals are participating in public programs of 2 or more States. (b) PREFERRED CONTENTS.\u2014The report required by subsection (a) should include\u2014 (1) a plan for building on the automated data processing systems of the States to establish a system with the capabilities described in subsection (a)(2); and (2) an estimate of the amount of time required to establish such a system and of the cost of establishing such a system. SEC. 107. STUDY ON ALTERNATIVE OUTCOMES MEASURES. (a) STUDY.\u2014The Secretary shall, in cooperation with the States, study and analyze outcomes measures for evaluating the success of the States in moving individuals out of the welfare system through employment as an alternative to the minimum participation rates described in section 407 of the Social Security Act. The study shall include a determination as to whether such alternative outcomes measures should be applied on a national or a State-by-State basis and a preliminary assessment of the effects of section 409(a)(7)(C) of such Act. (b) REPORT.\u2014Not later than September 30, 1998, the Secretary shall submit to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives a report containing the findings of the study required by subsection (a). SEC. 108. CONFORMING AMENDMENTS TO THE SOCIAL SECURITY ACT. (a) AMENDMENTS TO TITLE II.\u2014 (1) Section 205(c)(2)(C)(vi) (42 U.S.C. 405(c)(2)(C)(vi)), as so redesignated by section 321(a)(9)(B) of the Social Security Inde- pendence and Program Improvements Act of 1994, is amend- ed\u2014 (A) by inserting ”an agency administering a program funded under part A of title IV or” before ”an agency oper- ating”; and (B) by striking ”A or D of title IV of this Act” and in- serting ”D of such title”. (2) Section 228(d)(1) (42 U.S.C. 428(d)(1)) is amended by inserting ”under a State program funded under” before ”part A of title IV”. (b) AMENDMENTS TO PART B OF TITLE IV.\u2014Section 422(b)(2) (42 U.S.C. 622(b)(2)) is amended\u2014 (1) by striking ”plan approved under part A of this title” and inserting ”program funded under part A”; and (2) by striking ”part E of this title” and inserting ”under the State plan approved under part E”. (c) AMENDMENTS TO PART D OF TITLE IV.\u2014 (1) Section 451 (42 U.S.C. 651) is amended by striking ”aid” and inserting ”assistance under a State program funded”. (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is amended\u2014 64 (A) by striking ”aid to families with dependent chil- dren” and inserting ”assistance under a State program funded under part A”; (B) by striking ”such aid” and inserting ”such assist- ance”; and (C) by striking ”under section 402(a)(26) or” and insert- ing ”pursuant to section 408(a)(3) or under section”. (3) Section 452(a)(10)(F) (42 U.S.C. 652(a)(10)(F)) is amended\u2014 (A) by striking ”aid under a State plan approved” and inserting ”assistance under a State program funded”; and (B) by striking ”in accordance with the standards re- ferred to in section 402(a)(26)(B)(ii)” and inserting ”by the State”. (4) Section 452(b) (42 U.S.C. 652(b)) is amended in the first sentence by striking ”aid under the State plan approved under part A” and inserting ”assistance under the State program funded under part A”. (5) Section 452(d)(3)(B)(i) (42 U.S.C. 652(d)(3)(B)(i)) is amended by striking ”1115(c)” and inserting ”1115(b)”. (6) Section 452(g)(2)(A)(ii)(I) (42 U.S.C. 652(g)(2)(A)(ii)(I)) is amended by striking ”aid is being paid under the State’s plan approved under part A or E” and inserting ”assistance is being provided under the State program funded under part A”. (7) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is amended in the matter following clause (iii) by striking ”aid was being paid under the State’s plan approved under part A or E” and inserting ”assistance was being provided under the State pro- gram funded under part A”. (8) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended in the matter following subparagraph (B)\u2014 (A) by striking ”who is a dependent child” and insert- ing ”with respect to whom assistance is being provided under the State program funded under part A”; (B) by inserting ”by the State” after ”found”; and (C) by striking ”to have good cause for refusing to co- operate under section 402(a)(26)” and inserting ”to qualify for a good cause or other exception to cooperation pursuant to section 454(29)”. (9) Section 452(h) (42 U.S.C. 652(h)) is amended by strik- ing ”under section 402(a)(26)” and inserting ”pursuant to sec- tion 408(a)(3)”. (10) Section 453(c)(3) (42 U.S.C. 653(c)(3)) is amended by striking ”aid under part A of this title” and inserting ”assist- ance under a State program funded under part A”. (11) Section 454(5)(A) (42 U.S.C. 654(5)(A))) is amended\u2014 (A) by striking ”under section 402(a)(26)” and inserting ”pursuant to section 408(a)(3)”; and (B) by striking ”; except that this paragraph shall not apply to such payments for any month following the first month in which the amount collected is sufficient to make such family ineligible for assistance under the State plan approved under part A;” and inserting a comma. 65 (12) Section 454(6)(D) (42 U.S.C. 654(6)(D)) is amended by striking ”aid under a State plan approved” and inserting ”as- sistance under a State program funded”. (13) Section 456(a)(1) (42 U.S.C. 656(a)(1)) is amended by striking ”under section 402(a)(26)”. (14) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is amend- ed by striking ”402(a)(26)” and inserting ”408(a)(3)”. (15) Section 466(b)(2) (42 U.S.C. 666(b)(2)) is amended by striking ”aid” and inserting ”assistance under a State program funded”. (16) Section 469(a) (42 U.S.C. 669(a)) is amended\u2014 (A) by striking ”aid under plans approved” and insert- ing ”assistance under State programs funded”; and (B) by striking ”such aid” and inserting ”such assist- ance”. (d) AMENDMENTS TO PART E OF TITLE IV.\u2014 (1) Section 470 (42 U.S.C. 670) is amended\u2014 (A) by striking ”would be” and inserting ”would have been”; and (B) by inserting ”(as such plan was in effect on June 1, 1995)” after ”part A”. (2) Section 471(a)(17) (42 U.S.C. 671(a)(17)) is amended by striking ”plans approved under parts A and D” and inserting ”program funded under part A and plan approved under part D”. (3) Section 472(a) (42 U.S.C. 672(a)) is amended\u2014 (A) in the matter preceding paragraph (1)\u2014 (i) by striking ”would meet” and inserting ”would have met”; (ii) by inserting ”(as such sections were in effect on June 1, 1995)” after ”407”; and (iii) by inserting ”(as so in effect)” after ”406(a)”; and (B) in paragraph (4)\u2014 (i) in subparagraph (A)\u2014 (I) by inserting ”would have” after ”(A)”; and (II) by inserting ”(as in effect on June 1, 1995)” after ”section 402”; and (ii) in subparagraph (B)(ii), by inserting ”(as in ef- fect on June 1, 1995)” after ”406(a)”. (4) Section 472(h) (42 U.S.C. 672(h)) is amended to read as follows: ”(h)(1) For purposes of title XIX, any child with respect to whom foster care maintenance payments are made under this section is deemed to be a dependent child as defined in section 406 (as in ef- fect as of June 1, 1995) and deemed to be a recipient of aid to fami- lies with dependent children under part A of this title (as so in ef- fect). For purposes of title XX, any child with respect to whom foster care maintenance payments are made under this section is deemed to be a minor child in a needy family under a State program funded under part A of this title and is deemed to be a recipient of assist- ance under such part. ”(2) For purposes of paragraph (1), a child whose costs in a fos- ter family home or child care institution are covered by the foster 66 care maintenance payments being made with respect to the child’s minor parent, as provided in section 475(4)(B), shall be considered a child with respect to whom foster care maintenance payments are made under this section.”. (5) Section 473(a)(2) (42 U.S.C. 673(a)(2)) is amended\u2014 (A) in subparagraph (A)(i)\u2014 (i) by inserting ”(as such sections were in effect on June 1, 1995)” after ”407”; (ii) by inserting ”(as so in effect)” after ”specified in section 406(a)”; and (iii) by inserting ”(as such section was in effect on June 1, 1995)” after ”403”; (B) in subparagraph (B)(i)\u2014 (i) by inserting ”would have” after ”(B)(i)”; and (ii) by inserting ”(as in effect on June 1, 1995)” after ”section 402”; and (C) in subparagraph (B)(ii)(II), by inserting ”(as in ef- fect on June 1, 1995)” after ”406(a)”. (6) Section 473(b) (42 U.S.C. 673(b)) is amended to read as follows: ”(b)(1) For purposes of title XIX, any child who is described in paragraph (3) is deemed to be a dependent child as defined in sec- tion 406 (as in effect as of June 1, 1995) and deemed to be a recipi- ent of aid to families with dependent children under part A of this title (as so in effect) in the State where such child resides. ”(2) For purposes of title XX, any child who is described in paragraph (3) is deemed to be a minor child in a needy family under a State program funded under part A of this title and deemed to be a recipient of assistance under such part. ”(3) A child described in this paragraph is any child\u2014 ”(A)(i) who is a child described in subsection (a)(2), and ”(ii) with respect to whom an adoption assistance agree- ment is in effect under this section (whether or nor adoption as- sistance payments are provided under the agreement or are being made under this section), including any such child who has been placed for adoption in accordance with applicable State and local law (whether or not an interlocutory or other ju- dicial decree of adoption has been issued), or ”(B) with respect to whom foster care maintenance pay- ments are being made under section 472. ”(4) For purposes of paragraphs (1) and (2), a child whose costs in a foster family home or child-care institution are covered by the foster care maintenance payments being made with respect to the child’s minor parent, as provided in section 475(4)(B), shall be con- sidered a child with respect to whom foster care maintenance pay- ments are being made under section 472.”. (e) REPEAL OF PART F OF TITLE IV.\u2014Part F of title IV (42 U.S.C. 681 687) is repealed. (f) AMENDMENT TO TITLE X.\u2014Section 1002(a)(7) (42 U.S.C. 1202(a)(7)) is amended by striking ”aid to families with dependent children under the State plan approved under section 402 of this Act” and inserting ”assistance under a State program funded under part A of title IV”. (g) AMENDMENTS TO TITLE XI.\u2014 67 (1) Section 1109 (42 U.S.C. 1309) is amended by striking ”or part A of title IV,”. (2) Section 1115 (42 U.S.C. 1315) is amended\u2014 (A) in subsection (a)(2)\u2014 (i) by inserting ”(A)” after ”(2)”; (ii) by striking ”403,”; (iii) by striking the period at the end and inserting ”, and”; and (iv) by adding at the end the following new sub- paragraph: ”(B) costs of such project which would not otherwise be a permissible use of funds under part A of title IV and which are not included as part of the costs of projects under section 1110, shall to the extent and for the period prescribed by the Sec- retary, be regarded as a permissible use of funds under such part.”; (B) in subsection (c)(3), by striking ”the program of aid to families with dependent children” and inserting ”part A of such title”; and (C) by striking subsection (b) and redesignating sub- sections (c) and (d) as subsections (b) and (c), respectively. (3) Section 1116 (42 U.S.C. 1316) is amended\u2014 (A) in each of subsections (a)(1), (b), and (d), by strik- ing ”or part A of title IV,”; and (B) in subsection (a)(3), by striking ”404,”. (4) Section 1118 (42 U.S.C. 1318) is amended\u2014 (A) by striking ”403(a),”; (B) by striking ”and part A of title IV,”; and (C) by striking ”, and shall, in the case of American Samoa, mean 75 per centum with respect to part A of title IV”. (5) Section 1119 (42 U.S.C. 1319) is amended\u2014 (A) by striking ”or part A of title IV”; and (B) by striking ”403(a),”. (6) Section 1133(a) (42 U.S.C. 1320b 3(a)) is amended by striking ”or part A of title IV,”. (7) Section 1136 (42 U.S.C. 1320b 6) is repealed. (8) Section 1137 (42 U.S.C. 1320b 7) is amended\u2014 (A) in subsection (b), by striking paragraph (1) and in- serting the following: ”(1) any State program funded under part A of title IV of this Act;”; and (B) in subsection (d)(1)(B)\u2014 (i) by striking ”In this subsection\u2014” and all that follows through ”(ii) in” and inserting ”In this sub- section, in”; (ii) by redesignating subclauses (I), (II), and (III) as clauses (i), (ii), and (iii); and (iii) by moving such redesignated material 2 ems to the left. (h) AMENDMENT TO TITLE XIV.\u2014Section 1402(a)(7) (42 U.S.C. 1352(a)(7)) is amended by striking ”aid to families with dependent children under the State plan approved under section 402 of this 68 Act” and inserting ”assistance under a State program funded under part A of title IV”. (i) AMENDMENT TO TITLE XVI AS IN EFFECT WITH RESPECT TO THE TERRITORIES.\u2014Section 1602(a)(11), as in effect without regard to the amendment made by section 301 of the Social Security Amendments of 1972 (42 U.S.C. 1382 note), is amended by striking ”aid under the State plan approved” and inserting ”assistance under a State program funded”. (j) AMENDMENT TO TITLE XVI AS IN EFFECT WITH RESPECT TO THE STATES.\u2014Section 1611(c)(5)(A) (42 U.S.C. 1382(c)(5)(A)) is amended to read as follows: ”(A) a State program funded under part A of title IV,”. (k) AMENDMENT TO TITLE XIX.\u2014Section 1902(j) (42 U.S.C. 1396a(j)) is amended by striking ”1108(c)” and inserting ”1108(f)”. SEC. 109. CONFORMING AMENDMENTS TO THE FOOD STAMP ACT OF 1977 AND RELATED PROVISIONS. (a) Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended\u2014 (1) in the second sentence of subsection (a), by striking ”plan approved” and all that follows through ”title IV of the So- cial Security Act” and inserting ”program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)”; (2) in subsection (d)\u2014 (A) in paragraph (5), by striking ”assistance to families with dependent children” and inserting ”assistance under a State program funded”; and (B) by striking paragraph (13) and redesignating para- graphs (14), (15), and (16) as paragraphs (13), (14), and (15), respectively; (3) in subsection (j), by striking ”plan approved under part A of title IV of such Act (42 U.S.C. 601 et seq.)” and inserting ”program funded under part A of title IV of the Act (42 U.S.C. 601 et seq.)”; and (4) by striking subsection (m). (b) Section 6 of such Act (7 U.S.C. 2015) is amended\u2014 (1) in subsection (c)(5), by striking ”the State plan ap- proved” and inserting ”the State program funded”; and (2) in subsection (e)(6), by striking ”aid to families with de- pendent children” and inserting ”benefits under a State pro- gram funded”. (c) Section 16(g)(4) of such Act (7 U.S.C. 2025(g)(4)) is amended by striking ”State plans under the Aid to Families with Dependent Children Program under” and inserting ”State programs funded under part A of”. (d) Section 17 of such Act (7 U.S.C. 2026) is amended\u2014 (1) in the first sentence of subsection (b)(1)(A), by striking ”to aid to families with dependent children under part A of title IV of the Social Security Act” and inserting ”or are receiving as- sistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)”; and (2) in subsection (b)(3), by adding at the end the following new subparagraph: ”(I) The Secretary may not grant a waiver under this para- graph on or after the date of enactment of this subparagraph. Any 69 reference in this paragraph to a provision of title IV of the Social Security Act shall be deemed to be a reference to such provision as in effect on the day before such date.”; (e) Section 20 of such Act (7 U.S.C. 2029) is amended\u2014 (1) in subsection (a)(2)(B) by striking ”operating\u2014” and all that follows through ”(ii) any other” and inserting ”operating any”; and (2) in subsection (b)\u2014 (A) in paragraph (1)\u2014 (i) by striking ”(b)(1) A household” and inserting ”(b) A household”; and (ii) in subparagraph (B), by striking ”training pro- gram” and inserting ”activity”; (B) by striking paragraph (2); and (C) by redesignating subparagraphs (A) through (F) as paragraphs (1) through (6), respectively. (f) Section 5(h)(1) of the Agriculture and Consumer Protection Act of 1973 (Public Law 93 186; 7 U.S.C. 612c note) is amended by striking ”the program for aid to families with dependent children” and inserting ”the State program funded”. (g) Section 9 of the National School Lunch Act (42 U.S.C. 1758) is amended\u2014 (1) in subsection (b)\u2014 (A) in paragraph (2)(C)(ii)(II)\u2014 (i) by striking ”program for aid to families with de- pendent children” and inserting ”State program fund- ed”; and (ii) by inserting before the period at the end the fol- lowing: ”that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995”; and (B) in paragraph (6)\u2014 (i) in subparagraph (A)(ii)\u2014 (I) by striking ”an AFDC assistance unit (under the aid to families with dependent children program authorized” and inserting ”a family (under the State program funded”; and (II) by striking ”, in a State” and all that fol- lows through ”9902(2)))” and inserting ”that the Secretary determines complies with standards es- tablished by the Secretary that ensure that the standards under the State program are com- parable to or more restrictive than those in effect on June 1, 1995”; and (ii) in subparagraph (B), by striking ”aid to fami- lies with dependent children” and inserting ”assistance under the State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) that the Secretary determines complies with standards established by the Secretary that ensure that the stand- ards under the State program are comparable to or 70 more restrictive than those in effect on June 1, 1995”; and (2) in subsection (d)(2)(C)\u2014 (A) by striking ”program for aid to families with de- pendent children” and inserting ”State program funded”; and (B) by inserting before the period at the end the follow- ing: ”that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restric- tive than those in effect on June 1, 1995”. (h) Section 17(d)(2)(A)(ii)(II) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(d)(2)(A)(ii)(II)) is amended\u2014 (1) by striking ”program for aid to families with dependent children established” and inserting ”State program funded”; and (2) by inserting before the semicolon the following: ”that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in ef- fect on June 1, 1995”. SEC. 110. CONFORMING AMENDMENTS TO OTHER LAWS. (a) Subsection (b) of section 508 of the Unemployment Com- pensation Amendments of 1976 (42 U.S.C. 603a; Public Law 94 566; 90 Stat. 2689) is amended to read as follows: ”(b) PROVISION FOR REIMBURSEMENT OF EXPENSES.\u2014For pur- poses of section 455 of the Social Security Act, expenses incurred to reimburse State employment offices for furnishing information re- quested of such offices\u2014 ”(1) pursuant to the third sentence of section 3(a) of the Act entitled ‘An Act to provide for the establishment of a national employment system and for cooperation with the States in the promotion of such system, and for other purposes’, approved June 6, 1933 (29 U.S.C. 49b(a)), or ”(2) by a State or local agency charged with the duty of car- rying a State plan for child support approved under part D of title IV of the Social Security Act, shall be considered to constitute expenses incurred in the adminis- tration of such State plan.”. (b) Section 9121 of the Omnibus Budget Reconciliation Act of 1987 (42 U.S.C. 602 note) is repealed. (c) Section 9122 of the Omnibus Budget Reconciliation Act of 1987 (42 U.S.C. 602 note) is repealed. (d) Section 221 of the Housing and Urban-Rural Recovery Act of 1983 (42 U.S.C. 602 note), relating to treatment under AFDC of certain rental payments for federally assisted housing, is repealed. (e) Section 159 of the Tax Equity and Fiscal Responsibility Act of 1982 (42 U.S.C. 602 note) is repealed. (f) Section 202(d) of the Social Security Amendments of 1967 (81 Stat. 882; 42 U.S.C. 602 note) is repealed. (g) Section 903 of the Stewart B. McKinney Homeless Assistance Amendments Act of 1988 (42 U.S.C. 11381 note), relating to dem- onstration projects to reduce number of AFDC families in welfare hotels, is amended\u2014 71 (1) in subsection (a), by striking ”aid to families with de- pendent children under a State plan approved” and inserting ”assistance under a State program funded”; and (2) in subsection (c), by striking ”aid to families with de- pendent children in the State under a State plan approved” and inserting ”assistance in the State under a State program fund- ed”. (h) The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is amended\u2014 (1) in section 404C(c)(3) (20 U.S.C. 1070a 23(c)(3)), by striking ”(Aid to Families with Dependent Children)”; and (2) in section 480(b)(2) (20 U.S.C. 1087vv(b)(2)), by striking ”aid to families with dependent children under a State plan ap- proved” and inserting ”assistance under a State program fund- ed”. (i) The Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2301 et seq.) is amended\u2014 (1) in section 231(d)(3)(A)(ii) (20 U.S.C. 2341(d)(3)(A)(ii)), by striking ”The program for aid to dependent children” and in- serting ”The State program funded”; (2) in section 232(b)(2)(B) (20 U.S.C. 2341a(b)(2)(B)), by striking ”the program for aid to families with dependent chil- dren” and inserting ”the State program funded”; and (3) in section 521(14)(B)(iii) (20 U.S.C. 2471(14)(B)(iii)), by striking ”the program for aid to families with dependent chil- dren” and inserting ”the State program funded”. (j) The Elementary and Secondary Education Act of 1965 (20 U.S.C. 2701 et seq.) is amended\u2014 (1) in section 1113(a)(5) (20 U.S.C. 6313(a)(5)), by striking ”Aid to Families with Dependent Children program” and insert- ing ”State program funded under part A of title IV of the Social Security Act”; (2) in section 1124(c)(5) (20 U.S.C. 6333(c)(5)), by striking ”the program of aid to families with dependent children under a State plan approved under” and inserting ”a State program funded under part A of”; and (3) in section 5203(b)(2) (20 U.S.C. 7233(b)(2))\u2014 (A) in subparagraph (A)(xi), by striking ”Aid to Fami- lies with Dependent Children benefits” and inserting ”as- sistance under a State program funded under part A of title IV of the Social Security Act”; and (B) in subparagraph (B)(viii), by striking ”Aid to Fami- lies with Dependent Children” and inserting ”assistance under the State program funded under part A of title IV of the Social Security Act”. (k) The 4th proviso of chapter VII of title I of Public Law 99 88 (25 U.S.C. 13d 1) is amended to read as follows: ”Provided fur- ther, That general assistance payments made by the Bureau of In- dian Affairs shall be made\u2014 ”(1) after April 29, 1985, and before October 1, 1995, on the basis of Aid to Families with Dependent Children (AFDC) standards of need; and 72 ”(2) on and after October 1, 1995, on the basis of standards of need established under the State program funded under part A of title IV of the Social Security Act, except that where a State ratably reduces its AFDC or State pro- gram payments, the Bureau shall reduce general assistance pay- ments in such State by the same percentage as the State has re- duced the AFDC or State program payment.”. (l) The Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.) is amended\u2014 (1) in section 51(d)(9) (26 U.S.C. 51(d)(9)), by striking all that follows ”agency as” and inserting ”being eligible for finan- cial assistance under part A of title IV of the Social Security Act and as having continually received such financial assist- ance during the 90-day period which immediately precedes the date on which such individual is hired by the employer.”; (2) in section 3304(a)(16) (26 U.S.C. 3304(a)(16)), by strik- ing ”eligibility for aid or services,” and all that follows through ”children approved” and inserting ”eligibility for assistance, or the amount of such assistance, under a State program funded”; (3) in section 6103(l)(7)(D)(i) (26 U.S.C. 6103(l)(7)(D)(i)), by striking ”aid to families with dependent children provided under a State plan approved” and inserting ”a State program funded”; (4) in section 6103(l)(10) (26 U.S.C. 6103(l)(10))\u2014 (A) by striking ”(c) or (d)” each place it appears and in- serting ”(c), (d), or (e)”; and (B) by adding at the end of subparagraph (B) the fol- lowing new sentence: ”Any return information disclosed with respect to section 6402(e) shall only be disclosed to of- ficers and employees of the State agency requesting such in- formation.”; (5) in section 6103(p)(4) (26 U.S.C. 6103(p)(4)), in the mat- ter preceding subparagraph (A)\u2014 (A) by striking ”(5), (10)” and inserting ”(5)”; and (B) by striking ”(9), or (12)” and inserting ”(9), (10), or (12)”; (6) in section 6334(a)(11)(A) (26 U.S.C. 6334(a)(11)(A)), by striking ”(relating to aid to families with dependent children)”; (7) in section 6402 (26 U.S.C. 6402)\u2014 (A) in subsection (a), by striking ”(c) and (d)” and in- serting ”(c), (d), and (e)”; (B) by redesignating subsections (e) through (i) as sub- sections (f) through (j), respectively; and (C) by inserting after subsection (d) the following: ”(e) COLLECTION OF OVERPAYMENTS UNDER TITLE IV A OF THE SOCIAL SECURITY ACT.\u2014The amount of any overpayment to be re- funded to the person making the overpayment shall be reduced (after reductions pursuant to subsections (c) and (d), but before a credit against future liability for an internal revenue tax) in accord- ance with section 405(e) of the Social Security Act (concerning recov- ery of overpayments to individuals under State plans approved under part A of title IV of such Act).”; and (8) in section 7523(b)(3)(C) (26 U.S.C. 7523(b)(3)(C)), by striking ”aid to families with dependent children” and inserting 73 ”assistance under a State program funded under part A of title IV of the Social Security Act”. (m) Section 3(b) of the Wagner-Peyser Act (29 U.S.C. 49b(b)) is amended by striking ”State plan approved under part A of title IV” and inserting ”State program funded under part A of title IV”. (n) The Job Training Partnership Act (29 U.S.C. 1501 et seq.) is amended\u2014 (1) in section 4(29)(A)(i) (29 U.S.C. 1503(29)(A)(i)), by strik- ing ”(42 U.S.C. 601 et seq.)”; (2) in section 106(b)(6)(C) (29 U.S.C. 1516(b)(6)(C)), by striking ”State aid to families with dependent children records,” and inserting ”records collected under the State program fund- ed under part A of title IV of the Social Security Act,”; (3) in section 121(b)(2) (29 U.S.C. 1531(b)(2))\u2014 (A) by striking ”the JOBS program” and inserting ”the work activities required under title IV of the Social Security Act”; and (B) by striking the second sentence; (4) in section 123(c) (29 U.S.C. 1533(c))\u2014 (A) in paragraph (1)(E), by repealing clause (vi); and (B) in paragraph (2)(D), by repealing clause (v); (5) in section 203(b)(3) (29 U.S.C. 1603(b)(3)), by striking ”, including recipients under the JOBS program”; (6) in subparagraphs (A) and (B) of section 204(a)(1) (29 U.S.C. 1604(a)(1) (A) and (B)), by striking ”(such as the JOBS program)” each place it appears; (7) in section 205(a) (29 U.S.C. 1605(a)), by striking para- graph (4) and inserting the following: ”(4) the portions of title IV of the Social Security Act relat- ing to work activities;”; (8) in section 253 (29 U.S.C. 1632)\u2014 (A) in subsection (b)(2), by repealing subparagraph (C); and (B) in paragraphs (1)(B) and (2)(B) of subsection (c), by striking ”the JOBS program or” each place it appears; (9) in section 264 (29 U.S.C. 1644)\u2014 (A) in subparagraphs (A) and (B) of subsection (b)(1), by striking ”(such as the JOBS program)” each place it ap- pears; and (B) in subparagraphs (A) and (B) of subsection (d)(3), by striking ”and the JOBS program” each place it appears; (10) in section 265(b) (29 U.S.C. 1645(b)), by striking para- graph (6) and inserting the following: ”(6) the portion of title IV of the Social Security Act relating to work activities;”; (11) in the second sentence of section 429(e) (29 U.S.C. 1699(e)), by striking ”and shall be in an amount that does not exceed the maximum amount that may be provided by the State pursuant to section 402(g)(1)(C) of the Social Security Act (42 U.S.C. 602(g)(1)(C))”; (12) in section 454(c) (29 U.S.C. 1734(c)), by striking ”JOBS and”; (13) in section 455(b) (29 U.S.C. 1735(b)), by striking ”the JOBS program,”; 74 (14) in section 501(1) (29 U.S.C. 1791(1)), by striking ”aid to families with dependent children under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)” and inserting ”assistance under the State program funded under part A of title IV of the Social Security Act”; (15) in section 506(1)(A) (29 U.S.C. 1791e(1)(A)), by striking ”aid to families with dependent children” and inserting ”assist- ance under the State program funded”; (16) in section 508(a)(2)(A) (29 U.S.C. 1791g(a)(2)(A)), by striking ”aid to families with dependent children” and inserting ”assistance under the State program funded”; and (17) in section 701(b)(2)(A) (29 U.S.C. 1792(b)(2)(A))\u2014 (A) in clause (v), by striking the semicolon and insert- ing ”; and”; and (B) by striking clause (vi). (o) Section 3803(c)(2)(C)(iv) of title 31, United States Code, is amended to read as follows: ”(iv) assistance under a State program funded under part A of title IV of the Social Security Act;”. (p) Section 2605(b)(2)(A)(i) of the Low-Income Home Energy As- sistance Act of 1981 (42 U.S.C. 8624(b)(2)(A)(i)) is amended to read as follows: ”(i) assistance under the State program funded under part A of title IV of the Social Security Act;”. (q) Section 303(f)(2) of the Family Support Act of 1988 (42 U.S.C. 602 note) is amended\u2014 (1) by striking ”(A)”; and (2) by striking subparagraphs (B) and (C). (r) The Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 900 et seq.) is amended\u2014 (1) in the first section 255(h) (2 U.S.C. 905(h)), by striking ”Aid to families with dependent children (75 0412 0 1 609);” and inserting ”Block grants to States for temporary assistance for needy families;”; and (2) in section 256 (2 U.S.C. 906)\u2014 (A) by striking subsection (k); and (B) by redesignating subsection (l) as subsection (k). (s) The Immigration and Nationality Act (8 U.S.C. 1101 et seq.) is amended\u2014 (1) in section 210(f) (8 U.S.C. 1160(f)), by striking ”aid under a State plan approved under” each place it appears and inserting ”assistance under a State program funded under”; (2) in section 245A(h) (8 U.S.C. 1255a(h))\u2014 (A) in paragraph (1)(A)(i), by striking ”program of aid to families with dependent children” and inserting ”State program of assistance”; and (B) in paragraph (2)(B), by striking ”aid to families with dependent children” and inserting ”assistance under a State program funded under part A of title IV of the Social Security Act”; and (3) in section 412(e)(4) (8 U.S.C. 1522(e)(4)), by striking ”State plan approved” and inserting ”State program funded”. (t) Section 640(a)(4)(B)(i) of the Head Start Act (42 U.S.C. 9835(a)(4)(B)(i)) is amended by striking ”program of aid to families 75 with dependent children under a State plan approved” and insert- ing ”State program of assistance funded”. (u) Section 9 of the Act of April 19, 1950 (64 Stat. 47, chapter 92; 25 U.S.C. 639) is repealed. (v) Subparagraph (E) of section 213(d)(6) of the School-To-Work Opportunities Act of 1994 (20 U.S.C. 6143(d)(6)) is amended to read as follows: ”(E) part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) relating to work activities;”. (w) Section 552a(a)(8)(B)(iv)(III) of title 5, United States Code, is amended by striking ”section 464 or 1137 of the Social Security Act” and inserting ”section 404(e), 464, or 1137 of the Social Secu- rity Act”. SEC. 111. DEVELOPMENT OF PROTOTYPE OF COUNTERFEIT-RESIST- ANT SOCIAL SECURITY CARD REQUIRED. (a) DEVELOPMENT.\u2014 (1) IN GENERAL.\u2014The Commissioner of Social Security (in this section referred to as the ”Commissioner”) shall, in accord- ance with this section, develop a prototype of a counterfeit-re- sistant social security card. Such prototype card shall\u2014 (A) be made of a durable, tamper-resistant material such as plastic or polyester, (B) employ technologies that provide security features, such as magnetic stripes, holograms, and integrated cir- cuits, and (C) be developed so as to provide individuals with reli- able proof of citizenship or legal resident alien status. (2) ASSISTANCE BY ATTORNEY GENERAL.\u2014The Attorney Gen- eral of the United States shall provide such information and as- sistance as the Commissioner deems necessary to enable the Commissioner to comply with this section. (b) STUDY AND REPORT.\u2014 (1) IN GENERAL.\u2014The Commissioner shall conduct a study and issue a report to Congress which examines different meth- ods of improving the social security card application process. (2) ELEMENTS OF STUDY.\u2014The study shall include an eval- uation of the cost and work load implications of issuing a coun- terfeit-resistant social security card for all individuals over a 3-, 5-, and 10-year period. The study shall also evaluate the fea- sibility and cost implications of imposing a user fee for replace- ment cards and cards issued to individuals who apply for such a card prior to the scheduled 3-, 5-, and 10-year phase-in op- tions. (3) DISTRIBUTION OF REPORT.\u2014The Commissioner shall submit copies of the report described in this subsection along with a facsimile of the prototype card as described in subsection (a) to the Committees on Ways and Means and Judiciary of the House of Representatives and the Committees on Finance and Judiciary of the Senate within 1 year after the date of the en- actment of this Act. SEC. 112. MODIFICATIONS TO THE JOB OPPORTUNITIES FOR CERTAIN LOW-INCOME INDIVIDUALS PROGRAM. Section 505 of the Family Support Act of 1988 (42 U.S.C. 1315 note) is amended\u2014 76 (1) in the heading, by striking ”demonstration”; (2) by striking ”demonstration” each place such term ap- pears; (3) in subsection (a), by striking ”in each of fiscal years” and all that follows through ”10” and inserting ”shall enter into agreements with”; (4) in subsection (b)(3), by striking ”aid to families with de- pendent children under part A of title IV of the Social Security Act” and inserting ”assistance under the program funded part A of title IV of the Social Security Act of the State in which the individual resides”; (5) in subsection (c)\u2014 (A) in paragraph (1)(C), by striking ”aid to families with dependent children under title IV of the Social Secu- rity Act” and inserting ”assistance under a State program funded part A of title IV of the Social Security Act”; (B) in paragraph (2), by striking ”aid to families with dependent children under title IV of such Act” and insert- ing ”assistance under a State program funded part A of title IV of the Social Security Act”; (6) in subsection (d), by striking ”job opportunities and basic skills training program (as provided for under title IV of the Social Security Act)” and inserting ”the State program funded under part A of title IV of the Social Security Act”; and (7) by striking subsections (e) through (g) and inserting the following: ”(e) AUTHORIZATION OF APPROPRIATIONS.\u2014For the purpose of conducting projects under this section, there is authorized to be ap- propriated an amount not to exceed $25,000,000 for any fiscal year.”. SEC. 113. SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL FOR TECHNICAL AND CONFORMING AMENDMENTS. Not later than 90 days after the date of the enactment of this Act, the Secretary of Health and Human Services and the Commis- sioner of Social Security, in consultation, as appropriate, with the heads of other Federal agencies, shall submit to the appropriate committees of Congress a legislative proposal proposing such tech- nical and conforming amendments as are necessary to bring the law into conformity with the policy embodied in this title. SEC. 114. ASSURING MEDICAID COVERAGE FOR LOW-INCOME FAMI- LIES. (a) IN GENERAL.\u2014Title XIX is amended\u2014 (1) by redesignating section 1931 as section 1932; and (2) by inserting after section 1930 the following new section: ”ASSURING COVERAGE FOR CERTAIN LOW-INCOME FAMILIES ”SEC. 1931. (a) REFERENCES TO TITLE IV A ARE REFERENCES TO PRE-WELFARE-REFORM PROVISIONS.\u2014Subject to the succeeding provisions of this section, with respect to a State any reference in this title (or any other provision of law in relation to the operation of this title) to a provision of part A of title IV, or a State plan under such part (or a provision of such a plan), including income and resource standards and income and resource methodologies 77 under such part or plan, shall be considered a reference to such a provision or plan as in effect as of July 16, 1996, with respect to the State. ”(b) APPLICATION OF PRE-WELFARE-REFORM ELIGIBILITY CRI- TERIA.\u2014 ”(1) IN GENERAL.\u2014For purposes of this title, subject to paragraphs (2) and (3), in determining eligibility for medical assistance\u2014 ”(A) an individual shall be treated as receiving aid or assistance under a State plan approved under part A of title IV only if the individual meets\u2014 ”(i) the income and resource standards for deter- mining eligibility under such plan, and ”(ii) the eligibility requirements of such plan under subsections (a) through (c) of section 406 and section 407(a), as in effect as of July 16, 1996; and ”(B) the income and resource methodologies under such plan as of such date shall be used in the determination of whether any individual meets income and resource stand- ards under such plan. ”(2) STATE OPTION.\u2014For purposes of applying this section, a State\u2014 ”(A) may lower its income standards applicable with respect to part A of title IV, but not below the income stand- ards applicable under its State plan under such part on May 1, 1988; ”(B) may increase income or resource standards under the State plan referred to in paragraph (1) over a period (beginning after July 16, 1996) by a percentage that does not exceed the percentage increase in the consumer price index for all urban consumers (all items; U.S. city average) over such period; and ”(C) may use income and resource methodologies that are less restrictive than the methodologies used under the State plan under such part as of July 16, 1996. ”(3) OPTION TO TERMINATE MEDICAL ASSISTANCE FOR FAIL- URE TO MEET WORK REQUIREMENT.\u2014 ”(A) INDIVIDUALS RECEIVING CASH ASSISTANCE UNDER TANF.\u2014In the case of an individual who\u2014 ”(i) is receiving cash assistance under a State pro- gram funded under part A of title IV, ”(ii) is eligible for medical assistance under this title on a basis not related to section 1902(l), and ”(iii) has the cash assistance under such program terminated pursuant to section 407(e)(1)(B) (as in effect on or after the welfare reform effective date) because of refusing to work, the State may terminate such individual’s eligibility for medical assistance under this title until such time as there no longer is a basis for the termination of such cash assist- ance because of such refusal. ”(B) EXCEPTION FOR CHILDREN.\u2014Subparagraph (A) shall not be construed as permitting a State to terminate 78 medical assistance for a minor child who is not the head of a household receiving assistance under a State program funded under part A of title IV. ”(c) TREATMENT FOR PURPOSES OF TRANSITIONAL COVERAGE PROVISIONS.\u2014 ”(1) TRANSITION IN THE CASE OF CHILD SUPPORT COLLEC- TIONS.\u2014The provisions of section 406(h) (as in effect on July 16, 1996) shall apply, in relation to this title, with respect to in- dividuals (and families composed of individuals) who are de- scribed in subsection (b)(1)(A), in the same manner as they ap- plied before such date with respect to individuals who became ineligible for aid to families with dependent children as a result (wholly or partly) of the collection of child or spousal support under part D of title IV. ”(2) TRANSITION IN THE CASE OF EARNINGS FROM EMPLOY- MENT.\u2014For continued medical assistance in the case of individ- uals (and families composed of individuals) described in sub- section (b)(1)(A) who would otherwise become ineligible because of hours or income from employment, see sections 1925 and 1902(e)(1). ”(d) WAIVERS.\u2014In the case of a waiver of a provision of part A of title IV in effect with respect to a State as of July 16, 1996, or which is submitted to the Secretary before the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and approved by the Secretary on or before July 1, 1997, if the waiver affects eligibility of individuals for medical as- sistance under this title, such waiver may (but need not) continue to be applied, at the option of the State, in relation to this title after the date the waiver would otherwise expire. ”(e) STATE OPTION TO USE 1 APPLICATION FORM.\u2014Nothing in this section, or part A of title IV, shall be construed as preventing a State from providing for the same application form for assistance under a State program funded under part A of title IV (on or after the welfare reform effective date) and for medical assistance under this title. ”(f) ADDITIONAL RULES OF CONSTRUCTION.\u2014 ”(1) With respect to the reference in section 1902(a)(5) to a State plan approved under part A of title IV, a State may treat such reference as a reference either to a State program funded under such part (as in effect on and after the welfare reform ef- fective date) or to the State plan under this title. ”(2) Any reference in section 1902(a)(55) to a State plan ap- proved under part A of title IV shall be deemed a reference to a State program funded under such part. ”(3) In applying section 1903(f), the applicable income limi- tation otherwise determined shall be subject to increase in the same manner as income or resource standards of a State may be increased under subsection (b)(2)(B). ”(g) RELATION TO OTHER PROVISIONS.\u2014The provisions of this section shall apply notwithstanding any other provision of this Act. ”(h) TRANSITIONAL INCREASED FEDERAL MATCHING RATE FOR INCREASED ADMINISTRATIVE COSTS.\u2014 ”(1) IN GENERAL.\u2014Subject to the succeeding provisions of this subsection, the Secretary shall provide that with respect to 79 administrative expenditures described in paragraph (2) the per centum specified in section 1903(a)(7) shall be increased to such percentage as the Secretary specifies. ”(2) ADMINISTRATIVE EXPENDITURES DESCRIBED.\u2014The ad- ministrative expenditures described in this paragraph are ex- penditures described in section 1903(a)(7) that a State dem- onstrates to the satisfaction of the Secretary are attributable to administrative costs of eligibility determinations that (but for the enactment of this section) would not be incurred. ”(3) LIMITATION.\u2014The total amount of additional Federal funds that are expended as a result of the application of this subsection for the period beginning with fiscal year 1997 and ending with fiscal year 2000 shall not exceed $500,000,000. In applying this paragraph, the Secretary shall ensure the equi- table distribution of additional funds among the States. ”(4) TIME LIMITATION.\u2014This subsection shall only apply with respect to a State for expenditures incurred during the first 12 calendar quarters in which the State program funded under part A of title IV (as in effect on and after the welfare reform effective date) is in effect. ”(i) WELFARE REFORM EFFECTIVE DATE.\u2014In this section, the term ‘welfare reform effective date’ means the effective date, with re- spect to a State, of title I of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (as specified in section 116 of such Act).”. (b) PLAN AMENDMENT.\u2014Section 1902(a) (42 U.S.C. 1396a(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (61), (2) by striking the period at the end of paragraph (62) and inserting ”; and”, and (3) by inserting after paragraph (62) the following new paragraph: ”(63) provide for administration and determinations of eli- gibility with respect to individuals who are (or seek to be) eligi- ble for medical assistance based on the application of section 1931.”. (c) EXTENSION OF WORK TRANSITION PROVISIONS.\u2014Sections 1902(e)(1)(B) and 1925(f) (42 U.S.C. 1396a(e)(1)(B), 1396r 6(f)) are each amended by striking ”1998” and inserting ”2001”. (d) ELIMINATION OF REQUIREMENT OF MINIMUM AFDC PAY- MENT LEVELS.\u2014(1) Section 1902(c) (42 U.S.C. 1396a(c)) is amended by striking ”if\u2014” and all that follows and inserting the following: ”if the State requires individuals described in subsection (l)(1) to apply for assistance under the State program funded under part A of title IV as a condition of applying for or receiving medical assist- ance under this title.”. (2) Section 1903(i) (42 U.S.C. 1396b(i)) is amended by striking paragraph (9). SEC. 115. DENIAL OF ASSISTANCE AND BENEFITS FOR CERTAIN DRUG- RELATED CONVICTIONS. (a) IN GENERAL.\u2014An individual convicted (under Federal or State law) of any offense which is classified as a felony by the law of the jurisdiction involved and which has as an element the posses- sion, use, or distribution of a controlled substance (as defined in sec- 80 tion 102(6) of the Controlled Substances Act (21 U.S.C. 802(6))) shall not be eligible for\u2014 (1) assistance under any State program funded under part A of title IV of the Social Security Act, or (2) benefits under the food stamp program (as defined in section 3(h) of the Food Stamp Act of 1977) or any State pro- gram carried out under the Food Stamp Act of 1977. (b) EFFECTS ON ASSISTANCE AND BENEFITS FOR OTHERS.\u2014 (1) PROGRAM OF TEMPORARY ASSISTANCE FOR NEEDY FAMI- LIES.\u2014The amount of assistance otherwise required to be pro- vided under a State program funded under part A of title IV of the Social Security Act to the family members of an individ- ual to whom subsection (a) applies shall be reduced by the amount which would have otherwise been made available to the individual under such part. (2) BENEFITS UNDER THE FOOD STAMP ACT OF 1977.\u2014The amount of benefits otherwise required to be provided to a house- hold under the food stamp program (as defined in section 3(h) of the Food Stamp Act of 1977), or any State program carried out under the Food Stamp Act of 1977, shall be determined by considering the individual to whom subsection (a) applies not to be a member of such household, except that the income and resources of the individual shall be considered to be income and resources of the household. (c) ENFORCEMENT.\u2014A State that has not exercised its authority under subsection (d)(1)(A) shall require each individual applying for assistance or benefits referred to in subsection (a), during the appli- cation process, to state, in writing, whether the individual, or any member of the household of the individual, has been convicted of a crime described in subsection (a). (d) LIMITATIONS.\u2014 (1) STATE ELECTIONS.\u2014 (A) OPT OUT.\u2014A State may, by specific reference in a law enacted after the date of the enactment of this Act, ex- empt any or all individuals domiciled in the State from the application of subsection (a). (B) LIMIT PERIOD OF PROHIBITION.\u2014A State may, by law enacted after the date of the enactment of this Act, limit the period for which subsection (a) shall apply to any or all individuals domiciled in the State. (2) INAPPLICABILITY TO CONVICTIONS OCCURRING ON OR BE- FORE ENACTMENT.\u2014Subsection (a) shall not apply to convic- tions occurring on or before the date of the enactment of this Act. (e) DEFINITIONS OF STATE.\u2014For purposes of this section, the term ”State” has the meaning given it\u2014 (1) in section 419(5) of the Social Security Act, when refer- ring to assistance provided under a State program funded under part A of title IV of the Social Security Act, and (2) in section 3(m) of the Food Stamp Act of 1977, when re- ferring to the food stamp program (as defined in section 3(h) of the Food Stamp Act of 1977) or any State program carried out under the Food Stamp Act of 1977. 81 (f) RULE OF INTERPRETATION.\u2014Nothing in this section shall be construed to deny the following Federal benefits: (1) Emergency medical services under title XIX of the So- cial Security Act. (2) Short-term, noncash, in-kind emergency disaster relief. (3)(A) Public health assistance for immunizations. (B) Public health assistance for testing and treatment of communicable diseases if the Secretary of Health and Human Services determines that it is necessary to prevent the spread of such disease. (4) Prenatal care. (5) Job training programs. (6) Drug treatment programs. SEC. 116. EFFECTIVE DATE; TRANSITION RULE. (a) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as otherwise provided in this title, this title and the amendments made by this title shall take ef- fect on July 1, 1997. (2) DELAYED EFFECTIVE DATE FOR CERTAIN PROVISIONS.\u2014 Notwithstanding any other provision of this section, paragraphs (2), (3), (4), (5), (8), and (10) of section 409(a) and section 411(a) of the Social Security Act (as added by the amendments made by section 103(a) of this Act) shall not take effect with respect to a State until, and shall apply only with respect to conduct that occurs on or after, the later of\u2014 (A) July 1, 1997; or (B) the date that is 6 months after the date the Sec- retary of Health and Human Services receives from the State a plan described in section 402(a) of the Social Secu- rity Act (as added by such amendment). (3) GRANTS TO OUTLYING AREAS.\u2014The amendments made by section 103(b) shall take effect on October 1, 1996. (4) ELIMINATION OF CHILD CARE PROGRAMS.\u2014The amend- ments made by section 103(c) shall take effect on October 1, 1996. (5) DEFINITIONS APPLICABLE TO NEW CHILD CARE ENTITLE- MENT.\u2014Sections 403(a)(1)(C), 403(a)(1)(D), and 419(4) of the Social Security Act, as added by the amendments made by sec- tion 103(a) of this Act, shall take effect on October 1, 1996. (b) TRANSITION RULES.\u2014Effective on the date of the enactment of this Act: (1) STATE OPTION TO ACCELERATE EFFECTIVE DATE.\u2014 (A) IN GENERAL.\u2014If the Secretary of Health and Human Services receives from a State a plan described in section 402(a) of the Social Security Act (as added by the amendment made by section 103(a)(1) of this Act), then\u2014 (i) on and after the date of such receipt\u2014 (I) except as provided in clause (ii), this title and the amendments made by this title (other than by section 103(c) of this Act) shall apply with re- spect to the State; and (II) the State shall be considered an eligible State for purposes of part A of title IV of the Social 82 Security Act (as in effect pursuant to the amend- ments made by such section 103(a)); and (ii) during the period that begins on the date of such receipt and ends on June 30, 1997, there shall re- main in effect with respect to the State\u2014 (I) section 403(h) of the Social Security Act (as in effect on September 30, 1995); and (II) all State reporting requirements under parts A and F of title IV of the Social Security Act (as in effect on September 30, 1995), modified by the Secretary as appropriate, taking into account the State program under part A of title IV of the Social Security Act (as in effect pursuant to the amendments made by such section 103(a)). (B) LIMITATIONS ON FEDERAL OBLIGATIONS.\u2014 (i) UNDER AFDC PROGRAM.\u2014The total obligations of the Federal Government to a State under part A of title IV of the Social Security Act (as in effect on Sep- tember 30, 1995) with respect to expenditures in fiscal year 1997 shall not exceed an amount equal to the State family assistance grant. (ii) UNDER TEMPORARY FAMILY ASSISTANCE PRO- GRAM.\u2014Notwithstanding section 403(a)(1) of the Social Security Act (as in effect pursuant to the amendments made by section 103(a) of this Act), the total obliga- tions of the Federal Government to a State under such section 403(a)(1)\u2014 (I) for fiscal year 1996, shall be an amount equal to\u2014 (aa) the State family assistance grant; multiplied by (bb) 1\u2044366 of the number of days during the period that begins on the date the Secretary of Health and Human Services first receives from the State a plan described in section 402(a) of the Social Security Act (as added by the amendment made by section 103(a)(1) of this Act) and ends on September 30, 1996; and (II) for fiscal year 1997, shall be an amount equal to the lesser of\u2014 (aa) the amount (if any) by which the State family assistance grant exceeds the total obligations of the Federal Government to the State under part A of title IV of the Social Se- curity Act (as in effect on September 30, 1995) with respect to expenditures in fiscal year 1997; or (bb) the State family assistance grant, multiplied by 1\u2044365 of the number of days dur- ing the period that begins on October 1, 1996, or the date the Secretary of Health and Human Services first receives from the State a plan described in section 402(a) of the Social Security Act (as added by the amendment 83 made by section 103(a)(1) of this Act), which- ever is later, and ends on September 30, 1997. (iii) CHILD CARE OBLIGATIONS EXCLUDED IN DETER- MINING FEDERAL AFDC OBLIGATIONS.\u2014As used in this subparagraph, the term ”obligations of the Federal Government to the State under part A of title IV of the Social Security Act” does not include any obligation of the Federal Government with respect to child care ex- penditures by the State. (C) SUBMISSION OF STATE PLAN FOR FISCAL YEAR 1996 OR 1997 DEEMED ACCEPTANCE OF GRANT LIMITATIONS AND FORMULA AND TERMINATION OF AFDC ENTITLEMENT.\u2014The submission of a plan by a State pursuant to subparagraph (A) is deemed to constitute\u2014 (i) the State’s acceptance of the grant reductions under subparagraph (B) (including the formula for computing the amount of the reduction); and (ii) the termination of any entitlement of any indi- vidual or family to benefits or services under the State AFDC program. (D) DEFINITIONS.\u2014As used in this paragraph: (i) STATE AFDC PROGRAM.\u2014The term ”State AFDC program” means the State program under parts A and F of title IV of the Social Security Act (as in effect on September 30, 1995). (ii) STATE.\u2014The term ”State” means the 50 States and the District of Columbia. (iii) STATE FAMILY ASSISTANCE GRANT.\u2014The term ”State family assistance grant” means the State family assistance grant (as defined in section 403(a)(1)(B) of the Social Security Act, as added by the amendment made by section 103(a)(1) of this Act). (2) CLAIMS, ACTIONS, AND PROCEEDINGS.\u2014The amendments made by this title shall not apply with respect to\u2014 (A) powers, duties, functions, rights, claims, penalties, or obligations applicable to aid, assistance, or services pro- vided before the effective date of this title under the provi- sions amended; and (B) administrative actions and proceedings commenced before such date, or authorized before such date to be com- menced, under such provisions. (3) CLOSING OUT ACCOUNT FOR THOSE PROGRAMS TERMI- NATED OR SUBSTANTIALLY MODIFIED BY THIS TITLE.\u2014In closing out accounts, Federal and State officials may use scientifically acceptable statistical sampling techniques. Claims made with respect to State expenditures under a State plan approved under part A of title IV of the Social Security Act (as in effect on September 30, 1995) with respect to assistance or services provided on or before September 30, 1995, shall be treated as claims with respect to expenditures during fiscal year 1995 for purposes of reimbursement even if payment was made by a State on or after October 1, 1995. Each State shall complete the filing of all claims under the State plan (as so in effect) within 84 2 years after the date of the enactment of this Act. The head of each Federal department shall\u2014 (A) use the single audit procedure to review and resolve any claims in connection with the close out of programs under such State plans; and (B) reimburse States for any payments made for assist- ance or services provided during a prior fiscal year from funds for fiscal year 1995, rather than from funds author- ized by this title. (4) CONTINUANCE IN OFFICE OF ASSISTANT SECRETARY FOR FAMILY SUPPORT.\u2014The individual who, on the day before the ef- fective date of this title, is serving as Assistant Secretary for Family Support within the Department of Health and Human Services shall, until a successor is appointed to such position\u2014 (A) continue to serve in such position; and (B) except as otherwise provided by law\u2014 (i) continue to perform the functions of the Assist- ant Secretary for Family Support under section 417 of the Social Security Act (as in effect before such effective date); and (ii) have the powers and duties of the Assistant Secretary for Family Support under section 416 of the Social Security Act (as in effect pursuant to the amend- ment made by section 103(a)(1) of this Act). (c) TERMINATION OF ENTITLEMENT UNDER AFDC PROGRAM.\u2014 Effective October 1, 1996, no individual or family shall be entitled to any benefits or services under any State plan approved under part A or F of title IV of the Social Security Act (as in effect on Sep- tember 30, 1995). TITLE II\u2014SUPPLEMENTAL SECURITY INCOME SEC. 200. REFERENCE TO SOCIAL SECURITY ACT. Except as otherwise specifically provided, wherever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. Subtitle A\u2014Eligibility Restrictions SEC. 201. DENIAL OF SSI BENEFITS FOR 10 YEARS TO INDIVIDUALS FOUND TO HAVE FRAUDULENTLY MISREPRESENTED RESI- DENCE IN ORDER TO OBTAIN BENEFITS SIMULTA- NEOUSLY IN 2 OR MORE STATES. (a) IN GENERAL.\u2014Section 1611(e) (42 U.S.C. 1382(e)), as amended by section 105(b)(4)(A) of the Contract with America Ad- vancement Act of 1996, is amended by redesignating paragraph (5) as paragraph (3) and by adding at the end the following new para- graph: ”(4)(A) No person shall be considered an eligible individual or eligible spouse for purposes of this title during the 10-year period that begins on the date the person is convicted in Federal or State 85 court of having made a fraudulent statement or representation with respect to the place of residence of the person in order to receive as- sistance simultaneously from 2 or more States under programs that are funded under title IV, title XIX, or the Food Stamp Act of 1977, or benefits in 2 or more States under the supplemental security in- come program under this title. ”(B) As soon as practicable after the conviction of a person in a Federal or State court as described in subparagraph (A), an offi- cial of such court shall notify the Commissioner of such conviction.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall take effect on the date of the enactment of this Act. SEC. 202. DENIAL OF SSI BENEFITS FOR FUGITIVE FELONS AND PRO- BATION AND PAROLE VIOLATORS. (a) IN GENERAL.\u2014Section 1611(e) (42 U.S.C. 1382(e)), as amended by section 201(a) of this Act, is amended by adding at the end the following new paragraph: ”(5) No person shall be considered an eligible individual or eli- gible spouse for purposes of this title with respect to any month if during such month the person is\u2014 ”(A) fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the per- son flees, for a crime, or an attempt to commit a crime, which is a felony under the laws of the place from which the person flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(B) violating a condition of probation or parole imposed under Federal or State law.”. (b) EXCHANGE OF INFORMATION.\u2014Section 1611(e) (42 U.S.C. 1382(e)), as amended by section 201(a) of this Act and subsection (a) of this section, is amended by adding at the end the following new paragraph: ”(6) Notwithstanding any other provision of law (other than sec- tion 6103 of the Internal Revenue Code of 1986), the Commissioner shall furnish any Federal, State, or local law enforcement officer, upon the written request of the officer, with the current address, So- cial Security number, and photograph (if applicable) of any recipi- ent of benefits under this title, if the officer furnishes the Commis- sioner with the name of the recipient, and other identifying informa- tion as reasonably required by the Commissioner to establish the unique identity of the recipient, and notifies the Commissioner that\u2014 ”(A) the recipient\u2014 ”(i) is described in subparagraph (A) or (B) of para- graph (5); and ”(ii) has information that is necessary for the officer to conduct the officer’s official duties; and ”(B) the location or apprehension of the recipient is within the officer’s official duties.”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall take effect on the date of the enactment of this Act. SEC. 203. TREATMENT OF PRISONERS. (a) IMPLEMENTATION OF PROHIBITION AGAINST PAYMENT OF BENEFITS TO PRISONERS.\u2014 86 (1) IN GENERAL.\u2014Section 1611(e)(1) (42 U.S.C. 1382(e)(1)) is amended by adding at the end the following new subpara- graph: ”(I)(i) The Commissioner shall enter into an agreement, with any interested State or local institution described in clause (i) or (ii) of section 202(x)(1)(A) the primary purpose of which is to confine in- dividuals as described in section 202(x)(1)(A), under which\u2014 ”(I) the institution shall provide to the Commissioner, on a monthly basis and in a manner specified by the Commissioner, the names, social security account numbers, dates of birth, con- finement commencement dates, and, to the extent available to the institution, such other identifying information concerning the inmates of the institution as the Commissioner may require for the purpose of carrying out paragraph (1); and ”(II) the Commissioner shall pay to any such institution, with respect to each inmate of the institution who is eligible for a benefit under this title for the month preceding the first month throughout which such inmate is in such institution and becomes ineligible for such benefit as a result of the application of this subparagraph, $400 if the institution furnishes the infor- mation described in subclause (I) to the Commissioner within 30 days after the date such individual becomes an inmate of such institution, or $200 if the institution furnishes such infor- mation after 30 days after such date but within 90 days after such date. ”(ii)(I) The provisions of section 552a of title 5, United States Code, shall not apply to any agreement entered into under clause (i) or to information exchanged pursuant to such agreement. ”(II) The Commissioner is authorized to provide, on a reimburs- able basis, information obtained pursuant to agreements entered into under clause (i) to any Federal or federally-assisted cash, food, or medical assistance program for eligibility purposes. ”(iii) Payments to institutions required by clause (i)(II) shall be made from funds otherwise available for the payment of benefits under this title and shall be treated as direct spending for purposes of the Balanced Budget and Emergency Deficit Control Act of 1985.”. (2) EFFECTIVE DATE.\u2014The amendment made by this sub- section shall apply to individuals whose period of confinement in an institution commences on or after the first day of the sev- enth month beginning after the month in which this Act is en- acted. (b) STUDY OF OTHER POTENTIAL IMPROVEMENTS IN THE COL- LECTION OF INFORMATION RESPECTING PUBLIC INMATES.\u2014 (1) STUDY.\u2014The Commissioner of Social Security shall con- duct a study of the desirability, feasibility, and cost of\u2014 (A) establishing a system under which Federal, State, and local courts would furnish to the Commissioner such information respecting court orders by which individuals are confined in jails, prisons, or other public penal, correc- tional, or medical facilities as the Commissioner may re- quire for the purpose of carrying out section 1611(e)(1) of the Social Security Act; and 87 (B) requiring that State and local jails, prisons, and other institutions that enter into agreements with the Com- missioner under section 1611(e)(1)(I) of the Social Security Act furnish the information required by such agreements to the Commissioner by means of an electronic or other so- phisticated data exchange system. (2) REPORT.\u2014Not later than 1 year after the date of the en- actment of this Act, the Commissioner of Social Security shall submit a report on the results of the study conducted pursuant to this subsection to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Rep- resentatives. (c) ADDITIONAL REPORT TO CONGRESS.\u2014Not later than October 1, 1998, the Commissioner of Social Security shall provide to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives a list of the institutions that are and are not providing information to the Commissioner under section 1611(e)(1)(I) of the Social Security Act (as added by this section). SEC. 204. EFFECTIVE DATE OF APPLICATION FOR BENEFITS. (a) IN GENERAL.\u2014Subparagraphs (A) and (B) of section 1611(c)(7) (42 U.S.C. 1382(c)(7)) are amended to read as follows: ”(A) the first day of the month following the date such ap- plication is filed, or ”(B) the first day of the month following the date such indi- vidual becomes eligible for such benefits with respect to such application.”. (b) SPECIAL RULE RELATING TO EMERGENCY ADVANCE PAY- MENTS.\u2014Section 1631(a)(4)(A) (42 U.S.C. 1383(a)(4)(A)) is amend- ed\u2014 (1) by inserting ”for the month following the date the appli- cation is filed” after ”is presumptively eligible for such benefits”; and (2) by inserting ”, which shall be repaid through propor- tionate reductions in such benefits over a period of not more than 6 months” before the semicolon. (c) CONFORMING AMENDMENTS.\u2014 (1) Section 1614(b) (42 U.S.C. 1382c(b)) is amended\u2014 (A) by striking ”or requests” and inserting ”, on the first day of the month following the date the application is filed, or, in any case in which either spouse requests”; and (B) by striking ”application or”. (2) Section 1631(g)(3) (42 U.S.C. 1382j(g)(3)) is amended by inserting ”following the month” after ”beginning with the month”. (d) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to applications for benefits under title XVI of the Social Security Act filed on or after the date of the enactment of this Act, without regard to whether regulations have been is- sued to implement such amendments. (2) BENEFITS UNDER TITLE XVI.\u2014For purposes of this sub- section, the term ”benefits under title XVI of the Social Security Act” includes supplementary payments pursuant to an agree- 88 ment for Federal administration under section 1616(a) of the Social Security Act, and payments pursuant to an agreement entered into under section 212(b) of Public Law 93 66. Subtitle B\u2014Benefits for Disabled Children SEC. 211. DEFINITION AND ELIGIBILITY RULES. (a) DEFINITION OF CHILDHOOD DISABILITY.\u2014Section 1614(a)(3) (42 U.S.C. 1382c(a)(3)), as amended by section 105(b)(1) of the Con- tract with America Advancement Act of 1996, is amended\u2014 (1) in subparagraph (A), by striking ”An individual” and inserting ”Except as provided in subparagraph (C), an individ- ual”; (2) in subparagraph (A), by striking ”(or, in the case of an individual under the age of 18, if he suffers from any medically determinable physical or mental impairment of comparable se- verity)”; (3) by redesignating subparagraphs (C) through (I) as sub- paragraphs (D) through (J), respectively; (4) by inserting after subparagraph (B) the following new subparagraph: ”(C)(i) An individual under the age of 18 shall be considered disabled for the purposes of this title if that individual has a medi- cally determinable physical or mental impairment, which results in marked and severe functional limitations, and which can be ex- pected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. ”(ii) Notwithstanding clause (i), no individual under the age of 18 who engages in substantial gainful activity (determined in ac- cordance with regulations prescribed pursuant to subparagraph (E)) may be considered to be disabled.”; and (5) in subparagraph (F), as redesignated by paragraph (3), by striking ”(D)” and inserting ”(E)”. (b) CHANGES TO CHILDHOOD SSI REGULATIONS.\u2014 (1) MODIFICATION TO MEDICAL CRITERIA FOR EVALUATION OF MENTAL AND EMOTIONAL DISORDERS.\u2014The Commissioner of Social Security shall modify sections 112.00C.2. and 112.02B.2.c.(2) of appendix 1 to subpart P of part 404 of title 20, Code of Federal Regulations, to eliminate references to maladaptive behavior in the domain of personal\/behavorial function. (2) DISCONTINUANCE OF INDIVIDUALIZED FUNCTIONAL AS- SESSMENT.\u2014The Commissioner of Social Security shall dis- continue the individualized functional assessment for children set forth in sections 416.924d and 416.924e of title 20, Code of Federal Regulations. (c) MEDICAL IMPROVEMENT REVIEW STANDARD AS IT APPLIES TO INDIVIDUALS UNDER THE AGE OF 18.\u2014Section 1614(a)(4) (42 U.S.C. 1382(a)(4)) is amended\u2014 (1) by redesignating subclauses (I) and (II) of clauses (i) and (ii) of subparagraph (B) as items (aa) and (bb), respec- tively; 89 (2) by redesignating clauses (i) and (ii) of subparagraphs (A) and (B) as subclauses (I) and (II), respectively; (3) by redesignating subparagraphs (A) through (C) as clauses (i) through (iii), respectively; (4) by inserting before clause (i) (as redesignated by para- graph (3)) the following new subparagraph: ”(A) in the case of an individual who is age 18 or older\u2014 ”; (5) by inserting after and below subparagraph (A)(iii) (as so redesignated) the following new subparagraph: ”(B) in the case of an individual who is under the age of 18\u2014 ”(i) substantial evidence which demonstrates that there has been medical improvement in the individual’s impair- ment or combination of impairments, and that such im- pairment or combination of impairments no longer results in marked and severe functional limitations; or ”(ii) substantial evidence which demonstrates that, as determined on the basis of new or improved diagnostic techniques or evaluations, the individual’s impairment or combination of impairments, is not as disabling as it was considered to be at the time of the most recent prior deci- sion that the individual was under a disability or contin- ued to be under a disability, and such impairment or com- bination of impairments does not result in marked and se- vere functional limitations; or”; (6) by redesignating subparagraph (D) as subparagraph (C) and by inserting in such subparagraph ”in the case of any indi- vidual,” before ”substantial evidence”; and (7) in the first sentence following subparagraph (C) (as re- designated by paragraph (6)), by\u2014 (A) inserting ”(i)” before ”to restore”; and (B) inserting ”, or (ii) in the case of an individual under the age of 18, to eliminate or improve the individ- ual’s impairment or combination of impairments so that it no longer results in marked and severe functional limita- tions” immediately before the period. (d) EFFECTIVE DATES, ETC.\u2014 (1) EFFECTIVE DATES.\u2014 (A) SUBSECTIONS (a) AND (b).\u2014 (i) IN GENERAL.\u2014The provisions of, and amend- ments made by, subsections (a) and (b) of this section shall apply to any individual who applies for, or whose claim is finally adjudicated with respect to, benefits under title XVI of the Social Security Act on or after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such provisions and amendments. (ii) DETERMINATION OF FINAL ADJUDICATION.\u2014For purposes of clause (i), no individual’s claim with re- spect to such benefits may be considered to be finally adjudicated before such date of enactment if, on or after such date, there is pending a request for either administrative or judicial review with respect to such 90 claim that has been denied in whole, or there is pend- ing, with respect to such claim, readjudication by the Commissioner of Social Security pursuant to relief in a class action or implementation by the Commissioner of a court remand order. (B) SUBSECTION (c).\u2014The amendments made by sub- section (c) of this section shall apply with respect to benefits under title XVI of the Social Security Act for months begin- ning on or after the date of the enactment of this Act, with- out regard to whether regulations have been issued to im- plement such amendments. (2) APPLICATION TO CURRENT RECIPIENTS.\u2014 (A) ELIGIBILITY REDETERMINATIONS.\u2014During the pe- riod beginning on the date of the enactment of this Act and ending on the date which is 1 year after such date of enact- ment, the Commissioner of Social Security shall redeter- mine the eligibility of any individual under age 18 who is eligible for supplemental security income benefits by reason of disability under title XVI of the Social Security Act as of the date of the enactment of this Act and whose eligi- bility for such benefits may terminate by reason of the pro- visions of, or amendments made by, subsections (a) and (b) of this section. With respect to any redetermination under this subparagraph\u2014 (i) section 1614(a)(4) of the Social Security Act (42 U.S.C. 1382c(a)(4)) shall not apply; (ii) the Commissioner of Social Security shall apply the eligibility criteria for new applicants for ben- efits under title XVI of such Act; (iii) the Commissioner shall give such redetermina- tion priority over all continuing eligibility reviews and other reviews under such title; and (iv) such redetermination shall be counted as a re- view or redetermination otherwise required to be made under section 208 of the Social Security Independence and Program Improvements Act of 1994 or any other provision of title XVI of the Social Security Act. (B) GRANDFATHER PROVISION.\u2014The provisions of, and amendments made by, subsections (a) and (b) of this sec- tion, and the redetermination under subparagraph (A), shall only apply with respect to the benefits of an individ- ual described in subparagraph (A) for months beginning on or after the later of July 1, 1997, or the date of the redeter- mination with respect to such individual. (C) NOTICE.\u2014Not later than January 1, 1997, the Commissioner of Social Security shall notify an individual described in subparagraph (A) of the provisions of this paragraph. (3) REPORT.\u2014The Commissioner of Social Security shall re- port to the Congress regarding the progress made in implement- ing the provisions of, and amendments made by, this section on child disability evaluations not later than 180 days after the date of the enactment of this Act. 91 (4) REGULATIONS.\u2014Notwithstanding any other provision of law, the Commissioner of Social Security shall submit for re- view to the committees of jurisdiction in the Congress any final regulation pertaining to the eligibility of individuals under age 18 for benefits under title XVI of the Social Security Act at least 45 days before the effective date of such regulation. The submis- sion under this paragraph shall include supporting documenta- tion providing a cost analysis, workload impact, and projections as to how the regulation will effect the future number of recipi- ents under such title. (5) CAP ADJUSTMENT FOR SSI ADMINISTRATIVE WORK RE- QUIRED BY WELFARE REFORM.\u2014 (A) AUTHORIZATION.\u2014For the additional costs of con- tinuing disability reviews and redeterminations under title XVI of the Social Security Act, there is hereby authorized to be appropriated to the Social Security Administration, in addition to amounts authorized under section 201(g)(1)(A) of the Social Security Act, $150,000,000 in fiscal year 1997 and $100,000,000 in fiscal year 1998. (B) CAP ADJUSTMENT.\u2014Section 251(b)(2)(H) of the Bal- anced Budget and Emergency Deficit Control Act of 1985, as amended by section 103(b) of the Contract with America Advancement Act of 1996, is amended\u2014 (i) in clause (i)\u2014 (I) in subclause (II) by\u2014 (aa) striking ”$25,000,000” and inserting ”$175,000,000”; and (bb) striking ”$160,000,000” and inserting ”$310,000,000”; and (II) in subclause (III) by\u2014 (aa) striking ”$145,000,000” and inserting ”$245,000,000”; and (bb) striking ”$370,000,000” and inserting ”$470,000,000”; and (ii) by amending clause (ii)(I) to read as follows: ”(I) the term ‘continuing disability reviews’ means reviews or redeterminations as defined under section 201(g)(1)(A) of the Social Security Act and reviews and redeterminations authorized under section 211 of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996;”. (C) ADJUSTMENTS.\u2014Section 606(e)(1)(B) of the Con- gressional Budget Act of 1974 is amended by adding at the end the following new sentences: ”If the adjustments re- ferred to in the preceding sentence are made for an appro- priations measure that is not enacted into law, then the Chairman of the Committee on the Budget of the House of Representatives shall, as soon as practicable, reverse those adjustments. The Chairman of the Committee on the Budg- et of the House of Representatives shall submit any adjust- ments made under this subparagraph to the House of Rep- resentatives and have such adjustments published in the Congressional Record.”. 92 (D) CONFORMING AMENDMENT.\u2014Section 103(d)(1) of the Contract with America Advancement Act of 1996 (42 U.S.C. 401 note) is amended by striking ”medicaid pro- grams.” and inserting ”medicaid programs, except that the amounts appropriated pursuant to the authorization and discretionary spending allowance provisions in section 211(d)(2)(5) of the Personal Responsibility and Work Op- portunity Reconciliation Act of 1996 shall be used only for continuing disability reviews and redeterminations under title XVI of the Social Security Act.”. (6) BENEFITS UNDER TITLE XVI.\u2014For purposes of this sub- section, the term ”benefits under title XVI of the Social Security Act” includes supplementary payments pursuant to an agree- ment for Federal administration under section 1616(a) of the Social Security Act, and payments pursuant to an agreement entered into under section 212(b) of Public Law 93 66. SEC. 212. ELIGIBILITY REDETERMINATIONS AND CONTINUING DIS- ABILITY REVIEWS. (a) CONTINUING DISABILITY REVIEWS RELATING TO CERTAIN CHILDREN.\u2014Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as re- designated by section 211(a)(3) of this Act, is amended\u2014 (1) by inserting ”(i)” after ”(H)”; and (2) by adding at the end the following new clause: ”(ii)(I) Not less frequently than once every 3 years, the Commis- sioner shall review in accordance with paragraph (4) the continued eligibility for benefits under this title of each individual who has not attained 18 years of age and is eligible for such benefits by rea- son of an impairment (or combination of impairments) which is likely to improve (or, at the option of the Commissioner, which is unlikely to improve). ”(II) A representative payee of a recipient whose case is reviewed under this clause shall present, at the time of review, evidence dem- onstrating that the recipient is, and has been, receiving treatment, to the extent considered medically necessary and available, of the condition which was the basis for providing benefits under this title. ”(III) If the representative payee refuses to comply without good cause with the requirements of subclause (II), the Commissioner of Social Security shall, if the Commissioner determines it is in the best interest of the individual, promptly suspend payment of benefits to the representative payee, and provide for payment of benefits to an alternative representative payee of the individual or, if the inter- est of the individual under this title would be served thereby, to the individual. ”(IV) Subclause (II) shall not apply to the representative payee of any individual with respect to whom the Commissioner deter- mines such application would be inappropriate or unnecessary. In making such determination, the Commissioner shall take into con- sideration the nature of the individual’s impairment (or combina- tion of impairments). Section 1631(c) shall not apply to a finding by the Commissioner that the requirements of subclause (II) should not apply to an individual’s representative payee.”. (b) DISABILITY ELIGIBILITY REDETERMINATIONS REQUIRED FOR SSI RECIPIENTS WHO ATTAIN 18 YEARS OF AGE.\u2014 93 (1) IN GENERAL.\u2014Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as amended by subsection (a) of this section, is amended by adding at the end the following new clause: ”(iii) If an individual is eligible for benefits under this title by reason of disability for the month preceding the month in which the individual attains the age of 18 years, the Commissioner shall rede- termine such eligibility\u2014 ”(I) during the 1-year period beginning on the individual’s 18th birthday; and ”(II) by applying the criteria used in determining the initial eligibility for applicants who are age 18 or older. With respect to a redetermination under this clause, paragraph (4) shall not apply and such redetermination shall be considered a sub- stitute for a review or redetermination otherwise required under any other provision of this subparagraph during that 1-year period.”. (2) CONFORMING REPEAL.\u2014Section 207 of the Social Secu- rity Independence and Program Improvements Act of 1994 (42 U.S.C. 1382 note; 108 Stat. 1516) is hereby repealed. (c) CONTINUING DISABILITY REVIEW REQUIRED FOR LOW BIRTH WEIGHT BABIES.\u2014Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as amended by subsections (a) and (b) of this section, is amended by adding at the end the following new clause: ”(iv)(I) Not later than 12 months after the birth of an individ- ual, the Commissioner shall review in accordance with paragraph (4) the continuing eligibility for benefits under this title by reason of disability of such individual whose low birth weight is a contrib- uting factor material to the Commissioner’s determination that the individual is disabled. ”(II) A review under subclause (I) shall be considered a sub- stitute for a review otherwise required under any other provision of this subparagraph during that 12-month period. ”(III) A representative payee of a recipient whose case is re- viewed under this clause shall present, at the time of review, evi- dence demonstrating that the recipient is, and has been, receiving treatment, to the extent considered medically necessary and avail- able, of the condition which was the basis for providing benefits under this title. ”(IV) If the representative payee refuses to comply without good cause with the requirements of subclause (III), the Commissioner of Social Security shall, if the Commissioner determines it is in the best interest of the individual, promptly suspend payment of benefits to the representative payee, and provide for payment of benefits to an alternative representative payee of the individual or, if the inter- est of the individual under this title would be served thereby, to the individual. ”(V) Subclause (III) shall not apply to the representative payee of any individual with respect to whom the Commissioner deter- mines such application would be inappropriate or unnecessary. In making such determination, the Commissioner shall take into con- sideration the nature of the individual’s impairment (or combina- tion of impairments). Section 1631(c) shall not apply to a finding by the Commissioner that the requirements of subclause (III) should not apply to an individual’s representative payee.”. 94 (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to benefits for months beginning on or after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such amendments. SEC. 213. ADDITIONAL ACCOUNTABILITY REQUIREMENTS. (a) REQUIREMENT TO ESTABLISH ACCOUNT.\u2014Section 1631(a)(2) (42 U.S.C. 1383(a)(2)) is amended\u2014 (1) by redesignating subparagraphs (F) and (G) as sub- paragraphs (G) and (H), respectively; and (2) by inserting after subparagraph (E) the following new subparagraph: ”(F)(i)(I) Each representative payee of an eligible individual under the age of 18 who is eligible for the payment of benefits de- scribed in subclause (II) shall establish on behalf of such individual an account in a financial institution into which such benefits shall be paid, and shall thereafter maintain such account for use in ac- cordance with clause (ii). ”(II) Benefits described in this subclause are past-due monthly benefits under this title (which, for purposes of this subclause, in- clude State supplementary payments made by the Commissioner pursuant to an agreement under section 1616 or section 212(b) of Public Law 93 66) in an amount (after any withholding by the Commissioner for reimbursement to a State for interim assistance under subsection (g)) that exceeds the product of\u2014 ”(aa) 6, and ”(bb) the maximum monthly benefit payable under this title to an eligible individual. ”(ii)(I) A representative payee shall use funds in the account es- tablished under clause (i) to pay for allowable expenses described in subclause (II). ”(II) An allowable expense described in this subclause is an ex- pense for\u2014 ”(aa) education or job skills training; ”(bb) personal needs assistance; ”(cc) special equipment; ”(dd) housing modification; ”(ee) medical treatment; ”(ff) therapy or rehabilitation; or ”(gg) any other item or service that the Commissioner deter- mines to be appropriate; provided that such expense benefits such individual and, in the case of an expense described in item (bb), (cc), (dd), (ff), or (gg), is related to the impairment (or combination of impairments) of such individ- ual. ”(III) The use of funds from an account established under clause (i) in any manner not authorized by this clause\u2014 ”(aa) by a representative payee shall be considered a misapplication of benefits for all purposes of this paragraph, and any representative payee who knowingly misapplies bene- fits from such an account shall be liable to the Commissioner in an amount equal to the total amount of such benefits; and ”(bb) by an eligible individual who is his or her own payee shall be considered a misapplication of benefits for all purposes of this paragraph and the total amount of such benefits so used 95 shall be considered to be the uncompensated value of a disposed resource and shall be subject to the provisions of section 1613(c). ”(IV) This clause shall continue to apply to funds in the account after the child has reached age 18, regardless of whether benefits are paid directly to the beneficiary or through a representative payee. ”(iii) The representative payee may deposit into the account es- tablished pursuant to clause (i)\u2014 ”(I) past-due benefits payable to the eligible individual in an amount less than that specified in clause (i)(II), and ”(II) any other funds representing an underpayment under this title to such individual, provided that the amount of such underpayment is equal to or exceeds the maximum monthly benefit payable under this title to an eligible individual. ”(iv) The Commissioner of Social Security shall establish a sys- tem for accountability monitoring whereby such representative payee shall report, at such time and in such manner as the Commissioner shall require, on activity respecting funds in the account established pursuant to clause (i).”. (b) EXCLUSION FROM RESOURCES.\u2014Section 1613(a) (42 U.S.C. 1382b(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (10); (2) by striking the period at the end of paragraph (11) and inserting ”; and”; and (3) by inserting after paragraph (11) the following new paragraph: ”(12) any account, including accrued interest or other earn- ings thereon, established and maintained in accordance with section 1631(a)(2)(F).”. (c) EXCLUSION FROM INCOME.\u2014Section 1612(b) (42 U.S.C. 1382a(b)) is amended\u2014 (1) by striking ”and” at the end of paragraph (19); (2) by striking the period at the end of paragraph (20) and inserting ”; and”; and (3) by adding at the end the following new paragraph: ”(21) the interest or other earnings on any account estab- lished and maintained in accordance with section 1631(a)(2)(F).”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to payments made after the date of the enactment of this Act. SEC. 214. REDUCTION IN CASH BENEFITS PAYABLE TO INSTITU- TIONALIZED INDIVIDUALS WHOSE MEDICAL COSTS ARE COVERED BY PRIVATE INSURANCE. (a) IN GENERAL.\u2014Section 1611(e)(1)(B) (42 U.S.C. 1382(e)(1)(B)) is amended by inserting ”or, in the case of an eligible individual who is a child under the age of 18, receiving payments (with respect to such individual) under any health insurance policy issued by a private provider of such insurance” after ”section 1614(f)(2)(B),”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to benefits for months beginning 90 or more days after 96 the date of the enactment of this Act, without regard to whether reg- ulations have been issued to implement such amendments. SEC. 215. REGULATIONS. Within 3 months after the date of the enactment of this Act, the Commissioner of Social Security shall prescribe such regulations as may be necessary to implement the amendments made by this sub- title. Subtitle C\u2014Additional Enforcement Provision SEC. 221. INSTALLMENT PAYMENT OF LARGE PAST-DUE SUPPLE- MENTAL SECURITY INCOME BENEFITS. (a) IN GENERAL.\u2014Section 1631(a) (42 U.S.C. 1383) is amended by adding at the end the following new paragraph: ”(10)(A) If an individual is eligible for past-due monthly bene- fits under this title in an amount that (after any withholding for re- imbursement to a State for interim assistance under subsection (g)) equals or exceeds the product of\u2014 ”(i) 12, and ”(ii) the maximum monthly benefit payable under this title to an eligible individual (or, if appropriate, to an eligible indi- vidual and eligible spouse), then the payment of such past-due benefits (after any such reim- bursement to a State) shall be made in installments as provided in subparagraph (B). ”(B)(i) The payment of past-due benefits subject to this subpara- graph shall be made in not to exceed 3 installments that are made at 6-month intervals. ”(ii) Except as provided in clause (iii), the amount of each of the first and second installments may not exceed an amount equal to the product of clauses (i) and (ii) of subparagraph (A). ”(iii) In the case of an individual who has\u2014 ”(I) outstanding debt attributable to\u2014 ”(aa) food, ”(bb) clothing, ”(cc) shelter, or ”(dd) medically necessary services, supplies or equip- ment, or medicine; or ”(II) current expenses or expenses anticipated in the near term attributable to\u2014 ”(aa) medically necessary services, supplies or equip- ment, or medicine, or ”(bb) the purchase of a home, and such debt or expenses are not subject to reimbursement by a public assistance program, the Secretary under title XVIII, a State plan approved under title XIX, or any private entity legally liable to pro- vide payment pursuant to an insurance policy, pre-paid plan, or other arrangement, the limitation specified in clause (ii) may be ex- ceeded by an amount equal to the total of such debt and expenses. ”(C) This paragraph shall not apply to any individual who, at the time of the Commissioner’s determination that such individual 97 is eligible for the payment of past-due monthly benefits under this title\u2014 ”(i) is afflicted with a medically determinable impairment that is expected to result in death within 12 months; or ”(ii) is ineligible for benefits under this title and the Com- missioner determines that such individual is likely to remain ineligible for the next 12 months. ”(D) For purposes of this paragraph, the term ‘benefits under this title’ includes supplementary payments pursuant to an agree- ment for Federal administration under section 1616(a), and pay- ments pursuant to an agreement entered into under section 212(b) of Public Law 93 66.”. (b) CONFORMING AMENDMENT.\u2014Section 1631(a)(1) (42 U.S.C. 1383(a)(1)) is amended by inserting ”(subject to paragraph (10))” immediately before ”in such installments”. (c) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section are effective with respect to past-due benefits payable under title XVI of the Social Security Act after the third month following the month in which this Act is enacted. (2) BENEFITS PAYABLE UNDER TITLE XVI.\u2014For purposes of this subsection, the term ”benefits payable under title XVI of the Social Security Act” includes supplementary payments pursuant to an agreement for Federal administration under section 1616(a) of the Social Security Act, and payments pursuant to an agreement entered into under section 212(b) of Public Law 93 66. SEC. 222. REGULATIONS. Within 3 months after the date of the enactment of this Act, the Commissioner of Social Security shall prescribe such regulations as may be necessary to implement the amendments made by this sub- title. Subtitle D\u2014Studies Regarding Supplemental Security Income Program SEC. 231. ANNUAL REPORT ON THE SUPPLEMENTAL SECURITY IN- COME PROGRAM. Title XVI (42 U.S.C. 1381 et seq.), as amended by section 105(b)(3) of the Contract with America Advancement Act of 1996, is amended by adding at the end the following new section: ”ANNUAL REPORT ON PROGRAM ”SEC. 1637. (a) Not later than May 30 of each year, the Com- missioner of Social Security shall prepare and deliver a report an- nually to the President and the Congress regarding the program under this title, including\u2014 ”(1) a comprehensive description of the program; ”(2) historical and current data on allowances and denials, including number of applications and allowance rates for ini- tial determinations, reconsideration determinations, adminis- 98 trative law judge hearings, appeals council reviews, and Fed- eral court decisions; ”(3) historical and current data on characteristics of recipi- ents and program costs, by recipient group (aged, blind, dis- abled adults, and disabled children); ”(4) historical and current data on prior enrollment by re- cipients in public benefit programs, including State programs funded under part A of title IV of the Social Security Act and State general assistance programs; ”(5) projections of future number of recipients and program costs, through at least 25 years; ”(6) number of redeterminations and continuing disability reviews, and the outcomes of such redeterminations and re- views; ”(7) data on the utilization of work incentives; ”(8) detailed information on administrative and other pro- gram operation costs; ”(9) summaries of relevant research undertaken by the So- cial Security Administration, or by other researchers; ”(10) State supplementation program operations; ”(11) a historical summary of statutory changes to this title; and ”(12) such other information as the Commissioner deems useful. ”(b) Each member of the Social Security Advisory Board shall be permitted to provide an individual report, or a joint report if agreed, of views of the program under this title, to be included in the annual report required under this section.”. SEC. 232. STUDY BY GENERAL ACCOUNTING OFFICE. Not later than January 1, 1999, the Comptroller General of the United States shall study and report on\u2014 (1) the impact of the amendments made by, and the provi- sions of, this title on the supplemental security income program under title XVI of the Social Security Act; and (2) extra expenses incurred by families of children receiving benefits under such title that are not covered by other Federal, State, or local programs. TITLE III\u2014CHILD SUPPORT SEC. 300. REFERENCE TO SOCIAL SECURITY ACT. Except as otherwise specifically provided, wherever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. 99 Subtitle A\u2014Eligibility for Services; Distribution of Payments SEC. 301. STATE OBLIGATION TO PROVIDE CHILD SUPPORT ENFORCE- MENT SERVICES. (a) STATE PLAN REQUIREMENTS.\u2014Section 454 (42 U.S.C. 654) is amended\u2014 (1) by striking paragraph (4) and inserting the following new paragraph: ”(4) provide that the State will\u2014 ”(A) provide services relating to the establishment of paternity or the establishment, modification, or enforcement of child support obligations, as appropriate, under the plan with respect to\u2014 ”(i) each child for whom (I) assistance is provided under the State program funded under part A of this title, (II) benefits or services for foster care maintenance are provided under the State program funded under part E of this title, or (III) medical assistance is pro- vided under the State plan approved under title XIX, unless, in accordance with paragraph (29), good cause or other exceptions exist; ”(ii) any other child, if an individual applies for such services with respect to the child; and ”(B) enforce any support obligation established with re- spect to\u2014 ”(i) a child with respect to whom the State provides services under the plan; or ”(ii) the custodial parent of such a child;”; and (2) in paragraph (6)\u2014 (A) by striking ”provide that” and inserting ”provide that\u2014”; (B) by striking subparagraph (A) and inserting the fol- lowing new subparagraph: ”(A) services under the plan shall be made available to residents of other States on the same terms as to residents of the State submitting the plan;”; (C) in subparagraph (B), by inserting ”on individuals not receiving assistance under any State program funded under part A” after ”such services shall be imposed”; (D) in each of subparagraphs (B), (C), (D), and (E)\u2014 (i) by indenting the subparagraph in the same manner as, and aligning the left margin of the sub- paragraph with the left margin of, the matter inserted by subparagraph (B) of this paragraph; and (ii) by striking the final comma and inserting a semicolon; and (E) in subparagraph (E), by indenting each of clauses (i) and (ii) 2 additional ems. (b) CONTINUATION OF SERVICES FOR FAMILIES CEASING TO RE- CEIVE ASSISTANCE UNDER THE STATE PROGRAM FUNDED UNDER PART A.\u2014Section 454 (42 U.S.C. 654) is amended\u2014 (1) by striking ”and” at the end of paragraph (23); 100 (2) by striking the period at the end of paragraph (24) and inserting ”; and”; and (3) by adding after paragraph (24) the following new para- graph: ”(25) provide that if a family with respect to which services are provided under the plan ceases to receive assistance under the State program funded under part A, the State shall provide appropriate notice to the family and continue to provide such services, subject to the same conditions and on the same basis as in the case of other individuals to whom services are fur- nished under the plan, except that an application or other re- quest to continue services shall not be required of such a family and paragraph (6)(B) shall not apply to the family.”. (c) CONFORMING AMENDMENTS.\u2014 (1) Section 452(b) (42 U.S.C. 652(b)) is amended by striking ”454(6)” and inserting ”454(4)”. (2) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is amended by striking ”454(6)” each place it appears and inserting ”454(4)(A)(ii)”. (3) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is amended by striking ”in the case of overdue support which a State has agreed to collect under section 454(6)” and inserting ”in any other case”. (4) Section 466(e) (42 U.S.C. 666(e)) is amended by striking ”paragraph (4) or (6) of section 454” and inserting ”section 454(4)”. SEC. 302. DISTRIBUTION OF CHILD SUPPORT COLLECTIONS. (a) IN GENERAL.\u2014Section 457 (42 U.S.C. 657) is amended to read as follows: ”SEC. 457. DISTRIBUTION OF COLLECTED SUPPORT. ”(a) IN GENERAL.\u2014Subject to subsection (e), an amount col- lected on behalf of a family as support by a State pursuant to a plan approved under this part shall be distributed as follows: ”(1) FAMILIES RECEIVING ASSISTANCE.\u2014In the case of a family receiving assistance from the State, the State shall\u2014 ”(A) pay to the Federal Government the Federal share of the amount so collected; and ”(B) retain, or distribute to the family, the State share of the amount so collected. ”(2) FAMILIES THAT FORMERLY RECEIVED ASSISTANCE.\u2014In the case of a family that formerly received assistance from the State: ”(A) CURRENT SUPPORT PAYMENTS.\u2014To the extent that the amount so collected does not exceed the amount re- quired to be paid to the family for the month in which col- lected, the State shall distribute the amount so collected to the family. ”(B) PAYMENTS OF ARREARAGES.\u2014To the extent that the amount so collected exceeds the amount required to be paid to the family for the month in which collected, the State shall distribute the amount so collected as follows: ”(i) DISTRIBUTION OF ARREARAGES THAT ACCRUED AFTER THE FAMILY CEASED TO RECEIVE ASSISTANCE.\u2014 101 ”(I) PRE-OCTOBER 1997.\u2014Except as provided in subclause (II), the provisions of this section (other than subsection (b)(1)) as in effect and applied on the day before the date of the enactment of section 302 of the Personal Responsibility and Work Op- portunity Act Reconciliation of 1996 shall apply with respect to the distribution of support arrear- ages that\u2014 ”(aa) accrued after the family ceased to re- ceive assistance, and ”(bb) are collected before October 1, 1997. ”(II) POST-SEPTEMBER 1997.\u2014With respect to the amount so collected on or after October 1, 1997 (or before such date, at the option of the State)\u2014 ”(aa) IN GENERAL.\u2014The State shall first distribute the amount so collected (other than any amount described in clause (iv)) to the family to the extent necessary to satisfy any support arrearages with respect to the family that accrued after the family ceased to receive assistance from the State. ”(bb) REIMBURSEMENT OF GOVERNMENTS FOR ASSISTANCE PROVIDED TO THE FAMILY.\u2014 After the application of division (aa) and clause (ii)(II)(aa) with respect to the amount so collected, the State shall retain the State share of the amount so collected, and pay to the Fed- eral Government the Federal share (as defined in subsection (c)(2)) of the amount so collected, but only to the extent necessary to reimburse amounts paid to the family as assistance by the State. ”(cc) DISTRIBUTION OF THE REMAINDER TO THE FAMILY.\u2014To the extent that neither divi- sion (aa) nor division (bb) applies to the amount so collected, the State shall distribute the amount to the family. ”(ii) DISTRIBUTION OF ARREARAGES THAT ACCRUED BEFORE THE FAMILY RECEIVED ASSISTANCE.\u2014 ”(I) PRE-OCTOBER 2000.\u2014Except as provided in subclause (II), the provisions of this section (other than subsection (b)(1)) as in effect and applied on the day before the date of the enactment of section 302 of the Personal Responsibility and Work Op- portunity Reconciliation Act of 1996 shall apply with respect to the distribution of support arrear- ages that\u2014 ”(aa) accrued before the family received assistance, and ”(bb) are collected before October 1, 2000. ”(II) POST-SEPTEMBER 2000.\u2014Unless, based on the report required by paragraph (4), the Congress determines otherwise, with respect to the amount 102 so collected on or after October 1, 2000 (or before such date, at the option of the State)\u2014 ”(aa) IN GENERAL.\u2014The State shall first distribute the amount so collected (other than any amount described in clause (iv)) to the family to the extent necessary to satisfy any support arrearages with respect to the family that accrued before the family received assist- ance from the State. ”(bb) REIMBURSEMENT OF GOVERNMENTS FOR ASSISTANCE PROVIDED TO THE FAMILY.\u2014 After the application of clause (i)(II)(aa) and division (aa) with respect to the amount so col- lected, the State shall retain the State share of the amount so collected, and pay to the Fed- eral Government the Federal share (as defined in subsection (c)(2)) of the amount so collected, but only to the extent necessary to reimburse amounts paid to the family as assistance by the State. ”(cc) DISTRIBUTION OF THE REMAINDER TO THE FAMILY.\u2014To the extent that neither divi- sion (aa) nor division (bb) applies to the amount so collected, the State shall distribute the amount to the family. ”(iii) DISTRIBUTION OF ARREARAGES THAT ACCRUED WHILE THE FAMILY RECEIVED ASSISTANCE.\u2014In the case of a family described in this subparagraph, the provi- sions of paragraph (1) shall apply with respect to the distribution of support arrearages that accrued while the family received assistance. ”(iv) AMOUNTS COLLECTED PURSUANT TO SECTION 464.\u2014Notwithstanding any other provision of this sec- tion, any amount of support collected pursuant to sec- tion 464 shall be retained by the State to the extent past-due support has been assigned to the State as a condition of receiving assistance from the State, up to the amount necessary to reimburse the State for amounts paid to the family as assistance by the State. The State shall pay to the Federal Government the Federal share of the amounts so retained. To the extent the amount collected pursuant to section 464 exceeds the amount so retained, the State shall distribute the excess to the family. ”(v) ORDERING RULES FOR DISTRIBUTIONS.\u2014For purposes of this subparagraph, unless an earlier effec- tive date is required by this section, effective October 1, 2000, the State shall treat any support arrearages col- lected, except for amounts collected pursuant to section 464, as accruing in the following order: ”(I) To the period after the family ceased to re- ceive assistance. ”(II) To the period before the family received assistance. 103 ”(III) To the period while the family was re- ceiving assistance. ”(3) FAMILIES THAT NEVER RECEIVED ASSISTANCE.\u2014In the case of any other family, the State shall distribute the amount so collected to the family. ”(4) FAMILIES UNDER CERTAIN AGREEMENTS.\u2014In the case of a family receiving assistance from an Indian tribe, distribute the amount so collected pursuant to an agreement entered into pursuant to a State plan under section 454(33). ”(5) STUDY AND REPORT.\u2014Not later than October 1, 1998, the Secretary shall report to the Congress the Secretary’s find- ings with respect to\u2014 ”(A) whether the distribution of post-assistance arrear- ages to families has been effective in moving people off of welfare and keeping them off of welfare; ”(B) whether early implementation of a pre-assistance arrearage program by some States has been effective in moving people off of welfare and keeping them off of wel- fare; ”(C) what the overall impact has been of the amend- ments made by the Personal Responsibility and Work Op- portunity Act of 1996 with respect to child support enforce- ment in moving people off of welfare and keeping them off of welfare; and ”(D) based on the information and data the Secretary has obtained, what changes, if any, should be made in the policies related to the distribution of child support arrear- ages. ”(b) CONTINUATION OF ASSIGNMENTS.\u2014Any rights to support obligations, which were assigned to a State as a condition of receiv- ing assistance from the State under part A and which were in effect on the day before the date of the enactment of the Personal Respon- sibility and Work Opportunity Act of 1996, shall remain assigned after such date. ”(c) DEFINITIONS.\u2014As used in subsection (a): ”(1) ASSISTANCE.\u2014The term ‘assistance from the State’ means\u2014 ”(A) assistance under the State program funded under part A or under the State plan approved under part A of this title (as in effect on the day before the date of the enact- ment of the Personal Responsibility and Work Opportunity Act of 1996); and ”(B) foster care maintenance payments under the State plan approved under part E of this title. ”(2) FEDERAL SHARE.\u2014The term ‘Federal share’ means that portion of the amount collected resulting from the application of the Federal medical assistance percentage in effect for the fis- cal year in which the amount is collected. ”(3) FEDERAL MEDICAL ASSISTANCE PERCENTAGE.\u2014The term ‘Federal medical assistance percentage’ means\u2014 ”(A) the Federal medical assistance percentage (as de- fined in section 1118), in the case of Puerto Rico, the Virgin Islands, Guam, and American Samoa; or 104 ”(B) the Federal medical assistance percentage (as de- fined in section 1905(b), as in effect on September 30, 1996) in the case of any other State. ”(4) STATE SHARE.\u2014The term ‘State share’ means 100 per- cent minus the Federal share. ”(d) HOLD HARMLESS PROVISION.\u2014If the amounts collected which could be retained by the State in the fiscal year (to the extent necessary to reimburse the State for amounts paid to families as as- sistance by the State) are less than the State share of the amounts collected in fiscal year 1995 (determined in accordance with section 457 as in effect on the day before the date of the enactment of the Personal Responsibility and Work Opportunity Act of 1996), the State share for the fiscal year shall be an amount equal to the State share in fiscal year 1995. ”(e) GAP PAYMENTS NOT SUBJECT TO DISTRIBUTION UNDER THIS SECTION.\u2014At State option, this section shall not apply to any amount collected on behalf of a family as support by the State (and paid to the family in addition to the amount of assistance otherwise payable to the family) pursuant to a plan approved under this part if such amount would have been paid to the family by the State under section 402(a)(28), as in effect and applied on the day before the date of the enactment of section 302 of the Personal Responsibil- ity and Work Opportunity Reconciliation Act of 1996. For purposes of subsection (d), the State share of such amount paid to the family shall be considered amounts which could be retained by the State if such payments were reported by the State as part of the State share of amounts collected in fiscal year 1995.”. (b) CONFORMING AMENDMENTS.\u2014 (1) Section 464(a)(1) (42 U.S.C. 664(a)(1)) is amended by striking ”section 457(b)(4) or (d)(3)” and inserting ”section 457”. (2) Section 454 (42 U.S.C. 654) is amended\u2014 (A) in paragraph (11)\u2014 (i) by striking ”(11)” and inserting ”(11)(A)”; and (ii) by inserting after the semicolon ”and”; and (B) by redesignating paragraph (12) as subparagraph (B) of paragraph (11). (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall be effective on October 1, 1996, or earlier at the State’s option. (2) CONFORMING AMENDMENTS.\u2014The amendments made by subsection (b)(2) shall become effective on the date of the enact- ment of this Act. SEC. 303. PRIVACY SAFEGUARDS. (a) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by section 301(b) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (24); (2) by striking the period at the end of paragraph (25) and inserting ”; and”; and (3) by adding after paragraph (25) the following new para- graph: ”(26) will have in effect safeguards, applicable to all con- fidential information handled by the State agency, that are de- signed to protect the privacy rights of the parties, including\u2014 105 ”(A) safeguards against unauthorized use or disclosure of information relating to proceedings or actions to estab- lish paternity, or to establish or enforce support; ”(B) prohibitions against the release of information on the whereabouts of 1 party to another party against whom a protective order with respect to the former party has been entered; and ”(C) prohibitions against the release of information on the whereabouts of 1 party to another party if the State has reason to believe that the release of the information may re- sult in physical or emotional harm to the former party.”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall become effective on October 1, 1997. SEC. 304. RIGHTS TO NOTIFICATION OF HEARINGS. (a) IN GENERAL.\u2014Section 454 (42 U.S.C. 654), as amended by section 302(b)(2) of this Act, is amended by inserting after para- graph (11) the following new paragraph: ”(12) provide for the establishment of procedures to require the State to provide individuals who are applying for or receiv- ing services under the State plan, or who are parties to cases in which services are being provided under the State plan\u2014 ”(A) with notice of all proceedings in which support ob- ligations might be established or modified; and ”(B) with a copy of any order establishing or modifying a child support obligation, or (in the case of a petition for modification) a notice of determination that there should be no change in the amount of the child support award, with- in 14 days after issuance of such order or determination;”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall become effective on October 1, 1997. Subtitle B\u2014Locate and Case Tracking SEC. 311. STATE CASE REGISTRY. Section 454A, as added by section 344(a)(2) of this Act, is amended by adding at the end the following new subsections: ”(e) STATE CASE REGISTRY.\u2014 ”(1) CONTENTS.\u2014The automated system required by this section shall include a registry (which shall be known as the ‘State case registry’) that contains records with respect to\u2014 ”(A) each case in which services are being provided by the State agency under the State plan approved under this part; and ”(B) each support order established or modified in the State on or after October 1, 1998. ”(2) LINKING OF LOCAL REGISTRIES.\u2014The State case reg- istry may be established by linking local case registries of sup- port orders through an automated information network, subject to this section. ”(3) USE OF STANDARDIZED DATA ELEMENTS.\u2014Such records shall use standardized data elements for both parents (such as names, social security numbers and other uniform identification numbers, dates of birth, and case identification numbers), and 106 contain such other information (such as on case status) as the Secretary may require. ”(4) PAYMENT RECORDS.\u2014Each case record in the State case registry with respect to which services are being provided under the State plan approved under this part and with respect to which a support order has been established shall include a record of\u2014 ”(A) the amount of monthly (or other periodic) support owed under the order, and other amounts (including ar- rearages, interest or late payment penalties, and fees) due or overdue under the order; ”(B) any amount described in subparagraph (A) that has been collected; ”(C) the distribution of such collected amounts; ”(D) the birth date of any child for whom the order re- quires the provision of support; and ”(E) the amount of any lien imposed with respect to the order pursuant to section 466(a)(4). ”(5) UPDATING AND MONITORING.\u2014The State agency operat- ing the automated system required by this section shall prompt- ly establish and update, maintain, and regularly monitor, case records in the State case registry with respect to which services are being provided under the State plan approved under this part, on the basis of\u2014 ”(A) information on administrative actions and admin- istrative and judicial proceedings and orders relating to paternity and support; ”(B) information obtained from comparison with Fed- eral, State, or local sources of information; ”(C) information on support collections and distribu- tions; and ”(D) any other relevant information. ”(f) INFORMATION COMPARISONS AND OTHER DISCLOSURES OF INFORMATION.\u2014The State shall use the automated system required by this section to extract information from (at such times, and in such standardized format or formats, as may be required by the Secretary), to share and compare information with, and to receive information from, other data bases and information comparison services, in order to obtain (or provide) information necessary to en- able the State agency (or the Secretary or other State or Federal agencies) to carry out this part, subject to section 6103 of the Inter- nal Revenue Code of 1986. Such information comparison activities shall include the following: ”(1) FEDERAL CASE REGISTRY OF CHILD SUPPORT ORDERS.\u2014 Furnishing to the Federal Case Registry of Child Support Or- ders established under section 453(h) (and update as necessary, with information including notice of expiration of orders) the minimum amount of information on child support cases re- corded in the State case registry that is necessary to operate the registry (as specified by the Secretary in regulations). ”(2) FEDERAL PARENT LOCATOR SERVICE.\u2014Exchanging in- formation with the Federal Parent Locator Service for the pur- poses specified in section 453. 107 ”(3) TEMPORARY FAMILY ASSISTANCE AND MEDICAID AGEN- CIES.\u2014Exchanging information with State agencies (of the State and of other States) administering programs funded under part A, programs operated under a State plan approved under title XIX, and other programs designated by the Sec- retary, as necessary to perform State agency responsibilities under this part and under such programs. ”(4) INTRASTATE AND INTERSTATE INFORMATION COMPARI- SONS.\u2014Exchanging information with other agencies of the State, agencies of other States, and interstate information net- works, as necessary and appropriate to carry out (or assist other States to carry out) the purposes of this part.”. SEC. 312. COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS. (a) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b) and 303(a) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (25); (2) by striking the period at the end of paragraph (26) and inserting ”; and”; and (3) by adding after paragraph (26) the following new para- graph: ”(27) provide that, on and after October 1, 1998, the State agency will\u2014 ”(A) operate a State disbursement unit in accordance with section 454B; and ”(B) have sufficient State staff (consisting of State em- ployees) and (at State option) contractors reporting directly to the State agency to\u2014 ”(i) monitor and enforce support collections through the unit in cases being enforced by the State pursuant to section 454(4) (including carrying out the automated data processing responsibilities described in section 454A(g)); and ”(ii) take the actions described in section 466(c)(1) in appropriate cases.”. (b) ESTABLISHMENT OF STATE DISBURSEMENT UNIT.\u2014Part D of title IV (42 U.S.C. 651 669), as amended by section 344(a)(2) of this Act, is amended by inserting after section 454A the following new section: ”SEC. 454B. COLLECTION AND DISBURSEMENT OF SUPPORT PAY- MENTS. ”(a) STATE DISBURSEMENT UNIT.\u2014 ”(1) IN GENERAL.\u2014In order for a State to meet the require- ments of this section, the State agency must establish and oper- ate a unit (which shall be known as the ‘State disbursement unit’) for the collection and disbursement of payments under support orders\u2014 ”(A) in all cases being enforced by the State pursuant to section 454(4); and ”(B) in all cases not being enforced by the State under this part in which the support order is initially issued in the State on or after January 1, 1994, and in which the in- come of the noncustodial parent are subject to withholding pursuant to section 466(a)(8)(B). 108 ”(2) OPERATION.\u2014The State disbursement unit shall be op- erated\u2014 ”(A) directly by the State agency (or 2 or more State agencies under a regional cooperative agreement), or (to the extent appropriate) by a contractor responsible directly to the State agency; and ”(B) except in cases described in paragraph (1)(B), in coordination with the automated system established by the State pursuant to section 454A. ”(3) LINKING OF LOCAL DISBURSEMENT UNITS.\u2014The State disbursement unit may be established by linking local disburse- ment units through an automated information network, subject to this section, if the Secretary agrees that the system will not cost more nor take more time to establish or operate than a cen- tralized system. In addition, employers shall be given 1 location to which income withholding is sent. ”(b) REQUIRED PROCEDURES.\u2014The State disbursement unit shall use automated procedures, electronic processes, and computer- driven technology to the maximum extent feasible, efficient, and eco- nomical, for the collection and disbursement of support payments, including procedures\u2014 ”(1) for receipt of payments from parents, employers, and other States, and for disbursements to custodial parents and other obligees, the State agency, and the agencies of other States; ”(2) for accurate identification of payments; ”(3) to ensure prompt disbursement of the custodial parent’s share of any payment; and ”(4) to furnish to any parent, upon request, timely informa- tion on the current status of support payments under an order requiring payments to be made by or to the parent, except that in cases described in subsection (a)(1)(B), the State disburse- ment unit shall not be required to convert and maintain in automated form records of payments kept pursuant to section 466(a)(8)(B)(iii) before the effective date of this section. ”(c) TIMING OF DISBURSEMENTS.\u2014 ”(1) IN GENERAL.\u2014Except as provided in paragraph (2), the State disbursement unit shall distribute all amounts payable under section 457(a) within 2 business days after receipt from the employer or other source of periodic income, if sufficient in- formation identifying the payee is provided. ”(2) PERMISSIVE RETENTION OF ARREARAGES.\u2014The State disbursement unit may delay the distribution of collections to- ward arrearages until the resolution of any timely appeal with respect to such arrearages. ”(d) BUSINESS DAY DEFINED.\u2014As used in this section, the term ‘business day’ means a day on which State offices are open for regu- lar business.”. (c) USE OF AUTOMATED SYSTEM.\u2014Section 454A, as added by section 344(a)(2) and as amended by section 311 of this Act, is amended by adding at the end the following new subsection: ”(g) COLLECTION AND DISTRIBUTION OF SUPPORT PAYMENTS.\u2014 ”(1) IN GENERAL.\u2014The State shall use the automated sys- tem required by this section, to the maximum extent feasible, to 109 assist and facilitate the collection and disbursement of support payments through the State disbursement unit operated under section 454B, through the performance of functions, including, at a minimum\u2014 ”(A) transmission of orders and notices to employers (and other debtors) for the withholding of income\u2014 ”(i) within 2 business days after receipt of notice of, and the income source subject to, such withholding from a court, another State, an employer, the Federal Parent Locator Service, or another source recognized by the State; and ”(ii) using uniform formats prescribed by the Sec- retary; ”(B) ongoing monitoring to promptly identify failures to make timely payment of support; and ”(C) automatic use of enforcement procedures (includ- ing procedures authorized pursuant to section 466(c)) if payments are not timely made. ”(2) BUSINESS DAY DEFINED.\u2014As used in paragraph (1), the term ‘business day’ means a day on which State offices are open for regular business.”. (d) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall become effective on Oc- tober 1, 1998. (2) LIMITED EXCEPTION TO UNIT HANDLING PAYMENTS.\u2014 Notwithstanding section 454B(b)(1) of the Social Security Act, as added by this section, any State which, as of the date of the enactment of this Act, processes the receipt of child support pay- ments through local courts may, at the option of the State, con- tinue to process through September 30, 1999, such payments through such courts as processed such payments on or before such date of enactment. SEC. 313. STATE DIRECTORY OF NEW HIRES. (a) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a) and 312(a) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (26); (2) by striking the period at the end of paragraph (27) and inserting ”; and”; and (3) by adding after paragraph (27) the following new para- graph: ”(28) provide that, on and after October 1, 1997, the State will operate a State Directory of New Hires in accordance with section 453A.”. (b) STATE DIRECTORY OF NEW HIRES.\u2014Part D of title IV (42 U.S.C. 651 669) is amended by inserting after section 453 the fol- lowing new section: ”SEC. 453A. STATE DIRECTORY OF NEW HIRES. ”(a) ESTABLISHMENT.\u2014 ”(1) IN GENERAL.\u2014 ”(A) REQUIREMENT FOR STATES THAT HAVE NO DIREC- TORY.\u2014Except as provided in subparagraph (B), not later 110 than October 1, 1997, each State shall establish an auto- mated directory (to be known as the ‘State Directory of New Hires’) which shall contain information supplied in accord- ance with subsection (b) by employers on each newly hired employee. ”(B) STATES WITH NEW HIRE REPORTING IN EXIST- ENCE.\u2014A State which has a new hire reporting law in ex- istence on the date of the enactment of this section may con- tinue to operate under the State law, but the State must meet the requirements of subsection (g)(2) not later than October 1, 1997, and the requirements of this section (other than subsection (g)(2)) not later than October 1, 1998. ”(2) DEFINITIONS.\u2014As used in this section: ”(A) EMPLOYEE.\u2014The term ’employee’\u2014 ”(i) means an individual who is an employee with- in the meaning of chapter 24 of the Internal Revenue Code of 1986; and ”(ii) does not include an employee of a Federal or State agency performing intelligence or counterintel- ligence functions, if the head of such agency has deter- mined that reporting pursuant to paragraph (1) with respect to the employee could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission. ”(B) EMPLOYER.\u2014 ”(i) IN GENERAL.\u2014The term ’employer’ has the meaning given such term in section 3401(d) of the In- ternal Revenue Code of 1986 and includes any govern- mental entity and any labor organization. ”(ii) LABOR ORGANIZATION.\u2014The term ‘labor orga- nization’ shall have the meaning given such term in section 2(5) of the National Labor Relations Act, and includes any entity (also known as a ‘hiring hall’) which is used by the organization and an employer to carry out requirements described in section 8(f)(3) of such Act of an agreement between the organization and the employer. ”(b) EMPLOYER INFORMATION.\u2014 ”(1) REPORTING REQUIREMENT.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subpara- graphs (B) and (C), each employer shall furnish to the Di- rectory of New Hires of the State in which a newly hired employee works, a report that contains the name, address, and social security number of the employee, and the name and address of, and identifying number assigned under section 6109 of the Internal Revenue Code of 1986 to, the employer. ”(B) MULTISTATE EMPLOYERS.\u2014An employer that has employees who are employed in 2 or more States and that transmits reports magnetically or electronically may comply with subparagraph (A) by designating 1 State in which such employer has employees to which the employer will transmit the report described in subparagraph (A), and transmitting such report to such State. Any employer that 111 transmits reports pursuant to this subparagraph shall no- tify the Secretary in writing as to which State such em- ployer designates for the purpose of sending reports. ”(C) FEDERAL GOVERNMENT EMPLOYERS.\u2014Any depart- ment, agency, or instrumentality of the United States shall comply with subparagraph (A) by transmitting the report described in subparagraph (A) to the National Directory of New Hires established pursuant to section 453. ”(2) TIMING OF REPORT.\u2014Each State may provide the time within which the report required by paragraph (1) shall be made with respect to an employee, but such report shall be made\u2014 ”(A) not later than 20 days after the date the employer hires the employee; or ”(B) in the case of an employer transmitting reports magnetically or electronically, by 2 monthly transmissions (if necessary) not less than 12 days nor more than 16 days apart. ”(c) REPORTING FORMAT AND METHOD.\u2014Each report required by subsection (b) shall be made on a W 4 form or, at the option of the employer, an equivalent form, and may be transmitted by 1st class mail, magnetically, or electronically. ”(d) CIVIL MONEY PENALTIES ON NONCOMPLYING EMPLOYERS.\u2014 The State shall have the option to set a State civil money penalty which shall be less than\u2014 ”(1) $25; or ”(2) $500 if, under State law, the failure is the result of a conspiracy between the employer and the employee to not supply the required report or to supply a false or incomplete report. ”(e) ENTRY OF EMPLOYER INFORMATION.\u2014Information shall be entered into the data base maintained by the State Directory of New Hires within 5 business days of receipt from an employer pursuant to subsection (b). ”(f) INFORMATION COMPARISONS.\u2014 ”(1) IN GENERAL.\u2014Not later than May 1, 1998, an agency designated by the State shall, directly or by contract, conduct automated comparisons of the social security numbers reported by employers pursuant to subsection (b) and the social security numbers appearing in the records of the State case registry for cases being enforced under the State plan. ”(2) NOTICE OF MATCH.\u2014When an information comparison conducted under paragraph (1) reveals a match with respect to the social security number of an individual required to provide support under a support order, the State Directory of New Hires shall provide the agency administering the State plan approved under this part of the appropriate State with the name, ad- dress, and social security number of the employee to whom the social security number is assigned, and the name and address of, and identifying number assigned under section 6109 of the Internal Revenue Code of 1986 to, the employer. ”(g) TRANSMISSION OF INFORMATION.\u2014 ”(1) TRANSMISSION OF WAGE WITHHOLDING NOTICES TO EM- PLOYERS.\u2014Within 2 business days after the date information regarding a newly hired employee is entered into the State Di- 112 rectory of New Hires, the State agency enforcing the employee’s child support obligation shall transmit a notice to the employer of the employee directing the employer to withhold from the in- come of the employee an amount equal to the monthly (or other periodic) child support obligation (including any past due sup- port obligation) of the employee, unless the employee’s income is not subject to withholding pursuant to section 466(b)(3). ”(2) TRANSMISSIONS TO THE NATIONAL DIRECTORY OF NEW HIRES.\u2014 ”(A) NEW HIRE INFORMATION.\u2014Within 3 business days after the date information regarding a newly hired em- ployee is entered into the State Directory of New Hires, the State Directory of New Hires shall furnish the information to the National Directory of New Hires. ”(B) WAGE AND UNEMPLOYMENT COMPENSATION INFOR- MATION.\u2014The State Directory of New Hires shall, on a quarterly basis, furnish to the National Directory of New Hires extracts of the reports required under section 303(a)(6) to be made to the Secretary of Labor concerning the wages and unemployment compensation paid to indi- viduals, by such dates, in such format, and containing such information as the Secretary of Health and Human Serv- ices shall specify in regulations. ”(3) BUSINESS DAY DEFINED.\u2014As used in this subsection, the term ‘business day’ means a day on which State offices are open for regular business. ”(h) OTHER USES OF NEW HIRE INFORMATION.\u2014 ”(1) LOCATION OF CHILD SUPPORT OBLIGORS.\u2014The agency administering the State plan approved under this part shall use information received pursuant to subsection (f)(2) to locate individuals for purposes of establishing paternity and establish- ing, modifying, and enforcing child support obligations, and may disclose such information to any agent of the agency that is under contract with the agency to carry out such purposes. ”(2) VERIFICATION OF ELIGIBILITY FOR CERTAIN PRO- GRAMS.\u2014A State agency responsible for administering a pro- gram specified in section 1137(b) shall have access to informa- tion reported by employers pursuant to subsection (b) of this section for purposes of verifying eligibility for the program. ”(3) ADMINISTRATION OF EMPLOYMENT SECURITY AND WORK- ERS’ COMPENSATION.\u2014State agencies operating employment se- curity and workers’ compensation programs shall have access to information reported by employers pursuant to subsection (b) for the purposes of administering such programs.”. (c) QUARTERLY WAGE REPORTING.\u2014Section 1137(a)(3) (42 U.S.C. 1320b 7(a)(3)) is amended\u2014 (1) by inserting ”(including State and local governmental entities and labor organizations (as defined in section 453A(a)(2)(B)(iii))” after ”employers”; and (2) by inserting ”, and except that no report shall be filed with respect to an employee of a State or local agency perform- ing intelligence or counterintelligence functions, if the head of such agency has determined that filing such a report could en- 113 danger the safety of the employee or compromise an ongoing in- vestigation or intelligence mission” after ”paragraph (2)”. (d) DISCLOSURE TO CERTAIN AGENTS.\u2014Section 303(e) (42 U.S.C. 503(e)) is amended by adding at the end the following: ”(5) A State or local child support enforcement agency may dis- close to any agent of the agency that is under contract with the agency to carry out the purposes described in paragraph (1)(B) wage information that is disclosed to an officer or employee of the agency under paragraph (1)(A). Any agent of a State or local child support agency that receives wage information under this paragraph shall comply with the safeguards established pursuant to paragraph (1)(B).”. SEC. 314. AMENDMENTS CONCERNING INCOME WITHHOLDING. (a) MANDATORY INCOME WITHHOLDING.\u2014 (1) IN GENERAL.\u2014Section 466(a)(1) (42 U.S.C. 666(a)(1)) is amended to read as follows: ”(1)(A) Procedures described in subsection (b) for the with- holding from income of amounts payable as support in cases subject to enforcement under the State plan. ”(B) Procedures under which the income of a person with a support obligation imposed by a support order issued (or modified) in the State before October 1, 1996, if not otherwise subject to withholding under subsection (b), shall become sub- ject to withholding as provided in subsection (b) if arrearages occur, without the need for a judicial or administrative hear- ing.”. (2) CONFORMING AMENDMENTS.\u2014 (A) Section 466(b) (42 U.S.C. 666(b)) is amended in the matter preceding paragraph (1), by striking ”subsection (a)(1)” and inserting ”subsection (a)(1)(A)”. (B) Section 466(b)(4) (42 U.S.C. 666(b)(4)) is amended to read as follows: ”(4)(A) Such withholding must be carried out in full com- pliance with all procedural due process requirements of the State, and the State must send notice to each noncustodial par- ent to whom paragraph (1) applies\u2014 ”(i) that the withholding has commenced; and ”(ii) of the procedures to follow if the noncustodial par- ent desires to contest such withholding on the grounds that the withholding or the amount withheld is improper due to a mistake of fact. ”(B) The notice under subparagraph (A) of this paragraph shall include the information provided to the employer under paragraph (6)(A).”. (C) Section 466(b)(5) (42 U.S.C. 666(b)(5)) is amended by striking all that follows ”administered by” and inserting ”the State through the State disbursement unit established pursuant to section 454B, in accordance with the require- ments of section 454B.”. (D) Section 466(b)(6)(A) (42 U.S.C. 666(b)(6)(A)) is amended\u2014 (i) in clause (i), by striking ”to the appropriate agency” and all that follows and inserting ”to the State disbursement unit within 7 business days after the 114 date the amount would (but for this subsection) have been paid or credited to the employee, for distribution in accordance with this part. The employer shall with- hold funds as directed in the notice, except that when an employer receives an income withholding order is- sued by another State, the employer shall apply the in- come withholding law of the state of the obligor’s prin- cipal place of employment in determining\u2014 ”(I) the employer’s fee for processing an income with- holding order; ”(II) the maximum amount permitted to be withheld from the obligor’s income; ”(III) the time periods within which the employer must implement the income withholding order and forward the child support payment; ”(IV) the priorities for withholding and allocating in- come withheld for multiple child support obligees; and ”(V) any withholding terms or conditions not specified in the order. An employer who complies with an income withholding notice that is regular on its face shall not be subject to civil liability to any individual or agency for conduct in compliance with the notice.”; (ii) in clause (ii), by inserting ”be in a standard format prescribed by the Secretary, and” after ”shall”; and (iii) by adding at the end the following new clause: ”(iii) As used in this subparagraph, the term ‘business day’ means a day on which State offices are open for regular busi- ness.”. (E) Section 466(b)(6)(D) (42 U.S.C. 666(b)(6)(D)) is amended by striking ”any employer” and all that follows and inserting ”any employer who\u2014 ”(i) discharges from employment, refuses to employ, or takes disciplinary action against any noncustodial parent subject to income withholding required by this subsection because of the existence of such withholding and the obliga- tions or additional obligations which it imposes upon the employer; or ”(ii) fails to withhold support from income or to pay such amounts to the State disbursement unit in accordance with this subsection.”. (F) Section 466(b) (42 U.S.C. 666(b)) is amended by adding at the end the following new paragraph: ”(11) Procedures under which the agency administering the State plan approved under this part may execute a withholding order without advance notice to the obligor, including issuing the withholding order through electronic means.”. (b) DEFINITION OF INCOME.\u2014 (1) IN GENERAL.\u2014Section 466(b)(8) (42 U.S.C. 666(b)(8)) is amended to read as follows: ”(8) For purposes of subsection (a) and this subsection, the term ‘income’ means any periodic form of payment due to an in- dividual, regardless of source, including wages, salaries, com- 115 missions, bonuses, worker’s compensation, disability, payments pursuant to a pension or retirement program, and interest.”. (2) CONFORMING AMENDMENTS.\u2014 (A) Subsections (a)(8)(A), (a)(8)(B)(i), (b)(3)(A), (b)(3)(B), (b)(6)(A)(i), and (b)(6)(C), and (b)(7) of section 466 (42 U.S.C. 666(a)(8)(A), (a)(8)(B)(i), (b)(3)(A), (b)(3)(B), (b)(6)(A)(i), and (b)(6)(C), and (b)(7)) are each amended by striking ”wages” each place such term appears and insert- ing ”income”. (B) Section 466(b)(1) (42 U.S.C. 666(b)(1)) is amended by striking ”wages (as defined by the State for purposes of this section)” and inserting ”income”. (c) CONFORMING AMENDMENT.\u2014Section 466(c) (42 U.S.C. 666(c)) is repealed. SEC. 315. LOCATOR INFORMATION FROM INTERSTATE NETWORKS. Section 466(a) (42 U.S.C. 666(a)) is amended by inserting after paragraph (11) the following new paragraph: ”(12) LOCATOR INFORMATION FROM INTERSTATE NET- WORKS.\u2014Procedures to ensure that all Federal and State agen- cies conducting activities under this part have access to any sys- tem used by the State to locate an individual for purposes relat- ing to motor vehicles or law enforcement.”. SEC. 316. EXPANSION OF THE FEDERAL PARENT LOCATOR SERVICE. (a) EXPANDED AUTHORITY TO LOCATE INDIVIDUALS AND AS- SETS.\u2014Section 453 (42 U.S.C. 653) is amended\u2014 (1) in subsection (a), by striking all that follows ”subsection (c))” and inserting ”, for the purpose of establishing parentage, establishing, setting the amount of, modifying, or enforcing child support obligations, or enforcing child custody or visita- tion orders\u2014 ”(1) information on, or facilitating the discovery of, the lo- cation of any individual\u2014 ”(A) who is under an obligation to pay child support or provide child custody or visitation rights; ”(B) against whom such an obligation is sought; ”(C) to whom such an obligation is owed, including the individual’s social security number (or numbers), most recent address, and the name, address, and employer identification number of the individual’s employer; ”(2) information on the individual’s wages (or other income) from, and benefits of, employment (including rights to or enroll- ment in group health care coverage); and ”(3) information on the type, status, location, and amount of any assets of, or debts owed by or to, any such individual.”; and (2) in subsection (b)\u2014 (A) in the matter preceding paragraph (1), by striking ”social security” and all that follows through ”absent par- ent” and inserting ”information described in subsection (a)”; and (B) in the flush paragraph at the end, by adding the following: ”No information shall be disclosed to any person if the State has notified the Secretary that the State has 116 reasonable evidence of domestic violence or child abuse and the disclosure of such information could be harmful to the custodial parent or the child of such parent. Information received or transmitted pursuant to this section shall be subject to the safeguard provisions contained in section 454(26).”. (b) AUTHORIZED PERSON FOR INFORMATION REGARDING VISITA- TION RIGHTS.\u2014Section 453(c) (42 U.S.C. 653(c)) is amended\u2014 (1) in paragraph (1), by striking ”support” and inserting ”support or to seek to enforce orders providing child custody or visitation rights”; and (2) in paragraph (2), by striking ”, or any agent of such court; and” and inserting ”or to issue an order against a resi- dent parent for child custody or visitation rights, or any agent of such court;”. (c) REIMBURSEMENT FOR INFORMATION FROM FEDERAL AGEN- CIES.\u2014Section 453(e)(2) (42 U.S.C. 653(e)(2)) is amended in the 4th sentence by inserting ”in an amount which the Secretary determines to be reasonable payment for the information exchange (which amount shall not include payment for the costs of obtaining, compil- ing, or maintaining the information)” before the period. (d) REIMBURSEMENT FOR REPORTS BY STATE AGENCIES.\u2014Sec- tion 453 (42 U.S.C. 653) is amended by adding at the end the fol- lowing new subsection: ”(g) REIMBURSEMENT FOR REPORTS BY STATE AGENCIES.\u2014The Secretary may reimburse Federal and State agencies for the costs incurred by such entities in furnishing information requested by the Secretary under this section in an amount which the Secretary de- termines to be reasonable payment for the information exchange (which amount shall not include payment for the costs of obtaining, compiling, or maintaining the information).”. (e) CONFORMING AMENDMENTS.\u2014 (1) Sections 452(a)(9), 453(a), 453(b), 463(a), 463(e), and 463(f) (42 U.S.C. 652(a)(9), 653(a), 653(b), 663(a), 663(e), and 663(f)) are each amended by inserting ”Federal” before ”Parent” each place such term appears. (2) Section 453 (42 U.S.C. 653) is amended in the heading by adding ”FEDERAL” before ”PARENT”. (f) NEW COMPONENTS.\u2014Section 453 (42 U.S.C. 653), as amend- ed by subsection (d) of this section, is amended by adding at the end the following new subsections: ”(h) FEDERAL CASE REGISTRY OF CHILD SUPPORT ORDERS.\u2014 ”(1) IN GENERAL.\u2014Not later than October 1, 1998, in order to assist States in administering programs under State plans approved under this part and programs funded under part A, and for the other purposes specified in this section, the Sec- retary shall establish and maintain in the Federal Parent Loca- tor Service an automated registry (which shall be known as the ‘Federal Case Registry of Child Support Orders’), which shall contain abstracts of support orders and other information de- scribed in paragraph (2) with respect to each case in each State case registry maintained pursuant to section 454A(e), as fur- nished (and regularly updated), pursuant to section 454A(f), by State agencies administering programs under this part. 117 ”(2) CASE INFORMATION.\u2014The information referred to in paragraph (1) with respect to a case shall be such information as the Secretary may specify in regulations (including the names, social security numbers or other uniform identification numbers, and State case identification numbers) to identify the individuals who owe or are owed support (or with respect to or on behalf of whom support obligations are sought to be estab- lished), and the State or States which have the case. ”(i) NATIONAL DIRECTORY OF NEW HIRES.\u2014 ”(1) IN GENERAL.\u2014In order to assist States in administer- ing programs under State plans approved under this part and programs funded under part A, and for the other purposes spec- ified in this section, the Secretary shall, not later than October 1, 1997, establish and maintain in the Federal Parent Locator Service an automated directory to be known as the National Di- rectory of New Hires, which shall contain the information sup- plied pursuant to section 453A(g)(2). ”(2) ENTRY OF DATA.\u2014Information shall be entered into the data base maintained by the National Directory of New Hires within 2 business days of receipt pursuant to section 453A(g)(2). ”(3) ADMINISTRATION OF FEDERAL TAX LAWS.\u2014The Sec- retary of the Treasury shall have access to the information in the National Directory of New Hires for purposes of administer- ing section 32 of the Internal Revenue Code of 1986, or the ad- vance payment of the earned income tax credit under section 3507 of such Code, and verifying a claim with respect to em- ployment in a tax return. ”(4) LIST OF MULTISTATE EMPLOYERS.\u2014The Secretary shall maintain within the National Directory of New Hires a list of multistate employers that report information regarding newly hired employees pursuant to section 453A(b)(1)(B), and the State which each such employer has designated to receive such information. ”(j) INFORMATION COMPARISONS AND OTHER DISCLOSURES.\u2014 ”(1) VERIFICATION BY SOCIAL SECURITY ADMINISTRATION.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall transmit infor- mation on individuals and employers maintained under this section to the Social Security Administration to the ex- tent necessary for verification in accordance with subpara- graph (B). ”(B) VERIFICATION BY SSA.\u2014The Social Security Ad- ministration shall verify the accuracy of, correct, or supply to the extent possible, and report to the Secretary, the fol- lowing information supplied by the Secretary pursuant to subparagraph (A): ”(i) The name, social security number, and birth date of each such individual. ”(ii) The employer identification number of each such employer. ”(2) INFORMATION COMPARISONS.\u2014For the purpose of locat- ing individuals in a paternity establishment case or a case in- volving the establishment, modification, or enforcement of a support order, the Secretary shall\u2014 118 ”(A) compare information in the National Directory of New Hires against information in the support case ab- stracts in the Federal Case Registry of Child Support Or- ders not less often than every 2 business days; and ”(B) within 2 business days after such a comparison re- veals a match with respect to an individual, report the in- formation to the State agency responsible for the case. ”(3) INFORMATION COMPARISONS AND DISCLOSURES OF IN- FORMATION IN ALL REGISTRIES FOR TITLE IV PROGRAM PUR- POSES.\u2014To the extent and with the frequency that the Secretary determines to be effective in assisting States to carry out their responsibilities under programs operated under this part and programs funded under part A, the Secretary shall\u2014 ”(A) compare the information in each component of the Federal Parent Locator Service maintained under this sec- tion against the information in each other such component (other than the comparison required by paragraph (2)), and report instances in which such a comparison reveals a match with respect to an individual to State agencies oper- ating such programs; and ”(B) disclose information in such registries to such State agencies. ”(4) PROVISION OF NEW HIRE INFORMATION TO THE SOCIAL SECURITY ADMINISTRATION.\u2014The National Directory of New Hires shall provide the Commissioner of Social Security with all information in the National Directory. ”(5) RESEARCH.\u2014The Secretary may provide access to infor- mation reported by employers pursuant to section 453A(b) for research purposes found by the Secretary to be likely to contrib- ute to achieving the purposes of part A or this part, but without personal identifiers. ”(k) FEES.\u2014 ”(1) FOR SSA VERIFICATION.\u2014The Secretary shall reimburse the Commissioner of Social Security, at a rate negotiated be- tween the Secretary and the Commissioner, for the costs in- curred by the Commissioner in performing the verification serv- ices described in subsection (j). ”(2) FOR INFORMATION FROM STATE DIRECTORIES OF NEW HIRES.\u2014The Secretary shall reimburse costs incurred by State directories of new hires in furnishing information as required by subsection (j)(3), at rates which the Secretary determines to be reasonable (which rates shall not include payment for the costs of obtaining, compiling, or maintaining such information). ”(3) FOR INFORMATION FURNISHED TO STATE AND FEDERAL AGENCIES.\u2014A State or Federal agency that receives information from the Secretary pursuant to this section shall reimburse the Secretary for costs incurred by the Secretary in furnishing the information, at rates which the Secretary determines to be rea- sonable (which rates shall include payment for the costs of ob- taining, verifying, maintaining, and comparing the informa- tion). ”(l) RESTRICTION ON DISCLOSURE AND USE.\u2014Information in the Federal Parent Locator Service, and information resulting from comparisons using such information, shall not be used or disclosed 119 except as expressly provided in this section, subject to section 6103 of the Internal Revenue Code of 1986. ”(m) INFORMATION INTEGRITY AND SECURITY.\u2014The Secretary shall establish and implement safeguards with respect to the enti- ties established under this section designed to\u2014 ”(1) ensure the accuracy and completeness of information in the Federal Parent Locator Service; and ”(2) restrict access to confidential information in the Fed- eral Parent Locator Service to authorized persons, and restrict use of such information to authorized purposes. ”(n) FEDERAL GOVERNMENT REPORTING.\u2014Each department, agency, and instrumentality of the United States shall on a quar- terly basis report to the Federal Parent Locator Service the name and social security number of each employee and the wages paid to the employee during the previous quarter, except that such a report shall not be filed with respect to an employee of a department, agen- cy, or instrumentality performing intelligence or counterintelligence functions, if the head of such department, agency, or instrumental- ity has determined that filing such a report could endanger the safe- ty of the employee or compromise an ongoing investigation or intel- ligence mission.”. (g) CONFORMING AMENDMENTS.\u2014 (1) TO PART D OF TITLE IV OF THE SOCIAL SECURITY ACT.\u2014 (A) Section 454(8)(B) (42 U.S.C. 654(8)(B)) is amended to read as follows: ”(B) the Federal Parent Locator Service established under section 453;”. (B) Section 454(13) (42 U.S.C. 654(13)) is amended by inserting ”and provide that information requests by parents who are residents of other States be treated with the same priority as requests by parents who are residents of the State submitting the plan” before the semicolon. (2) TO FEDERAL UNEMPLOYMENT TAX ACT.\u2014Section 3304(a)(16) of the Internal Revenue Code of 1986 is amended\u2014 (A) by striking ”Secretary of Health, Education, and Welfare” each place such term appears and inserting ”Sec- retary of Health and Human Services”; (B) in subparagraph (B), by striking ”such informa- tion” and all that follows and inserting ”information fur- nished under subparagraph (A) or (B) is used only for the purposes authorized under such subparagraph;”; (C) by striking ”and” at the end of subparagraph (A); (D) by redesignating subparagraph (B) as subpara- graph (C); and (E) by inserting after subparagraph (A) the following new subparagraph: ”(B) wage and unemployment compensation information contained in the records of such agency shall be furnished to the Secretary of Health and Human Services (in accordance with regulations promulgated by such Secretary) as necessary for the purposes of the National Directory of New Hires estab- lished under section 453(i) of the Social Security Act, and”. 120 (3) TO STATE GRANT PROGRAM UNDER TITLE III OF THE SO- CIAL SECURITY ACT.\u2014Subsection (h) of section 303 (42 U.S.C. 503) is amended to read as follows: ”(h)(1) The State agency charged with the administration of the State law shall, on a reimbursable basis\u2014 ”(A) disclose quarterly, to the Secretary of Health and Human Services, wage and claim information, as required pur- suant to section 453(i)(1), contained in the records of such agen- cy; ”(B) ensure that information provided pursuant to subpara- graph (A) meets such standards relating to correctness and ver- ification as the Secretary of Health and Human Services, with the concurrence of the Secretary of Labor, may find necessary; and ”(C) establish such safeguards as the Secretary of Labor de- termines are necessary to insure that information disclosed under subparagraph (A) is used only for purposes of section 453(i)(1) in carrying out the child support enforcement program under title IV. ”(2) Whenever the Secretary of Labor, after reasonable notice and opportunity for hearing to the State agency charged with the administration of the State law, finds that there is a failure to com- ply substantially with the requirements of paragraph (1), the Sec- retary of Labor shall notify such State agency that further payments will not be made to the State until the Secretary of Labor is satis- fied that there is no longer any such failure. Until the Secretary of Labor is so satisfied, the Secretary shall make no future certification to the Secretary of the Treasury with respect to the State. ”(3) For purposes of this subsection\u2014 ”(A) the term ‘wage information’ means information regard- ing wages paid to an individual, the social security account number of such individual, and the name, address, State, and the Federal employer identification number of the employer pay- ing such wages to such individual; and ”(B) the term ‘claim information’ means information re- garding whether an individual is receiving, has received, or has made application for, unemployment compensation, the amount of any such compensation being received (or to be received by such individual), and the individual’s current (or most recent) home address.”. (4) DISCLOSURE OF CERTAIN INFORMATION TO AGENTS OF CHILD SUPPORT ENFORCEMENT AGENCIES.\u2014 (A) IN GENERAL.\u2014Paragraph (6) of section 6103(l) of the Internal Revenue Code of 1986 (relating to disclosure of return information to Federal, State, and local child sup- port enforcement agencies) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: ”(B) DISCLOSURE TO CERTAIN AGENTS.\u2014The following information disclosed to any child support enforcement agency under subparagraph (A) with respect to any individ- ual with respect to whom child support obligations are sought to be established or enforced may be disclosed by such agency to any agent of such agency which is under 121 contract with such agency to carry out the purposes de- scribed in subparagraph (C): ”(i) The address and social security account num- ber (or numbers) of such individual. ”(ii) The amount of any reduction under section 6402(c) (relating to offset of past-due support against overpayments) in any overpayment otherwise payable to such individual.” (B) CONFORMING AMENDMENTS.\u2014 (i) Paragraph (3) of section 6103(a) of such Code is amended by striking ”(l)(12)” and inserting ”para- graph (6) or (12) of subsection (l)”. (ii) Subparagraph (C) of section 6103(l)(6) of such Code, as redesignated by subsection (a), is amended to read as follows: ”(C) RESTRICTION ON DISCLOSURE.\u2014Information may be disclosed under this paragraph only for purposes of, and to the extent necessary in, establishing and collecting child support obligations from, and locating, individuals owing such obligations.” (iii) The material following subparagraph (F) of section 6103(p)(4) of such Code is amended by striking ”subsection (l)(12)(B)” and inserting ”paragraph (6)(A) or (12)(B) of subsection (l)”. (h) REQUIREMENT FOR COOPERATION.\u2014The Secretary of Labor and the Secretary of Health and Human Services shall work jointly to develop cost-effective and efficient methods of accessing the infor- mation in the various State directories of new hires and the Na- tional Directory of New Hires as established pursuant to the amend- ments made by this subtitle. In developing these methods the Sec- retaries shall take into account the impact, including costs, on the States, and shall also consider the need to insure the proper and au- thorized use of wage record information. SEC. 317. COLLECTION AND USE OF SOCIAL SECURITY NUMBERS FOR USE IN CHILD SUPPORT ENFORCEMENT. Section 466(a) (42 U.S.C. 666(a)), as amended by section 315 of this Act, is amended by inserting after paragraph (12) the following new paragraph: ”(13) RECORDING OF SOCIAL SECURITY NUMBERS IN CERTAIN FAMILY MATTERS.\u2014Procedures requiring that the social security number of\u2014 ”(A) any applicant for a professional license, commer- cial driver’s license, occupational license, or marriage li- cense be recorded on the application; ”(B) any individual who is subject to a divorce decree, support order, or paternity determination or acknowledg- ment be placed in the records relating to the matter; and ”(C) any individual who has died be placed in the records relating to the death and be recorded on the death certificate. For purposes of subparagraph (A), if a State allows the use of a number other than the social security number, the State shall so advise any applicants.”. 122 Subtitle C\u2014Streamlining and Uniformity of Procedures SEC. 321. ADOPTION OF UNIFORM STATE LAWS. Section 466 (42 U.S.C. 666) is amended by adding at the end the following new subsection: ”(f) UNIFORM INTERSTATE FAMILY SUPPORT ACT.\u2014In order to satisfy section 454(20)(A), on and after January 1, 1998, each State must have in effect the Uniform Interstate Family Support Act, as approved by the American Bar Association on February 9, 1993, to- gether with any amendments officially adopted before January 1, 1998 by the National Conference of Commissioners on Uniform State Laws.”. SEC. 322. IMPROVEMENTS TO FULL FAITH AND CREDIT FOR CHILD SUPPORT ORDERS. Section 1738B of title 28, United States Code, is amended\u2014 (1) in subsection (a)(2), by striking ”subsection (e)” and in- serting ”subsections (e), (f), and (i)”; (2) in subsection (b), by inserting after the 2nd undesig- nated paragraph the following: ” ‘child’s home State’ means the State in which a child lived with a parent or a person acting as parent for at least 6 consecutive months immediately preceding the time of filing of a petition or comparable pleading for support and, if a child is less than 6 months old, the State in which the child lived from birth with any of them. A period of temporary absence of any of them is counted as part of the 6-month period.”; (3) in subsection (c), by inserting ”by a court of a State” be- fore ”is made”; (4) in subsection (c)(1), by inserting ”and subsections (e), (f), and (g)” after ”located”; (5) in subsection (d)\u2014 (A) by inserting ”individual” before ”contestant”; and (B) by striking ”subsection (e)” and inserting ”sub- sections (e) and (f)”; (6) in subsection (e), by striking ”make a modification of a child support order with respect to a child that is made” and inserting ”modify a child support order issued”; (7) in subsection (e)(1), by inserting ”pursuant to subsection (i)” before the semicolon; (8) in subsection (e)(2)\u2014 (A) by inserting ”individual” before ”contestant” each place such term appears; and (B) by striking ”to that court’s making the modification and assuming” and inserting ”with the State of continuing, exclusive jurisdiction for a court of another State to modify the order and assume”; (9) by redesignating subsections (f) and (g) as subsections (g) and (h), respectively; (10) by inserting after subsection (e) the following new sub- section: ”(f) RECOGNITION OF CHILD SUPPORT ORDERS.\u2014If 1 or more child support orders have been issued with regard to an obligor and 123 a child, a court shall apply the following rules in determining which order to recognize for purposes of continuing, exclusive juris- diction and enforcement: ”(1) If only 1 court has issued a child support order, the order of that court must be recognized. ”(2) If 2 or more courts have issued child support orders for the same obligor and child, and only 1 of the courts would have continuing, exclusive jurisdiction under this section, the order of that court must be recognized. ”(3) If 2 or more courts have issued child support orders for the same obligor and child, and more than 1 of the courts would have continuing, exclusive jurisdiction under this section, an order issued by a court in the current home State of the child must be recognized, but if an order has not been issued in the current home State of the child, the order most recently issued must be recognized. ”(4) If 2 or more courts have issued child support orders for the same obligor and child, and none of the courts would have continuing, exclusive jurisdiction under this section, a court may issue a child support order, which must be recognized. ”(5) The court that has issued an order recognized under this subsection is the court having continuing, exclusive juris- diction.”; (11) in subsection (g) (as so redesignated)\u2014 (A) by striking ”PRIOR” and inserting ”MODIFIED”; and (B) by striking ”subsection (e)” and inserting ”sub- sections (e) and (f)”; (12) in subsection (h) (as so redesignated)\u2014 (A) in paragraph (2), by inserting ”including the dura- tion of current payments and other obligations of support” before the comma; and (B) in paragraph (3), by inserting ”arrears under” after ”enforce”; and (13) by adding at the end the following new subsection: ”(i) REGISTRATION FOR MODIFICATION.\u2014If there is no individ- ual contestant or child residing in the issuing State, the party or support enforcement agency seeking to modify, or to modify and en- force, a child support order issued in another State shall register that order in a State with jurisdiction over the nonmovant for the purpose of modification.”. SEC. 323. ADMINISTRATIVE ENFORCEMENT IN INTERSTATE CASES. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315 and 317 of this Act, is amended by inserting after paragraph (13) the following new paragraph: ”(14) ADMINISTRATIVE ENFORCEMENT IN INTERSTATE CASES.\u2014Procedures under which\u2014 ”(A)(i) the State shall respond within 5 business days to a request made by another State to enforce a support order; and ”(ii) the term ‘business day’ means a day on which State offices are open for regular business; ”(B) the State may, by electronic or other means, trans- mit to another State a request for assistance in a case in- volving the enforcement of a support order, which request\u2014 124 ”(i) shall include such information as will enable the State to which the request is transmitted to com- pare the information about the case to the information in the data bases of the State; and ”(ii) shall constitute a certification by the request- ing State\u2014 ”(I) of the amount of support under the order the payment of which is in arrears; and ”(II) that the requesting State has complied with all procedural due process requirements ap- plicable to the case; ”(C) if the State provides assistance to another State pursuant to this paragraph with respect to a case, neither State shall consider the case to be transferred to the case- load of such other State; and ”(D) the State shall maintain records of\u2014 ”(i) the number of such requests for assistance re- ceived by the State; ”(ii) the number of cases for which the State col- lected support in response to such a request; and ”(iii) the amount of such collected support.”. SEC. 324. USE OF FORMS IN INTERSTATE ENFORCEMENT. (a) PROMULGATION.\u2014Section 452(a) (42 U.S.C. 652(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (9); (2) by striking the period at the end of paragraph (10) (as amended by section 346(a) of this Act) and inserting ”; and”; and (3) by adding at the end the following new paragraph: ”(11) not later than October 1, 1996, after consulting with the State directors of programs under this part, promulgate forms to be used by States in interstate cases for\u2014 ”(A) collection of child support through income with- holding; ”(B) imposition of liens; and ”(C) administrative subpoenas.”. (b) USE BY STATES.\u2014Section 454(9) (42 U.S.C. 654(9)) is amended\u2014 (1) by striking ”and” at the end of subparagraph (C); (2) by inserting ”and” at the end of subparagraph (D); and (3) by adding at the end the following new subparagraph: ”(E) not later than March 1, 1997, in using the forms promulgated pursuant to section 452(a)(11) for income withholding, imposition of liens, and issuance of adminis- trative subpoenas in interstate child support cases;”. SEC. 325. STATE LAWS PROVIDING EXPEDITED PROCEDURES. (a) STATE LAW REQUIREMENTS.\u2014Section 466 (42 U.S.C. 666), as amended by section 314 of this Act, is amended\u2014 (1) in subsection (a)(2), by striking the first sentence and in- serting the following: ”Expedited administrative and judicial procedures (including the procedures specified in subsection (c)) for establishing paternity and for establishing, modifying, and enforcing support obligations.”; and 125 (2) by inserting after subsection (b) the following new sub- section: ”(c) EXPEDITED PROCEDURES.\u2014The procedures specified in this subsection are the following: ”(1) ADMINISTRATIVE ACTION BY STATE AGENCY.\u2014Proce- dures which give the State agency the authority to take the fol- lowing actions relating to establishment of paternity or to estab- lishment, modification, or enforcement of support orders, with- out the necessity of obtaining an order from any other judicial or administrative tribunal, and to recognize and enforce the au- thority of State agencies of other States to take the following ac- tions: ”(A) GENETIC TESTING.\u2014To order genetic testing for the purpose of paternity establishment as provided in section 466(a)(5). ”(B) FINANCIAL OR OTHER INFORMATION.\u2014To subpoena any financial or other information needed to establish, modify, or enforce a support order, and to impose penalties for failure to respond to such a subpoena. ”(C) RESPONSE TO STATE AGENCY REQUEST.\u2014To re- quire all entities in the State (including for-profit, non- profit, and governmental employers) to provide promptly, in response to a request by the State agency of that or any other State administering a program under this part, infor- mation on the employment, compensation, and benefits of any individual employed by such entity as an employee or contractor, and to sanction failure to respond to any such request. ”(D) ACCESS TO INFORMATION CONTAINED IN CERTAIN RECORDS.\u2014To obtain access, subject to safeguards on pri- vacy and information security, and subject to the nonliabil- ity of entities that afford such access under this subpara- graph, to information contained in the following records (including automated access, in the case of records main- tained in automated data bases): ”(i) Records of other State and local government agencies, including\u2014 ”(I) vital statistics (including records of mar- riage, birth, and divorce); ”(II) State and local tax and revenue records (including information on residence address, em- ployer, income and assets); ”(III) records concerning real and titled per- sonal property; ”(IV) records of occupational and professional licenses, and records concerning the ownership and control of corporations, partnerships, and other business entities; ”(V) employment security records; ”(VI) records of agencies administering public assistance programs; ”(VII) records of the motor vehicle department; and ”(VIII) corrections records. 126 ”(ii) Certain records held by private entities with respect to individuals who owe or are owed support (or against or with respect to whom a support obligation is sought), consisting of\u2014 ”(I) the names and addresses of such individ- uals and the names and addresses of the employ- ers of such individuals, as appearing in customer records of public utilities and cable television com- panies, pursuant to an administrative subpoena authorized by subparagraph (B); and ”(II) information (including information on as- sets and liabilities) on such individuals held by fi- nancial institutions. ”(E) CHANGE IN PAYEE.\u2014In cases in which support is subject to an assignment in order to comply with a require- ment imposed pursuant to part A or section 1912, or to a requirement to pay through the State disbursement unit es- tablished pursuant to section 454B, upon providing notice to obligor and obligee, to direct the obligor or other payor to change the payee to the appropriate government entity. ”(F) INCOME WITHHOLDING.\u2014To order income with- holding in accordance with subsections (a)(1)(A) and (b) of section 466. ”(G) SECURING ASSETS.\u2014In cases in which there is a support arrearage, to secure assets to satisfy the arrearage by\u2014 ”(i) intercepting or seizing periodic or lump-sum payments from\u2014 ”(I) a State or local agency, including unem- ployment compensation, workers’ compensation, and other benefits; and ”(II) judgments, settlements, and lotteries; ”(ii) attaching and seizing assets of the obligor held in financial institutions; ”(iii) attaching public and private retirement funds; and ”(iv) imposing liens in accordance with subsection (a)(4) and, in appropriate cases, to force sale of prop- erty and distribution of proceeds. ”(H) INCREASE MONTHLY PAYMENTS.\u2014For the purpose of securing overdue support, to increase the amount of monthly support payments to include amounts for arrear- ages, subject to such conditions or limitations as the State may provide. Such procedures shall be subject to due process safeguards, in- cluding (as appropriate) requirements for notice, opportunity to contest the action, and opportunity for an appeal on the record to an independent administrative or judicial tribunal. ”(2) SUBSTANTIVE AND PROCEDURAL RULES.\u2014The expedited procedures required under subsection (a)(2) shall include the following rules and authority, applicable with respect to all pro- ceedings to establish paternity or to establish, modify, or enforce support orders: 127 ”(A) LOCATOR INFORMATION; PRESUMPTIONS CONCERN- ING NOTICE.\u2014Procedures under which\u2014 ”(i) each party to any paternity or child support proceeding is required (subject to privacy safeguards) to file with the tribunal and the State case registry upon entry of an order, and to update as appropriate, information on location and identity of the party, in- cluding social security number, residential and mail- ing addresses, telephone number, driver’s license num- ber, and name, address, and telephone number of em- ployer; and ”(ii) in any subsequent child support enforcement action between the parties, upon sufficient showing that diligent effort has been made to ascertain the loca- tion of such a party, the tribunal may deem State due process requirements for notice and service of process to be met with respect to the party, upon delivery of writ- ten notice to the most recent residential or employer ad- dress filed with the tribunal pursuant to clause (i). ”(B) STATEWIDE JURISDICTION.\u2014Procedures under which\u2014 ”(i) the State agency and any administrative or ju- dicial tribunal with authority to hear child support and paternity cases exerts statewide jurisdiction over the parties; and ”(ii) in a State in which orders are issued by courts or administrative tribunals, a case may be transferred between local jurisdictions in the State without need for any additional filing by the petitioner, or service of process upon the respondent, to retain jurisdiction over the parties. ”(3) COORDINATION WITH ERISA.\u2014Notwithstanding sub- section (d) of section 514 of the Employee Retirement Income Se- curity Act of 1974 (relating to effect on other laws), nothing in this subsection shall be construed to alter, amend, modify, in- validate, impair, or supersede subsections (a), (b), and (c) of such section 514 as it applies with respect to any procedure re- ferred to in paragraph (1) and any expedited procedure referred to in paragraph (2), except to the extent that such procedure would be consistent with the requirements of section 206(d)(3) of such Act (relating to qualified domestic relations orders) or the requirements of section 609(a) of such Act (relating to quali- fied medical child support orders) if the reference in such sec- tion 206(d)(3) to a domestic relations order and the reference in such section 609(a) to a medical child support order were a ref- erence to a support order referred to in paragraphs (1) and (2) relating to the same matters, respectively.”. (b) AUTOMATION OF STATE AGENCY FUNCTIONS.\u2014Section 454A, as added by section 344(a)(2) and as amended by sections 311 and 312(c) of this Act, is amended by adding at the end the following new subsection: ”(h) EXPEDITED ADMINISTRATIVE PROCEDURES.\u2014The automated system required by this section shall be used, to the maximum ex- 128 tent feasible, to implement the expedited administrative procedures required by section 466(c).”. Subtitle D\u2014Paternity Establishment SEC. 331. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT. (a) STATE LAWS REQUIRED.\u2014Section 466(a)(5) (42 U.S.C. 666(a)(5)) is amended to read as follows: ”(5) PROCEDURES CONCERNING PATERNITY ESTABLISH- MENT.\u2014 ”(A) ESTABLISHMENT PROCESS AVAILABLE FROM BIRTH UNTIL AGE 18.\u2014 ”(i) Procedures which permit the establishment of the paternity of a child at any time before the child at- tains 18 years of age. ”(ii) As of August 16, 1984, clause (i) shall also apply to a child for whom paternity has not been estab- lished or for whom a paternity action was brought but dismissed because a statute of limitations of less than 18 years was then in effect in the State. ”(B) PROCEDURES CONCERNING GENETIC TESTING.\u2014 ”(i) GENETIC TESTING REQUIRED IN CERTAIN CON- TESTED CASES.\u2014Procedures under which the State is required, in a contested paternity case (unless other- wise barred by State law) to require the child and all other parties (other than individuals found under sec- tion 454(29) to have good cause and other exceptions for refusing to cooperate) to submit to genetic tests upon the request of any such party, if the request is supported by a sworn statement by the party\u2014 ”(I) alleging paternity, and setting forth facts establishing a reasonable possibility of the req- uisite sexual contact between the parties; or ”(II) denying paternity, and setting forth facts establishing a reasonable possibility of the non- existence of sexual contact between the parties. ”(ii) OTHER REQUIREMENTS.\u2014Procedures which re- quire the State agency, in any case in which the agency orders genetic testing\u2014 ”(I) to pay costs of such tests, subject to recoupment (if the State so elects) from the alleged father if paternity is established; and ”(II) to obtain additional testing in any case if an original test result is contested, upon request and advance payment by the contestant. ”(C) VOLUNTARY PATERNITY ACKNOWLEDGMENT.\u2014 ”(i) SIMPLE CIVIL PROCESS.\u2014Procedures for a sim- ple civil process for voluntarily acknowledging pater- nity under which the State must provide that, before a mother and a putative father can sign an acknowledg- ment of paternity, the mother and the putative father must be given notice, orally and in writing, of the al- ternatives to, the legal consequences of, and the rights 129 (including, if 1 parent is a minor, any rights afforded due to minority status) and responsibilities that arise from, signing the acknowledgment. ”(ii) HOSPITAL-BASED PROGRAM.\u2014Such procedures must include a hospital-based program for the vol- untary acknowledgment of paternity focusing on the pe- riod immediately before or after the birth of a child. ”(iii) PATERNITY ESTABLISHMENT SERVICES.\u2014 ”(I) STATE-OFFERED SERVICES.\u2014Such proce- dures must require the State agency responsible for maintaining birth records to offer voluntary pater- nity establishment services. ”(II) REGULATIONS.\u2014 ”(aa) SERVICES OFFERED BY HOSPITALS AND BIRTH RECORD AGENCIES.\u2014The Secretary shall prescribe regulations governing vol- untary paternity establishment services offered by hospitals and birth record agencies. ”(bb) SERVICES OFFERED BY OTHER ENTI- TIES.\u2014The Secretary shall prescribe regula- tions specifying the types of other entities that may offer voluntary paternity establishment services, and governing the provision of such services, which shall include a requirement that such an entity must use the same notice provisions used by, use the same materials used by, provide the personnel providing such services with the same training provided by, and evaluate the provision of such services in the same manner as the provision of such serv- ices is evaluated by, voluntary paternity estab- lishment programs of hospitals and birth record agencies. ”(iv) USE OF PATERNITY ACKNOWLEDGMENT AFFIDA- VIT.\u2014Such procedures must require the State to de- velop and use an affidavit for the voluntary acknowl- edgment of paternity which includes the minimum re- quirements of the affidavit specified by the Secretary under section 452(a)(7) for the voluntary acknowledg- ment of paternity, and to give full faith and credit to such an affidavit signed in any other State according to its procedures. ”(D) STATUS OF SIGNED PATERNITY ACKNOWLEDG- MENT.\u2014 ”(i) INCLUSION IN BIRTH RECORDS.\u2014Procedures under which the name of the father shall be included on the record of birth of the child of unmarried parents only if\u2014 ”(I) the father and mother have signed a vol- untary acknowledgment of paternity; or ”(II) a court or an administrative agency of competent jurisdiction has issued an adjudication of paternity. 130 Nothing in this clause shall preclude a State agency from obtaining an admission of paternity from the fa- ther for submission in a judicial or administrative pro- ceeding, or prohibit the issuance of an order in a judi- cial or administrative proceeding which bases a legal finding of paternity on an admission of paternity by the father and any other additional showing required by State law. ”(ii) LEGAL FINDING OF PATERNITY.\u2014Procedures under which a signed voluntary acknowledgment of pa- ternity is considered a legal finding of paternity, sub- ject to the right of any signatory to rescind the ac- knowledgment within the earlier of\u2014 ”(I) 60 days; or ”(II) the date of an administrative or judicial proceeding relating to the child (including a pro- ceeding to establish a support order) in which the signatory is a party. ”(iii) CONTEST.\u2014Procedures under which, after the 60-day period referred to in clause (ii), a signed vol- untary acknowledgment of paternity may be challenged in court only on the basis of fraud, duress, or material mistake of fact, with the burden of proof upon the chal- lenger, and under which the legal responsibilities (in- cluding child support obligations) of any signatory arising from the acknowledgment may not be sus- pended during the challenge, except for good cause shown. ”(E) BAR ON ACKNOWLEDGMENT RATIFICATION PRO- CEEDINGS.\u2014Procedures under which judicial or adminis- trative proceedings are not required or permitted to ratify an unchallenged acknowledgment of paternity. ”(F) ADMISSIBILITY OF GENETIC TESTING RESULTS.\u2014 Procedures\u2014 ”(i) requiring the admission into evidence, for pur- poses of establishing paternity, of the results of any ge- netic test that is\u2014 ”(I) of a type generally acknowledged as reli- able by accreditation bodies designated by the Sec- retary; and ”(II) performed by a laboratory approved by such an accreditation body; ”(ii) requiring an objection to genetic testing results to be made in writing not later than a specified num- ber of days before any hearing at which the results may be introduced into evidence (or, at State option, not later than a specified number of days after receipt of the results); and ”(iii) making the test results admissible as evidence of paternity without the need for foundation testimony or other proof of authenticity or accuracy, unless objec- tion is made. ”(G) PRESUMPTION OF PATERNITY IN CERTAIN CASES.\u2014 Procedures which create a rebuttable or, at the option of the 131 State, conclusive presumption of paternity upon genetic testing results indicating a threshold probability that the alleged father is the father of the child. ”(H) DEFAULT ORDERS.\u2014Procedures requiring a default order to be entered in a paternity case upon a showing of service of process on the defendant and any additional showing required by State law. ”(I) NO RIGHT TO JURY TRIAL.\u2014Procedures providing that the parties to an action to establish paternity are not entitled to a trial by jury. ”(J) TEMPORARY SUPPORT ORDER BASED ON PROBABLE PATERNITY IN CONTESTED CASES.\u2014Procedures which re- quire that a temporary order be issued, upon motion by a party, requiring the provision of child support pending an administrative or judicial determination of parentage, if there is clear and convincing evidence of paternity (on the basis of genetic tests or other evidence). ”(K) PROOF OF CERTAIN SUPPORT AND PATERNITY ES- TABLISHMENT COSTS.\u2014Procedures under which bills for pregnancy, childbirth, and genetic testing are admissible as evidence without requiring third-party foundation testi- mony, and shall constitute prima facie evidence of amounts incurred for such services or for testing on behalf of the child. ”(L) STANDING OF PUTATIVE FATHERS.\u2014Procedures en- suring that the putative father has a reasonable oppor- tunity to initiate a paternity action. ”(M) FILING OF ACKNOWLEDGMENTS AND ADJUDICA- TIONS IN STATE REGISTRY OF BIRTH RECORDS.\u2014Procedures under which voluntary acknowledgments and adjudica- tions of paternity by judicial or administrative processes are filed with the State registry of birth records for com- parison with information in the State case registry.”. (b) NATIONAL PATERNITY ACKNOWLEDGMENT AFFIDAVIT.\u2014Sec- tion 452(a)(7) (42 U.S.C. 652(a)(7)) is amended by inserting ”, and specify the minimum requirements of an affidavit to be used for the voluntary acknowledgment of paternity which shall include the so- cial security number of each parent and, after consultation with the States, other common elements as determined by such designee” be- fore the semicolon. (c) CONFORMING AMENDMENT.\u2014Section 468 (42 U.S.C. 668) is amended by striking ”a simple civil process for voluntarily acknowl- edging paternity and”. SEC. 332. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT. Section 454(23) (42 U.S.C. 654(23)) is amended by inserting ”and will publicize the availability and encourage the use of proce- dures for voluntary establishment of paternity and child support by means the State deems appropriate” before the semicolon. SEC. 333. COOPERATION BY APPLICANTS FOR AND RECIPIENTS OF PART A ASSISTANCE. Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(a), and 313(a) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (27); 132 (2) by striking the period at the end of paragraph (28) and inserting ”; and”; and (3) by inserting after paragraph (28) the following new paragraph: ”(29) provide that the State agency responsible for admin- istering the State plan\u2014 ”(A) shall make the determination (and redetermina- tion at appropriate intervals) as to whether an individual who has applied for or is receiving assistance under the State program funded under part A of this title or the State program under title XIX is cooperating in good faith with the State in establishing the paternity of, or in establishing, modifying, or enforcing a support order for, any child of the individual by providing the State agency with the name of, and such other information as the State agency may re- quire with respect to, the noncustodial parent of the child, subject to good cause and other exceptions which\u2014 ”(i) shall be defined, taking into account the best interests of the child, and ”(ii) shall be applied in each case, by, at the option of the State, the State agency administer- ing the State program under part A, this part, or title XIX; ”(B) shall require the individual to supply additional necessary information and appear at interviews, hearings, and legal proceedings; ”(C) shall require the individual and the child to sub- mit to genetic tests pursuant to judicial or administrative order; ”(D) may request that the individual sign a voluntary acknowledgment of paternity, after notice of the rights and consequences of such an acknowledgment, but may not re- quire the individual to sign an acknowledgment or other- wise relinquish the right to genetic tests as a condition of cooperation and eligibility for assistance under the State program funded under part A, or the State program under title XIX; and ”(E) shall promptly notify the individual, the State agency administering the State program funded under part A, and the State agency administering the State program under title XIX, of each such determination, and if non- cooperation is determined, the basis therefor.”. Subtitle E\u2014Program Administration and Funding SEC. 341. PERFORMANCE-BASED INCENTIVES AND PENALTIES. (a) DEVELOPMENT OF NEW SYSTEM.\u2014The Secretary of Health and Human Services, in consultation with State directors of pro- grams under part D of title IV of the Social Security Act, shall de- velop a new incentive system to replace, in a revenue neutral man- ner, the system under section 458 of such Act. The new system shall provide additional payments to any State based on such State’s per- formance under such a program. Not later than March 1, 1997, the 133 Secretary shall report on the new system to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate. (b) CONFORMING AMENDMENTS TO PRESENT SYSTEM.\u2014Section 458 (42 U.S.C. 658) is amended\u2014 (1) in subsection (a), by striking ”aid to families with de- pendent children under a State plan approved under part A of this title” and inserting ”assistance under a program funded under part A”; (2) in subsection (b)(1)(A), by striking ”section 402(a)(26)” and inserting ”section 408(a)(4)”; (3) in subsections (b) and (c)\u2014 (A) by striking ”AFDC collections” each place it ap- pears and inserting ”title IV A collections”, and (B) by striking ”non-AFDC collections” each place it ap- pears and inserting ”non-title IV A collections”; and (4) in subsection (c), by striking ”combined AFDC\/non- AFDC administrative costs” both places it appears and insert- ing ”combined title IV A\/non-title IV A administrative costs”. (c) CALCULATION OF PATERNITY ESTABLISHMENT PERCENT- AGE.\u2014 (1) Section 452(g)(1)(A) (42 U.S.C. 652(g)(1)(A)) is amended by striking ”75” and inserting ”90”. (2) Section 452(g)(1) (42 U.S.C. 652(g)(1)) is amended\u2014 (A) by redesignating subparagraphs (B) through (E) as subparagraphs (C) through (F), respectively, and by insert- ing after subparagraph (A) the following new subpara- graph: ”(B) for a State with a paternity establishment percentage of not less than 75 percent but less than 90 percent for such fis- cal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 2 percentage points;”; and (B) by adding at the end the following new flush sen- tence: ”In determining compliance under this section, a State may use as its paternity establishment percentage either the State’s IV D pater- nity establishment percentage (as defined in paragraph (2)(A)) or the State’s statewide paternity establishment percentage (as defined in paragraph (2)(B)).”. (3) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended\u2014 (A) in subparagraph (A)\u2014 (i) in the matter preceding clause (i)\u2014 (I) by striking ”paternity establishment per- centage” and inserting ”IV D paternity establish- ment percentage”; and (II) by striking ”(or all States, as the case may be)”; and (ii) by striking ”and” at the end; and (B) by redesignating subparagraph (B) as subpara- graph (C) and by inserting after subparagraph (A) the fol- lowing new subparagraph: ”(B) the term ‘statewide paternity establishment percentage’ means, with respect to a State for a fiscal year, the ratio (ex- 134 pressed as a percentage) that the total number of minor chil- dren\u2014 ”(i) who have been born out of wedlock, and ”(ii) the paternity of whom has been established or ac- knowledged during the fiscal year, bears to the total number of children born out of wedlock dur- ing the preceding fiscal year; and”. (4) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is amended\u2014 (A) by striking subparagraph (A) and redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively; and (B) in subparagraph (A) (as so redesignated), by strik- ing ”the percentage of children born out-of-wedlock in a State” and inserting ”the percentage of children in a State who are born out of wedlock or for whom support has not been established”. (d) EFFECTIVE DATES.\u2014 (1) INCENTIVE ADJUSTMENTS.\u2014 (A) IN GENERAL.\u2014The system developed under sub- section (a) and the amendments made by subsection (b) shall become effective on October 1, 1999, except to the ex- tent provided in subparagraph (B). (B) APPLICATION OF SECTION 458.\u2014Section 458 of the Social Security Act, as in effect on the day before the date of the enactment of this section, shall be effective for pur- poses of incentive payments to States for fiscal years before fiscal year 2000. (2) PENALTY REDUCTIONS.\u2014The amendments made by sub- section (c) shall become effective with respect to calendar quar- ters beginning on or after the date of the enactment of this Act. SEC. 342. FEDERAL AND STATE REVIEWS AND AUDITS. (a) STATE AGENCY ACTIVITIES.\u2014Section 454 (42 U.S.C. 654) is amended\u2014 (1) in paragraph (14), by striking ”(14)” and inserting ”(14)(A)”; (2) by redesignating paragraph (15) as subparagraph (B) of paragraph (14); and (3) by inserting after paragraph (14) the following new paragraph: ”(15) provide for\u2014 ”(A) a process for annual reviews of and reports to the Secretary on the State program operated under the State plan approved under this part, including such information as may be necessary to measure State compliance with Fed- eral requirements for expedited procedures, using such standards and procedures as are required by the Secretary, under which the State agency will determine the extent to which the program is operated in compliance with this part; and ”(B) a process of extracting from the automated data processing system required by paragraph (16) and trans- mitting to the Secretary data and calculations concerning the levels of accomplishment (and rates of improvement) 135 with respect to applicable performance indicators (includ- ing paternity establishment percentages) to the extent nec- essary for purposes of sections 452(g) and 458;”. (b) FEDERAL ACTIVITIES.\u2014Section 452(a)(4) (42 U.S.C. 652(a)(4)) is amended to read as follows: ”(4)(A) review data and calculations transmitted by State agencies pursuant to section 454(15)(B) on State program ac- complishments with respect to performance indicators for pur- poses of subsection (g) of this section and section 458; ”(B) review annual reports submitted pursuant to section 454(15)(A) and, as appropriate, provide to the State comments, recommendations for additional or alternative corrective ac- tions, and technical assistance; and ”(C) conduct audits, in accordance with the Government auditing standards of the Comptroller General of the United States\u2014 ”(i) at least once every 3 years (or more frequently, in the case of a State which fails to meet the requirements of this part concerning performance standards and reliability of program data) to assess the completeness, reliability, and security of the data and the accuracy of the reporting sys- tems used in calculating performance indicators under sub- section (g) of this section and section 458; ”(ii) of the adequacy of financial management of the State program operated under the State plan approved under this part, including assessments of\u2014 ”(I) whether Federal and other funds made avail- able to carry out the State program are being appro- priately expended, and are properly and fully ac- counted for; and ”(II) whether collections and disbursements of sup- port payments are carried out correctly and are fully accounted for; and ”(iii) for such other purposes as the Secretary may find necessary;”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall be effective with respect to calendar quarters beginning 12 months or more after the date of the enactment of this Act. SEC. 343. REQUIRED REPORTING PROCEDURES. (a) ESTABLISHMENT.\u2014Section 452(a)(5) (42 U.S.C. 652(a)(5)) is amended by inserting ”, and establish procedures to be followed by States for collecting and reporting information required to be pro- vided under this part, and establish uniform definitions (including those necessary to enable the measurement of State compliance with the requirements of this part relating to expedited processes) to be applied in following such procedures” before the semicolon. (b) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(a), 313(a), and 333 of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (28); (2) by striking the period at the end of paragraph (29) and inserting ”; and”; and (3) by adding after paragraph (29) the following new para- graph: 136 ”(30) provide that the State shall use the definitions estab- lished under section 452(a)(5) in collecting and reporting infor- mation as required under this part.”. SEC. 344. AUTOMATED DATA PROCESSING REQUIREMENTS. (a) REVISED REQUIREMENTS.\u2014 (1) IN GENERAL.\u2014Section 454(16) (42 U.S.C. 654(16)) is amended\u2014 (A) by striking ”, at the option of the State,”; (B) by inserting ”and operation by the State agency” after ”for the establishment”; (C) by inserting ”meeting the requirements of section 454A” after ”information retrieval system”; (D) by striking ”in the State and localities thereof, so as (A)” and inserting ”so as”; (E) by striking ”(i)”; and (F) by striking ”(including” and all that follows and in- serting a semicolon. (2) AUTOMATED DATA PROCESSING.\u2014Part D of title IV (42 U.S.C. 651 669) is amended by inserting after section 454 the following new section: ”SEC. 454A. AUTOMATED DATA PROCESSING. ”(a) IN GENERAL.\u2014In order for a State to meet the requirements of this section, the State agency administering the State program under this part shall have in operation a single statewide auto- mated data processing and information retrieval system which has the capability to perform the tasks specified in this section with the frequency and in the manner required by or under this part. ”(b) PROGRAM MANAGEMENT.\u2014The automated system required by this section shall perform such functions as the Secretary may specify relating to management of the State program under this part, including\u2014 ”(1) controlling and accounting for use of Federal, State, and local funds in carrying out the program; and ”(2) maintaining the data necessary to meet Federal report- ing requirements under this part on a timely basis. ”(c) CALCULATION OF PERFORMANCE INDICATORS.\u2014In order to enable the Secretary to determine the incentive payments and pen- alty adjustments required by sections 452(g) and 458, the State agency shall\u2014 ”(1) use the automated system\u2014 ”(A) to maintain the requisite data on State perform- ance with respect to paternity establishment and child sup- port enforcement in the State; and ”(B) to calculate the paternity establishment percentage for the State for each fiscal year; and ”(2) have in place systems controls to ensure the complete- ness and reliability of, and ready access to, the data described in paragraph (1)(A), and the accuracy of the calculations de- scribed in paragraph (1)(B). ”(d) INFORMATION INTEGRITY AND SECURITY.\u2014The State agency shall have in effect safeguards on the integrity, accuracy, and com- pleteness of, access to, and use of data in the automated system re- quired by this section, which shall include the following (in addi- 137 tion to such other safeguards as the Secretary may specify in regula- tions): ”(1) POLICIES RESTRICTING ACCESS.\u2014Written policies con- cerning access to data by State agency personnel, and sharing of data with other persons, which\u2014 ”(A) permit access to and use of data only to the extent necessary to carry out the State program under this part; and ”(B) specify the data which may be used for particular program purposes, and the personnel permitted access to such data. ”(2) SYSTEMS CONTROLS.\u2014Systems controls (such as pass- words or blocking of fields) to ensure strict adherence to the policies described in paragraph (1). ”(3) MONITORING OF ACCESS.\u2014Routine monitoring of access to and use of the automated system, through methods such as audit trails and feedback mechanisms, to guard against and promptly identify unauthorized access or use. ”(4) TRAINING AND INFORMATION.\u2014Procedures to ensure that all personnel (including State and local agency staff and contractors) who may have access to or be required to use con- fidential program data are informed of applicable requirements and penalties (including those in section 6103 of the Internal Revenue Code of 1986), and are adequately trained in security procedures. ”(5) PENALTIES.\u2014Administrative penalties (up to and in- cluding dismissal from employment) for unauthorized access to, or disclosure or use of, confidential data.”. (3) REGULATIONS.\u2014The Secretary of Health and Human Services shall prescribe final regulations for implementation of section 454A of the Social Security Act not later than 2 years after the date of the enactment of this Act. (4) IMPLEMENTATION TIMETABLE.\u2014Section 454(24) (42 U.S.C. 654(24)), as amended by section 303(a)(1) of this Act, is amended to read as follows: ”(24) provide that the State will have in effect an auto- mated data processing and information retrieval system\u2014 ”(A) by October 1, 1997, which meets all requirements of this part which were enacted on or before the date of en- actment of the Family Support Act of 1988, and ”(B) by October 1, 2000, which meets all requirements of this part enacted on or before the date of the enactment of the Personal Responsibility and Work Opportunity Act of 1996, except that such deadline shall be extended by 1 day for each day (if any) by which the Secretary fails to meet the deadline imposed by section 344(a)(3) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996;”. (b) SPECIAL FEDERAL MATCHING RATE FOR DEVELOPMENT COSTS OF AUTOMATED SYSTEMS.\u2014 (1) IN GENERAL.\u2014Section 455(a) (42 U.S.C. 655(a)) is amended\u2014 (A) in paragraph (1)(B)\u2014 138 (i) by striking ”90 percent” and inserting ”the per- cent specified in paragraph (3)”; (ii) by striking ”so much of”; and (iii) by striking ”which the Secretary” and all that follows and inserting ”, and”; and (B) by adding at the end the following new paragraph: ”(3)(A) The Secretary shall pay to each State, for each quarter in fiscal years 1996 and 1997, 90 percent of so much of the State expenditures described in paragraph (1)(B) as the Secretary finds are for a system meeting the requirements specified in section 454(16) (as in effect on September 30, 1995) but limited to the amount approved for States in the advance planning documents of such States submitted on or before September 30, 1995. ”(B)(i) The Secretary shall pay to each State, for each quarter in fiscal years 1996 through 2001, the percentage specified in clause (ii) of so much of the State expenditures described in paragraph (1)(B) as the Secretary finds are for a system meeting the require- ments of sections 454(16) and 454A. ”(ii) The percentage specified in this clause is 80 percent.”. (2) TEMPORARY LIMITATION ON PAYMENTS UNDER SPECIAL FEDERAL MATCHING RATE.\u2014 (A) IN GENERAL.\u2014The Secretary of Health and Human Services may not pay more than $400,000,000 in the aggre- gate under section 455(a)(3)(B) of the Social Security Act for fiscal years 1996 through 2001. (B) ALLOCATION OF LIMITATION AMONG STATES.\u2014The total amount payable to a State under section 455(a)(3)(B) of such Act for fiscal years 1996 through 2001 shall not ex- ceed the limitation determined for the State by the Sec- retary of Health and Human Services in regulations. (C) ALLOCATION FORMULA.\u2014The regulations referred to in subparagraph (B) shall prescribe a formula for allocat- ing the amount specified in subparagraph (A) among States with plans approved under part D of title IV of the Social Security Act, which shall take into account\u2014 (i) the relative size of State caseloads under such part; and (ii) the level of automation needed to meet the automated data processing requirements of such part. (c) CONFORMING AMENDMENT.\u2014Section 123(c) of the Family Support Act of 1988 (102 Stat. 2352; Public Law 100 485) is re- pealed. SEC. 345. TECHNICAL ASSISTANCE. (a) FOR TRAINING OF FEDERAL AND STATE STAFF, RESEARCH AND DEMONSTRATION PROGRAMS, AND SPECIAL PROJECTS OF RE- GIONAL OR NATIONAL SIGNIFICANCE.\u2014Section 452 (42 U.S.C. 652) is amended by adding at the end the following new subsection: ”(j) Out of any money in the Treasury of the United States not otherwise appropriated, there is hereby appropriated to the Sec- retary for each fiscal year an amount equal to 1 percent of the total amount paid to the Federal Government pursuant to section 457(a) during the immediately preceding fiscal year (as determined on the basis of the most recent reliable data available to the Secretary as 139 of the end of the 3rd calendar quarter following the end of such pre- ceding fiscal year), to cover costs incurred by the Secretary for\u2014 ”(1) information dissemination and technical assistance to States, training of State and Federal staff, staffing studies, and related activities needed to improve programs under this part (including technical assistance concerning State automated sys- tems required by this part); and ”(2) research, demonstration, and special projects of re- gional or national significance relating to the operation of State programs under this part. The amount appropriated under this subsection shall remain avail- able until expended.”. (b) OPERATION OF FEDERAL PARENT LOCATOR SERVICE.\u2014Sec- tion 453 (42 U.S.C. 653), as amended by section 316 of this Act, is amended by adding at the end the following new subsection: ”(o) RECOVERY OF COSTS.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there is hereby ap- propriated to the Secretary for each fiscal year an amount equal to 2 percent of the total amount paid to the Federal Government pur- suant to section 457(a) during the immediately preceding fiscal year (as determined on the basis of the most recent reliable data avail- able to the Secretary as of the end of the 3rd calendar quarter fol- lowing the end of such preceding fiscal year), to cover costs incurred by the Secretary for operation of the Federal Parent Locator Service under this section, to the extent such costs are not recovered through user fees.”. SEC. 346. REPORTS AND DATA COLLECTION BY THE SECRETARY. (a) ANNUAL REPORT TO CONGRESS.\u2014 (1) Section 452(a)(10)(A) (42 U.S.C. 652(a)(10)(A)) is amended\u2014 (A) by striking ”this part;” and inserting ”this part, in- cluding\u2014”; and (B) by adding at the end the following new clauses: ”(i) the total amount of child support payments col- lected as a result of services furnished during the fiscal year to individuals receiving services under this part; ”(ii) the cost to the States and to the Federal Gov- ernment of so furnishing the services; and ”(iii) the number of cases involving families\u2014 ”(I) who became ineligible for assistance under State programs funded under part A during a month in the fiscal year; and ”(II) with respect to whom a child support pay- ment was received in the month;”. (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is amended\u2014 (A) in the matter preceding clause (i)\u2014 (i) by striking ”with the data required under each clause being separately stated for cases” and inserting ”separately stated for cases”; (ii) by striking ”cases where the child was formerly receiving” and inserting ”or formerly received”; (iii) by inserting ”or 1912” after ”471(a)(17)”; and 140 (iv) by inserting ”for” before ”all other”; (B) in each of clauses (i) and (ii), by striking ”, and the total amount of such obligations”; (C) in clause (iii), by striking ”described in” and all that follows and inserting ”in which support was collected during the fiscal year;”; (D) by striking clause (iv); and (E) by redesignating clause (v) as clause (vii), and in- serting after clause (iii) the following new clauses: ”(iv) the total amount of support collected during such fiscal year and distributed as current support; ”(v) the total amount of support collected during such fiscal year and distributed as arrearages; ”(vi) the total amount of support due and unpaid for all fiscal years; and”. (3) Section 452(a)(10)(G) (42 U.S.C. 652(a)(10)(G)) is amended by striking ”on the use of Federal courts and”. (4) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended\u2014 (A) in subparagraph (H), by striking ”and”; (B) in subparagraph (I), by striking the period and in- serting ”; and”; and (C) by inserting after subparagraph (I) the following new subparagraph: ”(J) compliance, by State, with the standards estab- lished pursuant to subsections (h) and (i).”. (5) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended by striking all that follows subparagraph (J), as added by para- graph (4). (b) EFFECTIVE DATE.\u2014The amendments made by subsection (a) shall be effective with respect to fiscal year 1997 and succeeding fis- cal years. Subtitle F\u2014Establishment and Modification of Support Orders SEC. 351. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF CHILD SUPPORT ORDERS. Section 466(a)(10) (42 U.S.C. 666(a)(10)) is amended to read as follows: ”(10) REVIEW AND ADJUSTMENT OF SUPPORT ORDERS UPON REQUEST.\u2014 ”(A) 3-YEAR CYCLE.\u2014 ”(i) IN GENERAL.\u2014Procedures under which every 3 years (or such shorter cycle as the State may deter- mine), upon the request of either parent, or, if there is an assignment under part A, upon the request of the State agency under the State plan or of either parent, the State shall with respect to a support order being enforced under this part, taking into account the best interests of the child involved\u2014 ”(I) review and, if appropriate, adjust the order in accordance with the guidelines established pursuant to section 467(a) if the amount of the 141 child support award under the order differs from the amount that would be awarded in accordance with the guidelines; ”(II) apply a cost-of-living adjustment to the order in accordance with a formula developed by the State; or ”(III) use automated methods (including auto- mated comparisons with wage or State income tax data) to identify orders eligible for review, conduct the review, identify orders eligible for adjustment, and apply the appropriate adjustment to the orders eligible for adjustment under any threshold that may be established by the State. ”(ii) OPPORTUNITY TO REQUEST REVIEW OF ADJUST- MENT.\u2014If the State elects to conduct the review under subclause (II) or (III) of clause (i), procedures which permit either party to contest the adjustment, within 30 days after the date of the notice of the adjustment, by making a request for review and, if appropriate, ad- justment of the order in accordance with the child sup- port guidelines established pursuant to section 467(a). ”(iii) NO PROOF OF CHANGE IN CIRCUMSTANCES NECESSARY IN 3-YEAR CYCLE REVIEW.\u2014Procedures which provide that any adjustment under clause (i) shall be made without a requirement for proof or show- ing of a change in circumstances. ”(B) PROOF OF SUBSTANTIAL CHANGE IN CIR- CUMSTANCES NECESSARY IN REQUEST FOR REVIEW OUTSIDE 3-YEAR CYCLE.\u2014Procedures under which, in the case of a request for a review, and if appropriate, an adjustment out- side the 3-year cycle (or such shorter cycle as the State may determine) under clause (i), the State shall review and, if the requesting party demonstrates a substantial change in circumstances, adjust the order in accordance with the guidelines established pursuant to section 467(a). ”(C) NOTICE OF RIGHT TO REVIEW.\u2014Procedures which require the State to provide notice not less than once every 3 years to the parents subject to the order informing the parents of their right to request the State to review and, if appropriate, adjust the order pursuant to this paragraph. The notice may be included in the order.”. SEC. 352. FURNISHING CONSUMER REPORTS FOR CERTAIN PURPOSES RELATING TO CHILD SUPPORT. Section 604 of the Fair Credit Reporting Act (15 U.S.C. 1681b) is amended by adding at the end the following new paragraphs: ”(4) In response to a request by the head of a State or local child support enforcement agency (or a State or local government of- ficial authorized by the head of such an agency), if the person mak- ing the request certifies to the consumer reporting agency that\u2014 ”(A) the consumer report is needed for the purpose of estab- lishing an individual’s capacity to make child support pay- ments or determining the appropriate level of such payments; ”(B) the paternity of the consumer for the child to which the obligation relates has been established or acknowledged by the 142 consumer in accordance with State laws under which the obli- gation arises (if required by those laws); ”(C) the person has provided at least 10 days’ prior notice to the consumer whose report is requested, by certified or reg- istered mail to the last known address of the consumer, that the report will be requested; and ”(D) the consumer report will be kept confidential, will be used solely for a purpose described in subparagraph (A), and will not be used in connection with any other civil, administra- tive, or criminal proceeding, or for any other purpose. ”(5) To an agency administering a State plan under section 454 of the Social Security Act (42 U.S.C. 654) for use to set an initial or modified child support award.”. SEC. 353. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL RECORDS TO STATE CHILD SUPPORT EN- FORCEMENT AGENCIES IN CHILD SUPPORT CASES. Part D of title IV (42 U.S.C. 651 669) is amended by adding at the end the following: ”SEC. 469A. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL RECORDS TO STATE CHILD SUPPORT EN- FORCEMENT AGENCIES IN CHILD SUPPORT CASES. ”(a) IN GENERAL.\u2014Notwithstanding any other provision of Fed- eral or State law, a financial institution shall not be liable under any Federal or State law to any person for disclosing any financial record of an individual to a State child support enforcement agency attempting to establish, modify, or enforce a child support obliga- tion of such individual. ”(b) PROHIBITION OF DISCLOSURE OF FINANCIAL RECORD OB- TAINED BY STATE CHILD SUPPORT ENFORCEMENT AGENCY.\u2014A State child support enforcement agency which obtains a financial record of an individual from a financial institution pursuant to subsection (a) may disclose such financial record only for the purpose of, and to the extent necessary in, establishing, modifying, or enforcing a child support obligation of such individual. ”(c) CIVIL DAMAGES FOR UNAUTHORIZED DISCLOSURE.\u2014 ”(1) DISCLOSURE BY STATE OFFICER OR EMPLOYEE.\u2014If any person knowingly, or by reason of negligence, discloses a finan- cial record of an individual in violation of subsection (b), such individual may bring a civil action for damages against such person in a district court of the United States. ”(2) NO LIABILITY FOR GOOD FAITH BUT ERRONEOUS INTER- PRETATION.\u2014No liability shall arise under this subsection with respect to any disclosure which results from a good faith, but erroneous, interpretation of subsection (b). ”(3) DAMAGES.\u2014In any action brought under paragraph (1), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of\u2014 ”(A) the greater of\u2014 ”(i) $1,000 for each act of unauthorized disclosure of a financial record with respect to which such defend- ant is found liable; or ”(ii) the sum of\u2014 143 ”(I) the actual damages sustained by the plain- tiff as a result of such unauthorized disclosure; plus ”(II) in the case of a willful disclosure or a dis- closure which is the result of gross negligence, pu- nitive damages; plus ”(B) the costs (including attorney’s fees) of the action. ”(d) DEFINITIONS.\u2014For purposes of this section\u2014 ”(1) FINANCIAL INSTITUTION.\u2014The term ‘financial institu- tion’ means\u2014 ”(A) a depository institution, as defined in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)); ”(B) an institution-affiliated party, as defined in sec- tion 3(u) of such Act (12 U.S.C. 1813(u)); ”(C) any Federal credit union or State credit union, as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752), including an institution-affiliated party of such a credit union, as defined in section 206(r) of such Act (12 U.S.C. 1786(r)); and ”(D) any benefit association, insurance company, safe deposit company, money-market mutual fund, or similar entity authorized to do business in the State. ”(2) FINANCIAL RECORD.\u2014The term ‘financial record’ has the meaning given such term in section 1101 of the Right to Fi- nancial Privacy Act of 1978 (12 U.S.C. 3401).”. Subtitle G\u2014Enforcement of Support Orders SEC. 361. INTERNAL REVENUE SERVICE COLLECTION OF ARREAR- AGES. (a) COLLECTION OF FEES.\u2014Section 6305(a) of the Internal Reve- nue Code of 1986 (relating to collection of certain liability) is amended\u2014 (1) by striking ”and” at the end of paragraph (3); (2) by striking the period at the end of paragraph (4) and inserting ”, and”; (3) by adding at the end the following new paragraph: ”(5) no additional fee may be assessed for adjustments to an amount previously certified pursuant to such section 452(b) with respect to the same obligor.”; and (4) by striking ”Secretary of Health, Education, and Wel- fare” each place it appears and inserting ”Secretary of Health and Human Services”. (b) EFFECTIVE DATE.\u2014The amendments made by this section shall become effective October 1, 1997. SEC. 362. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL EMPLOY- EES. (a) CONSOLIDATION AND STREAMLINING OF AUTHORITIES.\u2014Sec- tion 459 (42 U.S.C. 659) is amended to read as follows: 144 ”SEC. 459. CONSENT BY THE UNITED STATES TO INCOME WITHHOLD- ING, GARNISHMENT, AND SIMILAR PROCEEDINGS FOR EN- FORCEMENT OF CHILD SUPPORT AND ALIMONY OBLIGA- TIONS. ”(a) CONSENT TO SUPPORT ENFORCEMENT.\u2014Notwithstanding any other provision of law (including section 207 of this Act and section 5301 of title 38, United States Code), effective January 1, 1975, moneys (the entitlement to which is based upon remuneration for employment) due from, or payable by, the United States or the District of Columbia (including any agency, subdivision, or instru- mentality thereof) to any individual, including members of the Armed Forces of the United States, shall be subject, in like manner and to the same extent as if the United States or the District of Co- lumbia were a private person, to withholding in accordance with State law enacted pursuant to subsections (a)(1) and (b) of section 466 and regulations of the Secretary under such subsections, and to any other legal process brought, by a State agency administering a program under a State plan approved under this part or by an indi- vidual obligee, to enforce the legal obligation of the individual to provide child support or alimony. ”(b) CONSENT TO REQUIREMENTS APPLICABLE TO PRIVATE PER- SON.\u2014With respect to notice to withhold income pursuant to sub- section (a)(1) or (b) of section 466, or any other order or process to enforce support obligations against an individual (if the order or process contains or is accompanied by sufficient data to permit prompt identification of the individual and the moneys involved), each governmental entity specified in subsection (a) shall be subject to the same requirements as would apply if the entity were a private person, except as otherwise provided in this section. ”(c) DESIGNATION OF AGENT; RESPONSE TO NOTICE OR PROC- ESS\u2014 ”(1) DESIGNATION OF AGENT.\u2014The head of each agency subject to this section shall\u2014 ”(A) designate an agent or agents to receive orders and accept service of process in matters relating to child support or alimony; and ”(B) annually publish in the Federal Register the des- ignation of the agent or agents, identified by title or posi- tion, mailing address, and telephone number. ”(2) RESPONSE TO NOTICE OR PROCESS.\u2014If an agent des- ignated pursuant to paragraph (1) of this subsection receives notice pursuant to State procedures in effect pursuant to sub- section (a)(1) or (b) of section 466, or is effectively served with any order, process, or interrogatory, with respect to an individ- ual’s child support or alimony payment obligations, the agent shall\u2014 ”(A) as soon as possible (but not later than 15 days) thereafter, send written notice of the notice or service (to- gether with a copy of the notice or service) to the individual at the duty station or last-known home address of the indi- vidual; ”(B) within 30 days (or such longer period as may be prescribed by applicable State law) after receipt of a notice pursuant to such State procedures, comply with all applica- ble provisions of section 466; and 145 ”(C) within 30 days (or such longer period as may be prescribed by applicable State law) after effective service of any other such order, process, or interrogatory, respond to the order, process, or interrogatory. ”(d) PRIORITY OF CLAIMS.\u2014If a governmental entity specified in subsection (a) receives notice or is served with process, as provided in this section, concerning amounts owed by an individual to more than 1 person\u2014 ”(1) support collection under section 466(b) must be given priority over any other process, as provided in section 466(b)(7); ”(2) allocation of moneys due or payable to an individual among claimants under section 466(b) shall be governed by sec- tion 466(b) and the regulations prescribed under such section; and ”(3) such moneys as remain after compliance with para- graphs (1) and (2) shall be available to satisfy any other such processes on a first-come, first-served basis, with any such proc- ess being satisfied out of such moneys as remain after the satis- faction of all such processes which have been previously served. ”(e) NO REQUIREMENT TO VARY PAY CYCLES.\u2014A governmental entity that is affected by legal process served for the enforcement of an individual’s child support or alimony payment obligations shall not be required to vary its normal pay and disbursement cycle in order to comply with the legal process. ”(f) RELIEF FROM LIABILITY.\u2014 ”(1) Neither the United States, nor the government of the District of Columbia, nor any disbursing officer shall be liable with respect to any payment made from moneys due or payable from the United States to any individual pursuant to legal process regular on its face, if the payment is made in accord- ance with this section and the regulations issued to carry out this section. ”(2) No Federal employee whose duties include taking ac- tions necessary to comply with the requirements of subsection (a) with regard to any individual shall be subject under any law to any disciplinary action or civil or criminal liability or penalty for, or on account of, any disclosure of information made by the employee in connection with the carrying out of such actions. ”(g) REGULATIONS.\u2014Authority to promulgate regulations for the implementation of this section shall, insofar as this section applies to moneys due from (or payable by)\u2014 ”(1) the United States (other than the legislative or judicial branches of the Federal Government) or the government of the District of Columbia, be vested in the President (or the designee of the President); ”(2) the legislative branch of the Federal Government, be vested jointly in the President pro tempore of the Senate and the Speaker of the House of Representatives (or their designees), and ”(3) the judicial branch of the Federal Government, be vest- ed in the Chief Justice of the United States (or the designee of the Chief Justice). ”(h) MONEYS SUBJECT TO PROCESS.\u2014 146 ”(1) IN GENERAL.\u2014Subject to paragraph (2), moneys paid or payable to an individual which are considered to be based upon remuneration for employment, for purposes of this section\u2014 ”(A) consist of\u2014 ”(i) compensation paid or payable for personal services of the individual, whether the compensation is denominated as wages, salary, commission, bonus, pay, allowances, or otherwise (including severance pay, sick pay, and incentive pay); ”(ii) periodic benefits (including a periodic benefit as defined in section 228(h)(3)) or other payments\u2014 ”(I) under the insurance system established by title II; ”(II) under any other system or fund estab- lished by the United States which provides for the payment of pensions, retirement or retired pay, an- nuities, dependents’ or survivors’ benefits, or simi- lar amounts payable on account of personal serv- ices performed by the individual or any other indi- vidual; ”(III) as compensation for death under any Federal program; ”(IV) under any Federal program established to provide ‘black lung’ benefits; or ”(V) by the Secretary of Veterans Affairs as compensation for a service-connected disability paid by the Secretary to a former member of the Armed Forces who is in receipt of retired or re- tainer pay if the former member has waived a por- tion of the retired or retainer pay in order to re- ceive such compensation; and ”(iii) worker’s compensation benefits paid under Federal or State law but ”(B) do not include any payment\u2014 ”(i) by way of reimbursement or otherwise, to de- fray expenses incurred by the individual in carrying out duties associated with the employment of the indi- vidual; or ”(ii) as allowances for members of the uniformed services payable pursuant to chapter 7 of title 37, Unit- ed States Code, as prescribed by the Secretaries con- cerned (defined by section 101(5) of such title) as nec- essary for the efficient performance of duty. ”(2) CERTAIN AMOUNTS EXCLUDED.\u2014In determining the amount of any moneys due from, or payable by, the United States to any individual, there shall be excluded amounts which\u2014 ”(A) are owed by the individual to the United States; ”(B) are required by law to be, and are, deducted from the remuneration or other payment involved, including Federal employment taxes, and fines and forfeitures or- dered by court-martial; ”(C) are properly withheld for Federal, State, or local income tax purposes, if the withholding of the amounts is 147 authorized or required by law and if amounts withheld are not greater than would be the case if the individual claimed all dependents to which he was entitled (the with- holding of additional amounts pursuant to section 3402(i) of the Internal Revenue Code of 1986 may be permitted only when the individual presents evidence of a tax obliga- tion which supports the additional withholding); ”(D) are deducted as health insurance premiums; ”(E) are deducted as normal retirement contributions (not including amounts deducted for supplementary cov- erage); or ”(F) are deducted as normal life insurance premiums from salary or other remuneration for employment (not in- cluding amounts deducted for supplementary coverage). ”(i) DEFINITIONS.\u2014For purposes of this section\u2014 ”(1) UNITED STATES.\u2014The term ‘United States’ includes any department, agency, or instrumentality of the legislative, judicial, or executive branch of the Federal Government, the United States Postal Service, the Postal Rate Commission, any Federal corporation created by an Act of Congress that is whol- ly owned by the Federal Government, and the governments of the territories and possessions of the United States. ”(2) CHILD SUPPORT.\u2014The term ‘child support’, when used in reference to the legal obligations of an individual to provide such support, means amounts required to be paid under a judg- ment, decree, or order, whether temporary, final, or subject to modification, issued by a court or an administrative agency of competent jurisdiction, for the support and maintenance of a child, including a child who has attained the age of majority under the law of the issuing State, or a child and the parent with whom the child is living, which provides for monetary support, health care, arrearages or reimbursement, and which may include other related costs and fees, interest and penalties, income withholding, attorney’s fees, and other relief. ”(3) ALIMONY.\u2014 ”(A) IN GENERAL.\u2014The term ‘alimony’, when used in reference to the legal obligations of an individual to provide the same, means periodic payments of funds for the support and maintenance of the spouse (or former spouse) of the in- dividual, and (subject to and in accordance with State law) includes separate maintenance, alimony pendente lite, maintenance, and spousal support, and includes attorney’s fees, interest, and court costs when and to the extent that the same are expressly made recoverable as such pursuant to a decree, order, or judgment issued in accordance with applicable State law by a court of competent jurisdiction. ”(B) EXCEPTIONS.\u2014Such term does not include\u2014 ”(i) any child support; or ”(ii) any payment or transfer of property or its value by an individual to the spouse or a former spouse of the individual in compliance with any community property settlement, equitable distribution of property, or other division of property between spouses or former spouses. 148 ”(4) PRIVATE PERSON.\u2014The term ‘private person’ means a person who does not have sovereign or other special immunity or privilege which causes the person not to be subject to legal process. ”(5) LEGAL PROCESS.\u2014The term ‘legal process’ means any writ, order, summons, or other similar process in the nature of garnishment\u2014 ”(A) which is issued by\u2014 ”(i) a court or an administrative agency of com- petent jurisdiction in any State, territory, or possession of the United States; ”(ii) a court or an administrative agency of com- petent jurisdiction in any foreign country with which the United States has entered into an agreement which requires the United States to honor the process; or ”(iii) an authorized official pursuant to an order of such a court or an administrative agency of competent jurisdiction or pursuant to State or local law; and ”(B) which is directed to, and the purpose of which is to compel, a governmental entity which holds moneys which are otherwise payable to an individual to make a payment from the moneys to another party in order to sat- isfy a legal obligation of the individual to provide child support or make alimony payments.”. (b) CONFORMING AMENDMENTS.\u2014 (1) TO PART D OF TITLE IV.\u2014Sections 461 and 462 (42 U.S.C. 661 and 662) are repealed. (2) TO TITLE 5, UNITED STATES CODE.\u2014Section 5520a of title 5, United States Code, is amended, in subsections (h)(2) and (i), by striking ”sections 459, 461, and 462 of the Social Se- curity Act (42 U.S.C. 659, 661, and 662)” and inserting ”section 459 of the Social Security Act (42 U.S.C. 659)”. (c) MILITARY RETIRED AND RETAINER PAY.\u2014 (1) DEFINITION OF COURT.\u2014Section 1408(a)(1) of title 10, United States Code, is amended\u2014 (A) by striking ”and” at the end of subparagraph (B); (B) by striking the period at the end of subparagraph (C) and inserting ”; and”; and (C) by adding after subparagraph (C) the following new subparagraph: ”(D) any administrative or judicial tribunal of a State competent to enter orders for support or maintenance (in- cluding a State agency administering a program under a State plan approved under part D of title IV of the Social Security Act), and, for purposes of this subparagraph, the term ‘State’ includes the District of Columbia, the Common- wealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.”. (2) DEFINITION OF COURT ORDER.\u2014Section 1408(a)(2) of such title is amended\u2014 (A) by inserting ”or a support order, as defined in sec- tion 453(p) of the Social Security Act (42 U.S.C. 653(p)),” before ”which\u2014”; 149 (B) in subparagraph (B)(i), by striking ”(as defined in section 462(b) of the Social Security Act (42 U.S.C. 662(b)))” and inserting ”(as defined in section 459(i)(2) of the Social Security Act (42 U.S.C. 659(i)(2)))”; and (C) in subparagraph (B)(ii), by striking ”(as defined in section 462(c) of the Social Security Act (42 U.S.C. 662(c)))” and inserting ”(as defined in section 459(i)(3) of the Social Security Act (42 U.S.C. 659(i)(3)))”. (3) PUBLIC PAYEE.\u2014Section 1408(d) of such title is amend- ed\u2014 (A) in the heading, by inserting ”(OR FOR BENEFIT OF)” before ”SPOUSE OR”; and (B) in paragraph (1), in the 1st sentence, by inserting ”(or for the benefit of such spouse or former spouse to a State disbursement unit established pursuant to section 454B of the Social Security Act or other public payee des- ignated by a State, in accordance with part D of title IV of the Social Security Act, as directed by court order, or as otherwise directed in accordance with such part D)” before ”in an amount sufficient”. (4) RELATIONSHIP TO PART D OF TITLE IV.\u2014Section 1408 of such title is amended by adding at the end the following new subsection: ”(j) RELATIONSHIP TO OTHER LAWS.\u2014In any case involving an order providing for payment of child support (as defined in section 459(i)(2) of the Social Security Act) by a member who has never been married to the other parent of the child, the provisions of this section shall not apply, and the case shall be subject to the provi- sions of section 459 of such Act.”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall become effective 6 months after the date of the enactment of this Act. SEC. 363. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF MEM- BERS OF THE ARMED FORCES. (a) AVAILABILITY OF LOCATOR INFORMATION.\u2014 (1) MAINTENANCE OF ADDRESS INFORMATION.\u2014The Sec- retary of Defense shall establish a centralized personnel locator service that includes the address of each member of the Armed Forces under the jurisdiction of the Secretary. Upon request of the Secretary of Transportation, addresses for members of the Coast Guard shall be included in the centralized personnel lo- cator service. (2) TYPE OF ADDRESS.\u2014 (A) RESIDENTIAL ADDRESS.\u2014Except as provided in sub- paragraph (B), the address for a member of the Armed Forces shown in the locator service shall be the residential address of that member. (B) DUTY ADDRESS.\u2014The address for a member of the Armed Forces shown in the locator service shall be the duty address of that member in the case of a member\u2014 (i) who is permanently assigned overseas, to a ves- sel, or to a routinely deployable unit; or (ii) with respect to whom the Secretary concerned makes a determination that the member’s residential 150 address should not be disclosed due to national secu- rity or safety concerns. (3) UPDATING OF LOCATOR INFORMATION.\u2014Within 30 days after a member listed in the locator service establishes a new residential address (or a new duty address, in the case of a member covered by paragraph (2)(B)), the Secretary concerned shall update the locator service to indicate the new address of the member. (4) AVAILABILITY OF INFORMATION.\u2014The Secretary of De- fense shall make information regarding the address of a mem- ber of the Armed Forces listed in the locator service available, on request, to the Federal Parent Locator Service established under section 453 of the Social Security Act. (b) FACILITATING GRANTING OF LEAVE FOR ATTENDANCE AT HEARINGS.\u2014 (1) REGULATIONS.\u2014The Secretary of each military depart- ment, and the Secretary of Transportation with respect to the Coast Guard when it is not operating as a service in the Navy, shall prescribe regulations to facilitate the granting of leave to a member of the Armed Forces under the jurisdiction of that Secretary in a case in which\u2014 (A) the leave is needed for the member to attend a hear- ing described in paragraph (2); (B) the member is not serving in or with a unit de- ployed in a contingency operation (as defined in section 101 of title 10, United States Code); and (C) the exigencies of military service (as determined by the Secretary concerned) do not otherwise require that such leave not be granted. (2) COVERED HEARINGS.\u2014Paragraph (1) applies to a hear- ing that is conducted by a court or pursuant to an administra- tive process established under State law, in connection with a civil action\u2014 (A) to determine whether a member of the Armed Forces is a natural parent of a child; or (B) to determine an obligation of a member of the Armed Forces to provide child support. (3) DEFINITIONS.\u2014For purposes of this subsection\u2014 (A) The term ”court” has the meaning given that term in section 1408(a) of title 10, United States Code. (B) The term ”child support” has the meaning given such term in section 459(i) of the Social Security Act (42 U.S.C. 659(i)). (c) PAYMENT OF MILITARY RETIRED PAY IN COMPLIANCE WITH CHILD SUPPORT ORDERS.\u2014 (1) DATE OF CERTIFICATION OF COURT ORDER.\u2014Section 1408 of title 10, United States Code, as amended by section 362(c)(4) of this Act, is amended\u2014 (A) by redesignating subsections (i) and (j) as sub- sections (j) and (k), respectively; and (B) by inserting after subsection (h) the following new subsection: ”(i) CERTIFICATION DATE.\u2014It is not necessary that the date of a certification of the authenticity or completeness of a copy of a 151 court order for child support received by the Secretary concerned for the purposes of this section be recent in relation to the date of re- ceipt by the Secretary.”. (2) PAYMENTS CONSISTENT WITH ASSIGNMENTS OF RIGHTS TO STATES.\u2014Section 1408(d)(1) of such title is amended by in- serting after the 1st sentence the following new sentence: ”In the case of a spouse or former spouse who, pursuant to section 408(a)(4) of the Social Security Act (42 U.S.C. 608(a)(4)), as- signs to a State the rights of the spouse or former spouse to re- ceive support, the Secretary concerned may make the child sup- port payments referred to in the preceding sentence to that State in amounts consistent with that assignment of rights.”. (3) ARREARAGES OWED BY MEMBERS OF THE UNIFORMED SERVICES.\u2014Section 1408(d) of such title is amended by adding at the end the following new paragraph: ”(6) In the case of a court order for which effective service is made on the Secretary concerned on or after the date of the enact- ment of this paragraph and which provides for payments from the disposable retired pay of a member to satisfy the amount of child support set forth in the order, the authority provided in paragraph (1) to make payments from the disposable retired pay of a member to satisfy the amount of child support set forth in a court order shall apply to payment of any amount of child support arrearages set forth in that order as well as to amounts of child support that currently become due.”. (4) PAYROLL DEDUCTIONS.\u2014The Secretary of Defense shall begin payroll deductions within 30 days after receiving notice of withholding, or for the 1st pay period that begins after such 30-day period. SEC. 364. VOIDING OF FRAUDULENT TRANSFERS. Section 466 (42 U.S.C. 666), as amended by section 321 of this Act, is amended by adding at the end the following new subsection: ”(g) LAWS VOIDING FRAUDULENT TRANSFERS.\u2014In order to sat- isfy section 454(20)(A), each State must have in effect\u2014 ”(1)(A) the Uniform Fraudulent Conveyance Act of 1981; ”(B) the Uniform Fraudulent Transfer Act of 1984; or ”(C) another law, specifying indicia of fraud which create a prima facie case that a debtor transferred income or property to avoid payment to a child support creditor, which the Sec- retary finds affords comparable rights to child support credi- tors; and ”(2) procedures under which, in any case in which the State knows of a transfer by a child support debtor with respect to which such a prima facie case is established, the State must\u2014 ”(A) seek to void such transfer; or ”(B) obtain a settlement in the best interests of the child support creditor.”. SEC. 365. WORK REQUIREMENT FOR PERSONS OWING PAST-DUE CHILD SUPPORT. (a) IN GENERAL.\u2014Section 466(a) (42 U.S.C. 666(a)), as amend- ed by sections 315, 317, and 323 of this Act, is amended by insert- ing after paragraph (14) the following new paragraph: 152 ”(15) PROCEDURES TO ENSURE THAT PERSONS OWING PAST- DUE SUPPORT WORK OR HAVE A PLAN FOR PAYMENT OF SUCH SUPPORT.\u2014 ”(A) IN GENERAL.\u2014Procedures under which the State has the authority, in any case in which an individual owes past-due support with respect to a child receiving assist- ance under a State program funded under part A, to issue an order or to request that a court or an administrative process established pursuant to State law issue an order that requires the individual to\u2014 ”(i) pay such support in accordance with a plan approved by the court, or, at the option of the State, a plan approved by the State agency administering the State program under this part; or ”(ii) if the individual is subject to such a plan and is not incapacitated, participate in such work activities (as defined in section 407(d)) as the court, or, at the op- tion of the State, the State agency administering the State program under this part, deems appropriate. ”(B) PAST-DUE SUPPORT DEFINED.\u2014For purposes of subparagraph (A), the term ‘past-due support’ means the amount of a delinquency, determined under a court order, or an order of an administrative process established under State law, for support and maintenance of a child, or of a child and the parent with whom the child is living.”. (b) CONFORMING AMENDMENT.\u2014The flush paragraph at the end of section 466(a) (42 U.S.C. 666(a)) is amended by striking ”and (7)” and inserting ”(7), and (15)”. SEC. 366. DEFINITION OF SUPPORT ORDER. Section 453 (42 U.S.C. 653) as amended by sections 316 and 345(b) of this Act, is amended by adding at the end the following new subsection: ”(p) SUPPORT ORDER DEFINED.\u2014As used in this part, the term ‘support order’ means a judgment, decree, or order, whether tem- porary, final, or subject to modification, issued by a court or an ad- ministrative agency of competent jurisdiction, for the support and maintenance of a child, including a child who has attained the age of majority under the law of the issuing State, or a child and the parent with whom the child is living, which provides for monetary support, health care, arrearages, or reimbursement, and which may include related costs and fees, interest and penalties, income with- holding, attorneys’ fees, and other relief.”. SEC. 367. REPORTING ARREARAGES TO CREDIT BUREAUS. Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended to read as follows: ”(7) REPORTING ARREARAGES TO CREDIT BUREAUS.\u2014 ”(A) IN GENERAL.\u2014Procedures (subject to safeguards pursuant to subparagraph (B)) requiring the State to report periodically to consumer reporting agencies (as defined in section 603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)) the name of any noncustodial parent who is delin- quent in the payment of support, and the amount of over- due support owed by such parent. 153 ”(B) SAFEGUARDS.\u2014Procedures ensuring that, in carry- ing out subparagraph (A), information with respect to a noncustodial parent is reported\u2014 ”(i) only after such parent has been afforded all due process required under State law, including notice and a reasonable opportunity to contest the accuracy of such information; and ”(ii) only to an entity that has furnished evidence satisfactory to the State that the entity is a consumer reporting agency (as so defined).”. SEC. 368. LIENS. Section 466(a)(4) (42 U.S.C. 666(a)(4)) is amended to read as follows: ”(4) LIENS.\u2014Procedures under which\u2014 ”(A) liens arise by operation of law against real and personal property for amounts of overdue support owed by a noncustodial parent who resides or owns property in the State; and ”(B) the State accords full faith and credit to liens de- scribed in subparagraph (A) arising in another State, when the State agency, party, or other entity seeking to enforce such a lien complies with the procedural rules relating to recording or serving liens that arise within the State, except that such rules may not require judicial notice or hearing prior to the enforcement of such a lien.”. SEC. 369. STATE LAW AUTHORIZING SUSPENSION OF LICENSES. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, and 365 of this Act, is amended by inserting after para- graph (15) the following: ”(16) AUTHORITY TO WITHHOLD OR SUSPEND LICENSES.\u2014 Procedures under which the State has (and uses in appropriate cases) authority to withhold or suspend, or to restrict the use of driver’s licenses, professional and occupational licenses, and recreational licenses of individuals owing overdue support or failing, after receiving appropriate notice, to comply with sub- poenas or warrants relating to paternity or child support pro- ceedings.”. SEC. 370. DENIAL OF PASSPORTS FOR NONPAYMENT OF CHILD SUP- PORT. (a) HHS CERTIFICATION PROCEDURE.\u2014 (1) SECRETARIAL RESPONSIBILITY.\u2014Section 452 (42 U.S.C. 652), as amended by section 345 of this Act, is amended by add- ing at the end the following new subsection: ”(k)(1) If the Secretary receives a certification by a State agency in accordance with the requirements of section 454(31) that an indi- vidual owes arrearages of child support in an amount exceeding $5,000, the Secretary shall transmit such certification to the Sec- retary of State for action (with respect to denial, revocation, or limi- tation of passports) pursuant to paragraph (2). ”(2) The Secretary of State shall, upon certification by the Sec- retary transmitted under paragraph (1), refuse to issue a passport to such individual, and may revoke, restrict, or limit a passport is- sued previously to such individual. 154 ”(3) The Secretary and the Secretary of State shall not be liable to an individual for any action with respect to a certification by a State agency under this section.”. (2) STATE AGENCY RESPONSIBILITY.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(b), 313(a), 333, and 343(b) of this Act, is amended\u2014 (A) by striking ”and” at the end of paragraph (29); (B) by striking the period at the end of paragraph (30) and inserting ”; and”; and (C) by adding after paragraph (30) the following new paragraph: ”(31) provide that the State agency will have in effect a pro- cedure for certifying to the Secretary, for purposes of the proce- dure under section 452(k), determinations that individuals owe arrearages of child support in an amount exceeding $5,000, under which procedure\u2014 ”(A) each individual concerned is afforded notice of such determination and the consequences thereof, and an opportunity to contest the determination; and ”(B) the certification by the State agency is furnished to the Secretary in such format, and accompanied by such supporting documentation, as the Secretary may require.”. (b) EFFECTIVE DATE.\u2014This section and the amendments made by this section shall become effective October 1, 1997. SEC. 371. INTERNATIONAL SUPPORT ENFORCEMENT. (a) AUTHORITY FOR INTERNATIONAL AGREEMENTS.\u2014Part D of title IV, as amended by section 362(a) of this Act, is amended by adding after section 459 the following new section: ”SEC. 459A. INTERNATIONAL SUPPORT ENFORCEMENT. ”(a) AUTHORITY FOR DECLARATIONS.\u2014 ”(1) DECLARATION.\u2014The Secretary of State, with the con- currence of the Secretary of Health and Human Services, is au- thorized to declare any foreign country (or a political subdivi- sion thereof) to be a foreign reciprocating country if the foreign country has established, or undertakes to establish, procedures for the establishment and enforcement of duties of support owed to obligees who are residents of the United States, and such procedures are substantially in conformity with the standards prescribed under subsection (b). ”(2) REVOCATION.\u2014A declaration with respect to a foreign country made pursuant to paragraph (1) may be revoked if the Secretaries of State and Health and Human Services determine that\u2014 ”(A) the procedures established by the foreign country regarding the establishment and enforcement of duties of support have been so changed, or the foreign country’s im- plementation of such procedures is so unsatisfactory, that such procedures do not meet the criteria for such a declara- tion; or ”(B) continued operation of the declaration is not con- sistent with the purposes of this part. ”(3) FORM OF DECLARATION.\u2014A declaration under para- graph (1) may be made in the form of an international agree- 155 ment, in connection with an international agreement or cor- responding foreign declaration, or on a unilateral basis. ”(b) STANDARDS FOR FOREIGN SUPPORT ENFORCEMENT PROCE- DURES.\u2014 ”(1) MANDATORY ELEMENTS.\u2014Support enforcement proce- dures of a foreign country which may be the subject of a dec- laration pursuant to subsection (a)(1) shall include the follow- ing elements: ”(A) The foreign country (or political subdivision there- of) has in effect procedures, available to residents of the United States\u2014 ”(i) for establishment of paternity, and for estab- lishment of orders of support for children and custo- dial parents; and ”(ii) for enforcement of orders to provide support to children and custodial parents, including procedures for collection and appropriate distribution of support payments under such orders. ”(B) The procedures described in subparagraph (A), in- cluding legal and administrative assistance, are provided to residents of the United States at no cost. ”(C) An agency of the foreign country is designated as a Central Authority responsible for\u2014 ”(i) facilitating support enforcement in cases in- volving residents of the foreign country and residents of the United States; and ”(ii) ensuring compliance with the standards estab- lished pursuant to this subsection. ”(2) ADDITIONAL ELEMENTS.\u2014The Secretary of Health and Human Services and the Secretary of State, in consultation with the States, may establish such additional standards as may be considered necessary to further the purposes of this sec- tion. ”(c) DESIGNATION OF UNITED STATES CENTRAL AUTHORITY.\u2014It shall be the responsibility of the Secretary of Health and Human Services to facilitate support enforcement in cases involving resi- dents of the United States and residents of foreign countries that are the subject of a declaration under this section, by activities in- cluding\u2014 ”(1) development of uniform forms and procedures for use in such cases; ”(2) notification of foreign reciprocating countries of the State of residence of individuals sought for support enforcement purposes, on the basis of information provided by the Federal Parent Locator Service; and ”(3) such other oversight, assistance, and coordination ac- tivities as the Secretary may find necessary and appropriate. ”(d) EFFECT ON OTHER LAWS.\u2014States may enter into reciprocal arrangements for the establishment and enforcement of support obli- gations with foreign countries that are not the subject of a declara- tion pursuant to subsection (a), to the extent consistent with Federal law.”. 156 (b) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(b), 313(a), 333, 343(b), and 370(a)(2) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (30); (2) by striking the period at the end of paragraph (31) and inserting ”; and”; and (3) by adding after paragraph (31) the following new para- graph: ”(32)(A) provide that any request for services under this part by a foreign reciprocating country or a foreign country with which the State has an arrangement described in section 459A(d)(2) shall be treated as a request by a State; ”(B) provide, at State option, notwithstanding paragraph (4) or any other provision of this part, for services under the plan for enforcement of a spousal support order not described in paragraph (4)(B) entered by such a country (or subdivision); and ”(C) provide that no applications will be required from, and no costs will be assessed for such services against, the foreign reciprocating country or foreign obligee (but costs may at State option be assessed against the obligor).”. SEC. 372. FINANCIAL INSTITUTION DATA MATCHES. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, 365, and 369 of this Act, is amended by inserting after paragraph (16) the following new paragraph: ”(17) FINANCIAL INSTITUTION DATA MATCHES.\u2014 ”(A) IN GENERAL.\u2014Procedures under which the State agency shall enter into agreements with financial institu- tions doing business in the State\u2014 ”(i) to develop and operate, in coordination with such financial institutions, a data match system, using automated data exchanges to the maximum extent fea- sible, in which each such financial institution is re- quired to provide for each calendar quarter the name, record address, social security number or other tax- payer identification number, and other identifying in- formation for each noncustodial parent who maintains an account at such institution and who owes past-due support, as identified by the State by name and social security number or other taxpayer identification num- ber; and ”(ii) in response to a notice of lien or levy, encum- ber or surrender, as the case may be, assets held by such institution on behalf of any noncustodial parent who is subject to a child support lien pursuant to para- graph (4). ”(B) REASONABLE FEES.\u2014The State agency may pay a reasonable fee to a financial institution for conducting the data match provided for in subparagraph (A)(i), not to ex- ceed the actual costs incurred by such financial institution. ”(C) LIABILITY.\u2014A financial institution shall not be liable under any Federal or State law to any person\u2014 ”(i) for any disclosure of information to the State agency under subparagraph (A)(i); 157 ”(ii) for encumbering or surrendering any assets held by such financial institution in response to a no- tice of lien or levy issued by the State agency as pro- vided for in subparagraph (A)(ii); or ”(iii) for any other action taken in good faith to comply with the requirements of subparagraph (A). ”(D) DEFINITIONS.\u2014For purposes of this paragraph\u2014 ”(i) FINANCIAL INSTITUTION.\u2014The term ‘financial institution’ has the meaning given to such term by sec- tion 469A(d)(1). ”(ii) ACCOUNT.\u2014The term ‘account’ means a de- mand deposit account, checking or negotiable with- drawal order account, savings account, time deposit ac- count, or money-market mutual fund account.”. SEC. 373. ENFORCEMENT OF ORDERS AGAINST PATERNAL OR MATER- NAL GRANDPARENTS IN CASES OF MINOR PARENTS. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, 365, 369, and 372 of this Act, is amended by inserting after paragraph (17) the following new paragraph: ”(18) ENFORCEMENT OF ORDERS AGAINST PATERNAL OR MA- TERNAL GRANDPARENTS.\u2014Procedures under which, at the State’s option, any child support order enforced under this part with respect to a child of minor parents, if the custodial parent of such child is receiving assistance under the State program under part A, shall be enforceable, jointly and severally, against the parents of the noncustodial parent of such child.”. SEC. 374. NONDISCHARGEABILITY IN BANKRUPTCY OF CERTAIN DEBTS FOR THE SUPPORT OF A CHILD. (a) AMENDMENT TO TITLE 11 OF THE UNITED STATES CODE.\u2014 Section 523(a) of title 11, United States Code, is amended\u2014 (1) by striking ”or” at the end of paragraph (16); (2) by striking the period at the end of paragraph (17) and inserting ”; or”; (3) by adding at the end the following: ”(18) owed under State law to a State or municipality that is\u2014 ”(A) in the nature of support, and ”(B) enforceable under part D of title IV of the Social Security Act (42 U.S.C. 601 et seq.).”; and (4) in paragraph (5), by striking ”section 402(a)(26)” and inserting ”section 408(a)(4)”. (b) AMENDMENT TO THE SOCIAL SECURITY ACT.\u2014Section 456(b) (42 U.S.C. 656(b)) is amended to read as follows: ”(b) NONDISCHARGEABILITY.\u2014A debt (as defined in section 101 of title 11 of the United States Code) owed under State law to a State (as defined in such section) or municipality (as defined in such section) that is in the nature of support and that is enforceable under this part is not released by a discharge in bankruptcy under title 11 of the United States Code.”. (c) APPLICATION OF AMENDMENTS.\u2014The amendments made by this section shall apply only with respect to cases commenced under title 11 of the United States Code after the date of the enactment of this Act. 158 SEC. 375. CHILD SUPPORT ENFORCEMENT FOR INDIAN TRIBES. (a) CHILD SUPPORT ENFORCEMENT AGREEMENTS.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(b), 313(a), 333, 343(b), 370(a)(2), and 371(b) of this Act is amended\u2014 (1) by striking ”and” at the end of paragraph (31); (2) by striking the period at the end of paragraph (32) and inserting ”; and”; (3) by adding after paragraph (32) the following new para- graph: ”(33) provide that a State that receives funding pursuant to section 428 and that has within its borders Indian country (as defined in section 1151 of title 18, United States Code) may enter into cooperative agreements with an Indian tribe or tribal organization (as defined in subsections (e) and (l) of section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b)), if the Indian tribe or tribal organization demonstrates that such tribe or organization has an established tribal court system or a Court of Indian Offenses with the au- thority to establish paternity, establish, modify, and enforce support orders, and to enter support orders in accordance with child support guidelines established by such tribe or organiza- tion, under which the State and tribe or organization shall pro- vide for the cooperative delivery of child support enforcement services in Indian country and for the forwarding of all funding collected pursuant to the functions performed by the tribe or or- ganization to the State agency, or conversely, by the State agen- cy to the tribe or organization, which shall distribute such funding in accordance with such agreement; and (4) by adding at the end the following new sentence: ”Noth- ing in paragraph (33) shall void any provision of any coopera- tive agreement entered into before the date of the enactment of such paragraph, nor shall such paragraph deprive any State of jurisdiction over Indian country (as so defined) that is lawfully exercised under section 402 of the Act entitled ‘An Act to pre- scribe penalties for certain acts of violence or intimidation, and for other purposes’, approved April 11, 1968 (25 U.S.C. 1322).”. (b) DIRECT FEDERAL FUNDING TO INDIAN TRIBES AND TRIBAL ORGANIZATIONS.\u2014Section 455 (42 U.S.C. 655) is amended by add- ing at the end the following new subsection: ”(b) The Secretary may, in appropriate cases, make direct pay- ments under this part to an Indian tribe or tribal organization which has an approved child support enforcement plan under this title. In determining whether such payments are appropriate, the Secretary shall, at a minimum, consider whether services are being provided to eligible Indian recipients by the State agency through an agreement entered into pursuant to section 454(34).”. (c) COOPERATIVE ENFORCEMENT AGREEMENTS.\u2014Paragraph (7) of section 454 (42 U.S.C. 654) is amended by inserting ”and Indian tribes or tribal organizations (as defined in subsections (e) and (l) of section 4 of the Indian Self-Determination and Education Assist- ance Act (25 U.S.C. 450b))” after ”law enforcement officials”. (d) CONFORMING AMENDMENT.\u2014Subsection (c) of section 428 (42 U.S.C. 628) is amended to read as follows: 159 ”(c) For purposes of this section, the terms ‘Indian tribe’ and ‘tribal organization’ shall have the meanings given such terms by subsections (e) and (l) of section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b)), respectively.”. Subtitle H\u2014Medical Support SEC. 381. CORRECTION TO ERISA DEFINITION OF MEDICAL CHILD SUP- PORT ORDER. (a) IN GENERAL.\u2014Section 609(a)(2)(B) of the Employee Retire- ment Income Security Act of 1974 (29 U.S.C. 1169(a)(2)(B)) is amended\u2014 (1) by striking ”issued by a court of competent jurisdiction”; (2) by striking the period at the end of clause (ii) and in- serting a comma; and (3) by adding, after and below clause (ii), the following: ”if such judgment, decree, or order (I) is issued by a court of competent jurisdiction or (II) is issued through an ad- ministrative process established under State law and has the force and effect of law under applicable State law.”. (b) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall take effect on the date of the enactment of this Act. (2) PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1997.\u2014Any amendment to a plan required to be made by an amendment made by this section shall not be required to be made before the 1st plan year beginning on or after January 1, 1997, if\u2014 (A) during the period after the date before the date of the enactment of this Act and before such 1st plan year, the plan is operated in accordance with the requirements of the amendments made by this section; and (B) such plan amendment applies retroactively to the period after the date before the date of the enactment of this Act and before such 1st plan year. A plan shall not be treated as failing to be operated in accord- ance with the provisions of the plan merely because it operates in accordance with this paragraph. SEC. 382. ENFORCEMENT OF ORDERS FOR HEALTH CARE COVERAGE. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, 365, 369, 372, and 373 of this Act, is amended by insert- ing after paragraph (18) the following new paragraph: ”(19) HEALTH CARE COVERAGE.\u2014Procedures under which all child support orders enforced pursuant to this part shall in- clude a provision for the health care coverage of the child, and in the case in which a noncustodial parent provides such cov- erage and changes employment, and the new employer provides health care coverage, the State agency shall transfer notice of the provision to the employer, which notice shall operate to en- roll the child in the noncustodial parent’s health plan, unless the noncustodial parent contests the notice.”. 160 Subtitle I\u2014Enhancing Responsibility and Opportunity for Non-Residential Parents SEC. 391. GRANTS TO STATES FOR ACCESS AND VISITATION PRO- GRAMS. Part D of title IV (42 U.S.C. 651 669), as amended by section 353 of this Act, is amended by adding at the end the following new section: ”SEC. 469B. GRANTS TO STATES FOR ACCESS AND VISITATION PRO- GRAMS. ”(a) IN GENERAL.\u2014The Administration for Children and Fami- lies shall make grants under this section to enable States to estab- lish and administer programs to support and facilitate noncustodial parents’ access to and visitation of their children, by means of ac- tivities including mediation (both voluntary and mandatory), coun- seling, education, development of parenting plans, visitation enforce- ment (including monitoring, supervision and neutral drop-off and pickup), and development of guidelines for visitation and alternative custody arrangements. ”(b) AMOUNT OF GRANT.\u2014The amount of the grant to be made to a State under this section for a fiscal year shall be an amount equal to the lesser of\u2014 ”(1) 90 percent of State expenditures during the fiscal year for activities described in subsection (a); or ”(2) the allotment of the State under subsection (c) for the fiscal year. ”(c) ALLOTMENTS TO STATES.\u2014 ”(1) IN GENERAL.\u2014The allotment of a State for a fiscal year is the amount that bears the same ratio to $10,000,000 for grants under this section for the fiscal year as the number of children in the State living with only 1 biological parent bears to the total number of such children in all States. ”(2) MINIMUM ALLOTMENT.\u2014The Administration for Chil- dren and Families shall adjust allotments to States under paragraph (1) as necessary to ensure that no State is allotted less than\u2014 ”(A) $50,000 for fiscal year 1997 or 1998; or ”(B) $100,000 for any succeeding fiscal year. ”(d) NO SUPPLANTATION OF STATE EXPENDITURES FOR SIMILAR ACTIVITIES.\u2014A State to which a grant is made under this section may not use the grant to supplant expenditures by the State for ac- tivities specified in subsection (a), but shall use the grant to supple- ment such expenditures at a level at least equal to the level of such expenditures for fiscal year 1995. ”(e) STATE ADMINISTRATION.\u2014Each State to which a grant is made under this section\u2014 ”(1) may administer State programs funded with the grant, directly or through grants to or contracts with courts, local pub- lic agencies, or nonprofit private entities; ”(2) shall not be required to operate such programs on a statewide basis; and ”(3) shall monitor, evaluate, and report on such programs in accordance with regulations prescribed by the Secretary.”. 161 Subtitle J\u2014Effective Dates and Conforming Amendments SEC. 395. EFFECTIVE DATES AND CONFORMING AMENDMENTS. (a) IN GENERAL.\u2014Except as otherwise specifically provided (but subject to subsections (b) and (c))\u2014 (1) the provisions of this title requiring the enactment or amendment of State laws under section 466 of the Social Secu- rity Act, or revision of State plans under section 454 of such Act, shall be effective with respect to periods beginning on and after October 1, 1996; and (2) all other provisions of this title shall become effective upon the date of the enactment of this Act. (b) GRACE PERIOD FOR STATE LAW CHANGES.\u2014The provisions of this title shall become effective with respect to a State on the later of\u2014 (1) the date specified in this title, or (2) the effective date of laws enacted by the legislature of such State implementing such provisions, but in no event later than the 1st day of the 1st calendar quarter beginning after the close of the 1st regular session of the State legis- lature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature. (c) GRACE PERIOD FOR STATE CONSTITUTIONAL AMENDMENT.\u2014 A State shall not be found out of compliance with any requirement enacted by this title if the State is unable to so comply without amending the State constitution until the earlier of\u2014 (1) 1 year after the effective date of the necessary State con- stitutional amendment; or (2) 5 years after the date of the enactment of this Act. (d) CONFORMING AMENDMENTS.\u2014 (1) The following provisions are amended by striking ”ab- sent” each place it appears and inserting ”noncustodial”: (A) Section 451 (42 U.S.C. 651). (B) Subsections (a)(1), (a)(8), (a)(10)(E), (a)(10)(F), (f), and (h) of section 452 (42 U.S.C. 652). (C) Section 453(f) (42 U.S.C. 653(f)). (D) Paragraphs (8), (13), and (21)(A) of section 454 (42 U.S.C. 654). (E) Section 455(e)(1) (42 U.S.C. 655(e)(1)). (F) Section 458(a) (42 U.S.C. 658(a)). (G) Subsections (a), (b), and (c) of section 463 (42 U.S.C. 663). (H) Subsections (a)(3)(A), (a)(3)(C), (a)(6), and (a)(8)(B)(ii), the last sentence of subsection (a), and sub- sections (b)(1), (b)(3)(B), (b)(3)(B)(i), (b)(6)(A)(i), (b)(9), and (e) of section 466 (42 U.S.C. 666). (2) The following provisions are amended by striking ”an absent” each place it appears and inserting ”a noncustodial”: (A) Paragraphs (2) and (3) of section 453(c) (42 U.S.C. 653(c)). 162 (B) Subparagraphs (B) and (C) of section 454(9) (42 U.S.C. 654(9)). (C) Section 456(a)(3) (42 U.S.C. 656(a)(3)). (D) Subsections (a)(3)(A), (a)(6), (a)(8)(B)(i), (b)(3)(A), and (b)(3)(B) of section 466 (42 U.S.C. 666). (E) Paragraphs (2) and (4) of section 469(b) (42 U.S.C. 669(b)). TITLE IV\u2014RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS SEC. 400. STATEMENTS OF NATIONAL POLICY CONCERNING WELFARE AND IMMIGRATION. The Congress makes the following statements concerning na- tional policy with respect to welfare and immigration: (1) Self-sufficiency has been a basic principle of United States immigration law since this country’s earliest immigra- tion statutes. (2) It continues to be the immigration policy of the United States that\u2014 (A) aliens within the Nation’s borders not depend on public resources to meet their needs, but rather rely on their own capabilities and the resources of their families, their sponsors, and private organizations, and (B) the availability of public benefits not constitute an incentive for immigration to the United States. (3) Despite the principle of self-sufficiency, aliens have been applying for and receiving public benefits from Federal, State, and local governments at increasing rates. (4) Current eligibility rules for public assistance and unen- forceable financial support agreements have proved wholly in- capable of assuring that individual aliens not burden the public benefits system. (5) It is a compelling government interest to enact new rules for eligibility and sponsorship agreements in order to assure that aliens be self-reliant in accordance with national immigra- tion policy. (6) It is a compelling government interest to remove the in- centive for illegal immigration provided by the availability of public benefits. (7) With respect to the State authority to make determina- tions concerning the eligibility of qualified aliens for public ben- efits in this title, a State that chooses to follow the Federal clas- sification in determining the eligibility of such aliens for public assistance shall be considered to have chosen the least restric- tive means available for achieving the compelling governmental interest of assuring that aliens be self-reliant in accordance with national immigration policy. 163 Subtitle A\u2014Eligibility for Federal Benefits SEC. 401. ALIENS WHO ARE NOT QUALIFIED ALIENS INELIGIBLE FOR FEDERAL PUBLIC BENEFITS. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsection (b), an alien who is not a qualified alien (as defined in section 431) is not eligible for any Fed- eral public benefit (as defined in subsection (c)). (b) EXCEPTIONS.\u2014 (1) Subsection (a) shall not apply with respect to the follow- ing Federal public benefits: (A) Medical assistance under title XIX of the Social Se- curity Act (or any successor program to such title) for care and services that are necessary for the treatment of an emergency medical condition (as defined in section 1903(v)(3) of such Act) of the alien involved and are not re- lated to an organ transplant procedure, if the alien in- volved otherwise meets the eligibility requirements for med- ical assistance under the State plan approved under such title (other than the requirement of the receipt of aid or as- sistance under title IV of such Act, supplemental security income benefits under title XVI of such Act, or a State sup- plementary payment). (B) Short-term, non-cash, in-kind emergency disaster relief. (C) Public health assistance (not including any assist- ance under title XIX of the Social Security Act) for immuni- zations with respect to immunizable diseases and for test- ing and treatment of symptoms of communicable diseases whether or not such symptoms are caused by a commu- nicable disease. (D) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consulta- tion with appropriate Federal agencies and departments, which (i) deliver in-kind services at the community level, including through public or private nonprofit agencies; (ii) do not condition the provision of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (iii) are necessary for the protection of life or safety. (E) Programs for housing or community development assistance or financial assistance administered by the Sec- retary of Housing and Urban Development, any program under title V of the Housing Act of 1949, or any assistance under section 306C of the Consolidated Farm and Rural Development Act, to the extent that the alien is receiving such a benefit on the date of the enactment of this Act. (2) Subsection (a) shall not apply to any benefit payable under title II of the Social Security Act to an alien who is law- fully present in the United States as determined by the Attorney General, to any benefit if nonpayment of such benefit would contravene an international agreement described in section 233 164 of the Social Security Act, to any benefit if nonpayment would be contrary to section 202(t) of the Social Security Act, or to any benefit payable under title II of the Social Security Act to which entitlement is based on an application filed in or before the month in which this Act becomes law. (c) FEDERAL PUBLIC BENEFIT DEFINED.\u2014 (1) Except as provided in paragraph (2), for purposes of this title the term ”Federal public benefit” means\u2014 (A) any grant, contract, loan, professional license, or commercial license provided by an agency of the United States or by appropriated funds of the United States; and (B) any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individ- ual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States. (2) Such term shall not apply\u2014 (A) to any contract, professional license, or commercial license for a nonimmigrant whose visa for entry is related to such employment in the United States; or (B) with respect to benefits for an alien who as a work authorized nonimmigrant or as an alien lawfully admitted for permanent residence under the Immigration and Na- tionality Act qualified for such benefits and for whom the United States under reciprocal treaty agreements is re- quired to pay benefits, as determined by the Attorney Gen- eral, after consultation with the Secretary of State. SEC. 402. LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR CERTAIN FEDERAL PROGRAMS. (a) LIMITED ELIGIBILITY FOR SPECIFIED FEDERAL PROGRAMS.\u2014 (1) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in paragraph (2), an alien who is a qualified alien (as defined in section 431) is not eligible for any specified Federal program (as defined in paragraph (3)). (2) EXCEPTIONS.\u2014 (A) TIME-LIMITED EXCEPTION FOR REFUGEES AND ASYLEES.\u2014Paragraph (1) shall not apply to an alien until 5 years after the date\u2014 (i) an alien is admitted to the United States as a refugee under section 207 of the Immigration and Na- tionality Act; (ii) an alien is granted asylum under section 208 of such Act; or (iii) an alien’s deportation is withheld under sec- tion 243(h) of such Act. (B) CERTAIN PERMANENT RESIDENT ALIENS.\u2014Para- graph (1) shall not apply to an alien who\u2014 (i) is lawfully admitted to the United States for permanent residence under the Immigration and Na- tionality Act; and (ii)(I) has worked 40 qualifying quarters of cov- erage as defined under title II of the Social Security 165 Act or can be credited with such qualifying quarters as provided under section 435, and (II) in the case of any such qualifying quarter creditable for any period begin- ning after December 31, 1996, did not receive any Fed- eral means-tested public benefit (as provided under sec- tion 403) during any such period. (C) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014Para- graph (1) shall not apply to an alien who is lawfully resid- ing in any State and is\u2014 (i) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (ii) on active duty (other than active duty for train- ing) in the Armed Forces of the United States, or (iii) the spouse or unmarried dependent child of an individual described in clause (i) or (ii). (D) TRANSITION FOR ALIENS CURRENTLY RECEIVING BENEFITS.\u2014 (i) SSI.\u2014 (I) IN GENERAL.\u2014With respect to the specified Federal program described in paragraph (3)(A), during the period beginning on the date of the en- actment of this Act and ending on the date which is 1 year after such date of enactment, the Com- missioner of Social Security shall redetermine the eligibility of any individual who is receiving bene- fits under such program as of the date of the enact- ment of this Act and whose eligibility for such ben- efits may terminate by reason of the provisions of this subsection. (II) REDETERMINATION CRITERIA.\u2014 With re- spect to any redetermination under subclause (I), the Commissioner of Social Security shall apply the eligibility criteria for new applicants for bene- fits under such program. (III) GRANDFATHER PROVISION.\u2014The provi- sions of this subsection and the redetermination under subclause (I), shall only apply with respect to the benefits of an individual described in sub- clause (I) for months beginning on or after the date of the redetermination with respect to such individ- ual. (IV) NOTICE.\u2014Not later than March 31, 1997, the Commissioner of Social Security shall notify an individual described in subclause (I) of the pro- visions of this clause. (ii) FOOD STAMPS.\u2014 (I) IN GENERAL.\u2014With respect to the specified Federal program described in paragraph (3)(B), during the period beginning on the date of enact- ment of this Act and ending on the date which is 1 year after the date of enactment, the State agency shall, at the time of the recertification, recertify the eligibility of any individual who is receiving bene- 166 fits under such program as of the date of enact- ment of this Act and whose eligibility for such ben- efits may terminate by reason of the provisions of this subsection. (II) RECERTIFICATION CRITERIA.\u2014With respect to any recertification under subclause (I), the State agency shall apply the eligibility criteria for appli- cants for benefits under such program. (III) GRANDFATHER PROVISION.\u2014The provi- sions of this subsection and the recertification under subclause (I) shall only apply with respect to the eligibility of an alien for a program for months beginning on or after the date of recertification, if on the date of enactment of this Act the alien is lawfully residing in any State and is receiving benefits under such program on such date of enact- ment. (3) SPECIFIED FEDERAL PROGRAM DEFINED.\u2014For purposes of this title, the term ”specified Federal program” means any of the following: (A) SSI.\u2014The supplemental security income program under title XVI of the Social Security Act, including supple- mentary payments pursuant to an agreement for Federal administration under section 1616(a) of the Social Security Act and payments pursuant to an agreement entered into under section 212(b) of Public Law 93 66. (B) FOOD STAMPS.\u2014The food stamp program as de- fined in section 3(h) of the Food Stamp Act of 1977. (b) LIMITED ELIGIBILITY FOR DESIGNATED FEDERAL PRO- GRAMS.\u2014 (1) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in section 403 and paragraph (2), a State is authorized to determine the eligibility of an alien who is a qualified alien (as defined in section 431) for any des- ignated Federal program (as defined in paragraph (3)). (2) EXCEPTIONS.\u2014Qualified aliens under this paragraph shall be eligible for any designated Federal program. (A) TIME-LIMITED EXCEPTION FOR REFUGEES AND ASYLEES.\u2014 (i) An alien who is admitted to the United States as a refugee under section 207 of the Immigration and Nationality Act until 5 years after the date of an alien’s entry into the United States. (ii) An alien who is granted asylum under section 208 of such Act until 5 years after the date of such grant of asylum. (iii) An alien whose deportation is being withheld under section 243(h) of such Act until 5 years after such withholding. (B) CERTAIN PERMANENT RESIDENT ALIENS.\u2014An alien who\u2014 (i) is lawfully admitted to the United States for permanent residence under the Immigration and Na- tionality Act; and 167 (ii)(I) has worked 40 qualifying quarters of cov- erage as defined under title II of the Social Security Act or can be credited with such qualifying quarters as provided under section 435, and (II) in the case of any such qualifying quarter creditable for any period begin- ning after December 31, 1996, did not receive any Fed- eral means-tested public benefit (as provided under sec- tion 403) during any such period. (C) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014An alien who is lawfully residing in any State and is\u2014 (i) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (ii) on active duty (other than active duty for train- ing) in the Armed Forces of the United States, or (iii) the spouse or unmarried dependent child of an individual described in clause (i) or (ii). (D) TRANSITION FOR THOSE CURRENTLY RECEIVING BENEFITS.\u2014An alien who on the date of the enactment of this Act is lawfully residing in any State and is receiving benefits under such program on the date of the enactment of this Act shall continue to be eligible to receive such bene- fits until January 1, 1997. (3) DESIGNATED FEDERAL PROGRAM DEFINED.\u2014For purposes of this title, the term ”designated Federal program” means any of the following: (A) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES.\u2014The program of block grants to States for temporary assistance for needy families under part A of title IV of the Social Se- curity Act. (B) SOCIAL SERVICES BLOCK GRANT.\u2014The program of block grants to States for social services under title XX of the Social Security Act. (C) MEDICAID.\u2014A State plan approved under title XIX of the Social Security Act, other than medical assistance described in section 401(b)(1)(A). SEC. 403. FIVE-YEAR LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR FEDERAL MEANS-TESTED PUBLIC BENEFIT. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsections (b), (c), and (d), an alien who is a qualified alien (as defined in section 431) and who enters the United States on or after the date of the enactment of this Act is not eligible for any Federal means-tested public benefit for a period of five years beginning on the date of the alien’s entry into the Unit- ed States with a status within the meaning of the term ”qualified alien”. (b) EXCEPTIONS.\u2014The limitation under subsection (a) shall not apply to the following aliens: (1) EXCEPTION FOR REFUGEES AND ASYLEES.\u2014 (A) An alien who is admitted to the United States as a refugee under section 207 of the Immigration and Nation- ality Act. (B) An alien who is granted asylum under section 208 of such Act. 168 (C) An alien whose deportation is being withheld under section 243(h) of such Act. (2) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014An alien who is lawfully residing in any State and is\u2014 (A) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (B) on active duty (other than active duty for training) in the Armed Forces of the United States, or (C) the spouse or unmarried dependent child of an in- dividual described in subparagraph (A) or (B). (c) APPLICATION OF TERM FEDERAL MEANS-TESTED PUBLIC BENEFIT.\u2014 (1) The limitation under subsection (a) shall not apply to assistance or benefits under paragraph (2). (2) Assistance and benefits under this paragraph are as fol- lows: (A) Medical assistance described in section 401(b)(1)(A). (B) Short-term, non-cash, in-kind emergency disaster relief. (C) Assistance or benefits under the National School Lunch Act. (D) Assistance or benefits under the Child Nutrition Act of 1966. (E) Public health assistance (not including any assist- ance under title XIX of the Social Security Act) for immuni- zations with respect to immunizable diseases and for test- ing and treatment of symptoms of communicable diseases whether or not such symptoms are caused by a commu- nicable disease. (F) Payments for foster care and adoption assistance under parts B and E of title IV of the Social Security Act for a parent or a child who would, in the absence of sub- section (a), be eligible to have such payments made on the child’s behalf under such part, but only if the foster or adoptive parent (or parents) of such child is a qualified alien (as defined in section 431). (G) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consulta- tion with appropriate Federal agencies and departments, which (i) deliver in-kind services at the community level, including through public or private nonprofit agencies; (ii) do not condition the provision of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (iii) are necessary for the protection of life or safety. (H) Programs of student assistance under titles IV, V, IX, and X of the Higher Education Act of 1965, and titles III, VII, and VIII of the Public Health Service Act. (I) Means-tested programs under the Elementary and Secondary Education Act of 1965. 169 (J) Benefits under the Head Start Act. (K) Benefits under the Job Training Partnership Act. (d) SPECIAL RULE FOR REFUGEE AND ENTRANT ASSISTANCE FOR CUBAN AND HAITIAN ENTRANTS.\u2014The limitation under subsection (a) shall not apply to refugee and entrant assistance activities, au- thorized by title IV of the Immigration and Nationality Act and sec- tion 501 of the Refugee Education Assistance Act of 1980, for Cuban and Haitian entrants as defined in section 501(e)(2) of the Refugee Education Assistance Act of 1980. SEC. 404. NOTIFICATION AND INFORMATION REPORTING. (a) NOTIFICATION.\u2014Each Federal agency that administers a program to which section 401, 402, or 403 applies shall, directly or through the States, post information and provide general notifica- tion to the public and to program recipients of the changes regard- ing eligibility for any such program pursuant to this subtitle. (b) INFORMATION REPORTING UNDER TITLE IV OF THE SOCIAL SECURITY ACT.\u2014Part A of title IV of the Social Security Act is amended by inserting the following new section after section 411: ”SEC. 411A. STATE REQUIRED TO PROVIDE CERTAIN INFORMATION. ”Each State to which a grant is made under section 403 shall, at least 4 times annually and upon request of the Immigration and Naturalization Service, furnish the Immigration and Naturalization Service with the name and address of, and other identifying infor- mation on, any individual who the State knows is unlawfully in the United States.”. (c) SSI.\u2014Section 1631(e) of such Act (42 U.S.C. 1383(e)) is amended\u2014 (1) by redesignating the paragraphs (6) and (7) inserted by sections 206(d)(2) and 206(f)(1) of the Social Security Independ- ence and Programs Improvement Act of 1994 (Public Law 103 296; 108 Stat. 1514, 1515) as paragraphs (7) and (8), respec- tively; and (2) by adding at the end the following new paragraph: ”(9) Notwithstanding any other provision of law, the Commis- sioner shall, at least 4 times annually and upon request of the Im- migration and Naturalization Service (hereafter in this paragraph referred to as the ‘Service’), furnish the Service with the name and address of, and other identifying information on, any individual who the Commissioner knows is unlawfully in the United States, and shall ensure that each agreement entered into under section 1616(a) with a State provides that the State shall furnish such in- formation at such times with respect to any individual who the State knows is unlawfully in the United States.”. (d) INFORMATION REPORTING FOR HOUSING PROGRAMS.\u2014Title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended by adding at the end the following new section: ”SEC. 27. PROVISION OF INFORMATION TO LAW ENFORCEMENT AND OTHER AGENCIES. ”Notwithstanding any other provision of law, the Secretary shall, at least 4 times annually and upon request of the Immigra- tion and Naturalization Service (hereafter in this section referred to as the ‘Service’), furnish the Service with the name and address of, and other identifying information on, any individual who the Sec- 170 retary knows is unlawfully in the United States, and shall ensure that each contract for assistance entered into under section 6 or 8 of this Act with a public housing agency provides that the public housing agency shall furnish such information at such times with respect to any individual who the public housing agency knows is unlawfully in the United States.”. Subtitle B\u2014Eligibility for State and Local Public Benefits Programs SEC. 411. ALIENS WHO ARE NOT QUALIFIED ALIENS OR NON- IMMIGRANTS INELIGIBLE FOR STATE AND LOCAL PUBLIC BENEFITS. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsections (b) and (d), an alien who is not\u2014 (1) a qualified alien (as defined in section 431), (2) a nonimmigrant under the Immigration and National- ity Act, or (3) an alien who is paroled into the United States under section 212(d)(5) of such Act for less than one year, is not eligible for any State or local public benefit (as defined in subsection (c)). (b) EXCEPTIONS.\u2014Subsection (a) shall not apply with respect to the following State or local public benefits: (1) Assistance for health care items and services that are necessary for the treatment of an emergency medical condition (as defined in section 1903(v)(3) of the Social Security Act) of the alien involved and are not related to an organ transplant procedure. (2) Short-term, non-cash, in-kind emergency disaster relief. (3) Public health assistance for immunizations with respect to immunizable diseases and for testing and treatment of symp- toms of communicable diseases whether or not such symptoms are caused by a communicable disease. (4) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) spec- ified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consultation with appropriate Federal agencies and departments, which (A) deliver in-kind services at the community level, including through public or private nonprofit agencies; (B) do not condition the provision of assistance, the amount of assistance provided, or the cost of as- sistance provided on the individual recipient’s income or re- sources; and (C) are necessary for the protection of life or safety. (c) STATE OR LOCAL PUBLIC BENEFIT DEFINED.\u2014 (1) Except as provided in paragraphs (2) and (3), for pur- poses of this subtitle the term ”State or local public benefit” means\u2014 (A) any grant, contract, loan, professional license, or commercial license provided by an agency of a State or local government or by appropriated funds of a State or local government; and 171 (B) any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assistance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individ- ual, household, or family eligibility unit by an agency of a State or local government or by appropriated funds of a State or local government. (2) Such term shall not apply\u2014 (A) to any contract, professional license, or commercial license for a nonimmigrant whose visa for entry is related to such employment in the United States; or (B) with respect to benefits for an alien who as a work authorized nonimmigrant or as an alien lawfully admitted for permanent residence under the Immigration and Na- tionality Act qualified for such benefits and for whom the United States under reciprocal treaty agreements is re- quired to pay benefits, as determined by the Secretary of State, after consultation with the Attorney General. (3) Such term does not include any Federal public benefit under section 4001(c). (d) STATE AUTHORITY TO PROVIDE FOR ELIGIBILITY OF ILLEGAL ALIENS FOR STATE AND LOCAL PUBLIC BENEFITS.\u2014A State may pro- vide that an alien who is not lawfully present in the United States is eligible for any State or local public benefit for which such alien would otherwise be ineligible under subsection (a) only through the enactment of a State law after the date of the enactment of this Act which affirmatively provides for such eligibility. SEC. 412. STATE AUTHORITY TO LIMIT ELIGIBILITY OF QUALIFIED ALIENS FOR STATE PUBLIC BENEFITS. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsection (b), a State is authorized to de- termine the eligibility for any State public benefits of an alien who is a qualified alien (as defined in section 431), a nonimmigrant under the Immigration and Nationality Act, or an alien who is pa- roled into the United States under section 212(d)(5) of such Act for less than one year. (b) EXCEPTIONS.\u2014Qualified aliens under this subsection shall be eligible for any State public benefits. (1) TIME-LIMITED EXCEPTION FOR REFUGEES AND ASYLEES.\u2014 (A) An alien who is admitted to the United States as a refugee under section 207 of the Immigration and Nation- ality Act until 5 years after the date of an alien’s entry into the United States. (B) An alien who is granted asylum under section 208 of such Act until 5 years after the date of such grant of asy- lum. (C) An alien whose deportation is being withheld under section 243(h) of such Act until 5 years after such withhold- ing. (2) CERTAIN PERMANENT RESIDENT ALIENS.\u2014An alien who\u2014 172 (A) is lawfully admitted to the United States for per- manent residence under the Immigration and Nationality Act; and (B)(i) has worked 40 qualifying quarters of coverage as defined under title II of the Social Security Act or can be credited with such qualifying quarters as provided under section 435, and (ii) in the case of any such qualifying quarter creditable for any period beginning after December 31, 1996, did not receive any Federal means-tested public benefit (as provided under section 403) during any such pe- riod. (3) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014An alien who is lawfully residing in any State and is\u2014 (A) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (B) on active duty (other than active duty for training) in the Armed Forces of the United States, or (C) the spouse or unmarried dependent child of an in- dividual described in subparagraph (A) or (B). (4) TRANSITION FOR THOSE CURRENTLY RECEIVING BENE- FITS.\u2014An alien who on the date of the enactment of this Act is lawfully residing in any State and is receiving benefits on the date of the enactment of this Act shall continue to be eligible to receive such benefits until January 1, 1997. Subtitle C\u2014Attribution of Income and Affidavits of Support SEC. 421. FEDERAL ATTRIBUTION OF SPONSOR’S INCOME AND RE- SOURCES TO ALIEN. (a) IN GENERAL.\u2014Notwithstanding any other provision of law, in determining the eligibility and the amount of benefits of an alien for any Federal means-tested public benefits program (as provided under section 403), the income and resources of the alien shall be deemed to include the following: (1) The income and resources of any person who executed an affidavit of support pursuant to section 213A of the Immi- gration and Nationality Act (as added by section 423) on behalf of such alien. (2) The income and resources of the spouse (if any) of the person. (b) DURATION OF ATTRIBUTION PERIOD.\u2014Subsection (a) shall apply with respect to an alien until such time as the alien\u2014 (1) achieves United States citizenship through naturaliza- tion pursuant to chapter 2 of title III of the Immigration and Nationality Act; or (2)(A) has worked 40 qualifying quarters of coverage as de- fined under title II of the Social Security Act or can be credited with such qualifying quarters as provided under section 435, and (B) in the case of any such qualifying quarter creditable for any period beginning after December 31, 1996, did not receive 173 any Federal means-tested public benefit (as provided under sec- tion 403) during any such period. (c) REVIEW OF INCOME AND RESOURCES OF ALIEN UPON RE- APPLICATION.\u2014Whenever an alien is required to reapply for benefits under any Federal means-tested public benefits program, the appli- cable agency shall review the income and resources attributed to the alien under subsection (a). (d) APPLICATION.\u2014 (1) If on the date of the enactment of this Act, a Federal means-tested public benefits program attributes a sponsor’s in- come and resources to an alien in determining the alien’s eligi- bility and the amount of benefits for an alien, this section shall apply to any such determination beginning on the day after the date of the enactment of this Act. (2) If on the date of the enactment of this Act, a Federal means-tested public benefits program does not attribute a spon- sor’s income and resources to an alien in determining the alien’s eligibility and the amount of benefits for an alien, this section shall apply to any such determination beginning 180 days after the date of the enactment of this Act. SEC. 422. AUTHORITY FOR STATES TO PROVIDE FOR ATTRIBUTION OF SPONSORS INCOME AND RESOURCES TO THE ALIEN WITH RESPECT TO STATE PROGRAMS. (a) OPTIONAL APPLICATION TO STATE PROGRAMS.\u2014Except as provided in subsection (b), in determining the eligibility and the amount of benefits of an alien for any State public benefits (as de- fined in section 412(c)), the State or political subdivision that offers the benefits is authorized to provide that the income and resources of the alien shall be deemed to include\u2014 (1) the income and resources of any individual who exe- cuted an affidavit of support pursuant to section 213A of the Immigration and Nationality Act (as added by section 423) on behalf of such alien, and (2) the income and resources of the spouse (if any) of the individual. (b) EXCEPTIONS.\u2014Subsection (a) shall not apply with respect to the following State public benefits: (1) Assistance described in section 411(b)(1). (2) Short-term, non-cash, in-kind emergency disaster relief. (3) Programs comparable to assistance or benefits under the National School Lunch Act. (4) Programs comparable to assistance or benefits under the Child Nutrition Act of 1966. (5) Public health assistance for immunizations with respect to immunizable diseases and for testing and treatment of symp- toms of communicable diseases whether or not such symptoms are caused by a communicable disease. (6) Payments for foster care and adoption assistance. (7) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) spec- ified by the Attorney General of a State, after consultation with appropriate agencies and departments, which (A) deliver in- kind services at the community level, including through public or private nonprofit agencies; (B) do not condition the provision 174 of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or re- sources; and (C) are necessary for the protection of life or safety. SEC. 423. REQUIREMENTS FOR SPONSOR’S AFFIDAVIT OF SUPPORT. (a) IN GENERAL.\u2014Title II of the Immigration and Nationality Act is amended by inserting after section 213 the following new sec- tion: ”REQUIREMENTS FOR SPONSOR’S AFFIDAVIT OF SUPPORT ”SEC. 213A. (a) ENFORCEABILITY.\u2014(1) No affidavit of support may be accepted by the Attorney General or by any consular officer to establish that an alien is not excludable as a public charge under section 212(a)(4) unless such affidavit is executed as a contract\u2014 ”(A) which is legally enforceable against the sponsor by the sponsored alien, the Federal Government, and by any State (or any political subdivision of such State) which provides any means-tested public benefits program, but not later than 10 years after the alien last receives any such benefit; ”(B) in which the sponsor agrees to financially support the alien, so that the alien will not become a public charge; and ”(C) in which the sponsor agrees to submit to the jurisdic- tion of any Federal or State court for the purpose of actions brought under subsection (e)(2). ”(2) A contract under paragraph (1) shall be enforceable with respect to benefits provided to the alien until such time as the alien achieves United States citizenship through naturalization pursuant to chapter 2 of title III. ”(b) FORMS.\u2014Not later than 90 days after the date of enactment of this section, the Attorney General, in consultation with the Sec- retary of State and the Secretary of Health and Human Services, shall formulate an affidavit of support consistent with the provi- sions of this section. ”(c) REMEDIES.\u2014Remedies available to enforce an affidavit of support under this section include any or all of the remedies de- scribed in section 3201, 3203, 3204, or 3205 of title 28, United States Code, as well as an order for specific performance and pay- ment of legal fees and other costs of collection, and include cor- responding remedies available under State law. A Federal agency may seek to collect amounts owed under this section in accordance with the provisions of subchapter II of chapter 37 of title 31, United States Code. ”(d) NOTIFICATION OF CHANGE OF ADDRESS.\u2014 ”(1) IN GENERAL.\u2014The sponsor shall notify the Attorney General and the State in which the sponsored alien is currently resident within 30 days of any change of address of the sponsor during the period specified in subsection (a)(2). ”(2) PENALTY.\u2014Any person subject to the requirement of paragraph (1) who fails to satisfy such requirement shall be subject to a civil penalty of\u2014 ”(A) not less than $250 or more than $2,000, or ”(B) if such failure occurs with knowledge that the alien has received any means-tested public benefit, not less than $2,000 or more than $5,000. 175 ”(e) REIMBURSEMENT OF GOVERNMENT EXPENSES.\u2014(1)(A) Upon notification that a sponsored alien has received any benefit under any means-tested public benefits program, the appropriate Federal, State, or local official shall request reimbursement by the sponsor in the amount of such assistance. ”(B) The Attorney General, in consultation with the Secretary of Health and Human Services, shall prescribe such regulations as may be necessary to carry out subparagraph (A). ”(2) If within 45 days after requesting reimbursement, the ap- propriate Federal, State, or local agency has not received a response from the sponsor indicating a willingness to commence payments, an action may be brought against the sponsor pursuant to the affi- davit of support. ”(3) If the sponsor fails to abide by the repayment terms estab- lished by such agency, the agency may, within 60 days of such fail- ure, bring an action against the sponsor pursuant to the affidavit of support. ”(4) No cause of action may be brought under this subsection later than 10 years after the alien last received any benefit under any means-tested public benefits program. ”(5) If, pursuant to the terms of this subsection, a Federal, State, or local agency requests reimbursement from the sponsor in the amount of assistance provided, or brings an action against the sponsor pursuant to the affidavit of support, the appropriate agency may appoint or hire an individual or other person to act on behalf of such agency acting under the authority of law for purposes of col- lecting any moneys owed. Nothing in this subsection shall preclude any appropriate Federal, State, or local agency from directly re- questing reimbursement from a sponsor for the amount of assistance provided, or from bringing an action against a sponsor pursuant to an affidavit of support. ”(f) DEFINITIONS.\u2014For the purposes of this section\u2014 ”(1) SPONSOR.\u2014The term ‘sponsor’ means an individual who\u2014 ”(A) is a citizen or national of the United States or an alien who is lawfully admitted to the United States for per- manent residence; ”(B) is 18 years of age or over; ”(C) is domiciled in any of the 50 States or the District of Columbia; and ”(D) is the person petitioning for the admission of the alien under section 204.”. (b) CLERICAL AMENDMENT.\u2014The table of contents of such Act is amended by inserting after the item relating to section 213 the fol- lowing: ”Sec. 213A. Requirements for sponsor’s affidavit of support.”. (c) EFFECTIVE DATE.\u2014Subsection (a) of section 213A of the Im- migration and Nationality Act, as inserted by subsection (a) of this section, shall apply to affidavits of support executed on or after a date specified by the Attorney General, which date shall be not ear- lier than 60 days (and not later than 90 days) after the date the Attorney General formulates the form for such affidavits under subsection (b) of such section. 176 (d) BENEFITS NOT SUBJECT TO REIMBURSEMENT.\u2014Require- ments for reimbursement by a sponsor for benefits provided to a sponsored alien pursuant to an affidavit of support under section 213A of the Immigration and Nationality Act shall not apply with respect to the following: (1) Medical assistance described in section 401(b)(1)(A) or assistance described in section 411(b)(1). (2) Short-term, non-cash, in-kind emergency disaster relief. (3) Assistance or benefits under the National School Lunch Act. (4) Assistance or benefits under the Child Nutrition Act of 1966. (5) Public health assistance for immunizations (not includ- ing any assistance under title XIX of the Social Security Act) with respect to immunizable diseases and for testing and treat- ment of symptoms of communicable diseases whether or not such symptoms are caused by a communicable disease. (6) Payments for foster care and adoption assistance under parts B and E of title IV of the Social Security Act for a parent or a child, but only if the foster or adoptive parent (or parents) of such child is a qualified alien (as defined in section 431). (7) Programs, services, or assistance (such as soup kitch- ens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consultation with appro- priate Federal agencies and departments, which (A) deliver in- kind services at the community level, including through public or private nonprofit agencies; (B) do not condition the provision of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or re- sources; and (C) are necessary for the protection of life or safe- ty. (8) Programs of student assistance under titles IV, V, IX, and X of the Higher Education Act of 1965, and titles III, VII, and VIII of the Public Health Service Act. (9) Benefits under the Head Start Act. (10) Means-tested programs under the Elementary and Secondary Education Act of 1965. (11) Benefits under the Job Training Partnership Act. Subtitle D\u2014General Provisions SEC. 431. DEFINITIONS. (a) IN GENERAL.\u2014Except as otherwise provided in this title, the terms used in this title have the same meaning given such terms in section 101(a) of the Immigration and Nationality Act. (b) QUALIFIED ALIEN.\u2014For purposes of this title, the term ”qualified alien” means an alien who, at the time the alien applies for, receives, or attempts to receive a Federal public benefit, is\u2014 (1) an alien who is lawfully admitted for permanent resi- dence under the Immigration and Nationality Act, (2) an alien who is granted asylum under section 208 of such Act, (3) a refugee who is admitted to the United States under section 207 of such Act, 177 (4) an alien who is paroled into the United States under section 212(d)(5) of such Act for a period of at least 1 year, (5) an alien whose deportation is being withheld under sec- tion 243(h) of such Act, or (6) an alien who is granted conditional entry pursuant to section 203(a)(7) of such Act as in effect prior to April 1, 1980. SEC. 432. VERIFICATION OF ELIGIBILITY FOR FEDERAL PUBLIC BENE- FITS. (a) IN GENERAL.\u2014Not later than 18 months after the date of the enactment of this Act, the Attorney General of the United States, after consultation with the Secretary of Health and Human Serv- ices, shall promulgate regulations requiring verification that a per- son applying for a Federal public benefit (as defined in section 401(c)), to which the limitation under section 401 applies, is a qualified alien and is eligible to receive such benefit. Such regula- tions shall, to the extent feasible, require that information requested and exchanged be similar in form and manner to information re- quested and exchanged under section 1137 of the Social Security Act. (b) STATE COMPLIANCE.\u2014Not later than 24 months after the date the regulations described in subsection (a) are adopted, a State that administers a program that provides a Federal public benefit shall have in effect a verification system that complies with the reg- ulations. (c) AUTHORIZATION OF APPROPRIATIONS.\u2014There are authorized to be appropriated such sums as may be necessary to carry out the purpose of this section. SEC. 433. STATUTORY CONSTRUCTION. (a) LIMITATION.\u2014 (1) Nothing in this title may be construed as an entitlement or a determination of an individual’s eligibility or fulfillment of the requisite requirements for any Federal, State, or local gov- ernmental program, assistance, or benefits. For purposes of this title, eligibility relates only to the general issue of eligibility or ineligibility on the basis of alienage. (2) Nothing in this title may be construed as addressing alien eligibility for a basic public education as determined by the Supreme Court of the United States under Plyler v. Doe (457 U.S. 202) (1982). (b) NOT APPLICABLE TO FOREIGN ASSISTANCE.\u2014This title does not apply to any Federal, State, or local governmental program, as- sistance, or benefits provided to an alien under any program of for- eign assistance as determined by the Secretary of State in consulta- tion with the Attorney General. (c) SEVERABILITY.\u2014If any provision of this title or the applica- tion of such provision to any person or circumstance is held to be unconstitutional, the remainder of this title and the application of the provisions of such to any person or circumstance shall not be af- fected thereby. 178 SEC. 434. COMMUNICATION BETWEEN STATE AND LOCAL GOVERN- MENT AGENCIES AND THE IMMIGRATION AND NATU- RALIZATION SERVICE. Notwithstanding any other provision of Federal, State, or local law, no State or local government entity may be prohibited, or in any way restricted, from sending to or receiving from the Immigra- tion and Naturalization Service information regarding the immi- gration status, lawful or unlawful, of an alien in the United States. SEC. 435. QUALIFYING QUARTERS. For purposes of this title, in determining the number of qualify- ing quarters of coverage under title II of the Social Security Act an alien shall be credited with\u2014 (1) all of the qualifying quarters of coverage as defined under title II of the Social Security Act worked by a parent of such alien while the alien was under age 18, and (2) all of the qualifying quarters worked by a spouse of such alien during their marriage and the alien remains mar- ried to such spouse or such spouse is deceased. No such qualifying quarter of coverage that is creditable under title II of the Social Security Act for any period beginning after Decem- ber 31, 1996, may be credited to an alien under paragraph (1) or (2) if the parent or spouse (as the case may be) of such alien received any Federal means-tested public benefit (as provided under section 403) during the period for which such qualifying quarter of cov- erage is so credited. Subtitle E\u2014Conforming Amendments Relating to Assisted Housing SEC. 441. CONFORMING AMENDMENTS RELATING TO ASSISTED HOUS- ING. (a) LIMITATIONS ON ASSISTANCE.\u2014Section 214 of the Housing and Community Development Act of 1980 (42 U.S.C. 1436a) is amended\u2014 (1) by striking ”Secretary of Housing and Urban Develop- ment” each place it appears and inserting ”applicable Sec- retary”; (2) in subsection (b), by inserting after ”National Housing Act,” the following: ”the direct loan program under section 502 of the Housing Act of 1949 or section 502(c)(5)(D), 504, 521(a)(2)(A), or 542 of such Act, subtitle A of title III of the Cranston-Gonzalez National Affordable Housing Act,”; (3) in paragraphs (2) through (6) of subsection (d), by strik- ing ”Secretary” each place it appears and inserting ”applicable Secretary”; (4) in subsection (d), in the matter following paragraph (6), by striking ”the term ‘Secretary’ ” and inserting ”the term ‘appli- cable Secretary’ ”; and (5) by adding at the end the following new subsection: ”(h) For purposes of this section, the term ‘applicable Secretary’ means\u2014 ”(1) the Secretary of Housing and Urban Development, with respect to financial assistance administered by such Secretary 179 and financial assistance under subtitle A of title III of the Cranston-Gonzalez National Affordable Housing Act; and ”(2) the Secretary of Agriculture, with respect to financial assistance administered by such Secretary.”. (b) CONFORMING AMENDMENTS.\u2014Section 501(h) of the Housing Act of 1949 (42 U.S.C. 1471(h)) is amended\u2014 (1) by striking ”(1)”; (2) by striking ”by the Secretary of Housing and Urban De- velopment”; and (3) by striking paragraph (2). Subtitle F\u2014Earned Income Credit Denied to Unauthorized Employees SEC. 451. EARNED INCOME CREDIT DENIED TO INDIVIDUALS NOT AU- THORIZED TO BE EMPLOYED IN THE UNITED STATES. (a) IN GENERAL.\u2014Section 32(c)(1) of the Internal Revenue Code of 1986 (relating to individuals eligible to claim the earned income credit) is amended by adding at the end the following new subpara- graph: ”(F) IDENTIFICATION NUMBER REQUIREMENT.\u2014The term ‘eligible individual’ does not include any individual who does not include on the return of tax for the taxable year\u2014 ”(i) such individual’s taxpayer identification num- ber, and ”(ii) if the individual is married (within the mean- ing of section 7703), the taxpayer identification number of such individual’s spouse.”. (b) SPECIAL IDENTIFICATION NUMBER.\u2014Section 32 of such Code is amended by adding at the end the following new subsection: ”(l) IDENTIFICATION NUMBERS.\u2014Solely for purposes of sub- sections (c)(1)(F) and (c)(3)(D), a taxpayer identification number means a social security number issued to an individual by the So- cial Security Administration (other than a social security number issued pursuant to clause (II) (or that portion of clause (III) that re- lates to clause (II)) of section 205(c)(2)(B)(i) of the Social Security Act).”. (c) EXTENSION OF PROCEDURES APPLICABLE TO MATHEMATICAL OR CLERICAL ERRORS.\u2014Section 6213(g)(2) of such Code (relating to the definition of mathematical or clerical errors) is amended by striking ”and’ at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting a comma, and by in- serting after subparagraph (E) the following new subparagraphs: ”(F) an omission of a correct taxpayer identification number required under section 32 (relating to the earned income credit) to be included on a return, and ”(G) an entry on a return claiming the credit under sec- tion 32 with respect to net earnings from self-employment described in section 32(c)(2)(A) to the extent the tax imposed by section 1401 (relating to self-employment tax) on such net earnings has not been paid.”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply with respect to returns the due date for which (without regard to extensions) is more than 30 days after the date of the en- actment of this Act. 180 TITLE V\u2014CHILD PROTECTION SEC. 501. AUTHORITY OF STATES TO MAKE FOSTER CARE MAINTE- NANCE PAYMENTS ON BEHALF OF CHILDREN IN ANY PRI- VATE CHILD CARE INSTITUTION. Section 472(c)(2) of the Social Security Act (42 U.S.C. 672(c)(2)) is amended by striking ”nonprofit”. SEC. 502. EXTENSION OF ENHANCED MATCH FOR IMPLEMENTATION OF STATEWIDE AUTOMATED CHILD WELFARE INFORMA- TION SYSTEMS. Section 13713(b)(2) of the Omnibus Budget Reconciliation Act of 1993 (42 U.S.C. 674 note; 107 Stat. 657) is amended by striking ”1996” and inserting ”1997”. SEC. 503. NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE. Part B of title IV of the Social Security Act (42 U.S.C. 620 628a) is amended by adding at the end the following: ”SEC. 429A. NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE. ”(a) IN GENERAL.\u2014The Secretary shall conduct a national study based on random samples of children who are at risk of child abuse or neglect, or are determined by States to have been abused or ne- glected. ”(b) REQUIREMENTS.\u2014The study required by subsection (a) shall\u2014 ”(1) have a longitudinal component; and ”(2) yield data reliable at the State level for as many States as the Secretary determines is feasible. ”(c) PREFERRED CONTENTS.\u2014In conducting the study required by subsection (a), the Secretary should\u2014 ”(1) carefully consider selecting the sample from cases of confirmed abuse or neglect; and ”(2) follow each case for several years while obtaining infor- mation on, among other things\u2014 ”(A) the type of abuse or neglect involved; ”(B) the frequency of contact with State or local agen- cies; ”(C) whether the child involved has been separated from the family, and, if so, under what circumstances; ”(D) the number, type, and characteristics of out-of- home placements of the child; and ”(E) the average duration of each placement. ”(d) REPORTS.\u2014 ”(1) IN GENERAL.\u2014From time to time, the Secretary shall prepare reports summarizing the results of the study required by subsection (a). ”(2) AVAILABILITY.\u2014The Secretary shall make available to the public any report prepared under paragraph (1), in writing or in the form of an electronic data tape. ”(3) AUTHORITY TO CHARGE FEE.\u2014The Secretary may charge and collect a fee for the furnishing of reports under paragraph (2). ”(e) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated to 181 the Secretary for each of fiscal years 1996 through 2002 $6,000,000 to carry out this section.”. SEC. 504. REDESIGNATION OF SECTION 1123. The Social Security Act is amended by redesignating section 1123, the second place it appears (42 U.S.C. 1320a 1a), as section 1123A. SEC. 505. KINSHIP CARE. Section 471(a) of the Social Security Act (42 U.S.C. 671(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (16); (2) by striking the period at the end of paragraph (17) and inserting ”; and”; and (3) by adding at the end the following: ”(18) provides that the State shall consider giving pref- erence to an adult relative over a non-related caregiver when determining a placement for a child, provided that the relative caregiver meets all relevant State child protection standards.”. TITLE VI\u2014CHILD CARE SEC. 601. SHORT TITLE AND REFERENCES. (a) SHORT TITLE.\u2014This title may be cited as the ”Child Care and Development Block Grant Amendments of 1996”. (b) REFERENCES.\u2014Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provi- sion of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858 et seq.). SEC. 602. GOALS. Section 658A (42 U.S.C. 9801 note) is amended\u2014 (1) in the section heading by inserting ”AND GOALS” after ”TITLE”; (2) by inserting ”(a) SHORT TITLE.\u2014” before ”This”; and (3) by adding at the end the following: ”(b) GOALS.\u2014The goals of this subchapter are\u2014 ”(1) to allow each State maximum flexibility in developing child care programs and policies that best suit the needs of chil- dren and parents within such State; ”(2) to promote parental choice to empower working parents to make their own decisions on the child care that best suits their family’s needs; ”(3) to encourage States to provide consumer education in- formation to help parents make informed choices about child care; ”(4) to assist States to provide child care to parents trying to achieve independence from public assistance; and ”(5) to assist States in implementing the health, safety, li- censing, and registration standards established in State regula- tions.”. 182 SEC. 603. AUTHORIZATION OF APPROPRIATIONS AND ENTITLEMENT AUTHORITY. (a) IN GENERAL.\u2014Section 658B (42 U.S.C. 9858) is amended to read as follows: ”SEC. 658B. AUTHORIZATION OF APPROPRIATIONS. ”There is authorized to be appropriated to carry out this sub- chapter $1,000,000,000 for each of the fiscal years 1996 through 2002.”. (b) SOCIAL SECURITY ACT.\u2014Part A of title IV of the Social Se- curity Act (42 U.S.C. 601 617) is amended by adding at the end the following new section: ”SEC. 418. FUNDING FOR CHILD CARE. ”(a) GENERAL CHILD CARE ENTITLEMENT.\u2014 ”(1) GENERAL ENTITLEMENT.\u2014Subject to the amount appro- priated under paragraph (3), each State shall, for the purpose of providing child care assistance, be entitled to payments under a grant under this subsection for a fiscal year in an amount equal to\u2014 ”(A) the sum of the total amount required to be paid to the State under section 403 for fiscal year 1994 or 1995 (whichever is greater) with respect to amounts expended for child care under section\u2014 ”(i) 402(g) of this Act (as such section was in effect before October 1, 1995); and ”(ii) 402(i) of this Act (as so in effect); or ”(B) the average of the total amounts required to be paid to the State for fiscal years 1992 through 1994 under the sections referred to in subparagraph (A); whichever is greater. ”(2) REMAINDER.\u2014 ”(A) GRANTS.\u2014The Secretary shall use any amounts appropriated for a fiscal year under paragraph (3), and re- maining after the reservation described in paragraph (4) and after grants are awarded under paragraph (1), to make grants to States under this paragraph. ”(B) AMOUNT.\u2014Subject to subparagraph (C), the amount of a grant awarded to a State for a fiscal year under this paragraph shall be based on the formula used for determining the amount of Federal payments to the State under section 403(n) (as such section was in effect be- fore October 1, 1995). ”(C) MATCHING REQUIREMENT.\u2014The Secretary shall pay to each eligible State in a fiscal year an amount, under a grant under subparagraph (A), equal to the Federal med- ical assistance percentage for such State for fiscal year 1995 (as defined in section 1905(b)) of so much of the ex- penditures by the State for child care in such year as exceed the State set-aside for such State under paragraph (1)(A) for such year and the amount of State expenditures in fis- cal year 1994 or 1995 (whichever is greater) that equal the non-Federal share for the programs described in subpara- graph (A) of paragraph (1). ”(D) REDISTRIBUTION.\u2014 183 ”(i) IN GENERAL.\u2014With respect to any fiscal year, if the Secretary determines (in accordance with clause (ii)) that amounts under any grant awarded to a State under this paragraph for such fiscal year will not be used by such State during such fiscal year for carrying out the purpose for which the grant is made, the Sec- retary shall make such amounts available in the subse- quent fiscal year for carrying out such purpose to 1 or more States which apply for such funds to the extent the Secretary determines that such States will be able to use such additional amounts for carrying out such purpose. Such available amounts shall be redistributed to a State pursuant to section 403(n) (as such section was in effect before October 1, 1995) by substituting ‘the number of children residing in all States applying for such funds’ for ‘the number of children residing in the United States in the second preceding fiscal year’. ”(ii) TIME OF DETERMINATION AND DISTRIBUTION.\u2014 The determination of the Secretary under clause (i) for a fiscal year shall be made not later than the end of the first quarter of the subsequent fiscal year. The re- distribution of amounts under clause (i) shall be made as close as practicable to the date on which such deter- mination is made. Any amount made available to a State from an appropriation for a fiscal year in accord- ance with this subparagraph shall, for purposes of this part, be regarded as part of such State’s payment (as determined under this subsection) for the fiscal year in which the redistribution is made. ”(3) APPROPRIATION.\u2014For grants under this section, there are appropriated\u2014 ”(A) $1,967,000,000 for fiscal year 1997; ”(B) $2,067,000,000 for fiscal year 1998; ”(C) $2,167,000,000 for fiscal year 1999; ”(D) $2,367,000,000 for fiscal year 2000; ”(E) $2,567,000,000 for fiscal year 2001; and ”(F) $2,717,000,000 for fiscal year 2002. ”(4) INDIAN TRIBES.\u2014The Secretary shall reserve not less than 1 percent, and not more than 2 percent, of the aggregate amount appropriated to carry out this section in each fiscal year for payments to Indian tribes and tribal organizations. ”(b) USE OF FUNDS.\u2014 ”(1) IN GENERAL.\u2014Amounts received by a State under this section shall only be used to provide child care assistance. Amounts received by a State under a grant under subsection (a)(1) shall be available for use by the State without fiscal year limitation. ”(2) USE FOR CERTAIN POPULATIONS.\u2014A State shall ensure that not less than 70 percent of the total amount of funds re- ceived by the State in a fiscal year under this section are used to provide child care assistance to families who are receiving assistance under a State program under this part, families who are attempting through work activities to transition off of such 184 assistance program, and families who are at risk of becoming dependent on such assistance program. ”(c) APPLICATION OF CHILD CARE AND DEVELOPMENT BLOCK GRANT ACT of 1990.\u2014Notwithstanding any other provision of law, amounts provided to a State under this section shall be transferred to the lead agency under the Child Care and Development Block Grant Act of 1990, integrated by the State into the programs estab- lished by the State under such Act, and be subject to requirements and limitations of such Act. ”(d) DEFINITION.\u2014As used in this section, the term ‘State’ means each of the 50 States or the District of Columbia.”. SEC. 604. LEAD AGENCY. Section 658D(b) (42 U.S.C. 9858b(b)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A), by striking ”State” the first place that such appears and inserting ”governmental or nongovernmental”; and (B) in subparagraph (C), by inserting ”with sufficient time and Statewide distribution of the notice of such hear- ing,” after ”hearing in the State”; and (2) in paragraph (2), by striking the second sentence. SEC. 605. APPLICATION AND PLAN. Section 658E (42 U.S.C. 9858c) is amended\u2014 (1) in subsection (b)\u2014 (A) by striking ”implemented\u2014” and all that follows through ”(2)” and inserting ”implemented”; and (B) by striking ”for subsequent State plans”; (2) in subsection (c)\u2014 (A) in paragraph (2)\u2014 (i) in subparagraph (A)\u2014 (I) in clause (i) by striking ”, other than through assistance provided under paragraph (3)(C),”; and (II) by striking ”except” and all that follows through ”1992”, and inserting ”and provide a de- tailed description of the procedures the State will implement to carry out the requirements of this subparagraph”; (ii) in subparagraph (B)\u2014 (I) by striking ”Provide assurances” and in- serting ”Certify”; and (II) by inserting before the period at the end ”and provide a detailed description of such proce- dures”; (iii) in subparagraph (C)\u2014 (I) by striking ”Provide assurances” and in- serting ”Certify”; and (II) by inserting before the period at the end ”and provide a detailed description of how such record is maintained and is made available”; (iv) by amending subparagraph (D) to read as fol- lows: 185 ”(D) CONSUMER EDUCATION INFORMATION.\u2014Certify that the State will collect and disseminate to parents of eli- gible children and the general public, consumer education information that will promote informed child care choices.”; (v) in subparagraph (E), to read as follows: ”(E) COMPLIANCE WITH STATE LICENSING REQUIRE- MENTS.\u2014 ”(i) IN GENERAL.\u2014Certify that the State has in ef- fect licensing requirements applicable to child care services provided within the State, and provide a de- tailed description of such requirements and of how such requirements are effectively enforced. Nothing in the preceding sentence shall be construed to require that licensing requirements be applied to specific types of providers of child care services. ”(ii) INDIAN TRIBES AND TRIBAL ORGANIZATIONS.\u2014 In lieu of any licensing and regulatory requirements applicable under State and local law, the Secretary, in consultation with Indian tribes and tribal organiza- tions, shall develop minimum child care standards (that appropriately reflect tribal needs and available resources) that shall be applicable to Indian tribes and tribal organization receiving assistance under this sub- chapter.”; (vi) in subparagraph (F) by striking ”Provide as- surances” and inserting ”Certify”; (vii) in subparagraph (G) by striking ”Provide as- surances” and inserting ”Certify”; and (viii) by striking subparagraphs (H), (I), and (J) and inserting the following: ”(H) MEETING THE NEEDS OF CERTAIN POPULATIONS.\u2014 Demonstrate the manner in which the State will meet the specific child care needs of families who are receiving as- sistance under a State program under part A of title IV of the Social Security Act, families who are attempting through work activities to transition off of such assistance program, and families that are at risk of becoming depend- ent on such assistance program.”; (B) in paragraph (3)\u2014 (i) in subparagraph (A), by striking ”(B) and (C)” and inserting ”(B) through (D)”; (ii) in subparagraph (B)\u2014 (I) by striking ”.\u2014Subject to the reservation contained in subparagraph (C), the” and inserting ”AND RELATED ACTIVITIES.\u2014The”; (II) in clause (i) by striking ”; and” at the end and inserting a period; (III) by striking ”for\u2014” and all that follows through ”section 658E(c)(2)(A)” and inserting ”for child care services on a sliding fee scale basis, ac- tivities that improve the quality or availability of such services, and any other activity that the State deems appropriate to realize any of the goals speci- 186 fied in paragraphs (2) through (5) of section 658A(b)”; and (IV) by striking clause (ii); (iii) by amending subparagraph (C) to read as fol- lows: ”(C) LIMITATION ON ADMINISTRATIVE COSTS.\u2014Not more than 5 percent of the aggregate amount of funds available to the State to carry out this subchapter by a State in each fiscal year may be expended for administrative costs in- curred by such State to carry out all of its functions and duties under this subchapter. As used in the preceding sen- tence, the term ‘administrative costs’ shall not include the costs of providing direct services.”; and (iv) by adding at the end thereof the following: ”(D) ASSISTANCE FOR CERTAIN FAMILIES.\u2014A State shall ensure that a substantial portion of the amounts available (after the State has complied with the requirement of sec- tion 418(b)(2) of the Social Security Act with respect to each of the fiscal years 1997 through 2002) to the State to carry out activities under this subchapter in each fiscal year is used to provide assistance to low-income working families other than families described in paragraph (2)(H).”; and (C) in paragraph (4)(A)\u2014 (i) by striking ”provide assurances” and inserting ”certify”; (ii) in the first sentence by inserting ”and shall provide a summary of the facts relied on by the State to determine that such rates are sufficient to ensure such access” before the period; and (iii) by striking the last sentence. SEC. 606. LIMITATION ON STATE ALLOTMENTS. Section 658F(b)(1) (42 U.S.C. 9858d(b)(1)) is amended by strik- ing ”No” and inserting ”Except as provided for in section 658O(c)(6), no”. SEC. 607. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE. Section 658G (42 U.S.C. 9858e) is amended to read as follows: ”SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE. ”A State that receives funds to carry out this subchapter for a fiscal year, shall use not less than 4 percent of the amount of such funds for activities that are designed to provide comprehensive consumer education to parents and the public, activities that in- crease parental choice, and activities designed to improve the qual- ity and availability of child care (such as resource and referral serv- ices).”. SEC. 608. REPEAL OF EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER-SCHOOL CARE REQUIREMENT. Section 658H (42 U.S.C. 9858f) is repealed. SEC. 609. ADMINISTRATION AND ENFORCEMENT. Section 658I(b) (42 U.S.C. 9858g(b)) is amended\u2014 (1) in paragraph (1), by striking ”, and shall have” and all that follows through ”(2)”; and 187 (2) in the matter following clause (ii) of paragraph (2)(A), by striking ”finding and that” and all that follows through the period and inserting ”finding and shall require that the State reimburse the Secretary for any funds that were improperly ex- pended for purposes prohibited or not authorized by this sub- chapter, that the Secretary deduct from the administrative por- tion of the State allotment for the following fiscal year an amount that is less than or equal to any improperly expended funds, or a combination of such options.”. SEC. 610. PAYMENTS. Section 658J(c) (42 U.S.C. 9858h(c)) is amended\u2014 (1) by striking ”expended” and inserting ”obligated”; and (2) by striking ”3 fiscal years” and inserting ”fiscal year”. SEC. 611. ANNUAL REPORT AND AUDITS. Section 658K (42 U.S.C. 9858i) is amended\u2014 (1) in the section heading by striking ”ANNUAL REPORT” and inserting ”REPORTS”; (2) in subsection (a), to read as follows: ”(a) REPORTS.\u2014 ”(1) COLLECTION OF INFORMATION BY STATES.\u2014 ”(A) IN GENERAL.\u2014A State that receives funds to carry out this subchapter shall collect the information described in subparagraph (B) on a monthly basis. ”(B) REQUIRED INFORMATION.\u2014The information re- quired under this subparagraph shall include, with respect to a family unit receiving assistance under this subchapter information concerning\u2014 ”(i) family income; ”(ii) county of residence; ”(iii) the gender, race, and age of children receiving such assistance; ”(iv) whether the family includes only 1 parent; ”(v) the sources of family income, including the amount obtained from (and separately identified)\u2014 ”(I) employment, including self-employment; ”(II) cash or other assistance under part A of title IV of the Social Security Act; ”(III) housing assistance; ”(IV) assistance under the Food Stamp Act of 1977; and ”(V) other assistance programs; ”(vi) the number of months the family has received benefits; ”(vii) the type of child care in which the child was enrolled (such as family child care, home care, or cen- ter-based child care); ”(viii) whether the child care provider involved was a relative; ”(ix) the cost of child care for such families; and ”(x) the average hours per week of such care; during the period for which such information is required to be submitted. 188 ”(C) SUBMISSION TO SECRETARY.\u2014A State described in subparagraph (A) shall, on a quarterly basis, submit the information required to be collected under subparagraph (B) to the Secretary. ”(D) SAMPLING.\u2014The Secretary may disapprove the in- formation collected by a State under this paragraph if the State uses sampling methods to collect such information. ”(2) BIANNUAL REPORTS.\u2014Not later than December 31, 1997, and every 6 months thereafter, a State described in para- graph (1)(A) shall prepare and submit to the Secretary a report that includes aggregate data concerning\u2014 ”(A) the number of child care providers that received funding under this subchapter as separately identified based on the types of providers listed in section 658P(5); ”(B) the monthly cost of child care services, and the portion of such cost that is paid for with assistance pro- vided under this subchapter, listed by the type of child care services provided; ”(C) the number of payments made by the State through vouchers, contracts, cash, and disregards under public benefit programs, listed by the type of child care services provided; ”(D) the manner in which consumer education informa- tion was provided to parents and the number of parents to whom such information was provided; and ”(E) the total number (without duplication) of children and families served under this subchapter; during the period for which such report is required to be sub- mitted.”; and (2) in subsection (b)\u2014 (A) in paragraph (1) by striking ”a application” and in- serting ”an application”; (B) in paragraph (2) by striking ”any agency admin- istering activities that receive” and inserting ”the State that receives”; and (C) in paragraph (4) by striking ”entitles” and inserting ”entitled”. SEC. 612. REPORT BY THE SECRETARY. Section 658L (42 U.S.C. 9858j) is amended\u2014 (1) by striking ”1993” and inserting ”1997”; (2) by striking ”annually” and inserting ”biennially”; and (3) by striking ”Education and Labor” and inserting ”Eco- nomic and Educational Opportunities”. SEC. 613. ALLOTMENTS. Section 658O (42 U.S.C. 9858m) is amended\u2014 (1) in subsection (a)\u2014 (A) in paragraph (1) (i) by striking ”POSSESSIONS” and inserting ”POS- SESSIONS”; (ii) by inserting ”and” after ”States,”; and (iii) by striking ”, and the Trust Territory of the Pacific Islands”; and 189 (B) in paragraph (2), by striking ”more than 3 percent” and inserting ”less than 1 percent, and not more than 2 percent,”; (2) in subsection (c)\u2014 (A) in paragraph (5) by striking ”our” and inserting ”out”; and (B) by adding at the end thereof the following new paragraph: ”(6) CONSTRUCTION OR RENOVATION OF FACILITIES.\u2014 ”(A) REQUEST FOR USE OF FUNDS.\u2014An Indian tribe or tribal organization may submit to the Secretary a request to use amounts provided under this subsection for construc- tion or renovation purposes. ”(B) DETERMINATION.\u2014With respect to a request sub- mitted under subparagraph (A), and except as provided in subparagraph (C), upon a determination by the Secretary that adequate facilities are not otherwise available to an Indian tribe or tribal organization to enable such tribe or organization to carry out child care programs in accord- ance with this subchapter, and that the lack of such facili- ties will inhibit the operation of such programs in the fu- ture, the Secretary may permit the tribe or organization to use assistance provided under this subsection to make pay- ments for the construction or renovation of facilities that will be used to carry out such programs. ”(C) LIMITATION.\u2014The Secretary may not permit an In- dian tribe or tribal organization to use amounts provided under this subsection for construction or renovation if such use will result in a decrease in the level of child care serv- ices provided by the tribe or organization as compared to the level of such services provided by the tribe or organiza- tion in the fiscal year preceding the year for which the de- termination under subparagraph (A) is being made. ”(D) UNIFORM PROCEDURES.\u2014The Secretary shall de- velop and implement uniform procedures for the solicita- tion and consideration of requests under this paragraph.”; and (3) in subsection (e), by adding at the end thereof the fol- lowing new paragraph: ”(4) INDIAN TRIBES OR TRIBAL ORGANIZATIONS.\u2014Any por- tion of a grant or contract made to an Indian tribe or tribal or- ganization under subsection (c) that the Secretary determines is not being used in a manner consistent with the provision of this subchapter in the period for which the grant or contract is made available, shall be allotted by the Secretary to other tribes or organizations that have submitted applications under sub- section (c) in accordance with their respective needs.”. SEC. 614. DEFINITIONS. Section 658P (42 U.S.C. 9858n) is amended\u2014 (1) in paragraph (2), in the first sentence by inserting ”or as a deposit for child care services if such a deposit is required of other children being cared for by the provider” after ”child care services”; and (2) by striking paragraph (3); 190 (3) in paragraph (4)(B), by striking ”75 percent” and insert- ing ”85 percent”; (4) in paragraph (5)(B)\u2014 (A) by inserting ”great grandchild, sibling (if such pro- vider lives in a separate residence),” after ”grandchild,”; (B) by striking ”is registered and”; and (C) by striking ”State” and inserting ”applicable”. (5) by striking paragraph (10); (6) in paragraph (13)\u2014 (A) by inserting ”or” after ”Samoa,”; and (B) by striking ”, and the Trust Territory of the Pacific Islands”; (7) in paragraph (14)\u2014 (A) by striking ”The term” and inserting the following: ”(A) IN GENERAL.\u2014The term”; and (B) by adding at the end thereof the following new sub- paragraph: ”(B) OTHER ORGANIZATIONS.\u2014Such term includes a Native Hawaiian Organization, as defined in section 4009(4) of the Augustus F. Hawkins-Robert T. Stafford Ele- mentary and Secondary School Improvement Amendments of 1988 (20 U.S.C. 4909(4)) and a private nonprofit organi- zation established for the purpose of serving youth who are Indians or Native Hawaiians.”. SEC. 615. EFFECTIVE DATE. (a) IN GENERAL.\u2014Except as provided in subsection (b), this title and the amendments made by this title shall take effect on October 1, 1996. (b) EXCEPTION.\u2014The amendment made by section 603(a) shall take effect on the date of enactment of this Act. TITLE VII\u2014CHILD NUTRITION PROGRAMS Subtitle A\u2014National School Lunch Act SEC. 701. STATE DISBURSEMENT TO SCHOOLS. (a) IN GENERAL.\u2014Section 8 of the National School Lunch Act (42 U.S.C. 1757) is amended\u2014 (1) in the third sentence, by striking ”Nothing” and all that follows through ”educational agency to” and inserting ”The State educational agency may”; (2) by striking the fourth and fifth sentences; (3) by redesignating the first through seventh sentences, as amended by paragraph (2), as subsections (a) through (g), re- spectively; (4) in subsection (b), as redesignated by paragraph (3), by striking ”the preceding sentence” and inserting ”subsection (a)”; and (5) in subsection (d), as redesignated by paragraph (3), by striking ”Such food costs” and inserting ”Use of funds paid to States”. 191 (b) DEFINITION OF CHILD.\u2014Section 12(d) of the National School Lunch Act (42 U.S.C. 1760(d)) is amended by adding at the end the following: ”(9) CHILD.\u2014 ”(A) IN GENERAL.\u2014The term ‘child’ includes an indi- vidual, regardless of age, who\u2014 ”(i) is determined by a State educational agency, in accordance with regulations prescribed by the Sec- retary, to have 1 or more mental or physical disabil- ities; and ”(ii) is attending any institution, as defined in sec- tion 17(a), or any nonresidential public or nonprofit private school of high school grade or under, for the purpose of participating in a school program estab- lished for individuals with mental or physical disabil- ities. ”(B) RELATIONSHIP TO CHILD AND ADULT CARE FOOD PROGRAM.\u2014No institution that is not otherwise eligible to participate in the program under section 17 shall be con- sidered eligible because of this paragraph.”. SEC. 702. NUTRITIONAL AND OTHER PROGRAM REQUIREMENTS. (a) NUTRITIONAL STANDARDS.\u2014Section 9(a) of the National School Lunch Act (42 U.S.C. 1758(a)) is amended\u2014 (1) in paragraph (2)\u2014 (A) by striking ”(2)(A) Lunches” and inserting ”(2) Lunches”; (B) by striking subparagraph (B); and (C) by redesignating clauses (i) and (ii) as subpara- graphs (A) and (B), respectively; (2) by striking paragraph (3); and (3) by redesignating paragraph (4) as paragraph (3). (b) UTILIZATION OF AGRICULTURAL COMMODITIES.\u2014Section 9(c) of the National School Lunch Act (42 U.S.C. 1758(c)) is amended\u2014 (1) in the fifth sentence, by striking ”of the provisions of law referred to in the preceding sentence” and inserting ”provision of law”; and (2) by striking the second, fourth, and sixth sentences. (c) NUTRITIONAL INFORMATION.\u2014Section 9(f) of the National School Lunch Act (42 U.S.C. 1758(f)) is amended\u2014 (1) by striking paragraph (1); (2) by striking ”(2)”; (3) by redesignating subparagraphs (A) through (D) as paragraphs (1) through (4), respectively; (4) by striking paragraph (1), as redesignated by paragraph (3), and inserting the following: ”(1) NUTRITIONAL REQUIREMENTS.\u2014Except as provided in paragraph (2), not later than the first day of the 1996 1997 school year, schools that are participating in the school lunch or school breakfast program shall serve lunches and breakfasts under the program that\u2014 ”(A) are consistent with the goals of the most recent Di- etary Guidelines for Americans published under section 301 of the National Nutrition Monitoring and Related Research Act of 1990 (7 U.S.C. 5341); and 192 ”(B) provide, on the average over each week, at least\u2014 ”(i) with respect to school lunches, 1\u20443 of the daily recommended dietary allowance established by the Food and Nutrition Board of the National Research Council of the National Academy of Sciences; and ”(ii) with respect to school breakfasts, 1\u20444 of the daily recommended dietary allowance established by the Food and Nutrition Board of the National Research Council of the National Academy of Sciences.”; (5) in paragraph (3), as redesignated by paragraph (3)\u2014 (A) by redesignating clauses (i) and (ii) as subpara- graphs (A) and (B), respectively; and (B) in subparagraph (A), as so redesignated, by redes- ignating subclauses (I) and (II) as clauses (i) and (ii), re- spectively; and (6) in paragraph (4), as redesignated by paragraph (3)\u2014 (A) by redesignating clauses (i) and (ii) as subpara- graphs (A) and (B), respectively; (B) in subparagraph (A), as redesignated by subpara- graph (A), by redesignating subclauses (I) and (II) as clauses (i) and (ii), respectively; and (C) in subparagraph (A)(ii), as redesignated by sub- paragraph (B), by striking ”subparagraph (C)” and insert- ing ”paragraph (3)”. (d) USE OF RESOURCES.\u2014Section 9 of the National School Lunch Act (42 U.S.C. 1758) is amended by striking subsection (h). SEC. 703. FREE AND REDUCED PRICE POLICY STATEMENT. Section 9(b)(2) of the National School Lunch Act (42 U.S.C. 1758(b)(2)) is amended by adding at the end the following: ”(D) FREE AND REDUCED PRICE POLICY STATEMENT.\u2014 After the initial submission, a school food authority shall not be required to submit a free and reduced price policy statement to a State educational agency under this Act un- less there is a substantive change in the free and reduced price policy of the school food authority. A routine change in the policy of a school food authority, such as an annual adjustment of the income eligibility guidelines for free and reduced price meals, shall not be sufficient cause for requir- ing the school food authority to submit a policy statement.”. SEC. 704. SPECIAL ASSISTANCE. (a) EXTENSION OF PAYMENT PERIOD.\u2014Section 11(a)(1)(D)(i) of the National School Lunch Act (42 U.S.C. 1759a(a)(1)(D)(i)) is amended by striking ”, on the date of enactment of this subpara- graph,”. (b) ROUNDING RULE FOR LUNCH, BREAKFAST, AND SUPPLEMENT RATES.\u2014 (1) IN GENERAL.\u2014The third sentence of section 11(a)(3)(B) of the National School Lunch Act (42 U.S.C. 1759a(a)(3)(B)) is amended by adding before the period at the end the following: ”, except that adjustments to payment rates for meals and sup- plements served to individuals not determined to be eligible for free or reduced price meals and supplements shall be computed 193 to the nearest lower cent increment and based on the unrounded amount for the preceding 12-month period”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall become effective on July 1, 1997. (c) APPLICABILITY OF OTHER PROVISIONS.\u2014Section 11 of the National School Lunch Act (42 U.S.C. 1759a) is amended\u2014 (1) by striking subsection (d); (2) in subsection (e)(2)\u2014 (A) by striking ”The” and inserting ”On request of the Secretary, the”; and (B) by striking ”each month”; and (3) by redesignating subsections (e) and (f), as so amended, as subsections (d) and (e), respectively. SEC. 705. MISCELLANEOUS PROVISIONS AND DEFINITIONS. (a) ACCOUNTS AND RECORDS.\u2014The second sentence of section 12(a) of the National School Lunch Act (42 U.S.C. 1760(a)) is amended by striking ”at all times be available” and inserting ”be available at any reasonable time”. (b) RESTRICTION ON REQUIREMENTS.\u2014Section 12(c) of the Na- tional School Lunch Act (42 U.S.C. 1760(c)) is amended by striking ”neither the Secretary nor the State shall” and inserting ”the Sec- retary shall not”. (c) DEFINITIONS.\u2014Section 12(d) of the National School Lunch Act (42 U.S.C. 1760(d)), as amended by section 701(b), is amend- ed\u2014 (1) in paragraph (1), by striking ”the Trust Territory of the Pacific Islands” and inserting ”the Commonwealth of the Northern Mariana Islands”; (2) by striking paragraphs (3) and (4); and (3) by redesignating paragraphs (1), (2), and (5) through (9) as paragraphs (6), (7), (3), (4), (2), (5), and (1), respectively, and rearranging the paragraphs so as to appear in numerical order. (d) ADJUSTMENTS TO NATIONAL AVERAGE PAYMENT RATES.\u2014 Section 12(f) of the National School Lunch Act (42 U.S.C. 1760(f)) is amended by striking ”the Trust Territory of the Pacific Islands,”. (e) EXPEDITED RULEMAKING.\u2014Section 12(k) of the National School Lunch Act (42 U.S.C. 1760(k)) is amended\u2014 (1) by striking paragraphs (1), (2), and (5); (2) by redesignating paragraphs (3) and (4) as paragraphs (1) and (2), respectively; and (3) in paragraph (1), as redesignated by paragraph (2), by striking ”Guidelines” and inserting ”guidelines contained in the most recent ‘Dietary Guidelines for Americans’ that is published under section 301 of the National Nutrition Monitoring and Re- lated Research Act of 1990 (7 U.S.C. 5341)”. (f) WAIVER.\u2014Section 12(l) of the National School Lunch Act (42 U.S.C. 1760(l)) is amended\u2014 (1) in paragraph (2)(A)\u2014 (A) in clause (iii), by adding ”and” at the end; (B) in clause (iv), by striking the semicolon at the end and inserting a period; and (C) by striking clauses (v) through (vii); (2) in paragraph (3)\u2014 (A) in subparagraph (A), by striking ”(A)”; and 194 (B) by striking subparagraphs (B) through (D); (3) in paragraph (4)\u2014 (A) in the matter preceding subparagraph (A), by strik- ing ”of any requirement relating” and inserting ”that in- creases Federal costs or that relates”; (B) by striking subparagraph (D); (C) by redesignating subparagraphs (E) through (N) as subparagraphs (D) through (M), respectively; and (D) in subparagraph (L), as redesignated by subpara- graph (C), by striking ”and” at the end and inserting ”or”; and (4) in paragraph (6)\u2014 (A) by striking ”(A)(i)” and all that follows through ”(B)”; and (B) by redesignating clauses (i) through (iv) as sub- paragraphs (A) through (D), respectively. SEC. 706. SUMMER FOOD SERVICE PROGRAM FOR CHILDREN. (a) ESTABLISHMENT OF PROGRAM.\u2014Section 13(a) of the Na- tional School Lunch Act (42 U.S.C. 1761(a)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in the first sentence, by striking ”initiate, maintain, and expand” and inserting ”initiate and maintain”; and (B) in subparagraph (E) of the second sentence, by striking ”the Trust Territory of the Pacific Islands,”; and (2) in paragraph (7)(A), by striking ”Except as provided in subparagraph (C), private” and inserting ”Private”. (b) SERVICE INSTITUTIONS.\u2014Section 13(b) of the National School Lunch Act (42 U.S.C. 1761(b)) is amended by striking ”(b)(1)” and all that follows through the end of paragraph (1) and inserting the following: ”(b) SERVICE INSTITUTIONS.\u2014 ”(1) PAYMENTS.\u2014 ”(A) IN GENERAL.\u2014Except as otherwise provided in this paragraph, payments to service institutions shall equal the full cost of food service operations (which cost shall include the costs of obtaining, preparing, and serving food, but shall not include administrative costs). ”(B) MAXIMUM AMOUNTS.\u2014Subject to subparagraph (C), payments to any institution under subparagraph (A) shall not exceed\u2014 ”(i) $1.97 for each lunch and supper served; ”(ii) $1.13 for each breakfast served; and ”(iii) 46 cents for each meal supplement served. ”(C) ADJUSTMENTS.\u2014Amounts specified in subpara- graph (B) shall be adjusted on January 1, 1997, and each January 1 thereafter, to the nearest lower cent increment to reflect changes for the 12-month period ending the preced- ing November 30 in the series for food away from home of the Consumer Price Index for All Urban Consumers pub- lished by the Bureau of Labor Statistics of the Department of Labor. Each adjustment shall be based on the unrounded adjustment for the prior 12-month period.”. 195 (c) ADMINISTRATION OF SERVICE INSTITUTIONS.\u2014Section 13(b)(2) of the National School Lunch Act (42 U.S.C. 1761(b)(2)) is amended\u2014 (1) in the first sentence, by striking ”four meals” and insert- ing ”3 meals, or 2 meals and 1 supplement,”; and (2) by striking the second sentence. (d) REIMBURSEMENTS.\u2014Section 13(c)(2) of the National School Lunch Act (42 U.S.C. 1761(c)(2)) is amended\u2014 (1) by striking subparagraphs (A), (C), (D), and (E); (2) by striking ”(B)”; (3) by striking ”, and such higher education institutions,”; and (4) by striking ”without application” and inserting ”on showing residence in areas in which poor economic conditions exist or on the basis of income eligibility statements for children enrolled in the program”. (e) ADVANCE PROGRAM PAYMENTS.\u2014Section 13(e)(1) of the Na- tional School Lunch Act (42 U.S.C. 1761(e)(1)) is amended\u2014 (1) by striking ”institution: Provided, That (A) the” and in- serting ”institution. The”; (2) by inserting ”(excluding a school)” after ”any service in- stitution”; and (3) by striking ”responsibilities, and (B) no” and inserting ”responsibilities. No”. (f) FOOD REQUIREMENTS.\u2014Section 13(f) of the National School Lunch Act (42 U.S.C. 1761(f)) is amended\u2014 (1) by redesignating the first through seventh sentences as paragraphs (1) through (7), respectively; (2) by striking paragraph (3), as redesignated by paragraph (1); (3) in paragraph (4), as redesignated by paragraph (1), by striking ”the first sentence” and inserting ”paragraph (1)”; (4) in subparagraph (B) of paragraph (6), as redesignated by paragraph (1), by striking ”that bacteria levels” and all that follows through the period at the end and inserting ”conform- ance with standards set by local health authorities.”; and (5) by redesignating paragraphs (4) through (7), as redesig- nated by paragraph (1), as paragraphs (3) through (6), respec- tively. (g) PERMITTING OFFER VERSUS SERVE.\u2014Section 13(f) of the Na- tional School Lunch Act (42 U.S.C. 1761(f)), as amended by sub- section (f), is amended by adding at the end the following: ”(7) OFFER VERSUS SERVE.\u2014A school food authority partici- pating as a service institution may permit a child attending a site on school premises operated directly by the authority to refuse 1 or more items of a meal that the child does not intend to consume, under rules that the school uses for school meals programs. A refusal of an offered food item shall not affect the amount of payments made under this section to a school for the meal.”. (h) RECORDS.\u2014The second sentence of section 13(m) of the Na- tional School Lunch Act (42 U.S.C. 1761(m)) is amended by striking ”at all times be available” and inserting ”be available at any rea- sonable time”. 196 (i) REMOVING MANDATORY NOTICE TO INSTITUTIONS.\u2014Section 13(n)(2) of the National School Lunch Act (42 U.S.C. 1761(n)(2)) is amended by striking ”, and its plans and schedule for informing service institutions of the availability of the program”. (j) PLAN.\u2014Section 13(n) of the National School Lunch Act (42 U.S.C. 1761(n)), as amended by subsection (i), is amended\u2014 (1) in paragraph (2), by striking ”, including the State’s methods of assessing need”; (2) by striking paragraph (3); (3) in paragraph (4), by striking ”and schedule”; and (4) by redesignating paragraphs (4) through (7) as para- graphs (3) through (6), respectively. (k) MONITORING AND TRAINING.\u2014Section 13(q) of the National School Lunch Act (42 U.S.C. 1761(q)) is amended\u2014 (1) by striking paragraphs (2) and (4); (2) in paragraph (3), by striking ”paragraphs (1) and (2) of this subsection” and inserting ”paragraph (1)”; and (3) by redesignating paragraph (3) as paragraph (2). (l) EXPIRED PROGRAM.\u2014Section 13 of the National School Lunch Act (42 U.S.C. 1761) is amended\u2014 (1) by striking subsection (p); and (2) by redesignating subsections (q) and (r) as subsections (p) and (q), respectively. (m) EFFECTIVE DATE.\u2014The amendments made by subsection (b) shall become effective on January 1, 1997. SEC. 707. COMMODITY DISTRIBUTION. (a) CEREAL AND SHORTENING IN COMMODITY DONATIONS.\u2014Sec- tion 14(b) of the National School Lunch Act (42 U.S.C. 1762a(b)) is amended\u2014 (1) by striking paragraph (1); and (2) by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (b) STATE ADVISORY COUNCIL.\u2014Section 14(e) of the National School Lunch Act (42 U.S.C. 1762a(e)) is amended to read as fol- lows: ”(e) Each State agency that receives food assistance payments under this section for any school year shall consult with representa- tives of schools in the State that participate in the school lunch pro- gram with respect to the needs of such schools relating to the man- ner of selection and distribution of commodity assistance for such program.”. (c) CASH COMPENSATION FOR PILOT PROJECT SCHOOLS.\u2014Sec- tion 14(g) of the National School Lunch Act (42 U.S.C. 1762a(g)) is amended by striking paragraph (3). SEC. 708. CHILD AND ADULT CARE FOOD PROGRAM. (a) ESTABLISHMENT OF PROGRAM.\u2014Section 17 of the National School Lunch Act (42 U.S.C. 1766) is amended in the first sentence of subsection (a), by striking ”initiate, maintain, and expand” and inserting ”initiate and maintain”. (b) PAYMENTS TO SPONSOR EMPLOYEES.\u2014Paragraph (2) of the last sentence of section 17(a) of the National School Lunch Act (42 U.S.C. 1766(a)) is amended\u2014 (1) in subparagraph (B), by striking ”and” at the end; 197 (2) in subparagraph (C), by striking the period at the end and inserting ”; and”; and (3) by adding at the end the following: ”(D) in the case of a family or group day care home sponsoring organization that employs more than 1 em- ployee, the organization does not base payments to an em- ployee of the organization on the number of family or group day care homes recruited.”. (c) TECHNICAL ASSISTANCE.\u2014The last sentence of section 17(d)(1) of the National School Lunch Act (42 U.S.C. 1766(d)(1)) is amended by striking ”, and shall provide technical assistance” and all that follows through ”its application”. (d) REIMBURSEMENT OF CHILD CARE INSTITUTIONS.\u2014Section 17(f)(2)(B) of the National School Lunch Act (42 U.S.C. 1766(f)(2)(B)) is amended by striking ”two meals and two supple- ments or three meals and one supplement” and inserting ”2 meals and 1 supplement”. (e) IMPROVED TARGETING OF DAY CARE HOME REIMBURSE- MENTS.\u2014 (1) RESTRUCTURED DAY CARE HOME REIMBURSEMENTS.\u2014 Section 17(f)(3) of the National School Lunch Act (42 U.S.C. 1766(f)(3)) is amended by striking ”(3)(A) Institutions” and all that follows through the end of subparagraph (A) and inserting the following: ”(3) REIMBURSEMENT OF FAMILY OR GROUP DAY CARE HOME SPONSORING ORGANIZATIONS.\u2014 ”(A) REIMBURSEMENT FACTOR.\u2014 ”(i) IN GENERAL.\u2014An institution that participates in the program under this section as a family or group day care home sponsoring organization shall be pro- vided, for payment to a home sponsored by the organi- zation, reimbursement factors in accordance with this subparagraph for the cost of obtaining and preparing food and prescribed labor costs involved in providing meals under this section. ”(ii) TIER I FAMILY OR GROUP DAY CARE HOMES.\u2014 ”(I) DEFINITION OF TIER I FAMILY OR GROUP DAY CARE HOME.\u2014In this paragraph, the term ‘tier I family or group day care home’ means\u2014 ”(aa) a family or group day care home that is located in a geographic area, as defined by the Secretary based on census data, in which at least 50 percent of the children resid- ing in the area are members of households whose incomes meet the income eligibility guidelines for free or reduced price meals under section 9; ”(bb) a family or group day care home that is located in an area served by a school enrolling elementary students in which at least 50 percent of the total number of children enrolled are certified eligible to receive free or reduced price school meals under this Act or 198 the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.); or ”(cc) a family or group day care home that is operated by a provider whose household meets the income eligibility guidelines for free or reduced price meals under section 9 and whose income is verified by the sponsoring or organization of the home under regulations es- tablished by the Secretary. ”(II) REIMBURSEMENT.\u2014Except as provided in subclause (III), a tier I family or group day care home shall be provided reimbursement factors under this clause without a requirement for docu- mentation of the costs described in clause (i), ex- cept that reimbursement shall not be provided under this subclause for meals or supplements served to the children of a person acting as a fam- ily or group day care home provider unless the children meet the income eligibility guidelines for free or reduced price meals under section 9. ”(III) FACTORS.\u2014Except as provided in sub- clause (IV), the reimbursement factors applied to a home referred to in subclause (II) shall be the fac- tors in effect on July 1, 1996. ”(IV) ADJUSTMENTS.\u2014The reimbursement fac- tors under this subparagraph shall be adjusted on July 1, 1997, and each July 1 thereafter, to reflect changes in the Consumer Price Index for food at home for the most recent 12-month period for which the data are available. The reimbursement factors under this subparagraph shall be rounded to the nearest lower cent increment and based on the unrounded adjustment in effect on June 30 of the preceding school year. ”(iii) TIER II FAMILY OR GROUP DAY CARE HOMES.\u2014 ”(I) IN GENERAL.\u2014 ”(aa) FACTORS.\u2014Except as provided in subclause (II), with respect to meals or supple- ments served under this clause by a family or group day care home that does not meet the criteria set forth in clause (ii)(I), the reim- bursement factors shall be 95 cents for lunches and suppers, 27 cents for breakfasts, and 13 cents for supplements. ”(bb) ADJUSTMENTS.\u2014The factors shall be adjusted on July 1, 1997, and each July 1 thereafter, to reflect changes in the Consumer Price Index for food at home for the most re- cent 12-month period for which the data are available. The reimbursement factors under this item shall be rounded down to the nearest lower cent increment and based on the unrounded adjustment for the preceding 12- month period. 199 ”(cc) REIMBURSEMENT.\u2014A family or group day care home shall be provided reimburse- ment factors under this subclause without a requirement for documentation of the costs de- scribed in clause (i), except that reimburse- ment shall not be provided under this sub- clause for meals or supplements served to the children of a person acting as a family or group day care home provider unless the chil- dren meet the income eligibility guidelines for free or reduced price meals under section 9. ”(II) OTHER FACTORS.\u2014A family or group day care home that does not meet the criteria set forth in clause (ii)(I) may elect to be provided reimburse- ment factors determined in accordance with the following requirements: ”(aa) CHILDREN ELIGIBLE FOR FREE OR RE- DUCED PRICE MEALS.\u2014In the case of meals or supplements served under this subsection to children who are members of households whose incomes meet the income eligibility guidelines for free or reduced price meals under section 9, the family or group day care home shall be provided reimbursement factors set by the Secretary in accordance with clause (ii)(III). ”(bb) INELIGIBLE CHILDREN.\u2014In the case of meals or supplements served under this sub- section to children who are members of house- holds whose incomes do not meet the income eligibility guidelines, the family or group day care home shall be provided reimbursement factors in accordance with subclause (I). ”(III) INFORMATION AND DETERMINATIONS.\u2014 ”(aa) IN GENERAL.\u2014If a family or group day care home elects to claim the factors de- scribed in subclause (II), the family or group day care home sponsoring organization serv- ing the home shall collect the necessary income information, as determined by the Secretary, from any parent or other caretaker to make the determinations specified in subclause (II) and shall make the determinations in accordance with rules prescribed by the Secretary. ”(bb) CATEGORICAL ELIGIBILITY.\u2014In mak- ing a determination under item (aa), a family or group day care home sponsoring organiza- tion may consider a child participating in or subsidized under, or a child with a parent participating in or subsidized under, a feder- ally or State supported child care or other ben- efit program with an income eligibility limit that does not exceed the eligibility standard for free or reduced price meals under section 9 200 to be a child who is a member of a household whose income meets the income eligibility guidelines under section 9. ”(cc) FACTORS FOR CHILDREN ONLY.\u2014A family or group day care home may elect to re- ceive the reimbursement factors prescribed under clause (ii)(III) solely for the children participating in a program referred to in item (bb) if the home elects not to have income statements collected from parents or other caretakers. ”(IV) SIMPLIFIED MEAL COUNTING AND REPORT- ING PROCEDURES.\u2014The Secretary shall prescribe simplified meal counting and reporting procedures for use by a family or group day care home that elects to claim the factors under subclause (II) and by a family or group day care home sponsoring or- ganization that sponsors the home. The procedures the Secretary prescribes may include 1 or more of the following: ”(aa) Setting an annual percentage for each home of the number of meals served that are to be reimbursed in accordance with the reimbursement factors prescribed under clause (ii)(III) and an annual percentage of the num- ber of meals served that are to be reimbursed in accordance with the reimbursement factors prescribed under subclause (I), based on the family income of children enrolled in the home in a specified month or other period. ”(bb) Placing a home into 1 of 2 or more reimbursement categories annually based on the percentage of children in the home whose households have incomes that meet the income eligibility guidelines under section 9, with each such reimbursement category carrying a set of reimbursement factors such as the fac- tors prescribed under clause (ii)(III) or sub- clause (I) or factors established within the range of factors prescribed under clause (ii)(III) and subclause (I). ”(cc) Such other simplified procedures as the Secretary may prescribe. ”(V) MINIMUM VERIFICATION REQUIREMENTS.\u2014 The Secretary may establish any minimum ver- ification requirements that are necessary to carry out this clause.”. (2) GRANTS TO STATES TO PROVIDE ASSISTANCE TO FAMILY OR GROUP DAY CARE HOMES.\u2014Section 17(f)(3) of the National School Lunch Act (42 U.S.C. 1766(f)(3)) is amended by adding at the end the following: ”(D) GRANTS TO STATES TO PROVIDE ASSISTANCE TO FAMILY OR GROUP DAY CARE HOMES.\u2014 ”(i) IN GENERAL.\u2014 201 ”(I) RESERVATION.\u2014From amounts made available to carry out this section, the Secretary shall reserve $5,000,000 of the amount made avail- able for fiscal year 1997. ”(II) PURPOSE.\u2014The Secretary shall use the funds made available under subclause (I) to pro- vide grants to States for the purpose of providing\u2014 ”(aa) assistance, including grants, to fam- ily and day care home sponsoring organiza- tions and other appropriate organizations, in securing and providing training, materials, automated data processing assistance, and other assistance for the staff of the sponsoring organizations; and ”(bb) training and other assistance to fam- ily and group day care homes in the imple- mentation of the amendment to subparagraph (A) made by section 708(e)(1) of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996. ”(ii) ALLOCATION.\u2014The Secretary shall allocate from the funds reserved under clause (i)(I)\u2014 ”(I) $30,000 in base funding to each State; and ”(II) any remaining amount among the States, based on the number of family day care homes participating in the program in a State during fis- cal year 1995 as a percentage of the number of all family day care homes participating in the pro- gram during fiscal year 1995. ”(iii) RETENTION OF FUNDS.\u2014Of the amount of funds made available to a State for fiscal year 1997 under clause (i), the State may retain not to exceed 30 percent of the amount to carry out this subparagraph. ”(iv) ADDITIONAL PAYMENTS.\u2014Any payments re- ceived under this subparagraph shall be in addition to payments that a State receives under subparagraph (A).”. (3) PROVISION OF DATA.\u2014Section 17(f)(3) of the National School Lunch Act (42 U.S.C. 1766(f)(3)), as amended by para- graph (2), is amended by adding at the end the following: ”(E) PROVISION OF DATA TO FAMILY OR GROUP DAY CARE HOME SPONSORING ORGANIZATIONS.\u2014 ”(i) CENSUS DATA.\u2014The Secretary shall provide to each State agency administering a child and adult care food program under this section data from the most recent decennial census survey or other appro- priate census survey for which the data are available showing which areas in the State meet the require- ments of subparagraph (A)(ii)(I)(aa). The State agency shall provide the data to family or group day care home sponsoring organizations located in the State. ”(ii) SCHOOL DATA.\u2014 ”(I) IN GENERAL.\u2014A State agency administer- ing the school lunch program under this Act or the 202 school breakfast program under the Child Nutri- tion Act of 1966 (42 U.S.C. 1771 et seq.) shall pro- vide to approved family or group day care home sponsoring organizations a list of schools serving elementary school children in the State in which not less than 1\u20442 of the children enrolled are cer- tified to receive free or reduced price meals. The State agency shall collect the data necessary to cre- ate the list annually and provide the list on a timely basis to any approved family or group day care home sponsoring organization that requests the list. ”(II) USE OF DATA FROM PRECEDING SCHOOL YEAR.\u2014In determining for a fiscal year or other annual period whether a home qualifies as a tier I family or group day care home under subpara- graph (A)(ii)(I), the State agency administering the program under this section, and a family or group day care home sponsoring organization, shall use the most current available data at the time of the determination. ”(iii) DURATION OF DETERMINATION.\u2014For purposes of this section, a determination that a family or group day care home is located in an area that qualifies the home as a tier I family or group day care home (as the term is defined in subparagraph (A)(ii)(I)), shall be in effect for 3 years (unless the determination is made on the basis of census data, in which case the determina- tion shall remain in effect until more recent census data are available) unless the State agency determines that the area in which the home is located no longer qualifies the home as a tier I family or group day care home.”. (4) CONFORMING AMENDMENTS.\u2014Section 17(c) of the Na- tional School Lunch Act (42 U.S.C. 1766(c)) is amended by in- serting ”except as provided in subsection (f)(3),” after ”For pur- poses of this section,” each place it appears in paragraphs (1), (2), and (3). (f) REIMBURSEMENT.\u2014Section 17(f) of the National School Lunch Act (42 U.S.C. 1766(f)) is amended\u2014 (1) in paragraph (3)\u2014 (A) in subparagraph (B), by striking the third and fourth sentences; and (B) in subparagraph (C)(ii), by striking ”conduct out- reach” and all that follows through ”may become” and in- serting ”assist unlicensed family or group day care homes in becoming”; and (2) in the first sentence of paragraph (4), by striking ”shall” and inserting ”may”. (g) NUTRITIONAL REQUIREMENTS.\u2014Section 17(g)(1) of the Na- tional School Lunch Act (42 U.S.C. 1766(g)(1)) is amended\u2014 (1) in subparagraph (A), by striking the second sentence; and (2) in subparagraph (B), by striking the second sentence. 203 (h) ELIMINATION OF STATE PAPERWORK AND OUTREACH BUR- DEN.\u2014Section 17 of the National School Lunch Act (42 U.S.C. 1766) is amended by striking subsection (k) and inserting the following: ”(k) TRAINING AND TECHNICAL ASSISTANCE.\u2014A State partici- pating in the program established under this section shall provide sufficient training, technical assistance, and monitoring to facilitate effective operation of the program. The Secretary shall assist the State in developing plans to fulfill the requirements of this sub- section.”. (i) RECORDS.\u2014The second sentence of section 17(m) of the Na- tional School Lunch Act (42 U.S.C. 1766(m)) is amended by striking ”at all times” and inserting ”at any reasonable time”. (j) UNNEEDED PROVISION.\u2014Section 17 of the National School Lunch Act is amended by striking subsection (q). (k) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall become effective on the date of enactment of this Act. (2) IMPROVED TARGETING OF DAY CARE HOME REIMBURSE- MENTS.\u2014The amendments made by paragraphs (1) and (4) of subsection (e) shall become effective on July 1, 1997. (3) REGULATIONS.\u2014 (A) INTERIM REGULATIONS.\u2014Not later than January 1, 1997, the Secretary of Agriculture shall issue interim regu- lations to implement\u2014 (i) the amendments made by paragraphs (1), (3), and (4) of subsection (e); and (ii) section 17(f)(3)(C) of the National School Lunch Act (42 U.S.C. 1766(f)(3)(C)). (B) FINAL REGULATIONS.\u2014Not later than July 1, 1997, the Secretary of Agriculture shall issue final regulations to implement the provisions of law referred to in subpara- graph (A). (l) STUDY OF IMPACT OF AMENDMENTS ON PROGRAM PARTICIPA- TION AND FAMILY DAY CARE LICENSING.\u2014 (1) IN GENERAL.\u2014The Secretary of Agriculture, in conjunc- tion with the Secretary of Health and Human Services, shall study the impact of the amendments made by this section on\u2014 (A) the number of family day care homes participating in the child and adult care food program established under section 17 of the National School Lunch Act (42 U.S.C. 1766); (B) the number of day care home sponsoring organiza- tions participating in the program; (C) the number of day care homes that are licensed, certified, registered, or approved by each State in accord- ance with regulations issued by the Secretary; (D) the rate of growth of the numbers referred to in subparagraphs (A) through (C); (E) the nutritional adequacy and quality of meals served in family day care homes that\u2014 (i) received reimbursement under the program prior to the amendments made by this section but do 204 not receive reimbursement after the amendments made by this section; or (ii) received full reimbursement under the program prior to the amendments made by this section but do not receive full reimbursement after the amendments made by this section; and (F) the proportion of low-income children participating in the program prior to the amendments made by this sec- tion and the proportion of low-income children participat- ing in the program after the amendments made by this sec- tion. (2) REQUIRED DATA.\u2014Each State agency participating in the child and adult care food program under section 17 of the National School Lunch Act (42 U.S.C. 1766) shall submit to the Secretary of Agriculture data on\u2014 (A) the number of family day care homes participating in the program on June 30, 1997, and June 30, 1998; (B) the number of family day care homes licensed, cer- tified, registered, or approved for service on June 30, 1997, and June 30, 1998; and (C) such other data as the Secretary may require to carry out this subsection. (3) SUBMISSION OF REPORT.\u2014Not later than 2 years after the date of enactment of this section, the Secretary of Agri- culture shall submit the study required under this subsection to the Committee on Economic and Educational Opportunities of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate. SEC. 709. PILOT PROJECTS. (a) UNIVERSAL FREE PILOT.\u2014Section 18(d) of the National School Lunch Act (42 U.S.C. 1769(d)) is amended\u2014 (1) by striking paragraph (3); and (2) by redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively. (b) DEMONSTRATION PROJECT OUTSIDE SCHOOL HOURS.\u2014Sec- tion 18(e) of the National School Lunch Act (42 U.S.C. 1769(e)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A)\u2014 (i) by striking ”(A)”; and (ii) by striking ”shall” and inserting ”may”; and (B) by striking subparagraph (B); and (2) by striking paragraph (5) and inserting the following: ”(5) AUTHORIZATION OF APPROPRIATIONS.\u2014There are au- thorized to be appropriated to carry out this subsection such sums as are necessary for each of fiscal years 1997 and 1998.”. SEC. 710. REDUCTION OF PAPERWORK. Section 19 of the National School Lunch Act (42 U.S.C. 1769a) is repealed. SEC. 711. INFORMATION ON INCOME ELIGIBILITY. Section 23 of the National School Lunch Act (42 U.S.C. 1769d) is repealed. 205 SEC. 712. NUTRITION GUIDANCE FOR CHILD NUTRITION PROGRAMS. Section 24 of the National School Lunch Act (42 U.S.C. 1769e) is repealed. Subtitle B\u2014Child Nutrition Act of 1966 SEC. 721. SPECIAL MILK PROGRAM. Section 3(a)(3) of the Child Nutrition Act of 1966 (42 U.S.C. 1772(a)(3)) is amended by striking ”the Trust Territory of the Pa- cific Islands” and inserting ”the Commonwealth of the Northern Mariana Islands”. SEC. 722. FREE AND REDUCED PRICE POLICY STATEMENT. Section 4(b)(1) of the Child Nutrition Act of 1966 (42 U.S.C. 1773(b)(1)) is amended by adding at the end the following: ”(E) FREE AND REDUCED PRICE POLICY STATEMENT.\u2014 After the initial submission, a school food authority shall not be required to submit a free and reduced price policy statement to a State educational agency under this Act un- less there is a substantive change in the free and reduced price policy of the school food authority. A routine change in the policy of a school food authority, such as an annual adjustment of the income eligibility guidelines for free and reduced price meals, shall not be sufficient cause for requir- ing the school food authority to submit a policy statement.”. SEC. 723. SCHOOL BREAKFAST PROGRAM AUTHORIZATION. (a) TRAINING AND TECHNICAL ASSISTANCE IN FOOD PREPARA- TION.\u2014Section 4(e)(1)(B) of the Child Nutrition Act of 1966 (42 U.S.C. 1773(e)(1)(B)) is amended by striking the second sentence. (b) EXPANSION OF PROGRAM; STARTUP AND EXPANSION COSTS.\u2014 (1) IN GENERAL.\u2014Section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773) is amended by striking subsections (f) and (g). (2) EFFECTIVE DATE.\u2014The amendments made by para- graph (1) shall become effective on October 1, 1996. SEC. 724. STATE ADMINISTRATIVE EXPENSES. (a) USE OF FUNDS FOR COMMODITY DISTRIBUTION ADMINISTRA- TION; STUDIES.\u2014Section 7 of the Child Nutrition Act of 1966 (42 U.S.C. 1776) is amended\u2014 (1) by striking subsections (e) and (h); and (2) by redesignating subsections (f), (g), and (i) as sub- sections (e), (f), and (g), respectively. (b) APPROVAL OF CHANGES.\u2014Section 7(e) of the Child Nutrition Act of 1966 (42 U.S.C. 1776(e)), as so redesignated, is amended\u2014 (1) by striking ”each year an annual plan” and inserting ”the initial fiscal year a plan”; and (2) by adding at the end the following: ”After submitting the initial plan, a State shall be required to submit to the Sec- retary for approval only a substantive change in the plan.”. SEC. 725. REGULATIONS. Section 10(b) of the Child Nutrition Act of 1966 (42 U.S.C. 1779(b)) is amended\u2014 206 (1) in paragraph (1), by striking ”(1)”; and (2) by striking paragraphs (2) through (4). SEC. 726. PROHIBITIONS. Section 11(a) of the Child Nutrition Act of 1966 (42 U.S.C. 1780(a)) is amended by striking ”neither the Secretary nor the State shall” and inserting ”the Secretary shall not”. SEC. 727. MISCELLANEOUS PROVISIONS AND DEFINITIONS. Section 15 of the Child Nutrition Act of 1966 (42 U.S.C. 1784) is amended\u2014 (1) in paragraph (1), by striking ”the Trust Territory of the Pacific Islands” and inserting ”the Commonwealth of the Northern Mariana Islands”; and (2) in the first sentence of paragraph (3)\u2014 (A) in subparagraph (A), by inserting ”and” at the end; and (B) by striking ”, and (C)” and all that follows through ”Governor of Puerto Rico”. SEC. 728. ACCOUNTS AND RECORDS. The second sentence of section 16(a) of the Child Nutrition Act of 1966 (42 U.S.C. 1785(a)) is amended by striking ”at all times be available” and inserting ”be available at any reasonable time”. SEC. 729. SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN. (a) DEFINITIONS.\u2014Section 17(b) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)) is amended\u2014 (1) in paragraph (15)(B)(iii), by inserting ”of not more than 365 days” after ”accommodation”; and (2) in paragraph (16)\u2014 (A) in subparagraph (A), by adding ”and” at the end; and (B) in subparagraph (B), by striking ”; and” and insert- ing a period; and (C) by striking subparagraph (C). (b) SECRETARY’S PROMOTION OF WIC.\u2014Section 17(c) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(c)) is amended by strik- ing paragraph (5). (c) ELIGIBLE PARTICIPANTS.\u2014Section 17(d) of the Child Nutri- tion Act of 1966 (42 U.S.C. 1786(d)) is amended by striking para- graph (4). (d) NUTRITION EDUCATION.\u2014Section 17(e) of the Child Nutri- tion Act of 1966 (42 U.S.C. 1786(e)) is amended\u2014 (1) in paragraph (2), by striking the third sentence; (2) in paragraph (4)\u2014 (A) in the matter preceding subparagraph (A), by strik- ing ”shall”; (B) by striking subparagraph (A); (C) by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively; (D) in subparagraph (A), as so redesignated\u2014 (i) by inserting ”shall” before ”provide”; and (ii) by striking ”and” at the end; (E) in subparagraph (B), as so redesignated\u2014 (i) by inserting ”shall” before ”provide”; and 207 (ii) by striking the period at the end and inserting ”; and”; and (F) by adding at the end the following: ”(C) may provide a local agency with materials describing other programs for which a participant in the program may be eligible.”; (3) in paragraph (5), by striking ”The State agency shall ensure that each” and inserting ”Each”; and (4) by striking paragraph (6). (e) STATE PLAN.\u2014Section 17(f) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(f)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A)\u2014 (i) by striking ”annually to the Secretary, by a date specified by the Secretary, a” and inserting ”to the Sec- retary, by a date specified by the Secretary, an initial”; and (ii) by adding at the end the following: ”After sub- mitting the initial plan, a State shall be required to submit to the Secretary for approval only a substantive change in the plan.”; (B) in subparagraph (C)\u2014 (i) by striking clause (iii) and inserting the follow- ing: ”(iii) a plan to coordinate operations under the program with other services or programs that may benefit participants in, and applicants for, the program;”; (ii) in clause (vi), by inserting after ”in the State” the following: ”(including a plan to improve access to the program for participants and prospective appli- cants who are employed, or who reside in rural areas)”; (iii) in clause (vii), by striking ”to provide program benefits” and all that follows through ”emphasis on” and inserting ”for”; (iv) by striking clauses (ix), (x), and (xii); (v) in clause (xiii), by striking ”may require” and inserting ”may reasonably require”; (vi) by redesignating clauses (xi) and (xiii), as so amended, as clauses (ix) and (x), respectively; and (vii) in clause (ix), as so redesignated, by adding ”and” at the end; (C) by striking subparagraph (D); and (D) by redesignating subparagraph (E) as subpara- graph (D); (2) by striking paragraphs (6) and (22); (3) in the second sentence of paragraph (5), by striking ”at all times be available” and inserting ”be available at any rea- sonable time”; (4) in paragraph (9)(B), by striking the second sentence; (5) in the first sentence of paragraph (11), by striking ”, in- cluding standards that will ensure sufficient State agency staff”; (6) in paragraph (12), by striking the third sentence; 208 (7) in paragraph (14), by striking ”shall” and inserting ”may”; (8) in paragraph (17), by striking ”and to accommodate” and all that follows through ”facilities”; (9) in paragraph (19), by striking ”shall” and inserting ”may”; and (10) by redesignating paragraphs (7) through (21) as para- graphs (6) through (20), and paragraphs (23) and (24) as para- graphs (21) and (22), respectively. (f) INFORMATION.\u2014Section 17(g) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(g)) is amended\u2014 (1) in paragraph (5), by striking ”the report required under subsection (d)(4)” and inserting ”reports on program participant characteristics”; and (2) by striking paragraph (6). (g) PROCUREMENT OF INFANT FORMULA.\u2014 (1) IN GENERAL.\u2014Section 17(h) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)) is amended\u2014 (A) in paragraph (4)(E), by striking ”and, on” and all that follows through ”(d)(4)”; and (B) in paragraph (8)\u2014 (i) by striking subparagraphs (A), (C), and (M); (ii) in subparagraph (G)\u2014 (I) in clause (i), by striking ”(i)”; and (II) by striking clauses (ii) through (ix); (iii) in subparagraph (I), by striking ”Secretary\u2014” and all that follows through ”(v) may” and inserting ”Secretary may”; (iv) by redesignating subparagraphs (B) and (D) through (L) as subparagraphs (A) and (B) through (J), respectively; (v) in subparagraph (A)(i), as so redesignated, by striking ”subparagraphs (C), (D), and (E)(iii), in carry- ing out subparagraph (A),” and inserting ”subpara- graphs (B) and (C)(iii),”; (vi) in subparagraph (B)(i), as so redesignated, by striking ”subparagraph (B)” each place it appears and inserting ”subparagraph (A)”; and (vii) in subparagraph (C)(iii), as so redesignated, by striking ”subparagraph (B)” and inserting ”subpara- graph (A)”. (2) APPLICATION.\u2014The amendments made by paragraph (1) shall not apply to a contract for the procurement of infant for- mula under section 17(h)(8) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)(8)) that is in effect on the date of enactment of this subsection. (h) NATIONAL ADVISORY COUNCIL ON MATERNAL, INFANT, AND FETAL NUTRITION.\u2014Section 17(k)(3) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(k)(3)) is amended by striking ”Secretary shall designate” and inserting ”Council shall elect”. (i) COMPLETED STUDY; COMMUNITY COLLEGE DEMONSTRATION; GRANTS FOR INFORMATION AND DATA SYSTEM.\u2014Section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786) is amended by strik- ing subsections (n), (o), and (p). 209 (j) DISQUALIFICATION OF VENDORS WHO ARE DISQUALIFIED UNDER THE FOOD STAMP PROGRAM.\u2014Section 17 of the Child Nutri- tion Act of 1966 (42 U.S.C. 1786), as amended by subsection (i), is amended by adding at the end the following: ”(n) DISQUALIFICATION OF VENDORS WHO ARE DISQUALIFIED UNDER THE FOOD STAMP PROGRAM.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall issue regulations providing criteria for the disqualification under this section of an approved vendor that is disqualified from accepting benefits under the food stamp program established under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.). ”(2) TERMS.\u2014A disqualification under paragraph (1)\u2014 ”(A) shall be for the same period as the disqualification from the program referred to in paragraph (1); ”(B) may begin at a later date than the disqualification from the program referred to in paragraph (1); and ”(C) shall not be subject to judicial or administrative review.”. SEC. 730. CASH GRANTS FOR NUTRITION EDUCATION. Section 18 of the Child Nutrition Act of 1966 (42 U.S.C. 1787) is repealed. SEC. 731. NUTRITION EDUCATION AND TRAINING. (a) FINDINGS.\u2014Section 19 of the Child Nutrition Act of 1966 (42 U.S.C. 1788) is amended\u2014 (1) in subsection (a), by striking ”that\u2014” and all that fol- lows through the period at the end and inserting ”that effective dissemination of scientifically valid information to children participating or eligible to participate in the school lunch and related child nutrition programs should be encouraged.”; and (2) in subsection (b), by striking ”encourage” and all that follows through ”establishing” and inserting ”establish”. (b) USE OF FUNDS.\u2014Section 19(f) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(f)) is amended\u2014 (1) in paragraph (1)\u2014 (A) by striking subparagraph (B); and (B) in subparagraph (A)\u2014 (i) by striking ”(A)”; (ii) by striking clauses (ix) through (xix); (iii) by redesignating clauses (i) through (viii) and (xx) as subparagraphs (A) through (H) and (I), respec- tively; (iv) in subparagraph (I), as so redesignated, by striking the period at the end and inserting ”; and”; and (v) by adding at the end the following: ”(J) other appropriate related activities, as determined by the State.”; (2) by striking paragraphs (2) and (4); and (3) by redesignating paragraph (3) as paragraph (2). (c) ACCOUNTS, RECORDS, AND REPORTS.\u2014The second sentence of section 19(g)(1) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(g)(1)) is amended by striking ”at all times be available” and inserting ”be available at any reasonable time”. 210 (d) STATE COORDINATORS FOR NUTRITION; STATE PLAN.\u2014Sec- tion 19(h) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(h)) is amended\u2014 (1) in the second sentence of paragraph (1)\u2014 (A) by striking ”as provided in paragraph (2) of this subsection”; and (B) by striking ”as provided in paragraph (3) of this subsection”; (2) in paragraph (2), by striking the second and third sen- tences; and (3) by striking paragraph (3). (e) AUTHORIZATION OF APPROPRIATIONS.\u2014Section 19(i) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(i)) is amended\u2014 (1) in the first sentence of paragraph (2)(A), by striking ”and each succeeding fiscal year”; (2) by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively; and (3) by inserting after paragraph (2) the following: ”(3) FISCAL YEARS 1997 THROUGH 2002.\u2014 ”(A) IN GENERAL.\u2014There are authorized to be appro- priated to carry out this section $10,000,000 for each of fis- cal years 1997 through 2002. ”(B) GRANTS.\u2014 ”(i) IN GENERAL.\u2014Grants to each State from the amounts made available under subparagraph (A) shall be based on a rate of 50 cents for each child enrolled in schools or institutions within the State, except that no State shall receive an amount less than $75,000 per fiscal year. ”(ii) INSUFFICIENT FUNDS.\u2014If the amount made available for any fiscal year is insufficient to pay the amount to which each State is entitled under clause (i), the amount of each grant shall be ratably reduced.”. (f) ASSESSMENT.\u2014Section 19 of the Child Nutrition Act of 1966 (42 U.S.C. 1788) is amended by striking subsection (j). (g) EFFECTIVE DATE.\u2014The amendments made by subsection (e) shall become effective on October 1, 1996. Subtitle C\u2014Miscellaneous Provisions SEC. 741. COORDINATION OF SCHOOL LUNCH, SCHOOL BREAKFAST, AND SUMMER FOOD SERVICE PROGRAMS. (a) COORDINATION.\u2014 (1) IN GENERAL.\u2014The Secretary of Agriculture shall de- velop proposed changes to the regulations under the school lunch program under the National School Lunch Act (42 U.S.C. 1751 et seq.), the summer food service program under section 13 of that Act (42 U.S.C. 1761), and the school breakfast program under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773), for the purpose of simplifying and coordinating those programs into a comprehensive meal program. (2) CONSULTATION.\u2014In developing proposed changes to the regulations under paragraph (1), the Secretary of Agriculture 211 shall consult with local, State, and regional administrators of the programs described in such paragraph. (b) REPORT.\u2014Not later than November 1, 1997, the Secretary of Agriculture shall submit to the Committee on Agriculture, Nutri- tion, and Forestry of the Senate and the Committee on Economic and Educational Opportunities of the House of Representatives a re- port containing the proposed changes developed under subsection (a). SEC. 742. REQUIREMENTS RELATING TO PROVISION OF BENEFITS BASED ON CITIZENSHIP, ALIENAGE, OR IMMIGRATION STATUS UNDER THE NATIONAL SCHOOL LUNCH ACT, THE CHILD NUTRITION ACT OF 1966, AND CERTAIN OTHER ACTS. (a) SCHOOL LUNCH AND BREAKFAST PROGRAMS.\u2014Notwithstand- ing any other provision of this Act, an individual who is eligible to receive free public education benefits under State or local law shall not be ineligible to receive benefits provided under the school lunch program under the National School Lunch Act (42 U.S.C. 1751 et seq.) or the school breakfast program under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773) on the basis of citizenship, alienage, or immigration status. (b) OTHER PROGRAMS.\u2014 (1) IN GENERAL.\u2014Nothing in this Act shall prohibit or re- quire a State to provide to an individual who is not a citizen or a qualified alien, as defined in section 431(b), benefits under programs established under the provisions of law described in paragraph (2). (2) PROVISIONS OF LAW DESCRIBED.\u2014The provisions of law described in this paragraph are the following: (A) Programs (other than the school lunch program and the school breakfast program) under the National School Lunch Act (42 U.S.C. 1751 et seq.) and the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.). (B) Section 4 of the Agriculture and Consumer Protec- tion Act of 1973 (7 U.S.C. 612c note). (C) The Emergency Food Assistance Act of 1983 (7 U.S.C 612c note). (D) The food distribution program on Indian reserva- tions established under section 4(b) of the Food Stamp Act of 1977 (7 U.S.C 2013(b)). TITLE VIII\u2014FOOD STAMPS AND COMMODITY DISTRIBUTION Subtitle A\u2014Food Stamp Program SEC. 801. DEFINITION OF CERTIFICATION PERIOD. Section 3(c) of the Food Stamp Act of 1977 (7 U.S.C. 2012(c)) is amended by striking ”Except as provided” and all that follows and inserting the following: ”The certification period shall not ex- ceed 12 months, except that the certification period may be up to 24 months if all adult household members are elderly or disabled. A 212 State agency shall have at least 1 contact with each certified house- hold every 12 months.”. SEC. 802. DEFINITION OF COUPON. Section 3(d) of the Food Stamp Act of 1977 (7 U.S.C. 2012(d)) is amended by striking ”or type of certificate” and inserting ”type of certificate, authorization card, cash or check issued in lieu of a cou- pon, or access device, including an electronic benefit transfer card or personal identification number,”. SEC. 803. TREATMENT OF CHILDREN LIVING AT HOME. The second sentence of section 3(i) of the Food Stamp Act of 1977 (7 U.S.C. 2012(i)) is amended by striking ”(who are not them- selves parents living with their children or married and living with their spouses)”. SEC. 804. ADJUSTMENT OF THRIFTY FOOD PLAN. The second sentence of section 3(o) of the Food Stamp Act of 1977 (7 U.S.C. 2012(o)) is amended\u2014 (1) by striking ”shall (1) make” and inserting the following: ”shall\u2014 ”(1) make”; (2) by striking ”scale, (2) make” and inserting the following: ”scale; ”(2) make”; (3) by striking ”Alaska, (3) make” and inserting the follow- ing: ”Alaska; ”(3) make”; and (4) by striking ”Columbia, (4) through” and all that follows through the end of the subsection and inserting the following: ”Columbia; and ”(4) on October 1, 1996, and each October 1 thereafter, ad- just the cost of the diet to reflect the cost of the diet in the pre- ceding June, and round the result to the nearest lower dollar increment for each household size, except that on October 1, 1996, the Secretary may not reduce the cost of the diet in effect on September 30, 1996.”. SEC. 805. DEFINITION OF HOMELESS INDIVIDUAL. Section 3(s)(2)(C) of the Food Stamp Act of 1977 (7 U.S.C. 2012(s)(2)(C)) is amended by inserting ”for not more than 90 days” after ”temporary accommodation”. SEC. 806. STATE OPTION FOR ELIGIBILITY STANDARDS. Section 5(b) of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)) is amended by striking ”(b) The Secretary” and inserting the follow- ing: ”(b) ELIGIBILITY STANDARDS.\u2014Except as otherwise provided in this Act, the Secretary”. SEC. 807. EARNINGS OF STUDENTS. Section 5(d)(7) of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)(7)) is amended by striking ”21” and inserting ”17”. SEC. 808. ENERGY ASSISTANCE. (a) IN GENERAL.\u2014Section 5(d) of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)) is amended by striking paragraph (11) and in- serting the following: ”(11)(A) any payments or allowances made for 213 the purpose of providing energy assistance under any Federal law (other than part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)), or (B) a 1-time payment or allowance made under a Federal or State law for the costs of weatherization or emergency re- pair or replacement of an unsafe or inoperative furnace or other heating or cooling device,”. (b) CONFORMING AMENDMENTS.\u2014Section 5(k) of the Food Stamp Act of 1977 (7 U.S.C. 2014(k)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A), by striking ”plan for aid to families with dependent children approved” and inserting ”program funded”; and (B) in subparagraph (B), by striking ”, not including energy or utility-cost assistance,”; (2) in paragraph (2), by striking subparagraph (C) and in- serting the following: ”(C) a payment or allowance described in subsection (d)(11);”; and (3) by adding at the end the following: ”(4) THIRD PARTY ENERGY ASSISTANCE PAYMENTS.\u2014 ”(A) ENERGY ASSISTANCE PAYMENTS.\u2014For purposes of subsection (d)(1), a payment made under a State law (other than a law referred to in paragraph (2)(H)) to provide en- ergy assistance to a household shall be considered money payable directly to the household. ”(B) ENERGY ASSISTANCE EXPENSES.\u2014For purposes of subsection (e)(7), an expense paid on behalf of a household under a State law to provide energy assistance shall be con- sidered an out-of-pocket expense incurred and paid by the household.”. SEC. 809. DEDUCTIONS FROM INCOME. (a) IN GENERAL.\u2014Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended by striking subsection (e) and inserting the following: ”(e) DEDUCTIONS FROM INCOME.\u2014 ”(1) STANDARD DEDUCTION.\u2014The Secretary shall allow a standard deduction for each household in the 48 contiguous States and the District of Columbia, Alaska, Hawaii, Guam, and the Virgin Islands of the United States of $134, $229, $189, $269, and $118, respectively. ”(2) EARNED INCOME DEDUCTION.\u2014 ”(A) DEFINITION OF EARNED INCOME.\u2014In this para- graph, the term ‘earned income’ does not include\u2014 ”(i) income excluded by subsection (d); or ”(ii) any portion of income earned under a work supplementation or support program, as defined under section 16(b), that is attributable to public assistance. ”(B) DEDUCTION.\u2014Except as provided in subparagraph (C), a household with earned income shall be allowed a de- duction of 20 percent of all earned income to compensate for taxes, other mandatory deductions from salary, and work expenses. ”(C) EXCEPTION.\u2014The deduction described in subpara- graph (B) shall not be allowed with respect to determining 214 an overissuance due to the failure of a household to report earned income in a timely manner. ”(3) DEPENDENT CARE DEDUCTION.\u2014 ”(A) IN GENERAL.\u2014A household shall be entitled, with respect to expenses (other than excluded expenses described in subparagraph (B)) for dependent care, to a dependent care deduction, the maximum allowable level of which shall be $200 per month for each dependent child under 2 years of age and $175 per month for each other dependent, for the actual cost of payments necessary for the care of a dependent if the care enables a household member to accept or continue employment, or training or education that is preparatory for employment. ”(B) EXCLUDED EXPENSES.\u2014The excluded expenses re- ferred to in subparagraph (A) are\u2014 ”(i) expenses paid on behalf of the household by a third party; ”(ii) amounts made available and excluded, for the expenses referred to in subparagraph (A), under sub- section (d)(3); and ”(iii) expenses that are paid under section 6(d)(4). ”(4) DEDUCTION FOR CHILD SUPPORT PAYMENTS.\u2014 ”(A) IN GENERAL.\u2014A household shall be entitled to a deduction for child support payments made by a household member to or for an individual who is not a member of the household if the household member is legally obligated to make the payments. ”(B) METHODS FOR DETERMINING AMOUNT.\u2014The Sec- retary may prescribe by regulation the methods, including calculation on a retrospective basis, that a State agency shall use to determine the amount of the deduction for child support payments. ”(5) HOMELESS SHELTER ALLOWANCE.\u2014Under rules pre- scribed by the Secretary, a State agency may develop a stand- ard homeless shelter allowance, which shall not exceed $143 per month, for such expenses as may reasonably be expected to be incurred by households in which all members are homeless in- dividuals but are not receiving free shelter throughout the month. A State agency that develops the allowance may use the allowance in determining eligibility and allotments for the households. The State agency may make a household with ex- tremely low shelter costs ineligible for the allowance. ”(6) EXCESS MEDICAL EXPENSE DEDUCTION.\u2014 ”(A) IN GENERAL.\u2014A household containing an elderly or disabled member shall be entitled, with respect to ex- penses other than expenses paid on behalf of the household by a third party, to an excess medical expense deduction for the portion of the actual costs of allowable medical ex- penses, incurred by the elderly or disabled member, exclu- sive of special diets, that exceeds $35 per month. ”(B) METHOD OF CLAIMING DEDUCTION.\u2014 ”(i) IN GENERAL.\u2014A State agency shall offer an eli- gible household under subparagraph (A) a method of claiming a deduction for recurring medical expenses 215 that are initially verified under the excess medical ex- pense deduction in lieu of submitting information on, or verification of, actual expenses on a monthly basis. ”(ii) METHOD.\u2014The method described in clause (i) shall\u2014 ”(I) be designed to minimize the burden for the eligible elderly or disabled household member choosing to deduct the recurrent medical expenses of the member pursuant to the method; ”(II) rely on reasonable estimates of the ex- pected medical expenses of the member for the cer- tification period (including changes that can be reasonably anticipated based on available infor- mation about the medical condition of the member, public or private medical insurance coverage, and the current verified medical expenses incurred by the member); and ”(III) not require further reporting or verifica- tion of a change in medical expenses if such a change has been anticipated for the certification period. ”(7) EXCESS SHELTER EXPENSE DEDUCTION.\u2014 ”(A) IN GENERAL.\u2014A household shall be entitled, with respect to expenses other than expenses paid on behalf of the household by a third party, to an excess shelter expense deduction to the extent that the monthly amount expended by a household for shelter exceeds an amount equal to 50 percent of monthly household income after all other appli- cable deductions have been allowed. ”(B) MAXIMUM AMOUNT OF DEDUCTION.\u2014In the case of a household that does not contain an elderly or disabled in- dividual, in the 48 contiguous States and the District of Columbia, Alaska, Hawaii, Guam, and the Virgin Islands of the United States, the excess shelter expense deduction shall not exceed\u2014 ”(i) for the period beginning on the date of enact- ment of this subparagraph and ending on December 31, 1996, $247, $429, $353, $300, and $182 per month, respectively; ”(ii) for the period beginning on January 1, 1997, and ending on September 30, 1998, $250, $434, $357, $304, and $184 per month, respectively; ”(iii) for fiscal years 1999 and 2000, $275, $478, $393, $334, and $203 per month, respectively; and ”(iv) for fiscal year 2001 and each subsequent fis- cal year, $300, $521, $429, $364, and $221 per month, respectively. ”(C) STANDARD UTILITY ALLOWANCE.\u2014 ”(i) IN GENERAL.\u2014In computing the excess shelter expense deduction, a State agency may use a standard utility allowance in accordance with regulations pro- mulgated by the Secretary, except that a State agency may use an allowance that does not fluctuate within a year to reflect seasonal variations. 216 ”(ii) RESTRICTIONS ON HEATING AND COOLING EX- PENSES.\u2014An allowance for a heating or cooling ex- pense may not be used in the case of a household that\u2014 ”(I) does not incur a heating or cooling ex- pense, as the case may be; ”(II) does incur a heating or cooling expense but is located in a public housing unit that has central utility meters and charges households, with regard to the expense, only for excess utility costs; or ”(III) shares the expense with, and lives with, another individual not participating in the food stamp program, another household participating in the food stamp program, or both, unless the al- lowance is prorated between the household and the other individual, household, or both. ”(iii) MANDATORY ALLOWANCE.\u2014 ”(I) IN GENERAL.\u2014A State agency may make the use of a standard utility allowance mandatory for all households with qualifying utility costs if\u2014 ”(aa) the State agency has developed 1 or more standards that include the cost of heat- ing and cooling and 1 or more standards that do not include the cost of heating and cooling; and ”(bb) the Secretary finds that the stand- ards will not result in an increased cost to the Secretary. ”(II) HOUSEHOLD ELECTION.\u2014A State agency that has not made the use of a standard utility al- lowance mandatory under subclause (I) shall allow a household to switch, at the end of a certification period, between the standard utility allowance and a deduction based on the actual utility costs of the household. ”(iv) AVAILABILITY OF ALLOWANCE TO RECIPIENTS OF ENERGY ASSISTANCE.\u2014 ”(I) IN GENERAL.\u2014Subject to subclause (II), if a State agency elects to use a standard utility al- lowance that reflects heating or cooling costs, the standard utility allowance shall be made available to households receiving a payment, or on behalf of which a payment is made, under the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8621 et seq.) or other similar energy assistance program, if the household still incurs out-of-pocket heating or cooling expenses in excess of any assist- ance paid on behalf of the household to an energy provider. ”(II) SEPARATE ALLOWANCE.\u2014A State agency may use a separate standard utility allowance for households on behalf of which a payment de- 217 scribed in subclause (I) is made, but may not be re- quired to do so. ”(III) STATES NOT ELECTING TO USE SEPARATE ALLOWANCE.\u2014A State agency that does not elect to use a separate allowance but makes a single stand- ard utility allowance available to households in- curring heating or cooling expenses (other than a household described in subclause (I) or (II) of clause (ii)) may not be required to reduce the al- lowance due to the provision (directly or indirectly) of assistance under the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8621 et seq.). ”(IV) PRORATION OF ASSISTANCE.\u2014For the purpose of the food stamp program, assistance pro- vided under the Low-Income Home Energy Assist- ance Act of 1981 (42 U.S.C. 8621 et seq.) shall be considered to be prorated over the entire heating or cooling season for which the assistance was pro- vided.”. (b) CONFORMING AMENDMENT.\u2014Section 11(e)(3) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(3)) is amended by striking ”. Under rules prescribed” and all that follows through ”verifies high- er expenses”. SEC. 810. VEHICLE ALLOWANCE. Section 5(g) of the Food Stamp Act of 1977 (7 U.S.C. 2014(g)) is amended by striking paragraph (2) and inserting the following: ”(2) INCLUDED ASSETS.\u2014 ”(A) IN GENERAL.\u2014Subject to the other provisions of this paragraph, the Secretary shall, in prescribing inclu- sions in, and exclusions from, financial resources, follow the regulations in force as of June 1, 1982 (other than those relating to licensed vehicles and inaccessible resources). ”(B) ADDITIONAL INCLUDED ASSETS.\u2014The Secretary shall include in financial resources\u2014 ”(i) any boat, snowmobile, or airplane used for rec- reational purposes; ”(ii) any vacation home; ”(iii) any mobile home used primarily for vacation purposes; ”(iv) subject to subparagraph (C), any licensed ve- hicle that is used for household transportation or to ob- tain or continue employment to the extent that the fair market value of the vehicle exceeds $4,600 through September 30, 1996, and $4,650 beginning October 1, 1996; and ”(v) any savings or retirement account (including an individual account), regardless of whether there is a penalty for early withdrawal. ”(C) EXCLUDED VEHICLES.\u2014A vehicle (and any other property, real or personal, to the extent the property is di- rectly related to the maintenance or use of the vehicle) shall not be included in financial resources under this paragraph if the vehicle is\u2014 ”(i) used to produce earned income; 218 ”(ii) necessary for the transportation of a physically disabled household member; or ”(iii) depended on by a household to carry fuel for heating or water for home use and provides the pri- mary source of fuel or water, respectively, for the household.”. SEC. 811. VENDOR PAYMENTS FOR TRANSITIONAL HOUSING COUNTED AS INCOME. Section 5(k)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2014(k)(2)) is amended\u2014 (1) by striking subparagraph (F); and (2) by redesignating subparagraphs (G) and (H) as sub- paragraphs (F) and (G), respectively. SEC. 812. SIMPLIFIED CALCULATION OF INCOME FOR THE SELF-EM- PLOYED. Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014), as amended by title I, is amended by adding at the end the following: ”(m) SIMPLIFIED CALCULATION OF INCOME FOR THE SELF-EM- PLOYED.\u2014 ”(1) IN GENERAL.\u2014Not later than 1 year after the date of enactment of this subsection, the Secretary shall establish a procedure by which a State may submit a method, designed to not increase Federal costs, for the approval of the Secretary, that the Secretary determines will produce a reasonable esti- mate of income excluded under subsection (d)(9) in lieu of cal- culating the actual cost of producing self-employment income. ”(2) INCLUSIVE OF ALL TYPES OF INCOME OR LIMITED TYPES OF INCOME.\u2014The method submitted by a State under para- graph (1) may allow a State to estimate income for all types of self-employment income or may be limited to 1 or more types of self-employment income. ”(3) DIFFERENCES FOR DIFFERENT TYPES OF INCOME.\u2014The method submitted by a State under paragraph (1) may differ for different types of self-employment income.”. SEC. 813. DOUBLED PENALTIES FOR VIOLATING FOOD STAMP PRO- GRAM REQUIREMENTS. Section 6(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2015(b)(1)) is amended\u2014 (1) in clause (i), by striking ”six months” and inserting ”1 year”; and (2) in clause (ii), by striking ”1 year” and inserting ”2 years”. SEC. 814. DISQUALIFICATION OF CONVICTED INDIVIDUALS. Section 6(b)(1)(iii) of the Food Stamp Act of 1977 (7 U.S.C. 2015(b)(1)(iii)) is amended\u2014 (1) in subclause (II), by striking ”or” at the end; (2) in subclause (III), by striking the period at the end and inserting ”; or”; and (3) by inserting after subclause (III) the following: ”(IV) a conviction of an offense under subsection (b) or (c) of section 15 involving an item covered by subsection (b) or (c) of section 15 having a value of $500 or more.”. 219 SEC. 815. DISQUALIFICATION. (a) IN GENERAL.\u2014Section 6(d) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)) is amended by striking ”(d)(1) Unless otherwise exempted by the provisions” and all that follows through the end of paragraph (1) and inserting the following: ”(d) CONDITIONS OF PARTICIPATION.\u2014 ”(1) WORK REQUIREMENTS.\u2014 ”(A) IN GENERAL.\u2014No physically and mentally fit indi- vidual over the age of 15 and under the age of 60 shall be eligible to participate in the food stamp program if the in- dividual\u2014 ”(i) refuses, at the time of application and every 12 months thereafter, to register for employment in a man- ner prescribed by the Secretary; ”(ii) refuses without good cause to participate in an employment and training program established under paragraph (4), to the extent required by the State agen- cy; ”(iii) refuses without good cause to accept an offer of employment, at a site or plant not subject to a strike or lockout at the time of the refusal, at a wage not less than the higher of\u2014 ”(I) the applicable Federal or State minimum wage; or ”(II) 80 percent of the wage that would have governed had the minimum hourly rate under sec- tion 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) been applicable to the offer of employment; ”(iv) refuses without good cause to provide a State agency with sufficient information to allow the State agency to determine the employment status or the job availability of the individual; ”(v) voluntarily and without good cause\u2014 ”(I) quits a job; or ”(II) reduces work effort and, after the reduc- tion, the individual is working less than 30 hours per week; or ”(vi) fails to comply with section 20. ”(B) HOUSEHOLD INELIGIBILITY.\u2014If an individual who is the head of a household becomes ineligible to participate in the food stamp program under subparagraph (A), the household shall, at the option of the State agency, become ineligible to participate in the food stamp program for a pe- riod, determined by the State agency, that does not exceed the lesser of\u2014 ”(i) the duration of the ineligibility of the individ- ual determined under subparagraph (C); or ”(ii) 180 days. ”(C) DURATION OF INELIGIBILITY.\u2014 ”(i) FIRST VIOLATION.\u2014The first time that an indi- vidual becomes ineligible to participate in the food stamp program under subparagraph (A), the individ- ual shall remain ineligible until the later of\u2014 220 ”(I) the date the individual becomes eligible under subparagraph (A); ”(II) the date that is 1 month after the date the individual became ineligible; or ”(III) a date determined by the State agency that is not later than 3 months after the date the individual became ineligible. ”(ii) SECOND VIOLATION.\u2014The second time that an individual becomes ineligible to participate in the food stamp program under subparagraph (A), the individ- ual shall remain ineligible until the later of\u2014 ”(I) the date the individual becomes eligible under subparagraph (A); ”(II) the date that is 3 months after the date the individual became ineligible; or ”(III) a date determined by the State agency that is not later than 6 months after the date the individual became ineligible. ”(iii) THIRD OR SUBSEQUENT VIOLATION.\u2014The third or subsequent time that an individual becomes ineligible to participate in the food stamp program under subparagraph (A), the individual shall remain ineligible until the later of\u2014 ”(I) the date the individual becomes eligible under subparagraph (A); ”(II) the date that is 6 months after the date the individual became ineligible; ”(III) a date determined by the State agency; or ”(IV) at the option of the State agency, perma- nently. ”(D) ADMINISTRATION.\u2014 ”(i) GOOD CAUSE.\u2014The Secretary shall determine the meaning of good cause for the purpose of this para- graph. ”(ii) VOLUNTARY QUIT.\u2014The Secretary shall deter- mine the meaning of voluntarily quitting and reducing work effort for the purpose of this paragraph. ”(iii) DETERMINATION BY STATE AGENCY.\u2014 ”(I) IN GENERAL.\u2014Subject to subclause (II) and clauses (i) and (ii), a State agency shall deter- mine\u2014 ”(aa) the meaning of any term used in subparagraph (A); ”(bb) the procedures for determining whether an individual is in compliance with a requirement under subparagraph (A); and ”(cc) whether an individual is in compli- ance with a requirement under subparagraph (A). ”(II) NOT LESS RESTRICTIVE.\u2014A State agency may not use a meaning, procedure, or determina- tion under subclause (I) that is less restrictive on individuals receiving benefits under this Act than 221 a comparable meaning, procedure, or determina- tion under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.). ”(iv) STRIKE AGAINST THE GOVERNMENT.\u2014For the purpose of subparagraph (A)(v), an employee of the Federal Government, a State, or a political subdivision of a State, who is dismissed for participating in a strike against the Federal Government, the State, or the political subdivision of the State shall be consid- ered to have voluntarily quit without good cause. ”(v) SELECTING A HEAD OF HOUSEHOLD.\u2014 ”(I) IN GENERAL.\u2014For purposes of this para- graph, the State agency shall allow the household to select any adult parent of a child in the house- hold as the head of the household if all adult household members making application under the food stamp program agree to the selection. ”(II) TIME FOR MAKING DESIGNATION.\u2014A household may designate the head of the house- hold under subclause (I) each time the household is certified for participation in the food stamp pro- gram, but may not change the designation during a certification period unless there is a change in the composition of the household. ”(vi) CHANGE IN HEAD OF HOUSEHOLD.\u2014If the head of a household leaves the household during a period in which the household is ineligible to participate in the food stamp program under subparagraph (B)\u2014 ”(I) the household shall, if otherwise eligible, become eligible to participate in the food stamp program; and ”(II) if the head of the household becomes the head of another household, the household that be- comes headed by the individual shall become ineli- gible to participate in the food stamp program for the remaining period of ineligibility.”. (b) CONFORMING AMENDMENT.\u2014 (1) The second sentence of section 17(b)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2026(b)(2)) is amended by striking ”6(d)(1)(i)” and inserting ”6(d)(1)(A)(i)”. (2) Section 20 of the Food Stamp Act of 1977 (7 U.S.C. 2029) is amended by striking subsection (f) and inserting the following: ”(f) DISQUALIFICATION.\u2014An individual or a household may be- come ineligible under section 6(d)(1) to participate in the food stamp program for failing to comply with this section.”. SEC. 816. CARETAKER EXEMPTION. Section 6(d)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(2)) is amended by adding at the end the following: ”A State that requested a waiver to lower the age specified in subparagraph (B) and had the waiver denied by the Secretary as of August 1, 1996, may, for a period of not more than 3 years, lower the age of a dependent child that qualifies a parent or other member of a 222 household for an exemption under subparagraph (B) to between 1 and 6 years of age.”. SEC. 817. EMPLOYMENT AND TRAINING. (a) IN GENERAL.\u2014Section 6(d)(4) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(4)) is amended\u2014 (1) by striking ”(4)(A) Not later than April 1, 1987, each” and inserting the following: ”(4) EMPLOYMENT AND TRAINING.\u2014 ”(A) IN GENERAL.\u2014 ”(i) IMPLEMENTATION.\u2014Each”; (2) in subparagraph (A)\u2014 (A) by inserting ”work,” after ”skills, training,”; and (B) by adding at the end the following: ”(ii) STATEWIDE WORKFORCE DEVELOPMENT SYS- TEM.\u2014Each component of an employment and training program carried out under this paragraph shall be de- livered through a statewide workforce development sys- tem, unless the component is not available locally through such a system.”; (3) in subparagraph (B)\u2014 (A) in the matter preceding clause (i), by striking the colon at the end and inserting the following: ”, except that the State agency shall retain the option to apply employ- ment requirements prescribed under this subparagraph to a program applicant at the time of application:”; (B) in clause (i), by striking ”with terms and condi- tions” and all that follows through ”time of application”; and (C) in clause (iv)\u2014 (i) by striking subclauses (I) and (II); and (ii) by redesignating subclauses (III) and (IV) as subclauses (I) and (II), respectively; (4) in subparagraph (D)\u2014 (A) in clause (i), by striking ”to which the application” and all that follows through ”30 days or less”; (B) in clause (ii), by striking ”but with respect” and all that follows through ”child care”; and (C) in clause (iii), by striking ”, on the basis of” and all that follows through ”clause (ii)” and inserting ”the ex- emption continues to be valid”; (5) in subparagraph (E), by striking the third sentence; (6) in subparagraph (G)\u2014 (A) by striking ”(G)(i) The State” and inserting ”(G) The State”; and (B) by striking clause (ii); (7) in subparagraph (H), by striking ”(H)(i) The Secretary” and all that follows through ”(ii) Federal funds” and inserting ”(H) Federal funds”; (8) in subparagraph (I)(i)(II), by striking ”, or was in oper- ation,” and all that follows through ”Social Security Act” and inserting the following: ”), except that no such payment or reim- bursement shall exceed the applicable local market rate”; (9)(A) by striking subparagraphs (K) and (L) and inserting the following: 223 ”(K) LIMITATION ON FUNDING.\u2014Notwithstanding any other provision of this paragraph, the amount of funds a State agency uses to carry out this paragraph (including funds used to carry out subparagraph (I)) for participants who are receiving benefits under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) shall not exceed the amount of funds the State agency used in fiscal year 1995 to carry out this para- graph for participants who were receiving benefits in fiscal year 1995 under a State program funded under part A of title IV of the Act (42 U.S.C. 601 et seq.).”; and (B) by redesignating subparagraphs (M) and (N) as sub- paragraphs (L) and (M), respectively; and (10) in subparagraph (L), as so redesignated\u2014 (A) by striking ”(L)(i) The Secretary” and inserting ”(L) The Secretary”; and (B) by striking clause (ii). (b) FUNDING.\u2014Section 16(h) of the Food Stamp Act of 1977 (7 U.S.C. 2025(h)) is amended by striking ”(h)(1)(A) The Secretary” and all that follows through the end of paragraph (1) and inserting the following: ”(h) FUNDING OF EMPLOYMENT AND TRAINING PROGRAMS.\u2014 ”(1) IN GENERAL.\u2014 ”(A) AMOUNTS.\u2014To carry out employment and training programs, the Secretary shall reserve for allocation to State agencies from funds made available for each fiscal year under section 18(a)(1) the amount of\u2014 ”(i) for fiscal year 1996, $75,000,000; ”(ii) for fiscal year 1997, $79,000,000; ”(iii) for fiscal year 1998, $81,000,000; ”(iv) for fiscal year 1999, $84,000,000; ”(v) for fiscal year 2000, $86,000,000; ”(vi) for fiscal year 2001, $88,000,000; and ”(vii) for fiscal year 2002, $90,000,000. ”(B) ALLOCATION.\u2014The Secretary shall allocate the amounts reserved under subparagraph (A) among the State agencies using a reasonable formula (as determined by the Secretary) that gives consideration to the population in each State affected by section 6(o). ”(C) REALLOCATION.\u2014 ”(i) NOTIFICATION.\u2014A State agency shall promptly notify the Secretary if the State agency determines that the State agency will not expend all of the funds allo- cated to the State agency under subparagraph (B). ”(ii) REALLOCATION.\u2014On notification under clause (i), the Secretary shall reallocate the funds that the State agency will not expend as the Secretary considers appropriate and equitable. ”(D) MINIMUM ALLOCATION.\u2014Notwithstanding sub- paragraphs (A) through (C), the Secretary shall ensure that each State agency operating an employment and training program shall receive not less than $50,000 for each fiscal year.”. 224 (c) ADDITIONAL MATCHING FUNDS.\u2014Section 16(h)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2025(h)(2)) is amended by inserting be- fore the period at the end the following: ”, including the costs for case management and casework to facilitate the transition from eco- nomic dependency to self-sufficiency through work”. (d) REPORTS.\u2014Section 16(h) of the Food Stamp Act of 1977 (7 U.S.C. 2025(h)) is amended\u2014 (1) in paragraph (5)\u2014 (A) by striking ”(5)(A) The Secretary” and inserting ”(5) The Secretary”; and (B) by striking subparagraph (B); and (2) by striking paragraph (6). SEC. 818. FOOD STAMP ELIGIBILITY. The third sentence of section 6(f) of the Food Stamp Act of 1977 (7 U.S.C. 2015(f)) is amended by inserting ”, at State option,” after ”less”. SEC. 819. COMPARABLE TREATMENT FOR DISQUALIFICATION. (a) IN GENERAL.\u2014Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015) is amended by adding at the end the following: ”(i) COMPARABLE TREATMENT FOR DISQUALIFICATION.\u2014 ”(1) IN GENERAL.\u2014If a disqualification is imposed on a member of a household for a failure of the member to perform an action required under a Federal, State, or local law relating to a means-tested public assistance program, the State agency may impose the same disqualification on the member of the household under the food stamp program. ”(2) RULES AND PROCEDURES.\u2014If a disqualification is im- posed under paragraph (1) for a failure of an individual to per- form an action required under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), the State agency may use the rules and procedures that apply under part A of title IV of the Act to impose the same disqualification under the food stamp program. ”(3) APPLICATION AFTER DISQUALIFICATION PERIOD.\u2014A member of a household disqualified under paragraph (1) may, after the disqualification period has expired, apply for benefits under this Act and shall be treated as a new applicant, except that a prior disqualification under subsection (d) shall be con- sidered in determining eligibility.”. (b) STATE PLAN PROVISIONS.\u2014Section 11(e) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)) is amended\u2014 (1) in paragraph (24), by striking ”and” at the end; (2) in paragraph (25), by striking the period at the end and inserting a semicolon; and (3) by adding at the end the following: ”(26) the guidelines the State agency uses in carrying out section 6(i); and”. (c) CONFORMING AMENDMENT.\u2014Section 6(d)(2)(A) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(2)(A)) is amended by striking ”that is comparable to a requirement of paragraph (1)”. 225 SEC. 820. DISQUALIFICATION FOR RECEIPT OF MULTIPLE FOOD STAMP BENEFITS. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 819, is amended by adding at the end the fol- lowing: ”(j) DISQUALIFICATION FOR RECEIPT OF MULTIPLE FOOD STAMP BENEFITS.\u2014An individual shall be ineligible to participate in the food stamp program as a member of any household for a 10-year period if the individual is found by a State agency to have made, or is convicted in a Federal or State court of having made, a fraud- ulent statement or representation with respect to the identity or place of residence of the individual in order to receive multiple bene- fits simultaneously under the food stamp program.”. SEC. 821. DISQUALIFICATION OF FLEEING FELONS. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 820, is amended by adding at the end the fol- lowing: ”(k) DISQUALIFICATION OF FLEEING FELONS.\u2014No member of a household who is otherwise eligible to participate in the food stamp program shall be eligible to participate in the program as a member of that or any other household during any period during which the individual is\u2014 ”(1) fleeing to avoid prosecution, or custody or confinement after conviction, under the law of the place from which the indi- vidual is fleeing, for a crime, or attempt to commit a crime, that is a felony under the law of the place from which the individual is fleeing or that, in the case of New Jersey, is a high mis- demeanor under the law of New Jersey; or ”(2) violating a condition of probation or parole imposed under a Federal or State law.”. SEC. 822. COOPERATION WITH CHILD SUPPORT AGENCIES. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 821, is amended by adding at the end the fol- lowing: ”(l) CUSTODIAL PARENT’S COOPERATION WITH CHILD SUPPORT AGENCIES.\u2014 ”(1) IN GENERAL.\u2014At the option of a State agency, subject to paragraphs (2) and (3), no natural or adoptive parent or other individual (collectively referred to in this subsection as ‘the individual’) who is living with and exercising parental con- trol over a child under the age of 18 who has an absent parent shall be eligible to participate in the food stamp program unless the individual cooperates with the State agency administering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.)\u2014 ”(A) in establishing the paternity of the child (if the child is born out of wedlock); and ”(B) in obtaining support for\u2014 ”(i) the child; or ”(ii) the individual and the child. ”(2) GOOD CAUSE FOR NONCOOPERATION.\u2014Paragraph (1) shall not apply to the individual if good cause is found for re- fusing to cooperate, as determined by the State agency in ac- cordance with standards prescribed by the Secretary in con- 226 sultation with the Secretary of Health and Human Services. The standards shall take into consideration circumstances under which cooperation may be against the best interests of the child. ”(3) FEES.\u2014Paragraph (1) shall not require the payment of a fee or other cost for services provided under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.). ”(m) NONCUSTODIAL PARENT’S COOPERATION WITH CHILD SUP- PORT AGENCIES.\u2014 ”(1) IN GENERAL.\u2014At the option of a State agency, subject to paragraphs (2) and (3), a putative or identified noncustodial parent of a child under the age of 18 (referred to in this sub- section as ‘the individual’) shall not be eligible to participate in the food stamp program if the individual refuses to cooperate with the State agency administering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.)\u2014 ”(A) in establishing the paternity of the child (if the child is born out of wedlock); and ”(B) in providing support for the child. ”(2) REFUSAL TO COOPERATE.\u2014 ”(A) GUIDELINES.\u2014The Secretary, in consultation with the Secretary of Health and Human Services, shall develop guidelines on what constitutes a refusal to cooperate under paragraph (1). ”(B) PROCEDURES.\u2014The State agency shall develop procedures, using guidelines developed under subpara- graph (A), for determining whether an individual is refus- ing to cooperate under paragraph (1). ”(3) FEES.\u2014Paragraph (1) shall not require the payment of a fee or other cost for services provided under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.). ”(4) PRIVACY.\u2014The State agency shall provide safeguards to restrict the use of information collected by a State agency ad- ministering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.) to purposes for which the information is collected.”. SEC. 823. DISQUALIFICATION RELATING TO CHILD SUPPORT ARREARS. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 822, is amended by adding at the end the fol- lowing: ”(n) DISQUALIFICATION FOR CHILD SUPPORT ARREARS.\u2014 ”(1) IN GENERAL.\u2014At the option of a State agency, no indi- vidual shall be eligible to participate in the food stamp pro- gram as a member of any household during any month that the individual is delinquent in any payment due under a court order for the support of a child of the individual. ”(2) EXCEPTIONS.\u2014Paragraph (1) shall not apply if\u2014 ”(A) a court is allowing the individual to delay pay- ment; or ”(B) the individual is complying with a payment plan approved by a court or the State agency designated under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.) to provide support for the child of the individual.”. 227 SEC. 824. WORK REQUIREMENT. (a) IN GENERAL.\u2014Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 823, is amended by adding at the end the following: ”(o) WORK REQUIREMENT.\u2014 ”(1) DEFINITION OF WORK PROGRAM.\u2014In this subsection, the term ‘work program’ means\u2014 ”(A) a program under the Job Training Partnership Act (29 U.S.C. 1501 et seq.); ”(B) a program under section 236 of the Trade Act of 1974 (19 U.S.C. 2296); and ”(C) a program of employment and training operated or supervised by a State or political subdivision of a State that meets standards approved by the Governor of the State, including a program under subsection (d)(4), other than a job search program or a job search training pro- gram. ”(2) WORK REQUIREMENT.\u2014Subject to the other provisions of this subsection, no individual shall be eligible to participate in the food stamp program as a member of any household if, during the preceding 36-month period, the individual received food stamp benefits for not less than 3 months (consecutive or otherwise) during which the individual did not\u2014 ”(A) work 20 hours or more per week, averaged month- ly; ”(B) participate in and comply with the requirements of a work program for 20 hours or more per week, as deter- mined by the State agency; ”(C) participate in and comply with the requirements of a program under section 20 or a comparable program es- tablished by a State or political subdivision of a State; or ”(D) receive benefits pursuant to paragraph (3), (4), or (5). ”(3) EXCEPTION.\u2014Paragraph (2) shall not apply to an indi- vidual if the individual is\u2014 ”(A) under 18 or over 50 years of age; ”(B) medically certified as physically or mentally unfit for employment; ”(C) a parent or other member of a household with re- sponsibility for a dependent child; ”(D) otherwise exempt under subsection (d)(2); or ”(E) a pregnant woman. ”(4) WAIVER.\u2014 ”(A) IN GENERAL.\u2014On the request of a State agency, the Secretary may waive the applicability of paragraph (2) to any group of individuals in the State if the Secretary makes a determination that the area in which the individ- uals reside\u2014 ”(i) has an unemployment rate of over 10 percent; or ”(ii) does not have a sufficient number of jobs to provide employment for the individuals. ”(B) REPORT.\u2014The Secretary shall report the basis for a waiver under subparagraph (A) to the Committee on Ag- 228 riculture of the House of Representatives and the Commit- tee on Agriculture, Nutrition, and Forestry of the Senate. ”(5) SUBSEQUENT ELIGIBILITY.\u2014 ”(A) REGAINING ELIGIBILITY.\u2014An individual denied eli- gibility under paragraph (2) shall regain eligibility to par- ticipate in the food stamp program if, during a 30-day pe- riod, the individual\u2014 ”(i) works 80 or more hours; ”(ii) participates in and complies with the require- ments of a work program for 80 or more hours, as de- termined by a State agency; or ”(iii) participates in and complies with the require- ments of a program under section 20 or a comparable program established by a State or political subdivision of a State. ”(B) MAINTAINING ELIGIBILITY.\u2014An individual who re- gains eligibility under subparagraph (A) shall remain eligi- ble as long as the individual meets the requirements of sub- paragraph (A), (B), or (C) of paragraph (2). ”(C) LOSS OF EMPLOYMENT.\u2014 ”(i) IN GENERAL.\u2014An individual who regained eli- gibility under subparagraph (A) and who no longer meets the requirements of subparagraph (A), (B), or (C) of paragraph (2) shall remain eligible for a consecutive 3-month period, beginning on the date the individual first notifies the State agency that the individual no longer meets the requirements of subparagraph (A), (B), or (C) of paragraph (2). ”(ii) LIMITATION.\u2014An individual shall not receive any benefits pursuant to clause (i) for more than a sin- gle 3-month period in any 36-month period. ”(6) OTHER PROGRAM RULES.\u2014Nothing in this subsection shall make an individual eligible for benefits under this Act if the individual is not otherwise eligible for benefits under the other provisions of this Act.”. (b) TRANSITION PROVISION.\u2014The term ”preceding 36-month pe- riod” in section 6(o) of the Food Stamp Act of 1977, as added by subsection (a), does not include, with respect to a State, any period before the earlier of\u2014 (1) the date the State notifies recipients of food stamp bene- fits of the application of section 6(o); or (2) the date that is 3 months after the date of enactment of this Act. SEC. 825. ENCOURAGEMENT OF ELECTRONIC BENEFIT TRANSFER SYS- TEMS. (a) IN GENERAL.\u2014Section 7(i) of the Food Stamp Act of 1977 (7 U.S.C. 2016(i)) is amended\u2014 (1) by striking ”(i)(1)(A) Any State” and all that follows through the end of paragraph (1) and inserting the following: ”(i) ELECTRONIC BENEFIT TRANSFERS.\u2014 ”(1) IN GENERAL.\u2014 ”(A) IMPLEMENTATION.\u2014Not later than October 1, 2002, each State agency shall implement an electronic bene- fit transfer system under which household benefits deter- 229 mined under section 8(a) or 26 are issued from and stored in a central databank, unless the Secretary provides a waiver for a State agency that faces unusual barriers to im- plementing an electronic benefit transfer system. ”(B) TIMELY IMPLEMENTATION.\u2014Each State agency is encouraged to implement an electronic benefit transfer sys- tem under subparagraph (A) as soon as practicable. ”(C) STATE FLEXIBILITY.\u2014Subject to paragraph (2), a State agency may procure and implement an electronic ben- efit transfer system under the terms, conditions, and design that the State agency considers appropriate. ”(D) OPERATION.\u2014An electronic benefit transfer system should take into account generally accepted standard oper- ating rules based on\u2014 ”(i) commercial electronic funds transfer tech- nology; ”(ii) the need to permit interstate operation and law enforcement monitoring; and ”(iii) the need to permit monitoring and investiga- tions by authorized law enforcement agencies.”; (2) in paragraph (2)\u2014 (A) by striking ”effective no later than April 1, 1992,”; (B) in subparagraph (A)\u2014 (i) by striking ”, in any 1 year,”; and (ii) by striking ”on-line”; (C) by striking subparagraph (D) and inserting the fol- lowing: ”(D)(i) measures to maximize the security of a system using the most recent technology available that the State agency considers appropriate and cost effective and which may include personal identification numbers, photographic identification on electronic benefit transfer cards, and other measures to protect against fraud and abuse; and ”(ii) effective not later than 2 years after the date of en- actment of this clause, to the extent practicable, measures that permit a system to differentiate items of food that may be acquired with an allotment from items of food that may not be acquired with an allotment;”; (D) in subparagraph (G), by striking ”and” at the end; (E) in subparagraph (H), by striking the period at the end and inserting ”; and”; and (F) by adding at the end the following: ”(I) procurement standards.”; and (3) by adding at the end the following: ”(7) REPLACEMENT OF BENEFITS.\u2014Regulations issued by the Secretary regarding the replacement of benefits and liability for replacement of benefits under an electronic benefit transfer system shall be similar to the regulations in effect for a paper- based food stamp issuance system. ”(8) REPLACEMENT CARD FEE.\u2014A State agency may collect a charge for replacement of an electronic benefit transfer card by reducing the monthly allotment of the household receiving the replacement card. ”(9) OPTIONAL PHOTOGRAPHIC IDENTIFICATION.\u2014 230 ”(A) IN GENERAL.\u2014A State agency may require that an electronic benefit card contain a photograph of 1 or more members of a household. ”(B) OTHER AUTHORIZED USERS.\u2014If a State agency re- quires a photograph on an electronic benefit card under subparagraph (A), the State agency shall establish proce- dures to ensure that any other appropriate member of the household or any authorized representative of the house- hold may utilize the card. ”(10) APPLICABLE LAW.\u2014Disclosures, protections, respon- sibilities, and remedies established by the Federal Reserve Board under section 904 of the Electronic Fund Transfer Act (15 U.S.C. 1693b) shall not apply to benefits under this Act de- livered through any electronic benefit transfer system. ”(11) APPLICATION OF ANTI-TYING RESTRICTIONS TO ELEC- TRONIC BENEFIT TRANSFER SYSTEMS.\u2014 ”(A) DEFINITIONS.\u2014In this paragraph: ”(i) AFFILIATE.\u2014The term ‘affiliate’ has the mean- ing provided the term in section 2(k) of the Bank Hold- ing Company Act of 1956 (12 U.S.C. 1841(k)). ”(ii) COMPANY.\u2014The term ‘company’ has the mean- ing provided the term in section 106(a) of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1971), but shall not include a bank, a bank holding company, or any subsidiary of a bank holding com- pany. ”(iii) ELECTRONIC BENEFIT TRANSFER SERVICE.\u2014 The term ‘electronic benefit transfer service’ means the processing of electronic transfers of household benefits, determined under section 8(a) or 26, if the benefits are\u2014 ”(I) issued from and stored in a central databank; ”(II) electronically accessed by household mem- bers at the point of sale; and ”(III) provided by a Federal or State govern- ment. ”(iv) POINT-OF-SALE SERVICE.\u2014The term ‘point-of- sale service’ means any product or service related to the electronic authorization and processing of payments for merchandise at a retail food store, including credit or debit card services, automated teller machines, point- of-sale terminals, or access to on-line systems. ”(B) RESTRICTIONS.\u2014A company may not sell or pro- vide electronic benefit transfer services, or fix or vary the consideration for electronic benefit transfer services, on the condition or requirement that the customer\u2014 ”(i) obtain some additional point-of-sale service from the company or an affiliate of the company; or ”(ii) not obtain some additional point-of-sale serv- ice from a competitor of the company or competitor of any affiliate of the company. ”(C) CONSULTATION WITH THE FEDERAL RESERVE BOARD.\u2014Before promulgating regulations or interpretations 231 of regulations to carry out this paragraph, the Secretary shall consult with the Board of Governors of the Federal Reserve System.”. (b) SENSE OF CONGRESS.\u2014It is the sense of Congress that a State that operates an electronic benefit transfer system under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) should operate the system in a manner that is compatible with electronic benefit trans- fer systems operated by other States. SEC. 826. VALUE OF MINIMUM ALLOTMENT. The proviso in section 8(a) of the Food Stamp Act of 1977 (7 U.S.C. 2017(a)) is amended by striking ”, and shall be adjusted” and all that follows through ”$5”. SEC. 827. BENEFITS ON RECERTIFICATION. Section 8(c)(2)(B) of the Food Stamp Act of 1977 (7 U.S.C. 2017(c)(2)(B)) is amended by striking ”of more than one month”. SEC. 828. OPTIONAL COMBINED ALLOTMENT FOR EXPEDITED HOUSE- HOLDS. Section 8(c) of the Food Stamp Act of 1977 (7 U.S.C. 2017(c)) is amended by striking paragraph (3) and inserting the following: ”(3) OPTIONAL COMBINED ALLOTMENT FOR EXPEDITED HOUSEHOLDS.\u2014A State agency may provide to an eligible household applying after the 15th day of a month, in lieu of the initial allotment of the household and the regular allotment of the household for the following month, an allotment that is equal to the total amount of the initial allotment and the first regular allotment. The allotment shall be provided in accord- ance with section 11(e)(3) in the case of a household that is not entitled to expedited service and in accordance with paragraphs (3) and (9) of section 11(e) in the case of a household that is entitled to expedited service.”. SEC. 829. FAILURE TO COMPLY WITH OTHER MEANS-TESTED PUBLIC ASSISTANCE PROGRAMS. Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is amended by striking subsection (d) and inserting the following: ”(d) REDUCTION OF PUBLIC ASSISTANCE BENEFITS.\u2014 ”(1) IN GENERAL.\u2014If the benefits of a household are re- duced under a Federal, State, or local law relating to a means- tested public assistance program for the failure of a member of the household to perform an action required under the law or program, for the duration of the reduction\u2014 ”(A) the household may not receive an increased allot- ment as the result of a decrease in the income of the house- hold to the extent that the decrease is the result of the re- duction; and ”(B) the State agency may reduce the allotment of the household by not more than 25 percent. ”(2) RULES AND PROCEDURES.\u2014If the allotment of a house- hold is reduced under this subsection for a failure to perform an action required under part A of title IV of the Social Secu- rity Act (42 U.S.C. 601 et seq.), the State agency may use the rules and procedures that apply under part A of title IV of the Act to reduce the allotment under the food stamp program.”. 232 SEC. 830. ALLOTMENTS FOR HOUSEHOLDS RESIDING IN CENTERS. Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is amended by adding at the end the following: ”(f) ALLOTMENTS FOR HOUSEHOLDS RESIDING IN CENTERS.\u2014 ”(1) IN GENERAL.\u2014In the case of an individual who resides in a center for the purpose of a drug or alcoholic treatment pro- gram described in the last sentence of section 3(i), a State agen- cy may provide an allotment for the individual to\u2014 ”(A) the center as an authorized representative of the individual for a period that is less than 1 month; and ”(B) the individual, if the individual leaves the center. ”(2) DIRECT PAYMENT.\u2014A State agency may require an in- dividual referred to in paragraph (1) to designate the center in which the individual resides as the authorized representative of the individual for the purpose of receiving an allotment.”. SEC. 831. CONDITION PRECEDENT FOR APPROVAL OF RETAIL FOOD STORES AND WHOLESALE FOOD CONCERNS. Section 9(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2018(a)(1)) is amended by adding at the end the following: ”No re- tail food store or wholesale food concern of a type determined by the Secretary, based on factors that include size, location, and type of items sold, shall be approved to be authorized or reauthorized for participation in the food stamp program unless an authorized em- ployee of the Department of Agriculture, a designee of the Secretary, or, if practicable, an official of the State or local government des- ignated by the Secretary has visited the store or concern for the pur- pose of determining whether the store or concern should be approved or reauthorized, as appropriate.”. SEC. 832. AUTHORITY TO ESTABLISH AUTHORIZATION PERIODS. Section 9(a) of the Food Stamp Act of 1977 (7 U.S.C. 2018(a)) is amended by adding at the end the following: ”(3) AUTHORIZATION PERIODS.\u2014The Secretary shall estab- lish specific time periods during which authorization to accept and redeem coupons, or to redeem benefits through an electronic benefit transfer system, shall be valid under the food stamp pro- gram.”. SEC. 833. INFORMATION FOR VERIFYING ELIGIBILITY FOR AUTHOR- IZATION. Section 9(c) of the Food Stamp Act of 1977 (7 U.S.C. 2018(c)) is amended\u2014 (1) in the first sentence, by inserting ”, which may include relevant income and sales tax filing documents,” after ”submit information”; and (2) by inserting after the first sentence the following: ”The regulations may require retail food stores and wholesale food concerns to provide written authorization for the Secretary to verify all relevant tax filings with appropriate agencies and to obtain corroborating documentation from other sources so that the accuracy of information provided by the stores and concerns may be verified.”. 233 SEC. 834. WAITING PERIOD FOR STORES THAT FAIL TO MEET AUTHOR- IZATION CRITERIA. Section 9(d) of the Food Stamp Act of 1977 (7 U.S.C. 2018(d)) is amended by adding at the end the following: ”A retail food store or wholesale food concern that is denied approval to accept and re- deem coupons because the store or concern does not meet criteria for approval established by the Secretary may not, for at least 6 months, submit a new application to participate in the program. The Secretary may establish a longer time period under the preced- ing sentence, including permanent disqualification, that reflects the severity of the basis of the denial.”. SEC. 835. OPERATION OF FOOD STAMP OFFICES. Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020), as amended by sections 809(b) and 819(b), is amended\u2014 (1) in subsection (e)\u2014 (A) by striking paragraph (2) and inserting the follow- ing: ”(2)(A) that the State agency shall establish procedures gov- erning the operation of food stamp offices that the State agency determines best serve households in the State, including house- holds with special needs, such as households with elderly or disabled members, households in rural areas with low-income members, homeless individuals, households residing on reserva- tions, and households in areas in which a substantial number of members of low-income households speak a language other than English. ”(B) In carrying out subparagraph (A), a State agency\u2014 ”(i) shall provide timely, accurate, and fair service to applicants for, and participants in, the food stamp pro- gram; ”(ii) shall develop an application containing the infor- mation necessary to comply with this Act; ”(iii) shall permit an applicant household to apply to participate in the program on the same day that the house- hold first contacts a food stamp office in person during of- fice hours; ”(iv) shall consider an application that contains the name, address, and signature of the applicant to be filed on the date the applicant submits the application; ”(v) shall require that an adult representative of each applicant household certify in writing, under penalty of perjury, that\u2014 ”(I) the information contained in the application is true; and ”(II) all members of the household are citizens or are aliens eligible to receive food stamps under section 6(f); ”(vi) shall provide a method of certifying and issuing coupons to eligible homeless individuals, to ensure that participation in the food stamp program is limited to eligi- ble households; and ”(vii) may establish operating procedures that vary for local food stamp offices to reflect regional and local dif- ferences within the State. 234 ”(C) Nothing in this Act shall prohibit the use of signatures provided and maintained electronically, storage of records using automated retrieval systems only, or any other feature of a State agency’s application system that does not rely exclu- sively on the collection and retention of paper applications or other records. ”(D) The signature of any adult under this paragraph shall be considered sufficient to comply with any provision of Federal law requiring a household member to sign an application or statement;”; (B) in paragraph (3)\u2014 (i) by striking ”shall\u2014” and all that follows through ”provide each” and inserting ”shall provide each”; and (ii) by striking ”(B) assist” and all that follows through ”representative of the State agency;”; (C) by striking paragraphs (14) and (25); (D)(i) by redesignating paragraphs (15) through (24) as paragraphs (14) through (23), respectively; and (ii) by redesignating paragraph (26), as paragraph (24); and (2) in subsection (i)\u2014 (A) by striking ”(i) Notwithstanding” and all that fol- lows through ”(2)” and inserting the following: ”(i) APPLICATION AND DENIAL PROCEDURES.\u2014 ”(1) APPLICATION PROCEDURES.\u2014Notwithstanding any other provision of law,”; and (B) by striking ”; (3) households” and all that follows through ”title IV of the Social Security Act. No” and insert- ing a period and the following: ”(2) DENIAL AND TERMINATION.\u2014Except in a case of dis- qualification as a penalty for failure to comply with a public as- sistance program rule or regulation, no”. SEC. 836. STATE EMPLOYEE AND TRAINING STANDARDS. Section 11(e)(6) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(6)) is amended\u2014 (1) by striking ”that (A) the” and inserting ”that\u2014 ”(A) the”; (2) by striking ”Act; (B) the” and inserting ”Act; and ”(B) the”; (3) in subparagraph (B), by striking ”United States Civil Service Commission” and inserting ”Office of Personnel Man- agement”; and (4) by striking subparagraphs (C) through (E). SEC. 837. EXCHANGE OF LAW ENFORCEMENT INFORMATION. Section 11(e)(8) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(8)) is amended\u2014 (1) by striking ”that (A) such” and inserting the following: ”that\u2014 ”(A) the”; (2) by striking ”law, (B) notwithstanding” and inserting the following: ”law; ”(B) notwithstanding”; 235 (3) by striking ”Act, and (C) such” and inserting the follow- ing: ”Act; ”(C) the”; and (4) by adding at the end the following: ”(D) notwithstanding any other provision of law, the address, social security number, and, if available, photo- graph of any member of a household shall be made avail- able, on request, to any Federal, State, or local law enforce- ment officer if the officer furnishes the State agency with the name of the member and notifies the agency that\u2014 ”(i) the member\u2014 ”(I) is fleeing to avoid prosecution, or custody or confinement after conviction, for a crime (or at- tempt to commit a crime) that, under the law of the place the member is fleeing, is a felony (or, in the case of New Jersey, a high misdemeanor), or is violating a condition of probation or parole im- posed under Federal or State law; or ”(II) has information that is necessary for the officer to conduct an official duty related to sub- clause (I); ”(ii) locating or apprehending the member is an of- ficial duty; and ”(iii) the request is being made in the proper exer- cise of an official duty; and ”(E) the safeguards shall not prevent compliance with paragraph (16);”. SEC. 838. EXPEDITED COUPON SERVICE. Section 11(e)(9) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(9)) is amended\u2014 (1) in subparagraph (A), by striking ”five days” and insert- ing ”7 days”; (2) by striking subparagraph (B); (3) by redesignating subparagraphs (C) and (D) as sub- paragraphs (B) and (C); (4) in subparagraph (B), as redesignated by paragraph (3), by striking ”five days” and inserting ”7 days”; and (5) in subparagraph (C), as redesignated by paragraph (3), by striking ”, (B), or (C)” and inserting ”or (B)”. SEC. 839. WITHDRAWING FAIR HEARING REQUESTS. Section 11(e)(10) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(10)) is amended by inserting before the semicolon at the end a period and the following: ”At the option of a State, at any time prior to a fair hearing determination under this paragraph, a household may withdraw, orally or in writing, a request by the household for the fair hearing. If the withdrawal request is an oral request, the State agency shall provide a written notice to the house- hold confirming the withdrawal request and providing the house- hold with an opportunity to request a hearing”. SEC. 840. INCOME, ELIGIBILITY, AND IMMIGRATION STATUS VERIFICA- TION SYSTEMS. Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020) is amended\u2014 236 (1) in subsection (e)(18), as redesignated by section 835(1)(D)\u2014 (A) by striking ”that information is” and inserting ”at the option of the State agency, that information may be”; and (B) by striking ”shall be requested” and inserting ”may be requested”; and (2) by adding at the end the following: ”(p) STATE VERIFICATION OPTION.\u2014Notwithstanding any other provision of law, in carrying out the food stamp program, a State agency shall not be required to use an income and eligibility or an immigration status verification system established under section 1137 of the Social Security Act (42 U.S.C. 1320b 7).”. SEC. 841. INVESTIGATIONS. Section 12(a) of the Food Stamp Act of 1977 (7 U.S.C. 2021(a)) is amended by adding at the end the following: ”Regulations issued pursuant to this Act shall provide criteria for the finding of a viola- tion and the suspension or disqualification of a retail food store or wholesale food concern on the basis of evidence that may include facts established through on-site investigations, inconsistent re- demption data, or evidence obtained through a transaction report under an electronic benefit transfer system.”. SEC. 842. DISQUALIFICATION OF RETAILERS WHO INTENTIONALLY SUBMIT FALSIFIED APPLICATIONS. Section 12(b) of the Food Stamp Act of 1977 (7 U.S.C. 2021(b)) is amended\u2014 (1) in paragraph (2), by striking ”and” at the end; (2) in paragraph (3), by striking the period at the end and inserting ”; and”; and (3) by adding at the end the following: ”(4) for a reasonable period of time to be determined by the Secretary, including permanent disqualification, on the know- ing submission of an application for the approval or reauthor- ization to accept and redeem coupons that contains false infor- mation about a substantive matter that was a part of the appli- cation.”. SEC. 843. DISQUALIFICATION OF RETAILERS WHO ARE DISQUALIFIED UNDER THE WIC PROGRAM. Section 12 of the Food Stamp Act of 1977 (7 U.S.C. 2021) is amended by adding at the end the following: ”(g) DISQUALIFICATION OF RETAILERS WHO ARE DISQUALIFIED UNDER THE WIC PROGRAM.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall issue regulations providing criteria for the disqualification under this Act of an approved retail food store or a wholesale food concern that is disqualified from accepting benefits under the special supple- mental nutrition program for women, infants, and children es- tablished under section 17 of the Child Nutrition Act of 1966 (7 U.S.C. 1786). ”(2) TERMS.\u2014A disqualification under paragraph (1)\u2014 ”(A) shall be for the same length of time as the dis- qualification from the program referred to in paragraph (1); 237 ”(B) may begin at a later date than the disqualification from the program referred to in paragraph (1); and ”(C) notwithstanding section 14, shall not be subject to judicial or administrative review.”. SEC. 844. COLLECTION OF OVERISSUANCES. (a) COLLECTION OF OVERISSUANCES.\u2014Section 13 of the Food Stamp Act of 1977 (7 U.S.C. 2022) is amended\u2014 (1) by striking subsection (b) and inserting the following: ”(b) COLLECTION OF OVERISSUANCES.\u2014 ”(1) IN GENERAL.\u2014Except as otherwise provided in this sub- section, a State agency shall collect any overissuance of coupons issued to a household by\u2014 ”(A) reducing the allotment of the household; ”(B) withholding amounts from unemployment com- pensation from a member of the household under sub- section (c); ”(C) recovering from Federal pay or a Federal income tax refund under subsection (d); or ”(D) any other means. ”(2) COST EFFECTIVENESS.\u2014Paragraph (1) shall not apply if the State agency demonstrates to the satisfaction of the Sec- retary that all of the means referred to in paragraph (1) are not cost effective. ”(3) MAXIMUM REDUCTION ABSENT FRAUD.\u2014If a household received an overissuance of coupons without any member of the household being found ineligible to participate in the program under section 6(b)(1) and a State agency elects to reduce the al- lotment of the household under paragraph (1)(A), the State agency shall not reduce the monthly allotment of the household under paragraph (1)(A) by an amount in excess of the greater of\u2014 ”(A) 10 percent of the monthly allotment of the house- hold; or ”(B) $10. ”(4) PROCEDURES.\u2014A State agency shall collect an over- issuance of coupons issued to a household under paragraph (1) in accordance with the requirements established by the State agency for providing notice, electing a means of payment, and establishing a time schedule for payment.”; and (2) in subsection (d)\u2014 (A) by striking ”as determined under subsection (b) and except for claims arising from an error of the State agency,” and inserting ”, as determined under subsection (b)(1),”; and (B) by inserting before the period at the end the follow- ing: ”or a Federal income tax refund as authorized by sec- tion 3720A of title 31, United States Code”. (b) CONFORMING AMENDMENTS.\u2014Section 11(e)(8)(C) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(8)(C)) is amended\u2014 (1) by striking ”and excluding claims” and all that follows through ”such section”; and (2) by inserting before the semicolon at the end the follow- ing: ”or a Federal income tax refund as authorized by section 3720A of title 31, United States Code”. 238 (c) RETENTION RATE.\u2014The proviso of the first sentence of sec- tion 16(a) of the Food Stamp Act of 1977 (7 U.S.C. 2025(a)) is amended by striking ”25 percent during the period beginning Octo- ber 1, 1990” and all that follows through ”section 13(b)(2) which arise” and inserting ”35 percent of the value of all funds or allot- ments recovered or collected pursuant to sections 6(b) and 13(c) and 20 percent of the value of any other funds or allotments recovered or collected, except the value of funds or allotments recovered or col- lected that arise”. SEC. 845. AUTHORITY TO SUSPEND STORES VIOLATING PROGRAM RE- QUIREMENTS PENDING ADMINISTRATIVE AND JUDICIAL REVIEW. Section 14(a) of the Food Stamp Act of 1977 (7 U.S.C. 2023(a)) is amended\u2014 (1) by redesignating the first through seventeenth sentences as paragraphs (1) through (17), respectively; and (2) by adding at the end the following: ”(18) SUSPENSION OF STORES PENDING REVIEW.\u2014Notwith- standing any other provision of this subsection, any permanent disqualification of a retail food store or wholesale food concern under paragraph (3) or (4) of section 12(b) shall be effective from the date of receipt of the notice of disqualification. If the disqualification is reversed through administrative or judicial review, the Secretary shall not be liable for the value of any sales lost during the disqualification period.”. SEC. 846. EXPANDED CRIMINAL FORFEITURE FOR VIOLATIONS. (a) FORFEITURE OF ITEMS EXCHANGED IN FOOD STAMP TRAF- FICKING.\u2014The first sentence of section 15(g) of the Food Stamp Act of 1977 (7 U.S.C. 2024(g)) is amended by striking ”or intended to be furnished”. (b) CRIMINAL FORFEITURE.\u2014Section 15 of the Food Stamp Act of 1977 (7 U.S.C. 2024) is amended by adding at the end the follow- ing: ”(h) CRIMINAL FORFEITURE.\u2014 ”(1) IN GENERAL.\u2014In imposing a sentence on a person con- victed of an offense in violation of subsection (b) or (c), a court shall order, in addition to any other sentence imposed under this section, that the person forfeit to the United States all prop- erty described in paragraph (2). ”(2) PROPERTY SUBJECT TO FORFEITURE.\u2014All property, real and personal, used in a transaction or attempted transaction, to commit, or to facilitate the commission of, a violation (other than a misdemeanor) of subsection (b) or (c), or proceeds trace- able to a violation of subsection (b) or (c), shall be subject to for- feiture to the United States under paragraph (1). ”(3) INTEREST OF OWNER.\u2014No interest in property shall be forfeited under this subsection as the result of any act or omis- sion established by the owner of the interest to have been com- mitted or omitted without the knowledge or consent of the owner. ”(4) PROCEEDS.\u2014The proceeds from any sale of forfeited property and any monies forfeited under this subsection shall be used\u2014 239 ”(A) first, to reimburse the Department of Justice for the costs incurred by the Department to initiate and com- plete the forfeiture proceeding; ”(B) second, to reimburse the Department of Agri- culture Office of Inspector General for any costs the Office incurred in the law enforcement effort resulting in the for- feiture; ”(C) third, to reimburse any Federal or State law en- forcement agency for any costs incurred in the law enforce- ment effort resulting in the forfeiture; and ”(D) fourth, by the Secretary to carry out the approval, reauthorization, and compliance investigations of retail stores and wholesale food concerns under section 9.”. SEC. 847. LIMITATION ON FEDERAL MATCH. Section 16(a)(4) of the Food Stamp Act of 1977 (7 U.S.C. 2025(a)(4)) is amended by inserting after the comma at the end the following: ”but not including recruitment activities,”. SEC. 848. STANDARDS FOR ADMINISTRATION. (a) IN GENERAL.\u2014Section 16 of the Food Stamp Act of 1977 (7 U.S.C. 2025) is amended by striking subsection (b). (b) CONFORMING AMENDMENTS.\u2014 (1) The first sentence of section 11(g) of the Food Stamp Act of 1977 (7 U.S.C. 2020(g)) is amended by striking ”the Sec- retary’s standards for the efficient and effective administration of the program established under section 16(b)(1) or”. (2) Section 16(c)(1)(B) of the Food Stamp Act of 1977 (7 U.S.C. 2025(c)(1)(B)) is amended by striking ”pursuant to sub- section (b)”. SEC. 849. WORK SUPPLEMENTATION OR SUPPORT PROGRAM. Section 16 of the Food Stamp Act of 1977 (7 U.S.C. 2025), as amended by section 848(a), is amended by inserting after subsection (a) the following: ”(b) WORK SUPPLEMENTATION OR SUPPORT PROGRAM.\u2014 ”(1) DEFINITION OF WORK SUPPLEMENTATION OR SUPPORT PROGRAM.\u2014In this subsection, the term ‘work supplementation or support program’ means a program under which, as deter- mined by the Secretary, public assistance (including any bene- fits provided under a program established by the State and the food stamp program) is provided to an employer to be used for hiring and employing a public assistance recipient who was not employed by the employer at the time the public assistance re- cipient entered the program. ”(2) PROGRAM.\u2014A State agency may elect to use an amount equal to the allotment that would otherwise be issued to a household under the food stamp program, but for the operation of this subsection, for the purpose of subsidizing or supporting a job under a work supplementation or support program estab- lished by the State. ”(3) PROCEDURE.\u2014If a State agency makes an election under paragraph (2) and identifies each household that partici- pates in the food stamp program that contains an individual who is participating in the work supplementation or support program\u2014 240 ”(A) the Secretary shall pay to the State agency an amount equal to the value of the allotment that the house- hold would be eligible to receive but for the operation of this subsection; ”(B) the State agency shall expend the amount received under subparagraph (A) in accordance with the work supplementation or support program in lieu of providing the allotment that the household would receive but for the operation of this subsection; ”(C) for purposes of\u2014 ”(i) sections 5 and 8(a), the amount received under this subsection shall be excluded from household in- come and resources; and ”(ii) section 8(b), the amount received under this subsection shall be considered to be the value of an al- lotment provided to the household; and ”(D) the household shall not receive an allotment from the State agency for the period during which the member continues to participate in the work supplementation or support program. ”(4) OTHER WORK REQUIREMENTS.\u2014No individual shall be excused, by reason of the fact that a State has a work supplementation or support program, from any work require- ment under section 6(d), except during the periods in which the individual is employed under the work supplementation or sup- port program. ”(5) LENGTH OF PARTICIPATION.\u2014A State agency shall pro- vide a description of how the public assistance recipients in the program shall, within a specific period of time, be moved from supplemented or supported employment to employment that is not supplemented or supported. ”(6) DISPLACEMENT.\u2014A work supplementation or support program shall not displace the employment of individuals who are not supplemented or supported.”. SEC. 850. WAIVER AUTHORITY. Section 17(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2026(b)(1)) is amended\u2014 (1) by redesignating subparagraph (B) as subparagraph (C); and (2) in subparagraph (A)\u2014 (A) in the first sentence, by striking ”benefits to eligible households, including” and inserting the following: ”bene- fits to eligible households, and may waive any requirement of this Act to the extent necessary for the project to be con- ducted. ”(B) PROJECT REQUIREMENTS.\u2014 ”(i) PROGRAM GOAL.\u2014The Secretary may not con- duct a project under subparagraph (A) unless\u2014 ”(I) the project is consistent with the goal of the food stamp program of providing food assist- ance to raise levels of nutrition among low-income individuals; andn ”(II) the project includes an evaluation to de- termine the effects of the project. 241 ”(ii) PERMISSIBLE PROJECTS.\u2014The Secretary may conduct a project under subparagraph (A) to\u2014 ”(I) improve program administration; ”(II) increase the self-sufficiency of food stamp recipients; ”(III) test innovative welfare reform strategies; or ”(IV) allow greater conformity with the rules of other programs than would be allowed but for this paragraph. ”(iii) RESTRICTIONS ON PERMISSIBLE PROJECTS.\u2014If the Secretary finds that a project under subparagraph (A) would reduce benefits by more than 20 percent for more than 5 percent of households in the area subject to the project (not including any household whose bene- fits are reduced due to a failure to comply with work or other conduct requirements), the project\u2014 ”(I) may not include more than 15 percent of the State’s food stamp households; and ”(II) shall continue for not more than 5 years after the date of implementation, unless the Sec- retary approves an extension requested by the State agency at any time. ”(iv) IMPERMISSIBLE PROJECTS.\u2014The Secretary may not conduct a project under subparagraph (A) that\u2014 ”(I) involves the payment of the value of an al- lotment in the form of cash, unless the project was approved prior to the date of enactment of this subparagraph; ”(II) has the effect of substantially transferring funds made available under this Act to services or benefits provided primarily through another public assistance program, or using the funds for any purpose other than the purchase of food, program administration, or an employment or training pro- gram; ”(III) is inconsistent with\u2014 ”(aa) the last 2 sentences of section 3(i); ”(bb) the last sentence of section 5(a), inso- far as a waiver denies assistance to an other- wise eligible household or individual if the household or individual has not failed to com- ply with any work, behavioral, or other con- duct requirement under this or another pro- gram; ”(cc) section 5(c)(2); ”(dd) paragraph (2)(B), (4)(F)(i), or (4)(K) of section 6(d); ”(ee) section 8(b); ”(ff) section 11(e)(2)(B); ”(gg) the time standard under section 11(e)(3); 242 ”(hh) subsection (a), (c), (g), (h)(2), or (h)(3) of section 16; ”(ii) this paragraph; or ”(jj) subsection (a)(1) or (g)(1) of section 20; ”(IV) modifies the operation of section 5 so as to have the effect of\u2014 ”(aa) increasing the shelter deduction to households with no out-of-pocket housing costs or housing costs that consume a low percent- age of the household’s income; or ”(bb) absolving a State from acting with reasonable promptness on substantial reported changes in income or household size (except that this subclause shall not apply with re- gard to changes related to food stamp deduc- tions); ”(V) is not limited to a specific time period; or ”(VI) waives a provision of section 26. ”(v) ADDITIONAL INCLUDED PROJECTS.\u2014A pilot or experimental project may include”; (B) by striking ”to aid to families with dependent chil- dren under part A of title IV of the Social Security Act” and inserting ”are receiving assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)”; and (C) by striking ”coupons. The Secretary” and all that follows through ”Any pilot” and inserting the following: ”coupons. ”(vi) CASH PAYMENT PILOT PROJECTS.\u2014Any pilot”. SEC. 851. RESPONSE TO WAIVERS. Section 17(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2026(b)(1)), as amended by section 850, is amended by adding at the end the following: ”(D) RESPONSE TO WAIVERS.\u2014 ”(i) RESPONSE.\u2014Not later than 60 days after the date of receiving a request for a waiver under subpara- graph (A), the Secretary shall provide a response that\u2014 ”(I) approves the waiver request; ”(II) denies the waiver request and describes any modification needed for approval of the waiver request; ”(III) denies the waiver request and describes the grounds for the denial; or ”(IV) requests clarification of the waiver re- quest. ”(ii) FAILURE TO RESPOND.\u2014If the Secretary does not provide a response in accordance with clause (i), the waiver shall be considered approved, unless the ap- proval is specifically prohibited by this Act. ”(iii) NOTICE OF DENIAL.\u2014On denial of a waiver request under clause (i)(III), the Secretary shall provide a copy of the waiver request and a description of the 243 reasons for the denial to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate.”. SEC. 852. EMPLOYMENT INITIATIVES PROGRAM. Section 17 of the Food Stamp Act of 1977 (7 U.S.C. 2026) is amended by striking subsection (d) and inserting the following: ”(d) EMPLOYMENT INITIATIVES PROGRAM.\u2014 ”(1) ELECTION TO PARTICIPATE.\u2014 ”(A) IN GENERAL.\u2014Subject to the other provisions of this subsection, a State may elect to carry out an employ- ment initiatives program under this subsection. ”(B) REQUIREMENT.\u2014A State shall be eligible to carry out an employment initiatives program under this sub- section only if not less than 50 percent of the households in the State that received food stamp benefits during the sum- mer of 1993 also received benefits under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) during the summer of 1993. ”(2) PROCEDURE.\u2014 ”(A) IN GENERAL.\u2014A State that has elected to carry out an employment initiatives program under paragraph (1) may use amounts equal to the food stamp allotments that would otherwise be issued to a household under the food stamp program, but for the operation of this subsection, to provide cash benefits in lieu of the food stamp allotments to the household if the household is eligible under para- graph (3). ”(B) PAYMENT.\u2014The Secretary shall pay to each State that has elected to carry out an employment initiatives pro- gram under paragraph (1) an amount equal to the value of the allotment that each household participating in the pro- gram in the State would be eligible to receive under this Act but for the operation of this subsection. ”(C) OTHER PROVISIONS.\u2014For purposes of the food stamp program (other than this subsection)\u2014 ”(i) cash assistance under this subsection shall be considered to be an allotment; and ”(ii) each household receiving cash benefits under this subsection shall not receive any other food stamp benefit during the period for which the cash assistance is provided. ”(D) ADDITIONAL PAYMENTS.\u2014Each State that has elected to carry out an employment initiatives program under paragraph (1) shall\u2014 ”(i) increase the cash benefits provided to each household participating in the program in the State under this subsection to compensate for any State or local sales tax that may be collected on purchases of food by the household, unless the Secretary determines on the basis of information provided by the State that the increase is unnecessary on the basis of the limited nature of the items subject to the State or local sales tax; and 244 ”(ii) pay the cost of any increase in cash benefits required by clause (i). ”(3) ELIGIBILITY.\u2014A household shall be eligible to receive cash benefits under paragraph (2) if an adult member of the household\u2014 ”(A) has worked in unsubsidized employment for not less than the preceding 90 days; ”(B) has earned not less than $350 per month from the employment referred to in subparagraph (A) for not less than the preceding 90 days; ”(C)(i) is receiving benefits under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.); or ”(ii) was receiving benefits under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) at the time the member first received cash benefits under this subsection and is no longer eligible for the State program because of earned income; ”(D) is continuing to earn not less than $350 per month from the employment referred to in subparagraph (A); and ”(E) elects to receive cash benefits in lieu of food stamp benefits under this subsection. ”(4) EVALUATION.\u2014A State that operates a program under this subsection for 2 years shall provide to the Secretary a writ- ten evaluation of the impact of cash assistance under this sub- section. The State agency, with the concurrence of the Secretary, shall determine the content of the evaluation.”. SEC. 853. REAUTHORIZATION. The first sentence of section 18(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2027(a)(1)) is amended by striking ”1991 through 1997” and inserting ”1996 through 2002”. SEC. 854. SIMPLIFIED FOOD STAMP PROGRAM. (a) IN GENERAL.\u2014The Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) is amended by adding at the end the following: ”SEC. 26. SIMPLIFIED FOOD STAMP PROGRAM. ”(a) DEFINITION OF FEDERAL COSTS.\u2014In this section, the term ‘Federal costs’ does not include any Federal costs incurred under section 17. ”(b) ELECTION.\u2014Subject to subsection (d), a State may elect to carry out a Simplified Food Stamp Program (referred to in this sec- tion as a ‘Program’), statewide or in a political subdivision of the State, in accordance with this section. ”(c) OPERATION OF PROGRAM.\u2014If a State elects to carry out a Program, within the State or a political subdivision of the State\u2014 ”(1) a household in which no members receive assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) may not participate in the Program; ”(2) a household in which all members receive assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) shall automatically be eligible to participate in the Program; 245 ”(3) if approved by the Secretary, a household in which 1 or more members but not all members receive assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) may be eligible to partici- pate in the Program; and ”(4) subject to subsection (f), benefits under the Program shall be determined under rules and procedures established by the State under\u2014 ”(A) a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.); ”(B) the food stamp program; or ”(C) a combination of a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) and the food stamp program. ”(d) APPROVAL OF PROGRAM.\u2014 ”(1) STATE PLAN.\u2014A State agency may not operate a Pro- gram unless the Secretary approves a State plan for the oper- ation of the Program under paragraph (2). ”(2) APPROVAL OF PLAN.\u2014The Secretary shall approve any State plan to carry out a Program if the Secretary determines that the plan\u2014 ”(A) complies with this section; and ”(B) contains sufficient documentation that the plan will not increase Federal costs for any fiscal year. ”(e) INCREASED FEDERAL COSTS.\u2014 ”(1) DETERMINATION.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall determine whether a Program being carried out by a State agency is increasing Federal costs under this Act. ”(B) NO EXCLUDED HOUSEHOLDS.\u2014In making a deter- mination under subparagraph (A), the Secretary shall not require the State agency to collect or report any information on households not included in the Program. ”(C) ALTERNATIVE ACCOUNTING PERIODS.\u2014The Sec- retary may approve the request of a State agency to apply alternative accounting periods to determine if Federal costs do not exceed the Federal costs had the State agency not elected to carry out the Program. ”(2) NOTIFICATION.\u2014If the Secretary determines that the Program has increased Federal costs under this Act for any fis- cal year or any portion of any fiscal year, the Secretary shall notify the State not later than 30 days after the Secretary makes the determination under paragraph (1). ”(3) ENFORCEMENT.\u2014 ”(A) CORRECTIVE ACTION.\u2014Not later than 90 days after the date of a notification under paragraph (2), the State shall submit a plan for approval by the Secretary for prompt corrective action that is designed to prevent the Pro- gram from increasing Federal costs under this Act. ”(B) TERMINATION.\u2014If the State does not submit a plan under subparagraph (A) or carry out a plan approved by the Secretary, the Secretary shall terminate the approval of the State agency operating the Program and the State agency shall be ineligible to operate a future Program. 246 ”(f) RULES AND PROCEDURES.\u2014 ”(1) IN GENERAL.\u2014In operating a Program, a State or polit- ical subdivision of a State may follow the rules and procedures established by the State or political subdivision under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) or under the food stamp program. ”(2) STANDARDIZED DEDUCTIONS.\u2014In operating a Program, a State or political subdivision of a State may standardize the deductions provided under section 5(e). In developing the stand- ardized deduction, the State shall consider the work expenses, dependent care costs, and shelter costs of participating house- holds. ”(3) REQUIREMENTS.\u2014In operating a Program, a State or political subdivision shall comply with the requirements of\u2014 ”(A) subsections (a) through (g) of section 7; ”(B) section 8(a) (except that the income of a household may be determined under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)); ”(C) subsection (b) and (d) of section 8; ”(D) subsections (a), (c), (d), and (n) of section 11; ”(E) paragraphs (8), (12), (16), (18), (20), (24), and (25) of section 11(e); ”(F) section 11(e)(10) (or a comparable requirement es- tablished by the State under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)); and ”(G) section 16. ”(4) LIMITATION ON ELIGIBILITY.\u2014Notwithstanding any other provision of this section, a household may not receive ben- efits under this section as a result of the eligibility of the house- hold under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), unless the Sec- retary determines that any household with income above 130 percent of the poverty guidelines is not eligible for the pro- gram.”. (b) STATE PLAN PROVISIONS.\u2014Section 11(e) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)), as amended by sections 819(b) and 835, is amended by adding at the end the following: ”(25) if a State elects to carry out a Simplified Food Stamp Program under section 26, the plans of the State agency for op- erating the program, including\u2014 ”(A) the rules and procedures to be followed by the State agency to determine food stamp benefits; ”(B) how the State agency will address the needs of households that experience high shelter costs in relation to the incomes of the households; and ”(C) a description of the method by which the State agency will carry out a quality control system under section 16(c).”. (c) CONFORMING AMENDMENTS.\u2014 (1) Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017), as amended by section 830, is amended\u2014 (A) by striking subsection (e); and 247 (B) by redesignating subsection (f) as subsection (e). (2) Section 17 of the Food Stamp Act of 1977 (7 U.S.C. 2026) is amended\u2014 (A) by striking subsection (i); and (B) by redesignating subsections (j) through (l) as sub- sections (i) through (k), respectively. SEC. 855. STUDY OF THE USE OF FOOD STAMPS TO PURCHASE VITA- MINS AND MINERALS. (a) IN GENERAL.\u2014The Secretary of Agriculture, in consultation with the National Academy of Sciences and the Center for Disease Control and Prevention, shall conduct a study on the use of food stamps provided under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) to purchase vitamins and minerals. (b) ANALYSIS.\u2014The study shall include\u2014 (1) an analysis of scientific findings on the efficacy of and need for vitamins and minerals, including\u2014 (A) the adequacy of vitamin and mineral intakes in low-income populations, as shown by research and surveys conducted prior to the study; and (B) the potential value of nutritional supplements in filling nutrient gaps that may exist in the United States population as a whole or in vulnerable subgroups in the population; (2) the impact of nutritional improvements (including vita- min or mineral supplementation) on the health status and health care costs of women of childbearing age, pregnant or lac- tating women, and the elderly; (3) the cost of commercially available vitamin and mineral supplements; (4) the purchasing habits of low-income populations with regard to vitamins and minerals; (5) the impact of using food stamps to purchase vitamins and minerals on the food purchases of low-income households; and (6) the economic impact on the production of agricultural commodities of using food stamps to purchase vitamins and minerals. (c) REPORT.\u2014Not later than December 15, 1998, the Secretary shall report the results of the study to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate. SEC. 856. DEFICIT REDUCTION. It is the sense of the Committee on Agriculture of the House of Representatives that reductions in outlays resulting from this title shall not be taken into account for purposes of section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 902). 248 Subtitle B\u2014Commodity Distribution Programs SEC. 871. EMERGENCY FOOD ASSISTANCE PROGRAM. (a) DEFINITIONS.\u2014Section 201A of the Emergency Food Assist- ance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended to read as follows: ”SEC. 201A. DEFINITIONS. ”In this Act: ”(1) ADDITIONAL COMMODITIES.\u2014The term ‘additional com- modities’ means commodities made available under section 214 in addition to the commodities made available under sections 202 and 203D. ”(2) AVERAGE MONTHLY NUMBER OF UNEMPLOYED PER- SONS.\u2014The term ‘average monthly number of unemployed per- sons’ means the average monthly number of unemployed per- sons in each State during the most recent fiscal year for which information concerning the number of unemployed persons is available, as determined by the Bureau of Labor Statistics of the Department of Labor. ”(3) ELIGIBLE RECIPIENT AGENCY.\u2014The term ‘eligible recipi- ent agency’ means a public or nonprofit organization that\u2014 ”(A) administers\u2014 ”(i) an emergency feeding organization; ”(ii) a charitable institution (including a hospital and a retirement home, but excluding a penal institu- tion) to the extent that the institution serves needy per- sons; ”(iii) a summer camp for children, or a child nutri- tion program providing food service; ”(iv) a nutrition project operating under the Older Americans Act of 1965 (42 U.S.C. 3001 et seq.), includ- ing a project that operates a congregate nutrition site and a project that provides home-delivered meals; or ”(v) a disaster relief program; ”(B) has been designated by the appropriate State agency, or by the Secretary; and ”(C) has been approved by the Secretary for participa- tion in the program established under this Act. ”(4) EMERGENCY FEEDING ORGANIZATION.\u2014The term ’emer- gency feeding organization’ means a public or nonprofit organi- zation that administers activities and projects (including the ac- tivities and projects of a charitable institution, a food bank, a food pantry, a hunger relief center, a soup kitchen, or a similar public or private nonprofit eligible recipient agency) providing nutrition assistance to relieve situations of emergency and dis- tress through the provision of food to needy persons, including low-income and unemployed persons. ”(5) FOOD BANK.\u2014The term ‘food bank’ means a public or charitable institution that maintains an established operation involving the provision of food or edible commodities, or the products of food or edible commodities, to food pantries, soup kitchens, hunger relief centers, or other food or feeding centers 249 that, as an integral part of their normal activities, provide meals or food to feed needy persons on a regular basis. ”(6) FOOD PANTRY.\u2014The term ‘food pantry’ means a public or private nonprofit organization that distributes food to low-in- come and unemployed households, including food from sources other than the Department of Agriculture, to relieve situations of emergency and distress. ”(7) POVERTY LINE.\u2014The term ‘poverty line’ has the mean- ing provided in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)). ”(8) SOUP KITCHEN.\u2014The term ‘soup kitchen’ means a pub- lic or charitable institution that, as an integral part of the nor- mal activities of the institution, maintains an established feed- ing operation to provide food to needy homeless persons on a regular basis. ”(9) TOTAL VALUE OF ADDITIONAL COMMODITIES.\u2014The term ‘total value of additional commodities’ means the actual cost of all additional commodities that are paid by the Secretary (in- cluding the distribution and processing costs incurred by the Secretary). ”(10) VALUE OF ADDITIONAL COMMODITIES ALLOCATED TO EACH STATE.\u2014The term ‘value of additional commodities allo- cated to each State’ means the actual cost of additional com- modities allocated to each State that are paid by the Secretary (including the distribution and processing costs incurred by the Secretary).”. (b) STATE PLAN.\u2014Section 202A of the Emergency Food Assist- ance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended to read as follows: ”SEC. 202A. STATE PLAN. ”(a) IN GENERAL.\u2014To receive commodities under this Act, a State shall submit a plan of operation and administration every 4 years to the Secretary for approval. The plan may be amended at any time, with the approval of the Secretary. ”(b) REQUIREMENTS.\u2014Each plan shall\u2014 ”(1) designate the State agency responsible for distributing the commodities received under this Act; ”(2) set forth a plan of operation and administration to ex- peditiously distribute commodities under this Act; ”(3) set forth the standards of eligibility for recipient agen- cies; and ”(4) set forth the standards of eligibility for individual or household recipients of commodities, which shall require\u2014 ”(A) individuals or households to be comprised of needy persons; and ”(B) individual or household members to be residing in the geographic location served by the distributing agency at the time of applying for assistance. ”(c) STATE ADVISORY BOARD.\u2014The Secretary shall encourage each State receiving commodities under this Act to establish a State advisory board consisting of representatives of all entities in the State, both public and private, interested in the distribution of com- modities received under this Act.”. 250 (c) AUTHORIZATION OF APPROPRIATIONS FOR ADMINISTRATIVE FUNDS.\u2014Section 204(a)(1) of the Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended\u2014 (1) in the first sentence, by striking ”for State and local” and all that follows through ”under this title” and inserting ”to pay for the direct and indirect administrative costs of the States related to the processing, transporting, and distributing to eligi- ble recipient agencies of commodities provided by the Secretary under this Act and commodities secured from other sources”; and (2) by striking the fourth sentence. (d) DELIVERY OF COMMODITIES.\u2014Section 214 of the Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended\u2014 (1) by striking subsections (a) through (e) and (j); (2) by redesignating subsections (f) through (i) as sub- sections (a) through (d), respectively; (3) in subsection (b), as redesignated by paragraph (2)\u2014 (A) in the first sentence, by striking ”subsection (f) or subsection (j) if applicable,” and inserting ”subsection (a),”; and (B) in the second sentence, by striking ”subsection (f)” and inserting ”subsection (a)”; (4) by striking subsection (c), as redesignated by paragraph (2), and inserting the following: ”(c) ADMINISTRATION.\u2014 ”(1) IN GENERAL.\u2014Commodities made available for each fiscal year under this section shall be delivered at reasonable intervals to States based on the grants calculated under sub- section (a), or reallocated under subsection (b), before December 31 of the following fiscal year. ”(2) ENTITLEMENT.\u2014Each State shall be entitled to receive the value of additional commodities determined under sub- section (a).”; and (5) in subsection (d), as redesignated by paragraph (2), by striking ”or reduce” and all that follows through ”each fiscal year”. (e) TECHNICAL AMENDMENTS.\u2014The Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended\u2014 (1) in the first sentence of section 203B(a), by striking ”203 and 203A of this Act” and inserting ”203A”; (2) in section 204(a), by striking ”title” each place it ap- pears and inserting ”Act”; (3) in the first sentence of section 210(e), by striking ”(except as otherwise provided for in section 214(j))”; and (4) by striking section 212. (f) REPORT ON EFAP.\u2014Section 1571 of the Food Security Act of 1985 (Public Law 99 198; 7 U.S.C. 612c note) is repealed. (g) AVAILABILITY OF COMMODITIES UNDER THE FOOD STAMP PROGRAM.\u2014The Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), as amended by section 854(a), is amended by adding at the end the fol- lowing: 251 ”SEC. 27. AVAILABILITY OF COMMODITIES FOR THE EMERGENCY FOOD ASSISTANCE PROGRAM. ”(a) PURCHASE OF COMMODITIES.\u2014From amounts made avail- able to carry out this Act, for each of fiscal years 1997 through 2002, the Secretary shall purchase $100,000,000 of a variety of nu- tritious and useful commodities of the types that the Secretary has the authority to acquire through the Commodity Credit Corporation or under section 32 of the Act entitled ‘An Act to amend the Agricul- tural Adjustment Act, and for other purposes’, approved August 24, 1935 (7 U.S.C. 612c), and distribute the commodities to States for distribution in accordance with section 214 of the Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note). ”(b) BASIS FOR COMMODITY PURCHASES.\u2014In purchasing com- modities under subsection (a), the Secretary shall, to the extent prac- ticable and appropriate, make purchases based on\u2014 ”(1) agricultural market conditions; ”(2) preferences and needs of States and distributing agen- cies; and ”(3) preferences of recipients.”. (h) EFFECTIVE DATE.\u2014The amendments made by subsection (d) shall become effective on October 1, 1996. SEC. 872. FOOD BANK DEMONSTRATION PROJECT. Section 3 of the Charitable Assistance and Food Bank Act of 1987 (Public Law 100 232; 7 U.S.C. 612c note) is repealed. SEC. 873. HUNGER PREVENTION PROGRAMS. The Hunger Prevention Act of 1988 (Public Law 100 435; 7 U.S.C. 612c note) is amended\u2014 (1) by striking section 110; (2) by striking subtitle C of title II; and (3) by striking section 502. SEC. 874. REPORT ON ENTITLEMENT COMMODITY PROCESSING. Section 1773 of the Food, Agriculture, Conservation, and Trade Act of 1990 (Public Law 101 624; 7 U.S.C. 612c note) is amended by striking subsection (f). Subtitle C\u2014Electronic Benefit Transfer Systems SEC. 891. PROVISIONS TO ENCOURAGE ELECTRONIC BENEFIT TRANS- FER SYSTEMS. Section 904 of the Electronic Fund Transfer Act (15 U.S.C. 1693b) is amended\u2014 (1) by striking ”(d) In the event that” and inserting ”(d) AP- PLICABILITY TO SERVICE PROVIDERS OTHER THAN CERTAIN FI- NANCIAL INSTITUTIONS.\u2014 ”(1) IN GENERAL.\u2014If”; and (2) by adding at the end the following: ”(2) STATE AND LOCAL GOVERNMENT ELECTRONIC BENEFIT TRANSFER SYSTEMS.\u2014 ”(A) DEFINITION OF ELECTRONIC BENEFIT TRANSFER SYSTEM.\u2014In this paragraph, the term ‘electronic benefit transfer system’\u2014 252 ”(i) means a system under which a government agency distributes needs-tested benefits by establishing accounts that may be accessed by recipients electroni- cally, such as through automated teller machines or point-of-sale terminals; and ”(ii) does not include employment-related pay- ments, including salaries and pension, retirement, or unemployment benefits established by a Federal, State, or local government agency. ”(B) EXEMPTION GENERALLY.\u2014The disclosures, protec- tions, responsibilities, and remedies established under this title, and any regulation prescribed or order issued by the Board in accordance with this title, shall not apply to any electronic benefit transfer system established under State or local law or administered by a State or local government. ”(C) EXCEPTION FOR DIRECT DEPOSIT INTO RECIPIENT’S ACCOUNT.\u2014Subparagraph (B) shall not apply with respect to any electronic funds transfer under an electronic benefit transfer system for a deposit directly into a consumer ac- count held by the recipient of the benefit. ”(D) RULE OF CONSTRUCTION.\u2014No provision of this paragraph\u2014 ”(i) affects or alters the protections otherwise appli- cable with respect to benefits established by any other provision Federal, State, or local law; or ”(ii) otherwise supersedes the application of any State or local law.”. TITLE IX\u2014MISCELLANEOUS SEC. 901. APPROPRIATION BY STATE LEGISLATURES. (a) IN GENERAL.\u2014Any funds received by a State under the pro- visions of law specified in subsection (b) shall be subject to appro- priation by the State legislature, consistent with the terms and con- ditions required under such provisions of law. (b) PROVISIONS OF LAW.\u2014The provisions of law specified in this subsection are the following: (1) Part A of title IV of the Social Security Act (relating to block grants for temporary assistance for needy families). (2) The Child Care and Development Block Grant Act of 1990 (relating to block grants for child care). SEC. 902. SANCTIONING FOR TESTING POSITIVE FOR CONTROLLED SUBSTANCES. Notwithstanding any other provision of law, States shall not be prohibited by the Federal Government from testing welfare recipi- ents for use of controlled substances nor from sanctioning welfare recipients who test positive for use of controlled substances. SEC. 903. ELIMINATION OF HOUSING ASSISTANCE WITH RESPECT TO FUGITIVE FELONS AND PROBATION AND PAROLE VIOLA- TORS. (a) ELIGIBILITY FOR ASSISTANCE.\u2014The United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended\u2014 (1) in section 6(l)\u2014 253 (A) in paragraph (5), by striking ”and” at the end; (B) in paragraph (6), by striking the period at the end and inserting ”; and”; and (C) by inserting immediately after paragraph (6) the following new paragraph: ”(7) provide that it shall be cause for immediate termi- nation of the tenancy of a public housing tenant if such ten- ant\u2014 ”(A) is fleeing to avoid prosecution, or custody or con- finement after conviction, under the laws of the place from which the individual flees, for a crime, or attempt to com- mit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(B) is violating a condition of probation or parole im- posed under Federal or State law.”; and (2) in section 8(d)(1)(B)\u2014 (A) in clause (iii), by striking ”and” at the end; (B) in clause (iv), by striking the period at the end and inserting ”; and”; and (C) by adding after clause (iv) the following new clause: ”(v) it shall be cause for termination of the tenancy of a tenant if such tenant\u2014 ”(I) is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the individual flees, for a crime, or attempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(II) is violating a condition of probation or parole imposed under Federal or State law;”. (b) PROVISION OF INFORMATION TO LAW ENFORCEMENT AGEN- CIES.\u2014Title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended by adding at the end the following: ”SEC. 27. EXCHANGE OF INFORMATION WITH LAW ENFORCEMENT AGENCIES. ”Notwithstanding any other provision of law, each public hous- ing agency that enters into a contract for assistance under section 6 or 8 of this Act with the Secretary shall furnish any Federal, State, or local law enforcement officer, upon the request of the offi- cer, with the current address, Social Security number, and photo- graph (if applicable) of any recipient of assistance under this Act, if the officer\u2014 ”(1) furnishes the public housing agency with the name of the recipient; and ”(2) notifies the agency that\u2014 ”(A) such recipient\u2014 ”(i) is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the individual flees, for a crime, or 254 attempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(ii) is violating a condition of probation or parole imposed under Federal or State law; or ”(iii) has information that is necessary for the offi- cer to conduct the officer’s official duties; ”(B) the location or apprehension of the recipient is within such officer’s official duties; and ”(C) the request is made in the proper exercise of the of- ficer’s official duties.”. SEC. 904. SENSE OF THE SENATE REGARDING THE INABILITY OF THE NONCUSTODIAL PARENT TO PAY CHILD SUPPORT. It is the sense of the Senate that\u2014 (a) States should diligently continue their efforts to enforce child support payments by the non-custodial parent to the cus- todial parent, regardless of the employment status or location of the non-custodial parent; and (b) States are encouraged to pursue pilot programs in which the parents of a non-adult, non-custodial parent who re- fuses to or is unable to pay child support must\u2014 (1) pay or contribute to the child support owed by the non-custodial parent; or (2) otherwise fulfill all financial obligations and meet all conditions imposed on the non-custodial parent, such as participation in a work program or other related activity. SEC. 905. ESTABLISHING NATIONAL GOALS TO PREVENT TEENAGE PREGNANCIES. (a) IN GENERAL.\u2014Not later than January 1, 1997, the Secretary of Health and Human Services shall establish and implement a strategy for\u2014 (1) preventing out-of-wedlock teenage pregnancies, and (2) assuring that at least 25 percent of the communities in the United States have teenage pregnancy prevention programs in place. (b) REPORT.\u2014Not later than June 30, 1998, and annually there- after, the Secretary shall report to the Congress with respect to the progress that has been made in meeting the goals described in para- graphs (1) and (2) of subsection (a). SEC. 906. SENSE OF THE SENATE REGARDING ENFORCEMENT OF STATUTORY RAPE LAWS. (a) SENSE OF THE SENATE.\u2014It is the sense of the Senate that States and local jurisdictions should aggressively enforce statutory rape laws. (b) JUSTICE DEPARTMENT PROGRAM ON STATUTORY RAPE.\u2014Not later than January 1, 1997, the Attorney General shall establish and implement a program that\u2014 (1) studies the linkage between statutory rape and teenage pregnancy, particularly by predatory older men committing re- peat offenses; and (2) educates State and local criminal law enforcement offi- cials on the prevention and prosecution of statutory rape, focus- 255 ing in particular on the commission of statutory rape by preda- tory older men committing repeat offenses, and any links to teenage pregnancy. (c) VIOLENCE AGAINST WOMEN INITIATIVE.\u2014The Attorney Gen- eral shall ensure that the Department of Justice’s Violence Against Women initiative addresses the issue of statutory rape, particularly the commission of statutory rape by predatory older men committing repeat offenses. SEC. 907. PROVISIONS TO ENCOURAGE ELECTRONIC BENEFIT TRANS- FER SYSTEMS. Section 904 of the Electronic Fund Transfer Act (15 U.S.C. 1693b) is amended\u2014 (1) by striking ”(d) In the event” and inserting ”(d) APPLICA- BILITY TO SERVICE PROVIDERS OTHER THAN CERTAIN FINAN- CIAL INSTITUTIONS.\u2014 ”(1) IN GENERAL.\u2014In the event”; and (2) by adding at the end the following new paragraph: ”(2) STATE AND LOCAL GOVERNMENT ELECTRONIC BENEFIT TRANSFER PROGRAMS.\u2014 ”(A) EXEMPTION GENERALLY.\u2014The disclosures, protec- tions, responsibilities, and remedies established under this title, and any regulation prescribed or order issued by the Board in accordance with this title, shall not apply to any electronic benefit transfer program established under State or local law or administered by a State or local govern- ment. ”(B) EXCEPTION FOR DIRECT DEPOSIT INTO RECIPIENT’S ACCOUNT.\u2014Subparagraph (A) shall not apply with respect to any electronic funds transfer under an electronic benefit transfer program for deposits directly into a consumer ac- count held by the recipient of the benefit. ”(C) RULE OF CONSTRUCTION.\u2014No provision of this paragraph may be construed as\u2014 ”(i) affecting or altering the protections otherwise applicable with respect to benefits established by Fed- eral, State, or local law; or ”(ii) otherwise superseding the application of any State or local law. ”(D) ELECTRONIC BENEFIT TRANSFER PROGRAM DE- FINED.\u2014For purposes of this paragraph, the term ‘electronic benefit transfer program’\u2014 ”(i) means a program under which a government agency distributes needs-tested benefits by establishing accounts to be accessed by recipients electronically, such as through automated teller machines, or point-of- sale terminals; and ”(ii) does not include employment-related pay- ments, including salaries and pension, retirement, or unemployment benefits established by Federal, State, or local governments.”. SEC. 908. REDUCTION OF BLOCK GRANTS TO STATES FOR SOCIAL SERVICES; USE OF VOUCHERS. (a) REDUCTION OF GRANTS.\u2014Section 2003(c) of the Social Secu- rity Act (42 U.S.C. 1397b(c)) is amended\u2014 256 (1) by striking ”and” at the end of paragraph (4); and (2) by striking paragraph (5) and inserting the following: ”(5) $2,800,000,000 for each of the fiscal years 1990 through 1995; ”(6) $2,381,000,000 for the fiscal year 1996; ”(7) $2,380,000,000 for each of the fiscal years 1997 through 2002; and ”(8) $2,800,000,000 for the fiscal year 2003 and each suc- ceeding fiscal year.”. (b) AUTHORITY TO USE VOUCHERS.\u2014Section 2002 of such Act (42 U.S.C. 1937a) is amended by adding at the end the following: ”(f) A State may use funds provided under this title to provide vouchers, for services directed at the goals set forth in section 2001, to families, including\u2014 ”(1) families who have become ineligible for assistance under a State program funded under part A of title IV by rea- son of a durational limit on the provision of such assistance; and ”(2) families denied cash assistance under the State pro- gram funded under part A of title IV for a child who is born to a member of the family who is\u2014 ”(A) a recipient of assistance under the program; or ”(B) a person who received such assistance at any time during the 10-month period ending with the birth of the child.”. SEC. 909. RULES RELATING TO DENIAL OF EARNED INCOME CREDIT ON BASIS OF DISQUALIFIED INCOME. (a) REDUCTION IN DISQUALIFIED INCOME THRESHOLD.\u2014 (1) IN GENERAL.\u2014Paragraph (1) of section 32(i) of the Inter- nal Revenue Code of 1986 (relating to denial of credit for indi- viduals having excessive investment income) is amended by striking ”$2,350” and inserting ”$2,200”. (2) ADJUSTMENT FOR INFLATION.\u2014Subsection (j) of section 32 of such Code is amended to read as follows: ”(j) INFLATION ADJUSTMENTS.\u2014 ”(1) IN GENERAL.\u2014In the case of any taxable year beginning after 1996, each of the dollar amounts in subsections (b)(2) and (i)(1) shall be increased by an amount equal to\u2014 ”(A) such dollar amount, multiplied by ”(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 1995’ for ‘calendar year 1992’ in subparagraph (B) thereof. ”(2) ROUNDING.\u2014 ”(A) IN GENERAL.\u2014If any dollar amount in subsection (b)(2), after being increased under paragraph (1), is not a multiple of $10, such dollar amount shall be rounded to the nearest multiple of $10. ”(B) DISQUALIFIED INCOME THRESHOLD AMOUNT.\u2014If the dollar amount in subsection (i)(1), after being increased under paragraph (1), is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.”. (3) CONFORMING AMENDMENT.\u2014Paragraph (2) of section 32(b) of such Code is amended to read as follows: 257 ”(2) AMOUNTS.\u2014The earned income amount and the phase- out amount shall be determined as follows: In the case of an eligible individual with: The earned income amount is: The phaseout amount is: 1 qualifying child …………………….. $6,330 $11,610 2 or more qualifying children …… $8,890 $11,610 No qualifying children ……………… $4,220 $ 5,280”. (b) DEFINITION OF DISQUALIFIED INCOME.\u2014Paragraph (2) of section 32(i) of such Code (defining disqualified income) is amended by striking ”and” at the end of subparagraph (B), by striking the pe- riod at the end of subparagraph (C) and inserting a comma, and by adding at the end the following new subparagraphs: ”(D) the capital gain net income (as defined in section 1222) of the taxpayer for such taxable year, and ”(E) the excess (if any) of\u2014 ”(i) the aggregate income from all passive activities for the taxable year (determined without regard to any amount included in earned income under subsection (c)(2) or described in a preceding subparagraph), over ”(ii) the aggregate losses from all passive activities for the taxable year (as so determined). For purposes of subparagraph (E), the term ‘passive activity’ has the meaning given such term by section 469.”. (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 1995. (2) ADVANCE PAYMENT INDIVIDUALS.\u2014In the case of any in- dividual who on or before June 26, 1996, has in effect an earned income eligibility certificate for the individual’s taxable year beginning in 1996, the amendments made by this section shall apply to taxable years beginning after December 31, 1996. SEC. 910. MODIFICATION OF ADJUSTED GROSS INCOME DEFINITION FOR EARNED INCOME CREDIT. (a) IN GENERAL.\u2014Subsections (a)(2)(B), (c)(1)(C), and (f)(2)(B) of section 32 of the Internal Revenue Code of 1986 are each amend- ed by striking ”adjusted gross income” each place it appears and in- serting ”modified adjusted gross income”. (b) MODIFIED ADJUSTED GROSS INCOME DEFINED.\u2014Section 32(c) of such Code (relating to definitions and special rules) is amended by adding at the end the following new paragraph: ”(5) MODIFIED ADJUSTED GROSS INCOME.\u2014 ”(A) IN GENERAL.\u2014The term ‘modified adjusted gross income’ means adjusted gross income determined without regard to the amounts described in subparagraph (B). ”(B) CERTAIN AMOUNTS DISREGARDED.\u2014An amount is described in this subparagraph if it is\u2014 ”(i) the amount of losses from sales or exchanges of capital assets in excess of gains from such sales or ex- changes to the extent such amount does not exceed the amount under section 1211(b)(1), ”(ii) the net loss from estates and trusts, 258 ”(iii) the excess (if any) of amounts described in subsection (i)(2)(C)(ii) over the amounts described in subsection (i)(2)(C)(i) (relating to nonbusiness rents and royalties), and ”(iv) 50 percent of the net loss from the carrying on of trades or businesses, computed separately with re- spect to\u2014 ”(I) trades or businesses (other than farming) conducted as sole proprietorships, ”(II) trades or businesses of farming conducted as sole proprietorships, and ”(III) other trades or businesses. For purposes of clause (iv), there shall not be taken into ac- count items which are attributable to a trade or business which consists of the performance of services by the tax- payer as an employee.”. (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 1995. (2) ADVANCE PAYMENT INDIVIDUALS.\u2014In the case of any in- dividual who on or before June 26, 1996, has in effect an earned income eligibility certificate for the individual’s taxable year beginning in 1996, the amendments made by this section shall apply to taxable years beginning after December 31, 1996. SEC. 911. FRAUD UNDER MEANS-TESTED WELFARE AND PUBLIC AS- SISTANCE PROGRAMS. (a) IN GENERAL.\u2014If an individual’s benefits under a Federal, State, or local law relating to a means-tested welfare or a public as- sistance program are reduced because of an act of fraud by the indi- vidual under the law or program, the individual may not, for the duration of the reduction, receive an increased benefit under any other means-tested welfare or public assistance program for which Federal funds are appropriated as a result of a decrease in the in- come of the individual (determined under the applicable program) attributable to such reduction. (b) WELFARE OR PUBLIC ASSISTANCE PROGRAMS FOR WHICH FEDERAL FUNDS ARE APPROPRIATED.\u2014For purposes of subsection (a), the term ”means-tested welfare or public assistance program for which Federal funds are appropriated” includes the food stamp pro- gram under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), any program of public or assisted housing under title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.), and any State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.). SEC. 912. ABSTINENCE EDUCATION. Title V of the Social Security Act (42 U.S.C. 701 et seq.) is amended by adding at the end the following section: ”SEPARATE PROGRAM FOR ABSTINENCE EDUCATION ”SEC. 510. (a) For the purpose described in subsection (b), the Secretary shall, for fiscal year 1998 and each subsequent fiscal year, 259 allot to each State which has transmitted an application for the fis- cal year under section 505(a) an amount equal to the product of\u2014 ”(1) the amount appropriated in subsection (d) for the fiscal year; and ”(2) the percentage determined for the State under section 502(c)(1)(B)(ii). ”(b)(1) The purpose of an allotment under subsection (a) to a State is to enable the State to provide abstinence education, and at the option of the State, where appropriate, mentoring, counseling, and adult supervision to promote abstinence from sexual activity, with a focus on those groups which are most likely to bear children out-of-wedlock. ”(2) For purposes of this section, the term ‘abstinence education’ means an educational or motivational program which\u2014 ”(A) has as its exclusive purpose, teaching the social, psychological, and health gains to be realized by abstaining from sexual activity; ”(B) teaches abstinence from sexual activity outside marriage as the expected standard for all school age chil- dren; ”(C) teaches that abstinence from sexual activity is the only certain way to avoid out-of-wedlock pregnancy, sexu- ally transmitted diseases, and other associated health prob- lems; ”(D) teaches that a mutually faithful monogamous rela- tionship in context of marriage is the expected standard of human sexual activity; ”(E) teaches that sexual activity outside of the context of marriage is likely to have harmful psychological and physical effects; ”(F) teaches that bearing children out-of-wedlock is likely to have harmful consequences for the child, the child’s parents, and society; ”(G) teaches young people how to reject sexual advances and how alcohol and drug use increases vulnerability to sexual advances; and ”(H) teaches the importance of attaining self-sufficiency before engaging in sexual activity. ”(c)(1) Sections 503, 507, and 508 apply to allotments under subsection (a) to the same extent and in the same manner as such sections apply to allotments under section 502(c). ”(2) Sections 505 and 506 apply to allotments under subsection (a) to the extent determined by the Secretary to be appropriate. ”(d) For the purpose of allotments under subsection (a), there is appropriated, out of any money in the Treasury not otherwise ap- propriated, an additional $50,000,000 for each of the fiscal years 1998 through 2002. The appropriation under the preceding sentence for a fiscal year is made on October 1 of the fiscal year.”. SEC. 913. CHANGE IN REFERENCE. Effective January 1, 1997, the third sentence of section 1902(a) and section 1908(e)(1) of the Social Security Act (42 U.S.C. 1396a(a), 1396g 1(e)(1)) are each amended by striking ”The First Church of Christ, Scientist, Boston, Massachusetts” and inserting 260 ”The Commission for Accreditation of Christian Science Nursing Organizations\/Facilities, Inc.” each place it appears. And the Senate agree to the same. JOHN R. KASICH, BILL ARCHER, WILLIAM F. GOODLING, PAT ROBERTS, TOM BLILEY, E. CLAY SHAW, Jr., JAMES TALENT, JIM NUSSLE, TIM HUTCHINSON, JIM MCCRERY, MICHAEL BILIRAKIS, LAMAR SMITH, NANCY L. JOHNSON, DAVE CAMP, GARY A. FRANKS, ”DUKE” CUNNINGHAM, MIKE CASTLE, BOB GOODLATTE, Managers on the Part of the House. From the Committee on the Budget: PETE V. DOMENICI, D. NICKLES, PHIL GRAMM, JIM EXON, From the Committee on Agriculture, Nutrition, and For- estry: RICHARD G. LUGAR, JESSE HELMS, THAD COCHRAN, RICK SANTORUM, From the Committee on Finance: WILLIAM V. ROTH, Jr., JOHN H. CHAFEE, CHUCK GRASSLEY, ORRIN HATCH, AL SIMPSON, From the Committee on Labor and Human Resources: NANCY LANDON KASSEBAUM, Managers on the Part of the Senate. (261) JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE The managers on the part of the House and the Senate at the conference on the disagreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 3734) to provide for rec- onciliation pursuant to section 201(a)(1) of the concurrent resolu- tion on the budget for fiscal year 1997, submit the following joint statement to the House and the Senate in explanation of the effect of the action agreed upon by the managers and recommended in the accompanying conference report: The Senate amendment struck all of the House bill after the enacting clause and inserted a substitute text. The House recedes from its disagreement to the amendment of the Senate with an amendment that is a substitute for the House bill and the Senate amendment. The differences between the House bill, the Senate amendment, and the substitute agreed to in con- ference are noted below, except for clerical corrections, conforming changes made necessary by agreements reached by the conferees, and minor drafting and clerical changes. EXPLANATION OF THE CONFERENCE AGREEMENT PRINCIPAL COMPONENTS OF THE CONFERENCE AGREEMENT The Personal Responsibility and Work Opportunity Reconcili- ation Act of 1996 puts in place the most fundamental reform of welfare since the program’s inception. It promotes work over wel- fare and self-reliance over dependency, thereby showing true com- passion for those in America who need a helping hand, not a hand- out. It takes the historic step of eliminating a Federal entitlement program\u2014Aid to Families with Dependent Children\u2014and replacing it with a block grant that restores the States’ fundamental role in assisting needy families. It makes substantial reforms in the Food Stamp Program, cracking down on fraud and abuse and applying tough work standards. It reforms the Supplemental Security In- come [SSI] disability program to strengthen eligibility require- ments and eliminating incentives for coaching children to mis- behave so they can qualify for benefits. It makes sweeping reforms relating to benefits for noncitizens, strengthening the principle that immigrants come to America to work, not to collect welfare bene- fits. The legislation does not abandon those Americans who truly need a helping hand. It retains protections for those who experi- ence genuine and intractable hardship. Above all, it recognizes the vulnerability of America’s children. It guarantees that they will continue to receive the support they need. Indeed, by discouraging illegitimacy and promoting stable families, this bill vastly improves the prospects of children in welfare families. But for most, welfare 262 should mean temporary assistance for those striving to return to self-sufficiency. The legislation is the first of three reconciliation bills called for in the reconciliation directives contained in the fiscal year 1997 budget resolution (H. Con. Res. 178). The measure will slow the growth of Federal welfare spending, but still maintain sufficient in- creases to protect vulnerable populations. According to preliminary estimates, welfare spending would grow from approximately $83 billion this year to about $107 billion in 2002, excluding the effects of Earned Income Credit [EIC] outlays. When EIC outlays are in- cluded, the preliminary estimates show welfare spending growing from about $99 billion this year to roughly $128 billion in 2002. The Federal Government still will spend nearly $600 billion on wel- fare programs not counting the EIC, and nearly $700 billion when the EIC is included. Either way, when compared with Federal spending projections for the current welfare program, this legisla- tion will reduce the Federal budget deficit by about $55 billion to $56 billion over 6 years. The importance of these budgetary effects is matched by the historic transformation of the welfare program embraced in this legislation. This measure rests on five principles that are the pil- lars of the welfare reform strategy in the 104th Congress: Welfare Should Not Be a Way of Life. The legislation assures that welfare will be a helping hand, not a lifetime handout, by im- posing a 5-year lifetime limit on benefits (although as many as 20 percent of families may be allowed exceptions for conditions of hardship). Work, Not Welfare. For the first time ever, able-bodied welfare recipients will be required to work for their benefits. At least one person in every family must be working within 2 years after receiv- ing welfare or lose benefits, and States are required to have at least half of their single-parent welfare recipients working by 2002. No More Welfare for Noncitizens and Felons. Most welfare (ex- cept emergency benefits) ends for most non-citizens during their first 5 years in the United States. Exceptions are made for refu- gees, persons who have worked and paid taxes in the United States for 10 years, and those who have served in the U.S. military. States will have the option of denying Medicaid eligibility to non- citizens who enter the United States after enactment. The legisla- tion also terminates benefits for fugitive felons fleeing from pros- ecution or imprisonment or violating parole, and offers financial in- centives to local corrections authorities to report persons incarcer- ated in their jails who are improperly receiving welfare checks. Power and Flexibility to the States. The best welfare solutions come from those closest to the problems\u2014not from bureaucrats in Washington. The legislation creates broad cash welfare and child care block grants providing maximum flexibility so that States can reform welfare in ways that are appropriate for them, and can move families into jobs. Encouraging Personal Responsibility To Halt Rising Illegit- imacy Rates. As a result of the current welfare system, which dis- courages two-parent families, today’s illegitimacy rate among wel- fare families is almost 50 percent and is rising. This legislation seeks to reverse the trend by boosting efforts to establish paternity 263 and make fathers pay child support. As an added incentive, States that reduce out-of-wedlock births will receive added cash grants. This legislation reforms welfare to make it more consistent with fundamental American values\u2014by rewarding work and self- reliance, encouraging personal responsibility, and restoring a sense of hope in the future. TITLE I: BLOCK GRANT FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES 1. FINDINGS Present law No provision. House bill Congress finds that marriage is the foundation of a successful society and an essential institution that promotes the interests of children. Promotion of responsible fatherhood and motherhood is integral to successful child-rearing and the well-being of children. It is the sense of Congress that prevention of out-of-wedlock preg- nancy and reduction on out-of-wedlock birth are very important government interests and that the policy outlined in the provisions of this title is intended to address the crisis. Senate amendment Adds that an effective strategy to combat teenage pregnancy must deal with the issue of male responsibility, including statutory rape culpability and prevention. Finds protection of teenage girls from pregnancy as well as predatory sexual behavior to be very im- portant Government interests. Conference agreement The conference agreement follows the Senate amendment. 2. REFERENCE TO THE SOCIAL SECURITY ACT Present law No provision. House bill Unless otherwise specified, any reference in this title to an amendment to or repeal of a section or other provision is to the So- cial Security Act. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 264 3. BLOCK GRANT TO STATES; PURPOSE Present law Title IV A of the Social Security Act, which provides grants to States for aid and services to needy families with children (AFDC), is designed to encourage care of dependent children in their own homes by enabling States to provide cash aid and services, main- tain and strengthen family life, and help parents attain maximum self-support consistent with maintaining parental care and protec- tion. House bill Block grants for temporary assistance for needy families (TANF), which replace Title IV A of the Social Security Act, are es- tablished to increase the flexibility of States in operating a pro- gram designed to provide assistance to needy families; end depend- ence on government benefits by promoting job preparation, work and marriage; prevent and reduce the incidence of out-of-wedlock pregnancies; and encourage the formation and maintenance of two- parent families. This part shall not be interpreted to entitle any individual or family to assistance under any State program funded under this part. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 4. ELIGIBLE STATES\u2014STATE PLAN REQUIREMENTS Present law A State must have an approved State plan for aid and services to needy families containing 43 provisions, ranging from single- agency administration to overpayment recovery rules. State plans explain the aid and services that are offered by the State. Aid is defined as money payments. For most parents without a child under age 3, States must provide education, work, or training under the JOBS program to help needy families with children avoid long-term welfare dependence. Note: work and education re- quirements of JOBS are subject to two conditions\u2014State resources must permit them and the program must be available in the recipi- ent’s political subdivision. To receive Federal funds, States must share in program costs. The Federal share of costs (matching rate) varies among States and is inversely related to the square of State per capita income. For AFDC benefits and child care, the Medicaid matching rate is used. This rate now ranges from 50 percent to 78 percent among States and averages about 55 percent. For JOBS ac- tivities, the rate averages 60 percent; for administrative costs, 50 percent. The general JOBS participation rate, which expired Sep- tember 30, 1995, required 20 percent of employable (nonexempt) adult recipients to participate in education, work, or training under 265 JOBS, in fiscal year 1995. In fiscal year 1996, at least one parent in 60 percent of unemployed-parent families must participate at least 16 hours weekly in an unpaid work experience or other work program. States must restrict disclosure of information to purposes directly connected to administration of the program and to any con- nected investigation, prosecution, legal proceeding or audit. Each State must offer family planning services to all ”appropriate” cases, including minors considered sexually active. State may not require acceptance of these services. Regulations require that States deter- mine need and amount of eligibility on an objective and equitable basis. House bill An ”eligible State” is a State that, during the 2-year period im- mediately preceding the fiscal year, has submitted a plan to the Secretary of HHS that the Secretary has found includes a written document describing how the State will: 1. conduct a program, designed to serve all political sub- divisions in the State, that provides cash assistance to needy families with (or expecting) children, and that provides parents with work and support services to enable them to become self- sufficient; 2. require a parent or a caretaker receiving assistance to engage in work as defined by the State once the parent or care- taker has received assistance for 24 months (whether or not consecutive) or earlier; 3. ensure that parents and caretakers engage in work ac- tivities as described below; 4. take such reasonable steps as the State deems necessary to restrict the use and disclosure of information about recipi- ents of assistance attributable to funds provided by the Federal government. 5. no provision. (See purpose above.) Further, the document must: 6. indicate whether the State intends to treat families moving into the State differently; and, if so, how. 7. indicate whether it intends to aid noncitizens. 8. set forth objective criteria for delivery of benefits and determinations of eligibility, and for fair and equitable treat- ment, including an explanation of how it will provide opportu- nities for adversely affected recipients to be heard in a State administrative or appeal process; 9. no provision; 10. no provision; 11. no provision. Senate amendment 1. Same. 2. Similar provision. 3. Same. 4. Same. 5. Establish goals and take action to prevent and reduce the incidence of pregnancies outside marriage, and establish numerical 266 goals for reducing the proportion of births out of wedlock for cal- endar years 1996 through 2005. Further, the document must: 6. Same. 7. Same. 8. outline how the State intends to determine, on an objective and equitable basis, the needs of and amount of aid to be provided to needy families; and, except as allowed for incoming families and noncitizens (items 6 and 7) to treat families of similar needs and circumstances similarly. 9. outline how it will grant opportunity for a fair hearing to anyone adversely affected or whose application is not acted on promptly. 10. require, not later than 1 year after enactment, a parent or caretaker is not engaged in work or exempt from work require- ments and who has received assistance for more than 2 months to participate in community service. States may opt out of this re- quirement by notifying the Secretary. 11. outline how the State will conduct a program, designed to reach States and local law enforcement officials, the education sys- tem, and relevant counseling services, that provides education and training on the problem of statutory rape so that teenage preg- nancy prevention programs may be expanded to include men. Conference agreement In general, the conference agreement follows the Senate amendment, except that the Senate recedes on requirements 2, 8, and 9. Requirement 10 is modified to provide that a State may opt out of this requirement by submitting a letter from the Governor to the Secretary. 5. ELIGIBLE STATES\u2014CERTIFICATIONS Present law States must have in effect an approved child support program. States must also have an approved plan for foster care and adop- tion assistance. States must have an income and verification sys- tem covering AFDC, Medicaid, unemployment compensation, food stamps, and\u2014in outlying areas\u2014adult cash aid. House bill State plans must include the following certifications: 1. that the State will operate a child support enforcement program; 2. that the State will operate a child protection program under Title IV B (child welfare services and family preserva- tion); 3. specifying which State agency or agencies will admin- ister and supervise the State plan, and assurances that local governments and private sector organizations have been con- sulted and have had an opportunity to submit comments on the plan; and 4. that the State will provide Indians with equitable access to assistance. 267 5. no provision. 6. no provision. Senate amendment 1. Same. 2. that the State will operate a foster care and adoption assist- ance program under Title IV E and ensure medical assistance for the children; 3. Same. 4. Same. 5. that the State has established standards to ensure against fraud and abuse. 6. that the State has established and is enforcing standards and procedures to screen for and identify recipients with a history of domestic violence, will refer them to counseling and supportive services, and will waive program requirements that would make it more difficult for these persons to escape violence. Conference agreement The conference agreement generally follows the Senate amend- ment, except that the certification that the State establish and en- force standards and special procedures regarding recipients with a history of domestic violence is made a State option. 6. ELIGIBLE STATES\u2014PUBLIC AVAILABILITY OF STATE PLAN SUMMARY Present law Federal regulations require that State program manuals and other policy issuances, which reflect the State plan, be maintained in the State office and in each local and district office for examina- tion on regular workdays. House bill The State shall make available to the public a summary of the State plan. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 7. GRANTS TO STATES\u2014FAMILY ASSISTANCE GRANT Present law AFDC entitles States to Federal matching funds. Current law provides permanent authority for appropriations without limit for grants to States for AFDC benefits, administration, and AFDC-re- lated child care. Over the years, because of court rulings, AFDC has evolved into an entitlement for qualified individuals to receive cash benefits. In general, States must give AFDC to all persons whose income and resources are below State-set limits if they are in a class or category eligible under Federal rules. 268 House bill Each eligible State and Territory is entitled to receive a grant from the Secretary for each of 6 fiscal years (1996 through 2001) in an amount equal to the State family assistance grant for the fis- cal year. A State’s family assistance grant is equal to the highest of former Federal payments to the State for AFDC benefits, AFDC Administration, Emergency Assistance, and JOBS during (1) fiscal years 1992 through 1994, on average; (2) fiscal year 1994 plus, under certain circumstances, 85 percent of increased fiscal year 1995 spending for emergency assistance, or (3) fiscal year 1995. If a State fails to make qualified State expenditures for eligible families under all State programs equal to at least 75 percent of its fiscal year 1994 spending level (or at least 80 percent, if the State fails to meet its mandatory work requirements) for AFDC benefits, AFDC Administration, Emergency Assistance, JOBS, AFDC-related child care, and at-risk child care, its family assist- ance grant is reduced by the shortfall (see the discussion of pen- alties below). Senate amendment Same, except raises required State expenditures to 80 percent of fiscal year 1994 level. Conference agreement The conference agreement follows the House bill. 8. GRANTS TO STATES\u2014GRANT TO REWARD STATES THAT REDUCE OUT- OF-WEDLOCK BIRTHS Present law No provision. House bill For each fiscal year beginning with 1998, a State’s grant amount is increased by 5 or 10 percent if the State ”illegitimacy ratio” is 1 or 2 percentage points, respectively, lower in that year than its 1995 illegitimacy ratio. Only States in which the rate of abortion falls below the 1995 level are eligible for these additional grants. The term ”illegitimacy ratio” means, during a fiscal year, the number of out-of-wedlock births that occurred in the State divided by the number of births. In calculating grants, the Secretary must disregard any difference in illegitimacy ratios or abortion rates at- tributable to a change in State methods of reporting data. Senate amendment Follows the House bill, except that for each of 5 fiscal years (1999 through 2003) the Secretary shall make a grant of up to $20 million for each of the 5 States that demonstrate the greatest de- crease in out-of-wedlock births during the most recent 2-year pe- riod for which the information is available. If fewer than 5 States are eligible, the amount of such grants shall be $25 million. 269 Conference agreement The conference agreement follows the Senate amendment, with the modification that funds are available between 1999 and 2002. 9. GRANTS TO STATES\u2014SUPPLEMENTAL GRANT FOR POPULATION IN- CREASES AND LOW FEDERAL SPENDING PER POOR PERSON IN CER- TAIN STATES Present law There is no adjustment for population growth. Instead, current law provides unlimited matching funds. When AFDC enrollment climbs, Federal funding automatically rises. House bill Subject to the eligibility criteria below, each qualifying State (for purposes of this section, the term ”State” is limited to the 50 States and the District of Columbia) is entitled to receive from the Secretary supplemental grants to assist in making cash welfare payments for 4 years, fiscal years 1997-2000. For fiscal year 1997 the supplemental grant equals 2.5 percent of Federal payments to the qualifying State during fiscal year 1994 for AFDC benefits, AFDC Administration, Emergency Assistance, JOBS and AFDC-re- lated child care. For fiscal years 1998 through 2000, each qualify- ing State is entitled to receive an amount equal to the supple- mental grant for the immediately preceding year plus, if it contin- ues to meet the eligibility criteria below, an annual increase. States that no longer meet the qualification criteria are entitled to receive the prior year’s grant without increase. A State is a qualifying State for a fiscal year if average Federal welfare spending per poor person is less than the national average and State population growth exceeds the average for all States. States must qualify dur- ing fiscal year 1997 in order to qualify during later years. Certain States (i.e. those in which Federal welfare spending per poor per- son for fiscal year 1994 was less than 35 percent of the fiscal year 1994 national average or in which population has increased by more than 10 percent from April 1, 1990 to July 1, 1994) are deemed to qualify for supplemental grants in each year between fiscal year 1997 and 2000. A total of $800 million is appropriated for this purpose. If this sum is insufficient for full supplemental grants for all qualifying States, pro rata reductions will be made. (p. 244) Senate amendment Same except for change in years of possible supplemental grants: fiscal years 1998 through 2001 (instead of 1997 through 2000). States must qualify during fiscal year 1998 in order to do so in later years. Conference agreement The conference agreement follows the Senate amendment. 270 10. GRANTS TO STATES\u2014BONUS TO REWARD HIGH PERFORMANCE STATES Present law No provision. House bill Certain ”high performing” States (i.e. those most successful in achieving the purposes of the block grant program) are entitled to receive additional payments of up to five percent of their State family assistance grant. The formula for measuring State perform- ance shall be developed by the Secretary in consultation with the National Governors’ Association and the American Public Welfare Association. A total of $0.5 billion is appropriated for high perform- ance bonuses to States during 5 fiscal years, 1999 through 2003, and average annual performance bonuses are to equal $100 million. Note.\u2014In addition, required maintenance-of-effort spending is to be reduced for States that achieve performance scores above a threshold set by the Secretary. Senate amendment Appropriates twice as much money for high performance bo- nuses\u2014$1 billion\u2014and provides that average annual bonuses are to equal $175 million for fiscal years 1999 through 2002 and $300 million for fiscal year 2003. Conference agreement The conference agreement follows the Senate amendment re- garding funding (total of $1 billion) and follows the House bill re- garding the criteria for awarding bonuses to ”high performance” States. The provision allowing certain high performance States to meet a lower maintenance of effort requirement is dropped (see below). 11. GRANTS TO STATES\u2014CONTINGENCY FUND FOR STATE WELFARE PROGRAMS Present law No provision. Current law provides unlimited matching funds. House bill To assist States (for purposes of this section, the term ”State” is limited to the 50 States and the District of Columbia) with in- creased welfare needs, the House proposal establishes a contin- gency fund for matching grants and appropriates up to $2 billion over a total of 5 fiscal years (1997 through 2001) for the fund. Eli- gible States may receive contingency fund payments totaling up to 20 percent of their annual family assistance grant in any single year (in any single month, States cannot receive more than 1\u204412 of 20 percent of the annual family assistance grant). States are to submit requests for payment of contingency funds, and the Sec- retary of the Treasury must make payments to eligible States in the order in which requests are received. 271 States are eligible to receive payments if State unemployment is high (at or above 6.5 percent in the most recent three-month pe- riod) and rising relative to previous years (at least 10 percent above the comparable level in either or both of two preceding years). States also are eligible to receive payments if food stamp participation in the State in the most recent three-month period has risen at least 10 percent from the average monthly number of recipients who would have participated in the comparable quarter of fiscal year 1994 or fiscal year 1995, as determined by the Sec- retary of Agriculture, if amendments made by this proposal to the food stamp program (including optional food stamp block grant pro- visions) and to eligibility of noncitizens had been in effect through- out fiscal year 1994 and 1995. States must maintain 100 percent of historic State welfare spending (generally, the amount of State funds spent in fiscal year 1994 for AFDC benefits and administra- tion, AFDC-related child care, at-risk child care, Emergency Assist- ance, and JOBS) during years in which contingency fund payments are made, or repay an amount reflecting the shortfall. States must share in the cost of contingency funds at their fiscal year 1995 Medicaid matching rate. To smooth their transition to recovery, States that have been receiving contingency fund payments will continue to receive payments for one month after they no longer meet the criteria described above. Senate amendment Contingency fund of $2 billion covers 4 fiscal years (1998 through 2001) rather than 5. (Because of the Byrd rule, the provi- sion specifying that the CBO baseline is to assume that no grant will be made after 2001 is deleted.) Conference agreement The conference agreement follows the House bill, with the modification that, notwithstanding section 257(b)(2) of the Bal- anced Budget and Emergency Deficit Control Act of 1985, the base- line shall assume that no grant shall be made under this sub- section after fiscal year 2001. 12. GRANTS TO STATES\u2014WORK PROGRAM GRANT Present law House bill To assist States in meeting the work requirements, eligible States may receive funds from a supplemental grant for the oper- ation of work programs. To be eligible, a State’s total expenditures for the fiscal year to meet work participation requirements must exceed its total jobs spending for fiscal year 1994, its TANF work programs must be coordinated with job training programs of Title II of the Job Training Partnership Act (JTPA), or its successor, and the State must need the extra funds to meet TANF work require- ments or certify that it intends to exceed participation require- ments. The Secretary is to issue regulations for equitable distribu- tion of the grants. For these supplemental grants, $3 billion is au- thorized for fiscal year 1999 (amounts appropriated are authorized to remain available until spent). 272 Senate amendment No provision. Conference agreement The conference agreement follows the Senate amendment. 13. USE OF GRANTS\u2014IN GENERAL Present law AFDC and JOBS funds are to be used in conformity with State plans. A State may replace a caretaker relative with a protective payee or a guardian or legal representative. House bill Grants may be used in any manner reasonably calculated to accomplish the purposes of this title, including activities now au- thorized under Titles IV-A and IV-F of the Social Security Act, or to provide low-income households with assistance in meeting home heating and cooling costs. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 14. USE OF GRANTS\u2014LIMITATION ON ADMINISTRATIVE SPENDING Present law No provision. House bill States may not use more than 15 percent of the family assist- ance grant for administrative purposes. However, this cap does not apply to spending for information technology and computerization needed to implement the tracking and monitoring required by this title. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 15. USE OF GRANTS\u2014RECIPIENTS MOVING INTO THE STATE FROM ANOTHER STATE Present law The Social Security Act forbids the Secretary to approve a plan that denies AFDC eligibility to a child unless he has resided in the State for 1 year. The U.S. Supreme Court has invalidated some State laws that withheld aid from persons who had not resided 273 there for at least 1 year. It has not ruled on the question of paying lower amounts of aid for incoming residents. House bill States may impose program rules and benefit levels of the State from which a family moved if the family has lived in the State for fewer than 12 months. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 16. USE OF GRANTS\u2014TRANSFER OF FUNDS Present law No provision. House bill States may transfer up to 30 percent of funds paid under this section to carry out a State program under Part B (child welfare and family preservation) or Part E (foster care and adoption assist- ance), the social services block grant, and the child care and devel- opment block grant. Of the 30 percent that may be transferred, not more than one-third (that is, not more than 10 percent of the total block grant) may be transferred into the Social Services Block Grant. Amounts transferred to the Social Services Block Grant must be spent on programs and services for children or their fami- lies. Senate amendment States may transfer up to 30 percent of funds only to the child care and development block grant. Conference agreement The conference agreement follows the House bill, except that the provision allowing transfers into the child protection block grant, which was deleted, is dropped. The conference agreement adds the modification that funds transferred into the Title XX So- cial Services Block Grant must be spent on families with incomes that do not exceed 200 percent of the poverty level (as determined annually by the Federal Office of Management and Budget). 17. USE OF GRANTS\u2014RESERVATION OF FUNDS Present law No provision. House bill A State may reserve amounts paid to the State for any fiscal year for the purpose of providing assistance under this part. Re- serve funds can be used in any fiscal year. 274 Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 18. USE OF GRANTS\u2014AUTHORITY TO OPERATE AN EMPLOYMENT PLACEMENT PROGRAM Present law Required JOBS services include job development and job place- ment. The State agency may provide services directly or through arrangements or under contracts with public agencies or private or- ganizations. House bill States may use a portion of the family assistance grant to make payments (or provide job placement vouchers) to State-ap- proved agencies that provide employment services to recipients of cash aid. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 19. USE OF GRANTS\u2014IMPLEMENTATION OF ELECTRONIC BENEFIT TRANSFER SYSTEM Present law Regulations permit States to receive Federal reimbursement funds (50 percent administrative cost-sharing rate) for operation of electronic benefit systems. To do so, States must receive advance approval from HHS and must comply with automatic data process- ing rules. House bill States are encouraged to implement an electronic benefit transfer (EBT) system for providing assistance under the State pro- gram funded under this part, and may use the grant for such pur- pose. (The food stamp title of the bill exempts any EBT system dis- tributing need-tested benefits established or administered by a State from Federal Reserve Board rules known collectively as ”Reg- ulation E.” The most important Regulation E provision requires that lost\/stolen benefits be restored; individuals with accounts are responsible only for the first $50 of any loss, when reported in a timely fashion.) Senate amendment Same (in Miscellaneous chapter). 275 Conference agreement The conference agreement follows the House bill. Conferees also agreed to put comprehensive language on EBT and Regulation E in the food stamps section of this legislation. 20. USE OF GRANTS\u2014INDIVIDUAL DEVELOPMENT ACCOUNTS Present law No provision. House bill No provision. Senate amendment Authorizes a State to use TANF funds to fund individual devel- opment accounts established by recipients for specified purposes: postsecondary educational expenses, first-home purchase, business capitalization. Terms include: contributions must be from earned income, withdrawals would be allowed only for the above purposes, and Federal benefit programs must disregard funds in the account in determining eligibility and amount of aid. Conference agreement The conference agreement follows the Senate amendment. 21. ADMINISTRATIVE PROVISIONS Present law The Secretary pays AFDC funds to the State on a quarterly basis. House bill The Secretary shall make each grant payable to a State in quarterly installments. The Secretary is to estimate each State’s payment on the basis of a report about expected expenditures from the State and to certify to the Secretary of the Treasury the amount estimated, adjusted if needed for overpayments or under- payments for any past quarter. The Secretary must notify States not later than three months in advance of any quarterly payment that will be reduced to reflect payments made to Indian tribes in the State. Under certain circumstances, overpayments to individ- uals no longer receiving temporary family assistance will be col- lected from Federal income tax refunds and repaid to affected States. Senate amendment Same, except the provision regarding ”Collection of State Over- payments to Families from Federal Tax Refunds” was deleted be- cause of the Byrd rule. Conference agreement The conference agreement follows the Senate amendment. 276 22. FEDERAL LOANS FOR STATE WELFARE PROGRAMS Present law No provision. Instead, current law provides unlimited match- ing funds. House bill The proposal establishes a $1.7 billion revolving loan fund from which eligible States may borrow funds to meet the purposes of this title. States that have been penalized for misspending block grant funds as determined by an audit are ineligible for loans. Loans are to mature in 3 years, at the latest, and the cumulative amount of all loans to a State during fiscal years 1997 through 2001 cannot exceed 10 percent of its basic block grant. The interest rate shall equal the current average market yield on outstanding U.S. securities with a comparable remaining maturity length. States face penalties for failing to make timely payments on their loan. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 23. MANDATORY WORK REQUIREMENTS\u2014PARTICIPATION RATE REQUIREMENTS Present law The following minimum percentage of nonexempt AFDC fami- lies must participate in JOBS: Minimum percentage Fiscal year: 1995 …………………………………………………………………………………………………… 20 1996 and thereafter (no requirement). …………………………………………………. 0 The following minimum percentages of two-parent families re- ceiving cash assistance must participate in specified work activi- ties: Minimum percentage Fiscal year: 1995 …………………………………………………………………………………………………… 50 1996 …………………………………………………………………………………………………… 60 1997 …………………………………………………………………………………………………… 75 1998 (last year) ………………………………………………………………………………….. 75 1999 and thereafter (no requirement). …………………………………………………. 0 House bill The following minimum percentages of all families receiving assistance funded by the family assistance grant (except those with a child under 1, if exempted by the State) must participate in work activities: Minimum percentage Fiscal year: 1997 …………………………………………………………………………………………………… 25 1998 …………………………………………………………………………………………………… 30 1999 …………………………………………………………………………………………………… 35 277 Minimum percentage 2000 …………………………………………………………………………………………………… 40 2001 …………………………………………………………………………………………………… 45 2002 or thereafter ………………………………………………………………………………. 50 The following minimum percentages of two-parent families re- ceiving cash assistance must participate in specified work activi- ties: Minimum percentage Fiscal year: 1996 …………………………………………………………………………………………………… 50 1997 …………………………………………………………………………………………………… 75 1998 …………………………………………………………………………………………………… 75 1999 and thereafter ……………………………………………………………………………. 90. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 24. MANDATORY WORK REQUIREMENTS\u2014CALCULATION OF PARTICIPATION RATES Present law Participation rates for all families are calculated for each month. A State’s rate, expressed as a percentage, equals the num- ber of actual JOBS participants divided by the number of AFDC re- cipients required to participate (nonexempt from JOBS). In cal- culating a State’s overall JOBS participation rate, a standard of 20 hours per week is used. The welfare agency is to count as partici- pants the largest number of persons whose combined and averaged hours in JOBS activities during the month equal 20 per week. Participation rates for two-parent families for a month equal the number of parents who participate divided by the number of principal earners in AFDC-UP families (but excluding families who received aid for two months or less, if one parent engaged in inten- sive job search). House bill 1. The participation rate (for all families and for two-parent families) for a State for the fiscal year is the average of the partici- pation rates for each month in the fiscal year. The monthly partici- pation rate for a State is a percentage obtained by dividing the number of families receiving assistance that include an adult who is engaged in work by the number of families receiving assistance (not counting those subject to a recent sanction for refusal to work). 2. The required participation rate for a year is to be adjusted down one percentage point for each percentage point that the aver- age monthly caseload is below fiscal year 1995 levels, unless the Secretary finds that the decrease was required by Federal law or results from changes in State eligibility criteria (which must be proved by the Secretary). The Secretary is to prescribe regulations for this adjustment. 278 3. States have the option of counting individuals receiving as- sistance under a tribal family assistance plan towards the State work participation requirement. 4. States have the option of not requiring single parents of chil- dren under age one to engage in work and may disregard these parents in determining work participation rates. Senate amendment 1. Same. 2. Same. 3. Same. 4. Allows a parent to receive this exemption only for a total of 12 months, whether or not consecutive. Conference agreement The conference agreement follows the Senate amendment, with a modification. For item 1, the conference agreement includes minor heads of households along with adults in the calculation of State work participation rates (in both the numerator and denomi- nator of the calculation). 25. MANDATORY WORK REQUIREMENTS\u2014OPTIONAL INDIVIDUAL RESPONSIBILITY PLAN Present law States must make an initial assessment of the educational, child care, and other supportive service needs, and of the skills and employability of each JOBS participant. In consultation with the participant, the agency shall develop an employability plan for the participant, which shall not be considered a contract. After these steps, the State agency may require the participant to negotiate and enter into an agreement that specifies matters such as the par- ticipant’s obligations, duration of participation, and services to be provided. House bill States are required to make an initial assessment of the skills, work experience, and employability of each recipient of assisting under the block grant who is over age 17 or has not completed high school or the equivalent, and is not attending secondary school. States may develop individual responsibility plans setting forth em- ployment goals, obligations of the individual, and services the State will provide. In addition to other penalties that may apply, States may reduce assistance to families that include an individual who fails to comply with the terms of such plans. Senate amendment Requires States to require TANF recipient families to enter into a personal responsibility agreement, as developed by the State. The agreement means a binding contract. It is to include a nego- tiated individual time limit for benefit eligibility, outline steps the family and State will take to move the family to self-sufficiency, provide for sanctions if the individual fails to sign the agreement 279 or comply with its terms and shall be invalid if the State fails to comply with its terms. Conference agreement The conference agreement follows the House bill. 26. MANDATORY WORK REQUIREMENTS\u2014ENGAGED IN WORK Present law Not relevant. (As discussed below, required activities in State JOBS programs are education, jobs skills training, job readiness, job development and job placement and two of these four: job search, on-the-job training, work supplementation, and community work experience, or other approved work experience. In general, to be counted as a JOBS participant, a person must be engaged in a JOBS activity for an average of 20 hours weekly.) House bill To be counted as engaged in work for a month, a recipient must be participating for at least the minimum average number of hours per week shown in the table below in one or more of these activities: unsubsidized employment, subsidized (private or public) employment, work experience, on-the-job training, job search and job readiness assistance, community service programs, or voca- tional educational training (12 months maximum). Minimum average weekly hours Fiscal year: 1996 …………………………………………………………………………………………………… 20 1997 …………………………………………………………………………………………………… 20 1998 …………………………………………………………………………………………………… 20 1999 …………………………………………………………………………………………………… 25 2000 …………………………………………………………………………………………………… 30 Exceptions to the above table: (1) to be considered engaged in work, an adult in a two-parent family must make progress in work activities at least 35 hours per week, with not fewer than 30 hours attributable to the work activities cited above; (2) an individual in job search may be counted as engaged in work for up to 8 weeks, no more than 4 of which may be consecutive; (3) a State may count a single parent with a child under age 11 as engaged in work for a month if the parent works an average of 20 hours weekly in all years (the hourly minimum does not rise for these parents); (4) not more than 20 percent of adults in all families and in two-parent families determined to be engaged in work in the State for a month may meet the work requirement through participation in voca- tional educational training; (5) teen parents (under age 20) who head their households are considered to be engaged in work if they maintain satisfactory attendance at secondary school or participate in work-related education for at least the minimum average num- ber of hours in the table; and (6) no provision. Senate amendment Changes list of work activities by substituting ”educational training (not to exceed 24 months with respect to any individual)” for ”vocational educational training (not to exceed 12 months with respect to any individual).” (Also, as the table below shows, re- 280 quired weekly hours of work rise to 35 in fiscal year 2002 and thereafter.) Minimum average weekly hours Fiscal year: 1996 …………………………………………………………………………………………………… 20 1997 …………………………………………………………………………………………………… 20 1998 …………………………………………………………………………………………………… 20 1999 …………………………………………………………………………………………………… 25 2000 …………………………………………………………………………………………………… 30 2001 …………………………………………………………………………………………………… 30 2002 and thereafter ……………………………………………………………………………. 35 Exceptions to the above table: (1) an adult in a two-parent family is considered engaged in work if he\/she works at least 35 hours weekly, with at least 30 hours attributable to one of the ac- tivities cited above, and, if the family receives federally-funded child care, the second parent makes satisfactory progress for at least 20 hours weekly in employment, work experience, on-the-job training, or community service; (2) an individual in job search may be counted as engaged in work for only 4 weeks (12 weeks if the State unemployment rate exceeds the national average); (3) same as House provision; (4) not more than 30 percent of adults in all families and in 2-parent families may meet the work activity re- quirement through participation in vocational educational training (note: bill language refers to vocational educational training, al- though references elsewhere are to educational training\u2014see above); (5) teen parents (under age 20) who head their households are considered to be engaged in work if they maintain satisfactory attendance at secondary school or the equivalent during the month or participate in education directly related to employment for at least the minimum average number of hours per week in the table; and (6) a person participating in a community service program may be treated as being engaged in work if she provides child care serv- ices to another participant in the community service program for the period of time each week determined by the State. Conference agreement The conference agreement follows the house bill and the Sen- ate amendment as follows: First, the conference agreement follows the House bill regard- ing vocational educational training as a work activity which is creditable for up to 12 months. Second, the conference agreement follows the House bill re- garding the minimum average weekly hours of work required. Finally, regarding exceptions to the work hour requirements, the conference agreement: (1) follows the Senate amendment on hours of work for adults in a 2-parent family, with the modification exempting the second parent, if such parent is disabled or caring for a severely disabled child; (2) follows the Senate amendment re- garding job search, with the modification that a total of 6 weeks is allowed, of which not more than 4 may be consecutive (and, in the case of States in which the unemployment rate is at least 50 percent above the national average, a total of 12 weeks is allowed); in addition an individual may count a partial week of job search as a full week of work limited to one occasion; (3) follows the House bill in permitting States to count certain single parents as engaged 281 in work if the parent works for 20 hours per week, with the modi- fication that the parent’s child must be under age 6 (however, the conference agreement follows the Senate amendment regarding the requirement that States may not disregard such an adult in cal- culating their work rates); (4) follows the House bill regarding the limitation on the number of parents countable if in vocational edu- cation; (5) follows the Senate amendment on teen parents and edu- cation, with the modification that teen parents meeting the work requirement in this way are counted towards the 20 percent limita- tion on vocational education (see above); and (6) follows the Senate amendment on persons providing child care, with the clarification that such hours spent providing child care count towards fulfill- ment of the hours of work required. 27. MANDATORY WORK REQUIREMENTS\u2014WORK ACTIVITIES DEFINED Present law JOBS programs must include specified educational activities (high school or equivalent education, basic and remedial education, and education for those with limited English proficiency); job skills training, job readiness activities, and job development and place- ment. In addition, States must offer at least two of these four items: group and individual job search; on-the-job training; work supplementation or community work experience program (or an- other work experience program approved by the HHS Secretary). The State also may offer postsecondary education in ”appropriate” cases. House bill ”Work activities” are defined as unsubsidized employment, subsidized private sector employment, subsidized public sector em- ployment, work experience if sufficient private sector employment is not available, on-the-job training, job search and job readiness assistance, community service programs, vocational educational training (1 year maximum), jobs skills training directly related to employment, education directly related to employment in the case of a recipient who lacks a high school diploma or equivalency, and satisfactory attendance at secondary school for a recipient who has not completed high school. Senate amendment Same as House provision except for last two items in list of ”work activities.” These activities (work-related education and sec- ondary school attendance) are creditable as ”work” only for persons under age 20. Conference agreement The conference agreement follows the House bill, with the modification to include the provision of child care services to an in- dividual who is participating in a community service program. 282 28. MANDATORY WORK REQUIREMENTS\u2014PENALTIES AGAINST INDIVIDUALS Present law For failure to meet JOBS requirements without good cause, AFDC benefits are denied to the offending parent and payments for the children are made to a third party. In a two-parent family, fail- ure of one parent to meet JOBS requirements without good cause results in denial of benefits for both parents (unless the other par- ent participates) and third-party payment on behalf of the children. Repeated failures to comply bring potentially longer penalty peri- ods. House bill If an adult recipient refuses to engage in required work, the State shall reduce the amount of assistance to the family pro rata (or more, at State option) with respect to the period of work re- fusal, or shall discontinue aid, subject to good cause and other ex- ceptions that the State may establish. In addition, if block grant re- cipients fail to meet any of the work requirements, States may ter- minate their coverage under the Medicaid program. A State may not penalize a single parent caring for a child under age eleven for refusal to work if the parent proves a demonstrated inability to ob- tain needed child care for specified reasons. Senate amendment Same as House provision except that Senate does not provide that States may end Medicaid for block grant recipients who fail to meet any of the work requirements in the act. Conference agreement The conference agreement follows the House bill with the modification that, if benefits are terminated under the work re- quirements of section 407 of this part, States may end Medicaid eli- gibility for adults made ineligible, but not children in the family. In addition, modifies the House bill and Senate amendment so that States may not penalize a single parent caring for a child under age 6 for refusal to work if the parent proves a demonstrated in- ability to obtain needed child care for specified reasons. 29. MANDATORY WORK REQUIREMENTS\u2014NONDISPLACEMENT IN WORK ACTIVITIES Present law Under JOBS law, no work assignment may displace any cur- rently employed worker or position (including partial displacement such as a reduction in hours of non-overtime work, wages, or em- ployment benefits). Nor may a JOBS participant fill a position va- cant because of layoff or because the employer has reduced the workforce with the effect of creating a position to be subsidized. House bill In general, an adult in a family receiving IV A assistance may fill a work vacancy. However, no adult in a Title IV A work activ- 283 ity shall be employed or assigned when another person is on layoff from the same or a substantially equivalent job, or when the em- ployer has terminated the employment of a regular worker or oth- erwise caused an involuntary reduction of its workforce in order to fill the vacancy thus created with a subsidized worker. This provi- sion does not preempt or supersede any State or local law providing greater protection from displacement. Senate amendment In general, an adult in a family receiving IV A assistance may fill a work vacancy. However, no IV A work assignment may displace a currently employed worker (including any partial dis- placement such as a reduction in hours of overtime work, wages, or employment benefits), impair an existing contract or collective bargaining agreement, or result in ending a regular worker’s em- ployment. States must establish and maintain a grievance proce- dure, including hearing opportunity, for resolving complaints and providing remedies for violations. This section does not preempt or supersede any State or local law providing greater protection from displacement. Conference agreement The conference agreement follows the House bill, with the modification to include a requirement that States establish a griev- ance procedure for workers adversely affected pursuant to this sec- tion. 30. MANDATORY WORK REQUIREMENTS\u2014SENSE OF THE CONGRESS THAT STATE SHOULD PLACE A PRIORITY ON PLACING CERTAIN PAR- ENTS IN WORK Present law As a condition of receiving full matching funds, a State must use 55 percent of its JOBS spending for these target groups: per- sons who have received aid for any 36 of the 60 preceding months, parents under age 24 who failed to complete high school, and par- ents whose youngest child is within 2 years of becoming ineligible for aid (i.e., whose youngest child is, usually, at least 16). House bill It is the sense of Congress that States should give highest pri- ority to requiring adults in two-parent families and adults in sin- gle-parent families with children that are older than preschool age to engage in work activities. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 284 31. MANDATORY WORK REQUIREMENTS\u2014SENSE OF THE CONGRESS THAT STATES SHOULD IMPOSE CERTAIN REQUIREMENTS ON NON- CUSTODIAL, NONSUPPORTING MINOR PARENTS Present law No provision. House bill It is the sense of the Congress that States should require non- custodial, nonsupporting parents who have not attained 18 years of age to fulfill community work obligations and attend appropriate parenting or money management classes after school. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 32. MANDATORY WORK REQUIREMENTS\u2014REVIEW OF IMPLEMENTATION OF STATE WORK PROGRAMS Present law No provision. House bill During fiscal year 1999, the Committees on Ways and Means and Finance must hold hearings to review the implementation by States of the mandatory work requirements, and may introduce legislation to remedy any problems found. Senate amendment No provision. Conference agreement The conference agreement follows the House bill. 33. PROHIBITIONS; REQUIREMENTS\u2014FAMILIES WITH NO MINOR CHILDREN Present law Only families with dependent children (under age 18, or 19 at State option if the child is still in secondary school or in the equiva- lent level of vocational or technical training) can participate in the program. House bill Only families with a minor child (who resides with a custodial parent or other adult caretaker relative of the child) or a pregnant individual may receive assistance under this part. 285 Senate amendment Adds prohibition against assistance to a family in which an adult already has received 60 months of assistance attributable to Federal funds. See also item 41. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. Conferees note that the 5-year time limit on bene- fits applies only to benefits provided using Temporary Assistance for Needy Families (TANF) Block Grant funds. Other Federal funds, such as Title XX Social Services Block Grants and support through the expanded Child Care and Development Block Grant, are not restricted for families that have already received 5 years of TANF support. 34. PROHIBITIONS; REQUIREMENTS\u2014NO ADDITIONAL CASH ASSISTANCE FOR CHILDREN BORN TO FAMILIES RECEIVING ASSISTANCE Present law No provision. House bill 1. Block grant funds may not be used to provide cash benefits for a child born to a recipient of cash welfare benefits or an individ- ual who received cash benefits at any time during the 10-month pe- riod ending with the birth of the child. This prohibition does not apply to children born as a result of rape or incest. Block grant funds can be used to provide noncash (voucher) assistance for par- ticular goods and services suitable for the care of the child. 2. States that pass a law specifically exempting their own pro- grams from this national rule may use Federal funds to increase cash benefits for families that have additional children while on welfare. 3. If a State has a family cap policy under a section 1115 waiv- er on the date of enactment, it may continue terms of those family caps. Senate amendment 1. Same family cap provision except that Senate amendment does not explicitly provide for use of block grant funds to give voucher assistance for care of the excluded child. (This provision was deleted because of the Byrd rule.) 2. Same. 3. Same provision, but adds permission for States to continue terms of family caps resulting from State law passed within 2 years of enactment. Conference agreement This provision was deleted due to the Byrd rule. 286 35. PROHIBITIONS; REQUIREMENTS\u2014NONCOOPERATION IN CHILD SUPPORT Present law As a condition of eligibility, applicants or recipients must co- operate in establishing paternity of a child born out-of-wedlock, in obtaining support payments, and in identifying any third party who may be liable to pay for medical care and services for the child. House bill The State must stop paying the parent’s share of the family welfare benefit if the parent fails to cooperate in establishing pater- nity, or in establishing, modifying or enforcing a child support order, and the individual does not qualify for a good cause or other exception; the State may deny benefits to the entire family for the parent’s failure to cooperate. Senate amendment If a parent fails to cooperate in establishing paternity or in es- tablishing, modifying, or enforcing a child support order, and the individual does not qualify for a good cause or other exception, the State shall reduce the family’s benefit by at least 25 percent. It may reduce the benefit to zero. Conference agreement The conference agreement follows the Senate amendment. 36. PROHIBITIONS; REQUIREMENTS\u2014FAILURE TO ASSIGN CERTAIN SUPPORT RIGHTS TO THE STATE Present law As a condition of AFDC eligibility, applicants must assign child support and spousal support rights to the State. House bill Block grant funds may not be used to provide cash benefits to a family with an adult who has not assigned to the State rights to child support or spousal support. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 37. PROHIBITIONS; REQUIREMENTS\u2014SCHOOL ATTENDANCE REQUIRED FOR ADULTS WITHOUT A DIPLOMA Present law No provision. House bill No provision. 287 Senate amendment Prohibits any TANF-funded assistance to the family of an adult older than 20 but younger than 51 who has received IV-A aid or food stamps if the person does not have, or is not working to- ward, a secondary school diploma or its equivalent. An exception is made for a person determined to lack the capacity to successfully complete the course of study. Conference agreement The conference agreement follows the Senate amendment. 38. PROHIBITIONS; REQUIREMENTS\u2014SCHOOL ATTENDANCE REQUIRED FOR MINOR CHILDREN Present law No provision. House bill No provision. Senate amendment Prohibits any TANF-funded aid to a family that includes an adult who has received IV A benefits or food stamps unless the adult ensures that the family’s minor dependent children attend school as required by the law of their State. Provides that a State shall not be prohibited from sanctioning a family with an adult who fails to meet this requirement. Conference agreement The conference agreement follows the Senate amendment. 39. PROHIBITIONS; REQUIREMENTS\u2014UNWED MINOR PARENT NOT ATTENDING HIGH SCHOOL OR NOT LIVING WITH AN ADULT Present law States may require unwed parents under age 18 to live with an adult in order to receive AFDC. They must require a custodial parent who is under 20 years old and who has not completed high school to participate in an educational activity under the JOBS pro- gram. House bill States have the option of using Federal funds to provide cash welfare payments to unmarried minors only under specified condi- tions. States may not use Federal family assistance grant funds to provide assistance to unwed parents under age 18 who have a child at least 12 weeks of age and did not complete high school unless they attend high school or an alternative educational or training program. States may not use Federal funds to provide assistance to unmarried parents under age 18 unless they live with a parent or in another adult-supervised setting; States may, under certain circumstances, use Federal funds to assist teen parents in locating and providing payment for a second chance home or other adult- supervised living arrangement. 288 Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 40. PROHIBITIONS; REQUIREMENTS\u2014MEDICAL SERVICES Present law States must assure that family planning services are offered to all AFDC recipients who request them. (The Secretary is to reduce AFDC payments by 1 percent for failure to offer and provide family planning services to those requesting them.) House bill Federal family assistance grants may not be used to provide medical services; Federal funds may, however, be used to provide prepregnancy family planning services. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 41. PROHIBITIONS; REQUIREMENTS\u2014TIME-LIMITED BENEFITS Present law No provision. House bill Federal family assistance grants may not be used to provide assistance for the family of a person who has received block grant aid for 60 months (or fewer, at State option), whether or not con- secutive. States may give hardship exemptions in a fiscal year to up to 20 percent of their average monthly caseload, including indi- viduals who have been battered or subjected to sexual abuse (but States are not required to exempt these persons). When considering an individual’s length of stay on welfare, States are to count only time during which the individual received assistance as the head of household or as the spouse of the household head. Any State funds spent to aid persons no longer eligible for TANF after 5 years of benefits may be counted toward the maintenance-of-effort re- quirement. This part shall not be interpreted to prohibit a State from using State funds not originating with the Federal government to aid families that lose eligibility for the block grant program be- cause of the 5-year time limit. Senate amendment Same, except adds an exemption from the time limit for per- sons who live on a reservation of an Indian tribe with a population 289 of at least 1,000 persons and with at least 50 percent of the adult population not employed. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment on the time limit policy, and includes the Senate provision on exceptions for certain Indian populations and the House provision specifying States’ authority to use State and local funds to provide support, including cash assistance, after 5 years. (For a description of other Federal funds that may be provided such families, see the conference agreement description of item 33 above.) 42. PROHIBITIONS; REQUIREMENTS\u2014FRAUDULENT MISREPRESENTATION OF RESIDENCE IN TWO STATES Present law No provision. House bill Any person convicted in Federal court or State court of having fraudulently misrepresented residence in order to obtain benefits or services in two or more States from the family assistance grant, Medicaid, Food Stamps, or Supplemental Security Income pro- grams is ineligible for family assistance grant aid for 10 years. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 43. PROHIBITIONS; REQUIREMENTS\u2014FUGITIVE FELONS AND PROBATION AND PAROLE VIOLATORS Present law States may provide a recipient’s address to a State or local law enforcement officer who furnishes the recipient’s name and social security number and demonstrates that the recipient is a fugitive felon and that the officer’s official duties include locating or appre- hending the felon. House bill No assistance may be provided to an individual who is fleeing to avoid prosecution, custody or confinement after conviction for a crime (or an attempt to commit a crime) that is a felony (or, in New Jersey, a high misdemeanor), or who violates probation or parole imposed under Federal or State law. Any safeguards established by the State against use or disclo- sure of information about individual recipients shall not prevent the agency, under certain conditions, from providing the address of a recipient to a law enforcement officer who is pursuing a fugitive felon or parole or probation violator. This provision applies also to a recipient sought by an officer not because he is a fugitive but be- 290 cause he has information that the officer says is necessary for his official duties. In both cases the officer must notify the State that location or apprehension of the recipient is within his official du- ties. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 44. PROHIBITIONS; REQUIREMENTS\u2014MINOR CHILDREN ABSENT FROM HOME FOR A SIGNIFICANT PERIOD Present law Regulations allow benefits to continue for children who are ”temporarily absent” from home. House bill No assistance may be provided for a minor child who has been absent from the home for 45 consecutive days or, at State option, between 30 and 180 consecutive days. States may establish a good cause exemption as long as it is detailed in the State report to the Secretary. No assistance can be given to a parent or caretaker who fails to report a missing minor child within five days of the time when it is clear (to the parent) that the child will be absent for the specified time. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 45. PROHIBITIONS; REQUIREMENTS\u2014MEDICAL ASSISTANCE REQUIRED TO BE PROVIDED FOR FAMILIES BECOMING INELIGIBLE FOR ASSIST- ANCE DUE TO INCREASED EARNINGS OR COLLECTION OF CHILD SUP- PORT Present law States must continue Medicaid (or pay premiums for employer- provided health insurance) for 6 months to a family that loses AFDC eligibility because of hours of, or income from, work of the caretaker relative, or because of loss of the earned income dis- regard after 4 months of work. States must offer an additional 6 months of medical assistance, for which it may require a premium payment if the family’s income after child care expenses is above the poverty guideline. For extended medical aid, families must sub- mit specified reports. States must continue Medicaid for 4 months to those who lose AFDC because of increased child or spousal sup- port. 291 House bill States must provide medical assistance for 1 year to families that become ineligible for block grant assistance because of in- creased earnings, provided they received cash block grant assist- ance in at least 3 of the 6 months before the month in which they became ineligible and their income is below the poverty line. For purposes of determining family income to compare with the Federal poverty line, States have the authority to set their own definition of income except that income from the Earned Income Tax Credit must be disregarded. States also must provide medical assistance for 4 months to families that leave welfare (after being enrolled for at least 3 of the previous 6 months) because of increased income from child support or spousal support. Senate amendment Same as current law. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment, with the modification that income restrictions con- form to current law. Transitional Medicaid coverage is extended through the life of the block grant. 46. PROHIBITIONS; REQUIREMENTS\u2014MEDICAID Present law States must provide Medicaid to all AFDC recipients and to some AFDC-related groups who do not receive cash aid. Examples include persons who do not receive a monthly payment because the amount would be below $10 (Federal law prohibits payments this small) and persons whose payments are reduced to zero in order to recover previous overpayments. States must continue Medicaid for specified periods for certain families who lose AFDC benefits. If the family loses AFDC benefits because of increased earnings or hours of employment, Medicaid coverage must be extended for 12 months. (During the second 6 months a premium may be imposed, the scope of benefits may be limited, or alternate delivery systems may be used.) If the family loses AFDC because of increased child or spousal support, coverage must be extended for 4 months. States are also required to furnish Medicaid to certain two-parent families whose principal earner is unemployed and who are not receiving cash assistance because the State has set a time limit on their AFDC coverage. House bill States must provide medical assistance to persons who would be eligible for AFDC cash benefits (under terms of July 16, 1996) if that program still were in effect. A State may increase the AFDC income standard above that of July 16, 1996 by the percentage increase in the consumer price index for all urban consumers over the same period. 292 Senate amendment States must provide medical assistance to persons who would be eligible for AFDC (under terms of July 1, 1996) as if that pro- gram were still in effect. Simplifies standards to make it easier for States to administer. States would have the option to: (1) lower their income standard, but not below those in effect on May 1, 1988; and (2) use income and resource standards and methodolo- gies that are less restrictive than those in effect on July 1, 1996. In order to provide States additional flexibility, States may use 1 application form and may administer the program through either its title IV agency or its title XIX agency. Families would receive transitional Medicaid benefits as under current law. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment, with the modification that States must retain the income and resource standards they had for AFDC eligibility on July 16, 1996. States may terminate Medicaid eligibility for an adult who is terminated from TANF because of failure to work. Conferees are concerned that the conference agreement may re- quire States to maintain a dual-eligibility determination system. Conferees, however, lacked adequate information to determine the true nature and extent of this problem. Thus, conferees recommend that the Committees on Ways and Means, Commerce, and Finance conduct hearings in the next Congress to carefully examine this problem. If the committees determine that the dual-eligibility sys- tem does in fact impose additional administrative costs on the States, Congress should consider Federal-State cost-sharing schemes and other legislative solutions. In the meantime, conferees are establishing a fund of $.5 billion in entitlement spending that will be distributed among States that experience additional admin- istrative expenses directly attributable to conducting a dual-eligi- bility system. 47. PROHIBITIONS; REQUIREMENTS\u2014STATE DISREGARD OF INCOME SECURITY PAYMENTS Present law AFDC benefits may not be paid to a recipient of old-age assist- ance (predecessor to Supplemental Security Income (SSI) and now available only in Puerto Rico, Guam, and the U.S. Virgin Islands), SSI, or AFDC foster care payments. House bill This provision allows States to disregard payments from old age and survivors’ insurance (social security), disability insurance, old-age assistance, foster care, and Supplemental Security Income in determining the amount of block grant cash assistance to be pro- vided to a family. Senate amendment No provision. 293 Conference agreement The conference agreement follows the Senate amendment. 48. PROHIBITIONS; REQUIREMENTS\u2014NONDISCRIMINATION Present law No explicit provision in current AFDC\/JOBS law. House bill No provision. Senate amendment States that have any program or activity that receives block grant funds for Temporary Assistance for Needy Families shall be subject to enforcement authorized under the Age Discrimination Act of 1975, the Rehabilitation Act of 1973 (sec. 504), and the Civil Rights Act of 1964 (Title VI). Conference agreement The conference agreement follows the Senate amendment. 49. PROHIBITIONS; REQUIREMENTS\u2014DENIAL OF BENEFITS FOR CERTAIN DRUG-RELATED CONVICTIONS Present law No explicit provision. House bill No provision. Senate amendment An individual convicted under Federal or State law of any crime related to illegal possession, use, or distribution of a drug is ineligible for any Federal means-tested benefit (for 5 years for a misdemeanor and for life for a felony). Family members or depend- ents of the individual are exempted, and individuals made ineli- gible would continue to be eligible for emergency benefits, including emergency medical services. Conference agreement The conference agreement follows the Senate amendment, with the modification that only TANF block grant benefits and food stamps are denied and that the denial is only for a felony offense. 50. PENALTIES\u2014USE OF GRANT IN VIOLATION OF THIS PART Present law If the Secretary finds that a State has failed to comply with the State plan, she is to withhold all payments from the State (or limit payments to categories not affected by noncompliance). House bill Note.\u2014Before imposing any of the penalties below, the Sec- retary shall notify the State of the violation and allow the State to enter into a corrective action plan (item 60). Also, except for items 294 51 and 52, the Secretary may not impose a penalty if she finds that the State has reasonable cause for its failure to comply. If an audit finds that a State has used Federal funds in viola- tion of the purposes of this title, the Secretary shall reduce the fol- lowing quarter’s payment by the amount misused. If the State can- not prove that the misuse was unintentional, the State’s following quarter payment will be reduced by an additional five percent. Senate amendment Same. See also item 57, Failure to Comply with Provisions of IV A or State Plan. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 51. PENALTIES\u2014FAILURE TO SUBMIT REQUIRED REPORT Present law There is no specific penalty for failure to submit a report, al- though the general noncompliance penalty could apply. House bill If a State fails to submit a required quarterly report within one month after the end of a fiscal quarter, the Secretary shall re- duce by 4 percent the block grant amount otherwise payable to the State for the next fiscal year. However, the penalty shall be re- scinded if the State submits the report before the end of the fiscal quarter succeeding the one for which the report was due. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 52. PENALTIES\u2014FAILURE TO SATISFY MINIMUM PARTICIPATION RATES Present law If a State fails to achieve the JOBS participation rate specified in law, the Secretary is to reduce to 50 percent the Federal match- ing rate for JOBS activities and for full-time personnel costs, which now ranges from 60 percent to 78 percent among States. (However, see item 54, ”Corrective Compliance,” for penalty waiver authority.) House bill If a State fails to achieve its required work participation rate for the fiscal year, the Secretary shall reduce the following year’s block grant by up to 5 percent, with the percentage cut based on the ”degree of noncompliance.” The Secretary has the authority to reduce the penalty if the State economy is in recession. In addition, failure to meet required work participation requirements results in States’ being required to maintain 80 percent of historic spending levels, instead of 75 percent. 295 Senate amendment Imposes a graduated penalty on each consecutive failure by a State to meet the work participation standard. The Senate amend- ment also does not authorize the Secretary to reduce the penalty for States with high unemployment. Conference agreement On penalty amounts, the conference agreement follows the Senate amendment with the modification that there is a graduated penalty of 5 percent the first year and 2 percent in addition to the prior year’s penalty in subsequent years (so annual penalties in consecutive years would be 5 percent in the first year, 7 percent in the second, 9 percent in the third, and so on), with a maximum cumulative penalty of 21 percent. The conference agreement follows the House bill in authorizing the Secretary to reduce the penalty for needy States as defined under the contingency fund eligibility criteria. 53. FAILURE TO PARTICIPATE IN THE INCOME AND ELIGIBILITY VERIFICATION SYSTEM Present law States must have in effect an Income and Eligibility Verifica- tion System covering AFDC, Medicaid, unemployment compensa- tion, the Food Stamp program, and adult cash aid in the outlying areas. There is no specific penalty for failure to comply. House bill If the State fails to participate in the Income and Eligibility Verification System (IEVS) designed to reduce welfare fraud, the Secretary shall reduce by up to 2 percent the annual family assist- ance grant of the State. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 54. FAILURE TO COMPLY WITH PATERNITY ESTABLISHMENT AND CHILD SUPPORT ENFORCEMENT REQUIREMENTS Present law The penalty against a State for noncompliance with child sup- port enforcement rules\u2014loss of AFDC matching funds\u2014shall be suspended if a State submits and implements a corrective action plan. House bill If the Secretary determines that a State does not enforce pen- alties requested by the Title IV D child support enforcement agen- cy against recipients of cash aid who fail to cooperate in establish- ing paternity or in establishing, modifying, or enforcing a child sup- 296 port order under Title IV D (and who do not qualify for any good cause or other exception), the Secretary shall reduce the cash as- sistance block grant by up to five percent. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 55. FAILURE TO TIMELY REPAY A FEDERAL LOAN FUND FOR STATE WELFARE PROGRAMS Present law No provision. House bill If a State fails to pay any amount borrowed from the Federal Loan Fund for State Welfare Programs within the maturity period, plus any interest owed, the Secretary shall reduce the State’s fam- ily assistance block grant for the immediately succeeding fiscal year quarter by the outstanding loan amount, plus the interest owed on it. The Secretary may not forgive these overdue debts. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 56. FAILURE OF ANY STATE TO MAINTAIN CERTAIN LEVEL OF HISTORIC EFFORT Present law No provision. House bill If in fiscal years 1997 through 2001 a State fails to spend a sum equal to at least 75 percent of its ”historic level” (generally fis- cal year 1994 expenditures for AFDC, JOBS, Emergency Assist- ance, AFDC-related child care and ”at-risk” child care) of State spending on specified programs, the Secretary shall reduce the fol- lowing year’s family assistance grant (that is, in fiscal years 1998 through 2002) by the difference between the 75 percent require- ment and what the State actually spent. However, States that fail to meet required work participation rates must maintain 80 per- cent of historic spending levels. Qualified State expenditures that count toward the 75 percent (or 80 percent) spending requirement are all State-funded expendi- tures under all State programs that provide any of the following assistance to families eligible for family assistance benefits (and those no longer eligible because of the 5-year time limit or ineli- gible because of the Act’s treatment of noncitizens): cash and child 297 care assistance; educational activities designed to increase self-suf- ficiency, job training and work (excluding any expenditure for pub- lic education in the State other than expenditures for services or assistance to a member of an eligible family that is not generally available to other persons); administrative costs not to exceed 15 percent of the total amount of qualified State expenditures; and any other use of funds reasonably calculated to accomplish pur- poses of the temporary family assistance. Qualified expenditures exclude spending from funds transferred from State or local pro- grams except those that exceed the amount expended in 1996 or those for which the State is entitled to a Federal payment under former AFDC\/JOBS law (as in effect just before enactment). The Secretary is to reduce the 75 percent (or 80 percent) main- tenance of effort spending requirement by up to eight percentage points (i.e., to no lower than 67 percent or 72 percent) for States that achieve ”high performance” scores, based on a threshold to be set by the Secretary, for achieving the goals of the program of Tem- porary Assistance for Needy Families (TANF). Senate amendment Raises required State spending to 80 percent of the ”historic” level for all States. (Does not distinguish between States that meet or fail work participation rates in maintenance-of-effort rule.) The Secretary is to reduce the 80 percent spending require- ment by up to 8 percentage points (to as low as 72 percent) for States with high performance scores. (This provision was deleted because of the Byrd rule.) Conference agreement The conference agreement follows the House bill, except that the provision allowing reduction of required State spending for high performance States is dropped. Conferees note that State spending on programs that promote self-sufficiency and prevent welfare dependence including, but not limited to, substance abuse treatment, teen parenting and pregnancy prevention shall count to- wards a State’s maintenance of effort. The fact that such funds are spent through or by State or local education agencies should not prevent their being counted towards the State maintenance of ef- fort. 57. SUBSTANTIAL NONCOMPLIANCE OF STATE CHILD SUPPORT ENFORCEMENT PROGRAM REQUIREMENTS Present law If a State child support program is found not to be in substan- tial compliance with Federal requirements, the Secretary is to re- duce AFDC matching funds: by 1 2 percent for first finding of non- compliance, by 2 3 percent for second consecutive finding, and by 3 5 percent for third or subsequent finding. (See ”corrective compli- ance” item 54.) Note: State child support plans must undertake to establish paternity of children born out-of-wedlock for whom AFDC is sought, and AFDC law requires the parent to cooperate in estab- lishing paternity. Failure to cooperate makes the parent ineligible for AFDC. 298 House bill If a State child support enforcement program is found by re- view not to have complied with Title IV D requirements, and the Secretary determines that the program is not in compliance at the time the finding is made, then the Secretary will reduce the State’s quarterly block grant payment for each quarter during which the State is not in compliance. For the first finding of noncompliance, the reduction will be between one and two percent; for the second consecutive finding, between two and three percent; for the third or subsequent findings, between three and five percent. Non-com- pliance of a technical nature is to be disregarded. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 58. FAILURE OF STATE RECEIVING AMOUNTS FROM CONTINGENCY FUND TO MAINTAIN 100 PERCENT OF HISTORIC EFFORT Present law Not relevant. House bill If the Secretary determines that a State failed to maintain 100 percent of historic State spending, as required during a year in which contingency funds are paid to the State, the following year’s block grant payment to the State is to be reduced by the amount of contingency funds paid. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 59. REQUIRED REPLACEMENT OF GRANT FUND REDUCTIONS CAUSED BY PENALTIES Present law Not applicable. House bill If a State’s block grant is reduced as a result of one of the above penalties, the State must, during the following fiscal year, replace the penalized funds using State funds. Senate amendment Same. 299 Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 60. PENALTIES\u2014FAILURE TO PROVIDE MEDICAL ASSISTANCE TO FAMI- LIES BECOMING INELIGIBLE FOR ASSISTANCE UNDER THIS PART DUE TO INCREASED EARNINGS FROM EMPLOYMENT OR COLLECTION OF CHILD SUPPORT Present law If the Secretary finds that a State fails to comply substantially with any required provision of its Medicaid plan (including transi- tional benefits for former AFDC families), she shall withhold all payments to the State (or limit payments to categories not affected by the noncompliance). House bill If the Secretary determines that a State does not comply with the requirement to provide extended medical assistance for certain families that become ineligible for block grant assistance due to in- creased earnings or the collection of child support, the Secretary must reduce the State’s block grant by up to 5 percent (depending on the severity of the violation). Senate amendment No specific provision about failure to comply with requirement for extended medical assistance, but see item below. Conference agreement The conference agreement follows the Senate amendment. 61. PENALTIES\u2014FAILURE TO COMPLY WITH PROVISIONS OF IV A OR STATE PLAN Present law If the Secretary finds that a State has failed to comply with the State plan, she is to withhold all payments from the State (or limit payments to categories not affected by noncompliance). (Item 46 above.) House bill No general penalty for failure to comply with State plan. Senate amendment If the Secretary, after notice and hearing, finds that a State has not substantially complied with any provision of IV A or the State plan during a fiscal year, she shall (if a preceding penalty paragraph does not apply) reduce the grant for the next year by up to 5 percent and shall continue an annual reduction of up to 5 per- cent until she determines that the State no longer is out of compli- ance. 300 Conference agreement The conference agreement follows the House bill, with the modification that a new penalty provision is added for States that fail to meet the requirement to not sanction, for failure to perform work, single parents who prove they cannot find child care for a child under age 6. 62. PENALTIES\u2014FAILURE TO COMPLY WITH 5-YEAR LIMIT ON ASSISTANCE Present law Not relevant. House bill No specific provision. Senate amendment If the Secretary determines that a State during a fiscal year has not complied with the 5-year time limit (for TANF-funded aid), she is to reduce the basic TANF grant for the next year by 5 per- cent. Conference agreement The conference agreement follows the Senate amendment. 63. PENALTIES\u2014REASONABLE CAUSE EXCEPTION Present law Not applicable. (States are eligible for unlimited funds, but must match every dollar at a prescribed rate.) House bill The Secretary may (except for failure to timely repay the loan fund, failure to meet the maintenance-of-effort requirement and re- quirement to replace grant reductions caused by penalties) with- hold penalties against a State if she determines that the State had reasonable cause for failing to comply with the requirement. Senate amendment The Secretary may (except for failure to timely repay the loan fund or failure to meet the maintenance-of-effort requirement) withhold penalties against a State if she determines that the State had reasonable cause for the failure. Conference agreement The conference agreement follows the House bill. 64. PENALTIES\u2014CORRECTIVE COMPLIANCE PLAN Present law The penalty against a State for substantial noncompliance with child support rules is loss of AFDC matching funds. That pen- alty shall be suspended if a State submits and implements a cor- rective action plan. Also, if a State fails to achieve the JOBS par- ticipation rate specified in law, the Secretary may waive, in whole 301 or part, the reduction in matching funds, provided the State has submitted a proposal likely to achieve the applicable participation rate for the current year. House bill Before assessing a penalty against a State under any program established or modified by this Act, the Secretary must notify the State of the violation and allow the State an opportunity to enter into a corrective compliance plan within 60 days of the notification. The Federal government will have 60 days within which to accept or reject the plan; if it accepts the plan, and if the State corrects the violation, no penalty will be assessed. A plan submitted by a State is deemed to be accepted if the Secretary does not accept or reject the plan during the 60-day period after the plan is submit- ted. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 65. PENALTIES\u2014LIMITATION ON AMOUNT OF PENALTY Present law If the Secretary finds that a State has failed to comply with the State AFDC plan, he is to withhold all AFDC payments from the State (or limit payments to categories not affected by the non- compliance.) House bill In imposing the penalties described above, a State’s quarterly family assistance grant cannot be reduced by more than a total of 25 percent; if necessary, penalties in excess of 25 percent will be carried forward to the immediately following fiscal year. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 66. APPEAL OF ADVERSE DECISION Present law Current law (sec. 1116 of the Social Security Act) entitles a State to a reconsideration, which HHS must grant upon request, of any disallowed reimbursement claim for an item or class of items. The section also provides for administrative and judicial review, upon petition of a State, of HHS decisions about approval of State plans. At the option of a State, any plan amendment may be treat- ed as the submission of a new plan. 302 House bill The Secretary is required to notify the Governor of a State within five days of any adverse decision or action under Title IV A, including any decision about the State’s plan or imposition of a penalty. This section provides for administrative review by a De- partmental Appeals Board within HHS, requires a Board decision within 60 days after an appeal is filed, and provides for judicial re- view (by a United States district court) within 90 days after a final decision by the Board. The proposal also repeals the reference to Title IV A in section 1116. Senate agreement Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 67. DATA COLLECTION AND REPORTING\u2014GENERAL REPORTING REQUIREMENT Present law States are required to report the average monthly number of families in each JOBS activity, their types, amounts spent per fam- ily, length of JOBS participation and the number of families aided with AFDC\/JOBS child care services, the kinds of child care serv- ices provided, and sliding fee schedules. States that disallow AFDC for minor mothers in their own living quarters are required to re- port the number living in their parent’s home or in another super- vised arrangement. States also must report data (including num- bers aided, types of families, how long aided, payments made) for families who receive transitional Medicaid benefits. House bill The National Integrated Quality Control System draws month- ly samples of AFDC cases and reports extensive background infor- mation about each case in the sample. JOBS regulations require States to submit a sample of monthly unaggregated case record data. Senate amendment Each eligible State must collect on a monthly basis, and report to the Secretary on a quarterly basis, the following information on individual families receiving assistance: 1. the county of residence of the family; 2. whether a child receiving assistance or an adult in the family is disabled; 3. the ages of family members; 4. the number of individuals in the family, and the rela- tionship of each member to the youngest child; 5. the employment status and earnings of the employed adult; 6. the marital status of adults, including whether they are never married, widowed, or divorced; 303 7. the race and educational status of each adult; 8. the race and educational status of each child; 9. whether the family received subsidized housing, Medic- aid, food stamps, or subsidized child care, and if the latter two, the amount received; 10. the number of months the family has received each type of assistance under the program; 11. if the adults participated in, and the number of hours per week of participation in, the following activities: education; subsidized private sector employment; unsubsidized employ- ment; public sector employment, work experience, or commu- nity service; job search; job skills training or on-the-job train- ing; and vocational education; 12. information necessary to calculate the State work par- ticipation rates; 13. the type and amount of assistance received under the program, including the amount of and reason for any reduction of assistance (including sanctions); 14. any amount of unearned income received by any family member; and 15. the citizenship of family members. In addition to data on individual cases, States must report, on a sample of cases closed during the quarter, whether families left welfare because of employment, marriage, the five-year time limit on benefits, sanction, or State policy. States may use scientifically acceptable sampling methods ap- proved by the Secretary to estimate the required data elements. The Secretary shall provide States with case sampling plans and data collection procedures deemed necessary for statistically valid estimates. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 68. OTHER STATE REPORTING REQUIREMENTS Present law Regulations require each State to submit quarterly estimates of the total amount (and the Federal share) of expenditures for AFDC benefits and administration. Required quarterly reports in- clude estimates of the Federal share of child support collections made by the State. House bill The above quarterly report submitted by the State must also include: 1. a statement of the percentage of the funds paid to the State that is used to cover administrative costs or overhead; 2. a statement of the total amount expended by the State during the quarter on programs for needy families; 304 3. the number of noncustodial parents in the State who participated in work activities as defined in the proposal dur- ing the quarter; and 4. the total amount spent by the State for providing transi- tional services to a family that no longer receives assistance because of employment, along with a description of those serv- ices. The Secretary shall prescribe regulations necessary to define the data elements. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 69. DATA COLLECTION AND REPORTING\u2014ANNUAL REPORTS TO THE CONGRESS BY THE SECRETARY Present law The law requires the HHS Secretary to report promptly to Congress the results of State reevaluations of AFDC need stand- ards and payment standards required at least every 3 years. The Secretary is to annually compile and submit to Congress annual State reports on at-risk child care. The Family Support Act re- quires the Secretary to submit recommendations regarding JOBS performance standards by a deadline that was extended. House bill Not later than 6 months after the end of fiscal year 1997, and each fiscal year thereafter, the Secretary shall send Congress a re- port describing: 1. whether States are meeting minimum participation rates and whether they are meeting objectives of increasing employment and earnings of needy families, increasing child support collections, and decreasing out-of-wedlock pregnancies and child poverty; 2. demographic and financial characteristics of applicant families, recipient families, and those no longer eligible for temporary family assistance; 3. characteristics of each State program funded under this part; and 4. trends in employment and earnings of needy families with minor children. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 305 70. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES\u2014 GRANTS FOR INDIAN TRIBES Present law No provision for AFDC administration by Indian tribes. Indian and Alaska families with children receive AFDC benefits on the same terms as other families in their States, from State or local AFDC agencies. More than 80 tribes and native organizations in 24 States are JOBS grantees, having applied to conduct JOBS within 6 months of enactment of the law establishing it. Their JOBS allocation of funds is deducted from that of their State. House bill For each fiscal year 1997 through 2000, the Secretary shall pay tribal family assistance grants to eligible Indian tribes (and shall reduce the family assistance grant for the State(s) in which the tribe’s service area lies accordingly). The tribal family assistance grant is equal to the total amount of Federal payments to the State for fiscal year 1994 in AFDC benefits, AFDC Administration, Emergency Assistance, and JOBS funds for Indian families resid- ing in the tribal service area. The Secretary shall pay tribes that participated in the JOBS program in fiscal year 1995 a grant equal to their fiscal year 1994 JOBS funding ($7.6 million). This sum is appropriated for each of six fiscal years, 1996 through 2001. Senate amendment Same as the House bill, except for adding a fifth year, 2001, for tribal family assistance grants. Conference agreement The conference agreement follows the Senate amendment. 71. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES\u2014 THREE-YEAR TRIBAL FAMILY ASSISTANCE PLAN Present law Not applicable. House bill Indian tribes must submit a tribal family assistance plan to be eligible to receive a tribal family assistance grant. The plan must outline the tribe’s approach to providing welfare services during the 3-year period, specify how services will be provided, identify populations and areas served, provide that families will not receive duplicate assistance from a State or other tribal assistance plan, identify employment opportunities in the service area, and apply fiscal accountability provisions of the Indian Self-Determination and Education Assistance Act relating to the submission of a sin- gle-agency audit report required under current law. The Secretary must approve tribal family assistance plans that meet the above requirements. For each tribe receiving a family as- sistance grant and with the participation of the tribe, the Secretary shall establish minimum work requirements, time limits, and pen- 306 alties that are consistent with provisions of this Act and the eco- nomic conditions and resources of the tribe. Tribes will be subject to the same penalties as States for misusing funds, failing to pay back Federal loan funds, and failing to meet work participation rates. Tribes will also be required to abide by the same data collec- tion and reporting requirements as States. Unless excepted through a waiver, tribes in Alaska that receive tribal family assistance grants must operate a program comparable to the temporary family assistance program of the State of Alaska. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 72. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES\u2014RESEARCH Present law Section 1110 of the Social Security Act authorizes and appro- priates ”such sums as the Congress may determine” for making grants and contracts to (or jointly financed arrangements with) States and public or private organizations for cooperative research or demonstration projects, such as those relating to the prevention and reduction of dependency. House bill The Secretary shall conduct research on the effects, benefits, and costs of operating State programs of Temporary Assistance for Needy Families, including time limits for eligibility. The research shall include studies on the effects of different programs and the impacts of the programs on welfare dependency, illegitimacy, teen pregnancy, employment rates, child well-being, and other appro- priate issues. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 73. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES\u2014DEVELOPMENT AND EVALUATION OF INNOVATIVE APPROACHES TO REDUCING WEL- FARE DEPENDENCY AND INCREASING CHILD WELL-BEING Present law Section 1115 of the Social Security Act authorizes waiver of specified provisions of AFDC law for State experimental, pilot or demonstration projects to promote objectives of the law, including self-support of parents and stronger family life. 307 House bill The Secretary may assist States in developing, and shall evalu- ate, innovative approaches for reducing welfare dependency and in- creasing the well-being of minor children, using random assign- ments in these evaluations to the maximum extent feasible. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 74. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES\u2014 DISSEMINATION OF INFORMATION Present law No provision. House bill The Secretary shall develop innovative methods of disseminat- ing information on research, evaluations, and studies, including ways to facilitate sharing of information via computers and other technologies. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 75. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES\u2014ANNUAL RANKINGS OF STATES AND REVIEW OF MOST AND LEAST SUCCESS- FUL WORK PROGRAMS Present law No provision. House bill The Secretary shall rank annually States receiving family as- sistance grants in the order of their success in moving families off welfare and into work, reducing the caseload, and, when a prac- ticable method of calculation becomes available, diverting persons from applying to the program. The Secretary shall review annually the three most and three least successful programs under these cri- teria. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 308 76. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES\u2014ANNUAL RANKINGS OF STATES AND REVIEW OF ISSUES RELATING TO OUT-OF- WEDLOCK BIRTHS Present law No provision. House bill The Secretary shall rank States annually on the percentage of births to families on welfare that are out-of-wedlock and on net changes in the percentage of out-of-wedlock births to families on welfare. The Secretary must review the programs of the five high- est and five lowest ranking States under these criteria. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 77. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES\u2014STATE- INITIATED EVALUATIONS Present law In a 1994 public notice, HHS stated that it is committed to a broad range of evaluation strategies, including true experimental, quasi-experimental, and qualitative designs, for demonstrations op- erating under waivers. Section 1115(d) of the Social Security Act required the Secretary to enter into agreements with up to eight applicant States to conduct demonstration projects testing more lib- eral treatment of unemployed 2-parent families. The law stipulated that the States must evaluate costs and work effort results by use of experimental and control groups. House bill A State is eligible to receive funding to evaluate its family as- sistance program if it submits an evaluation design determined by the Secretary to be rigorous and likely to yield credible and useful information. The State must pay 10 percent of the study’s cost, un- less the Secretary waives this rule. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 78. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES\u2014REPORT ON CIRCUMSTANCES OF CERTAIN CHILDREN AND FAMILIES Present law No provision. 309 House bill Beginning 3 years after enactment, the Secretary shall submit an annual report to 4 congressional committees (Ways and Means, Economic and Educational Opportunities, Finance, and Labor and Human Resources) about children whose families reached the cash assistance time limit of TANF, families that include a child ineli- gible because of the family cap, children born to teenaged parents, and persons who became parents as teenagers after enactment. For each of these four groups, detailed information is required, includ- ing percentages that dropped out of school, are employed, have been convicted of a crime or judged delinquent, continue to partici- pate in TANF, have health insurance (and whether from private entity or government), and average family incomes. Senate amendment No provision. Conference agreement The conference agreement follows the House bill. 79. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES\u2014FUNDING OF STUDIES AND DEMONSTRATIONS Present law See ”Research” above. For Section 1115(a) ”waiver” projects (”Innovative Approaches” above) Federal cost neutrality over the life of a demonstration project is required. Note: The annual budgets of HHS request funds for policy re- search. The fiscal year 1997 budget seeks $9 million and lists these priority issues: issues related to welfare reform, health care, family support and independence, poverty, at-risk children and youth, aging and disability, science policy, and improved access to health care and support services. House bill For research, development and evaluation of innovative ap- proaches, State-initiated evaluation studies of the family assistance program, and for costs of operating and evaluating demonstration projects begun under the AFDC waiver process, this section author- izes to be appropriated, and appropriates, a total of $15 million an- nually for 6 fiscal years, 1996 through 2001. Half of this sum is al- located to the purposes described above in ”Research” and ”Innova- tive Approaches” and half to the other purposes. The Secretary may implement and evaluate demonstrations of innovative and promising strategies that provide one-time capital funds to establish, expand, or replicate programs, test performance- based funding, and test strategies in multiple States and types of communities. Senate amendment Same, except provides funding only in 4 fiscal years, 1998 through 2001. 310 Conference agreement The conference agreement follows the House bill, with the modification to appropriate for the years 1996 through 2002. 80. CHILD POVERTY RATES Present law No provision. House bill No provision. Senate amendment Not later than 90 days after enactment, the governor of a State shall submit to the Secretary a statement of the child poverty rate in the State. Annually thereafter, the governor shall report the child poverty rate to the Secretary. If the rate increases by 5 per- cent or more as a result of changes made by the Act, the State shall prepare a corrective action plan to reduce the incidence of child poverty. Conference agreement The conference agreement follows the Senate amendment on the submission of reports on child poverty rates and the corrective action plans. The conference agreement follows the House bill on provisions in the Senate amendment that provide the Secretary of HHS with the authority to alter State plans. 81. STUDY BY THE CENSUS BUREAU Present law No provision. House bill The Census Bureau must expand the Survey of Income and Program Participation (SIPP) to evaluate the impact of welfare re- forms made by this title on a random national sample of recipients and, as appropriate, other low-income families. The study should focus on the impact of welfare reform on children and families, and should pay particular attention to the issues of out-of-wedlock birth, welfare dependency, the beginning and end of welfare spells, and the causes of repeat welfare spells. $10 million per year for 7 years (1996 2002) is appropriated for this study. Senate amendment Same provision, except that the $10 million annual appropria- tion is for only 5 years (fiscal years 1998 2002). Conference agreement The conference agreement follows the House bill. 311 82. WAIVERS Present law Section 1115 of the Social Security Act authorizes the HHS Secretary to waive specified requirements of State AFDC plans in order to enable a State to carry out any experimental, pilot, or demonstration project that the Secretary judges likely to assist in promoting the program’s objectives. Some 38 States have received waivers from the Clinton Administration for welfare reforms, as of late May 1996. House bill This section provides that terms of AFDC waivers in effect, or approved, as of September 30, 1995, will continue until their expi- ration, except that beginning with fiscal year 1996 a State operat- ing under a waiver shall receive the block grant described under Section 403 in lieu of any other payment provided for in the waiv- er. The section also allows for continuation, under certain condi- tions of waivers on or approved before July 1, 1997, on the basis of applications made before enactment of the new program. States have the option to terminate waivers before their expi- ration, but projects that are ended prematurely must be summa- rized in written reports. A State that submits a request to end a waiver within 90 days after the adjournment of the first regular session of the State legislature that begins after the date of enact- ment will be held harmless for accrued cost neutrality liabilities in- curred under the waiver. The Secretary is directed to encourage any State now operating a waiver to continue the project and to evaluate its result or effect. A State may elect to continue one or more individual waivers. Senate amendment Same. Conference agreement The conference agreement follows the Senate amendment, with the modification that such waivers may only apply to the geo- graphical areas of the State and to the specific program features for which the waiver was granted. All geographical areas of the State and program features of the State program not specifically covered by the waiver must conform to this part. Conferees urge the Secretary to approve the Wisconsin comprehensive welfare re- form waiver request (published in the Federal Register on June 10, 1996) by September 1, 1996. 83. ADMINISTRATION (AND REDUCTION IN FEDERAL WORKFORCE) Present law An Assistant Secretary for Family Support, appointed by the President by and with consent of the Senate, is to administer AFDC, child support enforcement, and the Jobs Opportunities and Basic Skills (JOBS) program. 312 House bill The provision for an Assistant Secretary for Family Support now found in section 417 of Part A of the Social Security Act is re- tained but modified to remove the reference to the JOBS program, which is repealed. No requirements to reduce workforce at HHS. Senate amendment The Temporary Assistance for Needy Families (TANF) block grant program and the child support enforcement program shall be administered by an Assistant Secretary for Family Support. The HHS Secretary must reduce the number of positions within the De- partment by 245 equivalent full-time equivalent (FTE) positions re- lated to the conversion of AFDC, Emergency Assistance, and Jobs into TANF and by 60 FTE managerial positions. In general, it re- quires the Secretary to reduce by 75 percent the number of FTE positions that relate to any direct spending program, or any pro- gram funded through discretionary spending that is converted into a block grant program under the bill and to reduce FTE depart- ment management positions similarly (on the basis of the portion of the Department’s total appropriation represented by programs converted to block grants). Conference agreement The conference agreement follows the Senate amendment. 84. LIMITATION ON FEDERAL AUTHORITY Present law No provision. House bill No officer or employee of the Federal Government may regu- late the conduct of States under this part or enforce any provision of this part, except to the extent expressly provided in this part. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 85. DEFINITIONS\u2014ADULT Present law No provision. House bill An individual who is not a minor child. Senate amendment Same. 313 Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 86. DEFINITIONS\u2014MINOR CHILD Present law No provision. A dependent child is defined as a needy child who is under age 18 (19, at State option, if a full time student in a secondary school or equivalent level of vocational and technical training and expected to complete school before age 19). House bill An individual who has not attained 18 years of age or has not attained 19 years of age and is a full-time student in a secondary school (or in the equivalent level of vocational or technical train- ing). Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 87. DEFINITIONS\u2014FISCAL YEAR Present Law No provision. House Bill Any 12-month period ending on September 30 of a calendar year. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 88. DEFINITIONS\u2014INDIAN, INDIAN TRIBE, AND TRIBAL ORGANIZATION Present law For JOBS purposes, an Indian tribe is defined as any tribe, band, Nation, or other organized group of Indians that is recog- nized as eligible for special programs and services of the U.S. be- cause of their status as Indians. An Alaska native organization is any organized group of Alaska natives eligible to operate a Federal program under P.L. 93 638 or that group’s designee. House bill With the exception of specified Indian tribes in Alaska, these terms have the meaning given in the Indian Self-Determination and Education Assistance Act. 314 Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 89. DEFINITIONS\u2014STATE Present law For purposes of AFDC, the term ”State” means the 50 States, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, and American Samoa. The last jurisdic- tion has not implemented AFDC. House bill Except as otherwise specifically provided (e.g., regarding the provision of population growth funds and contingency funds), the term ”State” means the 50 States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, and American Samoa. Senate amendment Same, except adds to this definition an option for a State to contract to provide services: The term ”State” includes administra- tion and provision of services under the family assistance program and under the programs of child welfare, foster care and adoption assistance, family preservation, and independent living, through contracts with charitable, religious or private organizations, and provision of aid by means of certificates, vouchers, or other forms of disbursement redeemable by these organizations. See item 92. Conference agreement The conference agreement follows the House bill. 90. ADDITIONAL GRANTS TO PUERTO RICO, THE VIRGIN ISLANDS, GUAM, AND AMERICAN SAMOA; LIMITATION ON TOTAL PAYMENTS Present law Under current law, the territories are eligible for 75 percent matching grants for their expenditures on cash welfare for adult assistance (i.e., assistance for needy persons who are aged, blind, or disabled), Aid to Families with Dependent Children (AFDC), Emergency Assistance (EA), Foster Care and Adoption Assistance, the Job Opportunities and Basic Skills (JOBS) program, and the Family Preservation program (Title IV B, subpart 2). These match- ing grants are limited by caps on Federal payments. The territories also receive grants under the child welfare services (Title IV B, subpart 1) program. [Note.\u2014Although eligible, territories do not claim foster care and adoption assistance funds.] The law places a ceiling on total payments for AFDC, aid to needy aged, blind or disabled adults, and foster care and adoption assistance to Puerto Rico\u2014$82 million, the Virgin Islands\u2014$2.8 315 million, Guam\u2014$3.8 million, and American Samoa (AFDC, foster care, and adoption assistance)\u2014$1 million. House bill The proposal retains but increases aggregate welfare ceilings in each of the territories and combines the individual programs into a single block grant. The new ceilings would apply to aggre- gate spending for cash aid for needy families (TANF), cash aid to needy aged, blind or disabled adults, and child protection (child welfare and family preservation services). The proposal authorizes territories to transfer funds among these programs. Maximum po- tential fiscal year payments (including both the capped mandatory payments listed below and the authorization of discretionary grants) are as follows: Puerto Rico\u2014$113.5 million; Guam\u2014$5.2 million; U.S. Virgin Islands\u2014$4.0 million; and American Samoa\u2014 $1.3 million. To receive mandatory ceiling amounts (capped entitlements), territories must spend from their own funds in a fiscal year as much as they did in fiscal year 1995 for cash aid to needy families, and cash aid to needy aged, blind, or disabled adults. Federal matching funds, at a 75 percent rate, would reimburse territories for expenditures above their fiscal year 1995 base level, but below the Federal cap. Mandatory ceiling amounts: Puerto Rico\u2014$105.5 million; Guam, $4.9 million; Virgin Islands, $3.7 million; and American Samoa, $1.1 million. Senate amendment The proposal retains but increases aggregate welfare ceilings in each of the territories and, in effect, combines all but IV B serv- ices (child welfare services and family preservation) into a single block grant. The new ceilings would apply to aggregate spending for cash aid for needy families (TANF), cash aid to needy aged, blind, or disabled adults, and foster care and adoption assistance. The proposal authorizes territories to transfer funds among these programs. To receive the new ceiling amounts (capped entitlements), ter- ritories must spend from their own funds in a fiscal year for cash aid to needy families and cash aid to needy aged, blind, or disabled adults. Federal matching funds, at a 75 percent rate, would reim- burse them for expenditures above their fiscal year 1995 base level, but below the Federal cap. Mandatory ceiling amounts\u2014Puerto Rico\u2014$102 million; Guam, $4.7 million; Virgin Islands, $3.6 mil- lion; and American Samoa, $1 million. (Current law and funding arrangements are retained for IV B programs.) Conference agreement The conference agreement generally follows the Senate amend- ment. The conference agreement adds a provision specifying that States may use Title XX funds to provide vouchers to families los- ing TANF block grant assistance due to a State-imposed family cap. 316 91. REPEAL OF PROVISIONS REQUIRING DISAPPROVAL OF MEDICAID PLANS OR DENIAL OF SAME MEDICAID PAYMENTS TO STATES THAT REDUCE WELFARE PAYMENT LEVELS Present law If a State reduces AFDC ”payment levels” below those of May 1, 1988, the Secretary shall not approve the State’s Medicaid plan. If a State reduces AFDC payment levels below those of July 1, 1987, Medicaid matching funds shall be disallowed for required services to pregnant women and children not enrolled in AFDC but eligible for Medicaid on grounds of low income. House bill The House proposal repeals provisions that impose Medicaid sanctions upon States that reduce AFDC payment levels. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 92. SERVICES PROVIDED BY CHARITABLE, RELIGIOUS, AND PRIVATE ORGANIZATIONS Present law The Child Care and Development Block Grant (CCDBG) Act prohibits use of any financial assistance provided through any grant or contract for any sectarian purpose or activity. In general, the CCDBG requires religious nondiscrimination, but it does allow a sectarian organization to require employees to adhere to its reli- gious tenets and teachings. House bill The proposal authorizes States to administer and provide fam- ily assistance services (and services under SSI, the child protection block grant program, foster care, adoption assistance, and inde- pendent living programs) through contracts with charitable, reli- gious, or private organizations. Under this provision, religious orga- nizations would be eligible, on the same basis as any other private organization, to provide assistance as contractors or to accept cer- tificates and vouchers so long as their programs are implemented consistent with the Establishment Clause of the Constitution. States may pay recipients by means of certificates, vouchers, or other forms of disbursement that are redeemable with such private organizations. The proposal provides that, except as otherwise allowed by law, a religious organization administering the program may not discriminate against beneficiaries on the basis of religious belief or refusal to participate in a religious practice. States must provide an alternative provider for a beneficiary who objects to the religious character of the designated organization. 317 Nothing in this section shall be construed to preempt any pro- vision of a State constitution or State statute that prohibits or re- stricts the expenditure of State funds in or by religious organiza- tions. Senate amendment Same provision, except that administration by charitable, reli- gious, and private organizations is authorized only for TANF and SSI. Conference agreement The conference agreement follows the House bill. 93. CENSUS DATA ON GRANDPARENTS AS PRIMARY CAREGIVERS FOR THEIR GRANDCHILDREN Present law No provision. House bill The Secretary of Commerce shall expand the Census Bureau’s question (for the decennial census and the mid-decade census) con- cerning households with both grandparents and their grand- children so as to distinguish between households in which a grand- parent temporarily provides a home and those where the grand- parent serves as primary caregiver. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 94. REPORT ON DATA PROCESSING Present law No provision. (State child support plans may provide for estab- lishment of a statewide automated data processing and information retrieval system.) House bill The Secretary must report to Congress within six months on the status of automatic data processing systems in the States and on what would be required to produce a system capable of tracking participants in public programs over time and checking case records across States to determine whether some individuals are participating in public programs in more than one State. The re- port should include a plan for building on the current automatic data processing system to produce a system capable of performing these functions as well as an estimate of the time required to put the system in place and the cost of the system. Senate amendment Same. 318 Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 95. STUDY ON ALTERNATIVE OUTCOMES MEASURES Present law The Family Support Act required the Secretary to submit to Congress recommendations for JOBS performance standards re- garding ”specific measures of outcomes.” It said the standards should not be measured solely by levels of activity or participation. (The report, due Oct. 1, 1993, was submitted 1 year late.) House bill The Secretary must, in cooperation with the States, study and analyze measures of program outcomes (as an alternative to mini- mum participation rates) for evaluating the success of State block grant programs in helping recipients leave welfare. The study must include a determination of whether outcomes measures should be applied on a State or national basis and a preliminary assessment of the job placement performance bonus established in the Act. The Secretary must report findings to the Committee on Finance and the Committee on Ways and Means not later than September 30, 1998. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 96. WELFARE FORMULA FAIRNESS COMMISSION Present law No provision. AFDC funds are not distributed by formula. States are entitled to reimbursement, at matching rates inversely related to their per capita income squared, for all AFDC benefits and AFDC-related child care spending (but not ”at-risk” child care). Federal funds received by a State are a function of its AFDC bene- fit levels, caseloads, and matching rate. House bill No provision. Senate amendment Establishes a welfare formula fairness commission to make recommendations on funding formulas, bonus payments, and work requirements of the new TANF program. Commission is to have 15 members, 3 each appointed by the President, Senate Majority Leader, Senate Minority Leader, House Speaker, and House Minor- ity Leader. It is to report to Congress by Sept. 1, 1998, either mak- ing recommendations for change or giving notice that none is need- ed. 319 Conference agreement The conference agreement follows the House bill. 97. CONFORMING AMENDMENTS TO THE SOCIAL SECURITY ACT Present law No provision. House bill This section makes a series of technical amendments, including the repeal of the JOBS program, that conform provisions of the proposal with various titles of the Social Security Act. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 98. CONFORMING AMENDMENTS TO THE FOOD STAMP ACT OF 1977 AND RELATED PROVISIONS Present law No provision. House bill This section makes a series of technical amendments that con- form provisions of the proposal with various titles of the Food Stamp Act and other related provisions. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 99. CONFORMING AMENDMENTS TO OTHER LAWS Present law No provision. House bill This section makes a series of amendments that conform provi- sions of the proposal to the Unemployment Compensation Amend- ments of 1976, the Omnibus Budget Reconciliation Act of 1987, the Housing and Urban-Rural Recovery Act of 1983, the Tax Equity and Fiscal Responsibility Act of 1982, the Social Security Amend- ments of 1967, the Stewart B. McKinney Homeless Assistance Amendments Act of 1988, the Higher Education Act of 1965, the Carl D. Perkins Vocational and Applied Technology Education Act, the Elementary and Secondary Education Act of 1965, Public Law 99-88, the Internal Revenue Code of 1986, the Wagner-Peyser Act, the Job Training Partnership Act, the Low-Income Home Energy 320 Assistance Act of 1981, the Family Support Act of 1988, the Bal- anced Budget and Emergency Deficit Control Act of 1985, the Im- migration and Nationality Act, the Head Start Act, and the School- to-Work Opportunities Act of 1994. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 100. DEVELOPMENT OF PROTOTYPE OF COUNTERFEIT-RESISTANT SOCIAL SECURITY CARD REQUIRED Present law No provision. House bill The Commissioner of Social Security is required to develop a prototype of a counterfeit-resistant Social Security card. The Com- missioner must report to Congress on the cost of issuing a tamper- proof card for all persons over a three, five, and 10-year period. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 101. COMMUNITY STEERING COMMITTEES DEMONSTRATION PROJECTS Present law No provision. House bill No provision. Senate amendment Requires the Secretary to enter into agreements with up to 5 applicant States to conduct demonstration projects designed to help TANF parents move into the nonsubsidized workforce. Duties of the committee: identify and create unsubsidized jobs for TANF re- cipients; propose and implement solutions to work barriers; assess needs of the children and provide services to ensure that the chil- dren enter school ready to learn and stay in school. A primary re- sponsibility of the committee shall be to help assure that parents who have obtained work retain their jobs. Activities may include counseling, emergency day care, sick day care, transportation, pro- vision of clothing, housing assistance, or any other needed help. Not later than Oct. 1, 2002, the Secretary shall report to Congress on the project results. 321 Conference agreement The conference agreement follows the House bill. 102. DISCLOSURE OF RECEIPT OF FEDERAL FUNDS Present law No provision. House bill Under certain circumstances specified public funds received by nonprofit, tax-exempt 501(c) organizations, must be publicly dis- closed. When a 501(c) organization that accepts Federal funds under the Personal Responsibility and Work Opportunity Act (other than those provided under Titles IV, XVI, and XX of the So- cial Security Act) makes any communication intended to promote public support or opposition to any governmental policy (Federal, State or local) through any broadcasting station, newspaper, maga- zine, outdoor advertising facility, direct mailing, or any other type of general public advertising, the communication must state: ”This was prepared and paid for by an organization that accepts taxpayer dollars.” Senate amendment Applies the fund disclosure rule to all Federal funds under the Personal Responsibility and Work Opportunity Act. (This provision was deleted because of the Byrd rule.) Conference agreement The conference agreement follows the Senate amendment (no provision as a result of the Byrd rule). 103. MODIFICATIONS TO THE JOB OPPORTUNITIES FOR CERTAIN LOW- INCOME INDIVIDUALS PROGRAMS Present law The Family Support Act of 1988 (Sec. 505) directed the Sec- retary to enter into agreement with between 5 and 10 nonprofit or- ganizations to conduct demonstrations to create job opportunities for AFDC recipients and other low-income persons. For these projects, $6.5 million was authorized to be appropriated for each fiscal year, 1990 1992. House bill The word ”demonstration” is struck from the description of these projects; the projects are converted to grant status. The pro- vision requires the Secretary to enter into agreements with non- profit organizations to conduct projects that create job opportuni- ties for recipients of family assistance and other persons with in- come below the poverty guideline. $25 million annually is author- ized for these projects. Senate amendment Same. 322 Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 104. CONFORMING AMENDMENTS TO MEDICAID Present law House bill Provides for continued application of AFDC standards and methodologies for certain families, entitling them to Medicaid. Al- lows cost-of-living adjustments in income standards above level of July 16, 1996. See ”Prohibitions; Requirements\u2014Medicaid” above. Senate amendment Same except that States may use less restrictive income stand- ards and methodologies than under current law. Conference agreement The conference agreement follows the House bill. 105. EFFECTIVE DATE; TRANSITION RULE Present law No provision. House bill Except as otherwise provided, this title and the amendments made by it take effect on July 1, 1997. Penalties (with the major exception of penalties for misuse of Federal family assistance grant funds) will not take effect until July 1, 1997, or six months after the State plan is received by the Secretary, whichever is later. Within 90 days of enactment, the Secretary of HHS, the Com- missioner of Social Security and other heads of appropriate agen- cies shall submit to appropriate congressional committees. Nec- essary technical and conforming amendments. States may opt to begin their block grant program before July 1, 1997, in which case the State is entitled to receive no more than the State family assistance grant for the entire fiscal year; block grant payments will be made pro rata based on the number of days remaining in the fiscal year after the Secretary first received the State plan. The submission of a State plan is deemed to constitute the State’s acceptance of the family assistance grant (including pro rata reductions for a partial fiscal year) and the termination of the individual entitlement to benefits under the AFDC program. Effec- tive October 1, 1996, no individual or family shall be entitled to any benefits or services under any State plan under part A or F of Title IV of the Social Security Act (as in effect on September 30, 1995). The amendments made do not apply with respect to powers, duties, penalties and other considerations applicable to aid, assist- ance or services provided before the effective date, or with respect to administrative actions and proceedings that commenced before the effective date. Federal and State officials may use scientifically acceptable statistical sampling techniques in closing out accounts. 323 Each State shall complete the filing of all claims within 2 years after the date of enactment. The person serving as Assistant Sec- retary for Family Support within HHS on the day before the effec- tive date of this title will continue to serve in that position until a successor is named, performing functions provided under current law and having powers and duties provided in Section 103 of this bill. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. TITLE II: SUPPLEMENTAL SECURITY INCOME 1. REFERENCE TO THE SOCIAL SECURITY ACT Present law No provision. House bill Any reference in this title expressed in terms of an amendment to or repeal of a section or other provision is made to the Social Security Act. Senate amendment Identical to House bill. Conference agreement The conference agreement follows the House bill. Subtitle A\u2014Eligibility Restrictions 2. DENIAL OF SSI BENEFITS TO INDIVIDUALS FOUND TO HAVE FRAUDU- LENTLY MISREPRESENTED RESIDENCE IN ORDER TO OBTAIN BENE- FITS SIMULTANEOUSLY IN 2 OR MORE STATES Present law Current law states that any person who knowingly and will- fully makes or causes to be made any false statements or misrepre- sentations in applying for or continuing to receive Supplemental Security Income (SSI) payments may be subject to a civil monetary penalty or be fined or imprisoned pursuant to title 18, U.S. Code. House bill Any person convicted in Federal court or State court of having fraudulently misrepresented residence in order to obtain benefits or services from two or more States under title IV, title XV, title XIX, or the Food Stamp Act of 1977, or benefits in 2 or more States from the SSI program, is ineligible for SSI benefits for 10 years. In addi- tion, an official of the court in which the individual was convicted is required to notify the Commissioner of such conviction. 324 Senate amendment Identical to House Bill. Conference agreement The conference agreement follows the House bill. 3. DENIAL OF SSI BENEFITS FOR FUGITIVE FELONS AND PROBATION AND PAROLE VIOLATORS Present law Current law provides safeguards which restrict the use or dis- closure of information concerning SSI applicants or recipients to purposes directly connected with the administration of the SSI pro- gram or other federally-funded programs. House bill No individual who is fleeing to avoid prosecution, custody or confinement after conviction for a crime (or an attempt to commit a crime) that is a felony (or, in New Jersey, a high misdemeanor), or who violates probation or parole imposed under Federal or State, law shall be eligible for SSI benefits. The Social Security Administration (SSA) shall furnish the cur- rent address, Social Security number, and photograph (if applica- ble) of a recipient to any Federal, State, or local law enforcement officer who is pursuing a fugitive felon or parole or probation viola- tor. This provision applies also to a recipient sought by an officer because the recipient has information necessary to the officer’s offi- cial duties. Senate amendment Identical to House Bill. Conference agreement The conference agreement follows the House bill with technical modification. 4. TREATMENT OF PRISONERS Implementation of Prohibition Against Payment of Benefits to Prisoners Present law Current law prohibits prisoners from receiving benefits while incarcerated. Federal, State, or county or local prisons are required to make available, upon written request, the name and Social Secu- rity account number of any individual who is confined in a penal institution or correctional facility and convicted of any crime pun- ishable by imprisonment of more than 1 year. House bill The Commissioner shall enter into an agreement with any in- terested State or local institution (defined as a jail, prison, other correctional facility, or institution where the individual is confined due to court order) under which the institution shall provide monthly the names, Social Security account numbers, dates of 325 birth, confinement dates, and other identifying information. The Commissioner shall pay to the institution for each eligible individ- ual who becomes ineligible $400 if the information is provided within 30 days of the individual becoming an inmate. The payment is $200 if the information is furnished after 30 days but within 90 days. In addition, the Computer Matching and Privacy Protection Act of 1988 shall not apply to the information exchanged pursuant to this contract. The Commissioner is authorized to provide, on a reimbursable basis, information obtained pursuant to agreements to any Federal or federally assisted cash, food, or medical assistance program for eligibility purposes. The dollar amounts paid to the institution shall be reduced by 50 percent if the Commissioner is also required to make a payment with respect to the same individual based on eligibility for Social Security disability insurance benefits. Payments to institutions shall be made from funds otherwise available for the payment of benefits. Senate amendment The Senate amendment is similar to the House bill, however, it deletes all references to OASDI programs (due to Senate rule) and does not include the provision for the Commissioner to provide information to other Federal or federally assisted programs. Conference agreement The conference agreement follows the House bill, except that all OASDI references are deleted. Denial of SSI Benefits for 10 Years to a Person Found To Have Fraudulently Obtained SSI Benefits While in Prison Present law No provision. House bill No provision. Senate amendment Denies benefits for 10 years (beginning the date of release from prison) to a person found to have fraudulently obtained SSI bene- fits while in prison. This provision is effective on the date of enact- ment. Conference agreement The conference agreement follows the House bill (i.e., no provi- sion). 326 Elimination of OASDI Requirement that Confinement Stem From Crimes Punishable by Imprisonment for More Than 1 Year Present law Bars Social Security benefits from prisoners convicted of any crime punishable by imprisonment of more than a year, not just felonies. House bill Replaces ”an offense punishable by imprisonment for more than 1 year” with ”a criminal offense” and deletes other language. Effective for benefits payable more than 180 days after the date of enactment. It bars Social Security benefits from persons confined, throughout a month, to (1) a penal institution or (2) other institu- tion if the person is found guilty but insane. Senate amendment No provision, due to Senate rule. Conference agreement The conference agreement follows the Senate amendment (i.e., no provision). Study of Other Potential Improvements in the Collection of Information Respecting Public Inmates Present law No provision. House bill The Commissioner shall conduct a study of the desirability, feasibility, and cost of establishing a system for courts to furnish the Commissioner information regarding court orders and requiring that State and local jails, prisons, and other institutions enter into agreements with the Commissioner by means of an electronic or similar data exchange system. The report of this study shall be submitted to the responsible Committees not later than 1 year after enactment. Not later than October 1, 1998, the Commissioner of Social Se- curity shall provide to the responsible Committees of Congress a list of institutions that are and are not providing information to the Commissioner in accordance with these provisions. Senate amendment The Senate amendment is identical to the House bill except uses the term ”contract” instead of ”agreement.” There is no provision for the Commissioner to provide a list of institutions who are or are not in compliance with these provisions. Conference agreement The conference agreement follows the House bill. 327 5. EFFECTIVE DATE OF APPLICATION FOR BENEFITS Present law The application of an individual for SSI benefits is effective on the later of the date the application is filed or the date the individ- ual first becomes eligible for such benefits. House bill Changes the effective date of application to the later of the first day of the month following the date the application is filed or the date the individual first becomes eligible for such benefits. The provision expands SSA’s authority to issue an immediate cash ad- vance to individuals faced with financial emergencies. Effective for applications filed on or after the date of enactment. Senate amendment Identical to House bill. Conference agreement The conference agreement follows the House bill with technical modifications. Subtitle B\u2014Benefits for Disabled Children 6. DEFINITION AND ELIGIBILITY RULES Definition of Childhood Disability Present law There is no definition of childhood disability in the statute. In- stead, the statute prescribes that an individual under age 18 shall be considered disabled for purposes of eligibility for SSI if that indi- vidual has an impairment or combination of impairments of ”com- parable severity” which would result in a work disability in an adult. This impairment or combination of impairments must be ex- pected to result in death or to last for a continuous period of not less than 12 months. House bill This section adds a new statutory definition of childhood dis- ability: an individual under the age of 18 is considered as disabled if the individual has a medically determinable physical or mental impairment, which results in marked and severe functional limita- tions, and which can be expected to result in death or which has lasted or can be expected to last for at least a continuous period of not less than 12 months. The Commissioner shall ensure that the combined effects of all physical or mental impairments of an individual are taken into ac- count in determining whether an individual is disabled. In addi- tion, the Commissioner shall ensure that the regulations prescribed by these provisions provide for the evaluation of children who can- not be tested because of their young age. 328 Senate amendment Identical to House bill regarding the new definition of disabil- ity. The provision does not include language regarding combined impairments or evaluation of children who cannot be tested be- cause of their young age. Conference agreement The conference agreement follows the Senate amendment. The conferees intend that only needy children with severe disabilities be eligible for SSI, and the Listing of Impairments and other cur- rent disability determination regulations as modified by these pro- visions properly reflect the severity of disability contemplated by the new statutory definition. In those areas of the Listing that in- volve domains of functioning, the conferees expect no less than two marked limitations as the standard for qualification. The conferees are also aware that SSA uses the term ”severe” to often mean ”other than minor” in an initial screening procedure for disability determination and in other places. The conferees, however, use the term ”severe” in its common sense meaning. In addition, the conferees expect that SSA will properly ob- serve the requirements of section 1614(a)(3)(F) of the Social Secu- rity Act and ensure that the combined effects of all the physical or mental impairments of an individual under age 18 are taken into account in making a determination regarding eligibility under the definition of disability. The conferees note that the 1990 Supreme Court decision in Zebley established that SSA had been previously remiss in this regard. The conferees also expect SSA to continue to use criteria in its Listing of Impairments and in the application of other determination procedures, such as functional equivalence, to ensure that young children, especially children too young to be test- ed, are properly considered for eligibility of benefits. The conferees recognize that there are rare disorders or emerg- ing disorders not included in the Listing of Impairments that may be of sufficient severity to qualify for benefits. Where appropriate, the conferees remind SSA of the importance of the use of functional equivalence disability determination procedures. Nonetheless, the conferees do not intend to suggest by this def- inition of childhood disability that every child need be especially evaluated for functional limitations, or that this definition creates a supposition for any such examination. Under current procedures for writing individual listings, level of functioning is an explicit consideration in deciding which impairment, with certain medical or other findings, is of sufficient severity to be included in the List- ing. Nonetheless, the conferees do not intend to limit the use of functional information, if reflecting sufficient severity and is other- wise appropriate. The conferees contemplate that Congress may revisit the defi- nition of childhood disability and the scope of benefits, if deemed appropriate, and have provided elsewhere for studies on these is- sues. 329 Requests for Comments To Improve Disability Evaluation Present law No provision. House bill No provision. Senate amendment Requires the Commissioner to request comments in the Fed- eral Register regarding improvements to the disability evaluation and determination procedures for individuals under age 18 to en- sure the comprehensive assessment of such individuals. Conference agreement The conference agreement follows the House bill (i.e., no provi- sion). Changes to SSI Childhood Regulations Present law Under the disability determination process for children, SSA first determines if a child meets or equals the ”Listing of Impair- ments” in Federal regulations. Under the Listings that relate to mental disorders, maladaptive behavior may be scored twice, in do- mains of social functioning and of personal\/behavior functioning. Under the disability determination process for children, indi- viduals who do not meet or equal the Listing of Impairments are subject to an ”Individualized Functional Assessment” (IFA). This assessment is intended to determine whether, or to what extent, a child can engage in age-appropriate activities. If the child cannot, the child may be determined disabled. House bill The Commissioner of Social Security shall eliminate references in the Listing of Impairments to maladaptive behavior among med- ical criteria for evaluation of mental and emotional disorders in the domain of personal\/behavioral function. The Commissioner of Social Security shall discontinue use of the Individualized Functional Assessment for children set forth in the Code of Federal Regulations. Senate amendment Identical to House bill. Conference agreement The conference agreement follows the House bill. Medical Improvement Review Standard as it Applies to Individuals Under the Age of 18 Present law No provision. 330 House bill This section contains technical modifications to the medical im- provement review standard based on the new definition of child- hood disability. Senate amendment Identical to the House bill. Conference agreement The conference agreement follows the House bill. Effective dates Present law No provision. House bill Changes in eligibility rules apply to new applications and pending requests for administrative or judicial review on or after the date of enactment, without regard to whether regulations have been issued. No later than 1 year after the date of enactment, the Commis- sioner shall redetermine the eligibility of any child receiving bene- fits on the date of enactment who would lose eligibility under these provisions. Benefits of current recipients will continue until their redeter- mination. Should a child be found ineligible, their benefits will end following redetermination. No later than January 1, 1997, the Commissioner must notify individuals whose eligibility for SSI benefits will terminate. The Commissioner must report to Congress within 180 days re- garding progress made in implementing the SSI children’s provi- sions. The Commissioner shall submit final regulations to the Com- mittees of jurisdiction of Congress for their review at least 45 days before they become effective. Senate amendment Identical to the House bill, except that benefits of current re- cipients will continue until the later of July 1, 1997, or the date of redetermination. The Senate amendment also includes language which authorizes and appropriates $300 million to remain available for fiscal years 1997 1999 for the Commissioner to conduct con- tinuing disability reviews (CDRs) and redeterminations. Conference agreement The conference agreement follows the Senate amendment with modification to authorize additional administrative funding for SSA: $150 million for fiscal year 1997 and $100 million for fiscal year 1998, to conduct SSI CDRs and redeterminations. The funding of CDRs and redeterminations will follow the usual appropriation process, except that the amounts above a base funding level will not be subject to discretionary caps. 331 7. ELIGIBILITY REDETERMINATIONS AND CONTINUING DISABILITY REVIEWS Present law Current law specifies that the Commissioner must reevaluate under adult disability criteria the eligibility of at least one-third of SSI children who turn age 18 in each of the fiscal years 1996, 1997, and 1998 (the CDR must be completed before these children reach age 19) and report to Congress no later than October 1, 1998. House bill At least once every 3 years the Commissioner must conduct CDRs of children receiving SSI benefits. For children who are eligi- ble for benefits and whose medical condition is not expected to im- prove, the requirement to perform such reviews does not apply (un- less the Commissioner decides otherwise). At the time of review the parent or guardian must present evidence demonstrating that the recipient is and has been receiving appropriate treatment for her disability. The eligibility for all children qualifying for SSI benefits must be redetermined using the adult criteria within 1 year after turn- ing 18 years of age. The review will be considered a substitute for any other review required under the changes made in this section. The ”minimum number of reviews” and the ”sunset” provisions of section 207 of the Social Security Independence and Program Im- provements Act of 1994 are eliminated. A review must be conducted 12 months after the birth of a child whose low birth weight is a contributing factor to the child’s disability. At the time of review, the parent or guardian must present evidence demonstrating that the recipient is and has been receiving appropriate treatment for his disability. Senate amendment Identical to House bill. Conference agreement The conference agreement follows the House bill. 8. ADDITIONAL ACCOUNTABILITY REQUIREMENTS Disposal of Resources for Less Than Fair Market Value Present law No provision. House bill The bill delays eligibility for any child applicant whose parents or guardians, in order to qualify a child for benefits, dispose of as- sets for less than fair market value within 36 months of the date of application. The provision stipulates that any assets in a trust in which the child (i.e., parent or representative payee) has control shall be considered assets of the child and subject to the 36-month ”look-back” rule. The delay (in months) is equal to the amount of assets divided by the SSI standard benefit. This provision is effec- tive 90 days after the date of enactment. 332 Senate amendment No provision. Conference agreement The conference agreement follows the Senate amendment (i.e., no provision). Treatment of Assets Held in Trust Present law No provision. Under current operating policy, a trust is not considered a resource if the SSI recipient does not have the legal authority to access trust assets for his or her own food, clothing, or shelter. House bill Stipulates that in determining the resources of an individual under the age of 18, a revocable trust (i.e., the person has legal ac- cess to the assets of the trust) must be considered a resource avail- able to the individual. In the case of an irrevocable trust, if there are any circumstances under which payment from the trust could be made to or for the benefit of the individual, then such payments are to be considered as resource available to the individual. The Commissioner of Social Security may waive these provisions if the Commissioner determines, on the basis of criteria prescribed in reg- ulations, that such application would be an undue hardship on the individual. Any earnings of, or additions to the principal of the trust would be considered income if they are available to the individual. Senate amendment No provision. Conference agreement The conference agreement follows the Senate amendment (i.e., no provision). Requirement To Establish Account Present law No provision. House bill Requires the representative payee (i.e., the parent) of an indi- vidual under the age of 18 to establish an account in a financial institution for the receipt of past-due SSI payments if the lump- sum payment amounts to more than 6 times the maximum month- ly SSI payment (including any State supplement). A representative payee shall use the funds in the account for the following expenses: education or job skills training; personal needs assistance; special equipment or housing modifications related to the child’s disability; medical treatment; appropriate therapy or rehabilitation; or any other item or service that the Commissioner determines is appro- priate. 333 Once the account is established the representative payee may deposit any past-due benefits owed to the recipient and any other funds representing an SSI underpayment provided the amount is more than the maximum monthly SSI benefit payment. The funds in these accounts would not be counted as a re- source and the interest and other earnings on the account would not be considered income in determining SSI eligibility. Senate amendment Identical to House provision, except allows rather than man- dates the representative payee to use the funds for allowable ex- penses. Conference agreement The conference agreement follows the House bill. 9. REDUCTION IN CASH BENEFITS PAYABLE TO INSTITUTIONALIZED IN- DIVIDUALS WHOSE MEDICAL COSTS ARE COVERED BY PRIVATE IN- SURANCE Present law Federal law stipulates that when individuals enter a hospital or other medical institution for which more than half of the bill is paid by the Medicaid program, their monthly SSI benefit is reduced to $30 per month. This personal needs allowance is intended to pay for small personal expenses, with the cost of maintenance and med- ical care provided by the Medicaid program. House bill Children in medical institutions whose medical costs are cov- ered by private insurance would be treated the same as children whose bills are currently paid by Medicaid (that is, their monthly SSI cash benefit would be reduced to $30 per month). Senate amendment Identical to House bill. Conference agreement The conference agreement follows the House bill. 10. REGULATIONS Present law No provision. House bill The Commissioner of Social Security and the Secretary of HHS will prescribe necessary regulations within three months after en- actment. Senate amendment Identical to House bill. Conference agreement The conference agreement follows the House bill. 334 Subtitle C\u2014Additional Enforcement Provisions 11. INSTALLMENT PAYMENT OF LARGE PAST-DUE SSI BENEFITS Present law No provision. House bill If an individual is eligible for past-due benefits (after any with- holding for reimbursement to a State for interim assistance) in an amount which exceeds 12 times the maximum monthly benefit pay- able to an eligible individual (currently $470) or couple (currently $705) (plus any State supplementary payments), benefits will be paid in 3 installments made at 6-month intervals. The first and second installments may not exceed 12 times the maximum month- ly benefit payable. Installment caps may be extended by certain debt (food, clothing, shelter, or medically necessary services, sup- plies, or equipment, or medicine) or the purchase of a home. In- stallment payments shall not apply to individuals whose medical impairment is expected to result in death in 12 months or for an individual who is ineligible and is likely to remain ineligible for the next 12 months. Senate amendment Identical to House bill. Conference agreement The conference agreement follows the House bill. 12. RECOVERY OF SSI OVERPAYMENTS FROM SOCIAL SECURITY BENEFITS Present law Generally, when an overpayment of Social Security benefits is made, recovery shall be made by adjusting future payments or by recovering the overpayment from the individual. House bill If the Commissioner is unable to recover the overpayment through future payment adjustments or direct recovery, the Com- missioner may decrease any OASI or SSDI payment to the individ- ual or their estate. As a result of this action, no individual may be- come eligible for SSI or eligible for increased SSI benefits. Senate amendment No provision (due to Senate rule). Conference agreement The conference agreement follows the Senate amendment (i.e., no provision). 13. REGULATIONS Present law No provision. 335 House bill The Commissioner of Social Security and the Secretary of HHS will prescribe necessary regulations within 3 months after enact- ment. Senate amendment Identical to House bill. Conference agreement The conference agreement follows the House bill. 14. REPEAL OF MAINTENANCE OF EFFORT REQUIREMENTS APPLICABLE TO OPTIONAL STATE PROGRAMS FOR SUPPLEMENTATION OF SSI Present law Since the beginning of the SSI program, States have had the option to supplement (with State funds) the Federal SSI payment. Subsequently, Congress passed section 1618 of the Social Security Act which in effect requires States to maintain such optional pay- ments or lose eligibility for Medicaid funds. The purpose of section 1618 of the Social Security Act was to encourage States to pass along to SSI recipients the amount of any Federal SSI benefit in- crease. Section 1618 allows States to comply with the ”pass along\/ maintenance of effort” provision by either maintaining their State supplementary payment levels at or above March 1983, levels or by maintaining their supplementary payment spending so that total annual Federal and State expenditures will be at least equal to what they were in the prior 12-month period, plus any Federal cost-of-living increase, provided the State was in compliance for that period. House bill Repeals the maintenance of effort requirements in Section 1618 applicable to optional State programs for supplementation of SSI benefits, effective on the date of enactment. Senate amendment No provision, due to Senate rule. Conference agreement The conference agreement follows the Senate amendment (i.e., no provision). Subtitle D\u2014Studies Regarding Supplemental Security Income Program 15. ANNUAL REPORT ON THE SUPPLEMENTAL SECURITY INCOME PROGRAM Present law The Social Security Administration collects and publishes lim- ited data on the SSI program. 336 House bill The Commissioner of Social Security must prepare and provide to the President and the Congress an annual report on the SSI pro- gram, which includes specified information and data. The report is due May 30 of each year. Senate amendment Identical to the House bill, except stipulates the inclusion of historical and correct data on prior enrollment by public assistance recipients. Conference agreement The conference agreement follows the House bill, modified by the Senate amendment. 16. STUDY OF DISABILITY DETERMINATION PROCESS Present law No provision. House bill Within 90 days of enactment, the Commissioner must contract with the National Academy of Sciences or another independent en- tity to conduct a comprehensive study of the disability determina- tion process for SSI and SSDI. The study must examine the valid- ity, reliability and consistency with current scientific standards of the Listings of Impairments cited above. The study must also ex- amine the appropriateness of the definitions of disability (and pos- sible alternatives) used in connection with SSI and SSDI, and the operation of the disability determination process, including the ap- propriate method of performing comprehensive assessments of indi- viduals under age 18 with physical or mental impairments. The Commissioner must issue interim and final reports of the findings and recommendations of the study within 18 months and 24 months, respectively, from the date of contract for the study. Senate amendment No provision, due to Senate rule. Conference agreement The conference agreement follows the Senate amendment (i.e., no provision). 17. STUDY BY GENERAL ACCOUNTING OFFICE Present law No provision. House bill No later than January 1, 1999, the Comptroller General of the United States must study and report on the impact of the amend- ments and provisions made by this bill, and extra expenses in- curred by families of children receiving benefits not covered by other Federal, State, or local programs. 337 Senate amendment Identical to House bill. Conference agreement The conference agreement follows the House bill. 18. NATIONAL COMMISSION ON THE FUTURE OF DISABILITY Present law No provision. House bill This section establishes a new Commission on the future of disability. The Commission must study all matters related to the nature, purpose and adequacy of all Federal programs for the disabled (and especially SSI and SSDI), including: projected growth in the num- ber of individuals with disabilities; possible performance standards for disability programs; the adequacy of Federal rehabilitation re- search and training; and the adequacy of policy research available to the Federal government and possible improvements. The Com- mission must submit to the President and the proper Congressional committees recommendations and possible legislative proposals effecting needed program changes. The Commission is to be composed of 15 members who are ap- pointed by the President and Congressional leadership and who serve for the life of the Commission. Members are to be chosen based on their education, training or experience, with consideration for representing the diversity of individuals with disabilities in the U.S. The Commission membership will also reflect the general in- terests of the business and taxpaying community. The Commission will have a director, appointed by the Chair, and appropriate staff, resources, and facilities. The Commission may conduct public hearings and obtain infor- mation from Federal agencies necessary to perform its duties. The Commission must issue an interim report to Congress and the President not later than 1 year prior to terminating. A final public report must be submitted prior to termination. The Commission will terminate 2 years after first having met and named a chair and vice chair. This section authorizes the appropriation of such funds as are necessary to carry out the purposes of the Commission. Senate amendment No provision, due to Senate rule. Conference agreement The conference agreement follows the Senate amendment (i.e., no provision). 338 TITLE III: CHILD SUPPORT ENFORCEMENT 1. REFERENCE TO THE SOCIAL SECURITY ACT Present law No provision. House bill Unless otherwise specified, any reference in this title to an amendment to or repeal of a section or other provision is to the So- cial Security Act. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. Subtitle A\u2014Eligibility for Services; Distribution of Payments 2. STATE OBLIGATION TO PROVIDE CHILD SUPPORT ENFORCEMENT SERVICES Present law States are required to establish paternity for children born out of wedlock if they are recipients of AFDC or Medicaid, and to ob- tain child and spousal support payments from noncustodial parents of children receiving AFDC, Medicaid benefits, or foster care main- tenance payments. States must provide child support collection or paternity determination services to persons not otherwise eligible if the person applies for services. Federal law requires States to co- operate with other States in establishing paternity (if necessary), locating absent parents, collecting child support payments, and car- rying out other child support enforcement functions. In cases in which a family ceases to receive AFDC, States are required to pro- vide appropriate notice to the family and continue to provide child support enforcement services without requiring the family to apply for services or charging an application fee. House bill States must provide services, including paternity establish- ment and establishment, modification, or enforcement of support obligations, for children receiving benefits from the Temporary As- sistance for Needy Families block grant (TANF), foster care main- tenance payments, Medicaid, and any child of an individual who applies for services. States must enforce support obligations with respect to children in their caseload and the custodial parents of such children. States must also make child support enforcement services available to individuals not residing within the State on the same terms as to individuals residing within the State. States are not required to provide services to families if the State deter- mines, taking into account the best interests of the child, that good cause and other exceptions exist. The provision also makes minor technical amendments to section 454 of the Social Security Act. 339 When a family ceases to receive benefits from the TANF block grant, States are required to provide appropriate notice to the fam- ily and continue to provide child support enforcement services without requiring the family to apply for services or charging an application fee. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 3. DISTRIBUTION OF CHILD SUPPORT COLLECTIONS Present law Federal law requires that child support collections be distrib- uted as follows: First, up to the first $50 in current support is paid to the AFDC family (a ”disregard” that does not affect the family’s AFDC benefit or eligibility status). Second, the Federal and State governments are reimbursed for the AFDC benefit paid to the fam- ily in that month. Third, if there is money left, the family receives it up to the amount of the current month’s child support obligation. Fourth, if there is still money left, the State keeps it to reimburse itself for any arrearages owed to it under the AFDC assignment (with appropriate reimbursement of the Federal share of the collec- tion to the Federal government). If no arrearages are owed the State, the money is used to pay arrearages to the family; such mon- eys are considered income under the AFDC program and would re- duce the family’s AFDC benefit. To receive AFDC benefits, a custodial parent must assign to the State any right to collect child support payments. This assign- ment covers current support and any arrearages that accumulated before the family began receiving public assistance, and lasts as long as the family receives AFDC. Some States are required to provide monthly supplemental payments to AFDC recipients who have less disposable income now than they would have had in July 1975 because child support is paid to the child support agency instead of directly to the family. States required to make these supplemental payments are often re- ferred to as ”fill-the-gap” States. These States pay less assistance than their full need standard, and allow recipients to use child sup- port income to make up all or part of the difference between the payment made by the State and the State’s need standard. House bill Several changes in the distribution rules under current law are made by this section. The $50 passthrough to families on AFDC is ended. In addition, distribution law is changed so that, beginning October 1, 1997, collections on arrearages that accumulated during the period after the family leaves welfare are paid to the State if the money was collected through the tax intercept and to the fam- ily if collected by any other method. Distribution law is also changed so that beginning on October 1, 2000, arrearages that ac- 340 cumulated during the period before the family went on welfare are paid to the State if the money was collected through the tax inter- cept and to the family if collected by any other method. (Note: These new distribution rules require the assignment rules for pre- welfare arrearages to be changed so that families can be paid be- fore States if the money was collected by a method other than the tax intercept; this change in assignment rules was made in Title I and will appear in Section 408(a)(3)(B) of the revised Social Secu- rity Act.) By October 1, 1998, the Secretary must present a report to the Congress concerning whether post-assistance arrearages have helped mothers avoid welfare and about the effectiveness of the new distribution rules. All assignments of support in effect when this proposal is en- acted must remain in effect. Several terms, including ”assistance from the State”, ”Federal share”, and ”State share” are defined. If States retain less money from collections than they retained in fiscal year 1995, States are allowed to retain the amount re- tained in fiscal year 1995. If a State follows a ”fill-the-gap” policy as outlined above, that State can continue to distribute funds to the family up to the amount needed to fill the gap. The provision also clarifies the rela- tionship between gap payments and both the $50 passthrough and the State hold harmless provision. Senate amendment Same, except Senate adds provision that stipulates that in the case of a family receiving assistance from an Indian tribe, the State distribute any support collected in accordance with any cooperative agreement between the State and the tribe. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment with the modification that the House accepts the Senate provision on Indian tribes. 4. PRIVACY SAFEGUARDS Present law Federal law limits the use or disclosure of information concern- ing recipients of Child Support Enforcement Services to purposes connected with administering specified Federal welfare programs. House bill States must implement safeguards against unauthorized use or disclosure of information related to proceedings or actions to estab- lish paternity or to establish or enforce child support. These safe- guards must include prohibitions on release of information where there is a protective order or where the State has reason to believe a party is at risk of physical or emotional harm from the other party. This provision is effective October 1, 1997. 341 Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 5. RIGHT TO NOTIFICATION OF HEARING Present law Most States have procedural due process requirements with re- spect to wage withholding. Federal law requires States to carry out withholding in full compliance with all procedural due process re- quirements of the State. House bill Parties to child support cases under Title IV D must receive notice of proceedings in which child support might be established or modified and must receive a copy of orders establishing or modi- fying child support (or a notice that modification was denied) with- in 14 days of issuance. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. Subtitle B\u2014Locate and Case Tracking 6. STATE CASE REGISTRY Present law Federal law requires that wage withholding be administered by a public agency capable of documenting payments of support and tracking and monitoring such payments. Federal law requires that child support orders be reviewed and adjusted, as appropriate, at least once every three years. House bill States must establish an automated State Case Registry that contains a record on each case in which services are being provided by the State agency, as well as each support order established or modified in the State on or after October 1, 1998. The Registry may be established by linking local case registries of support orders through an automated information network. The registry record will contain data elements on both parents, such as names, Social Security numbers and other uniform identi- fication numbers, dates of birth, case identification numbers, and any other data the Secretary may require. Each case record will contain the amount of support owed under the order and other amounts due or overdue (including inter- est or late payment penalties and fees), any amounts that have been collected and distributed, the birth date of any child for whom 342 the order requires the provision of support, and the amount of any lien imposed by the State. The State agency operating the registry will promptly estab- lish, maintain, update and regularly monitor case records in the registry with respect to which services are being provided under the State plan. Establishing and updating support orders will be based on administrative actions and administrative and judicial proceedings and orders relating to paternity and support, as well as on information obtained from comparisons with Federal, State, and local sources of information, information on support collections and distributions, and any other relevant information. The State automated system will be used to extract data for purposes of sharing and matching with Federal and State data bases and locator services, including the Federal Case Registry of Child Support Orders, the Federal Parent Locator Service, and Temporary Assistance for Needy Families and Medicaid agencies, as well as for conducting intrastate and interstate information com- parisons. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 7. COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS Present law No provision, but States may provide that, at the request of ei- ther parent, child support payments be made through the child support enforcement agency or the agency that administers the State’s income withholding system regardless of whether there is an arrearage. States must charge the parent who requests child support services a fee equal to the cost incurred by the State for these services, up to a maximum of $25 per year. House bill By October 1, 1998, State child support agencies are required to operate a centralized, automated unit for collection and disburse- ment of payments on child support orders enforced by the child support agency and payments on orders issued after December 31, 1993 which are not enforced by the State agency but for which in- come is subject to withholding. The specifics of how States will es- tablish and operate their State Disbursement Unit must be out- lined in the State plan. The State Disbursement Unit must be operated directly by the State agency, by two or more State agencies under a regional coop- erative agreement, or by a contractor responsible directly to the State agency. The State Disbursement Unit may be established by linking local disbursement units through an automated information network if the Secretary agrees that the system will not cost more, take more time to establish, nor take more time to operate than a single State system. All States, including those that operate a 343 linked system, must give employers one and only one location for submitting withheld income. The Disbursement Unit must be used to collect and disburse support payments, to generate orders and notices of withholding to employers, to keep an accurate identification of payments, to promptly distribute money to custodial parents or other States, and to furnish parents with a record of the current status of support payments (but States are not responsible for records that predate passage of this legislation). The Unit shall use automated proce- dures, electronic processes, and computer-driven technology to the maximum extent feasible, efficient, and economical. The Disbursement Unit must distribute all amounts payable within 2 business days after receiving money and identifying infor- mation from the employer or other source of periodic income, if suf- ficient information identifying the payee is provided. The Unit may retain arrearages in the case of appeals until they are resolved. States must use their automated system to facilitate collection and disbursement including at least: (1) transmission of orders and notices to employers within 2 days after receipt of the withholding notice; (2) monitoring to identify missed payments of support; and (3) automatic use of enforcement procedures when pay- ments are missed. It is the sense of Congress that in establishing a centralized unit for the collection of support payments, a State should choose the method of compliance which best meets the needs of parents, employers, and children. This section of the proposal will go into effect on October 1, 1998. States that process child support payments through local courts can continue court payments until September 30, 1999. Senate amendment Same, except Senate uses the term ”wages” rather than ”in- come” throughout this section. Senate amendment does not include the provision that States are not responsible for records that pre- date passage. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment with the modification that the term ”income” rath- er than ”wages” is used throughout this section. In addition, the House ”sense of the Congress” language was deleted. 8. STATE DIRECTORY OF NEW HIRES Present law In general, no provision. Section 1128 of the Social Security Act is an antifraud provision which excludes individuals and enti- ties that have committed fraud from participation in medicare and State health care programs. Section 1128A pertains to civil mone- tary penalties and describes the appropriate procedures and pro- ceedings for such penalties. 344 House bill State plans must include the provision that by October 1, 1997 States will operate a Directory of New Hires. Establishment. States are required to establish a State Direc- tory of New Hires to which employers and labor organizations in the State must furnish a report for each newly hired employee, un- less reporting could endanger the safety of the employee or com- promise an ongoing investigation or intelligence mission as deter- mined by the head of an agency. States that already have new hire reporting laws may continue to follow the provisions of their own law until October 1, 1998, at which time States must conform to Federal law. Employer Information. Employers must furnish to the State Directory of New Hires the name, address, and Social Security number of every new employee and the name, address, and identi- fication number of the employer. Multistate employers that report electronically or magnetically may report to the single State they designate; such employers must notify the Secretary of the name of the designated State. Agencies of the U.S. Government must re- port directly to the National Directory of New Hires (see below). Timing of Report. Employers must report new hire information within 20 days of the date of hire. Employers that report new hires electronically or by magnetic tape must file twice per month; re- ports must be separated by not less than 12 days and not more than 16 days. Reporting Format and Method. The report required in this sec- tion will be made on a W 4 form or the equivalent, and can be transmitted magnetically, electronically, or by first class mail. The decision of which reporting method to use is up to employers. Civil Money Penalties on Noncomplying Employers. States have the option of setting a civil money penalty which shall be not less than $25 or $500 if, under State law, the failure is the result of a conspiracy between the employer and employee. Entry of Employer Information. New hire information must be entered in the State data base within 5 business days of receipt from employer. Information Comparisons. By May 1, 1998, each State Direc- tory of New Hires must conduct automated matches of the Social Security numbers of reported employees against the Social Security numbers of records in the State Case Registry being enforced by the State agency and report the name, address, Social Security number, and the employer name, address, and identification num- ber on matches to the State child support agency. Transmission of Information. Within 2 business days of the entry of data in the registry, the State must transmit a withhold- ing order directing the employer to withhold wages in accord with the child support order. Within 3 days, the State Directory of New Hires must furnish employee information to the National Directory of New Hires for matching with the records of other State case reg- istries. The State Directory of New Hires must also report quar- terly to the National Directory of New Hires information on wages and unemployment compensation taken from the quarterly report to the Secretary of Labor now required by Title III of the Social Se- curity Act. 345 Other Uses of New Hire Information. The State child support agency must use the new hire information to locate individuals for purposes of establishing paternity as well as establishing, modify- ing, and enforcing child support obligations. New hire information must also be disclosed to the State agency administering the Tem- porary Assistance for Needy Families, Medicaid, Unemployment Compensation, Food Stamp, SSI, and territorial cash assistance programs for income eligibility verification, and to State agencies administering unemployment and workers’ compensation programs to assist determinations of the allowability of claims. State and local government agencies must participate in quarterly wage re- porting to the State employment security agency unless the agency performs intelligence or counterintelligence functions and it is de- termined that wage reporting could endanger the safety of the em- ployee or compromise an ongoing investigation or intelligence mis- sion. States may disclose new hire information to agencies working under contract with the child support agency. Disclosure to Certain Agents. States using private contractors are allowed to share information obtained from the Directory of New Hires with private entities working under contract with the State agency. Private contractors must comply with privacy safe- guards. Senate amendment Same, except under ”Other Uses of New Hire Information” Senate Amendment has no provision allowing States to share infor- mation with agencies working under contract with the State. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment with the modification that the House provision al- lowing private entities working under contract with child support agencies access to child support information is included. 9. AMENDMENTS CONCERNING INCOME WITHHOLDING Present law Since November 1, 1990, all new or modified child support or- ders that were being enforced by the State’s child support enforce- ment agency have been subject to immediate income withholding. If the noncustodial parent’s wages are not subject to income with- holding (pursuant to the November 1, 1990 provision), such par- ent’s wages would become subject to withholding on the date when support payments are 30 days past due. Since January 1, 1994, the law has required States to use immediate income withholding for nearly all new or modified support orders, regardless of whether a parent has applied for child support enforcement services. There are two circumstances in which income withholding does not apply: (1) one of the parents argues, and the court or administrative agen- cy agrees, that there is good cause not to do so, or (2) a written agreement is reached between both parents which provides for an alternative arrangement. States must implement procedures under which income withholding for child support can occur without the need for any amendment to the support order or for any further ac- 346 tion by the court or administrative entity that issued the order. States are also required to implement income withholding in full compliance with all procedural due process requirements of the State, and States must send advance notice to each nonresident parent to whom income withholding applies (with an exception for some States that had income withholding before enactment of this provision that met State due process requirements). States must extend their income withholding systems to include out-of-State support orders. House bill States must have laws providing that all child support orders issued or modified before October 1, 1996, which are not otherwise subject to income withholding, will become subject to income with- holding immediately if arrearages occur, without the need for judi- cial or administrative hearing. State law must also allow the child support agency to execute a withholding order through electronic means and without advance notice to the obligor. Employers must remit to the State Disbursement Unit, in a format prescribed by the Secretary, income withheld within five working days after the date such amount would have been paid to the employee. Employ- ers cannot take disciplinary action against employees subject to wage withholding. All child support orders subject to income with- holding, including those which are not part of the State IV D pro- gram, must be processed through the State Disbursement Unit. In addition, States must notify noncustodial parents that income with- holding has commenced and inform them of procedures for contest- ing income withholding. Employers must follow the withholding terms and conditions stated in the order; if the terms and condi- tions are not specified employers should follow those of the State in which the obligor lives. The section includes a definition of in- come to be used in interstate withholding and several conforming amendments to section 466 of the Social Security Act. Senate amendment Same, except employers must remit income withheld to the State disbursement unit within 7 rather than 5 days. There are also minor wording differences in the rules relating to income with- holding. There is also a difference in the House and Senate defini- tions of income. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment with the modifications that employers are given 7 days rather than 5 days to remit withheld income and that the House definition of income is followed. With respect to this provi- sion, ”timely-paid” is demonstrated by postmark, or in the case of electronic payment, the date the electronic transmission is proven to have been initiated by the employer. 10. LOCATOR INFORMATION FROM INTERSTATE NETWORKS Present law No provision. 347 House bill All State and the Federal Child Support Enforcement agencies must have access to the motor vehicle and law enforcement locator systems of all States. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 11. EXPANSION OF THE FEDERAL PARENT LOCATOR SERVICE Present law The law requires that the Federal Parent Locator Service (FPLS) be used to obtain and transmit information about the loca- tion of any absent parent when that information is to be used for the purpose of enforcing child support. Federal law also requires departments or agencies of the United States to be reimbursed for costs incurred in providing requested information to the FPLS. Information Comparisons and Other Disclosures. Upon re- quest, the Secretary must provide to an ”authorized person” (i.e., an employee or attorney of a child support agency, a court with ju- risdiction over the parties involved, the custodial parent, the legal guardian, or the child’s attorney) the most recent address and place of employment of any nonresident parent if the information is con- tained in the records of the Department of Health and Human Services or can be obtained from any other department or agency of the United States or of any State. The FPLS also can be used in connection with the enforcement or determination of child cus- tody, visitation, and parental kidnapping. Federal law requires the Secretary of Labor and the Secretary of Health and Human Serv- ices to enter into an agreement to give the FPLS prompt access to wage and unemployment compensation claims information useful in locating a noncustodial parent or his employer. Fees. ”Authorized persons” who request information from FPLS must be charged a fee. Restriction on Disclosure and Use. Federal law stipulates that no information shall be disclosed if the disclosure would contravene the national policy or security interests of the United States or the confidentiality of Census data. Quarterly Wage Reporting. The Secretary of Labor must pro- vide prompt access by the Secretary of HHS to wage and unem- ployment compensation claims information and data maintained by the Labor Department or State employment security agencies. House bill The purposes of the Federal Parent Locator Service are ex- panded. For the purposes of establishing parentage, establishing support orders or modifying them, or enforcing support orders, the Federal Parent Locator Service will provide information to locate individuals who owe child support or against whom an obligation is sought or to whom such an obligation is owed. Information in the 348 FPLS includes Social Security number, address, name and address of employer, wages and employee benefits (including information about health care coverage), and information about assets and debts. The provision also clarifies the statute so that parents with orders providing child custody or visitation rights are given access to information from the FPLS unless the State has notified the Sec- retary that there is reasonable evidence of domestic violence or child abuse or that the information could be harmful to the custo- dial parent or child. The Secretary is authorized to set reasonable rates for reim- bursing Federal and State agencies for the costs of providing infor- mation to the FPLS and to set reimbursement rates that State and Federal agencies that use information from the FPLS must pay to the Secretary. Federal Case Registry of Child Support Orders. Establishes within the FPLS an automated registry known as the Federal Case Registry of Child Support Orders. The Federal Case Registry con- tains abstracts of child support orders and other information speci- fied by the Secretary (such as names, Social Security numbers or other uniform identification numbers, and State case identification numbers) to identify individuals who owe or are owed support, or for or against whom support is sought to be established, and the State which has the case. States must begin reporting this informa- tion in accord with regulations issued by the Secretary by October 1, 1998. National Directory of New Hires. This provision establishes within the FPLS a National Directory of New Hires containing in- formation supplied by State Directories of New Hires. When fully implemented, the Federal Directory of New Hires will contain iden- tifying information on virtually every person who is hired in the United States. In addition, the FPLS will contain quarterly data supplied by the State Directory of New Hires on wages and Unem- ployment Compensation paid. The Secretary of the Treasury must have access to information in the Federal Directory of New Hires for the purpose of administering section 32 of the Internal Revenue Code and the Earned Income Credit. The information for the Na- tional Directory of New Hires must be entered within 2 days of re- ceipt, and requires the Secretary to maintain within the National Directory of New Hires a list of multistate employers that choose to send their report to one State and the name of the State so elect- ed. The Secretary must establish a National Directory of New Hires by October 1, 1997. Information Comparisons and Other Disclosures. The Sec- retary must verify the accuracy of the name, Social Security num- ber, birth date, and employer identification number of individuals in the Federal Parent Locator Service with the Social Security Ad- ministration. The Secretary is required to match data in the Na- tional Directory of New Hires against the child support order ab- stracts in the Federal Case Registry at least every 2 working days and to report information obtained from matches to the State child support agency responsible for the case within 2 days. The informa- tion is to be used for purposes of locating individuals to establish paternity, and to establish, modify, or enforce child support orders. The Secretary may also compare information across all components 349 of the FPLS to the extent and with the frequency that the Sec- retary determines will be effective. The Secretary will share infor- mation from the FPLS with several potential users including State agencies administering the Temporary Assistance for Needy Fami- lies program, the Commissioner of Social Security (to determine the accuracy of Social Security and Supplemental Security Income), and researchers under some circumstances. Fees. The Secretary must reimburse the Commissioner of So- cial Security for costs incurred in performing verification of Social Security information and States for submitting information on New Hires. States or Federal agencies that use information from FPLS must pay fees established by the Secretary. Restriction on Disclosure and Use. Information from the FPLS cannot be used for purposes other than those provided in this sec- tion, subject to section 6103 of the Internal Revenue Code (con- fidentiality and disclosure of returns and return information). Information Integrity and Security. The Secretary must estab- lish and use safeguards to ensure the accuracy and completeness of information from the FPLS and restrict access to confidential in- formation in the FPLS to authorized persons and purposes. Federal Government Reporting. Each department of the U.S. must submit the name, Social Security number, and wages paid the employee on a quarterly basis to the FPLS. Quarterly wage re- porting must not be filed for a Federal or State employee perform- ing intelligence or counter-intelligence functions if it is determined that filing such a report could endanger the employee or com- promise an ongoing investigation. Conforming Amendments. This section makes several conform- ing amendments to Titles III and IV of the Social Security Act, to the Federal Unemployment Tax Act, and to the Internal Revenue Code. Among the more important are that: State employment secu- rity agencies are required to report quarterly wage information to the Secretary of HHS or suffer financial penalties and that private agencies working under contract to State child support agencies can have access to certain specified information from IRS records under some circumstances. Requirement for Cooperation. The Secretaries of HHS and Labor must work together to develop cost-effective and efficient methods of accessing information in the various directories re- quired by this title; they must also consider the need to ensure the proper and authorized use of wage record information. Senate amendment Same, except under ”Information Comparisons and Other Dis- closures” the Senate amendment drops the requirement that the Social Security Administration must determine the accuracy of payments under the Social Security and SSI programs. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment with the modification that the agreement follows the Senate provision dropping the requirement that the Social Se- curity Administration determine the accuracy of Social Security and SSI payments. 350 12. COLLECTION AND USE OF SOCIAL SECURITY NUMBERS FOR USE IN CHILD SUPPORT ENFORCEMENT Present law Federal law requires that in the administration of any law in- volving the issuance of a birth certificate, States must require each parent to furnish their Social Security number for the birth records. The State is required to make such numbers available to child support agencies in accordance with Federal or State law. States may not place Social Security numbers directly on birth cer- tificates. House bill States must have procedures for recording the Social Security numbers of applicants on the application for professional licenses, commercial driver’s licenses, occupational licenses, and marriage li- censes. States must also record Social Security numbers in the records of divorce decrees, child support orders, and paternity de- termination or acknowledgment orders. Individuals who die will have their Social Security number placed in the records relating to the death and recorded on the death certificate. There are several conforming amendments to title II of the Social Security Act. Senate amendment Same, except difference in conforming amendment to Social Se- curity Act. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. Subtitle C\u2014Streamlining and Uniformity of Procedures 13. ADOPTION OF UNIFORM STATE LAWS Present law States have several options available for pursuing interstate child support cases including direct income withholding, interstate income withholding, and long-arm statutes which require the use of the court system in the State of the custodial parent. In addition, States use the Uniform Reciprocal Enforcement of Support Act (URESA) and the Revised Uniform Reciprocal Enforcement of Sup- port Act (RURESA) to conduct interstate cases. Federal law im- poses a Federal criminal penalty for the willful failure to pay past- due child support to a child who resides in a State other than the State of the obligor. In 1992, the National Conference of Commis- sioners on State Uniform Laws approved a new model State law for handling interstate child support cases. The new Uniform Inter- state Family Support Act (UIFSA) is designed to deal with deser- tion and nonsupport by instituting uniform laws in all 50 States that limit control of a child support case to a single State. This ap- proach ensures that only one child support order from one court or child support agency will be in effect at any given time. It also helps to eliminate jurisdictional disputes between States that are impediments to locating parents and enforcing child support orders 351 across State lines. As of February 1996, 26 States and the District of Columbia had enacted UIFSA. House bill By January 1, 1998, all States must have enacted the Uniform Interstate Family Support Act (UIFSA) and any amendments offi- cially adopted by the National Conference of Commissioners of Uni- form State Laws before January 1, 1998, and have the procedures required for its implementation in effect. States are allowed flexi- bility in deciding which specific interstate cases are pursued by using UIFSA and which cases are pursued using other methods of interstate enforcement. States must provide that an employer that receives an income withholding order follow the procedural rules that apply to the order under the laws of the State in which the noncustodial parent works. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment with additional clarifying provisions that conferees agreed to include at the request of the National Conference of Com- missioners of Uniform State Laws. The Commissioners asked con- ferees to make two changes in House and Senate provisions. More specifically, conferees agreed to drop language in the section on in- come withholding in interstate cases and to insert replacement lan- guage approved by the Commissioners. This provides specific in- structions to employers for rules to follow in processing interstate cases. Employers following these instructions are also provided with legal immunity. 14. IMPROVEMENTS TO FULL FAITH AND CREDIT FOR CHILD SUPPORT ORDERS Present law Federal law requires States to treat past-due support obliga- tions as final judgments that are entitled to full faith and credit in every State. This means that a person who has a support order in one State does not have to obtain a second order in another State to obtain support due should the debtor parent move from the issuing court’s jurisdiction. P.L. 103-383 restricts a State court’s ability to modify a support order issued by another State unless the child and the custodial parent have moved to the State where the modification is sought or have agreed to the modifica- tion. House bill The provision clarifies the definition of a child’s home State, makes several revisions to ensure that full faith and credit laws can be applied consistently with UIFSA, and clarifies the rules re- garding which child support orders States must honor when there is more than one order. 352 Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 15. ADMINISTRATIVE ENFORCEMENT IN INTERSTATE CASES Present law No provision. House bill States are required to have laws that permit them to send or- ders to and receive orders from other States. The transmission of the order itself serves as certification to the responding State of the arrears amount and of the fact that the initiating State met all pro- cedural due process requirements. In addition, each responding State must, without requiring the case to be transferred to their State, match the case against its data bases, take appropriate ac- tion if a match occurs, and send the collections, if any, to the initi- ating State. States must keep records of the number of requests they receive, the number of cases that result in a collection, and the amount collected. States must respond to interstate requests within five days. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 16. USE OF FORMS IN INTERSTATE ENFORCEMENT Present law No provision. House bill The Secretary of HHS, in consultation with State child support directors and not later than October 1, 1996, must issue forms that States must use for income withholding, for imposing liens, and for issuing administrative subpoenas in interstate cases. States must be using the forms by March 1, 1997. Senate amendment Same, except minor differences in wording. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 353 17. STATE LAWS PROVIDING EXPEDITED PROCEDURES Present law States must have procedures under which expedited processes are in effect under the State judicial system or under State admin- istrative processes for obtaining and enforcing support orders and for establishing paternity. Federal regulations provide a number of safeguards in expe- dited cases, such as requiring that the due process rights of the parties involved be protected. The Employee Retirement Income Security Act (ERISA) of 1974 supersedes any and all State laws. Under ERISA a noncusto- dial parent’s pension benefits can only be garnished or withheld if the custodial parent has a qualified domestic relations order. Simi- larly, a pension plan administrator is obligated to adhere to medi- cal support requirements only if the custodial parent has a quali- fied medical child support order. House bill States must adopt a series of procedures to expedite both the establishment of paternity and the establishment, enforcement, and modification of support. These procedures must give the State agency the authority to take the following actions, subject to due process safeguards, without the necessity of obtaining an order from any other judicial or administrative tribunal: (1) ordering genetic testing in appropriate cases; (2) issuing subpoenas to obtain information necessary to establish, modify or enforce an order, with appropriate sanc- tions for failure to respond to the subpoena; (3) requiring all entities in the State (including for-profit, nonprofit, and governmental employers) to provide information on employment, compensation and benefits of any employee or contractor in response to a request from the State IV D agency or the IV D agency of any other State, and to sanction failure to respond to such request; (4) obtaining access to a variety of public and private records including: vital statistics, State and local tax records, real and personal property, occupational and professional li- censes and records concerning ownership and control of cor- porations, partnerships and other business entities, employ- ment security records, public assistance records, motor vehicle records, corrections records, and, subject to the nonliability of these private entities and the issuance of an administrative subpoena, information in the customer records of public utili- ties and cable TV companies, and records of financial institu- tions; (5) directing the obligor or other payor to change the payee to the appropriate government entity in cases in which support is subject to an assignment or to a requirement to pay through the State Disbursement Unit; (6) ordering income withholding in certain IV D cases; (7) securing assets to satisfy arrearages: by intercepting or seizing periodic or lump sum payments from States or local agencies including Unemployment Compensation, workers’ 354 compensation, judgements, settlements, lottery winnings, as- sets held by financial institutions, and public and private re- tirement funds; by attaching and seizing assets held in finan- cial institutions; by attaching public and private retirement funds; and by imposing liens to force the sale of property; and (8) increasing automatically the monthly support due to in- clude amounts to offset arrears. Expedited procedures must include the following rules and au- thority applicable with respect to proceedings to establish paternity or to establish, modify, or enforce support orders: (1) Locator Information and Notice. Parties in paternity and child support actions must file and update information about identity, address, and employer with the tribunal and with the State Case Registry upon entry of the order. The tri- bunal can deem due process requirements for notice and serv- ice of process to be met in any subsequent action upon delivery of written notice to the most recent residential or employer ad- dress filed with the tribunal. (2) Statewide Jurisdiction. The child support agency and any administrative or judicial tribunal have the authority to hear child support and paternity cases, to exert Statewide ju- risdiction over the parties, and to grant orders that have State- wide effect; cases can also be transferred between local juris- dictions without additional filing or service of process. Except to the extent that the provisions related to expedited procedures are consistent with requirements of the ERISA qualified domestic relations orders and the qualified medical child support orders, the expedited procedures do not alter, amend, modify, inval- idate, impair or supersede ERISA requirements. The automated systems being developed by States are to be used, to the maximum extent possible, to implement expedited pro- cedures. Senate amendment Same, except for a modification that alters the nonliability of entities that share information with child support officials and eliminates the reference to administrative subpoenas. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment except that the agreement included the House pro- vision strengthening the nonliability of entities that share informa- tion with child support officials. Subtitle D\u2014Paternity Establishment 18. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT Present law Establishment Process Available from Birth Until Age 18. Fed- eral law requires States to have laws that permit the establish- ment of paternity until the child reaches age 18. As of August 16, 1984, these procedures would apply to a child for whom paternity has not been established or for whom a paternity action was 355 brought but dismissed because of statute of limitations of less than 18 years was then in effect in the State. Procedures Concerning Genetic Testing. Federal law requires States to implement laws under which the child and all other par- ties must undergo genetic testing upon the request of a party in contested cases. Voluntary Paternity Acknowledgement. Federal law requires States to implement procedures for a simple civil process for vol- untary paternity acknowledgment, including hospital-based pro- grams. Status of Signed Paternity Acknowledgement. Federal law re- quires States to implement procedures under which the voluntary acknowledgment of paternity creates a rebuttable presumption, or at State option, a conclusive presumption of paternity. Bar on Acknowledgement Ratification Proceedings. Federal law requires States to implement procedures under which voluntary ac- knowledgment is admissible as evidence of paternity and the vol- untary acknowledgment of paternity must be recognized as a basis for seeking a support order without requiring any further proceed- ings to establish paternity. Admissibility of Genetic Testing Results. Federal law requires States to implement procedures which provide that any objection to genetic testing results must be made in writing within a specified number of days before any hearing at which such results may be introduced into evidence. If no objection is made, the test results must be admissible as evidence of paternity without the need for foundation testimony or other proof of authenticity or accuracy. Presumption of Paternity in Certain Cases. Federal law re- quires States to implement procedures which create a rebuttable or, at State option, conclusive presumption of paternity based on genetic testing results indicating a threshold probability that the alleged father is the father of the child. Default Orders. Federal law requires States to implement pro- cedures that require a default order to be entered in a paternity case upon a showing of service of process on the defendant and any additional showing required by State law. House bill Establishment Process Available from Birth Until Age 18. States are required to have laws that permit paternity establish- ment until at least age 18 (or a higher limit at State option) even in cases that were previously dismissed because a statute of limita- tions of less than 18 years was then in effect. Procedures Concerning Genetic Testing. The child and all other parties, unless good cause provisions are met, must undergo ge- netic testing upon the request of a party if the request is supported by a sworn statement establishing a reasonable possibility of par- entage or nonparentage. When the tests are ordered by the State agency, States must pay the costs, subject to recoupment at State option from the father if paternity is established. Upon the request and advance payment by the contestant, States must seek addi- tional testing if the original test result is contested. Voluntary Paternity Acknowledgement. 356 (1) Simple Civil Process. States must have procedures that cre- ate a simple civil process for voluntary acknowledging paternity under which benefits, rights, and responsibilities of acknowledge- ment are explained to unwed parents before the acknowledgement is signed. (2) Hospital Program. States must have procedures that estab- lish a paternity acknowledgement program through hospitals. (3) Paternity Services. States must have procedures that re- quire the agency responsible for maintaining birth records to offer voluntary paternity establishment services. The Secretary must issue regulations governing voluntary paternity establishment services, including regulations on State agencies that may offer vol- untary paternity acknowledgement services and the conditions such agencies must meet. (4) Affidavit. States must develop their own voluntary acknowl- edgment form but the form must contain all the basic elements of a form developed by the Secretary. States must give full faith and credit to the forms of other States. Status of Signed Paternity Acknowledgement. (1) Inclusion in Birth Records. States must include the name of the father in the record of births to unmarried parents only if the father and mother have signed a voluntary acknowledgement of paternity or a court or administrative agency has issued an adju- dication of paternity. (2) Legal Finding. States must have procedures under which a signed acknowledgement of paternity is considered a legal finding of paternity unless rescinded within 60 days or the date of a judi- cial or administrative proceeding to establish a support order. (3) Contest. States must have procedures under which a pater- nity acknowledgment can be challenged in court only on the basis of fraud, duress, or material mistake of fact, with the burden of proof on the challenger. Bar on Acknowledgement Ratification Proceedings. No judicial or administrative proceedings are required or permitted to ratify a paternity acknowledgement which is not challenged by the parents. Admissibility of Genetic Testing Results. States must have pro- cedures for admitting into evidence accredited genetic tests, unless any objection is made in writing within a specified number of days, and if no objection is made, clarifying that test results are admissi- ble without the need for foundation or other testimony. Presumption of Paternity in Certain Cases. States must have laws that create a rebuttable or, at State option, conclusive pre- sumption of paternity when results from genetic testing indicate a threshold probability that the alleged father is the father of the child. Default Orders. A default order must be entered in a paternity case upon a showing of service of process on the defendant and any additional showing required by the State law. No Right to Jury Trial. State laws must state that parties in a contested paternity action are not entitled to a jury trial. In addition to all the above provisions that strengthen similar provisions of current law, the Committee report contains a number of new provisions that have no direct parallel in current law. These include: 357 Temporary Support Based on Probable Paternity. Upon motion of a party, State law must require issuance of a temporary support order pending an administrative or judicial determination of par- entage if paternity is indicated by genetic testing or other clear and convincing evidence. Proof of Certain Support and Paternity Establishment Costs. Bills for pregnancy, childbirth, and genetic testing must be admis- sible in judicial proceedings without foundation testimony and must constitute prima facie evidence of the cost incurred for such services. Standing of Putative Fathers. Putative fathers must have a reasonable opportunity to initiate a paternity action. Filing of Acknowledgement and Adjudications in State Registry of Birth Records. Both voluntary acknowledgements and adjudica- tions of paternity must be filed with the State registry of birth records for data matches with the central Case Registry of Child Support Orders. National Paternity Acknowledgement Affidavit. The Secretary is required to develop, in consultation with the States, the mini- mum requirements of an affidavit which includes the Social Secu- rity number of each parent to be used by States for voluntary ac- knowledgement of paternity. Senate amendment Same, except under ”Voluntary Paternity Acknowledgement,” the Senate amendment includes good cause exceptions. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment with modification that the good cause exceptions are dropped. 19. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT Present law States are required to regularly and frequently publicize, through public service announcements, the availability of child sup- port enforcement services. House bill States must publicize the availability and encourage the use of procedures for voluntary establishment of paternity and child sup- port. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 358 20. COOPERATION BY APPLICANTS FOR AND RECIPIENTS OF TEMPORARY FAMILY ASSISTANCE Present law AFDC applicants and recipients are required to cooperate with the State in establishing the paternity of a child and in obtaining child support payments unless the applicant or recipient is found to have good cause for refusing to cooperate. Under the ”good cause” regulations, the child support agency may determine that it is against the best interests of the child to seek to establish pater- nity in cases involving incest, rape, or pending procedures for adop- tion. Moreover, the agency may determine that it is against the best interest of the child to require the mother to cooperate if it is anticipated that such cooperation will result in the physical or emo- tional harm of the child, parent, or caretaker relative. House bill Individuals or their children who apply for or receive public as- sistance under the Temporary Assistance for Needy Families (TANF) program or the Medicaid program must cooperate, as de- termined by the State child support agency, with State efforts to establish paternity and establish, modify, or enforce a support order. State procedures must require both that applicants and re- cipients provide specific identifying information about the other parent and that applicants appear at interviews, hearings, and legal proceedings, unless the applicant or recipient is found to have good cause for refusing to cooperate. States must have ”good cause” exceptions and they must take into account the best interests of the child. The definition of good cause, and the determination of good cause in specific cases, can be accomplished by the State agen- cy administering TANF, child support enforcement, or Medicaid. States also must require the custodial parent and child to submit to genetic testing. States may not require the noncustodial parent to sign an acknowledgement of paternity or relinquish the right to genetic testing as a condition of cooperation. The State child sup- port agency must notify the agencies administering the TANF Block Grant and Medicaid programs if noncooperation is deter- mined. Senate amendment Same, except imposes a penalty for noncooperation. If it is de- termined that an individual is not cooperating, and the individual does not qualify for any good cause or other exception, then the State must deduct not less than 25 percent of the Title IV A assist- ance that otherwise would be provided to the family of the individ- ual; and the State may deny the family any Title IV A assistance. The Senate amendment also has references to Title XV not found in the House bill. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment except that the Senate penalty of 25 percent is in- cluded. This provision is included in Title I (Block Grants for Tem- porary Assistance for Needy Families) of the bill. 359 Subtitle E\u2014Program Administration and Funding 21. PERFORMANCE-BASED INCENTIVES AND PENALTIES Present law Incentive Adjustments to Federal Matching Rate. The Federal government reimburses approved administrative expenditures of States at a rate of 66 percent. In addition, the Federal government pays States an incentive amount ranging from six percent to 10 percent of both AFDC and non-AFDC collections. Conforming Amendments. No provision. Calculation of IV D Paternity Establishment Percentage. States are required to meet Federal standards for the establish- ment of paternity. The major standard relates to the percentage ob- tained by dividing the number of children in the State who are born out of wedlock, are receiving AFDC or child support enforce- ment services, and for whom paternity has been established by the number of children who are born out of wedlock and are receiving AFDC or child support enforcement services. To meet Federal re- quirements, this percentage in a State must be at least 75 percent or meet the following standards of improvement from the preceding year: (1) if the State paternity establishment ratio is between 50 and 75 percent, the State ratio must increase by 3 or more percent- age points from the ratio of the preceding year; (2) if the State ratio is between 45 and 50, the ratio must increase at least 4 percentage points; (3) if the State ratio is between 40 and 45 percent, it must increase at least 5 percentage points; and (4) if the State ratio is below 40 percent, it must increase at least 6 percentage points. If an audit finds that the State’s child support enforcement program has not substantially complied with the requirements of its State plan, the State is subject to a penalty. In accord with this penalty, the Secretary must reduce a State’s AFDC benefit payment by not less than 1 percent nor more than 2 percent for the first failure to comply; by not less than 2 percent nor more than 3 percent for the second consecutive failure to comply; and by not less than 3 percent nor more than 5 percent for third or subsequent consecutive failure to comply. House bill Incentive Adjustments to Federal Matching Rate. The Sec- retary, in consultation with State child support directors, must de- velop a proposal for a new incentive system that provides addi- tional payments to States (i.e., above the base matching rate of 66 percent) based on performance and report details of the new sys- tem to the Committees on Ways and Means and Finance by March 1, 1997. The Secretary’s new system must be revenue neutral. The current incentive system remains effective for fiscal years begin- ning before 2000. Conforming Amendments. Conforming amendments are made in Sections 458 of the Social Security Act. Calculation of IV D Paternity Establishment Percentage. States have the option of calculating the paternity establishment rate by either counting only unwed births in the State IV D case- load or by counting all unwed births in the State. The IV D pater- 360 nity establishment percentage for a fiscal year is equal to: (1) the total number of children in the State who were born out-of-wedlock, and who receive services under Part A or, at State option, Part D, and for whom paternity is acknowledged or established during the fiscal year, divided by (2) the total number of children born out-of- wedlock who receive services under Part A or E or, at State option, Part D. The Statewide paternity establishment percentage is simi- lar except that all out-of-wedlock births in the fiscal year in the State are in the denominator and all paternities established are in the numerator. The requirements for meeting the standard are the same as current law except the 75 percent rule is increased to 90 percent. States with a paternity establishment percentage of be- tween 75 percent and 90 percent must improve their performance by at least two percentage points per year. The noncompliance pro- visions of the child support program are modified so that the Sec- retary must take overall program performance into account. Senate amendment Same, except minor wording difference in amendment of Sec- tion 452(g)(2). Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 22. FEDERAL AND STATE REVIEW AND AUDITS Present law States are required to maintain a full record of child support collections and disbursements and to maintain an adequate report- ing system. The Secretary must collect and maintain, on a fiscal year basis, up-to-date State-by-State statistics on each of the services provided under the child support enforcement program. The Secretary is also required to evaluate the implementation of State child support en- forcement programs and conduct audits of these programs as nec- essary, but not less often than once every 3 years (or annually if a State has been found to be out of compliance with program rules). House bill States are required to annually review and report to the Sec- retary, using data from their automatic data processing system, both information adequate to determine the State’s compliance with Federal requirements for expedited procedures and timely case processing as well as the information necessary to calculate their levels of accomplishment and rates of improvement on the performance indicators in the proposal. The Secretary is required to determine the amount (if any) of incentives or penalties. The Secretary must also review State re- ports on compliance with Federal requirements and provide States with recommendations for corrective action. Audits must be con- ducted at least once every 3 years, or more often in the case of States that fail to meet Federal requirements. The purpose of the 361 audits is to assess the completeness, reliability, and security of data reported for use in calculating the performance indicators and to assess the adequacy of financial management of the State pro- gram. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 23. REQUIRED REPORTING PROCEDURES Present law The Secretary is required to assist States in establishing ade- quate reporting procedures and must maintain records of child sup- port enforcement operations and of amounts collected and dis- bursed, including costs incurred in collecting support payments. House bill The Secretary is required to establish procedures and uniform definitions for State collection and reporting of information nec- essary to measure State compliance with expedited processes. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 24. AUTOMATED DATA PROCESSING REQUIREMENTS Present law Federal law (P.L. 104 35) requires that by October 1, 1997, States have an operational automated data processing and infor- mation retrieval system designed to control, account for, and mon- itor all factors in the support enforcement and paternity determina- tion process, the collection and distribution of support payments, and the costs of all services rendered. The automated data processing system must be capable of pro- viding management information on all IV D cases from initial re- ferral or application through collection and enforcement. The auto- mated data processing system must also be capable of providing se- curity against unauthorized access to, or use of, the data in such system. To establish these automated data systems, the Federal government provided States with a 90 percent matching rate for the costs of development. This enhanced matching money expired on October 1, 1995. House bill States are required to have a single Statewide automated data processing and information retrieval system which has the capacity to perform the necessary functions and with the required fre- 362 quency, as described in this section. The State data system must be used to perform functions the Secretary specifies, including con- trolling and accounting for the use of Federal, State, and local funds and maintaining the data necessary to meet Federal report- ing requirements in carrying out the program. The system must maintain the requisite data for Federal reporting, calculate the State’s performance for purposes of the incentive and penalty provi- sions, and have in place systems controls to ensure the complete- ness, reliability, and accuracy of the data. To promote security of information, the State agency must have safeguards to protect the integrity, accuracy, and complete- ness of, and access to and use of, data in the automated systems including restricting access to passwords, monitoring of access to and use of the system, conducting automated systems training, and imposing penalties for unauthorized use or disclosure of confiden- tial data. The Secretary must prescribe final regulations for imple- mentation of this section no later than 2 years after the date of the enactment of this Act. The statutory provisions for State implementation of Federal automatic data processing requirements are revised to provide that, first, all requirements enacted on or before the date of enact- ment of the Family Support Act of 1988 are to be met by October 1, 1997. The requirements enacted on or before the date of enact- ment of this proposal must be met by October 1, 1999. The October 1, 1999 deadline will be extended by one day for each day by which the Secretary fails to meet the 2-year deadline for regulations. The Federal government will continue the 90 percent matching rate for 1996 and 1997 in the case of provisions outlined in advanced plan- ning documents submitted before September 30, 1995; the en- hanced match is also provided retroactively for funds expended since expiration of the enhanced rate on October 1, 1995. For fiscal years 1996 through 2001, the matching rate for the provisions of this section will be 80 percent. The Secretary must create procedures to cap payments to States to meet the new requirements at $400,000,000 over 6 years (fiscal years 1996 2001) to be distributed among States by a for- mula set in regulations which takes into account the relative size of State caseloads and the level of automation needed to meet ap- plicable automatic data processing requirements. Senate amendment Same, except that requirements enacted after the Family Sup- port Act must be met by October 1, 2000 (rather than October 1, 1999). Also, a difference in wording about payments in fiscal year 1998. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 363 25. TECHNICAL ASSISTANCE (AND FUNDING OF PARENT LOCATOR SERVICE) Present law Annual appropriations are made to cover the expenses of the Administration for Children and Families, which includes the Fed- eral Office of Child Support Enforcement (OCSE). Among OCSE’s administrative expenses are the costs of providing technical assist- ance to the States. House bill The Secretary can use 1 percent of the Federal share of child support collections on behalf of families in the Temporary Assist- ance for Needy Families program the preceding year to provide technical assistance to the States. Technical assistance can include training of State and Federal staff, research and demonstration programs, special projects of regional or national significance, and similar activities. The Secretary will receive 2 percent of the Fed- eral share of collections on behalf of TANF recipients the preceding year for operation of the Federal Parent Locator Service to the ex- tent that costs of the Parent Locator Service are not recovered by user fees. Senate amendment Same, except the effective date is October 1, 1997. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment except that the House effective date is followed. 26. REPORTS AND DATA COLLECTION BY THE SECRETARY Present law The Secretary is required to submit to Congress, not later than 3 months after the end of the fiscal year, a complete report on all child support enforcement activities. House bill In addition to current reporting requirements, the Secretary is required to report the following data to Congress in her annual re- port each fiscal year: (1) the total amount of child support payments collected; (2) the cost to the State and Federal governments of fur- nishing child support services; (3) the number of cases involving families that became in- eligible for aid under part A with respect to whom a child sup- port payment was received; (4) the total amount of current support collected and dis- tributed; (5) the total amount of past due support collected and dis- tributed; and (6) the total amount of support due and unpaid for all fis- cal years. 364 The Secretary also must report the compliance, by State, with IV D standards for responding to requests for child support assist- ance from other States and standards for distributing child support collections. Senate amendment Same, except minor difference in wording in amendment to Section 452(a)(10). Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 27. CHILD SUPPORT DELINQUENCY PENALTY Present law No provision. House bill States must impose an annual penalty of 10 percent on over- due support owed by noncustodial parents. The penalty is paid after the family has been repaid all arrearages and after the State has been repaid for welfare payments, if any, made to families. Senate amendment No provision. Conference agreement The conference agreement follows the Senate amendment by dropping this penalty provision. Subtitle F\u2014Establishment and Modification of Support Orders 28. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF CHILD SUPPORT ORDERS Present law A child support order legally obligates noncustodial parents to provide financial support for their child and stipulates the amount of the obligation and how it is to be paid. In 1984, P.L. 98 378 re- quired States to establish guidelines for establishing child support orders. In 1988, P.L. 100 485 made the guidelines binding on judges and other officials who had authority to establish support orders. P.L. 100 485 also required States to review and adjust indi- vidual child support orders once every three years under some cir- cumstances. States are required to notify both resident and non- resident parents of their right to a review. House bill States must review and, as appropriate, adjust child support orders at the request of the parents. In the case of orders being en- forced against parents whose children are receiving benefits under Title IV A of the Social Security Act, States may also review the order at their own option. No proof of change of circumstances is needed to initiate the review. States may adjust child support or- 365 ders by either applying the State guidelines and updating the award amount or by applying a cost of living increase to the order. In the latter case, both parties must be given 30 days after notice of adjustment to contest the results. States may use automated methods to identify orders eligible for review, conduct the review, identify orders eligible for adjustment, and apply the appropriate adjustment to the orders based on the threshold established by the State. States are required to give parties one notice of their right to request review and adjustment, which may be included in the order establishing the support amount. Senate amendment Major differences in the review and adjustment provisions; the House makes reviews optional while the Senate retains mandatory 3-year reviews of IV A cases as under current law; also other dif- ferences in wording. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. The compromise provision preserves the manda- tory review every 3 years if parents request a review but allows States some flexibility in reviewing child support cases in their welfare caseload. 29. FURNISHING CONSUMER REPORTS FOR CERTAIN PURPOSES RELATING TO CHILD SUPPORT Present law The Fair Credit Act requires consumer reporting agencies to include in any consumer report information on child support delin- quencies provided by or verified by a child support enforcement agency, which antedates the report by 7 years. House bill This section amends the Fair Credit Reporting Act. In response to a request by the head of a State or local child support agency (or a State or local government official authorized by the head of such an agency), consumer credit agencies must release informa- tion if the person making the request makes all of the following certifications: that the consumer report is needed to establish an individual’s capacity to make child support payments or determine the level of payments; that paternity has been established or ac- knowledged; that the consumer has been given at least 10 days no- tice by certified or registered mail that the report is being re- quested; and that the consumer report will be kept confidential, will be used solely for child support purposes, and will not be used in connection with any other civil, administrative, or criminal pro- ceeding or for any other purpose. Consumer reporting agencies must also give reports to a child support agency for use in setting an initial or modified award. Senate amendment Same. 366 Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 30. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL RECORDS Present law No provision. House bill Financial institutions are not liable to any person for informa- tion provided to child support agencies. Child support agencies can disclose information obtained from depository institutions only for child support purposes. There is no liability for disclosures that re- sult from good faith but erroneous interpretation of this statute. However, individuals who knowingly disclose information from fi- nancial records can have civil actions brought against them in Fed- eral district court; the maximum penalty is $1,000 for each disclo- sure or actual damages plus, in the case of willful disclosure result- ing from gross negligence, punitive damages, plus the costs of the action. Definitions of ”financial institution” and ”financial record” are included in this section. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. Subtitle G\u2014Enforcement of Support Orders 31. INTERNAL REVENUE SERVICE COLLECTION OF ARREARAGES Present law If the amount of overdue child support is at least $750, the In- ternal Revenue Service (IRS) can enforce the child support obliga- tion through its regular collection process, which may include sei- zure of property, freezing accounts, or use of other procedures if child support agencies request assistance according to prescribed rules (e.g., certifying that the delinquency is at least $750, etc.) House bill The Internal Revenue Code is amended so that no additional fees can be assessed for adjustment to previously certified amounts for the same obligor. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 367 32. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL EMPLOYEES Present law Federal law allows the wages of Federal employees to be gar- nished to enforce legal obligations for child support or alimony. Federal law provides that moneys payable by the United States to any individual are subject to being garnished in order to meet an individual’s legal obligation to provide child support or make ali- mony payments. An executive order issued on February 27, 1995 establishes the Federal government as a model employer in pro- moting and facilitating the establishment and enforcement of child support. Under the terms of the Executive Order, all Federal agen- cies, including the Uniformed Services, are required to cooperate fully in efforts to establish paternity and child support and to en- force the collection of child and medical support. All Federal agen- cies are to review their wage withholding procedures to ensure that they are in full compliance. Beginning no later than July 1, 1995, the Director of the Office of Personnel Management must publish annually in the Federal Register the list of agents (and their ad- dresses) designated to receive service of withholding notices for Federal employees. Federal law states that neither the United States nor any disbursing officer or government entity shall be lia- ble with respect to any payment made from moneys due or payable from the United States pursuant to the legal process. Federal law provides that money that may be garnished includes compensation for personal services, whether such compensation is denominated as wages, salary, commission, bonus, pay, or otherwise, and in- cludes but is not limited to, severance pay, sick pay, incentive pay- ments, and periodic payments. Includes definitions of ”United States”, ”child support”, ”alimony”, ”private person”, and ”legal process”. House bill Consolidation and Streamlining of Authorities: (1) Federal employees are subject to wage withholding and other actions taken against them by State child support enforce- ment agencies. (2) Federal agencies are responsible for the same wage with- holding and other child support actions taken by the State as if they were a private employer. (3) The head of each Federal agency must designate an agent and place the agent’s name, title, address, and telephone number in the Federal Register annually. The agent must, upon receipt of process, send written notice to the individual involved as soon as possible, but no later than 15 days, and to comply with any notice of wage withholding or respond to other process within 30 days. The agent also must respond to any order, process, or interrogatory about child support or alimony within 30 days after effective serv- ice of such requests. (4) Current law governing allocation of moneys owed by a Fed- eral employee is amended to give priority to child support, to re- quire allocation of available funds, up to the amount owed, among child support claimants, and to allocate remaining funds to other claimants on a first-come, first-served basis. 368 (5) A government entity served with notice of process for en- forcement of child support is not required to change its normal pay and disbursement cycle to comply with the legal process. (6) Similar to current law, the U.S., the government of the Dis- trict of Columbia, and disbursing officers are not liable for child support payments made in accord with this section; nor is any Fed- eral employee subject to disciplinary action or civil or criminal li- ability for disclosing information while carrying out the provisions of this section. (7) The President has the authority to promulgate regulations to implement this section as it applies to Federal employees of the Administrative branch of government; the President Pro Tempore of the Senate and Speaker of the House can issue regulations gov- erning their employees; and the Chief Justice can issue regulations applicable to the Judicial branch. (8) This section broadens the definition of income to include, in addition to wages, salary, commissions, bonus pay, allowances, sev- erance pay, sick pay, and incentive pay, funds such as insurance benefits, retirement and pension pay (including disability pay if the veteran has waived a portion of retirement pay to receive disability pay), survivor’s benefits, compensation for death and black lung disease, veteran’s benefits, and workers’ compensation; but to ex- clude from income funds paid to defray expenses incurred in carry- ing out job duties; amounts owed to the U.S. or used to pay Federal employment taxes, fines, or forfeitures ordered by court martial; and amounts withheld for tax purposes, for health insurance or life insurance premiums, for retirement contributions, or for life insur- ance premiums. (9) This section includes definitions of ”United States”, ”child support”, ”alimony”, ”private person”, and ”legal process”. Conforming Amendments. The House provision makes several conforming amendments to Title IV D of the Social Security Act and Title 5 of the United States Code. Military Retired and Retainer Pay. The definition of ”court” in the Armed Forces title of the U.S. Code (title 10) is amended to in- clude an administrative or judicial tribunal of a State which is competent to enter child support orders, and clarifies the definition of ”court order.” The Secretary of Defense is required to send with- held amounts for child support to the appropriate State Disburse- ment Unit. The provision also clarifies that military personnel who have never been married to the parent of their child are under ju- risdiction of the State child support program and the terms of sec- tion 459 of the Social Security Act. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 369 33. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF MEMBERS OF THE ARMED FORCES Present law Availability of Locator Information. The Executive Order is- sued February 27, 1995 requires a study which would include rec- ommendations on how to improve service of process for civilian em- ployees and members of the Uniformed Services stationed outside the United States. Facilitating Granting of Leave for Attendance at Hearings. No provision. Payment of Military Retired Pay in Compliance with Child Support Orders. Federal law requires allotments from the pay and allowances of any member of the uniformed service when the mem- ber fails to pay child (or child and spousal) support payments. House bill Availability of Locator Information. The Secretary of Defense must establish a central personnel locator service that contains res- idential or, in specified instances, duty addresses of every member of the Armed Services (including members of the Coast Guard, if requested). The locator service must be updated within 30 days of the time an individual establishes a new address. Information from the locator service must be made available upon request to the Federal Parent Locator Service. Facilitating Granting of Leave for Attendance at Hearings. The Secretary of each military department must issue regulations to fa- cilitate granting of leave for members of the Armed Services to at- tend hearings to establish paternity or to establish child support orders. The terms ”court” and ”child support” are defined. Payment of Military Retired Pay in Compliance with Child Support Orders. Child support orders received by the Secretary do not have to have been recently issued. The Secretary of each branch of the Armed Forces (including retirees, the Coast Guard, the National Guard, and the Reserves) is required to make child support payments from military retirement pay directly to any State to which a custodial parent has assigned support rights as a condition of receiving public assistance. Payments to satisfy cur- rent support or child support arrears must be made from dispos- able retirement pay. Payroll deductions must begin within 30 days or the first pay period after 30 days of receiving a wage withhold- ing order. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 34. VOIDING OF FRAUDULENT TRANSFERS Present law No provision. 370 House bill States must have in effect the Uniform Fraudulent Conveyance Act of 1981, the Uniform Fraudulent Transfer Act of 1984, or an equivalent law providing for voiding transfers of income or property that were made to avoid payment of child support. States also must have in effect procedures under which the State must seek to void a fraudulent transfer or obtain a settlement in the best interest of the child support creditor. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 35. WORK REQUIREMENT FOR PERSONS OWING PAST-DUE CHILD SUPPORT Present law Public Law 100 485 required the Secretary to grant waivers to up to five States allowing them to provide JOBS services on a vol- untary or mandatory basis to noncustodial parents who are unem- ployed and unable to meet their child support obligations. (In their report the conferees noted that the demonstrations would not grant any new powers to the States to require participation by noncusto- dial parents. The demonstrations were to be evaluated.) House bill States must have procedures under which the State has the authority to issue an order or request that a court or administra- tive process issue an order that requires individuals owing past-due child support for a child receiving assistance under the Temporary Family Assistance program either to pay the support due, to have and be in compliance with a plan to pay child support, or to partici- pate in work activities as deemed appropriate by the court or the child support agency. ”Past-due support” is defined and a conform- ing amendment is made to sec. 466 of the Social Security Act. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 36. DEFINITION OF SUPPORT ORDER Present law No provision. House bill A support order is defined as a judgement, decree, or order (whether temporary, final, or subject to modification) issued by a 371 court or an administrative agency for the support (monetary sup- port, health care, arrearages, or reimbursement) of a child (includ- ing a child who has reached the age of majority under State law) or of a child and the parent with whom the child lives, and which may include costs and fees, interest and penalties, income with- holding, attorney’s fees, and other relief. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 37. REPORTING ARREARAGES TO CREDIT BUREAUS Present law Federal law requires States to implement procedures which re- quire them to periodically report to consumer reporting agencies the name of debtor parents owing at least 2 months of overdue child support and the amount of child support overdue. However, if the amount overdue is less than $1,000, information regarding it shall be made available only at the option of the State. Moreover, information may only be made available after the noncustodial par- ent has been notified of the proposed action and has been given reasonable opportunity to contest the accuracy of the claim against him. States are permitted to charge consumer reporting agencies that request child support arrearage information a fee that does not exceed actual costs. House bill States are required to periodically report to consumer credit re- porting agencies the name of any noncustodial parent who is delin- quent in the payment of support and the amount of overdue sup- port owed by the parent. Before such a report can be sent, the obli- gor must have been afforded all due process rights, including notice and reasonable opportunity to contest the claim of child support de- linquency. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 38. LIENS Present law Federal law requires States to implement procedures under which liens are imposed against real and personal property for amounts of overdue support owed by a noncustodial parent who re- sides or owns property in the State. 372 House bill States must have procedures under which liens arise by oper- ation of law against property for the amount of overdue support. States must grant full faith and credit to liens of other States if the originating State agency or party has complied with procedural rules relating to the recording or serving of liens, except such rules cannot require judicial notice or hearing prior to enforcement of the lien. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 39. STATE LAW AUTHORIZING SUSPENSION OF LICENSES Present law No provision. House bill States must have the authority to withhold, suspend, or re- strict the use of drivers’ licenses, professional and occupational li- censes, and recreational licenses of individuals owing past-due sup- port or failing, after receiving appropriate notice, to comply with subpoenas or warrants relating to paternity or child support pro- ceedings. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 40. DENIAL OF PASSPORTS FOR NONPAYMENT OF CHILD SUPPORT Present law No provision. House bill If an individual owes arrearages in excess of $5,000 of child support, the Secretary of HHS must request that the State Depart- ment deny, revoke, restrict, or limit the individual’s passport. State child support agencies must have procedures for certifying to the Secretary arrearages in excess of $5,000 and for notifying individ- uals who are in arrears and providing them with an opportunity to contest. These provisions become effective on October 1, 1997. Senate amendment Same. 373 Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 41. INTERNATIONAL CHILD SUPPORT ENFORCEMENT Present law No provision. House bill (1) The Secretary of State, with concurrence of the Secretary of HHS, is authorized to declare reciprocity with foreign countries having requisite procedures for establishing and enforcing support orders. The Secretary may revoke reciprocity if she determines that the enforcement procedures do not continue to meet the requisite criteria. (2) The requirements for reciprocity include procedures in the foreign country for U.S. residents\u2014available at no cost\u2014to estab- lish parentage, to establish and enforce support orders for children and custodial parents, and to distribute payments. (3) An agency of the foreign country must be designated a central authority responsible for facilitating support enforcement and ensuring compliance with standards by both U.S. residents and residents of the foreign country. (4) The Secretary in consultation with the States, may estab- lish additional standards that she judges necessary to promote ef- fective international support enforcement. (5) The Secretary of HHS is required to facilitate enforcement services in international cases involving residents of the United States and of foreign reciprocating countries, including developing uniform forms and procedures, providing information from the FPLS on the State of residence of the obligor, and providing such other oversight, assistance, or coordination as she finds necessary and appropriate. (6) Where there is no Federal reciprocity agreement, States are permitted to enter into reciprocal agreements with foreign coun- tries. (7) The State plan must provide that request for services in international cases be treated the same as interstate cases, except that no application will be required and no costs will be assessed against the foreign country or the obligee (costs may be assessed at State option against the obligor). Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 42. FINANCIAL INSTITUTION DATA MATCHES Present law No provision. 374 House bill States are required to implement procedures under which the State child support agency must enter into agreements with finan- cial institutions doing business within the State to develop and op- erate a data match system, using automated data exchanges to the maximum extent feasible, in which such financial institutions are required to provide for each calendar quarter the name, address, Social Security number, and other identifying information for each noncustodial parent identified by the State who has an account at the institution and owes past-due child support. In response to a notice of lien or levy, the financial institution must encumber or surrender assets held by the institution on behalf of the noncusto- dial parent who is subject to the child support lien. The State agen- cy may pay a fee to the financial institution. The financial institu- tion is not liable for activities taken to implement the provisions of this section. Definitions of the terms ”financial institution” and ”account” are included. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 43. ENFORCEMENT OF ORDERS AGAINST PATERNAL OR MATERNAL GRANDPARENTS IN CASES OF MINOR PARENTS Present law No provision. However, Wisconsin and Hawaii have State laws that make grandparents financially responsible for their minor children’s dependents. House bill With respect to a child of minor parents receiving support from the Temporary Assistance for Needy Families Block Grant, States have the option to enforce a child support order against the parents of the minor noncustodial parent. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 44. NONDISCHARGEABILITY IN BANKRUPTCY OF CERTAIN DEBTS FOR THE SUPPORT OF A CHILD Present law Although child support payments may not be discharged in a filing of bankruptcy (i.e., the debtor parent cannot escape her child support obligation by filing a bankruptcy petition), a bankruptcy filing may cause long delays in securing child support payments. 375 Pursuant to P.L. 103 394, a filing of bankruptcy will not stay a pa- ternity, child support, or alimony proceeding. In addition, child support and alimony payments will be priority claims and custodial parents will be able to appear in bankruptcy court to protect their interests without paying a fee or meeting any local rules for attor- ney appearances. House bill Title 11 of the U.S. Code and Title IV D of the Social Security Act are amended to ensure that a debt owed to the State ”that is in the nature of support and that is enforceable under this part” cannot be discharged in bankruptcy proceedings. This amendment applies only to cases initiated under Title 11 after enactment of this Act. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 45. CHILD SUPPORT ENFORCEMENT FOR INDIAN TRIBES Present law There are about 340 federally recognized Indian tribes in the 48 contiguous States. Among these tribes there are approximately 130 tribal courts and 17 Courts of Indian Offenses. Most tribal codes authorize their courts to hear parentage and child support matters that involve at least one member of the tribe or person liv- ing on the reservation. This jurisdiction may be exclusive or con- current with State court jurisdiction, depending on specified cir- cumstances. House bill No provision. Senate amendment Any State that has Indian country may enter into a coopera- tion agreement with an Indian tribe if the tribe demonstrates that it has an established tribal court system with several specific char- acteristics. The Secretary may make direct payments to Indian tribes that have approved child support enforcement plans. Con- forming amendments are included. Conference agreement The conference agreement follows the Senate amendment. 376 Subtitle H\u2014Medical Support 46. CORRECTION TO ERISA DEFINITION OF MEDICAL CHILD SUPPORT ORDER Present law Public Law 103 66 requires States to adopt laws that require health insurers and employers to enforce orders for medical and child support and that forbid health insurers from denying cov- erage to children who are not living with the covered individual or who were born outside of marriage. Under Public Law 103 66, group health plans are required to honor ”qualified medical child support orders.” House bill This provision expands the definition of medical child support order in ERISA to clarify that any judgement, decree, or order that is issued by a court of competent jurisdiction or by an administra- tive process has the force and effect of law. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 47. ENFORCEMENT OF ORDERS FOR HEALTH CARE COVERAGE Present law Federal law requires the Secretary to require IV D agencies to petition for the inclusion of medical support as part of child support whenever health care coverage is available to the noncustodial par- ent at reasonable cost. House bill All orders enforced under this part must include a provision for health care coverage. If the noncustodial parent changes jobs and the new employer provides health coverage, the State must send notice of coverage, which shall operate to enroll the child in the health plan, to the new employer. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 377 SUBTITLE I\u2014ENHANCING RESPONSIBILITY AND OPPORTUNITY FOR NON-RESIDENTIAL PARENTS 48. GRANTS TO STATES FOR ACCESS AND VISITATION PROGRAMS Present law In 1988, Congress authorized the Secretary to fund for fiscal year 1990 and fiscal year 1991 demonstration projects by States to help divorcing or never-married parents cooperate with each other, especially in arranging for visits between the child and the non- resident parent. House bill This proposal authorizes grants to States for access and visita- tion programs including mediation, counseling, education, develop- ment of parenting plans, and visitation enforcement. Visitation en- forcement can include monitoring, supervision, neutral drop-off and pick-up, and development of guidelines for visitation and alter- native custody agreements. An annual entitlement of $10 million is appropriated for these grants. The amount of the grant to a State is equal to either 90 per- cent of the State expenditures during the year for access and visi- tation programs or the allotment for the State for the fiscal year. The allotment to the State bears the same ratio to the amount ap- propriated for the fiscal year as the number of children in the State living with one biological parent divided by the national number of children living with one biological parent. The Administration for Children and Families must adjust allotments to ensure that no State is allotted less than $50,000 for fiscal years 1997 or 1998 or less than $100,000 for any year after 1998. Projects are required to supplement rather than supplant State funds. States may use the money to create their own programs or to fund grant programs with courts, local public agencies, or nonprofit organizations. The programs do not need to be Statewide. States must monitor, evalu- ate, and report on their programs in accord with regulations issued by the Secretary. Senate amendment Same, except delays the effective date for 1 year. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment except that the House effective date is followed. SUBTITLE J\u2014EFFECTIVE DATES AND CONFORMING AMENDMENTS 49. EFFECTIVE DATES AND CONFORMING AMENDMENTS Present law No provision. House bill Except as noted in the text of the House proposal for specific provisions, the general effective date for provisions in the proposal is October 1, 1996. However, given that many of the changes re- 378 quired by this proposal must be approved by State Legislatures, the proposal contains a grace period tied to the meeting schedule of State Legislatures. In any given State, the proposal becomes ef- fective either on October 1, 1996 or on the first day of the first cal- endar quarter after the close of the first regular session of the State Legislature that begins after the date of enactment of the proposal. In the case of States that require a constitutional amend- ment to comply with the requirements of the proposal, the grace period is extended either for one year after the effective date of the necessary State constitutional amendment or five years after the date of enactment of the proposal. This section contains several conforming amendments to title IV D of the Social Security Act. This section also replaces the term ”absent parent” with ”noncusto- dial parent” each place it occurs in title IV D. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. TITLE IV: RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS 1. STATEMENTS OF NATIONAL POLICY CONCERNING WELFARE AND IMMIGRATION Present law No provision. House bill The Congress makes several statements concerning national policy with respect to welfare and immigration. These include the affirmation that it continues to be the immigration policy of the United States that noncitizens within the Nation’s borders not de- pend on public resources, that noncitizens nonetheless have been applying for and receiving public benefits at increasing rates, and that it is a compelling government interest to enact new eligibility and sponsorship rules to assure that noncitizens become self-reliant and to remove any incentive for illegal immigration. Senate amendment Similar to House bill. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 379 Subtitle A\u2014Eligibility for Federal Benefits 2. ALIENS WHO ARE NOT QUALIFIED ALIENS INELIGIBLE FOR FEDERAL PUBLIC BENEFITS Present law Current law limits alien eligibility for most major Federal as- sistance programs, including restrictions on, among other pro- grams, Supplemental Security Income, Aid to Families with De- pendent Children, housing assistance, and Food Stamps programs. Current law is silent on alienage under, among other programs, school lunch and nutrition, the Special Supplemental Food Pro- gram for Women, Infants, and Children (WIC), Head Start, mi- grant health centers, and the earned income credit. Under the pro- grams with restrictions, benefits are generally allowed for perma- nent resident aliens (also referred to as immigrants and green card holders), refugees, asylees, and parolees, but benefits (other than emergency Medicaid) are denied to nonimmigrants (or aliens law- fully admitted temporarily as, for example, tourists, students, or temporary workers) and illegal aliens. Benefits are permitted under AFDC, SSI, unemployment compensation, and non- emergency Medicaid to other aliens permanently residing in the United States under color of law (PRUCOL). House bill Noncitizens who are ”not qualified aliens” (generally, illegal immigrants and nonimmigrants such as students) are ineligible for all Federal public benefits, with limited exceptions for emergency medical services, emergency disaster relief, immunizations and testing and treatment of symptoms of communicable diseases, com- munity programs necessary for the protection of life or safety, cer- tain housing benefits (only for current recipients), licenses and ben- efits directly related to work for which a nonimmigrant has been authorized to enter the U.S, and certain Social Security retirement benefits protected by treaty or statute. Federal public benefits include: any grant, contract, loan, pro- fessional license or commercial license, and any retirement, wel- fare, health, disability, food assistance, unemployment or similar benefit provided by an agency or appropriated funds of the United States. Senate amendment Similar to House, except that the exception for communicable diseases is limited to treatment of the disease itself and must be triggered by a finding by HHS that testing and treatment of a par- ticular disease is necessary to prevent its spread. Conference agreement The conference agreement follows the House bill. The allowance for treatment of communicable diseases is very narrow. The conferees intend that it only apply where absolutely necessary to prevent the spread of such diseases. This is only a stop-gap measure until the deportation of a person or persons un- 380 lawfully here. It is not intended to provide authority for continued treatment of such diseases for a long term. The allowance for emergency medical services under Medicaid is very narrow. The conferees intend that it only apply to medical care that is strictly of an emergency nature, such as medical treat- ment administered in an emergency room, critical care unit, or in- tensive care unit. The conferees do not intend that emergency med- ical services include pre-natal or delivery care assistance that is not strictly of an emergency nature as specified herein. The intent of the conferees is that title I, part A of the Elemen- tary and Secondary Education Act would not be affected by section 401 because the benefit is not provided to an individual, household, or family eligibility unit. 3. LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR CERTAIN FEDERAL PROGRAMS Present law With the exception of certain buy-in rights under Medicare, im- migrants (or aliens) lawfully admitted for permanent residence are eligible for major Federal benefits, but the ability of some immi- grants to meet the needs tests for SSI, AFDC, and food stamps may be affected by the sponsor-to-alien deeming provisions dis- cussed below. Refugees, asylees, and parolees also generally are eli- gible. Benefits are permitted under AFDC, SSI, unemployment compensation, and nonemergency Medicaid to other aliens perma- nently residing in the United States under color of law (PRUCOL). House bill Legal noncitizens who are ”qualified aliens” (i.e., permanent resident aliens, refugees, asylees, aliens paroled into the United States for a period of at least 1 year, and aliens whose deportation has been withheld) are ineligible for SSI, Medicaid, and food stamp benefits until they attain citizenship, with exceptions noted below. States are given the option of similarly restricting Federal cash welfare and Title XX benefits for qualified aliens, with the excep- tion of those who are receiving benefits on the date of enactment as described below. Refugees, asylees, and aliens whose deportation has been with- held are excepted for 5 years after being granted their respective statuses. Also excepted are legal permanent residents who have worked (in combination with their spouse and parents) for at least 10 years, and noncitizens who are veterans or on active duty or their spouse or unmarried child. To allow individuals time to adjust to the revised policy, other- wise restricted aliens who are receiving SSI, food stamps, cash wel- fare, Medicaid or Title XX benefits on the date of enactment would remain eligible for at most 1 year after enactment. However, if a review determines the noncitizen would be ineligible if enrolling under the revised standards for SSI, Medicaid, and food stamps (for example, because the noncitizen failed to qualify under the ref- ugee or work exemptions) such benefits would cease immediately. States have the option of ending cash welfare and social services benefits for current recipients after January 1, 1997. 381 Senate amendment Similar to House bill, except that Medicaid is included among the programs subject to State option rather than a blanket bar. Conference agreement The conference agreement follows the Senate amendment. 4. FIVE-YEAR LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR FEDERAL MEANS-TESTED PUBLIC BENEFIT Present law See above. House bill The proposal restricts most Federal means-tested benefits (in- cluding SSI, food stamps, cash welfare, Medicaid, and title XX so- cial services benefits) for permanent resident aliens who arrive after the date of enactment for their first 5 years in the United States. Programs that are not restricted to legal noncitizens arriv- ing in the future include emergency medical services, non-cash emergency disaster relief, school lunch and child nutrition benefits, immunizations and testing and treatment for symptoms of commu- nicable diseases, foster care and adoption payments under parts B and E of Title IV of the Social Security Act, community programs for the protection of life or safety, certain elementary and second- ary education programs, Head Start, the Job Training Partnership Act, and higher education grants and loans. Exceptions are made for refugees, asylees, aliens whose depor- tation is being withheld, and noncitizens who are veterans, on ac- tive duty, or the spouse or unmarried child of such an individual. Senate amendment Excepted programs are similar to the House with the following differences: (1) benefits under Head Start Act and the Job Training Partnership Act are not excepted; (2) the exception for foster care and adoption assistance is limited to Part E of Title IV of the Social Security Act; (3) the exception for testing and treatment of commu- nicable diseases is more limited and must be triggered by a finding by HHS that detection and treatment of a particular disease is necessary to prevent its spread; and (4) includes an exception for education assistance under ti- tles III, VII, and VIII of the Public Health Service Act. Excepted classes are similar to House bill. Conference agreement The conference agreement follows the House bill and Senate amendment as follows. (1) The definition of Federal Means Tested Public Benefit (defined as ”a public benefit (including cash, medi- cal, housing, and food assistance and social services) of the Federal Government in which the eligibility of an individual, household, or family eligibility unit for benefits, or the amount of such benefits, or both are determined on the basis of income, resources, or finan- 382 cial need of the individual, household, or unit”) was deleted due to the Byrd rule. It is the intent of conferees that this definition be presumed to be in place for purposes of this title. (2) Regarding ex- cepted programs, the conference agreement follows the House bill on testing and treatment of communicable diseases and by adding Head Start and the Job Training Partnership Act as excepted pro- grams; the conference agreement adds refugee and entrant assist- ance as an excepted program; and the conference agreement follows the Senate amendment by adding education assistance under titles III, VII, and VIII of the Public Health Services Act as an excepted program. 5. NOTIFICATION AND INFORMATION REPORTING Present law Notification. Under regulation, individual advance written no- tice must be given of an intent to suspend, reduce, or terminate SSI benefits. Information Reporting. AFDC and SSI restrict the use or dis- closure of information concerning applicants and recipients to pur- poses connected to the administration of needs-based Federal pro- grams. House bill Each Federal agency that administers an affected program shall post information and provide general notification to the public and to program recipients of changes regarding eligibility. Agencies that administer SSI, housing assistance programs under the United States Housing Act of 1937, or block grants for temporary assistance for needy families (the successor program to AFDC) are required to furnish information about aliens they know to be unlawfully in the United States to the Immigration and Natu- ralization Service (INS) at least four times annually and upon INS request. Senate amendment Similar to House bill. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. Subtitle B\u2014Eligibility for State and Local Public Benefits Programs 6. ALIENS WHO ARE NOT QUALIFIED ALIENS OR NONIMMIGRANTS INELIGIBLE FOR STATE AND LOCAL PUBLIC BENEFITS Present law Under Plyler vs. Doe (457 U.S. 202 (1982)), States may not deny illegal alien children access to a public elementary education without authorization from Congress. However, the narrow 5 4 Su- preme Court decision may imply that illegal aliens may be denied at least some State benefits and that Congress may influence the eligibility of illegal aliens for State benefits. Many, but not all, 383 State general assistance laws currently deny illegal aliens means- tested general assistance. House bill Illegal aliens are ineligible for all State and local public bene- fits, with limited exceptions for emergency medical services, emer- gency disaster relief, immunizations and testing and treatment for symptoms of communicable diseases, and programs necessary for the protection of life or safety. States may, however, pass laws after the date of enactment that specify that illegal aliens may be eligible for certain State or local benefits that otherwise would be denied under this section. Senate amendment Similar to House bill, except that the exception for commu- nicable diseases is more limited and must be triggered by a finding by HHS that testing and treatment of a particular disease is nec- essary to prevent its spread. Conference agreement The conference agreement follows the House bill. No current State law, State constitutional provision, State ex- ecutive order or decision of any State or Federal court shall provide a sufficient basis for a State to be relieved of the requirement to deny benefits to illegal aliens. Laws, ordinances, or executive or- ders passed by county, city or other local officials will not allow those entities to provide benefits to illegal aliens. Only the affirma- tive enactment of a law by a State legislature and signed by the Governor after the date of enactment of this Act, that references this provision, will meet the requirements of this section. The phrase ”affirmatively provides for such eligibility” means that the State law enacted must specify that illegal aliens are eligi- ble for State or local benefits. Persons residing under color of law shall be considered to be aliens unlawfully present in the United States and are prohibited from receiving State or local benefits, as defined, regardless of the enactment of any State law. The conference agreement provides that no State or local gov- ernment entity shall prohibit, or in any way restrict, any entity or official from sending to or receiving from the INS information re- garding the immigration status of an alien or the presence, where- abouts, or activities of illegal aliens. It does not require, in and of itself, any government agency or law enforcement official to com- municate with the INS. The conferees intend to give State and local officials the au- thority to communicate with the INS regarding the presence, whereabouts, or activities of illegal aliens. This provision is de- signed to prevent any State or local law, ordinance, executive order, policy, constitutional provision, or decision of any Federal or State court that prohibits or in any way restricts any communica- tion between State and local officials and the INS. The conferees believe that immigration law enforcement is as high a priority as other aspects of Federal law enforcement, and that illegal aliens do not have the right to remain in the United States undetected and unapprehended. 384 7. STATE AUTHORITY TO LIMIT ELIGIBILITY OF QUALIFIED ALIENS FOR STATE PUBLIC BENEFITS Present law Under Graham v. Richardson (403 U.S. 365 (1971)), States may not deny legal permanent residents State-funded assistance that is provided to equally needy citizens without authorization from Congress. Currently, there is no Federal law barring legal temporary residents (i.e., nonimmigrants) from State and local needs-based programs. In general, States are restricted in denying assistance to nonimmigrants where the denial is inconsistent with the terms under which the nonimmigrants were admitted. Where a denial of benefits is not inconsistent with Federal immigration law, however, States have broader authority to deny benefits and States often do deny certain benefits to nonimmigrants. Also, aliens in most non- immigrant categories generally may have difficulty qualifying for many State and local benefits because of requirements that they be State ”residents.” House bill States are authorized to determine the eligibility of ”qualified aliens,” nonimmigrants, and aliens paroled into the United States for less than 1 year for any State or local means-tested public bene- fit program. Noncitizens receiving State and local benefits on the date of enactment would remain eligible for benefits until January 1, 1997. Exceptions to State authority to deny benefits are made for ref- ugees, asylees and aliens whose deportation has been withheld (for 5 years), permanent resident aliens who have worked in the United States (in combination with their spouse or parents) for at least 10 years, and noncitizens who are veterans or on active duty or their spouse or unmarried child. Senate amendment Similar to House bill, except that under Byrd rule the defini- tion of ”State public benefits” (sec. 2412(c)) is deleted. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. The conference agreement does not include a defi- nition of State public benefits in this section because the definition was dropped due to the Byrd rule. However, it is the intent of House and Senate conferees that the following definition be used by States in carrying out the authority granted by this section: ”STATE PUBLIC BENEFITS DEFINED.\u2014The term ‘State public bene- fits’ means any means-tested public benefits of a State or political subdivision of a State under which the State or political subdivision specifies the standards for eligibility, and does not include any Fed- eral public benefit.” 385 Subtitle C\u2014Attribution of Income and Affidavits of Support 8. FEDERAL ATTRIBUTION OF SPONSOR’S INCOME AND RESOURCES TO ALIEN Present law Federal Benefits. In determining whether an alien meets the means test for AFDC, SSI (except in cases of blindness or disability occurring after entry), and food stamps, the resources and income of an individual who filed an affidavit of support (”sponsor”) for the alien (and the income and resources of the individual’s spouse) are taken into account during a designated period after entry. Sponsor- to-alien deeming provisions were added to these three programs in part because several courts have found that affidavits of support, under current practice, do not obligate sponsors to reimburse gov- ernment agencies for benefits provided to sponsored aliens. See below. Amounts of Income and Resources Deemed. While the offset formulas vary among the programs, the amount of income and re- sources deemed under AFDC, SSI, and Food Stamps is reduced by certain offsets to provide for some of the sponsor’s own needs. Length of Deeming Period. For AFDC and Food Stamps, spon- sor-to-alien deeming applies to a sponsored alien seeking assistance within 3 years of entry. Through September 1996, sponsor-to-alien deeming applies to a sponsored alien seeking SSI within 5 years of entry, after which the deeming period reverts to 3 years. Review Upon Reapplication. Regulations implementing the food stamp program expressly require providing information on a sponsor’s resources as part of recertification. Application. No provision. House bill Federal Benefits. During the applicable deeming period (see ”Length of Deeming Period” below), the income and resources of a sponsor and the sponsor’s spouse are to be taken into account under all Federally-funded means-tested programs (with the excep- tion of the programs below) in determining the sponsored individ- ual’s neediness. Excepted programs are emergency medical serv- ices, emergency disaster relief, school lunch and child nutrition as- sistance, immunizations and testing and treatment for symptoms of communicable diseases, certain programs that protect life, safety, or public health, certain foster care and adoption assistance, Head Start, Job Training Partnership Act programs, certain elementary and secondary education programs, and higher education grants and loans. Amounts of Income and Resources Deemed. The full income and resources of the sponsor and the sponsor’s spouse are deemed to be that of the sponsored alien. Length of Deeming Period. Deeming extends until citizenship, unless the noncitizen has worked for at least 10 years in the Unit- ed States (either individually or in combination with the nonciti- zen’s spouse and parents). Review Upon Reapplication. Whenever a sponsored noncitizen is required to reapply for benefits under any Federal means-tested 386 public benefits program, the agency must review the income and resources deemed to the sponsored noncitizen. Application. For programs that already deem income and re- sources on the date of enactment, the changes in this section apply immediately; other programs must implement changes required within 180 days after the date of enactment. Senate amendment Federal Benefits. Under the Byrd rule, the definition of ”Fed- eral means-tested program” (sec. 2403(c)(1)) is deleted. Otherwise similar to House bill, with differences in exceptions to Federal means-tested programs noted above for the 5-year bar. Amounts of Income and Resources Deemed. Similar to House bill. Length of Deeming Period. Similar to House bill. Review Upon Reapplication. Similar to House bill. Application. Similar to House bill. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment, with the modification of certain additional ex- cepted programs as noted in item 4 above. The allowance for treatment of communicable diseases is very narrow. The conferees intend that it only apply where absolutely necessary to prevent the spread of such diseases. This is only a stop-gap measure until the deportation of a person or persons un- lawfully here. It is not intended to provide authority for continued treatment of such diseases for a long term. The allowance for emergency medical services under Medicaid is very narrow. The conferees intend that it only apply to medical care that is strictly of an emergency nature, such as medical treat- ment administered in an emergency room, critical care unit, or in- tensive care unit. The conferees do not intend that emergency med- ical services include pre-natal or delivery care assistance that is not strictly of an emergency nature as specified herein. 9. AUTHORITY FOR STATES TO PROVIDE FOR ATTRIBUTION OF SPON- SOR’S INCOME AND RESOURCES TO THE ALIEN WITH RESPECT TO STATE PROGRAMS Present law The highest courts of at least two States have held that the Supreme Court decision barring State discrimination against legal aliens in providing State benefits without Federal authorization (Graham v. Richardson, 403 U.S. 365 (1971)) prohibits State spon- sor-to-alien deeming requirements for State benefits. House bill State and local governments may, for the deeming period that applies to Federal benefits, deem a sponsor’s income and resources (and those of the sponsor’s spouse) to a sponsored individual in de- termining eligibility for and the amount of needs-based benefits. State and local governments may not require deeming for the fol- lowing State public benefits: emergency medical services, emer- 387 gency disaster relief, school lunch and child nutrition assistance, immunizations and testing and treatment for symptoms of commu- nicable diseases, foster care and adoption payments, and certain programs to protect life and safety. Senate amendment Similar to House bill, except that the exception for commu- nicable diseases is limited to testing and treatment of the disease itself and must be triggered by a finding by the chief State health official that it is necessary to prevent spread of the disease. Conference agreement The conference agreement follows the House bill. 10. REQUIREMENTS FOR SPONSOR’S AFFIDAVIT OF SUPPORT Present law In General. Administrative authorities may request an affida- vit of support on behalf of an alien seeking permanent residency pursuant to regulation. Requirements for affidavits of support are not specified by statute. Under the Immigration and Nationality Act, an alien who is likely to become a public charge may be excluded from entry unless this restriction is waived, as is the case for refugees. By regulation and administrative practice, the State Department and the Immi- gration and Naturalization Service permit a prospective permanent resident alien (also immigrant or green card holder) who otherwise would be excluded as a public charge (i.e., because of insufficient means or prospective income) to overcome exclusion through an af- fidavit of support or similar document executed by an individual in the United States commonly called a ”sponsor.” It has been re- ported that roughly one-half of the aliens who obtain legal perma- nent resident status have had affidavits of support filed on their behalf. Various State court decisions and decisions by immigration courts have held that the affidavits of support, as currently con- stituted, do not impose a binding obligation on the sponsor to reim- burse State agencies providing aid to the sponsored alien. Forms. No statutory provision. The Department of Justice is- sues a form (Form I 134) that complies with current sponsorship guidelines. Notification of Change of Address. There is no express require- ment under current administrative practice that sponsors inform welfare agencies of a change in address. However, a sponsored alien who applies for benefits for which deeming is required must provide various information regarding the alien’s sponsor. Reimbursement of Government Expenses. Various State court decisions and decisions by immigration courts have held that these affidavits, as currently constituted, do not impose a binding obliga- tion on the sponsor to reimburse State agencies providing aid to the sponsored alien. Definitions. There are no firm administrative restrictions on eligibility to execute an affidavit of support. There is no definition of ”Means-tested Public Benefits Program”. 388 Effective Date. No provision. Benefits Not Subject to Reimbursement. No provision. House bill In General. The proposal provides that when affidavits of sup- port are required, they must comply with the following: Affidavits of support must be executed as contracts that are le- gally enforceable against sponsors by Federal, State, and local agencies with respect to any means-tested benefits (with exceptions noted below) paid to sponsored aliens before they become citizens. Affidavits of support must be enforceable against the sponsor by the sponsored alien. Reimbursement shall be requested for all Federal, State or local need-based programs with the exceptions noted below. To qualify to execute an affidavit of support, an individual must meet the revised definition of sponsor below. Governmental entities that provide benefits may seek reim- bursement up to 10 years after a sponsored alien last receives ben- efits. Sponsorship extends until the alien becomes a citizen. Forms. The Attorney General, in consultation with the Sec- retary of State and the Secretary of HHS, shall formulate an affi- davit of support within 90 days after enactment, consistent with this section. Notification of Change of Address. Until they no longer are po- tentially liable for reimbursement of benefits paid to sponsored in- dividuals, sponsors must notify the Attorney General and the State, district, territory or possession in which the sponsored indi- vidual resides of any change of their address within 30 days of moving. Failure to notify may result in a civil penalty of up to $2,000 or, if the failure occurs after knowledge that the sponsored individual has received a reimbursable benefit, of up to $5,000. Reimbursement of Government Expenses. If a sponsored alien receives any benefit under any means-tested public assistance pro- gram, the appropriate Federal, State, or local official shall request reimbursement by the sponsor in the amount of such assistance. Thereafter the official may seek reimbursement in court if the sponsor fails to respond within 45 days of the request that the sponsor is willing to begin repayments. The official also may seek reimbursement through the courts within 60 days after a sponsor fails to comply with the terms of repayment. The Attorney General in consultation with the Secretary of HHS, shall prescribe regula- tions on requesting reimbursement. No action may be brought later than 10 years after the alien last received benefits. Definitions. A ”sponsor” is a citizen or an alien lawfully admit- ted to the United States for permanent residence who petitioned for immigration preference for the sponsored alien, is at least 18 years of age, and resides in any State. A ”Means-Tested Public Benefits Program” is a program of public benefits of the Federal, State or local government in which eligibility for or the amount of, benefits or both are determined on the basis of income, resources, or financial need. Effective Date. The changes regarding affidavits of support shall apply to affidavits of support executed no earlier than 60 days 389 or later than 90 days after the Attorney General promulgates the form. Benefits Not Subject to Reimbursement. Governmental entities cannot seek reimbursement with respect to: emergency medical services; emergency disaster relief; school lunch and child nutrition assistance; payments for foster care and adoption assistance; immunizations and testing for and treatment of commu- nicable diseases; certain programs that protect life, safety, or public health; postsecondary education benefits; means-tested elementary and secondary education pro- grams; Head Start; and Job Training Partnership Act programs. Senate amendment In General. Under the Byrd rule, the definition of ”means-test- ed public benefits program” (sec. 2423(a)) is deleted. Otherwise similar to House bill. Forms. Similar to House bill. Notification of Change of Address. Similar to House bill. Reimbursement of Government Expenses. Similar to House bill. Definitions. Similar to House bill. Definition for ”Means-tested public benefits program” deleted under the Byrd rule. Effective Date. Similar to House bill. Benefits Not Subject to Reimbursement. Similar to House bill except: does not add Head Start and Job Training Partnership Act programs to the list of excepted programs; the exception for foster care and adoption assistance is limited to part E of Title IV of the Social Security Act; the exception for testing and treatment of a communicable disease is more limited and must be triggered by a finding by HHS that it is necessary to prevent the disease’s spread; and adds exception for education assistance under titles III, VII, and VIII of the Public Health Service Act. Conference agreement The conference agreement generally follows the House bill and Senate amendment. The definition of Means-Tested Public Benefits Program (defined as ”a public benefit (including cash, medical, housing, and food assistance and social services) of the Federal Government or of a State or political subdivision of a State in which the eligibility of an individual, household, or family eligi- bility unit for benefits under the program, or the amount of such benefits, or both are determined on the basis of income, resources, or financial need of the individual, household, or unit”) for purposes of this section was deleted due to the Byrd rule. It is the intent of conferees that this definition be presumed to be in place for pur- poses of this title. With regard to excepted programs, the con- ference agreement follows the House bill on testing and treatment 390 of communicable diseases and by adding Head Start and Job Train- ing Partnership Act as excepted programs; the conference agree- ment follows the Senate amendment by adding education assist- ance under titles III, VII, and VIII of the Public Health Services Act as an excepted program. Subtitle D\u2014General Provisions 11. DEFINITIONS Present law In General. Federal assistance programs that have alien eligi- bility restrictions generally reference specific classes defined in the Immigration and Nationality Act. Qualified Alien. Some programs allow benefits for otherwise el- igible aliens who are ”permanently residing under color of law (PRUCOL).” This term is not defined under the Immigration and Nationality Act, and there has been some inconsistency in deter- mining which classes of aliens fit within the PRUCOL standard. House bill In General. Unless otherwise provided, the terms used in this title have the same meaning as defined in Section 101(a) of the Im- migration and Nationality Act. Qualified Alien. An alien who is a lawful permanent resident, refugee, asylee, or an alien who has been paroled into the United States for at least 1 year. Senate amendment In General. Similar to House bill. Qualified Alien. Similar to House bill. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 12. VERIFICATION OF ELIGIBILITY FOR FEDERAL PUBLIC BENEFITS Present law State agencies that administer most major Federal programs with alienage restrictions generally use the SAVE (Systematic Alien Verification for Entitlements) system to verify the immigra- tion status of aliens applying for benefits. House bill The Attorney General must adopt regulations to verify the law- ful presence of applicants for Federal benefits no later than 18 months after enactment. States must have a verification system that complies with these regulations within 24 months of their adoption, and must authorize necessary appropriations. Senate amendment Similar to House bill. 391 Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 13. STATUTORY CONSTRUCTION Present law No provision. House bill This title addresses only program eligibility based on alienage and does not address whether any individual meets other eligibility criteria. This title does not address alien eligibility for basic edu- cation or for any program of foreign assistance. Senate amendment Similar to House bill. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 14. COMMUNICATION BETWEEN STATE AND LOCAL GOVERNMENT AGENCIES AND THE IMMIGRATION AND NATURALIZATION SERVICE Present law The confidentiality provisions of various State statutes may prohibit disclosure of immigration status obtained under them. Some Federal laws, including the Family Education Rights and Protection Act, may deny funds to certain State and local agencies that disclose a protected individual’s immigration status. Various localities have enacted laws preventing local officials from disclos- ing the immigration status of individuals to INS. House bill No State or local government entity may be prohibited, or in any way restricted, from sending to or receiving from the Immigra- tion and Naturalization Service information regarding the immi- gration status, lawful or unlawful, of an alien in the United States. Senate amendment Similar to House bill. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 15. QUALIFYING QUARTERS Present law No provision. House bill In determining whether an alien may qualify for benefits under the exception for individuals who have worked at least 40 392 quarters while in the United States (see sections 402 and 421 above), work performed by parents and spouses may be credited to aliens under certain circumstances. Each quarter of work per- formed by the parent while an alien was under the age of 18 is credited to the alien, provided the parent did not receive any Fed- eral public benefits during the quarter. Similarly, each quarter of work performed by a spouse of an alien during their marriage is credited to the alien, if the spouse did not receive any Federal pub- lic benefits during the quarter. Senate amendment Similar to House bill. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. Subtitle E\u2014Conforming Amendments 16. CONFORMING AMENDMENTS RELATING TO ASSISTED HOUSING Present law No provision. House bill This section consists of a series of technical and conforming amendments. Senate amendment Similar to House bill. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. Subtitle F\u2014Earned Income Credit Denied to Unauthorized Employees 17. EARNED INCOME CREDIT DENIED TO INDIVIDUALS NOT AUTHORIZED TO BE EMPLOYED IN THE UNITED STATES [NOTE.\u2014For further description of this and additional earned income credit provisions, see Title IX: Miscellaneous below.] Present law Certain eligible low-income workers are entitled to claim a re- fundable credit of up to $3,556 in 1996 on their income tax return. The amount of the credit an eligible individual may claim depends upon whether the individual has one, more than one, or no qualify- ing children and is determined by multiplying the credit rate by the taxpayer’s earned income up to an earned income amount. The maximum amount of the credit is the product of the credit rate and the earned income amount. For taxpayers with earned income (or adjusted gross income (AGI), if greater) in excess of the beginning of the phaseout range, the maximum credit amount is reduced by the phaseout rate multiplied by the amount of earned income (or 393 AGI, if greater) in excess of the beginning of the phaseout range. For taxpayers with earned income (or AGI, if greater) in excess of the end of the phaseout range, no credit is allowed. In order to claim the credit, an individual must either have a qualifying child or meet other requirements. A qualifying child must meet a relationship test, an age test, an identification test, and a residence test. In order to claim the credit without a qualify- ing child, an individual must not be a dependent and must be over age 24 and under age 65. To satisfy the identification test, individuals must include on their tax return the name and age of each qualifying child. For re- turns filed with respect to tax year 1996, individuals must provide a taxpayer identification number (TIN) for all qualifying children born on or before November 30, 1996. For returns filed with respect to tax year 1997 and all subsequent years, individuals must pro- vide TINs for all qualifying children, regardless of their age. An in- dividual’s TIN is generally that individual’s social security number. The Internal Revenue Service may summarily assess addi- tional tax due as a result of a mathematical or clerical error with- out sending the taxpayer a notice of deficiency and giving the tax- payer an opportunity to petition the Tax Court. Where the IRS uses the summary assessment procedure for mathematical or cleri- cal errors, the taxpayer must be given an explanation of the as- serted error and a period of 60 days to request that the IRS abate its assessment. The IRS may not proceed to collect the amount of the assessment until the taxpayer has agreed to it or has allowed the 60-day period for objecting to expire. If the taxpayer files a re- quest for abatement of the assessment specified in the notice, the IRS must abate the assessment. Any reassessment of the abated amount is subject to the ordinary deficiency procedures. The re- quest for abatement of the assessment is the only procedure a tax- payer may use prior to paying the assessed amount in order to con- test an assessment arising out of a mathematical or clerical error. Once the assessment is satisfied, however, the taxpayer may file a claim for refund if he or she believes the assessment was made in error. House bill Individuals are not eligible for the credit if they do not include their taxpayer identification number (and, if married, their spouse’s taxpayer identification number) on their tax return. Solely for these purposes and for purposes of the present-law identifica- tion test for a qualifying child, a taxpayer identification number is defined as a social security number issued to an individual by the Social Security Administration other than a number issued under section 205(c)(2)(B)(i)(II) (or that portion of sec. 205(c)(2)(B)(i)(III) relating to it) of the Social Security Act (regarding the issuance of a number to an individual applying for or receiving Federally fund- ed benefits). If an individual fails to provide a correct taxpayer identifica- tion number, such omission will be treated as a mathematical or clerical error. If an individual who claims the credit with respect to net earnings from self-employment fails to pay the proper amount of self-employment tax on such net earnings, the failure 394 will be treated as a mathematical or clerical error for purposes of the amount of credit allowed. Senate amendment Similar to House bill. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. TITLE V: CHILD PROTECTION BLOCK GRANT PROGRAMS AND FOSTER CARE, ADOPTION ASSISTANCE, AND INDEPENDENT LIVING PROGRAMS Subtitle A\u2014Child Protection Block Grant Program and Foster Care, Adoption Assistance, and Independent Living Programs Present law Under current law, there are at least 36 programs designed to help children who are victims of abuse or neglect. These programs address the child protection issue by supporting abuse reporting and investigation; abuse prevention; child and family assessment, preservation, and support; foster care; adoption; and training of so- cial workers, foster parents, judges, and others. These programs can be divided into two general categories. The first are entitle- ment programs under jurisdiction of the Committee on Ways and Means and the Finance Committee, nearly all of which provide un- limited funding for foster and adoption maintenance payments, ad- ministrative costs, and training. The two exceptions are the Family Preservation and Support Program which provides capped entitle- ment funds to help States provide services that keep families to- gether and prevent abuse, and the Independent Living program which provides capped entitlement funds to help children in foster care make the transition to living on their own. The second group of programs are appropriated programs. These programs are small- er and, except the Child Welfare Services Program, are generally under the jurisdiction of the Economic and Educational Opportuni- ties Committee and the Labor and Human Resources Committee. House bill The House provision retains all the open-ended entitlement programs to ensure that States have adequate resources to help abused children that must be removed from their homes. The pro- vision also combines the two capped entitlement programs and many of the smaller programs into two block grants that will sim- plify administration, promote flexibility, and increase efficiency. Working in conjunction with the Committee on Economic and Edu- cational Opportunity, the Ways and Means Committee has created a block grant that is identical to a block grant created by the Op- portunities Committee. Across the two Committees, a total of 11 programs are combined into the new block grant structure. Pro- grams under jurisdiction of the Opportunities Committee are men- tioned briefly below to clarify the structure of the overall Federal program for helping abused children and their families. 395 Senate amendment The Senate amendment does not include the block grant; the amendment makes no changes in current law. Conference agreement The conference agreement follows the Senate amendment. Chapter 1\u2014Block Grants to States for the Protection of Children 1. PURPOSE Present law Child Welfare Services, now provided for in Title IV B of the Social Security Act, are designed to help States provide child wel- fare services, family preservation, and community-based family support services. House bill The proposed Child Protection Block Grant would replace cur- rent law under Title IV B. The purpose of the Child Protection Block Grant is to: (1) identify and assist families at risk of abusing or ne- glecting their children; (2) operate a system for receiving reports of abuse or ne- glect of children; (3) improve the intake, assessment, screening, and inves- tigation of reports of abuse and neglect; (4) enhance the general child protective system by improv- ing risk and safety assessment tools and protocols; (5) improve legal preparation and representation, including procedures for appealing and responding to appeals of substan- tiated reports of abuse and neglect; (6) provide support, treatment, and family preservation services to families which are, or are at risk of, abusing or ne- glecting their children; (7) support children who must be removed from or who cannot live with their families; (8) make timely decisions about permanent living arrange- ments for children who must be removed from or who cannot live with their families; (9) provide for continuing evaluation and improvement of child protection laws, regulations, and services; (10) develop and facilitate training protocols for individ- uals mandated to report child abuse or neglect; and (11) develop and enhance the capacity of community-based programs to integrate shared leadership strategies between parents and professionals to prevent and treat child abuse and neglect at the neighborhood level. Senate amendment The amendment does not change current law. Conference agreement The conference agreement follows the Senate amendment. 396 2. ELIGIBLE STATES Present law To be eligible for funding under Title IV B and IV E, States must have State plans, developed jointly with the Secretary under Title IV B, and approved by the Secretary under Title IV E. In ad- dition, to receive funds under the Child Abuse Prevention and Treatment Act (CAPTA), States must comply with certain require- ments including submission of a State plan. States must have a child welfare services plan developed joint- ly by the Secretary and the relevant State agency which provides for single agency administration and which describes services to be provided and geographic areas where services will be available. The State plan also must meet many other requirements, such as setting forth a 5-year statement of goals for family preservation and family support and assuring the review of progress toward those goals. For foster care and adoption assistance, States must submit for approval a Title IV E plan providing for a foster care and adoption assistance program and satisfying numerous require- ments. The Child Abuse Prevention and Treatment Act (CAPTA) requires States to have in effect a law for reporting known and sus- pected child abuse and neglect as well as providing for prompt in- vestigation of child abuse and neglect reports, among many other requirements. To receive funding under Title IV B and IV E of the Social Se- curity Act, States must comply with certain procedures for removal of children from their families when necessary, must develop case plans for each child that are reviewed at least every 6 months and contain specified information, and must establish specific goals for the maximum number of eligible children who will remain in foster care for more than 24 months. Under Title IV B, for fiscal years beginning on or after April 1, 1996, State plans must provide assurances that: (1) the State has completed an inventory of all children who, before the inventory, had been in foster care under the responsibility of the State for six months or more, which deter- mined: (i) the appropriateness of, and necessity for, the foster care placement; (ii) whether the child could or should be re- turned to the parents of the child or should be freed for adop- tion or other permanent placement; and (iii) the services nec- essary to facilitate the return of the child or the placement of the child for adoption or legal guardianship; (2) the State is operating to the satisfaction of the Sec- retary: (i) a statewide information system on children who are or have been in foster care in the last year; (ii) a case review system for each child receiving foster care under the super- vision of the State; (iii) a service program designed to help chil- dren return to families from which they have been removed; or be placed for adoption; (iv) a preplacement preventive service program designed to help children at risk remain with their families; and (3) the State has reviewed State policies and procedures in effect for children abandoned at birth; and is implementing (or, will implement by October 31, 1996) such policies or proce- 397 dures to enable permanent decisions with respect to the place- ment of such children to be made expeditiously. (For fiscal years beginning before April 1, 1996, these standards were in- centive funding requirements that States had to meet to re- ceive their full Title IV B allotment, and were known as sec- tion 427 protections.) Title IV E State plans must provide that reasonable efforts will be made prior to the placement of a child in foster care to pre- vent or eliminate the need for removal of the child from her home and to make it possible for the child to return to her home. Title IV E State plans must provide that, where appropriate, all steps will be taken, including cooperative efforts with State AFDC and child support enforcement agencies, to secure an assign- ment of any rights to support of a child receiving foster care main- tenance payments under Title IV E. House bill An ”Eligible State” is one that has submitted to the Secretary, not later than October 1, 1996, and every 3 years thereafter, a plan which has been signed by the Chief Executive Officer of the State. The plan must outline the State’s Child Protection Program and provide several certifications regarding the nature of its child pro- tection program. A State plan must thoroughly describe the State Child Protec- tion Program by describing State activities and procedures to be used for: (1) receiving and assessing reports of child abuse or ne- glect; (2) investigating such reports; (3) with respect to families in which abuse or neglect has been confirmed, providing services or referral for services for families and children where the State makes a determination that the child may safely remain with the family; (4) protecting children by removing them from dangerous settings and ensuring their placement in a safe environment; (5) providing training for individuals mandated to report suspected cases of child abuse or neglect; (6) protecting children in foster care; (7) promoting timely adoptions; (8) protecting the rights of families, using adult relatives as the preferred placement for children separated from their parents if such relatives meet all relevant standards; and (9) providing services aimed at preventing child abuse and neglect. The State plan must also certify that the State: (1) has in effect laws that require reporting of child abuse and neglect; (2) has in effect procedures for the immediate screening, safety assessment, and prompt investigation of child abuse or neglect reports; (3) has in effect procedures for the removal and placement of abused or neglected children; 398 (4) has in effect laws requiring immunity from prosecution under State and local laws for individuals making good faith reports of suspected or known cases of child abuse or neglect; (5) has in effect no later than 2 years after enactment, laws and procedures affording individuals an opportunity to appeal an official finding of abuse or neglect; (6) has in effect procedures for developing and reviewing written plans for the permanent placement of each child re- moved from the family that: specify the goal for achieving a permanent placement for the child in a timely fashion; ensure that the plan is reviewed every 6 months; and ensure that in- formation about the child is gathered regularly and placed in the case record. (7) has in effect a program to provide independent living services to 16 19 year old youths (and, at State option, youths up to age 22) who are in the foster care system but have no family to support them. (Under the proposal, States also will continue to receive capped entitlement grants for Independent Living services as under current law.) (8) has in effect procedures or programs (or both) to re- spond to reports of medical neglect of disabled infants; (9) has quantitative goals of the State child protection pro- gram; (10) will comply with respect to fiscal years beginning on or after April 1, 1996, with the same child protection standards as under current law. Standards related to abandoned children must be met by October 1, 1997; (11) will make reasonable efforts to prevent the placement of children in foster care and to make it possible for the child to return home. Each State must also certify that it provides services for children and families where maltreatment has been confirmed but the child remained with the family; (12) will take all appropriate steps, including cooperative efforts, to secure an assignment to the State of any rights to support on behalf of each child receiving foster care mainte- nance payments; and (13) has in effect requirements for disclosure of records only to specified individuals and entities, and provisions that allow for public disclosure of findings or information about cases of child abuse or neglect that have resulted in a child fa- tality or near fatality (except that such disclosure shall not in- clude identifying information about the individual initiating a report of suspected child abuse or neglect). The Secretary of HHS must determine whether the State plan includes the required materials and certifications (except material related to the certification of State procedures to respond to report- ing of medical neglect of disabled infants). The Secretary cannot add new elements beyond those listed above. Senate amendment The amendment does not change current law, except to require that the State plan for foster care and adoption assistance provide for the protection of the rights of families, using adult relatives as the preferred placement for children separated from their parents 399 where such relatives meet the relevant State child protection standards (see item 8). Conference agreement The conference agreement follows the Senate amendment with a modification to delete the proposed amendment dealing with adult relative preferences. 3. GRANTS TO STATES FOR CHILD PROTECTION Present law Title IV B of the Social Security Act contains both discre- tionary and capped entitlement funding for helping States provide assistance to troubled families and their children. Of capped enti- tlement funding for family preservation and support, 1 percent is reserved for Indians. For child welfare services under Title IV B, $325 million is authorized annually. For family preservation and support services, $225 million is authorized in fiscal year 1996; $240 million in fiscal year 1997; and $255 million in fiscal year 1998. State allotments for child welfare services are based on the State’s child population and per capita income. State allotments for family preservation and support are based on the number of chil- dren in the State receiving Food Stamps. Funds must be used for: ”protecting and promoting the welfare of children * * * preventing unnecessary separation of children from their families * * * restor- ing children to their families if they have been removed * * * fam- ily preservation services * * * community-based family support services to promote the well-being of children and families and to increase parents’ confidence and competence.” For-profit foster care providers are not eligible for Federal funding under Title IV E. Section 1123 of the Social Security Act requires the Secretary to establish by regulation a new Federal review system for child welfare which would allow penalties for misuse of funds. Regula- tions are expected to be published during the summer of 1996. (This provision would not be affected by the House proposal.) House bill The block grant contains both entitlement and appropriated funds. From the entitlement funds, each eligible State must receive from the Secretary an amount equal to the State share of the Child Protection Block Grant amount for the fiscal year (see below). A set-aside is provided for Indians equal to 1 percent of the entitle- ment money flowing into the block grant. Each eligible State is also given funds equal to the State share of the authorization component of the block grant that is appro- priated each year. Indians are given 0.36 percent of the appro- priated money flowing into the block grant. Funds for the author- ization component of the block grant under this section are not to exceed $325 million each year. No funds from the block grant can be used to pay for foster care or adoption maintenance payments. The term ”child protection amount” means: $240 million for fis- cal year 1997; $255 million for fiscal year 1998; $262 million for fis- 400 cal year 1999; $270 million for fiscal year 2000; $278 million for fis- cal year 2001; $286 million for fiscal year 2002. The term ”State share” means the qualified child protection ex- penses of a State divided by the sum of the qualified child protec- tion expenses of all of the States. The term ”qualified State expend- iture” means Federal grants to the State under the Child Welfare Services Grant and the Family Preservation and Support Services Grant in fiscal year 1994 or the average of 1992 94, whichever is greater. In determining amounts for fiscal years 1992 through 1994, the Secretary shall use information listed as actual amounts in the Justification for Estimates for Appropriation Committees of the Administration for Children and Families for fiscal years 1994 through 1996. A State to which funds are paid under this section may use the money in any manner the State deems appropriate to accomplish the purposes of this part, but the funds must be expended not later than the end of the immediately succeeding fiscal year. For-profit, foster care facilities are eligible to receive funds from the block grant. Under the terms and conditions of the block grant, States are subject to several penalties: (1) For misuse of funds. If an audit determines that any amounts provided to a State have been spent in violation of this part, the Secretary must reduce the grant otherwise pay- able for the next fiscal year by the amount of the misspent funds, plus 5 percent of the grant; (2) For failure to maintain effort. If States fail to maintain State spending equal to State expenditures under Part B of Title IV in fiscal year 1994, the Secretary must reduce the grant payable under this section by an amount equal to the previous year’s shortfall in maintenance of effort. A penalty of 5 percent of the State grant must also be imposed. States must maintain 100 percent of prior effort in fiscal years 1997 and 1998; and 75 percent in fiscal years 1999 through 2002; (3) For failure to submit report. If the Secretary deter- mines that the State has not submitted mandatory adoption and foster care data reports within 6 months of the end of the fiscal year, the Secretary must reduce by 3 percent the amount of the State’s block grant. If the report is submitted before the end of the immediately succeeding fiscal year, the Secretary shall rescind the penalty. Except in the case of failure to maintain effort, the Secretary may not impose a penalty if the determination is made that the State has reasonable cause for failing to comply with the require- ment. Further, a State must be informed before any penalty is im- posed and be given an opportunity to enter into a corrective compli- ance plan. The provision includes a series of deadlines for submis- sion of such corrective compliance plans and review by the Federal government. No quarterly payment can be reduced by more than 25 percent; penalty amounts above 25 percent must be carried for- ward to subsequent quarters. Each territory is entitled to receive from the Secretary for any fiscal year an amount equal to the total obligations due to the terri- tory under the Social Security Act for fiscal year 1995. 401 Except as expressly provided in this Act, the Secretary may not regulate the conduct of States under this part or enforce any provi- sion of this Act. Senate amendment The amendment does not change current law, except that it would amend the definition of ”child care institution” to include for- profit providers (see item 6). Conference agreement The conference agreement follows the Senate amendment. 4. DATA COLLECTION AND REPORTING Present law In 1986, Congress established the National Advisory Commit- tee on Adoption and Foster Care Information to assist HHS in de- signing a new comprehensive nationwide data collection system with full system implementation expected to be completed by Octo- ber 1991. However, final regulations were not issued until Decem- ber 1993 with the first transmission of data due May 1995. All States are now participating in the Adoption and Foster Care Anal- ysis and Reporting System (AFCARS). HHS is currently analyzing the first datasets transmitted from the States. The final rules re- quire semi-annual reporting on all children in foster care. The data collection is child and case specific and is intended to yield a semi- annual snapshot of child welfare trends. It is also intended to yield information that will enable policymakers to ”track” children in care and find out the reasons why children enter foster care, how long children stay in foster care, and what happens to children while in foster care as well as after they leave foster care. In 1993, Congress authorized enhanced funding of 75 percent for both the AFCARS system and for several additional functions not originally envisioned as part of AFCARS capability. These new functions included electronic data exchange within the State, auto- mated data collection on all children in foster care, collection and management of information necessary to facilitate delivery of child welfare services and to determine eligibility for such services, case management, case plan development and monitoring, and informa- tion security. Enhanced funding of 75 percent for this second data system, which HHS calls the Statewide Automated Child Welfare Information System (SACWIS), expires on October 1, 1996. House bill The House provision leaves unaltered the current State data reporting system on child protection. The enhanced funding rate of 75 percent for the Statewide Automated Child Welfare Information System (SACWIS) is extended for 1 additional year, through fiscal year 1997. Senate amendment Same. 402 Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 5. FUNDING FOR STUDIES OF CHILD WELFARE Present law Sec. 426 authorizes discretionary funding for child welfare re- search and demonstration projects. No funds were appropriated in 1996. House bill The Secretary is entitled to receive, for each of fiscal years 1996 through 2002, $6 million to conduct a national study based on random samples of children who are at risk of child abuse or neglect, and $10 million for other research. Senate amendment The amendment does not change current law. Conference agreement The conference agreement follows the House bill. The conferees recommend that the Secretary, in conducting the random sample study, require that the study have a longitudinal component and yield data that is reliable at the State level for as many States as she determines is feasible. The conferees also recommend that the Secretary carefully consider selecting the sample from cases of con- firmed abuse or neglect and follow each case for several years while obtaining information on, among other things, the type of abuse or neglect involved, the frequency of contact with State or local agen- cies, whether the child involved has been separated from the fam- ily, and, if so, under what circumstances, the number, type, and characteristics of out-of-home placements of the child, and the aver- age duration of each placement. 6. DEFINITIONS Present law The term ”child care institution” means a licensed nonprofit private or public facility which accommodates no more than 25 chil- dren. The term does not apply to detention facilities, forestry camps, training schools, or centers for delinquent children. House bill Same as present law, except the word ”nonprofit” is deleted. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 403 7. CONFORMING AMENDMENTS Present law House bill This section makes a series of technical and conforming amendments to the Social Security Act and the Omnibus Budget Reconciliation Act of 1986. Senate amendment The amendment redesignates section 1123 (42 U.S.C. 1320a 1a) the second place it appears as section 1123A. Conference agreement The conference agreement follows the Senate amendment. Chapter 2\u2014Foster Care, Adoption Assistance, and Independent Living Programs 8. CHANGES IN TITLE IV E OF THE SOCIAL SECURITY ACT Present law Title IV E Foster Care and Title IV E Adoption Assistance are intended to help States finance foster care and adoption assistance maintenance payments, administration, child placement services, and training related to foster care and adoption assistance. The purpose of the Title IV E Independent Living Program is to help older foster children make the transition to independent liv- ing. House bill The most notable feature of House action on Title IV E is that all the entitlement programs remain intact. In addition, the House retains the provision of current law that guarantees Medicaid cov- erage for children who receive maintenance payments from either the foster care or adoption programs. On the other hand, the House provision does change current law in three ways. First, the current law guarantee of eligibility for foster care and adoption maintenance payments for children eligible for the Aid to Families with Dependent Children (AFDC) program was dis- rupted because the AFDC statute was completely rewritten to give States the authority to establish their own welfare programs. To ensure that the eligibility of poor children for maintenance pay- ments continues, the House provision guarantees eligibility for all children from families that would have been eligible for the AFDC program as it existed in each State on the day before enactment of this legislation. Second, the House provision allows States to use private for- profit foster care facilities. The House believes that States should be allowed to use private child care organizations because they are fully capable of providing quality services. States are responsible for ensuring that children are in safe and reliable care whether it is provided by public or private entities. The House can see no rea- son to automatically refuse participation by an entire sector of the child caring community. 404 Third, the House provided enhanced funding for the Statewide Automated Child Welfare Information System (SACWIS) because automation is a vital part of providing quality child protection serv- ices. The House has investigated progress by the States in creating SACWIS and has found that several States are now ready to begin actual implementation and that as many as half the States can be expected to have operational systems by next year if funding re- mains available. Thus, the House is extending the enhanced fund- ing rate of 75 percent to encourage States to invest money in these important systems. Senate amendment The amendment amends Title IV E to include for-profit pro- viders in the definition of ”child care institutions” (see item 6). The provision also amends Title IV E to require that the State plan for foster care and adoption assistance provide for the protection of the rights of families, using adult relatives as the preferred placement for children separated from their parents where such relatives meet the relevant State child protection standards. Conference agreement The conference agreement follows the Senate amendment with a modification to delete the proposed amendment dealing with adult relative preference. Chapter 3\u2014Miscellaneous 9. SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL FOR TECHNICAL AND CONFORMING AMENDMENTS Present law No provision. House bill Not later than 90 days after the date of enactment, the Sec- retary of Health and Human Services must submit to Congress a legislative proposal providing for technical and conforming amend- ments required by the changes made in this subtitle of the pro- posal. Senate amendment No provision. Conference agreement The conference agreement follows the Senate amendment. 10. SENSE OF THE CONGRESS REGARDING TIMELY ADOPTION OF CHILDREN Present law No provision. House bill This section expresses the sense of Congress that too many adoptable children are spending too much time in foster care, that 405 States must take steps to increase the number of children who are adopted in a timely manner, and that States could achieve savings if they offered incentives for the adoption of special needs children, among other provisions. Senate amendment No provision. Conference agreement The conference agreement follows the Senate amendment. 11. EFFECTIVE DATE; TRANSITION RULES Present law No provision. House bill The changes made in this subtitle will be effective on or after October 1, 1996. Provisions that authorize and appropriate funds in fiscal year 1996 for research and court improvements, and cer- tain technical and conforming amendments are effective upon en- actment. The proposal establishes transition rules for pending claims, actions and proceedings, and closing out accounts for pro- grams that are terminated or substantially modified. Senate amendment No provision. Conference agreement The conference agreement follows the Senate amendment. Subtitle B\u2014Child and Family Services Block Grant Present law No provision. House bill The block grant and associated activities under Subtitle B are under the jurisdiction of the Economic and Educational Opportuni- ties Committee in the House and the Labor and Human Resources Committee in the Senate. The Child and Family Services Block Grant created by Subtitle B consolidates the following programs into a single block grant: The Child Abuse Prevention and Treat- ment Act, the Abandoned Infants Assistance Act, adoption opportu- nities under the Child Abuse Prevention and Treatment and Adop- tion Reform Act, the family support centers under the McKinney Homeless Assistance Act, and the Temporary Child Care and Crisis Nurseries Act. The Child and Family Services Block Grant has the same State plan and certification requirements as the Child Protec- tion Block Grant created by Subtitle A. The two Block Grants also have the same data collection and reporting requirements for child abuse incidence data and for the implementation of foster care and adoption tracking systems. The Child and Family Services Block Grant is authorized at $230 million for fiscal year 1996 and ”such sums as may be necessary” are authorized for fiscal year 1997 406 through fiscal year 2002. Title II of the Child and Family Services Block Grant provides that funds be available for research, dem- onstrations, training and technical assistance to better protect chil- dren from maltreatment. Funds under this block grant also will es- tablish a National Clearinghouse for Information Relating to Child Abuse, provide demonstration grants for the development of inno- vative programs, provide technical assistance to States to assist with child abuse investigation and the termination of parental rights proceedings, and provide training for professionals in related fields. For these Title II activities, 12 percent of the $230 million provided for this Block Grant is authorized of which 40 percent must be available for demonstration projects. The Missing Chil- dren’s Assistance Act and the Victims of Child Abuse Act of 1990 are both reauthorized. Senate amendment No provision. Conference agreement The conference agreement follows the Senate amendment. TITLE VI: CHILD CARE 1. SHORT TITLE AND REFERENCES Present law No provision. House bill Short Title: Child Care and Development Block Grant Amend- ments of 1996. Unless otherwise specified, references should be considered as made to the Child Care and Development Block Grant Act of 1990. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 2. GOALS Present law No provision. House bill This section establishes the following goals for the Child Care and Development Block Grant: (1) to allow each State maximum flexibility in developing child care programs and policies that best suit the needs of children and parents within the State; (2) to promote parental choice in making decisions on the child care that best suits their family’s needs; 407 (3) to encourage States to provide consumer information to help parents make informed child care choices; (4) to assist States in providing child care to parents trying to become independent of public assistance; and (5) to assist States in implementing the health, safety, li- censing and registration standards established in State regula- tions. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 3. AUTHORIZATION OF APPROPRIATIONS AND ENTITLEMENT AUTHORITY Present law The authorization of appropriations for the Child Care and De- velopment Block Grant expires at the end of fiscal year 1995. Ap- propriations in fiscal year 1996 are $935 million. (Sec. 658B of the CCDBG Act) [Note.\u2014In addition to appropriated funds, entitlement funds are available for the Child Care Block Grant under the AFDC Child Care, Transitional Child Care, and At-Risk Child Care pro- grams authorized by Title IV A of the Social Security Act.] House bill Authorization of Appropriations. There are authorized to be ap- propriated $1,000,000,000 for each of fiscal years 1996 through 2002. (Additional mandatory funding will be provided for child care under the Social Security Act so that a total of $22 billion will be provided for child care over the 7-year period fiscal years 1996 2002.) Child Care Entitlement. The proposal establishes a single child care block grant and State administrative system by adding man- datory funds to the existing Child Care and Development Block Grant (CCDBG). Specifically, one discretionary and two mandatory streams of funding will be consolidated in a reconstituted CCDBG. a. State General Entitlement. From the stream of entitlement funding, each State will receive the amount of funds it received for child care under all of the entitlement programs currently under Title IV A of the Social Security Act (AFDC Child Care, Transi- tional Child Care, and At-Risk Child Care) in fiscal year 1994, in fiscal year 1995, or the average amount in fiscal years 1992 through 1994, whichever is greater. This source of funds will pro- vide States with approximately $1.2 billion for child care each year between 1997 and 2002. b. Remainder. The mandatory funds remaining after the allo- cation to Indians (see below) and the State General Entitlement (see above) will be distributed among the States based on the for- mula currently used in the Title IV-A At-Risk Child Care Grant. Specifically, funds will be distributed based on the proportion of the number of children under age 13 residing in the State to the num- 408 ber of all of the Nation’s children under age 13. States must pro- vide matching funds at the fiscal year 1995 State Medicaid rate to receive these funds and must maintain spending at their fiscal year 1994 or 1995 level, whichever is greater, under the Title IV A child care programs. The money available to States through this source of funds for fiscal years 1997 through 2002, respectively, will be: $0.76 billion, $0.86 billion, $0.96 billion, $1.16 billion, $1.36 billion, and $1.51 billion. If a State does not use its full portion of funds, the remaining portion will be redistributed to other States according to section 402(i) of the At-Risk Child Care Grant (as such section was in ef- fect before October 1, 1995). Thus, each State applying for these re- maining funds will receive the percentage of funds that equals the percentage of children under age 13 residing in that State of all children under age 13 residing in all the States that apply for funds. The Secretary must determine whether States will use their entire portion of funds no later than the end of the first quarter of the subsequent fiscal year. c. Appropriation. Total child care funds under this proposal will equal $22 billion for child care over the 7-year period fiscal years 1996 2002, including both the $15 billion in mandatory funds discussed above and $7 billion in discretionary funds. Under current law for the three existing AFDC-related child care pro- grams, $1.1 billion in mandatory funds will be spent in fiscal year 1996. In addition, a total of $13.85 billion in mandatory funds would be authorized for child care in fiscal years 1997 2002, start- ing at $2.0 billion in fiscal year 1997 and rising to $2.7 billion in fiscal year 2002. Finally, as stated earlier, $1 billion will be author- ized annually in discretionary funds for the Child Care and Devel- opment Block Grant. d. Indian Tribes. One percent of all funds under the section are provided to Indian tribes. Use of Funds. Funds shall only be used to provide child care assistance. Amounts received by a State, based on the amounts re- ceived in previous years, shall be available for use by the State without fiscal year limitation. All funds from both mandatory and discretionary sources must be transferred to the lead agency under the Child Care and Development Block Grant and integrated into the State child care programs. Not less than 70 percent of the total amount of mandatory funds received by the State in a fiscal year must be used to provide child care assistance to families that are receiving assistance under a State program, families that are attempting to transition off pub- lic assistance, and families at risk of becoming dependent on public assistance. Senate amendment Same. Conference agreement The conference agreement follows the House bill and Senate amendment, with a modification. The Secretary shall reserve not less than 1 percent and not more than 2 percent of the total 409 amount appropriated (both mandatory and discretionary) in each fiscal year for payments to Indian tribes and tribal organizations. 4. LEAD AGENCY Present law The Chief Executive Officer of a State is required to designate an appropriate State agency to act as the lead agency in admin- istering financial assistance under the Act. (Sec. 658D of the CCDBG Act) House bill The proposal requires States to identify a lead agency to ad- minister all the child care funds received under the Act, including funds received through other ”governmental or nongovernmental” agencies (instead of other ”State” agencies). States must ensure that ”sufficient time and statewide distribution of the notice” be given of the public hearing on the development of the State plan. This section strikes language in current law specifying issues that may be considered during consultation with local governments on development of the State plan. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 5. APPLICATION AND PLAN Present law States are required to prepare and submit to the Secretary an application that includes a State plan. The initial plan must cover a 3-year period, and subsequent plans must cover 2-year periods. Required contents of the plan include designation of a lead agency; outline of policies and procedures regarding parental choice of pro- viders, summary of policies that guarantee unlimited parental ac- cess, parental complaints, and consumer education; and overview of policies that ensure compliance with State and local regulatory re- quirements, establishment of and compliance with health and safe- ty requirements, and review of State licensing and regulatory re- quirements. In addition, the State plan must provide that all funds will be used for child care services, and that 25 percent of funds will be reserved for activities to improve the quality of child care and to increase the availability of early childhood development and before- and after-school child care. (Sec. 658E of the CCDBG Act) State plans must also assure that payment rates will be ade- quate to provide eligible children with equal access to child care as compared with children whose families are not eligible for sub- sidies, and must assure that the State will establish and periodi- cally revise a sliding fee scale that provides for cost sharing by families that receive child care subsidies. 410 House bill The proposal requires the State plan to cover a 2-year period. States must provide a detailed description of procedures to be used to assure parental choice of providers. Instead of ”providing assur- ances,” States must ”certify” that procedures are in effect within the State to ensure unlimited parental access to the families pro- viding care to children and to ensure parental choice of child care provider; the proposal also requires that the State plan provide a detailed description of such procedures. Instead of ”providing assur- ances,” a State must ”certify” that it maintains a record of parental complaints and requires the State to provide a detailed description of how such a record is maintained and made available. The pro- posal changes the consumer education part of the State plan to re- quire assurances that the State will collect and disseminate consumer education information. States must certify that they have in effect child care licensing requirements and provide a detailed description of the requirements and how they are enforced. This provision does not require that licensing requirements be applied to specific types of child care providers. States must ”certify” that procedures are in effect to ensure that child care providers receiving funds under this Act comply with applicable State or local health and safety requirements. The Secretary is required to develop minimum standards for Indian tribes and tribal organizations receiving assistance. The proposal eliminates review of State licensing and regu- latory requirements, notification to the Department of Health and Human Services (HHS) when standards are reduced, and supplementation. The proposal also eliminates the requirement that unlicensed providers be registered. The House decided to re- tain a current law requirement that all States establish health and safety standards. The House provision does not specify the particu- lar standards that must be established, but all States must have requirements on prevention and control of infectious diseases (in- cluding immunizations), building and physical premises safety, and minimum health and safety training. A summary of the facts relied upon by the State to determine that payment rates are sufficient to ensure equal access to child care must be included in the State plan. Funds must be used for child care services, for activities to improve the quality and avail- ability of such services, and for any other activity that the State deems appropriate to realize the goals specified above. The pro- posal deletes the current law requirement that States reserve 25 percent of funds for activities to improve the quality of child care and to increase availability of early childhood development and before- and after-school care. States may spend no more than 5 per- cent on administrative costs. States must spend a substantial portion of the amounts avail- able to provide child care to low-income working families who are not working their way off welfare or are at risk of becoming welfare dependent. However, States first must comply with requirement that at least 70 percent of mandatory funds must be used for wel- fare or at-risk families. States must demonstrate how they will meet the child care needs of welfare and at-risk families. 411 Senate amendment Same, except the Senate maintains current law (which re- quires States to ”provide assurances” that child care providers re- ceiving funds under this Act comply with applicable State or local health and safety requirements). Conference agreement The conference agreement follows the House bill with a modi- fication. The provision requires States to ”certify” that health and safety requirements are in effect within a State applicable to child care providers. Nothing in the legislation either prohibits or requires States to differentiate between federally subsidized child care and nonsub- sidized child care regarding the application of specific standards and regulations. The cap of 5 percent on administrative costs is in- cluded in both the House and Senate passed bills. To help States implement this provision, the Department of Health and Human Services should issue regulations, in a timely manner and prior to the deadline for submission of State plans, that define and deter- mine true administrative costs, as distinct from expenditures for services. Eligibility determination and redetermination, prepara- tion and participation in judicial hearings, child care placement, the recruitment, licensing, inspection, reviews and supervision of child care placements, rate setting, resource and referral services, training, and the establishment and maintenance of computerized child care information are an integral part of service delivery and should not be considered administrative costs. 6. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE Present law As stated above, 25 percent of State allotments must be re- served for activities to improve child care quality and to increase the availability of early childhood development and before- and after-school child care. Section 658G specifies how these funds are to be used. Of reserved funds, States are required to use no less than 20 percent for improving the quality of care, including re- source and referral programs, making grants or loans to assist pro- viders in meeting State and local standards, monitoring of compli- ance with licensing and regulatory requirements, training of child care personnel, and improving compensation for child care person- nel. (Sec. 658G of the CCDBG Act). House bill A State that receives child care funds must use at least 4 per- cent of all funds received (both mandatory and discretionary) for activities designed to provide comprehensive consumer education to parents and the public, for activities that increase parental choice, and for activities designed to improve the quality and availability of child care. Senate amendment Same. 412 Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 7. REPEAL OF EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER-SCHOOL CARE REQUIREMENT Present law States are required to use no less than 75 percent of funds re- served for quality improvement for activities to expand and conduct early childhood development programs and before- and after-school child care. (Sec. 658H of the CCDBG Act) House bill The set-aside for early childhood development programs and before- and after-school care is repealed. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 8. ADMINISTRATION AND ENFORCEMENT Present law The Secretary of Health and Human Services (HHS) is re- quired to coordinate HHS and other Federal child care agencies, to collect and publish a list of State child care standards every 3 years, and to provide technical assistance to States. The Secretary must also review, monitor, and enforce compliance with the Act and the State plan by withholding payments and imposing addi- tional sanctions in certain cases. (Sec. 658I of the CCDBG Act) House bill This section strikes the current law requirement that the Sec- retary withhold further payments to a State in case of a finding of noncompliance until the noncompliance is corrected. Instead, the Secretary is authorized, in such cases, to require that the State re- imburse the Secretary for any improperly spent funds, or the Sec- retary may deduct from the administrative portion of the State’s subsequent allotment an amount equal to or less than the misspent funds, or a combination of such options. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 413 9. PAYMENTS Present law Payments received by a State for a fiscal year may be ex- pended in that fiscal year or in the succeeding 3 fiscal years. (Sec. 658J of the CCDBG Act) House bill The bill replaces the word ”expended” with ”obligated”. How- ever, the bill contains a drafting error. A provision that would have struck ”3 fiscal years” and inserted ”fiscal year” was inadvertently dropped. Senate amendment The Senate amendment contains the same drafting error. Conference agreement The conference agreement corrects a previous drafting error by striking ”3 fiscal years” and inserting ”fiscal year”. 10. ANNUAL REPORT AND AUDITS Present law States must prepare and submit to the Secretary every year a report specifying how funds are used; presenting data on the man- ner in which the child care needs of families in the State are being fulfilled, including information on the number of children served, child care programs in the State, compensation provided to child care staff, and activities to encourage public-private partnerships in child care; describing the extent to which affordability and avail- ability of child care has increased; summarizing findings from a re- view of State licensing and regulatory requirements, if applicable; explaining any action taken by the State to reduce standards, if ap- plicable; and describing standards and health and safety require- ments applied to child care providers in the State, including a de- scription of efforts to improve the quality of child care. (Sec. 658K of the CCDBG Act) House bill The title of the section is changed from ”Annual Report and Audits” to ”Reports and Audits.” States must collect on a monthly basis, and report to HHS on a quarterly basis, the following infor- mation on each family receiving assistance: (1) family income; (2) county of residence; (3) the gender, race, age of children receiving benefits; (4) whether the family includes only one parent; (5) the sources of family income, including: (a) the amount obtained from employment, including self-employment; (b) cash assistance or other assistance under Part A; (c) housing assistance; (d) food stamps; and (e) other public assistance; 414 (6) the number of months the family has received benefits; (7) the type of care in which the child was enrolled (family day care, center, own home); (8) whether the provider was a relative; (9) the cost of care; and (10) the average hours per week of care. Twice each year, the State must submit the following aggre- gate data to HHS: (1) the number of providers separately identified in accord with each type of provider that received funding under this subchapter; (2) the monthly cost of child care services and the portion of such cost paid with assistance from this Act by type of care; (3) the number of payments by the State in vouchers, con- tracts, cash, and disregards from public benefit programs by type of care; (4) the manner in which consumer education information was provided and the number of parents who received it; and (5) total number (unduplicated) of children and families served. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 11. REPORT BY THE SECRETARY Present law The Secretary is required to prepare and submit an annual re- port, summarizing and analyzing information provided by States, to the House Education and Labor Committee and the Senate Labor and Human Resources Committee. This report must contain an assessment and, where appropriate, recommendations to Con- gress regarding efforts that should be taken to improve access of the public to quality and affordable child care. (Sec. 658L of the CCDBG Act) House bill The Secretary must prepare and submit biennial reports, rath- er than annual reports, with the first report due no later than July 31, 1997; the reference to the House Education and Labor Commit- tee is replaced with the House Economic and Educational Opportu- nities Committee. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 415 12. ALLOTMENTS Present law The Secretary must reserve one-half of 1 percent of appropria- tions for payment to Guam, American Samoa, the Virgin Islands, the Northern Marianas, and the Trust Territory of the Pacific Is- lands. The Secretary also must reserve no more than 3 percent for payment to Indian tribes and tribal organizations with approved applications. Remaining funds are allocated to the States based on the States’ proportion of children under age 5 and the number of children receiving free or reduced-price school lunches, as well as the States’ per capita income. Any portion of a State’s reallotment that the Secretary determines is not needed by the State to carry out its plan for the allotment period must be reallotted by the Sec- retary to the other States in the same proportion as the original allotments. (Sec. 658O of the CCDBG Act) House bill Set-asides for the Territories, Indian tribes, and tribal organi- zations are maintained, except that the Trust Territory of the Pa- cific Islands is deleted from the set-aside for Territories. Indian tribes are provided with a 1 percent set-aside of all funds, both en- titlement and appropriated, authorized by this section each year. Under some circumstances, and with approval from the Secretary, Indian tribes are authorized to use a portion of their funds for ren- ovation and construction of child care facilities. Within the overall block grant for social programs provided to the territories, each ter- ritory is authorized to spend whatever portion they choose of their capped amount on child care (for additional details see item 79 of Title I). Allotments to States were described in item 3 above. Senate amendment Same as the House bill except the Indian tribes are provided with a 3-percent set-aside for child care. Conference agreement The conference agreement follows the House bill with a modi- fication. The Secretary shall reserve not less that 1 percent and not more than 2 percent of the total amount appropriated (both manda- tory and discretionary) in each fiscal year for payments to Indian tribes and tribal organizations. 13. DEFINITIONS Present law The following terms are defined: caregiver, child care certifi- cate, elementary school, eligible child, eligible child care provider, family child care provider, Indian tribe, lead agency, parent, sec- ondary school, Secretary, sliding fee scale, State, and tribal organi- zation. (Sec. 658P of the CCDBG Act) House bill Child care deposits are added as an allowable use of a child care certificate. The definition of ”eligible child” is revised to one 416 whose family income does not exceed 85 percent of the State me- dian, instead of 75 percent. The definition of ”relative child care provider” is revised by adding great grandchild and sibling (if the provider lives in a separate residence) to the list of eligible relative providers and the requirement that relatives providing care be reg- istered is struck. Relative providers are required to comply with any applicable requirements governing child care provided by a rel- ative, rather than State requirements. The definition for elemen- tary and secondary school is eliminated. The Trust Territory of the Pacific Islands is dropped from the definition of ”State.” Native Ha- waiian Organization is added to the definition of ”tribal organiza- tion.” Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 14. REPEALS Present law No provision. House bill The proposal repeals the following programs: (1) Child Devel- opment Associate (CDA) Scholarship Assistance; (2) State Depend- ent Care Development Grants; (3) Programs of National Signifi- cance under Title X of the Elementary and Secondary Education Assistance Act of 1965 (child care related to Cultural Partnerships for At-Risk Children and Youth, and Urban and Rural Education Assistance); and (4) Native-Hawaiian Family-Based Education Cen- ters. [NOTE.\u2014Title I of the proposal also repeals child care assistance provided under current law by Title IV A of the Social Security Act. This assistance is provided under three programs known as AFDC Child Care, Transitional Child Care, and At- Risk Child Care. Thus, the total number of child care programs merged into the Child Care and Development Block Grant is seven.] Senate amendment The Senate amendment does not repeal the following pro- grams: (1) Child Development Associate (CDA) Scholarship Assist- ance; (2) State Dependent Care Development Grants; (3) Programs of National Significance under Title X of the Elementary and Sec- ondary Education Assistance Act of 1965; and (4) Native Hawaiian Family-Based Education Centers. Conference agreement The conference agreement follows the Senate amendment. 15. EFFECTIVE DATE Present law No provision. 417 House bill This title and the amendments made by this title take effect on October 1, 1996; the authorization of appropriations and entitle- ment authority under section 8103(a) take effect on the date of en- actment. Senate amendment Same. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. TITLE VII: CHILD NUTRITION PROGRAMS Subtitle A\u2014National School Lunch Act 1. STATE DISBURSEMENT TO SCHOOLS Present law State Agency Authority. The provision of law requiring that agreements between State education agencies and schools be per- manent may not be ”construed” as limiting the ability of State agencies to suspend or terminate agreements in accordance with the Secretary’s regulations. [Sec. 8 of the NSLA] Technical Amendments. ”Child” for purposes of the NSLA is defined to include individuals, regardless of age, who are (a) deter- mined to have 1 or more disabilities and (b) attending an institu- tion for the purpose of participating in a program for individuals with mental or physical disabilities. [Sec. 8 of the NSLA] House bill State Agency Authority. Clarifies State education agencies’ au- thority to terminate or suspend agreements with schools participat- ing in school meal programs. [Sec. 3401] Technical Amendments. Makes a technical amendment placing this definition of child in the section of the NSLA containing other general definitions. [Sec. 3401] [NOTE.\u2014Sec. 3401 also makes conforming amendments to cross-references in sec. 8 of the NSLA.] Senate amendment State Agency Authority. Same provision. [Sec. 1201] Technical Amendments. Same provision with technical dif- ferences. [Sec. 1201] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills regarding State Agency Authority and adopts the Senate provision on Technical Amendments. [Sec. 701] 418 2. NUTRITIONAL AND OTHER PROGRAM REQUIREMENTS Present law Lowfat Cheese Purchases. Each calendar year, the Secretary is required to purchase specific amounts of lowfat cheese on a bid basis. [Sec. 9(a)(2) of the NSLA] Food Waste Procedures. The Secretary is required to establish administrative procedures designed to diminish food waste in schools. [Sec. 9(a)(3) of the NSLA] Announcing Guidelines. Each school year, State education agencies and schools are required to announce income eligibility guidelines to be used for free and reduced price lunches. [Sec. 9(b)(2) of the NSLA] Commodities. Schools in the school lunch program are required to use, as far as practicable, commodities designated by the Sec- retary as being in ”abundance.” The Secretary is authorized to prescribe terms and conditions under which donated commodities will be used in schools and other participating institutions. [Sec. 9(c) of the NSLA] Nutrition Information\/Requirements. By the first day of the 1996 1997 school year, the Secretary, State education agencies, schools, and school food service authorities are required, to the maximum extent practicable, to inform students and parents of the nutrition content of school meals and their consistency with the most recent Dietary Guidelines for Americans. [Sec. 9(f)(1) of the NSLA] Unless a waiver is granted by a State education agency, schools must serve meals that are consistent with the Dietary Guidelines for Americans (using the weekly average nutrient con- tent of the meals) by the beginning of the 1996 1997 school year. [Sec. 9(f)(2) of the NSLA] Use of Resources. State education agencies may use resources provided under the nutrition education and training program for training aimed at improving the quality and acceptance of school meals. [Sec. 9(h) of the NSLA] House bill Lowfat Cheese Purchases. Deletes the lowfat cheese purchase requirement. [Sec. 3402(a)] Food Waste Procedures. Deletes the requirement for the Sec- retary to establish procedures to diminish food waste. [Sec. 3402(a)] Announcing Guidelines. Deletes the requirements to annually announce income eligibility guidelines. [Sec. 3402(b)] Commodities. Deletes the requirement to use foods designated as abundant. Deletes the authority for the Secretary to prescribe terms and conditions for the use of commodities. [Sec. 3402(c)] Technical\/Conforming Changes. Makes a technical\/conforming amendment consistent with the elimination of the requirement to announce guidelines. Makes a technical\/conforming amendment to delete a provision dealing with discrimination against and identi- fication of children receiving free or reduced price lunches found elsewhere in the law. [Sec. 3402(b) & (d)] 419 Nutrition Information\/Requirements. Deletes the requirement to inform students and parents about the nutrition content of meals and their consistency with the Dietary Guidelines. [Sec. 3402(e)] Replaces the existing requirement to serve meals consistent with the Dietary Guidelines. Unless a waiver is granted by a State education agency, schools must serve meals that are consistent with the Dietary Guidelines by the beginning of the 1996 1997 school year. The meals must provide, on average over each week, at least one-third of the National Academy of Sciences’ daily rec- ommended dietary allowances (in the case of lunches) or one-quar- ter of the allowances (in the case of breakfasts). [Sec. 3402(e)] Use of Resources. Deletes the authority to use nutrition edu- cation and training funding for improving school meals (this au- thority is provided elsewhere in law). [Sec. 3402(f)] Senate amendment Lowfat Cheese Purchases. Same provision. [Sec. 1202(a) & (c)] Food Waste Procedures. Same provision. [Sec. 1202(a)] Announcing Guidelines. No provision. Commodities. Same provisions. [Sec. 1202(b)] Technical\/Conforming Changes. No provisions. Nutrition Information\/Requirements. Same provision. [Sec. 1202(d)] Use of Resources. Same provision. [Sec. 1201(e)] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. With respect to Announcing Guidelines, the con- ference agreement adopts the Senate provision. [Sec.702] 3. FREE AND REDUCED PRICE POLICY STATEMENT Present law No provision. House bill Provides that schools may not be required to submit free and reduced price ”policy statements” to State education agencies un- less there is a substantive change in the free and reduced price pol- icy of the school. Routine changes (e.g., adjusting income eligibility standards) are not sufficient cause for requiring a school to submit a policy statement. [Sec. 3403] Senate amendment Same provisions with a technical difference clarifying that school food authorities, rather than schools, are the entities that may not be required to submit a policy statement. [Sec. 1203] Conference agreement The conference agreement adopts the Senate provisions. [Sec.703] 420 4. SPECIAL ASSISTANCE Present law ”Provision 2.” Schools electing to serve all children free meals for 3 successive years may be paid special assistance payments for free and reduced price meals based on the number of meals served free or at a reduced price in the first year (”provision 2”). Schools electing this option as of November 1994 may receive a 2-year ex- tension from the State if it determines that the income level of the school’s population has remained stable. Schools receiving a 2-year extension may receive subsequent 5-year extensions (except that the Secretary may require that applications be taken at the begin- ning of any 5-year period). [Sec. 11(a)(1) of the NSLA] Terms and Conditions. The terms and conditions governing the operation of the school lunch program (set forth in other sections of the NSLA, except for matching requirements) apply to special assistance under the school lunch program, to the extent they are not inconsistent with the express requirements of the section gov- erning special assistance. [Sec. 11(d) of the NSLA] Monthly Reports. State education agencies must report each month the average number of children receiving free and reduced price lunches during the immediately preceding month. [Sec. 11(e)(2) of the NSLA] House bill ”Provision 2.” Allows all ”provision 2” schools to qualify for ex- tensions. [Sec. 3404(a)] Terms and Conditions. Deletes ”terms and conditions” require- ments. [Sec. 3404(b)] Monthly Reports. Removes the requirement for monthly re- ports and replaces it with a provision to report this information at the Secretary’s request. [Sec. 3404(b)] Senate amendment ”Provision 2.” Same provision. [Sec. 1204(a)] Terms and Conditions. Same provision. [Sec. 1204(b)] Monthly Reports. Same provision. [Sec. 1204(b)] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec.704] 5. MISCELLANEOUS PROVISIONS AND DEFINITIONS Present law Accounts and Records. States, State education agencies, and schools must make accounts and records available for inspection and audit by the Secretary ”at all times.” [Sec. 12(a) of the NSLA] Restrictions on Requirements. Neither the Secretary nor States may impose any requirement with respect to teaching personnel, curriculum, and instruction in any school when carrying out the provisions of the NSLA. [Sec. 12(c) of the NSLA] Definitions. ”State” is defined to include the Trust Territory of the Pacific Islands. [Sec. 12(d)(1) of the NSLA] 421 ”Participation rate” is defined as the number of lunches served in the second prior fiscal year. [Sec. 12(d)(3) of the NSLA] ”Assistance need rate” is defined as a rate relative to States’ annual per capita income. [Sec. 12(d)(4) of the NSLA] The Secretary is permitted to adjust reimbursement rates for Alaska, Hawaii, and outlying areas (including the Trust Territory of the Pacific Islands). [Sec. 12(f) of the NSLA] Expedited Rulemaking. The Secretary is required to issue pro- posed regulations on food-based menu systems prior to the publica- tion of final regulations for compliance with the Dietary Guidelines for Americans and must hold public meetings on the proposed regu- lations. Final regulations must reflect public comments. [Sec. 12(k) of the NSLA] Waivers. The Secretary may waive any Federal requirements if the requesting State or service provider demonstrates, to the Sec- retary’s satisfaction, that the waiver will not increase the overall Federal cost of the program and, if it does increase costs, they will be paid from non-Federal funds. Waiver applications must describe ”management goals” to be achieved, a timetable for implementation, and the process to be used for monitoring progress in implementing the waiver (including cost implications). The Secretary must state in writing the expected outcome of any approved waivers. The results of the Secretary’s decision on any waiver must be disseminated through ”normal means of communication.” Waivers may not exceed 3 years (unless extended by the Sec- retary). Waivers may not be granted with respect to ”offer versus serve” rules. Service providers must annually submit reports describing the use of their waivers and evaluating how the waiver contributed to improved services. States must annually submit a summary of pro- viders’ reports to the Secretary. The Secretary must annually sub- mit reports to Congress summarizing the use of waivers and de- scribing whether waivers resulted in improved services, the impact of waivers on the provision of nutritional meals, and how waivers reduced paperwork. [Sec. 12(l) of the NSLA] Food and Nutrition Programs. The Secretary is required to award grants to private nonprofit organizations or education insti- tutions for ”food and nutrition projects” that are fully integrated with elementary school curricula. Subject to appropriations, the Secretary must make grants to each of 3 organizations or institu- tions in amounts between $100,000 and $200,000 for each of fiscal years 1995 through 1998. [Sec. 12(m) of the NSLA] Simplified Administration of School Meal and Other Nutrition Programs. No provisions in current law; therefore, no citizenship or immigration status tests apply to programs under the NSLA or CNA, or to commodity assistance programs. House bill Accounts and Records. Revises the requirement to make ac- counts and records available at all times to a requirement that they be available at ”any reasonable time.” [Sec. 3405(a)] 422 Restrictions on Requirements. Removes the prohibition on States imposing personnel, curriculum, and instruction require- ments. [Sec. 3405(b)] Definitions. Replaces ”Trust Territory of the Pacific Islands” with ”Commonwealth of the Northern Mariana Islands.” Deletes the out-of-date definition of participation rate. Deletes the out-of-date definition of assistance need rate. Replaces the reference to the Trust Territory of the Pacific Is- lands with a reference to the ”Commonwealth of the Northern Mar- iana Islands.” [Sec. 3405(c) & (d)] Expedited Rulemaking. Deletes the noted out-of-date require- ments for regulations. [Sec. 3405(e)] Waivers. Adds a bar against the Secretary granting any waiver that increases Federal costs. Deletes the noted waiver requirements in present law. Deletes the noted outcome requirement in present law. Deletes the noted dissemination requirement in present law. Deletes the noted time limit requirement in present law. Deletes the noted offer versus serve prohibition in present law. Deletes requirements for waiver reports by service providers and States, but not the Secretary’s. [Sec. 3405(f)] Food and Nutrition Programs. Deletes authority for food and nutrition project grants. [Sec. 3405(g)] Simplified Administration of School Meal and Other Nutrition Programs. No provisions in the child nutrition provisions of the bill. However, other provisions of the bill would bar the eligibility of illegal aliens for programs under the NSLA and the CNA. Senate amendment Accounts and Records. Same provision. [Sec. 1205(a)] Restrictions on Requirements. Same provision. [Sec. 1205(b)] Definitions. Same provisions. [Sec. 1205(c) & (d)] Expedited Rulemaking. Same provision. [Sec. 1205(e)] Waivers. Same provisions. [Sec. 1205(f)] Food and Nutrition Programs. No provision. Simplified Administration of School Meal and Other Nutrition Programs. Notwithstanding any other provision of law, no assist- ance or benefits provided under the NSLA or CNA or commodity assistance programs may be contingent on citizenship or immigra- tion status. [Sec. 1205(g)] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 705] The conference agreement also adopts the Senate provision on Food and Nutrition Projects, and adopts the House provision on Simplified Administration of School Meal and Other Nutrition Programs with an amendment stating that in- dividuals who are ineligible for free public education benefits under State or local law are also ineligible for school meal benefits under the National School Lunch Act and the Child Nutrition Act of 1966. The amendment also states that ”nothing in this Act shall prohibit or require a State to provide to an individual who is not a citizen qualified alien, as defined elsewhere in the law, benefits * * *” under programs other than school lunch and breakfast program 423 under the National School Lunch Act and the Child Nutrition Act of 1966, the Commodity Supplemental Food Program, TEFAP and the food distribution program on Indian reservations. [Sec. 742] 6. SUMMER FOOD SERVICE PROGRAM FOR CHILDREN Present law Establishment of Program. The Secretary is authorized to carry out a summer food service program to assist States to initi- ate, maintain, and expand nonprofit food service programs for chil- dren. [Sec. 13(a) of the NSLA] Service Institutions: Payments. Payments to summer food serv- ice institutions may not exceed specific amounts set by law and in- dexed for inflation. For the summer of 1996, these rates are: $2.1675 for each lunch\/supper, $1.2075 for each breakfast, and 57 cents for each supplement (snack). Rates are adjusted each Janu- ary to reflect changes (for the 12 months ending the preceding No- vember) in the food away from home component of the CPI U. Each adjustment is rounded to the nearest quarter cent. [Sec. 13(b)(1) of the NSLA] Administration of Service Institutions. Payments to summer camps and service institutions that primarily serve migrant chil- dren may be made for up to 4 meals\/supplements each day. [Sec. 13(b)(2) of the NSLA] Reimbursements: National Youth Sports Program. Higher edu- cation institutions operating under the National Youth Sports Pro- gram (NYSP) may receive reimbursements for meals\/supplements served in months other than May through September, but for not more than 30 days for each child. NYSP children and institutions are eligible to participate ”without application.” NYSP institutions receive reimbursements for breakfasts and supplements equal to the ”severe need” rate for school breakfasts. Advance Program Payments. In general, 3 advance payments to summer food service program service institutions are required during any summer program. The second advance payment may not be released to any service institution that has not certified it has held training sessions for its own personnel and site personnel. [Sec. 13(e)(1) of the NSLA] Food Requirements. The Secretary is required to provide ”addi- tional technical assistance” to those service institutions and private nonprofit organizations that are having difficulty in maintaining compliance with nutritional requirements. Service institutions’ contracts with food service management companies must require that bacteria levels conform to the stand- ards applied by the local health authority. [Sec. 13(f) of the NSLA] Permitting ”Offer versus Serve”. The ”offer versus serve” op- tion is not permitted in the summer food service program. Food Service Management Companies. In accordance with the Secretary’s regulations, service institutions must make positive ef- forts to use small and minority-owned businesses as sources of sup- plies and services. 424 States are required to establish a standard form of contract for use by service institutions and food service management compa- nies. [Sec. 13(l) of the NSLA] Records. States and service institutions must make accounts and records available for inspection and audit by the Secretary ”at all times.” [Sec. 13(m) of the NSLA] Removing Mandatory Notice to Institutions. States’ plans must include its plans and schedule for informing service institutions of the availability of the summer food service program. [Sec. 13(n) of the NSLA] Plan. State plans must include: (1) the State’s method of as- sessing need, (2) the State’s best estimate of the number\/character of service institutions\/sites to be approved, and children and meals to be served, as well as its estimating methods, and (3) a schedule for providing technical assistance and training to service institu- tions. [Sec. 13(n) of the NSLA] Monitoring and Training. With the Secretary’s assistance, States must establish and implement an ongoing training and tech- nical assistance program for private nonprofit organizations. [Sec. 13(q) of the NSLA] Expired Program. During fiscal years 1990 and 1991, the Sec- retary and States must carry out a program to disseminate infor- mation to private nonprofit organizations about the amendments made by the Child Nutrition and WIC Reauthorization Act of 1989. [Sec. 13(p) of the NSLA] House bill Establishment of Program. Removes the reference to the Sec- retary’s authority to carry out a program to assist States to ”ex- pand” summer food services. [Sec. 3406(a)] [Note.\u2014Sec. 3406(a) also makes technical amendments deleting a reference to the Trust Territory of the Pacific Islands and an unnecessary cross-reference in present law.] Service Institutions: Payments. Establishes new maximum rates for summer food service institutions. They are: $1.82 for each lunch\/supper, $1.13 for each breakfast, and 46 cents for each sup- plement (snack). These new rates, adjusted for inflation, first apply to the summer of 1997. They are adjusted on January 1, 1997, and each January 1 thereafter, to reflect changes (for the 12 months ending the preceding November) in the food away from home com- ponent of the CPI U. Each adjustment is based on unrounded rates for the prior 12-month period, then rounded down to the nearest lower cent increment. [Sec. 3406(b) & (n)] [Note.\u2014Separate administrative cost reimbursement rates are not changed.] Administration of Service Institutions. Limits payments to summer camps and institutions serving migrant children to 3 meals, or 2 meals and a supplement, each day. [Sec. 3406(c)] Reimbursements: National Youth Sports Program. Deletes au- thority for reimbursements to NYSP institutions for months other than May through September. Requires that NYSP children be eligible on showing residence in an area of poor economic conditions or on the basis of an income eligibility statement. 425 Requires that NYSP institutions receive reimbursements for breakfasts and supplements equal to the regular free school break- fast reimbursement rates. Advance Program Payments. Limits to nonschool providers the prohibition on releasing the second advance payment without hav- ing certified training has been held. [Sec. 3406(e)] Food Requirements. Deletes the requirement for additional technical assistance in present law. Replaces the requirement that contracts require bacteria levels to conform to standards applied by the local health authority with a requirement that contracts be in conformance with standards set by local health authorities. [Sec. 3406(f)] Permitting ”Offer versus Serve.” Adds authority for school food authorities participating as a summer food service institution to permit children attending a site on school premises operated di- rectly by the school food authority to refuse 1 item of a meal with- out affecting reimbursement for the meal. [Sec. 3406(g)] Food Service Management Companies. Deletes requirement for positive efforts to use small and minority-owned businesses in present law. Deletes requirement for a standard form of contract in present law. [Sec. 3406(h)] Records. Revises the requirement to make accounts and records available at all times to a requirement that they be avail- able at ”any reasonable time.” [Sec. 3406(i)] Removing Mandatory Notice to Institutions. Deletes the re- quirement for a plan\/schedule for informing service institutions of the availability of the summer food service program. [Sec. 3406(j)] Plan. Deletes State plan requirements for a method of assess- ing need, estimates of service institutions\/sites to be approved and children and meals to be served, and a schedule for providing tech- nical assistance\/training. [Sec. 3406(k)] Monitoring and Training. Deletes requirement for ongoing training and technical assistance for private nonprofit organiza- tions. [Sec. 3406(l)] Expired Program. Deletes out-of-date requirement to dissemi- nate information. [Sec. 3406(m)] Senate amendment Establishment of Program. No provision. Service Institutions: Payments. No provisions. Administration of Service Institutions. No provision. Reimbursements: National Youth Sports Program. No provi- sion. Advance Program Payments. No provision. Food Requirements. No provision. Permitting ”Offer versus Serve.” No provision Food Service Management Companies. No provision. Records. No provision. Removing Mandatory Notice to Institutions. No provision. Plan. No provision. Monitoring and Training. No provision. Expired Program. No provision. 426 Conference agreement Establishment of Program. The conference agreement adopts the House provision. Service Institutions: Payments. The conference agreement adopts the House provisions with an amendment that sets the re- imbursement rate for lunches at $1.97. Administration of Service Institutions. The conference agree- ment adopts the House provisions. Reimbursements: National Youth Sports Program. The con- ference agreement adopts the House provisions with amendments that: delete the provision of present law allowing institutions to participate without application; require that all reimbursements to NYSP institutions be at the regular summer food service program rates; and delete special meal standard and compatibility require- ments for NYSP institutions. Advance Program Payments. The conference agreement adopts the House provisions. Food Requirements. The conference agreement adopts the House provisions. Permitting ”Offer versus Serve.” The conference agreement adopts the House provisions with an amendment allowing school food authorities to permit the refusal of 1 or more items under rules that the school uses for school meal programs. Food Service Management Companies. The conference agree- ment adopts the Senate provisions. Records. The conference agreement adopts the House provi- sion. Removing Mandatory Notice to Institutions. The conference agreement adopts the House provision. Plan. The conference agreement adopts the House provisions. Monitoring and Training. The conference agreement adopts the House provision. Expired Program. The conference agreement adopts the House provision. [Sec. 706] 7. COMMODITY DISTRIBUTION Present law Cereal and Shortening in Commodity Donations. Cereal and shortening and oil products must be included among products do- nated to the school lunch program. [Sec. 14(b) of the NSLA] Impact Study and Purchasing Procedures. By May 1979, the Secretary must report on the effect of changes in commodity pro- curement established under 1977 amendments to the NSLA. The Secretary must establish procedures to ensure that pur- chase contracts are not entered into unless the previous history and current patterns of the contracting party (with respect to com- pliance with meat inspection and other food wholesomeness stand- ards) are taken into account. [Sec. 14(d) of the NSLA] Cash Compensation for Pilot Project Schools. The Secretary must provide cash compensation to certain schools participating in a ”cash\/CLOC” pilot project to make up for losses sustained. Com- pensation is provided to schools applying before the end of 1990. [Sec. 14(g) of the NSLA] 427 State Advisory Council. State education agencies receiving food assistance must establish an advisory council composed of school representatives. The council advises the agency on schools’ needs relating to the manner of selecting and distributing commodities. [Sec. 14(e) of the NSLA] House bill Cereal and Shortening in Commodity Donations. Deletes the requirement to include cereal and shortening and oil products in school lunch program donations. [Sec. 3407(a)] Impact Study and Purchasing Procedures. Deletes out-of-date commodity procurement report requirement. Deletes requirement for purchase procedures that take into ac- count contractors’ compliance with meat inspection\/food wholesome- ness standards. [Sec. 3407(b)] Cash Compensation for Pilot Project Schools. Deletes an out- of-date requirement for compensation to certain schools in a pilot project. [Sec. 3407(c)] State Advisory Council. Deletes the requirement for State com- modity assistance advisory councils. [Sec. 3407(d)] Senate amendment Cereal and Shortening in Commodity Donations. Same provi- sion. [Sec. 1206(a)] Impact Study and Purchasing Procedures. No provisions. Cash Compensation for Pilot Project Schools. Same provision. [Sec. 1206(c)] State Advisory Council. Provides that any State agency receiv- ing food assistance must establish an advisory council (i.e., deletes the specific reference to State education agencies in present law). [Sec. 1206(b)] Conference agreement Cereal and Shortening in Commodity Donations. The con- ference agreement adopts the provision that is common to both bills. Impact Study and Purchasing Procedures. The conference agreement adopts the Senate provision. Cash Compensation for Pilot Project Schools. The conference agreement adopts the provision that is common to both bills. State Advisory Council. The conference agreement adopts the House provisions, with an amendment to replace the requirement for a formal advisory council with a requirement that State agen- cies to meet with local school food service personnel when making decisions regarding commodities used in meal programs. [Sec. 707] 8. CHILD CARE FOOD PROGRAM Present law Establishment of Program. The Secretary is authorized to carry out a program to assist States to initiate, maintain, and ex- pand nonprofit food service for children in child care institutions. [Sec. 17(a) of the NSLA] Payments to Sponsor Employees. No provision. 428 Technical Assistance. If necessary, States must provide tech- nical assistance to institutions submitting incomplete applications to participate. [Sec. 17(d) of the NSLA] Reimbursement of Child Care Institutions. Day care centers may be provided reimbursement for up to 2 meals and 2 supple- ments (or 3 meals and 1 supplement) each day for children in a child care setting for 8 or more hours a day. [Sec. 17(f)(2) of the NSLA] Improved Targeting of Day Care Home Reimbursements: Re- structured Day Care Home Reimbursements. Reimbursements for family or group day care homes are specific amounts set by law and indexed for inflation. All homes receive the same reimburse- ments, and reimbursements are not differentiated by family income of the child receiving a subsidized meal\/supplement. For July 1996 through June 1997, these rates are: $1.575 for each lunch\/supper, 86.25 cents for each breakfast, and 47 cents for each supplement. Rates are adjusted each July to reflect changes in the food away from home component of the CPI U for the most recent 12- month period for which data are available. Each adjustment is rounded to the nearest quarter cent. [Sec. 17(f)(3)(A) of the NSLA] Improved Targeting of Day Care Home Reimbursements: Grants to States. No provision. Improved Targeting of Day Care Home Reimbursements: Pro- vision of Data. No provision. Reimbursement. The Secretary is required to reduce adminis- trative payments to day care home sponsors as of August 1981 so as to achieve a 10 percent reduction in the total level of payments. [Sec. 17(f)(3)(B) of the NSLA] Funds for administrative expenses may be used by day care home sponsors to conduct outreach and recruitment to unlicensed day care homes so that they may become licensed. [Sec. 17(f)(3)(C) of the NSLA] States must provide monthly advance payments to approved day care institutions in an amount that reflects the full level of valid claims customarily received (or the State’s best estimate in the case of newly participating institutions). [Sec. 17(f)(4)] Nutritional Requirements. Meals served under the child and adult care food program must be ”served free to needy children.” The Secretary is required to provide ”additional technical as- sistance” to institutions and day care home sponsors that are hav- ing difficulty maintaining compliance with nutrition requirements. [Sec. 17(g)(1) of the NSLA] Elimination of State Paperwork\/Outreach Burden. States must take affirmative action to expand availability of the child and adult care food program benefits, including annual notification of all non- participating day care home providers. The Secretary must conduct demonstration projects to test approaches to removing or reducing barriers to participation by homes that operate in low-income areas or primarily serve low-income children. The Secretary and States must provide training and technical assistance to assist day care home sponsors in reaching low-income children. The Secretary must instruct States to provide information and training about child health and development through day care home sponsors. [Sec. 17(k) of the NSLA] 429 Records. States and institutions must make accounts and records available for inspection and audit by the Secretary and oth- ers ”at all times.” [Sec. 17(m) of the NSLA] Modification of Adult Care Food Program. Nonresidential adult day care centers (including group living arrangements) serving chronically impaired disabled adults or persons 60 years of age or older are eligible institutions under the child and adult care food program. Reimbursements are provided for meals served to chron- ically disabled adults and those 60 or older in these centers. [Sec. 17(o) of the NSLA] Unneeded Provision. The Secretary is required to provide State child and adult care food service agencies with basic information about the WIC program. State agencies must provide child care in- stitutions with specific materials about the WIC program, annually update the materials, and ensure that at least once a year the in- stitutions provide specific written information to parents about the WIC program. [Sec. 17(q) of the NSLA] Effective Date. No provision. Study. No provision. House bill Establishment of Program. Removes the reference to the Sec- retary’s authority to carry out a program to assist States to ”ex- pand” child care food services. [Sec. 3408(a)] Payments to Sponsor Employees. Prohibits payments to day care home sponsors that base payments to employees on the num- ber of homes recruited. [Sec. 3408 (b)] Technical Assistance. Deletes the requirement to provide tech- nical assistance in cases of incomplete applications. [Sec. 3408(c)] Reimbursement of Child Care Institutions. Removes authority for reimbursement for more than 2 meals and 1 supplement for children in care for 8 or more hours. [Sec. 3408(d)] Improved Targeting of Day Care Home Reimbursements: Re- structured Day Care Home Reimbursements. Establishes new re- imbursement rates for day care homes as follows: ”Tier I” homes receive the meal\/supplement rates in effect on July 1, 1996 (see present law), adjusted annually for inflation. ”Tier I” homes are (1) those located in areas, defined by the Secretary based on Census data, in which at least 50 percent of children are in households with income below 185 percent of the Federal poverty guidelines, (2) those located in an area served by a school enrolling elementary students in which at least 50 percent of the children are certified eligible to receive free or reduced price school meals, or (3) those operated by a provider whose household income is verified by a sponsor (under the Secretary’s regulations) to be below 185 percent of the poverty guidelines. ”Tier II” homes are homes that do not meet tier I standards, but they may, at their option, receive the substantially higher tier I reimbursement rates under certain conditions (see below). In general, tier II home rates are 90 cents for each lunch\/sup- per, 25 cents for each breakfast, and 10 cents for each supplement, adjusted annually for inflation. Tier II homes can elect to receive higher tier I rates for meals\/supplements served to children who are members of households with income below 185 percent of the 430 Federal poverty guidelines, if the sponsor collects the necessary in- come information and makes the appropriate eligibility determina- tions in accordance with the Secretary’s rules. Tier II homes also can elect to receive tier I rates for meals\/supplements served to children (or children whose parents are) participating in or sub- sidized under a federally or State-supported child care or other benefit program with an income eligibility limit that does not ex- ceed 185 percent of the poverty guidelines, and may restrict their claim for tier I reimbursements to these children if they choose not to collect income statements from all parents\/caretakers. The Secretary is required to prescribe simplified meal counting and reporting procedures for use by tier II homes (and their spon- sors) that elect to claim tier I reimbursements for children meeting the income or program participation requirements. These proce- dures can include (1) setting an annual percentage of meals\/supple- ments to be reimbursed at tier I rates based on the family income of children enrolled in a specific month or other period, (2) placing a home in a reimbursement category based on the percentage of children with household income below 185 percent of the poverty guidelines, or (3) other procedures determined by the Secretary. The Secretary is authorized to establish minimum require- ments for verifying income and program participation for tier II homes electing to claim tier I reimbursement rates. Inflation indexing of rates for day care homes also is revised. The rates set for tier I homes (see present law) and the new tier II rates are adjusted July 1, 1997, and each July thereafter, based on the unrounded rates for the previous 12-month period, then rounded down to nearest lower cent increment. Inflation adjust- ments are based on changes in the food at home component of the CPI U for the most recent 12-month period for which data are available. [Sec. 3408(e)(1)] Improved Targeting of Day Care Home Reimbursements: Grants to States. Provides grants to States to assist family or group day care homes and their sponsors in implementing the new reimbursement rate system. For fiscal year 1997, the Secretary is required to reserve for this purpose $5 million of the amounts made available for the child care food program and allocate it to States based on the number of homes participating in fiscal year 1995 (with a minimum of $30,000 for each State). [Sec. 3408(e)(2)] Improved Targeting of Day Care Home Reimbursements: Pro- vision of Data. Requires that the Secretary provide Census data necessary for determining homes’ tier I\/II status and that States provide school enrollment data necessary to determine tier I\/II sta- tus. In determining homes’ tier I\/II status, the most current avail- able data (Census, enrollment, income) must be used. In general, a determination that a home is located in a tier I area is effective for 3 years. [Sec. 3408(e)(3)] Reimbursement. Deletes the out-of-date requirement to reduce administrative payments to sponsors. Deletes the authority to use administrative expense funding for outreach and recruitment. Makes the provision of advance payments a State option. [Sec. 3408(f)] 431 Nutritional Requirements. Deletes a redundant provision re- quiring that free meals be served to needy children (this require- ment is found elsewhere in law). Deletes the requirement to provide additional technical assist- ance. [Sec. 3408(g)] Elimination of State Paperwork\/Outreach Burden. Removes the noted requirements in present law and replaces them with a requirement that States provide sufficient training, technical as- sistance, and monitoring to facilitate effective operation of the child care food program. Requires the Secretary to assist States in devel- oping plans to do so. [Sec. 3408(h)] Records. Revises the requirement to make accounts and records available at all times to a requirement that they be avail- able at ”any reasonable time.” [Sec. 3408(i)] Modification of Adult Care Food Program. Deletes authority for reimbursements for meals to those in adult day care centers who are not chronically impaired disabled persons. Deletes authority for any reimbursements to adult day care centers that do not serve chronically impaired disabled persons. [Sec. 3408(j)] [Note.\u2014Section 3408(a) & (l) make conforming amendments.] Unneeded Provision. Deletes requirements to provide WIC in- formation through the child care food program. [Sec. 3408(k)] Effective Date. Establishes effective dates for changes affecting the child care food program. In general, they are effective on enact- ment, but amendments restructuring day care home reimburse- ment rates are effective July 1, 1997. Requires the Secretary to issue interim regulations related to restructuring day care home reimbursement rates, provision of data to implement the restructured rates, and changes to sponsors’ use of administrative funds by January 1, 1997. Final regulations on these changes must be issued by July 1, 1997. [Sec. 3408(m)] Study. Requires the Secretaries of Agriculture and Health and Human Services to undertake a study of the effects of amendments restructuring day care home reimbursements, due 2 years after en- actment. Requires State agencies to provide certain data to support the study. [Sec. 3408(n)] Senate amendment Establishment of Program. Same provisions. [Sec. 1207(a)] Payments to Sponsor Employees. Same provision. [Sec. 1207(b)] Technical Assistance. Same provision. [Sec. 1207(c)] Reimbursement of Child Care Institutions. Same provision. [Sec. 1207(d)] Improved Targeting of Day Care Home Reimbursements: Re- structured Day Care Home Reimbursements. Same provisions, ex- cept that the new rates for tier II homes are $1 for lunches\/sup- pers, 30 cents for breakfasts, and 15 cents for supplements. [Sec. 1207(e)(1)] The conferees understand that the Secretary has historically provided different family and group day care home payments in Alaska and Hawaii. The conferees expect that the tier I and tier II reimbursements provided for in this measure also will be varied for Alaska and Hawaii. 432 Improved Targeting of Day Care Home Reimbursements: Pro- vision of Data. Same provisions. [Sec. 1207(e)(3)] Reimbursement. Same provisions, except replaces the existing permission to use funds for outreach\/recruitment with permission to use funds to assist unlicensed homes in becoming licensed. [Sec. 1207(f)] Nutritional Requirements. Same provisions. [Sec. 1207(g)] Elimination of State Paperwork\/Outreach Burden. Same provi- sions. [Sec. 1207(h)] Records. Same provision. [Sec. 1207(i)] Modification of Adult Care Food Program. No provision. Unneeded Provision. Replaces the existing requirement for pro- viding WIC information with a requirement that State agencies en- sure that, at least once a year, child care institutions provide writ- ten information to parents that includes basic WIC information. [Sec. 1207(j)] Effective Date. Same provisions. [Sec. 1207(k)] Study. Same provisions. [Sec. 1207(l)] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. With respect to the provisions in disagreement: Improved Targeting of Day Care Home Reimbursements: Re- structured Day Care Home Reimbursements. The conference agree- ment adopts the House provisions with an amendment setting the reimbursement rate at 95 cents for lunches\/suppers, 27 cents for breakfasts, and 13 cents for supplements. Reimbursement. The conference agreement adopts the Senate provisions. Modification of Adult Care Food Program. The conference agreement adopts the Senate provision. Unneeded Provision. The conference agreement adopts the House provision. [Sec. 708] 9. PILOT PROJECTS Present law ”Universal free lunch” pilots, similar to ”provision 2” authority found elsewhere in law, are required. [Sec. 18(d) of the NSLA] A demonstration project for grants to provide meals and sup- plements to adolescents in programs outside school hours is re- quired; assistance is in accordance with that provided under the child and adult care food program. For each of fiscal years 1996 and 1997, the Secretary must expend $475,000 ($525,000 in 1998), unless there is an insufficient number of suitable applicants. [Sec. 18(e) of the NSLA] Pilot projects are authorized to evaluate the effects of contract- ing with private organizations to act as a State agency in cases where the Secretary is administering a child nutrition program in place of a State. [Sec. 18(a) of the NSLA] A pilot project is authorized to assist schools in offering stu- dents additional choices of fruits, vegetables, legumes, cereals, and grain-based products (including organically produced commodities). [Sec. 18(g) of the NSLA] 433 A pilot project is authorized to assist schools in offering stu- dents additional choices of dairy products, lean meat, and poultry products (including organically produced commodities). [Sec. 18(h) of the NSLA] Pilots are authorized to reduce paperwork, application, and meal counting requirements, and make program changes that will increase school meal program participation\u2014while receiving Fed- eral payments equal to the prior year adjusted for inflation\/enroll- ment. [Sec. 18(i) of the NSLA] House bill Deletes separate authority for the ”universal free lunch” projects, which are similar to ”provision 2” authority found else- where in the law. [Sec. 3409(a)] Makes the pilot demonstration project for grants to provide meals and supplements to adolescents in programs outside school hours optional and authorizes ”such sums as are necessary” for fis- cal years 1997 and 1998. [Sec. 3409(b)] Deletes authority for the pilot projects to: evaluate effects of contracting with private organizations; assist schools in offering students additional choices of fruits, vegetables, legumes, cereals and grain-based products, dairy products, lean meat and poultry products (including organically produced commodities); reduce pa- perwork, application and meal counting requirements and make program changes to increase school meal program participation. [Sec. 3409(c)] Senate amendment The Senate amendment contains the same provisions that de- lete authority for the ”universal free lunch” projects and make the pilot demonstration project for grants to provide meals and supple- ments to adolescents in programs outside school hours optional (au- thorizing ”such sums as are necessary” for fiscal 1997 and 1998). [Sec. 1208(a), (b)] The Senate amendment does not contain the House provisions that delete authority for the pilot projects to: evaluate effects of contracting with private organizations; assist schools in offering students additional choices of fruits, vegetables, legumes, cereals and grain-based products, dairy products, lean meat and poultry products (including organically produced com- modities); reduce paperwork, application and meal counting re- quirements and make program changes to increase school meal program participation. Conference agreement The conference agreement adopts the provisions. [Sec. 709] 10. REDUCTION OF PAPERWORK Present law In carrying out the NSLA and the CNA, the Secretary is re- quired to reduce paperwork required of State and local agencies and others (e.g., parents) to the maximum extent practicable. In carrying out this requirement, the Secretary is required to consult with State\/local administrators and convene a meeting of these ad- 434 ministrators (not later than September 1990), and obtain sugges- tions from members of the public on reducing paperwork. By No- vember 1990, the Secretary is required to report to Congress con- cerning the extent to which reduction in paperwork has occurred. [Sec. 19 of the NSLA] House bill Deletes out-of-date paperwork reduction requirements. [Sec. 3410] Senate amendment Same provision. [Sec. 1209] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 710] 11. INFORMATION ON INCOME ELIGIBILITY Present law The Secretary is required to provide State agencies with infor- mation needed to determine income eligibility for free or reduced price meal. It must be provided by May 1990. Not later than July 1990, the Secretary must review model application forms under the NSLA and the CNA and simplify the format\/instructions for these forms. [Sec. 23 of the NSLA] House bill Deletes out-of-date income verification and application form re- quirements. [Sec. 3411] Senate amendment Same provision. [Sec. 1210] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 711] 12. NUTRITION GUIDANCE FOR CHILD NUTRITION PROGRAMS Present law By November 1991, the Secretary and the Secretary of Health and Human Services are required to develop a ”nutrition guidance” publication. They must distribute it within 6 months. The Sec- retary must revise menu planning guides to include recommenda- tions for implementing the nutrition guidance in the publication. In carrying out any school meal program, summer program, or child care food program, school food authorities must apply the published nutrition guidance, and the Secretary must ensure that meals and supplements are consistent with the nutrition guidance. The Sec- retary and the Secretary of Health and Human Services may joint- ly update the guidance publication. [Sec. 24 of the NSLA] 435 House bill Deletes the noted provisions of present law dealing with devel- opment and implementation of a nutrition guidance. [Sec. 3412] Senate amendment Same provision. [Sec. 1211] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 712] 13. INFORMATION CLEARINGHOUSE Present law The Secretary is required to enter into a contract with a non- governmental organization to establish and maintain a clearing- house for information for nongovernmental groups on food assist- ance and self-help initiatives. The clearinghouse is required to be funded at $200,000 in fiscal year 1996, $150,000 in 1997, and $100,000 in 1998. [Sec. 26 of the NSLA] House bill Deletes the requirement for funding of a nutrition information clearinghouse. [Sec. 3413] Senate amendment No provision. Conference agreement The conference agreement adopts the Senate provision. Subtitle B\u2014Child Nutrition Act of 1966 14. SPECIAL MILK PROGRAM Present law ”United States” is defined to include the Trust Territory of the Pacific Islands. [Sec. 3(a)(3) of the CNA] House bill Replaces Trust Territory of the Pacific Islands with ”Common- wealth of the Northern Mariana Islands.” [Sec. 3421] Senate amendment Same provision. [Sec. 1251] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec 721] 15. FREE AND REDUCED PRICE POLICY STATEMENT Present law No provision. 436 House bill Provides that schools may not be required to submit a free and reduced price ”policy statement” to State education agencies unless there is a substantive change in the free and reduced price policy of the school. Routine changes (e.g., adjusting income eligibility standards) are not sufficient cause for requiring a school to submit a policy statement. [Sec. 3422] Senate amendment Similar provisions with a technical amendment clarifying that school food authorities, rather than schools, are the entities that may be required to submit a policy statement. [Sec. 1252] Conference agreement The conference agreement adopts the Senate provision. [Sec. 722] 16. SCHOOL BREAKFAST PROGRAM AUTHORIZATION Present law Training and Technical Assistance. Through State education agencies, the Secretary must provide technical assistance and training to school breakfast program schools to assist them in com- plying with nutrition requirements and providing appropriate meals to children with medically certified special dietary needs. The Secretary also must provide additional technical assistance to schools that are having difficulty maintaining compliance with nu- trition requirements. [Sec. 4(e)(1) of the CNA] Startup and Expansion. The Secretary and State education agencies are directed to carry out information, promotion, and out- reach programs to further the policy of expanding the school break- fast program to all schools where it is needed, including the use of ”language appropriate” materials. The Secretary is to report to Congress no later than October 1, 1993, concerning efforts to in- crease school participation. [Sec. 4(f) of the CNA] The Secretary is required to use $5 million a year (through fis- cal year 1997), $6 million in 1998, and $7 million in each subse- quent year to fund a program of competitively bid grants to State education agencies for the purpose of initiating or expanding the school breakfast and summer food service programs. [Sec. 4(g) of the CNA] House bill Training and Technical Assistance. Deletes technical assist- ance and training requirements. [Sec. 3423(a)] Startup and Expansion. Effective October 1, 1996, deletes the requirement for information, promotion, and outreach grants to ex- pand the school breakfast program. [Sec. 3423(b)] Senate amendment Training and Technical Assistance. Deletes the requirement to provide additional technical assistance. [Sec. 1253(a)] Startup and Expansion. Same provision. [Sec. 1253(b)] 437 Conference agreement The conference agreement adopts the startup and expansion provisions that are common to both bills and adopts the Senate provision regarding Training and Technical Assistance. [Sec. 723] 17. STATE ADMINISTRATIVE EXPENSES Present law Commodity Distribution Administration. States are permitted to use a portion of the funds available for State administrative ex- penses to assist in administering the commodity distribution pro- gram. [Sec. 7(e) of the CNA] Studies. The Secretary may not provide State administrative expense funding to a State unless the State agrees to participate in any study or survey of NSLA or CNA programs conducted by the Secretary. [Sec. 7(h) of the CNA] Approval of Changes. States must annually submit a plan for the use of State administrative expense funds. [Sec. 7(f) of the CNA] House bill Commodity Distribution Administration. Deletes specific au- thority to use State administrative expense money for commodity distribution administration (this authority is found elsewhere in law). [Sec. 3424(a)] Studies. Deletes the provision barring State administrative ex- pense funding when a State fails to agree to participate in a study or survey. [Sec. 3424(a)] Approval of Changes. Removes the requirement for annual plans for State administrative expense funds and replaces it with a requirement to submit any substantive plan changes for the Sec- retary’s approval. [Sec. 3424(b)] Senate amendment Commodity Distribution Administration. Same provision. [Sec. 1254(a)] Studies. Same provision. [Sec. 1254(a)] Approval of Changes. Same provisions. [Sec. 1254(b)] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 724] The conference agreement repeals Section 7(e) of the Child Nu- trition Act so as to simplify the language in, and eliminate redun- dant provisions of, the Act. The managers note that no provisions of the Child Nutrition Act prohibit States from using State admin- istrative expense (SAE) funds to administer the Commodity Dis- tribution Program, which is authorized through the National School Lunch Act, and stress that the repeal of Section 7(e) should not be construed as barring or discouraging States from using SAE funds for this purpose. 438 18. REGULATIONS Present law The Secretary is required to develop, and provide to State agencies for distribution to schools, model language that bans the sale of competitive foods of minimal nutritional value, along with a copy of the regulations concerning competitive foods. [Sec. 10(b) of the CNA] House bill Deletes the out-of-date requirement for model language on competitive foods. [Sec. 3425] Senate amendment Same provision. [Sec. 1255] Conference agreement The conference agreement adopts provisions common to both bills. [Sec. 725] 19. PROHIBITIONS Present law Neither the Secretary nor the States may impose any require- ment with respect to teaching personnel, curriculum, or instruction in any school when carrying out the provisions of the special milk and school breakfast programs. [Sec. 11(a) of the CNA] House bill Removes the prohibition on States imposing personnel, curricu- lum, and instruction requirements. [Sec. 3426] Senate amendment Same provision. [Sec. 1256] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 726] 20. MISCELLANEOUS PROVISIONS AND DEFINITIONS Present law ”State” is defined to include the Trust Territory of the Pacific Islands. [Sec. 15(1) of the CNA] ”School” is defined to include nonprofit child care centers in Puerto Rico. [Sec. 15(3) of the CNA] House bill Replaces the reference to the Trust Territory of the Pacific Is- lands with a reference to the Commonwealth of the Northern Mari- ana Islands. [Sec. 3427] Makes a conforming amendment deleting the inclusion of non- profit child care centers as schools in Puerto Rico. [Sec. 3427] 439 Senate amendment Same provisions. [Sec. 1257] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 727] 21. ACCOUNTS AND RECORDS Present law States, State education agencies, schools, and nonprofit institu- tions must make accounts and records available for inspection by the Secretary ”at all times.” [Sec. 16(a) of the CNA] House bill Revises the requirement to make accounts and records avail- able at all times to a requirement that they be available at ”any reasonable time.” [Sec. 3428] Senate amendment Same provision. [Sec. 1258] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 728] 22. SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN Present law Definitions. ”Homeless individual” is defined to include an in- dividual whose primary nighttime residence is a temporary accom- modation in the residence of another. [Sec. 17(b)(15) of the CNA] Secretary’s Promotion of WIC. The Secretary must ”promote” the WIC program by producing and distributing materials, includ- ing public service announcements in English and other appropriate languages. [Sec. 17(c)(5) of the CNA] Eligible Participants. The Secretary must report biennially to Congress and the National Advisory Council on Maternal, Infant, and Fetal Nutrition on the income and nutritional risk characteris- tics of WIC participants, participation by migrants, and other ap- propriate matters. [Sec. 17(d)(4) of the CNA] Nutrition and Drug Abuse Education. State agencies must en- sure that drug abuse education is provided to all pregnant, postpartum, and breastfeeding WIC participants, and to parents\/ caretakers of WIC children. Nutrition education and breastfeeding promotion and support must be evaluated annually by State agencies. State agencies must ensure that written information about food stamps, AFDC, and the child support enforcement program is provided to WIC applicants and participants. Each local WIC agency may use a master file to document and monitor the provision of nutrition education to individuals that are required to be included in group nutrition education classes. 440 State agencies must ensure that local agencies maintain and make available a list of local resources for substance abuse counsel- ing and treatment. [Sec. 17(e) of the CNA] State Plan. State agencies must annually submit a State plan for WIC operations and administration. State agency WIC plans must include a plan to coordinate op- erations with special counseling services such as the expanded food and nutrition education program, immunization programs, local breastfeeding promotion programs, prenatal care, well-child care, family planning, drug abuse education, substance abuse counseling and treatment, child abuse counseling, AFDC, food stamps, mater- nal and child health care, and Medicaid (including Medicaid pro- grams that use ”coordinated care providers”). State agency WIC plans must include a plan to provide bene- fits to unserved and underserved areas in the State if sufficient funds are available. State agency WIC plans must include a plan to provide bene- fits to those most in need and to provide eligible individuals not participating with program information, with an emphasis on reaching and enrolling eligible women in the early months of preg- nancy and including provisions to reach and enroll eligible mi- grants. State agency WIC plans must include a specific plan for provi- sion of WIC benefits to incarcerated persons if they opt to provide benefits to these persons. State agency WIC plans must include a plan to improve access to participants and applicants who are employed or reside in rural areas by addressing their needs through procedures\/practices that minimize the time they must spend away from work and the dis- tances they must travel. State agency WIC plans must include an estimate of the in- creased participation that will result from cost-saving initiatives (including an explanation of how the estimate was developed) if the State chooses to request ”funds conversion authority” (using food money for administration). State agency WIC plans must include other information ”as the Secretary may require.” State agencies must establish procedures under which mem- bers of the general public are provided an opportunity to comment on the development of the State plan. State agencies must, on receiving a completed local agency ap- plication, notify the applicant in writing within 30 days of the ap- proval or disapproval of the application (accompanied by a state- ment of reasons for any disapproval). Within 15 days of receiving an incomplete application, the State agency must notify the appli- cant of added information need to complete the application. State agencies must, in cooperation with local WIC agencies, publicly announce and distribute information at least annually on the availability of WIC benefits to offices and organizations that deal with significant numbers of potentially eligible individuals. The information must be distributed in a manner designed to pro- vide it to those most in need of benefits, including pregnant women in the early months of pregnancy. Local agencies with cooperative arrangements with hospitals must advise potentially eligible per- 441 sons of the availability of benefits and provide them with the op- portunity to be certified as eligible in the hospital. State agency plans for fiscal year 1994 must advise the Sec- retary of procedures for reducing the purchase of low-iron infant formula. State and local WIC agencies must make accounts and records available for inspection and audit by the Secretary ”at all times.” Notices issued to WIC participants who are suspended or ter- minated during their certification period because of a shortage of funds must include the categories of participants whose benefits are being suspended or terminated (in addition to other informa- tion required by the Secretary). The Secretary must establish standards for proper, efficient, and effective administration, including standards that will ensure sufficient State agency staff. Products specifically designed for pregnant, postpartum, and breastfeeding women, or infants, are to be made available at the Secretary’s discretion if they are commercially available or are ap- proved by the Secretary based on clinical tests. State agencies must (a) provide nutrition education, breastfeeding promotion, and drug abuse education in languages other than English and (b) use appropriate foreign language mate- rials in areas where a substantial number of low-income house- holds speak a language other than English. State agencies may adopt methods of delivering benefits to ac- commodate the special needs and problems of incarcerated individ- uals. Local agencies must provide information about other potential sources of food assistance to WIC applicants who apply but cannot be served. [Sec. 17(f) of the CNA] Information. On completion of the 1990 Census, the Secretary must make available an estimate (by State and county) of the num- ber of women, infants, and children who are members of families with incomes below 185 percent of the Federal poverty guidelines. [Sec. 17(g)(6) of the CNA] Procurement of Infant Formula. The Secretary must require State agencies to report breastfeeding data for the biennial report by the Secretary on participant characteristics. No State may receive a WIC allocation unless it meets certain conditions related to cost containment prior to September 1989. States having cost-containment contracts in effect in 1989 need not meet new cost containment provisions until the term of the contract runs out. The Secretary is required to establish pilot projects to deter- mine the feasibility of using ”universal product codes” to aid ven- dors in providing the correct infant formula to WIC participants. The Secretary must follow certain specific rules in soliciting cost containment bids for infant formula on behalf of States. The Secretary must promote the joint purchase of infant for- mula by States, encourage the purchase of supplemental foods other than infant formula under cost containment procedures, in- form States of the benefits of cost containment, and provide tech- nical assistance related to cost containment. 442 The Secretary must use $10 million a year (from carryover funds) for infrastructure development, special projects of regional or national significance, and special breastfeeding support and pro- motion projects. [Sec. 17(h) of the CNA] National Advisory Council. The Secretary designates the Chairman and Vice-Chairman of the National Advisory Council on Maternal, Infant, and Fetal Nutrition. [Sec. 17(k) of the CNA] Completed Study; Community College Demonstration; Grants for Information and Data Systems. The Secretary must, by May 1989, conduct a study on appropriate methods of drug abuse edu- cation instruction. The Secretary must prepare and distribute drug abuse education materials. Specific appropriations for the study and materials are authorized for fiscal year 1989, and, for later years, ”such sums as may be necessary” are authorized for distrib- uting drug abuse education materials and making referrals under drug abuse education programs. [Sec. 17(n) of the CNA] The Secretary is authorized to conduct a pilot project for WIC clinics in community colleges offering nursing education programs. [Sec. 17(o) of the CNA] The Secretary is authorized to make grants to State agencies to improve WIC information and data systems. Appropriations for this are authorized through fiscal year 1994. [Sec. 17(p) of the CNA] House bill Definitions. Makes clear that, after 365 days in a temporary accommodation, individuals will not be considered homeless. [Sec. 3429(a)] [NOTE.\u2014Sec. 3429(a) also makes a technical\/conforming amendment to the defini- tion of ”drug abuse education.” Secretary’s Promotion of WIC. Deletes the requirement that the Secretary promote the WIC program. [Sec. 3429(b)] Eligible Participants. Deletes the requirement for the Sec- retary’s biennial report on participants. [Sec. 3429(c)] Nutrition and Drug Abuse Education. Makes provision of drug abuse education optional. Deletes the requirement to annually evaluate nutrition edu- cation and breastfeeding promotion\/support. Removes the requirement for providing information about food stamps, AFDC, and child support enforcement. Replaces it with au- thority for State agencies to provide local agencies with materials describing other programs for which WIC participants may be eligi- ble. Deletes the specific authority for using a nutrition education master file. Requires that local agencies maintain and make available lists of local substance abuse counseling and treatment resources. [Sec. 3429(d)] State Plan. Revises the State plan submission requirement to stipulate that State agencies only be required to submit sub- stantive changes in their plan for the Secretary’s approval. Removes the noted specific State plan requirements for coordi- nation. Replaces them with a requirement that State plans include 443 a plan to coordinate WIC operations with other services or pro- grams that may benefit WIC participants and applicants. Adds a requirement that State WIC plans include a plan to im- prove access for those who are employed, or who reside in rural areas. Removes the noted specific State plan requirements for reach- ing those most in need and not participating. Retains a require- ment that State plans include a plan for reaching and enrolling women in the early months of pregnancy and migrants. Deletes the noted specific State plan requirements as to how incarcerated persons will be provided benefits. Deletes the noted specific State plan requirements as to im- proving program access for the employed and rural residents. [NOTE.\u2014An earlier provision adds a general State plan requirement for improved access for these persons.] Deletes the noted State plan requirement for an estimate of in- creased participation when funds conversion authority is chosen by the State. Revises authority for the Secretary to require other informa- tion as the Secretary may require to a stipulation that plans must include other information as the Secretary may ”reasonably” re- quire. Makes a conforming amendment deleting a provision that per- mits State agencies to submit only those parts of plans that differ from previous years. Deletes the public comment procedures requirement. Deletes these processing requirements for local WIC agency ap- plications. Deletes the noted requirements for announcing and distribut- ing information and certification in hospitals. Deletes an out-of-date requirement that States advise the Sec- retary on procedures to reduce purchases of low-iron infant for- mula. Revises the requirement to make accounts and records avail- able at all times to a requirement that they be available at ”any reasonable time.” Deletes noted requirements as to the content of suspension\/ter- mination notices. Deletes the requirement for staffing standards. Deletes the noted provision stipulating that products designed for women and infants may be made available in the WIC program if commercially available or approved based on tests. Makes optional the provision of services and use of materials in languages other than English. Deletes specific authority for delivery methods to accommodate incarcerated individuals. Makes optional the requirement to provide information about other potential sources of food assistance. [Sec. 3429(e)] Information. Deletes out-of-date requirement for a report on those income-eligible for the WIC program based on the 1990 Cen- sus. [Sec. 3429(f)] Procurement of Infant Formula. Deletes the requirement for States to report data on breastfeeding for a biennial report that is eliminated elsewhere in the bill. 444 Deletes an out-of-date requirement to meet cost containment conditions. Deletes an out-of-date provision relating to cost containment contracts. Deletes the requirement for universal product code pilots. Deletes conditions on the Secretary when soliciting infant for- mula bids on behalf of States. Deletes noted requirements of the Secretary related to promot- ing cost containment. Removes breastfeeding promotion and support projects as a use for the Secretary’s special fund of $10 million a year. None of the amendments affecting procurement practices are to apply to contracts for infant formula in effect on enactment. [Sec. 3429(g)] National Advisory Council. Provides that the Advisory Council elect its Chairman and Vice-Chairman. [Sec. 3429(h)] Completed Study; Community College Demonstration; Grants for Information and Data Systems. Deletes requirements for a 1989 drug abuse education study and preparation of materials. Deletes funding for distributing materials and referrals. [Sec. 3429(I)] Deletes authority for a pilot for WIC clinics in community col- leges. [Sec. 3429(I)] Deletes out-of-date authority for information and data system improvement grants. [Sec. 3429(I)] Disqualification of WIC Vendors. Adds provisions for disquali- fying WIC vendors that have been disqualified from participation in the Food Stamp Program. Disqualification is for the same period as the food stamp disqualification and is not subject to separate ad- ministrative and judicial review. [Sec. 3429(j)] Senate amendment Definitions. Same provisions. [Sec. 1259(a)] Secretary’s Promotion of WIC. Same provision. [Sec. 1259(b)] Eligible Participants. Same provision. [Sec. 1259(c)] Nutrition and Drug Abuse Education. No provision. State Plan. Same provisions, except the Senate amendment (1) requires plans for improving access to those who are employed, or who reside, in rural areas; (2) includes no provisions to delete the public comment procedures requirement, delete requirements for announcing and distributing information and certification in hos- pitals, or to make optional the provision requiring services and use of materials in languages other than English. [Sec. 1259(d)] Information. Same provision. [Sec. 1259(e)] Procurement of Infant Formula. Same provisions, except that the Senate amendment has no provision to remove breastfeeding promotion and support projects as a use for the Secretary’s special fund. [Sec. 1259(f)] National Advisory Council. Same provision. [Sec. 1259(g)] Completed Study; Community College Demonstration; Grants for Information and Data Systems. Same provisions. [Sec. 1259(h)] Disqualification of WIC Vendors. Same provisions. [Sec. 1259(i)] 445 Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. With respect to provisions in disagreement: Nutrition Education and Drug Abuse Education. The con- ference agreement adopts the House provision with an amendment retaining the requirement for drug abuse education. State Plan. The conference agreement: adopts the House provi- sion regarding plans to improve access to the employed and those in rural areas; adopts the Senate provision on requirements for public comment procedures and for announcing and distributing in- formation and certification in hospitals, and; adopts the House pro- vision making optional the provision requiring services and use of materials in languages other than English. Procurement of Infant Formula. The conference agreement adopts the Senate provision retaining breastfeeding promotion and support projects as a use for the Secretary’s special fund. [Sec. 729] 23. CASH GRANTS FOR NUTRITION EDUCATION Present law The Secretary is authorized to make cash grants to State edu- cation agencies for demonstration projects in nutrition education. [Sec. 18 of the CNA] House bill Deletes authority for cash grants for nutrition education dem- onstration projects. [Sec. 3430] Senate amendment Same provision. [Sec. 1260] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 730] 24. NUTRITION EDUCATION AND TRAINING Present law Findings. Congress finds that: the proper nutrition of children is a matter of highest pri- ority; the lack of understanding of good nutrition principles and their relation to health can contribute to children’s rejection of nutritious foods and plate waste; many school food service personnel and teachers do not have adequate training; the lack of parental knowledge of nutrition can be det- rimental on children’s nutritional development; and there is a need to create opportunities for children to learn about good nutrition. [Sec. 19(a) of the CNA] It is the purpose of the provisions for a nutrition education and training program to (a) encourage dissemination of information to children and (b) establish a system of grants to State education 446 agencies for nutrition education and training programs. [Sec. 19(b) of the CNA] Use of Funds. State agencies may use nutrition education and training funds for: funding a nutrition component in consumer homemaking and health education programs; instructing teachers and school staff on how to promote better nutritional health and motivate children from a variety of linguistic and cultural backgrounds to practice sound eating habits; develop means of providing nutrition education in ”lan- guage appropriate” materials through after-school programs; training related to healthy and nutritious meals; creating instructional programming on the ”Food Guide Pyramid” (including language appropriate materials) for teach- ers, food service staff, and parents; funding aspects of the Secretary’s ”Strategic Plan for Nu- trition Education;” encouraging public service advertisements to promote healthy eating habits for children, including language appro- priate materials and advertisements; coordinating and promoting nutrition education and train- ing activities in local school districts; contracting with public and private nonprofit education in- stitutions to conduct nutrition education and training; increasing public awareness of the importance of break- fasts; and coordinating and promoting nutrition education and train- ing activities (including those under the summer and child care food programs). [Sec. 19(f) of the CNA] States may receive planning and assessment grants for nutri- tion education and training. [Sec. 19(f) of the CNA] Nothing in the provisions for a nutrition education and train- ing program prohibits agencies from making available or distribut- ing materials, resources, activities, or programs to adults. [Sec. 19(f) of the CNA] Accounts, Records, and Reports. State education agencies must make accounts and records available for inspection and audit by the Secretary ”at all times.” [Sec. 19(g) of the CNA] State Coordinators for Nutrition; State Plan. A State nutrition coordinator’s assessment of the nutrition education and training needs of the State must include identification of all students in need of nutrition education and identification of State and local re- sources for materials, facilities, staff, and methods for nutrition education. [Sec. 19(h) of the CNA] State nutrition coordinators’ comprehensive plans for nutrition education (prepared after receiving a planning and assessment grant) must meet certain specific standards. [Sec. 19(h) of the CNA] Authorization of Appropriations. Funding for the nutrition edu- cation and training program is permanently appropriated at $10 million a year. State grants are based on a rate of 50 cents for each child enrolled, except that no State may receive less than $62,500. [Sec. 19(I) of the CNA] 447 Assessment. By October 1, 1990, each State must assess its nu- trition education and training program. [Sec. 19(j) of the CNA] House bill Findings. Deletes the noted findings in present law and re- places them with a finding that ”effective dissemination of scientif- ically valid information to children participating or eligible to par- ticipate in the school lunch and related child nutrition programs should be encouraged.” [Sec. 3431(a)] Removes provisions referring to dissemination of information from the statement of purpose (they are included in the findings as noted above). [Sec. 3431(a)] Use of Funds. Deletes the noted provisions for use of nutrition education and training funds. Adds a provision allowing funds to be used for ”other appropriate activities, as determined by the State.” [Sec. 3431(b)] Deletes authority for nutrition education and training planning and assessment grants. [Sec. 3431(b)] Deletes the noted provision relating to materials and activities for adults. [Sec. 3431(b)] Accounts, Records, and Reports. Revises the requirement to make accounts and records available at all times to a requirement that they be available at ”any reasonable time.” [Sec. 3431(c)] State Coordinators for Nutrition; State Plan. Deletes the noted specific requirements for nutrition education and training State as- sessments. [Sec. 3431(d)] Deletes all specific requirements on comprehensive nutrition education plans prepared after a planning and assessment grant (these grants are eliminated elsewhere in the bill). [Sec. 3431(d)] Authorization of Appropriations. Beginning with fiscal year 1997, appropriations are authorized at $10 million a year (through 2002). State grants are based on a rate of 50 cents for each child enrolled, except that no State will receive less than $75,000. If funds are insufficient to provide grants based on the 50 cent\/ $75,000 rule, the amount of each State’s grant is ratably reduced. [Sec. 3431(e) & (g)] Assessment. Deletes the out-of-date requirement for State as- sessments of their nutrition education and training programs. [Sec. 3431(f)] Senate amendment Findings. Same provisions. [Sec. 1261(a)] Use of Funds. Same provisions. [Sec. 1261(b)] Accounts, Records, and Reports. Same provision. [Sec. 1261(c)] State Coordinators for Nutrition; State Plan. Same provisions. [Sec. 1261(d)] Authorization of Appropriations. Same provisions. [Sec. 1261(e) & (g)] Assessment. Same provision. [Sec. 1261(f)] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 731] 448 Subtitle C\u2014Miscellaneous Provisions 25. COORDINATION OF SCHOOL LUNCH, SCHOOL BREAKFAST, AND SUMMER FOOD SERVICE PROGRAMS Present law No provisions. House bill Requires the Secretary to develop proposed changes to regula- tions under the school lunch, school breakfast, and summer food service programs for the purpose of simplifying and coordinating them into a comprehensive meal program. Requires that the Sec- retary consult with local, State, and regional administrators in de- veloping the proposed changes. Not later than November 1, 1997, the Secretary must submit to Congress a report on the proposed changes. [Sec. 3441] Senate amendment No provision. Conference agreement The conference agreement adopts the House provisions. [Sec. 741] 26. ROUNDING RULES Present law When indexed, reimbursement rates for the school lunch, school breakfast, special milk, and commodity assistance programs are rounded to the nearest quarter cent. [Sec. 3 and 4 of the CNA; Sec. 6 and 11 of the NSLA] House bill No provision. [NOTE.\u2014Provisions amending the law governing the summer food service program and the child and adult care food program require that, when indexed, their reim- bursement rates be rounded down to the nearest lower cent increment.] Senate amendment Requires that, when indexed, reimbursement rates for the school breakfast, school lunch, special milk, and commodity assist- ance programs be rounded down to the nearest lower cent incre- ment. [Sec. 1262] [NOTE.\u2014As with the House bill, amendments affecting the summer food service program and the child and adult care food program include comparable rounding rules.] Conference agreement The conference agreement adopts the Senate provisions with an amendment making the new rounding rules applicable only to full price meals in the school breakfast and school lunch programs and full price meals in child care centers. [Sec. 704] 449 TITLE VIII\u2014FOOD STAMPS AND COMMODITIES DISTRIBUTION Subtitle A\u2014Food Stamp Program 1. DEFINITION OF CERTIFICATION PERIOD Present law For households subject to periodic (monthly) reporting, eligi- bility certification periods must be 6 12 months, but the Secretary may waive this rule. For households receiving federally aided pub- lic assistance or general assistance, certification periods must coin- cide with the certification periods for the other public assistance programs. For other households, certification periods generally must not be less than 3 months\u2014but they can be (1) up to 12 months for those consisting entirely of unemployable, elderly, or primarily self-employed persons or (2) as short as circumstances re- quire for those with a substantial likelihood of frequent changes in income or other circumstances and for any household on initial de- termination. The Secretary may waive the maximum 12-month pe- riod to improve program administration. [Sec. 3(c)] House bill Replaces existing provisions as to certification periods with a requirement that certification periods not exceed 12 months\u2014but can be up to 24 months if all adult household members are elderly or disabled. Requires that State agencies have at least 1 contact with each certified household every 12 months. [Sec. 1011] Senate amendment Same provision. [Sec. 1111] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 801] 2. DEFINITION OF COUPON Present law ”Coupon” is defined to mean any coupon, stamp, or type of cer- tificate issued under provisions of the Food Stamp Act. [Sec. 3(d)] House bill Expands the definition of coupon to include: authorization cards, cash or checks issued in lieu of a coupon, or access devices (including an electronic benefit transfer card or personal identifica- tion number). [Sec. 1012] Senate amendment Same provision. [Sec. 1112] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 802] 450 3. TREATMENT OF CHILDREN LIVING AT HOME Present law Parents and their children 21 years of age or younger who live together must apply for food stamps as a single household (thereby reducing aggregate household benefits)\u2014except for children who are themselves parents living with their children and children who are married and living with their spouses. [Sec. 3(i)] House bill Removes the exception, from the requirement that related per- sons apply together as a single household, for children who are themselves parents living with their children and children who are married and living with their spouses. [Sec. 1013] Senate amendment Same provision. [Sec. 1113] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 803] 4. OPTIONAL ADDITIONAL CRITERIA FOR SEPARATE HOUSEHOLD DETERMINATIONS Present law Certain persons who live together may apply for food stamps as separate households (thereby increasing aggregate household benefits) if they purchase food and prepare meals separately and (1) are unrelated or (2) are related but are not spouses or children living with their parents [see item 3 for the proposed change in the household definition]. In addition, elderly persons who live with others and cannot purchase food and prepare meals separately be- cause of a substantial disability may apply as separate ”house- holds” as long as their co-residents’ income is below prescribed lim- its. [Sec. 3(i)] House bill Permits States to establish criteria that prescribe when per- sons who live together (and might otherwise be allowed to apply as separate households) must apply for food stamps as a single house- hold\u2014without regard to common purchase of food and preparation of meals. [Sec. 1014] Senate amendment No provision. Conference agreement The conference agreement adopts the Senate provision. 5. ADJUSTMENT OF THE THRIFTY FOOD PLAN Present law Maximum food stamp benefits are defined as 103 percent of the cost of the Agriculture Department’s ”Thrifty Food Plan,” ad- 451 justed for food-price inflation each October to reflect the plan’s cost in the immediately preceding June\u2014and rounded down to the near- est dollar. [Sec. 3(o)] House bill Sets maximum monthly food stamp benefits at 100 percent of the cost of the Thrifty Food Plan, effective October 1, 1996, ad- justed annually as under present law. Requires that the October 1996 adjustment not reduce maximum benefit levels. [Sec. 1015] Senate amendment Same provision. [Sec. 1114] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 804] 6. DEFINITION OF HOMELESS INDIVIDUAL Present law For food stamp eligibility and benefit determination purposes, a ”homeless individual” is a person lacking a fixed\/regular night- time residence or one whose primary nighttime residence is a shel- ter, a residence intended for those to be institutionalized, a tem- porary accommodation in the residence of another, or a public or private place not designed to be a regular sleeping accommodation for humans. [Sec. 3(s)] House bill Provides that persons whose primary nighttime residence is a temporary accommodation in the home of another may only be con- sidered homeless if the accommodation is for no more than 90 days. [Sec. 1016] Senate amendment Same provision. [Sec. 1115] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 805] 7. STATE OPTION FOR ELIGIBILITY STANDARDS Present law The Secretary is directed to establish uniform national stand- ards of eligibility for food stamps, with certain variations allowed for Alaska, Hawaii, Guam, and the Virgin Islands, and in other cases (e.g., imposition of monthly reporting requirements). States may not impose any other standards of eligibility as a condition of participation in the program. [Sec. 5(b)] House bill Explicitly permits nonuniform standards of eligibility for food stamps. [Sec. 1017] 452 Senate amendment Same provision. [Sec. 1116] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 806] 8. EARNINGS OF STUDENTS Present law The earnings of an elementary\/secondary student are dis- regarded as income until the student’s 22nd birthday. [Sec. 5(d)(7)] House bill Provides an earnings disregard for elementary\/secondary stu- dents until the student’s 20th birthday. [Sec. 1018] Senate amendment Same provision, except that during fiscal year 2002 earnings will be disregarded until the student’s 18th birthday. [Sec. 1117] Conference agreement The conference agreement adopts the House provision with an amendment providing for the counting of earnings of elementary\/ secondary students once they reach age 18. [Sec. 807] 9. ENERGY ASSISTANCE Present law Payments or allowances for energy assistance provided by State or local law are, under rules set by the Secretary, dis- regarded as income. [Sec. 5(d)(11) and 5(k)] Payments or allowances for weatherization assistance are dis- regarded as energy assistance (although weatherization payments could otherwise be disregarded as lump-sum payments, vendor pay- ments, or reimbursements). [Sec. 5(d)(11) and 5(k)] Federal Low-Income Home Energy Assistance Program (LIHEAP) benefits are disregarded as income. [Sec. 5(d)(11) and 5(k) of the Food Stamp Act and sec. 2605(f) of the Low-Income Home Energy Assistance Act] Certain utility allowances\/reimbursements under Department of Housing and Urban Development (HUD) programs are dis- regarded as income. [Sec. 5(d)(11) and 5(k)] Shelter expense deductions may be claimed for utility costs covered by LIHEAP benefits, but not in the case of other dis- regarded energy assistance\u2014unless the household has out-of-pocket expenses. [Sec. 5(e) of the Food Stamp Act and sec. 2605(f) of the Low-Income Home Energy Assistance Act] House bill Requires that State\/local energy assistance be counted as in- come. [Sec. 1019] Requires an income disregard for one-time payments\/allow- ances under a Federal or State law for the costs of weatherization 453 or emergency repair\/replacement of unsafe\/inoperative furnaces or other heating\/cooling devices. [Sec. 1019] Requires that LIHEAP benefits be counted as income. [Sec. 1019] Requires that HUD utility allowances\/reimbursements be counted as income. [Sec. 1019] Allows claiming shelter expense deductions for utility costs covered directly or indirectly by the LIHEAP or other counted en- ergy assistance. [Sec. 1019] [NOTE.\u2014Sec. 2131 amends sec. 2605(f) of the Low-Income Home Energy Assist- ance Act to delete that Act’s requirement that LIHEAP recipients must be allowed to claim the amount of their LIHEAP benefits as a shelter expense.] Senate amendment State\/local assistance. Same provision (technical differences). [Sec. 1118] Weatherization assistance. Same provision (technical dif- ferences). [Sec. 1118] LIHEAP. Present law (technical differences). [Sec. 1118] HUD assistance. Present law (technical differences). [Sec. 1118] Shelter expense deductions. Present law (technical differences). [Sec. 1118] Conference agreement The conference agreement adopts the Senate provisions with a technical amendment. [Sec. 808] 10. DEDUCTIONS FROM INCOME Present law Standard Deductions. All households are allowed standard de- ductions from their otherwise countable income. Standard deduc- tions are indexed annually (each October) for inflation based on the Consumer Price Index for urban wage earners (CPI U) for items other than food and rounded down to the nearest dollar. For fiscal year 1995, standard deductions were: $134 a month for the 48 con- tiguous States and the District of Columbia, $229 for Alaska, $189 for Hawaii, $269 for Guam, and $118 for the Virgin Islands. For fiscal year 1996, they were ”scheduled” to rise to: $138, $236, $195, $277, and $122, respectively. This was barred by the fiscal year 1996 appropriations measure, and fiscal year 1996 standard deduc- tion levels are at the fiscal year 1995 amounts. [Sec. 5(e)] Earned Income Deduction. Households may claim a deduction for 20 percent of any earnings. This deduction is not allowed with respect to any income that a household willfully or fraudulently fails to report in a timely manner, as proven in a fraud hearing proceeding (i.e., it is not allowed when determining the amount of a benefit overissuance). [Sec. 5(e)] Homeless Shelter Allowance. For homeless households not re- ceiving free shelter throughout the month, States may develop a homeless shelter expense estimate (a standard allowance) to be used in calculating an excess shelter expense deduction. States must use this amount unless the household verifies higher ex- penses. The Secretary may prohibit the use of the allowance for 454 households with extremely low shelter costs. The maximum allow- ance amount is inflation indexed annually and currently stands at $143 a month (fiscal year 1996). [Sec. 11(e)(3)] Excess Shelter Expense Deduction. Households may claim ex- cess shelter expense deductions from their otherwise countable in- come\u2014in the amount of any shelter expenses (including utility costs) above 50 percent of their countable income after all other de- ductions have been applied. For households with elderly or disabled members, these deductions are unlimited. For other households, they are limited to: $247 a month in the 48 contiguous States and the District of Columbia, $429 in Alaska, $353 in Hawaii, $300 in Guam, and $182 in the Virgin Islands. Effective January 1, 1997, these limits on excess shelter expense deductions for households without elderly or disabled members are lifted. [Sec. 5(e)] States may develop and use ”standard utility allowances” (as approved by the Secretary) in calculating households’ shelter ex- penses. However, households may (1) claim actual expenses instead of the allowance and (2) switch between an actual expense claim and the standard allowance at the end of any certification period and 1 additional time during any 12-month period. [Sec. 5(e)] House bill Standard Deductions. Indefinitely freezes standard deduction amounts at their present levels (e.g., $134 for the 48 contiguous States and the District of Columbia). [Sec. 1020] Earned Income Deduction. Disallows an earned income deduc- tion for any income not reported in a timely manner and for the public assistance portion of income earned under a work supplementation\/support program. [Sec. 1020] Homeless Shelter Allowance. Indefinitely freezes the maximum homeless shelter allowance at its present level ($143). States may use it in calculating an excess shelter expense deduction (without regard to actual costs) and may prohibit its use for households with extremely low shelter costs. [Sec. 1020] Excess Shelter Expense Deduction. Indefinitely retains current limits on excess shelter expense deductions for households without elderly or disabled members (e.g., $247 for the 48 contiguous States and the District of Columbia). [Sec. 1020] Permits States to make use of standard utility allowances mandatory for all households if (1) the State has developed sepa- rate standards that do and do not include the cost of heating and cooling and (2) the Secretary finds that the standards will not re- sult in increased Federal costs. [Sec. 1020] Senate amendment Standard Deductions. Extends the present standard deduction levels (e.g., $134 for the 48 contiguous States) through November 1996. For December 1996 through September 2001, sets standard deduction at $120, $206, $170, $242, and $106. For October 2001 through August 2002, sets standard deductions at $113, $193, $159, $227, and $100. For September 2002, sets standard deduc- tions at $120, $206, $170, $242, and $106. Beginning with fiscal year 2003, standard deductions are indexed for inflation as under present law. [Sec. 1119] 455 Earned Income Deduction. Same provision. [Sec. 1119] Homeless Shelter Allowance. Same provision. [Sec. 1119] Excess Shelter Expense Deduction. Effective January 1, 1997, increases the current limits on excess shelter expense deductions to $342 in the 48 contiguous States and the District of Columbia, $594 in Alaska, $489 in Hawaii, $415 in Guam, and $252 in the Virgin Islands. No further increases are provided. [Sec. 1119] Includes the same provision as in the House bill in regard to mandatory standard utility allowances. [Sec. 1119] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. With regard to the provisions in disagreement: the conference agreement adopts the House provision as to standard deductions; and the conference agreement adopts the Senate provision as to limits on the excess shelter expense deduction with an amendment (1) requiring that they continue at their present- law levels (e.g. $247 for the 48 contiguous States and the Dis- trict of Columbia) through December 31, 1996, (2) for January 1, 1997, through fiscal year 1998, increasing the limits to $250 for the 48 States and the District of Columbia, $434 for Alaska, $357 for Hawaii, $304 for Guam, and $184 for the Virgin Is- lands, (3) for fiscal years 1999 and 2000, increasing the limits to $275, $478, $393, $334, and $203, and (4) for fiscal years 2001, 2002, and each subsequent fiscal year, increasing the limits to $300, $521, $429, $364, and $221. [Sec. 809] 11. VEHICLE ALLOWANCE Present law In determining a household’s liquid assets for food stamp eligi- bility purposes, a vehicle’s fair market value in excess of $4,600 is counted. This threshold is scheduled to rise to an estimated $5,150 on October 1, 1996, and be adjusted each October thereafter to re- flect changes in the new car component of the CPI-U for the 12- month period ending the immediately preceding June (rounded to the nearest $50). Excluded from this rule are vehicles used to produce income, necessary for transportation of a disabled house- hold member, or depended on to carry fuel or water. [Sec. 5(g)] House bill Retains the threshold above which the fair market value of a vehicle is counted as a liquid asset at the current level\u2014$4,600. [Sec. 1021] Senate amendment Effective October 1, 1996, sets the threshold above which the fair market value of a vehicle is counted as a liquid asset to $4,650. No further increases are provided. [Sec. 1120] 456 Conference agreement The conference agreement adopts the Senate provision. [Sec. 810] 12. VENDOR PAYMENTS FOR TRANSITIONAL HOUSING COUNTED AS INCOME Present law AFDC, or general assistance housing aid, provided to a third party on behalf of a food stamp household is considered paid di- rectly to the household (and thus counted as household income) un- less, among other exceptions, it is housing assistance paid on be- half of households residing in ”transitional housing for the home- less.” [Sec. 5(k)] House bill Removes the exception for vendor payments for transitional housing for the homeless. [Sec. 1022] Senate amendment Same provision. [Sec. 1121] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 811] 13. SIMPLIFIED CALCULATION OF INCOME FOR THE SELF-EMPLOYED Present law The cost of producing self-employment income is disregarded (subtracted out) in calculating household income. [Sec. 5(d)] House bill No provision. Senate amendment Provides that the Secretary establish a procedure (designed not to increase Federal costs) by which States may use a reasonable es- timate of the cost of producing self-employment income in lieu of calculating actual costs, not later than 1 year after enactment. The procedure must allow States to estimate costs for all types of self- employment income and may differ for different types of self-em- ployment income. [Sec. 1122] Conference agreement The conference agreement adopts the Senate provision with an amendment providing that the Secretary establish a procedure by which States may submit a method for determining reasonable es- timates of the cost of producing self-employment income designed not to increase Federal costs. [Sec. 812] 457 14. DOUBLED PENALTIES FOR VIOLATING FOOD STAMP PROGRAM REQUIREMENTS Present law The disqualification period for the first intentional violation of program requirements is 6 months. The penalty for a second inten- tional violation (and the first violation involving trading of a con- trolled substance) is 1 year. [Sec. 6(b)(1)] House bill Increases the disqualification penalty for a first intentional vio- lation to 1 year. Increases the penalty for a second intentional vio- lation (and the first involving a controlled substance) to 2 years. [Sec. 1023] Senate amendment Same provision. [Sec. 1123] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 813] 15. DISQUALIFICATION OF CONVICTED INDIVIDUALS Present law Permanent disqualification is required for the third intentional violation of program requirements, the second violation involving trading of a controlled substance, and the first violation involving trading of firearms, ammunition, or explosives. [Sec. 6(b)(1)] House bill Adds a requirement for permanent disqualification of persons convicted of trafficking in food stamp benefits where the benefits have a value of $500 or more. [Sec. 1024] Senate amendment Same provision. [Sec. 1124] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 814] 16. DISQUALIFICATION Present law Conditions of Participation. Non-exempt individuals between 16 and 60 are ineligible if they: (1) refuse to register for employ- ment, (2) refuse without good cause (including lack of adequate child care) to participate in an employment or training program when required to do so by the State, or (3) refuse, without good cause, a job offer meeting minimum standards. In addition, if the individual is head of household and fails to comply with one of the above-noted conditions or voluntarily quits a job without good cause, the entire household is ineligible. [Sec. 6(d)(1)] 458 Duration of Ineligibility\/Household Ineligibility. Disqualifica- tion periods for failure to meet work\/training conditions of partici- pation are (1) 2 months or until compliance (whichever is first) for most failures and (2) 90 days in the case of a voluntary quit. [Sec. 6(d)(1)] House bill Conditions of Participation. Adds conditions making individ- uals ineligible if they (1) refuse without good cause to provide suffi- cient information to allow the State agency to determine their em- ployment status or job availability or (2) voluntarily and without good cause reduce work effort and (after the reduction) are working less than 30 hours a week. Makes ineligibility for failure to comply with workfare requirements explicit and covered by new (see below) duration of ineligibility rules. Adds a condition making all individuals (in addition to heads of household) ineligible if they vol- untarily quit a job without good cause. Lack of adequate child care, as an explicit good cause exemption for refusal to participate in an employment or training program, is removed. [Sec. 1025] Duration of Ineligibility\/Household Ineligibility. Establishes new mandatory minimum disqualification periods for individuals failing to comply with any work\/training condition of participation. For the first violation, individuals are ineligible until they fulfill work\/training conditions, for 1 month, or for a period (determined by the State) not to exceed 3 months\u2014whichever is later. For the second violation, individuals are ineligible until they fulfill work\/ training conditions, for 3 months, or for a period (determined by the State) not to exceed 6 months\u2014whichever is later. For a third or subsequent violation, individuals are ineligible until they fulfill work\/training conditions, for 6 months, until a date set by the State agency, or (at State option) permanently. [Sec. 1025] Establishes a new household ineligibility rule: if any individual who is head of household is disqualified under a work\/training con- dition of participation, the entire household is, at State option, in- eligible for a period not to exceed the lesser of the duration of the individual’s ineligibility or 180 days. [Sec. 1025] Administration. In establishing cases of good cause, voluntary quit, and reduction of work effort, the Secretary determines the meaning of the terms. States determine the meaning of other terms related to work\/training conditions of participation and the proce- dures for making compliance decisions, but cannot make deter- minations that are less restrictive than a comparable one under the State’s family assistance block grant (TANF) program. [Sec. 1025] Senate amendment Conditions of Participation. Same provision. [Sec. 1125] Duration of Ineligibility\/Household Ineligibility. Same provi- sion. [Sec. 1125] Administration. Same provision. [Sec. 1125] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 815] 459 17. CARETAKER EXEMPTION Present law Parents or other household members with responsibility for the care of a dependent child under age 6 are exempt from food stamp work\/training conditions of participation. [Sec. 6(d)(2)] House bill Permits States to lower the age at which a child ”exempts” a parent or caretaker from age 6 to not under the age of 1. [Sec. 1026] Senate amendment No provision. Conference agreement The conference agreement adopts the House provision with an amendment to permit a State to lower the age at which a child ex- empts a parent or caretaker from age 6 to not under age 1, if the State requested a waiver to lower the age of a dependent child that exempts the parent or caretaker and had the waiver denied by the Secretary as of August 1, 1996. The State may lower the age of the child for not more than 3 years. [Sec. 816 ] 18. EMPLOYMENT AND TRAINING Present law Programs. States must operate employment and training pro- grams for nonexempt food stamp recipients and place a minimum proportion of those covered in a program component. Program com- ponents can range from job search or education activities to work experience\/training and workfare assignments. Work experience\/training program components must limit as- signments to projects serving a useful public purpose, use the prior training\/experience of assignees, not provide work that has the ef- fect of replacing others, and provide the same benefits and working conditions provided others. States and political subdivisions also may operate workfare programs under which nonexempt recipients may be required to perform work in return for the minimum wage equivalent of their household’s monthly food stamp allotment. Workfare assignments may not replace or prevent the employment of others and must provide the same benefits and working conditions provided others. The total hours of work required of a household under an em- ployment\/training program (including workfare) cannot exceed the minimum wage equivalent of the household’s monthly allotment. Monthly participation in an employment\/training program required of any household member cannot exceed 120 hours (when added to other work). And workfare hours (when added to other work) can- not exceed 30 hours a week for a household member. Under employment and training programs for food stamp re- cipients, States must provide or pay for transportation and other costs directly related to participation (up to $25 a month for each participant) and necessary dependent care expenses (in general, up 460 to local market rates). Under workfare program, States must reim- burse participants for transportation and other costs directly relat- ed to participation (up to $25 a month for each participant). [Sec. 6(d)(4) and sec. 20] Funding. To support employment and training programs for food stamp recipients, States receive a formula share of required spending of $75 million a year. Each State’s share is based on its share of nonexempt recipients and its share of those placed in em- ployment\/training program components. [Sec. 16(h)] In addition, States receive a 50 percent match for any addi- tional administrative or participant support costs. [Sec. 16(h)] House bill Programs. Revises the existing requirements for State-operated employment and training programs for food stamp recipients: makes clear that work experience is a purpose of employ- ment and training programs; requires that each component of an employment\/training program be delivered through a ”statewide workforce develop- ment system,” unless the component is not available locally through the system; expands the existing State option to apply work\/training requirements to applicants to include all work\/training require- ments, not only job search; removes specific Federal rules governing job search compo- nents (i.e., those tied to rules in the AFDC program); removes provisions for employment\/training components related to work experience requiring that they be in public service work and use recipients’ prior training\/experience; removes specific Federal rules as to States’ authority to ex- empt categories and individuals from employment\/training re- quirements, giving States full latitude to determine exemp- tions; removes a requirement to serve volunteers; removes the requirement for ”conciliation procedures” for resolving disputes involving participation in employment\/train- ing programs; limits employment and training funding provided by the food stamp program for services to family assistance block grant (TANF) recipients to the amount used by the State for AFDC recipients in fiscal year 1995; and removes provisions for Federal performance standards on States. [Sec. 1027] Funding. Provides for required Federal spending of increasing amounts for employment and training programs: $79 million in fis- cal year 1997, $81 million in 1998, $84 million in 1999, $86 million in 2000, $88 million in 2001, and $90 million in 2002. State alloca- tions are based on a ”reasonable formula” (determined by the Sec- retary) that gives consideration to each State’s population of per- sons subject to the new work requirement (see item 25). [Sec. 1027] Provides that the 50 percent match for additional administra- tive costs can include costs for case management\/casework to facili- tate the transition from economic dependency to self-sufficiency through work. [Sec. 1027] 461 Deletes a requirement for a report from the Secretary on modi- fying Federal employment and training program payments to States to reflect their effectiveness in carrying out employment and training programs. [Sec. 1027] Senate amendment Programs. Same provisions. [Sec. 1126] Funding. Same provisions, except that required Federal spend- ing is $85 million a year for fiscal years 1997 2002. [Sec. 1126] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills and adopts House provision with regard to Fund- ing. [Sec. 817] 19. FOOD STAMP ELIGIBILITY Present law The income and resources of aliens ineligible under Food Stamp Act provisions are counted as available to the remainder of the household, less a pro rata share for the ineligible alien. [Sec. 6(f)] House bill Permits States the option to count all of the income and re- sources of an alien ineligible under Food Stamp Act provisions as available to the remainder of the household. [Sec. 1066] Senate amendment Same provision, with technical differences. [Sec. 1127] Conference agreement The conference agreement adopts the Senate provision. [Sec. 818] 20. COMPARABLE TREATMENT FOR DISQUALIFICATION Present law Households penalized for an intentional failure to comply with a Federal, State, or local welfare program may not, for the duration of the penalty, receive an increased food stamp allotment because the welfare payment has been reduced. [Sec. 8(d)] Persons are exempt from food stamp work\/training conditions of participation if they are currently subject to and complying with AFDC or unemployment insurance work registration requirements. Failure to comply with an AFDC\/unemployment insurance work registration requirement that ”is comparable to” a food stamp work requirement results in disqualification as if the food stamp require- ment had been violated. [Sec. 6(d)(2)] House bill If an individual is disqualified for failure to perform an action required under a Federal, State, or local law relating to means- tested public assistance, the State agency is permitted to impose the same disqualification for food stamps. 462 If a disqualification is imposed under the family assistance block grant (TANF) rules, States are permitted to use the TANF rules and procedures to impose the same disqualification for food stamps. Permits individuals disqualified from food stamps because of failure to perform a required action under another public assist- ance program to apply for food stamps as new applicants after the disqualification period has expired, except that a prior disqualifica- tion under food stamp program work\/training rules must be consid- ered in determining eligibility. Requires States to include in their State plans the guidelines they use in carrying out food stamp disqualification for failure to perform another program’s required action(s). [Sec. 1028] Removes the requirement that an AFDC\/unemployment insur- ance work requirement be ”comparable” to a food stamp require- ment to bring on disqualification from food stamps. [Sec. 1028] Senate amendment Same provisions. [Sec. 1128] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 819] 21. DISQUALIFICATION FOR RECEIPT OF MULTIPLE FOOD STAMP BENEFITS Present law No comparable provision. House bill Adds a provision making individuals ineligible for 10 years if they are found by a State agency (or Federal or State court) to have made a fraudulent statement with respect to identity or resi- dence in order to receive multiple food stamp benefits simulta- neously. [Sec. 1029] Senate amendment Same provision. [Sec. 1129] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 820] The conferees note that State agency hearing processes have sufficient recipient protections to warrant a decision to impose a 10-year disqualification in these cases. 22. DISQUALIFICATION OF FLEEING FELONS Present law No provision. House bill Adds a provision making individuals ineligible while they are fleeing to avoid prosecution, custody, or confinement for a felony or 463 attempted felony or violating a condition of probation or parole. [Sec. 1030] Senate amendment Same provision. [Sec. 1130] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 821] 23. COOPERATION WITH CHILD SUPPORT AGENCIES Present law Custodial Parents. No provisions. Noncustodial Parents. No provisions. House bill Custodial Parents. Permits States to disqualify custodial par- ents of children under the age of 18 who have an absent parent, unless the parent cooperates with the State child support agency in establishing the child’s paternity and obtaining support for the child and the parent. Cooperation is not required if the State finds there is good cause (in accordance with Federal standards taking into account the child’s best interest). Fees or other costs for serv- ices may not be charged. [Sec. 1031] Noncustodial Parents. Permits States to disqualify putative or identified noncustodial parents of children under 18 if they refuse to cooperate with the State child support agency in establishing the child’s paternity and providing support for the child. The Secretary and the Secretary of Health and Human Services must develop guidelines as to what constitutes a refusal to cooperate, and States must develop procedures (using these guidelines) for determining whether there has been a refusal to cooperate. Fees or other costs for services may not be charged. States must provide privacy safe- guards. [Sec. 1031] Senate amendment Custodial Parents. Same provisions. [Sec. 1131] Noncustodial Parents. Same provisions. [Sec. 1131] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 822] 24. DISQUALIFICATION RELATING TO CHILD SUPPORT ARREARS Present law No provisions. House bill Allows States to disqualify individuals during any period in which the individual is delinquent in any court-ordered child sup- port payment, unless the court is allowing a delay or the individual is complying with a payment plan approved by the court or a State child support agency. [Sec. 1032] 464 Senate amendment Same provision. [Sec. 1132] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 823] 25. WORK REQUIREMENT Present law No comparable provisions. House bill Requirement. After the date of enactment, no nonexempt indi- vidual may be eligible for food stamps for more than 3 months dur- ing which the individual does not (1) work at least 20 hours a week (averaged monthly), (2) participate in and comply with a ”work pro- gram” for at least 20 hours a week (as determined by the State agency), or (3) participate in a workfare program. A work program is defined as a program under the Job Training Partnership Act, a Trade Adjustment Assistance Act program, or a program of em- ployment and training operated or supervised by a State or politi- cal subdivision that meets standards approved by the Governor (in- cluding a Food Stamp Act employment and training program), other than job search or job search training. [Sec. 1033] General Exemptions. The new work requirement does not apply to (1) those under 18 or over 50, (2) those who are medically certified as physically or mentally unfit for employment, (3) parents or other household members with the responsibility for a depend- ent child, (3) those otherwise exempt from work registration re- quirements (e.g., those caring for incapacitated persons), and (4) pregnant women. [Sec. 1033] Other Provisions. On a State agency’s request, the Secretary may waive application of the new work requirement to any group of individuals if the Secretary determines that the area where they reside (1) has an unemployment rate over 10 percent or (2) does not have a sufficient number of jobs to provide them employment. The Secretary must report the basis for any waiver to Congress. [Sec. 1033] Senate amendment Requirement. No nonexempt individual may be eligible for food stamps if, during the preceding 12-month period, the individual re- ceived food stamp benefits for 4 months or more while not (1) work- ing at least 20 hours a week (averaged monthly), (2) participating in and complying with a ”work program” for at least 20 hours a week (as determined by the State agency), or (3) participating in and complying with a workfare program. A work program is de- fined as in the House bill, with a technical difference. [Sec. 1133] General Exemptions. Same provisions. [Sec. 1133] Other Provisions. Provisions for unemployment-rate and job- availability waivers are the same as in the House bill, except that the Secretary must respond to a State agency request within 15 days. [Sec. 1133] 465 The disqualification imposed under the new work requirement ceases to apply if, during a 30-day period, an individual works 80 hours or more, participates in and complies with a work program (defined above) for at least 80 hours, or participates in and com- plies with a workfare program. After regaining eligibility, the indi- vidual again is subject to the new work requirement, except that a new 12-month period begins. [Sec. 1133] State agencies may exempt an individual from the new work requirement: (1) by reason of ”hardship” or (2) for up to 2 months (in any 12-month period), if the individual participates in and com- plies with a job search or job search training program under the Food Stamp Act’s employment and training program provisions that requires an average of at least 20 hours a week of participa- tion. The fiscal year average monthly number of individuals partici- pating because of a hardship exemption may not exceed 20 percent of the fiscal year average number of individuals receiving food stamps who are not exempt from the new work requirement be- cause of the general exemptions or waivers (noted above). [Sec. 1133] Provides for a transition to the new work requirement. Prior to 1 year after enactment, administrators would not ”look back” a full 12 months; they would look back only to the date of enactment. [Sec. 1133] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills: General Exemptions and provisions for waivers in cases of high unemployment and lack of sufficient jobs. With re- spect to the provisions in disagreement, the conference agreement adopts the Senate provisions with an amendment: No nonexempt individual may be eligible for food stamps if, during the preceding 36-month period, the individual received food stamp benefits for 3 months or more while not (1) working at least 20 hours a week (averaged monthly), (2) participating in and com- plying with a work program for at least 20 hours a week (as deter- mined by the State agency), or (3) participating in and complying with a workfare program. A work program is defined as in the House bill. Receipt of benefits while exempt (including participa- tion under the additional 3-month eligibility provision described below) or covered by a waiver would not count toward an individ- ual’s basic 3-month eligibility period. Individuals denied eligibility under the new work rule would regain eligibility if, during a 30-day period, the individual (1) works 80 or more hours, (2) participates in and complies with the require- ments of a work program for 80 or more hours (as determined by the State agency), or (3) participates in and complies with the re- quirements of a workfare program. After having met this 30-day work\/training requirement, the individual could remain eligible for a consecutive period of 3 months without working at least 20 hours a week or participating in an employment\/training or workfare pro- gram. For example, if an individual works 20 hours a week for at least 30 days and then loses a job, the individual could retain food stamp eligibility for 3 consecutive months without working or being in a training\/workfare program. 466 But individuals could not take advantage of this provision for an additional 3 months of eligibility, while not working or in an employment\/training or workfare program, for more than a single 3-month period in a 36-month period. Individuals regaining eligi- bility also would remain eligible as long as they continued to meet requirements to work at least 20 hours a week or participate in a training\/workfare program. Transition provisions are included that provide that the 36- month period established by the new work requirement will not in- clude any period before the earlier of the date the State notifies re- cipients (through means such as individual notices at certification, recertification, otherwise, mass mailings, media announcements, or otherwise) about the new work requirement or 3 months after en- actment. [Sec. 824] 26. ENCOURAGEMENT OF ELECTRONIC BENEFIT TRANSFER SYSTEMS Present law Rules for EBT Systems. State agencies, with the Secretary’s approval, may implement on-line electronic benefit transfer (EBT) systems for delivering food stamp benefits. No State may imple- ment or expand an EBT system without prior approval from the Secretary. States are responsible for 50 percent of EBT system costs. The Secretary’s regulations for approval must include (1) standards that require that, in any 1 year, the operational cost of an EBT system does not exceed costs of prior issuance systems and (2) system security standards. [Sec. 7(i)] Regulation E. The Federal Reserve Board has ruled that, as of March 1997 (and with some minor modifications), its ”Regulation E” will apply to EBT systems. Regulation E provides certain pro- tections for consumers using cards to access their accounts. It lim- its the liability of cardholders for unauthorized withdrawals (to $50 if timely notification is made) and requires periodic account state- ments and certain error resolution procedures. [Federal Register of March 7, 1994] Anti-tying Restrictions. No provision. House bill Rules for EBT Systems. Provides that States must implement EBT systems (on-line or off-line) before October 1, 2002, unless the Secretary waives the requirement because a State agency faces un- usual barriers to implementation. States are encouraged to imple- ment an EBT system as soon as practicable. [Sec. 1034] Subject to Federal standards, permits State agencies to procure and implement an EBT system under the terms, conditions, and design the agency considers appropriate. Adds a new requirement for Federal procurement standards and deletes the requirement for the Secretary’s prior approval. [Sec. 1034] Adds a requirement for EBT standards following generally ac- cepted operating rules based on commercial technology, the need to permit interstate operation and law enforcement, and the need to permit monitoring and investigations by law enforcement officials. [Sec. 1034] 467 Adds requirements that the Secretary’s standards include (1) measures to maximize security and (2) effective not later than 2 years after enactment, measures to permit EBT systems to dif- ferentiate among food items. [Sec. 1034] Deletes the requirement that EBT systems be cost neutral in any one year. [Sec. 1034] Adds a requirement that regulations regarding the replace- ment of benefits and liability for replacement under an EBT system be similar to those in effect for a paper food stamp issuance sys- tem. [Sec. 1034] Permits State agencies to collect a charge for replacing EBT cards by reducing allotments. [Sec. 1034] Permits State agencies to require that EBT cards contain a photograph of one or more household members and requires that, if a State requires a photograph, it must establish procedures to ensure that other appropriate members of the household and au- thorized representatives may use the card. [Sec. 1034] Declares it the sense of Congress that States operate EBT sys- tems that are compatible with other States’ systems. [Sec. 1034] Regulation E. Provides that Regulation E will not apply to any EBT system, established under, or administered by, State or local governments, distributing needs-tested benefits. [Sec. 1091] Anti-tying Restrictions. Provides that a company may not sell or provide EBT services, or fix or vary the consideration for such services, on the condition or requirement that the customer obtain, or not obtain, some additional point-of-sale service from the com- pany or any affiliate. Requires the Secretary to consult with the Governors of the Federal Reserve before issuing regulations to carry out this provision. [Sec. 1034] Senate amendment Rules for EBT Systems. Same provisions. [Sec. 1134] Regulation E. Same provision. [Sec. 2809] Also provides that Regulation E will not apply to food stamp benefits delivered through an EBT system. [Sec. 1134] Anti-tying Restrictions. No provision. Conference agreement The conference agreement adopts the provisions that are com- mon to both bills, with a technical amendment, and adopts the Senate provision providing that Regulation E will not apply to food stamp benefits. The conferees intend that regulations issued by the Secretary regarding the replacement of benefits and liability for re- placement of benefits under an EBT system will not require greater replacement of benefits or impose greater liability than those regu- lations in effect for a paper-based food stamp issuance system. [Sec. 825 and sec. 891] The conference agreement also adopts the House provision ap- plying anti-tying restrictions of the Bank Holding Company Act Amendments of 1970 to EBT services offered by nonbanks. The conferees intend that, in applying the anti-tying restrictions to nonbanks, the Secretary implement the anti-tying provision con- sistent with the anti-tying restrictions that apply to banks. [Sec. 825] 468 27. VALUE OF MINIMUM ALLOTMENT Present law The minimum monthly allotment for 1- and 2-person house- holds is set at $10. It is indexed for inflation and rounded to the nearest $5. [Sec. 8(a)] House bill Deletes the requirement for inflation indexing of the minimum allotment. [Sec. 1035] Senate amendment Same provision. [Sec. 1135] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 826] 28. BENEFITS ON RECERTIFICATION Present law Recipient households not fulfilling eligibility recertification re- quirements in the last month of their certification period are al- lowed a 1-month ”grace period” in which to fulfill the requirements before their benefits are pro-rated (reduced) to reflect the delay. [Sec. 8(c)] House bill For those who do not complete all eligibility recertification re- quirements in the last month of their certification period, but are then determined to be eligible after their certification period has expired, requires that they receive reduced benefits in the first month of their new certification period (i.e., their benefits would be pro-rated to the date they met the requirements and were judged eligible). [Sec. 1036] Senate amendment Same provision. [Sec. 1136] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 827] 29. OPTIONAL COMBINED ALLOTMENT FOR EXPEDITED HOUSEHOLDS Present law For households applying after the 15th of the month, States may provide an allotment that is the aggregate of the initial (pro- rated) allotment and the first regular allotment. However, com- bined allotments must be provided to households applying after the 15th who are entitled to expedited service. [Sec. 8(c)] House bill Makes provision of combined allotments a State option both for regular and expedited service applicants. [Sec. 1037] 469 Senate amendment Same provision. [Sec. 1137] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 828] 30. FAILURE TO COMPLY WITH OTHER MEANS-TESTED PUBLIC ASSISTANCE PROGRAMS Present law Households penalized for intentional failure to comply with a Federal, State, or local welfare program may not, for the duration of the penalty, receive an increased food stamp allotment because their welfare income has been reduced. [Sec. 8(d)] House bill Bars increased food stamp allotments when the benefits of a household are reduced under a Federal, State, or local means-test- ed public assistance program for failure to perform a required ac- tion. Permits States also to reduce a household’s food stamp allot- ment by up to 25 percent. If the allotment is reduced for failure to perform an action under a family assistance block grant (TANF) program, the State may use the rules and procedures of that pro- gram to reduce the food stamp allotment. [Sec. 1038] Senate amendment Same provision. [Sec. 1138] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 829] 31. ALLOTMENTS FOR HOUSEHOLDS RESIDING IN CENTERS Present law Residential substance abuse centers may be designated as re- cipients’ authorized representatives, and benefits generally are pro- vided to the center. House bill Permits State agencies to divide a month’s food stamp benefits between the center and an individual who leaves the center and permits States to require center residents to designate centers as authorized representatives. [Sec. 1039] Senate amendment Same provisions. [Sec. 1139] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 830] 470 32. CONDITION PRECEDENT FOR APPROVAL OF RETAIL FOOD STORES AND WHOLESALE FOOD CONCERNS Present law No provisions. House bill Provides that no food concerns (of a type determined by the Secretary based on factors including size, location, and types of items sold) be approved for participation unless visited by an Agri- culture Department employee (or, whenever possible, a State or local government official designated by the Secretary). [Sec. 1040] Senate amendment Same provision. [Sec. 1140] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 831] 33. AUTHORITY TO ESTABLISH AUTHORIZATION PERIODS Present law No provisions. House bill Requires the Secretary to establish specific time periods during which retail food stores’ and wholesale food concerns’ authorization to accept and redeem food stamp benefits will be valid. [Sec. 1041] Senate amendment Same provision. [Sec. 1141] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 832] 34. INFORMATION FOR VERIFYING ELIGIBILITY FOR AUTHORIZATION Present law No provisions. House bill Permits the Secretary to require that retailers and wholesalers seeking approval to accept and redeem food stamp benefits submit relevant income and sales tax filing documents. Permits regula- tions requiring retailers and wholesalers to provide written author- ization for the Secretary to verify all relevant tax filings and to ob- tain corroborating documentation from other sources in order to verify the accuracy of information provided by the retailer\/whole- saler. [Sec. 1042] Senate amendment Same provision. [Sec. 1142] 471 Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 833] 35. WAITING PERIOD FOR STORES THAT FAIL TO MEET AUTHORIZATION CRITERIA Present law No provisions. House bill Provides that retailers and wholesalers that have failed to be approved for participation may not submit a new application to participate for at least 6 months. The Secretary may establish a longer period (including permanent disqualification) that reflects the severity of the basis of the denial. [Sec. 1043] Senate amendment Same provision. [Sec. 1143] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 834] 36. OPERATION OF FOOD STAMP OFFICES Present law State Plans. States must: allow households contacting a food stamp office in person during office hours to make an oral\/written request for aid and receive and file an application on the same day; use a simplified, uniform, federally designed application, unless a waiver is approved; include certain, specific information in applications; waive in-person interviews under certain circumstances and use telephone interviews or home visits instead; provide for telephone contact and mail application by households with transportation or similar difficulties; require an adult representative of the household to certify as to household members’ citizenship\/alien status; assist households in obtaining verification and completing applications; not require additional verification of currently verified in- formation (unless there is reason to believe that the informa- tion is inaccurate, incomplete, or inconsistent); not deny an application solely because a nonhousehold member fails to cooperate; process applications if the household meets cooperation re- quirements; provide households with a statement of reporting respon- sibilities at certification and recertification; provide a toll-free or local telephone number at which households can reach State agency personnel; display and make available nutrition information; and 472 use mail issuance in rural areas where low-income house- holds face substantial difficulties in obtaining transportation. [Sec. 11(e) (2), (14), & (25)] Application and Denial Procedures. A single interview for de- termining AFDC and food stamp benefits is required. Food stamp applications generally are required to be contained in public assist- ance applications, and applications and information about how to apply for food stamps must be provided local assistance applicants. Applicants (including those who have recently lost or been denied public assistance) must be certified eligible for food stamps based on their public assistance casefile (to the extent it is reasonably verified). No household may be terminated from or denied food stamps solely on the basis of termination\/denial of other public as- sistance without a separate food stamp determination. [Sec. 11(i)] House bill State Plans. Replaces noted existing State plan requirements with requirements that the State: establish procedures governing the operation of food stamp offices that it determines best serve households in the State, including those with special needs (such as households with el- derly or disabled members, those in rural areas, the homeless, households residing on reservations, and households speaking a language other than English); provide timely, accurate, and fair service to applicants and participants; permit applicants to apply and participate on the same day they first contact a food stamp office during office hours; consider an application filed on the date the applicant sub- mits an application with the applicant’s name, address, and signature; require that an adult representative certify as to the truth of the information on the application and citizenship\/alien sta- tus; and have a method for certifying homeless households. [Sec. 1044] Permits States to establish operating procedures that vary for local food stamp offices. [Sec. 1044] Stipulates that the signature of a single adult will be sufficient to comply with any provision of Federal law requiring applicant signatures. [Sec. 1044] Makes clear that nothing in the Food Stamp Act prohibits elec- tronic storage of application and other information. [Sec. 1044] Application and Denial Procedures. Deletes noted existing re- quirements for single interviews, applications, and food stamp de- terminations based on public assistance information. Permits dis- qualification for food stamps based on another public assistance program’s disqualification for failure to comply with its rules or regulations. [Sec. 1044] Senate amendment State Plans. Same provisions. [Sec. 1144] Application and Denial Procedures. Same provisions. [Sec. 1144] 473 Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 835] 37. STATE EMPLOYEE AND TRAINING STANDARDS Present law States must employ agency personnel responsible for food stamp certifications in accordance with current Federal ”merit sys- tem” standards. States must provide continuing, comprehensive training for all certification personnel. States may undertake inten- sive training of personnel to ensure they are qualified for certifying farm households. States may provide or contract for the provision of training and assistance to persons working with volunteer or nonprofit organizations that provide outreach and eligibility screen- ing. [Sec. 11(e)(6)] House bill Deletes training provisions. [Sec. 1045] Senate amendment Same provision. [Sec. 1145] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 836] 38. EXCHANGE OF LAW ENFORCEMENT INFORMATION Present law No provisions. House bill Requires State food stamp agencies to make available to law enforcement officers the address, social security number, and a photograph (when available) of a food stamp recipient if the officer furnishes the recipient’s name and notifies the agency that the in- dividual is fleeing to avoid prosecution, custody, or confinement for a felony, is violating a condition of parole or probation, or has infor- mation necessary for the officer to conduct an official duty related to a felony\/parole violation. [Sec. 1046] Senate amendment Same provision. [Sec. 1146] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 837] 39. EXPEDITED COUPON SERVICE Present law States must provide expedited benefits to applicant households that (1) have gross income under $150 a month (or are ”destitute” migrant or seasonal farmworker households) and have liquid re- 474 sources of no more than $100, (2) are homeless, or (3) have com- bined gross income and liquid resources less than the household’s monthly shelter expenses. Expedited service means providing an allotment no later than 5 days after application. [Sec. 11(e)(9)] House bill Deletes noted requirements to provide expedited service to the homeless and those with shelter expenses in excess of their income\/ resources. Lengthens the period in which expedited benefits must be provided to 7 days. [Sec. 1047] Senate amendment No provision. Conference agreement The conference agreement adopts the House provisions with an amendment to retain the requirement for expedited service to those with income and liquid resources less than their monthly shelter expenses. [Sec. 838] 40. WITHDRAWING FAIR HEARING REQUESTS Present law No provisions. House bill At State option, permits households to withdraw fair hearing requests orally or in writing. If it is an oral request, the State must provide written notice confirming the request and providing the household with another chance to request a fair hearing. [Sec. 1048] Senate amendment Same provision. [Sec. 1147] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 839] 41. INCOME, ELIGIBILITY, AND IMMIGRATION STATUS VERIFICATION SYSTEMS Present law States must use the ”income and eligibility verification sys- tems” established under section 1137 of the Social Security Act to assist in verifying household circumstances; this includes a system for verifying financial circumstances (IEVS) and a system for veri- fying alien status (SAVE). [Sec. 11(e)(19)] House bill Makes use of IEVS and SAVE optional with the States. [Sec. 1049] Senate amendment Same provision. [Sec. 1148] 475 Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 840] 42. DISQUALIFICATION OF RETAILERS WHO INTENTIONALLY SUBMIT FALSIFIED APPLICATIONS Present law No provisions. House bill Retailers\/wholesalers who knowingly submit an application to accept and redeem food stamp benefits that contains false informa- tion about a substantive matter must be disqualified for a reason- able period of time to be determined by the Secretary (including permanent disqualification). [Sec. 1050] Senate amendment Same provision. [Sec. 1149] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 842] 43. DISQUALIFICATION OF RETAILERS WHO ARE DISQUALIFIED UNDER THE WIC PROGRAM Present law No provisions. House bill Requires the Secretary to issue regulations providing criteria for disqualifying from food stamp program participation retailers\/ wholesalers disqualified from the WIC program. Disqualification must be for the same length of time, may begin at a later date, and is not subject to separate food stamp administrative\/judicial review provisions. [Sec. 1051] Senate amendment Same provisions. [Sec. 1150] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 843] 44. COLLECTION OF OVERISSUANCES Present law In the case of overissuances due to an intentional program vio- lation, households must agree to repayment by either a reduction in future benefits or cash repayment; States also are required to collect overissuances to these households through other means such as tax refund or unemployment compensation collections if other repayment is not forthcoming (unless they demonstrate that the other means are not cost effective). In cases of overissuance be- 476 cause of inadvertent household error, States must collect the over- issuance through a reduction in future benefits, except that house- holds must be given 10 days notice to elect another means and col- lections are limited to 10 percent of the monthly allotment or $10 a month (whichever would result in faster collection). Otherwise uncollected overissued benefits, except those arising from State agency error, may be recovered from Federal pay or pensions. [Sec. 13 (b) & (d) and sec. 11(e)(8)] States may retain 25 percent of ”nonfraud” collections not aris- ing from State agency error and 50 percent of ”fraud” collections (increased from 10 percent and 25 percent on October 1, 1995). [Sec. 16(a)] House bill Replaces existing overissuance collection rules with provisions requiring States to collect any overissuance by reducing future ben- efits, withholding unemployment compensation, recovering from Federal pay or income tax refunds, or any other means\u2014unless the State demonstrates that all of the means are not cost effective. Limits benefit reductions (absent intentional program violation) to the greater of 10 percent of the monthly allotment or $10 a month. Provides that States must collect overissued benefits in accordance with State-established requirements for notice, electing a means of payment, and setting a schedule for payment. [Sec. 1052] Permits States to retain 25 percent of all collections other than those arising from State agency error. [Sec. 1052] Senate amendment Same provision, except permits States to retain 20 percent of nonfraud collections other than those arising from State agency error and 35 percent of fraud collections. [Sec. 1151] Conference agreement The conference agreement adopts the Senate provisions. [Sec. 844] 45. AUTHORITY TO SUSPEND STORES VIOLATING PROGRAM REQUIREMENTS PENDING ADMINISTRATIVE AND JUDICIAL REVIEW Present law No provisions. House bill Requires that any permanent disqualification of a retailer\/ wholesaler be effective from the date of receipt of the notice of dis- qualification. If the disqualification is reversed through administra- tive or judicial review, the Secretary is not liable for lost sales. [Sec. 1053] Senate amendment Same provision. [Sec. 1152] 477 Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 845] 46. EXPANDED CRIMINAL FORFEITURE FOR CRIMINAL VIOLATIONS Present law ”Administrative forfeiture” rules allow the Secretary to subject property involved in a program violation to forfeiture to the United States. [Sec. 15(g)] House bill Establishes ”criminal forfeiture” rules. Requires courts, in im- posing sentence on those convicted of trafficking in food stamps, to order that the person forfeit property to the United States. Prop- erty subject to forfeiture would include all property (real and per- sonal) used in a transaction (or attempted transaction) to commit (or facilitate the commission of) a trafficking violation (other than a misdemeanor); proceeds traceable to the violation also would be subject to forfeiture. An owner’s property interest would not be sub- ject to forfeiture if the owner establishes that the violation was committed without the owner’s knowledge or consent. Requires that the proceeds from any sale of forfeited property, and any money forfeited, be used to reimburse Federal and State agencies for costs and, by the Secretary, to carry out store monitor- ing activities. [Sec. 1054] Senate amendment Same provisions. [Sec. 1153] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 846] 47. LIMITATION OF FEDERAL MATCH Present law If a State opts to conduct informational (”outreach”) activities for the food stamp program, the Federal Government shares half the cost. [Sec. 11(e)(1) and sec. 16(a)] House bill Terminates the Federal share for any ”recruitment activities.” [Sec. 1055] Senate amendment Same provision. [Sec. 1154] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 847] 478 48. STANDARDS FOR ADMINISTRATION Present law The Secretary is required to (1) establish standards for effi- cient and effective administration of the program, including stand- ards for review of food stamp office hours to ensure that employed individuals are adequately served and (2) instruct States to submit reports on administrative actions taken to meet the standards. [Sec. 16(b)] House bill Deletes the noted requirements relating to Federal standards for efficient and effective administration. [Sec. 1056] Senate amendment Same provision. [Sec. 1155] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 848] 49. WORK SUPPLEMENTATION OR SUPPORT PROGRAM Present law No provisions. House bill Establishes a new option for States to operate work supplementation or support programs under which the value of public assistance benefits are provided to employers who hire re- cipients and, in turn, use the benefits to supplement the wages paid the recipient. Work supplementation\/support programs would have to adhere to standards set by the Secretary, be available for new employees only, and not displace employment of those who are not supplemented\/supported. The food stamp benefit value of the supplement could not be considered income for other purposes. Opt- ing States would be required to provide a description of how recipi- ents in their program will, within a specific period of time, be moved to unsubsidized employment. [Sec. 1057] Senate amendment Same provision. [Sec. 1156] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 849] 50. WAIVER AUTHORITY Present law The Secretary may waive Food Stamp Act requirements to the degree necessary to conduct pilot\/demonstration projects, but, in general, no project may be implemented that would lower or fur- ther restrict food stamp income\/resource eligibility standards or benefit levels. [Sec. 17(b)(1)] 479 House bill Permits the Secretary to conduct pilot and demonstration projects and waive Food Stamp Act requirements as long as the project is consistent with the food stamp program goal of providing food to increase the level of nutrition among low-income individ- uals. The Secretary is permitted to conduct projects that will im- prove the administration of the program, increase self-sufficiency of food stamp participants, test innovative welfare reform strategies, or allow greater conformity among public assistance programs than is otherwise allowed under the Food Stamp Act. The Secretary is not permitted to conduct projects that involve issuing benefits in cash (beyond those approved at enactment), substantially transfer program benefits to other public assistance programs, or are not limited to specific time periods. [Sec. 1058] Senate amendment No provision. Conference agreement The conference agreement adopts the House provision with an amendment. The Secretary is permitted to conduct pilot and dem- onstration projects and waive Food Stamp Act requirements to the extent necessary, with certain limitations and conditions. Projects must be consistent with the food stamp program goal of providing food assistance to raise levels of nutrition among low-income indi- viduals and must include an evaluation. Permissible projects are those that will improve the adminis- tration of the program, increase self-sufficiency of food stamp par- ticipants, test innovative welfare reform strategies, or allow greater conformity with the rules of other programs than is otherwise al- lowed under the Food Stamp Act. However, if the Secretary finds that a project would require the reduction of benefits by more than 20 percent, for more than 5 percent of households subject to the project (not including those whose benefits are reduced because of a failure to comply with work or other conduct requirements), the project (1) cannot include more than 15 percent of the State’s food stamp population and (2) is limited to 5 years (unless an extension is approved). The Secretary may not conduct a project that (1) involves the payment of food stamp allotments in cash (unless the project was approved prior to enactment), (2) has the effect of substantially transferring food stamp funds to services or benefits provided through another public assistance program, (3) has the effect of using food stamp funds for any purpose other than the purchase of food, program administration, or an employment or training pro- gram, (4) has the effect of granting or increasing shelter expense deductions to households with either no out-of-pocket shelter ex- penses or shelter expenses that represent a low percentage of their income, (5) has the effect of absolving the State from acting with reasonable promptness on substantial reported changes in income or household size (other than those related to deductions), (6) is not limited to a specific time period, or (7) waives a simplified food stamp program provision in carrying out a simplified program. 480 The Secretary also may not conduct a project that is inconsist- ent with certain Food Stamp Act requirements: (1) the bar against providing benefits to those in institutions (with certain exceptions), (2) the requirement to provide assistance to all those eligible, so long as they have not failed to comply with any food stamp or other program’s work, behavioral, or other conduct requirements, (3) the gross income eligibility limit (130 percent of the Federal poverty guidelines) for households without elderly or disabled members, (4) the rule that no parent or caretaker of a dependent child under age 6 will be subject to work\/training requirements [see item 17], (5) the rule that total hours of work required in an employment\/train- ing or workfare program be limited to the household’s allotment di- vided by the minimum wage, (6) the limit on the amount of em- ployment and training funding under the Food Stamp Act that can be used for TANF recipients, (7) the requirement that the value of food stamp benefits not be considered income or resources for any other purpose, (8) application and application processing require- ments (including the rule that benefits must be provided within 30 days, but not including expedited service requirements), (9) Fed- eral-State cost-sharing rules (including those for computerization, employment and training programs, and workfare), (10) ”quality control” requirements, and (11) the waiver limits set in law. [Sec. 850] 51. RESPONSE TO WAIVERS Present law No provisions. House bill Requires that, not later than 60 days after receiving a dem- onstration project waiver request, the Secretary must (1) approve the request, (2) deny it and explain any modifications needed for approval, (3) deny it and explain the grounds for denial, or (4) ask for clarification of the request. If a response is not forthcoming in 60 days, the waiver is considered approved. If a waiver is denied, the Secretary must provide a copy of the request and the grounds for denial to Congress. [Sec. 1059] Senate amendment Same provision. [Sec. 1157] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 851] 52. EMPLOYMENT INITIATIVES PROGRAM Present law No provisions. House bill Provides a new option for a limited number of States (those with not less than half of their food stamp households receiving AFDC benefits in 1993) to issue food stamps in cash to households 481 participating in both the State’s family assistance block grant (TANF) program and food stamps, if a member of the household has been working for at least 3 months and earns at least $350 a month in unsubsidized employment. Households receiving cash payments may continue to receive them after leaving a TANF pro- gram because of increased earnings, and a household eligible to re- ceive its allotment in cash may opt for food stamps instead. States opting for these cash payments must increase food stamp benefits (and pay for the increase) to compensate for State\/local sales taxes on food purchases and must provide a written evaluation. [Sec. 1060] Senate amendment Same provisions. [Sec. 1158] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 852] 53. REAUTHORIZATION Present law Food Stamp Act appropriations are authorized through fiscal year 1997. [Sec. 18(a)] House bill Extends the Food Stamp Act authorization of appropriations through fiscal year 2002. [Sec. 1061] Senate amendment Same provision. [Sec. 1159] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 853] 54. SIMPLIFIED FOOD STAMP PROGRAM Present law No provision. House bill Permits States to determine food stamp benefits for households receiving family assistance block grant (TANF) aid using TANF rules and procedures, food stamp rules\/procedures, or a combina- tion of both. States may operate a simplified program statewide or in regions of the State and may standardize deductions. However, States must comply with the following food stamp rules: requirements governing issuance procedures; the requirement that benefits be calculated by subtracting 30 percent of household income (as determined by State-estab- lished, not Federal, rules under the simplified program option) from the maximum food stamp benefit; the bar against counting food stamp benefits as income or resources in other programs; 482 requirements that State agencies assume responsibility for eligibility certification and issuance of benefits and keep records for inspection and audit; the bar against discrimination by reason of race, sex, reli- gious creed, national origin, or politics; requirements related to submission and approval of plans of operation and administration of the food stamp program on Indian reservations; limits on the use and disclosure of information about food stamp households; requirements for notice to and fair hearings for aggrieved households (or comparable requirements established by the State); requirements for submission of reports and other informa- tion required by the Secretary; the requirement to report illegal aliens to the INS; provisions for the use of certain Federal and State data sources in verifying eligibility; requirements to ensure that households are not receiving duplicate benefits; and requirements for the provision of social security numbers as a condition of eligibility and for their use by State agencies. Households may not receive benefits under a simplified pro- gram unless the Secretary determines that any household with in- come above 130 percent of the Federal poverty guidelines is ineli- gible for the program. The Secretary must determine whether a simplified program is increasing Federal costs above costs incurred in operations for the fiscal year prior to implementation, adjusted for changes in partici- pation, the income of participants not attributable to public assist- ance, and the cost of the thrifty food plan. The determination is made for each fiscal year, not later than 90 days after the end of the year. If the Secretary determines that there has been a cost in- crease, the State must be notified within 30 days. If a State does not then submit or carry out a ”corrective action” plan approved by the Secretary to prevent increased Federal costs, approval of the State’s simplified program is terminated, and the State is ineligible for further operation of a simplified program. States opting for a simplified program must include in their State plans the rules and procedures to be followed, how they will address the needs of households with high shelter costs, and a de- scription of the method by which they will carry out their quality control obligations. [Sec. 1062] Senate amendment Same provisions, except that the Senate amendment (1) stipu- lates that only households in which ”all members” receive TANF benefits may receive benefits under a simplified program and (2) requires that States opting for a simplified program follow food stamp rules regarding providing benefits within 30 days of applica- tion. Also provides that (1) the Secretary will determine whether a simplified program is increasing Federal costs, (2) States will not be required to collect information on households not in the sim- 483 plified program in cost increase determinations, and (3) the Sec- retary may approve ”alternative accounting periods” in making cost determinations. [Sec. 1160] Conference agreement The conference agreement adopts the House provision with an amendment providing that: (1) only households in which all mem- bers receive TANF benefits may receive benefits under a simplified program, (2) the Secretary will determine whether a simplified pro- gram is increasing Federal costs, (3) States will not be required to collect information on households not in the simplified program in cost increase determinations, and (4) the Secretary may approve al- ternative accounting periods in making cost determinations. In ad- dition, the conference agreement adopts an amendment that pro- vides that a simplified program may include households in which 1 or more members are not TANF recipients, if approved by the Secretary. The conferees encourage the Secretary to work with States to test methods for applying a single set of rules and proce- dures to households in which some, but not all, members receive cash welfare benefits under State rules. [Sec. 854] 55. STATE FOOD ASSISTANCE BLOCK GRANT Present law No provision. House bill Establishes an optional food assistance block grant. States that meet one of three conditions may elect to receive the block grant in lieu of participating in the regular food stamp program. The con- ditions are: (1) a statewide EBT system, (2) a payment error rate of 6 percent or less, or (3) if there is a payment error rate of higher than 6 percent, payment to the Federal government of the benefit cost of the difference. States electing a block grant would receive the greater of: (1) the amount received for benefits in fiscal year 1994 (or the 1992 1994 average) plus (2) the amount received for administration in fiscal year 1994 (or the 1992 1994 average). States electing a block grant and then terminating their option may not again elect a block grant. Block grant funding may only be used for food assistance to needy persons and administrative costs for providing the assist- ance\u2014so long as not more than 6 percent of total funds expended (other than State funds not otherwise required to be spent) are used for administrative costs and limits on carryover funds are fol- lowed. While States have control over most features of their block grant program, certain rules specified in law must be followed: pro- visions for notice and hearing for those aggrieved; bars against re- ceipt of benefits in more than 1 jurisdiction, benefits for fleeing fel- ons, and benefit for aliens otherwise barred under Federal law; pri- vacy and nondiscrimination safeguards; and quality control re- quirements of the Food Stamp Act. In addition, States opting for a block grant would continue to be covered under the Food Stamp Act’s employment and training program provisions (and receive separate funding for this) and would be required to bar benefits to 484 those not meeting food stamp work requirements (including the new requirement). [Sec. 1063] Senate amendment No provision. Conference agreement The conference agreement adopts the Senate provision. 56. A STUDY OF THE USE OF FOOD STAMPS TO PURCHASE VITAMINS AND MINERALS Present law No provision. House bill Requires the Secretary, in consultation with the National Academy of Sciences and the Centers for Disease Control and Pre- vention, to conduct a study of the use of food stamps to purchase vitamins and minerals and report to the House Committee on Agri- culture not later than December 15, 1996. [Sec. 1064] Senate amendment No provision. Conference agreement The conference agreement adopts the House provision with an amendment requiring a report to both the Senate Committee on Agriculture, Nutrition, and Forestry and the House Committee on Agriculture not later than December 15, 1998. [Sec. 855] 57. INVESTIGATIONS Present law No provision. House bill Requires that regulations provide criteria for the finding of vio- lations (and suspension\/disqualification) of retailers and whole- salers on the basis of evidence which may include facts established through on-site investigations, inconsistent redemption data, or evi- dence obtained through EBT transaction reports. [Sec. 1065] Senate amendment No provision. Conference agreement The conference agreement adopts the House provision. [Sec. 841] 58. REPORT BY THE SECRETARY Present law No provision. 485 House bill Permits the Secretary to report to the House Committee on Ag- riculture (not later than January 1, 2000) on the effect of the food stamp reforms in this act and the ability of State and local govern- ments to deal with people in poverty. [Sec. 1067] Senate amendment No provision. Conference agreement The conference agreement adopts the Senate provision. 59. DEFICIT REDUCTION Present law No provision. House bill Declares it the sense of the House Committee on Agriculture that outlay reductions resulting from the food stamp title not be taken into account under section 552 of the Balanced Budget and Emergency Deficit Control Act. [Sec. 1068] Senate amendment No provision. Conference agreement The conference agreement adopts the House provision with a technical amendment. [Sec. 856] Subtitle B\u2014Commodity Distribution Programs 1. SHORT TITLE Present law The Emergency Food Assistance Act (EFAA), The Hunger Pre- vention Act of 1988, The Charitable Assistance and Food Bank Act of 1987, the Food, Agriculture, Conservation, and Trade (FACT) Act of 1990. House bill Amends the EFAA and Section 110 of the Hunger Prevention Act of 1988 to combine the Emergency Food Assistance Program (TEFAP) and the soup kitchen\/food bank program and create a new TEFAP; repeals the expired food bank demonstration project under the Charitable Assistance and Food Bank Act of 1987; and repeals a requirement for a previously completed report on entitlement commodity processing under the FACT Act of 1990. [Sec. 1071, 1072, 1073, & 1074] Senate amendment Same provisions. [Sec. 1171, 1172, 1173, & 1174] 486 Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 871 874] 2. ELIGIBLE RECIPIENT AGENCIES Present law Defines ”eligible recipient agencies” and ”emergency feeding or- ganizations”. [Sec. 201A] Defines ”Additional commodities”, ”average monthly number of unemployed persons”, ”poverty line”, ”Total value of additional commodities”, Value of additional commodities.” [Sec. 214 of EFAA] House bill Incorporates into one section current law and regulatory defini- tions of terms used in TEFAP and section 110 of the Hunger Pre- vention Act. Definitions include ”eligible recipient agencies”, as well as ”emergency feeding organization,” ”additional commodities”, ”average monthly number of unemployed persons”, ”food bank”, ”food pantry”, ”poverty line”, ”soup kitchen”, ”total value of addi- tional commodities”, and ”value of additional commodities allocated to each State.” [Sec. 1071] Senate amendment Same provisions. [Sec. 1171] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 871] 3. AVAILABILITY OF CCC COMMODITIES Present law Outlines conditions under which the Secretary is to donate CCC commodities or other agricultural commodities, the varieties of commodities to be made available; requires semi-annual report on types of commodities made available; prohibits declines in dairy product donations, and requires that emergency feeding organiza- tions have the same access to excess CCC commodities as other do- mestic food programs. House bill Maintains current law provisions. [Sec. 1071] Senate Amendment Same provisions. [Sec. 1171] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 871] 487 4. AVAILABILITY OF CCC FLOUR, CORNMEAL, AND CHEESE Present law Provides for additional distribution in FY1988 of flour, cheese, and cornmeal when excess amounts are available from CCC hold- ings. House bill Strikes obsolete provision and moves definitions to a new sec- tion of the Act (see item 2 above). Replaces Sec. 202A with new provisions governing State plans (See item 5 below). [Sec. 1071] Senate amendment Same provisions. [Sec. 1171] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 871] 5. STATE PLAN Present law Requires Secretary to expedite distribution of commodities to agencies designated by the Governor, or directly distribute com- modities to eligible recipient agencies engaged in national commod- ity processing; allows States to give priority for donations to exist- ing food bank networks serving low-income households. Requires States to expeditiously distribute commodities to eligible recipient agencies, and to encourage distribution to rural areas. Also re- quires Secretary to distribute commodities only to agencies that serve needy persons and set their own need criteria, with the ap- proval of the Secretary. [Sec. 203B (a) and (c) of EFAA] House bill Requires States seeking commodities under the new EFA pro- gram to submit a plan of operation and administration every 4 years for approval by the Secretary and allows amendment of the plan at any time. Requires that at a minimum the State receiving commodities include in its plan: designation of responsible State agency; plan of operation and administration to expeditiously distribute commod- ities; standards of eligibility for recipient agencies; individual and household eligibility standards that require that they be needy and residing in the geographic area served by the recipient agency. [Sec. 1071] Senate amendment Same provisions. [Sec. 1171] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 871] 488 6. ADVISORY BOARD Present law No provision. House bill Requires Secretary to encourage States to establish advisory boards consisting of representatives of all interested entities, public and private, in the distribution of commodities. [Sec. 1071] Senate amendment Same provision. [Sec. 1171] Conference agreement The conference agreement adopts the provision that is common to both bills. [Sec. 871] 7. AUTHORIZATION OF APPROPRIATIONS FOR ADMINISTRATIVE FUNDS Present law Authorizes $50 million annually for fiscal year 1991 2002 for Secretary to make available to States for State and local costs asso- ciated with the distribution of commodities. Requires that funds be distributed on an advance basis in the same proportion as commod- ities are distributed. Allows for reallocation of unused funds among other States. Specifically allows States to use funds to help with distribution of commodities provided to soup kitchens and food banks under section 110 of the Hunger Prevention Act. House bill Revises language regarding availability of funds to States for State and local costs to require that such funds be used ”to pay for the direct and indirect administrative costs of the State related to processing, transporting, and distributing [commodities] to eligible recipient agencies.” Drops separate reference to soup kitchen and food banks because this program is incorporated into the new TEFAP. [Sec. 1071] Senate amendment Same provisions. [Sec. 1171] Conference agreement The conference agreement adopts the provisions that are com- mon to both bills. [Sec. 871 ] 8. REQUIRED PURCHASES OF COMMODITIES Present law Authorizes $175 million for fiscal year 1991, $190 million for FY 1992, and $200 million for each of fiscal years 1993 through 2002 for the Secretary to purchase, process and distribute addi- tional commodities to the extent that appropriations are provided. Establishes a formula for distribution of commodities to States whereby 60 percent of commodities are allocated based on a State’s share of persons in households with incomes below the poverty 489 level and 40 percent upon a State’s share of unemployed persons, and defines related terms. House bill Strikes provisions authorizing funds for commodity purchases. Instead, amends the Food Stamp Act to add a new section 28 re- quiring the Secretary to spend $300 million annually for each of fiscal years 1997 through 2002 from funds appropriated under the Food Stamp Act to buy commodities for the new TEFAP; requires the Secretary to take into account agricultural market conditions, and State, agency, and recipient preferences when buying commod- ities with these funds. Specifies that these commodities be distrib- uted under the current-law allocation formula. [Sec. 1071] Senate amendment Similar to House bill, except that $100 million is required to be used from food stamp funds annually to buy commodities for the new TEFAP. [Sec. ] Conference agreement The conference agreement adopts the Senate provision with a technical amendment. [Sec. 871] Subtitle C\u2014Electronic Benefit Transfer System See Item 26 of Subtitle A\u2014Food Stamp Program for a descrip- tion of the conference agreement on this subtitle. TITLE IX: MISCELLANEOUS 1. APPROPRIATION BY STATE LEGISLATURES Present law According to the National Conference of State Legislatures, there are six States in which under court rulings of interpretations of State constitutions, certain Federal funds are controlled by the Executive branch rather than the State legislature. (An example would be action on funds when the legislature is out of session.) These States are Arizona, Colorado, Connecticut, Delaware, New Mexico, and Oklahoma. House bill The proposal stipulates that funds from certain Federal block grants to the States are to be expended in accordance with the laws and procedures applicable to the expenditure of the State’s own re- sources (i.e., appropriated through the State legislature in all States). This provision applies to the following block grants: tem- porary assistance to needy families block grant, the optional State food assistance block grant, and the child care block grant. Thus, in the States in which the Governor previously had exclusive con- trol over Federal block grant funds, the State legislatures now would share control through the appropriations process. However, States would continue to spend Federal funds in accord with Fed- eral law. 490 Senate amendment Identical provision. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 2. SANCTIONING FOR TESTING POSITIVE FOR CONTROLLED SUBSTANCES Present law Eligibility and benefit status for most Federal welfare pro- grams are not affected by a recipient’s use of illegal drugs. House bill States are not prohibited by the Federal Government from testing welfare recipients for use of controlled substances nor for sanctioning welfare recipients who test positive for the use of con- trolled substances. Senate amendment Identical provision. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment. 3. ELIMINATION OF HOUSING ASSISTANCE WITH RESPECT TO FUGITIVE FELONS AND PROBATION AND PAROLE VIOLATORS Present law No provision. House bill No provision. Senate amendment Ends eligibility for public housing and Section 8 housing assist- ance of a person who is fleeing to avoid prosecution after conviction for a crime, or attempt to commit a crime, that is a felony where committed (or, in the case of New Jersey, is a high misdemeanor), or who is violating a condition of probation or parole. The amend- ment states that the person’s flight shall be cause for immediate termination of their housing aid. Requires specified public housing agencies to furnish any Fed- eral, State, or local law enforcement officer, upon the request of the officer, with the current address, social security number, and pho- tograph (if applicable) of any SSI recipient, if the officer furnishes the public housing agency with the person’s name and notifies the agency that the recipient is a fugitive felon (or in the case of New Jersey a person fleeing because of a high misdemeanor) or a proba- tion or parole violator or that the person has information that is necessary for the officer to conduct his official duties, and the loca- 491 tion or apprehension of the recipient is within the officer’s official duties. Conference agreement The conference agreement follows the Senate amendment. 4. SENSE OF THE SENATE REGARDING ENTERPRISE ZONES Present law No specific provision. However, as stated, the provisions out- lined in the Sense of the Senate language already can be done under present law. House bill No provision. Senate amendment Outlines some findings related to urban centers and empowerment zones and includes sense of the Senate language that urges the 104th Congress to pass an enterprise zone bill that provides Federal tax incentives to increase the formation and ex- pansion of small businesses and to promote commercial revitaliza- tion; allows localities to request waivers to accomplish the objec- tives of the enterprise zones; encourages resident management of public housing and home ownership of public housing; and author- izes pilot projects in designated enterprise zones to expand the edu- cational opportunities for elementary and secondary school chil- dren. Conference agreement The conference agreement follows the House bill. 5. SENSE OF THE SENATE REGARDING THE INABILITY OF THE NON- CUSTODIAL PARENT TO PAY CHILD SUPPORT Present law No provision. House bill No provision. Senate amendment It is the Sense of the Senate that States should pursue child support payments under all circumstances even if the noncustodial parent is unemployed or his or her whereabouts are unknown; and that States are encouraged to pursue pilot programs in which the parents of a minor non-custodial parent who refuses or is unable to pay child support contribute to the child support owed. Conference agreement The conference agreement follows the Senate amendment. 492 6. ESTABLISHING NATIONAL GOALS TO PREVENT TEENAGE PREGNANCIES Present law No provision. House bill No provision. Senate amendment Requires the Secretary to establish and implement by January 1, 1997, a strategy to: (1) prevent a 2 percent increase in out-of- wedlock teenage pregnancies, and (2) assure that at least 25 per- cent of U.S. communities have teenage pregnancy programs in place. HHS is required to report to Congress by June 30, 1998, on progress made toward meeting these 2 goals. Conference agreement The conference agreement generally follows the Senate amend- ment, except a specified level of reduction is not established. 7. SENSE OF THE SENATE REGARDING ENFORCEMENT OF STATUTORY RAPE LAWS Present law No provision. House bill No provision. Senate amendment Includes language that states that it is the sense of the Senate that States and local jurisdictions should aggressively enforce stat- utory rape laws. Not later than January 1, 1997, the Attorney General shall es- tablish and implement a program that studies the linkage between statutory rape and teenage pregnancy and educates States and local criminal law enforcement officials on the prevention and pros- ecution of statutory rape. The Attorney General shall ensure the DOJ Violence Against Women initiative addresses the issue of stat- utory rape. Conference agreement The conference agreement follows the Senate amendment. 8. PROVISIONS TO ENCOURAGE ELECTRONIC BENEFIT TRANSFER SYSTEMS Present law In 1978, Congress passed the Electronic Fund Transfer Act to provide a basic framework establishing the rights, liabilities, and responsibilities of participants in electronic fund transfer systems and required the Federal Reserve Board to develop implementing regulations, which generally are referred to as Regulation E. 493 House bill See food stamp title, which exempts from Regulation E any food stamp electronic benefit transfers. Senate amendment Exempts from Regulation E requirements any electronic bene- fit transfer program (distributing needs-tested benefits) established under State or local law or administered by a State or local govern- ment. Conference agreement The conference agreement follows the Senate amendment. 9. REDUCTION OF BLOCK GRANTS TO STATES FOR SOCIAL SERVICES; USE OF VOUCHERS Present law The Social Services Block Grant (Title XX) provides funds to States in order to provide a wide variety of social services, includ- ing child care, family planning, protective services for children and adults, services for children and adults on foster care, and employ- ment services. States have wide discretion over how they use Social Services Block Grant funds. States set their own eligibility require- ments and are allowed to transfer up to 10 percent of their allot- ment to certain Federal health block grants, and for low-income home energy assistance (LIHEAP). Funding for the Social Services Block Grant is capped at $2.8 billion a year. Funds are allocated among States according to the State’s share of its total population. No State matching funds are required to receive Social Services Block Grant money. House bill For fiscal years 1997 through 2002, the Social Services Block Grant is reduced by 10 percent. Senate amendment For fiscal years 1997 through 2002, the Social Services Block Grant is reduced by 20 percent. Requires that States receiving Title XX funds to dedicate 1 percent to programs and services for minors to avoid out-of-wedlock pregnancies. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment regarding the reduction in funding for the Social Services block grant, with the modification that the reduction is 15 percent. The conference agreement follows the House bill so that there is no special dedication of funds for programs and services for minors. The agreement specifically states that Title XX funds may be used to provide assistance to families who have lost assistance because of time limits on benefits. 494 1 In the case of a married individual who files a joint return with his or her spouse, the income for purposes of these tests is the combined income of the couple. 10. EARNED INCOME CREDIT PROVISIONS A. Deny earned income credit to individuals not authorized to be employed in the United States [NOTE.\u2014For additional discussion of this provision, refer to Title IV: Restricting Welfare and Public Benefits for Aliens, above.] Present law In general. Certain eligible low-income workers are entitled to claim a refundable credit on their income tax return. The amount of the credit an eligible individual may claim depends upon wheth- er the individual has one, more than one, or no qualifying children and is determined by multiplying the credit rate by the individ- ual’s 1 earned income up to an earned income amount. The maxi- mum amount of the credit is the product of the credit rate and the earned income amount. For individuals with earned income (or ad- justed gross income (AGI), if greater) in excess of the beginning of the phaseout range, the maximum credit amount is reduced by the phaseout rate multiplied by the amount of earned income (or AGI, if greater) in excess of the beginning of the phaseout range. For in- dividuals with earned income (or AGI, if greater) in excess of the end of the phaseout range, no credit is allowed. The parameters for the credit depend upon the number of qualifying children the individual claims. For 1996, the parameters are given in the following table: Two or more chil- dren One quali- fying child No qualify- ing chil- dren Credit rate (percent) ……………………………………………………………………………………………… 40.00 34.00 7.65 Earned income amount …………………………………………………………………………………………. $8,890 $6,330 $4,220 Maximum credit ……………………………………………………………………………………………………. $3,556 $2,152 $323 Phaseout begins …………………………………………………………………………………………………… $11,610 $11,610 $5,280 Phaseout rate (percent) …………………………………………………………………………………………. 21.06 15.98 7.65 Phaseout ends ……………………………………………………………………………………………………… $28,495 $25,078 $9,500 For years after 1996, the credit rates and the phaseout rates will be the same as in the preceding table. The earned income amount and the beginning of the phaseout range are indexed for inflation; because the end of the phaseout range depends on those amounts as well as the phaseout rate and the credit rate, the end of the phaseout range will also increase if there is inflation. In order to claim the credit, an individual must either have a qualifying child or meet other requirements. A qualifying child must meet a relationship test, an age test, an identification test, and a residence test. In order to claim the credit without a qualify- ing child, an individual must not be a dependent and must be over age 24 and under age 65. To satisfy the identification test, individuals must include on their tax return the name and age of each qualifying child. For re- turns filed with respect to tax year 1996, individuals must provide 495 a taxpayer identification number (TIN) for all qualifying children born on or before November 30, 1996. For returns filed with respect to tax year 1997 and all subsequent years, individuals must pro- vide TINs for all qualifying children, regardless of their age. An in- dividual’s TIN is generally that individual’s social security number. An individual with qualifying children may elect to receive a portion of the credit on an advance basis by furnishing an advance payment certificate to his or her employer. For such an individual, the employer makes an advance payment of the credit at the time wages are paid. The amount of advance payment allowable in a taxable year is limited to 60 percent of the maximum credit avail- able to an individual with one qualifying child. Mathematical or clerical errors. The Internal Revenue Service may summarily assess additional tax due as a result of a mathe- matical or clerical error without sending the taxpayer a notice of deficiency and giving the taxpayer an opportunity to petition the Tax Court. Where the IRS uses the summary assessment procedure for mathematical or clerical errors, the taxpayer must be given an explanation of the asserted error and a period of 60 days to request that the IRS abate its assessment. The IRS may not proceed to col- lect the amount of the assessment until the taxpayer has agreed to it or has allowed the 60-day period for objecting to expire. If the taxpayer files a request for abatement of the assessment specified in the notice, the IRS must abate the assessment. Any reassess- ment of the abated amount is subject to the ordinary deficiency procedures. The request for abatement of the assessment is the only procedure a taxpayer may use prior to paying the assessed amount in order to contest an assessment arising out of a mathe- matical or clerical error. Once the assessment is satisfied, however, the taxpayer may file a claim for refund if he or she believes the assessment was made in error. House bill Individuals are not eligible for the credit if they do not include their taxpayer identification number (and, if married, their spouse’s taxpayer identification number) on their tax return. Solely for these purposes and for purposes of the present-law identifica- tion test for a qualifying child, a taxpayer identification number is defined as a social security number issued to an individual by the Social Security Administration other than a number issued under section 205(c)(2)(B)(i)(II) (or that portion of sec. 205(c)(2)(B)(i)(III) relating to it) of the Social Security Act (regarding the issuance of a number to an individual applying for or receiving Federally fund- ed benefits). If an individual fails to provide a correct taxpayer identifica- tion number, such omission will be treated as a mathematical or clerical error. If an individual who claims the credit with respect to net earnings from self-employment fails to pay the proper amount of self-employment tax on such net earnings, the failure will be treated as a mathematical or clerical error for purposes of the amount of credit allowed. Effective date. The provision is effective for taxable years be- ginning after December 31, 1995. 496 Senate amendment The provision in the Senate amendment is identical to that in the House bill. Conference agreement The conference agreement follows the House bill and the Sen- ate amendment with a modification to the effective date. The con- ference agreement is effective with respect to returns the due date for which (without regard to extensions) is more than 30 days after the date of enactment of this Act. B. Change disqualified income test for earned income credit Present law For taxable years beginning after December 31, 1995, an indi- vidual is not eligible for the earned income credit if the aggregate amount of ”disqualified income” of the taxpayer for the taxable year exceeds $2,350. This threshold is not indexed. Disqualified in- come is the sum of: (1) interest (taxable and tax-exempt), (2) dividends, and (3) net rent and royalty income (if greater than zero). House bill No provision. Senate amendment For purposes of the disqualified income test for the earned in- come credit, the following items are added to the definition of dis- qualified income: capital gain net income and net passive income (if greater than zero) that is not self-employment income. The threshold above which an individual is not eligible for the credit is reduced from $2,350 to $2,200, and the threshold is in- dexed for inflation after 1996. Effective date. The provision generally is effective for taxable years beginning after December 31, 1995. For individuals who, as of June 26, 1996, had made an election to receive the current-year credit on an advance basis, the provision is effective for taxable years beginning after December 31, 1996. Conference agreement The conference agreement follows the Senate amendment. C. Modify definition of adjusted gross income used for phasing out the earned income credit Present law For taxpayers with earned income (or AGI, if greater) in excess of the beginning of the phaseout range, the maximum earned in- come credit amount is reduced by the phaseout rate multiplied by the amount of earned income (or AGI, if greater) in excess of the beginning of the phaseout range. For taxpayers with earned income (or AGI, if greater) in excess of the end of the phaseout range, no credit is allowed. 497 House bill No provision. Senate amendment The provision modifies the definition of AGI used for phasing out the earned income credit by including certain nontaxable in- come and by disregarding certain losses. The nontaxable items in- cluded are: (1) tax-exempt interest, and (2) nontaxable distributions from pensions, annuities, and individual retirement arrangements (but only if not rolled over into similar vehicles during the applicable rollover period). The losses disregarded are: (1) net capital losses (if greater than zero), (2) net losses from trusts and estates, (3) net losses from nonbusiness rents and royalties, and (4) net losses from businesses, computed separately with respect to sole proprietorships (other than in farming), sole proprietorships in farming, and other businesses. For purposes of item (4), above, amounts attributable to a busi- ness that consists of the performance of services by the taxpayer as an employee are not taken into account. Effective date. The provision generally is effective for taxable years beginning after December 31, 1995. For individuals who, as of June 26, 1996, had made an election to receive the current-year credit on an advance basis, the provision is effective for taxable years beginning after December 31, 1996. Conference agreement The conference agreement modifies the definition of AGI used for phasing out the earned income credit by disregarding certain losses. The losses disregarded are: (1) net capital losses (if greater than zero), (2) net losses from trusts and estates, (3) net losses from nonbusiness rents and royalties, and (4) 50 percent of the net losses from businesses, computed separately with respect to sole proprietorships (other than in farming), sole proprietorships in farming, and other businesses. For purposes of item (4), above, amounts attributable to a busi- ness that consists of the performance of services by the taxpayer as an employee are not taken into account. Effective date. Same as the Senate amendment provision. D. Suspend inflation adjustments for earned income credit for individuals with no qualifying children Present law To claim the earned income credit, an individual must either have a qualifying child or meet other requirements. In order to claim a credit without a qualifying child, an individual must not be a dependent and must be over age 24 and under age 65. The earned income amount and the beginning of the phaseout range are indexed for inflation; because the end of the phaseout range depends on these amounts as well as the phaseout rate and 498 the credit rate, the end of the phaseout range will also increase if there is inflation. House bill No provision. Senate amendment In the case of individuals with no qualifying children there will be no adjustment for inflation after 1996 to the earned income amount or the beginning of the phaseout range. Effective date. The provision is effective for taxable years be- ginning after December 31, 1996. Conference agreement The conference agreement follows the House bill (no provision). 11. REDUCTIONS IN FEDERAL GOVERNMENT POSITIONS A. Reductions Present law No provision House bill A covered activity is defined as one that the Department must carry out under a provision of this Act or a provision of Federal law that is amended or repealed by the Act. It also requires the Sec- retaries of Agriculture, Education, Labor, HHS, and Housing and Urban Development to report to Congress by December 31, 1996 on the number of full-time equivalent (FTE) positions required to carry out ”covered” activities before and after enactment of the amendment and to reduce the number of employees by the dif- ference in numbers. The Comptroller General of the United States shall prepare and submit to Congress by July 1, 1997, a report analyzing the determinations made by each Secretary. Senate amendment Similar to House bill, except: requires the Secretaries to report the number of FTEs not later than December 31, 1996 (rather than January 1, 1997); requires the Secretaries to prepare and submit a report of changes not later than December 31, 1997 (rather than Decem- ber 31, 1996); and adjusts discretionary spending limits downward for fiscal years 1997 and 1998 to account for savings achieved by this provision. (This provision was deleted due to the Byrd Rule.) Conference agreement This provision was deleted due to the Byrd rule. For additional discussion of related provisions, see Title I: Block Grants for Tem- porary Assistance for Needy Families, above. 499 B. Reductions in Federal Bureaucracy Present law No provision House bill The Department of Health and Human Services (HHS) reports that 118 employees in the Office of Family Assistance (OFA) work on AFDC and 209 (full-time equivalent positions) in regional offices of the Administration on Children and Families. The OFA employ- ees include 30 who spend some time interpreting AFDC\/JOBS pol- icy and participating with States in State plan development. Senate amendment Similar to House bill. (This provision was deleted due to the Byrd Rule.) Conference agreement This provision was deleted due to the Byrd rule. For additional discussion of related provisions, see Title I: Block Grants for Tem- porary Assistance for Needy Families, above. C. Reducing Personnel in Washington, DC Area Present law No provision. House bill The Secretary is encouraged to reduce personnel in the Wash- ington, D.C. office (agency headquarters) before reducing field per- sonnel. Senate amendment Similar to House bill. (This provision was deleted due to the Byrd Rule.) Conference agreement This provision was deleted due to the Byrd rule. For additional discussion of related provisions, see Title I: Block Grants for Tem- porary Assistance for Needy Families, above. 12. REFORM OF PUBLIC HOUSING A. Fraud under Means-Tested Welfare and Public Assistance Programs Present law No provision. House bill If a person’s means-tested benefits from a Federal, State, or local welfare program are reduced because of an act of fraud, their benefits from public or assisted housing may not be increased in re- sponse to the income loss caused by the penalty. 500 Senate amendment Similar to House bill. Conference agreement The conference agreement follows the House bill. B. Failure to Comply with other Welfare and Public Assistance Programs Present law If a family’s adjusted cash income declines\u2014no matter what the reason\u2014its housing benefit is increased (that is, its rental pay- ment is decreased, by 30 cents per dollar). This applies to cash in- come from any source, including means-tested benefit programs. However, the housing programs take no account of noncash income. Thus, if food stamp benefits decline, housing benefits are unaf- fected. House bill No provision. Senate amendment Provides that there be no reduction in public or assisted hous- ing rents in response to a tenant’s reduced income resulting from non-compliance with welfare or public assistance program require- ments; permits reduction where State or local law limits the period during which benefits may be provided. Conference agreement The conference agreement follows the House bill (no provision). 13. ABSTINENCE EDUCATION Present law The Maternal and Child Health (MCH) block grants (title V of the SSA, 42 USC 701) provides grants to States and insular areas to fund a broad range of preventive health and primary care activi- ties to improve the health status of mothers and children, with a special emphasis on those with low income or with limited avail- ability of health services. Sec. 502 includes a set-aside program for projects of national or regional significance. (The FY1995 appro- priation for MCH was $684 million.) See also: Title XX of the Pub- lic Health Service Act establishes the Adolescent Family Life (AFL) program to encourage adolescents to delay sexual activity and to provide services to alleviate the problems surrounding adolescent parenthood. One-third of all funding for AFL program services go to projects that provide ”prevention services.” The purpose of the prevention component is to find effective means within the context of the family of reaching adolescents, both male and female, before they become sexually active to maximize the guidance and support of parents and other family members in promoting abstinence from adolescent premarital sexual relations. (The FY1995 appropriation for AFL was $6.7 million.) 501 House bill Increases the authorization level to $761 million for FY 96 and each subsequent fiscal year. Adds abstinence education to the serv- ices to be provided. Defines abstinence education as an educational or motivational program which: (A) teaches the gains to be realized by abstaining from sex- ual activity; (B) teaches abstinence from sexual activity outside of mar- riage as the expected standard for all school age children; (C) teaches that abstinence is the only certain way to avoid out-of-wedlock pregnancy, sexually transmitted diseases, and other health problems; (D) teaches that a monogamous relationship in context of marriage is expected standard of human sexual activity; (E) teaches that sexual activity outside of marriage is like- ly to have harmful effects; (F) teaches that bearing children out-of-wedlock is likely to have harmful consequences; (G) teaches young people how to avoid sexual advances and how alcohol and drug use increases vulnerability to sexual advances; and (H) teaches the importance of attaining self-sufficiency be- fore engaging in sexual activity. Senate amendment Amends the Maternal and Child Health (MCH) block grants (title V of the SSA) to set aside $75 million to provide abstinence education\u2014defined as an educational or motivational program that has abstaining from sexual activity as its exclusive purpose\u2014and to provide at the option of the State mentoring, counseling and adult supervision to promote abstinence with a focus on those groups most likely to bear children out-of-wedlock. Also increases the authorization level of MCH to $761 million. (This provision was deleted due to the Byrd Rule.) Conference agreement The conference agreement follows the House bill with modifica- tion that $50 million for each of fiscal years 1998-2002 is directly appropriated for this purpose. 14. CHURCH OF CHRIST, SCIENTIST Present law Sections 1902(a) and 1908(e)(1) of the Social Security Act (re- lating to Medicaid) reference the Church of Christ, Scientist. House bill No provision. Senate amendment No provision. 502 Conference agreement Changes Medicaid references in Social Security Act from Church of Christ, Scientist, to the Commission for Accreditation of Christian Science Nursing Organizations\/Facilities, Inc. JOHN R. KASICH, BILL ARCHER, WILLIAM F. GOODLING, PAT ROBERTS, TOM BLILEY, E. CLAY SHAW, JR., JAMES TALENT, JIM NUSSLE, TIM HUTCHINSON, JIM MCCRERY, MICHAEL BILIRAKIS, LAMAR SMITH, NANCY L. JOHNSON, DAVE CAMP, GARY A. FRANKS, ”DUKE” CUNNINGHAM, MIKE CASTLE, BOB GOODLATTE, Managers on the Part of the House. From the Committee on the Budget: PETE V. DOMENICI, D. NICKLES, PHIL GRAMM, JIM EXON, From the Committee on Agriculture, Nutrition, and For- estry: RICHARD G. LUGAR, JESSE HELMS, THAD COCHRAN, RICK SANTORUM, From the Committee on Finance: WILLIAM V. ROTH, Jr., JOHN H. CHAFEE, CHUCK GRASSLEY, ORRIN HATCH, AL SIMPSON, From the Committee on Labor and Human Resources: NANCY LANDON KASSEBAUM, Managers on the Part of the Senate. \u00c6 Superintendent of Documents 2012-05-22T13:39:45-0400 US GPO, Washington, DC 20401 Superintendent of Documents GPO attests that this document has not been altered since it was disseminated by GPO ”

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” Congressional Record UN UM E PLURIBUS United States of America PROCEEDINGS AND DEBATES OF THE 104th CONGRESS, SECOND SESSION b This symbol represents the time of day during the House proceedings, e.g., b 1407 is 2:07 p.m. Matter set in this typeface indicates words inserted or appended, rather than spoken, by a Member of the House on the floor. H9379 House of Representatives Vol. 142 WASHINGTON, WEDNESDAY, JULY 31, 1996 No. 115 The House met at 10 a.m. and was called to order by the Speaker pro tem- pore [Mr. HEFLEY]. f DESIGNATION OF THE SPEAKER PRO TEMPORE The SPEAKER pro tempore laid be- fore the House the following commu- nication from the Speaker: WASHINGTON, DC, July 31, 1996. I hereby designate the Honorable JOEL HEFLEY to act as Speaker pro tempore on this day. NEWT GINGRICH, Speaker of the House of Representatives. f PRAYER The Chaplain, Rev. James David Ford, D.D., offered the following pray- er: As the rain waters the grass and the crops bring forth their fruit, and the light of the Sun makes clear the path and Your Spirit, O God, flows from on high, so nourish our spirits and make clear our path this day. Without Your light, O gracious God, and without the nurture of Your abiding presence, how will we know the way and the truth. So we pray, O God, that Your blessings will abound in our hearts and minds and spirits that we will be Your people and do those good things that honor You and serve people in their need. This is our earnest prayer. Amen. f THE JOURNAL The SPEAKER pro tempore. The Chair has examined the Journal of the last day’s proceedings and announces to the House his approval thereof. Pursuant to clause 1, rule I, the Jour- nal stands approved. Mrs. SCHROEDER. Mr. Speaker, pur- suant to clause 1, rule I, I demand a vote on agreeing to the Speaker’s ap- proval of the Journal. The SPEAKER pro tempore. The question is on the Chair’s approval of the Journal. The question was taken; and the Speaker pro tempore announced that the ayes appeared to have it. Mrs. SCHROEDER. Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present. The SPEAKER pro tempore. Evi- dently a quorum is not present. The Sergeant at Arms will notify ab- sent Members. The vote was taken by electronic de- vice, and there were\u2014yeas 302, nays 85, answered ”present” 1, not voting 45, as follows: [Roll No. 373] YEAS\u2014302 Allard Andrews Archer Armey Bachus Baesler Baker (CA) Baker (LA) Ballenger Barcia Barr Barrett (NE) Barrett (WI) Bartlett Barton Bass Bateman Beilenson Bentsen Bereuter Berman Bevill Bilbray Bilirakis Bishop Bliley Blumenauer Blute Boehlert Boehner Bonilla Borski Boucher Brewster Browder Bryant (TN) Bryant (TX) Bunning Burr Buyer Callahan Calvert Camp Campbell Canady Cardin Castle Chabot Chambliss Chenoweth Christensen Chrysler Clement Clinger Coble Coburn Collins (GA) Combest Condit Conyers Cooley Cox Cramer Crane Crapo Cremeans Cubin Cummings Cunningham Danner Davis de la Garza DeLay Dellums Deutsch Dickey Dicks Dingell Dixon Doggett Dooley Doolittle Dreier Duncan Dunn Edwards Ehlers Ehrlich Eshoo Ewing Farr Fawell Fields (LA) Fields (TX) Flanagan Foley Forbes Fowler Franks (CT) Franks (NJ) Frelinghuysen Frisa Frost Furse Gallegly Ganske Gejdenson Gekas Gilchrest Gilman Goodlatte Goodling Gordon Goss Graham Greene (UT) Greenwood Hall (TX) Hamilton Hancock Hansen Hastert Hastings (WA) Hayes Hayworth Hefley Herger Hobson Hoekstra Hoke Holden Hostettler Houghton Hoyer Hyde Inglis Jackson-Lee (TX) Johnson (CT) Johnson (SD) Johnson, E. B. Johnson, Sam Johnston Kaptur Kasich Kelly Kennedy (MA) Kennelly Kildee Kim King Kingston Kleczka Klink Klug Knollenberg Kolbe LaHood Lantos Largent LaTourette Laughlin Lazio Leach Lewis (CA) Lightfoot Linder Lipinski LoBiondo Lofgren Lucas Luther Manton Manzullo Markey Martinez Martini Mascara Matsui McCarthy McCollum McHale McHugh McInnis McIntosh McKeon McKinney Meek Metcalf Meyers Mica Millender- McDonald Miller (CA) Miller (FL) Minge Mink Moakley Molinari Mollohan Montgomery Morella Murtha Myers Myrick Nadler Nethercutt Neumann Ney Norwood Nussle Obey Olver Orton Owens Oxley Packard Parker Pastor Paxon Payne (VA) Peterson (FL) Peterson (MN) Petri Porter Portman Pryce Quillen Quinn Radanovich Rahall Rangel Reed Regula Rivers Roberts Roemer Rogers Rohrabacher Ros-Lehtinen Roukema Roybal-Allard Royce Salmon Sanford Sawyer Saxton Scarborough Schaefer Schiff Schumer Seastrand Sensenbrenner Shadegg Shaw Shays Shuster Skeen Skelton Slaughter Smith (MI) Smith (NJ) Smith (TX) Smith (WA) Solomon Souder Spence Stark Stearns Stenholm Stokes Studds Stump Stupak Tanner Tate Tauzin Tejeda Thomas Thornberry Thornton Thurman Tiahrt Torres Towns Traficant Upton Velazquez Vucanovich Walker Walsh Wamp Watt (NC) Waxman Weldon (FL) Weldon (PA) White Whitfield CONGRESSIONAL RECORD \u2014 HOUSEH9380 July 31, 1996 Wicker Williams Wilson Woolsey Wynn Zeliff NAYS\u201485 Abercrombie Baldacci Becerra Bonior Brown (CA) Brown (FL) Brown (OH) Bunn Clay Clyburn Collins (IL) Costello Deal DeFazio DeLauro Doyle Durbin English Ensign Evans Everett Fattah Fazio Filner Foglietta Fox Funderburk Gephardt Geren Gibbons Green (TX) Gutierrez Gutknecht Hall (OH) Hastings (FL) Hefner Heineman Hilliard Hinchey Hutchinson Jackson (IL) Jacobs Jefferson Jones Kennedy (RI) LaFalce Latham Levin Lewis (GA) Lewis (KY) Lowey Maloney McDermott McNulty Menendez Neal Oberstar Pallone Payne (NJ) Pickett Pomeroy Poshard Ramstad Rose Rush Sabo Sanders Schroeder Scott Skaggs Stockman Taylor (MS) Thompson Torkildsen Vento Visclosky Volkmer Ward Waters Watts (OK) Weller Wise Wolf Yates Zimmer ANSWERED ”PRESENT”\u20141 Harman NOT VOTING\u201445 Ackerman Bono Brownback Burton Chapman Clayton Coleman Collins (MI) Coyne Diaz-Balart Dornan Engel Flake Ford Frank (MA) Gillmor Gonzalez Gunderson Hilleary Horn Hunter Istook Kanjorski Lincoln Livingston Longley McCrery McDade Meehan Moorhead Moran Ortiz Pelosi Pombo Richardson Riggs Roth Serrano Sisisky Spratt Talent Taylor (NC) Torricelli Young (AK) Young (FL) b 1021 So the Journal was approved. The result of the vote was announced as above recorded. f PLEDGE OF ALLEGIANCE The SPEAKER pro tempore (Mr. HEFLEY). Will the gentleman from Ohio [Mr. CHABOT] come forward and lead the House in the Pledge of Allegiance. Mr. CHABOT led the Pledge of Alle- giance as follows: I pledge allegiance to the Flag of the United States of America, and to the Repub- lic for which it stands, one nation under God, indivisible, with liberty and justice for all. f MESSAGE FROM THE SENATE A message from the Senate by Mr. Lundregan, one of its clerks, an- nounced that the Senate had passed without amendment a bill of the House of the following title: H.R. 3663. An act to amend the District of Columbia Self-Government and Govern- mental Reorganization Act to permit the Council of the District of Columbia to au- thorize the issuance of revenue bonds with respect to water and sewer facilities, and for other purposes. The message also announced that the Senate had passed, with an amendment in which the concurrence of the House is requested, a bill of the House of the following title: H.R. 3816. An act making appropriations for energy and water development for the fis- cal year ending September 30, 1997, and for other purposes. The message also announced that the Senate insists upon its amendment to the bill (H.R. 3816) ”An act making ap- propriations for energy and water de- velopment for the fiscal year ending September 30, 1997, and for other pur- poses,” requests a conference with the House on the disagreeing votes of the two Houses thereon, and appoints Mr. DOMENICI, Mr. HATFIELD, Mr. COCHRAN, Mr. GORTON, Mr. MCCONNELL, Mr. BEN- NETT, Mr. BURNS, Mr. JOHNSTON, Mr. BYRD, Mr. HOLLINGS, Mr. REID, Mr. KERREY, and Mrs. MURRAY to be con- ferees on the part of the Senate. The message also announced that the Senate disagrees to the amendments of the House to the bill (S. 1260) ”An act to reform and consolidate the public and assisted housing programs of the United States, and to redirect primary responsibility for these programs from the Federal Government to States and localities, and for other purposes,” agrees to a conference asked by the House of Representatives on the dis- agreeing votes of the two Houses there- on, and appoints Mr. D’AMATO, Mr. MACK, Mr. FAIRCLOTH, Mr. BOND, Mr. SARBANES, Mr. KERRY, and Ms. MOSELEY-BRAUN to be the conferees on the part of the Senate. f PERSONAL EXPLANATION Mr. NADLER. Mr. Speaker, on roll- call vote 359 I was incorrectly recorded as voting ”no.” I intended to vote ”aye.” f ANNOUNCEMENT BY THE SPEAKER PRO TEMPORE The SPEAKER pro tempore. The Chair will entertain fifteen 1-minutes per side. f REFORM WELFARE NOW (Mr. CHABOT asked and was given permission to address the House for 1 minute.) Mr. CHABOT. Mr. Speaker, in 1992, Bill Clinton portrayed himself as a new Democrat. One of the things that was supposed to set him apart from the old Democrats was the belief shared by many people of goodwill that the wel- fare system was a mess, that it was broken and needed to be fixed. After two vetoes, we are now told that Bill Clinton may finally be pre- pared to sign a welfare reform package. If that is true, it is a very positive de- velopment. America needs, no, Ameri- cans demand serious, genuine welfare reform, and I frankly do not care who gets the credit. I do not care if it is the Republican Party or the new Demo- crats or the old Democrats or the blue dogs or the yellow dogs or the man on the moon. That part of it does not mat- ter and does not change the fact that we desperately need to change welfare so that it honors family and it honors work. Mr. Speaker, reforming welfare is the right thing to do, it is the com- monsense thing to do, and I say let us get it done now, no matter who gets credit for it. f COMMEMORATING THE F 111 (Mr. PETE GEREN of Texas asked and was given permission to address the House for 1 minute.) Mr. PETE GEREN of Texas. Mr. Speaker, I rise to commemorate the end of an era in U.S. aviation history. This past weekend at a ceremony in Fort Worth, TX, the F 111 was retired and officially named the ”Aardvark,” the nickname given it by the pilots that flew it. This ceremony commemo- rated the accomplishments of this great aircraft from its first flight in 1964 to its honorable service in the gulf war and its revolutionary impact on military aviation technology around the world. The F 111 served this Nation in the war in Vietnam, the bombing of terror- ist targets in Libya, and during Oper- ation Desert Storm. In November 1966, the F 111 set a record for the longest low-level supersonic flight, and it was the first tactical aircraft to fly across the Atlantic Ocean without refueling. Additionally, the F 111 was the first plane equipped with swing wing tech- nology that allowed it to take off and land on a short 2,000-foot runway while still being able to reach supersonic speeds at a variety of altitudes with wings swept back. Mr. Speaker and my colleagues, join me in celebrating the men and women who built this great aircraft, a bird that served our Nation and the free world for over 30 years and now takes its place among other great Texas built military aircraft like the B 24 Lib- erator and the B 58 Hustler. f PRESIDENT SHOULD SIGN WELFARE REFORM BILL (Mr. CHRYSLER asked and was given permission to address the House for 1 minute.) Mr. CHRYSLER. Mr. Speaker, wel- fare cases in Michigan are down signifi- cantly, but more importantly, parents are working to provide for their own families in setting examples for their children to follow. Currently the State of Michigan is waiting on 76 additional waivers from the President to fully im- plement their welfare plan. The enactment of the Personal Re- sponsibility and Work Opportunity Act would largely end the need for these waivers and allow Michigan to proceed with their reforms, truly helping the disabled and the people that need our help in restoring the basic human dig- nity and pride that comes from bring- ing home a paycheck and providing care for your family. However, if the President fails to ap- prove these reforms for the third time, it is the children who will suffer and CONGRESSIONAL RECORD \u2014 HOUSE H9381July 31, 1996 these children should not be left hos- tage any longer to elected officials breaking their promises. Mr. Speaker, I urge the President to sign the welfare reform today and truly end welfare as we know it. f PRESIDENTIAL CANDIDATES SHOULD FOCUS ON REAL IS- SUES, NOT NEGATIVE CAMPAIGN ADS (Mr. SANDERS asked and was given permission to address the House for 1 minute.) Mr. SANDERS. Mr. Speaker, at a time when this country has the lowest voter turnout of any major country and millions of Americans are giving up on the political process, it is imper- ative that the presidential candidates in this election focus their attention on the real issues facing the middle class and the working families and not devote their energy to negative 30-sec- ond television ads. b 1030 This country has some terribly seri- ous problems, and the American people want to hear those problems discussed. For example, why does this Nation have the most unfair distribution of wealth and income of all industrialized nations on Earth? Why is the gap be- tween the rich and the poor growing wider while the middle class continues to shrink? What do we do to reverse the trend by which real wages for working people continue to decline and today are 16 percent less than they were 20 years ago with workers now working longer and longer hours just to provide for their families? What do we do about the reality that most of the new jobs that are being created are poverty level jobs? Let us talk about the real issues. f CHILDREN ARE WAITING FOR WELFARE REFORM (Mr. BARTLETT of Maryland asked and was given permission to address the House for 1 minute and to revise and extend his remarks.) Mr. BARTLETT of Maryland. Mr. Speaker, how much longer should America wait before we rescue the mil- lions of children who are trapped in poverty by the current welfare system? Shouldn’t we be encouraging work, marriage, and family instead of dis- couraging them? How many more children, commu- nities, and cities must we lose to pov- erty and violence before we say enough is enough? When it comes to welfare reform, President Clinton has become the maybe man. Maybe he’ll end welfare as we know it and maybe he won’t. Should we trust what the President has said? Or should we judge the President by what he’s done? The President’s record on welfare is two vetoes and delays and denials of waivers for States to pursue innovative solutions. This week Congress will pass welfare reform for the third time. Will the third time prove the charm . . . or will the President strike out? The children are waiting. f A NEW WAR ON TERRORISM (Mrs. SCHROEDER asked and was given permission to address the House for 1 minute and to revise and extend her remarks.) Mrs. SCHROEDER. Mr. Speaker, America’s communities are being ter- rorized by lunatics. Our law enforce- ment officers are the ones who are on the front line trying to bring back some tranquility to America’s public places. Our law enforcement officers today look like Wyatt Earp. They real- ly do not have any more technology than Wyatt Earp had except they have a car instead of a horse. We could fix that. We have all sorts of cold war tech- nology taxpayers have paid for that should be opened up to law enforce- ment and move out there so we fight crime much smarter. If we could trace everything in the world, we ought to be able to trace explosives, and we know how to trace explosives. It is outrageous that this Congress might think about going home before we deal with this issue. One of the pri- mary reasons for the Congress, accord- ing to the Constitution, is to deal with the domestic tranquility. Let us deal with that before we adjourn. Let us open up that wonderful storehouse of research and development that we have paid for for the cold war for this new war on terrorism. f COMMONSENSE WELFARE REFORM (Mrs. SEASTRAND asked and was given permission to address the House for 1 minute and to revise and extend her remarks.) Mrs. SEASTRAND. Mr. Speaker, when President Bill Clinton says that the welfare system is broken, he’s ab- solutely right. Every year, the Govern- ment spends more and more money on welfare. Today, Government spends 1,600 per- cent more on welfare than they did in 1950 while the population of this coun- try has only increased 72 percent. Mr. Speaker, it all boils down to common sense. Common sense tells us that welfare has been a colossal failure\u2014as Presi- dent Clinton says, the system is bro- ken. Common sense also tells that money is simply not the answer\u2014wel- fare may give people money but it takes away something far more pre- cious. It is now time for this Government to exercise a little common sense of its own. Congress will soon give the Presi- dent a genuine welfare reform package. It is real; it is common sense; and it honors the basic values of work, fam- ily, and personal responsibility. We hope that Bill Clinton will do the right thing and sign commonsense wel- fare reform. f THE ISSUE OF TERRORISM (Mr. PALLONE asked and was given permission to address the House for 1 minute.) Mr. PALLONE. Mr. Speaker, this Friday Congress is scheduled to go into recess, but I do not think we should be recessing unless we address or until we address the issue of terrorism. I have to tell you that right now my constitu- ents in the phone calls to my office are overwhelming that people are con- cerned and want the Congress and the President to get together on a biparti- san basis to address the issue. It is not something that is just in other countries now. Clearly, because of the TWA crash, because of the explo- sion in Atlanta at the Olympics, people feel, and I think rightly so, that they cannot be safe and that we need to ad- dress the issue of terrorism. Basically, the President this week convened a bipartisan leadership meet- ing to discuss the steps that are nec- essary to fight against terrorism. As was mentioned by some of the previous speakers, we do have certain tools at hand which we really have not used and we can use on the Federal basis to try to get at the problem. Mentioned was the expanding the power to use wire tapping, also certain tracers or taggants, as they are called in explosives. These things need to be addressed, and we have to do them be- fore we recess. f THE WELFARE REFORM BILL (Mr. DUNCAN asked and was given permission to address the House for 1 minute and to revise and extend his re- marks.) Mr. DUNCAN. Mr. Speaker, last night, each Member had the August 12 issue of the New Republic delivered to our offices. As everyone knows, the New Repub- lic is a very liberal magazine. Yet this magazine had a lead edi- torial entitled ”Sign It,” urging the President to sign the welfare reform bill. The President earlier vetoed a wel- fare reform bill that passed the Senate 87 to 12. The current bill passed the Senate 74 to 24 and passed by a very large margin in this House. The New Republic says this bill ”will, finally, start the process by which America’s underclass problem can be solved.” The editors said the block grant structure of this bill ”is likely to point the way to ending the ‘culture of pov- erty.’ ” This is a really significant endorse- ment, Mr. Speaker. CONGRESSIONAL RECORD \u2014 HOUSEH9382 July 31, 1996 The New Republic ended its editorial with these words: The continuing agony of the underclass is destroying our cities, our race relations, our sense of civility, our faith in the possibilities of government. It’s worth taking some risks to end it. I urge the President to sign the wel- fare reform bill. f TERRORISM (Mr. DURBIN asked and was given permission to address the House for 1 minute and to revise and extend his re- marks.) Mr. DURBIN. Mr. Speaker, the image of terrorism are ingrained in our minds. What was often seen as someone else’s problem is now our problem. If America is being terrorized with- out and within, this Congress should not be terrorized by special interest groups opposed to legislation which would protect us. When Congress passed its antiterrorism bill, the gun lobby opposed a provision which would have required tracer particles in explo- sives so that law enforcement could track the source of terrorist bombs. Sadly, more than 200 Members of Con- gress bowed to the NRA and voted to deny the FBI this important tool to fight terrorism. Now we are being asked to pass addi- tional antiterrorism legislation in light of the recent tragedies. But the gun lobby has once again made it clear that it will oppose any effort to put tracers in explosives. As America would not be intimidated by terrorists, this Congress should not be intimidated by the gun lobby. Be- fore we go home this week, let us pass an antiterrorism bill that will protect American families, not protect special interest groups. f LEGITIMATE WELFARE REFORM (Mr. ENSIGN asked and was given permission to address the House for 1 minute and to revise and extend his re- marks.) Mr. ENSIGN. Mr. Speaker, using common sense, would we set up a wel- fare system that told a pregnant teen- age mom, Listen, do not live with your parents; we will get you an apartment; do not get a job; do not save any money; you can have any man live with you except for the father of the child and, by the way, if you want more money, have another child out of wedlock? Let us put party politics aside here. Let us let the American people win for the first time in a long time. Let us pass this legitimate welfare reform bill that we have on the House floor today. If you are an able-bodied American, you are going to be required to work. We are going to provide child care money for you to transition from wel- fare to work, and we are going to pro- vide job training. We have a program in Las Vegas called Opportunity Village. It is a pro- gram for mentally disabled people. We have enough compassion in Las Vegas to help people that are mentally dis- abled get into a job. Let us have enough compassion on welfare recipi- ents to help them get into a job. f THE NRA (Mr. MILLER of California asked and was given permission to address the House for 1 minute and to revise and extend his remarks.) Mr. MILLER of California. Mr. Speaker, if you are involved in a hit- and-run accident today, the police can trace the paint on your car to the exact day it was painted, to where it was painted, to the gallon of paint used and where that car was sold and who owns it. Today if you use your phone in the commission of a crime, they can trace your calls back to that. But if you blow up the World Trade Center or you blow up the TWA airline or you blow up the park in Atlanta, the NRA will not let them trace the powder in those explo- sives back to the point of purchase and manufacture to expedite the investiga- tion of who those people were that en- gaged in this terrorism against Amer- ican cities and against American citi- zens. That is an outrage. A few months ago, 200 Members in this Congress voted to deny the alco- hol, tobacco bureau the efforts to make that investigation, the FBI to make those investigations. We should now understand that these tools should be available to the FBI. They should be available to the alcohol, tobacco bu- reau. They should be available for the investigation to protect American lives. f PRESIDENT CLINTON ON WELFARE REFORM (Mr. BAKER of California asked and was given permission to address the House for 1 minute and to revise and extend his remarks.) Mr. BAKER of California. Mr. Speak- er, speaking to the National Governor’s Association 2 weeks ago, Bill Clinton sounded like a Republican. He talked about getting tough on irresponsible fathers; he talked about cutting red- tape; he talked about work; he talked about strong families; he even talked about imposing time limits on welfare benefits. This week, Congress will send the White House the third welfare reform bill that addresses all the concerns raised by the President. It will have real work requirements and real time limits. It is genuine welfare reform; it is common sense; and it will move peo- ple from dependence to work and inde- pendence. As Bill Clinton said in one of his radio addresses: ”No challenge is more important than replacing our broker welfare system.” Mr. Speaker, he’s right. But changing something as big and as entrenched as the welfare sys- tem requires commitment, it requires honesty, and it requires that politi- cians keep their promises. We can only hope Bill Clinton will do the right thing and sign the bill. f A POLITICAL ANSWER TO TERRORISM (Mr. SCHUMER asked and was given permission to address the House for 1 minute and to revise and extend his re- marks.) Mr. SCHUMER. Mr. Speaker, the No. 1 question I was asked when I talked to my constituents on the phone last night and this morning is, why the heck would anyone oppose putting taggants, little tracers in explosives so that we can find those who commit ter- rorism. There is no good answer. There is no good substantive answer. There is a po- litical answer. The reason this House is not going to address the issue of putting taggants, tracers explosives is three letters: NRA. We all know it is the right thing to do. In fact, at all the hearings our com- mittee held, there were only two groups of people who were against put- ting these taggants in explosives. Those were either explosive manufac- turers or the gun lobby. But the NRA is making a serious mistake here. The average gun owner does not agree with it. The average gun owner, who has a few hunting rifles or, in the city, carries a gun around for self-de- fense, they do not see that it is the NRA’s business that explosives are tagged so we can find terrorists. Congress, get with it. Stand up to the NRA and let our law enforcement be able to trace explosives with taggants. f GENUINE WELFARE REFORM (Mr. BALLENGER asked and was given permission to address the House for 1 minute.) Mr. BALLENGER. Mr. Speaker, lib- eral Democrats love to portray them- selves as the great champions of Amer- ica’s children. The President has even threatened to veto welfare reform for the third time unless, and I quote, it ”protects children.” For the last year, Bill Clinton has stood in the way of genuine welfare re- form. He seems incapable of showing any determined leadership on any of the pressing social or economic issues facing this Nation. When he does act, he always hides behind children or some other alleged victim. If Bill Clinton were truly concerned about children and those in need, he would have kept the promises he made in his campaign. He would have kept his promise to end welfare as we know it. He would have kept his promise to balance the budget in 5 years. The list of broken promises goes on and on. The children of America don’t need pandering they need a President who is willing to stand by his word, do the CONGRESSIONAL RECORD \u2014 HOUSE H9383July 31, 1996 right thing, and sign commonsense welfare reform. f THE SPIRIT OF THE OLYMPICS (Mr. LEWIS of Georgia asked and was given permission to address the House for 1 minute and to revise and extend his remarks.) Mr. LEWIS of Georgia. Mr. Speaker, yesterday I attended the reopening of the Olympic Centennial Park in At- lanta. Tens of thousands of people, from all over the country and the world, turned out for a memorial serv- ice in honor of those killed and injured in the bomb blast that exploded early Saturday morning, shattering the tran- quility of the Olympic games. They also turned out to demonstrate that they will not bow to the fear and in- timidation of terrorism. Mr. Speaker, the Olympic games rep- resent the best of the human spirit, and in many ways the response of the people in Atlanta to this vicious act truly represented the Olympic spirit. Yesterday, the people of Atlanta, of Georgia, of our Nation, and the world came together in prayer and solidarity. It was a beautiful and moving experi- ence to be in a crowd representing the true brotherhood of nations. Mr. Speaker, I want to take this op- portunity to commend the many people who acted heroically in the wake of this terrorist attack: the medical per- sonnel, the law enforcement officials and the thousands of volunteers who averted an even greater disaster. Make no mistake, Mr. Speaker, the person who carried out this hideous crime will be found and prosecuted to the full extent of the law. In the mean- time, we in the Congress should do ev- erything in our power to pass legisla- tion that will protect our citizens from such attacks in the future. f b 1045 WELFARE SHOULD NOT BE A WAY OF LIFE (Mr. BASS asked and was given per- mission to address the House for 1 minute and to revise and extend his re- marks.) Mr. BASS. Mr. Speaker, between 1965 and 1994 $5.4 trillion has been spent on welfare. Federal, State, and local wel- fare spending rose from $158 billion in 1975 to $324 billion in 1993. Now, my colleagues may think that welfare is thought of as providing short-term relief. Well, the fact is that the average stay on welfare today is 13 years. Now, since 1950 the population of the United States has increased 72 percent, from 151 million to 260 million. At the same time, total welfare spending by Federal, State, and local governments has increased by 1,623 percent. Mr. Speaker, today the House will pass a historic welfare reform bill that requires work and personal responsibil- ity and lifts families from lives of de- spair and hopelessness. Mr. Speaker, welfare should not be a way of life. Commonsense welfare re- form will help end the vicious cycle of welfare dependency. Mr. Speaker, I urge the President to sign this historic welfare proposal. f LET US DO THE JOB RIGHT ON ANTITERRORISM LEGISLATION (Ms. MCKINNEY asked and was given permission to address the House for 1 minute.) Ms. MCKINNEY. Mr. Speaker, as a Member of Congress from the Metro- Atlanta area I, like the rest of the Na- tion, was horrified by the senseless bombing of innocent civilians at the Olympic Park. As Americans, we have had a false sense of security that we are somehow immune to terrorism on our soil. How- ever, Mr. Speaker, we have always had terrorist acts committed against Americans in the United States\u2014we just did not call it terrorism. Whether it was lynchings, church burnings, abortion clinic bombings, and now attacks by antigovernment groups, terrorism has, unfortunately, always been with us. Mr. Speaker, it is time now that we dealt with all terrorist acts head on. Although the House passed the Presi- dent’s antiterrorism bill, it was wa- tered-down to the point where it is al- most ineffectual. Now we have an opportunity to re- introduce the antiterrorism tools stripped from the legislation. Let us do the job right this time. f THIS IS THE SPIRIT OF THE OLYMPICS (Mr. MANZULLO asked and was given permission to address the House for 1 minute and to revise and extend his remarks.) Mr. MANZULLO. Mr. Speaker, Theo- dore Roosevelt once said the credit be- longs to the one who is actually in the arena and who spends time in a worthy cause. This is the spirit of the Olym- pics. Shining examples of this indomitable spirit are Judy Wilmarth from Leaf River, IL, and Stephanie Brooks from Algonquin, IL. Judy helped carry the Olympic torch in Illinois, chosen be- cause of her devotion to service to the needy and distribution of food. Four- teen-year old Stephanie Brooks is com- peting in the Paralympics in Atlanta. She is qualified for the 50- and the 100- meter free style and the 50-meter but- terfly swimming events. She competes in these games as an elite athlete. These accomplishments stand in the face of the fact that Stephanie was born with spina bifida which has caused her to lose the use of her legs. Mr. Speaker, let me take this oppor- tunity to salute these two Olympic champions: Judy Wilmarth and Steph- anie Brooks. FOLLOWING THE ORDERS OF THE NATIONAL RIFLE ASSOCIATION MUST STOP (Mrs. LOWEY asked and was given permission to address the House for 1 minute and to revise and extend her re- marks.) Mrs. LOWEY. Mr. Speaker, it is time to give law enforcement officials the tools they need to prevent terrorist at- tacks in America. The Republican lead- ership must schedule a vote imme- diately on stronger measures to fight terrorism. These proposals\u2014requiring taggants in explosives and enhanced wiretapping authority\u2014are absolutely critical in the war against terrorism. These provisions should already be law, but were dropped from the original antiterrorism bill that Congress passed earlier this year. They were dropped because this Re- publican Congress followed the orders of the National Rifle Association and took them out. That was unacceptable then and it is unacceptable now. Speaker GINGRICH must not allow the NRA to hold up swift passage of tough antiterrorism legislation. The Repub- lican leadership must choose the safety and welfare of the American people over the objections of the NRA. This Republican Congress has spent the last 17 months following the orders of the NRA and it must stop. Congress must take a united stand against terrorism both foreign and do- mestic now. We must make it very clear that we will use all the resources at our disposal to prevent and punish acts of terror. f NOT ONE LOGICAL REASON FOR THE PRESIDENT NOT TO SIGN CONGRESS’ THIRD WELFARE RE- FORM BILL (Mr. SMITH of Texas asked and was given permission to address the House for 1 minute and to revise and extend his remarks.) Mr. SMITH of Texas. Mr. Speaker, our children are our country’s most precious resource. They are the hope of the future. But today many children will grow up in a cycle of poverty and dependence, and that is a tragedy, Mr. Speaker. Many of us came to Congress on a promise to do something about the failed welfare state. We want to end de- pendency, we want to encourage per- sonal responsibility, we want to honor work so that welfare does not become a way of life. President Clinton has already vetoed two welfare reform bills despite the promise during his campaign to, ”end welfare as we know it.” the jury is still out on whether or not the President will sign Congress’ third effort to re- form the welfare system. Personally, I cannot imagine one logical reason why Mr. Clinton would not sign the current bill. CONGRESSIONAL RECORD \u2014 HOUSEH9384 July 31, 1996 Mr. Speaker, it is a good bill. It is based on common sense. It honors work, family, and personal responsibil- ity. f WE MUST NOT LEAVE FOR AU- GUST RECESS WITHOUT PROVID- ING ANTITERRORISM LEGISLA- TION (Ms. DELAURO asked and was given permission to address the House for 1 minute and to revise and extend her re- marks.) Ms. DELAURO. Mr. Speaker, I was in Atlanta this past weekend, and I felt the aftershocks of the pipe bomb explo- sion in Centennial Park. The true spir- it of the games, the athletes, and the spectators shone through, and every- one agreed that the games must go on and that we should not bow to hostile acts of terror; but people also felt equally strongly that Congress must act to prevent this violence. The American people do not feel safe, and part of that is because we are good at catching criminals after the fact, but we are not good at preventing them from acting. The American people want the Gov- ernment to have the tools that it needs to prevent these bombings. President Clinton has asked the Congress this week to act on much-needed antiterrorism proposals like putting tracers in explosives, in gunpowder, a tool that is needed to be able to pre- vent acts of terror; but the NRA is op- posed to these tracers. Their opposition is wrong. We cannot in good faith leave for the August recess without passing legisla- tion that will give the Federal Govern- ment the tools that it needs to stop terrorism in this country. We need and we must act in good faith. We must leave in August and provide people with the peace of mind that they need so that we can keep this country free of terrorism. f CONGRESS PROVIDED ANTITERRORISM RESOURCES; THE ADMINISTRATION SITS ON ITS HANDS (Mr. MICA asked and was given per- mission to address the House for 1 minute and to revise and extend his re- marks.) Mr. MICA. Mr. Speaker, I was abso- lutely astounded this morning to learn that this administration was provided $80 million within the last 2 years to establish a terrorism center, and it has sat on its hands for the last 24 months and not done anything to institute ac- tion against terrorism. This Congress has already provided resources; this ad- ministration has not done a thing about this. I was stunned to find this out. Now, the FBI can find time and re- sources to hand over and provide files on Republicans. The FBI, as I learned in shock last weekend when the gen- tleman from Pennsylvania [Mr. CLINGER] came to the floor, can send agents to harass our witnesses in con- gressional hearings, but they cannot find the time and the resources that this Congress gave them to fight ter- rorism. We must act together to fight terror- ism and we have provided the re- sources. f WE SHOULD NOT RECESS UNTIL WE ACT ON TERRORISM (Mrs. MALONEY asked and was given permission to address the House for 1 minute and to revise and extend her re- marks.) Mrs. MALONEY. Mr. Speaker, do- mestic terrorism is becoming the greatest threat to our domestic tran- quility. It marred the Olympics, it hor- rified us in Oklahoma City and with the World Trade Center, and it may have destroyed TWA Flight 800. That tragedy touched me deeply and personally. Three nights before the tragedy I spent the evening with my neighbor and friend Judith Connelly Delouvier, who was on that flight. Three days later she was dead. She will never see her two children and husband again. Her family deserves action now. We should not recess until we take legisla- tive action on tracing explosives; we must take on the NRA; we must work on programmatic changes. Mr. Speaker, we should not recess until we act on terrorism. We cannot wait until September. f IN FIGHTING ANTITERRORISM WE MUST ALSO PROTECT OUR CIVIL LIBERTIES (Mr. MCINTOSH asked and was given permission to address the House for 1 minute and to revise and extend his re- marks.) Mr. MCINTOSH. Mr. Speaker, let me rise and say I agree we need to take ac- tion in order to address antiterrorism in this country. We have all been horri- fied by the bombing at the Olympics and among our civil aeronautics. I want to urge the President to go ahead and spend that $80 million and build the antiterrorism center at the FBI so that Americans can be safer in our travel. Second, we need to also protect civil liberties in this country, and I am troubled by President Clinton’s request for secret wiretap authority. As my colleagues know when the President has 900 FBI files in the White House basement on his political opponents and still refuses to release the list of 200,000 Americans that he keeps track of in his big brother database, I am not sure that we can trust him with more authority to wiretap Americans who may be innocent of any crime. We need to work to fight terrorism, but we also need to protect civil lib- erties in this country and make sure that we are not giving our Government authority to harass innocent Ameri- cans. SUPPORT H.R. 43, THE BOMBING PREVENTION ACT (Ms. SLAUGHTER asked and was given permission to address the House for 1 minute and to revise and extend her remarks.) Ms. SLAUGHTER. Mr. Speaker, the United States suffered a terrible loss with the recent bombing in Centennial Park in Atlanta. We lost our innocence and our faith it will never happen here. It is becoming increasingly probable that black or smokeless powder was in- volved in the construction of this dead- ly pipe bomb. I have introduced legislation during the last two Congresses that would help identify the perpetrators of this act. The Bombing Prevention Act, H.R. 43, would avert future deaths, save lives, and prevent families and our Na- tion as a whole from going through the anguish that terrorism leaves in its wake. Specifically, my bill would require every person who purchases explosives including more than five pounds of black or smokeless powder to hold a Federal permit. They would have to provide their name and address to the vendor, and indicate the purpose of the explosives purchase. This information would be invaluable to law enforce- ment officials investigating terrorism. Under current law, any purchase of less than 50 pounds of black powder is ex- empt from Federal oversight. This is crazy\u201450 pounds can unleash dreadful destruction. It would be a crime in itself if this Congress were to adjourn on Friday and go home without addressing this issue that has terrified every American from sea to shining sea. f ANTITERRORISM IS A BIPARTISAN MATTER (Mr. KINGSTON asked and was given permission to address the House for 1 minute and to revise and extend his re- marks.) Mr. KINGSTON. Mr. Speaker, as my colleagues know, last Friday I was on my way to Atlanta, and I was told to go see Tom Davis who was the FBI agent in charge of Centennial Park be- cause his father-in-law, Floyd Thaxton, works for us in our State’s Bureau of- fice. Well, needless to say something dramatically changed in the early hours of the morning, and I was unable to see Mr. Davis, who was one of the heroes and was injured by the bomb, but led the successful evacuation of many, many people. b 1100 Mr. Speaker, Mr. Davis is a hero to us. In his honor, I have to refute some of the things that are going on on this terrorism discussion today. I have the vote list on the terrorism bill, and many of the speakers today from the Democratic side voted against the only terrorism bill we had. To my knowledge, none of them of- fered amendments. There may have CONGRESSIONAL RECORD \u2014 HOUSE H9385July 31, 1996 been a few, but it is kind of interesting to hear these people talking about we need a terrorist bill by the end of the week, and yet they had their chance. For a year and a half we debated this, and most of them did not offer amend- ments. Just about all of them voted no. I have a copy of the vote list, it is kind of interesting, it is almost rollcall, from the people we have been hearing from. We have to work on a bipartisan basis. We want to continue working with the President. We want to solve this problem. We owe it to the Tom Davises of the world. f MEDICARE AND MEDICAID HAS DRASTICALLY REDUCED THE POVERTY RATE FOR AMERICA’S SENIOR CITIZENS (Mr. GENE GREEN of Texas asked and was given permission to address the House for 1 minute and to revise and extend his remarks.) Mr. GENE GREEN of Texas. In quick response, Mr. Speaker, to my col- league, the gentleman from Georgia, he knows who controls the rules on the floor. If we could have submitted amendments we probably would, but the Committee on Rules typically has closed rules, and the gentleman’s col- league from Georgia prohibited them with his amendment, most of them. What I am really here to talk about this week, we are celebrating the 31st anniversary of Medicare. We are look- ing back on a time that has seen dras- tic reductions in the number of seniors in poverty. As a result of Medicare, the poverty rate among America’s senior citizens has dropped from 30 percent in 1966 to 12 percent in 1993. Before 1966 only 51 percent of American seniors had health insurance. Today, thanks to Medicare, 99 percent of America’s sen- iors have health car. This is a program that America needs, not only in 1965, but today and tomorrow. Contrary to sentiments ex- pressed by my Republican colleagues, Medicare should not be allowed to wither on the vine or be limited to pay for tax cuts, or, as one of our former colleagues said, ”I was there fighting the fight voting against Medicare, 1 out of 12, because we knew it would not work in 1965.” Celebrating Medicare’s 31st birthday this week, we as Democrats are taking actions to ensure its success in the fu- ture. f REQUEST FOR PERMISSION TO AD- DRESS THE HOUSE FOR 1 MINUTE AND TO USE EXHIBIT Mr. DOGGETT. Mr. Speaker, I ask unanimous consent to address the House 1 minute and for use of this chart. The SPEAKER pro tempore. Is there objection to the request of the gen- tleman from Texas? Mr. VOLKMER. Mr. Speaker, pursu- ant to rule XXX, I object to the gentle- man’s use of the exhibit. The SPEAKER pro tempore (Mr. HEFLEY). This objection is not debat- able. Pursuant to rule XXX, the question is: Shall the gentleman from Texas [Mr. DOGGETT] be permitted to use the exhibit? The question was taken; and the Speaker pro tempore announced that the noes appeared to have it. Mr. VOLKMER. Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present. The SPEAKER pro tempore. Evi- dently a quorum is not present. The Sergeant at Arms will notify ab- sent Members. The vote was taken by electronic de- vice, and there were\u2014yeas 386, nays 28, answered ”present” 2, not voting 17, as follows: [Roll No. 374] YEAS\u2014386 Abercrombie Andrews Archer Armey Bachus Baesler Baker (CA) Baker (LA) Baldacci Ballenger Barcia Barr Barrett (NE) Barrett (WI) Bartlett Barton Bass Bateman Becerra Beilenson Bereuter Berman Bevill Bilbray Bilirakis Bishop Bliley Blumenauer Blute Boehlert Boehner Bonilla Bonior Bono Borski Boucher Brewster Browder Brown (CA) Brown (FL) Brown (OH) Brownback Bryant (TX) Bunn Burr Burton Calvert Camp Campbell Canady Cardin Castle Chabot Chambliss Chenoweth Christensen Chrysler Clay Clayton Clement Clinger Clyburn Coble Coburn Coleman Condit Conyers Cooley Costello Cox Coyne Cramer Crane Crapo Cremeans Cubin Cummings Cunningham Danner Davis de la Garza DeFazio DeLay Dellums Deutsch Diaz-Balart Dickey Dicks Dingell Dixon Doggett Dooley Doolittle Dornan Doyle Dreier Duncan Dunn Durbin Edwards Ehlers Ehrlich Engel English Ensign Eshoo Evans Farr Fattah Fawell Fazio Fields (LA) Fields (TX) Filner Flanagan Foglietta Foley Forbes Fowler Fox Frank (MA) Franks (CT) Franks (NJ) Frelinghuysen Frisa Frost Funderburk Furse Gallegly Ganske Gejdenson Gekas Gephardt Gibbons Gilchrest Gillmor Gilman Gonzalez Goodlatte Goodling Gordon Goss Graham Green (TX) Greenwood Gutierrez Gutknecht Hall (OH) Hall (TX) Hamilton Hancock Hansen Harman Hastings (FL) Hastings (WA) Hayes Hayworth Hefley Hefner Heineman Herger Hilliard Hinchey Hobson Hoekstra Holden Horn Hostettler Houghton Hoyer Hutchinson Hyde Inglis Istook Jackson (IL) Jackson-Lee (TX) Jacobs Jefferson Johnson (CT) Johnson (SD) Johnson, E. B. Johnson, Sam Johnston Jones Kanjorski Kaptur Kasich Kelly Kennedy (MA) Kennedy (RI) Kennelly Kildee Kim King Kingston Kleczka Klink Klug Knollenberg Kolbe LaFalce Lantos Largent Latham LaTourette Laughlin Leach Levin Lewis (CA) Lewis (GA) Linder Lipinski LoBiondo Lofgren Longley Lowey Lucas Luther Maloney Manton Manzullo Markey Martinez Martini Mascara Matsui McCarthy McCollum McCrery McDermott McHale McHugh McInnis McIntosh McKinney McNulty Meehan Meek Menendez Metcalf Meyers Mica Millender- McDonald Miller (CA) Miller (FL) Minge Mink Moakley Mollohan Montgomery Moorhead Moran Morella Myers Myrick Nadler Neal Nethercutt Ney Nussle Oberstar Obey Olver Ortiz Orton Owens Oxley Packard Pallone Parker Pastor Paxon Payne (NJ) Payne (VA) Pelosi Peterson (FL) Peterson (MN) Petri Pickett Pomeroy Porter Portman Poshard Pryce Quillen Quinn Radanovich Rahall Ramstad Rangel Reed Regula Rivers Roberts Roemer Rogers Rohrabacher Ros-Lehtinen Rose Roukema Roybal-Allard Royce Rush Sabo Salmon Sanders Sanford Sawyer Saxton Scarborough Schiff Schroeder Schumer Scott Seastrand Sensenbrenner Serrano Shaw Shays Shuster Sisisky Skaggs Skeen Skelton Slaughter Smith (MI) Smith (NJ) Smith (TX) Smith (WA) Solomon Spence Spratt Stark Stearns Stenholm Stockman Stokes Studds Stump Stupak Talent Tanner Tate Tauzin Taylor (MS) Taylor (NC) Tejeda Thomas Thompson Thornberry Thornton Thurman Tiahrt Torkildsen Torres Torricelli Towns Traficant Upton Velazquez Vento Visclosky Volkmer Vucanovich Walker Walsh Wamp Ward Waters Watt (NC) Watts (OK) Waxman Weldon (FL) Weldon (PA) White Whitfield Wicker Williams Wilson Wise Wolf Woolsey Wynn Yates Young (AK) Zeliff NAYS\u201428 Allard Bentsen Bryant (TN) Bunning Buyer Collins (GA) Combest Deal Everett Ewing Geren Greene (UT) Hastert Hilleary Lazio Lewis (KY) Lightfoot McKeon Molinari Murtha Neumann Norwood Pombo Schaefer Shadegg Souder Weller Zimmer ANSWERED ”PRESENT”\u20142 Hoke LaHood NOT VOTING\u201417 Ackerman Callahan Chapman Collins (IL) Collins (MI) DeLauro Flake Ford Gunderson Hunter Lincoln Livingston McDade Richardson Riggs Roth Young (FL) b 1122 Mr. BUYER, Ms. GREENE of Utah, and Mr. ALLARD changed their vote from ”yea” to ”nay.” Messrs. SPRATT, BALDACCI, PORTMAN, and FLANAGAN changed their vote from ”nay” to ”yea.” So the gentleman was permitted to use the exhibit in question. CONGRESSIONAL RECORD \u2014 HOUSEH9386 July 31, 1996 The result of the vote was announced as above recorded. Mr. WISE. Mr. Speaker, I move to re- consider the vote that was just taken. MOTION TO TABLE OFFERED BY MR. CASTLE Mr. CASTLE. Mr. Speaker, I move to lay the motion to reconsider the vote on the table. The SPEAKER pro tempore (Mr. HEFLEY). The question is on the motion offered by the gentleman from Dela- ware [Mr. CASTLE] to lay on the table the motion to reconsider the vote of- fered by the gentleman from West Vir- ginia [Mr. WISE]. The question was taken; and the Speaker pro tempore announced that the noes appeared to have it. RECORDED VOTE Mr. CASTLE. Mr. Speaker, I demand a recorded vote. A recorded vote was ordered. The vote was taken by electronic de- vice, and there were\u2014ayes 232, noes 181, not voting 20, as follows: [Roll No. 375] AYES\u2014232 Allard Archer Armey Bachus Baker (CA) Baker (LA) Ballenger Barr Barrett (NE) Bartlett Barton Bass Bateman Bentsen Bereuter Bilbray Bilirakis Bliley Blute Boehlert Boehner Bonilla Bono Brownback Bryant (TN) Bunn Bunning Burr Burton Buyer Callahan Calvert Camp Campbell Canady Castle Chabot Chambliss Chenoweth Christensen Chrysler Clinger Coble Coburn Collins (GA) Combest Cooley Cox Crane Crapo Cremeans Cubin Cunningham Davis Deal DeLay Diaz-Balart Dickey Doggett Doolittle Dornan Dreier Duncan Dunn Ehlers Ehrlich English Ensign Everett Ewing Fawell Flanagan Foley Forbes Fowler Fox Franks (CT) Franks (NJ) Frelinghuysen Frisa Funderburk Gallegly Ganske Gekas Gilchrest Gillmor Gilman Goodlatte Goodling Goss Graham Greene (UT) Greenwood Gutknecht Hamilton Hancock Hansen Hastert Hastings (WA) Hayes Hayworth Hefley Heineman Herger Hilleary Hobson Hoekstra Hoke Horn Hostettler Houghton Hunter Hutchinson Hyde Inglis Istook Johnson (CT) Johnson, Sam Kasich Kelly Kim King Kingston Klug Knollenberg Kolbe LaHood Largent Latham LaTourette Laughlin Lazio Leach Lewis (CA) Lewis (KY) Lightfoot Linder Livingston LoBiondo Longley Lucas Manzullo Martini McCollum McCrery McHugh McIntosh McKeon Metcalf Meyers Mica Miller (FL) Molinari Moorhead Morella Myers Myrick Nethercutt Neumann Ney Norwood Nussle Orton Oxley Packard Parker Paxon Petri Pombo Porter Portman Pryce Quillen Quinn Radanovich Ramstad Regula Roberts Roemer Rogers Rohrabacher Ros-Lehtinen Roukema Royce Salmon Sanford Saxton Scarborough Schaefer Schiff Seastrand Sensenbrenner Shadegg Shaw Shays Shuster Skeen Smith (MI) Smith (NJ) Smith (TX) Smith (WA) Solomon Souder Spence Stearns Stockman Stump Talent Tate Tauzin Taylor (MS) Taylor (NC) Thomas Thornberry Tiahrt Torkildsen Upton Walker Walsh Wamp Watts (OK) Weldon (FL) Weldon (PA) Weller White Whitfield Wicker Wilson Wolf Young (AK) Zeliff Zimmer NOES\u2014181 Abercrombie Andrews Baesler Baldacci Barcia Barrett (WI) Becerra Beilenson Berman Bevill Bishop Blumenauer Bonior Borski Boucher Brewster Browder Brown (CA) Brown (FL) Brown (OH) Bryant (TX) Cardin Clay Clayton Clement Clyburn Coleman Condit Conyers Costello Coyne Cramer Cummings Danner DeFazio DeLauro Dellums Deutsch Dicks Dingell Dixon Dooley Doyle Durbin Edwards Engel Evans Fattah Fazio Fields (LA) Filner Foglietta Frank (MA) Frost Furse Gejdenson Gephardt Geren Gibbons Gonzalez Gordon Green (TX) Gutierrez Hall (OH) Hall (TX) Harman Hastings (FL) Hefner Hilliard Hinchey Holden Hoyer Jackson (IL) Jackson-Lee (TX) Jacobs Jefferson Johnson (SD) Johnson, E.B. Johnston Kanjorski Kaptur Kennedy (MA) Kennedy (RI) Kennelly Kildee Kleczka Klink LaFalce Lantos Levin Lewis (GA) Lipinski Lofgren Lowey Luther Maloney Manton Markey Martinez Mascara Matsui McCarthy McDermott McHale McKinney McNulty Meehan Meek Menendez Millender- McDonald Miller (CA) Minge Mink Moakley Mollohan Montgomery Moran Murtha Nadler Neal Oberstar Obey Olver Ortiz Owens Pallone Pastor Payne (NJ) Payne (VA) Pelosi Peterson (FL) Peterson (MN) Pickett Pomeroy Poshard Rahall Rangel Reed Rivers Rose Roybal-Allard Rush Sabo Sanders Sawyer Schroeder Schumer Scott Serrano Sisisky Skaggs Skelton Slaughter Spratt Stark Stenholm Stokes Studds Stupak Tanner Tejeda Thompson Thornton Thurman Torres Torricelli Towns Traficant Velazquez Vento Visclosky Volkmer Ward Waters Watt (NC) Waxman Williams Wise Woolsey Wynn Yates NOT VOTING\u201420 Ackerman Chapman Collins (IL) Collins (MI) de la Garza Eshoo Farr Fields (TX) Flake Ford Gunderson Jones Lincoln McDade McInnis Richardson Riggs Roth Vucanovich Young (FL) b 1140 Ms. SLAUGHTER changed her vote from ”aye” to ”no”. So the motion to table the motion to reconsider was agreed to. The result of the vote was announced as above recorded. The SPEAKER pro tempore (Mr. HEFLEY). The gentleman from Texas [Mr. DOGGETT] is recognized for 1 minute and is permitted to use the ex- hibit. f MOTION TO ADJOURN Mr. VOLKMER. Mr. Speaker, I have a privileged motion at the desk. The SPEAKER pro tempore. The Clerk will report the motion. The clerk read as follows: Mr. VOLKMER moves that the House do now adjourn. The question was taken; and the Speaker pro tempore announced that the noes appeared to have it. RECORDED VOTE Mr. VOLKMER. Mr. Speaker, I de- mand a recorded vote. A recorded vote was ordered. The vote was taken by electronic de- vice, and there were\u2014ayes 76, noes 344, not voting 13, as follows: [Roll No. 376] AYES\u201476 Abercrombie Beilenson Bishop Blumenauer Bonior Brown (CA) Brown (FL) Brown (OH) Bryant (TX) Clay Clyburn Collins (MI) Conyers Coyne DeFazio Dellums Dicks Dingell Engel Fazio Filner Foglietta Frank (MA) Frost Gephardt Hastings (FL) Hilliard Hinchey Hoyer Jefferson Johnson, E. B. Johnston Kennedy (MA) Kennedy (RI) LaFalce Lantos Lewis (GA) Lowey Maloney Manton Markey Martinez Matsui McDermott McNulty Meek Millender- McDonald Miller (CA) Mink Moakley Neal Oberstar Obey Olver Owens Pastor Payne (NJ) Pomeroy Rangel Reed Rush Sabo Schroeder Serrano Slaughter Spratt Stark Stokes Thompson Torricelli Towns Volkmer Waters Watt (NC) Waxman Wilson NOES\u2014344 Ackerman Allard Andrews Archer Armey Bachus Baesler Baker (CA) Baker (LA) Baldacci Ballenger Barcia Barr Barrett (NE) Barrett (WI) Bartlett Barton Bass Bateman Becerra Bentsen Bereuter Bevill Bilbray Bilirakis Blute Boehner Bonilla Bono Borski Boucher Brewster Browder Brownback Bryant (TN) Bunn Bunning Burr Burton Buyer Callahan Calvert Camp Campbell Canady Cardin Castle Chabot Chambliss Chenoweth Christensen Chrysler Clayton Clement Clinger Coble Coburn Coleman Collins (GA) Combest Condit Cooley Costello Cox Cramer Crane Crapo Cremeans Cubin Cummings Cunningham Danner Davis de la Garza Deal DeLauro DeLay Deutsch Diaz-Balart Dickey Dixon Doggett Dooley Doolittle Dornan Doyle Dreier Duncan Dunn Durbin Edwards Ehlers Ehrlich English Ensign Eshoo Evans Everett Ewing Fattah Fawell Fields (LA) Fields (TX) Flanagan Foley Forbes Fowler Fox Franks (CT) Franks (NJ) Frelinghuysen CONGRESSIONAL RECORD \u2014 HOUSE H9387July 31, 1996 Frisa Funderburk Furse Gallegly Ganske Gejdenson Gekas Geren Gibbons Gilchrest Gillmor Gilman Gonzalez Goodlatte Goodling Gordon Goss Graham Green (TX) Greene (UT) Greenwood Gutierrez Gutknecht Hall (OH) Hall (TX) Hamilton Hancock Hansen Harman Hastert Hastings (WA) Hayes Hayworth Hefley Hefner Heineman Herger Hilleary Hobson Hoekstra Hoke Holden Horn Hostettler Houghton Hunter Hutchinson Hyde Inglis Istook Jackson (IL) Jackson-Lee (TX) Jacobs Johnson (CT) Johnson (SD) Johnson, Sam Jones Kanjorski Kaptur Kasich Kelly Kennelly Kildee Kim King Kingston Kleczka Klink Klug Knollenberg Kolbe LaHood Largent Latham LaTourette Laughlin Lazio Leach Levin Lewis (CA) Lewis (KY) Lightfoot Lincoln Linder Lipinski Livingston LoBiondo Lofgren Longley Lucas Luther Manzullo Martini Mascara McCarthy McCollum McCrery McHale McHugh McInnis McIntosh McKeon McKinney Meehan Menendez Metcalf Meyers Mica Miller (FL) Minge Molinari Mollohan Montgomery Moorhead Moran Morella Murtha Myers Myrick Nadler Nethercutt Neumann Ney Norwood Nussle Ortiz Orton Oxley Packard Pallone Parker Paxon Payne (VA) Pelosi Peterson (FL) Peterson (MN) Petri Pickett Pombo Porter Portman Poshard Pryce Quillen Quinn Radanovich Rahall Ramstad Regula Riggs Rivers Roberts Roemer Rogers Rohrabacher Ros-Lehtinen Rose Roth Roukema Roybal-Allard Royce Salmon Sanders Sanford Sawyer Saxton Scarborough Schaefer Schiff Schumer Scott Seastrand Sensenbrenner Shadegg Shaw Shays Sisisky Skaggs Skeen Skelton Smith (MI) Smith (NJ) Smith (TX) Smith (WA) Solomon Souder Spence Stearns Stenholm Stockman Studds Stump Stupak Talent Tanner Tate Tauzin Taylor (MS) Taylor (NC) Tejeda Thomas Thornberry Thornton Thurman Tiahrt Torkildsen Torres Traficant Upton Velazquez Vento Visclosky Vucanovich Walker Walsh Wamp Ward Watts (OK) Weldon (FL) Weldon (PA) Weller White Whitfield Wicker Williams Wise Wolf Woolsey Wynn Yates Young (AK) Zeliff Zimmer NOT VOTING\u201413 Berman Bliley Boehlert Chapman Collins (IL) Farr Flake Ford Gunderson McDade Richardson Shuster Young (FL) b 1159 Messrs. CUMMINGS, JACKSON of Il- linois, GEJDENSON, DORNAN, MORAN, GUTIERREZ, BENTSEN, and WISE changed their vote from ”aye” to ”no.” So the motion was rejected. The result of the vote was announced as above recorded. FURTHER MESSAGE FROM THE SENATE A further message from the Senate by Mr. Lundregan, one of its clerks, an- nounced that the Senate had passed without amendment a concurrent reso- lution of the House of the following title: H. Con. Res. 203. Concurrent resolution providing for an adjournment of the two Houses. The SPEAKER pro tempore. The gen- tleman from Texas [Mr. DOGGETT] is recognized for 1 minute and he may use the chart. f TERRORIST LEGISLATION Mr. DOGGETT. Mr. Speaker, Amer- ica takes justifiable pride in the strength and determination of our Olympic athletes. America respects the strength and determination of the criminal investigators who are seeking to determine who and how these incidences were caused by. But now America has good cause to ask whether this Congress has the strength and de- termination to deal with terrorists. Chemical markers called taggants could allow investigators of terrorist bombings to trace bomb materials and more quickly identify terrorists. But unfortunately, the same lobby group that stripped this provision from the antiterrorist legislation in the spring is now trying to block antiterrorist legislation again. Their senseless slogan now appears to be, ”bombs don’t kill people, people with bombs kill people,” and those bombers have the right to remain anonymous. Let us not side with these special in- terest lobbyists to protect the bomb- ers. Enact antiterrorist legislation now. f MOTION TO ADJOURN Mr. SKAGGS. Mr. Speaker, I offer a privileged motion. The SPEAKER pro tempore (Mr. HEFLEY). The Clerk will report the mo- tion. The Clerk read as follows: Mr. SKAGGS moves that the House do now adjourn. The SPEAKER pro tempore. The question is on the motion to adjourn offered by the gentleman from Colo- rado [Mr. SKAGGS]. The question was taken; and the Speaker pro tempore announced that the noes appeared to have it. RECORDED VOTE Mr. SKAGGS. Mr. Speaker, I demand a recorded vote. A recorded vote was ordered. The vote was taken by electronic de- vice, and there were\u2014ayes 57, noes 357, not voting 19, as follows: [Roll No. 377] AYES\u201457 Bonior Brown (CA) Brown (FL) Brown (OH) Clay Clyburn Coleman Collins (MI) Conyers Coyne DeFazio Dellums Dicks Dingell Engel Fazio Filner Foglietta Gephardt Hastings (FL) Hinchey Hoyer Jefferson Johnson, E. B. Kennedy (MA) LaFalce Lantos Lewis (GA) Markey Matsui McDermott McNulty Meek Millender- McDonald Mink Moakley Neal Oberstar Obey Olver Owens Pastor Payne (NJ) Pomeroy Schroeder Skaggs Slaughter Stockman Thompson Torres Torricelli Towns Volkmer Waters Watt (NC) Waxman Wilson NOES\u2014357 Abercrombie Ackerman Allard Andrews Archer Armey Baesler Baker (CA) Baker (LA) Baldacci Ballenger Barcia Barr Barrett (NE) Barrett (WI) Bartlett Barton Bass Bateman Becerra Beilenson Bentsen Bereuter Berman Bevill Bilbray Bilirakis Bishop Bliley Blumenauer Blute Boehlert Boehner Bonilla Bono Borski Boucher Brewster Browder Brownback Bryant (TN) Bryant (TX) Bunn Bunning Burr Burton Callahan Calvert Camp Campbell Canady Cardin Castle Chabot Chambliss Chenoweth Christensen Chrysler Clayton Clement Clinger Coble Collins (GA) Combest Condit Cooley Costello Cox Cramer Crane Crapo Cremeans Cubin Cummings Cunningham Danner Davis de la Garza Deal DeLauro DeLay Deutsch Diaz-Balart Dickey Dixon Doggett Dooley Doolittle Dornan Doyle Dreier Duncan Dunn Durbin Edwards Ehlers Ehrlich English Ensign Eshoo Evans Everett Ewing Fattah Fawell Fields (LA) Fields (TX) Flanagan Foley Forbes Fowler Fox Frank (MA) Franks (CT) Franks (NJ) Frelinghuysen Frisa Frost Funderburk Furse Gallegly Ganske Gejdenson Gekas Geren Gibbons Gilchrest Gillmor Gilman Gonzalez Goodlatte Goodling Gordon Goss Graham Green (TX) Greene (UT) Greenwood Gutierrez Gutknecht Hall (OH) Hall (TX) Hamilton Hancock Hansen Harman Hastert Hastings (WA) Hayworth Hefley Hefner Heineman Herger Hilleary Hilliard Hobson Hoekstra Hoke Holden Horn Hostettler Houghton Hyde Inglis Istook Jackson (IL) Jackson-Lee (TX) Jacobs Johnson (CT) Johnson (SD) Johnson, Sam Johnston Jones Kanjorski Kaptur Kasich Kelly Kennedy (RI) Kennelly Kildee Kim King Kingston Kleczka Klug Knollenberg Kolbe LaHood Largent Latham Laughlin Lazio Leach Levin Lewis (CA) Lewis (KY) Lightfoot Lincoln Linder Lipinski Livingston LoBiondo Lofgren Longley Lowey Lucas Luther Maloney Manton Manzullo Martinez Martini Mascara McCarthy McCollum McCrery McHale McHugh McInnis McIntosh McKeon McKinney Meehan Menendez Metcalf Meyers Mica Miller (CA) Miller (FL) Minge Molinari Mollohan Montgomery Moorhead Moran Morella CONGRESSIONAL RECORD \u2014 HOUSEH9388 July 31, 1996 Murtha Myers Myrick Nadler Nethercutt Neumann Ney Norwood Nussle Ortiz Orton Oxley Packard Pallone Parker Paxon Payne (VA) Pelosi Peterson (FL) Peterson (MN) Petri Pickett Pombo Porter Portman Poshard Pryce Quillen Quinn Radanovich Rahall Ramstad Rangel Reed Regula Riggs Rivers Roberts Roemer Rogers Rohrabacher Ros-Lehtinen Rose Roth Roukema Roybal-Allard Royce Rush Salmon Sanders Sanford Sawyer Saxton Scarborough Schaefer Schiff Schumer Scott Seastrand Sensenbrenner Serrano Shadegg Shaw Shays Shuster Sisisky Skeen Skelton Smith (MI) Smith (NJ) Smith (TX) Smith (WA) Solomon Souder Spence Spratt Stark Stearns Stenholm Stokes Studds Stump Stupak Talent Tanner Tate Tauzin Taylor (MS) Taylor (NC) Tejeda Thomas Thornberry Thornton Thurman Tiahrt Torkildsen Traficant Upton Velazquez Vento Visclosky Vucanovich Walker Walsh Wamp Ward Watts (OK) Weldon (FL) Weldon (PA) Weller White Whitfield Wicker Wise Wolf Woolsey Wynn Yates Young (AK) Zeliff Zimmer NOT VOTING\u201419 Bachus Buyer Chapman Coburn Collins (IL) Farr Flake Ford Gunderson Hayes Hunter Hutchinson Klink LaTourette McDade Richardson Sabo Williams Young (FL) b 1221 Mr. DAVIS changed his vote from ”aye” to ”no.” So the motion was rejected. The result of the vote was announced as above recorded. f WAIVING REQUIREMENT OF CLAUSE 4(B) OF RULE XI WITH RESPECT TO CONSIDERATION OF A CERTAIN RESOLUTION Mr. MCINNIS. Mr. Speaker, by direc- tion of the Committee on Rules, I call up House Resolution 492 and ask for its immediate consideration. The Clerk read the resolution, as fol- lows: H. RES. 492 Resolved, That the requirement of clause 4(b) of rule XI for a two-thirds vote to con- sider a report from the Committee on Rules on the same day it is presented to the House is waived with respect to a resolution re- ported before August 1, 1996, providing for consideration or disposition of a conference report to accompany the bill (H.R. 3734) to provide for reconciliation pursuant to sec- tion 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997. MOTION TO ADJOURN Mr. BONIOR. Mr. Speaker, I offer a preferential motion. The SPEAKER pro tempore (Mr. HEFLEY). I offer a preferential motion. The Clerk read as follows: Mr. BONIOR moves that the House do now adjourn. The SPEAKER pro tempore. The question is on the motion offered by the gentleman from Michigan [Mr. BONIOR]. The question was taken; and the Speaker pro tempore announced that the noes appeared to have it. Mr. BONIOR. Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present. The SPEAKER pro tempore. Evi- dently a quorum is not present. The Sergeant at Arms will notify ab- sent Members. The vote was taken by electronic de- vice, and there were\u2014yeas 50, nays 350, answered ”present” 1, not voting 32, as follows: [Roll No. 378] YEAS\u201450 Abercrombie Bonior Brown (OH) Clay Clyburn Collins (MI) Conyers Coyne Dellums Dicks Dingell Engel Fazio Filner Foglietta Frank (MA) Gephardt Hastings (FL) Hinchey Hoyer Jefferson Johnson, E. B. Johnston Kennedy (MA) LaFalce Lantos Lewis (GA) McDermott McNulty Millender- McDonald Miller (CA) Mink Moakley Neal Oberstar Olver Pastor Payne (NJ) Rush Schroeder Slaughter Stockman Thompson Towns Velazquez Volkmer Waters Watt (NC) Waxman Wilson NAYS\u2014350 Ackerman Allard Andrews Archer Armey Bachus Baesler Baker (CA) Baker (LA) Baldacci Ballenger Barcia Barr Barrett (NE) Barrett (WI) Bartlett Barton Bass Bateman Becerra Beilenson Bentsen Bereuter Berman Bevill Bilbray Bilirakis Bishop Bliley Blumenauer Blute Boehlert Boehner Bonilla Bono Borski Boucher Brewster Browder Brown (FL) Brownback Bryant (TN) Bryant (TX) Bunn Bunning Burr Burton Callahan Calvert Camp Campbell Canady Cardin Castle Chabot Chambliss Chenoweth Christensen Chrysler Clayton Clement Clinger Coble Coburn Coleman Collins (GA) Combest Condit Costello Cramer Crane Crapo Cremeans Cubin Cummings Cunningham Danner Davis de la Garza Deal DeLauro Deutsch Diaz-Balart Dixon Doggett Dooley Doolittle Dornan Doyle Dreier Duncan Dunn Durbin Edwards Ehlers Ehrlich English Ensign Eshoo Evans Everett Ewing Farr Fattah Fawell Fields (LA) Fields (TX) Flanagan Foley Forbes Fowler Franks (CT) Franks (NJ) Frelinghuysen Frisa Frost Funderburk Furse Gallegly Ganske Gejdenson Geren Gibbons Gilchrest Gillmor Gilman Gonzalez Goodlatte Gordon Goss Graham Green (TX) Greene (UT) Greenwood Gutierrez Gutknecht Hall (OH) Hall (TX) Hamilton Hancock Hansen Harman Hastert Hastings (WA) Hayworth Hefley Hefner Heineman Herger Hilleary Hilliard Hobson Hoekstra Hoke Holden Horn Hostettler Houghton Hunter Hyde Inglis Jackson (IL) Jackson-Lee (TX) Jacobs Johnson (CT) Johnson (SD) Jones Kanjorski Kaptur Kasich Kelly Kennedy (RI) Kennelly Kildee Kim King Kingston Kleczka Klink Klug Knollenberg Kolbe LaHood Largent Latham Laughlin Lazio Leach Levin Lewis (CA) Lewis (KY) Lightfoot Lincoln Linder Lipinski Livingston LoBiondo Lofgren Longley Lowey Lucas Luther Maloney Manton Manzullo Markey Martinez Martini Mascara Matsui McCarthy McCollum McCrery McHale McHugh McInnis McKeon McKinney Meehan Meek Menendez Metcalf Meyers Mica Miller (FL) Minge Molinari Mollohan Moorhead Morella Murtha Myers Myrick Nadler Nethercutt Ney Norwood Nussle Obey Ortiz Orton Oxley Packard Pallone Parker Paxon Payne (VA) Pelosi Peterson (FL) Peterson (MN) Petri Pickett Pombo Pomeroy Porter Portman Poshard Pryce Quillen Quinn Radanovich Rahall Ramstad Rangel Reed Regula Riggs Rivers Roberts Roemer Rohrabacher Ros-Lehtinen Rose Roth Roukema Roybal-Allard Royce Sabo Salmon Sanders Sanford Sawyer Saxton Scarborough Schaefer Schiff Schumer Scott Seastrand Sensenbrenner Serrano Shadegg Shaw Shays Shuster Sisisky Skaggs Skeen Skelton Smith (MI) Smith (NJ) Smith (TX) Smith (WA) Solomon Spence Spratt Stark Stearns Stenholm Stokes Studds Stump Stupak Talent Tanner Tate Tauzin Taylor (MS) Taylor (NC) Tejeda Thomas Thornberry Thornton Thurman Tiahrt Torres Traficant Upton Vento Visclosky Vucanovich Walker Walsh Wamp Ward Watts (OK) Weldon (FL) Weldon (PA) Weller White Whitfield Wicker Wise Wolf Woolsey Wynn Yates Young (AK) Zeliff Zimmer ANSWERED ”PRESENT”\u20141 DeFazio NOT VOTING\u201432 Brown (CA) Buyer Chapman Collins (IL) Cooley Cox DeLay Dickey Flake Ford Fox Gekas Goodling Gunderson Hayes Hutchinson Istook Johnson, Sam LaTourette McDade McIntosh Montgomery Moran Neumann Owens Richardson Rogers Souder Torkildsen Torricelli Williams Young (FL) b 1243 Mr. BUNN of Oregon changed his vote from ”yea” to ”nay.” So the motion to adjourn was re- jected. The result of the vote was announced as above recorded. PERSONAL EXPLANATION Mr. FOX of Pennsylvania. Mr. Speaker, on rollcall No. 378, I was in the Banking Commit- tee hearing and I did not hear the pager. Had I been present, I would have voted ”Nay.” The SPEAKER pro tempore (Mr. HEFLEY). The gentleman from Colorado [Mr. MCINNIS] is recognized for 1 hour. CONGRESSIONAL RECORD \u2014 HOUSE H9389July 31, 1996 Mr. MCINNIS. Mr. Speaker, for the purpose of debate only, I yield the cus- tomary 30 minutes to the gentleman from Massachusetts [Mr. MOAKLEY], pending which I yield myself such time as I may consume. During consider- ation of this resolution, all time yield- ed is for the purpose of debate only. (Mr. MCINNIS asked and was given permission to revise and extend his re- marks and include extraneous mate- rial.) Mr. MCINNIS. Mr. Speaker, House Resolution 492 is an extremely narrow resolution. The proposed rule merely waives the requirement of clause 4(b) of rule XI for a two-thirds vote to con- sider a report from the Committee on Rules on the same day it is presented to the House for a resolution reported from the committee before August 1, 1996, which provides for consideration or disposition of a conference report to accompany H.R. 3734, The Personal Re- sponsibility and Work Opportunity Act. This narrow, short-term, waiver will only apply to special rules providing for the consideration or disposition of a conference report to accompany the bill H.R. 3734, nothing else. Mr. Speaker, House Resolution 492 was reported by the Committee on Rules by unanimous voice vote. The distinguished Member, Mr. MOAKLEY, stated in the Committee on Rules that he had no objections to this rule. The committee recognized the need for ex- pedited procedures to bring the welfare reform conference report forward as soon as possible. Mr. Speaker, I include the following extraneous material for the RECORD: [From the U.S. News & World Report, June 3, 1996] THE END OF WELFARE AS WE KNOW IT? (By David Whitman) Bertha Bridges is still waiting for the end of welfare as she knows it. Bridges and her three children have been on and off welfare since the early 1980s, and she has been unable to hold a job in recent years because school administrators often call several times a week to ask her to pick up her disruptive, se- verely depressed 13-year-old son for fighting and disobeying teachers. Seventeen months after U.S. News first interviewed her for a cover story on welfare reform, matters have only worsened for the Detroit resident. Several weeks ago her son let three strangers into her house, and they promptly stole Bridges’s money, jewelry, clothing, dishes and videocassette recorder. Her son is now back in a psychiatric hos- pital, his younger sister is starting to imi- tate him by refusing to complete school as- signments and Bridges doesn’t know where to turn for help. ”I’m living a nightmare,” she says. Last week, President Clinton and Bob Dole jousted to claim the title of welfare aboli- tionist\u2014and to deny the other guy credit for overhauling a welfare system that still does little to encourage self-reliance. But while the candidates feud, many of the 4.6 million families on Aid to Families with Dependent Children are living out nightmares like that of Bridges. Clinton claims that waivers granted by his administration to 38 states to conduct dem- onstration programs have led to a quiet rev- olution. ”The state-based reform we have en- couraged,” he said in his May 18 radio ad- dress, ”has brought work and responsibility back to the lives of 75 percent of the Ameri- cans on welfare.” Yet according to federal statistics, only 13 percent of AFDC adults participated in any education, training or work program in a typical month in 1994, up a hair from 12 percent in 1992. At present, less than 1 in 100 AFDC parents toils each month in workfare programs in exchange for a relief check, a number that has remained constant since Clinton came to office. Thanks largely to an improved economy, the number of Americans on AFDC\u201412.8 mil- lion\u2014was 9 percent lower in January than three years earlier. Yet the rolls are still at historically high levels, and 1 in 5 American children still lives below the poverty line. In 1992, 13.5 percent of the nation’s children re- ceived AFDC; in 1995, 13.4 percent of the country’s children did so. One in seven kids in the United States is now on the dole. According to the Department of Health and Human Services, 75 percent of AFDC re- cipients could be affected in an average month by at least one provision of the 61 waivers granted by the Clinton administra- tion. That seems to be the basis for the president’s claim that his waivers have re- introduced work and responsibility to the vast majority of AFDC recipients. But many of the waivers are for modest reforms. Such as allowing recipients to keep more earned income before their welfare checks are re- duced. The most far-reaching waivers permit states to impose time limits, usually two years. On how long a family can receive AFDC. According to a soon-to-be-released study by the Center for Law and Social Pol- icy (CLASP), HHS has authorized 11 states to run statewide programs with full-family cash-aid cutoffs and two more states’ appli- cations are pending. Awaiting results. It is too early to tell whether the new time limits will fundamen- tally alter welfare. Since it takes years for recipients to use up their cash aid, time lim- its so far have affected few families. With the exception of Chicago, none of the na- tion’s 10 largest cities is in a full-family time-limit state\u2014and the new CLASP report indicates that 91 percent of AFDC recipients in Illinois are exempt from the time limits because they apply there only to families whose youngest child is 13 or older. Other states provide narrower exemptions and extensions than Illinois but still have protective loopholes. One of the biggest: HHS has insisted that no state can remove a fam- ily from the AFDC rolls if the mother has complied with program rules and failed to find a job despite her best efforts. CLASP’s Mark Greenberg worries that the new time limits could throw many needy women and children off welfare. ”If there are visible catastrophes,” he says, ”other states may be reluctant to move forward. But if the catastrophes are largely invisible, the na- tion’s safeguards for protecting children will start to unravel.” In Washington, mean- while, the politicians are still fiddling. Mr. Speaker, I reserve the balance of my time. Mr. MOAKLEY. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I did make the state- ment that I had no objection to the rule. That was based on the promise that we were going to have the bill at 8 p.m. last night. But we do not have the bill, so I do object to this rule. Mr. Speaker, I yield 3 minutes to the gentleman from Kentucky [Mr. WARD]. Mr. WARD. Mr. Speaker, I have here a presentation. Ms. DELAURO. Mr. Speaker, pursu- ant to rule XXX, I object to the gentle- man’s use of the exhibit. The SPEAKER pro tempo. Does the gentleman plan to use this exhibit? Mr. WARD. Yes, Mr. Speaker, I do. The SPEAKER pro tempore. Pursu- ant to rule XXX, the question is: Shall the gentleman from Kentucky [Mr. WARD] be permitted to use the exhibit? The question was taken; and the Speaker pro tempore announced that the ayes appeared to have it. Ms. DELAURO. Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present. PARLIAMENTARY INQUIRY Mr. WELDON of Pennsylvania. Mr. Speaker, I have a parliamentary in- quiry. The SPEAKER pro tempore. The gen- tleman will state it. Mr. WELDON of Pennsylvania. Mr. Speaker, under paragraph 803 of Jeffer- son’s Rules there is a provision, section 10, that states that no dilatory motion shall be entertained by the Speaker. This particular section of the rules is very explicit. It goes through to pro- claim that the clause was adopted in 1890 to make permanent a principle al- ready enunciated in a ruling of the Speaker, who had declared that the ”object of a parliamentary body is ac- tion, not stoppage of action.” Mr. Speaker, we have seen several motions to adjourn, one of which was offered by a colleague who then voted against that motion to adjourn. We now have the second case, Mr. Speaker, of a chart being put up that is blank, that in fact has no substance. The Speaker, has declined on a num- ber of occasions in the history of this body or refused to allow procedures to continue that in effect stop the orderly process of business in this body. I ask the Speaker, to rule on that section that, in fact, prohibits dilatory action. I ask the Speaker to rule on the parliamentary stature of an attempt to basically stop the action of the House through what in my opinion may be considered as a dilatory action under this particular rule of the operations of this body. POINT OF ORDER Mr. DOGGETT. Mr. Speaker, I have a point of order. The SPEAKER pro tempore. The gen- tleman will state his point of order. Mr. DOGGETT. Mr. Speaker, a vote is in order. This is not really even a le- gitimate parliamentary inquiry. I raise a point of order that with a vote al- ready under way, this parliamentary inquiry is out of order and would ask that the Chair proceed with the vote previously ordered. The SPEAKER pro tempore. The Chair is prepared to address the in- quiry made by the gentleman from Pennsylvania [Mr. WELDON]. The rule XXX question is not a mo- tion. The rule XXX question is in the nature of a point of order. CONGRESSIONAL RECORD \u2014 HOUSEH9390 July 31, 1996 The gentlewoman from Connecticut [Ms. DELAURO] objects to the vote on the ground that a quorum is not present and makes the point of order that a quorum is not present. Evidently a quorum is not present. The Sergeant at Arms will notify ab- sent Members. The vote was taken by electronic de- vice, and there were\u2014yeas 351, nays 53, answered ”present” 2, not voting 27, as follows: [Roll No. 379] YEAS\u2014351 Abercrombie Ackerman Andrews Archer Armey Bachus Baesler Baker (CA) Baker (LA) Barcia Barrett (NE) Barrett (WI) Bartlett Bass Bateman Becerra Beilenson Bereuter Bevill Bilbray Bishop Bliley Blumenauer Blute Boehlert Boehner Bonilla Bonior Bono Borski Boucher Brewster Browder Brown (FL) Brown (OH) Brownback Bryant (TX) Bunn Burton Callahan Calvert Camp Campbell Canady Cardin Castle Chabot Chambliss Christensen Chrysler Clay Clayton Clement Clinger Clyburn Coble Coburn Coleman Collins (MI) Condit Conyers Cooley Costello Cox Coyne Cramer Crane Crapo Cremeans Cummings Danner Davis de la Garza DeFazio DeLay Dellums Deutsch Diaz-Balart Dicks Dingell Dixon Doggett Dooley Doolittle Dornan Doyle Dreier Duncan Dunn Durbin Edwards Ehlers Ehrlich Engel English Eshoo Evans Ewing Farr Fattah Fawell Fazio Fields (LA) Fields (TX) Filner Flanagan Foglietta Foley Forbes Fowler Fox Frank (MA) Franks (CT) Franks (NJ) Frelinghuysen Frisa Frost Funderburk Furse Gallegly Ganske Gejdenson Gekas Gephardt Gilchrest Gillmor Gilman Gonzalez Goodlatte Goodling Gordon Goss Graham Green (TX) Gutierrez Gutknecht Hall (OH) Hall (TX) Hamilton Hancock Hansen Harman Hastings (FL) Hastings (WA) Hayworth Hefley Hefner Heineman Herger Hilliard Hinchey Hobson Hoekstra Holden Horn Hostettler Houghton Hoyer Hutchinson Hyde Inglis Istook Jackson (IL) Jackson-Lee (TX) Jacobs Jefferson Johnson (SD) Johnson, E.B. Johnston Jones Kanjorski Kaptur Kasich Kelly Kennedy (MA) Kennedy (RI) Kennelly Kildee Kim King Kingston Kleczka Klink Klug Knollenberg Kolbe LaFalce Lantos Largent Latham LaTourette Laughlin Leach Lewis (CA) Lewis (GA) Lincoln Lipinski Livingston LoBiondo Lofgren Lowey Lucas Luther Maloney Manton Manzullo Markey Martini Mascara Matsui McCarthy McCollum McCrery McDermott McHale McHugh McIntosh McKinney McNulty Meehan Meek Menendez Metcalf Mica Millender- McDonald Miller (CA) Miller (FL) Minge Mink Moakley Molinari Mollohan Montgomery Moorhead Morella Murtha Myers Myrick Nadler Neal Nethercutt Neumann Ney Norwood Nussle Oberstar Obey Olver Ortiz Orton Owens Oxley Pallone Parker Pastor Paxon Payne (NJ) Payne (VA) Pelosi Peterson (FL) Peterson (MN) Petri Pickett Pomeroy Porter Poshard Pryce Quillen Quinn Rahall Reed Regula Riggs Rivers Roberts Roemer Rogers Rohrabacher Ros-Lehtinen Rose Roybal-Allard Royce Rush Sabo Salmon Sanford Sawyer Saxton Schiff Schroeder Schumer Scott Seastrand Sensenbrenner Serrano Shaw Shays Shuster Sisisky Skaggs Skeen Skelton Slaughter Smith (MI) Smith (NJ) Smith (TX) Smith (WA) Solomon Spence Spratt Stark Stearns Stenholm Stokes Studds Stupak Talent Tanner Tate Taylor (MS) Taylor (NC) Tejeda Thomas Thompson Thornton Thurman Torres Upton Velazquez Visclosky Volkmer Vucanovich Walker Walsh Wamp Ward Waters Watt (NC) Waxman Weldon (PA) White Whitfield Wicker Williams Wilson Wise Wolf Woolsey Wynn Young (AK) Zeliff NAYS\u201453 Allard Baldacci Ballenger Bentsen Bilirakis Bryant (TN) Bunning Buyer Collins (GA) Combest Cubin Cunningham Deal DeLauro Ensign Geren Greene (UT) Hastert Hilleary Hoke Johnson (CT) Johnson, Sam Lazio Levin Lewis (KY) Lightfoot Linder McInnis McKeon Packard Pombo Radanovich Ramstad Rangel Sanders Scarborough Schaefer Shadegg Souder Stockman Stump Tauzin Thornberry Tiahrt Torkildsen Towns Traficant Vento Watts (OK) Weldon (FL) Weller Yates Zimmer ANSWERED ”PRESENT”\u20142 Everett LaHood NOT VOTING\u201427 Barr Barton Berman Brown (CA) Burr Chapman Chenoweth Collins (IL) Dickey Flake Ford Gibbons Greenwood Gunderson Hayes Hunter Longley Martinez McDade Meyers Moran Portman Richardson Roth Roukema Torricelli Young (FL) b 1309 Ms. DELAURO changed her vote from ”yea” to ”nay.” Ms. FURSE, Ms. RIVERS, Mr. HALL of Ohio, and Mr. SPENCE changed their vote from ”nay” to ”yea.” So the gentleman was permitted to use the exhibit in question. The result of the vote was announced as above recorded. Mr. MCDERMOTT. Mr. Speaker, I move that we reconsider the vote. MOTION TO TABLE OFFERED BY MR. LARGENT Mr. LARGENT. Mr. Speaker, I move to lay the motion to reconsider on the table. The Speaker pro tempore (Mr. HEFLEY). The question is on the motion offered by the gentleman from Okla- homa [Mr. LARGENT] to lay on the table the motion to reconsider the vote offered by the gentleman from Wash- ington [Mr. MCDERMOTT]. The question was taken; and the Speaker pro tempore announced that the ayes appeared to have it. RECORDED VOTE Mr. MCDERMOTT. Mr. Speaker, I de- mand a recorded vote. A recorded vote was ordered. The vote was taken by electronic de- vice, and there were\u2014ayes 239, noes 172, not voting 22, as follows: [Roll No. 380] AYES\u2014239 Allard Archer Armey Bachus Baker (CA) Baker (LA) Ballenger Barr Bartlett Barton Bass Bateman Bereuter Bilbray Bilirakis Bliley Blute Boehlert Boehner Bonilla Bono Brewster Brownback Bryant (TN) Bunn Bunning Burr Burton Buyer Callahan Calvert Camp Campbell Canady Castle Chabot Chambliss Christensen Chrysler Coble Coburn Collins (GA) Combest Condit Cooley Cox Crane Crapo Cremeans Cubin Cunningham Davis de la Garza Deal DeLay Diaz-Balart Dickey Doggett Doolittle Dornan Dreier Duncan Dunn Durbin Ehlers Ehrlich English Ensign Everett Ewing Fawell Fields (TX) Flanagan Foley Forbes Fowler Fox Franks (CT) Franks (NJ) Frelinghuysen Frisa Funderburk Gallegly Ganske Gilchrest Gillmor Gilman Goodlatte Goodling Gordon Goss Graham Greene (UT) Gutknecht Hall (TX) Hamilton Hancock Hansen Hastert Hastings (WA) Hayworth Hefley Heineman Herger Hobson Hoekstra Horn Hostettler Houghton Hutchinson Hyde Inglis Istook Jacobs Johnson (CT) Johnson, Sam Jones Kasich Kelly Kim King Kingston Klug Knollenberg Kolbe LaHood Largent Latham LaTourette Laughlin Lazio Leach Lewis (CA) Lewis (KY) Lightfoot Lincoln Linder Livingston LoBiondo Longley Lucas Manzullo Martini McCollum McCrery McHugh McInnis McIntosh McKeon Metcalf Mica Miller (FL) Molinari Moorhead Morella Myers Myrick Nethercutt Neumann Ney Norwood Nussle Orton Oxley Packard Parker Paxon Peterson (MN) Petri Pombo Porter Pryce Quillen Quinn Radanovich Rahall Ramstad Regula Riggs Roberts Roemer Rogers Rohrabacher Ros-Lehtinen Roth Roukema Royce Salmon Sanford Saxton Scarborough Schaefer Schiff Scott Sensenbrenner Shadegg Shaw Shays Shuster Sisisky Skeen Smith (MI) Smith (NJ) Smith (TX) Smith (WA) Solomon Souder Spence Stearns Stenholm Stockman Stump Talent Tate Tauzin Taylor (MS) Thomas Thornberry Thornton Tiahrt Torkildsen Traficant Upton Vucanovich Walker Walsh Wamp Weldon (FL) Weldon (PA) White Whitfield Wicker Williams Wilson Wise Wolf Young (AK) Zeliff Zimmer CONGRESSIONAL RECORD \u2014 HOUSE H9391July 31, 1996 NOES\u2014172 Abercrombie Ackerman Andrews Baesler Baldacci Barcia Barrett (NE) Barrett (WI) Becerra Beilenson Berman Bevill Bishop Blumenauer Bonior Borski Boucher Browder Brown (CA) Brown (FL) Brown (OH) Bryant (TX) Cardin Chapman Clay Clayton Clement Clyburn Coleman Collins (MI) Conyers Costello Coyne Cramer Cummings Danner DeFazio DeLauro Dellums Deutsch Dicks Dingell Dixon Dooley Doyle Edwards Engel Eshoo Evans Farr Fattah Fazio Fields (LA) Filner Foglietta Frank (MA) Frost Furse Gejdenson Gephardt Geren Gibbons Gonzalez Green (TX) Gutierrez Hall (OH) Harman Hastings (FL) Hefner Hilliard Hinchey Holden Hoyer Jackson (IL) Jackson-Lee (TX) Jefferson Johnson (SD) Johnson, E. B. Johnston Kanjorski Kaptur Kennedy (MA) Kennedy (RI) Kennelly Kildee Kleczka LaFalce Levin Lewis (GA) Lipinski Lofgren Lowey Luther Maloney Manton Markey Martinez Mascara Matsui McCarthy McDermott McHale McKinney McNulty Meehan Meek Menendez Millender- McDonald Miller (CA) Minge Mink Moakley Mollohan Montgomery Moran Murtha Nadler Neal Oberstar Obey Olver Ortiz Owens Pallone Pastor Payne (NJ) Payne (VA) Pelosi Peterson (FL) Pickett Pomeroy Poshard Rangel Reed Rivers Rose Roybal-Allard Rush Sabo Sanders Sawyer Schroeder Schumer Serrano Skaggs Skelton Slaughter Spratt Stark Stokes Studds Stupak Tanner Tejeda Thompson Thurman Torres Torricelli Towns Velazquez Vento Visclosky Volkmer Ward Waters Watt (NC) Watts (OK) Waxman Weller Woolsey Wynn Yates NOT VOTING\u201422 Bentsen Chenoweth Clinger Collins (IL) Flake Ford Gekas Greenwood Gunderson Hayes Hilleary Hoke Hunter Klink Lantos McDade Meyers Portman Richardson Seastrand Taylor (NC) Young (FL) b 1330 Mr. POMBO changed his vote from ”no” to ”aye.” So the motion to table the motion to reconsider was agreed to. The result of the vote was announced as above recorded. PERSONAL EXPLANATION Mr. PORTMAN. Mr. Speaker, due to a pre- vious speaking commitment located off Capitol Hill earlier today, I missed votes on rollcall No. 379, to permit the use of an exhibit, and roll- call No. 380, to table the motion to reconsider. Had I been present, I would have voted ”yes” on rollcoll No. 379 and ”yes” on rollcall No. 380. Mr. MOAKLEY. Mr. Speaker, re- claiming time I yielded to the gen- tleman from Kentucky [Mr. WARD], I yield myself such time as I may consume. I thank my colleague and my friend, the gentleman from Colorado [Mr. MCINNIS], for yielding me the cus- tomary half hour. Mr. Speaker, today, we are consider- ing this rule waiving the two-thirds re- quirement for same day consideration because my Republican colleagues didn’t finish the welfare bill until mid- night last night. And last evening, I agreed to this two-thirds rule because I was told this welfare bill would be available by 8 last night. But, Mr. Speaker, we did not get the bill until quarter of one in the morning and that is completely unacceptable. Because, Mr. Speaker, this issue is very very important and 434 Members of Congress are going to be asked to vote on this enormous bill and the ink isn’t even dry yet. This bill is no small potatoes. It rep- resents a major change in our welfare system which will affect millions and millions of Americans, most of those Americans, Mr. Speaker, are children. For that reason I think no amount of time is too much. We have a very seri- ous responsibility to the 9 million chil- dren who are supported by aid to fami- lies with dependent children and those children are depending on us to do it right. I urge my colleagues to oppose this two-thirds rule. Congress hasn’t had anywhere enough time to consider this bill and it will affect far too many chil- dren to be rushed through the Con- gress. Mr. Speaker, I reserve the balance of my time. Mr. MCINNIS. Mr. Speaker, I yield myself such time as I may consume. First of all, I am pleased to announce that we now understand that the Presi- dent is going to have a press conference here in about 81\u20442 minutes where he will announce that he is in support of this bill. I am also pleased to announce they have located Leon Panetta, so we can now proceed to the substance of this issue that we have sitting right here in front of us. The substance is very simple. That is, we have to change welfare in this country. The welfare bill originally went out of here with bipartisan sup- port. It is going to go to the President of the United States with bipartisan support, and it is going to be signed by the President. The gentleman from Massachusetts brings up a valid point. The problem is it is somewhat exaggerated. The gen- tleman shows a huge bill over there, as that is the bill that has been given to him in the last several hours or early this morning to read. That is correct. That particular bill was given to him. But about 99.9 percent of that bill is what has been previously contained. The only changes really were two- fold: First, on the family cap and, sec- ond, dealing with Medicaid. So that probably consumes maybe 20, 30 pages out of that entire bill. Yes, we have asked that Members here on the House floor take time this morning during their workday to read that 20 to 40 pages or whatever was necessary to be briefed by their staff. We are trying to get this bill to the President. For the first time in a long time, we have general agreement on a major, major issue. We have got Demo- crat and Republican support on the House side. We have got Democrat and Republican support on the Senate side. We have got a Democratic President that is willing to sign it. That means that we should expedite the movement of this bill. That means that this rule should pass. By the way, upstairs this bill was voted out of com- mittee on a unanimous vote, no dissen- sion upstairs. I think it is now an ap- propriate time for us to move on, pass this rule so that we can get to the meat of the conference committee re- port and send this bill to the President for signature. Mr. Speaker, I reserve the balance of my time. Mr. MOAKLEY. Mr. Speaker, I yield 5 minutes to the gentleman from Mis- souri [Mr. VOLKMER]. (Mr. VOLKMER asked and was given permission to revise and extend his re- marks.) Mr. VOLKMER. Mr. Speaker, I thank the gentleman for yielding the time to me. Mr. Speaker, it is not any great pleasure that I come here today to be able to address the rule that is now be- fore us. This is a rule that, when we as Democrats were in the majority, known as basically martial law, that we only used at the end of the session, usually the last 3 days, in order to fa- cilitate the passage of conference re- ports in those last few days. Yet under this leadership and this majority, this year alone this martial law type of rule has been in effect longer than any time if you added up all of my previous 19 years here. So in 1 year, this year, this session, we have used it more than I did in the previous 19 years. Now, that tells me a little bit about the running of the House and procedures in the House. This is not necessary. This rule is not necessary. If we follow the normal rules of the House, the rule to take up the welfare bill, it would be reported in a day, be taken up tomorrow in the normal course, be passed. The welfare bill will be taken up and passed. But for some reason or other, it has been dictated by on high, and that is what I did say, dictated by on high, the major- ity, the Speaker and the floor leader, the leadership of the Republicans have decided we are going to do it today. They wanted to do it early this morning. They wanted to do this right away before any of us even had a chance to look at the bill. The chairman, the ranking member of the committee has a copy of the bill there, and there is a copy right over here. I dare say on the gentleman’s side and my side there is not 10 percent of the Members that have even read that bill. Now, they have a general idea of what is in it, but that is all. CONGRESSIONAL RECORD \u2014 HOUSEH9392 July 31, 1996 A lot of them were willing to vote for it because I talked to Members on both sides. They are willing to vote for it, either for or against it this morning without knowing the details. Just the idea of what is in there. That gives me a great deal of con- cern, that we have here representatives of the people in the U.S. House of Rep- resentatives that are willing to vote on a far-reaching piece of legislation that will impact on millions of people and yet doing it without knowing exactly what is in it. That gives me a great deal of concern about the Members of the U.S. House of Representatives, not as great a deal as the policy that is being followed of, again, dictating to the Members of the House. That is ba- sically what we are seeing here, is a dictatorial policy, autocratic. The leadership knows better than anybody else. We are going to do it their way or no way, and that is what we are up against today. It is that policy that I think has led us to a lack of bipartisanship in this House. It is the Republican leadership, in my opinion, Speaker GINGRICH, Floor Leader DICK ARMEY, that are re- sponsible for the highly partisanship feeling that pervades this House today. It is not only just on this side. It is on the majority side, too. I hear it con- stantly, about the partisanship. Yet ev- erybody stands up and says, We ought to be bipartisan; we need to be biparti- san. How can we be bipartisan when the hand is never reached out to the other side to say, hey, what can we do to- gether on this. That hand is never reached out. Instead, it is just like this legislation, this rule, it is dictated from above. It is toned down. Take it or leave it. That is the way it is. There is no bipartisanship. There is no at- tempt to be bipartisan in this House. I hope that somewhere between now and the end of this session the major- ity leadership under the Speaker would see fit to not be so autocratic, not to be so dictatorial, but to reach out that hand to Members on this side and say, let us work together the rest of the year on legislation and let us be bipar- tisan. There is not much bipartisanship here today. Mr. MCINNIS. Mr. Speaker, I yield myself such time as I may consume. First of all, to the gentleman from Missouri, I wanted to caution him a lit- tle on the utilization of the word ”dic- tatorship.” I do not think that adds to the comity on the floor. I think we should approach those kind of terms with some trepidation. Let me address the other point. That is, I do not want the gentleman from Missouri, because I have great respect for the gentleman, to continue to use inaccurate facts. The gentleman stated to our body here that when they were in control we did not see these kind of rules until the end of the session. I do not know why this keeps coming up, but time after time after time, when we deal with a rule, Mr. Speaker, we have to repudiate that. I have got the facts right here. I would be happy, if the gentleman would like to come over here, we will show him the statistics. Let me cover very briefly 1993. It was not near the end of the session when his side utilized this rule. In fact, it was in February, in March, in March, in March, in March, in March, in March, and then, of course, we had some throughout the rest of the ses- sion, too. I just want to make sure that we are accurate on our facts. The final thing I would caution the gentleman from Missouri, his state- ments about this is not bipartisan. In fact, I think this bill right here, No. 1, both Democrats and Republicans and unaffiliated and reform party people from across this country acknowledge that welfare needs to be changed. The system does not work. All of the incen- tive on this system is to stay on it, not to get off it. The system helps people that do not need help and does not help the people that really do need help. Since I have been up here, I do not think I know such a major piece of leg- islation that has had more joint effort. Certainly the last 3 or 4 hours, I was somewhat amused when the gentleman said this morning, this morning es- caped from us because, frankly, there was a lot of partisanship delay this morning. But we have gotten past that. The bill itself, the substance of this bill is a bipartisan product, a Democrat and Republican product. Certainly. It has been brought up by the Republican leadership. It is a Republican part of our contract. It was one of our biggest efforts, but we have had lots of help and we have appreciated that. b 1345 It is bipartisan, and at 2 o’clock and 15 minutes, the President of this coun- try is going to hold a press conference where we anticipate that he is going to agree to sign this bill. Mr. Speaker, I yield 2 minutes to the gentleman from Pennsylvania [Mr. FOX]. Mr. FOX of Pennsylvania. Mr. Speak- er, I thank the gentleman from Colo- rado [Mr. MCINNIS] for extending the time because today, Mr. Speaker, we have an opportunity to pass a stark welfare reform that requires work and personal responsibility and lifts fami- lies from lives of despair and hopeless- ness. I think we should especially look to the fact that for able-bodied individ- uals this Congress and this Govern- ment will make sure that we have job training and job placement for the able-bodied, and for those that truly are in need, just seeking it, we will be there. The fact is that on child nutrition programs we are talking about block- granting the States, which is a great benefit because right now on child nu- trition programs we are spending 15 percent to administer those programs, and the States, only 5 percent for ad- ministration. With the extra 10 percent they will receive from the Federal Gov- ernment, they must feed more children more meals by our great standards. The States will follow the Federal standards. On child support enforcement, we are going to make sure that all of those in- dividuals and families that do not now have, for many deadbeat dads and other parents, the funds they need to make sure that the children are pro- tected. They will have to adopt in each State programs like they have in Maine where they had 21,000 people who had not paid their child support; and when they said they could lose their driver’s license, they in fact, 95 percent within 30 days, paid their child support payment. So we see a program that is going to become more modern, more sensitive, and make sure that we take care of those in need, and we make sure that the welfare reform that we have craft- ed here is bipartisan and worthy of the votes of both sides of the aisle in both Chambers and, hopefully, as well, with our President. Mr. MOAKLEY. Mr. Speaker, I yield back the balance of my time. Mr. MCINNIS. Mr. Speaker, I yield back the balance of my time, and I move the previous question on the res- olution. The previous question was ordered. The resolution was agreed to. A motion to reconsider was laid on the table. f CONFERENCE REPORT ON H.R. 3734, PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILI- ATION ACT OF 1996 Mr. SOLOMON, from the Committee on Rules, submitted a privileged report (Rept. No. 104 729) on the resolution (H. Res. 495) waiving points of order against the conference report to ac- company the bill (H.R. 3734) to provide for reconciliation pursuant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997, which was referred to the House Cal- endar and ordered to be printed. Mr. SOLOMON. Mr. Speaker, I call up the resolution (H. Res. 495) waiving points of order against the conference report to accompany the bill (H.R. 3734) to provide for reconciliation pursuant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997 and ask for its immediate consid- eration. The Clerk read the resolution, as fol- lows: H. RES. 495 Resolved, That upon adoption of this reso- lution it shall be in order to consider the conference report to accompany the bill (H.R. 3734) to provide for reconciliation pur- suant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997. All points of order against the conference re- port and against its consideration are waived. The conference report shall be con- sidered as read. The yeas and nays shall be considered as ordered on the question of adoption of the conference report and on any subsequent conference report or motion to CONGRESSIONAL RECORD \u2014 HOUSE H9393July 31, 1996 dispose of an amendment between the houses on H.R. 3734. Clause 5(c) of rule XXI shall not apply to the bill, amendments thereto, or conference reports thereon. The SPEAKER pro tempore (Mr. HEFLEY). The gentleman from New York [Mr. SOLOMON] is recognized for 1 hour. Mr. SOLOMON. Mr. Speaker, for the purposes of debate only, I yield the cus- tomary 30 minutes to the gentleman from Massachusetts [Mr. MOAKLEY], pending which I yield myself such time as I might consume. During consider- ation of the resolution, all time yielded is for the purpose of debate only. Mr. Speaker, this rule waives all points of order against the conference report to accompany H.R. 3734, the Per- sonal Responsibility and Work Oppor- tunity Reconciliation Act of 1996, and against its consideration. Additionally, the rule provides that the conference report shall be consid- ered as read. The rule also orders the yeas and nays on the adoption of the conference report and on any subse- quent conference report or motion to dispose of an amendment between the Houses. Finally, the rule provides that the provisions of clause 5(c) of rule XXI re- quiring a three-fifths vote on any in- come tax rate increase shall not apply to the bill, amendments thereto, or to the conference report thereon. Mr. Speaker, this rule is customary for conference reports. I urge support for the rule in order that we might send this legislation on to the Presi- dent swiftly, since he now has decided he is going to sign this vital piece of legislation. Mr. Speaker, in March 1995, I called up the rule that provided for consider- ation of the first welfare reform bill. Sixteen months, two bills, and two Presidential vetoes later we stand on the precipice of enacting real com- prehensive, compassionate welfare re- form legislation. Throughout the passionate debate on this subject we have held firm on our principles to enact a reform to the Na- tion’s welfare system which requires work, which imposes time limits on benefits for welfare recipients, and which allows for innovative State solu- tions to help the underprivileged in our communities. We have not departed from these principles throughout the confusing dialog with the President. These principles are embodied in the conference agreement before the House today. Mr. Speaker, these principles are not implemented in a vacuum. The con- ference package addresses concerns as- sociated with a radical overhaul of the Nation’s welfare programs. First and foremost, it should be made perfectly clear that this bill takes care of unfortunate people who are disabled, and able-bodied people are taken care of as well on a temporary basis, but the key word is temporary. After being taken care of on a limited basis, these people are going to have to go to work. The legislation contains valuable re- forms to the food stamp program, de- signed to curb fraud and abuse and re- quiring work for those food stamps. The agreement authorizes $22 billion in child care funding over the next 6 years, which is more than $3 billion over current law. Finally, the legislation contains tough measures to crack down on dead- beat dads who abrogate their moral re- sponsibility to their children; and, Mr. Speaker, in contrast to the bold and honest proposals that Congress has put forward to reform welfare, the Presi- dent has acted with characteristic te- merity. The alleged welfare reform that the Clinton administration says it has achieved is in actuality a fraud. It just is not there, and the savings show it. The President asserts that he has achieved a degree of welfare reform by granting waivers from his bureaucrats for States to experiment in this area. The reality is that we have heard tes- timony on this floor from State after State that the waiver process is that thoughtful and experimental governors must troop to Washington DC, hat in hand, and request permission to reform low-income programs at home. The waiver request is then subject to end- less debate by bureaucrats and subject to negotiation and even change by the Federal departments involved. Mr. Speaker, my State of New York has several waiver requests pending for low-income programs, and New York certainly needs flexibility for budg- etary purposes, and we are being stonewalled by this administration be- cause none of those waivers have been granted in a State that is overburdened with welfare problems today. Thank- fully, this Byzantine procedure will be relegated to the dust bin of history upon enactment of this legislation. The citizens of the States, in whom I have the utmost confidence, will be finally free to use local solutions to help low- income families in their neighbor- hoods. Mr. Speaker, I was raised to treat the less fortunate in our society with com- passion, as most Americans are. The way to effect change for those who suf- fer in poverty is certainly not addi- tional handouts and entrapment in the current cycle of dependency that has bred second- and third- and now fourth- generation welfare recipients. Rather, we should emphasize welfare as a tem- porary boost from despair to the sense of self-worth inherent in work. Mr. Speaker, that is what we ought to be doing, that is what we can do here today. This legislation gives the single moms and kids, who are the vast majority of welfare recipients, an op- portunity to escape a life of relying on government benefits. A vote against this package is a vote to deny kids on welfare hope to escape a life of welfare dependency. Mr. Speaker, this House will today once again pass comprehensive welfare reform by a wide bipartisan margin. The Senate is likely to do the same be- fore we recess this Friday. I sincerely hope the President lives up to his an- nouncement a few minutes ago and agrees with the bipartisan majorities in both houses of Congress and over- whelming public sentiment and he signs the legislation into law. If he does, the status quo goes out the win- dow, and finally, we are going to do something about this ever, ever-in- creasing welfare load in our country. I strongly urge passage of the bill. Mr. Speaker, I reserve the balance of my time. Mr. MOAKLEY. Mr. Speaker, I yield 4 minutes to the gentleman from Wash- ington [Mr. MCDERMOTT]. (Mr. MCDERMOTT asked and was given permission to revise and extend his remarks.) Mr. MCDERMOTT. Mr. Speaker, we started this Congress with the major- ity indicating that they were going to follow new procedures, and they made a big show of all the rules changes we were going to have, but here we are ramming through the biggest change of policy toward children in this country with a bill that has been in our hands for a little more than 12 hours. This 1,200- or 1,500-page bill was de- livered to the Members of Congress last night at 1 o’clock in the morning. All that is being characterized as partisan fighting out here is basically a resist- ance to having something like this rammed through the Congress with a lot of good rhetoric wrapped around it, but the facts belie what is being said. Now, the gentleman from New York [Mr. SOLOMON] has started to debate the bill and said this is a bill about work, but if my colleagues take this bill, and they go to page 80 under sec- tion 415, it is the section called waiv- ers, and if my colleagues can wade through this language, and I will read it for them: Except as provided in subparagraph (B), if any waiver granted to a State under section 1115 of this Act or otherwise which relates to the provision of assistance under a State plan under this part (as in effect on Septem- ber 30, 1996) is in effect as of the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the amendments made by the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996 (other than by section 103(c) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) shall not apply with respect to the State before the expiration. Let me tell my colleagues what that means. That means that in 43 States there is no requirement for work. Every bit of work requirement in this bill is a fraud because with that waiver on page 80, section 415, we allow any State who has a waiver now in effect, and there are 43 of them in, if they are in effect, they can waive the work re- quirements. b 1400. There are only seven places in the United States making up 5 percent of the welfare load; that is Alaska, Idaho. CONGRESSIONAL RECORD \u2014 HOUSEH9394 July 31, 1996 Rhode Island, Kansas, Kentucky, New Mexico, and Nevada that do not have waivers. If we read that section fur- ther, all they have to do is get a waiver from the Federal Government and those seven States can be out. There is no requirement for work in this bill, because they write all the perfect lan- guage, spend 50 pages saying work, work, work, and then at the bottom, they give a waiver. If there is a waiver, Mr. Speaker, in their State, their State does not have to provide a job. Let me tell the Members what it is like in Washington State, because I know the situation there. We have 100,000 people on public assistance. We have 125,000 people who have been drawing unemployment benefits. That is 225,000 people in the State of Wash- ington who do not have work. If tomorrow, with this bill passed, every one of them showed up and said, ”I want a job,” the State of Washing- ton could say, ”We do not have any re- sponsibility for you. We have a waiver. The State of Washington has a waiv- er.” Even if they were going to be re- sponsible, even if the State of Washing- ton said, ”We really care about these 225,000 people and their families,” last year, and the State of Washington, Members have to remember, is the fifth most rapidly growing State economi- cally. We are at the top in this coun- try. In our State last year we provided 44,000 new jobs. Mr. Speaker I urge people to vote against this bill. It is bad. It is a fraud. Mr. SOLOMON. I yield myself such time as I may consume. I am a little concerned, Mr. Speaker, I want to take just a minute to tell the gentleman, I think he is on the Com- mittee on Ways and Means. As a mat- ter of fact, at 12 o’clock last night this report was filed. There were those of us who were here and saw to it that the report was delivered to the minority at that hour. However, earlier in the day, in the morning yesterday, this report was complete and given to the minor- ity. I do not know why the gentleman from Washington did not see it. His own staff on the Committee on Ways and Means had possession of this re- port, so the gentleman should have done his due diligence and he would have had that information. Mr. Speaker, let me just say one thing about the work requirements. I am a little concerned with the bill, be- cause it has been watered down so much. As a matter of fact, when the bill left this House we had a family cap, which meant young girls that con- tinue to have baby after baby after baby could not just continue to have more and more and more welfare bene- fits given to them. Unfortunately, that was dropped. A phrase was put in that would allow States to opt in, or rather, would allow States to opt out, as op- posed to opting in. Let me tell the Members what hap- pens in a State like New York State, where we have had for years now the Cadillac of welfare programs and the Cadillac of Medicaid programs, where- by New York State has exercised their option to opt in for all of these various programs above and beyond the base coverages for welfare and Medicaid. In our State, we do not stand any chance of being able to change that law, so if we had arranged to have them be able to opt in, as opposed to opt out, then we could have expected some real change. So I am concerned about that, but we will live to fight that battle another day. Mr. Speaker, as the gentleman’s President is saying, this is a work-for- welfare program. I am surprised to hear the gentleman from Washington try to refute that. Mr. CAMP. Mr. Speaker, will the gen- tleman yield? Mr. SOLOMON. I yield to the gen- tleman from Michigan. Mr. CAMP. Mr. Speaker, I thank the chairman of the committee for yielding to me. Mr. Speaker, I know there has been some issue raised regarding the waivers for the work requirement. The waivers are all drawn more strictly than cur- rent law. I think that is an important point to make. The waivers that have been given by the administration are more strict than current law. The cur- rent waivers do not apply to the per- centage work requirement in the legis- lation. I think that is another impor- tant point to make. I thank the gen- tleman for yielding to me. Mr. SOLOMON. Mr. Speaker, I re- serve the balance of my time. Mr. MOAKLEY. Mr. Speaker, I yield 2 minutes to the gentleman from Texas [Mr. COLEMAN]. (Mr. COLEMAN asked and was given permission to revise and extend his re- marks.) Mr. COLEMAN. Mr. Speaker, I thank the gentleman from Massachusetts for yielding me this time. Mr. Speaker, I think it is important to point out, regardless of the politics of welfare reform, the issue ought to be what does the bill do. Regardless of whether or not a past President or a sitting President would sign or veto a bill, it should have nothing to do with the legislative branch priority and pre- rogative to pass good legislation. Mr. Speaker, I know many have worked long and hard on this bill and others like it over the past year and a half and longer. In fact, the discussion of welfare reform has been debated since I came here 14 years ago. I need to say, however, to my colleagues that it is not enough to play the politics with welfare reform that we are at- tempting to do today. I certainly do not intend to support welfare reform and then go home and applaud myself and tell people, are you not proud we have welfare reform? We have to look at what we are doing to children. More than 1 million children will be thrown off the welfare rolls. What kind of Nation is it that says, ”We care about what is in front of your name: Documented child, undocu- mented child, poor child, rich child”? What difference does that make to a great Nation? I submit to the Members, it should make none. All of us here in this country understand that we ought to care for children regardless of their station in life, regardless of the coun- try from which they came. To suggest that we should do this in this legisla- tion is plain wrong. I know all of the 50 States are great- ly benevolent. By the way, that re- minds me, why did we take over this program in the 1960’s in the first place up here at the Federal level? As I re- call, we had a patchwork, quiltwork of 50 different programs, some good to the poor, some bad to the poor, some harsh, causing people, of course, to mi- grate from State to State, based upon the benefits that they or their children could receive during tough economic times. This legislation also does not deal with tough economic issues the way it should. Mr. MOAKLEY. Mr. Speaker, it gives me great pleasure to yield 5 minutes to the distinguished gentleman from New York [Mr. RANGEL]. (Mr. RANGEL asked and was given permission to revise and extend his re- marks.) Mr. RANGEL. Mr. Speaker, let me thank the gentleman from Massachu- setts [Mr. MOAKLEY] for giving me an opportunity to speak out on this. I am going to say what is on everybody’s mind. It is just so close to the election, I suppose, on both sides of the aisle we get blinded about substance in our con- cern as to what is it that the pollsters really want. A lot of concern has been in the White House and on the Hill as to whether or not the President would breach his promise to change welfare as we know it. I would think that the chairman of the Committee on Rules, notwithstanding how diligently the Committee on Rules has worked on this legislation, would have to agree that there is no urgency in terms of Members understanding the work that was done in conference. This is not an unusual thing, unless it has something to do with the fact that we are going into recess, and that this will be a po- litical issue back home. Other than that, it seems to me if we are talking about millions of children, children who would be Democrat, Re- publican, Christians, Jews, black, white, Americans, and certainly the lesser among us, that all of us would want to make certain that we are doing the right thing; and really, not even push the President into making a hasty decision, when at least the last position he took was that he appre- ciated the direction in which the legis- lation was going and he saw some im- perfections which could be worked out. But it was he who said that he want- ed to change welfare as we know it. What is welfare? What is this obsession about putting people to work? Every- one agrees if you are able to work, you CONGRESSIONAL RECORD \u2014 HOUSE H9395July 31, 1996 should be working. Every taxpayer should be angry and annoyed to find people slipping back on their respon- sibilities and not working. Are we talking about just women, or are we talking about women that have children? I pause, because it is not a rhetorical question. The bills that I know of say aid for dependent children. I think what we are saying, I would say to the gentleman from New York [Mr. SOLOMON], is that that child will be held responsible for any conduct that we politically do not like about the mother. We are going even further, not as far as the gentleman would like, but I think even the President agrees with the gentleman’s posture, that if after 5 years or 4 or 3 or 2 or whatever the Governors decide, I think the minimum is 2 years, that if for any reason at all, there are no jobs available, and if the mother played by the rules, signed up, went into training, did all of the Amer- ican things in order to show that she wanted to maintain her dignity, she wanted her family not to stay on wel- fare, she wanted to go into the private sector and contribute, if all of those things are established, it is my under- standing it really does not make any difference. Playing by the rules does not make a difference, in election years, because we said it does not make any difference what the heck you have tried to do; the question is, are you working. Quite frankly, I believe that the mother could vote with her feet if she does not like the situation employ- ment-wise. I am mean enough to be with you. I am a politician, too. My problem is the child. What did the child have to do with the fact that the moth- er wanted to work, did not want to work, jobs were there, jobs were not there? Do Members know what the po- litical question is? The Republicans will throw 2 million people, children, into poverty, and my President will only throw 1 million into poverty. Mr. Speaker, I do not want to get in- volved in religion around here, but there is not a denomination of people that do not believe that the helpless of this country\u2014just being an American means you are supposed to help them. You do not send a 2-year-old child or a 2-month-old child out to get a job. Someone has to be responsible. Some- one has to be responsible for that child. Do not ask the child for its identifica- tion, and ask whether or not it is a cit- izen. Do not ask the child whether, by choice, the mother is a bum. Do not ask the child what the unemployment statistics are. As Americans we believe in taking care of our children. This is a political bill. It should not be passed into law. It should not be passed here. The President should not sign it if you do shove it down his throat. Mr. SOLOMON. Mr. Speaker, I yield 2 minutes to the distinguished gentle- woman from Jacksonville, FL, Mrs. TILLIE FOWLER, who has been a real leader in this effort. (Mrs. FOWLER asked and was given permission to revise and extend her re- marks.) Mrs. FOWLER. Mr. Speaker, the American welfare system was intended to be a safety net for those who fall on hard times. Unfortunately, it has be- come an overgrown bureaucracy which perpetuates dependency and denies people the chance to live the American dream. I am pleased the President has just announced that he would sign the Re- publican welfare bill. We knew when it got this close to the election this President would choose the path of po- litical expediency, as he always does. But this legislation is not about saving money, it is about saving hope and sav- ing lives while reforming a broken sys- tem and while preserving the safety net. This bill encourages work and inde- pendence and discourages illegitimacy. I urge my colleagues to vote for fair- ness, compassion, and responsibility, and pass a conference agreement on H.R. 3437. Mr. MOAKLEY. Mr. Speaker, I yield 3 minutes to the gentleman from Cali- fornia, the Honorable GEORGE MILLER, the ranking member on the Committee on Resources. (Mr. MILLER of California asked and was given permission to revise and ex- tend his remarks.) Mr. MILLER of California. Mr. Speaker, today is a serious and sad day. Not only are we presented with a welfare bill by the Republicans that for the first time in history does a great deal of harm to children in this coun- try, but we have learned in the last few minutes that the President of the Unit- ed States, Mr. Clinton, now says that he will sign that bill. This is a President who, along with the First Lady, have spent much of their public life trying to help chil- dren. Now he says he will sign a bill that, for the first time, knowingly, he knowingly, he has been presented the evidence by his own Cabinet, he has been presented the evidence by the Urban Institute and others, that will knowingly put somewhere around 1 million children who are currently not into poverty, into poverty. Almost half of those children are in families that are working, where peo- ple get up and they go to work every day. But at the end of the year, they are poor. This bill puts those children into poverty. That cannot be a proper purpose of the U.S. Congress, and that cannot be a proper endorsement for the President of the United States. b 1415 It is against the interest of our chil- dren. Yes, this program was started many years ago to try and save the children. For many, many years we have lifted those children out of pov- erty, not as well as we have done for the seniors, but it was a national goal. This bill now for the first time, again knowingly, the evidence is in front of us, and yet we are being asked to make a decision to reverse that trend and to once again put children into poverty. They can lose their benefits under this with nobody having offered their par- ents a chance to work or requiring them to do so, because in the 11th hour those same Governors who boasted about their desire to put people to work came in and got loopholes put into this bill so they do not have to meet the very standards that they said they were prepared to change this pro- gram from welfare to work. So how did they achieve the budget savings, then? They achieved the budg- et savings by going after children, by going after women. I grew up, and I think most people in this country be- lieve that when you said women and children first, what you were saying is you wanted to care for those individ- uals. This legislation suggests that they will be the first to be harmed and that is what this legislation allows. I appreciate all of the theory in the legislation, but the fact of the matter is every time that the pedal meets the road here, what we see is that in fact they are sacrificed. These children now pay to provide the $60 billion in savings that the majority says that they want. We cannot allow that to happen. this President should be demanding that this bill simply do no harm to those children. You can get all of the welfare reform you want and still do no harm to the children. But unfortunately this President has joined the Republicans now in making the children the very victims of the system he said he want- ed to reform. ANNOUNCEMENT BY THE SPEAKER PRO TEMPORE The SPEAKER pro tempore (Mr. HEFLEY). The Chair will make a brief statement in clarification of his re- sponse to the parliamentary inquiry propounded by the gentleman from Pennsylvania [Mr. WELDON] during the consideration of House Resolution 492. In that response, the Chair merely intended to indicate that, in the discre- tion of the Chair, the objection by the gentlewoman from Connecticut under rule XXX was not then a dilatory mo- tion. Mr. SOLOMON. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, in response to the pre- vious speaker for whom I have a great deal of respect, he came to this body about 20 years ago and I do not know what experience he had in previous government, but when he is critical of the Governors of these States, I look at my own Governor, Gov. George Pataki. He is probably one of the most knowl- edgeable people in America today about what it means about jamming things down the throats that we do here in Washington, sending it back to the States and local government. George Pataki was a town mayor be- fore he became a State assemblyman in the lower house and then before he be- came a State senator and now Gov- ernor. Believe me, he knows what un- funded mandates mean to a State like CONGRESSIONAL RECORD \u2014 HOUSEH9396 July 31, 1996 ours where we have seen job after job after job chased out of our State be- cause we just could not afford to do the things for business and industry that were necessary because of the terrible welfare burden. That is all changing now and it will change with the adop- tion of this legislation. We are once and for all going to be able to let those people who have the experience, those people down at the local levels of gov- ernment who have to deal with the wel- fare recipients day in and day out, let them come up with the solutions. That is what this debate is all about. Mr. Speaker, I yield 2 minutes to the gentlewoman from Columbus, OH [Ms. PRYCE], a member of the Committee on Rules. Ms. PRYCE. Mr. Speaker, I thank the distinguished chairman of the Rules Committee for yielding me this time. I rise in strong support of this fair rule to bring about real welfare reform. Mr. Speaker, a generation ago, Amer- icans began a much-celebrated war on poverty in the hope of creating a Great Society. But nearly 30 years and more than $5 trillion later, what we are left with is a failed welfare system that has deprived hope, diminished opportunity, and literally destroyed precious lives. Our country, and the future genera- tions of Americans who will lead her, deserve a better system. Today we will consider a conference report that replaces a welfare system debilitated by strict Federal control with a system based on innovation and flexibility at the State and local level. Instead of promoting dependency and illegitimacy, this conference agree- ment is built on the dignity of work and the enduring strength of families. By taking the Federal bureaucracy out of welfare, this legislation promotes creative solutions closer to home and offers a real sense of hope to the truly needy and the less fortunate. Mr. Speaker, despite the comments we will hear today, this is a compas- sionate bill. Helping those who by no fault of their own have fallen on hard times is the right thing to do. This bill responds to that in the finest American tradition. But when we help people that are able-bodied, when we just hand them a check, those people who make little or no effort to help them- selves, we risk destroying the Amer- ican spirit and undermining our soci- ety at large. This conference agreement rep- resents a true bipartisan attempt to change welfare as we know it. I hope the President will not shy away again from this historic opportunity for change. In closing, Mr. Speaker, I urge my colleagues to have the courage to set aside the status quo, to think of the children and families of this Nation and to embrace real reform. I urge a ”yes” vote on both sides of the aisle for this rule and the conference report. Mr. MOAKLEY. Mr. Speaker, I yield 21\u20442 minutes to the gentlewoman from Florida [Mrs. MEEK]. (Mrs. MEEK of Florida asked and was given permission to revise and extend her remarks.) Mrs. MEEK of Florida. Mr. Speaker, both times I have risen, I have risen in strong opposition to the rule and I will be doing so, I feel, to the conference re- port. Mr. Speaker, I do not think many people in this Congress really under- stand the effects of welfare. I think that the system should be reformed. I am sure that there are many people who still abuse this system. We have not yet changed to any great extent the enforcement, to be sure, that peo- ple who do not deserve welfare are on it and those who are abusing it get pun- ished for being so. Mr. Speaker, I contend that this con- ference report does not meet the needs of the people they are hoping that it will meet. We are still going to have hungry children, children who are not taken care of by their States. I served as a State legislator. We still did not give matching funds for the funds that the Federal Government gave us. Now that we are cutting the funds, are they going to do any better? My answer is no. The real world will teach everyone in this Congress that you are hurting children. It seems to me that you are doing it deliberately because many of us have said to you and shown you evi- dence that it is going to do it. OMB has done it. Several agencies with whom you have great credibility have shown the same. It permits the States to ex- periment with our children in order to save $40 to $60 billion in Federal funds. Why save it when you are losing your main human resources, your children? Almost one-third of these cuts come from mistreating the children of immi- grants. Do you feel that the legal im- migrant children in this country should be treated any less? Would you want your children to be treated any less than when they go down to get health care and they tell them they cannot be treated because their parents have been here 16 years or more paying taxes into the American Government, their sons and daughters have gone to war for this country? Are you going to say to those children, No, you can’t get any more treatment. Go to the State. Go to the county. When they get to the counties and they get to the States, there is no money. I have been there and I know there is none. The Republican majority is going to ban food stamps and SSI for some chil- dren, particularly those that are dis- abled and those that are poor. It bars Medicaid for legal immigrants. Is that going to make them any less ill be- cause we are barring it in this bill which we are using here in a vacuum? We have done perhaps no impact study. We do not know how this is going to impact on States like Florida and California. I say, Mr. Speaker, that this is wrong and that the Republican majority should realize what they are doing. Otherwise in the end the people will speak, and I hope they do. Mr. Speaker, I rise in strong opposition to the rule and the conference report itself. This rule is designed to prevent both the Members and the public from learning the details of this fatally flawed bill. This bill permits the States to experiment with our children in order to save $60 billion in Federal funds. Almost one-third of these cuts\u2014$18 billion\u2014come from treating the chil- dren of immigrants more harshly than other children. The Republican majority bans food stamps and supplemental security income payments for virtually all legal immigrants. The bill bars Medicaid for legal immigrants who are elderly or disabled. These immigrants the Republican majority wants to penalize are legally here. They played by the rules. They meet every require- ment of the law. They live and work hard; they pay taxes; they serve in the military. They will not vanish simply because the majority passes this bill. What will happen is that these costs now paid by the Federal Government will be un- fairly shifted to States like Florida, and coun- ties like Dade, that have a high number of legal immigrants. Let me give the House a concrete idea of how unfair this bill really is. My own State of Florida estimates that it will lose more than $300 million a year in Federal funds because of this bill. Who ends up paying? My constituents in Dade County and the State of Florida. The bill instructs States to deny school lunches to undocumented immigrants. The chairman of the Dade County School Board says that one-quarter of the children in the Dade schools were born in a foreign country. The Dade County schools would have to col- lect information from every single child in order to determine which ones can get sub- sidized lunches. The Republican majority is trying to balance the budget and cut taxes for the wealthy by creating local paperwork and higher local taxes. It is wrong and it is unfair for the Republican majority to force State and local govern- ments\u2014meaning our taxpayers back home\u2014 to pay for legal immigrant residents who are in this country because they complied with the immigration laws that previous Congresses have enacted. I urge my colleagues to vote against this rule and against the conference report. Mr. SOLOMON. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, one of my colleagues just approached me, and they said they hope the American people that might be watching on C SPAN would ask the question of all of us: Are you satisfied with the status quo? That seems to be what I hear from the other side of the aisle, even though the President is going to sign this bill, that they are satisfied with the status quo. The people I represent are not sat- isfied with that status quo. Mr. Speaker, I yield 1 minute to the gentleman from Erie, PA [Mr. ENG- LISH], one of the outstanding freshman Members of this body. Mr. ENGLISH of Pennsylvania. Mr. Speaker, I rise in strong support of this rule and in strong support of this con- ference report, the most sweeping wel- fare reform legislation this country has seen since the Great Society. CONGRESSIONAL RECORD \u2014 HOUSE H9397July 31, 1996 As Franklin Delano Roosevelt warned in the late 1930’s, giving perma- nent aid to anyone destroys them. By creating an underclass culture of pov- erty, dependency, and violence, we have been destroying the very people we have been claiming to help. How many more families will be trapped in the current welfare system while we waste time in Washington? I am delighted to see that the Presi- dent has indicated he may support this conference report, which will require for the first time ever able-bodied wel- fare recipients to work for their bene- fits. Every family receiving welfare must work within 2 years or lose bene- fits, and lifetime benefits are limited to 5 years. This is a balanced, mainstream ap- proach that links welfare rights to per- sonal responsible behavior. I urge the House to adopt this rule and lay the groundwork for passage of this con- ference report. Mr. SOLOMON. Mr. Speaker, I yield such time as he may consume to the gentleman from Sanibel, FL [Mr. GOSS]. (Mr. GOSS asked and was given per- mission to revise and extend his re- marks.) Mr. GOSS. Mr. Speaker, I rise in strong support of this rule and this bill because we all know that the era of big government is indeed over. Mr. Speaker, I thank my friend, the distin- guished chairman of the Rules Committee, for yielding me this time. The wisdom of SOLOMON has been in great demand these last few days, and once again he has delivered a fair and workable rule to this body. Our Rules Committee labored diligently yesterday evening and this morning to accommodate both the strong desire of the majority of Ameri- cans that we end welfare as we know it\u2014and the legitimate efforts that have been underway among Members of Congress and the admin- istration to negotiate a final product. For that reason, we brought two rules, in order to give the conferees as much time as possible to complete their work while getting welfare re- form to the President this week. This rule al- lows the House to consider a milestone bill\u2014 one that lays to rest 30 years of big-govern- ment policies that have cost $5.5 trillion but failed to win the war on poverty. I must say I am disturbed by the hand-wringing and dema- goguery that is emanating from some mem- bers of the minority. Their assurances that they do want to reform welfare, but they just don’t want to do it in this way, ring quite hol- low. Remember that they had the opportunity when they controlled both Houses of Con- gress and the White House for 2 years\u2014an opportunity they refused to capitalize on. So now, with a President who has pledged to end welfare as we know it, and a congressional majority committed to dismantling the Big Brother, Washington-knows-best bureaucracy that has made welfare a dependency trap\u2014we are finally going to make welfare reform hap- pen. I am sorry that the ultraliberal wing of the Democrat Party in this House is having trouble with that result\u2014but it’s one the American people are demanding. If those in the minority succeed in their carefully orchestrated attempt to delay enactment of this bill, I suspect they will have to answer to their constituents for de- nying poor Americans a fighting chance to break out of poverty and become productive members of this society. Mr. Speaker, this leg- islation unleashes the creativity of our States to solve problems or poverty at home. It unshackles them from the burdens of costly and micromanaging Federal regulation\u2014while providing significant resources for children and job programs. It allows those precious Federal dollars that are so desperately needed by our Nation’s poor to bypass the grossly inefficient Federal bureaucracy. And it emphasizes work for those who can, along with compassion for those who can’t. This is a balanced bill\u2014and it’s time for the defenders of the status quo to get with the program and heed the words of the President. Support this rule and the bill. Mr. MOAKLEY. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, the chairman of the Rules Committee just said if people are opposed to this rule and this bill that they are for status quo. That is abso- lutely incorrect. The people who are opposed to this bill are opposed to it because it puts another 1 million children into poverty and does not go far enough. Mr. Speaker, I yield 3 minutes to the gentleman from Indiana [Mr. ROEMER]. (Mr. ROEMER asked and was given permission to revise and extend his re- marks.) Mr. ROEMER. Mr. Speaker, this bill, this conference report that we will soon vote on, represents the biggest change to our social policy in the last 60 years. We have moved from the New Deal to the New Frontier to the Great Society, and now hopefully to the fair deal. Where have we gone in this debate over the last year? We started with H.R. 4, a bill that I think was terrible for this Nation and for our children, that was mean to our children, that was unfair to the people that we want- ed to give skills to go to work, that was not fair to our parents who had children home from child care. That bill has been vastly changed. Just re- cently we voted for a bill to come out of the House, and 30 of us Democrats voted to move the process along and improve the bill in the Senate and House conference, where it has been improved, and I will vote to support this conference. President Clinton deserves credit for his willingness to sign this bill, and he deserves praise for his determination to change previous bills that were mean to children and that did not give the resources to our workers to stay off welfare. Let us move forward in a bipartisan way to continue to modify what can be a better and better bill, through Execu- tive order, through legislative change, and through bipartisan work. Let us march forward together, Democrats and Republicans, to change the status quo and move to the fair deal for our taxpayers, and for those recipients of welfare and those children that are being raised from generation to genera- tion in welfare. We can work together. We can and must work together for the recipients of welfare and for the tax- payers of this country. Again, President Clinton will sign this bill, according to all the reports, and he has indicated a willingness to work in a bipartisan way. I am glad that the President changed the first bill, H.R. 4. I am glad that the Presi- dent vetoed those initial bills that were mean to children and were not fair to get people permanently off wel- fare. I hope to continue to work across this middle aisle, Democrats and Re- publicans, reaching out to join hands and to claim back a system for the tax- payer and the American people and our children, so that we do have the big- gest change in social policy in the last 60 years, moving from the New Deal to the fair deal for our taxpayers. b 1430 Mr. SOLOMON. Mr. Speaker, I yield myself such time as I may consume to say that my good friend from Boston, MA, Mr. MOAKLEY, made the statement that he is not for the status quo but he is opposed to this bill. We hear that so many times, but, but, but, but, but. No- body is ever ready to put themselves on the line for welfare reform. Today we have it. Mr. Speaker, I yield 2 minutes to the gentleman from Claremont, CA, Mr. DAVID DREIER, my good friend and member of the Committee on Rules. (Mr. DREIER asked and was given permission to revise and extend his re- marks.) Mr. DREIER. Mr. Speaker, I rise in strong support of this rule and the con- ference report. The gentleman from New York [Mr. SOLOMON] is absolutely right when he says that it is very easy to find things in this measure which we do not all support. I admit I have some concerns about some provisions as they impact my State of California. But the fact of the matter is, ending welfare as we know it is what the President said that he wanted to do when he was a candidate back in 1992. My friend, the gentleman from Illinois [Mr. MANZULLO], just re- minded me that it has gotten to the point where a Republican Congress has been able to do what a Democratic Congress did not do in the first 2 years of the President’s term, and that is end welfare as we know it. So we have finally gotten to the point where we are looking at the fact that over the last 3 decades we have ex- pended $5.3 trillion on welfare pay- ments of all kinds and we have seen the poverty rate move from 14.7 percent to 15.1 percent. So everyone, Democrats and Republicans alike, as the gen- tleman from New York [Mr. SOLOMON] just said, and the gentleman from Mas- sachusetts [Mr. MOAKLEY], our friend from south Boston, acknowledges he does not want to support the status quo and we must change the welfare system. Now, earlier today, when the chair- man of the Subcommittee on Human CONGRESSIONAL RECORD \u2014 HOUSEH9398 July 31, 1996 Resources, the gentleman from Florida [Mr. SHAW], was before the Committee on Rules, he talked about the fact that we will most likely, in the 105th Con- gress, need to make some sort of modi- fication to this measure, but if we de- feat this conference report there will be no welfare reform. We have gotten a measure, and the President has finally gotten to the point where he has agreed to sign it. That is why, as my friend, the gen- tleman from Indiana [Mr. ROEMER], said, we need to move ahead with bi- partisan support so we can try our darnedest to address a system which is broke. There are many more things that need to be done. Entitlement reform is something that is important, so that we are not simply, as many are label- ing this thing, attacking those who are less fortunate. We need to realize that this measure is designed not just to help those taxpayers who are shoulder- ing the responsibility but also to do ev- erything we can to help people get out of that generational cycle of depend- ence. Support the rule and support the con- ference report. Mr. MOAKLEY. Mr. Speaker, I yield myself such time as I may consume. It has been referred to some people on my side as being for the status quo. Two weeks ago we voted for the Tan- ner-Castle bill, which was a reform bill. It had much more reform than this. So it is not that we are for the status quo. We want a real reform bill. This is not it. Mr. Speaker, I yield 2 minutes to the gentlewoman from North Carolina [Mrs. CLAYTON]. Mrs. CLAYTON. Mr. Speaker, I think that the conference report will pass and, therefore, there will be reform be- cause the majority of our Members truly think they are reforming the wel- fare system. But reforming the welfare system means that we would have pro- visions in there that would ensure we were decreasing dependency, we would encourage work and we would be sup- portive to families. Those kind of structures are not present. I know everyone has good intentions, and certainly reform is because we are trying to reduce a big deficit, because we know already the amount of money we spend on welfare is really insignifi- cant to the total amount that we spend. If we wanted to reduce the budg- et, we would be reforming other things. Like the gentleman has just said, enti- tlements would be that issue. Hopefully, we can understand that those of us who will vote against this are really making a statement. We care about children too much to rob Paul to pay Peter. We are not willing to rob children of their opportunity and their future in order to provide other people an opportunity to live. Also we say we are about teenage pregnancy prevention, and yet this House last month had the opportunity just to appropriate $30 million to pre- vent teenage pregnancy. We know over a half million young people become pregnant every year. We spend annu- ally $6.5 billion, yet we will not put a small amount of money to encourage young people to do the positive behav- ior activity so they will not lead a life of dependency. We say we want to decrease depend- ency. We want to give kids stepping stones, but we put these stumbling blocks in their way. Mr. Speaker, this is not supportive of children, and I give no bad intents to anyone, but this con- ference bill, and I hope I am wrong, I hope I am wrong. I hope, indeed, mil- lions of children do not suffer, but I could not vote in good conscience for a bill that I am not assured of that. Reform means encouraging young people for support, decreasing depend- ency and making provisions for work. Vote against this conference bill. Mr. SOLOMON. Mr. Speaker, I yield 1 minute to the gentleman from Egan, IL, Mr. DON MANZULLO, an outstanding Member. (Mr. MANZULLO asked and was given permission to revise and extend his remarks.) Mr. MANZULLO. Mr. Speaker, in the last 31 years this country has spent over $5.4 trillion on the welfare system, and what do we have to show for it? We have generation after generation locked in a seemingly endless cycle of destitution and poverty. They are the lost forgotten statistics, dependent on the Federal entitlement trap that strips them of their dignity, destroys families, damages our work ethic, and destroys the self-esteem of those trapped in the system. Cruelty is allowing this destructive system to continue. By passing this welfare reform bill we will restore hope and opportunity by making work, and not welfare, a way of life. Our current welfare system has not only failed those in the system, but it has also failed those who have been supporting it, the hard working tax- payer. It has failed the forgotten Amer- ican, the one who gets up in the morn- ing, packs a lunch, sends the kids off to school. That person is working harder than ever to make ends meet, and the typical American family is paying over $3,400 a year in taxes for welfare pay- ments to perpetuate a failed system. Mr. Speaker, we should pass this bill and pass it swiftly. Mr. SOLOMON. Mr. Speaker, I yield 21\u20442 minutes to the gentlewoman from Kansas [Mrs. MEYERS], one of the truly outstanding Members of this body, who is retiring at the end of this year. She has been such a great Member, and we are going to miss her. (Mrs. MEYERS of Kansas asked and was given permission to revise and ex- tend her remarks.) Mrs. MEYERS of Kansas. Mr. Speak- er, I thank the gentleman for those comments. Mr. Speaker, I support this rule and urge my colleagues to support it. The Personal Responsibility Act is a good start toward reforming our welfare sys- tem. Because of the block grant, the entitlement nature of the program is ended. We ask able-bodied people between 18 and 50 who receive food stamps to do some work for their benefits. We re- form the SSI program to help stop monthly checks from going to pris- oners and checks that were going to healthy children. And we finally tell recent immigrants that the promise of America does not automatically in- clude a welfare check. But many issues remain unaddressed, and I believe the most serious is the ever-increasing illegitimacy rate. In 1994, one-third of our children were born into homes where no father ever lived. And by the year 2000, 80 percent of minority children and 40 percent of all children in this country will be born out of wedlock. Unfortunately, the conference report does nothing to require that fathers be identified. States who currently do nothing to identify fathers can con- tinue to do nothing, and those States who continue to reward teenage preg- nancy can continue to do so. Finally, there is no effort to enforce a family cap, even though we know that the family cap has reduced a drop in additional children in New Jersey, where it is now statewide policy. To repeat, this bill is a good start, but I believe we cannot reform our wel- fare system until we address the growth in illegitimacy. The link be- tween our ever-increasing illegitimacy rates and the growth in AFDC rolls are not casual. They are cause and effect. Why is it too much to ask that chil- dren have two responsible adults as parents? Sadly, we continue to encour- age the opposite. A previous speaker said that the cost of welfare was very modest in this country. The cost of AFDC alone, I am not talking about SSI or illegal aliens or legal aliens or anything else, just AFDC, is $70 billion a year because it is $16 billion a year AFDC, it is one- fourth of Medicaid, half of food stamps, about a third of housing plus all of the training and day care programs. It is between $70 and $80 billion a year. Mr. MOAKLEY. Mr. Speaker, I yield 1 minute to the gentleman from Penn- sylvania [Mr. FATTAH]. Mr. FATTAH. Mr. Speaker, I rise in opposition to the rule. This rule and this bill, this conference committee, is built on the biggest lie that has ever been told to the American people, and that is that we are spending too much as a country to help poor people. There is no calculation that any le- gitimate analysis of a Federal budget would tell us that we spent $5 trillion on the war on poverty. It is all made up out of whole cloth. It includes items like the Pell grants and all kinds of other programs, and education. The AFDC payments are about a little more than one penny out of every dol- lar that this Government spends to help poor children. CONGRESSIONAL RECORD \u2014 HOUSE H9399July 31, 1996 We have gotten everybody convinced that we are spending just too much money on poor people, and now we have convinced them that Speaker GINGRICH and the Republican majority are coming to help these poor children, that this is just a major effort to really help poor children, and cutting $60 bil- lion is just the best way to help them find their way to the American dream. This rule, this conference committee, the Washington Post in its editorial today said it was a bad idea. They said it was a defining moment of where this country was headed. And there will be Members who will come to the floor today, because they want to be re- elected and will vote for it, but out into the future there will be days that they will truly regret that they did not have the courage to stand up and op- pose this hideous proposal. Mr. SOLOMON. Mr. Speaker, I yield 1 minute to the former governor of Dela- ware, MIKE CASTLE, one of the people that probably knows best about the real problems or how this ought to be dealt with, and who knows that one of the reasons the welfare system in this country has failed miserably is because we inside the beltway have tried to dic- tate back to the States and local gov- ernments. Mr. CASTLE. Mr. Speaker, I thank the gentleman for yielding me this time. Mr. Speaker, I support the rule and the bill. We stand today at a historic divide, a defining moment that sepa- rates the past from the future, one which pits personal responsibility, work, and State flexibility against the largely failed welfare policies and prac- tices of the past. Today marks a turn- ing point for all of us, the Congress, our constituents, and perhaps most im- portantly, those welfare recipients. I am pleased that the bipartisan Cas- tle-Tanner reform proposal has pro- vided some very positive changes and provisions that will help shame welfare reform for the better. Perhaps the most important provision we helped retain was current law on guaranteeing Med- icaid eligibility to all welfare recipi- ents and those who may be eligible in the future. Also, the food stamp op- tional block grants and the child wel- fare block grants were dropped, thus retaining minimum Federal standards and preserving these national safety nets. On balance, we have achieved what we can all support. With this legisla- tion we have finally begun the process by which America’s underclass problem can be solved, and break a generational cycle and culture of dependency and poverty. Congress is now the shepherd of wel- fare reform, not the President, and it is up to us to review and improve upon this proposal. I, for one, stand ready and committed to revisit it, if need be, to make sure welfare reform is going to work. Mr. Speaker, we stand today at a historic di- vide, a defining moment that separates the past from the future; one which pits personal responsibility, work, and State flexibility against the largely failed welfare policies and practices of the past. Today marks a turning point for all of us\u2014the Congress, our constitu- ents, and perhaps most importantly, those welfare recipients. Just as our Nation was formed, we stand ready to forward a bold experiment in reform- ing our Nation’s welfare system. But like most experiments, we will most certainly have to re- visit our decisions. Though we have tried, there may not be enough resources for chil- dren’s care, or to adequately fund the work program that is the centerpiece of this legisla- tion. There most likely will be economic downturns that force Governors and the Con- gress to reevaluate. States may require more flexibility in meeting the stringent work require- ments. There are innumerable potential pit- falls. As a coauthor of the bipartisan Castle-Tan- ner welfare reform proposal, JOHN TANNER and I have helped forward some very positive changes and provisions that will help shape reform welfare for the better. Perhaps the most important provision I helped retain was current law on guaranteeing Medicaid eligibility to all welfare recipients, and those who may be eligible in the future. The food stamp optional block grant and the child welfare block grant were dropped, thus retaining minimum Federal standards and pre- serving these national safety nets. Protecting children in families that lose cash assistance is a high priority. Although I would have preferred mandatory in-kind assistance after a 5-year time limit on cash assistance, I am mostly satisfied that a provision could be added that would ensure that States can uti- lize Federal funds from the social services block grant for the care of the child. Further- more, we were successful in ensuring that a higher State maintenance of effort on State spending could be included in the conference report. We also were successful in including language that would require that Congress re- view in 3 years the work program to ensure its success. Last, Castle-Tanner has had a mod- erating impact on the burdens that the nonciti- zen provisions will put on our Nation’s future citizens, primarily in the health care area. While Castle-Tanner included stronger protec- tions for children and families under the cash block grant, increased funding for the welfare- to-work programs, significantly smaller food stamp cuts, and less severe immigrant cuts, its fingerprints can be readily identifiable on this conference report. Nevertheless, on balance, we have achieved what we all can support: with this legislation, we have finally begun the process by which America’s underclass problem can be solved, and break a generational cycle and culture of dependency and poverty. This is not a perfect experiment, but then experiments usually aren’t. Congress is now the shepard of welfare reform\u2014not the Presi- dent\u2014and it is up to us to review and improve upon this proposal. I, for one, stand ready and committed to revisit this as it is implemented, and as we gain empirical evidence that our ef- fort can be successful in making work pay more than welfare. And only then will we be truly able to say that we have ”ended welfare as we know it.” It’s worth taking some risks to end it. Mr. MOAKLEY. Mr. Speaker, I yield 1 minute to the gentleman from South Carolina [Mr. CLYBURN]. Mr. CLYBURN. Mr. Speaker, I rise today in opposition to the conference agreement. Being a slightly better op- tion than the House passed version of the bill does not mean this is a good piece of legislation. Welfare should be a temporary tran- sition from welfare to work. Unfortu- nately this is 1996, an election year, and we have entered the ”silly season.” Rather than being a constructive de- bate, the welfare reform debate has be- come, for the most part silly talk of budgetary savings and time limits\u2014not helping those in need of assistance learn how to help themselves. I think the designers of this legisla- tion have forgotten a valuable lesson: If you give a man a fish, you feed him for a day but if you teach that man how to fish, he can feed himself for a lifetime. This conference report would consist of a check for 2 years and then a re- quirement for work programs for only 50 percent of families receiving welfare payments\u20146 years from now. The Republicans have forgotten the parable about feeding a family for a lifetime but instead have decided that it is much cheaper to write a check to a welfare family than provide the nec- essary training to ensure that another check never has to be written to that family. And under the guise of welfare re- form even these checks are becoming smaller. Under the House passed ver- sion of this conference agreement the average annual cut per food stamp household in South Carolina would be $265, and this cut would grow to $394 by 2002. Under the Senate version of the bill, food stamp households in South Carolina stand to lose even more. While it is not clear what the actual cut would be for South Carolina fami- lies under the conference agreement, it is clear that my State’s most vulner- able households would be between the proverbial rock and a hard place with little or no hope of any training to help them lift themselves permanently out of poverty. With the talk of personal responsibil- ity being tossed around, I find it ironic that at the same time our Nation’s most vulnerable families are being re- quired to do more for themselves, our States are being asked to do even less. In this conference agreement, unlike the Tanner-Castle substitute bill I sup- ported earlier this month, States are required to spend only 75 percent of what they spent in 1994 in return for a block grant check from the Federal Government. At the same time, it is projected that as a result of this legis- lation 8,170 children in my state of South Carolina will be pushed into pvoerty. I urge my colleagues not to support this agreement. Although it may be the lesser of two evils, it is not the best we can do nor is it the best we can af- ford to do. CONGRESSIONAL RECORD \u2014 HOUSEH9400 July 31, 1996 b 1445 Mr. HALL of Ohio. Mr. Speaker, I yield 1 minute to the gentlewoman from Texas [Ms. JACKSON-LEE]. (Ms. JACKSON-LEE of Texas asked and was given permission to revise and extend her remarks.) Ms. JACKSON-LEE of Texas. Mr. Speaker, the politic thing to do today is to get in the well of the House and hit your gavel down and say I am against the deadbeat on welfare, and I am right with you for welfare reform. As America watches those of us who have a difference of opinion, we will get castigated and accused as support- ing those who would not work. But I come today to oppose this rule. I hope that those who have goodwill and understand what America is all about will realize that I believe in wel- fare reform but I do not believe in put- ting 1 million children in the streets. I do not believe in a weak work program where States will not have the work to give to those who are on welfare. I do not believe in a shortened contingency fund so that, when the 5 years comes, those who have not been able to bridge themselves out of welfare will not have the support that they need. I do not believe in sending legal im- migrants into war, but yet when they need a helping hand this Nation will say you can fight for us but we do not have any support for you and your chil- dren. I do not believe in dispossessing the disabled. I do not believe in deny- ing SSI benefits to 300,000 children. Oh, we could be politic today and many will do that. But it does not mat- ter to me because there are people in this country who need our help. This is a bad welfare reform. Vote against it. Mr. SOLOMON. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, if my colleagues want to take child abuse out of the welfare families, the best thing to do is to bring these people up out of the pov- erty system and given them meaning- ful jobs. That is what this legislation is meant to do. Mr. Speaker, I yield 2 minutes to the gentleman from Florida [Mr. WELDON], someone I am very proud of because he gave up a very lucrative medical prac- tice to come here and try to do some- thing for America. Mr. WELDON of Florida. Mr. Speak- er, I thank the distinguished gen- tleman for yielding, and it has been a pleasure for me to be here and advocate for the people in my district, who have been calling out for welfare reform for many years. Mr. Chairman, they know that the current welfare system is broken. The people in my district know that the rate of poverty has not decreased since welfare has been enacted. The average stay on welfare is 13 years, and today illegitimacy rates among many welfare families approach 50 percent. Mr. Speaker, I rise in strong support of the bill, and strong support of this rule. H.R. 734 will truly finally end wel- fare as we know it. It did not take a Republican Congress to end welfare as we know it. This bill makes welfare a helping hand, not a lifetime handout. It places 5-year lim- its on collecting AFDC benefits. For hardship cases States can exempt 20 percent of their case load from the 5- year limit, and able-bodied people must work after 2 years or lose their bene- fits. It cuts taxpayer financed welfare for noncitizens and felons. It returns power and flexibility to the States. It ends numerous redundancies within the welfare system by giving block grants to the States and rewards States for moving families from welfare to work. It seeks to halt the rising illegit- imacy rates. Moms are encouraged for the first time to identify the father or risk losing benefits by as much as 25 percent. It increases efforts to make deadbeat dads pay child support. And these, of course, are men who father children but then have shirked their fi- nancial responsibility for caring for them. It gives cash rewards to the top five States who make the most successful improvement in reducing illegitimacy. As we know, fatherlessness is linked to high juvenile crime rates, high drug abuse rates, and declining educational performance. Support the rule and sup- port the bill. Mr. Speaker, I rise in strong support of H.R. 3734 the Personal Responsibility and Work Opportunity Act. This historic welfare reform bill will end welfare as we know it. During the past 30 years, taxpayers have spent $5 trillion on failed welfare programs. What kind of re- turn have the taxpayers received on their in- vestment? The rate of poverty has not de- creased at all. Furthermore, the average length of stay on welfare is 13 years. Today’s illegitimacy rate among welfare families is al- most 50 percent and crime continues to run rampant. Current programs have encouraged dependency, trapped people in unsafe hous- ing, and saddled the poor with rules that are antiwork and antifamily. Clearly, those trapped in poverty and the taxpayers deserve better. This bill overhauls our broken welfare sys- tem. This plan makes sure welfare is not a way of life; stresses work not welfare; stops welfare to felons and most noncitizens; re- stores power and flexibility to the States; and offers States incentives to halt the rise in ille- gitimacy. By imposing a 5-year lifetime limit for col- lecting AFDC, this bill guarantees that welfare is a helping hand, not a lifetime handout. Rec- ognizing the need for helping true hardship cases, States would be allowed to exempt up to 20 percent of their caseload from the 5-year limit. In addition, H.R. 3734 for the first time ever requires able bodied welfare recipients to work for their benefits. Those who can work must do so within 2 years or lose benefits. States will be required to have at least 50 per- cent of their welfare recipients working by 2002. To help families make the transition from welfare to work, the legislation provides $4.5 billion more than current law for child care. Under this bill future entrants into this coun- try will no longer be eligible for most welfare programs during their first 5 years in the Unit- ed States. Felons will not be eligible for wel- fare benefits, and State and local jails will be given incentives to report felons who are skirt- ing the rules and receiving welfare benefits. Our current system has proven that the one- size-fits-all welfare system does not work. H.R. 3734 will give more power and flexibility to the States by ending the entitlement status of numerous welfare programs by block grant- ing the money to the States. No longer will States spend countless hours filling out the re- quired bureaucratic forms hoping to receive a waiver from Washington to implement their welfare program. States will also be rewarded for moving families from welfare to work. Finally, this bill addresses the problem of il- legitimacy in several ways. H.R. 3734 author- izes a cash reward for the five States most successful in reducing illegitimacy. It also strengthens child support enforcement provi- sions and requires States to reduce assist- ance by 25 percent to individuals who do not cooperate in establishing paternity. Lastly, this bill mandates an appropriation grant of $50 million annually to fund abstinence education programs combating teenage pregnancy and illegitimacy. The sad state of our current welfare system and the cycles of poverty and hopelessness it perpetuates are of great concern to me. I be- lieve this bill goes to the heart of reforming the welfare system by encouraging and helping in- dividuals in need become responsible for themselves and their family. I wholeheartedly support this bill because it makes welfare a helping hand in times of trouble, not a hand out that becomes a way of life. I truly believe that this reform will give taxpayers a better re- turn on their investment in helping those in need. Mr. SOLOMON. Mr. Speaker, I yield 2 minutes to the gentleman from Maine [Mr. LONGLEY], another outstanding new Member of this body. I particu- larly like him because he is a former Marine. (Mr. LONGLEY asked and was given permission to revise and extend his re- marks.) Mr. LONGLEY. Mr. Speaker, I want to compliment the gentleman from New York [Mr. SOLOMON], chair of the Committee on Rules, and also members of the committee for bringing this im- portant legislation to the floor, bring- ing this rule to the floor. This has been delayed far too long. This is a bill that is about child abuse. It is drug abuse. It is crime and violence and the fact that, for too many Americans who are trapped in this system, the American dream has become the American nightmare. I do not argue with the fact that the welfare system is a hand in need to those who need it. But for too many it has become a prison. This is about women and children who are suffering under this system as well as the social workers and the law enforcement offi- cers who are forced to deal with the ramifications of the aspects of the sys- tem that do not work. Mr. Speaker, for too long we have been delaying this. We have delayed this vote for most of the day. The fact of the matter is that welfare reform is at the door. It has been knocking for CONGRESSIONAL RECORD \u2014 HOUSE H9401July 31, 1996 almost 30 years, and it is finally here today. This afternoon, hopefully, it will be voted on and we will send it to a President who will endorse it. I think that is a tremendous accomplishment for the people of this country. I would also say it is a first step. The system has become so complex between the different aspects of service and how they are available to help people, that even the people running the system have difficulty understanding it, let alone those who have need for assist- ance. So, it is a first step in the direc- tion of reform, in the direction of pro- viding an American dream for more Americans and getting rid of the Amer- ican nightmare. Mr. SOLOMON. Mr. Speaker, I yield 1 minute to the gentleman from Texas [Mr. SMITH], an outstanding Member who has dealt with the immigration problem in this country. Mr. SMITH of Texas. Mr. Speaker, I rise in strong support of the rule and the Personal Responsibility Act. Wel- fare has harmed our children, families, and taxpayers. It has created a culture of dependency that saps people’s desire to better their lives. And welfare has undermined America’s longstanding immigration policy. America has always welcomed new citizens with the energy and commit- ment to come to our shores to build a better future. We’ve always ensured that immigrants are self-reliant\u2014not dependent on American taxpayers for support. Since 1917, noncitizens who have become public charges after they enter the United States have been sub- ject to deportation. Welfare undermines this policy and harms immigrants. Rather than pro- moting hard work, welfare tempts im- migrants to come to America to live off the American taxpayer. Noncitizen SSI recipients have increased 580 per- cent over the past 12 years, and will cost American taxpayers $5 billion this year alone. H.R. 3734 restores America’s historic immigrants policy and ends the cruel welfare trap. It ensures that sponsors, not taxpayers, will support new immi- grants who fall on hard times. Just as deadbeat dads should support the chil- dren they bring into this world, dead- beat sponsors should support the immi- grants they bring into our country. I urge my colleagues to support this rule and vote for this bill. Mr. SOLOMON. Mr. Speaker, I yield 2 minutes to the gentleman from Savan- nah, GA [Mr. KINGSTON]. Mr. KINGSTON. Mr. Speaker, I thank the gentleman from New York for yielding. It is interesting we have heard from the Democrats a number reasons why they are not going to support this bill today. One of their reasons was they have not had time to look at it. I am a relatively new Member of Congress. I have been here 4 years. We have been debating welfare for 4 years. I know that for a fact. I have been here. If they have not read the bill by now and have not been following the debate, that is not the fault of the Republican Con- gress. The second reason they say that is that welfare does not cost that much. If you add in all the Federal Govern- ment welfare programs, the cost is $345 billion, which is ore than we spend on defense. I am not sure what they con- sider money if $345 billion is not. We spent $5 trillion since LBJ’s Great So- ciety programs, and that is enough money. That is more than we spent on World War II. The final reason they are saying is that it is cruel to children. Nothing is more cruel than having a welfare sys- tem that traps children in poverty, that makes children and families break up, that makes them live in housing projects where the dad cannot be at home, where there is high drug use, where there are teenage dropout rates and teenage drug abuse. I do not see why they think that is compassion. Our program sends $4 billion more on child care than the Democrat proposal. And that is using their frame of think- ing that is more compassion than what they have. Welfare reform is family friendly. Welfare should not be a life style. It should be something that soci- ety gives people a temporary helping hand, not a permanent handout, not a hammock forever to swing in but a temporary safety net so that people can get back into the socioeconomic mainstream and enjoy the American dream just like the rest of us. Mr. MOAKLEY. Mr. Speaker, I yield myself such time as I may consume. Mr. Speaker, I want to begin by re- minding my colleagues of one very im- portant fact. Today 9 million children depend upon Aid to Families With De- pendent Children for their survival. When we are talking about reforming welfare, we are talking about these 9 million American children, and we need to be very, very careful on what changes we make. Mr. Speaker, this is not to say that I am opposed to welfare reform. In fact, I am very much in favor of welfare re- form. I have seen too many children growing up surrounded by violence. I have seen too many fathers completely abandon their responsibilities. And I have seen too many single mothers too dejected and overwhelmed to look for jobs. These days being poor is not what it used to be. It used to be that families stuck together. It used to be if you worked hard enough you could support your family. But, Mr. Speaker, unfor- tunately times have changed. I agree with the editorial in the Au- gust 12 issue of the New Republic which says that, although our current welfare system may not have created the cur- rent underclass, it certainly sustains it. I agree that welfare reform is one of the most important issues that we can take up in this Congress. Today’s Bos- ton Globe says that under this bill, poverty will grow with welfare done on the cheap. We need to be very careful, Mr. Speaker, how we change AFDC and not do it on the cheap. This bill, Mr. Speaker, is not the way to do it. I hoped that after this bill came out of conference, I would be able to support it. But after looking at it, I cannot because, Mr. Speaker, I cannot vote for a bill that will push 1 million additional children below the poverty level. I cannot vote for a bill that may not guarantee health care to poor chil- dren and a conference committee that cuts food stamps. I cannot vote for a bill that will provide no protection for bad times. If there is a recession, mil- lions of people will be completely des- titute. And, Mr. Speaker, I cannot vote for a bill that allows States to take at least one-half of their Federal money and spend it on something other than children. This Gingrich welfare bill, Mr. Speaker, is too tough on children. It is weak on work, and it is soft on dead- beat parents. Mr. Speaker, as I said, two out of every three people on wel- fare is a child, and we have a respon- sibility to those children. We have a re- sponsibility to make sure that under no circumstances whatsoever will they be hurt. We have a responsibility, Mr. Speaker, to make sure that their health and their safety is placed far above any jockeying for political ad- vantage. So I urge my colleagues to oppose this rule and oppose the conference committee bill and I yield back the balance of my time. b 1500 Mr. SOLOMON. Mr. Speaker, I yield myself the balance of my time. Mr. Speaker, did I hear the gen- tleman right when he said, the Ging- rich welfare bill? Is that not strange? I thought it was the Gingrich-Clinton welfare bill, because the President has just announced he is going to sign the bill. Mr. Speaker, colleagues, I would just say to you, what is compassionate about locking poor people into a life- time of welfare dependency? That is what this debate is all about. If you are really sincere, if you really care about poor people in America, do something for them. Change the status quo which has failed miserably. I see my good friend, the gentleman from Texas [Mr. STENHOLM], sitting over here, came here with me 18 years ago. He came before the Committee on Rules about an hour or so ago and he said, JERRY, this a bipartisan bill. He said, we Democrats have had input to it. It is a compromise. It is a step in the right direction. Mr. Speaker, what I was hearing is, no more ifs, ands and buts. This is the compromise. This is the step in the right direction we need to move in. Let us vote for this bill now. Vote for the rule and the bill and let us get on with trying to change the welfare sys- tem in America for the good of the poor. Mr. Speaker, I yield back the balance of my time, and I move the previous question on the resolution. CONGRESSIONAL RECORD \u2014 HOUSEH9402 July 31, 1996 The SPEAKER pro tempore (Mr. RIGGS). The question is on ordering the previous question. The question was taken; and the Speaker pro tempore announced that the ayes appeared to have it. Mr. MOAKLEY. Mr. Speaker, I object to the vote on the ground that a quorum is not present and make the point of order that a quorum is not present. The SPEAKER pro tempore. Evi- dently a quorum is not present. The Sergeant at Arms will notify ab- sent Members. Pursuant to clause 5 of rule XV, the Chair will reduce to 5 minutes the min- imum period of time within which a vote by electronic device, if ordered, will be taken on the question of agree- ing to the resolution. The vote was taken by electronic de- vice, and there were\u2014yeas 259, nays 164, not voting 10, as follows: [Roll No. 381] YEAS\u2014259 Allard Archer Armey Bachus Baesler Baker (CA) Baker (LA) Ballenger Barr Barrett (NE) Bartlett Barton Bass Bateman Bereuter Bilbray Bilirakis Bishop Bliley Blute Boehlert Boehner Bonilla Bono Brewster Browder Brownback Bryant (TN) Bunn Bunning Burr Burton Buyer Callahan Calvert Camp Campbell Canady Castle Chabot Chambliss Chapman Chenoweth Christensen Chrysler Clinger Coble Coburn Collins (GA) Combest Condit Cooley Cox Cramer Crane Crapo Cremeans Cubin Cunningham Davis Deal DeLay Diaz-Balart Dickey Dicks Dooley Doolittle Dornan Doyle Dreier Duncan Dunn Ehlers Ehrlich English Ensign Everett Ewing Fawell Fields (TX) Flanagan Foley Forbes Fowler Fox Franks (CT) Franks (NJ) Frelinghuysen Frisa Funderburk Gallegly Ganske Gekas Geren Gilchrest Gillmor Gilman Goodlatte Goodling Goss Graham Greene (UT) Greenwood Gutknecht Hall (TX) Hamilton Hancock Hansen Hastert Hastings (WA) Hayes Hayworth Hefley Heineman Herger Hilleary Hobson Hoekstra Hoke Holden Horn Hostettler Hunter Hutchinson Hyde Inglis Istook Johnson (CT) Johnson, Sam Jones Kasich Kelly Kim King Kingston Kleczka Klug Knollenberg Kolbe LaHood Largent Latham LaTourette Laughlin Lazio Leach Lewis (CA) Lewis (KY) Lightfoot Lincoln Linder Lipinski Livingston LoBiondo Longley Lucas Manzullo Martini McCollum McCrery McDermott McHugh McInnis McIntosh McKeon Metcalf Meyers Mica Miller (FL) Molinari Montgomery Moorhead Morella Myers Myrick Nethercutt Neumann Ney Norwood Nussle Orton Oxley Packard Parker Paxon Payne (VA) Peterson (FL) Peterson (MN) Petri Pickett Pombo Porter Portman Poshard Pryce Quillen Quinn Radanovich Ramstad Regula Riggs Roberts Roemer Rogers Rohrabacher Ros-Lehtinen Rose Roukema Royce Salmon Sanford Saxton Scarborough Schaefer Schiff Seastrand Sensenbrenner Shadegg Shays Shuster Skeen Smith (MI) Smith (NJ) Smith (TX) Smith (WA) Solomon Souder Spence Stearns Stenholm Stockman Stump Talent Tanner Tate Tauzin Taylor (MS) Taylor (NC) Thomas Thornberry Tiahrt Torkildsen Traficant Upton Vucanovich Walker Walsh Wamp Watts (OK) Weldon (FL) Weldon (PA) Weller White Whitfield Wicker Wolf Young (AK) Zeliff Zimmer NAYS\u2014164 Abercrombie Ackerman Andrews Baldacci Barcia Barrett (WI) Becerra Beilenson Bentsen Berman Bevill Blumenauer Bonior Borski Boucher Brown (CA) Brown (FL) Brown (OH) Bryant (TX) Cardin Clay Clayton Clement Clyburn Coleman Collins (IL) Collins (MI) Conyers Costello Coyne Cummings Danner de la Garza DeFazio DeLauro Dellums Deutsch Dingell Dixon Doggett Durbin Edwards Engel Eshoo Evans Farr Fattah Fazio Fields (LA) Filner Foglietta Frank (MA) Frost Furse Gejdenson Gephardt Gibbons Gonzalez Gordon Green (TX) Gutierrez Hall (OH) Harman Hastings (FL) Hefner Hilliard Hinchey Hoyer Jackson (IL) Jackson-Lee (TX) Jacobs Johnson (SD) Johnson, E. B. Johnston Kanjorski Kaptur Kennedy (MA) Kennedy (RI) Kennelly Kildee Klink LaFalce Lantos Levin Lewis (GA) Lofgren Lowey Luther Maloney Manton Markey Martinez Mascara Matsui McCarthy McHale McKinney McNulty Meehan Meek Menendez Millender- McDonald Miller (CA) Minge Mink Moakley Mollohan Moran Murtha Nadler Neal Oberstar Obey Olver Ortiz Owens Pallone Pastor Payne (NJ) Pelosi Pomeroy Rahall Rangel Reed Rivers Roybal-Allard Rush Sabo Sanders Sawyer Schroeder Schumer Scott Serrano Sisisky Skaggs Skelton Slaughter Spratt Stark Stokes Studds Stupak Tejeda Thompson Thornton Thurman Torres Torricelli Towns Velazquez Vento Visclosky Volkmer Ward Waters Watt (NC) Waxman Williams Wilson Wise Woolsey Wynn Yates NOT VOTING\u201410 Flake Ford Gunderson Houghton Jefferson McDade Richardson Roth Shaw Young (FL) b 1521 Mrs. KENNELLY and Mr. JOHNSON of South Dakota changed their vote from ”yea” to ”nay.” So the previous question was ordered. The result of the vote was announced as above recorded. The SPEAKER pro tempore (Mr. RIGGS). The question is on the resolu- tion. The question was taken; and the Speaker pro tempore announced that the ayes appeared to have it. Mr. MOAKLEY. Mr. Speaker, on that I demand the yeas and nays. The yeas and nays were ordered. The vote was taken by electronic de- vice, and there were\u2014yeas 281, nays 137, not voting 15, as follows: [Roll No. 382] YEAS\u2014281 Allard Archer Armey Bachus Baesler Baker (CA) Baker (LA) Ballenger Barcia Barr Barrett (NE) Bartlett Barton Bass Bateman Bentsen Bereuter Bilbray Bilirakis Bishop Bliley Blute Boehlert Boehner Bonilla Bono Boucher Brewster Browder Brownback Bryant (TN) Bunn Bunning Burr Burton Buyer Callahan Calvert Camp Campbell Canady Castle Chabot Chambliss Chapman Chenoweth Christensen Chrysler Clement Clinger Coble Coburn Collins (GA) Combest Condit Cooley Costello Cramer Crane Crapo Cremeans Cubin Cunningham Danner Deal DeLay Deutsch Diaz-Balart Dickey Dicks Dingell Dooley Doolittle Dornan Doyle Dreier Duncan Dunn Durbin Edwards Ehlers Ehrlich English Ensign Everett Ewing Fawell Fields (TX) Flanagan Foley Forbes Fowler Fox Franks (CT) Franks (NJ) Frelinghuysen Frisa Frost Funderburk Gallegly Ganske Gekas Geren Gilchrest Gillmor Gilman Goodlatte Goodling Gordon Goss Graham Greene (UT) Greenwood Gutknecht Hall (OH) Hall (TX) Hamilton Hancock Hansen Harman Hastert Hastings (WA) Hayworth Hefley Hefner Heineman Herger Hilleary Hobson Hoekstra Hoke Holden Horn Hostettler Hunter Hutchinson Hyde Inglis Istook Jacobs Johnson (CT) Johnson (SD) Johnson, Sam Jones Kasich Kelly Kennelly Kim King Kingston Kleczka Klug Kolbe LaHood Largent Latham LaTourette Laughlin Lazio Leach Levin Lewis (CA) Lewis (KY) Lightfoot Lincoln Lipinski LoBiondo Longley Lucas Luther Manzullo Martini Mascara McCarthy McCollum McCrery McHugh McInnis McIntosh McKeon Metcalf Meyers Mica Miller (FL) Minge Molinari Montgomery Moorhead Morella Myers Nethercutt Neumann Ney Norwood Nussle Orton Oxley Packard Parker Paxon Payne (VA) Peterson (FL) Peterson (MN) Petri Pickett Pombo Porter Portman Poshard Pryce Quillen Quinn Radanovich Ramstad Regula Riggs Rivers Roberts Roemer Rogers Rohrabacher Ros-Lehtinen Rose Roukema Royce Salmon Sanford Saxton Scarborough Schaefer Schiff Seastrand Sensenbrenner Shadegg Shaw Shays Shuster Sisisky Skeen Skelton Smith (MI) Smith (NJ) Smith (TX) Smith (WA) Solomon Souder Spence Spratt Stenholm Stockman Stump Talent CONGRESSIONAL RECORD \u2014 HOUSE H9403July 31, 1996 Tanner Tate Tauzin Taylor (MS) Thomas Thornberry Tiahrt Torkildsen Torricelli Traficant Upton Volkmer Vucanovich Walker Walsh Wamp Watts (OK) Weldon (FL) Weldon (PA) Weller White Whitfield Wicker Williams Wilson Wolf Young (AK) Zeliff Zimmer NAYS\u2014137 Abercrombie Ackerman Andrews Baldacci Barrett (WI) Becerra Beilenson Berman Bevill Blumenauer Bonior Borski Brown (CA) Brown (FL) Brown (OH) Bryant (TX) Cardin Clay Clayton Clyburn Coleman Collins (IL) Collins (MI) Conyers Coyne Cummings Davis de la Garza DeFazio DeLauro Dellums Dixon Doggett Engel Eshoo Evans Farr Fattah Fazio Fields (LA) Filner Foglietta Frank (MA) Furse Gejdenson Gephardt Gibbons Gonzalez Green (TX) Gutierrez Hastings (FL) Hilliard Hinchey Hoyer Jackson (IL) Jackson-Lee (TX) Jefferson Johnson, E. B. Johnston Kanjorski Kaptur Kennedy (MA) Kennedy (RI) Kildee Klink LaFalce Lantos Lewis (GA) Lofgren Lowey Maloney Manton Markey Martinez Matsui McDermott McHale McKinney McNulty Meehan Meek Menendez Millender- McDonald Miller (CA) Mink Moakley Mollohan Moran Murtha Nadler Neal Oberstar Obey Olver Ortiz Owens Pallone Pastor Payne (NJ) Pelosi Pomeroy Rahall Rangel Reed Roybal-Allard Rush Sabo Sanders Sawyer Schroeder Schumer Scott Serrano Skaggs Slaughter Stark Stokes Studds Stupak Taylor (NC) Tejeda Thompson Thornton Thurman Torres Towns Velazquez Vento Visclosky Ward Waters Watt (NC) Waxman Wise Woolsey Wynn Yates NOT VOTING\u201415 Cox Flake Ford Gunderson Hayes Houghton Knollenberg Linder Livingston McDade Myrick Richardson Roth Stearns Young (FL) b 1530 So the resolution was agreed to. The result of the vote was announced as above recorded. A motion to reconsider was laid of the table. PERSONAL EXPLANATION Mr. KNOLLENBERG. Mr. Speaker, on roll- call No. 382. I was in the Rayburn Room. The beeper and the bells failed to function and I missed the above vote. Had I been present, I would have voted ”yea.” PERSONAL EXPLANATION Mr. HOUGHTON. Mr. Speaker, I was inad- vertently delayed while attending an Inter- national Relations Committee hearing with Secretary Christopher, and missed voting on rollcalls No. 381 and No. 382. Had I been there, I would have voted ”yea” on 381 and ”yea” on 382. Mr. KASICH. Mr. Speaker, pursuant to House Resolution 495, I call up the conference report on the bill (H.R. 3734) to provide for reconciliation pursuant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997. The Clerk read the title of the bill. The SPEAKER pro tempore. Pursu- ant to House Resolution 495, the con- ference report is considered as having been read. (For conference report and state- ment, see Proceedings of the House of Tuesday, July 30, 1996, at page H8829.) The SPEAKER pro tempore. The gen- tleman from Ohio [Mr. KASICH] and the gentleman from Minnesota [Mr. SABO] will each be recognized for 30 minutes. The Chair recognizes the gentleman from Ohio [Mr. KASICH]. Mr. KASICH. Mr. Speaker, I yield 4 minutes to the gentleman from Kansas [Mr. ROBERTS], the distinguished chair- man of the Committee on Agriculture. (Mr. ROBERTS asked and was given permission to revise and extend his re- marks.) Mr. ROBERTS. Mr. Speaker, I thank the gentleman for yielding time to me, and I thank my colleagues for their re- luctant attention. Mr. Speaker, in a year that has been described by many as one of gridlock and finger-pointing and wheel-spinning and even-numbered year partisan rhet- oric, we are about to achieve a remark- able accomplishment. This House and the Senate, and now finally the Presi- dent, have responded to the American public. Simply put, this conference re- port represents real accomplishment, real welfare reform. We urged the President to sign this conference report. He has. There are good reasons why. Seventy-five percent of the food stamp reforms in this con- ference report represent the same things that were proposed by this ad- ministration. I do not care whether we are talking about budget savings, the work requirement, the program sim- plification, the tougher penalties for fraud and abuse, or keeping the pro- gram at the Federal level as we go through the welfare reform transition. We have tried to work with the admin- istration. We have done that. The President will sign the bill. Mr. Speaker, this road has not been easy. We have been working in this House for 18 months. The very first hearing held by me in the Committee on Agriculture was on fraud and abuse, and the critical and urgent need for re- form of the Food Stamp Program. The new Inspector General at the Depart- ment of Agriculture showed a video- tape of organized crime members trad- ing food stamps for cash, and eventu- ally using that cash for drugs and guns. That tape made national news, and it confirmed the suspicions of many tax- payers and citizens. Following that hearing, our late col- league and dear friend, the chairman of the subcommittee, Bill Emerson, held four extensive hearings and formulated the principles that guided the reform that is now before us. First, the original Republican plan was to make sure that as we go through welfare reform, no one would go hungry, that we would keep a re- formed Food Stamp Program as a safe- ty net so food can and will be provided while States are undergoing this tran- sition. Second, we wanted to eliminate as much paperwork and redtape and regu- lation as possible. We wanted to har- monize the welfare and the Food Stamp Program requirements. This bill does that. Third, having seen the program costs soar from $12 to $27 billion in 10 years, regardless of how the economy has per- formed, we wanted to take the program off of automatic pilot. We have done that. Fourth, the food stamps must not be a disincentive to work. In this bill, able-bodied participants, those from ages of 18 to 50 with no dependents, no kids, no children, only the able-bodied, these folks, less than 2 percent of those on food stamps, they must work in pri- vate sector jobs and not be rewarded for not working. Fifth, after hearing firsthand from the Inspector General, we tightened the controls on waste and abuse. We stopped the trafficking with increased and tough penalties. Mr. Speaker, these principles do rep- resent real reform of the Food Stamp Program. All are incorporated in the conference agreement. I urge my col- leagues to vote ”yes.” I want to thank my colleagues for a tremendous team effort, more espe- cially the gentleman from Ohio [Mr. KASICH], more especially the gen- tleman from Texas [Mr. ARCHER], more especially the gentleman from Penn- sylvania [Mr. GOODLING], and more es- pecially, underscored three times, the gentleman from Florida [Mr. SHAW], who said the work we have accom- plished is significant. We have true re- form. We have a real welfare reform bill. But now the work really starts. This bill is not perfect. We have a lot ahead of us and a lot of challenges. I urge a ”yes” vote on the conference re- port. Mr. SABO. Mr. Speaker, I yield 2 minutes to the distinguished gen- tleman from Tennessee [Mr. TANNER]. (Mr. TANNER asked and was given permission to revise and extend his re- marks.) Mr. TANNER. Mr. Speaker, I am happy today for several reasons. I think Congress has come together with the administration to take a step for- ward on certainly what is a pressing national social problem. That is wel- fare reform. We started out, as the pre- vious speaker said, almost 2 years ago to try to bring together something that could be signed and enacted into law so we could actually change the system that is broken, according to ev- eryone who has observed it, and actu- ally do something about it now. I want to thank the gentleman from Florida [Mr. SHAW], the gentleman from Ohio [Mr. KASICH], the gentleman from Minnesota [Mr. SABO], and many others here. I particularly want to CONGRESSIONAL RECORD \u2014 HOUSEH9404 July 31, 1996 thank the gentleman from Delaware, MIKE CASTLE, who came together with me to put together something that would be bipartisan so we could get off of this partisan gridlock that we have been suffering from. Mr. Speaker, in our motion to in- struct conferees we asked for two or three things: One, a safety net for kids. That has been accomplished with Med- icaid and food stamps. The safety net is there for children. The unfunded man- date problem has been partially taken care of, with the States being allowed to continue with waivers, and also be- cause the Medicaid situation is intact, there will not be a lot of costs trans- ferred to county hospitals across our country. We also asked that savings go to the debt. That has not been accom- plished, but as the previous speaker said, we will continue to work on that. The most important difference be- tween the conference agreement and the two bills that have previously been vetoed, in my judgment, is that we pro- tect innocent children. This bill no longer treats a 4-year-old child like he or she is a 24-year-old irresponsible adult. To me that was critical. That is not a part of welfare reform. That is just compassionate public policy. This bill has done that. I once again thank the Republican conferees for their hard work, the gen- tleman from Florida [Mr. SHAW] and others. I also urge a ”yes” vote. Let us make this a red letter day. Mr. CAMP. Mr. Speaker, I yield such time as she may consume to the gen- tlewoman from New Jersey [Mrs. ROU- KEMA]. (Mrs. ROUKEMA asked and was given permission to revise and extend her remarks.) Mrs. ROUKEMA. Mr. Speaker, I rise in support of this legislation, and want to associate myself with the statement of the chairman of the Committee on Agriculture, the gentleman from Kan- sas [Mr. ROBERTS], particularly as it applied to the Food Stamp Program. My opposition and stated principle in the last round of this bill before it went to conference was expressing a concern of what it did to innocent chil- dren in that regard. I rise in support. It has been corrected, and I support the conference agreement. Mr. Speaker, as someone who has ad- vocated a ”tough love” approach to welfare reform legislation, this goes a long way toward reforming our broken welfare system as we return the system to its original purpose\u2014a temporary safety net, not a way of life. Furthermore, as a pioneer in the bat- tle to also reform our child support en- forcement system, I am very pleased to see that the reforms I have been push- ing for almost 4 years now\u2014which rep- resent the heart and soul of the U.S. Interstate Commission on Child Sup- port’s final report\u2014have been included in the package before us today. Ensuring that these child support en- forcement reforms were included in this bill acknowledges what I’ve been saying for years: Effective reform of our interstate child support enforce- ment laws must be an integral compo- nent of any welfare reform plan that the 104th Congress sent to President Clinton. Research has found that somewhere between 25 and 40 percent of welfare costs go to support mothers and chil- dren who fall onto the welfare rolls precisely because these mothers are not receiving the legal, court-ordered support payments to which they are rightfully entitled. With the current system spending such a large portion of funding on these mothers, children are the first victims, and the taxpayers who have to support these families are the last vic- tims. The plan before us also puts teeth into the laws that require unwed moth- ers to establish paternity of their chil- dren at the hospital, thereby laying the groundwork for claiming responsibility for their actions and families. The core of the welfare reforms in- corporated into this bill are clearly de- fined work requirements for welfare beneficiaries\u2014which is essential to moving people off of the welfare rolls\u2014 strict time limits\u2014thereby giving wel- fare recipients a strong incentive to find a job\u2014and more flexibility for States to design welfare programs that fit the needs of their people. In addition, this welfare reform plan protects the safety net for children by including a rainy day fund to help the families in States suffering from reces- sion or economic downturns. The enhanced flexibility that States will receive under this plan is meritori- ous, provided that the safety net is maintained in order to protect families who truly need temporary assistance\u2014 not a lifetime of handouts generation after generation. For example, while I support the con- cept of giving States more flexibility in designing their own welfare pro- grams, I am very pleased to see that this bill contains strong maintenance of effort provisions which will require States to continue their commitment to the Nation’s safety net. Under no circumstances should a block grant reform allow States to simply administer welfare or any other program using only Federal moneys\u2014 this bill avoids that problem with its tough maintenance of effort language. I was very distressed by the fact that House version of this bill opened a sig- nificant loophole in the Food Stamp Program by giving States the option of using block grants for this critically- important aspect of our Nation’s safety net. Given that I was deeply concerned about giving a blank check to the Gov- ernors for the Food Stamp Program would result in innocent children going hungry, I opposed the House plan last week. But again I am very pleased to see that, once again, the Senate has saved the House of Representatives from it- self by rejecting this proposal, and suc- cessfully retaining its position on this issue in the final bill. Additionally, this legislation does take a modest step in the right direc- tion by allowing States to use their own money, or social services block grant funds\u2014to provide families on welfare with vouchers\u2014instead of cash benefits\u2014to pay for essential services needed by the family, that is, medicine, baby food, diapers, school supplies\u2014if a State has terminated the family’s cash benefits as part of its sanction pro- gram. This is the right thing to do because even if a welfare recipient is playing by all of the rules and has not found a job when the time limits become effective, the use of vouchers for services plays an important role in helping the family and its children keep their head above the water-line. There should be no question that we must enact strong welfare reform legis- lation this year. The American people are correctly demanding that we re- store the notion of individual respon- sibility and self-reliance to a system that has run amok over the past 20 years. Although I have strongly supported some welfare reforms that have been described as ”tough love” measures for several years now, I want to reiterate that my goal has always been to re- quire self-reliance and responsibility, while ensuring that innocent children do not go hungry and homeless as a re- sult of any Federal action. Finally, I am most supportive of the improvements the conference gave to the Medicaid Program. This is an en- lightened and humane response to gen- uine medical needs. Mr. Speaker, this bill is not perfect. But, it represents the first major re- form of our broken-down welfare sys- tem in generations. We have been given a historic opportunity that I hope and trust we will not squander. We owe no less to our children. I urge my col- leagues to join me in voting for final passage of this monumental reform package. Mr. CAMP. Mr. Speaker. I yield my- self such time us I may consume. (Mr. CAMP asked and was given per- mission to revise and extend his re- marks.) Mr. CAMP. Mr. Speaker, I rise in sup- port of the conference agreement. Today, the Congress is again presented with the opportunity to adopt meaningful wel- fare reform. Over the past 19 months, my col- leagues and I have written, debated, and adopted proposals to reform our current wel- fare system. Our efforts, however, were twice vetoed by the President. Since launching the war on poverty in 1965, over $5 trillion has been spent to eliminate poverty in America. Some 31 years later and despite billions and billions of dollars, poverty in America has worsened and our children grow and mature in an environment with little hope and opportunity. The proposal before us today reforms a wel- fare system that has trapped millions in a CONGRESSIONAL RECORD \u2014 HOUSE H9405July 31, 1996 cycle of poverty. Our current welfare system punishes families and children by rewarding ir- responsibility, illegitimacy and destroying self- esteem. For too long, the Federal Government has defended the current system and turned away as millions of families and children be- came trapped in a cycle of despair, depend- ence, and disappointment. This bill accomplishes several important goals. First, it time limits welfare to 5 years. The Federal and State governments have an obligation to assist those in need but our cur- rent system has become a way of life instead of a temporary helping hand for those experi- encing hard times. Second, our bill requires work. The Wash- ington welfare system has also robbed recipi- ents of their self-esteem by merely providing a check. This proposal requires each recipient to work for their benefits, thereby instilling the pride of employment and allowing each recipi- ent to earn a paycheck. This sense of accom- plishment and independence increases the in- dividual’s self-esteem and often influences the children who can see firsthand the benefits of a strong work ethic. For those continuing to experience hard times, however, the bill allows States to exempt up to 20 percent of the wel- fare caseload from the time limit. Most importantly our bill helps those families and individuals working to improve their lives. We provide more funding for child care than current law and more than requested by the President. This funding is extremely important in allowing families to work while ensuring their children receive the proper care. We also protect our children by ensuring eligibility for Medicaid. For those families moving from wel- fare to work, we continue assistance so they don’t have to worry about losing health care coverage if their incomes increase. Compassion is not the sole property of Washington and our bill creates a Federal- State partnership in meeting the needs of wel- fare recipients. States will have the power and opportunity to design and implement new in- novative programs that best meet the needs of residents. I urge my colleagues to support the conference report. Mr. Speaker, I ask unanimous con- sent that the gentleman from Florida [Mr. SHAW] be allowed to control the time and to yield. The SPEAKER pro tempore (Mr. RIGGS). Is there objection to the re- quest of the gentleman from Michigan? There was no objection. Mr. SHAW. Mr. Speaker, I yield 1 minute to the gentlewoman from Washington [Ms. DUNN], a member of the Committee on Ways and Means. Ms. DUNN of Washington. Mr. Speak- er, this is a good bill. I am very pleased that the President has announced that he is going to sign this bill. I want to commend Members on both sides of the aisle for their hard work. We have worked for a long time to put a good bill together. To those who are concerned with pro- tecting the children, so were we. We spent a lot of time, a lot of thought, a lot of effort on protecting the children. We have come up with a bill that in the child care portion of the bill provides over $4 billion more to help those mothers who are trying to get off wel- fare into the workplace, with the peace of mind to know their children will be taken care of, $4 billion more than in the current welfare system. On the child support portion of the legislation, where we all know that in this Nation today $34 billion are owed, ordered by the court to be paid to cus- todial parents, we have tightened up this system. Those children are often the children that go on welfare\u201430 per- cent of their parents leave the State to avoid paying money to support their own flesh-and-blood children. We have solved this problem. So it is my great joy to say support this bill, and thanks for all the help. Mr. SABO. Mr. Speaker, I yield 11\u20442 minutes to the distinguished gentle- woman from California [Ms. WOOLSEY]. (Ms. WOOLSEY asked and was given permission to revise and extend her re- marks.) Ms. WOOLSEY. Mr. Speaker, we all agree that the welfare system does not work for the welfare recipients and for the taxpayers. The challenge we face as lawmakers is to improve the system so we can invest in getting families off welfare and into jobs that pay a liveable wage, and also to answer the ”what ifs”. What if a mother on wel- fare cannot find a job? What if she is not earning enough to take care of her family? What if she cannot find child care for her 6-year-old? Unfortunately, this conference report will not ensure families can live on the jobs that they get, that they will earn a liveable wage, and this conference has made sure that it does not answer our ”what ifs”. It kicks families off of assistance, even if parents are trying hard to find a job. It does not even in- vest in the education and training par- ents need to get jobs that pay an ac- tual liveable wage. Even though the House and Senate agreed that single parents with kids under 11 should not leave their children home alone if there is no child care, the majority went ahead without dis- cussion and lowered that age to under 6. b 1545 How many of my colleagues would leave their 6-year-old home alone? I ask my colleagues, do not take this vote lightly. Do not leave any child be- hind. The lives of millions of children are at stake. It will be too late tomor- row if the what-ifs are not answered today. Mr. SHAW. Mr. Speaker, I yield 2 minutes to the gentleman from Penn- sylvania [Mr. GOODLING], the chairman of the Committee on Economic and Educational Opportunities. (Mr. GOODLING asked and was given permission to revise and extend his re- marks.) Mr. GOODLING. Mr. Speaker, as I have said many times, you cannot fix something, you cannot change some- thing unless you first admit it is bro- ken and first admit that you need to change it. Finally, both sides of the aisle came forward and indicated that we do have a broken system, that we have as a matter of fact put millions of Americans into a bind and took away their opportunity to ever have a chance at the American dream. Now, the tough part then came as to how do you fix it. Of course we had dif- fering opinions. Our committee started out with the idea that welfare must be a safety net, not a way of life; there must be a very clear emphasis on work and on getting those on welfare into work. There must be a strong measure to stop abuses of the system. We need to return power and flexibility to the States. Welfare should not encourage, it should discourage destructive per- sonal behavior that contributes so clearly not only to welfare dependence but to a host of social problems. Mr. Speaker, this is a good, balanced welfare reform bill. We have been very generous in providing money for child care. We have protected the nutrition program. We have established strong work requirements. And we have at long last addressed the tremendous problem of out-of-wedlock births and absentee fathers. Mr. Speaker, I commend all those who have worked so hard to bring about this welfare reform effort. I want to especially mention from the Com- mittee on Economic and Educational Opportunities, the gentleman from California [Mr. CUNNINGHAM], the gen- tleman from Delaware [Mr. CASTLE], the gentleman from Arkansas [Mr. HUTCHINSON], the gentleman from Mis- souri [Mr. TALENT], and the gentle- woman from Kansas [Mrs. MEYERS]. I strongly support the legislation. I urge all to vote for it because at long last we move forward in transforming wel- fare to a program of work and oppor- tunity. Mr. SABO. Mr. Speaker, I yield 2 minutes to the gentleman from Texas [Mr. STENHOLM]. (Mr. STENHOLM asked and was given permission to revise and extend his remarks.) Mr. STENHOLM. Mr. Speaker, I rise in support of this conference report. In doing so, I want to pay particular thanks to the gentleman from Florida [Mr. SHAW] for making this an inclu- sive conference, at least from the per- spective of those of us on this side of the aisle, and also the gentleman from Louisiana [Mr. MCCRERY] and the gen- tleman from Delaware [Mr. CASTLE]. They have been very good to work with, at least in listening to those of us on this side of the aisle who had major problems with previous bills before the House and thought we had constructive suggestions of how to make it better. We were listened to, and many of the proposals we made are included, of which we are grateful. To those that suggest that somehow the State waivers portion of this is contrary to the best interest of the work programs of somehow guts work requirements, I only suggest that they read the bill. Read the language which is available, and they will see. Far CONGRESSIONAL RECORD \u2014 HOUSEH9406 July 31, 1996 from gutting it, it makes it much more workable. For States like mine, Texas, Utah, Michigan, and others that have already begun experimenting with work pro- grams, this bill, I believe, allows those States and all of us who are interested in making this bill work as we say we wish it to, it allows the flexibility to allow States to experiment, to do pilot projects and pilot programs. In this case it is already happening in my State. Some of the concerns that we had with unfunded mandates, they have been alleviated as best as can be pos- sible under a conference report. For that we are grateful. In the area of health care providers, protection of children, this is moved in the direction that we feel is much, much more pref- erable than the bill that originally passed the House. While this welfare reform conference report is far from perfect, it is clearly preferable to continuing the current system and preferable to welfare legis- lation considered earlier. For these reasons I support the wel- fare reform conference report. I am ex- tremely pleased that the President has agreed to sign it, and I commend those who have worked so hard for so long in order to bring us to this day. Mr. Speaker, while some of the comments I’ve heard this afternoon have tended toward the hyperbolic, it truly is the case that the im- portance of what we are doing today should not be minimized. When this welfare reform proposal is signed into law, the status quo will be fundamentally changed. This kind of change does not happen by chance. More people than I can mention de- serve credit, but in addition to the obvious leadership of President Clinton, Chairman SHAW, and other members of the leadership, I want to express my thanks for the bipartisan efforts of MIKE CASTLE, JOHN TANNER, JOHN CHAFEE, SANDY LEVIN, NANCY JOHNSON, and others. One of the major reasons I opposed pre- vious welfare reform proposals, and specifi- cally the bill that was most recently before the House, was because of the restrictions it would have placed on the State of Texas. Ear- lier this year I worked extensively with Gov- ernor Bush and the White House to obtain ap- proval of the Texas welfare waiver which in- cludes the best plans of our State for moving people from welfare to work. President Clinton already has approved waivers allowing 41 States to implement inno- vative programs to move welfare recipients to work. The House’s welfare reform bill would have restricted those State reform initiatives by imposing work mandates that are less flexi- ble than States are implementing. Over 20 States would have been required to change their work programs to meet the mandates in that earlier House bill or face substantial pen- alties from the Federal Government. The conference report now allows States that are implementing welfare waivers to go forward with those efforts. Specifically, the conference report allows those States to count individuals who are participating in State-au- thorized work programs in meeting the work participation rates in the bill, even work pro- grams which otherwise do not meet the Fed- eral mandates in the bill. I know that some of my colleagues on my side of the aisle have been critical of the State waiver provisions included in this conference report. I must respectfully and forcefully dis- agree with that sentiment and say that in vir- tually all cases, I think that conversations with officials from their own States would lead them to supporting this waiver provision. I am convinced that these various State plans are precisely the best experiments for determining how to put people to work. Frank- ly, I think the State plans generally are more realistic about the work requirements and are more solidly grounded in the possible, rather than the hypothetical. Some of us around here have gotten carried away with our rhetoric about being tough on work by getting into a bidding war over who can have work requirements that sound tough- er. Our rhetoric about being tough on work has led us to impose work requirements in this bill that virtually no State can implement. The only work requirements that are mean- ingful are the work requirements that actually can be met by States. When I have said that previous welfare reform bills were weak on work, I have meant that the bills would not give States the resources to put welfare recipi- ents into work. The mandates in the bill passed by the House would force States such as Texas to make changes in the plans passed by the State legislature or face severe penalties from the Federal Government. The important State waiver change included in the conference report gives States nec- essary additional flexibility in implementing programs to move welfare recipients to work even if they don’t meet the mandates in this bill. The additional flexibility that this bill gives to States in developing work programs will re- duce the pressure on States to cut benefits or restrict eligibility for assistance in order to meet the work requirements of the bill. The Congressional Budget Office has reported that States would be forced to tighten eligibility for assistance to needy families or by reducing the size of benefits in order to offset the un- funded mandate in the work programs. Mem- bers who are concerned about the impact that welfare reform will have on children should strongly support giving States this flexibility and reducing the unfunded mandates. Despite some reservations I have about this conference report, I believe it is critical that welfare reform be enacted this year. Failure to do so will signal yet another wasted oppor- tunity to make critically needed reforms. We should enact this conference report and fix the current system now, moving towards a system that better promotes work and individual re- sponsibility. Mr. SHAW. Mr. Speaker, I yield 11\u20442 minutes to the distinguished gen- tleman from Nevada [Mr. ENSIGN], a valued member of the Subcommittee on Human Resources of the Committee on Ways and Means. (Mr. ENSIGN asked and was given permission to revise and extend his re- marks.) Mr. ENSIGN. I thank the chairman for yielding me the time, and I thank him for all the work he has done on be- half of the welfare recipients in the country. Mr. Speaker, today is truly independ- ence day for welfare recipients. It is the first day to redefine compassion in America. In Las Vegas, we have a pro- gram known as Opportunity Village. It is an incredible program for the men- tally disabled. It is a public-private partnership. The primary premise for the program is that it is compassionate enough to care enough about mentally disabled people to where the commu- nity works together to find these peo- ple jobs. It is an incredible situation to walk down there and to see the joy that these people have in being able to work every day so that they do not become a drain on society. They feel good about themselves. Today is the first day wel- fare recipients are going to start feel- ing good about themselves, and the children are going to start feeling good about their parents. My mom, when I was young, was di- vorced, supporting three kids, with very little money, just virtually no child support. I watched her every sin- gle day get up and go to work. She taught me a work ethic that has car- ried through my entire life with myself and my brother and sister. We have robbed that of welfare families. This bill starts giving that work ethic back to the American people. The Wall Street Journal did a poll. Ninety-five percent of all presidents of companies had their first job by the time they were 12 years of age. Com- passion, work ethic, today; vote for this bill. It is a good bill for America, and today is a great day for America. Mr. SABO. Mr. Speaker, I yield 1 minute to the distinguished gentle- woman from California [Ms. WATERS]. Ms. WATERS. Mr. Speaker, someday more politicians will approach tough decisions such as welfare reform with more care and integrity. This is not that day. Someday politicians will place children above politics. This is not that day. Someday politicians will place truth above personal gain. This is not that day. Too many Democrats and Repub- licans will run for reelection on this so- called welfare reform legislation. The truth is this bill does nothing to train mothers for work, to develop jobs, to help recipients become independent. This bill is welfare fraud, not welfare reform. This bill penalizes poor work- ing families and will drive more chil- dren into poverty. Only time will re- veal the shame of what happened this day, and only history will record the blatant lack of courage to simply do the right thing. Mr. SABO. Mr. Speaker, I yield 1 minute to the distinguished gentle- woman from Florida [Mrs. MEEK]. (Mrs. MEEK of Florida asked and was given permission to revise and extend her remarks.) Mrs. MEEK of Florida. Mr. Speaker, let no one fool you. This bill is not about reforming welfare. It is not about that. It is about saving money and trying your very best to influence CONGRESSIONAL RECORD \u2014 HOUSE H9407July 31, 1996 the American public that we have bal- anced the budget. I would not mind this. I want to see welfare reform. But this is not the way to do it. What we are doing here is hurting children. Every time I stand here, I talk about that. These are all children. The con- ference report did much worse than the Senate. You allow the States, and I come from a State that will, you are allowing a State to cut 25 percent of their 1994 spending levels without any penalty. When the Florida legislature gets ready to cut, they are going to cut this particular program. The parents of children ages 6 to 11 will have to work without assurance of child care at all. Who is going to take care of the chil- dren? Are they going to run all over the world and get into trouble? Yes. The transfer of funds from transfer as- sistance to work, the Senate bill did better than that. The conference bill allows them to divert funds. I am hoping that people listen to this bill because what this conference bill does is worse than the Senate bill and it should not be passed. Mr. Speaker, this is a travesty to the American pub- lic. Mr. SHAW. Mr. Speaker, I yield 2 minutes to the gentlewoman from Con- necticut [Mrs. JOHNSON], a distin- guished member of the Committee on Ways and Means. Mrs. JOHNSON of Connecticut. I thank the gentleman from Florida for yielding me the time and commend him on his extraordinary leadership now over 4 years in getting this bill to the President. Mr. Speaker, this bill is about work, responsibility, hope, and opportunity. I wish I had the time here today to an- swer some of the concerns that have been raised about day care and jobs and all of those things. I think this bill ad- dresses them. But I would like to dis- cuss two issues that have not received much attention but are integral to our underlying goal of helping families be- come self-sufficient: Child support en- forcement and Medicaid. First, I am very pleased to say that this bill retains current eligibility standards for families on Medicaid. All families now on Medicaid will continue to get Medicaid. Furthermore, all fami- lies in the future that meet today’s cri- teria will continue to get Medicaid even if their State redefines their wel- fare program with more constricted criteria. Regarding the Medicaid transition period, under current law when a fam- ily leaves the welfare rolls to work, they are guaranteed 1 year’s transi- tional Medicaid benefit. In the future, this will be absolutely true. We retain current law in this regard. Medical cov- erage is often one of the biggest bar- riers to families leaving welfare, espe- cially since lower paying jobs are less likely to have employer-provided health coverage. By keeping the transi- tion period policy constant, we are ena- bling families to go to work without worrying about losing their medical benefit. Second, this bill contains landmark child support provisions. Today in America 3.7 million custodial parents are poor; of those 3.7 million, fully three-quarters receive no child support. Of those who have child support orders in place, which is only 34 percent of the women, only 40 percent receive the payment they should receive. This is catastrophic for women and children, and this bill fixes that system, an enor- mous advance for women and children and a way off welfare. Mr. SABO. Mr. Speaker, I yield 1 minute to the distinguished gentle- woman from Florida [Mrs. THURMAN]. Mrs. THURMAN. I thank the gen- tleman from Minnesota for yielding me this time. Mr. Speaker, I rise today to con- gratulate my friends from the other side of the aisle for their wisdom in adopting the position of the bipartisan Castle-Tanner coalition in maintaining the Federal commitment to food stamps. My colleagues were right to elimi- nate the optional block grant that would have forced States to turn away hungry families with children. They were right to modify the Kasich food stamp amendment in favor of a provi- sion that provides assistance to laid-off and downsized workers. Of course, I still believe it would have been more beneficial if this bill realized that people who cannot find jobs still need to eat. But my col- leagues have come a long way, and it is significant improvement over the first attempt at welfare reform. I am happy that my friends from the other side of the aisle listened to us and made these important changes along with others such as Medicaid coverage and vouch- ers. I look forward to the opportunity for us to continue in a bipartisan spirit to look at the future of these programs and to ensure that people that we are trying to help to get to work are able to do so. My colleagues so aptly put in a provi- sion so that we do a review every 3 years. We need to make sure we follow through with that. Mr. SHAW. Mr. Speaker, I yield 11\u20442 minutes to the distinguished gen- tleman from Florida [Mr BILIRAKIS], a valued member of the Committee on Commerce. (Mr. BILIRAKIS asked and was given permission to revise and extend his re- marks.) Mr. BILIRAKIS. Mr. Speaker, as rep- resentatives of the people we do not get as many opportunities as we would like to do something that would truly help improve the lives of the people we serve. This bill presents us with just such an opportunity. This conference report is more than just a prescription for much needed welfare reform, how- ever. It is what I hope will be the first step in our bipartisan efforts to im- prove the public assistance programs on which disadvantaged families de- pend. After all, welfare as we know it means more than AFDC. It includes food stamps, housing assistance and energy assistance, and it includes med- ical assistance. That is right. For mil- lions of Americans, Medicaid is wel- fare. That is because income assistance alone is not sufficient to meet the pressing needs of disadvantaged fami- lies. For States, too, Medicaid is welfare. In fact, it makes up the largest share of State public assistance funding. As a share of State budgets, Medicaid is four times larger than AFDC. b 1600 If President Clinton does the right thing and signs this welfare reform bill into law, Medicaid will still be caught up in the choking bureaucratic red tape of Federal control, and that is why the Medicaid Program must be re- structured if States are to fully suc- ceed in making public assistance pro- grams more responsible and effective. Mr. Speaker, I commend my col- leagues on both sides of the aisle for their commitment to true welfare re- form, and I look forward to continuing our efforts to making all sources of public assistance work better for those who need a helping hand up. Mr. SABO. Mr. Speaker, I yield such time as he may consume to the gen- tleman from Illinois [Mr. JACKSON]. (Mr. JACKSON of Illinois asked and was given permission to revise and ex- tend his remarks.) Mr. JACKSON of Illinois. Mr. Speaker, I rise in strong opposition to this deadly and Draco- nian piece of garbage which will do nothing to reform the conditions of poverty and unem- ployment suffered by our Nation’s most vulner- able. As I listen to the debate on the floor of this body today, I felt compelled to make clear to the American people exactly what this bill will do to our Nation’s families and our Nation’s fu- ture. Despite the deceptive rhetoric that we have heard on the floor today, let us be clear\u2014at its core, this bill unravels a 60-year guarantee of a basic human safety net for our Nation’s poorest and most vulnerable children and their families. The President and many Members of the 104th Congress have decided to cut welfare as they know it\u2014to children, immigrants and the poorest Americans\u2014but they have left in- tact welfare as we know it\u2014welfare to Ameri- ca’s largest corporations. We cannot and must not balance the budget on the backs of the least of these. Mr. Speaker, I have heard Members on this floor urge support of this deadly measure, cloaking its defense in terms like ”This is for the good of the poor.” How can this be any- thing but bad for the poor, when we know that in my Home State of Illinois alone, 55,800 chil- dren will be pushed below the poverty line as a result of this bill, and 1.3 million children will be similarly impacted nationwide. Please know, Mr. Speaker, that I will not join demopublicans and republicrats in this mean-spirited attack. you can rest assured that I will work to continue to provide equal protection under the law for our Nation’s poor, our disabled, our immigrants and our children. Posturing tough on welfare mothers is viewed as good politics at least by a press CONGRESSIONAL RECORD \u2014 HOUSEH9408 July 31, 1996 corps that admires cynicism. But ending wel- fare as I know it is a good idea if done well. So before you push more poor kids and their mothers out on the streets let’s apply ”Two Years and You’re Off” to dependent corpora- tions and find a real jobs program for all Americans. Perhaps conservative Republicans and Democrats and posturing Presidents should begin to beat up on the welfare king for a change. Mr. SABO. Mr. Speaker, I yield 1 minute to the distinguished gentle- woman from New York [Mrs. MALONEY]. Mrs. MALONEY. Mr. Speaker, this conference report is dangerous and un- realistic. I do not believe the American people will tolerate a policy of ending support to a single mom who has played by the rules, tried to find a job for 2 years and could not. Our unemployment rate is over 5 per- cent, and that does not include mil- lions of welfare recipients. This con- ference report does not require the Government to create jobs. The result will be the world’s wealthiest nation putting families out on the street to fend for themselves. Will we tolerate destitution and call it reform? Republicans say the States will solve these problems. Already Philadelphia, as reported yesterday in the paper, has stopped providing shelter beds for sin- gle homeless people due to Federal and State welfare cuts. I am not predicting that Republican welfare reform will put people out on the street. I am pointing out that it already has. Oppose this conference report. Mr. SHAW. Mr. Speaker, I yield 1 minute to the distinguished gentleman from Delaware [Mr. CASTLE], who has done a great deal in this conference in bringing the two sides together. Mr. CASTLE. Mr. Speaker, I cannot thank the gentleman from Florida [Mr. SHAW] enough. At a time when some- body had to listen, he did. We do not always do that in this building, and it is just a tremendous honor to him that we are passing this bill today. I thank the gentleman from Ten- nessee, Congressman JOHN TANNER, not a finer person to work with I know in the House, who acted in a bipartisan way when I think we needed that in order to bring this bill into line. I thank the President, who I under- stand is going to sign this legislation. I believe he is doing the right thing for a variety of reasons. I believe the safety net was put back into place that we have talked about in several ways in the area of Medicaid, food stamps, and the ability of States to set up voucher systems after 5 years. I think they can deal with that. I have believed strongly, in my fight for welfare reform for 12 years now, that this is the opportunity. Everyone talks about this in a very draconian sense. I believe this is opportunity for women, for children, in some instances for men, and for families. It is oppor- tunity because we are going to take people who have not had a true chance to live the American life in terms of their education and background and we are giving them that chance. It is an experiment. We may have to come back to it, but I congratulate ev- erybody. Mr. SABO. Mr. Speaker, I yield 1 minute to the distinguished gentleman from South Carolina [Mr. CLYBURN]. Mr. CLYBURN. Mr. Speaker, I thank the ranking member for yielding me this time. Mr. Speaker, 2 years and you are out is not a bad proposition in and of itself, but in this bill it relies on that tried- and-true adage if you give a man a fish you may feed him for a day, if you teach a man how to fish he may feed himself for a lifetime. In this bill, Mr. Speaker, only 50 per- cent of those 2-years-and-you-are- outers can reasonably expect any chance at training. In this era of per- sonal responsibility, this legislation asks our most vulnerable citizens to do more, but our States are being required to do less. Mr. Speaker, this is not the best we can do, and it is not the best we can af- ford. I urge a no vote, Mr. Speaker. Mr. SABO. Mr. Speaker, I yield 1 minute to the distinguished new mom from Arkansas, Mrs. LINCOLN. (Mrs. LINCOLN asked and was given permission to revise and extend her re- marks.) Mrs. LINCOLN. Mr. Speaker, I thank the gentleman for yielding me this time and for his kind remarks. I think we can find that no one will argue that our current welfare system needs changed and today we have the opportunity to pass legislation that will hopefully move our Nation’s low- income citizens from passively accept- ing a welfare check to actively earning a paycheck. Welfare reform has been one of my top priorities since first coming to Congress, especially reform of the SSI disability program or the crazy check problem. I have worked diligently with mem- bers of the Blue Dog Coalition, with the Chairman of the Subcommittee on Human Resources, the task force, and with Members of both sides of the aisle to find a reasonable solution to those who truly need SSI assistance and wel- fare reform, hoping we can crack down on the abuse in the system while mak- ing provisions for those who need it. Although this conference report is not a perfect bill, it represents a sig- nificant improvement over our status quo. No one should get something for nothing, and if the American people are going to be generous with their tax dollars, they should get something in return. Mr. Speaker, this legislation provides responsible reform through the three main goals we started with: State flexi- bility, personal responsibility, and work. I urge my colleagues to support this provision, a lot of hard work in a bipartisan spirit. Mr. SHAW. Mr. Speaker, I yield such time as he may consume to the gen- tleman from Virginia [Mr. GOODLATTE]. (Mr. GOODLATTE asked and was given permission to revise and extend his remarks.) Mr. GOODLATTE. Mr. Speaker, I thank the gentleman for yielding me this time, for his fine work on this bill, and I rise in strong support of the wel- fare reform conference report. Mr. SABO. Mr. Speaker, I yield 1 minute to the distinguished gentle- woman from Hawaii [Mrs. MINK]. Mrs. MINK of Hawaii. Mr. Speaker, I thank the ranking member of the Com- mittee on the Budget for yielding me this time. I intend to vote against this con- ference report. The Urban Institute tells us that over a million children will be put into poverty as a result of this legislation. We are told by our own Republican Congressional Budget Of- fice that it is underfunded insofar as the work requirements. If indeed we want our people on wel- fare to go to work, is it not fair to ex- pect that there will be dollars there to provide them jobs, not to cut them adrift after 2 years without any cash support whatsoever? That is what the consequence of this bill will do. It will force people out on the streets, literally, with no cash as- sistance whatsoever and without the promise of any assistance in finding jobs. The women on welfare want to work. Look at any study that has been is- sued. These studies tell us that over 60 percent of the young mothers on wel- fare are out there looking for jobs and half of them do find them and they get off welfare. These people who say that the women stay there 13 years on wel- fare are simply not telling the truth. Mr. SHAW. Mr. Speaker, I yield 11\u20442 minutes to the gentlewoman from North Carolina [Mrs. MYRICK], the former mayor of Charlotte. Mrs. MYRICK. Mr. Speaker, the President’s decision to sign this wel- fare reform bill is really great news for working Americans and for people in need. The welfare bill will really re- form and empower the States to be cre- ative in solving their own problems and it will help end the cycle of dependency and poverty, which really truly helps millions of children with a decent ful- filling future. As a former mayor, I know firsthand these ideas work because we had pilot programs in our area where we were moving people out of public housing and into home ownership and off of welfare with child care help and really giving them their dignity back again. It is a sin not to help someone who genuinely, truly needs that help through no fault of their own, but it is also a sin to help people who do not need help. So this bill is going to en- courage that personal responsibility that we are all so proud of and give people their dignity back. Mr. SABO. Mr. Speaker, I yield 1 minute to the distinguished gentleman from North Dakota [Mr. POMEROY]. Mr. POMEROY. Mr. Speaker, I rise to support this legislation. I believe this CONGRESSIONAL RECORD \u2014 HOUSE H9409July 31, 1996 bill is clearly an improvement over the current system. I voted against the previous GOP bills because I believed they inad- equately protected children and were weak on work. Unlike those bills, this conference report does not deprive kids on Medicaid of their health care cov- erage. The conference report allows States to provide vouchers for children’s ne- cessities when their parents reach the time limit on benefits. The conference report removes the optional food stamp block grant and provides families with high rent or utility bills an adjustment for more grocery money than the ear- lier House versions allowed. I remain concerned that funding for job training may not be adequate yet, and that may need to be addressed in the future. A lot of us have worked hard to im- prove the various welfare reform pro- posals we have considered. Real welfare reform has meaningful protections for children, has a tough work require- ment and demands personal respon- sibility. While this bill is not perfect, it fits those parameters and begins a process of reforming welfare. Mr. SHAW. Mr. Speaker, I yield 1 minute to the gentleman from Louisi- ana [Mr. MCCRERY], a most valuable member of the Subcommittee on Human Resources of the Committee on Ways and Means. Mr. MCCRERY. Mr. Speaker, I thank the chairman of the subcommittee for yielding me this time and congratulate him on the great work in getting this welfare reform bill to the floor today. I also commend the President today for agreeing to sign this most historic bill. I want to talk for just a second about a part of the bill that I helped write, and I have gotten several calls today and yesterday, and some of my col- leagues have, regarding the SSI for children’s provisions in this bill. I want to assure all those teachers who brought this problem to my atten- tion and to the attention of other of my colleagues this is being taken care of in this welfare reform bill. We do away with a very subjective qualifying criteria that allows children to qualify for a disability when they really should not be on the program and replaces it with very definitive medical criteria that will be much, much superior to the current system. So I want to thank the gentlewoman from Arkansas, BLANCHE LAMBERT LIN- COLN, the gentleman from Wisconsin, GERALD KLECZKA, and others who helped me to bring to the attention of this body the very serious problems with the SSI disability for children. Mr. SABO. Mr. Speaker, I yield 1 minute to the gentleman from Califor- nia [Mr. FARR]. In addition, Mr. Speaker, I ask unan- imous consent to yield the remainder of the time on our side to the gen- tleman from Florida [Mr. GIBBONS] and that Mr. GIBBONS be permitted to man- age that time and to yield time to oth- ers. The SPEAKER pro tempore (Mr. MCINNIS). Is there objection to the re- quest of the gentleman from Min- nesota? There was no objection. The SPEAKER pro tempore. The gen- tleman from California [Mr. FARR] is recognized for 1 minute. (Mr. FARR of California asked and was given permission to revise and ex- tend his remarks.) Mr. FARR of California. Mr. Speaker, everybody in this Congress wants wel- fare reform. That is not the debate. But not everybody in the Congress wants to shift the cost from Federal Government to local government. We usually ask ourselves as law- makers to look before we leap. I do not think we have done that here on the welfare reform bill. We have asked to be quoted by Governors, but Governors do not administer welfare, commu- nities do. Counties and cities do. Has anyone asked the mayors and county supervisors? Well, I did. In California we are going to shift 230,000 people who are legal residents of the United States who are disabled. They are cut off. They live in our com- munity. Where are they going to go? What will this bill do to help them? This bill goes on. It hurts the people in our neighborhoods, people who go to school with our children. What can we do with a bill that hurts children, that hurts the disabled, that hurts the el- derly? In the Congress of the richest Nation in the world, what we can do is vote ”no” on this bill and say we can do a better job. We want welfare reform, but a wel- fare reform bill that just plows the problem on the community is not re- form at all. I ask for a ”no” vote. Mr. Speaker, I insert the following material for the RECORD: COUNTY OF SANTA CRUZ, HEALTH SERVICES AGENCY, Santa Cruz, CA, July 17, 1996. Re recommendation to oppose H.R. 3507 and S. 1795 denying eligibility for federal pro- grams for legal immigrants. Hon. SAM FARR, U.S. House of Representatives, Washington, DC. DEAR CONGRESSMAN FARR: On behalf of Santa Cruz County, we are asking for your assistance and intervention in deleting from H.R. 3507 and S. 1795, requirements which deny eligibility for federal programs to legal immigrants. These two bills are moving for- ward under the heading of welfare reform and in their present form, are expected to save the Federal government $23 billion over seven years. At least $9 billion of this total would be achieved by eliminating services to legal immigrants in California. Santa Cruz County with less than 1% of the state’s popu- lation, because of its population history, de- pendence on agriculture and demographics, expects an adverse financial impact far in excess of its population share. While the federal budget will experience some relief, the budgets of local govern- ments, especially over-taxed budgets such as Santa Cruz’s, will be severely impacted. These important issues demand thoughtful, coordinated planning and implementation to assure the least negative impact on those taxpayers who fund local government serv- ices and those residents who look to local government for care. These two legislative proposals, regardless of their noble intent, will savage local gov- ernment and cause severe personal and soci- etal disruption. For these reasons, we urge that you oppose these measures as long as they contain these unacceptable provisions which deny eligibility for legal immigrants. Very truly yours, CHARLES MOODY, Health Services Ad- ministrator. WILL LIGHTBOURNE, Human Resources Agency Adminis- trator. CALIFORNIA LEGISLATURE, Sacramento, CA, July 18, 1996. Hon. SAM FARR, U.S. House of Representatives, Washington, DC. DEAR REPRESENTATIVE FARR: We are writ- ing to convey major concerns raised by the most recent proposed welfare legislation cur- rently being considered by Congress. SERVICES FOR AGED AND DISABLED LEGAL IMMIGRANTS Denying Federal benefits to legal immi- grants disproportionately harms California communities. Over 230,000 non-citizen legal immigrants currently receive SSI in Califor- nia, excluding refugees. This aid is provided to the aged, blind and disabled, who could not support themselves by going to work if their SSI benefits ended. Under H.R. 3507, SSI and Food Stamps would be denied to non-citizens already legally residing in Cali- fornia as well as to new legal entrants, un- like the immigration reform legislation cur- rently under consideration in Congress, which permits continued benefits for exist- ing legal residents. The proposed bar on SSI and Food Stamps for all legal immigrants, and the denial of other Federal means-tested programs to new legal entrants for their first five years in the country would have a devastating effect on California’s counties, which are obligated to be the providers of last resort. It is esti- mated that these proposed changes would re- sult in costs of $9 billion to California’s counties over a seven-year period. At a mini- mum, the very elderly, those too disabled to become citizens and those who become dis- abled after they arrive in this country should be exempted from the prohibition on SSI\u2014if for no other reason than to lessen to counties the indefensible cost of shifting care from the Federal government to local taxpayers for a needy population admitted under U.S. immigration laws. PROTECTION OF CHILDREN While we agree that welfare dependence should not be encouraged as a way of life, it is essential in setting time limits on aid that adequate protections be provided for chil- dren once parents hit these time limits. Some provision must be made for vouchers or some other mechanism by which the es- sential survival needs of children such as food can be met. The Administration has suggested this sort of approach as a means of ensuring adequate protection for children whose parents hit time limits on aid. California’s child poverty rate was 27 per- cent for 1992 through 1994, substantially above the national rate of 21 percent. H.R. 4, which was vetoed by the President, would have caused an additional 1.5 million chil- dren to become poor. Though estimates have not been produced for H.R. 3507, it is likely that it also would result in a significant ad- ditional number of children falling below the poverty level. ADEQUATE FUNDING FOR CHILD CARE Funds provided for child care are essential to meet the needs of parents entering the CONGRESSIONAL RECORD \u2014 HOUSEH9410 July 31, 1996 work force while on aid and leaving aid as their earnings increase. For California to meet required participation rates, about 400,000 parents would have to enter the work force and an additional 100,000 would have to increase their hours of work. Even if only 15 percent of these parents need a paid, formal child care arrangement, California will need nearly $300 million per year in new child care funds. Thank you for your consideration of these concerns. If your staff have any questions about these issues, they can contact Tim Gage at (916) 324 0341.Sincerely, Bill Lockyer, President Pro Tem- pore, California Sen- ate. RICHARD KATZ, Democratic Floor Leader, California Assembly. NATIONAL IMMIGRATION LAW CENTER\u2014OVERVIEW OF CURRENT LAW AND WELFARE REFORM IMMIGRANT RESTRICTIONS\u2014104TH CONGRESS Current Law Welfare Reform Reconciliation Act of 1996 (H.R. 3734)as passed by the House Personal Responsibility, Work Opportunity Act of 1966 (H.R. 3734) as passed by the Senate Differences\/Comments Programs barred to most legal immigrants includ- ing current residents None Denied until citizenship: SSI, Food Stamps, and Medic- aid. Denied until Citizenship: SSI, and Food Stamps. Medicaid: House bars Medicaid to most legal immi- grants. Senate imposes lesser restrictions on immi- grant access to Medicaid. The Senate Medicaid provi- sions affect about half as many people after six years. Current recipients: phased in over one year. Current recipients: phased in over one year. Exemptions Refugees, asylees, withholding of deportation during 1st 5 years only. Veterans and family members. Immigrants who work 40 ”qualifying quarters” (as defined for Title II Social Security) and did not re- ceive any means-tested assistance in any of those quarters. Minor children get credit for quarters worked by par- ents; spouses get credit for work if still married or if working spouse is deceased. Exemptions Refugees, asylees withholding of deportation during 1st 5 years only. Veterans and family members. Immigrants who work 40 ”qualifying quarters” (as defined for Title II Social Security) and did not re- ceive any means-tested assistance in any of those quarters. Minor children get credit for quarters worked by par- ents; spouses get credit for work if still married or if working spouse is deceased. Refugees\/Asylees: Most refugees and asylees have been here more than five years and would be subject to the bar. State option to bar current legal residents and future legal immigrants. States may not discriminate against legal immigrants in the provision of as- sistance. Programs: State have option to bar both current resi- dents and new immigrants from: AFDC, title XX, and all entirely state funded means-tested programs. Programs: State option to bar both current residents and new immigrants from: Medicaid, AFDC, title XX, and all entirely state funded means-tested programs. Identical provisions. The definitions of ”means-tested” programs was de- leted from the Senate bill because of the ”Byrd rule”. Five Year prospective bar (on future legal immi- grants). None. Provision: Bars AFDC and most federal means tested programs to legal immigrants who come after date of enact- ment for 1st 5 years after entering the U.S. Exceptions: Emergency Medicaid. Immunizations & testing and treatment of the symp- toms of communicable diseases. Short-term non-cash disaster relief. School Lunch Act programs. Child Nutrition Act programs. Title IV foster care and adoption payments. Higher education loans & grants. Elementary & Secondary Education Act. Head Start. TPA. At AG discretion, community programs (such as soup kitchens) that do not condition assistance on individ- ual income or resources and are necessary to protect life or safety. Provision: Bars AFDC and most federal means tested programs to legal immigrants who come after date of enactment for 1st 5 years after entering the U.S. Exceptions: Emergency Medicaid. Immunization & testing and treatment of commu- nicable disease if necessary to prevent the spread of such disease. Short-term non-cash disaster relief. School Lunch Act programs. Child Nutrition Act programs. Certain other emergency food and commodity pro- grams. Title IV foster care and adoption payments. Higher education loans & grants (including those under the Public Health Services Act). Elementary & Secondary Education Act. At AG discretion, community programs (such as soup kitchens) that do not condition assistance on individ- ual income or resources and are necessary to protect life or safety. Communicable Diseases: House permits doctors to be reimbursed for treating symptoms of communicable diseases even if the disease later turns out not to have been communicable. Nutrition: Senate permits food banks and others who administer emergency food programs to avoid spend- ing volunteer resources to verify citizenship. Head Start and ITPA: House does not restrict legal im- migrant access to these programs. Student Assistance Under the Public Health Services Act: These programs were added to the Senate bill by floor amendment sponsored by Senator Paul Simon (D-IL). The definition of ”means-tested” programs was de- leted from the Senate bill due to the ”Byrd rule.” Programs restricted by deeming (impacts most family-based immigrants). AFDC, Food Stamps, and SSI. Provision: Virtually all federal means-tested program must deem future immigrants. Provision: Virtually all federal means-tested programs must deem future immigrants. Identical provisions. Exempted programs: Same programs exempted from deeming as from the 5-year prospective bar (see above). Exempted programs: Same programs exempted from deeming as from the 5-year prospective bar (see above). Neither bill exempts non-profit organizations from bur- densome verification requirements (as does the Sen- ate immigration bill). State and local programs: Programs that are entirely state funded may deem (or ban) current legally resi- dent immigrants as well as future legal immigrants (except for those exempt from federal deeming and programs that are equivalent to federal programs ex- empted from deeming). State and local programs; Programs that are entirely state funded may deem (or ban) current legally resi- dent immigrants as well as future legal immigrants (except for those exempt from federal deeming and programs that are equivalent to federal programs ex- empted from deeming). Length of deeming period\/ retroactivity. 3 years (SSI 5 years until 10\/1\/96). Current residents: same as current law. Current residents: same as current law. Identical provisions. Future immigrants: until citizenship unless an exemption applies (e.g. 40 quarters). Future immigrants: until citizenship unless one of the exemptions applies (e.g. 40 quarters). Immigrants exempt from deeming. Disabled after entry (SSI only). Immigrants who work 40 ”qualifying quarters” (as de- fined for Title II Social Security) and did not receive any means-tested assistance in any of those quar- ters. Immigrants who work 40 ”qualifying quarters” (as de- fined for Title II Social Security) and did not receive any means-tested assistance in any of those quar- ters. Identical provisions. Sponsor is receiving Food Stamps (Food Stamps only). Minor children get credit for quarters worked by parents; spouses get credit for work if still remarried or if working spouse is deceased. Minor children get credit for quarters worked by parents; spouses get credit for work if still married or if work- ing spouse is deceased. About half of the legal immigrants who will be cut off of SSI under these bills have been in the U.S. more than ten years. Veterans, exempt from SSI, Medicaid and Food Stamp bar, are not exempt from deeming. Veterans, exempt from SSI, Medicaid and Food Stamp bar, are not exempt from deeming. There is no exemption for battered spouses or children in either bill. Affidavits of support provi- sion. Affidavits of support are unenforceable against the sponsor. Enforceable to recover money spent on most means- tested programs. Enforceable to recover money spent on most means- tested programs. The requirement that only the petitioner may be the sponsor precludes all other close relatives from obli- gating themselves to support the immigrant. Sponsor liable for benefits used until citizenship, unless immigrant works 40 ”qualifying quarters” is credited for work of spouse or parent. For definition of ”quali- fying quarter,” see Immigrants Exempt from Deeming above. Sponsor liable for benefits used until citizenship, unless immigrant works 40 ”qualifying quarters” is credited for work of spouse or parent. For definition of ”quali- fying quarter,” see Immigrants Exempt from Deeming above. This entire section was deleted from the Senate bill be- cause of the Byrd rule. Enforceable against sponsor by sponsored immigrant or government agencies until 10 years after receipt of benefits. Sponsor fined up to $5,000 for failure to notify when sponsor moves. Enforceable against sponsor by sponsored immigrant or government agencies until 10 years after receipt of benefits. Sponsor fined up to $5,000 for failure to notify when sponsor moves. Only the petitioner may qualify as a sponsor. Only the petitioner may qualify as a sponsor. Treatment of ”Not qualified” immigrants. Eligibility of classes of im- migrants the INS does not plan to deport varies by program. Definition: ”Not qualified” = all but LPR, refugee, granted asylum, deportation withheld, parolee for > 1 year. Definition: ”Not qualified” = all but LPR, refugee, granted asylum, deportation withheld, parolee for > 1 year. Child Nutrition: The House would require the schools, churches, charities, and clinics that operate school lunch programs and WIC clinics to verify immigration status and turn away ineligible children. The Senate exempts child nutrition programs from these require- ments. Undocumented immigrants ineligible for cash as- sistance and all major federal programs. Ex- emptions include: emer- gency Medicaid, public health, child nutrition, Child care, child protec- tion, and maternal care, emergency services. Prohibition: Not qualified barred from: Social Security (affects new applicants only), unemployment, all fed- eral needs-based programs, and any governmental grant, contract, loan, or professional or commercial license (nonimmigrants may receive license or con- tract related to visa.) Prohibition: Not qualified barred from: Social Security (affects new applicants only), unemployment, all fed- eral needs-based programs, and any governmental grant, contract, loan, or professional or commercial license (nonimmigrants may receive license or con- tract related to visa.) CONGRESSIONAL RECORD \u2014 HOUSE H9411July 31, 1996 NATIONAL IMMIGRATION LAW CENTER\u2014OVERVIEW OF CURRENT LAW AND WELFARE REFORM IMMIGRANT RESTRICTIONS\u2014104TH CONGRESS\u2014Continued Current Law Welfare Reform Reconciliation Act of 1996 (H.R. 3734)as passed by the House Personal Responsibility, Work Opportunity Act of 1966 (H.R. 3734) as passed by the Senate Differences\/Comments Exceptions: Emergency Medicaid. Short-term emergency relief. Immunizations and testing and treatment of the symptoms of communicable diseases. Exceptions: Emergency Medicaid. Short-term emergency relief. Immunizations and testing and treatment of com- municable disease if necessary to prevent the spread of such disease. School Lunch Act programs. Child Nutrition Act programs. Certain other emergency food and commodity pro- grams. No Battered Women’s Exception: Beneficiaries of the Vio- lence Against Women Act (VAWA) self-petitioning pro- visions are treated the same as persons who are un- lawfully in the U.S. Current recipients of housing or community development funds. At AG discretion, community programs (such as soup kitchens) that do not condition assistance on individual income or resources and are necessary to protect life, or safety. Current recipients of housing or community development funds. At AG discretion, community programs (such as soup kitchens) that do not condition assistance on individual income or resources and are necessary to protect life, or safety. State and Local Programs: Immigrants who are not law- fully present may not participate in state or locally funded programs unless the state passes a law after enactment affirmatively providing for such eligibility (state has no option to provide assistance to ”not qualified” immigrants who are here lawfully). State and Local Programs: Immigrants who are not law- fully present may not participate in state or locally funded programs unless the state passes a law after enactment affirmatively providing for such eligibility (state has no option to provide assistance to ”not qualified” immigrants who are here lawfully). Verification and reporting. Agencies such as battered women’s shelters, hos- pitals, and law enforce- ment agencies may keep immigration information confidential if they feel such confidentiality is advisable given their mission. For example, a law enforcement agency may assure a timid wit- ness that he or she will not be deported as a re- sult of coming forward to report a crime. No Confidentiality: No state or local entity may ”in any way” restrict the flow of information to the INS. No Confidentiality: No state or local entity may ”in any way” restrict the flow of information to the INS. Identical provisions. Required Verification: All federal, state and local agen- cies that administer non-exempt federal programs must verify immigrant eligibility ”to the extent fea- sible” through a computerized database. Required Verification: All federal, state and local agen- cies that administer non-exempt federal programs must verify immigrant eligibility ”to the extent fea- sible” through a computerized database. The no confidentiality provision endangers witness pro- tection programs and all other endeavors in which confidentiality is necessary to encourage cooperation or participation. Required Reporting: SSI, Housing, and AFDC agencies must make quarterly reports to INS providing the name and other identifying information of persons known to be unlawfully in the U.S. Required Reporting: SSI, Housing, and AFDC agencies must make quarterly reports to INS providing the name and other identifying information of persons known to be unlawfully in the U.S. Mr. SHAW. Mr. Speaker, I yield 1 minute to the distinguished gentleman from California [Mr. RIGGS]. Mr. RIGGS. Mr. Speaker, I thank the gentleman for yielding me this time and for his hard work on this very his- toric and very important legislation. This legislation curtails food stamp fraud, it limits the access of resident aliens to welfare programs, which just might persuade some visitors to our country who did not come here to work to return home, but, more importantly, it is another step in the process of de- volving or sending social services back to the States and getting control back in the hands of local managers who are closer to the problems of the poor. It addresses a fundamental fairness issue in American society, and that is the resentment of working individuals toward able-bodied individuals who refuse to get off the dole. Most impor- tantly, in my mind, it addresses the problem of welfare dependency and welfare pathology in this country, which has led to soaring rates of family disintegration, illegitimacy in Amer- ican society, and the other con- sequences, like youth crime. This is indeed an historic day in this body and a very, very important piece of legislation, in my view the most im- portant legislation we will enact in the 104th Congress. b 1615 Mr. GIBBONS. Mr. Speaker, I yield myself 1 minute. Mr. Speaker, let me say first of all that there are some good things in this legislation that could have and should have become law without being tied to the rest of this fundamentally flawed package. The President has made a mistake in endorsing this legislation and the Congress will make a mistake in passing it. Essentially, Mr. Speaker, this legis- lation reduces assets that we need to help those who are the most vulnerable in our society. Seventy percent of all the people on welfare are infants and children. The rest are so disabled one way or another, and they cannot make a go of it. This bill reduces their assets, reduces the assets of the people who we are trying to help to improve and bet- ter their situation. For some reason that we do not thor- oughly understand, the bottom three- fifths of all the people in the United States have not made any progress in the last 20 years, economically speak- ing. The bottom one-fifth have lost 18 percent of their resources that are available to them. This bill further ex- acerbates that problem and will hurt infants and children. It should not be- come law. It should be vetoed. Mr. SHAW. Mr. Speaker, I yield 11\u20442 minutes to the distinguished gen- tleman from Connecticut [Mr. SHAYS], a member of the Committee on the Budget. Mr. SHAYS. Mr. Speaker, I thank the gentleman for yielding. Mr. Speaker, politicians are elected by adults to represent the children. We need to save our children from crip- pling national debt, Government debt. We need to make sure that our trust funds, like Medicare, are there for our children. And most importantly, we need to enable, we need to help our children become independent citizens of this great and magnificent country. This bill helps to transform our care- taking, social and corporate welfare state into a caring opportunity society. I extend tremendous admiration to the gentleman from Florida, [Mr. SHAW] for not giving into those who wanted to weaken the bill so that it would end up not doing anything. We have a caring bill that does this. In the final analysis, it is not what you do for your children but what you have taught them to do for themselves that will make them successful human beings. It ends this caretaking society and moves toward a caring society where we teach our children and the adults who raise our children how to grow the seeds, how to have the food. Mr. GIBBONS. Mr. Speaker, I yield 2 minutes to the gentleman from New York [Mr. RANGEL]. (Mr. RANGEL asked and was given permission to revise and extend his re- marks.) Mr. RANGEL. Mr. Speaker, what time is it? It is time for us to get on with our conventions. We better get on with the Democratic Convention and Republican Convention. What do we want to say that we are for? Reform. What is a nagging sore in everyone’s problem? Welfare. People who do not work. What is the bill all about? Well, the bill is supposed to be to protect chil- dren. I heard the previous speaker say that. He said that this child will be cut off of welfare if the mother does not CONGRESSIONAL RECORD \u2014 HOUSEH9412 July 31, 1996 get a job in 2, 3, 4 or 5 years. He did not say it, but I know he read the bill. The winners in this are the Gov- ernors. There is nothing to tell the Governors what to do, and they will be the losers in the long run, but not as bad as the children. They can do what they want with immigrants and with little kids because for 60 years we have said there is a safety net for children. But not before this election. Who won? Bob Dole? Oh, yes, he said it already. He shoved this one down the President’s throat. Three strikes and the President would have been out so he wins because what the heck, he forced the issue. And who is another winner? My President. He is a winner. He has re- moved this once again. Everything you come up with, my President says, oh, no you do not. And so here again he is a winner. So when we look at it, this is a big political victory. The Democrats are happy in the White House. The Repub- licans are happy because they made him do it. The Governors are happy. They begged for the opportunity to do it their way after all. They are closer to the problem. And the only losers we have now are the kids. The got no one there to protect them. The religious leaders came out. Obviously they are not as highly reg- istered as some other people, but they said do not do this to our children. They are the weakest. They cannot vote. If my colleagues do not like their mothers and their fathers and their neighborhoods, then get involved in education and job training and make them work. But there are winners and losers and the kids are the losers. Mr. SHAW. Mr. Speaker, I yield 3 minutes to the distinguished gen- tleman from Texas [Mr. ARCHER], the distinguished chairman of the Commit- tee on Ways and Means. Mr. ARCHER. Mr. Speaker, I thank the gentleman for yielding. Mr. Speaker, the only way we can change people’s behavior is by chang- ing the system. Franklin Roosevelt warned that giving permanent aid to anyone destroys them. By creating a culture of poverty and a culture of vio- lence, we have destroyed the very peo- ple we are claiming to help. Can any serious person argue that the fed- eralization of poverty by Washington has worked? Government, since 1965, has spent over $5 trillion on welfare, more than we have spent on all the wars that we have fought in this century. And we have lost the war on poverty. With this bill, we can begin to win the war. We need to come to the realization that dollars alone will not solve the problem. We need to give unemployed people hope and equip them for work so they will be better able to help them- selves. As our colleague, the gentleman from Oklahoma, J.C. WATTS, says, they are eagles waiting to soar. Today we will ask those now receiv- ing welfare to make a deal with the taxpayer. We will provide you with temporary help to get you through the hard times and we will help you feed your family and get the training you need, and in exchange, we ask that you commit yourself to find a job and move back into the economy. I am pleased to see that the Presi- dent has finally agreed to join us in our fight to overhaul the broken-down wel- fare system. It has been a long, ardu- ous road since 1988 when Ronald Reagan first made the effort to do something about work fare and finally we are here. Mr. President, the poor have suffered long enough and now we have the op- portunity to change it all and help the hard-working taxpayers as well. Mr. GIBBONS. Mr. Speaker, I yield 2 minutes to the gentlewoman from Con- necticut [Mrs. KENNELLY]. Mrs. KENNELLY. Mr. Speaker, we all can be proud of the record that many of us have in working on this bill to protect children. Eight months ago we had a welfare conference report on the floor that would have blocked fos- ter care or would have made foster care a block grant, and also food stamps. Today’s legislation retains the Federal guarantee for these services. Eight months ago we had Federal welfare legislation on this floor that would have cut severely disabled chil- dren by 25 percent. Today we do not have that flawed two-tiered system. Eight months ago we considered leg- islation that would have denied mil- lions of Americans Medicaid because they lost welfare eligibility. Today’s legislation, the legislation before us, guarantees continual health coverage for those who are currently entitled to these services. Eight months ago we voted on legis- lation that would have underfunded child care. This bill has $4.5 billion in it for child care. I am not suggesting the legislation is perfect. Most legislation is not perfect. But I predict we will be back on this very floor finding more answers and better answers than we have today. If that is there, I will be involved in these changes. But today we have to decide if this legislation as a whole represents an improvement over the status quo. My answer is: Yes, it does. While some of the changes here being suggested pose risks, so does the cur- rent system. Welfare is clearly broken, offering more dependence than oppor- tunity. We can vote today to at least begin to transform the welfare system. Today we can begin welfare reform, those of us who have worked hard over the months to make the bill, working with those who have had the bill. We now have the bill. We should vote for the bill and get on with welfare reform. Mr. SHAW. Mr. Speaker, I yield 2 minutes to the gentleman from Texas [Mr. DELAY], the distinguished Repub- lican whip. Mr. DELAY. Mr. Speaker, I am very pleased to hear that President Clinton has endorsed the welfare bill that will pass the House today. Clearly, the time has come to end welfare as we know it. The welfare system as we know it has been a disaster. The only thing great about the Great Society was the great harm it has caused our children. With this bill, Mr. Speaker, we make commonsense changes long requested by the American people. Common sense dictates that able- bodied people work. Common sense dictates that only Americans should receive welfare bene- fits in this country. Common sense dictates that incen- tives to keep families together. Common sense dictates that welfare should not be a way of life. Now liberal Democrats will vainly challenge these simple truths, and even the President could not help himself and has challenged some of these truths, but time and experience has proven them wrong. Welfare has not worked for the people it was supposed to help. Everybody knows that fact. Now is the time to change that system. Some well-meaning people will once again make the claim that welfare re- form is mean-spirited. Well, I disagree. We reform welfare not out of spite but out of compassion. We change this system not because we want to hurt people, but because we want to help people help themselves. And we change this system not to throw children into the streets, but to give children a greater chance to realize the American dream and still maintain a safety net for those truly in need. Mr. Speaker, I am proud of this Con- gress for the great work on this his- toric legislation, and I am pleased that President Clinton has agreed to finally live up to his campaign promise. Mr. GIBBONS. Mr. Speaker, I yield 1 minute to the gentleman from New York [Mr. NADLER]. (Mr. NADLER asked and was given permission to revise and extend his re- marks.) Mr. NADLER. Mr. Speaker, sadly, it seems clear that this House today will abdicate its moral duty and knowingly vote to allow children to go hungry in America. Sadly, our President, a mem- ber of the Democratic Party, the party of Franklin Roosevelt and John Ken- nedy and Lyndon Johnson, will sign this bill. Does this bill allocate sufficient funds to provide employment for peo- ple who want to work? No. Does this bill provide adequate child care so parents can leave their children in a safe environment and earn a liv- ing? No. Does this bill ensure that people leaving welfare can take their kids to a doctor when they get sick? No. Does this bill do anything to raise wages so people who work hard to play by the rules will not have to see their children grow up in poverty? No. Does this bill reduce the value of food stamps for children of the poorest working people to push these children into poverty and hunger? No. CONGRESSIONAL RECORD \u2014 HOUSE H9413July 31, 1996 Mr. Speaker, I know that scapegoating poor children is politi- cally popular this year, but it is not right. We must stand up for our coun- try’s children. I urge my colleagues to reject this immoral legislation. Mr. GIBBONS. Mr. Speaker, I yield 2 minutes to the gentleman from Geor- gia [Mr. LEWIS]. Mr. LEWIS of Georgia. Mr. Speaker, the bill we are considering today is a bad bill. I will vote against it and I urge all people of conscience to vote against it. It is a bad bill because it pe- nalizes children for the actions of their parents. This bill, Mr. Speaker, will put 1 million more children into pov- erty. How, how can any person of faith, of conscience vote for a bill that puts a million more kids into poverty. Where is the compassion, where is the sense of decency, where is the heart of this Con- gress. This bill is mean, it is base, it is downright low down. We are a great nation. We put a man on the Moon. We have learned to fly through the air like a bird and swim like a fish in the sea. We are the world’s only superpower. We did not do this by running away\u2014by giving up. As a nation, as a people\u2014as a govern- ment\u2014we met our challenges\u2014we won. This bill gives up\u2014it throws in the towel. We cannot run away from our challenges\u2014our responsibilities\u2014and leave them to the States. That is not the character of a great nation. I ask you, Mr. Speaker, What does it profit a great nation to conquer the world, only to lose it’s soul? Mr. Speaker, this bill is an abdication of our responsibility and an abandonment of our morality. It is wrong, just plain wrong. It was Hubert Humphrey, who said: We can judge a society by how it treats those in the dawn of life, our children, those in the twilight of life, our elderly and those in the shadow of life, the sick and the dis- abled. I agree with Hubert Humphrey, my colleagues. What we are doing here today is wrong. I say to you, all of my colleagues, you have the ability, you have the ca- pacity, you have the power to stop this assault, to prevent this injustice. Your vote is your voice. Raise your voice for the children, for the poor, for the dis- abled. Do what you know in your heart is right. Vote ”no.” b 1630 Mr. GIBBONS. Mr. Speaker, I yield 2 minutes to the gentleman from Michi- gan [Mr. LEVIN]. (Mr. LEVIN asked and was given per- mission to revise and extend his re- marks.) Mr. LEVIN. Mr. Speaker, the status quo is gone. The current system does not meet the American values of work, oppor- tunity, responsibility, and family. We have been wrestling for a long time with what should replace it. The key always has been the linkage of welfare to work, within a definite time structure, and with sensitivity to the children of the parent who needs to break out of a cycle of dependency, for her\/his good, for the child’s and for the taxpayer. The challenge has been to find a new balance, that combines State flexibil- ity with national interest. The first two bills vetoed by the President failed to address effectively work and dealt insensitively with chil- dren. If the AFDC entitlement was going to be replaced by a block grant\u2014which was already beginning to happen through Federal waivers\u2014after the ve- toes we successfully pressured the Re- publican majority to make substantial improvements in day care, health care, benefits for severely disabled children and to retain the basic structure of fos- ter care, food stamps and the school lunch program. In a word, this is a different bill than those vetoed by the President. The bill before us is at its very weak- est in two areas essentially unrelated to AFDC\u2014food stamps and legal immi- grants. Reform was needed in these areas, but surely not punishment nor a mere search for dollars, as was true of the majority’s approach. The question is whether the defects in those areas should sink changes in our broken welfare system. On balance, I believe it is better to proceed today with reforms in the wel- fare system, with a commitment to re- turn on a near tomorrow to the defects in this bill. I hope in the next session there will be a Congress willing to address these legitimate concerns with President Clinton. Mr. SHAW. Mr. Speaker, I yield 30 seconds to the distinguished gentleman from Louisiana [Mr. HAYES], a valued member of the Committee on Ways and Means. Mr. HAYES. Mr. Speaker, folks at home simply wonder if they can tell the difference between a disabled vet- eran from a real war and someone who has become disabled because of a fake war on poverty, converting food stamps into drugs, why cannot the Govern- ment. They want to know, if they can tell the difference between a young woman whose husband has walked out on them, leaving them a child with no recourse, and a teen who becomes preg- nant because of a system that rewards it, why cannot the Government? Today this body answers that it can tell the difference. The Senate can tell the difference. And I am very pleased to understand that the President is going to sign the bill that allows peo- ple at home to at least know we have that judgment to make that difference. Mr. GIBBONS. Mr. Speaker, I yield such time as he may consume to the gentleman from Maryland [Mr. HOYER]. (Mr. HOYER asked and was given permission to revise and extend his re- marks.) Mr. HOYER. Mr. Speaker, I rise in support of the bill. America’s welfare system is at odds with the core values Americans believe in: Responsibil- ity, work, opportunity, and family. Instead of rewarding and encouraging work, it does little to help people find jobs, and penalizes those who go to work. Instead of strengthening fami- lies and instilling personal responsibility, the system penalizes two-parent families, and lets too many absent parents off the hook. Instead of promoting self-sufficiency, the culture of welfare offices seems to create an expectation of dependence rather than inde- pendence. And the very ones who hate being on welfare are desperately trying to escape it. As a society we cannot afford a social wel- fare system without obligations. In order for welfare reform to be successful, individuals must accept the responsibility of working and providing for their families. In the instances where benefits are provided, they must be tied to obligations. We must invest our resources on those who value work and responsibility. Moreover, we must support strict requirements which move people from dependence to inde- pendence. Granting rights without demanding responsibility is unacceptable. The current system undermines personal re- sponsibility, destroys self-respect and initiative, and fails to move able-bodied people from welfare to work. Therefore, a complete over- haul of the welfare system is long overdue. We must create a different kind of social safe- ty net which will uphold the values our current system destroys. It must require work, and it must demand responsibility. Today, the House will take a historic step as it moves toward approving a welfare reform conference report which takes significant steps to end welfare as we know it. The bill is not perfect. But, at the insistence of the President and congressional Democrats, significant im- provements to require work and protect chil- dren have been made. It is because of these important changes that I will vote in favor of this bill. This bill requires all recipients to work within 2 years of receiving benefits. The bill requires teen parents to live at home or in a supervised setting, and teaches responsibility by requiring school or training attendance as a condition of receiving assistance. When the House Ways and Means Commit- tee marked up its first welfare bill 11\u20442 years ago, Democrats proposed an amendment to exempt mothers of young children from work requirements if they had no safe place for their children to stay during the day. The amendment was defeated by a unanimous Republican vote. I am pleased that the con- ference report prohibits States from penalizing mothers of children under 6 if they cannot work because they cannot find child care. A year and a half ago, Ways and Means Committee Republicans defeated Democratic amendments to strengthen child support en- forcement provisions, because committee Re- publicans felt those sanctions were ”too hard” on deadbeat dads. I am pleased that this con- ference report includes every provision in the President’s child support enforcement pro- posal, the toughest crackdown on deadbeat parents in history. A year and a half ago, the Republican wel- fare bill included a child nutrition block grant that would have caused thousands of children in Maryland to lose school lunches\u2014for some of those children, the only meal they would re- ceive in a day. I am pleased that the con- ference report maintains the guarantee of school meals for our neediest kids. CONGRESSIONAL RECORD \u2014 HOUSEH9414 July 31, 1996 As recently as last week, the House Repub- lican bill eliminated the guarantee of food stamps for poor children and assistance for children who had been neglected or abused. I am pleased that this bill prohibits the block grants which dismantle food stamp and child protection assistance. Like many Americans, I continue to have concerns about some of the provisions in this bill. We must be certain that both the Federal and State governments live up to their respon- sibilities to protect children who may lose as- sistance through no fault of their own. We must make sure that legal immigrants, who have paid taxes and in some cases defended the United States in our armed services, are not abandoned in their hour of need. And it is not enough to move people off of welfare\u2014we must move them into jobs that make them self-sufficient and contributing members of so- ciety. This bill supports the American values of work and personal responsibility. It has moved significantly in the direction of the welfare re- form proposals made by Congressman DEAL and Congressmen TANNER and CASTLE, both of which I supported. I applaud this important step to end welfare as we know it, and intend to vote in favor of this bill. Mr. GIBBONS. Mr. Speaker, I yield 1 minute to the gentleman from Rhode Island [Mr. KENNEDY]. Mr. KENNEDY of Rhode Island. Mr. Speaker, just hearing my colleague, the gentleman from Georgia, JOHN LEWIS, speak so passionately, I think should move anyone who listened to his speech. Over 30 years ago it was JOHN LEWIS who was fighting against States rights, States rights meaning justice dependent on geography. How you were treated depended on what State you lived in. And yet our Republican friends who are offering this welfare reform, as they call it, are willing to embrace States rights; what their block grant plan means is that again justice will depend on geography. In my State of Rhode Island, over 40,000 kids in pov- erty are going to be put at a disadvan- tage under the block grant system be- cause when you take away the money that is entitled to kids based upon their poverty, you leave it to the whim of the States. I can tell you, each State is under pressure to lower the bar so that you can squeeze people even more. This is wrong. When Mr. SHAW and Mr. ARCHER say that dollars will not do it alone, I want to ask the Republicans, what are they going to substitute when a poor child needs food, what are they going to sub- stitute for the money that they are supposed to be providing through these programs? Mr. SHAW. Mr. Speaker, I yield 1 minute to the gentlewoman from Cali- fornia [Ms. PELOSI]. Ms. PELOSI. Mr. Speaker, I thank the gentleman for yielding the time. I rise in opposition to the welfare bill. If this bill passed today, it will be a victory for the political spin artists and a defeat for the infants and chil- dren of America. We all agree that the welfare system must be reformed. But we must make sure that that reform reduces poverty, not bashes poor people. The cuts in this bill will diminish the quality of life of children in poor families in America and will have a devastating impact on the economy of our cities. Food and nutrition cuts will result in increased hunger. Local government will be forced to pay for the Federal Government’s abdication of respon- sibility. How can a country as great as America ignore the needs of America’s infants and children who are born into poverty? The Bible tells us that to minister to the needs of God’s children is an act of worship; to ignore those needs is to dis- honor the God who made them. Mr. Speaker, let us not go down that path today. Mr. GIBBONS. Mr. Speaker, I yield such time as he may consume to the gentleman from New York [Mr. TOWNS]. (Mr. TOWNS asked and was given permission to revise and extend his re- marks.) Mr. TOWNS. Mr. Speaker, vote no on this pain and shame that we are inflict- ing on young people, a garbage bill. This agreement along with the other vetoed welfare bills amount to nothing short of a roll- call of pain and shame that will be dumped on those Americans who are clearly in need of a social service safety net. And to add to that pain, legal immigrants will bear 40 percent of the cuts in welfare even though they make up only 5 percent of the population receiving welfare benefits. No one is satisfied with the way welfare pol- icy is constructed or practiced. The Federal Government doesn’t like it; the local adminis- trators don’t like it; the social workers don’t like it; the majority of the taxpayers don’t like it and the recipients don’t like it. There is no doubt that the welfare system in this country needs to be changed. Clearly reform is nec- essary. However, the overall scope of the pro- posed reforms will victimize those Americans most in need of assistance. I urge a ”no” vote on this conference agree- ment. Mr. GIBBONS. Mr. Speaker, I yield 45 seconds to the gentlewoman from Flor- ida [Ms. BROWN]. Ms. BROWN of Florida. Mr. Speaker, this was a bad House bill, a bad Senate bill and the conference report did not fix it. It is still bad. You can judge a great society by how it treats its children, its senior citi- zens. This bill guts our future. I urge my colleagues to vote against it. Mr. Speaker, I rise to oppose this con- ference report. The House welfare reform bill was a bad bill, the Senate bill was a bad bill and the conference report does not fix it. This legislation is so bad that it can’t be fixed. This bill will have a horrible impact on the children in my State. In Florida, at least 235,000 children would be denied benefits under this legislation. In Florida alone, 48,000 would be pushed deeper into poverty. Children will be hungrier if this bill becomes law. In Florida, 111,926 children would be denied aid in the year 2005 because of the 5 year time limit. In Florida, 42,714 babies would be denied cash aid in the year 2000 because they were born to families already on welfare. In the year 2000, 80,667 children in Florida would be denied benefits if the State froze its spending on cash assistance at the 1994 lev- els. In addition to the travesty this bill does to our children, this bill will pull the rug out from under our seniors who are legal immigrants. For a State like Florida whose population has such a large number of legal immigrants, the impact will be extremely high. There is another troubling aspect of this bill we need to look at. No victim of domestic vio- lence, no matter how abused nor how des- perate, could know that if she left her abusive spouse, that she would be able to rely upon cash assistance for herself or for her chil- dren\u2014even for a short period of time until she was able to secure employment. I have always believed that the sign of a great society is how well it treats its most vul- nerable\u2014children and seniors. Our children are America’s future. This bill prevents the fu- ture generation from meeting its potential to contribute to American society and instead dooms today’s poor children to deeper poverty and no chance to take their place as produc- tive members of our society. Mr. SHAW. Mr. Speaker, I yield my- self 3 minutes. Mr. Speaker, I come over here to do something I have never done before; that is, to trespass on the Democrat side. I hope that they will give me their understanding in my doing so, be- cause I do not do it out of smugness or arrogance. I do it out of coming to- gether. We have heard a lot of name calling, a lot of rhetoric, a lot of sound bites that we have heard all through this de- bate. We have come down a long road together. It was inevitable that the present welfare system was going to be put behind us. Today we need to bring to closure an era of a failed welfare system. I say that and I say that from this side of the aisle because I know that the Democrats agree with the Republicans. This is not a Republican bill that we are shoving down your throats. We are going to get a lot of Democratic sup- port today. I think the larger the sup- port, the more chance there is for this to really work and work well. The degree of the success that we are going to have is going to be a victory for the American people, for the poor. It is not going to be a victory for one political party. It is time now for us to put our hands out to one another and to come together to solve the problems of the poor. Without vision, the people will per- ish. Unfortunately, we have not had vi- sion in our welfare system now for many, many years. It has been allowed to sit stagnant. We have piled layer upon layer of humanity on top of each other. We have paid people not to get married. We have paid people to have children out of marriage. We have paid people not to work. This is self-destructive behavior. We know that. We all agree with that. CONGRESSIONAL RECORD \u2014 HOUSE H9415July 31, 1996 I know we have heard many, many speakers: My friend, the gentleman from Georgia, JOHN LEWIS, thinking that we are going the wrong way; my friend, the gentleman from New York, CHARLIE RANGEL, saying that we are going the wrong way. I also see some of my colleagues who have fought for different changes with- in the welfare bill within the Sub- committee on Human Resources of the Committee on Ways and Means, now coming to closure, where they do not believe this is a perfect bill. And I can stand here and say it is not a perfect bill, but it is as good as this Congress can do. It is as good as we can come to- gether. We have included the Governors in balancing out their interests and in seeing what they have been successful with and how they feel that they can be successful. We have talked to many of the Members on the Democrats’ side, and to my Republican colleagues I say, we are not through. We have another long road ahead of us. We need to get to a technical corrections bill as we see problems arise within this bill that we are going to be passing today. It was unexpected to hear that the President was going to endorse this bill and announced his signature of it. But let us now be patient with each other. Let us work with each other and let us bring this awful era of a failed welfare system to closure. Mr. GIBBONS. Mr. Speaker, I yield the balance of my time to the gen- tleman from Maryland [Mr. CARDIN]. The SPEAKER pro tempore (Mr. MCINNIS) The gentleman from Mary- land [Mr. CARDIN] is recognized for 21\u20442 minutes. Mr. CARDIN. Mr. Speaker, I thank the gentleman from Florida [Mr. GIB- BONS] for yielding me the time. Let me say to my friend, the gen- tleman from Florida [Mr. SHAW], first, congratulations on a job very well done and come on back over on this side of the aisle a little bit more frequently. I think that if we would have started working together in a bipartisan spirit, we could have had a better bill today, and we could have gotten here a little bit sooner. But I thank the gentleman very much for the way in which he has provided leadership on this issue. I know it has been heartfelt, and I know he has worked very, very hard. b 1645 Mr. Speaker, I support the conference report because I think it is important that we return welfare to what it was originally intended to be, and that is a transitional temporary program to help those people that are in need. The current system does not do that. We cannot defend the current system. But let me make it clear to my col- leagues, the bill before us is a far bet- ter bill than the bill that was origi- nally brought forward by the Repub- licans 2 years ago, the bill that was ve- toed twice by the President. We have a better bill here today. It is a bill that provides for major improvement in child support enforce- ment, something all of us agreed to; provides protective services for our children, which was not in the original bill; provides health insurance to peo- ple coming off of welfare, something that is very important; day care serv- ices, another important ingredient that people are going to get off welfare to work. Food stamps are in much better condition than the bill that was vetoed by the President. There is a Federal contingency fund in case of a downturn of our economy, and we have mainte- nance of effort requirements on our States so we can assure that there are certain minimum standards that are met in protecting people in our society. The bottom line is that this bill is better than the current system. It could have been better, and I re- gret that. I am not sure there is enough resources in this bill to make sure that people get adequate education and job training in order to find employment, and I look forward to working with the gentleman from Florida [Mr. SHAW] to make sure that this becomes a reality. But I do urge my colleagues to sup- port the conference report because bot- tom line: It is far better than the cur- rent system. Yes, we are going to take a risk to get people off of welfare to work, but the current system is not fair either to the welfare recipient or the taxpayer. This conference report is far better, and I urge my colleagues to support it. Mr. SHAW. Mr. Speaker, I yield the balance of my time to the distin- guished gentleman from Ohio [Mr. KA- SICH], chairman of the Committee on the Budget. The SPEAKER pro tempore (Mr. MCINNIS) The gentleman from Ohio is recognized for 53\u20444 minutes. Mr. KASICH. Mr. Speaker, I would like to initially congratulate the gen- tleman from Florida [Mr. SHAW] for his relentlessness in being able to pursue welfare reform and he deserves the lion’s share of the credit, along with the gentleman from Texas [Mr. AR- CHER], who has done an outstanding job, and although I do not see him on the floor, our very able staff director, Ron Haskins, who has probably lived with this bill for about a decade, feel- ing passionately about the need to re- form welfare. As my colleagues know, it was pretty amazing today to watch the President of the United States come on television and say that he was going, in fact, to sign this welfare bill. The reason why it is so amazing today is that because the American people, during all of my adult lifetime, have said that they want a system that will help people who cannot help themselves, but they want a system that is going to ask the able-bodied to get out and begin to work themselves. This has been de- layed and put off, with a million ex- cuses as to why we could not get it done. I just want to suggest to my friends who are in opposition, and I respect their opposition; many of them just did not talk; many of them were not able to talk, as they were beaten in the civil right protests in this country. I respect their opposition. But the simple fact of the matter is that this program was losing public support. Mr. Speaker, the cynicism connected to this program from the folks who get up and go to work every day for a liv- ing, and I do not mean the most fortu- nate, I mean those mothers and fathers who have had to struggle for an entire lifetime to make ends meet, they have never asked for food stamps, the have never asked for welfare, they have never asked for housing, and they are struggling. They are counting their nickels. They do not take the bus transfer because it costs a little extra money, and they walk instead so they can save some more money to educate their children. These people were be- coming cynical, they were being poisoned in regard to this system, and they were demanding change. Mr. Speaker, we all know here, as we have watched the Congress, the history of Congress over the decades, that when the American people speak, we must deliver to them what they want. They said they wanted the Vietnam war over. It took a decade, but they got it, and public cynicism and lack of support was rising against this pro- gram. It was necessary to give the peo- ple a program they could support. But I also want to say that the Amer- ican people have never, if I could be so bold as to represent a point of view, have never said that those who cannot help themselves should not be helped. That is Judio-Christianity, something that we all know has to be rekindled. Our souls must once again become at- tached to one another, and the people of this country and Judeo-Christianity siad it is a sin not to help somebody who needs help, but it is equally a sin to help somebody who needs to learn how to help themselves. But I say to my friends who oppose this bill: This is about the best of us. This is about having hopes and dreams. After 40 or 50 years of not trusting one an- other in our neighborhoods and having to vacate our power and our authority to the central government, to the Washington bureaucrats, this is now about reclaiming our power, it is about reclaiming our money, it is about re- claiming our authority, it is about re- building our community, it is about re- building our families, it is about ce- menting our neighborhoods, and it is about believing that all of us can march to that State capitol, that all of us can go into the community organi- zations and we can demand excellence, we can demand compassion, and that we can do it better. We marched 30, 40 years ago because we thought people were not being treated fairly, and we march today for the very same reason. What I would say, and maybe let me take it back and say many of my friends marched. I was CONGRESSIONAL RECORD \u2014 HOUSEH9416 July 31, 1996 too young, but I watched, and I respect it. What I would suggest at the end of the day, however, is that we all are going to have to stand up for those who get neglected in reform, but frankly this system is going to provide far more benefits, far more hope, restore the confidence in the American people that we have a system that will help those that cannot help themselves and at the same time demand something from able-bodied people who can. It will benefit their children, it will help the children of those who go to work. America is a winner in this. The President of the United States has rec- ognized that. He has joined with this Congress, and I think we have a bipar- tisan effort here to move America down the road towards reclaiming our neighborhoods and helping America. And I would say to my friends, we will be bold enough and humble enough when we see that mistakes are being made, to be able to come back and fix them; but let us not let these obstacles stand in the way of rebuilding this pro- gram based on fundamental American values. Support the conference report. Mr. BENTSEN. Mr. Speaker, I rise in sup- port of this welfare reform conference report. This bill is far from perfect, but it does move us down the road toward reforming the welfare system to help families in need. I have long advocated and agree with provi- sions requiring work and encouraging self-suf- ficiency and personal responsibility. This legislation is an improvement over more extreme earlier bills. It includes nec- essary provisions which I and others fought for during the last 2 years because they are im- portant to working families, children, and fast- growing states such as Texas. It provides some transitional health care benefits and child care assistance. It retains the Federal guarantee of health care and nutritional assist- ance for children. It eliminates the Repub- licans’ proposal to raise taxes on working fam- ilies by cutting the earned income tax credit. It provide a safety net, albeit minimal, for high growth states such as Texas, Florida, and California and for recessions. It lets States give noncash vouchers to families whose wel- fare eligibility has expired, so they can buy es- sentials for children. None of these provisions were contained in previous so-called welfare reform. While I am supporting this legislation, I am troubled by the elimination of benefits for legal immigrants who have participated in the workforce and paid taxes. Harris County, TX, which I represent, currently faces a measles epidemic. Future prohibitions on Medicaid for such instances would result in the State and county facing tremendous cost increases. I have no doubt that Congress will be forced to revisit this issue in part at the behest of States as we may be creating huge unfunded man- dates. Unfortunately, while this bill contains many positive reforms which I support, it also contains many misguided provisions for which the only motivation is monetary, not public pol- icy. Mrs. FOWLER. Mr. Speaker, the American welfare system was intended to be a safety net for those who fall on hard times. Unfortu- nately, it has become an overgrown bureauc- racy which perpetuates dependency and de- nies people a real chance to live the American dream. I am pleased that President Clinton has just announced he would sign the Republican wel- fare bill. We knew that when it got this close to the election, this President would choose the path of political expediency, as he always does. This legislation is not about saving money, it is about saving hope and saving lives, while reforming a broken system and preserving the safety net. The bill encourages work and independ- ence, and discourages illegitimacy. I urge my colleagues to vote for fairness, compassion, and responsibility. Pass the conference agree- ment on H.R. 3437. Mrs. SMITH of Washington. Mr. Speaker, I strongly support the Personal Responsibility and Work Opportunity Act of 1996 (H.R. 3734). This landmark piece of welfare reform legislation emphasizes responsibility and com- passion. It provides a helping hand and not a handout. Americans today want a future filled with hope. Parents want to be able to take care of themselves and their children. They want to teach their kids how to take respon- sibility for their lives. This legislation reverses welfare as we know it. Today, the average length of stay for families on welfare in 13 years. The cycle of dependency must stop. Congress’ welfare reform legislation also has tough work requirements. Families must work within 2 years or lose their benefits. Work is the beginning of dignity and personal responsibility. Single mothers who desire to work but cannot leave their children home alone will be provided with child care assist- ance. In fact, the Personal Responsibility and Work Opportunity Act provides $14 billion in guaranteed child care funding. Two parent families are encouraged through this plan. It takes two people to make a baby. Strong paternity requirements and tough child support measures ensure that deadbeat par- ents will take responsibility for their actions. This welfare reform package is estimated to save the American taxpayers $56.2 billion over the next 6 years. It is a balanced ap- proach that gives the States more autonomy and flexibility in crafting solutions. The Per- sonal Responsibility and Work Opportunity Act promotes work while also guaranteeing fami- lies adequate child care, medical care, and food assistance. It is compassionate while pro- moting the dignity of Americans through an honest day’s work. I urge my colleagues to support this bill. Ms. JACKSON-LEE of Texas. Mr. Speaker, I rise today to speak out against a great injus- tice, an injustice that is being committed against our Nation’s children, defenseless, nonvoting, children, I am referring of course to the conference agreement on H.R. 3734, the Personal Responsibility and Work Opportunity Act. We speak so often in this House about fam- ily values and protecting children. At the same time however, my colleagues on the other side of the aisle, have presented a welfare reform bill that will effectively eliminate the Federal guarantee of assistance for poor children in this country for the first time in 60 years and will push millions more children into poverty. A recent study by the Urban Institute esti- mated that the welfare legislation passed by the House would increase the number of chil- dren in poverty by 1.1 million, or 12 percent. The analysis estimated that families on wel- fare would lose, on average, about $1,000 a year once the bill is fully implemented. More than a fifth of American families with children would be affected by the legislation. This partisan legislation is antifamily and antichild. The Republican bill continues to be weak on work and hard on families. Without adequate funding for education, training, child care and employment, most of our Nation’s poor will be unable to avoid or escape the welfare trap. Even before the adoption of amendments increasing work in committee, the Congressional Budget Office [CBO] esti- mated that the Republican proposal is some $9 billion short of what would be needed in fis- cal years 1999 through 2002 to provide ade- quate money for the States to carry out the work program. Furthermore, the increase in the minimum work hours requirement, without a commemsurate increase in child care funding, will make it almost impossible for States to provide child care for families making the tran- sition from welfare to work. True welfare re- form can never be achieved and welfare de- pendency will never be broken, unless we pro- vide adequate education, training, child care, and jobs that pay a living wage. I am particularly concerned that, like the House bill, the conference agreement prohibits using cash welfare block grant funds to pro- vide vouchers for children in families who have been cut off from benefits because of the 5-year limit. We must not abandon the chil- dren of families whose benefits are cut off. We must continue to ensure that they will be pro- vided for and not punished for the actions of their parents. Many more children will be hurt by the bill’s denial of benefits to legal immigrants. Low-in- come legal immigrants would be denied aid provided under major programs such as SSI and food stamps. States would also have the option of denying Medicaid to legal immi- grants. They would also be denied assistance under smaller programs such as meals-on- wheels to the homebound elderly and prenatal care for pregnant women. Under this bill, near- ly half a million current elderly and disabled beneficiaries who are legal immigrants would be terminated from the SSI Program. Similarly, the Congressional Budget Office estimated that under the House bill, which is similar to the conference agreement, approximately 140,000 low-income legal immigrant children who would be eligible for Medicaid under cur- rent law would be denied it under this legisla- tion. Most of these children are likely to have no other health insurance. I cannot believe we would pass legislation that would result in even one more child being denied health care that could prevent disease and illness. This bill also changes the guideline under which nonimmigrant children qualify for bene- fits under the SSI Program. As a result, the CBO estimates that by 2002, some 315,000 low-income disabled chil- dren who would qualify for benefits under cur- rent law would be denied SSI. This represents 22 percent of the children that would qualify under current law. The bill would reduce the total benefits the program provides to disabled children by more than $7 billion over 6 years. Mr. Speaker, mandatory welfare-to-work programs can get parent off welfare and into jobs, but only if the program is well designed CONGRESSIONAL RECORD \u2014 HOUSE H9417July 31, 1996 and is given the resources to be successful. The GOP bill is punitive and wrongheaded. It will not put people to work, it will put them on the street. Any restructuring of the welfare system must move people away from depend- ency toward self-sufficiency. Facilitating the transition off welfare requires job training, guaranteed child care, and health insurance at an affordable price. We cannot expect to reduce our welfare rolls if we do not provide the women of this Nation the opportunity to better themselves and their families through job training and edu- cation, if we do not provide them with good quality child care and, most importantly, if we do not provide them with a job. Together, welfare programs make up the safety net that poor children and their families rely on in times of need. We must not allow the safety net to be shredded. We must keep our promises to the children of this Nation. We must ensure that in times of need they receive the health care, food, and general services they need to survive. I urge my colleagues to oppose this dangerous legislation and to live up to our moral responsibility to help the poor help themselves. Mr. BLILEY. Mr. Speaker, it is with pleasure that I take this opportunity to address the wel- fare reform conference report before us today. This measure will do exactly what its name promises: promote personal responsibility and work opportunity for disadvantaged Ameri- cans. More important, it will replace the de- spair of welfare dependency with the pride of independence. This measure is critical to welfare reform ini- tiatives taking place in the States. In my State, the Virginia Independence Program has al- ready helped two-thirds of all eligible welfare recipients find meaningful jobs and restore hope to their lives. This legislation will enable Virginia to con- tinue its highly successful statewide reform program. And it will allow other States to cre- ate similar initiatives\u2014without having to waste time and money seeking a waiver from the Federal Government. I am also proud of the role that the Com- merce Committee has played in crafting this landmark initiative. Although the Medicaid re- form plan designed by the Nation’s Republican and Democrat Governors is not a part of this legislation, the conference report does include important Medicaid provisions. In particular, the conference report guaran- tees continued coverage for all those who are eligible under the current AFDC Program. It also ensures that eligible children will not lose the health coverage they need. And it requires adult recipients to comply with work require- ments in order to remain eligible for Medicaid benefits. Mr. Speaker, I would like to close by con- gratulating all those who helped to shape this historic measure. It deserves our full support, and it should be signed by the President. Mr. COSTELLO. Mr. Speaker, today this body will take a large step in making sweeping reform in our welfare system. By passing the welfare reform agreement, we move toward a system that emphasizes work and independ- ence\u2014a new system that represents real change and expanded opportunity. Although this bill is not perfect, it is our best chance in years to enact welfare reform that represents an opportunity to improve the current system. Sadly, our current system hurts the very people it is designed to protect by perpetuat- ing a cycle of dependency. For those stuck on welfare, the system is not working. It is clear that we cannot and should not continue with the status quo. The status quo has fostered an entire culture of poverty. Our current sys- tem does little to help poor individuals move from welfare to work. It is clear the best antipoverty program is a job. To that end, this bill encourages work. It requires welfare recipients to work after 2 years and imposes a 5-year lifetime limit on welfare benefits. The bill turns Aid to Families with Dependent Children [AFDC] into a block grant program, allowing States to create their own unique welfare programs to best serve their residents. The bill maintains health care benefits for those currently receiving Medicaid because of their AFDC eligibility and provides $14 billion for child care so parents can go to work without worrying about the health and safety of their children. In addition, this bill preserves the earned income tax credit which has been successful in helping working fami- lies. Mr. Speaker, I voted against the Republican welfare reform bill when it was before this House. That bill represented a drastic depar- ture from the actual intent of welfare\u2014to help the most vulnerable in our society in their time of need. The House bill eliminated the safety net of Medicaid and food stamps for many children. It was mean in spirit and should not have passed. The conference agreement that is before us today, however, is much more reasonable. Children will have the guarantee of health care coverage through Medicaid even as their parents transition to work. Fur- ther, unlike the House bill, States will not be able to opt out of the Federal Food Stamp Program. The conference agreement is a far better bill than the measure passed by the House. It is a bold, yet compassionate step in helping foster independence. I am pleased the President has indicated he will sign this bill into law. I applaud the Presi- dent\u2014who has worked on this issue for years, even before it was politically fashionable\u2014for continuing to insist that the bill be improved before signing it into law. While the President and I agree that this bill is by no means per- fect, it is a good starting point. We can begin the process of moving toward a system that encourages and rewards work for all able-bod- ied citizens. Mr. TORRES. Mr. Speaker, I rise in opposi- tion to this antifamily, antichildren bill. There are so many parts of this bill that should con- cern us. I could stand here all day and de- scribe, in detail, how this bill falls short of our shared goal of welfare reform. For example, consider the effects on our Nation’s most unfortunate children. I say un- fortunate because these children are being sacrificed by election year politics simply be- cause they came from poor families. Their al- ready difficult lives will be made impossible due to food stamp reductions, loss of SSI as- sistance, and no guarantee of Federal assist- ance when time runs out for them and their families. The effect will be to drown an addi- tional 1.1 million children in poverty. Like I said, I could go on and on. But, I won’t waste your time discussing what we all know: that block grants aren’t responsive to a changing economy and inadequate child-care provisions make welfare-to-work a very difficult journey. I will tell you what this so-called reform will mean to California, and how my State is being asked to absorb 40 percent of the proposed cuts. Why? Because California is home to the largest immigrant population in our country and this bill denies legal immigrants Federal assistance. It does not take much to do the math and understand the consequences of de- nying food stamps, supplemental security in- come, or Medicaid to our legal immigrant pop- ulation. There are no exceptions for children or the elderly, regardless of the situation. The needs of these taxpaying, legal resi- dents will not vanish because the Federal Government looks the other way. The children will still be hungry, the elderly will still get sick, and the disabled will still have special needs. Someone will have to provide these services, and it will be our cities and counties who are forced to pick up the tab. And for California, the bill will be approximately $9 billion over 7 years. My district of Los Angeles County is home to some 3 million foreign-born residents. County officials estimate that denying SSI to legal immigrants could cost the county as much as $236 million per year in general relief assistance. More importantly, this translates into no Federal assistance for the elderly or disabled children. These costs would continue to rise with the loss of Medicaid coverage for legal immi- grants. More than 830,000 legal immigrants in California would lose Medicaid coverage, in- cluding 286,000 children. Overall, the total number of uninsured persons in California would rise from 6.6 million to 7.4 million. Under this bill, these people would turn to county hospitals for care. And the costs of that care will be shifted to local governments al- ready operating on shoe string budgets. In Los Angeles County, this could mean as much as $240 million per year. To say this is unfair is an understatement. Legal residents, who play by the rules and contribute over $90 billion a year in taxes, do not deserve this. They deserve what they earn; to be treated with the same care and provided with the same services enjoyed by the rest of the tax-paying community. I encourage my colleagues to oppose these short-sighted cuts and unfair rule changes: Say no to a bad deal and vote against this re- port. Mr. ORTON. Mr. Speaker, I am pleased to rise in support of this welfare reform bill. I commend this Congress for creating a flexible reform bill that will allow Utah and other inno- vative States to continue their successful wel- fare reform efforts. My greatest concerns during the course of the welfare reform debate have been to trans- form the system to a work-based system, to ensure that States like Utah have the flexibility to continue their successful reform efforts, and to protect innocent children. I have worked dili- gently with colleagues on both sides of the aisle to craft a bill that accomplishes these goals, and I am pleased to say that Congress has finally passed a bill that achieves them. I am extremely pleased that this bill contains a provision that allows Utah to continue its successful welfare reform efforts. Under the bill that passed the House 2 weeks ago, Utah would have had to change its program to meet the restrictive Federal requirements contained in the bill. Moreover, CBO estimated that the earlier bill imposed $13 billion in unfunded costs on States unless they restricted eligibility or decreased assistance to those in need. CONGRESSIONAL RECORD \u2014 HOUSEH9418 July 31, 1996 Both the National Governors’ Association and the State of Utah expressed concerns about these unfunded costs. I worked with members of the conference committee to address these concerns, and now we have a bill that really is flexible. The bill that passed the House today con- tained several of the provisions proposed by myself and others who have worked over re- cent months to find bipartisan common ground on welfare reform. For instance, this con- ference report is much more flexible than the earlier House bill because it allows States with waivers to use their own participation definition in meeting Federal work participation require- ments. It also reduces the unfunded costs in the bill substantially. Unlike the House version, the conference report maintains current pro- tections against child abuse, guarantees that children do not lose their Medicaid health care coverage as a result of the bill, and provides States with the option to provide noncash as- sistance to children whose parents have reached the time limit. Finally, it improves upon maintenance of effort provisions and en- forcement of work participation rates. It wasn’t long ago that we were debating H.R. 4, an extreme proposal that would have eliminated 23 child protection programs like foster care and child abuse protection and re- placed them with a block grant that contained $2.7 billion less funding than provided under current law. H.R. 4 would have eliminated nu- trition programs like school lunch, school breakfast, the Summer Food and Adult Care Food Program, the Women, Infants and Chil- dren Program, and the Homeless Children Nu- trition Program, and replaced them with two block grants that provided $6.6 billion less funding for nutrition than provided under cur- rent law. Although claims were made that there were no cuts to certain popular pro- grams like school lunch, the truth was a State would have to eliminate or severely reduce all other programs in order to fully fund these high profile programs. Even in the House version of welfare reform passed 2 weeks ago, children could have lost their Medicaid coverage as the result of the bill; current child abuse protections were elimi- nated and States were prohibited from provid- ing noncash assistance to children whose par- ents have reached the time limit. I am pleased that the conference report has corrected these provisions and protected children. Previous bills, which I opposed, treated 4- year-old children like 40-year-old deadbeats. This bill is far better for children and far more flexible for States than any of the other wel- fare reform proposals that have been passed by this Congress. We finally have a bill that should be signed into law. Mr. TANNER. Mr. Speaker, there is virtually universal agreement that our current welfare system is broken and must be dramatically overhauled. Americans are a compassionate people, eager to lend a helping hand to hard workers experiencing temporary difficulties and especially to children who are victims of circumstances beyond their control. But Ameri- cans also are a just people, expecting every- one to contribute as they are able and to take responsibility for themselves and their families. It is the balancing of these two concerns that makes correcting our welfare system a chal- lenge, but a challenge which must be met. This welfare reform conference report is far from perfect, but it clearly is preferable to con- tinuing the current system and preferable to welfare legislation considered earlier this Con- gress. For these reasons, we support the wel- fare reform conference report and have en- couraged the President to sign it. We have opposed previous welfare reform proposals because we believed that they of- fered empty, unsustainable promises of mov- ing welfare recipients to work. Additionally, earlier bills were seriously deficient in their protections for children and other truly vulner- able populations. We have decided to support this final conference report because it is con- siderably better than the welfare reform bill (H.R. 4) appropriately vetoed by the President last year and it also makes significant im- provements to the bill passed by the House last week. The conference committee agreed with our proposals giving States additional flexibility in moving welfare recipients to work, allowing States to use block grant funds to provide vouchers, and providing other protec- tions for children. This conference report incorporates several improvements proposed by the National Gov- ernors’ Association to H.R. 4 in its final form. it provides $4 billion more funding for child care that will assist parents transitioning to work. It doubles the contingency fund for States facing larger welfare rolls caused by economic downturns. The latest bill returns to a guaranteed status children eligible for school lunch and child abuse prevention programs. The reductions in benefits for disabled children contained in last year’s H.R. 4 are eliminated, and greater allowances are made for hardship cases, increasing the hardship exemption from the benefit time limits to 20 percent of a State’s caseload. Several changes proposed in the Castle- Tanner alternative were subsequently made to the bill passed by the House in July. The amount States must spend on child care was increased. Additionally, States will be required to assess the needs of welfare applicants and prepare an individual responsibility contract outlining a plan to move to work. Also, an in- crease in the State maintenance of effort for States that fail to meet the participation rates was added to the bill. All of these changes strengthen the effort of moving welfare recipi- ents to work. The conference report further improved the bill. The conferees adopted our suggestions providing additional State flexibility in develop- ing work programs and adding additional pro- tections for children. We were disappointed that the conference did not incorporate con- structive suggestions that were made regard- ing penalties for failure to meet work require- ments and, unfortunately, an authorization for additional work funds was eliminated because of parliamentary ”Byrd rule” considerations in the Senate. On balance, however, the con- ference report produced a bill that is signifi- cantly better than the bill passed by the House. President Clinton already has approved waivers allowing 41 States to implement inno- vative programs to move welfare recipients to work. The House’s Welfare Reform bill would have restricted those State reform initiatives by imposing work mandates that are less flexi- ble than States are implementing. Over 20 States would have been required to change their work programs to meet the mandates in that earlier House bill or face substantial pen- alties from the Federal Government. The conference report now allows States that are implementing welfare waivers to go forward with those efforts. Specifically, the conference report allows those States to count individuals who are participating in State-authorized work programs in meeting the work participation rates in the bill, even work programs which otherwise do not meet the Federal mandates in the bill. States such as Tennessee and Texas that have just received waivers will be permitted to begin implementing these reforms and States like Utah and Michigan which have a track record in moving welfare recipients into self- sufficiency will be able to continue their pro- grams. We will work to ensure that States will continue to have this flexibility when their waivers expire if the State plan is successful. Another key goal we have maintained throughout the debate is protecting innocent children. The earlier House bill would have treated a 4-year-old child the same as a 24- year-old deadbeat by prohibiting States from using block grant funds to provide vouchers after the time limit for benefits to the parents had expired. The conference report reverses this extreme position. In addition, the con- ference report moderates the impact of the food stamp cuts on children by maintaing a guaranteed status for children and by increas- ing the housing deduction to $300 a month for families with children. Third, we have been concerned about the impact of health coverage to individuals and payments to health providers as a result of welfare reform. The House bill effectively would have denied Medicaid to thousands of individuals, removing $9 billion of Medicaid as- sistance from the health care system and re- sulting in a cost shift to health care providers that would affect the cost, availability, and quality of care of to everyone. While the cor- rection is less than we had hoped, the con- ference report effectively reduces this cost shift to health care providers by more than half. The conference report also contains lan- guage very similar to the Castle-Tanner bill continuing current Medicaid eligibility rules for AFDC-related populations, ensuring that no one loses health care coverage as a result of welfare reform. As we began by saying, this conference re- port is far from perfect and we continue to have concerns about the impact of several provisions. Although the report provides States with additional flexibility in implementing work programs, the work provisions in the bill still may impose unfunded mandates on States that will make it more difficult to move welfare recipients to work. Given the unfunded man- dates in the bill, the provisions penalizing States for failing to meet participation rates by reducing funding to the State are counter- productive. The contingency fund in the con- ference report, while much stronger than the contingency fund in H.R. 4, will not be suffi- cient to respond to a severe national or re- gional recession. The conference report contains a require- ment that Congress review the impact of the bill 3 years. This review process will allow Congress to make a number of changes that we feel certain will be necessary to fulfill suc- cessful welfare reform. Despite these reservations, we believe that it is critical that welfare reform be enacted this year. Failure to do so will signal yet another wasted opportunity to make critically needed CONGRESSIONAL RECORD \u2014 HOUSE H9419July 31, 1996 reforms. We should enact this conference re- port and fix the current system now, moving toward a system that better promotes work and individual responsibility. Mr. ROYCE. Mr. Speaker, as I was reading the papers this morning I noticed some stories that claimed that this welfare reform proposal is not such a big change\u2014that its significance has been overrated. That all sides are coming to a consensus and it’s not such a big deal after all. In the short term, that’s how it may look. But in the long term, we are making a fundamental change to the status quo\u2014we’ve gone beyond questioning the failed policies of the past\u2014we are implementing a whole new approach. We are beginning to replace the welfare state with an opportunity society. Ideas have consequences and bad ideas have bad consequences. The Great Society approach may have been well-intentioned, but the impact was tragic. We have done a dis- service to those who have fallen into the wel- fare trap. The incentives have been all wrong and the logic backward. We need a welfare system that saves fami- lies, rather than breaking them. And that’s what this bill does. Our welfare system has deprived people of hope, diminished opportunity and destroyed lives. Go into our inner cities and you will find a generation fed on food stamps but starved of nurturing and hope. You’ll meet young teens in their third pregnancy. You’ll meet fa- therless children. You’ll talk to sixth graders who don’t know how many inches are in a foot. And you’ll talk to first-graders who don’t know their ABC’s. It’s time for Washington to learn from its past mistakes. It’s time to reform our welfare system, to encourage families to stay together and to put recipients back to work. That’s what our plan does. Four years ago, President Clinton promised to end welfare as we know it, and I am pleased that he has committed to sign our bill into law. Our plan calls for sweeping child support enforcement. We end welfare for those who won’t cooperate on child support. We strength- en provisions to establish paternity. We force young men to realize they will be required to provide financial support for their children by requiring States to establish an automated State registry to track child support informa- tion. One of the key elements of our welfare re- form bill is ending fraudulent welfare payments to prisoners and illegal immigrants\u2014saving $22 billion. Each year, millions of taxpayer dollars are il- legally sent to prisoners in State and local jails through the Supplemental Security Income Program. In fact, in one case, infamous ”Free- way Killer” William Bonin illegally collected SSI benefits for 14 years while on San Quen- tin’s death row. This bill removes the Washington-based intermeddling and bureaucratic micromanage- ment that has resulted in welfare programs that build a welfare population but do not re- lieve the suffering of those who are poor. We do not want to maintain the poor, we want to transform them. That’s exactly what this bill would do. Mr. SABO. Mr. Speaker, today we will de- bate legislation to radically change our welfare system. We will hear a lot about the fun- damental principles that should govern the way we help those truly in need. And while I agree with those who say our welfare system must work better for the American people, we need to remember that something much more profound than rhetoric is at stake. There is no denying that we should encour- age work and parental responsibility. And I have long argued that States and localities can deliver some services better than we can at the Federal level. But, there are also other principles that we need to remember when we discuss welfare. We need to remember that the safety net for vulnerable people is fundamentally impor- tant to our society. There has long been wide- spread support among Americans of all politi- cal views that the Government should help people who are too sick, too old or too young to help themselves\u2014particularly when they don’t have families who can take care of them. This is why the safety net was developed in the first place and has had the continued sup- port of Republicans such as Richard Nixon and Ronald Reagan as well as Democrats. I congratulate the Republican majority for its attempts to reform welfare, but I believe this legislation fails in many ways. Simply labeling this bill welfare reform cannot disguise the fact that it shreds the national safety net for mil- lions of vulnerable people. The Urban Institute has estimated that 1.1 million children will be pushed into poverty be- cause of this legislation. More than a fifth of American families with children will be hurt by it. They also note that almost half of the fami- lies affected by this bill are already employed. The provision to cut off food stamps after 3 months for unemployed people without de- pendents is unprecedented and unnecessarily harsh. These are some of the most vulnerable people in our country. Under this measure, even if they are trying to find work, if they don’t succeed they will go hungry. And, personally, I find the treatment of legal immigrants mystifying. My parents were immi- grants. They, like many others, came to this country, worked hard, and contributed to their community. Today’s immigrants are no dif- ferent. They come to this country, they work hard, and they pay taxes. If they should fall upon hard times, why shouldn’t we help them just like we help each other? Under the terms of this bill we aren’t allowed to help them. They lose food stamps and SSI even if they have been paying taxes and living legally in this country for years. And new immigrants will be denied Medicaid. Equally as disturbing as this bill’s reduction in its Federal commitment to a national safety net is the pressure it puts on States to reduce their commitments to help vulnerable people. The reduction in State match set by the bill and the flexibility to shift 30 percent of basic block grant moneys to other uses will exacer- bate pressures within State governments to pull their own resources out of these pro- grams. That combined with the cuts in Federal dollars will lead to a sharp reduction in re- sources available for needed services and benefits. The logical end result of all these inter- actions is significant cost-shifting to local gov- ernments. Because of the deep cut in Federal resources and potential reductions in State support, localities will need to spend more of their own funds to help move people from wel- fare to work and to provide needed services while that process is occurring. Many local of- ficials including the Republican mayor of New York, Rudolph Giuliani, have expressed alarm at the hundreds of millions of dollars in addi- tional costs their cities and residents will have to bear. Clearly, this will mean higher property taxes for working families all over the country. We should reform our welfare system. But we must do it in a way that does not simply shift costs and that does not abandon the safety net for people who are truly in need. Unfortunately, Mr. Speaker, this bill badly fails that test and America will be the worse for it. We can and should do better. Mr. CLAY. Mr. Speaker, I condemn both the process and the substance of the Republican conference agreement on welfare. As the 104th Congress draws to a close, the Repub- lican majority has not wavered from its auto- cratic role of this institution nor from its vicious indifference to our Nation’s poor and infirm. Like my other Democratic colleagues, I was systematically denied any meaningful role on that conference. The time and location of con- ference negotiations have been a closely-held secret among Republicans. This most anti- democratic process is an affront to the people of the 1st Congressional District of Missouri who send me here to represent their concerns on all matters of political discourse. Time and time again, this new Republican majority has interfered with my ability to fully represent the interests of my constituents. As a matter of policy and substance, this conference report is an evil charade. From the outset, I had little expectation that the final product of the conference would mean reason- able, viable, and compassionate welfare re- form. After all, both the House and Senate bill contained unrealistic work requirements, woe- ful funding for meaningful workfare, and the very real risk of throwing millions of children into poverty. The Republican majority has no real interest in truly reforming welfare. Then real objective is to steal $60 billion from antipoverty and antihunger programs in order to help finance their tax cuts and other gifts to the wealthy\u2014 Robin Hood in reverse. I can think of no more desperate, shameful act than to use the poor, especially children and the elderly, in a game of political chicken. Mr. Speaker, I cannot in good conscience support a welfare reform bill that will punish those who, through no fault of their own, must turn to their Government for help in times of need. Mr. CUNNINGHAM. Mr. Speaker, I proudly rise to support the conference report for H.R. 3734, the Personal Responsibility and Work Opportunity Act. As chairman of the House Subcommittee on Early Childhood, Youth and Families, as a former teacher and coach, and as a dad, I un- derstand the need to take into account the needs and interests of children. I cannot imag- ine a policy that is crueler to children than the current welfare system. Certainly it was born of the good intention to help the poor. But in the name of compassion, we have unleashed an unmitigated disaster upon America. To- day’s welfare system rewards and encourages the destruction of families, and childbirth out of wedlock. It penalizes work and learning. It poi- sons our communities and our country with generation after generation of welfare depend- ency. It robs human beings of hope and life and any opportunities at the American Dream. In the name of compassion, and with good intentions, the welfare status quo is mean and CONGRESSIONAL RECORD \u2014 HOUSEH9420 July 31, 1996 extreme to children. It is mean and extreme to families. It is mean and extreme to the hard- working Americans who foot the bill. Thus, without a doubt, we must replace this mean, extreme, and failed system of welfare dependency with work, hope, and opportunity. We can and must do better as Americans. And we will, by adopting this compassionate, historic legislation. Our measure makes welfare a way up, not a way of life. It replaces Washington-knows- best with local control and responsibility. It re- places a system that rewards illegitimacy and destroys families, with a family-friendly fighting chance at the American Dream. Now, President Clinton promised in his 1992 campaign to end welfare as we know it. He also made several other promises, including starting his administration with middle class tax relief. Unfortunately, the President has not kept his promises. He raised taxes. And twice, he has vetoed legislation to fulfill his own promise to end welfare. The President who pledged to end welfare as we know it has twice vetoed legislation to end welfare for ille- gal aliens. Let me speak for a moment about illegal aliens. Illegal immigration is breaking our treasury, burdening California, and trying America’s patience. It is wrong for our welfare system to provide lavish benefits for persons in America in violation of our laws. I am proud that the Personal Responsibility and Work Opportunity Act ends welfare for il- legal aliens. It ends eligibility for Government programs for illegal aliens. It ends the tax- payer-funded red carpet for illegal aliens. Our plan is to send a clear message to those who jump our borders, violate our laws, and reside in America illegally: Go home. Stop freeload- ing off of hard-working American taxpayers. Let me address the matter of legal immi- grants. America is a beacon of hope and op- portunity for the world. That is why we con- tinue to have the most generous system of legal immigration that history has ever known. It is in America’s interest to invite those who want to work for a better life, and have a fight- ing chance at the American Dream. But we will not support those who come to America to be dependent upon our social safety net. Thus, our legislation places priority on helping American citizens first, and represents the val- ues held by Americans. For we are determined to liberate families from welfare dependency and get them work and a chance at the American Dream. We un- derstand that for many single parents, child care can make the difference between being able to work or not. That’s why or bill provides more and better child care, with less bureauc- racy and redtape, and more choices and re- sources for parents striving for a better life. Here are the facts: This conference report provides $22 billion for child care over 7 years. That amounts to $4.5 billion over cur- rent law, and $1.7 billion more than President Clinton’s plan recommends. And we dramati- cally increase resources for child care quality improvement. By investing in quality child care, we provide more families the opportunity to be free from welfare dependency and to strive for the American Dream. In the end, this bill is what is about the best of America. We are a compassionate people, united by common ideals of freedom and op- portunity. The great glory of this land of oppor- tunity is the American Dream. Families trapped by welfare, and especially their chil- dren, have had this dream deferred. We can do better. And we do, through this legislation, because this is America. I urge the adoption of the conference report on H.R. 3734. Mr. BILIRAKIS. Mr. Speaker, I would like to join in supporting the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. As representatives of the people, we do not get as many opportunities as we would like to do something that will truly help im- prove the lives of the people we serve. This bill presents us with just such an op- portunity. The landmark welfare reform plan before us today will bring education, training, and jobs to low-income Americans. It will replace welfare dependence with economic self-reliance. And it will create more hopeful futures for the chil- dren of participants. This conference report is more than just a prescription for much-needed welfare reform. It is what I hope will be the first step in our bi- partisan efforts to improve the public assist- ance programs on which disadvantaged fami- lies depend. Last February, the Nation’s Republican and Democrat Governors unanimously endorsed welfare and Medicaid reform plans. And al- though the conference report before us today will give States the tools they need to improve their public assistance programs, our work is not done. After all, welfare as we know it means more than AFDC. It includes food stamps, housing assistance, and energy assistance. And it in- cludes medical assistance. That’s right\u2014for millions of Americans, Med- icaid is welfare. That is because income as- sistance alone is not sufficient to meet the pressing needs of disadvantaged families. For States, too, Medicaid is welfare. In fact, it makes up the largest share of State public assistance funding. As a share of State budg- ets, Medicaid is four times larger than AFDC. If President Clinton does the right thing and signs this welfare reform bill into law, Medicaid will still be caught up in the choking bureau- cratic redtape of Federal control. That is why the Medicaid program must be restructured if States are to fully succeed in making public assistance programs more responsive and ef- fective. I commend my colleagues on both sides of the aisle for their commitment to true welfare reform. And I look forward to continuing our efforts to making all sources of public assist- ance work better for those who need a helping hand up. Thank you. Mr. REED. Mr. Speaker, today’s vote is about change. Today we begin the move from a status quo that no one approves of to a re- formed and improved welfare system. Our cur- rent welfare system traps too many families in a cycle of dependency and does little to en- courage or help such individuals find employ- ment. Both welfare recipients and taxpayers lose if the status quo is maintained. I have repeatedly stated that meaningful welfare reform should move recipients to work and protect children. Just 2 weeks ago, I sup- ported a bipartisan welfare plan, authored by Republican Representative Michael Castle and Democratic Representative John Tanner, which I believe met these goals. The conference agreement on H.R. 3734 is not perfect, but it is a good first step into an era of necessary welfare reform. This legisla- tion contains many useful and necessary im- provements over the previous welfare propos- als put forth by the Republican majority. In fact, this legislation has moved several steps closer to the Castle-Tanner bill. The agreement ensures that low-income mothers and children retain their Medicaid eli- gibility; provides increased child care funding; removes the optional food stamp block grant; removes the adoption and foster care block grant; and allows States to use a portion of their Federal funding to provide assistance to children whose families have been cut off wel- fare because of the 5-year time limit. While this legislation attempts to protect children from the shortcomings and failures of their parents, it does not fulfill all of my goals for welfare reform. I am concerned that H.R. 3734 fails to provide adequate Federal re- sources for States to implement work pro- grams, nor does it contain adequate resources for States and individuals in the event of a se- vere recession. In addition, the legislation makes cuts in food stamps for unemployed individuals willing to work and contains legal immigrant provi- sions that will deny access by legal immigrant children to SSI, food stamps, and other bene- fits. These concerns should be rectified by this and subsequent Congresses. I am committed to realizing this goal, and therefore, I am pleased that the President plans to propose legislation to repeal many of these provisions. Furthermore, several States are currently working on plans to reform their welfare re- form systems. We must ensure that these ef- forts are accommodated by this legislation. This is the first Republican proposal which adequately acknowledges the need to protect children, while emphasizing work. Rhode Is- land, through the work of a coalition of State officials, business leaders, and advocacy groups, has crafted a welfare reform plan that also accomplishes these goals. Should H.R. 3734 prove detrimental to Rhode Island or the children of Rhode Island, I will work to make necessary changes to further strengthen the Nation’s welfare reform efforts. Mr. GOODLATTE. Mr. Speaker, I rise in strong support of this conference report. De- spite the slanderous accusations by the advo- cates of the current welfare state, our welfare reform plan is compassionate and humane, two adjectives rarely used to describe the cur- rent welfare program. Our welfare reform plan ends welfare as a way of life and gives back welfare recipients their self-worth. By replacing welfare with work, current recipients will realize that they have talents in which to make a productive and self-reliant life. They are so used to the government providing for them that they never believed they could provide for themselves and their families. We know this transition isn’t going to be easy; nothing worth having is easy. That is why our welfare reform plan continues govern- ment assistance as long as they are making a good-faith effort to be a productive member of society. We separate from bona fide eligible welfare candidates those who have been convicted of a felony or those that refuse to become citi- zens. For too long, those that have been try- ing to make their own way but are suppressed by the big thumb of government have been represented by those welfare recipients that CONGRESSIONAL RECORD \u2014 HOUSE H9421July 31, 1996 make the headlines. By denying convicted fel- ons and noncitizens taxpayer-funded assist- ance we take away the scourge previously as- sociated with all welfare benefits. We create a new benevolent program and therefore a posi- tive and refreshing atmosphere for its recipi- ents. Along with increased sense of self-worth that necessarily comes with a pay check that isn’t a donation comes a greater sense of per- sonal responsibility. Our reform promotes self- responsibility in an attempt to half rising illegit- imacy rates. Once we diminish illegitimacy we can truly end the cycle of dependency created by our current welfare state. As a condition for benefit eligibility, a mother must identify the father. This will ensure that single parents get the support they need and remind fathers that their children is their re- sponsibility, not the State’s. Our welfare reform plan gives power and flexibility back to the States. I think this is the provision that gives the proponents of the cur- rent welfare state the most heartburn. The block grants give the power and flexibility once enjoyed by big government advocates to our Nation’s Governors and State legislatures. Non longer will Washington power brokers be able to dictate who gets and how much they get. Rather, those who know the solutions for their unique challenges won’t have to wait for bureaucratic approval to put their programs in action. Mr. Speaker, not only is this reform plan his- toric, it is futuristic. This plan ends welfare as we know it and helps us see a society which encourages all of its members to be produc- tive and self-reliant. Mr. FRANKS of Connecticut. Mr. Speaker, this welfare reform conference bill brings us one step closer to fixing a welfare system that has been broken and in need of major repairs. We have had a welfare system that has caused generations of American citizens to live in poverty and become consumed by a condition of hopelessness and despair. We have had a welfare system that has created dependency upon a monthly stipend instead of employment as a viable solution to overcome poverty. I strongly believe in the American dream where each individual is given the opportunity to work, provide for their family, and partici- pate in our society. The current welfare sys- tem has taken that dream away from too many Americans. The conference committee bill represents the change that will place the welfare program back into the hands of the States so that States can implement programs that best fit the needs of their welfare constituents. The bill will reinforce the American principle in which parents are responsible for the well-being of their children. Welfare recipients will be re- quired to identify the absent father, and all able-bodied parents will be expected to work to provide for the needs of their children. The bill strengthens child support enforcement so that absent fathers will be located and re- quired to pay child support. The conference committee bill encourages States to implement the debit card for dis- bursement of welfare funds and food stamps. No longer will welfare recipients be able to use welfare funds to purchase illegal drugs. The bill will bring greater accountability in the spending of American taxpayer’s money. This conference committee bill will lead to greater self-sufficiency. The bill will give fami- lies who have had to live in poverty a new chance for a better life and an opportunity to participate in the American dream. I urge support for the conference committee bill. Mrs. COLLINS of Illinois. Mr. Speaker, I have heard of a rush to anger and a rush to judgment. What we have here is a rush to the floor. We’re told an agreement on a con- ference committee report to H.R. 3734 was made near midnight last night. I haven’t seen the conference report and don’t know what’s in the conference agreement. I read what’s in the National Journal’s Congress Daily\/A.M. edition and the Congressional Quarterly’s House Action Reports ”Conference Sum- mary.” The Congressional Quarterly Action Report includes the disclaimer that they haven’t seen the conference agreement report either, but prepared a morning briefing any- way, using information provided by committee staff. Well, excuse me. I don’t consider it appropriate to rely only on some nebulous statement written by someone who hasn’t read the report before casting my vote on behalf of my constituents. I want to have a copy of the legislation available and that’s why we have the rule that we don’t vote on a conference agreement the same day it is reported. In my 23 years in the Congress, I have been accustomed to reading and studying leg- islation before I cast my vote on behalf of the Seventh District of Illinois, a responsibility I take very seriously. The House has rules gov- erning debate, rules designed to keep us from rushing to judgment. Those rules dictate that we don’t vote on conference reports the same day they are filed so that we have time to study the provisions. That’s why there is a two-thirds majority vote requirement to over- turn that rule. So why are we being asked to waive the time requirement and go immediately to a vote on this conference report? We are told we will have 1 hour of debate on the rule that will give us 1 hour of debate to consider a special rule to waive the two-thirds vote requirement. Why? Because once again the Gingrich Re- publicans are trying to force legislation through the process without adhering to the safe- guards established to protect the American people and the legislative process. I object to this rule and urge my colleagues to defeat this rule so that America has a chance to look at what we are being asked to approve as new changes, major revisions real- ly, in the provisions and control of public as- sistance programs that provide a safety net for the needy and vulnerable among us. I owe it to my constituents to study legislation and weigh the measure before casting my vote for them. Let’s get back to reasoned debate, let’s follow the rules, just like we are going to ask the recipients of the benefits provided or de- nied under this bill to follow. Let’s stop chang- ing the rules as it suits the desires of the Gingrich Republicans. I urge my colleagues to defeat this motion to change the rules. I yield back the balance of my time. Mr. BLUMENAUER. Mr. Speaker, there is perhaps no more urgent issue in America today than ending welfare dependency. In place of a welfare program built around welfare checks, we need a program built around helping people get paychecks. We need to move people toward work and inde- pendence. And we need to be tough on work and protective of children. When the work on welfare reform started last year, the Republican proposals were weak on work, tough on kids, and the President was right to veto them. Unfortunately, the bill before us today, while a significant improvement on the earlier ver- sions, still falls short in both regards. On work, the bill is, in fact, too weak, for it underfunds employment assistance by $13 bil- lion. According to the Congressional Budget Office, a $13 billion shortfall is a guarantee that no State can meet the employment re- quirements in this bill. So we have missed an opportunity to make these poor families self- supporting. On children, the bill is, in fact, too weak in its child care provisions; it is too harsh in the manner children are punished for the failures of their parents; and it is far too extreme in its potential to push an additional 1 million chil- dren into poverty. I am also deeply concerned by the fun- damental premise of this legislation. There are many Governors, in many States, who today are sincerely committed to using a welfare block grant to raise the well-being and quality of life of people within their States. And as I listen to them, I hear a haunting echo of a sit- uation which occurred some years ago when many well-intended State legislators, myself included, voted to transition the mentally ill in Oregon into mainstream society. The concept seemed solid, as the welfare block grant seems to many Governors. But when the 1980’s recession hit Oregon, the commitments we made to the mentally ill\u2014similar in so many ways to the commitment the Governors today are making to their welfare recipients\u2014 simply came undone. And today, many years later, the mentally ill of Oregon still live on the streets, and Oregon’s neighborhoods and local governments are struggling under the burden of serving this neglected population. This, Mr. Speaker, is what I fear we face when the next recession rumbles through this land. When times get tough, and resources grow scarce, and the contingency funds are drawn down, who will be hurt the most? Will it be our schools? Our ports? Our highway funds? Our economic competitiveness pro- grams? Or will it be those who are struggling to find a route out of poverty? I fear without adequate planning, safe- guards, standards, and funding, welfare reform will likewise turn into a nightmare not just for the poor, but for the people in our community ill-equipped to deal with the consequences of another experiment that backfires. Mr. POSHARD. Mr. Speaker, I rise in sup- port of this conference agreement on welfare reform. This is truly an important moment in my legislative career and in the history of the House. I trust our judgement today will be proven wise in years to come. I have supported welfare reform with my work and with my votes during this session. I voted for the bill proposed by my colleague from Georgia, Congressman DEAL, and for the bill most recently proposed by a bipartisan co- alition led by Congressmen CASTLE and TAN- NER. By voting for those bills, and opposing the bills which were passed but vetoed by the President, we have been able to move toward a sensible middle ground, a tough yet humane bill which is worthy of our support. I will enter into the RECORD at this point a number of im- provements which helped earn my support for this legislation. CONGRESSIONAL RECORD \u2014 HOUSEH9422 July 31, 1996 Unlike the House bill, the Conference Agreement forces states wanting to transfer funds between block grants to transfer those funds specifically into child care and social services block grants. The Agreement allows states the flexibil- ity to implement pilot welfare programs like the one being put into place in Illinois. [A part of the Castle-Tanner Plan] However, states many use federal funds to provide vouchers and health and food stamp benfits to children through the five year time limi- tation mandated in the bill. After that, states have the option of continuing benefits in the form of a voucher. The Conference Agreement provides addi- tional flexibility in meeting the work re- quirements by allowing states that are im- plementing plans under federal waivers to count individuals who are participating in work programs under the waiver in meeting the work participation rates in the bill, even if the hours of work or the definition of work in the state plan do not meet the mandates in the bill. The Agreement does not include the House provision that would have prohibited states from using block grant funds to make cash payments to families that have an additional child while on welfare. Unlike the House bill, the Conference Agreement does not give states the option to receive food assistance in the form of a block grant, instead of under the regular Food Stamp program. The bill retains the current Food Stamp program. [A major part of the Castle-Tanner Plan] The Conference Agreement decreased the amount cut from the Food Stamp program by $2.3 billion. (The Agreement cuts the Food Stamp program by $23.3 billion over six years.) Tightens SSI eligibility criteria to restrict eligibility to children who meet the medical listings. However, individualized functional assessment and references to maladaptive behavior are repealed. [Criteria contained in Castle-Tanner Plan] All children meeting medical listings will be eligible for SSI bene- fits. The House bill restricted Food Stamps ben- efits for able-bodied, unemployed adults who have no dependent and who are between the ages of 18 and 50\u2014limiting Food Stamp bene- fits for this group to three months over their lifetime up to age 50. The Agreement pro- vides such individuals with Food Stamps for three months out of every three years, with the possibility of another three months with- in that period. [Moved closer to the Castle- Tanner Plan] Under the agreement, all families cur- rently receiving welfare and Medicaid bene- fits will continue to be eligible for the Med- icaid program. In addition, there is a one year transition period for Medicaid for those transitioning into the workforce. The Conference Agreement does not deny Medicaid benefits for legal immigrants retro- actively and applies the ban on benefits for five years instead of until citizenship to legal immigrants. The Agreement retains the current Family Preservation and Support program, which is a preventive program designed to teach im- proved parenting skills before a child must be removed to foster care. The House bill would have replaced the program with a block grant. The Agreement includes $500 million more than the House bill for a fund to reward states that are effective in moving people from welfare to work, preserving two-parent families, and reducing the out-of-wedlock births. I come from a rural area. I know times can be tough. But I also grew up on a farm where we worked for everything we ever had, and where we took care of each other. Most of the people I represent in the 19th district have similar backgrounds. They know that jobs can be lost or families can break apart and that we need to look after our neighbor. But they also want that neighbor to take responsibility for their behavior and for them to look for work if they’re able. This bill helps us respect those old-fash- ioned traditions in a modern world. It helps us move people from welfare to work, helps us save money in the program, and gives the states the flexibility to meet the needs of their people. We should be prepared to revisit this bill if in fact children are left behind as some critics fear. But today, we should embrace this pro- posal with courage and faith, confident that we are changing not only the construct but also the culture of welfare. Mr. DURBIN. Mr. Speaker, I rise in support of reforming the welfare system. As the Amer- ican people know, the current welfare system is in desperate need of reform. For public aid recipients trapped in the system, for those who exploit the welfare system, and for the taxpayers who foot the bills, an overhaul of welfare in America is a high priority. The fundamental problem with our current system is that for many people welfare be- comes more than a helping hand; it becomes a way of life. For some who enroll in the pri- mary welfare program, Aid to Families with Dependent Children [AFDC], welfare becomes a trap they cannot escape. Some are afraid to lose the health benefits they receive through Medicaid. Others are unable to secure child care to enable them to go to work. We must eliminate these barriers and chart a clear path for welfare recipients to go after a paycheck instead of a welfare check. Welfare should be viewed as temporary assistance, not a life- style. I believe welfare benefits should be cut off for recipients who are unwilling to pursue work, education or training. I also believe we must strengthen child support enforcement. Billions of dollars in child support payments go uncollected each year. By establishing pater- nity at birth and pursuing deadbeat parents, we can reduce the number of families impov- erished by the failure of non-custodial parents to fulfill their financial responsibilities. The legislation before the House today makes many of the changes needed to reform the welfare system. It will move people from welfare to work, and it provides child care funding and Medicaid to help people make the move from a welfare check to a paycheck. It maintains nutritional guarantees. And it in- cludes child support provisions to press dead- beat parents to meet their responsibilities so their children do not end up on welfare. This legislation is better than the Gingrich bill which I opposed 2 weeks ago. The Ging- rich bill eliminated the Federal guarantee of nutritional assistance. The Gingrich bill denied Medicaid to legal immigrants. The Gingrich bill denied benefits to children born to parents on welfare. And the Gingrich bill did not allow States to provide vouchers for children when their parents exceeded time limits. The legisla- tion before us today does not include any of these problems. This legislation is also far better than the Gingrich bill I opposed last year. Last year’s Gingrich bill would have block-granted and re- duced funding for the nutrition program for Women, Infants and Children; school lunches and breakfasts; and the Child and Adult Care Food Program. It would have eliminated the critical nutrition, education and health services that are an important part of the WIC pro- gram’s effectiveness in increasing the number of healthy births. It would have eliminated the assurance of food assistance for many chil- dren, leaving many of them without enough food to eat. And it would have eliminated the assurance of sound nutrition standards for these programs. Last year’s Gingrich bill also would have eliminated the guarantee of Medicaid cov- erage for millions of women and children on AFDC. It would have terminated most Federal day care programs and replaced them with a block grant to States. It would have cut overall child care funding and caused many families to be denied day care assistance. Without day care, many parents would be forced to quit their jobs and enter the welfare system. It also would have eliminated many of the health and safety standards that have previously been re- quired of day care providers receiving Federal funds, and put many children’s lives at risk. And it would have cut funding for foster care, adoption assistance, child abuse prevention and treatment and related services, and turned these programs over to the States in a block grant. Today’s bill does not contain these enormous flaws. The legislation before the House today is far from perfect. It has significant problems that must be corrected, and I will work with the President to ensure that these problems are effectively addressed. I support effective re- quirements on the sponsors of legal immi- grants who apply for benefits, but I do not be- lieve that people who live legally in our coun- try should be treated unfairly. The legislation before the House today is unfair to legal immi- grants who play by the rules and contribute to the progress of our country, just as all of our ancestors have done. And the legislation be- fore us today cuts nutritional assistance too deeply, which will be harmful to children and may force some working families to continue to choose between paying the rent and putting food on the table. I will vote for the legislation that is now be- fore the House because it makes many of the changes that must be made to change welfare from a way of life to a helping hand. And I will work with the President to correct the prob- lems in this legislation that have nothing to do with welfare reform. Mr. FAZIO of California. Mr. Speaker, I rise to express my support for the conference agreement before us and to voice my grati- tude to the many members of the Democratic Caucus who have worked long and hard over the last 2 years on this difficult issue. These members, including XAVIER BECERRA, LYNN WOOLSEY, JOHN TANNER, CHARLIE STEN- HOLM, SANDY LEVIN, BOB MATSUI, MARTIN SABO, and many, many others, have worked long and hard to improve the welfare reform bill that we are considering today. They have increased the awareness of their colleagues and have worked for a whole range of im- provements which have moderated some of the bill’s original provisions. I truly appreciate their efforts. While this conference agreement isn’t per- fect, it represents a step in the right direction. This agreement acknowledges the view that CONGRESSIONAL RECORD \u2014 HOUSE H9423July 31, 1996 welfare should be a second chance for those in need, not a way of life. This agreement sets a 5-year time limit on receiving benefits, includes tough welfare-to- work requirements, and allows States to de- cide how best to meet the needs of their citi- zens. I am pleased to see that the conference agreement moved toward the President’s posi- tion on a number of important issues, espe- cially the removal of a provision that would have allowed States to opt out of the food stamp program. This will help keep the nutri- tional safety net intact for our kids. In addition, I am pleased that strong child support enforce- ment provisions have been included in this agreement. The agreement that we’re voting on today is the first step toward a much-needed overhaul of our welfare system. It stresses both fiscal and personal responsibility and it breaks the cycle of dependence. I urge my colleagues to support this con- ference agreement. Mr. STOKES. Mr. Speaker, I rise in opposi- tion to H.R. 3734, the Personal Responsibility and Work Opportunity Act, a bill which would dramatically overhaul our Nation’s welfare sys- tem. On July 18, 1996, I joined with 170 of my colleagues to show my staunch opposition to H.R. 3734. After reviewing the product of the conference committee, my position remains unchanged. During this session of Congress, our Repub- lican colleagues assured us a family friendly Congress. They promised us that our children would be protected from harm. However, this bill is not about helping our families, nor is it about saving our children. The primary pur- pose of this bill is to achieve more than $61 billion in budget cuts. And unfortunately, those who will suffer most from this legislation will be those who need assistance the most, our children, and the poor. Seven months ago, President Clinton was forced to veto a welfare bill which, much like the bill before us today, would place an alarm- ing number of children into poverty. According to the Urban Institute, H.R. 3734 would push 1.5 million children into poverty. I appeal to President Clinton to veto this measure which abandons the Federal commitment and safety net that protects America’s children. H.R. 3734 slashes more than $61 billion over 6 years in welfare programs. This bill guts funding for the Food Stamp Program, cuts into the SSI protections for disabled chil- dren, drastically cuts child nutrition programs, and slashes benefits for legal immigrants. Mr. Speaker, I find these reductions in quality of life programs appalling. Mr. Speaker, I believe most of us agree that our Nation’s welfare system is in the need of reform. But do we reform the system by deny- ing benefits to legal immigrants who, despite working hard and paying taxes, fall upon hard times? How can we demand that welfare re- cipients work 30 hours a week, yet provide in- efficient job training and job services\u2014essen- tial components in contributing to longevity in the workplace? In short, how can we justify punishing children and their families simply because they are poor? If we are truly to talk about the reform of welfare, if we are going to talk about increas- ing opportunities for our low-income residents, we cannot expect productive changes for our community by taking away from those who al- ready have very little. Mr. Speaker, I can understand and support a balanced and thoughtful approach to ad- dressing the reform of our Nation’s welfare system. However, I cannot support this legisla- tion which would shatter the lives of millions of our Nation’s poor. The pledge to end welfare as we know it is not a mandate to act irresponsibly and without compassion. On behalf of America’s children and the poor, I urge my colleagues to vote against H.R. 3734. Mrs. COLLINS of Illinois. Mr. Speaker, I rise in opposition to the conference agreement on H.R. 3734, legislation that revises our current law providing welfare to needy children, indi- viduals, and families in America. This welfare revision does little more than poke holes in the safety net that is called welfare. In my opinion, this legislation is a desperate\u2014and unsuc- cessful\u2014attempt to claim reform when it is an illogical revision. Change merely for change’s sake can lead to chaos, damage, and injury. This bill reportedly contains changes to our welfare system that will ensure insecurity and forecast fear on the part of the many vulner- able, loving parents out there trying their best to provide for their children a safe, secure, and nurturing environment. Some of my constituents in the Seventh District of Illinois are among the poorest of the Nation. For the 231\u20442 years that I have served in this body, I have fought strong and some- times bitter battles for the benefit of the vul- nerable, the disenfranchised, the young, old, disabled, and poor. That is what I hope to be remembered for when I retire from the House at the end of the year. So, I feel I have an obligation to rise today in opposition to the conference agreement de- veloped in the 11th hour by a few secretly se- lected Members of Congress. I continue to be concerned that we are applying Band-Aid pol- icy and control instead of prevention and early intervention. The funds provided in current law attempt to address, and\/or remedy, the symp- toms of poverty: joblessness, hunger, domes- tic violence, child abuse and neglect, illiteracy; but until and unless we set about strategically to address the causes, we go far short of ade- quate to eradicate the problem and then won- der why we are losing the fight. I was contacted this morning by the Day- Care Council of Illinois, located in Chicago, who reminded me that President Franklin Roo- sevelt, under whose leadership the safety net for our most vulnerable children and families was established some 60 years ago once said: ”The test of our progress is not whether we add more to the abundance of those who have much; it is whether we provide enough for those who have too little.” We do too little when we take away the Federal oversight of funds that are channeled into State and local coffers in the form of block grants; reduce the Food Stamp program in the name of budget deficit; deny benefits to legal immigrants; and make children-having-children continue to live in housing environments that failed them as teenage parents instead of sup- porting communities in their efforts to provide stable, dependable support systems. Whether that support is supplied by the teen parent’s biological or substitute parent, or a publicly funded shelter, should be the decision of that child-parent, not the Federal Government. Block granting welfare benefits is likely to block grant suffering. I can only hope that if this legislation passes, sufficient Federal cri- teria and oversight can make them work. The States have asked for block grants and will be called upon to demonstrate that they can act responsibly to all vulnerable populations in a non-discriminatory manner. My fear and recol- lection of contemporary history is that many of them will not. On the issue of Medicaid eligibility, until and unless Congress can achieve meaningful health care reform to provide for universal ac- cess to health care financing, there must be Medicaid eligibility for the unemployed, unin- sured families who receive public assistance. The well-being of our children is what public welfare should be all about; and we should focus on how best we can prevent and protect the vulnerable children of our Nation from ex- periencing poverty and despair, against hun- ger and sickness, and against fear and help- lessness. I urge my colleagues to reject this rush to agreement. I yield back the balance of my time. Ms. VELA\u0301ZQUEZ. Mr. Speaker, I rise today in opposition to the welfare conference agree- ment. This bill is an outrage. It constitutes the latest chapter in the right wing majority’s all- out attack on children and the poor. Let’s get real. Less than 2 percent of Fed- eral dollars are spent on assisting poor women and children. Yet radicals are ramming a bill down our throats that does nothing more than single out and punish children in the name of deficit reduction. Many on the other side of the aisle are under the false assumption that all we need to do to eliminate poverty is take food and money away from poor people. But I have news for you\u2014this sink or swim approach will not work. According to the Urban Institute this bill would push 1.1 million children into poverty and eliminate their ability to count on basic in- come support. The worse tragedy of all is that this cruel bill comes up short on jobs. Cutting financial as- sistance to poor families without money for job creation, job training and day care will not force recipients to swim but cause millions of poor children to drown. The real problem is that in poor areas like the one I represent, there simply are not enough jobs for people. In fact in some areas in NYC there are 14 applicants for every one fast-food job. Let’s end this charade. I implore my col- leagues, on both sides of the aisle, to support fairness and basic decency and reject this heartless legislation. The SPEAKER pro tempore. Without objection, the previous question is or- dered on the conference report. There was no objection. The SPEAKER pro tempore. The question is on the conference report. Pursuant to House Resolution 495, the yeas and nays are ordered. The vote was taken by electronic de- vice, and there were\u2014yeas 328, nays 101, not voting 5, as follows: [Roll No. 383] YEAS\u2014328 Ackerman Allard Andrews Archer Armey Bachus Baesler Baker (CA) Baker (LA) Baldacci Ballenger Barcia Barr Barrett (NE) Bartlett Barton Bass Bateman CONGRESSIONAL RECORD \u2014 HOUSEH9424 July 31, 1996 Bentsen Bereuter Bevill Bilbray Bilirakis Bishop Bliley Blute Boehlert Boehner Bonilla Bono Borski Boucher Brewster Browder Brownback Bryant (TN) Bryant (TX) Bunn Bunning Burr Burton Buyer Callahan Calvert Camp Campbell Canady Cardin Castle Chabot Chambliss Chapman Chenoweth Christensen Chrysler Clement Clinger Coble Coburn Collins (GA) Combest Condit Cooley Costello Cox Cramer Crane Crapo Cremeans Cubin Cunningham Danner Davis de la Garza Deal DeFazio DeLay Deutsch Dickey Dicks Dingell Doggett Dooley Doolittle Dornan Doyle Dreier Duncan Dunn Durbin Edwards Ehlers Ehrlich English Ensign Everett Ewing Fawell Fazio Fields (TX) Flanagan Foley Forbes Fowler Fox Franks (CT) Franks (NJ) Frelinghuysen Frisa Frost Funderburk Furse Gallegly Ganske Gejdenson Gekas Geren Gilchrest Gillmor Gilman Gingrich Goodlatte Goodling Gordon Goss Graham Greene (UT) Greenwood Gutknecht Hall (TX) Hamilton Hancock Hansen Harman Hastert Hastings (WA) Hayes Hayworth Hefley Hefner Heineman Herger Hilleary Hobson Hoekstra Hoke Holden Horn Hostettler Houghton Hoyer Hunter Hutchinson Hyde Inglis Istook Johnson (CT) Johnson (SD) Johnson, Sam Jones Kanjorski Kaptur Kasich Kelly Kennelly Kildee Kim King Kingston Kleczka Klink Klug Knollenberg Kolbe LaHood Largent Latham LaTourette Laughlin Lazio Leach Levin Lewis (CA) Lewis (KY) Lightfoot Lincoln Linder Lipinski Livingston LoBiondo Longley Lowey Lucas Luther Manton Manzullo Martini Mascara McCarthy McCollum McCrery McHale McHugh McInnis McIntosh McKeon Meehan Metcalf Meyers Mica Miller (FL) Minge Molinari Montgomery Moorhead Moran Morella Murtha Myers Myrick Neal Nethercutt Neumann Ney Norwood Nussle Obey Orton Oxley Packard Pallone Parker Paxon Payne (VA) Peterson (FL) Peterson (MN) Petri Pickett Pombo Pomeroy Porter Portman Poshard Pryce Quillen Quinn Radanovich Ramstad Reed Regula Richardson Riggs Rivers Roberts Roemer Rogers Rohrabacher Rose Roth Roukema Royce Salmon Sanford Sawyer Saxton Scarborough Schaefer Schiff Seastrand Sensenbrenner Shadegg Shaw Shays Shuster Sisisky Skaggs Skeen Skelton Smith (MI) Smith (NJ) Smith (TX) Smith (WA) Solomon Souder Spence Spratt Stearns Stenholm Stockman Stump Stupak Talent Tanner Tate Tauzin Taylor (MS) Taylor (NC) Thomas Thornberry Thornton Thurman Tiahrt Torkildsen Torricelli Traficant Upton Vento Visclosky Volkmer Vucanovich Walker Walsh Wamp Ward Watts (OK) Weldon (FL) Weldon (PA) Weller White Whitfield Wicker Wilson Wise Wolf Wynn Young (AK) Zeliff Zimmer NAYS\u2014101 Abercrombie Barrett (WI) Becerra Beilenson Berman Blumenauer Bonior Brown (CA) Brown (FL) Brown (OH) Clay Clayton Clyburn Coleman Collins (IL) Collins (MI) Conyers Coyne Cummings DeLauro Dellums Diaz-Balart Dixon Engel Eshoo Evans Farr Fattah Fields (LA) Filner Foglietta Frank (MA) Gephardt Gibbons Gonzalez Green (TX) Gutierrez Hall (OH) Hastings (FL) Hilliard Hinchey Jackson (IL) Jackson-Lee (TX) Jacobs Jefferson Johnson, E. B. Johnston Kennedy (MA) Kennedy (RI) LaFalce Lantos Lewis (GA) Lofgren Maloney Markey Martinez Matsui McDermott McKinney McNulty Meek Menendez Millender- McDonald Miller (CA) Mink Moakley Mollohan Nadler Oberstar Olver Ortiz Owens Pastor Payne (NJ) Pelosi Rahall Rangel Ros-Lehtinen Roybal-Allard Rush Sabo Sanders Schroeder Schumer Scott Serrano Slaughter Stark Stokes Studds Tejeda Thompson Torres Towns Velazquez Waters Watt (NC) Waxman Williams Woolsey Yates NOT VOTING\u20145 Flake Ford Gunderson McDade Young (FL) b 1710 Mr. SCHUMER changed his vote from ”yea” to ”nay.” So the conference report was agreed to. The result of the vote was announced as above recorded. A motion to reconsider was laid on the table. f GENERAL LEAVE Mr. SHAW. Mr. Speaker, I ask unani- mous consent that all Members may have 5 legislative days within which to revise and extend their remarks and in- clude extraneous matter on the con- ference report on H.R. 3734. The SPEAKER pro tempore (Mr. ARMEY). Is there objection to the re- quest of the gentleman from Florida? There was no objection. f REPORT ON RESOLUTION WAIVING POINTS OF ORDER AGAINST CON- FERENCE REPORT ON H.R. 3603, AGRICULTURE, RURAL DEVELOP- MENT, FOOD AND DRUG ADMIN- ISTRATION, AND RELATED AGENCIES APPROPRIATIONS ACT, 1997 Mr. GOSS, from the Committee on Rules, submitted a privileged report (Rept. No. 104 730) on the resolution (H. Res. 496) waiving points of order against the conference report to ac- company the bill (H.R. 3603) making appropriations for Agriculture, Rural Development, Food and Drug Adminis- tration, and Related Agencies pro- grams for the fiscal year ending Sep- tember 30, 1997, and for other purposes, which was referred to the House Cal- endar and ordered to be printed. f REPORT ON RESOLUTION WAIVING POINTS OF ORDER AGAINST CON- FERENCE REPORT ON H.R. 3517, MILITARY CONSTRUCTION AP- PROPRIATIONS ACT, 1997 Mr. GOSS, from the Committee on Rules, submitted a privileged report (Rept. No. 104 731) on the resolution (H. Res. 497) waiving points of order against the conference report to ac- company the bill (H.R. 3517) making appropriations for military construc- tion, family housing, and base realign- ment and closure for the Department of Defense for the fiscal year ending September 30, 1997, and for other pur- poses, which was referred to the House Calendar and ordered to be printed. f REPORT ON RESOLUTION WAIVING POINTS OF ORDER AGAINST CON- FERENCE REPORT ON H.R. 3230, NATIONAL DEFENSE AUTHORIZA- TION ACT FOR FISCAL YEAR 1997 Mr. GOSS, from the Committee on Rules, submitted a privileged report (Rept. No. 104 732) on the resolution (H. Res. 498) waiving points of order against the conference report to ac- company the bill (H.R. 3230) to author- ize appropriations for fiscal year 1997 for military activities of the Depart- ment of Defense, to prescribe military personnel strengths for fiscal year 1997, and for other purposes, which was re- ferred to the House Calendar and or- dered to be printed. f b 1715 INTERNATIONAL DOLPHIN CONSERVATION PROGRAM ACT Mr. GOSS. Mr. Speaker, by direction of the Committee on Rules, I call up House Resolution 489 and ask for its immediate consideration. The Clerk read the resolution, as fol- lows: H. RES. 489 Resolved, That at any time after the adop- tion of this resolution the Speaker may, pur- suant to clause 1(b) of rule XXIII, declare the House resolved into the Committee of the Whole House on the state of the Union for consideration of the bill (H.R. 2823) to amend the Marine Mammal Protection Act of 1972 to support the International Dolphin Con- servation Program in the eastern tropical Pacific Ocean, and for other purposes. The first reading of the bill shall be dispensed with. General debate shall be confined to the bill and shall not exceed one hour equally di- vided and controlled by the chairman and ranking minority member of the Committee on Resources. After general debate the bill shall be considered for amendment under the five-minute rule. In lieu of the amendment recommended by the Committee on Re- sources now printed in the bill, it shall be in order to consider as an original bill for the purpose of amendment under the five-minute rule the amendment in the nature of a sub- stitute printed in the Congressional Record CONGRESSIONAL RECORD \u2014 HOUSE H9425July 31, 1996 and numbered 1 pursuant to clause 6 of rule XXIII. That amendment shall be considered as read. No other amendment shall be in order except a further amendment printed in the report of the Committee on Rules to ac- company this resolution, which may be of- fered only by Representative Miller of Cali- fornia or his designee, shall be considered as read, shall be debatable for one hour equally divided and controlled by the proponent and an opponent, and shall not be subject to amendment. At the conclusion of consider- ation of the bill for amendment the Commit- tee shall rise and report the bill to the House with such amendments as may have been adopted. Any Member may demand a sepa- rate vote in the House on any amendment adopted in the Committee of the Whole to the bill or to the amendment in the nature of a substitute made in order as original text. The previous question shall be considered as ordered on the bill and amendments thereto to final passage without intervening motion except one motion to recommit with or with- out instructions. The SPEAKER pro tempore (Mr. EWING) The gentleman from Florida [Mr. GOSS] is recognized for 1 hour. Mr. GOSS. Mr. Speaker, for the pur- poses of debate only, I yield the cus- tomary 30 minutes to the gentleman from California [Mr. BEILENSON], pend- ing which I yield myself such time as I may consume. During consideration of this resolution, all time yielded is for the purposes of debate only. (Mr. GOSS asked and was given per- mission to revise and extend his re- marks and include extraneous mate- rial.) Mr. GOSS. Mr. Speaker, the Rules Committee last week found itself in an unusual situation: A request for modi- fied closed rule on a bill reported from the Resources Committee\u2014although the Ways and Means Committee also had jurisdiction over a portion. As you know, bills reported from the Re- sources Committee are traditionally considered under open rules. So what’s different about H.R. 2823, the Inter- national Dolphin Conservation Pro- gram Act? Most importantly, this bill would essentially codify an inter- national agreement between 12 nations known as the Declaration of Panama. Any significant changes to the lan- guage of H.R. 2823 and that agreement is lost. It is worth mentioning that the negotiations that produced this agree- ment could serve as a model for envi- ronmental policymaking because just about every viewpoint in the tuna\/dol- phin debate was represented at the table. These negotiations not only in- volved the governments of 12 nations, but they also included representatives from the environmental community and the fishing industry. The result is a package that enjoys unusually broad support: From the administration and Vice President AL GORE to the Re- sources Committee Chairman DON YOUNG. From Greenpeace to the tuna fishermen. In recognition of the fragile nature of this agreement, the Rules Committee has reported a modified closed rule that allows for a vote on the bill, pre- ceded by an amendment to be offered by the gentleman from California [Mr. MILLER] or his designee, and one mo- tion to recommit, with or without in- structions. It had originally been the intention of the Rules Committee to allow a vote on a full substitute, but the minority specifically requested that the Miller amendment be made in order instead. The rule was agreed to in committee with voice vote without dissent. Mr. Speaker, if you cherish the dol- phin populations of the eastern Pacific, as I do, then you will agree it is vital that we move forward with this legisla- tion. During the coming debate, you will hear differing viewpoints on how this legislation may impact dolphins\u2014 the administration’s experts, the Re- sources Committee, and the Center for Marine Conservation all happen to be- lieve that this bill will save dolphins’ lives, and do so more effectively than current law\u2014I think that’s pretty good credentials. H.R. 2823 backs up that claim by mandating that every tuna boat operating in the eastern Pacific carry an observer to certify that not a single dolphin was killed when the tuna nets were hauled up. Even one dolphin death would prevent the entire catch from being sold in the United States as Dolphin safe. Under today’s standards American consumers do not have this kind of guarantee. However, this proposal is not just about saving dolphins; it’s about preserving endan- gered marine species like the sea tur- tles, as well as billfish and juvenile tunas. In Florida, we certainly treasure our dolphins\u2014but we also take special care to protect other marine popu- lations, and I am pleased that H.R. 2823 will address the eastern Pacific eco- system as a whole, not just one aspect of it. You will hear the argument that one of the techniques allowed under this agreement, encirclement\u2014with divers that release any dolphins before they are caught in the net, is harmful. But those who put forth this argument might not mention the enormous dam- age done by so-called safe fishing methods such as log sets and school sets. As the Resources Committee’s re- port says: The bycatch of other marine species asso- ciated with these two fishing techniques is significantly higher than the bycatch associ- ated with the encirclement technique. School sets generate approximately 10 times the amount of bycatch and log sets generate approximately 100 times the bycatch of juve- nile tunas and other marine species. So the message should be clear: If you want to protect dolphins, turtles, and other marine life, you should sup- port this rule and vote for the Inter- national Dolphin Conservation Pro- gram Act. Mr. Speaker, I reserve the balance of my time. Mr. BEILENSON. Mr. Speaker, I thank the gentleman from Florida [Mr. GOSS] for yielding the customary half hour debate time to me; and I yield myself such time as I may consume. Mr. Speaker, as the gentleman from Florida has explained, this is a modi- fied closed rule for the consideration of H.R. 2823, the International Dolphin Conservation Program Act. Even though we do not prefer rules that are this restrictive, and of course our colleagues who are now in the ma- jority always railed bitterly against them when we were in the majority, it appears that the nature of this debate probably does not require a completely open rule. On the other hand, it is also proper to point out that with a bill so narrow in scope as this one, it is difficult to un- derstand why we need a rule with such strict limits. In any case, we should support this rule. It should provide for adequate dis- cussion of the principal controversy at issue here. Mr. Speaker, the dolphin protection bill has created a great deal of con- troversy within the environmental community which was, after all, re- sponsible for calling our attention to the serious problem of the slaughter of dolphins by the tuna fishing industry in the first place. If it had not been for several environmental organizations, the public would not have known about the way the dolphins were routinely trapped and killed by the giant nets used by tuna fleets. But thanks to many organizations that are deeply concerned about the fate of our entire marine ecosystem, Congress passed legislation embargoing all tuna caught by that method, known as encirclement. Because of that embargo, other big tuna-fishing countries felt the eco- nomic pressure, and after meeting with U.S. officials to develop a voluntary international agreement, pledged to adopt safer fishing methods. These new techniques have been dramatically suc- cessful. The result is that dolphin mor- tality has declined from over 100,000 in 1991 to a little bit more than 3,000 in 1995. Because of that success, the United States, several environmental groups and 11 other nations met in Panama last year to develop a binding inter- national agreement, the terms of which are reflected in H.R. 2823, that rewards these efforts by lifting the United States embargo. The agreement and the bill would also reward any batch of tuna caught without a single dolphin death, to be verified by on-board ob- servers, with the dolphin-safe label that is so important commercially. Mr. Speaker, H.R. 2823 has bipartisan support in the Congress. It has been en- dorsed by the Clinton administration, which helped negotiate the binding international agreement to lock in the dramatic reductions in dolphin deaths that have been achieved and to protect other marine species that are unfortu- nately threatened by alternative tuna fishing practices. That so-called Declaration of Pan- ama was signed by 12 nations in Octo- ber 1995. Environmentalists believe, some environmentalists, not all, that this enforceable international agree- ment is the only way to protect marine CONGRESSIONAL RECORD \u2014 HOUSEH9426 July 31, 1996 resources for the long term. We cannot, they believe, continue to act alone. It would be impossible to protect dolphins and other species if we did. Again, Mr. Speaker, this is a modi- fied closed rule and one that might bet- ter have been somewhat less restrictive or limited. But we hope the terms of the rule will not prevent us from hear- ing all of the arguments about this leg- islation. We are supportive of the rule. We think it is a fair rule. Mr. Speaker, I reserve the balance of my time. Mr. GOSS. Mr. Speaker, I yield 3 minutes to the gentleman from greater San Dimas, CA [Mr. DREIER], the dis- tinguished vice chairman of the Com- mittee on Rules. Mr. DREIER. I thank my friend from Sanibel, FL, the distinguished chair- man of the Subcommittee on Legisla- tive and Budget Process, for yielding me this time, and I rise in strong sup- port of this rule. Mr. Speaker, I am one who enjoys consuming seafood but I am not par- ticularly fond of tuna. But I am very supportive of this measure because it has been a long time in coming. We have just had a great deal of ex- citement around here over the last sev- eral hours as we have brought about with, I think, 328 votes a bipartisan agreement on welfare reform, but the bipartisanship that exists on that, as the gentleman from Florida [Mr. GOSS] implied, pales in comparison when we look at the parties who are involved in this very important agreement who have disagreed on many, many issues in the past. The fact of the matter is while my friend, the gentleman from California [Mr. BEILENSON], said that we in the past would rail about rules that are like this, this rule is very clear in that we are dealing with 12 nations who were part of this negotiating process and as he knows under fast track nego- tiating authority, which this Congress has had in the past but does not have now, we have seen agreement struck where there would be simply an up-or- down vote on measures, and that is the direction in which we are headed with this rule, because we do have, I think, an important environmental concern that is being addressed here and also for other friends of ours in Latin Amer- ica. I was talking with some people at the Mexican Embassy and they have been very anxious about this because they want to see us move ahead and proceed with what is a very important agree- ment not only for the consumers in the United States and Mexico but also for those in the tuna industry and those who are concerned, as we all are, about the safety of dolphins. So when we look at the World Wildlife Federation, at DON YOUNG, I know they do not al- ways come together on issues, I believe that this is a great day as we continue the bipartisan spirit that was in evi- dence just a few minutes ago. About 6 hours ago the bipartisan spirit was not as in evidence here in the House of Representatives, but I am convinced that when we move to final passage on this rule and the measure that that great bipartisan spirit will be alive and well. Mr. BEILENSON. Mr. Speaker, I yield 8 minutes to the gentleman from California [Mr. MILLER], the distin- guished ranking member of the Com- mittee on Resources. (Mr. MILLER of California asked and was given permission to revise and ex- tend his remarks.) Mr. MILLER of California. Mr. Speaker, this legislation that we have begun debating here today, H.R. 2823, the International Dolphin Conserva- tion Program Act, I believe, is a dec- laration of surrender by this Congress to those who insist that American en- vironmental and labor standards must be destroyed on the altar of free trade. b 1730 H.R. 2823 is a complete capitulation to those who believe that U.S. consum- ers have no rights and our trade com- petitors must have all the rights when it comes to product disclosure. This is a bad bill: bad environmental policy, bad trade policy, and bad for- eign policy. It does precisely what we were told NAFTA and GATT would not do. It demands that our own laws gov- erning the environment, worker safety, species protection, and a consumer’s right to know be sacrificed. Less than a decade ago, millions of American consumers, led by school- children of this Nation, demanded the creation of dolphin protection pro- grams because of the needless slaugh- ter of hundreds of thousands of marine mammals by tuna fishermen. We passed the Dolphin Protection Act. We required that tuna sold in the United States be dolphin safe. The U.S. tuna industry, at enormous expense, complied with those require- ments, relocated their ships and proc- essing plants, and produced dolphin safe tuna. Those efforts have had a dra- matic success. Dolphin deaths last year were a little less than 3,600, compared to 100,000 or more a few years ago. The dolphin protection law has worked, but the bill before us today would renounce the very program that has achieved the goals we sought when the dolphin protection law was en- acted. Why on Earth would we so grievously weaken the very law that has worked so well? Not on behalf of American con- sumers, not on behalf of dolphin pro- tection, not on behalf of those inter- ests, but rather on behalf of Mexico, Venezuela, Colombia, and other na- tions who are trying a little environ- mental blackmail, and to date it seems to be working. Those very countries that have con- tinued to fish in violation of the dol- phin safe law now demand of this Na- tion that we weaken our laws so they can sell dolphin unsafe tuna in U.S. su- permarkets under a label that the consumer has come to understand as meaning dolphin safe, a label that was enacted by this Congress. This Con- gress should not now become a party to this deception of that label, and a de- ception that this act would bring about with respect to the American consumer. H.R. 2823 implements an inter- national agreement, the Panama Agreement, which was negotiated be- hind closed doors by five Washington- based environmental organizations and the government of Mexico. This agree- ment makes major changes to long- standing laws protecting dolphins and informing our consumers. But let us remember it was nego- tiated without the knowledge of any elected Member of Congress or other interested parties with a decades-long history on this issue. It was negotiated without consider- ation of the American tuna canning companies who in 1990 responded to the demands from our schoolchildren, their parents, and consumers nationwide, and some of the same environmental groups who secretly negotiated this deal. They did it by voluntarily an- nouncing that they would no longer purchase and sell tuna caught by harm- ing dolphins. It was negotiated without the par- ticipation and approval of dozens of en- vironmental organizations with mil- lions of members nationwide who vig- orously disagree that this is the best way to protect dolphins, and who strongly support the Studds amend- ment that will be offered later to re- tain the current dolphin safe label. The legislation was drafted with the help of lobbyists hired by the Mexican Government, and presented to the Committee on Resources with the ca- veat that no amendments could be ac- cepted if they were unacceptable to Mexico. Since when did we start nego- tiating in this fashion? Since when did we start negotiating in a fashion where privately negotiated agreements are now brought to the Congress and we are told that somehow they are the same as a treaty or an agreement be- tween this Nation and other nations, but this Congress cannot be engaged in the process of amendment? There are some very serious problems with this legislation. The most impor- tant is that it would do exactly what proponents of the trade agreement pledged these pacts would not do: drive down American environmental stand- ards through pressure from countries that do not want to meet those same standards. That is the goal, pure and simple. Let us be clear. The driving force be- hind this legislation is Mexico, which does not want to meet the standards of the dolphin safe label that is on every can of tuna sold in this country. Mex- ico wants to open the floodgates to nonsafe tuna and to desecrate the in- tegrity of the label that has led through consumer preferences. If we do not accede to this undermin- ing effort, Mexico and other nations CONGRESSIONAL RECORD \u2014 HOUSE H9427July 31, 1996 tell us that they will abandon their commitment to this agreement, to fishing dolphin safe, and deliberately resume the slaughter of dolphins. These nations, and many other trading partners, are waiting to see how the U.S. Congress responds to this threat. This legislation responds by capitula- tion. We are going to hear a lot of as- sertions about this legislation, how sensitive it is to dolphins, how it would not allow damage to be done to dol- phins. Before Members vote I urge them to consider the following: This legislation, as currently writ- ten, the supporters will tell us that this bill does not allow more dolphins to be killed; that it reduces the number of dolphin deaths. But the fact is, H.R. 2823 allows the number of dolphin deaths to rise by almost 30 percent. There is nothing in this bill about keeping dolphin deaths at today’s his- toric low level. This bill is about allow- ing more dolphin deaths. They say that their bill does not allow dolphins to be hurt. Under H.R. 2823, dolphins may be regularly encir- cled, harassed, and injured. The bill im- poses no limit on the amount of injury that could be imposed on dolphins, as long as the dolphins do not actually die in the nets. We will hear the proponents say that the environmentalists support this leg- islation. The fact of the matter is that over 80 grassroots environmental orga- nizations vigorously oppose this bill and support the Studds amendment. By contrast, what we have are five Wash- ington-based environmental groups that secretly negotiated this agree- ment with Mexico who are now sup- porting it. Since when is this Congress obligated to accept, unamended, the products of negotiation by environmental organi- zations and foreign governments? Lastly, the supporters of this legisla- tion argue that we cannot change the bill because to do so would be to re- nounce international agreements and damage American credibility. The fact is, there is no international agreement. There is no treaty. This is about going to the negotiations on a possible trea- ty. This bill requires that we change U.S. law as a condition of going to those negotiations. It is worth noting that the United States is the only country that is re- quired to make these kinds of changes, to change domestic consumer protec- tion laws to conform with this agree- ment. I would hope that the Members of this Congress would see through this effort by Mexico to essentially abolish the dolphin safe protection that we currently have on the books, and would support the Studds amendment that will allow for the protection of the label, the protection of consumer knowledge, and provide for the protec- tion of the dolphins. Mr. GOSS. Mr. Speaker, I yield 2 minutes to the distinguished gen- tleman from New Jersey [Mr. SAXTON], chairman of the Subcommittee on Fisheries, Wildlife and Oceans. Mr. SAXTON. Mr. Speaker, first let me thank and commend the Committee on Rules, led by the gentleman from New York [Mr. SOLOMON] and the gen- tleman from Florida [Mr. GOSS], for bringing this rule to the floor. Let me also commend my friend from Mary- land, Mr. GILCHREST, who was the au- thor of this bill, who I think did a very fine job. Mr. Speaker, when I was sitting in my office of the first day of this ses- sion, press reporters called and said, ”How do you think it is going to be serving with a Democrat President, be- cause in your term of being here you have always been able to communicate with and serve with Republican Presi- dents?” I said, ”It will be my goal to find places and issues upon which the President the Democrat President, and I can agree.” This is one of those issues. This is President Clinton’s initiative. And as chairman, of the Subcommittee on Fisheries, Wildlife and Oceans, I am pleased to have been able to support a Clinton administration initiative. I would also just like to point out to the gentleman from California [Mr. MILLER], who used some fairly harsh phrases, phrases like capitulation, and phrases like weakening the law, envi- ronmental blackmail, dolphin unsafe tuna, deception, secret negotiations, lobbyists hired by Mexico, I would just say to my friend from California those characterizations of this bill are mis- leading, untrue, and patently false. There is not any truth to any of those assertions and that is why I rise in support of this rule and its granting of a modified closed rule to govern de- bate on H.R. 2823. I realize the Commit- tee on Resources has traditionally re- quested open rules, but in this case it provides for a total, including the rule, of 4 hours of debate. I believe it is cer- tainly a rule which merits our support. Let me just in closing say, Mr. Speaker, that this bill is supported by the following organizations. Listen to this. Greenpeace, the Center for Marine Conservation, the Environmental De- fense Fund, the World Wildlife Fund, the National Wildlife Federation, and the American Sports Fishing Associa- tion, to say nothing of the Clinton ad- ministration, and the AFL CIO. This is a good rule, it is a good bill, and I urge passage of the rule. Mr. BEILENSON. Mr. Speaker, I re- serve the balance of my time. Mr. GOSS. Mr. Speaker, I yield my- self such time as I may consume to say that I have two remaining speakers, which I will call on. I have admonished them that this is the rule and they are going to focus on the rule and the mer- its of the rule and how it might affect the substance. Once we get through that, I hope we can get to a quick oral vote. Mr. Speaker, I yield 5 minutes to the distinguished gentleman from Mary- land [Mr. GILCHREST], the author of this bill. Mr. GILCHRIST. Mr. Speaker, I thank the gentleman for yielding me this time. Mr. Speaker, I would like to say very quickly that I appreciate the Commit- tee on Rules understanding the nature of this international agreement to bring forth this type of rule that does allow for one opposing view, but the importance of the agreement under- scores the fact that we, as the basic au- thor of the agreement, the United States is the basic author of the agree- ment, we have not given up any sov- ereignty whatsoever. We have encour- aged other nations, other international nations to better manage the marine ecosystem. In response to the gentleman from California, I want to make three quick points. As far as his statement in ref- erence to this bill being, this legisla- tion being debated and formulated be- hind closed doors by people who are fa- natics about open trade, well, first, labor groups that are supporting this legislation, environmental groups that are supporting this legislation opposed NAFTA and GATT. This legislation was created in the full light of day at public hearings in this U.S. Congress. Legislation that was adopted that we are now dealing with was not created by extreme envi- ronmental groups without any back- ground in the marine biological sciences. We tapped the best scientists in this country to come up with the best management scheme so that we could not only, as an individual coun- try, the United States, manage our ma- rine ecosystem, but so that we pre- served it for generations to come and, by the way, ensure that dolphin deaths were down, hopefully, in a few years, to zero. We tapped marine biologists with some of the best background that this country has ever seen, and they are the ones that have come to this unanimous consensus that if we are going to deal on this tiny little planet, that by the year 2096 is going to have a population of 17 billion people, and we have 5.5 bil- lion people right now, we had better begin to learn how to get along with our neighbors. If we are going to deal with a much more complicated regime as global cli- mate change, and we have to deal with our neighbors and create international agreements, we had better understand that the best way to do that is not demagoging an issue but dealing with the matters that people are concerned about, such as dolphin safe tuna. We know that. We are going to ensure that those dolphin safe labels on every one of those tuna cans reflect that no dol- phins were killed or hurt. We are going to ensure that we as a Nation can work with other countries about environ- mental issues. b 1745 So I know that the gentleman from Florida [Mr. GOSS] says that this is a CONGRESSIONAL RECORD \u2014 HOUSEH9428 July 31, 1996 debate about the rule, and I support the rule 1,000 percent, and I would urge the entire Congress to support this rule. Mr. GOSS. Mr. Speaker, I yield 4 minutes to the distinguished gen- tleman from California [Mr. CUNNINGHAM], who is an author of this bill in its original version and was also, interestingly enough, the most fierce representative for his tuna fishermen of anyone I have ever met. Out of that has come this good legislation, and I congratulate him for that. Mr. CUMMINGHAM. Mr. Speaker, it was characterized that some fly-by- night groups got together and put this thing together. At the Inter-American Tropical Tuna Commission, the IATTC, a La Jolla, CA-based organization, 35 scientists got together and developed the most effective bycatch reduction program ever implemented. It saved dolphin and brought down the num- bers. The ”dolphin safe” label now used in U.S. markets takes a much higher ecological toll on marine life. Those who read their Congressional Monitor read that tuna fisherman can- not label their tuna ”dolphin safe.” That is not the case. Many American consumers still mistakenly believe that the Nation’s ”dolphin safe” poli- cies and product labels worked. U.S. fishermen have to have observers on board. None of these other Nations do. If the Studds-Miller agreement goes back, all of the other Nations that have signed aboard this agreement will no longer be required to have observ- ers. They are going to go on and kill dolphin. Why not? They can sell it abroad. This ties other Nations that the United States has no control over to a ”dolphin safe” policy. This is going to save dolphin. And why? Fish from sets of nets where 100 percent of encircled dolphins are re- leased unharmed will qualify as ”dol- phin safe.” No tuna will be labeled safe unless absolutely no dolphins are killed. It has to have 100 percent ver- ification on site as the fish are caught. Trying to comply with current law, the no-encirclement policy, some skip- pers have to fish immature tuna. That is killing our future. And that is why we have such broad support in this. It actually enhances the tuna and the crop for later years. The amendment being offered by the gentleman from Massachusetts [Mr. STUDDS] and the gentleman from Cali- fornia [Mr. MILLER] will destroy the most effective dolphin bycatch resolu- tion. That is why I support this rule, Vice President GORE, and who are the other people who have supported this? The AFL CIO. The gentleman from California [Mr. MILLER] said it is destroying our legal policy. If we look at President Clinton, Vice President GORE, five of the admin- istration groups and all five major en- vironmental groups support this be- cause it is going to help save dolphin; and we support that. And when we can come together as a body and throw out the extremes on both sides and arrive somewhere in the middle, work with industry, work with environmental groups, that is good. Why is the Panama agreement im- portant? Because it does tie those 12 nations to the same observation, the same requirements that the United States has to go through today. This Congress must support dolphin conservation, the fishermen who per- fected their fishing techniques, and the scientists who worked with them to achieve these many accomplishments. Mr. Speaker, I thank the gentleman from Maryland [Mr. GILCHREST] and the gentleman from Illinois [Mr. POR- TER] for their hard work in the face of a lot of lobbying from groups with mis- information. And I would like to thank them for sticking to principle and be- lieving in what they are trying to do. Mr. Speaker, I have a letter from the President of the United States support- ing this legislation, and I would like to submit it for the RECORD. Mr. BEILENSON. Mr. Speaker, I yield such time as he may consume to the gentleman from American Samoa [Mr. FALEOMAVAEGA]. (Mr. FALEOMAVAEGA asked and was given permission to revise and ex- tend his remarks.) Mr. FALEOMAVAEGA. Mr. Speaker, American Samoa is in the middle of the South Pacific Ocean, and fishing has been the life blood of Samoans for thousands of years. While today’s com- mercial canning operations bear little resemblance to my father’s subsistence fishing, we continue to use the same resource, the Pacific Ocean. The Samoans are also known as the voyagers, and countless generations ago, my forefathers, using Samoa and Tonga as a base, expanded the known world to include the island groups now known as French Polynesia, which in- cludes the Island of Tahiti, the Cook is- lands, the Hawaiian Islands, and many of the smaller islands in between. We learned well the ways of the ocean, in- cluding who our friends are. In my lifetime, I have had the oppor- tunity over the years to share the ex- periences of my ancestors. As a youth I traveled extensively on the waters of the Pacific in vessels voyaging between Tokelau and the Manu’s islands. I have even traveled on a purse seiner for 400 miles from Samoa to the southern Tongan Islands. I was also invited to sail on the famous Hokule’a, a histori- cal Polynesian sailing canoe built by native Hawaiians and constructed so as to be the same in size and configura- tion as the ancient sailing canoes. With Nainoa Thompson as our first Polyne- sian navigator in 200 years, we voyaged on the Hokule’a from the Island of Rangiroa in French Polynesia to Ha- waii, utilizing noninstrument naviga- tional methods, sailing by the move- ment of the stars, the ocean waves, and the flight of birds. During this voyage, I had the oppor- tunity to experience firsthand the interaction among those who live in the sea and those who live on and above it. I developed a greater appre- ciation for all living things, and con- firmed the gentle, helpful nature of dolphins. In fact, the experience I got from being at sea for weeks at a time is that the dolphins were always there, and I can share with my colleagues that the dolphins are just like humans. Dol- phins have been sacred to the Polyne- sians as far back as our legends re- count our history. Ancient Polynesians would rather starve than kill a dol- phin. When people are at sea under sail for weeks, dolphins are of tremendous psy- chological benefit. I have experienced lack of movement in the doldrums and the intense heat of the tropics, and I can understand how the dolphins would have given early Polynesian travelers a sense of hope. My voyage on the Hokule’a gave me an opportunity to contemplate that perhaps the reason God created dolphins was to provide psychological support for sailors at sea. Samoan legend and modern news re- porting all confirm today’s common knowledge about dolphins: They are of no threat to mankind, and have on oc- casions saved the lives of their fellow mammals. In return mankind has hunted them down, killing over 100,000 per year, not for sustenance, but be- cause tuna swim under them. When this was brought to the atten- tion of the U.S. public, we rose in out- rage and put enough economic pressure on the tuna industry to change its methods of fishing. And you have al- ready heard, dolphin deaths have dropped from over 100,000 per year to 3,300 in 1995. This is a significant achievement, and we consumers are to be commended. Congress did its part as well, placing an embargo on tuna that is caught by methods which harm dolphins, and by enacting legislation which permits the use of the all-familiar ”dolphin safe” label. Part of the underlying problem is that tuna in the eastern tropical Pa- cific Ocean swim under schools of dol- phin, and one easy, quick way to catch tuna in the eastern Pacific is to chase dolphins until they are too exhausted to swim any further. Then the dol- phins, and the tuna under them, are en- circled in a net. It is this chasing and netting procedure that causes the harm to the dolphins. In the western Pacific Ocean, the tuna do not always swim under schools of dolphin, and tuna are found through the use of modern techniques, includ- ing helicopters and sonar. By netting schools of tuna which are not swim- ming under dolphins, the problem is solved: Consumers get their canned tuna, and no dolphins are killed in the process. Now, under pressure from foreign governments, it is being proposed that the current statutory and regulatory system be changed. My colleagues will CONGRESSIONAL RECORD \u2014 HOUSE H9429July 31, 1996 recall that when we debated the imple- menting legislation for GATT and the proposed World Trade Organization, many of us pointed out the economic and policy difficulties which passage of the legislation would create. This is an example of the kind of problems we knew we would encounter under regu- lations of the World Trade Organiza- tion, or the WTO. Today we are being told that our dol- phin safe embargo is in violation of the WTO rules, and that if we do not re- move our embargo, the United States will be forced to pay significant fines. today we are being asked to forget a sound fisheries management policy that has reduced dolphin kills by 96 percent; we are being asked to forget the sound policy of using the attrac- tion of the consumer market in the United States to alter the behavior of nations less concerned with the preser- vation of life; and instead we are being asked to give in to the foreign inter- ests. H.R. 2823 is a bad idea because it re- wards those who have the worst record in the killing of dolphins. This bill is nothing more than giving in to black- mail. What the foreign governments are saying is that unless we lift the embargo on canned tuna, they will allow the slaughter of hundreds of thousands of dolphins to resume. If this isn’t blackmail\u2014I don’t know what is! Lifting the embargo constitutes only part of the bill. This will also per- petrate a fraud on the American consumer. H.R. 2823 changes the defini- tion of dolphin safe to allow chasing, injury, harassment, encirclement, and capture of dolphins as long as no dol- phins are observed dead in the nets. This definition allows tuna which have been caught by encirclement to be sold as dolphin safe in the U.S. market. This, Mr. Speaker, constitutes consumer fraud. This canneries in American Samoa were the first to announce they would no longer purchase tuna caught in as- sociation with dolphin. In large meas- ure, this decision resulted in a marked decrease in the killing of dolphins worldwide\u2014from a high of 115,000 in 1986 to less than 4,000 in 1995. Lifting the tuna embargo on Mexico and changing the definition of dolphin safe will confuse American consumers and undermine the integrity of an Amer- ican industry which is currently strug- gling to survive. Lifting the embargo will also encour- age what is left of the U.S. tuna indus- try to move to foreign countries in which businesses do not have to com- ply with any of the regulations that apply to U.S. companies located in our States and territories. U.S.-flagged purse seiners and tuna canning facili- ties in the United States must comply with the higher U.S. standards placed on U.S. companies by Federal law. Most foreign countries do not require the same high environmental and labor standards as the United States, and this works to the disadvantage of U.S. citizens and businesses because it puts pressure on U.S. companies to move overseas to be more competitive. There is proof that this movement to over- seas locations is occurring. As a matter of policy, we should be encouraging businesses to locate and expand in the United States, not move to foreign soil. In 1983, 28.3 million pounds of foreign canned tuna entered the U.S. market above the quota. By 1991, this amount had increased to 237.2 million pounds\u2014 a more than eight-fold increase. In 1991, canned tuna from U.S. plants ac- counted for approximately 50 percent of the U.S. market. By 1993, our mar- ket share had been reduced to approxi- mately 39 percent. Mr. Speaker, lifting the embargo on tuna caught by foreign nations will drive the last nail into the coffin of what remains of the U.S. tuna indus- try. Thailand, the Philippines, Indo- nesia, Taiwan, Sri Lanka, and other countries are already able to export their canned tuna to the United States without having to comply with any of the safety, health, or environmental regulations that apply to U.S. compa- nies. Adding additional countries to this list will have a devastating effect on the largest industry in American Samoa. It is believed that approxi- mately 80 percent of our private-sector employment is associated with the catching, cleaning, canning, and ship- ping of tuna. Needless to say, closure of these plants would devastate the econ- omy of American Samoa. Mr. Speaker, now is not the time to turn back the clock. Dolphin deaths worldwide have been reduced by 96 per- cent because of tough dolphin safe laws in the United States and Europe. The foreign businesses which are behind this harmful bill insist the U.S. change its law to unload their hard-to-market dolphin unsafe tuna in the lucrative U.S. dolphin safe market. This makes a mockery of the term dolphin safe. Unfortunately, the dolphins cannot be here to make a case for themselves. A few of us are here in the Chamber today to speak on their behalf, and I want to say on behalf of the millions of dolphins at risk, the day will come when mankind will be held accountable for its actions. This should be an easy vote. By vot- ing against this bill, you will be voting for the dolphins, for U.S. fishermen, for the U.S. boat owners, for the U.S. tuna canners, and against foreign interests. Let us not be governed by foreign in- terests. Save the dolphins and kill the Gilchrest legislation. Mr. Speaker, I submit the following for the RECORD: BOGUS CLAIMS ABOUT TUNA-DOLPHIN BILL DEAR COLLEAGUE: As the House prepares to debate H.R. 2823, the International Dolphin Act, you should know the truth behind sev- eral misimpressions frequently conveyed by supporters of the legislation. A careful ex- amination of the facts provides overwhelm- ing justification for the Studds ”Truth in Dolphin-Safe Labelling Amendment.” H.R. 2823 supporters say: ”This bill doesn’t allow more dolphins to be killed. It will re- duce the number of dolphin deaths.” But the fact is: H.R. 2823 allows the num- ber of dolphin deaths to rise by over 30 per- cent! H.R. 2823 supporters say: ”Our bill doesn’t allow dolphins to be hurt.” But the fact is: dolphins may be regularly encircled, harassed and injured under the provisions of the bill! H.R. 2823 supporters say: ”Environmental- ists support this bill.” The fact is: over 80 grassroots environ- mental organizations vigorously oppose this bill and support the Studds amendment. By contrast, only the five environmental groups that secretly negotiated this agreement with Mexico support the bill. H.R. 2823 supporters say: ”We must support this bill, and we can’t change this bill, be- cause we would renounce an international treaty and damage American credibility.” The fact is: no treaty has yet been nego- tiated, just an agreement to negotiate a treaty! This bill requires that we change U.S. law as a condition of negotiating the international agreement. The U.S. is the only country required to change its domestic consumer protection laws to conform to the pre-treaty agreement. Congress must not perpetuate a fraud on American consumers. ”Dolphin Safe” must mean that dolphins are not injured or killed in the hunt for tuna, which is what our con- stituents believe it means. H.R. 2823 allows an increase in dolphin deaths and the unlim- ited injuring and harassment of dolphins. That is not ”Dolphin Safe.” Support the Studds amendment to keep the ”Dolphin Safe” label honest for Amer- ican consumers. b 1800 Mr. GOSS. Mr. Speaker, I yield 1 minute to the gentleman from Mary- land [Mr. GILCHREST]. Mr. GILCHREST. Mr. Speaker, I would like to submit for the RECORD a letter supporting this legislation from the Maritime Trades Department of the AFL CIO, the Vice President of the United States that supports this legis- lation, and a list of scientists that had concern about the tuna-dolphin issue. I would like to submit these for the RECORD. Very quickly, the gentleman from American Samoa said we were pres- sured into this legislation by foreign powers. I want to say that we were pressured into this legislation by the marine ecosystem that needs our help in managing those scarce resources. The ancient Polynesians had values that we should reflect today. The world is much different today than it was during the ancient Polynesians’ coura- geous efforts across the high seas. We want to retain the values of the an- cient Polynesians. That is why we are trying to manage the ecosystem on an international basis. The last point, 10,000 to 40,000 dol- phins are killed now in the western tropical Pacific. We are trying to eliminate that down to zero with our legislation. Mr. Speaker, I include for the RECORD the correspondence to which I referred: CONGRESSIONAL RECORD \u2014 HOUSEH9430 July 31, 1996 [From the Maritime Trades Department, AFL CIO] H.R. 2823 WOULD GIVE U.S. TUNA INDUSTRY A LEVEL PLAYING FIELD Shortly the House of Representatives will take up H.R. 2823, the International Dolphin Conservation Program Act of 1996, legisla- tion designed to provide a level playing field for the American tuna fishing industry. The Maritime Trades Department, AFL CIO (MTD), representing affiliates that include fishermen and tuna cannery workers among their ranks, urges Congress to adopt this measure without amendment. American tuna fishermen have been dis- advantaged by amendments to the Marine Mammal Protection Act and Dolphin Protec- tion Consumer Information Act. Since 1992, they have been singularly barred from encir- cling dolphins during tuna harvesting. This restriction has had the paradoxical effect of forcing off the high seas American boats and crews, who were responsible for developing dolphin saving techniques in the harvesting process. As a result, many American-flag tuna vessels have been sold and placed under convenience registries with less experienced foreign crews that don’t share similar envi- ronmental concerns. Domestic tuna can- neries have been denied sufficient product to operate economically and have experienced periodic shutdowns. Enactment of H.R. 2823 would help gen- erate conditions conducive to increased par- ticipation of American tuna vessels in the Eastern Tropical Pacific. It also provides adequate supplies of quality tuna to enable domestic tuna canneries in California and Puerto Rico to operate full-time. In the proc- ess, hundreds of American fishing and relat- ed canning jobs will be restored and main- tained. The bill, introduced by Congressman Wayne Gilchrest, also provides strong envi- ronmental benefits that underscore longtime congressional interest in eliminating dolphin mortality resulting from tuna harvesting. H.R. 2823 accomplishes this goal through an international regime for protecting dolphins, including observers and other monitoring, verification and tracking of catch, research and enforcement. Moreover, the bill requires reductions in the allowable dolphin mortal- ity rate to a level that guarantees recovery of dolphin stocks. The act also calls for ship- board observers to be responsible for mon- itoring bycatch of all species, with the goal of reducing total bycatch. On balance, H.R. 2823 creates an environ- ment that will enhance opportunities for American tuna industry workers, while en- hancing international efforts to make tuna harvesting safe for dolphin and other fish species. The MTD urges your support for this legislation. THE VICE PRESIDENT, Washington, DC, June 3, 1996. Hon. WAYNE T. GILCHREST, House of Representatives, Washington, DC. DEAR REPRESENTATIVE GILCHREST: I am writing to thank you for your leadership on the International Dolphin Conservation Pro- gram Act, H.R. 2823. As you know, the Ad- ministration strongly supports this legisla- tion, which is essential to the protection of dolphins and other marine life in the Eastern Tropical Pacific. In recent years, we have reduced dolphin mortality in the Eastern Tropical Pacific tuna fishery far below historic levels. Your legislation will codify an international agreement to lock these gains in place, fur- ther reduce dolphin mortality, and protect other marine life in the region. This agree- ment was signed last year by the United States and 11 other nations, but will not take effect unless your legislation is enacted into law. As you know, H.R. 2823 is supported by major environmental groups, including Greenpeace, the World Wildlife Fund, the National Wildlife Federation, the Center for Marine Conservation, and the Environmental Defense Fund. The legislation is also sup- ported by the U.S. fishing industry, which has been barred from the Eastern Tropical Pacific tuna fishery. Opponents of this legislation promote al- ternative fishing methods, such as ”log fish- ing” and ”school fishing,” but these are en- vironmentally unsound. These fishing meth- ods involve unacceptably high by-catch of juvenile tunas, billfish, sharks, endangered sea turtles and other species, and pose long- term threats to the marine ecosystem. I urge your colleagues to support this leg- islation. Passage of this legislation this ses- sion is integral to ensure implementation of an important international agreement that protects dolphins and other marine life in the Eastern Tropical Pacific. Sincerely, AL GORE. LETTER FROM CONCERNED SCIENTISTS ON THE TUNA\/DOLPHIN PROBLEM We the undersigned scientists recognize the achievements made over the last twenty years to reduce dolphin mortality in the Eastern Tropical Pacific purse seine fishery for yellowfin tuna as well as efforts by U.S. and international scientists to improve the data and estimates of abundance and recruit- ment for dolphin stocks incidentally taken in this fishery. Specifically, dolphin mortal- ity in this fishery has declined dramatically from 423,678 in 1972 to 4,095 in 1994. We support efforts domestically and inter- nationally to continue progress to reduce and eliminate dolphin mortality in this fish- ery. Further, we strongly believe that sound resource management and conservation de- pend upon reliable science and take into con- sideration the conservation and management of the ecosystem as a whole. The Declaration of Panama signed, on October 4, by the Unit- ed States and eleven other nations takes sig- nificant steps in this regard. The scientific merits of the Panama Declaration are nota- ble. First, the Panama Declaration establishes conservative species\/stock specific annual dolphin mortality limits at 0.2% to 0.1% of the minimum population estimate (Nmin) up to 2001 and less than 0.1% of Nmin thereafter. One way to approach the question of how much mortality dolphin populations can sus- tain and remain stable or increase is to ex- press harvest as a proportion of net recruit- ment (i.e. as a proportion of the number of animals added to the population each year minus those that died). Recent estimates of recruitment are 2 6% per year. The Panama Declaration’s annual species\/stock specific mortality limits are set such a low level as to probably result in substantial increases in dolphin populations in the Eastern Pacific Ocean. Second, the Panama Declaration estab- lishes for the first time measures aimed at protecting other marine life caught inciden- tally in the eastern pacific tuna fishery, and represents an important first step towards efforts to reduce bycatch in commercial fish- eries and sound ecosystem management. Third, the Panama Declaration places greater emphasis on science-based manage- ment and conservation of tuna, dolphin, and other marine life in the Eastern Tropical Pa- cific through provisions that strengthen the existing scientific review process; promotes greater interaction between the scientific communities of the nations participating in the eastern Pacific tuna fishery; and places greater reliance on scientific data to inform the conservation and management of the fishery and the incidental take of dolphins and marine life in the fishery. As scientists, we fully support these sci- entific principles which provide the basis for the Panama Declaration, and believe that they represent a scientifically sound ap- proach to the management of the tuna fish- ery and conservation of dolphins. Sincerely, Ken Norris, Ph.D., Professor Emeritus, University of California Santa Cruz. John H. Prescott, Director Emeritus, New England Aquarium, former Chair, Commit- tee of Scientific Advisors, U.S. Marine Mam- mal Commission. Lloyd F. Lowry, Ph.D., Marine Mammal Scientist, Alaska Department of Fish and Game. William E. Evans, Ph.D., President of the Texas Institute of Oceanography, Professor of Wildlife and Fishery of Sciences, Texas A & M University. David Challinor, Ph.D., Science Advisor National Zoo, Smithsonian Institution. J. Lawrence Dunn, VMD, Staff Veterinar- ian, Mystic Marinelife Aquarium. Daniel P. Costa, Ph.D., Professor of Biol- ogy, University of California, Santa Cruz. Dayton L. Alverson, Ph.D., Natural Re- source Consultants. Terry Samansky, Director of Marine Mam- mals, Marine World Africa USA. Edwin S. Skoch, Professor of Biology, John Carroll University, Ecotoxicology & Marine Animal Research Lab. Brad Fenwick, Professor, Kansas State University, College of Veterinary Medicine. Wendy Blanshard, Veterinarian, Sea World Enterprises, Surfer’s Paradise, Australia. Sarah Lister, DVM, Johns Hopkins Univer- sity. Kathryn J. Frost, Ph.D., Marine Mammal Scientist, Alaska Department of Fish and Game. Graham Worthy, Ph.D., Professor of Ma- rine Biology, Texas A & M University. George Woodwell, Ph.D., Past President, Ecological Society of America, Woods Hole Research Center. David St. Aubin, Ph.D., Researcher, Mystic Marinelife Aquarium. Jeff Boehm, Vice President Research and Veterinarian Services, Shedd Aquarium. William Y. Brown, Ph.D., Researcher, Hagler Bailly. Sarah Paynter, Ph.D., Lecturer, Johns Hopkins University and National Aquarium in Baltimore. Gwen Griffith, DVM, President, Alliance of Veterinarians for the Environment. Cecile Gaspar, DVM, Dolphin Quest, Moorea-French Polynesia. Scott Nachbar, DVM, Aquarium of Niagra Falls. Mr. BEILENSON. Mr. Speaker, I yield 2 minutes to the gentleman from American Samoa [Mr. FALEOMAVAEGA]. Mr. FALEOMAVAEGA. Mr. Speaker, I appreciate the sentiments expressed by my good friend from Maryland con- cerning the legislation. But I think as a point of observation that I would like to share with the gentleman about the movement of tuna, not only as a mi- gratory fish, but the fact that the way tuna is being caught in the eastern Pa- cific is quite different than the prob- lems that we face in the western Pa- cific, the problems we have along the coastlines, the Latin American coun- tries where the tuna tend to come up closer to the dolphins. CONGRESSIONAL RECORD \u2014 HOUSE H9431July 31, 1996 I do not know if it is because of the current or the warmth of the water, whatever it is, that causes this dif- ference in how the tuna survives when it moves, quite different than from the way that we catch tuna in the western Pacific. The fact is that the tuna tends to go lower in depth and so that when we do the purse seining, the dolphins are not as much affected as opposed to the problems we face in the eastern Pa- cific. This is the predicament that we find ourselves under. The fact that because of the differences in temperature, whatever it is, that causes the tuna, the eastern Pacific tuna to go up a lit- tle closer to the dolphins so we obvi- ously end up with a very difficult prob- lem there, where our friends from Mex- ico and other countries that have the tendency, when they do catch the tuna under the dolphins, the dolphins defi- nitely are more affected by it as com- pared to the problems that we have in the western Pacific. I say to my good friend while I can appreciate his observations of how my forefathers have given a real sense of appreciation not only for the ocean en- vironment, but the fact that here one of the most beautiful mammals in the world that we see and putting them on a sacrificial altar for the name of expe- diency and saying that tuna is more important than dolphins, I submit to the gentleman from Maryland, I could not disagree with him more on this issue. Mr. GILCHREST. Mr. Speaker, will the gentleman yield? Mr. FALEOMAVAEGA. I yield to the gentleman from Maryland. Mr. GILCHREST. Mr. Speaker, I un- derstand the nature of the difference between the way in which tuna and dolphins act in the eastern tropical Pa- cific. We have reduced the dolphin kill in the eastern tropical Pacific to a lit- tle over 3000. We have not reduced the kill of dolphins in the western tropical Pacific where we have no management ability. Mr. GOSS. Mr. Speaker, I have no further requests for time, and I reserve the balance of my time. Mr. BEILENSON. Mr. Speaker, I yield 4 minutes to the gentleman from New Mexico [Mr. RICHARDSON]. (Mr. RICHARDSON asked and was given permission to revise and extend his remarks.) Mr. RICHARDSON. Mr. speaker, the Gilchrest approach offers the dolphin a better chance than the alternatives. Let me say that the Studds approach is also in my judgment a good alter- native, but this one is much better be- cause we would not be going it alone. Internationally we would be supported by many countries using the approach of WAYNE GILCHREST. Mr. Speaker, the argument is very simple. If fleets do not receive some re- ward for their changed behavior soon, they will revert to their old and easier ways of fishing. Dolphin casualties are going to rise. Under this proposal, we are going to keep international mon- itoring programs all in effect. This leg- islation is critical for both the environ- mental and international communities. I hope my colleagues will support this bill that is fair, is necessary. It is mod- erate and has broad support. Mr. Speaker, who can be greener than AL GORE, the Vice President of the United States who supports this bill? This bill is the next step in the proc- ess of minimizing the impact of tuna fishing on dolphin populations in the marine ecosystem. In 1972, over 400,000 dolphins died in tuna nets. Last year that number was just over 3,000. The Saxton-Gilchrest bill, of which I am a cosponsor, locks into a place a 99 per- cent improvement in environmental protection. Dolphin protection in international waters cannot be carried out by the United States alone. If we go the alter- native route, everyone will say, there goes the United States, on its own again. We have to rely upon commit- ments of several fishing nations to co- operate with us to protect dolphins. With Mexico we have worked very well on this issue. There is a lot of progress. We cannot risk losing this important international coalition. If we do, the United States runs the risk of never being a leader in dolphin protection. then what would happen would be anar- chy and more whaling deaths and there would be a whole upsurge of commer- cialism rather than environmentalism dictating what we should do. The changes promoted by this bill will give incentives to make tuna fish- ing less wasteful of nontarget fish and as safe as ever for dolphins. This bill guarantees through the best observer program in the world that every time a net is deployed only tuna that is truly dolphin safe will receive this label. This dolphin-safe certification would be given to any haul of tuna in which no dolphins were killed or seriously in- jured. Although there are reasonable con- cerns from my colleagues that dolphins will be stressed by this fishing tech- nique, this bill that we are supporting, the Saxton-Gilchrest bill, calls for a study on dolphin stress so that we can finally make some solid conclusions about this issue. The United States must continue to hold the firm line on compliance with sound fishing. This is why this bill will use the same tough trade measures that push countries to improve their fishing methods in the first place. It is important that we implement the Panama Declaration to reward the efforts taken by our trading partners. if we fail to implement this agreement, there is reason to fear that our trading partners will return to their old ways of fishing. If this happens, dolphin mor- tality levels will rise. This bill again is supported by the Clinton administration, National Wild- life Federation, Environmental Defense Fund, World Wildlife Fund, Greenpeace, and 12 nations have agreed to an unprecedented level of marine life protection. I think this is a good bill. It is a good, appropriate step in the interest of sustainable fishing, dol- phin protection and the marine eco- system. I think it has already been stressed that the maritime trade unions of the AFL CIO support this bill. They have issued a statement. Mr. Speaker, let us support this bill, but let us say that the approach that the gentleman from Massachusetts [Mr. STUDDS] has proposed I think is a good approach, but not hardly as good as this one that we are pursuing today. Let us give bipartisanism and environ- mental protection a very strong vote. Mr. BEILENSON. Mr. Speaker, I yield back the balance of my time. Mr. GOSS. Mr. Speaker, I yield my- self such time as I may consume. I would like to point out that this has been an almost full hour debate on the rule. I think we have come to the conclusion that this is a very good rule and it is going to lead to some very fine debate, when we get to the debate on this subject, which we are all look- ing forward to. I am personally pleased that we have made such great progress in dolphin protection. Six years ago, when there was a merchant marine and fisheries committee, there was some disagree- ment that led to a better solution. Fur- ther disagreements have led to better solutions. This shows that democracy works, this Congress works, and I am proud to be part of it. Mr. Speaker, I yield back the balance of my time, and I move the previous question on the resolution. The previous question was ordered. The resolution was agreed to. A motion to reconsider was laid on the table. The SPEAKER pro tempore (Mr. EWING). Pursuant to House Resolution 489 and rule XXIII, the Chair declares the House in the Committee of the Whole House on the State of the Union for consideration of the bill, H.R. 2823. b 1811 IN THE COMMITTEE OF THE WHOLE Accordingly the House resolved itself into the Committee of the Whole House on the State of the Union for the con- sideration of the bill (H.R. 2823) to amend the Marine Mammal Protection Act of 1972 to support the International Dolphin Conservation Program in the eastern tropical Pacific Ocean, and for other purposes, with Mr. COLLINS of Georgia in the chair. The Clerk read the title of the bill. The CHAIRMAN. Pursuant to the rule, the bill is considered as having been read the first time. Under the rule, the gentleman from New Jersey [Mr. SAXTON] and the gen- tleman from Massachusetts [Mr. STUDDS] each will control 30 minutes. The Chair recognizes the gentleman from New Jersey [Mr. SAXTON]. Mr. SAXTON. Mr. Chairman, I yield myself such time as I may consume. CONGRESSIONAL RECORD \u2014 HOUSEH9432 July 31, 1996 Mr. Chairman, I thank the Chair for making in order the consideration of this bill, H.R. 2823, which would codify the Panama Declaration. This bill has been the subject of scrutiny by several committees: The Committee on Re- sources and, of course, our Subcommit- tee on Fisheries, Wildlife and Oceans, the Committee on Ways and Means, as well as the Committee on Commerce. Our distinguished chairman, the gen- tleman from Alaska, DON YOUNG, and the gentleman from Massachusetts, GERRY STUDDS, have both expressed their reluctance to reopen the dolphin- safe tuna issue. They remember the rhetorical battle of the merchant ma- rine and fisheries committee on which we all served, and I remember that bat- tle as well. The Gilchrest bill will lead 12 nations that currently fish in the eastern tropi- cal Pacific or the ETC to a binding agreement to conserve and protect the entire ecosystem, including dolphins. The alternative is an increase in school and log sets which result in kill- ing sharks, endangered sea turtles, bill- fish, and baby tunas. These pictures exemplify what it is that we are trying to protect. We have endangered Olive Ridley turtles. We have sharks. We have wahoo and bill- fish and, of course, juvenile or baby tuna. These are all species that we are trying to protect pursuant to this act. Opponents of the Gilchrest bill will make several arguments. First, they will argue that the change in the sta- tus quo will lead to the wholesale slaughter of dolphins in the eastern tropical Pacific. We will show that that is not true. b 1815 Second, Mr. Chairman, opponents of the Gilchrest bill will also argue that the status quo will serve the purpose of saving the dolphins. We believe that is not true. Opponents will also claim that this bill will somehow undermine NAFTA, which we also believe is un- true. So let me just start with the first issue. The first issue with regard to the Gilchrest bill will be that it is a change in the status quo and it will lead to the wholesale slaughter of dolphins. To me this is a disingenuous argument. In fact, other nations are currently setting on dolphins; in other words, fishing for tuna under dolphins, in the eastern tropical Pacific, as the regular tuna harvesting method. That is going on today, and there is a large-scale slaughter of dolphins today by other countries. These fishermen have refined their harvesting techniques so that a sizable reduction, however, in dolphin mortal- ity has resulted from hundreds of thou- sands of dolphin deaths annually to just about 4,500 dolphin deaths today. Scientists say that this is about 4,500 out of a total of more than 9 million dolphin deaths. These 11 nations, Belize, Columbia, Costa Rica, Ecuador, France, Hon- duras, Mexico, Panama, Spain, Vanuatu, and Venezuela have all nego- tiated with the Clinton administration in good faith to set up the framework for a binding agreement to cap dolphin mortality in the eastern tropical Pa- cific. Mr. Chairman, the result of these ne- gotiations is the Panama Declaration, and the enactment of this bill is the enactment of our promises under that declaration. The linchpin to the Pan- ama Declaration, on which neither our State Department nor other nations will compromise, is the change in the dolphin safe definition. Without this change, the Panama Declaration, the international treaty, falls apart and so does our chance for a binding inter- national marine conservation agree- ment to protect dolphins and other ma- rine life. The opponents also will argue that the Gilchrest bill, that the status quo will better serve the same purpose. Ac- tually that is false. The status quo will no longer exist if the Panama Declara- tion is scuttled, and other countries will revert to their old practices. The current agreement under which these nations, known as the LaJolla Agreement, is 100 percent voluntary on the part of all nations. These nations have shown that they will walk away from the voluntary conservation meas- ures outlined in LaJolla without this agreement. As a matter of fact, in fairness to the opponents, I delayed the subcommittee markup to ensure that all members had an opportunity to express their concerns and have them addressed. The international community expressed its determined disagreement, and I had to personally spend hours meeting with representatives of Latin American countries who threatened to walk away from this process. The gentleman from Massachusetts [Mr. STUDDS] has an amendment that he will offer at the appropriate time. When we begin debate on the Studds amendment, I will discuss in detail why it will cause the demise of many more dolphins in the eastern tropical Pacific, also known as the ETP, than currently occurs. Third, as I pointed out, the oppo- nents will also suggest that this some- how is related to NAFTA. They will further claim that if this bill is ap- proved, the United States is telling the world that we will weaken our own en- vironmental laws to avoid violating NAFTA. I voted against NAFTA, and I can assure my colleagues that this bill is not related to NAFTA at all. That assertion is way off the mark. We are changing the law, yes; but we are not, we are not in any way, weakening it. We are strengthening it by enticing other countries already setting on dol- phins or fishing on dolphins to partici- pate in this binding international agreement that will reduce dolphin mortality even further. Let me just repeat. A binding agree- ment will reduce dolphin mortality even further. Remember the current agreement is voluntary, not binding, and these countries can walk away from it at any time. The NAFTA agree- ment does not wash, the NAFTA argu- ment does not wash, and neither does the assertion that we are weakening our environmental laws. I cannot fath- om how a binding agreement to reduce dolphin mortalities in the ETP can be portrayed as anything, anything but a stunning environmental accomplish- ment. At the close of general debate I will be offering a managers amendment that, like the Gilchrest bill, is whole- heartedly supported by the Clinton ad- ministration. It is also supported by Green Peace, the American Tuna Own- ers Association, the Center for Marine Conservation, the Environmental De- fense Fund, the World Wildlife Fund, the National Wildlife Federation, the Seafarers International Union, and the American Sportfishing Association. I will explain the substitute further at that time and urge all Members to do the right thing for all marine crea- tures in the eastern tropical Pacific and to vote yes. Mr. Chairman, I reserve the balance of my time. Mr. MILLER of California. Mr. Chair- man, I yield 3 minutes to the gen- tleman from New Jersey [Mr. PALLONE]. Mr. PALLONE. Mr. Chairman, in an effort to make concessions to foreign fishing interests, the Clinton adminis- tration and other proponents of H.R. 2823 are tampering with the standards set under the authority of one of our most fundamental and successful envi- ronmental laws, the Marine Mammal Protection Act of 1972. This bill per- mits the number of dolphin deaths to actually increase up to 5,000 annually and has no provisions, in my opinion, to enforce this limit or specify how this number should decrease over time. I believe it leaves a gaping loophole, with no limitations on injuring or harassing dolphins so long as there are no observed mortalities. I think also the American people have the right to know that this bill, in my opinion, has not been subject to proper debate and consideration. I know that my colleague from New Jer- sey talked about the action that took place in the Committee on Resources, but the bill was not referred to the Committee on Commerce which has in the past considered numerous bills re- lating to the labeling of tuna. Also, I am skeptical that adequate observer coverage can occur on a set by set basis as proposed by this bill, much less that a single observer could monitor nets that are up to a mile long and a hun- dred feet deep for potential dolphin fa- talities. Proponents are suggesting that bycatch is an important consideration, and I strongly support the need to ad- dress bycatch issues for tuna fishing, but by means other than a shifting of fishing effort to practices which place CONGRESSIONAL RECORD \u2014 HOUSE H9433July 31, 1996 dolphins at risk. This bill provides no alternative to dolphin sets with a fail- ure to ensure that bycatch mitigation research is done. Setting on logs and debris under which tuna aggregate will continue as two other major commer- cial tuna species, the skipjack and big- eye tunas are traditionally caught under logs and debris and are not typi- cally found with dolphins. Setting on dolphins is not a real solution to the bycatch issue, and H.R. 2823 does ad- dress this. This bill is yet another rollback of environmentalist legislation, and the threat this bill poses to dolphins is very real in my opinion. Mr. SAXTON. Mr. Chairman, I yield such time as he may consume to the gentleman from Maryland [Mr. GILCHREST], the author of the bill. Mr. GILCHREST. Mr. Chairman, I thank the gentleman for yielding this time to me. What I would like to explain to the Members that will be voting here in the next hour or so is that we have a piece of legislation that has been put together in the light of day by numer- ous interested parties, by the fisher- men who want to catch their fair share of fish, by scientists who understand the complexity of the nature of the ma- rine ecosystem, by elected officials in the United States that want to ensure jobs and ensure environmental quality and ensure the sovereignty of the Unit- ed States. This bill has absolutely nothing to do with reneging on our en- vironmental policies, this bill has nothing to do with violating the label so consumers understand that they are eating dolphin safe tuna. Mr. Chairman, this is a bill that puts the best of American together, to join us with 11 other nations to understand the nature of limited resources and a bulging population. This bill under- stands the nature of trying to get international agreement on sensitive environmental issues. This bill is a first step to understand the nature of complex environmental issues such as global warming that we will have to sit down at the table and find agreements on. Now the issue here is encirclement, the issue here is encirclement that deals with purse seine nets, and yes, those purse seine nets since the 1950’s have killed hundreds and thousands of dolphins in the eastern tropical Pa- cific, and yes, the United States placed an embargo on that type of encircle- ment, the United States placed a gear restriction so that we would not im- port tuna where dolphins were killed. But there are still not only dolphins being killed in the pursuit of tuna, there are tens of thousands of sharks as bycatch. There are immature tuna being caught in other methods that will never stand the chance to spawn, and so the tuna population will con- tinue to diminish. So we have gotten together in the light of day in LaJolla, CA some years ago to try to figure out, we, as intel- ligent human beings, trying to figure out how we can manage our resources, feed the world and sustain the environ- mental marine ecosystem for genera- tions to come. Now a speaker earlier talked about the Polynesians and their values for life, both human and animal, fish spe- cies, mammals and so on. Those same values of respecting life on planet Earth are an inherent part of this piece of legislation, and so encircling dol- phins the way it used to be, encircling tuna the way it used to be, killed tens of thousands of dolphins. In this new method, which is not an end-all to this scheme of things, we are not going to adopt this legislation and have this agreement with 12 other countries and not continue to pursue to understand the nature of how to catch tuna without killing one dolphin. We are continuing to study this issue. We encircle the dolphins. I say to my colleagues, Now imagine a boat with a circle around the back of that boat, and you have encircled the tuna fish that are swimming under- neath these dolphins. The boat stops with a licensed observer on board, and then the back of the net drops down. Into that circle, into that net, go mem- bers of that tuna boat to chase the dol- phins and the other marine mammals out of that net, and the net drops down below the surface of the water. And until all the dolphins are out of the net, that net does not get pulled and the tuna do not get processed on board ship. This is not a perfect solution. There is no utopia on planet Earth. We must manage our limited resources with the technology that is available to us at this moment, and in my judgment the technology to reduce dolphin deaths, the technology to ensure the honesty of labeling dolphin safe tuna is this leg- islation. So I will encourage my colleagues, as painful as it is to the gentleman from Massachusetts and the gentleman from California, and I very rarely vote against these two gentlemen when it comes to environmental issues, but I would encourage my colleagues to vote against the Miller-Studds amendment and vote for this legislation. Mr. MILLER of California. Mr. Chair- man, I yield 3 minutes to the gen- tleman from American Samoa [Mr. FALEOMAVAEGA]. Mr. FALEOMAVAEGA. Mr. Chair- man, at some point in time in this de- bate the gentleman from Massachu- setts, I know, will be offering an amendment to the pending legislation, and for that reason I rise in support of the amendment of the gentleman from Massachusetts [Mr. STUDDS] which will continue the meaningful standard of current Federal law on the use of the dolphin safe label. Mr. Chairman, it was through a pub- lic outcry beginning over a decade ago that Congress responded in 1990 with the dolphin safe label we see on all tuna sold in the United States. Amer- ican consumers wanted to purchase canned tuna, but they were not willing to do so if it meant killing over 100,000 dolphins per year. It was through a grass roots belief that dolphins should be protected that the dolphin safe label was born. b 1830 Throughout this period, Mr. Chair- man, Mexican fishermen have wanted to catch tuna by encircling dolphins and selling it to consumers in the Unit- ed States. The Gilchrest bill would give foreign interests greater access to our markets and remove the incentives to the tuna industry to stay in the United States. That is not good policy for any- one but the foreign fishing fleets and foreign canners. Mr. Chairman, today, in a misplaced effort to comply with the foreign trade agreement, supporters of this bill pro- pose changing the definition of dol- phin-safe so dolphins can be chased and encircled in the catching of tuna, and the tuna can still be sold in the United States under the dolphin-safe label. Mr. Chairman, I am opposed to this legislation and, quite frankly, even with the Studds amendment, but I do not believe that the bill adequately protects the dolphin stocks. Without the Studds amendment, Mr. Chairman, the consumers will not have that choice because they will not be able to tell dolphin-safe tuna from dolphin-un- safe tuna. H.R. 2823 is not the solution, Mr. Chairman, to the dolphin issue I would choose, but the Studds amendment is the tolerable option. I urge my col- leagues to vote for the Studds amend- ment when it is brought before the floor for consideration. Mr. SAXTON. Mr. Chairman, I yield 3 minutes to the gentleman from New York [Mr. BOEHLERT]. (Mr. BOEHLERT asked and was given permission to revise and extend his re- marks.) Mr. BOEHLERT. Mr. Chairman, I rise in strong support of this bill. I wish to congratulate the gentleman from Maryland [Mr. GILCHREST] for all his hard work on it, for the thoroughness with which he took this challenging as- signment on, for the openness of the process, for the methodical manner in which this final product was developed. WAYNE GILCHREST is a class act. The choice we face in this debate is between ideological purity and prac- tical impact. The purists want to push an approach to fishing in which no dol- phins will ever become entangled in tuna nets. That sounds good, and we would all feel good voting for it, having demonstrated our purity. There is only one problem: that is, the practical im- pact that vote would have. If we vote down this bill or amend it, we walk away from an international agreement that has been enormously successful in saving dolphins. Dolphin deaths have dropped from over 400,000 in the 1970’s to less than 4,000 last year. The agreement will continue to move CONGRESSIONAL RECORD \u2014 HOUSEH9434 July 31, 1996 us toward reducing mortality to zero. The agreement would fall apart. Other countries would go back to their old means of fishing, and dolphin mortal- ity would increase again if we voted other than for the Gilchrest bill. Not only that, bycatch of other spe- cies such as sea turtles would increase. So our choice is to vote for this bill and accept a small and declining level of dolphin mortality, or to pretend to purity and cause the death of dolphins and other sea creatures. The gentleman from Maryland [Mr. GILCHREST], as one would expect, has taken the moderate approach. It has won the support of even such immod- erate groups as Greenpeace. Some of my friends are for this bill. People ask me, what about your friends? I point out some of my friends are for this bill, and some of my friends are not so enthusiastic. But let me tell the Members about my friends that are for this bill: The National Wildlife Fed- eration, the Environmental Defense Fund, Greenpeace, World Wildlife Fund, Center for Marine Conservation, our good friends in the maritime trades department of the AFL CIO, the Amer- ican Sport Fishing Association, the American Tuna Boat Owners. The Washington Post twice has editorial- ized in support of this Gilchrest bill, and so has the New York Times and the Houston Chronicle. Seasoned observers who care deeply about this process have all examined very carefully the Gilchrest proposal, and they have urged us, the Represent- atives of the American people, to vote for it. I proudly identify with my col- league, the gentleman from Maryland [Mr. GILCHREST], and I enthusiastically support this bill and urge my col- leagues to do likewise. Mr. MILLER of California. Mr. Chair- man, I yield myself such time as I may consume. Mr. Chairman, I would like to re- spond to a couple of things that have been said here. The suggestion is that somehow, if we engage the legislation as it is currently written, that some- how that will lead to a reduction in the dolphin death rate from what we have today. The fact of the matter is the legislation allows for almost a 30 per- cent increase in dolphin deaths under this bill. It also does not address and in fact would allow for the first time, under the guise of being dolphin-safe, the har- assment, the hunting, capture, and killing, the attempt to harass, hunt, capture, or kill, marine mammals. We would not allow this, and this is not al- lowed for any other mammal, any other kind of fisheries under the law. But the fact of the matter is that is what happens. What we do know, and one of the rea- sons that we have this legislation, is because the encirclement, the harassing, and the stress on the dol- phins has taken a toll on them. Yet somehow we condone that, and we sug- gest that that is in fact dolphin-safe, when in fact all the scientists agreed when we wrote this law that that was not dolphin-safe. In fact, Greenpeace, which is supporting the Gilchrest ap- proach here, I believe has never changed their position, that there should be an end to the encirclement of dolphins. But in fact, that is sanc- tioned under this legislation. My colleagues keep referring to their friends who are supporting this legisla- tion. I would like to point out that the Sierra Club, the American Society for the Prevention of Cruelty to Animals, the Earth Island Institute, the Humane Society of the United States, Friends of the Earth, the International Broth- erhood of Teamsters, the American Hu- mane Association, those organizations that have dedicated their entire exist- ence to the humane treatment of ani- mals, to ending the slaughter of ani- mals, mammals and wildlife, oppose this legislation. Again, by denigrating the label, by suggesting that these activities will be allowed, that the increased killing of dolphins will be allowed, and somehow trying to present to the same Amer- ican consumer that has now been mak- ing a decision for many, many years that when they buy a can of tuna that is sold in the United States, that in fact the label of dolphin-safe means dolphin-safe, now we are going to pull a trick on them. We are going to pull a trick. We are going to tell them that dolphin-safe means dolphin-safe, but it does not. It means we can encircle, and we can harass, and we can maim, and we can injure, and we can in fact in- crease the number of dolphins that are killed. The current system, with all of these bandits out there fishing the way they want, the current system has dramati- cally reduced the measured kill in dol- phins some 95, 97 percent. Yet we are told now under the new regime what we have to do is allow these people to kill more dolphins. Then we are going to kid the school- children that led the crusade in this country for dolphin-safe tuna, for the consumers, for the packaging compa- nies that complied with this and made a decision, made an investment, we are going to con all of them that now somehow this legislation is really dol- phin-safe and better for the dolphins, in spite of the language in the legisla- tion that allows the dolphins to be put under much more stress, to be injured, and to be maimed, in direct contradic- tion of the Marine Mammal Protection Act. These are exactly the acts that are prohibited and for which these mam- mals are protected, but in the case of the dolphin, they will no longer have that protection. I am sure my col- leagues on the other side, the col- leagues supporting this legislation, would not suggest that we do away with that protection for marine mam- mals. But somehow, because of the in- sistence of Mexico that they need to do this, and I do not see Mexico volunteer- ing not to take juvenile tuna in their coastal waters. They did not put that in this agreement. The only thing we put in this agreement is changing how American consumers are going to be able to depend upon a label and what this label means. My colleagues say we have to change the method in which we fish for dol- phins because it has an impact on juve- nile tuna. But most of the juvenile tuna is taken within the coastal waters of Mexico, and it is exempt from this agreement. Our trade negotiators, our State De- partment, constantly continue to sell the American market cheap. In one agreement after another, we con- stantly give away the integrity of the market, and, in this case, the integrity of our consumer protection, the integ- rity of our environmental laws, the in- tegrity of our workplace, the integrity of the jobs for our workers. Somehow we do not appreciate the real value of this market. The reason they are banging on the door for this agreement, and this is not a treaty, as people on the other side have sug- gested. This is about an agreement to go forward to negotiations for an agreement. But what we have is Amer- ica unilaterally agreeing to change its basic consumer protection laws. Mexico, however, is free to continue to take all the juvenile tuna they want, probably far in excess of any- thing that will be dealt with by the current system. So I would just hope that our colleagues would understand that there are a lot of suggestions about what this bill will do, but the language of the bill itself simply is contradictory to those representations. Mr. Chairman, I reserve the balance of my time. Mr. SAXTON. Mr. Chairman, I yield 2 minutes to the gentleman from Florida [Mr. GIBBONS]. Mr. GIBBONS. Mr. Chairman, I love the dolphin. I am privileged to, when I go home in Florida, wake up every morning and watch the dolphin frolic in my front yard. Fortunately, com- mercial fishing in my area of the world does not include the capture or the harassment of dolphin, so maybe I should stay out of this fight. But I do love the species, and I think it is important that we begin to get an international agreement on the preser- vation of that species. I wish there were a perfect way to solve this prob- lem, but there is not. I think the Gilchrest bill is a realistic bill and does the proper type of conservation of this particular species. There is, as I say, with the tech- nology that we have now and the knowledge that we have now, and the fact that we do not have an inter- national agreement on the preserva- tion of the dolphin, it leads me to be- lieve that the Gilchrest bill goes in the right direction. Quite often we strike out in our attempts to do good by tak- ing unilateral action. I believe we can do even better if we take international CONGRESSIONAL RECORD \u2014 HOUSE H9435July 31, 1996 action, because these are international waters we are dealing with. This is a migratory species that moves about quite rapidly. I think, attacking this conservation matter, and the fact that such people as Greenpeace, whose credentials are beyond dispute as far as the species is concerned, are endorsing it, I think it is the wisest action to take. I say that, having great respect for the gentleman from Massachusetts [Mr. STUDDS] and the gentleman from California [Mr. MILLER] and their position. But I find that it is best in my judgment to go for the Gilchrest proposal. Mr. SAXTON. Mr. Chairman, I yield 4 minutes to the gentleman from Califor- nia [Mr. CUNNINGHAM]. Mr. CUNNINGHAM. Mr. Chairman, why support this bill? First of all, the United States has fallen under an en- cumbrance of having to have observers on a boat. This is in light of they have actually reduced the number of thou- sands of dolphins killed down to 4,000. My colleague, the gentleman from California, says first of all the number increased 20 percent. Then just a minute ago he said it increased 30 per- cent, which we need to know what it is. I can tell the Members what it is. It goes from 4,000 to 5,000. Let me tell the Members why. Currently, currently the other na- tions that are involved or have the re- strictions on them can go out and kill thousands of dolphin at will. But be- cause of this agreement, the Panama Agreement, they fall under the same umbrella that we do. Fishermen have gone down to 4,000. Dolphin-safe does not have to be dolphin-safe under this current law. Under this bill, we will know that 100 percent of the tuna under as dolphin- safe label will be dolphin-safe, because every single boat will have an observer, not just U.S. boats, but all 12 of the other nations. Why would my friends oppose that? The gentleman from New York, Mr. SHERRY BOEHLERT, called it ”ideological purity.” We have some of those on our side. I recognize that. I think both groups need to moderate their positions. b 1845 I think that has been done by the gentleman from Maryland [Mr. GILCHREST], the gentleman from New Jersey [Mr. SAXTON], the gentleman from New York [Mr. BOEHLERT], people that are known for their environ- mental record, and on your side as well, I would say to the gentleman from California [Mr. MILLER]. I do not apply any motive to this. I think the gentleman has a purely in- tensive feeling about his support of his own amendment. Let us take a look at the groups that support this. Earth Island. They have made millions of dollars managing the dolphin-safe label, managing the dol- phin-safe label from Starkist. Fact. Earth Island, who makes mil- lions of dollars from this, is generating fundraising dollars for their efforts. It is an economical issue for them. But yet on the other side we have the Vice President of the United States; AL GORE, who is your champion for the en- vironment. If we have any radical group on our side, it is the AFL CIO. They endorse this. But on the other side we have the gentleman from New York [Mr. BOEHLERT], the gentleman from Maryland [Mr. GILCHREST], the gentleman from New Jersey [Mr. SAXTON], and many others who nor- mally vote with a green vote. Because they feel that this is an honest effort to protect a resource that under the current conditions, you catch turtles because you fish for immature tuna, and you catch swordfish and the rest of it, and all that bycatch is wasted; killed. This method prevents that. It also saves the resource for future gen- erations. That is why the President and AL GORE and many Members on your side of the aisle support this bill, as well as on our side. I would ask the gentleman in good faith, and I think he knows I am sin- cere in this. I truly believe that this will save dolphins. I think it will help our fishermen. I think it will move Mexico in not just this but in other ways. Already Mexico has worked very closely with us on our sports fisher- men’s rights and moved in that genera- tion. Unless we adopt international agreements and enforce them, and I will work with the gentleman to make sure that these are enforced, then I think that we have slipped backwards. Mr. MILLER of California. Mr. Chair- man, I yield myself 1 minute, just to say that the AFL CIO does not support this legislation. We just spoke to them. We have member unions of the AFL CIO that support this legislation and we in fact have members of the AFL CIO that support our version, the Studds amendment, of that same legis- lation. We just got off the phone to their representative. We both have con- stituents, just as you have environ- mental organizations on both sides. The point is that these same nations that are now making this threat in fact today are not going out and killing tens of thousands, hundreds of thou- sands of dolphins, but they are threat- ening to. They are threatening to go out and act in a completely irrespon- sible fashion unless the U.S. Congress goes along with this attempt to get us to dupe the American consumers about the nature of the dolphin-safe label and the tuna which they buy. Mr. Chairman, I reserve the balance of my time. Mr. SAXTON. Mr. Chairman, I yield 2 minutes to the gentleman from Colo- rado [Mr. SKAGGS]. Mr. SKAGGS. Mr. Chairman, I sup- port this bill. I believe its enactment is necessary if we are going to continue to make progress in reducing dolphin mortality associated with fishing for tuna. I, like many of my colleagues, always have cause to pause for a moment be- fore challenging the position of my friends and colleagues from Massachu- setts and California on an issue like this. Certainly it is disconcerting to have words like ”conned” and ”duped” thrown into the debate. I think every- body here is in agreement about our basic objective, which is reducing dol- phin mortality. It is evident that opin- ions are divided about how to pursue that objective, and so there is a divi- sion of opinion about this bill. I respect those that question the bill’s approach, because I know that what they are primarily seeking here is what I am seeking, and that is reduc- ing to the minimum, as efficiently as we can, the deaths of dolphins. We all remember the horrifying pictures of dolphins dying in fishermen’s nets. That brought the public clamor that got us the very major progress that we have made to date in this issue. The improvement that has been made is largely the result of the La Jolla Agreement. That agreement has brought much reduction in dolphin mortality. But last year, as has been discussed, a dozen tuna fishing nations, including the United States, met to try to build on that agreement and put to- gether a binding international agree- ment to replace the strictly voluntary La Jolla Agreement. The result of those talks was the framework agreement known as the Panama Declaration. It is the purpose of this bill to implement that agree- ment in order to strengthen inter- national conservation programs and set the stage for a further reduction in dolphin mortality. We need to support this legislation in order to be able to keep that international cohesion to- gether in support of a goal that I think all Members share. Mr. Chairman, I support this bill. I believe that its enactment is necessary if we are to continue to make progress in reducing dolphin mortality associated with fishing for tuna. I think everyone here agrees that further re- ducing dolphin mortality should be the goal. But it’s evident that opinions are divided about how we should pursue that objective\u2014and as a result there are divisions of opinion about this bill. I respect those who have questions about this bill’s approach, because I think that what’s primarily involved here is an honest dif- ference of opinion over the specific legislation, not a fundamental difference over its objec- tives. We all remember the horrifying images of dolphins dying in fishermen’s nets. Those scenes rightly brought a public clamor for ur- gent action. And, since then we’ve made real progress. In fact, dolphin mortality in the east- ern tropical Pacific has been cut by better than 90 percent. This improvement is to a large extent the re- sult of an informal, voluntary agreement\u2014 known as the La Jolla Agreement\u2014among countries whose nationals fish in the eastern Pacific. However, while this agreement has brought much improvement, more attention has gone to the U.S. law setting criteria for labeling tuna as ”dolphin safe”\u2014criteria based on fishing practices rather than on dolphin mortality. CONGRESSIONAL RECORD \u2014 HOUSEH9436 July 31, 1996 Last year, a dozen tuna-fishing nations\u2014in- cluding the United States\u2014met in Panama to develop a binding international agreement to replace the strictly voluntary La Jolla Agree- ment. The result of those talks is a new frame- work agreement, known as the Panama Dec- laration. The purpose of this bill is to imple- ment that declaration, in order to strengthen international conservation programs and to set the stage for further reducing dolphin mortality. As we consider this legislation, we should keep in mind what the Panama Declaration provides, because it goes beyond previous agreements in several important ways. Under the Panama Declaration, there would for the first time be a firm, binding international commitment to the goal of completely eliminat- ing dolphin loss resulting from tuna fishing in the eastern Pacific Ocean. In addition, the declaration would provide new, effective pro- tection for individual dolphin species\u2014bio- logically-based mortality caps that will provide important new safeguards for the most de- pleted dolphin populations. And the Panama declaration provides for the world’s strongest dolphin monitoring program, with independent observers on every fishing boat. Implementation of the Panama Declaration depends upon the changes in U.S. law that would be made by this bill. Among other things, these changes will lift restrictions on access to our markets for tuna caught in com- pliance with the new agreement, including re- vision of the standard for use of the ”dolphin safe” label. That change in the ”dolphin safe” label seems to be the most controversial part of the bill, but it is an essential part and should be approved. Remember, under the current law that a ”dolphin safe” label on a can of tuna doesn’t necessarily mean that no dolphins died in con- nection with the catch of the fish. Instead, it simply means that the fishermen did not use a school of dolphins as their guide for setting their nets. If that condition is met, the ”dolphin safe” label can be applied even if dolphin mor- tality in fact has occurred. By contrast, under the Panama Declaration\u2014as implemented by H.R. 2823\u2014the term ”dolphin safe” may not be used for any tuna caught in the eastern Pacific Ocean by a purse seine vessel in a set in which a dolphin mortality occurred\u2014as doc- umented by impartial, independent observers. In other words, it’s not true that this bill would destroy the meaning of the ”dolphin safe” label\u2014it would make its meaning more specific and more accurate, by imposing a no- mortality standard, while providing for further study of the effects of dolphin-encirclement and a mechanism to again stop that fishing technique if it’s determined to have an ad- verse impact on dolphins. I think this is a de- sirable change in the law. Furthermore, fishing can’t be truly ”dolphin safe” unless it’s safe for the ecosystem. Be- cause it focuses on fishing methods, not dol- phin mortality, the current labeling law has had serious unintended consequences. Some of the ”dolphin safe” methods tend to result in a catch of primarily juvenile tuna\u2014harmful to the viability of the fishery\u2014or result in numerous catches of other species such as endangered sea turtles or billfish. In fact, it well may be better for the ocean ecosystem for tuna fishermen to set their nets on dolphins and then to release the dolphins safely when the tuna are harvested\u2014some- thing that is strongly discouraged by the cur- rent labelling standard. So, Mr. Chairman, this is a good bill, one that represents a win-win situation for all. It’s supported by the administration and the U.S. fishing industry as well as by environmental and conservation groups, including the Na- tional Wildlife Federation, the World Wildlife Fund, the Environmental Defense Fund, the Center for Marine Conservation, and Greenpeace. It deserves the support of the House. Mr. TORKILDSEN. Mr. Chairman, I rise in strong support of H.R. 2823, the International Dolphin Conservation Program Act, sponsored by Mr. GILCHREST. This bill is vital to the pro- tection of dolphins, sharks, endangered sea turtles, and other creatures of our marine eco- system. This bill is supported by such well-known environmental advocates as Greenpeace, World Wildlife Fund, the Center for Marine Conservation, and the Environmental Defense Fund. H.R. 2823 is better for dolphins because it locks into place binding international legal pro- tections for dolphins in the eastern tropical Pa- cific [ETP]. Currently, dolphin protection in the ETP is voluntary. Many nations seek to protect dolphins in order to sell tuna in the U.S. mar- ket. The nations that fish for tuna in the eastern tropical Pacific have developed new fishing methods to reduce dolphin mortality. As a re- sult of these efforts, dolphin mortality has dropped from 125,000 in 1991 to 3,300 last year, just 0.2 percent of the population. This is a level more than four times lower than that recommended by the National Research Council to allow recovery of dolphins. This bill sets aggressive mortality limits, with the goal of reducing dolphin mortality to zero. Under the Gilchrest bill the ”dolphin safe” definition is based on actual dolphin mortality. If a dolphin dies as a result of harvesting tuna, then that tuna will not be permitted into the United States and onto our shelves. Currently, despite the label on cans of tuna that it is dol- phin safe, there has been shown to be some dolphin mortality in even log and school sets of tuna harvests. H.R. 2823 assures consum- ers that no dolphins died in the catch of la- beled tuna. Despite the current embargo, existing law has been ineffective in changing fishing prac- tices of foreign fleets in the ETP; in fact, ap- proximately 50 percent of sets by the foreign fleet are on dolphin schools despite the em- bargo. H.R. 2823 implements the Panama Declara- tion, and international agreement to reduce dolphin mortality in the eastern tropical Pacific Ocean and to be bound by the conservation and management measures enacted by the Inter-American Tropical Tuna Commission [IATTC]. Without the Gilchrest bill the signers to the Panama Declaration will walk away from the agreement and we will risk all protec- tions of dolphin throughout the region. A vote for this bill is a vote for the marine environment. The Gilchrest bill contains tough provisions that require tuna fishermen to pro- tect dolphins, sea turtles, sharks, and bill fish. Under current methods of fishing, hundreds of endangered sea turtles and thousands of sharks die every year. The Gilchrest bill pro- vides for protections of these species while si- multaneously strengthening international dol- phin protections. This bill is supported by the administration, Greenpeace, World Wildlife Fund, the Center for Marine Conservation, and the Environ- mental Defense Fund. While important envi- ronmental advocates like the Sierra Club and the Humane Society oppose this legislation, I feel this bill is a good compromise in protect- ing dolphins, sea turtles, and sharks through- out the eastern tropical Pacific Ocean. I urge my colleagues to support H.R. 2823 and vote to protect dolphins in the ETP. I yield back the balance of my time. Mr. MCDERMOTT. Mr. Chairman, last year the United Nations adopted a new treaty to assure the conservation of fish caught in inter- national waters, known as the Agreement on the Conservation and Management of Strad- dling Fish Stocks and Highly Migratory Fish Stocks. This new treaty, which was recently ratified by Congress with bipartisan support, seeks to reverse the depletion of fish and other marine life that has resulted from unsustainable fish- ing practices and the lack of effective inter- national management. The need for this new treaty is painfully ob- vious. Many of our most important fisheries have been depleted, undermining the eco- nomic well-being of coastal communities worldwide. Similarly, the wasteful bycatch of marine life in many fisheries poses a major threat to biodiversity. The legislation we are debating today, H.R. 2823, the International Dolphin Conservation Program Act, and the Panama Agreement upon which it is premised, represents the most far-reaching attempt to date to implement the conservation mandates of the new treaty. If enacted by Congress, it will create a model for the management of high seas fisheries around the world. H.R. 2823 advances several of the new, im- portant conservation objectives of the U.N. treaty. For example, like the U.N. treaty, it pre- vents overfishing by requiring the establish- ment of catch limits based on a precautionary approach. Like the U.N. treaty, it also requires steps to minimize the wasteful by catch of all forms of marine wildlife. Like the U.N. treaty, it assures transparency in the management of fisheries in the eastern Pacific, so that all in- terested stakeholders can effectively partici- pate in the management process; and like the U.N. treaty, it secures international coopera- tion in the conservation of marine resources. H.R. 2823 recognizes that unilateral meas- ures alone cannot succeed in conserving fish- eries that are prosecuted in international wa- ters. It builds upon the recent, important work by the United Nations aimed at the sustain- able management of world fisheries. H.R. 2823 is our best hope of assuring healthy fisheries as well as dolphin protection in the eastern Pacific Ocean. I urge my col- leagues to support this legislation. Mr. CRANE. Mr. Chairman, I am pleased to rise today in support of H.R. 2823. This is a unique opportunity to approve legislation that would put us in compliance with our inter- national obligations, use multilateral standards for the imposition of sanctions instead of uni- lateral standards that violate the GATT, and meet our environmental concerns over dolphin mortality. This bill was referred to the Ways and Means Committee to address its trade as- pects. We reported it out as approved by the Resources Committee, without further amend- ment. I support the bill because it would replace the current use of United States unilateral CONGRESSIONAL RECORD \u2014 HOUSE H9437July 31, 1996 standards as a trigger for an import ban of tuna caught with purse seine nets with multi- lateral standards agreed to as part of the Pan- ama Declaration. If countries are in compli- ance with the multilateral standard for the fish- ing of yellowfin tuna, then the import ban would not apply. Any use of unilateral standards for the impo- sition of sanctions is troubling. In fact, a GATT panel has found our current law to violate our international obligations. Instead, enforcement actions are most effective when they are based on international consensus, as this bill would establish. Such consensus is more con- structive to effective management of the ETP tuna fishery by all countries concerned. I be- lieve that these standards will serve as a posi- tive incentive to reduce dolphin mortality, while, at the same time, putting the United States in compliance with international agree- ments. The Studds amendment, however, would put the Panama Declaration at risk and would threaten all we have achieved. Adoption of this language would invite a serious challenge under the WTO and would discourage our trading partners from adopting more environ- mentally sound fishing methods. Far from achieving increased protection for dolphins, the amendment would undo the progress we have already made. Proof of the benefits of H.R. 2823, without the Studds amendment, is the fact that this legislation is supported by the administration and key environmental groups such as the National Wildlife Federation, the Center for Marine Conservation, the Environmental De- fense Fund, Greenpeace, and the World Wild- life Fund. In addition, our tuna fishing industry supports the bill, and our trading partners have indicated that they believe implementa- tion of the bill would put us in compliance with our international obligations. With such a strong and diverse coalition behind this bill, we should strongly support this bill. Mr. OXLEY. Mr. Chairman, I rise today in strong support of H.R. 2823, the International Dolphin Conservation Program Act. Among other things, this legislation implements the Declaration of Panama, agreed to by a dozen different nations, including the United States. As a strong proponent of free and fair trade, I think this represents a good example of how we can work together with out trading partners to achieve our shared goal of preserving the Earth’s precious resources. H.R. 2823 includes several provisions within the jurisdiction of the Committee on Com- merce. H.R. 2823 provides for implementation of the declaration in an effort to increase inter- national participation in activities to reduce the number of dolphins and other marine mam- mals that die each year as a result of tuna fishing techniques. This bill would also modify the definition of ”dolphin safe” for the purpose of labeling tuna products sold in the United States, and alter current regulations on the im- portation of tuna products. Also, the bill would make misuse of the ”dolphin safe” label an unfair and deceptive trade practice under sec- tion 5 of the Federal Trade Commission Act. In short, this legislation will help the United States achieve its environmental goals by im- plementing a reasonable agreement reached by the United States and its trading partners. It is supported by Republicans and Democrats alike, some environmental groups, and the Clinton administration. I would also like to take this opportunity to thank the gentleman from Alaska [Mr. YOUNG] for his support and willing- ness to work with the Commerce Committee to expedite consideration of this legislation. I urge all of my colleagues to support this legis- lation. Mr. BILBRAY. Mr. Chairman, we are here today to make a decision on an issue of great importance first and foremost to our marine environment, but also to the process by which we will craft the environmental and public health policies of the future. We have a choice between the status quo, which would focus solely on one issue at the expense of others which are equally important, and a com- prehensive, forward-looking agreement which will carry strong dolphin and marine protection policies well into the next century. If we are truly interested in progressive, outcome-based environmental policy, then H.R. 2823 must serve as a cornerstone of that policy founda- tion. Over the last decade, great strides have been made in reducing dolphin mortality rates in the eastern tropical Pacific [ETP], as a re- sult of improved and innovative tuna fishing methods pioneered by the U.S. tuna fleet, and stepped-up levels of on-vessel observer mon- itoring. These improvements were reflected in the landmark La Jolla Agreement of 1992, a voluntary resolution entered into by a number of tuna fishing nations, including the United States, Mexico, and several Latin American countries. This agreement established strict and declining levels of annual dolphin mortality rates, requiring that an annual overall rate of less than 5,000 be achieved by 1999, which is less than 0.1 percent of the estimated total dolphin population. This program has been so effective that it has already achieved a rate of below 4,000 annually, which is considered by scientists to be below levels of biological sig- nificance. I have an article that elaborates fur- ther on this point, Mr. Chairman, which I would ask to be entered into the RECORD along with my statement, but I would like to read one passage from it at this point. These remarks come from Dr. James Joseph, who is the di- rector of the Inter-American Tropical Tuna Commission [IATTC]: Joseph said the dolphin mortality rate is now so low that it cannot affect the survival of any of the dolphin species ”The dolphins increase at a rate of from 2.5% to 3.5% per year. The mortality for every (dolphin) stock is less than one-tenth of 1 percent,” he said. In other words, a great many more young dolphins are born and survive each year than die in tuna nets. There are about 9.5 million dolphins in Eastern Pacific populations in all, and none of their several species\u2014includ- ing common, spinner, and spotted\u2014is endan- gered. ”We continue to take the approach that we can bring it (dolphin mortality) lower, and we continue to work in that direc- tion. It is essential that we keep all of the countries involved in the fishery cooperating in our program,” Joseph said. The La Jolla Agreement also required that observers be posted on each licensed vessel, which were each assigned strict dolphin mor- tality limits [DML]. To date, the signatories have continued to operate in good faith to pro- tect dolphin in the course of harvesting tuna under this nonbinding agreement; however, some nations had openly considered dropping out of the La Jolla Agreement and the Inter- American Tropical Tuna Commission, its um- brella organization, because despite the ad- vances made in reducing dolphin mortality rates, U.S. law had not been changed to lift the existing embargoes on tuna imported into the United States. However, H.R. 2823, if en- acted, would provide the incentives for these other fishing nations to want to remain in- volved in the IATTC and continue to fish for tuna in a dolphin-sensitive fashion, rather than ”leaving the table” and reverting to older and more dolphin-unsafe fishing methods. In addition to this threat of retreat from vast- ly improved dolphin protection practices, bio- logical problems of significant dimensions have arisen as a result of alternative ”nondol- phin” fishing methods now in use due to the existing restrictions to setting tuna nets ”on dolphin”. Such methods include setting nets around tuna attracted to floating objects\u2014log fishing\u2014or around free-swimming schools of fish\u2014school fishing. While these methods do reduce direct contact with dolphin, they create other problems. Studies indicate that up to 25 percent of volume of these harvest methods is ”bycatch” of other species, including high vol- umes of sharks, billfish, and other pelagics, endangered sea turtles, and immature tuna. These young tuna are not market-ready, and are largely dead by the time they are returned to the sea. This wasteful depletion of juvenile tuna poses a serious threat to maintaining healthy, long-term populations of yellowfin tuna, in addition to stressing the populations of these other sensitive species. Conversely, setting tuna nets ”on dolphin” creates little bycatch other than the dolphin themselves. While this was problematic\u2014and lethal\u2014for dolphin in past years, recent im- provements in tuna harvest methods, such as the ”backing down” procedure, in which the edge of the nets are allowed to swim below the surface, affording dolphins the opportunity to leave the net, have served to greatly mini- mize the threat to dolphin. In addition, small boats and a number of divers are often de- ployed within the net to assist dolphin out of danger. However, the problem of bycatch under- scores a policy dilemma, as to how best to manage our marine resources on an ”eco- system” basis, rather than channeling all our energy and resources into ”single population” strategies. While it is clearly essential that we continue to work to reduce dolphin mortality rates toward zero, this cannot and should not occur at the expense of other parts of our ocean biosystem, Fortunately, in H.R. 2823, we have a long-term solution before us today which will resolve the challenges, both envi- ronmental and economic, which we now face. In October 1995, 12 nations, including the United States, met in Panama to craft a bind- ing international agreement to protect dolphin and other species in the eastern tropical Pa- cific. Five major environmental organizations were instrumental in developing this agree- ment, which been dubbed the Panama Dec- laration. The declaration will establish a per- manent mortality limit, with the goal of zero dolphin mortality in that fishery. It will set mor- tality caps for individual species of dolphin, and provide for individual vessel accountability by establishing strict per vessel mortality caps. Just as important, the Panama Declaration provides greater study of and protection for other now at risk from ”bycatch”, and increase internationally enforceable monitoring systems to ensure compliance by participating nations who wish to fish in the ETP. CONGRESSIONAL RECORD \u2014 HOUSEH9438 July 31, 1996 The Panama Declaration, which will be codi- fied into law by enactment of H.R. 2823, cre- ates a binding and enforceable process to en- sure continued declining rates of dolphin mor- tality, while for the first time adopting an ”eco- system-based” approach to ocean resource management. While there is absolutely no question that dolphin populations must and will continue to be protected and strengthened under the progressive strategies of this legisla- tion, we can no longer ignore the potentially harmful problems which have been inadvert- ently created by our existing ”dolphin-safe” policies. The Panama Declaration, in the form of H.R. 2823, should be codified into law, in order to ensure that we manage our marine resources to protect all species, in a sound and science-based manner. We must reject efforts, however well-intended, to reinforce the status quo, and move swiftly to enact the pro- visions of this legislation. H.R. 2823, which I have cosponsored along with a great number of my colleagues from both sides of the aisle, is the vehicle to achieve this, and I would urge all my colleagues to lend their support to this progressive measure. This is more than sound ocean resources management. It is a blueprint for how we should proceed on future environmental strat- egy matters. This is an opportunity for us to move beyond the outdated ”single species” approach of years past, and embrace more comprehensive, inclusive, and effective multi- species conservation management style. We have to be able to see the whole picture, and assemble our strategies accordingly. The in- creased loss of other marine life and sensitive species to ”bycatch” under existing law has to date been largely overlooked, and is a loom- ing biological threat which certainly merits the same levels of concern and proper scientific attention as has our dolphin population. These unintended consequences are indeed troubling, and will be comprehensively ad- dressed by the Panama Declaration and H.R. 2823. We have created the technology and the incentives to keep dolphin mortality at in- significant and declining levels, which will be reinforced and locked in by H.R. 2823. How- ever, protection for the dolphin is not the ”end of the story” for conserving our ocean environ- ment. It is also not the end of our responsibil- ities. As we have done with other strategies, we must take a comprehensive approach to marine conservation as well, in order to iden- tify and understand these threats, and take ac- tion on them before they reach a crisis point. If we are truly interested in progressive, out- come-based environmental policy, guided by science, then we should embrace this biparti- san proposal, which is supported by the U.S. tuna fleet, the Clinton administration, and a number of major environmental groups. As we move into the next century, we should lead with an environmental strategy which reflects the level of scientific knowledge we have now, not what we knew 15 or 20 years ago. This bill keeps dolphins safe, and will help us avoid future problems with marine conservation. I urge all my colleagues to support H.R. 2823, the International Dolphin Conservation Act of 1996. [From the San Diego Union Tribune, June 7, 1996] SCIENTIST HAILED FOR SAVING DOLPHINS (By Steve La Rue) Dolphin deaths in tuna fishing nets have declined by about 98 percent since 1986 in the Eastern Pacific Ocean, and a San Diego ma- rine scientist will get a large share of the credit tonight when he receives San Diego Oceans Foundation’s highest award. The annual Roger Revelle Perpetual Award will be presented to James Joseph, director of the La Jolla-based Inter-American Tropi- cal Tuna Commission since 1969. With Joseph at the helm, the eight-nation commission has mounted a sustained effort to reduce drowning deaths of dolphins in tuna fishing nets. Its success could help unlock a decades-old environmental dispute and end a U.S. embargo on tuna caught by boats from Mexico and other countries that look for the popular fish under dolphin schools. Large tuna often swim under schools of dolphins in the Eastern Pacific Ocean for reasons that are not entirely understood. Fishing boats historically have encircled these surface-swimming schools with their nets, cinched the nets shut at the bottom, then reeled in their catch. Air-breathing dolphins drowned in vast numbers, because they were snared in the nets and dragged under water. An estimated 133,174 dolphins died this way in 1986, but the total fell to an estimated 3,274 last year, ac- cording to the commission. The decline has come through a variety of measures, including placement of observers on every tuna boat in the Eastern Pacific, newer equipment for some boats, better training of tuna crews and captains, special attention to individual boats with high-dol- phin kills and other measures. Joseph said the dolphin mortality level is now so low that it cannot affect the survival of any of the dolphin species. The dolphins increase at a rate of from 2.5 to 3.5 percent per year. The mortality for every (dolphin) stock as a percentage of every stock is less than one-tenth of 1 per- cent,” he said. In other words, a great deal more young dolphins are born and survive each year than die in tuna nets. There are about 9.5 million dolphins in Eastern Pacific populations in all, and none of their several species\u2014includ- ing common, spinner and spotted dolphins\u2014 is endangered. ”We continue to take the approach that we can bring it lower, and we continue to work in that direction. It is essential that we keep all of the countries involved in this fishery cooperating in our program,” Joseph said. Commission members include Costa Rica, France, Nicaragua, Panama, the United States; the Pacific island-nation of Vanuatu and Venezuela. Frank Powell, executive director of Hubbs- Sea World Research Institute and last year’s award winner, praised Joseph in a prepared statement as ”A first-class biologist who has devoted his entire career to the ocean. He has been instrumental in reducing the num- ber of dolphin fatalities related to tuna fish- ing.” The award\u2014a wood sculpture of a garibaldi fish that remains in Scripps Bank’s La Jolla office\u2014will be present tonight at the San Diego Oceans Foundation benefit dinner. The foundation is a volunteer organization committed to preserving San Diego’s bays and ocean waters. The Roger Revelle Perpet- ual Award is named for the late scientist who was founder of UCSD and director of the Scripps Institution of Oceanography. Lowering the dolphin kill also was a prel- ude to the introduction of proposed federal legislation to allow tuna caught by setting nets around dolphin schools to be sold in the United States as ”dolphin-safe”\u2014but only if the commission’s on-board observers certify that no dolphins were killed. Under current law, no tuna can be sold as ”dolphin-safe” is this country if they are caught by setting nets around dolphin schools. The issue also has split environmental groups. Greenpeace, the Center for Marine Conservation, the Environmental Defense Fund, and the National Wildlife Federation support the proposed law. The Earth Island Institute, the Sierra Club, the Human Soci- ety of the United States, and the American Society for the Prevention of Cruelty to Ani- mals oppose it. Because of the current law and other fac- tors, the U.S. tuna fishing fleet, which once numbered 110 vessels and was prominent in San Diego, has shrunk to 40 vessels operat- ing in the Western Pacific and 10 in the East- ern Pacific. The Earth Island Institute said in a state- ment that the legislation would allow ”For- eign tuna stained by the blood of dolphins to be sold on U.S. supermarket shelves” and allow ”chasing, harassing, injuring, and en- circling dolphins as long as no dolphins were ‘observed’ being killed outright.” Mr. MILLER of California. Mr. Chair- man, I have no further requests for time, and I yield back the balance of my time. Mr. SAXTON. Mr. Chairman, I have no further requests for time, and I yield back the balance of my time. The CHAIRMAN. All time for general debate has expired. Pursuant to the rule, the amendment in the nature of a substitute printed in the CONGRESSIONAL RECORD as No. 1 is considered as an original bill for the purpose of amendment and is consid- ered read. The text of the amendment in the na- ture of a substitute is as follows: H.R. 2823 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; REFERENCES. (a) SHORT TITLE.\u2014This Act may be cited as the ”International Dolphin Conservation Program Act”. (b) REFERENCES TO MARINE MAMMAL PRO- TECTION ACT.\u2014Except as otherwise expressly provided, whenever in this Act an amend- ment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be con- sidered to be made to a section or other pro- vision of the Marine Mammal Protection Act of 1972 (16 U.S.C. 1361 et seq.). SEC. 2. PURPOSE AND FINDINGS. (a) PURPOSE.\u2014The purposes of this Act are\u2014 (1) to give effect to the Declaration of Pan- ama, signed October 4, 1995, by the Govern- ments of Belize, Colombia, Costa Rica, Ecua- dor, France, Honduras, Mexico, Panama, Spain, the United States of America, Vanuatu, and Venezuela, including the es- tablishment of the International Dolphin Conservation Program, relating to the pro- tection of dolphins and other species, and the conservation and management of tuna in the eastern tropical Pacific Ocean; (2) to recognize that nations fishing for tuna in the eastern tropical Pacific Ocean have achieved significant reductions in dol- phin mortality associated with that fishery; and (3) to eliminate the ban on imports of tuna from those nations that are in compliance with the International Dolphin Conservation Program. (b) FINDINGS.\u2014The Congress finds the fol- lowing: (1) The nations that fish for tuna in the eastern tropical Pacific Ocean have achieved CONGRESSIONAL RECORD \u2014 HOUSE H9439July 31, 1996 significant reductions in dolphin mortalities associated with the purse seine fishery from hundreds of thousands annually to fewer than 5,000 annually. (2) The provisions of the Marine Mammal Protection Act of 1972 that impose a ban on imports from nations that fish for tuna in the eastern tropical Pacific Ocean have served as an incentive to reduce dolphin mortalities. (3) Tuna canners and processors of the United States have led the canning and proc- essing industry in promoting a dolphin-safe tuna market. (4) 12 signatory nations to the Declaration of Panama, including the United States, agreed under that Declaration to require that the total annual dolphin mortality in the purse seine fishery for yellowfin tuna in the eastern tropical Pacific Ocean not exceed 5,000, with a commitment and objective to progressively reduce dolphin mortality to a level approaching zero through the setting of annual limits. SEC. 3. DEFINITIONS. Section 3 (16 U.S.C. 1362) is amended by adding at the end the following new para- graphs: ”(28) The term ‘International Dolphin Con- servation Program’ means the international program established by the agreement signed in La Jolla, California, in June 1992, as for- malized, modified, and enhanced in accord- ance with the Declaration of Panama, that requires\u2014 ”(A) that the total annual dolphin mortal- ity in the purse seine fishery for yellowfin tuna in the eastern tropical Pacific Ocean not exceed 5,000, with the commitment and objective to progressively reduce dolphin mortality to levels approaching zero through the setting of annual limits; ”(B) the establishment of a per-stock per- year mortality limit for dolphins, for each year through the year 2000, of between 0.2 percent and 0.1 percent of the minimum pop- ulation estimate; ”(C) beginning with the year 2001, that the per-stock per-year mortality of dolphin not exceed 0.1 percent of the minimum popu- lation estimate; ”(D) that if the mortality limit set forth in subparagraph (A) is exceeded, all sets on dol- phins shall cease for the fishing year con- cerned; ”(E) that if the mortality limit set forth in subparagraph (B) or (C) is exceeded sets on such stock and any mixed schools containing members of such stock shall cease for that fishing year; ”(F) in the case of subparagraph (B), to conduct a scientific review and assessment in 1998 of progress toward the year 2000 ob- jective and consider recommendations as ap- propriate; and ”(G) in the case of subparagraph (C), to conduct a scientific review and assessment regarding that stock or those stocks and consider further recommendations; ”(H) the establishment of a per-vessel max- imum annual dolphin mortality limit con- sistent with the established per-year mortal- ity caps; and ”(I) the provision of a system of incentives to vessel captains to continue to reduce dol- phin mortality, with the goal of eliminating dolphin mortality. ”(29) The term ‘Declaration of Panama’ means the declaration signed in Panama City, Republic of Panama, on October 4, 1995.”. SEC. 4. AMENDMENTS TO TITLE I. (a) AUTHORIZATION FOR INCIDENTAL TAK- ING.\u2014Section 101(a)(2) (16 U.S.C. 1371(a)(2)) is amended as follows: (1) By inserting after the first sentence ”Such authorizations may also be granted under title III with respect to the yellowfin tuna fishery of the eastern tropical Pacific Ocean, subject to regulations prescribed under that title by the Secretary without re- gard to section 103.”. (2) By striking the semicolon in the second sentence and all that follows through ”prac- ticable”. (b) DOCUMENTARY EVIDENCE.\u2014Section 101(a) (16 U.S.C. 1371(a)) is amended by strik- ing so much of paragraph (2) as follows sub- paragraph (A) and as precedes subparagraph (C) and inserting: ”(B) in the case of yellowfin tuna har- vested with purse seine nets in the eastern tropical Pacific Ocean, and products there- from, to be exported to the United States, shall require that the government of the ex- porting nation provide documentary evi- dence that\u2014 ”(i) the tuna or products therefrom were not banned from importation under this paragraph before the effective date of the International Dolphin Conservation Program Act; ”(ii) the tuna or products therefrom were harvested after the effective date of the International Dolphin Conservation Program Act by vessels of a nation which participates in the International Dolphin Conservation Program, such harvesting nation is either a member of the Inter-American Tropical Tuna Commission or has initiated (and with- in 6 months thereafter completed) all steps (in accordance with article V, paragraph 3 of the Convention establishing the Inter-Amer- ican Tropical Tuna Commission) necessary to become a member of that organization; ”(iii) such nation is meeting the obliga- tions of the International Dolphin Conserva- tion Program and the obligations of member- ship in the Inter-American Tropical Tuna Commission, including all financial obliga- tions; ”(iv) the total dolphin mortality permitted under the International Dolphin Conserva- tion Program will not exceed 5,000 in 1996, or in any year thereafter, consistent with the commitment and objective of progressively reducing dolphin mortality to levels ap- proaching zero through the setting of annual limits and the goal of eliminating dolphin mortality; and ”(v) the tuna or products therefrom were harvested after the effective date of the International Dolphin Conservation Program Act by vessels of a nation which participates in the International Dolphin Conservation Program, and such harvesting nation has not vetoed the participation by any other nation in such Program.”. (c) ACCEPTANCE OF EVIDENCE COVERAGE.\u2014 Section 101 (16 U.S.C. 1371) is amended by adding at the end the following new sub- sections: ”(d) ACCEPTANCE OF DOCUMENTARY EVI- DENCE.\u2014The Secretary shall not accept docu- mentary evidence referred to in section 101(a)(2)(B) as satisfactory proof for purposes of section 101(a)(2) if\u2014 ”(1) the government of the harvesting na- tion does not provide directly or authorize the Inter-American Tropical Tuna Commis- sion to release complete and accurate infor- mation to the Secretary to allow a deter- mination of compliance with the Inter- national Dolphin Conservation Program; ”(2) the government of the harvesting na- tion does not provide directly or authorize the Inter-American Tropical Tuna Commis- sion to release complete and accurate infor- mation to the Secretary in a timely manner for the purposes of tracking and verifying compliance with the minimum requirements established by the Secretary in regulations promulgated under subsection (f) of the Dol- phin Protection Consumer Information Act (16 U.S.C. 1385(f)); or ”(3) after taking into consideration this in- formation, findings of the Inter-American Tropical Tuna Commission, and any other relevant information, including information that a nation is consistently failing to take enforcement actions on violations which di- minish the effectiveness of the International Dolphin Conservation Program, the Sec- retary, in consultation with the Secretary of State, finds that the harvesting nation is not in compliance with the International Dol- phin Conservation Program. ”(e) EXEMPTION.\u2014The provisions of this Act shall not apply to a citizen of the United States who incidentally takes any marine mammal during fishing operations outside the United States exclusive economic zone (as defined in section 3(6) of the Magnuson Fishery Conservation and Management Act (16 U.S.C. 1802(6))) when employed on a for- eign fishing vessel of a harvesting nation which is in compliance with the Inter- national Dolphin Conservation Program.”. (d) ANNUAL PERMITS.\u2014Section 104(h) is amended to read as follows: ”(h) ANNUAL PERMITS.\u2014(1) Consistent with the regulations prescribed pursuant to sec- tion 103 and the requirements of section 101, the Secretary may issue an annual permit to a United States vessel for the taking of such marine mammals, and shall issue regula- tions to cover the use of any such annual permits. ”(2) Annual permits described in paragraph (1) for the incidental taking of marine mam- mals in the course of commercial purse seine fishing for yellowfin tuna in the eastern tropical Pacific Ocean shall be governed by section 304, subject to the regulations issued pursuant to section 302.”. (e) REVISIONS AND FUNDING SOURCES.\u2014Sec- tion 108(a)(2) (16 U.S.C. 1378(a)(2)) is amended as follows: (1) By striking ”and” at the end of sub- paragraph (A). (2) By adding at the end the following: ”(C) discussions to expeditiously negotiate revisions to the Convention for the Estab- lishment of an Inter-American Tropical Tuna Commission (1 UST 230, TIAS 2044) which will incorporate conservation and management provisions agreed to by the na- tions which have signed the Declaration of Panama; ”(D) a revised schedule of annual contribu- tions to the expenses of the Inter-American Tropical Tuna Commission that is equitable to participating nations; and ”(E) discussions with those countries par- ticipating or likely to participate in the International Dolphin Conservation Pro- gram, to identify alternative sources of funds to ensure that needed research and other measures benefiting effective protec- tion of dolphins, other marine species, and the marine ecosystem;”. (f) REPEAL OF NAS REVIEW.\u2014Section 110 (16 U.S.C. 1380) is amended as follows: (1) By redesignating subsection (a)(1) as subsection (a). (2) By striking subsection (a)(2). (g) LABELING OF TUNA PRODUCTS.\u2014Para- graph (1) of section 901(d) of the Dolphin Pro- tection Consumer Information Act (16 U.S.C. 1385(d)(1)) is amended to read as follows: ”(1) It is a violation of section 5 of the Fed- eral Trade Commission Act for any producer, importer, exporter, distributor, or seller of any tuna product that is exported from or of- fered for sale in the United States to include on the label of that product the term ‘Dol- phin Safe’ or any other term or symbol that falsely claims or suggests that the tuna con- tained in the product was harvested using a method of fishing that is not harmful to dol- phins if the product contains any of the fol- lowing: ”(A) Tuna harvested on the high seas by a vessel engaged in driftnet fishing. CONGRESSIONAL RECORD \u2014 HOUSEH9440 July 31, 1996 ”(B) Tuna harvested in the eastern tropical Pacific Ocean by a vessel using purse seine nets unless the tuna is considered dolphin safe under paragraph (2). ”(C) Tuna harvested outside the eastern tropical Pacific Ocean by a vessel using purse seine nets unless the tuna is consid- ered dolphin safe under paragraph (3). ”(D) Tuna harvested by a vessel engaged in any fishery identified by the Secretary pur- suant to paragraph (4) as having a regular and significant incidental mortality of ma- rine mammals.”. (h) DOLPHIN SAFE TUNA.\u2014(1) Paragraph (2) of section 901(d) of the Dolphin Protection Consumer Information Act (16 U.S.C. 1385(d)(2)) is amended to read as follows: ”(2)(A) For purposes of paragraph (1)(B), a tuna product that contains tuna harvested in the eastern tropical Pacific Ocean by a ves- sel using purse seine nets is dolphin safe if the vessel is of a type and size that the Sec- retary has determined, consistent with the International Dolphin Conservation Pro- gram, is not capable of deploying its purse seine nets on or to encircle dolphins, or if the product meets the requirements of sub- paragraph (B). ”(B) For purposes of paragraph (1)(B), a tuna product that contains tuna harvested in the eastern tropical Pacific Ocean by a ves- sel using purse seine nets is dolphin safe if the product is accompanied by a written statement executed by the captain of the vessel which harvested the tuna certifying that no dolphins were killed during the sets in which the tuna were caught and the prod- uct is accompanied by a written statement executed by\u2014 ”(i) the Secretary or the Secretary’s des- ignee; ”(ii) a representative of the Inter-Amer- ican Tropical Tuna Commission; or ”(iii) an authorized representative of a par- ticipating nation whose national program meets the requirements of the International Dolphin Conservation Program, which states that there was an observer ap- proved by the International Dolphin Con- servation Program on board the vessel dur- ing the entire trip and documents that no dolphins were killed during the sets in which the tuna concerned were caught. ”(C) The statements referred to in clauses (i), (ii), and (iii) of subparagraph (B) shall be valid only if they are endorsed in writing by each exporter, importer, and processor of the product, and if such statements and endorse- ments comply with regulations promulgated by the Secretary which would provide for the verification of tuna products as dolphin safe.”. (2) Subsection (d) of section 901 of the Dol- phin Protection Consumer Information Act (16 U.S.C. 1385(d)) is amended by adding the following new paragraphs at the end thereof: ”(3) For purposes of paragraph (1)(C), tuna or a tuna product that contains tuna har- vested outside the eastern tropical Pacific Ocean by a vessel using purse seine nets is dolphin safe if\u2014 ”(A) it is accompanied by a written state- ment executed by the captain of the vessel certifying that no purse seine net was inten- tionally deployed on or to encircle dolphins during the particular voyage on which the tuna was harvested; or ”(B) in any fishery in which the Secretary has determined that a regular and signifi- cant association occurs between marine mammals and tuna, it is accompanied by a written statement executed by the captain of the vessel and an observer, certifying that no purse seine net was intentionally deployed on or to encircle marine mammals during the particular voyage on which the tuna was harvested. ”(4) For purposes of paragraph (1)(D), tuna or a tuna product that contains tuna har- vested in a fishery identified by the Sec- retary as having a regular and significant in- cidental mortality or serious injury of ma- rine mammals is dolphin safe if it is accom- panied by a written statement executed by the captain of the vessel and, where deter- mined to be practicable by the Secretary, an observer participating in a national or inter- national program acceptable to the Sec- retary certifying that no marine mammals were killed in the course of the fishing oper- ation or operations in which the tuna were caught. ”(5) No tuna product may be labeled with any reference to dolphins, porpoises, or ma- rine mammals, unless such product is la- beled as dolphin safe in accordance with this subsection.”. (i) TRACKING AND VERIFICATION.\u2014Sub- section (f) of section 901 of the Dolphin Pro- tection Consumer Information Act (16 U.S.C. 1385(f)) is amended to read as follows: ”(f) TRACKING AND VERIFICATION.\u2014The Sec- retary, in consultation with the Secretary of the Treasury, shall issue regulations to im- plement subsection (d) not later than 3 months after the date of enactment of the International Dolphin Conservation Program Act. In the development of these regulations, the Secretary shall establish appropriate procedures for ensuring the confidentiality of proprietary information the submission of which is voluntary or mandatory. Such regu- lations shall, consistent with international efforts and in coordination with the Inter- American Tropical Tuna Commission, estab- lish a domestic and international tracking and verification program that provides for the effective tracking of tuna labeled under subsection (d), including but not limited to each of the following: ”(1) Specific regulations and provisions ad- dressing the use of weight calculation for purposes of tracking tuna caught, landed, processed, and exported. ”(2) Additional measures to enhance ob- server coverage if necessary. ”(3) Well location and procedures for mon- itoring, certifying, and sealing holds above and below deck or other equally effective methods of tracking and verifying tuna la- beled under subsection (d). ”(4) Reporting receipt of and database stor- age of radio and facsimile transmittals from fishing vessels containing information relat- ed to the tracking and verification of tuna, and the definition of sets. ”(5) Shore-based verification and tracking throughout the transshipment and canning process by means of Inter-American Tropical Tuna Commission trip records or otherwise. ”(6) Provisions for annual audits and spot checks for caught, landed, and processed tuna products labeled in accordance with subsection (d). ”(7) The provision of timely access to data required under this subsection by the Sec- retary from harvesting nations to undertake the actions required in paragraph (6) of this subsection. The Secretary may make such adjustments as may be appropriate to the regulations promulgated under this subsection to imple- ment an international tracking and verifica- tion program that meets or exceeds the min- imum requirements established by the Sec- retary under this subsection.”. SEC. 5. AMENDMENTS TO TITLE III. (a) HEADING.\u2014The heading of title III is amended to read as follows: ”TITLE III\u2014INTERNATIONAL DOLPHIN CONSERVATION PROGRAM”. (b) FINDINGS.\u2014Section 301 (16 U.S.C. 1411) is amended as follows: (1) In subsection (a), by amending para- graph (4) to read as follows: ”(4) Nations harvesting yellowfin tuna in the eastern tropical Pacific Ocean have dem- onstrated their willingness to participate in appropriate multilateral agreements to re- duce, with the goal of eliminating, dolphin mortality in that fishery. Recognition of the International Dolphin Conservation Program will assure that the existing trend of reduced dolphin mortality continues; that individual stocks of dolphins are adequately protected; and that the goal of eliminating all dolphin mortality continues to be a priority.”. (2) In subsection (b), by amending para- graphs (2) and (3) to read as follows: ”(2) support the International Dolphin Conservation Program and efforts within the Program to reduce, with the goal of elimi- nating, the mortality referred to in para- graph (1); ”(3) ensure that the market of the United States does not act as an incentive to the harvest of tuna caught with driftnets or caught by purse seine vessels in the eastern tropical Pacific Ocean that are not operating in compliance with the International Dol- phin Conservation Program;”. (c) INTERNATIONAL DOLPHIN CONSERVATION PROGRAM.\u2014Section 302 (16 U.S.C. 1412) is amended to read as follows: ”SEC. 302. AUTHORITY OF THE SECRETARY. ”(a) REGULATIONS TO IMPLEMENT PROGRAM REGULATIONS.\u2014(1) The Secretary shall issue regulations to implement the International Dolphin Conservation Program. ”(2)(A) Not later than 3 months after the date of enactment of this section, the Sec- retary shall issue regulations to authorize and govern the incidental taking of marine mammals in the eastern tropical Pacific Ocean, including any species of marine mam- mal designated as depleted under this Act but not listed as endangered or threatened under the Endangered Species Act of 1973 (16 U.S.C. 1531 et seq.), by vessels of the United States participating in the International Dolphin Conservation Program. ”(B) Regulations issued under this section shall include provisions\u2014 ”(i) requiring observers on each vessel; ”(ii) requiring use of the backdown proce- dure or other procedures equally or more ef- fective in avoiding mortality of marine mammals in fishing operations; ”(iii) prohibiting intentional deployment of nets on, or encirclement of, dolphins in violation of the International Dolphin Con- servation Program; ”(iv) requiring the use of special equip- ment, including dolphin safety panels in nets, monitoring devices as identified by the International Dolphin Conservation Pro- gram, as practicable, to detect unsafe fishing conditions before nets are deployed by a tuna vessel, operable rafts, speedboats with tow- ing bridles, floodlights in operable condition, and diving masks and snorkels; ”(v) ensuring that the backdown procedure during the deployment of nets on, or encir- clement of, dolphins is completed and rolling of the net to sack up has begun no later than 30 minutes after sundown; ”(vi) banning the use of explosive devices in all purse seine operations; ”(vii) establishing per vessel maximum an- nual dolphin mortality limits, total dolphin mortality limits and per-stock per-year mor- tality limits, in accordance with the Inter- national Dolphin Conservation Program; ”(viii) preventing the intentional deploy- ment of nets on, or encirclement of, dolphins after reaching either the vessel maximum annual dolphin mortality limits, total dol- phin mortality limits, or per-stock per-year mortality limits; ”(ix) preventing the fishing on dolphins by a vessel without an assigned vessel dolphin mortality limit; CONGRESSIONAL RECORD \u2014 HOUSE H9441July 31, 1996 ”(x) allowing for the authorization and conduct of experimental fishing operations, under such terms and conditions as the Sec- retary may prescribe, for the purpose of test- ing proposed improvements in fishing tech- niques and equipment (including new tech- nology for detecting unsafe fishing condi- tions before nets are deployed by a tuna ves- sel) that may reduce or eliminate dolphin mortality or do not require the encirclement of dolphins in the course of commercial yel- lowfin tuna fishing; ”(xi) authorizing fishing within the area covered by the International Dolphin Con- servation Program by vessels of the United States without the use of special equipment or nets if the vessel takes an observer and does not intentionally deploy nets on, or en- circle, dolphins, under such terms and condi- tions as the Secretary may prescribe; and ”(xii) containing such other restrictions and requirements as the Secretary deter- mines are necessary to implement the Inter- national Dolphin Conservation Program with respect to vessels of the United States. ”(C) The Secretary may make such adjust- ments as may be appropriate to the require- ments of subparagraph (B) that pertain to fishing gear, vessel equipment, and fishing practices to the extent the adjustments are consistent with the International Dolphin Conservation Program. ”(b) CONSULTATION.\u2014In developing regula- tions under this section, the Secretary shall consult with the Secretary of State, the Ma- rine Mammal Commission and the United States Commissioners to the Inter-American Tropical Tuna Commission appointed under section 3 of the Tuna Conventions Act of 1950 (16 U.S.C. 952). ”(c) EMERGENCY REGULATIONS.\u2014(1) If the Secretary determines, on the basis of the best scientific information available (includ- ing that obtained under the International Dolphin Conservation Program) that the in- cidental mortality and serious injury of ma- rine mammals authorized under this title is having, or is likely to have, a significant ad- verse effect on a marine mammal stock or species, the Secretary shall take actions as follows\u2014 ”(A) notify the Inter-American Tropical Tuna Commission of the Secretary’s find- ings, along with recommendations to the Commission as to actions necessary to re- duce incidental mortality and serious injury and mitigate such adverse impact; and ”(B) prescribe emergency regulations to reduce incidental mortality and serious in- jury and mitigate such adverse impact. ”(2) Prior to taking action under para- graph (1) (A) or (B), the Secretary shall con- sult with the Secretary of State, the Marine Mammal Commission, and the United States Commissioners to the Inter-American Tropi- cal Tuna Commission. ”(3) Emergency regulations prescribed under this subsection\u2014 ”(A) shall be published in the Federal Reg- ister, together with an explanation thereof; and ”(B) shall remain in effect for the duration of the applicable fishing year; and The Secretary may terminate such emer- gency regulations at a date earlier than that required by subparagraph (B) by publication in the Federal Register of a notice of termi- nation, if the Secretary determines that the reasons for the emergency action no longer exist. ”(4) If the Secretary finds that the inciden- tal mortality and serious injury of marine mammals in the yellowfin tuna fishery in the eastern tropical Pacific Ocean is con- tinuing to have a significant adverse impact on a stock or species, the Secretary may ex- tend the emergency regulations for such ad- ditional periods as may be necessary. ”(d) RESEARCH.\u2014The Secretary shall, in cooperation with the nations participating in the International Dolphin Conservation Program and with the Inter-American Tropi- cal Tuna Commission, undertake or support appropriate scientific research to further the goals of the International Dolphin Conserva- tion Program. Such research may include but shall not be limited to any of the follow- ing: ”(1) Devising cost-effective fishing meth- ods and gear so as to reduce, with the goal of eliminating, the incidental mortality and se- rious injury of marine mammals in connec- tion with commercial purse seine fishing in the eastern tropical Pacific Ocean. ”(2) Developing cost-effective methods of fishing for mature yellowfin tuna without deployment of nets on, or encirclement of, dolphins or other marine mammals. ”(3) Carrying out stock assessments for those marine mammal species and marine mammal stocks taken in the purse seine fishery for yellowfin tuna in the eastern tropical Pacific Ocean, including species or stocks not within waters under the jurisdic- tion of the United States. ”(4) Studying the effects of chase and en- circlement on the health and biology of dol- phin and individual dolphin populations inci- dentally taken in the course of purse seine fishing for yellowfin tuna in the eastern tropical Pacific Ocean. There are authorized to be appropriated to the Department of Commerce $1,000,000 to be used by the Sec- retary, acting through the National Marine Fisheries Service, to carry out this para- graph. Upon completion of the study, the Secretary shall submit a report containing the results of the study, together with rec- ommendations, to the Congress and to the Inter-American Tropical Tuna Commission. ”(5) Determining the extent to which the incidental take of nontarget species, includ- ing juvenile tuna, occurs in the course of purse seine fishing for yellowfin tuna in the eastern tropical Pacific Ocean, the geo- graphic location of the incidental take, and the impact of that incidental take on tuna stocks, and nontarget species. The Secretary shall include a description of the annual results of research carried out under this subsection in the report required under section 303.”. (d) REPORTS.\u2014Section 303 (16 U.S.C. 1414) is amended to read as follows: ”SEC. 303. REPORTS BY THE SECRETARY. ”Notwithstanding section 103(f), the Sec- retary shall submit an annual report to the Congress which includes each of the follow- ing: ”(1) The results of research conducted pur- suant to section 302. ”(2) A description of the status and trends of stocks of tuna. ”(3) A description of the efforts to assess, avoid, reduce, and minimize the bycatch of juvenile yellowfin tuna and other nontarget species. ”(4) A description of the activities of the International Dolphin Conservation Program and of the efforts of the United States in support of the Program’s goals and objec- tives, including the protection of dolphin populations in the eastern tropical Pacific Ocean, and an assessment of the effective- ness of the Program. ”(5) Actions taken by the Secretary under subsections (a)(2)(B) and (d) of section 101. ”(6) Copies of any relevant resolutions and decisions of the Inter-American Tropical Tuna Commission, and any regulations pro- mulgated by the Secretary under this title. ”(7) Any other information deemed rel- evant by the Secretary.”. (e) PERMITS.\u2014Section 304 (16 U.S.C. 1416) is amended to read as follows: ”SEC. 304. PERMITS. ”(a) IN GENERAL.\u2014(1) Consistent with sec- tion 302, the Secretary is authorized to issue a permit to a vessel of the United States au- thorizing participation in the International Dolphin Conservation Program and may re- quire a permit for the person actually in charge of and controlling the fishing oper- ation of the vessel. The Secretary shall pre- scribe such procedures as are necessary to carry out this subsection, including, but not limited to, requiring the submission of\u2014 ”(A) the name and official number or other identification of each fishing vessel for which a permit is sought, together with the name and address of the owner thereof; and ”(B) the tonnage, hold capacity, speed, processing equipment, and type and quantity of gear, including an inventory of special equipment required under section 302, with respect to each vessel. ”(2) The Secretary is authorized to charge a fee for issuing a permit under this section. The level of fees charged under this para- graph may not exceed the administrative cost incurred in granting an authorization and issuing a permit. Fees collected under this paragraph shall be available, subject to appropriations, to the Under Secretary of Commerce for Oceans and Atmosphere for expenses incurred in issuing permits under this section. ”(3) After the effective date of the Inter- national Dolphin Conservation Program Act, no vessel of the United States shall operate in the yellowfin tuna fishery in the eastern tropical Pacific Ocean without a valid per- mit issued under this section. ”(b) PERMIT SANCTIONS.\u2014(1) In any case in which\u2014 ”(A) a vessel for which a permit has been issued under this section has been used in the commission of an act prohibited under section 305; ”(B) the owner or operator of any such ves- sel or any other person who has applied for or been issued a permit under this section has acted in violation of section 305; or ”(C) any civil penalty or criminal fine im- posed on a vessel, owner or operator of a ves- sel, or other person who has applied for or been issued a permit under this section has not been paid or is overdue, the Secretary may\u2014 ”(i) revoke any permit with respect to such vessel, with or without prejudice to the issu- ance of subsequent permits; ”(ii) suspend such permit for a period of time considered by the Secretary to be ap- propriate; ”(iii) deny such permit; or ”(iv) impose additional conditions or re- strictions on any permit issued to, or applied for by, any such vessel or person under this section. ”(2) In imposing a sanction under this sub- section, the Secretary shall take into ac- count\u2014 ”(A) the nature, circumstances, extent, and gravity of the prohibited acts for which the sanction is imposed; and ”(B) with respect to the violator, the de- gree of culpability, any history of prior of- fenses, and other such matters as justice re- quires. ”(3) Transfer of ownership of a vessel, by sale or otherwise, shall not extinguish any permit sanction that is in effect or is pend- ing at the time of transfer of ownership. Be- fore executing the transfer of ownership of a vessel, by sale or otherwise, the owner shall disclose in writing to the prospective trans- feree the existence of any permit sanction that will be in effect or pending with respect to the vessel at the time of transfer. ”(4) In the case of any permit that is sus- pended for the failure to pay a civil penalty CONGRESSIONAL RECORD \u2014 HOUSEH9442 July 31, 1996 or criminal fine, the Secretary shall rein- state the permit upon payment of the pen- alty or fine and interest thereon at the pre- vailing rate. ”(5) No sanctions shall be imposed under this section unless there has been a prior op- portunity for a hearing on the facts underly- ing the violation for which the sanction is imposed, either in conjunction with a civil penalty proceeding under this title or other- wise.”. (f) PROHIBITIONS.\u2014Section 305 is repealed and section 307 (16 U.S.C. 1417) is redesig- nated as section 305, and amended as follows: (1) In subsection (a): (A) By amending paragraph (1) to read as follows: ”(1) for any person to sell, purchase, offer for sale, transport, or ship, in the United States, any tuna or tuna product unless the tuna or tuna product is either dolphin safe or has been harvested in compliance with the International Dolphin Conservation Program by a country that is a member of the Inter- American Tropical Tuna Commission or has initiated steps, in accordance with Article V, paragraph 3 of the Convention establishing the Inter-American Tropical Tuna Commis- sion, to become a member of that organiza- tion;”. (B) By amending paragraph (2) to read as follows: ”(2) except in accordance with this title and regulations issued pursuant to this title as provided for in subsection 101(e), for any person or vessel subject to the jurisdiction of the United States intentionally to set a purse seine net on or to encircle any marine mammal in the course of tuna fishing oper- ations in the eastern tropical Pacific Ocean; or”. (C) By amending paragraph (3) to read as follows: ”(3) for any person to import any yellowfin tuna or yellowfin tuna product or any other fish or fish product in violation of a ban on importation imposed under section 101(a)(2);”. (2) In subsection (b)(2), by inserting ”(a)(5) and” before ”(a)(6)”. (3) By striking subsection (d). (g) REPEAL.\u2014Section 306 is repealed and section 308 (16 U.S.C. 1418) is redesignated as section 306, and amended by striking ”303” and inserting in lieu thereof ”302(d)”. (h) CLERICAL AMENDMENTS.\u2014The table of contents in the first section of the Marine Mammal Protection Act of 1972 is amended by striking the items relating to title III and inserting in lieu thereof the following: ”TITLE III\u2014INTERNATIONAL DOLPHIN CONSERVATION PROGRAM ”Sec. 301. Findings and policy. ”Sec. 302. Authority of the Secretary. ”Sec. 303. Reports by the Secretary. ”Sec. 304. Permits. ”Sec. 305. Prohibitions. ”Sec. 306. Authorization of appropriations.”. SEC. 6. AMENDMENTS TO THE TUNA CONVEN- TIONS ACT. (a) MEMBERSHIP.\u2014Section 3(c) of the Tuna Conventions Act of 1950 (16 U.S.C. 952(c)) is amended to read as follows: ”(c) at least one shall be either the Direc- tor, or an appropriate regional director, of the National Marine Fisheries Service; and”. (b) ADVISORY COMMITTEE AND SCIENTIFIC ADVISORY SUBCOMMITTEE.\u2014Section 4 of the Tuna Conventions Act of 1950 (16 U.S.C. 953) is amended to read as follows: ”SEC. 4. GENERAL ADVISORY COMMITTEE AND SCIENTIFIC ADVISORY SUBCOMMIT- TEE. ”The Secretary, in consultation with the United States Commissioners, shall: ”(1) Appoint a General Advisory Commit- tee which shall be composed of not less than 5 nor more than 15 persons with balanced representation from the various groups par- ticipating in the fisheries included under the conventions, and from nongovernmental con- servation organizations. The General Advi- sory Committee shall be invited to have rep- resentatives attend all nonexecutive meet- ings of the United States sections and shall be given full opportunity to examine and to be heard on all proposed programs of inves- tigations, reports, recommendations, and regulations of the commission. The General Advisory Committee may attend all meet- ings of the international commissions to which they are invited by such commissions. ”(2) Appoint a Scientific Advisory Sub- committee which shall be composed of not less than 5 nor more than 15 qualified sci- entists with balanced representation from the public and private sectors, including nongovernmental conservation organiza- tions. The Scientific Advisory Subcommittee shall advise the General Advisory Commit- tee and the Commissioners on matters in- cluding the conservation of ecosystems; the sustainable uses of living marine resources related to the tuna fishery in the eastern Pa- cific Ocean; and the long-term conservation and management of stocks of living marine resources in the eastern tropical Pacific Ocean. In addition, the Scientific Advisory Subcommittee shall, as requested by the General Advisory Committee, the United States Commissioners or the Secretary, per- form functions and provide assistance re- quired by formal agreements entered into by the United States for this fishery, including the International Dolphin Conservation Pro- gram. These functions may include each of the following: ”(A) The review of data from the Program, including data received from the Inter-Amer- ican Tropical Tuna Commission. ”(B) Recommendations on research needs, including ecosystems, fishing practices, and gear technology research, including the de- velopment and use of selective, environ- mentally safe and cost-effective fishing gear, and on the coordination and facilitation of such research. ”(C) Recommendations concerning sci- entific reviews and assessments required under the Program and engaging, as appro- priate, in such reviews and assessments. ”(D) Consulting with other experts as needed. ”(E) Recommending measures to assure the regular and timely full exchange of data among the parties to the Program and each nation’s National Scientific Advisory Com- mittee (or equivalent). ”(3) Establish procedures to provide for ap- propriate public participation and public meetings and to provide for the confidential- ity of confidential business data. The Sci- entific Advisory Subcommittee shall be in- vited to have representatives attend all non- executive meetings of the United States sec- tions and the General Advisory Subcommit- tee and shall be given full opportunity to ex- amine and to be heard on all proposed pro- grams of scientific investigation, scientific reports, and scientific recommendations of the commission. Representatives of the Sci- entific Advisory Subcommittee may attend meetings of the Inter-American Tropical Tuna Commission in accordance with the rules of such Commission. ”(4) Fix the terms of office of the members of the General Advisory Committee and Sci- entific Advisory Subcommittee, who shall receive no compensation for their services as such members.”. SEC. 7. EQUITABLE FINANCIAL CONTRIBUTIONS. It is the sense of the Congress that each nation participating in the International Dolphin Conservation Program should con- tribute an equitable amount to the expenses of the Inter-American Tropical Tuna Com- mission. Such contributions shall take into account the number of vessels from that na- tion fishing for tuna in the eastern tropical Pacific Ocean, the consumption of tuna and tuna products from the eastern tropical Pa- cific Ocean and other relevant factors as de- termined by the Secretary. SEC. 8. EFFECTIVE DATE. This Act and the amendments made by this Act shall take effect upon certification by the Secretary of State to the Congress that a binding resolution of the Inter-Amer- ican Tropical Tuna Commission, or another legally binding instrument, establishing the International Dolphin Conservation Program has been adopted and is in effect. The CHAIRMAN. No other amend- ment shall be in order except a further amendment printed in House Report 104 708, which may be offered only by the gentleman from California [Mr. MILLER] or his designee, shall be con- sidered read, shall be debatable for 1 hour, equally divided and controlled by the proponent and an opponent, and shall not be subject to amendment. AMENDMENT OFFERED BY MR. STUDDS Mr. STUDDS. Mr. Chairman, I offer an amendment made in order under the rule. The CHAIRMAN. The Clerk will des- ignate the amendment. The text of the amendment is as fol- lows: Amendment offered by Mr. STUDDS: In sec- tion 901(d)(2)(B) of the Dolphin Protection Consumer Information Act (as proposed to be amended by section 4(h)(1) of the amendment in the nature of a substitute made in order as original text), insert ”, chased, harassed, injured, or encircled with nets” after ”killed” in each of the places it appears. The CHAIRMAN. Pursuant to House Resolution 489, the gentleman from Massachusetts [Mr. STUDDS] and a Member opposed each will control 30 minutes. The Chair recognizes the gentleman from Massachusetts [Mr. STUDDS]. Mr. STUDDS. Mr. Chairman, I yield myself such time as I may consume. (Mr. STUDDS asked and was given permission to revise and extend his re- marks.) Mr. STUDDS. Mr. Chairman, let me begin by stating most emphatically that I would very much prefer not to be standing here debating this issue or of- fering this amendment. I have very lit- tle doubt that by now every Member in this Chamber, and there must be at least six of them, and those who are watching, are thoroughly confused about how best to save dolphins. Ap- parently, so are the environmental groups, and, quite frankly, so am I. Nonetheless, I offer this amendment because the one portion of this debate that should not be confusing is the def- inition of the word ”safe,” notwith- standing the fact that people in this city have been always able to take short English words and euphemize the meaning out of them. When I grew up, safe meant secure from danger, harm or evil. That is what the dictionary says it means. Under this bill, safe would permit doing all kinds of things to dolphins, CONGRESSIONAL RECORD \u2014 HOUSE H9443July 31, 1996 including seriously injuring them, and as long as no one actually noticed it happening, they might even be able to kill them. This legislation would define as safe a process that stops dolphins from feeding, separates mothers from their calves, injures animals, and al- lows them to be chased for hours until they are unable to swim any longer. We can only hope that the Committee on the Judiciary does not get a hold of this reasoning the next time it takes up reform of the criminal code. For three of the four debates during which we have had strong bipartisan support for legislation protecting dol- phins from the extraordinary slaughter that occurred in this fishery, I had the honor of chairing the subcommittee of jurisdiction. We passed the law requir- ing truth in tuna labeling because American consumers, American voters, and American schoolchildren de- manded it. They made it clear that they did not want to endorse the sell- ing of a product whose harvesting caused any harm to dolphins. Since its enactment in 1972, the Marine Mammal Protection Act has prohibited any, quote, attempt to harass, hunt, capture or kill any marine mammal, unquote. Again, it is illegal under current law to harass, hunt, capture or kill any marine mammal. That language is in the law because we know that these ac- tivities are not safe from marine mam- mals. Those who support the labeling change in this bill, I am sure, would not allow whale-watching vessels in my district to harass whales and separate mothers from nursing calves and then market those cruises as safe for whales. I suspect they would not allow Mr. YOUNG’s oil companies to conduct exploratory drilling that disrupts the feeding behavior of whales and then call the oil whale-safe. Two years ago, some of the environ- mental groups that are supporting this bill blocked regulations allowing dol- phin-feeding cruises in Florida and in Texas because they were convinced that the harassment of dolphins was not safe. The double standard in this bill, put there for Mexico’s sake, violates in my judgment the integrity of everything we on both sides of this aisle have worked to achieve over the last 20 years. The amendment is simple. It did not get read but it would have taken less time to read it than to designate it. It simply adds after the word ”killed,” and I quote, ”chased, harassed, injured or encircled with nets.” You cannot do any of those things under our amend- ment and call it dolphin safe. The amendment leaves intact the provisions of the bill that lift the em- bargoes on tuna. It leaves intact the remainder of the international agree- ment. But it retains honest informa- tion for American consumers, and that is all it does. Not long ago we held a debate on this floor about truth in nutrition labeling. Right now there is a bipartisan effort under way in both Chambers to estab- lish simple labels on clothing and sporting goods that would inform con- sumers if those products were made by child labor. Labeling means something to consumers. It means trust. The American people know what the word ”safe” means. If we cannot be honest about the meaning, then we should probably get rid of the label. Perhaps we could call it ”good for Mex- ico,” or ”NAFTA-consistent,” or ”caught under international guide- lines,” but we should not call it safe for dolphins, because by any standard, semantic or otherwise, it is not. Let me once again remind my col- leagues that the amendment does not address the international agreement. it does not address the embargo. It sim- ply says that we retain the sanctity and the meaning of the label ”dolphin- safe” which has been so successful as it is now in current law, which says that if they want to use that label on im- ported tuna, they not only have to demonstrate that that tuna was caught in a way that did not kill dolphins but did not involve chasing, harassing, in- juring, or encircling with nets the aforementioned dolphins. Like the gentleman from Florida [Mr. GIBBONS], I too have communed with my own dolphins on this matter and, as I have in the past, I can assure my colleagues that in unequivocally dolphin ways they have made it very clear to me that they support this amendment. That is pretty tough. I know the gentleman from Alaska is going to suggest that these may be a regional dialect in question here, and that dolphins in other parts of the country may be saying something dif- ferent, but I rather doubt that. I am also prepared to stipulate, as suggested by the gentleman from New York, that the gentleman from Mary- land is a class act. I think I made that observation myself even before the gentleman from New York [Mr. BOEH- LERT] did. I have no doubt whatsoever about that. I wish there were more like him in this Chamber. b 1900 Mr. Chairman, I reserve the balance of my time. Mr. SAXTON. Mr. Chairman, I rise in opposition to the amendment. The CHAIRMAN. The gentleman from New Jersey [Mr. SAXTON] will control 30 minutes. The Chair recognizes the gentleman from New Jersey [Mr. SAXTON]. Mr. SAXTON. Mr. Chairman, I yield such time as he may consume to the gentleman from Alaska [Mr. YOUNG]. Mr. YOUNG of Alaska. Mr. Chair- man, I thank the gentleman for yield- ing me this time. Mr. Chairman, I usually agree with my esteemed colleague from Massachu- setts on fishery issues. He and I have worked together for 24 years and rarely do we disagree on the issues of fish- eries. I must oppose his amendment, though, because the Gilchrest bill im- plements the Panama Declaration, as discussed in general debate, which locks into place binding conservation management measures for dolphin and other marine life. This bill is supported, as has been said before, by five environmental or- ganizations, the American Tunaboat Owners, the National Fisheries Insti- tute, the Seafarers’ International Union, the California Federation of Labor, the United Industrial Workers, the American Sportfishing Association, and the Clinton administration, al- though that gives me some reservation. Mr. Chairman, H.R. 2823 recognizes the international voluntary compli- ance with the Inter-American Tropical Tuna Commission’s dolphin conserva- tion program, which has been in place for the past 4 years. This bill incor- porates provisions into U.S. law to con- tinue the international cooperation and compliance. Over the last couple of months, Mr. GILCHREST has worked to address the concerns of the opponents to H.R. 2823. However, the definition of dolphin-safe has kept the two sides from reaching an agreement. The amendment being offered by Mr. STUDDS was offered at subcommittee markup by Congressman FARR and was defeated. The Studds-Miller amend- ment will keep the current dolphin- safe definition which will continue to outlaw the use of fishing practices with the lowest bycatch, despite techno- logical breakthroughs which have re- duced dolphin mortality by 97 percent. The proponents of this amendment will tell you that by keeping the cur- rent dolphin-safe definition, it will pro- tect dolphins. However, the Studds- Miller amendment will not end the en- circlement of dolphins by foreign fish- ermen in the eastern tropical Pacific Ocean. Since the adoption of the em- bargo in 1992, the number of dolphin sets has not decreased. Approximately 50 percent of sets by foreign fleets are on dolphin schools despite the embar- go. The Studds-Miller amendment also promotes fishing practices which have a high bycatch of juvenile tuna, bill- fish, sea turtles and sharks. Mr. Chairman, H.R. 2823 promotes conservation and management meas- ures based on science. It does not pro- mote the protection of one species over the needs of other marine species. This legislation protects dolphins and other marine life. The Studds-Miller amendment, on the other hand, will jeopardize the progress made in reducing dolphin mor- talities in the eastern tropical Pacific Ocean and do nothing to protect other marine life. Finally, the amendment will negate all of the international co- operation and compliance envisioned in the Panama Declaration. Therefore, I ask my colleagues to vote against the Studds-Miller amend- ment. I think it will actually cut this bill. Mr. STUDDS. Mr. Chairman, I find it difficult to believe the gentleman from CONGRESSIONAL RECORD \u2014 HOUSEH9444 July 31, 1996 Alaska has been here for 24 years given his appearance, but we will have to take his word for it. Mr. Chairman, I yield 2 minutes to the distinguished gentlewoman from Oregon [Ms. FURSE]. Ms. FURSE. Mr. Chairman, I rise in strong support of the Studds amend- ment. This amendment does one thing, it protects the integrity of the ”dol- phin safe” label. Now, it is really very simple. The rest of the world would like to get into our market, they would like to sell their product under the label ”dolphin safe,” but without this amendment and under this bill, tuna fisheries could chase, harass, injure dolphins and still get the benefit of the ”dolphin safe” label. Now, maybe in this bill we should have a ”dolphin less-safe” label or a ”dolphin almost-safe” label, but if we want the consumers to rely on the ”dolphin safe” label, we must pass the Studds amendment because we simply do not know what the effects are of chasing and harassing these mammals. However, marine mammal biologists believe that the trauma that dolphins endure under this type of encirclement does lead to the diminishment of the dolphin populations. I would remind my colleagues that our first obligation is to the U.S. consumer, not, not to the Mexican Government. We cannot allow our do- mestic consumer protection laws and environmental laws to be held hostage. Please join me and the millions of Americans who want the opportunity to choose the type of tuna they are buying. They want to know that ”dol- phin safe” means ”dolphin safe.” Sup- port the Studds amendment. Make this bill significantly better. Mr. SAXTON. Mr. Chairman, I yield 2 minutes to the gentleman from Mary- land [Mr. CARDIN]. Mr. CARDIN. Mr. Chairman, first let me thank my colleague from New Jer- sey for yielding me this time and thank him for his leadership on this issue. Mr. Chairman, I rise in support of H.R. 2823 and against the Miller-Studds amendment. I first want to compliment my colleague from Maryland, Mr. GILCHREST, for his leadership on this legislation. He has done a great job in bringing this issue forward, which would implement the Panama Declara- tion by opening up the U.S. market to tuna caught in compliance with the Tuna Commission Program, which would reduce dolphin mortality, lessen the bycatch of other forms of marine life and sustain dolphin and fish popu- lations for the future. Mr. Chairman, people are most con- cerned with the practice of dolphin en- circlement by fishing vessels. The rate of dolphin mortality under the Panama Declaration has dramatically declined because of the declaration’s goals to strictly limit any deaths, provide tuna- boat crew training, and require inter- nationally trained observers on all tuna vessels. This bill requires that the annual mortality rate be further re- duced to less than a fraction of 1 per- cent of the dolphin population, leading to the elimination of dolphin mortali- ties altogether. The ”dolphin-safe” label is preserved because certified in- spectors aboard ship guarantee that no dolphins were killed. We should not forget that other methods of catching tuna kill other sea life. Tuna have been known to swim near logs and debris close to shorelines. Fishermen who cast their nets to catch these tuna don’t kill dolphins, but they do kill a huge bycatch of sharks, en- dangered sea turtles, and juvenile tuna whose survival is crucial to tuna pros- perity years from now. Because of the progress made through an international effort led by the United States, we have negotiated an agreement among all the countries that have fishing vessels in the eastern Pacific. Dolphin conservation gains have come as a result of more careful fishing and international cooperation, and we must continue with this progress by passing H.R. 2823. Mr. Chairman, I urge my colleagues to defeat this amendment that would compromise this bill. Let us pass H.R. 2823. It is in the interest of the environ- ment, and I urge my colleagues to sup- port the legislation. Mr. STUDDS. Mr. Chairman, I yield 2 minutes to the gentleman from Califor- nia [Mr. FARR]. Mr. FARR of California. Mr. Chair- man, I thank the gentleman from Mas- sachusetts for yielding me this time. Mr. Chairman, I rise in support of the Studds amendment and let me tell my colleagues why. There is a problem that I think the author, the gentleman from Maryland [Mr. GILCHREST], is try- ing to address. We all want to address that problem, and that is the problem of bycatch. But the bill, as written, really does not do that without harm- ing dolphins, and that is why the Studds amendment makes the bill a better bill. It is very simple. In America we have what we call truth in labeling. For 6 years U.S. consumers have been buying tuna in the stores that say that it is dolphin safe. We all know what the word ”safe” means, our constituents know what it means, school kids know what it means. They are confident that tuna labeled as ”dolphin safe” has not been caught in a way that harms dol- phins. The amendment that the gentleman from Massachusetts [Mr. STUDDS] is of- fering only puts 6 words into law. If the bill goes through right now, however, dolphins that are chased and die can be labeled ”dolphin safe.” Dolphins that are harassed and die can be labeled ”dolphin safe.” Dolphins that are in- jured or encircled with nets and die can be labeled as ”dolphin safe.” That is not truth in labeling, and that is the problem here. We need to have truth in labeling. I urge my colleagues, add these 6 words to this bill to make it a good bill, to make it a better bill, to make it a bill we can all vote for and support, because that is what the American peo- ple want. They do not want us in Con- gress to play tricks with labels on cans in order to enhance an industry that fishes way offshore from here. Changing the definition of ”dolphin safe” now without a sound scientific basis for that decision not only risks undercutting the progress we have made in the last decade to protect dol- phins, but it also misleads the Amercan consumers. Vote ”yes” on this simple amend- ment. Restore order to this bill. Mr. SAXTON. Mr. Chairman, I yield 8 minutes to the gentleman from Mary- land [Mr. GILCHREST] who was the first to point out to me that this bill not only protects dolphins, but it also pro- tects sea turtles, sharks, and billfish. Mr. GILCHREST. Mr. Chairman, I thank the gentleman from New Jersey for yielding me this time, and I thank the gentleman from Massachusetts for his applause. Mr. Chairman, if we could just look at this photograph over here for a sec- ond, what I want to try to display to my colleagues is the present condition of the marine ecosystem under the present law. When we talk about bycatch, that means discarded fish, that means dis- carded marine mammals, that means discarded reptiles, that means dis- carded turtles, sea turtles, many of which are endangered. If we look at this picture, up in the right-hand corner we will see sharks that are discarded in the present proc- ess of fishing techniques. If we look at this photograph here, we will see in this trough immature tuna that will not be able to spawn, that will not sustain the population. The basic point I want to get across here is that we need to find new meth- ods of fishing, new techniques. Unless we change what we are doing at the present time, and unless we have an agreement with other countries to try to preserve and sustain the resources of our coastal oceans, we cannot do it alone. Mr. SAXTON. Mr. Chairman, will the gentleman yield? Mr. GILCHREST. I yield to the gen- tleman from New Jersey. Mr. SAXTON. Mr. Chairman, I just want the gentleman to explain perhaps to Members who are not on the com- mittee why it is that fishing on log sets and why it is that fishing on schools of tuna produces a larger bycatch than the proposed method of fishing on dolphins. Mr. GILCHREST. Mr. Chairman, re- claiming my time, I will try to in 60 seconds educate people on encircle- ment, log sets, and tuna sets, if I can. Basically, encirclement the way we did it in the past was bad. We had an embargo, we ended it, we reduced the dolphin kills from 100,000 a year down to under 4,000 a year. That is what we are trying to do here. CONGRESSIONAL RECORD \u2014 HOUSE H9445July 31, 1996 Log sets. Tuna, for some strange rea- son, will swim under something. If they do not swim under dolphins like ma- ture tuna fish do, they will swim under logs. Now, we have a lot of immature tuna that swim under logs. We do not have any dolphins there, but when they encircle the tuna and catch them in these big nets, not only do they catch tuna fish, but what we see in these pic- tures here is they catch many more marine species. These species are under stress be- cause they are being discarded. They are not being used. Mr. SAXTON. Mr. Chairman, if the gentleman would continue to yield. This is an important point. If we prohibit fishing on dolphins, which we now believe we can do much safer than we used to, then we not only permit fishing on log sets and permit fishing on schools, but we encourage those fishermen who would normally be fishing in a safer way on dolphins to go fish on log sets and on schools where we get this higher bycatch. Mr. GILCHREST. The whole reason for this particular legislation is three- fold: to reduce the number of dolphins killed, to reduce the number of marine species that are killed in the process of catching tuna, and to set up an agree- ment that we are sponsoring to ensure the sustainability of the marine eco- system. We can then open the door to a number of other environmental agreements, including global warming. What I want to do is to talk briefly on some of the charges that the other side has made. Last year there were 3,300 dolphins killed in the eastern tropical Pacific. That is down 99 percent from what it was. That is using this particular tech- nique. Why do we have in our bill a maxi- mum, maximum, of 5,000 dolphins killed? That is because there will be more fishers in the fishery, so we need to have some reasonable number. Five thousand dolphins killed is biologically insignificant as assessed by some of the best scientists in the world. One of them is from the National Oceanic and Atmospheric Administration, a woman named Elizabeth Edwards, who says that is biologically insignificant. We understand that. We do not ac- cept the 5,000 number. We will continue to work toward zero. Here is what Dr. Edwards says about the study, that the process that we are trying to get into law stresses dolphins to the degree that it harms them. She says, ”In particular the 5 reviewers were unanimous in their opinion that the study failed to confirm the stated conclusion that dolphins were experi- encing acute continuous stress.” b 1915 So I wanted to dismiss that accusa- tion that the encirclement, where you allow the dolphins to get out, which is what we are doing, causes stress that harms the dolphin. There is no evi- dence to that effect. The Center for Marine Conservation, one of our more sophisticated, respected environmental groups around the country, says argu- ably stress is not found to lead to spe- cies decline, the stress that they expe- rience in this encirclement. And under- stand, we do not want to encircle dol- phins. This is not the last step in this process. This international agreement does not end the way we catch tuna fish. This international agreement by the United States, by the environmental groups such as Greenpeace, Center for Marine Conservation, we want to con- tinue to use the expertise of the United States to find ways to ensure the sus- tainability of the marine ecosystem and reduce dolphin kills to zero and some day hopefully end encirclement entirely. But we cannot do it alone. We need this international agreement. I want to point out one other thing. IATTC is showing an increase in dol- phin population. Now, the comment that we are im- porting tuna fish for the purpose of doing something for the benefit of Mex- ico or Mexican fishermen, and we are not concerned about the death of dol- phins. Well, I want to say something. In our bill, on every single boat there will be, there must be, observers in order to sell that tuna fish into the United States. So we will know, how- ever unfortunate it might be, every single dolphin death. And we will know that because we have observers on board those boats. Since we have ob- servers on those boats, we recognize in the past year there has been 3,300 dol- phin deaths, but we know that, and we are trying to reduce that. Now, the present regime, before this legislation goes into effect, we are get- ting much of our tuna fish, if not most of our tuna fish, from the western trop- ical Pacific, where there are no observ- ers on those boats, and it is fundamen- tally understood. It is fundamentally understood that from 10,000 to 40,000 dolphins are killed a year. We have no control over that. Do we want to have dolphin kills without anybody to ob- serve those dolphin deaths and then quite likely import that tuna, can it in the United States, and then label it dolphin safe? I would much rather have an understanding as to the number of dolphin deaths and a continuous effort to reduce those dolphin deaths. Mr. Chairman, I urge my colleagues to oppose the Miller-Studds amend- ment and to support the legislation. It is an international agreement of very positive proportions so that we can continue down the road as a planet, as a world population that is continuing to increase to have some sense of un- derstanding together as a global com- munity to sustain the limited re- sources that are essential for the food of this planet. Mr. STUDDS. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I want to correct one thing. The gentleman from Maryland may be right or he may be wrong, but he is simply asserting something with- out documentation. There has only been one study to date that we know on the effect of encirclement of dol- phins, and I am holding it in my hand. It is from the Journal of Pathophysiology, and it has the impos- ing title of ”Adrenocortical Color Darkness and Correlates as Indicators of Continuous Acute Premortem Stress in Chased and Purse-seine Captured Male Dolphins.” So there. I want the record to reflect that, done by the Na- tional Marine Fisheries Service, the only study we have suggests, does not assert, suggests to the contrary. Now, the dolphins as usual speak for themselves. There are two species that have been consistently, over time, chased and netted in this fishery: The eastern spinner dolphin and the north- ern offshore spotted dolphin. I do not know which one the gentleman is com- muning with. According to the Na- tional Marine Fisheries Service, these two populations are at less than 20 per- cent of their original size. This is an indisputable fact due to the 8 million deaths that have taken place over the last 20 years. Now, we have been enormously suc- cessful in reducing those deaths, as most people have mentioned speaking on both sides of this issue, but, and this is a large ”but,” in spite of the much observed lower level of dolphin deaths these two dolphin populations are now growing. The fact is worth repeating. Although dolphin deaths have dropped from approximately 100,000 annually to about 3,600, we see no increase in these populations. Many biologists believe that the con- stant injury and harassment of these animals is preventing the recovery of the populations. I do not pretend to as- sert that as fact. I have been quite open from the beginning that I do not know. But I suggest that no one else here knows either. Insofar as we have any study to suggest that the contrary may be true, to assert something on the floor of this hallowed institution does not make it so, and in this case it might be that a little bit of humility and caution might be in order. Mr. Chairman, I yield 2 minutes to the gentleman from New Jersey [Mr. PALLONE]. Mr. PALLONE. Mr. Chairman, I urge my colleagues to support the amend- ment offered by the gentleman from Massachusetts [Mr. STUDDS]. Consum- ers have a right to know that ”dolphin safe” means that dolphins were not harassed or killed. That is what the label has meant for the last 6 years. Under the Studds amendment, tuna can be sold in the United States re- gardless of whether it was caught using safe techniques, but it could not be la- beled ”dolphin safe” unless it meets the standard that every American consumer has relied upon and should be able to continue to rely upon. It is hard to believe that chasing dol- phins by speedboats and helicopters until they are too exhausted to escape CONGRESSIONAL RECORD \u2014 HOUSEH9446 July 31, 1996 and then encircled in a purse-seine net can be considered safe. At worst, the netted dolphins face the risk of crushed bones, loss of fins, or suffocation in the nylon nets. At the very least, mortal injuries may ensue from separation of mothers from their calves or the severe stress caused by this harassment which may have detrimental effects. One study suggests that there may be immediate effects of stress on these animals or long-term effects on the population as a whole, as indicated by the reduced pregnancy rates from heav- ily fished areas. There are signs that netting dolphins may have adverse ef- fects, with the stress being one possible cause. All of which may not necessarily go observed as the dolphins also sink or survive the experience only to die later. Meaning that the change to the ”dolphin safe” label would render it worthless as now observed, and I quote, ”observed,” mortalities occurred dur- ing the netting. The bottom line is that the only true safe method to fish for tuna is to re- move dolphins from the equation. The public knows this and so do over 80 en- vironmental groups that support this amendment. That is why I voted for the current definition of dolphin safe in 1990 under the Dolphin Protection Consumer Information Act. At Mexico’s request in 1991, a GATT panel found that trade embargoes on tuna imports under the authority of the Marine Mammal Protection Act did not meet with trade obligations. But the dolphin-safe label was not an issue before the GATT dispute panel; only the embargo itself. There is no le- gitimate trade conflict with the dol- phin-safe label. The Studds amendment will continue to preserve the dolphin- safe label, which is an integral part of dolphin protection. Mr. Chairman, I include the following ”Dear Colleague” letter for the RECORD. SAVE THE ”DOLPHIN SAFE” LABEL DEAR COLLEAGUE: H.R. 2823, ”The Inter- national Dolphin Conservation Program Act” will change U.S. law and allow tuna caught by methods that injure and terrorize dolphins to be labeled ”Dolphin Safe.” The bill’s proponents admit that under H.R. 2823, the number of dolphins that will be killed could rise. In fact, H.R. 2823 specifically per- mits a 25% increase in the number of dead dolphins. This legislation would perpetuate a fraud on American consumers. Consumers have a right to know that ”Dol- phin Safe” means that dolphins were not harassed or killed. That is what the label has meant for the past 6 years. Under the Studds amendment, tuna can be sold in the United States regardless of whether it was caught using safe techniques. But it could not be labelled ”Dolphin Safe” unless it meets the standard that every American consumer has relied upon and should be able to continue to rely on. WHAT THE ”DOLPHIN SAFE” LABEL MEANS H.R. 2823 (Gilchrest) Studds Amendment Dolphins can be encircled, harassed, injured and tuna can still be called Dolphin Safe); 25% in- crease in dolphin mortality al- lowed. Current law: no harassing tech- niques, no dolphin injuries, no dolphin deaths; non-safe tuna may be sold without the label. If we can’t save dolphins, at least we can save the label. Support the ”Dolphin Safe” Label: Support the Studds Truth in Labelling Amendment. Sincerely, SAM FARR. FRANK PALLONE, Jr. Mr. SAXTON. Mr. Chairman, I yield 1 minute to the gentleman from Mary- land [Mr. GILCHREST] for purposes of responding to the author of the amend- ment. Mr. GILCHREST. Mr. Chairman, in response to the assertion of the gen- tleman from Massachusetts, let me re- spond to the study that was done on stress by Dr. Elizabeth Edwards of the National Oceanic and Atmospheric Ad- ministration. This is what she said about the study concerning stress in dolphins: ”While all five reviewers felt that post-mortem examination of one or more physiological or histological sam- ples taken from dolphins killed during purse-seining might well provide some indication of types and amounts of stress the animals may have experi- enced prior to death, none of the re- viewers,” talking about the study that was done, ”none of the reviewers felt that the body of work described in this paper presented any convincing evi- dence. In particular, the reviewers” of the study ”were unanimous in their opinion that the study failed to con- firm the stated conclusion * * *” Mr. SAXTON. Mr. Chairman, I yield 2 minutes to the gentleman from San Diego, CA [Mr. BILBRAY]. Mr. BILBRAY. Mr. Chairman, I re- gretfully have to oppose the Studds amendment, and I would like to clarify that. I oppose the amendment because it locks us into the old concepts of spe- cies management that might have served us well in the seventies and the eighties, but is totally deficient for the latter part of the nineties and going into the next century. Mr. Chairman, one of the great ac- complishments that we are seeing this decade is the movement from single- species management to multispecies management when it comes to environ- mental protection. This amendment would lead us back into single-species management. Mr. Chairman, I do not think anyone who originally supported this legisla- tion meant to endanger sensitive ma- rine species or to encourage, if not mandate, fishing practices that would directly and negatively impact dif- ferent species, including endangered species. The loss of endangered sea tur- tles as a result of the present alter- native to this legislation, H.R. 2823, the main bill, was, I think, totally unfore- seen back in the 1970’s and the 1980’s, and new science says that we need to address this. Now, Mr. Chairman, I do not want to make this a battle between Flipper and the Ninja Turtles; that we are going to have to choose between porpoises and billfish, or dolphins and endangered turtles. I think there is a proper way to do this, and one of the ways is to direct our fishing practices in a manner that would facilitate protection of multiple species, as H.R. 2823 would do. This amendment would strike that concept and move us back to the era of the 1970’s and 1980’s; the old concept that we will only look at one species rather than the entire environment. Mr. Chairman, I ask that my col- leagues consider the fact that both Vice President GORE and Greenpeace, among others, recognize that it is time to move forward and be more progres- sive and more global in our approach to ocean species management. America must lead, but we cannot do this alone, and species management cannot be done appropriately when focused only on one species or subspecies. This amendment would move us back to that position, that would hamstring us in addressing these protection issues in a comprehensive manner. So I would ask the supporters of the motion to recognize its unintentional but negative impact to endangered ma- rine species, and to reflect on the facts which are that this Studds amendment does not address the concerns that we need to address to definitely protect dolphins and other ocean animals. Mr. SAXTON. Mr. Chairman, I yield 3 minutes to the gentleman from Ari- zona [Mr. KOLBE]. Mr. KOLBE. Mr. Chairman, I thank the gentleman for yielding. Mr. Chairman, I rise in support of this bill H.R. 2823, the International Dolphin Conservation Program Act and in opposition to the amendment offered by the gentleman from California [Mr. MILLER] and the gentleman from Mas- sachusetts [Mr. STUDDS]. I think this is an exceptional bill pro- viding an international solution to an international problem, and that is the regulation of tuna fishing in the open seas. It is a good bill and reflects a good compromise among a lot of com- peting interests. But, I think we need to start by putting it in historical per- spective. In the mid-1970’s, dolphin mortality rates were clearly at unacceptable lev- els. Over 500,000 dolphins were being killed each year in pursuit of tuna stocks. So in response to this unaccept- able loss of life among the dolphin pop- ulation, 5 years ago the United States placed an embargo on the importation of tuna caught using primitive encir- clement measures. But as has been pointed out in this debate, in recent years tuna fishermen have developed new and innovative methods which enable them to capture tuna without ensnaring dolphins at the same time. We have tough new mon- itoring procedures that have been in- stituted and international oversight re- sponsibility has been strengthened. CONGRESSIONAL RECORD \u2014 HOUSE H9447July 31, 1996 Over time, these procedures have be- come increasingly internationalized, first through voluntary compliance with the La Jolla Agreement, then through permanent binding procedures set forth in the Panama Declaration. By implementing the Panama Dec- laration, H.R. 2823 brings us along in the next step as the gentleman from Maryland has suggested, the next step in this evolutionary process. It locks in the reforms of the Panama Declaration and strengthens compliance proce- dures. The bill also provides incentives needed for other nations to remain in compliance by providing those nations who abide by the agreement with ac- cess to their most important tuna mar- ket, the United States. It was this issue with Mexico and my work with the United States-Mexico Interparliamentary Conference that brought me first to this issue. b 1930 Make no mistake about it, these market incentives are absolutely criti- cal to the continued success of the pro- gram. The procedures required under the Panama Declaration are costly: on- board observers on all tuna boats, indi- vidual boat licensing, and use of nets and divers to ensure the safety of the dolphin population. But let us be blunt. Without the U.S. market as an incentive, these nations are certain to revert to destructive fishing practices of the past and just export to the markets that they can, and we will end up with dolphin kill ra- tios as high as we had in the 1970’s and 1980’s. If we do not act today and enact this legislation without amendment, what we have left is a dolphin-safe label but no dolphins. As has been pointed out, this bill does more than protect dolphins. It provides an effective method to con- serve total marine ecosystem in the eastern Pacific. The fishing practices encouraged by proposed alternative legislation result in an unreasonably excessive bycatch of a number of dif- ferent species, including endangered sea turtles, sharks, billfish, and large numbers of tuna and other fish species. In fact, the fishing procedures advo- cated by the opponents to this bill are likely to endanger the long-term health of tuna stocks themselves. We need this bill. We can do it. We can have tuna fishing, and we can pro- tect dolphins. We have the technology to preserve the marine ecosystem and protect the dolphin. Let us do it. Let us implement the legislation of the Pan- ama Declaration. Keep the dolphin and the marine ecosystem safe. I urge sup- port for the bill and opposition to the Studds amendment. Mr. STUDDS. Mr. Chairman, now that English is about to become the of- ficial language and we have La Jolla and Saint Diego, I guess I should yield to the gentlewoman from Saint Frank or Saint Francis, whatever that will become once we become English speak- ing. Mr. Chairman, I yield 3 minutes to the distinguished gentlewoman from California [Ms. PELOSI]. Ms. PELOSI. Mr. Chairman, I thank the gentleman for yielding and rise in support of his amendment. It is a wonderful thing in the House of Representatives that we are express- ing all of this concern for the dolphin. Hopefully, this will carry over to the human species as well. Mr. Speaker, as I said, I rise in oppo- sition to the legislation as it is and in the hopes that our colleagues will vote in support of the Studds amendment. As has been said, in 1990, environ- mental, animal and consumer activists won a victory with the advent of the dolphin-safe label for commercially sold tuna. No product can be labeled dolphin-safe if the tuna is caught by chasing, harassing or netting dolphins. The issue before the house tonight is about what can be labeled dolphin-safe. The dolphin-safe label has worked to preserve dolphin populations. After Congress adopted its ban of imported tuna caught using enclosure nets in 1992, the dolphin mortality rate dropped from 100,000 per year to less than 3,000, as has been indicated. The bill before us would change the meaning of dolphin-safe to allow ac- tivities that would include highspeed chases with boats and helicopters, the separation of mothers from their calves, the withholding of food from trapped schools and the deliberate in- jury of dolphins to prevent the school from escape. I call to the attention of my col- leagues this chart which compares what the dolphin-safe label means. Under the bill, it means this. Under the public view, dolphin-safe means this. We have got to keep faith with the public in our truth-in-labeling. In fact almost any fishing activity would be termed dolphin-safe provided that no dolphins were observed to die during the catch. Dolphin populations have been depleted by as much as 80 percent. The dolphin-safe label stopped this trend and has proved one of the most successful consumer initiatives in U.S. history. Americans care about what is left of our natural resources and the threatened creatures who in- habit them. The Studds amendment maintains the integrity of the dolphin-safe stick- er to the definition of the label. Dol- phin-safe must mean that dolphins are safe and not injured or killed in the hunt for tuna. H.R. 2823 allows an increase in the dolphin deaths and unlimited injury and harassment of dolphin. That is by no means dolphin-safe. Mr. Chairman, I urge our colleagues to support the Studds amendment which would enable us to keep the promise made to the American people. The trade agreements would not result in the weakening of U.S. environ- mental laws. At the same time, it would help us live up to those trade ob- ligations and protect dolphins. I urge an ”aye” vote on the Studds amend- ment. Mr. SAXTON. Mr. Chairman, I yield 1 minute to the gentleman from Mary- land [Mr. GILCHREST] who is busy re- erecting some visual aids. Mr. GILCHREST. Mr. Chairman, I thank the gentleman for yielding the time. If I may, the gentleman from Califor- nia asked me to get my own chart so I will not use the chart that the gentle- woman from California [Ms. PELOSI] used just a second ago. What I would like to do, when we looked at the chart from Ms. PELOSI, the fine gentlewoman from California, she showed us a dol- phin sort of beat up and said that that is what is going to happen under our bill, and then a dolphin that looked really healthy and find and not beat up. That is what would happen with their bill and their dolphin-safe bill. What I want to explain though, just another point, existing law, 10,000 40,000 dolphins are killed that are not observed. Many likely are killed in the process of catching tuna fish that are sold in the United States because we do not observe those deaths as dolphin- safe with the label. What we want to do is put an ob- server on every single boat, every sin- gle time they fish for dolphins, every single time they fish for tuna, and they cannot sell that tuna in the United States unless they have a licensed ob- server on board. We want to protect the system, protect the truth in label- ing. Vote against the Studds amend- ment. Mr. STUDDS. Mr. Chairman, I yield 2 minutes to the gentleman from Califor- nia [Mr. MILLER] so that he may po- litely but devastatingly respond to the gentleman from Maryland. Mr. MILLER of California. Mr. Chair- man, the chart is terribly graphic and makes the point. We will have observ- ers on the boat. What observers can ob- serve is dolphins being, for example, encircled, harassed, hunted down, maimed, and injured. Under that bill that is what is allowed. Under current law, that is not al- lowed, that is not allowed. And to be sold on supermarket shelves, the tuna that results cannot be sold as dolphin- safe. What we are saying is, you can have your ocean management tech- niques, you can try your bycatch, you can do all of those things. But when it results in a dolphin being maimed, being harassed and being chased and being stressed and being exhausted, do not try to tell the American consumer that that is dolphin-safe. What the Studds amendment says is let the consumer choose. Let the consumer choose. They can choose the existing can of tuna with the existing label under the Studds amendment that they know is dolphin-safe. Or they can choose some pale imitation that lets you kill an increased number of dolphins, lets you harass, lets you en- circle, lets you stress, lets you harm, lets you maim, all with observers. CONGRESSIONAL RECORD \u2014 HOUSEH9448 July 31, 1996 The American people do not want ob- servers to this activity. They want an end to this activity. That is what the Studds amendment allows to happen. Mr. STUDDS. Mr. Chairman, I yield myself 30 seconds. I observe no further requests for time on this side. If the gentleman has the right to close and intends to use it, I trust he will do it with humane brev- ity. I challenge the gentleman to prove to a certainty that anything that can be said has not already been said. With that in mind and secure in the feeling that what has been said on be- half of the amendment far outweighs in subtlety and in strength and in humor and goodwill that which has been said in opposition to the amendment, I con- fidently, quietly, and quickly yield back the balance of my time. Mr. SAXTON. Mr. Chairman, I yield myself such time as I may consume for purposes of closing debate. Mr. Chairman, I think the gentleman is right. Much of what has been said has been said. It is pretty obvious to me that the weight of the arguments in opposition to the gentleman’s amend- ment are strong and heavy and that we should move to a vote, hopefully di- rectly to final passage. Just let me close by summarizing. A vote in favor of final passage and pre- viously to that, I suppose, against the Studds amendment enables the United States to join with 11 other countries to put in place fishing methods agreed to by those 12 countries that will pro- tect dolphins, protect sea turtles, pro- tect sharks, protect billfish, and pro- tect juvenile tuna. That is what the gentleman from California [Mr. BILBRAY] was referring to when he talked about multispecies manage- ment. It is true, I suspect, that if we were to reject this bill and in so doing enact the Studds amendment, I suppose that unilaterally we could protect dolphins in 1 country out of the 12. My under- standing is that that includes pres- ently something in the neighborhood of six to eight fishing boats on the west coast of the United States. That is what we would be regulating, six to eight boats in one country as opposed to many boats in a dozen countries. In addition to that, Mr. Chairman, I would just like to point out, once again, that it would be unusual for the major environmental groups, including the National Wildlife Federation, the Environmental Defense Fund, Greenpeace, the World Wildlife Fund, the Center for Marine Conservation, and others to join with this chairman of the Subcommittee on Fisheries, Wildlife and Oceans and the Clinton ad- ministration and variety of labor groups in supporting final passage of this bill, if it were subject to all of the charges that have been made by some of the opponents. Obviously, we hope that this bill passes. As one who has been a sup- porter of marine wildlife and aqua wildlife all of my career, along with many other Members, such as Mr. GILCHREST and others from both sides, we believe on a bipartisan basis that this bill deserves to be passed, should be passed, and will implement a very important international agreement. Mr. Chairman, I ask Members on both sides of the aisle for strong bipar- tisan support and encourage a ”no” vote on the Studds amendment and ob- viously a ”yes” vote on final passage. Mr. OLVER. Mr. Chairman, this amendment offers American consumers exactly what we know they want. It took American citizens more than two decades to get the Congress to end the slaughter of dolphins and adopt dol- phin-safe labeling of tuna. The terrible pictures of herds of dead dol- phins in a sea of red are practically gone from memory. It’s been great environmental suc- cess. Without the Studds amendment the underly- ing bill moves us backward. No, it doesn’t mean that we’ll return to the days of mass dol- phin slaughter, but it does mean that dolphins will be chased, harassed, and encircled. Perhaps there is no mammal more symbolic of American’s love and concern for animals\u2014 than the dolphin. As this Congress desperately attempts to recast itself in the wake of its poor environ- mental record\u2014no vote is easier and will please such a broad spectrum of the Amer- ican public than the Studds amendment. Recently, this Congress has voted for consumer-friendly right-to-know provisions in several bills. Yet today, this bill aims to confuse the dol- phin-safe label and deceive the American pub- lic. Americans want to know which tuna has been caught without risks to dolphins. The dolphin-safe label ought to mean what it says. Finally, I believe it’s fair to say that no one in recent memory in this body has done so much to protect so many of one individual species than my colleague from Massachu- setts. We should honor his 20 years of work and expertise by supporting the Studds amend- ment. If Studds does not pass\u2014we could be faced with another tuna boycott until the American public can be sure that dolphin-safe labels are telling the truth. Ms. ESHOO. Mr. Chairman, I rise in support of this important and necessary amendment, and I thank Representatives STUDDS and MIL- LER for all of their efforts to protect our plan- et’s ocean life and our Nation’s consumers. Mr. Chairman, this amendment is simple: It protects dolphins from being chased, har- assed, injured, or encircled with nets by tuna fishermen. It’s necessary because the underlying legis- lation would allow unlimited harassment and injuring of dolphins, so long as no more than 5,000 are actually killed in the eastern tropical Pacific each year. Despite increased deaths and injury to dolphins, tuna caught under the provisions of the underlying legislation could still be labeled in the United States as dolphin- safe. That’s not acceptable. In my view, there should be zero dolphin deaths associated with our dolphin-safe label. Seven years ago, 100,000 dolphins were slaughtered each year. As a result of the U.S. tuna industry’s voluntary policy of refusing to purchase tuna caught while harming or killing dolphins, that number has dropped to approxi- mately 3,200\u2014an impressive 97 percent. The Studds amendment retains the integrity of the dolphin safe label by ensuring that dol- phins are not harassed while fishing for tuna. Although H.R. 2823, even if improved by the Studds\/Miller amendment, would condone more dolphin deaths than are associated with the current U.S. dolphin safe label, it would actually result in fewer dolphin deaths world- wide. This is because only 5,000 deaths total would be permitted, and only those foreign fishermen that fish in compliance with the 5,000 limit would be able to sell their tuna to the U.S. market. Consumers need to know that dolphin safe means what it says. The Studds amendment although imperfect, helps move us in that di- rection. Mr. Chairman, I urge my colleagues to sup- port the Studds amendment, support the wish- es of the American consumer, and support the dolphins. Mr. Chairman, I yield back the bal- ance of my time. The CHAIRMAN. The question is on the amendment offered by the gen- tleman from Massachusetts [Mr. STUDDS]. The question was taken; and the Chairman announced that the noes ap- peared to have it. RECORDED VOTE Mr. STUDDS. Mr. Chairman, I de- mand a recorded vote. A recorded vote was ordered. The vote was taken by electronic de- vice, and there were\u2014ayes 161, noes 260, not voting 12, as follows: [Roll No. 384] AYES\u2014161 Abercrombie Andrews Baldacci Barcia Barrett (WI) Becerra Berman Bilirakis Blumenauer Blute Bonior Borski Brown (CA) Brown (FL) Brown (OH) Bryant (TN) Bunn Campbell Chabot Clay Clayton Clyburn Coleman Collins (IL) Collins (MI) Conyers Costello Coyne Cummings de la Garza DeFazio DeLauro Dellums Deutsch Dixon Doggett Dornan Doyle Durbin Engel Ensign Eshoo Evans Farr Fattah Fazio Fields (LA) Filner Flanagan Foglietta Foley Forbes Frank (MA) Franks (NJ) Frost Furse Gejdenson Gephardt Goodling Gordon Green (TX) Gutierrez Hall (OH) Harman Hastings (FL) Hilliard Hinchey Holden Jackson (IL) Jackson-Lee (TX) Jacobs Jefferson Johnson (SD) Johnson, E. B. Jones Kanjorski Kaptur Kennedy (MA) Kennedy (RI) Kildee Kleczka Klink LaHood Lantos Lewis (GA) Lipinski Lofgren Lowey Maloney Manton Markey Martini Mascara McDermott McHale McKinney McNulty Meehan Meek Menendez Meyers Millender- McDonald Miller (CA) Mink Moakley Mollohan Moran Murtha Nadler Neal Ney Oberstar Obey Olver Owens Pallone Payne (NJ) Pelosi Poshard Rahall Rangel Reed Rivers Rose Roybal-Allard Rush Sabo CONGRESSIONAL RECORD \u2014 HOUSE H9449July 31, 1996 Sanders Sanford Schiff Schroeder Schumer Scott Shays Slaughter Smith (NJ) Spratt Stark Stokes Studds Stupak Taylor (MS) Thornton Torres Torricelli Velazquez Vento Visclosky Volkmer Wamp Ward Waters Watt (NC) Waxman Weller Wilson Wise Woolsey Wynn Yates Zimmer NOES\u2014260 Ackerman Allard Archer Armey Baesler Baker (CA) Baker (LA) Ballenger Barr Barrett (NE) Bartlett Barton Bass Bateman Beilenson Bentsen Bereuter Bevill Bilbray Bishop Bliley Boehlert Boehner Bonilla Bono Boucher Brewster Browder Bryant (TX) Bunning Burr Burton Buyer Callahan Calvert Camp Canady Cardin Castle Chambliss Chapman Chenoweth Christensen Chrysler Clement Clinger Coble Coburn Collins (GA) Combest Condit Cooley Cox Cramer Crane Crapo Cremeans Cubin Cunningham Danner Davis Deal DeLay Diaz-Balart Dickey Dicks Dingell Dooley Doolittle Dreier Duncan Dunn Edwards Ehlers Ehrlich English Everett Ewing Fawell Fields (TX) Fowler Fox Franks (CT) Frelinghuysen Frisa Funderburk Gallegly Ganske Gekas Geren Gibbons Gilchrest Gillmor Gilman Gonzalez Goodlatte Goss Graham Greene (UT) Greenwood Gunderson Gutknecht Hall (TX) Hamilton Hancock Hansen Hastings (WA) Hayes Hayworth Hefley Hefner Heineman Herger Hilleary Hobson Hoekstra Hoke Horn Hostettler Houghton Hoyer Hunter Hutchinson Hyde Inglis Istook Johnson (CT) Johnson, Sam Johnston Kasich Kelly Kennelly Kim King Kingston Klug Knollenberg Kolbe LaFalce Largent Latham LaTourette Laughlin Lazio Leach Levin Lewis (CA) Lewis (KY) Lightfoot Lincoln Linder Livingston LoBiondo Longley Lucas Luther Manzullo Matsui McCarthy McCollum McHugh McInnis McIntosh McKeon Metcalf Mica Miller (FL) Minge Molinari Montgomery Moorhead Morella Myers Myrick Nethercutt Neumann Norwood Nussle Ortiz Orton Oxley Packard Parker Pastor Paxon Payne (VA) Peterson (FL) Peterson (MN) Petri Pickett Pombo Pomeroy Porter Portman Pryce Quillen Quinn Radanovich Ramstad Regula Richardson Riggs Roberts Roemer Rogers Rohrabacher Ros-Lehtinen Roth Roukema Royce Salmon Sawyer Saxton Scarborough Schaefer Seastrand Sensenbrenner Shadegg Shaw Shuster Sisisky Skaggs Skeen Skelton Smith (MI) Smith (TX) Smith (WA) Solomon Souder Spence Stearns Stenholm Stockman Stump Talent Tanner Tate Tauzin Taylor (NC) Tejeda Thompson Thornberry Thurman Tiahrt Torkildsen Traficant Upton Vucanovich Walker Walsh Watts (OK) Weldon (FL) Weldon (PA) White Whitfield Wicker Williams Wolf Young (AK) Zeliff NOT VOTING\u201412 Bachus Brownback Flake Ford Hastert Martinez McCrery McDade Serrano Thomas Towns Young (FL) b 2000 Mr. ARCHER changed his vote from ”aye” to ”no.” Ms. VELA\u0301ZQUEZ, Mr. RAHALL, and Mr. HOLDEN changed their vote from ”no” to ”aye.” So the amendment was rejected. The result of the vote was announced as above recorded. The CHAIRMAN. The question is on the amendment in the nature of a sub- stitute. The amendment in the nature of a substitute was agreed to. The CHAIRMAN. Under the rule, the Committee rises. Accordingly the Committee rose; and the Speaker pro tempore (Mr. FOX of Pennsylvania) having assumed the chair, Mr. COLLINS of Georgia, Chair- man of the Committee of the Whole House on the State of the Union, re- ported that that Committee, have had under consideration the bill (H.R. 2823) to amend the Marine Mammal Protec- tion Act of 1972 to support the Inter- national Dolphin Conservation Pro- gram in the eastern tropical Pacific Ocean, and for other purposes, pursu- ant to House Resolution 489, he re- ported the bill back to the House with the amendment adopted by the Com- mittee of the Whole. The SPEAKER pro tempore. Under the rule, the previous question is or- dered. The question is on the amendment in the nature of a substitute. The amendment in the nature of a substitute was agreed to. The SPEAKER pro tempore. The question is on the engrossment and third reading of the bill. The bill was ordered to be engrossed and read a third time, and was read the third time. The SPEAKER pro tempore. The question is on the passage of the bill. The question was taken; and the Speaker pro tempore announced that the ayes appeared to have it. RECORDED VOTE Mr. SAXTON. Mr. Speaker, I demand a recorded vote. A recorded vote was ordered. The vote was taken by electronic de- vice, and there were\u2014ayes 316, noes 108, not voting 9, as follows: [Roll No. 385] AYES\u2014316 Ackerman Allard Archer Armey Baesler Baker (CA) Baker (LA) Ballenger Barr Barrett (NE) Bartlett Barton Bass Bateman Becerra Beilenson Bentsen Bereuter Berman Bevill Bilbray Bishop Bliley Blumenauer Blute Boehlert Boehner Bonilla Bono Borski Boucher Brewster Browder Brown (FL) Bryant (TN) Bryant (TX) Bunning Burr Burton Buyer Callahan Calvert Camp Canady Cardin Castle Chambliss Chapman Chenoweth Christensen Chrysler Clement Clinger Clyburn Coble Coburn Collins (GA) Combest Condit Cooley Cox Cramer Crane Crapo Cremeans Cubin Cummings Cunningham Danner Davis de la Garza DeLay Deutsch Diaz-Balart Dickey Dicks Dingell Dixon Doggett Dooley Doolittle Dreier Duncan Dunn Edwards Ehlers Ehrlich English Ensign Everett Ewing Fawell Fazio Fields (LA) Fields (TX) Flanagan Foley Forbes Fowler Fox Franks (CT) Frelinghuysen Frisa Frost Funderburk Gallegly Ganske Gekas Geren Gibbons Gilchrest Gillmor Gilman Gonzalez Goodlatte Goodling Gordon Goss Graham Green (TX) Greene (UT) Greenwood Gunderson Gutknecht Hall (OH) Hall (TX) Hamilton Hancock Hansen Harman Hastert Hastings (FL) Hastings (WA) Hayes Hayworth Hefley Hefner Heineman Herger Hilleary Hobson Hoekstra Hoke Holden Horn Hostettler Houghton Hoyer Hunter Hutchinson Hyde Inglis Istook Jackson-Lee (TX) Johnson (CT) Johnson, Sam Johnston Jones Kasich Kelly Kennelly Kim King Kingston Klug Knollenberg Kolbe LaFalce LaHood Largent Latham LaTourette Laughlin Lazio Leach Levin Lewis (CA) Lewis (KY) Lightfoot Lincoln Linder Livingston LoBiondo Longley Lucas Luther Manton Manzullo Martini Mascara Matsui McCarthy McCollum McDermott McHale McHugh McInnis McIntosh McKeon Meek Metcalf Mica Miller (FL) Minge Mink Molinari Mollohan Montgomery Moorhead Moran Morella Myers Myrick Nethercutt Ney Norwood Nussle Ortiz Orton Oxley Packard Parker Pastor Paxon Payne (VA) Peterson (FL) Peterson (MN) Petri Pickett Pombo Pomeroy Porter Portman Pryce Quillen Quinn Radanovich Rahall Ramstad Rangel Reed Regula Richardson Riggs Roberts Roemer Rogers Rohrabacher Ros-Lehtinen Roth Roukema Roybal-Allard Royce Salmon Sawyer Saxton Scarborough Schaefer Schiff Scott Seastrand Sensenbrenner Shadegg Shaw Shays Shuster Sisisky Skaggs Skeen Skelton Slaughter Smith (MI) Smith (TX) Smith (WA) Solomon Souder Spence Stearns Stenholm Stockman Stump Stupak Talent Tanner Tate Tauzin Taylor (NC) Tejeda Thomas Thompson Thornberry Thornton Torkildsen Torres Traficant Upton Visclosky Vucanovich Walker Walsh Wamp Ward Watts (OK) Weldon (FL) Weldon (PA) Weller White Whitfield Wicker Williams Wilson Wise Wolf Yates Young (AK) Zeliff NOES\u2014108 Abercrombie Andrews Baldacci Barcia Barrett (WI) Bilirakis Bonior Brown (CA) Brown (OH) CONGRESSIONAL RECORD \u2014 HOUSEH9450 July 31, 1996 Bunn Campbell Chabot Clay Clayton Coleman Collins (IL) Collins (MI) Conyers Costello Coyne Deal DeFazio DeLauro Dellums Dornan Doyle Durbin Engel Eshoo Evans Farr Fattah Filner Foglietta Frank (MA) Franks (NJ) Furse Gejdenson Gephardt Gutierrez Hilliard Hinchey Jackson (IL) Jacobs Jefferson Johnson (SD) Johnson, E. B. Kanjorski Kaptur Kennedy (MA) Kennedy (RI) Kildee Kleczka Klink Lantos Lewis (GA) Lipinski Lofgren Lowey Maloney Markey McKinney McNulty Meehan Menendez Meyers Millender- McDonald Miller (CA) Moakley Murtha Nadler Neal Neumann Oberstar Obey Olver Owens Pallone Payne (NJ) Pelosi Poshard Rivers Rose Rush Sabo Sanders Sanford Schroeder Schumer Serrano Smith (NJ) Spratt Stark Stokes Studds Taylor (MS) Thurman Tiahrt Torricelli Velazquez Vento Volkmer Waters Watt (NC) Waxman Woolsey Wynn Zimmer NOT VOTING\u20149 Bachus Brownback Flake Ford Martinez McCrery McDade Towns Young (FL) b 2020 So the bill was passed. The result of the vote was announced as above recorded. A motion to reconsider was laid on the table. f GENERAL LEAVE Mr. GILCHREST. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their re- marks and include extraneous material on the bill just passed. The SPEAKER pro tempore (Mr. FOX of Pennsylvania). Is there objection to the request of the gentleman from Maryland? There was no objection. f TEAMWORK FOR EMPLOYEES AND MANAGERS ACT OF 1995\u2014VETO MESSAGE FROM THE PRESIDENT OF THE UNITED STATES The SPEAKER pro tempore. The un- finished business is the further consid- eration of the veto message of the President on the bill (H.R. 743) to amend the National Labor Relations Act to allow labor management cooper- ative efforts that improve economic competitiveness in the United States to continue to thrive, and for other purposes. Mr. GOODLING. Mr. Speaker, I ask unanimous consent that the veto mes- sage of the President, together with the accompanying bill, H.R. 743, be re- ferred to the Committee on Economic and Educational Opportunities. The SPEAKER pro tempore. Is there objection to the request of the gen- tleman from Pennsylvania? There was no objection. REPORT ON RESOLUTION PROVID- ING FOR CONSIDERATION OF H.R. 123, ENGLISH LANGUAGE EMPOWERMENT ACT OF 1996 Mr. GOSS, from the Committee on Rules, submitted a privileged report (Rept. 104 734) on the resolution (H. Res. 499) providing for consideration of the bill (H.R. 123) to amend title 4, United States Code, to declare English as the official language of the Govern- ment of the United States, which was referred to the House Calendar and or- dered to be printed. f CONFERENCE REPORT ON H.R. 3754, LEGISLATIVE BRANCH APPRO- PRIATIONS ACT, 1997 Mr. PACKARD submitted the follow- ing conference report and statement on the bill (H.R. 3754) making appropria- tions for the legislative branch for the fiscal year ending September 30, 1997, and for other purposes: CONFERENCE REPORT (H. REPT. 104 733) The committee of conference on the dis- agreeing votes of the two Houses on the amendments of the Senate to the bill (H.R. 3754) ”making appropriations for the Legisla- tive Branch for the fiscal year ending Sep- tember 30, 1997, and for other purposes,” hav- ing met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows: That the Senate recede from its amend- ments numbered 9, 20, 23, and 24. That the House recede from its disagree- ments to the amendments of the Senate numbered 1, 2, 6, 10, 11, 12, 13, 14, 17, 18, and 19, and agree to the same. Amendment Numbered 3: That the House recede from its disagree- ment to the amendment of the Senate num- bered 3, and agree to the same with an amendment, as follows: In lieu of the sum proposed by said amend- ment, insert: $2,750,000; and the Senate agree to the same. Amendment Numbered 4: That the House recede from its disagree- ment to the amendment of the Senate num- bered 4, and agree to the same with an amendment, as follows: In lieu of the sum proposed by said amend- ment, insert: $69,356,000; and the Senate agree to the same. Amendment Numbered 5: That the House recede from its disagree- ment to the amendment of the Senate num- bered 5, and agree to the same with an amendment, as follows: In lieu of the sum proposed by said amend- ment, insert: $33,437,000; and the Senate agree to the same. Amendment Numbered 7: That the House recede from its disagree- ment to the amendment of the Senate num- bered 7, and agree to the same with an amendment, as follows: In lieu of the sum proposed by said amend- ment, insert: $2,782,000; and the Senate agree to the same. Amendment Numbered 8: That the House recede from its disagree- ment to the amendment of the Senate num- bered 8, and agree to the same with an amendment, as follows: In lieu of the sum proposed by said amend- ment, insert: $24,532,000; and the Senate agree to the same. Amendment Numbered 15: That the House recede from its disagree- ment to the amendment of the Senate num- bered 15, and agree to the same with an amendment, as follows: In lieu of the sum proposed by said amend- ment, insert: $9,753,000; and the Senate agree to the same. Amendment Numbered 16: That the House recede from its disagree- ment to the amendment of the Senate num- bered 16, and agree to the same with an amendment, as follows: In lieu of the sum proposed by said amend- ment, insert: $1,310,000; and the Senate agree to the same. Amendment Numbered 21: That the House recede from its disagree- ment to the amendment of the Senate num- bered 21, and agree to the same with an amendment, as follows: In lieu of the matter proposed by said amendment, insert: SEC. 314. (A) Upon enactment into law of this Act, there shall be established a program for providing the widest possible exchange of infor- mation among legislative branch agencies with the long range goal of improving information technology planning and evaluation. The Com- mittee on House Oversight of the House of Rep- resentatives and the Committee on Rules and Administration of the Senate are requested to determine the structure and operation of this program and to provide appropriate oversight. All of the appropriate offices and agencies of the legislative branch as defined below shall participate in this program for information ex- change, and shall report annually on the extent and nature of their participation in their budget submissions to the Committee on Appropriations of the House of Representatives and the Com- mittee on Appropriations of the Senate. (B) As used in this section\u2014 (1) the term ”offices and agencies of the legis- lative branch” means the office of the Clerk of the House, the office of the Secretary of the Sen- ate, the office of the Architect of the Capitol, the General Accounting Office, the Government Printing Office, the Library of Congress, the Congressional Research Service, the Congres- sional Budget Office, the Chief Administrative Officer of the House of Representatives, and the Sergeant at Arms of the Senate; and (2) the term ”technology” refers to any form of computer hardware and software; computer- based systems, services, and support for the cre- ation, processing, exchange, and delivery of in- formation; and telecommunications systems, and the associated hardware and software, that pro- vide for voice, data, or image communication. And the Senate agree to the same. Amendment Numbered 22: That the House recede from its disagree- ment to the amendment of the Senate num- bered 22, and agree to the same with an amendment, as follows: In lieu of the of the first section number named in said amendment, insert: 315; and the Senate agree to the same. Amendment Numbered 25: That the House recede from its disagree- ment to the amendment of the Senate num- bered 25, and agree to the same with an amendment, as follows: In lieu of the of the first section number named in said amendment, insert: 316 and at the end of the matter proposed by said amendment, insert the following: Sec. 317. For payment to Jo Ann Emerson, widow of Bill Emerson, late a Representative from the State of Missouri, $133,600. And the Senate agree to the same. RON PACKARD, CHARLES H. TAYLOR, DAN MILLER, ROGER F. WICKER, BOB LIVINGSTON, RAY THORNTON, JOSE\u0301 SERRANO, VIC FAZIO, DAVID R. OBEY, Managers on the Part of the House. CONGRESSIONAL RECORD \u2014 HOUSE H9451July 31, 1996 CONNIE MACK, ROBERT F. BENNETT, BEN NIGHTHORSE CAMPBELL, MARK O. HATFIELD, PATTY MURRAY, BARBARA A. MIKULSKI, ROBERT C. BYRD, Managers on the Part of the Senate. JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE The managers on the part of the House and the Senate at the conference on the disagree- ing votes on the two Houses on the amend- ments of the Senate to the bill (H.R. 3754) making appropriations for the Legislative Branch for the fiscal year ending September 30, 1997, and for other purposes, submit the following joint statement to the House and Senate in explanation of the effect of the ac- tion agreed upon by the managers and rec- ommended in the accompanying conference report. TITLE I\u2014CONGRESSIONAL OPERATIONS SENATE Amendment No. 1: Appropriates $441,208,000 for the operations of the Senate, and con- tains several administrative provisions. In- asmuch as the amendment relates solely to the Senate and in accord with long practice under which each body determines its own housekeeping requirements and the other concurs without intervention, the managers on the part of the House, at the request of the managers on the part of the Senate, have receded to the Senate amendment. HOUSE OF REPRESENTATIVES The managers on the part of the House, with the concurrence of the managers on the part of the Senate, support the policy of dis- posing of excess House computer equipment for the use of elementary and secondary schools, comparable to the program estab- lished by the Senate. The House managers note that, under current statute, the Com- mittee on House Oversight has the authority to make such dispositions. JOINT ITEMS JOINT COMMITTEE ON INAUGURAL CEREMONIES OF 1997 Amendment No. 2: Deletes $950,000, and re- lated provisions, appropriated for the Joint Committee on Inaugural Ceremonies of 1997 as proposed by the House and inserts $950,000, together with related provisions, appro- priated for the Joint Committee on Inau- gural Ceremonies of 1997 as proposed by the Senate. These funds are provided in accord- ance with Senate Concurrent Resolutions 47 and 48, 104th Congress, agreed to in the Sen- ate on March 20, 1996. JOINT ECONOMIC COMMITTEE Amendment No. 3: Appropriates $2,750,000 for the Joint Economic Committee instead of $3,000,000 as proposed by the House and $750,000 as proposed by the Senate. The con- ferees agree that the long term need for this committee should be reviewed and expect the funding to be phased down to zero in the future. CAPITOL POLICE BOARD CAPITOL POLICE SALARIES Amendment No. 4: Appropriates $69,356,000 for the salaries and related personnel ex- penses of the Capitol Police instead of $68,392,000 as proposed by the House and $70,132,000 as proposed by the Senate. The conferees believe that the information and systems that support Capitol Police finan- cial management processes are in need of im- provement. To some extent, the transfer of payroll\/personnel recordkeeping to the Na- tional Finance Center will lead to significant improvement in the reliability and accuracy of financial data, but other accounting and management information systems also re- quire attention. Amendment No. 5: Provides $33,437,000 to the Sergeant at Arms of the House of Rep- resentatives, to be disbursed by the Chief Ad- ministrative Officer of the House, for the Capitol Police assigned to the House rolls in- stead of $32,927,000 as proposed by the House and $34,213,000 as proposed by the Senate. Amendment No. 6: Provides $35,919,000 to the Sergeant at Arms and Doorkeeper of the Senate, to be disbursed by the Secretary of the Senate, for the Capitol Police assigned to the Senate rolls as proposed by the Senate instead of $35,465,000 as proposed by the House. GENERAL EXPENSES Amendment No. 7: Appropriates $2,782,000 for general expenses of the Capitol Police in- stead of $2,685,000 as proposed by the House and $2,880,000 as proposed by the Senate. The additional funds provided above the House bill are provided for vehicle replacement. CONGRESSIONAL BUDGET OFFICE SALARIES AND EXPENSES Amendment No. 8: Appropriates $24,532,000 for salaries and expenses, Congressional Budget Office, instead of $24,288,000 as pro- posed by the House and $24,775,000 as pro- posed by the Senate. ARCHITECT OF THE CAPITOL CAPITOL BUILDINGS AND GROUNDS CAPITOL BUILDINGS Amendment No. 9: Appropriates $23,255,000 for Capitol buildings, Architect of the Cap- itol as proposed by the House instead of $23,555,000 as proposed by the Senate. The conferees note that the Capitol Police, due to legislation enacted in the District of Columbia Appropriations Act for Fiscal Year 1996, will inherit the D.C. canine facility lo- cated at Blue Plains at a site adjacent to the Botanic Garden plant nursery. In the mean- time, through a reprogramming of funds made available by the Committees on Appro- priations, the Capitol Police canine oper- ation was relocated, on July 24, 1996, to a site adjacent to the buildings, training grounds, and kennels they will occupy when the D.C. canine operation vacates. This recent Cap- itol Police relocation was accomplished within a few months of learning of extremely hazardous conditions at the former location, and includes new kennels, training grounds, temporary office and classroom buildings, and other facilities necessary to continue this very important security program. The Committees on Appropriations have been ad- vised that the space being developed for the D.C. canine operation will be completed by February 27, 1997. The conferees expect that the Architect of the Capitol and the Capitol Police will make the necessary arrange- ments to move into those quarters imme- diately upon their availability. In the mean- time, the conferees believe that the Archi- tect of the Capitol should survey the need for renovations at the D.C. canine facility. If it is determined that renovations are nec- essary, the Committees on Appropriations will entertain a request to reprogram funds based upon the receipt of adequate engineer- ing estimates, plans, and design documenta- tion. HOUSE OFFICE BUILDINGS The managers on the part of the House, with the concurrence of the managers on the part of the Senate, direct that all employees displaced by the custodial contract at the Ford House Office Building will be absorbed in available vacant positions and expect every effort to be made to place them in po- sitions of equal or comparable pay. SENATE OFFICE BUILDINGS Amendment No. 10: Appropriates $39,640,000, of which $3,200,000 shall remain available until expended, for the operations of the Senate office buildings. Inasmuch as the amendment relates solely to the Senate and in accord with long practice under which each body determines its own housekeeping requirements and the other concurs without intervention, the managers on the part of the House, at the request of the managers on the part of the Senate, have receded to the Senate amendment. TITLE II\u2014OTHER AGENCIES LIBRARY OF CONGRESS SALARIES AND EXPENSES Amendment No. 11: Provides $216,007,000 for salaries and expenses, Library of Congress as proposed by the Senate instead of $215,007,000 as proposed by the House. The conferees agree with the Senate report language re- garding the deputy Librarian of Congress. Amendment No. 12: Earmarks $928,800 for the operation of the American Folklife Cen- ter as proposed by the Senate. ADMINISTRATIVE PROVISIONS Amendment No. 13: Deletes a provision proposed by the House and stricken by the Senate authorizing account-to-account transfers, subject to approval, of funds ap- propriated in the bill to the Library of Con- gress. Amendment No. 14: Provides a two-year authorization for the American Folklife Cen- ter as proposed by the Senate. ARCHITECT OF THE CAPITOL LIBRARY BUILDINGS AND GROUNDS STRUCTURAL AND MECHANICAL CARE Amendment No. 15: Appropriates $9,753,000 for structural and mechanical care, Library buildings and grounds, Architect of the Cap- itol instead of $9,003,000 as proposed by the House and $10,453,000 as proposed by the Sen- ate. These funds include $750,000 above the House bill for an uninterruptible power sup- ply. The conferees note that the additional amounts provided were not included in the budget request transmitted to the Congress. Amendment No. 16: Provides that $1,310,000 shall remain available until expended for structural and mechanical care, Library buildings and grounds instead of $560,000 as proposed by the House and $1,910,000 as pro- posed by the Senate. GENERAL ACCOUNTING OFFICE SALARIES AND EXPENSES The conferees agree that funding included for the General Accounting Office contract audit services is $8,000,000. TITLE III\u2014GENERAL PROVISIONS Amendment No. 17: Deletes a provision proposed by the House and stricken by the Senate regarding dynamic macroeconomic scoring of certain spending and revenue leg- islation. Amendment No. 18: Authorizes law en- forcement personnel of the Capitol Police to elect to receive compensatory time off in lieu of overtime compensation in excess of the maximum for their work period as pro- posed by the Senate. Amendment No. 19: Makes a date change in section 316 of Public Law 101 302 regarding Senate artwork as proposed by the Senate. Amendment No. 20: Deletes a provision proposed by the Senate that the Government Printing Office shall be considered an agency and the Public Printer shall be considered the head of the agency for purposes of sec- tions 801(b)(2)(B) and 801(b)(2)(C), respec- tively, of the National Energy Conservation Policy Act. Amendment No. 21: Changes a section number and amends a provision inserted by CONGRESSIONAL RECORD \u2014 HOUSEH9452 July 31, 1996 the Senate regarding technology planning, evaluation, development, and management in the legislative branch. The conference agreement requests the Senate Committee on Rules and the Committee on House Over- sight to oversee a program for providing the widest possible exchange of information among legislative branch agencies with the long range goal of improving information technology planning and evaluation. The conferees note that the Committee on House Oversight and the Senate Committee on Rules and Administration have begun a process to develop a common information system. The Clerk of the House and the Sec- retary of the Senate have been called upon to coordinate the project with the oversight of those Committees and to ultimately pro- pose the standards for a legislative branch wide information system to the Committees for approval. An open exchange of technology, projects, plans and developments is crucial to the suc- cess of a legislative branch wide information system. The conferees expect, therefore, that the following organizations will be relied upon to participate and assist in this effort: the Clerk of the House, the Chief Adminis- trative Officer of the House, the office of the Secretary of the Senate, the Sergeant at Arms of the Senate, the Library of Congress, the Government Printing Office, House In- formation Resources, the Senate Computer Center, the General Accounting Office, the Congressional Budget Office, and the office of the Architect of the Capitol. Section 209 of the Legislative Branch Ap- propriations Act, 1996, directed the Library of Congress to develop a plan and supporting analyses for this system. In so doing, the Li- brary identified the major programs under development in various parts of the legisla- tive branch as well as a significant amount of duplication. The process begun by the oversight committees will enable the strengths of each program to be recognized and integrated into a system that will bene- fit Congress as a whole. Amendment No. 22: Retains a provision proposed by the Senate, amended to change a section number, that amends section 3303 of Title 5, United States Code, together with technical and conforming amendments, re- garding recommendations made by Senators and Representatives for applicants to the competitive service. Amendment No. 23: Deletes a provision proposed by the Senate regarding an elec- tronic information system. The managers on the part of the House and Senate agree that the Congressional Research Service, upon the request of the Senate Committee on Rules and Administration, and in consulta- tion with the Secretary of the Senate and the heads of the appropriate offices and agencies of the legislative branch, shall co- ordinate the development of an electronic congressional legislative information and document retrieval system to provide for the legislative information needs of the Senate through the exchange and retrieval of infor- mation and documents among legislative branch offices and agencies. The managers on the part of the House and the Senate also agree that the Library of Congress shall as- sist the Congressional Research Service in supporting the Senate in this effort, and shall provide technical staff and resources as may be necessary. Amendment No. 24: Deletes a provision in- serted by the Senate regarding employment limitations under section 207(e) of title 18, United States Code. Amendment No. 25: Retains a provision proposed by the Senate, amended to change a section number, that amends Chapter 1 of title 17, United States Code, to exempt from infringement of copyright the reproduction or distribution of certain publications in spe- cialized formats exclusively for use by blind or other persons with disabilities. In addi- tion, the conferees, at the request of the managers on the part of the House, have in- serted a provision that provides the tradi- tional death gratuity for the widow of Bill Emerson, late a Representative from the State of Missouri. CONFERENCE TOTAL\u2014WITH COMPARISONS The total new budget (obligational) au- thority for the fiscal year 1997 recommended by the Committee of Conference, with com- parisons to the fiscal year 1996 amount, the 1997 budget estimates, and the House and Senate bills for 1997 follow: New budget (obligational) authority, fiscal year 1996 …………………………… $2,187,356,000 Budget estimates of new (obligational) authority, fiscal year 1997 ……………. 2,339,421,000 House bill, fiscal year 1997 1,681,311,000 Senate bill, fiscal year 1997 2,165,081,000 Conference agreement, fis- cal year 1997 ……………….. 2,165,097,600 Conference agreement compared with: New budget (obligational) author- ity, fiscal year 1996 … \u00a522,258,400 Budget estimates of new (obligational) authority, fiscal year 1997 ……………………… \u00a5174,323,400 House bill, fiscal year 1997 ……………………… +483,786,600 Senate bill, fiscal year 1997 ……………………… +16,000 RON PACKARD, CHARLES H. TAYLOR, DAN MILLER, ROGER F. WICKER, BOB LIVINGSTON, RAY THORNTON, JOSE\u0301 SERRANO, VIC FAZIO, DAVID R. OBEY, Managers on the Part of the House. CONNIE MACK, ROBERT F. BENNETT, BEN NIGHTHORSE CAMPBELL, MARK O. HATFIELD, PATTY MURRAY, BARBARA A. MIKULSKI, ROBERT C. BYRD, Managers of the Part of the Senate. f PROVIDING FOR DISPOSAL OF PUBLIC LANDS IN SUPPORT OF MANZANAR HISTORIC SITE Mr. HANSEN. Mr. Speaker, I ask unanimous consent for the immediate consideration in the House of the bill (H.R. 3006) to provide for disposal of public lands in support of the Manzanar Historic Site in the State of California, and for other purposes. The Clerk read the title of the bill. The SPEAKER pro tempore. Is there objection to the request of the gen- tleman from Utah? Mr. MILLER of California. Mr. Speaker, reserving the right to object, I yield to the gentleman from Califor- nia [Mr. LEWIS] to explain the purpose of the bill. (Mr. LEWIS of California asked and was given permission to revise and ex- tend his remarks.) Mr. LEWIS of California. I appreciate the gentleman yielding. Mr. Speaker, responding to the gen- tleman from California, this bill is de- signed to add additional land to the Manzanar Historic Site. I think the House knows that that was a major lo- cation whereby Americans of Japanese descent were interned during World War II, and it is combined with a rath- er fantastic environmental project tak- ing place between the country of Inyo and the Los Angeles Department of Water and Power. Mr. MILLER of California. I thank the gentleman. Mr. Speaker, further reserving the right to object, I yield to the gen- tleman from California [Mr. MATSUI]. (Mr. MATSUI asked and was given permission to revise and extend his re- marks.) Mr. MATSUI. I thank the gentleman from California for yielding. Mr. Speaker, I thank the gentleman from California [Mr. LEWIS] for leading the way on this piece of legislation. We really appreciate all he has done as well as, of course, the gentleman from Utah [Mr. HANSEN], the gentleman from Alaska [Mr. YOUNG], the gen- tleman from California [Mr. MILLER], and the gentleman from New Mexico [Mr. RICHARDSON]. I just want to thank all the gentle- men for all the help on behalf of the Japanese-American community. Mr. LEWIS of California. Mr. Speak- er, if the gentleman will yield further under his reservation, I must say I very much appreciate the cooperation of my colleague from California as well, all of my colleagues from California. This is a very important measure. Mr. MATSUI. Mr. Speaker, I am extremely pleased that we are moving forward tonight with this important legislation, H.R. 3006, the Owens River Valley Environmental Restoration and Manzanar Land Transfer Act of 1996. This bill will allow us to complete the process of creating a National Historic Site on the grounds of the former Manzanar Internment Camp. During World War II, 11,000 Americans of Japanese ancestry were confined at the Manzanar Internment Camp. These individuals were some of the over 120,000 Japanese- Americans interned at 10 sites throughout the United States. The National Park Service determined in the 1980’s that of the 10 former internment camps, Manzanar was best suited to be pre- served and to thus serve as a reminder to Americans of the glaring violation of civil rights that the internment represented. As a result, the 102d Congress passed Public Law 102 248 establishing a national historic site at Manzanar. H.R. 3006 will finish this process by allowing the Federal Government to obtain the CONGRESSIONAL RECORD \u2014 HOUSE H9453July 31, 1996 Manzanar site through a land exchange with the Los Angeles Department of Water and Power [LADWP], which currently owns the property. The parties that would be involved in this land transfer\u2014LADWP, the National Park Service, the Bureau of Land Management, and Inyo County\u2014reached agreement in Feb- ruary on a land exchange that can occur rap- idly once our legislation is passed. All of these parties strongly support this legislation. When completed, the Manzanar National Historic Site will stand as powerful testimony to the tragedy of the internment. Through its ability to educate future generations of Ameri- cans, the site will make an important contribu- tion to our efforts to prevent any group in the United States from ever suffering such a wide- spread abrogation of its constitutional liberties. I want to express my deep gratitude to my colleague, JERRY LEWIS, for his hard work in introducing this legislation and moving it for- ward. In addition, I deeply appreciate the as- sistance of the Resources Committee, particu- larly Chairman DON YOUNG and the ranking minority member GEORGE MILLER, as well as JIM HANSEN and BILL RICHARDSON, chairman and ranking minority member of the National Parks, Forests and Lands Subcommittee re- spectively. I also want to thank Sue Embrey and the other members of the Manzanar National His- toric Site Advisory Commission. Their tireless commitment to the realization of the Manzanar NHS has been the critical force behind this ef- fort. Finally, we could not have reached this stage without the help of Director of the Na- tional Park Service Roger Kennedy, the re- gional staff of the National Park Service and Bureau of Land Management, the Los Angeles Department of Water and Power [LADWP], and Inyo County. I look forward to working with my colleagues in this body and in the Senate to achieve final passage of this important bill. Mr. MILLER of California. Mr. Speaker, H.R. 3006 will facilitate the disposal of certain pub- lic lands for the benefit of the Manzanar Na- tional Historic Site by revoking some outdated public land withdrawals. It is our understand- ing that these lands, which the BLM has iden- tified for disposal, will then be used in an ex- change for lands owned by the city of Los An- geles which are inside the boundary of the Manzanar National Historic Site. In addition, the bill expands the Boundaries of the Manzanar National Historic Site to include an additional 300 acres of land that has been found to have important archaeological ele- ments. This is a good initiative that is supported by the administration, and on a bipartisan basis by Members of the California delegation. We support the bill and have no objection to its consideration today. Mr. Speaker, I withdraw my reserva- tion of objection. The SPEAKER pro tempore. Is there objection to the request of the gen- tleman from Utah? There was no objection. The Clerk read the bill, as follows: H.R. 3006 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. TERMINATION OF WITHDRAWALS. (a) UNAVAILABILITY OF CERTAIN LANDS.\u2014 The Congress, by enacting the Act entitled ”An Act to establish the Manzanar National Historic Site in the State of California, and for other purposes”, approved March 3, 1992 (106 Stat. 40; Public Law 102 248), (1) provided for the protection and interpretation of the historical, cultural, and natural resources associated with the relocation of Japanese- Americans during World War II and estab- lished the Manzanar National Historic Site in the State of California, and (2) authorized the Secretary of the Interior to acquire lands or interests therein within the boundary of the Historic Site by donation, purchase with donated or appropriated funds, or by ex- change. The public lands identified for dis- posal in the Bureau of Land Management’s Bishop Resource Area Resource Management Plan that could be made available for ex- change in support of acquiring lands within the boundary of the Historic Site are cur- rently unavailable for this purpose because they are withdrawn by an Act of Congress. (b) TERMINATION OF WITHDRAWAL.\u2014To pro- vide a land base with which to allow land ex- changes in support of acquiring lands within the boundary of the Manzanar National His- toric Site, the withdrawal of the following described lands is terminated and such lands shall not be subject to the Act of March 4, 1931 (chap. 517; 46 Stat. 1530): MOUNT DIABLO MERIDIAN Township 2 North, Range 26 East Section 7: North half south half of lot 1 of southwest quarter, north half south half of lot 2 of southwest quarter, north half south half southeast quarter, Township 4 South, Range 33 East Section 31: Lot 1 of southwest quarter, northwest quarter northeast quarter, southeast quar- ter; Section 32: Southeast quarter northwest quarter, northeast quarter southwest quarter, south- west quarter southeast quarter, Township 5 South, Range 33 East Section 4: West half of lot 1 of northwest quarter, west half of lot 2 of northwest quarter, Section 5: East half of lot 1 of northeast quarter, east half of lot 2 of northeast quarter, Section 9: Northwest quarter southwest quarter northeast quarter, Section 17: Southeast quarter northwest quarter, northwest quarter southeast quarter, Section 22: Lot 1 and 2, Section 27: Lot 2, west half northeast quarter, south- east quarter northwest quarter, northeast quarter southwest quarter, northwest quar- ter southeast quarter, Section 34: Northeast quarter, northwest quarter, southeast quarter, Township 6 South, Range 31 East Section 19: East half northeast quarter southeast quarter. Township 6 South, Range 33 East Section 10: East half southeast quarter; Section 11: Lot 1 and 2, west half northeast quarter, northwest quarter, west half southwest quar- ter, northeast quarter southwest quarter; Section 14: Lots 1 thru 4, west half northeast quarter, southeast quarter northwest quarter, north- east quarter southwest quarter, northwest quarter southeast quarter. Township 7 South, Range 32 East Section 23: South half southwest quarter; Section 25: Lot 2, northeast quarter northwest quar- ter. Township 7 South, Range 33 East Section 30: South half of lot 2 of northwest quarter, lot 1 and 2 of southwest quarter, Section 31: North half of lot 2 of northwest quarter, southeast quarter northeast quarter, north- east quarter southeast quarter. Township 8 South, Range 33 East Section 5: Northwest quarter southwest quarter. Township 13 South, Range 34 East Section 1: Lots 43, 46, and 49 thru 51. Section 2: North half northwest quarter southeast quarter southeast quarter. Township 11 South, Range 35 East Section 30: Lots 1 and 2, east half northwest quarter, east half southwest quarter, and west half southwest quarter southeast quarter. Section 31: Lot 8, west half west half northeast quar- ter, east half northwest quarter, and west half southeast quarter. Township 13, South, Range 35 East Section 18: South half of lot 2 of northwest quarter, lot 1 and 2 of southwest quarter, southwest quarter northeast quarter, northwest quarter southeast quarter; Section 29: Southeast quarter northeast quarter, northeast quarter southeast quarter. Township 13 South, Range 36 East Section 17: Southwest quarter northwest quarter, southwest quarter; Section 18: South half of lot 1 of northwest quarter, lot 1 of southwest quarter, northeast quar- ter, southeast quarter; Section 19: North half of lot 1 of northwest quarter, east half northeast quarter, northwest quar- ter northeast quarter; Section 20: Southwest quarter northeast quarter, northwest quarter, northeast quarter south- west quarter, southeast quarter; Section 28: Southwest quarter southwest quarter; Section 29: East half northeast quarter; Section 33: Northwest quarter northwest quarter, southeast quarter northwest quarter. Township 14 South, Range 36 East Section 31: Lot 1 and 2 of southwest quarter, south- west quarter southeast quarter. aggregating 5,630 acres, more or less. (c) AVAILABILITY OF LANDS.\u2014Upon enact- ment of this Act, the lands specified in sub- section (b) shall be open to operation of the public land laws, including the mining and mineral leasing laws, only after the Sec- retary of the Interior has published a notice in the Federal Register opening such lands. COMMITTEE AMENDMENT The SPEAKER pro tempore. The Clerk will report the committee amendment. The Clerk read as follows: Committee amendment: Page 8, after line 4, insert the following: CONGRESSIONAL RECORD \u2014 HOUSEH9454 July 31, 1996 SEC. 2. ADDITIONAL AREA. Section 101 of Public Law 102 248 is amend- ed by inserting in subsection (b) after the second sentence ”The site shall also include an additional area of approximately 300 acres as demarcated as the new proposed bound- aries in the map dated March 8, 1996, entitled ‘Manzanar National Historic Site Archae- ological Base Map’.” The committee amendment was agreed to. The bill was ordered to be engrossed and read a third time, was read the third time, and passed. The title of the bill was amended so as to read: ”A bill to provide for dis- posal of public lands in support of the Manzanar National Historic Site in the State of California, and for other pur- poses.” A motion to reconsider was laid on the table. f TRANSFERRING JURISDICTION OF FEDERAL PROPERTY LOCATED IN THE DISTRICT OF COLUMBIA Mr. HANSEN. Mr. Speaker, I ask unanimous consent for the immediate consideration in the House of the bill (H.R. 2636) to transfer jurisdiction over certain parcels of Federal real property located in the District of Columbia, and for other purposes. The Clerk read the title of the bill. The SPEAKER pro tempore. Is there objection to the request of the gen- tleman from Utah? Mr. MILLER of California. Mr. Speaker, reserving the right to object, and I shall not object, I yield to the gentleman from Utah [Mr. HANSEN]. (Mr. HANSEN asked and was given permission to revise and extend his re- marks.) Mr. HANSEN. Mr. Speaker, I rise in support of this piece of legislation. Mr. MILLER of California. Mr. Speaker, further reserving the right to object, I just want to mention that this legislation was introduced by our col- league the gentleman from Minnesota [Mr. OBERSTAR]. I want to thank the gentleman from Utah for his coopera- tion. Mr. Speaker, H.R. 2636, introduced by our colleague, Mr. OBERSTAR, authorizes a three- way transfer of jurisdiction over several par- cels of land among the Architect of the Cap- itol, the Secretary of the Interior, and the Dis- trict of Columbia. In addition to facilitating management of these parcels, this transfer is being done for the purpose of setting aside a parcel of land adjacent to the Capitol Grounds for the proposed Japanese-American Patriot- ism Memorial. The memorial will honor the pa- triotic efforts of Japanese-Americans in World War II. It is our understanding that the parties in- volved support this transfer and we have no objection to the passage of the bill. Mr. MATSUI. Mr. Speaker, I rise to express my strong support for this important legislation and my great pleasure that it is before us this evening. H.R. 2636 is needed to facilitate the construction of a Memorial honoring the patri- otism of Japanese Americans during World War II here in our nation’s Capital. In 1992, Congress passed Public Law 102 502, authorizing the construction of this Me- morial on federal property. Under the terms of the legislation, the Memorial will involve vir- tually no Federal costs. All construction and major maintenance costs will be paid by pri- vate funds. The National Japanese American Memorial Foundation, formerly the Go For Broke National Veterans Association, has al- ready begun this fundraising effort. Land currently owned by the Architect of the Capitol has been selected as a site for the Memorial. However, in order for the construc- tion of the Memorial to proceed, the land must be transferred to the National Park Service. H.R. 2636 would direct such a transfer to occur. In exchange, the Architect of the Cap- itol would obtain a parcel of land adjacent to the Hart Senate Office Building that is more integral to the Capitol grounds. It is critically important for the land ex- change to occur this year. The 1992 authoriz- ing legislation and other applicable law require that construction on the Memorial begin by 1999. Until the land is transferred, the ap- proval process for the Memorial’s design can not begin. Because of the many agencies in- volved, this approval process will almost defi- nitely consume the next three years. 33,000 Americans of Japanese Ancestry served in the military during World War II. The all Japanese American 100th Infantry Battal- ion\/442nd Regimental Combat Team was the most decorated unit in military history for its size and length of service\u2014700 members of the unit gave their lives. When completed, this Memorial will pay tribute to the immeasurable sacrifice made by these individuals as well as the many other contributions that Japanese- Americans made to the war effort. This effort would not have reached this stage without the hard work and assistance of several individuals. The leadership of my friend and former colleague Norm Mineta in achieving the passage of the original 1992 legislation as well as his important role in de- veloping this legislation was absolutely essen- tial. In addition, I am extremely grateful to the sponsor of H.R. 2636, JIM OBERSTAR and also to Chairman of the Transportation and Infra- structure Committee, BUD SHUSTER. I also deeply appreciate the assistance of the Re- sources Committee, particularly Chairman DON YOUNG and the Ranking Minority Member GEORGE MILLER, as well as JIM HANSEN and BILL RICHARDSON, chairman and ranking mi- nority member of the National Parks, Forests and Lands Subcommittee respectively. The Board and staff of the National Japa- nese American Memorial Foundation has also been critical to this effort. I would note particu- larly the Foundation’s Chairman Emeritus Wil- liam Marutani, its Chairman Mo Marumoto, Honorary Co-Chair Etsu Mineta Masaoka and Executive Director George Wakiji. I look forward to working with my colleagues in this body and in the Senate to achieve final passage of this important bill. Mr. MILLER of California. Mr. Speaker, I withdraw my reservation of objection. The SPEAKER pro tempore. Is there objection to the request of the gen- tleman from Utah? There was no objection. The Clerk read the bill, as follows: H.R. 2636 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. PURPOSE. It is the purpose of this Act\u2014 (1) to assist in the effort to timely estab- lish within the District of Columbia a na- tional memorial to Japanese American pa- triotism in World War II; and (2) to improve management of certain par- cels of Federal real property located within the District of Columbia, by transferring ju- risdiction over such parcels to the Architect of the Capitol, the Secretary of the Interior, and the Government of the District of Co- lumbia. SAC. 2. TRANSFERS OF JURISDICTION. (a) IN GENERAL.\u2014Effective on the date of the enactment of this Act and notwithstand- ing any other provision of law, jurisdiction over the parcels of Federal real property de- scribed in subsection (b) is transferred with- out additional consideration as provided by subsection (b). (b) SPECIFIC TRANSFERS.\u2014 (1) TRANSFERS TO SECRETARY OF THE INTE- RIOR.\u2014 (A) IN GENERAL.\u2014Jurisdication over the following parcels is transferred to the Sec- retary of the Interior: (i) That triangle of Federal land, including any contiguous sidewalks and tree space, that is part of the United States Capitol Grounds under the jurisdiction of the Archi- tect of the Capitol bound by D Street, N.W., New Jersey Avenue, N.W., and Louisiana Av- enue, N.W., in Square W632 in the District of Columbia, as shown on the Map Showing Properties Under Jurisdiction of the Archi- tect of the Capitol, dated November 8, 1994. (ii) That triangle of Federal land, includ- ing any contiguous sidewalks and tree space, that is part of the United States Capitol Grounds under the jurisdiction of the Archi- tect of the Capitol bound by C Street, N.W., First Street, N.W., and Louisiana Avenue, N.W., in the District of Columbia, as shown on the Map Showing Properties Under Juris- diction of the Architect of the Capitol, dated November 8, 1994. (B) LIMITATION.\u2014The parcels transferred by subparagraph (A) shall not include those contiguous sidewalks abutting Louisiana Av- enue, N.W., which shall remain part of the United States Capitol Grounds under the ju- risdiction of the Architect of the Capitol. (C) CONSIDERATION AS MEMORIAL SITE.\u2014The parcels transferred by clause (i) of subpara- graph (A) may be considered as a site for a S6201 national memorial to Japanese Amer- ican patriotism in World War II. (2) TRANSFERS TO ARCHITECT OF THE CAP- ITOL.\u2014Jurisdiction over the following par- cels is transferred to the Architect of the Capitol: (A) That portion of the triangle of Federal land in Reservation No. 204 in the District of Columbia under the jurisdiction of the Sec- retary of the Interior, including any contig- uous sidewalks, bound by Constitution Ave- nue, N.E., on the north, the branch of Mary- land Avenue, N.E. running in a northeast di- rection on the west, the major portion of Maryland avenue, N.E., on the south, and 2nd Street, N.E., on the east, including the con- tiguous sidewalks. (B) That irregular area of Federal land in Reservation No. 204 in the District of Colum- bia under the jurisdiction of the Secretary of the Interior, including any contiguous side- walks, northeast of the real property de- scribed in subparagraph (A) bound by Con- stitution Avenue, N.E., on the north, the branch of Maryland Avenue, N.E., running to the northeast on the south, and the private property on the west known as lot 7 in square 726. (C) The two irregularly shaped medians lying north and east of the property de- scribed in subparagraph (A), located between CONGRESSIONAL RECORD \u2014 HOUSE H9455July 31, 1996 the north and south curbs of Constitution Avenue, N.E., west of its intersection with Second Street, N.E., all as shown in Land Record No. 268, dated November 22, 1957, in the Office of the Surveyor, District of Co- lumbia, in Book 138, Page 58. (D) All sidewalks under the jurisdiction of the District of Columbia abutting on and contiguous to the land described in subpara- graphs (A), (B), and (C). (3) TRANSFERS TO DISTRICT OF COLUMBIA.\u2014 Jurisdiction over the following parcels is transferred to the Government of the Dis- trict of Columbia: (A) That portion of New Jersey Avenue, N.W., between the northernmost point of the intersection of New Jersey Avenue, N.W., and D Street, N.W., and the northernmost point of the intersection of New Jersey Ave- nue, N.W., and Louisiana Avenue, N.W., be- tween squares 631 and W632, which remains Federal property. (B) That portion of D Street, N.W., be- tween its intersection with New Jersey Ave- nue, N.W., and its intersection with Louisi- ana Avenue, N.W., between Squares 630 and W632, which remains Federal property. SEC. 3. MISCELLANEOUS. (A) COMPLIANCE WITH OTHER LAWS.\u2014Com- pliance with this Act shall be deemed to sat- isfy the requirements of all laws otherwise applicable to transfers of jurisdiction over parcels of Federal real property. (b) LAW ENFORCEMENT RESPONSIBILITY.\u2014 Law enforcement responsibility for the par- cels of Federal real property for which juris- diction is transferred by section 2 shall be assumed by the person acquiring such juris- diction. (c) UNITED STATES CAPITOL GROUNDS.\u2014 (1) DEFINITION.\u2014The first section of the Act entitled ”An Act to define the United States Capitol Grounds, to regulate the use thereof, and for other purposes”, approved July 31, 1946 (40 U.S.C. 193a), is amended to include within the definition of the United States Capitol Grounds the parcels of Fed- eral real property described in section 2(b)(2). (2) JURISDICTION OF CAPITOL POLICE.\u2014The United States Capitol Police shall have ju- risdiction over the parcels of Federal real property described in section 2(b)(2) in ac- cordance with section 9 of such Act of July 31, 1946 (40 U.S.C. 212a). (e) EFFECT OF TRANSFERS.\u2014A person relin- quishing jurisdiction over a parcel of Federal real property transferred by section 2 shall not retain any interest in the parcel except as specifically provided by this Act. COMMITTEE AMENDMENT The SPEAKER pro tempore. The Clerk will report the committee amendment. The Clerk read as follows: Committee amendment: Page 4, line 12, strike ”S6201”. The committee amendment was agreed to. The bill was ordered to be engrossed and read a third time, was read the third time, and passed, and a motion to reconsider was laid on the table. f GENERAL LEAVE Mr. HANSEN. Mr. Speaker, I ask unanimous consent that all Members may have 5 legislative days within which to revise and extend their re- marks on H.R. 3006 and H.R. 2636, the bills just passed. The SPEAKER pro tempore. Is there objection to the request of the gen- tleman from Utah? There was no objection. f b 2030 SPECIAL ORDERS The SPEAKER pro tempore (Mr. FOX of Pennsylvania). Under the Speaker’s announced policy of May 12, 1995, and under a previous order of the House, the following Members will be recog- nized for 5 minutes each. f The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from New Jersey [Mr. SAXTON] is recognized for 5 minutes. [Mr. SAXTON addressed the House. His remarks will appear hereafter in the Extensions of Remarks.] f The SPEAKER pro tempore. Under a previous order of the House, the gentle- woman from Illinois [Mrs. COLLINS] is recognized for 5 minutes. [Mrs. COLLINS of Illinois addressed the House. Her remarks will appear hereafter in the Extensions of Re- marks.] f The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from Indiana [Mr. BURTON] is recognized for 5 minutes. [Mr. BURTON of Indiana addressed the House. His remarks will appear hereafter in the Extensions of Re- marks.] f SPECIAL CEREMONY FOR STEPHEN D. BAKRAN The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from Michigan [Mr. STUPAK] is recognized for 5 minutes. Mr. STUPAK. Mr. Speaker, I would like to call to your attention and that of the U.S. House of Representatives a special ceremony that will be held this Friday, August 2, in Wells, MI, in my congressional district. On Friday, the family of Navy avia- tion Radioman Second Class Stephen D. Bakran will gather at the gardens of Rest Memorial Park in Wells, MI, as his remains are laid to rest. It is the tradition of our Nation to honor our war dead. What makes the ceremony for Airman Bakran so special is the fact that this important closure for the family comes more than five decades after this young man was killed in action. From Navy officials and other sources, we know that Stephen Bakran was part of a special bombing squadron on a unique mission assigned to the U.S.S. Ranger, CV 4, the first ship built from the keel up as an aircraft carrier. Stephen Bakran came to be aboard the Ranger after enlisting in the Navy on June 27, 1941, only weeks after his graduation from high school. The eldest son in a Catholic family of 11 children, Stephen is remembered by family, friends, teachers, and others as an honest, hard working, caring indi- vidual. The son of Croatian immigrants, Ste- phen is recalled in his role as a money earner for the family on his paper route, a dutiful son working in the family garden or tending the farm ani- mals, and a responsible sibling chang- ing and washing diapers of his younger brothers and sisters. Airman Bakran is part of the first U.S. carrier based mission launch against Nazi-held Norway. Code named Operation Leader, the planes of the mission sank Nazi shipping and caused other damage at the cost of two SBD 5 Dauntless scout bombers. One of these bombers that were downed claimed the lives of Stephen Bakran and his pilot, Lieutenant Clyde A. Tucker, Jr. of Alexandria, LA. Reports say that Stephen Bakran was still firing his machine gun as his plane went down on October 4, 1943. Although the Navy listed Stephen Bakran and Clyde Tucker as killed in action, it was not until 1990 that a Nor- wegian diving club and a Norwegian historical research vessel found the wreckage of the aircraft off the coast of Bodo, Norway, in 150 feet of water. It was not until July of 1993 that div- ers were able to locate and recover the two aviators. The remains of Clyde Tucker were identified in 1994 and are buried in Arlington National Cemetery. However, DNA tests did not conclu- sively identify the remains of Stephen Bakran until this year. I am pleased that I was able to assist the family by working with our mili- tary officials during the identification process, and now I am extremely grate- ful to everyone, including those who helped to find, identify and transport Steve Bakran back to his family where they will be able to find a final resting place for this fallen warrior. Today as we watch other families struggle with the tragedies of the dis- appearance of loved ones in a dark wa- tery grave, we find comfort in witness- ing that the search for our military missing in action never ends and the door of hope, hope that they may be found, never closes. Mr. Speaker, let us remember the Bakran family in our thoughts and prayers on Friday. I regret that I will not be able to attend the funeral, as I will be here attending to legislative business. The Bakran family, the Wells and Escanaba community will be at Steve’s funeral, but my family will join the Bakran family in a final salute to our World War II Navy veteran who is laid to rest. f The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from California [Mr. RIGGS] is recognized for 5 minutes. [Mr. RIGGS addressed the House. His remarks will appear hereafter in the Extensions of Remarks.] CONGRESSIONAL RECORD \u2014 HOUSEH9456 July 31, 1996 The SPEAKER pro tempore. Under a previous order of the House, the gentle- woman from California [Ms. MILLENDER-MCDONALD] is recognized for 5 minutes. [Ms. MILLENDER-MCDONALD ad- dressed the House. Her remarks will appear hereafter in the Extensions of Remarks.] f The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from Washington [Mr. METCALF] is recognized for 5 minutes. [Mr. METCALF addressed the House. His remarks will appear hereafter in the Extensions of Remarks.] f TRIBUTE TO JACK HENNING The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from California [Mr. BROWN] is recognized for 5 minutes. Mr. BROWN of California. Mr. Speak- er, I rise today to pay tribute to the life and career of John F. ”Jack” Henning. On Tuesday, July 30, 1996, yesterday, the California labor movement bid a fond farewell to their top leader for the past 26 years. Mr. Henning, at the age of 80 years, retired as executive sec- retary-treasurer of the California Labor Federation, AFL CIO. Born in San Francisco, where he was raised in a blue collar family, Jack earned a college degree in English lit- erature at St. Mary’s College. Mr. Henning’s rise in labor unions began in the 1940’s, when he held jobs in a pipe and steel plant; and in 1949, he began working at the California Labor Fed- eration, initially as a senior staffer. Mr. Henning has also served as Direc- tor of the California Department of In- dustrial Relations in the early 1960’s, where I worked closely with him in my role as a member of the State Assem- bly Committee on Industrial Relations. He also worked as Under Secretary of Labor in both the Kennedy and John- son administrations, where again I worked closely with him as a Member of Congress and a member of the Com- mittee on Education and Labor. In ad- dition to his already distinguished ca- reer, Mr. Henning was also the Ambas- sador to New Zealand from 1967 to 1969, where again I visited with him on my first trip to Anarctica, and a Regent of the University of California from 1977 to 1989. After Mr. Henning returned home from New Zealand, he took the helm of the California Labor Federation, and for the past 26 years never faced an op- ponent for the post. Throughout his career in the labor union movement, which he began as a young man in 1938, he was heralded as a master orator, ”thundering from the political left against what he regards as the scourge of unbridled capital- ism.” Mr. Henning has been a cham- pion of the working poor and underclass, fighting to increase their standard of living. Mr. Henning was in- strumental in the passage of the Cali- fornia Agricultural Labor Relations Act of 1975, which gave farm workers the right to organize and bargain col- lectively, as he was in sponsoring an initiative in 1988 which regulated work- place health and safety for the state’s workers. During his farewell address, he called upon those to his political right to visit any major U.S. city and ”see what capital has done to the poor, see the centers of wealth and the mansions and the corporate wealth, and then see the impoverished . . . homeless, beggers at the table of wealth.” One of his many accomplishments has been preventing restaurant owners from counting tips as part of the minimum wage. Jack Henning has left behind a ca- reer in the labor union movement in which his contributions will not be for- gotten. His tough negotiating skills along with his ability to sway people with his orations, have provided labor employees with better working condi- tions. He has truly been an inspiration to me and to others who are fighting to protect the jobs and lives of the citi- zens of California. Mr. Speaker, I ask my colleagues to join me in commending Jack Henning on his dedicated service to the Califor- nia Labor Federation and to the work- ers of the State of California. f The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from Florida [Mr. FOLEY] is recognized for 5 minutes. [Mr. FOLEY addressed the House. His remarks will appear hereafter in the Extensions of Remarks.] f The SPEAKER pro tempore. Under a previous order of the House, the gentle- woman from Texas [Ms. JACKSON-LEE] is recognized for 5 minutes. [Ms. JACKSON-LEE of Texas ad- dressed the House. Her remarks will appear hereafter in the Extensions of Remarks.] f The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from California [Mr. MILLER] is recognized for 5 minutes. [Mr. MILLER of California addressed the House. His remarks will appear hereafter in the Extensions of Re- marks.] f ECONOMIC GROWTH UNDER CLIN- TON ADMINISTRATION HAS BEEN ANEMIC The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from California [Mr. DREIER] is recognized for 5 minutes. Mr. DREIER. Mr. Speaker, I rise this evening to comment on a statement that was made throughout the debate on this historic welfare reform measure that was passed. I am pleased to see that we did it in a bipartisan way, but both sides of the aisle, very appro- priately, accurately stated that as we look at reducing welfare we are going to be faced with an economy that will not have enough jobs for those people out there who are going to be moving off of welfare. That is a very legitimate concern be- cause economic growth under this ad- ministration has been anemic. In fact, it has been lower than 21 of the last 30 years. Now, I believe, Mr. Speaker, that it is very important for us to follow up the very historic welfare reform legislation which we passed today with an eco- nomic growth plan that increases sav- ings and investment, which will lead to higher rates of productivity, increase worker wages and the creation of more private sector jobs. The reason for the anemic growth that we have seen is that productivity growth is too low. Productivity is too low because we are not investing enough in both physical capital and human capital. Unfortunately, this ad- ministration is responsible for low pro- ductivity growth because the tax and regulatory burden has been way too great. Every year since Bill Clinton took of- fice, taxes have been higher and family income has been lower than when he got elected. In fact, as we all have come to find out, the average family has a tax burden which is in excess of 38 percent. Under the Clinton administration the cost of complying with Federal regula- tions has also been very high. It aver- ages $1,000 per household. Obviously, we all know that regulation increases the cost of employing workers, and thus acts as a tax on job creation and employment. Now, this administration is respon- sible for low productivity growth be- cause the President has fought our ef- forts to reform the education system that we have. Unfortunately, this ad- ministration, due to it, government spending on education, as we all know, has gone way up, while the perform- ance, the school performance and stu- dent achievement have remained static and are leaving young Americans ill equipped to function in today’s increas- ingly competitive global economy. What Congress can do to increase productivity and long-term capital eco- nomic growth is very, very key, and there are more than a few items that we can do to address them. Obviously, the first that comes to mind for vir- tually everyone is balance the budget. We have been very committed to a balance budget, and we know what that will create. It obviously increases do- mestic savings, it lowers interest rates, and increases overall investment, and we know that that would be a very, very key and beneficial item as we look towards addressing this concern of anemic economic growth and slow pro- ductivity. Another one that is very key is to de- crease the tax burden on investment. CONGRESSIONAL RECORD \u2014 HOUSE H9457July 31, 1996 Now, so often these things are mis- labeled as a tax cut on the rich, but every shred of empirical evidence, Mr. Speaker, has demonstrated that it will in fact be beneficial in job creation and economic growth. A capital gains tax cut will make more venture capital available for emerging technologies as we charge to- ward the millennium. We know how important that is. We know that job creation is emanating from the private sector and the small business sector of our economy. b 2045 We also need, in looking at the tech- nological changes that are made, we need to make the research and develop- ment tax credit permanent so that this incentive that we need for encouraging innovation in new technologies is there. We also need to do what we can to in- crease the skills of the workforce in this country, improving basic edu- cation through school choice, increas- ing local control and reducing the bu- reaucracy; creating tax deferred or tax- free education savings account similar to individual retirement accounts, something that this administration ad- mittedly has talked about, but has not acted upon. And we have tried respon- sibly to move ahead with that and have not gotten much support from the ad- ministration. We have not cut spending on education, nor should we continue to throw money at what is a wasteful, broken system. We need also to enact significant reg- ulatory reform. The explosion of new regulation we have seen since 1988 has raised the cost of labor and capital, created barriers to the formation of new companies and jobs, and raised the cost of employing Americans. The higher cost of employment, in turn, means that in a competitive economy the return to labor in the form of wages is greatly reduced. The regulatory burden needs to be rolled back, not only to allow wages to rise, but also to decrease the cost of hiring workers. And remember, again we are trying to address the concern that many have raised that will follow on with reforming the welfare structure. We also need to have a modest in- crease in the long-term growth rate, which can have a dramatic impact on the standard of living here in the Unit- ed States. A 1 percent increase in long- term economic growth would mean 6 million new jobs created over an 8- year-period, $700 billion more in tax revenue, enough to balance the budget by the year 2002 without any spending cuts, and also Social Security would remain solvent for 30 more years if we were to have just a 1 percent increase in long-term economic growth. Also, 200,000 new small businesses would be created over a 4-year period. With that, I am convinced, Mr. Speaker, that we could go a long way towards addressing the concerns that have been raised by Members on both sides of the aisle that will following the wake of reforming the welfare sys- tem, but it must be done, it must be done as expeditiously as possible. Unleash this economy and let us do it now. f PENSIONS MUST BE PROTECTED The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from Massachusetts [Mr. TORKILDSEN] is recognized for 5 min- utes. Mr. TORKILDSEN. Mr. Speaker, I rise this evening to discuss an issue im- portant to every American: protecting pensions. Pensions represent security and inde- pendence for all working Americans. As Americans have come to rely on So- cial Security, they also have every right to expect their pensions will be there when they retire. This Congress has made great strides in enacting a balanced budget. Finally, Republicans and most Democrats agree that the budget must be balanced in the next 6 years. How we actually get to a balanced budget is still being de- bated, but at least there is bipartisan agreement to balance the budget. The issue of pensions became a part of last year’s budget battle. While I supported the balanced budget, I voted for the motion to instruct conferees that would have ensured workers’ pen- sions throughout America. The reason we needed to instruct conferees was that the act proposed allowing some businesses to tap into so-called excess pension funds. While under this pro- posal, these funds would need to be used in other employee benefit ac- counts, cutting pension accounts for any reason could place workers’ retire- ments at risk. The investment market is simply too volatile. In many cases these were not ”ex- cess” pension funds at all, but were simply the value that inflation had added to the pension funds. If any- thing, these excess funds should only be used for cost-of-living adjustments for retirees. That is why I voted to in- struct conferees to protect workers’ pensions. A study done by the Pension Guar- anty Corporation reported that plans with excess funding could become un- derfunded with an economic downturn, such as a drop in interest rates or mar- ket shifts. While businesses must make up any shortfalls, this weakens their overall financial health. This just is not worth the risk. It is critical that Congress protect these pensions for workers as it did when the Tax Reform Act of 1986 was passed. Congress recognized that em- ployers have an obligation to ensure their employees’ pensions. This obliga- tion is critical in the 1990’s. When the budget was signed into law by President Clinton, it contained no changes that would allow any cor- porate raid on pensions. I will continue my work to protect workers’ pensions. These funds were earned by retirees and they must be there when they need them. f AMERICA IS IN NEED OF PRAYER The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from California [Mr. DORNAN] is recognized for 5 minutes. Mr. DORNAN. Mr. Speaker, I had the opportunity to put in that section of the RECORD we call the Extension of Remarks a beautiful, thoughtful, short exposition by the Reverend Joseph Wright. He is not from my State. It was given to me by one of the outside institutions around this place, the lovely Rita Warren of Massachusetts, who goes through all the hoops around here to get permission to have a Pas- sion Play on the East Steps of our beautiful U.S. Capitol every Easter week; and I noticed she is starting to worry about what is happening to our country, vis-a-vis what Reverend Billy Graham or the Holy Father in Rome has said. So I notice that she has her Passion Play out on the steps with a figure of Jesus and all of his beautiful sayings as the Prince of Peace that can save our world. But she asked me, since she had given me this recitation by Reverend Wright if I could not read it on the floor of the House, as well as put it in. So for Rita Warren, I will do that, Mr. Speaker. The following is ex- cerpted from a prayer in the Kansas house. This was delivered on the floor of the Kansas legislature, courageous Bob Dole’s home State, on January 23 by Joe Wright of Central Christian Church, Wichita. We have ridiculed the absolute truth of God’s word and called it pluralism. We have worshiped false gods and called it multiculturalism. We have endorsed perversion and called it alternative lifestyle or diver- sity. We have exploited the poor and called it the lottery. We have neglected the needy and called it self-preservation. We have rewarded laziness and called it welfare. We have killed the pre-born and called it choice. We have neglected to discipline our children and have called it building self-esteem. We have abused power and called it political savvy. We have coveted our neighbor’s pos- sessions and called it ambition. We have polluted the airwaves with profanity and pornography and called it freedom of expression. We have ridiculed the time-honored values of our forefathers and called it enlightenment. We have indoctrinated our children and called it education. We have censored God from our pub- lic life and called it religious freedom. We have prevented our citizens from defending themselves and called it gun control. CONGRESSIONAL RECORD \u2014 HOUSEH9458 July 31, 1996 We have allowed violent criminals to be released to prey on society and called it compassion or rehabilitation. We have imprisoned the innocent and let the guilty go free and called it jus- tice. Indeed America is in much need of prayer. And in my concluding minute, let me point out, Mr. Speaker, that the RU 486 pill, about to emerge on the Amer- ican market, has been called by Thom- as Grenchik, director of the arch- diocesan Pro-Life Office as a child-pes- ticide. He says Clinton has another an- ticipated victory in his campaign to kill the pre-born. ”At the President’s direction,” Mr. Grenchik says, ”the Food and Drug Ad- ministration has strong-armed the use of RU 486 from its European owner and, as promised, will ramrod the approval of this child-pesticide at all costs.” It goes on to describe this panel of experts on July 19, way out of town in Gaithersburg with a 6 0 vote, two ab- staining, on unleashing this child-pes- ticide. RU 486, also known by its generic name mifepristone, is taken first and causes the uterine lining to break down and slough off. Then misoprostol, a prostaglandin that stimulates uterine contractions, is taken 2 days later, a complicated procedure requiring sev- eral medical visits, precise drug doses, and monitoring. In an editorial in ”L’Osservatore Ro- mano,” the Vatican newspaper, it was condemned as an abortion pill, ”the pill of Cain, the monster that cynically kills one’s brother”; and in this edi- torial, a moral theologian writes that the pill’s anticipated approval in the United States is an important victory for what it termed, and this is in Rome, the ”abortion party” led by the Population Council and the Inter- national Planned Parenthood Federa- tion. So the battle goes on, Mr. Speaker, and let us hope that people go into this with their eyes open and that we do not have a delayed time bomb of the tha- lidomide problem here. Yes, as Rev- erend Joe Wright says, America is cer- tainly a Nation in need of prayer. As Billy Graham said in our beautiful Rotunda when he received, unani- mously from both the Senate and the House, the Congressional Gold Medal, America is a Nation on the brink of self-destruction. ACTIONS TO MARKET ABORTION PILL ARE DENOUNCED The archdiocesan pro-life director de- nounced this week’s government actions that would soon put the abortion-inducing pill RU 486 on the American market. Thomas Grenchik, director of the arch- diocesan Pro-Life Office, said that President Clinton ”has another anticipated victory in his campaign to kill” the unborn. ”At the president’s direction, the Food and Drug Ad- ministration has strong-armed the use of RU 486 from its European owner and, as promised, will ramrod the approval of this child-pesticide at all costs.” A panel of scientific experts recommended July 19 that the FDA here in Washington allow the controversial abortion-inducing pill to be marketed in the United States. Following a public hearing in Gaithersburg, the FDA’s Reproductive Health Drugs Advisory Committee voted 6 0 that the benefits of the RU 486\/misoprostol regimen for terminating early pregnancies outweigh its risks. Two members of the panel abstained. RU 486, also known by its generic name mifepristone, is taken first and causes the uterine lining to break down and slough off. Misoprostol, a prostaglandin that stimulates uterine contractions, is taken two days later. The procedure requires several medical visits, precise drug dosage and monitoring. An editorial in the July 22 issue of L’Osservatore Romano, the Vatican news- paper, condemned the abortion pill as ”the pill of Cain, the monster that cynically kills one’s brother.” The editorial, signed by Father Gino Concetti, a moral theologian, said the pill’s anticipated approval in the United States was an important victory for what it termed the ”abortion party” led by the Population Council and the International Planned Par- enthood Federation. At the hearing, the Population Council, a New-York based research organization that holds the U.S. patent rights to RU 486, pre- sented clinical data from two French trials involving 2,480 women and preliminary safe- ty data from U.S. trials involving 2,100 women. More than 30 individuals also testified dur- ing the open portion of the meeting. The French data showed the medical abor- tion procedure to be 95 percent effective. However, panelists also heard that women participating in the clinical trials experi- enced painful contractions of the uterus as well as nausea, vomiting, diarrhea, pelvic pain and spasm, and headache. In some cases where the chemical com- bination failed to produce an abortion, women then had surgical abortions; others completed their pregnancies and delivered babies with deformities. According to an FDA statement after the panel decision, ”a very small percentage of patients in the clinical trials required hos- pitalizations, surgical treatment or trans- fusions.” Dr. Mark Louviere, a Waterloo, Iowa, emergency room physician who said he is a supporter of legalized abortion, told FDA panelists that he treated a participant in the Planned Parenthood of Iowa trial who lost more than half of her blood volume and near- ly died. ”I am concerned that all of the true com- plications of RU 486 are not being reported to both the media and to the FDA,” he said, adding that he also fears the use of RU 486 ”by physicians without appropriate follow- up.” ”The FDA approval process is moving at an unheard-of-pace to approve this deadly drug combination, leaving many concerns about safety unresolved,” said Wanda Franz, a developmental psychologist at West Vir- ginia University and president of the Na- tional Right to Life Committee, in a state- ment from the group’s Washington office. ”Respect for human life and women’s health, not developing human ‘pesticides,’ should be at the center of the FDA’s concern when advancing new drugs,’ said Judie Brown, president of the American Life League, in a statement from the organiza- tion’s headquarters in Stafford, VA. RU 486 was developed by the French com- pany Roussel Uclaf, and has been taken by more than 200,000 European women since 1989. In 1994, Roussel Uclaf signed over U.S. rights to the Population Council, which filed the FDA application in March. In deciding on drug applications, the fed- eral agency usually has followed the rec- ommendations of its advisory committees. If RU 486 is approved by the FDA, the drug would be sold by Advances in Health Tech- nology, a company set up for that purpose last year, and could be available in the Unit- ed States next year. f REPORT ON RESOLUTION WAIVING REQUIREMENT OF CLAUSE 4(b) OF RULE XI WITH RESPECT TO SAME DAY CONSIDERATION OF RESOLUTION REPORTED BY COM- MITTEE ON RULES Mr. GOSS (during the special order of the gentleman from Georgia [Mr. KINGSTON] from the Committee on Rules, submitted a privileged report (Rept. No. 104 735) on the resolution (H. Res. 500) waiving a requirement of clause 4(b) of rule XI with respect to consideration of a certain resolution reported from the Committee on Rules, which was referred to the House Cal- endar and ordered to be printed. f A DIFFERENT VISION OF AMERICA The SPEAKER pro tempore. Under the Speaker’s announced policy of May 12, 1995, the gentleman from Georgia [Mr. KINGSTON] is recognized for 60 minutes as the designee of the major- ity leader. Mr. KINGSTON. Mr. Speaker, I want- ed to talk tonight about a different vi- sion of America, a vision that we are not really seeing from the Washington bureaucracy, but one that this Con- gress is trying to form and trying to achieve and move our Nation towards. We have asked ourselves some fun- damental questions: What kind of America do we want? Do we want an America where illegal drug use is up? Do we want an America where taxes are up and wages are down? Do we want an America where welfare traps fami- lies and despairs generation after gen- eration? And do we want an America where illegal immigration is up? And do we want one where a White House has more scandals than Hollywood has disaster films? Look at that vision of America. That is somehow what many of the Washing- ton bureaucrats see and administer today. Think about another kind of Amer- ica. Would we like one that has strong- er and safer families through a real fight against crime and illegal drugs? Do we want an America where there are more opportunities through lower taxes, higher wages, better jobs and more free time? Do we want an Amer- ican where illegal immigration is down and English is truly our common and unifying language? Do we want an America where welfare is replaced by work? And do we want an America where the White House is the moral leader of the country, not just the po- litical issues. These are the things that we are going to talk about tonight, and I have CONGRESSIONAL RECORD \u2014 HOUSE H9459July 31, 1996 with me our esteemed colleague from Pennsylvania, Mr. CURT WELDON. Mr. WELDON, if you have any com- ments, let me yield to you. Mr. WELDON of Pennsylvania. Mr. Speaker, I thank the gentleman for yielding, and I am pleased to join with him this evening in a portion of his special order. As he knows, I will be taking a special order following this to discuss our defense bill that will be on the floor this week. But I thought it very important to highlight the key areas the gentleman has raised that are really, I think, going to frame the debate as we move into the final 3 months of the election cycle into Sep- tember and October and talk about what is the status of this country today in five key areas and what is the vision for the future and which party and which candidate can offer the best vision for America. I start out by saying to the gen- tleman and my friend, I ran for office and got involved in public life because of drug use in my hometown and my county. I come from a town that was one of our most distressed commu- nities in Pennsylvania. I was born and raised, the youngest of nine children, there, was active in the community a number of ways, including the volun- teer fire company and the Red Cross and the Boy Scout troop, and was upset because our town had become the na- tional headquarters of one of the five largest motorcycle gangs in America. That gang controlled all the drug trafficking along the east coast of this country. They had 65 members living there, and the national president lives there and because we were just a small town, we had no resources of coping with the problem of drug abuse. We have continuously seen since that point in time, approximately 20 years ago, a declining use of drugs in Amer- ica. During the era of Ronald Reagan and George Bush, we saw a marked de- crease in the use of drugs in this coun- try. The gentleman has some factual in- formation that he might want to insert in the RECORD. My understanding is that in the past 3 years the use of drugs in this country has in fact reversed, and we are now seeing an increase in the amount of drug use by 14-year- old’s. Is that correct? Mr. KINGSTON. You have made a very good point. For 11 straight years, until 1992, illegal drug use fell in all categories of drugs except, for some reason, heroin, but everything else had fallen. b 2100 Now, since 1992, when a lot of these drug education programs and a lot of the interdiction programs and enforce- ment programs were cut, under the Clinton administration drug use has gone back up to the extent now that, just to give some numbers, marijuana use among teenagers has dropped, ex- cuse me, has since 1992 increased 137 percent amongst 12- and 13-year-olds. Now, for 14- to 15-year-olds there has been a 200 percent increase. Of the graduating class of 1995, sta- tistically half of the will have experi- enced some sort of illegal drug, and a drug like LSD which we really had not been talking about at all in recent years is now back strong on the streets and LSD use has increased 62 percent since 1992. One of the things that we have been fighting is the fact that the President had slashed the funding for the Office of National Drug Control Policy by 80 percent. I am on the Treasury-Post Of- fice Committee. We are doing every- thing we can to work with General McCaffrey, the new drug czar, to re- store much of this funding and do ev- erything we can, but along with gov- ernment funding there are some other things that we can do to fight drugs. And I do believe in these interdiction programs. I do believe in local policing in States like Georgia where, for exam- ple, the police opened up a satellite station in the middle of one of the big- gest housing projects, where they had the high drug use and they had crime and teenage dropout and teenage preg- nancy problems. As a result of them doing that, the children got to know the police officers. The families came out of the house and the streets got to be safe. And in Statesboro, GA, in that high crime area, drug use has dropped. That is the sort of thing that we are trying to encourage with our budget is local policies to fight drugs. Mr. WELDON of Pennsylvania. The gentleman makes an excellent point. Two key considerations here. First of all, while the administration puts out the rhetoric of being concerned about drug use and supposedly doing some- thing about it, the facts and this is typically the case throughout this ad- ministration, just do not bear out the rhetoric. As the gentleman and my friend pointed out, the office of Drug Enforce- ment Administration reporting to the White House has in fact been cut by, I think the figure used was 84 percent. In fact, it has been decimated. But this President, knowing that he can use perception as opposed to substance, in his last State of the Union Speech ap- pointed one of this Nation’s heroes, General Barry McCaffrey, to head up the drug effort because he wanted to give the people the perception that he in fact is really doing something sub- stantive. So he appoints a genuine hero in this country, whom all of us have the highest respect for and whom all of us want to help, while at the same time he is decimating the funding to allow the programs under the control of that individual and that agency in fact to go forward. Furthermore, perceptually, this ad- ministration has created a casual at- mosphere about drug use. That casual atmosphere then gets translated to our teenagers across the country, and they then think maybe it is okay to do some drugs or limited use and we see the numbers start to go up, as our col- league has pointed out. We saw de- scending use of drugs in this country for the previous 12 years, and in the last 3 years we have seen an increase in drug use by the use of this country. While we cannot blame any one per- son for that, we can look at the factors that may in fact be causing that in- crease and the fact that we have to be doing more substantively to deal with that increase. As the gentleman points out, that is one of the issues that we have been fighting to have as a top pri- ority for the past 2 years since the Re- publican Party has controlled this in- stitution. Mr. KINGSTON. I want to conclude this section of our five-part discussion with this comment. Two other things we want to do with drugs is to have se- vere penalties, pressure; if you are pushing drugs to school kids on basket- ball courts or playgrounds, you go to jail. You stay in jail. We need to have that. Then finally for the addicts, why not have a 24-hour a day hotline that says if a drug addict says I am ready to kill myself, I have hit bottom, I want to bounce back up, give a 24-hour hotline that we will get you help the next day, we will get you help on the spot, be- cause once an individual has made up his or her mind to kick the habit, then they are the easiest to cure. We are going to talk again about in a second on illegal immigration, but in the meantime let me yield to the dis- tinguished chairman of the Committee on Rules, Mr. SOLOMON. Mr. SOLOMON. Mr. Speaker, I thank the gentleman for yielding. Mr. Speaker, I just came from a Com- mittee on Rules meeting and heard what my colleagues were doing on this proliferation of drug use in America. It is such a sad, sad thing. The gentleman over here from Pennsylvania [Mr. WELDON] mentioned casual attitude. Let me tell how bad that casual atti- tude is coming out of the White House and what is happening to our children and our grandchildren. Seventy-five percent of all violent crime in America today that is com- mitted against women and children, 75 percent that is committed against women and children are drug-related. What has this casual attitude done? It is the most pathetic thing. Today among 12- and 13-year olds, marijuana use is up 137 percent. And in the 14- and 15-year-old range, it is up 200 percent. Among young adults, it has doubled just in the last four years. The worst part of it is these kinds of drugs today, because of this casual attitude coming out of the White House and other places, means that drugs now are being used as weapons against women and children. A drug like Rohypnol, for in- stance, is used as a weapon where, after young women have been plied with marijuana or with alcohol, they have had a Rohypnol tablet slipped into their drink. It renders them uncon- scious, but awake, so that they cannot CONGRESSIONAL RECORD \u2014 HOUSEH9460 July 31, 1996 defend themselves but they can see what is going on when the rape is tak- ing place. This is a whole new genera- tion that is now exposed to this. When we compare this to Nancy Rea- gan’s ”Just Say No” and Ronald Reagan when he sponsored, when he ap- proved my legislation which had ran- dom drug testing for our military, we had use of drugs in our military that was running at 25 percent back in the early 1980s, and once we implemented that random drug testing system, it dropped to 4.5 percent. Drug use all over America began to drop. Now look what has happened. It has turned around and it is just ruining these kids. Is a terrible thing. I thank the gentleman for bringing this to our attention and we need to focus on this all the way. There better be a change at the White House in this casual attitude. Mr. KINGSTON. Mr. Speaker, I want- ed to go on to the next topic that Mr. WELDON and I wanted to bring up, the subject of illegal immigration. First, let me recognize Mr. BOB EHR- LICH of Maryland, who is here with us tonight. Before I yield to the gen- tleman, let me throw out some statis- tics on how bad the illegal immigra- tion problem is, because most Ameri- cans know that we have a lot of illegal aliens in America but they do not know how extensive the problem is. There are an estimated 4.5 million il- legal aliens in America now, that is about the size of the State of Indiana; 300,000 new illegal aliens come each year and so the problem is getting big- ger and bigger. In many cases, they are using false documents to get American welfare benefits, American jobs and so forth, and it is displacing people and putting a further tax drain on us. One of the huge tax drains is in the Federal penal system where right now approximately 22 percent of the pris- oners in the Federal penitentiaries are illegal aliens, and about 80 percent of them are violent offenders which are the most expensive to incarcerate. We have a lot of direct and indirect costs because of the strain of illegal aliens, but one of them is now that school systems must offer not just bi- lingual education but multi-lingual education. In Seattle, for example, there are 75 different languages spoken in the school system; in Los Angeles, 80; 100 in Chicago. Now, we are all sons and daughters of immigrants, most of us sons and daughters of legal immigrants. But what they did when they came to America is they learned American cul- ture and they learned English as our common language. They did not turn their back on the home country great traditions. Savannah, GA, where I live, has ethnic celebrations all through the year, because we have a strong ethnic heritage. We want to keep that in mind and celebrate it. I know where I was raised, not in Sa- vannah but in Athens, GA, a lot of Cuban families came after Castro took over and in most of their homes they spoke Spanish. But their children were raised in the school systems where they learned English. Now those chil- dren are in very good jobs because they were not trained to be special. They were trained\u2014well, I take that back. They were trained to be special because all Americans are special. But now our school systems have all these ridicu- lous requirements. I have heard that the voting ballot in California is in seven different languages. Can you imagine voting but not knowing Eng- lish? I yield to the gentleman from Mary- land [Mr. EHRLICH]. Mr. EHRLICH. Mr. Speaker, the gen- tleman said an awful lot of truth here. It really speaks to the fact that we are a multi-ethnic culture and we revel in that fact. The gentleman just recited that fact, but we are one culture. And that one culture has a common language, which is English. Of course, the English bill will certainly dominate the debate on this floor over the next couple days. But I know the gentleman has put it very well. What better means to you achieve economic mobility in this country other than by a common lan- guage? Does it make any sense that any other options\u2014look what is hap- pening in Quebec right to the north? Multi-ethnic but one single culture, that is the way to the American dream. That is the way to economic prosper- ity. That is certainly the message that should go out from this Congress. Mr. KINGSTON. If you will remem- ber the biblical story about the tower of Babel, the story is that the villagers decided to build a tower to heaven. And the Lord did not want that done and, as a preemptive measure, gave them all different languages. And then they could not work together, and they broke up and they started all the other nations. I am not saying that we cannot work with each other when we speak dif- ferent languages, but the fact is, it is interesting that thousands and thou- sands of years ago, in a Bible story we all learned as children, the way to break up a nation was to have different languages. I believe, to say it in a posi- tive light, the way to unify America further is having one common lan- guage. Today there are 320 languages spoken in the United States of Amer- ica. Mr. WELDON of Pennsylvania. Mr. Speaker, on the issue of immigration, again, this administration wants to create the perception among the Amer- ican people that Republicans do not care, that we are not sensitive, that we are not compassionate. And we have to rise up and we have to shout as loud as we can the facts, because that is not the case. What we are trying to do is to stop the abuse. I think the best case that I can point to of what is going haywire in this country was brought to my at- tention by a good friend and colleague from California, ELTON GALLEGLY, who has been the leader in this Congress in terms of immigration. ELTON GALLEGLY showed me a brochure, I think it was the last session of Con- gress, printed in Spanish, paid for by the U.S. taxpayers. This four-page brochure was being handed out in southern California to anyone who was Spanish speaking that needed health care. And what it said was that if you are pregnant, you can go to any hospital within the jurisdic- tion of the brochure being given out, I think it was Orange County, and you can get prenatal care, postnatal care, and have the cost of delivering your child borne by the taxpayers of this country. If you are a young Mexican mother and you know in a brochure printed in your native language that you can come across the border to America, where health care is the best in the world, and you can go to any hospital and have your prenatal care provided, your baby delivered and your postnatal care provided, what are you going to do? You are going to do everything you can to come across that border. Here is the real rub. The person also knows, the mother also knows when that child is born in America, guess what, that child is an American citi- zen. Even though that child is born to an illegal immigrant in this country, that child becomes a full U.S. citizen with the same rights as any other child born here. But what really bothered me about this brochure, which should bother every Member of this institution, was a paragraph in the bottom of the third page that said, you cannot be turned into the immigration service even if you are here illegally. b 2115 Now we wonder why we have an im- migration problem. Here is a brochure printed by the taxpayers of this coun- try in Spanish given to people all over the southern part of California and in Mexico, and we wonder why they are all coming across the border. We just cannot continue to be the health care resource center for the world. That is what we are talking about, immigra- tion reform that stops that. Mr. KINGSTON. Well, let me give some numbers on that: 1996 taxpayers will spend $26 billion to provide welfare benefits to nonciti- zens which includes 11 billion in Medic- aid benefits, which is basically free in- surance, health care, free health care; 4.4 billion in Supplemental Security In- come, which is up, incidentally, 825 percent. Now remember we are just talking about noncitizens. There is 2.9 billion in food stamps; 2.3 billion in Aid to Families with Depend- ent Children; 3.89 billion in housing cash assistance and other subsidies. And that is from a Harvard University study; that is not exactly, you know, a conservative group up there. But this CONGRESSIONAL RECORD \u2014 HOUSE H9461July 31, 1996 is putting an additional tax strain on American middle class taxpayers. I believe we need to strengthen our border patrols. We need to crack down on deportation of criminals aliens. We need to have sponsorship, legally bind- ing; so if you want to bring your family member or whoever in, fine, but you need to be responsible for that person to make sure he or she is independent of government benefits. We also need to protect American jobs. There are a lot of American jobs that have been displaced. Then finally tomorrow this House will vote on English-first as a lan- guage. I believe we have enough votes to pass it. I think the President is probably going to veto it, but I am not discouraged because the liberal Gov- ernor of Georgia vetoed it two or three times himself. Finally this year, be- cause of election year pressures, he signed it. As we saw today with wel- fare, our President is very sensitive to election year pressures, and maybe we can get his attention on it. Mr. EHRLICH. If the gentleman will yield, I think the message is well taken. I hear this term sensitivity used in this House so much. But I never hear that term used in the context of the American taxpayer. The gentleman cited an interesting statistic early on; I think it bears re- peating. The gentleman, I believe, said that 22 percent of the population in the Federal penal system in this country, is illegal aliens; is that correct? Mr. KINGSTON. That is absolutely correct. Mr. EHRLICH. This free ride on the American taxpayer has to end. That is the bottom line to illegal drugs. That is the bottom line to illegal immigra- tion. That is the bottom line to reform- ing our legal immigration system. That is the bottom line to welfare re- form as we have discussed. It is the bottom line to almost every issue in this town because, as the gentleman just said, working Americans are just tired of it. They are tired of the free ride. We have a very hospitable people in this country. We are a Nation of immi- grants, as the gentleman has said. We are sensitive to the concerns and the plights of people. But at some point this Congress has to say: You know what, folks? You know what, world? There is a limit to what we can do, and we expect you to abide by our laws. Mr. KINGSTON. Our compassion does not rule out common sense, and we have to just put a little bit more com- mon sense in it. Just as we have said, we are going to address this illegal im- migration, this English-first issue. This Congress is going to move in that direction. The other thing that we all mention is $26 billion is the direct cost of illegal immigration. There are other indirect costs, but that tax strain is further adding to the third issue that we want- ed to discuss. That is the fact that this Congress, this Republican agenda, wants to have for our middle class citi- zens lower taxes, higher wages and more free time. I am going to show you some of the statistics on taxes, but right now we know that the average middle class family is paying 38 percent of the total household income in taxes, which basi- cally means the second income earner is working for the government. That is just, you know, what is happening. Right now we all work until May 7 to have the tax-free independence. So from January 1 to May 7 every year, people are working just to pay the IRS and State and local taxes. Now, if you add on the cost of gov- ernment regulations and other taxes, you are going until July 3d for Inde- pendence Day. Now people will say, well, what are you talking about? Let me show you this chart. This is a gas pump. On $1.20 for a gal- lon of gas\u2014fortunately I am paying a little bit less in Georgia, but I know the folks in Maryland, they all are pay- ing more than $1.20. But on a $1.20 gal- lon of gas, 56 cents goes to taxes, and that includes\u2014I am just going to read: FICA tax, corporate income tax, indi- vidual tax, capital gains tax, customs, ad valorem taxes, State taxes, cor- porate income, unemployment taxes, motor fuel taxes, excise taxes, used oil disposal taxes, business property taxes, pipeline throughput taxes. It is ridicu- lous. When people buy 10 gallons worth of gas, they are paying $5.60. They do not even think about taxes on top of what has already been taken out of their paycheck. Now let us talk about a bottle of beer, 43 cents on a dollar bottle\u2014well a little over a dollar, but 43 cents on a bottle of beer goes to taxes, basically the same kind of thing. On a loaf of bread there are 118 dif- ferent taxes that you and I and our families pay when we go to the grocery store to buy a loaf of bread. Hidden in the cost of that bread are 118 different taxes. That is why the middle class families are working their tails off. The harder they work, the less time they have because the more taxes they have to pay, and we do not have that family fellowship that we so des- perately need to impart values to our next generation. Mr. EHRLICH. That is why the mid- dle class in this country is nervous. When working folks get nervous, this place feels it. The gentleman has raised a very interesting point. The gen- tleman talked about, what was it, 120 different taxes on a loaf of bread? Mr. KINGSTON. One hundred eight- een. Mr. EHRLICH. One hundred eighteen. But when we go to the grocery store, what do we see? One price, one price. We never think about it. And I love this term ”takehome pay.” What does takehome pay mean to you, to the average person? Well, after you work until what, July 3d this year, you get your takehome pay. You work the rest of the year for yourself; right? Mr. KINGSTON. Well now, actually your direct tax burden\u2014you work from January 1 to May 7, and then the indi- rect tax in regulatory burden, you go on to July 3d. Mr. EHRLICH. But the rest of the year you are really not taking home the rest of your paycheck because, de- spite your takehome pay, you take your takehome pay, your cash, and you go out and you buy things which are taxes. So I think we really need to under- stand the dramatic way in which taxes impact the average working person in this country. Mr. KINGSTON. Now to give my col- leagues an idea of the Federal Govern- ment Washington command control bu- reaucracy view on taxes versus drugs, when we talked about earlier 13- and 14-year-olds using marijuana higher than ever before, I think, in history, but it is up anywhere from 137 to 200 percent depending on what age group in that 12-to-14 range, here is what we have fighting drugs. Now this chart, I hope you can see it. The DEA has 6,700 employees, and that is to fight drugs. The Border Pa- trol, immigration folks, 5,800 employ- ees. So that is what we have got. You know, we will just round this up and say about 13,000 employees for fighting drugs and illegal immigration. For the IRS we have 111,000 employ- ees. Now, of those 111,000 employees, for every 3,000 citizens of America there is one criminal investigator. So what we are saying is, no, we can- not fight drugs, we cannot fight illegal immigration, but we can audit you, and we can make sure that you are paying your taxes, and people should pay their taxes, and IRS should be able to collect it. But it shows a disproportionate value rendered when you have 110,000 IRS employees versus 13,000 Border Patrol and drug enforcement. Mr. EHRLICH. If the gentleman will yield, it reflects the values that have held sway in this town for at least 30 to 40 years. That is exactly what it re- flects. I know the gentleman is very anxious to talk about the topic of the day, the issue of the day, welfare reform. Mr. KINGSTON. I am. But before we leave that, I do want to get one other thing on taxes. There was a big discussion about the Clinton tax increase went to balancing the budget 1993, when Clinton passed the largest tax increase in the history of America, $245 billion. That money did not go into deficit reduction. That money went into more Federal Govern- ment. Now, you know, the thinking that Americans do not deserve tax relief right after the President just passed such a huge tax credit\u2014what the Re- publican Party was trying to do was CONGRESSIONAL RECORD \u2014 HOUSEH9462 July 31, 1996 basically say we want to give you back some of the money that the President took from you in 1993, and one of those was a $500 per child tax credit. So, working person, and I love to tell the story about John Johnson who works for UPS, U P S, in my district, and he said to me: You know, I make pretty good money. I do a lot of overtime. I worked hard. My wife is a school teacher, and between the two of us we do OK. But we have got three kids. And at the end of the month we are not able to go down to Florida or go up to Atlanta and see a Braves game or do some of the nice things because we have got to buy a new set of tires, a new dryer. We have got to spend money on groceries, and so forth, and we cannot get ahead. And this is a real story. Now, with the $500 per child tax cred- it, he and his wife could have had $1,500 in their pocket that they could have spent any way they wanted to. And I think they know how to do it a heck of a lot better than Washington bureau- crats. Mr. EHRLICH. If the gentleman will yield, what is so dangerous, what is so radical, and my favorite term in this Congress, what is so extreme about working people in this country taking home just a little bit more money? And I think I have the answer to that ques- tion: Class warfare works in elections. How much class warfare do we see on this floor every day? How many times do we hear this phrase, the rich, the rich? And you know what? Those folks you just mentioned in your district, they are rich. They do not know it. Mr. KINGSTON. Yes, they are, be- cause under the liberal Washington def- inition of rich, that means you hold a job and you pay taxes. You know another thing: marriage tax penalty. Two people living together doing everything that a married couple does pay less taxes than if they go down to the chapel and get a ring around their finger. That is absurd. Marriage is the key foundation block of the family in America, and here the first thing we do right off the bat is tell a couple: Hey, it is cheaper to live together than it is to get married. Mr. EHRLICH. If the gentleman will yield, what is the basic fabric of the free enterprise system in America? Small business people, small business- men, and particularly small business women. Yet, we make it extremely dif- ficult for these small business folks, who create 80 to 85 percent of the jobs in this country, to transfer their small businesses to the next generation. We punish success. Of course, that is what class warfare is all about, punishing success. And I rally think it is incumbent upon this Congress\u2014and now we have been joined by the President of the freshman class, the gentleman from California [Mr. RADANOVICH], and I know he has very strong views on this issue, being a busi- ness man himself. We make it for some reason part of the political atmosphere in this coun- try to practice this class warfare, gen- eration warfare to make that person who is making $25,000 a year jealous of that person making $38,000 a year, which is not the way it is supposed to be. Yet every day in this House we hear from across the aisle: Class warfare. Tired of it. Mr. KINGSTON. I have a friend of mine named Ted Fox, and Ted says this is what Congress’ basic mentality is, that it is the three of us right here. We are walking down the street together, and one had more money than the other two. The other two could vote to take your money, and it would be mor- ally fine and justified. b 2130 That is exactly, that is the whole left-wing premise: It is okay to steal, as long as you vote it as law in Con- gress. That is their whole mentality. I want to yield to the gentleman from California [Mr. RADANOVICH] be- cause he has been involved in so many of these good changes we have done. First, I want to say this, the idea be- hind class warfare is a loser. You are just bashing people. The other day we had a leading Dem- ocrat say in the CONGRESSIONAL RECORD, and I will give you both and anybody else interested a copy of this, that the employer-employee relation- ship is similar to the jailer and pris- oner relationship or the slave and the master relationship. That was from a leading Democrat, in one of the pro- family debates we were having. Mr. Speaker, I yield to the gentleman from California [Mr. RADANOVICH]. Mr. RADANOVICH. My thanks to the gentleman from Georgia, Mr. Speaker, I was interested in the debate and wanted to come down and share the gentleman’s comments and concerns. In my perception, I think, of what we have seen in the brief year and a half and a little bit more that we have been in Washington as freshmen, it has been one of continual amazement in our dia- log with the American people and how we think our Government relates to so- ciety in general, and how we are com- ing up against some pretty old ideas that have been around town for the last 40 years about government and its rela- tionship with the people, as if that is the only relationship that is in Amer- ica today. It kind of epitomizes the Great Soci- ety and some of the ways of thinking of the last 40 years, in that the only rela- tionship in America is Americans, with their government, and that there is only a two-way street there. In coming to Washington and having to develop ideas on how to solve com- plex problems, like the deficit that we have, the up to $200 billion deficit and $5 trillion worth of debt, we have to begin to think in terms of other rela- tionships that comprise America; that there are other institutions out there that are perhaps fundamentally more suited to the solving of some of our so- ciety’s problems. So when we get people coming on the House floor debating class warfare and this idea that there is a pot with only so much in it and you have to divvy it up among the people in the United States, and the only relationship that Americans have is with their Govern- ment, they are some of the ideas we have to begin to defuse. In so doing, we have to remind the American people that there are other institutions out there that are perhaps more suited to taking up the responsibilities that we have seen fit over the last 40 years to assume. There are family units, there is busi- ness, legitimate business, and there are religious and civic institutions. Some of those jobs that government is doing right now are far more suited to these other institutions. Rather than get into this dialog about there being fi- nite resources and we have to promote class warfare to get our piece of the pie, and that government should be in- volved in doing all these things and that is the only way we are going to solve our problem, I think what we need to do is to speak in terms of what other institutions in this country are better suited to solving these problems. If we were thinking in those terms we would probably not be $5 trillion in debt right now. Mr. KINGSTON. I will say one thing, Mr. Speaker, that we all who are par- ents know the joy of holding our own child for the first time. You can hold your nephew or niece, you can hold a friend’s baby, and you can love that baby and go to bat for him time and time again and care for him very deep- ly, but when you hold your own baby it is a whole new ball game. The difference is we have Washington bureaucrats, and as well-minded as they may be about the children in Cali- fornia, in Maryland, in Georgia, and I am sure they love them to death, and I am sure they would never use children as political pawns, but the fact is the folks in Georgia, California, and Mary- land love our kids a heck of a lot better than Washington bureaucrats, regard- less of how great they may be up here. WELFARE Mr. Speaker, we want to move to our next topic, which ties into the family. It ties into the tax burden. That is that of welfare. The gentleman from Mary- land [Mr. EHRLICH] had mentioned that earlier. I could tell he was chomping at the bit. I need to congratulate the two gentlemen for their leadership on this issue, because it is truly because their freshman class has been so persistent when the President has twice vetoed welfare reform, and you two have fought hard to bring it back to the floor time and time again. Mr. Speaker, I am disappointed the President vetoed welfare twice, but that is part of the process. The fact is in our American system, hey, it is 3 months away from election, and he is CONGRESSIONAL RECORD \u2014 HOUSE H9463July 31, 1996 going to sign it. He is going to sign it for that reason. I understand that, and I will not complain about it if we get a bill and we help get children out of the poverty trap, so they can enjoy the so- cial and economic mainstream. Mr. EHRLICH. If the gentleman will continue to yield, once we think about getting some other bills on which we have had vetoes in the past, maybe a clean products liability bill, maybe we can get that signed. The president of the class is here and I know he would love that. Before I begin my remarks on wel- fare, I have to be maybe the first in the entire House to congratulate my friend on his engagement, the gentleman from California [Mr. RADANOVICH]. I am very proud of the gentleman, and so is my wife. Welfare reform. It is a great day, a great day for America. Substance tri- umphs over politics: Real work require- ments, real reform of our legal immi- gration system, real time limits. It really leads into what the gentleman from California [Mr. RADANOVICH] was talking about just 2 minutes ago: what institutions do when we realize finally that government cannot do everything; that $5 trillion to $6 trillion in debt has made us at this point a permanent debtor nation, and we all know no su- perpower can live on for very long being a permanent debtor nation. What institutions will take over for government? One is the private sector: jobs, real work, a quid pro quo for the Federal taxpayer. You want hard- earned tax money to live? Fine. It is a legitimate thing for government to do, to provide temporary assistance to folks. No one argues that. It should not be generational, it should not be multigenerational. Look what it has done to the society. What is part of the answer? Work. The very foundation, the philosophical foundation of our welfare bill, which is quite similar to what the President ve- toed last year, is work. Mr. RADANOVICH. Mr. Speaker, if the gentleman will continue to yield, it also is fair in saying too that when we are dealing with generations of people who are used to being on the welfare rolls, we have to be concerned a little more about conscience-building among those ranks to get them off. Work is a moral responsibility. It really is not something that government should be teaching right now. Every citizen in this country has the obligation of work, but it is very hard to instill those values, being a govern- ment institution. That is why block granting and getting these ideas away from government and starting to think about religious and civic institutions instilling those morals, and in the busi- ness institutions learning to work, so people go out and get the job and get the satisfaction of a day’s pay for a day’s work. It will be a wonderful thing. Government cannot teach those things. Mr. KINGSTON. One of the things that is dear to the heart of every American citizen, Mr. Speaker, and particularly Virginia legislators, be- cause it has the first House of Bur- gesses, which was the first legislative body in America, Jamestown, as the gentleman recalls from our history, the Jamestown Colony, many of the people who came over had their job classifica- tion as gentlemen. They thought they were coming to America, to the streets of gold, and so forth, the land of oppor- tunity. They did not realize it had a work requirement to it. As a result, I think half of the crew perished that first and very harsh winter. Then Cap- tain John Smith said, all right, there is going to be a new game. Everybody is going to work. When they did, the col- ony survived. What we are saying is that if you are able to work, you are going to be re- quired to work, and you are going to be better for it because you can join the socioeconomic mainstream. President Clinton loves to tell the story about the little boy who says, ”The best thing about my Mama being off welfare is because when people ask me what she does, I can say she has a job,” so we are very much in line, here. Mr. Speaker, I wanted to recognize the gentleman from Arizona [Mr. SHADEGG], who is here to join us, and I will yield to the gentleman. Mr. EHRLICH. Mr. Speaker, we have our classmate outnumbered, 3 to 1. The gentleman from Arizona [Mr. SHADEGG] is a good friend of all of us and a great leader in our class. Before he speaks, I just want to say one thing. All of us go back to our districts every weekend and talk to our con- stituents. That is part of the job. The modern House has evolved into that. It is such an important part of our jobs. Housing policy is a major issue in my district, particularly a settlement in Baltimore, which I know my friends in the class know about too well; welfare reform, personal responsibility as a concept. What I see as the common denomina- tor to all these issues is just a working class interest in having people work. It is a working class resentment toward those who will not, not cannot, but will not. I see it time and time again in comments from people I represent who stop me in shopping malls, gas sta- tions, the hardware store, wherever, and they say, ”We work very hard to send our kids to school, to pay our mortgage, to buy our car. We do every- thing, EHRLICH, you want us to do. Yet we see in the newspaper every day peo- ple who will not who are rewarded for it.” Mr. KINGSTON. Mr. Speaker let me apologize to the gentleman who I said earlier was from Nevada. We have so many good-looking freshmen faces that sometimes I just assume they are from all out West somewhere, and throw all those categories out there. I apologize, and I yield to the gentleman from Ari- zona. Mr. SHADEGG. No apology nec- essary, Mr. Speaker. I am just pleased to join you all in celebrating what I think is a great victory for America today. Today really is not a day for par- tisanship, it is a day for celebration. The truth is all across America, Ameri- cans understand that the welfare sys- tem we have, though well-intended, simply is not working. It is not work- ing for the Americans that are at work and paying taxes, now paying taxes of close to half of their income, support- ing those people. It is not working for them. But even more importantly, the wel- fare system that we have created in this Nation, out of a desire to help our fellow man and our fellow women and the poor children in this country, sim- ply is not benefiting them. I think the beauty of it, and it is well put in the gentleman’s quote about the young boy who says, ”Now I can say that my mother has a job, or is not on welfare any longer,” is the benefit for those people who are right now trapped in the system. In a way, God created us to respond to incentives. The incentives in the current system are very bad. The in- centives encourage people not to go back to work. They encourage people to have multiple illegitimate births. They encourage people to engage in lifestyles which are self-destructive. All Americans recognize that there ought to be a safety net there to help those in need, but the safety net we have built has become not only a safe- ty net but a trap. People try to climb out of that net and are caught up in it. Indeed, they spend way too long in it. It destroys them, it destroys their self- respect, and it destroys their families. What we have done with this welfare bill, and I commend the President. I do not really care what his reasons are. He opposed it twice before. Now he has joined us. The bottom line point is we are going to make America better. We are fulfilling his promise to end welfare as we know it, because way back 3 years ago when he made that promise Americans understood welfare as we know it was a failure. Now we are embarked on a program which will redesign welfare in America to help those that need help, but not just help them at their down point in their lives, help them get back into the job market, help them make them- selves productive citizens again, help them attain back that point in their lives when they can respect what they do and when they can feel good about it, and when they can hold their head high and become participants in this economy and in the great experiment which is America, which is that we are going to reward initiative, that we are going to reward hard work. That is what this Nation was built on. We have been cutting a whole block of Americans out from under that dream, saying to them, ”No, you really cannot work. We know you are not able to work, so we are going to take care of you.” That is not an answer, and that CONGRESSIONAL RECORD \u2014 HOUSEH9464 July 31, 1996 is not giving them hope, it is not giv- ing them a future. I just think it is a tremendous day to celebrate the fact that we are in fact revising a failed system and making the Nation better, not only for the peo- ple trapped in the system but for those of us who are picking up the tab, as well. Mr. KINGSTON. Mr. Speaker, we now have with us another freshman, the gentleman from Washington, Mr. RANDY TATE, and I will attribute him to the State of Washington, rightly or wrongly. I know it is west of the Mis- sissippi. Mr. TATE. I would like to thank the gentleman from Georgia, Mr. Speaker. To folks out in the real Washington, this is an exciting day. To me welfare reform is not about balancing the budget. It has nothing to do with that, from my perspective. It is about help- ing people that are trapped in a system that has destroyed their self-esteem, that is taking their initiative away, that has trapped families and hurt chil- dren. We have spent, I have heard that number many times, $5 trillion since the 1960s. If we put that in real dollars, that is more than we spent fighting the Japanese and Germans during World War II, and we won that battle. Everyone agrees welfare has failed. President Clinton said just right here during his State of the Union that this is the year to end welfare as we know it. Today, in the House of Representa- tives, we began to end welfare as we know it, not for the sake of balancing the budget, not sitting there and counting beans. It is about helping peo- ple. That is what this whole debate is about, breaking down the system to make it work for people again, to help families, to help moms, to help dads, to help kids have a better future. b 2145 Mr. EHRLICH. The gentleman has really brought up the fifth topic of the evening, which is words and actions. Mr. KINGSTON. Before going to the fifth topic, I want to make it very abundantly clear for the record that we would not be in a position of having a welfare bill today if not for the action of the freshman class and the leader- ship of the 4 of you and many of your colleagues, because I can say this hav- ing come the previous term. We all talked about welfare, we never could get a bill on the floor of the House. You have been persistent. I would like to say also, I do not think there is anything extreme about saying able-bodied people who can work would be required to work, and I do not think there is anything extreme about getting people out of the poverty trap, and I do not think there is any- thing extreme about saying to nonciti- zens, you cannot have our welfare ben- efits if that is the reason you have come into the country. I know your class has caught lots of criticism, but this victory today be- longs to your class. I think that is very important. Mr. RADANOVICH. If the gentleman would yield, I would like to add to that comment and appreciate the senti- ment. Before saying what I am going to say, there are two things that need to be said. One is that it does not matter who gets credit for this, it passed and it was good for America. So it does not make any difference if the President gets credit or Congress gets credit. However, having said that, I would say one thing, and that is during the dark times of late December, early January, when we were struck in the middle of a Government shutdown, when the freshmen were getting a lot of flak for standing on resolve and keeping certain people to their word, this is the fruit of that. I think that I am not at all out of line to say that had we not gone through a Government shutdown, we would not have had the President of the United States in the Chamber say- ing that the era of big Government is over and we would not have a President in here signing welfare reform that changes welfare as we know it simply because he knew that there were people in the House of Representatives that were going to keep him to his word, come heck or high water. I think that that needs to be said. We are seeing the fruits of that shutdown. I know it is a tough subject, I know it is not what people want to go back to and talk about, but the American peo- ple know that that was absolutely nec- essary in order to get the changes that we are beginning to see the fruit of now. Mr. EHRLICH. The President of the class just used the word ”fortitude,” and the word ”integrity” gets brought up, and the word ”consistency.” Now you are joined by 4 freshman, the gen- tleman from Georgia is really sur- rounded; five actually with the gen- tleman from California [Mr. BILBRAY]. There is a quote right next to the gen- tleman. One of the President’s closest advisers made that quote recently, I believe on Larry King Live, in Feb- ruary 1996. It is really interesting for the freshmen and certainly for the non- freshmen in this Congress to look at quotes like this and wonder what is meant. I know when I go back home on weekends, people come up to me, and I get a lot of credit for doing the easiest thing in the world, what no politician should get credit for in any legislative body anywhere, which is keeping his or her word. We should not get credit for it, yet we all get credit for it every weekend, every day, and in talking to my colleagues, I know we do. It is somewhat of a symbol of how far we have fallen, and this institution has fallen, our profession. We hate to admit it now, but we are full-time politicians, Members of Congress. ”For this President, words are ac- tions.” Mr. Stephanopoulos, words are not actions. Words are cheap, words are meaningless. Words, whether it is the State of the Union, these words we are speaking tonight, if they are not backed up with real actions, are with- out meaning. I know the gentleman from Arizona is chomping at the bit over there. Mr. SHADEGG. If the gentleman will yield, let me just make this point. If Mr. Stephanopoulos said this, ”For this President, words are actions,” it pretty well defines the situation. I guess then saying that we should end welfare as we know it means that you have ended it. And yet in the first 3 years of this administration, nothing changed for America, not until the rub- ber hit the road, not until the votes were cast on the floor of this House to actually change the welfare system as written in the law did anything mean- ingful ever happen. I would like to add one point to that. The victory, while it may been driven in part by the freshman class, as our colleague from Georgia has just point- ed out, it was really driven by Main Street, America. This today was and is, and I guess we can claim victory today because the President has come for- ward and to his credit he has said he will sign this bill, that is victory for Main Street, America, because the val- ues that freshmen have been advocat- ing, the ideas of changing welfare to make it work for all Americans, those in the system and those paying for the system, those ideas came not from freshmen, they came from Main Street, America. They came from the people that we went to and asked what they wanted to see happen in this country and they want change. That is the point. Mr. BILBRAY. If the gentleman will yield, I think the word was used quite appropriately, ”integrity.” There are those that have been in this town for a long time who think that the freshmen and the new majority is somehow radi- cal because we have brought with us from mainstream America the concept of integrity, that words without com- mitment, words without action, words that are said without the intent to per- form lack integrity. And yet there are those in Washington who are terrified of the 73 freshmen who came here and said, I will not sacrifice either my in- tegrity personally or the integrity of the commitment to the people of the United States. Frankly, I have to sort of chuckle at the fact that Washington is so terrified of a group that is finally bringing some integrity to the House floor. I want to say this about the welfare reform. I served as the chairman of San Diego County, which has a welfare sys- tem larger than 32 States in the Union. We in 1978 proposed a concept that at that time they called cruel and mean- spirited. That concept in 1978 was workfare. Every bureaucrat and every obstructionist tried to stop us from executing a concept that would bring dignity back into the public assistance programs. When we were fighting on things like welfare fraud, as an admin- istrator I looked at it, at the cards and CONGRESSIONAL RECORD \u2014 HOUSE H9465July 31, 1996 said ”There is not even a picture on the ID. Let’s put a picture on the ID.” Common sense. Washington said no, be- cause they said it would violate the privacy of the welfare recipient. These are just a few of many stories where every time you try to do some- thing right with welfare, Washington stood in the way. Tonight we finally brought the integrity of the system be- fore the American people and said if you want to promise that we are going to change welfare as we know it, then you have got to have the guts to change it. Mr. KINGSTON. Let me reclaim the time just to remind everybody we have about 4 minutes left. So if each of you want to have a closing statement of 1 minute each. Mr. EHRLICH. Just to back up what the gentleman from California had to say, I know the gentleman has another quote right next to him: ”The Presi- dent has kept all the promises he meant to keep.” What does that mean? The American people deserve to know what that means. They deserve to know when the President makes a promise which promise he means and which promise he does not mean. I do not care if you are liberal, conservative, Republican, Democrat. Your words should have meaning. Your words should have, as the gentleman said, integrity behind them if you sit in any legislative body, particularly the Congress of the United States. Mr. TATE. I could not agree more. What does that mean? Are there prom- ises you did not mean to keep, Mr. President? That is the question that I think is quite clear. The President did not mean to keep his tax cut for the middle class because he never provided a plan to do that. He never meant to balance the budget. We had to bring him kicking and screaming all the way to the dance, so to speak, all the way to actually pro- vide a plan finally, 3 years into his term, and, lastly, welfare reform today. It was not until the last moment, after he had already vetoed it twice, did he finally agree to sign welfare reform. So I think I know exactly what it meant. Say one thing when you run, do another thing when you get elected. That is not what this Republican Con- gress is all about. Mr. BILBRAY. I think the sad part about it is America and this Congress knows that if it was not election year, we would not have gotten three-quar- ters of Congress supporting what the American people are demanding. We operate a welfare system in this soci- ety that we would not do to our own children. But we justify it under the guise of being merciful. It would be il- legal for us to do to our own children what we do on welfare. We pay under- age children to live alone and send them a check. If you and I did that to our own children, it would not only be child abandonment, it would be child abuse. But there are those here who claim they care about the children and hide behind the words they care about the children when in fact what they are doing is government-subsidized child abuse. Tonight we had a great victory, and the American people had the great vic- tory of making politics work for the American people, changing the system. I worry that without the American people keeping a clear message in the next election, that there are those who will try to go back to the old, worn- out, corrupt systems of the old Wash- ington rather than moving forward with the integrity of the new majority. Mr. Kingston. Let me reclaim the time just to yield to the president of the freshman class that has made all these changes possible. We are closing our discussion of illegal immigration, drug use, higher wages, lower taxes and, of course, welfare reform. I yield to the gentleman from California [Mr. RADANOVICH]. Mr. RADANOVICH. I thank the gen- tleman. My final words are promises made, promises kept; the promise to the American people that until we start keeping word and following through in Washington, it will be a long time even then before they begin to feel the results on Main Street, America. This is really truly where is happens. That is the commitment that we intend to keep to the American peo- ple. Mr. KINGSTON. Mr. Speaker, I thank the gentleman from Arizona [Mr. SHADEGG], the gentleman from Washington [Mr. TATE], the gentleman from California [Mr. BILBRAY], the gen- tleman from California [Mr. RADANOVICH], the gentleman from Pennsylvania [Mr. WELDON], and the Gentleman from Maryland [Mr. EHR- LICH] for participating in this special order. f IN SUPPORT OF CONFERENCE RE- PORT ON H.R. 3230, NATIONAL DEFENSE AUTHORIZATION ACT The SPEAKER pro tempore (Mr. TAYLOR of North Carolina). Under the Speaker’s announced policy of May 12, 1995, the gentleman from Pennsylvania [Mr. WELDON] is recognized for 60 min- utes. Mr. WELDON of Pennsylvania. Mr. Speaker, I will attempt to not take the entire hour, but I did want to rise this evening first of all to commend my col- leagues for the excellent work they did in discussing the message of the Repub- lican Party, and not just the Repub- lican Party but, as evidenced by the vote on the welfare reform bill today, the overwhelming majority of Members of this institution. In fact, on the final vote there were 98 Democrats who voted for the bill and 98 who opposed it. So it truly was a bipartisan effort. While there is much perceptual criti- cism of the Republicans in the Con- gress this year, the fact is that most of our initiatives have passed with bipar- tisan support and our colleagues on the other side have joined us. That leads me to my point of discus- sion tonight, which is also bipartisan and which I expect to hit the House floor tomorrow, and that is the final conference report on the defense au- thorization bill for 1997. Mr. Speaker, I rise as the chairman of the Subcommittee on Research and Development for the House Committee on National Security and one of the conferees who chaired two of the panels with the Senate in deliberating the final conference report that will come before us tomorrow. Let me start out by saying, Mr. Speaker, that I think it is a good bill. It is not everything that I had wanted. I will talk about some of the weak- nesses that I think we did not get in this bill, but all in all it is a good piece of legislation that deserves the support from a bipartisan standpoint of the ma- jority of the Members of this institu- tion. But I want to start off by clearing up some misconceptions. The President and certain members of his administra- tion and some on the other side in the more liberal wing of the Democratic Party have gone around the country talking about the Republicans wanting to have massive plus-ups in defense spending and that in fact the Repub- licans are giving the Pentagon pro- grams that they really do not want, that we are just about buying more weapons systems and that we really are not concerned about the human problems that people in this country face. Let me start out by saying, Mr. Speaker, that I come to this body as a public school teacher. I taught for 7 years in the public schools of Penn- sylvania. I ran a chapter 1 program for 3 years in one of my depressed commu- nities like West Philadelphia, then worked for a corporation running their training department and ran for office as the mayor of my hometown. All of those things I did to try to help people and to try to make a difference. In my 10 years in Washington, I have tried to exercise in every possible way through my votes and my actions sup- port and compassion for those needs that ordinary people have. In fact, I take great pride this year in the fact that, working with my colleague the gentleman from New York, RICK LAZIO, after Speaker GINGRICH had asked RICK and I to cochair an effort dealing with anti-poverty initiatives, that we were able to plus-up the funding for the community services block grant pro- gram in the appropriate appropriations bill on the House floor by $100 million. This money goes directly to a net- work of 1100 community action agen- cies nationwide that basically is to- tally consistent with the Republican philosophy of empowering people lo- cally to solve the problems of the poor. This plus-up in funding did not get much play in the national media. It was the single largest plus-up in the CONGRESSIONAL RECORD \u2014 HOUSEH9466 July 31, 1996 community services block grant pro- gram in the history of that program, which dates back to prior to the 1980’s. b 2200 In fact, these CAA’s nationwide le- verage, on average, $2 to $3 of private money for every $1 of public money we put in. So it is a tremendous invest- ment in helping local folks through the nonprofit CAA’s nationwide solve the problems of poverty and ways that we can work to empower people who have the greatest needs. That is just one example of the kinds of things that this Congress has done that have largely been ignored by the American media in its rush to embrace the liberal wing of the Democrat Party and this President, who talk a good game but do not seem to follow through with the deeds that match their rhetoric. I say that, Mr. Speaker, because we have also heard the rhetoric coming out of both the White House and the liberal wing of the Democratic Party that somehow we have dramatically in- creased defense spending. I want to get to that point because that is the topic of my special order tonight. Again, the facts do not bear that out. The analysis that I use, Mr. Speaker, is to take defense spending and com- pare it today versus what we were spending back in the 1960’s. I pick the time period of the 1960’s because we were at relative peace in the world. It was after Korea and it was before Viet- nam. John Kennedy, a Democrat, was our President. He believed in a strong defense for our country and worked hard to maintain our national security interests. During John Kennedy’s tenure, Mr. Speaker, we were spending about 9 per- cent of our country’s gross national product on the military. We were spending about 55 cents of every Fed- eral dollar that we take in in terms of taxes on the defense of this country\u201455 cents of every Federal dollar and 9 per- cent of our total gross national prod- uct. This year’s defense budget that will be finally approved tomorrow, in the final conference report that we will vote on, will see us spend less than 3 percent of our gross national product on the military and about 16 cents of the total Federal dollar that we take in this year. Now, those are glaring differences, Mr. Speaker; 9 percent of our GNP in the 1960’s versus 3 percent of our GNP today; 55 cents of every Federal dollar in the 1960s versus 16 cents of the Fed- eral dollar that we take in today. In addition to those numbers, Mr. Speaker, we have to let the American people know that there are some dif- ferences in today’s environment. First of all, we have an all-volunteer mili- tary. We no longer have the draft. We pay those people who join the services a much higher salary and, in fact, a much larger percentage of our military personnel today are married and they have kids. So we have added housing costs, we have cost-of-living increases, we have a much larger health care sys- tem. The quality of life for our service per- sonnel today is dramatically improved over what it was back in the 1960’s and, in fact, a much larger percentage of that lesser amount of Federal money is going for the quality of life for those men and women who serve in the var- ious branches of our Armed Services. So, in fact, while we have decreased the percentage of Federal spending on our national defense, we in fact, Mr. Speaker, are spending more of today’s defense dollar on the quality-of-life is- sues for our men and women who serve in the military. We have over the past 8 and 9 years made dramatic cuts in defense spend- ing. Now, these were not all done at the suggestion of President Clinton. I am not here to say that tonight. In fact, some of these cuts were proposed under the Bush administration because the world was changing. And, in fact, many of those cuts I supported, but no- where near the draconian cuts that are taking place today. Those cuts, Mr. Speaker, that were proposed during the Bush administra- tion were based on threat assessments that we were given from the situations that existed around the world that threatened American Security Inter- ests and our allies’ security interests. Today’s dollars that we spend on the military are largely not spent based on threat assessments, they are largely determined by numbers pulled out of the air. The Clinton administration, in fact, just pulled a number out of the air and said this is what we are going to spend on defense, in spite of the fact that when Les Aspin served as Secretary of Defense and completed his bottom-up review, he said we would need enough money to be able to fund the support for two simultaneous conflicts. The General Accounting Office has said on the record that there is no way, given the Clinton administration num- bers, that we could ever come close to funding up two simultaneous oper- ations. So, in fact, Mr. Speaker, the numbers that we are basing our defense budget on today are not based on reality, they are not even based on the philosophy that this administration established for our military leaders, and that was established in the bottom-up review headed up by then-Secretary of Defense Les Aspin. What is more ironic, Mr. Speaker, with where we are today is that in dra- matically cutting defense spending over the past 3 years, by the most sig- nificant cuts in the last 50 years in this country in terms of our military, we have seen 1 million men and women lose their jobs. Now, Mr. Speaker, the defense budget is not a jobs bill. It is not like public works projects and it is not designed to ultimately just employ people, but we have to understand the irony of what is occurring in the country today, Mr. Speaker, and I want to point it out. We have the Clinton administration over the past 3 years cutting defense spending by draconian amounts, result- ing in the forced layoffs and cutbacks in defense industries and subcontrac- tors that have caused 1 million men and women to lose their jobs in Amer- ica. Now, Mr. Speaker, the irony here is that most of those 1 million men and women were union employees. They were members of the United Auto Workers, the International Association of Machinists, the IUE, the electrical workers. They were involved in the building trades who worked in our bases and in our facilities. So the bulk of the 1 million men and women who lost their jobs over the past 3 years, caused by this administra- tion’s actions, were union personnel. Not only did they lose their jobs, and all across this country, Mr. Speaker, we know of hundreds of thousands of our constituents who are out of work today who were employed at defense plants and subcontracting machine shops and subcontracting companies, but the irony is that the national AFL CIO this year is forcing from every union employee in this country a $39 assessment. That $39 assessment is being taken out of the pockets of union personnel who work in defense plants to defeat Republican Members who have supported the dollars to fund their jobs. Now, that has to be the ultimate irony. I look particularly at one plant, McDonnell-Douglas. My understanding is they have 8,000 union employees. Mr. Speaker, if we look at the amount of assessment that the AFL CIO has lev- ied on those defense workers working for McDonnell-Douglas, it amounts to over $300,000, and that money is being targeted not to people who are voting against their jobs, but it is being tar- geted to support the ideals of the Democratic Congressional Campaign Committee, and only to target fresh- men Republican Members, most of whom supported a more robust defense budget which in effect provided the dollars for those very jobs. That is the ultimate irony, Mr. Speaker. And all of this money is being taken from those rank-and-file union workers without their support and without their ability to determine where that money should be spent, in spite of the fact that in the 1994 elec- tions, 40 percent of the rank-and-file union workers in this country voted for Republican candidates. Mr. Speaker, that is outrageous; yet we have not heard one national labor leader in Washington talk about the Clinton elimination of 1 million union jobs in this country. We are now in the process, Mr. Speaker, of taking that message to every plant in this Nation. And why are we going to do that? Because this President will go to every one of those CONGRESSIONAL RECORD \u2014 HOUSE H9467July 31, 1996 plants and stand up on the podium next to the CEO and the union leader and talk about the jobs that are there, and he will talk about what his administra- tion is doing to keep those workers em- ployed. Yet this administration, in concert with the national AFL CIO leadership, is in fact targeting, through forced contributions, funds to eliminate those freshman Members who have largely voted for the defense funding level that we are going to have on this floor to- morrow. To me, Mr. Speaker, that is outrageous. Now, the further hypocrisy of this administration, Mr. Speaker, is that last year the Congress, bipartisan sup- port, plussed up defense spending by about $5.5 billion above the President’s mark. We did not pull that number out of the air, Mr. Speaker, we took it from the recommendations of the Joint Chiefs of Staff. They are not political appointees, they are career servants of the military, whose command respon- sibilities are to protect the lives of our troops. We met with them and, based upon their advice, we funded the Defense De- partment funding levels to the requests that they gave us. Actually they want- ed more money than we could provide. This year, Mr. Speaker, when the President again chose in a draconian way to cut defense spending, we brought in the service chiefs, and the service chiefs were very candid. They said the budget proposed was unaccept- able. In fact, Mr. Speaker, when the House Committee on National Security had the four service chiefs in front of us, it was the late Admiral Boorda, the CNO of the Navy, and a very fine leader of our naval forces who said publicly, when asked if he had the ability to pro- vide a wish list for additional funds, where would he put those dollars, and he replied back to us, Congressmen, there is no wish list. These priorities that I will give you are absolutely es- sential to protect the sailors under my command. We then went to the Commandant of the Marine Corps and when the Com- mandant, General Krulak, had his chance to respond, he likewise said, look Congressmen and Congresswomen, I am not going to make any bones about what we need here. My warriors need additional funding, and the re- quest I give you is going to be real. To every last one of the four service chiefs, they gave us the dollar amounts that they need to support the inter- nationalist escapades of this adminis- tration around the world; to fund the operations in Somalia, to fund the $3 to $4 billion we are currently spending in Bosnia, the $2 to $3 billion we are spending in Haiti, the escapades that the President is committing our men and women all over the world. These four leaders told us the dollar amounts that they felt were absolutely nec- essary to meet the requirements of quality of life and protection of these troops. Mr. Speaker, the bill that we will provide tomorrow will begin to do that. It will not completely provide the sup- port they requested from us, because we cannot get additional dollars in this budget environment where we are com- mitted to balancing the budget over a set period of time. We do not have addi- tional money to put into the military. Therefore, we have to make do with this plus-up that we are providing. Now, here is the outrage again, Mr. Speaker, the outrage that I feel every day I serve in this body. This President criticized this Congress last year for plussing up defense spending over his request. When Secretary Perry came before our committee this year, he had a chart showing the amount of defense spending that the Clinton administra- tion would provide. In that chart, it was a line graph, he showed a flattening out of the cuts in the acquisition programs to buy new equipment and he said that the Clinton administration was taking steps to stop the decline and that decline, in fact, stopped in 1996. I said to the Secretary of Defense, this is an outrage. It is the most out- rageous presentation I have seen from a Secretary of Defense. Why? Because here we had the Secretary of Defense, who last year joined with President Clinton in criticizing us for plussing up defense spending, now this year taking credit for what they criticized us for doing last year. That same thing will happen this year, Mr. Speaker. My prediction is that with all the criticisms from the White House and from the Secretary of Defense, they in fact will accept the final bill that we pass, the funding will be provided, and then this President will go to every one of those plants and every one of those bases, and this President will take credit for those items that we funded through a bipar- tisan action of this Congress that he opposed and criticized us for. It even gets worse than that, Mr. Speaker. The hypocrisy coming from the White House is unbelievable. The B 2 bomber is a perfect case in point. Let me say, Mr. Speaker, that some would say you are just down here as a Republican hawk who supports every defense weapon system and that is why you are mad at President Clinton. b 2045 That is not the case. Let me give the example of the B 2. I have opposed the B 2 bomber for the last 3 years, Mr. Speaker, even though I chair the Na- tional Security Research and Develop- ment Subcommittee. My party leader- ship, as you know, has supported the B 2 bomber; in fact, the majority of my colleagues on the Republican side sup- port the B 2 bomber. I felt it was great technology, but we cannot afford it. Given the budget numbers that we have to work with, we cannot afford to spend money on a pro- gram that we cannot continue. There- fore, over the past 3 years I have con- sistently, in committee and on the House floor, opposed money for the B 2. Now this President, Mr. Speaker, has said that he too opposes the B 2 bomb- er, just like he has criticized us for plussing up defense spending. But after the President signed the defense appro- priation bill last year, which had B 2 funding in it, what did this President do? He went out to southern California and he went to the plant where the B 2 bomber is manufactured and he gave a speech with the head of the union and the head of the company standing on both sides of him and what did he say? He said to those workers, I am here to support building one more B 2 bomber. And then he went on to say, and I have authorized the commission of a study that is going to be done that will deter- mine whether or not we need more deep strike bombing capabilities. Now, there is the President, who sup- posedly was against the B 2, had criti- cized this Congress for funding it, now out at the plant where the program is under way taking credit for it and, fur- thermore, leaving all of these workers in southern California believing that somehow this President is having a change of heart and leaving the option out there that perhaps there will be a change, and after the election is over, somehow will reverse and we will start building more B 2’s. In fact, the President told these workers that that study will be re- leased at end of November. Which oh, by the way, Mr. Speaker, is a couple of weeks after the Presidential election. All of those B 2 workers, Mr. Speak- er, are union employees. Where is the outrage from the national leadership? There is none. The hypocrisy of this administration on defense programs is mind boggling. One final example, Mr. Speaker, this President went before AIPAC, a na- tional association of Jews in America who support Israel as much as I do. He went before AIPAC, they had a thou- sand or so people here in the Capital, and he gave a very commanding speech about our relationship with Israel and especially Israel’s national security. And during that speech, he pledged publicly that he would move forward with a bold new defense program called Nautilus. This new missile defense technology would protect the Israeli people from the threat of a Russian Katyusha rock- et being launched into Israel, like we saw the Scuds launched in there during Desert Storm. That speech was met with thunderous applause as the AIPAC members stood up and ap- plauded President Clinton for his bold words of support for protecting the Is- raeli people. But again, Mr. Speaker, we have to look beyond the rhetoric and the words. In fact, Mr. Speaker, as I said the next day after I read the text of the President’s speech, the Clinton admin- istration for the past 3 years has zeroed out funding for the high energy laser CONGRESSIONAL RECORD \u2014 HOUSEH9468 July 31, 1996 program each year. In fact, this year they put $3 million in their budget re- quest to kill the program totally. That was in January. Mr. Speaker, the high energy laser program is Nautilus. So here we had a President standing before thousands of supporters of Israel’s protection and freedom, getting rave reviews and cheers, not telling these same people that he has tried to kill that program 3 straight years. Only because of the Congress’ action, Democrats and Re- publicans alike, was the high energy laser program kept intact and can we now fully fund that tomorrow in the bill that we will bring before this body. In fact, Mr. Speaker, there was no re- quest by this administration for fund- ing for the Nautilus program at all this year. Now that is outrageous. The President gave a speech; the President said he was for the program. There was never a request given to this body or our committee for funding the Nautilus program. We funded it. Democrats and Repub- licans working together made sure the full funding for Nautilus is in this bill. And tomorrow we vote on it and it will be there. My bill, Mr. Speaker, in fact, is a good bill. It provides for the quality-of- life issues that are important for our service people. It provides for a pay raise. The first year of the Clinton ad- ministration he did not even request a pay raise for our troops. He wanted them to forgo a pay raise; send them to Somalia or Bosnia or Haiti, but do not give them a pay raise. Extend the de- ployments. Have them go 6, 8, 9, 12 months, but do not give them a pay raise. We found the money in the Con- gress to fully fund the pay raise the first couple of years of the Clinton ad- ministration. In this year’s bill, Mr. Speaker, that we will vote on tomorrow, a pay raise for our troops is consistent with other Federal employees. We have also pro- vided funds for a COLA for our retired military employees. We have also, Mr. Speaker, taken ag- gressive steps to deal with those human issues of impact aid to affect those school districts where kids of people who are in the military go to school to make sure we take care of those extra costs associated with the sons and daughters of our enlisted per- sonnel. We have also, Mr. Speaker, gone to great lengths to provide for the qual- ity-of-life support for our men and women in the military. And much of the increase that we provide, over the President’s request that he has criti- cized us for, will go for day care cen- ters, will go for family housing, will go for cost-of-living adjustments for those men and women serving this country around the world. They are justified. They are right, and they are supported by an over- whelmingly bipartisan group of this body and the other body. I am happy to say they are in the bill. Mr. Speaker, our defense bill that we will finally enact tomorrow with the help of our colleagues also does some other things. In my particular area of concern, there are some new initia- tives. For instance, we fully fund our laboratories. The laboratories allow us to maintain state-of-the-art research on new technologies. That, in fact, is a key part of the R&D portion of our conference report tomorrow. We fund our national science and technology initiative to make sure that our uni- versities are continuing to do research in new technologies, in new materials, to make sure that we are always on the cutting edge. The bill that we enact tomorrow, Mr. Speaker, and we will vote on tomor- row, does some other things that are very important. It provides a whole new oceans partnership initiative that Congress and PAT KENNEDY and I offer. This new initiative, Mr. Speaker, again bipartisan, allows the Navy to take the lead in bringing together all of our Federal agencies that do oceanographic research to better coordinate the dol- lars that we spend and provide new partnerships with the private sector with academic institutions like Woods Hole and Scripps and those other facili- ties around the country that are look- ing at the environmental impact of our oceans and what needs to be done to protect coral reefs and our ocean ecosystems. Much of the work that we are seeing off the coast of New York in searching for those remains of TWA flight 800 are being done with the Navy, because of the extensive capabilities the Navy has. And there is a whole new initia- tive in tomorrow’s bill to further en- hance the Navy’s capability in the area of oceanographic work, oceanographic mapping, and ocean partnership activi- ties. Mr. Speaker, we have also taken great steps forward to keep in place a dual-use initiative so that we encour- age the military to use dual use wher- ever possible, so it is not just benefit- ting the military but it is also benefit- ting civilian life so that wherever we can take a technology, use it for the military, but also have civilian benefit, that we provide the dollars to make those kinds of things happen. That is a major part of our bill that we will be voting on tomorrow. But, Mr. Speaker, the real purpose of my special order tonight is to focus on what I think are the two major threats that we face as a Nation, both of which are addressed in this bill and both of which the leadership has come not from 1600 Pennsylvania Avenue, but rather from this body. Democrats and Republicans working together have crafted a bill that has al- lowed us to address the two major threats that we face as a Nation. These threats are critical, they are real, and we see evidence of them as we just look around the world today. The first is terrorism, and we see it every day in every possible aspect of our society and our lives, whether it be in the air, on the ground, or whatever. It is a major problem and a major con- cern. The other is missile proliferation. Those are the two major threats, Mr. Speaker, that we see emerging around the world which this bill directly ad- dresses and they both involve weapons of mass destruction, whether they be the use of chemical, biological, nuclear or conventional arms. How did we address that, Mr. Speak- er? Despite, again, the words and the rhetoric coming out of the White House because of the downing of the TWA and because of the bombing of our troops in Saudi Arabia, it was this Congress, Mr. Speaker, that in the last 2 years plussed up funding under Republican leadership for chemical and biological research and development. My subcommittee and our full com- mittee and the final conference in last year’s bill and this year’s bill plussed up funding in that area so that our military spends more money and more focus on the threat from chemical, bio- logical, nuclear and conventional weapons of mass destruction. It is money that has been in the bill since we started this process last January; not money that we put in because of the TWA incident or because of the Saudi Arabia bombing. Money that we put in because the hearings that we held last fall and this winter showed that the administration was not re- questing enough dollars. Well, we met the shortfall and we put the money in. We put the money in another area where the President was quick to criti- cize our actions. Now though, changing his course, he wants to have a huge meeting at the White House about what can we do about the threat of ter- rorism and chemical and biological weapons. Again, because the media’s focus is there, the President is there. Well, this Congress has been there long before the media was focused on these kinds of incidents. Mr. Speaker, we also provide addi- tional funding for what is being called Nunn-Lugar Two. We did not accept ev- erything that SAM NUNN and RICHARD LUGAR wanted in the other body, but we took their recommendations deal- ing with terrorism and disposal of nu- clear weapons in Russia and other former Soviet States and we modified and changed it and we modified the do- mestic side, so that we have a robust program to assist our towns and cities in dealing with terrorist acts around the country. Now, again, Mr. Speaker, these are not new issues. I introduced a piece of legislation three sessions ago that would have required FEMA to establish a computerize inventory of every pos- sible resource that a city mayor, a fire chief, or an incident command scene coordinator could have at his or her disposal if a mass incident occurred, whether it be the World Trade Center bombing or the Oklahoma City bomb- ing or some other incident. FEMA has still not acted on that request. That is in our bill tomorrow. CONGRESSIONAL RECORD \u2014 HOUSE H9469July 31, 1996 Mr. Speaker, that will be part of the requirement; that FEMA working with the DOD and other Federal agencies has to computerize every resource that this Federal Government provides that could be brought to use in the case of a disaster in our cities, our towns, our rural areas, wherever it might be. And it is about time that took place. That did not come about because the White House said it was important; it came about because this Congress took the action. Mr. Speaker, we also provide a new thrust for local emergency response personnel. Our portion that we forced through the conference process on the House side and agreed to by the other body provides dollars to train local emergency response personnel, fire- fighters, EMT’s, paramedics, police of- ficers, so that when they are called upon to respond to disasters involving terrorist acts and terrorist weapons, they know what they are dealing with and they can respond accordingly. Those plus-ups are in this bill. They are valid and they are worthy of our support tomorrow. Last week in one of our other appro- priation bills we plussed up money, $5 million, for a local emergency re- sponder, so it adds to that effort that we have already approved in this body. Mr. Speaker, we go a long way to ad- dressing the issue of responding to ter- rorist acts and to better equip not just our military, but to better equip those civilian entities around the country that are the first responders in these types of situations. The bill also, Mr. Speaker, addresses the second major threat that we face as a Nation, and that is the threat of mis- sile proliferation. Mr. Speaker, around the world, there is a mad rush by scores of countries to develop new ca- pabilities in terms of missile tech- nology and these new capabilities, Mr. Speaker, present real challenges for the United States and our allies. b 2230 We, to look at Israel and see the con- cern of just those very antiquated Scuds being fired and the damage they caused during the Desert Storm. In fact, Mr. Speaker, the only major loss of life from one single incident in Desert Storm to American troops was caused by an Iraqi Scud missile being fired into one of our barracks. If we would have developed and de- ployed systems that we know we have the capability of putting into place today, perhaps we could have prevented those kinds of incidents from ever oc- curring. The threat of missile proliferation is more real than it has ever been and countries around the world today are developing capabilities that we have never seen before. This Congress, Mr. Speaker, has taken the effort to plus up funding in the area of defending our country against a missile attack. There has been a lot of misinformation, Mr. Speaker. The liberal media and the White House basically rails against missile spending, saying we should not be spending this money. We have not been talking about building new offen- sive weapons. We are not talking about building MX missiles. What we are talking about, Mr. Speaker, is defense, protecting the American people, our troops and our allies against an acci- dental or deliberate launch by one or two missiles. Today, Mr. Speaker, we have no such capability. Our troops are vulnerable and our people are vulnerable. What we want to do in this Congress is, we want to deploy those technologies that we know are available today and will be available over the next several years. It is the single biggest area of dis- agreement with this administration, how fast and how much we should be developing and deploying missile de- fense systems for the troops, for our al- lies and for the people of this country. The Clinton administration would have us believe that the world is rosy. Again, the President has misinformed the American people. Remember what we heard earlier about words. Words seem to be everything in this White House. Actions and facts seem to fall by the wayside. On two occasions, Mr. Speaker, the President of the United States has stood at this podium right behind me in the State of the Union speech and he has said to the American people, as he bit his lip, that the children of America can sleep well tonight because for the first time in 20 or 30 years, there are no Russian offensive missiles pointed at America’s children. During the past year, Mr. Speaker, we have totally refuted what the Presi- dent said, not by Republican experts but by his own personnel working in the military. First of all, Mr. Speaker, during a se- ries of 14 hearings we held in this ses- sion of the Congress, we had the ex- perts from the Air Force, from the in- telligence community come in and tell us on the record there is no way for us to verify whether or not the Russians have retargeted their offensive weap- ons. We have no way of verifying that. The President has no way of verifying it because our intelligence community cannot verify it. But the President made the statement. The second thing is, Mr. Speaker, if we even could verify that, our targeting experts have said on the record that we can retarget an offen- sive missile in less than 30 seconds. Why then would the President say this? Because the President wants to create this impression that somehow all is so well and somehow the American people do not have to worry. Let me make a point here, Mr. Speaker, I am not a reactionary alarm- ist. In fact, I probably do more work with the Russians that any other Mem- ber of the Congress. I will talk about those initiatives again tonight. Since my undergraduate degree in Russian studies and since my days in speaking the Russian language and in my numerous visits to Russia, I have worked in helping them with their en- ergy needs, their environmental needs, and, in fact, I am right now setting up a new initiative that the Speaker has tasked me to do with Mr. Vladimir Lukin, chairman of the International Affairs Committee for the Russian Duma, that will have Members of this Congress and the Russian Duma come together for the first time in a real way on an ongoing basis. It will be an institutional process that will last be- yond Members. Right now I am working with the ambassador of Russia to help develop a new technology transfer center in America for Russian technology. I put money in the defense bill, Mr. Speaker, this year for $20 million of joint Rus- sian-American missile defense tech- nology so that we work with the Rus- sians, so that we do not try to squirrel one up on them. I was the one last year who opposed those in my party who wanted to offer an amendment on the defense bill last year that would have forced the Presi- dent to abrogate the ABM treaty. Mr. Speaker, I am not some rabid conserv- ative who thinks that perhaps the Rus- sian government is still the evil em- pire. I want the same ultimate objective that I think Bill Clinton wants. I want the same ultimate objective that I think Strobe Talbott wants; that is, a free, democratic Russia to succeed with free markets and security and less of a threat to America and the rest of the world. But there is one key difference, Mr. Speaker. I am willing to go to the Rus- sians when there are problems that we have to confront them with and confront them openly. This administra- tion’s pattern has been to ignore re- ality and in effect to try to bury or brush over or create a perception that there are no problems there. We all know that Russia is going through problems of severe internal turmoil. We were all happy that Boris Yeltsin won the presidential election a few short weeks ago. And we are all happy the Duma is committed to work- ing with him. Mr. Speaker, there is one very impor- tant fact we have to keep in mind. The leadership in the Russian military today is the same leadership that was there during the Soviet Communist domination. Perestroika and glasnost has not come with the Russian mili- tary. In fact, Mr. Speaker, I obtained a document earlier this year that was published by one of the leading Russian think tanks, the Institute for Defense Analysis, it was published by a gen- tleman of the name of Anton Surikov. It is called the Surikov document. This document, which was briefed to the former defense minister Pavel Grazhdye and the current chief of com- mand for the Russian military, General Kalesnakov, has some very interesting material in it that every American and CONGRESSIONAL RECORD \u2014 HOUSEH9470 July 31, 1996 every one of our colleagues should read. It says in it that in the end America is always going to be an enemy of Rus- sia. In the end America is always going to be a threat to Russia’s sovereignty. In the the end, the Russian government should look to establish linkages with emerging rogue Islamic nations and it names them. It names Libya. It names Iraq, Syria as those allies of Russia that should be nurtured and where technology should be transferred to benefit a mutual relationship. This is not put out by some American think tank. This is an internal docu- ment published within Russia. Mr. Speaker, I am not here to say that every Russian believes this be- cause they do not. Boris Yeltsin does not believe this, I firmly believe. But there are people in the Russian mili- tary who still believe this, and this President and this administration do not want to call them on that. That is what is so outrageous. Mr. Speaker, we have seen some evi- dence of that. Last year about this time there was a transfer of accelerometers and gyroscopes that went from Russia to Iraq. Why is that so important? Mr. Speaker, gyroscopes and the accelerometers and the gyro- scopes that were retrieved by the Jor- danian intelligence agency and the Is- raeli intelligence agency could only be used for one purpose: They are so so- phisticated that their only purpose is to be used in long range missiles; that is, short range Scuds, long range mis- siles, long range missiles that ulti- mately could pose a threat to the U.S. Now these missiles, these devices, the accelerometers and the gyroscopes were going from Russia to Iraq. The Washington Post, in December, re- ported the story on the front page, that the Jordanians and Israelis had inter- cepted these devices. I asked the administration to give me a briefing on it. I got some remark that it was too early. I was in Moscow in January, and I met with our ambassador at the time, Ambassador Pickering, who is a fine gentleman and I think doing a great job in Moscow. I said to him, Mr. Am- bassador, what is the response of the Russian government to the fact that we have intercepted these devices being transferred to Iraq, because it is a direct violation of the Missile Tech- nology Control Regime. The MTCR, which is very complicated, is basically an arms control agreement that we brought Russia into that says they will not transfer technology involving mis- siles to another rogue Nation. This is a clear violation. When I asked the ambassador what the Russian response was, he said, Con- gressman, we have not asked them yet. I said, What do you mean you have not asked them yet. We have not requested them yet. We have not officially asked the Russians why and how these mate- rials were being transferred from Rus- sia to Iraq. I came back to the U.S. and I asked the question again and again. In fact, I wrote to the President in late Feb- ruary. I did not get a response until April 3. The President’s response to me was, Mr. Congressman, we have asked the Russians for a full explanation and they have promised us they will get it to us. I have asked when and we have no answer. But the important point, Mr. Speak- er, is, that is a violation of an arms control agreement that this adminis- tration maintains is the cornerstone of our relationship with Russia. Now, if we are not going to hold na- tions accountable when they violate arms control agreements that this President feels are the cornerstone of our relationship, how can we expect the Russian people to have any respect for us? We cannot, because they do not. Missile technology is being transferred around the world. I am not saying it is being done open- ly by the Russian government, because I do not think they would do that. But it is happening. The rise of the Mafia in Russia that has stolen nuclear mate- rial, nuclear fissile material, that has transferred technology, that has gained control of certain elements of the arms control system in Russia, is spreading around the world and this administra- tion is not taking aggressive steps to deal with that. This Congress is. This Congress is dealing in reality, Mr. Speaker. And we are not doing it in such a way to tweak the Russians. Everything I have talked about is to do it holding the leadership’s hands in Russia, to show them that we want to work with them. We want Russia to succeed. We are not about getting an edge up on that. We do not want to gain an advan- tage over Russia. But we do want to provide a protection for our people that we do not have that the Russian people have had for the past 15 years. Mr. Speaker, under the ABM treaty, each country is allowed to have one missile defense system. The Russians have one. They have had it for 15 years. They have upgraded it four times. We have none. We have none because the liberals in this city have never wanted the U.S. to be able to achieve its rightful place in providing a defensive system to protect the people of America. Mr. Speaker, that is outrageous. We are not talking about offensive mis- siles. We are not talking about killing people. We are talking about a defen- sive system that Russia already has. Mr. Speaker, I hope this becomes a major issue in this year’s presidential race because this President is totally and completely vulnerable on the issue of arms control and our relations with not just Russia but those nations de- veloping missile technology. This Con- gress is doing something about that. This Congress does not wait until Is- rael gets hit by some Scuds and it goes before AIPAC and makes a big speech and then tries to put money in. This Congress looks at the facts. This Congress has deliberated, Demo- crats and Republicans, and based on the threat as we understand it, has said we are not doing enough to protect the American people and our troops. In fact, Mr. Speaker, it has become somewhat outrageous. Last year the commanding officer for our troops in South Korea wrote to General Shalikashvili, the commander’s name is General Luck. General Luck is charged by the people of this country with the responsibility of protecting the lives of our sons and daughters who are in South Korea today. General Luck wrote to General Shalikashvili and he said, I need to have a theater missile defense system as soon as pos- sible, because I feel that my troops are vulnerable and I need you to give me a deployment as soon as you can give it to me. The system he is talking about, Mr. Speaker, is not national missile de- fense. It is not the new variation of protecting our own country. It is thea- ter missile defense, which this Presi- dent has said publicly he supports. It is called THAAD. The Navy ver- sion is called Navy Upper Tier. Now this President has come out and said he supports theater missile defense. This Congress supports theater missile defense. But in this year’s defense bill, Mr. Speaker, that we are now imple- menting, the 1996 defense bill, we put two specific dates in that bill for de- ploying THAAD and Navy Upper Tier. Never once did this President or the Secretary of Defense or any general come to us and tell us those dates were unattainable. Never once did they say, do not put them in there, we cannot meet them. The dates were 2000 and 2001, the earliest possible dates for hav- ing systems in place to protect our troops. b 2245 This President signed that bill into law in February of this year. Within a week of signing that bill into law, his people came before the Congress and said: We are going to restructure the program, we are not going to be able to meet those dates, we are not going to obey the law. We are going to slip the THAAD program until 2006. We are going to slip the program requested by the general in charge of our troops in South Korea by 6 years, even though it is law and even though this President signed that bill into law, and even though this President never objected to that date, and even though the com- mander in chief of our troops over there says it is vitally important we have them in place. We have no recourse, Mr. Speaker. We are suing the President in Federal court right now to get him to abide like the law like we all have to do. There are major areas of disagree- ment, Mr. Speaker, between this Con- gress and that White House in terms of national missile defense, theater mis- sile defense, and cruise missile defense. Unfortunately, we have an administra- tion that waits until the right media CONGRESSIONAL RECORD \u2014 HOUSE H9471July 31, 1996 opportunity, the APAC speech, the Scud attack, the Saudi attack, the TWA bombing, and then raises its hands, calls a press conference, invites people to stand behind the President, and then all of a sudden there is con- cern that we are going to do something to solve the problem. Yet all along while this Congress is in a very deliberate way providing the dollars to meet those very threats and needs, this President and his people are criticizing this Congress and attempt- ing to make the case to the American people of providing funds to meet threats that do not exist. Mr. Speaker, to me as someone who devotes the bulk of my time to both national security and Russian rela- tions, it is outrageous, and I am not going to stand for it. I am going to use every possible opportunity I have for the next 3 months to expose this ad- ministration for the hypocrisy that oc- curs every day. Whether it is the lack of enforcement of arms control agree- ments, whether it is the lack of calling the Chinese on the transfer of ring magnets to Pakistan, or whether it is the M 11 missile technology transfers, or whether it is the accelerometers and gyroscopes going from Russia to Iraq, we are going to call this administra- tion. But that is not enough, Mr. Speaker, because the world is dangerous. The Russians are hurting for cash right now. In our bill tomorrow we are going to provide some dollars to help them dismantle nuclear weapons, and I will stand up and I will support that on the floor, as I have done repeatedly, but that is not enough. In the rush of the Russians to try to find new markets, they are now offer- ing for market sale their most sophisti- cated offensive strategic weapons. These are long-range weapons. The SS 25 is what they are technically referred to: These missiles have a range of 10,000 kilometers, which means that these missiles can hit any city in the United States from any place in Russia. Now, Mr. Speaker, I am not here to say tonight that I think Russia is going to launch a SS 25 at America, so I do not want my liberal friends to go out saying, ”There goes WELDON, scar- ing the American people.” I am not saying that. There is a possibility of a rogue event occurring. The Russian military has tremendous problems with morale\u2014underpaid, finding proper housing. They have got problems with crime. But I still have some degree of confidence in the Russian military’s control of their systems. We are not talking about that, Mr. Speaker. What we are talking about is taking a SS 25 launcher, and we know the Russians have over 400 of them, they are all mobile, they are on the back of a truck, you can drive them any place. They are on rubber tires. You can drive them through the coun- try, and the CIA has said on the record it would be possible to move one of those launchers out of Russia without our surveillance camera detecting it. Here is the rub, Mr. Speaker, I do not really think that the threat comes from Iraq developing its own long- range missile. I do not think it is going to come from Libya developing its own long-range missile. What I think is going to happen is one of those nations will pay the right price to buy one of those mobile launched SS 25 systems that is currently being marketed for space launch purposes. Now the Russians tell us that they are controlling the launches, that they are all going to occur on their soil, even though they originally wanted to have a launch capacity in both Brazil and South Africa until we objected. But the point is, at some point in time in the future, mark my works, Mr. Speaker, there will be an incident in- volving a transfer of one of those launch systems, and when that occurs, we have no protection. Mr. Speaker, we have no system in this country today to protect the American people. If we are threatened, we have nothing we can do except of- fensively go in and attempt to take that missile launcher out, if we know in advance it is going to occur. That is where the threat is, Mr. Speaker, and that does not even in- clude the threat coming from North Korea and China. The Chinese are now on their latest variation of the CSS 5A. This missile has a range of 13,000 kilo- meters. We know it can hit any city in America. Now the Clinton administration tells us we do not need missile defense be- cause we have the ABM Treaty and therefore, since Russia is part of the ABM Treaty, we do not have to worry about Russia attacking us. China is not and never was a signatory to the ABM Treaty. There is no prohibition in China, and their offensive weapons today have the capacity to hit any city in the United States. North Korea is developing the Tae Po Dong and the Tae Po Dong II. These missiles will eventually have the range, very short- ly, in a matter of years, of hitting Ha- waii and Alaska. Again the outrage, Mr. Speaker. In- stead of this President talking hon- estly to the American people about the threat, what did he have the intel- ligence community do? In a threat as- sessment that was leaked to two Demo- crats last December before it was done, even though General O’Neill was the customer for that threat assessment, this administration said in their intel- ligence report there is no threat to the continental United States that we have to worry about for the next 10 to 15 years. Now the intelligence community is going back now and kind of rethinking what they said there, but here is the important thing. Here is an adminis- tration that would go to this length, in terms of disagreeing between the Con- gress and the White House over missile defense initiatives, to say no threat to the continental United States. In other words, forget about Alaska and Hawaii. Because they are not a part of the con- tinental United States, we are not going to worry about the North Kore- ans having the capability of hitting Hawaii or parts of Alaska. Mr. Speaker, that is outrageous. This administration said that, and this ad- ministration has sold that to Members of Congress and the American people. Thank goodness this Congress has not bought it. Mr. Speaker, our bill tomorrow pro- vides full funding for missile defense in response to what the President’s own ballistic missile defense organization said it could use. We did not go out and put money into programs just because we felt they are important, and I have no programs anywhere near my district in this area at all. We went to General O’Neill, who ran the President’s own operation up until he retired last month, and said where would you put the dollars, and that is where we put the money. But this President, Mr. Speaker, is not providing honest information to the American people about reality today, reality in terms of the threat and reality in terms of what we should be doing to protect the American peo- ple and our troops. Here we are putting our troops around the world, yet not giving them the protection they need through capabilities that we have tech- nically available today. There are two major provisions that were deleted from the final conference bill that I am very disappointed with. The first would have prevented the ad- ministration from making any changes to the ABM Treaty in terms of adding in other nations without the advice and consent of the U.S. Senate. To me that is outrageous. This administration right now is over in Geneva negotiating changes to the ABM Treaty. They want to bring in other former Soviet states. Why is that so significant? Because when we want to modify that treaty, we do not just have to get Russia’s approval, we have got to get Belorussia’s approval, Ukraine’s approval, Kazakhstan’s ap- proval, Tadzhikistan’s approval, none of whom have offensive nuclear weap- ons. When I was over in Geneva as the only Member of Congress to visit the discussions and the negotiations tak- ing place this year, for 21\u20442 hours I sat across from the chief Russian nego- tiator General Kotunov. He is a hard- liner, but a decent person. We had a frank discussion. Sitting next to me was our chief American negotiator, Stanley Riveles. I looked General Kotunov right in the eye and I said: ”General, tell me, why does Russia want to amend the treaty to bring in all of these other countries? They do not have offensive weapons, they do not have offensive missiles.” He said, ”Congressman, you are ask- ing that question of the wrong person. I have not raised the issue of multilateralizing the treaty. You should be asking that of the person sit- ting next to you. CONGRESSIONAL RECORD \u2014 HOUSEH9472 July 31, 1996 Mr. Speaker, I cannot believe that our administration would be so be- holden to an arms control treaty that they would want to involve other coun- tries so it would be more difficult for us to amend that treaty down the road. That is what I feel this administration is doing, and I feel that is wrong. It is also certainly wrong without the ad- vice and consent of the Senate. We had to remove that language from the bill because this President threatened to veto it, and the Senate would not go along with us. The second thing we had to remove from this bill was on further discus- sions in Geneva relative to demarca- tion. Now there are not many people who understand the demarcation issue because, to be honest with you, I can- not understand it fully myself. But I can tell you what is going on. This administration, unlike the pre- vious 12 years of administrations deal- ing with Russia, has interpreted the ABM Treaty in such a way to require us to go in and negotiate systems that we have never before felt came under the terms of the ABM Treaty. This ad- ministration is right now about to give us an agreement, probably in October, that will limit our ability to fully de- velop our Navy upper-tier theater mis- sile defense system. We call it dumbing-down our technology. There is no reason for it, Mr. Speaker. The previous two administrations set a standard that this Congress, Demo- crats and Republicans, agreed to. It is called the demonstrated standard in terms of where the ABM Treaty ap- plies. This administration went over to Geneva and opened up a whole new can of worms, and so we are going to nego- tiate an agreement with the Russians on what is or is not allowed in terms of theater missile defense systems; the bottom line being, we are going to fur- ther limit, self-limit and self-impose, limitations on our own capabilities. It reminds me of what we did with the Patriot system. A lot of us saw the Patriot used during Desert Storm and we thought what a great system. Do you know, Mr. Speaker, that system was dumbed-down? That system was originally designed to take out planes and not missiles. We had a change at the eleventh hour because of the mis- siles coming into Israel. Is that what is going to happen here? Are we going to wait until something happens, and then let the President have a major national press conference and pound the table and talk about his commitment to missile defense for our troops? Are we going to wait until we have a missile land in South Korea and then say that we are working hard on this new initiative? Are we going to wait until we have a Third World na- tion get a capability that threatens our sovereignty and then say we are going to move ahead? That is not what this Congress is doing. This Congress is taking steps to protect our troops and to protect our American people in spite of this admin- istration. I just hope that as this year goes on our colleagues join with us in telling the message of truth about what is happening to our national secu- rity. f THE DEFENSE NEEDS OF OUR NATION The SPEAKER pro tempore. Under a previous order of the House, the gen- tleman from Maine [Mr. LONGLEY] is recognized for 5 minutes. Mr. LONGLEY. Mr. Speaker, I recog- nize that the hour is late and I will only speak but for a few minutes, but I was in my office listening to the gen- tleman from Pennsylvania, and was very struck by his remarks, and felt that it would be appropriate to perhaps follow along with what the gentleman from Pennsylvania has been saying. He is a fellow member of the Committee on National Security, but he is making some very important points. It was a masterful summary of the provisions of the defense conference report that we will be discussing in the House tomor- row, but, more importantly, the focus on the reality of the problems, the threats that confront us as a Nation, and the issues and how they affect our defense and national security could not have been better stated. I want to particularly make ref- erence to his comments in the light of the unfortunate incident of barely 2 weeks ago, the downing of TWA Flight 800. I think that we are all greatly sorry that that aircraft was downed in the manner that it was. But I have to say very honestly that I think we do know what caused the aircraft to come down, and I am very concerned that we seem to be somewhat afraid of actually stating the reason. From all circumstances, and again I have no particular knowledge, but from all the circumstantial evidence it ap- pears very clear that this aircraft was taken down by an act of sabotage. Again, it has not been proven yet, but the suggestion is very strong that it was some form of an altitude deto- nated device that sent 230 innocent men women and children to their deaths in the Atlantic off of Long Is- land. b 2300 To the extent that that is true, I think as a Nation we need to be look- ing at our defense bill, not only in the context of that terrible, tragic acci- dent, but also in the context of the prior bombing of the Dhahran barracks barely another 2 weeks prior to that, where another 19 or 20 young Ameri- cans lost their lives in Saudi Arabia, and then going back to last November in Riyadh and the attack, again, on in- nocent Americans, the five that were killed in that maintenance facility in Saudi Arabia. One of the things that is becoming very clear about the previous two at- tacks is that they were well-planned and very sophisticated and required a high level of training and expertise to be carried out. I am advised, for in- stance, that the bomb that destroyed the facility in Riyadh was timed to detonate at precisely noon, or roughly during the time of noon prayer, when any non-American personnel were like- ly to be at the nearby mosque for noon prayers; or that the bomb that deto- nated the barracks in Dhahran was ac- tually a very sophisticated mix of mili- tary and commercial grade explosives, well over 5,000 to 10,000 pounds of explo- sives, again, that were structured in a highly sophisticated and detailed man- ner designed, in effect, and executed by professionals. Again, we do not know yet the an- swer to TWA Flight 800, but it is very clear that many of the terrorist groups in the Middle East who have taken credit, small or large, for the prior at- tacks are also invoking their name in the context of TWA Flight 800. To that extent, it is a serious, serious issue that I hope this Congress will de- mand very honest and candid answers to; because to the extent that there is a connection between these three inci- dents, to the extent that they docu- ment a very serious threat that is being mounted against this country, then I think that while it is appro- priate that we be engaging in a discus- sion of what security measures are ap- propriate and how we might best pro- tect ourselves as a Nation, as a group of innocent people, concerned with the danger that might be raised against in- nocent men and women and children, then it is also appropriate that we con- sider, to the extent that it is possible to do so, from whence these attacks have arisen; what is the cause, who were the perpetrators, why are inno- cent men and women and children and American servicemen and women being targeted in the manner they are being targeted? I also say this with reference to my service in Desert Storm and as a vet- eran of that conflict. I am very much aware of the fact that 95 percent of our seaborne traffic, our military support that supported American troops in Desert Storm and Saudi Arabia, transited into the Persian Gulf through the Straits of Hormuz, past the three islands that are currently occupied by the country of Iran, islands that have been fortified with chemical weapons, islands that have been fortified with antiship and anti-air missiles, and is- lands the sovereignty over which has been claimed by a country that openly proclaims its intentions of driving the United States from the Middle East, driving the United States from the Per- sian Gulf, and in effect, asserting con- trol over the tremendous oil resources of that region and threatening the eco- nomic lifeblood of the western and free world, including the United States. Mr. Speaker, I have tried to raise several very important questions. I think they are very serious in the con- text of the prior tour de force that was conducted by the gentleman from CONGRESSIONAL RECORD \u2014 HOUSE H9473July 31, 1996 Pennsylvania, Mr. WELDON, relating to our defense needs and the method in which we have attempted to address them in the upcoming conference re- port. f RECESS The SPEAKER pro tempore (Mr. TAYLOR of North Carolina). Pursuant to clause 12 of rule I, the House stands in recess subject to the call of the Chair. Accordingly (at 11 o’clock and 2 min- utes p.m.), the House stood in recess subject to the call of the Chair. f b 2343 AFTER RECESS The recess having expired, the House was called to order by the Speaker pro tempore (Mr. TAYLOR of North Caro- lina) at 11 o’clock and 43 minutes p.m. f REPORT ON H.R. 3103, HEALTH IN- SURANCE PORTABILITY AND AC- COUNTABILITY ACT OF 1996 Mr. HASTERT submitted the follow- ing conference report and statement on the bill (H.R. 3103) to amend the Inter- nal Revenue Code of 1986 to improve portability and continuity of health in- surance coverage in the group and indi- vidual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings accounts, to improve access to long-term care serv- ices and coverage, to simplify the ad- ministration of health insurance, and for other purposes. CONFERENCE REPORT (H. REPT. 104 736) The committee of conference on the dis- agreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 3103), to amend the Internal Revenue Code of 1986 to improve portability and continuity of health insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings accounts, to improve access to long- term care services and coverage, to simplify the administration of health insurance, and for other purposes, having met, after full and free conference, and agreed to recommend and do recommend to their respective Houses as follows: That the House recede from its disagree- ment to the amendment of the Senate and agree to the same with an amendment as fol- lows: In lieu of the matter proposed to be in- serted by the Senate amendment, insert the following: SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) SHORT TITLE.\u2014This Act may be cited as the ”Health Insurance Portability and Account- ability Act of 1996”. (b) TABLE OF CONTENTS.\u2014The table of con- tents of this Act is as follows: Sec. 1. Short title; table of contents. TITLE I\u2014HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY Subtitle A\u2014Group Market Rules PART 1\u2014PORTABILITY, ACCESS, AND RENEWABILITY REQUIREMENTS Sec. 101. Through the Employee Retirement In- come Security Act of 1974. ”PART 7\u2014GROUP HEALTH PLAN PORTABILITY, ACCESS, AND RENEWABILITY REQUIREMENTS ”Sec. 701. Increased portability through limitation on preexisting condi- tion exclusions. ”Sec. 702. Prohibiting discrimination against individual participants and beneficiaries based on health status. ”Sec. 703. Guaranteed renewability in mul- tiemployer plans and multiple em- ployer welfare arrangements. ”Sec. 704. Preemption; State flexibility; construction. ”Sec. 705. Special rules relating to group health plans. ”Sec. 706. Definitions. ”Sec. 707. Regulations. Sec. 102. Through the Public Health Service Act. ”TITLE XXVII\u2014ASSURING PORTABILITY, AVAILABILITY, AND RENEWABILITY OF HEALTH INSURANCE COVERAGE ”PART A\u2014GROUP MARKET REFORMS ”SUBPART 1\u2014PORTABILITY, ACCESS, AND RENEWABILITY REQUIREMENTS ”Sec. 2701. Increased portability through limitation on preexisting condi- tion exclusions. ”Sec. 2702. Prohibiting discrimination against individual participants and beneficiaries based on health status. ”SUBPART 2\u2014PROVISIONS APPLICABLE ONLY TO HEALTH INSURANCE ISSUERS ”Sec. 2711. Guaranteed availability of cov- erage for employers in the group market. ”Sec. 2712. Guaranteed renewability of cov- erage for employers in the group market. ”Sec. 2713. Disclosure of information. ”SUBPART 3\u2014EXCLUSION OF PLANS; ENFORCEMENT; PREEMPTION ”Sec. 2721. Exclusion of certain plans. ”Sec. 2722. Enforcement. ”Sec. 2723. Preemption; State flexibility; construction. ”PART C\u2014DEFINITIONS; MISCELLANEOUS PROVISIONS ”Sec. 2791. Definitions. ”Sec. 2792. Regulations. Sec. 103. Reference to implementation through the Internal Revenue Code of 1986. Sec. 104. Assuring coordination. Subtitle B\u2014Individual Market Rules Sec. 111. Amendment to Public Health Service Act. ”PART B\u2014INDIVIDUAL MARKET RULES ”Sec. 2741. Guaranteed availability of indi- vidual health insurance coverage to certain individuals with prior group coverage. ”Sec. 2742. Guaranteed renewability of in- dividual health insurance cov- erage. ”Sec. 2743. Certification of coverage. ”Sec. 2744. State flexibility in individual market reforms. ”Sec. 2745. Enforcement. ”Sec. 2746. Preemption. ”Sec. 2747. General exceptions. Subtitle C\u2014General and Miscellaneous Provisions Sec. 191. Health coverage availability studies. Sec. 192. Report on medicare reimbursement of telemedicine. Sec. 193. Allowing Federally-qualified HMOs to offer high deductible plans. Sec. 194. Volunteer services provided by health professionals at free clinics. Sec. 195. Findings; severability. TITLE II\u2014PREVENTING HEALTH CARE FRAUD AND ABUSE; ADMINISTRATIVE SIMPLIFICATION; MEDICAL LIABILITY REFORM Sec. 200. References in title. Subtitle A\u2014Fraud and Abuse Control Program Sec. 201. Fraud and abuse control program. Sec. 202. Medicare integrity program. Sec. 203. Beneficiary incentive programs. Sec. 204. Application of certain health anti- fraud and abuse sanctions to fraud and abuse against Federal health care programs. Sec. 205. Guidance regarding application of health care fraud and abuse sanc- tions. Subtitle B\u2014Revisions to Current Sanctions for Fraud and Abuse Sec. 211. Mandatory exclusion from participa- tion in medicare and State health care programs. Sec. 212. Establishment of minimum period of exclusion for certain individuals and entities subject to permissive exclusion from medicare and State health care programs. Sec. 213. Permissive exclusion of individuals with ownership or control interest in sanctioned entities. Sec. 214. Sanctions against practitioners and persons for failure to comply with statutory obligations. Sec. 215. Intermediate sanctions for medicare health maintenance organiza- tions. Sec. 216. Additional exception to anti-kickback penalties for risk-sharing ar- rangements. Sec. 217. Criminal penalty for fraudulent dis- position of assets in order to ob- tain medicaid benefits. Sec. 218. Effective date. Subtitle C\u2014Data Collection Sec. 221. Establishment of the health care fraud and abuse data collection pro- gram. Subtitle D\u2014Civil Monetary Penalties Sec. 231. Social security act civil monetary pen- alties. Sec. 232. Penalty for false certification for home health services. Subtitle E\u2014Revisions to Criminal Law Sec. 241. Definitions relating to Federal health care offense. Sec. 242. Health care fraud. Sec. 243. Theft or embezzlement. Sec. 244. False Statements. Sec. 245. Obstruction of criminal investigations of health care offenses. Sec. 246. Laundering of monetary instruments. Sec. 247. Injunctive relief relating to health care offenses. Sec. 248. Authorized investigative demand pro- cedures. Sec. 249. Forfeitures for Federal health care of- fenses. Sec. 250. Relation to ERISA authority. Subtitle F\u2014Administrative Simplification Sec. 261. Purpose. Sec. 262. Administrative simplification. ”PART C\u2014ADMINISTRATIVE SIMPLIFICATION ”Sec. 1171. Definitions. ”Sec. 1172. General requirements for adop- tion of standards. ”Sec. 1173. Standards for information trans- actions and data elements. ”Sec. 1174. Timetables for adoption of standards. ”Sec. 1175. requirements. ”Sec. 1176. General penalty for failure to comply with requirements and standards. ”Sec. 1177. Wrongful disclosure of individ- ually identifiable health informa- tion. CONGRESSIONAL RECORD \u2014 HOUSEH9474 July 31, 1996 ”Sec. 1178. Effect on State law. ”Sec. 1179. Processing payment trans- actions. Sec. 263. Changes in membership and duties of National Committee on Vital and Health Statistics. Sec. 264. Recommendations with respect to pri- vacy of certain health informa- tion. Subtitle G\u2014Duplication and Coordination of Medicare-Related Plans Sec. 271. Duplication and coordination of medi- care-related plans. Subtitle H\u2014Patent Extension Sec. 281. Patent extension. TITLE III\u2014TAX-RELATED HEALTH PROVISIONS Sec. 300. Amendment of 1986 Code. Subtitle A\u2014Medical Savings Accounts Sec. 301. Medical savings accounts. Subtitle B\u2014Increase in Deduction for Health Insurance Costs of Self-Employed Individuals Sec. 311. Increase in deduction for health insur- ance costs of self-employed indi- viduals. Subtitle C\u2014Long-Term Care Services and Contracts PART I\u2014GENERAL PROVISIONS Sec. 321. Treatment of long-term care insur- ance. Sec. 322. Qualified long-term care services treat- ed as medical care. Sec. 323. Reporting requirements. PART II\u2014CONSUMER PROTECTION PROVISIONS Sec. 325. Policy requirements. Sec. 326. Requirements for issuers of qualified long-term care insurance con- tracts. Sec. 327. Effective dates. Subtitle D\u2014Treatment of Accelerated Death Benefits Sec. 331. Treatment of accelerated death bene- fits by recipient. Sec. 332. Tax treatment of companies issuing qualified accelerated death bene- fit riders. Subtitle E\u2014State Insurance Pools Sec. 341. Exemption from income tax for State- sponsored organizations providing health coverage for high-risk indi- viduals. Sec. 342. Exemption from income tax for State- sponsored workmen’s compensa- tion reinsurance organizations. Subtitle F\u2014Organizations Subject to Section 833 Sec. 351. Organizations subject to section 833. Subtitle G\u2014IRA Distributions to the Unemployed Sec. 361. Distributions from certain plans may be used without additional tax to pay financially devastating medi- cal expenses. Subtitle H\u2014Organ and Tissue Donation Infor- mation Included With Income Tax Refund Payments Sec. 371. Organ and tissue donation informa- tion included with income tax re- fund payments. TITLE IV\u2014APPLICATION AND ENFORCE- MENT OF GROUP HEALTH PLAN RE- QUIREMENTS Subtitle A\u2014Application and Enforcement of Group Health Plan Requirements Sec. 401. Group health plan portability, access, and renewability requirements. Sec. 402. Penalty on failure to meet certain group health plan requirements. Subtitle B\u2014Clarification of Certain Continuation Coverage Requirements Sec. 421. COBRA clarifications. TITLE V\u2014REVENUE OFFSETS Sec. 500. Amendment of 1986 Code. Subtitle A\u2014Company-Owned Life Insurance Sec. 501. Denial of deduction for interest on loans with respect to company- owned life insurance. Subtitle B\u2014Treatment of Individuals Who Lose United States Citizenship Sec. 511. Revision of income, estate, and gift taxes on individuals who lose United States citizenship. Sec. 512. Information on individuals losing United States citizenship. Sec. 513. Report on tax compliance by United States citizens and residents living abroad. Subtitle C\u2014Repeal of Financial Institution Transition Rule to Interest Allocation Rules Sec. 521. Repeal of financial institution transi- tion rule to interest allocation rules. TITLE I\u2014HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY Subtitle A\u2014Group Market Rules PART 1\u2014PORTABILITY, ACCESS, AND RENEWABILITY REQUIREMENTS SEC. 101. THROUGH THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974. (a) IN GENERAL.\u2014Subtitle B of title I of the Employee Retirement Income Security Act of 1974 is amended by adding at the end the follow- ing new part: ”PART 7\u2014GROUP HEALTH PLAN PORTABILITY, ACCESS, AND RENEWABILITY REQUIREMENTS ”SEC. 701. INCREASED PORTABILITY THROUGH LIMITATION ON PREEXISTING CON- DITION EXCLUSIONS. ”(a) LIMITATION ON PREEXISTING CONDITION EXCLUSION PERIOD; CREDITING FOR PERIODS OF PREVIOUS COVERAGE.\u2014Subject to subsection (d), a group health plan, and a health insurance is- suer offering group health insurance coverage, may, with respect to a participant or bene- ficiary, impose a preexisting condition exclusion only if\u2014 ”(1) such exclusion relates to a condition (whether physical or mental), regardless of the cause of the condition, for which medical ad- vice, diagnosis, care, or treatment was rec- ommended or received within the 6-month period ending on the enrollment date; ”(2) such exclusion extends for a period of not more than 12 months (or 18 months in the case of a late enrollee) after the enrollment date; and ”(3) the period of any such preexisting condi- tion exclusion is reduced by the aggregate of the periods of creditable coverage (if any, as defined in subsection (c)(1)) applicable to the partici- pant or beneficiary as of the enrollment date. ”(b) DEFINITIONS.\u2014For purposes of this part\u2014 ”(1) PREEXISTING CONDITION EXCLUSION.\u2014 ”(A) IN GENERAL.\u2014The term ‘preexisting con- dition exclusion’ means, with respect to cov- erage, a limitation or exclusion of benefits relat- ing to a condition based on the fact that the condition was present before the date of enroll- ment for such coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date. ”(B) TREATMENT OF GENETIC INFORMATION.\u2014 Genetic information shall not be treated as a condition described in subsection (a)(1) in the absence of a diagnosis of the condition related to such information. ”(2) ENROLLMENT DATE.\u2014The term ‘enroll- ment date’ means, with respect to an individual covered under a group health plan or health in- surance coverage, the date of enrollment of the individual in the plan or coverage or, if earlier, the first day of the waiting period for such en- rollment. ”(3) LATE ENROLLEE.\u2014The term ‘late enrollee’ means, with respect to coverage under a group health plan, a participant or beneficiary who enrolls under the plan other than during\u2014 ”(A) the first period in which the individual is eligible to enroll under the plan, or ”(B) a special enrollment period under sub- section (f). ”(4) WAITING PERIOD.\u2014The term ‘waiting pe- riod’ means, with respect to a group health plan and an individual who is a potential participant or beneficiary in the plan, the period that must pass with respect to the individual before the in- dividual is eligible to be covered for benefits under the terms of the plan. ”(c) RULES RELATING TO CREDITING PREVIOUS COVERAGE.\u2014 ”(1) CREDITABLE COVERAGE DEFINED.\u2014For purposes of this part, the term ‘creditable cov- erage’ means, with respect to an individual, cov- erage of the individual under any of the follow- ing: ”(A) A group health plan. ”(B) Health insurance coverage. ”(C) Part A or part B of title XVIII of the So- cial Security Act. ”(D) Title XIX of the Social Security Act, other than coverage consisting solely of benefits under section 1928. ”(E) Chapter 55 of title 10, United States Code. ”(F) A medical care program of the Indian Health Service or of a tribal organization. ”(G) A State health benefits risk pool. ”(H) A health plan offered under chapter 89 of title 5, United States Code. ”(I) A public health plan (as defined in regu- lations). ”(J) A health benefit plan under section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e)). Such term does not include coverage consisting solely of coverage of excepted benefits (as de- fined in section 706(c)). ”(2) NOT COUNTING PERIODS BEFORE SIGNIFI- CANT BREAKS IN COVERAGE.\u2014 ”(A) IN GENERAL.\u2014A period of creditable cov- erage shall not be counted, with respect to en- rollment of an individual under a group health plan, if, after such period and before the enroll- ment date, there was a 63-day period during all of which the individual was not covered under any creditable coverage. ”(B) WAITING PERIOD NOT TREATED AS A BREAK IN COVERAGE.\u2014For purposes of subpara- graph (A) and subsection (d)(4), any period that an individual is in a waiting period for any cov- erage under a group health plan (or for group health insurance coverage) or is in an affili- ation period (as defined in subsection (g)(2)) shall not be taken into account in determining the continuous period under subparagraph (A). ”(3) METHOD OF CREDITING COVERAGE.\u2014 ”(A) STANDARD METHOD.\u2014Except as otherwise provided under subparagraph (B), for purposes of applying subsection (a)(3), a group health plan, and a health insurance issuer offering group health insurance coverage, shall count a period of creditable coverage without regard to the specific benefits covered during the period. ”(B) ELECTION OF ALTERNATIVE METHOD.\u2014A group health plan, or a health insurance issuer offering group health insurance coverage, may elect to apply subsection (a)(3) based on cov- erage of benefits within each of several classes or categories of benefits specified in regulations rather than as provided under subparagraph (A). Such election shall be made on a uniform basis for all participants and beneficiaries. Under such election a group health plan or is- suer shall count a period of creditable coverage with respect to any class or category of benefits if any level of benefits is covered within such class or category. ”(C) PLAN NOTICE.\u2014In the case of an election with respect to a group health plan under sub- paragraph (B) (whether or not health insurance coverage is provided in connection with such plan), the plan shall\u2014 ”(i) prominently state in any disclosure state- ments concerning the plan, and state to each enrollee at the time of enrollment under the plan, that the plan has made such election, and CONGRESSIONAL RECORD \u2014 HOUSE H9475July 31, 1996 ”(ii) include in such statements a description of the effect of this election. ”(4) ESTABLISHMENT OF PERIOD.\u2014Periods of creditable coverage with respect to an individual shall be established through presentation of cer- tifications described in subsection (e) or in such other manner as may be specified in regulations. ”(d) EXCEPTIONS.\u2014 ”(1) EXCLUSION NOT APPLICABLE TO CERTAIN NEWBORNS.\u2014Subject to paragraph (4), a group health plan, and a health insurance issuer of- fering group health insurance coverage, may not impose any preexisting condition exclusion in the case of an individual who, as of the last day of the 30-day period beginning with the date of birth, is covered under creditable cov- erage. ”(2) EXCLUSION NOT APPLICABLE TO CERTAIN ADOPTED CHILDREN.\u2014Subject to paragraph (4), a group health plan, and a health insurance is- suer offering group health insurance coverage, may not impose any preexisting condition exclu- sion in the case of a child who is adopted or placed for adoption before attaining 18 years of age and who, as of the last day of the 30-day period beginning on the date of the adoption or placement for adoption, is covered under cred- itable coverage. The previous sentence shall not apply to coverage before the date of such adop- tion or placement for adoption. ”(3) EXCLUSION NOT APPLICABLE TO PREG- NANCY.\u2014A group health plan, and health insur- ance issuer offering group health insurance cov- erage, may not impose any preexisting condition exclusion relating to pregnancy as a preexisting condition. ”(4) LOSS IF BREAK IN COVERAGE.\u2014Para- graphs (1) and (2) shall no longer apply to an individual after the end of the first 63-day pe- riod during all of which the individual was not covered under any creditable coverage. ”(e) CERTIFICATIONS AND DISCLOSURE OF COV- ERAGE.\u2014 ”(1) REQUIREMENT FOR CERTIFICATION OF PE- RIOD OF CREDITABLE COVERAGE.\u2014 ”(A) IN GENERAL.\u2014A group health plan, and a health insurance issuer offering group health insurance coverage, shall provide the certifi- cation described in subparagraph (B)\u2014 ”(i) at the time an individual ceases to be cov- ered under the plan or otherwise becomes cov- ered under a COBRA continuation provision, ”(ii) in the case of an individual becoming covered under such a provision, at the time the individual ceases to be covered under such pro- vision, and ”(iii) on the request on behalf of an individ- ual made not later than 24 months after the date of cessation of the coverage described in clause (i) or (ii), whichever is later. The certification under clause (i) may be pro- vided, to the extent practicable, at a time con- sistent with notices required under any applica- ble COBRA continuation provision. ”(B) CERTIFICATION.\u2014The certification de- scribed in this subparagraph is a written certifi- cation of\u2014 ”(i) the period of creditable coverage of the in- dividual under such plan and the coverage (if any) under such COBRA continuation provi- sion, and ”(ii) the waiting period (if any) (and affili- ation period, if applicable) imposed with respect to the individual for any coverage under such plan. ”(C) ISSUER COMPLIANCE.\u2014To the extent that medical care under a group health plan consists of group health insurance coverage, the plan is deemed to have satisfied the certification re- quirement under this paragraph if the health insurance issuer offering the coverage provides for such certification in accordance with this paragraph. ”(2) DISCLOSURE OF INFORMATION ON PRE- VIOUS BENEFITS.\u2014In the case of an election de- scribed in subsection (c)(3)(B) by a group health plan or health insurance issuer, if the plan or issuer enrolls an individual for coverage under the plan and the individual provides a certifi- cation of coverage of the individual under para- graph (1)\u2014 ”(A) upon request of such plan or issuer, the entity which issued the certification provided by the individual shall promptly disclose to such requesting plan or issuer information on cov- erage of classes and categories of health benefits available under such entity’s plan or coverage, and ”(B) such entity may charge the requesting plan or issuer for the reasonable cost of disclos- ing such information. ”(3) REGULATIONS.\u2014The Secretary shall es- tablish rules to prevent an entity’s failure to provide information under paragraph (1) or (2) with respect to previous coverage of an individ- ual from adversely affecting any subsequent coverage of the individual under another group health plan or health insurance coverage. ”(f) SPECIAL ENROLLMENT PERIODS.\u2014 ”(1) INDIVIDUALS LOSING OTHER COVERAGE.\u2014A group health plan, and a health insurance is- suer offering group health insurance coverage in connection with a group health plan, shall permit an employee who is eligible, but not en- rolled, for coverage under the terms of the plan (or a dependent of such an employee if the de- pendent is eligible, but not enrolled, for cov- erage under such terms) to enroll for coverage under the terms of the plan if each of the fol- lowing conditions is met: ”(A) The employee or dependent was covered under a group health plan or had health insur- ance coverage at the time coverage was pre- viously offered to the employee or dependent. ”(B) The employee stated in writing at such time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment, but only if the plan spon- sor or issuer (if applicable) required such a statement at such time and provided the em- ployee with notice of such requirement (and the consequences of such requirement) at such time. ”(C) The employee’s or dependent’s coverage described in subparagraph (A)\u2014 ”(i) was under a COBRA continuation provi- sion and the coverage under such provision was exhausted; or ”(ii) was not under such a provision and ei- ther the coverage was terminated as a result of loss of eligibility for the coverage (including as a result of legal separation, divorce, death, ter- mination of employment, or reduction in the number of hours of employment) or employer contributions towards such coverage were termi- nated. ”(D) Under the terms of the plan, the em- ployee requests such enrollment not later than 30 days after the date of exhaustion of coverage described in subparagraph (C)(i) or termination of coverage or employer contribution described in subparagraph (C)(ii). ”(2) FOR DEPENDENT BENEFICIARIES.\u2014 ”(A) IN GENERAL.\u2014If\u2014 ”(i) a group health plan makes coverage available with respect to a dependent of an indi- vidual, ”(ii) the individual is a participant under the plan (or has met any waiting period applicable to becoming a participant under the plan and is eligible to be enrolled under the plan but for a failure to enroll during a previous enrollment period), and ”(iii) a person becomes such a dependent of the individual through marriage, birth, or adop- tion or placement for adoption, the group health plan shall provide for a de- pendent special enrollment period described in subparagraph (B) during which the person (or, if not otherwise enrolled, the individual) may be enrolled under the plan as a dependent of the individual, and in the case of the birth or adop- tion of a child, the spouse of the individual may be enrolled as a dependent of the individual if such spouse is otherwise eligible for coverage. ”(B) DEPENDENT SPECIAL ENROLLMENT PE- RIOD.\u2014A dependent special enrollment period under this subparagraph shall be a period of not less than 30 days and shall begin on the later of\u2014 ”(i) the date dependent coverage is made available, or ”(ii) the date of the marriage, birth, or adop- tion or placement for adoption (as the case may be) described in subparagraph (A)(iii). ”(C) NO WAITING PERIOD.\u2014If an individual seeks to enroll a dependent during the first 30 days of such a dependent special enrollment pe- riod, the coverage of the dependent shall become effective\u2014 ”(i) in the case of marriage, not later than the first day of the first month beginning after the date the completed request for enrollment is re- ceived; ”(ii) in the case of a dependent’s birth, as of the date of such birth; or ”(iii) in the case of a dependent’s adoption or placement for adoption, the date of such adop- tion or placement for adoption. ”(g) USE OF AFFILIATION PERIOD BY HMOS AS ALTERNATIVE TO PREEXISTING CONDITION EX- CLUSION.\u2014 ”(1) IN GENERAL.\u2014In the case of a group health plan that offers medical care through health insurance coverage offered by a health maintenance organization, the plan may pro- vide for an affiliation period with respect to cov- erage through the organization only if\u2014 ”(A) no preexisting condition exclusion is im- posed with respect to coverage through the orga- nization, ”(B) the period is applied uniformly without regard to any health status-related factors, and ”(C) such period does not exceed 2 months (or 3 months in the case of a late enrollee). ”(2) AFFILIATION PERIOD.\u2014 ”(A) DEFINED.\u2014For purposes of this part, the term ‘affiliation period’ means a period which, under the terms of the health insurance cov- erage offered by the health maintenance organi- zation, must expire before the health insurance coverage becomes effective. The organization is not required to provide health care services or benefits during such period and no premium shall be charged to the participant or bene- ficiary for any coverage during the period. ”(B) BEGINNING.\u2014Such period shall begin on the enrollment date. ”(C) RUNS CONCURRENTLY WITH WAITING PERI- ODS.\u2014An affiliation period under a plan shall run concurrently with any waiting period under the plan. ”(3) ALTERNATIVE METHODS.\u2014A health main- tenance organization described in paragraph (1) may use alternative methods, from those de- scribed in such paragraph, to address adverse selection as approved by the State insurance commissioner or official or officials designated by the State to enforce the requirements of part A of title XXVII of the Public Health Service Act for the State involved with respect to such issuer. ”SEC. 702. PROHIBITING DISCRIMINATION AGAINST INDIVIDUAL PARTICIPANTS AND BENEFICIARIES BASED ON HEALTH STATUS. ”(a) IN ELIGIBILITY TO ENROLL.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2), a group health plan, and a health insurance is- suer offering group health insurance coverage in connection with a group health plan, may not establish rules for eligibility (including con- tinued eligibility) of any individual to enroll under the terms of the plan based on any of the following health status-related factors in rela- tion to the individual or a dependent of the in- dividual: ”(A) Health status. ”(B) Medical condition (including both phys- ical and mental illnesses). ”(C) Claims experience. ”(D) Receipt of health care. ”(E) Medical history. ”(F) Genetic information. ”(G) Evidence of insurability (including con- ditions arising out of acts of domestic violence). CONGRESSIONAL RECORD \u2014 HOUSEH9476 July 31, 1996 ”(H) Disability. ”(2) NO APPLICATION TO BENEFITS OR EXCLU- SIONS.\u2014To the extent consistent with section 701, paragraph (1) shall not be construed\u2014 ”(A) to require a group health plan, or group health insurance coverage, to provide particular benefits other than those provided under the terms of such plan or coverage, or ”(B) to prevent such a plan or coverage from establishing limitations or restrictions on the amount, level, extent, or nature of the benefits or coverage for similarly situated individuals en- rolled in the plan or coverage. ”(3) CONSTRUCTION.\u2014For purposes of para- graph (1), rules for eligibility to enroll under a plan include rules defining any applicable wait- ing periods for such enrollment. ”(b) IN PREMIUM CONTRIBUTIONS.\u2014 ”(1) IN GENERAL.\u2014A group health plan, and a health insurance issuer offering health insur- ance coverage in connection with a group health plan, may not require any individual (as a condition of enrollment or continued enroll- ment under the plan) to pay a premium or con- tribution which is greater than such premium or contribution for a similarly situated individual enrolled in the plan on the basis of any health status-related factor in relation to the individ- ual or to an individual enrolled under the plan as a dependent of the individual. ”(2) CONSTRUCTION.\u2014Nothing in paragraph (1) shall be construed\u2014 ”(A) to restrict the amount that an employer may be charged for coverage under a group health plan; or ”(B) to prevent a group health plan, and a health insurance issuer offering group health insurance coverage, from establishing premium discounts or rebates or modifying otherwise ap- plicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention. ”SEC. 703. GUARANTEED RENEWABILITY IN MUL- TIEMPLOYER PLANS AND MULTIPLE EMPLOYER WELFARE ARRANGE- MENTS. ”A group health plan which is a multiem- ployer plan or which is a multiple employer wel- fare arrangement may not deny an employer whose employees are covered under such a plan continued access to the same or different cov- erage under the terms of such a plan, other than\u2014 ”(1) for nonpayment of contributions; ”(2) for fraud or other intentional misrepre- sentation of material fact by the employer; ”(3) for noncompliance with material plan provisions; ”(4) because the plan is ceasing to offer any coverage in a geographic area; ”(5) in the case of a plan that offers benefits through a network plan, there is no longer any individual enrolled through the employer who lives, resides, or works in the service area of the network plan and the plan applies this para- graph uniformly without regard to the claims experience of employers or any health status-re- lated factor in relation to such individuals or their dependents; and ”(6) for failure to meet the terms of an appli- cable collective bargaining agreement, to renew a collective bargaining or other agreement re- quiring or authorizing contributions to the plan, or to employ employees covered by such an agreement. ”SEC. 704. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION. ”(a) CONTINUED APPLICABILITY OF STATE LAW WITH RESPECT TO HEALTH INSURANCE ISSUERS.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2) and except as provided in subsection (b), this part shall not be construed to supersede any provision of State law which establishes, imple- ments, or continues in effect any standard or re- quirement solely relating to health insurance is- suers in connection with group health insurance coverage except to the extent that such standard or requirement prevents the application of a re- quirement of this part. ”(2) CONTINUED PREEMPTION WITH RESPECT TO GROUP HEALTH PLANS.\u2014Nothing in this part shall be construed to affect or modify the provi- sions of section 514 with respect to group health plans. ”(b) SPECIAL RULES IN CASE OF PORTABILITY REQUIREMENTS.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2), the provisions of this part relating to health in- surance coverage offered by a health insurance issuer supersede any provision of State law which establishes, implements, or continues in effect a standard or requirement applicable to imposition of a preexisting condition exclusion specifically governed by section 701 which dif- fers from the standards or requirements specified in such section. ”(2) EXCEPTIONS.\u2014Only in relation to health insurance coverage offered by a health insur- ance issuer, the provisions of this part do not supersede any provision of State law to the ex- tent that such provision\u2014 ”(i) substitutes for the reference to ‘6-month period’ in section 701(a)(1) a reference to any shorter period of time; ”(ii) substitutes for the reference to ’12 months’ and ’18 months’ in section 701(a)(2) a reference to any shorter period of time; ”(iii) substitutes for the references to ’63’ days in sections 701(c)(2)(A) and 701(d)(4)(A) a ref- erence to any greater number of days; ”(iv) substitutes for the reference to ’30-day period’ in sections 701(b)(2) and 701(d)(1) a ref- erence to any greater period; ”(v) prohibits the imposition of any preexist- ing condition exclusion in cases not described in section 701(d) or expands the exceptions de- scribed in such section; ”(vi) requires special enrollment periods in ad- dition to those required under section 701(f); or ”(vii) reduces the maximum period permitted in an affiliation period under section 701(g)(1)(B). ”(c) RULES OF CONSTRUCTION.\u2014Nothing in this part shall be construed as requiring a group health plan or health insurance coverage to pro- vide specific benefits under the terms of such plan or coverage. ”(d) DEFINITIONS.\u2014For purposes of this sec- tion\u2014 ”(1) STATE LAW.\u2014The term ‘State law’ in- cludes all laws, decisions, rules, regulations, or other State action having the effect of law, of any State. A law of the United States applicable only to the District of Columbia shall be treated as a State law rather than a law of the United States. ”(2) STATE.\u2014The term ‘State’ includes a State, the Northern Mariana Islands, any politi- cal subdivisions of a State or such Islands, or any agency or instrumentality of either. ”SEC. 705. SPECIAL RULES RELATING TO GROUP HEALTH PLANS. ”(a) GENERAL EXCEPTION FOR CERTAIN SMALL GROUP HEALTH PLANS.\u2014The requirements of this part shall not apply to any group health plan (and group health insurance coverage of- fered in connection with a group health plan) for any plan year if, on the first day of such plan year, such plan has less than 2 partici- pants who are current employees. ”(b) EXCEPTION FOR CERTAIN BENEFITS.\u2014The requirements of this part shall not apply to any group health plan (and group health insurance coverage) in relation to its provision of excepted benefits described in section 706(c)(1). ”(c) EXCEPTION FOR CERTAIN BENEFITS IF CERTAIN CONDITIONS MET.\u2014 ”(1) LIMITED, EXCEPTED BENEFITS.\u2014The re- quirements of this part shall not apply to any group health plan (and group health insurance coverage offered in connection with a group health plan) in relation to its provision of ex- cepted benefits described in section 706(c)(2) if the benefits\u2014 ”(A) are provided under a separate policy, certificate, or contract of insurance; or ”(B) are otherwise not an integral part of the plan. ”(2) NONCOORDINATED, EXCEPTED BENEFITS.\u2014 The requirements of this part shall not apply to any group health plan (and group health insur- ance coverage offered in connection with a group health plan) in relation to its provision of excepted benefits described in section 706(c)(3) if all of the following conditions are met: ”(A) The benefits are provided under a sepa- rate policy, certificate, or contract of insurance. ”(B) There is no coordination between the provision of such benefits and any exclusion of benefits under any group health plan main- tained by the same plan sponsor. ”(C) Such benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor. ”(3) SUPPLEMENTAL EXCEPTED BENEFITS.\u2014The requirements of this part shall not apply to any group health plan (and group health insurance coverage) in relation to its provision of excepted benefits described in section 706(c)(4) if the ben- efits are provided under a separate policy, cer- tificate, or contract of insurance. ”(d) TREATMENT OF PARTNERSHIPS.\u2014For pur- poses of this part\u2014 ”(1) TREATMENT AS A GROUP HEALTH PLAN.\u2014 Any plan, fund, or program which would not be (but for this subsection) an employee welfare benefit plan and which is established or main- tained by a partnership, to the extent that such plan, fund, or program provides medical care (including items and services paid for as medical care) to present or former partners in the part- nership or to their dependents (as defined under the terms of the plan, fund, or program), di- rectly or through insurance, reimbursement, or otherwise, shall be treated (subject to paragraph (2)) as an employee welfare benefit plan which is a group health plan. ”(2) EMPLOYER.\u2014In the case of a group health plan, the term ’employer’ also includes the partnership in relation to any partner. ”(3) PARTICIPANTS OF GROUP HEALTH PLANS.\u2014 In the case of a group health plan, the term ‘participant’ also includes\u2014 ”(A) in connection with a group health plan maintained by a partnership, an individual who is a partner in relation to the partnership, or ”(B) in connection with a group health plan maintained by a self-employed individual (under which one or more employees are partici- pants), the self-employed individual, if such individual is, or may become, eligible to receive a benefit under the plan or such individ- ual’s beneficiaries may be eligible to receive any such benefit. ”SEC. 706. DEFINITIONS. ”(a) GROUP HEALTH PLAN.\u2014For purposes of this part\u2014 ”(1) IN GENERAL.\u2014The term ‘group health plan’ means an employee welfare benefit plan to the extent that the plan provides medical care (as defined in paragraph (2) and including items and services paid for as medical care) to employ- ees or their dependents (as defined under the terms of the plan) directly or through insurance, reimbursement, or otherwise. ”(2) MEDICAL CARE.\u2014The term ‘medical care’ means amounts paid for\u2014 ”(A) the diagnosis, cure, mitigation, treat- ment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body, ”(B) amounts paid for transportation pri- marily for and essential to medical care referred to in subparagraph (A), and ”(C) amounts paid for insurance covering medical care referred to in subparagraphs (A) and (B). ”(b) DEFINITIONS RELATING TO HEALTH INSUR- ANCE.\u2014For purposes of this part\u2014 ”(1) HEALTH INSURANCE COVERAGE.\u2014The term ‘health insurance coverage’ means benefits con- sisting of medical care (provided directly, through insurance or reimbursement, or other- wise and including items and services paid for CONGRESSIONAL RECORD \u2014 HOUSE H9477July 31, 1996 as medical care) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance or- ganization contract offered by a health insur- ance issuer. ”(2) HEALTH INSURANCE ISSUER.\u2014The term ‘health insurance issuer’ means an insurance company, insurance service, or insurance orga- nization (including a health maintenance orga- nization, as defined in paragraph (3)) which is licensed to engage in the business of insurance in a State and which is subject to State law which regulates insurance (within the meaning of section 514(b)(2)). Such term does not include a group health plan. ”(3) HEALTH MAINTENANCE ORGANIZATION.\u2014 The term ‘health maintenance organization’ means\u2014 ”(A) a Federally qualified health mainte- nance organization (as defined in section 1301(a) of the Public Health Service Act (42 U.S.C. 300e(a))), ”(B) an organization recognized under State law as a health maintenance organization, or ”(C) a similar organization regulated under State law for solvency in the same manner and to the same extent as such a health maintenance organization. ”(4) GROUP HEALTH INSURANCE COVERAGE.\u2014 The term ‘group health insurance coverage’ means, in connection with a group health plan, health insurance coverage offered in connection with such plan. ”(c) EXCEPTED BENEFITS.\u2014For purposes of this part, the term ‘excepted benefits’ means benefits under one or more (or any combination thereof) of the following: ”(1) BENEFITS NOT SUBJECT TO REQUIRE- MENTS.\u2014 ”(A) Coverage only for accident, or disability income insurance, or any combination thereof. ”(B) Coverage issued as a supplement to li- ability insurance. ”(C) Liability insurance, including general li- ability insurance and automobile liability insur- ance. ”(D) Workers’ compensation or similar insur- ance. ”(E) Automobile medical payment insurance. ”(F) Credit-only insurance. ”(G) Coverage for on-site medical clinics. ”(H) Other similar insurance coverage, speci- fied in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits. ”(2) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED SEPARATELY.\u2014 ”(A) Limited scope dental or vision benefits. ”(B) Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof. ”(C) Such other similar, limited benefits as are specified in regulations. ”(3) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED AS INDEPENDENT, NONCOORDINATED BENEFITS.\u2014 ”(A) Coverage only for a specified disease or illness. ”(B) Hospital indemnity or other fixed indem- nity insurance. ”(4) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED AS SEPARATE INSURANCE POLICY.\u2014 Medicare supplemental health insurance (as de- fined under section 1882(g)(1) of the Social Secu- rity Act), coverage supplemental to the coverage provided under chapter 55 of title 10, United States Code, and similar supplemental coverage provided to coverage under a group health plan. ”(d) OTHER DEFINITIONS.\u2014For purposes of this part\u2014 ”(1) COBRA CONTINUATION PROVISION.\u2014The term ‘COBRA continuation provision’ means any of the following: ”(A) Part 6 of this subtitle. ”(B) Section 4980B of the Internal Revenue Code of 1986, other than subsection (f)(1) of such section insofar as it relates to pediatric vaccines. ”(C) Title XXII of the Public Health Service Act. ”(2) HEALTH STATUS-RELATED FACTOR.\u2014The term ‘health status-related factor’ means any of the factors described in section 702(a)(1). ”(3) NETWORK PLAN.\u2014The term ‘network plan’ means health insurance coverage offered by a health insurance issuer under which the fi- nancing and delivery of medical care (including items and services paid for as medical care) are provided, in whole or in part, through a defined set of providers under contract with the issuer. ”(4) PLACED FOR ADOPTION.\u2014The term ‘place- ment’, or being ‘placed’, for adoption, has the meaning given such term in section 609(c)(3)(B). ”SEC. 707. REGULATIONS. ”The Secretary, consistent with section 104 of the Health Care Portability and Accountability Act of 1996, may promulgate such regulations as may be necessary or appropriate to carry out the provisions of this part. The Secretary may promulgate any interim final rules as the Sec- retary determines are appropriate to carry out this part.”. (b) ENFORCEMENT WITH RESPECT TO HEALTH INSURANCE ISSUERS.\u2014Section 502(b) of such Act (29 U.S.C. 1132(b)) is amended by adding at the end the following new paragraph: ”(3) The Secretary is not authorized to en- force under this part any requirement of part 7 against a health insurance issuer offering health insurance coverage in connection with a group health plan (as defined in section 706(a)(1)). Nothing in this paragraph shall af- fect the authority of the Secretary to issue regu- lations to carry out such part.”. (c) DISCLOSURE OF INFORMATION TO PARTICI- PANTS AND BENEFICIARIES.\u2014 (1) IN GENERAL.\u2014Section 104(b)(1) of such Act (29 U.S.C. 1024(b)(1)) is amended in the matter following subparagraph (B)\u2014 (A) by striking ”102(a)(1),” and inserting ”102(a)(1) (other than a material reduction in covered services or benefits provided in the case of a group health plan (as defined in section 706(a)(1))),”; and (B) by adding at the end the following new sentences: ”If there is a modification or change described in section 102(a)(1) that is a material reduction in covered services or benefits pro- vided under a group health plan (as defined in section 706(a)(1)), a summary description of such modification or change shall be furnished to participants and beneficiaries not later than 60 days after the date of the adoption of the modification or change. In the alternative, the plan sponsors may provide such description at regular intervals of not more than 90 days. The Secretary shall issue regulations within 180 days after the date of enactment of the Health Insur- ance Portability and Accountability Act of 1996, providing alternative mechanisms to delivery by mail through which group health plans (as so defined) may notify participants and bene- ficiaries of material reductions in covered serv- ices or benefits.”. (2) PLAN DESCRIPTION AND SUMMARY.\u2014Section 102(b) of such Act (29 U.S.C. 1022(b)) is amend- ed\u2014 (A) by inserting ”in the case of a group health plan (as defined in section 706(a)(1)), whether a health insurance issuer (as defined in section 706(b)(2)) is responsible for the financing or ad- ministration (including payment of claims) of the plan and (if so) the name and address of such issuer;” after ”type of administration of the plan;”; and (B) by inserting ”including the office at the Department of Labor through which partici- pants and beneficiaries may seek assistance or information regarding their rights under this Act and the Health Insurance Portability and Accountability Act of 1996 with respect to health benefits that are offered through a group health plan (as defined in section 706(a)(1))” after ”benefits under the plan”. (d) TREATMENT OF HEALTH INSURANCE ISSUERS OFFERING HEALTH INSURANCE COVERAGE TO NONCOVERED PLANS.\u2014Section 4(b) of such Act (29 U.S.C. 1003(b)) is amended by adding at the end (after and below paragraph (5)) the follow- ing: ”The provisions of part 7 of subtitle B shall not apply to a health insurance issuer (as defined in section 706(b)(2)) solely by reason of health in- surance coverage (as defined in section 706(b)(1)) provided by such issuer in connection with a group health plan (as defined in section 706(a)(1)) if the provisions of this title do not apply to such group health plan.”. (e) REPORTING AND ENFORCEMENT WITH RE- SPECT TO CERTAIN ARRANGEMENTS.\u2014 (1) IN GENERAL.\u2014Section 101 of such Act (29 U.S.C. 1021) is amended\u2014 (A) by redesignating subsection (g) as sub- section (h), and (B) by inserting after subsection (f) the fol- lowing new subsection: ”(g) REPORTING BY CERTAIN ARRANGE- MENTS.\u2014The Secretary may, by regulation, re- quire multiple employer welfare arrangements providing benefits consisting of medical care (within the meaning of section 706(a)(2)) which are not group health plans to report, not more frequently than annually, in such form and such manner as the Secretary may require for the purpose of determining the extent to which the requirements of part 7 are being carried out in connection with such benefits.”. (2) ENFORCEMENT.\u2014 (A) IN GENERAL.\u2014Section 502 of such Act (29 U.S.C. 1132) is amended\u2014 (i) in subsection (a)(6), by striking ”under subsection (c)(2) or (i) or (l)” and inserting ”under paragraph (2), (4), or (5) of subsection (c) or under subsection (i) or (l)”; and (ii) in the last 2 sentences of subsection (c), by striking ”For purposes of this paragraph” and all that follows through ”The Secretary and” and inserting the following: ”(5) The Secretary may assess a civil penalty against any person of up to $1,000 a day from the date of the person’s failure or refusal to file the information required to be filed by such per- son with the Secretary under regulations pre- scribed pursuant to section 101(g). ”(6) The Secretary and”. (B) TECHNICAL AND CONFORMING AMEND- MENT.\u2014Section 502(c)(1) of such Act (29 U.S.C. 1132(c)(1)) is amended by adding at the end the following sentence: ”For purposes of this para- graph, each violation described in subparagraph (A) with respect to any single participant, and each violation described in subparagraph (B) with respect to any single participant or bene- ficiary, shall be treated as a separate viola- tion.”. (3) COORDINATION.\u2014Section 506 of such Act (29 U.S.C. 1136) is amended by adding at the end the following new subsection: ”(c) COORDINATION OF ENFORCEMENT WITH STATES WITH RESPECT TO CERTAIN ARRANGE- MENTS.\u2014A State may enter into an agreement with the Secretary for delegation to the State of some or all of the Secretary’s authority under sections 502 and 504 to enforce the requirements under part 7 in connection with multiple em- ployer welfare arrangements, providing medical care (within the meaning of section 706(a)(2)), which are not group health plans.”. (f) CONFORMING AMENDMENTS.\u2014 (1) Section 514(b) of such Act (29 U.S.C. 1144(b)) is amended by adding at the end the following new paragraph: ”(9) For additional provisions relating to group health plans, see section 704.”. (2)(A) Part 6 of subtitle B of title I of such Act (29 U.S.C. 1161 et seq.) is amended by striking the heading and inserting the following: ”PART 6\u2014CONTINUATION COVERAGE AND ADDI- TIONAL STANDARDS FOR GROUP HEALTH PLANS”. (B) The table of contents in section 1 of such Act is amended by striking the item relating to the heading for part 6 of subtitle B of title I and inserting the following: CONGRESSIONAL RECORD \u2014 HOUSEH9478 July 31, 1996 ”PART 6\u2014CONTINUATION COVERAGE AND ADDI- TIONAL STANDARDS FOR GROUP HEALTH PLANS”. (3) The table of contents in section 1 of such Act (as amended by the preceding provisions of this section) is amended by inserting after the items relating to part 6 the following new items: ”PART 7\u2014GROUP HEALTH PLAN PORTABILITY, ACCESS, AND RENEWABILITY REQUIREMENTS ”Sec. 701. Increased portability through limita- tion on preexisting condition ex- clusions. ”Sec. 702. Prohibiting discrimination against individual participants and bene- ficiaries based on health status. ”Sec. 703. Guaranteed renewability in multiem- ployer plans and multiple em- ployer welfare arrangements. ”Sec. 704. Preemption; State flexibility; con- struction. ”Sec. 705. Special rules relating to group health plans. ”Sec. 706. Definitions. ”Sec. 707. Regulations.”. (g) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in this section, this section (and the amendments made by this section) shall apply with respect to group health plans for plan years beginning after June 30, 1997. (2) DETERMINATION OF CREDITABLE COV- ERAGE.\u2014 (A) PERIOD OF COVERAGE.\u2014 (i) IN GENERAL.\u2014Subject to clause (ii), no pe- riod before July 1, 1996, shall be taken into ac- count under part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974 (as added by this section) in determining creditable coverage. (ii) SPECIAL RULE FOR CERTAIN PERIODS.\u2014The Secretary of Labor, consistent with section 104, shall provide for a process whereby individuals who need to establish creditable coverage for pe- riods before July 1, 1996, and who would have such coverage credited but for clause (i) may be given credit for creditable coverage for such pe- riods through the presentation of documents or other means. (B) CERTIFICATIONS, ETC.\u2014 (i) IN GENERAL.\u2014Subject to clauses (ii) and (iii), subsection (e) of section 701 of the Em- ployee Retirement Income Security Act of 1974 (as added by this section) shall apply to events occurring after June 30, 1996. (ii) NO CERTIFICATION REQUIRED TO BE PRO- VIDED BEFORE JUNE 1, 1997.\u2014In no case is a cer- tification required to be provided under such subsection before June 1, 1997. (iii) CERTIFICATION ONLY ON WRITTEN REQUEST FOR EVENTS OCCURRING BEFORE OCTOBER 1, 1996.\u2014In the case of an event occurring after June 30, 1996, and before October 1, 1996, a cer- tification is not required to be provided under such subsection unless an individual (with re- spect to whom the certification is otherwise re- quired to be made) requests such certification in writing. (C) TRANSITIONAL RULE.\u2014In the case of an in- dividual who seeks to establish creditable cov- erage for any period for which certification is not required because it relates to an event oc- curring before June 30, 1996\u2014 (i) the individual may present other credible evidence of such coverage in order to establish the period of creditable coverage; and (ii) a group health plan and a health insur- ance issuer shall not be subject to any penalty or enforcement action with respect to the plan’s or issuer’s crediting (or not crediting) such cov- erage if the plan or issuer has sought to comply in good faith with the applicable requirements under the amendments made by this section. (3) SPECIAL RULE FOR COLLECTIVE BARGAINING AGREEMENTS.\u2014Except as provided in paragraph (2), in the case of a group health plan main- tained pursuant to 1 or more collective bargain- ing agreements between employee representa- tives and one or more employers ratified before the date of the enactment of this Act, part 7 of subtitle B of title I of Employee Retirement In- come Security Act of 1974 (other than section 701(e) thereof) shall not apply to plan years be- ginning before the later of\u2014 (A) the date on which the last of the collective bargaining agreements relating to the plan ter- minates (determined without regard to any ex- tension thereof agreed to after the date of the enactment of this Act), or (B) July 1, 1997. For purposes of subparagraph (A), any plan amendment made pursuant to a collective bar- gaining agreement relating to the plan which amends the plan solely to conform to any re- quirement of such part shall not be treated as a termination of such collective bargaining agree- ment. (4) TIMELY REGULATIONS.\u2014The Secretary of Labor, consistent with section 104, shall first issue by not later than April 1, 1997, such regu- lations as may be necessary to carry out the amendments made by this section. (5) LIMITATION ON ACTIONS.\u2014No enforcement action shall be taken, pursuant to the amend- ments made by this section, against a group health plan or health insurance issuer with re- spect to a violation of a requirement imposed by such amendments before January 1, 1998, or, if later, the date of issuance of regulations re- ferred to in paragraph (4), if the plan or issuer has sought to comply in good faith with such re- quirements. SEC. 102. THROUGH THE PUBLIC HEALTH SERV- ICE ACT. (a) IN GENERAL.\u2014The Public Health Service Act is amended by adding at the end the follow- ing new title: ”TITLE XXVII\u2014ASSURING PORTABILITY, AVAILABILITY, AND RENEWABILITY OF HEALTH INSURANCE COVERAGE ”PART A\u2014GROUP MARKET REFORMS ”SUBPART 1\u2014PORTABILITY, ACCESS, AND RENEWABILITY REQUIREMENTS ”SEC. 2701. INCREASED PORTABILITY THROUGH LIMITATION ON PREEXISTING CON- DITION EXCLUSIONS. ”(a) LIMITATION ON PREEXISTING CONDITION EXCLUSION PERIOD; CREDITING FOR PERIODS OF PREVIOUS COVERAGE.\u2014Subject to subsection (d), a group health plan, and a health insurance is- suer offering group health insurance coverage, may, with respect to a participant or bene- ficiary, impose a preexisting condition exclusion only if\u2014 ”(1) such exclusion relates to a condition (whether physical or mental), regardless of the cause of the condition, for which medical ad- vice, diagnosis, care, or treatment was rec- ommended or received within the 6-month period ending on the enrollment date; ”(2) such exclusion extends for a period of not more than 12 months (or 18 months in the case of a late enrollee) after the enrollment date; and ”(3) the period of any such preexisting condi- tion exclusion is reduced by the aggregate of the periods of creditable coverage (if any, as defined in subsection (c)(1)) applicable to the partici- pant or beneficiary as of the enrollment date. ”(b) DEFINITIONS.\u2014For purposes of this part\u2014 ”(1) PREEXISTING CONDITION EXCLUSION.\u2014 ”(A) IN GENERAL.\u2014The term ‘preexisting con- dition exclusion’ means, with respect to cov- erage, a limitation or exclusion of benefits relat- ing to a condition based on the fact that the condition was present before the date of enroll- ment for such coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date. ”(B) TREATMENT OF GENETIC INFORMATION.\u2014 Genetic information shall not be treated as a condition described in subsection (a)(1) in the absence of a diagnosis of the condition related to such information. ”(2) ENROLLMENT DATE.\u2014The term ‘enroll- ment date’ means, with respect to an individual covered under a group health plan or health in- surance coverage, the date of enrollment of the individual in the plan or coverage or, if earlier, the first day of the waiting period for such en- rollment. ”(3) LATE ENROLLEE.\u2014The term ‘late enrollee’ means, with respect to coverage under a group health plan, a participant or beneficiary who enrolls under the plan other than during\u2014 ”(A) the first period in which the individual is eligible to enroll under the plan, or ”(B) a special enrollment period under sub- section (f). ”(4) WAITING PERIOD.\u2014The term ‘waiting pe- riod’ means, with respect to a group health plan and an individual who is a potential participant or beneficiary in the plan, the period that must pass with respect to the individual before the in- dividual is eligible to be covered for benefits under the terms of the plan. ”(c) RULES RELATING TO CREDITING PREVIOUS COVERAGE.\u2014 ”(1) CREDITABLE COVERAGE DEFINED.\u2014For purposes of this title, the term ‘creditable cov- erage’ means, with respect to an individual, cov- erage of the individual under any of the follow- ing: ”(A) A group health plan. ”(B) Health insurance coverage. ”(C) Part A or part B of title XVIII of the So- cial Security Act. ”(D) Title XIX of the Social Security Act, other than coverage consisting solely of benefits under section 1928. ”(E) Chapter 55 of title 10, United States Code. ”(F) A medical care program of the Indian Health Service or of a tribal organization. ”(G) A State health benefits risk pool. ”(H) A health plan offered under chapter 89 of title 5, United States Code. ”(I) A public health plan (as defined in regu- lations). ”(J) A health benefit plan under section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e)). Such term does not include coverage consisting solely of coverage of excepted benefits (as de- fined in section 2791(c)). ”(2) NOT COUNTING PERIODS BEFORE SIGNIFI- CANT BREAKS IN COVERAGE.\u2014 ”(A) IN GENERAL.\u2014A period of creditable cov- erage shall not be counted, with respect to en- rollment of an individual under a group health plan, if, after such period and before the enroll- ment date, there was a 63-day period during all of which the individual was not covered under any creditable coverage. ”(B) WAITING PERIOD NOT TREATED AS A BREAK IN COVERAGE.\u2014For purposes of subpara- graph (A) and subsection (d)(4), any period that an individual is in a waiting period for any cov- erage under a group health plan (or for group health insurance coverage) or is in an affili- ation period (as defined in subsection (g)(2)) shall not be taken into account in determining the continuous period under subparagraph (A). ”(3) METHOD OF CREDITING COVERAGE.\u2014 ”(A) STANDARD METHOD.\u2014Except as otherwise provided under subparagraph (B), for purposes of applying subsection (a)(3), a group health plan, and a health insurance issuer offering group health insurance coverage, shall count a period of creditable coverage without regard to the specific benefits covered during the period. ”(B) ELECTION OF ALTERNATIVE METHOD.\u2014A group health plan, or a health insurance issuer offering group health insurance, may elect to apply subsection (a)(3) based on coverage of benefits within each of several classes or cat- egories of benefits specified in regulations rather than as provided under subparagraph (A). Such election shall be made on a uniform basis for all participants and beneficiaries. Under such elec- tion a group health plan or issuer shall count a period of creditable coverage with respect to any class or category of benefits if any level of bene- fits is covered within such class or category. ”(C) PLAN NOTICE.\u2014In the case of an election with respect to a group health plan under sub- paragraph (B) (whether or not health insurance CONGRESSIONAL RECORD \u2014 HOUSE H9479July 31, 1996 coverage is provided in connection with such plan), the plan shall\u2014 ”(i) prominently state in any disclosure state- ments concerning the plan, and state to each enrollee at the time of enrollment under the plan, that the plan has made such election, and ”(ii) include in such statements a description of the effect of this election. ”(D) ISSUER NOTICE.\u2014In the case of an elec- tion under subparagraph (B) with respect to health insurance coverage offered by an issuer in the small or large group market, the issuer\u2014 ”(i) shall prominently state in any disclosure statements concerning the coverage, and to each employer at the time of the offer or sale of the coverage, that the issuer has made such elec- tion, and ”(ii) shall include in such statements a de- scription of the effect of such election. ”(4) ESTABLISHMENT OF PERIOD.\u2014Periods of creditable coverage with respect to an individual shall be established through presentation of cer- tifications described in subsection (e) or in such other manner as may be specified in regulations. ”(d) EXCEPTIONS.\u2014 ”(1) EXCLUSION NOT APPLICABLE TO CERTAIN NEWBORNS.\u2014Subject to paragraph (4), a group health plan, and a health insurance issuer of- fering group health insurance coverage, may not impose any preexisting condition exclusion in the case of an individual who, as of the last day of the 30-day period beginning with the date of birth, is covered under creditable cov- erage. ”(2) EXCLUSION NOT APPLICABLE TO CERTAIN ADOPTED CHILDREN.\u2014Subject to paragraph (4), a group health plan, and a health insurance is- suer offering group health insurance coverage, may not impose any preexisting condition exclu- sion in the case of a child who is adopted or placed for adoption before attaining 18 years of age and who, as of the last day of the 30-day period beginning on the date of the adoption or placement for adoption, is covered under cred- itable coverage. The previous sentence shall not apply to coverage before the date of such adop- tion or placement for adoption. ”(3) EXCLUSION NOT APPLICABLE TO PREG- NANCY.\u2014A group health plan, and health insur- ance issuer offering group health insurance cov- erage, may not impose any preexisting condition exclusion relating to pregnancy as a preexisting condition. ”(4) LOSS IF BREAK IN COVERAGE.\u2014Para- graphs (1) and (2) shall no longer apply to an individual after the end of the first 63-day pe- riod during all of which the individual was not covered under any creditable coverage. ”(e) CERTIFICATIONS AND DISCLOSURE OF COV- ERAGE.\u2014 ”(1) REQUIREMENT FOR CERTIFICATION OF PE- RIOD OF CREDITABLE COVERAGE.\u2014 ”(A) IN GENERAL.\u2014A group health plan, and a health insurance issuer offering group health insurance coverage, shall provide the certifi- cation described in subparagraph (B)\u2014 ”(i) at the time an individual ceases to be cov- ered under the plan or otherwise becomes cov- ered under a COBRA continuation provision, ”(ii) in the case of an individual becoming covered under such a provision, at the time the individual ceases to be covered under such pro- vision, and ”(iii) on the request on behalf of an individ- ual made not later than 24 months after the date of cessation of the coverage described in clause (i) or (ii), whichever is later. The certification under clause (i) may be pro- vided, to the extent practicable, at a time con- sistent with notices required under any applica- ble COBRA continuation provision. ”(B) CERTIFICATION.\u2014The certification de- scribed in this subparagraph is a written certifi- cation of\u2014 ”(i) the period of creditable coverage of the in- dividual under such plan and the coverage (if any) under such COBRA continuation provi- sion, and ”(ii) the waiting period (if any) (and affili- ation period, if applicable) imposed with respect to the individual for any coverage under such plan. ”(C) ISSUER COMPLIANCE.\u2014To the extent that medical care under a group health plan consists of group health insurance coverage, the plan is deemed to have satisfied the certification re- quirement under this paragraph if the health insurance issuer offering the coverage provides for such certification in accordance with this paragraph. ”(2) DISCLOSURE OF INFORMATION ON PRE- VIOUS BENEFITS.\u2014In the case of an election de- scribed in subsection (c)(3)(B) by a group health plan or health insurance issuer, if the plan or issuer enrolls an individual for coverage under the plan and the individual provides a certifi- cation of coverage of the individual under para- graph (1)\u2014 ”(A) upon request of such plan or issuer, the entity which issued the certification provided by the individual shall promptly disclose to such requesting plan or issuer information on cov- erage of classes and categories of health benefits available under such entity’s plan or coverage, and ”(B) such entity may charge the requesting plan or issuer for the reasonable cost of disclos- ing such information. ”(3) REGULATIONS.\u2014The Secretary shall es- tablish rules to prevent an entity’s failure to provide information under paragraph (1) or (2) with respect to previous coverage of an individ- ual from adversely affecting any subsequent coverage of the individual under another group health plan or health insurance coverage. ”(f) SPECIAL ENROLLMENT PERIODS.\u2014 ”(1) INDIVIDUALS LOSING OTHER COVERAGE.\u2014A group health plan, and a health insurance is- suer offering group health insurance coverage in connection with a group health plan, shall permit an employee who is eligible, but not en- rolled, for coverage under the terms of the plan (or a dependent of such an employee if the de- pendent is eligible, but not enrolled, for cov- erage under such terms) to enroll for coverage under the terms of the plan if each of the fol- lowing conditions is met: ”(A) The employee or dependent was covered under a group health plan or had health insur- ance coverage at the time coverage was pre- viously offered to the employee or dependent. ”(B) The employee stated in writing at such time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment, but only if the plan spon- sor or issuer (if applicable) required such a statement at such time and provided the em- ployee with notice of such requirement (and the consequences of such requirement) at such time. ”(C) The employee’s or dependent’s coverage described in subparagraph (A)\u2014 ”(i) was under a COBRA continuation provi- sion and the coverage under such provision was exhausted; or ”(ii) was not under such a provision and ei- ther the coverage was terminated as a result of loss of eligibility for the coverage (including as a result of legal separation, divorce, death, ter- mination of employment, or reduction in the number of hours of employment) or employer contributions towards such coverage were termi- nated. ”(D) Under the terms of the plan, the em- ployee requests such enrollment not later than 30 days after the date of exhaustion of coverage described in subparagraph (C)(i) or termination of coverage or employer contribution described in subparagraph (C)(ii). ”(2) FOR DEPENDENT BENEFICIARIES.\u2014 ”(A) IN GENERAL.\u2014If\u2014 ”(i) a group health plan makes coverage available with respect to a dependent of an indi- vidual, ”(ii) the individual is a participant under the plan (or has met any waiting period applicable to becoming a participant under the plan and is eligible to be enrolled under the plan but for a failure to enroll during a previous enrollment period), and ”(iii) a person becomes such a dependent of the individual through marriage, birth, or adop- tion or placement for adoption, the group health plan shall provide for a de- pendent special enrollment period described in subparagraph (B) during which the person (or, if not otherwise enrolled, the individual) may be enrolled under the plan as a dependent of the individual, and in the case of the birth or adop- tion of a child, the spouse of the individual may be enrolled as a dependent of the individual if such spouse is otherwise eligible for coverage. ”(B) DEPENDENT SPECIAL ENROLLMENT PE- RIOD.\u2014A dependent special enrollment period under this subparagraph shall be a period of not less than 30 days and shall begin on the later of\u2014 ”(i) the date dependent coverage is made available, or ”(ii) the date of the marriage, birth, or adop- tion or placement for adoption (as the case may be) described in subparagraph (A)(iii). ”(C) NO WAITING PERIOD.\u2014If an individual seeks to enroll a dependent during the first 30 days of such a dependent special enrollment pe- riod, the coverage of the dependent shall become effective\u2014 ”(i) in the case of marriage, not later than the first day of the first month beginning after the date the completed request for enrollment is re- ceived; ”(ii) in the case of a dependent’s birth, as of the date of such birth; or ”(iii) in the case of a dependent’s adoption or placement for adoption, the date of such adop- tion or placement for adoption. ”(g) USE OF AFFILIATION PERIOD BY HMOS AS ALTERNATIVE TO PREEXISTING CONDITION EX- CLUSION.\u2014 ”(1) IN GENERAL.\u2014A health maintenance or- ganization which offers health insurance cov- erage in connection with a group health plan and which does not impose any preexisting con- dition exclusion allowed under subsection (a) with respect to any particular coverage option may impose an affiliation period for such cov- erage option, but only if\u2014 ”(A) such period is applied uniformly without regard to any health status-related factors; and ”(B) such period does not exceed 2 months (or 3 months in the case of a late enrollee). ”(2) AFFILIATION PERIOD.\u2014 ”(A) DEFINED.\u2014For purposes of this title, the term ‘affiliation period’ means a period which, under the terms of the health insurance cov- erage offered by the health maintenance organi- zation, must expire before the health insurance coverage becomes effective. The organization is not required to provide health care services or benefits during such period and no premium shall be charged to the participant or bene- ficiary for any coverage during the period. ”(B) BEGINNING.\u2014Such period shall begin on the enrollment date. ”(C) RUNS CONCURRENTLY WITH WAITING PERI- ODS.\u2014An affiliation period under a plan shall run concurrently with any waiting period under the plan. ”(3) ALTERNATIVE METHODS.\u2014A health main- tenance organization described in paragraph (1) may use alternative methods, from those de- scribed in such paragraph, to address adverse selection as approved by the State insurance commissioner or official or officials designated by the State to enforce the requirements of this part for the State involved with respect to such issuer. ”SEC. 2702. PROHIBITING DISCRIMINATION AGAINST INDIVIDUAL PARTICIPANTS AND BENEFICIARIES BASED ON HEALTH STATUS. ”(a) IN ELIGIBILITY TO ENROLL.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2), a group health plan, and a health insurance is- suer offering group health insurance coverage CONGRESSIONAL RECORD \u2014 HOUSEH9480 July 31, 1996 in connection with a group health plan, may not establish rules for eligibility (including con- tinued eligibility) of any individual to enroll under the terms of the plan based on any of the following health status-related factors in rela- tion to the individual or a dependent of the in- dividual: ”(A) Health status. ”(B) Medical condition (including both phys- ical and mental illnesses). ”(C) Claims experience. ”(D) Receipt of health care. ”(E) Medical history. ”(F) Genetic information. ”(G) Evidence of insurability (including con- ditions arising out of acts of domestic violence). ”(H) Disability. ”(2) NO APPLICATION TO BENEFITS OR EXCLU- SIONS.\u2014To the extent consistent with section 701, paragraph (1) shall not be construed\u2014 ”(A) to require a group health plan, or group health insurance coverage, to provide particular benefits other than those provided under the terms of such plan or coverage, or ”(B) to prevent such a plan or coverage from establishing limitations or restrictions on the amount, level, extent, or nature of the benefits or coverage for similarly situated individuals en- rolled in the plan or coverage. ”(3) CONSTRUCTION.\u2014For purposes of para- graph (1), rules for eligibility to enroll under a plan include rules defining any applicable wait- ing periods for such enrollment. ”(b) IN PREMIUM CONTRIBUTIONS.\u2014 ”(1) IN GENERAL.\u2014A group health plan, and a health insurance issuer offering health insur- ance coverage in connection with a group health plan, may not require any individual (as a condition of enrollment or continued enroll- ment under the plan) to pay a premium or con- tribution which is greater than such premium or contribution for a similarly situated individual enrolled in the plan on the basis of any health status-related factor in relation to the individ- ual or to an individual enrolled under the plan as a dependent of the individual. ”(2) CONSTRUCTION.\u2014Nothing in paragraph (1) shall be construed\u2014 ”(A) to restrict the amount that an employer may be charged for coverage under a group health plan; or ”(B) to prevent a group health plan, and a health insurance issuer offering group health insurance coverage, from establishing premium discounts or rebates or modifying otherwise ap- plicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention. ”SUBPART 2\u2014PROVISIONS APPLICABLE ONLY TO HEALTH INSURANCE ISSUERS ”SEC. 2711. GUARANTEED AVAILABILITY OF COV- ERAGE FOR EMPLOYERS IN THE GROUP MARKET. ”(a) ISSUANCE OF COVERAGE IN THE SMALL GROUP MARKET.\u2014 ”(1) IN GENERAL.\u2014Subject to subsections (c) through (f), each health insurance issuer that offers health insurance coverage in the small group market in a State\u2014 ”(A) must accept every small employer (as de- fined in section 2791(e)(4)) in the State that ap- plies for such coverage; and ”(B) must accept for enrollment under such coverage every eligible individual (as defined in paragraph (2)) who applies for enrollment dur- ing the period in which the individual first be- comes eligible to enroll under the terms of the group health plan and may not place any re- striction which is inconsistent with section 2702 on an eligible individual being a participant or beneficiary. ”(2) ELIGIBLE INDIVIDUAL DEFINED.\u2014For pur- poses of this section, the term ‘eligible individ- ual’ means, with respect to a health insurance issuer that offers health insurance coverage to a small employer in connection with a group health plan in the small group market, such an individual in relation to the employer as shall be determined\u2014 ”(A) in accordance with the terms of such plan, ”(B) as provided by the issuer under rules of the issuer which are uniformly applicable in a State to small employers in the small group mar- ket, and ”(C) in accordance with all applicable State laws governing such issuer and such market. ”(b) ASSURING ACCESS IN THE LARGE GROUP MARKET.\u2014 ”(1) REPORTS TO HHS.\u2014The Secretary shall re- quest that the chief executive officer of each State submit to the Secretary, by not later De- cember 31, 2000, and every 3 years thereafter a report on\u2014 ”(A) the access of large employers to health insurance coverage in the State, and ”(B) the circumstances for lack of access (if any) of large employers (or one or more classes of such employers) in the State to such cov- erage. ”(2) TRIENNIAL REPORTS TO CONGRESS.\u2014The Secretary, based on the reports submitted under paragraph (1) and such other information as the Secretary may use, shall prepare and submit to Congress, every 3 years, a report describing the extent to which large employers (and classes of such employers) that seek health insurance cov- erage in the different States are able to obtain access to such coverage. Such report shall in- clude such recommendations as the Secretary determines to be appropriate. ”(3) GAO REPORT ON LARGE EMPLOYER ACCESS TO HEALTH INSURANCE COVERAGE.\u2014The Comp- troller General shall provide for a study of the extent to which classes of large employers in the different States are able to obtain access to health insurance coverage and the cir- cumstances for lack of access (if any) to such coverage. The Comptroller General shall submit to Congress a report on such study not later than 18 months after the date of the enactment of this title. ”(c) SPECIAL RULES FOR NETWORK PLANS.\u2014 ”(1) IN GENERAL.\u2014In the case of a health in- surance issuer that offers health insurance cov- erage in the small group market through a net- work plan, the issuer may\u2014 ”(A) limit the employers that may apply for such coverage to those with eligible individuals who live, work, or reside in the service area for such network plan; and ”(B) within the service area of such plan, deny such coverage to such employers if the is- suer has demonstrated, if required, to the appli- cable State authority that\u2014 ”(i) it will not have the capacity to deliver services adequately to enrollees of any addi- tional groups because of its obligations to exist- ing group contract holders and enrollees, and ”(ii) it is applying this paragraph uniformly to all employers without regard to the claims ex- perience of those employers and their employees (and their dependents) or any health status-re- lated factor relating to such employees and de- pendents. ”(2) 180-DAY SUSPENSION UPON DENIAL OF COV- ERAGE.\u2014An issuer, upon denying health insur- ance coverage in any service area in accordance with paragraph (1)(B), may not offer coverage in the small group market within such service area for a period of 180 days after the date such coverage is denied. ”(d) APPLICATION OF FINANCIAL CAPACITY LIMITS.\u2014 ”(1) IN GENERAL.\u2014A health insurance issuer may deny health insurance coverage in the small group market if the issuer has dem- onstrated, if required, to the applicable State authority that\u2014 ”(A) it does not have the financial reserves necessary to underwrite additional coverage; and ”(B) it is applying this paragraph uniformly to all employers in the small group market in the State consistent with applicable State law and without regard to the claims experience of those employers and their employees (and their de- pendents) or any health status-related factor re- lating to such employees and dependents. ”(2) 180-DAY SUSPENSION UPON DENIAL OF COV- ERAGE.\u2014A health insurance issuer upon deny- ing health insurance coverage in connection with group health plans in accordance with paragraph (1) in a State may not offer coverage in connection with group health plans in the small group market in the State for a period of 180 days after the date such coverage is denied or until the issuer has demonstrated to the ap- plicable State authority, if required under appli- cable State law, that the issuer has sufficient fi- nancial reserves to underwrite additional cov- erage, whichever is later. An applicable State authority may provide for the application of this subsection on a service-area-specific basis. ”(e) EXCEPTION TO REQUIREMENT FOR FAIL- URE TO MEET CERTAIN MINIMUM PARTICIPATION OR CONTRIBUTION RULES.\u2014 ”(1) IN GENERAL.\u2014Subsection (a) shall not be construed to preclude a health insurance issuer from establishing employer contribution rules or group participation rules for the offering of health insurance coverage in connection with a group health plan in the small group market, as allowed under applicable State law. ”(2) RULES DEFINED.\u2014For purposes of para- graph (1)\u2014 ”(A) the term ’employer contribution rule’ means a requirement relating to the minimum level or amount of employer contribution toward the premium for enrollment of participants and beneficiaries; and ”(B) the term ‘group participation rule’ means a requirement relating to the minimum number of participants or beneficiaries that must be en- rolled in relation to a specified percentage or number of eligible individuals or employees of an employer. ”(f) EXCEPTION FOR COVERAGE OFFERED ONLY TO BONA FIDE ASSOCIATION MEMBERS.\u2014Sub- section (a) shall not apply to health insurance coverage offered by a health insurance issuer if such coverage is made available in the small group market only through one or more bona fide associations (as defined in section 2791(d)(3)). ”SEC. 2712. GUARANTEED RENEWABILITY OF COV- ERAGE FOR EMPLOYERS IN THE GROUP MARKET. ”(a) IN GENERAL.\u2014Except as provided in this section, if a health insurance issuer offers health insurance coverage in the small or large group market in connection with a group health plan, the issuer must renew or continue in force such coverage at the option of the plan sponsor of the plan. ”(b) GENERAL EXCEPTIONS.\u2014A health insur- ance issuer may nonrenew or discontinue health insurance coverage offered in connection with a group health plan in the small or large group market based only on one or more of the follow- ing: ”(1) NONPAYMENT OF PREMIUMS.\u2014The plan sponsor has failed to pay premiums or contribu- tions in accordance with the terms of the health insurance coverage or the issuer has not re- ceived timely premium payments. ”(2) FRAUD.\u2014The plan sponsor has performed an act or practice that constitutes fraud or made an intentional misrepresentation of mate- rial fact under the terms of the coverage. ”(3) VIOLATION OF PARTICIPATION OR CON- TRIBUTION RULES.\u2014The plan sponsor has failed to comply with a material plan provision relat- ing to employer contribution or group participa- tion rules, as permitted under section 2711(e) in the case of the small group market or pursuant to applicable State law in the case of the large group market. ”(4) TERMINATION OF COVERAGE.\u2014The issuer is ceasing to offer coverage in such market in accordance with subsection (c) and applicable State law. ”(5) MOVEMENT OUTSIDE SERVICE AREA.\u2014In the case of a health insurance issuer that offers CONGRESSIONAL RECORD \u2014 HOUSE H9481July 31, 1996 health insurance coverage in the market through a network plan, there is no longer any enrollee in connection with such plan who lives, resides, or works in the service area of the issuer (or in the area for which the issuer is authorized to do business) and, in the case of the small group market, the issuer would deny enrollment with respect to such plan under section 2711(c)(1)(A). ”(6) ASSOCIATION MEMBERSHIP CEASES.\u2014In the case of health insurance coverage that is made available in the small or large group market (as the case may be) only through one or more bona fide associations, the membership of an em- ployer in the association (on the basis of which the coverage is provided) ceases but only if such coverage is terminated under this paragraph uniformly without regard to any health status- related factor relating to any covered individ- ual. ”(c) REQUIREMENTS FOR UNIFORM TERMI- NATION OF COVERAGE.\u2014 ”(1) PARTICULAR TYPE OF COVERAGE NOT OF- FERED.\u2014In any case in which an issuer decides to discontinue offering a particular type of group health insurance coverage offered in the small or large group market, coverage of such type may be discontinued by the issuer in ac- cordance with applicable State law in such mar- ket only if\u2014 ”(A) the issuer provides notice to each plan sponsor provided coverage of this type in such market (and participants and beneficiaries cov- ered under such coverage) of such discontinu- ation at least 90 days prior to the date of the discontinuation of such coverage; ”(B) the issuer offers to each plan sponsor provided coverage of this type in such market, the option to purchase all (or, in the case of the large group market, any) other health insurance coverage currently being offered by the issuer to a group health plan in such market; and ”(C) in exercising the option to discontinue coverage of this type and in offering the option of coverage under subparagraph (B), the issuer acts uniformly without regard to the claims ex- perience of those sponsors or any health status- related factor relating to any participants or beneficiaries covered or new participants or beneficiaries who may become eligible for such coverage. ”(2) DISCONTINUANCE OF ALL COVERAGE.\u2014 ”(A) IN GENERAL.\u2014In any case in which a health insurance issuer elects to discontinue of- fering all health insurance coverage in the small group market or the large group market, or both markets, in a State, health insurance coverage may be discontinued by the issuer only in ac- cordance with applicable State law and if\u2014 ”(i) the issuer provides notice to the applica- ble State authority and to each plan sponsor (and participants and beneficiaries covered under such coverage) of such discontinuation at least 180 days prior to the date of the dis- continuation of such coverage; and ”(ii) all health insurance issued or delivered for issuance in the State in such market (or markets) are discontinued and coverage under such health insurance coverage in such market (or markets) is not renewed. ”(B) PROHIBITION ON MARKET REENTRY.\u2014In the case of a discontinuation under subpara- graph (A) in a market, the issuer may not pro- vide for the issuance of any health insurance coverage in the market and State involved dur- ing the 5-year period beginning on the date of the discontinuation of the last health insurance coverage not so renewed. ”(d) EXCEPTION FOR UNIFORM MODIFICATION OF COVERAGE.\u2014At the time of coverage renewal, a health insurance issuer may modify the health insurance coverage for a product offered to a group health plan\u2014 ”(1) in the large group market; or ”(2) in the small group market if, for coverage that is available in such market other than only through one or more bona fide associations, such modification is consistent with State law and effective on a uniform basis among group health plans with that product. ”(e) APPLICATION TO COVERAGE OFFERED ONLY THROUGH ASSOCIATIONS.\u2014In applying this section in the case of health insurance coverage that is made available by a health insurance is- suer in the small or large group market to em- ployers only through one or more associations, a reference to ‘plan sponsor’ is deemed, with re- spect to coverage provided to an employer mem- ber of the association, to include a reference to such employer. ”SEC. 2713. DISCLOSURE OF INFORMATION. ”(a) DISCLOSURE OF INFORMATION BY HEALTH PLAN ISSUERS.\u2014In connection with the offering of any health insurance coverage to a small em- ployer, a health insurance issuer\u2014 ”(1) shall make a reasonable disclosure to such employer, as part of its solicitation and sales materials, of the availability of informa- tion described in subsection (b), and ”(2) upon request of such a small employer, provide such information. ”(b) INFORMATION DESCRIBED.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (3), with respect to a health insurance issuer offer- ing health insurance coverage to a small em- ployer, information described in this subsection is information concerning\u2014 ”(A) the provisions of such coverage concern- ing issuer’s right to change premium rates and the factors that may affect changes in premium rates; ”(B) the provisions of such coverage relating to renewability of coverage; ”(C) the provisions of such coverage relating to any preexisting condition exclusion; and ”(D) the benefits and premiums available under all health insurance coverage for which the employer is qualified. ”(2) FORM OF INFORMATION.\u2014Information under this subsection shall be provided to small employers in a manner determined to be under- standable by the average small employer, and shall be sufficient to reasonably inform small employers of their rights and obligations under the health insurance coverage. ”(3) EXCEPTION.\u2014An issuer is not required under this section to disclose any information that is proprietary and trade secret information under applicable law. ”SUBPART 3\u2014EXCLUSION OF PLANS; ENFORCEMENT; PREEMPTION ”SEC. 2721. EXCLUSION OF CERTAIN PLANS. ”(a) EXCEPTION FOR CERTAIN SMALL GROUP HEALTH PLANS.\u2014The requirements of subparts 1 and 2 shall not apply to any group health plan (and health insurance coverage offered in con- nection with a group health plan) for any plan year if, on the first day of such plan year, such plan has less than 2 participants who are cur- rent employees. ”(b) LIMITATION ON APPLICATION OF PROVI- SIONS RELATING TO GROUP HEALTH PLANS.\u2014 ”(1) IN GENERAL.\u2014The requirements of sub- parts 1 and 2 shall apply with respect to group health plans only\u2014 ”(A) subject to paragraph (2), in the case of a plan that is a nonfederal governmental plan, and ”(B) with respect to health insurance cov- erage offered in connection with a group health plan (including such a plan that is a church plan or a governmental plan). ”(2) TREATMENT OF NONFEDERAL GOVERN- MENTAL PLANS.\u2014 ”(A) ELECTION TO BE EXCLUDED.\u2014If the plan sponsor of a nonfederal governmental plan which is a group health plan to which the pro- visions of subparts 1 and 2 otherwise apply makes an election under this subparagraph (in such form and manner as the Secretary may by regulations prescribe), then the requirements of such subparts insofar as they apply directly to group health plans (and not merely to group health insurance coverage) shall not apply to such governmental plans for such period except as provided in this paragraph. ”(B) PERIOD OF ELECTION.\u2014An election under subparagraph (A) shall apply\u2014 ”(i) for a single specified plan year, or ”(ii) in the case of a plan provided pursuant to a collective bargaining agreement, for the term of such agreement. An election under clause (i) may be extended through subsequent elections under this para- graph. ”(C) NOTICE TO ENROLLEES.\u2014Under such an election, the plan shall provide for\u2014 ”(i) notice to enrollees (on an annual basis and at the time of enrollment under the plan) of the fact and consequences of such election, and ”(ii) certification and disclosure of creditable coverage under the plan with respect to enroll- ees in accordance with section 2701(e). ”(c) EXCEPTION FOR CERTAIN BENEFITS.\u2014The requirements of subparts 1 and 2 shall not apply to any group health plan (or group health in- surance coverage) in relation to its provision of excepted benefits described in section 2791(c)(1). ”(d) EXCEPTION FOR CERTAIN BENEFITS IF CERTAIN CONDITIONS MET.\u2014 ”(1) LIMITED, EXCEPTED BENEFITS.\u2014The re- quirements of subparts 1 and 2 shall not apply to any group health plan (and group health in- surance coverage offered in connection with a group health plan) in relation to its provision of excepted benefits described in section 2791(c)(2) if the benefits\u2014 ”(A) are provided under a separate policy, certificate, or contract of insurance; or ”(B) are otherwise not an integral part of the plan. ”(2) NONCOORDINATED, EXCEPTED BENEFITS.\u2014 The requirements of subparts 1 and 2 shall not apply to any group health plan (and group health insurance coverage offered in connection with a group health plan) in relation to its pro- vision of excepted benefits described in section 2791(c)(3) if all of the following conditions are met: ”(A) The benefits are provided under a sepa- rate policy, certificate, or contract of insurance. ”(B) There is no coordination between the provision of such benefits and any exclusion of benefits under any group health plan main- tained by the same plan sponsor. ”(C) Such benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor. ”(3) SUPPLEMENTAL EXCEPTED BENEFITS.\u2014The requirements of this part shall not apply to any group health plan (and group health insurance coverage) in relation to its provision of excepted benefits described in section 27971(c)(4) if the benefits are provided under a separate policy, certificate, or contract of insurance. ”(e) TREATMENT OF PARTNERSHIPS.\u2014For pur- poses of this part\u2014 ”(1) TREATMENT AS A GROUP HEALTH PLAN.\u2014 Any plan, fund, or program which would not be (but for this subsection) an employee welfare benefit plan and which is established or main- tained by a partnership, to the extent that such plan, fund, or program provides medical care (including items and services paid for as medical care) to present or former partners in the part- nership or to their dependents (as defined under the terms of the plan, fund, or program), di- rectly or through insurance, reimbursement, or otherwise, shall be treated (subject to paragraph (2)) as an employee welfare benefit plan which is a group health plan. ”(2) EMPLOYER.\u2014In the case of a group health plan, the term ’employer’ also includes the partnership in relation to any partner. ”(3) PARTICIPANTS OF GROUP HEALTH PLANS.\u2014 In the case of a group health plan, the term ‘participant’ also includes\u2014 ”(A) in connection with a group health plan maintained by a partnership, an individual who is a partner in relation to the partnership, or ”(B) in connection with a group health plan maintained by a self-employed individual CONGRESSIONAL RECORD \u2014 HOUSEH9482 July 31, 1996 (under which one or more employees are partici- pants), the self-employed individual, if such individual is, or may become, eligible to receive a benefit under the plan or such individ- ual’s beneficiaries may be eligible to receive any such benefit. ”SEC. 2722. ENFORCEMENT. ”(a) STATE ENFORCEMENT.\u2014 ”(1) STATE AUTHORITY.\u2014Subject to section 2723, each State may require that health insur- ance issuers that issue, sell, renew, or offer health insurance coverage in the State in the small or large group markets meet the require- ments of this part with respect to such issuers. ”(2) FAILURE TO IMPLEMENT PROVISIONS.\u2014In the case of a determination by the Secretary that a State has failed to substantially enforce a provision (or provisions) in this part with re- spect to health insurance issuers in the State, the Secretary shall enforce such provision (or provisions) under subsection (b) insofar as they relate to the issuance, sale, renewal, and offer- ing of health insurance coverage in connection with group health plans in such State. ”(b) SECRETARIAL ENFORCEMENT AUTHOR- ITY.\u2014 ”(1) LIMITATION.\u2014The provisions of this sub- section shall apply to enforcement of a provision (or provisions) of this part only\u2014 ”(A) as provided under subsection (a)(2); and ”(B) with respect to group health plans that are nonfederal governmental plans. ”(2) IMPOSITION OF PENALTIES.\u2014In the cases described in paragraph (1)\u2014 ”(A) IN GENERAL.\u2014Subject to the succeeding provisions of this subsection, any nonfederal governmental plan that is a group health plan and any health insurance issuer that fails to meet a provision of this part applicable to such plan or issuer is subject to a civil money penalty under this subsection. ”(B) LIABILITY FOR PENALTY.\u2014In the case of a failure by\u2014 ”(i) a health insurance issuer, the issuer is liable for such penalty, or ”(ii) a group health plan that is a nonfederal governmental plan which is\u2014 ”(I) sponsored by 2 or more employers, the plan is liable for such penalty, or ”(II) not so sponsored, the employer is liable for such penalty. ”(C) AMOUNT OF PENALTY.\u2014 ”(i) IN GENERAL.\u2014The maximum amount of penalty imposed under this paragraph is $100 for each day for each individual with respect to which such a failure occurs. ”(ii) CONSIDERATIONS IN IMPOSITION.\u2014In de- termining the amount of any penalty to be as- sessed under this paragraph, the Secretary shall take into account the previous record of compli- ance of the entity being assessed with the appli- cable provisions of this part and the gravity of the violation. ”(iii) LIMITATIONS.\u2014 ”(I) PENALTY NOT TO APPLY WHERE FAILURE NOT DISCOVERED EXERCISING REASONABLE DILI- GENCE.\u2014No civil money penalty shall be imposed under this paragraph on any failure during any period for which it is established to the satisfac- tion of the Secretary that none of the entities against whom the penalty would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. ”(II) PENALTY NOT TO APPLY TO FAILURES CORRECTED WITHIN 30 DAYS.\u2014No civil money penalty shall be imposed under this paragraph on any failure if such failure was due to reason- able cause and not to willful neglect, and such failure is corrected during the 30-day period be- ginning on the first day any of the entities against whom the penalty would be imposed knew, or exercising reasonable diligence would have known, that such failure existed. ”(D) ADMINISTRATIVE REVIEW.\u2014 ”(i) OPPORTUNITY FOR HEARING.\u2014The entity assessed shall be afforded an opportunity for hearing by the Secretary upon request made within 30 days after the date of the issuance of a notice of assessment. In such hearing the deci- sion shall be made on the record pursuant to section 554 of title 5, United States Code. If no hearing is requested, the assessment shall con- stitute a final and unappealable order. ”(ii) HEARING PROCEDURE.\u2014If a hearing is re- quested, the initial agency decision shall be made by an administrative law judge, and such decision shall become the final order unless the Secretary modifies or vacates the decision. No- tice of intent to modify or vacate the decision of the administrative law judge shall be issued to the parties within 30 days after the date of the decision of the judge. A final order which takes effect under this paragraph shall be subject to review only as provided under subparagraph (E). ”(E) JUDICIAL REVIEW.\u2014 ”(i) FILING OF ACTION FOR REVIEW.\u2014Any en- tity against whom an order imposing a civil money penalty has been entered after an agency hearing under this paragraph may obtain re- view by the United States district court for any district in which such entity is located or the United States District Court for the District of Columbia by filing a notice of appeal in such court within 30 days from the date of such order, and simultaneously sending a copy of such notice by registered mail to the Secretary. ”(ii) CERTIFICATION OF ADMINISTRATIVE RECORD.\u2014The Secretary shall promptly certify and file in such court the record upon which the penalty was imposed. ”(iii) STANDARD FOR REVIEW.\u2014The findings of the Secretary shall be set aside only if found to be unsupported by substantial evidence as pro- vided by section 706(2)(E) of title 5, United States Code. ”(iv) APPEAL.\u2014Any final decision, order, or judgment of the district court concerning such review shall be subject to appeal as provided in chapter 83 of title 28 of such Code. ”(F) FAILURE TO PAY ASSESSMENT; MAINTE- NANCE OF ACTION.\u2014 ”(i) FAILURE TO PAY ASSESSMENT.\u2014If any en- tity fails to pay an assessment after it has be- come a final and unappealable order, or after the court has entered final judgment in favor of the Secretary, the Secretary shall refer the mat- ter to the Attorney General who shall recover the amount assessed by action in the appro- priate United States district court. ”(ii) NONREVIEWABILITY.\u2014In such action the validity and appropriateness of the final order imposing the penalty shall not be subject to re- view. ”(G) PAYMENT OF PENALTIES.\u2014Except as oth- erwise provided, penalties collected under this paragraph shall be paid to the Secretary (or other officer) imposing the penalty and shall be available without appropriation and until ex- pended for the purpose of enforcing the provi- sions with respect to which the penalty was im- posed. ”SEC. 2723. PREEMPTION; STATE FLEXIBILITY; CONSTRUCTION. ”(a) CONTINUED APPLICABILITY OF STATE LAW WITH RESPECT TO HEALTH INSURANCE ISSUERS.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2) and except as provided in subsection (b), this part and part C insofar as it relates to this part shall not be construed to supersede any provi- sion of State law which establishes, implements, or continues in effect any standard or require- ment solely relating to health insurance issuers in connection with group health insurance cov- erage except to the extent that such standard or requirement prevents the application of a re- quirement of this part. ”(2) CONTINUED PREEMPTION WITH RESPECT TO GROUP HEALTH PLANS.\u2014Nothing in this part shall be construed to affect or modify the provi- sions of section 514 of the Employee Retirement Income Security Act of 1974 with respect to group health plans. ”(b) SPECIAL RULES IN CASE OF PORTABILITY REQUIREMENTS.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2), the provisions of this part relating to health in- surance coverage offered by a health insurance issuer supersede any provision of State law which establishes, implements, or continues in effect a standard or requirement applicable to imposition of a preexisting condition exclusion specifically governed by section 701 which dif- fers from the standards or requirements specified in such section. ”(2) EXCEPTIONS.\u2014Only in relation to health insurance coverage offered by a health insur- ance issuer, the provisions of this part do not supersede any provision of State law to the ex- tent that such provision\u2014 ”(i) substitutes for the reference to ‘6-month period’ in section 2701(a)(1) a reference to any shorter period of time; ”(ii) substitutes for the reference to ’12 months’ and ’18 months’ in section 2701(a)(2) a reference to any shorter period of time; ”(iii) substitutes for the references to ’63’ days in sections 2701(c)(2)(A) and 2701(d)(4)(A) a ref- erence to any greater number of days; ”(iv) substitutes for the reference to ’30-day period’ in sections 2701(b)(2) and 2701(d)(1) a reference to any greater period; ”(v) prohibits the imposition of any preexist- ing condition exclusion in cases not described in section 2701(d) or expands the exceptions de- scribed in such section; ”(vi) requires special enrollment periods in ad- dition to those required under section 2701(f); or ”(vii) reduces the maximum period permitted in an affiliation period under section 2701(g)(1)(B). ”(c) RULES OF CONSTRUCTION.\u2014Nothing in this part shall be construed as requiring a group health plan or health insurance coverage to pro- vide specific benefits under the terms of such plan or coverage. ”(d) DEFINITIONS.\u2014For purposes of this sec- tion\u2014 ”(1) STATE LAW.\u2014The term ‘State law’ in- cludes all laws, decisions, rules, regulations, or other State action having the effect of law, of any State. A law of the United States applicable only to the District of Columbia shall be treated as a State law rather than a law of the United States. ”(2) STATE.\u2014The term ‘State’ includes a State (including the Northern Mariana Islands), any political subdivisions of a State or such Islands, or any agency or instrumentality of either. ”PART C\u2014DEFINITIONS; MISCELLANEOUS PROVISIONS ”SEC. 2791. DEFINITIONS. ”(a) GROUP HEALTH PLAN.\u2014 ”(1) DEFINITION.\u2014The term ‘group health plan’ means an employee welfare benefit plan (as defined in section 3(1) of the Employee Re- tirement Income Security Act of 1974) to the ex- tent that the plan provides medical care (as de- fined in paragraph (2)) and including items and services paid for as medical care) to employees or their dependents (as defined under the terms of the plan) directly or through insurance, reim- bursement, or otherwise. ”(2) MEDICAL CARE.\u2014The term ‘medical care’ means amounts paid for\u2014 ”(A) the diagnosis, cure, mitigation, treat- ment, or prevention of disease, or amounts paid for the purpose of affecting any structure or function of the body, ”(B) amounts paid for transportation pri- marily for and essential to medical care referred to in subparagraph (A), and ”(C) amounts paid for insurance covering medical care referred to in subparagraphs (A) and (B). ”(3) TREATMENT OF CERTAIN PLANS AS GROUP HEALTH PLAN FOR NOTICE PROVISION.\u2014A pro- gram under which creditable coverage described in subparagraph (C), (D), (E), or (F) of section 2701(c)(1) is provided shall be treated as a group health plan for purposes of applying section 2701(e). CONGRESSIONAL RECORD \u2014 HOUSE H9483July 31, 1996 ”(b) DEFINITIONS RELATING TO HEALTH INSUR- ANCE.\u2014 ”(1) HEALTH INSURANCE COVERAGE.\u2014The term ‘health insurance coverage’ means benefits con- sisting of medical care (provided directly, through insurance or reimbursement, or other- wise and including items and services paid for as medical care) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health maintenance or- ganization contract offered by a health insur- ance issuer. ”(2) HEALTH INSURANCE ISSUER.\u2014The term ‘health insurance issuer’ means an insurance company, insurance service, or insurance orga- nization (including a health maintenance orga- nization, as defined in paragraph (3)) which is licensed to engage in the business of insurance in a State and which is subject to State law which regulates insurance (within the meaning of section 514(b)(2) of the Employee Retirement Income Security Act of 1974). Such term does not include a group health plan. ”(3) HEALTH MAINTENANCE ORGANIZATION.\u2014 The term ‘health maintenance organization’ means\u2014 ”(A) a Federally qualified health mainte- nance organization (as defined in section 1301(a)), ”(B) an organization recognized under State law as a health maintenance organization, or ”(C) a similar organization regulated under State law for solvency in the same manner and to the same extent as such a health maintenance organization. ”(4) GROUP HEALTH INSURANCE COVERAGE.\u2014 The term ‘group health insurance coverage’ means, in connection with a group health plan, health insurance coverage offered in connection with such plan. ”(5) INDIVIDUAL HEALTH INSURANCE COV- ERAGE.\u2014The term ‘individual health insurance coverage’ means health insurance coverage of- fered to individuals in the individual market, but does not include short-term limited duration insurance. ”(c) EXCEPTED BENEFITS.\u2014For purposes of this title, the term ‘excepted benefits’ means benefits under one or more (or any combination thereof) of the following: ”(1) BENEFITS NOT SUBJECT TO REQUIRE- MENTS.\u2014 ”(A) Coverage only for accident, or disability income insurance, or any combination thereof. ”(B) Coverage issued as a supplement to li- ability insurance. ”(C) Liability insurance, including general li- ability insurance and automobile liability insur- ance. ”(D) Workers’ compensation or similar insur- ance. ”(E) Automobile medical payment insurance. ”(F) Credit-only insurance. ”(G) Coverage for on-site medical clinics. ”(H) Other similar insurance coverage, speci- fied in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits. ”(2) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED SEPARATELY.\u2014 ”(A) Limited scope dental or vision benefits. ”(B) Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof. ”(C) Such other similar, limited benefits as are specified in regulations. ”(3) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED AS INDEPENDENT, NONCOORDINATED BENEFITS.\u2014 ”(A) Coverage only for a specified disease or illness. ”(B) Hospital indemnity or other fixed indem- nity insurance. ”(4) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED AS SEPARATE INSURANCE POLICY.\u2014 Medicare supplemental health insurance (as de- fined under section 1882(g)(1) of the Social Secu- rity Act), coverage supplemental to the coverage provided under chapter 55 of title 10, United States Code, and similar supplemental coverage provided to coverage under a group health plan. ”(d) OTHER DEFINITIONS.\u2014 ”(1) APPLICABLE STATE AUTHORITY.\u2014The term ‘applicable State authority’ means, with respect to a health insurance issuer in a State, the State insurance commissioner or official or officials designated by the State to enforce the require- ments of this title for the State involved with re- spect to such issuer. ”(2) BENEFICIARY.\u2014The term ‘beneficiary’ has the meaning given such term under section 3(8) of the Employee Retirement Income Security Act of 1974. ”(3) BONA FIDE ASSOCIATION.\u2014The term ‘bona fide association’ means, with respect to health insurance coverage offered in a State, an asso- ciation which\u2014 ”(A) has been actively in existence for at least 5 years; ”(B) has been formed and maintained in good faith for purposes other than obtaining insur- ance; ”(C) does not condition membership in the as- sociation on any health status-related factor re- lating to an individual (including an employee of an employer or a dependent of an employee); ”(D) makes health insurance coverage offered through the association available to all members regardless of any health status-related factor re- lating to such members (or individuals eligible for coverage through a member); ”(E) does not make health insurance coverage offered through the association available other than in connection with a member of the asso- ciation; and ”(F) meets such additional requirements as may be imposed under State law. ”(4) COBRA CONTINUATION PROVISION.\u2014The term ‘COBRA continuation provision’ means any of the following: ”(A) Section 4980B of the Internal Revenue Code of 1986, other than subsection (f)(1) of such section insofar as it relates to pediatric vaccines. ”(B) Part 6 of subtitle B of title I of the Em- ployee Retirement Income Security Act of 1974, other than section 609 of such Act. ”(C) Title XXII of this Act. ”(5) EMPLOYEE.\u2014The term ’employee’ has the meaning given such term under section 3(6) of the Employee Retirement Income Security Act of 1974. ”(6) EMPLOYER.\u2014The term ’employer’ has the meaning given such term under section 3(5) of the Employee Retirement Income Security Act of 1974, except that such term shall include only employers of two or more employees. ”(7) CHURCH PLAN.\u2014The term ‘church plan’ has the meaning given such term under section 3(33) of the Employee Retirement Income Secu- rity Act of 1974. ”(8) GOVERNMENTAL PLAN.\u2014(A) The term ‘governmental plan’ has the meaning given such term under section 3(32) of the Employee Retire- ment Income Security Act of 1974 and any Fed- eral governmental plan. ”(B) FEDERAL GOVERNMENTAL PLAN.\u2014The term ‘Federal governmental plan’ means a gov- ernmental plan established or maintained for its employees by the Government of the United States or by any agency or instrumentality of such Government. ”(C) NONFEDERAL GOVERNMENTAL PLAN.\u2014The term ‘nonfederal governmental plan’ means a governmental plan that is not a Federal govern- mental plan. ”(9) HEALTH STATUS-RELATED FACTOR.\u2014The term ‘health status-related factor’ means any of the factors described in section 2702(a)(1). ”(10) NETWORK PLAN.\u2014The term ‘network plan’ means health insurance coverage of a health insurance issuer under which the financ- ing and delivery of medical care (including items and services paid for as medical care) are pro- vided, in whole or in part, through a defined set of providers under contract with the issuer. ”(11) PARTICIPANT.\u2014The term ‘participant’ has the meaning given such term under section 3(7) of the Employee Retirement Income Security Act of 1974. ”(12) PLACED FOR ADOPTION DEFINED.\u2014The term ‘placement’, or being ‘placed’, for adop- tion, in connection with any placement for adoption of a child with any person, means the assumption and retention by such person of a legal obligation for total or partial support of such child in anticipation of adoption of such child. The child’s placement with such person terminates upon the termination of such legal obligation. ”(13) PLAN SPONSOR.\u2014The term ‘plan sponsor’ has the meaning given such term under section 3(16)(B) of the Employee Retirement Income Se- curity Act of 1974. ”(14) STATE.\u2014The term ‘State’ means each of the several States, the District of Columbia, Puerto Rico, the Virgin Islands, Guam, Amer- ican Samoa, and the Northern Mariana Islands. ”(e) DEFINITIONS RELATING TO MARKETS AND SMALL EMPLOYERS.\u2014For purposes of this title: ”(1) INDIVIDUAL MARKET.\u2014 ”(A) IN GENERAL.\u2014The term ‘individual mar- ket’ means the market for health insurance cov- erage offered to individuals other than in con- nection with a group health plan. ”(B) TREATMENT OF VERY SMALL GROUPS.\u2014 ”(i) IN GENERAL.\u2014Subject to clause (ii), such terms includes coverage offered in connection with a group health plan that has fewer than two participants as current employees on the first day of the plan year. ”(ii) STATE EXCEPTION.\u2014Clause (i) shall not apply in the case of a State that elects to regu- late the coverage described in such clause as coverage in the small group market. ”(2) LARGE EMPLOYER.\u2014The term ‘large em- ployer’ means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an av- erage of at least 51 employees on business days during the preceding calendar year and who employs at least 2 employees on the first day of the plan year. ”(3) LARGE GROUP MARKET.\u2014The term ‘large group market’ means the health insurance mar- ket under which individuals obtain health in- surance coverage (directly or through any ar- rangement) on behalf of themselves (and their dependents) through a group health plan main- tained by a large employer. ”(4) SMALL EMPLOYER.\u2014The term ‘small em- ployer’ means, in connection with a group health plan with respect to a calendar year and a plan year, an employer who employed an av- erage of at least 2 but not more than 50 employ- ees on business days during the preceding cal- endar year and who employs at least 2 employ- ees on the first day of the plan year. ”(5) SMALL GROUP MARKET.\u2014The term ‘small group market’ means the health insurance mar- ket under which individuals obtain health in- surance coverage (directly or through any ar- rangement) on behalf of themselves (and their dependents) through a group health plan main- tained by a small employer. ”(6) APPLICATION OF CERTAIN RULES IN DETER- MINATION OF EMPLOYER SIZE.\u2014For purposes of this subsection\u2014 ”(A) APPLICATION OF AGGREGATION RULE FOR EMPLOYERS.\u2014all persons treated as a single em- ployer under subsection (b), (c), (m), or (o) of section 414 of the Internal Revenue Code of 1986 shall be treated as 1 employer. ”(B) EMPLOYERS NOT IN EXISTENCE IN PRECED- ING YEAR.\u2014In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether such employer is a small or large employer shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year. ”(C) PREDECESSORS.\u2014Any reference in this subsection to an employer shall include a ref- erence to any predecessor of such employer. CONGRESSIONAL RECORD \u2014 HOUSEH9484 July 31, 1996 ”SEC. 2792. REGULATIONS. ”The Secretary, consistent with section 104 of the Health Care Portability and Accountability Act of 1996, may promulgate such regulations as may be necessary or appropriate to carry out the provisions of this title. The Secretary may promulgate any interim final rules as the Sec- retary determines are appropriate to carry out this title.”. (b) APPLICATION OF RULES BY CERTAIN HEALTH MAINTENANCE ORGANIZATIONS.\u2014Section 1301 of such Act (42 U.S.C. 300e) is amended by adding at the end the following new subsection: ”(d) An organization that offers health bene- fits coverage shall not be considered as failing to meet the requirements of this section notwith- standing that it provides, with respect to cov- erage offered in connection with a group health plan in the small or large group market (as de- fined in section 2791(e)), an affiliation period consistent with the provisions of section 2701(g).”. (c) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014Except as provided in this subsection, part A of title XXVII of the Public Health Service Act (as added by subsection (a)) shall apply with respect to group health plans, and health insurance coverage offered in con- nection with group health plans, for plan years beginning after June 30, 1997. (2) DETERMINATION OF CREDITABLE COV- ERAGE.\u2014 (A) PERIOD OF COVERAGE.\u2014 (i) IN GENERAL.\u2014Subject to clause (ii), no pe- riod before July 1, 1996, shall be taken into ac- count under part A of title XXVII of the Public Health Service Act (as added by this section) in determining creditable coverage. (ii) SPECIAL RULE FOR CERTAIN PERIODS.\u2014The Secretary of Health and Human Services, con- sistent with section 104, shall provide for a proc- ess whereby individuals who need to establish creditable coverage for periods before July 1, 1996, and who would have such coverage cred- ited but for clause (i) may be given credit for creditable coverage for such periods through the presentation of documents or other means. (B) CERTIFICATIONS, ETC.\u2014 (i) IN GENERAL.\u2014Subject to clauses (ii) and (iii), subsection (e) of section 2701 of the Public Health Service Act (as added by this section) shall apply to events occurring after June 30, 1996. (ii) NO CERTIFICATION REQUIRED TO BE PRO- VIDED BEFORE JUNE 1, 1997.\u2014In no case is a cer- tification required to be provided under such subsection before June 1, 1997. (iii) CERTIFICATION ONLY ON WRITTEN REQUEST FOR EVENTS OCCURRING BEFORE OCTOBER 1, 1996.\u2014In the case of an event occurring after June 30, 1996, and before October 1, 1996, a cer- tification is not required to be provided under such subsection unless an individual (with re- spect to whom the certification is otherwise re- quired to be made) requests such certification in writing. (C) TRANSITIONAL RULE.\u2014In the case of an in- dividual who seeks to establish creditable cov- erage for any period for which certification is not required because it relates to an event oc- curring before June 30, 1996\u2014 (i) the individual may present other credible evidence of such coverage in order to establish the period of creditable coverage; and (ii) a group health plan and a health insur- ance issuer shall not be subject to any penalty or enforcement action with respect to the plan’s or issuer’s crediting (or not crediting) such cov- erage if the plan or issuer has sought to comply in good faith with the applicable requirements under the amendments made by this section. (3) SPECIAL RULE FOR COLLECTIVE BARGAINING AGREEMENTS.\u2014Except as provided in paragraph (2)(B), in the case of a group health plan main- tained pursuant to 1 or more collective bargain- ing agreements between employee representa- tives and one or more employers ratified before the date of the enactment of this Act, part A of title XXVII of the Public Health Service Act (other than section 2701(e) thereof) shall not apply to plan years beginning before the later of\u2014 (A) the date on which the last of the collective bargaining agreements relating to the plan ter- minates (determined without regard to any ex- tension thereof agreed to after the date of the enactment of this Act), or (B) July 1, 1997. For purposes of subparagraph (A), any plan amendment made pursuant to a collective bar- gaining agreement relating to the plan which amends the plan solely to conform to any re- quirement of such part shall not be treated as a termination of such collective bargaining agree- ment. (4) TIMELY REGULATIONS.\u2014The Secretary of Health and Human Services, consistent with section 104, shall first issue by not later than April 1, 1997, such regulations as may be nec- essary to carry out the amendments made by this section and section 111. (5) LIMITATION ON ACTIONS.\u2014No enforcement action shall be taken, pursuant to the amend- ments made by this section, against a group health plan or health insurance issuer with re- spect to a violation of a requirement imposed by such amendments before January 1, 1998, or, if later, the date of issuance of regulations re- ferred to in paragraph (4), if the plan or issuer has sought to comply in good faith with such re- quirements. (d) MISCELLANEOUS CORRECTION.\u2014Section 2208(1) of the Public Health Service Act (42 U.S.C. 300bb 8(1)) is amended by striking ”sec- tion 162(i)(2)” and inserting ”5000(b)”. SEC. 103. REFERENCE TO IMPLEMENTATION THROUGH THE INTERNAL REVENUE CODE OF 1986. For provisions amending the Internal Revenue Code of 1986 to provide for application and en- forcement of rules for group health plans similar to those provided under the amendments made by section 101(a), see section 401. SEC. 104. ASSURING COORDINATION. The Secretary of the Treasury, the Secretary of Health and Human Services, and the Sec- retary of Labor shall ensure, through the execu- tion of an interagency memorandum of under- standing among such Secretaries, that\u2014 (1) regulations, rulings, and interpretations is- sued by such Secretaries relating to the same matter over which two or more such Secretaries have responsibility under this subtitle (and the amendments made by this subtitle and section 401) are administered so as to have the same ef- fect at all times; and (2) coordination of policies relating to enforc- ing the same requirements through such Sec- retaries in order to have a coordinated enforce- ment strategy that avoids duplication of en- forcement efforts and assigns priorities in en- forcement. Subtitle B\u2014Individual Market Rules SEC. 111. AMENDMENT TO PUBLIC HEALTH SERV- ICE ACT. (a) IN GENERAL.\u2014Title XXVII of the Public Health Service Act, as added by section 102(a) of this Act, is amended by inserting after part A the following new part: ”PART B\u2014INDIVIDUAL MARKET RULES ”SEC. 2741. GUARANTEED AVAILABILITY OF INDI- VIDUAL HEALTH INSURANCE COV- ERAGE TO CERTAIN INDIVIDUALS WITH PRIOR GROUP COVERAGE. ”(a) GUARANTEED AVAILABILITY.\u2014 ”(1) IN GENERAL.\u2014Subject to the succeeding subsections of this section and section 2744, each health insurance issuer that offers health insur- ance coverage (as defined in section 2791(b)(1)) in the individual market in a State may not, with respect to an eligible individual (as defined in subsection (b)) desiring to enroll in individual health insurance coverage\u2014 ”(A) decline to offer such coverage to, or deny enrollment of, such individual; or ”(B) impose any preexisting condition exclu- sion (as defined in section 2701(b)(1)(A)) with re- spect to such coverage. ”(2) SUBSTITUTION BY STATE OF ACCEPTABLE ALTERNATIVE MECHANISM.\u2014The requirement of paragraph (1) shall not apply to health insur- ance coverage offered in the individual market in a State in which the State is implementing an acceptable alternative mechanism under section 2744. ”(b) ELIGIBLE INDIVIDUAL DEFINED.\u2014In this part, the term ‘eligible individual’ means an in- dividual\u2014 ”(1)(A) for whom, as of the date on which the individual seeks coverage under this section, the aggregate of the periods of creditable coverage (as defined in section 2701(c)) is 18 or more months and (B) whose most recent prior cred- itable coverage was under a group health plan, governmental plan, or church plan (or health insurance coverage offered in connection with any such plan); ”(2) who is not eligible for coverage under (A) a group health plan, (B) part A or part B of title XVIII of the Social Security Act, or (C) a State plan under title XIX of such Act (or any successor program), and does not have other health insurance coverage; ”(3) with respect to whom the most recent cov- erage within the coverage period described in paragraph (1)(A) was not terminated based on a factor described in paragraph (1) or (2) of sec- tion 2712(b) (relating to nonpayment of pre- miums or fraud); ”(4) if the individual had been offered the op- tion of continuation coverage under a COBRA continuation provision or under a similar State program, who elected such coverage; and ”(5) who, if the individual elected such con- tinuation coverage, has exhausted such con- tinuation coverage under such provision or pro- gram. ”(c) ALTERNATIVE COVERAGE PERMITTED WHERE NO STATE MECHANISM.\u2014 ”(1) IN GENERAL.\u2014In the case of health insur- ance coverage offered in the individual market in a State in which the State is not implement- ing an acceptable alternative mechanism under section 2744, the health insurance issuer may elect to limit the coverage offered under sub- section (a) so long as it offers at least two dif- ferent policy forms of health insurance coverage both of which\u2014 ”(A) are designed for, made generally avail- able to, and actively marketed to, and enroll both eligible and other individuals by the issuer; and ”(B) meet the requirement of paragraph (2) or (3), as elected by the issuer. For purposes of this subsection, policy forms which have different cost-sharing arrangements or different riders shall be considered to be dif- ferent policy forms. ”(2) CHOICE OF MOST POPULAR POLICY FORMS.\u2014The requirement of this paragraph is met, for health insurance coverage policy forms offered by an issuer in the individual market, if the issuer offers the policy forms for individual health insurance coverage with the largest, and next to largest, premium volume of all such pol- icy forms offered by the issuer in the State or applicable marketing or service area (as may be prescribed in regulation) by the issuer in the in- dividual market in the period involved. ”(3) CHOICE OF 2 POLICY FORMS WITH REP- RESENTATIVE COVERAGE.\u2014 ”(A) IN GENERAL.\u2014The requirement of this paragraph is met, for health insurance coverage policy forms offered by an issuer in the individ- ual market, if the issuer offers a lower-level cov- erage policy form (as defined in subparagraph (B)) and a higher-level coverage policy form (as defined in subparagraph (C)) each of which in- cludes benefits substantially similar to other in- dividual health insurance coverage offered by the issuer in that State and each of which is covered under a method described in section CONGRESSIONAL RECORD \u2014 HOUSE H9485July 31, 1996 2744(c)(3)(A) (relating to risk adjustment, risk spreading, or financial subsidization). ”(B) LOWER-LEVEL OF COVERAGE DESCRIBED.\u2014 A policy form is described in this subparagraph if the actuarial value of the benefits under the coverage is at least 85 percent but not greater than 100 percent of a weighted average (de- scribed in subparagraph (D)). ”(C) HIGHER-LEVEL OF COVERAGE DE- SCRIBED.\u2014A policy form is described in this sub- paragraph if\u2014 ”(i) the actuarial value of the benefits under the coverage is at least 15 percent greater than the actuarial value of the coverage described in subparagraph (B) offered by the issuer in the area involved; and ”(ii) the actuarial value of the benefits under the coverage is at least 100 percent but not greater than 120 percent of a weighted average (described in subparagraph (D)). ”(D) WEIGHTED AVERAGE.\u2014For purposes of this paragraph, the weighted average described in this subparagraph is the average actuarial value of the benefits provided by all the health insurance coverage issued (as elected by the is- suer) either by that issuer or by all issuers in the State in the individual market during the pre- vious year (not including coverage issued under this section), weighted by enrollment for the dif- ferent coverage. ”(4) ELECTION.\u2014The issuer elections under this subsection shall apply uniformly to all eligi- ble individuals in the State for that issuer. Such an election shall be effective for policies offered during a period of not shorter than 2 years. ”(5) ASSUMPTIONS.\u2014For purposes of para- graph (3), the actuarial value of benefits pro- vided under individual health insurance cov- erage shall be calculated based on a standard- ized population and a set of standardized utili- zation and cost factors. ”(d) SPECIAL RULES FOR NETWORK PLANS.\u2014 ”(1) IN GENERAL.\u2014In the case of a health in- surance issuer that offers health insurance cov- erage in the individual market through a net- work plan, the issuer may\u2014 ”(A) limit the individuals who may be enrolled under such coverage to those who live, reside, or work within the service area for such network plan; and ”(B) within the service area of such plan, deny such coverage to such individuals if the is- suer has demonstrated, if required, to the appli- cable State authority that\u2014 ”(i) it will not have the capacity to deliver services adequately to additional individual en- rollees because of its obligations to existing group contract holders and enrollees and indi- vidual enrollees, and ”(ii) it is applying this paragraph uniformly to individuals without regard to any health sta- tus-related factor of such individuals and with- out regard to whether the individuals are eligi- ble individuals. ”(2) 180-DAY SUSPENSION UPON DENIAL OF COV- ERAGE.\u2014An issuer, upon denying health insur- ance coverage in any service area in accordance with paragraph (1)(B), may not offer coverage in the individual market within such service area for a period of 180 days after such coverage is denied. ”(e) APPLICATION OF FINANCIAL CAPACITY LIMITS.\u2014 ”(1) IN GENERAL.\u2014A health insurance issuer may deny health insurance coverage in the indi- vidual market to an eligible individual if the is- suer has demonstrated, if required, to the appli- cable State authority that\u2014 ”(A) it does not have the financial reserves necessary to underwrite additional coverage; and ”(B) it is applying this paragraph uniformly to all individuals in the individual market in the State consistent with applicable State law and without regard to any health status-related fac- tor of such individuals and without regard to whether the individuals are eligible individuals. ”(2) 180-DAY SUSPENSION UPON DENIAL OF COV- ERAGE.\u2014An issuer upon denying individual health insurance coverage in any service area in accordance with paragraph (1) may not offer such coverage in the individual market within such service area for a period of 180 days after the date such coverage is denied or until the is- suer has demonstrated, if required under appli- cable State law, to the applicable State author- ity that the issuer has sufficient financial re- serves to underwrite additional coverage, which- ever is later. A State may provide for the appli- cation of this paragraph on a service-area-spe- cific basis. ”(e) MARKET REQUIREMENTS.\u2014 ”(1) IN GENERAL.\u2014The provisions of sub- section (a) shall not be construed to require that a health insurance issuer offering health insur- ance coverage only in connection with group health plans or through one or more bona fide associations, or both, offer such health insur- ance coverage in the individual market. ”(2) CONVERSION POLICIES.\u2014A health insur- ance issuer offering health insurance coverage in connection with group health plans under this title shall not be deemed to be a health in- surance issuer offering individual health insur- ance coverage solely because such issuer offers a conversion policy. ”(f) CONSTRUCTION.\u2014Nothing in this section shall be construed\u2014 ”(1) to restrict the amount of the premium rates that an issuer may charge an individual for health insurance coverage provided in the individual market under applicable State law; or ”(2) to prevent a health insurance issuer of- fering health insurance coverage in the individ- ual market from establishing premium discounts or rebates or modifying otherwise applicable co- payments or deductibles in return for adherence to programs of health promotion and disease prevention. ”SEC. 2742. GUARANTEED RENEWABILITY OF IN- DIVIDUAL HEALTH INSURANCE COV- ERAGE. ”(a) IN GENERAL.\u2014Except as provided in this section, a health insurance issuer that provides individual health insurance coverage to an indi- vidual shall renew or continue in force such coverage at the option of the individual. ”(b) GENERAL EXCEPTIONS.\u2014A health insur- ance issuer may nonrenew or discontinue health insurance coverage of an individual in the indi- vidual market based only on one or more of the following: ”(1) NONPAYMENT OF PREMIUMS.\u2014The indi- vidual has failed to pay premiums or contribu- tions in accordance with the terms of the health insurance coverage or the issuer has not re- ceived timely premium payments. ”(2) FRAUD.\u2014The individual has performed an act or practice that constitutes fraud or made an intentional misrepresentation of mate- rial fact under the terms of the coverage. ”(3) TERMINATION OF PLAN.\u2014The issuer is ceasing to offer coverage in the individual mar- ket in accordance with subsection (c) and appli- cable State law. ”(4) MOVEMENT OUTSIDE SERVICE AREA.\u2014In the case of a health insurance issuer that offers health insurance coverage in the market through a network plan, the individual no longer resides, lives, or works in the service area (or in an area for which the issuer is authorized to do business) but only if such coverage is ter- minated under this paragraph uniformly with- out regard to any health status-related factor of covered individuals. ”(5) ASSOCIATION MEMBERSHIP CEASES.\u2014In the case of health insurance coverage that is made available in the individual market only through one or more bona fide associations, the member- ship of the individual in the association (on the basis of which the coverage is provided) ceases but only if such coverage is terminated under this paragraph uniformly without regard to any health status-related factor of covered individ- uals. ”(c) REQUIREMENTS FOR UNIFORM TERMI- NATION OF COVERAGE.\u2014 ”(1) PARTICULAR TYPE OF COVERAGE NOT OF- FERED.\u2014In any case in which an issuer decides to discontinue offering a particular type of health insurance coverage offered in the indi- vidual market, coverage of such type may be discontinued by the issuer only if\u2014 ”(A) the issuer provides notice to each covered individual provided coverage of this type in such market of such discontinuation at least 90 days prior to the date of the discontinuation of such coverage; ”(B) the issuer offers to each individual in the individual market provided coverage of this type, the option to purchase any other individ- ual health insurance coverage currently being offered by the issuer for individuals in such market; and ”(C) in exercising the option to discontinue coverage of this type and in offering the option of coverage under subparagraph (B), the issuer acts uniformly without regard to any health status-related factor of enrolled individuals or individuals who may become eligible for such coverage. ”(2) DISCONTINUANCE OF ALL COVERAGE.\u2014 ”(A) IN GENERAL.\u2014Subject to subparagraph (C), in any case in which a health insurance is- suer elects to discontinue offering all health in- surance coverage in the individual market in a State, health insurance coverage may be discon- tinued by the issuer only if\u2014 ”(i) the issuer provides notice to the applica- ble State authority and to each individual of such discontinuation at least 180 days prior to the date of the expiration of such coverage, and ”(ii) all health insurance issued or delivered for issuance in the State in such market are dis- continued and coverage under such health in- surance coverage in such market is not renewed. ”(B) PROHIBITION ON MARKET REENTRY.\u2014In the case of a discontinuation under subpara- graph (A) in the individual market, the issuer may not provide for the issuance of any health insurance coverage in the market and State in- volved during the 5-year period beginning on the date of the discontinuation of the last health insurance coverage not so renewed. ”(d) EXCEPTION FOR UNIFORM MODIFICATION OF COVERAGE.\u2014At the time of coverage renewal, a health insurance issuer may modify the health insurance coverage for a policy form offered to individuals in the individual market so long as such modification is consistent with State law and effective on a uniform basis among all indi- viduals with that policy form. ”(e) APPLICATION TO COVERAGE OFFERED ONLY THROUGH ASSOCIATIONS.\u2014In applying this section in the case of health insurance coverage that is made available by a health insurance is- suer in the individual market to individuals only through one or more associations, a ref- erence to an ‘individual’ is deemed to include a reference to such an association (of which the individual is a member). ”SEC. 2743. CERTIFICATION OF COVERAGE. ”The provisions of section 2701(e) shall apply to health insurance coverage offered by a health insurance issuer in the individual market in the same manner as it applies to health insurance coverage offered by a health insurance issuer in connection with a group health plan in the small or large group market. ”SEC. 2744. STATE FLEXIBILITY IN INDIVIDUAL MARKET REFORMS. ”(a) WAIVER OF REQUIREMENTS WHERE IM- PLEMENTATION OF ACCEPTABLE ALTERNATIVE MECHANISM.\u2014 ”(1) IN GENERAL.\u2014The requirements of section 2741 shall not apply with respect to health in- surance coverage offered in the individual mar- ket in the State so long as a State is found to be implementing, in accordance with this section and consistent with section 2746(b), an alter- native mechanism (in this section referred to as an ‘acceptable alternative mechanism’)\u2014 ”(A) under which all eligible individuals are provided a choice of health insurance coverage; CONGRESSIONAL RECORD \u2014 HOUSEH9486 July 31, 1996 ”(B) under which such coverage does not im- pose any preexisting condition exclusion with respect to such coverage; ”(C) under which such choice of coverage in- cludes at least one policy form of coverage that is comparable to comprehensive health insur- ance coverage offered in the individual market in such State or that is comparable to a stand- ard option of coverage available under the group or individual health insurance laws of such State; and ”(D) in a State which is implementing\u2014 ”(i) a model act described in subsection (c)(1), ”(ii) a qualified high risk pool described in subsection (c)(2), or ”(iii) a mechanism described in subsection (c)(3). ”(2) PERMISSIBLE FORMS OF MECHANISMS.\u2014A private or public individual health insurance mechanism (such as a health insurance coverage pool or programs, mandatory group conversion policies, guaranteed issue of one or more plans of individual health insurance coverage, or open enrollment by one or more health insurance is- suers), or combination of such mechanisms, that is designed to provide access to health benefits for individuals in the individual market in the State in accordance with this section may con- stitute an acceptable alternative mechanism. ”(b) APPLICATION OF ACCEPTABLE ALTER- NATIVE MECHANISMS.\u2014 ”(1) PRESUMPTION.\u2014 ”(A) IN GENERAL.\u2014Subject to the succeeding provisions of this subsection, a State is pre- sumed to be implementing an acceptable alter- native mechanism in accordance with this sec- tion as of July 1, 1997, if, by not later than April 1, 1997, the chief executive officer of a State\u2014 ”(i) notifies the Secretary that the State has enacted or intends to enact (by not later than January 1, 1998, or July 1, 1998, in the case of a State described in subparagraph (B)(ii)) any necessary legislation to provide for the imple- mentation of a mechanism reasonably designed to be an acceptable alternative mechanism as of January 1, 1998, (or, in the case of a State de- scribed in subparagraph (B)(ii), July 1, 1998); and ”(ii) provides the Secretary with such infor- mation as the Secretary may require to review the mechanism and its implementation (or pro- posed implementation) under this subsection. ”(B) DELAY PERMITTED FOR CERTAIN STATES.\u2014 ”(i) EFFECT OF DELAY.\u2014In the case of a State described in clause (ii) that provides notice under subparagraph (A)(i), for the presumption to continue on and after July 1, 1998, the chief executive officer of the State by April 1, 1998\u2014 ”(I) must notify the Secretary that the State has enacted any necessary legislation to provide for the implementation of a mechanism reason- ably designed to be an acceptable alternative mechanism as of July 1, 1998; and ”(II) must provide the Secretary with such in- formation as the Secretary may require to re- view the mechanism and its implementation (or proposed implementation) under this subsection. ”(ii) STATES DESCRIBED.\u2014A State described in this clause is a State that has a legislature that does not meet within the 12-month period begin- ning on the date of enactment of this Act. ”(C) CONTINUED APPLICATION.\u2014In order for a mechanism to continue to be presumed to be an acceptable alternative mechanism, the State shall provide the Secretary every 3 years with information described in subparagraph (A)(ii) or (B)(i)(II) (as the case may be). ”(2) NOTICE.\u2014If the Secretary finds, after re- view of information provided under paragraph (1) and in consultation with the chief executive officer of the State and the insurance commis- sioner or chief insurance regulatory official of the State, that such a mechanism is not an ac- ceptable alternative mechanism or is not (or no longer) being implemented, the Secretary\u2014 ”(A) shall notify the State of\u2014 ”(i) such preliminary determination, and ”(ii) the consequences under paragraph (3) of a failure to implement such a mechanism; and ”(B) shall permit the State a reasonable op- portunity in which to modify the mechanism (or to adopt another mechanism) in a manner so that may be an acceptable alternative mecha- nism or to provide for implementation of such a mechanism. ”(3) FINAL DETERMINATION.\u2014If, after provid- ing notice and opportunity under paragraph (2), the Secretary finds that the mechanism is not an acceptable alternative mechanism or the State is not implementing such a mechanism, the Sec- retary shall notify the State that the State is no longer considered to be implementing an accept- able alternative mechanism and that the re- quirements of section 2741 shall apply to health insurance coverage offered in the individual market in the State, effective as of a date speci- fied in the notice. ”(4) LIMITATION ON SECRETARIAL AUTHOR- ITY.\u2014The Secretary shall not make a determina- tion under paragraph (2) or (3) on any basis other than the basis that a mechanism is not an acceptable alternative mechanism or is not being implemented. ”(5) FUTURE ADOPTION OF MECHANISMS.\u2014If a State, after January 1, 1997, submits the notice and information described in paragraph (1), un- less the Secretary makes a finding described in paragraph (3) within the 90-day period begin- ning on the date of submission of the notice and information, the mechanism shall be considered to be an acceptable alternative mechanism for purposes of this section, effective 90 days after the end of such period, subject to the second sentence of paragraph (1). ”(c) PROVISION RELATED TO RISK.\u2014 ”(1) ADOPTION OF NAIC MODELS.\u2014The model act referred to in subsection (a)(1)(D)(i) is the Small Employer and Individual Health Insur- ance Availability Model Act (adopted by the Na- tional Association of Insurance Commissioners on June 3, 1996) insofar as it applies to individ- ual health insurance coverage or the Individual Health Insurance Portability Model Act (also adopted by such Association on such date). ”(2) QUALIFIED HIGH RISK POOL.\u2014For pur- poses of subsection (a)(1)(D)(ii), a ‘qualified high risk pool’ described in this paragraph is a high risk pool that\u2014 ”(A) provides to all eligible individuals health insurance coverage (or comparable coverage) that does not impose any preexisting condition exclusion with respect to such coverage for all eligible individuals, and ”(B) provides for premium rates and covered benefits for such coverage consistent with stand- ards included in the NAIC Model Health Plan for Uninsurable Individuals Act (as in effect as of the date of the enactment of this title). ”(3) OTHER MECHANISMS.\u2014For purposes of subsection (a)(1)(D)(iii), a mechanism described in this paragraph\u2014 ”(A) provides for risk adjustment, risk spread- ing, or a risk spreading mechanism (among issu- ers or policies of an issuer) or otherwise provides for some financial subsidization for eligible indi- viduals, including through assistance to partici- pating issuers; or ”(B) is a mechanism under which each eligible individual is provided a choice of all individual health insurance coverage otherwise available. ”SEC. 2745. ENFORCEMENT. ”(a) STATE ENFORCEMENT.\u2014 ”(1) STATE AUTHORITY.\u2014Subject to section 2746, each State may require that health insur- ance issuers that issue, sell, renew, or offer health insurance coverage in the State in the in- dividual market meet the requirements estab- lished under this part with respect to such issu- ers. ”(2) FAILURE TO IMPLEMENT REQUIREMENTS.\u2014 In the case of a State that fails to substantially enforce the requirements set forth in this part with respect to health insurance issuers in the State, the Secretary shall enforce the require- ments of this part under subsection (b) insofar as they relate to the issuance, sale, renewal, and offering of health insurance coverage in the individual market in such State. ”(b) SECRETARIAL ENFORCEMENT AUTHOR- ITY.\u2014The Secretary shall have the same author- ity in relation to enforcement of the provisions of this part with respect to issuers of health in- surance coverage in the individual market in a State as the Secretary has under section 2722(b)(2) in relation to the enforcement of the provisions of part A with respect to issuers of health insurance coverage in the small group market in the State. ”SEC. 2746. PREEMPTION. ”(a) IN GENERAL.\u2014Subject to subsection (b), nothing in this part (or part C insofar as it ap- plies to this part) shall be construed to prevent a State from establishing, implementing, or con- tinuing in effect standards and requirements unless such standards and requirements prevent the application of a requirement of this part. ”(b) RULES OF CONSTRUCTION.\u2014Nothing in this part (or part C insofar as it applies to this part) shall be construed to affect or modify the provisions of section 514 of the Employee Retire- ment Income Security Act of 1974 (29 U.S.C. 1144). ”SEC. 2747. GENERAL EXCEPTIONS. ”(a) EXCEPTION FOR CERTAIN BENEFITS.\u2014The requirements of this part shall not apply to any health insurance coverage in relation to its pro- vision of excepted benefits described in section 2791(c)(1). ”(b) EXCEPTION FOR CERTAIN BENEFITS IF CERTAIN CONDITIONS MET.\u2014The requirements of this part shall not apply to any health insur- ance coverage in relation to its provision of ex- cepted benefits described in paragraph (2), (3), or (4) of section 2791(c) if the benefits are pro- vided under a separate policy, certificate, or contract of insurance.”. (b) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014Except as provided in this subsection, part B of title XXVII of the Public Health Service Act (as inserted by subsection (a)) shall apply with respect to health insurance coverage offered, sold, issued, renewed, in ef- fect, or operated in the individual market after June 30, 1997, regardless of when a period of creditable coverage occurs. (2) APPLICATION OF CERTIFICATION RULES.\u2014 The provisions of section 102(d)(2) of this Act shall apply to section 2743 of the Public Health Service Act in the same manner as it applies to section 2701(e) of such Act. Subtitle C\u2014General and Miscellaneous Provisions SEC. 191. HEALTH COVERAGE AVAILABILITY STUDIES. (a) STUDIES.\u2014 (1) STUDY ON EFFECTIVENESS OF REFORMS.\u2014 The Secretary of Health and Human Services shall provide for a study on the effectiveness of the provisions of this title and the various State laws, in ensuring the availability of reasonably priced health coverage to employers purchasing group coverage and individuals purchasing cov- erage on a non-group basis. (2) STUDY ON ACCESS AND CHOICE.\u2014The Sec- retary also shall provide for a study on\u2014 (A) the extent to which patients have direct access to, and choice of, health care providers, including specialty providers, within a network plan, as well as the opportunity to utilize pro- viders outside of the network plan, under the various types of coverage offered under the pro- visions of this title; and (B) the cost and cost-effectiveness to health insurance issuers of providing access to out-of- network providers, and the potential impact of providing such access on the cost and quality of health insurance coverage offered under provi- sions of this title. (3) CONSULTATION.\u2014The studies under this subsection shall be conducted in consultation with the Secretary of Labor, representatives of CONGRESSIONAL RECORD \u2014 HOUSE H9487July 31, 1996 State officials, consumers, and other representa- tives of individuals and entities that have exper- tise in health insurance and employee benefits. (b) REPORTS.\u2014Not later than January 1, 2000, the Secretary shall submit to the appropriate committees of Congress a report on each of the studies under subsection (a). SEC. 192. REPORT ON MEDICARE REIMBURSE- MENT OF TELEMEDICINE. The Health Care Financing Administration shall complete its ongoing study of medicare re- imbursement of all telemedicine services and submit a report to Congress on medicare reim- bursement of telemedicine services by not later than March 1, 1997. The report shall\u2014 (1) utilize data compiled from the current dem- onstration projects already under review and gather data from other ongoing telemedicine networks; (2) include an analysis of the cost of services provided via telemedicine; and (3) include a proposal for medicare reimburse- ment of such services. SEC. 193. ALLOWING FEDERALLY-QUALIFIED HMOS TO OFFER HIGH DEDUCTIBLE PLANS. Section 1301(b) of the Public Health Service Act (42 U.S.C. 300e(b)) is amended by adding at the end the following new paragraph: ”(6) A health maintenance organization that otherwise meets the requirements of this title may offer a high-deductible health plan (as de- fined in section 220(c)(2) of the Internal Reve- nue Code of 1986).”. SEC. 194. VOLUNTEER SERVICES PROVIDED BY HEALTH PROFESSIONALS AT FREE CLINICS. Section 224 of the Public Health Service Act (42 U.S.C. 233) is amended by adding at the end the following subsection: ”(o)(1) For purposes of this section, a free clinic health professional shall in providing a qualifying health service to an individual be deemed to be an employee of the Public Health Service for a calendar year that begins during a fiscal year for which a transfer was made under paragraph (6)(D). The preceding sentence is subject to the provisions of this subsection. ”(2) In providing a health service to an indi- vidual, a health care practitioner shall for pur- poses of this subsection be considered to be a free clinic health professional if the following conditions are met: ”(A) The service is provided to the individual at a free clinic, or through offsite programs or events carried out by the free clinic. ”(B) The free clinic is sponsoring the health care practitioner pursuant to paragraph (5)(C). ”(C) The service is a qualifying health service (as defined in paragraph (4)). ”(D) Neither the health care practitioner nor the free clinic receives any compensation for the service from the individual or from any third- party payor (including reimbursement under any insurance policy or health plan, or under any Federal or State health benefits program). With respect to compliance with such condition: ”(i) The health care practitioner may receive repayment from the free clinic for reasonable ex- penses incurred by the health care practitioner in the provision of the service to the individual. ”(ii) The free clinic may accept voluntary do- nations for the provision of the service by the health care practitioner to the individual. ”(E) Before the service is provided, the health care practitioner or the free clinic provides writ- ten notice to the individual of the extent to which the legal liability of the health care prac- titioner is limited pursuant to this subsection (or in the case of an emergency, the written notice is provided to the individual as soon after the emergency as is practicable). If the individual is a minor or is otherwise legally incompetent, the condition under this subparagraph is that the written notice be provided to a legal guardian or other person with legal responsibility for the care of the individual. ”(F) At the time the service is provided, the health care practitioner is licensed or certified in accordance with applicable law regarding the provision of the service. ”(3)(A) For purposes of this subsection, the term ‘free clinic’ means a health care facility op- erated by a nonprofit private entity meeting the following requirements: ”(i) The entity does not, in providing health services through the facility, accept reimburse- ment from any third-party payor (including re- imbursement under any insurance policy or health plan, or under any Federal or State health benefits program). ”(ii) The entity, in providing health services through the facility, either does not impose charges on the individuals to whom the services are provided, or imposes a charge according to the ability of the individual involved to pay the charge. ”(iii) The entity is licensed or certified in ac- cordance with applicable law regarding the pro- vision of health services. ”(B) With respect to compliance with the con- ditions under subparagraph (A), the entity in- volved may accept voluntary donations for the provision of services. ”(4) For purposes of this subsection, the term ‘qualifying health service’ means any medical assistance required or authorized to be provided in the program under title XIX of the Social Se- curity Act, without regard to whether the medi- cal assistance is included in the plan submitted under such program by the State in which the health care practitioner involved provides the medical assistance. References in the preceding sentence to such program shall as applicable be considered to be references to any successor to such program. ”(5) Subsection (g) (other than paragraphs (3) through (5)) and subsections (h), (i), and (l) apply to a health care practitioner for purposes of this subsection to the same extent and in the same manner as such subsections apply to an officer, governing board member, employee, or contractor of an entity described in subsection (g)(4), subject to paragraph (6) and subject to the following: ”(A) The first sentence of paragraph (1) ap- plies in lieu of the first sentence of subsection (g)(1)(A). ”(B) This subsection may not be construed as deeming any free clinic to be an employee of the Public Health Service for purposes of this sec- tion. ”(C) With respect to a free clinic, a health care practitioner is not a free clinic health pro- fessional unless the free clinic sponsors the health care practitioner. For purposes of this subsection, the free clinic shall be considered to be sponsoring the health care practitioner if\u2014 ”(i) with respect to the health care practi- tioner, the free clinic submits to the Secretary an application meeting the requirements of sub- section (g)(1)(D); and ”(ii) the Secretary, pursuant to subsection (g)(1)(E), determines that the health care practi- tioner is deemed to be an employee of the Public Health Service. ”(D) In the case of a health care practitioner who is determined by the Secretary pursuant to subsection (g)(1)(E) to be a free clinic health professional, this subsection applies to the health care practitioner (with respect to the free clinic sponsoring the health care practitioner pursuant to subparagraph C)) for any cause of action arising from an act or omission of the health care practitioner occurring on or after the date on which the Secretary makes such de- termination. ”(E) Subsection (g)(1)(F) applies to a health care practitioner for purposes of this subsection only to the extent that, in providing health serv- ices to an individual, each of the conditions specified in paragraph (2) is met. ”(6)(A) For purposes of making payments for judgments against the United States (together with related fees and expenses of witnesses) pur- suant to this section arising from the acts or omissions of free clinic health professionals, there is authorized to be appropriated $10,000,000 for each fiscal year. ”(B) The Secretary shall establish a fund for purposes of this subsection. Each fiscal year amounts appropriated under subparagraph (A) shall be deposited in such fund. ”(C) Not later than May 1 of each fiscal year, the Attorney General, in consultation with the Secretary, shall submit to the Congress a report providing an estimate of the amount of claims (together with related fees and expenses of wit- nesses) that, by reason of the acts or omissions of free clinic health professionals, will be paid pursuant to this section during the calendar year that begins in the following fiscal year. Subsection (k)(1)(B) applies to the estimate under the preceding sentence regarding free clinic health professionals to the same extent and in the same manner as such subsection ap- plies to the estimate under such subsection re- garding officers, governing board members, em- ployees, and contractors of entities described in subsection (g)(4). ”(D) Not later than December 31 of each fiscal year, the Secretary shall transfer from the fund under subparagraph (B) to the appropriate ac- counts in the Treasury an amount equal to the estimate made under subparagraph (C) for the calendar year beginning in such fiscal year, subject to the extent of amounts in the fund. ”(7)(A) This subsection takes effect on the date of the enactment of the first appropriations Act that makes an appropriation under para- graph (6)(A), except as provided in subpara- graph (B)(i). ”(B)(i) Effective on the date of the enactment of the Health Insurance Portability and Ac- countability Act of 1996\u2014 ”(I) the Secretary may issue regulations for carrying out this subsection, and the Secretary may accept and consider applications submitted pursuant to paragraph (5)(C); and ”(II) reports under paragraph (6)(C) may be submitted to the Congress. ”(ii) For the first fiscal year for which an ap- propriation is made under subparagraph (A) of paragraph (6), if an estimate under subpara- graph (C) of such paragraph has not been made for the calendar year beginning in such fiscal year, the transfer under subparagraph (D) of such paragraph shall be made notwithstanding the lack of the estimate, and the transfer shall be made in an amount equal to the amount of such appropriation.”. SEC. 195. FINDINGS; SEVERABILITY. (a) FINDINGS RELATING TO EXERCISE OF COM- MERCE CLAUSE AUTHORITY.\u2014Congress finds the following in relation to the provisions of this title: (1) Provisions in group health plans and health insurance coverage that impose certain preexisting condition exclusions impact the abil- ity of employees to seek employment in inter- state commerce, thereby impeding such com- merce. (2) Health insurance coverage is commercial in nature and is in and affects interstate com- merce. (3) It is a necessary and proper exercise of Congressional authority to impose requirements under this title on group health plans and health insurance coverage (including coverage offered to individuals previously covered under group health plans) in order to promote com- merce among the States. (4) Congress, however, intends to defer to States, to the maximum extent practicable, in carrying out such requirements with respect to insurers and health maintenance organizations that are subject to State regulation, consistent with the provisions of the Employee Retirement Income Security Act of 1974. (b) SEVERABILITY.\u2014If any provision of this title or the application of such provision to any person or circumstance is held to be unconstitu- tional, the remainder of this title and the appli- cation of the provisions of such to any person or circumstance shall not be affected thereby. CONGRESSIONAL RECORD \u2014 HOUSEH9488 July 31, 1996 TITLE II\u2014PREVENTING HEALTH CARE FRAUD AND ABUSE; ADMINISTRATIVE SIMPLIFICATION SEC. 200. REFERENCES IN TITLE. Except as otherwise specifically provided, whenever in this title an amendment is ex- pressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. Subtitle A\u2014Fraud and Abuse Control Program SEC. 201. FRAUD AND ABUSE CONTROL PROGRAM. (a) ESTABLISHMENT OF PROGRAM.\u2014Title XI (42 U.S.C. 1301 et seq.) is amended by inserting after section 1128B the following new section: ”FRAUD AND ABUSE CONTROL PROGRAM ”SEC. 1128C. (a) ESTABLISHMENT OF PRO- GRAM.\u2014 ”(1) IN GENERAL.\u2014Not later than January 1, 1997, the Secretary, acting through the Office of the Inspector General of the Department of Health and Human Services, and the Attorney General shall establish a program\u2014 ”(A) to coordinate Federal, State, and local law enforcement programs to control fraud and abuse with respect to health plans, ”(B) to conduct investigations, audits, evalua- tions, and inspections relating to the delivery of and payment for health care in the United States, ”(C) to facilitate the enforcement of the provi- sions of sections 1128, 1128A, and 1128B and other statutes applicable to health care fraud and abuse, ”(D) to provide for the modification and es- tablishment of safe harbors and to issue advi- sory opinions and special fraud alerts pursuant to section 1128D, and ”(E) to provide for the reporting and disclo- sure of certain final adverse actions against health care providers, suppliers, or practitioners pursuant to the data collection system estab- lished under section 1128E. ”(2) COORDINATION WITH HEALTH PLANS.\u2014In carrying out the program established under paragraph (1), the Secretary and the Attorney General shall consult with, and arrange for the sharing of data with representatives of health plans. ”(3) GUIDELINES.\u2014 ”(A) IN GENERAL.\u2014The Secretary and the At- torney General shall issue guidelines to carry out the program under paragraph (1). The pro- visions of sections 553, 556, and 557 of title 5, United States Code, shall not apply in the issu- ance of such guidelines. ”(B) INFORMATION GUIDELINES.\u2014 ”(i) IN GENERAL.\u2014Such guidelines shall in- clude guidelines relating to the furnishing of in- formation by health plans, providers, and others to enable the Secretary and the Attorney Gen- eral to carry out the program (including coordi- nation with health plans under paragraph (2)). ”(ii) CONFIDENTIALITY.\u2014Such guidelines shall include procedures to assure that such informa- tion is provided and utilized in a manner that appropriately protects the confidentiality of the information and the privacy of individuals re- ceiving health care services and items. ”(iii) QUALIFIED IMMUNITY FOR PROVIDING IN- FORMATION.\u2014The provisions of section 1157(a) (relating to limitation on liability) shall apply to a person providing information to the Secretary or the Attorney General in conjunction with their performance of duties under this section. ”(4) ENSURING ACCESS TO DOCUMENTATION.\u2014 The Inspector General of the Department of Health and Human Services is authorized to ex- ercise such authority described in paragraphs (3) through (9) of section 6 of the Inspector Gen- eral Act of 1978 (5 U.S.C. App.) as necessary with respect to the activities under the fraud and abuse control program established under this subsection. ”(5) AUTHORITY OF INSPECTOR GENERAL.\u2014 Nothing in this Act shall be construed to dimin- ish the authority of any Inspector General, in- cluding such authority as provided in the In- spector General Act of 1978 (5 U.S.C. App.). ”(b) ADDITIONAL USE OF FUNDS BY INSPECTOR GENERAL.\u2014 ”(1) REIMBURSEMENTS FOR INVESTIGATIONS.\u2014 The Inspector General of the Department of Health and Human Services is authorized to re- ceive and retain for current use reimbursement for the costs of conducting investigations and audits and for monitoring compliance plans when such costs are ordered by a court, volun- tarily agreed to by the payor, or otherwise. ”(2) CREDITING.\u2014Funds received by the In- spector General under paragraph (1) as reim- bursement for costs of conducting investigations shall be deposited to the credit of the appropria- tion from which initially paid, or to appropria- tions for similar purposes currently available at the time of deposit, and shall remain available for obligation for 1 year from the date of the de- posit of such funds. ”(c) HEALTH PLAN DEFINED.\u2014For purposes of this section, the term ‘health plan’ means a plan or program that provides health benefits, wheth- er directly, through insurance, or otherwise, and includes\u2014 ”(1) a policy of health insurance; ”(2) a contract of a service benefit organiza- tion; and ”(3) a membership agreement with a health maintenance organization or other prepaid health plan.”. (b) ESTABLISHMENT OF HEALTH CARE FRAUD AND ABUSE CONTROL ACCOUNT IN FEDERAL HOS- PITAL INSURANCE TRUST FUND.\u2014Section 1817 (42 U.S.C. 1395i) is amended by adding at the end the following new subsection: ”(k) HEALTH CARE FRAUD AND ABUSE CON- TROL ACCOUNT.\u2014 ”(1) ESTABLISHMENT.\u2014There is hereby estab- lished in the Trust Fund an expenditure ac- count to be known as the ‘Health Care Fraud and Abuse Control Account’ (in this subsection referred to as the ‘Account’). ”(2) APPROPRIATED AMOUNTS TO TRUST FUND.\u2014 ”(A) IN GENERAL.\u2014There are hereby appro- priated to the Trust Fund\u2014 ”(i) such gifts and bequests as may be made as provided in subparagraph (B); ”(ii) such amounts as may be deposited in the Trust Fund as provided in sections 242(b) and 249(c) of the Health Insurance Portability and Accountability Act of 1996, and title XI; and ”(iii) such amounts as are transferred to the Trust Fund under subparagraph (C). ”(B) AUTHORIZATION TO ACCEPT GIFTS.\u2014The Trust Fund is authorized to accept on behalf of the United States money gifts and bequests made unconditionally to the Trust Fund, for the benefit of the Account or any activity financed through the Account. ”(C) TRANSFER OF AMOUNTS.\u2014The Managing Trustee shall transfer to the Trust Fund, under rules similar to the rules in section 9601 of the Internal Revenue Code of 1986, an amount equal to the sum of the following: ”(i) Criminal fines recovered in cases involv- ing a Federal health care offense (as defined in section 982(a)(6)(B) of title 18, United States Code). ”(ii) Civil monetary penalties and assessments imposed in health care cases, including amounts recovered under titles XI, XVIII, and XIX, and chapter 38 of title 31, United States Code (except as otherwise provided by law). ”(iii) Amounts resulting from the forfeiture of property by reason of a Federal health care of- fense. ”(iv) Penalties and damages obtained and otherwise creditable to miscellaneous receipts of the general fund of the Treasury obtained under sections 3729 through 3733 of title 31, United States Code (known as the False Claims Act), in cases involving claims related to the provision of health care items and services (other than funds awarded to a relator, for restitution or otherwise authorized by law). ”(D) APPLICATION.\u2014Nothing in subparagraph (C)(iii) shall be construed to limit the availabil- ity of recoveries and forfeitures obtained under title I of the Employee Retirement Income Secu- rity Act of 1974 for the purpose of providing eq- uitable or remedial relief for employee welfare benefit plans, and for participants and bene- ficiaries under such plans, as authorized under such title. ”(3) APPROPRIATED AMOUNTS TO ACCOUNT FOR FRAUD AND ABUSE CONTROL PROGRAM, ETC.\u2014 ”(A) DEPARTMENTS OF HEALTH AND HUMAN SERVICES AND JUSTICE.\u2014 ”(i) IN GENERAL.\u2014There are hereby appro- priated to the Account from the Trust Fund such sums as the Secretary and the Attorney General certify are necessary to carry out the purposes described in subparagraph (C), to be available without further appropriation, in an amount not to exceed\u2014 ”(I) for fiscal year 1997, $104,000,000, ”(II) for each of the fiscal years 1998 through 2003, the limit for the preceding fiscal year, in- creased by 15 percent; and ”(III) for each fiscal year after fiscal year 2003, the limit for fiscal year 2003. ”(ii) MEDICARE AND MEDICAID ACTIVITIES.\u2014 For each fiscal year, of the amount appro- priated in clause (i), the following amounts shall be available only for the purposes of the activities of the Office of the Inspector General of the Department of Health and Human Serv- ices with respect to the medicare and medicaid programs\u2014 ”(I) for fiscal year 1997, not less than $60,000,000 and not more than $70,000,000; ”(II) for fiscal year 1998, not less than $80,000,000 and not more than $90,000,000; ”(III) for fiscal year 1999, not less than $90,000,000 and not more than $100,000,000; ”(IV) for fiscal year 2000, not less than $110,000,000 and not more than $120,000,000; ”(V) for fiscal year 2001, not less than $120,000,000 and not more than $130,000,000; ”(VI) for fiscal year 2002, not less than $140,000,000 and not more than $150,000,000; and ”(VII) for each fiscal year after fiscal year 2002, not less than $150,000,000 and not more than $160,000,000. ”(B) FEDERAL BUREAU OF INVESTIGATION.\u2014 There are hereby appropriated from the general fund of the United States Treasury and hereby appropriated to the Account for transfer to the Federal Bureau of Investigation to carry out the purposes described in subparagraph (C), to be available without further appropriation\u2014 ”(i) for fiscal year 1997, $47,000,000; ”(ii) for fiscal year 1998, $56,000,000; ”(iii) for fiscal year 1999, $66,000,000; ”(iv) for fiscal year 2000, $76,000,000; ”(v) for fiscal year 2001, $88,000,000; ”(vi) for fiscal year 2002, $101,000,000; and ”(vii) for each fiscal year after fiscal year 2002, $114,000,000. ”(C) USE OF FUNDS.\u2014The purposes described in this subparagraph are to cover the costs (in- cluding equipment, salaries and benefits, and travel and training) of the administration and operation of the health care fraud and abuse control program established under section 1128C(a), including the costs of\u2014 ”(i) prosecuting health care matters (through criminal, civil, and administrative proceedings); ”(ii) investigations; ”(iii) financial and performance audits of health care programs and operations; ”(iv) inspections and other evaluations; and ”(v) provider and consumer education regard- ing compliance with the provisions of title XI. ”(4) APPROPRIATED AMOUNTS TO ACCOUNT FOR MEDICARE INTEGRITY PROGRAM.\u2014 ”(A) IN GENERAL.\u2014There are hereby appro- priated to the Account from the Trust Fund for each fiscal year such amounts as are necessary to carry out the Medicare Integrity Program under section 1893, subject to subparagraph (B) and to be available without further appropria- tion. CONGRESSIONAL RECORD \u2014 HOUSE H9489July 31, 1996 ”(B) AMOUNTS SPECIFIED.\u2014The amount ap- propriated under subparagraph (A) for a fiscal year is as follows: ”(i) For fiscal year 1997, such amount shall be not less than $430,000,000 and not more than $440,000,000. ”(ii) For fiscal year 1998, such amount shall be not less than $490,000,000 and not more than $500,000,000. ”(iii) For fiscal year 1999, such amount shall be not less than $550,000,000 and not more than $560,000,000. ”(iv) For fiscal year 2000, such amount shall be not less than $620,000,000 and not more than $630,000,000. ”(v) For fiscal year 2001, such amount shall be not less than $670,000,000 and not more than $680,000,000. ”(vi) For fiscal year 2002, such amount shall be not less than $690,000,000 and not more than $700,000,000. ”(vii) For each fiscal year after fiscal year 2002, such amount shall be not less than $710,000,000 and not more than $720,000,000. ”(5) ANNUAL REPORT.\u2014Not later than January 1, the Secretary and the Attorney General shall submit jointly a report to Congress which identi- fies\u2014 ”(A) the amounts appropriated to the Trust Fund for the previous fiscal year under para- graph (2)(A) and the source of such amounts; and ”(B) the amounts appropriated from the Trust Fund for such year under paragraph (3) and the justification for the expenditure of such amounts. ”(6) GAO REPORT.\u2014Not later than January 1 of 2000, 2002, and 2004, the Comptroller General of the United States shall submit a report to Congress which\u2014 ”(A) identifies\u2014 ”(i) the amounts appropriated to the Trust Fund for the previous two fiscal years under paragraph (2)(A) and the source of such amounts; and ”(ii) the amounts appropriated from the Trust Fund for such fiscal years under paragraph (3) and the justification for the expenditure of such amounts; ”(B) identifies any expenditures from the Trust Fund with respect to activities not involv- ing the medicare program under title XVIII; ”(C) identifies any savings to the Trust Fund, and any other savings, resulting from expendi- tures from the Trust Fund; and ”(D) analyzes such other aspects of the oper- ation of the Trust Fund as the Comptroller Gen- eral of the United States considers appro- priate.”. SEC. 202. MEDICARE INTEGRITY PROGRAM. (a) ESTABLISHMENT OF MEDICARE INTEGRITY PROGRAM.\u2014Title XVIII is amended by adding at the end the following new section: ”MEDICARE INTEGRITY PROGRAM ”SEC. 1893. (a) ESTABLISHMENT OF PRO- GRAM.\u2014There is hereby established the Medi- care Integrity Program (in this section referred to as the ‘Program’) under which the Secretary shall promote the integrity of the medicare pro- gram by entering into contracts in accordance with this section with eligible entities to carry out the activities described in subsection (b). ”(b) ACTIVITIES DESCRIBED.\u2014The activities described in this subsection are as follows: ”(1) Review of activities of providers of serv- ices or other individuals and entities furnishing items and services for which payment may be made under this title (including skilled nursing facilities and home health agencies), including medical and utilization review and fraud review (employing similar standards, processes, and technologies used by private health plans, in- cluding equipment and software technologies which surpass the capability of the equipment and technologies used in the review of claims under this title as of the date of the enactment of this section). ”(2) Audit of cost reports. ”(3) Determinations as to whether payment should not be, or should not have been, made under this title by reason of section 1862(b), and recovery of payments that should not have been made. ”(4) Education of providers of services, bene- ficiaries, and other persons with respect to pay- ment integrity and benefit quality assurance is- sues. ”(5) Developing (and periodically updating) a list of items of durable medical equipment in ac- cordance with section 1834(a)(15) which are sub- ject to prior authorization under such section. ”(c) ELIGIBILITY OF ENTITIES.\u2014An entity is el- igible to enter into a contract under the Pro- gram to carry out any of the activities described in subsection (b) if\u2014 ”(1) the entity has demonstrated capability to carry out such activities; ”(2) in carrying out such activities, the entity agrees to cooperate with the Inspector General of the Department of Health and Human Serv- ices, the Attorney General, and other law en- forcement agencies, as appropriate, in the inves- tigation and deterrence of fraud and abuse in relation to this title and in other cases arising out of such activities; ”(3) the entity complies with such conflict of interest standards as are generally applicable to Federal acquisition and procurement; and ”(4) the entity meets such other requirements as the Secretary may impose. In the case of the activity described in sub- section (b)(5), an entity shall be deemed to be el- igible to enter into a contract under the Pro- gram to carry out the activity if the entity is a carrier with a contract in effect under section 1842. ”(d) PROCESS FOR ENTERING INTO CON- TRACTS.\u2014The Secretary shall enter into con- tracts under the Program in accordance with such procedures as the Secretary shall by regu- lation establish, except that such procedures shall include the following: ”(1) Procedures for identifying, evaluating, and resolving organizational conflicts of interest that are generally applicable to Federal acquisi- tion and procurement. ”(2) Competitive procedures to be used\u2014 ”(A) when entering into new contracts under this section; ”(B) when entering into contracts that may result in the elimination of responsibilities of an individual fiscal intermediary or carrier under section 202(b) of the Health Insurance Port- ability and Accountability Act of 1996; and ”(C) at any other time considered appropriate by the Secretary, except that the Secretary may continue to con- tract with entities that are carrying out the ac- tivities described in this section pursuant to agreements under section 1816 or contracts under section 1842 in effect on the date of the enactment of this section. ”(3) Procedures under which a contract under this section may be renewed without regard to any provision of law requiring competition if the contractor has met or exceeded the performance requirements established in the current contract. The Secretary may enter into such contracts without regard to final rules having been pro- mulgated. ”(e) LIMITATION ON CONTRACTOR LIABILITY.\u2014 The Secretary shall by regulation provide for the limitation of a contractor’s liability for ac- tions taken to carry out a contract under the Program, and such regulation shall, to the ex- tent the Secretary finds appropriate, employ the same or comparable standards and other sub- stantive and procedural provisions as are con- tained in section 1157.”. (b) ELIMINATION OF FI AND CARRIER RESPON- SIBILITY FOR CARRYING OUT ACTIVITIES SUBJECT TO PROGRAM.\u2014 (1) RESPONSIBILITIES OF FISCAL INTERMEDIARIES UNDER PART A.\u2014Section 1816 (42 U.S.C. 1395h) is amended by adding at the end the following new subsection: ”(l) No agency or organization may carry out (or receive payment for carrying out) any activ- ity pursuant to an agreement under this section to the extent that the activity is carried out pur- suant to a contract under the Medicare Integ- rity Program under section 1893.”. (2) RESPONSIBILITIES OF CARRIERS UNDER PART B.\u2014Section 1842(c) (42 U.S.C. 1395u(c)) is amended by adding at the end the following new paragraph: ”(6) No carrier may carry out (or receive pay- ment for carrying out) any activity pursuant to a contract under this subsection to the extent that the activity is carried out pursuant to a contract under the Medicare Integrity Program under section 1893. The previous sentence shall not apply with respect to the activity described in section 1893(b)(5) (relating to prior authoriza- tion of certain items of durable medical equip- ment under section 1834(a)(15)).”. SEC. 203. BENEFICIARY INCENTIVE PROGRAMS. (a) CLARIFICATION OF REQUIREMENT TO PRO- VIDE EXPLANATION OF MEDICARE BENEFITS.\u2014 The Secretary of Health and Human Services (in this section referred to as the ”Secretary”) shall provide an explanation of benefits under the medicare program under title XVIII of the So- cial Security Act with respect to each item or service for which payment may be made under the program which is furnished to an individ- ual, without regard to whether or not a deduct- ible or coinsurance may be imposed against the individual with respect to the item or service. (b) PROGRAM TO COLLECT INFORMATION ON FRAUD AND ABUSE.\u2014 (1) ESTABLISHMENT OF PROGRAM.\u2014Not later than 3 months after the date of the enactment of this Act, the Secretary shall establish a pro- gram under which the Secretary shall encourage individuals to report to the Secretary informa- tion on individuals and entities who are engag- ing in or who have engaged in acts or omissions which constitute grounds for the imposition of a sanction under section 1128, 1128A, or 1128B of the Social Security Act, or who have otherwise engaged in fraud and abuse against the medi- care program under title XVIII of such act for which there is a sanction provided under law. The program shall discourage provision of, and not consider, information which is frivolous or otherwise not relevant or material to the imposi- tion of such a sanction. (2) PAYMENT OF PORTION OF AMOUNTS COL- LECTED.\u2014If an individual reports information to the Secretary under the program established under paragraph (1) which serves as the basis for the collection by the Secretary or the Attor- ney General of any amount of at least $100 (other than any amount paid as a penalty under section 1128B of the Social Security Act), the Secretary may pay a portion of the amount collected to the individual (under procedures similar to those applicable under section 7623 of the Internal Revenue Code of 1986 to payments to individuals providing information on viola- tions of such Code). (c) PROGRAM TO COLLECT INFORMATION ON PROGRAM EFFICIENCY.\u2014 (1) ESTABLISHMENT OF PROGRAM.\u2014Not later than 3 months after the date of the enactment of this Act, the Secretary shall establish a pro- gram under which the Secretary shall encourage individuals to submit to the Secretary sugges- tions on methods to improve the efficiency of the medicare program. (2) PAYMENT OF PORTION OF PROGRAM SAV- INGS.\u2014If an individual submits a suggestion to the Secretary under the program established under paragraph (1) which is adopted by the Secretary and which results in savings to the program, the Secretary may make a payment to the individual of such amount as the Secretary considers appropriate. CONGRESSIONAL RECORD \u2014 HOUSEH9490 July 31, 1996 SEC. 204. APPLICATION OF CERTAIN HEALTH ANTI-FRAUD AND ABUSE SANCTIONS TO FRAUD AND ABUSE AGAINST FED- ERAL HEALTH CARE PROGRAMS. (a) IN GENERAL.\u2014Section 1128B (42 U.S.C. 1320a 7b) is amended as follows: (1) In the heading, by striking ”MEDICARE OR STATE HEALTH CARE PROGRAMS” and inserting ”FEDERAL HEALTH CARE PROGRAMS”. (2) In subsection (a)(1), by striking ”a pro- gram under title XVIII or a State health care program (as defined in section 1128(h))” and in- serting ”a Federal health care program (as de- fined in subsection (f))”. (3) In subsection (a)(5), by striking ”a pro- gram under title XVIII or a State health care program” and inserting ”a Federal health care program”. (4) In the second sentence of subsection (a)\u2014 (A) by striking ”a State plan approved under title XIX” and inserting ”a Federal health care program”, and (B) by striking ”the State may at its option (notwithstanding any other provision of that title or of such plan)” and inserting ”the ad- ministrator of such program may at its option (notwithstanding any other provision of such program)”. (5) In subsection (b), by striking ”title XVIII or a State health care program” each place it appears and inserting ”a Federal health care program”. (6) In subsection (c), by inserting ”(as defined in section 1128(h))” after ”a State health care program”. (7) By adding at the end the following new subsection: ”(f) For purposes of this section, the term ‘Federal health care program’ means\u2014 ”(1) any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States Government (other than the health insurance program under chapter 89 of title 5, United States Code); or ”(2) any State health care program, as de- fined in section 1128(h).”. (b) EFFECTIVE DATE.\u2014The amendments made by this section shall take effect on January 1, 1997. SEC. 205. GUIDANCE REGARDING APPLICATION OF HEALTH CARE FRAUD AND ABUSE SANCTIONS. Title XI (42 U.S.C. 1301 et seq.), as amended by section 201, is amended by inserting after sec- tion 1128C the following new section: ”GUIDANCE REGARDING APPLICATION OF HEALTH CARE FRAUD AND ABUSE SANCTIONS ”SEC. 1128D. (a) SOLICITATION AND PUBLICA- TION OF MODIFICATIONS TO EXISTING SAFE HAR- BORS AND NEW SAFE HARBORS.\u2014 ”(1) IN GENERAL.\u2014 ”(A) SOLICITATION OF PROPOSALS FOR SAFE HARBORS.\u2014Not later than January 1, 1997, and not less than annually thereafter, the Secretary shall publish a notice in the Federal Register so- liciting proposals, which will be accepted during a 60-day period, for\u2014 ”(i) modifications to existing safe harbors is- sued pursuant to section 14(a) of the Medicare and Medicaid Patient and Program Protection Act of 1987 (42 U.S.C. 1320a 7b note); ”(ii) additional safe harbors specifying pay- ment practices that shall not be treated as a criminal offense under section 1128B(b) and shall not serve as the basis for an exclusion under section 1128(b)(7); ”(iii) advisory opinions to be issued pursuant to subsection (b); and ”(iv) special fraud alerts to be issued pursu- ant to subsection (c). ”(B) PUBLICATION OF PROPOSED MODIFICA- TIONS AND PROPOSED ADDITIONAL SAFE HAR- BORS.\u2014After considering the proposals described in clauses (i) and (ii) of subparagraph (A), the Secretary, in consultation with the Attorney General, shall publish in the Federal Register proposed modifications to existing safe harbors and proposed additional safe harbors, if appro- priate, with a 60-day comment period. After con- sidering any public comments received during this period, the Secretary shall issue final rules modifying the existing safe harbors and estab- lishing new safe harbors, as appropriate. ”(C) REPORT.\u2014The Inspector General of the Department of Health and Human Services (in this section referred to as the ‘Inspector Gen- eral’) shall, in an annual report to Congress or as part of the year-end semiannual report re- quired by section 5 of the Inspector General Act of 1978 (5 U.S.C. App.), describe the proposals received under clauses (i) and (ii) of subpara- graph (A) and explain which proposals were in- cluded in the publication described in subpara- graph (B), which proposals were not included in that publication, and the reasons for the rejec- tion of the proposals that were not included. ”(2) CRITERIA FOR MODIFYING AND ESTABLISH- ING SAFE HARBORS.\u2014In modifying and establish- ing safe harbors under paragraph (1)(B), the Secretary may consider the extent to which pro- viding a safe harbor for the specified payment practice may result in any of the following: ”(A) An increase or decrease in access to health care services. ”(B) An increase or decrease in the quality of health care services. ”(C) An increase or decrease in patient free- dom of choice among health care providers. ”(D) An increase or decrease in competition among health care providers. ”(E) An increase or decrease in the ability of health care facilities to provide services in medi- cally underserved areas or to medically under- served populations. ”(F) An increase or decrease in the cost to Federal health care programs (as defined in sec- tion 1128B(f)). ”(G) An increase or decrease in the potential overutilization of health care services. ”(H) The existence or nonexistence of any po- tential financial benefit to a health care profes- sional or provider which may vary based on their decisions of\u2014 ”(i) whether to order a health care item or service; or ”(ii) whether to arrange for a referral of health care items or services to a particular practitioner or provider. ”(I) Any other factors the Secretary deems ap- propriate in the interest of preventing fraud and abuse in Federal health care programs (as so de- fined). ”(b) ADVISORY OPINIONS.\u2014 ”(1) ISSUANCE OF ADVISORY OPINIONS.\u2014The Secretary, in consultation with the Attorney General, shall issue written advisory opinions as provided in this subsection. ”(2) MATTERS SUBJECT TO ADVISORY OPIN- IONS.\u2014The Secretary shall issue advisory opin- ions as to the following matters: ”(A) What constitutes prohibited remunera- tion within the meaning of section 1128B(b). ”(B) Whether an arrangement or proposed ar- rangement satisfies the criteria set forth in sec- tion 1128B(b)(3) for activities which do not re- sult in prohibited remuneration. ”(C) Whether an arrangement or proposed ar- rangement satisfies the criteria which the Sec- retary has established, or shall establish by reg- ulation for activities which do not result in pro- hibited remuneration. ”(D) What constitutes an inducement to re- duce or limit services to individuals entitled to benefits under title XVIII or title XIX within the meaning of section 1128B(b). ”(E) Whether any activity or proposed activ- ity constitutes grounds for the imposition of a sanction under section 1128, 1128A, or 1128B. ”(3) MATTERS NOT SUBJECT TO ADVISORY OPIN- IONS.\u2014Such advisory opinions shall not address the following matters: ”(A) Whether the fair market value shall be, or was paid or received for any goods, services or property. ”(B) Whether an individual is a bona fide em- ployee within the requirements of section 3121(d)(2) of the Internal Revenue Code of 1986. ”(4) EFFECT OF ADVISORY OPINIONS.\u2014 ”(A) BINDING AS TO SECRETARY AND PARTIES INVOLVED.\u2014Each advisory opinion issued by the Secretary shall be binding as to the Secretary and the party or parties requesting the opinion. ”(B) FAILURE TO SEEK OPINION.\u2014The failure of a party to seek an advisory opinion may not be introduced into evidence to prove that the party intended to violate the provisions of sec- tions 1128, 1128A, or 1128B. ”(5) REGULATIONS.\u2014 ”(A) IN GENERAL.\u2014Not later than 180 days after the date of the enactment of this section, the Secretary shall issue regulations to carry out this section. Such regulations shall provide for\u2014 ”(i) the procedure to be followed by a party applying for an advisory opinion; ”(ii) the procedure to be followed by the Sec- retary in responding to a request for an advi- sory opinion; ”(iii) the interval in which the Secretary shall respond; ”(iv) the reasonable fee to be charged to the party requesting an advisory opinion; and ”(v) the manner in which advisory opinions will be made available to the public. ”(B) SPECIFIC CONTENTS.\u2014Under the regula- tions promulgated pursuant to subparagraph (A)\u2014 ”(i) the Secretary shall be required to issue to a party requesting an advisory opinion by not later than 60 days after the request is received; and ”(ii) the fee charged to the party requesting an advisory opinion shall be equal to the costs incurred by the Secretary in responding to the request. ”(6) APPLICATION OF SUBSECTION.\u2014This sub- section shall apply to requests for advisory opin- ions made on or after the date which is 6 months after the date of enactment of this section and before the date which is 4 years after such date of enactment. ”(c) SPECIAL FRAUD ALERTS.\u2014 ”(1) IN GENERAL.\u2014 ”(A) REQUEST FOR SPECIAL FRAUD ALERTS.\u2014 Any person may present, at any time, a request to the Inspector General for a notice which in- forms the public of practices which the Inspec- tor General considers to be suspect or of particu- lar concern under the medicare program under title XVIII or a State health care program, as defined in section 1128(h) (in this subsection re- ferred to as a ‘special fraud alert’). ”(B) ISSUANCE AND PUBLICATION OF SPECIAL FRAUD ALERTS.\u2014Upon receipt of a request de- scribed in subparagraph (A), the Inspector Gen- eral shall investigate the subject matter of the request to determine whether a special fraud alert should be issued. If appropriate, the In- spector General shall issue a special fraud alert in response to the request. All special fraud alerts issued pursuant to this subparagraph shall be published in the Federal Register. ”(2) CRITERIA FOR SPECIAL FRAUD ALERTS.\u2014In determining whether to issue a special fraud alert upon a request described in paragraph (1), the Inspector General may consider\u2014 ”(A) whether and to what extent the practices that would be identified in the special fraud alert may result in any of the consequences de- scribed in subsection (a)(2); and ”(B) the volume and frequency of the conduct that would be identified in the special fraud alert.”. Subtitle B\u2014Revisions to Current Sanctions for Fraud and Abuse SEC. 211. MANDATORY EXCLUSION FROM PAR- TICIPATION IN MEDICARE AND STATE HEALTH CARE PROGRAMS. (a) INDIVIDUAL CONVICTED OF FELONY RELAT- ING TO HEALTH CARE FRAUD.\u2014 (1) IN GENERAL.\u2014Section 1128(a) (42 U.S.C. 1320a 7(a)) is amended by adding at the end the following new paragraph: ”(3) FELONY CONVICTION RELATING TO HEALTH CARE FRAUD.\u2014Any individual or entity that has CONGRESSIONAL RECORD \u2014 HOUSE H9491July 31, 1996 been convicted for an offense which occurred after the date of the enactment of the Health In- surance Portability and Accountability Act of 1996, under Federal or State law, in connection with the delivery of a health care item or service or with respect to any act or omission in a health care program (other than those specifi- cally described in paragraph (1)) operated by or financed in whole or in part by any Federal, State, or local government agency, of a criminal offense consisting of a felony relating to fraud, theft, embezzlement, breach of fiduciary respon- sibility, or other financial misconduct.”. (2) CONFORMING AMENDMENT.\u2014Paragraph (1) of section 1128(b) (42 U.S.C. 1320a 7(b)) is amended to read as follows: ”(1) CONVICTION RELATING TO FRAUD.\u2014Any individual or entity that has been convicted for an offense which occurred after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, under Federal or State law\u2014 ”(A) of a criminal offense consisting of a mis- demeanor relating to fraud, theft, embezzlement, breach of fiduciary responsibility, or other fi- nancial misconduct\u2014 ”(i) in connection with the delivery of a health care item or service, or ”(ii) with respect to any act or omission in a health care program (other than those specifi- cally described in subsection (a)(1)) operated by or financed in whole or in part by any Federal, State, or local government agency; or ”(B) of a criminal offense relating to fraud, theft, embezzlement, breach of fiduciary respon- sibility, or other financial misconduct with re- spect to any act or omission in a program (other than a health care program) operated by or fi- nanced in whole or in part by any Federal, State, or local government agency.”. (b) INDIVIDUAL CONVICTED OF FELONY RELAT- ING TO CONTROLLED SUBSTANCE.\u2014 (1) IN GENERAL.\u2014Section 1128(a) (42 U.S.C. 1320a 7(a)), as amended by subsection (a), is amended by adding at the end the following new paragraph: ”(4) FELONY CONVICTION RELATING TO CON- TROLLED SUBSTANCE.\u2014Any individual or entity that has been convicted for an offense which oc- curred after the date of the enactment of the Health Insurance Portability and Accountabil- ity Act of 1996, under Federal or State law, of a criminal offense consisting of a felony relating to the unlawful manufacture, distribution, pre- scription, or dispensing of a controlled sub- stance.”. (2) CONFORMING AMENDMENT.\u2014Section 1128(b)(3) (42 U.S.C. 1320a 7(b)(3)) is amended\u2014 (A) in the heading, by striking ”CONVICTION” and inserting ”MISDEMEANOR CONVICTION”; and (B) by striking ”criminal offense” and insert- ing ”criminal offense consisting of a mis- demeanor”. SEC. 212. ESTABLISHMENT OF MINIMUM PERIOD OF EXCLUSION FOR CERTAIN INDI- VIDUALS AND ENTITIES SUBJECT TO PERMISSIVE EXCLUSION FROM MED- ICARE AND STATE HEALTH CARE PROGRAMS. Section 1128(c)(3) (42 U.S.C. 1320a 7(c)(3)) is amended by adding at the end the following new subparagraphs: ”(D) In the case of an exclusion of an individ- ual or entity under paragraph (1), (2), or (3) of subsection (b), the period of the exclusion shall be 3 years, unless the Secretary determines in accordance with published regulations that a shorter period is appropriate because of mitigat- ing circumstances or that a longer period is ap- propriate because of aggravating circumstances. ”(E) In the case of an exclusion of an individ- ual or entity under subsection (b)(4) or (b)(5), the period of the exclusion shall not be less than the period during which the individual’s or enti- ty’s license to provide health care is revoked, suspended, or surrendered, or the individual or the entity is excluded or suspended from a Fed- eral or State health care program. ”(F) In the case of an exclusion of an individ- ual or entity under subsection (b)(6)(B), the pe- riod of the exclusion shall be not less than 1 year.”. SEC. 213. PERMISSIVE EXCLUSION OF INDIVID- UALS WITH OWNERSHIP OR CON- TROL INTEREST IN SANCTIONED EN- TITIES. Section 1128(b) (42 U.S.C. 1320a 7(b)) is amended by adding at the end the following new paragraph: ”(15) INDIVIDUALS CONTROLLING A SANCTIONED ENTITY.\u2014(A) Any individual\u2014 ”(i) who has a direct or indirect ownership or control interest in a sanctioned entity and who knows or should know (as defined in section 1128A(i)(6)) of the action constituting the basis for the conviction or exclusion described in sub- paragraph (B); or ”(ii) who is an officer or managing employee (as defined in section 1126(b)) of such an entity. ”(B) For purposes of subparagraph (A), the term ‘sanctioned entity’ means an entity\u2014 ”(i) that has been convicted of any offense de- scribed in subsection (a) or in paragraph (1), (2), or (3) of this subsection; or ”(ii) that has been excluded from participa- tion under a program under title XVIII or under a State health care program.”. SEC. 214. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR FAILURE TO COMPLY WITH STATUTORY OBLIGA- TIONS. (a) MINIMUM PERIOD OF EXCLUSION FOR PRACTITIONERS AND PERSONS FAILING TO MEET STATUTORY OBLIGATIONS.\u2014 (1) IN GENERAL.\u2014The second sentence of sec- tion 1156(b)(1) (42 U.S.C. 1320c 5(b)(1)) is amended by striking ”may prescribe)” and in- serting ”may prescribe, except that such period may not be less than 1 year)”. (2) CONFORMING AMENDMENT.\u2014Section 1156(b)(2) (42 U.S.C. 1320c 5(b)(2)) is amended by striking ”shall remain” and inserting ”shall (subject to the minimum period specified in the second sentence of paragraph (1)) remain”. (b) REPEAL OF ”UNWILLING OR UNABLE” CON- DITION FOR IMPOSITION OF SANCTION.\u2014Section 1156(b)(1) (42 U.S.C. 1320c 5(b)(1)) is amended\u2014 (1) in the second sentence, by striking ”and determines” and all that follows through ”such obligations,”; and (2) by striking the third sentence. SEC. 215. INTERMEDIATE SANCTIONS FOR MEDI- CARE HEALTH MAINTENANCE ORGA- NIZATIONS. (a) APPLICATION OF INTERMEDIATE SANCTIONS FOR ANY PROGRAM VIOLATIONS.\u2014 (1) IN GENERAL.\u2014Section 1876(i)(1) (42 U.S.C. 1395mm(i)(1)) is amended by striking ”the Sec- retary may terminate” and all that follows and inserting ”in accordance with procedures estab- lished under paragraph (9), the Secretary may at any time terminate any such contract or may impose the intermediate sanctions described in paragraph (6)(B) or (6)(C) (whichever is appli- cable) on the eligible organization if the Sec- retary determines that the organization\u2014 ”(A) has failed substantially to carry out the contract; ”(B) is carrying out the contract in a manner substantially inconsistent with the efficient and effective administration of this section; or ”(C) no longer substantially meets the appli- cable conditions of subsections (b), (c), (e), and (f).”. (2) OTHER INTERMEDIATE SANCTIONS FOR MIS- CELLANEOUS PROGRAM VIOLATIONS.\u2014Section 1876(i)(6) (42 U.S.C. 1395mm(i)(6)) is amended by adding at the end the following new subpara- graph: ”(C) In the case of an eligible organization for which the Secretary makes a determination under paragraph (1), the basis of which is not described in subparagraph (A), the Secretary may apply the following intermediate sanctions: ”(i) Civil money penalties of not more than $25,000 for each determination under paragraph (1) if the deficiency that is the basis of the de- termination has directly adversely affected (or has the substantial likelihood of adversely af- fecting) an individual covered under the organi- zation’s contract. ”(ii) Civil money penalties of not more than $10,000 for each week beginning after the initi- ation of procedures by the Secretary under paragraph (9) during which the deficiency that is the basis of a determination under paragraph (1) exists. ”(iii) Suspension of enrollment of individuals under this section after the date the Secretary notifies the organization of a determination under paragraph (1) and until the Secretary is satisfied that the deficiency that is the basis for the determination has been corrected and is not likely to recur.”. (3) PROCEDURES FOR IMPOSING SANCTIONS.\u2014 Section 1876(i) (42 U.S.C. 1395mm(i)) is amended by adding at the end the following new para- graph: ”(9) The Secretary may terminate a contract with an eligible organization under this section or may impose the intermediate sanctions de- scribed in paragraph (6) on the organization in accordance with formal investigation and com- pliance procedures established by the Secretary under which\u2014 ”(A) the Secretary first provides the organiza- tion with the reasonable opportunity to develop and implement a corrective action plan to cor- rect the deficiencies that were the basis of the Secretary’s determination under paragraph (1) and the organization fails to develop or imple- ment such a plan; ”(B) in deciding whether to impose sanctions, the Secretary considers aggravating factors such as whether an organization has a history of de- ficiencies or has not taken action to correct defi- ciencies the Secretary has brought to the organi- zation’s attention; ”(C) there are no unreasonable or unneces- sary delays between the finding of a deficiency and the imposition of sanctions; and ”(D) the Secretary provides the organization with reasonable notice and opportunity for hearing (including the right to appeal an initial decision) before imposing any sanction or termi- nating the contract.”. (4) CONFORMING AMENDMENTS.\u2014Section 1876(i)(6)(B) (42 U.S.C. 1395mm(i)(6)(B)) is amended by striking the second sentence. (b) AGREEMENTS WITH PEER REVIEW ORGANI- ZATIONS.\u2014Section 1876(i)(7)(A) (42 U.S.C. 1395mm(i)(7)(A)) is amended by striking ”an agreement” and inserting ”a written agree- ment”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply with respect to con- tract years beginning on or after January 1, 1997. SEC. 216. ADDITIONAL EXCEPTION TO ANTI-KICK- BACK PENALTIES FOR RISK-SHARING ARRANGEMENTS. (a) IN GENERAL.\u2014Section 1128B(b)(3) (42 U.S.C. 1320a 7b(b)(3)) is amended\u2014 (1) by striking ”and” at the end of subpara- graph (D); (2) by striking the period at the end of sub- paragraph (E) and inserting ”; and”; and (3) by adding at the end the following new subparagraph: ”(F) any remuneration between an organiza- tion and an individual or entity providing items or services, or a combination thereof, pursuant to a written agreement between the organization and the individual or entity if the organization is an eligible organization under section 1876 or if the written agreement, through a risk-sharing arrangement, places the individual or entity at substantial financial risk for the cost or utiliza- tion of the items or services, or a combination thereof, which the individual or entity is obli- gated to provide.”. (b) NEGOTIATED RULEMAKING FOR RISK-SHAR- ING EXCEPTION.\u2014 (1) ESTABLISHMENT.\u2014 CONGRESSIONAL RECORD \u2014 HOUSEH9492 July 31, 1996 (A) IN GENERAL.\u2014The Secretary of Health and Human Services (in this subsection referred to as the ”Secretary”) shall establish, on an expe- dited basis and using a negotiated rulemaking process under subchapter 3 of chapter 5 of title 5, United States Code, standards relating to the exception for risk-sharing arrangements to the anti-kickback penalties described in section 1128B(b)(3)(F) of the Social Security Act, as added by subsection (a). (B) FACTORS TO CONSIDER.\u2014In establishing standards relating to the exception for risk- sharing arrangements to the anti-kickback pen- alties under subparagraph (A), the Secretary\u2014 (i) shall consult with the Attorney General and representatives of the hospital, physician, other health practitioner, and health plan com- munities, and other interested parties; and (ii) shall take into account\u2014 (I) the level of risk appropriate to the size and type of arrangement; (II) the frequency of assessment and distribu- tion of incentives; (III) the level of capital contribution; and (IV) the extent to which the risk-sharing ar- rangement provides incentives to control the cost and quality of health care services. (2) PUBLICATION OF NOTICE.\u2014In carrying out the rulemaking process under this subsection, the Secretary shall publish the notice provided for under section 564(a) of title 5, United States Code, by not later than 45 days after the date of the enactment of this Act. (3) TARGET DATE FOR PUBLICATION OF RULE.\u2014 As part of the notice under paragraph (2), and for purposes of this subsection, the ‘target date for publication’ (referred to in section 564(a)(5) of such title) shall be January 1, 1997. (4) ABBREVIATED PERIOD FOR SUBMISSION OF COMMENTS.\u2014In applying section 564(c) of such title under this subsection, ’15 days’ shall be substituted for ’30 days’. (5) APPOINTMENT OF NEGOTIATED RULEMAKING COMMITTEE AND FACILITATOR.\u2014The Secretary shall provide for\u2014 (A) the appointment of a negotiated rule- making committee under section 565(a) of such title by not later than 30 days after the end of the comment period provided for under section 564(c) of such title (as shortened under para- graph (4)), and (B) the nomination of a facilitator under sec- tion 566(c) of such title by not later than 10 days after the date of appointment of the committee. (6) PRELIMINARY COMMITTEE REPORT.\u2014The negotiated rulemaking committee appointed under paragraph (5) shall report to the Sec- retary, by not later than October 1, 1996, regard- ing the committee’s progress on achieving a con- sensus with regard to the rulemaking proceeding and whether such consensus is likely to occur before one month before the target date for pub- lication of the rule. If the committee reports that the committee has failed to make significant progress towards such consensus or is unlikely to reach such consensus by the target date, the Secretary may terminate such process and pro- vide for the publication of a rule under this sub- section through such other methods as the Sec- retary may provide. (7) FINAL COMMITTEE REPORT.\u2014If the commit- tee is not terminated under paragraph (6), the rulemaking committee shall submit a report con- taining a proposed rule by not later than one month before the target publication date. (8) INTERIM, FINAL EFFECT.\u2014The Secretary shall publish a rule under this subsection in the Federal Register by not later than the target publication date. Such rule shall be effective and final immediately on an interim basis, but is subject to change and revision after public no- tice and opportunity for a period (of not less than 60 days) for public comment. In connection with such rule, the Secretary shall specify the process for the timely review and approval of applications of entities to be certified as pro- vider-sponsored organizations pursuant to such rules and consistent with this subsection. (9) PUBLICATION OF RULE AFTER PUBLIC COM- MENT.\u2014The Secretary shall provide for consid- eration of such comments and republication of such rule by not later than 1 year after the tar- get publication date. (c) EFFECTIVE DATE.\u2014The amendments made by subsection (a) shall apply to written agree- ments entered into on or after January 1, 1997, without regard to whether regulations have been issued to implement such amendments. SEC. 217. CRIMINAL PENALTY FOR FRAUDULENT DISPOSITION OF ASSETS IN ORDER TO OBTAIN MEDICAID BENEFITS. Section 1128B(a) (42 U.S.C. 1320a 7b(a)) is amended\u2014 (1) by striking ”or” at the end of paragraph (4); (2) by adding ”or” at the end of paragraph (5); and (3) by inserting after paragraph (5) the follow- ing new paragraph: ”(6) knowingly and willfully disposes of assets (including by any transfer in trust) in order for an individual to become eligible for medical as- sistance under a State plan under title XIX, if disposing of the assets results in the imposition of a period of ineligibility for such assistance under section 1917(c),”. SEC. 218. EFFECTIVE DATE. Except as otherwise provided, the amendments made by this subtitle shall take effect January 1, 1997. Subtitle C\u2014Data Collection SEC. 221. ESTABLISHMENT OF THE HEALTH CARE FRAUD AND ABUSE DATA COLLEC- TION PROGRAM. (a) IN GENERAL.\u2014Title XI (42 U.S.C. 1301 et seq.), as amended by sections 201 and 205, is amended by inserting after section 1128D the following new section: ”HEALTH CARE FRAUD AND ABUSE DATA COLLECTION PROGRAM ”SEC. 1128E. (a) GENERAL PURPOSE.\u2014Not later than January 1, 1997, the Secretary shall estab- lish a national health care fraud and abuse data collection program for the reporting of final adverse actions (not including settlements in which no findings of liability have been made) against health care providers, suppliers, or practitioners as required by subsection (b), with access as set forth in subsection (c), and shall maintain a database of the information collected under this section. ”(b) REPORTING OF INFORMATION.\u2014 ”(1) IN GENERAL.\u2014Each Government agency and health plan shall report any final adverse action (not including settlements in which no findings of liability have been made) taken against a health care provider, supplier, or practitioner. ”(2) INFORMATION TO BE REPORTED.\u2014The in- formation to be reported under paragraph (1) in- cludes: ”(A) The name and TIN (as defined in section 7701(a)(41) of the Internal Revenue Code of 1986) of any health care provider, supplier, or practitioner who is the subject of a final adverse action. ”(B) The name (if known) of any health care entity with which a health care provider, sup- plier, or practitioner, who is the subject of a final adverse action, is affiliated or associated. ”(C) The nature of the final adverse action and whether such action is on appeal. ”(D) A description of the acts or omissions and injuries upon which the final adverse ac- tion was based, and such other information as the Secretary determines by regulation is re- quired for appropriate interpretation of infor- mation reported under this section. ”(3) CONFIDENTIALITY.\u2014In determining what information is required, the Secretary shall in- clude procedures to assure that the privacy of individuals receiving health care services is ap- propriately protected. ”(4) TIMING AND FORM OF REPORTING.\u2014The information required to be reported under this subsection shall be reported regularly (but not less often than monthly) and in such form and manner as the Secretary prescribes. Such infor- mation shall first be required to be reported on a date specified by the Secretary. ”(5) TO WHOM REPORTED.\u2014The information required to be reported under this subsection shall be reported to the Secretary. ”(c) DISCLOSURE AND CORRECTION OF INFOR- MATION.\u2014 ”(1) DISCLOSURE.\u2014With respect to the infor- mation about final adverse actions (not includ- ing settlements in which no findings of liability have been made) reported to the Secretary under this section with respect to a health care pro- vider, supplier, or practitioner, the Secretary shall, by regulation, provide for\u2014 ”(A) disclosure of the information, upon re- quest, to the health care provider, supplier, or licensed practitioner, and ”(B) procedures in the case of disputed accu- racy of the information. ”(2) CORRECTIONS.\u2014Each Government agency and health plan shall report corrections of in- formation already reported about any final ad- verse action taken against a health care pro- vider, supplier, or practitioner, in such form and manner that the Secretary prescribes by regula- tion. ”(d) ACCESS TO REPORTED INFORMATION.\u2014 ”(1) AVAILABILITY.\u2014The information in the database maintained under this section shall be available to Federal and State government agen- cies and health plans pursuant to procedures that the Secretary shall provide by regulation. ”(2) FEES FOR DISCLOSURE.\u2014The Secretary may establish or approve reasonable fees for the disclosure of information in such database (other than with respect to requests by Federal agencies). The amount of such a fee shall be sufficient to recover the full costs of operating the database. Such fees shall be available to the Secretary or, in the Secretary’s discretion to the agency designated under this section to cover such costs. ”(e) PROTECTION FROM LIABILITY FOR RE- PORTING.\u2014No person or entity, including the agency designated by the Secretary in sub- section (b)(5) shall be held liable in any civil ac- tion with respect to any report made as required by this section, without knowledge of the falsity of the information contained in the report. ”(f) COORDINATION WITH NATIONAL PRACTI- TIONER DATA BANK.\u2014The Secretary shall imple- ment this section in such a manner as to avoid duplication with the reporting requirements es- tablished for the National Practitioner Data Bank under the Health Care Quality Improve- ment Act of 1986 (42 U.S.C. 11101 et seq.). ”(g) DEFINITIONS AND SPECIAL RULES.\u2014For purposes of this section: ”(1) FINAL ADVERSE ACTION.\u2014 ”(A) IN GENERAL.\u2014The term ‘final adverse ac- tion’ includes: ”(i) Civil judgments against a health care pro- vider, supplier, or practitioner in Federal or State court related to the delivery of a health care item or service. ”(ii) Federal or State criminal convictions re- lated to the delivery of a health care item or service. ”(iii) Actions by Federal or State agencies re- sponsible for the licensing and certification of health care providers, suppliers, and licensed health care practitioners, including\u2014 ”(I) formal or official actions, such as revoca- tion or suspension of a license (and the length of any such suspension), reprimand, censure or probation, ”(II) any other loss of license or the right to apply for, or renew, a license of the provider, supplier, or practitioner, whether by operation of law, voluntary surrender, non-renewability, or otherwise, or ”(III) any other negative action or finding by such Federal or State agency that is publicly available information. ”(iv) Exclusion from participation in Federal or State health care programs (as defined in sec- tions 1128B(f) and 1128(h), respectively). CONGRESSIONAL RECORD \u2014 HOUSE H9493July 31, 1996 ”(v) Any other adjudicated actions or deci- sions that the Secretary shall establish by regu- lation. ”(B) EXCEPTION.\u2014The term does not include any action with respect to a malpractice claim. ”(2) PRACTITIONER.\u2014The terms ‘licensed health care practitioner’, ‘licensed practitioner’, and ‘practitioner’ mean, with respect to a State, an individual who is licensed or otherwise au- thorized by the State to provide health care services (or any individual who, without au- thority holds himself or herself out to be so li- censed or authorized). ”(3) GOVERNMENT AGENCY.\u2014The term ‘Gov- ernment agency’ shall include: ”(A) The Department of Justice. ”(B) The Department of Health and Human Services. ”(C) Any other Federal agency that either ad- ministers or provides payment for the delivery of health care services, including, but not limited to the Department of Defense and the Veterans’ Administration. ”(D) State law enforcement agencies. ”(E) State medicaid fraud control units. ”(F) Federal or State agencies responsible for the licensing and certification of health care providers and licensed health care practitioners. ”(4) HEALTH PLAN.\u2014The term ‘health plan’ has the meaning given such term by section 1128C(c). ”(5) DETERMINATION OF CONVICTION.\u2014For purposes of paragraph (1), the existence of a conviction shall be determined under paragraph (4) of section 1128(i).”. (b) IMPROVED PREVENTION IN ISSUANCE OF MEDICARE PROVIDER NUMBERS.\u2014Section 1842(r) (42 U.S.C. 1395u(r)) is amended by adding at the end the following new sentence: ”Under such system, the Secretary may impose appropriate fees on such physicians to cover the costs of in- vestigation and recertification activities with re- spect to the issuance of the identifiers.”. Subtitle D\u2014Civil Monetary Penalties SEC. 231. SOCIAL SECURITY ACT CIVIL MONETARY PENALTIES. (a) GENERAL CIVIL MONETARY PENALTIES.\u2014 Section 1128A (42 U.S.C. 1320a 7a) is amended as follows: (1) In the third sentence of subsection (a), by striking ”programs under title XVIII” and in- serting ”Federal health care programs (as de- fined in section 1128B(f)(1))”. (2) In subsection (f)\u2014 (A) by redesignating paragraph (3) as para- graph (4); and (B) by inserting after paragraph (2) the fol- lowing new paragraph: ”(3) With respect to amounts recovered arising out of a claim under a Federal health care pro- gram (as defined in section 1128B(f)), the por- tion of such amounts as is determined to have been paid by the program shall be repaid to the program, and the portion of such amounts at- tributable to the amounts recovered under this section by reason of the amendments made by the Health Insurance Portability and Account- ability Act of 1996 (as estimated by the Sec- retary) shall be deposited into the Federal Hos- pital Insurance Trust Fund pursuant to section 1817(k)(2)(C).”. (3) In subsection (i)\u2014 (A) in paragraph (2), by striking ”title V, XVIII, XIX, or XX of this Act” and inserting ”a Federal health care program (as defined in section 1128B(f))”, (B) in paragraph (4), by striking ”a health in- surance or medical services program under title XVIII or XIX of this Act” and inserting ”a Fed- eral health care program (as so defined)”, and (C) in paragraph (5), by striking ”title V, XVIII, XIX, or XX” and inserting ”a Federal health care program (as so defined)”. (4) By adding at the end the following new subsection: ”(m)(1) For purposes of this section, with re- spect to a Federal health care program not con- tained in this Act, references to the Secretary in this section shall be deemed to be references to the Secretary or Administrator of the depart- ment or agency with jurisdiction over such pro- gram and references to the Inspector General of the Department of Health and Human Services in this section shall be deemed to be references to the Inspector General of the applicable de- partment or agency. ”(2)(A) The Secretary and Administrator of the departments and agencies referred to in paragraph (1) may include in any action pursu- ant to this section, claims within the jurisdic- tion of other Federal departments or agencies as long as the following conditions are satisfied: ”(i) The case involves primarily claims submit- ted to the Federal health care programs of the department or agency initiating the action. ”(ii) The Secretary or Administrator of the de- partment or agency initiating the action gives notice and an opportunity to participate in the investigation to the Inspector General of the de- partment or agency with primary jurisdiction over the Federal health care programs to which the claims were submitted. ”(B) If the conditions specified in subpara- graph (A) are fulfilled, the Inspector General of the department or agency initiating the action is authorized to exercise all powers granted under the Inspector General Act of 1978 (5 U.S.C. App.) with respect to the claims submitted to the other departments or agencies to the same man- ner and extent as provided in that Act with re- spect to claims submitted to such departments or agencies.”. (b) EXCLUDED INDIVIDUAL RETAINING OWNER- SHIP OR CONTROL INTEREST IN PARTICIPATING ENTITY.\u2014Section 1128A(a) (42 U.S.C. 1320a 7a(a)) is amended\u2014 (1) by striking ”or” at the end of paragraph (1)(D); (2) by striking ”, or” at the end of paragraph (2) and inserting a semicolon; (3) by striking the semicolon at the end of paragraph (3) and inserting ”; or”; and (4) by inserting after paragraph (3) the follow- ing new paragraph: ”(4) in the case of a person who is not an or- ganization, agency, or other entity, is excluded from participating in a program under title XVIII or a State health care program in accord- ance with this subsection or under section 1128 and who, at the time of a violation of this sub- section\u2014 ”(A) retains a direct or indirect ownership or control interest in an entity that is participating in a program under title XVIII or a State health care program, and who knows or should know of the action constituting the basis for the ex- clusion; or ”(B) is an officer or managing employee (as defined in section 1126(b)) of such an entity;”. (c) MODIFICATIONS OF AMOUNTS OF PENALTIES AND ASSESSMENTS.\u2014Section 1128A(a) (42 U.S.C. 1320a 7a(a)), as amended by subsection (b), is amended in the matter following paragraph (4)\u2014 (1) by striking ”$2,000” and inserting ”$10,000”; (2) by inserting ”; in cases under paragraph (4), $10,000 for each day the prohibited relation- ship occurs” after ”false or misleading informa- tion was given”; and (3) by striking ”twice the amount” and insert- ing ”3 times the amount”. (d) CLARIFICATION OF LEVEL OF KNOWLEDGE REQUIRED FOR IMPOSITION OF CIVIL MONETARY PENALTIES.\u2014 (1) IN GENERAL.\u2014Section 1128A(a) (42 U.S.C. 1320a 7a(a)) is amended\u2014 (A) in paragraphs (1) and (2), by inserting ”knowingly” before ”presents” each place it appears; and (B) in paragraph (3), by striking ”gives” and inserting ”knowingly gives or causes to be given”. (2) DEFINITION OF STANDARD.\u2014Section 1128A(i) (42 U.S.C. 1320a 7a(i)), as amended by subsection (h)(2), is amended by adding at the end the following new paragraph: ”(7) The term ‘should know’ means that a per- son, with respect to information\u2014 ”(A) acts in deliberate ignorance of the truth or falsity of the information; or ”(B) acts in reckless disregard of the truth or falsity of the information, and no proof of specific intent to defraud is re- quired.”. (e) CLAIM FOR ITEM OR SERVICE BASED ON IN- CORRECT CODING OR MEDICALLY UNNECESSARY SERVICES.\u2014Section 1128A(a)(1) (42 U.S.C. 1320a 7a(a)(1)), as amended by subsection (b), is amended\u2014 (1) in subparagraph (A) by striking ”claimed,” and inserting ”claimed, including any person who engages in a pattern or practice of presenting or causing to be presented a claim for an item or service that is based on a code that the person knows or should know will re- sult in a greater payment to the person than the code the person knows or should know is appli- cable to the item or service actually provided,”; (2) in subparagraph (C), by striking ”or” at the end; (3) in subparagraph (D), by striking the semi- colon and inserting ”, or”; and (4) by inserting after subparagraph (D) the following new subparagraph: ”(E) is for a pattern of medical or other items or services that a person knows or should know are not medically necessary;”. (f) SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR FAILURE TO COMPLY WITH STATU- TORY OBLIGATIONS.\u2014Section 1156(b)(3) (42 U.S.C. 1320c 5(b)(3)) is amended by striking ”the actual or estimated cost” and inserting ”up to $10,000 for each instance”. (g) PROCEDURAL PROVISIONS.\u2014Section 1876(i)(6) (42 U.S.C. 1395mm(i)(6)), as amended by section 215(a)(2), is amended by adding at the end the following new subparagraph: ”(D) The provisions of section 1128A (other than subsections (a) and (b)) shall apply to a civil money penalty under subparagraph (B)(i) or (C)(i) in the same manner as such provisions apply to a civil money penalty or proceeding under section 1128A(a).”. (h) PROHIBITION AGAINST OFFERING INDUCE- MENTS TO INDIVIDUALS ENROLLED UNDER PRO- GRAMS OR PLANS.\u2014 (1) OFFER OF REMUNERATION.\u2014Section 1128A(a) (42 U.S.C. 1320a 7a(a)), as amended by subsection (b), is amended\u2014 (A) by striking ”or” at the end of paragraph (3); (B) by striking the semicolon at the end of paragraph (4) and inserting ”; or”; and (D) by inserting after paragraph (4) the fol- lowing new paragraph: ”(5) offers to or transfers remuneration to any individual eligible for benefits under title XVIII of this Act, or under a State health care pro- gram (as defined in section 1128(h)) that such person knows or should know is likely to influ- ence such individual to order or receive from a particular provider, practitioner, or supplier any item or service for which payment may be made, in whole or in part, under title XVIII, or a State health care program (as so defined);”. (2) REMUNERATION DEFINED.\u2014Section 1128A(i) (42 U.S.C. 1320a 7a(i)) is amended by adding at the end the following new paragraph: ”(6) The term ‘remuneration’ includes the waiver of coinsurance and deductible amounts (or any part thereof), and transfers of items or services for free or for other than fair market value. The term ‘remuneration’ does not in- clude\u2014 ”(A) the waiver of coinsurance and deductible amounts by a person, if\u2014 ”(i) the waiver is not offered as part of any advertisement or solicitation; ”(ii) the person does not routinely waive coin- surance or deductible amounts; and ”(iii) the person\u2014 CONGRESSIONAL RECORD \u2014 HOUSEH9494 July 31, 1996 ”(I) waives the coinsurance and deductible amounts after determining in good faith that the individual is in financial need; ”(II) fails to collect coinsurance or deductible amounts after making reasonable collection ef- forts; or ”(III) provides for any permissible waiver as specified in section 1128B(b)(3) or in regulations issued by the Secretary; ”(B) differentials in coinsurance and deduct- ible amounts as part of a benefit plan design as long as the differentials have been disclosed in writing to all beneficiaries, third party payers, and providers, to whom claims are presented and as long as the differentials meet the stand- ards as defined in regulations promulgated by the Secretary not later than 180 days after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996; or ”(C) incentives given to individuals to pro- mote the delivery of preventive care as deter- mined by the Secretary in regulations so pro- mulgated.”. (i) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to acts or omissions occurring on or after January 1, 1997. SEC. 232. PENALTY FOR FALSE CERTIFICATION FOR HOME HEALTH SERVICES. (a) IN GENERAL.\u2014Section 1128A(b) (42 U.S.C. 1320a 7a(b)) is amended by adding at the end the following new paragraph: ”(3)(A) Any physician who executes a docu- ment described in subparagraph (B) with respect to an individual knowing that all of the require- ments referred to in such subparagraph are not met with respect to the individual shall be sub- ject to a civil monetary penalty of not more than the greater of\u2014 ”(i) $5,000, or ”(ii) three times the amount of the payments under title XVIII for home health services which are made pursuant to such certification. ”(B) A document described in this subpara- graph is any document that certifies, for pur- poses of title XVIII, that an individual meets the requirements of section 1814(a)(2)(C) or 1835(a)(2)(A) in the case of home health services furnished to the individual.”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall apply to certifications made on or after the date of the enactment of this Act. Subtitle E\u2014Revisions to Criminal Law SEC. 241. DEFINITIONS RELATING TO FEDERAL HEALTH CARE OFFENSE. (a) IN GENERAL.\u2014Chapter 1 of title 18, United States Code, is amended by adding at the end the following: ” 24. Definitions relating to Federal health care offense ”(a) As used in this title, the term ‘Federal health care offense’ means a violation of, or a criminal conspiracy to violate\u2014 ”(1) section 669, 1035, 1347, or 1518 of this title; ”(2) section 287, 371, 664, 666, 1001, 1027, 1341, 1343, or 1954 of this title, if the violation or con- spiracy relates to a health care benefit program. ”(b) As used in this title, the term ‘health care benefit program’ means any public or private plan or contract, affecting commerce, under which any medical benefit, item, or service is provided to any individual, and includes any individual or entity who is providing a medical benefit, item, or service for which payment may be made under the plan or contract.”. (b) CLERICAL AMENDMENT.\u2014The table of sec- tions at the beginning of chapter 2 of title 18, United States Code, is amended by inserting after the item relating to section 23 the following new item: ”24. Definitions relating to Federal health care offense.”. SEC. 242. HEALTH CARE FRAUD. (a) OFFENSE.\u2014 (1) IN GENERAL.\u2014Chapter 63 of title 18, United States Code, is amended by adding at the end the following: ” 1347. Health care fraud ”Whoever knowingly and willfully executes, or attempts to execute, a scheme or artifice\u2014 ”(1) to defraud any health care benefit pro- gram; or ”(2) to obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any health care benefit program, in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned not more than 10 years, or both. If the violation results in serious bodily injury (as defined in section 1365 of this title), such person shall be fined under this title or imprisoned not more than 20 years, or both; and if the violation results in death, such person shall be fined under this title, or imprisoned for any term of years or for life, or both.”. (2) CLERICAL AMENDMENT.\u2014The table of sec- tions at the beginning of chapter 63 of title 18, United States Code, is amended by adding at the end the following: ”1347. Health care fraud.”. (b) CRIMINAL FINES DEPOSITED IN FEDERAL HOSPITAL INSURANCE TRUST FUND.\u2014The Sec- retary of the Treasury shall deposit into the Federal Hospital Insurance Trust Fund pursu- ant to section 1817(k)(2)(C) of the Social Secu- rity Act (42 U.S.C. 1395i) an amount equal to the criminal fines imposed under section 1347 of title 18, United States Code (relating to health care fraud). SEC. 243. THEFT OR EMBEZZLEMENT. (a) IN GENERAL.\u2014Chapter 31 of title 18, Unit- ed States Code, is amended by adding at the end the following: ” 669. Theft or embezzlement in connection with health care ”(a) Whoever knowingly and willfully embez- zles, steals, or otherwise without authority con- verts to the use of any person other than the rightful owner, or intentionally misapplies any of the moneys, funds, securities, premiums, cred- its, property, or other assets of a health care benefit program, shall be fined under this title or imprisoned not more than 10 years, or both; but if the value of such property does not exceed the sum of $100 the defendant shall be fined under this title or imprisoned not more than one year, or both. ”(b) As used in this section, the term ‘health care benefit program’ has the meaning given such term in section 1347(b) of this title.”. (b) CLERICAL AMENDMENT.\u2014The table of sec- tions at the beginning of chapter 31 of title 18, United States Code, is amended by adding at the end the following: ”669. Theft or embezzlement in connection with health care.”. SEC. 244. FALSE STATEMENTS. (a) IN GENERAL.\u2014Chapter 47 of title 18, Unit- ed States Code, is amended by adding at the end the following: ” 1035. False statements relating to health care matters ”(a) Whoever, in any matter involving a health care benefit program, knowingly and willfully\u2014 ”(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; or ”(2) makes any materially false, fictitious, or fraudulent statements or representations, or makes or uses any materially false writing or document knowing the same to contain any ma- terially false, fictitious, or fraudulent statement or entry, in connection with the delivery of or payment for health care benefits, items, or services, shall be fined under this title or imprisoned not more than 5 years, or both. ”(b) As used in this section, the term ‘health care benefit program’ has the meaning given such term in section 1347(b) of this title.”. (b) CLERICAL AMENDMENT.\u2014The table of sec- tions at the beginning of chapter 47 of title 18, United States Code, is amended by adding at the end the following new item: ”1035. False statements relating to health care matters.”. SEC. 245. OBSTRUCTION OF CRIMINAL INVES- TIGATIONS OF HEALTH CARE OF- FENSES. (a) IN GENERAL.\u2014Chapter 73 of title 18, Unit- ed States Code, is amended by adding at the end the following: ” 1518. Obstruction of criminal investigations of health care offenses ”(a) Whoever willfully prevents, obstructs, misleads, delays or attempts to prevent, ob- struct, mislead, or delay the communication of information or records relating to a violation of a Federal health care offense to a criminal in- vestigator shall be fined under this title or im- prisoned not more than 5 years, or both. ”(b) As used in this section the term ‘criminal investigator’ means any individual duly author- ized by a department, agency, or armed force of the United States to conduct or engage in inves- tigations for prosecutions for violations of health care offenses.”. (b) CLERICAL AMENDMENT.\u2014The table of sec- tions at the beginning of chapter 73 of title 18, United States Code, is amended by adding at the end the following new item: ”1518. Obstruction of criminal investigations of health care offenses.”. SEC. 246. LAUNDERING OF MONETARY INSTRU- MENTS. Section 1956(c)(7) of title 18, United States Code, is amended by adding at the end the fol- lowing: ”(F) Any act or activity constituting an of- fense involving a Federal health care offense.”. SEC. 247. INJUNCTIVE RELIEF RELATING TO HEALTH CARE OFFENSES. (a) IN GENERAL.\u2014Section 1345(a)(1) of title 18, United States Code, is amended\u2014 (1) by striking ”or” at the end of subpara- graph (A); (2) by inserting ”or” at the end of subpara- graph (B); and (3) by adding at the end the following: ”(C) committing or about to commit a Federal health care offense.”. (b) FREEZING OF ASSETS.\u2014Section 1345(a)(2) of title 18, United States Code, is amended by in- serting ”or a Federal health care offense” after ”title)”. SEC. 248. AUTHORIZED INVESTIGATIVE DEMAND PROCEDURES. (a) IN GENERAL.\u2014Chapter 223 of title 18, Unit- ed States Code, is amended by adding after sec- tion 3485 the following: ” 3486. Authorized investigative demand pro- cedures ”(a) AUTHORIZATION.\u2014(1) In any investiga- tion relating to any act or activity involving a Federal health care offense, the Attorney Gen- eral or the Attorney General’s designee may issue in writing and cause to be served a sub- poena\u2014 ”(A) requiring the production of any records (including any books, papers, documents, elec- tronic media, or other objects or tangible things), which may be relevant to an authorized law enforcement inquiry, that a person or legal entity may possess or have care, custody, or control; or ”(B) requiring a custodian of records to give testimony concerning the production and au- thentication of such records. ”(2) A subpoena under this subsection shall describe the objects required to be produced and prescribe a return date within a reasonable pe- riod of time within which the objects can be as- sembled and made available. ”(3) The production of records shall not be re- quired under this section at any place more than 500 miles distant from the place where the CONGRESSIONAL RECORD \u2014 HOUSE H9495July 31, 1996 subpoena for the production of such records is served. ”(4) Witnesses summoned under this section shall be paid the same fees and mileage that are paid witnesses in the courts of the United States. ”(b) SERVICE.\u2014A subpoena issued under this section may be served by any person who is at least 18 years of age and is designated in the subpoena to serve it. Service upon a natural person may be made by personal delivery of the subpoena to him. Service may be made upon a domestic or foreign corporation or upon a part- nership or other unincorporated association which is subject to suit under a common name, by delivering the subpoena to an officer, to a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process. The affidavit of the person serving the subpoena entered on a true copy thereof by the person serving it shall be proof of service. ”(c) ENFORCEMENT.\u2014In the case of contumacy by or refusal to obey a subpoena issued to any person, the Attorney General may invoke the aid of any court of the United States within the jurisdiction of which the investigation is carried on or of which the subpoenaed person is an in- habitant, or in which he carries on business or may be found, to compel compliance with the subpoena. The court may issue an order requir- ing the subpoenaed person to appear before the Attorney General to produce records, if so or- dered, or to give testimony concerning the pro- duction and authentication of such records. Any failure to obey the order of the court may be punished by the court as a contempt thereof. All process in any such case may be served in any judicial district in which such person may be found. ”(d) IMMUNITY FROM CIVIL LIABILITY.\u2014Not- withstanding any Federal, State, or local law, any person, including officers, agents, and em- ployees, receiving a summons under this section, who complies in good faith with the summons and thus produces the materials sought, shall not be liable in any court of any State or the United States to any customer or other person for such production or for nondisclosure of that production to the customer. ”(e) LIMITATION ON USE.\u2014(1) Health informa- tion about an individual that is disclosed under this section may not be used in, or disclosed to any person for use in, any administrative, civil, or criminal action or investigation directed against the individual who is the subject of the information unless the action or investigation arises out of and is directly related to receipt of health care or payment for health care or action involving a fraudulent claim related to health; or if authorized by an appropriate order of a court of competent jurisdiction, granted after application showing good cause therefor. ”(2) In assessing good cause, the court shall weigh the public interest and the need for dis- closure against the injury to the patient, to the physician-patient relationship, and to the treat- ment services. ”(3) Upon the granting of such order, the court, in determining the extent to which any disclosure of all or any part of any record is necessary, shall impose appropriate safeguards against unauthorized disclosure.”. (b) CLERICAL AMENDMENT.\u2014The table of sec- tions at the beginning of chapter 223 of title 18, United States Code, is amended by inserting after the item relating to section 3485 the follow- ing new item: ”3486. Authorized investigative demand proce- dures.”. (c) CONFORMING AMENDMENT.\u2014Section 1510(b)(3)(B) of title 18, United States Code, is amended by inserting ”or a Department of Jus- tice subpoena (issued under section 3486 of title 18),” after ”subpoena”. SEC. 249. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES. (a) IN GENERAL.\u2014Section 982(a) of title 18, United States Code, is amended by adding after paragraph (5) the following new paragraph: ”(6) The court, in imposing sentence on a per- son convicted of a Federal health care offense, shall order the person to forfeit property, real or personal, that constitutes or is derived, directly or indirectly, from gross proceeds traceable to the commission of the offense.”. (b) CONFORMING AMENDMENT.\u2014Section 982(b)(1)(A) of title 18, United States Code, is amended by inserting ”or (a)(6)” after ”(a)(1)”. (c) PROPERTY FORFEITED DEPOSITED IN FED- ERAL HOSPITAL INSURANCE TRUST FUND.\u2014 (1) IN GENERAL.\u2014After the payment of the costs of asset forfeiture has been made and after all restoration payments (if any) have been made, and notwithstanding any other provision of law, the Secretary of the Treasury shall de- posit into the Federal Hospital Insurance Trust Fund pursuant to section 1817(k)(2)(C) of the Social Security Act, as added by section 301(b), an amount equal to the net amount realized from the forfeiture of property by reason of a Federal health care offense pursuant to section 982(a)(6) of title 18, United States Code. (2) COSTS OF ASSET FORFEITURE.\u2014For pur- poses of paragraph (1), the term ”payment of the costs of asset forfeiture” means\u2014 (A) the payment, at the discretion of the At- torney General, of any expenses necessary to seize, detain, inventory, safeguard, maintain, advertise, sell, or dispose of property under sei- zure, detention, or forfeited, or of any other necessary expenses incident to the seizure, de- tention, forfeiture, or disposal of such property, including payment for\u2014 (i) contract services; (ii) the employment of outside contractors to operate and manage properties or provide other specialized services necessary to dispose of such properties in an effort to maximize the return from such properties; and (iii) reimbursement of any Federal, State, or local agency for any expenditures made to per- form the functions described in this subpara- graph; (B) at the discretion of the Attorney General, the payment of awards for information or assist- ance leading to a civil or criminal forfeiture in- volving any Federal agency participating in the Health Care Fraud and Abuse Control Account; (C) the compromise and payment of valid liens and mortgages against property that has been forfeited, subject to the discretion of the Attor- ney General to determine the validity of any such lien or mortgage and the amount of pay- ment to be made, and the employment of attor- neys and other personnel skilled in State real es- tate law as necessary; (D) payment authorized in connection with remission or mitigation procedures relating to property forfeited; and (E) the payment of State and local property taxes on forfeited real property that accrued be- tween the date of the violation giving rise to the forfeiture and the date of the forfeiture order. (3) RESTORATION PAYMENT.\u2014Notwithstanding any other provision of law, if the Federal health care offense referred to in paragraph (1) re- sulted in a loss to an employee welfare benefit plan within the meaning of section 3(1) of the Employee Retirement Income Security Act of 1974, the Secretary of the Treasury shall trans- fer to such employee welfare benefit plan, from the amount realized from the forfeiture of prop- erty referred to in paragraph (1), an amount equal to such loss. For purposes of paragraph (1), the term ‘restoration payment’ means the amount transferred to an employee welfare ben- efit plan pursuant to this paragraph.”. SEC. 250. RELATION TO ERISA AUTHORITY. Nothing in this subtitle shall be construed as affecting the authority of the Secretary of Labor under section 506(b) of the Employee Retirement Income Security Act of 1974, including the Sec- retary’s authority with respect to violations of title 18, United States Code (as amended by this subtitle). Subtitle F\u2014Administrative Simplification SEC. 261. PURPOSE. It is the purpose of this subtitle to improve the medicare program under title XVIII of the So- cial Security Act, the medicaid program under title XIX of such Act, and the efficiency and ef- fectiveness of the health care system, by encour- aging the development of a health information system through the establishment of standards and requirements for the electronic transmission of certain health information. SEC. 262. ADMINISTRATIVE SIMPLIFICATION. (a) IN GENERAL.\u2014Title XI (42 U.S.C. 1301 et seq.) is amended by adding at the end the fol- lowing: ”PART C\u2014ADMINISTRATIVE SIMPLIFICATION ”DEFINITIONS ”SEC. 1171. For purposes of this part: ”(1) CODE SET.\u2014The term ‘code set’ means any set of codes used for encoding data ele- ments, such as tables of terms, medical concepts, medical diagnostic codes, or medical procedure codes. ”(2) HEALTH CARE CLEARINGHOUSE.\u2014The term ‘health care clearinghouse’ means a public or private entity that processes or facilitates the processing of nonstandard data elements of health information into standard data elements. ”(3) HEALTH CARE PROVIDER.\u2014The term ‘health care provider’ includes a provider of services (as defined in section 1861(u)), a pro- vider of medical or other health services (as de- fined in section 1861(s)), and any other person furnishing health care services or supplies. ”(4) HEALTH INFORMATION.\u2014The term ‘health information’ means any information, whether oral or recorded in any form or medium, that\u2014 ”(A) is created or received by a health care provider, health plan, public health authority, employer, life insurer, school or university, or health care clearinghouse; and ”(B) relates to the past, present, or future physical or mental health or condition of an in- dividual, the provision of health care to an indi- vidual, or the past, present, or future payment for the provision of health care to an individual. ”(5) HEALTH PLAN.\u2014The term ‘health plan’ means an individual or group plan that pro- vides, or pays the cost of, medical care (as such term is defined in section 2791 of the Public Health Service Act). Such term includes the fol- lowing, and any combination thereof: ”(A) A group health plan (as defined in sec- tion 2791(a) of the Public Health Service Act), but only if the plan\u2014 ”(i) has 50 or more participants (as defined in section 3(7) of the Employee Retirement Income Security Act of 1974); or ”(ii) is administered by an entity other than the employer who established and maintains the plan. ”(B) A health insurance issuer (as defined in section 2791(b) of the Public Health Service Act). ”(C) A health maintenance organization (as defined in section 2791(b) of the Public Health Service Act). ”(D) Part A or part B of the medicare pro- gram under title XVIII. ”(E) The medicaid program under title XIX. ”(F) A medicare supplemental policy (as de- fined in section 1882(g)(1)). ”(G) A long-term care policy, including a nursing home fixed indemnity policy (unless the Secretary determines that such a policy does not provide sufficiently comprehensive coverage of a benefit so that the policy should be treated as a health plan). ”(H) An employee welfare benefit plan or any other arrangement which is established or main- tained for the purpose of offering or providing health benefits to the employees of 2 or more em- ployers. ”(I) The health care program for active mili- tary personnel under title 10, United States Code. CONGRESSIONAL RECORD \u2014 HOUSEH9496 July 31, 1996 ”(J) The veterans health care program under chapter 17 of title 38, United States Code. ”(K) The Civilian Health and Medical Pro- gram of the Uniformed Services (CHAMPUS), as defined in section 1072(4) of title 10, United States Code. ”(L) The Indian health service program under the Indian Health Care Improvement Act (25 U.S.C. 1601 et seq.). ”(M) The Federal Employees Health Benefit Plan under chapter 89 of title 5, United States Code. ”(6) INDIVIDUALLY IDENTIFIABLE HEALTH IN- FORMATION.\u2014The term ‘individually identifiable health information’ means any information, in- cluding demographic information collected from an individual, that\u2014 ”(A) is created or received by a health care provider, health plan, employer, or health care clearinghouse; and ”(B) relates to the past, present, or future physical or mental health or condition of an in- dividual, the provision of health care to an indi- vidual, or the past, present, or future payment for the provision of health care to an individual, and\u2014 ”(i) identifies the individual; or ”(ii) with respect to which there is a reason- able basis to believe that the information can be used to identify the individual. ”(7) STANDARD.\u2014The term ‘standard’, when used with reference to a data element of health information or a transaction referred to in sec- tion 1173(a)(1), means any such data element or transaction that meets each of the standards and implementation specifications adopted or established by the Secretary with respect to the data element or transaction under sections 1172 through 1174. ”(8) STANDARD SETTING ORGANIZATION.\u2014The term ‘standard setting organization’ means a standard setting organization accredited by the American National Standards Institute, includ- ing the National Council for Prescription Drug Programs, that develops standards for informa- tion transactions, data elements, or any other standard that is necessary to, or will facilitate, the implementation of this part. ”GENERAL REQUIREMENTS FOR ADOPTION OF STANDARDS ”SEC. 1172. (a) APPLICABILITY.\u2014Any standard adopted under this part shall apply, in whole or in part, to the following persons: ”(1) A health plan. ”(2) A health care clearinghouse. ”(3) A health care provider who transmits any health information in electronic form in connec- tion with a transaction referred to in section 1173(a)(1). ”(b) REDUCTION OF COSTS.\u2014Any standard adopted under this part shall be consistent with the objective of reducing the administrative costs of providing and paying for health care. ”(c) ROLE OF STANDARD SETTING ORGANIZA- TIONS.\u2014 ”(1) IN GENERAL.\u2014Except as provided in para- graph (2), any standard adopted under this part shall be a standard that has been developed, adopted, or modified by a standard setting orga- nization. ”(2) SPECIAL RULES.\u2014 ”(A) DIFFERENT STANDARDS.\u2014The Secretary may adopt a standard that is different from any standard developed, adopted, or modified by a standard setting organization, if\u2014 ”(i) the different standard will substantially reduce administrative costs to health care pro- viders and health plans compared to the alter- natives; and ”(ii) the standard is promulgated in accord- ance with the rulemaking procedures of sub- chapter III of chapter 5 of title 5, United States Code. ”(B) NO STANDARD BY STANDARD SETTING OR- GANIZATION.\u2014If no standard setting organiza- tion has developed, adopted, or modified any standard relating to a standard that the Sec- retary is authorized or required to adopt under this part\u2014 ”(i) paragraph (1) shall not apply; and ”(ii) subsection (f) shall apply. ”(3) CONSULTATION REQUIREMENT.\u2014 ”(A) IN GENERAL.\u2014A standard may not be adopted under this part unless\u2014 ”(i) in the case of a standard that has been developed, adopted, or modified by a standard setting organization, the organization consulted with each of the organizations described in sub- paragraph (B) in the course of such develop- ment, adoption, or modification; and ”(ii) in the case of any other standard, the Secretary, in complying with the requirements of subsection (f), consulted with each of the or- ganizations described in subparagraph (B) be- fore adopting the standard. ”(B) ORGANIZATIONS DESCRIBED.\u2014The organi- zations referred to in subparagraph (A) are the following: ”(i) The National Uniform Billing Committee. ”(ii) The National Uniform Claim Committee. ”(iii) The Workgroup for Electronic Data Interchange. ”(iv) The American Dental Association. ”(d) IMPLEMENTATION SPECIFICATIONS.\u2014The Secretary shall establish specifications for im- plementing each of the standards adopted under this part. ”(e) PROTECTION OF TRADE SECRETS.\u2014Except as otherwise required by law, a standard adopt- ed under this part shall not require disclosure of trade secrets or confidential commercial infor- mation by a person required to comply with this part. ”(f) ASSISTANCE TO THE SECRETARY.\u2014In com- plying with the requirements of this part, the Secretary shall rely on the recommendations of the National Committee on Vital and Health Statistics established under section 306(k) of the Public Health Service Act (42 U.S.C. 242k(k)), and shall consult with appropriate Federal and State agencies and private organizations. The Secretary shall publish in the Federal Register any recommendation of the National Committee on Vital and Health Statistics regarding the adoption of a standard under this part. ”(g) APPLICATION TO MODIFICATIONS OF STANDARDS.\u2014This section shall apply to a modi- fication to a standard (including an addition to a standard) adopted under section 1174(b) in the same manner as it applies to an initial standard adopted under section 1174(a). ”STANDARDS FOR INFORMATION TRANSACTIONS AND DATA ELEMENTS ”SEC. 1173. (a) STANDARDS TO ENABLE ELEC- TRONIC EXCHANGE.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall adopt standards for transactions, and data elements for such transactions, to enable health informa- tion to be exchanged electronically, that are ap- propriate for\u2014 ”(A) the financial and administrative trans- actions described in paragraph (2); and ”(B) other financial and administrative trans- actions determined appropriate by the Sec- retary, consistent with the goals of improving the operation of the health care system and re- ducing administrative costs. ”(2) TRANSACTIONS.\u2014The transactions re- ferred to in paragraph (1)(A) are transactions with respect to the following: ”(A) Health claims or equivalent encounter information. ”(B) Health claims attachments. ”(C) Enrollment and disenrollment in a health plan. ”(D) Eligibility for a health plan. ”(E) Health care payment and remittance ad- vice. ”(F) Health plan premium payments. ”(G) First report of injury. ”(H) Health claim status. ”(I) Referral certification and authorization. ”(3) ACCOMMODATION OF SPECIFIC PROVID- ERS.\u2014The standards adopted by the Secretary under paragraph (1) shall accommodate the needs of different types of health care providers. ”(b) UNIQUE HEALTH IDENTIFIERS.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall adopt standards providing for a standard unique health identifier for each individual, employer, health plan, and health care provider for use in the health care system. In carrying out the pre- ceding sentence for each health plan and health care provider, the Secretary shall take into ac- count multiple uses for identifiers and multiple locations and specialty classifications for health care providers. ”(2) USE OF IDENTIFIERS.\u2014The standards adopted under paragraphs (1) shall specify the purposes for which a unique health identifier may be used. ”(c) CODE SETS.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall adopt standards that\u2014 ”(A) select code sets for appropriate data ele- ments for the transactions referred to in sub- section (a)(1) from among the code sets that have been developed by private and public enti- ties; or ”(B) establish code sets for such data elements if no code sets for the data elements have been developed. ”(2) DISTRIBUTION.\u2014The Secretary shall es- tablish efficient and low-cost procedures for dis- tribution (including electronic distribution) of code sets and modifications made to such code sets under section 1174(b). ”(d) SECURITY STANDARDS FOR HEALTH INFOR- MATION.\u2014 ”(1) SECURITY STANDARDS.\u2014The Secretary shall adopt security standards that\u2014 ”(A) take into account\u2014 ”(i) the technical capabilities of record sys- tems used to maintain health information; ”(ii) the costs of security measures; ”(iii) the need for training persons who have access to health information; ”(iv) the value of audit trails in computerized record systems; and ”(v) the needs and capabilities of small health care providers and rural health care providers (as such providers are defined by the Secretary); and ”(B) ensure that a health care clearinghouse, if it is part of a larger organization, has policies and security procedures which isolate the activi- ties of the health care clearinghouse with re- spect to processing information in a manner that prevents unauthorized access to such infor- mation by such larger organization. ”(2) SAFEGUARDS.\u2014Each person described in section 1172(a) who maintains or transmits health information shall maintain reasonable and appropriate administrative, technical, and physical safeguards\u2014 ”(A) to ensure the integrity and confidential- ity of the information; ”(B) to protect against any reasonably antici- pated\u2014 ”(i) threats or hazards to the security or in- tegrity of the information; and ”(ii) unauthorized uses or disclosures of the information; and ”(C) otherwise to ensure compliance with this part by the officers and employees of such per- son. ”(e) ELECTRONIC SIGNATURE.\u2014 ”(1) STANDARDS.\u2014The Secretary, in coordina- tion with the Secretary of Commerce, shall adopt standards specifying procedures for the electronic transmission and authentication of signatures with respect to the transactions re- ferred to in subsection (a)(1). ”(2) EFFECT OF COMPLIANCE.\u2014Compliance with the standards adopted under paragraph (1) shall be deemed to satisfy Federal and State statutory requirements for written signatures with respect to the transactions referred to in subsection (a)(1). ”(f) TRANSFER OF INFORMATION AMONG HEALTH PLANS.\u2014The Secretary shall adopt standards for transferring among health plans CONGRESSIONAL RECORD \u2014 HOUSE H9497July 31, 1996 appropriate standard data elements needed for the coordination of benefits, the sequential proc- essing of claims, and other data elements for in- dividuals who have more than one health plan. ”TIMETABLES FOR ADOPTION OF STANDARDS ”SEC. 1174. (a) INITIAL STANDARDS.\u2014The Sec- retary shall carry out section 1173 not later than 18 months after the date of the enactment of the Health Insurance Portability and Accountabil- ity Act of 1996, except that standards relating to claims attachments shall be adopted not later than 30 months after such date. ”(b) ADDITIONS AND MODIFICATIONS TO STANDARDS.\u2014 ”(1) IN GENERAL.\u2014Except as provided in para- graph (2), the Secretary shall review the stand- ards adopted under section 1173, and shall adopt modifications to the standards (including additions to the standards), as determined ap- propriate, but not more frequently than once every 12 months. Any addition or modification to a standard shall be completed in a manner which minimizes the disruption and cost of com- pliance. ”(2) SPECIAL RULES.\u2014 ”(A) FIRST 12-MONTH PERIOD.\u2014Except with re- spect to additions and modifications to code sets under subparagraph (B), the Secretary may not adopt any modification to a standard adopted under this part during the 12-month period be- ginning on the date the standard is initially adopted, unless the Secretary determines that the modification is necessary in order to permit compliance with the standard. ”(B) ADDITIONS AND MODIFICATIONS TO CODE SETS.\u2014 ”(i) IN GENERAL.\u2014The Secretary shall ensure that procedures exist for the routine mainte- nance, testing, enhancement, and expansion of code sets. ”(ii) ADDITIONAL RULES.\u2014If a code set is modified under this subsection, the modified code set shall include instructions on how data elements of health information that were en- coded prior to the modification may be con- verted or translated so as to preserve the infor- mational value of the data elements that existed before the modification. Any modification to a code set under this subsection shall be imple- mented in a manner that minimizes the disrup- tion and cost of complying with such modifica- tion. ”REQUIREMENTS ”SEC. 1175. (a) CONDUCT OF TRANSACTIONS BY PLANS.\u2014 ”(1) IN GENERAL.\u2014If a person desires to con- duct a transaction referred to in section 1173(a)(1) with a health plan as a standard transaction\u2014 ”(A) the health plan may not refuse to con- duct such transaction as a standard trans- action; ”(B) the insurance plan may not delay such transaction, or otherwise adversely affect, or at- tempt to adversely affect, the person or the transaction on the ground that the transaction is a standard transaction; and ”(C) the information transmitted and received in connection with the transaction shall be in the form of standard data elements of health in- formation. ”(2) SATISFACTION OF REQUIREMENTS.\u2014A health plan may satisfy the requirements under paragraph (1) by\u2014 ”(A) directly transmitting and receiving standard data elements of health information; or ”(B) submitting nonstandard data elements to a health care clearinghouse for processing into standard data elements and transmission by the health care clearinghouse, and receiving stand- ard data elements through the health care clear- inghouse. ”(3) TIMETABLE FOR COMPLIANCE.\u2014Paragraph (1) shall not be construed to require a health plan to comply with any standard, implementa- tion specification, or modification to a standard or specification adopted or established by the Secretary under sections 1172 through 1174 at any time prior to the date on which the plan is required to comply with the standard or speci- fication under subsection (b). ”(b) COMPLIANCE WITH STANDARDS.\u2014 ”(1) INITIAL COMPLIANCE.\u2014 ”(A) IN GENERAL.\u2014Not later than 24 months after the date on which an initial standard or implementation specification is adopted or es- tablished under sections 1172 and 1173, each per- son to whom the standard or implementation specification applies shall comply with the standard or specification. ”(B) SPECIAL RULE FOR SMALL HEALTH PLANS.\u2014In the case of a small health plan, paragraph (1) shall be applied by substituting ’36 months’ for ’24 months’. For purposes of this subsection, the Secretary shall determine the plans that qualify as small health plans. ”(2) COMPLIANCE WITH MODIFIED STAND- ARDS.\u2014If the Secretary adopts a modification to a standard or implementation specification under this part, each person to whom the stand- ard or implementation specification applies shall comply with the modified standard or implemen- tation specification at such time as the Sec- retary determines appropriate, taking into ac- count the time needed to comply due to the na- ture and extent of the modification. The time determined appropriate under the preceding sentence may not be earlier than the last day of the 180-day period beginning on the date such modification is adopted. The Secretary may ex- tend the time for compliance for small health plans, if the Secretary determines that such ex- tension is appropriate. ”(3) CONSTRUCTION.\u2014Nothing in this sub- section shall be construed to prohibit any person from complying with a standard or specification by\u2014 ”(A) submitting nonstandard data elements to a health care clearinghouse for processing into standard data elements and transmission by the health care clearinghouse; or ”(B) receiving standard data elements through a health care clearinghouse. ”GENERAL PENALTY FOR FAILURE TO COMPLY WITH REQUIREMENTS AND STANDARDS ”SEC. 1176. (a) GENERAL PENALTY.\u2014 ”(1) IN GENERAL.\u2014Except as provided in sub- section (b), the Secretary shall impose on any person who violates a provision of this part a penalty of not more than $100 for each such vio- lation, except that the total amount imposed on the person for all violations of an identical re- quirement or prohibition during a calendar year may not exceed $25,000. ”(2) PROCEDURES.\u2014The provisions of section 1128A (other than subsections (a) and (b) and the second sentence of subsection (f)) shall apply to the imposition of a civil money penalty under this subsection in the same manner as such provisions apply to the imposition of a penalty under such section 1128A. ”(b) LIMITATIONS.\u2014 ”(1) OFFENSES OTHERWISE PUNISHABLE.\u2014A penalty may not be imposed under subsection (a) with respect to an act if the act constitutes an offense punishable under section 1177. ”(2) NONCOMPLIANCE NOT DISCOVERED.\u2014A penalty may not be imposed under subsection (a) with respect to a provision of this part if it is established to the satisfaction of the Secretary that the person liable for the penalty did not know, and by exercising reasonable diligence would not have known, that such person vio- lated the provision. ”(3) FAILURES DUE TO REASONABLE CAUSE.\u2014 ”(A) IN GENERAL.\u2014Except as provided in sub- paragraph (B), a penalty may not be imposed under subsection (a) if\u2014 ”(i) the failure to comply was due to reason- able cause and not to willful neglect; and ”(ii) the failure to comply is corrected during the 30-day period beginning on the first date the person liable for the penalty knew, or by exer- cising reasonable diligence would have known, that the failure to comply occurred. ”(B) EXTENSION OF PERIOD.\u2014 ”(i) NO PENALTY.\u2014The period referred to in subparagraph (A)(ii) may be extended as deter- mined appropriate by the Secretary based on the nature and extent of the failure to comply. ”(ii) ASSISTANCE.\u2014If the Secretary determines that a person failed to comply because the per- son was unable to comply, the Secretary may provide technical assistance to the person dur- ing the period described in subparagraph (A)(ii). Such assistance shall be provided in any man- ner determined appropriate by the Secretary. ”(4) REDUCTION.\u2014In the case of a failure to comply which is due to reasonable cause and not to willful neglect, any penalty under sub- section (a) that is not entirely waived under paragraph (3) may be waived to the extent that the payment of such penalty would be excessive relative to the compliance failure involved. ”WRONGFUL DISCLOSURE OF INDIVIDUALLY IDENTIFIABLE HEALTH INFORMATION ”SEC. 1177. (a) OFFENSE.\u2014A person who knowingly and in violation of this part\u2014 ”(1) uses or causes to be used a unique health identifier; ”(2) obtains individually identifiable health information relating to an individual; or ”(3) discloses individually identifiable health information to another person, shall be punished as provided in subsection (b). ”(b) PENALTIES.\u2014A person described in sub- section (a) shall\u2014 ”(1) be fined not more than $50,000, impris- oned not more than 1 year, or both; ”(2) if the offense is committed under false pretenses, be fined not more than $100,000, im- prisoned not more than 5 years, or both; and ”(3) if the offense is committed with intent to sell, transfer, or use individually identifiable health information for commercial advantage, personal gain, or malicious harm, fined not more than $250,000, imprisoned not more than 10 years, or both. ”EFFECT ON STATE LAW ”SEC. 1178. (a) GENERAL EFFECT.\u2014 ”(1) GENERAL RULE.\u2014Except as provided in paragraph (2), a provision or requirement under this part, or a standard or implementation speci- fication adopted or established under sections 1172 through 1174, shall supersede any contrary provision of State law, including a provision of State law that requires medical or health plan records (including billing information) to be maintained or transmitted in written rather than electronic form. ”(2) EXCEPTIONS.\u2014A provision or requirement under this part, or a standard or implementa- tion specification adopted or established under sections 1172 through 1174, shall not supersede a contrary provision of State law, if the provision of State law\u2014 ”(A) is a provision the Secretary determines\u2014 ”(i) is necessary\u2014 ”(I) to prevent fraud and abuse; ”(II) to ensure appropriate State regulation of insurance and health plans; ”(III) for State reporting on health care deliv- ery or costs; or ”(IV) for other purposes; or ”(ii) addresses controlled substances; or ”(B) subject to section 264(c)(2) of the Health Insurance Portability and Accountability Act of 1996, relates to the privacy of individually iden- tifiable health information. ”(b) PUBLIC HEALTH.\u2014Nothing in this part shall be construed to invalidate or limit the au- thority, power, or procedures established under any law providing for the reporting of disease or injury, child abuse, birth, or death, public health surveillance, or public health investiga- tion or intervention. ”(c) STATE REGULATORY REPORTING.\u2014Noth- ing in this part shall limit the ability of a State to require a health plan to report, or to provide access to, information for management audits, CONGRESSIONAL RECORD \u2014 HOUSEH9498 July 31, 1996 financial audits, program monitoring and eval- uation, facility licensure or certification, or in- dividual licensure or certification. ”PROCESSING PAYMENT TRANSACTIONS BY FINANCIAL INSTITUTIONS ”SEC. 1179. To the extent that an entity is en- gaged in activities of a financial institution (as defined in section 1101 of the Right to Financial Privacy Act of 1978), or is engaged in authoriz- ing, processing, clearing, settling, billing, trans- ferring, reconciling, or collecting payments, for a financial institution, this part, and any standard adopted under this part, shall not apply to the entity with respect to such activi- ties, including the following: ”(1) The use or disclosure of information by the entity for authorizing, processing, clearing, settling, billing, transferring, reconciling or col- lecting, a payment for, or related to, health plan premiums or health care, where such payment is made by any means, including a credit, debit, or other payment card, an account, check, or elec- tronic funds transfer. ”(2) The request for, or the use or disclosure of, information by the entity with respect to a payment described in paragraph (1)\u2014 ”(A) for transferring receivables; ”(B) for auditing; ”(C) in connection with\u2014 ”(i) a customer dispute; or ”(ii) an inquiry from, or to, a customer; ”(D) in a communication to a customer of the entity regarding the customer’s transactions, payment card, account, check, or electronic funds transfer; ”(E) for reporting to consumer reporting agen- cies; or ”(F) for complying with\u2014 ”(i) a civil or criminal subpoena; or ”(ii) a Federal or State law regulating the en- tity.”. (b) CONFORMING AMENDMENTS.\u2014 (1) REQUIREMENT FOR MEDICARE PROVIDERS.\u2014 Section 1866(a)(1) (42 U.S.C. 1395cc(a)(1)) is amended\u2014 (A) by striking ”and” at the end of subpara- graph (P); (B) by striking the period at the end of sub- paragraph (Q) and inserting ”; and”; and (C) by inserting immediately after subpara- graph (Q) the following new subparagraph: ”(R) to contract only with a health care clear- inghouse (as defined in section 1171) that meets each standard and implementation specification adopted or established under part C of title XI on or after the date on which the health care clearinghouse is required to comply with the standard or specification.”. (2) TITLE HEADING.\u2014Title XI (42 U.S.C. 1301 et seq.) is amended by striking the title heading and inserting the following: ”TITLE XI\u2014GENERAL PROVISIONS, PEER REVIEW, AND ADMINISTRATIVE SIM- PLIFICATION”. SEC. 263. CHANGES IN MEMBERSHIP AND DUTIES OF NATIONAL COMMITTEE ON VITAL AND HEALTH STATISTICS. Section 306(k) of the Public Health Service Act (42 U.S.C. 242k(k)) is amended\u2014 (1) in paragraph (1), by striking ”16” and in- serting ”18”; (2) by amending paragraph (2) to read as fol- lows: ”(2) The members of the Committee shall be appointed from among persons who have distin- guished themselves in the fields of health statis- tics, electronic interchange of health care infor- mation, privacy and security of electronic infor- mation, population-based public health, pur- chasing or financing health care services, inte- grated computerized health information systems, health services research, consumer interests in health information, health data standards, epi- demiology, and the provision of health services. Members of the Committee shall be appointed for terms of 4 years.”; (3) by redesignating paragraphs (3) through (5) as paragraphs (4) through (6), respectively, and inserting after paragraph (2) the following: ”(3) Of the members of the Committee\u2014 ”(A) 1 shall be appointed, not later than 60 days after the date of the enactment of the Health Insurance Portability and Accountabil- ity Act of 1996, by the Speaker of the House of Representatives after consultation with the mi- nority leader of the House of Representatives; ”(B) 1 shall be appointed, not later than 60 days after the date of the enactment of the Health Insurance Portability and Accountabil- ity Act of 1996, by the President pro tempore of the Senate after consultation with the minority leader of the Senate; and ”(C) 16 shall be appointed by the Secretary.”; (4) by amending paragraph (5) (as so redesig- nated) to read as follows: ”(5) The Committee\u2014 ”(A) shall assist and advise the Secretary\u2014 ”(i) to delineate statistical problems bearing on health and health services which are of na- tional or international interest; ”(ii) to stimulate studies of such problems by other organizations and agencies whenever pos- sible or to make investigations of such problems through subcommittees; ”(iii) to determine, approve, and revise the terms, definitions, classifications, and guidelines for assessing health status and health services, their distribution and costs, for use (I) within the Department of Health and Human Services, (II) by all programs administered or funded by the Secretary, including the Federal-State-local cooperative health statistics system referred to in subsection (e), and (III) to the extent possible as determined by the head of the agency in- volved, by the Department of Veterans Affairs, the Department of Defense, and other Federal agencies concerned with health and health serv- ices; ”(iv) with respect to the design of and ap- proval of health statistical and health informa- tion systems concerned with the collection, proc- essing, and tabulation of health statistics within the Department of Health and Human Services, with respect to the Cooperative Health Statistics System established under subsection (e), and with respect to the standardized means for the collection of health information and statistics to be established by the Secretary under subsection (j)(1); ”(v) to review and comment on findings and proposals developed by other organizations and agencies and to make recommendations for their adoption or implementation by local, State, na- tional, or international agencies; ”(vi) to cooperate with national committees of other countries and with the World Health Or- ganization and other national agencies in the studies of problems of mutual interest; ”(vii) to issue an annual report on the state of the Nation’s health, its health services, their costs and distributions, and to make proposals for improvement of the Nation’s health statistics and health information systems; and ”(viii) in complying with the requirements im- posed on the Secretary under part C of title XI of the Social Security Act; ”(B) shall study the issues related to the adoption of uniform data standards for patient medical record information and the electronic exchange of such information; ”(C) shall report to the Secretary not later than 4 years after the date of the enactment of the Health Insurance Portability and Account- ability Act of 1996 recommendations and legisla- tive proposals for such standards and electronic exchange; and ”(D) shall be responsible generally for advis- ing the Secretary and the Congress on the status of the implementation of part C of title XI of the Social Security Act.”; and (5) by adding at the end the following: ”(7) Not later than 1 year after the date of the enactment of the Health Insurance Portability and Accountability Act of 1996, and annually thereafter, the Committee shall submit to the Congress, and make public, a report regarding the implementation of part C of title XI of the Social Security Act. Such report shall address the following subjects, to the extent that the Committee determines appropriate: ”(A) The extent to which persons required to comply with part C of title XI of the Social Se- curity Act are cooperating in implementing the standards adopted under such part. ”(B) The extent to which such entities are meeting the security standards adopted under such part and the types of penalties assessed for noncompliance with such standards. ”(C) Whether the Federal and State Govern- ments are receiving information of sufficient quality to meet their responsibilities under such part. ”(D) Any problems that exist with respect to implementation of such part. ”(E) The extent to which timetables under such part are being met.”. SEC. 264. RECOMMENDATIONS WITH RESPECT TO PRIVACY OF CERTAIN HEALTH IN- FORMATION. (a) IN GENERAL.\u2014Not later than the date that is 12 months after the date of the enactment of this Act, the Secretary of Health and Human Services shall submit to the Committee on Labor and Human Resources and the Committee on Fi- nance of the Senate and the Committee on Com- merce and the Committee on Ways and Means of the House of Representatives detailed rec- ommendations on standards with respect to the privacy of individually identifiable health infor- mation. (b) SUBJECTS FOR RECOMMENDATIONS.\u2014The recommendations under subsection (a) shall ad- dress at least the following: (1) The rights that an individual who is a sub- ject of individually identifiable health informa- tion should have. (2) The procedures that should be established for the exercise of such rights. (3) The uses and disclosures of such informa- tion that should be authorized or required. (c) REGULATIONS.\u2014 (1) IN GENERAL.\u2014If legislation governing standards with respect to the privacy of individ- ually identifiable health information transmit- ted in connection with the transactions de- scribed in section 1173(a) of the Social Security Act (as added by section 262) is not enacted by the date that is 36 months after the date of the enactment of this Act, the Secretary of Health and Human Services shall promulgate final reg- ulations containing such standards not later than the date that is 42 months after the date of the enactment of this Act. Such regulations shall address at least the subjects described in subsection (b). (2) PREEMPTION.\u2014A regulation promulgated under paragraph (1) shall not supercede a con- trary provision of State law, if the provision of State law imposes requirements, standards, or implementation specifications that are more stringent than the requirements, standards, or implementation specifications imposed under the regulation. (d) CONSULTATION.\u2014In carrying out this sec- tion, the Secretary of Health and Human Serv- ices shall consult with\u2014 (1) the National Committee on Vital and Health Statistics established under section 306(k) of the Public Health Service Act (42 U.S.C. 242k(k)); and (2) the Attorney General. Subtitle G\u2014Duplication and Coordination of Medicare-Related Plans SEC. 271. DUPLICATION AND COORDINATION OF MEDICARE-RELATED PLANS. (a) TREATMENT OF CERTAIN HEALTH INSUR- ANCE POLICIES AS NONDUPLICATIVE.\u2014Section 1882(d)(3)(A) (42 U.S.C. 1395ss(d)(3)(A)) is amended\u2014 (1) in clause (iii), by striking ”clause (i)” and inserting ”clause (i)(II)”; and (2) by adding at the end the following: ”(iv) For purposes of this subparagraph, a health insurance policy (other than a medicare CONGRESSIONAL RECORD \u2014 HOUSE H9499July 31, 1996 supplemental policy) providing for benefits which are payable to or on behalf of an individ- ual without regard to other health benefit cov- erage of such individual is not considered to ‘duplicate’ any health benefits under this title, under title XIX, or under a health insurance policy, and subclauses (I) and (III) of clause (i) do not apply to such a policy. ”(v) For purposes of this subparagraph, a health insurance policy (or a rider to an insur- ance contract which is not a health insurance policy) is not considered to ‘duplicate’ health benefits under this title or under another health insurance policy if it\u2014 ”(I) provides health care benefits only for long-term care, nursing home care, home health care, or community-based care, or any combina- tion thereof, ”(II) coordinates against or excludes items and services available or paid for under this title or under another health insurance policy, and ”(III) for policies sold or issued on or after the end of the 90-day period beginning on the date of enactment of the Health Insurance Port- ability and Accountability Act of 1996) discloses such coordination or exclusion in the policy’s outline of coverage. For purposes of this clause, the terms ‘coordi- nates’ and ‘coordination’ mean, with respect to a policy in relation to health benefits under this title or under another health insurance policy, that the policy under its terms is secondary to, or excludes from payment, items and services to the extent available or paid for under this title or under another health insurance policy. ”(vi)(I) An individual entitled to benefits under part A or enrolled under part B of this title who is applying for a health insurance pol- icy (other than a policy described in subclause (III)) shall be furnished a disclosure statement described in clause (vii) for the type of policy being applied for. Such statement shall be fur- nished as a part of (or together with) the appli- cation for such policy. ”(II) Whoever issues or sells a health insur- ance policy (other than a policy described in subclause (III)) to an individual described in subclause (I) and fails to furnish the appro- priate disclosure statement as required under such subclause shall be fined under title 18, United States Code, or imprisoned not more than 5 years, or both, and, in addition to or in lieu of such a criminal penalty, is subject to a civil money penalty of not to exceed $25,000 (or $15,000 in the case of a person other than the is- suer of the policy) for each such violation. ”(III) A policy described in this subclause (to which subclauses (I) and (II) do not apply) is a medicare supplemental policy or a health insur- ance policy identified under 60 Federal Register 30880 (June 12, 1995) as a policy not required to have a disclosure statement. ”(IV) Any reference in this section to the re- vised NAIC model regulation (referred to in sub- section (m)(1)(A)) is deemed a reference to such regulation as revised by section 171(m)(2) of the Social Security Act Amendments of 1994 (Public Law 103 432) and as modified by substituting, for the disclosure required under section 16D(2), disclosure under subclause (I) of an appropriate disclosure statement under clause (vii). ”(vii) The disclosure statement described in this clause for a type of policy is the statement specified under subparagraph (D) of this para- graph (as in effect before the date of the enact- ment of the Health Insurance Portability and Accountability Act of 1996) for that type of pol- icy, as revised as follows: ”(I) In each statement, amend the second line to read as follows: ‘THIS IS NOT MEDICARE SUPPLEMENT INSURANCE’. ”(II) In each statement, strike the third line and insert the following: ‘Some health care services paid for by Medicare may also trigger the payment of benefits under this policy.’. ”(III) In each statement not described in sub- clause (V), strike the boldface matter that begins ‘This insurance’ and all that follows up to the next paragraph that begins ‘Medicare’. ”(IV) In each statement not described in sub- clause (V), insert before the boxed matter (that states ‘Before You Buy This Insurance’) the following: ‘This policy must pay benefits with- out regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.’. ”(V) In a statement relating to policies provid- ing both nursing home and non-institutional coverage, to policies providing nursing home benefits only, or policies providing home care benefits only, amend the sentence that begins ‘Federal law’ to read as follows: ‘Federal law requires us to inform you that in certain situa- tions this insurance may pay for some care also covered by Medicare.’. ”(viii)(I) Subject to subclause (II), nothing in this subparagraph shall restrict or preclude a State’s ability to regulate health insurance poli- cies, including any health insurance policy that is described in clause (iv), (v), or (vi)(III). ”(II) A State may not declare or specify, in statute, regulation, or otherwise, that a health insurance policy (other than a medicare supple- mental policy) or rider to an insurance contract which is not a health insurance policy, that is described in clause (iv), (v), or (vi)(III) and that is sold, issued, or renewed to an individual enti- tled to benefits under part A or enrolled under part B ‘duplicates’ health benefits under this title or under a medicare supplemental policy.”. (b) CONFORMING AMENDMENTS.\u2014Section 1882(d)(3) (42 U.S.C. 1395ss(d)(3)) is amended\u2014 (1) in subparagraph (C)\u2014 (A) by striking ”with respect to (i)” and in- serting ”with respect to”, and (B) by striking ”, (ii) the sale” and all that follows up to the period at the end; and (2) by striking subparagraph (D). (c) TRANSITIONAL PROVISION.\u2014 (1) NO PENALTIES.\u2014Subject to paragraph (3), no criminal or civil money penalty may be im- posed under section 1882(d)(3)(A) of the Social Security Act for any act or omission that oc- curred during the transition period (as defined in paragraph (4)) and that relates to any health insurance policy that is described in clause (iv) or (v) of such section (as amended by subsection (a)). (2) LIMITATION ON LEGAL ACTION.\u2014Subject to paragraph (3), no legal action shall be brought or continued in any Federal or State court inso- far as such action\u2014 (A) includes a cause of action which arose, or which is based on or evidenced by any act or omission which occurred, during the transition period; and (B) relates to the application of section 1882(d)(3)(A) of the Social Security Act to any act or omission with respect to the sale, issu- ance, or renewal of any health insurance policy that is described in clause (iv) or (v) of such sec- tion (as amended by subsection (a)). (3) DISCLOSURE CONDITION.\u2014In the case of a policy described in clause (iv) of section 1882(d)(3)(A) of the Social Security Act that is sold or issued on or after the effective date of statements under section 171(d)(3)(C) of the So- cial Security Act Amendments of 1994 and before the end of the 30-day period beginning on the date of the enactment of this Act, paragraphs (1) and (2) shall only apply if disclosure was made in accordance with section 1882(d)(3)(C)(ii) of the Social Security Act (as in effect before the date of the enactment of this Act). (4) TRANSITION PERIOD.\u2014In this subsection, the term ”transition period” means the period beginning on November 5, 1991, and ending on the date of the enactment of this Act. (d) EFFECTIVE DATE.\u2014(1) Except as provided in this subsection, the amendment made by sub- section (a) shall be effective as if included in the enactment of section 4354 of the Omnibus Budg- et Reconciliation Act of 1990. (2)(A) Clause (vi) of section 1882(d)(3)(A) of the Social Security Act, as added by subsection (a), shall only apply to individuals applying for\u2014 (i) a health insurance policy described in sec- tion 1882(d)(3)(A)(iv) of such Act (as added by subsection (a)), after the date of the enactment of this Act, or (ii) another health insurance policy after the end of the 30-day period beginning on the date of the enactment of this Act. (B) A seller or issuer of a health insurance policy may substitute, for the disclosure state- ment described in clause (vii) of such section, the statement specified under section 1882(d)(3)(D) of the Social Security Act (as in ef- fect before the date of the enactment of this Act), without the revision specified in such clause. Subtitle H\u2014Patent Extension SEC. 281. PATENT EXTENSION. (a) IN GENERAL.\u2014Any owner on the date of the enactment of this Act of the right to market a non-steroidal anti-inflammatory drug that\u2014 (1) contains a patented active agent, (2) has been reviewed by the Federal Food and Drug Administration for a period of more than 96 months as a new drug application, and (3) was approved as safe and effective by the Federal Food and Drug Administration on Jan- uary 31, 1991, shall be entitled, for the 2-year period beginning on February 28, 1997, to exclude others from making, using, offering for sale, selling, or im- porting into the United States such active agent, in accordance with section 154(a)(1) of title 35, United States Code. (b) INFRINGEMENT.\u2014Section 271 of title 35, United States Code, shall apply to the infringe- ment of the entitlement provided under sub- section (a) to the same extent as such section applies to infringement of a patent. (c) NOTIFICATION.\u2014Not later than 30 days after the date of the enactment of this Act, any owner granted an entitlement under subsection (a) shall notify the Commissioner of Patents and Trademarks and the Secretary for Health and Human Services of such entitlement. Not later than 7 days after the receipt of such notice, the Commissioner and the Secretary shall publish an appropriate notice of the receipt of such no- tice. (d) OFFSET.\u2014An owner described in sub- section (a) shall pay the amount of $10,000,000 to the Secretary of Health and Human Services in each of the fiscal years 1997 and 1998 as a condition for being eligible to qualify for the en- titlement under subsection (a). As a further con- dition for eligibility, such owner shall enter into a legally binding agreement with the Secretary of Health and Human Services which shall pro- vide a means for ensuring that the entitlement under subsection (a) shall not create any net costs to the States under the medicaid program under title XIX of the Social Security Act. TITLE III\u2014TAX-RELATED HEALTH PROVISIONS SEC. 300. AMENDMENT OF 1986 CODE. Except as otherwise expressly provided, when- ever in this title an amendment or repeal is ex- pressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. Subtitle A\u2014Medical Savings Accounts SEC. 301. MEDICAL SAVINGS ACCOUNTS. (a) IN GENERAL.\u2014Part VII of subchapter B of chapter 1 (relating to additional itemized deduc- tions for individuals) is amended by redesignat- ing section 220 as section 221 and by inserting after section 219 the following new section: ”SEC. 220. MEDICAL SAVINGS ACCOUNTS. ”(a) DEDUCTION ALLOWED.\u2014In the case of an individual who is an eligible individual for any month during the taxable year, there shall be CONGRESSIONAL RECORD \u2014 HOUSEH9500 July 31, 1996 allowed as a deduction for the taxable year an amount equal to the aggregate amount paid in cash during such taxable year by such individ- ual to a medical savings account of such indi- vidual. ”(b) LIMITATIONS.\u2014 ”(1) IN GENERAL.\u2014The amount allowable as a deduction under subsection (a) to an individual for the taxable year shall not exceed the sum of the monthly limitations for months during such taxable year that the individual is an eligible individual. ”(2) MONTHLY LIMITATION.\u2014The monthly lim- itation for any month is the amount equal to 1\u204412 of\u2014 ”(A) in the case of an individual who has self- only coverage under the high deductible health plan as of the first day of such month, 65 per- cent of the annual deductible under such cov- erage, and ”(B) in the case of an individual who has family coverage under the high deductible health plan as of the first day of such month, 75 percent of the annual deductible under such coverage. ”(3) SPECIAL RULE FOR MARRIED INDIVID- UALS.\u2014In the case of individuals who are mar- ried to each other, if either spouse has family coverage\u2014 ”(A) both spouses shall be treated as having only such family coverage (and if such spouses each have family coverage under different plans, as having the family coverage with the lowest annual deductible), and ”(B) the limitation under paragraph (1) (after the application of subparagraph (A) of this paragraph) shall be divided equally between them unless they agree on a different division. ”(4) DEDUCTION NOT TO EXCEED COMPENSA- TION.\u2014 ”(A) EMPLOYEES.\u2014The deduction allowed under subsection (a) for contributions as an eli- gible individual described in subclause (I) of subsection (c)(1)(A)(iii) shall not exceed such in- dividual’s wages, salaries, tips, and other em- ployee compensation which are attributable to such individual’s employment by the employer referred to in such subclause. ”(B) SELF-EMPLOYED INDIVIDUALS.\u2014The de- duction allowed under subsection (a) for con- tributions as an eligible individual described in subclause (II) of subsection (c)(1)(A)(iii) shall not exceed such individual’s earned income (as defined in section 401(c)(1)) derived by the tax- payer from the trade or business with respect to which the high deductible health plan is estab- lished. ”(C) COMMUNITY PROPERTY LAWS NOT TO APPLY.\u2014The limitations under this paragraph shall be determined without regard to commu- nity property laws. ”(5) COORDINATION WITH EXCLUSION FOR EM- PLOYER CONTRIBUTIONS.\u2014No deduction shall be allowed under this section for any amount paid for any taxable year to a medical savings ac- count of an individual if\u2014 ”(A) any amount is contributed to any medi- cal savings account of such individual for such year which is excludable from gross income under section 106(b), or ”(B) if such individual’s spouse is covered under the high deductible health plan covering such individual, any amount is contributed for such year to any medical savings account of such spouse which is so excludable. ”(6) DENIAL OF DEDUCTION TO DEPENDENTS.\u2014 No deduction shall be allowed under this section to any individual with respect to whom a deduc- tion under section 151 is allowable to another taxpayer for a taxable year beginning in the calendar year in which such individual’s tax- able year begins. ”(c) DEFINITIONS.\u2014For purposes of this sec- tion\u2014 ”(1) ELIGIBLE INDIVIDUAL.\u2014 ”(A) IN GENERAL.\u2014The term ‘eligible individ- ual’ means, with respect to any month, any in- dividual if\u2014 ”(i) such individual is covered under a high deductible health plan as of the 1st day of such month, ”(ii) such individual is not, while covered under a high deductible health plan, covered under any health plan\u2014 ”(I) which is not a high deductible health plan, and ”(II) which provides coverage for any benefit which is covered under the high deductible health plan, and ”(iii)(I) the high deductible health plan cover- ing such individual is established and main- tained by the employer of such individual or of the spouse of such individual and such employer is a small employer, or ”(II) such individual is an employee (within the meaning of section 401(c)(1)) or the spouse of such an employee and the high deductible health plan covering such individual is not es- tablished or maintained by any employer of such individual or spouse. ”(B) CERTAIN COVERAGE DISREGARDED.\u2014Sub- paragraph (A)(ii) shall be applied without re- gard to\u2014 ”(i) coverage for any benefit provided by per- mitted insurance, and ”(ii) coverage (whether through insurance or otherwise) for accidents, disability, dental care, vision care, or long-term care. ”(C) CONTINUED ELIGIBILITY OF EMPLOYEE AND SPOUSE ESTABLISHING MEDICAL SAVINGS AC- COUNTS.\u2014If, while an employer is a small em- ployer\u2014 ”(i) any amount is contributed to a medical savings account of an individual who is an em- ployee of such employer or the spouse of such an employee, and ”(ii) such amount is excludable from gross in- come under section 106(b) or allowable as a de- duction under this section, such individual shall not cease to meet the re- quirement of subparagraph (A)(iii)(I) by reason of such employer ceasing to be a small employer so long as such employee continues to be an em- ployee of such employer. ”(D) LIMITATIONS ON ELIGIBILITY.\u2014 ”For limitations on number of taxpayers who are eligible to have medical savings ac- counts, see subsection (i). ”(2) HIGH DEDUCTIBLE HEALTH PLAN.\u2014 ”(A) IN GENERAL.\u2014The term ‘high deductible health plan’ means a health plan\u2014 ”(i) in the case of self-only coverage, which has an annual deductible which is not less than $1,500 and not more than $2,250, ”(ii) in the case of family coverage, which has an annual deductible which is not less than $3,000 and not more than $4,500, and ”(iii) the annual out-of-pocket expenses re- quired to be paid under the plan (other than for premiums) for covered benefits does not exceed\u2014 ”(I) $3,000 for self-only coverage, and ”(II) $5,500 for family coverage. ”(B) SPECIAL RULES.\u2014 ”(i) EXCLUSION OF CERTAIN PLANS.\u2014Such term does not include a health plan if substantially all of its coverage is coverage described in para- graph (1)(B). ”(ii) SAFE HARBOR FOR ABSENCE OF PREVEN- TIVE CARE DEDUCTIBLE.\u2014A plan shall not fail to be treated as a high deductible health plan by reason of failing to have a deductible for pre- ventive care if the absence of a deductible for such care is required by State law. ”(3) PERMITTED INSURANCE.\u2014The term ‘per- mitted insurance’ means\u2014 ”(A) Medicare supplemental insurance, ”(B) insurance if substantially all of the cov- erage provided under such insurance relates to\u2014 ”(i) liabilities incurred under workers’ com- pensation laws, ”(ii) tort liabilities, ”(iii) liabilities relating to ownership or use of property, or ”(iv) such other similar liabilities as the Sec- retary may specify by regulations, ”(C) insurance for a specified disease or ill- ness, and ”(D) insurance paying a fixed amount per day (or other period) of hospitalization. ”(4) SMALL EMPLOYER.\u2014 ”(A) IN GENERAL.\u2014The term ‘small employer’ means, with respect to any calendar year, any employer if such employer employed an average of 50 or fewer employees on business days dur- ing either of the 2 preceding calendar years. For purposes of the preceding sentence, a preceding calendar year may be taken into account only if the employer was in existence throughout such year. ”(B) EMPLOYERS NOT IN EXISTENCE IN PRECED- ING YEAR.\u2014In the case of an employer which was not in existence throughout the 1st preced- ing calendar year, the determination under sub- paragraph (A) shall be based on the average number of employees that it is reasonably ex- pected such employer will employ on business days in the current calendar year. ”(C) CERTAIN GROWING EMPLOYERS RETAIN TREATMENT AS SMALL EMPLOYER.\u2014The term ‘small employer’ includes, with respect to any calendar year, any employer if\u2014 ”(i) such employer met the requirement of sub- paragraph (A) (determined without regard to subparagraph (B)) for any preceding calendar year after 1996, ”(ii) any amount was contributed to the medi- cal savings account of any employee of such em- ployer with respect to coverage of such employee under a high deductible health plan of such em- ployer during such preceding calendar year and such amount was excludable from gross income under section 106(b) or allowable as a deduction under this section, and ”(iii) such employer employed an average of 200 or fewer employees on business days during each preceding calendar year after 1996. ”(D) SPECIAL RULES.\u2014 ”(i) CONTROLLED GROUPS.\u2014For purposes of this paragraph, all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer. ”(ii) PREDECESSORS.\u2014Any reference in this paragraph to an employer shall include a ref- erence to any predecessor of such employer. ”(5) FAMILY COVERAGE.\u2014The term ‘family coverage’ means any coverage other than self- only coverage. ”(d) MEDICAL SAVINGS ACCOUNT.\u2014For pur- poses of this section\u2014 ”(1) MEDICAL SAVINGS ACCOUNT.\u2014The term ‘medical savings account’ means a trust created or organized in the United States exclusively for the purpose of paying the qualified medical ex- penses of the account holder, but only if the written governing instrument creating the trust meets the following requirements: ”(A) Except in the case of a rollover contribu- tion described in subsection (f)(5), no contribu- tion will be accepted\u2014 ”(i) unless it is in cash, or ”(ii) to the extent such contribution, when added to previous contributions to the trust for the calendar year, exceeds 75 percent of the highest annual limit deductible permitted under subsection (c)(2)(A)(ii) for such calendar year. ”(B) The trustee is a bank (as defined in sec- tion 408(n)), an insurance company (as defined in section 816), or another person who dem- onstrates to the satisfaction of the Secretary that the manner in which such person will ad- minister the trust will be consistent with the re- quirements of this section. ”(C) No part of the trust assets will be in- vested in life insurance contracts. ”(D) The assets of the trust will not be com- mingled with other property except in a common trust fund or common investment fund. ”(E) The interest of an individual in the bal- ance in his account is nonforfeitable. ”(2) QUALIFIED MEDICAL EXPENSES.\u2014 ”(A) IN GENERAL.\u2014The term ‘qualified medi- cal expenses’ means, with respect to an account holder, amounts paid by such holder for medical CONGRESSIONAL RECORD \u2014 HOUSE H9501July 31, 1996 care (as defined in section 213(d)) for such indi- vidual, the spouse of such individual, and any dependent (as defined in section 152) of such in- dividual, but only to the extent such amounts are not compensated for by insurance or other- wise. ”(B) HEALTH INSURANCE MAY NOT BE PUR- CHASED FROM ACCOUNT.\u2014 ”(i) IN GENERAL.\u2014Subparagraph (A) shall not apply to any payment for insurance. ”(ii) EXCEPTIONS.\u2014Clause (i) shall not apply to any expense for coverage under\u2014 ”(I) a health plan during any period of con- tinuation coverage required under any Federal law, ”(II) a qualified long-term care insurance contract (as defined in section 7702B(b)), or ”(III) a health plan during a period in which the individual is receiving unemployment com- pensation under any Federal or State law. ”(C) MEDICAL EXPENSES OF INDIVIDUALS WHO ARE NOT ELIGIBLE INDIVIDUALS.\u2014Subparagraph (A) shall apply to an amount paid by an ac- count holder for medical care of an individual who is not an eligible individual for the month in which the expense for such care is incurred only if no amount is contributed (other than a rollover contribution) to any medical savings ac- count of such account holder for the taxable year which includes such month. This subpara- graph shall not apply to any expense for cov- erage described in subclause (I) or (III) of sub- paragraph (B)(ii). ”(3) ACCOUNT HOLDER.\u2014The term ‘account holder’ means the individual on whose behalf the medical savings account was established. ”(4) CERTAIN RULES TO APPLY.\u2014Rules similar to the following rules shall apply for purposes of this section: ”(A) Section 219(d)(2) (relating to no deduc- tion for rollovers). ”(B) Section 219(f)(3) (relating to time when contributions deemed made). ”(C) Except as provided in section 106(b), sec- tion 219(f)(5) (relating to employer payments). ”(D) Section 408(g) (relating to community property laws). ”(E) Section 408(h) (relating to custodial ac- counts). ”(e) TAX TREATMENT OF ACCOUNTS.\u2014 ”(1) IN GENERAL.\u2014A medical savings account is exempt from taxation under this subtitle un- less such account has ceased to be a medical savings account. Notwithstanding the preceding sentence, any such account is subject to the taxes imposed by section 511 (relating to imposi- tion of tax on unrelated business income of charitable, etc. organizations). ”(2) ACCOUNT TERMINATIONS.\u2014Rules similar to the rules of paragraphs (2) and (4) of section 408(e) shall apply to medical savings accounts, and any amount treated as distributed under such rules shall be treated as not used to pay qualified medical expenses. ”(f) TAX TREATMENT OF DISTRIBUTIONS.\u2014 ”(1) AMOUNTS USED FOR QUALIFIED MEDICAL EXPENSES.\u2014Any amount paid or distributed out of a medical savings account which is used ex- clusively to pay qualified medical expenses of any account holder shall not be includible in gross income. ”(2) INCLUSION OF AMOUNTS NOT USED FOR QUALIFIED MEDICAL EXPENSES.\u2014Any amount paid or distributed out of a medical savings ac- count which is not used exclusively to pay the qualified medical expenses of the account holder shall be included in the gross income of such holder. ”(3) EXCESS CONTRIBUTIONS RETURNED BEFORE DUE DATE OF RETURN.\u2014 ”(A) IN GENERAL.\u2014If any excess contribution is contributed for a taxable year to any medical savings account of an individual, paragraph (2) shall not apply to distributions from the medical savings accounts of such individual (to the ex- tent such distributions do not exceed the aggre- gate excess contributions to all such accounts of such individual for such year) if\u2014 ”(i) such distribution is received by the indi- vidual on or before the last day prescribed by law (including extensions of time) for filing such individual’s return for such taxable year, and ”(ii) such distribution is accompanied by the amount of net income attributable to such excess contribution. Any net income described in clause (ii) shall be included in the gross income of the individual for the taxable year in which it is received. ”(B) EXCESS CONTRIBUTION.\u2014For purposes of subparagraph (A), the term ‘excess contribution’ means any contribution (other than a rollover contribution) which is neither excludable from gross income under section 106(b) nor deductible under this section. ”(4) ADDITIONAL TAX ON DISTRIBUTIONS NOT USED FOR QUALIFIED MEDICAL EXPENSES.\u2014 ”(A) IN GENERAL.\u2014The tax imposed by this chapter on the account holder for any taxable year in which there is a payment or distribution from a medical savings account of such holder which is includible in gross income under para- graph (2) shall be increased by 15 percent of the amount which is so includible. ”(B) EXCEPTION FOR DISABILITY OR DEATH.\u2014 Subparagraph (A) shall not apply if the pay- ment or distribution is made after the account holder becomes disabled within the meaning of section 72(m)(7) or dies. ”(C) EXCEPTION FOR DISTRIBUTIONS AFTER MEDICARE ELIGIBILITY.\u2014Subparagraph (A) shall not apply to any payment or distribution after the date on which the account holder attains the age specified in section 1811 of the Social Se- curity Act. ”(5) ROLLOVER CONTRIBUTION.\u2014An amount is described in this paragraph as a rollover con- tribution if it meets the requirements of subpara- graphs (A) and (B). ”(A) IN GENERAL.\u2014Paragraph (2) shall not apply to any amount paid or distributed from a medical savings account to the account holder to the extent the amount received is paid into a medical savings account for the benefit of such holder not later than the 60th day after the day on which the holder receives the payment or dis- tribution. ”(B) LIMITATION.\u2014This paragraph shall not apply to any amount described in subparagraph (A) received by an individual from a medical savings account if, at any time during the 1- year period ending on the day of such receipt, such individual received any other amount de- scribed in subparagraph (A) from a medical sav- ings account which was not includible in the in- dividual’s gross income because of the applica- tion of this paragraph. ”(6) COORDINATION WITH MEDICAL EXPENSE DEDUCTION.\u2014For purposes of determining the amount of the deduction under section 213, any payment or distribution out of a medical savings account for qualified medical expenses shall not be treated as an expense paid for medical care. ”(7) TRANSFER OF ACCOUNT INCIDENT TO DI- VORCE.\u2014The transfer of an individual’s interest in a medical savings account to an individual’s spouse or former spouse under a divorce or sepa- ration instrument described in subparagraph (A) of section 71(b)(2) shall not be considered a tax- able transfer made by such individual notwith- standing any other provision of this subtitle, and such interest shall, after such transfer, be treated as a medical savings account with re- spect to which such spouse is the account hold- er. ”(8) TREATMENT AFTER DEATH OF ACCOUNT HOLDER.\u2014 ”(A) TREATMENT IF DESIGNATED BENEFICIARY IS SPOUSE.\u2014If the account holder’s surviving spouse acquires such holder’s interest in a medi- cal savings account by reason of being the des- ignated beneficiary of such account at the death of the account holder, such medical savings ac- count shall be treated as if the spouse were the account holder. ”(B) OTHER CASES.\u2014 ”(i) IN GENERAL.\u2014If, by reason of the death of the account holder, any person acquires the ac- count holder’s interest in a medical savings ac- count in a case to which subparagraph (A) does not apply\u2014 ”(I) such account shall cease to be a medical savings account as of the date of death, and ”(II) an amount equal to the fair market value of the assets in such account on such date shall be includible if such person is not the es- tate of such holder, in such person’s gross in- come for the taxable year which includes such date, or if such person is the estate of such holder, in such holder’s gross income for the last taxable year of such holder. ”(ii) SPECIAL RULES.\u2014 ”(I) REDUCTION OF INCLUSION FOR PRE-DEATH EXPENSES.\u2014The amount includible in gross in- come under clause (i) by any person (other than the estate) shall be reduced by the amount of qualified medical expenses which were incurred by the decedent before the date of the decedent’s death and paid by such person within 1 year after such date. ”(II) DEDUCTION FOR ESTATE TAXES.\u2014An ap- propriate deduction shall be allowed under sec- tion 691(c) to any person (other than the dece- dent or the decedent’s spouse) with respect to amounts included in gross income under clause (i) by such person. ”(g) COST-OF-LIVING ADJUSTMENT.\u2014In the case of any taxable year beginning in a cal- endar year after 1998, each dollar amount in subsection (c)(2) shall be increased by an amount equal to\u2014 ”(1) such dollar amount, multiplied by ”(2) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which such taxable year begins by substituting ‘calendar year 1997’ for ‘calendar year 1992’ in subparagraph (B) thereof. If any increase under the preceding sentence is not a multiple of $50, such increase shall be rounded to the nearest multiple of $50. ”(h) REPORTS.\u2014The Secretary may require the trustee of a medical savings account to make such reports regarding such account to the Sec- retary and to the account holder with respect to contributions, distributions, and such other matters as the Secretary determines appropriate. The reports required by this subsection shall be filed at such time and in such manner and fur- nished to such individuals at such time and in such manner as may be required by the Sec- retary. ”(i) LIMITATION ON NUMBER OF TAXPAYERS HAVING MEDICAL SAVINGS ACCOUNTS.\u2014 ”(1) IN GENERAL.\u2014Except as provided in para- graph (5), no individual shall be treated as an eligible individual for any taxable year begin- ning after the cut-off year unless\u2014 ”(A) such individual was an active MSA par- ticipant for any taxable year ending on or be- fore the close of the cut-off year, or ”(B) such individual first became an active MSA participant for a taxable year ending after the cut-off year by reason of coverage under a high deductible health plan of an MSA partici- pating employer. ”(2) CUT-OFF YEAR.\u2014For purposes of para- graph (1), the term ‘cut-off year’ means the ear- lier of\u2014 ”(A) calendar year 2000, or ”(B) the first calendar year before 2000 for which the Secretary determines under sub- section (j) that the numerical limitation for such year has been exceeded. ”(3) ACTIVE MSA PARTICIPANT.\u2014For purposes of this subsection\u2014 ”(A) IN GENERAL.\u2014The term ‘active MSA par- ticipant’ means, with respect to any taxable year, any individual who is the account holder of any medical savings account into which any contribution was made which was excludable from gross income under section 106(b), or allow- able as a deduction under this section, for such taxable year. ”(B) SPECIAL RULE FOR CUT-OFF YEARS BE- FORE 2000.\u2014In the case of a cut-off year before 2000\u2014 CONGRESSIONAL RECORD \u2014 HOUSEH9502 July 31, 1996 ”(i) an individual shall not be treated as an eligible individual for any month of such year or an active MSA participant under paragraph (1)(A) unless such individual is, on or before the cut-off date, covered under a high deductible health plan, and ”(ii) an employer shall not be treated as an MSA-participating employer unless the em- ployer, on or before the cut-off date, offered coverage under a high deductible health plan to any employee. ”(C) CUT-OFF DATE.\u2014For purposes of sub- paragraph (B)\u2014 ”(i) IN GENERAL.\u2014Except as otherwise pro- vided in this subparagraph, the cut-off date is October 1 of the cut-off year. ”(ii) EMPLOYEES WITH ENROLLMENT PERIODS AFTER OCTOBER 1.\u2014In the case of an individual described in subclause (I) of subsection (c)(1)(A)(iii), if the regularly scheduled enroll- ment period for health plans of the individual’s employer occurs during the last 3 months of the cut-off year, the cut-off date is December 31 of the cut-off year. ”(iii) SELF-EMPLOYED INDIVIDUALS.\u2014In the case of an individual described in subclause (II) of subsection (c)(1)(A)(iii), the cut-off date is November 1 of the cut-off year. ”(iv) SPECIAL RULES FOR 1997.\u2014If 1997 is a cut- off year by reason of subsection (j)(1)(A)\u2014 ”(I) each of the cut-off dates under clauses (i) and (iii) shall be 1 month earlier than the date determined without regard to this clause, and ”(II) clause (ii) shall be applied by substitut- ing ‘4 months’ for ‘3 months’. ”(4) MSA-PARTICIPATING EMPLOYER.\u2014For purposes of this subsection, the term ‘MSA-par- ticipating employer’ means any small employer if\u2014 ”(A) such employer made any contribution to the medical savings account of any employee during the cut-off year or any preceding cal- endar year which was excludable from gross in- come under section 106(b), or ”(B) at least 20 percent of the employees of such employer who are eligible individuals for any month of the cut-off year by reason of cov- erage under a high deductible health plan of such employer each made a contribution of at least $100 to their medical savings accounts for any taxable year ending with or within the cut- off year which was allowable as a deduction under this section. ”(5) ADDITIONAL ELIGIBILITY AFTER CUT-OFF YEAR.\u2014If the Secretary determines under sub- section (j)(2)(A) that the numerical limit for the calendar year following a cut-off year described in paragraph (2)(B) has not been exceeded\u2014 ”(A) this subsection shall not apply to any otherwise eligible individual who is covered under a high deductible health plan during the first 6 months of the second calendar year fol- lowing the cut-off year (and such individual shall be treated as an active MSA participant for purposes of this subsection if a contribution is made to any medical savings account with re- spect to such coverage), and ”(B) any employer who offers coverage under a high deductible health plan to any employee during such 6-month period shall be treated as an MSA-participating employer for purposes of this subsection if the requirements of paragraph (4) are met with respect to such coverage. For purposes of this paragraph, subsection (j)(2)(A) shall be applied for 1998 by substituting ‘750,000’ for ‘600,000’. ”(j) DETERMINATION OF WHETHER NUMERICAL LIMITS ARE EXCEEDED.\u2014 ”(1) DETERMINATION OF WHETHER LIMIT EX- CEEDED FOR 1997.\u2014The numerical limitation for 1997 is exceeded if, based on the reports required under paragraph (4), the number of medical sav- ings accounts established as of\u2014 ”(A) April 30, 1997, exceeds 375,000, or ”(B) June 30, 1997, exceeds 525,000. ”(2) DETERMINATION OF WHETHER LIMIT EX- CEEDED FOR 1998 OR 1999.\u2014 ”(A) IN GENERAL.\u2014The numerical limitation for 1998 or 1999 is exceeded if the sum of\u2014 ”(i) the number of MSA returns filed on or be- fore April 15 of such calendar year for taxable years ending with or within the preceding cal- endar year, plus ”(ii) the Secretary’s estimate (determined on the basis of the returns described in clause (i)) of the number of MSA returns for such taxable years which will be filed after such date, exceeds 600,000 (750,000 in the case of 1999). For purposes of the preceding sentence, the term ‘MSA return’ means any return on which any exclusion is claimed under section 106(b) or any deduction is claimed under this section. ”(B) ALTERNATIVE COMPUTATION OF LIMITA- TION.\u2014The numerical limitation for 1998 or 1999 is also exceeded if the sum of\u2014 ”(i) 90 percent of the sum determined under subparagraph (A) for such calendar year, plus ”(ii) the product of 2.5 and the number of medical savings accounts established during the portion of such year preceding July 1 (based on the reports required under paragraph (4)) for taxable years beginning in such year, exceeds 750,000. ”(3) PREVIOUSLY UNINSURED INDIVIDUALS NOT INCLUDED IN DETERMINATION.\u2014 ”(A) IN GENERAL.\u2014The determination of whether any calendar year is a cut-off year shall be made by not counting the medical sav- ings account of any previously uninsured indi- vidual. ”(B) PREVIOUSLY UNINSURED INDIVIDUAL.\u2014 For purposes of this subsection, the term ‘pre- viously uninsured individual’ means, with re- spect to any medical savings account, any indi- vidual who had no health plan coverage (other than coverage referred to in subsection (c)(1)(B)) at any time during the 6-month period before the date such individual’s coverage under the high deductible health plan commences. ”(4) REPORTING BY MSA TRUSTEES.\u2014 ”(A) IN GENERAL.\u2014Not later than August 1 of 1997, 1998, and 1999, each person who is the trustee of a medical savings account established before July 1 of such calendar year shall make a report to the Secretary (in such form and manner as the Secretary shall specify) which specifies\u2014 ”(i) the number of medical savings accounts established before such July 1 (for taxable years beginning in such calendar year) of which such person is the trustee, ”(ii) the name and TIN of the account holder of each such account, and ”(iii) the number of such accounts which are accounts of previously uninsured individuals. ”(B) ADDITIONAL REPORT FOR 1997.\u2014Not later than June 1, 1997, each person who is the trust- ee of a medical savings account established be- fore May 1, 1997, shall make an additional re- port described in subparagraph (A) but only with respect to accounts established before May 1, 1997. ”(C) PENALTY FOR FAILURE TO FILE REPORT.\u2014 The penalty provided in section 6693(a) shall apply to any report required by this paragraph, except that\u2014 ”(i) such section shall be applied by substitut- ing ‘$25’ for ‘$50’, and ”(ii) the maximum penalty imposed on any trustee shall not exceed $5,000. ”(D) AGGREGATION OF ACCOUNTS.\u2014To the ex- tent practical, in determining the number of medical savings accounts on the basis of the re- ports under this paragraph, all medical savings accounts of an individual shall be treated as 1 account and all accounts of individuals who are married to each other shall be treated as 1 ac- count. ”(5) DATE OF MAKING DETERMINATIONS.\u2014Any determination under this subsection that a cal- endar year is a cut-off year shall be made by the Secretary and shall be published not later than October 1 of such year. (b) DEDUCTION ALLOWED WHETHER OR NOT INDIVIDUAL ITEMIZES OTHER DEDUCTIONS.\u2014Sub- section (a) of section 62 is amended by inserting after paragraph (15) the following new para- graph: ”(16) MEDICAL SAVINGS ACCOUNTS.\u2014The de- duction allowed by section 220.” (c) EXCLUSIONS FOR EMPLOYER CONTRIBU- TIONS TO MEDICAL SAVINGS ACCOUNTS.\u2014 (1) EXCLUSION FROM INCOME TAX.\u2014The text of section 106 (relating to contributions by em- ployer to accident and health plans) is amended to read as follows: ”(a) GENERAL RULE.\u2014Except as otherwise provided in this section, gross income of an em- ployee does not include employer-provided cov- erage under an accident or health plan. ”(b) CONTRIBUTIONS TO MEDICAL SAVINGS AC- COUNTS.\u2014 ”(1) IN GENERAL.\u2014In the case of an employee who is an eligible individual, amounts contrib- uted by such employee’s employer to any medi- cal savings account of such employee shall be treated as employer-provided coverage for medi- cal expenses under an accident or health plan to the extent such amounts do not exceed the limi- tation under section 220(b)(1) (determined with- out regard to this subsection) which is applica- ble to such employee for such taxable year. ”(2) NO CONSTRUCTIVE RECEIPT.\u2014No amount shall be included in the gross income of any em- ployee solely because the employee may choose between the contributions referred to in para- graph (1) and employer contributions to another health plan of the employer. ”(3) SPECIAL RULE FOR DEDUCTION OF EM- PLOYER CONTRIBUTIONS.\u2014Any employer con- tribution to a medical savings account, if other- wise allowable as a deduction under this chap- ter, shall be allowed only for the taxable year in which paid. ”(4) EMPLOYER MSA CONTRIBUTIONS REQUIRED TO BE SHOWN ON RETURN.\u2014Every individual re- quired to file a return under section 6012 for the taxable year shall include on such return the aggregate amount contributed by employers to the medical savings accounts of such individual or such individual’s spouse for such taxable year. ”(5) MSA CONTRIBUTIONS NOT PART OF COBRA COVERAGE.\u2014Paragraph (1) shall not apply for purposes of section 4980B. ”(6) DEFINITIONS.\u2014For purposes of this sub- section, the terms ‘eligible individual’ and ‘medi- cal savings account’ have the respective mean- ings given to such terms by section 220. ”(7) CROSS REFERENCE.\u2014 ”For penalty on failure by employer to make comparable contributions to the medical sav- ings accounts of comparable employees, see section 4980E.”. (2) EXCLUSION FROM EMPLOYMENT TAXES.\u2014 (A) RAILROAD RETIREMENT TAX.\u2014Subsection (e) of section 3231 is amended by adding at the end the following new paragraph: ”(10) MEDICAL SAVINGS ACCOUNT CONTRIBU- TIONS.\u2014The term ‘compensation’ shall not in- clude any payment made to or for the benefit of an employee if at the time of such payment it is reasonable to believe that the employee will be able to exclude such payment from income under section 106(b).” (B) UNEMPLOYMENT TAX.\u2014Subsection (b) of section 3306 is amended by striking ”or” at the end of paragraph (15), by striking the period at the end of paragraph (16) and inserting ”; or”, and by inserting after paragraph (16) the fol- lowing new paragraph: ”(17) any payment made to or for the benefit of an employee if at the time of such payment it is reasonable to believe that the employee will be able to exclude such payment from income under section 106(b).” (C) WITHHOLDING TAX.\u2014Subsection (a) of sec- tion 3401 is amended by striking ”or” at the end of paragraph (19), by striking the period at the end of paragraph (20) and inserting ”; or”, and by inserting after paragraph (20) the following new paragraph: ”(21) any payment made to or for the benefit of an employee if at the time of such payment it is reasonable to believe that the employee will be able to exclude such payment from income under section 106(b).” CONGRESSIONAL RECORD \u2014 HOUSE H9503July 31, 1996 (3) EMPLOYER CONTRIBUTIONS REQUIRED TO BE SHOWN ON W-2.\u2014Subsection (a) of section 6051 is amended by striking ”and” at the end of para- graph (9), by striking the period at the end of paragraph (10) and inserting ”, and”, and by inserting after paragraph (10) the following new paragraph: ”(11) the amount contributed to any medical savings account (as defined in section 220(d)) of such employee or such employee’s spouse.” (4) PENALTY FOR FAILURE OF EMPLOYER TO MAKE COMPARABLE MSA CONTRIBUTIONS.\u2014 (A) IN GENERAL.\u2014Chapter 43 is amended by adding after section 4980D the following new section: ”SEC. 4980E. FAILURE OF EMPLOYER TO MAKE COMPARABLE MEDICAL SAVINGS AC- COUNT CONTRIBUTIONS. ”(a) GENERAL RULE.\u2014In the case of an em- ployer who makes a contribution to the medical savings account of any employee with respect to coverage under a high deductible health plan of the employer during a calendar year, there is hereby imposed a tax on the failure of such em- ployer to meet the requirements of subsection (d) for such calendar year. ”(b) AMOUNT OF TAX.\u2014The amount of the tax imposed by subsection (a) on any failure for any calendar year is the amount equal to 35 percent of the aggregate amount contributed by the em- ployer to medical savings accounts of employees for taxable years of such employees ending with or within such calendar year. ”(c) WAIVER BY SECRETARY.\u2014In the case of a failure which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by subsection (a) to the extent that the payment of such tax would be excessive relative to the failure involved. ”(d) EMPLOYER REQUIRED TO MAKE COM- PARABLE MSA CONTRIBUTIONS FOR ALL PARTICI- PATING EMPLOYEES.\u2014 ”(1) IN GENERAL.\u2014An employer meets the re- quirements of this subsection for any calendar year if the employer makes available comparable contributions to the medical savings accounts of all comparable participating employees for each coverage period during such calendar year. ”(2) COMPARABLE CONTRIBUTIONS.\u2014 ”(A) IN GENERAL.\u2014For purposes of paragraph (1), the term ‘comparable contributions’ means contributions\u2014 ”(i) which are the same amount, or ”(ii) which are the same percentage of the an- nual deductible limit under the high deductible health plan covering the employees. ”(B) PART-YEAR EMPLOYEES.\u2014In the case of an employee who is employed by the employer for only a portion of the calendar year, a con- tribution to the medical savings account of such employee shall be treated as comparable if it is an amount which bears the same ratio to the comparable amount (determined without regard to this subparagraph) as such portion bears to the entire calendar year. ”(3) COMPARABLE PARTICIPATING EMPLOY- EES.\u2014For purposes of paragraph (1), the term ‘comparable participating employees’ means all employees\u2014 ”(A) who are eligible individuals covered under any high deductible health plan of the employer, and ”(B) who have the same category of coverage. For purposes of subparagraph (B), the cat- egories of coverage are self-only and family cov- erage. ”(4) PART-TIME EMPLOYEES.\u2014 ”(A) IN GENERAL.\u2014Paragraph (3) shall be ap- plied separately with respect to part-time em- ployees and other employees. ”(B) PART-TIME EMPLOYEE.\u2014For purposes of subparagraph (A), the term ‘part-time employee’ means any employee who is customarily em- ployed for fewer than 30 hours per week. ”(e) CONTROLLED GROUPS.\u2014For purposes of this section, all persons treated as a single em- ployer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer. ”(f) DEFINITIONS.\u2014Terms used in this section which are also used in section 220 have the re- spective meanings given such terms in section 220.” (B) CLERICAL AMENDMENT.\u2014The table of sec- tions for chapter 43 is amended by adding after the item relating to section 4980D the following new item: ”Sec. 4980E. Failure of employer to make com- parable medical savings account contributions.” (d) MEDICAL SAVINGS ACCOUNT CONTRIBU- TIONS NOT AVAILABLE UNDER CAFETERIA PLANS.\u2014Subsection (f) of section 125 of such Code is amended by inserting ”106(b),” before ”117”. (e) TAX ON EXCESS CONTRIBUTIONS.\u2014Section 4973 (relating to tax on excess contributions to individual retirement accounts, certain section 403(b) contracts, and certain individual retire- ment annuities) is amended\u2014 (1) by inserting ”medical savings accounts,” after ”accounts,” in the heading of such section, (2) by striking ”or” at the end of paragraph (1) of subsection (a), (3) by redesignating paragraph (2) of sub- section (a) as paragraph (3) and by inserting after paragraph (1) the following: ”(2) a medical savings account (within the meaning of section 220(d)), or”, and (4) by adding at the end the following new subsection: ”(d) EXCESS CONTRIBUTIONS TO MEDICAL SAV- INGS ACCOUNTS.\u2014For purposes of this section, in the case of medical savings accounts (within the meaning of section 220(d)), the term ‘excess con- tributions’ means the sum of\u2014 ”(1) the aggregate amount contributed for the taxable year to the accounts (other than rollover contributions described in section 220(f)(5)) which is neither excludable from gross income under section 106(b) nor allowable as a deduc- tion under section 220 for such year, and ”(2) the amount determined under this sub- section for the preceding taxable year, reduced by the sum of\u2014 ”(A) the distributions out of the accounts which were included in gross income under sec- tion 220(f)(2), and ”(B) the excess (if any) of\u2014 ”(i) the maximum amount allowable as a de- duction under section 220(b)(1) (determined without regard to section 106(b)) for the taxable year, over ”(ii) the amount contributed to the accounts for the taxable year. For purposes of this subsection, any contribu- tion which is distributed out of the medical sav- ings account in a distribution to which section 220(f)(3) applies shall be treated as an amount not contributed.” (f) TAX ON PROHIBITED TRANSACTIONS.\u2014 (1) Section 4975 (relating to tax on prohibited transactions) is amended by adding at the end of subsection (c) the following new paragraph: ”(4) SPECIAL RULE FOR MEDICAL SAVINGS AC- COUNTS.\u2014An individual for whose benefit a medical savings account (within the meaning of section 220(d)) is established shall be exempt from the tax imposed by this section with respect to any transaction concerning such account (which would otherwise be taxable under this section) if, with respect to such transaction, the account ceases to be a medical savings account by reason of the application of section 220(e)(2) to such account.” (2) Paragraph (1) of section 4975(e) is amended to read as follows: ”(1) PLAN.\u2014For purposes of this section, the term ‘plan’ means\u2014 ”(A) a trust described in section 401(a) which forms a part of a plan, or a plan described in section 403(a), which trust or plan is exempt from tax under section 501(a), ”(B) an individual retirement account de- scribed in section 408(a), ”(C) an individual retirement annuity de- scribed in section 408(b), ”(D) a medical savings account described in section 220(d), or ”(E) a trust, plan, account, or annuity which, at any time, has been determined by the Sec- retary to be described in any preceding subpara- graph of this paragraph.” (g) FAILURE TO PROVIDE REPORTS ON MEDI- CAL SAVINGS ACCOUNTS.\u2014 (1) Subsection (a) of section 6693 (relating to failure to provide reports on individual retire- ment accounts or annuities) is amended to read as follows: ”(a) REPORTS.\u2014 ”(1) IN GENERAL.\u2014If a person required to file a report under a provision referred to in para- graph (2) fails to file such report at the time and in the manner required by such provision, such person shall pay a penalty of $50 for each fail- ure unless it is shown that such failure is due to reasonable cause. ”(2) PROVISIONS.\u2014The provisions referred to in this paragraph are\u2014 ”(A) subsections (i) and (l) of section 408 (re- lating to individual retirement plans), and ”(B) section 220(h) (relating to medical sav- ings accounts).” (h) EXCEPTION FROM CAPITALIZATION OF POL- ICY ACQUISITION EXPENSES.\u2014Subparagraph (B) of section 848(e)(1) (defining specified insurance contract) is amended by striking ”and” at the end of clause (ii), by striking the period at the end of clause (iii) and inserting ”, and”, and by adding at the end the following new clause: ”(iv) any contract which is a medical savings account (as defined in section 220(d)).”. (i) CLERICAL AMENDMENT.\u2014The table of sec- tions for part VII of subchapter B of chapter 1 is amended by striking the last item and insert- ing the following: ”Sec. 220. Medical savings accounts. ”Sec. 221. Cross reference.”. (j) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to taxable years be- ginning after December 31, 1996. (k) MONITORING OF PARTICIPATION IN MEDI- CAL SAVINGS ACCOUNTS.\u2014The Secretary of the Treasury or his delegate shall\u2014 (1) during 1997, 1998, 1999, and 2000, regularly evaluate the number of individuals who are maintaining medical savings accounts and the reduction in revenues to the United States by reason of such accounts, and (2) provide such reports of such evaluations to Congress as such Secretary determines appro- priate. (l) STUDY OF EFFECTS OF MEDICAL SAVINGS ACCOUNTS ON SMALL GROUP MARKET.\u2014The Comptroller General of the United States shall enter into a contract with an organization with expertise in health economics, health insurance markets, and actuarial science to conduct a comprehensive study regarding the effects of medical savings accounts in the small group market on\u2014 (1) selection, including adverse selection, (2) health costs, including any impact on pre- miums of individuals with comprehensive cov- erage, (3) use of preventive care, (4) consumer choice, (5) the scope of coverage of high deductible plans purchased in conjunction with such ac- counts, and (6) other relevant items. A report on the results of the study conducted under this subsection shall be submitted to the Congress no later than January 1, 1999. Subtitle B\u2014Increase in Deduction for Health Insurance Costs of Self-Employed Individuals SEC. 311. INCREASE IN DEDUCTION FOR HEALTH INSURANCE COSTS OF SELF-EM- PLOYED INDIVIDUALS. (a) IN GENERAL.\u2014Paragraph (1) of section 162(l) is amended to read as follows: ”(1) ALLOWANCE OF DEDUCTION.\u2014 ”(A) IN GENERAL.\u2014In the case of an individ- ual who is an employee within the meaning of CONGRESSIONAL RECORD \u2014 HOUSEH9504 July 31, 1996 section 401(c)(1), there shall be allowed as a de- duction under this section an amount equal to the applicable percentage of the amount paid during the taxable year for insurance which constitutes medical care for the taxpayer, his spouse, and dependents. ”(B) APPLICABLE PERCENTAGE.\u2014For purposes of subparagraph (A), the applicable percentage shall be determined under the following table: ”For taxable years beginning in The applicable in calendar year\u2014 percentage is\u2014 1997 …………………… 40 percent 1998 through 2002 …. 45 percent 2003 …………………… 50 percent 2004 …………………… 60 percent 2005 …………………… 70 percent 2006 or thereafter ….. 80 percent.”. (b) EXCLUSION FOR AMOUNTS RECEIVED UNDER CERTAIN SELF-INSURED PLANS.\u2014Paragraph (3) of section 104(a) is amended by inserting ”(or through an arrangement having the effect of ac- cident or health insurance)” after ”health in- surance”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to taxable years be- ginning after December 31, 1996. Subtitle C\u2014Long-Term Care Services and Contracts PART I\u2014GENERAL PROVISIONS SEC. 321. TREATMENT OF LONG-TERM CARE IN- SURANCE. (a) GENERAL RULE.\u2014Chapter 79 (relating to definitions) is amended by inserting after sec- tion 7702A the following new section: ”SEC. 7702B. TREATMENT OF QUALIFIED LONG- TERM CARE INSURANCE. ”(a) IN GENERAL.\u2014For purposes of this title\u2014 ”(1) a qualified long-term care insurance con- tract shall be treated as an accident and health insurance contract, ”(2) amounts (other than policyholder divi- dends, as defined in section 808, or premium re- funds) received under a qualified long-term care insurance contract shall be treated as amounts received for personal injuries and sickness and shall be treated as reimbursement for expenses actually incurred for medical care (as defined in section 213(d)), ”(3) any plan of an employer providing cov- erage under a qualified long-term care insur- ance contract shall be treated as an accident and health plan with respect to such coverage, ”(4) except as provided in subsection (e)(3), amounts paid for a qualified long-term care in- surance contract providing the benefits de- scribed in subsection (b)(2)(A) shall be treated as payments made for insurance for purposes of section 213(d)(1)(D), and ”(5) a qualified long-term care insurance con- tract shall be treated as a guaranteed renewable contract subject to the rules of section 816(e). ”(b) QUALIFIED LONG-TERM CARE INSURANCE CONTRACT.\u2014For purposes of this title\u2014 ”(1) IN GENERAL.\u2014The term ‘qualified long- term care insurance contract’ means any insur- ance contract if\u2014 ”(A) the only insurance protection provided under such contract is coverage of qualified long-term care services, ”(B) such contract does not pay or reimburse expenses incurred for services or items to the ex- tent that such expenses are reimbursable under title XVIII of the Social Security Act or would be so reimbursable but for the application of a deductible or coinsurance amount, ”(C) such contract is guaranteed renewable, ”(D) such contract does not provide for a cash surrender value or other money that can be\u2014 ”(i) paid, assigned, or pledged as collateral for a loan, or ”(ii) borrowed, other than as provided in subparagraph (E) or paragraph (2)(C), ”(E) all refunds of premiums, and all policy- holder dividends or similar amounts, under such contract are to be applied as a reduction in fu- ture premiums or to increase future benefits, and ”(F) such contract meets the requirements of subsection (g). ”(2) SPECIAL RULES.\u2014 ”(A) PER DIEM, ETC. PAYMENTS PERMITTED.\u2014 A contract shall not fail to be described in sub- paragraph (A) or (B) of paragraph (1) by reason of payments being made on a per diem or other periodic basis without regard to the expenses in- curred during the period to which the payments relate. ”(B) SPECIAL RULES RELATING TO MEDICARE.\u2014 ”(i) Paragraph (1)(B) shall not apply to ex- penses which are reimbursable under title XVIII of the Social Security Act only as a secondary payor. ”(ii) No provision of law shall be construed or applied so as to prohibit the offering of a quali- fied long-term care insurance contract on the basis that the contract coordinates its benefits with those provided under such title. ”(C) REFUNDS OF PREMIUMS.\u2014Paragraph (1)(E) shall not apply to any refund on the death of the insured, or on a complete surrender or cancellation of the contract, which cannot exceed the aggregate premiums paid under the contract. Any refund on a complete surrender or cancellation of the contract shall be includible in gross income to the extent that any deduction or exclusion was allowable with respect to the premiums. ”(c) QUALIFIED LONG-TERM CARE SERVICES.\u2014 For purposes of this section\u2014 ”(1) IN GENERAL.\u2014The term ‘qualified long- term care services’ means necessary diagnostic, preventive, therapeutic, curing, treating, miti- gating, and rehabilitative services, and mainte- nance or personal care services, which\u2014 ”(A) are required by a chronically ill individ- ual, and ”(B) are provided pursuant to a plan of care prescribed by a licensed health care practi- tioner. ”(2) CHRONICALLY ILL INDIVIDUAL.\u2014 ”(A) IN GENERAL.\u2014The term ‘chronically ill individual’ means any individual who has been certified by a licensed health care practitioner as\u2014 ”(i) being unable to perform (without substan- tial assistance from another individual) at least 2 activities of daily living for a period of at least 90 days due to a loss of functional capacity, ”(ii) having a level of disability similar (as de- termined under regulations prescribed by the Secretary in consultation with the Secretary of Health and Human Services) to the level of dis- ability described in clause (i), or ”(iii) requiring substantial supervision to pro- tect such individual from threats to health and safety due to severe cognitive impairment. Such term shall not include any individual oth- erwise meeting the requirements of the preceding sentence unless within the preceding 12-month period a licensed health care practitioner has certified that such individual meets such re- quirements. ”(B) ACTIVITIES OF DAILY LIVING.\u2014For pur- poses of subparagraph (A), each of the following is an activity of daily living: ”(i) Eating. ”(ii) Toileting. ”(iii) Transferring. ”(iv) Bathing. ”(v) Dressing. ”(vi) Continence. A contract shall not be treated as a qualified long-term care insurance contract unless the de- termination of whether an individual is a chron- ically ill individual takes into account at least 5 of such activities. ”(3) MAINTENANCE OR PERSONAL CARE SERV- ICES.\u2014The term ‘maintenance or personal care services’ means any care the primary purpose of which is the provision of needed assistance with any of the disabilities as a result of which the individual is a chronically ill individual (includ- ing the protection from threats to health and safety due to severe cognitive impairment). ”(4) LICENSED HEALTH CARE PRACTITIONER.\u2014 The term ‘licensed health care practitioner’ means any physician (as defined in section 1861(r)(1) of the Social Security Act) and any registered professional nurse, licensed social worker, or other individual who meets such re- quirements as may be prescribed by the Sec- retary. ”(d) AGGREGATE PAYMENTS IN EXCESS OF LIM- ITS.\u2014 ”(1) IN GENERAL.\u2014If the aggregate of\u2014 ”(A) the periodic payments received for any period under all qualified long-term care insur- ance contracts which are treated as made for qualified long-term care services for an insured, and ”(B) the periodic payments received for such period which are treated under section 101(g) as paid by reason of the death of such insured, exceeds the per diem limitation for such period, such excess shall be includible in gross income without regard to section 72. A payment shall not be taken into account under subparagraph (B) if the insured is a terminally ill individual (as defined in section 101(g)) at the time the payment is received. ”(2) PER DIEM LIMITATION.\u2014For purposes of paragraph (1), the per diem limitation for any period is an amount equal to the excess (if any) of\u2014 ”(A) the greater of\u2014 ”(i) the dollar amount in effect for such pe- riod under paragraph (4), or ”(ii) the costs incurred for qualified long-term care services provided for the insured for such period, over ”(B) the aggregate payments received as reim- bursements (through insurance or otherwise) for qualified long-term care services provided for the insured during such period. ”(3) AGGREGATION RULES.\u2014For purposes of this subsection\u2014 ”(A) all persons receiving periodic payments described in paragraph (1) with respect to the same insured shall be treated as 1 person, and ”(B) the per diem limitation determined under paragraph (2) shall be allocated first to the in- sured and any remaining limitation shall be al- located among the other such persons in such manner as the Secretary shall prescribe. ”(4) DOLLAR AMOUNT.\u2014The dollar amount in effect under this subsection shall be $175 per day (or the equivalent amount in the case of pay- ments on another periodic basis). ”(5) INFLATION ADJUSTMENT.\u2014In the case of a calendar year after 1997, the dollar amount con- tained in paragraph (4) shall be increased at the same time and in the same manner as amounts are increased pursuant to section 213(d)(10). ”(6) PERIODIC PAYMENTS.\u2014For purposes of this subsection, the term ‘periodic payment’ means any payment (whether on a periodic basis or otherwise) made without regard to the extent of the costs incurred by the payee for qualified long-term care services. ”(e) TREATMENT OF COVERAGE PROVIDED AS PART OF A LIFE INSURANCE CONTRACT.\u2014Except as otherwise provided in regulations prescribed by the Secretary, in the case of any long-term care insurance coverage (whether or not quali- fied) provided by a rider on or as part of a life insurance contract\u2014 ”(1) IN GENERAL.\u2014This section shall apply as if the portion of the contract providing such coverage is a separate contract. ”(2) APPLICATION OF 7702.\u2014Section 7702(c)(2) (relating to the guideline premium limitation) shall be applied by increasing the guideline pre- mium limitation with respect to a life insurance contract, as of any date\u2014 ”(A) by the sum of any charges (but not pre- mium payments) against the life insurance con- tract’s cash surrender value (within the mean- ing of section 7702(f)(2)(A)) for such coverage made to that date under the contract, less CONGRESSIONAL RECORD \u2014 HOUSE H9505July 31, 1996 ”(B) any such charges the imposition of which reduces the premiums paid for the con- tract (within the meaning of section 7702(f)(1)). ”(3) APPLICATION OF SECTION 213.\u2014No deduc- tion shall be allowed under section 213(a) for charges against the life insurance contract’s cash surrender value described in paragraph (2), unless such charges are includible in income as a result of the application of section 72(e)(10) and the rider is a qualified long-term care insur- ance contract under subsection (b). ”(4) PORTION DEFINED.\u2014For purposes of this subsection, the term ‘portion’ means only the terms and benefits under a life insurance con- tract that are in addition to the terms and bene- fits under the contract without regard to long- term care insurance coverage. ”(f) TREATMENT OF CERTAIN STATE-MAIN- TAINED PLANS.\u2014 ”(1) IN GENERAL.\u2014If\u2014 (A) an individual receives coverage for quali- fied long-term care services under a State long- term care plan, and ”(B) the terms of such plan would satisfy the requirements of subsection (b) were such plan an insurance contract, such plan shall be treated as a qualified long- term care insurance contract for purposes of this title. ”(2) STATE LONG-TERM CARE PLAN.\u2014For pur- poses of paragraph (1), the term ‘State long-term care plan’ means any plan\u2014 ”(A) which is established and maintained by a State or an instrumentality of a State, ”(B) which provides coverage only for quali- fied long-term care services, and ”(C) under which such coverage is provided only to\u2014 ”(i) employees and former employees of a State (or any political subdivision or instrumen- tality of a State), ”(ii) the spouses of such employees, and ”(iii) individuals bearing a relationship to such employees or spouses which is described in any of paragraphs (1) through (8) of section 152(a).” (b) RESERVE METHOD.\u2014Clause (iii) of section 807(d)(3)(A) is amended by inserting ”(other than a qualified long-term care insurance con- tract, as defined in section 7702B(b))” after ”in- surance contract”. (c) LONG-TERM CARE INSURANCE NOT PER- MITTED UNDER CAFETERIA PLANS OR FLEXIBLE SPENDING ARRANGEMENTS.\u2014 (1) CAFETERIA PLANS.\u2014Section 125(f) is amended by adding at the end the following new sentence: ”Such term shall not include any product which is advertised, marketed, or of- fered as long-term care insurance.” (2) FLEXIBLE SPENDING ARRANGEMENTS.\u2014Sec- tion 106 (relating to contributions by employer to accident and health plans), as amended by section 301(c), is amended by adding at the end the following new subsection: ”(c) INCLUSION OF LONG-TERM CARE BENEFITS PROVIDED THROUGH FLEXIBLE SPENDING AR- RANGEMENTS.\u2014 ”(1) IN GENERAL.\u2014Effective on and after Jan- uary 1, 1997, gross income of an employee shall include employer-provided coverage for qualified long-term care services (as defined in section 7702B(c)) to the extent that such coverage is provided through a flexible spending or similar arrangement. ”(2) FLEXIBLE SPENDING ARRANGEMENT.\u2014For purposes of this subsection, a flexible spending arrangement is a benefit program which pro- vides employees with coverage under which\u2014 ”(A) specified incurred expenses may be reim- bursed (subject to reimbursement maximums and other reasonable conditions), and ”(B) the maximum amount of reimbursement which is reasonably available to a participant for such coverage is less than 500 percent of the value of such coverage. In the case of an insured plan, the maximum amount reasonably available shall be deter- mined on the basis of the underlying coverage.” (d) CONTINUATION COVERAGE RULES NOT TO APPLY.\u2014 (1) Paragraph (2) of section 4980B(g) is amended by adding at the end the following new sentence: ”Such term shall not include any plan substantially all of the coverage under which is for qualified long-term care services (as defined in section 7702B(c)).” (2) Paragraph (1) of section 607 of the Em- ployee Retirement Income Security Act of 1974 is amended by adding at the end the following new sentence: ”Such term shall not include any plan substantially all of the coverage under which is for qualified long-term care services (as defined in section 7702B(c) of such Code).” (3) Paragraph (1) of section 2208 of the Public Health Service Act is amended by adding at the end the following new sentence: ”Such term shall not include any plan substantially all of the coverage under which is for qualified long- term care services (as defined in section 7702B(c) of such Code).” (e) CLERICAL AMENDMENT.\u2014The table of sec- tions for chapter 79 is amended by inserting after the item relating to section 7702A the fol- lowing new item: ”Sec. 7702B. Treatment of qualified long-term care insurance.”. (f) EFFECTIVE DATES.\u2014 (1) GENERAL EFFECTIVE DATE.\u2014 (A) IN GENERAL.\u2014Except as provided in sub- paragraph (B), the amendments made by this section shall apply to contracts issued after De- cember 31, 1996. (B) RESERVE METHOD.\u2014The amendment made by subsection (b) shall apply to contracts issued after December 31, 1997. (2) CONTINUATION OF EXISTING POLICIES.\u2014In the case of any contract issued before January 1, 1997, which met the long-term care insurance requirements of the State in which the contract was sitused at the time the contract was is- sued\u2014 (A) such contract shall be treated for purposes of the Internal Revenue Code of 1986 as a quali- fied long-term care insurance contract (as de- fined in section 7702B(b) of such Code), and (B) services provided under, or reimbursed by, such contract shall be treated for such purposes as qualified long-term care services (as defined in section 7702B(c) of such Code). In the case of an individual who is covered on December 31, 1996, under a State long-term care plan (as defined in section 7702B(f)(2) of such Code), the terms of such plan on such date shall be treated for purposes of the preceding sentence as a contract issued on such date which met the long-term care insurance requirements of such State. (3) EXCHANGES OF EXISTING POLICIES.\u2014If, after the date of enactment of this Act and be- fore January 1, 1998, a contract providing for long-term care insurance coverage is exchanged solely for a qualified long-term care insurance contract (as defined in section 7702B(b) of such Code), no gain or loss shall be recognized on the exchange. If, in addition to a qualified long- term care insurance contract, money or other property is received in the exchange, then any gain shall be recognized to the extent of the sum of the money and the fair market value of the other property received. For purposes of this paragraph, the cancellation of a contract pro- viding for long-term care insurance coverage and reinvestment of the cancellation proceeds in a qualified long-term care insurance contract within 60 days thereafter shall be treated as an exchange. (4) ISSUANCE OF CERTAIN RIDERS PERMITTED.\u2014 For purposes of applying sections 101(f), 7702, and 7702A of the Internal Revenue Code of 1986 to any contract\u2014 (A) the issuance of a rider which is treated as a qualified long-term care insurance contract under section 7702B, and (B) the addition of any provision required to conform any other long-term care rider to be so treated, shall not be treated as a modification or mate- rial change of such contract. (5) APPLICATION OF PER DIEM LIMITATION TO EXISTING CONTRACTS.\u2014The amount of per diem payments made under a contract issued on or before July 31, 1996, with respect to an insured which are excludable from gross income by rea- son of section 7702B of the Internal Revenue Code of 1986 (as added by this section) shall not be reduced under subsection (d)(2)(B) thereof by reason of reimbursements received under a con- tract issued on or before such date. The preced- ing sentence shall cease to apply as of the date (after July 31, 1996) such contract is exchanged or there is any contract modification which re- sults in an increase in the amount of such per diem payments or the amount of such reimburse- ments. (g) LONG-TERM CARE STUDY REQUEST.\u2014The Chairman of the Committee on Ways and Means of the House of Representatives and the Chair- man of the Committee on Finance of the Senate shall jointly request the National Association of Insurance Commissioners, in consultation with representatives of the insurance industry and consumer organizations, to formulate, develop, and conduct a study to determine the marketing and other effects of per diem limits on certain types of long-term care policies. If the National Association of Insurance Commissioners agrees to the study request, the National Association of Insurance Commissioners shall report the results of its study to such committees not later than 2 years after accepting the request. SEC. 322. QUALIFIED LONG-TERM CARE SERVICES TREATED AS MEDICAL CARE. (a) GENERAL RULE.\u2014Paragraph (1) of section 213(d) (defining medical care) is amended by striking ”or” at the end of subparagraph (B), by redesignating subparagraph (C) as subpara- graph (D), and by inserting after subparagraph (B) the following new subparagraph: ”(C) for qualified long-term care services (as defined in section 7702B(c)), or”. (b) TECHNICAL AMENDMENTS.\u2014 (1) Subparagraph (D) of section 213(d)(1) (as redesignated by subsection (a)) is amended by inserting before the period ”or for any qualified long-term care insurance contract (as defined in section 7702B(b))”. (2)(A) Paragraph (1) of section 213(d) is amended by adding at the end the following new flush sentence: ”In the case of a qualified long-term care insur- ance contract (as defined in section 7702B(b)), only eligible long-term care premiums (as de- fined in paragraph (10)) shall be taken into ac- count under subparagraph (D).” (B) Paragraph (2) of section 162(l) is amended by adding at the end the following new sub- paragraph: ”(C) LONG-TERM CARE PREMIUMS.\u2014In the case of a qualified long-term care insurance contract (as defined in section 7702B(b)), only eligible long-term care premiums (as defined in section 213(d)(10)) shall be taken into account under paragraph (1).” (C) Subsection (d) of section 213 is amended by adding at the end the following new para- graphs: ”(10) ELIGIBLE LONG-TERM CARE PREMIUMS.\u2014 ”(A) IN GENERAL.\u2014For purposes of this sec- tion, the term ‘eligible long-term care premiums’ means the amount paid during a taxable year for any qualified long-term care insurance con- tract (as defined in section 7702B(b)) covering an individual, to the extent such amount does not exceed the limitation determined under the following table: ”In the case of an in- dividual with an at- tained age before the close of the tax- able year of: The limitation is: 40 or less …………….. $200 More than 40 but not more than 50 ……….. 375 More than 50 but not more than 60 ……….. 750 CONGRESSIONAL RECORD \u2014 HOUSEH9506 July 31, 1996 ”In the case of an in- dividual with an at- tained age before the close of the tax- able year of: The limitation is: More than 60 but not more than 70 ……….. 2,000 More than 70 ……….. 2,500. ”(B) INDEXING.\u2014 ”(i) IN GENERAL.\u2014In the case of any taxable year beginning in a calendar year after 1997, each dollar amount contained in subparagraph (A) shall be increased by the medical care cost adjustment of such amount for such calendar year. If any increase determined under the pre- ceding sentence is not a multiple of $10, such in- crease shall be rounded to the nearest multiple of $10. ”(ii) MEDICAL CARE COST ADJUSTMENT.\u2014For purposes of clause (i), the medical care cost ad- justment for any calendar year is the percentage (if any) by which\u2014 ”(I) the medical care component of the Consumer Price Index (as defined in section 1(f)(5)) for August of the preceding calendar year, exceeds ”(II) such component for August of 1996. The Secretary shall, in consultation with the Secretary of Health and Human Services, pre- scribe an adjustment which the Secretary deter- mines is more appropriate for purposes of this paragraph than the adjustment described in the preceding sentence, and the adjustment so pre- scribed shall apply in lieu of the adjustment de- scribed in the preceding sentence. ”(11) CERTAIN PAYMENTS TO RELATIVES TREAT- ED AS NOT PAID FOR MEDICAL CARE.\u2014An amount paid for a qualified long-term care service (as defined in section 7702B(c)) provided to an indi- vidual shall be treated as not paid for medical care if such service is provided\u2014 ”(A) by the spouse of the individual or by a relative (directly or through a partnership, cor- poration, or other entity) unless the service is provided by a licensed professional with respect to such service, or ”(B) by a corporation or partnership which is related (within the meaning of section 267(b) or 707(b)) to the individual. For purposes of this paragraph, the term ‘rel- ative’ means an individual bearing a relation- ship to the individual which is described in any of paragraphs (1) through (8) of section 152(a). This paragraph shall not apply for purposes of section 105(b) with respect to reimbursements through insurance.” . (3) Paragraph (6) of section 213(d) is amend- ed\u2014 (A) by striking ”subparagraphs (A) and (B)” and inserting ”subparagraphs (A), (B), and (C)”, and (B) by striking ”paragraph (1)(C)” in sub- paragraph (A) and inserting ”paragraph (1)(D)”. (4) Paragraph (7) of section 213(d) is amended by striking ”subparagraphs (A) and (B)” and inserting ”subparagraphs (A), (B), and (C)”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to taxable years be- ginning after December 31, 1996. SEC. 323. REPORTING REQUIREMENTS. (a) IN GENERAL.\u2014Subpart B of part III of sub- chapter A of chapter 61 is amended by adding at the end the following new section: ”SEC. 6050Q. CERTAIN LONG-TERM CARE BENE- FITS. ”(a) REQUIREMENT OF REPORTING.\u2014Any per- son who pays long-term care benefits shall make a return, according to the forms or regulations prescribed by the Secretary, setting forth\u2014 ”(1) the aggregate amount of such benefits paid by such person to any individual during any calendar year, ”(2) whether or not such benefits are paid in whole or in part on a per diem or other periodic basis without regard to the expenses incurred during the period to which the payments relate, ”(3) the name, address, and TIN of such indi- vidual, and ”(4) the name, address, and TIN of the chron- ically ill or terminally ill individual on account of whose condition such benefits are paid. ”(b) STATEMENTS TO BE FURNISHED TO PER- SONS WITH RESPECT TO WHOM INFORMATION IS REQUIRED.\u2014Every person required to make a re- turn under subsection (a) shall furnish to each individual whose name is required to be set forth in such return a written statement show- ing\u2014 ”(1) the name of the person making the pay- ments, and ”(2) the aggregate amount of long-term care benefits paid to the individual which are re- quired to be shown on such return. The written statement required under the pre- ceding sentence shall be furnished to the indi- vidual on or before January 31 of the year fol- lowing the calendar year for which the return under subsection (a) was required to be made. ”(c) LONG-TERM CARE BENEFITS.\u2014For pur- poses of this section, the term ‘long-term care benefit’ means\u2014 ”(1) any payment under a product which is advertised, marketed, or offered as long-term care insurance, and ”(2) any payment which is excludable from gross income by reason of section 101(g).”. (b) PENALTIES.\u2014 (1) Subparagraph (B) of section 6724(d)(1) is amended by redesignating clauses (ix) through (xiv) as clauses (x) through (xv), respectively, and by inserting after clause (viii) the following new clause: ”(ix) section 6050Q (relating to certain long- term care benefits),”. (2) Paragraph (2) of section 6724(d) is amend- ed by redesignating subparagraphs (Q) through (T) as subparagraphs (R) through (U), respec- tively, and by inserting after subparagraph (P) the following new subparagraph: ”(Q) section 6050Q(b) (relating to certain long-term care benefits),”. (c) CLERICAL AMENDMENT.\u2014The table of sec- tions for subpart B of part III of subchapter A of chapter 61 is amended by adding at the end the following new item: ”Sec. 6050Q. Certain long-term care benefits.”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to benefits paid after December 31, 1996. PART II\u2014CONSUMER PROTECTION PROVISIONS SEC. 325. POLICY REQUIREMENTS. Section 7702B (as added by section 321) is amended by adding at the end the following new subsection: ”(g) CONSUMER PROTECTION PROVISIONS.\u2014 ”(1) IN GENERAL.\u2014The requirements of this subsection are met with respect to any contract if the contract meets\u2014 ”(A) the requirements of the model regulation and model Act described in paragraph (2), ”(B) the disclosure requirement of paragraph (3), and ”(C) the requirements relating to nonforfeit- ability under paragraph (4). ”(2) REQUIREMENTS OF MODEL REGULATION AND ACT.\u2014 ”(A) IN GENERAL.\u2014The requirements of this paragraph are met with respect to any contract if such contract meets\u2014 ”(i) MODEL REGULATION.\u2014The following re- quirements of the model regulation: ”(I) Section 7A (relating to guaranteed re- newal or noncancellability), and the require- ments of section 6B of the model Act relating to such section 7A. ”(II) Section 7B (relating to prohibitions on limitations and exclusions). ”(III) Section 7C (relating to extension of ben- efits). ”(IV) Section 7D (relating to continuation or conversion of coverage). ”(V) Section 7E (relating to discontinuance and replacement of policies). ”(VI) Section 8 (relating to unintentional lapse). ”(VII) Section 9 (relating to disclosure), other than section 9F thereof. ”(VIII) Section 10 (relating to prohibitions against post-claims underwriting). ”(IX) Section 11 (relating to minimum stand- ards). ”(X) Section 12 (relating to requirement to offer inflation protection), except that any re- quirement for a signature on a rejection of infla- tion protection shall permit the signature to be on an application or on a separate form. ”(XI) Section 23 (relating to prohibition against preexisting conditions and probationary periods in replacement policies or certificates). ”(ii) MODEL ACT.\u2014The following requirements of the model Act: ”(I) Section 6C (relating to preexisting condi- tions). ”(II) Section 6D (relating to prior hospitaliza- tion). ”(B) DEFINITIONS.\u2014For purposes of this para- graph\u2014 ”(i) MODEL PROVISIONS.\u2014The terms ‘model regulation’ and ‘model Act’ mean the long-term care insurance model regulation, and the long- term care insurance model Act, respectively, promulgated by the National Association of In- surance Commissioners (as adopted as of Janu- ary 1993). ”(ii) COORDINATION.\u2014Any provision of the model regulation or model Act listed under clause (i) or (ii) of subparagraph (A) shall be treated as including any other provision of such regulation or Act necessary to implement the provision. ”(iii) DETERMINATION.\u2014For purposes of this section and section 4980C, the determination of whether any requirement of a model regulation or the model Act has been met shall be made by the Secretary. ”(3) DISCLOSURE REQUIREMENT.\u2014The require- ment of this paragraph is met with respect to any contract if such contract meets the require- ments of section 4980C(d). ”(4) NONFORFEITURE REQUIREMENTS.\u2014 ”(A) IN GENERAL.\u2014The requirements of this paragraph are met with respect to any level pre- mium contract, if the issuer of such contract of- fers to the policyholder, including any group policyholder, a nonforfeiture provision meeting the requirements of subparagraph (B). ”(B) REQUIREMENTS OF PROVISION.\u2014The non- forfeiture provision required under subpara- graph (A) shall meet the following requirements: ”(i) The nonforfeiture provision shall be ap- propriately captioned. ”(ii) The nonforfeiture provision shall provide for a benefit available in the event of a default in the payment of any premiums and the amount of the benefit may be adjusted subse- quent to being initially granted only as nec- essary to reflect changes in claims, persistency, and interest as reflected in changes in rates for premium paying contracts approved by the Sec- retary for the same contract form. ”(iii) The nonforfeiture provision shall pro- vide at least one of the following: ”(I) Reduced paid-up insurance. ”(II) Extended term insurance. ”(III) Shortened benefit period. ”(IV) Other similar offerings approved by the Secretary. ”(5) CROSS REFERENCE.\u2014 ”For coordination of the requirements of this subsection with State requirements, see section 4980C(f).” SEC. 326. REQUIREMENTS FOR ISSUERS OF QUALIFIED LONG-TERM CARE INSUR- ANCE CONTRACTS. (a) IN GENERAL.\u2014Chapter 43 is amended by adding at the end the following new section: ”SEC. 4980C. REQUIREMENTS FOR ISSUERS OF QUALIFIED LONG-TERM CARE INSUR- ANCE CONTRACTS. ”(a) GENERAL RULE.\u2014There is hereby imposed on any person failing to meet the requirements CONGRESSIONAL RECORD \u2014 HOUSE H9507July 31, 1996 of subsection (c) or (d) a tax in the amount de- termined under subsection (b). ”(b) AMOUNT.\u2014 ”(1) IN GENERAL.\u2014The amount of the tax im- posed by subsection (a) shall be $100 per insured for each day any requirement of subsection (c) or (d) is not met with respect to each qualified long-term care insurance contract. ”(2) WAIVER.\u2014In the case of a failure which is due to reasonable cause and not to willful ne- glect, the Secretary may waive part or all of the tax imposed by subsection (a) to the extent that payment of the tax would be excessive relative to the failure involved. ”(c) RESPONSIBILITIES.\u2014The requirements of this subsection are as follows: ”(1) REQUIREMENTS OF MODEL PROVISIONS.\u2014 ”(A) MODEL REGULATION.\u2014The following re- quirements of the model regulation must be met: ”(i) Section 13 (relating to application forms and replacement coverage). ”(ii) Section 14 (relating to reporting require- ments), except that the issuer shall also report at least annually the number of claims denied during the reporting period for each class of business (expressed as a percentage of claims de- nied), other than claims denied for failure to meet the waiting period or because of any appli- cable preexisting condition. ”(iii) Section 20 (relating to filing require- ments for marketing). ”(iv) Section 21 (relating to standards for mar- keting), including inaccurate completion of med- ical histories, other than sections 21C(1) and 21C(6) thereof, except that\u2014 ”(I) in addition to such requirements, no per- son shall, in selling or offering to sell a qualified long-term care insurance contract, misrepresent a material fact; and ”(II) no such requirements shall include a re- quirement to inquire or identify whether a pro- spective applicant or enrollee for long-term care insurance has accident and sickness insurance. ”(v) Section 22 (relating to appropriateness of recommended purchase). ”(vi) Section 24 (relating to standard format outline of coverage). ”(vii) Section 25 (relating to requirement to deliver shopper’s guide). ”(B) MODEL ACT.\u2014The following requirements of the model Act must be met: ”(i) Section 6F (relating to right to return), except that such section shall also apply to de- nials of applications and any refund shall be made within 30 days of the return or denial. ”(ii) Section 6G (relating to outline of cov- erage). ”(iii) Section 6H (relating to requirements for certificates under group plans). ”(iv) Section 6I (relating to policy summary). ”(v) Section 6J (relating to monthly reports on accelerated death benefits). ”(vi) Section 7 (relating to incontestability pe- riod). ”(C) DEFINITIONS.\u2014For purposes of this para- graph, the terms ‘model regulation’ and ‘model Act’ have the meanings given such terms by sec- tion 7702B(g)(2)(B). ”(2) DELIVERY OF POLICY.\u2014If an application for a qualified long-term care insurance con- tract (or for a certificate under such a contract for a group) is approved, the issuer shall deliver to the applicant (or policyholder or certificateholder) the contract (or certificate) of insurance not later than 30 days after the date of the approval. ”(3) INFORMATION ON DENIALS OF CLAIMS.\u2014If a claim under a qualified long-term care insur- ance contract is denied, the issuer shall, within 60 days of the date of a written request by the policyholder or certificateholder (or representa- tive)\u2014 ”(A) provide a written explanation of the rea- sons for the denial, and ”(B) make available all information directly relating to such denial. ”(d) DISCLOSURE.\u2014The requirements of this subsection are met if the issuer of a long-term care insurance policy discloses in such policy and in the outline of coverage required under subsection (c)(1)(B)(ii) that the policy is in- tended to be a qualified long-term care insur- ance contract under section 7702B(b). ”(e) QUALIFIED LONG-TERM CARE INSURANCE CONTRACT DEFINED.\u2014For purposes of this sec- tion, the term ‘qualified long-term care insur- ance contract’ has the meaning given such term by section 7702B. ”(f) COORDINATION WITH STATE REQUIRE- MENTS.\u2014If a State imposes any requirement which is more stringent than the analogous re- quirement imposed by this section or section 7702B(g), the requirement imposed by this sec- tion or section 7702B(g) shall be treated as met if the more stringent State requirement is met.”. (b) CONFORMING AMENDMENT.\u2014The table of sections for chapter 43 is amended by adding at the end the following new item: ”Sec. 4980C. Requirements for issuers of quali- fied long-term care insurance con- tracts.” SEC. 327. EFFECTIVE DATES. (a) IN GENERAL.\u2014The provisions of, and amendments made by, this part shall apply to contracts issued after December 31, 1996. The provisions of section 321(f) (relating to transi- tion rule) shall apply to such contracts. (b) ISSUERS.\u2014The amendments made by sec- tion 326 shall apply to actions taken after De- cember 31, 1996. Subtitle D\u2014Treatment of Accelerated Death Benefits SEC. 331. TREATMENT OF ACCELERATED DEATH BENEFITS BY RECIPIENT. (a) IN GENERAL.\u2014Section 101 (relating to cer- tain death benefits) is amended by adding at the end the following new subsection: ”(g) TREATMENT OF CERTAIN ACCELERATED DEATH BENEFITS.\u2014 ”(1) IN GENERAL.\u2014For purposes of this sec- tion, the following amounts shall be treated as an amount paid by reason of the death of an in- sured: ”(A) Any amount received under a life insur- ance contract on the life of an insured who is a terminally ill individual. ”(B) Any amount received under a life insur- ance contract on the life of an insured who is a chronically ill individual. ”(2) TREATMENT OF VIATICAL SETTLEMENTS.\u2014 ”(A) IN GENERAL.\u2014If any portion of the death benefit under a life insurance contract on the life of an insured described in paragraph (1) is sold or assigned to a viatical settlement pro- vider, the amount paid for the sale or assign- ment of such portion shall be treated as an amount paid under the life insurance contract by reason of the death of such insured. ”(B) VIATICAL SETTLEMENT PROVIDER.\u2014 ”(i) IN GENERAL.\u2014The term ‘viatical settle- ment provider’ means any person regularly en- gaged in the trade or business of purchasing, or taking assignments of, life insurance contracts on the lives of insureds described in paragraph (1) if\u2014 ”(I) such person is licensed for such purposes (with respect to insureds described in the same subparagraph of paragraph (1) as the insured) in the State in which the insured resides, or ”(II) in the case of an insured who resides in a State not requiring the licensing of such per- sons for such purposes with respect to such in- sured, such person meets the requirements of clause (ii) or (iii), whichever applies to such in- sured. ”(ii) TERMINALLY ILL INSUREDS.\u2014A person meets the requirements of this clause with re- spect to an insured who is a terminally ill indi- vidual if such person\u2014 ”(I) meets the requirements of sections 8 and 9 of the Viatical Settlements Model Act of the National Association of Insurance Commis- sioners, and ”(II) meets the requirements of the Model Reg- ulations of the National Association of Insur- ance Commissioners (relating to standards for evaluation of reasonable payments) in determin- ing amounts paid by such person in connection with such purchases or assignments. ”(iii) CHRONICALLY ILL INSUREDS.\u2014A person meets the requirements of this clause with re- spect to an insured who is a chronically ill indi- vidual if such person\u2014 ”(I) meets requirements similar to the require- ments referred to in clause (ii)(I), and ”(II) meets the standards (if any) of the Na- tional Association of Insurance Commissioners for evaluating the reasonableness of amounts paid by such person in connection with such purchases or assignments with respect to chron- ically ill individuals. ”(3) SPECIAL RULES FOR CHRONICALLY ILL INSUREDS.\u2014In the case of an insured who is a chronically ill individual\u2014 ”(A) IN GENERAL.\u2014Paragraphs (1) and (2) shall not apply to any payment received for any period unless\u2014 ”(i) such payment is for costs incurred by the payee (not compensated for by insurance or oth- erwise) for qualified long-term care services pro- vided for the insured for such period, and ”(ii) the terms of the contract giving rise to such payment satisfy\u2014 ”(I) the requirements of section 7702B(b)(1)(B), and ”(II) the requirements (if any) applicable under subparagraph (B). For purposes of the preceding sentence, the rule of section 7702B(b)(2)(B) shall apply. ”(B) OTHER REQUIREMENTS.\u2014The require- ments applicable under this subparagraph are\u2014 ”(i) those requirements of section 7702B(g) and section 4980C which the Secretary specifies as applying to such a purchase, assignment, or other arrangement, ”(ii) standards adopted by the National Asso- ciation of Insurance Commissioners which spe- cifically apply to chronically ill individuals (and, if such standards are adopted, the analo- gous requirements specified under clause (i) shall cease to apply), and ”(iii) standards adopted by the State in which the policyholder resides (and if such standards are adopted, the analogous requirements speci- fied under clause (i) and (subject to section 4980C(f)) standards under clause (ii), shall cease to apply). ”(C) PER DIEM PAYMENTS.\u2014A payment shall not fail to be described in subparagraph (A) by reason of being made on a per diem or other periodic basis without regard to the expenses in- curred during the period to which the payment relates. ”(D) LIMITATION ON EXCLUSION FOR PERIODIC PAYMENTS.\u2014 ”For limitation on amount of periodic pay- ments which are treated as described in para- graph (1), see section 7702B(d).” ”(4) DEFINITIONS.\u2014For purposes of this sub- section\u2014 ”(A) TERMINALLY ILL INDIVIDUAL.\u2014The term ‘terminally ill individual’ means an individual who has been certified by a physician as having an illness or physical condition which can rea- sonably be expected to result in death in 24 months or less after the date of the certification. ”(B) CHRONICALLY ILL INDIVIDUAL.\u2014The term ‘chronically ill individual’ has the meaning given such term by section 7702B(c)(2); except that such term shall not include a terminally ill individual. ”(C) QUALIFIED LONG-TERM CARE SERVICES.\u2014 The term ‘qualified long-term care services’ has the meaning given such term by section 7702B(c). ”(D) PHYSICIAN.\u2014The term ‘physician’ has the meaning given to such term by section 1861(r)(1) of the Social Security Act (42 U.S.C. 1395x(r)(1)). ”(5) EXCEPTION FOR BUSINESS-RELATED POLI- CIES.\u2014This subsection shall not apply in the case of any amount paid to any taxpayer other CONGRESSIONAL RECORD \u2014 HOUSEH9508 July 31, 1996 than the insured if such taxpayer has an insur- able interest with respect to the life of the in- sured by reason of the insured being a director, officer, or employee of the taxpayer or by reason of the insured being financially interested in any trade or business carried on by the tax- payer.”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall apply to amounts re- ceived after December 31, 1996. SEC. 332. TAX TREATMENT OF COMPANIES ISSU- ING QUALIFIED ACCELERATED DEATH BENEFIT RIDERS. (a) QUALIFIED ACCELERATED DEATH BENEFIT RIDERS TREATED AS LIFE INSURANCE.\u2014Section 818 (relating to other definitions and special rules) is amended by adding at the end the fol- lowing new subsection: ”(g) QUALIFIED ACCELERATED DEATH BENEFIT RIDERS TREATED AS LIFE INSURANCE.\u2014For pur- poses of this part\u2014 ”(1) IN GENERAL.\u2014Any reference to a life in- surance contract shall be treated as including a reference to a qualified accelerated death bene- fit rider on such contract. ”(2) QUALIFIED ACCELERATED DEATH BENEFIT RIDERS.\u2014For purposes of this subsection, the term ‘qualified accelerated death benefit rider’ means any rider on a life insurance contract if the only payments under the rider are payments meeting the requirements of section 101(g). ”(3) EXCEPTION FOR LONG-TERM CARE RID- ERS.\u2014Paragraph (1) shall not apply to any rider which is treated as a long-term care insurance contract under section 7702B.”. (b) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendment made by this section shall take effect on January 1, 1997. (2) ISSUANCE OF RIDER NOT TREATED AS MATE- RIAL CHANGE.\u2014For purposes of applying sec- tions 101(f), 7702, and 7702A of the Internal Rev- enue Code of 1986 to any contract\u2014 (A) the issuance of a qualified accelerated death benefit rider (as defined in section 818(g) of such Code (as added by this Act)), and (B) the addition of any provision required to conform an accelerated death benefit rider to the requirements of such section 818(g), shall not be treated as a modification or mate- rial change of such contract. Subtitle E\u2014State Insurance Pools SEC. 341. EXEMPTION FROM INCOME TAX FOR STATE-SPONSORED ORGANIZATIONS PROVIDING HEALTH COVERAGE FOR HIGH-RISK INDIVIDUALS. (a) IN GENERAL.\u2014Subsection (c) of section 501 (relating to list of exempt organizations) is amended by adding at the end the following new paragraph: ”(26) Any membership organization if\u2014 ”(A) such organization is established by a State exclusively to provide coverage for medical care (as defined in section 213(d)) on a not-for- profit basis to individuals described in subpara- graph (B) through\u2014 ”(i) insurance issued by the organization, or ”(ii) a health maintenance organization under an arrangement with the organization, ”(B) the only individuals receiving such cov- erage through the organization are individ- uals\u2014 ”(i) who are residents of such State, and ”(ii) who, by reason of the existence or history of a medical condition\u2014 ”(I) are unable to acquire medical care cov- erage for such condition through insurance or from a health maintenance organization, or ”(II) are able to acquire such coverage only at a rate which is substantially in excess of the rate for such coverage through the membership organization, ”(C) the composition of the membership in such organization is specified by such State, and ”(D) no part of the net earnings of the organi- zation inures to the benefit of any private shareholder or individual.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to taxable years be- ginning after December 31, 1996. SEC. 342. EXEMPTION FROM INCOME TAX FOR STATE-SPONSORED WORKMEN’S COMPENSATION REINSURANCE OR- GANIZATIONS. (a) IN GENERAL.\u2014Subsection (c) of section 501 (relating to list of exempt organizations), as amended by section 341, is amended by adding at the end the following new paragraph: ”(27) Any membership organization if\u2014 ”(A) such organization is established before June 1, 1996, by a State exclusively to reimburse its members for losses arising under workmen’s compensation acts, ”(B) such State requires that the membership of such organization consist of\u2014 ”(i) all persons who issue insurance covering workmen’s compensation losses in such State, and ”(ii) all persons and governmental entities who self-insure against such losses, and ”(C) such organization operates as a non- profit organization by\u2014 ”(i) returning surplus income to its members or workmen’s compensation policyholders on a periodic basis, and ”(ii) reducing initial premiums in anticipation of investment income.” (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to taxable years end- ing after the date of the enactment of this Act. Subtitle F\u2014Organizations Subject to Section 833 SEC. 351. ORGANIZATIONS SUBJECT TO SECTION 833. (a) IN GENERAL.\u2014Section 833(c) (relating to organization to which section applies) is amend- ed by adding at the end the following new para- graph: ”(4) TREATMENT AS EXISTING BLUE CROSS OR BLUE SHIELD ORGANIZATION.\u2014 ”(A) IN GENERAL.\u2014Paragraph (2) shall be ap- plied to an organization described in subpara- graph (B) as if it were a Blue Cross or Blue Shield organization. ”(B) APPLICABLE ORGANIZATION.\u2014An organi- zation is described in this subparagraph if it\u2014 ”(i) is organized under, and governed by, State laws which are specifically and exclu- sively applicable to not-for-profit health insur- ance or health service type organizations, and ”(ii) is not a Blue Cross or Blue Shield organi- zation or health maintenance organization.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to taxable years end- ing after December 31, 1996. Subtitle G\u2014IRA Distributions to the Unemployed SEC. 361. DISTRIBUTIONS FROM CERTAIN PLANS MAY BE USED WITHOUT ADDITIONAL TAX TO PAY FINANCIALLY DEV- ASTATING MEDICAL EXPENSES. (a) IN GENERAL.\u2014Section 72(t)(3)(A) is amend- ed by striking ”(B),”. (b) DISTRIBUTIONS FOR PAYMENT OF HEALTH INSURANCE PREMIUMS OF CERTAIN UNEMPLOYED INDIVIDUALS.\u2014Paragraph (2) of section 72(t) is amended by adding at the end the following new subparagraph: ”(D) DISTRIBUTIONS TO UNEMPLOYED INDIVID- UALS FOR HEALTH INSURANCE PREMIUMS.\u2014 ”(i) IN GENERAL.\u2014Distributions from an indi- vidual retirement plan to an individual after separation from employment\u2014 ”(I) if such individual has received unemploy- ment compensation for 12 consecutive weeks under any Federal or State unemployment com- pensation law by reason of such separation, ”(II) if such distributions are made during any taxable year during which such unemploy- ment compensation is paid or the succeeding taxable year, and ”(III) to the extent such distributions do not exceed the amount paid during the taxable year for insurance described in section 213(d)(1)(D) with respect to the individual and the individ- ual’s spouse and dependents (as defined in sec- tion 152). ”(ii) DISTRIBUTIONS AFTER REEMPLOYMENT.\u2014 Clause (i) shall not apply to any distribution made after the individual has been employed for at least 60 days after the separation from em- ployment to which clause (i) applies. ”(iii) SELF-EMPLOYED INDIVIDUALS.\u2014To the extent provided in regulations, a self-employed individual shall be treated as meeting the re- quirements of clause (i)(I) if, under Federal or State law, the individual would have received unemployment compensation but for the fact the individual was self-employed.”. (c) CONFORMING AMENDMENT.\u2014Subparagraph (B) of section 72(t)(2) is amended by striking ”or (C)” and inserting ”, (C), or (D)”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to distributions after December 31, 1996. Subtitle H\u2014Organ and Tissue Donation Infor- mation Included With Income Tax Refund Payments SEC. 371. ORGAN AND TISSUE DONATION INFOR- MATION INCLUDED WITH INCOME TAX REFUND PAYMENTS. (a) IN GENERAL.\u2014The Secretary of the Treas- ury shall, to the extent practicable, include with the mailing of any payment of a refund of indi- vidual income tax made during the period begin- ning on February 1, 1997, and ending on June 30, 1997, a copy of the document described in subsection (b). (b) TEXT OF DOCUMENT.\u2014The Secretary of the Treasury shall, after consultation with the Sec- retary of Health and Human Services and orga- nizations promoting organ and tissue (including eye) donation, prepare a document suitable for inclusion with individual income tax refund payments which\u2014 (1) encourages organ and tissue donation; (2) includes a detachable organ and tissue donor card; and (3) urges recipients to\u2014 (A) sign the organ and tissue donor card; (B) discuss organ and tissue donation with family members and tell family members about the recipient’s desire to be an organ and tissue donor if the occasion arises; and (C) encourage family members to request or authorize organ and tissue donation if the occa- sion arises. TITLE IV\u2014APPLICATION AND ENFORCE- MENT OF GROUP HEALTH PLAN RE- QUIREMENTS Subtitle A\u2014Application and Enforcement of Group Health Plan Requirements SEC. 401. GROUP HEALTH PLAN PORTABILITY, AC- CESS, AND RENEWABILITY REQUIRE- MENTS. (a) IN GENERAL.\u2014The Internal Revenue Code of 1986 is amended by adding at the end the fol- lowing new subtitle: ”Subtitle K\u2014Group Health Plan Portability, Access, and Renewability Requirements ”Chapter 100. Group health plan portability, ac- cess, and renewability require- ments. ”CHAPTER 100\u2014GROUP HEALTH PLAN PORTABILITY, ACCESS, AND RENEW- ABILITY REQUIREMENTS ”Sec. 9801. Increased portability through limita- tion on preexisting condition ex- clusions. ”Sec. 9802. Prohibiting discrimination against individual participants and bene- ficiaries based on health status. ”Sec. 9803. Guaranteed renewability in multiem- ployer plans and certain multiple employer welfare arrangements. ”Sec. 9804. General exceptions. ”Sec. 9805. Definitions. ”Sec. 9806. Regulations. CONGRESSIONAL RECORD \u2014 HOUSE H9509July 31, 1996 ”SEC. 9801. INCREASED PORTABILITY THROUGH LIMITATION ON PREEXISTING CON- DITION EXCLUSIONS. ”(a) LIMITATION ON PREEXISTING CONDITION EXCLUSION PERIOD; CREDITING FOR PERIODS OF PREVIOUS COVERAGE.\u2014Subject to subsection (d), a group health plan may, with respect to a par- ticipant or beneficiary, impose a preexisting condition exclusion only if\u2014 ”(1) such exclusion relates to a condition (whether physical or mental), regardless of the cause of the condition, for which medical ad- vice, diagnosis, care, or treatment was rec- ommended or received within the 6-month period ending on the enrollment date; ”(2) such exclusion extends for a period of not more than 12 months (or 18 months in the case of a late enrollee) after the enrollment date; and ”(3) the period of any such preexisting condi- tion exclusion is reduced by the length of the aggregate of the periods of creditable coverage (if any) applicable to the participant or bene- ficiary as of the enrollment date. ”(b) DEFINITIONS.\u2014For purposes of this sec- tion\u2014 ”(1) PREEXISTING CONDITION EXCLUSION.\u2014 ”(A) IN GENERAL.\u2014The term ‘preexisting con- dition exclusion’ means, with respect to cov- erage, a limitation or exclusion of benefits relat- ing to a condition based on the fact that the condition was present before the date of enroll- ment for such coverage, whether or not any medical advice, diagnosis, care, or treatment was recommended or received before such date. ”(B) TREATMENT OF GENETIC INFORMATION.\u2014 For purposes of this section, genetic information shall not be treated as a condition described in subsection (a)(1) in the absence of a diagnosis of the condition related to such information. ”(2) ENROLLMENT DATE.\u2014The term ‘enroll- ment date’ means, with respect to an individual covered under a group health plan, the date of enrollment of the individual in the plan or, if earlier, the first day of the waiting period for such enrollment. ”(3) LATE ENROLLEE.\u2014The term ‘late enrollee’ means, with respect to coverage under a group health plan, a participant or beneficiary who enrolls under the plan other than during\u2014 ”(A) the first period in which the individual is eligible to enroll under the plan, or ”(B) a special enrollment period under sub- section (f). ”(4) WAITING PERIOD.\u2014The term ‘waiting pe- riod’ means, with respect to a group health plan and an individual who is a potential participant or beneficiary in the plan, the period that must pass with respect to the individual before the in- dividual is eligible to be covered for benefits under the terms of the plan. ”(c) RULES RELATING TO CREDITING PREVIOUS COVERAGE.\u2014 ”(1) CREDITABLE COVERAGE DEFINED.\u2014For purposes of this part, the term ‘creditable cov- erage’ means, with respect to an individual, cov- erage of the individual under any of the follow- ing: ”(A) A group health plan. ”(B) Health insurance coverage. ”(C) Part A or part B of title XVIII of the So- cial Security Act. ”(D) Title XIX of the Social Security Act, other than coverage consisting solely of benefits under section 1928. ”(E) Chapter 55 of title 10, United States Code. ”(F) A medical care program of the Indian Health Service or of a tribal organization. ”(G) A State health benefits risk pool. ”(H) A health plan offered under chapter 89 of title 5, United States Code. ”(I) A public health plan (as defined in regu- lations). ”(J) A health benefit plan under section 5(e) of the Peace Corps Act (22 U.S.C. 2504(e). Such term does not include coverage consisting solely of coverage of excepted benefits (as de- fined in section 9805(c)). ”(2) NOT COUNTING PERIODS BEFORE SIGNIFI- CANT BREAKS IN COVERAGE.\u2014 ”(A) IN GENERAL.\u2014A period of creditable cov- erage shall not be counted, with respect to en- rollment of an individual under a group health plan, if, after such period and before the enroll- ment date, there was a 63-day period during all of which the individual was not covered under any creditable coverage. ”(B) WAITING PERIOD NOT TREATED AS A BREAK IN COVERAGE.\u2014For purposes of subpara- graph (A) and subsection (d)(4), any period that an individual is in a waiting period for any cov- erage under a group health plan or is in an af- filiation period shall not be taken into account in determining the continuous period under sub- paragraph (A). ”(C) AFFILIATION PERIOD.\u2014 ”(i) IN GENERAL.\u2014For purposes of this section, the term ‘affiliation period’ means a period which, under the terms of the health insurance coverage offered by the health maintenance or- ganization, must expire before the health insur- ance coverage becomes effective. During such an affiliation period, the organization is not re- quired to provide health care services or benefits and no premium shall be charged to the partici- pant or beneficiary. ”(ii) BEGINNING.\u2014Such period shall begin on the enrollment date. ”(iii) RUNS CONCURRENTLY WITH WAITING PERI- ODS.\u2014Any such affiliation period shall run con- currently with any waiting period under the plan. ”(3) METHOD OF CREDITING COVERAGE.\u2014 ”(A) STANDARD METHOD.\u2014Except as otherwise provided under subparagraph (B), for purposes of applying subsection (a)(3), a group health plan shall count a period of creditable coverage without regard to the specific benefits for which coverage is offered during the period. ”(B) ELECTION OF ALTERNATIVE METHOD.\u2014A group health plan may elect to apply subsection (a)(3) based on coverage of any benefits within each of several classes or categories of benefits specified in regulations rather than as provided under subparagraph (A). Such election shall be made on a uniform basis for all participants and beneficiaries. Under such election a group health plan shall count a period of creditable coverage with respect to any class or category of benefits if any level of benefits is covered within such class or category. ”(C) PLAN NOTICE.\u2014In the case of an election with respect to a group health plan under sub- paragraph (B), the plan shall\u2014 ”(i) prominently state in any disclosure state- ments concerning the plan, and state to each enrollee at the time of enrollment under the plan, that the plan has made such election, and ”(ii) include in such statements a description of the effect of this election. ”(4) ESTABLISHMENT OF PERIOD.\u2014Periods of creditable coverage with respect to an individual shall be established through presentation of cer- tifications described in subsection (e) or in such other manner as may be specified in regulations. ”(d) EXCEPTIONS.\u2014 ”(1) EXCLUSION NOT APPLICABLE TO CERTAIN NEWBORNS.\u2014Subject to paragraph (4), a group health plan may not impose any preexisting condition exclusion in the case of an individual who, as of the last day of the 30-day period be- ginning with the date of birth, is covered under creditable coverage. ”(2) EXCLUSION NOT APPLICABLE TO CERTAIN ADOPTED CHILDREN.\u2014Subject to paragraph (4), a group health plan may not impose any preexist- ing condition exclusion in the case of a child who is adopted or placed for adoption before at- taining 18 years of age and who, as of the last day of the 30-day period beginning on the date of the adoption or placement for adoption, is covered under creditable coverage. The previous sentence shall not apply to coverage before the date of such adoption or placement for adop- tion. ”(3) EXCLUSION NOT APPLICABLE TO PREG- NANCY.\u2014For purposes of this section, a group health plan may not impose any preexisting condition exclusion relating to pregnancy as a preexisting condition. ”(4) LOSS IF BREAK IN COVERAGE.\u2014Para- graphs (1) and (2) shall no longer apply to an individual after the end of the first 63-day pe- riod during all of which the individual was not covered under any creditable coverage. ”(e) CERTIFICATIONS AND DISCLOSURE OF COV- ERAGE.\u2014 ”(1) REQUIREMENT FOR CERTIFICATION OF PE- RIOD OF CREDITABLE COVERAGE.\u2014 ”(A) IN GENERAL.\u2014A group health plan shall provide the certification described in subpara- graph (B)\u2014 ”(i) at the time an individual ceases to be cov- ered under the plan or otherwise becomes cov- ered under a COBRA continuation provision, ”(ii) in the case of an individual becoming covered under such a provision, at the time the individual ceases to be covered under such pro- vision, and ”(iii) on the request on behalf of an individ- ual made not later than 24 months after the date of cessation of the coverage described in clause (i) or (ii), whichever is later. The certification under clause (i) may be pro- vided, to the extent practicable, at a time con- sistent with notices required under any applica- ble COBRA continuation provision. ”(B) CERTIFICATION.\u2014The certification de- scribed in this subparagraph is a written certifi- cation of\u2014 ”(i) the period of creditable coverage of the in- dividual under such plan and the coverage under such COBRA continuation provision, and ”(ii) the waiting period (if any) (and affili- ation period, if applicable) imposed with respect to the individual for any coverage under such plan. ”(C) ISSUER COMPLIANCE.\u2014To the extent that medical care under a group health plan consists of health insurance coverage offered in connec- tion with the plan, the plan is deemed to have satisfied the certification requirement under this paragraph if the issuer provides for such certifi- cation in accordance with this paragraph. ”(2) DISCLOSURE OF INFORMATION ON PRE- VIOUS BENEFITS.\u2014 ”(A) IN GENERAL.\u2014In the case of an election described in subsection (c)(3)(B) by a group health plan, if the plan enrolls an individual for coverage under the plan and the individual pro- vides a certification of coverage of the individ- ual under paragraph (1)\u2014 ”(i) upon request of such plan, the entity which issued the certification provided by the individual shall promptly disclose to such re- questing plan information on coverage of classes and categories of health benefits available under such entity’s plan, and ”(ii) such entity may charge the requesting plan or issuer for the reasonable cost of disclos- ing such information. ”(3) REGULATIONS.\u2014The Secretary shall es- tablish rules to prevent an entity’s failure to provide information under paragraph (1) or (2) with respect to previous coverage of an individ- ual from adversely affecting any subsequent coverage of the individual under another group health plan or health insurance coverage. ”(f) SPECIAL ENROLLMENT PERIODS.\u2014 ”(1) INDIVIDUALS LOSING OTHER COVERAGE.\u2014A group health plan shall permit an employee who is eligible, but not enrolled, for coverage under the terms of the plan (or a dependent of such an employee if the dependent is eligible, but not en- rolled, for coverage under such terms) to enroll for coverage under the terms of the plan if each of the following conditions is met: ”(A) The employee or dependent was covered under a group health plan or had health insur- ance coverage at the time coverage was pre- viously offered to the employee or individual. ”(B) The employee stated in writing at such time that coverage under a group health plan or health insurance coverage was the reason for declining enrollment, but only if the plan spon- sor (or the health insurance issuer offering CONGRESSIONAL RECORD \u2014 HOUSEH9510 July 31, 1996 health insurance coverage in connection with the plan) required such a statement at such time and provided the employee with notice of such requirement (and the consequences of such re- quirement) at such time. ”(C) The employee’s or dependent’s coverage described in subparagraph (A)\u2014 ”(i) was under a COBRA continuation provi- sion and the coverage under such provision was exhausted; or ”(ii) was not under such a provision and ei- ther the coverage was terminated as a result of loss of eligibility for the coverage (including as a result of legal separation, divorce, death, ter- mination of employment, or reduction in the number of hours of employment) or employer contributions towards such coverage were termi- nated. ”(D) Under the terms of the plan, the em- ployee requests such enrollment not later than 30 days after the date of exhaustion of coverage described in subparagraph (C)(i) or termination of coverage or employer contribution described in subparagraph (C)(ii). ”(2) FOR DEPENDENT BENEFICIARIES.\u2014 ”(A) IN GENERAL.\u2014If\u2014 ”(i) a group health plan makes coverage available with respect to a dependent of an indi- vidual, ”(ii) the individual is a participant under the plan (or has met any waiting period applicable to becoming a participant under the plan and is eligible to be enrolled under the plan but for a failure to enroll during a previous enrollment period), and ”(iii) a person becomes such a dependent of the individual through marriage, birth, or adop- tion or placement for adoption, the group health plan shall provide for a de- pendent special enrollment period described in subparagraph (B) during which the person (or, if not otherwise enrolled, the individual) may be enrolled under the plan as a dependent of the individual, and in the case of the birth or adop- tion of a child, the spouse of the individual may be enrolled as a dependent of the individual if such spouse is otherwise eligible for coverage. ”(B) DEPENDENT SPECIAL ENROLLMENT PE- RIOD.\u2014The dependent special enrollment period under this subparagraph shall be a period of not less than 30 days and shall begin on the later of\u2014 ”(i) the date dependent coverage is made available, or ”(ii) the date of the marriage, birth, or adop- tion or placement for adoption (as the case may be) described in subparagraph (A)(iii). ”(C) NO WAITING PERIOD.\u2014If an individual seeks coverage of a dependent during the first 30 days of such a dependent special enrollment pe- riod, the coverage of the dependent shall become effective\u2014 ”(i) in the case of marriage, not later than the first day of the first month beginning after the date the completed request for enrollment is re- ceived; ”(ii) in the case of a dependent’s birth, as of the date of such birth; or ”(iii) in the case of a dependent’s adoption or placement for adoption, the date of such adop- tion or placement for adoption. ”SEC. 9802. PROHIBITING DISCRIMINATION AGAINST INDIVIDUAL PARTICIPANTS AND BENEFICIARIES BASED ON HEALTH STATUS. ”(a) IN ELIGIBILITY TO ENROLL.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2), a group health plan may not establish rules for eligibility (including continued eligibility) of any individual to enroll under the terms of the plan based on any of the following factors in re- lation to the individual or a dependent of the individual: ”(A) Health status. ”(B) Medical condition (including both phys- ical and mental illnesses). ”(C) Claims experience. ”(D) Receipt of health care. ”(E) Medical history. ”(F) Genetic information. ”(G) Evidence of insurability (including con- ditions arising out of acts of domestic violence). ”(H) Disability. ”(2) NO APPLICATION TO BENEFITS OR EXCLU- SIONS.\u2014To the extent consistent with section 9801, paragraph (1) shall not be construed\u2014 ”(A) to require a group health plan to provide particular benefits (or benefits with respect to a specific procedure, treatment, or service) other than those provided under the terms of such plan; or ”(B) to prevent such a plan from establishing limitations or restrictions on the amount, level, extent, or nature of the benefits or coverage for similarly situated individuals enrolled in the plan or coverage. ”(3) CONSTRUCTION.\u2014For purposes of para- graph (1), rules for eligibility to enroll under a plan include rules defining any applicable wait- ing periods for such enrollment. ”(b) IN PREMIUM CONTRIBUTIONS.\u2014 ”(1) IN GENERAL.\u2014A group health plan may not require any individual (as a condition of en- rollment or continued enrollment under the plan) to pay a premium or contribution which is greater than such premium or contribution for a similarly situated individual enrolled in the plan on the basis of any factor described in sub- section (a)(1) in relation to the individual or to an individual enrolled under the plan as a de- pendent of the individual. ”(2) CONSTRUCTION.\u2014Nothing in paragraph (1) shall be construed\u2014 ”(A) to restrict the amount that an employer may be charged for coverage under a group health plan; or ”(B) to prevent a group health plan from es- tablishing premium discounts or rebates or modi- fying otherwise applicable copayments or deductibles in return for adherence to programs of health promotion and disease prevention. ”SEC. 9803. GUARANTEED RENEWABILITY IN MUL- TIEMPLOYER PLANS AND CERTAIN MULTIPLE EMPLOYER WELFARE AR- RANGEMENTS. ”(a) IN GENERAL.\u2014A group health plan which is a multiemployer plan (as defined in section 414(f)) or which is a multiple employer welfare arrangement may not deny an employer contin- ued access to the same or different coverage under such plan, other than\u2014 ”(1) for nonpayment of contributions; ”(2) for fraud or other intentional misrepre- sentation of material fact by the employer; ”(3) for noncompliance with material plan provisions; ”(4) because the plan is ceasing to offer any coverage in a geographic area; ”(5) in the case of a plan that offers benefits through a network plan, because there is no longer any individual enrolled through the em- ployer who lives, resides, or works in the service area of the network plan and the plan applies this paragraph uniformly without regard to the claims experience of employers or a factor de- scribed in section 9802(a)(1) in relation to such individuals or their dependents; or ”(6) for failure to meet the terms of an appli- cable collective bargaining agreement, to renew a collective bargaining or other agreement re- quiring or authorizing contributions to the plan, or to employ employees covered by such an agreement. ”(b) MULTIPLE EMPLOYER WELFARE ARRANGE- MENT.\u2014For purposes of subsection (a), the term ‘multiple employer welfare arrangement’ has the meaning given such term by section 3(40) of the Employee Retirement Income Security Act of 1974, as in effect on the date of the enactment of this section. ”SEC. 9804. GENERAL EXCEPTIONS. ”(a) EXCEPTION FOR CERTAIN PLANS.\u2014The re- quirements of this chapter shall not apply to\u2014 ”(1) any governmental plan, and ”(2) any group health plan for any plan year if, on the first day of such plan year, such plan has less than 2 participants who are current em- ployees. ”(b) EXCEPTION FOR CERTAIN BENEFITS.\u2014The requirements of this chapter shall not apply to any group health plan in relation to its provi- sion of excepted benefits described in section 9805(c)(1). ”(c) EXCEPTION FOR CERTAIN BENEFITS IF CERTAIN CONDITIONS MET.\u2014 ”(1) LIMITED, EXCEPTED BENEFITS.\u2014The re- quirements of this chapter shall not apply to any group health plan in relation to its provi- sion of excepted benefits described in section 9805(c)(2) if the benefits\u2014 ”(A) are provided under a separate policy, certificate, or contract of insurance; or ”(B) are otherwise not an integral part of the plan. ”(2) NONCOORDINATED, EXCEPTED BENEFITS.\u2014 The requirements of this chapter shall not apply to any group health plan in relation to its provi- sion of excepted benefits described in section 9805(c)(3) if all of the following conditions are met: ”(A) The benefits are provided under a sepa- rate policy, certificate, or contract of insurance. ”(B) There is no coordination between the provision of such benefits and any exclusion of benefits under any group health plan main- tained by the same plan sponsor. ”(C) Such benefits are paid with respect to an event without regard to whether benefits are provided with respect to such an event under any group health plan maintained by the same plan sponsor. ”(3) SUPPLEMENTAL EXCEPTED BENEFITS.\u2014The requirements of this chapter shall not apply to any group health plan in relation to its provi- sion of excepted benefits described in section 9805(c)(4) if the benefits are provided under a separate policy, certificate, or contract of insur- ance. ”SEC. 9805. DEFINITIONS. ”(a) GROUP HEALTH PLAN.\u2014For purposes of this chapter, the term ‘group health plan’ has the meaning given to such term by section 5000(b)(1). ”(b) DEFINITIONS RELATING TO HEALTH INSUR- ANCE.\u2014For purposes of this chapter\u2014 ”(1) HEALTH INSURANCE COVERAGE.\u2014 ”(A) IN GENERAL.\u2014Except as provided in sub- paragraph (B), the term ‘health insurance cov- erage’ means benefits consisting of medical care (provided directly, through insurance or reim- bursement, or otherwise) under any hospital or medical service policy or certificate, hospital or medical service plan contract, or health mainte- nance organization contract offered by a health insurance issuer. ”(B) NO APPLICATION TO CERTAIN EXCEPTED BENEFITS.\u2014In applying subparagraph (A), ex- cepted benefits described in subsection (c)(1) shall not be treated as benefits consisting of medical care. ”(2) HEALTH INSURANCE ISSUER.\u2014The term ‘health insurance issuer’ means an insurance company, insurance service, or insurance orga- nization (including a health maintenance orga- nization, as defined in paragraph (3)) which is licensed to engage in the business of insurance in a State and which is subject to State law which regulates insurance (within the meaning of section 514(b)(2) of the Employee Retirement Income Security Act of 1974, as in effect on the date of the enactment of this section). Such term does not include a group health plan. ”(3) HEALTH MAINTENANCE ORGANIZATION.\u2014 The term ‘health maintenance organization’ means\u2014 ”(A) a Federally qualified health mainte- nance organization (as defined in section 1301(a) of the Public Health Service Act (42 U.S.C. 300e(a))), ”(B) an organization recognized under State law as a health maintenance organization, or ”(C) a similar organization regulated under State law for solvency in the same manner and CONGRESSIONAL RECORD \u2014 HOUSE H9511July 31, 1996 to the same extent as such a health maintenance organization. ”(c) EXCEPTED BENEFITS.\u2014For purposes of this chapter, the term ‘excepted benefits’ means benefits under one or more (or any combination thereof) of the following: ”(1) BENEFITS NOT SUBJECT TO REQUIRE- MENTS.\u2014 ”(A) Coverage only for accident, or disability income insurance, or any combination thereof. ”(B) Coverage issued as a supplement to li- ability insurance. ”(C) Liability insurance, including general li- ability insurance and automobile liability insur- ance. ”(D) Workers’ compensation or similar insur- ance. ”(E) Automobile medical payment insurance. ”(F) Credit-only insurance. ”(G) Coverage for on-site medical clinics. ”(H) Other similar insurance coverage, speci- fied in regulations, under which benefits for medical care are secondary or incidental to other insurance benefits. ”(2) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED SEPARATELY.\u2014 ”(A) Limited scope dental or vision benefits. ”(B) Benefits for long-term care, nursing home care, home health care, community-based care, or any combination thereof. ”(C) Such other similar, limited benefits as are specified in regulations. ”(3) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED AS INDEPENDENT, NONCOORDINATED BENEFITS.\u2014 ”(A) Coverage only for a specified disease or illness. ”(B) Hospital indemnity or other fixed indem- nity insurance. ”(4) BENEFITS NOT SUBJECT TO REQUIREMENTS IF OFFERED AS SEPARATE INSURANCE POLICY.\u2014 Medicare supplemental health insurance (as de- fined under section 1882(g)(1) of the Social Secu- rity Act), coverage supplemental to the coverage provided under chapter 55 of title 10, United States Code, and similar supplemental coverage provided to coverage under a group health plan. ”(d) OTHER DEFINITIONS.\u2014For purposes of this chapter\u2014 ”(1) COBRA CONTINUATION PROVISION.\u2014The term ‘COBRA continuation provision’ means any of the following: ”(A) Section 4980B, other than subsection (f)(1) thereof insofar as it relates to pediatric vaccines. ”(B) Part 6 of subtitle B of title I of the Em- ployee Retirement Income Security Act of 1974 (29 U.S.C. 1161 et seq.), other than section 609 of such Act. ”(C) Title XXII of the Public Health Service Act. ”(2) GOVERNMENTAL PLAN.\u2014The term ‘govern- mental plan’ has the meaning given such term by section 414(d). ”(3) MEDICAL CARE.\u2014The term ‘medical care’ has the meaning given such term by section 213(d) determined without regard to\u2014 ”(A) paragraph (1)(C) thereof, and ”(B) so much of paragraph (1)(D) thereof as relates to qualified long-term care insurance. ”(4) NETWORK PLAN.\u2014The term ‘network plan’ means health insurance coverage of a health insurance issuer under which the financ- ing and delivery of medical care are provided, in whole or in part, through a defined set of pro- viders under contract with the issuer. ”(5) PLACED FOR ADOPTION DEFINED.\u2014The term ‘placement’, or being ‘placed’, for adop- tion, in connection with any placement for adoption of a child with any person, means the assumption and retention by such person of a legal obligation for total or partial support of such child in anticipation of adoption of such child. The child’s placement with such person terminates upon the termination of such legal obligation. ”SEC. 9806. REGULATIONS. ”The Secretary, consistent with section 104 of the Health Care Portability and Accountability Act of 1996, may promulgate such regulations as may be necessary or appropriate to carry out the provisions of this chapter. The Secretary may promulgate any interim final rules as the Secretary determines are appropriate to carry out this chapter.” (b) CLERICAL AMENDMENT.\u2014The table of sub- titles of such Code is amended by adding at the end the following new item: ”Subtitle K. Group health plan portability, ac- cess, and renewability require- ments.” (c) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to plan years beginning after June 30, 1997. (2) DETERMINATION OF CREDITABLE COV- ERAGE.\u2014 (A) PERIOD OF COVERAGE.\u2014 (i) IN GENERAL.\u2014Subject to clause (ii), no pe- riod before July 1, 1996, shall be taken into ac- count under chapter 100 of the Internal Revenue Code of 1986 (as added by this section) in deter- mining creditable coverage. (ii) SPECIAL RULE FOR CERTAIN PERIODS.\u2014The Secretary of the Treasury, consistent with sec- tion 104, shall provide for a process whereby in- dividuals who need to establish creditable cov- erage for periods before July 1, 1996, and who would have such coverage credited but for clause (i) may be given credit for creditable cov- erage for such periods through the presentation of documents or other means. (B) CERTIFICATIONS, ETC.\u2014 (i) IN GENERAL.\u2014Subject to clauses (ii) and (iii), subsection (e) of section 9801 of the Inter- nal Revenue Code of 1986 (as added by this sec- tion) shall apply to events occurring after June 30, 1996. (ii) NO CERTIFICATION REQUIRED TO BE PRO- VIDED BEFORE JUNE 1, 1997.\u2014In no case is a cer- tification required to be provided under such subsection before June 1, 1997. (iii) CERTIFICATION ONLY ON WRITTEN REQUEST FOR EVENTS OCCURRING BEFORE OCTOBER 1, 1996.\u2014In the case of an event occurring after June 30, 1996, and before October 1, 1996, a cer- tification is not required to be provided under such subsection unless an individual (with re- spect to whom the certification is otherwise re- quired to be made) requests such certification in writing. (C) TRANSITIONAL RULE.\u2014In the case of an in- dividual who seeks to establish creditable cov- erage for any period for which certification is not required because it relates to an event oc- curring before June 30, 1996\u2014 (i) the individual may present other credible evidence of such coverage in order to establish the period of creditable coverage; and (ii) a group health plan and a health insur- ance issuer shall not be subject to any penalty or enforcement action with respect to the plan’s or issuer’s crediting (or not crediting) such cov- erage if the plan or issuer has sought to comply in good faith with the applicable requirements under the amendments made by this section. (3) SPECIAL RULE FOR COLLECTIVE BARGAINING AGREEMENTS.\u2014Except as provided in paragraph (2), in the case of a group health plan main- tained pursuant to 1 or more collective bargain- ing agreements between employee representa- tives and one or more employers ratified before the date of the enactment of this Act, the amendments made by this section shall not apply to plan years beginning before the later of\u2014 (A) the date on which the last of the collective bargaining agreements relating to the plan ter- minates (determined without regard to any ex- tension thereof agreed to after the date of the enactment of this Act), or (B) July 1, 1997. For purposes of subparagraph (A), any plan amendment made pursuant to a collective bar- gaining agreement relating to the plan which amends the plan solely to conform to any re- quirement added by this section shall not be treated as a termination of such collective bar- gaining agreement. (4) TIMELY REGULATIONS.\u2014The Secretary of the Treasury, consistent with section 104, shall first issue by not later than April 1, 1997, such regulations as may be necessary to carry out the amendments made by this section. (5) LIMITATION ON ACTIONS.\u2014No enforcement action shall be taken, pursuant to the amend- ments made by this section, against a group health plan or health insurance issuer with re- spect to a violation of a requirement imposed by such amendments before January 1, 1998, or, if later, the date of issuance of regulations re- ferred to in paragraph (4), if the plan or issuer has sought to comply in good faith with such re- quirements. SEC. 402. PENALTY ON FAILURE TO MEET CER- TAIN GROUP HEALTH PLAN RE- QUIREMENTS. (a) IN GENERAL.\u2014Chapter 43 of the Internal Revenue Code of 1986 (relating to qualified pen- sion, etc., plans) is amended by adding after section 4980C the following new section: ”SEC. 4980D. FAILURE TO MEET CERTAIN GROUP HEALTH PLAN REQUIREMENTS. ”(a) GENERAL RULE.\u2014There is hereby imposed a tax on any failure of a group health plan to meet the requirements of chapter 100 (relating to group health plan portability, access, and re- newability requirements). ”(b) AMOUNT OF TAX.\u2014 ”(1) IN GENERAL.\u2014The amount of the tax im- posed by subsection (a) on any failure shall be $100 for each day in the noncompliance period with respect to each individual to whom such failure relates. ”(2) NONCOMPLIANCE PERIOD.\u2014For purposes of this section, the term ‘noncompliance period’ means, with respect to any failure, the period\u2014 ”(A) beginning on the date such failure first occurs, and ”(B) ending on the date such failure is cor- rected. ”(3) MINIMUM TAX FOR NONCOMPLIANCE PE- RIOD WHERE FAILURE DISCOVERED AFTER NOTICE OF EXAMINATION.\u2014Notwithstanding paragraphs (1) and (2) of subsection (c)\u2014 ”(A) IN GENERAL.\u2014In the case of 1 or more failures with respect to an individual\u2014 ”(i) which are not corrected before the date a notice of examination of income tax liability is sent to the employer, and ”(ii) which occurred or continued during the period under examination, the amount of tax imposed by subsection (a) by reason of such failures with respect to such in- dividual shall not be less than the lesser of $2,500 or the amount of tax which would be im- posed by subsection (a) without regard to such paragraphs. ”(B) HIGHER MINIMUM TAX WHERE VIOLATIONS ARE MORE THAN DE MINIMIS.\u2014To the extent vio- lations for which any person is liable under sub- section (e) for any year are more than de minimis, subparagraph (A) shall be applied by substituting ‘$15,000’ for ‘$2,500’ with respect to such person. ”(C) EXCEPTION FOR CHURCH PLANS.\u2014This paragraph shall not apply to any failure under a church plan (as defined in section 414(e)). ”(c) LIMITATIONS ON AMOUNT OF TAX.\u2014 ”(1) TAX NOT TO APPLY WHERE FAILURE NOT DISCOVERED EXERCISING REASONABLE DILI- GENCE.\u2014No tax shall be imposed by subsection (a) on any failure during any period for which it is established to the satisfaction of the Sec- retary that the person otherwise liable for such tax did not know, and exercising reasonable diligence would not have known, that such fail- ure existed. ”(2) TAX NOT TO APPLY TO FAILURES COR- RECTED WITHIN CERTAIN PERIODS.\u2014No tax shall be imposed by subsection (a) on any failure if\u2014 ”(A) such failure was due to reasonable cause and not to willful neglect, and ”(B)(i) in the case of a plan other than a church plan (as defined in section 414(e)), such CONGRESSIONAL RECORD \u2014 HOUSEH9512 July 31, 1996 failure is corrected during the 30-day period be- ginning on the 1st date the person otherwise lia- ble for such tax knew, or exercising reasonable diligence would have known, that such failure existed, and ”(ii) in the case of a church plan (as so de- fined), such failure is corrected before the close of the correction period (determined under the rules of section 414(e)(4)(C)). ”(3) OVERALL LIMITATION FOR UNINTENTIONAL FAILURES.\u2014In the case of failures which are due to reasonable cause and not to willful neglect\u2014 ”(A) SINGLE EMPLOYER PLANS.\u2014 ”(i) IN GENERAL.\u2014In the case of failures with respect to plans other than specified multiple employer health plans, the tax imposed by sub- section (a) for failures during the taxable year of the employer shall not exceed the amount equal to the lesser of\u2014 ”(I) 10 percent of the aggregate amount paid or incurred by the employer (or predecessor em- ployer) during the preceding taxable year for group health plans, or ”(II) $500,000. ”(ii) TAXABLE YEARS IN THE CASE OF CERTAIN CONTROLLED GROUPS.\u2014For purposes of this sub- paragraph, if not all persons who are treated as a single employer for purposes of this section have the same taxable year, the taxable years taken into account shall be determined under principles similar to the principles of section 1561. ”(B) SPECIFIED MULTIPLE EMPLOYER HEALTH PLANS.\u2014 ”(i) IN GENERAL.\u2014In the case of failures with respect to a specified multiple employer health plan, the tax imposed by subsection (a) for fail- ures during the taxable year of the trust forming part of such plan shall not exceed the amount equal to the lesser of\u2014 ”(I) 10 percent of the amount paid or incurred by such trust during such taxable year to pro- vide medical care (as defined in section 9805(d)(3)) directly or through insurance, reim- bursement, or otherwise, or ”(II) $500,000. For purposes of the preceding sentence, all plans of which the same trust forms a part shall be treated as 1 plan. ”(ii) SPECIAL RULE FOR EMPLOYERS REQUIRED TO PAY TAX.\u2014If an employer is assessed a tax imposed by subsection (a) by reason of a failure with respect to a specified multiple employer health plan, the limit shall be determined under subparagraph (A) (and not under this subpara- graph) and as if such plan were not a specified multiple employer health plan. ”(4) WAIVER BY SECRETARY.\u2014In the case of a failure which is due to reasonable cause and not to willful neglect, the Secretary may waive part or all of the tax imposed by subsection (a) to the extent that the payment of such tax would be excessive relative to the failure involved. ”(d) TAX NOT TO APPLY TO CERTAIN INSURED SMALL EMPLOYER PLANS.\u2014 ”(1) IN GENERAL.\u2014In the case of a group health plan of a small employer which provides health insurance coverage solely through a con- tract with a health insurance issuer, no tax shall be imposed by this section on the employer on any failure which is solely because of the health insurance coverage offered by such is- suer. ”(2) SMALL EMPLOYER.\u2014 ”(A) IN GENERAL.\u2014For purposes of paragraph (1), the term ‘small employer’ means, with re- spect to a calendar year and a plan year, an employer who employed an average of at least 2 but not more than 50 employees on business days during the preceding calendar year and who employs at least 2 employees on the first day of the plan year. For purposes of the pre- ceding sentence, all persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as 1 employer. ”(B) EMPLOYERS NOT IN EXISTENCE IN PRECED- ING YEAR.\u2014In the case of an employer which was not in existence throughout the preceding calendar year, the determination of whether such employer is a small employer shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the current calendar year. ”(C) PREDECESSORS.\u2014Any reference in this paragraph to an employer shall include a ref- erence to any predecessor of such employer. ”(3) HEALTH INSURANCE COVERAGE; HEALTH IN- SURANCE ISSUER.\u2014For purposes of paragraph (1), the terms ‘health insurance coverage’ and ‘health insurance issuer’ have the respective meanings given such terms by section 9805. ”(e) LIABILITY FOR TAX.\u2014The following shall be liable for the tax imposed by subsection (a) on a failure: ”(1) Except as otherwise provided in this sub- section, the employer. ”(2) In the case of a multiemployer plan, the plan. ”(3) In the case of a failure under section 9803 (relating to guaranteed renewability) with re- spect to a plan described in subsection (f)(2)(B), the plan. ”(f) DEFINITIONS.\u2014For purposes of this sec- tion\u2014 ”(1) GROUP HEALTH PLAN.\u2014The term ‘group health plan’ has the meaning given such term by section 9805(a). ”(2) SPECIFIED MULTIPLE EMPLOYER HEALTH PLAN.\u2014The term ‘specified multiple employer health plan’ means a group health plan which is\u2014 ”(A) any multiemployer plan, or ”(B) any multiple employer welfare arrange- ment (as defined in section 3(40) of the Em- ployee Retirement Income Secrurity Act of 1974, as in effect on the date of the enactment of this section). ”(3) CORRECTION.\u2014A failure of a group health plan shall be treated as corrected if\u2014 ”(A) such failure is retroactively undone to the extent possible, and ”(B) the person to whom the failure relates is placed in a financial position which is as good as such person would have been in had such failure not occurred.” (b) CLERICAL AMENDMENT.\u2014The table of sec- tions for chapter 43 of such Code is amended by adding after the item relating to section 4980C the following new item: ”Sec. 4980D. Failure to meet certain group health plan requirements.” (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to failures under chapter 100 of the Internal Revenue Code of 1986 (as added by section 401 of this Act). Subtitle B\u2014Clarification of Certain Continuation Coverage Requirements SEC. 421. COBRA CLARIFICATIONS. (a) PUBLIC HEALTH SERVICE ACT.\u2014 (1) PERIOD OF COVERAGE.\u2014Section 2202(2) of the Public Health Service Act (42 U.S.C. 300bb 2(2)) is amended\u2014 (A) in subparagraph (A)\u2014 (i) by transferring the sentence immediately preceding clause (iv) so as to appear imme- diately following such clause (iv); and (ii) in the last sentence (as so transferred)\u2014 (I) by striking ”an individual” and inserting ”a qualified beneficiary”; (II) by striking ”at the time of a qualifying event described in section 2203(2)” and inserting ”at any time during the first 60 days of continu- ation coverage under this title”; (III) by striking ”with respect to such event,”; and (IV) by inserting ”(with respect to all quali- fied beneficiaries)” after ”29 months”; (B) in subparagraph (D)(i), by inserting be- fore ”, or” the following: ”(other than such an exclusion or limitation which does not apply to (or is satisfied by) such beneficiary by reason of chapter 100 of the Internal Revenue Code of 1986, part 7 of subtitle B of title I of the Em- ployee Retirement Income Security Act of 1974, or title XXVII of this Act)”; and (C) in subparagraph (E), by striking ”at the time of a qualifying event described in section 2203(2)” and inserting ”at any time during the first 60 days of continuation coverage under this title”. (2) NOTICES.\u2014Section 2206(3) of the Public Health Service Act (42 U.S.C. 300bb 6(3)) is amended by striking ”at the time of a qualifying event described in section 2203(2)” and inserting ”at any time during the first 60 days of continu- ation coverage under this title”. (3) BIRTH OR ADOPTION OF A CHILD.\u2014Section 2208(3)(A) of the Public Health Service Act (42 U.S.C. 300bb 8(3)(A)) is amended by adding at the end thereof the following new flush sen- tence: ”Such term shall also include a child who is born to or placed for adoption with the covered employee during the period of continuation cov- erage under this title.”. (b) EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.\u2014 (1) PERIOD OF COVERAGE.\u2014Section 602(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1162(2)) is amended\u2014 (A) in the last sentence of subparagraph (A)\u2014 (i) by striking ”an individual” and inserting ”a qualified beneficiary”; (ii) by striking ”at the time of a qualifying event described in section 603(2)” and inserting ”at any time during the first 60 days of continu- ation coverage under this part”; (iii) by striking ”with respect to such event”; and (iv) by inserting ”(with respect to all qualified beneficiaries)” after ”29 months”; (B) in subparagraph (D)(i), by inserting be- fore ”, or” the following: ”(other than such an exclusion or limitation which does not apply to (or is satisfied by) such beneficiary by reason of chapter 100 of the Internal Revenue Code of 1986, part 7 of this subtitle, or title XXVII of the Public Health Service Act)”; and (C) in subparagraph (E), by striking ”at the time of a qualifying event described in section 603(2)” and inserting ”at any time during the first 60 days of continuation coverage under this part”. (2) NOTICES.\u2014Section 606(a)(3) of the Em- ployee Retirement Income Security Act of 1974 (29 U.S.C. 1166(a)(3)) is amended by striking ”at the time of a qualifying event described in sec- tion 603(2)” and inserting ”at any time during the first 60 days of continuation coverage under this part”. (3) BIRTH OR ADOPTION OF A CHILD.\u2014Section 607(3)(A) of the Employee Retirement Income Se- curity Act of 1974 (29 U.S.C. 1167(3)) is amended by adding at the end thereof the following new flush sentence: ”Such term shall also include a child who is born to or placed for adoption with the covered employee during the period of continuation cov- erage under this part.”. (c) INTERNAL REVENUE CODE OF 1986.\u2014 (1) PERIOD OF COVERAGE.\u2014Section 4980B(f)(2)(B) of the Internal Revenue Code of 1986 is amended\u2014 (A) in the last sentence of clause (i)\u2014 (i) by striking ”at the time of a qualifying event described in paragraph (3)(B)” and insert- ing ”at any time during the first 60 days of con- tinuation coverage under this section”; (ii) by striking ”with respect to such event”; and (iii) by inserting ”(with respect to all qualified beneficiaries)” after ”29 months”; (B) in clause (iv)(I), by inserting before ”, or” the following: ”(other than such an exclusion or limitation which does not apply to (or is satis- fied by) such beneficiary by reason of chapter 100 of this title, part 7 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, or title XXVII of the Public Health Service Act)”; and (C) in clause (v), by striking ”at the time of a qualifying event described in paragraph (3)(B)” and inserting ”at any time during the first 60 CONGRESSIONAL RECORD \u2014 HOUSE H9513July 31, 1996 days of continuation coverage under this sec- tion”. (2) NOTICES.\u2014Section 4980B(f)(6)(C) of the In- ternal Revenue Code of 1986 is amended by striking ”at the time of a qualifying event de- scribed in paragraph (3)(B)” and inserting ”at any time during the first 60 days of continu- ation coverage under this section”. (3) BIRTH OR ADOPTION OF A CHILD.\u2014Section 4980B(g)(1)(A) of the Internal Revenue Code of 1986 is amended by adding at the end thereof the following new flush sentence: ”Such term shall also include a child who is born to or placed for adoption with the covered employee during the period of continuation cov- erage under this section.”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall become effective on Janu- ary 1, 1997, regardless of whether the qualifying event occurred before, on, or after such date. (e) NOTIFICATION OF CHANGES.\u2014Not later than November 1, 1996, each group health plan (covered under title XXII of the Public Health Service Act, part 6 of subtitle B of title I of the Employee Retirement Income Security Act of 1974, and section 4980B(f) of the Internal Reve- nue Code of 1986) shall notify each qualified beneficiary who has elected continuation cov- erage under such title, part or section of the amendments made by this section. TITLE V\u2014REVENUE OFFSETS SEC. 500. AMENDMENT OF 1986 CODE. Except as otherwise expressly provided, when- ever in this title an amendment or repeal is ex- pressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. Subtitle A\u2014Company-Owned Life Insurance SEC. 501. DENIAL OF DEDUCTION FOR INTEREST ON LOANS WITH RESPECT TO COM- PANY-OWNED LIFE INSURANCE. (a) IN GENERAL.\u2014Paragraph (4) of section 264(a) is amended\u2014 (1) by inserting ”, or any endowment or annu- ity contracts owned by the taxpayer covering any individual,” after ”the life of any individ- ual”, and (2) by striking all that follows ”carried on by the taxpayer” and inserting a period. (b) EXCEPTION FOR CONTRACTS RELATING TO KEY PERSONS; PERMISSIBLE INTEREST RATES.\u2014 Section 264 is amended\u2014 (1) by striking ”Any” in subsection (a)(4) and inserting ”Except as provided in subsection (d), any”, and (2) by adding at the end the following new subsection: ”(d) SPECIAL RULES FOR APPLICATION OF SUB- SECTION (a)(4).\u2014 ”(1) EXCEPTION FOR KEY PERSONS.\u2014Sub- section (a)(4) shall not apply to any interest paid or accrued on any indebtedness with re- spect to policies or contracts covering an indi- vidual who is a key person to the extent that the aggregate amount of such indebtedness with respect to policies and contracts covering such individual does not exceed $50,000. ”(2) INTEREST RATE CAP ON KEY PERSONS AND PRE-1986 CONTRACTS.\u2014 ”(A) IN GENERAL.\u2014No deduction shall be al- lowed by reason of paragraph (1) or the last sentence of subsection (a) with respect to inter- est paid or accrued for any month beginning after December 31, 1995, to the extent the amount of such interest exceeds the amount which would have been determined if the appli- cable rate of interest were used for such month. ”(B) APPLICABLE RATE OF INTEREST.\u2014For purposes of subparagraph (A)\u2014 ”(i) IN GENERAL.\u2014The applicable rate of inter- est for any month is the rate of interest de- scribed as Moody’s Corporate Bond Yield Aver- age-Monthly Average Corporates as published by Moody’s Investors Service, Inc., or any suc- cessor thereto, for such month. ”(ii) PRE-1986 CONTRACTS.\u2014In the case of in- debtedness on a contract purchased on or before June 20, 1986\u2014 ”(I) which is a contract providing a fixed rate of interest, the applicable rate of interest for any month shall be the Moody’s rate described in clause (i) for the month in which the contract was purchased, or ”(II) which is a contract providing a variable rate of interest, the applicable rate of interest for any month in an applicable period shall be such Moody’s rate for the third month preceding the first month in such period. For purposes of subclause (II), the taxpayer shall elect an applicable period for such con- tract on its return of tax imposed by this chap- ter for its first taxable year ending on or after October 13, 1995. Such applicable period shall be for any number of months (not greater than 12) specified in the election and may not be changed by the taxpayer without the consent of the Sec- retary. ”(3) KEY PERSON.\u2014For purposes of paragraph (1), the term ‘key person’ means an officer or 20- percent owner, except that the number of indi- viduals who may be treated as key persons with respect to any taxpayer shall not exceed the greater of\u2014 ”(A) 5 individuals, or ”(B) the lesser of 5 percent of the total officers and employees of the taxpayer or 20 individuals. ”(4) 20-PERCENT OWNER.\u2014For purposes of this subsection, the term ’20-percent owner’ means\u2014 ”(A) if the taxpayer is a corporation, any per- son who owns directly 20 percent or more of the outstanding stock of the corporation or stock possessing 20 percent or more of the total com- bined voting power of all stock of the corpora- tion, or ”(B) if the taxpayer is not a corporation, any person who owns 20 percent or more of the cap- ital or profits interest in the employer. ”(5) AGGREGATION RULES.\u2014 ”(A) IN GENERAL.\u2014For purposes of paragraph (4)(A) and applying the $50,000 limitation in paragraph (1)\u2014 ”(i) all members of a controlled group shall be treated as 1 taxpayer, and ”(ii) such limitation shall be allocated among the members of such group in such manner as the Secretary may prescribe. ”(B) CONTROLLED GROUP.\u2014For purposes of this paragraph, all persons treated as a single employer under subsection (a) or (b) of section 52 or subsection (m) or (o) of section 414 shall be treated as members of a controlled group.”. (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to interest paid or ac- crued after October 13, 1995. (2) TRANSITION RULE FOR EXISTING INDEBTED- NESS.\u2014 (A) IN GENERAL.\u2014In the case of\u2014 (i) indebtedness incurred before January 1, 1996, or (ii) indebtedness incurred before January 1, 1997 with respect to any contract or policy en- tered into in 1994 or 1995, the amendments made by this section shall not apply to qualified interest paid or accrued on such indebtedness after October 13, 1995, and before January 1, 1999. (B) QUALIFIED INTEREST.\u2014For purposes of subparagraph (A), the qualified interest with re- spect to any indebtedness for any month is the amount of interest (otherwise deductible) which would be paid or accrued for such month on such indebtedness if\u2014 (i) in the case of any interest paid or accrued after December 31, 1995, indebtedness with re- spect to no more than 20,000 insured individuals were taken into account, and (ii) the lesser of the following rates of interest were used for such month: (I) The rate of interest specified under the terms of the indebtedness as in effect on October 13, 1995 (and without regard to modification of such terms after such date). (II) The applicable percentage of the rate of interest described as Moody’s Corporate Bond Yield Average-Monthly Average Corporates as published by Moody’s Investors Service, Inc., or any successor thereto, for such month. For purposes of clause (i), all persons treated as a single employer under subsection (a) or (b) of section 52 of the Internal Revenue Code of 1986 or subsection (m) or (o) of section 414 of such Code shall be treated as 1 person. Subclause (II) of clause (ii) shall not apply to any month be- fore January 1, 1996. (C) APPLICABLE PERCENTAGE.\u2014For purposes of subparagraph (B), the applicable percentage is as follows: For calendar year: The percentage is: 1996 ………………………… 100 percent 1997 ………………………… 90 percent 1998 ………………………… 80 percent. (3) SPECIAL RULE FOR GRANDFATHERED CON- TRACTS.\u2014This section shall not apply to any contract purchased on or before June 20, 1986, except that section 264(d)(2) of the Internal Rev- enue Code of 1986 shall apply to interest paid or accrued after October 13, 1995. (d) SPREAD OF INCOME INCLUSION ON SURREN- DER, ETC. OF CONTRACTS.\u2014 (1) IN GENERAL.\u2014If any amount is received under any life insurance policy or endowment or annuity contract described in paragraph (4) of section 264(a) of the Internal Revenue Code of 1986\u2014 (A) on the complete surrender, redemption, or maturity of such policy or contract during cal- endar year 1996, 1997, or 1998, or (B) in full discharge during any such cal- endar year of the obligation under the policy or contract which is in the nature of a refund of the consideration paid for the policy or con- tract, then (in lieu of any other inclusion in gross in- come) such amount shall be includible in gross income ratably over the 4-taxable year period beginning with the taxable year such amount would (but for this paragraph) be includible. The preceding sentence shall only apply to the extent the amount is includible in gross income for the taxable year in which the event de- scribed in subparagraph (A) or (B) occurs. (2) SPECIAL RULES FOR APPLYING SECTION 264.\u2014A contract shall not be treated as\u2014 (A) failing to meet the requirement of section 264(c)(1) of the Internal Revenue Code of 1986, or (B) a single premium contract under section 264(b)(1) of such Code, solely by reason of an occurrence described in subparagraph (A) or (B) of paragraph (1) of this subsection or solely by reason of no additional premiums being received under the contract by reason of a lapse occurring after October 13, 1995. (3) SPECIAL RULE FOR DEFERRED ACQUISITION COSTS.\u2014In the case of the occurrence of any event described in subparagraph (A) or (B) of paragraph (1) of this subsection with respect to any policy or contract\u2014 (A) section 848 of the Internal Revenue Code of 1986 shall not apply to the unamortized bal- ance (if any) of the specified policy acquisition expenses attributable to such policy or contract immediately before the insurance company’s taxable year in which such event occurs, and (B) there shall be allowed as a deduction to such company for such taxable year under chapter 1 of such Code an amount equal to such unamortized balance. Subtitle B\u2014Treatment of Individuals Who Lose United States Citizenship SEC. 511. REVISION OF INCOME, ESTATE, AND GIFT TAXES ON INDIVIDUALS WHO LOSE UNITED STATES CITIZENSHIP. (a) IN GENERAL.\u2014Subsection (a) of section 877 is amended to read as follows: ”(a) TREATMENT OF EXPATRIATES.\u2014 ”(1) IN GENERAL.\u2014Every nonresident alien in- dividual who, within the 10-year period imme- diately preceding the close of the taxable year, CONGRESSIONAL RECORD \u2014 HOUSEH9514 July 31, 1996 lost United States citizenship, unless such loss did not have for 1 of its principal purposes the avoidance of taxes under this subtitle or subtitle B, shall be taxable for such taxable year in the manner provided in subsection (b) if the tax im- posed pursuant to such subsection exceeds the tax which, without regard to this section, is im- posed pursuant to section 871. ”(2) CERTAIN INDIVIDUALS TREATED AS HAVING TAX AVOIDANCE PURPOSE.\u2014For purposes of paragraph (1), an individual shall be treated as having a principal purpose to avoid such taxes if\u2014 ”(A) the average annual net income tax (as defined in section 38(c)(1)) of such individual for the period of 5 taxable years ending before the date of the loss of United States citizenship is greater than $100,000, or ”(B) the net worth of the individual as of such date is $500,000 or more. In the case of the loss of United States citizen- ship in any calendar year after 1996, such $100,000 and $500,000 amounts shall be increased by an amount equal to such dollar amount mul- tiplied by the cost-of-living adjustment deter- mined under section 1(f)(3) for such calendar year by substituting ‘1994’ for ‘1992’ in subpara- graph (B) thereof. Any increase under the pre- ceding sentence shall be rounded to the nearest multiple of $1,000.”. (b) EXCEPTIONS.\u2014 (1) IN GENERAL.\u2014Section 877 is amended by striking subsection (d), by redesignating sub- section (c) as subsection (d), and by inserting after subsection (b) the following new sub- section: ”(c) TAX AVOIDANCE NOT PRESUMED IN CER- TAIN CASES.\u2014 ”(1) IN GENERAL.\u2014Subsection (a)(2) shall not apply to an individual if\u2014 ”(A) such individual is described in a sub- paragraph of paragraph (2) of this subsection, and ”(B) within the 1-year period beginning on the date of the loss of United States citizenship, such individual submits a ruling request for the Secretary’s determination as to whether such loss has for 1 of its principal purposes the avoid- ance of taxes under this subtitle or subtitle B. ”(2) INDIVIDUALS DESCRIBED.\u2014 ”(A) DUAL CITIZENSHIP, ETC.\u2014An individual is described in this subparagraph if\u2014 ”(i) the individual became at birth a citizen of the United States and a citizen of another coun- try and continues to be a citizen of such other country, or ”(ii) the individual becomes (not later than the close of a reasonable period after loss of United States citizenship) a citizen of the coun- try in which\u2014 ”(I) such individual was born, ”(II) if such individual is married, such indi- vidual’s spouse was born, or ”(III) either of such individual’s parents were born. ”(B) LONG-TERM FOREIGN RESIDENTS.\u2014An in- dividual is described in this subparagraph if, for each year in the 10-year period ending on the date of loss of United States citizenship, the in- dividual was present in the United States for 30 days or less. The rule of section 7701(b)(3)(D)(ii) shall apply for purposes of this subparagraph. ”(C) RENUNCIATION UPON REACHING AGE OF MAJORITY.\u2014An individual is described in this subparagraph if the individual’s loss of United States citizenship occurs before such individual attains age 181\u20442. ”(D) INDIVIDUALS SPECIFIED IN REGULA- TIONS.\u2014An individual is described in this sub- paragraph if the individual is described in a category of individuals prescribed by regulation by the Secretary.” (2) TECHNICAL AMENDMENT.\u2014Paragraph (1) of section 877(b) of such Code is amended by strik- ing ”subsection (c)” and inserting ”subsection (d)”. (c) TREATMENT OF PROPERTY DISPOSED OF IN NONRECOGNITION TRANSACTIONS; TREATMENT OF DISTRIBUTIONS FROM CERTAIN CONTROLLED FOREIGN CORPORATIONS.\u2014Subsection (d) of sec- tion 877, as redesignated by subsection (b), is amended to read as follows: ”(d) SPECIAL RULES FOR SOURCE, ETC.\u2014For purposes of subsection (b)\u2014 ”(1) SOURCE RULES.\u2014The following items of gross income shall be treated as income from sources within the United States: ”(A) SALE OF PROPERTY.\u2014Gains on the sale or exchange of property (other than stock or debt obligations) located in the United States. ”(B) STOCK OR DEBT OBLIGATIONS.\u2014Gains on the sale or exchange of stock issued by a domes- tic corporation or debt obligations of United States persons or of the United States, a State or political subdivision thereof, or the District of Columbia. ”(C) INCOME OR GAIN DERIVED FROM CON- TROLLED FOREIGN CORPORATION.\u2014Any income or gain derived from stock in a foreign corpora- tion but only\u2014 ”(i) if the individual losing United States citi- zenship owned (within the meaning of section 958(a)), or is considered as owning (by applying the ownership rules of section 958(b)), at any time during the 2-year period ending on the date of the loss of United States citizenship, more than 50 percent of\u2014 ”(I) the total combined voting power of all classes of stock entitled to vote of such corpora- tion, or ”(II) the total value of the stock of such cor- poration, and ”(ii) to the extent such income or gain does not exceed the earnings and profits attributable to such stock which were earned or accumulated before the loss of citizenship and during periods that the ownership requirements of clause (i) are met. ”(2) GAIN RECOGNITION ON CERTAIN EX- CHANGES.\u2014 ”(A) IN GENERAL.\u2014In the case of any ex- change of property to which this paragraph ap- plies, notwithstanding any other provision of this title, such property shall be treated as sold for its fair market value on the date of such ex- change, and any gain shall be recognized for the taxable year which includes such date. ”(B) EXCHANGES TO WHICH PARAGRAPH AP- PLIES.\u2014This paragraph shall apply to any ex- change during the 10-year period described in subsection (a) if\u2014 ”(i) gain would not (but for this paragraph) be recognized on such exchange in whole or in part for purposes of this subtitle, ”(ii) income derived from such property was from sources within the United States (or, if no income was so derived, would have been from such sources), and ”(iii) income derived from the property ac- quired in the exchange would be from sources outside the United States. ”(C) EXCEPTION.\u2014Subparagraph (A) shall not apply if the individual enters into an agreement with the Secretary which specifies that any in- come or gain derived from the property acquired in the exchange (or any other property which has a basis determined in whole or part by ref- erence to such property) during such 10-year pe- riod shall be treated as from sources within the United States. If the property transferred in the exchange is disposed of by the person acquiring such property, such agreement shall terminate and any gain which was not recognized by rea- son of such agreement shall be recognized as of the date of such disposition. ”(D) SECRETARY MAY EXTEND PERIOD.\u2014To the extent provided in regulations prescribed by the Secretary, subparagraph (B) shall be applied by substituting the 15-year period beginning 5 years before the loss of United States citizenship for the 10-year period referred to therein. ”(E) SECRETARY MAY REQUIRE RECOGNITION OF GAIN IN CERTAIN CASES.\u2014To the extent provided in regulations prescribed by the Secretary\u2014 ”(i) the removal of appreciated tangible per- sonal property from the United States, and ”(ii) any other occurrence which (without rec- ognition of gain) results in a change in the source of the income or gain from property from sources within the United States to sources out- side the United States, shall be treated as an exchange to which this paragraph applies. ”(3) SUBSTANTIAL DIMINISHING OF RISKS OF OWNERSHIP.\u2014For purposes of determining whether this section applies to any gain on the sale or exchange of any property, the running of the 10-year period described in subsection (a) shall be suspended for any period during which the individual’s risk of loss with respect to the property is substantially diminished by\u2014 ”(A) the holding of a put with respect to such property (or similar property), ”(B) the holding by another person of a right to acquire the property, or ”(C) a short sale or any other transaction. ”(4) TREATMENT OF PROPERTY CONTRIBUTED TO CONTROLLED FOREIGN CORPORATIONS.\u2014 ”(A) IN GENERAL.\u2014If\u2014 ”(i) an individual losing United States citizen- ship contributes property to any corporation which, at the time of the contribution, is de- scribed in subparagraph (B), and ”(ii) income derived from such property was from sources within the United States (or, if no income was so derived, would have been from such sources), during the 10-year period referred to in sub- section (a), any income or gain on such property (or any other property which has a basis deter- mined in whole or part by reference to such property) received or accrued by the corporation shall be treated as received or accrued directly by such individual and not by such corporation. The preceding sentence shall not apply to the extent the property has been treated under sub- paragraph (C) as having been sold by such cor- poration. ”(B) CORPORATION DESCRIBED.\u2014A corporation is described in this subparagraph with respect to an individual if, were such individual a United States citizen\u2014 ”(i) such corporation would be a controlled foreign corporation (as defined in 957), and ”(ii) such individual would be a United States shareholder (as defined in section 951(b)) with respect to such corporation. ”(C) DISPOSITION OF STOCK IN CORPORATION.\u2014 If stock in the corporation referred to in sub- paragraph (A) (or any other stock which has a basis determined in whole or part by reference to such stock) is disposed of during the 10-year period referred to in subsection (a) and while the property referred to in subparagraph (A) is held by such corporation, a pro rata share of such property (determined on the basis of the value of such stock) shall be treated as sold by the corporation immediately before such disposi- tion. ”(D) ANTI-ABUSE RULES.\u2014The Secretary shall prescribe such regulations as may be necessary to prevent the avoidance of the purposes of this paragraph, including where\u2014 ”(i) the property is sold to the corporation, and ”(ii) the property taken into account under subparagraph (A) is sold by the corporation. ”(E) INFORMATION REPORTING.\u2014The Secretary shall require such information reporting as is necessary to carry out the purposes of this para- graph.” (d) CREDIT FOR FOREIGN TAXES IMPOSED ON UNITED STATES SOURCE INCOME.\u2014 (1) Subsection (b) of section 877 is amended by adding at the end the following new sentence: ”The tax imposed solely by reason of this sec- tion shall be reduced (but not below zero) by the amount of any income, war profits, and excess profits taxes (within the meaning of section 903) paid to any foreign country or possession of the United States on any income of the taxpayer on which tax is imposed solely by reason of this section.” CONGRESSIONAL RECORD \u2014 HOUSE H9515July 31, 1996 (2) Subsection (a) of section 877, as amended by subsection (a), is amended by inserting ”(after any reduction in such tax under the last sentence of such subsection)” after ”such sub- section”. (e) COMPARABLE ESTATE AND GIFT TAX TREATMENT.\u2014 (1) ESTATE TAX.\u2014 (A) IN GENERAL.\u2014Subsection (a) of section 2107 is amended to read as follows: ”(a) TREATMENT OF EXPATRIATES.\u2014 ”(1) RATE OF TAX.\u2014A tax computed in accord- ance with the table contained in section 2001 is hereby imposed on the transfer of the taxable es- tate, determined as provided in section 2106, of every decedent nonresident not a citizen of the United States if, within the 10-year period end- ing with the date of death, such decedent lost United States citizenship, unless such loss did not have for 1 of its principal purposes the avoidance of taxes under this subtitle or subtitle A. ”(2) CERTAIN INDIVIDUALS TREATED AS HAVING TAX AVOIDANCE PURPOSE.\u2014 ”(A) IN GENERAL.\u2014For purposes of paragraph (1), an individual shall be treated as having a principal purpose to avoid such taxes if such in- dividual is so treated under section 877(a)(2). ”(B) EXCEPTION.\u2014Subparagraph (A) shall not apply to a decedent meeting the requirements of section 877(c)(1).”. (B) CREDIT FOR FOREIGN DEATH TAXES.\u2014Sub- section (c) of section 2107 is amended by redesig- nating paragraph (2) as paragraph (3) and by inserting after paragraph (1) the following new paragraph: ”(2) CREDIT FOR FOREIGN DEATH TAXES.\u2014 ”(A) IN GENERAL.\u2014The tax imposed by sub- section (a) shall be credited with the amount of any estate, inheritance, legacy, or succession taxes actually paid to any foreign country in re- spect of any property which is included in the gross estate solely by reason of subsection (b). ”(B) LIMITATION ON CREDIT.\u2014The credit al- lowed by subparagraph (A) for such taxes paid to a foreign country shall not exceed the lesser of\u2014 ”(i) the amount which bears the same ratio to the amount of such taxes actually paid to such foreign country in respect of property included in the gross estate as the value of the property included in the gross estate solely by reason of subsection (b) bears to the value of all property subjected to such taxes by such foreign country, or ”(ii) such property’s proportionate share of the excess of\u2014 ”(I) the tax imposed by subsection (a), over ”(II) the tax which would be imposed by sec- tion 2101 but for this section. ”(C) PROPORTIONATE SHARE.\u2014For purposes of subparagraph (B), a property’s proportionate share is the percentage of the value of the prop- erty which is included in the gross estate solely by reason of subsection (b) bears to the total value of the gross estate.”. (C) EXPANSION OF INCLUSION IN GROSS ESTATE OF STOCK OF FOREIGN CORPORATIONS.\u2014Para- graph (2) of section 2107(b) is amended by strik- ing ”more than 50 percent of” and all that fol- lows and inserting ”more than 50 percent of\u2014 ”(A) the total combined voting power of all classes of stock entitled to vote of such corpora- tion, or ”(B) the total value of the stock of such cor- poration,”. (2) GIFT TAX.\u2014 (A) IN GENERAL.\u2014Paragraph (3) of section 2501(a) is amended to read as follows: ”(3) EXCEPTION.\u2014 ”(A) CERTAIN INDIVIDUALS.\u2014Paragraph (2) shall not apply in the case of a donor who, within the 10-year period ending with the date of transfer, lost United States citizenship, unless such loss did not have for 1 of its principal pur- poses the avoidance of taxes under this subtitle or subtitle A. ”(B) CERTAIN INDIVIDUALS TREATED AS HAVING TAX AVOIDANCE PURPOSE.\u2014For purposes of sub- paragraph (A), an individual shall be treated as having a principal purpose to avoid such taxes if such individual is so treated under section 877(a)(2). ”(C) EXCEPTION FOR CERTAIN INDIVIDUALS.\u2014 Subparagraph (B) shall not apply to a decedent meeting the requirements of section 877(c)(1). ”(D) CREDIT FOR FOREIGN GIFT TAXES.\u2014The tax imposed by this section solely by reason of this paragraph shall be credited with the amount of any gift tax actually paid to any for- eign country in respect of any gift which is tax- able under this section solely by reason of this paragraph.”. (f) COMPARABLE TREATMENT OF LAWFUL PER- MANENT RESIDENTS WHO CEASE TO BE TAXED AS RESIDENTS.\u2014 (1) IN GENERAL.\u2014Section 877 is amended by re- designating subsection (e) as subsection (f) and by inserting after subsection (d) the following new subsection: ”(e) COMPARABLE TREATMENT OF LAWFUL PERMANENT RESIDENTS WHO CEASE TO BE TAXED AS RESIDENTS.\u2014 ”(1) IN GENERAL.\u2014Any long-term resident of the United States who\u2014 ”(A) ceases to be a lawful permanent resident of the United States (within the meaning of sec- tion 7701(b)(6)), or ”(B) commences to be treated as a resident of a foreign country under the provisions of a tax treaty between the United States and the for- eign country and who does not waive the bene- fits of such treaty applicable to residents of the foreign country, shall be treated for purposes of this section and sections 2107, 2501, and 6039F in the same man- ner as if such resident were a citizen of the United States who lost United States citizenship on the date of such cessation or commencement. ”(2) LONG-TERM RESIDENT.\u2014For purposes of this subsection, the term ‘long-term resident’ means any individual (other than a citizen of the United States) who is a lawful permanent resident of the United States in at least 8 tax- able years during the period of 15 taxable years ending with the taxable year during which the event described in subparagraph (A) or (B) of paragraph (1) occurs. For purposes of the pre- ceding sentence, an individual shall not be treated as a lawful permanent resident for any taxable year if such individual is treated as a resident of a foreign country for the taxable year under the provisions of a tax treaty be- tween the United States and the foreign country and does not waive the benefits of such treaty applicable to residents of the foreign country. ”(3) SPECIAL RULES.\u2014 ”(A) EXCEPTIONS NOT TO APPLY.\u2014Subsection (c) shall not apply to an individual who is treat- ed as provided in paragraph (1). ”(B) STEP-UP IN BASIS.\u2014Solely for purposes of determining any tax imposed by reason of this subsection, property which was held by the long-term resident on the date the individual first became a resident of the United States shall be treated as having a basis on such date of not less than the fair market value of such property on such date. The preceding sentence shall not apply if the individual elects not to have such sentence apply. Such an election, once made, shall be irrevocable. ”(4) AUTHORITY TO EXEMPT INDIVIDUALS.\u2014 This subsection shall not apply to an individual who is described in a category of individuals prescribed by regulation by the Secretary. ”(5) REGULATIONS.\u2014The Secretary shall pre- scribe such regulations as may be appropriate to carry out this subsection, including regulations providing for the application of this subsection in cases where an alien individual becomes a resident of the United States during the 10-year period after being treated as provided in para- graph (1).”. (2) CONFORMING AMENDMENTS.\u2014 (A) Section 2107 is amended by striking sub- section (d), by redesignating subsection (e) as subsection (d), and by inserting after subsection (d) (as so redesignated) the following new sub- section: ”(e) CROSS REFERENCE.\u2014 ”For comparable treatment of long-term lawful permanent residents who ceased to be taxed as residents, see section 877(e).”. (B) Paragraph (3) of section 2501(a) (as amended by subsection (e)) is amended by add- ing at the end the following new subparagraph: ”(E) CROSS REFERENCE.\u2014 ”For comparable treatment of long-term lawful permanent residents who ceased to be taxed as residents, see section 877(e).”. (g) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to\u2014 (A) individuals losing United States citizen- ship (within the meaning of section 877 of the Internal Revenue Code of 1986) on or after Feb- ruary 6, 1995, and (B) long-term residents of the United States with respect to whom an event described in sub- paragraph (A) or (B) of section 877(e)(1) of such Code occurs on or after February 6, 1995. (2) RULING REQUESTS.\u2014In no event shall the 1-year period referred to in section 877(c)(1)(B) of such Code, as amended by this section, expire before the date which is 90 days after the date of the enactment of this Act. (3) SPECIAL RULE.\u2014 (A) IN GENERAL.\u2014In the case of an individual who performed an act of expatriation specified in paragraph (1), (2), (3), or (4) of section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481(a)(1) (4)) before February 6, 1995, but who did not, on or before such date, furnish to the United States Department of State a signed statement of voluntary relinquishment of United States nationality confirming the per- formance of such act, the amendments made by this section and section 512 shall apply to such individual except that the 10-year period de- scribed in section 877(a) of such Code shall not expire before the end of the 10-year period be- ginning on the date such statement is so fur- nished. (B) EXCEPTION.\u2014Subparagraph (A) shall not apply if the individual establishes to the satis- faction of the Secretary of the Treasury that such loss of United States citizenship occurred before February 6, 1994. SEC. 512. INFORMATION ON INDIVIDUALS LOSING UNITED STATES CITIZENSHIP. (a) IN GENERAL.\u2014Subpart A of part III of sub- chapter A of chapter 61 is amended by inserting after section 6039E the following new section: ”SEC. 6039F. INFORMATION ON INDIVIDUALS LOS- ING UNITED STATES CITIZENSHIP. ”(a) IN GENERAL.\u2014Notwithstanding any other provision of law, any individual who loses Unit- ed States citizenship (within the meaning of sec- tion 877(a)) shall provide a statement which in- cludes the information described in subsection (b). Such statement shall be\u2014 ”(1) provided not later than the earliest date of any act referred to in subsection (c), and ”(2) provided to the person or court referred to in subsection (c) with respect to such act. ”(b) INFORMATION TO BE PROVIDED.\u2014Infor- mation required under subsection (a) shall in- clude\u2014 ”(1) the taxpayer’s TIN, ”(2) the mailing address of such individual’s principal foreign residence, ”(3) the foreign country in which such indi- vidual is residing, ”(4) the foreign country of which such indi- vidual is a citizen, ”(5) in the case of an individual having a net worth of at least the dollar amount applicable under section 877(a)(2)(B), information detailing the assets and liabilities of such individual, and ”(6) such other information as the Secretary may prescribe. ”(c) ACTS DESCRIBED.\u2014For purposes of this section, the acts referred to in this subsection are\u2014 CONGRESSIONAL RECORD \u2014 HOUSEH9516 July 31, 1996 ”(1) the individual’s renunciation of his Unit- ed States nationality before a diplomatic or con- sular officer of the United States pursuant to paragraph (5) of section 349(a) of the Immigra- tion and Nationality Act (8 U.S.C. 1481(a)(5)), ”(2) the individual’s furnishing to the United States Department of State a signed statement of voluntary relinquishment of United States na- tionality confirming the performance of an act of expatriation specified in paragraph (1), (2), (3), or (4) of section 349(a) of the Immigration and Nationality Act (8 U.S.C. 1481(a)(1) (4)), ”(3) the issuance by the United States Depart- ment of State of a certificate of loss of national- ity to the individual, or ”(4) the cancellation by a court of the United States of a naturalized citizen’s certificate of naturalization. ”(d) PENALTY.\u2014Any individual failing to pro- vide a statement required under subsection (a) shall be subject to a penalty for each year (of the 10-year period beginning on the date of loss of United States citizenship) during any portion of which such failure continues in an amount equal to the greater of\u2014 ”(1) 5 percent of the tax required to be paid under section 877 for the taxable year ending during such year, or ”(2) $1,000, unless it is shown that such failure is due to reasonable cause and not to willful neglect. ”(e) INFORMATION TO BE PROVIDED TO SEC- RETARY.\u2014Notwithstanding any other provision of law\u2014 ”(1) any Federal agency or court which col- lects (or is required to collect) the statement under subsection (a) shall provide to the Sec- retary\u2014 ”(A) a copy of any such statement, and ”(B) the name (and any other identifying in- formation) of any individual refusing to comply with the provisions of subsection (a), ”(2) the Secretary of State shall provide to the Secretary a copy of each certificate as to the loss of American nationality under section 358 of the Immigration and Nationality Act which is approved by the Secretary of State, and ”(3) the Federal agency primarily responsible for administering the immigration laws shall provide to the Secretary the name of each law- ful permanent resident of the United States (within the meaning of section 7701(b)(6)) whose status as such has been revoked or has been ad- ministratively or judicially determined to have been abandoned. Notwithstanding any other provision of law, not later than 30 days after the close of each cal- endar quarter, the Secretary shall publish in the Federal Register the name of each individual losing United States citizenship (within the meaning of section 877(a)) with respect to whom the Secretary receives information under the preceding sentence during such quarter. ”(f) REPORTING BY LONG-TERM LAWFUL PER- MANENT RESIDENTS WHO CEASE TO BE TAXED AS RESIDENTS.\u2014In lieu of applying the last sen- tence of subsection (a), any individual who is required to provide a statement under this sec- tion by reason of section 877(e)(1) shall provide such statement with the return of tax imposed by chapter 1 for the taxable year during which the event described in such section occurs. ”(g) EXEMPTION.\u2014The Secretary may by regu- lations exempt any class of individuals from the requirements of this section if he determines that applying this section to such individuals is not necessary to carry out the purposes of this section.”. (b) CLERICAL AMENDMENT.\u2014The table of sec- tions for such subpart A is amended by inserting after the item relating to section 6039E the fol- lowing new item: ”Sec. 6039F. Information on individuals losing United States citizenship.”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to\u2014 (1) individuals losing United States citizenship (within the meaning of section 877 of the Inter- nal Revenue Code of 1986) on or after February 6, 1995, and (2) long-term residents of the United States with respect to whom an event described in sub- paragraph (A) or (B) of section 877(e)(1) of such Code occurs on or after such date. In no event shall any statement required by such amendments be due before the 90th day after the date of the enactment of this Act. SEC. 513. REPORT ON TAX COMPLIANCE BY UNIT- ED STATES CITIZENS AND RESI- DENTS LIVING ABROAD. Not later than 90 days after the date of the enactment of this Act, the Secretary of the Treasury shall prepare and submit to the Com- mittee on Ways and Means of the House of Rep- resentatives and the Committee on Finance of the Senate a report\u2014 (1) describing the compliance with subtitle A of the Internal Revenue Code of 1986 by citizens and lawful permanent residents of the United States (within the meaning of section 7701(b)(6) of such Code) residing outside the United States, and (2) recommending measures to improve such compliance (including improved coordination between executive branch agencies). Subtitle C\u2014Repeal of Financial Institution Transition Rule to Interest Allocation Rules SEC. 521. REPEAL OF FINANCIAL INSTITUTION TRANSITION RULE TO INTEREST AL- LOCATION RULES. (a) IN GENERAL.\u2014Paragraph (5) of section 1215(c) of the Tax Reform Act of 1986 (Public Law 99 514, 100 Stat. 2548) is hereby repealed. (b) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendment made by this section shall apply to taxable years begin- ning after December 31, 1995. (2) SPECIAL RULE.\u2014In the case of the first tax- able year beginning after December 31, 1995, the pre-effective date portion of the interest expense of the corporation referred to in such paragraph (5) of such section 1215(c) for such taxable year shall be allocated and apportioned without re- gard to such amendment. For purposes of the preceding sentence, the pre-effective date por- tion is the amount which bears the same ratio to the interest expense for such taxable year as the number of days during such taxable year before the date of the enactment of this Act bears to 366. And the Senate agree to the same. BILL ARCHER, BILL THOMAS, TOM BLILEY, MICHAEL BILIRAKIS, WILLIAM F. GOODLING, H.W. FAWELL, HENRY HYDE, BILL MCCOLLUM, J. DENNIS HASTERT, Managers on the Part of the House. BILL ROTH, NANCY LANDON KASSEBAUM, TRENT LOTT, TED KENNEDY, Managers on the Part of the Senate. JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE The managers on the part of the House and the Senate at the conference on the disagree- ing votes of the two Houses on the amend- ment of the Senate to the bill (H.R. 3103) to amend the Internal Revenue Code of 1986 to improve portability and continuity of health insurance coverage in the group and individ- ual markets, to combat waste, fraud, and abuse in health insurance and health care de- livery, to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance, and for other purposes, submit the following joint statement to the House and the Senate in ex- planation of the effect of the action agreed upon by the managers and recommended in the accompanying conference report: The Senate amendment struck all of the House bill after the enacting clause and in- serted a substitute text. The House recedes from its disagreement to the amendment of the Senate with an amendment that is a substitute for the House bill and the Senate amendment. The differences between the House bill, the Sen- ate amendment, and the substitute agreed to in conference are noted below, except for clerical corrections, conforming changes made necessary by agreements reached by the conferees, and minor drafting and cleri- cal changes. TITLE I.\u2014HEALTH CARE ACCESS, PORTABILITY, AND RENEWABILITY I. STRUCTURE House bill The House bill would amend the Internal Revenue Code (IRC) and the Employee Re- tirement Income Security Act of 1974 (ERISA), and includes free-standing provi- sions. Senate amendment The Senate amendment includes free- standing provisions. Conference agreement The conference agreement adds new provi- sions to the Employee Retirement Income Security Act of 1974 (ERISA), the Public Health Services (PHS) Act, and the Internal Revenue Code (IRC). II. AVAILABILITY AND PORTABILITY OF GROUP HEALTH PLANS Current law Current federal law does not impose any requirements on employers to provide or contribute toward the health insurance cov- erage of their employees or their employees’ dependents. However, specific federal re- quirements do apply to existing employer- sponsored health plans (e.g., fiduciary, noti- fication and disclosure requirements under ERISA and COBRA continuation coverage, non-discrimination requirements under ERISA and the Internal Revenue Code.) House bill The House bill would provide for federal re- quirements on group health plans (and insur- ers and health maintenance organizations (HMOs) selling to such plans) relating to portability, the use of preexisting medical condition, and discrimination based on health status. Senate amendment The Senate amendment would provide for federal requirements on group health plans, health plan issuers (entities licensed by the state to offer a group or individual health plan) and employee health benefit plans, re- lating to portability, the use of preexisting medical conditions, and discrimination based on health status. Conference agreement The conference agreement provides for fed- eral requirements on group health and health insurance issuers offering group health insurance coverage relating to port- ability, access, and renewability. A. DEFINITIONS (Also see item IX below.) Current law Section 5000(b)(1) of the Internal Revenue Code (IRC) defines a group health plan as a plan (including a self-insured plan) of, or contributed to by, an employer (including a self-employed person) or employee organiza- tion to provide health care (directly or oth- erwise) to the employees, former employees, CONGRESSIONAL RECORD \u2014 HOUSE H9517July 31, 1996 the employer, others associated or formerly associated with the employer in a business relationship, or their families. Section 607(1) of ERISA defines a group health plan as an employee welfare benefit plan providing medical care to participants or beneficiaries directly or through insur- ance, reimbursement, or otherwise. Church plans are excluded from federal re- quirements on existing employer plans such as ERISA’s requirements on employee health benefit plans and COBRA continuation cov- erage requirements under the IRC and ERISA. House bill Group health plan means an employee wel- fare benefit plan to the extent that the plan provides medical care employees and their dependent directly or through insurance, re- imbursement, or otherwise, and includes a group health plan within the meaning of sec- tion 5000(b)(1) of the IRC. The provisions of this subtitle (other than those relating to individual coverage) apply to group health plans with 2 or more partici- pants as current employees on the first day of the plan year. The requirements would not apply to church plans unless such plans met the ex- emption for multiple employer health plans under subtitle c (see item V). For purposes of applying the provisions related to qualified prior coverage (II(B) below), a group health plan could elect to disregard periods of cov- erage of an individual under a church plan that is not subject to this subtitle. Governmental plans could elect not to be a group health plan covered under the subtitle. For purposes of applying the provisions re- lated to qualified prior coverage, a group health plan could elect not to include cov- erage under a governmental plan that elect- ed to be excluded from this subtitle’s re- quirements. Senate amendment Employee health benefit plan means any employee welfare benefit plan, governmental plan, or church plan, or any health benefit plan under section 5(e) of the Peace Corps Act, that provides or pays for health benefit for participants or beneficiaries whether di- rectly, through a group health plan offered by a health plan issuer (see item III(A) below), or otherwise. Conference agreement The conference agreement defines a group health plan as an employee welfare benefit plan to the extent that the plan provides medical care to employees or their depend- ents directly or through insurance, reim- bursement, or otherwise. Both governmental and church plans are included, but certain plans with limited coverage are excluded. The portability and guaranteed availabil- ity provisions (other than those relating to individual coverage) apply to group health plans with 2 or more participants who are ac- tive employees on the first day of the plan year. These provisions would apply to non- federal governmental plans, unless they elected to be excluded as described below, and to church and governmental plans. (See section III(B)(3) below for exceptions from availability, renewability, and portability requirements for group health plans and group health insurance coverage for certain benefits.) Nonfederal governmental plans could elect not to be a group health plan covered under the amendments to the PHS. An election would apply for a single specified plan year, or, in the case of a plan provided pursuant to a collective bargaining agreement, for the term of such agreement. If a nonfederal gov- ernmental plan makes this election, it must notify enrollees of the fact and consequences of the election. The plan must still provide certification and disclosure of creditable coverage under the plan to enrollees who leave the plan, for purposes of portability. Upon request, Medicare, Medicaid, a pro- gram of the Indian Health Service or a tribal organization, and military-sponsored health care programs must also provide notice of previous creditable coverage to individuals who leave such coverage. B. PORTABILITY OF COVERAGE FOR PREVIOUSLY COVERED INDIVIDUALS Current law No provision. House bill The House bill would provide that in gen- eral, a group health plan and an insurer or HMO offering health insurance coverage in connection with a group health plan would have to reduce any preexisting condition limitation period by the length of the aggre- gate period of prior coverage. Prior coverage would not qualify under this provision if there was more than a 60-day break in cov- erage under a group health plan. (Waiting pe- riods would not be considered a break in cov- erage.) Qualified coverage would include cov- erage of the individual under a group health plan, health insurance coverage, Medicare, Medicaid, Tricare, a program of the Indian Health Service, and State health insurance coverage or risk pool, and coverage under the Federal Employees Health Benefit Pro- gram (FEHBP). Senate amendment The Senate Amendment is similar. An em- ployee benefit plan or a health plan issuer of- fering a group health plan would have to re- duce any preexisting condition limitation period by 1 month for each month for which the person was in a period of previous quali- fying coverage. This provision would not apply if there was a break of more than 30 days. (Waiting periods would not be consid- ered a break in coverage.) Previous qualify- ing coverage includes enrollment under an employee health benefit plan, group health plan, individual health plan, or under a pub- lic or private health plan established under federal or state law. Conference agreement The conference agreement provides that in general, group health plans, and health in- surance issuers offering group health insur- ance coverage, would have to reduce any pre- existing condition limitation period by the length of the aggregate period of prior cred- itable coverage. Prior coverage would not qualify under this provision if there was a break in coverage under a group health plan that was longer than a 63-day period. (Wait- ing periods and affiliation periods would not be considered a break in coverage.) Cred- itable coverage includes coverage of the indi- vidual under a group health plan (including a governmental or church plan), health insur- ance coverage (either group or individual in- surance), Medicare, Medicaid, military-spon- sored health care, a program of the Indian Health Service, a State health benefits risk pool, the FEHBP, a public health plan as de- fined in regulations, and any health benefit plan under section 5(e) of the Peace Corps Act. An individual would establish a cred- itable coverage period through presentation of certifications describing previous cov- erage, or through other procedures specified in regulations to carry out this provision. The conferees intend that creditable cov- erage includes short-term, limited coverage. 1. Method for establishing qualified coverage periods Current law No provision. House bill The House bill would provide that a group health plan or insurer or HMO offering health insurance coverage in connection with a group health plan could determine qualified coverage periods without regard to the specific benefits offered, referred to as the standard method. Alternatively, it could make such determination on a benefit-spe- cific basis and not include as a qualified cov- erage period a specific benefit that had not been included at the end of the most recent period of coverage. If this alternative meth- od were to be used, the group plan or insurer would be required to state prominently in any disclosure statements and to each en- rollee at the time of enrollment that such a method of determining qualifying coverage was being used, and include a description of the effect of this method. The plan, insurer, or HMO would request a certification from prior plan administrators, insurers, or HMOs which discloses the plan statement related to health benefits under the plan or other de- tailed benefit information on the benefits available under the previous plan or cov- erage. The entity providing the certification could charge the reasonable cost for provid- ing the benefit information to the requesting plan or insurer. Senate bill The Senate Amendment would provide that an employee health benefit plan or health plan issuer offering a group plan could impose a limitation or exclusion of benefits relating to the treatment of a pre- existing condition only to the extent that such service or benefit was not previously covered under the plan in which the partici- pant or beneficiary was enrolled imme- diately prior to enrollment in the plan in- volved. Conference agreement The conference agreement provides that a group health plan, and issuer offering group health insurance coverage, could determine creditable coverage periods without regard to the specific benefits covered during the period. Alternatively, it could make such de- termination based on several classes or cat- egories of benefits, as specified in regula- tions. A group health plan and issuer would be required to count a period of creditable coverage with respect to any class or cat- egory of benefits if any level of benefits is provided. This alternative would have to be used uniformity for all participants and beneficiaries. It is the intent of the conferees that the al- ternate method be available to account for significant differences in benefits. For exam- ple, the inclusion versus exclusion of a cat- egory of benefits such as pharmaceuticals could be considered a difference in classes of benefits. Similarly, significant differentials in deductibles could be considered dif- ferences in classes of benefits, but the alter- native method would not apply to small dif- ferences in deductibles, such as $250 versus $200. The alternative method would not apply for differences in specific services or treatments. If the alternate method were to be used, the group health plan and issuer would be re- quired to state prominently in any disclo- sure statements that such a method of deter- mining qualifying coverage was being used, and would be required to include a descrip- tion of the effect of this election. A group health plan using the alternate method would be required to notify each enrollee at the time of enrollment that the plan had made such an election, and describe the ef- fect. An issuer would be required to notify each employer at the time of offer or sale of the coverage. 2. Certification of prior coverage Current law No provision. CONGRESSIONAL RECORD \u2014 HOUSEH9518 July 31, 1996 House bill The House bill would require the plan ad- ministrator of a group health plan, or the in- surer or HMO offering health insurance cov- erage to a group plan, on request made on behalf of an individual covered or previously covered within the past 18 months under the plan or coverage, to provide for a certifi- cation of the period of coverage of the indi- vidual under the plan and of the waiting pe- riod (if any) imposed. Senate amendment The Senate Amendment would require an employee health plan to provide documenta- tion of coverage to participants and bene- ficiaries whose coverage was terminated under the plan. As specified by regulation, the duty of an employee health benefit plan to verify previous qualifying coverage would be discharged when such plan provided docu- mentation to the participant or beneficiary including the following information: (1) the dates that the person was covered under the plan; and (2) the benefits and costs-sharing arrangement available to the person under the plan. Conference agreement The conference agreement requires the group health plan, and health insurance is- suer offering group health insurance cov- erage, to provide a certification of the period of creditable coverage under the plan, the coverage under any applicable COBRA con- tinuation provision, and waiting period (if any) (and affiliation period if applicable) im- posed on the individual. This certification would have to be provided when the individ- ual ceases to be covered under the plan or otherwise becomes covered under a COBRA continuation provision, after any COBRA continuation coverage ceases, and on the re- quest of an individual not later than 24 months after coverage ceased. The certifi- cation may be provided, to the extent prac- ticable, at a time consistent with notices re- quired under any applicable COBRA continu- ation provision. A group health plan offering medical care through health insurance cov- erage would not be required to provide cer- tification if the health insurance issuer pro- vides certification. If a group health plan or health insurance issuer elects the alternative method of cred- iting coverage, the plan or issuer would re- quest, from prior entities providing cov- erage, information on coverage of classes and categories of benefits available under the previous plan or coverage. The entity provid- ing the certification could charge the rea- sonable cost for providing such information to the requesting plan or insurer. The Sec- retary is required to establish rules to pre- vent an entity’s failure to provide informa- tion on health benefits under previous cov- erage from adversely affecting any subse- quent coverage under another group health plan or health insurance coverage. C. RESTRICTIONS ON USE OF PRE-EXISTING CONDITION LIMITATION PERIOD Current law No provision. House bill The House bill would restrict the use of preexisting condition limitation periods in group health plans and in plans offered by in- surers and HMOs to group health plans. Senate amendment The Senate Amendment is similar but would apply to employee health benefit plans and group plans offered by health plan issuers. Conference agreement The conference agreement restricts the use of preexisting conditions limitation exclu- sions by group health plans and health insur- ance issuers offering group health insurance coverage. 1. Definition of preexisting condition Current law No provision. House bill The House bill would define a preexisting condition to be a condition, regardless of the cause of condition, for which medical advice, diagnosis, care, or treatment was rec- ommended or received within the 6-months ending on the day before the effective date of the coverage or the earliest date upon which such coverage would have been effective if no waiting period was applicable, whichever was earlier. Genetic information would not be considered a preexisting condition, so long as the treatment of the condition to which the information was applicable had not been sought in the 6-month period just described. Senate amendment The Senate Amendment provides a similar definition of preexisting condition. It does not include the genetic information lan- guage. Conference agreement The conference agreement defines a pre- existing condition exclusion to be a limita- tion or exclusion of benefits relating to a condition, whether physical or mental, based on the fact that the condition was present before the enrollment date, whether or not any medical advice, diagnosis, care, or treat- ment was recommended or received before that date. Genetic information would not be considered a condition in the absence of a di- agnosis of the condition related to such in- formation. 2. Restrictions on limitation period Current law No provision. House bill The House bill would prohibit a group health plan, and an insurer or HMO offering health insurance coverage in connection with a group health plan from imposing a preexisting condition limitation period in excess of 12 months, or 18 months in the event of a late enrollment. A preexisting condition limitation period could not be ap- plied to a newborn, adopted child, or child placed for adoption, so long as the individual became covered within 30 days of birth or adoption or placement for adoption. Pre- existing condition limitation periods would not apply to pregnancies. An HMO could im- pose an eligibility period as an alternative to a preexisting condition limitation period but only if it did not exceed 60 days for timely enrollment and 90 days for late enrollment. An HMO could use alternative methods to address adverse selection as approved by state regulators. Senate amendment The Senate Amendment includes a similar provision, but with respect to affiliation pe- riods of an HMO, would specify that during such a period the plan could not be required to provide health care services or benefits and no premium could be charged to the par- ticipant or beneficiary. Conference agreement The conference agreement permits a group health plan and health insurance issuers to impose a preexisting condition exclusion if the exclusion relates to a condition (whether physical or mental), regardless of the cause of condition, for which medical advice, diag- nosis, care, or treatment was recommended or received within the 6-month period ending on the enrollment date. The exclusion could extend to not more than 12 months (18 months for late enrollees) after the enroll- ment date. The exclusion would be reduced by the aggregate of the periods of creditable coverage. Enrollment date is defined as the date of enrollment in the plan or coverage or, if earlier, the first day of the waiting pe- riod for such enrollment. Any waiting period or affiliation period would run concurrently with any preexisting condition exclusion period. A preexisting condition limitation period could not be ap- plied to a newborn, an adopted child or child placed for adoption under age 18, so long as the individual becomes covered under cred- itable coverage within 30 days of birth or adoption or placement for adoption. These exceptions for newborns and certain adopted children would not apply if the individual had a break in coverage longer than a 63-day period. Preexisting condition exclusions could not apply to pregnancies. A group health plan offering health insur- ance coverage through an HMO, or an HMO which offers health insurance coverage in connection with a group health plan, may impose an affiliation period only if no pre- existing condition exclusion is imposed, the period is imposed uniformly without regard to health status, and does not exceed 2 months for timely enrollment and 3 months for late enrollment. It is the intent of the conferees that any affiliation period would apply to all new enrollees and beneficiaries. During the affiliation period, the HMO could not be required to provide health care serv- ices or benefits and no premium could be charged to the participant or beneficiary. The affiliation period would begin on the en- rollment date and would run concurrently with any other applicable waiting period under the plan. An HMO could use alter- native methods to address adverse selection as approved by state regulators. D. PROHIBITING EXCLUSIONS BASED ON HEALTH STATUS (ACCESS) Current law Under section 510 of ERISA, an employee benefit plan may not discriminate against a particular beneficiary for exercising any right to which he or she is entitled under the provisions of an employee benefit plan. Sec- tion 105(h) of the IRC prohibits discrimina- tion in favor of highly compensated individ- uals by self-insured employer health plans. House bill Except as specified below, a group health plan, and an insurer or HMO offering cov- erage in connection with a plan, cannot ex- clude an employee or his or her beneficiary from being (or continuing to be enrolled) as a participant or beneficiary under the plan based on health status. Health status in- cludes, with respect to an individual, medi- cal condition, claims experience, receipt of health care, medical history, genetic infor- mation, evidence of insurability (including conditions arising out of domestic violence), or disability. A group health plan and an in- surer or HMO offering coverage in connec- tion with a group health plan cannot require a premium or contribution which is greater than such premium or contribution for a similarly situated participant or beneficiary solely on the basis of health status. It can, however, very the premium or contribution based on factors that are not directly related to health status (such as scope of benefits, geographic area of resident, or wage levels). The House bill provides that nothing is in- tended to affect the premium rates an in- surer or HMO could charge an employer for health insurance coverage provided in con- nection with a group health plan. A group health plan (or insurer or HMO providing coverage in connection to a group plan) could establish premium discounts or CONGRESSIONAL RECORD \u2014 HOUSE H9519July 31, 1996 modify otherwise applicable copayments or deductibles in return for adherence to pro- grams of health promotion and disease pre- vention. Senate amendment Except as specified below, a health plan is- suer offering a group health plan may not de- cline to offer whole group coverage to a group purchaser desiring to purchase the coverage. An employee health benefit plan or a health plan issuer offering a group health plan could not condition eligibility, enroll- ment, or premium contribution require- ments based on health status, medical condi- tion, claims experience, receipt of health care, medical history, evidence of insurabil- ity (including conditions arising out of do- mestic violence), genetic information, or dis- ability. The bill does not include a specific rule of construction relating to premium rates charged to group health plans other than a prohibition of premium contribution require- ments based on health status. A group health plan (or insurer of HMO providing coverage in connection to a group plan) could establish premium discounts or modify otherwise applicable copayments or deductibles in return for adherence to pro- grams of health promotion and disease pre- vention. Conference agreement Except as specified below, a group health plan, and a health insurance issuer offering group health insurance coverage, cannot es- tablish rules for eligibility (including contin- ued eligibility) of an individual to enroll under the terms of the plan based on any of the following health-related factors in rela- tion to the individual or a dependent of the individual: health status, medical condition (including both physical and mental illness), claims experience, receipt of health care, medical history, genetic information, evi- dence of insurability (including conditions arising out of domestic violence), or disabil- ity. The inclusion of evidence of insurability in the definition of health status is intended to ensure, among other things, that individuals are not excluded from health care coverage due to their participation in activities such as motorcycling, snowmobiling, all-terrain vehicle riding, horseback riding, skiing and other similar activities. It is the intent of the conferees that a plan cannot knowingly be designed to exclude in- dividuals and their dependents on the basis of health status. However, generally applica- ble terms of the plan may have a disparate impact on individual enrollees. For example, a plan may exclude all coverage of a specific condition, or may include a lifetime cap on all benefits, or a lifetime cap on specific ben- efits. Although individuals with the specific condition would be adversely affected by an exclusion of coverage for that condition, and individuals with serious illnesses may be ad- versely affected by a lifetime cap on all or specific benefits, such plan characteristics would be permitted as long as they are not directed at individual sick employees or de- pendents. The Conference agreement does not require a group health plan or health insurance cov- erage to provide particular benefits other than those provided under the terms of the plan or coverage. Nor does it prevent any plan or coverage from establishing limita- tions or restrictions on the amount, level, extent, or nature of the benefits or coverage for similarly situated individuals enrolled in the plan or coverage. Rules defining any ap- plicable waiting periods for enrollment may not be established based on health status re- lated factors. It is the intent of the conferees that a plan or coverage cannot single out an individual based on the health status or health status related factors of that individual for denial of a benefit otherwise provided other individ- uals covered under the plan or coverage. For example, the plan or coverage may not deny coverage for prescription drugs to a particu- lar beneficiary or dependent if such coverage is available to other similarly situated indi- vidual covered under the plan or coverage. However, the plan or coverage could deny coverage for prescription drugs to all bene- ficiaries and dependents. The term ”simi- larly situated” means that a plan or cov- erage would be permitted to vary benefits available to different groups of employees, such as full-time versus part-time employees or employees in different geographic loca- tions. In addition, a plan or coverage could have different benefit schedules for different collective bargaining units. The conference agreement provides that a group health plan and an issuer offering group coverage cannot require a premium or contribution which is greater than such pre- mium or contribution for a similarly situ- ated individual enrolled in the plan on the basis of any health status-related factor re- lating to the individual or to any individual enrolled under the plan as a dependent of the individual. It does not restrict the amount that an employer may be charged for cov- erage under a group health plan. The group health plan and health insurance issuer may establish premium discounts or rebates, or modify otherwise applicable copayments or deductibles in return for adherence to pro- grams of health promotion and disease pre- vention. The conferees intend that these provisions preclude insurance companies from denying coverage to employers based on health sta- tus and related factors that they have tradi- tionally used. In addition, this provision is meant to prohibit insurers or employers from excluding employees in a group from coverage or charging them higher premiums based on their health status and other relat- ed factors that could lead to higher health costs. This does not mean that an entire group cannot be charged more. But it does preclude health plans from singling out indi- viduals in the group for higher premiums or dropping them from coverage altogether. 1. Exceptions to the non-discrimination requirement Current law No provision. House bill No provision for group health plans (i.e., the plans of the employer). See item III(B) below on requirements on insurers and HMOs. Senate amendment Exceptions are provided to health plan is- suers with respect to enrollment in the event that: (1) the health plan ceases to offer cov- erage to any additional group purchasers; or (2) the issuer can demonstrate to the state insurance regulator that to enroll new peo- ple would impair its financial or provider ca- pacity. See item III B(3) below. Conference agreement See item III(B) below on requirements for health plan issuers offering group health in- surance coverage. E. ENROLLMENT OF ELIGIBLE INDIVIDUALS WHO LOSE OTHER COVERAGE Current law No provision. House bill The House bill would require group health plans to permit an uncovered employee (or uncovered dependent) otherwise eligible for coverage to enroll under at least one benefit option if certain conditions are met: (1) the person was already covered when the plan was previously offered; (2) the person stated in writing at such time that another source of coverage was the reason for declining en- rollment; (3) the person lost coverage as a re- sult of a loss of eligibility or termination from or reduction in hours of employment; and (4) the person requested enrollment within 30 days after the date of the cov- erage’s termination. If a group health plan offered dependent coverage, it could not require, as a condition of coverage as a dependent, a waiting period applicable to: (1) a newborn, (2) adopted child or child placed for adoption, or (3) a spouse, at the time of marriage if the person had met any applicable waiting period. Enrollment of a participant’s beneficiary would be considered to be timely if a request for enrollment were made within 30 days of the date family coverage was first made available or, in the case of a newborn or adoption or placement for adoption, within 30 days of that event; and in the case of mar- riage, within 30 days of the date of the mar- riage, if family coverage was available. Senate amendment The Senate Amendment would require em- ployee health benefit plans to provide for special enrollment periods extending for a reasonable time after certain qualifying events to permit the participant to change individual or family basis of coverage or to enroll in the plan if coverage would have otherwise been available. The qualifying events would be: (1) changes in family status affecting eligibility under a plan including marriage, separation, divorce, death, birth, or placement of a child for adoption; (2) changes in employment status that would otherwise cause the loss of eligibility for coverage (other than COBRA continuation coverage); or (3) changes in employment sta- tus of a family member that results in a loss of eligibility under a group, individual, or employee health benefit plan. The special enrollment period would have to ensure that a child born or placed for adoption was deemed covered as of the date of birth or placement so long as the child was enrolled within 30 days. Conference agreement The conference agreement requires special enrollment periods for certain individuals losing other coverage and for certain depend- ent beneficiaries. It requires group health plans, and health insurance issuers offering group health insurance coverage, to permit eligible employees or dependents who lose other coverage to enroll under the terms of the plan if each of the following conditions is met: (1) the employee or dependent was al- ready covered when the plan was previously offered; (2) the employee stated in writing at such time that another source of coverage was the reason for declining enrollment, but only if the plan sponsor or issuer required such a statement and provided the employee with notice of this requirement; (3) the per- son was covered under COBRA continuation coverage which was exhausted, or coverage was not under a COBRA continuation provi- sion and was terminated as a result of a loss of eligibility for the coverage (including as a result of legal separation, divorce, death, termination of employment, or reduction in hours of employment) or termination of em- ployer contributions towards such coverage; and (4) the person requested enrollment not later than 30 days after the loss of other cov- erage. If a group health plan offers dependent cov- erage, it must offer a dependent special en- rollment period for persons becoming a de- pendent through marriage, birth, or adoption or placement for adoption. The dependent CONGRESSIONAL RECORD \u2014 HOUSEH9520 July 31, 1996 special enrollment period must last for not less than 30 days. The dependent may be en- rolled as a dependent of the individual. If the individual is eligible for enrollment, but not enrolled, the individual may also enroll at this time. Moreover, in the case of the birth or adoption of a child, the spouse of the indi- vidual also may be enrolled as a dependent of the individual if the spouse is otherwise eli- gible for coverage but not already enrolled. If an individual seeks to enroll a dependent during the first 30 days of a dependent spe- cial enrollment period, the coverage would become effective as of the date of birth, of adoption or placement for adoption, or, in the case of marriage, not later than the first day of the first month beginning after the date the completed request for enrollment was received. F. APPLICABILITY OF RENEWAL REQUIREMENTS TO MULTIPLE EMPLOYER ARRANGEMENTS Current law Under section 3(37) of ERISA, a multiem- ployer plan is one in which more than one employer contributes and which is estab- lished through a collective bargaining agree- ment. (Such plans are commonly found in unionized sectors of the building and con- struction, publishing, and entertainment trades, and the lumber, maritime, retail, food, hotel, and restaurant industries.) Under section 3(40) of ERISA, a multiple em- ployer welfare arrangement (MEWA) is an employee welfare benefit plan or any other arrangement which offers or provides health benefits and meets additional criteria, (e.g., it must offer such benefits to the employees of 2 or more employers). There is no provi- sion or definition under current law for ”multiple employer health plans.” House bill Such plans could not deny an employer who employees are covered under the plan or arrangement continued access to the same or different coverage except: (1) for cause (e.g., nonpayment of premiums, fraud, and non- compliance with plan provisions); (2) because the plan is not offering coverage in a geo- graphic area; or (3) due to a failure to meet the terms of an applicable collective bar- gaining agreement. Certain collectively bar- gained arrangements and ”multiple em- ployer health plans” (MEHPs) would be re- quired to meet specific requirements relat- ing to the nondiscrimination requirements. (MEHPs are established under this bill (see item V below) and are generally non-fully-in- sured MEWAs that meet certain require- ments excepting them from state regula- tion.) Senate amendment No provision. (Note that the rules regard- ing group and individual health plans (e.g., guaranteed renewal, nondiscrimination, and portability) or state laws not preempted by the Senate Amendment also apply to health plans offered by health plan issuers to a pur- chasing cooperative. See item VIII below). Conference agreement The conference agreement provides that a group health plan which is a multiemployer plan or a multiple employer welfare arrange- ment may not deny an employer continued access to the same or different coverage under the terms of such plan except: (1) for nonpayment of contributions; (2) for fraud; (3) for noncompliance with plan provisions; (4) because the plan is ceasing to offer any coverage in a geographic area; (5) in the case of a network plan, there is no longer any in- dividual enrolled through the employer who lives, resides, or works in the service area of the network plan, and the plan applies this provision uniformly without regard to claims experience or health status-related factors; or (6) due to a failure to meet the terms of an applicable collective bargaining agreement, to renew a collective bargaining agreement or other agreement requiring or authorizing contributions to the plan, or to employ employees covered by such an agree- ment. G. ENFORCEMENT OF GROUP HEALTH PLAN REQUIREMENTS Current law Federal requirements on existing group health plans are enforced through various laws, including ERISA, the Public Health Service (PHS) Act, the IRC, and Medicare. House bill The House bill would provide for enforce- ment of the federal group health plan avail- ability and portability requirements through the IRC, ERISA, and through civil monetary penalties imposed through the Secretary of Health and Human Services Senate amendment The Senate Amendment would provide for enforcement of the federal group health plan availability and portability requirements through the Secretary of Labor, in consulta- tion with the Secretary of Health and Human Services using ERISA civil enforce- ment provisions. Conference agreement The conference agreement provides for en- forcement of the federal group health plan availability and portability requirements through the IRC, ERISA, and through civil monetary penalties imposed through the Secretary of Health and Human Services (HHS). 1. Enforcement through COBRA provisions of IRC Current law Plans that fail to comply with the IRC COBRA provision are subject to an excise tax of $100 per day per violation. The tax is not applied where the failure was determined to be unintentional or if the failure was cor- rected within 30 days. An overall limitation on the tax applies in the event of an uninten- tional failure. House bill The House bill would provide that non- complying plans and insurers and HMOs sell- ing to group health plans would be subject to an excise tax of $100 per day per violation en- forced through the COBRA provisions of the IRC. Penalties would not be assessed if the failure was determined to be unintentional or a correction was made within 30 days. No tax could be imposed on a noncomplying in- surer or HMO subject to state insurance reg- ulation if the Secretary of Health and Human Services (HHS) determined that the state had an effective enforcement mecha- nism. In the case of a group health plan of a small employer that provided coverage sole- ly through a contract with an insurer or HMO, no tax would be imposed upon the em- ployer if the failure was solely because of the product offered by the insurer or HMO. No tax penalty would be assessed for a failure under this provision if a sanction had been imposed under ERISA or by the Secretary of HHS. Senate amendment No provision. Conference agreement See Title IV. 2. Enforcement through ERISA Current law Under section 502 of ERISA, employee ben- efit plans that fail to comply with applicable requirements can be sued for relief and be subject to civil money penalties, and can be sued to recover any benefits due under the plan. Section 504 of ERISA provides the Sec- retary of Labor with investigative authority to determine whether any person is out of compliance with the law’s requirements. Section 506 provides for coordination and re- sponsibility of agencies in enforcement. Sec- tion 510 prohibits a health plan from dis- criminating against a participant or bene- ficiary for exercising any right under the plan. House bill The House bill would provide that ERISA sanctions apply to group health plans by deeming the provisions of subtitle A and sub- title D (insofar as it is applicable to this sub- title) to be provisions of title I of ERISA. Such sanctions also would apply to an in- surer or HMO that was subject to state law in the event that the Secretary of Labor de- termined that the state had not provided for enforcement of the above provisions of this Act. Sanctions would not apply in the event that the Secretary of Labor established that none of the persons against whom the liabil- ity would be imposed knew, or exercising reasonable diligence, would have known that a failure existed, or if the noncomplying en- tity acted within 30 days to correct the fail- ure. In no case would a civil money penalty be imposed under ERISA for a violation for which an excise tax under the COBRA en- forcement provisions was imposed or for which a civil money penalty was imposed by the Secretary of HHS. Senate amendment The Senate Amendment would provide that for employee health benefit plans, the Secretary would be required to enforce the reform standards established by the bill in the same manner as provided under sections 502, 504, 506, and 510 of ERISA. (See item IV(I) below for enforcement provisions relat- ing to health plan issuers and group health plans sold to employers and others.) Conference agreement The conference agreement provides that provisions with respect to group health plans would be enforced under Title I of ERISA as under current law. The Secretary of Labor would not enforce the provisions of Title I applicable to health insurance issuers. How- ever, private right of action under part V of ERISA would apply to such issuers. Enforce- ment of provisions with respect to health in- surance issuers generally would be limited to civil remedies established under the PHS Act amendments (as described in the following subsection). The conference agreement provides that a state may enter into an agreement with the Secretary for delegation to the state of some or all of the Secretary’s authority under sec- tions 502 and 504 of ERISA to enforce the re- quirements of this part in connection with MEWAs providing medical care which are not group health plans. 3. Enforcement through civil money penalties Current law No provision. House bill The House bill would provide that a group health plan, insurer, or HMO that failed to meet the above requirements would be sub- ject to a civil money penalty. Rules similar to those imposed under the COBRA penalties would apply. The maximum amount of pen- alty would be $100 for each day for each indi- vidual with respect to which a failure oc- curred. In determining the penalty amount, the Secretary of HHS would have to take into account the previous record of compli- ance of the person being assessed with the applicable requirements of this subtitle, the gravity of the violation, and the overall lim- itations for unintentional failures provided CONGRESSIONAL RECORD \u2014 HOUSE H9521July 31, 1996 under the IRC COBRA provisions. No penalty could be assessed if the failure was not inten- tional or if the failure was corrected within 30 days. A procedure would be available for administrative and judicial review of a pen- alty assessment. Collected penalties would be paid to the Secretary of HHS and would be available for the purpose of enforcing the provisions with respect to which the penalty was imposed. The authority for the Secretary of HHS to impose civil money penalties would not apply to enforcement with respect to any en- tity which offered health insurance coverage and which was an insurer or HMO subject to state regulation by an applicable state au- thority if the Secretary of HHS determined that the state had established an effective enforcement plan. In no case would a civil money penalty be imposed under this provi- sion for a violation for which an excise tax under COBRA or civil money penalty under ERISA was assessed. Senate amendment No provision. Conference agreement The conference agreement provides that each state may require that health insurance issuers that issue, sell, renew, or offer health insurance coverage in the state in the small or large group markets meet the Act’s re- quirements. In the case of a determination by the Secretary of HHS that a state has failed to substantially enforce a provision or provisions of part A with respect to health insurance issuers in the state, the Secretary would enforce such provision or provisions insofar as they relate to the issuance, sale, renewal, and offering of health insurance coverage in connection with group health plans in the state. Secretarial enforcement would apply only in the absence of state en- forcement and with respect to group health plans that are nonfederal governmental plans. In the case of a failure by a health insur- ance issuer, the issuer is liable for any pen- alty. In the case of failure by a group health plan that is a nonfederal governmental plan, the plan is liable if it is sponsored by 2 or more employers; otherwise the employer is liable. Rules similar to those imposed under the COBRA penalties would apply. The maxi- mum amount of penalty for noncompliance would be $100 per day per individual. In de- termining the penalty amount, the Sec- retary of HHS would have to take into ac- count the previous record of compliance and the gravity of the violation. No penalty could be assessed if the failure was not inten- tional or if the failure was corrected within 30 days. A procedure would be available for administrative and judicial review of a pen- alty assessment. Collected penalties would be paid to the Secretary of HHS and would be available for the purpose of enforcing the provisions with respect to which the penalty was imposed. 4. Coordination in administration Current law Section 506 of ERISA provides for coordi- nation of other federal agencies (e.g., the In- ternal Revenue Service) with the Depart- ment of Labor in enforcing ERISA. House bill The House bill would require the Secretar- ies of Treasury, Labor, and HHS to issue reg- ulations that are not duplicative to carry out this subtitle. The bill would require these regulations to be issued in a manner that assures coordination and nonduplica- tion in their activities under this subtitle. Senate amendment No provision. Conference agreement The conference agreement provides that the Secretaries of Treasury, Labor, and HHS would ensure, through execution of an inter- agency memorandum of understanding, that regulations, rulings, and interpretations are administered so as to have the same effect at all times. It requires the Secretaries to co- ordinate enforcement policies for the same requirements to avoid duplication of enforce- ment efforts and assign priorities in enforce- ment. It is the intent of the conferees that the committees of jurisdiction should work to- gether to assure the coordination of policies under this Act. Such coordination is consid- ered necessary to maintain consistency in the IRC, ERISA, and the PHS Act. III. AVAILABILITY, PORTABILITY, AND RENEW- ABILITY REQUIREMENTS ON INSURERS, HMOS, AND ISSUERS OF HEALTH PLANS IN THE GROUP MARKET Current law The McCarran Ferguson Act of 1945 (P.L. 79 15) exempts the business of insurance from federal antitrust regulation to the ex- tent that it is regulated by the states and in- dicates that no federal law should be inter- preted as overriding state insurance regula- tion unless it does so explicitly. Section 514(b)(2)(A) of ERISA leaves to the states the regulation of insurance. (Employee benefit plans are not insurance and are regulated by the federal government.) House bill The House bill would establish federal re- quirements on insurers and HMOs selling in the group market to provide for guaranteed availability of health insurance coverage. Senate amendment The Senate Amendment is similar but would apply requirements to health plan is- suers offering plans in the group market. Conference agreement The conference agreement establishes fed- eral requirements on health insurance issu- ers offering group health insurance coverage to provide for guaranteed availability of health insurance coverage. A. DEFINITIONS Current law No provision. House bill The House bill would define insurer to mean an insurance company, insurance serv- ice, or insurance organization which is li- censed to engage in the business of insurance in a state and which (except for the purposes of individual health insurance availability provisions of this subtitle) is subject to state law which regulates insurance within the meaning of section 514(b)(2)(A) of ERISA. The House bill would define a health main- tenance organization to mean (a) a federally qualified HMO, (b) an organization recog- nized under state law as an HMO, or (c) a similar organization regulated under state law for solvency in the same manner and ex- tent as an HMO, if (other than for the pur- poses of individual health insurance avail- ability provisions of the bill) it is subject to state law which regulates insurance within the meaning of section 514(b)(2) of ERISA. Under the House bill, a bona fide associa- tion would be defined as an association which (a) has been actively in existence for at least 5 years; (b) has been formed and maintained in good faith for purposes other than obtaining insurance; (c) does not condi- tion membership in the association on health status; (d) makes health insurance coverage offered through the association available to any individual who is a member (or dependent of a member) of the associa- tion at the time the coverage is initially is- sued; (e) does not make health insurance coverage offered through the association available to any member who is not a mem- ber (or dependent of a member) of the asso- ciation at the time coverage is initially is- sued; (f) does not impose preexisting condi- tion exclusions consistent with the require- ments of this bill relating to group health plans; and (g) provides for renewal and con- tinuation of coverage consistent with the re- quirements of this bill. Senate amendment The Senate Amendment would define health plan issuer as any entity that is li- censed (prior to or after the date of enact- ment of this Act) by a state to offer a group health plan or an individual health plan. The Senate Amendment does not use the terms health maintenance organization, or bona fide association. Conference agreement The conference agreement defines a health insurance issuer as an insurance company, insurance service, or insurance organization, including an HMO, which is licensed to en- gage in the business of insurance in a state and which is subject to state law which regu- lates insurance within the meaning of sec- tion 514(b)(2) of ERISA. A group health plan is not a health insurance issuer. An HMO is: (a) a federally qualified HMO, (b) an organization recognized under state law as an HMO, or (c) a similar organization regulated under state law for solvency in the same manner and extent as an HMO. A bona fide association is an association which: (a) has been actively in existence for at least 5 years; (b) has been formed and maintained in good faith for purposes other than obtaining insurance; (c) does not condi- tion membership in the association on any health status-related factor; (d) makes health insurance coverage offered through the association available to any member, or individuals eligible for coverage through such member, regardless of any health sta- tus-related factor; (e) does not make health insurance coverage offered through the asso- ciation available other than in connection with a member of the association; and (f) meets additional requirements as may be im- posed under state law. B. GUARANTEED AVAILABILITY OF COVERAGE Current law No provision. House bill The House bill would require each insurer or HMO offering health insurance coverage in the small group market to accept every small employer in the state that applied for coverage and to accept for enrollment under such coverage every eligible individual who applied for enrollment during the initial en- rollment period in which the individual first became eligible for the group coverage. No restriction could be imposed on an eligible individual based on his or her health status. An eligible individual is determined in ac- cordance with the terms of the plan consist- ent with all applicable state laws. Senate amendment The Senate Amendment would require a health plan issuer offering a group health plan to accept the whole group desiring to purchase the coverage. A health plan issuer offering a group health plan could not condi- tion eligibility, continuation of eligibility, enrollment, or premium contribution re- quirements based on health status. (Health status is defined the same as under the House bill.) Conference agreement The conference agreement requires each health insurance issuer that offers health in- surance coverage in the small group market in a state to accept every small employer in CONGRESSIONAL RECORD \u2014 HOUSEH9522 July 31, 1996 the state that applies for coverage, and to accept for enrollment under such coverage every eligible individual who applies for en- rollment during the period in which the indi- vidual first became eligible to enroll under the terms of the group health plan. The health plan issuer may not impose restric- tions on any eligible individual being a par- ticipant or beneficiary based on his or her health status, or the health status of depend- ents. An eligible individual is determined in accordance with the terms of the plan, as provided by the health insurance issuer under the rules of the issuer which are uni- formly applicable in a state to small employ- ers in the small group market, and consist- ent with all applicable state laws governing the issuer and market. 1. Scope of requirement Current law No provision. House bill The House bill provides that the guaran- teed availability requirement apply to the small group market only. Small groups are those with 2 to 50 employees. Senate amendment The Senate Amendment provides that the guaranteed availability requirement apply to all health plan issuers and group health plans. Conference agreement The conference agreement provides that the guaranteed availability requirement ap- plies to the small group market only. Small groups are those with 2 to 50 employees on a typical business day. To assure access in the large group mar- ket, the conference agreement provides that the Secretary of HHS request that the chief executive officer of each state submit a re- port on the access of large employers to health insurance coverage and the cir- cumstances for lack of access to coverage, if any, of large employers, and classes of em- ployers. The Secretary shall request the re- ports not later than December 31, 2000 and every 3 years thereafter. Based on the state reports and other information, the Secretary would be required to prepare a report for Congress, every 3 years, describing the ac- cess to health insurance for large employers, and classes of employers in each state. The Secretary may include recommendations to assure access. In addition, the Comptroller General will submit to Congress not later than 18 months after the date of enactment of this act, a re- port on access of classes of large employers to health insurance coverage in the different states, and the circumstances for lack of ac- cess, if any. 2. Restrictions on preexisting condition limitation periods Current law No provision. House bill The House bill would provide for the same restrictions on the use of preexisting condi- tion limitations by each insurer and HMO that offers health insurance coverage in con- nection with a group health plan as those de- scribed in above item II (C). Senate amendment The Senate amendment would provide for the same restrictions on the use of preexist- ing condition limitations by health plan is- suers as described in above item II (C). Conference agreement The conference agreement provides us for the same restrictions on the use of preexist- ing condition limitations by each health in- surance issuer that offers group health insur- ance coverage as those described in above item II (C). 3. Exceptions to guaranteed availability Current law No provision. House bill The House bill would provide that an HMO or an insurer offering coverage in the small group market through a network plan could: (1) limit employers for such coverage to those with eligible individuals whose place of employment or residence was in the plan’s or HMO’s service area; (2) limit the individuals who might be enrolled to those whose place of residence or employment was within the service area; (3) within the service area, deny coverage if the plan or HMO demonstrated lack of capacity to deliver services ade- quately, but only if it was applying the ca- pacity limit to all employers without regard to the group’s claims experience or the health status of its participants and bene- ficiaries. Those denying coverage on the basis of capacity could not offer small groups coverage in the service area for 180 days. Similar exceptions would apply in the event of financial capacity limits. Senate amendment The Senate amendment would provide that a health plan issuer offering a group health plan could cease offering coverage to group purchasers if (1) the plan ceased to offer cov- erage to any additional group purchasers, and (2) the issuer could demonstrate to the applicable certifying authority that its fi- nancial or provider capacity would be im- paired if the issuer were required to offer coverage to additional group purchasers. Such an issuer would be prohibited from of- fering coverage for 6 months or until the is- suer could demonstrate that the capacity was adequate, whichever was later. An issuer would only be eligible for this exception if it offered coverage on a first-come-first-served basis or other basis established by a state to ensure a fair opportunity to enroll and avoid risk selection. Conference agreement The conference agreement provides that a health insurance issuer offering coverage in the small group market through a network plan could: (1) limit employers for such cov- erage to those with eligible individuals who live, work, or reside in the service area for the network plan; (2) within the service area, deny coverage to small employers if the is- suer has demonstrated, if required, to the ap- plicable state authority, the lack of capacity to deliver services adequately to additional groups, but only if it was applying the capac- ity limit to all employers uniformly without regard to claims experience or any health status-related factor. An issuer denying cov- erage on the basis of capacity could not offer coverage in the small group market in the service area for 180 days. A health insurance issuer may deny cov- erage in the small group market if the issuer has demonstrated, if required, to the applica- ble state authority, that it does not have the financial reserves necessary to underwrite additional coverage. The issuer would be re- quired to apply the financial capacity limit to all employers in the small group market in the state, consistent with applicable state law, and without regard to claims experience or health status-related factors. An issuer denying coverage on the basis of financial capacity could not offer coverage in the small group market in the service area for 180 days or until the issuer has dem- onstrated, if required, to the applicable state authority, that it has adequate capacity, whichever is later. A State may provide for determination of adequate capacity on a service-area-specific basis. It is the intent of the conferees that an issuer denying cov- erage on the basis of capacity limitations may demonstrate compliance if enrollment is provided on a first-come first-serve basis, or other state approved method. The conference agreement imposes require- ments for renewal and continuation on issu- ers offering health insurance plans to bona fide associations, but does not require these issuers to guarantee issue of the coverage of- fered to bona fide associations. The conferees do not intend the provision to mean that is- suers of coverage to an association have to offer a particular association plan to any other employer. Thus issuers offering cov- erage to associations are not required to guarantee issue the association’s plan to other small employers. Nondiscrimination rules would apply to these association plans, and no employee or dependent could be ex- cluded from coverage on the basis of any health status-related factor. The conference agreement provides excep- tions to the availability, renewability and portability requirements for group health plans and group health insurance coverage for certain benefits, sometimes under certain conditions. First, these requirements would not apply to provision of certain excepted benefits including: coverage only for acci- dent, or disability insurance, or any com- bination thereof; coverage issued as a supple- ment to liability insurance; liability insur- ance; workers’ compensation or similar in- surance; automobile medical payment insur- ance; credit-only insurance; coverage for on- site medical clinics; and, other similar cov- erage, as specified in regulations, under which benefits for medical care are second- ary or incidental to other insurance benefits. Second, if the following benefits are (a) provided under a separate policy, certificate, or contract or insurance, or (b) if the bene- fits are otherwise not an integral part of the plan, the requirements would not apply to: limited scope dental or vision benefits; bene- fits for long-term care, nursing home care, home health care, community-based care, or any combination thereof; or, similar limited benefits as specified in regulations. Third, if the following benefits: (a) are pro- vided under a separate policy, certificate, or contract of insurance; (b) there is no coordi- nation between the provision of these bene- fits and any exclusion of benefits under any group health plan maintained by the same plan sponsor; and (c) such benefits are paid with respect to an event without regard to whether benefits are provided for that event under any group health plan maintained by the same plan sponsor, the requirements would not apply to: coverage only for a spec- ified disease or illness, or hospital indemnity or other fixed indemnity insurance. Fourth, if the following benefits are pro- vided under a separate policy, certificate, or contract of insurance, the requirements would not apply to: Medicare supplemental health insurance; coverage supplemental to coverage provided under military health care; and, similar supplemental coverage provided to coverage under a group health plan. 4. Exceptions for failure to meet participation or contribution rules Current law No provision. House bill The House bill would provide that an ex- ception to the guaranteed availability re- quirement would apply in the case of any group health plan which failed to meet the participation or contribution rules of the in- surer or HMO. Such participation and con- tribution rules would have to be uniformly applicable and in accordance with state law. CONGRESSIONAL RECORD \u2014 HOUSE H9523July 31, 1996 Senate amendment No provision. Conference agreement The conference agreement provides that an exception to the guaranteed availability re- quirement would apply in the case of any group health plan which failed to meet the participation or contribution rules of the health insurance issuer. Such participation and contribution rules would have to be in accordance with state law. C. GUARANTEED RENEWABILITY Current law No provision. House bill The House bill would provide that regard- less of the size of the group, insurers and HMOs would be required to renew or con- tinue in force coverage at the option of the covered employer with certain exceptions. Senate amendment The Senate provision is similar but at the option of the group purchaser. Conference agreement The conference agreement provides that a health insurance issuer offering group health insurance coverage in the small or large group market would be required to renew or continue in force coverage at the option of the plan sponsor of the plan. 1. Exceptions to guaranteed renewability of group coverage Current law No provision. House bill The House bill would provide exceptions to the guaranteed renewability requirement for: nonpayment of premiums, fraud, viola- tion of participation and contribution rules, termination of the plan in a state or geo- graphic area, or the employer moved outside the service area (but only if this last provi- sion was applied uniformly without regard to health status). Exceptions to guaranteed re- newability would also apply in the event that the insurer or plan no longer offered a particular type of coverage but only if prior notice was provided, the employer was given the chance to buy another plan offered by the insurer or HMO, and the termination was applied uniformly without regard to health status or insurability. An exception would also apply in the event of discontinuance of all coverage, but only if certain conditions were met. In this instance, the insurer or HMO could not market small and\/or large group coverage for 5 years. Senate amendment The Senate Amendment is similar. It would include as exceptions to the guaran- teed renewability requirement the loss of eli- gibility of COBRA continuation coverage, and failure of a participant or beneficiary to meet requirements for eligibility for cov- erage under the group health plan that are not prohibited by this subtitle. A network plan could deny continued par- ticipation under the plan to participant or beneficiaries who did not live, reside, or work in an area in which the plan was of- fered, but only if the denial was applied uni- formly, without regard to health status or insurability. The provisions relating to discontinuation of a plan or of coverage in general are simi- lar to the House bill. Conference agreement The conference agreement provides excep- tions to the guaranteed renewability require- ment for one or more of the following: (1) nonpayment of premiums; (2) fraud; (3) viola- tion of participation or contribution rules; (4) termination of coverage in the market in accordance with applicable state law, as out- lined below; (5) for network plans, no enroll- ees connected to the plan live, reside, or work in the service area of the issuer, or area for which the issuer is authorized to do business, and, in the case of the small group market only if the issuer would deny enroll- ment to the plan under regulations govern- ing guaranteed availability of coverage; (6) for coverage made available to bona fide as- sociations, if membership in the association ceases, but only if coverage is terminated uniformly without regard to any health sta- tus-related factor relating to any covered in- dividual. Exceptions to guaranteed renewability would also apply if the issuer or plan no longer offered a particular type of group cov- erage in the small or large group market so long as the issuer, in accordance with appli- cable state law: (1) provided prior notice to each plan sponsor and participants and bene- ficiaries; (2) gave the plan sponsor the chance to purchase all (or, in the case of the large group market, any) other plans offered by the issuer in such market; and (3) applied the termination uniformly without regard to the claims experience of the sponsors or any health status-related factor to any partici- pants or beneficiaries covered or new partici- pants or beneficiaries who may become eligi- ble for such coverage. An exception would also apply in the event of discontinuance of all coverage, but only if certain conditions were met. In this in- stance, the issuer could not offer coverage in the market and state involved for 5 years. Issuers would be permitted to modify the health insurance coverage for a product of- fered to a group health plan in the large group market, and in the small group mar- ket if the modification was effective on a uniform basis among group health plans with that product. For example, the conferees intend that is- suers could uniformly modify the terms of treatment for particular conditions among group health plans within a type of coverage. An exception would apply to coverage avail- able in the small group market only through 1 or more bona fide associations. Issuers could modify a product offered to a group plan in the large group market. See section B(3) above for exceptions from availability, renewability, and portability requirements for certain benefits. D. DISCLOSURE OF INFORMATION BY HEALTH PLAN ISSUERS Current law Section 101 of ERISA requires covered plans to furnish summary plan descriptions and other information and notices to plan participants and the Secretary of Labor. Sec- tion 104 of ERISA requires covered plans to file certain information with the Secretary of Labor and to furnish certain information to plan participants. House bill The House bill does not include a provi- sion. Senate amendment The Senate Amendment would require that in connection with the offering of any group health plan to a small employer (defined under state law or, if not so defined, one with not more than 50 employees), that a health plan issuer make a reasonable disclo- sure as part of its solicitation and sales ma- terials of certain information, such as the provisions of the plan concerning the right of the issuer to change premium rates and the factors that could affect such changes, the provision of the plan relating to renewability and any preexisting condition provisions, and descriptive information about the plan’s benefits and premiums. The information would have to be understandable by the aver- age small employer and sufficiently accurate and comprehensive to reasonably inform em- ployers, participants, and beneficiaries of their rights and obligations under the plan. These requirements would not apply to pro- prietary and trade secret information under applicable law and do not preempt state re- porting and disclosure requirements. The Senate Amendment would amend sec- tion 104(b)(1) of ERISA relating to the sum- mary plan description to provide that if there is a modification or change described in the summary plan description that is a material reduction in covered services or benefits provided, a summary of such changes would have to be furnished to par- ticipants within 60 days after the date of its adoption. Alternatively, plans sponsors could provide such a description at regular inter- vals of not more than 90 days. The bill re- quires the Secretary of Labor to issue regu- lations providing alternative mechanisms to delivering by mail through which employee benefit plans may notify participants of ma- terial reductions in covered services. It fur- ther amends the summary plan description provisions of ERISA to require the inclusion of certain information. Conference agreement The conference agreement requires a health plan issuer offering any health insur- ance coverage to a small employer to make a reasonable disclosure of the availability of information as part of its solicitation and sales materials. At the small employer’s re- quest, the issuer must provide the provisions of the plan concerning the right of the issuer to change premium rates and the factors that could affect such changes, the provi- sions of the plan relating to renewability and any preexisting condition provisions, and the benefits and premiums under all health in- surance coverage for which the employer is qualified. The information would have to be understandable by the average small em- ployer and sufficient to reasonably inform small employers of their rights and obliga- tions under the health insurance coverage. These requirements would not apply to pro- prietary and trade secret information under applicable law. The conference agreement would amend section 104(b)(1) of ERISA relating to the summary plan description to provide that if there is a material reduction in covered serv- ices or benefits, a summary of such changes would have to be furnished to participants within 60 days after the date of its adoption. Alternatively, plan sponsors could provide a description at regular intervals of not more than 90 days. The conference agreement re- quires the Secretary of Labor to issue regu- lations within 180 days of enactment of this Act which would provide for alternative mechanisms, besides delivery by mail, through which employee benefit plans may notify participants of material reductions in covered services. It further amends the sum- mary plan description provisions of ERISA to require the inclusion of certain informa- tion. The conference agreement would amend section 101 of ERISA to permit the Sec- retary, in accordance with regulations pre- scribed by the Secretary, to require MEWAs that provide medical care benefits, but are not group health plans, to report, not more frequently than annually, in such form and manner as the Secretary may require to de- termine the extent to which the require- ments of this part are being carried out. E. STATE FLEXIBILITY Current law The McCarran Ferguson Act of 1945 (P.L. 79 15) exempts the business of insurance CONGRESSIONAL RECORD \u2014 HOUSEH9524 July 31, 1996 from federal antitrust regulation to the ex- tent that it is regulated by the states and in- dicates that no federal law should be inter- preted as overriding state insurance regula- tion unless it does so explicitly. Section 514 of ERISA leaves to the states the regulation of insurance. (Employee benefit plans are not insurance and are regulated by the fed- eral government.) House bill The House bill would provide that unless preempted by section 514 of ERISA, state laws would not be preempted that (1) related to matters not specifically addressed in sub- titles A and B, or (2) that required insurers or HMOs to: (a) impose a limitation or exclu- sion of benefits relating to the treatment of a preexisting condition for periods shorter than specified in the bill, (b) allowed persons to be considered to be in a period of previous qualifying coverage if they experienced a lapse in coverage greater than 60 days, or (c) had a look-back provision shorter than 6 months. Senate amendment The Senate Amendment does not include ”related to matters not specifically ad- dressed in subtitles A and B.” The Senate Amendment would provide that unless pre- empted by section 514 of ERISA, state laws would not be preempted that (1) required health plan issuers to impose a limitation or exclusion of benefits relating to the treat- ment of a preexisting condition for periods that are shorter than specified in the bill; (2) allowed individuals, participants, and bene- ficiaries to be considered in a period of pre- vious qualifying coverage if such person ex- perienced a lapse in coverage that was great- er than the 30-days provided under this bill; or (3) required issuers to have a lookback pe- riod shorter than provided for under this subtitle. Conference agreement The conference agreement provides that any provision of state law which establishes, implements, or continues in effect any standard or requirement solely relating to health insurance issuers in connection with health insurance coverage would not be su- perseded unless the state standard or re- quirement prevents the application of a fed- eral requirement of this part. Nothing in this part of the Act would affect or modify the provisions of section 514 of ERISA with re- spect to group health plans. The conferees intend the narrowest pre- emption. State laws which are broader than federal requirements would not prevent the application of federal requirements. For ex- ample, states may require guaranteed avail- ability of coverage for groups of more than 50 employees, or for groups of 1. The conference agreement provides special rules in the case of portability requirements. State laws applicable to a preexisting condi- tion exclusion which differ from the stand- ards or requirements specified in this part would be superseded except if they: (1) short- en the lookback period in determination of a preexisting condition limitation (from 6 months to any shorter period of time); (2) shorter the length of a preexisting condition limitation exclusion (from 12 months, or 18 months for late enrollees, to any shorter pe- riod); (3) lengthen the break in coverage time from 63 days to any greater number; (4) lengthen the time for enrollment of newborns, or certain children adopted or placed for adoption, from 30 days to any greater number; (5) prohibit the imposition of any preexisting condition exclusions in cases not described, or expand the exclusions described; (6) require additional special en- rollment periods; (7) reduce the maximum period permitted in an affiliation period. A group health plan or health insurance coverage is not required to provide specific benefits other than those provided under the terms of such plan or coverage. IV. INDIVIDUAL MARKET RULES Current law The individual health insurance market is currently regulated by the states. As of De- cember, 1995, 11 states required that individ- ual insurers write policies on a guaranteed issue basis; 16 states required guaranteed re- newal; and 22 states limited the use of pre- existing condition limitation periods. House bill The House bill would provide for federal re- quirements to guarantee availability of indi- vidual health insurance coverage to certain qualified individuals with prior group cov- erage, without limitation or exclusion of benefits, and to guarantee renewability of in- dividual health insurance coverage. Senate amendment Similar. Conference agreement The conference agreement provides for fed- eral requirements to guarantee availability of individual health insurance coverage to certain qualified individuals with prior group coverage, without limitation or exclu- sion of benefits, and to guarantee renewabil- ity of individual health insurance coverage. A. GUARANTEED AVAILABILITY OF INDIVIDUAL HEALTH INSURANCE COVERAGE Current law No provision. House bill The House bill would include goals that any qualifying individual would be able to obtain qualifying coverage and that qualify- ing individuals would receive credit for prior coverage toward the new coverage’s preexist- ing condition exclusion period, if any. If states fail to implement programs meeting these goals, a federal fall back requirement would take effect requiring that each indi- vidual insurer enroll all eligible individuals and that such persons receive credit for their prior coverage toward any preexisting condi- tion limitation period. (See item IV(D) below on exceptions for network plans and HMOs.) The House bill would require that any pre- existing condition exclusion period be re- duced by the length of the aggregate period of qualified prior coverage. To determine qualified coverage, the plan could choose one of two alternatives: (1) it could disregard specific benefits covered and include all peri- ods of coverage from qualified sources; or (2) it could examine prior coverage on a benefit- specific basis, and exclude from qualified coverage any specific benefits not covered under the most recent prior plan. If the sec- ond method were chosen, plans would be re- quired to disclose this procedure at the time of enrollment or sale of the plan. Senate amendment The Senate Amendment would provide that all health plan issuers that issue or renew individual health plans must enroll all eligible individuals except if the insurer demonstrates that it would have financial problems, or, that its ability to service indi- viduals already enrolled in the plan would di- minish if new enrollees were allowed to join the plan. In these cases, the insurer would be prohibited from enrolling new individuals for a period of 6 months, or, if later, when the insurer could demonstrate that they could properly service new entrants. An insurer would have to enroll individuals on a first- come-first-served basis, or other basis deter- mined by the state, to be eligible for this limitation. States implementing guaranteed availability programs meeting certain re- quirements would be excepted from the fed- eral requirements. The Senate amendment would provide that a health plan issuer may not impose a limi- tation or exclusion of benefits on benefits that were covered under prior health plans. Conference agreement The conference agreement provides that each health insurance issuer that offers health insurance coverage in the individual market in a state may not decline to offer coverage to, or deny enrollment of an eligi- ble individual and may not impose any pre- existing condition exclusions with respect to such coverage. This requirement will not apply in States with acceptable alternative mechanisms as described in section IV(E) below. In addition, in States without an ac- ceptable alternative mechanism, a health in- surance issuer may limit the coverage of- fered as described in section IV(C). B. QUALIFYING\/ELIGIBLE INDIVIDUALS Current law No provision. House bill The House bill would provide that qualify- ing individuals are individuals: with 18 or more months of qualified coverage periods; with most recent prior coverage from a group health plan, governmental plan, or church plan; ineligible for group health cov- erage, Medicare Parts A or B, Medicaid, and without individual coverage; not terminated from most recent prior coverage for nonpay- ment of premiums or fraud; who, if eligible for continuation coverage under COBRA or similar state program, elected and exhausted this coverage; and who applied for individual coverage not more than 60 days after the last day of coverage under a group plan, or the termination date of COBRA benefits. Senate amendment Similar, but individual would have to apply for individual coverage not more than 30 days after the last day of coverage under a group plan. Conference agreement The conference agreement defines eligible individuals as individuals: with 18 or more months of aggregate creditable coverage; with most recent prior coverage from a group health plan, governmental plan, or church plan (or health insurance coverage of- fered in connection with any such plan); in- eligible for group health coverage, Medicare Parts A or B, Medicaid (or any successor pro- gram), and without any other health insur- ance coverage; not terminated from their most recent prior coverage for nonpayment of premiums or fraud; and who, if eligible for continuation coverage under COBRA or a similar state program, elected and exhausted this coverage. C. QUALIFYING COVERAGE Current law No provision. House bill The House bill would require coverage with an actuarial value of benefits not less than the weighted average actuarial value of the benefits provided by all the individual health insurance coverage (excluding coverage is- sued under this section) during the previous year, issued by: (1) the insurer or HMO in the state; or (2) all insurers and HMOs in the state. Requires that the actuarial value of benefits be calculated based on a standard- ized population and a set of standardized uti- lization and cost factors. Senate amendment No provision. Conference agreement The conference agreement requires individ- ual health insurance issuers to offer cov- erage to eligible individuals under all policy CONGRESSIONAL RECORD \u2014 HOUSE H9525July 31, 1996 forms with exceptions. First, a health insur- ance issuer may not offer coverage under all policy forms if the state is implementing an acceptable alternative mechanism (see sec- tion IV(E) below). If a state is not imple- menting an acceptable alternative mecha- nism, the health insurance issuer may elect to limit the policy forms offered to eligible individuals so long as it offers at least two different policy forms of health insurance coverage both of which are designed for, made generally available and actively mar- keted to, and enroll both eligible and other individuals by the issuer. In addition, the 2 policy forms must meet one of the following: (1) the 2 policy forms have the largest and next to the largest premium volume; or (2) the 2 policy forms are representative of indi- vidual health insurance coverage by the is- suer. An issuer must apply the election uni- formly to all eligible individuals in the state for that issuer, and the election will be effec- tive for policies offered for not less than 2 years. The 2 representative policy forms would in- clude a lower and higher-level of coverage, each of which has benefits substantially similar to other individual health insurance coverage offered by the issuer in the state. The lower-level policy form would have bene- fits with an actuarial value at least 85 per- cent, but not greater than 100 percent of a weighted average benefit. The higher-level policy form would have benefits with an ac- tuarial value: (1) at least 15 percent greater than the actuarial value of the lower-level policy form; and (2) between 100 and 120 per- cent of the weighted average benefit. Both products must include benefits substantially similar to other individual health insurance coverage offered by the issuer in the state. The weighted average may be either: (1) the average actuarial value of the benefits from individual coverage provided by the issuer; or (2) the average actuarial value of the ben- efits from individual coverage provided by all issuers in the state. The weighted average will be based on coverage provided during the previous year and exclude coverage of el- igible individuals. Actuarial values will be calculated based on a standardized popu- lation and a set of standardize utilization and cost factors. Network plans may limit coverage to those who live, reside, or work within the service area for the network plan. Within the service area for the plan, the issuer may deny cov- erage to individuals if the issuer has dem- onstrated, if required, to the applicable state authority that it will not have the capacity to deliver services adequately to additional individual enrollees. Denial must be made uniformly to individuals without regard to any health status-related factor and without regard to whether the individuals are eligi- ble individuals. Upon denial, the issuer may not offer coverage in the individual market within the service area for 180 days. Similar rules apply for financial capacity limits. D. GUARANTEED RENEWAL Current law No provision. House bill The House bill would require that individ- ual coverage is renewable at the option of the individual except for: nonpayment; fraud; termination of all individual coverage by the insurer or HMO, or termination of coverage in a geographic area in the case of network or HMO plan; movement of the indi- vidual outside the insurer’s service area; ter- mination of the particular type of coverage by the insurer or HMO, after the insurer has provided 90 day notice, offered the option to purchase any other coverage, and acted with- out regard to health status or insurability; discontinuation of all individual coverage by the insurer or HMO, after 180 days notice; uniform modification of all health plans within the individual’s type of coverage. Senate amendment The Senate Amendment would require that individual coverage is renewable at the op- tion of the individual except for: nonpay- ment; fraud; termination of the particular type of coverage by the insurer or HMO, which has provided 90 day notice, offered the option to purchase any other coverage, and acted without regard to health status or in- surability; termination of all individual cov- erage by the insurer or HMO, after 180 days notice, and prohibition against market re- entry for 5 years; change such that the indi- vidual lives or works outside the insurer’s service area but only if denial of coverage is applied uniformly without regard to the health status or insurability of the individ- ual. Conference agreement The conference agreement provides that a health insurance issuer that provides indi- vidual health insurance coverage to an indi- vidual must renew or continue in force such coverage at the option of the individual. It provides exceptions to the guaranteed renew- ability requirement for one or more of the following: (1) nonpayment of premiums or untimely payment; (2) fraud; (3) termination of coverage in the market (as outlined below) in accordance with applicable state law; (4) for network plans, the individual no longer lives, resides, or works in the service area of the issuer, or area for which the is- suer is authorized to do business but only if coverage is terminated uniformly without regard to any health status-related factor; (5) for coverage made available to bona fide associations, if membership in the associa- tion ceases, but only if the coverage is termi- nated uniformly without regard to any health status-related factor. An issuer may discontinue a particular type of coverage in the individual market only if the issuer: (1) provides prior notice to each covered individual; (2) offers each indi- vidual the option to purchase any other indi- vidual health insurance coverage offered by the issuer for individuals; and (3) acts uni- formly without regard to any health status- related factor of enrolled individuals or indi- viduals who may become eligible for such coverage. An issuer may elect to discontinue offering all health insurance coverage in the individual market in a state only if certain conditions are met. In this case, the issuer could not issue coverage in the market and state involved for 5 years. Issuers could mod- ify the health insurance coverage for a pol- icy form offered to individuals in the individ- ual market so long as the modification was consistent with state law and was effective on a uniform basis among all individuals with that policy form. In the case of health insurance coverage that is made available by a health insurance issuer in the individual market to individ- uals only through one or more associations, the issuer would be required to meet the Act’s requirements related to individuals. Health insurance issuers in the individual market must provide certifications of cov- erage in the same manner as health insur- ance issuers in the small group market. E. OPTIONAL STATE PROGRAMS\/STATE FLEXIBILITY 1. In general Current law No provision. House bill. The House bill would provide that a state may establish public or private mechanisms to meet the goals of guaranteed availability of coverage. The chief executive officer of the state must notify the Secretary of HHS if the state elects to use state mechanisms. Under a state mechanism, a state may define qualified coverage as coverage with benefits not less than the weighted average actuarial value of the benefits provided by all the indi- vidual health insurance coverage (excluding coverage issued under this section) during the previous year, issued by: the insurer or HMO in the state; or all insurers and HMOs in the state. The state may elect to establish qualified coverage for all insurers and HMOs in the state after it has established qualified coverage for each insurer or HMO. State mechanisms could include one or more, or a combination of: health insurance coverage pools or programs authorized or es- tablished by the state; mandatory group con- version policies; guaranteed issue of one or more plans; or open enrollment by one or more insurers or HMOs. This list is not ex- clusive. A state with a health insurance coverage pool or risk pool in effect on March 12, 1996, which offers qualified coverage, would auto- matically be considered to have met the Fed- eral access objectives. In general, states would have until July 1, 1997 to implement a state program. States without a regular legislative session between January 1, 1997 and June 30, 1997 would have a deadline of July 1, 1998. Senate amendment Similar. The Senate Amendment would provide that a state may adopt alternative public or private mechanisms to provide ac- cess to affordable health benefits for eligible individuals. The Governor of the state must notify the Secretary of Health and Human Services that the state has adopted an alter- native mechanism which achieves the goals of portability and renewability, and that the state intends to implement this mechanism. State mechanisms could include guaran- teed issue, open enrollment by one or more health plan issuers, high-risk pools, manda- tory conversion policies, or any combination of these mechanisms. A state high risk pool would meet the portability and renewability requirements if it is: (a) open to eligible indi- viduals; (b) limits preexisting condition waiting periods; and (c) is consistent with premium rates and covered benefits in the National Association of Insurance Commis- sioners (NAIC) Model Health Plan for Unin- surable Individuals Act. States which adopt a NAIC model act, including group to indi- vidual market portability provisions that meet the Federal portability and renewabil- ity goals, would not be subject to federal rules. A state may notify the Secretary, within 6 months after enactment of this Act, that state alternate mechanism(s) would meet portability and renewability goals. The Sec- retary would not determine if the state mechanism meets the goals until 12 months after the initial state notification, or Janu- ary 1, 1998, whichever is later. The Secretary would not make a determination until Janu- ary 1, 1999 for states without legislative ses- sions within the 12 months after enactment of this Act. Conference agreement The conference agreement provides that a state may implement an acceptable alter- native mechanism that is designed to pro- vide access to health benefits for individuals. This mechanism must: (1) provide a choice of health insurance coverage to all eligible in- dividuals; (2) not impose any preexisting con- dition exclusions; and (3) include at least one policy form of coverage that is comparable to either comprehensive health insurance coverage offered in the individual market in CONGRESSIONAL RECORD \u2014 HOUSEH9526 July 31, 1996 the state or a standard option of coverage available under the group or individual health insurance laws in the state. If a state elects to implement the following mecha- nisms, the state must also meet the preced- ing requirements. These mechanisms are: (1) the NAIC Small Employer and Individual Health Insurance Availability Model Act (as it applies to individual health insurance cov- erage) or the Individual Health Insurance Portability Model Act; (2) a qualified high risk pool that meets certain specified re- quirements; or (3) other mechanisms that provide for risk adjustment, risk spreading, or a risk spreading mechanism (by an issuer or among issuers or policies of an issuer), or otherwise provide some financial subsidies for participating insurers or eligible individ- uals, or, alternatively, a mechanism under which each eligible individual is provided a choice of all individual health insurance cov- erage otherwise available. Examples of potential alternative mecha- nisms include health insurance coverage pools or programs, mandatory group conver- sion policies, guaranteed issue of one or more plans of individual health insurance coverage, or open enrollment by one or more health insurance issuers, or a combination of such mechanisms. A state is presumed to be implementing an acceptable alternative mechanism as of Jan- uary 1, 1998, by not later than July 1, 1997, the chief executive officer of the state noti- fies the Secretary that the state has enacted any necessary legislation as of January 1, 1998 and provides the Secretary with infor- mation needed to review the mechanism and its implementation, or proposed implemen- tation. The state must provide this informa- tion to the Secretary every 3 years to con- tinue to be presumed to have an acceptable alternative mechanism. If a state submits notice and information after July 1, 1997, and the Secretary makes no determination with- in 90 days, the mechanism will be considered acceptable after 90 days. F. CONSTRUCTION\/PREEMPTION Current law No provision. House bill The House bill would provide that states are not prevented from: (1) implementing guaranteed availability mechanisms before the deadline; (2) continuing state mecha- nisms that were in effect before the enact- ment of this act; (3) offering guaranteed availability of coverage that is not qualify- ing coverage; or (4) offering guaranteed availability of coverage to individuals who are not qualifying individuals Senate amendment The Senate Amendment would provide that states are not required to replace or dis- solve high risk pools or other similar state mechanisms which are designed to provide individuals in those states with access to health benefits. Conference agreement The conference agreement provides that nothing in this part would prevent a state from establishing, implementing, or continu- ing in effect standards and requirements un- less they prevent the application of a re- quirement in this part. Nothing in this part would affect or modify the provisions of sec- tion 514 of ERISA. G. FEDERAL RULES (FALLBACK OR IN ABSENCE OF STATE ALTERNATIVE) Current law No provision. House bill The House bill would provide that the Sec- retary of HHS notify a state that federal rules would apply if: (1) the state has not elected to use a state mechanism; or (2) if the Secretary finds, after consultation with state officials, that the state mechanism would not meet the federal availability goals, and the state has had reasonable op- portunity to change or implement a state mechanism to meet the goals. Federal rules would provide that each in- surer or HMO which issues individual health insurance coverage in the state would have to offer qualifying coverage to qualifying in- dividuals, and credit prior coverage toward any preexisting condition exclusion periods. In addition, no individual could be refused coverage based on health status. Network plans or HMOs could refuse coverage to indi- viduals who did not reside or work in the plan’s service area, or if network or financial capacity limits would be exceeded. Federal rules would cease to apply if the state imple- ments a mechanism designed to meet the federal goals of availability. Senate amendment The Senate Amendment would provide that federal standards would apply if the state does not notify the Secretary of HHS of its intent to implement state mechanisms, or if the Secretary finds that the state mech- anism fails to: (1) offer coverage to eligible individuals; (2) prohibit preexisting condi- tion limitations or exclusions for benefits covered under previous health plans; (3) offer eligible individuals a choice of individual health plans, including at least one com- prehensive plan, or a plan comparable to a standard option plan available under the group or individual health insurance laws of the state; or (4) implement a risk spreading mechanism, cross subsidy mechanism, risk adjustment mechanism, rating limitation or other mechanism designed to reduce the var- iation in costs of coverage for eligible indi- viduals and other plans offered by the carrier or available in the state. The bill would waive the requirement for a risk spreading mechanism if all individual health plans available in the market are also available to eligible individuals. It would provide that if the Secretary de- termines that the state alternative mecha- nism fails to meet the above criteria, or if the state mechanism is no longer being im- plemented, the Secretary would have to no- tify the Governor of the failure to meet the goals of portability and renewability, and permit the state to come into compliance. Federal individual health plan portability rules would apply if the state still does not meet these criteria. Under these rules, a plan issuer could not, with respect to an eligible individual, decline to offer coverage to or deny enrollment of the individual or impose a limitation or exclusion of benefits, other- wise available under the plan, for which cov- erage was available under the group health plan or employee health benefit plan in which the person was previously enrolled. (This would not prevent a health plan issuer from establishing premium discounts or modifying otherwise applicable copayments or deductibles in return for adherence to pro- grams of health promotion or disease preven- tion.) Future adoptions of a state mechanism would be subject to the same procedures of: (1) notification of the Secretary; and (2) de- termination of satisfaction of criteria for compliance, except in the cases of adoption of the NAIC model or high risk pool. Conference agreement The conference agreement provides that if the Secretary finds that the state mecha- nism is not acceptable or is no longer being implemented, the Secretary must notify the state of the preliminary determination and consequences of failure to implement an ac- ceptable mechanism. The state will have a reasonable opportunity to modify the mecha- nism, or adopt a new mechanism. If the Sec- retary finds that the state mechanism is not acceptable, or is not being implemented, the Secretary must notify the state of the effec- tive date of federal requirements for guaran- teed availability. Each issuer would then be required to guarantee issue health insurance coverage to any individual, but could limit coverage to 2 policy forms as outlined in sec- tion IV(C) above. Secretarial authority would be limited to determinations based only on whether a state mechanism is not an acceptable alternative mechanism or is not being implemented. It is the intent of Con- gress that the risk adjustment, risk spread- ing, risk spreading mechanism and financial subsidization standards provide meaningful financial protection and assistance for eligi- ble individuals, both in the case of a state al- ternative system and alternative coverage provided under section 2741(c). H. CONSTRUCTION (PREMIUMS, MARKET RE- QUIREMENTS, ASSOCIATION COVERAGE AND MARKETING) Current law No provision. House bill The House bill would provide that insurers or HMOs are free to determine the premiums for individual health insurance coverage under applicable state law. Insurers or HMOs which only insure groups or associations would not be required to offer individual health insurance coverage. Insurers or HMOs that offer conversion policies in connection with a group health plan would not be re- quired to offer individual coverage. Insurers or HMOs that offer coverage only in connec- tion with a group health plan or in connec- tion with individuals based on affiliation with one or more bona fide associations would not be considered to be offering indi- vidual coverage. A state could require that insurers or HMOs offering individual coverage actively market this coverage. Senate bill The Senate Amendment is similar but did not include a provision relating to associa- tions. Conference agreement Premiums that an issuer may charge an in- dividual for individual health insurance cov- erage are not restricted by the conference agreement, but must comply with state law. The health insurance issuer may establish premium discounts or rebates, or modify otherwise applicable copayments or deductibles in return for adherence to pro- grams of health promotion and disease pre- vention. Under the conference agreement, health in- surance issuers offering health insurance coverage in connection with group health plans, or through one or more bona fide asso- ciations, or both, are not required to offer health insurance coverage in the individual market. A health insurance issuer offering group health coverage is not considered to be a health insurance issuer offering individual health insurance coverage solely because the issuer offers a conversion policy. I. ENFORCEMENT OF REQUIREMENTS ON INDIVID- UAL INSURERS, HMO’S, AND HEALTH PLAN IS- SUERS Current law Under section 502 of ERISA, employee ben- efit plans that fail to comply with applicable requirements can be sued for relief and be subject to civil money penalties, and can be sued to recover any benefits due under the plan. Section 504 of ERISA provides the Sec- retary of Labor with investigative authority CONGRESSIONAL RECORD \u2014 HOUSE H9527July 31, 1996 to determine whether any person is out of compliance with the law’s requirements. Section 506 provides for coordination and re- sponsibility of agencies in enforcement. Sec- tion 510 prohibits a health plan from dis- criminating against a participant or bene- ficiary for exercising any right under the plan. House bill Noncomplying insurers and HMOs would be subject to enforcement through federal civil money penalties (in the same manner as im- posed above (see item II(G)) but only in the event that the Secretary of HHS has deter- mined that the state in which the insurer or HMO is selling coverage is not providing for enforcement. Senate amendment Noncomplying individual health plans of- fered by a health plan issuer would be sub- ject to state enforcement. Each state would require each individual health plan issued, sold, renewed, or offered for sale or operated in the state by a health plan issuer to meet the Act’s standards pursuant to an enforce- ment plan filed with the Secretary of Labor. The state would be required to submit such information as required by the Secretary demonstrating effective implementation of the enforcement plan. In the event that the state failed to substantially enforce the Act’s standards and requirements, the Sec- retary of Labor, in consultation with the Secretary of HHS, would implement an en- forcement plan. Issuers would then be sub- ject to civil enforcement as provided under sections 502, 504, 506 and 510 of ERISA. The Secretary of Labor could issue such regula- tions as needed to carry out this Act. Conference agreement Each state may require health insurance issuers that issue, sell, renew, or offer health insurance coverage in the individual market to meet the requirements under this part with respect to such issuers. If a state fails to substantially enforce the federal require- ments, the Secretary will provide enforce- ment in the same manner as in the small group market (see section II(G) above). V. MULTIPLE EMPLOYER POOLING ARRANGEMENTS A. CLARIFICATION OF DUTY OF THE SECRETARY OF LABOR TO IMPLEMENT CURRENT LAW PRO- VIDING FOR EXEMPTIONS FROM STATE REGU- LATION OF MULTIPLE EMPLOYER HEALTH PLANS (MEHPS) Current law Section 3(40) of ERISA defines a multiple employer welfare benefit plan, or any other arrangement which offers or provides health benefits and meets additional criteria, (e.g., it must offer such benefits to the employees or 2 or more employers and cannot be a plan established under a collective bargaining agreement, a rural electric cooperative, or rural telephone cooperative association). Two or more trades or businesses, whether or not incorporated, are deemed a single em- ployer and thus not a MEWA if such trades or businesses are within the same control group. Section 514 of ERISA treats fully-insured MEWAs differently from those that are not fully-insured (i.e., that are partly or fully-in- sured). With respect to a fully-insured MEWA, a state may apply and enforce its in- surance laws (section 514(b)(6)(A)(i)). With respect to a not-fully-insured MEWA, a state may apply and enforce its insurance laws so long as such laws or regulations are not in- consistent with ERISA (section 514(b)(6)(A)(ii). Section 514(b)(6)(B) provides that the Department of Labor (DOL) may issue an exemption from state law with re- spect to non-fully-insured MEWAs. (No such exemptions have been issued.) House bill The House bill would add a new Part 7 (Rules Governing State Regulation of Mul- tiple Employer Health Plans) to Title I of ERISA. It would define the following terms: in- surer, fully-insured, HMO, participating em- ployer, sponsor, and state insurance comis- sioner. The House bill would define a mul- tiple employer health plan as a MEWA which provides medical care and which is or has been exempt under section 514(b)(6)(B) of ERISA. The bill clarifies the conditions under which multiple employer health plans (MEHPs)\u2014non-fully-insured multiple em- ployer arrangements providing medical care\u2014may apply for an exemption from cer- tain state laws. In provides that only certain legitimate association health plans and other arrangements (described below) which are not fully insured are eligible for an ex- emption. This is accomplished by clarifying the duty of the Secretary of Labor to imple- ment the provisions of current law section 514(b)(6)(B) to provide exemption from state law for MEHPS. The bill would establish criteria which a not fully-insured arrangement must meet to qualify for an exemption and thus become a MEHP. The Secretary could grant an exemp- tion to an arrangement only if: (1) a com- plete application has been filed, accompanied by the filing fee of $5,000; (2) the application demonstrates compliance with requirements established in new sections 703 and 704 de- scribed below; (3) the Secretary finds that the exemption is administratively feasible, not adverse to the interests of the individ- uals covered under it, and protective of the rights and benefits of the individuals covered under the arrangement, and (4) all other terms of the exemption are met (including fi- nancial, actuarial, reporting, participation, and such other requirements as may be spec- ified as a condition of the exemption). The application must include: (1) identifying in- formation about the arrangement and the states in which it will operate; (2) evidence that ERISA’s bonding requirements will be met; (3) copies of all plan documents and agreements with service providers; (4) a funding report indicating that the reserve re- quirements of new section 705 will be met, that contribution rates will be adequate to cover obligations, and that a qualified actu- ary (a member in good standing of the Amer- ican Academy of Actuaries or an actuary meeting such other standards the Secretary considers adequate) has issued an opinion with respect to the arrangement’s assets, li- abilities, and projected costs; and (5) any other information prescribed by the Sec- retary. Exempt arrangements must notify the Secretary of any material changes in this information at any time, must file an- nual reports with the Secretary, and must engage a qualified actuary. In addition, the bill would provide for a class exemption from section 514(b)(6)(B)(ii) of ERISA for large MEHPs that have been in operation for at least five years on the date of enactment. An arrangement would qualify for this class exemption if, in addition to all other requirements: (1) at the time of appli- cation for exemption; the arrangement cov- ers at least 1,000 participants and bene- ficiaries, or has at least 2,000 employees of eligible participating employers ; (2) a com- plete application has been filed and is pend- ing; and (3) the application meets require- ments established by the Secretary with re- spect to class exemptions. Class exemptions would be treated as having been granted with respect to the arrangement unless the Secretary provide appropriate notice that the exemption has been denied. 1. Requirements relating to MEHP sponsors, board of trustees, plan operations, and cov- ered persons The House bill would establish eligibility requirements for MEHPs. Applications must comply with requirements established by the Secretary. They must demonstrate that the arrangement’s sponsor has been in existence for a continuous period of at least 5 years and is organized and maintained in good faith, with a constitution and by laws spe- cifically starting its purpose and providing for at least annual meetings, as a trade asso- ciation, an industry association, a profes- sional association, or a chamber of com- merce (or similar business group, including a corporation or similar organization that op- erates on a cooperative basis within the meaning of section 1381 of the IRC) for pur- poses other than that of obtaining or provid- ing medical care. Also, the applicant must demonstrate that the sponsor is established as a permanent entity, has the active sup- port of its members, and collects dues from its members without conditioning such on the basis of the health status or claims expe- rience of plan participants or beneficiaries or on the basis of the member’s participation in the MEHP. The bill would require that the arrange- ment be operated, pursuant to a trust agree- ment, by a ”board of trustees” which has complete fiscal control and which is respon- sible for all operations of the arrangement. The board of trustees must develop rules of operation and financial control based on a three-year plan of operation which is ade- quate to carry out the terms of the arrange- ment and to meet all applicable require- ments of the exemption and Title I of ERISA. With respect to covered persons, the bill would require that all employers who are as- sociation members be eligible for participa- tion under the terms of the plan. Eligible in- dividuals of such participating employers cannot be excluded from enrolling in the plan because of health status (as required under section 103 of the Act as described in item I-(B) above). The rules also stipulate that premium rates established under the plan with respect to any particular partici- pating employer cannot be based on the claims experience of the particular em- ployer. 2. Additional entities eligible to be MEHPs In addition to the associations described above, certain other entities would be pro- vided eligibility to seek an exemption as MEHPs under section 514(b)(6)(B). These in- clude (1) franchise networks (section 703(b)), (2) certain existing collectively bargained ar- rangements which fail to meet the statutory exemption criteria (section 703(c)), and (3) certain arrangements not meeting the statu- tory exemption criteria for single employer plans (section 703(d)). (Section 709 of ERISA, added by section 166 of this subtitle, also makes eligible certain church plans electing to seek an exemption.) 3. Other requirements for exemption The House bill would require a MEHP to meet the following additional requirements: (1) its governing instruments must provide that the board of trustees serves as the named fiduciary and plan administrator, that the sponsor serves as plan sponsor, and that the reserve requirements of new section 705 are met; (2) the contribution rates must be adequate, and (3) any other requirements set out in regulations by the Secretary of Labor must be met. 4. Maintenance of reserves The House bill would require that MEHPs establish and maintain reserves sufficient for unearned contributions, benefit liabil- ities incurred but not yet satisfied, and for CONGRESSIONAL RECORD \u2014 HOUSEH9528 July 31, 1996 which risk of loss has not been transferred, expected administrative costs, and any other obligations and margin for error rec- ommended by the qualified actuary. The minimum reserves must be no less than 25% of expected incurred claims and expenses for the year or $400,000, whichever is greater. The Secretary may provide additional re- quirements relating to reserves and excess\/ stop loss coverage and may provide adjust- ments to the levels of reserves otherwise re- quired to take into account excess\/stop loss coverage or other financial arrangements. The bill provides for an alternative means of compliance in which the Secretary could permit an arrangement to substitute, for all or part of the requirements of this section, such security, guarantee, hold-harmless ar- rangement, or other financial arrangement as the Secretary of Labor determined to be adequate to enable the arrangement to fully meet its financial obligations on a timely basis. 5. Notice requirements for voluntary termination The House bill would provide that, except as permitted in new section 707 below, a MEHP may terminate only if the board of trustees provides 60 days advance written no- tice to participants and beneficiaries and submits to the Secretary a plan providing for timely payment of all benefit obligations. 6. Corrective actions and mandatory termination The House bill would require a MEHP to continue to meet the reserve requirements even if its exemption is no longer in effect. The board of trustees must quarterly deter- mine whether the reserve requirements of new section 705 (as described above) are being met and, if they are not, must, in con- sultation with the qualified actuary, develop a plan to ensure compliance and report such information to the Secretary. In any case where a MEHP notifies the Secretary that it has failed to meet the reserve requirements and corrective action has not restored com- pliance, and the Secretary of Labor deter- mines that the failure will result in a con- tinuing failure to pay benefit obligations, the Secretary may direct the board to termi- nate the arrangement and take action need- ed to ensure that the arrangement’s affairs are resolved in a manner which will result in timely provision of all benefits for which the arrangement is obligated. 7. Temporary application of state laws a. Provides for exclusion of arrangements from the small group market in any state upon the state’s certification of guaranteed access to health insurance coverage in such state (i.e, state opt-out). Provides that a state which certifies to the Secretary that it provides guaranteed access to health cov- erage may deny a MEHP the right to offer coverage in the small group market (or oth- erwise regulate such MEHP with respect to such coverage), except as described below. The certification triggering the state opt-out could be in effect no longer than 3 years. A state is considered to provide such guar- anteed access, if (1) the state certifies that at least 90% of all state residents are covered by a group health plan or otherwise have health insurance coverage, or (2) the state has, in the small group market, provided for guaranteed issue of at least one standard benefits package and for rating reforms de- signed to make health insurance coverage more affordable. In states without such guar- anteed access, MEHPs could offer coverage in the small group market in the state as long as they met the standards set forth in Part 7 (as established by this subtitle). b. Provides for exceptions to the exclusion of MEHPs from state small group markets. Provides a limited exception to the state opt out for certain large, multi-state arrange- ments. The State opt out would not apply to new and existing MEHPs that meet the fol- lowing criteria: (1) the sponsor operates in a majority of the 50 states and in at least 2 of the regions of the country; (2) the arrange- ment covers or will cover at least 7,500 par- ticipants and beneficiaries; and (30 at the time the application to become a MEHP is filed, the arrangement does not have pending against it any enforcement action by the state. In addition, the state opt out would not apply in a state in which an arrangement meeting the MEHP standards operates on March 6, 1996, to the extent a state enforce- ment action is not pending against such an entity at the time an application for an ex- emption is made. The above two exceptions do not apply to any state which, as of January 1, 1996, either (1) has enacted a law providing for guaran- teed issue of fully community rated individ- ual health insurance coverage offered by in- surers and HMOs, or (2) requires insurers of- fering group health coverage to reimburse insurers offering individual coverage for losses resulting from their offering individ- ual coverage on an open enrollment basis. Regulations may also provide for an exemp- tion to the application of state law for cer- tain single industry plans. c. Premium tax assessment authority with respect to new arrangements. Provides that a state could assess new association-based MEHPs (formed after March 6, 1996) non- discriminatory state premium taxes set at a rate no greater than that applicable to any insurer or health maintenance organization offering health insurance coverage in the state. MEHPs existing as of March 6, 1996 would remain exempt from state premium taxes. However, if they expanded into a new state, the state could apply the above rule. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. VI. STATE AUTHORITY OVER NON-EXEMPT MEWAS Current law Under section 514(6)(A) of ERISA, a state may apply and enforce state insurance laws with respect to a MEWA so long as the law or regulation is not inconsistent with ERISA. House bill The House bill would provide that states have the authority under ERISA to regulate without limitation non-fully-insured MEWAs which are not provided an exemption under new Part 7 of ERISA (see item V above). In other words, states can continue to regulate MEWAs that are not MEHPs. Senate amendment No provision. Conference agreement the conference agreement does not include the House provision. VII. ADDITIONAL MEWA AND RELATED PROVISIONS A. CLARIFICATION OF TREATMENT OF SINGLE- EMPLOYER ARRANGEMENTS Current law Section 3(40) of ERISA defines a MEWA and specifies the conditions under which two or more trades or businesses shall be deemed a single employer, if such trades or busi- nesses are within the same control group. Common control could not be based on an in- terest of less than 25%. House bill The House bill would modify the treatment of certain single employer arrangements under section 3(40) of ERISA. The treatment of a single employer plan as being excluded from the definition of a MEWA (and thus from state law) is clarified by defining the minimum interest required for two or more entities to be in ”common control” as a per- centage which cannot be required to be greater than 25%. Also a plan would be con- sidered a single employer plan if less than 25% of the covered employees are employed by other participating employers. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. B. CLARIFICATION OF TREATMENT OF CERTAIN COLLECTIVELY-BARGAINED ARRANGEMENTS Current law Under section 3(40) of ERISA, a MEWA is defined not to include any plan or arrange- ment which is established or maintained under or pursuant to one or more agree- ments which the Secretary finds to be collec- tive bargaining agreements, or by a rural electric cooperative. (No such Secretarial finding has ever been issued). House bill The House bill would establish the condi- tions under which multiemployer and other collectively-bargained arrangements are ex- empted from the MEWA definition, and thus exempt from state law. Amends the defini- tion of a MEWA to exclude a plan or arrange- ment which is established or maintained under or pursuant to a collective bargaining arrangement (as described in the National Labor Relations Act, the Railway Labor Act, and similar state public employee relations laws). It then specifies additional conditions which must be met for such a plan to be a statutorily excluded collectively bargained arrangement and thus not a MEWA. These conditions include: (1) The plan can- not utilize the services of any licensed insur- ance agent or broker to solicit or enroll em- ployers or pay a commission or other form of compensation to certain persons that is re- lated to the volume or number of employers or individuals solicited or enrolled in the plan; (2) a maximum 15 percent rule applies to the number of covered individuals in the plan who are not employees (or their bene- ficiaries) within a bargaining unit covered by any of the collective bargaining agree- ments with a participating employer or who are not present or former employees (or their beneficiaries) of sponsoring employee organi- zations or employers who are or were a party to any of the collective bargaining agree- ments (provides for a higher maximum in the case of certain plans or arrangements in ex- istence as of the date of enactment); and (3) the employee organization or other entity sponsoring the plan or arrangement must certify annually to the Secretary the plan has met the previous requirements. If the plan or arrangement is not fully in- sured, it must be a multiemployer plan meeting specific requirements of the Labor Management Relations Act (i.e., the require- ment for joint labor-management trustee- ship under section 302(c)(5)(B)). If the plan or arrangement is not in effect as of the date of enactment, the employee or- ganization or other entity sponsoring the plan or arrangement must have existed for at least 3 years or have been affiliated with another employee organization in existence for at least 3 years, or demonstrates to the Secretary that certain of the above require- ments have been met. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. CONGRESSIONAL RECORD \u2014 HOUSE H9529July 31, 1996 C. TREATMENT OF CHURCH PLANS Current law Section 4(b)(2) of ERISA exempts from its requirements church plans that do not elect to participate in qualified pension plans under the IRC. House bill The House bill would add a new section 709 to ERISA treating certain church plans (in- cluding a church, convention or association of churches or similar organization) as a MEWA and permitting such plans to volun- tarily elect to apply to the Department of Labor for an exemption from state laws that would otherwise apply to a MEWA under sec- tion 514(b)(6)(B) and in accordance with new ERISA Part 7. An exempted church plan would, with certain exceptions, have to com- ply with the provisions of ERISA Title I in order to receive an exception from state law. The election to be covered by ERISA would be irrevocable. A church plan is covered under this section if the plan provides bene- fits which include medical care and some or all of the benefits are not fully insured. (Cer- tain provisions of ERISA, such as its COBRA continuation coverage requirements, would not apply to the church plans described here- in.) Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. D. ENFORCEMENT PROVISIONS RELATING MEWAs Current law MEWAs are subject to ERISA’s enforce- ment and other provisions of title I. House bill The House bill would amend ERISA to es- tablish enforcement provisions relating to the multiple employer elements of the bill: (1) a civil penalty would apply for failure of MEWAs to file registration statements; (2) state enforcement would be authorized through Federal courts with respect to viola- tions by multiple employer health plans, subject to the existence of enforcement agreements between the states and the fed- eral government; (3) willful misrepresenta- tion that an entity is an exempted MEWA or collectively-bargained arrangement could re- sult in criminal penalties; (4) cease activity orders could be issued for arrangements found to be neither licensed, registered, or otherwise approved under State insurance law, or operating in accordance with the terms of an exemption granted by the Sec- retary under new part 7; and (5) provides that each MEHP require its fiduciary or board of trustees to comply with the required claims procedure under ERISA. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. E. COOPERATION BETWEEN FEDERAL AND STATE AUTHORITIES Current law Section 506 of ERISA provides for coordi- nation between the Department of Labor and other federal agencies in the enforcement of ERISA. The Secretary is authorized to use the facilities or services of the states, with the consent of the affected departments, agencies, or establishments in enforcing ERISA. House bill The House bill would amend section 506 of ERISA to specify State responsibility with respect to self-insured MEHPs and voluntary health insurance associations (VHIAs). A State could enter into an agreement with the Secretary for delegation to the State of some or all of the Secretary’s authority to enforce provisions of ERISA applicable to ex- empted MEHPs or to VHIAs. The Secretary would be required to enter into the agree- ment if the Secretary determined that dele- gation to the State would not result in a lower level or quality of enforcement. How- ever, if the Secretary delegated authority to a State, the Secretary could continue to ex- ercise such authority concurrently with the State. The Secretary would be required to provide enforcement assistance to the States with respect to MEWAs. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. F. FILING AND DISCLOSURE REQUIREMENTS FOR MEWAs OFFERING HEALTH BENEFITS Current law ERISA provides for certain reporting and disclosure requirements. House bill The reporting and disclosure requirements of ERISA would be amended to require MEWAs offering health benefits to file with the Secretary a registration statement with- in 60 days before beginning operations (for those starting on or after January 1, 1997) and no later than February 15 of each year. In addition, MEWAs providing medical care would be required to issue to participating employers certain information including summary plan descriptions, contribution rates, and the status of the arrangement (whether fully-insured or an exempted self- insured plan). Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. G. SINGLE ANNUAL FILING FOR ALL PARTICIPATING EMPLOYERS Current law Section 110 of ERISA provides for alter- native methods of compliance with reporting and disclosure requirements to those speci- fied in previous sections of the law. House bill This section would amend ERISA’s section 110 to provide for a single annual filing for all participating employers of fully insured MEWAs. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. H. EFFECTIVE DATES\/TRANSITION RULES Current law No provision. House bill The House bill would provide that in gen- eral, the amendments made by this title would be effective January 1, 1998. In addi- tion, the Secretary would be required to issue all regulations needed to carry out the amendments before January 1, 1998. The bill would provide for transition rules for self-insured MEWAs which meet the re- quirements of Part 7 and which are in oper- ation as of the effective date so that those applying to the Secretary for an exemption from State regulation are deemed to be ex- cluded for a period not to exceed 18 months unless the Secretary denies the exemption or finds the MEWAs application deficient, pro- vided that the arrangement does not have pending against it an enforcement action by a state. The Secretary could revoke the ex- emption at any time if it would be detrimen- tal to the interests of individuals covered under the Act. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. VIII. VOLUNTARY HEALTH INSURANCE ASSO- CIATIONS\/HEALTH PLAN PURCHASING CO- OPERATIVES (HPPCS) Current law While the states regulate insurance sold to purchasing cooperatives, a purchasing coop- erative that is also a MEWA is also regulated under ERISA. Under ERISA, a state may apply and enforce its insurance laws with re- spect to fully-insured MEWAs. As of December 1995, 15 states had enacted laws relating to voluntary purchasing alli- ances\/cooperatives. House bill The House bill would add a new subsection (d) to section 514 of ERISA defining under ERISA voluntary health insurance associa- tions and establishing federal requirements for such associations. Associations meeting these requirements would be exempt from specific state laws. Senate amendment The Senate Amendment would provide for limited exemptions from state laws for health insurance purchasing cooperatives that meet the requirements established by this section. Conference agreement The conference agreement does not include the House or Senate provision. A. DEFINITIONS\/NATURE OF ORGANIZATION Current law No provision. House bill The House bill would define a voluntary health insurance association as a multiple employer welfare arrangement, maintained by a qualified association, under which all medical benefits are fully-insured, under which no employer is excluded as a partici- pating employer (subject to minimum par- ticipation requirements of an insurer), under which the enrollment requirements of sec- tion 103 of the Act apply (see item II above), under which all health insurance coverage options are aggressively marketed, and under which the health insurance coverage is provided by an insurer or HMO to which the laws of the state in which it operates apply. A qualified association would be an asso- ciation in which the sponsor of the associa- tion is, and has been (together with its im- mediate predecessor, if any) for a continuous period of not less than 5 years, organized and maintained in good faith, with a constitu- tion and bylaws specifically stating its pur- pose, as a trade association, an industry as- sociation, a professional association, or a chamber of commerce (or similar business group), for substantial purposes other than that of obtaining or providing medical care, is established as a permanent entity which receives the active support of its members and meets at least annually, and collects dues without conditioning such dues on the basis of the health status or claims experi- ence of plan participants or beneficiaries or on the basis of participation in a VHIA. A ”small employer” would be defined as one who employs at least 2 but fewer than 51 employees on a typical business day in the year. CONGRESSIONAL RECORD \u2014 HOUSEH9530 July 31, 1996 Senate amendment The Senate Amendment would define a ”health plan purchasing cooperative” or HPPC to mean a group of employees or a group of individuals and employers that, on a voluntary basis and in accordance with this section, form a cooperative for the pur- pose of purchasing an individual health plan or group health plans offered by health plan issuers. An HPPC could not: (a) perform any activ- ity relating to the licensing of health plan issuers; (b) assume financial risk directly or indirectly (that is, it would have to be fully- insured); (c) establish eligibility, enrollment, or premium contribution requirements for individual participants or beneficiaries based on health status, medical condition, claims experience, receipt of health care, medical history, evidence of insurability, genetic in- formation, or disability; (d) operate on a for- profit or other basis where the legal struc- ture of the cooperative permits profits to be made and not returned to the members of the cooperative, or (e) perform any other ac- tivities that conflict or are inconsistent with the performance of its duties under this Act. A for-profit cooperative could be formed by a nonprofit organization or organizations in which: (1) membership in such organization is not based on health status, medical condi- tion, claims experience, receipt of health care, medical history, evidence of insurabil- ity, genetic information, or disability and (2) that accepts as members all employers or in- dividuals on a first-come, first-serve basis, subject to any established limit on the maxi- mum size of an employer that may become a member. Conference agreement The conference agreement does not include the House or Senate provision. B. CERTIFICATION Current law No provision. House bill No provision. Senate agreement The Senate Amendment would provide that a state certify a group as a HPPC if it appropriately notifies the state and the Sec- retary of Labor that it wants to form a HPPC under the requirements of this sec- tion. The state would be required to deter- mine in a timely fashion whether the group is in compliance with the section’s require- ments and to oversee the operations of the HPPC to ensure continued compliance with the requirements. Each certified HPPC would have to register with the Secretary of Labor. If a state failed to implement a HPPC cer- tification program in accordance with this Act’s standards, the Secretary of Labor would certify and oversee the HPPCs in that state. However, the Secretary would not certify a HPPC if, upon submission of an application of the state to the Secretary, the Secretary determined that a state law was in effect on the date of enactment of this Act providing that all small employers in the state had a means readily available that ensured: (a) that individuals and employees had a choice of multiple, unaffiliated health plan issuers; (b) that health plan coverage was subject to state premium rating requirements that were not based on the health and other risk factors described above and that contained a mandatory minimum loss ratio; (c) that comparative health plan materials were dis- seminated (including information about cost, quality, benefits, and other informa- tion); and that (d) the state program other- wise met the objectives of this Act. A HPPC operating in more than one state would be certified by the state in which the cooperative was domiciled. States could enter into cooperative agreements for the purpose of overseeing a HPPC’s operation. A HPPC would be considered to be domiciled in the state in which most of the members of the HPPC reside. Conference agreement The conference agreement does not include the Senate provision. C. STRUCTURE AND RESPONSIBILITIES OF ORGANIZATION Current law No provision. House bill The House bill would provide that VHIAs and qualified associations meet certain con- ditions (described in items VIII(A) and VIII(D)) to qualify as a VHIA and therefore for exemption from state insurance laws. Senate amendment The Senate Amendment would provide for the following requirements for HPPCs: I. Board of Directors.\u2014Requires each HPPC to be governed by a board of directors that would be responsible for ensuring the performance of the HPPC. The board would have to be composed of a cross-section of representatives of employers, employees, and individuals participating in the HPPC. The board members could not be compensated but could receive reimbursement for reason- able and necessary expenses incurred in per- forming their HPPC responsibilities. 2. Membership and marketing area.\u2014Per- mits a HPPC to establish limits on the maxi- mum size of employers who could become members and to determine whether to allow individuals to be members. Once membership limits were established, the HPPC would be required to accept all employers (or individ- uals) residing within the area served by the HPPC who met the membership require- ments on a first-come, first-served basis, or on another basis established by the state to ensure equitable access to the HPPC. 3. Duties and responsibilities.\u2014Requires a HPPC to: (a) objectively evaluate potential health plan issuers and enter into agree- ments with multiple, unaffiliated ones, ex- cept that this requirement would not apply in regions, such as remote or frontier areas, where compliance was not possible; (b) enter into agreements with employers and individ- uals who become members; (c) participate in any program of risk-adjustment or reinsur- ance, or any similar program established by the state; (d) prepare and disseminate com- parative health plan materials concerning the plans offered through the HPPC; (e) broadly solicit and actively market to all el- igible employers and individuals residing within the service area; and (f) act as an om- budsman for enrollees. 4. Permissible activities.\u2014Permits a HPPC to perform other functions as needed to fur- ther the purposes of this Act, such as: (a) col- lecting and distributing premiums and per- forming other administrative functions; (b) collecting and analyzing surveys of satisfac- tion; (c) charging fees for membership and participation fees to issuers; (d) cooperating with (or accepting as members) employers who provide health benefits directly but only for the purpose of negotiating with provid- ers; and (5) negotiating with health care pro- viders and health plan issuers. 5. Limitation on cooperative activities.\u2014 see item VIII(A) above. 6. Conflict of interest.\u2014Prohibits any indi- vidual, partnership, or corporation from serving on the HPPC board, being employed by or receiving compensation from the HPPC, or initiating or financing a HPPC if such individual, partnership, or corporation (a) fails to discharge the duties and respon- sibilities in a manner that is solely in the in- terest of the members; or (b) derives personal benefit from the sale of, or financial interest in, health plans, services, or products sold through the HPPC. However, a HPPC could contract with third parties to provide admin- istrative, marketing, consultive, or other services. Conference agreement The conference agreement does not include the House or Senate provision. D. PREEMPTION OF STATE LAWS Current law Section 514(a) of ERISA preempts state laws relating to employee benefit plans. Sec- tion 514(b)(2) of ERISA provides that state laws apply in the case of the regulation of in- surance. House bill The House bill would amend section 514 of ERISA to preempt the following state laws: (1) laws that preclude an insurer or HMO from offering health insurance coverage under VHIAs; (2) laws that preclude an in- surer or HMO from setting premium rates under a VHIA based on the claims experience of the VHIA (except the VHIA’s premium rates could not vary on the basis of any par- ticular employer’s claims experience); (3) laws that require coverage in connection with a VHIA to include specific items or services of medical care or that require an insurer or HMO offering coverage in connec- tion with a VHIA to include specific item or services consisting of medical care, except to the extent that such state laws prohibit an exclusion for a specific disease in such cov- erage. This preemption of mandated benefits would apply only with respect to those items and services specified in a list which would be prescribed in regulations by the Secretary of Labor. In general, states would be able to apply their laws if they had in place guaranteed ac- cess measures meeting certain conditions. A state which certified to the Secretary that it provided ”guaranteed access” to health cov- erage could deny a VHIA the right to offer coverage in the small group market (or oth- erwise regulate such VHIA with respect to such coverage), except as described below. (The certification could not be in effect for more than 3 years.) A state would be considered to provide such guaranteed access, if (1) it certified that at least 90% of all state residents were cov- ered by a group health plan or otherwise had health insurance coverage, or (2) that it had, in the small group market, provided for guaranteed issue of at least one option of coverage and for small group rating reforms designed to make health insurance coverage more affordable. However, an exception to this provision would apply for certain large, multi-state arrangements that demonstrated to the Secretary that it met the following criteria. In other words, state laws would not apply if: (1) the VHIA sponsor operates in a majority of the 50 states and in at least 2 of the regions of the country; (2) the arrange- ment covers or will cover (in the case of new VHIAs) at least 7,500 participants and bene- ficiaries; and (3) under the terms of the ar- rangement, either the qualified association does not exclude from membership any small employer in the state, or the arrangement accepts every small employer in the state that applies for coverage. In addition, state laws would not apply in a state in which a VHIA operated on March 6, 1996 and under the terms of the arrangement, either the qualified association does not exclude from membership any small employer in the state, or the arrangement accepts every small em- ployer in the state that applies for coverage. CONGRESSIONAL RECORD \u2014 HOUSE H9531July 31, 1996 The exemption from state laws for multistate plans and existing plans would not apply to any state which, as of January 1, 1996, either (1) had enacted a law providing for guaranteed issue of fully community rated individual health insurance coverage offered by insurers and HMOs, or (2) required insurers offering group health coverage to reimburse insurers offering individual cov- erage for losses resulting from their offering individual coverage on an open enrollment basis. In other words, such states could apply their insurance laws. Senate amendment The Senate Amendment would provide that HPPCs that meet the requirements of this Act would be exempt from state ficti- tious group laws. A health plan issuer offering a group or in- dividual health plan through a HPPC meet- ing the requirements of this Act would be re- quired to comply with all otherwise applica- ble state rating requirements if the plan were to be offered outside the cooperative except a state would be required to permit an issuer to reduce its premiums negotiated with a HPPC to reflect savings derived from administrative costs, marketing costs, profit margins, economies of scale, or other fac- tors. However, such premium reductions could not be based on the health status, de- mographic factors, industry type, duration, or other indicators of risk of HPPC members. Health plan issuers offering coverage through the HPPC would be required to com- ply with state mandated benefit laws. How- ever, in states that have enacted laws au- thorizing alternative benefit plans for small employers, such issuers could offer such small employer plan through a HPPC. Conference agreement The conference agreement does not include the House or Senate provision. E. RULES OF CONSTRUCTION Current law No provision. House bill No provision. Senate amendment The Senate Amendment would provide that nothing in this section should be con- strued to: (1) require that a state organize, operate, or create HPPCs; (2) otherwise es- tablish HPPCs; (3) require individuals, plan sponsors, or employers to purchase coverage through a HPPC; (4) preempt a state from re- quiring licensure for individuals who are in- volved in directly supplying advice or selling health plans on behalf of a HPPC; (5) require that a HPPC be the only type of purchasing arrangement permitted to operate in a state; (6) confer authority upon a state that the state would not otherwise have to regulate health plan issuers or employee health bene- fit plans; (7) confer authority upon a state (or the federal government) that it would not otherwise have to regulate group purchasing arrangements, coalitions, association plans, or similar entities that do not desire to be- come a HPPC; or (8) except as specifically provided for above, prevent the application of state laws and regulations otherwise to health plan issuers offering coverage through a HPPC. Conference agreement The conference agreement does not include the Senate provision. F. ENFORCEMENT THROUGH ERISA Current law Part 4 of subtitle B of title I of ERISA pro- vides for fiduciary responsibilities, including the fiduciary duties of a plan sponsor and prohibited transactions; part 5 provides for administration and enforcement, including criminal and civil penalties. House bill The House bill contains no specific provi- sion (but as MEWAs, VHIAs would be subject to ERISA requirements including those re- lated to fiduciary responsibilities and admin- istration and enforcement, including en- forcement of the new VHIA rules as added by this subtitle.) Senate amendment The Senate Amendment would provide that for enforcement purposes only, that parts 4 and 5 of subtitle B of title I of ERISA apply to a HPPC as if such plan were an em- ployee benefit plan. Conference agreement The conference agreement does not include the Senate provision. IX. ADDITIONAL DEFINITIONS\/OTHER PROVISIONS Current law Section 3 of ERISA defines numerous terms relating to pension and employee wel- fare benefit plans. House bill The House bill: A. Defines the following terms: group health plan, including treatment of govern- mental and church plans, and defines Medic- aid, medicare, and the Indian Health Service programs as group health plans. B. Incorporates specific ERISA definitions such as beneficiary, participant, employee, and employer. C. Provides additional definitions includ- ing applicable state authority, bona fide as- sociation, COBRA continuation provision, health insurance coverage, health mainte- nance organization, health status, individual health insurance coverage, insurer, medical care network plan, and waiting period. D. Provides for the treatment of partner- ships. E. Provides definitions related to markets and small employers, including individual market, large group market, small employer and small group market. Senate bill The Senate Amendment: A. Defines an employee health benefit plan to include a governmental or church plan. An employee health benefit plan is not a group health plan, individual plan, or a health plan. Provides different definition for group health plan. B. Similarly incorporates many ERISA definitions such as that for beneficiary, par- ticipant, employee, and employer. C. Defines group purchaser and health plan issuer. Conference agreement The conference agreement: A. Defines under ERISA the following terms relating to health insurance: health insurance coverage, health insurance issuer, health maintenance organization, group health insurance coverage, and excepted ben- efits. Also defines placed for adoption. B. Defines under PHS Act the following terms relating to health insurance: health insurance coverage, health insurance issuer, health maintenance organization, group health insurance coverage, and excepted ben- efits. C. Defines under the PHS Act: state, appli- cable state authority, state law, beneficiary, and bona fide association. Also, provides definitions under the PHS Act relating to markets and small employers for: large group market, small employer, and small group market. D. Provides definitions under ERISA and the PHS Act relating to portability for: pre- existing condition exclusion, enrollment date, late enrollee, waiting period, creditable coverage, and affiliation period. E. Defines under ERISA and the PHS Act group health plan, medical care, COBRA con- tinuation provision, and health status-relat- ed factor. The definition of medical care is intended to parallel that of the IRC using current law, and is intended to be broad enough to encom- pass the services of Christian Science practi- tioners, nurses, and sanatoriums and nursing facilities. F. Amends ERISA to provide for the treat- ment of partnerships. G. Incorporated in the PHS Act specific ERISA definitions such as employee, em- ployer, beneficiary, church plan, govern- mental plan, participant, plan sponsor. H. Provides definitions under the PHS Act for federal governmental plan, nonfederal governmental plan, and placed for adoption. X. EFFECTIVE DATES Current law No provision. House bill The House bill, except as otherwise pro- vided, would apply with respect to (a) group health plans, and health insurance coverage offered in connection with group health plans, for plan years beginning on or after January 1, 1998; (b) individual health insur- ance coverage issued, renewed, in effect, or operated on or after July 1, 1998. The bill would require the Secretaries of HHS, Treas- ury, and Labor to jointly establish rules re- garding the treatment of certain coverage periods before the applicable effective dates, and would require the 3 Secretaries to issue such regulations on a timely basis. Senate amendment The Senate Amendment, except as other- wise provided, (a) with respect to group health plans, would apply to plans offered, sold, issued, renewed, in effect, or operated on or after January 1, 1997; (b) with respect to individual health plans, would apply to plans offered, sold, issued, renewed, in effect, or operated on or after the date that is 6 months after enactment or January 1, 1997, whichever is later; and (c) with respect to employee health benefit plans, would apply on the first day of the first plan year begin- ning on or after January 1, 1997, whichever is later. Conference agreement The conference agreement, except as oth- erwise provided, would apply with respect to (a) group health plans, and health insurance coverage offered in connection with group health plans, for plan years beginning after July 1, 1997; (b) individual health insurance coverage offered, sold, issued, renewed, in ef- fect, or operated after July 1, 1997. In gen- eral, group health plans and health plan issu- ers would be required to issue certifications of coverage for periods of coverage after July 1, 1996; actual certifications need not be is- sued before October 1, 1996. A special rule di- rects the Secretaries to provide for a process whereby individuals who need to establish creditable coverage for periods before July 1, 1996 may be given credit through the presen- tation of documents or other means. A spe- cial rule would apply to collective bargain- ing agreements. A good faith compliance provision is pro- vided with respect to a transition period. XI. HEALTH COVERAGE AVAILABILITY STUDIES Current law No provision. House bill No provision. Senate amendment The Senate Amendment would require the Secretary of HHS, in consultation with the Secretary of Labor, representatives of state CONGRESSIONAL RECORD \u2014 HOUSEH9532 July 31, 1996 officials, consumers, and other representa- tives of individuals and entities that have expertise in health insurance and employee benefits, to conduct a three-part study and prepare and submit reports. (A) By January 1, 1998, the Secretary would be required to prepare and submit to Congress an evalua- tion of the various mechanisms used to en- sure the availability of reasonably priced health coverage and whether standards that limit premium variations would further the purposes of this Act. (B) No later than Janu- ary 1, 1999, the Secretary would be required to prepare and submit to Congress a report concerning the effectiveness of provisions of the Act and various state laws in ensuring the availability of reasonably priced health coverage. (C) No later than January 1, 1998, the Secretary would be required to prepare and submit to Congress a report (1) evaluat- ing the extent to which patients have direct access to, and choice of, health care provid- ers, as well as the opportunity to utilize pro- viders outside of the network, under the var- ious types of coverage offered under the pro- visions of this Act; (2) evaluating the cost to the insurer of providing out-of-network ac- cess to providers and the feasibility of offer- ing out-of-network access under all plans of- fered under this Act; and (3) evaluating the percent of premium used for medical care ad- ministration of the various types of coverage offered. Conference agreement The conference agreement requires the Secretary of HHS, in consultation with the Secretary of Labor, representatives of state officials, consumers, and other representa- tives of individuals and entities that have expertise in health insurance and employee benefits, to conduct two studies by January 1, 2000. The first study, on the effectiveness of federal and state reforms, would examine the availability of reasonably priced health coverage to employers purchasing group cov- erage and individuals purchasing coverage on a non-group basis. The second study, on ac- cess and choice, would examine the extent to which patients have direct access to, and choice of, health care providers, including specialty providers, within a network plan, as well as the opportunity to use providers outside of the network plan, under the var- ious types of coverage offered under the pro- visions of this title. This study will also ex- amine the cost and cost-effectiveness to health insurance issuers of providing access to out-of-network providers, and the poten- tial impact of providing such access on the cost and quality of health insurance cov- erage offered under provisions of this title. XII. REIMBURSEMENT OF TELEMEDICINE Current law No provision. House bill No provision. Senate amendment The Senate amendment would direct the Health Care Financing Administration (HCFA) to complete its ongoing study of re- imbursement of all telemedicine services and submit a report to Congress with a proposal for reimbursement of fee-for-service medi- cine by March 1, 1997. The report would be required to use data compiled from the cur- rent demonstration projects already under review and gather data from other ongoing telemedicine networks, and include an anal- ysis of the cost of services provided via tele- medicine. Conference agreement The conference agreement directs the HCFA to complete its ongoing study of Medi- care reimbursement of all telemedicine serv- ices and submit a report to Congress on re- imbursement of telemedicine services by March 1, 1997. The report would be required to use data compiled from the current dem- onstration projects already under review and gather data from other ongoing telemedicine networks, include an analysis of the cost of services provided via telemedicine, and in- clude a proposal for Medicare reimbursement of telemedicine services. XIII. HMOS AND MEDICAL SAVINGS ACCOUNTS (MSAS) Current law Under the Public Health Service Act, fed- erally qualified HMOs may require enrollees to pay only nominal copayments and a rea- sonable deductible if services are obtained from an out-of-network provider. House bill No provision, but see Title III, Subtitle A on Medical Savings Accounts. Senate amendment The PHS Act would be amended to allow federally-qualified HMOs, at the request of the HMO member, to charge a deductible to the HMO member if he or she has an MSA. Provides that it is the sense of the Com- mittee on Labor and Human Resources that the establishment of MSAs should be encour- aged as part of any health insurance reform legislation passed by the Senate through the use of tax incentives relating to contribu- tions to, the income growth of, and the qualified use of, such accounts. Provides that it is the sense of the Senate that Congress should take measures to fur- ther the purposes of this Act, including any necessary changes to the Internal Revenue Code to encourage groups and individuals to obtain health coverage, and to promote ac- cess, equity, portability, affordability, and security of health benefits. Conference agreement The conference agreement amends the PHS Act to allow federally qualified HMOs to offer a high-deductible health plan as defined in the IRC. All other requirements of the fed- eral HMO Act remain in effect. XIV. VOLUNTEER SERVICES PROVIDED BY HEALTH PROFESSIONALS AT FREE CLINICS See report language for Title II. XV. FINDINGS; SEVERABILITY Current law No provision. House bill The House bill would provide that Congress finds: (1) that group health plans and health insurance coverage that impose preexisting conditions impact the ability of employees to seek employment in interstate commerce and thereby impedes such commerce; (2) that health insurance coverage is commercial in nature and is in and affects interstate com- merce; (3) that it is a necessary and proper exercise of congressional authority to im- pose requirements on group health plans and health insurance coverage to promote com- merce among states; and (4) that Congress intends however to defer to the states to the maximum extent practicable in carrying out requirements with respect to insurers and HMOs that are subject to state regulation, consistent with ERISA. Senate amendment The Senate Amendment would provide that if any provision of the Act or applica- tion of a provision of the Act to any person or circumstance is held to be unconstitu- tional, the remainder of the Act and the ap- plication of the provisions of such to any person or circumstances would not be af- fected. Conference agreement The conference agreement provides that Congress finds: (1) that group health plans and health insurance coverage that impose preexisting conditions impact the ability of employees to seek employment in interstate commerce and thereby impedes such com- merce; (2) that health insurance coverage is commercial in nature and is in and affects interstate commerce; (3) that it is a nec- essary and proper exercise of congressional authority to impose requirements under this title on group health plans and health insur- ance coverage, including coverage offered to individuals previously covered under group health plans, to promote commerce among states; and (4) that Congress intends to defer to the states, to the maximum extent prac- ticable, in carrying out such requirements with respect to insurers and HMOs that are subject to state regulation, consistent with ERISA. The conference agreement provides that if any provision of this title or application of such provision to any person or cir- cumstance is held to be unconstitutional, the remainder of this title and the applica- tion of the provisions of such to any person or circumstances would not be affected. XVI. COBRA CLARIFICATIONS Current law Title X of the Consolidated Omnibus Budg- et Reconciliation Act of 1985 (COBRA, P.L. 99 272) amends the Internal Revenue Code (IRC), ERISA, and the Public Health Service Act to require employers who provide group health plans with 20 or more employees to offer continuation coverage to employees and their dependents who experience specific qualifying events, including changes in job or family status. In general, when a covered employee experiences termination or reduc- tions in hours of employment, the continued coverage of the employee and any qualified beneficiaries is for 18 months. For other qualifying events (e.g., death, divorce, legal separation, and child turns age of majority under the plan), the duration of coverage is 3 years. The Omnibus Budget Reconciliation Act of 1989 (P.L. 10 239) provides that if a covered employee is determined to be dis- abled under the Social Security Act at the time in which he or she terminates or re- duces hours of employment, then the em- ployee is eligible for 29 months of continued coverage. House bill No provision. Senate amendment The Senate Amendment would amend the PHS Act, ERISA, and the IRC to provide for clarifications of COBRA continuation re- quirements. Provides that individuals who have disabled family members or who be- come disabled at any time during their cov- erage under an initial COBRA period (the first 18 months) be able to extend their cov- erage for the additional 11 month period cur- rently available only to workers who are dis- abled at the time they lose their coverage. Provides that newborns and children who are placed for adoption may be covered im- mediately under a parent’s COBRA policy. Conference agreement See Title IV, Subtitle B. XVII. SENSE OF THE COMMITTEE REGARDING MEDICARE Current law No provision. House bill No provision. Senate amendment The Committee on Labor and Human Re- sources notes that the Medicare trustees concluded in their 1995 report that: (i) the Medicare program is unsustainable in its present form; (ii) that the hospital insurance CONGRESSIONAL RECORD \u2014 HOUSE H9533July 31, 1996 trust fund will only be able to pay for bene- fits for about 7 years and is severely out of financial balance in the long run; and (iii) the Public Trustees recommended that the problems be urgently addressed on a com- prehensive basis including a review of the program’s financing methods, benefit provi- sions, and delivery mechanisms. The provi- sion expresses the sense of the Committee that the Senate should take up measures necessary to reform the Medicare program, to provide increased choice for seniors, and to respond to the findings of the Public Trustees by protecting the short term sol- vency and long-term sustainability of the Medicare program. Conference agreement The conference agreement does not include the Senate provision. XVIII. PARITY FOR MENTAL HEALTH SERVICES Current law No provision. House bill No provision. Senate amendment The Senate Amendment would prohibit an employee health benefit plan, or a health plan issuer offering a group health plan or individual health plan from imposing treat- ment limitations or financial requirements on the coverage of mental health services if similar requirements are not imposed on coverage for services for other conditions. It would provide for a rule of construction that the preceding should not be construed as prohibiting an employee health benefit plan or a health plan issuer offering a group or individual health plan from requiring preadmission screening prior to the author- ization of services covered under the plan or from applying other limitations that restrict coverage for mental health services to those services that are medically necessary. Conference agreement The conference agreement does not include the Senate provision. XIX. WAIVER OF FOREIGN COUNTRY RESIDENCE WITH RESPECT TO INTERNATIONAL MEDICAL GRADUATES Current law The Immigration and Nationality Tech- nical Corrections Act of 1994 provides for a waiver of the requirement that non- immigrant international medical graduates entering as J exchange visitors return to their country of nationality for two years before being eligible to return to the U.S. The provision applies to aliens admitted to the U.S. before June 1, 1996. House bill No provision. Senate bill The Senate Amendment would extend waivers for the requirement that non- immigrant international medical graduates entering as J exchange visitors return to their country of nationality for two years before being eligible to return to the U.S. through June 1, 2002. It would amend provisions related to feder- ally requested waivers requested by an inter- ested U.S. agency on behalf of certain aliens. Conference agreement The conference agreement does not include the Senate provision. XX. ORGAN AND TISSUE DONATION INFORMA- TION INCLUDED WITH INCOME TAX REFUND PAYMENTS Current law No provision. House bill No provision. Senate bill The Senate Amendment would require the Secretary of Treasury to include with any payment of a refund of individual income tax made during the period beginning on Feb- ruary 1, 1997 through June 30, 1997, a copy of the document developed in consultation with the Secretary of HHS and organizations pro- moting organ and tissue donation which en- courages organ and tissue donation. The doc- ument would also include a detachable organ and tissue donor card, and would urge recipi- ents to sign the card, discuss organ and tis- sue donations with family members, and en- courage family members to request or au- thorize organ and tissue donation if the oc- casion arises. Conference agreement The conference agreement does not include the Senate provision. XXI. SENSE OF THE SENATE REGARDING ADE- QUATE HEALTH CARE COVERAGE FOR ALL CHILDREN AND PREGNANT WOMEN Current law No provision. House bill No provision. Senate amendment The Senate Amendment provides that the Senate finds that the health care coverage of mothers and children in the United States is unacceptable, with more than 9.3 million children and 500,000 expectant mothers hav- ing no health insurance, in addition to there being high levels of infant and maternal mortality and other enumerated indicators of inadequate access to care. The Senate Amendment provides that it is the sense of the Senate that the issue of ade- quate health care for our mothers and chil- dren is important to the future of the United States, and in consideration of the impor- tance of such issue, the Senate should pass health care legislation that will ensure health care coverage for all of the United States’ pregnant women and children. Conference agreement The conference agreement does not include the Senate provision. XXII. SENSE OF THE SENATE REGARDING AVAILABLE TREATMENTS Current law No provision. House bill No provision. Senate amendment The Senate Amendment provides that it is the sense of the Senate that patients deserve to know the full range of treatments avail- able to them and Congress should thought- fully examine these issues to ensure that all patients get the care they deserve. Conference agreement The conference agreement does not include the Senate provision. XXIII. RULE OF CONSTRUCTION Current law No provision. House bill The House bill would provide that nothing in this title or any amendment made by it may be construed to require (or to authorize any regulation that requires) the coverage of any specific procedure, treatment, or service under a group health plan or health insur- ance coverage. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision, but see section III(E). TITLE II\u2014PREVENTING HEALTH CARE FRAUD AND ABUSE: ADMINISTRATIVE SIMPLIFICATION; MEDICAL LIABILITY REFORM 1. Fraud and abuse control program (Subtitle A of title II of the House bill; title V of the Senate amendment.) I. IN GENERAL A. FRAUD AND ABUSE CONTROL PROGRAM (Section 201 of the House bill; section 501 of the Senate amendment.) Current law Currently, the investigation and prosecu- tion of fraud related to Federal health pro- grams is the responsibility of the Depart- ment of Health and Human Services (DHHS), the FBI and the Department of Justice. The DHHS Office of Inspector General inves- tigates Federal cases of fraud regarding Med- icare, Medicaid, and the Maternal and Child Health Block Grant programs and is author- ized by the Secretary to impose civil mone- tary penalties and program exclusions on fraudulent providers. The FBI can inves- tigate both Federal and private payer cases of fraud but cannot impose sanctions. Both the Office of Inspector General and the FBI refer investigative findings to the Depart- ment of Justice which may prosecute per- sons for violations of federal criminal laws. State Medicaid fraud control units are re- sponsible for the investigation, prosecution, or referral for prosecution, of fraudulent ac- tivities associated with State Medicaid pro- grams. House bill The Secretary of the Department of Health and Human Services (acting through the Of- fice of the Inspector General) and the Attor- ney General would be required to jointly es- tablish a national health care fraud and abuse control program to coordinate Fed- eral, State and local law enforcement to combat fraud with respect to health plans. To facilitate the enforcement of this fraud and abuse control program the Secretary and Attorney General would be authorized to conduct investigations, audits, evaluations and inspections relating to the delivery of and payment for health care, and would be required to arrange for the sharing of data with representatives of public and private third party payers. This program, imple- mented by guidelines issued by the Secretary and the Attorney General, would also facili- tate the enforcement of applicable Federal statutes relating to health care fraud and abuse, and would provide for the provision of guidance to health care providers through the issuance of safe harbors, advisory opin- ions and special fraud alerts. The Secretary and Attorney General would consult with and share data with representa- tives of health plans. Guidelines issued by the Secretary and Attorney General would ensure the confidentiality of information furnished by health plans, providers and oth- ers, as well as the privacy of individuals re- ceiving health care services. The Inspector General would retain all current authorities. For purposes of this section the term ”health plan” means a plan or program that provides health benefits through insurance or otherwise. Such plans include health in- surance policies, contracts of service benefit organizations, and membership agreements with health maintenance organizations or other prepaid health plans. The Health Care Fraud and Abuse Control Account would be established as an expendi- ture account within the Federal Hospital In- surance (HI) Trust Fund. Amounts equal to monies derived from the coordinated health care anti-fraud and abuse programs from the imposition of civil money penalties, fines, CONGRESSIONAL RECORD \u2014 HOUSEH9534 July 31, 1996 forfeitures and damages assessed in criminal, civil or administrative health care cases, along with any gifts or bequests would be transferred into the Medicare HI trust fund from the U.S. Treasury. There are appro- priated from the HI trust fund to the Ac- count such sums as the Secretary and the Attorney General certify are necessary to carry out certain functions, subject to speci- fied limits to each fiscal year beginning with 1997. There would be appropriated from the gen- eral fund of the U.S. Treasury to the Fraud and Abuse Account for transfer to the FBI certain funds, subject to fiscal year limita- tions, for specified functions. These func- tions include prosecuting health care mat- ters, investigations, audits of health care programs and operations, inspections and other evaluations, and provider and consumer education regarding compliance with fraud and abuse provisions. Specified amounts in the Account would also be avail- able to carry out the Medicare Integrity Pro- gram. The Secretary and the Attorney Gen- eral would be required to submit a joint an- nual report to Congress on the revenues and expenditures, and the justification for such disbursements from the Health Care Fraud and Abuse Control Account. Senate amendment Similar. Conference agreement The conference agreement includes the House provision with an amendment adding a requirement that the Comptroller General submit to Congress a report for certain fiscal years regarding amounts deposited in the Hospital Insurance Trust Fund under this section. The conference agreement also in- cludes a provision regarding the availability of recoveries and forfeitures for purposes of certain provisions of the Employee Retire- ment Income Security Act of 1974. B. MEDICARE INTEGRITY PROGRAM (Section 202 of the House bill; section 502 of the Senate amendment.) Current law Currently Medicare’s program integrity functions are subsumed under Medicare’s general administrative budget. These func- tions are performed, along with general claims processing functions, by insurance companies under contract with the Health Care Financing Administration. House bill Establishes a Medicare Integrity Program under which the Secretary would promote the integrity of the Medicare program by en- tering into contracts with eligible private entities to carry out certain activities. These activities would include the following: (1) review of activities of providers of serv- ices or other individuals and entities furnish- ing items and services for which payment may be made under the Medicare program, including medical and utilization review and fraud review, (2) audit of cost reports, (3) de- terminations as to whether payment should not be, or should not have been, made by rea- son of Medicare as secondary payor provi- sions and recovery of payments that should not have been made, (4) education of provid- ers of services, beneficiaries and other per- sons with respect to payment integrity and benefit quality assurance issues, and (5) de- veloping and updating a list of durable medi- cal equipment pursuant to section 1834(a)(15) of the Social Security Act. An entity is eligi- ble to enter into a contract under this pro- gram if it meets certain requirements, in- cluding demonstrating to the Secretary that the entity’s financial holdings, interests, or relationships will not interfere with its abil- ity to perform the required functions. Senate amendment Similar except for differences in applicable conflict of interest requirements with regard to entities eligible to enter into contracts under this program. Conference agreement The conference agreement includes the House provision with a modification of the applicable conflict of interest requirements for eligible entities and assurance that cur- rent contractors meeting applicable require- ments may compete for contracts on new program integrity activities. C. BENEFICIARY INCENTIVE PROGRAMS (Section 203 of the House bill; section 503 of the Senate amendment.) Current law No provision. House bill The Secretary would be required to provide an explanation of Medicare benefits with re- spect to each item or service for which pay- ment may be made, without regard to wheth- er a deductible or coinsurance may be im- posed with respect to the item or service. This provision would require the Sec- retary, within three months after enactment of this bill, to establish a program to encour- age individuals to report to the Secretary in- formation on individuals and entities who are engaging or who have engaged in acts or omissions that constitute grounds for sanc- tions under sections 1128, 1128A, or 1128B of the Social Security Act, or who have other- wise engaged in fraud and abuse against the Medicare program. If an individual reports information to the Secretary under this pro- gram that serves as a basis for the collection by the Secretary or the Attorney General of any amount of at least $100 (other than amounts paid as a penalty under section 1128B), the Secretary may pay a portion of the amount collected to the individual, under procedures similar to those applicable under section 7623 of the Internal Revenue Code of 1986. The Secretary would be required, within three months after enactment of this bill, to establish a program to encourage individuals to submit to the Secretary suggestions on methods to improve the efficiency of the Medicare program. If the Secretary adopts a suggestion and savings to the program re- sult, the Secretary would make a payment to the individual of an amount the Secretary considers appropriate. Senate amendment Identical. Conference agreement The conference agreement includes the House provision. D. APPLICATION OF CERTAIN HEALTH ANTI- FRAUD AND ABUSE SANCTIONS TO FRAUD AND ABUSE AGAINST FEDERAL HEALTH CARE PRO- GRAMS (Section 204 of the House bill; section 504 of the Senate amendment.) Current law Section 1128B provides for certain criminal penalties for convictions of Medicare and Medicaid (and certain other state health care programs) program-related fraud. House bill This provision would extend certain crimi- nal penalties for fraud and abuse violations under the Medicare and Medicaid programs to similar violations in Federal health care programs generally. The term ”Federal health care program” would mean any plan or program that provides health benefits, whether directly, through insurance, or oth- erwise which is funded directly, in whole or in part by the United States Government (other than the Federal Employee Health Benefit Program, Chapter 89 of Title 5 of the United States Code). The term also would in- clude any state health care program, which under section 1128(h), includes Medicaid, the Maternal and Child Health Services Block Grant Program and the Social Services Block Grant Program. Senate amendment Identical. Conference agreement The conference agreement includes the House provision. E. GUIDANCE REGARDING APPLICATION OF HEALTH CARE FRAUD AND ABUSE SANCTIONS (Section 205 of House bill, section 505 of Senate amendment.) Current law The 1987 Medicare and Medicaid Patient and Program Protection Act specified var- ious payment practices which, although po- tentially capable of including referrals of business under Medicare or State health care programs, are protected from criminal pros- ecution or civil sanction under the anti- kickback provisions of the law. The 1987 law also established authority for the Secretary to promulgate regulations specifying addi- tional payment practices, known as ”safe harbors,” which will not be subject to sanc- tions under the fraud and abuse provisions. House bill The Secretary would publish an annual no- tice in the Federal Register soliciting pro- posals for modifications to existing safe har- bors and new safe harbors. After considering such proposals the Secretary, in consulta- tion with the Attorney General, would issue final rules modifying existing safe harbors and establishing new safe harbors, as appro- priate. The Inspector General would submit an annual report to Congress describing the proposals received, as well as the action taken regarding the proposals. The Sec- retary, in considering proposals, may con- sider a number of factors including the ex- tent to which the proposals would affect ac- cess to health care services, quality of care services, patient freedom of choice among health care providers, competition among health care providers, ability of health care facilities to provide services in medically un- derserved areas or to medically underserved populations, and the like. The Secretary of Health and Human Serv- ices would publish the first notice in the Federal Register soliciting proposals for new or modified safe harbors no later than Janu- ary 1, 1997. The Secretary would issue written advi- sory opinions regarding what constitutes prohibited remuneration under section 1128B(b), whether an arrangement or pro- posed arrangement satisfies the criteria for activities which do not result in prohibited remuneration, what constitutes an induce- ment to reduce or limit services to individ- uals entitled to benefits, and, whether an ac- tivity constitutes grounds for the imposition of civil or criminal sanctions under sections 1128, 1128A or 1128B. Advisory opinions would be binding as to the Secretary and the party requesting the opinion. Any person would be able to request the Inspector General to issue a special fraud alert informing the public of practices which the Inspector General considers to be suspect or of particular concern under the Medicare program or a State health care program, as defined in section 1128(h) of the Social Secu- rity Act. After investigation of the subject matter of the request, and, if appropriate, the Inspector General would issue a special fraud alert in response to the request, pub- lished in the Federal Register. CONGRESSIONAL RECORD \u2014 HOUSE H9535July 31, 1996 Senate amendment Identical to the House bill provisions re- garding the issuance of safe harbors and spe- cial fraud alerts. However, provides for the issuance of ”interpretative rulings” instead of ”advisory opinions” by the Secretary. Conference agreement The conference agreement includes the House provision with modifications to the advisory opinion provisions. The Secretary will be required to issue to a party request- ing an advisory opinion within 60 days and the advisory opinion provisions will apply to requests made for opinions on or after the date which is 6 months after the date of en- actment of this section and before the date which is 4 years after such date of enact- ment. II. REVISION TO CURRENT SANCTIONS FOR FRAUD AND ABUSE (Subtitle B of the House bill; subtitle B of the Senate amendment.) A. MANDATORY EXCLUSION FROM PARTICIPATION IN MEDICARE AND STATE HEALTH CARE PRO- GRAMS (Section 211 of the House bill; section 511 of the Senate amendment.) Current law Section 1128 of the Social Security Act au- thorizes the Secretary to impose mandatory and permissive exclusions of individuals and entities from participation in the Medicare program, Medicaid program and programs receiving funds under the Maternal and Child Health Service Block Grant, or the Social Services Block Grant. Mandatory exclusions are authorized for convictions of criminal of- fenses related to the delivery of health care services under Medicare and State health care programs, as well as for convictions re- lating to patient abuse in connection with the delivery of a health care item or service. In the case of an exclusion under the manda- tory exclusion authority the minimum pe- riod of exclusion could be no less than 5 years, with certain exceptions. Permissive exclusions are authorized for a number of of- fenses relating to fraud, kickbacks, obstruc- tion of an investigation, and controlled sub- stances, and activities relating to license revocations or suspensions, claims for exces- sive charges or unnecessary services, and the like. Thee are no specified minimum periods of exclusion under the permissive exclusion authority. Under Section 1128A of the Social Security Act civil monetary penalties may be imposed for false and fraudulent claims for reim- bursement under the Medicare and State health care programs. Under section 1128B, upon conviction of a program-related felony, an individual may be fined not more than $25,000 or imprisoned for not more than five years, or both. House bill The provision would require the Secretary to exclude individuals and entities from Medicare and State health care programs who have been convicted of felony offenses relating to health care fraud for a minimum five year period. The Secretary would also retain the discretionary authority to exclude individuals from Medicare and State health care programs who have been convicted of misdemeanor criminal health care fraud of- fenses, or who have been convicted of a criminal offense relating to fraud, theft, em- bezzlement, breach of fiduciary responsibil- ity, or other financial misconduct in pro- grams (other than health care programs) funded in whole or part by any Federal, State or local agency. The Secretary would also be required to exclude individuals and entities from Medi- care and State health care programs who have been convicted of felony offenses relat- ing to controlled substances for a minimum five year period. The Secretary would retain the discretionary authority to exclude indi- viduals from Medicare and State health care programs who have been convicted of mis- demeanor offenses relating to controlled sub- stances. Senate amendment Identical. Conference agreement The conference agreement includes the House provision. B. ESTABLISHMENT OF MINIMUM PERIOD OF EX- CLUSION FOR CERTAIN INDIVIDUALS AND ENTI- TIES SUBJECT TO PERMISSIVE EXCLUSION FROM MEDICARE (Section 212 of the House bill; section 512 of the Senate amendment.) Current law See above. House bill This section would establish a minimum period of exclusion for certain permissive ex- clusions from participation in Medicare and State health care programs. For convictions of misdemeanor criminal health care fraud offenses, criminal offenses relating to fraud in non-health care Federal or State programs, convictions relating to obstruction of an investigation of health care fraud offenses, and convictions of mis- demeanor offenses relating to controlled sub- stances, the minimum period of exclusion would be three years, unless the Secretary determines that a longer or shorter period is appropriate, due to aggravating or mitigat- ing circumstances. For permissive exclusions from Medicare or State health care programs due to the revocation or suspension of a health care li- cense of an individual or entity, the mini- mum period of exclusion would not be less than the period during which the individual’s or entity’s license was revoked or suspended. For permissive exclusions from Medicare or State health care programs due to exclu- sion from any Federal health care program or State health care program for reasons bearing on an individual’s or entity’s profes- sional competence of financial integrity, the minimum period of exclusion would not be less than the period the individual or entity is excluded or suspended from a Federal or State health care program. For permissive exclusions from Medicare or State health care programs due to a deter- mination by the Secretary that an individual or entity has furnish items or services to pa- tients substantially in excess of the needs of such patients or of a quality which fails to meet professionally recognized standards of health care, the period of exclusion would be not less than one year. Senate amendment Identical. Conference agreement The conference agreement includes the House provision. C. PERMISSIVE EXCLUSION OF INDIVIDUALS WITH OWNERSHIP OR CONTROL INTEREST IN SANC- TIONED ENTITIES (Section 213 of the House bill; section 513 of the Senate amendment.) Current law See above. House bill Under this provision an individual who has a direct or indirect ownership or control in- terest in a sanctioned entity and who knows or should know of the action constituting the basis for the conviction or exclusion, or who is an officer or managing employee of such an entity, may also be excluded from participation in Medicare and State health care programs by the Secretary if the entity has been convicted of an offense listed in sec- tion 1129(a) or (b)(1), (2) or (3) or otherwise excluded from program participation. Under this provision, the culpable individual would also be subject to program exclusion, even if not initially convicted or excluded. Senate amendment Identical. Conference agreement The conference agreement includes the House provision. D. SANCTIONS AGAINST PRACTITIONERS AND PERSONS FOR FAILURE TO COMPLY WITH STATUTORY OBLIGATIONS (Section 214 of the House bill; section 514 of the Senate amendment.) Current law See above. House bill Under this provision the Secretary may ex- clude a practitioner or person who has failed to comply with certain statutory obligations relating to quality of health care for such pe- riod as the Secretary may prescribe, except that such period shall be not less than one year. The Secretary, in making his determina- tion that a practitioner or person should be sanctioned for failure to comply with certain statutory obligations relating to quality of health care, will no longer be required to prove that the individual was either unwill- ing or unable to comply with such obliga- tions. Senate amendment Identical. Conference agreement The conference agreement includes the House provision. E. INTERMEDIATE SANCTIONS FOR MEDICARE HEALTH MAINTENANCE ORGANIZATIONS (Section 215 of the House bill; section 515 of the Senate amendment.) Current law A contract between the Secretary and a Medicare Health Maintenance Organization (HMO) is generally for a 1 year term, with an option for automatic renewal. However, the Secretary may terminate any such contract at any time, after reasonable notice and an opportunity for a hearing, if the Medicare HMO has failed substantially to carry out the contract, or is carrying out the contract in a manner inconsistent with the efficient and effective administration of the require- ments of section 1876 of the Social Security Act, or if the Medicare HMO no longer sub- stantially meets the statutory requirements contained in Section 1876(b), (c), (e) and (f). House bill Under this section the Secretary may ter- minate a contract with a Medicare Health Maintenance Organization (HMO) or may im- pose certain intermediate sanctions on the organization if the Secretary determines that the Medicare HMO has failed substan- tially to carry out the contract; is carrying out the contract in a manner substantially inconsistent with the efficient and effective administration of this section; or, if the Medicare HMO no longer substantially meets the statutory requirements contained in Sec- tion 1876(b), (c), (e) and (f) of the Social Secu- rity Act. If the basis for the determination by the Secretary that intermediate sanctions should be imposed on an eligible organiza- tion is other than that the organization has failed substantially to carry out its contract with the Secretary, then the Secretary may CONGRESSIONAL RECORD \u2014 HOUSEH9536 July 31, 1996 apply intermediate sanctions as follows: civil money penalties of not more than $25,000 for each determination if the defi- ciency that is the basis of the determination has directly adversely affected (or has the substantial likelihood of adversely affecting) an individual covered under the organiza- tion’s contract; civil money penalties or not more than $10,000 for each week of a continu- ing violation; and suspension of enrollment of individuals until the Secretary is satisfied that the deficiency has been corrected and is not likely to recur. Whenever the Secretary seeks to either terminate a Medicare HMO contract or im- pose intermediate sanctions on such an orga- nization, the Secretary must do so pursuant to a formal investigation and under compli- ance procedures which provide the organiza- tion with a reasonable opportunity to de- velop and implement a corrective action plan to correct the deficiencies that were the basis of the Secretary’s adverse determina- tion. In making a decision whether to impose sanctions the Secretary is required to con- sider aggravating factors such as whether an entity has a history of deficiencies or has not taken action to correct deficiencies the Secretary has brought to their attention. The Secretary’s compliance procedures must also include notice and opportunity for a hearing (including the right to appeal an ini- tial decision) before the Secretary imposes any sanction or terminates the contract of a Medicare HMO, and there must not be any unreasonable or unnecessary delay between the finding of a deficiency and the imposi- tion of sanctions. Under this section each risk-sharing con- tract with a Medicare HMO must provide that the organization will maintain a writ- ten agreement with a utilization and quality control peer review organization or similar organization for quality review functions. The amendments made by this section would apply to contract years beginning on or after January 1, 1996. Senate amendment Same as the House bill provision except specifies a different effective date, i.e., Janu- ary 1, 1997. Conference agreement The Conference agreement includes the House provision, but with an effective date of January 1, 1997. F. ADDITIONAL EXCEPTION TO ANTI-KICKBACK PENALTIES FOR RISK-SHARING ARRANGEMENTS (Section 216 of the House bill; section 516 of the Senate amendment,) Current law The anti-kickback provision in section 1128B(b) contains several exceptions. These exceptions include discounts or other reduc- tions in price obtained by a provider of serv- ices or other entity under Medicare or a State health care program if the reduction in price is properly disclosed and appropriately reflected in the costs claimed or charges made by the provider or entity under Medi- care or a State health care program; any amount paid by an employer to an employee for employment in the provision of covered items or services; any amount paid by a ven- dor of goods or services to a person author- ized to act as a purchasing agent for a group of individuals or entities under specified con- ditions; a waiver of any co-insurance under Part B of Medicare by a federally qualified health care center with respect to an individ- ual who qualifies for subsidized services under a provision of the Public Health Serv- ice Act; and any payment practice specified by the Secretary as a safe harbor exception. House bill This section would add a new exception to the anti-kickback provisions allowing remu- neration between an eligible organization under section 1876 and an individual or en- tity providing items or services pursuant to a written agreement between an eligible or- ganization under section 1876 and the indi- vidual or entity. Remuneration would also be allowed between an organization and an individual or entity if a written agreement places the individual or entity at substantial financial risk for the cost or utilization of the items or services which the individual or entity is obligated to provide. The risk ar- rangement may be provided through a with- hold, capitation, incentive pool, per diem payment or other similar risk arrangement. This amendment would apply to acts of omissions occurring after January 1, 1997. Senate amendment Similar. However, the House provision spe- cifically lists two permissible risk arrange- ments, i.e., incentive pools, and per diem payments, which are not listed in the Senate provision, and the Senate provision provides for the issuance of regulations by the Sec- retary, in consultation with the Attorney General, to define substantial financial risk as necessary to protect program or patient abuse. Conference agreement The conference agreement includes the House provision with modifications to the definition of allowable remuneration. In ad- dition, the conference agreement adds a pro- vision setting forth a negotiated rulemaking process for standards relating to the new ex- ception to the anti-kickback penalties added by this section. G. CRIMINAL PENALTY FOR FRAUDULENT DIS- POSITION OF ASSETS IN ORDER TO OBTAIN MEDICAID BENEFITS (Section 217 of the House bill.) Current law Under section 1128B, upon conviction of a program-related felony, an individual may be fined not more than $25,000 or imprisoned for not more than five years or both. House bill This provision would add a new crime to the list of prohibited activities under section 1128B of the Social Security Act for cases where a person knowingly and willfully dis- poses of assets by transferring assets in order to become eligible for benefits under the Medicaid program, if disposing of the as- sets results in the imposition of a period of ineligibility. Senate amendment No provision. Conference agreement The conference agreement includes the House provision. III. DATA COLLECTION (Subtitle C of the House bill; subtitle C of the Senate amendment.) A. ESTABLISHMENT OF THE HEALTH CARE FRAUD AND ABUSE DATA COLLECTION PROGRAM (Section 221 of the House bill; section 521 of the Senate amendment.) Current law No provision. House bill The Secretary of Health and Human Serv- ices would be required to establish a national health care fraud and abuse data collection program for reporting final adverse actions (not including settlements in which no find- ings of liability have been made) against health care providers, suppliers, or practi- tioners. Each government agency and health plan would, on a monthly basis, report any final adverse action taken against a health care provider, supplier, or practitioner. Certain information would be included in the report, including a description of the acts or omis- sions and injuries upon which the final ad- verse action was taken. The Secretary would, however, protect the privacy of indi- viduals receiving health care services. The Secretary would, by regulation, pro- vide for disclosure of the information about adverse actions, upon request, to the health care provider, supplier, or licensed practi- tioner and provide procedures in the case of disputed accuracy of the information. Each government agency and health plan is re- quired to report corrections of information already reported about any final adverse ac- tion taken against a health care provider, supplier, or practitioner in such form and manner that the Secretary prescribes by reg- ulation. The information in the database would be available to Federal and State government agencies and health plans. The Secretary may approve reasonable fees for the disclo- sure of information in the data base (other than with respect to requests by Federal agencies). The amount of such a fee shall be sufficient to recover the full costs of operat- ing the data base. No person or entity would be held liable in any civil action with respect to any report made as required by this section, unless the person or entity knows the information is false. The Secretary may impose appropriate fees on physicians to cover the costs of in- vestigation and recertification activities with respect to the issuance of identifiers for physicians who furnish services for which Medicare payments are made. Senate amendment Similar with one additional provision re- quiring that the Secretary implement this section in such a manner as to avoid duplica- tion with the reporting requirements estab- lished for the National Practitioner Data Bank. Conference agreement The conference agreement includes the House provision with a modification direct- ing the Secretary to implement this section so as to avoid duplication with the reporting requirements of the National Practitioner Data Bank under the Health Care Quality Improvement Act of 1986. IV. CIVIL MONETARY PENALTIES (Subtitle D of the House bill; subtitle D of the Senate amendment.) A. SOCIAL SECURITY ACT CIVIL MONETARY PENALTIES (Section 231 of the House bill; section 531 of the Senate amendment.) Current law Under Section 1128A of the Social Security Act civil monetary penalties may be imposed for false and fraudulent claims for reim- bursement under the Medicare and State health care programs. House bill The Medicare and Medicaid program provi- sions providing for civil monetary penalties for specified fraud and abuse violations would apply to similar violations involving other Federal health care programs. Federal health care programs would include any health insurance plans or programs funded, in whole or part, by the Federal government, such as CHAMPUS. Civil monetary penalties and assessments received by the Secretary would be deposited into the Health Care Fraud and Abuse Control Account estab- lished under this Act. Any person who has been excluded from participating in Medicare or a State health care program and who retains a direct or in- direct ownership or control interest in an en- tity that is participating in a program under CONGRESSIONAL RECORD \u2014 HOUSE H9537July 31, 1996 Medicare or a State health care program, and who knows or should know of the action constituting the basis for the exclusion, or who is an officer or managing employee of such an entity, would be subject to a civil monetary penalty of not more than $10,000 for each day the prohibited relationship oc- curs. Amends the civil monetary penalty provi- sions of Section 1128A(a) by increasing the amount of a civil money penalty from $2,000 to $10,000 for each item or service involved. Also increases the assessment which a per- son may be subject to from ”not more than twice the amount” to ”not more than three times the amount” claimed for each such item or service in lieu of damages sustained by the United States or a State agency be- cause of such claim. Adds two practices to the list of prohibited practices for which civil money penalties may be assessed. The first occurs when a per- son engages in a pattern or practice of pre- senting a claim for an item or service based on a code that the person knows or should know will result in greater payments than appropriate. The second is the practice whereby a person submits a claim or claims that the person knows or should know is for a medical item or service which is not medi- cally necessary. The sanction against practitioners and per- sons who fail to comply with certain statu- tory obligations is changed from an amount equal to ”the actual or estimated cost” of the medically improper or unnecessary serv- ices provided, to ”up to $10,000 for each in- stance of medically improper or unnecessary services provided. The procedural provisions outlined in Sec- tion 1128A, such as notice, hearings, and ju- dicial review rights, would apply to civil monetary penalties assessed against Medi- care Health Maintenance Organizations in the same manner as they apply to civil mon- etary penalties assessed against health care providers generally. This provision also adds a new practice to the list of prohibited practices for which civil monetary penalties could be assessed. Any person who offers remuneration to an individual eligible for benefits under Medi- care or a State health care program that such individual knows or should know is likely to influence such individual to order or received from a particular provider, prac- titioner or supplier any item or service reim- bursable under Medicare or a State health care program would be subject to the various civil monetary penalties, assessments and exclusion provisions of section 1128A of the Social Security Act. The term ”remuneration” is defined to in- clude the waiver of part or all of coinsurance and deductible amounts, as well as transfers of items or services for free, or for other than fair market value. There would be ex- ceptions to this definition. The waiver of part or all of coinsurance and deductible amounts would not be considered remunera- tion under this section if the waiver is not offered as part of any advertisement or solic- itation, the person does not routinely waive coinsurence or deductible amounts, and the person either waives the coinsurance and de- ductible amounts because the individual is in financial need, or fails to collect the amounts after reasonable collection efforts, or provides for a permissible waiver under regulations issued by the Secretary. In addi- tion, the term remuneration would not in- clude differentials in coinsurance and de- ductible amounts as part of a benefit plan design if the differentials have been disclosed in writing to all beneficiaries, third party payors, and providers, and if the differentials meeting the standards defined in the Sec- retary’s regulations. Remuneration would also not include incentives given to individ- uals to promote the delivery of preventive care under the Secretary’s regulations. The effective date of these provisions is January 1, 1997. Senate amendment Identical. Conference agreement The conference agreement includes the House provision. The conferees do not intend that the language of section 231(d) create any new standard for coverage of a claim. The intent is to assure that a proper evalua- tion by a practitioner is completed and evi- dence of treatment need is established before services are delivered for which claims are submitted. The conferees recognize that under current law the reasonableness of a service provided by a non-medical practi- tioner, including a practitioner of alter- native medicine, in judged by the application of principles particular to such non-medical health care professions. For example, the provision and reasonableness of chiropractic services under Medicare is judged by the ap- plication of chiropractic principles. There is significant concern regarding the impact of the anti-fraud provisions on the practice of complementary or alternative medicine and health care. The practice of complementary or alternative medical or health care practice itself would not con- stitute fraud. The conferees do not intend to penalize the exercise of medical judgment of health care treatment choices made in good faith and which are supported by significant evidence or held by a respectable minority of those providers who customarily provide similar methods of treatment. The Act is not in- tended to penalize providers simply because of a professional difference of opinion regard- ing diagnosis or treatment. A sanction is not intended for providers who submit claims they know will not be considered reimbursable as medically nec- essary services, but who are required to sub- mit the claims because their patients need to document that Medicare will not reimburse the service. In submitting such claims, pro- viders shall notify carriers that a claim is being submitted solely for purpose of seeking reimbursement from secondary payers. Moreover, the conferees intend that a pen- alty will be imposed on presentation of a claim that is false or fraudulent. No sanction is intended for providers who simply inform beneficiaries that are particular service is not covered by Medicare. Moreover, nothing in this section is intended to supersede the limitation on liability provisions established under Section 1879 of the Social Security Act. In addition, the conferees intend, with re- spect to allowable remuneration, that this provision not preclude the provision of items and services of nominal value, including, for example, refreshments, medical literature, complimentary local transportation serv- ices, or participation in free health fairs. B. CLARIFICATION OF LEVEL OF INTENT REQUIRED FOR IMPOSITION OF SANCTIONS (Section 232 of the House bill.) Current law Civil monetary penalties may be imposed for seeking reimbursement under the Medi- care and Medicaid programs for items of services not provided or for services provided by someone who is not a licensed physician, whose license was obtained through mis- representation, or who misrepresented his or her qualification as a specialist, or where the claim is otherwise fraudulent. Civil penalties may also be sought for presenting a claim due for payments which are in violation of (1) contracts payment due to assignment of a patient, (2) agreements with state agencies limiting permitted charges, (3) agreements with participating physicians or suppliers, and (4) agreements with providers of serv- ices. Civil monetary penalties may also be sought against persons who provide false or misleading information that could reason- ably be expected to influence a decision to discharge a person from a hospital. A person is subject to these provisions if he or she pre- sented a claim and he or she ”knows or should have known” that the claim fell into one of the categories listed above. House bill This provision adds a requirement, similar to the False Claims Act, that a person is sub- ject to this provision when the person ”knowingly” presents a claim that the per- son ”knows or should know” falls into one of the prohibited categories. Thus, an assess- ment under this provision would only be made where a person had actual knowledge that he or she had submitted a claim or had provided false or misleading information, and where the person had actual knowledge of the fraudulent nature of the claim, acted in deliberate ignorance, or acted in reckless disregard of the truth or falsity of the infor- mation. The requirement that a person ”knowingly” present a claim or ”know- ingly” make a false or misleading statement which influences discharge would prevent charging persons who inadvertently perform these acts. Senate amendment No provision. Conference agreement The conference agreement includes the House provision, but this provision has been added to the section of this bill entitled ”So- cial Security Act Civil Monetary Penalties”, above. C. PENALTY FOR FALSE CERTIFICATION FOR HOME HEALTH SERVICES (Section 233 of the House bill.) Current law No provision. House bill This provision would add an additional civil monetary penalty of not more than three times the amount of the payments, or $5,000, whichever is greater, for a physician who certifies that an individual meets all of Medicare’s requirements to receive home health care while knowing that the individ- ual does not meet all such requirements. This provision would apply to certifications made on or after the date of enactment of this Act. Senate amendment No provision. Conference agreement The conference agreement includes the House provision. V. REVISIONS TO CRIMINAL LAW (Subtitle E of the House bill; subtitle E of the Senate amendment.) A. DEFINITIONS RELATING TO FEDERAL HEALTH CARE OFFENSE (Section 241 of the House bill; section 542 of the Senate amendment.) Current law No provision. House bill This provision defines the term ”Federal health care offense” to include violations of, or criminal conspiracies to violate, section 669, 1035, 1347 or 1518 of Title 18 of the United States Code, or section 287, 371, 664, 666, 1001, 1027, 1341, 1343, or 1954 of this title, if the vio- lation or conspiracy relates to a health care benefit program. A ”health care benefit pro- gram” is any public or private plan affecting CONGRESSIONAL RECORD \u2014 HOUSEH9538 July 31, 1996 commerce under which any medical benefit, item or service is provided to any individual, and includes any individual or entity provid- ing such a medical benefit, item or service for which payment may be made under the plan. Senate amendment The Senate amendment defines ”Federal health care offense” as a violation of, or a criminal conspiracy to violate section 1128B of the Social Security Act, section 1347 of this title, and sections 287, 371, 664, 666, 669, 1001, 1027, 1341, 1343, or 1954 of this title if the violation or conspiracy relates to health care fraud. Conference agreement The conference agreement includes the House provision. B. HEALTH CARE FRAUD (Section 242 of the House bill; section 541 of the Senate amendment.) Current law Depending on the facts of a particular case, criminal penalties may be imposed on per- sons engaged in health care fraud under fed- eral mail and wire fraud statutes, the False Claims Act, false statement statues, money laundering statutes, racketeering, and other related laws. House bill Under this provision criminal penalties would be imposed for knowingly executing or attempting to execute a scheme or artifice (1) to defraud any health care benefit pro- gram; or (2) to obtain, by means of false or fraudulent pretense, money or property owned by, or under the custody or control of, any health care benefit program. Penalties include fines and up to 10 years imprison- ment. If the violation results in serious bod- ily injury, the person may be imprisoned up to 20 years. If the violation results in death, the person may be imprisoned for life. Senate amendment Similar. However, the Senate provision provides that the crime be commended ”will- fully” as well as knowingly, and the pen- alties are listed as ”any term of years” if the violation results in serious bodily injury. The Senate provision also provides that criminal fines imposed under this section be deposited into the Federal Hospital Insur- ance Trust Fund. Conference agreement The conference agreement includes the House provision with a modification specify- ing that the standard of intent will be ”knowingly and willfully”. There has been significant concern regard- ing the impact of the anti-fraud provisions on the practice of complementary and alter- native medicine and health care. The prac- tice of complementary, alternative, innova- tive, experimental or investigational medi- cal or health care itself would not constitute fraud. The conferees intend that this pro- posal not be interpreted as a prohibition of the practice of these types of medical or health care. The Act is not intended to pe- nalize a person who exercises a health care treatment choice or makes a medical or health care judgment in good faith simply because there is a difference of opinion re- garding the form of diagnosis or treatment. Nor does this provision in general prohibit plans from covering specific types of treat- ment. Whether certain complementary and alternative practices will be covered is and should be a decision left to health care plan administrators. C. THEFT OR EMBEZZLEMENT Section 243 of the House bill; section 546 of the Senate amendment) Current law No provision. House bill Criminal penalties would be imposed for embezzling, stealing, or otherwise without authority knowingly converting or inten- tionally misapplying any of the moneys, funds, securities, premiums, credits, prop- erty, or other assets of a health care benefit program. A person convicted under this pro- vision would be subject to a fine under Title 18 of the United States Code, or imprisoned not more than 10 years, or both. If the value of property does not exceed $100, the defend- ant would be fined or imprisoned not more than one year, or both. Senate amendment Requires that this crime be committed ”willfully”, and the person convicted is sub- ject to a fine under this title or imprison- ment of not more than 10 years, or both. Conference agreement The conference agreement includes the House provision with a modification specify- ing that the standard of intent will be ”knowingly and willfully”. D. FALSE STATEMENTS (Section 244 of the Hose bill; section 544 of the Senate amendment.) Current law The Federal false statements provision at 18 U.S.C. 1001 generally prohibits false statements with regard to any matter within the jurisdiction of a Federal department or agency. House bill Criminal penalties would be imposed for knowingly falsifying, concealing, or covering up by any trick, scheme, or device a material fact, or making false, fictitious, or fraudu- lent statements or representations, or mak- ing or using any falsewriting or document knowing the same to contain any false, ficti- tious, or fraudulent statement or entry in any matter involving a health care benefit program. A person convicted under this pro- vision may be punished by the imposition of fines under title 18 of the United States Code, or by imprisonment of not more than 5 years, or both. Senate amendment Contains additional elements of the crime of false statements, including the words ”willfully” and ”materially”. The House bill language specifying that the false state- ments be ”in connection with the delivery of or payment for health care benefits, items, or services” does not appear in the Senate amendment provision. Conference agreement The conference agreement includes the House provision with a modification specify- ing that the standard of intent will be ”knowingly and willfully”. E. OBSTRUCTION OF CRIMINAL INVESTIGATIONS OF HEALTH CARE OFFENSES (Section 245 of the House bill; section 545 of the Senate amendment.) Current law Under current law, criminal penalties are imposed for obstructing, delaying or prevent- ing the communication of information to law enforcement officials regarding the violation of criminal statues by using bribery, intimi- dation, threats, corrupt persuasion, or har- assment. House bill Criminal penalties would be imposed for willfully preventing, obstructing, mislead- ing, delaying or attempting to prevent, ob- struct, mislead or delay the communication of information or records relating to a Fed- eral health care offense to a criminal inves- tigator. A person convicted under this provi- sion could be punished by the imposition of fines under title 18 of the United States Code or by imprisonment of not more than 5 years, or both. Criminal investigator would mean any individual duly authorized by a de- partment, agency, or armed force of the United States to conduct or engage inves- tigations for prosecution for violations of health care offenses. Senate amendment Similar, with only minor drafting dif- ferences. Conference agreement The conference agreement includes the House provision. F. LAUNDERING OF MONETARY INSTRUMENTS (Section 246 of the House bill; section 547 of the Senate amendment.) Current law The current Federal money laundering pro- vision is found at 18 U.S.C. 1956(c)(7), but does not include money laundering as related to health care fraud. House bill An act or activity constituting a Federal health care offense would be considered a ”specified unlawful activity” for purposes of the prohibition on money laundering, so that any person who engages in money laundering in connection with a Federal health care of- fense would be subject to existing criminal penalties. Senate amendment Similar, with only minor drafting dif- ferences. Conference agreement The conference agreement includes the House provision. G. INJUNCTIVE RELIEF RELATING TO HEALTH CARE OFFENSES (Section 247 of the House bill; section 543 of the Senate amendment.) Current law Depending on the facts of a particular case, injunctive relief may be imposed on persons who are committing or about to commit health care fraud under federal racketeering statutes and other related laws. House bill If a person is violating or about to commit a Federal health care offense, the Attorney General of the United States could com- mence a civil action in any Federal court to enjoin such a violation. If a person is alien- ating or disposing of property or intends to alienate or dispose of property obtained as a result of a Federal health care offense, the Attorney General could seek to enjoin such alienation or disposition, or could seek a re- straining order to prohibit the person from withdrawing, transferring, removing, dis- sipating or disposing of any such property or property of equivalent value and appoint a temporary receiver to administer such re- straining order. Senate amendment Similar. Conference agreement The conference agreement includes the House provision. H. AUTHORIZED INVESTIGATIVE DEMAND PROCEDURES (Section 248 of the House bill; section 548 of the Senate amendment.) Current law No provision. House bill This provision would establish procedures for the Attorney General to make investiga- tive demands in cases regarding health care CONGRESSIONAL RECORD \u2014 HOUSE H9539July 31, 1996 fraud. Under this section, the Attorney Gen- eral could issue a summons for records and\/ or a witness to authenticate the records. Administrative summons would be author- ized for investigations of any scheme to de- fraud an health care benefit program in con- nection with the delivery of or payment for health care. This section would provide for service of a subpoena and enforcement of a subpoena in all United States courts, as well as a grant of immunity to persons respond- ing to a subpoena from civil liability for dis- closure of such information. The provision would also provide that health information about an individual that is disclosed under this section may not be used in, or disclosed to any person for use in any administrative, civil, or criminal action or investigation directed against the individ- ual who is the subject of the information un- less the action or investigation arises out of, and is directly related to, receipt of health care of payment for health care or action in- volving a fraudulent claim related to health, or if good cause is shown. Senate amendment Contains additional language relating to testimony by a custodian of records, the pro- duction of records, witness fees, and adminis- trative summons. Conference agreement The conference agreement includes the House provision with an amendment to in- clude Senate bill language relating to testi- mony by a custodian of records. I. FORFEITURES FOR FEDERAL HEALTH CARE OFFENSES (Section 249 of the House bill; section 542 of the Senate amendment.) Current law Depending on the facts of a particular case, criminal forfeiture may be imposed on per- sons convicted under federal money launder- ing statutes, racketeering statutes, and other related laws. House bill A court imposing a sentence on a person convicted of a Federal health care offense could order the person to forfeit all real or personal property that is derived, directly or indirectly, from proceeds traceable to the commission of the offense. After payment of the costs of asset forfeiture have been made, the Secretary of the Treasury would deposit into the Federal Hospital Insurance Trust Fund an amount equal to the net amount re- alized from the forfeiture of property by rea- son of a federal health care offense. Senate amendment Identical. Conference agreement The conference agreement includes the House provision. J. RELATION TO ERISA AUTHORITY (Section 250 of the House bill.) Current law The Employee Retirement Income Secu- rity Act of 1974 sets forth comprehensive re- quirements for employee pension and welfare benefit plans, including reporting and disclo- sure requirements and fiduciary standards for trustees and fiduciaries; pension plans are also subject to funding, participation, and vesting requirements. House bill The provision states that nothing in this subtitle (Revisions to Criminal law), shall af- fect the authority of the Secretary of Labor under section 506(b) of ERISA to detect and investigate civil and criminal violations re- lated to ERISA. Senate amendment No provision. Conference agreement The conference agreement includes the House provision. 2. Administrative simplification (Sections 251 and 252 of subtitle F of title II of the House bill.) Current law No provision. House bill The bill would provide that the purpose of the subtitle was to improve the Medicare and Medicaid programs, and the efficiency and effectiveness of the health care system, by encouraging the development of health infor- mation network through the establishment of standards and requirements for the elec- tronic transmission of certain health infor- mation. Amends title XI of the Social Secu- rity Act by adding Part C\u2014Administrative Simplification. Senate amendment No provision. Conference agreement The conference agreement includes the House provision. A. DEFINITIONS (New section 1171 of the Social Security Act.) Current law No provision. House bill The bill would provide definitions for this part of the Act including the following: clearinghouse, code set, coordination of ben- efits, health care provider, health informa- tion, health plan, individually identifiable health information, standard, and standard setting organization. Senate amendment No provision. Conference agreement The conference agreement includes the House provision with an amendment to ex- clude a definition for coordination of bene- fits and clarifies the definition of health plan. B. GENERAL REQUIREMENTS FOR ADOPTION OF STANDARDS (New section 1172 of the Social Security Act.) Current law No provision. House bill The bill would require that any standard or modification of a standard adopted would apply to the following: (1) a health plan, (2) a clearinghouse, or (3) a health care provider, but only to the extent that the provider was conducting electronic transactions referred to in the bill. The bill would require that any standard or modification of a standard adopted must reduce the administrative cost of providing and paying for health care. The standard setting organization would be re- quired to develop or modify any standard or modification adopted. The Secretary could adopt a standard or modification of a stand- ard that was different from any standard de- veloped by such organization if the different standard or modification was promulgated in accordance with rulemaking procedures and would substantially reduce administrative costs to providers and plans. The Secretary would be required to establish specifications for implementing each of the standards and modifications adopted. The standards adopt- ed would be prohibited from requiring disclo- sure of trade secrets or confidential commer- cial information by a participant in the health information network. In complying with the requirements of this part, the Sec- retary would be required to rely on the rec- ommendations of the Health Information Ad- visory Committee established by the bill, and consult with appropriate Federal and State agencies and private organizations. Senate amendment No provision. Conference agreement The conference agreement includes the House provision with a modification that re- quires the Secretary to rely on the rec- ommendations of the National Committee on Vital and Health Statistics. The standard- setting organization should consult with the National Uniform Billing Committee, the National Uniform Claim Committee, the Working Group for Electronic Data Inter- change, and the American Dental Associa- tion. C. STANDARDS FOR INFORMATION TRANSACTIONS AND DATA ELEMENTS New section 1173 of the Social Security Act.) Current law No provision. House bill The bill would require the Secretary to adopt appropriate standards for financial and administrative transactions and data ele- ments exchanged electronically that are con- sistent with the goals of improving the oper- ation of the health care system and reducing administrative costs. Financial and adminis- trative transactions would include claims, claims attachments, enrollment and disenrollment, eligibility, health care pay- ment and remittance advice, premium pay- ments, first report of injury, claims status, and referral certification and authorization. Standards adopted by the Secretary would be required to accommodate the needs of dif- ferent types of health care providers. The Secretary would be required to adopt standards providing for a standard unique health identifier for each individual, em- ployer, health plan, and health care provider for use in the health care system. The Sec- retary would be required to establish secu- rity standards that (1) take into account the technical capabilities of record systems to maintain health information, the costs of se- curity measures, the need for training per- sons with access to health information, the value of audit trails in computerized record systems used, and the needs and capabilities of small health care providers and rural health care providers; and (2) ensure that a clearinghouse, if it is part of a larger organi- zation, has policies and security procedures which isolate the activities of such service to prevent unauthorized access to such infor- mation by such larger organization. The Sec- retary would be required to establish stand- ards and modifications to such standards re- garding the privacy of individually identifi- able health information that is in the health information network. The Secretary, in co- ordination with the Secretary of Commerce, would be required to adopt standards specify- ing procedures for the electronic trans- mission and authentication of signatures, compliance with which would be deemed to satisfy Federal and State statutory require- ments for written signatures with respect to the transactions specified by the bill. This part would not be construed to prohibit the payment of health care services or health plan premiums by debit, credit, payment card or numbers, or other electronic means. The Secretary would be required to adopt standards for determining the financial li- ability of health plans when health benefits are payable under two or more health plans, the sequential processing of claims, and other data elements for individuals who have more than one health plan. CONGRESSIONAL RECORD \u2014 HOUSEH9540 July 31, 1996 Senate amendment No provision. Conference agreement The conference agreement includes the House provision. The conferees recognize that certain uses of in- dividually identifiable information are ap- propriate, and do not compromise the pri- vacy of an individual. Examples of such use of information include the transfer of infor- mation when making referrals from primary care to specialty care, and the transfer of information from a health plan to an orga- nization for the sole purpose of conducting health care-related research. As health plans and providers continue to focus on outcomes research and innovation, it is im- portant that the exchange and aggregated use of health care data be allowed. The conference agreement includes a modifica- tion that this part would not be construed to regulate the payment of health care serv- ices or health care premiums by debit, cred- it, payment card or other electronic means. D. TIMETABLES FOR ADOPTION OF STANDARDS (New section 1174 of the Social Security Act.) Current law No provision. House bill The bill would require the Secretary to adopt standards relating to the transactions, data elements of health information, secu- rity and privacy by not later than 18 months after the date of enactment of the part, ex- cept that standards relating to claims at- tachments would be required to be adopted not later than 30 months after enactment. The Secretary would be required to review the adopted standards and adopt additional or modified standards as appropriate, but not more frequently than once every 6 months, except during the first 12-month period after the standards are adopted unless the Sec- retary determines that a modification is nec- essary in order to permit compliance with the standards. The Secretary would also be required to ensure that procedures exist for the routine maintenance, testing, enhance- ment, and expansion of code sets. Senate amendment No provision. Conference agreement The conference agreement includes the House provision with a modification that the Secretary would be required to adopt addi- tional or modified standards not more fre- quently than 12 months. E. REQUIREMENTS (New section 1175 of the Social Security Act.) Current law No provision. House bill The bill would establish that if a person desires to conduct a financial or administra- tive transaction with a health plan as a standard transaction, (1) the health plan may not refuse to conduct such transaction as a standard transaction, (2) the health plan may not delay such transaction, or other- wise adversely affect, or attempt to ad- versely affect, the person or the transaction on the grounds that the transaction is a standard transaction, and (3) the informa- tion transmitted and received in connection with the transaction would be required to be in a form of standard data elements for health information. Health plans could sat- isfy the transmission of information by di- rectly transmitting standard data elements of health information, or submitting non- standard data elements to a clearinghouse for processing in to standard data elements and transmission. Not later than 24 months after the date on which standard or imple- mentation specification was adopted or es- tablished under this part, each person to which the standard applied would be required to comply with the standard or specification. Small health plans, determined by the Sec- retary, would be required to comply not later than 36 months after standards were adopted. Senate amendment No provision. Conference agreement The conference agreement includes the House provision. F. GENERAL PENALTY FOR FAILURE TO COMPLY WITH REQUIREMENTS AND STANDARDS (Section 1176 of the Social Security Act.) Current law No provision. House bill The bill would require the Secretary to im- pose on any person who violates a provision under the bill a penalty of not more than $100 for each such violation of a specific standard or requirement, except that the total amount imposed on the person for all such violations during a calendar year would not exceed $25,000. A penalty would not be imposed if it was established that the person liable for the penalty did not know, and by exercising reasonable diligence would not have known, that such person violated the provision. A penalty would not be imposed if (1) the failure to comply was due to reason- able cause and not willful neglect, and (2) the failure to comply with corrected during the 30-day period beginning on the first date the person liable for the penalty knows, or would have known, that the failure to comply oc- curred. Senate amendment No provision. Conference agreement. The conference agreement includes the House provision. G. WRONGFUL DISCLOSURE OF INDIVIDUALLY IDENTIFIABLE HEALTH INFORMATION (New section 1177 of the Social Security Act.) Current law No provision. House bill The bill would define the offense of wrong- ful disclosure of individually identifiable health information as instances when a per- son who knowingly (1) uses or causes to be used a unique health identifier violation of a provision in this part, (2) obtains individ- ually identifiable health information relat- ing to an individual in violation of a provi- sion in this part, or (3) discloses individually identifiable health information to another person in violation of this part. A person committing such an offense would be re- quired to (1) be fined not more than $50,000, imprisoned not more than 1 year, or both; (2) if the offense was committed under false pre- tenses, be fined not more than $100,000, im- prisoned not more than 5 years, or both; and (3) if the offense was committed with intent to sell, transfer, or use individually identifi- able health information for commercial ad- vantage, personal gain, or malicious harm, fined not more than $250,000, imprisoned not more than 10 years, or both. Senate amendment No provision. Conference agreement The conference agreement includes the House provision. H. EFFECT ON STATE LAW (New section 1178 of the Social Security Act.) Current law No provision. House bill The bill would require that a provision, re- quirement, or standard provided by the bill supersede any contrary provision of state law, including a provision of state law that required medical or health plan records (in- cluding billing information) to be main- tained or transmitted in written rather that electronic form. A provision under the bill would not supersede a contrary provision of state law if the provision of state law (1) was more stringent than the requirements of the bill with respect to privacy or individually identifiable health information, or (2) was a provision the Secretary determined was nec- essary to prevent fraud and abuse with re- spect to controlled substances or for other purposes. Senate amendment No provision. Conference agreement The conference agreement includes the House provision with a modification, that the provision would not supersede a contrary State law only if the Secretary determines that the State law (1) is necessary to prevent fraud and abuse; (2) to ensure appropriation State regulation of insurance and health plans; (3) for state reporting on health care delivery or costs, or for other purposes; or (4) addresses controlled substances. The conference agreement also includes the requirement that any standard adopted under this part would not apply to the fol- lowing: (1) the use or disclosure of informa- tion for authorizing, processing, clearing, settling, billing, transferring, collecting, or reconciling a payment for, health plan pre- miums or health care, where such payment is made by means of a credit, debit, or other payment card, or by an account, check, elec- tronic funds transfer or other such means; (2) the use or disclosure of information relating to a payment described above for transfer- ring receivables, resolving customer disputes or inquiries, auditing, supplying a statement to a consumer of a financial institution re- garding the customer’s account with such an institution, reporting to customer reporting agencies, or complying with a civil or crimi- nal subpoena or a Federal or State law regu- lating financial institutions. The conferees do not intend to exclude the activities of financial institutions or their contractors from compliance with the stand- ards adopted under this part if such activi- ties would be subject to this part. However, conferees intend that this part does not apply to use or disclosure of information when an individual utilizes a payment sys- tem to make a payment for, or related to, health plan premiums or health care. For ex- ample, the exchange of information between participants in a credit card system in con- nection with processing a credit card pay- ment for health care would not be covered by this part. Similarly sending a checking ac- count statement to an account holder who uses a credit or debit card to pay for health care services, would not be covered by this part. However, this part does apply if a com- pany clears health care claims, the health care claims activities remain subject to the requirements of this part. 1. CHANGES IN MEMBERSHIP AND DUTIES OF NA- TIONAL COMMITTEE ON VITAL AND HEALTH STATISTICS (Section 253 of the House bill.) Current law No provision. CONGRESSIONAL RECORD \u2014 HOUSE H9541July 31, 1996 House bill The bill would amend the membership and duties of the National Committee on Vital and Health Statistics, authorized under sec- tion 306(k) of the Public Health Service Act, as amended, by increasing the number of members to 18. The committee would be re- quired to (1) provide assistance and advice to the Secretary on issues related to health sta- tistical and health information; health with complying with the requirements of the bill; (2) study the issues related to the adoption of uniform data standards for patient medical record information and electronic exchange of such information; (3) report to the Sec- retary not later than 4 years after enact- ment of the Health Coverage Availability and Affordability Act of 1996, and annually thereafter, recommendations and legislative proposals for such standards and electronic exchange; and (4) be generally advising the Secretary and the Congress on the status of the future of the health information net- work. The committee would be required, not later than 1 year after enactment, to report to Congress, health care providers, health plans, and other entities using the health in- formation network regarding (1) the extent to which entities using the network were meeting the standards adopted and working together to form an integrated network that meets the needs of its users; (2) the extent to which entities were meeting the privacy and security standards, and the types of pen- alties assessed for noncompliance; (3) wheth- er the federal and state governments were receiving information of sufficient quality to meet their responsibilities; (4) any problems that exist with implementation of the net- work; and (5) the extent to which timetables established by under this part of the bill were being met. Senate amendment No provision. Conference agreement The conference agreement includes the House provision. The conference agreement also includes a requirement that the Secretary submit de- tailed recommendations on standards with respect to the privacy of individually identi- fiable health information not later than 12 months after enactment. The recommenda- tions would be required to address at least: (1) the rights an individual should have re- lating to individually identifiable health in- formation; (2) the procedures that should be established for the exercise of such rights; and (3) the uses and disclosures of such infor- mation that should be authorized or re- quired. The Secretary would be required to consult with the Attorney General, and the National Committee on Vital and Health Statistics for carrying out this requirement. If Congress fails to enact privacy legislation, the Secretary is required to develop stand- ards with respect to privacy of individually identifiable health information not later than 42 months from the date of enactment. The conferees recognize that industry ex- perts are essential to the membership of the National Committee on Vital and Health Statistics. It is the conferees’ intent that the Committee select representatives from the insurer, HMO, provider, employer, accredita- tion communities, and a representative from the Workgroup for Electronic Data Inter- change (WEDI). The conferees recognize that technological innovation with respect to electronic trans- mission of health-care related transactions is progressing rapidly in the marketplace. The conferees do not intend to stifle innova- tion in this area. Therefore, the conferees in- tend that the Committee take into account private sector initiatives. 3. Duplication and coordination of Medicare- related plans (Subtitle G of title II of the House bill.) A. DUPLICATION AND COORDINATION OF MEDICARE-RELATED PLANS (Section 281 of House bill.) Current law Many Medicare beneficiaries purchase pri- vate health insurance to supplement their Medicare coverage. These individually pur- chased policies are known as Medigap poli- cies. The Omnibus Budget Reconciliation Act of 1990 (OBRA 1990, P.L. 101 508) provided for a standardization of Medigap policies. OBRA also substantially modified the antiduplication provision contained in law. The intent of the OBRA 1990 anti-duplication provision was to prohibit sales of duplicative Medigap policies. However, the statutory language applied, with very limited excep- tions, to all ”health insurance policies” sold to Medicare beneficiaries. Observers noted that this provision could thus apply to a broad range of policies including hospital in- demnity plans, dread disease policies, and long-term care insurance policies. The Social Security Amendments of 1994 (P.L. 103 432) included a number of technical modifications to the Medigap statute, in- cluding modifications to the anti-duplication provisions contained in section 1882(d)(3) of the Act. Under the revised language, it is il- legal to sell or issue the following policies to Medicare beneficiaries: (i) a health insurance policy with knowledge that is duplicates Medicare or Medicaid benefits to which a beneficiary is otherwise entitled; (ii) a Medigap policy, with knowledge that the beneficiary already has a Medigap policy; or (iii) a health insurance policy (other than Medigap) with knowledge that it duplicates private health benefits to which the bene- ficiary is already entitled. A number of exceptions to these prohibi- tions are established. The sale of a medigap policy is not in violation of the provisions relating to duplication of Medicaid coverage if: (i) the State Medicaid program pays the premiums for the policy; (ii) in the case of qualified Medicare beneficiaries (QMBs), the policy includes prescription drug coverage; or (iii) the only Medicaid assistance the indi- vidual is entitled to is payment of Medicare Part B premiums. The sale of a health insurance policy (other than a Medigap policy) that dupli- cates private coverage is not prohibited if the policy pays benefits directly to the indi- vidual without regard to other coverage. Further, the sale of a health insurance pol- icy (other than a Medigap policy to an indi- vidual entitled to Medicaid) is not in viola- tion of the prohibition relating to selling of a policy duplicating Medicare or Medicaid, if the benefits are paid without regard to the duplication in coverage. This exception is conditional on the prominent disclosure of the extent of the duplication, as part of or together with, the application statement. P.L. 103 432 provided for the development by the National Association of Insurance Commissioners (NAIC) of disclosure state- ments describing the extent of duplication for each of the types of private health insur- ance policies. Statements were to be devel- oped, at a minimum, for policies paying fixed cash benefits directly to the beneficiary and policies limiting benefits to specific diseases. The NAIC identified 10 types of health insur- ance policies requiring disclosure statements and developed statements for them. These were approved by the Secretary and pub- lished in the Federal Register on June 12, 1995. House bill The provision would modify the anti-dupli- cation provisions. The requirement for ob- taining a written application statement would be limited to the sale of Medigap poli- cies to persons already having Medigap poli- cies. Anti-duplicative provisions would specifi- cally state that a policy which pays benefits to or on behalf of an individual without re- gard to other health benefit coverage would not be considered to duplicate any health benefits under Medicare, Medicaid, or a health insurance policy. Further, such poli- cies would be excluded from the sales prohi- bitions. The provision would specifically state that a health insurance policy (or a rider to an in- surance contract which is not a health pol- icy) which provides benefits for long term care, nursing home care, home health care or community-based care and that coordinates or excludes against services covered under Medicare would not be considered duplica- tive, provided such coordination or exclusion was disclosed in the policy’s outline of cov- erage. The provision would specify that a health insurance policy (which may be a contract with a health maintenance organization), provided to a disabled beneficiary, that is a replacement product for another policy that is being terminated by the insurer would not be considered duplicative if it coordinates with Medicare. The provision would prohibit the imposi- tion of criminal or civil penalties, or taking of legal action, with respect to any actions which occurred between enactment of P.L. 103 432 and enactment of this measure, pro- vided the policies the policies met the new requirements. The provision would prohibit States from imposing duplication requirements with re- spect to a policy (other than Medigap policy) or rider to an insurance contract which is not a health policy if the policy or rider pays benefits without regard to other benefits coverage or if it is a long-term care, policy or policy sold to the disabled (as such poli- cies are described above). The provision would also delete current language relating to required disclosure statements. Senate amendment No provision. Conference agreement The conference agreement includes the House provision with modifications. The agreement would clarify that policies offer- ing only long-term care nursing home care, home health care, or community based care, or any combination thereof would be allowed to coordinate benefits with Medicare and not be considered duplicative, provided such co- ordination was disclosed. The conference agreement does not include the provision re- lating to replacement policies sold to dis- abled persons. The conference agreement would modify, rather than repeal, the current law require- ment for disclosure statements for policies that pay regardless of other coverage. Dis- closure statements, for the type of policy being applied for, would be furnished to a Medicare beneficiary applying for a health insurance policy. The statement would be furnished as a part of (or together with) the policy application. The conference agreement would specify that whoever issues or sells a health insur- ance policy to a Medicare beneficiary and fails to furnish the required disclosure state- ment would be fined under title 18 of the United States Code, or imprisoned not more than five years or both. In addition, or in lieu of the criminal penalty, a civil money penalty of $25,000 (or $15,000 in the case of someone who is not an issuer) could be im- posed for each violation. CONGRESSIONAL RECORD \u2014 HOUSEH9542 July 31, 1996 The disclosure requirements would not apply to Medigap policies or health insur- ance policies identified in the July 12, 1995 Federal Register notice (i.e. policies that do not duplicate Medicare (even incidentally), life insurance policies that contain long- term care riders or accelerated death bene- fits, disability insurance policies, property and casualty policies, employer and union group health plans, managed care organiza- tions with Medicare contracts, and health care prepayment plans (HCPPs) that provide some or all of Part B benefits under an agreement with HCFA.) The conference agreement would modify existing disclosure statements to remove the wording that implies the policies duplicate Medicare coverage. New language would be substituted which states that: ”Some health care services paid for by Medicare may also trigger the payment of benefits under this policy”. The agreement would further modify the required statement for policies providing both nursing home and non-institutional coverage, nursing home benefits only, or home health care benefits only. The ref- erence to Federal law would be modified to read: ”Federal law requires us to inform you that in certain situations this insurance may pay for some care also covered by Medicare”. All other policies would be required to in- clude the following statement: ”This policy must pay benefits without regard to other health benefit coverage to which you may be entitled under Medicare or other insurance.” The conference agreement would further modify the language relating to State ac- tions. The law would specifically state that nothing in the provision restricts or pre- cludes a State’s ability to regulate health in- surance, including the policies subject to dis- closure requirements. However, a State may not declare or specify, in statute, regulation, or otherwise, that a health insurance policy (other than a Medigap policy) or rider to an insurance contract which is not a health in- surance policy that pays regardless of other coverage duplicates Medicare or Medigap benefits. The conference agreement further narrows the language relating to application of pen- alties and legal action with respect to non- duplication requirements during a transition period, defined as beginning on November 5, 1991 and ending on the date of enactment. No criminal or civil monetary penalty could be imposed for an act or omission that occurred during the transition period relating to poli- cies that pay benefits without regard to other coverage or long-term care policies. No legal action could be brought or continued in any Federal or State court with respect to the sale of such policies insofar as such ac- tion includes a cause of action which arose or is based on action occurring during the transition period and relating to non-dupli- cation requirements. This limitation on legal actions would be conditional on the ex- isting disclosure requirements being met with respect to any policy sold during the period beginning on the effective date of the disclosure requirements required by the 1994 Act (i.e. August 11, 1995) and ending 30 days after enactment. The conference agreement further provides that the new disclosure rules only apply after enactment to health insurance policies that pay regardless of other coverage and 30- days after enactment to another health in- surance policy. The conference agreement would further permit a seller or issuer of a health insur- ance policy to use current disclosure state- ments rather than the new disclosure state- ments. 4. Medical liability reform (Subtitle H of title II of the House bill; sec- tion 310 of title I of the Senate amendment.) I. GENERAL PROVISIONS A. FEDERAL REFORM OF HEALTH CARE LIABILITY ACTIONS (Section 271 of House bill.) Current law There are no uniform Federal standards governing health care liability actions. House bill (1) Applicability. The provision would pro- vide for Federal reform of health care liabil- ity actions. It would apply to any health care liability action brought in any State or Federal court. The provisions would not apply to any action for damages arising from a vaccine-related injury or death or to the extent that the provisions of the National Vaccine Injury Compensation Program apply. The provisions would also not apply to actions under the Employment Retire- ment Income Security Act. (2) Preemption; Effect on Sovereign Immu- nity. The provisions would preempt State law to the extent State law provisions were inconsistent with the new requirements. However, it would not preempt State law to the extent State law provisions were more stringent. The provision specifies that noth- ing in the preemption provision could be con- strued to: (i) waive or affect any defense of sovereign immunity asserted by any State under any provision of law; (ii) waive or af- fect any defense of sovereign immunity as- serted by the U.S.: (iii) affect any provision of the Foreign Services Immunity Act of 1976; (iv) preempt State choice-of-law rules with respect to claims brought by a Foreign nation or a citizen of a foreign nation; or (v) affect the right of any court to transfer venue or to apply the law of a foreign nation or to dismiss a claim of a foreign nation or of a citizen of a foreign nation on the ground of inconvenient forum. (3) Amount in Controversy; Federal Court Jurisdiction. The provision would specify that in the case of a health care liability ac- tion brought under section 1332 of Title 28 of the U.S. Code, the amount of noneconomic and punitive damages and attorneys fees would not be included in establishing the amount in controversy for purposes of estab- lishing original jurisdiction. Further, the provision would specify that nothing in this subtitle would be construed to establish any jurisdiction in the U.S. district courts over health care liability action on the basis of Federal question grounds specified in section 1331 or 1337 of title 28 of the U.S. Code. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. B. DEFINITIONS (Section 272 of House bill.) Current law No provision. House bill The provision would define the following terms for purposes of the Federal reforms: actual damages; alternative dispute resolu- tion system; claimant; clear and convincing evidence; collateral source payments; drug; economic loss; harm; health benefit plan; health care liability action; health care li- ability claim; health care provider; health care service; medical device; noneconomic damages; person; product seller; punitive damages; and State. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. C. EFFECTIVE DATE (Section 273 of House bill.) Current law No provision. House bill The provision would specify that Federal reforms apply to any health care liability ac- tion brought in any State or Federal court that is initiated after the date of enactment. The provision would also apply to any health care liability claim subject to an alternative dispute resolution system, Any health care liability claim or action arising from an in- jury occurring prior to enactment would be governed by the statute of limitations in ef- fect at the time the injury occurred. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. II. UNIFORM STANDARDS FOR HEALTH CARE LIABILITY ACTIONS A. STATUTE OF LIMITATIONS (Section 281 of House bill.) Current law To date reforms of the malpractice system have occurred primarily at the State level and have generally involved changes in the rules governing tort cases. (A tort case is a civil action to recover damages, other than for a breach of contract.) House bill The provision would establish a uniform statute of limitations. Actions could not be brought more than two years after the injury was discovered or reasonably should have been discovered. In no event could the action be brought more than five years after the date of the alleged injury. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. B. CALCULATION AND PAYMENT OF DAMAGES (Section 282 of House bill.) Current bill No provision. House bill 1. Noneconomic Damages. The provision would limit noneconomic damages to $250,000 in a particular case. The limit would apply regardless of the number of persons against whom the action was brought or the number of actions brought. The provision would specify that a defend- ant would only be liable for the amount of noneconomic damages attributable to that defendant’s proportionate share of the fault or responsibility for that claimant’s injury. 2. Punitive Damages. The provision would permit the award of punitive damages (to the extent allowed under State law) only if the claimant established by clear and convincing evidence either that the harm was the result of conduct that specifically intended to cause harm or the conduct manifested a con- scious flagrant indifference to the rights or safety of others. The amount of punitive damages awarded could not exceed $250,000 or three times the amount of economic dam- ages, whichever was greater. The determina- tion of punitive damages would be deter- mined by the court and not be disclosed to the jury. The provision would not create a cause of action for punitive damages. Fur- ther, it would not preempt or supersede any State or Federal law to the extent that such law would further limit punitive damage awards. CONGRESSIONAL RECORD \u2014 HOUSE H9543July 31, 1996 The provision would permit either party to request a separate proceeding (bifurcation) on the issue of whether punitive damages should be awarded and in what amount. If a separate proceeding was requested, evidence related only to the claim of punitive dam- ages would be inadmissible in any proceeding to determine whether actual damages should be awarded. The provision would prohibit the award of punitive damages in a case where the drug or device was subject to premarket approval by the Food and Drug Administration, unless there was misrepresentation or fraud. A manufacturer or product seller would not be held liable for punitive damages related to adequacy of required tamper resistant pack- aging unless the packaging or labeling was found by clear and convincing evidence to be substantially out of compliance with the reg- ulations. 3. Periodic Payments for Future Losses. The provision would permit the periodic (rather than lump sum) payment of future losses in excess of $50,000. The judgment of a court awarding periodic payments could not, in the absence of fraud, be reopened at any time to contest, amended, or modify the schedule or amount of payments. The provi- sion would not preclude a lump sum settle- ment. 4. Treatment of Collateral Source Pay- ments. the provision would permit a defend- ant to introduce evidence of collateral source payments. Such payments are those which are any amounts paid or reasonably likely to be paid by health or accident insur- ance, disability coverage, workers compensa- tion, or other third party sources. If such evidence was introduced, the claimant could introduce evidence of any amount paid or reasonably likely to be paid to secure the right to such collateral source payments. No provider of collateral source payments would be permitted to recover any amount against the claimant or against the claimant’s re- covery. The provision would apply to settle- ments as well as actions resolved by the courts. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. C. ALTERNATIVE DISPUTE RESOLUTION (Section 283 of House bill.) Current law No provision. House bill The provision would require that any al- ternative dispute resolution system used to resolve health care liability actions or claims must include provisions identical to those specified in the bill. Senate amendment No provision. Conference agreement The conference agreement does not include the House provision. III. MEDICAL VOLUNTEERS (Section 310 of Senate bill.) Current law The Federally Supported Health Centers Assistance Act of 1992 (P.L. 102 501) provides protection from legal liability for certain health professionals providing services under the Public Health Service Act P.L. 104 73 made the provision permanent. House bill No provision. Senate amendment Section 310 of the bill would be known as the Medical Volunteer Act. It would provide that under certain circumstances a health care professional would be regarded for pur- poses of a malpractice claim to be a Federal employee for purposes of the Federal tort claims provisions of title 28 of the U.S. Code. Specifically this would occur when such pro- fessional provided services to a medically underserved person without receiving com- pensation for such services. The professional would be deemed to have provided services without providing compensation only if prior to furnishing services the professional: (i) agreed to furnish services without charge to any person, including any health insurance plan or program under which the recipient is covered; and (ii) provided the recipient with adequate notice (as determined by the Sec- retary) of the limited liability of the profes- sional. These provisions would preempt any State law to the extent such law was incon- sistent; they would not preempt any State law that provided greater incentives or pro- tections. A medically underserved person would be defined as a person residing in either: (I) a medically underserved area as defined for purposes of determining a medically under- served population under section 330 of the Public Health Service Act; or (ii) a health professional shortage area as defined in sec- tion 332 of that Act. Further the individual would have to receive care in a facility sub- stantially comparable to any of those des- ignated in the Federally-Supported Health Centers Act, as determined in regulations of the Secretary. Conference agreement The conference agreement includes the Senate provision. The provision extends Fed- eral Tort Claims Act coverage to certain medical volunteers in free clinics in order to expand access to health care services to low- income individuals in medically underserved areas. Such coverage is currently provided in the Public Health Service Act to certain community and other health centers under the Federally Supported Health Centers As- sistance Act. The provision tracks to the ex- tent possible the provisions of that Act with respect to the coverage provided, quality as- surance, and the process by which a free clin- ic applies to have a free clinic health profes- sional deemed an employee of the Public Health Service. Health professionals must meet certain conditions before they are deemed employees of the Public health Service Act. They must be licensed or certified in accordance with applicable law and they must be volunteers; they may not receive compensation for the services in the form of salary, fees, or third- party payments. However, they may receive reimbursement from the clinic for reason- able expenses, such as costs of transpor- tation and the cost of supplies they provide. Further, the free clinic may receive a vol- untary donation from the individual served. Eligible health professionals must provide qualifying services (i.e., otherwise available for Medicaid reimbursement) at a free clinic or through programs or events conducted by the clinic. These programs or events may in- clude the provision of health services in a clinic-owned or clinic-operated mobile van or at a booth in a health fair. They may not in- clude the provision of health services in a private physician’s office following a referral from the free clinic. The health care profes- sional or the free clinic must provide prior written notice of the extent of the limited li- ability to the individual. The free clinic must be licensed or cer- tified under applicable law and may not im- pose a charge on or accept reimbursement from any private or public third-party payor. The free clinic may, however, receive vol- untary donations from individuals receiving health care services and is not precluded from receiving donations, grants, contracts, or awards from private or public sources for the general support of the clinic, or for spe- cific purposes other than for payment or re- imbursement for a health care service. A free clinic must apply, consistent with the provisions applicable to community health centers, to have each health care pro- fessional ”deemed” an employee of the Pub- lic Health Service Act, and therefore eligible for coverage under the Federal Tort Claims Act. A free clinic may not be deemed such an employee under this provision. The Committee is aware that each of the 50 states have passed laws to limit the liability of volunteers in a variety of circumstances. This provision does not preempt those laws beyond the preemption provided in the Fed- eral Tort Claims Act. Instead, the United States shall be liable in the same manner and to the same extent as a private individ- ual in the same circumstances under State law. The provision applies only to causes of ac- tion filed against a health professional for acts or omissions occurring on or after the date on which the health professional is de- termined by the Secretary to be a ”free clin- ic health professional.” The provision establishes for free clinics funding and estimating mechanisms that match to the extent possible those for com- munity health centers. No funds appro- priated for purposes of community health centers will be available to free clinics. 4. Other provisions I. EXTENSION OF MEDICARE SECONDARY PAYER PROVISIONS (Sec. 621 of Senate Amendment.) Current law Generally Medicare is the ”primary payer,” that is, it pays health claims first, with an individual’s private or other public insurance filling in some or all of Medicare’s coverage gaps. However, in certain instances, the individual’s other coverage pays first, while Medicare is the secondary payer. This phenomenon is referred to as the MSP pro- gram. A group health plan offered by an em- ployer (with 20 or more employees is re- quired to offer workers age 65 or over (and workers spouses age 65 or over) the same group health insurance coverage as is offered to younger workers. If the worker accepts the coverage, the employer is the primary payer, with Medicare becoming the second- ary payer. Similarly, a group health plan offered by a large employer (100 or more employees) is the primary payer for employees or their de- pendents who are on the Medicare disability program. The provision applies only to per- sons covered under the group plan because the employee is in ”current employment sta- tus” (i.e. is an employee or is treated as an employee by the employer). The MSP provi- sion for the disabled population expires Oc- tober 1, 1998. The MSP provisions apply to end-stage renal (ESRD) beneficiaries with employer group health plans, regardless of employer size. The group health plan is the primary payer for 18 months for persons who become eligible for Medicare ESRD benefits. The em- ployer’s role as primary payer is limited to a maximum of 21 months (18 months plus the usual 3-month waiting period for Medicare ESRD coverage). The 18-month MSP provi- sions for the ESRD population expire Octo- ber 1, 1998; at that time the period would re- vert to 12 months. The law authorizes a data match program which is intended to identify potential sec- ondary payer situations. Medicare bene- ficiaries are matched against data contained CONGRESSIONAL RECORD \u2014 HOUSEH9544 July 31, 1996 in Social Security Administration (SSA) and Internal Revenue Service (IRS) files to iden- tify cases in which a working beneficiary (or working spouse) may have employer-based health insurance coverage. Cases of previous incorrect Medicare payments are identified and recoveries are attempted. The authority for the program extends through Sept. 30, 1998. House bill No provision. Senate Amendment The provision would make permanent the MSP provisions for the disabled and the 18- month period for the ESRD population. It would also make permanent the data match requirement. Conference agreement The conference agreement does not include the Senate provision. TITLE III. TAX-RELATED HEALTH PROVISIONS A. MEDICAL SAVINGS ACCOUNTS (Sec. 301 of the House bill.) Present law The tax treatment of health expenses de- pends on whether the individual is an em- ployee or self employed, and whether the in- dividual is covered under an employer-spon- sored health plan. Employer contributions to a health plan for coverage for the employee and the employee’s spouse and dependents is excludable from the employee’s income and wages for social security tax purposes. Self- employed individuals are entitled to deduct 30 percent of the amount paid for health in- surance for a self-employed individual and his or her spouse or dependents. Any individ- ual who itemizes tax deductions may deduct unreimbursed medical expenses (including expenses for medical insurance) paid during the year to the extent that the total of such expenses exceeds 7.5 percent of the individ- ual’s adjusted gross income (”AGI”). Present law does not contain any special rules for medical savings accounts. House bill In general Within limits, contributions to a medical savings account (”MSA”) are deductible if made by an eligible individual and are ex- cludable from income (and wages for social security purposes) if made by the employer of an eligible individual. Earnings on amounts in an MSA are not currently tax- able. Distributions from an MSA for medical expenses are not taxable. Eligible individuals An individual is eligible to make a deduct- ible contribution to an MSA (or to have em- ployer contributions made on his or her be- half) if the individual is covered under a high deductible health plan and is not covered under another health plan (other than a plan that provides certain permitted coverage). An individual with other coverage in addi- tion to a high deductible plan is still eligible for an MSA if such other coverage is certain permitted insurance or is coverage (whether provided through insurance to otherwise) for accidents, disability, dental care, vision care, or long-term care. Permitted insurance is (1) Medicare supplemental insurance; (2) insurance if substantially all of the coverage provided under such insurance relates to (a) liabilities incurred under worker’s com- pensation law, (b) tort liabilities, (c) liabil- ities relating to ownership or use of property (e.g., auto insurance), or (d) such other simi- lar liabilities as the Secretary may prescribe by regulations, (3) insurance for a specified disease or illness, and (4) insurance that pro- vides a fixed payment for hospitalization. An individual is not eligible to make deductible contributions to an MSA for a year if any employer contributions are made to an MSA on behalf of the individual for the year. Tax treatment of and limits on contributions Individuals contributions to an MSA are deductible (within limits) in determining AGI. Employer contributions are excludable (within the same limits) from gross income and wages for employment tax purposes, ex- cept that this exclusion does not apply to contributions made through a cafeteria plan. The maximum amount of contributions that can be deducted or excluded for a year is equal to the lesser of (1) the deductible under the high deductible health plan or (2) $2,000 in the case of single coverage and $4,000 if the high deductible plan covers the individ- ual and a spouse or dependent. The annual limit is the sum of the limits determined separately for each month, based on the indi- vidual’s status as of the first day of the month. The maximum contribution limit to an MSA is determined separately for each spouse in a married couple. In no event can the maximum contribution limit exceed $4,000 for a family. The dollar limits are in- dexed for medical inflation and rounded to the nearest multiple of $50. Definition of high deductible health plan A high deductible health plan is a health plan with a deductible of at least $1,500 in the case of single coverage and $3,000 in the case of coverage of more than one individual. These dollar limits are indexed for medical inflation, rounded to the nearest multiple of $50. Tax treatment of MSAs Earnings on amounts in an MSA are not currently includible in income. Taxation of distributions Distributions from an MSA for the medical expenses of the individual and his or her spouse or dependents are excludable from in- come. For this purpose, medical expenses do not include expenses for insurance other than long-term care insurance, premiums for health care continuation coverage, and pre- miums for health care coverage while an in- dividual is receiving unemployment com- pensation under Federal or State law. Distributions that are not for medical ex- penses are includible in income. Such dis- tributions are also subject to an additional 10-percent tax unless made after age 591\u20442, death or disability. Upon death, if the beneficiary is the indi- vidual’s surviving spouse, the spouse may continue the MSA as his or her own. Other- wise, the beneficiary must include the MSA balance in income in the year of death. If there is no beneficiary, the MSA balance is includible on the final return of the dece- dent. In any case, no estate tax applies. Definition of MSA In general, an MSA is a trust or custodial account created exclusively for the benefit of the account holder and is subject to rules similar to those applicable to individual re- tirement arrangements. Effective date Taxable years beginning after December 31, 1996. Senate amendment The Senate amendment does not contain provisions providing favorable tax treatment for MSAs. However, the Senate amendment amends the Public Health Services Act to permit health maintenance organizations to charge deductibles to individuals with an MSA. In addition, the Senate amendment provides that it is the sense of the Commit- tee on Labor and Human Resources that the establishment of MSAs should be encouraged as part of any health insurance legislation passed by the Senate through the use of tax incentives relating to contributions to, the income growth of, and the qualified use of, MSAs. The Senate amendment also provides that it is the sense of the Senate that the Congress should take measures to further the purposes of the Senate amendment, in- cluding any necessary changes to the Inter- nal Revenue Code to encourage groups and individuals to obtain health coverage, and to promote access, equity, portability, afford- ability, and security of health benefits. Conference agreement The conference agreement follows the House bill, with modifications. In general Within limits, contributions to a medical savings account (”MSA”) are deductible if made by an eligible individual and are ex- cludable if made by the employer of an eligi- ble individual. Earnings on amounts in an MSA are not currently taxable. Distribu- tions from an MSA for medical expenses are not taxable. Eligible individuals Beginning in 1997, MSAs are available to employees covered under an employer-spon- sored high deductible plan of a small em- ployer and self-employed individuals. An em- ployer is a small employer if it employed, on average, no more than 50 employees during either the preceding or the second preceding year. In determining whether an employer is a small employer, a preceding year is not taken into account unless the employer was in existence throughout such year. In the case of an employer that was not in exist- ence through the first preceding year, the de- termination of whether the employer has no more than 50 employees is based on the aver- age number of employees that the employer reasonably expects to employ in the current year. In determining the number of employ- ees of an employer, employers under com- mon control are treated as a single em- ployer. In order for an employee of an eligible em- ployer to be eligible to make MSA contribu- tions (or to have employer contributions made on his or her behalf), the employee must be covered under an employer-spon- sored high deductible health plan and must not be covered under any other health plan (other than a plan that provides certain per- mitted coverage). In the case of an employee, contributions can be made to an MSA either by the individual or by the individual’s em- ployer. However, an individual is not eligible to make contributions to an MSA for a year if any employer contributions are made to an MSA on behalf of the individual for the year. Similarly, in order to be eligible to make contributions to an MSA, a self-employed in- dividual must be covered under a high de- ductible health plan and no other health plan (other than a plan that provides certain permitted coverage). An individual with other coverage in addi- tion to a high deductible plan is till eligible for an MSA if such other coverage is certain permitted insurance or is coverage (whether provided through insurance to otherwise) for accidents, disability, dental care, vision care, or long-term care. Permitted insurance is: (1) Medicare supplemental insurance; (2) insurance if substantially all of the coverage provided under such insurance relates to (a) liabilities incurred under worker’s com- pensation law, (b) tort liabilities, (c) liabil- ities relating to ownership or use of property (e.g., auto insurance), or (d) such other simi- lar liabilities as the Secretary may prescribe by regulations, (3) insurance for a specified disease or illness, and (4) insurance that pro- vides a fixed payment for hospitalization. CONGRESSIONAL RECORD \u2014 HOUSE H9545July 31, 1996 If a small employer with an MSA plan (i.e., the employer or its employees made con- tributions to an MSA) ceases to become a small employer (i.e., exceeds the 50-employee limit), then the employer (and its employ- ees) can continue to establish and make con- tributions to MSAs (including contributions for new employees and employees that did not previously have an MSA) until the year following the first year in which the em- ployer has more than 200 employees. After that, those employees who had an MSA (to which individual or employer contributions were made in any year) can continue to make contributions (or have contributions made on their behalf) even if the employer has more than 200 employees. For example, suppose Employer A has 48 employees in 1995 and 1996, and 205 employees in 1997 and 1998. A would be a small employer in 1997 and 1998 because it has 50 or fewer employees in the preceding or the second preceding year. Em- ployer A would still be considered a small employer in 1999. However, in years after 1999, Employer A would not be considered a small employer (even if the number of em- ployees fell to 50 or below), and in years after 1999, only employees who previously had MSA contributions (or have employer con- tributions made on their behalf). Tax treatment of and limits on contributions Individual contributions to an MSA are de- ductible (within limits) in determining AGI (i.e., ”above the line”). In addition, employer contributions are excludable (within the same limits), except that this exclusion does not apply to contributions made through a cafeteria plan. In the case of a self-employed individual, the deduction cannot exceed the individual’s earned income from the trade or business with respect to which the high deductible plan is established. In the case of an em- ployee, the deduction cannot exceed the indi- vidual’s compensation attributable to the employer sponsoring the high deductible plan in which the individual is enrolled. The maximum annual contribution that can be made to an MSA for a year is 65 per- cent of the deductible under the high deduct- ible plan in the case of individual coverage and 75 percent of the deductible in the case of family coverage. No other dollar limits on the maximum contribution apply. The an- nual contribution limit is the sum of the limits determined separately for each month, based on the individual’s status and health plan coverage as of the first day of the month. Contributions for a year can be made until the due date for the individual’s tax return for the year (determined without regard to extensions). In order to facilitate application of the cap on the number of MSA participants, de- scribed below, the employer is required to re- port employer MSA contributions, and the individual is required to report such em- ployer MSA contributions on the individual’s tax return. Comparability rule for employer contributions If an employer provides high deductible health plan coverage coupled with an MSA to employees and makes employer contribu- tions to the MSAs, the employer must make available a comparable contribution on be- half of all employees with comparable cov- erage during the same period. Contributions are considered comparable if they are either of the same amount or the same percentage of the deductible under the high deductible plan. The comparability rule is applied sepa- rately to part-time employees (i.e., employ- ees who are customarily employed for fewer than 30 hours per week). No restrictions are placed on the ability of the employer to offer different plans to different groups of employ- ees. For example, suppose an employer main- tains two high deductible plans, Plan A, with a deductible of $1,500 for individual coverage and $3,000 for family coverage, and Plan B, with a deductible of $2,000 for individual cov- erage and $4,000 for family coverage. The em- ployer offers an MSA contribution to full- time employees in Plan A of $500 for individ- ual coverage and $750 for family coverage. In order to satisfy the comparability rule, the employer would have to offer full-time em- ployees covered under Plan B one of the fol- lowing MSA contributions (1) $500 for em- ployees with individual coverage and $750 for employees with family coverage or (2) $667 for employees with individual coverage and $1,000 for employees with family coverage. Different contributions (or no contributions) could be made for part-time employees cov- ered under either high deductible plan. If employer contributions do not comply with the comparability rule during a period, then the employer is subject to an excise tax equal to 35 percent of the aggregate amount contributed by the employer to MSAs of the employer for that period. The excise tax is designed as a proxy for the denial of em- ployer contributions. In the case of a failure to comply with the comparability rule which is due to reasonable cause and not to willful neglect, the Secretary may waive part of all of the tax imposed to the extent that the payment of the tax would be excessive rel- ative to the failure involved. For purposes of the comparability rule, employers under common control are aggre- gated in the same manner as in determining whether the employer is a small employer. The comparability rule does not fail to be satisfied in a year if the employer is pre- cluded from making contributions for all employees with high deductible plan cov- erage because the employer has more than 200 employees or due to operation of the cap during the initial 4-year period. Definition of high deductible plan A high deductible plan is a health plan with an annual deductible of a least $1,500 and no more than $2,250 in the case of indi- vidual coverage and at least $3,000 and no more than $4,500 in the case of family cov- erage. In addition, the maximum out-of- pocket expenses with respect to allowed costs (including the deductible) must be no more than $3,000 in the case of individual coverage and no more than $5,500 in the case of family coverage. Beginning after 1998, these dollar amounts are indexed for infla- tion in $50 dollar increments based on the consumer price index. In plan does not fail to qualify as a high deductible plan merely be- cause it does not have a deductible for pre- ventive care as required by State law. As under present law, State insurance commissions would have oversight over the issuance of high deductible plans issued in conjunction with MSAs and could impose ad- ditional consumer protections. It is intended that the National Association of Insurance Commissioners (”NAIC”) will develop model standards for high deductible plans that indi- vidual States could adopt. Tax treatment of MSAs Earnings on amounts in an MSA are not currently includible in income. Taxation of distributions Distributions from an MSA for the medical expenses of the individual and his or her spouse or dependents generally are exclud- able from income. However, in any year for which a contribution is made to an MSA, withdrawals from an MSA maintained by that individual are excludable from income only if the individual for whom the expenses were incurred was eligible to make an MSA contribution at the time the expenses were incurred. This rule is designed to ensure that MSAs are in fact used in conjunction with a high deductible plan, and that they are not primarily used by other individuals who have health plans that are not high deductible plans. For example, suppose that, in 1997, in- dividual A is covered by a high deductible plan, and A’s spouse (”B”) is covered by a health plan that is not a high deductible plan. A makes contributions to an MSA for 1997. Withdrawals from the MSA to pay B’s medical expenses incurred in 1997 would be includible in income (and subject to the ad- ditional tax on nonmedical withdrawals) be- cause B is not covered by a high deductible plan. For this purpose, medical expenses are de- fined as under the itemized deduction for medical expenses, except that medical ex- penses do not include expenses for insurance other than long-term care insurance, pre- miums for health care continuation cov- erage, and premiums for health care cov- erage while an individual is receiving unem- ployment compensation under Federal or State law. Distributions that are not for medical ex- penses are includible in income. Such dis- tributions are also subject to an additional 15-percent tax unless made after age 65, death, or disability. Estate tax treatment Upon death, any balance remaining in the decedent’s MSA is includible in his or her gross estate. If the account holder’s surviving spouse is the named beneficiary of the MSA, then, after the death of the account holder, the MSA becomes the MSA of the surviving spouse and the amount of the MSA balance may be deducted in computing the dece- dent’s taxable estate, pursuant to the estate tax marital deduction provided in Code sec- tion 2056. The MSA qualifies for the marital deduction because the account holder has sole control over disposition of the assets in the MSA. The surviving spouse is not re- quired to include any amount in income as a result of the death; the general rules applica- ble to MSAs apply to the surviving spouse’s MSA (e.g., the surviving spouse is subject to income tax only on distributions from the MSA for nonmedical purposes). The surviv- ing spouse can exclude from income amounts withdrawn from the MSA for expenses in- curred by the decedent prior to death, to the extent they otherwise are qualified medical expenses. If, upon death, the MSA passes to a named beneficiary other than the decedent’s surviv- ing spouse, the MSA ceases to be an MSA as of the date of the decedent’s death, and the beneficiary is required to include the fair market value of MSA assets as of the date of death in gross income for the taxable year that includes the date of death. The amount includable in income is reduced by the amount in the MSA used, within one year of the death, to pay qualified medical expenses incurred prior to the death. As is the case with other MSA distributions, whether the expenses are qualified medical expenses is determined as of the time the expenses were incurred. In computing taxable income, the beneficiary may claim a deduction for that portion of the Federal estate tax on the decendent’s estate that was attributable to the amount of the MSA balance (calculated in accordance with the present-law rules re- lating to income in respect of a decedent set forth in sec. 691(c)). If there is no named beneficiary for the de- cedent’s MSA, the MSA ceases to be an MSA as of the date of death, and the fair market value of the assets in the MSA as of such date are includible in the decedent’s gross in- come for the year of the death. This rule ap- plies in all cases in which there is no named CONGRESSIONAL RECORD \u2014 HOUSEH9546 July 31, 1996 1 Permitted coverage, as described above, does not constitute coverage under a health insurance plan for this purpose. 2 This report would include the name and social se- curity number of taxpayers establishing an MSA. Failures to report are subject to a penalty of $25 for each MSA up to a maximum of $5,000. A trustee or custodian required to report could elect to do so on a company-wide or branch-by-branch basis. 3 That is, the report would not include MSAs to which contributions are made for the prior year. 4 Each income tax return on which an MSA con- tribution is shown is treated as one taxpayer for purposes of the cap. It is anticipated that the IRS would adjust the actual return information to take into account MSAs that may have been established by late filers. beneficiary, even if the surviving spouse ulti- mately obtains the right to MSA assets (e.g., if the surviving spouse is the sole beneficiary of the decedent’s estate). Because of the sig- nificant tax consequences if a married indi- vidual fails to name his or her spouse as the MSA beneficiary, even if the rights to MSA assets are otherwise acquired by the surviv- ing spouse, it is anticipated that the market- ing materials describing other tax aspects of MSAs will explain the consequences of fail- ure to name the spouse as the beneficiary. Cap on taxpayers utilizing MSAs In general.\u2014The number of taxpayers bene- fiting annually from an MSA contribution is limited to a threshold level (generally 750,000 taxpayers). If it is determined in a year that the threshold level has been exceeded (called a ”cut-off” year) then, in general, for suc- ceeding years during the 4-year pilot period 1997 2000, only those individuals who (1) made an MSA contribution or had an em- ployer MSA contribution for the year or a preceding year (i.e. are active MSA partici- pants) or (2) are employed by a participating employer, would be eligible for an MSA con- tribution. In determining whether the threshold for any year has been exceeded, MSAs of individuals who were not covered under a health insurance plan for the six month period ending on the date on which coverage under a high deductible plan com- mences would not be taken into account.1 However, if the threshold level is exceeded in a year, previously uninsured individuals would be subject to the same restriction on contributions in succeeding years as other individuals. That is, they would not be eligi- ble for an MSA contribution for a year fol- lowing a cut-off-year unless they are an ac- tive MSA participant (i.e. had an MSA con- tribution for the year or a preceding year) or are employed by a participating employer. In a year after a cut-off year, employees of a participating employer can establish new MSAs and make new contributions (even if the employee is a new employee or did not previously have an MSA). An employer is a participating employer if (1) the employer made any MSA contributions on behalf of employees in any preceding year or (2) at least 20 percent of the employees covered under a high deductible plan made an MSA contribution of at least $100 in the preceding year. In the case of a cut-off year before 2000, an individual is not an eligible individual or an active MSA participant unless the individual was first covered under a high deductible plan on or before the cut-off date. The cut-off date is generally October 1 of the cut-off year. However, if the individual was enrolled in a plan pursuant to a regularly scheduled enrollment period, then the cut-off date is December 31. Similarly, an employer is not considered a participating employer if it first offered coverage after October 1 of a cut-off year unless the high deductible plan is offered pursuant to a regularly scheduled enrollment period. In addition, a self-em- ployed individual is not considered an eligi- ble individual or an active MSA participant unless the individual was covered under a high deductible plan on or before November 1 of a cut-off year. These rules are designed to prevent high deductible plans from being offered just be- fore the limitation on MSAs is effective in order to avoid application of the cap. They are not, however, intended to preclude indi- viduals who first enroll in an employer-spon- sored high deductible health plan or employ- ees of employers that adopt a high deduct- ible plan in a cut-off year due to normal health plan operation from having MSAs. For example, suppose a small employer of- fers a high deductible plan that provides that new employees may be covered under the plan beginning the first day of the month after the month in which they are hired. New employee A (whose previous coverage was not high deductible coverage) is hired on Oc- tober 15, and is enrolled in the high deduct- ible plan November 1 of that year. If the year is a cut-off year, Employee A is an eligible individual and, if he has an MSA contribu- tion for the year, an active participant for the year because he was enrolled pursuant to a regularly scheduled enrollment period. Similarly, suppose that employer A is a small employer and does not currently offer health care coverage. In 1997, A decides to offer health plan coverage to its employees, including a high deductible plan coupled with an MSA. A takes steps to provide such coverage on or before October 1 of the year (e.g., making arrangements with insurance companies or distributing plan material to employees). The first enrollment period for the health plans begins September 1, and coverage under the plan will begin November 1. If the year is a cut-off year, the employer is a participating employer because the plan was established pursuant to a regularly scheduled enrollment period. Under certain circumstances, MSA partici- pation may be reopened after a cut-off year so that MSAs are again available to all indi- viduals in the qualifying group of self-em- ployed individuals and employees of small employers. For the 1997 tax year, taxpayers are per- mitted to establish MSAs provided that they are in the qualifying group of self-employed individuals or employees working for small employers. Rules for 1997 On or before June 1, 1997, each trustee or custodian of an MSA (e.g., insurance com- pany or financial institution) is required to report to the Internal Revenue Service (”IRS”) the total number of MSAs estab- lished as of April 30, 1997, for which it acts as trustee or custodian, including the number of MSAs established for previously uninsured individuals.2 If, based on this reporting, the number of MSAs established (but excluding those established for previously uninsured individuals) as of April 30, 1997, exceeds 375,000 (50 percent of 750,000), on or before September 1, 1997, the IRS would publish guidance providing that only active MSA participants or employees of participating employers would be eligible for an MSA con- tribution for the 1998 tax year and there- after. If this threshold is exceeded, an indi- vidual who is first covered by an employer- sponsored high deductible health plan after September 1, 1997, is not an eligible individ- ual or an active MSA participant (and there- fore cannot have an MSA for 1997 or a subse- quent year) unless the high deductible cov- erage is elected pursuant to a regularly scheduled enrollment period. Similarly, an employer is not considered a participating employer if it first offered a high deductible plan after September 1, 1997, unless the plan was offered pursuant to a regularly sched- uled enrollment period. Also, a self-employed individual would not be an eligible individ- ual or an active MSA participant unless the individual was first covered under a high de- ductible plan on or before October 1, 1997. If the 375,000 cap is not exceeded, then an- other determination of MSA participation will be made, as follows. On or before August 1, 1997, each trustee or custodian of an MSA (e.g., insurance company or financial institu- tion) is required to report to the Internal Revenue Service (”IRS”) the total number of MSAs established as of June 30, 1997, for which it acts as trustee or custodian, includ- ing the number of MSAs established for pre- viously uninsured individuals. If, based on this reporting, the number of MSAs estab- lished (but excluding those established for previously uninsured individuals) exceeds the 1997 threshold level of 525,000 (70 percent of 750,000), on or before October 1, 1997, the IRS would publish guidance providing that only active MSA participants or employees of participating employers would be eligible for an MSA contribution for the 1998 tax year and thereafter. If the 1997 threshold is ex- ceeded, an individual who is first covered by an employer-sponsored high deductible health plan after October 1, 1997, is not an el- igible individual or an active MSA partici- pant (and therefore cannot have an MSA for 1997 or a subsequent year) unless the high de- ductible coverage is elected pursuant to a regularly scheduled enrollment period. Simi- larly, an employer is not considered a par- ticipating employer if it first offered a high deductible plan after October 1, 1997, unless the plan was offered pursuant to a regularly scheduled enrollment period. Also, a self-em- ployed individual would not be an eligible in- dividual or an active MSA participant unless the individual was first covered under a high deductible plan on or before November 1, 1997. If the 1997 threshold level is not exceeded, all taxpayers in the qualifying eligible group (i.e., self-employed individuals and employ- ees working for employers with 50 or fewer employees) would be permitted to have MSA contributions for the 1998 tax year. Rules for 1998 and succeeding years In general\u2014In 1998 and succeeding years, on or before August 1 of the year, each trustee or custodian of an MSA is required to report to the IRS the total number of MSAs estab- lished as of June 30 for the current year,3 in- cluding the number of such MSAs estab- lished for previously uninsured individuals. In addition, the IRS is directed to collect data with respect to the number of taxpayers showing an MSA contribution on their indi- vidual income tax returns for the prior year and the extent to which such taxpayers were previously uninsured.4 If, based on this infor- mation, the IRS determines as described below that the number of taxpayers antici- pated to have MSA contributions (disregard- ing previously uninsured individuals) ex- ceeds the applicable threshold level, the IRS is required to issue guidance to the public by no later than October 1. If this guidance is issued, then only taxpayers who are active MSA participants or who are employed by a participating employer would be entitled to MSA contributions in tax years following the year the guidance is issued. For 1998 and succeeding years, the thresh- old is exceeded if either of the following lim- its are exceeded. The numerical limit is ex- ceeded if: (1) the number of MSA returns filed on or before April 1 of the year, plus the estimate of the number of MSA returns for such year that will be filed after such date exceeds the threshold, or (2) 90 percent of the amount determined under (1), plus 15\/6ths of the MSAs established for the year before July 1 exceeds $750,000. CONGRESSIONAL RECORD \u2014 HOUSE H9547July 31, 1996 1998.\u2014In 1998, the IRS would analyze the return data from the filing of 1997 tax year returns and would determine, based on this data, the number of taxpayers with MSA contributions for 1997 and who were not pre- viously uninsured. If the IRS determines that (1) MSA returns filed on or before April 15, 1998, plus the estimated number of MSA return for 1997 filed after such date exceeds 600,000, or (2) that 90 percent of the MSA re- turns in (1), plus 15\/6ths of the number of MSAs established for 1998 between January 1 and July 1, 1998, the IRS would publish guid- ance on or before October 1, 1998, advising taxpayers that only taxpayers who had pre- viously had MSA contributions (i.e., for ei- ther the 1997 or 1998 tax year) or who are em- ployed by a participating employer would be eligible for MSA contributions in succeeding tax years. If the 1998 threshold is exceeded, an individual who is first covered by an em- ployer-sponsored high deductible health plan after October 1, 1998, is not an eligible indi- vidual or an active MSA participant (and therefore cannot have an MSA for 1998 or a subsequent year) unless the high deductible coverage is elected pursuant to a regularly scheduled enrollment period. Similarly, an employer is not considered a participating employer if it first offered a high deductible plan after October 1, 1998, unless the plan was offered pursuant to a regularly sched- uled enrollment period. Also, a self-employed individual would not be an eligible individ- ual or an active MSA participant unless the individual was first covered under a high de- ductible plan on or before November 1, 1998. In the event that the threshold level had not been exceeded, all taxpayers in the quali- fying eligible group would be permitted to establish MSAs during the 1999 tax year. 1999.\u2014In 1999, the IRS would analyze the return data from the filing of 1998 tax year returns and would determine, based on this data, the number of taxpayers with MSA contributions for 1998 and who were not pre- viously uninsured. If the IRS determines that (1) MSA returns filed on or before April 15, 1999, plus the estimated number of MSA returns for 1998 filed after such date exceeds 600,000, or (2) that 90 percent of the MSA re- turns in (1), plus 15\/6ths of the number of MSAs established for 1998 between January 1 and July 1, 1999, the IRS would publish guid- ance on or before October 1, 1999, advising taxpayers that only taxpayers who had pre- viously had MSA contributions (i.e., for the 1997, 1998, or 1999 tax year) or who are em- ployed by a participating employer would be eligible for MSA contributions in succeeding tax years. If the 1999 threshold is exceeded, an individual who is first covered by an em- ployer-sponsored high deductible health plan after October 1, 1999, is not an eligible indi- vidual or an active MSA participant (and therefore cannot have an MSA for 1999 or a subsequent year) unless the high deductible coverage is elected pursuant to a regularly scheduled enrollment period. Similarly, an employer is not considered a participating employer if it first offered a high deductible plan after October 1, 1999, unless the plan was offered pursuant to a regularly sched- uled enrollment period. Also, a self-employed individual would not be an eligible individ- ual or an active MSA participant unless the individual was first covered under a high de- ductible plan on or before November 1, 1999. In the event that the threshold level had not been exceeded, all taxpayers in the quali- fying eligible group would be permitted to establish MSAs during the 2000 tax year. Reopening of MSA participation.\u2014If 1997 is a cut-off year, then in 1998, the IRS would (as described above) analyze the return data from the filing of 1997 tax year returns and would determine, based on this data, the number of taxpayers with MSA contribu- tions for 1997 and who were not previously uninsured. If the IRS determines that MSA returns filed on or before April 15, 1998, plus the estimated number of MSA return for 1997 filed after such date (disregarding MSAs of previously uninsured individuals) exceeds 750,000, then the IRS will announce by Octo- ber 1, 1998, that MSAs will be available to all eligible individuals in the qualifying eligible group of self-employed individuals and em- ployees of small employers covered under a high deductible health plan during the first 6 months of 1999. Similarly, if 1998, is a cut-off year, then in 1999, MSA returns filed on or before April 15, 1999, plus the estimated num- ber of MSA returns for 1998 filed after such date (disregarding MSAs of previously unin- sured individuals) exceeds 750,000, then IRS will announce by October 1, 1998, that MSAs will be available to all eligible individuals in the qualifying eligible group of self-em- ployed individual and employees of small employers with high deductible plan cov- erage during the first 6 months of 2000. End of pilot project After December 31, 2000, no new contribu- tions may be made to MSAs except by or on behalf of individuals who previously had MSA contributions and employees who are employed by a participating employer. An employer is a participating employer if (1) the employer made any MSA contributions for any year to an MSA on behalf of employ- ees or (2) at least 20 percent of the employees covered under a high deductible plan made MSA contributions of at least $100 in the year 2000. Self-employed individuals who made con- tributions to an MSA during the period 1997 2000 also may continue to make contribu- tions after 2000. Measuring the effects of MSAs During 1997 2000, the Department of the Treasury will evaluate MSA participation and the reduction in Federal revenues due to such participation and make such reports of such evaluations to the Congress as the Sec- retary determines appropriate. The General Accounting Office is directed to contract with an organization with exper- tise in health economics, health insurance markets and actuarial science to conduct a study regarding the effects of MSAs in the small group market on (1) selection (includ- ing adverse selection), (2) health costs, in- cluding the impact on premiums of individ- uals with comprehensive coverage, (3) use of preventive care, (4) consumer choice, (5) the scope of coverage of high deductible plans purchased in conjunction with an MSA and (6) other relevant issues, to be submitted to the Congress by January 1, 1999. The conferees intend that the study be broad in scope, gather sufficient data to fully evaluate the relevant issues, and be ade- quately funded. The conferees expect the study to utilize appropriate techniques to measure the impact of MSAs on the broader health care market, including in-depth anal- ysis of local markets with high penetration. The conferees expect the study to evaluate the impact of MSAs on individuals and fami- lies experience high health care costs, espe- cially low- and middle-income families. Definiton of MSA In general, an MSA is a trust or custodial account created exclusively for the benefit of the account holder and his subject to rules similar to those applicable to individual re- tirement arrangements. Effective date The provisions are effective for taxable years beginning after December 31, 1996. B. INCREASE IN DEDUCTION FOR HEALTH INSUR- ANCE EXPENSES OF SELF-EMPLOYED INDIVID- UALS (Sec. 311 of the House bill and sec. 401 of the Senate amendment.) Present law Under present law, self-employed individ- uals are entitled to deduct 30 percent of the amount, paid for health insurance for the self-employed individual and the individual’s spouse and dependents. The deduction is not available for any month in which the tax- payer is eligible to participate in a sub- sidized health plan maintained by the em- ployer of the taxpayer of the taxpayer’s spouse. The 30-percent deduction is available in the case of self insurance as well as com- mercial insurance. The self-insured plan must in fact be insurance (e.g., there must be appropriate risk shifting) and not merely a reimbursement arrangement. House bill Under the House bill, the deduction for health insurance for self-employed individ- uals is phased up to 50 percent as follows: for taxable years beginning in 1998, the amount of the deduction would be 35 percent of health insurance expenses; for taxable years beginning in 1999, 2000, and 2001, 40 percent; for taxable years beginning in 2002, 45 per- cent; and for taxable years beginning in 2003 and thereafter, 50 percent. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1997. Senate amendment Beginning in 1997, the Senate amendment phases up the deduction in 5 percent incre- ments until it is 80 percent in 2006 and there- after. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1996. Conference agreement The conference agreement increases the deduction for health insurance of self-em- ployed individuals as follows: the deduction would be 40 percent in 1997; 45 percent in 1998 through 2002, 50 percent in 2003; 60 percent in 2004, 70 percent in 2005; and 80 percent in 2006 and thereafter. The conference agreement also provides that payments for personal injury or sick- ness through and arrangements having the effect of accident or health insurance (and that are not merely reimbursement arrange- ments) are excludable from income. In order for the exclusion to apply, the arrangement must be insurance (e.g., there must be ade- quate risk shifting). This provision equalizes the treatment of payments under commer- cial insurance and arrangements other than commercial insurance that have the effect of insurance. Under this provision, a self-em- ployed individual who receives payments from such an arrangement could exclude the payments from income. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1996. No inference is intended with respect to the excludability of payments under ar- rangements having the effect of accident or health insurance under present law. C. TREATMENT OF LONG-TERM CARE INSURANCE AND SERVICES (Secs. 321 323 and 325 328 of the House bill and secs. 411 415 and 421 424 of the Senate amendment.) Present law In general Present law generally does not provide ex- plicit rules relating to the tax treatment of long-term care insurance contracts or long- term care services. Thus, the treatment of CONGRESSIONAL RECORD \u2014 HOUSEH9548 July 31, 1996 5 These requirements include a requirement that a health FSA can only provide reimbursement for medical expenses (as defined in sec. 213) and cannot provide reimbursement for premium payments for other health coverage and that the maximum amount of reimbursement under a health FSA must be available at all times during the period of cov- erage. 6 The bill does not otherwise modify the require- ments relating to FSAs. An FSA is defined as a ben- efit program providing employees with coverage under which specified incurred expenses may be re- imbursed (subject to maximums and other reason- able conditions), and the maximum amount of reim- bursement that is reasonably available to a partici- pant is less than 500 percent of the value of the cov- erage. 7 The 90-day period is not a waiting period. Thus, for example, an individual can be certified was chronically ill if the licensed health care practi- tioner certifies that the individual will be unable to perform at least 2 activities of daily living for at least 90 days. 8 Nothing in the bill requires the contract to take into account all of the activities of daily living. For example, a contract could require that an individual be unable to perform (without substantial assist- ance) 2 out of any 5 such activities, or for another example, 3 out of the 6 activities. long-term care contracts and services is un- clear. Present law does provide rules relating to medical expenses and accident or health insurance. Itemized deduction for medical expenses In determining taxable income for Federal income tax purposes, a taxpayer is allowed an itemized deduction for unreimbursed ex- penses that are paid by the taxpayer during the taxable year for medical care of the tax- payer, the taxpayer’s spouse, or a dependent of the taxpayer, to the extent that such ex- penses exceed 7.5 percent of the adjusted gross income of the taxpayer for such year (sec. 213). For this purpose, expenses paid for medical care generally are defined as amounts paid: (1) for the diagnosis, cure, mitigation, treatment, or prevention of dis- ease (including prescription medicines or drugs and insulin), or for the purpose of af- fecting any structure or function of the body (other than cosmetic surgery not related to disease, deformity, or accident); (2) for trans- portation primarily for, and essential to, medical care referred to in (1); or (3) for in- surance (including Part B Medicare pre- miums) covering medical care referred to in (1) and (2). Exclusion for amounts received under acci- dent or health insurance Amounts received by a taxpayer under ac- cident or health insurance for personal inju- ries or sickness generally are excluded from gross income to the extent that the amounts received are not attributable to medical ex- penses that were allowed as a deduction for a prior taxable year (sec. 104). Treatment of accident or health plans main- tained by employers Contributions of an employer to an acci- dent or health plan that provides compensa- tion (through insurance or otherwise) to an employee for personal injuries or sickness of the employee, the employee’s spouse, or a de- pendent of the employee, are excluded from the gross income of the employee (sec. 106). In addition, amounts received by an em- ployee under such a plan generally are ex- cluded from gross income to the extent that the amounts received are paid, directly or in- directly, to reimburse the employee for ex- penses for the medical care of the employee, the employee’s spouse, or a dependent of the employee (sec. 105). for this purpose, ex- penses incurred for medical care are defined in the same manner as under the rules re- garding the deduction for medical expenses. A cafeteria plan is an employer-sponsored arrangement under which employees can elect among cash and certain employer-pro- vided qualified benefits. No amount is in- cluded in the gross income of a participant in a cafeteria plan merely because the par- ticipant has the opportunity to make such an election (sec. 125). Employer-provided ac- cident or health coverage is one of the bene- fits that may be offered under a cafeteria plan. A flexible spending arrangement (”FSA”) is an arrangement under which an employee is reimbursed for medical expenses or other nontaxable employer-provided benefits, such as dependent care, and under which the max- imum amount of reimbursement that is rea- sonably available to a participant for a pe- riod of coverage is not substantially in ex- cess of the total premium (including both employee-paid and employer-paid portions of the premium) for such participant’s cov- erage. Under proposed Treasury regulations, a maximum amount of reimbursement is not substantially in excess of the total premium if such maximum amount is less than 500 percent of the premium. An FSA may be part of a cafeteria plan or provided by an em- ployer outside a cafeteria plan. FSAs are commonly used to reimburse employees for medical expenses not covered by insurance. If certain requirements are satisfied,5 amounts reimbursed for nontaxable benefits from an FSA are excludable from income. Health care continuation rules The health care continuation rules require that an employer must provide qualified beneficiaries the opportunity to continue to participate for a specified period in the em- ployer’s health plan after the occurrence of certain events (such as termination of em- ployment) that would have terminated such participation (sec. 4980B). Individuals elect- ing continuation coverage can be required to pay for such coverage. House bill Tax treatment and definition of long-term care insurance contracts and qualified long-term care services Exclusion of long-term care proceeds.\u2014A long-term care insurance contract generally is treated as an accident and health insur- ance contract. Amounts (other than policy- holder dividends or premium refunds) re- ceived under a long-term care insurance con- tract generally are excludable as amounts received for personal injuries and sickness, subject to a cap of $175 per day, or $63,875 an- nually, on per diem contracts only. If the ag- gregate amount of periodic payments under all qualified long-term care contracts ex- ceeds the dollar cap for the period, then the amount of such excess payments is exclud- able only to the extent of the individual’s costs (that are not otherwise compensated for by insurance or otherwise) for long-term care services during the period. The dollar cap is indexed by the medical care cost com- ponent of the consumer price index. Exclusion for employer-provided long-term care coverage.\u2014A plan of an employer provid- ing coverage under a long-term care insur- ance contract generally is treated as an acci- dent and health plan. Employer-provided coverage under a long-term care insurance contract is not, however, excludable by an employee if provided through a cafeteria plan; similarly, expenses for long-term care services cannot be reimbursed under an FSA.6 Definition of long-term care insurance con- tract.\u2014A long-term care insurance contract is defined as any insurance contract that provides only coverage of qualified long-term care services and that meets other require- ments. The other requirements are that (1) the contract is guaranteed renewable, (2) the contract does not provide for a cash surren- der value or other money that can be paid, assigned, pledged or borrowed, (3) refunds (other than refunds on the death of the in- sured or complete surrender or cancellation of the contract) and dividends under the con- tract may be used only to reduce future pre- miums or increase future benefits, and (4) the contract generally does not pay or reim- burse expenses reimbursable under Medicare (except where Medicare is a secondary payor, or the contract makes per diem or other periodic payments without regard to ex- penses). A contract does not fail to be treated as a long-term care insurance contract solely be- cause it provides for payments on a per diem or other periodic basis without regard to ex- penses incurred during the period. Medicare duplication rules.\u2014The bill pro- vides that no provision of law shall be con- strued or applied so as to prohibit the offer- ing of a long-term care insurance contract on the basis that the contract coordinates its benefits with those provided under Medi- care. Thus, long-term care insurance con- tracts are not subject to the rules requiring duplication of Medicare benefits. Definition of qualified long-term care serv- ices.\u2014Qualified long-term care services means necessary diagnostic, preventive, therapeutic, curing, treating, mitigating and rehabilitative services, and maintenance or personal care services that are required by a chronically ill individual and that are pro- vided pursuant to a plan of care prescribed by a licensed health care practitioner. Chronically ill individual.\u2014A chronically ill individual is one who has been certified with- in the previous 12 months by a licensed health care practitioner as (1) being unable to perform (without substantial assistance) at least 2 activities of daily living for at least 90 days 7 due to a loss of functional ca- pacity, (2) having a similar level of disability as determined by the Secretary of the Treas- ury in consultation with the Secretary of Health and Human Services, or (3) requiring substantial supervision to protect such indi- vidual from threats to health and safety due to severe cognitive impairment. Activities of daily living are eating, toileting, transfer- ring, bathing, dressing and continence.8 it is intended that an individual who is physically able but has a cognitive impair- ment such as Alzheimer’s disease or another form of irreversible loss of mental capacity be treated similarly to an individual who is unable to perform (without substantial as- sistance) at least 2 activities of daily living. Because of the concern that eligibility for the medical expense deduction not be diag- nosis-driven, the provision requires the cog- nitive impairment to be severe. It is in- tended that severe cognitive impairment mean a deterioration or loss in intellectual capacity that is measured by clinical evi- dence and standardized tests which reliably measure impairment in: (1) short- or long- term memory; (2) orientation to people, places or time; and (3) deductive or abstract reasoning. In addition, it is intended that such deterioration or loss place the individ- ual in jeopardy of harming self or others and therefore require substantial supervision by another individual. A licensed health care practitioner is a physician (as defined in sec. 1861(r)(l) of the Social Security Act) and any registered pro- fessional nurse, licensed social worker or other individual who meets such require- ments as may be prescribed by the Secretary of the Treasury. Expenses for long-term care services treated as medical expenses.\u2014Unreimbursed expenses for qualified long-term care services provided to the taxpayer or the taxpayer’s spouse or de- pendents are treated as medical expenses for CONGRESSIONAL RECORD \u2014 HOUSE H9549July 31, 1996 9 The rule limiting such services provided by a rel- ative or a related corporation does not apply for pur- poses of the exclusion for amounts received under a long-term care insurance contract, whether the con- tract is employer-provided or purchased by an indi- vidual. The limitation in unnecessary in such cases because it is anticipated that the insurer will mon- itor reimbursements to limit opportunities for fraud in connection with the performance of services by the taxpayer’s relative or a related corporation. 10 Similarly, within certain limits, in the case of a rider to a life insurance contract, charges against the life insurance contract’s cash surrender value that are includible in income are treated as medical expenses (provided the rider constitutes a long-term care insurance contract). 11 Terminally ill is defined as under the provision of the bill relating to accelerated death benefits. In general, under that provision, an individual is con- sidered to be terminally ill if he or she is certified as having an illness or physical condition that rea- sonably can be expected to result in death within 24 months of the date of the certification. purposes of the itemized deduction for medi- cal expenses (subject to the present-law floor of 7.5 percent of adjusted gross income). For this purpose, amounts received under a long- term care insurance contract (regardless of whether the contract reimburses expenses or pays benefits on a per diem or other periodic basis) are treated as reimbursement for ex- penses actually incurred for medical care. For purposes of the deduction for medical expenses, qualified long-term care services do not include services provided to an indi- vidual by a relative or spouse (directly, or through a partnership, corporation, or other entity), unless the relative is a licensed pro- fessional with respect to such services, or by a related corporation (within the meaning of Code section 267(b) or 707(b)).9 Long-term care insurance premiums treated as medical expenses.\u2014Long-term care insurance premiums that do not exceed specified dollar limits are treated as medical expenses for purposes of the itemized deduction for medi- cal expenses.10 The limits are as follows: In the case of an indi- vidual with an at- tained age before the close of the tax- able year of: The limitation on premiums paid for such taxable years is: Not more than 40 ……………………. $200 More than 40 but not more than 50 ……………………………………….. 375 More than 50 but not more than 60 ……………………………………….. 750 More than 60 but not more than 70 ……………………………………….. 2,000 More than 70 ………………………….. 2,500 For taxable years beginning after 1997, these dollar limits are indexed for increases in the medical care component of the consumer price index. The Secretary of the Treasury, in consultation with the Secretary of Health and Human Services, is directed to develop a more appropriate index to be ap- plied in lieu of the foregoing. Such an alter- native might appropriately be based on in- creases in skilled nursing facility and home health care costs. It is intended that the Treasury Secretary annually publish the in- dexed amount of the limits as early in the year as they can be calculated. Deduction for long-term care insurance of self-employed individuals.\u2014The present-law 30 percent deduction for health insurance ex- penses of self-employed individuals is phased up to 50 percent under the bill. Because the bill treats payments of eligible long-term care insurance premiums in the same man- ner as medical insurance premiums, the self- employed health insurance deduction applies to eligible long-term care insurance pre- miums under the bill. Long-term care riders on life insurance con- tracts.\u2014In the case of long-term care insur- ance coverage provided by a rider on or as part of a life insurance contract, the require- ments applicable to long-term care insur- ance contracts apply as if the portion of the contract providing such coverage were a sep- arate contract. The term ”portion” means only the terms and benefits that are in addi- tion to the terms and benefits under the life insurance contract without regard to long- term care coverage. As a result, if the appli- cable requirements are met by the long-term care portion of the contract, amounts re- ceived under the contract as provided by the rider are treated in the same manner as long-term care insurance benefits, whether or not the payment of such amounts causes a reduction in the contract’s death benefit or cash surrender value. The guideline premium limitation applicable under section 7702(c)(2) is increased by the sum of charges (but not premium payments) against the life insur- ance contract’s cash surrender value, the im- position of which reduces premiums paid for the contract (within the meaning of sec. 7702(f)(1)). In addition, it is anticipated that Treasury regulations will provide for appro- priate reduction in premiums paid (within the meaning of sec. 7702(f)(1)) to reflect the payment of benefits under the rider that re- duce the cash surrender value of the life in- surance contract. A similar rule should apply in the case of a contract governed by section 101(f) and in the case of the payments under a rider that are excludable under sec- tion 101(g) of the Code (as added by this bill). Health care continuation rules.\u2014The health care continuation rules do not apply to cov- erage under a long-term care insurance con- tract. Inclusion of excess long-term care benefits In general, the bill provides that the maxi- mum annual amount of long-term care bene- fits under a per diem type contract that is excludable from income with respect to an insured who is chronically ill (not including amounts received by reason of the individual being terminally ill) 11 cannot exceed the equivalent of $175 per day for each day the individual is chronically ill. Thus, for per diem type contracts, the maximum annual exclusion for long-term care benefits with respect to any chronically ill individual (not including amounts received by reason of the individual being terminally ill) is $63,875 (for 1997). If payments under such contracts ex- ceed the dollar limit, then the excess is ex- cludable only to the extent the individual has incurred actual costs for long-term care services. If the insured is not the same as the holder of the contract, the insured may as- sign some or all of this limit to the contract holder at the time and manner prescribed by the Secretary. This $175 per day limit is indexed for infla- tion after 1997 for increases in the medical care component of the consumer price index. The Treasury Secretary, in consultation with the Secretary of Health and Human Services, is directed to develop a more ap- propriate index, to be applied in lieu of the foregoing. Such an alternative might appro- priately be based on increases in skilled nursing facility and home health care costs. It is intended that the Treasury Secretary annually publish the indexed amount of the limit as early in the year as it can be cal- culated. A payor of long-term care benefits (defined for this purpose to include any amount paid under a product advertised, marketed or of- fered as long-term care insurance) is re- quired to report to the IRS the aggregate amount of such benefits paid to any individ- ual during any calendar year, and the name, address and taxypayer identification number of such individual. A copy of the report must be provided to the payee by January 31 fol- lowing the year of payment, showing the name of the payor and the aggregate amount of benefits paid to the individual during the calendar year. Failure to file the report or provide the copy to the payee is subject to the generally applicable penalties for failure to file similar information reports. Consumer protection provisions Under the bill, long-term care insurance contracts, and issuers of contracts, are re- quired to satisfy certain provisions of the long-term care insurance model Act and model regulations promulgated by the Na- tional Association of Insurance Commis- sioners (as adopted as of January 1993). The policy requirements relate to disclosure, nonforfeitability, guaranteed renewal or noncancellability, prohibitions on limita- tions and exclusions, extension of benefits, continuation or conversion of coverage, dis- continuance and replacement of policies, un- intentional lapse, post-claims underwriting, minimum standards, inflation protection, preexisting conditions, and prior hospitaliza- tion. The bill also provides disclosure and nonforfeiture requirements. The nonforfeit- ure provision gives consumers the option of selecting reduced paid-up insurance, ex- tended term insurance, or a shortened bene- fit period in the event a policyholder who elects a nonforfeiture provision is unable to continue to pay premiums. The requirements for issuers of long-term care insurance con- tracts relate to application forms, reporting requirements, marketing, appropriateness of purchase, format, delivering a shopper’s guide, right to return, outline of coverage, group plans, policy summary, monthly re- ports on accelerated death benefits, and in- contestability period. A tax is imposed equal to $100 per policy per day for failure to sat- isfy these requirements. Nothing in the bill prevents a State from establishing, implementing or continuing standards related to the protection of policy- holders of long-term care insurance policies, if such standards are not inconsistent with standards established under the bill. Effective date The provisions defining long-term care in- surance contracts and qualified long-term care services apply to contracts issued after December 31, 1996. Any contract issued be- fore January 1, 1997, that met the long-term care insurance requirements in the State in which the policy was sitused at the time it was issued shall be treated as a long-term care insurance contract, and services pro- vided under or reimbursed by the contract treated as qualified long-term care services. A contract providing for long-term care in- surance may be exchanged for a long-term care insurance contract (or the former can- celled and the proceeds reinvested in the lat- ter within 60 days) tax free between the date of enactment and January 1, 1998. Taxable gain would be recognized to the extent money or other property is received in the exchange. The issuance or conformance of a rider to a life insurance contract providing long-term care insurance coverage is not treated as a modification or a material change for pur- poses of applying sections 101(f), 7702, and 7702A of the Code. The provision relating to treatment of eli- gible long-term care premiums as a medical expense is effective for taxable years begin- ning after December 31, 1996. The provision treating amounts paid for long-term care services as a medical expense (for purposes of the medical expense deduction) is effective for services furnished in taxable years begin- ning after December 31, 1997. The provisions relating to the maximum exclusion for certain long-term care benefits and reporting are effective for taxable years CONGRESSIONAL RECORD \u2014 HOUSEH9550 July 31, 1996 12 See item D, below. beginning after December 31, 1996. Thus, the initial year in which reports will be filed with the IRS and copies provided to the payee will be 1998, with respect to long-term care benefits paid in 1997. Senate amendment The Senate amendment is the same as the House bill, except as follows. Life insurance company reserves In determining reserves for insurance com- pany tax purposes, the Senate amendment provides that the Federal income tax reserve method applicable for a long-term care in- surance contract issued after December 31, 1996, is the method prescribed by the Na- tional Association of Insurance Commis- sioners (”NAIC”) (or, if no reserve method has been so prescribed, a method consistent with the tax reserve method for life insur- ance, annuity or noncancellable accident and health insurance contracts, whichever is most appropriate). The method currently prescribed by the NAIC for long-term care insurance contracts is the one-year full pre- liminary term method. As under present law, however, in no event may the tax reserve for a contract as of any time exceed the amount which would be taken into account with re- spect to the contract as of such time in de- termining statutory reserves. Exchanges of life insurance and other con- tracts for long-term care insurance con- tracts The exchange of a life insurance contract or an endowment or annuity contract for a qualified long-term care insurance contract is not taxable under the Senate amendment. Distributions from IRAs and retirement plans for long-term care insurance The Senate amendment permits certain plans to make distributions to pay premiums for long-term care insurance for the individ- ual or the individual’s spouse and provides that the 10-percent tax on early withdrawals does not apply to such distributions. The provision applies to distributions from indi- vidual retirement arrangements (”IRAs”) and distributions attributable to elective de- ferrals to qualified cash or deferred arrange- ments (sec. 401(k) plans), tax-sheltered annu- ities (sec. 403(b) plans), nonqualified deferred compensation plans of governmental or tax- exempt employers (sec. 457 plans), and sec- tion 501(c)(18) plans used to pay premiums for long-term care insurance for the individ- ual or the individual’s spouse. Such distribu- tions are includable in income (as under present law). Effective dates The effective dates are the same as the House bill, except as follows. The provision treating long-term care serv- ices as a medical expense is effective for tax- able years beginning after December 31, 1996. The change in treatment of reserves for long-term care insurance contracts is effec- tive for contracts issued after December 31, 1996. The provision relating to tax-free ex- changes of life insurance, endowment and an- nuity contracts for long-term care insurance contracts is effective for taxable years begin- ning after December 31, 1997. The provision relating to certain distribu- tions from IRSs and elective deferrals used to pay long-term care insurance premiums is effective for payments and distributions after December 31, 1996. Conference agreement The conference agreement generally fol- lows the House bill, except as follows. Tax treatment and definition of long-term care insurance contracts and qualified long-term care services Chronically ill individual.\u2014The conference agreement provides that, for purposes of de- termining whether an individual is chron- ically ill, the number of activities of daily living that are taken into account under the contract may not be less than five. For ex- ample, a contract could require that an indi- vidual be unable to perform (without sub- stantial assistance) two out of any five of the activities listed in the bill. By contrast, a contract does not meet this requirement if it required that an individual be unable to perform two out of any four of the activities listed in the bill. In addition, the conference agreement modifies the second test for whether an indi- vidual is chronically ill (i.e., that the indi- vidual has a level of disability similar to an individual who is unable to perform (without substantial assistance) at least two activi- ties of daily living). Under the conference agreement, this test is met if the individual has been certified within the previous 12 months by a licensed health care practi- tioner as having a similar level of disability, as determined under regulations prescribed by the Secretary in consultation with the Secretary of Health and Human Services. Health care continuation rules.\u2014The health care continuation rules do not apply to cov- erage under a plan, substantially all of the coverage under which is for qualified long- term care services. State-maintained plans.\u2014The conference agreement modifies the definition of a quali- fied long-term care insurance contract. Under the conference agreement, an arrange- ment is treated as a qualified long-term care insurance contract if an individual receives coverage for qualified long-term care serv- ices under a State long-term care plan, and the terms of the arrangement would satisfy the requirements for a long-term care insur- ance contract under the provision, were the arrangement an insurance contract. For this purpose, a State long-term care plan is any plan established and maintained by a State (or instrumentality of such State) under which only employees (and former employ- ees, including retirees) of a State or of a po- litical subdivision or instrumentality of the State, and their relatives, and their spouses and spouses’ relatives, may receive coverage only for qualified long-term care services. Relative is defined as under section 152(a)(1) (8). No inference is intended with respect to the tax consequences of such arrangements under present law. Inclusions of excess long-term care benefits The conference agreement modifies the calculation of the dollar cap applicable to aggregate payments under per diem type long-term care insurance contracts and amounts received with respect to a chron- ically ill individual pursuant to a life insur- ance contract.12 The amount of the dollar cap with respect to any one chronically ill individual (who is not terminally ill) is $175 per day ($63,875 annually, as indexed), re- duced by the amount of reimbursements and payments received by anyone for the cost of qualified long-term care services for the chronically ill individual. If more than one payee receives payments with respect to any one chronically ill individual, then everyone receiving periodic payments with respect to the same insured is treated as one person for purposes of the dollar cap. The amount of the dollar cap is utilized first by the chron- ically ill person, and any remaining amount is allocated in accordance with Treasury reg- ulations. If payments under such contracts exceed the dollar cap, then the excess is ex- cludable only to the extent of actual costs (in excess of the dollar cap) incurred for long-term care services. Amounts in excess of the dollar cap, with respect to which no actual costs were incurred for long-term care services, are fully includable in income with- out regard to rules relating to return of basis under Code section 72. The managers of the bill wish to clarify that, although the legislation imposes a daily (or equivalent) dollar cap on the amount of excludable benefits under certain types of long-term care insurance in certain circumstances, this limitation is not in- tended to suggest a preference or otherwise convey or facilitate a competitive advantage to one type of long-term care insurance com- pared to another type of long-term care in- surance. The Chairmen of the House Committee on Ways and Means and the Senate Finance Committee shall jointly request that the NAIC, in consultation with representatives of the insurance industry and consumer or- ganizations, develop and conduct a study to determine the marketing and other effects, if any, of the dollar limit on excludable long- term care benefits under certain types of long-term care insurance contracts under the bill. Such Chairmen are to request that the NAIC, if it agrees to such request, shall submit the results of its study to the such Committees by no later than two years after agreeing to the request. The conference agreement modifies the re- porting requirement for payors of amounts excludable under the provision. Thus, in ad- dition to the reporting requirements of the House bill, a payor is required to report the name, address, and taxpayer identification number of the chronically ill individual on account of whose condition such amounts are paid, and whether the contract under which the amount is paid is a per diem-type contract. A grandfather rule is provided under the conference agreement in the case of a per diem type contract issued to a policyholder on or before July 31, 1996. Under the grand- father rule, the amount of the dollar cap with respect to such a per diem contract is calculated without any reduction for reim- bursements for qualified long-term care serv- ices under any other contract issued with re- spect to the same insured on or before July 31, 1996. The other provisions of the dollar cap are not affected by the grandfather rule. The grandfather rule ceases to apply as of the time that any of the contracts issued on or before July 31, 1996, with respect to the in- sured are exchanged, or benefits are in- creased. Life insurance company reserves The conference agreement includes the Senate amendment provision with respect to life insurance reserves. Thus, under the con- ference agreement, in determining reserves for insurance company tax purposes, the Senate amendment provides that the Federal income tax reserve method applicable for a long-term care insurance contract is the method prescribed by the NAIC (or, if no re- serve method has been so prescribed, a meth- od consistent with the tax reserve method for life insurance, annuity or noncancellable accident and health insurance contracts, whichever is most appropriate). As under present law, in no event may the tax reserve for a contract as of any time exceed the amount which would be taken into account with respect to the contract as of such time in determining statutory reserves. Consumer protection provisions The conference agreement clarifies and modifies the category of contracts to which the consumer protection provisions apply. The conference agreement clarifies that the consumer protection provisions that apply with respect to the terms of the contract apply only for purposes of determining whether a contract is a qualified long-term CONGRESSIONAL RECORD \u2014 HOUSE H9551July 31, 1996 13 Prop. Treas. Reg. Secs. 1.101 8, 1.7702.0, 1.7702.2, and 1.7702A 1 (December 15, 1992). 14 For purposes of determining the present value under the proposed regulations, the maximum per- missible discount rate would be the greater of (1) the applicable Federal rate that applies under the dis- counting rules for property and casualty insurance loss reserves, and (2) the interest rate applicable to policy loans under the contract. Also, the present value would be determined assuming that the death benefit would have been paid twelve months after payment of the accelerated death benefit. 15 A physician is defined for these purposes as in section 1861(r)(1) of the Social Security Act, which provides that a physician means a doctor of medi- cine or osteopathy legally authorized to practice medicine and surgery by the State in which he per- forms such function or action (including a physician within the meaning of section 1101(a)(7) of that Act). Section 1101(a)(7) of that Act provides that the term physician includes osteopathic practitioners within the scope of their practice as defined by State law. 16 Thus, a chronically ill individual is one who has been certified within the previous 12 months by a li- censed health care practitioner as (1) being unable to perform (without substantial assistance) at least 2 activities of daily living for at least 90 days due to a loss of functional capacity, (2) having a similar level of disability as determined by the Secretary of the Treasury in consultation with the Secretary of Health and Human Services, or (3) requiring sub- stantial supervision to protect such individual from threats to health and safety due to severe cognitive impairment. Activities of daily living are eating, toileting, transferring, bathing, dressing and con- tinence. Nothing in the bill requires the contract to take into account all of the activities of daily liv- ing. care insurance contract (within the meaning of the bill). The conference agreement provides that, for purposes of both the requirements as to contract terms and the requirements relat- ing to issuers of contracts, the determina- tion of whether any requirement of a model regulation or model Act has been met is made by the Secretary of the Treasury. It is not intended that the Secretary create a Federal standard, but rather, look to appli- cable or appropriate State standards or to those provided specifically in the model reg- ulation or model Act. The conference agreement modifies the $100-per-day tax on failure to satisfy the re- quirements for issuers of contracts, to pro- vide that the amount of the tax imposed is $100 per insured per day. The conference agreement provides that the consumer pro- tection requirements for issues of contracts apply with respect to contracts that are qualified long-term care insurance contracts (within the meaning of the bill). The conference agreement modifies the rule relating to State establishment of standards relating to contract terms or issu- ers of contracts. The conference agreement provides that an otherwise qualified long- term care insurance contract will not fail to be a qualified long-term care insurance con- tract, and will not be treated as failing to meet the analogous requirement under the conference agreement, solely because it sat- isfies a consumer protection standard im- posed under applicable State law that is more stringent than the analogous standard provided in the bill. The conference agree- ment does not preclude States from enacting more stringent consumer protection provi- sions than the analogous standards under the bill. Effective date The conference agreement follows the Sen- ate amendment with respect to the effective date of the provision treating long-term care services as a medical expenses. Thus, under the conference agreement, this provision is effective for taxable years beginning after December 31, 1996. The conference agreement provides that the provision relating to life insurance com- pany reserves is effective for contracts is- sued after December 31, 1997. D. TREATMENT OF ACCELERATED DEATH BENEFITS UNDER LIFE INSURANCE CONTRACTS (Secs. 331 332 of the House bill and secs. 431 432 of the Senate amendment). Present law Treatment of amounts received under a life in- surance contract If a contract meets the definition of a life insurance contract, gross income does not include insurance proceeds that are paid pur- suant to the contract by reason of the death of the insured (sec. 101(a)). In addition, the undistributed investment income (”inside buildup”) earned on premiums credited under the contract is not subject to current taxation to the owner of the contract. The exclusion under section 101 applies regard- less of whether the death benefits are paid as a lump sum or otherwise. Amounts received under a life insurance contract (other than a modified endowment contract) prior to the death of the insured are includable in the gross income of the re- cipient to the extent that the amount re- ceived constitutes cash value in excess of the taxpayer’s investment in the contract (gen- erally, the investment in the contract is the aggregate amount of premiums paid less amounts previously received that were ex- cluded from gross income). If a contract fails to be treated as a life in- surance contract under section 7702(a), inside buildup on the contract is generally subject to tax (sec. 7702(g)). Requirements for a life insurance contract To qualify as a life insurance contract for Federal income tax purposes, a contract must be a life insurance contract under the applicable State or foreign law and must sat- isfy either of two alternative tests: (1) cash value accumulation test or (2) a test consist- ing of a guideline premium requirement and a cash value corridor requirement (sec. 7702(a)). A contract satisfies the cash value accumulation test if the cash surrender value of the contract may not at any time exceed the net single premium that would have to be paid at such time to fund future benefits under the contract. A contract sat- isfies the guideline premium and cash value corridor tests if the premiums paid under the contract do not at any time exceed the greater of the guideline single premium or the sum of the guideline level premiums, and if the death benefit under the contract is not less than a varying statutory percentage of the cash surrender value of the contract. Proposed regulations on accelerated death benefits The Treasury Department has issued pro- posed regulations 13 under which certain ”qualified accelerated death benefits” paid by reason of the terminal illness of an in- sured would be treated as paid by reason of the death of the insured and therefore qual- ify for exclusion under section 101. In addi- tion, the proposed regulations would permit an insurance contract that includes a quali- fied accelerated death benefit rider to qual- ify as a life insurance contract under section 7702. Thus, the proposed regulations provide that including this benefit would not cause an insurance contract to fail to meet the def- inition of a life insurance contract. Under the proposed regulations, a benefit would qualify as a qualified accelerated death benefit only if it meets three require- ments. First, the accelerated death benefit can be payable only if the insured becomes terminally ill. Second, the amount of the benefit must equal or exceed the present value of the reduction in the death benefit otherwise payable.14 Third, the cash surren- der value and the death benefit payable under the policy must be reduced proportion- ately as a result of the accelerated death benefit. For purposes of the proposed regulations, an insured would be treated as terminally ill if he or she has an illness that, despite ap- propriate medical care, the insurer reason- ably expects to result in death within twelve months from the payment of the accelerated death benefit. The proposed regulations would not apply to viatical settlements. House bill The House bill provides an exclusion from gross income as an amount paid by reason of the death of an insured for (1) amounts re- ceived under a life insurance contract and (2) amount received for the sale or assignment of a life insurance contract to a qualified viatical settlement provider, provided that the insured under the life insurance contract is either terminally ill or chronically ill. The exclusion for amounts received under a life insurance contract on the life of an insured who is chronically ill applies if the amount is received under a rider or other provision of the contract that is treated as a long-term care insurance contract under section 7702B (as added by the bill), and the amount is ex- cludable as a payment for long-term care services under section 7702B (including under the dollar cap on per diem type payments ($175 per day, or $63,875 annually, in 1997). The provision does not apply in the case of an amount paid to any taxpayer other than the insured, if such taxpayer has an insur- able interest by reason of the insured being a director, officer or employee of the tax- payer, or by reason of the insured being fi- nancial interested in any trade or business carried on by the taxpayer. A terminally ill individual is defined as one who has been certified by a physician as having an illness or physical condition that reasonably can be expected to result in death within 24 months of the date of certification. A physician is defined for this purpose in the same manner as under the long-term care in- surance rules of the bill.15 A chronically ill individual is defined under the long-term care provisions of the bill.16 In the case of amounts received with respect to a chronically ill individual (but not amounts received by reason of the indi- vidual being terminally ill), the $175 per day ($63,875 annual) limitation on excludable benefits that applies for per diem type long- term care insurance contracts also limits amounts that are excludable with respect to such contracts under this provision. The payor of a payment to which this pro- vision applies is required to report to the IRS the aggregate amount of such benefits paid to any individual during any calendar year, and the name, address and taxpayer identification number of such individual. A copy of the report must be provided to the payee by January 31 following the year of payment, showing the name of the payer and the aggregate amount of such benefits paid to the individual during the calendar year. Failure to file the report or provide the copy to the payee is subject to the generally ap- plicable penalties for failure to file similar information reports. A qualified viatical settlement provider is any person that regularly purchases or takes assignments of life insurance contracts on the lives of the terminally ill individuals and either (1) is licensed for such purposes in the State in which the insured resides; or (2) if the person is not required to be licensed by that State, meets the requirements of sec- tions 8 and 9 of the Viatical Settlements Model Act (issued by the National Associa- tion of Insurance Commissioners (NAIC)), and also meets the section of the NAIC CONGRESSIONAL RECORD \u2014 HOUSEH9552 July 31, 1996 17 See item C, above. Viatical Settlements Model Regulation re- lating to standards for evaluation of reason- able payments, including discount rates, in determining amounts paid by the viatical settlement provider. For life insurance company tax purposes, the bill provides that a life insurance con- tract is treated as including a reference to a qualified accelerated death benefit rider to a life insurance contract (except in the case of any rider that is treated as a long-term care insurance contract under section 7702B, as added by the bill). A qualified accelerated death benefit rider is any rider on a life in- surance contract that provides only for pay- ments of a type that are excludable under this provision. Effective date The provision applies to amounts received after December 31, 1996. The provision treat- ing a qualified accelerated death benefit rider as life insurance for life insurance com- pany tax purposes takes effect on January 1, 1997. The issuance of a qualified accelerated death benefit rider to a life insurance con- tract, or the addition of any provision re- quired to conform an accelerated death bene- fit rider to these provisions, is not treated as a modification or material change to the contract (and is not intended to affect the issue date of any contract under section 101(f)). Senate amendment The Senate amendment is the same as the House bill, except that, in the case of a chronically ill insured, while the Senate amendment does provide that the exclusion for amounts received under a life insurance contract applies if the amount is received under a rider or other provision of the con- tract that is treated as a long-term care in- surance contract under section 7702B (as added by the bill), the Senate amendment does not include the explicit language of the House bill requiring that the amount be treated as a payment for long-term care services under section 7702B. Conference agreement The conference agreement follows the House bill and the Senate amendment, with technical modifications and clarifications. The conference agreement provides that the amount paid for the sale or assignment of any portion of the death benefit under a life insurance contract on the life of a termi- nally or chronically ill individual to a viatical settlement provider is excludable by the recipient as an amount paid under the contract by reason of the death of the in- sured. For example, the sale or assignment of a life insurance contract that has a rider providing for long-term care insurance, pay- ments under which rider are funded by and reduce the death benefit, is considered the sale or assignment of the death benefit. Sale or assignment of a stand-alone rider provid- ing for long-term care insurance (where pay- ments under the rider are not funded by re- ductions in the death benefit), however, is not considered the sale or assignment of the death benefit. The conference agreement provides that a viatical settlement provider is any person regularly engaged in the trade or business of purchasing or taking assignments of life in- surance contracts on the lives of insured in- dividuals who are terminally ill or chron- ically ill, so long as the viatical settlement provider meets certain requirements. The viatical settlement provider must either (1) be licensed, in the State where the insured resides, to engage in such transactions with terminally ill individuals (if the insured is terminally ill) or with chronically ill indi- viduals (if the insured is chronically ill), or (2) if such licensing with respect to the in- sured individual is not required in the State, meet other requirements depending on whether the insured is terminally or chron- ically ill. If the insured is terminally ill, the viatical settlement provider must meet the requirements of sections 8 and 9 of the Viatical Settlements Model Act, relating to disclosure and general rules (issued by the National Association of Insurance Commis- sioner (NAIC)), and also meet the section of the NAIC Viatical Settlements Model Regu- lation relating to standards for evaluation of reasonable payments, including discount rates, in determining amounts paid by the viatical settlement provider. If the insured is chronically ill, the viatical settlement pro- vider must meet requirements similar to those of sections 8 and 9 of the NAIC Viatical Settlements Model Act, and also must meet the standards, if any, promulgated by the NAIC for evaluating the reasonableness of amounts paid in viatical settlement trans- actions with chronically ill individuals. The conference agreement clarifies the rules for chronically ill insureds so that the tax treatment of payments with respect to chronically ill individuals is reasonably similar under the long-term care rules of the bill and under this provision. In the case of a chronically ill individual, the exclusion under this provision with respect to amounts paid under a life insurance contract and amounts paid in a sale or assignment to a viatical settlement provider applies if the payment received is for costs incurred by the payee (not compensated by insurance or oth- erwise) for qualified long-term care services (as defined under the long-term care rules of the bill) for the insured person for the pe- riod, and two other requirements (similar to requirements applicable to long-term care insurance contracts under the bill) are met. The first requirement is that under the terms of the contract giving rise to the pay- ment, the payment is not a payment or reim- bursement of expenses reimbursable under Medicare (except where Medicare is a second- ary payor under the arrangement, or the ar- rangement provides for per diem or other periodic payments without regard to ex- penses for qualified long-term care services). The conference agreement provides that no provision of law shall be construed or applied so as to prohibit the offering of such a con- tract giving rise to such a payment on the basis that the contract coordinates its pay- ments with those provided under Medicare. The second requirement is that the arrange- ment complies with those consumer protec- tion provisions applicable under the bill to long-term care insurance contracts and issu- ers that are specified in Treasury regula- tions. It is intended that such guidance in- corporate rules similar to those of section 6F (relating to right to return, permitting the payee 30 days to rescind the arrangement) of the NAIC Long-Term Care Insurance Model Act, and section 13 (relating to requirements for application, requiring that the payee be asked if he or she already has long-term care insurance, Medicaid, or similar coverage) of the NAIC Long-Term Care Insurance Model Regulations. If the NAIC or the State in which the policyholder resides issues stand- ards relating to chronically ill individuals, then the analogous requirements under Treasury regulations cease to apply. An individual who meets the definition of a terminally ill individual is not treated as chronically ill, for purposes of this provision. Payments made on a per diem or other periodic basis, without regard to expenses in- curred for qualified long-term care services, are nevertheless excludable under this provi- sion, subject to the dollar cap on excludable benefits that applies for amounts that are excludable under per diem type long-term care insurance contracts. The conference agreement modifies the calculation of the dollar cap applicable to aggregate payments under per diem type long-term care insur- ance contracts and amounts received with respect to a chronically ill individual pursu- ant to a life insurance contract.17 The amount of the dollar cap with respect to the aggregate amount received under per diem type long-term care insurance contracts and this provision with respect to any one chron- ically ill individual (who is not terminally ill) is $175 per day ($63,875 annually) (in- dexed), reduced by the amount of reimburse- ments and payments received by anyone for the cost of qualified long-term care services for the chronically ill individual. If more than one payee receives payments with re- spect to any one chronically ill individual, the amount of the dollar cap is utilized first by the chronically ill person, and any re- maining amount is allocated in accordance with Treasury regulations. If payments under such contracts exceed the dollar cap, then the excess is excludable only to the ex- tent of actual costs incurred for long-term care services. Amounts in excess of the dol- lar cap, with respect to which no actual costs (in excess of the dollar cap) were in- curred for long-term care services, are fully includable in income without regard to rules relating to return of basis under Code sec- tion 72. The conference agreement modifies the re- porting requirement for payors of amounts excludable under the provision. Thus, in ad- dition to the reporting requirements of the House bill, a payor is required to report the name, address, and taxpayer identification number of the chronically ill individual on account of whose condition such amounts are paid, and whether the contract under which the amount is paid is a per diem-type contract. E. EXEMPTION FROM INCOME TAX FOR STATE- SPONSORED ORGANIZATIONS PROVIDING HEALTH COVERAGE FOR HIGH-RISK INDIVID- UALS; EXEMPTION FROM INCOME TAX FOR STATE-SPONSORED WORKERS’ COMPENSATION REINSURANCE ORGANIZATIONS (Sec. 341 of the House bill and sec. 451 of the Senate amendment). Present law In general, the Internal Revenue Service (”IRS”) takes the position that organiza- tions that provide insurance for their mem- bers or other individuals are not considered to be engaged in a tax-exempt activity. The IRS maintains that such insurance activity is either (1) a regular business of a kind ordi- narily carried on for profit, or (2) an econ- omy or convenience in the conduct of mem- bers’ businesses because it relieves the mem- bers from obtaining insurance on an individ- ual basis. Certain insurance risk pools have qualified for tax exemption under Code section 501(c)(6). In general, these organizations (1) assign any insurance policies and adminis- trative functions to their member organiza- tions (although they may reimburse their members for amounts paid and expenses), (2) serve an important common business inter- est of their members, and (3) must be mem- bership organizations financed, at least in part, by membership dues. State insurance risk pools may also qual- ify for tax-exempt status under section 501(c)(4) as a social welfare organizations or under section 115 as serving an essential gov- ernmental function of a State. In seeking qualification under section 501(c)(4), insur- ance organizations generally are constrained by the restrictions on the provision of ”com- mercial-type insurance” contained in section CONGRESSIONAL RECORD \u2014 HOUSE H9553July 31, 1996 18 No inference is intended as to the tax treatment of other types of State-sponsored organizations. 501(m). Section 115 generally provides that gross income does not include income de- rived from the exercise of any essential gov- ernmental function and accruing to a State or any political subdivision thereof. How- ever, the IRS may be reluctant to rule that particular State risk-pooling entities satisfy the section 501(c)(4) or 115 requirements for tax-exempt status. House bill Health coverage for high-risk individuals The House bill provides tax-exempt status to any membership organization that is es- tablished by a State exclusively to provide coverage for medical care on a nonprofit basis to certain high-risk individuals, pro- vided certain criteria are satisfied.18 The or- ganization may provide coverage for medical care either by issuing insurance itself or by entering into an arrangement with a health maintenance organization (”HMO”). High-risk individuals eligible to receive medical care coverage from the organization must be residents of the State who, due to a pre-existing medical condition, are unable to obtain health coverage for such condition through insurance or an HMO, or are able to acquire such coverage only at a rate that is substantially higher than the rate charged for such coverage by the organization. The State must determine the composition of membership in the organization. For exam- ple, a State could mandate that all organiza- tions that are subject to insurance regula- tion by the State must be members of the or- ganization. The House bill further requires the State or members of the organization to fund the liabilities of the organization to the extent that premiums charged to eligible individ- uals are insufficient to cover such liabilities. Finally, no part of the net earnings of the or- ganization can inure to the benefit of any private shareholder or individual. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Workers’ compensation reinsurance organiza- tions No provision. Senate amendment The Senate amendment is the same as the House bill. Conference agreement Health coverage for high-risk individuals The conference agreement follows the House bill and the Senate amendment. Workers’ compensation reinsurance organiza- tions The conference agreement provides tax-ex- empt status to any membership organization that is established by a State before June 1, 1996, exclusively to reimburse its members for workers’ compensation insurance losses, and that satisfies certain other conditions. A State must require that the membership of the organization consist of all persons who issue insurance covering workers’ compensa- tion losses in such State, and all persons who issue insurance covering workers’ compensa- tion losses in such State, and all persons and governmental entities who self-insure against such losses. In addition, the organi- zation must operate as a nonprofit organiza- tion by returning surplus income to mem- bers or to workers’ compensation policy- holders on a periodic basis and by reducing initial premiums in anticipation of invest- ment income. Effective date.\u2014The provision applies to taxable years ending after the date of enact- ment. F. HEALTH INSURANCE ORGANIZATIONS ELIGIBLE FOR BENEFITS OF SECTION 833 (Sec. 351 of the House bill). Present law An organization described in sections 501(c)(3) or (4) of the Code is exempt from tax only if no substantial part of its activities consists of providing commercial-type insur- ance (sec. 501(m)). Special rules apply to cer- tain eligible health insurance organizations. Eligible health insurance organizations are (1) Blue Cross and Blue Shield organizations existing on August 16, 1986, which have not experienced a material change in structure or operations since that date, and (2) other organizations that meet certain community- service related requirements and substan- tially all of whose activities involve the pro- viding of health insurance. Section 833 pro- vides that eligible organizations are gen- erally treated as stock property and casualty insurance companies. Section 833 provides a special deduction for eligible organizations, equal to 25 percent of the claims and expenses incurred during the year, less the adjusted surplus at the begin- ning of the year. This deduction is calculated by computing surplus, taxable income, claims incurred, expenses incurred, tax-ex- empt income, net operating loss carryovers, and other items attributable to health ex- penses. The deduction may not exceed tax- able income attributable to health business for the year (calculated without regard to this deduction). In addition, section 833 eliminates, for eli- gible organizations, the 20 percent reduction in unearned premium reserves that applies generally to all property and casualty insur- ance companies. House bill The House bill applies the special rules under section 833 to the same extent they are provided to certain existing Blue Cross or Blue Shield organizations, in the case of any organization that (1) is not a Blue Cross or Blue Shield organization existing on August 16, 1986, and (2) otherwise meets the require- ments of section 833(c)(2) (including the re- quirement of no material change in oper- ations or structure since August 16, 1986). Under the provision, an organization quali- fies for this treatment only if (1) it is not a health maintenance organization and (2) it is organized under and governed by State laws which are specifically and exclusively appli- cable to not-for-profit health insurance or health service type organizations. Effective date.\u2014The provision is effective for taxable years ending after December 31, 1996. Senate amendment No provision. Conference agreement The conference agreement follows the House bill. G. PENALTY-FREE WITHDRAWALS FROM IRAS FOR MEDICAL EXPENSES (Sec. 461 of the Senate amendment). Present law Amounts withdrawn from an individual re- tirement arrangement (”IRA”) are includ- ible in income (except to the extent of any nondeductible contributions). In addition, a 10-percent additional tax applies to with- drawals from IRAs made before age 591\u20442, un- less the withdrawal is made on account of death or disability or is made in the form of annuity payments. A similar additional tax applies to early withdrawals from employer-sponsored tax- qualified pension plans. However, the 10-per- cent additional tax does not apply to with- drawals form such plans to the extent used for medical expenses that exceed 7.5 percent of adjusted gross income (”AGI”). House bill No provision. Senate amendment The Senate amendment extends the excep- tion to the 10-percent tax for medical ex- penses in excess of 7.5 percent of AGI to withdrawals from IRAs. In addition, the Sen- ate amendment provides that the 10-percent additional tax does not apply to withdrawals for medical insurance (without regard to the 7.5 percent of AGI floor) if the individual (in- cluding a self-employed individual) has re- ceived unemployment compensation under Federal or State law for at least 12 weeks, and the withdrawal is made in the year such unemployment compensation is received or the following year. If a self-employed indi- vidual is not eligible for unemployment com- pensation under applicable law, then, to the extent provided in regulations, a self-em- ployed individual is treated as having re- ceived unemployment compensation for at least 12 weeks if the individual would have received unemployment compensation but for the fact that the individual was self-em- ployed. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1996. Conference agreement The conference agreement follows the Sen- ate amendment, with the modification that the exception ceases to apply if the individ- ual has been reemployed for at least 60 days. H. REQUIRE TREASURY TO INCLUDE ORGAN AND TISSUE DONATION INFORMATION WITH TAX RE- FUNDS (Sec. 307 of the Senate amendment). Present law There is no statutory requirement that Treasury include organ and tissue donation information with any payment of a refund of individual income taxes. House bill No provision. Senate amendment The Senate amendment requires Treasury to include organ and tissue donation infor- mation with any payment of a refund of indi- vidual income taxes made on or after Feb- ruary 1, 1997, through June 30, 1997. Effective date.\u2014The provision is effective for refunds made on or after February 1, 1997, through June 30, 1997. Conference agreement The conference agreement generally fol- lows the Senate amendment, with two tech- nical modifications. the first modification requires that the organ donor card be in- cluded to the extent particable. The second modification clarifies that the organ donor card is to be included with the mailing of any payment of a refund of individual in- come taxes. Effective date.\u2014The provision is effective for refunds made on or after February 1, 1997, through June 30, 1997. TITLE IV. APPLICATION AND ENFORCEMENT OF GROUP HEALTH PLAN REQUIREMENTS A. APPLICATION AND ENFORCEMENT OF GROUP HEALTH PLAN PORTABILITY, ACCESS, AND RE- NEWABILITY REQUIREMENTS (Sec. 104(b) of the House bill). Present Law Under present law, the health care con- tinuation rules (referred to as ”COBRA” rules, after the Consolidated Omnibus Budg- et Reconciliation Act of 1985 in which they were enacted) require that most employer- sponsored group health plans must offer cer- tain employees and their dependents (”quali- fied beneficiaries”) the option of purchasing CONGRESSIONAL RECORD \u2014 HOUSEH9554 July 31, 1996 19 These requirements are discussed earlier in greater detail. 20 In the case of a church plan, this correction is generally extended to 270 days after the date of mailing by the Secretary of a notice of default with respect to a failure to comply with the group health plan requirements. continued health coverage in the case of cer- tain qualifying events. These qualifying events include: termination or reduction in hours of employment, death, divorce or legal separation, enrollment in Medicare, or the end of a child’s dependency under a parent’s health plan. In general, the maximum period of COBRA coverage is 18 months. An em- ployer is permitted to charge qualified bene- ficiaries 102 percent of the applicable pre- mium for COBRA coverage. A tax is imposed on the failure of a group health plan to satisfy the COBRA rules. The tax must be imposed on the employer spon- soring the plan in the case of a plan other than a multiemployer plan, on the plan in the case of a multiemployer plan, or on each person who is responsible for administering or providing benefits under the plan if such person has, by written agreement, assumed responsibility for performing the act pursu- ant to which the violation occurs. The amount of the tax is generally equal to $100 per day for each day on which there is a violation. The tax applies separately with respect to each qualified beneficiary for whom a failure occurs. In general, a tax will not be imposed if the violation was uninten- tional and is corrected within 30 days. The maximum tax for unintentional violations that can be imposed for a taxable year gen- erally is the lesser of (1) 10 percent of the employer’s payments under group health plans (or under the trust funding the plan in the case of a multiemployer plan), or (2) $500,000. If the tax is imposed on another per- son responsible for administering or provid- ing benefits under the plan, the maximum penalty for failures during the year is $2 mil- lion. The Secretary may waive all or part of the tax to the extent that payment of the tax would be excessive relative to the failure involved. Other than the COBRA rules, there are no other requirements in the Code which apply to group health plans (or insurers or health maintenance organizations (”HMOs”)) re- garding portability through limitations on preexisting condition exclusions, prohibi- tions on excluding individuals from coverage based on health status, and guaranteed re- newability of health plan coverage. House bill Under the House bill, group health plans, insurers, and HMOs are subject to certain re- quirements regarding portability through limitations on preexisting condition exclu- sions and prohibitions on excluding individ- uals from coverage based on health status. The House bill generally extends the tax for failures to satisfy the COBRA rules to fail- ures to comply with these requirements. No tax is imposed on an insurer or HMO that is governed under a State law that the Secretary of Health and Human Services has determined to provide enforcement of simi- lar requirements. In addition, no tax may be imposed on a small employer (defined as an employer who employs at least 2, but fewer than 51 employees on a typical business day) that provides health care benefits through a contract with an insurer or HMO and the vio- lation is solely because of the product of- fered by the insurer or HMO under such con- tract. In addition, no tax is imposed if there has been enforcement by the Secretary of Labor or the Secretary of Health and Human Services. Effective date.\u2014The provision generally is effective with respect to plan years begin- ning on or after January 1, 1998. Senate amendment No provision. The requirements in the Sen- ate amendment on group health plans, insur- ers, and HMOs regarding portability through limitations on preexisting condition exclu- sions and prohibitions on excluding individ- uals from coverage based on health status are not applied or enforced through the Code. Conference agreement Under the conference agreement, group health plans are subject to certain require- ments regarding portability through limita- tions on preexisting condition exclusions, prohibitions on excluding individuals from coverage based on health status, and guaran- teed renewability of health insurance cov- erage.19 The conference agreement incor- porates these requirements into the Code and generally imposes a tax with respect to any failure of a group health plan to comply with the requirements. The tax may gen- erally be imposed on the employer sponsor- ing the plan. However, the tax may be im- posed on the plan in the case of a multiem- ployer plan, and, with respect to violations of the requirements relating to guaranteed renewability, on the arrangement in the case of a multiple employer welfare arrangement. The group health plan requirements con- tained in the Code do not apply to govern- mental plans and plans which on the first day of the plan year cover less than 2 current employees. In addition, no tax may be im- posed on a small employer (defined as an em- ployer who employed an average of 50 or fewer employees on business days during the preceding calendar year) that provides health care benefits through a contract with an insurer or HMO and the violation is solely because of the coverage offered by the in- surer or HMO. The amount of the tax is generally equal to $100 per day for each day during which a failure occurs until the failure is corrected. The tax applies separately with respect to each individual affected by the failure. In general, a tax will not be imposed if the vio- lation was unintentional and is corrected within 30 days.20 The maximum tax for unin- tentional violations that can be imposed generally is the lesser of (1) 10 percent of the employer’s payments during the taxable year in which the failure occurred under group health plans (or 10 percent of the amount paid by the multiemployer plan or multiple employer welfare arrangement during the plan year in which the failure occurred for medical care, if applicable), or (2) $500,000. The Secretary may waive all or part of the tax to the extent that payment of the tax would be excessive relative to the failure in- volved. Effective date.\u2014The provision applies with respect to failures of group health plans to satisfy the requirements regarding port- ability through limitations on preexisting condition exclusions, prohibitions on exclud- ing individuals from coverage based on health status, and guaranteed renewability of health insurance coverage. B. CLARIFICATION OF CERTAIN COBRA HEALTH CARE CONTINUATION REQUIREMENTS (Sec. 121 of the Senate amendment). Present law Under present law, the health care con- tinuation rules (referred to as ”COBRA” rules, after the Consolidated Omnibus Budg- et Reconciliation Act of 1985 in which they were enacted) require that most employer- sponsored group health plans must offer cer- tain employees and their dependents (”quali- fied beneficiaries”) the option of purchasing continued health coverage in the case of cer- tain qualifying events. These qualifying events include; termination or reduction in hours of employment, death, divorce or legal separation, enrollment in Medicare, or the end of a child’s dependency under a parent’s health plan. In general, the maximum period of COBRA coverage is 18 months. An em- ployer is permitted to charge qualified bene- ficiaries 102 percent of the applicable pre- mium for COBRA coverage. A $100 per day tax generally may be assessed against em- ployers (plans in the case of multiemployer plans) for failures to comply with the COBRA rules, subject to certain exceptions and limitations. The 18-month maximum COBRA coverage period is extended to 29 months if the quali- fied beneficiary is determined under the So- cial Security Act to have been disabled at the time of the qualifying event and the qualified beneficiary provides notice of such determination to the employer before the end of the 18-month period. A qualified bene- ficiary has 60 days to notify the employer of a disability determination. During the 11- month period of extended COBRA coverage, the qualified beneficiary may be charged 150 percent of the applicable premium. COBRA coverage may be terminated before the 18-month maximum coverage period in the case of certain events. These include: the employer ceases to maintain any group health plan, the qualified beneficiary fails to pay the premium, the qualified beneficiary becomes covered under another group health plan with no preexisting condition limita- tion or exclusion, or the qualified bene- ficiary becomes entitled to Medicare. Under present law, the term qualified bene- ficiary only includes individuals who were either the spouse or the dependent of the covered employee at the time of the qualify- ing event. A group health plan is required to notify each covered employee and the covered em- ployee’s spouse of their COBRA rights upon commencement of participation in the plan. Further, the group health plan adminis- trator must notify each qualified beneficiary of their COBRA rights within 14 days after notification of the occurrence of a qualifying event. House bill No provision. However, the House bill modifies the COBRA rules so that the pen- alties applicable to failures to comply with the COBRA rules generally apply to failures to comply with the requirements in the House bill on group health plans, insurers, and health maintenance organizations (”HMOs”) regarding portability through lim- itations on preexisting condition exclusions and prohibitions on excluding individuals from coverage based on health status. Senate amendment The Senate amendment modifies the COBRA rules by clarifying that the extended maximum COBRA coverage period of 29 months in cases of disability also applies to the disabled qualified beneficiary of the cov- ered employee. In addition, the Senate amendment provides the extended COBRA coverage if the disability exists at any time during the initial 18-month COBRA coverage period as opposed to requiring the disability to exist at the time of the qualifying event. As under present law, the disability deter- mination still has to be made, and the notice of the disability still has to be given, before the end of the initial COBRA coverage pe- riod. CONGRESSIONAL RECORD \u2014 HOUSE H9555July 31, 1996 21 This favorable tax treatment is available only if a life insurance contract meets certain requirements designed to limit the investment character of the contract (sec. 7702). Distributions from a life insur- ance contract (other than a modified endowment contract) that are made prior to the death of the in- sured generally are includible in income, to the ex- tent that the amounts distributed exceed the tax- payer’s basis in the contract; such distributions gen- erally are treated first as a tax-free recovery of basis, and then as income (sec. 72(e)). In the case of a modified endowment contract, however, in gen- eral, distributions are treated as income first, loans are treated as distributions (i.e., income rather than basis recovery first), and an additional 10 percent tax is imposed on the income portion of distribu- tions made before age 59 1\u20442 and in certain other cir- cumstances (secs. 72 (e) and (v)). A modified endow- ment contract is a life insurance contract that does not meet a statutory ”7-pay” test, i.e., generally is funded more rapidly than 7 annual level premiums (sec. 7702A). 22 The statute provides that the $50,000 limitation applies only with respect to contracts purchased after June 20, 1986. However, additional limitations are imposed on the deductibility of interest with re- spect to single premium contracts (sec. 264(a)(2)), and on the deductibility of premiums paid on a life insurance contract covering the life of any officer or employee or person financially interested in a trade or business of the taxpayer when the taxpayer is di- rectly or indirectly a beneficiary under the contract (sec. 264(a)(1)). 23 Interest deductions are disallowed if any of the disallowance rules of section 264(a) (2) (4) apply. The disallowance rule of section 264(a)(3) is not applica- ble if one of the exceptions of section 264(c), such as the 4-out-of-7 rule (sec. 264(c)(1)) is satisfied. In addi- tion to the specific disallowance rules of section 264, generally applicable principles of tax law apply. The Senate amendment coordinates the COBRA rules with the new requirements re- garding preexisting condition exclusions so that COBRA coverage can be terminated if a qualified beneficiary becomes covered under another group health plan, even if such group health plan contains a preexisting con- dition limitation or exclusion, provided the preexisting condition limitation or exclusion does not apply to the qualified beneficiary by reason of the new requirements restricting the application of preexisting condition limi- tations and exclusions. The Senate amendment also modifies the definition of qualified beneficiary to include a child born to our placed for adoption with the covered employee during the period of COBRA coverage. Consequently, since the health care availability provisions in the Senate amendment require group health plans to allow participants to change their coverage status (i.e., to change from individ- ual coverage to family coverage, or to add on the new child) upon the birth or adoption of a new child, COBRA participants would also be allowed to change their coverage status upon the birth or adoption of a new child. The Senate amendment requires a group health plan to notify each qualified bene- ficiary who has elected COBRA coverage of the changes to the COBRA rules contained in the Senate amendment no later than Novem- ber 1, 1996. Effective date.\u2014The provision applies to qualifying events occurring on or after the date of enactment for plan years beginning after December 31, 1997. Conference agreement The conference agreement follows the Sen- ate amendment, except the extended period of COBRA coverage in cases of disability ap- plies if the disability exists at any time dur- ing the first 60 days of COBRA coverage. Effective date.\u2014The provision is effective on January 1, 1997, regardless of whether the qualifying event occurred before, on, or after such date. TITLE V. REVENUE OFFSETS A. DISALLOW INTEREST DEDUCTION FOR COR- PORATE-OWNED LIFE INSURANCE POLICY LOANS (Sec. 495 of the Senate amendment). Present law No Federal income tax generally is im- posed on a policyholder with respect to the earnings under a life insurance contract (”inside buildup”). 21 Further, an exclusion from Federal income tax is provided for amounts received under a life insurance con- tract paid by reason of the death of the in- sured (sec. 101(a)). The policyholder may bor- row with respect to the life insurance con- tract without affecting these exclusions, sub- ject to certain limitations. The limitations on borrowing with respect to a life insurance contract under present law provide that no deduction is allowed for any interest paid or accrued on any indebt- edness with respect to one or more life insur- ance policies owned by the taxpayer covering the life of any individual who (1) is an officer or employee of, or (2) is financially inter- ested in, any trade or business carried on by the taxpayer to the extent that the aggre- gate amount of such debt with respect to policies covering the individual exceeds $50,000 (sec. 264(a)(4)). Further, no deduction is allowed for any amount paid or accrued on debt incurred or continued to purchase or carry a life insur- ance, endowment, or annuity contract pursu- ant to a plan of purchase that contemplates the systematic direct or indirect borrowing of part or all of the increases in the cash value of the contract.22 An exception to the latter rule is provided, permitting deduct- ibility of interest on bona fide debt that is part of such a plan, if no part of 4 of the an- nual premiums due during the first 7 years is paid by means of debt (the ”4-out-of-7 rule”) (sec. 264(c)(1)). Provided the transaction gives rise to debt for Federal income tax pur- poses, and provided the 4-out-of-7 rule is met,23 a company may under present law borrow up to $50,000 per employee, officer, or financially interested person to purchase or carry a life insurance contract covering such a person, and is not precluded under section 264 from deducting the interest on the debt, even though the earnings inside the life in- surance contract (inside buildup) are tax- free, and in fact the taxpayer has full use of the borrowed funds. House bill No provision. Senate amendment Under the Senate amendment, no deduc- tion is allowed for interest paid or accrued on any indebtedness with respect to one or more life insurance policies or annuity or en- dowment contracts owned by the taxpayer covering any individual who is (1) an officer or employee of, or (2) financially interested in, any trade or business carried on by the taxpayer, regardless of the aggregate amount of debt with respect to policies or contracts covering the individual. An exception is provided retaining present law for interest on indebtedness with respect to life insurance policies covering up to 10 key persons. A key person is an individual who is either an officer or a 20-percent owner of the taxpayer. The number of individuals that can be treated as key persons may not exceed the greater of (1) 5 individuals, or (2) the lesser of 5 percent of the total number of officers and employees of the taxpayer or 10 individuals. Interest paid or accrued on debt with respect to a life insurance contract cov- ering a key person is deductible only to the extent the rate of interest does not exceed Moody’s Corporate Bond Yield Average\u2014 Monthly Average Corporates for each month interest is paid or accrued. Effective date.\u2014The Senate amendment provision generally is effective with respect to interest paid or accrued after December 31, 1995 (subject to a phase-in rule). The phase-in rule provides that with re- spect to debt incurred before January 1, 1996, any otherwise deductible interest paid or ac- crued after October 13, 1995, and before Janu- ary 1, 1999, is allowed to the extent the rate of interest does not exceed the lesser of (1) the borrowing rate specified in the contract as of October 13, 1995, or (2) a percentage of Moody’s Corporate Bond Yield Average\u2014 Monthly Average Corporates for each month the interest is paid or accrued. For interest paid or accrued after October 13, 1995, and be- fore January 1, 1996, the percentage of the Moody’s rate is 100 percent; for interest paid or accrued in 1996, the percentage is 90 per- cent; for interest paid or accrued in 1997, the percentage is 80 percent; for 1998, the per- centage is 70 percent; for 1999 and thereafter, the percentage is 0 percent. Only interest that would have been allowed as a deduction but for the provision is allowed under the phase-in. Interest that is deductible under the phase-in rules does not include interest on borrowings by the taxpayer with respect to contracts on the lives of more than 20,000 insured individuals, effective for interest paid or accrued after December 31, 1995. For this purpose, all persons treated as a single employer are treated as one taxpayer. An exception is provided under the effec- tive date with respect to any life insurance contract entered into during 1994 or 1995. In the case of such contracts, with respect to debt incurred before January 1, 1997, a deduc- tion is allowed for interest (that is otherwise deductible) only (1) with respect to policies that satisfy the key person exception, and (2) as provided under the phase-in rule. Thus, with respect to interest on amounts bor- rowed during 1996 with respect to such a con- tract, the phase-in rule applies, capping the rate for determining the amount of deduct- ible interest at the lesser of (1) the borrow- ing rate specified in the contracts as of Octo- ber 13, 1995, or (2) the applicable percentage of Moody’s Corporate Bond Yield Average\u2014 Monthly Average Corporates for each month the interest is paid or accrued. For example, for interest paid or accrued in 1996 on amounts borrowed in 1996 with respect to such a contract, the applicable percentage is 90 percent. The provision generally does not apply to interest on debt with respect to contracts purchased on or before June 20, 1986 (thus generally continuing the effective date pro- vision of the $50,000 limitation enacted in the 1986 Act.) If the policy loan interest rate under such a contract provides for a fixed rate of interest, then interest on such a con- tract paid or accrued after October 13, 1995, is allowable only to the extent the fixed rate of interest does not exceed Moody’s Cor- porate Bond Yield Average\u2014Monthly Aver- age Corporates for the month in which the contract was purchased. If the policy loan in- terest rate under such a contract does not provide for a fixed rate of interest, then in- terest on such a contract paid or accrued after October 13, 1995, is allowable only to the extent the rate of interest for each fixed period selected by the taxpayer does not ex- ceed Moody’s Corporate Bond Yield Aver- age\u2014Monthly Average Corporates, for the month immediately preceding the beginning of the fixed period. The fixed period must be 12 months or less. it is intended that con- forming a contract to satisfy this interest rate limitation not be treated as a material modification for purposes of this grandfather rule or sections 101(f), 7702 or 7702A. No infer- ence is intended as to whether such a change is a material modification under present law. Any amount included in income during 1996, 1997, or 1998, that is received under a contract described in the proposal on the CONGRESSIONAL RECORD \u2014 HOUSEH9556 July 31, 1996 complete surrender, redemption or maturity of the contract or in full discharge of the ob- ligation under the contract that is in the na- ture of a refund of the consideration paid for the contract, is includable ratably over the first 4 taxable years beginning with the tax- able year the amount would otherwise have been includable. Utilization of this 4-year in- come-spreading rule does not cause interest paid or accrued prior to January 1, 1999, to be nondeductible solely by reason of (1) failure to meet the 4-out-or-7 rule, or (2) causing the contract to be treated as single premium contract within the meaning of section 264(b)(1) (i.e., a contract in which substan- tially all of the premiums are paid within 4 years after the date of purchase). In addi- tion, the lapse of a contract after October 13, 1995, due to nonpayment of premiums does not cause interest paid or accrued prior to January 1, 1999, to be nondeductible solely by reason of (1) failure to meet the 4-out-of- 7 rule, or (2) causing the contract to be treat- ed as a single premium contract within the meaning of section 264(b)(1). In the case of an insurance company, the unamortized balance of policy expense at- tributable to a contract with respect to which the 4-year income-spreading treat- ment is allowed to the policyholder is de- ductible in the year in which the transaction giving rise to income-spreading occurs. No inference, is intended as to the treat- ment of interest paid or accrued under present law. Conference agreement The conference agreement follows the Sen- ate amendment, with the following modifica- tions. The exception relating to key persons is modified to apply to life insurance policies covering up to 20 key persons. Thus, under the conference agreement, the number of in- dividuals that can be treated as key persons may not exceed the greater of (1) 5 individ- uals, or (2) the lesser of 5 percent of the total number of officers and employees of the tax- payer or 20 individuals. The cap (based on Moody’s Corporate Bond Yield Average\u2014Monthly Average Corpo- rates) on deductible interest paid or accrued with respect to (1) interest paid or accrued on debt with respect to a life insurance con- tract covering a key person, and (2) interest on debt with respect to contracts purchased on or before June 20, 1986, applies only for in- terest paid or accrued for any month begin- ning after December 31, 1995. In addition, in the case of a contract pur- chased on or before June 20, 1986, where the policy loan interest rate under the contract does not provide for a fixed rate of interest, the interest is allowable only to the extent the rate of interest for each period does not exceed Moody’s Corporate Bond Yield Aver- age\u2014Monthly Average Corporates for the third month preceding the first month pre- ceding the first month preceding the period. Effective date.\u2014The conference agreement modifies the percentages of the Moody’s Cor- porate Bond Yield Average\u2014Monthly Aver- age Corporates that apply with respect to qualified interest under the phase-in rule. Thus, under the conference agreement, the percentage of the Moody’s rate is 100 percent for interest paid or accrued in 1996; 90 per- cent for interest paid or accrued in 1997; 80 percent for interest paid or accrued in 1998; and 0 percent thereafter. The rule limiting deductible interest to the applicable percent- age of the Moody’s rate does not apply for in- terest paid or accrued in any month begin- ning before January 1, 1996. B. EXPATRIATION TAX PROVISIONS (Secs. 421 423 of the House bill and secs. 471 473 of the Senate amendment.) Present law Individuals who relinquish U.S. citizenship with a principal purpose of avoiding U.S. taxes are subject to special tax provisions for 10 years after expatriation. The determina- tion of who is U.S. citizen for tax purposes, and when such citizenship is lost, is governed by the provisions of the Immigration and Na- tionality Act, 8 U.S.C. section 1401, et seq. An individual who relinquishes his U.S. citizenship with a principal purpose of avoid- ing U.S. taxes is subject to tax on his or her U.S. source income at the rates applicable to U.S. citizens, rather than the rates applica- ble to other non-resident aliens, for 10 years after expatriation. In addition, the scope of items treated as U.S. source income for this purpose is broader than those items gen- erally considered to be U.S. source income. For example, gains on the sale of personal property located in the United States and gains on the sale or exchange of stock or se- curities issued by U.S. persons are treated as U.S. source income. This alternative method of income taxation applies only if it results in higher U.S. tax liability. Rules applicable in the estate and gift tax contexts expand the categories of items that are subject to the gift and estate taxes in the case of a U.S. citizen who relinquished citi- zenship with a principal purpose of avoiding U.S. taxes within the 10-year period ending on the date of the transfer. For example, U.S. property held through a foreign cor- poration controlled by such individual and related persons is included in his or her es- tate and gifts of U.S.-situs intangible prop- erty by such individual are subject to the gift tax. House bill Overview The House bill expands and substantially strengthens in several ways the present-law provisions that subject U.S. citizens who lose their citizenship for tax avoidance purposes to special tax rules for 10 years after such loss of citizenship (secs. 877, 2107, and 2501(a)(3)). First, the House bill extends the expatriation tax provisions to apply not only to U.S. citizens who lose their citizenship but also to certain long-term residents of the United States whose U.S. residency is termi- nated. Second, the House bill subjects cer- tain individuals to the expatriation tax pro- visions without inquiry as to their motive for losing their U.S. citizenship or residency, but allows certain categories of citizens to show an absence of tax-avoidance motive if they request a ruling from the Secretary of the Treasury as to whether the loss of citi- zenship had a principal purpose of tax avoid- ance. Third, the House bill expands the cat- egories of income and gains that are treated as U.S. source (and therefore subject to U.S. income tax under section 877) if earned by an individual who is subject to the expatriation tax provisions and includes provisions de- signed to eliminate the ability to engage in certain transactions that under current law partially or completely circumvent the 10- year reach of section 877. Further, the House bill provides relief from double taxation in circumstances where another country im- poses tax on items that would be subject to U.S. tax under the expatriation tax provi- sions. The House bill also contains provisions to enhance compliance with the expatriation tax provisions. The House bill imposes infor- mation reporting obligations on U.S. citizens who lose their citizenship and long-term residents whose U.S. residency is terminated at the time of expatriation. In addition, the House bill directs the Treasury Department to undertake a study regarding compliance by individuals living abroad with their U.S. tax reporting obligations and to make rec- ommendations with respect to improving such compliance. Individuals covered The present-law expatriation tax provi- sions apply only to certain U.S. citizens who lose their citizenship. The House bill extends these expatriation tax provisions to apply also to long-term residents of the United States whose U.S. residency is terminated. For this purpose, a long-term resident is any individual who was a lawful permanent resi- dent of the United States for at least 8 out of the 15 taxable year sending with the year in which such termination occurs. In applying this 8-year test, an individual is not consid- ered to be a lawful permanent resident for any year in which the individual is taxed as a resident of another country under a treaty tie-breaker rule. An individual’s U.S. resi- dency is considered to be terminated when either the individual ceases to be a lawful permanent resident pursuant to section 7701(b)(6) (i.e., the individual loses his or her green-card status) or the individual is treat- ed as a resident of another country under a tie-breaker provision of a tax treaty (and the individual does not elect to waive the bene- fits of such treaty). Furthermore, a long- term resident may elect to use the fair mar- ket value basis of property on the date the individual became a U.S. resident (rather than the property’s historical basis) to deter- mine the amount of gain subject to the expa- triation tax provisions if the asset is sold within the 10-year period. Under present law, the expatriation tax provisions are applicable to a U.S. citizen who loses his or her citizenship unless such loss did not have as a principal purpose the avoidance of taxes. Under the House bill, U.S. citizens who lose their citizenship and long-term residents whose U.S. residency is terminated are generally treated as having lost such citizenship or terminated such resi- dency with a principal purpose of the avoid- ance of taxes if either: (1) the individual’s av- erage annual U.S. Federal income tax liabil- ity for the 5 taxable years ending before the date of such loss or termination is greater than $100,000 (the ”tax liability test”), or (2) the individual’s net worth as of the date of such loss or termination is $500,000 or more (the ”net worth test”). The dollar amount thresholds contained in the tax liability test and the net worth test are indexed for infla- tion in the case of a loss of citizenship or ter- mination of residency occurring in any cal- endar year after 1996. An individual who falls below the thresholds specified in both the tax liability test and the net worth test is subject to the expatriation tax provisions unless the individual’s loss of citizenship or termination of residency did not have as a principal purpose the avoidance of tax (as under present law in the case of U.S. citi- zens). A U.S. citizen, who loses his or her citizen- ship and who satisfies either the tax liability test or the net worth test, is not subject to the expatriation tax provisions if such indi- vidual can demonstrate that he or she did not have a principal purpose of tax avoidance and the individual is within one of the fol- lowing categories: (1) the individual was born with dual citizenship and retains only the non-U.S. citizenship; (2) the individual be- comes a citizen of the country in which the individual, the individual’s spouse, or one of the individual’s parents, was born; (3) the in- dividual was present in the United States for no more than 30 days during any year in the 10-year period immediately preceding the date of his or her loss of citizenship; (4) the individual relinquishes his or her citizenship before reaching age 181\u20442; or (5) any other cat- egory of individuals prescribed by Treasury regulations. In all of these situations, the in- dividual would have been subject to tax on CONGRESSIONAL RECORD \u2014 HOUSE H9557July 31, 1996 24 Under present law, all nonresident aliens (in- cluding expatriates) are subject to U.S. income tax at graduated rates on certain types of income. Such income includes income effectively connected with a U.S. trade or business and gains from the disposition of interests in U.S. real property. For example, com- pensation (including deferred compensation) paid with respect to services performed in the United States is subject to such tax. Thus, under current law, a U.S. citizen who earns a stock option while employed in the United States and delays the exer- cise of such option until after such individual loses his or her citizenship is subject to U.S. tax on the compensation income recognized upon exercise of the stock option (even if the stock received upon the exercise is stock in a foreign corporation). his or her worldwide income (as are all U.S. citizens) until the time of expatriation. In order to qualify for one of these exceptions, the former U.S. citizen must, within one year from the date of loss of citizenship, sub- mit a ruling request for a determination by the Secretary of the Treasury as to whether such loss had as one of its principal purposes the avoidance of taxes. A former U.S. citizen who submits such a ruling request is entitled to challenge an adverse determination by the Secretary of the Treasury. However, a former U.S. citizen who fails to submit a timely ruling request is not eligible for these exceptions. It is expected that in making a determination as to the presence of a prin- cipal purpose of tax avoidance, the Secretary of the Treasury will take into account fac- tors such as the substantiality of the former citizen’s ties to the United States (including ownership of U.S. assets) prior to expatria- tion, the retention of U.S. citizenship by the former citizen’s spouse, and the extent to which the former citizen resides in a country that imposes little or no tax. The foregoing exceptions are not available to long-term residents whose U.S. residency is terminated. However, the House bill au- thorizes the Secretary of the Treasury to prescribe regulations to exempt certain cat- egories of long-term residents from the House bill’s provisions. Items subject to section 877 Under section 877, an individual covered by the expatriation tax provisions is subject to tax on U.S. source income and gains for a 10- year period after expatriation at the grad- uated rates applicable to U.S. citizens.24 The tax under section 877 applies to U.S. source income and gains of the individual for the 10- year period, without regard to whether the property giving rise to such income or gains was acquired before or after the date the in- dividual became subject to the expatriation tax provisions. For example, a U.S. citizen who inherits an appreciated asset imme- diately before losing citizenship and disposes of the asset immediately after such loss would not recognize any taxable gain on such disposition (because of the date of death fair market value basis accorded to inherited assets), but the individual would continue to be subject to tax under section 877 on the in- come or gain derived from any U.S. property acquired with the proceeds from such dis- position. In addition, section 877 currently re- characterizes as U.S. source income certain gains of individuals who are subject to the expatriation tax provisions, thereby subject- ing such individuals to U.S. income tax on such gains. Under this rule, gain on the sale or exchange of stock of a U.S. corporation or debt of a U.S. person is treated as U.S. source income. In this regard, under current law, the substitution of a foreign obligor for a U.S. obligor is generally treated as a tax- able exchange of the debt instrument, and therefore any gain on such exchange is sub- ject to tax under section 877. The House bill extends this recharacterization to income and gains derived from property obtained in certain transactions on which gain or loss is not recognized under present law. An indi- vidual covered by section 877 who exchanges property that would produce U.S. source in- come for property that would produce for- eign source income is required to recognize immediately as U.S. source income any gain on such exchange (determined as if the prop- erty had been sold for its fair market value on such date). To the extent gain is recog- nized under this provision, the property would be accorded the step-up in basis pro- vided under current law. This rule requiring immediate gain recognition does not apply if the individual enters into an agreement with the Secretary of the Treasury specifying that any income or gains derived from the property received in the exchange during the 10-year period after the loss of citizenship (or termination of U.S. residency, as applicable) would be treated as U.S. source income. Such a gain recognition agreement terminates if the property transferred in the exchange is disposed of by the acquiror, and any gain that had not been recognized by reason of such agreement is recognized as U.S. source as of such date. It is expected that a gain recognition agreement would be entered into not later than the due date for the tax return for the year of the exchange. In this regard, the Secretary of the Treasury is authorized to issue regulations providing similar treat- ment for nonrecognition transactions that occur within 5 years immediately prior to the date of loss of citizenship (or termi- nation of U.S. residency, as applicable). The Secretary of Treasury is authorized to issue regulations to treat removal of tan- gible personal property from the United States, and other circumstances that result in a conversion of U.S. source income to for- eign source income without recognition of any unrealized gain, as exchange for pur- poses of computing gain subject to section 877. The taxpayer may defer the recognition of the gain if he or she enters into a gain rec- ognition agreement as described above. For example, a former citizen who removes ap- preciated artwork that he or she owns from the United States could be subject to imme- diate tax on the appreciation under this pro- vision unless the individual enters into a gain recognition agreement. The foregoing rules regarding the treat- ment under section 877 of nonrecognition transactions are illustrated by the following examples: Ms. A loses her U.S. citizenship on January 1, 1996, and is subject to section 877. On June 30, 1997, Ms. A transfers the stock she owns in a U.S. corporation, USCo, to a wholly-owned foreign corporation, FCo, in a transaction that qualifies for tax-free treat- ment under section 351. At the time of such transfer, A’s basis in the stock of USCo is $100,000 and the fair market value of the stock is $150,000. Under present law, Ms. A. would not be subject to U.S. tax on the $50,000 of gain realized on the exchange. Moreover, Ms. A would not be subject to U.S. tax on any distribution of the proceeds from a subsequent disposition of the USCo stock by FCo. Under the House bill, if Ms. A does not enter into a gain recognition agreement with the Secretary of the Treasury, Ms. A would be deemed to have sold the USCo stock for $150,000 on the date of the transfer, and would be subject to U.S. tax in 1997 on the $50,000 of gain realized. Alternatively, if Ms. A enters into a gain recognition agree- ment, she would not be required to recognize for U.S. tax purposes in 1997 the $50,000 of gain realized upon the transfer of the USCo stock to FCo. However, under the gain rec- ognition agreement, for the 10-year period ending on December 31, 2005, any income (e.g., dividends) or gain with respect to the FCo stock would be treated as U.S. source, and therefore Ms. A would be subject to tax on such income or gain under section 877. If FCo disposes of the USCo stock on January 1, 2002, Ms. A’s gain recognition agreement would terminate on such date, and Ms. A would be required to recognize as U.S. source income at that time the $50,000 of gain that she previously deferred under the gain rec- ognition agreement. (The amount of gain re- quired to be recognized by Ms. A in this situ- ation would not be affected by any changes in the value of the USCo stock since her June 30, 1997 transfer of such stock to FCo.) The House bill also extends the re- characterization rules of section 877 to treat as U.S. source any income and gains derived from stock in a foreign corporation if the in- dividual losing citizenship or terminating residency owns, directly or indirectly, more than 50 percent of the vote or value of the stock of the corporation on the date of such loss or termination or at any time during the 2 years preceding such date. Such income and gains are recharacterized as U.S. source only to the extent of the amount of earnings and profits attributable to such stock earned or accumulated prior to the date of loss of citizenship (or termination of residency, as applicable) and while such ownership re- quirement is satisfied. The following example illustrates this rule: Mr. B loses his U.S. citizenship on July 1, 1996 and is subject to section 877. Mr. B has owned all of the stock of a foreign corpora- tion, FCo, since its incorporation in 1991. As of FCo’s December 31, 1995 year-end, FCo has accumulated earnings and profits of $500,000. FCo has earnings and profits of $100,000 for 1996 and does not have any subpart F income (as defined in sec. 952). FCo makes a $100,000 distribution to Mr. B in each of 1997 and 1998. On January 1, 1999, Mr. B disposes of all his stock of FCo and realizes $400,000 of gain. Under present law, neither the distributions from FCo nor the gain on the disposition of the FCo stock would be subject to U.S. tax. Under the House bill, the distributions from FCo and the gain on the sale of the stock of FCo would be treated as U.S. source income and would be taxed to Mr. B under section 877, subject to the earnings and profits limi- tation. For this purpose, the amount of FCo’s earnings and profits for 1996 is pro- rated based on the number of days during 1996 that Mr. B is a U.S. citizen. Thus, the amount of FCo’s earnings and profits earned or accumulated before Mr. B’s loss of citizen- ship is $550,000. Accordingly, the $100,000 dis- tributions from FCo in 1997 and 1998 would be treated as U.S. source income taxable to Mr. B under section 877 in such years. In addi- tion, $350,000 of the gain realized from the sale of the stock of FCo in 1999 would be treated as U.S. source income taxable to Mr. B under section 877 in that year. Special rule for shift in risks of ownership Section 877 applies to income and gains for the 10-year period following the loss of citi- zenship (or termination of residency, as ap- plicable). For purposes of applying section 877, the House bill suspends this 10-year pe- riod for gains derived from a particular prop- erty during any period in which the individ- ual’s risk of loss with respect to such prop- erty is substantially diminished. For exam- ple, Ms. C loses her citizenship on January 1, 1996 and is subject to section 877. On that date Ms. C owns 10,000 shares of stock of a U.S. corporation, USCo, with a value of $1 million. On the same date Ms. C enters into an equity swap with respect to such USCo stock with a 5-year term. under the trans- action, Ms. C will transfer to the counter- party an amount equal to the dividends on the USCo stock and any increase in the value of the USCo stock for the 5-year pe- riod. The counter-party will transfer to Ms. C an amount equal to a market rate of inter- est on $1 million and any decrease in the CONGRESSIONAL RECORD \u2014 HOUSEH9558 July 31, 1996 value of the USCo stock for the same period. Ms. C’s risk of loss with respect to the USCo stock is substantially diminished during the 5-year period in which the equity swap is in effect, and therefore, under the House bill, the 10-year period under section 877 is sus- pended during such period. Accordingly, under the House bill, if Ms. C sells here USCo stock for a gain on January 1, 2010, such gain would be treated as U.S. source income tax- able to Ms. C under section 877. Such gain would not be subject to U.S. tax under present law. Double tax relief In order to avoid the double taxation of in- dividuals subject to the expatriation tax pro- visions, the House bill provides a credit against the U.S. tax imposed under such pro- visions for any foreign income, gift, estate or similar taxes paid with respect to the items subject to such taxation. This credit is avail- able only against the tax imposed solely as a result of the expatriation tax provisions, and is not available to be used to offset any other U.S. tax liability. For example, Mr. D loses his citizenship on January 1, 1996 and is sub- ject to section 877. Mr. D becomes a resident of Country X. During 1996, Mr. D recognizes a $100,000 gain upon the sale of stock of a U.S. corporation, USCo. Country X imposes $20,000 tax on this capital gain. But for the double tax relief provision, Mr. D would be subject to tax of $28,000 on this gain under section 877. However, Mr. D’s U.S. tax under section 877 would be reduced by the $20,000 of foreign tax paid, and Mr. D’s resulting U.S. tax on this gain would be $8,000. Effect on tax treaties While it is believed that the expatriation tax provisions, as amended by the House bill, are generally consistent with the underlying principles of income tax treaties to the ex- tent the House bill provides a foreign tax credit for items taxed by another country, it is intended that the purpose of the expatria- tion tax provisions, as amended, not be de- feated by any treaty provision. The Treasury Department is expected to review all out- standing treaties to determine whether the expatriation tax provisions, as revised, po- tentially conflict with treaty provisions and to eliminate any such potential conflicts through renegotiation of the affected trea- ties as necessary. Beginning on the tenth an- niversary of the enactment of the House bill, any conflicting treaty provisions that re- main in force would take precedence over the expatriation tax provisions as revised. Required information reporting and sharing Under the House bill, a U.S. citizen who loses his or her citizenship is required to pro- vide a statement to the State Department (or other designated government entity) which includes the individual’s social secu- rity number, forwarding foreign address, new country of residence and citizenship and, in the case of individuals with a net worth of at least $500,000, a balance sheet. The entity to which such statement is to be provided is re- quired to provide the Secretary of the Treas- ury copies of all statements received and the names of individuals who refuse to provide such statements. A long-term resident whose U.S. residency is terminated is required to attach a similar statement to his or her U.S. income tax return for the year of such termi- nation. An individual’s failure to provide the required statement results in the imposition of a penalty for each year the failure contin- ues equal to the greater of (1) 5 percent of the individual’s expatriation tax liability for such year, or (2) $1,000. The House bill requires the State Depart- ment to provide the Secretary of the Treas- ury with a copy of each certificate of loss of nationality (CLN) approved by the State De- partment. Similarly, the House bill requires the agency administering the immigration laws to provide the Secretary of the Treas- ury with the name of each individual whose status as a lawful permanent resident has been revoked or has been determined to have been abandoned. Further, the House bill requires the Sec- retary of the Treasury to publish in the Fed- eral Register the names of all former U.S. citizens from whom it receives the required statements or whose names it receives under the foregoing information-sharing provi- sions. Treasury report on tax compliance by U.S. citizens and residents living abroad The Treasury Department is directed to undertake a study on the tax compliance of U.S. citizens and green-card holders residing outside the United States and to make rec- ommendations regarding the improvement of such compliance. The findings of such study and such recommendations are required to be reported to the House Committee on Ways and Means and the Senate Committee on Fi- nance within 90 days of the date of enact- ment. During the course of the 1995 Joint Com- mittee on Taxation staff study on expatria- tion (see Joint Committee on Taxation, Is- sues Presented by Proposals to Modify the Tax Treatment of Expatriation (JCS 17 95), June 1, 1995), a specific issue was identified regarding the difficulty in determining when a U.S. citizen has committed an expatriating act with the requisite intent, and thus no longer has the obligation to continue to pay U.S. taxes on his or her worldwide income due to the fact that the individual is no longer a U.S. citizen. Neither the Immigra- tion and Nationality Act nor any other Fed- eral law requires an individual to request a CLN within a specified amount of time after an expatriating act has been committed, even though the expatriating act terminates the status of the individual as a U.S. citizen for all purposes, including the status of being subject to U.S. tax on worldwide income. Ac- cordingly, it is anticipated that the Treasury report, in evaluating whether improved co- ordination between executive branch agen- cies could improve compliance with the re- quirements of the Internal Revenue Code, will review the process through which the State Department determines when citizen- ship has been lost, and make recommenda- tions regarding changes to such process to recognize the importance of such date for tax purposes. In particular, it is anticipated that the Treasury Department will explore ways of working with the State Department to in- sure that the State Department will not issue a CLN confirming the commission of an expatriating act with the requisite intent necessary to terminate citizenship in the ab- sence of adequate evidence of both the occur- rence of the expatriating act (e.g., the join- ing of a foreign army) and the existence of the requisite intent. Effective date The expatriation tax provisions as modi- fied by the House bill generally apply to any individual who loses U.S. citizenship, and any long-term residents whose U.S. resi- dency is terminated, on or after February 6, 1995. For citizens, the determination of the date of loss of citizenship remains the same as under present law (i.e., the date of loss of citizenship is the date of the expatriating act). However, a special transition rule ap- plies to individuals who committed an expa- triating act within one year prior to Feb- ruary 6, 1995, but had not applied for a CLN as of such date. Such an individual is subject to the expatriation tax provisions as amend- ed by the House bill as of the date of applica- tion for the CLN, but is not retroactively lia- ble for U.S. income taxes on his or her world- wide income. In order to qualify for the ex- ceptions provided for individuals who fall within one of the specified categories, such individual is required to submit a ruling re- quest within 1 year after the date of enact- ment of the House bill. The special transition rule is illustrated by the following example. Mr. E joined a foreign army on October 1, 1994 with the intent to re- linquish his U.S. citizenship, but Mr. E does not apply for a CLN until October 1, 1995. Mr. E would be subject to the expatriation tax provisions (as amended) for the 10-year pe- riod beginning on October 1, 1995. Moreover, if Mr. E falls within one of the specified cat- egories (i.e., Mr. E is age 18 when he joins the foreign army), in order to qualify for the ex- ception provided for such individuals, Mr. E would be required to submit his ruling re- quest within 1 year after the date of enact- ment of the House bill. Mr. E would not, however, be liable for U.S. income taxes on his worldwide income for any period after October 1, 1994. Senate amendment In general The Senate amendment replaces the present-law expatriation income tax rules with rules that generally subject certain U.S. citizens who relinquish their U.S. citi- zenship and certain long-term U.S. residents who relinquish their U.S. residency to tax on the net unrealized gain in their property as if such property were sold for fair market value on the expatriation date. The Senate amendment also imposes information report- ing obligations on U.S. citizens who relin- quish their citizenship and long-term resi- dents whose U.S. residency is terminated. Individuals covered The Senate amendment applies the expa- triation tax to certain U.S. citizens and long-term residents who terminate their U.S. citizenship or residency. For this purpose, a long-term resident is any individual who was a lawful permanent resident of the United States for at least 8 out of the 15 taxable years ending with the year in which the ter- mination of residency occurs. In applying this 8-year test, an individual is not consid- ered to be a lawful permanent resident of the United States for any year in which the indi- vidual is taxed as a resident of another coun- try under a treaty tie-breaker rule. An indi- vidual’s U.S. residency is considered to be terminated when either the individual ceases to be a lawful permanent resident pursuant to section 7701(b)(6) (i.e., the individual loses his or her green-card status) or the individ- ual is treated as a resident of another coun- try under a tie-breaker provision of a tax treaty (and the individual does not elect to waive the benefits of such treaty). The expatriation tax under the Senate amendment applies only to individuals whose average income tax liability or net worth exceeds specified levels. U.S. citizens who lose their citizenship and long-term residents who terminate U.S. residency are subject to the expatriation tax if they meet either of the following tests: (1) the individ- ual’s average annual U.S. Federal income tax liability for the 5 taxable years ending before the date of such loss or termination is great- er than $100,000, or (2) the individual’s net worth as of the date of such loss or termi- nation is $500,000 or more. The dollar amount thresholds contained in these tests are in- dexed for inflation in the case of a loss of citizenship or termination of residency oc- curring in any calendar year after 1996. Exceptions from the expatriation tax under the Senate amendment are provided for individuals in two situations. The first exception applies to an individual who was CONGRESSIONAL RECORD \u2014 HOUSE H9559July 31, 1996 born with citizenship both in the United States and in another country, provided that (1) as of the date of relinquishment of U.S. citizenship the individual continues to be a citizen of, and is taxed as a resident of, such other country, and (2) the individual was a resident of the United States for no more than 8 out of the 15 taxable years ending with the year in which the relinquishment of U.S. citizenship occurred. The second excep- tion applies to a U.S. citizen who relin- quishes citizenship before reaching age 181\u20442, provided that the individual was a resident of the United States for no more than 5 tax- able years before such relinquishment. Deemed sale of property upon expatriation Under the Senate amendment, individuals who are subject to the expatriation tax gen- erally are treated as having sold all of their property at fair market value immediately prior to the relinquishment of citizenship or termination of residency. Gain or loss from the deemed sale of property is recognized at that time, generally without regard to provi- sions of the Code that would otherwise pro- vide nonrecognition treatment. The net gain, if any, on the deemed said of all such prop- erty is subject to U.S. tax at such time to the extent it exceeds $600,000 ($1.2 million in the case of married individuals filing a joint return, both of whom expatriate). The deemed sale rule of the Senate amend- ment generally applies to all property inter- ests held by the individual on the date of re- linquishment of citizenship or termination of residency, provided that the gain on such property interest would be includible in the individual’s gross income if such property in- terest were sold for its fair market value on such date. Special rules apply in the case of trust interests (see ”Interests in trusts,” below). U.S. real property interests, which remain subject to U.S. taxing jurisdiction in the hands of nonresident aliens, generally are excepted from the Senate amendment. An exception also applies to interests in qualified retirement plans and, subject to a limit of $500,000, interests in certain foreign pension plans as prescribed by regulations. The Secretary of the Treasury is authorized to issue regulations exempting other prop- erty interests as appropriate. For example, an exclusion may be provided for an interest in a nonqualified compensation plan of a U.S. employer, where payments from such plan to the individual following expatriation would continue to be subject to U.S. with- holding tax. Under the Senate amendment, an individ- ual who is subject to the expatriation tax is required to pay a tentative tax equal to the amount of tax that would be due for a hypo- thetical short tax year ending on the date the individual relinquished citizenship or terminated residency. Thus, the tentative tax is based on all income, gain, deductions, loss and credits of the individual for the year through such date, including amounts real- ized from the deemed sale of property. The tentative tax is due on the 90th day after the date of relinquishment of citizenship or ter- mination of residency. Deferral of payment of tax Under the Senate amendment, an individ- ual is permitted to elect to defer payment of the expatriation tax with respect to the deemed sale of any property. Under this elec- tion, the expatriation tax with respect to a particular property, plus interest thereon, is due when the property is subsequently dis- posed of. For this purpose, except as provided in regulations, the disposition of property in a nonrecognition transaction constitutes a disposition. In addition, if an individual holds property until his or her death, the in- dividual is treated as having disposed of the property immediately before death. In order to elect deferral of the expatriation tax, the individual is required to provide adequate se- curity to ensure that the deferred expatria- tion tax and interest ultimately will be paid. A bond in the amount of the deferred tax and interest constitutes adequate security. Other security mechanisms are also permitted pro- vided that the individual establishes to the satisfaction of the Security of the Treasury that the security is adequate. In the event that the security provided with respect to a particular property subsequently becomes inadequate and the individual fails to cor- rect such situation, the deferred expatriation tax and interest with respect to such prop- erty will become due. As a further condition to making this election, the individual is re- quired to consent to the waiver of any treaty rights that would preclude the collection of the expatriation tax. Interests in trusts In general.\u2014Under the Senate amendment, special rules apply to trust interests held by the individual at the time of relinquishment of citizenship or termination of residency. The treatment of trust interests depends upon whether the trust is a qualified trust. For this purpose, a ”qualified trust” is a trust that is organized under and governed by U.S. law and that is required by its in- struments to have at least one U.S. trustee. Constructive ownership rules apply to a trust beneficiary that is a corporation, part- nership, trust or estate. In such cases, the shareholders, partners or beneficiaries of the entity are deemed to be the direct bene- ficiaries of the trust for purposes of applying these provisions. In addition, an individual who holds (or who is treated as holding) a trust interest at the time of relinquishment of citizenship or termination of residency is required to disclose on his or her tax return the methodology used to determine his or her interest in the trust, and whether such individual knows (or has reason to know) that any other beneficiary of the trust uses a different method. Nonqualified trusts.\u2014If an individual holds an interest in a trust that is not a qualified trust, a special rule applies for purposes of determining the amount of the expatriation tax due with respect to such trust interest. The individuals interest in the trust is treat- ed as a separate trust consisting of the trust assets allocable to such interest. Such sepa- rate trust is treated as having sold its assets as of the date of relinquishment of citizen- ship or termination of residency and having distributed all proceeds to the individual, and the individual is treated as having re- contributed such proceeds to the trust. The individual is subject to the expatriation tax with respect to any net income or gain aris- ing from the deemed distribution from the trust. The election to defer payment is avail- able for the expatriation tax attributable to a nonqualifed trust interest. A beneficiary’s interest in a nonqualified trust is determined on the basis of all facts and circumstances. These include the terms of the trust instrument itself, any letter of wishes or similar document, historical pat- terns of trust distributions, and the role of any trust protector or similar advisor. Qualified trusts.\u2014If the individual has an interest in a qualified trust, a different set of rules applies. Under these rules, the amount of unrealized gain allocable to the individ- ual’s trust interest is calculated at the time of expatriation. In determining this amount, all contingencies and discretionary interests are assumed to be resolved in the individ- ual’s favor (i.e., the individual is allocated the maximum amount that he or she poten- tially could receive under the terms of the trust instrument). the expatriation tax im- posed on such gains generally is collected when the individual receives distributions from the trust, or, if earlier, upon the indi- vidual’s death. Interest is charged for the pe- riod between the date of expatriation and the date on which the tax is paid. If an individual has an interest in a quali- fied trust, the individual is subject to expa- triation tax upon the receipt of any distribu- tion from the trust. Such distributions may also be subject to U.S. income tax. For any distribution from a qualified trust made to an individual after he or she has expatriated, expatriation tax is imposed in an amount equal to the amount of the distribution mul- tiplied by the highest tax rate generally ap- plicable to trusts and estates, but in no event will the tax imposed exceed the de- ferred tax amount with respect to such trust interest. The ”deferred tax amount” would be equal to (1) the tax calculated with re- spect to the unrealized gain allocable to the trust interest at the time of expatriation, (2) increased by interest thereon, and (3) re- duced by the tax imposed under this provi- sion with respect to prior trust distributions to the individual. If an individual’s interest in a trust is vest- ed as of the expatriation date (e.g., if the in- dividual’s interest in the trust is non-contin- gent and non-discretionary), the gain alloca- ble to the individual’s trust interest is deter- mined based on the truth assets allocable to his or her trust interest. If the individual’s interest in the trust is not vested as of the expatriation date (e.g., if the individual’s trust interest is a contingent or discre- tionary interest), the gain allocable to his or her trust interest is determined based on all of the trust assets that could be allocable to his or her trust interest, determined by re- solving all contingencies and discretionary powers in the individual’s favor. In the case where more than one trust beneficiary is subject to the expatriation tax with respect to trust interests that are not vested, the rules are intended to apply so that the same unrealized gain with respect to assets in the trust is not taxed to both individuals. If the individual disposes of his or her trust interest, the trust ceases to be a qualified trust, or the individual dies, expatriation tax is imposed as of such date. The amount of such tax equal to the lesser of (1) the tax cal- culated under the rules for nonqualified trust interests applied as of such date or (2) the deferred tax amount with respect to the trust interest as of such date. If the individual agrees to waive any trea- ty rights that would preclude collection of the tax, the tax is imposed under this provi- sion with respect to distributions from a qualified trust to the individual deducted and withheld from distributions. If the indi- vidual does not agree to such a waiver of treaty rights, the tax with respect to dis- tributions to the individual is imposed on the trust, the trustee is personally liable therefore, and any other beneficiary of the trust has a right of contribution against such individual with respect to such tax. Similarly, in the case of the tax imposed in connection with an individual’s disposition of a trust interest, the individual’s death while holding a trust interest or the individ- ual’s holding of an interest in a trust that ceases to be qualified, the tax is imposed on the trust, the trustee is personnaly liable therefor, and any other beneficiary of the trust has a right of contribution against such individual with respect to such tax. Election to be treated as a U.S. citizen Under the Senate amendment, an individ- ual is permitted to make an irrevocable elec- tion to continue to be taxed as a U.S. citizen with respect to all property that otherwise is CONGRESSIONAL RECORD \u2014 HOUSEH9560 July 31, 1996 covered by the expatriation tax. This elec- tion is an ”all-or-nothing” election; an indi- vidual is not permitted to elect this treat- ment for some property but not other prop- erty. The election, if made, applies to all property that would be subject to the expa- triation tax and to any property the basis of which is determined by reference to such property. Under this election, the individual continues to pay U.S. income taxes at the rates applicable to U.S. citizens following ex- patriation on any income generated by the property and on any gain realized on the dis- position of the property, as well as any ex- cise tax imposed with respect to property (see, e.g., sec 1491). In addition, the property continues to be subject to U.S. gift, estate, and generation-shipping taxes. However, the amount of any transfer tax so imposed is limited to the amount of income tax that would have been due if the property had been sold for its fair market value immediately before the transfer or death. The $600,000 ex- clusion provided with respect to the expa- triation tax under the Senate amendment is available to reduce the tax imposed by rea- son of this election. In order to make this election, the taxpayer is required to waive any treaty rights that would preclude the collection of the tax. The individual is also required to provide security to ensure pay- ment of the tax under this election in such form, manner, and amount as the Secretary of the Treasury requires. Date of relinquishment of citizenship Under the Senate amendment, as individ- ual is treated as having relinquished U.S. citizenship on the date that the individual first makes known to U.S. government of consular officer his or her intention to relin- quish U.S. citizenship. Thus, a U.S. citizen who relinquishes citizenship by formally re- nouncing his or her U.S. nationality before a diplomatic or consular officer for the United States is treated as having relinquished ciizenship on that date, provided that the re- nunciation is later confirmed by the issuance of a CLN. A U.S. citizen who furnishes to the State Department a signed statement of vol- untary relinquishment of U.S. nationality confirming the performance of an expatriat- ing act with the requisite interest to relin- quish his or her citizenship is treated as hav- ing relinquished his or her citizenship on the date the statement is so furnished (regard- less of when the expatriating act was per- formed), provided that the voluntary relin- quishment is later confirmed by the issuance of a CLN. If neither of these circumstances exist, the individual is treated as having re- linquished citizenship on the date a CLN is issued or a certificate of naturalization is cancelled. The date of relinquishment of citi- zenship determined under the Senate amend- ment applies for all purposes. Effect on present-law expatriation provisions Under the Senate amendment, the present- law income tax provisions with respect to U.S. citizens who expatriate with a principal purpose of avoiding tax (sec. 877) and certain aliens who have a break in residency status (sec. 7701(b)(10)) do applying to U.S. citizens who are treated as relinquishing their citi- zenship on or after February 6, 1995 or to long-term U.S. residents who terminate their residency on or after such date. The special estate and gift tax provisions with respect to individuals who expatriate with a principal purpose of avoiding tax (secs. 2107 and 2501(a)(3)), however, continue to apply; a credit against the tax imposed solely by rea- son of such special provisions is allowed for the expatriation tax imposed with respect to the same property. Treatment of gifts and inheritances from an expatriate Under the Senate amendment, the exclu- sion from income provided in section 102 does not apply to the value of any property re- ceived by gift or inheritance from an individ- ual who was subject to the expatriation tax (i.e., an individual who relinquished citizen- ship or terminated residency and to whom the expatriation tax was applicable). Accord- ingly, a U.S. taxpayer who receives a gift or inheritance from such an individual is re- quired to include the value of such gift or in- heritance in gross income and is subject to U.S. income tax on such amount. Required information reporting and sharing Under the Senate amendment, an individ- ual who relinquishes citizenship or termi- nates residency is required to provide a statement which includes the individual’s so- cial security number, forwarding foreign ad- dress, new country of residence and citizen- ship and, in the case of individuals with a net worth of at least $500,000, a balance sheet. In the case of a former citizen, such statement is due not later than the date the individual’s citizenship is treated as relin- quished and is to be provided to the State Department (or other government entity in- volved in the administration of such relin- quishment). The entity to which the state- ment is to be provided by former citizens is required to provide to the Secretary of the Treasury copies of all statements received and the names of individuals who refuse to provide such statements. In the case of a former long-term resident, the statement is provided to the Secretary of the Treasury with the individual’s tax return for the year in which the individual’s U.S. residency is terminated. An individual’s failure to pro- vide the statement required under this provi- sion results in the imposition of a penalty for each year the failure continues equal to the greater of (1) 5 percent of the individual’s expatriation tax liability for such year or (2) $1,000. The Senate amendment requires the State Department to provide the Secretary of the Treasury with a copy of each CLN approved by the State Department. Similarly, the Senate amendment requires the agency ad- ministering the immigration laws to provide the Secretary of the Treasury with the name of each individual whose status as a lawful permanent resident has been revoked or has been determined to have been abandoned. Further, the Senate amendment requires the Secretary of the Treasury to publish in the Federal Register the names of all former U.S. citizens with respect to whom it re- ceives the required statements or whose names it receives under the foregoing infor- mation-sharing provisions. Treasury report on tax compliance by U.S. citizens and residents living abroad The Treasury Department is directed to undertake a study on the tax compliance of U.S. citizens and green-card holders residing outside the United States and to make rec- ommendations regarding the improvement of such compliance. The findings of such study and such recommendations are required to be reported to the House Committee on Ways and Means and the Senate Committee on Fi- nance within 90 days of the date of enact- ment. Effective date The provision is effective for U.S. citizens whose date of relinquishment of citizenship (as determined under the Senate amend- ment, see ”Date of relinquishment of citizen- ship” above) occurs on or after February 6, 1995. Similarly, the provision is effective for long-term residents who terminate their U.S. residency on or after February 6, 1995. U.S. citizens who committed an expatriat- ing act with the requisite intent to relin- quish their U.S. citizenship prior to Feb- ruary 6, 1995, but whose date of relinquish- ment of citizenship (as determined under the Senate amendment) does not occur until after such date, are subject to the expatria- tion tax under the Senate amendment as of date of relinquishment of citizenship. How- ever, the individual is not subject retro- actively to worldwide tax as a U.S. citizen for the period after he or she committed the expatriating act (and therefore ceased being U.S. citizen for tax purposes under present law). Such an individual continues to be sub- ject to the expatriation tax imposed by present-law section 877 until the individual’s date of relinquishment of citizenship (at which time the individual would be subject to the expatriation tax of the Senate amend- ment). The rules described in this paragraph do not apply to an individual who committed an expatriating act prior to February 6, 1995, but did not do so with the requisite intent to relinquish his or her U.S. citizenship. The tentative tax is not required to be paid, and the reporting requirements would not be required to be met, until 90 days after the date of enactment. Such provisions apply to all individuals whose date of relinquish- ment of U.S. citizenship or termination of U.S. residency occurs on or after February 6, 1995. Conference agreement The conference agreement follows the House bill with modifications. Under the conference agreement, modified rules apply if an individual who is covered by section 877 contributes property that would produce U.S. source income to a foreign corporation if (1) the individual, directly or indirectly, owns 10 percent or more (by vote) of the stock of such corporation and (2) the individ- ual, directly, indirectly or constructively, owns more than 50 percent (by vote or by value) of the stock of such corporation. For purposes of determining indirect and con- structive ownership, the rules of section 958 apply. Under the modified rules, for the ten- year period following expatriation the indi- vidual is treated as receiving or accruing di- rectly the income or gains received or ac- crued by the foreign corporation with re- spect to the contributed property (or other property which has a basis determined by reference to the basis of such contributed property). Moreover, if the individual dis- poses of the stock of the foreign corporation, the individual is subject to U.S. tax on the gain that would have been recognized if the corporation had sold such property imme- diately before the disposition. If the individ- ual disposes of less than all of his or her stock in the foreign corporation, such dis- position is treated as a disposition of a pro rata share (determined based on value) of such contributed property (e.g., if the indi- vidual owns 100 shares of the foreign corpora- tion’s stock and disposes of 10 of such shares, such disposition is treated as a disposition of 10 percent of the property contributed to the foreign corporation). Regulatory authority is provided to prescribe regulations to prevent the avoidance of this rule. Information re- porting will be required as necessary to carry out the purposes of this rule. In addi- tion, under the conference agreement, in the case of any former U.S. citizen, a request for a ruling that such individual’s loss of citi- zenship would be due not earlier than 90 days after date of enactment. C. TREATMENT OF BAD DEBT DEDUCTIONS OF THRIFT INSTITUTIONS (Sec. 401 of the House bill and and sec. 611 of the Senate amendment.) Present law Generally, a taxpayer engaged in a trade or business may deduct the amount of any debt that becomes wholly or partially worthless during the year (the ”specific charge-off” CONGRESSIONAL RECORD \u2014 HOUSE H9561July 31, 1996 25 In the case of a married individual who files a joint return with his or her spouse, the income for purposes of these tests is the combined income of the couple. method of sec. 166). Certain thrift institu- tions (building and loan associations, mutual savings banks, or cooperative banks) are allow deductions for bad debts under meth- ods more favorable than those granted to other taxpayers (and more favorable than the rules applicable to other financial insti- tutions). Qualified thrift institutions may compute deductions for bad debts using ei- ther the specific charge-off method or the re- serve method of section 593. Under section 593, a thrift institution an- nually may elect to deduct bad debts under either (1) the ”percentage of taxable in- come” method applicable only to thrift in- stitutions, or (2) the ”experience” method that also is available to small banks. Under the ”percentage of taxable income” method, a thrift institution generally is allowed a de- duction for an addition to its bad debt re- serve equal to 8 percent of its taxable income (determined without regard to this deduction and with additional adjustments). Under the experience method, a thrift institution gen- erally is allowed a deduction for an addition to its bad debt reserve equal to the greater of (1) an amount based on its actual average ex- perience for losses in the current and five preceding taxable years, or (2) an amount necessary to restore the reserve to its bal- ance as of the close of the base year. If a thrift institution becomes ineligible to use the section 593 method, it is required to change its method of accounting for bad debts and, under proposed Treasury regula- tions, is required to recapture all or a por- tion of its bad debt reserve. In addition, a thrift institution eligible to use the section 593 method may be subject to a form of re- serve recapture if the institution makes cer- tain excessive distributions to its sharehold- ers (sec. 593(e)). House bill Repeal of section 593 The House bill repeals the section 593 re- serve method of accounting for bad debts by thrift institutions, effective for taxable years beginning after 1995. Thrift institu- tions that would be treated as small banks are allowed to utilize the experience method applicable to such institutions, while thrift institutions that are treated as large banks are required to use only the specific charge- off method. Thus, the percentage of taxable income method of accounting for bad debts is no longer available for any financial institu- tion. Treatment of recapture of bad debt reserves A thrift institution required to change its method of computing reserves for bad debts will treat such change as a change in a meth- od of accounting, initiated by the taxpayer, and having been made with the consent of the Secretary of the Treasury. Any section 481(a) adjustment required to be recaptured with respect to such change generally will be determined solely with respect to the ”appli- cable excess reserves” of the taxpayer. The amount of applicable excess reserves will be taken into account ratably over a six-tax- able year period, beginning with the first taxable year beginning after 1995, subject to the residential loan requirement described below. In the case of a thrift institution that becomes a large bank, the amount of the in- stitution’s applicable excess reserves gen- erally is the excess of (1) the balances of its reserve for losses on qualifying real property loans and its reserve for losses on non- qualifying loans as of the close of its last taxable year beginning before January 1, 1996, over (2) the balances of such reserves as of the close of its last taxable year beginning before January 1, 1988 (i.e., the ”pre-1988 re- serves.”) Similar rules are provided for small banks that are allowed to use the experience method. For taxable years that begin after Decem- ber 31, 1995, and before January 1, 1998, if the taxpayer continues to make a certain level of residential loans, the recapture of the ap- plicable excess reserves otherwise required to be taken into account for such years will be suspended. The balance of the pre-1988 reserves is sub- ject to the provisions of section 593(e), as modified by the House bill (requiring recap- ture in the case of certain excessive distribu- tions to shareholders.) Other special recapture rules are provided if a thrift institution no longer qualifies as a bank or if a thrift institution becomes a credit union. Effective date The provision generally is effective for tax- able years beginning after December 31, 1995. Senate amendment The Senate amendment generally is the same as the House bill, with certain modi- fications. Conference agreement The conference agreement does not include either the provision in the House bill or the provision in the Senate amendment. D. EARNED INCOME CREDIT PROVISIONS (Sec. 411 of the House bill.) Present law In general Certain eligible low-income workers are entitled to claim a refundable credit on their income tax return. The amount of the credit an eligible individual may claim depends upon whether the individual has one, more than one or no qualifying children and is de- termined by multiplying the credit rate by the individual’s 25 earned income up to an earned income amount. The maximum amount of the credit is the product of the credit rate and the earned income amount. For individuals with earned income (or ad- justed gross income (AGI), if greater) in ex- cess of the beginning of the phaseout range, the maximum credit amount is reduced by the phaseout rate multiplied by the amount of earned income (or AGI, if greater) in ex- cess of the beginning of the phaseout range. For individuals with earned income (or AGI, if greater) in excess of the end of the phase- out range, no credit is allowed. The parameters for the credit depend upon the number of qualifying children the indi- vidual claims. For 1996, the parameters are given in the following table: Two or more qualifying children\u2014 One qualify- ing child\u2014 No qualify- ing chil- dren\u2014 Credit rate (percent) …………….. 40.00 34.00 7.65 Earned income amount …………. $8,890 $6,330 $4,220 Maximum credit …………………… $3,356 $2,152 $323 Phaseout begins ………………….. $11,610 $11,610 $5,280 Phaseout rate (percent) ………… 21.06 15.98 7.65 Phaseout ends …………………….. $28,495 $25,078 $9,500 For years after 1996, the credit rates and the phaseout rates will be the same as in the preceding table. The earned income amount and the beginning of the phaseout range are indexed for inflation; because the end of the phaseout range depends on those amounts as well as the phaseout rate and the credit rate, the end of the phaseout range will also in- crease if there is inflation. In order to claim the credit, an individual must either have a qualifying child or meet other requirements. A qualifying child must meet a relationship test, an age test, an identification test, and a residence test. In order to claim the credit without a qualify- ing child, an individual must not be a de- pendent and must be over age 24 and under age 65. To satisfy the identification test, individ- uals must include on their tax return the name and age of each qualifying child. For returns filed with respect to tax year 1996, individuals must provide a taxpayer identi- fication number (TIN) for all qualifying chil- dren born on or before November 30, 1996. For returns filed with respect to tax year 1997 and all subsequent years, individuals must provide TINs for all qualifying children, re- gardless of their age. An individual’s TIN is generally that individual’s social security number. Mathematical or clerical errors The IRS may summarily assess additional tax due as a result of a mathematical or cler- ical error without sending the taxpayer a no- tice of deficiency and giving the taxpayer an opportunity to petition the Tax Court. Where the IRS uses the summary assessment procedure for mathematical or clerical er- rors, the taxpayer must be given an expla- nation of the asserted error and a period of 60 days to request that the IRS abate its as- sessment. The IRS may not proceed to col- lect the amount of the assessment until the taxpayer has agreed to it or has allowed the 60-day period for objecting to expire. If the taxpayer files a request for abatement of the assessment specified in the notice, the IRS must abate the assessment. Any reassess- ment of the abated amount is subject to the ordinary deficiency procedures. The request for abatement of the assessment is the only procedure a taxpayer may use prior to pay- ing the assessed amount in order to contest an assessment arising out of a mathematical or clerical error. Once the assessment is sat- isfied, however, the taxpayer may file a claim for refund if he or she believes the as- sessment was made in error. House bill Under the House bill, individuals are not eligible for the credit if they do not include their taxpayer identification number (and, if married, their spouse’s taxpayer identifica- tion number) on their tax return. Solely for these purposes and for purposes of the present-law identification test for a qualify- ing child, a taxpayer identification number is defined as a social security number issued to an individual by the Social Security Ad- ministration other than a number issued under section 205(c)(2)(B)(i)(II) (or that por- tion of sec. 205(c)(2)(B)(i)(III) relating to it) of the Social Security Act (regarding the is- suance of a number to an individual applying for or receiving Federally funded benefits). If an individual fails to provide a correct taxpayer identification number, such omis- sion will be treated as a mathematical or clerical error. If an individual who claims the credit with respect to net earnings from self-employment fails to pay the proper amount of self-employment tax on such net earnings, the failure will be treated as a mathematical or clerical error for purposes of the amount of credit allowed. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1995. Senate amendment No provision. Conference agreement The conference agreement does not include the House bill provision. E. MODIFY TREATMENT OF FOREIGN TRUSTS (Secs. 601 606 of the Senate amendment). Present law Inbound grantor trusts with foreign grantors Under the grantor trust rules (secs. 671 679), a grantor that retains certain rights or CONGRESSIONAL RECORD \u2014 HOUSEH9562 July 31, 1996 26 The exception does not apply to the portion of any such trust attributable to any transfers made after September 19, 1995. powers generally is treated as the owner of the trust’s assets without regard to whether the grantor is a domestic or foreign person. Under these rules, U.S. trust beneficiaries are not subject to U.S. tax on distributions from a trust where a foreign grantor is treat- ed as owner of the trust, even though no tax may be imposed on the trust income by any jurisdiction. In addition, a special rule pro- vides that if a U.S. beneficiary of an inbound grantor trust transfers property to the for- eign grantor by gift, that U.S. beneficiary is treated as the grantor of the trust to the ex- tent of the transfer. Foreign trusts that are not grantor trusts Under the accumulation distribution rules (which generally apply to distributions from a trust in excess of the trust’s distributable net income for the taxable year), a distribu- tion by a foreign nongrantor trust of pre- viously accumulated income generally is taxed at the U.S. beneficiary’s average mar- ginal rate for the prior 5 years, plus interest (secs. 666 and 667). Interest is computed at a fixed annual rate of 6 percent, with no compounding (sec. 668). If adequate records of the trust are not available to determine the proper application of the rules relating to accumulation distributions to any dis- tribution from a trust, the distribution is treated as an accumulation distribution out of income earned during the first year of the trust (sec. 666(d)). If a foreign nongrantor trust makes a loan to one of its beneficiaries, the principal of such a loan generally is not taxable as in- come to the beneficiary. Outbound foreign grantor trusts with U.S. grantors Under the grantor trust rules, a U.S. per- son that transfers property to a foreign trust generally is treated as the owner of the por- tion of the trust comprising that property for any taxable year in which there is a U.S. beneficiary of any portion of the trust (sec. 679(a)). This treatment generally does not apply, however, to transfers by reason of death, to transfers made before the trans- feror became a U.S. person, or to transfers that represent sales or exchanges of property at fair market value where gain is recognized to the transferor. Residence of trusts and estates An estate or trust is treated as foreign if it is not subject to U.S. income taxation on its income that is neither derived from U.S. sources nor effectively connected with the conduct of a U.S. trade or business. Thus, if a trust is taxed in a manner similar to a non- resident alien individual, it is considered to be a foreign trust. Any other trust is treated as domestic. Section 1491 generally imposes a 35-percent excise tax on a U.S. person that transfers ap- preciated property to certain foreign enti- ties, including a foreign trust. In the case of a domestic trust that changes its situs and becomes a foreign trust, it is unclear wheth- er property has been transferred from a U.S. person to a foreign entity and, thus, whether the transfer is subject to the excise tax. Information reporting and penalties related to foreign trusts Any U.S. person that creates a foreign trust or transfers money or property to a for- eign trust is required to report that event to the Treasury Department without regard to whether the trust is a grantor trust or a non- grantor trust. Similarly, any U.S. person that transfers property to a foreign trust that has one or more U.S. beneficiaries is re- quired to report annually to the Treasury Department. In addition, any U.S. person that makes a transfer described in section 1491 is required to report the transfer to the Treasury Department. Any person that fails to file a required re- port with respect to the creation of, or a transfer to, a foreign trust may be subject to a penalty of 5 percent of the amount trans- ferred to the foreign trust. Similarly, any person that fails to file a required annual re- port with respect to a foreign trust with U.S. beneficiaries may be subject to a penalty of 5 percent of the value of the corpus of the trust at the close of the taxable year. The maximum amount of the penalty imposed under either case may not exceed $1,000. A reasonable cause exception is available. Reporting of foreign gifts There is no requirement to report gifts or bequests from foreign sources. House bill No provision. Senate amendment Inbound grantor trusts with foreign grantors The Senate amendment generally applies the grantor trust rules only to the extent that they result, directly or indirectly, in in- come or other amounts being currently taken into account in computing the income of a U.S. citizen or resident or a domestic corporation. Certain exceptions apply to this general rule. Under one exception, the grant- or trust rules continue to apply to a rev- ocable trust. Under another exception, the grantor trust rules continue to apply to a trust where the only amounts distributable during the lifetime of the grantor are to the grantor or the grantor’s spouse. The general rule denying grantor trust status does not apply to trusts established to pay compensa- tion, and certain trusts in existence as of September 19, 1995 provided that such trust is treated as owned by the grantor under sec- tion 676 or 677 (other than sec. 677(a)(3)).26 In addition, the grantor trust rules generally apply where the grantor is a controlled for- eign corporation (as defined in sec. 957). Fi- nally, the grantor trust rules continue to apply in determining whether a foreign cor- poration is characterized as a passive foreign investment company (”PFIC”). Thus, a for- eign corporation cannot avoid PFIC status by transferring its assets to a grantor trust. If a U.S. beneficiary of an inbound grantor trust transfers property to the foreign grant- or, such beneficiary generally is treated as a grantor of a portion of the trust to the ex- tent of the transfer. This rule applies with- out regard to whether the foreign grantor is otherwise treated as the owner of any por- tion of such trust. However, this rule does not apply if the transfer is a gift that quali- fies for the annual exclusion described in section 2503(b). The Senate amendment provides a special rule that allows the Secretary of the Treas- ury to recharacterize a transfer, directly or indirectly, from a partnership or foreign cor- poration which the transferee treats as a gift or bequest, to prevent the avoidance of the purpose of section 672(f). In a case where a foreign person (that would be treated as the owner of a trust but for the above rule) actu- ally pays tax on the income of the trust to a foreign country, it is anticipated that Treas- ury regulations will provide that, for foreign tax credit purposes, U.S. beneficiaries that are subject to U.S. income tax on the same income will be treated as having paid the foreign taxes that are paid by the foreign grantor. Any resulting foreign tax credits will be subject to applicable foreign tax cred- it limitations. Effective date.\u2014The provisions described in this part are effective on the date of enact- ment. Foreign trusts that are not grantor trusts The Senate amendment changes the inter- est rate applicable to accumulation distribu- tions from foreign trusts from simple inter- est at a fixed rate of 6 percent to compound interest determined in the same manner as interest imposed on underpayments of tax under section 6621(a)(2). Simple interest is accrued at the rate of 6 percent through 1995. Beginning on January 1, 1996 compound in- terest based on the underpayment rate is im- posed on tax amounts determined under the accumulation distribution rules and the total simple interest for pre-1996 periods, if any. For purposes of computing the interest charge, the accumulation distribution is al- located proportionately to prior trust years in which the trust has undistributed net in- come (and the beneficiary receiving the dis- tribution was a U.S. citizen or resident), rather than to the earliest of such years. An accumulation distribution is treated as re- ducing proportionately the undistributed net income from prior years. In the case of a loan of cash or marketable securities by the foreign trust to a U.S. grantor or a U.S. beneficiary (or a U.S. per- son related to such grantor or beneficiary), except to the extent provided by Treasury regulations, the Senate amendment treats the full amount of the loan as distributed to the grantor or beneficiary. It is expected that the Treasury regulations will provide an exception from this treatment for loans with arm’s-length terms. In applying this ex- ception, it is further expected that consider- ation be given to whether there is a reason- able expectation that a loan will be repaid. In addition, any subsequent transaction be- tween the trust and the original borrower re- garding the principal of the loan (e.g., repay- ment) is disregarded for all purposes of the Code. This provision does not apply to loans made to persons that are exempt from U.S. income tax. Effective date.\u2014The provision to modify the interest charge on accumulation distribu- tions applies to distributions after the date of enactment. The provision with respect to loans to U.S. grantors, U.S. beneficiaries or a U.S. person related to such a grantor or beneficiary applies to loans made after Sep- tember 19, 1995. Outbound foreign grantor trusts with U.S. grantors The Senate amendment makes several modifications to the general rule of section 679(a)(1) under which a U.S. person who transfers property to a foreign trust gen- erally is treated as the owner of the portion of the trust comprising that property for any taxable year in which there is a U.S. bene- ficiary of the trust. The Senate amendment also conforms the definition of certain for- eign corporations the income of which is deemed to be accumulated for the benefit of a U.S. beneficiary to the definition of con- trolled foreign corporations (as defined in sec. 957(a)). Sale or exchange at market value.\u2014Present law contains several exceptions to grantor trust treatment under section 679(a)(1) de- scribed above. Under one of the exceptions, grantor trust treatment does not result from a transfer of property by a U.S. person to a foreign trust in the form of a sale or ex- change at fair market value where gain is recognized to the transferor. In determining whether the trust paid fair market value to the transferor, the Senator amendment pro- vides that obligations issued (or, to the ex- tent provided by regulations, guaranteed) by the trust, by any grantor or beneficiary of the trust, or by any person related to any grantor or beneficiary (referred to as ”trust obligations”) are not taken into account ex- cept as provided in Treasury regulations. It CONGRESSIONAL RECORD \u2014 HOUSE H9563July 31, 1996 is expected that the Treasury regulations will provide an exception from this treat- ment for loans with arm’s-length terms. In applying this exception, it is further ex- pected that consideration be given to wheth- er there is a reasonable expectation that a loan will be repaid. Principal payments by the trust on any such trust obligations gen- erally will reduce the portion of the trust at- tributable to the property transferred (i.e., the portion of which the transferor is treated as the grantor). Other transfers.\u2014The Senate amendment adds a new exception to the general rule of section 679(a)(1) described above. Under the Senate amendment, a transfer of property to certain charitable trusts is exempt from the application of the rules treating foreign trusts with U.S. grantors and U.S. bene- ficiaries as grantor trusts. Transferors or beneficiaries who become U.S. persons.\u2014The Senate amendment applies the rule of section 679(a)(1) to certain foreign persons who transfer property to a foreign trust and subsequently become U.S. persons. A nonresident alien individual who transfers property, directly or indirectly, to a foreign trust and then becomes a resident of the United States within 5 years after the trans- fer generally is treated as making a transfer to the foreign trust on the individual’s U.S. residency starting date (as defined in sec. 7701(b)(2)(A)). The amount of the deemed transfer is the portion of the trust (including undistributed earnings) attributable to the property previously transferred. Con- sequently, the individual generally is treated under section 679(a)(1) as the owner of that portion of the trust in any taxable year in which the trust has U.S. beneficiaries. Outbound trust migrations.\u2014The Senate amendment applies the rules of section 679(a)(1) to a U.S. person that transferred property to a domestic trust if the trust sub- sequently becomes a foreign trust while the transferor is still alive. Such a person is deemed to make a transfer to the foreign trust on the date of the migration. The amount of the deemed transfer is the portion of the trust (including undistributed earn- ings) attributable to the property previously transferred. Consequently, the individual generally is treated under the rules of sec- tion 679(a)(1) as the owner of that portion of the trust in any taxable year in which the trust has U.S. beneficiaries. Effective date.\u2014The provisions to amend section 679 apply to transfers of property after February 6, 1995. Anti-abuse regulatory authority The Senate amendment includes an anti- abuse rule which authorizes the Secretary of the Treasury to issue regulations, on or after the date of enactment, that may be nec- essary or appropriate to carry out the pur- poses of the rules applicable to estates, trusts and beneficiaries, including regula- tions to prevent the avoidance of those pur- poses. Effective date.\u2014The provision is effective on the date of enactment. Residence of trusts and estates The Senate amendment establishes a two- part objective test for determining for tax purposes whether a trust is foreign or domes- tic. If both parts of the test are satisfied, the trust is treated as domestic. Only the first part of the test applies to estates. Under the first part of the test, if a U.S. court (i.e., Federal, State, or local) exercises primary supervision over the administration of a trust or estate, the trust or estate is treated as domestic. Under the second part of the test, in order for a trust to be treated as do- mestic, one or more U.S. fiduciaries must have the authority to control all substantial decisions of the trust. Under the Senate amendment, if a domes- tic trust changes its situs and becomes a for- eign trust, the trust is treated as having made a transfer of its assets to a foreign trust and is subject to the 35-percent excise tax imposed by present-law section 1491 un- less one of the exceptions to this excise tax is applicable. Effective date.\u2014The provision to modify the treatment of a trust or estate as a U.S. per- son applies to taxable years beginning after December 31, 1996. In addition, if the trustee of a trust so elects, the provision would apply to taxable years ending after the date of enactment. The amendment to section 1491 is effective on the date of enactment. Information reporting and penalties relating to foreign trusts The Senate amendment generally requires the grantor, transferor or executor (i.e., the ”responsible party”) to notify the Treasury Department upon the occurrence of certain reportable events. The term ”reportable event” means the creation of any foreign trust by a U.S. person, the direct and indi- rect transfer of any money or property to a foreign trust, including a transfer by reason of death, and the death of a U.S. citizen or resident if any portion of a foreign trust was included in the gross estate of the decedent. In addition, a U.S. owner of any portion of a foreign trust is required to ensure that the trust files an annual return to provide full accounting of all the trust activities for the taxable year. Finally, any U.S. person that relieves (directly or indirectly) any distribu- tion from a foreign trust is required to file a return to report the aggregate amount of the distributions received during the year. The Senate amendment provides that if a U.S. owner of any portion of a foreign trust fails to appoint a limited U.S. agent to ac- cept service of process with respect to any requests and summons by the Secretary of the Treasury in connection with the tax treatment of any items related to the trust, the Secretary of the Treasury may deter- mine the tax consequences of amounts to be taken into account under the grantor trust rules. In cases where adequate records are not provided to the Secretary of Treasury to determine the proper treatment of any dis- tributions from a foreign trust, the distribu- tion is includible in the gross income of the U.S. distributee and is treated as an accumu- lation distribution from the middle year of a foreign trust (i.e., computed by taking the number of years that the trust has been in existence divided by 2) for purposes of com- puting the interest charge applicable to such distribution, unless the foreign trust elects to have a U.S. agent for the limited purpose of accepting service of process (as described above). Under the Senate amendment, a person that fails to provide the required notice or return in cases involving the transfer of property to a new or existing foreign trust, or a distribution by a foreign trust to a U.S. person, is subject to an initial penalty equal to 35 percent of the gross reportable amount (generally the value of the property involved in the transaction). A failure to provide an annual reporting of trust activities will re- sult in an initial penalty equal to 5 percent of the gross reportable amount. An addi- tional $10,000 penalty is imposed for contin- ued failure for each 30-day period (or fraction thereof) beginning 90 days after the Treasury Department notifies the responsible party of such failure. Such penalties are subject to a reasonable cause exception. In no event will the total amount of penalties exceed the gross reportable amount. Effective date.\u2014The reporting requirements and applicable penalties generally apply to reportable events occurring or distributions received after the date of enactment. The an- nual reporting requirement and penalties ap- plicable to U.S. grantors apply to taxable years of such persons beginning after the date of enactment. Reporting of foreign gifts The Senate amendment generally requires any U.S. person (other than certain tax-ex- empt organizations) that receives purported gifts or bequests from foreign sources total- ing more than $10,000 during the taxable year to report them to the Treasury Department. The threshold for this reporting requirement is indexed for inflation. The definition of a gift to a U.S. person for this purpose ex- cludes amounts that are qualified tuition or medical payments made on behalf of the U.S. person, as defined for gift tax purposes (sec. 2503(e)(2)). If the U.S. person fails, without reasonable cause, to report foreign gifts as required, the Treasury Secretary is author- ized to determine, in his sole discretion, the tax treatment of the unreported gifts. In ad- dition, the U.S. person is subject to a pen- alty equal to 5 percent of the amount of the gift for each month that the failure contin- ues, with the total penalty not to exceed 25 percent of such amount. Effective date.\u2014The provision applies to amounts received after the date of enact- ment. Conference agreement The conference agreement does not include the Senate amendment. F. REPEAL OF FINANCIAL INSTITUTION TRANSI- TION RULE TO INTEREST ALLOCATION RULES Present law For foreign tax credit purposes, taxpayers generally are required to allocate and appor- tion interest expense between U.S. and for- eign source income based on the proportion of the taxpayer’s total assets in each loca- tion. Such allocation and apportionment is required to be made for affiliated groups (as defined in sec. 864(e)(5)) as a whole rather than on a subsidiary-by-subsidiary basis. However, certain types of financial institu- tions that are members of an affiliated group are treated as members of a separate affili- ated group for purposes of allocating and ap- portioning their interest expense. Section 1215(c)(5) of the Tax Reform Act of 1986 (P.L. 99 514, 100 Stat. 2548) includes a targeted rule which treats a certain corporation as a fi- nancial institution for this purpose. House bill No provision. Senate amendment No provision. However, section 1606 of the Senate amendment to H.R. 3448 (Small Busi- ness Job Protection Act of 1996) contained a provision that repeals section 1215(c)(5) of the Tax Reform Act of 1986. Effective date.\u2014Taxable years beginning after December 31, 1995. Conference agreement The conference agreement includes the provision in the Senate amendment to H.R. 3448 with one modification. The conference agreement repeals section 1215(c)(5) of the Tax Reform Act of 1986 effective on the date of enactment. Under the conference agree- ment, a taxpayer will perform two computa- tions with respect to its taxable year that includes the enactment date. Under the first computation, the taxpayer’s pre-effective date interest expense is allocated and appor- tioned taking into account the targeted rule, and under the second computation, the tax- payer’s post-effective date interest expense is allocated and apportioned without regard to the targeted rule. These computations will not require a closing of a taxpayer’s books and records and it is intended that an CONGRESSIONAL RECORD \u2014 HOUSEH9564 July 31, 1996 administratively simple approach be used in applying this rule. BILL ARCHER, BILL THOMAS, TOM BLILEY, MICHAEL BILIRAKIS, WILLIAM F. GOODLING, H.W. FAWELL, HENRY HYDE, BILL MCCOLLUM, J. DENNIS HASTERT, Managers on the Part of the House. BILL ROTH NANCY LANDON KASSEBAUM, TRENT LOTT, TED KENNEDY, Managers on the Part of the Senate. f SPECIAL ORDERS GRANTED By unanimous consent, permission to address the House, following the legis- lative program and any special orders heretofore entered, was granted to: (The following Members (at the re- quest of Mr. BROWN of California) to re- vise and extend their remarks and in- clude extraneous material:) Mrs. COLLINS of Illinois, for 5 min- utes, today. Mr. STUPAK, for 5 minutes, today. Ms. MILLENDER-MCDONALD, for 5 min- utes, today. Mr. BROWN of California, for 5 min- utes, today. Ms. JACKSON-LEE of Texas, for 5 min- utes, today. (The following Members (at the re- quest of Mr. DREIER) to revise and ex- tend their remarks and include extra- neous material:) Mr. RIGGS, for 5 minutes, today. Mr. METCALF, for 5 minutes, today. Mr. FOLEY for 5 minutes, today and August 1. Mr. TORKILDSEN, for 5 minutes, today and August 1. Mr. MILLER of Florida, for 5 minutes, today. Mr. DREIER, for 5 minutes, today and August 1. (The following Member (at his own request) to revise and extend his re- marks and include extraneous mate- rial:) Mr. LONGLEY, for 5 minutes, today. (The following Members (at his own request) to revise and extend his re- marks and include extraneous mate- rial:) Mr. LONGLEY, for 5 minutes, today. f EXTENSION OF REMARKS By unanimous consent, permission to revise and extend remarks was granted to: (The following Members (at the re- quest of Mr. BROWN of California) and to include extraneous material:) Mrs. COLLINS of Illinois. Mrs. MINK of Hawaii. Mr. EVANS. Mr. SISISKY. Mr. TORRES. Mr. CLAY. Mrs. MALONEY. Mr. TORRICELLI. Mr. FRAZER. Mr. WYNN. Mr. VENTO. Mr. LIPINSKI. Ms. VELA\u0301ZQUEZ. (The following Members (at the re- quest of Mr. DREIER) and to include ex- traneous matter:) Mr. FIELDS of Texas. Mr. DUNCAN. Mr. DAVIS. Mr. WOLF. Mr. SCHIFF. Mr. THOMAS. Mr. SOLOMON in two instances. Mr. ZELIFF. Mr. SAXTON. Mr. DORNAN. Mr. HANSEN. (The following Members (at the re- quest of Mr. HASTERT) and to include extraneous matter:) Mr. PAYNE of New Jersey. Mr. BARCIA. f ADJOURNMENT Mr. HASTERT. Mr. Speaker, I move that the House do now adjourn. The motion was agreed to; accord- ingly (at 11 o’clock and 44 minutes p.m.), the House adjourned until to- morrow, Thursday, August 1, 1996, at 10 a.m. f EXECUTIVE COMMUNICATIONS, ETC. Under clause 2 of rule XXIV, execu- tive communications were taken from the Speaker’s table and referred as fol- lows: 4456. A letter from the Administrator, Ag- ricultural Marketing Service, transmitting the Service’s final rule\u2014Dried Prunes Pro- duced in California; Assessment Rate [Dock- et No. FV96 993 1 IFR] received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- mittee on Agriculture. 4457. A letter from the Administrator, Ag- ricultural Marketing Service, transmitting the Service’s final rule\u2014Onions Grown in Certain Designated Counties in Idaho, and Malheur, Oregon; Relaxation of Pack and Marketing Requirements [FV96 958 3 IFR] received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Agri- culture. 4458. A letter from the Administrator, Ag- ricultural Marketing Service, transmitting the Service’s final rule\u2014Almonds Grown in California; Assessment Rate [Docket No. FV96 981 2 IFR] received July 31, 1996, pursu- ant to 5 U.S.C. 801(a)(1)(A); to the Committee on Agriculture. 4459. A letter from the Congressional Re- view Coordinator, Animal and Plant Health Inspection Service, transmitting the Serv- ice’s final rule\u2014Horses from Mexico; Quar- antine Requirements [Docket No. 96 052 1] received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Agri- culture. 4460. A letter from the Chief, Programs and Legislation Division, Office of Legislative Liaison, Department of the Air Force, trans- mitting notification that the Commander of Air Force Space Command is initiating a multifunction cost comparison of portions of communications, civil engineering, informa- tion management, and services and person- nel activities at Vandenberg AFB, CA, pursu- ant to 38 U.S.C. 5010(c)(5) (96 Stat. 1448); to the Committee on National Security. 4461. A letter from the Chief, Programs and Legislation Division, Office of Legislative Liaison, Department of the Air Force, trans- mitting notification that the Commander of Air Force Space Command is initiating a multifunction cost comparison of portions of communications, civil engineering, informa- tion management, and services and person- nel activities at Peterson AFB, CO, pursuant to 38 U.S.C. 5010(c)(5) (96 Stat. 1448); to the Committee on National Security. 4462. A letter from the Chief, Programs and Legislation Division, Office of Legislative Liaison, Department of the Air Force, trans- mitting notification that the Commander of Air Force Space Command is initiating a multifunction cost comparison of portions of communications, civil engineering, informa- tion management, and services and person- nel activities at Patrick AFB, FL, pursuant to 38 U.S.C. 5010(c)(5) (96 Stat. 1448); to the Committee on National Security. 4463. A letter from the General Counsel, Federal Emergency Management Agency, transmitting the Agency’s final rule\u2014Na- tional Flood Insurance Program; Assistance to Private Sector Property Insurers (RIN: 3067 AC26) received July 30, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Banking and Financial Services. 4464. A letter from the Managing Director, Federal Housing Finance Board, transmit- ting the Board’s final rule\u2014Modification of Definition of Deposits in Banks or Trust Companies [No. 96 48] received July 30, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- mittee on Banking and Financial Services. 4465. A letter from the Director, Office of Regulatory Management and Information, Environmental Protection Agency, transmit- ting the Agency’s final rule\u2014Accidental Re- lease Prevention Requirements: Risk Man- agement Programs Under Clean Air Act Sec- tion 112(r)(7) (FRL 5516 5) (RIN: 2050 AD26) received July 29, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Commerce. 4466. A letter from the Director, Office of Regulatory Management and Information, Environmental Protection Agency, transmit- ting the Agency’s final rule\u2014Approval and Promulgation of Implementation Plans; Illi- nois (FRL 5424 4) received July 29, 1996, pur- suant to 5 U.S.C. 801(a)(1)(A); to the Commit- tee on Commerce. 4467. A letter from the Director, Office of Regulatory Management and Information, Environmental Protection Agency, transmit- ting the Agency’s final rule\u2014Approval and Promulgation of Air Quality Implementa- tion Plans; Pennsylvania Emission State- ment Program (FRL 5427 2) received July 29, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Commerce. 4468. A letter from the Director, Office of Regulatory Management and Information, Environmental Protection Agency, transmit- ting the Agency’s final rule\u2014Interim Final Determination that State has Corrected the Deficiency; Ohio (FRL 5462 2) received July 9, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Commerce. 4469. A letter from the Director, Office of Regulatory Management and Information, Environmental Protection Agency, transmit- ting the Agency’s final rule\u2014Designation of Areas for Air Quality Planning Purposes; Michigan [MI45 01 7240a; FRL 5545 2] re- ceived July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Commerce. 4470. A letter from the Director, Office of Regulatory Management and Information, Environmental Protection Agency, transmit- ting the Agency’s final rule\u2014Designation of Areas for Air Quality Planning Purposes; Il- linois [IL146 1a; FRL 5540 6] received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Commerce. CONGRESSIONAL RECORD \u2014 HOUSE H9565July 31, 1996 4471. A letter from the Director, Office of Regulatory Management and Information, Environmental Protection Agency, transmit- ting the Agency’s final rule\u2014Illinois: Final Authorization of Revisions to State Hazard- ous Waste Management Program (FRL 5544 9) received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Commerce. 4472. A letter from the Chair, Federal En- ergy Regulatory Commission, transmitting the Commission’s final rule\u2014Standards for Business Practices of Interstate Natural Gas Pipelines [Docket No. RM96 1 000] received July 30, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Commerce. 4473. A letter from the Chair, Federal En- ergy Regulatory Commission, transmitting the Commission’s final rule\u2014Oil Pipelines Cost-of-Service Filing Requirements [Docket No. RM96 10 000] received July 30, 1996, pur- suant to 5 U.S.C. 801(a)(1)(A); to the Commit- tee on Commerce. 4474. A letter from the Director, Regula- tions Policy Management Staff, Office of Policy, Food and Drug Administration, transmitting the Administration’s final rule\u2014Medical Devices; Medical Device Dis- tributor and Manufacturer Reporting; Cer- tification, Registration, Listing, and Pre- market Notification Submission; Stay of Ef- fective Date; Revocation of Final Rule [Docket No. 91N 0295] (RIN: 0910 AA09) re- ceived July 30, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Commerce, 4475. A letter from the Assistant Legal Ad- viser for Treaty Affairs, Department of State, transmitting copies of international agreement, other than treaties, entered into by the United States, pursuant to 1 U.S.C. 112b(a); to the Committee on International Relations. 4476. A letter from the Acting Director, Of- fice of Fisheries Conservation and Manage- ment, National Marine Fisheries Service Agency, transmitting the Service’s final rule\u2014Fisheries of the Northeastern United States; Framework Adjustment 8 Gear Re- strictions [Docket No. 950615156 6193 02; I.D. 070196C] received July 30, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Re- sources. 4477. A letter from the Director, Office of Surface Mining, transmitting the Office’s final rule\u2014Wyoming Regulatory Program (shrub density stocking requirements and wildlife habitat) [SPATS No. WY 022] re- ceived July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Resources. 4478. A letter from the Under Secretary of Commerce for Technology, Department of Commerce, transmitting the Department’s final rule\u2014Acquisition and Protection of Foreign Rights in Inventions; Licensing of Foreign Patents Acquired by the Govern- ment; Uniform Patent Policy for Rights in Inventions Made by Government Employees [Docket No. 960604157 6157 01] (RIN: 0692 AA15) received July 30, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on the Judiciary. 4479. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Airworthiness Directives; Boeing Model 767 Series Air- planes (Federal Aviation Administration) [Docket No. 96 NM 161 AD; Amendment 39 9695; AD 96 14 51] (RIN: 2120 AA64) received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transpor- tation and Infrastructure. 4480. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Airworthiness Directives; British Aerospace Model BAe 146 100A, 200A, and 300A Series Airplanes (Fed- eral Aviation Administration) [Docket No. 96 NM 162 AD; Amendment 39 9694; AD 96 14 09] (RIN: 2120 AA64) received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- mittee on Transportation and Infrastruc- ture. 4481. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Amendment to Class E Airspace, Ames, IA (Federal Aviation Administration) [Airspace Docket No. 96 ACE 5] (RIN: 2120 AA66) received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transportation and Infra- structure. 4482. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Amendment to Class E Airspace, McCook, NE (Federal Avia- tion Administration) [Docket No. 96 ACE 8] received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transpor- tation and Infrastructure. 4483. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Amendment to Class E Airspace, Russell, KS (Federal Avia- tion Administration) [Docket No. 96 ACE 7] received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transpor- tation and Infrastructure. 4484. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Modification of Class E Airspace; Rice Lake, WI (Federal Aviation Administration) [Airspace Docket No. 95 AGL 19] received July 31, 1996, pursu- ant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transportation and Infrastructure. 4485. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014IFR Altitudes; Miscellaneous Amendments (Federal Avia- tion Administration) [Docket No. 28621; Amdt. No. 397] received July 31, 1996, pursu- ant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transportation and Infrastructure. 4486. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Amendment to Definition of ”Substance Abuse Profes- sional” (RIN: 2105 AC33) received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transportation and Infra- structure. 4487. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Amendments to Laboratory Certification Requirements [OST Docket No. OST 96 1532] (RIN: 2105 AC37) re- ceived July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transpor- tation and Infrastructure. 4488. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Safety Zone: Cuyahoga River, Cleveland, OH (U.S. Coast Guard) [CGD09 95 018] received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Com- mittee on Transportation and Infrastruc- ture. 4489. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Federal Motor Vehicle Safety Standards; Air Brake Sys- tems; Long-Stroke Brake Chambers [Docket No. 93 54, Notice 3] (RIN: 2127 AG25) received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transpor- tation and Infrastructure. 4490. A letter from the Comptroller General of the United States, transmitting a report entitled ”Financial Audit: Federal Deposit Insurance Corporation’s 1995 and 1994 Finan- cial Statements” [GAO\/AIMD 96 89] July 1996, pursuant to 31 U.S.C. 9106(a); jointly, to the Committees on Government Reform and Oversight and Banking and Financial Serv- ices. REPORTS OF COMMITTEES ON PUBLIC BILLS AND RESOLUTIONS Under clause 2 of rule XIII, reports of committees were delivered to the Clerk for printing and reference to the proper calendar, as follows: Mr. LIVINGSTON: Committee on Appro- priations. Revised subdivision of budget to- tals for fiscal year 1997 (Rept. 104 727). Re- ferred to the Committee of the Whole House on the State of the Union. Mr. CANADY: Committee on the Judici- ary. H.R. 351. A bill to amend the Voting Rights Act of 1965 to eliminate certain provi- sions relating to bilingual voting require- ments; with an amendment (Rept. 104 728). Referred to the Committee of the Whole House on the State of the Union. Mr. SOLOMON: Committee on Rules. House Resolution 495. Resolution waiving points of order against the conference report to accompany the bill (H.R. 3734) to provide for reconciliation pursuant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997 (Rept. 104 729). Re- ferred to the House Calendar. Mr. GOSS: Committee on Rules. House Resolution 496. Resolution waiving points of order against the conference report to ac- company the bill (H.R. 3603) making appro- priations for Agriculture, Rural Develop- ment, Food and Drug Administration, and related agencies program for the fiscal year ending September 30, 1997, and for other pur- poses (Rept. 104 730). Referred to the House Calendar. Ms. PRYCE: Committee on Rules. House Resolution 497. Resolution waiving points of order against the conference report to ac- company the bill (H.R. 3517) making appro- priations for military construction, family housing, and base realignment and closure for the Department of Defense for the fiscal year ending September 30, 1997, and for other purposes (Rept. 104 731). Referred to the House Calendar. Mr. SOLOMON: Committee on Rules. House Resolution 498. Resolution waiving points of order against the conference report to accompany the bill (H.R. 3230) to author- ize appropriations for fiscal year 1997 for military activities of the Department of De- fense, to prescribe military personnel strengths for fiscal year 1997, and for other purposes (Rept. 104 732). Referred to the House Calendar. Mr. PACKARD: Committee on Conference. Conference report on H.R. 3754. A bill mak- ing appropriations for the legislative branch for the fiscal year ending September 30, 1997, and for other purposes (Rept. 104 733). Or- dered to be printed. Mr. LINDER: Committee on Rules. House Resolution 499. Resolution providing for con- sideration of the bill (H.R. 123) to amend title 4, United States Code, to declare Eng- lish as the official language of the Govern- ment of the United States (Rept. 104 734). Referred to the House Calendar. Mr. GOSS: Committee on Rules. House Resolution 500. Resolution waiving a require- ment of clause 4(b) of rule XI with respect to consideration of a certain resolution re- ported from the Committee on Rules (Rept. 104 735). Referred to the House Calendar. Mr. HASTERT: Committee of Conference. Conference report on H.R. 3103. A bill to amend the Internal Revenue Code of 1986 to improve portability and continuity of health insurance coverage in the group and individ- ual markets, to combat waste, fraud, and abuse in health insurance and health care de- livery, to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance, and for CONGRESSIONAL RECORD \u2014 HOUSEH9566 July 31, 1996 other purposes (Rept. 104 736). Ordered to be printed. f PUBLIC BILLS AND RESOLUTIONS Under clause 5 of rule X and clause 4 of rule XXII, public bills and resolu- tions were introduced and severally re- ferred as follows: By Mr. SHUSTER (for himself, Mr. DUNCAN, Mr. OBERSTAR, Mr. LIPINSKI, Mr. HUTCHINSON, Mr. BAKER of Cali- fornia, Mr. FRANKS of New Jersey, Mr. BLUTE, Mr. EHLERS, Mr. BACHUS, Ms. BROWN of Florida, Mr. LATHAM, Mrs. KELLY, Mr. LATOURETTE, Mr. MASCARA, Mr. LAZIO of New York, and Mr. LAHOOD): H.R. 3923. A bill to amend title 49, United States Code, to require the National Trans- portation Safety Board and individual air carriers to take actions to address the needs of families of passengers involved in aircraft accidents; to the Committee on Transpor- tation and Infrastructure. By Mr. HORN (for himself and Mrs. MALONEY): H.R. 3924. A bill to provide uniform safe- guards for the confidentiality of information acquired for exclusively statistical purposes, and to improve the efficiency of Federal sta- tistical programs and the quality of Federal statistics by permitting limited sharing of records for statistical purposes under strong safeguards; to the Committee on Govern- ment Reform and Oversight. By Mr. DORNAN (for himself, Mr. HUN- TER, Mr. CHAMBLISS, Mr. STEARNS, and Mr. CRANE): H.R. 3925. A bill to amend title 10, United States Code, to restore the regulations pro- hibiting service of homosexuals in the Armed Forces; to the Committee on National Security. H.R. 3926. A bill to amend title 10, United States Code, to require the separation from military service under certain circumstances of members of the Armed Forces diagnosed with the HIV 1 virus; to the Committee on National Security. By Mr. EVANS (for himself, Mr. GUTIERREZ, Mr. FILNER, Mr. STOCK- MAN, Mr. ACKERMAN, Mr. KILDEE, Mrs. THURMAN, Mr. FALEOMAVAEGA, Mr. FROST, Ms. MCKINNEY, Mr. JOHN- SON of South Dakota, Mr. MCDERMOTT, and Mr. METCALF): H.R. 3927. A bill to amend title 38, United States Code, to provide benefits for certain children of Vietnam veterans who are born with spina bifida, and for other purposes; to the Committee on Veterans’ Affairs. By Mr. FRANK of Massachusetts: H.R. 3928. A bill to amend the Immigration and Nationality Act with respect to waiver of exclusion for certain excludable aliens; to the Committee on the Judiciary. By Mr. STUMP (for himself, Mr. SHADEGG, and Mr. HAYWORTH): H.R. 3929. A bill to direct the Secretary of the Interior to utilize certain Federal lands in Arizona to acquire by eminent domain State trust lands located in or adjacent to the other Federal lands in Arizona; to the Committee on Resources, and in addition to the Committee on Veterans’ Affairs, for a pe- riod to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdic- tion of the committee concerned. By Mr. TOWNS: H.R. 3930. A bill to protect the personal pri- vacy rights of insurance customers and claimants, and for other purposes; to the Committee on Commerce, and in addition to the Committee on the Judiciary, for a period to be subsequently determined by the Speak- er, in each case for consideration of such pro- visions as fall within the jurisdiction of the committee concerned. By Ms. VELAZQUEZ (for herself, Mr. RANGEL, Mr. SCHUMER, Mrs. MALONEY, Mr. MANTON, Mr. ACKER- MAN, Mr. TOWNS, Mrs. LOWEY, Mr. FLAKE, Mr. NADLER, Mr. OWENS, Mr. SERRANO, Mr. ENGEL, Mr. GILMAN, Mr. HINCHEY, and Mr. KING): H.R. 3931. A bill to amend the Financial In- stitutions Reform, Recovery, and Enforce- ment Act of 1989 to require the development and implementation of a national financial crimes strategy to combat financial crimes involving money laundering and other relat- ed activities, and for other purposes; to the Committee on Banking and Financial Serv- ices, and in addition to the Committee on the Judiciary, for a period to be subse- quently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. By Mr. WISE: H.R. 3932. A bill to amend title II of the So- cial Security Act to provide that the waiting period for disability benefits shall not be ap- plicable in the case of a disabled individual suffering from a terminal illness; to the Committee on Ways and Means. By Mr. WOLF (for himself, Mr. LIVING- STON, Mr. SAM JOHNSON, Mr. DAVIS, Mr. BLILEY, Mr. GOODLATTE, Mr. MORAN, Mr. PAYNE of Virginia, Mr. BOUCHER, Mr. PICKETT, Mr. SISISKY, Mr. BATEMAN, and Mr. SCOTT): H.R. 3933. A bill to authorize construction of the Smithsonian Institution National Air and Space Museum Dulles Center at Wash- ington Dulles International Airport, and for other purposes; to the Committee on Trans- portation and Infrastructure. By Mr. ZELIFF (for himself, Mr. PAXON, and Mr. QUINN): H.R. 3934. A bill to provide protections against bundling of contract requirements in Federal procurement; to the Committee on National Security, and in addition to the Committee on Government Reform and Oversight, for a period to be subsequently de- termined by the Speaker, in each case for consideration of such provisions as fall with- in the jurisdiction of the committee con- cerned. By Mrs. MALONEY (for herself, Mr. YATES, and Mrs. LOWEY): H. Res. 501. Resolution calling upon the Government of Germany to negotiate in good faith regarding expansion of eligibility for Holocaust survivor compensation; to the Committee on International Relations. f MEMORIALS Under clause 4 of rule XXII, 239. The SPEAKER presented a memorial of the Senate of the Commonwealth of Mas- sachusetts, relative to momorializing Con- gress to require the Federal Railway Admin- istration to postpone a ruling relative to the sounding of train whistles; to the Committee on Transportation and Infrastructure. f PRIVATE BILLS AND RESOLUTIONS Under clause 1 of rule XXII, Mr. HEFLEY introduced a bill (H.R. 3935) to authorize the Secretary of Transportation to issue a certificate of documentation with appropriate endorsement for employment in the coastwise trade for each of the vessels High Hopes and High Hopes II; which was re- ferred to the Committee on Transportation and Infrastructure. H.R. 249: Mr. WELDON of Pennsylvania. H.R. 878: Mr. PALLONE and Mr. HOYER. H.R. 1073: Mr. BEREUTER, Mr. TORRICELLI, Mr. CHRYSLER, Mr. WICKER, and Mrs. MYRICK. H.R. 1074: Mr. BEREUTER, Mr. TORRICELLI, Mr. POMEROY, Mr. CHRYSLER, Mr. WICKER, and Mrs. MYRICK. H.R. 1090: Mr. SMITH, of New Jersey. H.R. 1309: Mr. FRAZER, Mr. GONZALEZ, Mr. TORRICELLI, Mr. GREEN of Texas, Mrs. CLAY- TON, Mr. BROWN of Ohio, Mr. MASCARA, Mr. PARKER, and Ms. NORTON. H.R. 1386: Mr. STEARNS. H.R. 1389: Ms. McKinney. H.R. 1406: Mr. MCKEON, Mr. HOBSON, and Mr. STOKES. H.R. 1711: Mr. WICKER. H.R. 1923: Mr. STEARNS. H.R. 2011: Mrs. LOWEY, Mr. STOCKMAN, Mr. RANGEL, and Mr. COYNE. H.R. 2193: Mr. POMBO. H.R. 2270: Mr. BARR. H.R. 2320: Mr. FARR. H.R. 2472: Ms. NORTON and Ms. EDDIE BER- NICE JOHNSON of Texas. H.R. 2582: Mr. TAYLOR of North Carolina, Mr. MORAN, and Mr. FOX. H.R. 2603: Mr. QUINN. H.R. 2651: Mr. POMBO. H.R. 2654: Mr. LAFALCE. H.R. 2928: Mr. FUNDERBURK. H.R. 3022: Mr. MARKEY, Mr. MASCARA, and Mr. PAYNE of Virginia. H.R. 3047: Mr. CONDIT. H.R. 3117: Mr. DELLUMS. H.R. 3119: Mr. DELLUMS. H.R. 3181: Mr. CLYBURN and Mr. DEFAZIO. H.R. 3187: Mr. KENNEDY of Rhode Island and Mr. BOEHLERT. H.R. 3195: Mr. SENSENBRENNER, Mr. TAUZIN, and Mr. COLLINS of Georgia. H.R. 3202: Mr. CONYERS and Ms. WOOLSEY. H.R. 3207: Ms. KAPTUR. H.R. 3211: Mr. CALVERT and Mr. WICKER. H.R. 3226: Mr. YATES. H.R. 3251: Mr. CAMP. H.R. 3374: Mr. COBURN and Mr. SMITH of New Jersey. H.R. 3391: Mrs. VUCANOVICH. H.R. 3401: Ms. PRYCE, Mr. CONDIT, and Mr. DORNAN. H.R. 3430: Mr. WISE, Mr. BLILEY, Mr. SCARBOROUGH, Mr. BREWSTER, and Mr. ABER- CROMBIE. H.R. 3467: Mr. NETHERCUTT. H.R. 3498: Mr. MARTINEZ and Mr. SPRATT. H.R. 3565: Mrs. SEASTRAND. H.R. 3578: Mr. DELLUMS. H.R. 3633: Mr. BURR. H.R. 3636: Ms. PRYCE. H.R. 3645: Mr. GREENWOOD, Mr. REGULA, Mr. PASTOR, Mr. GUTIERREZ, Ms. FURSE, and Mr. KENNEDY of Rhode Island. H.R. 3654: Mr. LAHOOD, Mr. JOHNSON of South Dakota, Mr. KLUG, and Mr. MEEHAN. H.R. 3688: Mr. COYNE and Mr. DURBIN. H.R. 3714: Mr. FRANK of Massachusetts, Mr. ROGERS, and Mr. CLYBURN. H.R. 3747: Mr. TORRES, Mr. MCDERMOTT, Mrs. MEEK of Florida, and Mr. BEILENSON. H.R. 3790: Mr. CHRISTENSEN. H.R. 3830: Mr. OWENS, Mr. SANDERS, Mr. FRAZER, Mr. HASTINGS of Florida, and Mr. STUDDS. H.R. 3849: Mr. GILLMOR. H.R. 3863: Mr. ROHRABACHER, Mr. EWING, Mr. WATTS of Oklahoma, Ms. GREENE of Utah, Mr. PALLONE, Mr. GREEN of Texas, Mr. HOLDEN, and Mr. FLAKE. H.R. 3902: Mr. POMEROY. H.R. 3905: Mr. HUTCHINSON. H.J. Res. 97: Ms. DELAURO and Mr. MILLER of California. H.J. Res. 114: Ms. DELAURO. H. Con. Res. 100: Mr. WICKER. H. Con. Res. 200: Mr. DEFAZIO, Mr. DORNAN, Mr. POMBO, Mr. STEARNS, Mr. TORRICELLI, Mr. HAYWORTH, Mr. KLECZKA, Mrs. KEN- NELLY, Mr. MCNULTY, Mr. EVERETT, Mr. LI- PINSKI, Mr. HASTINGS of Florida, Mr. SHADEGG, Mr. LIVINGSTON, Mr. TANNER, Mr. MONTGOMERY, Mr. MCCOLLUM, Ms. MILLENDER-MCDONALD, and Mr. SPRATT. H. Res. 470: Mr. FRANKS of Connecticut, Mr. CAMPBELL, Ms. FURSE, and Mr. LIPINSKI. H. Res. 478: Ms. GREENE of Utah and Mr. BOUCHER. Congressional Record UN UM E PLURIBUS United States of America PROCEEDINGS AND DEBATES OF THE 104th CONGRESS, SECOND SESSION \u2211 This ”bullet” symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor. . S9209 Vol. 142 WASHINGTON, WEDNESDAY, JULY 31, 1996 No. 115 Senate The Senate met at 9 a.m., and was called to order by the President pro tempore [Mr. THURMOND]. PRAYER The Chaplain, Dr. Lloyd John Ogilvie, offered the following prayer: Holy Lord God, we admit that we often try to live our lives within the narrow, limited dimensions of our own wisdom and strength. As a result, we order our lives around our own abilities and skills and miss the adventure of life You have prepared for us. We con- fess to You all the things we do not at- tempt; the courageous deeds we con- template but are afraid we cannot do, the gracious thoughts we do not ex- press; the forgiveness we feel, but do not communicate. Forgive us, Lord, for settling for a life which is a mere shad- ow of what You have prepared for us, forgetting that You are able to do in and through us what we could never do by ourselves. Plant in us the vivid picture of what You are able to do with lives like ours, and give us the gift of new excitement about living life by Your triumphant power in the name of our Lord and Sav- iour. Amen. f RECOGNITION OF THE ACTING MAJORITY LEADER The PRESIDENT pro tempore. The able Senator from Idaho is recognized. f SCHEDULE Mr. CRAIG. Mr. President, this morning the Senate will immediately turn to the consideration of S. 1936, the Nuclear Waste Policy Act. The bill will be considered under a previous unani- mous-consent agreement that limits the bill to eight first-degree amend- ments with 1 hour of debate equally di- vided on each. Following disposition of that bill, the Senate will resume con- sideration of the transportation appro- priations bill which will also be consid- ered under an agreement limiting first- degree amendments to that bill. Fol- lowing disposition of those bills, the Senate may also be asked to turn to consideration of the VA HUD appro- priations bill. Therefore, Senators can expect a full legislative day with roll- call votes expected throughout the day and into the evening in order to com- plete action on the bills just mentioned or any other items cleared for action. f RESERVATION OF LEADER TIME The PRESIDING OFFICER. Under the previous order, the leadership time is reserved. f NUCLEAR WASTE POLICY ACT OF 1996 The PRESIDING OFFICER (Mr. INHOFE). The Chair lays before the Sen- ate S. 1936, which the clerk will report. The assistant legislative clerk read as follows: A bill (S. 1936) to amend the Nuclear Waste Policy Act of 1982. The Senate resumed consideration of the bill. AMENDMENT NO. 5055 Mr. MURKOWSKI. Mr. President, I call up amendment No. 5055 which is at the desk. The PRESIDING OFFICER. The clerk will report the amendment. The assistant legislative clerk read as follows: The Senator from Alaska [Mr. MURKOWSKI] proposes an amendment numbered 5055. Mr. MURKOWSKI. Mr. President, I ask unanimous consent that further reading of the amendment be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. (The text of the amendment is print- ed in today’s RECORD under ”Amend- ments Submitted.”) Mr. MURKOWSKI. Mr. President, this amendment will solve a pressing environmental problem, a major envi- ronmental problem in our Nation, a problem that is looming as a liability to the taxpayers, and this will end an era of irresponsible delay. This major environmental issue is simple to understand. That is, do we want 80 nuclear waste dumps in 41 States serving 110 commercial reactors and defense sites across the country\u2014 near our neighbors, our schools and populated cities? Or do we want just one in the remote, unpopulated Nevada desert where we tested and exploded nuclear weapons for decades? Mr. President, I am going to yield some time on the amendment to the distinguished Senator from South Carolina, the Senate President pro tempore, Senator THURMOND, without losing my right to the floor. Mr. THURMOND. I thank the able Senator from Alaska. The PRESIDING OFFICER. The Sen- ator from South Carolina. Mr. THURMOND. Mr. President, I rise today in strong support of S. 1936, the Nuclear Waste Policy Act of 1996. In 1982, Congress passed the Nuclear Waste Policy Act, which directed the Department of Energy to develop a per- manent repository for highly radio- active waste from nuclear powerplants and defense facilities. This act was amended in 1987 to limit DOE’s reposi- tory development activities to a single site at Yucca Mountain, NV. Since 1983, electric consumers have been taxed almost $12 billion to finance the development of a permanent storage site. Despite DOE’s obligation to take title to spent nuclear fuel in 1998, a permanent repository at Yucca Moun- tain will not be ready to accept this waste until the year 2010, at the ear- liest. Mr. President, a July 16, 1996, Wash- ington Post editorial states that the nuclear waste storage situation is not VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00001 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9210 July 31, 1996 yet a fully urgent problem. I believe that it is a fully urgent problem. Cur- rently, nuclear waste is stored in 41 States at facilities that were never in- tended for long-term storage. At least 23 nuclear reactors are nearing full storage capacity for their spent fuel. According to a Washington Post article from December 31, 1995, every day, 6 more tons of high-level radioactive waste pile up at the Nation’s 109 nu- clear powerplants, a total of some 30,000 tons of spent fuel rods so far. If it were all shaped into midsize cars, it would fill every parking space at the Pentagon\u2014twice over\u2014with material that will be dangerous for centuries. And there’s nowhere for it to go. On July 23, 1996, the U.S. Court of Ap- peals for the District of Columbia Cir- cuit correctly ruled that DOE must begin disposing of this waste by 1998. Unless we designate an appropriate storage site soon, DOE will be unable to safely fulfill this obligation. With- out a central interim site, DOE may be forced to use existing DOE facilities that are unsuitable for waste storage. Or, if DOE continues to evade its obli- gation to store waste by 1998, facility operators may then have to expand on- site storage at an additional cost to ratepayers. Powerplants may have to close down, adversely affecting the re- liability of electric services and deplet- ing funding for the Federal disposal program. Because DOE will fail to pro- vide an appropriate facility for this waste on time, we must designate a temporary central storage site imme- diately. Anything less would be irre- sponsible and dangerous to the envi- ronment. The most logical location for an in- terim site is Yucca Mountain. Trans- portation of spent nuclear fuel is a delicate undertaking, so it is sensible to locate an interim facility as near to the likely permanent facility as is pos- sible. We have already spent 13 years and $6 billion to find a permanent re- pository site and conduct development activities at Yucca Mountain. Desig- nating a central interim storage facil- ity and continuing to develop a perma- nent repository at Yucca Mountain is our most reasonable course of action. S. 1936 provides a safe, efficient, and responsible means for reaching this ob- jective. I would like to commend Sen- ator CRAIG and Senator MURKOWSKI for their excellent work on this bill, and I urge my colleagues to vote in favor of final passage. Mr. President, I yield the floor. Again, I thank the Senator from Alas- ka. Mr. MURKOWSKI addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Alaska. Mr. MURKOWSKI. I thank the Chair and I thank my good friend and col- league for his support in addressing once and for all the issue of high-level nuclear waste in this country. Mr. President, I think it is signifi- cant to reflect that at last we have in our extended debate with our good friends from Nevada basically broken the filibuster on this issue. Today the Senate is going to have the chance to debate the issue and reach conclusions. We are demonstrating, I think, that we do have the courage to address this dif- ficult problem, recognizing that it is one of the major environmental issues before the U.S. Senate. Two weeks ago Senator CRAIG, Sen- ator JOHNSTON, and I stood on this floor and said the Government had an obligation to take this spent fuel. Of course, some disagreed with us. Some argued that the Government had no such obligation. But a curious thing happened last week. A Federal appeals court unanimously ruled the Govern- ment does, indeed, have an obligation to take the spent fuel; as a matter of fact, a statutory obligation. Mr. President, this is a landmark de- cision, because it makes it imperative for us to pass this bill today. The situa- tion has radically changed since our last vote. I appeal to my colleagues, if you did not vote with us last time, there is a good reason to vote with us today. That reason is very simple: The court unanimously ruled that the Govern- ment does have an obligation to take the spent fuel. Again, Mr. President, that is a statutory obligation. The courts have confirmed our contention that the Federal Government has the obligation to take spent commercial fuel. Failure to pass this bill and build an interim repository means the Govern- ment will have to take the fuel and put it somewhere else, or simply pay the damages. The court has not specified the amount of the damages yet be- cause, technically, the Government has not yet broken its promise. But the damages could run into the billions of dollars if the Government reneges on its obligation. If we do not build an in- terim repository in Nevada, the Gov- ernment might have to store the fuel at other Federal facilities around the Nation. The interesting thing about this problem, Mr. President, you simply cannot just throw spent fuel up in the air and defer the decision about where to store it. It has to come down some- where. It has to be stored somewhere. Perhaps it will be the naval fuel stor- age facility in Connecticut, or maybe Rocky Flats or Fort St. Vrain in Colo- rado, or maybe the Pinellas plant in Florida, or maybe in Ohio, Ports- mouth, Mound or Fernald, or maybe West Valley in New York, or perhaps Paducah in Kentucky, or perhaps it will be in Hanford on the Columbia River, which flows through Oregon and Washington. Therefore, Senators, I appeal to you, those from Connecticut, Colorado, Florida, Ohio, New York, Kentucky, Oregon, those who did not vote with us for cloture on the motion to proceed, you might want to reexamine your po- sition in light of the recent court deci- sion, which simply states the Federal Government has to take it. The court has said the Government must take the spent fuel. As I have said, it has to go somewhere. If you are saying no to Ne- vada, you may be saying yes to your own State. You are certainly saying yes to someplace else. Last night I received a letter from Secretary of Energy O’Leary that criti- cizes Senate bill 1936 because it pro- vides for the Department of Energy to begin accepting waste in 1999 and not 1998. I repeat, Mr. President, last night we did receive a letter from the Sec- retary criticizing Senate bill 1936 be- cause it provides for the DOE to begin accepting waste in 1999, not 1998. This criticism is almost humorous in light of the fact that the current administra- tion would not provide for the accept- ance of waste at a central facility until the year 2010 at the earliest. Even under the most optimistic scenario, the Department of Energy would be in breach of its contract for 12 years. Further, the letter is inconsistent on its face because it then proceeds to criticize Senate bill 1936 for providing unrealistic schedules. It seems the ad- ministration believes our bill would provide an interim storage facility both too late or perhaps too soon. Senate bill 1936 provides a valid, real- istic plan for the construction of a safe, centralized interim storage facility. I have personally sent over four letters to the President over the last 18 months asking for his plan if he op- posed any legislation pending before this body. I have received only support for the status quo. Again, I repeat, if you were not with us before, you have reason to be with us today. The court’s decision has made it clear that the status quo is not an acceptable option. Now, Mr. President, I make a few comments for the benefit of those Sen- ators who did not vote with us 2 weeks ago. That is, very realistically, the ratepayers in your State are getting ripped off. They paid for something, and they are not getting anything in return. Instead of saving more for their children’s college fund or saving for their dream home, consumers paid into the nuclear waste fund through their individual electric bill. They paid somewhere in the neighborhood of al- most $12 billion. They have paid this money with the expectation that the Government would live up to their part of the bargain and remove the waste as it promised. But the Government sim- ply has not performed. The waste is still there. It is near the homes, near the schools, it is near the neighbor- hoods. The opponents of this legisla- tion are working to keep the status quo, and to keep the waste where it is. I want to again run down the list of States where those Senators did not vote with us, or at least one of the Sen- ators did, and repeat how much the consumers of those States have spent for the nuclear waste fund. The State of Arkansas has contributed $266 mil- lion into that fund, and they receive 33 VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00002 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9211 July 31, 1996 percent of their electric power from nuclear energy; California, $645 million has been paid by the ratepayers, they receive 26 percent of their electricity from nuclear power; Connecticut, $429 million paid in, and they receive 73 per- cent of their power from nuclear en- ergy. It is rather interesting, as well, be- cause I was reminded by my friend from Idaho that we build various sub- marines in Connecticut; after they are decommissioned they are cut up, and various parts of the reactors go to Han- ford, where they are buried, and the fuel goes to Idaho, where they are cur- rently stored. The point is, Mr. Presi- dent, we all have an interest in this issue of what to do with nuclear waste. Florida, $557 million from ratepayers, for receiving 18 percent on nuclear en- ergy; Massachusetts, $319 million paid by the ratepayers, 14 percent dependent on nuclear energy; Maryland, $257 mil- lion, 24 percent of their power is nu- clear; New York, $734 million rate- payers in New York have paid into the fund and they are 28 percent dependent on nuclear energy; Ohio, $253 million has been paid in, 7 percent dependent on nuclear energy; Wisconsin, $336 mil- lion paid by the ratepayer, 23 percent of their energy comes from nuclear. There are other States with no nu- clear plants that, nevertheless, depend on nuclear power from neighboring States, and they have also paid into that fund. Those States are: Delaware, $29 million; Indiana, $288 million; Iowa, $192 million; Kentucky, $81 million; New Mexico, $32 million; North Da- kota, $11 million; Rhode Island, $8 mil- lion. Mr. President, that adds up to a total of $4.537 billion. That is a lot of money to throw away without results. That is not our money, Mr. President; that was money collected from Ameri- cans to deal with nuclear waste. Do we really want to tell consumers from those States that after allowing this money to be taken from their elec- tric bills, we are not going to use that money to solve the nuclear waste prob- lem? Do we want to tell consumers that we are going to make them pay, once again, for additional waste stor- age at reactor sites, or that we will ex- pose them and all taxpayers to tremen- dous liabilities arising out of the court cases I mentioned earlier? The extent of these liabilities are very difficult to estimate, but we know they are going to be high. There are yet other reasons to join us in supporting this amendment, and I appeal to my colleagues. After the 65- to-34 cloture vote on the motion to pro- ceed to Senate bill 1936 2 weeks ago, we received many constructive sugges- tions for improving the bill. Amendment No. 5055 would replace the text of Senate bill 1936 with new language and incorporate these changes. The most important of the changes are as follows: A role for the EPA. The amendment provides that the Environmental Pro- tection Agency shall issue standards for the protection of the public from releases of radioactive materials from a permanent nuclear waste repository. The Nuclear Regulatory Commission is required to base its licensing deter- mination on whether the repository can be operated in accordance with EPA’s radiation protection standards. Another issue was transportation routing. The amendment includes the language of an amendment that was filed by Senator MOSELEY-BRAUN, which provides for further assurance of the safe transportation of these mate- rials by requiring the Secretary of En- ergy to use routes that minimize, to the maximum practical extent, trans- portation through populated and sen- sitive environmental areas. Elimination of civil service exemp- tion. As requested by Senator GLENN, the amendment strikes the provisions in title VII that would have exempted the nuclear waste program from civil service laws and regulations. Elimination of train inspection limi- tation. The amendment includes lan- guage provided by Senator PRESSLER that strikes any reference to who shall perform inspections of trains. This is to address concerns that the language in Senate bill 1936 would change exist- ing law with regard to train inspec- tions. Clarify scope of the Department of Transportation training standards. The amendment clarifies that the Nuclear Regulatory Commission has primary authority for the training of workers in nuclear-related activities. However, the Department of Transportation is authorized to promulgate worker safe- ty training standards for removal and transportation of spent fuel if it finds that there are gaps in the NRC regula- tions. Next, Mr. President, is elimination of permanent disposal research provi- sions. This amendment eliminates the section requiring the Department of Energy to establish an office to study new technologies for the disposal of nu- clear waste. Elimination of budget priorities. This amendment eliminates a section pro- viding that the Secretary must prioritize funds appropriated to the nu- clear waste program to the construc- tion of the interim storage facility. This provision, obviously, is no longer needed in light of DOE’s reevaluation of its budget requirements for the pro- gram. Elimination of direct reference to Chalk Mountain route. The amendment eliminates the reference to the map outlining the heavy haul route through Nellis Air Force Base. The amendment simply provides that the DOE must use heavy haul to transport casks from the intermodal transfer facility at Caliente, NV, and does not specify any particular route. Remove failure to finalize viability assessment as a trigger for raising size of phase 2. Senate bill 1936 provides that phase 2 of the interim storage fa- cility will be no larger than the 40,000 metric tons of spent fuel, but provides a series of triggers that will allow the Department of Energy to expand the facility to 60,000 metric tons. The amendment eliminates DOE’s failure to complete a viability assess- ment of the permanent repository in 1998 as a trigger, making the first trig- ger the license application for the per- manent repository in the year 2002. Limitation and clarification of ”pre- liminary decisionmaking” language. The amendment clarifies that the prelicensing construction activities au- thorized by 203(e)(1) are the only con- struction activities that will be consid- ered to be ”preliminary decision- making” activities. Further, the amendment corrects this section by indicating that the use of the existing E-Mad facility at the in- terim storage site for emergency fuel handling in phase 1 is considered to be a preliminary decisionmaking activity. Senate bill 1936 mistakenly refers to use of facilities use authorized another section, which was the entire interim storage facility. Mr. President, we believe these changes, in addition to those already made in Senate bill 1936, provide addi- tional assurance that the construction and the operation of an integrated management system will be carried out with the utmost sensitivity to environ- mental and safety concerns. However, Senate bill 1936 will still allow the Department of Energy to re- solve this urgent environmental prob- lem by meeting its obligation to store and dispose of spent fuel and nuclear waste in a timely manner. Obviously, I urge my colleagues to consider the merits of this amendment and support final passage of Senate bill 1936. Mr. JOHNSTON. Mr. President, I un- derstand that there may be some ambi- guity in the unanimous-consent re- quest and that it may give 4 hours to the distinguished Senator from Alaska and 4 hours to the less distinguished Senator from Louisiana. I think that would really be a good way to do it, but, unfortunately, my friends from Nevada are insistent that they be granted equal time. So I ask unanimous consent that, to the extent there is ambiguity, the Sen- ator from Alaska have his 4 hours, and the other 4 hours be under the control of the distinguished senior Senator from Nevada. The PRESIDING OFFICER. Is there objection? Without objection, it is so ordered. Mr. MURKOWSKI. Mr. President, I believe it would be appropriate to defer to our colleagues from Nevada at this time. How much time do I have remaining? The PRESIDING OFFICER. The Sen- ator has 7 minutes 36 seconds. Mr. MURKOWSKI. I am sure that my friend from Louisiana, as well as Sen- ator CRAIG, would like to be heard from. But I think we should perhaps go to the other side at this time. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00003 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9212 July 31, 1996 The PRESIDING OFFICER. The Sen- ator from Nevada, [Mr. REID] is recog- nized. Mr. REID. Will the Chair advise the Senator from Nevada when he has used 10 minutes? The PRESIDING OFFICER. Yes. Mr. REID. Mr. President, the sub- stitute is nothing more than a regurgi- tation of S. 1936. It changes absolutely nothing. It is just a rearranging of words. That is all it is. There are no constructive suggestions. It answers none of the questions that have been propounded by a number of Senators on this issue. There has been the term used that the ratepayers are being ripped off. Mr. President, the only rip-off occurring to the taxpayers of this country would be if this travesty, S. 1936, is allowed to pass. The substitute offered by my friend from Alaska does not address any of the substantive problems regarding the underlying legislation. This is still bad legislation, unnecessary legislation, and still very dangerous legislation. This is effectively at least the third substitute for the original bill, S. 1271. We went from S. 1271 to S. 1936 to the chairman’s substitute, and now to this substitute amendment. They are all the same. There are no changes. Chang- ing the number of the legislation will not help the substantive aspect of this legislation. As each of the earlier versions were shown to be seriously flawed, a cos- metic substitute was offered. This amendment contains that same failed strategy\u2014change the number and talk about the great changes in the bill. A loose examination\u2014not a close exam- ination\u2014a loose examination indicates that there are literally no changes. None of these substitutes have ad- dressed the fundamental flaws of the proposed legislation. This version, as well as the previous one, tramples on our environment, our safety, and our health laws. There has been nothing done to answer why this legislation is necessary. It is not. There has been nothing to indicate why the risk standard is 400 percent higher than any other risk standard. There is nothing to answer why we preempt Federal law. There is nothing to an- swer how you are going to handle the difficult transportation problems. There is nothing to answer the most\u2014 and it is so interesting that there is never a word from the proponents of this legislation about the report to Congress from the Secretary of Energy that was filed this year by the Nuclear Waste Technical Review Board where they said, ”Is there urgent technical need for centralized storage of com- mercial spent fuel?” And the answer is clearly no. The board ”sees no compel- ling technical or safety reason to move spent fuel to a centralized storage fa- cility. The methods now used to store spent fuel at reactor sites are safe and will remain safe for decades to come.” There has never been a response to this except legislate them out of busi- ness. That is what this legislation does. If you do not agree with the proponents of the powerful nuclear lobby, then leg- islate them out of business. That is what they have done here. It is also quite interesting that they have done nothing to address the re- sults of a court case last year. They come and talk about a spin. They should sign on to one of the Presi- dential campaigns. The court case does not help their case. The court case set- tles the contractual dispute between Michigan-Indiana Power and the De- partment of Energy. We will talk about that later. But in the briefs filed by the power utilities they did not even seek to re- lieve these people who gave the deci- sion. There is nothing wrong with the decision. We have an amendment that is going to incorporate the results of that opinion into this legislation\u2014but anything to confuse and to get the ideas of the powerful nuclear lobby in the eyes of the public with full-page ads in newspapers all over the country. Who pays for that? Mr. President, I think that we should recognize that every environmental group in America\u2014not those that are to the left nor those to the right\u2014 every environmental group in America is opposed to this legislation; is op- posed to this amendment. Public Citizen yesterday came out because it was a letter sent to Senators by the other side saying we should pass this nuclear waste bill because EPA’s authority has been restored. Wrong again\u2014false advertising. And it ex- plains why. Another group, National Resources Defense Council: On behalf of the quarter million members of the National Resources Defense Council, I am writing you to urge you to oppose 1936 and the amendment. It would curtail a broad range of environmental health and safety laws. It would quadruple allowable radiation standards for waste storage. It would exacer- bate the risk of transportation of nuclear waste throughout the country. Please vote no on 1936. Before turning this over to my col- league from Nevada, Mr. President, I want to refer to part of a letter that was sent to all Senators last week. Here is part of the language from it. S. 1936 is a bill only a polluter could love. The measure attacks the Environmental Protection Agency, curtails Federal environ- mental regulations, preempts State laws . . . And I should have a little editorial ”exempts Federal laws. . . . and sets a repository standard that al- lows four times the radiation exposure of current regulations. Oppose S. 1936. That says it all. I yield to my colleague from Nevada. I reserve the remainder of my time. Mr. MURKOWSKI. Mr. President, I yield 6 minutes to the Senator from Louisiana. The PRESIDING OFFICER. The Sen- ator from Louisiana is recognized for 6 minutes. Mr. JOHNSTON. I thank my col- league. Mr. President, this may be the last bill that I will floor manage as a U.S. Senator. It happens to be on a subject matter that it has fallen my lot to deal with for some 20 years now\u2014dealing with nuclear waste. It is a lot that has fallen to me because of jurisdictions on the committees of which I have been involved. I have not enjoyed being in opposi- tion to my friends from Nevada who have done an absolutely marvelous job with an absolutely bankrupt case in my view which means that the people of Nevada to the extent they agree with their Nevada Senators ought to be greatly appreciative of the excellent job they have done, as I say, with a weak case. When I say a weak case, Mr. President, the amazing thing to me is that Nevada can be so opposed to hav- ing a nuclear waste site when at the same time they have been so anxious to have a nuclear test site for explod- ing nuclear bombs because with nu- clear bombs all they did was dig a hole and shoot the bombs underground\u2014 some even as low as the water table\u2014 hundreds of these nuclear tests that in- volved all of the radioactivity mate- rials that are present in nuclear waste: Thorium, cesium 137, strontium 90, plu- tonium\u2014all of these daughter elements of a nuclear explosion, the same thing as you have in nuclear wastes. Nevada was not only willing to have these nu- clear tests but anxious to have the nu- clear tests. As chairman of the Energy and Water Appropriations Subcommittee I sit shoulder to shoulder with my friends from Nevada, the Senators from Ne- vada, in seeking more nuclear tests. My motive was that I thought we ought to have reliability and safety in our nuclear arsenal and, therefore, a few years ago I proposed that. My friends from Nevada argued the same thing and also argued the economy of Nevada in seeking additional tests. Mr. President, when you have these explosions which leave a cavity in the ground with all of these\u2014cesium, strontium, et cetera\u2014in the cavity, it is not sealed over by a waste package. We hope and we believe that these waste packages may be good for 10,000 years, even if they were thrown some- where where they had exposure to the water. We think that the waste pack- age itself is going to be sufficient. And, moreover, in Yucca Mountain the waste packages will be buried some 200 meters above the water table. So it is many times better, if you are con- cerned about the contamination of the ground and the water, it is many times better to have a nuclear waste site such as Yucca Mountain than it is to have a test site. That is common sense\u2014absolutely common sense\u2014because, on the one hand, you have the explosion, some in the water table, and hundreds of these explosions. On the other hand, you have a Yucca Mountain which is 200 meters that is more than 600 feet above the water table in one of the driest places on the face of the Earth. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00004 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9213 July 31, 1996 So we start with that, Mr. President. That is why I say my colleagues from Nevada have an exceedingly weak case. On the question of the pending amendment, to say that it eviscerates the role of EPA is just not correct. We set the standard at 100 millirems which is the same standard that you have for the International Commission on Radi- ological Protection, the National Coun- cil on Radiation Protection and Meas- urements, the United States Nuclear Regulatory Commission, the Environ- mental Protection Agency, and the International Atomic Energy Agency. That is where we get the 100 millirems. What we say is, if EPA believes that poses an unreasonable risk to health and safety, we give to EPA the right, the duty, and the mandate to set it at such level as they think will protect health and safety. So, Mr. President, that argument simply does not hold water. Moreover, I would say, Mr. President, that, again to compare it to the nu- clear test site, it is exceedingly more safe than the nuclear test site. We have upwards of 40,000 metric tons of nuclear waste in some 70 sites around the country. If we do not put away this waste in an interim storage facility, then it will take, according to testimony before the Energy and Nat- ural Resources Committee, some $5 bil- lion to build what we call dry cask storage, which, according to the Court of Appeals of the District of Columbia in a decision just last week, is the re- sponsibility of the Federal Govern- ment. So what we are dealing with on this interim storage facility is a $5 bil- lion bill to the United States of Amer- ica. We are told in letters from the ad- ministration that if we build this in- terim storage facility, we may have to move the waste twice. Not so, Mr. President. The present legislation on which we will vote very clearly states that you may not begin construction on the interim facility until and unless the repository, that is, the underground facility, is declared to be suitable, or I think the word is via- ble, which is a defined word in the leg- islation. So that not until 1998, when the nuclear waste administrator says he can and will make that decision, may you begin construction on the in- terim facility. So by that time we will know whether or not this is a suitable facility for the repository. Why do we say pick the facility now and begin construction? Simply be- cause we have about 21\u20442 or 3 years of what we call long-lead-time items which are necessary before you begin construction\u2014such things as the envi- ronmental impact statement, the de- sign, picking the routes of transpor- tation. Those things can and should be done at this point so as to save the bil- lions of dollars that are involved. We urge Senators to vote for the pending amendment. The PRESIDING OFFICER. The Sen- ator’s time has expired. Mr. MURKOWSKI. Mr. President, I ask for the yeas and nays on the pend- ing amendment. The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second. The yeas and nays were ordered. Mr. MURKOWSKI. Mr. President, recognizing there is time on the other side, I anticipate a vote on the pending amendment at the conclusion of the Senators from Nevada speaking on this amendment, because I think our time has just about expired. How much time do we have? The PRESIDING OFFICER. The Sen- ator is correct. Time has expired. Mr. MURKOWSKI. I thank the Chair. So all Senators should be advised that will be\u2014I guess the Senators from Ne- vada can give us a better idea, but I would imagine 15 or 20 minutes. Mr. BRYAN. May I inquire of the Chair as to how much time remains? The PRESIDING OFFICER. The Sen- ators from Nevada have 24 minutes re- maining. Mr. BRYAN. I thank the Chair. Mr. President, let me just make a couple of preliminary observations. Our good friend, the distinguished senior Senator from South Carolina, rose this morning to express his strong support for this legislation. I say with great affection and great respect that the irony of his position could not have been more acute. In this morning’s En- ergy Daily, we read that the State of South Carolina, the State that he has so ably represented and defended since 1954, has filed suit against the Depart- ment of Energy because they are con- cerned about safety standards as it re- lates to the shipment of foreign nu- clear fuel into the State of South Caro- lina. I guess I would have to repeat, Mr. President, an old expression that I think would be understood down home: ”What’s sauce for the goose ought to be sauce for the gander.” I respect and greatly admire the Senator’s concern about the health and safety of his own State. I just wish he shared that same perspective in terms of the health and safety of the entire Nation, because that is one of the principal objections we have to this piece of legislation. Let me in the time that I have try to address the issues that were so funda- mental to the debate in S. 1936, be- cause, as my senior colleague has pointed out, with respect to the core issues nothing has changed. There has been some language that has been mas- saged, but nothing has been changed. Let me take my colleagues for a great leap through the bill itself. We have expressed strong opposition, not on behalf of Nevada but on behalf of the Nation, to a piece of legislation that would effectively emasculate major pieces of the environmental leg- islation that affects all Americans. The National Environmental Policy Act provides the framework for making major policy decisions that affect the environment, and nobody denies that the legislation before us, the siting of an interim storage facility, has pro- found implications in terms of its im- pact. So here is what we have in the act itself under section 204. OK, first of all, and I paraphrase, it says, ”The Na- tional Environmental Policy Act shall apply.” That is like saying the Con- stitution and the Bill of Rights shall apply. And then it goes on to say that such environmental impact statements shall not consider the need for interim storage, the time of the initial avail- ability of interim storage, any alter- natives to the storage, any alternatives to design criteria, the environmental impacts of the storage beyond the ini- tial term. We are talking about something that lasts tens of thousands of years, and they are talking about something that would be limited to the initial term of the license, which is a matter of years. Then they go on to deprive the court of jurisdiction to review the environ- mental impact statement as it is being developed, and then goes on to say, in what is the height of arrogance\u2014our colleagues have railed against the costs that have been incurred over the years in seeking a solution to the dis- position of high-level nuclear waste. Much of those costs have been incurred as a result of unrealistic time lines generated by the zeal of the nuclear utility industry in America. The stor- age of interim waste has been for more than 30 years their Holy Grail. That is what they want, and the only reason we are having this debate today is be- cause the nuclear utilities want in- terim storage. But the irony and the ultimate travesty that I refer to is, after talking about the environmental policy act, it goes on to say none of the activities carried out pursuant to this paragraph shall delay or otherwise af- fect the development or construction, licensing or operation. So, yes, the Constitution and the Bill of Rights by way of analogy would apply, but the amendments that all of us rely upon for our protection, by way of analogy, would not apply here. So far as the contention has been made that there has been an effort to address environmental concerns, that is simply false. And I will not take the time at this point, but we will discuss it in more detail. The letter sent by the Administrator of the Environmental Protection Agen- cy makes a very compelling argument. So for the purposes of this act, we, in effect, wipe out the National Environ- mental Policy Act. Let me go on and talk about the standards because we have talked a good bit about that. The standards that we are concerned about are the radioactive exposure standards. Nowhere in the world, for no other project on the face of the Earth is a radiation standard\u2014if I could get that chart\u2014no other place in the world do we have a radiation standard that proposes 100 millirems from a single source. No place. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00005 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9214 July 31, 1996 The EPA safe drinking water stand- ard is 4; the WIPP standard is 15. Let me refresh my colleague’s memory. In this Congress, this year, our distin- guished colleague from New Mexico got up, and properly so, expressed concern about EPA’s ability to establish stand- ards for the WIPP facility, the reposi- tory for transuranic waste. The National Academy of Sciences has recommended between 10 and 30 millirems of exposure. What do we have in Nevada? Mr. President, 100 millirems. That is just simply uncon- scionable. That is simply unconscion- able. Oh, yes, they say, the EPA is brought back into the process. Not as one would expect it. That is the standard unless they are able to disprove that 100 millirems would have no adverse im- pact on health and safety, another con- cern raised by the EPA, which makes no equivocation at all about the fact that that presents a public health risk. Every Member in this body, whatever his or her view is on an interim storage facility, should be concerned as Ameri- cans about what is being done with re- spect to this provision. Moreover, the EPA is restricted and the NRC is restricted in terms of how to apply the standards. We will talk a little bit more about that during the course of this debate. The National Academy of Sciences has indicated, as one example, that there are health and safety concerns for 10,000 years and be- yond. The statute we are being asked to consider in this very amendment would limit the ability to consider this only to the first 1,000 years. That is not the most critical time. It is after 1,000 years that the canisters are supposed to fail and then it migrates into the underground repository itself. I could go on and on. We have talked about the preemption. Make no mis- take, I say to my colleagues, this amendment in effect preempts the en- vironmental laws of America, all of these provisions here. I will not take time to read all of them because we are under some time constraints on this amendment. Look at them: Federal Land Policy Act, RCRA, clean air, clean water, Superfund. None of those apply if they are in conflict with the provisions of this act, none. This is simply an outrage, whatever one’s view is about transporting nuclear waste across the country, and much more will be said about that later. The fiscal impact of this has been discussed. I want to comment briefly on this. It has been clear since the very beginning of the Nuclear Waste Policy Act of 1982, that the fundamental premise of that act, as contained in all the provisions, indicates the first and primary responsibility from a financial point of view will be the utilities’ themselves. That is the first and fore- most responsibility. This amendment very cleverly changes that. Mr. President, how much time do I have remaining? The PRESIDING OFFICER. The Sen- ator has 14 minutes remaining. Mr. BRYAN. It very cleverly changes that. Remember the premise in the 1982 Nuclear Policy Act itself was the re- sponsibility will be that of the utili- ties, in terms of the financial responsi- bility. Repeatedly\u2014over and over again. The responsibility goes far beyond the initial licensing period. We are talking about something that lasts for tens of thousands of years. But this is why this is the nuclear industry bail- out or relief act. What they have done is limited the liability of the utility by saying, until 2002, the maximum amount that can be contributed into the nuclear waste fund, a fund that is generated by a 1 mill levy on each kilo- watt hour of energy generated, will be 1 mill. The people who have looked at that, the General Accounting Office and oth- ers, have concluded that the fund cur- rently is underfunded between $4 and $8 billion. It gets better. After the year 2002, the utilities’ liability is further limited to the amount of the annual appropriation. So there is nothing that is being done with respect to the long- term implications of this piece of legis- lation, in terms of the storage of nu- clear wastes. Let me be clear that by the year 2033, for the utilities, nuclear utilities that are currently licensed, those licensing periods expire. What this means is that the American taxpayer, people who have never received 1 kilowatt of nu- clear-generated power, will pick up the balance. Let me be clear on that. His- torically, since the establishment of the Nuclear Waste Policy Act, it has been the financial responsibility of the utilities to handle the storage, the fi- nancial responsibility. This now changes dramatically and there are limitations\u2014the 1 mill limitation and, after the year 2002, only the amount that is appropriated. This year, for ex- ample, that would have been roughly one-third of a mill. The balance all shifts to the taxpayer. So, you talk about an unfunded mandate on the American taxpayer, this is it. Let me respond briefly to a couple of comments that were made, and I know our time will conclude. First of all, our friend from Louisiana makes the point that Nevada has hosted the Nevada test site and nuclear detonations have occurred there for many years. I hope none of us is going to be penalized be- cause Nevada, as part of the national defense effort beginning during the height of the cold war in the 1950’s, agreed to accept the Nevada test site. That was part of our national defense effort and Nevadans assumed that re- sponsibility, and proudly so. Now, with respect to the amount of radioactivity generated, all the tests conducted out there would amount to less than 1 ton. That would be the cu- mulative impact of all of that radioac- tivity. What we are talking about\u2014\u2014 Mr. JOHNSTON. Will the Senator yield at that point? Mr. BRYAN. Yes. Mr. JOHNSTON. You are speaking of the radioactivity released to the air at this point, are you not? Mr. BRYAN. No. We are referring to the total volume of radioactivity, un- derground as well. Mr. JOHNSTON. It amounts to how much? Mr. BRYAN. One ton. Mr. JOHNSTON. One ton? Mr. BRYAN. Yes. The point I am trying to make is, by way of comparison, we are talking about tens of thousands of metric tons, so the degree of risk is immeasurably greater as a result. Let me turn next to the question of the lawsuit. Much has been made of the lawsuit. The lawsuit changes abso- lutely nothing, as my colleague point- ed out. In point of fact, what the law- suit said is there is an obligation on the part of the Department of Energy, and we look to the provisions of the contract to determine how that liabil- ity will be ascertained. At no time\u2014 and I emphasize\u2014at no time was it contended by the utilities that there would be a need to commence some type of transportation on February 1, 1988. In point of fact, in the briefs, the legal briefs filed by the utilities, they make it very clear that they do not as- sert that there should be a mandatory injunction requiring the transfer of anything, or the movement of anything on January 31, 1998. What they say, and our amendment that we will offer later indicates that, is that becomes a mat- ter of contract adjudication, depending upon the nature of the delay. I believe it is fair to point out the Secretary of Energy makes that point in her letter, that the lawsuit changes nothing. It is a smokescreen. The utilities did not seek nor does the lawsuit decision re- quire the transport of anything on Jan- uary 31, 1988. At most it would require an adjustment of the fees paid by utili- ties into the nuclear waste fund, to the extent that they incur additional costs to expand that storage. I might say, parenthetically, the Senators from Nevada have introduced legislation to that effect for the last 7 years. So the lawsuit means absolutely nothing. It is plain the ratepayers are not get- ting what they paid for. Let me say that certainly is not the fault of the citizens of Nevada. Frankly, it is the fault of the way the nuclear utilities themselves have constantly tried to jam unrealistic deadlines, to make pol- itics rather than science the deter- miner of this program. The original program suggested we should search the country, find the best site, send three sites, after they have been stud- ied, to the President of the United States, and have the President make the determination. That did not occur. Politics\u2014politics intervened, nuclear politics. The folks in the Northeast, and understandably, said we do not want granite in the study, so they were taken out of the equation. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00006 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9215 July 31, 1996 The folks in the Southeast, I can un- derstand, said, ”My gosh, we don’t want salt domes.” So what happened in 1987\u2014and no scientist worthy of the de- scription of scientist would ever con- tend that from a scientific point of view, forcing all of the study to occur at a single site is the best from a sci- entific perspective, and the fact they have encountered technical problems dealing with health and safety cer- tainly is not the fault of Nevadans. Frankly, the decision to embark upon nuclear energy carried with it certain risks for the utilities, and part of that risk is the financial responsi- bility of dealing with the waste. So I simply say to my colleagues that none of the provisions that relate to the heart and core of our concerns\u2014 the National Environmental Policy Act, the preemption provisions, the standards or the fiscal impact for the American taxpayers\u2014not a single pro- vision in this new amendment changes the impact from the debate that we had in S. 1936, and none of my col- leagues should be misled as a result. May I inquire as to how much time I have left? The PRESIDING OFFICER (Mr. CAMPBELL). The Senator has 5 minutes 53 seconds. Mr. BRYAN. I reserve the remainder of my time. Mr. REID addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Nevada, [Mr. REID], is recog- nized. Mr. REID. Mr. President, there has been a suggestion by my friend, the senior Senator from Louisiana, that this is a bankrupt case, the defense of S. 1936, the opposition to S. 1936. Mr. President, the exact opposite is true. For example, the opposition to S. 1936 is supported by the President of the United States. He has done it vocally and in writing. The case is supported by the Secretary of Energy. There is a letter that will be entered into the RECORD where she vehemently dis- agrees with not only the underlying legislation but the amendment. No one can ever think that the Secretary of Energy would do anything to assist this Senator from Nevada. This Sen- ator and the Secretary of Energy have been in a longstanding dispute over various issues, but her letter is direct and to the point that not only is the legislation bad, but the amendment is bad. The Environmental Protection Agen- cy Administrator sent a letter that is succinct, to the point, that outlines why the legislation is bad and why the amendment is bad. The Council for Environmental Qual- ity opposes this legislation. The Nu- clear Waste Technical Review Board is opposed to what they are trying to do, and, as we talked about before, all en- vironmental organizations. Mr. President, let me say that the only case for S. 1936 is a powerful nu- clear industry. They are the only sup- porters of this legislation. The Senators from Nevada have indi- cated that we would not require a roll- call vote on this amendment. We have been told that the advocates of this amendment want a vote on it. I can only speak for this Senator, but this amendment does not help anything. I say to all my colleagues, it does not help anything in the underlying legis- lation, and it does not hurt it. It is just as bad after you adopt it as before. My colleagues can go ahead and vote for this if they want. It makes abso- lutely no difference, because the ulti- mate test of this legislation will come on final passage when we will deter- mine whether or not the President of the United States is going to have to oppose this legislation by veto and whether the request, the pleas by the President, the Secretary of Energy, the Vice President of the United States, the Environmental Protection Agency, the Council for Environmental Quality, the Nuclear Waste Technical Review Board and all environmental organiza- tions are going to land on deaf ears. I reserve the remainder of our time on this amendment. The PRESIDING OFFICER. The Sen- ators from Nevada still have 2 minutes 56 seconds. Who yields time? Mr. REID. I reserve the 2 minutes 56 seconds to the underlying bill. Parliamentary inquiry, Mr. Presi- dent. Can we reserve the time on the other amendments on the bill itself? The PRESIDING OFFICER. The Chair will state to the Senator the time will continue to roll unless the Senator seeks unanimous consent to stop the time. Mr. REID. Mr. President, I ask unan- imous consent that all time be no longer counted against the opponents of this amendment and that, if there is going to be a rollcall, we have it. The PRESIDING OFFICER. Is there objection? Mr. MURKOWSKI. That is fine. We would like a rollcall vote. I have asked for the yeas and nays. The PRESIDING OFFICER. Without objection, it is so ordered. The question is on agreeing to amendment No. 5055. The yeas and nays have been ordered. The clerk will call the roll. The legislative clerk called the roll. Mr. NICKLES. I announce that the Senator from New Hampshire [Mr. GREGG] is necessarily absent. Mr. FORD. I announce that the Sen- ator from Ohio [Mr. GLENN] is nec- essarily absent. The PRESIDING OFFICER. Are there any other Senators in the Chamber de- siring to vote? The result was announced\u2014yeas 86, nays 12, as follows: [Rollcall Vote No. 256 Leg.] YEAS\u201486 Abraham Akaka Ashcroft Bennett Bingaman Bond Bradley Breaux Brown Bumpers Burns Byrd Campbell Chafee Coats Cochran Cohen Coverdell Craig D’Amato DeWine Dodd Domenici Dorgan Exon Faircloth Feingold Feinstein Ford Frahm Frist Gorton Graham Gramm Grams Grassley Harkin Hatch Hatfield Heflin Helms Hollings Hutchison Inhofe Inouye Jeffords Johnston Kassebaum Kempthorne Kennedy Kerrey Kerry Kohl Kyl Lautenberg Leahy Levin Lott Lugar Mack McCain McConnell Mikulski Moseley-Braun Murkowski Murray Nickles Nunn Pressler Robb Roth Santorum Sarbanes Shelby Simon Simpson Smith Snowe Specter Stevens Thomas Thompson Thurmond Warner Wellstone Wyden NAYS\u201412 Baucus Biden Boxer Bryan Conrad Daschle Lieberman Moynihan Pell Pryor Reid Rockefeller NOT VOTING\u20142 Glenn Gregg The amendment (No. 5055) was agreed to. Mr. MURKOWSKI. Mr. President, I move to reconsider the vote. Mr. CRAIG. I move to lay that mo- tion on the table. The motion to lay on the table was agreed to. Mr. REID addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Nevada. Mr. REID. Mr. President, I ask unan- imous consent that there be a quorum call, which I am going to suggest, and that the time not run against either the proponents or the opponents of this legislation. The PRESIDING OFFICER. Is there objection? Mr. MURKOWSKI. Mr. President, I object. I ask that the time run equally. Mr. REID. Mr. President, I suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. LOTT. Mr. President, I ask unan- imous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. LOTT. Mr. President, I commend the Senators who are working on this very important legislation. They have been doing an excellent job. I have the impression they are going to make good progress today. I thank, again, the Nevada Senators for their reason- ableness in a very difficult situation. The sooner we can finish this legisla- tion, the better, so that we can move on to very important issues that are pending, such as the transportation ap- propriations and the VA\/HUD appro- priations bill. Conference reports are beginning to come back now. I thank the Democratic leader for his cooperation in bringing this issue to this point. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00007 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9216 July 31, 1996 PROVIDING FOR THE ADJOURNMENT OF BOTH HOUSES Mr. LOTT. Mr. President, I ask unan- imous consent that the Senate proceed to the immediate consideration of House Congressional Resolution 203, the adjournment resolution, which was received from the House; further, that the resolution be considered and agreed to, and the motion to reconsider be laid upon the table. The PRESIDING OFFICER. Without objection, it is so ordered. The concurrent resolution (H. Con. Res. 203) was considered and agreed to, as follows: H. CON. RES. 203 Resolved by the House of Representatives (the Senate concurring), That, in consonance with section 132(a) of the Legislative Reorganiza- tion Act of 1946, when the House adjourns on the legislative day of Thursday, August 1, 1996, Friday, August 2, 1996, or Saturday, Au- gust 3, 1996, pursuant to a motion made by the Majority Leader or his designee, it stand adjourned until noon on Wednesday, Sep- tember 4, 1996, or until noon on the second day after Members are notified to reassemble pursuant to section 2 of this concurrent reso- lution, whichever occurs first; and that when the Senate recesses or adjourns at the close of business on Thursday, August 1, 1996, Fri- day, August 2, 1996, Saturday, August 3, 1996, or Sunday, August 4, 1996, pursuant to a mo- tion made by the Majority Leader or his des- ignee in accordance with this resolution, it stand recessed or adjourned until noon on Tuesday, September 3, 1996, or until such time on that day as may be specified by the Majority Leader or his designee in the mo- tion to recess or adjourn, or until noon on the second day after Members are notified to reassemble pursuant to section 2 of this con- current resolution, whichever occurs first. SEC. 2. The Speaker of the House and the Majority Leader of the Senate, acting jointly after consultation with the Minority Leader of the House and the Minority Leader of the Senate, shall notify the Members of the House and Senate, respectively, to reassem- ble whenever, in their opinion, the public in- terest shall warrant it. Mr. LOTT. Mr. President, I suggest the absence of a quorum and ask unani- mous consent that the time be equally divided. The PRESIDING OFFICER. Without objection, it is so ordered. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. REID. Mr. President, I ask unan- imous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. f NUCLEAR WASTE POLICY ACT OF 1996 The Senate continued with the con- sideration of the bill. Mr. REID. Mr. President, I yield such time as the Senator from Minnesota, Senator WELLSTONE, may use up to one-half hour. The PRESIDING OFFICER. The Sen- ator from Minnesota is recognized for up to one-half hour. AMENDMENT NO. 5037 (Purpose: To protect the taxpayer by ensur- ing that the Secretary of Energy does not accept title to high-level nuclear waste and spent nuclear fuel unless protection of pub- lic safety or health or the environment so require) Mr. WELLSTONE. Mr. President, I call up amendment 5037. The PRESIDING OFFICER. The clerk will report. The legislative clerk read as follows: The Senator from Minnesota (Mr. WELLSTONE) proposes an amendment num- bered 5037. Mr. WELLSTONE. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. The amendment is as follows: On page 85 of the bill, strike lines 13 through 15 and insert in lieu thereof the fol- lowing: ”(a) Notwithstanding any other provision of this Act (except subsection (b) of this sec- tion) or contract as defined in section 2 of this Act, the Secretary shall not accept title to spent nuclear fuel or high-level nuclear waste generated by a commercial nuclear power reactor unless the Secretary deter- mines that accepting title to the fuel or waste is necessary to enable the Secretary to protect adequately the public health or safe- ty, or the environment. To the extent that the federal government is responsible for personal or property damages arising from such fuel or waste while in the federal gov- ernment’s possession, such liability shall be borne by the federal government.” Mr. WELLSTONE. Mr. President, most of the time that I am on the floor I do not really use notes, or at least I do not use notes extensively. I think today what I want to try to do is read what I think is a kind of brief that I want to argue for this amendment. Most of the debate on S. 1936 will be about the environmental policy rami- fications of the bill. I know we will learn a great deal about that today. While these are important points\u2014I view them as very important points\u2014 there is another very significant part of this debate. I am referring to the im- plications of this bill for the taxpayers, particularly future taxpayers. I hope that if my colleagues are not able to listen to the statement, that their staffs will and that these words will be given serious consideration. As you will soon see, this bill would perpetuate a flawed policy that has set up the future taxpayers of America, I fear, for a potentially infinite liability. Mr. President, section 302 of the Nu- clear Waste Policy Act of 1982, sub- section (a), paragraph 4, states what has long been accepted as nuclear waste policy, that nuclear utilities shall pay a fee into a fund to ”ensure full cost recovery” for costs associated with the nuclear waste program. In- deed, an earlier version of this very bill, introduced as S. 1271, recited in its findings section the same basic premise: ”While the Federal Govern- ment has the responsibility to provide for the centralized interim storage and permanent disposal of spent nuclear fuel and high-level radioactive waste to protect the public health and safety and the environment”\u2014I agree with that\u2014”the cost of such storage and dis- posal should be the responsibility of the generators and owners of such waste and spent fuels.” Mr. President, once you understand that simple basic and longstanding premise, you cannot help but be con- fused by the policy we have been pur- suing for years and which is strength- ened in the bill before us. That policy is to provide for the transfer of title to high-level nuclear waste from the util- ity to the taxpayer. Mr. President, could I have order in the Chamber? I would appreciate it if you would ask the discussion to be off the floor. The PRESIDING OFFICER. All dis- cussions will be taken into the cloak- room. Mr. WELLSTONE. Mr. President, let me explain. As I have already de- scribed, the full cost of the waste dis- posal program is to be borne by the generators of that waste. To imple- ment this idea, Congress created the nuclear waste fund in the Treasury. The nuclear waste fund is supplied by a fee paid by the nuclear utilities, which is really the ratepayer. That fee is specified in the 1982 act to be equal to ”one mill,” which is one-tenth of one cent per kilowatt-hour of electricity generated. The 1982 act further gave the Sec- retary of Energy the authority to ad- just the fee if she or he found it nec- essary to ”ensure full cost recovery.” As you can readily see, when a com- mercial nuclear powerplant ceases to generate electricity, it ceases to pay into the nuclear waste fund. In the next 15 to 20 years, as our current nu- clear plants age, more and more of these plants will stop generating power, and the flow of money into the nuclear waste fund will begin to dry up. When no more money is flowing into the fund in the form of fees, we will know how much money we will have to pay for the full cost of the dis- posal program. Now, we must ask the question: Will we have enough money? Will all those fees aggregated in the nuclear waste fund, plus interest paid out as nec- essary to meet the actual progress of the program, be sufficient to cover all the actual costs of storing high-level nuclear waste until it is no longer a threat to public health and safety and the environment, perhaps as long as 10,000 years? Are we going to be able to cover the cost? I will share with you the opinions of the experts on that question in a mo- ment, but first let me tell you who is stuck with the tab if the nuclear waste fund is not sufficient. Because our nu- clear waste policy provides for title to the waste to transfer from the utility to the Federal Government, which translates into taxpayers\u2014it is you and me, or at least our families in the future\u2014who are going to be stuck with VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00008 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9217 July 31, 1996 the bill. You see, it is the transfer of the tab which the nuclear utilities are really working for. Moving the waste in Nevada is impor- tant to them, but I am not sure that is the real prize. What they really want is to be free and clear of the stuff because they know that there is a fair chance that disposal costs will be greater than what they are currently saying it will be. When their plants are shut down and they no longer pay the fee into the fund, they want to make sure that the taxpayer cannot come back to them to pony up some more. If the Department of Energy holds title, the waste is no longer the utility’s problem, but it is the taxpayers’ problem, and it is a po- tentially huge one. Let us see if this is a real problem. After all, Mr. President, if everybody agrees that the fund will be adequate, then there will not be any taxpayer li- ability to worry about. Mr. President, could I have order, please, on the floor, and could I ask my colleagues to please cease discussion? The PRESIDING OFFICER. The Sen- ate will be in order. Mr. WELLSTONE. Mr. President, the question then becomes whether there will be a real problem. After all, if ev- erybody agrees that the fund will be adequate, the question is whether there is going to be any taxpayer liability to worry about. The Nuclear Waste Tech- nical Review Board in its March 1996 report to the Congress states: In a discussion of costs, however, the board believes a more important question is wheth- er the nuclear waste fund is adequate to pay the cost of disposal as well as previously un- anticipated long-term storage. Although the Department of Energy has not yet made a new formal determination of the fund’s ade- quacy, in a presentation before this board, analysts who conducted an independent func- tion and management review of the Yucca Mountain project suggested that the nuclear waste fund as currently projected would be deficient by $3 to $5 billion. In a June 1990 report, the General Ac- counting Office estimated, depending on varying inflation rates and numbers of repositories needed, a potentially huge shortfall\u2014up to $77 billion. The report states: Unless careful attention is given to its fi- nancial condition, the nuclear waste pro- gram is susceptible to future budget short- falls. Without a fee increase, the civilian waste part of the program may already be underfunded by at least $2.4 billion in dis- counted 1998 dollars. That is the GAO report of 1990. Now, Mr. President, in fairness\u2014and I am trying to present a rigorous anal- ysis for my colleagues\u2014there is no con- sensus on whether the fund will be ade- quate. The Department of Energy be- lieves that it will be. The nuclear in- dustry likewise is quite adamant that the fund will be sufficient. But, of course, estimating fund adequacy is a very complicated matter, and reason- able people can have different views. There are two basic elements to de- termine if the fund will be adequate. First, there is a total lifetime cost esti- mate for the disposal program. Depend- ing on how far out you wish to run it, this could require making estimates for thousands of years. DOE’s latest life cycle cost estimate\u2014this is Sep- tember 1995 \u2014estimates costs for only 88 years, from the beginning of the pro- gram in 1983 through the expected end year of the program, which is 2071, when the repository is decommis- sioned. This, of course, assumes that the repository is built, loaded, and closed on schedule, I might add, a very questionable assumption. Cost estimates also depend on the elements of the program, including whether there will be both an interim facility and a permanent repository. In the Department of Energy’s 1995 esti- mate, it is assumed that the program will only include a permanent reposi- tory. They were not even talking about the interim storage facility. The second element to determine fund sufficiency has to do with the sup- ply side of the question: how much money will be put into the fund through fees. Because the fees are based on generation of electricity, this estimate is inextricably tied up with the life expectancies of existent nu- clear powerplants and their level of electricity generation. What if the plants do not get relicensed? What if they shut down prematurely because of economic considerations or safety issues associated with aging reactors? So far, no plant has lasted to the end of its license. That is a point worth em- phasizing. What if the plants have long outages and thus generate less power? The Department of Energy assumes all plants operate for their full 40-year li- cense with no renewal and that their generating efficiency improves over time. In the end, Mr. President, I think we all have to realize that any estimate of fund adequacy is tentative at best. As Daniel Dreyfus, Director of the Office of Civilian Radioactive Waste Manage- ment of DOE, put it last April, address- ing the adequacy of the fee to ensure a sufficient fund: Any such fee adequacy analysis must, of course, be based upon a number of assump- tions about the near and long term future. Some of the most important are the pro- jected rate of expenditure from the fund which in turn impacts the interest credits accruing from the unspent balance, the as- sumed future rates of interest and inflation, and the assumed number of kilowatts of nu- clear power still to be generated and sold. Significant deviations from these could re- sult in errors in either direction that would warrant changes in the fee. Mr. President, what my amendment would do\u2014we now have established that the fund, which is the utility com- panies’ fund, may not be sufficient, and some believe we are headed for a sig- nificant shortfall. The evidence is irref- utable on that point. Here is where we get to the crux of my amendment. If there is a shortfall, who is going to pay for it? The answer is that the owner of the waste, the title holder, will pay for the shortfall. If title transfers to the Department of Energy, the taxpayers in this country are going to be on the hook. It is the taxpayers who are going to end up hav- ing to pay the costs. The amendment I offer today would protect the taxpayer from such an un- certain fate. My amendment would simply prevent the Department of En- ergy from accepting title to the waste unless accepting title was necessary to protect the public health and safety and the environment. For people con- cerned about liability for damage from an accident caused by DOE once the waste is in the Government’s posses- sion, my amendment would ensure that the DOE is, indeed, liable for such dam- ages. All this amendment does is protect taxpayers from shouldering the burden of waste disposal costs after the fund runs out. That burden should remain with the utilities. That was the inten- tion and that is the way it ought to be. We do not know the cost over 10,000 years, and this transfer of title through the sleight of hand transfers a huge po- tential unfunded liability to taxpayers in this country. I have heard my colleagues argue that ratepayers and taxpayers are in- distinguishable. That is not true. In other words, some folks seem to be- lieve that changing the law to make sure that the utilities pay for the out- year liability is pretty much the same as if the taxpayer is directly on the hook for it as current law and this bill would have it. That is simply not so. Ratepayers are people who currently use nuclear-gen- erated power. Taxpayers are every- body. All ratepayers are taxpayers but not all taxpayers currently use nu- clear-generated power. Ratepayers are a subset of taxpayers. Ask people in northern Minnesota whether they ought to be held as liable for a fund shortfall as, for example, somebody in the Twin Cities. Ask somebody in Mon- tana if they feel they should pay as much for waste disposal as somebody in a more heavily nuclear State. Mr. President, this bill, as I have stated already, would provide for title to transfer to the taxpayer. That is what this bill is about. I think that is a very flawed premise in this bill. While that is also part of the current law, the bill throws in a new twist. Under S. 1936, title transfers even soon- er than under current law. Current law has title transferring when DOE ac- cepts the waste for permanent disposal. In other words, title does not transfer until we actually have a permanent place to put it. S. 1936, however, does not wait. This bill puts the taxpayer on the hook as soon as the Department of Energy takes it off the utility’s hands for interim storage. That is what this is about. As I have already indicated, the level of the fee is integral to any estimate of fund suffi- ciency. Current law allows the Sec- retary of Energy to adjust that fee, if necessary, to ensure fund sufficiency. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00009 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9218 July 31, 1996 Despite the General Accounting Office and other estimates, this bill would re- move that authority, effectively freez- ing the one-mill fee, which has never been changed or pegged to inflation in statutory language. Thus, even if the Department of Energy does ultimately estimate that the fund will experience a shortfall, the Secretary cannot even act to prevent it to protect taxpayers from accepting the liability. Finally, Mr. President, this bill would require a significant up-front ex- penditure from the fund to pay for con- struction of an interim storage facil- ity, something that was not considered by the DOE in its latest assessments of fund sufficiency. As has already been explained, interest buildup from the unspent fund balances is a key compo- nent ensuring fund sufficiency. With large early expenditures, there will ob- viously be less interest accumulated and the fund will be less able to cover long-term costs. This amendment is all about respon- sibility. It is all about making sure that costs are allocated to those who should bear them. It is all about decid- ing who should be on the hook when shaky estimates of costs well into the next century and beyond prove, as they invariably do, to be off the mark. We do not know what the costs are going to be. The estimates are very shaky. Yet what we are doing through this bill is essentially transferring all of the li- ability to taxpayers in this country. Less than a month ago, in discussing this issue on the floor of the Senate, one of the chief sponsors of the bill, the Senator from Idaho, said, ”It is irre- sponsible to shirk our responsibility to protect the environment and the future for our children and grandchildren.” I could not agree with him more. But protecting our children and grand- children also means protecting their wallets, as I am sure he would agree. We have spent an enormous amount of time and effort in the past few years cutting the deficit and moving toward a balanced budget, in large part to pro- tect future generations. Let us have some consistency. Let us keep that goal in mind. Let us not stick future generations of taxpayers with a poten- tially enormous liability. Let the title to nuclear waste stay with those who generate it. That is what this amend- ment says. It is simple. It is straightforward. Mr. President, how much time do I have left? The PRESIDING OFFICER. The Sen- ator has 12 minutes and 11 seconds. AMENDMENT NO. 5037, AS MODIFIED Mr. WELLSTONE. Mr. President, I may reserve the remainder of my time but, before I do, if I could, I ask my amendment be modified to effect the changes in page and line at the desk, necessary because of the adoption of the amendment of Senator MURKOWSKI. The PRESIDING OFFICER. Without objection, it is so ordered. The amendment (No. 5037), as modi- fied, as follows: On page 52 of the bill, as amended by Mur- kowski amendment No. 5055, strike lines 15 through 16 and insert in lieu thereof the fol- lowing: ”(a) Notwithstanding any other provision of this Act (except subsection (b) of this sec- tion) or contract as defined in section 2 of this Act, the Secretary shall not accept title to spent nuclear fuel or high-level nuclear waste generated by a commercial nuclear power reactor unless the Secretary deter- mines that accepting title to the fuel or waste is necessary to enable the Secretary to protect adequately the public health or safe- ty, or the environment. To the extent that the Federal Government is responsible for personal or property damages arising from such fuel or waste while in the Federal Gov- ernment’s possession, such liability shall be borne by the Federal Government.” Mr. MURKOWSKI. I believe we have a half hour on our side, Mr. President? The PRESIDING OFFICER. That is correct. Mr. MURKOWSKI. It is my intention to yield to the distinguished Senator from Louisiana 15 minutes and the Senator from Minnesota 5, the Senator from Idaho 5, and I will use the other 5 at the conclusion. And that takes care of our side. The PRESIDING OFFICER. The Sen- ator from Louisiana. Mr. JOHNSTON. Mr. President, the amendment of the Senator from Min- nesota is based upon two profoundly wrong assumptions. The first assump- tion is that the Federal Government, acting through this Congress, has the right to take away vested rights of American citizens or American cor- porations. It is such an item of Hornbook law\u2014and I might add funda- mental fairness\u2014that vested rights are enforceable in the courts, that it hard- ly seems worthwhile to argue that. Nevertheless, having said it is not worthwhile to argue it, let me just quote from the Winstar decision of the U.S. Supreme Court, decided July 1, 1996, in which it says: The Federal Government, as sovereign, has the power to enter contracts that confer vested rights, and the concomitant duty to honor those rights. . .. If we allowed the government to break its contractual promises without having to pay compensation, such a policy would come at a high cost in terms of increased default pre- miums in future government contracts and increased disenchantment with the govern- ment generally. I could quote other equally persua- sive language from this decision. Mr. WELLSTONE. Will the Senator yield just for a moment? Mr. JOHNSTON. Yes. Mr. WELLSTONE. First of all, if the industry and DOE are correct, and the fund is sufficient, there would be no shortfall and there would be no dam- ages; is that correct? The estimates of the industry is that the fund is suffi- cient, and if that is the case, there would be no shortfall and therefore there would be no damages. If, in fact, there were damages\u2014let me just ask the Senator to respond to the first question. Mr. JOHNSTON. No, the Senator is wrong. First of all, damages would not be paid from the nuclear waste fund. Damages would have to be paid from the judgment fund, provided elsewhere. Mr. WELLSTONE. But Senator, by the very estimates you have made, by the very estimates that the utility companies have made, there would be no damages because you have said that the fund is sufficient. So there would be no damages. Mr. JOHNSTON. I have not said the fund is sufficient. DOE has said the fund is sufficient. And many nuclear utilities do not believe it is sufficient. But the sufficiency of the fund has nothing to do with the damages to which a utility would be entitled. The fund could be more than sufficient and a utility would be entitled to damages based upon whether the Government had violated a vested right. Mr. WELLSTONE. I thank the Sen- ator. Mr. JOHNSTON. Would the Senator agree with me, first of all, the Govern- ment has no right to violate a vested right of the utilities? Mr. WELLSTONE. My response would be, if it was decided by the courts that this amendment improp- erly breaches preexisting contracts, then presumably the utilities would be able to recover damages from the Gov- ernment. However, I want to point out one more time that if the industry and the DOE are correct, that the fund is sufficient, there would be no shortfall and therefore there would be no dam- ages. That would be up to the courts to decide. Mr. JOHNSTON. Let us take this one at a time. You agree with me the Gov- ernment has no right to take away vested rights, and would be liable for the violation? Mr. WELLSTONE. I have said, unless they pay damages. But I have also made it clear the courts would decide that and I have also made it clear that by the very estimates of the utility in- dustry, this is the very question that is in doubt, that there would be no dam- ages because there would be no short- fall. Mr. JOHNSTON. Mr. President, the Senator has answered my first ques- tion, which I think there is only one answer to, and that is the Government cannot violate contractual rights. The second question is what is the duty of the Federal Government with respect to nuclear waste? It so happens that the Court of Appeals for the Dis- trict of Columbia has decided that very question definitively and clearly on July 23, 1996. Here is what they have said. I hope the Senator from Min- nesota will not leave. What the deci- sion said, and it is very clear: Thus we hold that section 302(a)(5)(B) cre- ates an obligation in DOE, reciprocal to the utilities’ obligation to pay, to start dis- posing of spent nuclear fuel no later than January 31, 1998. Let me repeat that: . . . we hold that the Nuclear Waste Policy Act creates an obligation in DOE . . . to start disposing of the spent nuclear fuel no later than January 31, 1998. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00010 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9219 July 31, 1996 What the decision does is delineates between the duty of the Federal Gov- ernment to accept title, which the court clearly says is dependent upon the completion of a nuclear repository, and the duty to dispose of the spent nu- clear fuel on January 31, 1998, which is an absolute duty. So, come January 31, 1998, the Fed- eral Government must dispose of this nuclear waste, whether or not the facil- ity is complete. And, if the amendment of the Senator from Minnesota were agreed to, it would have nothing to do with the obligation of the Federal Gov- ernment to pay damages. The obliga- tion of the Federal Government to pay damages and the sufficiency of the nu- clear waste fund are two separate things. If, on January 31, 1998, the re- pository is not complete, and it will not be complete, and there are utilities which must build their own dry cask storage at their own expense, I believe it is clear, based on this decision of the court of appeals, that the Federal Gov- ernment would have to pay damages. Where they would pay the damages from\u2014I believe it would have to come from the damage fund and not from this, the nuclear waste fund, but that would be a separate item for the court to decide. But the point is, it is very clear that this amendment cannot succeed in doing what the Senator from Min- nesota says. The Senator from Min- nesota says that this amendment takes the burden off the taxpayers\u2014off the ratepayers, and puts it on the utilities. Mr. President, that cannot be. The utilities have vested rights, recognized by the Supreme Court as late as July of this year. This very month, the Su- preme Court has reiterated a very long- standing principle of law, which is that vested rights cannot be taken away by this Congress or by the courts. The utilities have a vested right to have the Federal Government dispose of their waste by January 31, 1998. You simply cannot take away that duty. I ask the distinguished Senator from Minnesota if he agrees with my inter- pretation of the court of appeals’ deci- sion rendered last week in that the Federal Government has an unqualified duty ”to start disposing of the spent nuclear fuel no later than January 31, 1998\u2033? Does the Senator agree with that? Mr. WELLSTONE. The court decision only deals with the statute, and we are changing law. I was out during part of the Senator’s presentation, and I think the part of the finding of the court that you did not read I will read when I have time. So I will come back to it. Mr. JOHNSTON. I am reading right here: Thus, we hold that the Nuclear Waste Pol- icy Act creates an obligation in DOE to start disposing of the spent nuclear fuel no later than January 31, 1998. Is there any disagreement with what I read in the decision? Mr. WELLSTONE. I don’t disagree with that. Mr. JOHNSTON. And the Senator would not disagree you can’t take away that right legislatively, can you? Mr. WELLSTONE. This doesn’t take away this right legislatively. Mr. JOHNSTON. Then how in the world can the Senator say they are transferring the duty of disposing of nuclear waste from the Federal Gov- ernment or the taxpayers and giving that to the utilities? Mr. WELLSTONE. There is a basic distinction. You are talking about pos- session, and I am talking about title. I did not say there wasn’t a commitment to change this in terms of possession. I read the findings of the original legis- lation, and I am telling you that when we had the original findings, the origi- nal bill, it was made very clear that, in fact, when it comes to title and when it comes to the actual liability of paying for this, this should be paid for by peo- ple who benefit from nuclear power, not by taxpayers across the country. Period. Mr. JOHNSTON. The decision of the court of appeals makes clear that they have a vested right to the title passing as of the time that the nuclear reposi- tory is built and not until that time, but they have the duty to dispose of the waste January 31, 1998. Is the Senator saying that their duty to dispose of the waste does not involve any responsibility, any duty to pay damages? Mr. WELLSTONE. Let me just read from the decision to put this to rest and the part you did not read: In addition, contrary to DOE’s assertions, it is not illogical for DOE to begin to dispose of SNF by the 1998 deadline and, yet, not take title to the SNF until a later date. Mr. JOHNSTON. What is the dif- ference in liability between having the duty to dispose of and in taking title? Mr. WELLSTONE. Dispose of has to do with possession, and title has to do with who pays for it. As a matter of fact, let me read for you, as long as this is on your time and not on my time, let me read for you\u2014 Mr. JOHNSTON. Well, I don’t want\u2014 Mr. WELLSTONE. The original find- ings of the bill that you wrote. Mr. JOHNSTON. I have limited time remaining. Mr. President, what the Senator is saying is so illogical. We have established that the Federal Gov- ernment has the duty to dispose of spent nuclear fuel, and the Senator is saying that that duty carries with it no responsibility to pay damages, no fi- nancial responsibility; that that some- how stays with the title. Mr. President, that is just not so. What the court said in the court of ap- peals’ decision is that they are with- holding the remedy until January 31, 1998, because the Federal Government would not have defaulted until that time. That is when the duty of the Fed- eral Government to dispose of the waste ripens, January 31, 1998. We cannot come in here and say, ”Well, we’re going to pass that duty on to the utilities because they are some- how at fault.” Mr. President, that is just so clearly not the law. I believe that it is simply not an argument that bears any weight at all. Mr. WELLSTONE. Will the Senator yield 1 minute? Mr. JOHNSTON. I will yield on your time. Mr. WELLSTONE. I appreciate it. Mr. JOHNSTON. On your time? Mr. WELLSTONE. That is right, for 1 minute. This does not say the Federal Government does not have the respon- sibility to take the waste. That is not this amendment. The Senator mischaracterizes this amendment. That is a straw-man or straw-person argument. This amendment deals with the whole question of liability. Mr. JOHNSTON. No; it does not\u2014\u2014 Mr. WELLSTONE. In the very court decision the Senator cited, the court did not find this to be illogical; they made that distinction. I am not argu- ing the Federal Government should not take responsibility. I believe we should live up to that responsibility. This is a question of whether or not taxpayers should have to pay for the liability of it. Mr. JOHNSTON. First of all, the Sen- ator’s amendment does not mention li- ability. Mr. WELLSTONE. This is not on my time. Mr. JOHNSTON. Or the taxpayers. It simply says who has title and the fact that title and responsibility are not the same thing. I reserve the remainder of my time. Mr. MURKOWSKI addressed the Chair. The PRESIDING OFFICER (Mr. THOMAS). The Senator from Alaska. Mr. MURKOWSKI. I yield 5 minutes to Senator GRAMS from Minnesota. Mr. GRAMS. Mr. President, I want to follow up on what the Senator from Louisiana was saying. Just last week, the courts reaffirmed what the Congress and also the Na- tion’s taxpayers have known since 1982 when this contract, this agreement was worked out, and that is, the Depart- ment of Energy has the legal obliga- tion to begin accepting nuclear waste by January 31, 1998. This ruling by the D.C. Circuit Court of Appeals, the second highest court in the land, marked a historic trans- formation in the nuclear waste debate. We are no longer discussing whether or not DOE has a responsibility to accept the waste, but how quickly we can move toward the final disposal solu- tion. As my colleagues know, the road- blocks have not been environmental or technological, only political. After nearly 15 years, and at a cost to the Nation’s electric consumers of $12 bil- lion, the courts appear to have finally cleared that path. So why are some of our colleagues still trying to raise new obstacles? Is it because they are opposed to finding a real resolution to this environmental crisis? VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00011 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9220 July 31, 1996 I cannot believe anyone would want to see nuclear waste continue to pile up in some 35 States, 41 if you include waste produced by the Government. Many of those States’ utility commis- sioners argue that the ratepayer had paid for the waste to be removed and stored at a single permanent site. It was the DOE’s failure to live up to its end of the bargain that led to the high- ly publicized lawsuit against DOE. The three circuit court judges con- curred with the States’ opinion and re- jected the DOE’s attempt to ”rewrite the law.” Even so, some of our col- leagues want to rewrite that law today. Such amendments reject the manda- tory obligation of the DOE to take title to the spent fuel in 1998. They are merely an attempt to rewrite the law under the guise that somehow rate- payers are different than taxpayers. By vilifying those customers who are served by nuclear power facilities, the opponents of nuclear power hope to refocus the debate. Hiding behind the cloak of so-called taxpayer protection, they refuse to acknowledge the fact that moving forward with a permanent disposable program is the best way to avoid a taxpayer bailout. In fact, entities as diverse as the Na- tional Association of Regulatory Util- ity Commissioners and the utilities themselves have calculated that enact- ment of S. 1936 would save $5 billion to $10 billion to the U.S. taxpayers\/rate- payers. What I find most disturbing is this false differentiation of electric cus- tomers served by nuclear utilities from the rest of the public. The idea that somehow these Americans reaped the benefit of low-cost power for years and are now somehow trying to get out of their obligation to pay for the waste is an affront to the citizens of this coun- try. Over the last decade and a half, Min- nesotans have paid nearly $250 million in exchange for the unmet promises that the DOE would permanently store our State’s nuclear waste. Again, the Nation has paid $12 billion, nationwide, into the nuclear waste trust fund. I be- lieve the ratepayers have now lived up to their end of the bargain and met their financial obligation. It is the DOE that has not. But what about those who have bene- fited indirectly from nuclear power? I am referring to the customers served by utilities that themselves do not own nuclear generating stations but that from time to time do purchase the low- cost nuclear power. Aren’t these the same taxpayers that opponents of this bill are seeking to protect? Yet don’t these individuals share some of the re- sponsibility? This issue is clearly ex- plained in the letter that I received from Minnesota Department of Public Service Commissioner Kris Sanda. Commissioner Sanda wrote: For reliability reasons, our Nation’s elec- trical grid is divided into several regional power pools. The Mid-Continent Power Pool serves our home state [of Minnesota, as well as] North and South Dakota, Nebraska, Iowa, portions of Montana and Wisconsin . . . In addition to ensuring the reliable deliv- ery of electrical energy, MAPP [as it is called] serves as a clearinghouse for spot and intermediate term market for energy and ca- pacity transactions . . . There are certain times of day and seasons of the year when energy from those plants is sold by [a nuclear generating facility] to other utilities in MAPP . . . So in other words, other areas of the country receive this power. It is without question . . . that all Min- nesotans benefit from [NSP’s] nuclear facili- ties, regardless of which utility provides their power . . . The same is true for virtually all con- sumers across the country, even those whose primary utility does not use nuclear fuel to generate electricity. Therefore, responsibility for funding a permanent storage site is clearly shared by all of the Nation’s power consumers. And Congress has the re- sponsibility for ensuring that DOE builds an environmentally sound facil- ity. Finally, Mr. President, I think it is important that our vote to reject this amendment will send a clear message that we reject these attempts by the antinuclear forces to portray as vil- lains the electric consumers served by nuclear generating stations. I urge my colleagues to support final passage of S. 1936. Mr. MURKOWSKI. How much time do we have? The PRESIDING OFFICER. The Sen- ator has 11 minutes. Mr. MURKOWSKI. Does the Senator from Minnesota wish to\u2014\u2014 Mr. WELLSTONE. A quick response to the Senator from Minnesota. Mr. MURKOWSKI. This is on the time of the Senator from Minnesota. Mr. WELLSTONE. That is correct. I will take my 11 minutes now, if it is all right. First, a quick response. This amend- ment has nothing to do with the Fed- eral Government living up to its com- mitment to take the waste. I am in favor of that. This amendment has to do with who pays the cost over 10,000 years; it has to do with tax liability. You cannot mix apples and oranges. Let me just yield to the Senator from Nevada for 1 minute, please. Mr. BRYAN. I thank the Senator. I call my colleagues’ attention to this. Under the Nuclear Waste Policy Act, the Department of Energy and the utilities entered into a contract. It is the contractual liability that becomes the issue as a result of the court’s deci- sion that the senior Senator from Lou- isiana referenced. Under the contract provision, the remedy is spelled out. If the delays are unavoidable, there is no liability in a financial sense. The schedule for re- ceiving shipment is adjusted accord- ingly. If it is determined that the De- partment of Energy has been respon- sible for the delay, an adjustment is made with respect to the fees that are paid into the nuclear waste trust fund. So those are the remedies that are pro- vided. I thank the Senator from Min- nesota for yielding me time. Mr. WELLSTONE. How much time is remaining for this Senator? The PRESIDING OFFICER. The Sen- ator has 2 minutes. Mr. MURKOWSKI. I yield 5 minutes to the Senator from Idaho, Senator CRAIG. Mr. CRAIG. Mr. President, I thank my chairman for yielding, and let me thank him for the work he has done on this legislation and the effort that has been put forth by the senior Senator from the State of Louisiana, to bring us to where we are at this moment. I do not oftentimes do this, but I think it is time to speak to the citizens of Minnesota, because their Senator has produced an amendment that in my opinion reverses a longstanding Government policy. This amendment purports to release the Government from its obligation to take the waste. The Senator from Minnesota calls this a taxpayers’ protection amend- ment. What he does not tell us is that it would nail the ratepayer, the rate- payers of his State. For instance, it would force the people of Minnesota who have already paid over $229 million into the waste fund to pay millions more to build more storage sites at their reactors. Minnesotans have al- ready paid twice. I believe the Wellstone amendment, if the courts upheld it, would force Minnesotans, who get 31 percent of their electricity from nuclear power, to pay again and again and again. Last week, the U.S. Court of Appeals ruled that DOE has an obligation, and that has been thoroughly debated by the Senator from Minnesota and the Senator from Louisiana. It is very clear what the court said. The obliga- tion exists. We will decide when the time comes that you have the responsi- bility to take it how you will take it. This amendment, in my opinion, is unfair and it changes the rules in the middle of the game. It damages tre- mendously the citizens of the State of Minnesota who have already invested heavily in what they believed was the Government’s role in taking care of this waste issue. In fact, the courts held that the Congress cannot change the contractual obligations of the Gov- ernment, precisely because it would not be fair. If we were to be able to do something like this, no one would ever sign a contract with the Federal Gov- ernment. Let me repeat: No one would ever sign a contract with the Federal Government if the Congress could come along, willy-nilly after the fact, and change the rules. This amendment is little more than an effort to kill the bill\u2014I do not think there is any doubt about it\u2014that is the source of 22 percent of our Nation’s electrical power and 31 percent of the electrical power for the State of Min- nesota. That would be, in my opinion, one of the worst environmental votes we could make. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00012 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9221 July 31, 1996 Minnesota nuclear power plants have reduced Minnesota’s carbon dioxide emissions by 3 million metric tons in 1995, and by 55 million metric tons from 1973 to today. Last year, nuclear power in Minnesota displaced 118,000 tons of sulfur dioxide and 53,000 tons of nitrogen oxide. Following Senator WELLSTONE’s pre- scription, if that is what the Congress chooses to do and what becomes law, could result in more emissions of acid rain and more carbon emissions than the climate could tolerate. Somehow we have to also talk about the tremendous advantage the citizens of Minnesota have received from the clean source of power, 31 percent of their power, the electrical power. Now, today, we are insisting by this legisla- tion, a process that allows us to adhere to what the courts have said is our con- tractual relationship with the rate- payers of our country who receive the benefits of nuclear power, and to do something positive for the environ- ment, to do something that will say this country is going to be responsible in the management of high-level nu- clear waste in a way that is optimum science, in a way that maximizes our pledge and our responsibility to the citizens of this country. I hope my colleagues will vote with me in tabling the Wellstone amend- ment. We need not kill the process. We need not stick the citizens of Min- nesota with additional millions and millions of dollars where they are going to be forced to either build addi- tional storage facilities or turn their lights out. I yield back the balance of my time. Mr. WELLSTONE. Mr. President, I speak, too, to the people of Minnesota, but will speak first of all to the Sen- ator from Idaho. Mr. MURKOWSKI. How much time is left on the other side? The PRESIDING OFFICER. The Sen- ator from Minnesota has 2 minutes, the Senator from Alaska has 61\u20442 minutes. Mr. WELLSTONE. I will take 1 minute to respond. The Senator wants it both ways. First he says the utility companies are absolutely right, the fund is sufficient to cover the costs. Now he is saying the ratepayers of Minnesota will have to pay all this additional money with his scare stories. First the utility companies say this fund is sufficient to pay the cost. So, if that is the case, Senator, there will be no additional cost. But if the fund is not sufficient, over 10,000 years, then, Mr. President, the question is, who pays the costs? People in Minnesota be- lieve that, as a matter of fact, the peo- ple who benefit pay the cost. I come from a State with a standard of fairness. Nobody wants to see an un- funded liability transferred by sleight of hand to taxpayers everywhere all across this country, period. As far as the environment is con- cerned, Senator, since you were a bit personal and I will not be too personal, I would be pleased to match my envi- ronmental record with your environ- mental record for the citizens of Min- nesota to look at any day. I reserve the balance of my time. Mr. JOHNSTON. Will the Senator yield 1 minute? Mr. MURKOWSKI. I yield 1 minute to the Senator from Louisiana and 1 minute to the Senator from Idaho. Mr. JOHNSTON. Mr. President, I think the Senator from Minnesota has another fundamental misconception and that is the question of the suffi- ciency of the fund. DOE has said they believe the fund is sufficient to build the repository. To quote them, ”The preliminary assess- ment which is still under management review, indicates the fee is adequate to ensure total cost recovery.” That means for building the repository. That is what DOE says. I, frankly, think it is probably not going to be sufficient, in my own view, but that is what they say. No one has said that the fund is suffi- cient to cover both the cost of damages to Northern States of power and other utilities all around the country and to also build the repository. That is pay- ing twice\u2014paying to the utilities for their own, what we call dry cask stor- age, and also building the repository at Yucca Mountain or wherever in the country they decide to build it. That is the fundamental misconcep- tion, Mr. President. If you have these damages caused by the delay that Con- gress puts in, then clearly the fund will not be sufficient to pay for that. Mr. MURKOWSKI. I yield to the Sen- ator from Idaho. How much time is remaining? The PRESIDING OFFICER. Five minutes remains. Mr. MURKOWSKI. I yield 2 minutes. Mr. CRAIG. I thank my chairman for yielding. This is not a question of whether the fund is sufficient. I agree with the Sen- ator from Louisiana. I have spent an awful lot of time studying, and when push comes to shove, obviously the amendment that the Senator from Minnesota would inject into it, the question becomes, is it sufficient or not? What I am talking about are utilities in Minnesota who no longer have stor- age facilities and had relied on the Government to take the high-level waste that they were paying for. My guess is that if this Senator’s amend- ment passes, that comes into question. Do you turn the power off or do you build additional storage facility? Mr. WELLSTONE. Will the Senator yield? Mr. CRAIG. No, I will not yield. The Senator has his own time. My point is simply this: If you have changed the contractual relationship, then you have changed the obligations. If you do that, somebody else has to pay. Who has been paying in Min- nesota? The ratepayers. Who would pay under the amendment of the Senator from Minnesota? The ratepayers. That is what I believe thorough study of this amendment would cause if it were to become law. Mr. MURKOWSKI. Mr. President, I think it is important to recognize we had a very clear understanding. A deal was made, the ratepayers would pay a fee and the Government would take title of the waste, period. That was the arrangement. We cannot and we should not at this time revisit this decision in an attempt to retroactively change the deal. That is basically the basis for the amend- ment from my friend from Minnesota. Mr. President, the decision that the Government would undertake the obli- gation to take title was made in a pre- vious Nuclear Waste Policy Act and is part of the contract. The utility rate- payers have paid the fees under the contract, and again the Government simply has to live up to its end of the bargain. The Government already has title to large amounts, large amounts of spent fuel and waste that will be stored in these facilities. As a practical matter, the Government will be the deep pock- et for liability for these facilities, even if did not take title to civilian fuel. We have competition and the realiza- tion that competition brings increased uncertainty to the electrical industry. That is just a fact of business. The util- ities are the corporate entities and they cease to exist. That is the reason why the Government agreed, wanted and felt compelled to take title to spent fuel in the first place. The Gov- ernment will own and operate these fa- cilities. It is unfair now for the utility ratepayers to be on the hook for a li- ability for facilities that they have simply no control over. So I, again, suggest to the Senator from Minnesota that the Minnesota ratepayers have already paid twice. The Wellstone amendment, if the Court upheld it, would force Minnesotans who get, I might add, 31 percent of their electric energy from nuclear power, to pay again and again and again. If Minnesota were to lose its depend- ence on nuclear energy, what would be the alternative? I think the Senator from Idaho indicated that, last year, nuclear power in Minnesota displaced 118,000 tons of sulfur dioxide, 53,000 tons of nitrogen oxide, and there is simply no other alternative, if Minnesota were to lose its dependence on nuclear en- ergy, other than to generate power from fossil fuel. It is fair to say that, again, Min- nesota nuclear power plants have re- duced Minnesota’s carbon dioxide emis- sions by 3 million metric tons by 1995 and, I think, 55 million metric tons since 1973. What is the alternative to this if we don’t have the nuclear capa- bility that so many\u2014roughly a third\u2014 Minnesota residents depend on? Mr. President, has all time expired on the amendment? The PRESIDING OFFICER. The Sen- ator’s time has expired. The Senator VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00013 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9222 July 31, 1996 from Minnesota has 1 minute remain- ing. Mr. WELLSTONE. Has the Senator completed his remarks? The PRESIDING OFFICER. Yes. Mr. WELLSTONE. Mr. President, this amendment has nothing to do with the Government’s obligation to take possession of the waste. I think the Government should. But if the fund is insufficient, somebody will have to pay for that shortfall, and that somebody is the person who holds title to the waste. DOE will have possession under my amendment, but the utilities will re- tain the title. My colleagues have confused this. Of course, DOE will have possession. But the utilities will pay the title. This is not, Minnesotans and all the people across the country, about turning the lights off. That is not what this amend- ment is about, and my colleagues know it. It is about making sure that tax- payers don’t get stuck with this un- funded liability. The PRESIDING OFFICER. All time has expired. Mr. DOMENICI. Mr. President, I move to table the pending amendment and ask for the yeas and nays. The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second. The yeas and nays were ordered. The PRESIDING OFFICER. The question is on agreeing to the motion to table the amendment of the Senator from Minnesota [Mr. WELLSTONE]. The clerk will call the roll. The assistant legislative clerk called the roll. The PRESIDING OFFICER (Mr. ASHCROFT). Are there any other Sen- ators in the Chamber desiring to vote? The result was announced\u2014yeas 83, nays 17, as follows: [Rollcall Vote No. 257 Leg.] YEAS\u201483 Abraham Ashcroft Bennett Biden Bingaman Bond Bradley Breaux Brown Bumpers Burns Campbell Chafee Coats Cochran Cohen Conrad Coverdell Craig D’Amato DeWine Dodd Domenici Dorgan Faircloth Feinstein Ford Frahm Frist Glenn Gorton Graham Gramm Grams Grassley Gregg Hatch Hatfield Heflin Helms Hollings Hutchison Inhofe Inouye Jeffords Johnston Kassebaum Kempthorne Kennedy Kerrey Kerry Kohl Kyl Lautenberg Levin Lieberman Lott Lugar Mack McCain McConnell Mikulski Moseley-Braun Murkowski Nickles Nunn Pressler Pryor Robb Roth Santorum Sarbanes Shelby Simon Simpson Smith Snowe Specter Stevens Thomas Thompson Thurmond Warner NAYS\u201417 Akaka Baucus Boxer Bryan Byrd Daschle Exon Feingold Harkin Leahy Moynihan Murray Pell Reid Rockefeller Wellstone Wyden The motion to lay on the table the amendment (No. 5037) was agreed to. The PRESIDING OFFICER. The Sen- ator from Alaska is recognized. Mr. MURKOWSKI. Mr. President, I move to reconsider the vote. Mr. THURMOND. I move to lay that motion on the table. The motion to lay on the table was agreed to. AMENDMENT NO. 5051 Mr. MURKOWSKI. Mr. President, I call up an amendment, No. 5051, which is at the desk. I ask it be stated. The PRESIDING OFFICER. The clerk will report. The legislative clerk read as follows: The Senator from Alaska [Mr. MURKOWSKI] proposes an amendment numbered 5051. Mr. MURKOWSKI. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. The amendment is as follows: Strike section 501 and insert in lieu thereof the following: ”SEC. 501. COMPLIANCE WITH OTHER LAWS. ”If the requirements of any Federal, State, or local law (including a requirement im- posed by regulation or by any other means under such a law) are inconsistent with or duplicative of the requirements of the Atom- ic Energy Act of 1954 (42 U.S.C. 2011 et seq.) or of this Act, the Secretary shall comply only with the requirements of the Atomic Energy Act of 1954 and of this Act in imple- menting the integrated management sys- tem.”. Mr. MURKOWSKI. Mr. President, this amendment contains the language previously filed by Senator CHAFEE as amendment No. 4834. This amendment originally suggested by Senator CHAFEE would soften the existing pre- emption language in the bill to clarify that only when another Federal, State, or local law is inconsistent, that is, when another Federal, State, or local law is inconsistent or duplicative with this act, then this act will govern. Oth- erwise, all previous applications of both State and Federal environmental or safety statutes continue to apply. What we have attempted to do here is craft an amendment to ensure that there will be adequate oversight of all Federal and State and local laws, un- less they are an obstacle to carrying out the act, because the act itself stip- ulates that there shall be an interim storage site at Yucca Mountain under specific conditions. Some have ex- pressed concern that this language could be interpreted to provide preemp- tion of other laws in cases where com- plying with those laws were simply in- convenient or impractical. That is not the case, and it does, I think, strain the interpretation of the bill. However, in order to address these questions, we are offering this amend- ment that was suggested by Senator CHAFEE. This language provides the De- partment of Energy must comply\u2014 they must comply\u2014again, with all Fed- eral, State, and local laws unless those laws are inconsistent with or duplica- tive of the requirements of S. 1936. There is an effort to, if you will, dis- guise by generalities the intent of this bill. But it mandates compliance, again, with all Federal, State, and local laws unless they are inconsistent or duplicative, duplicate the require- ments. The Nuclear Waste Policy Act of 1996 contains a carefully crafted regulatory scheme that applies to this one unique nuclear waste storage facility. Think about that: This is consistent because there is no other such facility in the country. So the policy act contains words crafted relative to the regu- latory proposal that applies to only this one, unique, nuclear waste storage facility. Since we have no other, this is designed specifically for this facility. So there is no applicability to any other facility. Our general Federal, State and local laws are intended to apply to every sit- uation generically. So it is only appro- priate that we clarify that where those general laws conflict with this very specific law that we are designing for this interim storage site, that we have carefully drafted, with the input of many concerned people, the provisions of this law, of this act, will control the process. The vast majority of other laws will certainly not be subject to being super- seded and will be complied with. A sug- gestion that the Department of Energy should be forced to attempt to comply with laws that conflict with this act will simply open it up to spending years of litigation on which provisions apply and is simply a recipe, Mr. Presi- dent, for unnecessary delays at the ratepayers’ and taxpayers’ expense and I think would provide full employment for a significant number of lawyers in this country. So I think as we attempt to address the merits of this amendment, we rec- ognize that this is designed to address concerns that somehow this legisla- tion, as crafted, will not cover ade- quately all Federal, State and local laws of an environmental nature that are, obviously, designed for the protec- tion of the public. Mr. President, I retain the remainder of my time and ask if my good friends from Nevada would like to have some time running. If there is any other Sen- ator here who would like to be heard on this amendment, I would appreciate it if they will advise the staff, and we will attempt to accommodate them on time. Mr. BRYAN addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Nevada. Mr. BRYAN. Mr. President, I yield myself 15 minutes. Mr. President, I believe it will be helpful for our colleagues and staffs lis- tening in, because these two amend- ments have been described in the ab- stract. I acknowledge and confess that it has been a number of years since I attended law school, but I must say, VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00014 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9223 July 31, 1996 not even a flyspeck lawyer could make a meaningful distinction between these two provisions. Let me read them, because they are quite simple. Under the language of the amendment that was offered earlier today and was approved by the body, section 501 deals with compliance with other laws. So here is the present state of the legislation as we debate it. It is only a couple of paragraphs, so I think it important it be understood: If the requirements of any law are incon- sistent with or duplicative of the require- ments of the Atomic Energy Act and this Act, the Secretary shall comply only with the requirements of the Atomic Energy Act and this Act in implementing the integrated management system. Any requirement of a State or political subdivision of a State is preempted (1) if complying with such requirement and a re- quirement of this Act is impossible; (2) that such requirement, as applied or enforced, is an obstacle to accomplishing or carrying out this Act or regulation under this Act. So, in effect, what the bill currently does is it bifurcates, it makes reference to Federal laws and then it talks about State preemption. But the operative language with respect to Federal law under the current state of the bill is that if any requirement of any law is inconsistent with the provisions of this act, it shall not apply. By any plain reading of the language that is contained, any reasonable inter- pretation, that is, in point of fact, a Federal preemption. The second part of the existing bill deals specifically with State preemp- tion and has those two provisions. If it is impossible, then you don’t have to comply with it and, second, if it is an obstacle to accomplishing or carrying out the act, you don’t have to comply with it. Here is the so-called amendment that changes all of that, that solves it that deals with the issue. Section 501, which is the amendment offered by our friend from Alaska, says as follows: If the requirement of any Federal, State or local law, including a requirement imposed by regulation or by any other means under such law, are inconsistent with or duplica- tive to the requirements of the Atomic En- ergy Act or of this Act, the Secretary shall comply only with the requirements of the Atomic Energy Act of 1954 and this Act in implementing the integrated management system. Mr. President, I say to my col- leagues, it could not be clearer. One does not have to go to law school to understand that if any other provision of the law is inconsistent with this bill, it does not apply. What provisions are we talking about? We are talking about the entire framework of the environmental laws in America that have been enacted since the early 1970’s. And lest this de- bate be deemed to be of a partisan na- ture\u2014and I assure my colleagues it is not\u2014many of those provisions were en- acted under the Presidency of Richard Nixon. Here is what we wipe out: If, for ex- ample, the Clean Air Act is incon- sistent with the bill that we are going to be asked to vote on for final passage later on today, the entire Clean Air Act does not apply. If the Clean Water Act has any provi- sion that is inconsistent with the pro- visions of this act, it does not apply. If the Superfund law has any provi- sion inconsistent with the provisions of the bill that we are being asked to vote on, it does not apply. If the National Environmental Policy Act contains any provision that is in- consistent with the provisions of the bill that we are going to be asked to vote on, it does not apply. If FLPMA, the Federal Land Policy and Management Act, has any provi- sion inconsistent with this bill, it does not apply. Think about that for a moment. This is truly a nuclear utility’s dream. In ef- fect, these provisions that are the framework of our environmental policy in America, most of which have been enacted over the past two decades, that none of these, not a one, not one has any force of law whatsoever if it is deemed to be in conflict with the provi- sions of this act. I know that a number of my col- leagues have been persuaded, and I re- gret that fact, that there is a great ur- gency and imperative to move nuclear waste. This is all, in my opinion, part of a fabricated, as the Washington Post concluded, contrived argument. They have been at this now for 16 years. If we were looking at the CONGRES- SIONAL RECORD of this very week in 1980, my colleagues, I think, would be surprised, because the thrust of the ar- gument is identical: ”Hey, we’ve got to have this, we’ve got to have it right away. Waive the acts, waive the laws, we have to get this going.” In point of fact, I call this to my col- leagues’ attention. CONGRESSIONAL RECORD, July 28, 1980, 16 years ago: Mr. President, this bill deals comprehen- sively with the problem of civilian nuclear waste. That sounds familiar. It is an urgent problem\u2014 That kind of sounds familiar, too, doesn’t it? Mr. President, for this Nation. It is urgent, first, because we are running out of reactor space at reactors for storage of the fuel, and if we do not build what we call away-from-re- actor storage\u2014 That is a little different. We call it interim storage now, but away-from-re- actor storage is the same basic con- cept\u2014 and begin that soon, we could begin shutting down civilian nuclear reactors in this coun- try as soon as 1983, those predictions coming from the Nuclear Regulatory Commission and the Department of Energy. That is 1980. As of 1983, 13 years ago, not a single nuclear utility in America has shut down because it has run out of space. So when we use ”contrived” and ”fab- ricated,” that is precisely the language to describe it. That is why every environmental or- ganization in America that I am aware of has examined the preemption sec- tions and have concluded that it would be bad, bad public policy. From the Si- erra Club to public-interest groups to Citizen Awareness to the League of Conservation Voters, and many, many more. So I hear my colleagues often talk about this, the proponents of this bill, that this is an important piece of envi- ronmental legislation. Let me be clear. This is an important piece of environ- mental legislation, yes, because it would be a disaster repealing, by impli- cation and by expressed language, all of the provisions that have been en- acted for more than a quarter of a cen- tury as it relates to this process. So that is why in a letter that has been sent to the Democratic leader, the administrator of the Environmental Protection Agency, Ms. Browner, has specifically referenced the fact that this would be a preemption. I quote her letter when she indicates: EPA is also concerned with provisions of S. 1936 and the substitute amendments\u2014 The one that we are addressing right now\u2014 which preempt the environmental protec- tions provided by other environmental stat- utes. Section 501 in the bill and amendment preempts all Federal, state, and local envi- ronmental laws applicable to the Yucca Mountain facility if they are inconsistent with or duplicative of the [specific piece of legislation we are talking about]. So I think that the colleagues who want to say to themselves, well, in this debate who has more credibility with respect to whether or not this is pre- emption? The agency under the law, the Environmental Protection Agen- cy’s Administrator has been very clear. It is clearly a preemption. The environ- mental organizations in America who have looked at this all have concluded that it is a preemption and, for that reason, would be an environmental dis- aster. But may I say, just plain ordinary English, just read it. It could not be clearer. ”If the requirements of any Federal, State, or local law (including a requirement imposed by regulation or by any other means under such a law) are inconsistent with or duplica- tive of the requirements of the Atomic Energy Act * * * or of this Act, the Secretary shall comply only”\u2014only\u2014 ”with the requirements of the Atomic Energy Act * * * and of this Act * * *.” So, Mr. President, I think it is be- yond refutation, beyond argument. Why is that important? My colleague from Nevada, in a moment, will expand upon one aspect of that, and that is the transportation issue. Let me just say, to give a little fla- vor of this, that it is contemplated, under this piece of legislation that would create an interim storage facil- ity, that 85,000 metric tons of fuel would be shipped from existing com- mercial reactors and transported to the Nevada test site in Nevada. That is about 6,200 shipments by truck, about 9,400 by rail. Some have indicated those numbers understate the amount. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00015 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9224 July 31, 1996 Each truck cask weighs 25 tons, each rail cask up to 125 tons. Each rail cask\u2014that is the one that is 125 tons\u2014 contains the radiological equivalent, in terms of long-life radiation, of 200 Hiro- shima bombs. So when we refer to this as a ”mobile Chernobyl,” this nuclear waste is rolling through your commu- nity. My colleague will address that in more detail. Fifty-one million Ameri- cans live within 1 mile of one of the rail or highway transportation routes that would be involved in the trans- shipment of these 85,000 metric tons. I may say that my friend from a pre- vious life\u2014the distinguished occupant of the chair\u2014his State knows well the circumstance because his predecessors, in the aftermath of Three Mile Island, were very much involved in a debate because much of that waste would have gone through the St. Louis metropoli- tan area. I just say that the transportation route which I know my friend fully un- derstands contemplates 6,000 shipments that will move through St. Louis, just to cite one particular State and a large metropolitan area that would be ex- posed to this risk. Let me just repeat, before yielding to my colleague, that each one of those rail casks, 125 tons, with the radioactive equivalent of 200 Hiroshima-sized bombs\u2014now, admit- tedly, the truck casks are slightly dif- ferent; they are 25 tons\u2014so let us say that each one of those shipments roughly would contain the equivalent of 40 Hiroshima-sized bombs in terms of the amount of long-lived nuclear radi- ation that would be involved. So when we are talking about pre- empting all of these laws, this is not just a law school or academic or eso- teric issue. This is something that has been designed by Democrats and Re- publicans alike over a quarter of a cen- tury and is designed to protect Ameri- cans everywhere\u2014everywhere. We are talking about 43 States that would be involved in this transportation route. So I know that many of our colleagues have heard our arguments and are per- haps weary of them. But let me urge them to look at these preemption provisions. They are antienvironment. They are opposed by every environmental organization in America. We are not just talking about some technical, abstract proposition. We are talking about the full panoply of environmental laws designed to pro- tect all Americans. Very clearly, what the amendment offered by the Senator from Alaska would do, it would do the same, in my view, as the language in the present bill and simply say that, if any of these provisions conflict in any way with the provisions of this act, they simply are to be ignored and set aside. I reserve the remainder of my time, and yield the floor. Mr. MURKOWSKI. We have one-half hour remaining. Senator JOHNSTON has indicated that he would like to respond very briefly for 2 minutes, and then I intend to recognize the Senator from North Carolina for approximately 5 minutes. The PRESIDING OFFICER. The Sen- ator has 24 minutes remaining. Mr. JOHNSTON. I thank my col- league for yielding. I want to briefly reply to a statement that was made a little earlier by the Senator from Nevada, quoting me a few years back saying that nuclear power- plants were running out of space. The fact of the matter is, that statement was true. What has happened since that time is two things. First, there has been a reg- ulatory and technological change in al- lowing what is called reracking or a greater density of nuclear rods in the swimming pools, using more boron and a change in licensing. The change in licensing, obviously, was not under the control of the utili- ties, and they have allowed that. I might say that is now at its maximum. Some would say that the NRC is flirt- ing with the safety question by allow- ing such density of reracking. But, in addition to that, Mr. Presi- dent, some utilities have been forced to buy their own dry cask storage at great expense. The Surry VA nuclear plant has been required to do so, the Calvert Cliffs plant in Maryland has been re- quired to do so, and Northern States Power in Minnesota has been required to do so. As mentioned earlier, according to the decision just rendered by the D.C. Court of Appeals, that will become, on January 31, 1998, the responsibility of the Federal Government to pay for. That is really what is at issue here in the interim storage. That is, if we do not build interim storage, then the Federal Government is going to have to pay for the dry cask storage on site for a host of utilities, not just the three which have it now, but for a host of utilities all around the country. So, ratepayers and taxpayers will be paying twice, first, with the nuclear waste fee, and, second, with the dam- ages which will be assessed to the Fed- eral Government to pay for the dry cask storage. That $5 billion additional fee for damages to the Federal Govern- ment can and should be avoided. That is what we seek to do in this legisla- tion. I thank my colleague. The PRESIDING OFFICER. The Sen- ator from North Carolina is recognized. Mr. FAIRCLOTH. Mr. President, if ever we have had a commonsense solu- tion to a complex problem come through the Senate, it is S. 1936. It is a sensible way to deal with the high-level radioactive waste that has been accu- mulating in 110 commercial nuclear units throughout the country. Regrettably, Mr. President, this bill has been met with wave after wave of opposition based on emotion and ulte- rior motives rather than the true sci- entific facts of what we are dealing with. It is now time for this Senate to stand up and make workable decisions using the facts, those facts that we know and have been proven, and ignor- ing the conflicting rhetoric, no matter how loudly it is expressed. As chairman of the Subcommittee on Clean Air, Wetlands, Private Property and Nuclear Safety, I am fully con- fident S. 1936 is a proper approach that will ensure the storage, disposal, and transportation of spent nuclear fuel and will be accomplished under all nec- essary safety requirements. Mr. President, it has been brought up that safety is not really the issue here. Opponents wish to use safety as a stalking horse, because by keeping spent fuel in a state of uncertainty, they can argue that no more nuclear plants should be built and current plants should be closed. The strategy is very simple: Confuse the debate when you do not have a le- gitimate argument. This is really not about disposal of spent fuel. What we are really talking about here is the fu- ture of nuclear energy as a generator of power in this Nation. The Federal Gov- ernment has a legal responsibility to take the utilities’ spent fuel. This is a legal responsibility. Last week, the U.S. Court of Appeals for the District of Columbia cited the Department of Energy must begin ac- cepting this waste by January 1, 1998, an obvious ruling considering the clear requirements of the Nuclear Waste Pol- icy Act of 1982. It seems that just about everybody understands this except the Department of Energy. Taxpayers are not paying for spent fuel disposal. Fulfilling their part of the bargain, electric utility customers have contributed $12 billion into the nuclear waste fund, $344 million from North Carolina alone. Now, it is time for the Federal Government to live up to its part of the bargain. Utilities do not have enough onsite spent fuel storage space to permit elec- trical production to continue for the entire life of their plants, which is 40 years, and possibly many, many more. The Federal Government has to fulfill its responsibility and start taking the spent fuel. If we continue to accept delays, inex- cusable delays that have plagued this program, the same utility customers will be forced to pay twice and finance the expansion of new construction at existing plants to store spent fuel. Those who advocate delaying central- ized storage believe it is better, in- stead, to store spent fuel at 110 nuclear units around the country than in one area. If ever there was a false idea as to the safety of storing it, it is to have it in 110 different locations. Mr. President, let me address the concern that has been raised about the transportation of nuclear fuel. The Federal Government currently trans- ports spent fuel from foreign research reactors in the name of reducing the risk of proliferation. We do it very well. The Navy moves spent fuel for temporary storage in Idaho, and utili- ties transport fuel between stations. Transporting and storing fuel is one of the few things we do very well. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00016 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9225 July 31, 1996 There is absolutely no reason for any further delay, and there are many com- pelling reasons to move forward. There is absolutely no reason to delay any further. There are many compelling reasons we need to move forward. We must pass S. 1936 to demonstrate fiscal responsibility and to fulfill the prom- ises made by the U.S. Government on which, in good faith, the Nation’s elec- trical utility customers have relied. Once again, let me repeat, this is not about the waste. It is not about the dis- posal of nuclear waste. It is about the future of nuclear energy in this coun- try. That is what the opposition is fighting. The PRESIDING OFFICER. The Sen- ator from Idaho controls 15 minutes and 45 seconds, and the other side has 15 minutes. Mr. REID. Mr. President, if anyone has any question about where the money is on this issue, where the big lobbyists stand, all we need to do is walk out this set of doors to my right prior to the next vote being called and you will find a sea of lobbyists. This is one of the heaviest lobbying jobs we have ever seen. There are always promises about this bill, through the various incarnations of the legislation, that it is going to get better. Mr. President, 1271 was in- troduced. They said it was not quite good enough and tried to make it bet- ter. Thereafter, 1936 was introduced and they said it was a better bill. Now we have a number of substitutes that allegedly will make it better. None of them make it better. I have been a member of the Environ- ment and Public Works Committee my entire time in the Senate. I love work- ing on that committee. I have served as chairman of the subcommittee that dealt with chemicals and pesticides. We held significant hearings on a drug called Alar, put on apples, grapes, cher- ries, to prolong their lifetime. It was poisonous. It made people sick, we be- lieved, and is no longer used. We had hearings on lawn chemicals, fungicides. Mr. President, I am, almost for lack of a better word, offended by someone saying that this amendment will ease the environmental laws. The environ- mental laws are preempted. They take away all the Federal laws, laws we have worked on. I cannot imagine, for example, the chairman of the full com- mittee thinking that legislation like this is good, legislation that I know he has fought for on a bipartisan basis, in- cluding the Clean Water Act, Clean Air Act, Safe Drinking Water Act, Super- fund\u2014these laws are all preempted by S.1936. My colleague, the Senator from Ne- vada, did a good job of explaining why this does not answer the problems. It is as bad with this amendment as without the amendment. We have talked about this legislation being unnecessary, and it is unneces- sary. The Nuclear Waste Technical Re- view Board is not biased toward either side. A group of 12 scientists, eminent scientists, said that transportation of nuclear waste at this time is unneces- sary and wrong. Their conclusions were driven by careful and objective exami- nations of all the issues. They con- cluded that centralization of spent nu- clear fuel, high-level nuclear waste, makes no technical sense, no safety sense, or financial sense. They found that there is no need for off-site interim storage. They also de- cided that transportation under this bill is extremely risky. Why do they say that? They say it because it doesn’t permit what is absolutely necessary\u2014 that is, planning and preparation to make sure that the public health and safety is protected during this massive undertaking. Mr. President, we are not talking only about the people of Nevada, we are talking about the residents of 43 States. Nobody ever responds to the transportation issue. People are con- cerned in this Chamber about garbage being hauled across State lines. I don’t know how many sponsors there are on the legislation, but I am one of those that think there should be some rules about transporting garbage. Well, this is real garbage. This is real garbage. This is worse than any plastics, or paper, or hazardous waste that you might throw in the garbage. This is real garbage. In the past, we have had roughly 100 shipments per year of nuclear waste, but they have gone short distances, and most of these were between various places in the eastern part of the United States in reprocessing facilities. Mr. President, this legislation is a concern to people all over the country. I received in my office a letter from someone in St. Louis, MO. I did not ask for the letter. I got it in the mail. A resident of St. Louis, MO, sent to me in the mail a newspaper from St. Louis. It is dated the middle of June. This news- paper is the Riverfront Times. One of the lead stories in this publication is ”Gateway to the Waste, Not to the West.” This article says a number of things. One of the things it says is this: No matter how slim the odds of an acci- dent, the potential consequences of such a move are cataclysmic. Under the plan, tons of radioactive materials would likely pass through the St. Louis area by either truck or rail a few times a week for the next 30 years. We guess about 6,000 truck and train loads would pass through this site. The article goes on to say: Each cask would contain the radiological equivalent of 200 Hiroshima bombs. Alto- gether, the nuclear dunnage would be enough to kill everybody on earth. That is why people all over the coun- try are concerned about this nuclear poison. ”Safety last” is the hallmark of this legislation. This is not a Nevada issue; it is a national issue. Why? It is a national issue because we have train wrecks that have occurred all over the United States. Look at these pictures. Here is one in Ledger, MT. If you want to talk about a wreck, this is a real wreck. This is a mutilated train outside Ledger, MT. We also had one thousands of miles away, a recent train wreck that oc- curred in Corona, CA. This closed down I 15 for about 4 days, off and on, which is the main road between Los Angeles, CA, and Las Vegas, NV. Fire burned for a long period of time. Also, Mr. President, we had a train wreck that occurred in Alabama a lit- tle over a year ago. Some of the people watching this will remember. A barge, in effect, nicked this train trestle, and the next time the train went through, it did not go all the way through. It dumped people in the river, killed peo- ple. People are concerned about transpor- tation, and they should be concerned about transportation, because we have been told by those who know that we should not be transporting nuclear waste. There is no need to do it. The Nuclear Technical Review Board said there is no reason to do it. They are 12 nonpartisan scientists who are trying to do the best thing for the country. Mr. President, this spent nuclear fuel\u2014we talk about Nevada, but it originates someplace. We have here a chart that we will talk about later. It shows the funnel effect of transpor- tation. Thousands, tens of thousands of loads of spent nuclear fuel will be shipped and eventually wind up in a tiny spot in Nevada. But in the process of getting there, these thousands of shipments will go into 43 different States. Mr. President, these shipments start somewhere. They don’t start in Ne- vada. We don’t have nuclear fuel. This is a risk to all States of the United States, not just Nevada. The industry and the sponsors of this bill would like you to believe that transportation is risk free. Well, it isn’t. There have been truck and train accidents involv- ing all kinds of things, including nu- clear waste. We have been fortunate that there has not been a great disper- sion of this nuclear poison. There will be more accidents because there will be tens of thousands of more loads of this. The industry will tell you that the probability of an accident is not great. Well, probabilities have an inevitable result, and if you push them long enough, the adverse will occur. The day before Chernobyl, the probability of such an accident was extremely low. The accident happened and the con- sequences were enormous. Now, the probability of another one is much more significant than it was. The same potential exists here. Mr. President, under this legislation, as the Nuclear Technical Review Board said, we have not made the necessary investments to assure capable re- sponses to accidents. I talked about a few of these train wrecks. We know that if they are moved, they are sub- ject to terrible violation. We know that the casks have been developed to be protective of fire. Yes, fire for 30 min- utes. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00017 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9226 July 31, 1996 We know that recently\u2014in fact, last year\u2014we had a train that burned for 4 days. What will a cask do that is safe for 30 minutes of exposure to fire at temperatures of 1475 degrees? Well, it is pretty tough to understand that when we know that diesel fuel burns at an average temperature of 1800 degrees. Most of the trucks and trains use die- sel fuel. Diesel fuel has had occurrences where the heat was 3200 degrees Fahr- enheit. So why only 30 minutes? Why 1475 degrees? It simply will not protect us, Mr. President. They also say, well, you can get in a wreck\u2014they have a little film in the industry, which they will show you. You will see this truck firing down and the cask shoots off of it. Well, the casks are safe if the acci- dent occurs if you are only going 30 miles an hour. If you are going faster, you have big problems. The cask will break, and you are in trouble. I don’t know how many would think that this train accident here occurred when the train was going 30 miles an hour. The damage to this vehicle had to have occurred at more than 30 miles an hour. We all know\u2014because we have watched trains go by\u2014that trains do go 30 miles an hour once in a while, but not very often. So having protection at 30 miles an hour simply doesn’t do the trick. We have residents, Mr. President, along this route\u2014over 50 million of them\u2014within a mile of where this poi- son is going to be carried. The term ”mobile Chernobyl” has been coined for this legislation, and rightfully so. A trainload of waste may not contain the potential that Chernobyl provided\u2014 with death and destruction in its wake, and people are still dying from that \u2014but the risk is still there. People know the risk of this poison. This is something that we have talked about early on, about people waiting after one of these accidents to find out what dreaded disease they are going to get. The odds are that they will get something. We have had that experi- ence in Nevada. We know that the above-ground nuclear tests made a lot of people sick, Mr. President. Most of the downwinders were in east-central Nevada and southern Utah. They got real sick. So transportation is some- thing that has not been answered, it has not been responded to, and it should, because transportation of nu- clear waste is something that we sim- ply do not know how to do yet. Mr. CRAIG addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Idaho, [Mr. CRAIG] is recog- nized. The Senator from Idaho has 15 minutes 16 seconds. Mr. CRAIG. What remains on the other side? The PRESIDING OFFICER. The Sen- ator from Nevada has 2 minutes 11 sec- onds remaining. Mr. CRAIG. Mr. President, will you signal me when I have spoken for 10 minutes? Mr. President, we have heard a series of statements by my colleague from Nevada that I think the least you could say about is that they were subtly in- flammatory. The worst you can say about them is that they are shocking; alarming. The only problem is, if they were true, they might be that. But they are not true. Science argues it, the law argues it, and the facts argue it. There is nothing worse than a pic- ture of a train wreck which my col- league from Nevada has put forth; very dramatic. If there had been a cask of spent nu- clear fuel in the middle of that train wreck, it would still be there and it would be whole and it would be unbreached. That is the evidence. While my colleague from Nevada would argue that these tests are at 30 miles an hour, what it shows is that, in speeds in excess of 150 miles an hour, there might be a potential of breach. My colleague from Nevada is right. You rarely see a train that moves less than 30, although I have never seen one moving at 150. Mr. REID. Mr. President, will the Senator yield for a question? Mr. CRAIG. I am happy to yield for a question; a question, not a statement, or I will take my time back. Thank you. Mr. REID. Will the Senator inform me and the rest of the Senate where the 150 miles an hour information comes from? Mr. CRAIG. The 150 miles an hour we talk about in relation to the science that was developed to an ”unyielding surface.” I believe that is the term that is used in the test. That was the result of the calculation which was a product of Sandia National Labora- tory, so, I guess I could say, from the best engineers in the country who know how to look at the science and the engineering involved and come up with those calculations. The most I can say\u2014and I think my colleagues deserve to hear this\u2014is that the language that has been offered and the statements that have been offered this afternoon by my colleague from Nevada as it relates to transportation are simply misleading. By the way, when you talk of Chernobyl or you talk of Hiroshima and you talk of explosions, casks do not explode, period. There is no one in the scientific field today who would make that argument. If they were breached, they would release radioac- tivity, but they do not explode, and it is unfair to in any way paint the verbal picture that that kind of risk would be involved. What the paper from Missouri did not say was that waste now traffics through St. Louis, MO, and it has for a good number of years in its route across the country to the State of Idaho, or to other States where the waste ultimately finds a temporary storage destination. So for this to be something new in the city of St. Louis is not true. What is important to say about it is that in all the years that it has been trafficked by our Federal Government, there have been no accidents that resulted in any radioactive spill. That is what is im- portant to understand here. I think that is the issue that is so critical as we debate this. The amendment we have before us is very clear. It says that DOE must com- ply with all Federal, State, and local laws unless they are inconsistent, or duplicative with the requirements of S. 1936. My colleagues from Nevada could list all of the Federal laws in the country; every one of them. You can just pick and pull. The point is that, if they are duplicative, then we have already met the test. Why ask somebody to repeat and repeat again only for the exercise, the futility, if you have already made the determination? Would we list all of the defense laws in the country? Pick any law you want. That is not the issue. The issue is the question of compli- ance being responsible, being environ- mentally safe, and humanly safe. I must say that, based on the record that we have already demonstrated in this country by the transporting of the high-level waste of the Defense Depart- ment, we have a spotless record. So it is impossible to argue unless you really wish to only characterize this for the purposes of a motion. Mr. BRYAN. Will the Senator yield? Mr. CRAIG. I have no more time to yield. Thank you. In this issue, emotion sometimes works and scare sometimes works, and I understand that. I have no concern about that. The citizens of my State are very frustrated, as I know the citi- zens of the State of Nevada are. But what the citizens of Idaho have to admit is that in the years that nuclear waste has been transported to Idaho or through Idaho there has never been a spill. It has been transported safely. Idaho has been concerned about it and has repeatedly checked on it, and as a result of all of that, it has been done in a very safe way. The Hazardous Materials Transpor- tation Act that S. 1936 complies to, the responsibility that States and authori- ties have under that act and that the local communities have under that act to assure the safest of transportation, is exactly what we are achieving here. It is my intent, and it is the intent of the Senator from Alaska and the Sen- ator from Louisiana, to assure this Senate that within the capacity of the law and in the capacity of science and engineering today, this is safe. History proves it to be safe. There is no way to argue an example where it has failed or has been unsafe. At this time, I would like to yield 1 minute to my colleague from Lou- isiana. The PRESIDING OFFICER. The Sen- ator from Louisiana. Mr. JOHNSTON. I thank my col- league for yielding, Mr. President. I simply wanted to quote from the Nuclear Waste Technical Review Board VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00018 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9227 July 31, 1996 of March 1996 on the question of trans- portation risk. The Technical Review Board has been quoted by both sides here today, but this bears directly on the question. It says: The Nation has more than three decades of experience transporting both civilian and DOE-owned spent fuel. In 1997, 471 shipments were made, 444 of which were by truck. In the 1980’s, 100 to 200 such shipments were typically made each year. Numerous anal- yses have been performed in recent years concerning the transportation risks associ- ated with shipping spent fuel. The result of these analyses all show very low levels of risk under both normal and accident condi- tions. The safety record has been very good and corroborates the low risks estimated analytically. In fact, during the decades that spent fuel has been shipped, no accident has caused a radioactive release. Again, from the Nuclear Waste Tech- nical Review Board of March 1996. Mr. MURKOWSKI. How much time is remaining? The PRESIDING OFFICER. The Sen- ator from Alaska has 6 minutes, and the other side has 1 minute left. Mr. MURKOWSKI. I will make a rel- atively short statement. Mr. President, again I would like to refer specifically to what this amend- ment does and what it does not do. The amendment simply states that if there are provisions of law that are in- consistent with specific terms of this bill, then this bill is applicable. This bill will govern. Now, the Senators from Nevada would ask that the Department of En- ergy attempt to comply with incon- sistent laws. I can only assume that they ask this because they know it is impossible to do. That is a catch-22. That is simply a recipe for delay, a recipe for additional expense, a recipe for additional litiga- tion and full employment for a lot of lawyers. Instead, we offer a responsible provision which clarifies that while the Department of Energy will comply with this act, if any Federal, State, or local law is not in conflict with this act, those laws will be complied with. I reiterate\u2014this is a unique, one-of-a- kind facility. That is why we are here today. We are designing laws to fit this facility. That is why we are debating this legislation. It is not designed to do anything more than address this facil- ity. Other laws are designed for a broad breadth of activities. This is unique. It contains a carefully crafted regulatory program, as I have said, governing this facility only. The position of the Sen- ators from Nevada, I think, results in confusion and attempts to thwart the will of Congress as expressed in this very unique piece of legislation de- signed for one thing. Let me just mention the transpor- tation aspect because I have had an op- portunity to observe transportation of high-level nuclear waste in Great Brit- ain, in France, and Sweden. To suggest that American technology cannot safe- ly develop a system and casks nec- essary to transport this waste is simply unrealistic. It is moving by rail in France. One can go into a nuclear plant and see cars on the sidings that were designed to carry the casks. It is moved in Scandinavia by special ships that have been built that traverse the shores of Sweden unescorted. They are in casks. They are specially crewed from the standpoint of the training, but it is not Government employees, it is a shipping line, and they have a proven record of safety. We have seen this high-level nuclear waste moved in Europe by highway in casks with appropriate measures. If Members will recall, there was a thought given a few years ago to the utilization of a Boeing 747 400 to move high-level waste from the Orient to Eu- rope, primarily because the Japanese were interested in bringing their waste back to France for reprocessing. So you would be basically moving waste that contains plutonium. The question quite legitimately came up, can you design a cask to withstand a free fall at 30,000 feet? And the answer was, yes, it can be done. It will cost a good deal of money. What we are talking about here is a realization that we have moved this material for an extended period of time throughout Europe. We have moved it in the United States to a lesser degree. But if we adopt this legislation and if Yucca is the interim site for a reposi- tory, to suggest that we cannot move it safely defies realism, defies the experi- ence that other countries have had, and I think it sells American tech- nology short. I see no other Senator at this time who desires to speak, and I reserve the remainder of my time pending the dis- position of the pending amendment. Mr. BRYAN addressed the Chair. The PRESIDING OFFICER (Mr. CAMPBELL). The Senator from Nevada [Mr. BRYAN] is recognized. Mr. BRYAN. I thank the Senator. Let me respond briefly. The Senator from Idaho was unable to respond to my question because of time limita- tions, but he was going on at some length as to why the Senators from Ne- vada would insist that there, in effect, be a duplicative experience when the law already covered it. A point I want to make very em- phatically is the Senator from Idaho is quoting from only a part of the pre- emption language. The preemption lan- guage, in effect, says that if the re- quirements of any Federal, State, or local law are inconsistent with\u2014incon- sistent with\u2014or duplicative. So the point I made, I think, is a telling one and one that is irrefutable, in my opin- ion, namely that all of these environ- mental laws that we talked about, if there is a conflict, do not apply. I must say that in terms of public policy, putting aside one’s view for the moment of how you feel about nuclear waste and any urgency that may or may not be present, what a disastrous public policy it is to wipe out the envi- ronmental laws, and that is why every environmental organization has op- posed this language and that is why the Environmental Protection Agency has strongly resisted it. Let me talk a moment about the casks, and we will talk a lot more about transportation later on in this debate. The senior Senator from Lou- isiana cites the numbers that have been shipped around the country. I am sure he is absolutely accurate. But we are talking about something of a scale and dimension unprecedented any- where in the world\u201485,000 metric tons, 16,000 shipments. We are not talking about 100. We are talking about 16,000 shipments. The Nuclear Regulatory Commission claims that the cask de- sign will fail in 6 of every 1,000 rail ac- cidents. Built into this, the laws of probability tell us that with the heightened and elevated volume, you are going to have an accident and a failure. Finally, I would just like to say with respect to the casks, what has driven this entire debate about nuclear waste over the years is how to do it cheaper, how to do it faster. That is where the nuclear utilities are coming from. And so the new casks that are going to be used to store this have not yet been de- signed and they will be less expensive and subject to less rigorous standards. The PRESIDING OFFICER. The Sen- ators’ time has expired. The Senator from Alaska has 1 minute and 6 seconds. Mr. MURKOWSKI. Has all time ex- pired? The PRESIDING OFFICER. All time of the Senators from Nevada has ex- pired. Mr. MURKOWSKI. I say to my friend relative to his reference to an unprece- dented scale which he suggests will occur, that factually is just not so. As a matter of fact, the French alone have moved 30,000 metric tons of spent fuel\u2014 that is spent nuclear fuel. This is the same amount we currently have, or ap- proximately the same amount we have in the United States today. I remind my colleagues of one other thing. While it is true we do not have support from the environmental move- ment in this country, the reality is that most of those groups are opposed to the generation of power by nuclear energy. What they do not do is recog- nize the obligation that since we are nearly 22 percent dependent on nuclear energy, we are going to have to meet the demand with something else. Nu- clear power opponents want to termi- nate the industry, by not allowing the States to have the availability of stor- age under State licenses. So when one looks at the environmental concern, you have to recognize the environ- mentalists are not really meeting their obligation, and that is to come up with an alternative. The PRESIDING OFFICER. The Sen- ator’s time has expired. All time has expired. Mr. MURKOWSKI. Mr. President, it would be my intention to ask for a voice vote on this amendment unless there is an objection. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00019 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9228 July 31, 1996 The PRESIDING OFFICER. Is there an objection? If not, the question oc- curs on agreeing to Murkowski amend- ment No. 5051. The amendment (No. 5051) was agreed to. Mr. MURKOWSKI. Mr. President, I move to reconsider the vote. Mr. JOHNSTON. I move to lay that motion on the table. The motion to lay on the table was agreed to. AMENDMENT NO. 5048 Mr. MURKOWSKI. Mr. President, I call up amendment numbered 5048 which is at the desk and ask that it be stated. The PRESIDING OFFICER. The clerk will report the amendment. The bill clerk read as follows: The Senator from Alaska [Mr.MURKOWSKI] proposes an amendment numbered 5048. Mr. MURKOWSKI. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. The amendment is as follows: Strike subsections (h) through (i) of sec- tion 201 and insert in lieu thereof the fol- lowing\u2014 ”(h) BENEFITS AGREEMENT.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall offer to enter into an agreement with the City of Caliente and Lincoln County, Nevada con- cerning the integrated management system. ”(2) AGREEMENT CONTENT.\u2014Any agreement shall contain such terms and conditions, in- cluding such financial and institutional ar- rangements, as the Secretary and agreement entity determine to be reasonable and appro- priate and shall contain such provisions as are necessary to preserve any right to par- ticipation or compensation of the City of Caliente and Lincoln County, Nevada. ”(3) AMENDMENT.\u2014An agreement entered into under this subsection may be amended only with the mutual consent of the parties to the amendment and terminated only in accordance with paragraph (4). ”(4) TERMINATION.\u2014The Secretary shall terminate the agreement under this sub- section if any major element of the inte- grated management system may not be com- pleted. ”(5) LIMITATION.\u2014Only 1 agreement may be in effect at any one time. ”(6) JUDICIAL REVIEW.\u2014Decisions of the Secretary under this section are not subject to judicial review. ”(i) CONTENT OF AGREEMENT.\u2014 ”(1) SCHEDULE.\u2014In addition to the benefits to which the City of Caliente and Lincoln County is entitled to under this title, the Secretary shall make payments under the benefits agreement in accordance with the following schedule: BENEFITS SCHEDULE [Amounts in millions] Event Payment (A) Annual payments prior to first receipt of spent fuel …………. $2.5 (B) Annual payments beginning upon first spent fuel receipt …. 5 (C) Payment upon closure of the intermodal transfer facility ….. 5 ”(2) DEFINITIONS.\u2014For purposes of this sec- tion, the term\u2014 ”(A) ‘spent fuel’ means high-level radio- active waste or spent nuclear fuel; and ”(B) ‘first spent fuel receipt’ does not in- clude receipt of spent fuel or high-level ra- dioactive waste for purposes of testing or operational demonstration. ”(3) ANNUAL PAYMENTS.\u2014Annual payments prior to first spent fuel receipt under para- graph (1)(A) shall be made on the date of exe- cution of the benefits agreement and there- after on the anniversary date of such execu- tion. Annual payments after the first spent fuel receipt until closure of the facility under paragraph (1)(C) shall be made on the anniversary date of such first spent fuel re- ceipt. ”(4) REDUCTION.\u2014If the first spent fuel pay- ment under paragraph (1)(B) is made within 6 months after the last annual payment prior to the receipt of spent fuel under paragraph (1)(A), such first spent fuel payment under paragraph (1)(B) shall be reduced by an amount equal to 1\u204412 of such annual payment under paragraph (1)(A) for each full month less than 6 that has not elapsed since the last annual payment under paragraph (1)(A). ”(5) RESTRICTIONS.\u2014The Secretary may not restrict the purposes for which the pay- ments under this section may be used. ”(6) DISPUTE.\u2014In the event of a dispute concerning such agreement, the Secretary shall resolve such dispute, consistent with this Act and applicable State law. ”(7) CONSTRUCTION.\u2014The signature of the Secretary on a valid benefits agreement under this section shall constitute a commit- ment by the United States to make pay- ments in accordance with such agreement under section 401(c)(2).”. Mr. MURKOWSKI. Mr. President, this amendment is an effort to clarify the issue of consideration to be pro- vided to Lincoln County, NV. Specifi- cally, it clarifies that assistance money provided to Lincoln County, NV, may be provided to the city of Caliente, NV. Caliente is within Lin- coln County and is the actual site of the intermodal transfer facility au- thorized by the bill. The intermodal transfer facility is where the cask con- taining spent nuclear fuel would be offloaded from the trains and placed upon the heavy-haul trucks for the final leg of transport to the interim storage facility at the Nevada site. These can be the off highway type, heavy rigs that operate on very, very large tires and make virtually no foot- print. That technology is well known. That equipment, off highway, is used in large mineral excavations and various other large commercial earth moving activities that are of an off-highway nature. Caliente is northeast of the Nevada test site. The reason for it being se- lected as the intermodal transfer is that point avoids the transportation of casks through the Las Vegas area. The elected officials of the city of Caliente, in Lincoln County, have taken what I consider to be a very rea- sonable, very practical approach, a conservative approach to the storage of this nuclear waste in Nevada. I think they recognize the inevitability. In spite of the difficulty with our con- cerns of our friends from Nevada, this waste has to go somewhere. You just cannot throw it up in the air and ex- pect it to stay there. Nevada is the pre- ferred site, it is a site where we have had over 50 years of nuclear testing of various types, where it has been ex- pressed on this floor we have had test nuclear explosions that have taken place actually below the water table. So clearly, as we look at the alter- native, the Nevada test site is the log- ical site for the interim repository. So I think what we see here is that Lincoln County, the city of Caliente, has recognized the inevitability of this and they have simply attempted to en- sure that the interests of their citizens are protected, and I think that is an obligation that we have. They have maintained, throughout the process, that disposition, despite a series of legal attacks, some rather harsh, on their right to represent their citizens and their freedom of speech by the State of Nevada. I ask unanimous consent the text of a petition, signed by 286 citizens of the city of Caliente, Lincoln County, sup- porting this position be printed in the RECORD. There being no objection, the text of the petition was ordered to be printed in the RECORD, as follows: We the undersigned, support recommenda- tions for maximizing benefits and mini- mizing risks as outlined in the City of Caliente\/Lincoln County Nevada Joint Reso- lution 1 95. As residents of the State of Ne- vada, the United States Constitution pro- vides that if the Nuclear Waste Policy Act is going to be amended to allow transportation of spent fuel rods through Lincoln County and the City of Caliente, we are entitled to provide input to any such proposals. Such input would request oversight of safety issues and receipt of benefits that may be as- sociated to any transportation and\/or stor- age facilities located within Lincoln County. Mr. MURKOWSKI. I was going to read, ”We the undersigned support rec- ommendations” and the rest of the statement, but it is cut off by the Xerox machine, so we will try to get that and enter it into the RECORD. I ap- preciate the President’s willingness to have that printed in the RECORD. In conclusion, I certainly commend the citizens of Caliente and Lincoln County as a whole. I urge the pending amendment be adopted. I reserve the remainder of my time. The PRESIDING OFFICER. Who yields time? The Senator from Nevada [Mr. BRYAN] is recognized. Mr. BRYAN. Mr. President, I yield myself 2 minutes. Mr. President, let me respond. It is true some citizens of Caliente em- braced this. From the time of the Old Testament, there are some who are prepared to forfeit their birthright for a pottage of lentils. I must say, I be- lieve my friends and neighbors in Caliente, those who have advocated this project, are misled and misadvised. I simply point out if 286 becomes the standard, I am sure we could get 286 Alaskans or Louisianians or others to embrace this. It is part of the nuclear energy industry’s attempt to, in effect, buy it. Caliente is a wonderful commu- nity. It has endured tremendous hard- ship in recent years. When I was Gov- ernor they wanted to have an inciner- ator and import hazardous wastes to be incinerated. These are folks who are VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00020 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9229 July 31, 1996 absolutely desperate. I vetoed that leg- islation. The present Governor has done similarly. I understand and sympathize with the economic plight of my fellow Ne- vadans who live in Caliente, but I must say they have been used and badly used by the nuclear industry with this promise about putting a little money out. For my senior colleague and I, this is not about money, this is about pub- lic health and safety of 1.8 million peo- ple, and there can be no compromise on that issue. That represents the broad public view in Nevada. I yield the floor. The PRESIDING OFFICER. The Sen- ator from Nevada [Mr. REID] is recog- nized. Mr. REID. Mr. President, the Nuclear Waste Technical Review Board, in March 1996, recognized the problems with transportation. They recognized, as the senior Senator from Louisiana indicated, that there have been small loads of nuclear waste that traveled very short distances. But they go on to say\u2014and that is the whole point, that they are in effect legislated out of busi- ness, because they said, ”the Board sees no technical or safety reason to move spent fuel to a centralized stor- age facility.” Caliente of course means hot. It is not because it is hot weather. It is be- cause they have hot water in the ground there. That is how this town got its name. The city of Caliente rep- resents 0.05 percent of the people of the State of Nevada, 0.05 percent. They are desperate. We have 17 counties in Ne- vada. There is no county that is in more desperate economic condition. Their mineral abilities are gone. Their agricultural interests are very sparse. A lot of land is owned by the Federal Government. And they have really struggled. Caliente was a rail- road town. The railroad, in effect, has moved out on them. It does not stop there anymore. People who used to work for the railroads do not work there anymore. It is in deep, deep eco- nomic depression. Senator BRYAN talked about one thing they wanted. They also wanted to start a cyanide plant there. They will take anything, I am sorry to say, they are so desperate for money. Caliente represents, I think, a sub- ject we want to talk about here. Caliente is remote. It is about 150 miles from Las Vegas. Nevada is, surpris- ingly, the most urban State in Amer- ica. Mr. President, 90 percent of the people, approximately, live in urban areas, the Reno-Las Vegas areas. Only about 10 percent of the people live in rural Nevada, as we remember it. We have a lot of areas in Nevada that are lonely. We have the loneliest road in Amer- ica in Nevada. But Nevada is not the only place that has remote areas. Utah, eastern Utah is extremely remote. I have driven through parts of Colorado that are as remote as any place in Ne- vada ever was, as are parts of Arizona and New Mexico. The reason I mention that is we need to understand that not only is transportation a problem for the safety of carrying these canisters\u2014 and I say to my friend from Idaho, the 150 mile an hour\u2014they may have run a test at 150 miles an hour, I do not know about that. But I do know the canisters have been certified by the Nuclear Reg- ulatory Commission to this point for 30 miles an hour and for burning for 30 minutes. That is fact. So the 150 miles an hour, I do not know where that came from. They may have run some tests. But certification is for burning at 1,475 degrees for 30 minutes and speeds of 30 miles an hour. We are concerned about unforesee- able accidents. We have pictures of train wrecks, Ledger, MT, Vernon, CA, Alabama. All over the country they have about 600 train wrecks a year. Most of them, thank Heavens, are not bad, but some are disastrous, like the one that burned for 4 days last year, like the one that closed the freeway be- tween Las Vegas and Los Angeles for 4 days. So we have bad train wrecks. I am not talking about what I am going to say in just a few minutes, be- cause of what took place with TWA, and what took place in Atlanta with the bomb. I talked about this 3 weeks ago prior to these horrible incidents. I want the RECORD to show I spoke earlier about these and other threats before these tragic event at the Olympics and TWA incident off the coast of New York. No one wants to exploit the pain, the suffering, and the anguish of those peo- ple. Those of us who serve in the Con- gress, especially serve the western part of the United States, we seemingly live on airplanes. So, when these accidents happen, we all look inward. But I must speak to the threat of ter- rorism, because the nationwide trans- port of spent nuclear fuel will provide targets of inconceivable attraction to terrorists, both foreign and, I am sorry to say, domestic; we have people who are terrorists within our own country, as indicated in the Oklahoma City bombing and probably in the Atlanta Olympic bombing. We have enemies and they are not all outside the boundaries of this country. For whatever reason, though, these en- emies detest parts of our country, and the foreign operations detest what our country stands for and its values. Our very freedoms are threatened. They dwell on hitting points of interest to the American public. That is why the White House is such a target. That is why this building is such a target. That is why we have a police force of almost 2,000 men and women who protect the people who work in these buildings and the tourists who come to this Capitol complex. That is why the Capitol Po- lice have animals that sniff out explo- sives, animals that are around at all times looking at cars that come in and out, sniffing to find out if there are ex- plosives. We have bomb detection units. We have bomb disassembly units. All over this Capitol complex, there are plainclothes officers pro- tecting the people who come into this building. There are people who would do any- thing to cause terror to this country. So, Mr. President, we have to eliminate whatever we can that allows them tar- gets. There are many clandestine foreign interests. We know that. Some are led by leaders of countries. They want to publicize their existence and promote their goals through outrageous acts of blatant terror and destruction. What better stage could be set for any of these enemies of our country than a trainload or a truckload of the most hazardous substance known to man, clearly and predictably moving through our free and open society? You cannot move a 125-ton object on a train that is full of nuclear waste without having it marked and without notifying people it is coming through. These shipments, of necessity, must pass through our most populated cen- ters, which provides opportunity for a successful attack for a terrorist to strike terror and public confidence in our form of Government. Earlier today, I talked about some- thing I received in the mail from St. Louis. It is a newspaper called Gateway to the Waste. It talks about how in St. Louis they are afraid of nuclear ship- ments there. Each cask would contain a radio- logical equivalent of 200 Hiroshima bombs. All together the nuclear ton- nage would be enough to kill everybody on Earth. These shipments would not only pass through populated centers but through remote and inaccessible territory. Remember, I say to my col- leagues of the Senate, that the acci- dent that occurred in Arizona occurred in a very remote area. A person went out there undetected and simply took some tools and took the track apart. When the train came over, the tracks spread and death and destruction was in its wake. The opportunity to inflict widespread contamination to engender real health risk to millions of Americans is appar- ent. And people say, ”Oh, no one would do that.” What happened in Japan? Sarin gas was collected and dispersed. They did not do a very good job. They only wound up killing dozens of people and causing respiratory problems and other forms of illness to hundreds and hun- dreds of people. That was a failure, even though they caused death and de- struction to that many people. If they had done it right, it would have killed thousands. We must prepare for the realities ac- companying a massive transportation campaign that would be required to consolidate nuclear waste at a reposi- tory site. We must deter our enemies through readiness and competent re- sponse before we undertake this dan- gerous program. One of the things the Nuclear Waste Technical Review Board said is we are VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00021 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9230 July 31, 1996 not ready for this. The Governors’ As- sociation hired some people to conduct a test to see how the State of Nevada\u2014 this was not done by the State of Ne- vada, but the Governors’ Association did it to find out how Nevada is pre- pared\u2014now remember, Nevada has dealt with things nuclear before with aboveground and underground nuclear testing\u2014how we would deal with nu- clear waste transportation through Ne- vada if something went wrong. We are not ready, not even close. If we are not ready, you can imagine how other States are. We must assure our citizens we only have to undertake this dan- gerous venture once. It is paramount we do it right the first time. There is a growing danger in this country from both domestic and inter- national terrorism. Exposure of this substance can lead to immediate sick- ness. It is much worse than sarin gas. Early death, and for less acute expo- sure, to years of anxiety and uncer- tainty as the exposed populations wait helplessly for the first onset of thyroid cancer, bone cancer, leukemia, liver and kidney cancer, and on and on. We know that we must be prepared, and we are not prepared. The com- prehensive assessment of its capacity to respond and manage a radiological incident in Nevada did not work out well. That is the way it is all over the country. Mr. President, why are we concerned about terrorist incidents? We have weapons that are almost unbelievable. Most of us in this Chamber have gone shooting with a shotgun. We know how big a shotgun shell is. Here we have a shell not even double the size of a shotgun shell, and this is a shaped charge warhead terrorist tool. it is 11\u20442 inches in diameter and 4 inches long and, as described by scientists, it kind of works like a watermelon. When you squeeze the seed of a watermelon it squeezes the liner material and squirts out. This will pierce 5 inches of steel. That is what this chart shows. Mr. President, if the Presiding Offi- cer wanted to buy a weapon to spread terrorism around the United States, he could do it. It might take you a week, 2 weeks, but if you have money, you can buy from an arms dealer. I have pictured one weapon. We have lots of other weapons we can show, but this one weapon is a Russian version of a portable antitank weapon. This weapon is pretty accurate. At 330 yards, you can hit a target the size of my fingers here. It weighs 15 pounds. That is all it weighs. This weapon is a little more powerful than the one I just showed you, because this will fire 330 yards. It will go through 16 inches of steel. The typical rail canister of nuclear waste is about 4 inches of steel plus some lead and some water. A piece of cake for this weapon that I just showed you. But, Mr. President, weapons are all over, easy to pick up and purchase, weapons weighing 16 pounds, 22 pounds, penetrating up to 3 feet of steel. You might say, no one could afford this. These weapons you can buy for $5,000, $10,000. That is all they cost. Buy a few shells with them. These are antiarmor weapons. The reason, Mr. President, we should be concerned about this is that all nu- clear waste is funneled into one small part of our country. It starts out this big with tens of thousands of ship- ments, but the more it goes, by the time it gets to Colorado, the circle is that big, and all through these parts of the country, Mr. President, you keep narrowing the scope. It is becoming easier and easier the farther west you go, the more remote it becomes, and the more concentrated volume of nu- clear waste will be shipped there. If I were a terrorist organization, this would be a piece of cake. These weapons will fire up to 300 to 400 yards. They are in very remote areas. You can go places in Nevada, Arizona, and Colo- rado where people do not go for days. Along those railroad tracks, you can be out there, camp, and all you are going to be interrupted by are the trains coming by. That is why they have been unable to catch the person in Arizona because he could have been gone for a day before the tracks separated, or longer. So what are we going to do? I think what we should do is do what the Nu- clear Waste Technical Review Board did and say, let us not subject the world and the country to the spread of this nuclear poison. We have not in- vested in the transportation planning. And the preparations are absolutely necessary for the safe transportation of this dangerous material through our heartland. We have not addressed the spectrum of threats to safe transportation and not developed a transportation process that guards against these threats and are not ready to meet the emergencies that could develop because of a nuclear accident or a terrorist act. The Nuclear Waste Technical Review Board recog- nizes our lack of readiness. That is one of the reasons they argued against the transportation program proposed by this legislation. The lack of readiness, preparedness and careful planning is one of the main reasons I urge my col- leagues to vote against this ill-con- ceived, unnecessary and premature ap- proach to managing nuclear waste for our country. Mr. President, we are talking about a substance that is the most poisonous substance known to man. We have been told by preeminent scientists, Dr. John E. Cantlon, Michigan State University; Dr. Clarence R. Allen, California Insti- tute of Technology; John Arendt, of Arendt Associates; Dr. Gary Brewer, University of Michigan; Dr. Jared Cohon, Yale University; Dr. Edward Cording, University of Illinois, and on and on. These people, 12 in number, are emi- nent scientists with no political agen- da, scientists saying we are not ready to move this stuff. It is safe to leave it where it is. Leave it where it is. So we should leave it where it is. This legislation is unnecessary. It is being pushed by the nuclear lobby. That is why it is being done, to save the nuclear industry money and pass the expense off to American taxpayers. They are always in a rush\u2014always in a rush. It took us many years before the permanent repository. We got it where science would control what went on. Lawsuits had to be filed. Legisla- tion had to be passed. But that is not fast enough for them. Now they do not want to wait for science, which will come back and tell us in 1998 how the Yucca site is going to be. They are un- willing to wait for that because they want to save a buck. They want to save a buck by passing the responsibility off to the Federal Government way ahead of time and, in the process, making this country vul- nerable to accident by rail or car, and opening our country to more terrorist acts. The terror we have known in the past pales any time we think about what could happen if a terrorist was able to penetrate one of these nuclear shipments. The PRESIDING OFFICER. Who yields time? Mr. MURKOWSKI addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Alaska is recognized. Mr. MURKOWSKI. I thank the Chair. I would like to comment about the remarks made by my good friend from Nevada relative to the concern we all have, the legitimate concern we have over terrorism. He makes the case that, you know, there is a terrorist threat and therefore we ought to leave it where it is. Let us look at where it is, Mr. Presi- dent. The chart behind me shows it is in 41 States. There are 81 sites out there. Is it logical to assume that we are better off to leave it there where it is exposed in 41 States at 81 sites or put it in one place\u2014one place\u2014out in the Nevada desert, where we have had over a period of some 50 years extensive nu- clear tests, time and time again, an area where it is concentrated and can be supervised and guarded, namely, the one site in Nevada? It just does not make sense if you are going to argue the merits of terrorism to have it all over the country, as I have indicated on this chart\u201441 States, 81 sites\u2014or put it in one place where you can monitor, you can control it, you can guard it. You can take the nec- essary steps to ensure that the threat from terrorism is at a minimum. I do not know an awful lot about bal- listics, Mr. President, but I know some- thing about a shotgun because I hunt ducks. I cannot comprehend a type of a shotgun that can go 300 yards and pierce through 5 inches of steel. What I do know is what the Department of En- ergy has supplied us with. They have done eight sabotage studies. One of those included a 4,000-pound ammonium nitrate bomb that was VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00022 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9231 July 31, 1996 similar in size, same makeup of what was used in the Oklahoma Federal building. They placed it in a container to see if they could pierce the cask. It was not breached, Mr. President. Another test\u2014unfortunately, they are not able to disclose this type of technology because it is a black pro- gram, but they stated that this device was 30 times larger than an antitank weapon. Although this weapon made a small hole in the container, there was no significant release of radioactivity. Make no mistake about it, if there is a puncture, it is not going to blow up. The suggestion was made, you are going to have the equivalent of so many times of Hiroshima; if you are going to penetrate that cask, the radio- active material can come out. But it is very, very heavy. As a consequence, its tendency is to remain in the imme- diate area. But the point is, these casks are designed to withstand, if you will, the exposures associated with an accident, whether it be a railroad, whether it be a ship, or whether it be a highway. I would like to turn a little bit to at- titudes prevailing in Nevada. As I indi- cated earlier, we have some 268 signa- tures from Caliente. I have been able to obtain the completed Xerox of the one that I started on earlier, Mr. President, and was cut off. I think it is important to read what these people said, and that has been inserted in the RECORD. We the undersigned, support recommenda- tions for maximizing benefits and mini- mizing risks as outlined in the city of Caliente\/Lincoln County Nevada joint reso- lution 1 95. As residents of the State of Ne- vada, the United States Constitution pro- vides that, if the Nuclear Waste Policy Act is going to be amended to allow transportation of spent fuel rods through Lincoln County and the city of Caliente, we are entitled to provide input to any such proposals. Such input would request oversight of safety issues and receipt of benefits that may be as- sociated to any transportation and\/or stor- age facility located within Lincoln County. That is the point of this amendment, Mr. President, to provide that assist- ance. Mr. President, I ask unanimous con- sent that a letter from the Inter- national Association of Fire Chiefs, dated July 26, be printed in the RECORD. There being no objection, the letter was ordered to be printed in the RECORD, as follows: INTERNATIONAL ASSOCIATION OF FIRE CHIEFS, Fairfax, VA, July 26, 1996. Hon. FRANK H. MURKOWSKI, Chairman, Energy and Natural Resources Com- mittee, U.S. Senate, Washington, DC. DEAR CHAIRMAN MURKOWSKI: The Inter- national Association of Fire Chiefs (IAFC) fully supports S. 1936 and urges its prompt passage. Nuclear fuel has been accumulating and temporarily stockpiled since 1982 at numer- ous staging locations throughout the United States. The stockpiling of nuclear waste in so many removed locales renders them most vulnerable to potential sabotage and ter- rorist attacks. A plan to remove this nuclear fuel and coordinate its transport to a single secure designated interim storage facility at Yucca Flat, NV, in accordance with prudent planning, training, and preparation can be a safe, logical and acceptable alternative. S. 1936 offers a plan to remove this spent fuel and coordinate its transport to a single secure interim storage facility. With proper planning, training and preparation, this spent fuel can be transported safely and effi- ciently over the nation’s railways and high- ways. We appreciate your leadership on this dif- ficult but important issue. Very truly yours, ALAN CALDWELL, Director, Government Relations. Mr. MURKOWSKI. It states:. DEAR CHAIRMAN MURKOWSKI: The Inter- national Association of Fire Chiefs (IAFC) fully supports S. 1936 and urges its prompt passage. Nuclear fuel has been accumulating and temporarily stockpiled since 1982 at numer- ous staging locations throughout the United States. The stockpiling of nuclear waste in so many removed locales renders them most vulnerable to potential sabotage and ter- rorist attacks. That is what I said before. Do you want it over here in the 41 States in over 80 sites? The fire chiefs say, no, put it in one site. A plan [they further say] to remove this nuclear fuel and coordinate its transport to a single secure designated interim storage facility at Yucca Flat, NV, in accordance with prudent planning, training, and prepa- ration can be a safe, logical and acceptable alternative. Senate bill 1936 offers a plan to remove this spent fuel, coordinate its trans- port to a single secure interim storage facil- ity. With proper planning, training and prep- aration, this spent fuel can be transported safely and efficiently over the Nation’s rail- ways and highways. It is signed by Alan Caldwell, direc- tor, government relations, from the International Association of Fire Chiefs. Here is a petition, Mr. President, to the President of the United States, signed by 600 workers associated with the Nevada test site. I previously en- tered the specific petition and nar- rative in the RECORD, but let me read what it says. This is signed by over 600 workers at the Nevada test site. We who have signed this petition live in the State of Nevada. Many of us work at the Nevada Test Site. Some of us work on the Yucca Mountain project. The [Nevada Test Site], an area larger than the State of Rhode Island, was chosen as a nuclear weapons testing site by Presi- dent Truman. Its dry climate and remote lo- cation made it ideal for weapons testing 45 years ago. Those same factors make the NTS ideal for storing high level nuclear waste and spent nuclear fuel. There is now, in southern Nevada, a resident work force that is well trained and experienced in dealing with nu- clear materials. We, who are part of that work force, believe the NTS presents a solu- tion for the United States for the temporary and permanent storage of high level nuclear waste and spent nuclear fuel. It is a well se- cured site, it is remote, it has already been utilized for nuclear purposes, it has an expe- rienced and well-trained work force and we as Nevada workers, want it. We urge you to work with Congress to make the NTS the solution to this Nation’s nuclear waste dilemma. There you have it, Mr. President. How much time is remaining? The PRESIDING OFFICER. The Sen- ator from Alaska has 17 minutes 8 sec- onds. Mr. MURKOWSKI. I read the fol- lowing letter from the Southern Ne- vada Building & Construction Trade Council, dated July 23, a letter to Sen- ator CARL LEVIN. DEAR SENATOR LEVIN: I am writing to thank you for your support of Senate Bill 1936 and I urge you to continue that support. I am a representative of the many working men and women of Nevada who strongly sup- port the passage of S. 1936. Although we more often than not support the positions of Senator Harry Reid and Sen- ator Richard Bryan, our views on this par- ticular issue differ significantly from theirs. On behalf of my members I urge you to con- tinue your support of S. 1936, as reflected by your recent vote in favor of cloture. We sin- cerely thank you for your position. As way of introduction, I am President of the Southern Nevada Building and Construc- tion Trades Council, Vice President of the Nevada AFL CIO, and serve as an appointee of Nevada Governor Bob Miller to the Ne- vada Commission on Nuclear Projects. I have followed the nuclear waste issue in Nevada for many years. My years of experience at the Nevada Test Site goes back to a time when Nevada elected officials actually sought the opportunity to store high-level waste at the Test Site. The 18,000 craftsmen that I represent, as well as over 100,000 members of the Nevada AFL CIO, feel strongly that the Yucca Mountain Project is safe and can be good for Nevada. We recognize, perhaps better than most, the importance of health and safety in dealing with high-level waste and nuclear materials. We have dealt with it for many years and as the workers handling this mate- rial we have the most to lose if this program is not safely run. Based upon our past experi- ence in Nevada, we have a great deal of con- fidence that this facility will be safe. Nevadans are pragmatic people and I be- lieve that, contrary to statements made by some Nevada officials, many if not most Ne- vadans would not contest the location of this facility in Nevada. Remember that we have tested over 900 nuclear devices in the Nevada desert with little local opposition. Like the nuclear weapons testing program the nuclear waste program is essentially a non-issue among rank and file Nevadans. We find it ex- tremely difficult to imagine that you could possibly find a more willing political climate anywhere else in the United States for this type of facility. We understand that you may have been asked, by members of the Nevada delegation, to oppose legislative efforts to move the nu- clear material storage program forward. An immense amount of scientific study has been conducted at Yucca Mountain and it has con- clusively found the location to be a superior one for this type of facility. Some officials from Nevada have made a concerted effort, using every conceivable means, to thwart this scientific and environmental program. Enclosed you will find petitions signed by many Nevadans who support passage of this legislation. We intend to meet with the White House shortly to express our position and to transmit the petitions. Our message to the President will be: Move this program forward\u2014do not allow partisan politics to stand in the way of a solution to this prob- lem. Any other approach would be both bad politics and bad public policy. As a fellow American, a fellow Democrat, and as a representative of the working men and women of Nevada, I urge your continued support of S. 1936. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00023 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9232 July 31, 1996 It is signed by Frank Caine, president of the Southern Nevada Building Con- struction & Trade Council. Mr. CONRAD. Will the Senator yield? Mr. MURKOWSKI. I do not attempt to speak, obviously, for the people in Nevada. That is the job of the Senators from Nevada. I do think it represents a significant voice to be heard and to be brought to the floor. I yield on the Senator’s time. The PRESIDING OFFICER. The Sen- ator from North Dakota has no time. Mr. MURKOWSKI. I yield very brief- ly for a question if it is on my time be- cause we are running short. Mr. CONRAD. I have been increas- ingly concerned about the notion of the terrorist threat, and I am very inter- ested in the answer of the Senator from Alaska. It strikes this Senator, when you are talking about 100 different locations in the shipment of nuclear fuel from around the country to a single spot, that the risk of a terrorist threat in- creases dramatically; I just ask the Senator from Alaska, in talking to se- curity people\u2014in fact, I talked to Se- cret Service people about when the President is most vulnerable, and they told me they believe the President or anybody that they are guarding is most vulnerable when they are in tran- sit. In fact, they feel they are most vul- nerable when they are getting in or out of the vehicle. I was thinking how that relates to the circumstances we face here. We saw that with President Reagan and the as- sassination attempt when he was get- ting into a vehicle. Rabin was assas- sinated when he was getting into a lim- ousine, because you know where a per- son is, you know where they will be, that is when they are most vulnerable. It strikes me that the same thing may be the case with respect to the transporting of these materials, and I am interested in the reaction of the Senator from Alaska to that. Mr. MURKOWSKI. If I may respond to the Senator from North Dakota, that is the very point we are talking about. Terrorism is a threat, but we have this currently in 41 States at 81 sites, and the ability to secure those sites from terrorism in its current form is much more difficult than having it in one central spot, because that is where it will be permanently stored, ei- ther until Yucca Mountain has a per- manent repository or, during the in- terim, until the permanent repository is set. What we are looking at here is one site, one storage capability, one set of experienced personnel to guard against terrorist activity, as opposed to the chart, which I will again leave for the Senator to view, 41 States and 81 sites. It just simply makes sense. The Sen- ator from North Dakota was not here when I entered into the RECORD a letter from the International Association of Fire Chiefs which simply says: . . . so many removed locales renders them most vulnerable to potential sabotage and terrorists attacks. A plan to remove this nu- clear fuel and coordinate its transport to a single secure designated interim storage fa- cility at Yucca Flat, NV, in accordance with prudent planning, training, and preparation can be a safe, logical and acceptable alter- native. So this is the very concern we are talking about. Obviously, you are not going to store in these sites forever. That is a given. You have to take it out of these sites at some point in time. The Federal Government has collected almost $12 billion from the ratepayers. It has entered into a contractual agree- ment. We are talking about reneging on the agreement, basically, if we don’t go ahead with it, and leaving it where it is for an undetermined period of time until then you decide to move it. It is inevitable that you are going to move it. We are talking about here\u2014once you move it, the threat of terrorist ac- tivities associated with it are much re- duced because you don’t have that number of sites in that exposure in the 41 States. So the logic, I think, speaks for itself. I think, from the standpoint of terrorism, exposure is less dramatic if you have it at one site where it is easi- er to secure. I think my time has about expired. The PRESIDING OFFICER (Ms. SNOWE). The Senator has 8 minutes re- maining. Mr. CONRAD. Might I ask my col- league to yield me some time so I might pursue this? Mr. BRYAN. How much time does my friend require? Mr. CONRAD. A couple of minutes. Mr. MURKOWSKI. How much time remains on the other side? The PRESIDING OFFICER. There are 9 minutes 50 seconds remaining. Mr. BRYAN. I yield 3 minutes to the Senator from North Dakota. Mr. CONRAD. Madam President, I can understand, with respect to a ter- rorist threat, that if you had it at one site, it is easier to guard and secure than at 81 sites. What really raises questions, at least in my mind, is when this material is in transit, because now you are not talking about 81 sites, you are talking about an infinite number of places where you are vulnerable to some kind of terrorist threat. So, to me, it is not a question of 81 sites versus 1 site, it is a question of being in transit from 81 sites to 1 known place. If I were trying to put myself in the po- sition of a terrorist, and I knew that all this material has to go through a series of locations to arrive at one des- tination, that makes it very vulnerable to a terrorist attack. So the question I really have is, aren’t you most vulner- able when this material is in transit? Mr. MURKOWSKI. I respond by ask- ing my friend from North Dakota, is it not inevitable that at some point in time, in order to meet the contractual commitment, you are going to have to move this anyway? Mr. CONRAD. Yes. Mr. MURKOWSKI. So it is still going to be vulnerable to terrorist attacks. Mr. CONRAD. I think, without ques- tion, my own view is that, obviously, this material is going to have to be moved at some point. But, on the other hand, perhaps the technology will be developed that would allow you to deal with this material at those locations and not have to be transporting it to a single site in one place in the country, where you are vulnerable. It would seem that it would be easy for a ter- rorist to look at the map and say, ”Here are the sites it is coming from, and here is the one place on the map it is going to.” You could draw a series of sequential rings and, with a high de- gree of confidence, know this material is going to pass through there, and you are, in that way, highly vulnerable to a terrorist threat. Mr. MURKOWSKI. Madam President, the Senator from\u2014\u2014 Mr. BRYAN. On whose time is the Senator from Alaska responding? Mr. MURKOWSKI. On my own time. First of all, the Senator from North Dakota is suggesting that we dispose of it on-site somehow through advanced technology. That suggests reprocess- ing, which we don’t allow. So that is basically a nonalternative. Some peo- ple suggest that is somewhat unfortu- nate because, in France, they do re- process, reinject. They don’t bury the plutonium like we do. They put it back in the reactors and burn it. Now, the inevitability of the question of whether or not you leave it where it is and subject yourself to the potential terrorist exposure in 41 States and 81 sites\u2014that suggests that you are not going to have the same degree of secu- rity and experience in all these sites because you cannot possibly cover that many sites. So you put it at the one site in Nevada where you can provide the security. So the terrorism exposure in Nevada is, for all practical purposes, eliminated. Your exposure is shipping them, granted. That is why the casks are designed as they are designed. As I said in an earlier statement, the Army has tested a device 30 times larg- er than an antitank weapon, and al- though it made a small hole in the cask, there was no release of radioac- tivity. So you can’t eliminate the en- tire risk, but you can eliminate, to a large degree, the technical design\u2014this is a heavy thing; the terrorists are not going to run off with it. They have to do something very significant. Obvi- ously, there is going to be security as- sociated with the movement. I think we are talking about 10,000 casks. I defer to the Senator from Louisiana who, I think, wants to address the Sen- ate. Mr. JOHNSTON. Madam President, I appreciate my colleague yielding to me. They have done studies on these shippings, and what they have found is that upward of 10,000 to 20,000 ship- ments have already been made. They say numerous analyses have been per- formed in recent years concerning transportation risks associated with shipping spent fuel. The results of VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00024 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9233 July 31, 1996 these analyses all show very little risk under both normal and accident condi- tions. The safety record has been very good in corroboration of the low-risk estimate analytically. In fact, during the decades that spent fuel has been shipped, no accident has caused a ra- dioactive release. What they have done is they have made models both on the computer and they have done actual tests. For example, there was a chart up there that showed that they hit a cask at 80 miles an hour with a train, and they dropped them from buildings and all that. In none of these was there a risk. I might add that we ship nuclear war- heads all the time. We don’t ship those actually in these kind of casks. Frank- ly, I don’t know how they ship them, but they are not sealed off as these casks are. They have gone to the ex- tent\u2014in one instance, they said a ship- ping cask has been subjected to attack by explosives to evaluate the cask and spent fuel response to a device 30 times larger than an antitank weapon. They attacked one of these with a weapon 30 times larger than an antitank weapon. The device would carve approximately a 3-inch diameter hole through the cask wall that contained spent fuel, and it was estimated to cause a release of about one-third of an ounce. ”No transportation”\u2014this is a quote\u2014”can be identified that would impose any- where near the energy per unit volume caused by this explosive attack.” So even if you get a weapon 30 times larger than an antitank weapon and at- tack the cask with it, all it does is have a release of about one-third of an ounce. So I submit to my colleague that, I guess you can postulate some accident where some meteorite might come down and happen to hit a railroad train in just the right way and some- how that could harm somebody. But they have postulated about every con- ceivable risk, including a weapon 30 times larger than an antitank weapon, and they postulate only one-third of an ounce of release\u2014that, plus the fact that there has never been a release of radioactivity in 4 decades of these transportations, from 10,000 to 20,000 shipments in this country alone, not to mention those around the world. I would say there are things to worry about. But I honestly do not believe that transportation is one of them. Mr. CONRAD. Let me ask my col- league. Mr. REID. Madam President, I would be happy to yield to my friend, but I want to respond directly to the state- ments made by the Senator from Lou- isiana. This is pure doubletalk. The fact of the matter is that the weapon that they used to test was a device designed to destroy reinforced concrete pillars and piers. The weapon was not designed to destroy a structure like a nuclear waste canister. In fact, the weapon used for testing performed its military mission so poorly that our military forces abandoned this device for a bet- ter design. The weapon used, even though it was not much good, did per- forate the canister. The hole is small, and there was leakage, but it was not a great deal of leakage. But everyone looking at this knows that the weapon that has been used\u2014 any of the weapons that I have on this chart are manufactured all over the world\u2014would perforate this thing like that\u201416 inches of steel, 36 inches of steel, 28 inches of steel. This is, in all due respect to the Sen- ator from Louisiana, who is a tremen- dous advocate for the nuclear industry, part of their doubletalk. They have not been willing to test these canisters the way they should be tested, and the Nu- clear Regulatory Commission has said to this point that all they have to do is to be able to withstand a maximum of 30 miles an hour and a fire for 30 min- utes. That is totally inadequate not only for accidents, but for terrorist ac- tivities. I yield now to my friend from North Dakota. Mr. CONRAD. Madam President, I thank my friend from Nevada. I just go back to this question. It does strike me, given the rise of ter- rorist activity not only in this country but around the world, that when you put in motion from 80 different sites around the country, from 41 States, thousands of these casks headed for one location, that if you were a ter- rorist organization\u2014it would take very little calculation to figure out where this is most vulnerable\u2014you would have the potential here for a terrorist organization when this stuff is most vulnerable, when it is in motion, when it is in transit, to attack either a train or a truck and get possession of this material and thereby be able to threat- en dozens of cities in America. I must say, when I have talked to se- curity people\u2014again, I talked to a per- son who was in the Secret Service\u2014 with respect to when they think some- thing that they are guarding is most vulnerable, they said without question it is when it is in transit, when it is on the move. That is when it is the most vulnerable. Mr. JOHNSTON. Madam President, will the Senator yield? Mr. CONRAD. Yes. Mr. JOHNSTON. Is the Senator sug- gesting that we leave it permanently at the 70-plus sites around the country? Mr. CONRAD. No. This Senator is suggesting that maybe we ought to re- visit the question of reprocessing in this country. That is an alternative. Maybe we ought to consider various other technological alternatives that may present themselves. I am just rais- ing the question. With what is going on in terms of terrorist threats abroad and in this country, are we doing a wise thing by setting up a cir- cumstance in which this material starts to move from 80 sites around the country to one defined location in America? That troubles me. I really am struggling myself with the question of how to respond to that. I must say it has made me rethink the whole question of reprocessing. I won- der sometimes if we have made wise choices in this country. Mr. JOHNSTON. If I may answer that, because the Senator is a very thoughtful Senator and it is a fair question. First of all, let me say, on the issue of reprocessing, you would need a cen- tral facility for reprocessing anyway. So that does not solve the transpor- tation problem. Second, I would say to my friend that the studies that have been done\u2014and you have four decades of experience with transportation of this fuel with never a radioactive release, plus you have a lot of postulated accidents. For example, they have taken actual acci- dents and made the studies of what that would have done to nuclear waste had it been involved. In one, in April 1982, there was a three-vehicle collision involving a gasoline truck trailer, a bus, and an automobile which occurred in a tunnel in which 88,000 gallons of gasoline caught fire and burned for 2 hours and 42 minutes. For 40 minutes the fire was at 1,900 degrees Fahr- enheit. If a nuclear waste canister had been involved in this accident, it would have suffered no significant impact damage, and the fire would not have breached the canister. There would have been no radiological hazard. The spent fuel in the canister would not have reached temperatures high enough to cause fuel cladding to fail. We go on here to other postulated ac- cidents. A train containing both vinyl chloride and petroleum\u2014the tanker cars derailed and caught fire. The fire burned for several days and moved over a large area. There were two explo- sions. Had nuclear waste canisters been on the train, they would not have sus- tained any damage from the explosion. They might have been exposed to the petroleum fire for a period ranging from 82 hours to 4 days. Even so, the canisters themselves would not have been breached. Mr. CONRAD. Will the Senator yield? Mr. BRYAN. Madam President, we have just a little time left. Mr. CONRAD. I would like to con- clude with this question. My understanding is that those are accident scenarios. What concerns this Senator is a terrorist scenario when terrorists launch an attack on these materials when they are in transit and most vulnerable. I must say that I think it is something that we have to be concerned about. Mr. JOHNSTON. The point is this, though: They have tested it with weap- ons 30 times bigger than antitank weapons with direct hits. That caused a breach. Only a third of an ounce comes out. There are many, many much more lucrative targets, by orders of magnitude more lucrative for terror- ists, everything from chemicals that travel throughout the country every day, from LP gas to others which are many, many times easier to breach and VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00025 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9234 July 31, 1996 would cause a much bigger problem. The essential thing is that nuclear waste is not a volatile matter. Mr. BRYAN. Madam President, I say to my colleague that this is on my time. How much time is left? The PRESIDING OFFICER. Approxi- mately 2 minutes. Mr. BRYAN. If the Senator uses his own time, I have no problem with it. But I am not prepared to yield any more time. Mr. JOHNSTON. I would be finished in just a moment. Mr. MURKOWSKI. Madam President, I ask unanimous consent that the other side have 2 more minutes total and that we may have 1 minute on this side. The PRESIDING OFFICER. Is there objection? Without objection, it is so ordered. Mr. JOHNSTON. Madam President, nuclear waste traveling the country is, first of all, solid in form. It is sealed in a cask that, as I say, if you get a direct hit by something 30 times more power- ful than an antitank weapon, what do you get? You get a third of an ounce of release. What does that do? It does not explode. It is not gaseous. It does not get down to the water supply. It is, as these matters go, relatively benign. And, even so, you cannot imagine a sit- uation other than a terrorist attack where there is any release at all. So I submit that there are a lot of things to worry about, but transpor- tation is not one of them. Mr. MURKOWSKI. If I may, Madam President, take the last 30 seconds in response to the Senator from North Dakota, we have seen in Europe the movement of over 30,000 tons of high- level nuclear waste in countries that are exposed to terrorism at a far great- er theoretical sense than the United States. There has never been one in- stance of a terrorist activity associated with movement by rail, highway, or ship. Terrorists are not going to nec- essarily look at terrorizing a shipment when they can move into nerve gas and weapons disposals that are moving across this country\u2014all types of mate- rial that are associated with weapons \u2014where they can create an incident of tremendous annihilation on a popu- lation. This is very difficult because it is se- cure, in a cask; it is guarded; and it has been proven it has moved through other countries, particularly Great Britain, France, in Scandinavia, and to some extent starting in Japan. So there is a risk associated with every- thing. But we have not had terrorist activity in this area because there are other more suitable sites. The PRESIDING OFFICER. The Sen- ator’s time has expired. Mr. BRYAN addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Nevada. Mr. BRYAN. I thank the Chair. Mr. President, I appreciate the state- ment of the senior Senator from North Dakota, his expression of concern about the vulnerability that we have to terrorism. It is a fact of life in 20th century America. All of us apprehend, lament, and regret it, but it is a very real fact. I must say, just as the bad guys in the Old West always knew where the stagecoach was most vulner- able\u2014it was not when it was at the of- fice; it was not when it was being un- loaded at the bank\u2014it was out on the road, so too when we are talking about thousands and thousands of miles of rail and highway shipments. There are so many places that a terrorist could find a point of vulnerability. The con- cerns that my colleague from North Dakota mentioned I believe are very real and very genuine, so I thank him very much for his explanation. Let me just make one other point here. It is something we constantly hear about, that this bill will result automatically in not 109 sites but 1 site. Mr. President, that is just abso- lutely false, absolutely false. Each of the nuclear reactors that are currently generating power have spent fuel rods contained in the pools. They remain there at least for 5 years. If we assume that every reactor in the country is going to close, which is certainly not the predicate of the Nuclear Regu- latory Commission, under the current existing licenses some nuclear utilities would remain open at least until the year 2033. So all this bill would do in terms of concentrating storage would add not 109 but you would have 110 sites, namely the new facility that they have proposed to construct at the Nevada test site for interim storage. So this ad, I know, the nuclear utili- ties love. They spend millions of dol- lars in advertisements in magazines and publications that give one the im- pression, wow, if we just opened up this facility at the Nevada test site there will not be nuclear waste stored any place in the country. That is wrong. May I inquire as to how much more time the Senator from Nevada has? The PRESIDING OFFICER (Mr. HELMS). All time has expired. Mr. MURKOWSKI addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Alaska. Mr. MURKOWSKI. Mr. President, I ask for a voice vote on the amendment. The PRESIDING OFFICER. The question occurs on agreeing to amend- ment No. 5048 offered by the Senator from Alaska. The amendment (No. 5048) was agreed to. Mr. MURKOWSKI. Mr. President, I move to reconsider the vote. Mr. JOHNSTON. I move to lay that motion on the table. The motion to lay on the table was agreed to. The PRESIDING OFFICER. Are there further amendments to the bill? Mr. REID. Mr. President, if I could just confer for a few minutes with my friend from Alaska and inform the rest of the Senate, what we are trying to work out now\u2014and we do not know we can do it, but we are trying to\u2014on this side we have three amendments. We want to vote on one of those amend- ments, a recorded vote. We would like that, if it is OK\u2014we have a Democratic conference that is starting at 4. We would like to do that at 3:30 and then have final passage at approximately 5 o’clock and dispose of the other amend- ments in the interim by voice vote. I have spoken to the Senator from Alaska. I know he has to confer with others to see if that can be worked out. Otherwise, we can do something else. In the meantime, we will go ahead and offer an amendment. Mr. MURKOWSKI. Mr. President, I conferred with the Senator from Ne- vada and my colleague, Senator JOHN- STON, and I want to check with our leadership. It is my understanding the next amendment will be offered by the Sen- ators from Nevada, and they would want a rollcall vote on that amend- ment? Mr. REID. No, the next amendment, we will offer and talk about it a little bit and have a voice vote. Mr. MURKOWSKI. Voice vote. The one after that you would like\u2014 Mr. REID. The one after that we would\u2014 Mr. MURKOWSKI. Might I ask whether the Senators intend to use their full 30 minutes? Mr. REID. We would be willing to work out something after this so the time is equally balanced. Mr. MURKOWSKI. I will entertain then the amendment that is about to be offered that would require simply a voice vote, and that will give me an op- portunity to check with the leadership on this side and then respond to the Senators concerning their proposal. I thank the Chair and yield to my colleague from Nevada. The PRESIDING OFFICER. The Sen- ator is recognized. Mr. BRYAN. I thank the Chair. AMENDMENT NO. 5075 (Purpose: To specify contractual obligations between DOE and waste generators) Mr. BRYAN. I send an amendment numbered 5075 to the desk and ask for its immediate consideration. The PRESIDING OFFICER. The clerk will report. Mr. MURKOWSKI. If I may interrupt, I assume there is acknowledgement that the Senators contemplate a voice vote prevailing on our side? Mr. BRYAN. That is correct. We are not requesting that a rollcall vote occur with respect to amendment 5075. Mr. MURKOWSKI. The voice vote that the Senators are proposing, they are assuming we would prevail? Mr. REID. I would say to my friend from Alaska, he has not heard the ar- gument yet. He may be persuaded. Mr. MURKOWSKI. I will take my chances. The PRESIDING OFFICER. The clerk will report. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00026 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9235 July 31, 1996 The legislative clerk read as follows: The Senator from Nevada [Mr. BRYAN] pro- poses an amendment numbered 5075. Mr. BRYAN. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. The amendment is as follows: At the appropriate place in the bill, insert the following new section: ”SEC. . CONTRACT DELAYS. ”(a) UNAVOIDABLE DELAYS BY CONTRACT HOLDER OR DEPARTMENT.\u2014Notwithstanding any other provision of this Act, neither the Department nor the contract holder shall be liable under a contract executed under Sec- tion 302(a) of the Nuclear Waste Policy Act of 1982 for damages caused by failure to per- form its obligations thereunder, if such fail- ure arises out of causes beyond the control and without the fault or negligence of the party failing to perform. In the event cir- cumstances beyond the reasonable control of the contract holder or the Department\u2014such as acts of God, or of the public enemy, acts of Government in either its sovereign or con- tractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, freight em- bargoes and unusually severe weather\u2014cause delay in scheduled delivery, acceptance or transport of spent nuclear fuel and\/or high- level radioactive waste, the party experi- encing the delay will notify the other party as soon as possible after such delay is ascertained and the parties will readjust their schedules, as appropriate, to accommo- date such delay. ”(b) AVOIDABLE DELAYS BY CONTRACT HOLDER OR DEPARTMENT.\u2014Notwithstanding any other provision of this Act, in the event of any delay in the delivery, acceptance or transport of spent nuclear fuel and\/or high- level nuclear waste to or by the Department under contracts executed under Section 302(a) of the Nuclear Waste Policy Act of 1982 caused by circumstances within the reason- able control of either the contract holder or the Department or their respective contrac- tors or suppliers, the charges and schedules specified by this contract will be equitably adjusted to reflect any estimated additional costs incurred by the party not responsible for or contributing to the delay. ”(c) REMEDY.\u2014Notwithstanding any other provision of this Act, the provisions of sub- sections (a) and (b) of this Section shall con- stitute the only remedy available to con- tract holders or the Department for failure to perform under a contract executed under Section 302(a) of the Nuclear Waste Policy Act of 1982. The PRESIDING OFFICER. The Sen- ator from Nevada. Mr. BRYAN. I thank the Chair. Mr. President, let me just take a mo- ment because this deals with a provi- sion that we believe clarifies the situa- tion in light of the court decision over which most comment has been had. What this amendment does is simply incorporate into the bill provisions that exist in the contract. My col- leagues will recall that under the Nu- clear Waste Policy Act of 1982, the De- partment of Energy was directed to enter into contracts with the various utilities that were involved in gener- ating high-level nuclear waste, and so what we have done, my colleague and I from Nevada, is to have incorporated verbatim other than perhaps in the context there may be some grammat- ical changes, but verbatim the rem- edies that are provided in those con- tracts. They are found in article 9 of the contract, and the contract provides what occurs if a delay, referring to the delay of the opening of the repository, is unavoidable delay, and subparagraph (b) deals with avoidable delays. So there has been talk that somehow this court case now casts a different light on everything, and as the Sec- retary of Energy indicated in her letter to each of us, that case absolutely has no impact on the debate. It is true that the court indicated there was an obli- gation on the Department of Energy but refrained from determining what the remedy was, and it is our view that the remedy is contained in the con- tract that the parties entered into. So we offer the amendment in that spirit. I must say that I believe one of the biggest scams being perpetrated upon us in this bill is the provision which deals with the shifting of liability from the utilities to the general taxpayer. Mr. President, 1982 is the genesis of our current nuclear waste policy. It was absolutely clear at the time that law was enacted that the financial respon- sibility for the disposal of nuclear waste rested upon the utilities, those that generated it. ”Generators, owners of high-level radioactive waste and spent nuclear fuel have the primary re- sponsibility to provide for and the re- sponsibility to pay the costs of interim storage of such waste and spent fuel until such time as the fuel is accepted by the Secretary of Energy.” And then it goes on to talk about a number of in- stances throughout this particular act that it is the primary responsibility of the industry, the utilities. Mr. President, this bill that has been introduced turns that concept upside down, totally upside down. Here is what is done under section 501 of the amendment that we are debating cur- rently. It says that until the year 2002\u2014I beg your pardon. I misquoted. I cited 501. It is section 401. It says until the year 2002, the maximum that can be assessed against the utilities, which is done on the basis of kilowatt-hours generated \u2014one mill currently is the assessment for each kilowatt-hour. It says under this bill by statute now the maximum that can be levied against utilities is one mill. The General Ac- counting Office and others have con- cluded that even if no interim storage is added to the agenda or the responsi- bility of the Department of Energy, we are currently underfunded to the ex- tent of about $4 billion a year. In plain and simple terms, that means the American taxpayer is going to pick up that liability, that responsi- bility, and that is fundamentally wrong. However you feel about nuclear energy, however you feel about how nu- clear waste ought to be disposed of, it ought not to be cast upon the Amer- ican taxpayer. These utilities are pri- vate sector utilities. They make a sub- stantial amount of money. That is their right. But it ought not to be shifted on us. So I think that needs to be pointed out, No. 1. No. 2, it gets even more clever. After the year 2002, the only amount that can be assessed against each utility is whatever their proportionate cost is, to the total amount of money that is ap- propriated by the Congress for nuclear waste. If we use the current year, for example, we would be talking about a third of a mill. That is something that is just, in my view, unconscionable. Not only has the General Accounting Office concluded there is a shortfall, but in a recent study that was commis- sioned by the Department called A Spe- cial Management and Financial Re- view, a report that came out in 1995, they point out that there is a shortfall, depending on whether you take a con- servative or more expansive view, of anywhere from $4 to $15 billion. So what is being done here is chang- ing fundamentally who pays for this disposal of nuclear waste. Is it the util- ities? That was the original premise of the law in 1982. These are private utili- ties, generating profits for their inves- tors and shareholders. Or is that liabil- ity now to be shifted to the general taxpayer? That is what this bill does, it shifts that liability because it is clear, even if you take the length of time without renewal at all, these utilities will ultimately, by the year 2033, if the licenses are not extended, those utili- ties will cease generating electrical power. Therefore they will cease con- tributing into the fund. But the prob- lem of the storage of high-level nuclear waste continues. It is, to some extent, a crude analogy to the situation we have with our So- cial Security fund. Currently, more money is coming into that fund than is necessary to pay the recipients of So- cial Security. We all know sometime after the turn of the century, because of changing demographics, that changes rather dramatically. So, too, with this nuclear waste fund because, as these utilities go off line, some of them are scheduled, if they do not get an extension of their license, to cease operation in the year 2000, others in the year 2006 and, intermediately to the year 2033\u2014but the waste just does not disappear. It becomes a financial responsibility for someone and that is why it is necessary to generate sur- pluses in the nuclear waste fund in order to deal with the storage problem later on. So I think my colleagues need to look at the budget implications of this. Because, in effect, we create an unfunded liability for the Federal tax- payers the way this bill is currently drafted. Let me return to the specifics of the amendment just one more time before reserving my time and yielding what- ever time my colleague may take to comment on this issue. That is to say, what we are saying amplifies the deci- sion of the court, simply specifying what the remedy is. The remedy is that the delay is unavoidable. They simply have to reschedule the shipments. If VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00027 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9236 July 31, 1996 the delay is deemed avoidable, that is if there is some culpability, then there is readjustment on the amount of fees the nuclear utilities pay into the trust fund. I must say I believe that is fair. My colleague and I, from Nevada, have long recognized that, indeed, if the high-level nuclear waste repository is not available by the year 1998, if ad- ditional on-site storage is necessitated, then, indeed, the utilities would be en- titled to a credit against any addi- tional costs for interim storage that they would incur, and that is the thrust of this amendment. I reserve the remainder of my time. The PRESIDING OFFICER (Mr. GRAMS). The Senator from Louisiana. Mr. JOHNSTON. Mr. President, on behalf of Senator MURKOWSKI I yield myself 5 minutes. This is sort of a version 2 of the Wellstone amendment, in that it seeks to take the rights of utilities and, sec- ondarily, the rights of ratepayers of utilities, and abolish those by legisla- tive fiat\u2014which simply cannot be done. The rights of utilities and, indeed, the rights of the ratepayers of those utili- ties, have been fixed by the Nuclear Waste Policy Act of 1982 as amended by amendments in 1987 and by contracts between the utilities and the Depart- ment of Energy. The contracts between the utilities and the Department of En- ergy contain two provisions in article IX which relate to delays: A, involve unavoidable delay by purchaser or DOE, and, B, involve avoidable delays by purchaser or DOE. And those sec- tions, A, and B, are part of the con- tracts between the utilities and DOE, set out, in part, the relative rights in the event of those delays. What the Senator from Nevada would attempt to do is take those two exist- ing provisions of contracts and state that those are the exclusive remedies, thereby leaving out another provision of those same contracts. Another pro- vision of those same contracts in arti- cle XI says: Nothing in this contract shall be construed to preclude either party from asserting its rights and remedies under the contract or at law. In other words, the present contracts in article XI state that nothing pre- cludes the assertion of the rights both under the contract and at law. What they would do is take that provision out and say that those sections, A and B, that I just read, are the exclusive remedies. Mr. President, that is clever, but what the court has said last week is that ”We hold that the Nuclear Waste Policy Act creates an obligation in DOE to start disposing of the spent nu- clear fuel no later than January 31, 1998.” That is the law, decided only last week. And what the Senator from Ne- vada would say, that notwithstanding what the court has said we are going to write that out of this, and the exclu- sive remedy is that which he has just stated in his amendment, which is only part of what the contract says, I re- peat\u2014it is absolutely settled law that this Congress, under our Constitution, may not take away vested rights. When someone has a right under the law, the Congress cannot come in and take it away without subjecting themselves to damages. Again, quoting from the Winstar case, and this is from July 1996, this very month, the Supreme Court says: Congress may not simply abrogate a statu- tory provision obligating performance with- out breaching the contract and rendering itself liable for damages. Damages are al- ways the default remedy for breach of con- tract. They go on to quote in a footnote: Every breach of contract gives the injured party a right to damages against the party in breach unless the parties by agreement vary the rules. The award of damages is the common form of relief for breach of con- tract. Virtually any breach gives the injured party a claim for damages. Mr. President, this is not a surprising new precedent of the Court. It is a prin- ciple of law as old as John Marshall and the Supreme Court and the Con- stitution. So for my friends from Ne- vada to come along and say the exclu- sive remedy is subsections (A) and (B) of his amendment, I will not say it is ludicrous, Mr. President, out of respect for my colleagues, but let’s say that the argument does not have any weight and is totally contrary to that which is settled law of the U.S. Supreme Court. Mr. President, at this time, I yield 5 minutes, or such time as the Senator from Washington requires. The PRESIDING OFFICER. The Sen- ator from Washington. Mr. GORTON. Mr. President, there are some occasions in this body in which a bit of institutional memory is truly of value. And, in my case, I have a memory which has been reinforced by reading the CONGRESSIONAL RECORD of the creation of the Nuclear Waste Pol- icy Act of 1982. Interestingly enough, the managers on both sides of the party aisle here were Members of that Congress. But the distinguished Senator from Lou- isiana, I believe, was perhaps the most knowledgeable Member of the body at that time, as he is today, on this par- ticular subject. More than 14 years ago, in April 1982 when this bill was being debated, this is what the Senator from Louisiana said: The bill before the Senate today requires the Federal Government to undertake defini- tive and specific actions to assume the re- sponsibility for nuclear waste disposal which existing law reserves to it. We can attempt to avoid this responsibility in the context of this particular Congress, but we will never finally escape the necessity of enacting leg- islation very similar to this bill. It is a task that no one but Congress can perform. The Senator from Louisiana went on to say: The aim of this bill is to provide congres- sional support which will force the executive branch to place before Congress and the pub- lic real solutions to our nuclear waste man- agement problems. A schedule for Federal actions which could lead to a site specific ap- plication for a license for the disposition of nuclear waste in deep geologic formations is established in title IV. The Senator from Louisiana was, ob- viously, an optimist at that point, as were all of those who overwhelmingly supported him in passing that bill, this Senator included. I cannot imagine that the Senator from Louisiana, whose bill included this deadline referred to by the District of Columbia Circuit Court of Appeals last week ”beginning not later than January 31, 1998, the Federal Govern- ment will dispose of the high-level ra- dioactive waste or spent nuclear fuel involved,” I cannot imagine the Sen- ator from Louisiana anticipated that we would have made so little progress by the date upon which we are debating this bill. He was convinced, and we were convinced, that by this year, we would certainly know what we were going to do with this nuclear waste on a temporary basis and be much further along the road to finding a long-term solution for the problem. As a consequence of an overopti- mistic view of what might happen then, we have collected from utilities of the United States some $12 billion. We have spent close to $6 billion of that attempting to characterize a per- manent nuclear waste repository in Ne- vada, but we are certainly nowhere near as close to reaching a conclusion to this challenge as we expected to be in 1982 when we passed this bill, and we spent more money on it, money that comes out of the pockets of American citizens in their utility bills. Given that degree of frustration, given the almost infinite ability of those who oppose any major decision of this nature to delay that decision through bureaucratic requirements, through court tests and the like, we now have been faced with the necessity of finding at least a temporary reposi- tory for this nuclear waste to meet the very requirements that we laid down in 1982. That, obviously, is what this bill is designed to do. In fact, by saying that we ought to begin by December 31 of 1998, even the sponsors of the bill already have let some time slip by. But, Mr. President, at this point, with the failure to meet the schedule that we wanted to meet in 1982, with the expenditure of literally billions of dollars, with this nuclear waste piling up in various plants in 34 States, with the real challenge of what to do with our defense nuclear waste, it is simply time to reach at least an in- terim decision. I expect that the Senators from Ne- vada, and many other Senators as well, are firm in the belief that wherever the temporary storage site is located will end up being the permanent storage site. I suspect that may very well be true, but I do believe that we are far enough along this road that it is appro- priate for the Congress to make that decision and to make that decision now. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00028 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9237 July 31, 1996 The waste is there, the environ- mental threat is there, the physical dangers are there, the necessity to gather it together in one place is there. We know enough now about the policy to be able to make that decision to be there. We are simply carrying out under the leadership of the Senator from Alaska and the Senator from Lou- isiana the very policies that this Con- gress and a former President of the United States felt to be appropriate policies in 1982, and in doing so, we will save the taxpayers money, we will help the environment, we will help our over- all safety, and we will, one hopes, allow the Senator from Louisiana to retire, as he has regrettably chosen to do, from the Senate knowing that he has completed the job that he started in 1982 or earlier. Mr. MURKOWSKI addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Alaska. Mr. MURKOWSKI. How much time remains on both sides? The PRESIDING OFFICER. The Sen- ator from Alaska has control of 17 min- utes; the Senators from Nevada have control of 20 minutes, 39 seconds. Mr. REID. I am wondering if we could have a vote on this amendment and go to something else? Mr. MURKOWSKI. I would be very pleased to. Is that the wish of the Sen- ator from Nevada? Mr. REID. Yes. Mr. MURKOWSKI. I yield back the remainder of our time. Mr. REID. That is, on this amend- ment that is true. Mr. MURKOWSKI. Both sides are willing to yield back the remainder of their time and ask for a voice vote. The PRESIDING OFFICER. With all time being yielded back on the amend- ment, the question now is on agreeing to the amendment. The amendment (No. 5075) was re- jected. Mr. JOHNSTON. I move to reconsider the vote. Mr. MURKOWSKI. I move to lay that motion on the table. The motion to lay on the table was agreed to. Mr. REID. Mr. President, I wonder if the Senator from Alaska has the unan- imous consent agreement that was being typed up for our submission? I suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The bill clerk proceeded to call the roll. Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. The Senator from Alaska. Mr. MURKOWSKI. On behalf of the leader, I ask unanimous consent that the vote occur on or in relation to the amendment number 5073 at 3:30 p.m. today, and notwithstanding the agree- ment of July 24, the vote occur on final passage of S. 1936 at 4:55, and that para- graph 4 of rule XII be waived. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. MURKOWSKI. I thank my col- leagues from Nevada for expediting the process. Mr. REID. I say to my friend from Alaska, I think it would be appropriate the time would be equally divided be- tween now and 3:30 on the amendment offered by the Senators from Nevada. I ask unanimous consent that that be the case. Mr. MURKOWSKI. That is agreeable. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. BRYAN addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Nevada. Mr. BRYAN. I thank the Chair. AMENDMENT NO. 5073 (Purpose: To specify contractual obligations between DOE and waste generators) Mr. BRYAN. Mr. President, I send amendment No. 5073 to the desk and ask for its consideration. The PRESIDING OFFICER. The clerk will report. The bill clerk read as follows: The Senator from Nevada [Mr. BRYAN] pro- poses amendment numbered 5073. Mr. BRYAN. Mr. President, I ask unanimous consent that further read- ing of the amendment be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. The amendment is as follows: At the appropriate place in the bill, insert the following new provisions: ”SEC. . COMPLIANCE WITH OTHER LAWS. ”Notwithstanding any other provision of this Act, the Secretary shall comply with all Federal laws and regulations in developing and implementing the integrated manage- ment system. ”SEC. . COMPLIANCE WITH NATIONAL ENVIRON- MENTAL POLICY ACT. ”(a) NATIONAL ENVIRONMENTAL POLICY ACT OF 1969.\u2014Notwithstanding any other provi- sion of this Act, the Secretary shall comply with all requirements of the National Envi- ronmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) in developing and implementing the integrated management system. ”(b) JUDICIAL REVIEW.\u2014Notwithstanding any other provision of this Act, any agency action relating to the development or imple- mentation of the integrated management system shall be subject to judicial review.” Mr. BRYAN. Mr. President, much has been said over the past few hours today and earlier during the course of our discussion of S. 1936 about what I con- sider one of the most serious defects of this piece of legislation in that it emasculates the environmental protec- tions that have been drafted for more than a quarter of a century, most of which with bipartisan support and in effect says with respect to this par- ticular issue they shall not apply. So what we are doing is we are giving people an opportunity, our colleagues an opportunity, to express themselves on the environmental issue, very, very simple. The first part of this amendment says: Notwithstanding any other provision of this Act, the Secretary shall comply with all Federal laws and regulations in developing and implementing the integrated manage- ment system. My colleagues will recall the section 501 under the current provisions, as amended, is very convoluted and says: If the requirements of any Federal, State, or local law (including a requirement im- posed by regulation or by any other means under such a law) are inconsistent with or duplicative of the requirements of the Atom- ic Energy Act . . . or of this Act, the Sec- retary shall comply only with the require- ments of the Atomic Energy Act of 1954 and of this Act. . . . This Mr. President, makes it very, very clear. If you do not want all of these environmental laws preempted, this is the way to correct it. Straight- forward, no ifs, ands, or buts: Notwith- standing any other provision of this act, the Secretary shall comply with all Federal laws and regulations in de- veloping and implementing the inte- grated management system. I note for my colleagues, because the two Senators from Nevada have been involved in this issue now for the last 14 years, we made a policy judgment not to include State law so it could not be asserted that this was an indirect ef- fort to allow the Nevada legislature to implement some type of barrier that would make this impossible. So this is straightforward. It does not get any cleaner, it does not get any clearer, and does not get any easier to understand. If you are truly opposed to preempting all of these laws, this is the amendment that does it. If you also believe that there is a purpose in America for the National Environmental Policy Act, this amend- ment provides for the full application and judicial review. Under the current bill the provisions say on the one hand that the Environmental Policy Act will apply, and then go on to say at some considerable length, but it shall not apply to the various citing alter- natives. I will provide that. Section 204, subsection (f) says the National Environmental Policy Act shall apply. Then you get down into subsection (B). Such Environmental Impact Statement shall not consider \u2014 (i) the need for interim storage. . . (ii) the time of the initial availability of the interim storage. . . (iii) any alternatives to the storage of [nu- clear waste]. * * * * * (v) any alternatives to the design cri- teria. . . (vi) the environmental impacts of the stor- age [beyond the period of initial licensure]. You will recall the National Acad- emy of Sciences said those should con- sider 10,000 years and beyond. This bill would limit it to just the pe- riod of time of the initial licensure. And so, Mr. President, this is a clean, straightforward attempt to say that the full array of provisions under the National Environmental Policy Act shall apply. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00029 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9238 July 31, 1996 Let me just say that the Council on Environmental Quality\u2014that is the council that was established when Con- gress passed the National Environ- mental Policy Act in 1969\u2014 went on to say\u2014and I quote from the letter. ”S. 1936”\u2014that is essentially what we are dealing with: S. 1936 renders the NEPA process meaning- less by precluding the incorporation of NEPA’s core values which are necessary for making informed and timely decisions essen- tial for protecting public health, safety and environmental quality. Consequently, the bill all but locks into place both interim and permanent storage sites by giving decision- makers no reasonable options * * * It is that same rationale that has caused the Administrator of the Envi- ronmental Protection Agency, to point out that in effect we do not have the provisions of the National Environ- mental Policy Act under the provisions of the bill as now constituted. So, Mr. President, I think we can make this very clear and very simple. If Senators want these environmental laws to apply, if they believe that the Environmental Policy Act ought to be applicable to this very critical deci- sion, in which we all agree that we are dealing with material that is not just kind of messy, kind of unpleasant, to be a little bit difficult and inconven- ient to clean up, we are talking about stuff that is deadly for tens of thou- sands of years, the highest kind of risk to public health and safety. Yet, the nuclear industry, and its supporters, have the audacity to emasculate the application of the environmental laws and in effect try to reduce the impact of the National Environmental Policy Act to a hollow and pale facsimile of what the law provides in terms of pro- tections for various policy initiatives, et cetera. Mr. President, I reserve the remainder of my time and yield the floor. Mr. MURKOWSKI. Mr. President, we now have how much time? The PRESIDING OFFICER. The Sen- ator has 161\u20442 minutes. Mr. MURKOWSKI. It is my intention to speak for about 4 minutes and give the Senator from Louisiana about 8 minutes, and then reserve the balance of my time. Mr. President, this is another innoc- uous-sounding amendment which, in reality, is a bonanza for lawyers, and there are a lot of lawyers in this coun- try. We have general laws in this coun- try to cover situations that Congress did not specifically consider. The courts understand that. So when there is a conflict between a general law and a specific law enacted with a particular facility or purpose in mind, the court follows the specific law. With this act we are considering, the specific conditions to apply to specific nuclear waste repositories\u2014an interim repository and a permanent repository. What the amendment of the Senator from Nevada attempts to do is to pro- vide broadly written, general laws with the same standing as the specific direc- tions we are providing in this bill. Theirs is an amendment, Mr. Presi- dent, carefully crafted to confuse the courts, confound the legal process, and enrich the lawyers. This amendment is going to delay the process leading to a responsible so- lution to the nuclear waste problem. I implore my colleagues to avoid this trap. That is what it is. This is an antienvironmental amendment. Let me repeat that, Mr. President. This is an antienvironmental amend- ment. It does not address, obviously, the problem we have with the nuclear waste. If you want to solve a huge envi- ronmental problem in this country, you want to oppose this amendment. If this amendment prevails, Mr. President, the Department of Energy is going to be mired in litigation. It will be mired in red tape. It will be mired in delay. We are simply not going to be able to get there from here with a re- sponsible answer to this problem. Tax- payer dollars are going to be squan- dered in litigation if this amendment is adopted. The problem of nuclear waste will continue to persist, and, as a con- sequence, we will be right back to zero. I retain the balance of my time and yield 7 or 8 minutes to the Senator from Louisiana. Mr. JOHNSTON. Mr. President, I thank my colleague for yielding. Mr. President, if you want to frustrate any ability to have a nuclear waste reposi- tory, vote for this amendment, be- cause, to be sure, this would make it impossible to build. Now, Mr. President, this has been ad- vertised as an attempt only to make this subject to the same environmental laws that every other process has. Not so, Mr. President. Under the present Administrative Procedures Act, there is an appeal to the courts only for a final agency action. That is section 704 of the Administrative Procedures Act. What this amendment would do is to say that any agency action related to the development or implementation of the management system shall be sub- ject to judicial review\u2014any agency ac- tion. So, Mr. President, I guess anything that the agency does, whether it is a major Federal action or not, whether it is a final agency action, would be sub- ject to judicial review. They would be able to go to court. If you wake up in the morning and purchase a cup of cof- fee, I guess that is some kind of agency action, not final, but subject to judicial review. It would mean it would be im- possible to do anything under this sys- tem. Mr. President, much has been made of the fact that environmental impact statements have been waived here. The fact of the matter is, Mr. President, ex- isting legislation presently calls for a waiver of virtually every provision al- ready contained herein. For example, Mr. President, we state that such envi- ronmental impact statement shall not consider any alternatives to the stor- age of spent nuclear fuel at the interim storage facility. Now, why did we put that in the ini- tial legislation back in 1982? Why did we bring it forward in 1987? And why do we have it here? Because, Mr. Presi- dent, there are endless alternatives to storage of spent nuclear fuel. You can shoot it into space and into the sun. That has been seriously sug- gested. You can send it down to the ocean bottom and bury it in the deep mud down there. You can have detona- tion underground in caverns. You can reprocess in light-water reactors, you can reprocess in liquid light-water re- actors, you can have other space launches, deep bore holes in the Earth. Mr. President, all of these alternatives. But this language would have to be evaluated under the National Environ- mental Policy Act, notwithstanding the fact that Congress has spoken very clearly on the need for a nuclear waste repository. Mr. President, this would endlessly delay this matter by having to do very expensive studies on matters which have already been rejected by the Con- gress. Another provision on which the law already provides no need for a NEPA statement is an alternative to the site of the facility as designated by the Secretary. The site here is Yucca Mountain. Now, the Congress has clearly spoken in naming Yucca Mountain. That is why we have said in previous legisla- tion that you did not need to do an al- ternative NEPA statement to examine, for example, the granite in Maine or the different kind of geologic forma- tions in Washington, for example, or the salt domes in Mississippi. There are potential sites all over this country and, but for the waiver of a NEPA statement, you would have to go and revisit each of these facilities all over the country, each of these locations. That is, in each of these cases, the law already provides for a waiver of the NEPA statement to consider these var- ious alternatives. The same is true for the alternatives to the design. The same is true for the need for the interim storage facility. Mr. President, rather than bring for- ward some new series of waivers, we are really bringing forward what exist- ing law provides and has already been waived as part of the Nuclear Waste Policy Act. Mr. President, it is not too much to say that if we adopted this amendment you would never be able to build a re- pository in the United States or an in- terim facility because you would put on endless requirements for NEPA statements on matters to examine sites all over the United States, to ex- amine alternatives to repository dis- posal and interim disposal, on matters that would be very expensive to inves- tigate and very difficult to prove, and would take many, many years to deter- mine. Most especially, Mr. President, by providing that there would be appeal from any agency action as opposed to VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00030 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9239 July 31, 1996 final agency action, final agency ac- tion appeals are provided in this legis- lation, but interim agency actions are not. If you made all agency actions ap- pealable, it would simply be impossible to have a repository. The PRESIDING OFFICER (Mr. COVERDELL). The time of the Senator has expired. Mr. REID. Would the Chair advise the Senator from Nevada how much time we have. The PRESIDING OFFICER. The Sen- ator’s side has 12 minutes, and the other side has 8 minutes. Mr. REID. I want to yield to my friend from California, but prior to that, I want to discuss a number of things. First, this is a good deal for the pro- ponents of this bill. They want to waive all the environmental laws, and they are saying the reason is because people might want to appeal, they might be protecting their rights, which is what you can do in this country. That is why we have NEPA. That is why we have all the laws set forth in the chart behind us. I also want to drop back a few min- utes, Mr. President. The senior Senator from North Dakota was here. He was concerned about terrorism, but because we were running out of time on an amendment, we could not respond to his concern. I want to take a few min- utes to respond to him. I hope if the Senator is not listening, his staff is, be- cause this is, I think, extremely impor- tant to the question he asked. We have here a letter from the Blue Ridge Environmental Defense League. Among other things, they say in this letter, dated July 29, 1996\u2014what they are basically explaining is that nuclear waste is dangerous and terrorists will get to the nuclear shipments, and they proved it. Two shipments arrived at the Military Ocean Terminal at Sunny Point in North Carolina, were loaded onto rail cars, and then transported overland to SRS. We were able to track both of these shipments from their ports of origin in Denmark, Greece, France, and Sweden across the Atlantic to North Carolina to SRS. These shipments cannot be kept se- cret so long as we live in a free society. Our actions were peaceful, but we proved that determined individuals, on a shoestring budget, can precisely track international and domestic shipments of strategic mate- rials. In the wake of Oklahoma City and At- lanta, the dangers posed by domestic or international terrorists armed with explo- sives makes the transport of highly radio- active spent nuclear fuel too dangerous to contemplate for the foreseeable future. I ask unanimous consent that the letter dated July 29 from the Blue Ridge Environmental Defense League be printed in the RECORD. There being no objection, the letter was ordered to be printed in the RECORD, as follows: BLUE RIDGE ENVIRONMENTAL DEFENSE LEAGUE, Marshall, NC, July 29, 1996. U.S. SENATE, Washington, DC. DEAR SENATOR: The Nuclear Waste Policy Act of 1996 (S. 1936) would place in jeopardy the lives of millions of American citizens by transporting 15,638 casks of highly radio- active material over railways and highways of this nation. This attempt at a quick-fix for the nuclear waste dilemma would cause more problems than it attempts to solve. The people who would bear the greatest bur- den would be the 172 million Americans who live nearest the transportation corridors. S. 1936 is a legislative short-circuit that will make us less secure as a nation and which will dump the costs of emergency response on the states and local governments. The Blue Ridge Environmental Defense League began in 1984: our work takes us throughout the southeast. Since 1994 we have observed the international shipments of spent nuclear fuel (SNF) from foreign re- search reactors (FRR) to a disposal site at the Savannah River Site (SRS) in South Carolina. Two shipments arrived at the Mili- tary Ocean Terminal at Sunny Point (MOTSU) in North Carolina, were loaded onto rail cars, and then transported overland to SRS. We were able to track both of these shipments from their ports of origin in Den- mark, Greece, France, and Sweden across the Atlantic to North Carolina to SRS. We ob- served the fuel shipment when they arrived at MOTSU. We watched the SNF transfer from ship to train and followed it through the countryside of coastal North and South Carolina. Our reason for doing this was to alert people along the transport route about the shipments through their communities. We rented a light plane and flew out over the SNF ships when they reached the three-mile limit. Television news cameras accompanied us and transmitted pictures for broadcast on the evening news. If we can track such ship- ments, anyone can. These shipments cannot be kept secret so long as we live in a free so- ciety. Our actions were peaceful but we proved that determined individuals on a shoestring budget can precisely track inter- national and domestic shipments of strategic materials. In the wake of Oklahoma City and Atlanta the dangers posed by domestic or international terrorists armed with explo- sives make the transport of highly radio- active spent nuclear fuel too dangerous to contemplate for the foreseeable future. Our work in North Carolina, Tennessee, and Virginia takes us to many rural commu- nities. Emergency management personnel in these areas are dedicated volunteers, but they are unprepared for nuclear waste. Vol- unteer fire departments in rural counties are very good at putting out house fires and brush fires. While serving as a volunteer fire fighter in Madison County, NC, I had the privilege of working with these men and women. We took special training to handle propane tank emergencies utilizing locally- built water pumper trucks. More sophisti- cated training or equipment was prohibi- tively expensive and beyond our financial means. Traffic control is a consideration at an emergency scene. Any fire or accident tends to draw a crowd. Onlookers arrive as soon as the fire department\u2014sometimes sooner in remote areas. There are always traffic jams reducing traffic flow to a one- lane crawl day or night, fair weather or foul. The remote river valleys and steep grades of Appalachia are legendary. At Saluda, NC the steepest standard gauge mainline railroad grade in the United States drops 253 feet\/mile (4.8% grade). The CSX and Norfolk Southern lines trace the French Broad River Valley and the Nolichucky Gorge west through the Appalachian Mountains along remote stretches of rivers famous among whitewater rafters for their steep drops and their dis- tance from civilization. The Norfolk South- ern RR crosses the French Broad River at Deep Water Bridge where the mountains rise 2,200 feet above the river. These are the transport routes through western North Carolina that will be used for high level nu- clear waste transport as soon as 1998 accord- ing to S. 1936. County emergency management personnel are entrusted with early response to hazards to the public in western North Carolina com- munities. When we asked about their readi- ness to respond to a nuclear transport acci- dent, they answered professionally saying, ”We’ll just go out there and keep people away until state or federal officials arrive.” This may be the best that can be done while a fire burns or radiation leaks from a dam- aged cask. In a recent interview, one western NC emergency coordinator said, ”There is no response team anywhere in this part of the state and, for the foreseeable future, there is no money in local budgets to equip us with any first response to radioactive spills.” The concerns of local officials reflect their on-the-scene responsibility while state offi- cials, faced with limited budgets and staff, make plans based on current bureaucratic realities. The Nuclear Waste Policy Act and Amendments of 1982 and 1987 place large- scale nuclear transportation scenarios dec- ades in the future. This fact and the limited resources of existing emergency planning de- partments make the timeline for preparation for nuclear accident response completely in- adequate for shipments beginning as soon as 1998. In North Carolina’s Division of Emer- gency Management, the lead REP planner has four staffers and a whole state to cover. It is not possible under these circumstances, to be ready with credible emergency re- sponse plans, training, and equipment in two years. I am asking you to oppose this expensive and dangerous legislation which would place an unfair and unnecessary financial burden on communities and which would place at risk the health and safety of millions of American citizens. Respectfully, LOUIS ZELLER. Mr. REID. Mr. President, we also know that they are running roughshod over environmental laws in this coun- try\u2014”they” being the proponents of this legislation. We have here a state- ment from Public Citizen, which says, ”If you believe in environmental stand- ards, don’t vote for S. 1936. S. 1936 se- verely weakens environmental stand- ards by carving loopholes in the Na- tional Environmental Policy Act”\u2014 that is what we call NEPA\u2014”elimi- nating licensing standards, forbidding the EPA from raising radiation release standards.” Mr. President, we received from the President of the United States office late last night a reiteration of why he believes this legislation is bad and why it should be voted down. Among other things said in this letter from John Hilly, assistant to the President of the United States, it says: The bill undermines environmental laws and processes. Americans deserve full public health protection. Yet, this bill renders the National Environmental Policy Act mean- ingless, undermines EPA and the Nuclear Regulatory Commission regulatory process for public protection from radiation expo- sure. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00031 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9240 July 31, 1996 It is a good deal the proponents have\u2014just wipe out the environmental laws and say we have to get rid of nu- clear waste. The powerful nuclear lobby has been willing to run rough- shod over the lives of Americans for too many years. It is time we stopped it. There is a permanent repository being characterized in Nevada. The only reason they want to go with the interim storage is to save money. It is not going fast enough for them. They don’t care about environmental laws. They care about the bottom line, the dollar amount. They are making tons of money. Mr. President, on this chart are the companies pushing this. Look, Mr. President, at the percent of net income relative to revenue: 20 percent of their revenues come from nuclear power. Here is 17.25 percent, 17.7 percent, 20.5 percent, 22.75 percent, and 25 percent. They are raking in the money. But it is not enough. They want to make more. They don’t care about the rights and liberties of Americans that are pro- tected with the laws called Clean Air, Clean Water, Superfund, and other such laws. I understand my friend from Cali- fornia has a question. Mrs. BOXER. I do. I would like to ad- dress a couple of questions. First, I want to thank both of you for your courage. I think Senator REID has shown us that there is a lot of power behind this particular bill\u2014economic power\u2014and it is always difficult to stand up against that. So my thanks to you for doing that. That is why we need people like you in the U.S. Sen- ate. Your team leadership has been no- ticed by many throughout this great country. I want to also thank Senator CONRAD and Senator REID for talking about the issue of terrorism, because having to close our eyes to the terrorist threat after what we have been through is\u2014I can’t even fathom it. I think Senator CONRAD was correct to bring this up. The answer from Senator REID, I found, to be very illuminating. This is my basic question: Did we not have in this Senate, over many years, a lot of struggles and fights to win pas- sage of the very legislation that would be waived in this act, and wasn’t that struggle and that fight a bipartisan one, where we came together, from dif- ferent parties sometimes, and some- times with different viewpoints, to pass the Clean Air Act and the Clean Water Act? Mr. REID. I respond to my friend from California that most of this legis- lation began during the period of Rich- ard Nixon. Mrs. BOXER. That is correct. Mr. REID. Take clean water. The rea- son the Clean Water Act was initiated is because the Cuyahoga River in Ohio caught fire, not once, but three times. After the third fire, people around the country started saying, ”Maybe we should do something about this.” I re- spond to my friend from California that when the Clean Water Act was ini- tiated, 80 percent of the rivers and streams in America were polluted. Now, some 25 years later, those num- bers have almost reversed. Approxi- mately 80 percent of the streams and rivers in America\u2014you can swim in them and drink out of them. They are in pretty good shape. It is not perfect. We have a long way to go, but we have done pretty well. Mrs. BOXER. Let me say that I have the honor and privilege of serving with my friend, Senator REID, on the Envi- ronment Committee, and that is what brought me to the floor today. I ask Senator BRYAN this question: Is it not true that the waste that will be moved throughout this country and placed in this repository is dangerous waste that could last between thou- sands of years to even a million years or millions of years? Mr. BRYAN. The Senator from Cali- fornia is correct. This is among the most dangerous material on the face of the Earth. We are talking not about something that would be a problem for 5, 10, 15, 20 years, even 2 or 3 lifetimes. The whole thrust of the bill that is be- fore us is to cut corners, try to save a few bucks here, to impose artificial deadlines that can never be met, all to the disadvantage of public health and safety. Very seldom do you hear the nuclear utilities talk about doing something to protect public health and safety. It is always, ”This costs too much,” ”Delay this a little bit,” ”It would be incon- venient or difficult.” The whole thrust of these laws is a balancing of public health and safety, and the fact that it may take a little longer, it may be a little more difficult, was a bipartisan consensus, as my senior colleague pointed out, during the term of Rich- ard Nixon. NEPA was enacted in 1969, the first year he served as President. It was a bipartisan consensus in America. This legislation would shatter that and subject those who would be affected by this decision\u2014at least 51 million people along the transportation routes\u2014to a lower standard of protection for public health and safety. Mrs. BOXER. The point of my ques- tion is that here we have the most dan- gerous elements known to humankind. And of all the things we should be doing, it seems to me, when we decide on a repository, is to make sure that every one of those acts is complied with\u2014Clean Air, Clean Water, National Environmental Policy Act, Community Right to Know, Safe Drinking Water Act\u2014and that is why I am so strongly supportive of the Senators’ amend- ment. All of the response about being dupli- cative and inconsistent\u2014I respect my friends on the other side of the debate, but we have a difference in the way we view the public interest. I have nothing but respect for those who hold a dif- ferent view. But I say this: If it is du- plicative and there is even one question about it, why not vote for this amend- ment and be doubly sure, if you will, that our people are protected from the most harmful elements known to hu- mankind? I thank my colleague for yielding, and I yield back my time to him. The PRESIDING OFFICER. The Chair advises that all the time of the Senator from Nevada has expired. There are 8 minutes remaining on the other side. The Chair recognizes the Senator from Alaska. Mr. MURKOWSKI. I thank the Chair. I observe, for the benefit of my friend from California, for whom I have the utmost and fondest regard, that ac- cepting this amendment means her State gets considered as a possible al- ternative for interim storage. The State of California currently has ap- proximately 1,319 metric tons of high- level nuclear waste that is stored in California. It is estimated that, by the year 2010, there will be 2,639 metric tons. So the point is, if we leave it where it is, which is what we will do with the amendment offered by my friends from Nevada, waste is simply going to stay where it is. As a consequence, at some point in time somebody will have to do something with it. To do something with it implies you have to move it. We have heard fear, fear, fear. We move money in armored cars. We used to move it in stagecoaches. We protected it. We protect it in armored cars. We will protect waste, if you will, in casks. This movement is not just helter-skel- ter. They have moved, in Europe, 30,000 metric tons of high-level nuclear waste. They moved it safely. That does not mean an accident could not happen or that a terrorist activity could not happen. But they have moved it. It has not been designed, if you will, to be easily lifted. It is very, very heavy and very difficult. The containers are built to maintain a degree of security un- known in any other type of engineering device. So while there is a risk associated with all aspects of this, there is also a reality of inconsistency in this amend- ment because the Senator from Nevada indicated that by permitting one repos- itory in Nevada as a permanent reposi- tory, he has acknowledged that the material has to get there somehow. So you have the potential risk, if you will, if you simply say we are going for a permanent repository and we are not going to consider an interim reposi- tory. The stuff has to move anyhow. There is a risk associated with move- ment. Mrs. BOXER. Will the Senator yield? Mr. MURKOWSKI. I am sorry. I have a limited time, in all due respect to my friend from California. Adopting a NEPA process open to al- ternatives opens up new areas for con- sideration. There is behind us the map showing all of the places other than a Nevada test site that could be used for an in- terim central storage facility. You can VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00032 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9241 July 31, 1996 see them. They are all over the coun- try. If you say yes to this amendment, you may be saying yes to nuclear waste storage in your State or near your State. The possibilities include New York, Hawaii, Connecticut, Wash- ington, Maine, Iowa, California, Mon- tana, North Dakota, South Dakota, Ar- kansas, Wisconsin, Oregon, and others. There are potential locations in 40 other States of about 605,000 square miles; 20 percent of the continental United States. You have to put it somewhere. So what we have here is an effort by the Senators from Nevada that may sound reasonable at first glance but it sets this whole process back 15 or 20 years. It allows all the decisions we are making today to be reconsidered. It al- lows them all to be challenged in the courts. It guarantees further delay, further gridlock, further stalemate, and it will, therefore, force the rate- payers in all of these States not to pay once but to pay twice, to continue to pay into the nuclear waste fund and to build new interim reactor storage sites because some of them are full at this time. This is a giant loophole for the Gov- ernment to use in avoiding its promise to store and handle waste. It is an ef- fort to derail the process. Senate bill 1936 does not\u2014and I em- phasize ”does not”\u2014exempt the estab- lishment of an interim or final reposi- tory for NEPA. Instead, it requires an EIS for both the interim and perma- nent repository. We require it. Furthermore, S. 1936 is consistent with NEPA and the Executive Order 12114 which implements NEPA. NEPA and the Executive order clearly antici- pates the situation we have here. There are some decisions of policy that are within the agency’s power to affect. There are others that are not. Congress may properly reserve some decisions for itself and allow other decisions to be considered in the NEPA process. Otherwise, we would never get any- thing done around here. Senate bill 1936 identifies six deci- sions that are appropriate for congres- sional consideration only. These six de- cisions involve whether we need a re- pository, when we need a repository, and where the repository should be built. So it is whether, when, and where. These are fundamental deci- sions of policy. I say to my colleagues that there are some things that we have the responsi- bility to decide and decisions that we are paid to make. These are some poli- cies that we alone must determine, and that is our job. If we adopt this amendment, we are being irresponsible because it will sim- ply put off the process, put into the courts and delay beyond this adminis- tration to sometime in the future, and we will never address it. What this amendment would do is to throw all of the cards back up in the air again as if to say Congress has made the tough decisions and cast the tough votes, but we are going to ignore all of that and revisit all of these deci- sions that we have already made. Mr. President, if we are going to allow the agencies to revisit all of the decisions of Congress, either through NEPA or some other means, then there is no need for us to be here. We might as well go home because there is noth- ing for us to do. So do not be fooled by this amend- ment. This is an amendment designed to derail responsible action to address nuclear waste in a repository. It looks reasonable at first glance, but it mere- ly is a means to upset the applecart and put us back to where we were in 1980. Mr. President, I yield all of my re- maining time. I move to table the pending amend- ment and ask for the yeas and nays. The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second. The yeas and nays were ordered. The PRESIDING OFFICER. The question is on agreeing to the motion of the Senator from Alaska to lay on the table the amendment of the Sen- ator from Nevada. On this question, the yeas and nays have been ordered, and the clerk will call the roll. The assistant legislative clerk called the roll. The result was announced\u2014yeas 73, nays 27, as follows: [Rollcall Vote No. 258 Leg.] YEAS\u201473 Abraham Ashcroft Bennett Biden Bingaman Bond Brown Burns Byrd Campbell Coats Cochran Cohen Conrad Coverdell Craig D’Amato DeWine Dodd Domenici Dorgan Exon Faircloth Frahm Frist Gorton Graham Gramm Grams Grassley Gregg Hatch Hatfield Heflin Helms Hollings Hutchison Inhofe Inouye Jeffords Johnston Kassebaum Kempthorne Kerrey Kerry Kyl Leahy Levin Lott Lugar Mack McCain McConnell Mikulski Moseley-Braun Murkowski Nickles Nunn Pressler Robb Roth Santorum Shelby Simon Simpson Smith Snowe Specter Stevens Thomas Thompson Thurmond Warner NAYS\u201427 Akaka Baucus Boxer Bradley Breaux Bryan Bumpers Chafee Daschle Feingold Feinstein Ford Glenn Harkin Kennedy Kohl Lautenberg Lieberman Moynihan Murray Pell Pryor Reid Rockefeller Sarbanes Wellstone Wyden The motion to lay on the table the amendment (No. 5073) was agreed to. Mr. MURKOWSKI. Mr. President, I move to reconsider the vote by which the motion was agreed to. Mr. JOHNSTON. I move to lay that motion on the table. The motion to lay on the table was agreed to. Mr. KERRY. Mr. President, I sup- ported the motion to table the Bryan amendment to S. 1936 not because it in- cluded a requirement that the Depart- ment of Energy comply with the Na- tional Environmental Policy Act [NEPA] in the establishment of an in- terim storage facility at the Nevada nuclear test site\u2014language which I support\u2014but because it also included unjustifiably sweeping judicial review language. While I support judicial re- view of all final agency actions, this provision goes well beyond final rulemakings and would be unneces- sarily burdensome and costly to both the Federal Government and the pri- vate sector. In my judgment, should this bill become law over my objec- tions, this judicial review could cause the entire process of establishing the repository to grind to a halt. Congress passed NEPA in 1969 to en- sure that Federal agencies integrate environmental values\u2014as well as so- cial, economic, and technical factors\u2014 in the decisionmaking process. Section 102 of NEPA requires environmental impact statements [EIS] for proposed major Federal actions which would sig- nificantly affect the quality of the human environment. The EIS process includes alternatives analysis in which reasonable alternatives to the proposed action are explored in an effort to present clear choices to decision- makers and the public, and to ensure that the most environmentally sound course of action is taken. S. 1936 limits or eliminates the appli- cation of a number of NEPA’s health and environmental standards with re- spect to the establishment of a tem- porary waste repository. For example, in order to expedite the interim reposi- tory’s opening it waives any regula- tions for the protection of public health and the environment if the reg- ulations would delay or affect the de- velopment, licensing, construction or operation of the interim storage facil- ity. I strongly believe that any facility in the United States designed to store spent nuclear fuel should be required to comply with NEPA. Therefore, I whole- heartedly support the first half of the Bryan amendment which instructs the Secretary of Energy to comply with all NEPA requirements. My concern with the Bryan amend- ment stems from its language which would add sweeping judicial review provisions to this bill. It would subject to judicial review any agency action relating to the development or imple- mentation of the integrated manage- ment system. I firmly support judicial review for all final agency actions. However, I am concerned that includ- ing any and all agency actions, not just final actions, may produce innumer- able interlocutory judgments. The cost to taxpayers likely would be very high, and the repository to be es- tablished under the terms of this bill likely would be drowned in a sea of red- tape. That is not in our Nation’s best interests despite the capable efforts of the Senators from Nevada to do every- thing in their power to prevent or VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00033 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9242 July 31, 1996 delay the establishment and operation of a repository in their State. Once our Government makes a decision to estab- lish a repository for nuclear wastes which is badly needed\u2014although I do not believe we are ready to make that decision with the confidence we should have for a step of this consequence\u2014we should not deliberately set up the ef- fort to fail by tying it in legal and pro- cedural knots. It appears unlikely that any addi- tional amendments to this bill will be offered or approved that would restore the applicability of NEPA provisions. Therefore, because the legislation ex- empts the repository establishment process from the application of NEPA and other environmental statutes, I will oppose final passage of S. 1936. I am hopeful this bill in its current form will not be enacted. The President has said he will veto it in this form, and I would urge him to do so. But, Mr. President, I wish to empha- size that I do not take this stance with enthusiasm. Our Nation needs a reposi- tory for nuclear waste. We should not continue ad infinitum to store it tem- porarily at the sites where it has been produced. That is neither safe nor pru- dent. Our Government needs to redou- ble its efforts to reach a conclusion about the establishment of a perma- nent repository, and it needs to do that with alacrity. Unfortunately, this legislation to create a temporary repository is not the answer. Establishing a temporary facility necessarily brings difficult problems that would not be present with a permanent facility. Exempting the facility and the process of estab- lishing it from environmental laws and safeguards is unacceptable. It is not inconceivable, even if quite unlikely, that these problems can be remedied this year in a way that would permit me to support this legislation. The first requirement is that the proc- ess be subjected to compliance with en- vironmental laws and regulations. This could be accomplished in a conference committee. If it is not, I will continue to oppose it. But if its flaws are not adequately re- paired, and the bill either is not finally passed by the Congress or is vetoed by the President, the 105th Congress needs to begin grappling early and seriously with this matter. I hope when it does so, Mr. President, that it will take a different and more responsible course than has been taken in the current Congress. SECTION 101(g) Mr. LEVIN. Mr. President, at page 9, lines 20 23 of the manager’s substitute amendment, section 101(g) provides that ”subject to subsection (f), nothing in this Act shall be construed to sub- ject the United States to financial li- ability for the Secretary’s failure to meet any deadline for the acceptance or emplacement of spent nuclear fuel or high-level radioactive waste. * * *” Is it the manager’s intention that this language prevent contract holders from recovering damages or other financial relief from the Government on account of DOE’s failure to comply with the 1998 deadline established in section 302(a) of the Nuclear Waste Policy Act of 1982? Mr. MURKOWSKI. It is not the man- ager’s intention that section 101(g) limit in any way the rights of contract holders, their ratepayers, or those agencies of the State governments that represent ratepayers, from enforcing any right they might have, including the right to hold the Federal Govern- ment liable financially, under the 1982 act and the contracts executed pursu- ant thereto. Section 101(g) is expressly subject to section 101(f), which makes clear that rights conferred by section 302(a) of the Nuclear Waste Policy Act of 1982 or by the contracts executed thereunder are not affected by this bill, including section 101(g). To the extent that act or the contracts established a 1998 deadline and the DOE fails to meet that deadline, it is not the manager’s intent that the substitute amendment in any way restrict the relief available to those damaged by the failure to meet the deadline. Mr. LEVIN. Is it correct then that the manager does not intend that the amendment would restrict the scope of remedies available to the plaintiffs in the litigation in which the Court of Ap- peals of the District of Columbia has recently held that the 1998 deadline is a binding obligation of the Federal Gov- ernment? Mr. MURKOWSKI. That is correct. It is not the manager’s intent that the language of section 101(g) proscribe the court of appeals or any other court from awarding monetary relief or other financial remedies to those who have paid fees to the Government under the 1982 act and the contracts, or those who will incur additional expense on account of the DOE’s failure to comply with any right conferred by 1982 act or the contracts. Mr. LEVIN. If a deadline were im- posed by the Nuclear Waste Policy Act of 1996, as reflected by the substitute amendment, as well as by the Nuclear Waste Policy of 1982 or the contracts executed thereunder, is it the man- ager’s intention that section 101(g) would proscribe financial liability for failure to meet the deadline to the ex- tent it is imposed by the 1982 act? For instance, if DOE were to fail to com- mence the acceptance and emplace- ment of spent nuclear fuel and high level radioactive waste by November 30, 1999 or thereafter, would the amend- ment proscribe a court from imposing financial liability on DOE if a court ruled that DOE’s inaction constituted a failure to comply with the deadline established in section 302(a) of the Nu- clear Waste Policy Act of 1982 and the contracts? Mr. MURKOWSKI. It is not the man- ager’s intention that section 101(g) limit the rights or remedies available under the Nuclear Waste Policy Act of 1982 or the contracts executed there- under. If a failure by DOE to comply with any deadline established in the amendment also constituted a failure to comply with a deadline established by the 1982 act or a contract under that act, it is not the manager’s intent that section 101(g) modify the right of any contract holder to seek any and all remedies otherwise available for the violation of the 1982 act or for breach of the contract. It is the manager’s in- tention that section 101(f) preserve all of those rights, regardless of whether the same or a similar obligation is ex- pressed in the Nuclear Waste Policy Act of 1996. Mr. LEVIN. With respect to a dead- line imposed for the first time in the Nuclear Waste Policy Act of 1996, is it the manager’s intention that section 101(g) proscribe a court order that the Secretary of Energy comply with such deadline, or granting relief other than money damages to contract holders? Mr. MURKOWSKI. It is not the man- ager’s intent that section 101(g) pro- scribe anything other than financial li- ability for failure to meet a deadline imposed by the Nuclear Waste Policy Act of 1996. To the extent other forms of relief are available for the govern- ment’s failure to comply with a dead- line imposed by the amendment, the manager does not intend that such a remedy be prohibited. Mr. LEVIN. Is it the manager’s in- tention that section 101(g) limit the li- ability of the United States for any- thing other than a failure to meet a deadline? For instance, if the Nuclear Waste Policy Act of 1996 imposes an ob- ligation which is not a deadline, such as the requirement to reimburse con- tract holders for transportable storage systems if DOE uses such systems as part of the integrated management system, is it the manager’s intention that that obligation not constitute a financial liability of the United States? Mr. MURKOWSKI. It is not the man- ager’s intention that section 101(g) limit the liability of the Federal Gov- ernment for anything other than a deadline. The manager does not intend that any other obligation imposed by the Nuclear Waste Policy Act of 1996 be affected by section 101(g). Mr. GLENN. Mr. President, when I first saw the Nuclear Waste Policy Act, S. 1271, I was very surprised at its ap- parent disregard to the rights of citi- zens and the protection of the environ- ment. It appeared to me that pro- ponents of that bill wanted to ignore those issues, all in the name of remov- ing a burden from the nuclear industry. I can understand the desire to make the Federal Government live up to its promises, but not at the expense of the environment or citizen’s rights. The bill, as originally written, con- tained provisions for prohibiting the Environmental Protection Agency from performing its legislatively man- dated function of defining standards for radiation releases from the permanent or interim radioactive waste reposi- tory. Congress established what ap- peared to be a limit which disregarded VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00034 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9243 July 31, 1996 scientific and public input on appro- priate limits. Particularly galling was the prohibition of public input and EPA involvement in standard setting. Other issues of concern included: First, opening the door to reprocessing, called conditioning in the original bill; second, running rough-shod over the citizens of States through which the radioactive waste would be trans- ported; and third, gutting Civil Service laws for a particular DOE office. I filed several amendments, in an at- tempt to correct provisions of the bill that in my view would result in unfair treatment or inadequate protection of citizens and the environment. Several of those provisions have been cor- rected, or at least modified. I am pleased to see that, in the latest version of the bill, the EPA and the NRC have been brought back into the process, albeit somewhat awkwardly. These two agencies are charged with responsibilities for setting standards for protection of the public, workers, and the environment from produced ra- dioactive materials, which includes those found in nuclear reactors or ra- dioactive waste repositories. I am very disturbed, however, with the legislatively imposed standard of 100 mrem per year to the average per- son in the vicinity of Yucca Mountain. I understood that EPA and NRC have the responsibility and authority to es- tablish radiation dose limits and stand- ards. I certainly would not substitute my limited knowledge on the effects of exposure to radioactive materials, for that of the EPA and NRC. I doubt if there are any others in this Chamber who would be qualified to do that, ei- ther. We should leave it to the experts, at EPA and NRC, as well as to the pub- lic, instead of imposing an arbitrary standard of our own. It is claimed that EPA and NRC have veto rights in this bill. However, the bill’s wording is such, that instead of giving the agen- cies the responsibility for establishing a standard, they are required to adhere to our standard, unless they determine that our standard constitutes an ”un- reasonable risk to health and safety.” What constitutes ”unreasonable risk”? How will EPA or NRC determine what is ”reasonable” and what isn’t in terms of risk? That is a subjective judgment, and it is an invitation to extensive liti- gation on that judgment. At the same time, the bill limits judicial review of rulemaking based on the 100 mrem standard. I am also concerned that our limit is significantly higher than limits im- posed for other nuclear activities. Why is this so? Is it because someone has been told that we can’t design a reposi- tory to tougher standards? Is this what health and safety regulation has come to? Don’t set a standard that the Na- tional Academy of Sciences suggests you should set\u2014their report suggests a much lower number than 100 mrem\/yr. for exposure\u2014instead let’s pick one that the engineers say they can easily meet today\u2014despite the fact that the repository will be around, maybe, for thousands of years. I understand that there is disagree- ment among scientists about the ef- fects of low-level radiation. The EPA sets a limit of 25 mrem, and the NRC has historically set 25 mrem around nuclear power plants. International standards setting bodies have also al- lowed dose limits for waste storage of 15 to 25 percent of the 100 mrem total limit. The EPA has also opposed the legis- latively mandated limit, in letters to Senate Committees and individual Sen- ators. I have also been informed that EPA is going to issue their dose limits in the very near future. [Draft within a month.] I want to know what they say in this regard before I set a congres- sionally imposed limit, which may or may not meet our best scientific judg- ment. Beyond this, Mr. President, the phi- losophy behind this bill is one that is seriously questionable. The bill pre- sumes that a permanent deep geologic burial site of nuclear waste is the most suitable solution to the waste problem and then sets up a structure that will inevitably lead to pressures to make the interim site the site of the perma- nent facility, and with legislated safety standards for the permanent reposi- tory. I simply do not believe that we now have the technology or engineering knowledge to credibly design and con- struct a permanent repository that can meet acceptable safety standards for tens of thousands of years. If we did have this ability and understanding, then it would not be necessary to con- tort our environmental laws and regu- latory oversight as this bill does. Until we get closer to being able to design and construct a repository with appro- priate safety standards, there is no rea- son why we cannot continue to have monitored retrievable surface storage of these dangerous materials. The level of risk is not greater than that posed by the construction of a central in- terim facility requiring continuing transportation of radioactive materials from all over the country. Accordingly, Mr. President, I am opposed to the pas- sage of this bill. Mr. KERREY. Mr. President, I would like to take this opportunity to explain my opposition to S. 1936. We can, and we must, seek a responsible and perma- nent solution to the important problem of high-level nuclear waste storage. In that light, I have supported, and will continue to support, a permanent geo- logic repository. What I do not support is designating the location of an in- terim storage site before we have de- termined the viability of the Yucca Mountain permanent repository. I have three major objections to that policy. First, it exerts a growing pressure to name Yucca Mountain as a permanent repository. The pressure to move nu- clear waste to Yucca Mountain con- tinues to increase. The premature deci- sion to authorize the storage of tens of thousands of metric tons of nuclear waste at the site only adds to the pres- sure to push blindly down this course. The American people need to be con- fident that the final decisions regard- ing the permanent repository are based on sound science and not political ex- pediency. The American people deserve a credible, deliberative policymaking process. They must have faith that the location of the permanent repository is based on a fair and balanced consider- ation of environmental, health and safety issues. Mandating the location of a interim site at this time under- mines the public confidence in this process. My second concern is that the in- terim site may become the de facto permanent site. If for either scientific or political reasons, the work on the construction of the permanent reposi- tory stops, who will be motivated to move the waste from temporary stor- age in Nevada to a permanent reposi- tory in another State? The nuclear waste at the interim site will, at that point, be of concern to very few. Those who were responsible for generating that waste will have no moral, legal, or financial responsibility for that waste. I submit that the policy options avail- able at that time will be rather lim- ited. This brings me to my third, and most important, concern. If, despite the in- ertia at work, another site for a perma- nent repository were named, it would set up an unacceptable situation. We would have moved the waste from Yucca Mountain to another, yet to be named, location. Nebraska is a major corridor to Yucca Mountain. Under no circumstances will I vote for a bill that sets up the possibility of the Nation’s nuclear waste passing though my State twice. Simply stated, it is unnecessary to subject the public to the risk and ex- pense of transporting this waste twice. That summarizes the irony of S. 1936, regardless of what the final deposition of the permanent repository at Yucca Mountain, we have errored. If Yucca Mountain is found to be a viable loca- tion, we have unnecessarily under- mined the credibility of the scientific studies. If Yucca Mountain is not a via- ble site, we are given a no-win situa- tion. We either allow the interim site to become the de facto permanent site or we once again move high-level nu- clear waste to another location. Why does the Senate chose this road with no winning outcomes? Are we re- acting to a crisis that does not exist? For years the operators of commercial nuclear power plants have stated that on-site storage was safe. All evidence supports this position, and I believe them. Current on-site storage is not a permanent solution, but by the same token, it does not present a crisis. The alternative to the no-win course outlined in S. 1936 is quite simple. We wait until the completion of the viabil- ity study at Yucca Mountain in 1998. At that time we can consider the pol- icy options available based on sound VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00035 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9244 July 31, 1996 science and hard evidence. We will not have locked ourselves into narrow pol- icy options or have undermined the credibility of the process through pre- mature decision making. The geologic repository will be designed to store high-level nuclear waste for 10,000 years. Yet, this body can not wait 2 years to base public policy decisions on sound science and a credible process. Mrs. MURRAY. Mr. President, I in- tend to support S. 1936, as amended. However, I would also like to express my reservations about portions of this bill. I supported cloture and I appreciate my colleagues from Nevada agreeing to allow this bill to move forward. It is critical that we proceed with the busi- ness we have to complete prior to ad- journment; namely, 13 appropriations bills. I hold no grudges against my sin- cere colleagues from Nevada for their use of Senate rules to delay this bill. Were I in their shoes, I too would like- ly use every parliamentary device available to me to prevent enactment of this bill. It is because I do not want to be in their shoes that I support this bill. I, and many of my constituents, are con- cerned that there may be a renewed ef- fort to place either an interim or a per- manent nuclear waste repository in Washington, at Hanford, adjacent to the Columbia River. As many who have dealt with this issue over the years know, Hanford, a Texas site, and Yucca Mountain were the winners in the per- manent repository selection process. So, for the health of my constituents, I support development of Yucca Moun- tain. Conversely, it is also that fear for my constituents that makes me most nerv- ous about S. 1936. While I appreciate the improvements made about Envi- ronmental Protection Agency author- ity regarding radiation release and ex- posure standards, I am worried about the bill’s easing of some environmental and health standards. It is not unlikely that someday we in Washington may have the rest of the Nation decide that Hanford radiation standards could be lessened in order to foist some new batch of nuclear waste upon us. So, I am leery of such provisions in this bill and am pleased that the authors con- tinue to make improvements. I also am frustrated that the U.S. Government has made a commitment to some of its citizens, to ratepayers, to the nuclear industry, to store nu- clear waste by 1998. Maybe we should not have made such a commitment or collected fees to follow through on that commitment. But we did. It is time to act on that commitment\u2014even if it means so doing with this imperfect ve- hicle. Mr. President, this is a very difficult issue for me. I care about my State, I care about the ratepayers’ money being spent on this never-ending project to get nuclear waste in a permanent geo- logic repository, I care about the health of all people, including Nevad- ans, and I care about fairness. I agree with many of the arguments made by my colleagues, Senators BRYAN and REID. Therefore, I will support any amendments that address my concerns. In the end though, I will support S. 1936 in its final form. Ms. MOSELEY-BRAUN. Mr. Presi- dent, on balance, I support S. 1936. It is not a perfect bill, but it is a reasonable bill, and I do not believe that the United States can afford further, in- definite delays. The decision before the Senate is, in part, about the suitability of Yucca Mountain, the risks associated with the transportation of spent nuclear fuel, and the legacy of spent nuclear fuel created by our nuclear industry. The issues that flow from a decision to open an interim facility near Yucca Mountain, however, are as important as the site decision itself. My own State of Illinois, with 13 reactors, has more nuclear plants than any other State. For 36 years, waste has been building up, and the volume continues to grow. With our excellent network of highways and railways, Illinois also faces issues associated with interstate shipments of spent fuel destined for a permanent repository. There will never be a perfect disposal site for spent nuclear fuel. The fuel is dangerously radioactive, and remains so for hundreds of thousands of years. Whether it is placed in deep geologic storage, sunk beneath the ocean, drilled far into the earth, or shot it into space, every approach poses risks to humans and the environment, and none will ever completely eliminate the dangers of this substance. Without a perfect solution, however, we are forced to choose the next best option: A location where the waste will have the least potential adverse impact on human health. Ideally, such a site is in an unpopulated area, away from threats to underground water, away from animal habitats, and in a place where it poses the least environmental risk and where we are assured of max- imum security protection. Illinois, home to over 11 million peo- ple, is not such a site. Yet, over 5,000 tons of spent fuel are housed at tem- porary locations scattered throughout my State. Most of these locations are in northern Illinois, near great con- centrations of people. The fuel rods are stored in underwater pools, a method never meant to be permanent. While the pools pose no imminent risk, and will likely remain safe for the foresee- able future, they do not ensure com- plete safety, maximum security, or long-term protection of the environ- ment. And the volume of waste at these sites will continue to accumulate as spent fuel is removed from nuclear plants. For Illinois, there are no perfect an- swers, there are only options, and each option has its problems. If a Western waste disposal site is opened, Illinois, because of its key role in our national transportation system, faces a future of literally thousands of shipments of nuclear waste across the State. The other alternative is even less palat- able\u2014keeping large amounts of deadly waste at Illinois nuclear power plans for perhaps 100 years and beyond, in fa- cilities never designed for long-term safety and security, located too close to people, too close to groundwater, and quite frankly, too close for com- fort. My conclusion is that spent nuclear fuel cannot remain in Illinois. Illinois is not suitable for the medium and long-term storage of nuclear waste, and should not have to risk inadvert- ently becoming a de facto permanent site because Congress fails to act. Congress has debated this issue for 14 years. Illinois ratepayers have paid more than $1.5 billion to help finance the construction of a permanent dis- posal site in Yucca Mountain. Despite the billions received, the Federal Gov- ernment has made little progress, and Yucca Mountain is not expected to open until 2010 or later. Meanwhile, space runs out in Illinois beginning in 2001. If Congress fails to act, utilities will be required to build additional storage space at reactor sites, and rate- payers will foot the bill, essentially paying twice for the storage of this waste. I am concerned about transportation. While I have been assured by the city of Chicago and the Illinois Department of Nuclear Safety, both of which have excellent hazardous waste transpor- tation programs, that spent fuel ship- ments pose no risk to the general pub- lic, we must remain as vigilant as pos- sible on this issue. These fuel shipments must be han- dled in a manner that meets the high- est safety standards and does not put Illinoisans or other Americans at risk. That’s why I offered an amendment to this bill that would hold the Depart- ment of Energy and the Department of Transportation accountable for these shipments, and directs the Department of Energy to select routes that avoid heavily populated areas and environ- mentally sensitive areas. I thank the chairman and ranking member of the committee for accepting these amend- ments. I do believe, however, that more should be done to further improve transportation safety, and I hope Con- gress will revisit this issue in the very near future. It is worth remembering that if this bill is enacted this year, there will be no immediate cross-country exodus of spent fuel. The Nuclear Waste Tech- nical Review Board recognizes that ”even if passed into law now, none of the proposals before Congress would enable the operations of a centralized facility before 2002.” Additionally, the process of licensing and developing a large interim facility, and the trans- portation infrastrucutre that goes with it, has been estimated to take 5 to 7 years. Furthermore, it is not expected that the Department of Energy will meet several deadlines in this bill. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00036 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9245 July 31, 1996 Even if S. 1936 is promptly enacted, spent fuel will remain where it is for quite some time. Each decade of delay, however, adds 20,000 metric tons to storage capacity. Beyond 2020, nearly 85,000 metric tons of spent fuel will have been generated. And that is ex- actly why the Nuclear Waste Techical Review Board recommends that action must begin now on a Federal facility, so that full scale operations can begin by 2010 when reactors begin shutting down in large numbers. Mr. President, this debate is not about whether nuclear power should ever have been pursued as an energy option. That has long since been de- cided. We cannot wave the magic wand, nor turn back the clock. Nuclear power is here, and nuclear waste must be dealt with. Our decision on dealing with nuclear waste will never be perfect, because it cannot be perfect. But, it is a decision that must be made. If we fail to act, Congress will send a message to the American people that the nuclear waste problems created by our genera- tion are best resolved, and best fi- nanced, by our children and our grand- children. That is neither right, nor fair, and that is why I am voting in favor of S 1936. I urge my colleagues to do likewise. NUCLEAR WASTE AND THE BUDGET Mr. DOMENICI. Mr. President, I want to take a moment to congratu- late the senior senator from Idaho, the chairman and ranking minority mem- ber of the Senate Energy and Natural Resources Committee and the majority leader on this bill. All of these Sen- ators deserve a great deal of credit for getting this controversial bill pulled together and scheduled for Senate ac- tion in a year when the calendar is working against us. I also want to con- gratulate the Senators from Nevada. This is a difficult issue. I may disagree with them, but I respect the effort and vigor they have put into their opposi- tion to this bill. The Nuclear Waste Policy Act re- quired electric utilities to contract with the Department of Energy to take title and ultimately dispose of nuclear waste generated by these utilities in exchange for a fee on nuclear-gen- erated electricity. The Department of Energy’s view is that they do not have obligation to take this waste until the development of an operational interim storage facility or a permanent reposi- tory. The Clinton administration has shown incredible bad faith on its part to honor these contracts. While the ad- ministration has argued that there is no obligation to take the waste in 1998, it continues to collect fees from elec- tric utilities pursuant to its contracts with these utilities. The Clinton ad- ministration has threatened to veto legislation, last year during consider- ation of the Energy and Water Develop- ment Appropriations bill and this year during consideration of this legisla- tion, providing an interim storage fa- cility that would provide DOE with the means to meets its contractual respon- sibilities while a permanent repository is being developed. Although the ad- ministration has professed support for development of a permanent reposi- tory, the President has not provided the leadership necessary to gain the funding or the changes in the law that will be necessary to ensure an oper- ational disposal facility will be devel- oped. For example, in his most recent budget request, the President proposed to reduce spending for the nuclear waste program over the next 6 years. When DOE indicated it would not ac- cept responsibility for the utilities’ nu- clear waste in 1998, the electric utility industry took them to court. The United States Federal Court of Appeals for the D.C. Circuit recently sided with the utilities on the question of the Fed- eral Government’s obligation and con- cluded that the Federal Government has an obligation to accept title for this waste in 1998 that is reciprocal to the utilities’ obligation to pay. The court clearly rejected DOE’s argument that its obligation was contingent on the development of an interim or per- manent repository. S. 1936 will allow the Federal Govern- ment to honor that commitment. It provides for an interim storage facility to meet the Federal Government’s commitment to take this waste and sets forth a process that will allow the Federal Government to study, evalu- ate, and develop a safe and environ- mentally-sound permanent repository for nuclear waste. Earlier versions of this legislation in- cluded provisions that would have vio- lated the Budget Act. Senators CRAIG, MURKOWSKI, and JOHNSTON have writ- ten a bill that does not violate the Budget Act. It is fully paid for over the 10-year period as required by the Act. The bill, however, will result in a $600 million annual increase in direct spending and the deficit beginning in 2003. This direct spending would be available to fund program manage- ment, interim storage, transportation, and development of a permanent repos- itory. It pays for this increased spend- ing over the 10-year period by accel- erating the payment of fees by electric utilities. Although the bill does not technically violate the pay-as-you-go rule over the 10-year period, it meets this requirement by shifting future payments by utilities into the 10-year budget window. This bill provides direct spending au- thority that will be available to fund all aspects of the nuclear waste dis- posal program. I understand the very strong arguments for this spending au- thority, but as Budget Committee chairman I am constantly confronted with very compelling arguments on why we should increase spending for numerous programs. In this instance, particularly consid- ering the Appeals Court’s decision, clearly the Federal Government has an obligation to take title to this waste in 1998. DOE’s argument was that it had no obligation because no disposal facil- ity was available. The Court discarded this view and interpreted disposal to be a very broad term that included tem- porary storage of nuclear waste. Viewing the tremendous effort that went into getting an agreement for consideration of this bill, I decided not to pursue an amendment that would have limited the increase in direct spending to what is needed to develop an interim storage facility. If this leg- islation is not enacted, I intend to pur- sue modifications to this legislation to limit the increase in direct spending to what is necessary to provide for the in- terim storage of this waste. I think a very strong case can be made that the Government has a binding contractual obligation to provide for the interim storage of this waste and that is clear- ly supported by the court’s opinion. Mr. ROCKEFELLER. Mr. President, I oppose the Nuclear Waste Policy Act, and I would like to share some of my reasons with my colleagues. First, the Senate should not be ram- ming through a bill to designate an in- terim storage site just when a com- prehensive, sophisticated process is well underway to come up with a per- manent site or solution. This legisla- tion basically says the Senate knows better\u2014it says the Senate should take the place of scientists and experts, choosing Nevada as the so-called in- terim site and presumably paving the way for the same location to be used forever. I do not think this is the time what- soever for the Senate to make this de- cision\u2014it’s a misuse of power, it con- tradicts other policies that Congress has put on the books, and it could trig- ger all kinds of unfortunate con- sequences, including the possibility of a very serious accident. This bill, S. 1936, violates current law, the 1987 Nuclear Waste Policy Act amendments. Under the 1987 law, DOE is not allowed to begin construction of an interim storage facility until the NRC has granted a construction license for the permanent site. Also, that law stated that no more than 10,000 metric tons of waste could be stored at the in- terim site before the permanent site began operating, and no more than 15,000 metric tons after that. But S. 1936 authorizes an interim site storage capacity far greater than either of these levels\u201440,000 metric tons after phase two, which will be increased to 60,000 metric tons if Yucca Mountain falls behind schedule. In 1987, Congress was saying that it would be unwise to ship nuclear waste across the country to a temporary above-ground storage site until a per- manent site gets built. The same is true now. It still isn’t smart. But, under this bill, the waste would be shipped to the Nevada interim storage site anyway, before the studies have been completed to certify whether or not Yucca Mountain is the place to be a permanent repository of nuclear waste. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00037 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9246 July 31, 1996 Some say this isn’t true, that there is a safeguard in the bill. But, while the bill requires DOE to stop construction on the interim site if the President de- termines that Yucca Mountain is un- suitable as the permanent repository, there’s a catch. If Yucca Mountain isn’t found suitable, the bill will re- quire that the interim site be built in Nevada anyway unless the President picks an alternative site within 18 months. This alternate site must then also be approved by Congress within 2 years after that. Leaving aside the idea that we should designate nuclear waste sites on objective criteria rather than strict timetables, does anybody believe another site will be found in 18 months? Or that Congress will approve another site 2 years after that? I’m not betting on it. Why all this pressure to act on the bill before us, S. 1936? From everything I have seen, there is no overwhelming case, for safety or related reasons, to force the transportation and placement of this waste into an interim site. The nonpartisan Nuclear Waste Technical Review Board issued a report saying that there is no compelling technical or safety reason to move spent fuel to a centralized facility for the next few years. And the Nuclear Regulatory Commission has said that the waste could safely remain at the current sites for far longer than that in dry cask storage facilities. In short, this waste doesn’t have to be moved now. In fact, it is even conceivable that science may ultimately lead to the re- jection of a single repository, because of the dangers of transporting waste and progress being made in developing alternatives. The Senate should not be intervening, singling out Nevada, and short-circuiting what could be a safer, sounder, and less costly solution. And there are a number of safety concerns that argue against this bill. Experts have raised concerns about the radiation exposure standard in this bill, and I think we should question the preemption of several key environ- mental laws, such as the Clean Water Act and the National Environmental Policy Act. Transportation of this waste also is a major concern, and reason enough to reject this legislation. If the plan in this bill goes forward, we will see the transport of up to 60,000 tons of nuclear waste by road and rail from nuclear fa- cilities around the Nation to this in- terim storage site. These mobile nu- clear waste sites will travel through West Virginia and 42 other States. I have been told that 50 million people live within 1 mile of the proposed transportation routes that would be used. In West Virginia, we have no nuclear facilities. We have no spent fuel. We have no nuclear waste. And we have no storage problem. But, under this bill, West Virginians will have nuclear waste being shipped through the State. I do not want to be alarmist, but I do have concerns that West Virginia and the other 42 States have not had ade- quate time to develop the necessary transportation safety plans, and are not ready to handle the possible acci- dents that may occur. I don’t know how many of my colleagues have spent time in southern West Virginia, but the mountains and roads there will not be friendly to rescue efforts if one of these trains goes off the tracks. Under this bill, the zeal of some to force this premature interim storage facility into Nevada may raise risks for protecting the people and the environment in places like West Virginia. Mr. President, this is an unnecessary bill that forces Nevada to prematurely take the Nation’s nuclear waste and become America’s so-called interim storage site. It looks like a set-up to becoming the permanent storage facil- ity, not as a result of the promised ob- jective and scientific process, but as a result of political pressure and an ea- gerness to dump a problem onto a lone State. It uses a radiation exposure standard that looks questionable and undermines environmental laws in ways that could be dangerous. It threatens to expose millions of Ameri- cans to the risks of transporting and storing this waste. The Senate has no business passing this bill. The President has made it clear he will veto the bill, wisely in- sisting on the completion of the kind of process that should be used to make decisions as monumental as where, when, and how to transport and locate nuclear waste. The Senate should defer to that process as well, and resist this idea of singling out one State in such an insensitive and heavy-handed man- ner. The PRESIDING OFFICER. The Sen- ator from Louisiana. Mr. JOHNSTON. Mr. President, I wonder if my colleague from Alaska and my colleagues from Nevada will listen to a question, which is, as I un- derstand it, the plan now is to go to third reading immediately and vote on final passage at 4:55? Mr. MURKOWSKI. Mr. President, in response to my colleague from Lou- isiana, that is the plan that has been agreed to. Mr. REID. It is my understanding there will be general debate until that time, that we each have an amendment left, and it is my understanding neither the proponents of the legislation nor the opponents of the legislation are going to offer the last amendments they have in order, and that the time will be evenly divided between now and 4:55 for general debate on the legisla- tion. Mr. MURKOWSKI. That is my under- standing, Mr. President. Mr. JOHNSTON. I wonder if we can advance that by unanimous consent. Mr. President, if it is in order and agreeable with my colleague from Alaska, I ask unanimous consent that we move immediately to third reading, and that the time between now and 4:55 for final passage be equally divided be- tween the Senator from Alaska and the senior Senator from Nevada. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. MURKOWSKI. I thank the Chair. The PRESIDING OFFICER. The question is on the engrossment and third reading of the bill. The bill was ordered to be engrossed for a third reading and was read the third time. The PRESIDING OFFICER. Who yields time? Mr. MURKOWSKI addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Alaska. Mr. MURKOWSKI. Mr. President, I wonder if I may have the Chair identify the time that will be divided on either side. The PRESIDING OFFICER. The Sen- ator from Alaska has 30 minutes; the Senator from Nevada 31 minutes. Mr. BRYAN. Mr. President, the Sen- ate is not in order. I did not hear the inquiry of the Senator from Alaska. The PRESIDING OFFICER. The Sen- ator is correct. The Senate will come to order. I ask that all audible con- versations be removed to the Cloak- room. The Chair recognizes the Senator from Alaska. Mr. MURKOWSKI. Mr. President, as I understand it\u2014I was distracted as well\u2014we have about 30 minutes. The PRESIDING OFFICER. The Sen- ator from Alaska has just over 30 min- utes. Mr. MURKOWSKI. I thank the Chair. I inquire among Senators on this side as to how much time they need. I think the Senator from Wyoming requests time. How much time does he need? Mr. SIMPSON. Mr. President, I think 5 to 7 minutes will be quite adequate. Mr. MURKOWSKI. The Senator from Idaho, I know, is going to request time, 10 or 15. The Senator from Louisiana. I am going to yield myself 5 minutes at this time, and I will attempt to accom- modate\u2014why don’t I just go ahead with the Senator from Wyoming now and allot him 5 minutes. I yield 5 min- utes to my good friend, the Senator from Wyoming, who, unfortunately, will be departing this body at some point in time. The PRESIDING OFFICER. The Sen- ator from Wyoming. Mr. SIMPSON. Mr. President, I do richly commend my friend, Senator MURKOWSKI. I have watched him dog- gedly work in this area. There are many who have done so much in this area over the years: Senator JOHNSTON from Louisiana; I was involved with it as chairman of the Subcommittee on Nuclear Regulations; Senator Gary Hart, and back through the years. The problem with nuclear waste stor- age is a most serious and complex one. I cannot tell you how tired I am of the people on both sides who are extrem- ists in the area; those who are the ”Hell, no, we won’t glow” group and the ”nobody’s ever been killed” group. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00038 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9247 July 31, 1996 Somewhere between those two groups is sanity. I think we are finally on the track of doing something sensible. The mere mention of nuclear waste sends shivers up the spine of many people. I discov- ered that when I came to the Senate and joined the Nuclear Regulatory Subcommittee. That is what happens when one utters, ”All right, I’ll take an assignment no one else wants.” I did that a couple of times, and I got Immi- gration and Nuclear Regulations and Veterans Affairs, so cursed with busi- ness three times in some ways. I have enjoyed those issues, but they are filled with emotion, fear, guilt and racism, all three of them. So here we have this entire issue that has been a continuing victim of gross misinformation, reprehensible scare tactics, particularly in the 17 years since Three Mile Island, and certainly people deserve to know more of exactly what we are dealing with. The waste products resulting from many good and beneficial uses of nu- clear elements are not just going to go away. It is a little late for protesters just to run around the streets with signs saying, ”Don’t put it here, don’t put it there.” Wastes of varying levels of activities are piling up at thousands of sites across this country from sources like universities, nuclear powerplants, vital medical procedures conducted at hos- pitals and even dismantled Soviet mis- siles. Much of this waste is sitting\u2014sit- ting\u2014in or near highly populated areas which face potential threats with re- gard to earthquake, tornado, and hurri- canes. The specific problem the bill address- es is the disposal of high-level nuclear waste from powerplants, the spent-fuel rods that are left over after years of generating electricity. Back in 1982\u2014 incidentally, the same year Cal Ripken’s playing streak started\u2014Con- gress passed the law. I was involved in that. In essence, it said we will make a deal with the nuclear power consumers in this country. We said the Federal Government would provide a place for storing the spent-fuel rods, but the consumers had to pay for it. Since that law has passed, those fees, plus interest, have provided $11 billion; $6 billion has already been spent, some of it for unrelated purposes, and still construction of the disposal site has not even started. We are running out of time. No more time for placards, no more time for running through the streets, no more time for standing out on the highway, because here is where we are: There are 109 active commercial powerplants in 35 States providing 20 percent of the country’s electricity. For the most part, the spent-fuel rods produced in those facilities are there on site in pools under 30 feet of demineralized water. If the water were to drain away for any reason because of some struc- tural defect from natural disaster, the rods would reheat and eventually melt down. These pools were never designed for long-term storage. Yet, because of the strength of the political opposition to a permanent site\u2014I can understand all the reasons\u2014we run the risk of jeopardizing the health of millions of Americans. A typical nuclear power- plant produces 30 tons of spent fuel. The PRESIDING OFFICER. The Chair advises the Senator that his 5 minutes have expired. Mr. SIMPSON. I ask for an additional 2 minutes. The PRESIDING OFFICER. The Sen- ator will proceed. Mr. SIMPSON. A typical nuclear powerplant produces 30 tons of spent fuel every year. Right now more than 30,000 metric tons of spent fuel are being stored at 75 sites across this country. And 23 reactors will run out of room in their storage pools by 1998. By 2010, a total of 78 reactors will be out of storage space for their spent fuel and have about 45,000 tons of metric tons of spent fuel. It is very important we get the waste out of these inappropriate and unsafe locations into a technologically sound, permanent storage site. It is also very important for every person in this country to realize that it is perfectly possible and technically feasible to transport and store this waste with very little risk to human health or the environment. I point out the Department of Energy has been transporting nuclear waste from the weapons facilities under its jurisdictions for 30 years without a sin- gle incident of environmental or human harm. It is crucial to get on with the busi- ness and get on with the work of an ef- ficient and safe system for civilian nu- clear waste before the risks we have been dodging with our current hap- hazard setups catch up with us. I applaud the work of Senators MUR- KOWSKI and CRAIG and JOHNSTON, their bipartisan effort through the years. They have a realistic piece of legisla- tion which finally allows the Federal Government to live up to its commit- ment to provide a safe, secure, and cen- tralized location for the storage of the most radioactive of the nuclear waste. It also provides the money and Federal assistance for training State and local personnel in safety and emergency pro- cedures. It is a very important bill and a good compromise, and good work all around. I am very pleased to support it and encourage my colleagues to do the same. I thank very much the Senator from Alaska. Mr. MURKOWSKI. Madam President, I believe the other side wants to speak. I retain the remainder of our time. Mr. BRYAN addressed the Chair. The PRESIDING OFFICER (Mrs. FRAHM). The Senator from Nevada. Mr. BRYAN. Madam President, how much time remains under the control of the Senator from Nevada? The PRESIDING OFFICER. The Sen- ator from Nevada has 30 minutes. Mr. BRYAN. I thank the Chair. I, at this point, will allocate myself 10 min- utes of that time and ask the Chair to inform me when I have used that. Madam President, it has been a num- ber of weeks we have been discussing the high-level nuclear waste issue. And I think it is time to put this into some perspective. In 1980, some 16 years ago, debate on the floor of the Senate indicated that there was a great urgency and imme- diacy to take action, that there was a crisis, that indeed, if nothing were done, if we did not get the interim stor- age, what was called MRS storage, nu- clear reactors around the country would have to shut down by 1983. I offer that interesting piece of his- tory as a footnote because the debate today is in almost identical respect the same debate that occurred this very week on July 28, 1980. This is a con- trived and fabricated crisis. Let me begin by pointing out what the Nuclear Waste Technical Review Board\u2014this is a board that was created by act of Congress in 1987. And the Nu- clear Waste Technical Review Board has concluded that there is no need for interim storage at this time. And that is a conclusion which they have en- dorsed. Anyone who has any question about it, this is the document. So all of this debate is at best premature and in our view totally unnecessary. When you look at the substance of the legislation, what is occurring is an absolute travesty. The major environ- mental provisions that protected Americans with bipartisan support for more than 2 decades are simply wiped out, simply wiped out. We have just had a debate. The National Environ- mental Policy Act, designed to apply to circumstances such as this, for all intents and purposes, has been evis- cerated by the nuclear utilities in their zeal to get interim storage. Let me just cite two specific ref- erences. Among the things that the En- vironmental Policy Act would ordi- narily consider would be the environ- mental impacts of the storage of spent fuel and high-level radioactive waste for the period of foreseeable danger \u2014thousands of years. This piece of leg- islation would restrict the application of NEPA, the Environmental Policy Act, to the initial term of licensure of about 30 years. Nothing has occurred to date that would establish a design criteria for such facility. Ordinarily the Environ- mental Policy Act would consider the alternatives to the design criteria. That is now wiped out. NEPA cannot consider design criteria, cannot con- sider the application for longer periods of time of health hazards. So we have a major piece of environmental legisla- tion wiped out. Preemption. The amendment offered by our friends from the other side has put us in the situation in which all Federal laws that are inconsistent with this act are wiped out. And we have gone through a whole litany of them. We have the National Environmental Policy Act, FLPMA, clean air, clean VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00039 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9248 July 31, 1996 water, all of those, if they are incon- sistent, they do not apply. So forget environmental laws when it comes to siting an interim storage. That is sim- ply an outrage, Madam President, no matter how one feels about nuclear en- ergy or whether one believes there ought to be some type of interim stor- age. With respect to standards, nowhere in the world\u2014nowhere \u2014is a radio- active standard of 100 millirems estab- lished by statute\u2014nowhere. And 100 millirems would be at least 24 times the standard for the safe drinking water, would be at least six times-plus the standard set for the WIPP facility. I must say, this is all laid out right here. So, 100 millirems. Why in God’s name, for the most dan- gerous stuff on the face of the Earth, would we mandate by statute a 100- millirem standard, and then say to the EPA, well, you know, if you can prove that that is unsafe, then you can change it. We do not do that. I mean, if this were a straight-up deal, if this were not some contrived wish list by the nuclear utilities, the EPA would be designated as finding a standard and establishing it. No other place in the world. The National Academy of Sciences was asked in a piece of legislation ap- proved in 1992\u2014the energy bill\u2014was asked to come back and make a report with respect to a standard. And what they said is that the safety standard, in terms of radioactive exposure\u2014this is the ”Technical Bases For Yucca Moun- tain Standards.” This is the product of the National Academy of Sciences. And what they said is, it should be some- where between 10 and 30 millirems. How can you justify it? How can you justify that? And indeed when you look at the Environmental Protection Agen- cy, here is what our Administrator tells us. S. 1936 and the substitute amendments es- tablish a Congressionally set overall per- formance standard of 100 millirems a year to the average person in the general vicinity of Yucca Mountain nuclear waste repository for 1000 years. Although the substitute amend- ments allow EPA to challenge the 100 millirem a year standard, EPA believes the standard is inappropriate because it is less protective than other U.S. standards and international advisory board recommenda- tions for a single source. Furthermore . . . the actual risk to public health and the envi- ronment will occur well after 1,000 years. . . . And the limitation that is imposed in this legislation applies only to 1,000 years. So again, public health and safety be dammed. Anything that helps the nu- clear utilities, that is what we are going to buy into. Madam President, that is just an ab- solutely indefensible matter of public policy. I must say that no other place in the world establishes such a stand- ard. We are frequently cited to the international sanctioning bodies. And although 100 millirems is referenced in those standards, never is it referenced for single source. It indicates here that most other countries have endorsed the principle of apportionment of the total allowed radiation dose. So no\u2014no\u2014standards that exist in the world, to the best of our knowledge, would propose 100 millirems from a single source. Finally, on the standards issue, I must say, clearly what drives that de- cision, as well as every provision in this bill, is to make it easier to lower public health and safety standards, to make it less costly. And the public health, and the consequences of those persons, would be effectively by and large ignored. My colleague is going to talk a good bit about transportation, but we are talking about 85,000 metric tons. We are talking about 16,000 shipments or more, traveling across the rail cor- ridors in America, as well as our high- way system, and 51 million Americans live within 1 mile of that. Each of those railroad casks weigh 125 tons, and the consequence of the hazardous cargo in terms of radioactivity would be the equivalent of 200 bombs dropped at Hiroshima. We are not just talking about Nevadans at risk. If you ship it by way of cask and highway cargo, you are talking about the equivalent of 40 bombs. Finally, and we have tried to make this point albeit it is a difficult thing to explain, in effect this is a financial bailout of the nuclear power industry. Since the very enactment of the Nu- clear Waste Policy Act of 1982, its fun- damental premise has been that the utilities are the ones that get the prof- it, they are the ones that generate the waste, they have the financial respon- sibility. Through a series of significant changes, albeit somewhat subtle, a cap or a ceiling or a limitation is placed on the amount that the utilities will be required to contribute. Now, to the year 2002, it is 1 mill based upon each kilowatt of power gen- erated. After the year 2002, it will be- come no more than the amount of the appropriation each year. In 2003, we would be talking one-third of a mill, the balance all left to the taxpayer to pick up. Madam President, I simply say, No. 1, this debate is unnecessary, this bill is unnecessary, and that comes from a body of eminent scientists impaneled as a result of legislation enacted by this body. The National Environmental Policy Act is, in effect, gutted as a con- sequence of the restrictions placed upon it. All other Federal environ- mental laws are preempted. The stand- ards that are set are so high as to con- stitute a clear and present danger to public health and safety. The Environ- mental Protection Agency agrees, as do others. Ultimately the taxpayer, not the utility, will pick up the bill if this bill becomes law. I reserve the remainder of my time. Mr. MURKOWSKI. I yield 6 minutes to my friend from Louisiana. Mr. JOHNSTON. Mr. President, in the original form of our bill, we pro- vided for 100 millirem radioactivity limit from the repository. However, be- cause our friends from Nevada stated the EPA should have a role here, we amended that. The present bill now on third reading provides, if EPA finds that the 100 millirem would not be con- sistent with health or safety, they may set it at another level and, indeed, whatever they would set under the Ad- ministrative Procedure Act would be final unless that level is arbitrary and capricious. Madam President, we have provided here for the role of EPA to make the health and safety determination. Why did we set it at 100 millirems to begin with? Because that is the level set by the International Commission on Radi- ological Protection, the National Coun- cil on Radiation Protection and Meas- urements, the U.S. Nuclear Regulatory Commission, and indeed the EPA in its radiation protection guidance for expo- sure of the general public, 1994, as well as the International Atomic Agency. Beyond that, the 100 millirems is a commonsense level because there is more than 100 millirems difference in the natural exposure of someone in Washington, DC, which is about 345 millirems, and Montana, Wyoming, or Colorado, where the average exposure exceeds 450 millirems, so that if you live in an average place in the United States or if you live in Washington, DC, you would get a higher exposure by flying to Denver, CO, or Butte, MT, Cody, WY, or you name it, and living there than living here. I remind my colleagues, Madam President, there has never been the slightest warning of EPA or of any nu- clear radiation body to say it is dan- gerous to live in one of those mountain States where the millirem activity per year exceeds what we provide in this bill. If EPA should so decide, they may set the standard elsewhere. Madam President, Nevada is the right choice. Nevada is one of the most remote places on Earth, Yucca Moun- tain. It is one of the driest places on Earth, and, Madam President, that area has been polluted by over 500 nu- clear tests which have been not sealed off from the environment. Those nu- clear tests have provided all of the ra- diation byproducts that are contained in nuclear waste, including cesium 137, iodine 131, strontium 90, americium 243, technicium 99, plutonium 241. You name it, if it is in nuclear waste, it is contained already in the Nevada test site. Need I remind my colleagues that our two colleagues from Nevada have been steadfast in wanting not less tests but more tests at the Nevada test site. Those tests have not been sealed off from the environment. Indeed, some of those tests have been right in the water table. What is the defense of my colleague from Nevada when we say, how could you on the one hand want nuclear bomb tests and on the other hand not want these rods which are in canisters, VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00040 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9249 July 31, 1996 and those canisters are nonleak can- isters that I believe would be valid and provide protection for 10,000 years? The answer is, well, they are only 1 ton. I guess that is somewhere between 2,000 and, if you use a long ton, 2,200 pounds of nuclear material. Now, Madam President, a ton of ra- dioactive material not sealed off from the environment is many thousands of times what you would expect in any leakage which might occur thousands of years from now from one of these containers. The containers designed to hold these nuclear waste rods are de- signed to last hundreds and thousands of years. We would imagine they would last, frankly, 10,000 years. That has not been proved. I do not state that as a fact. That is what we speculate. But, certainly, hundreds of years without any leakage whatever. Yet the Nevada test site now already has 1 ton of all these radioactive products which are not sealed off from the water supply, not sealed off from the ground around it, but where unprotected blasts took place in the ground. Madam President, if there is ever a place in the country to store the nu- clear waste, it is adjacent to that Ne- vada test site. That is why, Madam President, the Congress chose in 1987 Yucca Mountain. That is why it is the right place to store this waste today. Mr. MURKOWSKI. Madam President, how much time is remaining on this side? The PRESIDING OFFICER. The Sen- ator has 16 minutes, and the other side has 19 minutes. Mr. REID. Madam President, the Senator from Louisiana is a brilliant man. He knows all the procedures here. He certainly knows basic mathematics. Basic mathematics indicates that 1 ton in the ground, spread out over a signifi- cant distance under the ground, is cer- tainly much different than 70,000 tons stacked on top of the ground\u2014signifi- cantly different. So we need to hear no more, I believe, about the Nevada test site. Madam President, S. 1936 guts the ex- isting law of its environmental safety provisions and forces the Federal Gov- ernment to take responsibility for the waste and liabilities of the nuclear power industry. The nuclear power in- dustry has been extremely clever in spending their money to generate this argument, because they recognize that the nuclear power facilities don’t last forever. In fact, most are being phased out right now. They want no responsi- bility for the garbage they have gen- erated. They want to shift the ball to the Federal Government. That is what this legislation is about. It is also about corporate welfare at its very, very worst. It will needlessly expose people across America to the risk of nuclear accidents. S. 1936 is proposed because the nu- clear industry wants to transfer the risk and responsibilities and their le- gitimate business expenses to the American taxpayer. The interim stor- age facility is not needed. In accord- ance with the charter of the Nuclear Waste Technical Review Board, in March of this year, I repeat, it found no compelling safety or technical rea- son to accelerate the centralization of spent nuclear fuel. Implementation of dry cask storage at generator sites is feasible, cheap, and relatively safe. We have talked at great length, and will talk some more, about how unsafe it is to transport this product around the country. There is no need to do that; it is safe where it is. It will be even safer with dry cask storage. If it is properly implemented\u2014and that is fairly easy to do\u2014the investment will double its return by storing the mate- rial in certified multipurpose canisters so the material is ready for shipment at some later time. Operating costs for onsite dry cask storage, according to Mr. Dreyfuss’ of- fice, amounts to only about $1 million per year per site. Capital costs for on- site storage include preparation of placement site and canisterization of spent fuel. Storing spent fuel in multi- purpose canisters means that the mar- ginal onsite capitalization costs are only a few million dollars. Imple- menting onsite storage at all sites needing some additional storage space, would require less than $60 million for capitalization and less than $30 million per year for their operation. This is compared to the multibillions of dol- lars they are talking about for interim storage. So onsite storage could be maintained for about 40 years before equalling the construction cost of in- terim storage at the test site, as esti- mated by the sponsors of this bill. There is simply no compelling need to rush into centralized interim storage. It is simply wrong. Madam President, we have talked about terrorism. We talked about it be- cause it is something we should talk about. I referred, briefly, at the end of the last amendment that was offered, to a statement that we received, with- out solicitation, from the Blue Ridge Environmental Defense League, lo- cated in North Carolina. The letter says a number of things. We have ad- mitted it into the RECORD. Let me refer specifically to some of the things con- tained in this extremely important communication. These shipments of nuclear waste cannot be kept secret so long as we live in a free society. And we do. Our actions were peaceful\u2014 Peaceful following around these nu- clear waste shipments. \u2014but we proved that determined individ- uals on a shoestring budget\u2014 Not paid for by terrorists with huge amounts of money, because some ter- rorist groups are supported by foreign governments. \u2014can precisely track international and do- mestic shipments of strategic materials. In the wake of Oklahoma City and Atlanta, the dangers posed by domestic or international terrorists armed with explosives make the transport of highly radioactive spent nuclear fuel too dangerous to contemplate for the foreseeable future. They go on to say that their work is in North Carolina, Tennessee, and Vir- ginia. They have determined that the emergency management personnel in these areas are dedicated volunteers, but they are unprepared for nuclear waste. Volunteer fire departments in rural coun- ties are very good at putting out house fires and brush fires\u2014 And the person writing this letter knows that because he has worked in these volunteer fire departments. They say, among other things: The remote river valleys and steep grades of Appalachia are legendary. In Saluda, North Carolina, the steepest standard gauge mainline railroad grade in the United States drops 253 feet per mile, 4.8 percent grade. The CSX and Norfolk Southern Lines trace the French Broad River Valley and the Nolchucky Gorge west through the Appa- lachian Mountains along remote stretches of rivers famous among whitewater rafters for their steep drops and their distance from civ- ilization. The Norfolk Southern Railroad crosses the French Broad River at Deep Water Bridge where the mountains rise 2,200 feet above the river. These are the transport routes through western North Carolina that will be used for high-level nuclear waste as soon as 1998 according to S. 1936. They say: When we asked [the emergency response teams in North Carolina about their readi- ness to respond to a nuclear transport acci- dent, they answered professionally, saying, ”We’ll just go out there and keep people away until State or Federal officials arrive.” Well, another western North Carolina coordinator said: There is no response team anywhere in this part of the State, and, for the foreseeable fu- ture, there is no money in local budgets to equip us with any first response to radio- active spills. In closing, Louis Zeller tells us: I am asking you to oppose this expensive and dangerous legislation which would place an unfair and unnecessary financial burden on communities and which would place at risk the health and safety of millions of American citizens. Madam President, this legislation is unnecessary. It opens the doors to added terrorism, and it only further frightens our communities. Madam President, the President of the United States and others in the Federal Gov- ernment have stated they oppose this legislation. We have a letter from the Director of the Department of Energy, a Cabinet-level officer. She should know about nuclear waste; she worked in the nuclear industry previously. She says, without equivocation, that this is bad legislation. ”The bill does not solve,” she says, ”a fundamental prob- lem posed by the Indiana-Michigan Power Company case, namely, that the Department must begin to dispose of nuclear waste. Instead, the bill threat- ens to repeat the same mistakes made in the past.” She goes on to say other things, but basically that this is bad legislation. Hazel O’Leary and I have not always been on the same side of the debates. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00041 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9250 July 31, 1996 She is someone who is head of the De- partment of Energy, a Cabinet-level of- ficer, formerly in the nuclear industry, and she says this is bad legislation. Also, our head of the department that oversees environmental laws, Carol BROWNer, has written a letter dated last night saying, ”I am writing to in- form you that the Environmental Pro- tection Agency opposes this legisla- tion, S. 1936, and all the amendments. S. 1936 and the substitute amendment are a concern to the EPA because they limit consideration of public health and environmental standards in order to expedite the repository’s opening. EPA is also concerned about the pre- emption. It takes away Federal laws.” Madam President, this legislation is a travesty. It has big bucks behind it. We have not had the opportunity to have people in chauffeur-driven lim- ousines come and lobby Members of the Senate. We have not had the oppor- tunity to have people stand in the halls and lobby against this legislation. We have a grassroots organization, like the people from the Blue Ridge Envi- ronmental Defense League, who stand up for what is right in this country. What is right in this country is to op- pose this legislation. It would curtail a broad range of health and safety laws, it would quadruple the allowable radi- ation standards for waste storage, and it would exacerbate the risk of trans- porting nuclear waste throughout the country. For these and many other rea- sons, I call upon my colleagues\u2014I beg my colleagues\u2014to vote against this legislation. It is the most antienvironmental legislation in this Congress, and to say that, you say it all. I reserve the remainder of our time. Mr. MURKOWSKI. It is our under- standing that we have 16 minutes. Mr. PRESSLER. Mr. President, I rise today to express my support for S. 1936, the Nuclear Waste Policy Act, and to congratulate my colleagues Senator FRANK MURKOWSKI, chairman of the Committee on Energy and Natural Re- sources, and Senator LARRY CRAIG, vice-chairman of the Subcommittee on Energy Research and Development, for all their hard work on this bill. I am proud to be a cosponsor of this legisla- tion. As chairman of the Committee on Commerce, Science, and Transpor- tation, I have a particular interest in the transportation aspect of this legis- lation. Clearly, we will need a special transportation system to safely trans- fer nuclear waste to a centralized stor- age facility as mandated by S. 1936. Already, there are some tough laws in place. Shipments of spent nuclear fuel and other commercial or defense- related high level radioactive waste must adhere to very strict standards before the waste can move on Amer- ica’s highways or railroads. S. 1936 will strengthen these standards. It’s important to point out that under the current regulation moni- toring process, the Federal Govern- ment and the nuclear industry have transported thousands of shipments of nuclear waste without any release of radioactive material. That’s an impec- cable safety record. This legislation takes additional steps to maintain an already safe environment for the trans- portation and storage of spent nuclear fuel. Let me set the record straight even further. As part of the Nuclear Waste Policy Act, the Department of Energy promised to begin transporting com- mercial spent fuel to a Federal man- agement facility in 1998. To solidify this promise, contracts were signed be- tween the Federal Government and utilities that own the Nation’s nuclear power plants. S. 1936 reaffirms that commitment. S. 1936 would not weaken current law\u2014it improves it. Spent fuel ship- ments would still be regulated by the Hazardous Materials Transportation Act and other transportation regula- tions that have protected us for the past 30 years. To ensure safety in every step of the transportation network, the Nuclear Regulatory Commission [NRC] already has established demanding regulations on the packaging and transportation of radioactive materials. Spent nuclear fuel rods are trans- ported in heavy steel containers. Be- fore these can be approved by the NRC, manufacturers must demonstrate that each container design can withstand a number of hypothetical accident condi- tions, including being dropped from 30 feet onto a flat, unyielding surface; falling onto a vertical steel spike; being engulfed in a 1,475 degree Fahr- enheit fire for 30 minutes; and being submerged under 3 feet of water for 8 hours. The same container also must withstand a separate immersion test in 50 feet of water for 8 hours. Mr. President, I challenge any other transportation container to measure up to these rigorous tests. Again, these are the tests required under existing law. The containers that meet these tests are some of the most rugged on Earth, and rightfully so. The Department of Transportation also has responsibility for regulating many aspects of radioactive waste shipments. Shippers are required to file a written route plan that includes the origin and destination of each ship- ment, preapproved routes to be used, estimated arrival times and emergency telephone numbers in each State a shipment will enter. The principal in- tent of DOT routing guidelines is to re- duce the time in transit. The agency requires tractor-trailer shipments to use preferred highway routes, such as interstate highways and bypasses that divert them away from highly populated areas. States also may propose alternate routes to the interstate highway system. In fact, at least 10 States already have established alternate routes. Potentially affected States and localities must be consulted in the process of designating alternate routes. The Transportation Department also requires that shippers notify the Gov- ernor 7 days in advance of material being transported through the State. To ensure the safety of these ship- ments, the Department of Energy has developed a satellite-based system that allows continuous tracking and com- munications with all DOE shipments. Mr. President, recent shipments of foreign research reactor fuel from Sunny Point, NC to the Savannah River site in South Carolina provide a perfect example of the safeguards which are in place for spent fuel trans- portation. In moving this fuel, the En- ergy Department worked closely with State and local officials on training and planning. They practiced every- thing\u2014from preparing routine shipping procedures to testing emergency re- sponse systems. The Nuclear Waste Policy Act would require DOE to pro- vide similar funding and technical as- sistance for State, tribal and local training and planning activities in ad- vance of any actual commercial spent fuel shipments. Mr. President, there is no disputing that transportation is one of the most important issues in our consideration of S. 1936. It is an essential component of an integrated nuclear waste manage- ment program. Clearly, as I have outlined today, nu- clear waste can be transported safely and efficiently. A comprehensive plan already is in place to ensure this. To maximize safety, the plan directs ship- ments away from metropolitan areas whenever possible. It allows for the se- lection of the most direct and safest routes. It provides training to national, State and local officials so that they are ready to respond in the event of an emergency. We know that accidents happen, Mr. President. That is why S. 1936 builds on the existing regulatory framework that, to date, has protected this Nation during more than 2,400 shipments of commercial spent nuclear fuel. I urge my colleagues to take a close look at this program. Many of my con- stituents have expressed their interest in nuclear waste transportation. Fortu- nately, there is good news to report to them. We have a safe, well-coordinated system. It ensures the safety of nuclear waste transportation by relying on the expertise of the Nuclear Regulatory Commission, the Department of Trans- portation and the Department of En- ergy, as well as the State and local governments. S. 1936 builds on the sys- tem to enhance protection of our citi- zens and our environment. I urge my colleagues to support this legislation. By passing S. 1936, we can take the final steps towards ensuring that nuclear waste is managed in the safest possible manner. SECTION 203 Mr. President, I see the distinguished chairman of the Energy and Natural Resources Committee on the floor. My colleague has been very helpful in ad- dressing a concern I had with certain VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00042 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9251 July 31, 1996 provisions in Section 203 of S. 1936. I appreciate Chairman MURKOWSKI’s at- tention to this matter. Mr. MURKOWSKI. I thank the Sen- ator from South Dakota. The Senator has raised some understandable con- cerns regarding requirements for the transportation of spent nuclear fuel. Mr. PRESSLER. I would like to fur- ther question my colleague regarding the transportation training standards addressed in this bill. In particular, section 203 (g) would require the Sec- retary of Transportation to issue regu- lations establishing training standards applicable to workers directly involved in the removal and transportation of spent nuclear fuel and high-level radio- active waste. New language, as pro- posed by the chairman on my behalf, would also require that an employer possess evidence of satisfaction of these training standards before an indi- vidual could be employed in such activ- ity. As chairman of the Senate Com- mittee on Commerce, Science, and Transportation, I believe this provision is consistent with existing law, as set forth in Section 5107 of title 49 of the United States Code (49 U.S.C. 5107), which details requirements for the training of employees engaged in haz- ardous materials transportation. I would ask the chairman if this inter- pretation is correct? Mr. MURKOWSKI. The Senator from South Dakota is correct. I defer to my colleague’s judgement and expertise, as chairman of the committee with juris- diction over the transportation of haz- ardous materials. I might also add that this provision is not meant to prejudice in any way the means by which the training requirements are satisfied. Mr. PRESSLER. I thank the Senator from Alaska for clarifying this matter for me. Again, I greatly appreciate his willingness to work with me to resolve this matter. I urge my colleagues to support final passage of S. 1936. Mr. MURKOWSKI. Mr. President, when the Senate debated the motion to proceed. I suggested that S. 1936 was the answer to nuclear waste and that the editorial page of the Washington Post was the answer to parakeet waste. I would not insult parakeets by sug- gesting that would be a good use of the letter from the Administrator of the EPA or the Chair of the CEQ. The statements made in these letters are inaccurate and simply the shrill hysteria of those who believe that if you repeat a lie often enough, someone might believe you. The administration, sadly, has dem- onstrated that they are incapable or unwilling to address this issue, and have now resorted to misstatement, mischaracterization, and distortion to prevent Congress from exercising the leadership the administration has abandoned. Far from being an assault on our en- vironmental laws, this legislation reaf- firms our commitment to the environ- ment, and the health and safety of the American people. Now, turning specifically to the let- ters\u2014EPA says we preempt laws in S. 1936: The substitute the Senate just overwhelm- ingly adopted does not preempt environ- mental statutes. EIS requirements are con- solidated, but a full EIS is required. EPA says section 204(i) of our bill prevents the NRC from issuing regula- tions to protect public health under certain circumstances. This is inflam- matory and misleading: Section 204(i) simply says that the storage of commercial spent fuel, that the NRC will regulate under our bill, does not need to wait while the NRC writes regulations for other forms of nuclear wastes including naval reac- tor and defense wastes. EPA says section 205(d)(3)(C) pre- vents NRC from making important de- terminations: All our bill says is that the NRC is not re- quired to assume that the records of waste disposal, security measures, and the natural and engineered barriers will be insufficient to prevent future human intrusion. Without this provision, DOE would have to prove a negative. Turning now to the letter from CEQ: The CEQ’s letter asserts S. 1936 ”Dis- mantles the EIS process under NEPA,” by removing the requirement that DOE conduct an ”alternatives analysis” on the selection of an interim storage site. The CEQ’s letter entirely misses the point: This legislation requires an EIS to be pre- pared by the NRC as part of its licensing process because Congress is today rendering its judgment about the need for interim stor- age and the location of the site, we say that these decisions need not be duplicated in the NRO process. I would add that our legislation does not preclude the President from performing an alternatives analysis in selecting an interim storage site other than Nevada, if he deter- mines that the permanent repository at Yucca Mountain is not viable. There is an EIS. It can be challenged in court, and public safety and the environment is protected. The EPA letter says the 100 millirem standard is inappropriate: EPA is given the authority to change the 100 millirem standard if it determines it con- stitutes an unreasonable risk to public health\/saftey. What are they complaining about? There are no valid scientific studies which suggest a release of 100 millirem per year poses any health risk. The probability of ad- verse health consequences has not been shown to be any less from a zero dose than from a 100 millirem dose. There is at least a 100 millirem difference between a person living on the east coast and Western States. If you move from Wash- ington to Denver, you would receive 100 or more additional millirem from natural sources. EPA doesn’t have a problem with that. You get 100 extra millirem by living in the White House, a stone building with natural radiation. Is EPA saying the White House is unsafe for the President? Madam President, I think it is appro- priate to note that these letters simply represent an action by the administra- tion to delay what has been delayed for 15 years. There are no positive rec- ommendations in spite of the fact that the committee and myself personally have requested in three letters to the President that if he opposes specific portions of this legislation, he come up with alternatives. Those letters, for all practical purposes, have been ignored. Clearly, this administration simply wishes to put this off to somebody else’s watch, and that is irresponsible for the administration. It is irrespon- sible to duck the issue at this time. I yield 5 minutes to my friend from Idaho and retain the remainder of my time. The PRESIDING OFFICER. The Sen- ator from Idaho. Mr. CRAIG. Madam President, let me thank the chairman for the time and thank my colleague, the senior Senator from Louisiana, who has worked so closely with us in the last year to produce and bring to the floor this leg- islation. I first introduced this legislation in September of 1995 as S. 1271. We worked our way through the process with hear- ings held, of course, before the Energy and Natural Resources Committee in December with additional hearings in March and in May. Finally, we have been able to craft and bring to the floor what I believe and what I call\u2014because I think it is fair to call it that\u2014probably one of the most comprehensive environmental bills that has come before the Congress this year. Our Nation’s high-level nuclear waste has an answer now that is responsible, fair, and environmentally friendly and is supported by a very large majority of this body and the U.S. House of Rep- resentatives. Today, high-level nuclear waste and highly radioactive used nuclear fuel is accumulating in over 80 sites in 41 States. You have heard our colleagues come to the floor and talk about their concern and the seriousness that this accumulation brings to these indi- vidual States. Today, we stand before you respon- sible to our country and to our Govern- ment in assuring that we will be able to comply with the Nuclear Waste Pol- icy Act of 1982 to meet the court ex- aminations and to be able to do what our country expected us to do to facili- tate this legislation. We have all worked closely together in a strong bi- partisan way to assure that we could produce the ultimate legislation that would pass. However, in doing all of this, S. 1936 contains many important clarifications and changes that deal with concerns raised regarding the de- tails of the legislation amongst most of our Members. As a result of that, I think we can hopefully today produce a vote and a work product that the U.S. House of Representatives will take as we reconvene in September. The issue is clear, and the proposal we have before you is direct. It does not violate any environmental laws, and yet directs our country to move re- sponsibly and decisively to resolve an issue that has plagued our country for well over two decades. I hope that VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00043 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9252 July 31, 1996 today our colleagues in a final vote on this issue will vote in very large num- bers to assure that we move forward on this issue. Let me cover one other detailed topic. It is frustrating to me as the two Senators from Nevada have come to the floor on several occasions over the last week and a half to talk about the reality of a 100-millirem test and how, for some reason, this in some way ques- tioned the integrity of a site and the development of a deep geological repos- itory at Yucca Mountain. Let me quote from the Nevada Administrative Code, section 459.335. This is the code that governs 153 facilities in the State of Nevada. It says this: ”The total effec- tive dose equivalent to any member of the public from its licensed and reg- istered operation does not exceed 100 millirems per year, not including con- tribution from the disposal by the li- censee of radioactive material in sani- tary sewage,” and so on and so forth. The point I am making here\u2014and this chart clearly spells it out\u2014is that the standards that we have established, the standards that come from the GAO audit, the standards that the State of Nevada, the very State the two Sen- ators are from and arguing today, ar- gues this. It argues right here that 153 facilities in the State of Nevada that use radioactive material cannot exceed the very standard that we are saying Yucca Mountain cannot exceed. I hope, once and for all, that we do not shake the scare tree, that we look at the facts and we look at the statis- tics, and they are very clear. Whether it is proposed EPA guidance of 1995, whether it is the Nuclear Regulatory Commission limit, whether it is the proposed DOE limit, whether it is the State of Nevada, or whether it is Yucca Mountain, what we are talking about here is an international standard well accepted by all of the professionals in the field and accepted by the State of Nevada, by the State government of Nevada and, obviously, by State politi- cians in Nevada. Why do they arrive at that standard? Because that is the national standard. That is the international standard that clearly says this is an acceptable level. Madam President, I recognize my time is up. Mr. MURKOWSKI. Let me yield time to the Senator from Idaho to conclude his remarks. Mr. CRAIG. I thank my chairman for yielding to me. Let me close with this thought. It has been a long, hard effort. It took an awful lot of very talented people in- volved. Let me thank Karen Hunsicker, David Garman, Gary Ellsworth, and Jim Beirne of the Energy and Natural Resources staff for the tremendous work that they have done and for the expertise they themselves have devel- oped, the cooperative effort they have had in working with all of the staffs in a bipartisan manner. Let me thank once again our chair- man, FRANK MURKOWSKI, and also the senior Senator from the State of Lou- isiana, BENNETT JOHNSTON, for his dedi- cated effort over several decades to as- sure that there would be a safe and re- sponsible solution to the management of high-level nuclear waste, and we are clearly on the threshold of allowing that to happen. I hope in the end once this makes it to our President’s desk that he will read the bill\u2014read the bill\u2014and look at the changes we have made. I think in doing so this President will say that we have been responsible to our country and to the State of Nevada in promul- gating legislation that can deal with a very important national issue. Mr. JOHNSTON. Madam President, will the Senator yield to me for a quick comment to endorse what he has said about the good staff work. Let me add to that great staff work SAM FOWLER, BOB SIMON, and BEN COO- PER on our side, who have really done an outstanding job as well. Mr. MURKOWSKI. Madam President, how much time is remaining on our side? The PRESIDING OFFICER. Eight minutes. Mr. MURKOWSKI. I yield to the Sen- ator from Wyoming 3 minutes that he requested. The PRESIDING OFFICER. The Sen- ator from Wyoming. Mr. THOMAS. Thank you very much. Madam President, I wanted to rise in support of this bill before it is voted on. I have been involved in it for some time not only here but in Wyoming, and I just wanted to kind of generally share some thoughts that I have. We have talked about it a great deal. We probably have talked about it more than we really needed to. Nevertheless, there has been a great deal of detail naturally, as there should be. But it seems to me that there are some basic things that most of us do understand and most of us accept, and I think that is where we are. First, we have nuclear waste. We have to do something about it. It is there. It is stored all over the country in a number of sites\u2014I think 80. Clear- ly, it is more difficult to ensure safety that way than it is if we put it in a place that we can ensure safety. We are going to have more. We need to be pre- pared for that. The ratepayers have paid to do some- thing about it. They have paid, I think, somewhere near $12 billion. We spent $5 billion already in preparing this spot. There is not much to show for that. Yet, we need to make sure that there is. It makes sense, it seems to me, to move to the permanent site with an in- termediate site that we have for stor- age. We have been through that inter- mediate storage thing for several years. We have been unsuccessful in doing it. Transportation is, in fact, something that is the highest of scientific study and I think as safe as anything can be. There are always risks. I have been disappointed this whole time of dealing with the storage of nu- clear waste. Opponents in the press talk about nuclear waste dumps. They are not dumps. They are high-tech storage, as high tech as we can be. It is also true that the Government has agreed to storage in 1998. Let us do it. So even though that is very nontech- nical, Madam President, I think those are about the basic ideas we have to understand. Most of us know we have to do something about it. This bill gives us the opportunity to live up to the challenges we have and to do the things we have to do. I thank the Senator for the time. Mr. MURKOWSKI. Madam President, how much time is remaining on our side? The PRESIDING OFFICER. The Sen- ator has 5 minutes. Mr. MURKOWSKI. I thank the Chair. Mr. BRYAN. May I inquire of the Chair how much time we have on our side? The PRESIDING OFFICER. The Sen- ator from Nevada has 9 minutes. Mr. BRYAN. Madam President, I yield myself 4 minutes. I have tried purposely to keep the focus on the issues, but I must say that my friend from Idaho has spoken and my friend from Wyoming has just spo- ken, and they obviously reach a dif- ferent conclusion as to the urgency of the need than does the scientific com- munity, which has specifically rejected the need. Let me say with great respect to them, if they disagree, they have the right under the law to volunteer their States as sites for interim storage. That is permissible. I find some irony in the fact they are eager to have it come to us in Nevada and yet suggest that their own State would not be available. There is another irony. Late last week, another letter was circulated that raised some concerns about the interstate shipment of trash, and this letter goes on to say, in part: It is important that Congress pass inter- state legislation this year. Cities and towns all across the Nation are being forced to take trash from other States. Many States have tried to restrict the shipments. The letter goes on to say: But every time they do, they have been challenged in court and their laws have been overturned as a violation of the commerce clause of the Constitution. It is clear that States cannot protect themselves, their resi- dents or their land from being spoiled by out-of-State waste. We need Federal legisla- tion to empower States and communities with the authority to manage solid waste within their borders. Without legislation, they will have to continue to accept un- wanted trash. Does anybody see a disconnect or an inconsistency? Here they are talking about trash, and many of my col- leagues who have ventured forth in the Chamber and who have expressed sup- port for this legislation have gotten greatly exercised about the trash issue. You cannot have it both ways. My col- league and I have signed on to this let- ter because we understand the con- cerns. You can be concerned about VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00044 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9253 July 31, 1996 trash but not the most dangerous, le- thal trash known to mankind, high- level nuclear waste. Finally, let me just say that we have talked about the standards ad nau- seam. I think it just one more time needs to be pointed out that the Na- tional Academy of Sciences\u2014these are the scientists which this body asked to make recommendations about stand- ards\u2014reported and concluded that the standards in terms of radioactive expo- sure should be from 10 to 30 millirems. That is their view. They are sci- entists. Nobody\u2014I repeat, nobody\u2014in the world has set a 100-millirem stand- ard, and to point out that those who are charged under our law with the re- sponsibility of enforcing and admin- istering the environmental laws, the Environmental Protection Agency, through Carol Browner, the Council on Environmental Quality, the President of the United States, the Department of Energy, all have urged a no vote on this piece of legislation. Now, I guess what they do not have in common with some of the advocates is that they are not supporting the view of the nuclear industry. This is special interest legislation at its worst. There is no groundswell for this legis- lation. The nuclear industry and its phalanx of lobbyists who ply these halls every day with enormous amounts of money and power and influ- ence, they are the ones who are driving this debate by creating a contrived and fabricated crisis that purports to call out for a legislative response. That is simply not the case. There is no need. The damage that we do to our Nation’s environmental laws and to people across America that can be af- fected by this is unconscionable\u2014un- conscionable. No environmental orga- nization in America\u2014none\u2014supports this legislation. All oppose the irrep- arable damage it would do to our envi- ronmental laws. And no agency charged by law at the Federal level to enforce the environmental standards supports this legislation. All have con- cluded that to do so would be irrep- arable, do irreversible damage to our environment. I reserve the remainder of my time. The PRESIDING OFFICER. Who yields time? The Senator from Alaska. Mr. CRAIG addressed the Chair. Mr. MURKOWSKI. I would ask at the conclusion of the debate time for the yeas and nays on final passage. Mr. CRAIG. Will the Senator yield to me one moment? Mr. MURKOWSKI. I yield to my friend from Idaho. The PRESIDING OFFICER. The Sen- ator from Idaho. Mr. CRAIG. I thank my chairman for yielding. I apologize. Some of the people who work the most closely with us we often forget. I want the RECORD to show that Nils Johnson on my staff, who has worked on this issue for a good number of years with me and the staff of the committee, was a tremendous asset through all of this debate. I thank the Senator very much. Mr. MURKOWSKI. Again, Madam President, may I ask for the yeas and nays on final passage. The PRESIDING OFFICER. Is there a sufficient second? There appears to be. The yeas and nays were ordered. Mr. MURKOWSKI. I thank the Chair. Madam President, as we approach the final minutes prior to voting, I would like to very briefly refute some of the specific claims that have been made in the Chamber in the debate. These claims, of course, have had to do with transportation, safety, cask integrity, radiation, the application of environ- mental laws, and, of course, finally, the issue of just who benefits from this leg- islation. The issue of transportation and safe- ty and cask integrity is important, and there has been every effort to describe that the transportation of used fuel is something that has a risk. But the op- ponents of this legislation talk about it as if it represents some novel and un- tested approach, and these statements are not true. We have been moving spent fuel both in the United States and around the world for decades. There have been over 20,000 movements of spent fuel around the world over the last 40 years; 30,000 tons have been moved in France alone. That is equal to what we have in storage. So it can be moved, and it can be moved safely because it is designed to be moved safely. This bill, S. 1936, includes new meas- ures, new training and new assistance to make the movement even safer. The fact is nuclear materials will be trans- ported with or without the passage of this bill. Spent fuel, foreign research reactor fuel, naval fuel, and other ra- dioactive materials are being trans- ported every day in the United States. Another example is we build sub- marines on the east coast in Con- necticut, but when the sub has served its useful life, the fuel is removed and taken to Idaho. The sub is cut up. The reactor compartment is buried in Han- ford, WA. So we all have an interest in this, and we must address responsibly a solution. Another claim I want to refute has to do with the generalization that has been made on the floor of the Senate that somehow we are waiving the ap- plication of environmental laws that are needed to protect the public health and safety. S. 1936 requires the NRC to prepare environmental impact state- ments, or EIS’s, as part of a decision to license a central interim storage facil- ity, and the EIS’s must include the im- pact of transporting the used fuel to the interim storage facility. There is also judicial review. S. 1936 requires the DOE to submit an EIS on construction and operation of the re- pository. It is clear, Madam President, S. 1936 does not trample environmental laws as has been charged on this floor. This is a unique facility. None like it has ever been developed anywhere in the world. So the regulatory licensing program for a permanent facility contained in S. 1936 is designed to protect public health and safety without reliance upon other laws. With respect to NEPA, we recognize Congress has decided that we will build an interim site in Nevada, and we do not let the NEPA process revisit the decision that Congress has already made. That is what we are saying. NEPA applies. We are simply saying NEPA does not have to revisit the deci- sion of policy that we are making here today. The last claim I am compelled to re- fute is on the issue of timing. Oppo- nents say S. 1936 claims that there is no need to tackle the issue now, that it is a waste of time. That does not sound like anything other than Washington bureaucracy: Let’s defer the decision. Let’s not take action. Let’s keep spending money without results. Let’s maintain the status quo. Let’s promote the stale- mate. Let’s maintain the gridlock.” For 15 years we have collected bil- lions of dollars. We have expended $6 billion and we go nowhere. We have a chance to go somewhere today. But the Washington bureaucracy wants to say: ”Let’s keep taking the consumers’ money, but not provide them with nuclear waste removal serv- ices we promised them in return. Let’s ignore the recent court cases and let us stick it to the taxpayers who will have to pay the damages.” Our opponents would have you be- lieve the Government has no responsi- bility. But the recent court decision has blown our opponents’ arguments out of the water. The Federal Govern- ment has a responsibility. Failure to live up to that responsibility will have significant consequences, so said the court. And it said so unanimously. Finally, the fifth issue I must refute is the issue of just who benefits from the legislation. The other side has tried to paint this bill as one of exclusively benefiting the nuclear power lobby. But I have letters from 23 States, writ- ten by Governors and attorneys gen- eral, urging the Congress to pass and the President to sign the bill. We have letters from Governors, Governor Lawton Chiles of Florida and others, relative to that matter. We have broad support for this bill across the political spectrum. Ours is a bipartisan effort, Democrats, Repub- licans, liberals, conservatives. We are supported by unions as well, the Elec- trical Workers Union, Utility Workers, AFL CIO, Joiners and Carpenters. The fire chiefs in Nevada have indicated support of this. As have many Nevad- ans\u2014I have already entered that in the RECORD. Our constituents should not have to pay twice for nuclear waste services. We do not have to create 80 waste VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00045 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9254 July 31, 1996 dumps, including some in populated areas or sitting just outside national parks, when one will do. We do not have to settle for further delay, further stalemate and further gridlock. We can avoid multibillion-dollar damages against the taxpayer for the Govern- ment’s failure to address a problem that a recent court case says is Gov- ernment’s responsibility. We can do that. It is the right thing to do for the consumers and electric ratepayers, for the environment, for public health and safety, and I urge we pass Senate bill 1936. Madam President, at this time I would like to thank my dear friend and colleague, Senator JOHNSTON, who has been involved in this much longer than I, for his steadfast commitment to what is responsible and what is right for the country, to finally address our responsibility. I thank my friend, LARRY CRAIG, who introduced this leg- islation initially, and Senator DOMEN- ICI, Senator GRAMM, Senator THUR- MOND, Senator SIMPSON, Senator FAIR- CLOTH, Senator GORTON. I recognize Senator THOMAS, as well as my two col- leagues, Senator BRYAN and Senator REID. I know what a tough thing this is for your State. Mr. REID addressed the Chair. The PRESIDING OFFICER. The time of the Senator has expired. Mr. MURKOWSKI. Let me thank the staff as well. I would like to thank the Energy Committee staff, including Gregg Renkes, Gary Ellsworth, Jim Beirne, Karen Hunsicker, David Garman, David Fish and Betty Nevitt, as well as Nils Johnson from Senator CRAIG’s office, and the minority staff, Ben Cooper, Sam Fowler and Bob Simon. I yield the floor. Mr. REID. Madam President, I apolo- gize for being rude but we have a Mem- ber who needs to vote and that is why we need to stick with the program. If anyone believes in environmental standards, you must vote against this bill. This bill will ultimately open the door for the greatest nuclear waste transportation project in human his- tory, sending thousands and thousands of tons of the Nation’s radioactive waste onto the roads and rails. Last year we had 2,500 accidents on rail that only involved trains, and 6,000 acci- dents at railroad crossings over the last year. Madam President, in the last 10 years, 26,354 accidents occurred with damage to track, structure or equip- ment in excess of $6,300 dollars. There were 60,553 accidents at railroad cross- ings. This bill is bad, bad, bad, if you sup- port environmental standards. If you oppose corporate welfare, vote against this. The court decision helps our cause. That is why we offered an amendment to that effect. They keep coming back saying it was a unani- mous opinion. We agree. Three judges said they have to follow the contract they entered into. We agree with that. Hazel O’Leary is not only the Sec- retary of the Department of Energy, she is also a corporate lawyer. She said that decision does not affect what the DOE is going to do. In fact, she says, if this bill passes it will, again, harm what the decision did. So, Madam President, if you believe in returning authority to the States, vote against this bill. If you oppose Government taking private property, vote against this bill. Homeowners along transportation routes may well find their property values reduced as a result of nuclear waste trains and trucks passing by, and that is an un- derstatement. No mechanism exists in S. 1936 to compensate homeowners in such a circumstance. If you believe in public participation in regulatory pro- ceedings, vote against this bill. If you believe in a rational nuclear waste pol- icy, vote against this bill. If you believe that the nuclear indus- try is entitled to lavish taxpayer-fi- nanced benefits from the Federal Gov- ernment at the expense of public health and safety, then you should vote for this legislation. We ask Senators to vote against this legislation. This is the most anti-envi- ronmental legislation of this Congress and that says a great deal because this is known as the most anti-environ- mental Congress in the history of this country. Mr. MURKOWSKI. Madam President, I suggest the absence of a quorum. The PRESIDING OFFICER. Without objection, the clerk will call the roll. The bill clerk proceeded to call the roll. Mr. MURKOWSKI. Madam President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. MURKOWSKI. I ask we proceed with the vote. The yeas and nays have been ordered. I ask for the regular order. The PRESIDING OFFICER. The Sen- ators from Nevada yield back their time? Mr. REID. We will. We have. We do. The PRESIDING OFFICER. All time having been yielded back, the question is, Shall the bill pass? The yeas and nays have been ordered. The clerk will call the roll. The bill clerk called the roll. The PRESIDING OFFICER (Mr. ABRAHAM). Are there any other Sen- ators in the Chamber who desire to vote? The result was announced\u2014yeas 63, nays 37, as follows: [Rollcall Vote No. 259 Leg.] YEAS\u201463 Abraham Ashcroft Bennett Bond Brown Burns Cochran Cohen Coverdell Craig D’Amato DeWine Domenici Faircloth Frahm Frist Gorton Graham Gramm Grams Grassley Gregg Harkin Hatch Hatfield Heflin Helms Hollings Hutchison Inhofe Jeffords Johnston Kassebaum Kempthorne Kohl Kyl Leahy Levin Lott Lugar Mack McCain McConnell Moseley-Braun Murkowski Murray Nickles Nunn Pressler Robb Roth Santorum Shelby Simon Simpson Smith Snowe Specter Stevens Thomas Thompson Thurmond Warner NAYS\u201437 Akaka Baucus Biden Bingaman Boxer Bradley Breaux Bryan Bumpers Byrd Campbell Chafee Coats Conrad Daschle Dodd Dorgan Exon Feingold Feinstein Ford Glenn Inouye Kennedy Kerrey Kerry Lautenberg Lieberman Mikulski Moynihan Pell Pryor Reid Rockefeller Sarbanes Wellstone Wyden The bill (S. 1936), as amended, was passed, as follows: S. 1936 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, That the Nuclear Waste Policy Act of 1982 is amended to read as fol- lows: ”SECTION 1. SHORT TITLE AND TABLE OF CON- TENTS. ”(a) SHORT TITLE.\u2014This Act may be cited as the ‘Nuclear Waste Policy Act of 1996’. ”(b) TABLE OF CONTENTS.\u2014 ”Sec. 1. Short title and table of contents. ”Sec. 2. Definitions. ”TITLE I\u2014OBLIGATIONS ”Sec. 101. Obligations of the Secretary of Energy. ”TITLE II\u2014INTEGRATED MANAGEMENT SYSTEM ”Sec. 201. Intermodal transfer. ”Sec. 202. Transportation planning. ”Sec. 203. Transportation requirements. ”Sec. 204. Interim storage. ”Sec. 205. Permanent repository. ”Sec. 206. Land withdrawal. ”TITLE III\u2014LOCAL RELATIONS ”Sec. 301. Financial assistance. ”Sec. 302. On-site representative. ”Sec. 303. Acceptance of benefits. ”Sec. 304. Restrictions on use of funds. ”Sec. 305. Land conveyances. ”TITLE IV\u2014FUNDING AND ORGANIZATION ”Sec. 401. Program funding. ”Sec. 402. Office of Civilian Radioactive Waste Management. ”Sec. 403. Federal contribution. ”TITLE V\u2014GENERAL AND MISCELLANEOUS PROVISIONS ”Sec. 501. Compliance with other laws. ”Sec. 502. Judicial review of agency actions. ”Sec. 503. Licensing of facility expansions and transshipments. ”Sec. 504. Siting a second repository. ”Sec. 505. Financial arrangements for low- level radioactive waste site clo- sure. ”Sec. 506. Nuclear Regulatory Commission training authorization. ”Sec. 507. Emplacement schedule. ”Sec. 508. Transfer of title. ”Sec. 509. Decommissioning pilot program. ”Sec. 510. Water rights. ”TITLE VI\u2014NUCLEAR WASTE TECHNICAL REVIEW BOARD ”Sec. 601. Definitions. ”Sec. 602. Nuclear Waste Technical Review Board. ”Sec. 603. Functions. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00046 Fmt 4624 Sfmt 0655 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9255 July 31, 1996 ”Sec. 604. Investigatory powers. ”Sec. 605. Compensation of members. ”Sec. 606. Staff. ”Sec. 607. Support services. ”Sec. 608. Report. ”Sec. 609. Authorization of appropriations. ”Sec. 610. Termination of the board. ”TITLE VII\u2014MANAGEMENT REFORM ”Sec. 701. Management reform initiatives. ”Sec. 702. Reporting. ”Sec. 703. Effective date. ”SEC. 2. DEFINITIONS. ”For purposes of this Act: ”(1) ACCEPT, ACCEPTANCE.\u2014The terms ‘ac- cept’ and ‘acceptance’ mean the Secretary’s act of taking possession of spent nuclear fuel or high-level radioactive waste. ”(2) AFFECTED INDIAN TRIBE.\u2014The term ‘af- fected Indian tribe’ means any Indian tribe\u2014 ”(A) whose reservation is surrounded by or borders an affected unit of local government, or ”(B) whose federally defined possessory or usage rights to other lands outside of the reservation’s boundaries arising out of con- gressionally ratified treaties may be sub- stantially and adversely affected by the lo- cating of an interim storage facility or a re- pository if the Secretary of the Interior finds, upon the petition of the appropriate governmental officials of the tribe, that such effects are both substantial and adverse to the tribe. ”(3) AFFECTED UNIT OF LOCAL GOVERN- MENT.\u2014The term ‘affected unit of local gov- ernment’ means the unit of local government with jurisdiction over the site of a repository or interim storage facility. Such term may, at the discretion of the Secretary, include other units of local government that are con- tiguous with such unit. ”(4) ATOMIC ENERGY DEFENSE ACTIVITY.\u2014 The term ‘atomic energy defense activity’ means any activity of the Secretary per- formed in whole or in part in carrying out any of the following functions: ”(A) Naval reactors development. ”(B) Weapons activities including defense inertial confinement fusion. ”(C) Verification and control technology. ”(D) Defense nuclear materials production. ”(E) Defense nuclear waste and materials byproducts management. ”(F) Defense nuclear materials security and safeguards and security investigations. ”(G) Defense research and development. ”(5) CIVILIAN NUCLEAR POWER REACTOR.\u2014 The term ‘civilian nuclear power reactor’ means a civilian nuclear power plant re- quired to be licensed under section 103 or 104 b. of the Atomic Energy Act of 1954 (42 U.S.C. 2133, 2134(b)). ”(6) COMMISSION.\u2014The term ‘Commission’ means the Nuclear Regulatory Commission. ”(7) CONTRACTS.\u2014The term ‘contracts’ means the contracts, executed prior to the date of enactment of the Nuclear Waste Pol- icy Act of 1996, under section 302(a) of the Nuclear Waste Policy Act of 1982, by the Sec- retary and any person who generates or holds title to spent nuclear fuel or high-level radioactive waste of domestic origin for ac- ceptance of such waste or fuel by the Sec- retary and the payment of fees to offset the Secretary’s expenditures, and any subse- quent contracts executed by the Secretary pursuant to section 401(a) of this Act. ”(8) CONTRACT HOLDERS.\u2014The term ‘con- tract holders’ means parties (other than the Secretary) to contracts. ”(9) DEPARTMENT.\u2014The term ‘Department’ means the Department of Energy. ”(10) DISPOSAL.\u2014The term ‘disposal’ means the emplacement in a repository of spent nu- clear fuel, high-level radioactive waste, or other highly radioactive material with no foreseeable intent of recovery, whether or not such emplacement permits recovery of such material for any future purpose. ”(11) DISPOSAL SYSTEM.\u2014The term ‘dis- posal system’ means all natural barriers and engineered barriers, and engineered systems and components, that prevent the release of radionuclides from the repository. ”(12) EMPLACEMENT SCHEDULE.\u2014The term ’emplacement schedule’ means the schedule established by the Secretary in accordance with section 507(a) for emplacement of spent nuclear fuel and high-level radioactive waste at the interim storage facility. ”(13) ENGINEERED BARRIERS AND ENGI- NEERED SYSTEMS AND COMPONENTS.\u2014The terms ‘engineered barriers’ and ‘engineered systems and components’, mean man-made components of a disposal system. These terms include the spent nuclear fuel or high- level radioactive waste form, spent nuclear fuel package or high-level radioactive waste package, and other materials placed over and around such packages. ”(14) HIGH-LEVEL RADIOACTIVE WASTE.\u2014The term ‘high-level radioactive waste’ means\u2014 ”(A) the highly radioactive material re- sulting from the reprocessing of spent nu- clear fuel, including liquid waste produced directly in reprocessing and any solid mate- rial derived from such liquid waste that con- tains fission products in sufficient con- centrations; and ”(B) other highly radioactive material that the Commission, consistent with existing law, determines by rule requires permanent isolation, which includes any low-level ra- dioactive waste with concentrations of radio- nuclides that exceed the limits established by the Commission for class C radioactive waste, as defined by section 61.55 of title 10, Code of Federal Regulations, as in effect on January 26, 1983. ”(15) FEDERAL AGENCY.\u2014The term ‘Federal agency’ means any Executive agency, as de- fined in section 105 of title 5, United States Code. ”(16) INDIAN TRIBE.\u2014The term ‘Indian tribe’ means any Indian tribe, band, nation, or other organized group or community of Indians recognized as eligible for the services provided to Indians by the Secretary of the Interior because of their status as Indians in- cluding any Alaska Native village, as defined in section 3(c) of the Alaska Native Claims Settlement Act (43 U.S.C. 1602(c)). ”(17) INTEGRATED MANAGEMENT SYSTEM.\u2014 The term ‘integrated management system’ means the system developed by the Sec- retary for the acceptance, transportation, storage, and disposal of spent nuclear fuel and high-level radioactive waste under title II of this Act. ”(18) INTERIM STORAGE FACILITY.\u2014The term ‘interim storage facility’ means a facility de- signed and constructed for the receipt, han- dling, possession, safeguarding, and storage of spent nuclear fuel and high-level radio- active waste in accordance with title II of this Act. ”(19) INTERIM STORAGE FACILITY SITE.\u2014The term ‘interim storage facility site’ means the specific site within area 25 of the Nevada test site that is designated by the Secretary and withdrawn and reserved in accordance with this Act for the location of the interim storage facility. ”(20) LOW-LEVEL RADIOACTIVE WASTE.\u2014The term ‘low-level radioactive waste’ means ra- dioactive material that\u2014 ”(A) is not spent nuclear fuel, high-level radioactive waste, transuranic waste, or by- product material as defined in section 11 e.(2) of the Atomic Energy Act of 1954 (42 U.S.C. 2014(e)(2)); and ”(B) the Commission, consistent with ex- isting law, classifies as low-level radioactive waste. ”(21) METRIC TONS URANIUM.\u2014The terms ‘metric tons uranium’ and ‘MTU’ mean the amount of uranium in the original unirradiated fuel element whether or not the spent nuclear fuel has been reprocessed. ”(22) NUCLEAR WASTE FUND.\u2014The terms ‘Nuclear Waste Fund’ and ‘waste fund’ mean the nuclear waste fund established in the United States Treasury prior to the date of enactment of this Act under section 302(c) of the Nuclear Waste Policy Act of 1982. ”(23) OFFICE.\u2014The term ‘Office’ means the Office of Civilian Radioactive Waste Manage- ment established within the Department prior to the date of enactment of this Act under the provisions of the Nuclear Waste Policy Act of 1982. ”(24) PROGRAM APPROACH.\u2014The term ‘pro- gram approach’ means the Civilian Radio- active Waste Management Program Plan, dated May 6, 1996, as modified by this Act, and as amended from time to time by the Secretary in accordance with this Act. ”(25) REPOSITORY.\u2014The term ‘repository’ means a system designed and constructed under title II of this Act for the geologic dis- posal of spent nuclear fuel and high-level ra- dioactive waste, including both surface and subsurface areas at which spent nuclear fuel and high-level radioactive waste receipt, handling, possession, safeguarding, and stor- age are conducted. ”(26) SECRETARY.\u2014The term ‘Secretary’ means the Secretary of Energy. ”(27) SITE CHARACTERIZATION.\u2014The term ‘site characterization’ means activities, whether in a laboratory or in the field, un- dertaken to establish the geologic condition and the ranges of the parameters of a can- didate site relevant to the location of a re- pository, including borings, surface exca- vations, excavations of exploratory facili- ties, limited subsurface lateral excavations and borings, and in situ testing needed to evaluate the licensability of a candidate site for the location of a repository, but not in- cluding preliminary borings and geophysical testing needed to assess whether site charac- terization should be undertaken. ”(28) SPENT NUCLEAR FUEL.\u2014The term ‘spent nuclear fuel’ means fuel that has been withdrawn from a nuclear reactor following irradiation, the constituent elements of which have not been separated by reprocess- ing. ”(29) STORAGE.\u2014The term ‘storage’ means retention of spent nuclear fuel or high-level radioactive waste with the intent to recover such waste or fuel for subsequent use, proc- essing, or disposal. ”(30) WITHDRAWAL.\u2014The term ‘withdrawal’ has the same definition as that set forth in section 103(j) of the Federal Land Policy and Management Act of 1976 (43 U.S.C. 1702(j)). ”(31) YUCCA MOUNTAIN SITE.\u2014The term ‘Yucca Mountain site’ means the area in the State of Nevada that is withdrawn and re- served in accordance with this Act for the lo- cation of a respository. ”TITLE I\u2014OBLIGATIONS ”SEC. 101. OBLIGATIONS OF THE SECRETARY OF ENERGY. ”(a) DISPOSAL.\u2014The Secretary shall de- velop and operate an integrated management system for the storage and permanent dis- posal of spent nuclear fuel and high-level ra- dioactive waste. ”(b) INTERIM STORAGE.\u2014The Secretary shall store spent nuclear fuel and high-level radioactive waste from facilities designated by contract holders at an interim storage fa- cility pursuant to section 204 in accordance with the emplacement schedule, beginning not later than November 30, 1999. ”(c) TRANSPORTATION.\u2014The Secretary shall provide for the transportation of spent nu- clear fuel and high-level radioactive waste VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00047 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9256 July 31, 1996 accepted by the Secretary. The Secretary shall procure all systems and components necessary to transport spent nuclear fuel and high-level radioactive waste from facilities designated by contract holders to and among facilities comprising the Integrated Manage- ment System. Consistent with the Buy American Act (41 U.S.C. 10a 10c), unless the Secretary shall determine it to be incon- sistent with the public interest, or the cost to be unreasonable, all such systems and components procured by the Secretary shall be manufactured in the United States, with the exception of any transportable storage systems purchased by contract holders prior to the effective date of the Nuclear Waste Policy Act of 1996 and procured by the Sec- retary from such contract holders for use in the integrated management system. ”(d) INTEGRATED MANAGEMENT SYSTEM.\u2014 The Secretary shall expeditiously pursue the development of each component of the inte- grated management system, and in so doing shall seek to utilize effective private sector management and contracting practices. ”(e) PRIVATE SECTOR PARTICIPATION.\u2014In administering the Integrated Management System, the Secretary shall, to the max- imum extent possible, utilize, employ, pro- cure and contract with, the private sector to fulfill the Secretary’s obligations and re- quirements under this Act. ”(f) PRE-EXISTING RIGHTS.\u2014Nothing in this Act is intended to or shall be construed to modify\u2014 ”(1) any right of a contract holder under section 302(a) of the Nuclear Waste Policy Act of 1982, or under a contract executed prior to the date of enactment of this Act under that section; or ”(2) obligations imposed upon the Federal Government by the United States District Court of Idaho in an order entered on Octo- ber 17, 1995 in United States v. Batt (No. 91 0054 S EJL). ”(g) LIABILITY.\u2014Subject to subsection (f), nothing in this Act shall be construed to subject the United States to financial liabil- ity for the Secretary’s failure to meet any deadline for the acceptance or emplacement of spent nuclear fuel or high-level radio- active waste for storage or disposal under this Act. ”TITLE II\u2014INTEGRATED MANAGEMENT SYSTEM ”SEC. 201. INTERMODAL TRANSFER. ”(a) ACCESS.\u2014The Secretary shall utilize heavy-haul truck transport to move spent nuclear fuel and high-level radioactive waste from the mainline rail line at Caliente, Ne- vada, to the interim storage facility site. ”(b) CAPABILITY DATE.\u2014The Secretary shall develop the capability to commence rail to truck intermodal transfer at Caliente, Nevada, no later than November 30, 1999. Intermodal transfer and related activities are incidental to the interstate transpor- tation of spent nuclear fuel and high-level radioactive waste. ”(c) ACQUISITIONS.\u2014The Secretary shall ac- quire lands and rights-of-way necessary to commence intermodal transfer at Caliente, Nevada. ”(d) REPLACEMENTS.\u2014The Secretary shall acquire and develop on behalf of, and dedi- cate to, the City of Caliente, Nevada, parcels of land and right-of-way within Lincoln County, Nevada, as required to facilitate re- placement of land and city wastewater dis- posal facilities necessary to commence inter- modal transfer pursuant to this Act. Re- placement of land and city wastewater dis- posal activities shall occur no later than No- vember 30, 1999. ”(e) NOTICE AND MAP.\u2014Within 6 months of the date of enactment of the Nuclear Waste Policy Act of 1996, the Secretary shall\u2014 ”(1) publish in the Federal Register a no- tice containing a legal description of the sites and rights-of-way to be acquired under this subsection; and ”(2) file copies of a map of such sites and rights-of-way with the Congress, the Sec- retary of the Interior, the State of Nevada, the Archivist of the United States, the Board of Lincoln County Commissioners, the Board of Nye County Commissioners, and the Caliente City Council. Such map and legal description shall have the same force and effect as if they were in- cluded in this Act. The Secretary may cor- rect clerical and typographical errors and legal descriptions and make minor adjust- ments in the boundaries. ”(f) IMPROVEMENTS.\u2014The Secretary shall make improvements to existing roadways se- lected for heavy-haul truck transport be- tween Caliente, Nevada, and the interim storage facility site as necessary to facili- tate year-round safe transport of spent nu- clear fuel and high-level radioactive waste. ”(g) LOCAL GOVERNMENT INVOLVEMENT.\u2014 The Commission shall enter into a Memo- randum of Understanding with the City of Caliente and Lincoln County, Nevada, to pro- vide advice to the Commission regarding intermodal transfer and to facilitate on-site representation. Reasonable expenses of such representation shall be paid by the Sec- retary. ”(h) BENEFITS AGREEMENT.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall offer to enter into an agreement with the City of Caliente and Lincoln County, Nevada con- cerning the integrated management system. ”(2) AGREEMENT CONTENT.\u2014Any agreement shall contain such terms and conditions, in- cluding such financial and institutional ar- rangements, as the Secretary and agreement entity determine to be reasonable and appro- priate and shall contain such provisions as are necessary to preserve any right to par- ticipation or compensation of the City of Caliente and Lincoln County, Nevada. ”(3) AMENDMENT.\u2014An agreement entered into under this subsection may be amended only with the mutual consent of the parties to the amendment and terminated only in accordance with paragraph (4). ”(4) TERMINATION.\u2014The Secretary shall terminate the agreement under this sub- section if any major element of the inte- grated management system may not be com- pleted. ”(5) LIMITATION.\u2014Only one agreement may be in effect at any one time. ”(6) JUDICIAL REVIEW.\u2014Decisions of the Secretary under this section are not subject to judicial review. ”(i) CONTENT OF AGREEMENT.\u2014 ”(1) SCHEDULE.\u2014In addition to the benefits to which the City of Caliente and Lincoln County is entitled to under this title, the Secretary shall make payments under the benefits agreement in accordance with the following schedule: ”BENEFITS SCHEDULE ”(Amounts in millions) ”Event Payment ”(A) Annual payments prior to first receipt of spent fuel ………………… $2.5 ”(B) Annual payments beginning upon first spent fuel receipt …….. 5 ”(C) Payment upon closure of the intermodal transfer facility …….. 5 ”(2) DEFINITIONS.\u2014For purposes of this sec- tion, the term\u2014 ”(A) ‘spent fuel’ means high-level radio- active waste or spent nuclear fuel; and ”(B) ‘first spent fuel receipt’ does not in- clude receipt of spent fuel or high-level ra- dioactive waste for purposes of testing or operational demonstration. ”(3) ANNUAL PAYMENTS.\u2014Annual payments prior to first spent fuel receipt under para- graph (1)(A) shall be made on the date of exe- cution of the benefits agreement and there- after on the anniversary date of such execu- tion. Annual payments after the first spent fuel receipt until closure of the facility under paragraph (1)(C) shall be made on the anniversary date of such first spent fuel re- ceipt. ”(4) REDUCTION.\u2014If the first spent fuel pay- ment under paragraph (1)(B) is made within 6 months after the last annual payment prior to the receipt of spent fuel under paragraph (1)(A), such first spent fuel payment under paragraph (1)(B) shall be reduced by an amount equal to 1\u204412 of such annual payment under paragraph (1)(A) for each full month less than six that has not elapsed since the last annual payment under paragraph (1)(A). ”(5) RESTRICTIONS.\u2014The Secretary may not restrict the purposes for which the pay- ments under this section may be used. ”(6) DISPUTE.\u2014In the event of a dispute concerning such agreement, the Secretary shall resolve such dispute, consistent with this Act and applicable State law. ”(7) CONSTRUCTION.\u2014The signature of the Secretary on a valid benefits agreement under this section shall constitute a commit- ment by the United States to make pay- ments in accordance with such agreement under section 401(c)(2). ”(j) INITIAL LAND CONVEYANCES.\u2014 ”(1) CONVEYANCES OF PUBLIC LANDS.\u2014One hundred and twenty days after enactment of this Act, all right, title and interest of the United States in the property described in paragraph (2), and improvements thereon, to- gether with all necessary easements for util- ities and ingress and egress to such property, including, but not limited to, the right to improve those easements, are conveyed by operation of law to the County of Lincoln, Nevada, unless the county notifies the Sec- retary of the Interior or the head of such other appropriate agency in writing within 60 days of such date of enactment that it elects not to take title to all or any part of the property, except that any lands conveyed to the County of Lincoln under this sub- section that are subject to a Federal grazing permit or lease or a similar federally granted permit or lease shall be conveyed between 60 and 120 days of the earliest time the Federal agency administering or granting the permit or lease would be able to legally terminate such right under the statutes and regula- tions existing at the date of enactment of this Act, unless Lincoln County and the af- fected holder of the permit or lease negotiate an agreement that allows for an earlier con- veyance. ”(2) SPECIAL CONVEYANCES.\u2014Notwith- standing any other law, the following public lands depicted on the maps and legal descrip- tions dated October 11, 1995, shall be con- veyed under paragraph (1) to the County of Lincoln, Nevada: Map 10; Lincoln County, parcel M, indus- trial park site. Map 11; Lincoln County, parcel F, mixed use industrial site. Map 13; Lincoln County, parcel J, mixed use, Alamo Community Expansion Area. Map 14; Lincoln County, parcel E, mixed use, Pioche Community Expansion Area. Map 15; Lincoln County, parcel B, landfill expansion site. ”(3) CONSTRUCTION.\u2014The maps and legal descriptions special conveyances referred to in paragraph (2) shall have the same force and effect as if they were included in this Act. The Secretary may correct clerical and typographical errors in the maps and legal descriptions and make minor adjustments in the boundaries of the sites. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00048 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9257 July 31, 1996 ”(4) EVIDENCE OF TITLE TRANSFER.\u2014Upon the request of the County of Lincoln, Ne- vada, the Secretary of the Interior shall pro- vide evidence of title transfer. ”SEC. 202. TRANSPORTATION PLANNING. ”(a) TRANSPORTATION READINESS.\u2014The Secretary shall take those actions that are necessary and appropriate to ensure that the Secretary is able to transport safely spent nuclear fuel and high-level radioactive waste from sites designated by the contract holders to mainline transportation facilities, using routes that minimize, to the maximum prac- ticable extent consistent with Federal re- quirements governing transportation of haz- ardous materials, transportation of spent nu- clear fuel and high-level radioactive waste through populated areas, beginning not later than November 30, 1999, and, by that date, shall, in consultation with the Secretary of Transportation, develop and implement a comprehensive management plan that en- sures that safe transportation of spent nu- clear fuel and high-level radioactive waste from the sites designated by the contract holders to the interim storage facility site beginning not later than November 30, 1999. ”(b) TRANSPORTATION PLANNING.\u2014In con- junction with the development of the logistical plan in accordance with subsection (a), the Secretary shall update and modify, as necessary, the Secretary’s transportation institutional plans to ensure that institu- tional issues are addressed and resolved on a schedule to support the commencement of transportation of spent nuclear fuel and high-level radioactive waste to the interim storage facility no later than November 30, 1999. Among other things, such planning shall provide a schedule and process for ad- dressing and implementing as necessary, transportation routing plans, transportation contracting plans, transportation training in accordance with section 203, and public edu- cation regarding transportation of spent nu- clear fuel and high-level radioactive waste, and transportation tracking programs. ”SEC. 203. TRANSPORTATION REQUIREMENTS. ”(a) PACKAGE CERTIFICATION.\u2014No spent nu- clear fuel or high-level radioactive waste may be transported by or for the Secretary under this Act except in packages that have been certified for such purposes by the Com- mission. ”(b) STATE NOTIFICATION.\u2014The Secretary shall abide by regulations of the Commission regarding advance notification of State and local governments prior to transportation of spent nuclear fuel or high-level radioactive waste under this Act. ”(c) TECHNICAL ASSISTANCE.\u2014The Sec- retary shall provide technical assistance and funds to States, units of local government, and Indian tribes through whose jurisdiction the Secretary plans to transport substantial amounts of spent nuclear fuel or high-level radioactive waste for training for public safety officials of appropriate units of local government. The Secretary shall also pro- vide technical assistance and funds for train- ing directly to national nonprofit employee organizations which demonstrate experience in implementing and operating worker health and safety training and education programs and demonstrate the ability to reach and involve in training programs tar- get populations of workers who are or will be directly engaged in the transportation of spent nuclear fuel and high-level radioactive waste, or emergency response or post-emer- gency response with respect to such trans- portation. Training shall cover procedures required for safe routine transportation of these materials, as well as procedures for dealing with emergency response situations, and shall be consistent with any training standards established by the Secretary of Transportation in accordance with sub- section (g). The Secretary’s duty to provide technical and financial assistance under this subsection shall be limited to amounts speci- fied in annual appropriations. ”(d) PUBLIC EDUCATION.\u2014The Secretary shall conduct a program to educate the pub- lic regarding the transportation of spent nu- clear fuel and high-level radioactive waste, with an emphasis upon those States, units of local government, and Indian tribes through whose jurisdiction the Secretary plans to transport substantial amounts of spent nu- clear fuel or high-level radioactive waste. ”(e) COMPLIANCE WITH TRANSPORTATION REGULATIONS.\u2014Any person that transports spent nuclear fuel or high-level radioactive waste under the Nuclear Waste Policy Act of 1986, pursuant to a contract with the Sec- retary, shall comply with all requirements governing such transportation issued by the Federal, State and local governments, and Indian tribes, in the same way and to the same extent that any person engaging in that transportation that is in or affects interstate commerce must comply with such requirements, as required by section 5126 of title 49, United States Code. ”(f) EMPLOYEE PROTECTION.\u2014Any person engaged in the interstate commerce of spent nuclear fuel or high-level radioactive waste under contract to the Secretary pursuant to this Act shall be subject to and comply fully with the employee protection provisions of 49 United States Code 20109 and 49 United States Code 31105. ”(g) TRAINING STANDARD.\u2014(1) No later than 12 months after the date of enactment of the Nuclear Waste Policy Act of 1996, the Sec- retary of Transportation, pursuant to au- thority under other provisions of law, in con- sultation with the Secretary of Labor and the Commission, shall promulgate a regula- tion establishing training standards applica- ble to workers directly involved in the re- moval and transportation of spent nuclear fuel and high-level radioactive waste. The regulation shall specify minimum training standards applicable to workers, including managerial personnel. The regulation shall require that the employer possess evidence of satisfaction of the applicable training standard before any individual may be em- ployed in the removal and transportation of spent nuclear fuel and high-level radioactive waste. ”(2) If the Secretary of Transportation de- termines, in promulgating the regulation re- quired by paragraph (1), that regulations promulgated by the Commission establish adequate training standards for workers, then the Secretary of Transportation can re- frain from promulgating additional regula- tions with respect to worker training in such activities. The Secretary of Transportation and the Commission shall work through their Memorandum of Understanding to en- sure coordination of worker training stand- ards and to avoid duplicative regulation. ”(3) The training standards required to be promulgated under paragraph (1) shall, among other things deemed necessary and appropriate by the Secretary of Transpor- tation, include the following provisions\u2014 ”(A) a specified minimum number of hours of initial off site instruction and actual field experience under the direct supervision of a trained, experienced supervisor; ”(B) a requirement that onsite managerial personnel receive the same training as work- ers, and a minimum number of additional hours of specialized training pertinent to their managerial responsibilities; and ”(C) a training program applicable to per- sons responsible for responding to and clean- ing up emergency situations occurring dur- ing the removal and transportation of spent nuclear fuel and high-level radioactive waste. ”(4) There is authorized to be appropriated to the Secretary of Transportation, from general revenues, such sums as may be nec- essary to perform his duties under this sub- section. ”SEC. 204. INTERIM STORAGE. ”(a) AUTHORIZATION.\u2014The Secretary shall design, construct, and operate a facility for the interim storage of spent nuclear fuel and high-level radioactive waste at the interim storage facility site. The interim storage fa- cility shall be subject to licensing pursuant to the Atomic Energy Act of 1954 in accord- ance with the Commission’s regulations gov- erning the licensing of independent spent fuel storage installations, which regulations shall be amended by the Commission as nec- essary to implement the provisions of this Act. The interim storage facility shall com- mence operation in phases in accordance with subsection (b). ”(b) SCHEDULE.\u2014(1) The Secretary shall proceed forthwith and without further delay with all activities necessary to begin storing spent nuclear fuel and high-level radioactive waste at the interim storage facility at the interim storage facility site by November 30, 1999, except that: ”(A) The Secretary shall not begin any construction activities at the interim stor- age facility site before December 31, 1998. ”(B) The Secretary shall cease all activi- ties (except necessary termination activi- ties) at the Yucca Mountain site if the Presi- dent determines, in his discretion, on or be- fore December 31, 1998, based on a preponder- ance of the information available at such time, that the Yucca Mountain site is un- suitable for development as a repository, in- cluding geologic and engineered barriers, be- cause of a substantial likelihood that a re- pository of useful size, cannot be designed, licensed, and constructed at the Yucca Mountain site. ”(C) No later than June 30, 1998, the Sec- retary shall provide to the President and to the Congress a viability assessment of the Yucca Mountain site. The viability assess- ment shall include\u2014 ”(i) the preliminary design concept for the critical elements of the repository and waste package, ”(ii) a total system performance assess- ment, based upon the design concept and the scientific data and analysis available by June 30, 1998, describing the probable behav- ior of the respository in the Yucca Mountain geologic setting relative to the overall sys- tem performance standard set forth in sec- tion 205(d) of this Act, ”(iii) a plan and cost estimate for the re- maining work required to complete a license application, and ”(iv) an estimate of the costs to construct and operate the repository in accordance with the design concept. ”(D) Within 18 months of a determination by the President that the Yucca Mountain site is unsuitable for development as a repos- itory under subparagraph (B), the President shall designate a site for the construction of an interim storage facility. If the President does not designate a site for the construction of an interim storage facility, or the con- struction of an interim storage facility at the designated site is not approved by law within 24 months of the President’s deter- mination that the Yucca Mountain site is not suitable for development as a repository, the Secretary shall begin construction of an interim storage facility at the interim stor- age facility site as defined in section 2(19) of this Act. The interim storage facility site as defined in section 2(19) of this Act shall be deemed to be approved by law for purposes of this section. ”(2) Upon the designation of an interim storage facility site by the President under VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00049 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9258 July 31, 1996 paragraph (1)(D), the Secretary shall proceed forthwith and without further delay with all activities necessary to begin storing spent nuclear fuel and high-level radioactive waste at an interim storage facility at the des- ignated site, except that the Secretary shall not begin any construction activities at the designated interim storage facility site be- fore the designated interim storage facility site is approved by law. ”(c) DESIGN.\u2014 ”(1) The interim storage facility shall be designed in two phases in order to commence operations no later than November 30, 1999. The design of the interim storage facility shall provide for the use of storage tech- nologies, licensed, approved, or certified by the Commission for use at the interim stor- age facility as necessary to ensure compat- ibility between the interim storage facility and contract holders’ spent nuclear fuel and facilities, and to facilitate the Secretary’s ability to meet the Secretary’s obligations under this Act. ”(2) The Secretary shall consent to an amendment to the contracts to provide for reimbursement to contract holders for trans- portable storage systems purchased by con- tract holders if the Secretary determines that it is cost effective to use such trans- portable storage systems as part of the inte- grated management system, provided that the Secretary shall not be required to expend any funds to modify contract holders’ stor- age or transport systems or to seek addi- tional regulatory approvals in order to use such systems. ”(d) LICENSING.\u2014 ”(1) PHASES.\u2014The interim storage facility shall be licensed by the Commission in two phases in order to commerce operations no later than November 30, 1999. ”(2) FIRST PHASE.\u2014No later than 12 months after the date of enactment of the Nuclear Waste Policy Act of 1996, the Secretary shall submit to the Commission an application for a license for the first phase of the interim storage facility. The Environmental Report and Safety Analysis Report submitted in support of such license application shall be consistent with the scope of authority re- quested in the license application. The li- cense issued for the first phase of the interim storage facility shall have a term of 20 years. The interim storage facility licensed in the first phase shall have a capacity of not more than 15,000 MTU. The Commission shall issue a final decision granting or denying the ap- plication for the first phase license no later than 16 months from the date of the sub- mittal of the application for such license. ”(3) SECOND PHASE.\u2014No later than 30 months after the date of enactment of the Nuclear Waste Policy Act of 1996, the Sec- retary shall submit to the Commission an application for a license for the second phase interim storage facility. The license for the second phase facility shall authorize a stor- age capacity of 40,000 MTU. If the Secretary does not submit the license application for construction of a respository by February 1, 2002, or does not begin full spent nuclear fuel receipt operations at a repository by Janu- ary 17, 2010, the license shall authorize a storage capacity of 60,000 MTU. The license application shall be submitted such that the license can be issued to permit the second phase facility to begin full spent nuclear fuel receipt operations no later than December 31, 2002. The license for the second phase shall have an initial term of up to 100 years, and shall be renewable for additional terms upon application of the Secretary. ”(e) ADDITIONAL AUTHORITY.\u2014 ”(1) CONSTRUCTION.\u2014For purposes of com- plying with this section, the Secretary may commence site preparation for the interim storage facility as soon as practicable after the date of enactment of the Nuclear Waste Policy Act of 1996 and shall commence con- struction of each phase of the interim stor- age facility subsequent to submittal of the license application for such phase except that the Commission shall issue an order suspending such construction at any time if the Commission determines that such con- struction poses an unreasonable risk to pub- lic health and safety or the environment. The Commission shall terminate all or part of such order upon a determination that the Secretary has taken appropriate action to eliminate such risk. ”(2) FACILITY USE.\u2014Notwithstanding any otherwise applicable licensing requirement, the Secretary may utilize any facility owned by the Federal Government on the date of enactment of the Nuclear Waste Policy Act of 1996 within the boundaries of the interim storage facility site, in connection with an imminent and substantial endangerment to public health and safety at the interim stor- age facility prior to commencement of oper- ations during the second phase. ”(3) EMPLACEMENT OF FUEL AND WASTE.\u2014 Subject to subsection (i), once the Secretary has achieved the annual acceptance rate for spent nuclear fuel from civilian nuclear power reactors established pursuant to the contracts executed prior to the date of en- actment of the Nuclear Waste Policy Act of 1996, as set forth in the Secretary’s annual capacity report dated March, 1995 (DOE\/RW 0457), the Secretary shall accept, in an amount not less than 25 percent of the dif- ference between the contractual acceptance rate and the annual emplacement rate for spent nuclear fuel from civilian nuclear power reactors established under section 507(a), the following radioactive materials\u2014 ”(A) spent nuclear fuel or high-level radio- active waste of domestic origin from civilian nuclear power reactors that have perma- nently ceased operation on or before the date of enactment of the Nuclear Waste Policy Act of 1996; ”(B) spent nuclear fuel from foreign re- search reactors, as necessary to promote non-proliferation objectives; and ”(C) spent nuclear fuel, including spent nu- clear fuel from naval reactors, and high-level radioactive waste from atomic energy de- fense activities. ”(f) NATIONAL ENVIRONMENTAL POLICY ACT OF 1969.\u2014 ”(1) PRELIMINARY DECISIONMAKING ACTIVI- TIES.\u2014The Secretary’s and President’s ac- tivities under this section, including, but not limited to, the selection of a site for the in- terim storage facility, assessments, deter- minations and designations made under sec- tion 204(b), the preparation and submittal of a license application and supporting docu- mentation, the construction of a facility under paragraph (e)(1) of this section, and fa- cility use pursuant to paragraph (e)(2) of this section shall be considered preliminary deci- sionmaking activities for purposes of judi- cial review. The Secretary shall not prepare an environmental impact statement under section 102(2)(C) of the National Environ- mental Policy Act of 1969 (42 U.S.C. 4332(2)(C)) or any environmental review under subparagraph (E) or (F) of such Act be- fore conducting these activities. ”(2) ENVIRONMENTAL IMPACT STATEMENT.\u2014 ”(A) FINAL DECISION.\u2014A final decision by the Commission to grant or deny a license application for the first or second phase of the interim storage facility shall be accom- panied by an Environmental Impact State- ment prepared under section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). In preparing such Envi- ronmental Impact Statement, the Commis- sion\u2014 ”(i) shall ensure that the scope of the Envi- ronmental Impact Statement is consistent with the scope of the licensing action; and ”(ii) shall analyze the impacts of the trans- portation of spent nuclear fuel and high-level radioactive waste to the interim storage fa- cility in a generic manner. ”(B) CONSIDERATIONS.\u2014Such Environ- mental Impact Statement shall not con- sider\u2014 ”(i) the need for the interim storage facil- ity, including any individual component thereof; ”(ii) the time of the initial availability of the interim storage facility; ”(iii) any alternatives to the storage of spent nuclear fuel and high-level radioactive waste at the interim storage facility; ”(iv) any alternatives to the site of the fa- cility as designated by the Secretary in ac- cordance with subsection (a); ”(v) any alternatives to the design criteria for such facility or any individual compo- nent thereof, as specified by the Secretary in the license application; or ”(vi) the environmental impacts of the storage of spent nuclear fuel and high-level radioactive waste at the interim storage fa- cility beyond the initial term of the license or the term of the renewal period for which a license renewal application is made. ”(g) JUDICIAL REVIEW.\u2014Judicial review of the Commission’s environmental impact statement under the National Environ- mental Policy Act of 1969 (42 U.S.C. 4321 et seq.) shall be consolidated with judicial re- view of the Commission’s licensing decision. No court shall have jurisdiction to enjoin the construction or operation of the interim storage facility prior to its final decision on review of the Commission’s licensing action. ”(h) WASTE CONFIDENCE.\u2014The Secretary’s obligation to construct and operate the in- terim storage facility in accordance with this section and the Secretary’s obligation to develop an integrated management sys- tem in accordance with the provisions of this Act, shall provide sufficient and independent grounds for any further findings by the Com- mission of reasonable assurance that spent nuclear fuel and high-level radioactive waste will be disposed of safely and on a timely basis for purposes of the Commission’s deci- sion to grant or amend any license to oper- ate any civilian nuclear power reactor under the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.). ”(i) STORAGE OF OTHER SPENT NUCLEAR FUEL AND HIGH-LEVEL RADIOACTIVE WASTE.\u2014 No later than 18 months following the date of enactment of the Nuclear Waste Policy Act of 1996, the Commission shall, by rule, establish criteria for the storage in the in- terim storage facility of fuel and waste list- ed in subparagraph (e)(3) (A) through (C), to the extent such criteria are not included in regulations issued by the Commission and existing on the date of enactment of the Nu- clear Waste Policy Act of 1996. Following es- tablishment of such criteria, the Secretary shall seek authority, as necessary, to store fuel and waste listed in subparagraph (e)(3) (A) through (C) at the interim storage facil- ity. None of the activities carried out pursu- ant to this subsection shall delay, or other- wise affect, the development, construction, licensing, or operation of the interim storage facility. ”(j) SAVINGS CLAUSE.\u2014The Commission shall, by rule, establish procedures for the li- censing of any technology for the dry stor- age of spent nuclear fuel by rule and with- out, to the maximum extent possible, the need for site-specific approvals by the Com- mission. Nothing in this Act shall affect any such procedures, or any licenses or approvals issued pursuant to such procedures in effect on the date of enactment. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00050 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9259 July 31, 1996 ”SEC. 205. PERMANENT REPOSITORY. ”(a) REPOSITORY CHARACTERIZATION.\u2014 ”(1) GUIDELINES.\u2014The guidelines promul- gated by the Secretary and published at part 960 of title 10, Code of Federal Regulations are annulled and revoked and the Secretary shall make no assumptions or conclusions about the licensability of the Yucca Moun- tain site as a repository by reference to such guidelines. ”(2) SITE CHARACTERIZATION ACTIVITIES.\u2014 The Secretary shall carry out appropriate site characterization activities at the Yucca Mountain site in accordance with the Sec- retary’s program approach to site character- ization. The Secretary shall modify or elimi- nate those site characterization activities designed only to demonstrate the suitability of the site under the guidelines referenced in paragraph (1). ”(3) SCHEDULE DATE.\u2014Consistent with the schedule set forth in the program approach, as modified to be consistent with the Nu- clear Waste Policy Act of 1996, no later than February 1, 2002, the Secretary shall apply to the Commission for authorization to con- struct a repository. If, at any time prior to the filing of such application, the Secretary determines that the Yucca Mountain site cannot satisfy the Commission’s regulations applicable to the licensing of a geologic re- pository, the Secretary shall terminate site characterization activities at the site, notify Congress and the State of Nevada of the Sec- retary’s determination and the reasons therefor, and recommend to Congress not later than 6 months after such determina- tion, further actions, including the enact- ment of legislation, that may be needed to manage the Nation’s spent nuclear fuel and high-level radioactive waste. ”(4) MAXIMIZING CAPACITY.\u2014In developing an application for authorization to construct the repository, the Secretary shall seek to maximize the capacity of the repository, in the most cost-effective manner, consistent with the need for disposal capacity. ”(b) REPOSITORY LICENSING.\u2014Upon the completion of any licensing proceeding for the first phase of the interim storage facil- ity, the Commission shall amend its regula- tions governing the disposal of spent nuclear fuel and high-level radioactive waste in geo- logic repositories to the extent necessary to comply with this Act. Subject to subsection (c), such regulations shall provide for the li- censing of the repository according to the following procedures: ”(1) CONSTRUCTION AUTHORIZATION.\u2014The Commission shall grant the Secretary a con- struction authorization for the repository upon determining that there is reasonable assurance that spent nuclear fuel and high- level radioactive waste can be disposed of in the repository\u2014 ”(A) in conformity with the Secretary’s application, the provisions of this Act, and the regulations of the Commission; ”(B) without unreasonable risk to the health and safety of the public; and ”(C) consistent with the common defense and security. ”(2) LICENSE.\u2014Following substantial com- pletion of construction and the filing of any additional information needed to complete the license application, the Commission shall issue a license to dispose of spent nu- clear fuel and high-level radioactive waste in the repository if the Commission determines that the repository has been constructed and will operate\u2014 ”(A) in conformity with the Secretary’s application, the provisions of this Act, and the regulations of the Commission; ”(B) without unreasonable risk to the health and safety of the public; and ”(C) consistent with the common defense and security. ”(3) CLOSURE.\u2014After emplacing spent nu- clear fuel and high-level radioactive waste in the repository and collecting sufficient con- firmatory data on repository performance to reasonably confirm the basis for repository closure consistent with the Commission’s regulations applicable to the licensing of a repository, as modified in accordance with this Act, the Secretary shall apply to the Commission to amend the license to permit permanent closure of the repository. The Commission shall grant such license amend- ment upon finding that there is reasonable assurance that the repository can be perma- nently closed\u2014 ”(A) in conformity with the Secretary’s application to amend the license, the provi- sions of this Act, and the regulations of the Commission; ”(B) without unreasonable risk to the health and safety of the public; and ”(C) consistent with the common defense and security. ”(4) POST-CLOSURE.\u2014The Secretary shall take those actions necessary and appropriate at the Yucca Mountain site to prevent any activity at the site subsequent to repository closure that poses an unreasonable risk of\u2014 ”(A) breaching the repository’s engineered or geologic barriers; or ”(B) increasing the exposure of individual members of the public to radiation beyond the release standard established in sub- section (d)(1). ”(c) MODIFICATION OF REPOSITORY LICENS- ING PROCEDURE.\u2014The Commission’s regula- tions shall provide for the modification of the repository licensing procedure, as appro- priate, in the event that the Secretary seeks a license to permit the emplacement in the repository, on a retrievable basis, of spent nuclear fuel or high-level radioactive waste as is necessary to provide the Secretary with sufficient confirmatory data on repository performance to reasonably confirm the basis for repository closure consistent with appli- cable regulations. ”(d) REPOSITORY LICENSING STANDARDS.\u2014 The Administrator of the Environmental Protection Agency shall, pursuant to author- ity under other provisions of law, issue gen- erally applicable standards for the protec- tion of the public from releases of radio- active materials or radioactivity from the repository. Such standards shall be con- sistent with the overall system performance standard established by this subsection un- less the Administrator determines by rule that the overall system performance stand- ard would constitute an unreasonable risk to health and safety. The Commission’s reposi- tory licensing determinations for the protec- tion of the public shall be based solely on a finding whether the repository can be oper- ated in conformance with the overall system performance standard established in para- graph (1), applied in accordance with the pro- visions of paragraph (2), and the Administra- tor’s radiation protection standards. The Commission shall amend its regulations in accordance with subsection (b) to incor- porate each of the following licensing stand- ards: ”(1) ESTABLISHMENT OF OVERALL SYSTEM PERFORMANCE STANDARD.\u2014The standard for protection of the public from release of ra- dioactive material or radioactivity from the repository shall prohibit releases that would expose an average member of the general population in the vicinity of the Yucca Mountain site to an annual dose in excess of 100 millirems unless the Commission deter- mines by rule that such standard would con- stitute an unreasonable risk to health and safety and establishes by rule another stand- ard which will protect health and safety. Such standard shall constitute an overall system performance standard. ”(2) APPLICATION OF OVERALL SYSTEM PER- FORMANCE STANDARD.\u2014The Commission shall issue the license if it finds reasonable assur- ance that for the first 1,000 years following the commencement of repository operations, the overall system performance standard will be met based on a probabilistic evalua- tion, as appropriate, of compliance with the overall system performance standard in paragraph (1). ”(3) FACTORS.\u2014For purposes of making the finding in paragraph (2)\u2014 ”(A) the Commission shall not consider catastrophic events where the health con- sequences of individual events themselves can be reasonably assumed to exceed the health consequences due to the impact of the events on repository performance; ”(B) for the purpose of this section, an av- erage member of the general population in the vicinity of the Yucca Mountain site means a person whose physiology, age, gen- eral health, agricultural practices, eating habits, and social behavior represent the av- erage for persons living in the vicinity of the site. Extremes in social behavior, eating habits, or other relevant practices or charac- teristics shall not be considered; and ”(C) the Commission shall assume that, following repository closure, the inclusion of engineered barriers and the Secretary’s post- closure actions at the Yucca Mountain site, in accordance with subsection (b)(4), shall be sufficient to\u2014 ”(i) prevent any human activity at the site that poses an unreasonable risk of breaching the repository’s engineered or geologic bar- riers; and ”(ii) prevent any increase in the exposure of individual members of the public to radi- ation beyond the allowable limits specified in paragraph (1). ”(4) ADDITIONAL ANALYSIS.\u2014The Commis- sion shall analyze the overall system per- formance through the use of probabilistic evaluations that use best estimate assump- tions, data, and methods for the period com- mencing after the first 1,000 years of oper- ation of the repository and terminating at 10,000 years after the commencement of oper- ation of the repository. ”(e) NATIONAL ENVIRONMENTAL POLICY ACT.\u2014 ”(1) SUBMISSION OF STATEMENT.\u2014Construc- tion and operation of the repository shall be considered a major Federal action signifi- cantly affecting the quality of the human en- vironment for purposes of the National Envi- ronmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). The Secretary shall submit an envi- ronmental impact statement on the con- struction and operation of the repository to the Commission with the license application and shall supplement such environmental impact statement as appropriate. ”(2) CONSIDERATIONS.\u2014For purposes of complying with the requirements of the Na- tional Environmental Policy Act of 1969 and this section, the Secretary shall not consider in the environmental impact statement the need for the repository, or alternative sites or designs for the repository. ”(3) ADOPTION BY COMMISSION.\u2014The Sec- retary’s environmental impact statement and any supplements thereto shall, to the ex- tent practicable, be adopted by the Commis- sion in connection with the issuance by the Commission of a construction authorization under subsection (b)(1), a license under sub- section (b)(2), or a license amendment under subsection (b)(3). To the extent such state- ment or supplement is adopted by the Com- mission, such adoption shall be deemed to also satisfy the responsibilities of the Com- mission under the National Environmental Policy Act of 1969, and no further consider- ation shall be required, except that nothing VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00051 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9260 July 31, 1996 in this subsection shall affect any inde- pendent responsibilities of the Commission to protect the public health and safety under the Atomic Energy Act of 1954. In any such statement or supplement prepared with re- spect to the repository, the Commission shall not consider the need for a repository, or alternate sites or designs for the reposi- tory. ”(f) JUDICIAL REVIEW.\u2014No court shall have jurisdiction to enjoin issuance of the Com- mission repository licensing regulations prior to its final decision on review of such regulations. ”SEC. 206. LAND WITHDRAWAL. ”(a) WITHDRAWAL AND RESERVATION.\u2014 ”(1) WITHDRAWAL.\u2014Subject to valid exist- ing rights, the interim storage facility site and the Yucca Mountain site, as described in subsection (b), are withdrawn from all forms of entry, appropriation, and disposal under the public land laws, including the mineral leasing laws, the geothermal leasing laws, the material sale laws, and the mining laws. ”(2) JURISDICTION.\u2014Jurisdiction of any land within the interim storage facility site and the Yucca Mountain site managed by the Secretary of the Interior or any other Fed- eral officer is transferred to the Secretary. ”(3) RESERVATION.\u2014The interim storage fa- cility site and the Yucca Mountain site are reserved for the use of the Secretary for the construction and operation, respectively, of the interim storage facility and the reposi- tory and activities associated with the pur- poses of this title. ”(b) LAND DESCRIPTION.\u2014 ”(1) BOUNDARIES.\u2014The boundaries depicted on the map entitled ‘Interim Storage Facil- ity Site Withdrawal Map’, dated March 13, 1996, and on file with the Secretary, are es- tablished as the boundaries of the Interim Storage Facility site. ”(2) BOUNDARIES.\u2014The boundaries depicted on the map entitled ‘Yucca Mountain Site Withdrawal Map’, dated July 9, 1996, and on file with the Secretary, are established as the boundaries of the Yucca Mountain site. ”(3) NOTICE AND MAPS.\u2014Within 6 months of the date of the enactment of the Nuclear Waste Policy Act of 1996, the Secretary shall\u2014 ”(A) publish in the Federal Register a no- tice containing a legal description of the in- terim storage facility site; and ”(B) file copies of the maps described in paragraph (1), and the legal description of the interim storage facility site with the Congress, the Secretary of the Interior, the Governor of Nevada, and the Archivist of the United States. ”(4) NOTICE AND MAPS.\u2014Concurrent with the Secretary’s application to the Commis- sion for authority to construct the reposi- tory, the Secretary shall\u2014 ”(A) publish in the Federal Register a no- tice containing a legal description of the Yucca Mountain site; and ”(B) file copies of the maps described in paragraph (2), and the legal description of the Yucca Mountain site with the Congress, the Secretary of the Interior, the Governor of Nevada, and the Archivist of the United States. ”(5) CONSTRUCTION.\u2014The maps and legal descriptions of the interim storage facility site and the Yucca Mountain site referred to in this subsection shall have the same force and effect as if they were included in this Act. The Secretary may correct clerical and typographical errors in the maps and legal descriptions and make minor adjustments in the boundaries of the sites. ”TITLE III\u2014LOCAL RELATIONS ”SEC. 301. FINANCIAL ASSISTANCE. ”(a) GRANTS.\u2014The Secretary is authorized to make grants to any affected Indian tribe or affected unit of local government for pur- poses of enabling the affected Indian tribe or affected unit of local government\u2014 ”(1) to review activities taken with respect to the Yucca Mountain site for purposes of determining any potential economic, social, public health and safety, and environmental impacts of the integrated management sys- tem on the affected Indian tribe or the af- fected unit of local government and its resi- dents; ”(2) to develop a request for impact assist- ance under subsection (c); ”(3) to engage in any monitoring, testing, or evaluation activities with regard to such site; ”(4) to provide information to residents re- garding any activities of the Secretary, or the Commission with respect to such site; and ”(5) to request information from, and make comments and recommendations to, the Sec- retary regarding any activities taken with respect to such site. ”(b) SALARY AND TRAVEL EXPENSES.\u2014Any salary or travel expense that would ordi- narily be incurred by any affected Indian tribe or affected unit of local government may not be considered eligible for funding under this section. ”(c) FINANCIAL AND TECHNICAL ASSIST- ANCE.\u2014 ”(1) ASSISTANCE REQUESTS.\u2014The Secretary is authorized to offer to provide financial and technical assistance to any affected In- dian tribe or affected unit of local govern- ment requesting such assistance. Such as- sistance shall be designed to mitigate the impact on the affected Indian tribe or af- fected unit of local government of the devel- opment of the integrated management sys- tem. ”(2) REPORT.\u2014Any affected Indian tribe or affected unit of local government may re- quest assistance under this section by pre- paring and submitting to the Secretary a re- port on the economic, social, public health and safety, and environmental impacts that are likely to result from activities of the in- tegrated management system. ”(d) OTHER ASSISTANCE.\u2014 ”(1) TAXABLE AMOUNTS.\u2014In addition to fi- nancial assistance provided under this sub- section, the Secretary is authorized to grant to any affected Indian tribe or affected unit of local government an amount each fiscal year equal to the amount such affected In- dian tribe or affected unit of local govern- ment, respectively, would receive if author- ized to tax integrated management system activities, as such affected Indian tribe or af- fected unit of local government taxes the non-Federal real property and industrial ac- tivities occurring within such affected unit of local government. ”(2) TERMINATION.\u2014Such grants shall con- tinue until such time as all such activities, development, and operations are terminated at such site. ”(3) ASSISTANCE TO INDIAN TRIBES AND UNITS OF LOCAL GOVERNMENT.\u2014 ”(A) PERIOD.\u2014Any affected Indian tribe or affected unit of local government may not receive any grant under paragraph (1) after the expiration of the 1-year period following the date on which the Secretary notifies the affected Indian tribe or affected unit of local government of the termination of the oper- ation of the integrated management system. ”(B) ACTIVITIES.\u2014Any affected Indian tribe or affected unit of local government may not receive any further assistance under this sec- tion if the integrated management system activities at such site are terminated by the Secretary or if such activities are perma- nently enjoined by any court. ”SEC. 302. ON-SITE REPRESENTATIVE. ”The Secretary shall offer to the unit of local government within whose jurisdiction a site for an interim storage facility or reposi- tory is located under this Act an opportunity to designate a representative to conduct on- site oversight activities at such site. The Secretary is authorized to pay the reason- able expenses of such representative. ”SEC. 303. ACCEPTANCE OF BENEFITS. ”(a) CONSENT.\u2014The acceptance or use of any of the benefits provided under this title by any affected Indian tribe or affected unit of local government shall not be deemed to be an expression of consent, express, or im- plied, either under the Constitution of the State or any law thereof, to the siting of an interim storage facility or repository in the State of Nevada, any provision of such Con- stitution or laws to the contrary notwith- standing. ”(b) ARGUMENTS.\u2014Neither the United States nor any other entity may assert any argument based on legal or equitable estop- pel, or acquiescence, or waiver, or consensual involvement, in response to any decision by the State to oppose the siting in Nevada of an interim storage facility or repository pre- mised upon or related to the acceptance or use of benefits under this title. ”(c) LIABILITY.\u2014No liability of any nature shall accrue to be asserted against any offi- cial of any governmental unit of Nevada pre- mised solely upon the acceptance or use of benefits under this title. ”SEC. 304. RESTRICTIONS ON USE OF FUNDS. ”None of the funding provided under this title may be used\u2014 ”(1) directly or indirectly to influence leg- islative action on any matter pending before Congress or a State legislature or for any lobbying activity as provided in section 1913 of title 18, United States Code; ”(2) for litigation purposes; and ”(3) to support multistate efforts or other coalition-building activities inconsistent with the purposes of this Act. ”SEC. 305. LAND CONVEYANCES. ”(a) CONVEYANCES OF PUBLIC LANDS.\u2014One hundred and twenty days after enactment of this Act, all right, title and interest of the United States in the property described in subsection (b), and improvements thereon, together with all necessary easements for utilities and ingress and egress to such prop- erty, including, but not limited to, the right to improve those easements, are conveyed by operation of law to the County of Nye, Ne- vada, unless the county notifies the Sec- retary of Interior or the head of such other appropriate agency in writing within 60 days of such date of enactment that it elects not to take title to all or any part of the prop- erty, except that any lands conveyed to the County of Nye under this subsection that are subject to a Federal grazing permit or lease or a similar federally granted permit or lease shall be conveyed between 60 and 120 days of the earliest time the Federal agency admin- istering or granting the permit or lease would be able to legally terminate such right under the statutes and regulations existing at the date of enactment of this Act, unless Nye County and the affected holder of the permit or lease negotiate an agreement that allows for an earlier conveyance. ”(b) SPECIAL CONVEYANCES.\u2014Notwith- standing any other law, the following public lands depicted on the maps and legal descrip- tions dated October 11, 1995, and on file with the Secretary shall be conveyed under sub- section (a) to the County of Nye, Nevada: Map 1: Proposed Pahrump industrial park site. Map 2: Proposed Lathrop Wells (gate 510) industrial park site. Map 3: Pahrump landfill sites. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00052 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9261 July 31, 1996 Map 4: Amargosa Valley Regional Landfill site. Map 5: Amargosa Valley Municipal Land- fill site. Map 6: Beatty Landfill\/Transfer Station site. Map 7: Round Mountain Landfill site. Map 8: Tonopah Landfill site. Map 9: Gabbs Landfill site. ”(c) CONSTRUCTION.\u2014The maps and legal descriptions of special conveyances referred to in subsection (b) shall have the same force and effect as if they were included in this Act. The Secretary may correct clerical and typographical errors in the maps and legal descriptions and make minor adjustments in the boundaries of the sites. ”(d) EVIDENCE OF TITLE TRANSFER.\u2014Upon the request of the County of Nye, Nevada, the Secretary of the Interior shall provide evidence of title transfer. ”TITLE IV\u2014FUNDING AND ORGANIZATION ”SEC. 401. PROGRAM FUNDING. ”(a) CONTRACTS.\u2014 ”(1) AUTHORITY OF SECRETARY.\u2014In the per- formance of the Secretary’s functions under this Act, the Secretary is authorized to enter into contracts with any person who gen- erates or holds title to spent nuclear fuel or high-level radioactive waste of domestic ori- gin for the acceptance of title and posses- sion, transportation, interim storage, and disposal of such waste or spent fuel. Such contracts shall provide for payment of an- nual fees to the Secretary in the amounts set by the Secretary pursuant to paragraphs (2) and (3). Except as provided in paragraph (3), fees assessed pursuant to this paragraph shall be paid to the Treasury of the United States and shall be available for use by the Secretary pursuant to this section until ex- pended. Subsequent to the date of enactment of the Nuclear Waste Policy Act of 1996, the contracts executed under section 302(a) of the Nuclear Waste Policy Act of 1982 shall continue in effect under this Act: Provided, That the Secretary shall consent to an amendment to such contracts as necessary to implement the provisions of this Act. ”(2) ANNUAL FEES.\u2014 ”(A) for electricity generated by civilian nuclear power reactors and sold between January 7, 1983, and September 30, 2002, the fee under paragraph (1) shall be equal to 1.0 mill per kilowatt-hour generated and sold. For electricity generated by civilian nuclear power reactors and sold on or after October 1, 2002, the aggregate amount of fees col- lected during each fiscal year shall be no greater than the annual level of appropria- tions for expenditures on those activities consistent with subsection (d) for that fiscal year, minus\u2014 ”(i) any unobligated balance collected pur- suant to this section during the previous fis- cal year; and ”(ii) the percentage of such appropriation required to be funded by the Federal Govern- ment pursuant to section 403, The Secretary shall determine the level of the annual fee for each civilian nuclear power reactor based on the amount of elec- tricity generated and sold, except that the annual fee collected under this subparagraph shall not exceed 1.0 mill per kilowatt-hour generated and sold. ”(B) EXPENDITURES IF SHORTFALL.\u2014If, dur- ing any fiscal year on or after October 1, 2002, the aggregate amount of fees assessed pursuant to subparagraph (A) is less than the annual level of appropriations for expendi- tures on those activities specified in sub- section (d) for that fiscal year, minus\u2014 ”(i) any unobligated balance collected pur- suant to this section during the previous fis- cal year; and ”(ii) the percentage of such appropriations required to be funded by the Federal Govern- ment pursuant to section 403, the Secretary may make expenditures from the Nuclear Waste Fund up to the level of the fees assessed. ”(C) RULES.\u2014The Secretary shall, by rule, establish procedures necessary to implement this paragraph. ”(3) ONE-TIME FEE.\u2014For spent nuclear fuel or solidified high-level radioactive waste de- rived from spent nuclear fuel, which fuel was used to generate electricity in a civilian nu- clear power reactor prior to January 7, 1983, the fee shall be in an amount equivalent to an average charge of 1.0 mill per kilowatt- hour for electricity generated by such spent nuclear fuel, or such solidified high-level waste derived therefrom. Payment of such one-time fee prior to the date of enactment of the Nuclear Waste Policy Act of 1996 shall satisfy the obligation imposed under this paragraph. Any one-time fee paid and col- lected subsequent to the date of enactment of the Nuclear Waste Policy Act of 1996 pur- suant to the contracts, including any inter- est due pursuant to such contracts, shall be paid to the Nuclear Waste Fund no later than September 30, 2002. The Commission shall suspend the license of any licensee who fails or refuses to pay the full amount of the fee referred to in this paragraph on or before September 30, 2002, and the license shall re- main suspended until the full amount of the fee referred to in this paragraph is paid. The person paying the fee under this paragraph to the Secretary shall have no further finan- cial obligation to the Federal Government for the long-term storage and permanent dis- posal of spent fuel or high-level radioactive waste derived from spent nuclear fuel used to generate electricity in a civilian power reac- tor prior to January 7, 1983. ”(4) ADJUSTMENTS TO FEE.\u2014The Secretary shall annually review the amount of the fees established by paragraphs (2) and (3), to- gether with the existing balance of the Nu- clear Waste Fund on the date of enactment of the Nuclear Waste Policy Act of 1996, to evaluate whether collection of the fee will provide sufficient revenues to offset the costs as defined in subsection (c)(2). In the event the Secretary determines that the rev- enues being collected are either insufficient or excessive to recover the costs incurred by the Federal Government that are specified in subsection (c)(2), the Secretary shall propose an adjustment to the fee in subsection (c)(2) to ensure full cost recovery. The Secretary shall immediately transmit the proposal for such an adjustment to both houses of Con- gress. ”(b) ADVANCE CONTRACTING REQUIRE- MENT.\u2014 ”(1) IN GENERAL.\u2014 ”(A) LICENSE ISSUANCE AND RENEWAL.\u2014The Commission shall not issue or renew a li- cense to any person to use a utilization or production facility under the authority of section 103 or 104 of the Atomic Energy Act of 1954 (42 U.S.C. 2133, 2134) unless\u2014 ”(i) such person has entered into a con- tract under subsection (a) with the Sec- retary; or ”(ii) the Secretary affirms in writing that such person is actively and in good faith ne- gotiating with the Secretary for a contract under this section. ”(B) PRECONDITION.\u2014The Commission, as it deems necessary or appropriate, may require as a precondition to the issuance or renewal of a license under section 103 or 104 of the Atomic Energy Act of 1954 (42 U.S.C. 2133, 2134) that the applicant for such license shall have entered into an agreement with the Secretary for the disposal of spent nuclear fuel and high-level radioactive waste that may result from the use of such license. ”(2) DISPOSAL IN REPOSITORY.\u2014Except as provided in paragraph (1), no spent nuclear fuel or high-level radioactive waste gen- erated or owned by any person (other than a department of the United States referred to in section 101 or 102 of title 5, United States Code) may be disposed of by the Secretary in the repository unless the generator or owner of such spent fuel or waste has entered into a contract under subsection (a) with the Sec- retary by not later than the date on which such generator or owner commences genera- tion of, or takes title to, such spent fuel or waste. ”(3) ASSIGNMENT.\u2014The rights and duties of contract holders are assignable. ”(c) NUCLEAR WASTE FUND.\u2014 ”(1) IN GENERAL.\u2014The Nuclear Waste Fund established in the Treasury of the United States under section 302(c) of the Nuclear Waste Policy Act of 1982 shall continue in ef- fect under this Act and shall consist of\u2014 ”(A) the existing balance in the Nuclear Waste Fund on the date of enactment of the Nuclear Waste Policy Act of 1996; and ”(B) all receipts, proceeds, and recoveries realized under subsections (a), and (c)(3) sub- sequent to the date of enactment of the Nu- clear Waste Policy Act of 1996, which shall be deposited in the Nuclear Waste Fund imme- diately upon their realization. ”(2) USE.\u2014The Secretary may make ex- penditures from the Nuclear Waste Fund, subject to subsections (d) and (e), only for purposes of the integrated management sys- tem. ”(3) ADMINISTRATION OF NUCLEAR WASTE FUND.\u2014 (A) IN GENERAL.\u2014The Secretary of the Treasury shall hold the Nuclear Waste Fund and, after consultation with the Secretary, annually report to the Congress on the finan- cial condition and operations of the Nuclear Waste Fund during the preceding fiscal year. ”(B) AMOUNTS IN EXCESS OF CURRENT NEEDS.\u2014If the Secretary determines that the Nuclear Waste Fund contains at any time amounts in excess of current needs, the Sec- retary may request the Secretary of the Treasury to invest such amounts, or any por- tion of such amounts as the Secretary deter- mines to be appropriate, in obligations of the United States\u2014 ”(i) having maturities determined by the Secretary of the Treasury to be appropriate to the needs of the Nuclear Waste Fund; and ”(ii) bearing interest at rates determined to be appropriate by the Secretary of the Treasury, taking into consideration the cur- rent average market yield on outstanding marketable obligations of the United States with remaining periods to maturity com- parable to the maturities of such invest- ments, except that the interest rate on such investments shall not exceed the average in- terest rate applicable to existing borrowings. ”(C) EXEMPTION.\u2014Receipts, proceeds, and recoveries realized by the Secretary under this section, and expenditures of amounts from the Nuclear Waste Fund, shall be ex- empt from annual apportionment under the provisions of subchapter II of chapter 15 of title 31, United States Code. ”(d) BUDGET.\u2014The Secretary shall submit the budget for implementation of the Sec- retary’s responsibilities under this Act to the Office of Management and Budget annu- ally along with the budget of the Depart- ment of Energy submitted at such time in accordance with chapter 11 of title 31, United States Code. The budget shall consist of the estimates made by the Secretary of expendi- tures under this Act and other relevant fi- nancial matters for the succeeding 3 fiscal years, and shall be included in the budget of the United States Government. ”(e) APPROPRIATIONS.\u2014The Secretary may make expenditures from the Nuclear Waste VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00053 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9262 July 31, 1996 Fund, subject to appropriations, which shall remain available until expended. ”SEC. 402. OFFICE OF CIVILIAN RADIOACTIVE WASTE MANAGEMENT. ”(a) ESTABLISHMENT.\u2014There hereby is es- tablished within the Department of Energy an Office of Civilian Radioactive Waste Man- agement. The Office shall be headed by a Di- rector, who shall be appointed by the Presi- dent, by and with the advice and consent of the Senate, and who shall be compensated at the rate payable for level IV of the Executive Schedule under section 5315 of title 5, United States Code. ”(b) FUNCTIONS OF DIRECTOR.\u2014The Director of the Office shall be responsible for carrying out the functions of the Secretary under this Act, subject to the general supervision of the Secretary. The Director of the Office shall be directly responsible to the Secretary. ”SEC. 403. FEDERAL CONTRIBUTION. ”(a) ALLOCATION.\u2014No later than one year from the date of enactment of the Nuclear Waste Policy Act of 1996, acting pursuant to section 553 of title 5, United States Code, the Secretary shall issue a final rule estab- lishing the appropriate portion of the costs of managing spent nuclear fuel and high- level radioactive waste under this Act allo- cable to the interim storage or permanent disposal of spent nuclear fuel and high-level radioactive waste from atomic energy de- fense activities and spent nuclear fuel from foreign research reactors. The share of costs allocable to the management of spent nu- clear fuel and high-level radioactive waste from atomic energy defense activities and spent nuclear fuel from foreign research re- actors shall include\u2014 ”(1) an appropriate portion of the costs as- sociated with research and development ac- tivities with respect to development of an in- terim storage facility and repository; and ”(2) as appropriate, interest on the prin- cipal amounts due calculated by reference to the appropriate Treasury bill rate as if the payments were made at a point in time con- sistent with the payment dates for spent nu- clear fuel and high-level radioactive waste under the contracts. ”(b) APPROPRIATION REQUEST.\u2014In addition to any request for an appropriation from the Nuclear Waste Fund, the Secretary shall re- quest annual appropriations from general revenues in amounts sufficient to pay the costs of the management of spent nuclear fuel and high-level radioactive waste from atomic energy defense activities and spent nuclear fuel from foreign research reactors, as established under subsection (a). ”(c) REPORT.\u2014In conjunction with the an- nual report submitted to Congress under sec- tion 702, the Secretary shall advise the Con- gress annually of the amount of spent nu- clear fuel and high-level radioactive waste from atomic energy activities and spent nu- clear fuel from foreign research reactors, re- quiring management in the integrated man- agement system. ”(d) AUTHORIZATION.\u2014There is authorized to be appropriated to the Secretary, from general revenues, for carrying out the pur- poses of this Act, such sums as may be nec- essary to pay the costs of the management of spent nuclear fuel and high-level radioactive waste from atomic energy defense activities and spent nuclear fuel from foreign research reactors, as established under subsection (a). ”TITLE V\u2014GENERAL AND MISCELLANEOUS PROVISIONS ”SEC. 501. COMPLIANCE WITH OTHER LAWS. ”If the requirements of any Federal, State, or local law (including a requirement im- posed by regulation or by any other means under such a law) are inconsistent with or duplicative of the requirements of the Atom- ic Energy Act of 1954 (42 U.S.C. 2011 et seq.) or of this Act, the Secretary shall comply only with the requirements of the Atomic Energy Act of 1954 and of this Act in imple- menting the integrated management system. ”SEC. 502. JUDICIAL REVIEW OF AGENCY AC- TIONS. ”(a) JURISDICTION OF THE UNITED STATES COURTS OF APPEALS.\u2014 ”(1) ORIGINAL AND EXCLUSIVE JURISDIC- TION.\u2014Except for review in the Supreme Court of the United States, and except as otherwise provided in this Act, the United States courts of appeals shall have original and exclusive jurisdiction over any civil ac- tion\u2014 ”(A) for review of any final decision or ac- tion of the Secretary, the President, or the Commission under this Act; ”(B) alleging the failure of the Secretary, the President, or the Commission to make any decision, or take any action, required under this Act; ”(C) challenging the constitutionality of any decision made, or action taken, under any provision of this Act; or ”(D) for review of any environmental im- pact statement prepared or environmental assessment pursuant to the National Envi- ronmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) with respect to any action under this Act or alleging a failure to prepare such statement with respect to any such action. ”(2) VENUE.\u2014The venue of any proceeding under this section shall be in the judicial cir- cuit in which the petitioner involved resides or has its principal office, or in the United States Court of Appeals for the District of Columbia Circuit. (b) DEADLINE FOR COMMENCING ACTION.\u2014A civil action for judicial review described under subsection (a)(1) may be brought no later than 180 days after the date of the deci- sion or action or failure to act involved, as the case may be, except that if a party shows that he did not know of the decision or ac- tion complained of (or of the failure to act), and that a reasonable person acting under the circumstances would not have known, such party may bring a civil action no later than 180 days after the date such party ac- quired actual or constructive knowledge or such decision, action, or failure to act. ”(c) APPLICATION OF OTHER LAW.\u2014The pro- visions of this section relating to any matter shall apply in lieu of the provisions of any other Act relating to the same matter. ”SEC. 503. LICENSING OF FACILITY EXPANSIONS AND TRANSSHIPMENTS. ”(a) ORAL ARGUMENT.\u2014In any Commission hearing under section 189 of the Atomic En- ergy Act of 1954 (42 U.S.C. 2239) on an appli- cation for a license, or for an amendment to an existing license, filed after January 7, 1983, to expand the spent nuclear fuel storage capacity at the site of a civilian nuclear power reactor, through the use of high-den- sity fuel storage racks, fuel rod compaction, the transshipment of spent nuclear fuel to another civilian nuclear power reactor with- in the same utility system, the construction of additional spent nuclear fuel pool capac- ity or dry storage capacity, or by other means, the Commission shall, at the request of any party, provide an opportunity for oral argument with respect to any matter which the Commission determines to be in con- troversy among the parties. The oral argu- ment shall be preceded by such discovery procedures as the rules of the Commission shall provide. The Commission shall require each party, including the Commission staff, to submit in written form, at the time of the oral argument, a summary of the facts, data, and arguments upon which such party pro- poses to rely that are known at such time to such party. Only facts and data in the form of sworn testimony or written submission may be relied upon by the parties during oral argument. Of the materials that may be sub- mitted by the parties during oral argument, the Commission shall only consider those facts and data that are submitted in the form of sworn testimony or written submis- sion. ”(b) ADJUDICATORY HEARING.\u2014 ”(1) DESIGNATION.\u2014At the conclusion of any oral argument under subsection (a), the Commission shall designate any disputed question of fact, together with any remain- ing questions of law, for resolution in an ad- judicatory hearing only if it determines that\u2014 ”(A) there is a genuine and substantial dis- pute of fact which can only be resolved with sufficient accuracy by the introduction of evidence in an adjudicatory hearing; and ”(B) the decision of the Commission is likely to depend in whole or in part on the resolution of such dispute. ”(2) DETERMINATION.\u2014In making a deter- mination under this subsection, the Commis- sion\u2014 ”(A) shall designate in writing the specific facts that are in genuine and substantial dis- pute, the reason why the decision of the agency is likely to depend on the resolution of such facts, and the reason why an adju- dicatory hearing is likely to resolve the dis- pute; and ”(B) shall not consider\u2014 ”(i) any issue relating to the design, con- struction, or operation of any civilian nu- clear power reactor already licensed to oper- ate at such site, or any civilian nuclear power reactor to which a construction per- mit has been granted at such site, unless the Commission determines that any such issue substantially affects the design, construc- tion, or operation of the facility or activity for which such license application, author- ization, or amendment is being considered; or ”(ii) any siting or design issue fully consid- ered and decided by the Commission in con- nection with the issuance of a construction permit or operating license for a civilian nu- clear power reactor at such site, unless\u2014 ”(I) such issue results from any revision of siting or design criteria by the Commission following such decision; and ”(II) the Commission determines that such issue substantially affects the design, con- struction, or operation of the facility or ac- tivity for which such license application, au- thorization, or amendment is being consid- ered. ”(3) APPLICATION.\u2014The provisions of para- graph (2)(B) shall apply only with respect to licenses, authorizations, or amendments to licenses or authorizations, applied for under the Atomic Energy Act of 1954 (42 U.S.C. 2011 et seq.) before December 31, 2005. ”(4) CONSTRUCTION.\u2014The provisions of this section shall not apply to the first applica- tion for a license or license amendment re- ceived by the Commission to expand onsite spent fuel storage capacity by the use of a new technology not previously approved for use at any nuclear power plant by the Com- mission. ”(c) JUDICIAL REVIEW.\u2014No court shall hold unlawful or set aside a decision of the Com- mission in any proceeding described in sub- section (a) because of a failure by the Com- mission to use a particular procedure pursu- ant to this section unless\u2014 ”(1) an objection to the procedure used was presented to the Commission in a timely fashion or there are extraordinary cir- cumstances that excuse the failure to present a timely objection; and ”(2) the court finds that such failure has precluded a fair consideration and informed resolution of a significant issue of the pro- ceeding taken as a whole. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00054 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9263 July 31, 1996 ”SEC. 504. SITING A SECOND REPOSITORY. ”(a) CONGRESSIONAL ACTION REQUIRED.\u2014 The Secretary may not conduct site-specific activities with respect to a second repository unless Congress has specifically authorized and appropriated funds for such activities. ”(b) REPORT.\u2014The Secretary shall report to the President and to Congress on or after January 1, 2007, but not later than January 1, 2010, on the need for a second repository. ”SEC. 505. FINANCIAL ARRANGEMENTS FOR LOW- LEVEL RADIOACTIVE WASTE SITE CLOSURE. ”(a) FINANCIAL ARRANGEMENTS.\u2014 ”(1) STANDARDS AND INSTRUCTIONS.\u2014The Commission shall establish by rule, regula- tion, or order, after public notice, and in ac- cordance with section 181 of the Atomic En- ergy Act of 1954 (42 U.S.C. 2231), such stand- ards and instructions as the Commission may deem necessary or desirable to ensure in the case of each license for the disposal of low-level radioactive waste that an adequate bond, surety, or other financial arrangement (as determined by the Commission) will be provided by a licensee to permit completion of all requirements established by the Com- mission for the decontamination, decommis- sioning, site closure, and reclamation of sites, structures, and equipment used in con- junction with such low-level radioactive waste. Such financial arrangements shall be provided and approved by the Commission, or, in the case of sites within the boundaries of any agreement State under section 274 of the Atomic Energy Act of 1954 (42 U.S.C. 2021), by the appropriate State or State enti- ty, prior to issuance of licenses for low-level radioactive waste disposal or, in the case of licenses in effect on January 7, 1983, prior to termination of such licenses. ”(2) BONDING, SURETY OR OTHER FINANCIAL ARRANGEMENTS.\u2014If the Commission deter- mines that any long-term maintenance or monitoring, or both, will be necessary at a site described in paragraph (1), the Commis- sion shall ensure before termination of the license involved that the licensee has made available such bonding, surety, or other fi- nancial arrangements as may be necessary to ensure that any necessary long-term maintenance or monitoring needed for such site will be carried out by the person having title and custody for such site following li- cense termination. ”(b) TITLE AND CUSTODY.\u2014 ”(1) AUTHORITY OF SECRETARY.\u2014The Sec- retary shall have authority to assume title and custody of low-level radioactive waste and the land on which such waste is disposed of, upon request of the owner of such waste and land and following termination of the li- cense issued by the Commission for such dis- posal, if the Commission determines that\u2014 ”(A) the requirements of the Commission for site closure, decommissioning, and de- contamination have been met by the licensee involved and that such licensee is in compli- ance with the provisions of subsection (a); ”(B) such title and custody will be trans- ferred to the Secretary without cost to the Federal Government; and ”(C) Federal ownership and management of such site is necessary or desirable in order to protect the public health and safety, and the environment. ”(2) PROTECTION.\u2014If the Secretary assumes title and custody of any such waste and land under this subsection, the Secretary shall maintain such waste and land in a manner that will protect the public health and safe- ty, and the environment. ”(c) SPECIAL SITES.\u2014If the low-level radio- active waste involved is the result of a li- censed activity to recover zirconium, haf- nium, and rare earths from source material, the Secretary, upon request of the owner of the site involved, shall assume title and cus- tody of such waste and the land on which it is disposed when such site has been decon- taminated and stabilized in accordance with the requirements established by the Com- mission and when such owner has made ade- quate financial arrangements approved by the Commission for the long-term mainte- nance and monitoring of such site. ”SEC. 506. NUCLEAR REGULATORY COMMISSION TRAINING AUTHORIZATION. ”The Commission is authorized and di- rected to promulgate regulations, or other appropriate regulatory guidance, for the training and qualifications of civilian nu- clear power plant operators, supervisors, technicians, and other appropriate operating personnel. Such regulations or guidance shall establish simulator training require- ments for applicants for civilian nuclear power plant operator licenses and for oper- ator requalification programs; requirements governing Commission administration of re- qualification examinations; requirements for operating tests at civilian nuclear power plant simulators, and instructional require- ments for civilian nuclear power plant li- censee personnel training programs. ”SEC. 507. EMPLACEMENT SCHEDULE. ”(a) The emplacement schedule shall be implemented in accordance with the fol- lowing: ”(1) Emplacement priority ranking shall be determined by the Department’s annual ‘Acceptance Priority Ranking’ report. ”(2) The Secretary’s spent fuel emplace- ment rate shall be no less than the following: 1,200 MTU in fiscal year 2000 and 1,200 MTU in fiscal year 2001; 2,000 MTU in fiscal year 2002 and 2,000 MTU in fiscal year 2003; 2,700 MTU in fiscal year 2004; and 3,000 MTU annu- ally thereafter. ”(b) If the Secretary is unable to begin em- placement by November 30, 1999 at the rates specified in subsection (a), or if the cumu- lative amount emplaced in any year there- after is less than that which would have been accepted under the emplacement rate speci- fied in subsection (a), the Secretary shall, as a mitigation measure, adjust the emplace- ment schedule upward such that within 5 years of the start of emplacement by the Secretary, ”(1) the total quantity accepted by the Secretary is consistent with the total quan- tity that the Secretary would have accepted if the Secretary had began emplacement in fiscal year 2000, and ”(2) thereafter the emplacement rate is equivalent to the rate that would be in place pursuant to subsection (a) above if the Sec- retary had commenced emplacement in fis- cal year 2000. ”SEC. 508. TRANSFER OF TITLE. ”(a) Acceptance by the Secretary of any spent nuclear fuel or high-level radioactive waste shall constitute a transfer of title to the Secretary. ”(b) No later than 6 months following the date of enactment of the Nuclear Waste Pol- icy Act of 1996, the Secretary is authorized to accept all spent nuclear fuel withdrawn from Dairyland Power Cooperative’s La Crosse Reactor and, upon acceptance, shall provide Dairyland Power Cooperative with evidence of the title transfer. Immediately upon the Secretary’s acceptance of such spent nuclear fuel, the Secretary shall as- sume all responsibility and liability for the interim storage and permanent disposal thereof and is authorized to compensate Dairyland Power Cooperative for any costs related to operating and maintaining facili- ties necessary for such storage from the date of acceptance until the Secretary removes the spent nuclear fuel from the La Crosse Reactor site. ”SEC. 509. DECOMMISSIONING PILOT PROGRAM. ”(a) AUTHORIZATION.\u2014The Secretary is au- thorized to establish a Decommissioning Pilot Program to decommission and decon- taminate the sodium-cooled fast breeder ex- perimental test-site reactor located in northwest Arkansas. ”(b) FUNDING.\u2014No funds from the Nuclear Waste Fund may be used for the Decommis- sioning Pilot Program. ”SEC. 510. WATER RIGHTS. ”(a) NO FEDERAL RESERVATION.\u2014Nothing in this Act or any other Act of Congress shall constitute or be construed to con- stitute either an express or implied Federal reservation of water or water rights for any purpose arising under this Act. ”(b) ACQUISITION AND EXERCISE OF WATER RIGHTS UNDER NEVADA LAW.\u2014The United States may acquire and exercise such water rights as it deems necessary to carry out its responsibilities under this Act pursuant to the substantive and procedural requirements of the State of Nevada. Nothing in this Act shall be construed to authorize the use of eminent domain by the United States to ac- quire water rights for such lands. ”(c) EXERCISE OF WATER RIGHTS GEN- ERALLY UNDER NEVADA LAWS.\u2014Nothing in this Act shall be construed to limit the exer- cise of water rights as provided under Ne- vada State laws. ”TITLE VI\u2014NUCLEAR WASTE TECHNICAL REVIEW BOARD ”SEC. 601. DEFINITIONS. ”For purposes of this title\u2014 ”(1) CHAIRMAN.\u2014The term ‘Chairman’ means the Chairman of the Nuclear Waste Technical Review Board. ”(2) Board.\u2014The term ‘Board’ means the Nuclear Waste Technical Review Board con- tinued under section 602. ”SEC. 602. NUCLEAR WASTE TECHNICAL REVIEW BOARD. ”(a) CONTINUATION OF THE NUCLEAR WASTE TECHNICAL REVIEW BOARD.\u2014The Nuclear Waste Technical Review Board, established under section 502(a) of the Nuclear Waste Policy Act of 1982 as constituted prior to the date of enactment of the Nuclear Waste Pol- icy Act of 1996, shall continue in effect subse- quent to the date of enactment of the Nu- clear Waste Policy Act of 1996. ”(b) MEMBERS.\u2014 ”(1) NUMBER.\u2014The Board shall consist of 11 members who shall be appointed by the President not later than 90 days after De- cember 22, 1987, from among persons nomi- nated by the National Academy of Sciences in accordance with paragraph (3). ”(2) CHAIR.\u2014The President shall designate a member of the Board to serve as Chairman. ”(3) NATIONAL ACADEMY OF SCIENCES.\u2014 ”(A) NOMINATIONS.\u2014The National Academy of Sciences shall, not later than 90 days after December 22, 1987, nominate not less than 22 persons for appointment to the Board from among persons who meet the qualifications described in subparagraph (C). ”(B) VACANCIES.\u2014The National Academy of Sciences shall nominate not less than 2 per- sons to fill any vacancy on the Board from among persons who meet the qualifications described in subparagraph (C). ”(C) NOMINEES.\u2014 ”(i) Each person nominated for appoint- ment to the Board shall be\u2014 ”(I) eminent in a field of science or engi- neering, including environmental sciences; and ”(II) selected solely on the basis of estab- lished records of distinguished service. ”(ii) The membership of the Board shall be representatives of the broad range of sci- entific and engineering disciplines related to activities under this title. ”(iii) No person shall be nominated for ap- pointment to the Board who is an employee of\u2014 ”(I) the Department of Energy; VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00055 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9264 July 31, 1996 ”(II) a national laboratory under contract with the Department of Energy; or ”(III) an entity performing spent nuclear fuel or high-level radioactive waste activi- ties under contract with the Department of Energy. ”(4) VACANCIES.\u2014Any vacancy on the Board shall be filled by the nomination and appointment process described in paragraphs (1) and (3). ”(5) TERMS.\u2014Members of the Board shall be appointed for terms of 4 years, each such term to commence 120 days after December 22, 1987, except that of the 11 members first appointed to the Board, 5 shall serve for 2 years and 6 shall serve for 4 years, to be des- ignated by the President at the time of ap- pointment, except that a member of the Board whose term has expired may continue to serve as a member of the Board until such member’s successor has taken office. ”SEC. 603. FUNCTIONS. ”The Board shall limit its evaluations to the technical and scientific validity solely of the following activities undertaken directly by the Secretary after December 22, 1987\u2014 ”(1) site characterization activities; and ”(2) activities of the Secretary relating to the packaging or transportation of spent nu- clear fuel or high-level radioactive waste. ”SEC. 604. INVESTIGATORY POWERS. ”(a) HEARINGS.\u2014Upon request of the Chair- man or a majority of the members of the Board, the Board may hold such hearings, sit and act at such times and places, take such testimony, and receive such evidence, as the Board considers appropriate. Any member of the Board may administer oaths or affirma- tions to witnesses appearing before the Board. The Secretary or the Secretary’s des- ignee or designees shall not be required to appear before the Board or any element of the Board for more than twelve working days per calendar year. ”(b) PRODUCTION OF DOCUMENTS.\u2014 ”(1) RESPONSE TO INQUIRES.\u2014Upon the re- quest of the Chairman or a majority of the members of the Board, and subject to exist- ing law, the Secretary (or any contractor of the Secretary) shall provide the Board with such records, files, papers, data, or informa- tion that is generally available to the public as may be necessary to respond to any in- quiry of the Board under this title. ”(2) EXTENT.\u2014Subject to existing law, in- formation obtainable under paragraph (1) may include drafts of products and docu- mentation of work in progress. ”SEC. 605. COMPENSATION OF MEMBERS. ”(a) IN GENERAL.\u2014Each member of the Board shall be paid at the rate of pay pay- able for level III of the Executive Schedule for each day (including travel time) such member is engaged in the work of the Board. ”(b) TRAVEL EXPENSES.\u2014Each member of the Board may receive travel expenses, in- cluding per diem in lieu of subsistence, in the same manner as is permitted under sec- tions 5702 and 5703 of title 5, United States Code. ”SEC. 606. STAFF. ”(a) CLERICAL STAFF.\u2014 ”(1) AUTHORITY OF CHAIRMAN.\u2014Subject to paragraph (2), the Chairman may appoint and fix the compensation of such clerical staff as may be necessary to discharge the responsibilities of the Board. ”(2) PROVISIONS OF TITLE 5.\u2014Clerical staff shall be appointed subject to the provisions of title 5, United States Code, governing ap- pointments in the competitive service, and shall be paid in accordance with the provi- sions of chapter 51 and subchapter III of chapter 3 of such title relating to classifica- tion and General Schedule pay rates. ”(b) PROFESSIONAL STAFF.\u2014 ”(1) AUTHORITY OF CHAIRMAN.\u2014Subject to paragraphs (2) and (3), the Chairman may ap- point and fix the compensation of such pro- fessional staff as may be necessary to dis- charge the responsibilities of the Board. ”(2) NUMBER.\u2014Not more than 10 profes- sional staff members may be appointed under this subsection. ”(3) TITLE 5.\u2014Professional staff members may be appointed without regard to the pro- visions of title 5, United States Code, gov- erning appointments in the competitive service, and may be paid without regard to the provisions of chapter 51 and subchapter III of chapter 53 of such title relating to clas- sification and General Schedule pay rates, except that no individual so appointed may receive pay in excess of the annual rate of basic pay payable for GS 18 of the General Schedule. ”SEC. 607. SUPPORT SERVICES. ”(a) GENERAL SERVICES.\u2014To the extent permitted by law and requested by the Chair- man, the Administrator of General Services shall provide the Board with necessary ad- ministrative services, facilities, and support on a reimbursable basis. ”(b) ACCOUNTING, RESEARCH, AND TECH- NOLOGY ASSESSMENT SERVICES.\u2014The Comp- troller General and the Librarian of Congress shall, to the extent permitted by law and subject to the availability of funds, provide the Board with such facilities, support, funds and services, including staff, as may be nec- essary for the effective performance of the functions of the Board. ”(c) ADDITIONAL SUPPORT.\u2014Upon the re- quest of the Chairman, the Board may secure directly from the head of any department or agency of the United States information nec- essary to enable it to carry out this title. ”(d) MAILS.\u2014The Board may use the United States mails in the same manner and under the same conditions as other depart- ments and agencies of the United States. ”(e) EXPERTS AND CONSULTANTS.\u2014Subject to such rules as may be prescribed by the Board, the Chairman may procure temporary and intermittent services under section 3109(b) of title 5 of the United States Code, but at rates for individuals not to exceed the daily equivalent of the maximum annual rate of basic pay payable for GS 18 of the General Schedule. ”SEC. 608. REPORT. ”The Board shall report not less than two times per year to Congress and the Secretary its findings, conclusions, and recommenda- tions. ”SEC. 609. AUTHORIZATION OF APPROPRIATIONS. ”There are authorized to be appropriated for expenditures such sums as may be nec- essary to carry out the provisions of this title. ”SEC. 610. TERMINATION OF THE BOARD. ”The Board shall cease to exist not later than one year after the date on which the Secretary begins disposal of spent nuclear fuel or high-level radioactive waste in the re- pository. ”TITLE VII\u2014MANAGEMENT REFORM ”SEC. 701. MANAGEMENT REFORM INITIATIVES. ”(a) IN GENERAL.\u2014The Secretary is di- rected to take actions as necessary to im- prove the management of the civilian radio- active waste management program to ensure that the program is operated, to the max- imum extent practicable, in like manner as a private business. ”(b) AUDITS.\u2014 ”(1) STANDARD.\u2014The Office of Civilian Ra- dioactive Waste Management, its contrac- tors, and subcontractors at all tiers, shall conduct, or have conducted, audits and ex- aminations of their operations in accordance with the usual and customary practices of private corporations engaged in large nu- clear construction projects consistent with its role in the program. ”(2) TIME.\u2014The management practices and performances of the Office of Civilian Radio- active Waste Management shall be audited every 5 years by an independent manage- ment consulting firm with significant expe- rience in similar audits of private corpora- tions, engaged in large nuclear construction projects. The first such audit shall be con- ducted 5 years after the enactment of the Nuclear Waste Policy Act of 1996. ”(3) COMPTROLLER GENERAL.\u2014The Comp- troller General of the United States shall an- nually make an audit of the Office, in ac- cordance with such regulations as the Comp- troller General may prescribe. The Comp- troller General shall have access to such books, records, accounts, and other mate- rials of the Office as the Comptroller General determines to be necessary for the prepara- tion of such audit. The Comptroller General shall submit to the Congress a report on the results of each audit conducted under this section. ”(4) TIME.\u2014No audit contemplated by this subsection shall take longer than 30 days to conduct. An audit report shall be issued in final form no longer than 60 days after the audit is commenced. ”(5) PUBLIC DOCUMENTS.\u2014All audit reports shall be public documents and available to any individual upon request. ”(c) VALUE ENGINEERING.\u2014The Secretary shall create a value engineering function within the Office of Civilian Radioactive Waste Management that reports directly to the Director, which shall carry out value en- gineering functions in accordance with the usual and customary practices of private corporations engaged in large nuclear con- struction projects. ”(d) SITE CHARACTERIZATION.\u2014The Sec- retary shall employ, on an on-going basis, in- tegrated performance modeling to identify appropriate parameters for the remaining site characterization effort and to eliminate studies of parameters that are shown not to affect long-term repository performance. ”SEC. 702. REPORTING. ”(a) INITIAL REPORT.\u2014Within 180 days of enactment of this section, the Secretary shall report to Congress on its planned ac- tions for implementing the provisions of this Act, including the development of the Inte- grated Waste Management System. Such re- port shall include\u2014 ”(1) an analysis of the Secretary’s progress in meeting its statutory and contractual ob- ligation to accept title to, possession of, and delivery of spent nuclear fuel and high-level radioactive waste beginning no later than November 30, 1999, and in accordance with the acceptance schedule; ”(2) a detailed schedule and timeline show- ing each action that the Secretary intends to take to meet the Secretary’s obligation under this Act and the contracts; ”(3) a detailed description of the Sec- retary’s contingency plans in the event that the Secretary is unable to meet the planned schedule and timeline; and ”(4) an analysis by the Secretary of its funding needs for fiscal years 1996 through 2001. ”(b) ANNUAL REPORTS.\u2014On each anniver- sary of the submittal of the report required by subsection (a), the Secretary shall make annual reports to the Congress for the pur- pose of updating the information contained in such report. The annul reports shall be brief and shall notify the Congress of\u2014 ”(1) any modifications to the Secretary’s schedule and timeline for meeting its obliga- tions under this Act; ”(2) the reasons for such modifications, and the status of the implementation of any of the Secretary’s contingency plans; and ”(3) the Secretary’s analysis of its funding needs for the ensuing 5 fiscal years. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00056 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9265 July 31, 1996 ”SEC. 703. EFFECTIVE DATE. ”This Act shall become effective one day after enactment.”. Mr. MURKOWSKI. I move to recon- sider the vote. Mr. BRYAN. I move to lay that mo- tion on the table. The motion to lay on the table was agreed to. f VISIT TO THE SENATE BY THE HONORABLE HOSNI MUBARAK, PRESIDENT OF EGYPT Mr. HELMS. Mr. President, I present to the Senate of the United States, the distinguished and honorable President of Egypt, Hosni Mubarak. [Applause.] RECESS Mr. HELMS. Mr. President, I ask unanimous consent that the Senate stand in recess in honor of President Hosni Mubarak, so Members might meet our friend from Egypt. There being no objection, the Senate, at 5:21 p.m., recessed until 5:25 p.m.; whereupon, the Senate reassembled when called to order by the Presiding Officer. Mr. WARNER. Mr. President, I sug- gest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The assistant legislative clerk pro- ceeded to call the roll. Mr. HATFIELD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. PRIVILEGE OF THE FLOOR Mr. HATFIELD. Mr. President, I ask unanimous consent that Dr. Jonelle Rowe, a fellow on Senator FRIST’s staff, be granted floor privileges today, July 31, 1996, during the consideration of the fiscal year 1997 Transportation appropriations. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. HATFIELD. I suggest the ab- sence of a quorum. The assistant legislative clerk pro- ceeded to call the roll. Mr. DORGAN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. f DEPARTMENT OF TRANSPOR- TATION AND RELATED AGEN- CIES APPROPRIATIONS ACT, 1997 The PRESIDING OFFICER. The clerk will report. The bill clerk read as follows: A bill (H.R. 3675) making appropriations for the Department of Transportation and related agencies for the fiscal year ending September 30, 1997, and for other purposes. The Senate resumed consideration of the bill. Mr. DORGAN. Mr. President, I had given notice that I would offer one ad- ditional amendment. I say to the rank- ing member and the manager that I will not offer that amendment, but I do want to speak for just a couple of min- utes while we are waiting for another Senator to come to offer an amend- ment. I think that will probably be good news to them because they want to move the bill along, and they do not want me to offer another amendment. I want to describe, as you are waiting for Senator BAUCUS and others, what I was going to offer the amendment on. I want Members of the Senate to under- stand that we are going to be dealing with this issue in a day or so. Here is the issue. It is very simple. It is something most Senators have not heard of, but it is something that went on late last night here in the Senate in a deal between the Senate and the House, I am told. There is a bill that is traveling with the minimum wage that is called the Small Business Job Pro- tection Act that gives some benefits to small business. Of course, it is not just benefits for small business. Included in that bill was a provision repealing something called section 956A of the Internal Revenue Code. What is 956A? It is a provision of the law that was passed in 1993 to close a corporate tax loophole by which cor- porations move investments and U.S. jobs overseas, and avoid paying taxes here at home. In 1993, that loophole was closed by something that was pro- posed by President Clinton and sup- ported by the Congress: 956A. It says that you cannot start a manufacturing plant overseas, earn a lot of money, and pay no taxes back home. My point is that in 1993 a tax loop- hole was closed. It had benefited some of the largest corporations in the coun- try. It said to them, if you move your investments and jobs overseas, we will give you a special tax break that is not available to small businesses operating in this country. And they moved their jobs overseas. They earn income over- seas and pay no taxes in this country on income. They invest it in passive as- sets abroad in foreign countries, and pay no income tax here. We closed that tax loophole. Guess what? There are some folks in this Chamber and the House that have been working late at night to reopen that loophole. I know it is only a few hun- dred million dollars, but it is a few hundred million dollars in favors to some of the largest corporations in this country. I have worked for couple of years try- ing to get some money to deal with In- dian child abuse\u2014a million dollars, two million dollars. I have told my col- leagues before that I have been in an office where there is a stack of papers that high on the floor of complaints of sexual abuse and violence against chil- dren that have not even been inves- tigated because there is not enough money. We do not have enough money to do things like that. We are simply short of money. But when it comes to late night in this place, in the conference, there is enough money to give a $235 million tax break to corporations and say, if you want a tax break to move your jobs overseas, we will sweeten it up; we will give you a big, juicy tax loophole. That is going to be put in the bill in conference. I am told the deal was struck last night between the chairmen of the two committees working late last night. I venture to say that there is not an- other Member of the Senate who knows about it, and it probably does not mean a lot to some. It will mean something to those people who are going to lose their jobs in this country because we make it juicier for corporations to move jobs overseas. We decide to give a huge tax break to firms which move jobs overseas. And it will mean that some people in this country are going to lose their good-paying jobs. It is going to mean that we are out several hundred million dollars because we now have a new tax break that we thought we had closed in 1993. It is going to mean that small businesses that operate in this country are going to be forced to compete with large mul- tinational firms at a greater disadvan- tage. This is coming to the Senate, and it is stuck in a bill called the Small Busi- ness Job Protection Act. It ought to be against the law to use a title like that when it includes provisions like this. You are going to hear more from me if it is true that the conference has ac- cepted this and is going to bring it to the floor of the Senate. I am told a deal was made last night. I could name some large corporations on the floor\u2014but I will not at this mo- ment\u2014that have been moving around this town saying, ”Reopen, please, for us this tax loophole. We want to ben- efit from it. We want to move our jobs overseas. We want to invest our money overseas. Reopen this loophole.” We have folks jumping for joy to see if they cannot accommodate those who want another tax loophole done in the dead of night without the knowledge of people in this Chamber and the other Chamber. Most of them do not know much about 956A\u2014and done with hun- dreds of millions of dollars at a time when we cannot get $0.5 million or $1 million to deal with critical issues of child abuse on Indian reservations. They cannot even get them inves- tigated. But there is plenty of money to do this. I will tell you, if I sound upset about this stuff, I am, because this sort of thing should not go on in this town. If you want to debate restoring a tax loophole, then let us debate it on the floor of the Senate. We repealed it 3 years ago. Now the folks want to go out and open it up again. Let us debate that on the floor of the Senate and see if you get one vote. How many want to stand up in the Senate and say, ”Yes, we would like to restore a new tax loophole. Count us in. We want to go home and brag about creating a new tax loophole which ben- efits some of the biggest corporations VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00057 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9266 July 31, 1996 in this country so they can move their jobs overseas”. I want to know one Senator who wants to go home and brag about that in August. I bet there is not one who would do it, not one who would want to vote on this, so you do not have to vote on it because it is done under cover of darkness, slipped in a bill that is called the Small Business Job Protection Act. You talk about mismanagement. There is nothing about small busi- ness job protection in any of this. This is not job protection\u2014shipping jobs overseas. It is not small business when you are talking about the biggest busi- nesses in the country. So I would say if tomorrow this con- ference report comes back to the floor of the Senate, you are going to hear a lot about this, and I am going to ask: Who is the person that said, ”Count me in, count me in at a time when we are tightening our belts wanting to lead the charge to open up a new tax loop- hole. Sign me up for that”? I want to find the Member of the Senate or the House who says, ”Yes, that is me. That is what I stand for,” because I think this is an outrage. I think that there are a lot of people who think they can do it simply be- cause if they do it in conference, we do not get a chance to vote on it sepa- rately. Do you know something? It was not put in the Senate bill. They were going to put it in the Senate bill, but they did not do it because I think they knew I was going to force a vote on it. So they put it in the House bill and packaged up a rule so they do not have to vote on it. The result is that nobody in con- ference who tries to push this sort of sweet deal\u2014so that big business move jobs overseas\u2014nobody has to vote on it. So they get the job done for their friends worth hundreds of millions of dollars and do not have to vote on it, therefore, and do not have to go home and raise their hand and say, ”It was me. I am the one who stood for spend- ing several hundred millions opening up a new tax loophole that benefits large profitable corporations.” I just urge that if this deal is not done\u2014I am told it was done last night\u2014if it is not done, rethink it, be- cause somebody is going to live with the consequences, and somebody is going to have to stand up and say, ”I am the one who believed we ought to open up new tax loopholes.” That is not what we ought to be doing. We ought to be closing tax loop- holes. We ought not be doing things to ship jobs overseas. We ought to keep jobs at home. You talk about a perversion of con- structive thought about economics. This is a perversion. So I will not offer the amendment. I was going to offer a motion to instruct conferees. I do not think at this mo- ment that is something that will ac- complish what I want. I guess what I would like to do is simply serve notice to Members of the Senate that if there is a vote in conference on this, I hope conferees will stand up and be counted. If this comes to the floor in this bill, I hope it comes to the floor in a cir- cumstance where we can have a good aggressive fight about it. I know they are going to wrap it up in conference and tie the bow and try to jam it through here so we do not have a chance to discuss this, but it is not going to go through here without some of us asking questions: For whom is this done? Who does it benefit? Who did it? Why did they do it? And how on Earth do they think this benefits this country if you are concerned about jobs and opportunity in this country? Mr. President, I yield the floor. Mr. LAUTENBERG addressed the Chair. The PRESIDING OFFICER. The Sen- ator from New Jersey. Mr. LAUTENBERG. I thank the Sen- ator from North Dakota. Despite the fact that I heartily agree with him, I hardly think that there are many in this Chamber or many across the country who would think it is a good idea to facilitate the exportation of jobs. That is about the silliest thing we can do, and, frankly, I think it has hurt America severely by providing ease of transportation, transmission, and relocation of jobs that used to be in America that we thought were rel- atively menial, low-skilled jobs that today would be very nice to have in our country. The Senator’s point is an excellent one, and I regret that we at this point cannot accommodate him, but I think the message is clear to those who are going to be on the conference com- mittee that they ought to pay atten- tion because it will be remembered for a long time to come if they ignore the opportunity to cut that flow. I thank the Senator very much. Mr. BAUCUS addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Montana. Mr. BAUCUS. Mr. President, momen- tarily I am going to be offering an amendment to correct a mistake the Treasury Department and Department of Transportation made in calculating allocation of highway funds. I see my very good friend from Vir- ginia is in the Chamber. He is a very valuable member, ranking member of the authorizing subcommittee and wishes to make a statement on this, and I should like to yield to my good friend from Virginia, Senator WARNER. Mr. WARNER addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Virginia. Mr. WARNER. Mr. President, I know full well the Senator did not mean to call me ranking member. I do believe we have had a small matter of an elec- tion, and I am now the chairman. Mr. BAUCUS. Excuse me. I am sorry. Mr. WARNER. In any event, the dis- tinguished Senator from Montana and I have worked together on many, many things over many, many years, and we will continue, in all probability, to work together. The point I wish to make is that when the Senator from Montana has the opportunity to present the amend- ment to the Senate, I wish to be re- corded in opposition for the following reasons. There is nothing that I have witnessed in my period here in the Sen- ate that is more divisive than the high- way allocation formulas. Mr. President, I do not know\u2014I think I do know, but for the moment I do not have before me the documentation\u2014 who devised this formula years ago, but I know it requires many, many bu- reaucrats and many, many pages of ref- erence material for even those in the Department of Transportation respon- sible for this allocation formula to fig- ure it out. I think it is incumbent upon the Con- gress next year as a part of the ISTEA reauthorization, in which I hope to play an active role, to revise this for- mula so: First, it is simple and can be understood and all States know the various factors that are taken into consideration to make the allocation; and: second, that it is fair. Right now there are donor States and donee States. The donor State is a State in which the receipts from sales of gasoline in that State go to the highway trust fund and then the allo- cation from the highway trust fund comes back and that State gets a sum less than the total of the receipts paid by its constituents and such others that may avail themselves of the fuel in that State. Now, donees get a great- er sum than the total of their revenues from the sale of gasoline as a Federal tax. So the time has come to reconcile this ancient formula with reality and with fairness. What is the present problem? The Senator from Montana I think quite properly brings before the Senate the fact that someone\u2014and I am not point- ing an accusing finger of malice aforethought\u2014misapplied a regulation, a rule or something. As a result, Mr. President, we have 19 States, my State being one of the 19, which received an incorrect sum of money. In the case of Virginia, it is $10,488,000, a sum of money which is greater than Virginia was entitled to under the complicated formula to which I have referred had that formula been properly administered by the un- known bureaucrat. And 18 other States are in a similar situation\u2014Arizona, Ar- kansas, California\u2014$65 million for California\u2014Colorado, Indiana, Lou- isiana, Massachusetts\u2014I will not go on. They are here. I will put them in the RECORD. I so ask unanimous consent. I will name Oregon, Mr. President, the State of the distinguished chairman of the committee. There being no objection, the mate- rial was ordered to be printed in the RECORD, as follows: VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00058 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9267 July 31, 1996 COMPARISON OF PROPOSED FY 1997 OBLIGATION LIMITA- TION BASED ON ESTIMATED FY 1997 APPROPRIATIONS States 90 percent of payments estimated @ $2.6B 90 percent of payments esti- mated @ $1.5B + $135M Difference Alabama ……………………….. 316,954 317,760 806 Alaska …………………………… 174,987 184,165 9,178 Arizona ………………………….. 238,340 233,851 (4,189 ) Arkansas ……………………….. 196,398 189,800 (6,598 ) California ………………………. 1,490,847 1,424,889 (65,958 ) Colorado ……………………….. 195,996 195,439 (557 ) Connecticut …………………… 309,047 324,870 15,823 Delaware ……………………….. 67,550 71,008 3,458 District of Columbia ……….. 72,833 76,652 3,819 Florida ………………………….. 692,919 695,436 2,517 Georgia …………………………. 511,466 528,744 17,278 Hawaii ………………………….. 106,597 112,055 5,458 Idaho ……………………………. 94,626 99,588 4,962 Illinois …………………………… 592,113 604,958 12,845 Indiana …………………………. 380,999 362,901 (18,098 ) Iowa ……………………………… 178,942 181,124 2,182 Kansas ………………………….. 178,921 188,082 9,161 Kentucky ……………………….. 282,885 293,063 10,178 Louisiana ………………………. 258,683 243,528 (15,155 ) Maine ……………………………. 79,641 83,564 3,923 Maryland ……………………….. 260,348 258,343 (2,005 ) Massachusetts ………………. 597,481 628,817 31,336 Michigan ……………………….. 488,272 463,353 (24,919 ) Minnesota ……………………… 247,475 228,404 (19,071 ) Mississippi ……………………. 194,751 193,413 (1,338 ) Missouri ………………………… 389,783 384,254 (5,529 ) Montana ……………………….. 132,763 139,726 6,963 Nebraska ………………………. 121,326 127,538 6,212 Nevada …………………………. 99,084 99,599 515 New Hampshire ……………… 74,635 78,457 3,822 New Jersey …………………….. 417,115 438,472 21,357 New Mexico ……………………. 147,746 155,494 7,748 New York ………………………. 912,361 959,076 46,715 North Carolina ……………….. 427,763 420,165 (7,598 ) North Dakota …………………. 88,859 93,409 4,550 Ohio ……………………………… 598,477 558,927 (42,550 ) Oklahoma ……………………… 246,635 245,416 (1,219 ) Oregon ………………………….. 195,536 196,960 1,424 Pennsylvania …………………. 655,910 637,515 (18,395 ) Rhode Island …………………. 74,195 78,086 3,891 South Carolina ………………. 248,779 258,338 9,559 South Dakota …………………. 97,350 102,456 5,106 Tennessee ……………………… 363,093 353,238 (9,855 ) Texas ……………………………. 1,132,043 1,105,498 (26,545 ) Utah ……………………………… 112,946 115,506 2,560 Vermont ………………………… 68,516 72,024 3,508 Virginia …………………………. 381,449 370,961 (10,488 ) Washington ……………………. 283,047 297,892 14,845 West Virginia …………………. 137,862 144,921 7,059 Wisconsin ……………………… 286,718 279,676 (7,042 ) Wyoming ……………………….. 97,018 101,986 4,968 Puerto Rico ……………………. 71,920 75,603 3,683 Subtotal ……………………. 16,072,000 16,072,000 0 Administration ……………….. 532,000 532,000 0 Federal lands ………………… 426,000 426,000 0 Allocation reserve …………… 620,000 620,000 0 Total …………………………. 17,650,000 17,650,000 0 Note: Estimated apportionments prepared by HPP 21 Mr. WARNER. Now, my position is that this correction should be done in the course of our consideration of the revision of this formula next year dur- ing ISTEA. Owing to the clear con- science of the distinguished chairman of the committee, the distinguished ranking member from New Jersey, the distinguished ranking member of the Environment Committee, our chair- man, and indeed backup from well-in- formed staff, we decided not to do this amendment last night\u2014I among others objected\u2014as a managers’ amendment\u2014 and I commend the managers of this bill for not trying to do this\u2014which re- sults in a considerable loss of money to 19 States. The Senator has every right to do it as an amendment to the pending bill. Technically, I suppose it is legislation on this bill. I intend to vote, however the vote is taken, in opposition because I think the better course of action is to deal with this correction next year. These sums of money will not affect the ability of the several States, 50 of them, to go forward with their highway programs. My State, although it has been told it is going to get the $10 mil- lion, has made certain plans to expend this $10 million, and it will require a certain perturbation in the planning to take $10 million out of the budget for this year. And 18 other States will similarly be subjected to deducting from their highway budgets this sum of money. So that, to me, is the more eq- uitable and more fair way to deal with this question. That would enable all the other Senators, many of whom are learning, presumably for the first time at this moment, knowledge of this problem. The other reason I feel it should be done this way, and with due respect to the distinguished ranking member of the committee, the Senator from Mon- tana, is we do not have before us\u2014at least I do not\u2014any letter from the De- partment of Transportation explaining to Senators exactly how this happened. Perhaps the Senator from Montana can articulate the problem in more detail. But it seems to me the Senate should have before it certain documentation from the Secretary of Transportation explaining how this happened and the need for it to be corrected by the Con- gress. It is apparent that the Secretary of Transportation has made the deci- sion he cannot do it administratively within the executive branch, but it re- quires the Congress to act. So I have concluded my remarks and, at such time as the distinguished Sen- ator from Montana wishes, he can put the amendment forward. I hope other Senators will find the opportunity to speak on it. I yield the floor. I thank my colleague. The PRESIDING OFFICER. The Sen- ator from Montana. Mr. BAUCUS. Mr. President, I appre- ciate the statement the chairman of the Subcommittee on Transportation of the Environment and Public Works Committee made. I understand the Senator’s position, namely that al- though a mistake is made, and there is not anybody who disputes that a mis- take was made, the point is the mis- take could be corrected next year when Congress takes up reauthorization of the highway bill, the so-called ISTEA. The problem with that is very sim- ple. First of all, this is a mistake. This is not a formula question. When ISTEA comes up next year, this Congress will deal with the formula under which the highway funds are disbursed. This is not a formula question\u2014not a formula question. This is correcting an admin- istrative error the Department of Transportation and, more precisely, the Department of Treasury made. It is a simple correction. I might also say the mistake that was made, and nobody disputes the mistake was made, is not a donor- donee question. The mistake distrib- utes the dollars inappropriately to some States and does not distribute dollars inappropriately to other States, irrespective of the donor-donee ques- tion. This has nothing to do with donor-donee issues. It has nothing to do with the formula. One more point which I think is even more salient is this. The States in question here would not receive this money, if the mistake is not corrected, until fiscal 1997. So they are not going to be receiving any money this year, calendar 1996. They are not going to be receiving any money next year until after the fiscal year begins on October 1, 1997. So this is the appropriate time to correct the mistake, that is, before States would otherwise receive their money. It is a lot easier to correct a mistake before a State or somebody re- ceives money than it is afterward. I know full well the States that receive their money, if they were to receive their money incorrectly next year, they are not going to be very likely to give it back. I think, therefore, for all those rea- sons, the appropriate place to correct the mistake\u2014nobody disputes the mis- take was made\u2014is right now. Just do it quickly and easily. Then, next year, this Congress will engage in a full bat- tle royal, I know, over the allocation of highway funds. For those reasons, I think this is more appropriate that the correction be made here and now, simply, rather than putting it off to next year. Mr. HATFIELD. Will the Senator yield? Mr. BAUCUS. I am glad to yield to the chairman of the Appropriations Committee. Mr. HATFIELD. I discussed this mat- ter with the Senator from Virginia, and I believe the Senator is willing to enter into a time agreement on this amendment of 1 hour, equally divided. Mr. BAUCUS. Fine. Mr. HATFIELD. I ask unanimous consent an hour limitation be given to the Baucus amendment. The PRESIDING OFFICER. Is there objection? Mr. HATFIELD. Mr. President, I withdraw the request. The PRESIDING OFFICER. The re- quest is withdrawn. Mr. BAUCUS. Mr. President, I sug- gest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. LAUTENBERG. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. LAUTENBERG. Mr. President, we are going to be waiting for a few minutes for other Senators who wish to speak to arrive. I would like to take a few minutes during that wait to lend my support to the amendment that will be offered by the distinguished Senator from Montana. I think it is well-intentioned, and I think the amendment is fair. The one thing I want to be certain of is that this amendment is not going to be perceived as a formula fight, be- cause that should not be. This is a cor- rection. It corrects the fact that the Department of Treasury misinter- preted the revenue reports that were VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00059 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9268 July 31, 1996 put into a new format. The unfortunate result is that the Treasury Department grossly overstated the amount of gas tax receipts to the highway trust fund during 1994. This error is acknowledged by the Treasury Department and by the Fed- eral Highway Administration. Unfortu- nately, the FHWA is required by law to base a certain category of highway fund allocations on the Treasury’s for- mal estimates, whether or not they are correct. So, what the Baucus amendment seeks to do is correct the allocations made as a result of Treasury’s error. And the amendment, I must say to my colleagues who were in the Chamber or who might hear us, the amendment will not deny any State the full 90 per- cent of the payments they are due through the Federal aid to highways formula program. What this amend- ment will do is to set these payments at 90 percent of what the States actu- ally paid, rather than 90 percent of the Treasury’s erroneous estimates. We heard from the distinguished Sen- ator from Virginia about the interest that he and the Senator from Montana have in terms of examining the for- mula. We will have a chance to do that, I assure you, at length, I believe. But we ought not to try to do it here, and that is not what is being attempted. Unfortunately, the impact of cor- recting this mistake results in certain States getting more and others getting less than they would otherwise receive if this correction were not adopted. When reviewing this amendment, I hope that the Members will keep in mind that the bill before us provides an increase of $100 million in the overall obligation limit for the Federal Aid Highway Program, from $17.55 billion to $17.65 billion, a $100 million increase. This increase is going to help all States in meeting their transportation needs. While it is unfortunate that the legis- lation is required to correct this mis- take, the Federal Highway Administra- tion assures us that absent this bill language, the Secretary does not have the administrative authority to correct these highway allocations and bring them into conformity with what we now know to be the actual gas tax re- ceipts. I hope our Members will support this amendment. It is the right thing to do; it is the fair thing to do. The amend- ment is not an attempt to pick any- one’s pocket in the dark of night. Mr. President, I yield the floor. Mr. BAUCUS addressed the Chair. The PRESIDING OFFICER (Mr. SANTORUM). The Senator from Mon- tana. AMENDMENT NO. 5141 (Purpose: To require the calculation of Fed- eral-aid highway apportionments and allo- cations for fiscal year 1997 to be deter- mined so that States experience no net ef- fect from a credit to the Highway Trust Fund made in correction of an accounting error made in fiscal year 1994) Mr. BAUCUS. Mr. President, I have an amendment which I send to the desk and ask for its immediate consider- ation. The PRESIDING OFFICER. The clerk will report. The legislative clerk read as follows: The Senator from Montana [Mr. BAUCUS] proposes an amendment numbered 5141. Mr. BAUCUS. Mr. President, I ask unanimous consent that the reading of the amendment be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. The amendment is as follows: At the appropriate place in title III, insert the following: SEC. 3 . CALCULATION OF FEDERAL-AID HIGH- WAY APPORTIONMENTS AND ALLO- CATIONS. (a) IN GENERAL.\u2014Except as provided in subsection (b), for fiscal year 1997, the Sec- retary of Transportation shall determine the Federal-aid highway apportionments and al- locations to a State without regard to the approximately $1,596,000,000 credit to the Highway Trust Fund (other than the Mass Transit Account) of estimated taxes paid by States that was made by the Secretary of the Treasury for fiscal year 1995 in correc- tion of an accounting effort made in fiscal year 1994. (b) ADJUSTMENTS FOR EFFECTS IN 1996.\u2014The Secretary of Transportation shall, for each State\u2014 (1) determine whether the State would have been apportioned and allocated an in- creased or decreased amount for Federal-aid highways for fiscal year 1996 if the account- ing error referred to in subsection (a) had not been made (which determination shall take into account the effects of section 1003(c) of the Intermodal Surface Transpor- tation Efficiency Act of 1991 (Public Law 102 240; 105 Stat. 1921)); and (2) after apportionments and allocations are determined in accordance with sub- section (a)\u2014 (A) adjust the amount apportioned and al- located to the State for Federal-aid high- ways for fiscal year 1997 by the amount of in- crease or decrease; and (B) adjust accordingly the obligation limi- tation for Federal-aid highways distributed to the State under this Act. (c) NO EFFECT ON 1996 DISTRIBUTIONS.\u2014 Nothing in this section shall affect any ap- portionment, allocation, or distribution of obligation limitation, or reduction thereof, to a State for Federal-aid highways for fiscal year 1996. (d) EFFECTIVE DATE.\u2014This section shall take effect on September 30, 1996. Mr. BAUCUS. Mr. President, this is a very simple technical correction amendment. Very simply, it corrects a mistake that the Department of the Treasury made. The administration tells us, incredibly, they need legisla- tive authority to correct the mistake. This amendment simply does that leg- islatively, it corrects that mistake. Nobody disputes that a mistake was made\u2014nobody. The administration ad- mits it, and the Senators who have spo- ken on this issue also admit it was a mistake. What was the mistake? The mistake is very simple. Essentially, in 1994, the Treasury failed to credit the Highway Trust Fund with about $1.5 billion, an administrative error, a bureaucratic error. The Treasury then corrected that error in 1995, credited the High- way Trust Fund with the 1994 mistake, that is, the $1.5 billion and also contin- ued to collect revenues in 1995, as they should. The problem is the extra bump, the additional revenue in 1995, that is not only the revenue to be collected prop- erly in 1995 but also the additional $1.5 billion credit because the mistake was made in 1994, that additional bump skewed the formulas, because the for- mulas are based upon the revenue that was received in 1995; that is, the for- mula’s distribution for future years is based upon the 1995 receipts. The Department of Transportation has written us a letter saying that they cannot correct this mistake adminis- tratively and cannot, by their own ad- ministrative procedures, correct this error. They say it has to be made by legislation. It is a pure and simple error, pure and simple mistake. I think it is appropriate at this time to correct the mistake. I might say, Mr. President, this is not a donor-donee question. This has nothing to do with the claim that some States have that they are so-called donee States, that is, their citizens are contributing more dollars in gasoline taxes in the Highway Trust Fund than they are receiving in highway formula distributions. This is not that issue. In fact, the mistake that the Treasury made results in a misallocation which is totally independent of the donee- donor issue\u2014totally independent; it has nothing to do with it. I remind my colleagues who might think this is an allocation question, that this might be, ”Oh, here we go again, one of those battles where States are trying to get more money for themselves,” this is not that issue. We will have an opportunity to deal with that question next year. Why next year? Because next year the Congress is due to reauthorize the highway bill, ISTEA. The States have been dealing with the formula under ISTEA for the past several years. The last ISTEA was passed in 1991. Here we are in 1996. The next ISTEA 6 years later will be passed in 1997. That is the opportunity and the place to figure out what the proper for- mula is in distribution of highway funds. There will be a lot of good arguments made by a lot of Senators as to what that formula should be. A lot of factors go into it. Obviously, population den- sity, miles traveled, population growth\u2014a whole host of factors. And next year the Congress will dig down deep, try to figure out which factors, which indicators make the most sense, and we can deal with that issue then. That is the time, next year, to deal with the formula. It certainly is not here on the floor of the Senate at the end of July, this is not the time to deal with the highway allocation formula. This is not a formulation, this is sim- ply correcting a mistake which every- one agrees was a mistake and should be corrected. Some might ask, ”Gee, why don’t we take up this mistake and correct this VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00060 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9269 July 31, 1996 mistake next year when we take up the highway bill?” The answer to that is very simple, Mr. President. It is this: The maldistributions, the unjust-en- richment distributions that will be al- located under this mistake will not occur this year in 1996, they will occur in the next fiscal year, 1997. So those States who unjustly are enriched by a clerical bureaucratic mistake will not be receiving any funds until after Octo- ber 1 of next year, 1997. So now is the time to correct the mistake; that is, before States receive money they should not receive and be- fore States do not receive money that they should receive. Now is the time to correct the mistake. Sure as we are here tonight, Mr. President, we know next year after Oc- tober of 1997\u2014and ISTEA will certainly come up later than October of next year, that is the new highway bill as we deal with the new allocation for- mula\u2014States are not going to want to give back money they improperly re- ceive. They already will have received the dollars. So now is the time in 1996 to correct the mistake so States are in a lot better position to deal with what is proper here. I might say, too, Mr. President, that 19 States benefited by this mistake; 31 States were injured, harmed by this mistake. The amendment I am offering simply returns us to the status quo. It does not tilt the formula any way, one way or the other. It is totally a res- toration of the status quo; that is, a total correction of a mistake that was made, which means under this amend- ment 31 States will be better off, 19 States will be worse off, compared with where they would be if the mistake were not corrected. The amendment here simply again is to correct the mis- take. I would like to read the names of the States, Mr. President, which will benefit under this amendment, that is, returned to the status quo, that is, States which will then be receiving what they are supposed to be receiving under the ISTEA bill, the highway bill. Here are the States: Alabama, Alaska\u2014 so if you are one of these States, you are a State that is being unjustly, un- fairly harmed by a bureaucratic error. This amendment would add dollars back to correct that mistake so we are back to the status quo. Again: Alabama, Alaska, Con- necticut, Delaware, District of Colum- bia, Florida, Georgia, Hawaii, Idaho, Il- linois, Iowa, Kansas, Kentucky, Maine, Massachusetts, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Dakota, Oregon, Rhode Island, South Carolina, South Dakota, Utah, Vermont, Wash- ington, West Virginia, and Wyoming. I might also add, Puerto Rico would be in that list as well. Very simply, I will sum up, Mr. President, by saying this is an attempt to correct a mistake. Everyone admits it is a mistake. This is not a donee- donor question. Now is the proper time to correct the mistake because funds have not yet been allocated. They will not be allocated\u2014under the mistake\u2014 until 1997, fiscal 1997. That is beginning October 1 of next year. So now is the time to correct it. The issue of how we allocate disbursements should be addressed when we take up the highway bill next year. I have given the names of the States that will be benefited under this amendment. Again, they are States who are harmed by the mistake but to be returned to the status quo. Thirty-one States in that category. Mr. President, I see the chairman of the committee, my very good friend, John CHAFEE on the floor. And he also supports this amendment for the cor- rection for the States. I yield the floor. Mr. CHAFEE addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Rhode Island. Mr. CHAFEE. Mr. President, I sup- port the amendment by the ranking member of the Senate Environment and Public Works Committee, the dis- tinguished Senator from Montana. Mr. President, the amendment by the Senator from Montana corrects an ac- counting error made by the Depart- ment of the Treasury in 1994. There may be some confusion as to whether under this amendment States will receive full credit for contribu- tions made to the highway trust fund. Under the Baucus amendment the States will receive full credit for all contributions made to the highway trust fund but they will receive that credit in the year that they were actu- ally collected rather than when they were recorded on the Treasury ledger. I would like to emphasize that this is not an attempt to rewrite the highway funding formula under the so-called ISTEA, the Interstate Transportation Act. This is not a highway trust fund formula amendment. And I do think it is very, very unfortunate that the cler- ical error has resulted in confusion, and indeed understandable irritation for Members of this body. Frankly, Mr. President, I greatly wish it had never occurred so that we would not be here trying to straighten things out. I realize that some Members of this body believe that the formulas that distribute highway funds are not fair or appropriate. And that is a legiti- mate concern. Members will have their chance to make their case for changes in the formula next year when we reau- thorize the highway program. The En- vironment and Public Works Com- mittee plans to commence hearings on the reauthorization of the so-called ISTEA in September of this year. We will continue those hearings next year. We want to get on with this bill. We have to get on with it next year. At that time we definitely will have argu- ments over the formula and what should go into it. The Senator from Montana ticked off some of those items. For example, should we count the amount of inter- state highway mileage, the State’s pop- ulation, the miles driven, the amount of highway trust fund contributions, the number of deficient bridges? All of those are legitimate things to consider when we deal with the formula. That will be a very healthy debate, I can guarantee everybody here, because you have donor States who put in more than they get back and you have donee States that receive more than they put in. Legitimately, the States that put in more are distressed. And the States that put in less think that, well, this is a National Highway System so you should not get back exactly what you put in. That is OK. We will debate that vigorously. But I do believe that it is unfortu- nate and not appropriate, when we are trying to straighten out a bureaucratic error, to change the current formula that has been agreed to, was agreed to by Congress in 1991. The distribution of funds in the highway program struc- ture are issues that must be debated on the merits, as I said, when we reau- thorize the basic legislation. Some would say, ”Well, OK, if you want to straighten out this problem, wait until next spring when you deal with the highway reauthorization. Why do we take it up now?” We are taking it up now because the problem that we are talking about will be compounded if we wait. Now is the time, difficult though it might be. Some might say, ”Oh, well, in the list that the Senator from Montana read off, Rhode Island will get back some money that they should have gotten, and others will have to restore some of the extra money that they received.” As I say, we wish that all had not occurred. But if we wait, the problem, as I say, will become more difficult. I would like to raise, Mr. President, a concern regarding the public percep- tion of this issue. Failure to approve the amendment by the Senator from Montana will mean that an accounting error will generate more than $1 billion in false spending authority. This situa- tion obviously will be difficult to ex- plain to taxpayers when they are con- cerned about reining in Federal spend- ing. Moreover, unless it is corrected, this error will create the image of an irresponsible Federal Government which cannot correct an error. So I hope we will support this amendment and get on with it, difficult though it might be. I thank the Chair. Mr. GRASSLEY. Mr. President, I rise in support of the amendment being of- fered by Senator BAUCUS, and my col- leagues Senator CHAFEE and DOMENICI. Due to the error by the Treasury De- partment, my home State of Iowa stands to lose $2,182,000 from the high- way trust fund. This amendment would correct the Treasury Department’s error, restoring the money. I understand that the Treasury De- partment did not correctly credit $1.6 billion to the highway trust fund in fis- cal year 1994. The Treasury then cor- rected this error in fiscal year 1995. However, by not correctly attributing the funds to fiscal year 1994, the Treas- ury action is adversely affecting the VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00061 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9270 July 31, 1996 distribution of highway funds to 31 States in fiscal year 1997. This is un- fair. These States are being unfairly penalized through no fault of their own. They are being penalized by an error by the Treasury Department. I urge my fellow Senators to join the Senator from Montana, myself, and the other cosponsors of this amendment to correct this error. It is the right thing to do. Mr. GRAMM addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Texas. Mr. GRAMM. Mr. President, I am somewhat puzzled by this debate be- cause what has happened is that the error has been corrected. No one is say- ing that there is a problem in the allo- cation in the bill before us. What we are seeing here is an effort to use an appropriations bill to try to go back and impose a change on a formula which this year is fair to correct a problem which it is asserted existed last year. Let me remind my colleagues of how we came to this point. The apportion- ment of highway dollars to States is based in part on the actual motor fuel taxes collected in the State. And the law says that the most recent data available will be used. In fiscal year 1996, the most recent data available was an estimate of fiscal year 1994 collections. The Secretary of the Treasury certified that that was the data that was available. On the basis of that data and the law, an allo- cation was made. The Department of the Treasury was late in reporting the 1994 actual data collection to the De- partment of Transportation and there- fore they relied on the data that was available at that time. What we are being asked to do now is to go back and change a formula which has already been adjusted. In listening to our colleague from Rhode Island, one would get the view that the current appropriations bill be- fore us has an unfair allocation of funds under ISTEA or an allocation which is based on old data. But unless I am wrong\u2014and I would be happy to be corrected\u2014that is not the case. No one is asserting that this appro- priations bill in any way is in error in allocating funds. What is instead being asserted is, that since the most recent data available when this was done last year was the estimated 1994 data, which therefore under law was used, that if the actual 1994 data had been available, that the funding formulas would have generated a different re- sult. Are we, Mr. President, every year, going to go back and second-guess the formula? Or are we going to follow the law? Now we have one of these things that, from time-to-time, happens, where by going back and changing the base-year data, more States benefit than lose. The bottom line is that no one here has asserted that the Sec- retary of the Treasury or the Secretary of Transportation did not comply with the law. The law says that the alloca- tion will be based on the most recent data available. It was based on the most recent data available last year. No one asserts that the current for- mula is wrong. But what is being as- serted is that, using data that was not available last year, we could go back and reallocate these funds and take an allocation which this year no one dis- putes is a fair allocation, but we would go back and take money away from States in a formula that no one argues is unfair, to basically allocate funds, not according to the law last year, since the estimated 1994 data was the most recent year available, but accord- ing to how it would have been allocated if data had been available which was not available. Here is my point: I think you can argue endlessly on these things, but I do not think this is the place where the argument should occur. This is an ap- propriations bill. Obviously, what we have here is an attempt to change the allocation. The amendment changes an allocation, which no one disputes as being valid, to try to reallocate funds from last year. It is true that nobody here would dis- pute that if the actual 1994 data was available last year, instead of the esti- mate, the allocation might have been different. But it was not. The law says very clearly that the allocation is based on the most recent data avail- able. I believe if we are going to deal with this issue, we need to deal with it when we are reauthorizing ISTEA, and we need to deal with it not just for this year but we ought to set out a prin- ciple. I think it makes absolutely no sense to simply go back and say, if data had been available then, which was not available, the allocation might have been different, and therefore take a year where no one disputes the allo- cation and reallocate the money, be- cause 31 States will benefit and only 19 States will lose. I hope we will table this amendment because it clearly is legislating on an appropriations bill. I think if we start opening these for- mulas up to this kind of debate, it is going to make it very, very difficult for us to be able to pass these appropria- tions bills. I am not at this point ready to give a time limit on this bill. I think we should vote on tabling it, and then I think we will want to look at second- degree amendments. I yield the floor and I suggest the ab- sence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. BAUCUS. Mr. President, I want to enter into the RECORD a couple of letters from the administration which document that a mistake was made. The first is a memorandum from the Department of Treasury. I would like to read several portions of it without reading it in detail. In fiscal 1994 an accounting error, de- scribed in greater detail below, resulted in a $1.590 billion misallocation of excise taxes against the Highway Trust Fund. This misallocation of excise taxes was corrected in fiscal year 1995. Another portion reads: This change led to a misinterpretation of the information provided to FMS on the IRS Quarterly Certification and resulted in a misallocation of excise taxes between the Highway Trust Fund and General Fund in Fiscal Year 1994. This misallocation of excise taxes was corrected in Fiscal Year 1995, deb- iting the General Fund and crediting the Highway Trust Fund in the amount of $1.590 billion. Procedures have been implemented to assure that future adjustments to the Highway Trust Fund occur in an accurate and timely manner. I ask unanimous consent that this document be printed in the RECORD. There being no objection, the mate- rial was ordered to be printed in the RECORD, as follows: DEPARTMENT OF THE TREASURY, Washington, DC, July 31, 1996. Memorandum to: Senator John H. Chafee, Chairman, Environment and Public Works Committee, U.S. Senate, Wash- ington, DC. From: Linda L. Robertson, Assistant Sec- retary (Legislative Affairs and Public Li- aison). Subject: Correcting the misallocation of ex- cise taxes between the highway trust fund and the general fund. In Fiscal Year 1994, an accounting error, described in greater detail below, resulted in a $1.590 billion misallocation of excise taxes, against the Highway Trust Fund (HTF). This misallocation of excise taxes was corrected in Fiscal Year 1995. The initial transfer of receipts to the High- way Trust Fund is based upon monthly esti- mates provided to Financial Management Services (FMS) by the Office of Tax Anal- ysis. Subsequently, FMS uses the IRS Quar- terly Certification of ”actual” liability to adjust the Highway Trust Fund balance for any difference between amounts initially transferred and ”actual” quarterly liability. This adjustment is referred to as the ”Cor- recting Adjustment.” At the request of OTA, the format of the IRS Quarterly Certifications used to make correcting adjustments to the Highway Trust Fund was changed. This change led to a misinterpretation of the information pro- vided to FMS on the IRS Quarterly Certifi- cation and resulted in a misallocation of ex- cise taxes between the Highway Trust Fund and the General Fund in Fiscal Year 1994. This misallocation of excise taxes was cor- rected in Fiscal Year 1995, debiting the Gen- eral Fund and crediting the Highway Trust Fund in the amount of $1.590 billion. Proce- dures have been implemented to assure that future adjustments to the Highway Trust Fund occur in an accurate and timely man- ner. Mr. BAUCUS. Mr. President, very clearly, the Department of Treasury admits the error, a $1.590 billion mis- calculation. To review this, so that Senators understand how this proce- dure works, by law, there is a 2-year time lag, which means that because a mistake was made in 1994, by defini- tion, 1996 allocations were not made in advance of what the formula would VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00062 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9271 July 31, 1996 otherwise require, because in 1994, al- most $1.6 billion was not credited to the highway trust fund. In 1996, the for- mula was based upon the amount that is in the 1994 account. Since the 1994 account was deficient by $1.6 billion, by definition, States were not overpaid in 1996. So no States were overpaid in 1996. Again, as I said, by law, the alloca- tion is made 2 years after the account is so-called certified. Well, in 1995, after the mistake was discovered, not only were normal 1995 accounts re- ceived from States and the highway trust fund credited with the usual amount it should have been, but in ad- dition to that, the mistake\u2014the $1.6 billion\u2014was added on top of the 1995 account, which overstated 1997 pay- ments. So the correction we are trying to make here today is a combination of 1994 and 1995, the underpayment in 1994, as well as the overpayment in 1995, which determine the State allocations in fiscal years 1996 and 1997. I might add, Mr. President, I have an- other letter from the Department of Transportation\u2014actually, from the Federal Highway Administration, signed by Rodney Slater, Adminis- trator. It states in part that it is unable to administratively make the correction. I can read portions of that, but Sen- ators may read the letter. It is a little bit technical and bureaucratic. But the long and short of it is that they admit the mistake and explain what would have happened had the mistake not oc- curred. They state that it has to be corrected by legislation. I listened with great curiosity to the arguments of the Senator from Texas. He, in a sense, was saying that because the 1994 allocation was determined as it was, and the mistake was made, we should close our eyes and be blind to any mistake that might have been made. He is saying, by law, the 1996 al- location should be determined by what the 1994 receipts are, and a mistake was made, but do not look at the mis- take because that is what the law said in 1994. Mr. President, we are only saying that everyone admits it was a mistake. The Department of Treasury docu- ments it was a mistake, as does the De- partment of Transportation. Senator WARNER was on the floor not long ago and also admitted the mistake. I guess the real question is, if it is a mistake, do we correct it or not? That is the issue. Very simply, if a mistake is made, should it be corrected, or should it not be corrected? I submit, Mr. President, to ask the question is to answer it. Of course, we should correct the mistake. That is what normal, civilized human beings do\u2014correct mistakes. The other argument I have heard is, well, gee, even if a mistake was made, don’t correct it now, correct it next year. Well, we all know, Mr. President, one of the greatest problems that we as human beings have is procrastinating, putting off what we can do now. Here we are tonight. Let us correct this mistake. We could, I suppose, take it up next year when ISTEA comes up. But ISTEA is the highway bill. The highway bill battle is to determine what the allocation should be. We are not arguing what the allocation should be. That is an argument that Senators will engage in next year, in 1997. I might also say\u2014repeating myself\u2014 if we don’t correct the mistake now, next year the States will receive dol- lars they should not receive, and they are not very likely to want to send the dollars back, even though they know they should. We are really put to a test here, Mr. President. The real test is: Are we going to live up to our word or not? I might say, particularly, as Senators, that is really the issue here. Sure, if a State is unjustly enriched, it is kind of fun to get the extra dollars. But if it is unjustly enriched because of a mistake, we all know we should not accept those dollars, and we should correct the mis- take, according to the formula and un- derstanding that we all had when we passed the highway bill in 1991. So that is really the deeper under- lying question here tonight. Are we Senators going to live up to our word? Or are we going to be greedy and take advantage of a mistake that was made, even though we know that is not fair, that is not the right thing to do? That is the deep underlying question here tonight that we have to ask ourselves. I say, Mr. President, that it is very clear. I am surprised that we are debat- ing this. I am surprised that this amendment was not automatically ac- cepted. It was a mistake. We are not in a highway allocation fight tonight. This is not a donor-donee issue. We all know it is better to correct something sooner than later. So let us correct it tonight. Mr. GRAMM addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Texas is recognized. Mr. GRAMM. Mr. President, let me reiterate that there is no mistake in- volved here. In fact, nobody has said there is a mistake involved here. Mr. BAUCUS. Will the Senator yield for a question? Mr. GRAMM. Let me make my point, and then I will be happy to. Here are the facts: ISTEA says that the alloca- tion of funds among States shall be based on the most recent data avail- able. That is what it says. The most re- cent data available, provided by the Treasury Department, was the data which was, in fact, provided under the law. In fact, if you will read the letter sent to Senator BAUCUS, basically that letter makes it clear that it is the De- partment of Transportation’s position that it does not have authority to use anything other than the official ac- counts of the trust fund maintained by the Department of the Treasury in cal- culating apportionments among the States. Here is the point. When the Treasury gave their estimate, they gave that es- timate based on the best data they had available and required by the law. It is true that, if you go back after the fact and take data that they did not have that they could have had, you could have allocated funds differently. But to call that an error is simply a misuse of the English language. The Department of Transportation used the best esti- mate they had based on the data they had. Now, what the Senator from Mon- tana is trying to do is to say that, be- cause they did not have data then which they now have, that we should now go back and alter allocations. No one disputes that the 1997 formula, which is in the bill before us, is based on the newest data, which no one dis- putes as being the best available data that apparently everyone is satisfied with, no one says that the allocation of funds in this bill are in any way unfair for fiscal year 1997. If they do, I have not heard it. But what the Senator is saying is that because the Treasury did not have final 1994 data in 1996 when they did the estimate, and because they gave the best data available, complied with the letter and the spirit of the law, that knowing now what that data turned out to be after the fact that we could go back last year and rewrite the for- mula. Clearly, ISTEA provides no authority whatsoever to do that, and what is being sought here is rewriting ISTEA. This is legislation on an appropriations bill. This is taking an allocation for 1997, that no one disputes as being valid, and changing it to reallocate funds to reflect an allocation that would have occurred had the Depart- ment of Transportation had data which was not available. It seems to me that this is games- manship that we can engage in end- lessly. Let me give you an example. Next year we may have the final 1995 data. Next year we might even have the 1996 data. It would be possible for this Senator or any other Senator next year to stand up and say, ”When the al- location was done for 1997, the Depart- ment of the Treasury relied on 1995 data, but actually, if they had known what the 1996 tax collections would have been, they could have had a dif- ferent allocation.” My point being, this amendment could be offered every single year be- cause there is a lag in available data that the Treasury is able to provide the Department of Transportation to do these estimates. What we have done in the past is simply each year made the fairest estimate that we could make. But I am not aware that we have ever gone back retroactively and said, if Treasury had had newer data and if they had provided it to the Department of Transportation data that we now know but was not known then, could not have been known then, that last year’s allocation could be rewritten. I hope my colleagues will understand and agree with me that next year this VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00063 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9272 July 31, 1996 same amendment could be offered be- cause next year we will have the actual data for the next year in this series\u2014 1995 1996. We could stand up and argue that the actual allocation in the bill before us\u2014not last year\u2014is wrong be- cause it is based on 1995 data which is the best data available but that next year when we get 1996 data it might produce a different allocation. The point is that while 31 States in fact do benefit, some very slightly, by this reallocation, this amendment could be offered every single year to every Department of Transportation allocation of funds under ISTEA be- cause each year we get a new data point. You could take that data point which was not available when the funds were allocated by the formula, but, if it had been available, the allocation would have been different. Do we want to do this every single year? Am I to stand up next year when the 1996 data is available and say had we known in writing in the 1997 alloca- tion what the actual 1996 data was, which we do not know today, that the allocation would have been different and Texas would have gotten more money and, therefore, I want to go back retroactively and take money in the 1998 bill away from some other State, perhaps Montana, to give to Texas? I think this is a very, very bad prece- dent, and it is something that could be done every single year. That is the point. I hope that we will not do this because we are setting a precedent that it seems to me simply leaves chaos in the allocation of these funds. I yield the floor. Mr. BAUCUS addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Montana. Mr. BAUCUS. Mr. President, the Sen- ator from Texas\u2014by the way, one of the biggest beneficiaries of this bu- reaucratic snafu, his State, gets more dollars as a result of this bureaucratic snafu than almost any other State. Mr. GRAMM. That is not correct. California loses the most dollars under your amendment. Mr. BAUCUS. I said one of the most. I did not say ”the.” He is saying that, under the law, the allocation is made according to the best data available. The fact is the data was available and is available in 1994. Do you know what happened? Some bureaucrat punched the wrong keys. So the allocation was put over to the general fund instead of the high- way trust fund. The data is always available. It is collected. Just some bu- reaucrat, somebody, made a mistake and punched the wrong buttons in the computer. So the allocations from States, gasoline receipts from States, a portion of it, was put in the wrong ac- count. It was put in the general fund, not the trust fund. The data was avail- able. More importantly, I am astounded at the argument of the Senator from Texas. The Senator from Texas who rails against bureaucracy, who rails against the Federal Government, is standing here tonight basically stand- ing up for the bureaucratic ”snafu pro- tection act.” As he says, if a bureau- crat makes a mistake, we do not cor- rect it. If the bureaucrat makes a mis- take, we do not correct it, and we do not come back here on the floor and try to correct the mistake. I am as- tounded, absolutely astounded, that the Senator from Texas would stand up and say we should let a bureaucrat who makes a snafu continue the effect of that mistake and do not correct the mistake even though the result is $1.6 billion of unfairly distributed highway trust funds. That is essentially what he is saying. Essentially that is what he is saying. Do not correct the mistake. If we come back here next year and find a mis- take, we should not correct it. I hope we do not come back here next year and correct this mistake again. The Department of Treasury has said, and I take them at that their word, in a memo they sent up to us here to- night, ”Procedures have been imple- mented to assure that future adjust- ments to the highway trust fund occur in an accurate and timely manner.” Now no one can guarantee they will not make a mistake again. I would guess tonight there are a lot of red- faced folks over there in the Depart- ment of Treasury perhaps watching this debate saying, ”Oh, my gosh, how do we make that mistake? How in the world did that happen? Boy, don’t we have egg on our face.” It is true they do. They made a booboo, a $1.6 billion mistake. So all we are saying is let us correct it. The Senator is wrong when he says this is an allocation fight tonight. It is not that. Nobody who is listening to this debate believes it is. Nobody who is listening to this debate believes the argument that this is an allocation fight. This is simply an effort to cor- rect a mistake. That is all it is, pure and simple. Now somebody can come up with some kind of sophistry, argument, turn on the tail and come back around, and so forth, to try to confuse people. This Senator is not trying to confuse any- body. This Senator is trying to very plainly ask the Senate to correct a mistake that was made\u2014and this is an- other point, Mr. President\u2014so that when we go into ISTEA next year there is a better taste in people’s mouths; that Senators will be more inclined to know that the base is fair. I tell you, Mr. President, if this mis- take is not corrected, there is going to be a lot of bitterness in that debate next year as we begin to try to figure out what the correct allocation is be- cause Senators will know that a mis- take that should have been corrected was not corrected and we are starting off basically with a base that is the re- sult of a big snafu and that snafu is compounded every cycle. I do not think we want that. I think we want to start off on a level playing field, and the level playing field will be the restoration of what the formula is supposed to be and that will be the case if this mistake is corrected. Mr. President, I ask unanimous con- sent to add Senators GRASSLEY and BINGAMAN as cosponsors to the pending amendment. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. GRAMM addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Texas. Mr. GRAMM. Mr. President, I do not know that we are gaining very much in dragging this dead cat back and forth across the table here, but let me go back to the point which I think is rel- evant. Where is this snafu? I see no docu- mentation of a snafu. Let me go back and outline exactly what the law says and how it works and make clear what the Senator is calling a bureaucratic snafu, the press- ing of a button by a mindless, nameless bureaucrat. If the Senator has data to show that, if the Senator has docu- mentation to show that a bureaucrat pushed the wrong button, this Senator would like to see it. But I do not have it. Now, here is what I understand the facts to be. Under ISTEA, the Depart- ment of Treasury, based on the newest data available to them, gives an esti- mate to the Department of Transpor- tation as to how much in highway trust funds is collected by States. When this estimate was given for last year’s appropriation, the Department of Treasury did not have the final 1994 data, as I understand it. If someone has evidence to the contrary, I would like to see it. But based on everything that I have seen, based on all the cor- respondence that is available, the Treasury Department, based on the newest data they had, gave an estimate of tax collections by State to the De- partment of Transportation, which, based on that data, which at that point, to the best of my knowledge or anyone else’s knowledge, was the best data that was available, on the basis of that data the Department of Transpor- tation allocated funds in last year’s ap- propriations bill which in fact we voted on and it became law and the funds were allocated. What is being called a snafu here is that based on the best data they had last year, the Department of the Treas- ury made an estimate, and if they had data that is now available 1 year later they would have made a different esti- mate and the allocation formula would have been different. But that is not a snafu. Basically, they were using the best data they had last year just as we are using the best data we have this year. My point is that it is distinctly pos- sible, in fact probable, likely, that next year when we have 1995 and 1996 data we will find the allocation used for 1997 would have been different had we had this data, which we did not have this year. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00064 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9273 July 31, 1996 The point being each and every year we can go back and second-guess last year’s estimate based on data that the estimators did not have. I would be able, if we set this principle, to offer an amendment to next year’s appropria- tion based on actual data that will be available next year which is not avail- able this year to say that the formula this year would have been different had we had another year of data. And it will be. Invariably it will be. There is no mistake in the current allocation based on the newest and best estimate we have, but what the Sen- ator from Montana is saying is that the estimate made last year was made on the data which was available then. I do not know that he is arguing a con- spiracy by the Treasury. I hear the word snafu, pressed the wrong button, but I do not have any data to substan- tiate that, and I would be willing to look at it if there is data. But based on everything they knew, the Treasury made an estimate last year, and on the basis of that estimate we allocated money. Based on everything they know this year, they made an estimate, and we are allocating money again. But if we are going to go back and change this year’s formula based on new data that was not available last year, why can we not do that next year and the next year and the next year? The whole purpose of this system is to take the best data available and al- locate funds on the basis of it. That is what, based on all the information that I have, the Department of the Trans- portation did. And relying on this data\u2014and the law requires the Depart- ment of Transportation to rely on this data\u2014they allocated funds. Now the Senator is saying a year later that if we had had new data that has since be- come available, the allocation would be different. He is right. But the point is the same will be true next year about this year. The same will be true year after next about next year. If we are going to get into a situation where every year we are going to look back at the last allocation based on data that was not available when the allocation was made, we are going to be able to reestimate everything. Was it a snafu that the estimate they had last year based on the best data turned out not to be right when they got the final data? I do not think it was a snafu. It was an estimate based on what they had. It is no more a snafu than the data we are using this year, when next year we have an additional year, will clearly be different. And by the same logic I could stand up here and say it was a snafu last year. Based on the data the Treasury had last year, we had an allocation of money, but now 1 year later with actual data they did not have, I want to go back and re- estimate the allocation. I think we are inviting chaos if we go down this road because we could do it every single year. Was the estimate last year more inaccurate than the es- timate this year will turn out to be? I do not know. Maybe it was. Maybe it will be less inaccurate than the esti- mate this year will turn out to be. The point is, the law requires the use of the best available data. Based on every- thing I know, that was done. The Senator talks about snafus, about pushing the wrong key on the computer. I do not know about any of those things. I see no documentation whatsoever. All I have seen documenta- tion on is that, based on the best data they had, the Treasury made an esti- mate. We allocated funds on it. Now that they have another year of data, if they were making the estimate today, it would be different. That is like saying, if I am predicting what is going to happen next year, that it is a snafu that I have imperfect knowledge relative to what I will have next year after I have lived out the year. I do not call that a snafu. I sim- ply call it having to make decisions on the best data that is available. I think this is a fundamental issue. I think many of my colleagues started this debate saying there was a mistake made in last year’s estimation because they did not have data which we now have. It just so happens, in that mis- take, 31 States gain and 19 States lose. The point is the exact same facts will exist next year and the next year and the next year and the next year, and maybe it will be other States who will gain next year and other States who will lose. But we are creating a chaotic situation if we are going to try to go back each year and redo last year’s for- mula, based on data that was not avail- able last year. That is why, while this is not be-all and end-all of the planet, this is a bad principle and it is a principle we are going to end up refighting every year. In fact, if we start down this road, we might as well have a 1-year lag of col- lecting the money to allocate it be- cause we are going to end up, every sin- gle year, rewriting this formula. Be- cause every Senator is going to check the allocation based on the new data that will be available next year, reesti- mate the allocation this year, and all those who will gain are going to stand up, as our dear colleague is saying, and say, ”There was a snafu. Somebody pushed the wrong computer key. Some- body made a mistake. They predicted the future and the future turned out to be different, and therefore we ought to go back and correct that.” The point is, that is not how the sys- tem works. If we are going to do that, we are going to create chaos, and that is why I hope we will not do it. Mr. MACK. Mr. President, I am here today to oppose the amendment being offered even though my State, Florida, would marginally benefit from its pas- sage. This amendment is said to correct a bureaucratic error\u2014a mistake which resulted in many donee States receiv- ing for 1 year less than what they thought they were entitled to under the law. Well, it is extremely hard for me to be sympathetic to this argument. I know a good number of States\u2014donor States\u2014who, for the last 5 years, feel they got far less than that amount to which they were entitled. They would call the formulas enacted in law during ISTEA a mistake. I believe the amendment now being considered appropriately highlights the problems that result from a muddled, inefficient, and overly bureaucratic Federal highway program. So, not only is it my intention to op- pose this amendment tonight, but it is my intention to be a leader in the fight next year to move our Nations’ trans- portation program away from the Fed- eral highway program that exists today. It is high time to harness the inge- nuity of State officials and local gov- ernments, the entrepreneurialism of private industry, and the strength of the financial markets to enhance the Nation’s transportation infrastructure. It is time to recognize that the na- tional interest may be best served by allowing States to assume the primary role in transportation uninhibited by Federal mandates, the redistribution of States gas tax dollars. I look forward to working with my colleagues next year to return the pri- mary role in transportation to our States. I yield the floor and suggest the ab- sence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The bill clerk proceeded to call the roll. Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. BAUCUS. Mr. President, I do not want to prolong this either, but I would much rather read facts into the RECORD than sit here in a quorum call. So I will correct the misinformation we just heard from the Senator from Texas. The Senator from Texas is trying to imply this is an error in estimating the highway trust fund, it is not a bureau- cratic error. I would like to address that by reading the memorandum to the chairman of the committee from the Department of the Treasury, dated today. There is a little bit of bureaucratese in here, but, if you listen closely, you can tell this is not an estimate prob- lem, it is a bureaucratic problem. I will read from the beginning. In fiscal year 1994, an accounting error, de- scribed in greater detail below\u2014 It did not say an error in estimating, in estimating receipts. It says ”an ac- counting error.” An accounting error was made\u2014 Resulted in a $1.590 billion misallocation of excise taxes against the Highway Trust Fund. . . . Then it says: This misallocation of excise taxes was cor- rected in Fiscal Year 1995. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00065 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9274 July 31, 1996 Then going on: The initial transfer of receipts to the High- way Trust Fund is based upon monthly esti- mates provided to Financial Management Services . . . by the Office of Tax Analysis. Subsequently, FMS uses the IRS Quarterly Certification of ”actual” liability to adjust the Highway Trust Fund balance for any dif- ference between accounts initially trans- ferred and ”actual” quarterly liability. This adjustment was referred to as the ”Cor- recting Adjustment.” More importantly: At the request of OTA, [that is the Office of Tax Analysis, in the Treasury] the format of the IRS Quarterly Certifications used to make correcting adjustments to the High- way Trust Fund was changed. I will repeat that statement. At the request of OTA, the format of the IRS Quarterly Certifications used to make correcting adjustments to the Highway Trust Fund was changed. The format was changed. This [format] change led to a misinter- pretation of the information provided to FMS on the IRS Quarterly Certification and resulted in a misallocation of excise taxes between the Highway Trust Fund and the General Fund in Fiscal Year 1994. The problem is not a miscalculation of the estimates. It was a mistake made because of a change in format. Somebody over there did not under- stand the new format and took the data, the correct data, but put it in the wrong account. This misallocation of excise taxes was cor- rected in Fiscal Year 1995, debiting the Gen- eral Fund and crediting the Highway Trust Fund in the amount of $1.590 billion. Proce- dures have been implemented to assure that future adjustments to the Highway Trust Fund occur in an accurate and timely man- ner. This has nothing to do with what the right estimate is, nothing at all. This has everything to do with just a bu- reaucratic mistake in misinterpreting a new format, that is all this is. It is very clearly a clerical, bureaucratic error. It is not an error in estimating tax receipts, not at all. It is an error made in computing the adjustments that were made between the Highway Trust Fund and the General Fund. That is all this is, stated clearly by the Department of the Treasury. That is the technical argument. The basic argument, Mr. President, is: Here we are. This is the end of July. This is 1996. What special is going on right now in America? It is the Olym- pics. In the world? It is the Olympics down in Atlanta, where people compete fairly. They compete according to the rules, and there are winners and losers, according to the rules. Certainly Sen- ators, if they want, can take advantage of a mistake, take advantage of some- thing that is unfairly given to them at the expense of somebody else. Or they can live by the rules, live by the rules and not take advantage of an ill-begot- ten gain but rather say, yes, that is not fair, let us correct this, when the real battle on highway allocation of trust funds is next year when Congress takes up the transportation bill. That is what this is all about, very simply, very plainly. Are we going to correct a mistake or are those Sen- ators who are enriched by the mistake going to take advantage of that mis- take? Or are they going to say, yes, a mistake is made, let us correct the mistake and let us go on. I made a point earlier, which I think is one worth remembering. That is, if this mistake is not corrected, it is going to sour the debate next year when Congress takes up the highway bill, because Senators are going to know the debate begins not with what it was supposed to be, not as was deter- mined by the 1991 highway bill. Rather, it would be based as a result of a bu- reaucratic snafu, and I do not think we want that. I think we want to correct the mistake. I urge my colleagues to just basically correct the mistake and get ready for the battle next year when we take up the highway bill in earnest, because that is the proper place to do all that. Mr. President, I ask unanimous con- sent the letter, dated July 31, 1996, from Linda Robertson to Senator CHAFEE, be printed in the RECORD, and I yield the floor. There being no objection, the letter was ordered to be printed in the RECORD, as follows: DEPARTMENT OF THE TREASURY, Washington, D.C., July 31, 1996. Memorandum to: Senator JOHN H. CHAFEE, Chairman, Environment and Public Works Committee, U.S. Senate, Wash- ington, DC. From: Linda L. Robertson, Assistant Sec- retary, (Legislative Affairs and Public Liaison). Subject: Correcting the misallocation of ex- cise taxes between the highway trust fund and the general fund. In Fiscal Year 1994, an accounting error, described in greater detail below, resulted in a $1.590 billion misallocation of excise taxes, against the Highway Trust Fund (HTF). This misallocation of excise taxes was corrected in Fiscal Year 1995. The initial transfer of receipts to the High- way Trust Fund is based upon monthly esti- mates provided to Financial Management Services (FMS) by the Office of Tax Anal- ysis. Subsequently, FMS uses the IRS Quar- terly Certification of ”actual” liability to adjust the Highway Trust Fund balance for any difference between amounts initially transferred and ”actual” quarterly liability. This adjustment is referred to as the ”Cor- recting Adjustment.” At the request of OTA, the format of the IRS Quarterly Certifications used to make correcting adjustments to the Highway Trust Fund was changed. This change led to a misinterpretation of the information pro- vided to FMS on the IRS Quarterly Certifi- cation and resulted in a misallocation of ex- cise taxes between the Highway Trust Fund and the General Fund in Fiscal Year 1994. This misallocation of excise taxes was cor- rected in Fiscal Year 1995, debiting the Gen- eral Fund and crediting the Highway Trust Fund in the amount of $1.590 billion. Proce- dures have been implemented to assure that future adjustments to the Highway Trust Fund occur in an accurate and timely man- ner. The PRESIDING OFFICER. The Sen- ator from Texas. Mr. GRAMM. Mr. President, one of the things I always try to tell my chil- dren is you should never debate about facts. You go look up facts, you debate about ideas, you debate about what they mean. Our dear colleague from Montana just quoted from correspondence that, so far as I can determine in talking to the majority and the minority side, no one else has. What I would like to propose is this\u2014 and I would like to have a copy of it. What I would like to propose is that we set this amendment aside to give all of us an opportunity to talk to the Treas- ury Department in the morning and as- certain exactly what the facts are so that we can debate tomorrow where we all are dealing with the same facts. We are all, obviously, entitled to our ideas. Jefferson once said good people with the same facts are going to dis- agree. But what I think is important that we do is that we be certain that we are all dealing with the same facts. What I will promise my colleague is that I will, obviously, read this memo, and I will talk tomorrow to the Treas- ury Department to ascertain exactly what happened. All of the documentation that I have that was made available to my office by the Department of Transportation shows that this simply was a best available estimate, which, obviously, is different now that we have additional data, as you would expect it to be. But I would certainly be willing to look at additional information from the Treas- ury Department. I think probably the best thing to do is to set this amend- ment aside and give us all an oppor- tunity to talk to the Treasury Depart- ment to try to ascertain what the facts are. That would be my suggestion. Mr. BENNETT. Mr. President, I sug- gest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The assistant legislative clerk pro- ceeded to call the roll. Mr. BUMPERS. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. BUMPERS. Mr. President, to say that it is a complex issue is an under- statement. I am not sure everybody on this floor fully understands what we are debating. But let me tell you what I do understand about it, and I wel- come the comments of either of the managers or the author of the amend- ment. We appropriate trust funds 2 years after we receive them. For instance, whatever we took in in the trust fund in 1994 is actually allocated to the States in 1996. That is my under- standing. As I say, I invite anybody to correct anything I say. I just want ev- eryone to understand what we are talk- ing about. So whatever the Treasury Depart- ment takes in in gasoline taxes, which is called the trust fund, in 1994, is allo- cated for use in 1996. So in 1994, appar- ently the Treasury Department made an error and took in $1.5 billion more VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00066 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9275 July 31, 1996 than they said they were going to have, and rather than try to correct the error at the time it was made, they said, ”Well, we will just save this until next year. We’ll put it in the 1995 alloca- tion.” Now, bear in mind that when you are allocating money in 1995, you are talk- ing about money that the States are going to get in 1996, simply because we appropriate money a year in advance. Mr. BAUCUS. Mr. President, if I might, a slight correction, 1995 is in 1997. Mr. BUMPERS. Please feel free to in- terrupt. Mr. BAUCUS. The 1995 determination affects the 1997 allocation, 2 years later. Mr. BUMPERS. Say that again, please. Mr. BAUCUS. The allocation made to States is determined by the receipts re- ceived 2 years earlier. So 1994 deter- mines 1996, and the amount in the trust fund in 1995 determines 1997. Mr. BUMPERS. You appropriate the money in 1995 for 1996, don’t you? Mr. BAUCUS. Yes. Mr. BUMPERS. That is correct? Mr. BAUCUS. That is correct. Mr. BUMPERS. That is right, you al- locate it 2 years later than the Treas- ury Department receives it. But the basic problem here is that the Treasury Department underestimated by $1.5 bil- lion 1994 receipts. So when it came time to appropriate the money from the trust fund in 1995, it was appropriated, not realizing the fact that they had $1.5 billion more than they thought they had. So this year, 1996, the States got an allocation of 1994 trust funds that was $1.5 billion short\u2014$1.6 billion, to be precise. Here is my problem. My State tells me that by the time the $1.5 billion error had been discovered, everybody knew it, and the great State of Arkan- sas got less money in 1996 than we were entitled to, and we were told that we would get it made up in 1997, which is the bill we are debating here tonight, the 1997 bill. So the 1997 money is being allocated here this evening and, lo and behold, an amendment is offered that would cause my State to be about $6.5 million short. Now, that is not a lot of money to a very many people. However, in the State of Arkansas, $6.5 million is a pretty good hunk of change. So Arkansas got less money in 1996 than we were supposed to get. We did not get our share of that $1.5 billion. And now they are taking it away from us again in 1997. So, as I say, that is my under- standing so far. And on that basis, of course, I do not have any choice but to vote against the Senator from Mon- tana’s amendment. I am hoping that a lot of other people will do likewise. I also note that the managers of this bill would like to get this thing done tonight so they can get out of here. I do not want to slow things up. But I would like, when all this conversation ends over here, to have somebody to comment on the things I have said, ei- ther refute the statement I made that we got less money in 1996 than we were supposed to get, or that we got more. But you should not penalize my State in 1997 and give us less money if we got penalized last year. That is what we call a double whammy. And it is not right and it is not fair. I yield the floor and suggest the ab- sence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The assistant legislative clerk pro- ceeded to call the roll. Mr. HATFIELD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. HATFIELD. Mr. President, at 7:45 I will make a motion to table the Baucus amendment and ask for the yeas and nays at that time. I say that at this point in order to give Members due warning and opportunity to return to the Hill. And I say this. We will make no other compensation for people being off the Hill until we finish this bill tonight. Everybody ought to be alert to the fact we may have votes at any time, and we are not going to delay a vote henceforth. But this vote will be called at 7:45. I, at that point, will make a motion to table. Mr. President, I ask unanimous consent that I be recog- nized at that time to make that mo- tion. The PRESIDING OFFICER. Is there objection? Without objection, it is so ordered. Mr. HATFIELD. I thank the Chair and suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The assistant legislative clerk pro- ceeded to call the roll. Mr. HATFIELD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. f UNANIMOUS-CONSENT AGREE- MENT\u2014CONFERENCE REPORT TO ACCOMPANY H.R. 3603 Mr. HATFIELD. Mr. President, on behalf of the leader, I propound a unan- imous-consent agreement adopting the conference report accompanying H.R. 3603. This has been cleared on both sides. I ask unanimous consent that when the conference report accompanying H.R. 3603, the Agriculture, Rural Devel- opment, Food and Drug Administra- tion, and Related Agencies Appropria- tions Act for Fiscal Year 1997, is re- ceived in the Senate, that it be consid- ered as having been agreed to and the motion to reconsider be laid upon the table. The PRESIDING OFFICER. Without objection, it is so ordered. DEPARTMENT OF TRANSPOR- TATION AND RELATED AGEN- CIES APPROPRIATIONS ACT, 1997 The Senate continued with consider- ation of the bill. AMENDMENT NO. 5142 (Purpose: To transfer previously appro- priated funds among highway projects in Minnesota) Mr. LAUTENBERG. Mr. President, I ask unanimous consent to set aside the current amendment, and I send an amendment to the desk on behalf of Senator WELLSTONE and ask for its consideration. The PRESIDING OFFICER. Without objection, it is so ordered. The clerk will report. The assistant legislative clerk read as follows: The Senator from New Jersey [Mr. LAU- TENBERG], for Mr. WELLSTONE, proposes an amendment numbered 5142. Mr. LAUTENBERG. Mr. President, I ask unanimous consent the reading of the amendment be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. The amendment is as follows: At the appropriate place in title IV, insert the following: SEC. 4. TRANSFER OF FUNDS AMONG MINNESOTA HIGHWAY PROJECTS. (A) IN GENERAL.\u2014Such portions of the amounts appropriated for the Minnesota highway projects described in subsection (b) that have not been obligated as of December 31, 1996, may, at the option of the Minnesota Department of Transportation, be made available to carry out the 34th Street Cor- ridor Project in Moorhead, Minnesota, au- thorized by section 149(a)(5)(A)(iii) of the Surface Transportation and Uniform Reloca- tion Assistance Act of 1987 (Public Law 100 17; 101 Stat. 181) (as amended by section 340(a) of the National Highway System Des- ignation Act of 1995 (Public Law 104 59; 109 Stat. 607)). (b) PROJECTS.\u2014The Minnesota highway projects described in this subsection are\u2014 (1) the project for Saint Louis County au- thorized by section 149(a)(76) of the Surface Transportation and Uniform Relocation As- sistance Act of 1987 (Public Law 100 17; 101 Stat. 192); and (2) the project for Nicollet County author- ized by item 159 of section 1107(b) of the Intermodal Surface Transportation Effi- ciency Act of 1991 (Public Law 102 240; 105 Stat. 2056). Mr. LAUTENBERG. Mr. President, this amendment has been cleared by both sides. We are prepared to accept it. The PRESIDING OFFICER. The question is on agreeing to the amend- ment. The amendment (No. 5142) was agreed to. Mr. LAUTENBERG. I move to recon- sider the vote. Mr. HATFIELD. I move to table the motion. The motion to lay on the table was agreed to. AMENDMENT NO. 5143 (Purpose: To provide conditions for the im- plementation of regulations issued by the Secretary of Transportation that require the sounding of a locomotive horn at high- way-rail grade crossings) VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00067 Fmt 4624 Sfmt 8472 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9276 July 31, 1996 Mr. LAUTENBERG. Mr. President, I send an amendment to the desk on be- half of Senator WYDEN of Oregon and ask for its immediate consideration. The PRESIDING OFFICER. The clerk will report. The assistant legislative clerk read as follows: The Senator from New Jersey [Mr. LAU- TENBERG], for Mr. WYDEN, for himself and Mr. KERRY and Mrs. MOSELEY-BRAUN, pro- poses an amendment numbered 5143. Mr. LAUTENBERG. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. The amendment is as follows: At the appropriate place, insert the fol- lowing new section: SEC. . TRAIN WHISTLE REQUIREMENTS. No funds shall be made available to imple- ment the regulations issued under section 20153(b) of title 49, United States Code, re- quiring audible warnings to be sounded by a locomotive horn at highway-rail grade cross- ings, unless\u2014 (1) in implementing the regulations or pro- viding an exception to the regulations under section 20153(c) of such title, the Secretary of Transportation takes into account, among other criteria\u2014 (A) the interests of the communities that have in effect restrictions on the sounding of a locomotive horn at highway-rail grade crossings as of July 30, 1996; and (B) the past safety record at each grade crossing involved; and (2) whatever the Secretary determines that supplementary safety measures (as that term is defined in section 20153(a) of title 49, United States Code) are necessary to provide an exception referred to in paragraph (1), the Secretary\u2014 (A) having considered the extent to which local communities have established public awareness initiatives and highway-rail cross- ing traffic law enforcement programs allows for a period of not to exceed 3 years, begin- ning on the date of that determination, for the installation of those measures; and (B) works in partnership with affected communities to provide technical assistance and to develop a reasonable schedule for the installation of those measures. Mr. WYDEN. Mr. President, the pur- pose of this amendment is to give local communities time to work with the Department of Transportation and the Federal Railroad Administration to find grade crossing safety mechanisms that meet their needs. Without this amendment, the Fed- eral Government, beginning in Novem- ber of this year, will impose a one-size- fits-all standard on every community in America with a railroad grade cross- ing. Many communities have banned the blowing of train whistles. But the Federal Government would preempt these local laws and impose a require- ment that trains begin blowing their whistles within one quarter mile of any crossing that does not have the most expensive grade crossing safety equip- ment. Without this amendment, every com- munity in America that doesn’t have the fancy, top-of-the-line grade cross- ing safety gates will be forced to go out and immediately spend upwards of $300,000+ to install this equipment, or face Federal preemption. This means small communities of several hundred will have to find $300,000 for this equip- ment, or see their local train whistle bans preempted by the Federal Govern- ment. Under current law, on November 2 of this year, all towns without complex and expensive grade safety require- ments will be required to lift their train whistle bans. What this means for some towns in Oregon and across the country, is that day and night the com- munities are going to be barraged with train whistles. These communities are essentially being blackmailed by cacophony into raising taxes and putting up exorbitant amounts of money to install highly so- phisticated safety measures\u2014when in many cases, much simpler measures would have the same desired results. My friends, there is a better way to do this. Safety is paramount, but under these train whistle requirements, what we are seeing is cookie-cutter solutions to safety that may not be appropriate for all communities. Many communities can make sub- stantial improvements in safety through public education, highway markings, and signage, but right now it looks like their only choice is a cost- ly four quadrant gates\u2014otherwise, they are going to be doomed to whis- tling trains. The original legislation, while plac- ing an important emphasis on train safety, left out one key issue and that is community involvement in the deci- sion making on train whistle bans. My very simple amendment would encourage the Department of Transpor- tation to work with communities to develop effective local solutions. First, the Department would be re- quired to take into account the inter- ests of affected communities and the past safety record at the grade crossing involved when determining how to im- plement safety requirements. Second, where the Department deter- mines that a grade crossing is not suf- ficiently safe, my amendment requires them to work in partnership with com- munities to develop reasonable safety requirements. In Oregon, there are two commu- nities in particular that are concerned about the train whistle ban require- ments, Pendleton and the Dalles. In these communities, trains may pass through certain neighborhoods every few minutes. Trains are required to blow their whistles one-quarter mile before reaching a grade crossing. Clear- ly this is a recipe for chaos. I think that it is important that the Department of Transportation work with these communities to develop ef- fective and timely safety measures, in- stead of mandating costly and perhaps unnecessary grade crossing equipment or threaten them with nonstop whis- tles. My amendment will do just this and I urge the Senate to support its inclu- sion in this legislation. Ms. MOSELEY-BRAUN. Mr. Presi- dent, this amendment provides impor- tant direction to the Department of Transportation with regard to the im- plementation of a provision of the Swift Rail Development Act of 1994. Under this 1994 law, the Federal Gov- ernment is required to develop regula- tions that direct trains to sound their whistles at all hours of the day and night at most at-grade railroad cross- ings around the country, unless the local communities can afford to act on a specified list of alternatives. The Swift Rail Development Act will re- quire trains to blow their whistles at approximately 168,000 railroad cross- ings in the U.S. and more than 9,900 in Illinois\u2014including about 2,000 in the Chicago area and 1,000 in Cook County alone. This provision was inserted into the 1994 law without debate or discussion. Communities had no input into the process, even though it will be commu- nities that will be most affected. I am acutely aware of the need to im- prove the safety of railroad crossings. A recent tragedy in my home State in- volving a train and a school bus in Fox River Grove, IL, killed seven children and shattered the lives of many more families. According to statistics pub- lished by the Department of Transpor- tation, someone is hit by a train every 90 minutes. In 1994, there were nearly 2,000 injuries and 615 fatalities caused by accidents at railroad crossings around the country. Clearly, ensuring the safety of our rail crossings is im- perative. The Swift Rail Development Act mandates that trains sound their whis- tles at every railroad crossing around the country that does not conform to specific safety standards. It does not take into consideration the affect of this action on communities, nor does it require the Department of Transpor- tation to take into consideration the past safety records at affected at-grade crossings. Requiring trains to blow their whis- tles at every crossing would have a considerable affect on people living near these crossings. It is unclear, how- ever, that there would be a commensu- rate improvement in safety. In Fox River Grove, for example, the engineer blew his whistle as he approached the road crossing, but the school bus did not move. At many railroad crossings in Illinois and elsewhere, accidents never or rare- ly occur, while some crossings are the sites of frequent tragedies. Just as we do not impose the same safety man- dates on every traffic intersection in the country, we should not universally require trains to blow their whistles at every railroad crossing in the country. When transportation officials decide to make safety improvements at a highway intersection, they consider a wide range of factors, including its ac- cident history, traffic patterns, and conditions in the surrounding area. Every intersection is a case study. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00068 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9277 July 31, 1996 There are guidelines, but not inflexible rules. The approach to railroad crossing safety should be no less reasoned. The train whistle should be one tool in the transportation safety official’s regu- latory repertoire; it should not be the only one. Because every community has a different history and different needs, I do not believe that a one-size- fits-all, top-down approach to railroad crossing safety is appropriate. In Dupage County, IL, for example, there are 159 public railroad crossings. In 1994, there were accidents at only 18 of these crossings, and 45 have not ex- perienced an accident in at least 40 years. On one of METRA’s commuter rail lines, 64 trains per day pass through 35 crossings. In the last 5 years, there have been a total of three accidents and one fatality along the entire length of this corridor. Every one of the crossings on this METRA commuter line has a whistle ban in place to preserve the quiet of the surrounding communities. The im- position of a Federal train whistle mandate on this line would, therefore, have a considerable negative impact on the quality of life of area residents. The safety benefits, on the other hand, would, at best, be only marginal. METRA’s Chicago to Fox Lake line has 54 crossings and is used by 86 trains per day. A whistle ban is in place on 37 of these crossings. Between 1991 and 1995, there were a total of 13 accidents on this line, with five injuries and one fatality. In Des Plaines, IL, one of my con- stituents reports that she lives near five crossings. In the last 11 years, there has been only one accident at any of these crossings. She will hear a train whistle at least 64 times per day and night. In Arlington Heights, IL, there are four crossings in the downtown area about 300 feet away from one another. 5,400 residents live within one-half mile of downtown, and 3,500 people commute to the area every day for work. Sixty- three commuter and four freight trains pass through Arlington Heights every weekday between the hours of 5:30 am and 1:15 am. Train whistles are blown at nearly 150 decibels, and depending on the weather, they can be heard for miles. According to one Burlington Northern railroad conductor, a train traveling from Downers Grove, IL to La Vergne, IL\u2014a distance of approximately 12 miles\u2014would have to blow its whistle 124 times. 144 trains travel this route every day. Mr. President, the residents of these communities, and others across Illinois and the country, are confused by the 1994 law that will require train whistles to sound at all hours of the day and night in their communities\u2014in some cases hundreds of times per day\u2014at railroad crossings that have not experi- enced accidents in decades, if ever. Under a Federal train whistle man- date, home-owners in many of these communities would experience a de- cline in their property values, or an in- crease in their local taxes in order to pay for expensive safety improvements. The 1994 law, in this respect, represents either a taking of private property value, or an unfunded mandate on local communities. The train whistle mandate places the entire burden on the community. Trains will keep rolling through quiet, densely populated towns at all hours of the night, and both the railroads and the passengers will experience no dis- ruptions. In aviation, by contrast, airline flights are routinely routed to mini- mize the disturbance to surrounding communities. Flight curfews are estab- lished, and restrictions are placed on certain types of aircraft in efforts to minimize the disruption to area resi- dents. These restrictions place burdens on airlines, passengers, and the com- munities; it is a joint effort. The pending amendment provides the Department of Transportation with im- portant direction on how to implement the train whistle law in a more ration- al and flexible manner. It directs the Secretary of Transportation to con- sider the interests of affected commu- nities, as well as the past safety records at affected railroad crossings. The concerns of local communities must be heard\u2014not just the sounds of train whistles. It also addresses safety concerns. In situations where railroad crossings are determined not to meet the supple- mentary safety requirements, commu- nities will have up to a maximum of 3 years to install additional safety meas- ures before the train whistle mandate takes affect. In these situations, the Department of Transportation will work in partnership with affected com- munities to develop a reasonable schedule for the installation of addi- tional safety measures. Mr. President, I have been concerned about the implementation of the Swift Rail Development Act since Karen Heckmann, one of my constituents, first brought it to my attention more than a year ago. Since that time, I have spoken and met with mayors, offi- cials, and constituents from Illinois communities, and visited areas that would be most severely affected. In re- sponse to their concerns, I have writ- ten several letters to, and met with Transportation Secretary Pen\u0303a and other officials numerous times, and have been working with the Depart- ment of Transportation to ensure that they implement the 1994 law in a man- ner that both works for communities and protects safety. This amendment provides important congressional direction to the Depart- ment of Transportation that is con- sistent with the ongoing discussions that I, and other members of Congress, continue to have with the Department. I urge all of my colleagues to vote for this important amendment. Mr. KERRY. Mr. President, today I was pleased to join with Senator WYDEN to cosponsor an amendment concerning an issue of great impor- tance to a number of my constituents. Many of them have contacted me about the 1994 Swift Rail Development Act [SRDA]. As you know, the SRDA al- lows for Federal preemption of local train whistle bans so that all trains would begin sounding their whistles one-quarter mile before reaching any grade crossing. My home State of Massachusetts has 88 grade crossings in some 27 commu- nities whose whistle bans would be pre- empted by this law. Many of these communities have good safety record: From January 1988 through June 1994, the Federal Railroad Administration [FRA] noted 34 accidents involving one fatality and 15 injuries at these cross- ings. Some of these communities are strongly opposed to Federal preemp- tion of their whistle bans. Their concerns were not allayed by FRA officials at a meeting that took place in Beverly on October 25, 1995 to discuss the SRDA. A member of my staff reported that many who attended desired outright repeal of the SRDA. As Christopher Smallhorn of Beverly Farms wrote: I doubt your representative will transmit to you the feeling of frustration and anger taken away by those taxpayers attending the meeting. A sampling of my correspondence from other constituents reveals that others share Mr. Smallhorn’s concerns. John J. Evans from Beverly Farms wrote: This proposed new regulation * * * will render my home uninhabitable as my house sits between two grade crossings. Fay Senner wrote: The safety at these railway crossings is a local issue and one that we have been able to manage effectively in the 150 years that rail- roads have been a part of life in Acton. Scott and Sharon Marlow of Andover wrote: My daughter was born with a cardiac mus- cle defect and I do not even want to think about the anguish loud whistle blasts would have caused my family or any other family with a heart condition. William C. Mullin, chairman of the Acton Board of Selectmen, wrote: If train whistles once again pierce the peace and quiet of our community, the anger of our residents will be quickly felt. Richard and Nancy Silva of Beverly wrote: The horn blowing will change the value of our home and add more stress in an already stressful environment. Diane M. Allen, chairman of the Wil- mington Board of Selectmen, wrote: We do not wish to have the Federal govern- ment set unjustifiable standards for our local roads nor do we want those decisions of our duly elected officials to be overridden by the Federal government. Nevertheless, the safety of railroad grade crossings is clearly a real issue, as the October 1995 school bus accident in Illinois sadly illustrates. The FRA has released a study show- ing that accidents occurred at fewer VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00069 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9278 July 31, 1996 than 6 percent of the Nation’s grade crossings where whistle bans are in ef- fect. A one-size-fits-all approach is therefore not appropriate. I am thus proud to cosponsor this amendment, which contains a more sensible strat- egy for dealing with this issue, and I compliment the Senator from Oregon and his staff for bringing it before the Senate. Knowing the impact that the SRDA is having on communities and constitu- ents in both Massachusetts and other States, I look forward to working with the FRA and my colleagues to ensure the safety of grade crossings without hurting the quality of life in our com- munities. I urge my colleagues to join in supporting the amendment. The PRESIDING OFFICER. The question is on agreeing to the amend- ment. The amendment (No. 5143) was agreed to. Mr. LAUTENBERG. I move to recon- sider the vote. Mr. HATFIELD. I move to table the motion. The motion to lay on the table was agreed to. Mr. HATFIELD. Mr. President, I in- dicate at this point, that with one ex- ception, we have completed all the Members’ amendments that we know about and were part of the unanimous- consent agreement we reached last night, which means the only amend- ments we have left, namely, two rel- evant amendments for Senator LOTT, six amendments on terrorism for Sen- ator LOTT, and the McCain amend- ment, as I understand it, and the Biden amendments, five of them on antiterrorism. We are about ready to have a completion of the Bradley amendment. We have completed all but the antiterrorism issue. Mr. President, first of all, it is not relevant to this bill in terms of it being legislative action on an appropriation. I am very hopeful that we can have an agreement reached to remove that encumbrance to com- pleting this bill and having final pas- sage. I believe that is the only other vote that we will have to have on this bill. We can do that following the vote that we are about ready to take up, on a ta- bling motion of the Baucus amend- ment. I urge any Member or any Member’s staff person who has knowledge of these amendments that we had in- cluded in our unanimous-consent agreement, if they have any different viewpoint, or if they have any ques- tion, they better address those ques- tions during the next vote and come to Senator LAUTENBERG and my desk here to go over the list to make sure they have been taken care of in our efforts to cover the remaining business. Otherwise, we will proceed to end in a couple of colloquies for the other two amendments, and hopefully by that time the leadership can give us some indication of what kind of an agree- ment may have been reached at a meeting that began at 6 o’clock to- night relating to the issue of antiterrorism. AMENDMENT NO. 5141 Mr. HATFIELD. With that, Mr. President, under the unanimous con- sent, I move to table the Baucus amendment, and I ask for the yeas and nays. The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second. The yeas and nays were ordered. The PRESIDING OFFICER. The question is on agreeing to the motion to lay on the table, the amendment No. 5141. The yeas and nays were ordered. The clerk will call the roll. The assistant legislative clerk called the roll. Mr. FORD. I announce that the Sen- ator from Arkansas [Mr. PRYOR] is nec- essarily absent. The PRESIDING OFFICER. Are there any other Senators in the Chamber de- siring to vote? The result was announced\u2014yeas 42, nays 57, as follows: [Rollcall Vote No. 260 Leg.] YEAS\u201442 Abraham Ashcroft Bond Boxer Breaux Brown Bumpers Campbell Coats Cochran Coverdell DeWine Faircloth Feingold Feinstein Frist Glenn Graham Gramm Grams Hatfield Helms Hutchison Inhofe Johnston Kohl Kyl Levin Lott Lugar Mack McCain Mikulski Nickles Nunn Robb Santorum Sarbanes Specter Thompson Warner Wellstone NAYS\u201457 Akaka Baucus Bennett Biden Bingaman Bradley Bryan Burns Byrd Chafee Cohen Conrad Craig D’Amato Daschle Dodd Domenici Dorgan Exon Ford Frahm Gorton Grassley Gregg Harkin Hatch Heflin Hollings Inouye Jeffords Kassebaum Kempthorne Kennedy Kerrey Kerry Lautenberg Leahy Lieberman McConnell Moseley-Braun Moynihan Murkowski Murray Pell Pressler Reid Rockefeller Roth Shelby Simon Simpson Smith Snowe Stevens Thomas Thurmond Wyden NOT VOTING\u20141 Pryor The motion to lay on the table the amendment (No. 5141) was rejected. Mr. COATS addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Indiana. Mr. COATS. I suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. HATFIELD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. The Senate will be in order. The Senator from Oregon. Mr. HATFIELD. Mr. President, we have one colloquy to be delivered on the floor between Senator BRADLEY and the leader, Senator LOTT. Then we have the possibility of another per- fecting amendment, or an amendment dealing with the subject we have just failed to table; we have a Cohen amend- ment to be dispensed with, and then we are ready for third reading. AMENDMENT NO. 5141 The PRESIDING OFFICER. The pending question is the Baucus amend- ment. Is there further debate on the Baucus amendment? Mr. HATFIELD. I ask unanimous consent to temporarily lay aside the amendment at the moment to engage in a colloquy. The PRESIDING OFFICER. Is there objection? Mr. COATS. Mr. President, reserving the right to object, I will not object to proceed with business outside the scope of the Baucus amendment, but I want to preserve the right to offer or to join with others in offering an amendment on that subject. So I just want to put Members on notice that this bill is not going to go forward until we have that opportunity to do so. Mr. HATFIELD. Mr. President, I think I indicated the other part of the business was to complete that issue, so we are not cutting off anybody’s right to offer an amendment. Mr. BIDEN. Mr. President, will the Senator yield for a comment? Mr. HATFIELD. Yes. Mr. BIDEN. Mr. President, I have placed, I think, three or four spots for amendments. Mr. HATFIELD. Five. Mr. BIDEN. Five spots. I want to re- port that due to the great work of the full committee, Senator HATCH and I have elements of a bipartisan agree- ment on terrorism, and as a con- sequence of that I am not going to offer any of the amendments on this legisla- tion. Mr. HATFIELD. I thank the Senator. That will also affect five or six other amendments on both sides. Mr. BIDEN. I understand they have placed five or six slots based on that. I do not think there will be any amend- ments on terrorism on this legislation. Mr. HATFIELD. Senator BRADLEY. The PRESIDING OFFICER. Without objection, the Baucus amendment is set aside. Mr. BRADLEY addressed the Chair. The PRESIDING OFFICER. The Sen- ator from New Jersey. Mr. BRADLEY. Mr. President, I have an amendment that deals with newborns and insurance coverage for newborns, a bill that Senator KASSE- BAUM and I introduced last year. It is a bill that had been improved greatly with the help of Senator FRIST and Senator DEWINE and a bill that I care deeply about. Mr. LOTT. Mr. President, will the Senator from New Jersey yield? VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00070 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9279 July 31, 1996 Mr. BRADLEY. I am pleased to yield to the majority leader. Mr. LOTT. I would like to say I have been aware of this issue the Senator from New Jersey is discussing. There was an attempt made earlier to get it cleared for unanimous consent. We did not get that done. But I want to tell the Senator I will be glad to work with him to get this issue considered the first week in September. I think it is something that we should take up and have an opportunity to consider. In order to help expedite this legislation but also because I think he has a good point, I want to make the further statement I will work with him to get that accomplished. Mr. BRADLEY. I thank the majority leader for his statement and his com- mitment, and I will not pursue the amendment based on what he has said. I think that Senator FRIST of Ten- nessee concurs. I simply want the Senate to know that this is an enormously important issue in terms of children who are born and forced out of the hospital in the first 24 hours instead of the first 48 hours, and we hope to revisit this issue when we come back in September. I am prepared to yield to Senator FRIST if he has anything to say on this amendment. Mr. FRIST. Thank you, Mr. Presi- dent. I would just like to say that we have worked long and hard on this bill, the Newborn’s and Mother’s Health Protection Act of 1996. It is a bill we worked on in a bipartisan way and pro- vides a safe haven for mothers with young children. I am delighted the ma- jority leader\u2014\u2014 The PRESIDING OFFICER. The Sen- ator will withhold. The Senate will be in order. The Senator from Tennessee deserves to be heard. The Senate will be in order. Mr. FRIST. Thank you, Mr. Presi- dent. This bill does provide a safe haven for mothers and young children over a 48- hour period. It is a bill we have worked on in a bipartisan way, and do appre- ciate the consideration the majority leader has given to take this up after Labor Day. The PRESIDING OFFICER. The Sen- ator from Oregon. Mr. HATFIELD. Mr. President, I think we have two final technical amendments to dispose of? Mr. LAUTENBERG. That is correct. We are also reviewing a matter with the Senator from Maine and the Sen- ator from New Hampshire. I hope we will be able to have that resolved. Mr. HATFIELD. I believe the Senator from Maine said he would withdraw his? Mr. CHAFEE. No, I do not believe that is correct. Mr. HATFIELD. OK, let us do the technical amendments. AMENDMENTS NOS. 5144 AND 5145, EN BLOC Mr. LAUTENBERG. Mr. President, I have a technical correction to the bill that simply changes the wording with- out changing any sums; and one that makes reference to direct loans. We have cleared this with both sides. I send them to the desk for their consid- eration. The PRESIDING OFFICER. Is there objection to considering the amend- ments en bloc? Without objection, the clerk will report the amendments. The legislative clerk read as follows: The Senator from New Jersey [Mr. LAU- TENBERG] proposes amendments numbered 5144 and 5145, en bloc. Mr. LAUTENBERG. Mr. President, I ask unanimous consent that reading of the amendments be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. The amendments are as follows: AMENDMENT NO. 5144 (Purpose: To make a technical correction) On page 19, strike lines 10 through 12 and insert ”For the cost of direct loans, $8,000,000, as authorized by 23 United States Code 108.” AMENDMENT NO. 5145 (Purpose: To make a technical correction to the bill) On page 60, line 20, strike ”103 311” and in- sert ”103 331”. The PRESIDING OFFICER. If there be no further debate, the question is on agreeing to the amendments, en bloc. The amendments (Nos. 5144 and 5145), en bloc, were agreed to. Mr. LAUTENBERG. Mr. President, I move to reconsider the vote. Mr. HATFIELD. I move to lay that motion on the table. The motion to lay on the table was agreed to. Mr. HATFIELD. Mr. President, I might indicate following any action to be taken on the subject of the Baucus amendment, we are ready for third reading of the bill and final passage. I thank the Senators on the antiterrorism amendments, of which we had 11, for reaching an agreement to not pursue them on this particular bill but to have them as a matter of business to be taken up at a later time. Mr. President, I suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. HATFIELD. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. HATFIELD. Mr. President, I move, after final passage, the Senate insist on its amendments, request a conference with the House on the dis- agreeing votes of the two Houses, and the Chair appoint conferees on the part of the Senate. The PRESIDING OFFICER. Is there objection? Mr. BYRD. Mr. President, reserving the right to object, I cannot hear what the Senator has asked for in his re- quest. Mr. HATFIELD. I will repeat. It would be to move ahead on the premise we are going to pass this bill in final passage in a few moments, and to go ahead and appoint the conferees. Mr. BYRD. Mr. President, I have to object. That is getting a little ahead of the game. The PRESIDING OFFICER. Objec- tion is heard. Mr. BYRD. The only reason I do ob- ject, I think that request should wait, I say this with apologies to my dear friend, until the final vote on the bill occurs. The PRESIDING OFFICER. Who seeks recognition? Mr. FORD. I suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. DORGAN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. DORGAN. Mr. President, I sim- ply rise to inquire of the Senator from Oregon when we might expect final passage on the legislation? I have a couple of young children who go to bed at 9 o’clock, and it would be kind of nice to get home. It appears we are through the end of the amendment process. I had a couple of amendments that I referenced that I did not offer. I wanted to expedite the process of this legislation. But if we are near completion, I wonder if the Senator can inform us when he can ex- pect final passage. Mr. HATFIELD. Mr. President, I will respond that we have a piece of unfin- ished business before we can go to third reading. The Baucus amendment was not tabled, and we have not disposed of that amendment. There is a process now, I am hoping, of finding some ac- commodation in order to dispose of the Baucus amendment. The Senator from North Dakota cer- tainly made a correct point. We should have had this bill passed yesterday. If we are going to do the HUD-VA and independent agencies tomorrow, Friday and Saturday, we have to get this bill behind us. So consequently, we are waiting for that occasion to accommo- date the Senators who have an interest in that. As soon as that resolved issue is brought to us, we will do that and third reading. Mr. DORGAN. I appreciate the Sen- ator’s response. None of us enjoy wait- ing. On behalf of the Senator from Con- necticut, Mr. LIEBERMAN, who has a young daughter who expects to wait up for him as well, to the extent we can move ahead, I think all of us would ap- preciate it. Mr. HATFIELD. I might say, we have a parliamentary situation beyond an accommodation here to the Senators. We are in a parliamentary situation. We cannot go to third reading until there is a final disposition of either adopting the Baucus amendment or modifying the Baucus amendment. So that is where we are locked in. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00071 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9280 July 31, 1996 Mr. President, I suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. LOTT. Mr. President, I ask unan- imous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. LOTT. Mr. President, I thank the chairman of the Subcommittee on Transportation and the ranking mem- ber for their efforts. I believe we are about ready to wrap up this very im- portant appropriations bill. There are good-faith negotiations underway right now. I am hopeful in the next few min- utes we will have an agreement on how to deal with the Baucus-Gramm mat- ter. I think we have a reasonable sug- gestion that can be agreed to. Cer- tainly we hope so. Then when that is done, we will be able to go to third reading and final passage of the transportation appro- priations bill tonight. There has been some suggestion that we carry this over until tomorrow, but as we know, things have a way of growing over- night. The chairman and the ranking mem- ber are absolutely right, as we are very close to completing this appropriations bill. So if Members will be patient a few more minutes, I think we can get it completed and go to final passage. f ORDER OF PROCEDURE Mr. LOTT. Mr. President, for the in- formation of all Senators, we will go tomorrow morning at 9:30 immediately to the reconciliation bill, which is the welfare package. Under the rules I think there are 10 hours allowed for that. Some of that time may be yielded back. So we would spend the bulk of the day tomorrow on that issue with the vote coming sometime late tomor- row afternoon. I believe the Demo- cratic leader would appreciate it com- ing later on in the afternoon. We will work with him to get a time that meets with his needs. Then we would go to some conference reports that may be available. Re- corded votes may be requested on those\u2014legislative appropriations, D.C. appropriations. Then we would hope to take up the HUD-VA appropriations bills tomorrow night, and stay with that until we have other conference re- ports that may be available. There has been an agreement reached and the conferees’ signatures acquired on the health insurance reform pack- age. Senator KASSEBAUM, Senator KEN- NEDY, many others have done a lot of good work on that. So we should be able to take up that health insurance package on Friday. I understand agreement has also been reached on the safe drinking water con- ference report, which is a very impor- tant bill. And we have sort of a dead- line on that one. If we do not act on it by Friday, there is some $725 million that would move over into another fund. So really good work is being done. Also, there has been a press con- ference this afternoon with regard to the terrorism task force efforts. We have had our colleagues on both sides of the aisle working with the Chief of Staff and the White House. And they had announced earlier this afternoon, or about 2 hours ago, that they had made substantial progress. We believe we can take up an agreed-to package on the terrorism issue hopefully tomor- row or Friday. So a lot of good work has been done today. We will have this final vote here hopefully in just a few minutes and begin with welfare reform in the morn- ing. Mr. President, I yield the floor and suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. f DEPARTMENT OF TRANSPOR- TATION AND RELATED AGEN- CIES APPROPRIATIONS ACT, 1997 The Senate continued with consider- ation of the bill. Mr. COHEN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. AMENDMENT NO. 5146 (Purpose: To prevent the Department of Transportation from penalizing Maine or New Hampshire for non-compliance with federal vehicle weight limitations) Mr. COHEN. Mr. President, on behalf of myself, Senator SNOWE, Senator SMITH, and Senator GREGG, I send an amendment to the desk and ask for its immediate consideration. The PRESIDING OFFICER. The clerk will report. The legislative clerk read as follows: The Senator from Maine [Mr. COHEN], for himself, Ms. SNOWE, Mr. SMITH, and Mr. GREGG, proposes an amendment numbered 5146. Mr. COHEN. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. The amendment is as follows: Insert at the appropriate place: No funds appropriated under this act shall be used to levy penalties prior to September 1, 1997 on the States of Maine or New Hamp- shire based on non-compliance with federal vehicle weight limitations. Mr. COHEN. Mr. President, this is an amendment that pertains to the States of Maine and New Hampshire, dealing with weight limit for trucks. We have worked in close conjunction with the Senator from New Jersey, the Senator from Montana, and the Sen- ator from Rhode Island. They have agreed that the amendment should be adopted. It would defer imposition of penalties or the use of funds to impose penalties prior to September 1, 1997. That is acceptable to both sides. Mr. LAUTENBERG. Mr. President, I think this is a good solution to a dif- ficult problem. I commend the Sen- ators from New Hampshire and Maine for their cooperation here. We accept it on this side. Mr. HATFIELD. Mr. President, the amendment has been one of long stand- ing on our list. I am happy to be able to dispose of it. It has been cleared, as indicated by the Senator from Maine, by the author- izing committees, by the ranking mem- ber, as well as the chairman of the au- thorizing committee, and has been cleared by the two managers. The PRESIDING OFFICER. The question is on agreeing to the amend- ment. The amendment (No. 5146) was agreed to. Mr. LAUTENBERG. I move to recon- sider the vote. Mr. HATFIELD. I move to table the motion. The motion to lay on the table was agreed to. Mr. LAUTENBERG. Mr. President, I suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The bill clerk proceeded to call the roll. Mr. GRAMM. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. AMENDMENT NO. 5147 TO AMENDMENT NO. 5141 Mr. GRAMM. Mr. President, I send a second-degree amendment to the desk and ask for its immediate consider- ation. The PRESIDING OFFICER. The clerk will report. The bill clerk read as follows: The Senator from Texas [Mr. GRAMM], for himself, Mr. BOND, Mr. COATS, Mr. ABRAHAM, Mr. FAIRCLOTH, Mrs. HUTCHISON, Mr. LEVIN, and Mr. WARNER, proposes an amendment numbered 5147 to Amendment No. 5141. Mr. GRAMM. Mr. President, I ask unanimous consent that reading of the amendment be dispensed with. The PRESIDING OFFICER. Without objection, it is so ordered. The amendment is as follows: At the end of the amendment, add the fol- lowing: SEC. . Prior to September 30, 1996, the Secretary of the Treasury and the Secretary of Transportation shall conduct a review of the reporting of excise tax data by the De- partment of the Treasury to the Department of Transportation for fiscal year 1994 and its impact on the allocation of Federal-aid high- ways. If the President certifies that all of the fol- lowing conditions are met: 1. A significant error was made by Treas- ury in its estimate of Highway Trust Fund revenues collected in fiscal year 1994; 2. The error is fundamentally different from errors routinely made in such esti- mates in the past; 3. The error is significant enough to justify that fiscal year 1997 apportionments and al- locations of Highway Trust Funds be ad- justed; and finds that the provision in B ap- propriately corrects these deficiencies, then subsection B will be operative. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00072 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9281 July 31, 1996 (b) CALCULATION OF FEDERAL-AID HIGHWAY APPORTIONMENTS AND ALLOCATIONS.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), for fiscal year 1997, the Sec- retary of Transportation shall determine the Federal-aid highway apportionments and al- locations to a State without regard to the approximately $1,596,000,000 credit to the Highway Trust Fund (other than the mass Transit Account) of estimated taxes paid by States that was made by the Secretary of the Treasury for fiscal year 1995 in correc- tion of an accounting error made in fiscal year 1994. (2) ADJUSTMENTS FOR EFFECTS IN 1996.\u2014The Secretary of Transportation shall, for each State\u2014 (A) determine whether the State would have been apportioned and allocated an in- creased or decreased amount for Federal-aid highways for fiscal year 1996 if the account- ing error referred to in paragraph (1) had not been made (which determination shall take into account the effects of section 1003(c) of the Intermodal Surface Transportation Effi- ciency Act of 1991 (Public Law 102 240; 105 Stat. 1921)); and (B) after apportionments and allocations are determined in accordance with paragraph (1)\u2014 (i) adjust the amount apportioned and allo- cated to the State for Federal-aid highways for fiscal year 1997 by the amount of the in- crease or decrease; and (ii) adjust accordingly the obligation limi- tation for Federal-aid highways distributed to the State under this Act. (3) NO EFFECT ON 1996 DISTRIBUTIONS.\u2014Noth- ing in this section shall affect any apportion- ment, allocation, or distribution of obliga- tion limitation, or reduction thereof, to a State for Federal-aid highways for fiscal year 1996. (4) EFFECTIVE DATE.\u2014This section shall take effect on September 30, 1996. Mr. GRAMM. Mr. President, I think we have put together a good com- promise here. It sets up three condi- tions that have to be met. It mandates that the Secretary of the Treasury and the Secretary of Transportation will look at the issue, which has been raised by our colleague from Montana, and if they make three findings concerning its significance\u2014if the President, based on their study, makes those three find- ings, then the provision of the Senator from Montana will be offered in the bill. The Senator from Montana has agreed to this amendment. I thank him for working with us on this. Mr. BAUCUS. Mr. President, this is an accommodation to allow us to pro- ceed with the bill. I think it meets the objective of the Senator from Texas, and as to another look at the degree to which there is an accounting clerical error, it is also significant. It is my view that it is. It is altogether appro- priate that we crafted the amendment in a way so that the Senators who were concerned about this issue are better reassured that this error was, in fact, made. Second, it accommodates our inter- ests because it is quite clear that an error was made, and I feel quite con- fident that the administration, in reex- amining this, will make the proper cer- tification. Nevertheless, it helps us get a little better record and a better sense of what actually did happen here. That suits the interests of all Senators all the way around. I thank my colleague from Texas for helping craft this amendment. I urge its adoption. Mr. COATS. Mr. President, I think it is also important to understand why some of us are so sensitive on issues like this. Coming from a donor State, a State that over the years has consist- ently contributed substantially more to the highway trust fund than it re- ceives back, we are sensitive about any changes in formulas that result in a further loss of funds to our State. Now, it appears that a technical error was made and not a formula change. The resulting formula change corrects that area rather than being a formula designed to benefit some States at the expense of others. I think a number of us who come from those donor States\u2014and 16 of the 19 States affected here that lose money are donor States\u2014felt that we needed a certification as to the validity of that particular technical error and the fact that this proposal by the Senator from Montana corrects that error in the cor- rect fashion. So the certification here will allow us to receive that informa- tion. I think it will leave us with some feeling that we are adopting the right procedures here in terms of certifying the accuracy of this. So I thank the Senator from Mon- tana for his willingness to work with us. I particularly thank the Senator from Texas for his ability to discern and take a complex issue and put it into understandable amendment form in a fairly short amount of time. I thank him for his efforts. Mr. LEVIN. Mr. President, let me also thank the Senator from Texas, the Senator from Indiana, the Senator from Montana, and others for working on the second-degree amendment. I have a question of the Senator from Texas. Does the second-degree amendment make any change in the underlying for- mula? Mr. GRAMM. No. Mr. LEVIN. Let me add one comment and one thought to what the Senator from Indiana said. All but three or four of the States which would lose money if this allocation were made according to the amendment are States which al- ready are ahead of the game. They are donee States\u2014three or four. Those of us that are donor States, so-called, there are 20 of us. When we look at this kind of amendment and see that, it ob- viously makes us somewhat skeptical. Again, most of the States by far that would be on the giving end are the same States that already are, under the formula, on the giving end. That may be a coincidence. It may be that the alleged error happened to work out that way. But I want to join the Senator from Indiana in expressing the sensitivity of the States that already give much more than they get back under the for- mula. My question to the Senator from Texas is this: Can he state for the Record what those three findings are? Mr. GRAMM. Let me get back the copy of the amendment. The three findings are\u2014let me make it clear because I want to be certain, given what the Senator from Indiana said, we are not making the judgment here of whether or not an error was made. It is my belief that probably is not the case, as the Senator from Mon- tana believes that it was the case. We are setting up objective criteria to have a judgment, so we are not pre- judging that based on anything we say here. Let me just read it. The Secretary of the Treasury and the Sec- retary of Transportation shall conduct a re- view of the reporting of excise tax data by the Department of Treasury to the Depart- ment of Transportation for FY ’94 and its impact on the allocation of Federal aid high- ways. If the President certificates that all of the following conditions are met: 1. A significant error was made by Treas- ury in its estimate of highway trust fund revenues collected in FY ’94; 2. The error is fundamentally different from errors routinely made in such esti- mates in the past; 3. The error is significant enough to justify that FY ’97 apportionments and allocations of highway trust funds be adjusted; and finds that provisions in B\u2014 That is the Baucus amendment. appropriately corrects these deficiencies, then subsection B\u2014 Which is the Baucus amendment. will be operative. Mr. LEVIN. I thank the Senator. I ask unanimous consent that I be added as a cosponsor to that second-de- gree amendment. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. BOND. Mr. President, I ask on behalf of the Senator from Virginia, Senator WARNER, that he be added as a cosponsor to the amendment. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. BOND. Mr. President, I join in thanking my colleague from Montana for his willingness to work with us on this amendment. Mr. COATS. Mr. President, I would also like to add my name as a cospon- sor to the Gramm amendment, if I am not already on it. The PRESIDING OFFICER. Without objection, it is so ordered. Is there further debate on the amend- ment? If not, the question is on agree- ing to the second-degree amendment of the Senator from Texas. The amendment (No. 5147) was agreed to. The PRESIDING OFFICER. The question is now on the underlying Bau- cus amendment, the first-degree amendment. The amendment (No. 5141) was agreed to. Mr. LAUTENBERG. Mr. President, I move to reconsider the vote by which the amendment was agreed to. Mr. HATFIELD. I move to lay that motion on the table. The motion to lay on the table was agreed to. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00073 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9282 July 31, 1996 SHILOH INTERCHANGE Mr. BURNS. Mr. President, I would like to discuss the importance of the Shiloh Interchange in Billings, MT. ISTEA authorized this project for $11 million. However, since that authoriza- tion the cost of the project has in- creased by an additional $3 million. The Senator from Oregon is aware of the request I have made to include an additional $3 million for this project. Mr. HATFIELD. Yes, you have re- quested additional funds for this project. However, criteria established in the One-hundred-and-fourth Con- gress by the Transportation Appropria- tions Subcommittee of the House pre- cludes me from being able to accommo- date the Senator from Montana’s re- quest. The subcommittee has an ironclad rule that no highway projects which are not authorized be included for fund- ing under the appropriations bill. In addition, no increases above the au- thorized levels will be included. Given the level of single-purpose projects in- cluded in ISTEA the ability of the Ap- propriations Committee to accomodate the Senator’s request has been severely reduced, and such adjustments need to be made in the authorizing legislation. Mr. BURNS. I appreciate the Chair- man’s clarification and consideration. Have any non-authorized levels for highway projects been included in ei- ther the FY96 law or the current bill being considered by the Senate? Mr. HATFIELD. No, there are no in- creases above the authorized level in the fiscal year 1996 act or the fiscal year 1997 bill currently under consider- ation. Mr. BURNS. I thank the Chairman, and I yield the floor. SURFACE TRANSPORTATION BOARD Mr. BURNS. Mr. President, as we focus upon the Transportation budget for the upcoming fiscal year, I would like to discuss with you a number of points regarding the Surface Transpor- tation Board [STB] in light of the ICC Termination Act. The statutorily mandated time frames have been complied with in the latest merger. The STB should assign a priority to the handling of old cases. For example, those cases pending more than 3 or 4 years before the effective date of the ICC Termination Act. In addition, the STB’s own release as to its recent pub- lic vote in the Union Pacific\/Southern Pacific merger, it was indicated that considerable weight was given to the managerial judgment of the applicants. Since that application had been pend- ing prior to the effective date of the ICC Termination Act, similar treat- ment should be given to the other long- pending cases. The STB’s policy should be based on the widest perspective as to railroad proposals, be they mergers, construc- tions, line extensions, or rates, that will benefit area-wide economies in ad- dition to the applicants themselves. Also, the Board should encourage rail proposals compatible with the require- ments of appropriate environmental laws and should continue its policy of promoting competition in rail trans- portation which I believe will benefit the consumer. Mr. HATFIELD. The Senator’s points are well-taken. Long-pending cases of this type should be decided promptly. Such action would be particularly war- ranted with rail proposals that will benefit area-wide economies, promote competition, or foster the objectives of our environmental laws. I would hope that such public interest consider- ations would merit early resolution. Mr. BURNS. I thank the Chairman. MICHIGAN TRANSIT PROJECTS IN THE TRANSPOR- TATION APPROPRIATIONS BILL, FISCAL YEAR 1997 Mr. LEVIN. Mr. President, my col- league from Michigan and I would like to join the distinguished chairman of the Senate Appropriations Committee in a brief colloquy regarding Michigan transit projects in the bill before the Senate. We are seeking to resolve the dif- ferences between the House and Senate Appropriations Committee reports on Transportation appropriations for fis- cal year 1997 that relate to section 3 bus and bus facility funding for Michi- gan. Hopefully, the proposal from the Michigan Department of Transpor- tation, as embodied in the chart below, can be useful to the conference com- mittee when it meets. I ask unanimous consent that the chart be inserted into the record following our discussion. The PRESIDING OFFICER. Without objection, it is so ordered. (See exhibit 1.) Mr. LEVIN. We have sent the chart to the Michigan House Members whose districts are affected. Because of the short time, explicit support for this ar- rangement has not been received from all of them. However, this distribution appears to be a fair compromise be- tween the House and the Senate com- mittees report language. Barring any significant objection from Michigan’s House Members, I urge the conferees to retain the total Senate funding level of $20 million provided for section 3 tran- sit projects and accommodate the dis- tribution in the chart. I would hope that the distinguished chairman of the Senate Appropriations Committee would do his utmost to pre- serve the Senate level in conference. As the Senator from Oregon is aware, his State is a donor State like Michi- gan, and as such, receives less than an even return on the gas taxes contrib- uted into the Highway Trust Fund, from which transit funds are derived. Though that return was improved by ISTEA for highways, States like Michi- gan, and I suspect Oregon, continue to be significant donor States on transit projects. This formula matter must be addressed when Congress next takes up reauthorization of ISTEA. Mr. HATFIELD. I appreciate the in- terest of the Senators and their input in helping to recommend a resolution of the differences between the House and Senate report language on transit projects in Michigan. Mr. ABRAHAM. I fully support the remarks of my fellow Michigan Sen- ator regarding the unfair distribution of transit funds, and how the Senate must insist on the higher total funding level of $20 million for the State of Michigan. However, I wish to further elaborate on the distribution of these funds within the State of Michigan. The Michigan Department of Trans- portation has provided our offices with a project by project breakdown of this distribution, which Senator LEVIN has introduced. Per the fiscal year 1996 Transportation Appropriations Con- ference report, the full $1.23 million final project funding is recommended for the Lansing Intermodal Facility. Furthermore, we, in coordination with the Michigan Department of Transpor- tation [MDOT], recommend that at least $1.8 million be appropriated for the Grand Rapids Area Transit Author- ity, and at least $900,000 to the Kala- mazoo Transit Authority for buses and an intermodal facility. Finally, MDOT believes that as a start-up project, no more than $764,000 is needed for the Dearborn Intermodal Facility. No more than the remaining $7.13 million, in our coordinated opinion with MDOT, should be appropriated to MDOT for statewide distribution. There are other projects enumerated in the MDOT pro- posal, which melds the House and Sen- ate marks, which we also believe de- serve the designated level of support. Mr. President, I would ask the chair- man of the Appropriations Committee whether he cares to comment on this proposal? Mr. HATFIELD. Considering the ex- tensive discussions I know the two Senators from Michigan have con- ducted with their State and local gov- ernments over this proposal, I wish to assure both Senators that I will make every effort to ensure their proposal is given full consideration in conference discussions with the House. EXHIBIT 1 Transit agency Description Federal funds Lansing ………………………….. Facility …………………………… $1,230,000 SMART …………………………… Buses and facility ………….. 1,800,000 GRATA ……………………………. Facility …………………………… 1,800,000 Flint ………………………………. Facility …………………………… 1,800,000 Kalkaska ………………………… Facility …………………………… 576,000 Kalamazoo ……………………… Buses and facility ………….. 900,000 DDOT ……………………………… Buses and facility ………….. 2,000,000 Dearborn ………………………… Intermodal facility ………….. 764,000 Detroit ……………………………. Intermodal facility ………….. 2,000,000 Subtotal …………….. ……………………………………… 12,870,000 Total ………………….. ……………………………………… 20,000,000 ADVANCED TECHNOLOGY BUS Mrs. BOXER. Mr. President, I would like to ask the esteemed chairman of the Senate Appropriations Committee, Senator HATFIELD, if he would yield to a question regarding the transpor- tation appropriations bill. Mr. HATFIELD. I would be pleased to yield to the Senator from California. Mrs. BOXER. Thank you. I first want to personally praise the distinguished chairman for this appropriations bill VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00074 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9283 July 31, 1996 which does so much to enhance the safety and infrastructure investment in our Nation’s transportation systems. I know the Senator is a long-time sup- porter of renewable energy tech- nologies and transportation which uses clean fuels that preserve air quality in our Nation’s cities. I am particularly pleased at the com- mittee’s decision to approve the Presi- dent’s request for funding the Ad- vanced Technology Transit Bus [ATTB]. This project, under develop- ment in Los Angeles, uses the expertise of our defense aerospace industry to build a next-generation transit bus that will run on a variety of clean fuels, will provide considerable mainte- nance savings to our transit agencies and will provide conveniences for dis- abled passengers. The committee included by request for $13.1 million in bus discretionary funding to deploy five bus prototypes for transit agencies participating in the project across the country. The President had also requested $6.5 mil- lion in his budget to complete the re- search program under the National Planning and Research budget of the Federal Transit Administration. The committee fully funded the President’s request for Transit Planning and Re- search, but did not specifically refer to the Advanced Technology Transit Bus. As the chairman knows, the prototype development will be dependent on the completion of the research phase. I ask the chairman whether the Transportation Appropriations com- mittee report excludes support for the ATTB research funding? In addition, since fuel cell technology is one of the propulsion systems proposed for the ATTB, would some funding for the Fuel Cell Transit Bus Program also be avail- able to the ATTB project? Mr. HATFIELD. I assure my col- league from California that the com- mittee report does not mean the com- mittee does not support research fund- ing for the ATTB. I point out that the report also states that the committee has not earmarked projects mentioned in the House report that are not listed in this report. This action is taken without prejudice to final decisions on project funding that will be made in conference. The fuel cell component of the ATTB is an important part of the project, and I will make every effort to ensure that it is considered for funding. Mrs. BOXER. I thank the Senator for his support for the research and de- ployment of the Advanced Technology Transit Bus. Mrs. FEINSTEIN. I would like to en- gage in a colloquy with the chairman of the committee to clarify the sub- committee’s intent with respect to the committee report language relating to the BART SFO extension. Specifically, I would like to address the stipulation contained in the com- mittee report that would prevent the Federal Transit Administration from entering into a full funding grant agreement for the BART SFO exten- sion until all litigation regarding the project has been resolved. I have very strong concerns that this requirement could result in indefinite delays in the project. Further, I understand Sec- retary Pen\u0303a, Governor Wilson, and the Federal Transit Administration [FTA] share these same concerns. I understand it is not the chairman’s intent with this report language to kill this project. Further, the chairman does not intend to impose any restric- tions on the BART SFO extension that have not previously been demanded of this and other transit projects seeking full funding grant agreements from the FTA. I have a July 30 letter from Secretary Pen\u0303a stating that the language con- tained in the committee report could encourage lawsuits and further that he would prefer not to see this language included. I understand the chairman does not intend to encourage frivolous lawsuits with this language, and fur- ther, I understand in speaking with the chairman that I can be assured this committee report language will be re- vised during the conference negotia- tions with the House to reflect the chairman’s intent to move ahead with this project. Mr. HATFIELD. That is my under- standing. Mrs. BOXER. I ask the President if the chairman would yield to another question. Mr. HATFIELD. I would be happy to yield to the senator from California. Mrs. BOXER. We appreciate the chairman’s past support for this project and knows he understands the value of providing key connections for transit with other modes of travel, such as airports. We also appreciate his concerns over local participation in the decision-making for such a project. We would like to remind the chairman that this project has been on the local ballots and approved by our voters on three previous occasions. It enjoys wide community support. We under- stand from the county counsel of San Mateo County that as of July 16, 1996, any new initiative petition would be too late to qualify for the November 1996 ballot. Is it the chairman’s understanding that the committee report language will not necessitate another vote in 1996 if the time for qualifying such ini- tiative has expired? Mr. HATFIELD. That is my under- standing. I thank the Senators for bringing their concerns to me. DIGITAL BRITE RADAR INDICATOR TOWER EQUIP- MENT (DBRITE) AT THE GAINESVILLE-ALACHUA REGIONAL AIRPORT Mr. MACK. Mr. President, I would like to engage the Chairman in a brief colloquy on critical issues affecting the Gainesville-Alachua Regional Airport and the State of Florida. Mr. HATFIELD. I would be pleased to engage in a colloquy with the Senator from Florida on this matter. Mr. MACK. I would first like to thank the Chairman for his leadership and the fine work of his subcommittee in keeping the highways, railways and airways of this Nation safe and effec- tive in meeting the transportation needs of our citizens. Mr. HATFIELD. I thank my friend and colleague. Mr. MACK. I believe you are aware, Mr. Chairman, of the situation con- fronting the Gainesville-Alachua Re- gional Airport in their effort to obtain a radar upgrade and the installation of a DBRITE system. Gainesville was one of four airports specified by Congress in the reports ac- companying the fiscal year 1988 and fis- cal year 1990 Transportation appropria- tion bills to receive radar upgrades. To date, all but Gainesville have received radar upgrades. I find it very frus- trating that the FAA has not fully im- plemented the direction in these re- ports. At the time the FAA requested the DBRITE system, they considered it a crucial safety factor for air traffic utilizing the Ocala, Gainesville, and north Florida region. Now, as a con- tract tower with 35 percent less man- power, this system appears even more essential. The DBRITE system would provide local controllers with real time pictures of all air traffic in the North Central Region, complementing the ca- pacities and coverage of Jacksonsville Airport. I noted this year’s Transportation Appropriations Committee Report con- tains language encouraging the FAA to honor prior commitments. Accord- ingly, Mr. Chairman, as it has now been almost 8 years since Congress al- located funds for Gainesville’s DBRITE system, I would expect the FAA to take heed of this language and provide this much needed system to Gaines- ville-Alachua Regional Airport. Mr. HATFIELD. Mr. President, I can sympathize with the frustration ex- pressed by the junior Senator from Florida on behalf of the Gainesville\/ Ocala communities and regional air- port. If the FAA had recognized a le- gitimate need which still exists, I cer- tainly think it appropriate for the FAA to move forward in the delivery of the DBRITE system for the Gainesville- Alachua Regional Airport. Mr. MACK. Mr. President, as an addi- tional matter, I would like to bring to the chairman’s attention another prob- lem confronting the Gainesville- Alachua Regional Airport Authority and the surrounding areas and commu- nities in finalizing their eligible FAA noise grant funding. I have been informed that as a result of judicial inverse condemnation pro- ceedings, the city was forced to acquire certain properties and relocate former owners and occupants from certain sites covered by Federal Aviation Reg- ulations, Part 150, Airport Noise Com- patibility. This action required signifi- cant financial commitments from the local authorities, the city of Gaines- ville, and the Regional Airport Author- ity which these parties were appar- ently led to believe would be eligible VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00075 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9284 July 31, 1996 for reimbursement through the AIP Noise Grant Program. Would you not concur, Mr. Chairman, that this matter warrants FAA consid- eration? Mr. HATFIELD. Mr. President, I can assure the Senator from Florida that I certainly think this is a matter which the FAA should carefully review. And, I look forward to working with him to bring both these matters to a resolu- tion before the Congress finalizes the fiscal year 1997 legislation. VTS 2000 COLLOQUY Mr. JOHNSTON. I would like to en- gage into a colloquy with the distin- guished chairman and ranking member of the Transportation Appropriations Subcommittee. Mr. President, I would like to commend the Transportation Appropriations Subcommittee on its committee report which provides fund- ing to complete the final development of the Vessel Traffic System [VTS] 2000. This is a system that is necessary to enhance the safety and environ- mental quality of our country’s vital ports and waterways. In the recent past, and quoted in the committee’s re- port, the GAO has estimated the cost of establishing these VTS Systems at the originally envisioned 17 ports at a cost of up to $310 million. Through a competitive bidding process and the widespread use of commercial off-the- shelf and non-developmental equip- ment, the estimated costs have now been dramatically reduced. In fact, re- cent estimates of the costs are well below those estimated by the GAO\u2014 now less than $200 million. And that number could be substantially reduced depending on what type of systems are implemented as part of VTS 2000. Mr. LAUTENBERG. I appreciate my colleague’s remarks. The VTS 2000 pro- gram was one that we considered very carefully during markup of the Trans- portation appropriations bill this year. I believe that the VTS 2000 system pro- vides great promise in promoting the safety and environmental protection of our Nation’s waterways. The con- ference committee will indeed consider very carefully during our deliberations these cost issues you have just raised. Mr. BREAUX. Mr. President, I would like to associate myself with the re- marks made by my colleagues regard- ing the VTS 2000 system. The study which was recently published by the Marine Board of the National Research Council concluded that ”there is a compelling national interest in pro- tecting the environment and in pro- viding safe and efficient ports and wa- terways.” and that ”VTS can be a sig- nificant factor in enhancing the safety and efficiency of ports and waterways . . .”. Establishing VTS systems at our Nation’s important ports and water- ways is absolutely vital. Also, I agree with my colleague that the estimated cost to produce and field the systems has been dramatically reduced. In addi- tion, I would like to highlight the fact that the estimated annual costs to op- erate the system once it has been de- ployed have also been greatly reduced. Whereas some have estimated the an- nual operating costs of a VTS system to be $65 million, the Coast Guard now believes that those costs will be only $42 million per year for installation at all proposed posts, which includes the $20 million currently being spent annu- ally on five operational ports. I would also note that there are a variety of creative ways to meet those annual op- erating obligations which should be fully reviewed once a final VTS system is proposed. Mr. LAUTENBERG. Mr. President, I appreciate the very knowledgeable comments of Senator BREAUX. He is correct that there are significant po- tential cost reductions in both the es- tablishment and operation of the VTS 2000 system. Both of my colleagues can rest assured that I will keep these issues clearly in focus as we deliberate the fiscal year 1997 Transportation ap- propriations bill in conference with the other body. Mr. HATFIELD. I also appreciate the very knowledgeable comments of both of my distinguished colleagues from Louisiana. Maintaining the safety and environmental quality of this Nation’s waterways remain critically important objectives of this subcommittee. The important cost issues raised by the Senators from Louisiana should be carefully considered by the conference committee as well as the completion of a final VTS system. MID-AMERICA AVIATION RESOURCE CONSORTIUM Mr. NICKLES. Senator HATFIELD, I strongly support the Senate report lan- guage which opposes the House’s ear- mark of $1,700,000 for the Mid-America Aviation Resource Consortium [MARC]. In order to fund the facility in Minnesota, the House transferred funds out of the air traffic controller train- ing program from the FAA Academy in Oklahoma City. This is an imprudent transfer of funds to a program which has not received the necessary support to continue. I refer my colleagues to the con- ference report that accompanied the fiscal year 1996 bill which stated, ”The conferees agree to provide $250,000 for continued support of the Mid-America Aviation Resource Consortium as pro- posed by the House, but intend that this be the final year of Federal sup- port for this facility unless requested in the President’s budget.” Funding for this facility was not requested in the President’s fiscal year 1997 budget. I would like to include in the RECORD a letter from Mr. Richard Sanford, di- rector of the Florida Aviation Manage- ment Development Associates, an FAA contractor, to Senator MACK which ref- erences the reallocation of $1.7 million in the House bill. Mr. Sanford writes, ”This action, taken against the wishes of the FAA, effectively reduces the [FAA Academy’s] budget and directly decrements $1.7 million from a com- petitively awarded instructional serv- ices contract held by the University of Oklahoma. I am very concerned that this action serves to penalize desired academic\/business partnerships in the interests of supporting a consortium whose members have neither competed for the business nor are the FAA’s pre- ferred instructional service pro- vider(s).” I urge Senate conferees on the fiscal year 1997 transportation appropriations bill to insist upon the Senate position. Mr. HATFIELD. Senator NICKLES, I appreciate your interest in this impor- tant issue and your strong commit- ment to safety training at the FAA. I oppose the House effort to reallocate $1,700,000 from the FAA Academy to MARC and will remind conferees of the intention of the fiscal year 1996 con- ference report to terminate funding for MARC. Finally, I will urge the fiscal year 1997 conference to maintain the position outlined in the Senate provi- sion. Mr. NICKLES. I ask unanimous con- sent the letter from Mr. Sanford be printed in the RECORD. There being no objection, the letter was ordered to be printed in the RECORD, as follows: FAMDA, A JOINT VENTURE, Palm Coast, FL, July 10, 1996. Senator CONNIE MACK, Hart Office Building, Washington, DC. DEAR SENATOR MACK: The Federal Aviation Administration has elected to model part- nerships between the Government, academia, and business by awarding both technical and non-technical instructional services con- tracts to organizations featuring such part- nerships. In the technical training area, the partnership with the FAA at the FAA Acad- emy in Oklahoma City is shared by the Uni- versity of Oklahoma with American Systems Corporation as a subcontractor. In the non- technical area, Florida Aviation Manage- ment Development Associates (FAMDA), a joint venture between the University of Cen- tral Florida and American Systems Corpora- tion (ASC) supports the Center for Manage- ment Development (CMD) in Palm Coast, Florida. A short time ago, the House Appropria- tions Subcommittee signed out their appro- priations bill which, among other things, di- rected the reallocation of $1.7M originally budgeted to support instructional activities at the FAA Academy in Oklahoma City to the Mid-America Aviation Research Consor- tium (MARC), a group of educational institu- tions which have positioned themselves to provide technical training support to the FAA. This action, taken against the wishes of the FAA, effectively reduces the Academy budget and directly decrements $1.7M from a competitively awarded instructional services contract held by the University of Okla- homa. I am very concerned that this action serves to penalize desired academic\/business partnerships in the interests of supporting a consortium whose members have neither competed for the business nor are the FAA’s preferred instructional services provider(s). I am also mindful that this same flawed strat- egy could be applied to the Center for Man- agement Development in Palm Coast to the detriment of the University of Central Flor- ida and ASC. Senator Don Nickles is leading an effort to restore the $1.7M in funding to the FAA Academy and, ultimately, the University of Oklahoma. I urge you to lend your support to his efforts and favorably resolve this issue in conference. I have attached information VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00076 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9285 July 31, 1996 which may provide additional insight on this issue. Thank you for your continued support of CMD and the FAMDA joint venture. Sincerely, RICHARD M. SANFORD, Managing Director. Mr. KERRY. This is a good bill, Mr. President, responsibly and carefully as- sembled by the distinguished chair- man, the ranking Democratic member, the subcommittee and its staff. I com- pliment them on their work and sup- port its passage. Even so, Mr. President, due to the very difficult budget environment in which we are laboring, this bill does not do complete justice to what I be- lieve are vital transportation infra- structure needs, a reality on which I believe I could find considerable agree- ment with the chairman and ranking member. For example, Massachusetts and other States need more funding for mass transit and passenger rail than the committee could provide. Federal funding for Amtrak has de- clined by approximately one-quarter since 1995. This year, the Senate bill appropriates $592 million for Amtrak for 1997 which is $130 million more than the House provided. I commend the committee for at least including this amount for Amtrak because the House’s amount is a slow-motion death penalty. The capital-intensive nature of passenger rail makes it unlikely to survive as a viable transportation mode without some kind of Govern- ment support. And I do not know why we find that surprising. We heavily subsidize scheduled air travel, general aviation, and highways. It is entirely appropriate\u2014and beneficial to our Na- tion\u2014that we subsidize passenger rail. The United States still falls short among the nations of the world in per capita spending on passenger rail\u2014be- hind such countries as Belarus, Bot- swana, and Guinea, not to mention the nations of Western Europe. It is my hope that the Senate position on fund- ing for Amtrak will be sustained in the conference committee to resolve the differences between the bills passed by the House and the Senate. And as a member of the Senate Commerce Com- mittee, which has reported legislation to restructure Amtrak in order to place it on a path toward greater fiscal stability and accountability, I am very hopeful that we can enact reauthoriza- tion legislation before the end of the 104th Congress. I strongly support the Senate actions to fund the Northeast Corridor Im- provement Project [NECIP] which is vital to reducing congestion in the cor- ridor and which, in turn, will result in important environmental, energy and employment benefits. We must move ahead with track work, upgrading maintenance facilities and completion of the electrification of the northern section as soon as possible. The $200 million in funding this legislation pro- vides for NECIP will enable this impor- tant work to move forward. Again, I urge the members of the Committee who will be conferees to insist on the Senate position on NECIP in the con- ference committee. I would like to ex- press my gratitude to Chairman HAT- FIELD and Ranking Member LAUTEN- BERG for their continuing and depend- able support of NECIP. Another area of special importance to Massachusetts is mass transit. I cannot avoid being disappointed by this bill’s funding level for mass tran- sit operating assistance. Recent cuts in funding have had a devastating effect on mass transit systems in my State. In Massachusetts, statutory caps are imposed on the amount of funding transit authorities can receive from State and local sources. Therefore, cuts in Federal assistance have a direct, im- mediate, and unavoidable impact on service to seniors, workers and stu- dents in my State. Having voiced my concern, I do want to acknowledge that I realize this problem is not attrib- utable to the will of the subcommittee, its chairman, or its ranking member. My constituents living and working in the Boston area are very appre- ciative for the funding included in the bill for the South Boston Piers Transitway, which is a critical compo- nent of the State Implementation Plan to comply with Clean Air Act require- ments, and is anticipated to serve 22,000 riders daily. The transitway will be integrated with the extensive net- work of transit, commuter rail and bus service at South Station. I also appreciate support for the res- toration of historic Union Station in Springfield, MA, which will allow for the consolidation of regional transpor- tation services in western Massachu- setts in a single intermodal facility for local bus lines, intercity bus systems, trains, taxis, and limousine service. The restoration of the facility will be accompanied by renovation of the fa- cility to accommodate commercial ten- ancy. Also welcome is the committee’s rec- ommended funding for the development of the Cape Cod Intermodal Center which will accommodate intercity buses, regional buses, local shuttles, intercity trains, Amtrak summer tour trains, and bicyclists and will provide connections to the steamship authority’s Hyannis terminal and to Barnstable Municipal Airport. Once again, I thank the chairman and ranking member, who have labored conscientiously and diligently to do as much good in the transportation arena for the Nation and its people as pos- sible under the budget restrictions im- posed on them. I also want to acknowl- edge with appreciation the work of the staff with whom I am familiar, Pat McCann, Peter Rogoff, and Anne Miano. I offer my strongest encourage- ment to the conferees the Senate will name to work out differences between the House-passed and Senate-passed bills. This is a good bill, and I fervently hope the conference agreement will contain its best features. It matters to the nation and its people in 1996, and it will matter in the future. Mrs. BOXER. Mr. President, I would like to speak today in support of the transportation appropriations bill for fiscal year 1997. I commend the leadership of the Transportation Subcommittee, Chair- man HATFIELD and ranking member, Senator LAUTENBERG, for their hard work in fashioning a program of infra- structure investment and safety en- hancement with such little resources available to the subcommittee under this budget. This bill makes considerable im- provements over the House-passed leg- islation. These improvements will pro- vide better air quality, better mobility for our citizens and safer skies. The re- cent tragedies from the air disasters from Florida and New York sadly un- derscored the fact that we have not done all that we can to make our skies safer. I represent a State with 32 commer- cial airports, including at least half a dozen international airports, that han- dle more than 123 million passengers a year. So, I have a particularly strong interest in being sure that aviation se- curity is our highest priority in air travel. As a member of the House Govern- ment Operations Committee that held extensive hearings on the Pan Am Flight 103 disaster in 1989, and later as Chair of its Subcommittee on Govern- ment Activities and Transportation, I strongly urged greater attention to aviation security. I want to also add my thanks to the chairman for the increased funding for aviation safety. Funding in the bill will add 250 more air traffic controllers and provide needed investment in our air- ways infrastructure, including $1.46 bil- lion in airport improvement program funding. The House provided only $1.3 billion, a cut of $150 million from this year’s level. I am particularly pleased that the Senate committee provided the full amount requested by the President for the northern California TRACON. This is the regional radar facility for air traffic. The Senate’s funding of the $8.7 million requested keeps this facility on track for commissioning in November 2000. The Senate bill also provides $3.1 mil- lion for the precision approach path in- dicators, a state-of-the-art naviga- tional systems for our airports. This funding will enable the Los Angeles company which manufactures this equipment to keep their production lines open. I also believe ocean traffic safety will be enhanced by a provision that would prohibit funds to prohibit the Coast Guard from implementing regulations that would permit vessels to operate with a narrower margin of safety be- tween Santa Barbara and San Fran- cisco. This is a high-traffic area, par- ticularly for oil tankers. The provision prohibits a vessel traffic safety fairway which is less than 5 miles wide. I au- thored a similar provision as a Member of the House. It makes good sense. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00077 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9286 July 31, 1996 On enhancing trade, the Senate could do no better than its support for the Alameda transportation corridor. The Senate Appropriations Committee’s support for the Alameda corridor project was our last major hurdle for moving this major trade project for- ward. Last year in the National Highway System bill, we declared the project a ”high priority corridor,” eligible for a Federal loan. We worked with the President’s top financing and transpor- tation experts to fashion a loan pack- age, and the President requested the $59 million appropriation to pay the subsidy cost for a $400 million loan for the $2 billion project. The House supported that program, and now we have the Senate on board. The House and Senate approach the loan in different ways. Although this is not the approach that I would have rec- ommended, Senator HATFIELD pre- ferred using part of the funds provided under the State infrastructure bank program to provide a direct Federal loan for the project instead of the House’s plan under the Federal Rail- road Administration’s loan guarantee program. We can work out the best approach in conference. But there is no doubt that the House and Senate, Democrat and Republican, mayors of Long Beach and Los Angeles and the Governor of Cali- fornia and the President of the United States all support $59 million in Fed- eral seed money to build this project. It will eliminate more than 200 inter- sections with the rail link to the larg- est port complex in the United States, the ports of Los Angeles and Long Beach. It will provide a modern gate- way to Pacific Rim trade for our ex- porters across the country. The Senate bill provides $234 million more for transit than the House bill, including $134 million more for local rail systems. Each weekday more than 6.8 million commuters use some form of transit, eliminating the need for more than 1,000 lanes of urban high- ways. I think that is a good investment in terms of improved air quality and economic productivity for our people. The bill provides needed transit in- vestment for California communities, including $5.5 million for a new transit center for Stockton which will anchor its major downtown redevelopment plans and $2.5 million to consolidate several, duplicative transit operations around Lake Tahoe into an efficient system using the latest in intelligent transportation technology. The bill provides $3 million for the Los Angeles Neighborhood Initiative and $600,000 for a new multimodal transit center in Thousand Oaks. I am particularly pleased at the com- mittee’s decision to approve the Presi- dent’s request for funding the advanced technology transit bus. This project, under development in Los Angeles, uses the expertise of our defense aero- space industry to build a next-genera- tion transit bus that will run on a vari- ety of clean fuels, will provide consid- erable maintenance savings to our transit agencies and will provide con- veniences for disabled passengers. The committee included my request for $13.1 million in bus discretionary funding to deploy five bus prototypes for transit agencies participating in the project across the country. Do I agree with everything in this bill? No, of course not. We do not meet the President’s request for operating money for the Federal Aviation Admin- istration. On the transit side, I am troubled by the freeze on operating as- sistance and the low funding for our major fixed rail transit projects in San Francisco and Los Angeles. I am particularly concerned over the language in the Committee Report for the Bay Area Rapid Transit project to link up with San Francisco Inter- national Airport. I appreciate the chairman’s generosity in personally meeting with me and Senator FEIN- STEIN to hear our request for funding. Although the committee provided $20 million for the Bay Area rails program, it included harsh and overly restrictive report language. I believe it is well within reason to restrict Federal funding until BART has presented a detailed financing plan and met all local funding commitment criteria. However, to hold up a full funding grant agreement ”until all liti- gation regarding this project is re- solved” is highly unrealistic. This lan- guage must send a chill down the spine of every major transit general man- ager. What project is next? Lawsuits are not uncommon on any public works project, and there are legal avenues al- ready available particularly to address the environmental impact issues. I ask unanimous consent to have printed in the RECORD a letter from Mr. Gordon Linton, administrator of the Federal Transit Administration, in this regard. There being no objection, the letter was ordered to be printed in the RECORD, as follows: U.S. DEPARTMENT OF TRANSPORTATION, FEDERAL TRANSIT ADMINISTRATION, Washington, DC, July 31, 1996. Hon. MARK O. HATFIELD, Chairman, Committee on Appropriations, U.S. Senate, Washington, DC. DEAR CHAIRMAN HATFIELD: I write to ex- press concern about language in the Senate report accompanying the fiscal year 1997 U.S. Department of Transportation and Re- lated Agencies Appropriations Act that would prohibit the Federal Transit Adminis- tration (FTA) from executing a Full Funding Grant Agreement or issuing a Letter of No Prejudice for the Bay Area Transit District’s extension to San Francisco International Airport (the ”SFO extension”) ”until all liti- gation” against the project ”has been resolved . . .” For the reasons presented below, I respectfully request that this lan- guage be deleted in conference. First, let me emphasize that, for good rea- son, no such directive has been applied to any fixed guideway project in FTA’s thirty- five year history. All large transit projects, like all large public works projects, are in- evitably the subject of some litigation. We cannot expect otherwise. Indeed, all Federal transit grantees undertaking new starts set aside contingency line items in their budgets to finance the litigation they can and should anticipate in the ordinary course of business. Resolution of such litigation often takes many years. The language in the Senate report would require than a $1.2 billion investment in eco- nomic growth, congestion mitigation, and enhanced mobility for the Bay Area some- how proceed with no grievances against the project from contractors, suppliers, property owners, competing providers of transpor- tation, or interested parties opposing the project. Whatever the intent, the language would hold the BART SFO extension hostage to any party making a claim\u2014whether meri- torious of spurious\u2014against the project for the purpose of extracting money or other concessions from BART and Federal and local taxpayers. Second, notwithstanding the persistent threats of environmental litigation against the SFO extension, both FTA and BART have every confidence in the adequacy of our environmental studies for this project and in our compliance with the National Environ- mental Policy Act (NEPA), the California Environmental Quality Act (CEQA), and all other applicable Federal and local environ- mental law and regulations. Let me assure you that there has never been a transit project that was the subject of NEPA and CEQA documents so thorough and volumi- nous as those for this project. Finally, the selection of the locally pre- ferred alternative for the SFO extension was the result of a very open, vigorous, and lengthy debate. Clearly, not everyone will be pleased with the tough decisions that must be made to pursue a project so vital and visi- ble as this one; such is the nature of the transportation industry and the legacy of the Federal transit program’s reliance on local decisionmaking to best serve a local- ity’s needs. Litigation against a project ought to stand or fall on its own merits in the courts; it ought not be allowed to skew the orderly, even-handed development of leg- islation for the Fedreal transportation pro- grams. I have sent a similar letter to Congressman Wolf. Please let me know if I can be of any assistance in this matter. Sincerely, GORDON I. LINTON. Mrs. BOXER. I look forward to con- tinued conversations with the chair- man and BART officials to bring some better understanding of their respec- tive concerns before the Senate com- pletes a conference report on the bill. I also look forward to further con- versations on how we can increase funding for the Los Angeles Red Line extension. The $55 million provided in the bill will have a serious impact on the project’s construction schedule. The amount is about a third of the President’s request. The shortfall could lead to $300 million in cost increases from delays. More than 5,000 jobs would be lost. Ultimately, this shortfall will lead to slower highway speeds and cost- ly delays that our stressed Los Angeles highway network and its commuters can hardly sustain. We still have more work to do in con- ference to improve the infrastructure investments for California. Overall, the Senate bill provides greater help for my State, and I am hopeful these last few differences can be settled so we can VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00078 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9287 July 31, 1996 send the bill to the President for his signature. Mrs. MURRAY. Mr. President, I rise today in strong support of the trans- portation appropriations bill. I want to applaud Senators HATFIELD and LAU- TENBERG for their strong leadership over an area of increased competition for fewer dollars. This legislation though, is bitter- sweet, as it marks the final transpor- tation bill for Chairman HATFIELD. My neighbor to the south has been a com- passionate champion for our Nation’s infrastructure. The loss to this body and the Pacific Northwest will be felt for a very long time. The State of Washington has wit- nessed tremendous growth over the last decade, accompanied by traffic congestion on roads that have not kept pace with this region’s large influx of residents. I am pleased that this bill seeks to accommodate much of that growth within the Puget Sound region. The committee has included funds which support a commuter rail service between the cities of Everett, Seattle, and Tacoma. This line would form the foundation for a larger regional transit service in the Puget Sound that is set for a vote this November. This com- muter service would operate trains on existing track between the most heav- ily populated centers of Washington State. The committee also included funding to aid commuters traveling from sub- urban cities to downtown Seattle. These funds will enable King County Metro to connect the cities of Ken- more, Redmond, Renton, Tukwila, and Auburn with Seattle, through smaller neighborhood buses that meet larger commuter buses heading into the city. Further, I am thrilled that the bill has included funds that support a com- prehensive transportation solution to congestion around the Kingdome and new baseball stadium. Together with King County, the city of Seattle, the Washington State Department of Transportation, the Port of Seattle, the Baseball Stadium Public Facilities District and Burlington Northern- Santa Fe Railroad, these dollars will create a transit center facilitating ac- cess for both transit and pedestrians through the area. Last, Mr. President, I wanted to com- mend the committee for allowing Wenatchee to finish construction on the Chelan-Douglas Multimodal Cen- ter. The city of Wenatchee and Link Transit Systems have been working on the Multimodal Transportation Center project for 3 years. These funds will finish construction on the project and improve pedestrian and bicycle access. All of these projects utilize several different modes of transportation to more quickly and efficiently move our growing population. I appreciate the committee’s hard work in light of dif- ficult budget choices and urge my col- leagues’ support of this critical appro- priations bill. Mr. DOMENICI. Mr. President, I rise in support of the Department of Trans- portation and Related Agencies appro- priations bill for fiscal year 1997. I commend the distinguished chair- man of the Appropriations Committee for bringing us a balanced bill consid- ering the current budget constraints. The Senate reported bill provides $12.6 billion in new budget authority [BA] and $12.3 billion in new outlays to fund the programs of the Department of Transportation, including federal aid highway, mass transit, and aviation ac- tivities. When outlays from prior-year budget authority is taken into account, the bill totals $12.6 billion in BA and $36.1 billion in new outlays. The subcommittee is essentially at its 602(b) allocation in both BA and outlays. The Senate reported bill is $184 mil- lion in outlays below the President’s 1997 request. The bill does provide for the President’s request of $250 million for state infrastructure banks. The Senate reported bill is $240 mil- lion in BA below the House version of the bill. Both House and Senate bills provide the same amount of outlays. Mr. President, I ask unanimous con- sent that a table displaying the Budget Committee scoring of this bill be print- ed in the RECORD at this point. There being no objection, the mate- rial was ordered to be printed in the RECORD, as follows: TRANSPORTATION SUBCOMMITTEE\u2014SPENDING TOTALS\u2014 SENATE-REPORTED BILL\u2014FISCAL YEAR 1997 [In millions of dollars] Budget authority Outlays Defense discretionary; Outlays from prior-year BA and other actions completed ……………………………………………. ……………. 37 H.R. 3675, as reported to the Senate …………. ……………. ……………. Scorekeeping adjustment …………………………… ……………. ……………. Subtotal defense discretionary ……………….. ……………. 37 Nondefense discretionary: Outlays from prior-year BA and other actions completed ……………………………………………. ……………. 23,748 H.R. 3675, as reported to the Senate …………. 11,950 11,668 Scorekeeping adjustment …………………………… ……………. ……………. Subtotal nondefense discretionary ………….. 11,950 35,416 Mandatory: Outlays from prior-year BA and other actions completed ……………………………………………. ……………. ……………. H.R. 3675, as reported to the Senate …………. 608 602 Adjustment to conform mandatory programs with Budget Resolutions assumptions ……. \u00a53 ……………. Subtotal mandatory ………………………………. 605 602 Adjusted bill total …………………………….. 12,555 36,055 Senate Subcommittee 602(b) allocation: Defense discretionary ………………………………… ……………. 37 Nondefense discretionary …………………………… 11,950 35,416 Violent crime reduction trust fund ……………… ……………. ……………. Mandatory ……………………………………………….. 605 602 Total allocation …………………………………….. 12,555 36,055 Adjusted bill total compared to Senate Sub- committee 602(b) allocation: Defense discretionary ………………………………… ……………. ……………. Nondefense discretionary …………………………… ……………. ……………. Violent crime reduction trust fund ……………… ……………. ……………. Mandatory ……………………………………………….. ……………. ……………. Total allocation ………………………………………… ……………. ……………. Note: Details may not add to totals due to rounding. Totals adjusted for consistency with current scorekeeping conventions. Mr. DOMENICI. Mr. President, I sup- port the bill and urge its adoption. Mr. HATFIELD. Mr. President, I know of no further amendments to be offered. I ask for third reading of the bill. The PRESIDING OFFICER. The question is on the engrossment of the amendments and third reading of the bill. The amendments were ordered to be engrossed and the bill to be read a third time. The bill was read a third time. Mr. DOMENICI. I ask for the yeas and nays. The PRESIDING OFFICER. Is there a sufficient second? There is a sufficient second. The yeas and nays were ordered. The PRESIDING OFFICER. The bill having been read for the third time, the question is, Shall the bill pass? On this question, the yeas and nays have been ordered, and the clerk will call the roll. The assistant legislative clerk called the roll. Mr. FORD. I announce that the Sen- ator from Louisiana [Mr. JOHNSTON], the Senator from Arkansas [Mr. PRYOR], and the Senator from Illinois [Mr. SIMON], are necessarily absent. The PRESIDING OFFICER. Are there any other Senators in the Chamber who desire to vote? The result was announced\u2014yeas 95, nays 2, as follows: [Rollcall Vote No. 261 Leg.] YEAS\u201495 Abraham Akaka Ashcroft Baucus Bennett Biden Bingaman Bond Boxer Bradley Breaux Brown Bryan Bumpers Burns Byrd Campbell Chafee Coats Cochran Cohen Conrad Coverdell Craig D’Amato Daschle DeWine Dodd Domenici Dorgan Exon Faircloth Feingold Feinstein Ford Frahm Frist Glenn Gorton Graham Gramm Grams Grassley Gregg Harkin Hatch Hatfield Heflin Helms Hollings Hutchison Inhofe Inouye Jeffords Kassebaum Kempthorne Kennedy Kerrey Kerry Kohl Lautenberg Leahy Levin Lieberman Lott Lugar Mack McConnell Mikulski Moseley-Braun Moynihan Murkowski Murray Nickles Nunn Pell Pressler Reid Robb Rockefeller Roth Santorum Sarbanes Shelby Simpson Smith Snowe Specter Stevens Thomas Thompson Thurmond Warner Wellstone Wyden NAYS\u20142 Kyl McCain NOT VOTING\u20143 Johnston Pryor Simon The bill (H.R. 3675), as amended, was passed. Mr. HATFIELD. Mr. President, I move to reconsider the vote by which the bill was passed. Mr. LAUTENBERG. I move to lay that motion on the table. The motion to lay on the table was agreed to. Mr. HATFIELD. Now, Mr. President, I move that the Senate insist on its amendments, request a conference with the House of Representatives on the disagreeing votes of the two Houses, and the Chair be authorized to appoint conferees on the part of the Senate. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00079 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9288 July 31, 1996 The motion was agreed to, and the Presiding Officer appointed Mr. HAT- FIELD, Mr. DOMENICI, Mr. SPECTER, Mr. BOND, Mr. GORTON, Mr. SHELBY, Mr. LAUTENBERG, Mr. BYRD, Mr. HARKIN, Ms. MIKULSKI and Mr. REID conferees on the part of the Senate. Mr. HATFIELD. Mr. President, I want to call attention to a matter re- lating to one of our staff people, Pat McCann, who is the staff director for the majority party. He is a very inter- esting person who has been on this committee, the transportation sub- committee, for 13 years. It is illus- trative of another matter, and that is how our committee must operate on a bipartisan basis. When we bring a bill to the floor we have to have comanagers, in which the ranking member and whoever he or she may be, a Democrat and a Republican, and the Chair, have to have agreed to the bill and therefore present a united front. I say this is unusual about com- mittees in the Senate, but we are the only committee that has to report bills by law. We have to keep this country going and, therefore, we have to report 13 bills, come whatever may. I happened to be chairing the Appro- priations Committee in a previous cycle, from 1981 to 1987. I, at that time, had an opportunity to hire on the com- mittee Pat McCann, as the Republican majority at that time. But subsequent chairmen of that committee, the full committee, Senator Stennis and Sen- ator BYRD, followed the same pattern that I followed and that is that we do not wipe out our staff in each election cycle, because they are truly profes- sionals, serving both sides of the com- mittee. So Pat McCann continued on in that professional role. My immediate predecessor, Senator LAUTENBERG, now the ranking member, as the chairman of that subcommittee, continued Pat McCann, and Anne Miano, our assistant staff director, was hired by Senator D’AMATO when he chaired that particular subcommittee. As it was with Peter Rogoff, who is now the staff director for the minority. They continued all through these var- ious changes of party and majorityship. So I not only pay tribute to Pat McCann for his faithful service, totally professional service that he has pro- vided the committee, but to all the staff on our particular committee. I thank also at this time the out- standing work of Senator LAUTENBERG. We could not have brought this bill to the floor without Senator LAUTEN- BERG’s leadership, and we could not have resolved the many conflicts and problems that we faced in this com- mittee. Again, I say to Anne Miano, Peter Rogoff, Pat McCann that we only are able to do this when we have this kind of staff. We look good, and at the same time we have to realize it is more than just our charming personalities. It is the fine work of staff that has made possible the producing of this bill. So I just want to call attention to Pat’s leaving of the Senate. He is going to move through the conference with us. By the time we get that conference report back here, he will probably be up in the balcony, up in the gallery. I hope he is not editorializing verbally up there as we proceed with the con- ference report, because I expect it to be of such quality that we will be able to pass it with a voice vote within a very, very brief time. I thank the Chair. Mr. LAUTENBERG addressed the Chair. The PRESIDING OFFICER. The Sen- ator from New Jersey. Mr. LAUTENBERG. Mr. President, I, too, want to add some words of com- mendation and appreciation to the staff, particularly on this occasion when Pat McCann will have seen the last transportation appropriations bill that he is going to have to work on. I reminded him, sometime he is going to look back here, where it is a quarter to 10 at night, he has not had dinner, has not seen his family, he has not been able to watch the Olympics, how much he is going to miss this place. He start- ed to weep, and I could see a tear fall down his cheek, but he will be strong. On a serious note, Pat’s service has been truly exemplary of bipartisanship. He came to me as a Republican, stayed with me as a Republican and left as a Republican. That is really bipartisan. But we have worked very well to- gether\u2014again, trying to be serious, Pat and Peter, the two senior people on each of the subcommittee staffs, the majority and the minority, have given loyal service wherever and whenever called upon to do so. We are going to miss Pat. He brings a special touch and a good sense of humor and knows the subject ex- tremely well, and he had the good judg- ment to send his daughter to college in New Jersey. Princeton, of course, is a nice place to have a child. Mine didn’t go there. He felt it was too close to dad or too close to home. Pat has been a marvelous, marvelous influence on staff and on Members as well. So it is with other members. Peter Rogoff is really busy these days. We learned the difference between being in the majority and being in the minor- ity. It is numbers of people that you have to do the job. Peter has been a very able assistant throughout this. I thank also Anne Miano. I have got- ten to know Anne over the years and watched her approach motherhood and do that very well, while also staying on top of the work she has here. Joyce Rose who has been helpful, Carole Geagley and Mike Brennan, his first time on the bill. To all the staff, my deepest appreciation and thanks for a good job. When I look at how complicated things are right now and see how sparse the funding for major, signifi- cant programs has become, we just dealt with over 37 billion dollars’ worth of funding, very important transpor- tation programs dealing with aviation, highways, rail, Coast Guard, and I think have done it with balance and with consideration for the value of all of the programs. That resulted, Mr. President, from the influence of Senator HATFIELD, his leadership, his constancy, his conscien- tious belief that things have to be right among all, not just a few. It has en- abled me to feel very good and feel like a full partner, though in the minority status and throughout the negotiation and the planning and the hearings and the markup of this bill. So, we note with a degree of sadness, though he will be here with other bills, this is the last time that we will have Senator HATFIELD’s valued hand as chairman. I hope, too, the conference will go through on a voice vote and, as a tribute to MARK HATFIELD, perhaps I can call on the goodness of the hearts of our colleagues to do it just that way. As a friend, as a leader, as an out- standing citizen and American, MARK HATFIELD has been an enlightenment for many of us and particularly for me in the years I have had a chance to work with him. We close this bill hoping our col- leagues are satisfied with the job we have tried to do as best we can. I thank the Chair. Mr. GRASSLEY addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Iowa. f MORNING BUSINESS Mr. GRASSLEY. Mr. President, I ask unanimous consent that there now be a period for the transaction of morning business, with Senators permitted to speak for up to 5 minutes each. The PRESIDING OFFICER. Without objection, it is so ordered. f NOMINATIONS OF ADM. JAY L. JOHNSON, U.S. NAVY, TO BE AD- MIRAL Mr. THURMOND. Mr. President, this is a joint statement by Senator NUNN and myself on behalf of the Committee on Armed Services. Today, the Armed Services Com- mittee voted unanimously to favorably report the nomination of Adm. Jay Johnson for reappointment to the grade of admiral and assignment as the Chief of Naval Operations. The vote followed both a closed ses- sion and an open hearing of the Com- mittee on Armed Services in which the Members considered information pro- vided by the Department of Defense relevant to admiral Johnson’s quali- fications to be Chief of Naval Oper- ations. During the hearing, Admiral Johnson discussed his attendance at Tailhook. In addressing the Committee he stated, ”While I can’t change the past, I can\u2014 and did\u2014learn from it; so did the rest of the Navy. I was cautioned by the Secretary of the Navy for not being proactive in monitoring the conduct of VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00080 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9289 July 31, 1996 junior officers and not taking effective action to prevent misconduct at Tailhook ’91. Because I was there and have seen and felt first hand how much Tailhook hurt our great Navy, I am even more committed to ensuring that such an atmosphere will never again be tolerated.” Information provided by the Depart- ment of Defense relevant to the nomi- nation is available at the Committee Office for review personally by Sen- ators. f THE VERY BAD DEBT BOXSCORE Mr. HELMS. Mr. President, at the close of business yesterday, Tuesday, July 30, the Federal debt stood at $5,183,982,827,241.61. On a per capita basis, every man, woman, and child in America owes $19,532.86 as his or her share of that debt. f FULL HONOR REVIEW AND AWARD CEREMONY FOR SENATOR SAM NUNN Mr. WARNER. Mr. President, history will record Senator SAM NUNN’s distin- guished public service with many chap- ters. There are, I am certain, more to come covering future challenges he will accept. None, however, will be more impor- tant, more meaningful to him, than his ever vigilant concern for the men and women of all ranks of the armed serv- ices. I can attest to his work, for I was privileged to serve on the Armed Serv- ices Committee for 6 years, when Sen- ator NUNN was chairman, as the rank- ing Republican. We were partners and a very high de- gree of bipartisanship prevailed among all members. One of the many tributes to his serv- ice on this committee was paid to Sen- ator NUNN on July 12, 1996, with a Trooping of the Colors by the troops for their chairman. I ask unanimous consent to have printed in the RECORD remarks made on this memorable auspicious occasion. There being no objection, the mate- rial was ordered to be printed in the RECORD, as follows: FULL HONOR REVIEW AND AWARD CEREMONY FOR SENATOR SAM NUNN AWARD NARRATIVE For exceptional and outstanding service as Chairman, Ranking Member, and Member of the Armed Services Committee of the United States Senate from 1972 through 1996. Senator Nunn has been the leading legisla- tive voice on national security issues during a period of extraordinary change and chal- lenge for the Department of Defense. With his unparalleled knowledge of national de- fense and foreign policy issues, his contribu- tions to the security and well-being of our Nation are profound. His clear and eloquent voice has focused public debate on defining the vital interests of the United States, and promoted a strong defense and peace for fu- ture generations. Senator Nunn has taken the initiative in authoring and sustaining legislation that has strengthened the morale and welfare of our men and women in uniform and their families, including the Nunn-Warner in- creases in military pay and benefits in 1980 to put the All-Volunteer Force on a sound footing, the Persian Gulf benefits package for the men and women who fought in Oper- ation Desert Storm, and the post-cold-war transition benefits for military personnel, Department of Defense civilians, and defense industry employees. Senator Nunn co-authored the Nunn-Lugar Cooperative Threat Reduction Program which has reduced significantly the threat of nuclear war by providing incentives for the states of the former Soviet Union to dis- mantle their arsenals. Senator Nunn played a critical role in the development of the Department of Defense Reorganization Act of 1986, creation of the combatant command for special operation forces, enactment of the Federal Acquisition Streamlining Act of 1994, establishment of cooperative acquisition programs with our NATO allies, passage of legislation to facili- tate cost savings through the closing of mili- tary bases, and in the development of the an- nual National Defense Authorization Acts. At the request of President Clinton, he ac- companied former President Jimmy Carter and retired General Colin Powell to Haiti during the 1994 crisis, where he helped to achieve an agreement that averted a mili- tary confrontation. Senator Nunn has consistently articulated his views in a bipartisan manner that recog- nizes and sustains the traditional values of military service, duty, and patriotism. His achievements and dedication represent the highest traditions of government and public service, and reflects great credit upon him- self, the Department of Defense, and the Congress of the United States. For these and his many other contributions, I take great pleasure in presenting Sam Nunn the Depart- ment of Defense Medal for Distinguished Public Service. [Applause] Secretary Perry: Less than a mile up the Potomac River from here on Roosevelt Is- land are inscribed these words of President Theodore Roosevelt: ”In popular govern- ment, results worth having can be achieved only by men who can combine worthy ideals with practical good sense.” For more than two decades, our government has been blessed with the worthy results achieved by a man known for combining worthy ideals with practical good sense. That man is Sen- ator Sam Nunn. Worthy ideals and practical good sense are the hallmarks of each of Sam Nunn’s many achievements. In 1991, Senator Nunn had the practical good sense that the world would be a much safer place if the thousands of nu- clear weapons in the former Soviet Union were dismantled and safeguarded. He com- bined that practical good sense with worthy ideals, and along with Senator Richard Lugar, created the Nunn-Lugar program. This program has been a remarkable success. Perhaps the most compelling Nunn-Lugar success story is centered on the Ukrainian town of Pervomaysk, which once housed 700 nuclear warheads, all of them aimed at tar- gets in the United States. I have visited Pervomaysk four times in the last two years. The first visit was in March 1994, just after we signed the Trilateral Agreement, when I looked down into a nuclear missile silo and saw the missile, then saw the first batch of warheads on the way out. On my fourth visit this June, I joined the defense ministers of Ukraine and Russia in planting sunflower seeds at the site. By harvest time, that former missile field will be a productive sun- flower field. Thanks to the vision of Senator Sam Nunn, over 4,000 nuclear warheads have been removed from deployment and more than 700 bombers and ballistic missile launchers have been dismantled. Ukraine is now nuclear- weapons free. Kazakstan is already weapons free and Belarus will be nuclear weapons free by the end of the year. The worthy ideals and common sense that lie behind the Nunn-Lugar program, are em- blematic of Senator NUNN’s entire career in the U.S. Senate. He has applied these traits to making America safer and stronger. He was the unsung hero of the Goldwater-Nich- ols Act. Sam never minded being unsung, but I think today we ought to sing him. And\u2014 [Applause] \u2014I believe the Goldwater-Nichols Act is perhaps the most important defense legisla- tion since World War II. It dramatically changed the way that America’s forces oper- ate by streamlining the command process and empowering the Chairman of the Joint Chiefs of Staff and the unified commanders. These changes paid off in the resounding suc- cess of our forces in Desert Storm, in Haiti, and today, in Bosnia. Sam Nunn provided much of the thinking and logic behind the legislation and was the persuasive force be- hind its passage into law. I will always think of it as the Goldwater-Nichols-Nunn legisla- tion. Throughout his career, Senator Nunn left his mark throughout the U.S. Armed Forces. In the 1970’s and the 1980’s, he championed the stealth technology that helped win the Gulf War. In the 1990’s, he led the fight for acquisition reform, ensuring that our forces get the best equipment, at the best price, at the quickest time. And he’s been a strong ad- vocate of making the most use of the Guard and Reserve and their unique talents and re- sources. And nobody\u2014I mean nobody\u2014has done more for our men and women in uniform than Sam Nunn. He knows that they are the ones we count on to keep our country safe. And he’s worked tirelessly to help build our quality force. Thanks to his efforts, we now have the best force in our history and the best force in the world. I have seen that quality force in action everywhere I’ve trav- eled. I’ve seen it at the DMZ in Korea, on the carriers in the Med and along the zone of separation in Bosnia. I visited our IFOR troops in early January. It was the day after we opened up the Pon- toon Bridge over the Sava River on the Bos- nia border. The tanks and the Bradleys were rolling across the bridge and General Nash, General Joulwan, General Shalikaskvili and I decided that our entry to Bosnia would be on foot. And we decided to walk across the Sava River bridge from Croatia into Bosnia. Halfway across, we met some of the combat engineers who built the bridge, still working on finishing up some of the details. One of them was Sergeant First Class Kidwell, who stepped forward and said his enlistment was up and he wanted to reenlist. After all he and his comrades had been through to build this bridge\u2014the bitter cold, the flooding of epic proportions, the danger of land mines\u2014 this sergeant still wanted to reenlist. And so we swore him in for another four years in the Army, right there in the middle of the Sava River bridge. And I can tell you I have never been more proud of our Armed Forces than at that moment. And that mo- ment\u2014[Applause]\u2014that moment is a tribute to Sam Nunn and to the quality force he has fought to build. Today, the Department of Defense is thanking Senator Nunn, through his Distin- guished Public Service Award. And to this award, I want to add my personal thanks. Three-and-a-half years ago, as I was consid- ering whether or not to return to public service and to Washington, I consulted Sen- ator Nunn. He urged me to accept the job as VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00081 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9290 July 31, 1996 Deputy Secretary of Defense, and he talked about the exciting opportunities to improve the security of our country. And as I weighed my decision, one of the big pluses in my thinking was the opportunity to work with a public servant as intelligent, thoughtful, and courageous as Sam Nunn. Well, this is Sam Nunn’s last year in the U.S. Senate, but his influence will last for decades to come. He influenced the Senate and the Department of Defense. He’s influ- enced the Nation. He leaves a magnificent legacy; a legacy of wisdom, tenacity, vision, and patriotism; a legacy which will make our world a better and safer world for our children and our grandchildren. Thank you, Senator Nunn. [Applause] General Shalikashvili: Senator Nunn, Mrs. Nunn, distinguished guests, let me begin by congratulating these magnificent soldiers, sailors, airmen, marines, and coast guards- men standing in front of you. [Applause] My thanks to you. You’ve really made this day very, very special. Now, in ancient times, the purpose of pa- rades was for soldiers to come together in a very formal way to honor a man of very great status. And that very much is the pur- pose of this ceremony today\u2014to honor a most remarkable man and to thank him for 24 years of service in the U.S. Senate. President Theodore Roosevelt had a favor- ite admonishment\u2014a warning really\u2014a warning that you cannot spread patriotism too thin. Surely, as much as any American alive today, Sam Nunn has painted a pic- ture\u2014a vibrant canvas of patriotism\u2014a can- vas unstained by partisanship or personal gain, or even personal pride. But painted, in- stead, with broad brush strokes of wisdom, of conscience, of love for his country and of heartfelt love for the men and women in uni- form. He has sat through year after year, for over two decades, of endless hearings and briefings, of going on trip after trip, listen- ing to the needs and requests from our coun- try’s senior military and defense officials\u2014 always patiently, always with the court- liness for which he’s so well known. And al- ways it has been with the dedication to en- sure that our policies are correct, that are plans are well-conceived, and that our mili- tary has the resources to remain the finest and most capable military in the world. It has been said of him, that on issues of national security, Sam Nunn is the E.F. Hut- ton of the Hill. Well, actually, he’s bigger than that. People not only eavesdropped to hear his views, they sought his views. [Ap- plause] There is an old saying that if you want peace, then you must understand war. It is a dictum that Sam Nunn has spent his career heeding\u2014to the great benefit of his fellow Americans and of every American that’s worn the uniform during his 24 years in the Senate. I, for one, will greatly miss his counsel, his support, and his friendship and his unyielding efforts to maintain the Armed Services Committee as a serious body where issues of national security receive a fair and open hearing, and where wisdom and con- science, rather than partisanship, rule. Senator Nunn, on behalf of the Joint Chiefs of Staff and on behalf of every man and woman in uniform, I thank you and I sa- lute you. And I also suspect, indeed, I sin- cerely hope, that your voice and your coun- sel and your service will remain a national asset for a long, long time to come. My thanks to you. [Applause] Senator NUNN: Secretary Perry, General Shalikashvili, members of the Joint Chiefs, Department of Defense personnel, Chairman Thurmond, my colleagues in the Senate and House and staffs\u2014we should never forget them\u2014distinguished ambassadors, men and women of our military service, members of my family and many friends. From the bottom of my heart, I thank you for this great honor, for this medal and for this ceremony. Colleen and I will cherish this day, this parade, this ceremony, and we will remember it forever. Chairman Carl Vinson, my great-uncle, upon the chris- tening of the nuclear aircraft carrier named in his honor, stated, ”My star has reached its zenith.” I feel that way today, Secretary Perry, General Shali and all of you gathered here. Secretary Perry and General Shali, your remarks were so laudatory that I may change my mind and follow in the footsteps of Senator Strom Thurmond by becoming a write-in candidate for the U.S. Senate. [Ap- plause] Congress has no higher responsibility than its duty under our Constitution to provide for the common defense. That is our con- stitutional charge. During my quarter cen- tury in the Senate, my greatest sense of sat- isfaction has been working with our out- standing men and women in uniform that serve our Nation all over the world, as well as the personnel in the Department of De- fense. To those who proudly marched in to- day’s parade and to your comrades in arms who are on duty around the world\u2014those of us in the Congress of the United States, and I think I can speak for everyone on both sides of the aisle, we are very proud of you and we are very proud of your families and we are proud of the job you do for the Amer- ican people. When I look around this audience, I feel like a pupil standing with gratitude before his mentors, his teachers and his heroes. Secretary of Defense Bill Perry is all three. He has matched his technological genius with his dedicated commitment to the well- being of our men and women that serve our Nation in uniform. His personal integrity and his ability to explain complex issues in understandable terms is particularly valued by those of us whose VCRs are always blink- ing at 12 o’clock. [Laughter] Secretary Perry’s ability to judge char- acter and leadership is exemplified in his choice of General Shalikashvili to head our Nation’s armed forces. General Shali, we are grateful for your outstanding career and most of all we are grateful for your leader- ship of our military and for your example to the young people in the military and all young Americans. When I see here today the Under Secretary for Acquisition and the Vice Chairman of the Joint Chiefs, I am reminded of 1977 when then Air Force Colonel Paul Kaminski and his assistant, then Major Joe Ralston, were driving Arnold Punaro and me on a cloak- and-dagger route to see the then highly-clas- sified Stealth fighter at a clandestine loca- tion which could not be mentioned to any- one. The reason the F 117 stayed secret so long is that these guys couldn’t find the base. [Laughter] We ended up calling for help at a McDon- alds’ pay phone. There was, however, no doubt about their ability to keep a secret. Perhaps, that is why they are such good leaders today. When I see retired General James Hol- lingsworth, my dear friend, in the audience, it brings back memories of his outstanding leadership in Korea and his leadership in the fundamental strengthening of our NATO pos- ture at a very crucial time in our history. Thank you, Holly. When I see one of my great friends and teachers, Jim Schlesinger, former ”Sec- retary of Everything,” I am reminded of his enormous contributions to our national se- curity for the last four decades. Jim con- tinues to be America’s intellectual ”pillar of iron” on matters of national security and foreign policy. I also think back today to the courageous leadership of General David Jones, former Chairman of the Joint Chiefs; General Shy Meyer, the head of the U.S. Army; as well as Admiral Bill Crowe, now Ambassador, in leading the way toward fundamental Depart- ment of Defense reorganization which has paid off big-time as Secretary Perry has al- ready mentioned. I also recall my good friend, the late General Dick Ellis, who as commander of the Strategic Air Command, prepared the foundation for much of the work I have done in risk reduction and non- proliferation. John Warner remembers that well because he was my partner in that en- deavor. I am reminded of industry giants like David Packard who recently passed away and others like him in industry today\u2014many of whom are in this audience\u2014who have led the way in making America the techno- logical superpower of the world. I think today of our excellent Committee staff who have assisted me and the Senate for the last 24 years, indeed, assisted all of us in the Congress, led by Staff Directors like Ed Braswell, Frank Sullivan, Rhett Dawson, Jim Roche, Jim McGovern, Carl Smith, Pat Tucker, Dick Reynard, Les Brownlee and, of course, Arnold Punaro, who likes to be called general. These staff directors and those who serve with them are the unsung heroes of America’s military strength. They work day and night. They are assisted every day by outstanding people on our personal staffs. Many of those are here today. I will not try to call all of their names, but I am indebted to them and they know it. There are two important footnotes to every national security improvement in which I have been involved. First, I take full responsibility for my mistakes and my bad ideas. No one else is responsible for those. But all of my good ideas were inspired by our men and women in uniform like those who stand so proudly here today. I have been the beneficiary of the leadership, guidance, ad- vice and support of Senators like Senator John Stennis, Senator Scoop Jackson, and Senator Robert Byrd, as well as my other colleagues on the Armed Services and Appro- priations Committees and my many friends in the House of Representatives. That’s the first footnote. My second footnote, I believe, is of some relevance in this era of unfortunate but in- creasing political party warfare. And that’s what it is. Each time I have been involved in a major national security initiative, it has been with a Republican partner. From Barry Goldwater and Strom Thur- mond on defense reorganization; to John Warner on risk reduction and pay and bene- fits for our troops; to Bill Cohen on special operations and low intensity conflict and de- mirving our missiles; and to Dick Lugar and Pete Domenici on preventing the spread of weapons of mass destruction. Every major improvement in defense dur- ing my time in the Senate has been the re- sult of a few Senators and House Members of both parties putting our Nation’s security before partisan politics. [Applause.] I submit, ladies and gentlemen, that there is no serious problem facing America today that can be solved by one political party. The American people recognize that and it is time for those of us in Washington to recog- nize that. [Applause.] I could go on and on, but most of the pa- rades I have attended were as an enlisted man standing at parade rest so the time has come for self-imposed cloture. [Laughter.] VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00082 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9291 July 31, 1996 Thomas Jefferson once said, ”The blood of martyrs is the seed of freedom’s tree.” Amer- ica’s independence and our continued free- dom have rested for 220 years on this premise. Freedom is in greater supply around the world today thanks to the United States and our allies\u2014our allies played a big role and we should never forget that\u2014but it comes at no small price in terms of required courage and commitment. To the men and women in uniform and to all those who serve our Nation, I will leave the Senate keenly aware of what every American should remember. Our sense of se- curity depends on your vigilance and your discipline. Our prosperity depends on your sacrifice. Our dreams and our children’s dreams depend on your sleepless nights. And our freedom to live our lives in freedom de- pends on your willingness to risk yours. May God bless each of you and all of those who serve America in the cause of freedom. Mr. WARNER. Mr. President, I rise today to recognize the dedication, pub- lic service, and patriotism that per- sonified the life of Capt. John William Kennedy, U.S. Air Force. Lieutenant Kennedy, or Jack as he was better known, was reported as missing in ac- tion on August 16, 1971, in South Viet- nam. He was presumed killed in action on July 16, 1978, and finally confirmed as having been killed in action in May of this year. Jack was born here in Washington, DC, but grew up in nearby Arlington, VA. He graduated from the Virginia Military Institute in 1969. While at VMI, he was the 1969 Southern Con- ference 160-pound wrestling champion, a member of the VMI honor court, and was inducted into the VMI sports hall of fame in 1980. In October 1970, a year after entering the Air Force, Jack graduated from pilot training at Craig FBI in Selma, AL, and was awarded the Under- graduate Pilot Training Office Train- ing Award for being tops in his class. He then attended O 2A pilot training at Hurlburt Field, Eglin AFB, FL, and was thereafter assigned to the 20th Tactical Air Support Squadron [PACAF] in South Vietnam. Unfortunately, Jack’s promising young career was tragically ended while Captain Kennedy was flying on a visual reconnaissance mission over the Quangtin Province in South Vietnam. On August 16, 1971, radio contact with Jack’s O 2A aircraft was lost. A search effort was initiated, but no crash site or radio contacts or witnesses were un- covered. U.S. Army intelligence reports indicated that the 31st North Viet- namese Regiment was in the area at this time. In 1993, over 20 years later, remains were found at a crash site in Quangtin Province. The DNA from these bone fragments were positively identified as a match with Jack’s mother in 1995, and Captain Kennedy’s remains were returned to the United States in late June 1996. On Friday, August 2, a fu- neral is scheduled for Captain Kennedy in the Old Post Chapel on Fort Myer, and internment with full military hon- ors will follow at Arlington National Cemetery. For his remarkable, yet short career, Lieutenant Kennedy was awarded the Distinguished Flying Cross, the Purple Heart, the Air Medal with two oak leaf clusters, the National Defense Service Medal, the Vietnam Service Medal, and the Republic of Vietnam Campaign Medal. Capt. John Kennedy was the embodi- ment of an American hero. A true pa- triot and a superb Air Force officer who served with courage and integrity, he lost his life during one of the most intense and demanding periods in our Nation’s history. His mother, who lives in Lake Ridge, VA, and his brother, Dan, who many of us know from his ef- forts on the Hill as Bechtel’s represent- ative, should be proud of Jack and what he accomplished during his short life. I am thankful that Jack’s fate has been determined, and that he has now been returned home for a proper burial. f TRIBUTE TO SETH J. DIAMOND Mr. BURNS. Mr. President, Montana suffered a large loss on Friday after- noon. A plane crash in the northwest corner of our State claimed the life of three men, Seth Diamond, Ken Kohli, and Al Hall. Seth lived in Missoula, MT, and Ken and Al lived in Cour d’Alene, ID. Over the last few years, my staff and I had the pleasure of getting to know Seth Diamond. As a representative of the timber community in the inter- mountain West, I had many opportuni- ties to work with Seth. Whether we were working on changing the way our Government deals with the Endangered Species Act or working in issues re- lated to forest health and management, Seth was there with fresh ideas on how to solve hotly contested issues. It was Seth’s sense of fairplay that gave him such a good standing with groups on both ends of the natural resource man- agement spectrum. I valued and re- spected his comments and advice. Seth Diamond was born in Philadel- phia and grew up on Long Island, NY. He received an undergraduate degree from Duke and a wildlife biology mas- ters from Virginia Polytechnic Insti- tute and State University. In 1988, Seth found his way to Montana as a biolo- gist for the U.S. Forest Service. He worked on the Lewis and Clark Na- tional Forest out of Choteau, MT. The West is truly an unique area. Most believe you have to grow up in the West to appreciate our way of life and feel a strong commitment to pro- tecting the businesses that have made Montana economically and culturally what it is today. It amazes me that a kid who grew up on the east coast could come to Montana and work to keep the wood products industry a part of Montana’s economy, but most im- portantly believe it is vital to the well- being of Montana. Seth did just that. Montana’s resource dependent com- munities owe a great debt to Seth. He worked to achieve a common goal of providing jobs for families and pro- tecting a renewable resource. In addition to his commitment to Montana, Seth was a proud family man. He is survived by his wife, Carol, and children Kale, Laura, and Jesse Lynn. They and the rest of the Dia- mond family have Phyllis’ and my prayers. Montana is a richer place today be- cause of the work and dedication of Seth Diamond. I feel fortunate to have been given an opportunity to consider him a friend. Mr. President, I yield the floor. f FOREIGN OIL CONSUMED BY U.S.? HERE’S THE WEEKLY BOX SCORE Mr. HELMS. Mr. President, the American Petroleum Institute reports that for the week ending July 26, the United States imported 7,500,000 barrels of oil each day, the same amount im- ported during the same week a year ago. Americans relied on foreign oil for 53.9 percent of their needs last week, and there are no signs that the upward spiral will abate. Before the Persian Gulf war, the United States obtained about 45 percent of its oil supply from foreign countries. During the Arab oil embargo in the 1970’s, foreign oil ac- counted for only 35 percent of Amer- ica’s oil supply. Anybody else interested in restoring domestic production of oil\u2014by U.S. producers using American workers? Politicians had better ponder the eco- nomic calamity sure to occur in Amer- ica if and when foreign producers shut off our supply\u2014or double the already enormous cost of imported oil flowing into the United States\u2014now 7,500,000 barrels a day. f SALUTING THE ALABAMA NSSC DIRECTORS ASSOCIATION Mr. HEFLIN. Mr. President, in 1981, the Alabama Association of Retired Senior Volunteer Program [RSVP] project directors developed a proposal requesting State funding for their projects as a supplement to their Fed- eral budgets. During State budget ne- gotiations, the funding was also ex- tended to Alabama’s Senior Companion and Foster Grandparent projects, marking the beginning of a collabora- tion among senior service corps pro- grams in my State that has continued for 15 years. As a State association known as the Alabama National Senior Service Corps Directors Association, these three programs\u2014RSVP, Senior Com- panion, and Foster Grandparents\u2014have worked together to secure other fund- ing. The Senior Corps’ 35 State projects receive more than a quarter million dollars annually from the State budget to cover costs related to volunteers. These funds have been used to establish several programs, including a public housing mentoring program and train- ing programs in prescription and over- the-counter drug misuse. The funds have also been used to conduct free VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00083 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9292 July 31, 1996 community intergenerational work- shops at sites throughout the State. The association also contracts with the IRS to provide tax counseling services for the elderly. The association is now seeking Med- icaid waiver funding and hopes to soon venture into the arena of private sector funding. Project directors have taken the first step toward seeking private sector support by incorporating as a 501(c)(3) organization. I am pleased to congratulate and commend the Alabama National Senior Service Corps Directors Association for developing an array of outstanding pro- grams and for providing a model that illustrates the power and potential of these kinds of partnerships in pro- viding important services to our senior citizens. f THE MENTALLY ILL AND THE HEALTH INSURANCE BILL Mr. DOMENICI. Mr. President, today I was informed by the chairman of Labor, Health and Human Services, Senator NANCY KASSEBAUM, that the conferees on the health insurance bill were not going to include\u2014with ref- erence to the mentally ill in this coun- try\u2014were not going to include even the compromise which had been offered to them that has been pending for the last 2 or 3 weeks. Frankly, the U.S. Senate voted overwhelmingly to rid this coun- try of a terrible, terrible plight, the discrimination against the mentally ill in insurance coverage in this country. And not only the discrimination but the lack of fairness and parity of cov- erage. I say publicly now to the business community of the United States, in particular the large companies, some of which are self-insured\u2014I do not say this very often\u2014but ”Shame, shame on you. Shame on you.” It is a very sim- ple proposition of parity that is not going to cost very much and will say to the 5 million severely mentally ill Americans and their families that they are not going to be treated any longer like second-rate, if not third-rate, citi- zens. All we asked of them in our com- promise Senator WELLSTONE and I sub- mitted was that if you are going to cover mental illness, if you are going to cover mental illness, that you must include two things: One, the same life- time cap that is total coverage, and the same annual allowable per year as you include in insurance for everyone else. Let me repeat, that amendment did not require any kind of insurance. It did not dictate coinsurance, deduct- ibility or anything. So companies could still tailor mental health coverage. If they are concerned about abuses, they can write the abuses out before they even offer them. All we asked for was the simple prop- osition to get started recognizing the discrimination that is in our current situation. That is to say, those who are mentally ill, do not cover them with $50,000 for life while you cover cancer patients with $1 million, do not cover the mentally ill with a $100,000 total lifetime if you cover those who have tuberculosis or have serious heart trou- ble with $500,000 or $1 million. Just par- ity, total coverage for total lifetime. On an annual basis, do not say to those who are mentally ill, you can only col- lect $10,000 a year maximum where you have $100,000 or $50,000 for others. I truly believe there is a total lack of willingness to understand the nature of this problem. This problem is a blight on America, a blight on our insurance companies, and a blight on the business community who continues to resist moving in the direction of parity. I want to thank those companies in the United States that already cover the mentally ill. And there are many. And I can say they are not running around complaining about the extraor- dinary costs. As a matter of fact, if this amendment, the one we told them we would settle for, were adopted, the increases are almost insignificant ac- cording to the Congressional Budget Office, because there are not a lot of people who will reach those limits. It is just to make sure we do not say to them, you are second-rate citizens. If you have insurance, your parents bought insurance, they cover somebody in their family with schizophrenia, they did not get the shock of their life that after they have spent $100,000 they have no more for the rest of their life and look around at their neighbor who had a heart condition and they get $1 million worth of coverage. No. I am not sure where we are going to end up. But I can say that a counteroffer was proposed, and I regret to say it was tantamount to a whole menu of options. And if you have a menu of options, you are going to get nothing, you are going to dump the mentally ill where they are already being dumped. So I hope that they will reconsider this decision. I, for one, am prepared to look, at this moment, at any way I can\u2014I am not sure I can succeed\u2014but at any way I can to make it hard to pass that bill. And any way I can find to make it impossible to pass that bill, I will do it. I am not sure on this con- ference I will accomplish a great deal, but we will make some noise about it because there is no need for this deci- sion to go this way. If those on the business side will look at the proposed amendment that was offered in lieu of the Senate-passed amendment, if they can come forth and tell me and tell those who support it how it will hurt them, how it is going to cost them, what their problems are, then I would be willing to say indeed they are trying to do something fair. Thus far, I think it is stubbornness, I think it is totally shameful, and I, for one, have been a staunch supporter of making sure we do not put undue bur- dens on business. It is a joke to say they do not want any additional man- dates when the whole bill is a mandate. The whole bill is a mandate. We man- date insurance companies and busi- nesses to pay for people with pre- existing conditions which is going to cost billions of dollars, and they do not talk about that. There is no excuse. I, for one, believe we have made a reasonable case. We have been more than fair. The millions of Americans suffering from this disgraceful dis- crimination are willing to accept a foot in the door, a little bit, just a start, and we get the door slammed right on them. Obviously, we have a lot of work to do, but any conferees that are unaware of the decision to give the mentally ill people of this country nothing in this conference report, maybe they ought to start with the conferees. That is what they are about to do. Mr. WELLSTONE. I say that the Senator from New Mexico spoke with great eloquence and power, and speaks for me. f MESSAGES FROM THE PRESIDENT Messages from the President of the United States were communicated to the Senate by Mr. Thomas, one of his secretaries. EXECUTIVE MESSAGES REFERRED As in executive session the Presiding Officer laid before the Senate messages from the President of the United States submitting sundry nominations which were referred to the Committee on Armed Services. (The nominations received today are printed at the end of the Senate pro- ceedings.) f MESSAGES FROM THE HOUSE At 12:30 p.m., a message from the House of Representatives, delivered by Ms. Goetz, one of its reading clerks, an- nounced that the House has passed the following bill, with an amendment, in which it requests the concurrence of the Senate: S. 640. An act to provide for the conserva- tion and development of water and related resources, to authorize the Secretary of the Army to construct various projects for im- provements to rivers and harbors of the United States, and for other purposes. The message also announced that the House has passed the following bills, in which it requests the concurrence of the Senate: H.R. 3846. An act to amend the Foreign As- sistance Act of 1961 to authorize the provi- sion of assistance for microenterprises, and for other purposes. H.R. 3870. An act to authorize the Agency for International Development to offer vol- untary separation incentive payments to em- ployees of that agency. At 3:58 p.m., a message from the House of Representatives, delivered by Mr. Hays, one of its reading clerks, an- nounced that the House has passed the following bills and joint resolution, in which it requests the concurrence of the Senate: VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00084 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9293 July 31, 1996 H.R. 740. An act to confer jurisdiction on the United States Court of Federal Claims with respect to land claims of Pueblo of Isleta Indian Tribe. H.R. 885. An act to designate the United States Post Office building located at 153 East 110th Street, New York, New York, as the ”Oscar Garcia Rivera Post Office Build- ing.” H.R. 1734. An act to reauthorize the Na- tional Film Preservation Board, and for other purposes. H.R. 1786. An act to regulate fishing in cer- tain waters of Alaska. H.R. 2391. An act to amend the Fair Labor Standards Act of 1938 to provide compen- satory time for all employees. H.R. 2700. An act to designate the building located at 8302 FM 327, Elmendorf, Texas, which houses operations of the United States Postal Service, as the ”Amos F. Longoria Post Office Building”. H.R. 3118. An act to amend title 38, United States Code, to reform eligibility for health care provided by the Department of Veterans Affairs. H.R. 3139. An act to redesignate the United States Post Office building located at 245 Centereach Mall on Middle Country Road in Centereach, New York, as the ”Rose Y. Caracappa United States Post Office Build- ing.” H.R. 3198. An act to reauthorize and amend the National Geologic Mapping Act of 1992, and for other purposes. H.R. 3215. An act to amend title 18, United States Code, to repeal the provision relating to Federal employees contracting or trading with Indians. H.R. 3287. An act to direct the Secretary of the Interior to convey the Crawford National Fish Hatchery to the city of Crawford, Ne- braska. H.R. 3435. An act to make technical amend- ments to the Lobbying Disclosure Act of 1995. H.R. 3546. An act to direct the Secretary of the Interior to convey the Walhalla National Fish Hatchery to the State of South Caro- lina. H.R. 3557. An act to direct the Secretary of the Interior to convey the Marion National Fish Hatchery and the Claude Harris Na- tional Aquacultural Research Center to the State of Alabama. H.R. 3586. An act to amend title 5, United States Code, to strengthen veterans’ pref- erence, to increase employment opportuni- ties for veterans, and for other purposes. H.R. 3680. An act to amend title 18, United States Code, to carry out the international obligations of the United States under the Geneva Conventions to provide criminal pen- alties for certain war crimes. H.R. 3735. An act to amend the Foreign As- sistance Act of 1961 to reauthorize the Devel- opment Fund for Africa under chapter 10 of part 1 of that act. H.R. 3768. An act to designate a United States Post Office to be located in Groton, Massachusetts, as the ”Augusta ‘Gusty’ Hornblower United States Post Office.” H.R. 3815. An act to make technical correc- tions and miscellaneous amendments to trade laws. H.R. 3834. An act to redesignate the Dun- ning Post Office in Chicago, Illinois, as the ”Roger P. McAuliffe Post Office.” H.R. 3867. An act to amend the Develop- mental Disabilities Assistance and Bill of Rights Act to extend the Act, and for other purposes. H.R. 3868. An act to extend certain pro- grams under the Energy Policy and Con- servation Act through September 30, 1996. H.J. Res. 166. Joint resolution granting the consent of Congress to the Mutual Aid Agreement between the city of Bristol, Vir- ginia, and the city of Bristol, Tennessee. The message also announced that the House has agreed to the following con- current resolutions, in which it re- quests the concurrence of the Senate: H. Con. Res. 142. Concurrent resolution re- garding the human rights situation in Mau- ritania, including the continued practice of chattel slavery. H. Con. Res. 155. Concurrent resolution concerning human and political rights and in support of a resolution of the crisis in Kosova. H. Con. Res. 191. Concurrent resolution to recognize and honor the Filipino World War II veterans for their defense of democratic ideals and their important contribution to the outcome of World War II. At 5:54 p.m., a message from the House of Representatives, delivered by Ms. Goetz, on of its reading clerks, an- nounced that the House has passed the following bill, in which it requests the concurrence of the Senate: H.R. 2297. An act to codify without sub- stantive change laws related to transpor- tation and to improve the United States Code. At 7:34 p.m., a message from the House of Representatives, delivered by Ms. Goetz, one of its reading clerks, an- nounced that the House agrees to the committee of conference on the dis- agreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 3734) to provide for reconcili- ation pursuant to section 201(a)(1) of the concurrent resolution on the budg- et for fiscal year 1997. MEASURES REFERRED The following bills were read the first and second times by unanimous con- sent and referred as indicated: H.R. 885. An act to designate the United States Post Office building located at 153 East 110th Street, New York, New York, as the ”Oscar Garcia Rivera Post Office Build- ing”; to the Committee on Governmental Af- fairs. H.R. 1734. An act to reauthorize the Na- tional Film Preservation Board, and for other purposes; to the Committee on the Ju- diciary. H.R. 1786. An act to regulate fishing in cer- tain waters of Alaska; to the Committee on Energy and Natural Resources. H.R. 2297. An act to codify without sub- stantive change laws related to transpor- tation and to improve the United States Code; to the Committee on the Judiciary. H.R. 2700. An act to designate the building located at 8302 FM 327, Elmendorf, Texas, which houses operations of the United States Postal Service, as the ”Amos F. Longoria Post Office Building”; to the Committee on Governmental Affairs. H.R. 3118. An act to amend title 38, United States Code, to reform eligibility for health care provided by the Department of Veterans Affairs; to the Committee on Veterans’ Af- fairs. H.R. 3198. An act to reauthorize and amend the National Geologic Mapping Act of 1992, and for other purposes; to the Committee on Energy and Natural Resources. H.R. 3287. An act to direct the Secretary of the Interior to convey the Crawford National Fish Hatchery to the city of Crawford, Ne- braska; to the Committee on Environment and Public Works. H.R. 3546. An act to direct the Secretary of the Interior to convey the Walhalla National Fish Hatchery to the State of South Caro- lina; to the Committee on Environment and Public Works. H.R. 3557. An act to direct the Secretary of the Interior to convey the Marion National Fish Hatchery and the Claude Harris Na- tional Aquacultural Research Center to the State of Alabama; to the Committee on En- vironment and Public Works. H.R. 3586. An act to amend title 5, United States Code, to strengthen veterans’ pref- erence, to increase employment opportuni- ties for veterans, and for other purposes; to the Committee on Veterans’ Affairs. H.R. 3786. An act to designate a United States Post Office to be located in Groton, Massachusetts, as the ”Augusta ‘Gusty’ Hornblower United States Post Office”; to the Committee on Governmental Affairs. . H.R. 3815. An act to make technical correc- tions and miscellaneous amendments to trade laws; to the Committee on Finance. H.R. 3846. An act to amend the Foreign As- sistance Act of 1961 to authorize the provi- sion of assistance for microenterprises, and for other purposes; to the Committee on For- eign Relations. H.R. 3867. An act to amend the Develop- mental Disabilities Assistance and Bill of Rights Act to extend the Act, and for other purposes; to the Committee on Labor and Human Resources. The following concurrent resolutions were read and referred as indicated: H. Con. Res. 142. Concurrent resolution re- garding the human rights situation in Mau- ritania, including the continued practice of chattel slavery; to the Committee on For- eign Relations. H. Con. Res. 155. Concurrent resolution concerning human and political rights and in support of a resolution of the crisis in Kosova; to the Committee on Foreign Rela- tions. H. Con. Res. 191. Concurrent resolution to recognize and honor the Filipino World War II veterans for their defense of democratic ideals and their important contribution to the outcome of World War II; to the Com- mittee on the Judiciary. The following bill, previously re- ceived from the House of Representa- tives for the concurrence of the Senate, was read the first and second times by unanimous consent and referred as in- dicated: H.R. 3665. An act to transfer to the Sec- retary of Agriculture the authority to con- duct the census of agriculture; to the Com- mittee on Governmental Affairs. f MEASURES PLACED ON THE CALENDAR The following measure was read the first and second times by unanimous consent and placed on the calendar: H.R. 3868. An act to extend certain pro- grams under the Energy Policy and Con- servation Act through September 30, 1996. f MEASURE READ THE FIRST TIME The following measure was read the first time: H.R. 2391. An act to amend the Fair Labor Standards Act of 1938 to provide compen- satory time for all employees. f EXECUTIVE AND OTHER COMMUNICATIONS The following communications were laid before the Senate, together with VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00085 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9294 July 31, 1996 accompanying papers, reports, and doc- uments, which were referred as indi- cated: EC 3573. A communication from the Assist- ant Secretary of Legislative Affairs, Depart- ment of State, transmitting, pursuant to law, the report on the program recommenda- tions of the Riyadh Accountability Review Board; to the Committee on Foreign Rela- tions. f REPORTS OF COMMITTEES The following reports of committees were submitted: By Mr. PRESSLER, from the Committee on Commerce, Science, and Transportation, without amendment: S. 1311. A bill to establish a National Fit- ness and Sports Foundation to carry out ac- tivities to support and supplement the mis- sion of the President’s Council on Physical Fitness and Sports, and for other purposes (Rept. No. 104 340). By Mr. PRESSLER, from the Committee on Commerce, Science, and Transportation, with amendments: S. 1735. A bill to establish the United States Tourism Organization as a non- governmental entity for the purpose of pro- moting tourism in the United States (Rept. No. 104 341). By Mr. PRESSLER, from the Committee on Commerce, Science, and Transportation, without amendment: S. 1840. A bill to amend the Federal Trade Commission Act to authorize appropriations for the Federal Trade Commission (Rept. No. 104 342). By Mr. HATCH, from the Committee on the Judiciary: Report on the Activities of the Committee on the Judiciary of the U.S. Senate During the 103d Congress (Rept. No. 104 343). By Mrs. KASSEBAUM, from the Com- mittee on Labor and Human Resources, with an amendment in the nature of a substitute: S. 1643. A bill to amend the Older Ameri- cans Act of 1965 to authorize appropriations for fiscal years 1997 through 2001, and for other purposes (Rept. No. 104 344). By Mrs. KASSEBAUM, from the Com- mittee on Labor and Human Resources, without amendment: S. Con. Res. 52. A bill to recognize and en- courage the convening of a National Silver Haired Congress (Rept. No. 104 345). By Mr. MCCAIN, from the Committee on Indian Affairs, without amendment: S. 1869. A bill to make certain technical corrections in the Indian Health Care Im- provement Act, and for other purposes (Rept. No. 104 346). f EXECUTIVE REPORTS OF COMMITTEES The following executive reports of committees were submitted: By Mr. PRESSLER, from the Committee on Commerce, Science, and Transportation: Thomas Hill Moore, of Florida, to be a Commissioner of the Consumer Product Safety Commission for a term of 7 years from October 26, 1996. (The above nominations were re- ported with the recommendation that he be confirmed, subject to the nomi- nee’s commitment to respond to re- quests to appear and testify before any duly constituted committee of the Sen- ate.) By Mr. THURMOND, from the Committee on Armed Services: The following-named officers for pro- motion in the Naval Reserve of the United States to the grade indicated under title 10, United States Code, section 5912: UNRESTRICTED LINE To be rear admiral Rear Adm. (1h) James Wayne Eastwood, 000 00 0000, U.S. Naval Reserve. Rear Adm. (1h) John Edwin Kerr, 000 00 0000, U.S. Naval Reserve. Rear Adm. (1h) John Benjamin Totushek, 000 00 0000, U.S. Naval Reserve. RESTRICTED LINE To be rear admiral Rear Adm. (1h) Robert Hulburt Weidman, Jr., 000 00 0000, U.S. Naval Reserve. STAFF CORPS To be rear admiral Rear Adm. (1h) M. Eugene Fussell, 000 00 0000, U.S. Naval Reserve. The following-named officer for appoint- ment to the grade of lieutenant general in the U.S. Marine Corps while assigned to a po- sition of importance and responsibility under the provisions of section 601(a), Title 10, United States Code: To be lieutenant general Maj. Gen. Carlton W. Fulford, Jr., 000 00 0000. The following-named colonel of U.S. Ma- rine Corps for promotion to the grade of brigadier general, under the provisions of section 624 of Title 10, United States Code: To be brigadier general Col. Arnold Fields, 000 00 0000, USMC. The following-named officer, on the active duty list, for promotion to the grade of brig- adier general in the U.S. Marine Corps in ac- cordance with section 5046 of title 10, United States Code: Theodore G. Hess, 000 00 0000. The following-named colonels of the U.S. Marine Corps for promotion to the grade of brigadier general, under the provisions of section 624 of title 10, United States Code: To be brigadier general Col. Robert R. Blackman, Jr., 000 00 0000, USMC. Col. William G. Bowdon III, 000 00 0000, USMC. Col. James T. Conway, 000 00 0000, USMC. Col. Keith T. Holcomb, 000 00 0000, USMC. Col. Harold Mashburn, Jr., 000 00 0000, USMC. Col. Gregory S. Newbold, 000 00 0000, USMC. The following-named officer for appoint- ment to the grade of lieutenant general while assigned to a position of importance and responsibility under title 10, United States Code, section 601: To be lieutenant general Maj. Gen. John B. Sams, Jr., 000 00 0000, U.S. Air Force. The following-named officer for appoint- ment in the Reserve of the Air Force, to the grade indicated, under title 10, United States Code, sections 8374, 12201, and 12212: To be brigadier general Col. Christopher J. Luna, 000 00 0000, Air Na- tional Guard of the United States. The following-named officer for promotion in the Regular Air Force of the United States to the grade indicated under title 10, United States Code, section 624: To be brigadier general Col. Gilbert J. Regan, 000 00 0000, U.S. Air Force. The following-named brigadier generals of the U.S. Marine Corps Reserve for promotion to the grade of major general, under the pro- visions of section 5898 of title 10, United States Code: To be major general Brig. Gen. John W. Hill, 000 00 0000, USMCR. Brig. Gen. Dennis M. McCarthy, 000 00 0000, USMCR. The following-named colonel of the U.S. Marine Corps for promotion to the grade of brigadier general, under the provisions of section 624 of title 10, United States Code: To be brigadier general Col. Guy M. Vanderlinden, 000 00 0000, USMC. The following-named officers for pro- motion in the Regular Army of the United States to the grade indicated under title 10, United States Code, sections 611(a) and 624: To be major general Brig. Gen. Michael W. Ackerman, 000 00 0000. Brig. Gen. Frank H. Akers, Jr., 000 00 0000. Brig. Gen. Leo J. Baxter, 000 00 0000. Brig. Gen. Roy E. Beauchamp, 000 00 0000. Brig. Gen. Kenneth R. Bowra, 000 00 0000. Brig. Gen. Kevin P. Byrnes, 000 00 0000. Brig. Gen. Michael A. Canavan, 000 00 0000. Brig. Gen. Robert T. Clark, 000 00 0000. Brig. Gen. Michael L. Dodson, 000 00 0000. Brig. Gen. Robert B. Flowers, 000 00 0000. Brig. Gen. Peter C. Franklin, 000 00 0000. Brig. Gen. Thomas W. Garrett, 000 00 0000. Brig. Gen. Emmitt E. Gibson, 000 00 0000. Brig. Gen. David L. Grange, 000 00 0000. Brig. Gen. David R. Gust, 000 00 0000. Brig. Gen. Mark R. Hamilton, 000 00 0000. Brig. Gen. Patricia R.P. Hickerson, 000 00 0000. Brig. Gen. Robert R. Ivany, 000 00 0000. Brig. Gen. Joseph K. Kellogg, Jr., 000 00 0000. Brig. Gen. John M. LeMoyne, 000 00 0000. Brig. Gen. John M. McDuffie, 000 00 0000. Brig. Gen. Freddy E. McFarren, 000 00 0000. Brig. Gen. Mario F. Montero, Jr., 000 00 0000. Brig. Gen. Stephen T. Rippe, 000 00 0000. Brig. Gen. John J. Ryneska, 000 00 0000. Brig. Gen. Robert D. Shadley, 000 00 0000. Brig. Gen. Edwin P. Smith, 000 00 0000. Brig. Gen. John B. Sylvester, 000 00 0000. Brig. Gen. Ralph G. Wooten, 000 00 0000. The following-named Army Medical Corps Competitive Category officers for appoint- ment in the Regular Army of the United States to the grade of brigadier general under the provisions of title 10, United States Code, sections 611(a) and 624(c): To be brigadier general Col. Ralph O. Dewitt, Jr., 000 00 0000, U.S. Army. Col. Kevin C. Kiley, 000 00 0000, U.S. Army. Col. Michael J. Kussman, 000 00 0000, U.S. Army. Col. Darrel R. Porr, 000 00 0000, U.S. Army. The following-named Army Medical Corps Competitive Category officer for appoint- ment in the Regular Army of the United States to the grade of brigadier general under the provisions of title 10, United States Code, sections 611(a) and 624(c): To be brigadier general Col. Mack C. Hill, 000 00 0000, U.S. Army. The following-named officer for appoint- ment to the grade of lieutenant general in the U.S. Army while assigned to a position of importance and responsibility under title 10, United States Code, section 601(a): To be lieutenant general Maj. Gen. David L. Benton, 000 00 0000. The following-named officer for appoint- ment to the grade of lieutenant general while assigned to a position of importance and responsibility under title 10, United States Code, section 601: To be lieutenant general Maj. Gen. Frank B. Campbell, 000 00 0000, U.S. Air Force. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00086 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9295 July 31, 1996 The following-named officer for reappoint- ment to the grade of lieutenant general in the U.S. Air Force while assigned to a posi- tion of importance and responsibility under title 10, United States Code, section 601: To be lieutenant general Lt. Gen. Lester L. Lyles, 000 00 0000. The following-named officer for appoint- ment to the grade of lieutenant general in the U.S. Air Force while assigned to a posi- tion of importance and responsibility under title 10, United States Code, section 601: To be lieutenant general Maj. Gen. Patrick K. Gamble, 000 00 0000. The following-named officer for appoint- ment to the grade of lieutenant general in the U.S. Air Force while assigned to a posi- tion of importance and responsibility under title 10, United States Code, section 601: To be lieutenant general Maj. Gen. Roger G. DeKok, 000 00 0000. The following-named officer for reappoint- ment to the grade of lieutenant general while assigned to a position of importance and responsibility under title 10, United States Code, section 601: To be lieutenant general Lt. Gen. Charles T. Robertson, 000 00 0000, U.S. Air Force. The following-named officers for appoint- ment in the Reserve of the Air Force, to the grade indicated, under the provisions of title 10, United States Code, sections 8373, 8374, 12201, and 12212: To be major general Brig. Gen. Keith D. Bjerke, 000 00 0000, Air National Guard. Brig. Gen. Edmond W. Boenisch, Jr., 000 00 0000, Air National Guard. Brig. Gen. Stewart R. Byrne, 000 00 0000, Air National Guard. Brig. Gen. John H. Fenimore V, 000 00 0000, Air National Guard. Brig. Gen. Johnny J. Hobbs, 000 00 0000, Air National Guard. Brig. Gen. Stephen G. Kearney, 000 00 0000, Air National Guard. Brig. Gen. William B. Lynch, 000 00 0000, Air National Guard. To be brigadier general Col. Brian E. Barents, 000 00 0000, Air Na- tional Guard. Col. George P. Christakos, 000 00 0000, Air National Guard. Col. Walter C. Corish, Jr., 000 00 0000, Air Na- tional Guard. Col. Fred E. Ellis, 000 00 0000, Air National Guard. Col. Frederick D. Feinstein, 000 00 0000, Air National Guard. Col. William P. Gralow, 000 00 0000, Air Na- tional Guard. Col. Douglas E. Henneman, 000 00 0000, Air National Guard. Col. Edward R. Jayne II, 000 00 0000, Air Na- tional Guard. Col. Raymond T. Klosowski, 000 00 0000, Air National Guard. Col. Fred N. Larson, 000 00 0000, Air National Guard. Col. Bruce W. Maclane, 000 00 0000, Air Na- tional Guard. Col. Ronald W. Mielke, 000 00 0000, Air Na- tional Guard. Col. Frank A. Mitolo, 000 00 0000. Col. Frank D. Rezac, 000 00 0000. Col. John P. Silliman, Jr., 000 00 0000. Col. George E. Wilson III, 000 00 0000. The following-named officer for reappoint- ment to the grade of admiral in the U.S. Navy while assigned to a position of impor- tance and responsibility under title 10, United States Code, sections 601 and 5033: CHIEF OF NAVAL OPERATIONS To be admiral Adm. Jay L. Johnson, 000 00 0000. The following-named officer for appoint- ment to the grade of general in the U.S. Air Force while assigned to a position of impor- tance and responsibility under title 10 United States Code, section 601: To be general Lt. Gen. Howell M. Estes III, 000 00 0000. The following U.S. Army National Guard officer for promotion in the Reserve of the Army to the grade indicated under title 10, United States Code, sections 3385, 3392 and 12203(a): To be major general Brig. Gen. Gerald A. Rudisill, Jr., 000 00 0000. The following-named officer for promotion in the Regular Air Force of the United States to the grade indicated under title 10, United States Code, section 624: To be brigadier general Col. Garry R. Trexler, 000 00 0000. *Everett Alverez, Jr., of Maryland, to be a Member of the Board of Regents of the Uni- formed Services University of the Health Sciences for a term expiring May 1, 1999. *Alberto Aleman Zubieta, a citizen of the Republic of Panama, to be Administrator of the Panama Canal Commission The following named officer for appoint- ment to the grade of lieutenant general in the U.S. Army while assigned to a position of importance and responsibility under title 10, United States Code, section 601(a): To be lieutenant general Maj. Gen. Eric K. Shinseki, 000 00 0000. The following-named officer for appoint- ment to the grade of vice admiral in the U.S. Navy while assigned to a position of impor- tance and responsibility under title 10 United States Code, section 601: To be vice admiral Rear Adm. (Selectee) Lyle G. Bien, 000 00 0000. (The above nominations were re- ported with the recommendation that they be confirmed.) Mr. THURMOND. Mr. President, for the Committee on Armed Services, I report favorably the attached listing of nominations. Those identified with a double asterisk (**) are to lie on the Secretary’s desk for the information of any Senator, since these names have already appeared in the RECORDS of May 17, 1996, June 3, 18, and July 9, 11, 1996, and ask unanimous consent, to save the expense of reprinting on the Executive Calendar, that these nomi- nations lie at the Secretary’s desk for the information of Senators. The PRESIDING OFFICER. Without objection, it is so ordered. (The nominations ordered to lie on the Secretary’s desk were printed in the RECORDS of May 17, 1996, June 3, 18, and July 9, 11, 1996, at the end of the Senate proceedings.) **In the Air Force there are 31 promotions to the grade of lieutenant colonel (list begins with Gregory O. Allen) (Reference No. 1132). **In the Navy there are 170 promotions to the grade of captain (list begins with Wil- liam S. Adsit) (Reference No. 1133). **In the Navy there are 304 promotions to the grade of captain (list begins with Johnny P. Albus) (Reference No. 1134). **In the Air Force there are 2,525 pro- motions to the grade of lieutenant colonel and below (list begins with Derrick K. Ander- son) (Reference No. 1135). In the Navy there are 317 promotions to the grade of captain (list begins with Mi- chael P. Agor) **In the Army there is 1 promotion to the grade of lieutenant colonel (Wayne E. Ander- son) (Reference No. 1165). **In the Air Force there are 13 promotions to the grade of colonel and below (list begins with Stephen D. Chiabotti) (Reference No. 1188). **In the Marine Corps there are 2 pro- motions to the grade of lieutenant colonel and below (list begins with Richard L. West) (Reference No. 1189). **In the Navy there are 10 appointments to the grade of ensign (list begins with Anthony L. Evangelista) (Reference No. 1190). **In the Marine Corps there is 1 post- humous appointment to the grade of lieuten- ant colonel (John J. Canney) (Reference No. 1195). **In the Army there are 200 promotions to the grade of lieutenant colonel (list begins with Ann L. Bagley) (Reference No. 1196). **In the Army there are 423 promotions to the grade of major (list begins with James W. Baik) (Reference No. 1197). Total: 3,742. f INTRODUCTION OF BILLS AND JOINT RESOLUTIONS The following bills and joint resolu- tions were introduced, read the first and second time by unanimous con- sent, and referred as indicated: By Mr. WYDEN (for himself, Ms. SNOWE, and Mrs. BOXER): S. 2004. A bill to modify certain provisions of the Health Care Quality Improvement Act of 1986; to the Committee on Labor and Human Resources. By Mr. WYDEN: S. 2005. A bill to prohibit the restriction of certain types of medical communications be- tween a health care provider and a patient; to the Committee on Labor and Human Re- sources. By Mr. HATCH (for himself, Mr. BIDEN, Mr. THURMOND, and Mr. GRASSLEY): S. 2006. A bill to clarify the intent of Con- gress with respect to the Federal carjacking prohibition; read the first time. By Mr. BIDEN (for himself, Mr. HATCH, Mr. LEAHY, Mr. KOHL, Mr. GRASSLEY, Mrs. BOXER, Ms. MIKULSKI, and Ms. MOSELEY-BRAUN): S. 2007. A bill to clarify the intent of Con- gress with respect to the Federal carjacking prohibition; read the first time. By Mr. DASCHLE (for himself, Mr. ROCKEFELLER, Mr. KERRY, Mr. WELLSTONE, Ms. MIKULSKI, Mr. BYRD, Mr. DODD, Mr. CONRAD, Mr. INOUYE, Mr. PELL, Mr. SIMON, Mr. FEINGOLD, Mr. BREAUX, Mrs. BOXER, Mr. DOR- GAN, Mrs. FEINSTEIN, Mr. GLENN, Mr. HARKIN, Mr. ROBB, and Mr. KENNEDY): S. 2008. A bill to amend title 38, United States Code, to provide benefits for certain children of Vietnam veterans who are born with spina bifida, and for other purposes; to the Committee on Veterans’ Affairs. By Mr. ASHCROFT: S.J. Res. 58. A joint resolution proposing an amendment to the Constitution of the United States relative to granting power to the States to propose constitutional amend- ments; to the Committee on the Judiciary. f STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mr. WYDEN (for himself, Ms. SNOWE, and Mrs. BOXER): VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00087 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9296 July 31, 1996 S. 2004. A bill to modify certain pro- visions of the Health Care Quality Im- provement Act of 1986; to the Com- mittee on Labor and Human Resources. By Mr. WYDEN: S. 2005. A bill to prohibit the restric- tion of certain types of medical com- munications between a health care pro- vider and a patient; to the Committee on Labor and Human Resources. THE PATIENT COMMUNICATIONS PROTECTION ACT OF 1996 Mr. WYDEN. Mr. President, I rise today to introduce two new bills which I believe will help more fully inform patients and consumers about the health care choices they face, and safe- guard the most critical relationship be- tween care giver and patient. The first bill, which I introduce with my colleagues Senator SNOWE and Sen- ator BOXER, is the Health Care Quality Improvements Act of 1996. It amends and improves the 1986 public law which created the national practitioner databank, an informational resource maintained by the Department of Health and Human Services which is a compendium of State disciplinary ac- tions and civil malpractice case judg- ments against caregivers. As of this year, some 86,000 caregivers are listed in this taxpayer-supported databank. Currently, this informational resource is accessible only by hospitals, insur- ance plans, and State boards of medi- cine and health care licensing. The leg- islation introduced by Senator SNOWE and me, today, would for the first time allow public access to critically impor- tant databank records. Caregivers who have had at least three reportable inci- dents in their files would have their en- tire databank records opened to the public. This legislation also would cre- ate an Internet site on the World Wide Web allowing easier access for publicly accessible information. The second bill, the Patient Commu- nications Protection Act of 1996, would make illegal provisions in some con- tracts between caregivers and health plans which restrict communications between caregivers and their patients. Too often, I believe, these contract pro- visions limit the free and necessary communications of information to pa- tients regarding their medical condi- tion and all possible modalities of treatment. This legislation, while up- holding the right of plans to work with physicians to improve the overall qual- ity of care within a health plan, clearly restricts plans from impeding the free flow of medical information between State-licensed caregivers and patient. The Health Care Quality Improve- ments Act is endorsed by a number of groups including Families USA, Con- sumer Action, the National Associa- tion of Health Data Organizations, and the United Seniors Health Cooperative. The Patient Communications Protec- tion Act is supported by the Oregon Medical Association, the American As- sociation of Retired Persons, the Cen- ter for Patient Advocacy, Citizen Ac- tion, the Consumers Union, and the American College of Emergency Physi- cians. Mr. President, I ask unanimous con- sent that the text of the bills be print- ed in the RECORD. There being no objection, the bills were ordered to be printed in the RECORD, as follows: S. 2004 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ”Health Care Quality Improvement Act Amendments of 1996”. SEC. 2. STANDARDS FOR PROFESSIONAL REVIEW ACTIONS. Section 412(a) of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11112(a)) is amended in the matter after and below paragraph (4) by adding at the end the fol- lowing sentence: ”A motion for summary judgment that such standards have been met shall be granted unless, considering the evi- dence in the light most favorable to the op- posing party, a reasonable finder of fact could conclude that the presumption has been so rebutted. The decision on such a mo- tion may be appealed as of right, without re- gard to whether the motion is granted or de- nied, and the courts of appeals (other than the United States Court of Appeals for the Federal Circuit) have jurisdiction of appeals from such decisions of the district courts.”. SEC. 3. REQUIRING REPORTS ON MEDICAL MAL- PRACTICE DATA. (a) IN GENERAL.\u2014Section 421 of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11131) is amended\u2014 (1) by striking subsections (a) and (b); (2) by redesignating subsections (c) and (d) as subsections (d) and (e), respectively; and (3) by inserting before subsection (d) (as so redesignated) the following subsections: ”(a) IN GENERAL.\u2014 ”(1) REQUIREMENT OF REPORTING.\u2014Subject to the subsequent provisions of this sub- section, each person or entity which makes payment under a policy of insurance, self-in- surance, or otherwise in settlement (or par- tial settlement) of, or in satisfaction of a judgment in, a medical malpractice action or claim shall report, in accordance with sec- tion 424, information respecting the payment and circumstances thereof. ”(2) PAYMENTS BY PRACTITIONERS.\u2014The persons to whom the requirement of para- graph (1) applies include a physician or other licenses healthcare practitioner who makes a payment described in such paragraph and whose acts or omissions are the basis of the action or claim involved. The preceding sen- tence is subject to paragraph (3). ”(3) REFIND OF FEES.\u2014With respect to a physician or other licensed health care prac- titioner whose acts or omissions are the basis of an action or claim described in para- graph (1), the requirement of such paragraph shall not apply to a payment described in such paragraph if\u2014 ”(A) the payment is made by the physician or practitioner as a refund of fees for the health services involved, and ”(B) the payment does not exceed the amount of the original charge for the health services. ”(4) DEFINITION OF ENTITY AND PERSON.\u2014 For purposes of this section, the term ‘enti- ty’ includes the Federal Government, any State or local government, and any insur- ance company or other private entity; and the term ‘person’ includes Federal officers and employees. ”(b) INFORMATION TO BE REPORTED.\u2014The information to be reported under subsection (a) by a person or entity regarding a pay- ment and an action or claim includes the fol- lowing: ”(1)(A) The name of each physician or other licensed health care practitioner whose acts or omissions were the basis of the ac- tion or claim; and (to the extent authorized under title II of the Social Security Act) the social security account number assigned to the physician or practitioner. ”(B) The medical field of the physician or practitioner, including as applicable the medical specialty. ”(C) The date on which the physician or practitioner was first licensed in the medical field involved, and the number of years the physician or practitioner has been practicing in such field. ”(D) If the physician or practitioner could not be identified for purposes of subpara- graph (A)\u2014 ”(i) a statement of such fact and an expla- nation of the inability to make the identi- fication, and ”(ii) the name of the hospital or other health services organization (as defined in section 431) for whose benefit the payment was made. ”(2) The amount of the payment. ”(3) The name (if known) of any hospital or other health services organization with which the physician or practitioner is affili- ated or associated. ”(4)(A) A statement that describes the acts or omissions and injuries or illnesses upon which the action or claim was based, that specifies whether an action was filed, and if an action was filed, that specifies whether the action was a class action. ”(B) A statement by the physician or prac- titioner regarding the action or claim, if the physician or practitioner elects to make such a statement. ”(C) If the payment was made without the consent of the physician or practitioner, a statement specifying such fact and the rea- sons underlying the decision to make the payment without such consent. ”(5) Such other information as the Sec- retary determines is required for appropriate interpretation of information reported under this section. ”(c) CERTAIN REPORTING CRITERIA; NOTICE TO PRACTITIONERS.\u2014 ”(1) REPORTING CRITERIA.\u2014The establishing criteria under section 424(a) for reports under this section, the Secretary shall estab- lish criteria regarding statements under sub- section (b)(4). Such criteria shall include\u2014 ”(A) criteria regarding the length of each of the statements, ”(B) criteria regarding the notice required by paragraph (2) of this subsection, and ”(C) such other criteria as the Secretary determines to be appropriate. ”(2) NOTICE OF OPPORTUNITY TO MAKE STATEMENT.\u2014In the case of an entity that prepares a report under subsection (a)(1) re- garding a payment and an action or claim, the entity shall notify any physician or prac- titioner identified under subsection (b)(1)(A) of the opportunity to make a statement under subsection (b)(4)(B). Criteria under paragraph (1)(B) of this subsection shall in- clude criteria regarding the date by which the reporting entity is to provide the notice and the date by which the physician or prac- titioner is to submit the statement to the entity.”. (b) DEFINITION OF HEALTH SERVICES ORGA- NIZATION.\u2014Section 431 of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11151) is amended\u2014 (1) by redesignating paragraphs (5) through (14) as paragraphs (6) through (15), respec- tively; and VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00088 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9297 July 31, 1996 (2) by inserting after paragraph (4) the fol- lowing paragraph: ”(5) The term ‘health services organiza- tion’ means an entity that, directly or through contracts, provides health services. Such term includes hospitals; health mainte- nance organizations and other health plans; and health care entities (as defined in para- graph (4)).”. (c) CONFORMING AMENDMENTS.\u2014 (1) IN GENERAL.\u2014The Health Care Quality Improvement Act of 1986 (42 U.S.C. 11101 et seq.) is amended\u2014 (A) in section 411(a)(1), in the matter pre- ceding subparagraph (A), by striking ”431(9)” and inserting ”431(10)”; (B) in section 421(d) (as redesignated by subsection (a)(2) of this section), by inserting ”person or” before ”entity”; (C) in section 422(a)(2)(A), by inserting be- fore the comma at the end the following: ”, and (to the extent authorized under title II of the Social Security Act) the social secu- rity account number assigned to the physi- cian”; and (D) in section 423(a)(3)(A), by inserting be- fore the comma at the end the following: ”, and (to the extent authorized under title II of the Social Security Act) the social secu- rity account number assigned to the physi- cian or practitioner”. (2) APPLICABILITY OF REQUIREMENTS TO FED- ERAL ENTITIES.\u2014 (A) Section 432 of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11152) is amended\u2014 (i) by striking subsection (b); and (ii) by redesignating subsection (c) as sub- section (b). (B) Section 432 of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11133) is amended by adding at the end the following subsection: ”(e) APPLICABILITY TO FEDERAL FACILITIES AND PHYSICIANS.\u2014 ”(1) IN GENERAL.\u2014Subsection (a) applies to Federal health facilities (including hos- pitals) and actions by such facilities regard- ing the competence or professional conduct of Federal physicians to the same extent and in the same manner as such subsection ap- plies to health care entities and professional review actions. ”(2) RELEVANT BOARD OF MEDICAL EXAM- INERS.\u2014For purposes of paragraph (1), the Board of Medical Examiners to which a Fed- eral health facility is to report is the Board of Medical Examiners of the State within which the facility is located.”. (C) Section 425 of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11135) is amended by adding at the end the following subsection: ”(d) APPLICABILITY TO FEDERAL HOS- PITALS.\u2014This section applies to Federal hos- pitals to the same extent and in the same manner as such subsection applies to other hospitals.”. SEC. 4. REPORTING OF SANCTIONS TAKEN BY BOARDS OF MEDICAL EXAMINERS. Section 422(a) of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11132(a)) is amended\u2014 (1) in paragraph (1)(A), by striking ”which revokes or suspends” and inserting ”which denies, revokes, or suspends”; and (2) in paragraph (2)\u2014 (A) in subparagraph (B), by striking ”(if known)” and all that follows and inserting ”for the action described in paragraph (1)(A) that was taken with respect to the physician or, if known, for the surrender of the li- cense,”; (B) by redesignating subparagraph (C) as subparagraph (E); and (C) by inserting after subparagraph (B) the following subparagraphs: ”(C) the medical field of the physician, if known, including as applicable the medical specialty, ”(D) the date on which the physician was first licensed in the medical field, and the number of years the physician has been prac- ticing in such field, if known, and”. SEC. 5. REPORTING OF CERTAIN PROFESSIONAL REVIEW ACTIONS TAKEN BY HEALTH CARE ENTITIES. Section 423(a)(3) of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11133(a)(3)) is amended\u2014 (1) in subparagraph (B), by striking ”and” after ”surrender,”; (2) by redesignating subparagraph (C) a subparagraph (E); and (3) by inserting after subparagraph (B) the following subparagraphs: ”(C) the medical field of the physician, if known, including as applicable the medical specialty, ”(D) the date on which the physician was first licensed in the medical field, and the number of years the physician has been prac- ticing in such field, if known, and”. SEC. 6. FORM OF REPORTING. Section 424 of the Health Care Quality Im- provement Act of 1986 (42 U.S.C. 11134) is amended by adding at the end the following subsection: ”(d) ADDITIONAL REQUIREMENTS.\u2014Not later than 30 days after the effective date for this subsection under section 11 of the Health Care Quality Improvement Act Amendments of 1996, the information reported under sec- tions 421, 422(a), and 423(b) shall be available (to persons and entities authorized in this Act to receive the information) in accord- ance with the following: ”(1) The methods of organizing the infor- mation shall include organizing by medical field (and as applicable by medical spe- cialty). ”(2) With respect to medical malpractice actions reported under section 421(b)(4)(A), the methods of organizing shall specify whether the action was a class action.”. SEC. 7. DUTY TO OBTAIN INFORMATION. Part B of the Health Care Quality Improve- ment Act of 1986 (42 U.S.C. 11131 et seq.) is amended by inserting after section 425 the following section: ”SEC. 425A. DUTY OF BOARDS OF MEDICAL EXAM- INERS TO OBTAIN INFORMATION. ”(a) IN GENERAL.\u2014Effective 2 years after the date of the enactment of the Health Care Quality Improvement Act Amendments of 1996, it is the duty of each Board of Medical Examiners to request from the Secretary (or the agency designated under section 424(b)) information reported under this part con- cerning a physician\u2014 ”(1) at the time the physician submits the initial application for a physician’s license in the State involved, and ”(2) at each time the physician submits an application to continue in effect the license, subject to subsection (d). A Board of Medical Examiners may request information reported under this part con- cerning a physician at other times. ”(b) FAILURE TO OBTAIN INFORMATION.\u2014 With respect to an action for mandamus or other cause of action against a Board of Med- ical Examiners, a Board which does not re- quest information respecting a physician as required under subsection (a) is presumed to have knowledge of any information reported under this part to the Secretary with respect to the physician. ”(c) RELIANCE ON INFORMATION PROVIDED.\u2014 With respect to a cause of action against a Board of Medical Examiners, each Board of Medical Examiners may rely upon informa- tion provided to the Board under this title, unless the Board has knowledge that the in- formation provided was false. ”(d) STATE OPTION REGARDING CONTINU- ATION OF LICENSES.\u2014 ”(1) ESTABLISHMENT OF ELECTRONIC SYSTEM FOR TRANSMISSION OF DATA.\u2014After consulta- tion with the States, the Secretary shall es- tablish a system for electronically transmit- ting information under this part to States that elect to install equipment necessary for participation in the system. The system shall possess the capability to receive trans- missions of data from such States. ”(2) STATE OPTION REGARDING ELECTRONIC SYSTEM.\u2014With respect to compliance with subsection (a)(2) (relating to applications to continue in effect physicians’ licenses), if a State is participating in the system under paragraph (1) and provides the Board of Med- ical Examiners of the State with access to the system, the Board may elect, in lieu of complying with subsection (a)(2), to comply with paragraph (3) of this subsection. ”(3) DESCRIPTION OF OPTION.\u2014For purposes of paragraph (2), a Board of Medical Exam- iners is complying with this paragraph if\u2014 ”(A) through the system under paragraph (1), the Board annually transmits to the Sec- retary (or the agency designated under sec- tion 424(b)) data identifying all individuals who hold a valid physician’s license issued by the Board, without regard to whether the licenses are expiring, and ”(B) after receiving from the Secretary (or such agency) a list of physicians under para- graph (4)(B), the Board complies with para- graph (5). ”(4) IDENTIFICATION BY SECRETARY OF REL- EVANT PHYSICIANS.\u2014After receiving data under paragraph (3)(A) from a Board of Med- ical Examiners, the Secretary (or the agency designated under section 424(b)) shall\u2014 ”(A) from among the physicians identified through the data, determine which of such physicians has been the subject of informa- tion reported under this part, and the State in which the incidents involved occurred, and ”(B) provide to the Board, through the sys- tem under paragraph (1), a list of the physi- cians who have been such subjects, which list specifies for each physician the States in which the incidents involved occurred. ”(5) REQUEST BY STATE OF INFORMATION ON RELEVANT PHYSICIANS.\u2014For purposes of para- graph (3)(B), a Board of Medical Examiners of a State is complying with this paragraph if, after receiving the list of physicians under paragraph (4)(B), the Board promptly\u2014 (A) identifies which of the physicians has had, for purposes of paragraph (4), an inci- dent in another State, and (B) requests for the Secretary (or the agen- cy) information reported under this part con- cerning each of the physicians so identi- fied.”. SEC. 8. ADDITIONAL PROVISIONS REGARDING ACCESS TO INFORMATION; MIS- CELLANEOUS PROVISIONS. (a) ACCESS TO INFORMATION.\u2014Section 427(a) of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11137(a)) is amended to read as follows: ”(a) ACCESS REGARDING LICENSING, EM- PLOYMENT, AND CLINICAL PRIVILEGES.\u2014The Secretary (or the agency designated under section 424(b)) shall, upon request, provide information reported under this part con- cerning a physician or other licensed health care practitioner to\u2014 ”(1) State licensing boards, and ”(2) hospitals and other health services or- ganizations\u2014 ”(A) that have entered (or may be enter- ing) into an employment or affiliation rela- tionship with the physician or practitioner, or ”(B) to which the physician or practitioner has applied for clinical privileges or appoint- ment to the medical staff.”. (b) FEES.\u2014Section 427(b)(4) of the Health Care Quality Improvement Act of 1986 (42 VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00089 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9298 July 31, 1996 U.S.C. 11137(b)(4)) is amended to read as fol- lows: ”(4) FEES.\u2014In disclosing information under subsection (a) or section 426, the Secretary may impose fees in amounts reasonably re- lated to the costs of carrying out the duties of the Secretary regarding the information reported under this part (including the func- tions specified in section 424(b) with respect to the information), except that a fee may not be imposed for providing a list under sec- tion 425A(d)(4)(B) to any Board of Medical Examiners. Such fees are available to the Secretary (or, in the Secretary’s discretion, to the agency designated under section 424(b)) to cover such costs. Such fees remain available until expended.”. (c) ADDITIONAL DISCLOSURES OF INFORMA- TION.\u2014Section 427 of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11137) is amended by adding at the end the following subsection: ”(e) AVAILABILITY OF INFORMATION TO PUB- LIC.\u2014 ”(1) IN GENERAL.\u2014Not later than 30 days after the effective date for this subsection under section 11 of the Health Care Quality Improvement Act Amendments of 1996, and every 3 months thereafter, the Secretary shall, except as provided in paragraph (2), make available to the public all information reported under sections 421, 422(a), and 423(b). For such purpose, the information shall be published as a separate document whose principal topic is such information, and in addition the information shall be made available through the method described in paragraph (3). ”(2) LIMITATIONS.\u2014In the case of a physi- cian or other licensed health care practi- tioner with respect to whom one or more in- cidents have been reported under sections 421, 422(a), and 423(b), the following applies: ”(A) Information may not be made avail- able under paragraph (1) if, subject to sub- paragraph (B), the aggregate number of dis- crete incidents reported under such sections is not more than 2. ”(B) A discrete incident reported under section 421 may not be counted under sub- paragraph (A) if the payment for the medical malpractice action or claim involved was less than $25,000. ”(C) If the number of discrete incidents counted under subparagraph (A) is 3 or more, the resulting availability of information under paragraph (1) with respect to such practitioner shall include information re- ported on all the discrete incidents that were so counted. Such availability may not in- clude information on any incident not count- ed by reason of subparagraph (B). ”(D) Of the information reported under section 421, the following information may not be made available under paragraph (1) (regardless of the number of discrete inci- dents counted under subparagraph (A) and regardless of the amount of the payments in- volved): ”(i) The social security account number of the physician or practitioner. ”(ii) Information disclosing the identity of any patient involved in the incidents in- volved. ”(iii) With respect to information that the Secretary requires under section 421(b)(5) (if any)\u2014 ”(I) the home address of the physician or practitioner, and ”(II) the number assigned to the physician or practitioner by the Drug Enforcement Ad- ministration. ”(iv) Information not required to be re- ported under such section. ”(3) USE OF INTERNET.\u2014For purposes of paragraph (1), the method described in this paragraph is to make the information in- volved available to the public through the telecommunications medium known as the World Wide Web of the Internet. The Sec- retary, acting through the Administrator of the Health Resources and Services Adminis- tration, shall provide for the establishment of a site on such medium, and shall update the information maintained through such medium not less frequently than once every 3 months. ”(4) DISSEMINATION; FEES.\u2014The Secretary shall disseminate each publication under paragraph (1) to public libraries without charge. In providing the publication to other entities, and in making information avail- able under paragraph (3), the Secretary may impose a fee reasonably related to the costs of the Secretary in carrying out this sub- section. Such fees are available to the Sec- retary (or, in the Secretary’s discretion, to the agency designated under section 424(b)) to cover such costs. Such fees remain avail- able until expended.”. (d) CONFORMING AMENDMENTS.\u2014Section 427 of the Health Care Quality Improvement Act of 1986 (42 U.S.C. 11137) is amended\u2014 (1) in subsection (b)(1), in the first sen- tence, by striking ”Information reported” and inserting the following: ”Except for in- formation disclosed under subsection (e), in- formation reported”; and (2) in the heading for the section, by strik- ing ”MISCELLANEOUS PROVISIONS” and inserting the following: ”ADDITIONAL PRO- VISIONS REGARDING ACCESS TO INFOR- MATION; MISCELLANEOUS PROVISIONS”. SEC. 9. OTHER MATTERS. The Health Care Quality Improvement Act of 1986 (42 U.S.C. 11101 et seq.) is amended\u2014 (1) by redesignating part C as part D; and (2) by inserting after part B the following part: ”PART C\u2014OTHER MATTERS REGARDING IMPROVEMENT OF HEALTH CARE QUAL- ITY ”SEC. 428. PROHIBITION AGAINST SETTLEMENT WITHOUT CONSENT OF PRACTI- TIONER. ”(a) PROHIBITION.\u2014With respect to a physi- cian or other licensed health care practi- tioner whose acts or omissions are the basis of a medical malpractice action or claim, an entity may not make a payment described in section 421(a)(1) without the written consent of the physician or practitioner, subject to subsection (b). ”(b) EXCEPTIONS.\u2014Subsection (a) shall not apply with respect to a payment by an entity regarding an action or claim, subject to sub- section (c)\u2014 ”(1) if the payment is made in satisfaction of a judgment in a court of competent juris- diction, ”(2) if, with respect to the action or claim, the physician or other licensed health care practitioner involved enters a process of al- ternative dispute resolution, and the process has been concluded or any of the individuals involved has terminated participation in the process, ”(3)(A) the entity delivers directly, or makes a reasonable effort to deliver through the mail, a written notice to the physician or practitioner involved providing the infor- mation specified in subsection (c), and ”(B) a 30-day period elapses, at the conclu- sion of which the entity has a reasonable be- lief that the physician or practitioner does not object to the payment. ”(c) CRITERIA REGARDING NOTICE.\u2014For pur- poses of subsection (b)(3) regarding a written notice to a physician or practitioner\u2014 ”(1) the notice shall be considered to have been delivered if the notice was delivered to the home or business address of the physi- cian or practitioner, and to the attorney (if any) representing the physician or practi- tioner in the action or claim involved, ”(2) the notice shall be considered to have been delivered directly if the notice was de- livered personally by the entity involved or by an agent of the entity, ”(3) the entity shall be considered to have made a reasonable effort to deliver the no- tice through the mail if the entity provided the notice through certified mail, with re- turn receipt requested, ”(4) the information specified in this para- graph for the notice is that the entity in- tends to make the payment involved; that the physician or practitioner has a legal right to prohibit the payment; and that such right expires in 30 days, with a specification of the date on which the right expires, and ”(5) the 30-day period begins on the date on which the notice is delivered directly to the physician or practitioner, or on the seventh day after the date on which the notice is posted, as the case may be. ”(d) CIVIL MONEY PENALTY.\u2014An entity that makes a payment in violation of sub- section (a) shall be subject to a civil money penalty of not more than $10,000 for each such payment involved. Such penalty shall be imposed and collected in the same manner as civil money penalties under subsection (a) of section 1128A of the Social Security Act are imposed and collected under that sec- tion. ”SEC. 429. EMPLOYMENT TERMINATION OF PHY- SICIAN. ”(a) REQUIREMENT OF ADEQUATE NOTICE AND HEARING.\u2014 ”(1) IN GENERAL.\u2014A health services organi- zation may not terminate the employment of a physician, and may not terminate a con- tract with a physician for the provision of health services, unless adequate notice and hearing procedures have been afforded the physician involved. ”(2) APPLICABILITY.\u2014Section 412(a)(3) ap- plies in lieu of paragraph (1) in the case of an employment termination that is a profes- sional review action. (With respect to the preceding sentence, paragraph (1) does apply to an employment termination that is an ac- tion described in subparagraph (A) of section 431(10) or in the other subparagraphs of such section.) ”(b) SAFE HARBOR.\u2014 ”(1) IN GENERAL.\u2014A health services organi- zation is deemed to have met the adequate notice and hearing requirement of subsection (a) with respect to the employment of, or a contract of, a physician if the conditions de- scribed in paragraphs (2) through (4) are met (or are waived voluntarily by the physician). ”(2) NOTICE OF PROPOSED ACTION.\u2014Condi- tions under paragraph (1) are that the physi- cian involved has been given notice stating\u2014 ”(A)(i) that the health services organiza- tion proposes to take action to terminate the employment or contract, ”(ii) reasons for the proposed action, ”(B)(i) that the physician has the right to request a hearing on the proposed action, ”(ii) any time limit (of not less than 30 days) within which to request such a hear- ing, and ”(C) a summary of the rights in the hear- ing under paragraph (4). ”(3) NOTICE OF HEARING.\u2014Conditions under paragraph (1) are that, if a hearing is re- quested on a timely basis under paragraph (2)(B), the physician involved must be given notice stating\u2014 ”(A) the place, time, and date, of the hear- ing, which date shall not be less than 30 days after the date of the notice, and ”(B) a list of the witnesses (if any) ex- pected to testify at the hearing on behalf of the health services organization. ”(4) CONDUCT OF HEARING AND NOTICE.\u2014Con- ditions under paragraph (1) are that, if a hearing is requested on a timely basis under paragraph (2)(B)\u2014 VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00090 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9299 July 31, 1996 ”(A) subject to subparagraph (B), the hear- ing shall be held (as determined by the health services organization)\u2014 ”(i) before arbitrator mutually acceptable to the physician involved and the health services organization, ”(ii) before a hearing officer who is ap- pointed by the organization and who is not in direct economic competition with the physician, or ”(iii) before a panel of individuals who are appointed by the organization and are not in direct economic competition with the physi- cian, ”(B) the right to the hearing may be for- feited if the physician fails, without good cause, to appear, ”(C) in the hearing the physician has the right\u2014 ”(i) to representation by an attorney or other person of the physician’s choice, ”(ii) to have a record made of the pro- ceedings, copies of which may be obtained by the physician upon payment of any reason- able charges associated with the preparation thereof, ”(iii) to call, examine, and cross-examine witnesses, ”(iv) to present evidence determined to be relevant by the hearing officer, regardless of its admissibility in a court of law, and ”(v) to submit a written statement at the close of the hearing, and ”(D) upon completion of the hearing, the physician has the right\u2014 ”(i) to receive the written recommendation of the arbitrator, officer, or panel, including a statement of the basis for the rec- ommendations, and ”(ii) to receive a written decision of the health services organization, including a statement of the basis for the decision. ”(c) RULE OF CONSTRUCTION.\u2014A health services organization’s failure to meet the conditions described in paragraphs (2) through (4) of subsection (b) shall not, in itself, constitute failure to meet the stand- ards of subsection (a).”. SEC. 10. DEFINITIONS. Section 431(6) of the Health Care Quality Improvement Act of 1986, as redesignated by section 3(b)(1) of this Act, is amended by in- serting before the period the following: ”(ex- cept that such term means an institution de- scribed in such paragraph (1) (without regard to such paragraph (7)) if, under applicable State or local law, the institution is per- mitted to operate without being licensed or otherwise approved as a hospital)”. SEC. 11. EFFECTIVE DATES. (a) INCORPORATION OF TEXT OF AMEND- MENTS.\u2014The amendments described in this Act are made upon the date of the enactment of this Act. (b) SUBSTANTIVE EFFECT.\u2014Except as pro- vided in subsection (c)(1) and subsection (d), and except as otherwise provided in this Act\u2014 (1) the amendments made by this Act take effect upon the expiration of the 1-year pe- riod beginning on the date of the enactment of this Act; and (2) prior to the expiration of such period, the Health Care Quality Improvement Act of 1986, as in effect on the day before such date of enactment, continues in effect. (c) REGULATIONS.\u2014 (1) IN GENERAL.\u2014With respect to the amendments made by this Act, the Secretary of Health and Human Services may issue reg- ulations pursuant to such amendments be- fore the expiration of the period specified in subsection (b)(1), and may otherwise take ap- propriate action before the expiration of such period to prepare for the responsibil- ities of the Secretary to the amendments. (2) ABSENCE OF FINAL RULE.\u2014The final rule for purposes of paragraph (1) may not take effect before the expiration of the period specified in subsection (b)(1), and the absence of such a rule upon such expiration does not affect the provisions of subsection (b). (d) TRANSITIONAL PROVISIONS REGARDING MALPRACTICE PAYMENTS BY PERSONS.\u2014With respect to the reporting of information under section 421 of the Health Care Quality Im- provement Act of 1986, the following applies: (1) The requirement of reporting by per- sons under section 421(a)(1) of such Act (as amended by section 3(a) of this Act) takes ef- fect 180 days after the date of the enactment of this Act. (2) The requirement of reporting by per- sons applies to payments under such section 421(a)(1) made before, on, or after such date of enactment. (3)(A) The information received by the Sec- retary of Health and Human Services on or before August 27, 1993, pursuant to regula- tions requiring reports from persons (in addi- tion to reports from entities) shall be main- tained in the same manner as the informa- tion was maintained prior to such date, and shall be available in accordance with the regulations in effect under such Act prior to such date (which regulations remain in effect unless a provision of this Act takes effect pursuant to this section and requires other- wise). (B) Subparagraph (A) takes effect on the date of the enactment of this Act. S. 2005 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; FINDINGS. (a) SHORT TITLE.\u2014This Act may be cited as the ”Patient Communications Protection Act of 1996”. (b) FINDINGS.\u2014Congress finds the fol- lowing: (1) Patients need access to all relevant in- formation to make appropriate decisions, with their physicians, about their health care. (2) Restrictions on the ability of physicians to provide full disclosure of all relevant in- formation to patients making health care decisions violate the principles of informed consent and practitioner ethical standards. (3) The offering and operation of health plans affect commerce among the States. Health care providers located in one State serve patients who reside in other States as well as that State. In order to provide for uniform treatment of health care providers and patients among the States, it is nec- essary to cover health plans operating in one State as well as those operating among the several States. SEC. 2. PROHIBITION OF INTERFERENCE WITH CERTAIN MEDICAL COMMUNICA- TIONS. (a) IN GENERAL.\u2014 (1) PROHIBITION OF CERTAIN PROVISIONS.\u2014 Subject to paragraph (2), an entity offering a health plan (as defined in subsection (d)(2)) may not include any provision that prohibits or restricts any medical communication (as defined in subsection (b)) as part of\u2014 (A) a written contract or agreement with a health care provider, (B) a written statement to such a provider, or (C) an oral communication to such a pro- vider. ”(2) CONSTRUCTION.\u2014Nothing in this sec- tion shall be construed as preventing an en- tity from exercising mutually agreed upon terms and conditions not inconsistent with paragraph (1), including terms or conditions requiring caregivers to participate in, and cooperate with, all programs, policies, and procedure developed or operated by the per- son, corporation, partnership, association, or other organization to ensure, review, or im- prove the quality of health care. (3) NULLIFICATION.\u2014Any provision de- scribed in paragraph (1) is null and void. (b) MEDICAL COMMUNICATION DEFINED.\u2014In this section, the term ”medical communica- tion” means a communication made by a health care provider with a patient of the provider (or the guardian or legal representa- tive of such patient) with respect to the pa- tient’s physician or mental condition or treatment options. (c) ENFORCEMENT THROUGH IMPOSITION OF CIVIL MONEY PENALTY.\u2014 (1) IN GENERAL.\u2014Any entity that violates paragraph (1) of subsection (a) shall be sub- ject to a civil money penalty of up to $15,000 for each violation. No such penalty shall be imposed solely on the basis of an oral com- munication unless the communication is part of a pattern or practice of such commu- nications and the violation is demonstrated by a preponderance of the evidence. (2) PROCEDURES.\u2014The provisions of sub- sections (c) through (l) of section 1128A of the Social Security Act (42 U.S.C. 1320a 7a) shall apply to civil money penalties under paragraph (1) in the same manner as they apply to a penalty or proceeding under sec- tion 1128A(a) to a penalty or proceeding under section 1128A(a) of such Act. (d) DEFINITIONS.\u2014For purposes of this sec- tion: (1) HEALTH CARE PROVIDER.\u2014The term ”health care provider” means anyone li- censed under State law to provide health care services, including a practitioner such as a nurse anesthetist or chiropractor who is so licensed. (2) HEALTH PLAN.\u2014The term ”health plan” means any public or private health plan or arrangement (including an employee welfare benefit plan) which provides, or pays the cost of, health benefits, and includes an organiza- tion of health care providers that furnishes health services under a contract or agree- ment with such a plan. (3) COVERAGE OF THIRD PARTY ADMINISTRA- TORS.\u2014In the case of a health plan that is an employee welfare benefit plan (as defined in section 3(1) of the Employee Retirement In- come Security Act of 1974), any third party administrator or other person with responsi- bility for contracts with health care pro- viders under the plan shall be considered, for purposes of this section, to be an entity of- fering such health plan. (e) NON-PREEMPTION OF STATE LAW.\u2014A State may establish or enforce requirements with respect to the subject matter of this section, but only if such requirements are consistent with the Act and are more protec- tive of medical communications than the re- quirements established under this section. (g) EFFECTIVE DATE.\u2014Subsection (a) shall take effect 180 days after the date of the en- actment of this Act and shall apply to med- ical communications made on or after such date. By Mr. HATCH (for himself, Mr. BIDEN, Mr. THURMOND, and Mr. GRASSLEY): S. 2006. A bill to clarify the intent of Congress with respect to the Federal carjacking prohibition. THE CARJACKING CORRECTION ACT OF 1996 Mr. HATCH. Mr. President, I rise to introduce the Carjacking Correction Act of 1996. This bill adds an important clarification to the Federal carjacking statute, which is to provide that a rape committed during a carjacking should be considered a serious bodily injury. I am pleased to be joined in this ef- fort by the ranking member of the Ju- diciary Committee, Senator BIDEN. He VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00091 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9300 July 31, 1996 has long been a leader in addressing the threat of violence against women, and our partnership in enacting the Vi- olence Against Women Act is evidence of strong bipartisan outrage at every incident of assault or domestic vio- lence. This correction to the law is neces- sitated by the fact that at least one court has held that under the Federal carjacking statute, rape would not con- stitute a serious bodily injury. Few crimes are as brutal, vicious, and harmful to the victim than rape. Yet, under this interpretation, the sen- tencing enhancement for such injury may not be applied to a carjacker who brutally rapes his victim. In my view, Congress should act now to clarify the law in this regard. The bill we introduce today would do this by specifically including rape as seri- ous bodily injury under the statute. I want to thank Representative JOHN CONYERS, the ranking member of the House Judiciary Committee, who brought this matter to my attention and is leading the effort in the House for passage of this legislation. I urge my colleagues to support swift passage of this bill. By Mr. DASCHLE (for himself, Mr. ROCKEFELLER, Mr. KERRY, Mr. WELLSTONE, Ms. MIKULSKI, Mr. BYRD, Mr. DODD, Mr. CONRAD, Mr. INOUYE, Mr. PELL, Mr. SIMON, Mr. FEINGOLD, Mr. BREAUX, Mrs. BOXER, Mr. DOR- GAN, Mrs. FEINSTEIN, Mr. GLENN, Mr. HARKIN, Mr. ROBB, and Mr. KENNEDY): S. 2008. A bill to amend title 38, United States Code, to provide benefits for certain children of Vietnam vet- erans who are born with spina bifida, and for other purposes; to the Com- mittee on Veterans Affairs. THE AGENT ORANGE BENEFITS ACT OF 1996 Mr. DASCHLE. Mr. President, today, with 19 of my colleagues, I am intro- ducing the Agent Orange Benefits Act of 1996. This legislation is an important step toward easing the burden of inno- cent, indirect victims of our country’s use of agent orange during the Viet- nam war. The bill would extend health care and related benefits, including a monthly monetary allowance, to Viet- nam veterans’ children suffering from spina bifida\u2014a serious neural tube birth defect that requires lifelong care. This bill is a necessary followup to the Agent Orange Act of 1991, which I coauthored with Senators KERRY and Cranston and Representative LANE EVANS and which unanimously passed the Senate. Among other things, the Agent Orange Act required the Depart- ment of Veterans Affairs [VA] to con- tract with the Institute of Medicine [IOM], which is part of the National Academy of Sciences [NAS], to conduct a scientific review of all evidence per- taining to exposure to agent orange and other herbicides used in Vietnam and the subsequent occurrence of dis- ease and other health-related condi- tions. The law required an initial re- port, which was issued by NAS in 1993, followed by biennial updates for 10 years. The first update was published by NAS last March. In accordance with the law, Vietnam veterans are not required to prove ex- posure to agent orange; the law pre- sumes that all military personnel who served in Vietnam were exposed to agent orange. The Secretary is to pro- vide presumptive disability compensa- tion for diseases suffered by Vietnam veterans whenever he determines, based on all credible evidence, includ- ing the congressionally mandated NAS reports, that a positive association ex- ists between exposure and the occur- rence of such diseases in humans. For purposes of this law, a positive associa- tion must be found to exist whenever credible evidence for an association is equal to or outweighs the credible evi- dence against the association. We have been struggling for decades to provide compensation and health care for Vietnam veterans\u2014and, if war- ranted, their children\u2014for health prob- lems associated with exposure to agent orange. Since 1985, Vietnam veterans have been eligible for free VA health care for conditions believed to be re- lated to exposure to agent orange. Vietnam veterans are also eligible for presumptive disability compensation for several diseases, including chloracne and various cancers, associ- ated with exposure to agent orange or other herbicides used in Vietnam. Most recently, in response to the March NAS report, the Secretary of Veterans Af- fairs awarded service-connected dis- ability compensation for prostate can- cer and acute and subacute peripheral neuropathy. An area of key concern to Vietnam veterans has been what they believe to be a high rate of birth defects in the children born to them since their serv- ice in Vietnam. The Agent Orange Act of 1991 specifically mandated that the area of reproductive disorders and birth defects be given special attention to determine whether or not compen- satory action is warranted. The March NAS report showed new evidence sug- gesting a link between exposure to agent orange and the occurrence of spina bifida in Vietnam veterans’ chil- dren. The report also noted that there is growing evidence, though not as strong as the evidence on spina bifida at this point, suggestive of an increase in other birth defects among Vietnam veterans’ children. In response to the NAS report, the Secretary of Veterans Affairs assem- bled an interdepartmental task force, which consulted with interested vet- erans’ service organizations and ex- perts in spina bifida, to review the NAS findings and make policy recommenda- tions to the Secretary. In May, the Secretary delivered to the President several policy rec- ommendations based on the VA’s re- view of the NAS report. These included recommendations to add prostate can- cer and acute and subacute peripheral neuropathy to the list of presumptive diseases, and, if authority were grant- ed, to treat spina bifida in veterans’ children in the same manner. The VA does not currently have the authority to provide benefits to veterans’ chil- dren. Subsequently, President Clinton announced that the administration would propose legislation to provide an appropriate remedy for Vietnam vet- erans’ children who suffer from spina bifida. This bill reflects that effort. Clearly, the Government’s responsi- bility does not end once veterans re- turn from war. Effects of combat, even those passed down through reproduc- tive disorders, are a direct result of our decisions to place our Nation’s men and women in harm’s way. We have a moral responsibility to help veterans whose children suffer from spina bifida and to meet those children’s health care needs. It should be noted that spina bifida is a devastating, irreversible birth defect resulting from the failure of the spine to properly close early in pregnancy. It requires lifelong medical treatment, and the cost of caring for a child with spina bifida can be financially dev- astating for families. While spina bifida affects approximately one of every 1,000 newborns in the United States, a study of Vietnam veterans that was included in the NAS report showed three spina bifida cases in a group of only 792 infants of Vietnam veterans\u2014a statistically significant re- sult. The Agent Orange Benefits Act of 1996 would provide health care, limited vocational rehabilitation, and a monthly stipend to Vietnam veterans’ children with spina bifida based on the severity of each child’s condition. It in- cludes the provision of essential med- ical care and case management serv- ices to coordinate health and social services for the child. Unfortunately, the NAS report con- firmed what Vietnam veterans have long feared: the Vietnam war continues to claim innocent victims. Nothing can erase the physical and psychological wounds of the war, but, by providing limited benefits to affected children, the Agent Orange Benefits Act of 1996 will allow us to heal some of the lin- gering scars from Vietnam. The NAS report also serves as a valu- able reminder that the impact of any war is felt decades beyond the final shots. Just as reproductive disorders and birth defects in their children have been among Vietnam veterans’ great- est health concerns, health problems in their children is of great concern to veterans who served in the Gulf war. We must be prepared to learn from the scientific effort on agent orange and apply these lessons to the effort to dis- cover the true health effects of envi- ronmental hazards on the men and women who served in the Gulf and on their children. Based on the NAS re- port’s findings related to spina bifida in the children of Vietnam veterans, VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00092 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9301 July 31, 1996 the VA is establishing a reproductive outcomes research center to inves- tigate potential environmental hazards of military service. I look forward to seeing those efforts come to fruition, and I am hopeful they will help us pro- vide answers to the many outstanding questions in this area. I applaud the President and Sec- retary Jesse Brown, along with my col- leagues who have been committed to this fight for years, for working to- gether to develop a proposal that ade- quately addresses the needs of these children and their families, and for pro- viding modest compensation for a wrong that can never fully be righted. With the passage of this legislation, we can begin to fulfill our promise to these most innocent victims and their families. Vietnam veterans’ families have suffered for decades and now live with the pain of knowing that their military service may have jeopardized the health and welfare of their chil- dren. The very least we can do is ease their burden by providing this limited assistance and care. Mr. President, I ask unanimous con- sent that the text of the bill, a sum- mary of the bill, a letter of support from the administration, and a table from the NAS report that explains the four-tiered classification system for agent orange-related illnesses, be printed in the RECORD. There being no objection, the mate- rial was ordered to be printed in the RECORD, as follows: S. 2008 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. REFERENCES TO TITLE 38, UNITED STATES CODE. Except as otherwise expressly provided, whenever in this Act an amendment or re- peal is expressed in terms of an amendment or repeal is expressed in terms of an amend- ment to, or repeal of, a section or other pro- vision, the reference shall be considered to be made to a section or other provision of title 38, United States Code. SEC. 2. BENEFITS FOR THE CHILDREN OF VIET- NAM VETERANS WHO ARE BORN WITH SPINA BIFIDA. (a) SHORT TITLE.\u2014This section may be cited as the ”Agent Orange Benefits Act of 1996.” (b) ESTABLISHMENT OF NEW CHAPTER 18.\u2014 Part II is amended by inserting after chapter 17 the following new chapter: ”CHAPTER 18\u2014BENEFITS FOR THE CHIL- DREN OF VIETNAM VETERANS WHO ARE BORN WITH SPINA BIFIDA ”Sec. ”1801. Purpose. ”1802. Definitions. ”1803. Health care. ”1804. Vocational training. ”1805. Monetary allowance. ”1806. Effective date of Awards. SEC. ”1801. PURPOSE. ”The purpose of this chapter is to provide for the special needs of certain children of Vietnam veterans who were born with the birth defect spina bifida, possibly as the re- sult of the exposure of one or both parents to herbicides during active service in the Re- public of Vietnam during the Vietnam era, through the provision of health care, voca- tional training, and monetary benefits. ”SEC. 1802. DEFINITIONS. ”For the purposes of this chapter\u2014 ”(1) The term ‘child’ means a natural child of a Vietnam veteran, regardless of age or marital status, who was conceived after the date on which the veteran first entered the Republic of Vietnam during the Vietnam era. ”(2) The term ‘Vietnam veteran’ means a veteran who, during active military, naval, or air service, served in the Republic of Viet- nam during the Vietnam era. ”(3) The term ‘spina bifida’ means all forms of spina bifida other than spina bifida occulta. ”SEC. 1803. HEALTH CARE. ”(a) In accordance with regulations the Secretary shall prescribe, the Secretary shall provide such health care under this chapter as the Secretary determines is need- ed to a child of a Vietnam veteran who is suffering from spina bifida, for any disability associated with such condition. ”(b) The Secretary may provide health care under this section directly or by con- tract or other arrangement with a health care provider. ”(c) For the purposes of this section\u2014 ”(1) the term ‘health care’ means home care, hospital care, nursing home care, out- patient care, preventive care, habilitative and rehabilitative care, case management, and respite care, and includes the training of appropriate members of a child’s family or household in the care of the child and provi- sion of such pharmaceuticals, supplies, equipment, devices, appliances, assistive technology, direct transportation costs to and from approved sources of health care au- thorized under this section, and other mate- rials as the Secretary determines to be nec- essary. ”(2) the term ‘health care provider’ in- cludes, but is not limited to, specialized spina bifida clinics, health-care plans, insur- ers, organizations, institutions, or any other entity or individual who furnishes health care services that the Secretary determines are covered under this section. ”(3) the term ‘home care’ means outpatient care, habilitative and rehabilitative care, preventive health services, and health-re- lated services furnished to an individual in the individual’s home or other place of resi- dence. ”(4) the term ‘hospital care’ means care and treatment for a disability furnished to an individual who has been admitted to a hospital as a patient. ”(5) the term ‘nursing home care’ means care and treatment for a disability furnished to an individual who has been admitted to a nursing home as a resident. ”(6) the term ‘outpatient care’ means care and treatment of a disability, and preventive health services, furnished to an individual other than hospital care or nursing home care. ”(7) the term ‘preventive care’ means care and treatment furnished to prevent dis- ability or illness, including periodic exami- nations, immunizations, patient health edu- cation, and such other services as the Sec- retary determines are necessary to provide effective and economical preventive health care. ”(8) the term ‘habilitative and rehabilita- tive care’ means such professional, coun- seling, and guidance services and treatment programs (other than vocational training under section 1804 of this title) as are nec- essary to develop, maintain, or restore, to the maximum extent, the functioning of a disabled person. ”(9) the term ‘respite care’ means care fur- nished on a intermittent basis in a Depart- ment facility for a limited period to an indi- vidual who resides primarily in a private res- idence when such care will help the indi- vidual to continue residing in such private residence. ”SEC. 1804. VOCATIONAL TRAINING. ”(a) Pursuant to such regulations as the Secretary may prescribe, the Secretary may provide vocational training under this sec- tion to a child of a Vietnam veteran who is suffering from spina bifida if the Secretary determines that the achievement of a voca- tional goal by such child is reasonably fea- sible. ”(b)(1) If a child elects to pursue a program of vocational training under this section, the program shall be designed in consultation with the child in order to meet the child’s in- dividual needs and shall be set forth in an in- dividualized written plan of vocational reha- bilitation. ”(2)(A) Subject to subparagraph (B) of this paragraph, a vocational training program under this subsection shall consist of such vocationally oriented services and assist- ance, including such placement and post- placement services and personal and work adjustment training, as the Secretary deter- mines are necessary to enable the child to prepare for and participate in vocational training or employment. ”(B) A vocational training program under this subsection\u2014 ”(i) may not exceed 24 months unless, based on a determination by the Secretary that an extension is necessary in order for the child to achieve a vocational goal identi- fied (before the end of the first 24 months of such program) in the written plan formu- lated for the child, the Secretary grants an extension for a period not to exceed 24 months; ”(ii) may not include the provision of any loan or subsistence allowance or any auto- mobile adaptive equipment; and ”(iii) may include a program of education at an institution of higher learning only in a case in which the Secretary determines that the program involved is predominantly voca- tional in content. ”(c)(1) A child who is pursuing a program of vocational training under this section who is also eligible for assistance under a pro- gram under chapter 35 of this title may not receive assistance under both of such pro- grams concurrently but shall elect (in such form and manner as the Secretary may pre- scribe) under which program to receive as- sistance. ”(2) The aggregate period for which a child may receive assistance under this section and chapter 35 of this title may not exceed 48 months (or the part-time equivalent there- of). ”SEC. 1805. MONETARY ALLOWANCE. ”(a) The Secretary shall pay a monthly al- lowance under this chapter to any child of a Vietnam veteran for disability resulting from spina bifida suffered by such child. ”(b) The amount of the allowance paid under this section shall be based on the de- gree of disability suffered by a child as deter- mined in accordance with such schedule for rating disabilities resulting from spina bifida as the Secretary may prescribe. The Sec- retary shall, in prescribing the rating sched- ule for the purposes of this section, establish three levels of disability upon which the amount of the allowance provided by this section shall be based. The allowance shall be $200 per month for the lowest level of dis- ability prescribed, $700 per month for the in- termediate level of disability prescribed, and $1,200 per month for the highest level of dis- ability prescribed. ”(c)(1) Whenever there is an increase in benefit amounts payable under title II of the Social Security Act (42 U.S.C. 401 et seq.) as a result of a determination under section VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00093 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9302 July 31, 1996 215(i) of such Act (42 U.S.C. 415(i)), the Sec- retary shall, effective on the date of such in- crease in benefit amounts, increase each rate of allowance under this section, as such rates were in effect immediately prior to the date of such increase in benefits payable under title II of the Social Security Act, by the same percentage as the percentage by which such benefit amounts are increased. ”(2) Whenever there is an increase in the rates of the allowance payable under this section, the Secretary shall publish such rates in the Federal Register. ”(3) Whenever such rates are so increased, the Secretary may round such rates in such manner as the Secretary considers equitable and appropriate for ease of administration. ”(d) Notwithstanding any other provision of law, receipt by a child of an allowance under this section shall not impair, infringe, or otherwise affect the right of such child to receive any other benefit to which the child may otherwise be entitled under any law ad- ministered by the Secretary, nor shall such receipt impair, infringe, or otherwise affect the right of any individual to receive any benefit to which he or she is entitled under any law administered by the Secretary that is based on the child’s relationship to such individual. ”(e) Notwithstanding any other provision of law, the allowance paid to a child under this section shall not be considered income or resources in determining eligibility for or the amount of benefits under any Federal or federally assisted program. ”SEC. 1806. EFFECTIVE DATE OF AWARDS. ”Effective date for an award for benefits under this chapter shall be fixed in accord- ance with the facts found, but shall not be earlier than the date of receipt of applica- tion therefor.”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall become effective on October 1, 1996. (d) CLERICAL AMENDMENT.\u2014The tables of chapters before part I and at the beginning of part II are each amended by inserting after the item referring to chapter 17 the fol- lowing new item: ”18. Benefits for children of Vietnam veterans who are born with spina bifida ……………………………………. 1801”. SEC. 3. CLARIFICATION OF ENTITLEMENT FOR BENEFITS FOR DISABILITY RESULT- ING FROM TREATMENT OR VOCA- TIONAL SERVICES PROVIDED BY DE- PARTMENT OF VETERANS AFFAIRS. (a) Section 1151 is amended\u2014 (1) by striking out the first sentence and inserting in lieu thereof the following: ”(a) Compensation under this chapter and dependency and indemnity compensation under chapter 13 of this title shall be award- ed for qualifying additional disability to or death of a veteran in the same manner as if such additional disability or death were serv- ice-connected. For purposes of this section, additional disability or death is qualifying only if it was not the result of the veteran’s willful misconduct and\u2014 ”(1) it was caused by hospital care, medical or surgical treatment, or examination fur- nished the veteran under any law adminis- tered by the Secretary, either by a Depart- ment employee or in a Department facility as defined in section 1701(3)(A) of this title, where the additional disability or death proximately resulted\u2014 ”(A) from carelessness, negligence, lack of proper skill, error in judgment, or similar in- stance of fault on the part of the Department in furnishing the hospital care, medical or surgical treatment, or examination; or ”(B) from an event not reasonably foresee- able; or ”(2) it was incurred as a proximate result of the provision of training and rehabilita- tion services by the Secretary (including by a service-provider used by the Secretary for such purpose under section 3115 of this title) as part of an approved rehabilitation pro- gram under chapter 31 of this title.”; and (2) in the second sentence\u2014 (A) by redesignating that sentence as sub- section (b); (B) by striking out ”, aggravation,” both places it appears; and (C) by striking out ”sentence” and sub- stituting in lieu thereof ”subsection”. (b) The amendments made by subsection (a) shall govern all administrative and judi- cial determinations of eligibility for benefits under section 1151 of title 38, United States Code, made with respect to claims filed on or after the date of enactment of this Act, in- cluding those based on original applications and applications seeking to reopen, revise, reconsider, or otherwise readjudicate on any basis claims for benefits under section 1151 of that title or predecessor provisions of law. AGENT ORANGE BENEFITS FOR VIETNAM VET- ERANS’ CHILDREN SUFFERING FROM SPINA BIFIDA The Agent Orange Act of 1996 would extend health care and related benefits, including a monthly monetary allowance, to Vietnam veterans’ children suffering from spina bifida\u2014a serious neural tube birth defect that requires life-long care\u2014provided the children were conceived after the veterans began their service in Vietnam. BACKGROUND A March National Academy of Sciences (NAS) report cited new evidence that sup- ports a link between exposure to Agent Or- ange and the occurrence of spina bifida in children of veterans who served in Vietnam. This report was required by the Agent Or- ange Act of 1991. Since 1985, Vietnam veterans have been eli- gible for free VA health care for conditions believed to be related to exposure to Agent Orange. Veterans’ disability compensation for several Agent Orange-related illnesses\u2014 including non-Hodgkin’s lymphoma, soft-tis- sue sarcoma, Hodgkin’s disease, chloracne, respiratory cancers, and multiple myeloma\u2014 has been awarded as a result of either con- gressional or VA action, some of which was based on a 1993 NAS report. Earlier this year, Secretary Brown and the President, in re- sponse to the March NAS report, extended service-connected benefits to veterans suf- fering from prostate cancer and acute and sub-acute peripheral neuropathy. Reproductive disorders and birth defects in their children have been among veterans’ greatest Agent Orange-related health con- cerns. This legislation is necessary because, while the VA has recommended that spina bifida in veterans’ offspring be service-con- nected, the VA does not currently have the authority to extend health care or other ben- efits to children of veterans. COST CBO has not yet provided an estimate for this proposal. However, costs would be offset by overturning the Gardner case, which would limit the VA’s liability for non-mal- practice-related injuries occurring in VA fa- cilities. This non-controversial provision was included in Democratic and Republican budget proposals for FY 96. Excess savings would be directed to deficit reduction. ROLE OF THE NATIONAL ACADEMY OF SCIENCES The Agent Orange Act of 1991 directed the VA to contract with the National Academy of Sciences to conduct for 10 years biennial, comprehensive evaluations of the scientific and medical information regarding the health effects of exposure to Agent Orange and other herbicides used in Vietnam. The first report, ”Veterans and Agent Or- ange: Health Effects of Herbicides Used in Vietnam,” was published in 1993. It created the following categories to classify the level of association between certain health condi- tions and exposure to Agent Orange: Cat- egory I (”sufficient evidence of an associa- tion”); category II (”limited\/suggestive evi- dence of an association”); category III (”in- adequate\/insufficient evidence to determine whether an association exists”); category IV (”limited\/suggestive evidence of NO associa- tion”). Following the 1993 report, the VA began to compensate Vietnam veterans suffering from three diseases in categories I and II that had not been service-connected through previous congressional or administrative action: porphyria cutanea tarda, respiratory can- cers, and multiple myeloma. The 1996 update, which was issued in March, confirmed many of the findings in the 1993 report, and found new evidence to link spina bifida in veterans’ children with exposure to Agent Orange. The NAS panel placed ”spina bifida in offspring” in category II, supporting a connection between birth de- fects and military service. The NAS report currently places birth defects other than spina bifida in category III. After reviewing the NAS report and other information, the VA has recommended that all remaining conditions in categories I and II, including spina bifida, be service-con- nected. THE SECRETARY OF VETERANS AFFAIRS, Washington, DC, July 5, 1996. Hon. CHRISTOPHER S. (KIT) BOND, Chairman, Subcommittee on VA, HUD, and Independent Agencies, Committee on Appro- priations, U.S. Senate, Washington, DC. DEAR MR. CHAIRMAN: I am pleased to share with you a copy of legislation we provided earlier today to Senator Daschle. This legis- lation, the ”Agent Orange Benefits Act of 1996,” would provide benefits to certain chil- dren of Vietnam veterans who are born with the birth defect spinal bifida. Enacting this legislation is a Presidential priority. Under Public Law 102 4, and with the ben- efit of a National Academy of Sciences re- port, I determined that a positive associa- tion exists between the exposure of Vietnam veterans to herbicides (such as a Agent Or- ange) and spinal bifida in their children. In approving this determination, the President promised to submit ”an appropriate remedy” for these veterans’ children. This legislation fulfills that commitment. It provides for health care, vocational training, and month- ly monetary allowance for these children. As set forth in the legislation, the Admin- istration proposes to offset the costs associ- ated with these new benefits with a savings proposal that would effectively reverse the U.S. Supreme Court decision in Gardner v. Brown which held that monthly VA dis- ability compensation must be paid for any additional disability or death attributable to VA medical treatment even if VA was not negligent in providing that care. Enactment of this legislation is a top Pres- idential priority. I strongly urge the Senate to include it in the earliest appropriate leg- islative vehicle. Thank you for your assistance in ensuring prompt and immediate action on this impor- tant legislation. The Office of Management and Budget has advised that there is no objection from the standpoint of the Administration’s program to the presentation of this letter. Sincerely, JESSE BROWN. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00094 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9303 July 31, 1996 EXECUTIVE SUMMARY TABLE 1 1\u2014UPDATED SUMMARY OF FINDINGS IN OCCUPATIONAL, ENVIRONMENTAL, AND VET- ERANS STUDIES REGARDING THE ASSOCIATION BETWEEN SPECIFIC HEALTH PROBLEMS AND EXPOSURE TO HERBICIDES Sufficient evidence of an association Evidence is sufficient to conclude that there is a positive association. That is, a positive association has been observed be- tween herbicides and the outcome in studies in which chance, bias, and confounding could be ruled out with reasonable confidence. For example, if several small studies that are free from bias and confounding show an asso- ciation that is consistent in magnitude and direction, there may be sufficient evidence for an association. There is sufficient evi- dence of an association between exposure to herbicides and the following health out- comes: Soft-tissue sarcoma; Non-Hodgkin’s lymphoma; Hodgkin’s disease; Chlorance. Limited\/suggestive evidence of an association Evidence is suggestive of an association be- tween herbicides and the outcome but is lim- ited because chance, bias, and confounding could not be ruled out with confidence. For example, at least one high-quality study shows a positive association, but the results of other studies are inconsistent. There is limited\/suggestive evidence of an association between exposure to herbicides and the fol- lowing health outcomes: Respiratory cancers (lung, larynx, trachea); Prostate cancer; Multiple myeloma; Acute and subacute pe- ripheral neuropathy (new disease category); Spina bifida (new disease category); Porphyria cutanea tarda (category change in 1996). Inadequate\/insufficient evidence to determine whether an association exists The available studies are of insufficient quality, consistency, or statistical power to permit a conclusion regarding the presence or absence of an association. For example, studies fail to control for confounding, have inadequate exposure assessment, or fail to address latency. There is inadequate or in- sufficient evidence to determine whether an association exists between exposure to herbi- cides and the following health outcomes: Hepatobiliary cancers; Nasal\/nasopharyngeal cancer; Bone cancer; Female reproductive cancers (cervical, uterine, ovarian); Breast cancer; Renal cancer; Testicular cancer; Leukemia; spontaneous abortion; Birth de- fects (other than spina bifida); Neonatal\/in- fant death and stillbirths; Low birthweight; Childhood cancer in offspring; Abnormal sperm parameters and infertility; cognitive and neuropsychiatric disorders; Motor\/co- ordination dysfunction; Chronic peripheral nervous system disorders; Metabolic and di- gestive disorders (diabetes, changes in liver enzymes, lipid abnormalities, ulcers); Im- mune system disorders (immune suppression and autoimmunity); Circulatory disorders; Respiratory disorders; Skin cancer (category change in 1996). Limited\/suggestive evidence of no association Several adequate studies, covering the full range of levels of exposure that human beings are known to encounter, are mutually consistent in not showing a positive associa- tion between exposure to herbicides and the outcome at any level of exposure. A conclu- sion of ”no association” is inevitably limited to the conditions, level of exposure, and length of observation covered by the avail- able studies. In addition, the possibility of a very small elevation in risk at the levels of exposure studied can never be excluded. There is limited\/suggestive evidence of no as- sociation between exposure to herbicides and the following health outcomes: Gastro- intestinal tumors (stomach cancer, pan- creatic cancer, colon cancer, rectal cancer); Bladder cancer; Brain tumors. Note: ”Herbicides” refers to the major her- bicides used in Vietnam: 2,4 D (2,4- dichlorophenoxyacetic acid); 2,4,5-T (2,4,5- trichlorophenoxyacetic acid) and its con- taminant TCDD (2,3,7,8-tetrachlorodibenzo-p- dioxin); cacodylic acid; and picloram. The evidence regarding association is drawn from occupational and other studies in which sub- jects were exposed to a variety of herbicides and herbicide components. Mr. BYRD. Mr. President, I am proud to cosponsor the legislation introduced by the able Democratic leader, Senator DASCHLE, which provides health care and assistance to the children of Viet- nam veterans who suffer from spina bifida. This legislation provides the needed authority for the Department of Veterans Affairs to treat these children for their service-connected disabilities arising from their father’s exposure to agent orange during the Vietnam con- flict. This is an unprecedented but ap- propriate action, since scientific re- search is now sufficiently sophisticated to allow us to understand the effects of toxic exposures on ourselves and on fu- ture generations. As a result of the Agent Orange Act of 1991, the Department of Veterans Af- fairs and the National Academy of Sciences have at regular intervals re- viewed the ongoing research on Agent Orange exposure. The report update issued this spring found ”limited\/sug- gestive evidence” linking the birth de- fect spina bifida to agent orange expo- sure. The report notes that all three epidemiologic studies reviewed suggest an association between herbicide expo- sure and increased risk of spina bifida in offspring. It further notes that in contrast to most other diseases, for which the strongest data have been from occupationally exposed workers, these studies focused on Vietnam vet- erans. All the studies were judged to be of relatively high quality, although they did suffer from some methodologic limitations. On the basis of this finding, Sec- retary Jesse Brown recommended that a service connection be granted to Vietnam veterans’ children with spina bifida. It is the right decision, and I ap- plaud him for it. The research and the legislation are long overdue for fami- lies that have been struggling for some twenty years. Some one has observed that ”procrastination is the thief of time.” These children and their fami- lies have already lost time, lost long years of doubt and wondering, of finan- cial hardship that they bore alone be- cause the government procrastinated in investigating and acknowledging its role in this tragedy. The legislation in- troduced today by Senator DASCHLE at- tempts to correct that injustice, and I commend him for it. The poet Edward Young (1683 1796) has said: ”Be wise today; ’tis madness to defer.” Support this legislation, take responsibility for the tragic aftermath of our involve- ment in Vietnam, and take care of these children. Mr. KERRY. Mr. President, I am pleased to join my distinguished col- league from South Dakota, Senator DASCHLE, in cosponsoring the Agent Orange Benefits Act of 1996. This bill takes another crucial step forward in repaying our debt to those who have served their country and are still suf- fering as a result of their service in Vietnam many years ago. In May, President Clinton announced that leg- islation would be proposed to aid Viet- nam veterans’ children who suffer from the disease spina bifida. This bill ful- fills that commitment by recognizing and accepting natural responsibility for one of the serious health care needs of veterans’ families that stem from the tragic effects of agent orange. Senator DASCHLE and I and many others have worked for the past decade to try to bring to a fair and just resolu- tion the questions surrounding agent orange and the effects it has had on the men and women who faithfully served this country. I know that there is still controversy about the effects of agent orange. There may always be con- troversy, just as there may always be controversy about the Vietnam war itself. But we must set aside the con- troversy\u2014or put it behind us\u2014to en- able suffering children to receive the care and treatment they need when that suffering can be followed back to a service person’s exposure to agent or- ange. After years of hard work, I believe we have reached an acceptable consensus on the effects of agent orange through numerous studies\u2014and independent scientific reviews of the many studies\u2014 which have been made on the effects of this dangerous chemical that contains deadly dioxin. I might add that it has been 30 years since agent orange was sprayed in Vietnam and we must stop debating over the bias of each indi- vidual analyzing the information. As I said back in May of 1988, ”It is offen- sive to veterans to tell them that there is not enough ‘scientific evidence’ to justify compensation * * * The evi- dence is in their own bodies, and even worse, in the bodies of their children.” We have made great strides in reach- ing a consensus in some areas of health care for Vietnam veterans. Since 1985, Vietnam veterans have been eligible for free health care from the Veterans Administration for conditions that are related to exposure to agent orange. Veterans’ disability compensation has been awarded to veterans affected by several agent orange-related illnesses including non-Hodgkins lymphoma, soft tissue sarcoma, Hodgkin’s disease, chloracne, respiratory cancers, mul- tiple myeloma, and, most recently, prostate cancer and acute and subacute peripheral neuropathy. Today, Mr. President, we are address- ing a particularly heinous effect of agent orange\u2014an effect that unfortu- nately will carry the legacy of the Vietnam war to yet another genera- tion. The bill we are introducing today would extend health care and related VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00095 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9304 July 31, 1996 benefits to children of Vietnam vet- erans who suffer from spina bifida, a serious neural tube birth defect that requires life-long care\u2014provided, of course, the children were conceived after the veterans began their service in Vietnam. The National Academy of Sciences released a report in March of this year, citing new evidence supporting the link between exposure to agent orange and the occurrence of spina bifida in chil- dren of veterans who served in Viet- nam. This report, Mr. President, war- rants our action. Both the President and the Secretary of Veterans Affairs, Jesse Brown, have asked that spina bifida in veterans’ off- spring be considered service connected. However, the VA currently does not have the authority to extend the health care and other related benefits to these children that they so greatly need. This bill will grant the VA the necessary authority to finally start providing needed care to these children who are suffering. Mr. President, these are children whose misery stems from physical damage caused to one of their parents who was fighting for this country in Vietnam. We should do no less than provide them with the care and treat- ment they need. We must not make some of the children of our Vietnam veterans the last victims of the Viet- nam war. I urge my colleagues to sup- port this bill. By Mr. ASHCROFT: S.J. Res. 58. A joint resolution pro- posing an amendment to the Constitu- tion of the United States relative to granting power to the States to pro- pose constitutional amendments; to the Committee on the Judiciary. STATE-INITIATED CONSTITUTIONAL AMENDMENT JOINT RESOLUTION Mr. ASHCROFT. Mr. President, I rise this afternoon to talk about first prin- ciples, about fundamental truths, about a battle that helped give birth to a nation. The amendment I have sent to the desk represents an effort to re- store the federal system conceived by the Framers over two centuries ago by giving the States the capacity to ini- tiate constitutional reforms. In considering my remarks earlier this morning, I was reminded of a trip my family and I made several years ago when I was Governor of the State of Missouri. In 1989, we were extended an opportunity to visit the site where the Continental Army, led by Gen. Atemas Ward, fought to seize Bunker Hill on the Charlestown peninsula. It was a moving experience. One can- not help but recall the monument, dedicated by Daniel Webster, that stands as a tribute to the lives that were lost. I recommend the trip to both Members and the viewing audience alike. I must confess, however, that the ex- pansive field you will find fails to fully capture the raw carnage that visited Bunker Hill in June of 1775. Close to 2,000 lives were lost in less than 2 hours. And, while General Howe’s regulars were masters of the peninsula at the end of the day, the casualties they sustained were more than twice that of the American militia. Historians, Mr. President, have come to record Bunker Hill as a bloody if in- decisive contest, an early salvo in a conflict which Dr. Jonathan Rossie has characterized as a ”glorious cause.” Glorious, if warfare can be called that, because the issue that animated the colonists that day was freedom, for themselves and generations yet to come; God, courage, and posterity were their invisible allies. And as I reflect on those events, I cannot help but wonder what has be- come of the first principles for which our forefathers fought? What has be- come of the fundamental truths that compelled those great patriots up that hill, bayonets flashing, voices shouting ”push on, push on.” For that battle outside of Boston helped give birth to a nation, a con- stitutional republic that was the first of its kind. A system where, as Madi- son suggested in ”Federalist” No. 46, ”the federal and state governments are in fact but different agents of the peo- ple, constituted with different powers, and designed for different purposes.” Unfortunately, Mr. President, Madi- son’s vision is being lost. Judicial ac- tivism, Federal intervention, and past constitutional reforms have led to a gradual erosion of State power. In par- ticular, the passage of the 16th and 17th amendments have had a disastrous ef- fect on the capacity of the States to check Federal expansion. The former, establishing the income tax, gave the central government a virtually unlim- ited spending power, while the latter, providing for the direct election of Senators, worked to undermine the Senate’s contemplated role as the pro- tector of State autonomy. One of the single, greatest challenges we face as a country and as a Congress, is addressing the constitutional imbal- ance that has arisen from the conver- gence of these trends. Allowing the States to initiate amendments on issues ranging from a balanced budget to congressional term limits would do just that. The operation of the proposed amend- ment is as simple as its intent is clear. Whenever two-thirds of the States pro- pose an amendment, in identical terms, it is submitted to the Congress for re- view. If two-thirds of both Houses fail to disapprove the amendment during the session in which it is received, the proposal is then forwarded to the States for ratification by three-fourths of the legislatures thereof. If adopted, the proposed amendment would have tremendous value on sev- eral different fronts. First, it would force the cold corridors of power on the Potomac to respond to the will of the people\u2014no more mandates, no more deficits, no more careerist in the Con- gress. Similarly, the amendment would allow the States to once again share the constitutional agenda of the Na- tion. And finally, it would provide a po- tential for addressing the problems of federalism in a context which could conceivably augment State power. In Gregory versus Ashcroft, Justice O’Connor opined that ”in the tension between Federal and State power lies the promise of liberty.” And so it does. I believe reconstituting the federal sys- tem of which Madison wrote must be- come conservatives’ new glorious cause. This amendment is a measured, moderate step toward achieving that end. For these reasons, Mr. President, I beg its adoption. f ADDITIONAL COSPONSORS S. 334 At the request of Mr. MCCONNELL, the name of the Senator from Okla- homa [Mr. INHOFE] was added as a co- sponsor of S. 334, a bill to amend title I of the Omnibus Crime Control and Safe Streets Act of 1968 to encourage States to enact a Law Enforcement Of- ficers’ Bill of Rights, to provide stand- ards and protection for the conduct of internal police investigations, and for other purposes. S. 729 At the request of Mr. BAUCUS, the name of the Senator from Minnesota [Mr. GRAMS] was added as a cosponsor of S. 729, a bill to provide off-budget treatment for the Highway Trust Fund, the Airport and Airway Trust Fund, the Inland Waterways Trust Fund, and the Harbor Maintenance Trust Fund, and for other purposes. S. 1744 At the request of Mr. INOUYE, the name of the Senator from West Vir- ginia [Mr. ROCKEFELLER] was added as a cosponsor of S. 1744, a bill to permit duty free treatment for certain struc- tures, parts, and components used in the Gemini Telescope Project. S. 1838 At the request of Mr. FAIRCLOTH, the name of the Senator from Oklahoma [Mr. INHOFE] was added as a cosponsor of S. 1838, a bill to require the Sec- retary of the Treasury to mint and issue coins in commemoration of the centennial anniversary of the first manned flight of Orville and Wilbur Wright in Kitty Hawk, North Carolina, on December 17, 1903. S. 1873 At the request of Mr. INHOFE, the name of the Senator from Montana [Mr. BURNS] was added as a cosponsor of S. 1873, a bill to amend the National Environmental Education Act to ex- tend the programs under the Act, and for other purposes. S. 1885 At the request of Mr. INHOFE, the names of the Senator from Tennessee [Mr. FRIST] and the Senator from Ha- waii [Mr. INOUYE] were added as co- sponsors of S. 1885, a bill to limit the liability of certain nonprofit organiza- tions that are providers of prosthetic devices, and for other purposes. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00096 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9305 July 31, 1996 S. 1938 At the request of Mr. BOND, the name of the Senator from New York [Mr. D’AMATO] was added as a cosponsor of S. 1938, a bill to enact the model Good Samaritan Act Food Donation Act, and for other purposes. S. 1951 At the request of Mr. FORD, the name of the Senator from Kentucky [Mr. MCCONNELL] was added as a cosponsor of S. 1951, a bill to ensure the competi- tiveness of the United States textile and apparel industry. S. 1963 At the request of Mr. ROCKEFELLER, the name of the Senator from Hawaii [Mr. INOUYE] was added as a cosponsor of S. 1963, a bill to establish a dem- onstration project to study and provide coverage of routine patient care costs for medicare beneficiaries with cancer who are enrolled in an approved clin- ical trial program. S. 1987 At the request of Mr. FAIRCLOTH, the name of the Senator from Utah [Mr. BENNETT] was added as a cosponsor of S. 1987, a bill to amend titles II and XVIII of the Social Security Act to prohibit the use of social security and medicare trust funds for certain ex- penditures relating to union represent- atives at the Social Security Adminis- tration and the Department of Health and Human Services. SENATE JOINT RESOLUTION 57 At the request of Mr. ASHCROFT, the name of the Senator from Texas [Mrs. HUTCHISON] was added as a cosponsor of Senate Joint Resolution 57, a joint res- olution requiring the Congressional Budget Office and the Joint Committee on Taxation to use dynamic economic modeling in addition to static eco- nomic modeling in the preparation of budgetary estimates of proposed changes in Federal revenue law. SENATE CONCURRENT RESOLUTION 64 At the request of Mr. INOUYE, the name of the Senator from Alabama [Mr. SHELBY] was added as a cosponsor of Senate Concurrent Resolution 64, a concurrent resolution to recognize and honor the Filipino World War II vet- erans for their defense of democratic ideals and their important contribu- tion to the outcome of World War II. f AMENDMENTS SUBMITTED THE DEPARTMENT OF TRANSPOR- TATION AND RELATED AGEN- CIES APPROPRIATIONS ACT, 1997 BAUCUS (AND OTHERS) AMENDMENT NO. 5141 Mr. BAUCUS (for himself, Mr. BINGA- MAN, Mr. GRASSLEY, and Mr. REID) pro- posed an amendment to the bill (H.R. 3675) making appropriations for the De- partment of Transportation and re- lated agencies for the fiscal year end- ing September 30, 1997, and for other purposes; as follows: At the appropriate place in title III, insert the following: SEC. 3 . CALCULATION OF FEDERAL-AID HIGH- WAY APPORTIONMENTS AND ALLO- CATIONS. (a) IN GENERAL.\u2014Except as provided in subsection (b), for fiscal year 1997, the Sec- retary of Transportation shall determine the Federal-aid highway apportionments and al- locations to a State without regard to the approximately $1,596,000,000 credit to the Highway Trust Fund (other than the Mass Transit Account) of estimated taxes paid by States that was made by the Secretary of the Treasury for fiscal year 1995 in correc- tion of an accounting error made in fiscal year 1994. (b) ADJUSTMENTS FOR EFFECTS IN 1996.\u2014The Secretary of Transportation shall, for each State\u2014 (1) determine whether the State would have been apportioned and allocated an in- creased or decreased amount for Federal-aid highways for fiscal year 1996 if the account- ing error referred to in subsection (a) had not been made (which determination shall take into account the effects of section 1003(c) of the Intermodal Surface Transpor- tation efficiency Act of 1991 (Public law 1002 240; 105 Stat. 1921)); and (2) after apportionments and allocations are determined in accordance with sub- section (a)\u2014 (A) adjust the amount apportioned and al- located to the State for Federal-aid high- ways for fiscal year 1997 by the amount of the increase or decrease; and (B) adjust accordingly the obligation limi- tation for Federal-aid highways distributed to the State under this Act. (c) NO EFFECT ON 1996 DISTRIBUTIONS.\u2014 Nothing in this section shall affect any ap- portionment, allocation, or distribution of obligation limitation, or reduction thereof, to a State for Federal-aid highways for fiscal year 1996. (d) EFFECTIVE DATE.\u2014This section shall take effect on September 30, 1996. WELLSTONE AMENDMENT NO. 5142 Mr. LAUTENBERG (for Mr. WELLSTONE) proposed an amendment to the bill, H.R. 3675, supra; as follows: At the appropriate place in title IV, insert the following: SEC. 4 . TRANSFER OF FUNDS AMONG MIN- NESOTA HIGHWAY PROJECTS. (a) IN GENERAL.\u2014Such portions of the amounts appropriated for the Minnesota highway projects described in subsection (b) that have not been obligated as of December 31, 1996, may, at the option of the Minnesota Department of Transportation, be made available to carry out the 34th Street Cor- ridor Project in Moorhead, Minnesota, au- thorized by section 149(a)(5)(A)(iii) of the Surface Transportation and Uniform Reloca- tion Assistance Act of 1987 (Public Law 100 17; 101 Stat. 181) (as amended by section 340(a) of the National Highway System Des- ignation Act of 1995 (Public Law 104 59; 109 Stat. 607)). (b) PROJECTS.\u2014The Minnesota highway projects described in this subsection are\u2014 (1) the project for Saint Louis County au- thorized by section 149(a)(76) of the Surface Transportation and Uniform Relocation As- sistance Act of 1987 (Public Law 100 17; 101 Stat. 192); and (2) the project for Nicollet County author- ized by item 159 of section 1107(b) of the Intermodal Surface Transportation Effi- ciency Act of 1991 (Public Law 102 240; 105 Stat. 2056). WYDEN (AND OTHERS) AMENDMENT NO. 5143 Mr. LAUTENBERG (for Mr. WYDEN, for himself, Mr. KERRY, and Ms. MOSELEY-BRAUN) proposed an amend- ment to the bill, H.R. 3675, supra; as follows: At the appropriate place, insert the fol- lowing new section: SEC. . TRAIN WHISTLE REQUIREMENTS. No funds shall be made available to imple- ment the regulations issued under section 20153(b) of title 49, United States Code, re- quiring audible warnings to be sounded by a locomotive horn at highway-rail grade cross- ings, unless\u2014 (1) in implementing the regulations or pro- viding an exception to the regulations under section 20153(c) of such title, the Secretary of Transportation takes into account, among other criteria\u2014 (A) the interests of the communities that have in effect restrictions on the sounding of a locomotive horn at highway-rail grade crossings as of July 30, 1996; and (B) the past safety record at each grade crossing involved; and (2) whenever the Secretary determines that supplementary safety measures (as that term is defined in section 20153(a) of title 49, United States Code) are necessary to provide an exception referred to in paragraph (1), the Secretary\u2014 (A) having considered the extent to which local communities have established public awareness initiatives and highway-rail cross- ing traffic law enrollment programs allows for a period of not to exceed 3 years, begin- ning on the date of that determination, for the installation of those measures; and (B) works in partnership with affected communities to provide technical assistance and to develop a reasonable schedule for the installation of those measures. LAUTENBERG AMENDMENTS NOS. 5144 5145 Mr. LAUTENBERG proposed two amendments to the bill, H.R. 3675, supra; as follows: AMENDMENT NO. 5144 On page 19, strike lines 10 through 12 and insert ”For the cost of direct loans, $8,000,000, as authorized by 23 United States Code 108.” AMENDMENT NO. 5145 On page 60, line 20, strike ”103 311” and in- sert ”103 331”. COHEN (AND OTHERS) AMENDMENT NO. 5146 Mr. COHEN (for himself, Ms. SNOWE, Mr. SMITH, and Mr. GREGG) proposed an amendment to the bill, H.R. 3675, supra; as follows: Insert at the appropriate place: ”No funds appropriated under this act shall be used to levy penalties prior to Sep- tember 1, 1997 on the States of Maine or New Hampshire based on non-compliance with federal vehicle weight limitations”. GRAMM (AND OTHERS) AMENDMENT NO. 5147 Mr. GRAMM (for himself, Mr. BOND, Mr. COATS, Mr. ABRAHAM, Mr. FAIR- CLOTH, Mrs. HUTCHISON, Mr. LEVIN, Mr. WARNER, and Mr. HELMS) proposed an amendment to amendment No. 5141 VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00097 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9306 July 31, 1996 proposed by Mr. BAUCUS to the bill, H.R. 3675, supra; as follows: At the end of the amendment, add the fol- lowing: SEC. . Prior to September 30, 1996, the Secretary of the Treasury and the Secretary of Transportation shall conduct a review of the reporting of excise tax data by the De- partment of the Treasury to the Department of Transportation for fiscal year 1994 and its impact on the allocation of Federal aid high- ways. If the President certifies that all of the fol- lowing conditions are met: 1. A significant error was made by Treas- ury in its estimate of Highway Trust Fund revenues collected in fiscal year 1994; 2. The error is fundamentally different from errors routinely made in such esti- mates in the past; 3. The error is significant enough to justify that fiscal year 1997 apportionments and al- locations of highway trust funds be adjusted; and finds that the provision in B appro- priately corrects these deficiencies, then subsection B will be operative. (b) CALCULATION OF FEDERAL-AID HIGHWAY APPORTIONMENTS AND ALLOCATIONS.\u2014(1) IN GENERAL.\u2014Except as provided in paragraph (2), for fiscal year 1997, the Secretary of Transportation shall determine that Fed- eral-aid highway apportionments and alloca- tions to a State without regard to the ap- proximately $1,596,000,000 credit to the High- way Trust Fund (other than the Mass Tran- sit Account) of estimated taxes paid by States that was made by the Secretary of the Treasury for fiscal year 1995 in correc- tion of an accounting error made in fiscal year 1994. (2) ADJUSTMENTS FOR EFFECTS IN 1996.\u2014The Secretary of Transportation shall, for the State\u2014 (A) determine whether the State would have been apportioned and allocated an in- creased or decreased amount for Federal-aid highways for fiscal year 1996 if the account- ing error referred to in paragraph (1) had not been made (which determination shall take into account the effects of section 1003(c) of the Intermodal Surface Transportation Effi- ciency Act of 1991 (Public Law 102 240; 105 Stat. 1921)); and (B) after apportionments and allocations are determined in accordance with paragraph (1)\u2014 (i) adjust the amount apportioned and allo- cated to the State for Federal-aid highways for fiscal year 1997 by the amount of the in- crease or decrease; and (ii) adjust accordingly the obligation limi- tation for Federal-aid highways distributed to the State under this Act. (3) NO EFFECT ON 1996 DISTRIBUTIONS.\u2014Noth- ing in this section shall affect any apportion- ment, allocation, or distribution of obliga- tion limitation, or reduction thereof, to a State for Federal-aid highways for fiscal year 1996. (4) EFFECTIVE DATE.\u2014This section shall take effect on September 30, 1996. f AUTHORITY FOR COMMITTEES TO MEET COMMITTEE ON ARMED SERVICES Mr. MURKOWSKI. Mr. PRESIDENT. I ask unanimous consent that the Com- mittee on Armed Services be author- ized to meet at the following times on Wednesday, July 31, 1996: 9:45 a.m. in executive session, to con- sider certain pending military nomina- tions; 11:15 a.m. in open session, to consider the nomination of Lieutenant General Howell M. Estes III, USAG for appoint- ment to the grade of general and to be Commander-in-Chief, United States Space Command\/Commander-in-Chief, North American Aerospace Defense Command; 1:30 p.m. in open session, to consider the nomination of Admiral Jay L. Johnson, USN for reappointment to the grade of admiral and to be Chief of Naval Operations; and 3:30 p.m. in executive session, to con- sider certain pending military nomina- tions. The Presiding Officer. Without objec- tion, it is so ordered. COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the Com- mittee on Environment and Public Works be granted permission to meet to consider the nominations of Nils J. Diaz, and Edward McGaffigan, Jr., each nominated by the President to be a Member of the Nuclear Regulatory Commission, Wednesday, July 31, 1996, immediately following the first vote, in the President’s Room. The PRESIDING OFFICER. Without objection, it is so ordered. COMMITTEE ON FOREIGN RELATIONS Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the Com- mittee on Foreign Relations be author- ized to meet during the session of the Senate on Wednesday, July 31, 1996, at 2 p.m. The PRESIDING OFFICER. Without objection, it is so ordered. COMMITTEE ON THE JUDICIARY Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the Com- mittee on the Judiciary be authorized to meet during the session of the Sen- ate on Wednesday, July 31, 1996, at 10:00 a.m. to hold a hearing on ”Losing Ground on Drugs: The Erosion of Amer- ica’s Borders.” The PRESIDING OFFICER. Without objection, it is so ordered. COMMITTEE ON THE JUDICIARY Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the Com- mittee on the Judiciary be authorized to meet during the session of the Sen- ate on Wednesday, July 31, 1996, at 2:00 p.m., to hold a hearing on judicial nominees. The PRESIDING OFFICER. Without objection, it is so ordered. COMMITTEE ON LABOR AND HUMAN RESOURCES Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the Com- mittee on Labor and Human Resources be authorized to meet in executive ses- sion during the session of the Senate on Wednesday, July 31, 1996, at 9:30 a.m. The PRESIDING OFFICER. Without objection, it is so ordered. SELECT COMMITTEE ON INTELLIGENCE Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be author- ized to meet during the session of the Senate on Wednesday, July 31, 1996 at 9:30 a.m. to hold an open hearing on In- telligence Matters. The PRESIDING OFFICER. Without objection, it is so ordered. SUBCOMMITTEE ON INTERNATIONAL FINANCE Mr. MURKOWSKI. Mr. President, I ask unanimous consent that the Sub- committee on International Finance of the Committee on Banking, Housing, and Urban Affairs be authorized to meet during the session of the Senate on Wednesday, July 31, 1996, to conduct a hearing on H.R. 361, ”The Export Ad- ministration Act of 1996.” The PRESIDING OFFICER. Without objection, it is so ordered. f ADDITIONAL STATEMENTS MORE THAN A ROOF \u2211 Mr. SIMON. Mr. President, for many years I have had the privilege of know- ing Ed Marciniak, now president of the Institute of Urban Life at Loyola Uni- versity, who chairs the City Club of Chicago’s committee on the future of public housing in Chicago. He had a commentary on public hous- ing that was published in Common- wealth, which is really more of a com- mentary on poverty and urban life and what we ought to do. He says: The average income of families living in Chicago’s public housing is $2,500. Broadly speaking, a fatal flaw of these projects is that they provide tenant families with little else than space: little in the way of oppor- tunity or incentive to better themselves and their children. In most cities the high-rise projects, often with as many inhabitants as a small town, house not a single teacher, nurse, firefighter, manager, technician, or civil servant and offer few role models for the children, few standard-setters for the adults, and scant motivation to become self- sufficient. Recently Congress has approved a pilot project called Moving to Oppor- tunity. Marciniak points out that it was based on a model in Chicago. He writes: Moving to Opportunity was modeled on a successful program sponsored by Chicago’s Leadership Council for Metropolitan Open Communities. Since 1976, the Council has used federal funds to screen and then relo- cate more than 6,000 public housing families, most of them female-headed, into privately owned apartments, half of them in suburbs. By bidding good-by to public housing, most of the families not only bettered their living conditions but also greatly improved their children’s opportunities. Among the subur- ban children only 5 percent dropped out of school, 54 percent attended college, and 27 percent found jobs. When people’s expecta- tions were raised and standards established, many started living up to them. Residential mobility made a difference. I have had a chance to observe this program and it is a great step forward. With a little creativity and sensi- tivity we can do much better in this country. What is required is that we recognize that we have to do something to ad- dress the problems of those who are the least successful now in our society. They lack success not because of lack of ability in most cases, but because they find themselves trapped. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00098 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9307 July 31, 1996 We have to open that trap. Mr. President, I ask that the article from Commonweal be printed in the Record. The article follows: MORE THAN A ROOF\u2014PROMISING MOVES IN PUBLIC HOUSING (By Ed Marciniak) Not long ago, I attended a national hous- ing conference where a featured panelist was a woman introduced as a longtime resident of public housing. She herself then noted, matter-of-factly, that she had lived in public housing for forty-five years. For me, that ad- mission was mind-blowing. Even more star- tling, however, was the realization that her remark had not caused even a ripple of sur- prise among the subsidized-housing profes- sionals in the audience. Nonchalantly, they had come to accept public housing’s way of life as a given for which they felt no personal responsibility. It’s unlikely that informed members of the general public are so complacent, whether as taxpayers concerned with the costs or as citizens aware of the pathologies associated with much public housing. People in the know are beginning to insist that govern- ment subsidies must not only meet their re- cipients’ immediate needs but must be ori- ented toward helping them become self-sup- porting. Recent developments in and around Chicago, the area I know best, confirm that most public housing clients, the poorest of the urban poor, have not given up. Many have already helped themselves escape the trap that public housing has become. We now know that there are ways of giving them a chance to do so that have been tested, at least on a small scale, and found workable. These approaches deserve to be better known and more broadly applied. But, as will be seen, many questions need to be asked and answered. In a bipartisan effort, Congress is cur- rently overhauling the U.S. Housing Act of 1937. Despite its noble purpose and promising beginnings with scattered, low-rise public housing, that legislation has produced some- thing of a monster. Today the U.S. Depart- ment of Housing and Urban Development [HUD} finances some 1.4 million apartments owned and managed by local hosing authori- ties. Another 1. 5 million privately owned units are federally subsidized through rent vouchers of one kind or another. Taking into account these programs and a host of others sponsored by HUD, the department has be- come the nation’s largest slumlord. But the problem is not primarily the num- bers or costs. Our giant high-rise public housing projects have become ghettos for the urban poor: conglomerations riddled with drugs, gangs, crime, and poverty, peopled by far too high a proportion of single-family households, some now in their third and fourth generation. The average income of families living in Chicago’s public housing is $2,500. Broadly speaking, a fatal flaw of these projects is that they provide tenant families with little else than space: little in the way of opportunity or incentive to better them- selves and their children. In most cities the high-rise projects, often with as many inhab- itants as a small town, house not a single teacher, nurse, firefighter, manager, techni- cian, or civil servant and offer few role mod- els for the children, few standard-setters for the adults, and scant motivation to become self-sufficient. In recognition of these realities, Congress has persuaded HUD to begin dismantling these housing projects by giving residents, through rent vouchers, the option of living in privately owned housing in mixed-income neighborhoods; by scattering low-rise public housing throughout the city and its suburbs; by tearing down vacant high rises instead of rebuilding them; by using HUD dollars to at- tract other investment in additional housing for families of low and moderate income; and by stricter screening of a applicants and the prompt eviction of lawbreakers who are drug dealers or gang leaders. In April, HUD Sec- retary Henry G. Cisneros released a report on ”The Transformation of America’s Public Housing,” reporting these and other steps HUD is taking to ensure ”long-term recov- ery.” Congress has approved, though as a pilot project, a ”Moving to Opportunity” initia- tive, which offers public housing families a chance to move to scattered-site public housing in the city or the suburbs. This mod- estly funded program, already in operation in Baltimore, Boston, Los Angeles, New York, and elsewhere, is being evaluated by its success or failure in escorting families into the urban mainstream. Important data will be collected about families who become home owners or leaseholders paying conven- tional rents. What were the bridges or esca- lators they used to leave public housing? Who provided the ladders of opportunity? Are the relocated families now in better housing? How many stayed in the suburbs, how many moved back to the city? ”Moving to Opportunity” was modeled on a successful program sponsored by Chicago’s Leadership Council for Metropolitan Open Communities. Since 1976, the Council has used federal funds to screen and then relo- cate more than 6,000 public housing families, most of them female-headed, into privately owned apartments, half of them in suburbs. By bidding good-by to public housing, most of the families not only bettered their living conditions but also greatly improved their children’s opportunities. Among the subur- ban children, only 5 percent dropped out of school, 54 percent attended college, and 27 percent were enrolled in a four-year college. As for the parents, 75 percent found jobs. When people’s expectations were raised and standards established, many started living up to them. Residential mobility made a dif- ference. This good news is part of a larger move- ment toward depopulation of Chicago’s fam- ily projects; occupancy has decreased from 137,000 in 1980 to 80,000 in 1995. More impor- tantly, the council’s work reflects a growing awareness among government and private funders of antipoverty programs of the need to find answers for certain key, long-ne- glected questions. How do people shed chron- ic dependency to achieve self-sufficiency? How do we reverse the nation’s poverty rate, which declined in the 1970s and early 1980s but has been inching up ever since? How is the underclass turned into a working class? Accordingly, the role of the private sector serving poverty-engulfed neighborhoods is also under scrutiny. Churches, social service agencies, youth clubs, and counseling cen- ters are being asked to link short-term aid to more lasting improvement, to do more than collect the statistics on Sunday attend- ance, on youngsters who use the gym, on Christmas baskets, on kids in day care, on midnight basketball, or on mothers in self- improvement classes. Funders want to know whether and how their dollars made a dif- ference: How many of the families were no longer on public aid? What percentage of the teen-agers finished high school? How many adults found jobs? Similar questions can be and are now being asked about the persistence of homelessness. How did it happen that the homeless were made the immediate responsibility of local housing officials? Many of the homeless are jobless or the victims of a family break-up. Many were evicted from mental health insti- tutions and dumped mercilessly on city streets. Some are vagabonds, down-and- outers addicted to drugs and\/or alcohol. All may qualify as homeless, but what they des- perately need encompasses a lot more than a space to live in. Too often, of course, discussion of such problems devolves into ideological debates, focused on ”Who is to blame?” rather than on ”What is to be done?” On homelessness, however, as with public housing, there are pragmatic initiatives in play. An example is Deborah’s Place in Chicago, a shelter for homeless women but with a difference. From day one, the purpose of Deborah’s Place has been to help the women return to a more normal lifestyle\u2014a job, a family, or, in case of need, to a caring institution that matches the woman’s special problem. At three dif- ferent locations, each with a staged program. Deborah’s Place works to ”help women leave the streets and shelters behind for new lives of independence, productivity, and well- being.” As clients move up and out, they leave room and time for other women to be assisted. On ending joblessness, strategy can also make a difference. Suburban Job Link, with offices in Chicago’s South Lawndale commu- nity and suburban Bensenville, uses a unique method for promoting upward mobility. On contract with relatively job-rich suburban employers, the organization buses workers to temporary jobs that often lead to ”work- ing interviews” for applicants who want to demonstrate their potential to fill entry- level positions. Factory owners and other employers are invited to hire any worker full-time without a fee, thus supplying the missing rung on a stepladder to year-round employment. Through its ”no-charge” ar- rangement, Job Link will place 1,000 ”temps” into regular jobs with benefits in the next twelve months. Finally, it con- tinues to bus the newly hired until they ar- range transportation on their own, through a car pool, for example. As a not-for-profit, Job Link is funded by government and foun- dation grants and by its own earned income. Another strategic point of entry for en- couraging upward mobility has to do with school choice. Over the past decade it has be- come evident that nonpublic schools, espe- cially those under religious sponsorship, have been remarkably successful in easing not only children but also their low-income parents into the urban mainstream. Nearly one of every four youngsters enrolled in an elementary or secondary school in Chicago attends a nonpublic school. Now, hundreds of scholarships to attend Catholic, Lutheran, and Episcopal schools are given to young- sters who live in the Cabrini Green, Henry Horner, Rockwell Gardens, and other public housing projects. The aid covers only part of the tuition, requiring parents or guardians to pay the balance and fees. Though statistics are not available, it is our experience that the decision by a public housing family to enroll children in a private school is often the first step that eventually leads to an apartment in the private housing market. The choice made by a deserted mother, taken at personal sacrifice, is re- warded and reinforced when she sees that her child is in fact making educational progress; she is likely to strive even harder to climb out of poverty in order to continue sending her child to the school of her choice. A final example\u2014useful even though at present it is a matter of aspiration rather than achievement\u2014returns to a housing pro- gram. It will be operative in 1997 when Chi- cago’s Lawson YMCA finishes rehabilitating its twenty-five-story building to provide 583 single-occupancy rooms. The difference here lies in the overall aim, which is not just to provide livable space for otherwise homeless VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00099 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9308 July 31, 1996 persons but also to help people who are homeless, jobless, and difficult-to-employ get jobs, preferably within walking distance, and become self-sufficient. The YMCA staff will work, for example, with people who are recovering from substance abuse by concen- trating aggressively on job training and job getting. Success will be measured not just by occupancy rates but, more importantly, by the number who have moved to independent living. As with the other examples, the virtue of the YMCA initiative lies in its responding not just to today’s need but also to tomor- row’s challenge. To paraphrase columnist Robert J. Samuelson, the United States struggles through a soul-searching transi- tion from an era of entitlement to an era of responsibility.\u2211 f MODEL EMPLOYMENT PROGRAMS FOR EX-OFFENDERS \u2211 Mr. CAMPBELL. Mr. President, I take this opportunity to recognize the continued outstanding accomplish- ments of a model employment program for ex-offenders in my home State of Colorado. The Golden Door program, founded and developed by Bill Coors, president of the Coors Brewing Co., was imple- mented 28 years ago this month. The goal of Golden Door is to provide ex-of- fenders with a comprehensive program for reentry into society with a focus on employment. In addition to an employ- ment opportunity targeting people with limited employment skills, the Golden Door program offers an edu- cation, training in personal finances, general counseling, and the stability that allows people to successfully maintain a job. Eighty percent of the participants in the Golden Door program complete it successfully and move on to assume full-time positions within the corpora- tion. While this kind of opportunity is somewhat rare, Colorado has proven that the concept can be effectively du- plicated, proving profitable to the sponsoring business, the community and the participants. Bill Coors’ vision for a better com- munity and a second change for people has left the State of Colorado with his legacy of philanthropic efforts and a solid example to which businesses, small and large alike, can aspire. It was in 1994 that I first called the atten- tion of Congress to the Golden Door program, commending its good will and success. I also used that opportunity to express my support for the Targeted Jobs Tax Credit\u2014now the Work Oppor- tunity Tax Credit\u2014initiative, a pro- gram designed to assist smaller busi- nesses in employing people of similar target groups. Since then, a variety of other legisla- tive action has been taken to encour- age the successful reentry of ex-offend- ers into society. Employment training is being institutionalized in prisons, and Congress is working to safeguard the continuation of these programs as we move through the legislative proc- ess. In addition to highlighting the ongo- ing success of Golden Door and the Na- tion’s concern over reducing the rate of recidivism, I would like to recognize a sister program to Golden Door called Gateway Through the Rockies, a com- munity partnership to reduce criminal recidivism. The El Paso County, CO, Sheriff’s Department recently kicked off Gateway to provide inmates nearing release with a comprehensive program of education, counseling, work experi- ence, social skills training and post-re- lease support. Modeled after Golden Door, Gateway offers ex-offenders a second chance at no cost to taxpayers. Golden Door and Gateway Through the Rockies are shining examples of how communities and businesses can work together toward improving the quality of life for the community, while drastically reducing the cost we now incur by simply shuffling people in and out of the penal system. On July 11 of this year, my colleague, Senator GRAHAM, stated in a Senate floor state- ment that in Florida, ”the recidivism rate among those prisoners who have been through our prison industry pro- gram is one-fifth of the recidivism rate of the population as a whole.” These figures are impressive. It is my hope that in our effort to practice fiscal re- sponsibility and become a less intru- sive and yet more responsive govern- ment, we would make practical deci- sions regarding that segment of our community that has paid its debt and is capable of making a positive con- tribution. Programs serving as this segue simply makes sense. Mr. President, I would like to state my commitment to encouraging such programs and exploring potential legis- lative initiatives to facilitate commu- nity partnerships to reduce recidivism. Again, my thanks to all of the individ- uals, organizations and businesses for their ground-breaking contributions to community-based programs in Colo- rado and across the country.\u2211 f CITY CAB CO. \u2211 Mr. LEVIN. Mr. President, I rise to honor City Cab Co. on its 68th anniver- sary. City Cab Co. is the Nation’s old- est African-American taxicab associa- tion. On July 17, 1928, a group of ambitious African-American taxi drivers met in Detroit to discuss the possibility of starting a nonprofit corporate associa- tion because they were not accepted at the major cab company. Two weeks later, City Cab Co. was founded with nine charter members. City Cab mem- bership has grown over the last 68 years, and as the company has re- mained in the city since its inception, it has become closely involved with the community. City Cab has transported children with special needs to and from school for over 30 years free of charge. This year, an anniversary gala will benefit these children further with pro- ceeds going to scholarship fund. City Cab has shown the people of De- troit what it means to be a supportive partner of the community. I know my Senate colleagues join me in congratu- lating City Cab Co. on its 68th anniver- sary.\u2211 f THE GATHERING STORM \u2211 Mr. BRYAN. Mr. President, I urge my colleagues to read an article by Maj. Gen. Edward J. Philbin, which I ask be printed in the RECORD. In the wake of downsizing our national de- fense apparatus, we will come to rely even more on the capabilities of United States’ Reserve Forces. As Members of Congress, we should take it upon our- selves to insure that guard and reserve units are prepared to carry this mis- sion well into the next century. The article follows: [From National Guard, June 1996] THE GATHERING STORM (By Maj. Gen. Edward J. Philbin (ret.)) Recently, I was conducting experiments on the aerodynamic behavior of low-altitude, low-velocity spherical bodies at the Andrews Air Force Base golf course. Like all weather- wary flyers, I kept a suspicious eye on the mutating cloud formations overhead. Across the initially cloudless, blue sky crept wisps of white, which slowly burgeoned into rising silver cloud towers, the pinnacles fattening into great overhanging mushrooms of gold and purple. Progressively, the sky was dark- ened by a great sea of these forbidding gray thunderstorms. And then, these ”duty boomers” unleashed a lightning barrage, which generated peals of thunder, followed by a monsoon-like deluge of water. With apologies to Winston Churchill for appropriating one of his titles, I was struck by the similarity between this atmospheric spectacle and the acerbic treatment ac- corded the Army Guard since Operation Desert Shield\/Desert Storm almost six years ago. At that time an orchestrated public af- fairs attack on the Army Guard was launched, concentrating on the three round- out brigades federalized on November 30, 1990. The most popular target of abuse was Georgia’s 48th Infantry Brigade, roundout to the 24th Infantry Division, because of its al- leged post-mobilization ineptitude at the Na- tional Training Center (NTC). The fact that the 48th Brigade had, before mobilization, been consistently evaluated as combat ready by the 24th Infantry Division was ignored. Also ignored was the 48th’s call-up 31\u20442 months after its parent division was alerted for Gulf deployment. Also never mentioned was the fact that, despite all the obstacles placed in its path at the NTC, the 48th was revalidated as combat ready in 91 calendar days, which was just one day more than scheduled, and on the very day the cease-fire went into effect. During those 91 days, the 48th Infantry Brigade spent only 65 days ac- tually training. Despite these facts, the 48th has been con- tinually flogged and castigated by the media for ”failure” to deploy to the combat area. With relentless determination, the media have published a rash of articles emphasizing fictional failings rather than positive accom- plishments of the 48th, concluding that since the 48th ”couldn’t hack it,” then none of the Army Guard ”can hack it.” This World War II tactic relies on the theory that ”if you tell a big enough lie, and tell it often enough, most people will eventually believe it.” The audience for which this propaganda is in- tended is the members of Congress in the hope they will relegate the Army National Guard to a state constabulary. The Reserve Officers Association (ROA), in its May issue of the ROA National Security VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00100 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9309 July 31, 1996 Report, published the written testimony of Richard Davis, General Accounting Office (GAO), which was presented at a hearing be- fore Senator John McCain (R-Arizona). Davis, among other things, claimed that ”at least one reserve component has not suffi- ciently adapted to the new challenges [of re- gional dangers rather than a global Soviet threat] and therefore may not be prepared to carry out its assigned missions.” Guess which one? It’s the Army National Guard. Davis went on to state that (1) the ”Army National Guard has considerable excess com- bat forces” while the ”big Army” hungers for more combat support units; (2) ”the abil- ity of some Army National Guard combat brigades to be ready for early deployment missions * * * is highly uncertain,” sug- gesting that Army National Guard roles and missions should be ”modified;” and (3) the Air National Guard force dedicated to conti- nental air defense ”* * * is not needed today” and eliminating them would free ”considerable funds” for better use. Since this issue will be resolved cooperatively with the United States Air Force and the Con- gress, no further comment will be made here. Davis, whose resume\u0301 is devoid of any hint of military experience, grounded his opinion upon the alleged military deficiencies of the three Army National Guard brigades, fed- eralized for the Gulf War. However, those three brigades met the Army’s deployability criteria, but were never given the mission to deploy and no sealift was ever requested or scheduled for them. I repeat: All three roundout brigades and the three additional Guard battalions (Texas, Alabama and South Carolina) met the readiness deployability criteria established by the Army Mobiliza- tion and Operations Planning System (AMOPS) on the first day of federalization. The truth, obscured by the slanderous bil- lingsgate that has been spewed on the Army Guard, is that Operation Desert Shield\/ Desert Storm was a significant success for the Army National Guard as well as the ”big Army.” Army Guard volunteers filled crit- ical positions early in the crisis. It was suc- cessful in rapidly deploying 60 COL\/LTC level commands to SWA, all of which made a sig- nificant contribution to Operation Desert Storm\/Desert Shield. Due to years of preparation, Army Guard units were ready for federalization and were successful. All Army Guard units were at their respective mobilization stations within 72 hours of federalization. More than 97 per- cent of ARNG units met or exceeded deployability criteria when federalized. Sixty-seven percent of all Army Guard units deployed within 45 days of being federalized. The primary obstacle to an even earlier de- ployment was unavailability of sealift and airlift. Almost 100 percent of the Army Guard sol- diers called-up reported for active duty and more than 94 percent of the units’ soldiers were deployable. Of the unit troops, only six percent (3,974 of 62,411) were ineligible for de- ployment under statutory provisions and DoD guidelines. Before federalization, the combat readiness of the Army National Guard was at an his- toric high. The Army Guard demonstrated its ability to alert, federalize and rapidly de- ploy to the theater of operations (CENTCOM)\u2014reports to the contrary not- withstanding. Did Mr. Davis (B.S. degree in accounting; M.S. in business administration) consider any of these data in arriving at the apoca- lyptic conclusions about the Army National Guard’s military prowess? If he did, he didn’t mention it in his written or oral testimony. But his oral testimony was liberally but- tressed with statements such as: ”I think,” ”I believe,” ”it’s my opinion,” but no evi- dence was given. Our ”good friends” in the ROA never men- tioned these facts to their readers. Nor did ROA mention that for various reasons a con- siderable portion of the Army Reserve is not deployable. Probably that is the reason the Army Reserve is energetically blocking the path of Army Reservists who wish to trans- fer to the Army Guard. ROA claims that the purpose of its National Security Report is to inform Reservists of the facts of readiness issues. Yet, ROA publishes only material that denigrates the Army Guard. The motive may be found in the following excerpt from a commentary printed beside the Davis testi- mony: ”Anyone reading carefully between the lines of the articles contained in this month’s NSR will become aware of the riptides and undercurrents that can impact negatively on the future size and role of the Reserves if we (ROA) are not careful. The problem is that many Reserve officers as- signed to units feel they do not have to join ROA in order to take advantage of the bene- fits of the highly effective legislative work ROA does on their behalf on Capitol Hill.” Sounds more like a membership drive than a crusade for the truth. ROA followed Mr. Davis’ fantasy with two other articles presented as if they were hot- off-the-press news flashes: ”21st Century Force: A Federal Army and a Militia” and ”The State Militia.” In fact, as the Brits say, they were ”mutton dressed up as lamb,” having been written in 1993 at the Army War College’s Strategic Studies Institute, by COL Charles Heller, who was an Army Reserve ad- visor. Heller’s first article blames the ”inordi- nate influence” of the AGAUS and NGAUS for the ”big Army’s” alleged difficulty in structuring a stronger Total Army. Not sur- prisingly, he paints the Army Reserve and ROA as more responsive to and supportive of the ”big Army.” Predictably, Heller alleges that the Army Reserve call-up and its serv- ice in the Gulf War were exemplary, while Army Guard combat maneuver elements re- quired, ”lengthy post-mobilization training and then [did] not deploy to the Gulf.” Heller concludes that, ”the Total Army should be organized into two components\u2014a federal Army (Active Army and the U.S. Army Re- serve) and a militia (the state Army Na- tional Guard.”) He stops short, just barely, of advocating equipping the Army Guard with horses, lances and swords. Heller proposes that the Army Reserve be made responsible for the Federal Emergency Management Agency (FEMA). That’s very interesting, since the ROA leadership, which published Heller’s musings, now professes to have utterly no interest in seeking new jobs for the Army Reserve. Yet, they feverishly sought and probably still seek passage of the Laughlin Bill (H.R. 1646), which would have interjected the Army Reserve into the Na- tional Guard’s constitutional state mission. Very solicitous of the National Guard’s welfare, Heller worries that the Army Guard will have no time to train adequately for both the state and federal mission, alleging without explanation that the Army Guard failed in the Gulf deployment and in the Los Angeles riots. He proposes of that the Army Guard should concentrate on the state mis- sion. He also advocates USAR involvement in the state, as well as the federal, mission in a contradiction in his argument, which in his exuberance to redesign the Army Guard, he ignores. His opinions and conclusions are heuristic, self-serving, internally contradictory and unsupported by any evidence. All of these al- legations are refuted by the actual perform- ance of the Army Guard in the Gulf War. But Heller performs a valuable service by raising an extremely important question: Why have two Army Reserve components? Why, in- deed? Certainly, the constitutional framers recognized, as did George Washington, the need to establish a full-time standing army and accordingly gave Congress the power to raise and support armies\u2014and only standing armies were contemplated by that particular language. The Founding Fathers never in- tended and the sovereign states never grant- ed the federal government the power to orga- nize and maintain a federal militia over which the states would have no control. They recognized the necessity of a well-regu- lated militia and, in the Militia Clause of the Constitution (Art. I, Sec. 8, Cl. 16), they made provisions accordingly. It is under this clause that the militia and its modern coun- terpart, the National Guard, have developed. A propaganda storm has been gathering and thickening around the Army National Guard since the Gulf War. These libels are intended to generate thunderous doubt about the capability of the Army Guard to perform its federal mission; to generate lightning bolts of criticism of the Army Guard from the Congress and ultimately to create a leg- islative deluge in which the Army Guard will sink into oblivion. This storm has been ener- gized by the hunger of the National Guard would-be competitors to co-opt our missions and the share of the federal military budget that supports these missions. There are two ways to deal with an immi- nent thunderstorn. One way is to huddle under an umbrella, close your eyes to the lightning, put your fingers in your ears to mute the thunder and hope for survival. The other way is to seed the clouds with a defusing substance like silver iodide, dis- sipate their destructive energy and make them vanish. The time may be at hand when supporters of the National Guard must resort to the defusing technique, which might very well answer, once and for all, Heller’s ques- tion. Why have two Army Reserve compo- nents? Why, indeed, when the United States Con- stitution authorizes only one\u2014the National Guard. Note: As this article was being written, troops of the 48th Brigade were packing up to once again deploy to the NTC. On April 23, Mr. Davis’ GAO Division notified DoD that it was initiating, on its own authority, a re- view of ”Roles, Missions, Functions and Costs of the Army Guard and Army Re- serve.” Be assured that the NGAUS will be scrutinizing both events for any signs of dis- sembling.\u2211 f LAKE SUPERIOR STATE UNIVERSITY \u2211 Mr. LEVIN. Mr. President, I rise today to honor Lake Superior State University on the 50th anniversary of its founding. The University has a long and interesting history. In 1822, Colonel Hugh Brady estab- lished a fort in Sault Ste. Marie along the Saint Mary’s River. The fort was later named after Colonel Brady, its first commanding officer. In 1866, Fort Brady was rebuilt to protect the State lock and canal from invasion or de- struction. In 1892, Fort Brady was moved to a nearby hill-top because in- creased commercial shipping raised the value of river-front property. During World War II, Fort Brady saw a lot of action as over 20,000 troops were stationed there for training. The Army used the winters of the region to condition its snowshoe troops for war- fare in northern Europe. At the end of VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00101 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9310 July 31, 1996 World War II, Fort Brady was placed on inactive status. After Fort Brady’s closing, local businessmen and officials were prompt- ed to find a way to keep the recently renovated buildings and property in use. At the same time that residents were working to keep Fort Brady func- tioning, the Sault branch of the Michi- gan College of Mining and Technology (currently Michigan Technological University) was being inundated with applications from war veterans. It was quickly decided that moving the school to Fort Brady would solve both prob- lems. In 1946, the Michigan College of Min- ing and Technology opened with a class of 272. The Sault Ste. Marie branch of- fered classes in chemical, electrical, and mechanical engineering and in for- estry. Michigan State University as- sisted in the founding of a general studies program that offered liberal arts credits for the first 2 years of course work that were transferrable to other institutions. In 1966, the college was renamed Lake Superior State College. The State Board of Education accorded the Col- lege 4-year status and authorized it to grant baccalaureate degrees. The Col- lege’s first class of 4-year students graduated in 1967. The College sepa- rated from Michigan Technological University in 1970, and on November 4, 1987, Governor James Blanchard signed legislation changing Lake Superior State from a College to a University. Over its 50 years, the University has grown steadily and currently has an enrollment of approximately 3,500 stu- dents. Lake Superior State has main- tained the school’s small personal at- mosphere, while achieving national recognition for accomplishments such as winning three NCAA division 1 hockey titles. In the field of academics, the school is particularly known for the quality of its criminal justice and nursing programs. Over the past 50 years, Lake Superior State University has prepared thou- sands of students, including several members of my Senate staff, to con- tribute to the State of Michigan and the Nation. I know my Senate col- leagues will join me in honoring Lake Superior State University on its 50 years of service to the community.\u2211 f TRIBUTE TO HARRIET TRUDELL \u2211 Mr. REID. Mr. President, I rise today to honor one of Nevada’s living leg- ends, Harriet Trudell. Harriet has had many titles during her life, from demo- cratic activist, human rights advocate, lobbyist, feminist, campaign manager, and champion of the poor, to mother and grandmother. To me, Harriet is both a valued friend and a trusted advi- sor. To her country and the State of Nevada, she is a courageous and tire- less fighter who can always be counted on to tell it like it is. For more than 20 years, Harriet has been a key player in the public arena, both in Nevada and across the Nation. She is an invaluable asset to all of the many organizations and groups to which she has lent her energy, her fer- vor, and her skill. Harriet has a strong voice, a quick mind, and a political acumen which she uses to great effect for those who often lack a voice in our society. Both her compassion and her outrage at injustice drive her to orga- nize, inspire, and fight, long after most would have been exhausted. From marching in protest down ”the Strip” in Las Vegas, to addressing the State legislature or lobbying Members of Congress, Harriet sticks to her convic- tions and never gives up the fight. Over the years, whether she was serv- ing on my staff or for another organi- zation, Harriet has fought for those in our society who are so often forgotten. Whenever there is a social issue con- fronting Congress, I can always expect a phone call from Harriet to remind me of my obligations. She is a champion of women, children, minorities, and the poor. When tough decisions have to be made, Harriet is there serving as our conscience. Even when her causes are politically unpopular, she steadfastly speaks out for justice. It is my pleasure to speak today in tribute to Harriet Trudell\u2014a Nevadan and a patriot\u2014and congratulate her on being selected for a well-deserved honor by the Southern Nevada Wom- en’s Political Caucus. Nevada and the Nation owe Harriet Trudell a debt of gratitude.\u2211 f TRIBUTE TO JOSH WESTON \u2211 Mr. LAUTENBERG. Mr. President, I rise today to pay tribute to Josh Wes- ton who is retiring as chief executive officer of Automatic Data Processing. It’s been said that you can’t judge a businessman by intentions, but by re- sults. If that’s true, then we can only judge Josh Weston as an incredible suc- cess. Josh joined ADP in 1970, and he has far exceeded the high expectations I had for him. During his 14 years as chairman and chief executive officer of ADP, Josh’s leadership accelerated ADP’s already extraordinary record of excellence. In the words of Wall Street Stock analyst James A. Meyer, ”This company is so well managed that it’s the envy of ev- eryone on Wall Street.” Josh has decided that it’s time to pass on his mantle at ADP, and he leaves a legacy that was not only good for ADP, its staff, clients, and share- holders, but for our country. His ex- traordinary talent for management will serve as a model to be studied by managers across our corporate society. ADP has grown phenomenally since two friends and I joined together in the early 1950’s. It went public in 1961 and continued to grow and prosper; in fact, ADP is the only public company in the Nation to achieve consistent, record growth in earnings and revenue for 139 quarters\u2014nearly 35 years. In the most recent quarter, which ended on March 31, ADP earned a net $143.9 million. Earnings grew 15 percent and revenue 20 percent. Yet, ADP’s success goes far beyond the debit and credit columns. It cur- rently has 350,000 clients, prepares checks for 19 million, and enjoys a fi- nancial history which has made inves- tors, many of them ordinary ADP em- ployees, financially secure. In addition, ADP provides jobs for 5,000 New Jerseyans and employs 29,000, world- wide. Much of this success is due to the leadership of Josh Weston over the past 14 years. He did it by following and building upon ADP’s established for- mula for success: striving to master new technology, to improve efficiency, to attract outstanding staff, to make profits every employee’s responsibility, and to develop new products and mar- kets . But perhaps most importantly, ADP has always invested in the morale, skills and training of its employees. These valuable men and women are ADP’s greatest resource, and Josh never failed to recognize this fact. In fact, in a recent article in the Newark Star Ledger, Josh credited ”team- work” as the key to ADP’s success. Although an extremely successful businessman, Josh has always believed that we make a living by what we gain, but we make a life by what we give. And Josh’s contributions to his com- munity are considerable. The numer- ous Pro Bono Boards on which he has been active include Chairman of Boys Town of Jerusalem; Chairman of Moun- tainside Hospital; Vice-Chairman of the Tri-State United Way; New Jersey Symphony Orchestra; Atlantic Health System; WNET\/Channel 13; I Have a Dream Foundation; Montclair Art Mu- seum; Montclair State University Busi- ness School; New Jersey Quality Edu- cation Commission; National Con- ference of Christians and Jews; New Jersey University of Medicine and Den- tistry; etc. This sampling undeniably demonstrates Josh’s breadth and depth of commitment. For the past 14 years, Josh Weston and ADP have been a great team, but Josh has decided that it’s time to relin- quish the CEO title to ADP’s current president and chief operating officer, Art Weinbach. As usual, Josh made an excellent decision. Management gurus John Clemens and Douglas Mayer once noted, ”From a management viewpoint, Shake- speare’s King Lear is a tragedy because Lear failed to understand two manage- rial concepts: the need to select com- petent successors and the need to let go.” Josh undeniably understands these concepts. However, ADP will miss his vision and vitality. Josh Wes- ton is not just a businessman or an ex- ecutive; his record of accomplishment, his commitment to his customers and his loyalty to his employees distin- guishes him as a true leader. I am proud to call him a friend, and I wish him the best as he goes on to other challenges. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00102 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9311 July 31, 1996 GEN. COLIN POWELL \u2211 Mr. SIMON. Mr. President, few would dispute the fact that one of the most distinguished and highly respected pub- lic servants in our lifetime is Gen. Colin Powell. I read in Carl Rowan’s column of a speech he gave at a commencement at Bowie State University. I contacted General Powell to obtain a copy of it, and I have just read his re- marks for the second time. They are common sense. They are compassionate. They are forward-look- ing. A significant part of his remarks, in my opinion, is what he has to say about affirmative action. Affirmative action can be abused like any good thing can be abused. His com- ments should be spread much more widely than simply to this graduating class. I ask that Gen. Colin Powell’s re- marks be printed in the CONGRESSIONAL RECORD. The remarks follow: REMARKS OF GEN. COLIN POWELL I can never speak at a commencement such as this without the years peeling away as I drift back into a reverie of my own com- mencement some 38 years ago. The world you have educated yourselves for is so very, very different from the world that I started in those many years ago. I graduated as the Cold War was deepening, as lethal arsenals of nuclear weapons were growing ever more ominous. The world in 1958 that I entered was a world that seemed on the verge of gloom and despair. For most of my years as a soldier, for most of those 35 years, I participated in a death struggle of survival between the forces of Communism and the evil empire, and the forces of good, the forces of democracy, that we rep- resented. It was a long, long struggle, a struggle that dominated most of my life. I can still remember the commission I got at my ROTC graduation in 1958. It was signed by Dwight Eisenhower, and the mission they gave Lt. Powell at that time was simple. ”Lt. Powell go to Germany. Take command of 40 soldiers. Find the City of Frankfurt. Go to the east of the City of Frankfurt. You’ll find the Iron Curtain. Lt. Powell, with your 40 soldiers, guard a small section of the Iron Curtain. In the time of war, don’t let the Russian Army come through. Got it?” ”Yes, sir. Got it.” And I did that for two years, successfully preventing World War II from breaking out. The years went by, and 28 years later, I got a new commission. This time from Ronald Reagan, and he made me a Lieutenant Gen- eral of Infantry And they gave me 75,000 proud American soldiers to command. And 28 yeas later, my mission was, ”General Powell, with your 75,000 soldiers, you’ll be in Ger- many, find the city of Frankfurt. Go the east of the city of Frankfurt. Guard a slightly wider section of the Iron Curtain this time. Try to do as good a job as you did when you were a Lieutenant.” During your years here at Bowie, that Cold War came to an end. The arsenals of nuclear weapons are being dismantled. The Soviet Union has broken into 15 individual nations, each seeking its own way down a difficult path of learning how democracy works, mas- tering the mysteries of free enterprise and market economic system. Communism lies discredited, its few remaining adherents cling to the corpse of a dead ideology. This historic reconciliation that has taken place between East and West has changed the old Cold War map that used to be red and blue with an Iron Curtain between the colors into a new kind of map, a map full of mosaic pieces, different colors as new nations and old nations seek to find a new way in a dif- ferent kind of world, a world structured as a world trading system as opposed to a world in conflict. This reconciliation that took place be- tween the Soviet Union and us is matched by other historic reconciliations that have taken place around the world in recent years. In the Middle East, the peace process is moving forward that we hope will be suc- cessful in finally bringing peace to that trou- bled part of the world. In South Africa, Nelson Mandela who was on trial when I graduated from college and who spent 27 years in prison, is now the president of his country. And in his triumph, he killed the evil ideology of Apartheid. In our own hemisphere, as I think back just seven years to when I was National Se- curity Advisor to the President of the United States and we had all kinds of problems here in Haiti, in Nicaragua, and Honduras and El Salvador and Panama and now, all of those nations are moving forward down the road to democracy with elected civilian leaders; all of them save one, Cuba. But Cuba cannot withstand the winds of historic change that are sweeping across our hemisphere. In Asia, the pattern is the same as we watch the Philippines and India, the Southeast Asia tiger, Vietnam, even China, emerging into this new world trading system. You are entering a world where our former adversaries, those that we were in conflict with for all these decades, have now become our economic competitors as well as becom- ing our new markets, new opportunities for us. It is not a world without problems or con- flicts. Bosnia, Liberia, North Korea, and other places of tragedy remind us on our tel- evision sets every evening of the dangers that will lurk ahead. Yet, I want you to see this as a time of hope and optimism because our value systems have prevailed. There is no cross-border war anywhere in the world today. No nation is fighting with any other nation across a national border. American troops on this Memorial Day are not at war. Instead, they are conducting peacekeeping operations. In Bosnia they are even working alongside Russian soldiers who were once their sworn enemies. The world that you are entering to make your contribution will increasingly be struc- tured not by armies staring at each other across iron or bamboo curtains. Instead, it will be structured by free world trade, by the power of the information and technology revolutions, by the instantaneous flow of capital, data, ideas, values. The cellular tele- phone, the fax machine and the Internet are breaking down all the old Cold War bound- aries that once divided people. What will not change is the responsibility that America will have to burden the very difficult, difficult task of world leadership. We have power that is trusted. We are still a beacon of freedom, and we are still an exam- ple of what can be achieved, what can be ac- complished when free people are allowed to determine their own destiny. With the end of the Cold War, we have now turned inward here in America to start to deal with those vexing problems that, per- haps, we overlook while we were worrying about nuclear warfare and World War III. We look inward and know that we need a more rapidly growing economy to provide good, well-paying jobs for all Americans. We know that we have to do something about the problems of violence on our streets and vio- lence in our schools. We have to do some- thing about an education system, while it serves you well, it is not structured to serve all our youngsters well. We must do something about the scourge of drugs that threatens to wipe out an entire generation of young people. We will have to deal with the breakdown that has occurred in the norms of civility within our society which have led to such public and political rancor that causes us to wonder what kind of a society we are becoming. We must do something about the racial separation that exists in our nation and keeps us from the dream of an integrated society that Dr. King set out for us. In some ways, the new world that we face will be more complex and demanding than the old world, both here and abroad. But de- spite the challenges, incredible opportunities await you in this new world, opportunities that await educated people. The education you received here, the additional education you must acquire in whatever field of en- deavor you enter\u2014because in this increas- ingly technical and competitive world, suc- cess will go to those who realize that edu- cation must now become a lifelong pursuit. America will not be going back to smoke- stack industries. The corporate restruc- turing that you see taking place allow us to be more competitive, more agile, more ready to deal with the challenges of a world eco- nomic system. You each face the prospect of several different careers in several different companies in different places around the country and around the world as you go about your working career. America has changed in so many, many wonderful ways since my graduation in 1958. When I graduated as a black man, I was, by law, a second-class citizen. When I graduated in 1958, the Declaration of Independence and the Bill of Rights didn’t fully apply to me. I entered at that time perhaps the only insti- tution in America that permitted a black person to rise in an integrated setting lim- ited only by my own willingness to work hard and my dreams and ambition. And that institution was the United States Army. The Army led the nation, and the nation followed. The young Captain Powell who was once refused service at a lunch counter in Georgia, when I came home from Vietnam after a year of fighting for my country, that Captain Powell was able to become General Powell, the Chairman of the Joint Chiefs of Staff for the Armed Forces of United States. But I didn’t do it alone. I climbed on the backs of the those who came before me and those who broke the trail, the Buffalo sol- diers and Tuskegee Airmen, and the other black military pioneers. I climbed on the backs of men and women who knew that they served a country that was not yet pre- pared to serve them. But they did it anyway because they had faith in what the future held for them and for their country. I benefited from the sacrifices of Dr. Mar- tin Luther King, Jr. and Jesse and Rosa and Andrew and so many, many others\u2014black and white\u2014who were determined to build an America that would be faithful to the dreams of its founding fathers. The men and women who are honored along with me today, your teachers and parents and family members who are present today, they strug- gled as well. We succeeded because we worked hard, we believed in ourselves, and because we be- lieved in the fundamental goodness of the American people and we believed in the re- demptive potential of our society; and we did it all for you. We now expect you to do even more. We expect you to climb higher. We ex- pect you to take advantage of the marvelous opportunities that are before you, opportuni- ties that were not there for us. We expect VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00103 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9312 July 31, 1996 you to let your shoulders be used by those who still search for success, who wonder if the dream is still there for them. Because you see, the struggle is not yet over. We’re not where we have got to be. We’re not where we want to be. We have a great America. We can make it a greater America. There are those who say, ”Well, you know, we can stop now. America is a color blind so- ciety.” But it isn’t yet. There are those who say, ”We have a level playing field.” But we don’t yet. There are those who say that, ”All you need is to climb up on your own boot straps.” But there are too many Americans who don’t have boots, much less boot straps. A few\u2014a few Horatio Alger stories, not enough to give hope to our fellow citizens who still live in the despair of racism, who are trapped in tightening circles of poverty and poor education, who wonder if compas- sion and caring are still the pillars of the American dream. There are those who rail against Affirmative Action. They rail against Affirmative Action preferences, while they have lived an entire life of pref- erence. There are those who do not under- stand that the progress we have achieved over the past generation must be continued if we wish to bless future generations. And so, Colin Powell believes in Affirma- tive Action. I believe it has been good for America, and I know that we can design Affirmative Ac- tion Programs that will satisfy the Constitu- tional requirements, because what we want is Affirmative Action that provides access for all Americans to the opportunities that rightfully belong to all Americans. In my travels around the country since re- tirement, I have visited with many corporate leaders, and I have been pleased to see how committed American industry is to Affirma- tive Action. They understand that we cannot waste any human potential. They under- stand that in the future that is ahead they must have diverse work forces. They must be prepared to operate in a world trading envi- ronment that is increasingly minority, as we would call it, becoming a majority. I’m very, very proud of what I’ve seen in American corporate life. In one case, one company leader said to me, ”We don’t care what the government does with respect to Affirmative Action. We believe in it. We be- lieve it’s the right thing to do. We are going to continue to move forward.” Affirmative Action finds and prepares qualified people for entry into the education system and into the work force. We must re- sist misguided government efforts that seek to shut it all down, efforts such as the Cali- fornia Civil Rights Initiative which poses as an Equal Opportunity Initiative, but which puts at risk every outreach program. It sets back the gains made by women, and puts the brakes on expanding opportunities for people who are in need. I don’t speak about Affirmative Action from an academic sense. I speak from experi- ence. In the military, we worked hard to in- clude all Americans. We used Affirmative Action to reach out to those who were quali- fied, but who were often overlooked or ig- nored as a result of indifference or inertia. We used Affirmative Action in the military to create the level playing field and to create the color blind environment that so many people speak of. We didn’t wait for it to happen. We made it happen in the military. We created an envi- ronment where advancement came from per- formance and a striving for excellence and not from color or gender. But first we had to open the gates to let people in. As a result, we produced an Armed Force rich in its di- versity and the very, very best in the world, a reflection of what all of America should look like. So we have to keep it up. We have to commit ourselves. There is no alternative. When one black man graduates, at the same time, 100 black men are going to jail. We still need Affirmative Action. When half of all African American men be- tween the ages of 24 and 35 years of age are without full-time employment, we still need Affirmative Action. When half of all black children live in poverty, we need Affirmative Action as well as quality education systems and a thriving economy to produce the good jobs, the good jobs that free enterprise and capitalism can produce, the jobs that at the end of day are the only solution to the prob- lems we face. Some people will say that Affirmative Ac- tion stigmatizes the recipients. Nonsense. Affirmative Action provides access for the qualified. And for anybody who feels stig- matized, go get A’s instead of C’s. Knock them dead. And then\u2014I tell the story in my book about when I was a young Lieutenant and one of my commanding officers back then in the late ’50s came up to me and said, ”Powell, you’re doing great. You’re one of best black Lieutenants I’ve ever known.” And I just said, ”Thank you, sir.” And I said to myself silently, ”That ain’t going to be good enough. You may have a stereotype of me, but I intend to be the best Lieutenant you ever saw.” And I will\u2014for the way to handle stereotypes and stigmatism is to let it be somebody else’s problem. You just per- form and do your very, very best. Because you see, the Army put me in an environment where I could be a winner, and I wanted to be a winner. Beautiful graduates before me this morning are all winners. You have benefited from the sacrifices of those who went before you. You have worked hard. And today, you receive your reward. You are filled by the love and by the dreams of your parents and families. You are nourished by the education you have received from the dedicated teachers here present who have given you the priceless gift of learning. We expect you to go forth and prosper and contribute to the economic growth of this nation. We expect you to lead a life of serv- ice to your community and to serve those who have not had the advantages that you have. You are people of accomplishment. You are now role models. Each of you must find a way to reach down and back to help someone in need, someone in pain, someone who wonders if anybody cares, somebody who wonders if the American dream is still there for them. In order to have a complete life, make sure you share your time, your talent, and your treasure with these who are less fortunate. We expect you to raise strong families. We expect you to raise children who are inspired to do even better than you are. Marry well, and marry for life. Be parents of value. Teach your children the difference between right and wrong. Teach your children the place of God in their lives. Teach your children the value of hard work and education. Teach them to love. Teach them to be tolerant. Teach them to be proud of their heritage, their color. And teach them to respect their fellow citizens who may look different but who are not different. Teach them to respect themselves, to be- lieve in themselves. Teach them, above all, to believe in America as you must believe in America. America, a noisy, noisy country, the noise has a name. It’s called ”democ- racy.” Democracy as we argue with each other to find the correct way forward. Amer- ica, a wonderful place. A place with prob- lems, problems that are now yours to solve and not just to curse, because we are a good people. We want to do the right thing. We must have faith in ourselves. We are, as Lin- coln put it, ”The last, best hope of earth,” I am so proud of you today, so very, very proud. Go forth now to make this a better land. Go forth to find your destiny. Go forth to find happiness. Go forth on your American journey. Go forth with my congratulations and with God’s blessings. Have a great life. Thank you.\u2211 f NOMINATION OF NINA GERSHON \u2211 Mr. MOYNIHAN. Mr. President, yes- terday, by unanimous consent the Sen- ate confirmed the nomination of Mag- istrate Judge Nina Gershon for the po- sition of U.S. District Judge for the Eastern District of New York. I rec- ommended Judge Gershon to President Clinton on July 11, 1995 and the Presi- dent nominated her on October 18, 1995. The Senate has confirmed a judge of impeccable credentials. She has been a magistrate court judge since 1976 and was chosen chief U.S. magistrate judge for the Southern District in January of 1992. Indeed, Judge Gershon has the distinction of being the first chief mag- istrate judge for the Southern District. Nina Gershon has shown herself to be an extremely able and well-respected magistrate. And I am confident that she will serve the Eastern District of New York with equal dedication. Throughout the nomination process she has had bipartisan support and I thank the leaders for bringing her nomination forward.\u2211 f RENEWABLE TECHNOLOGIES RESEARCH AND DEVELOPMENT Mr. AKAKA. Mr. President, I want to express my support of Jeffords-Roth- Leahy renewable energy amendment. This amendment will restore funding for the Department of Energy solar and renewable energy research and develop- ment program to the amount appro- priated in fiscal year 1996. I want to thank Senator JEFFORDS for offering this amendment because I believe that our country’s renewable energy program is at an important wa- tershed. With support from Congress and the Federal Government, our Na- tion can forge ahead in developing reli- able and cost-effective renewable tech- nologies. We can also position our re- newable energy industry to capture its share of the rapidly expanding market of solar and other renewable tech- nologies. And, we can expand power generation capacity in an environ- mentally responsible manner. In recent years, energy efficiency and renewable energy programs have been remarkably successful and have cre- ated a new industry capable of world leadership in a very important tech- nology sector. Energy efficient tech- nologies are generating billions of dol- lars of consumer energy savings and new business opportunities and play an important role in job creation, accord- ing to a study by energy expert Daniel Yergin. If we retreat from this prom- ising growth industry, as we did throughout the decade of 1980s, our international competitors will quickly carve up a market that will exceed a billion dollars by the turn of the cen- tury. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00104 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9313 July 31, 1996 We should not reduce funding for re- newable R&D and allow this initiative to sputter and stall. We must move for- ward, as other countries are doing, and make essential investments in tech- nologies that will create new jobs, open export markets, and promote a healthy environment. This is the choice we have made in approving this amend- ment. At stake is our ability to compete in an international energy market that will experience explosive growth in the decades ahead. Many countries cannot afford to meet the growing energy de- mand by building, operating, and main- taining centralized power plants and the costly infrastructure associated with them. The flexibility offered by renewable technologies is a natural fit for the developing world. Countries around the world are also making conscious strategic decisions to endorse and adopt renewable energy as a mainstay of their energy policy. These policies may lead to the amelio- ration of problems associated with global climate change. The past decade was a period of un- paralleled success in the drive to re- duce the cost of solar and renewable technologies. Some are at the verge of becoming cost competitive with con- ventional energy sources. This trend will continue to improve in the years ahead. As these technologies become more and more cost competitive, the rate at which these technologies are in- tegrated into the energy grid will steadily increase. What is at stake is the ability of a young, dynamic industry to capture the world markets for renewable tech- nologies so that Americans can hold their share of rewarding, high paying jobs. That is what the Jeffords amend- ment is all about. If we are to move into the future with a strong economy and a healthy environment, renewable energy technologies must be a part of our investment strategy for the future. Although the value of U.S. renewable energy exports exceeds a quarter of a billion dollars, the U.S. renewable en- ergy industry is barely penetrating the expanding world market for renewable energy technologies. This is a result of a weak commitment to renewable en- ergy research, development, and export promotion. Compared with seven other leading trading nations, the United States ranks lowest in resources allocated to solar and renewable export promotion, according to a 1992 Department of En- ergy report. National Science Foundation data confirms that the U.S. investment in R&D is in decline. Since 1987, Federal R&D investments have dropped stead- ily in real terms. Since 1992, industry R&D has stagnated. And today, less than one-third of private R&D is dedi- cated to research; the rest is being spent on product and process develop- ment. I support the Jeffords amendment be- cause I want to reverse this trend. Frankly, I would have preferred higher spending levels for solar and renewable programs, but this is not realistic given the budget constraints we face. Unless we maintain a reasonable fund- ing level for these programs, we will continue to lose ground and should not be surprised if other countries outcompete U.S. industry in this rap- idly expanding market. Finally, there are important energy security reasons for supporting this amendment. U.S. oil imports are at record levels, are continuing to grow, and could reach 60 percent of consump- tion by the year 2005. Oil imports that high would contribute nearly $90 bil- lion to the trade deficit. According to a recent Department of Commerce anal- ysis, this level of oil imports con- stitutes a threat to U.S. economic se- curity. Persian Gulf countries are pro- jected to control 70 percent of the glob- al market for oil by the year 2010, mak- ing world oil markets increasingly un- stable. Renewable energy technologies will lead to significant movement toward alleviating some of the potential nega- tive consequences of our continuing and increasing reliance on imported oil.\u2211 f TRIBUTE TO THE EXPERIMENTAL AIRCRAFT ASSOCIATION ON THE OCCASION OF THE 43D ANNUAL ”FLY IN” IN OSHKOSH, WIS- CONSIN, AUGUST 1, 1996 \u2211 Mr. FEINGOLD. Mr. President, I rise today to salute the 160,000 inter- national members of the Experimental Aircraft Association, based in Oshkosh, Wisconsin, on the opening day of their 43rd annual ”Fly In” convention, the single largest aviation event of its kind in the world. Mr. President, the Fly In, held at the Wittman Regional Airport in Oshkosh, is the stage for 12,000 experimental air- craft, vintage warplanes, showplanes, ultralights and rotorcraft. More than 700 exhibitors will present examples of cutting edge aviation technology, and more than 500 workshops, seminars and forums will feature many of the lead- ing figures in aviation passing along their knowledge and experience on sub- jects covering the whole spectrum of flight. More than 800,000 people from all over the world will attend the Fly In. This year’s program includes a salute to test pilots, the people who strap into the latest aviation designs and push them as far and as fast and as high as they can possibly go, pushing the per- formance envelope in the continuous quest for better aircraft. There will also be a salute to Korean War and Vietnam War veterans. Mr. President, the Fly In is a terrific show, but it is only part of the ongoing work of the EAA. The Experimental Aircraft Associa- tion works both to preserve aviation’s heritage and promote its future. If you are interested in designing, building, restoring, maintaining or flying air- planes, or if you simply take pleasure in watching aircraft perform, the EAA offers something for you through pro- grams at the state, regional, national and international level, all aimed at making flying safer, more enjoyable and more accessible for anyone inter- ested. The EAA supports a foundation dedi- cated to the education, history and de- velopment of sport flying. It maintains a large collection of aircraft, a portion of which is on display at the EAA Air Adventure Museum in Oshkosh. EAA has created the Young Eagles program to give a free flight experience to young people, and there’s a scholarship program for young people interested in aviation careers. All this began, Mr. President, in Jan- uary, 1953, a little less than 50 years after the Wright brothers flew at Kitty Hawk. Paul Poberezny and a group of flying enthusiasts met at Milwaukee’s Curtiss Wright field, now known as Timmerman Field. The first Fly In was held nine months later at Curtiss Wright, drawing fewer than 40 people and a handful of aircraft. Mr. Poberezny was elected the group’s first president, and he held that post until 1989, when his son, Tom, took the reins. For the first 11 years of its existence, EAA was run out of the basement of Mr. Poberezny’s home in Hales Corners, Wisconsin, near Mil- waukee. Now it operates from its head- quarters in Oshkosh. Mr. President, flight has fascinated the human race for centuries. Less than a century ago, powered flight be- came a reality. Sixty-six years later, we landed on the moon. Still, the won- der of traveling among the clouds re- mains, and that spirit, along with the inventiveness and daring of pilots, de- signers and engineers, is nurtured by the Experimental Aircraft Associa- tion.\u2211 f IT’S TIME TO END DEFERRAL \u2211 Mr. DORGAN. Mr. President, it’s time to end the perverse $2.2 billion U.S. jobs export subsidy called deferral that our Tax Code provides to big U.S. companies that move their manufac- turing plants and U.S. jobs to tax ha- vens abroad, and then ship back their tax-haven products into the United States for sale. Since 1979, we have lost about 3 million good-paying manufac- turing jobs in this country, in part, be- cause of this ill-advised subsidy. Presidents Kennedy, Nixon, and Carter all tried to curb this misguided tax subsidy. In 1975, the Senate voted to end it. In 1987, the House voted to stop it. But in each case, high-powered lobbyists for the big corporations were able to derail it before such action could be enacted and signed into law. In July, Robert McIntyre, Director of the Citizens for Tax Justice, offered compelling testimony in support of the effort to pull the plug on this mis- guided tax break at a recent Families VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00105 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9314 July 31, 1996 First forum on paycheck security issues. He thoroughly debunks the lob- byist-driven myths that repealing this $2.2 billion U.S. jobs export subsidy will somehow prevent large U.S. multi- national firms from competing in the global economy. I think that you will find his testimony provides an excel- lent perspective on this subject, and I hope that you will read it. I ask that the text of Mr. McIntyre’s recent testimony be printed in the RECORD. The material follows: STATEMENT OF ROBERT S. MCINTYRE, DIREC- TOR, CITIZENS FOR TAX JUSTICE, IN SUPPORT OF LEGISLATION TO CURB TAX SUBSIDIES FOR EXPORTING JOBS Citizens for Tax Justice strongly supports legislation to limit current federal tax defer- rals that subsidize the export of American jobs. Such reform legislation is embodied in S. 1355, Senator Byron Dorgan’s ”American Jobs and Manufacturing Preservation Act.” Similar legislation has been approved by the House of Representative in the past. We urge the full Congress to pass S. 1355 and send it to the President to sign. TAX BREAKS FOR EXPORTING JOBS SHOULD BE ELIMINATED\u2014WE SHOULDN’T PAY OUR COMPA- NIES TO MAKE GOODS FOR THE AMERICAN MARKET IN FOREIGN COUNTRIES In its 1990 annual report, the Hewlett- Packard company noted: ”As a result of cer- tain employment and capital investment ac- tions undertaken by the company, income from manufacturing activities in certain countries is subject to reduced tax rates, and in some cases is wholly exempt from taxes, for years through 2002.” In fact, said Hew- lett-Packard’s report, ”the income tax bene- fits attributable to the tax status of these subsidiaries are estimated to be $116 million, $88 million and $57 million for 1990, 1989 and 1988, respectively.” This is not an isolated instance. An exam- ination of 1990 corporate annual reports that we undertook a few years ago provided the following additional examples.1 Footnotes at end of article. Baxter International noted that it has ”manufacturing operations outside the U.S. which benefit from reductions in local tax rates under tax incentives that will continue at least through 1997.” Baxter said that its tax savings from these (and its Puerto Rican) operations totaled $200 million from 1988 to 1990.2 Pfizer reported that the ”[e]ffects of par- tially tax-exempt operations in Puerto Rico and reduced rates in Ireland” amounted to $125 million in tax savings in 1990, $106 mil- lion in 1989 and $95 million in 1988. Schlering-Plough said that it ”has subsidi- aries in Puerto Rico and Ireland that manu- facture products for distribution to both do- mestic and foreign markets. These subsidi- aries operate under tax exemption grants and other incentives that expire at various dates through 2018.” Becton Dickinson reported $43 million in ”tax reductions related to tax holidays in various countries” from 1988 to 1990. Beckman noted: ”Certain income of sub- sidiaries operating in Puerto Rico and Ire- land is taxed at substantially lower income tax rates,” worth more than $7 million a year to the company over the past two years. Abbot Laboratories pegged the value of ”tax incentive grants related to subsidiaries in Puerto Rico and Ireland” at $82 million in 1990, $79 million in 1989 and $76 million in 1988. Merck & Co. noted that ”earnings from manufacturing operations in Ireland [were] exempt from Irish taxes. The tax exemption expired in 1990; thereafter, Irish earnings will be taxed at an incentive rate of 10 percent.” In fact, under current law, American com- panies often are taxed considerably less if they move their manufacturing operations to an overseas ”tax haven” such as Singa- pore, Ireland or Taiwan, and then import their products back into the United States for sale. HOW WE SUBSIDIZE THE EXPORT OF AMERICAN JOBS The tax incentive for exporting American jobs results from current tax rules that: 1. allow companies to ”defer” indefinitely U.S. taxes on repatriated profits earned by their foreign subsidiaries; and 2. allow companies to use foreign tax cred- its generated by taxes paid to non-tax haven countries to offset the U.S. tax otherwise due on repatriated profits earned in low- or no-tax foreign tax havens. S. 1355 WOULD END THIS WRONG-HEADED SUBSIDY Why should the United States tax code give companies a tax incentive to establish jobs and plants in tax-haven countries, rath- er than keeping or expanding their plants and jobs in the United States? Why should our tax code make tax breaks a factor in de- cisions by American companies about where to make the products they sell in the United States? Why indeed? We believe that this tax break for overseas plants should be ended. Profits earned by American-owned companies from sales in the United States should be taxed\u2014 whether the products are Made in the USA or abroad. S. 1355 would end the current tax break for exporting jobs\u2014by taxing profits on goods that are manufactured by American compa- nies in foreign tax havens and imported back into the United States. It would achieve this result by (1) imposing current tax on the ”imported property income” of foreign sub- sidiaries of U.S. corporations; and (2) adding a new separate foreign tax credit limitation for imported property income earned by U.S. companies, either directly or through foreign subsidiaries. 3 legislation identical to S. 1355 was passed by the House in 1987. Unfortunately, at that time the reform provision was dropped in conference at the insistence of the Reagan administration. SPURIOUS ARGUMENTS AGAINST CURBING SUBSIDIES FOR EXPORTING JOBS Of course, Congress has heard loud com- plaints from lobbyists for companies that benefit from the current tax breaks for ex- porting jobs. Some have apparently argued that their companies will be at a competi- tive disadvantage in foreign markets if this legislation were approved. But since the bill applies only to sales in U.S. markets, that argument makes no sense. Lobbyists also have asserted that if Amer- ican multinationals have to pay U.S. taxes on their profits from U.S. sales for foreign- made goods, they might be disadvantaged compared to foreign-owned companies sell- ing products in the United States. Perhaps. But as the House concluded in 1987, it would be far better ”to place U.S.-owned foreign enterprises who produce for the U.S. market on a par with similar or competing U.S. en- terprises” rather than worrying about ”plac- ing them on a par with purely foreign enter- prises.” 4 Finally, lobbyists have made the spurious point that overall, foreign affiliates of U.S. companies have a negative trade balance with the United States, that is, they move more goods and services out of the United States than they export back in. To which, one might answer, so what? After all, S. 1355 does not deal with all for- eign affiliates of U.S. companies. Rather, it deals only with U.S.-controlled foreign sub- sidiaries that produce goods for the Amer- ican market in tax-haven countries.5 When U.S. companies shift what would otherwise be domestic production to these foreign sub- sidiaries it most certainly does not improve the U.S. trade balance; it hurts it.6 CONCLUSION American companies may move jobs and plants to foreign locations in order to make goods for the U.S. market for many rea- sons\u2014such as low wages or lack of regula- tion\u2014that the tax code can do little about. But we should not provide an additional in- ducement for such American-job-losing moves through our income tax policy. American multinationals should pay in- come taxes on their U.S.-related profits from foreign production. Such income should not be more favorably treated by our tax code than profits from producing goods here in the United States. We urge Congress to ap- prove the provisions of S. 1355. 1 Several of the companies mentioned here appar- ently have been lobbying hard against S. 1355. 2 Many companies do not separate the tax savings from their Puerto Rican and foreign tax-haven ac- tivities in their annual reports. 3 ”Imported property income means income . . . derived in connection with manufacturing, pro- ducing, growing, or extracting imported property; the sale, exchange, or other disposition of imported property; or the lease, rental, or licensing of im- ported property. For the purpose of the foreign tax credit limitation, income that is both imported property income and U.S. source income is treated as U.S. source income. Foreign taxes on that U.S. source imported property income are eligible for crediting against the U.S. tax on foreign source import[ed] property income. Imported property does not include any foreign oil and gas extraction in- come or any foreign oil-related income. ”The bill defines ‘imported property’ as property which is imported into the United States by the con- trolled foreign corporation or a related person.” House Committee on Ways and Means, ”Report on Title X of the Omnibus Budget Reconciliation Act of 1987,” in House Committee on the Budget, Omnibus Budget Reconciliation Act of 1987, House Rpt. 100 391, 100th Cong., 1st Sess., Oct. 26, 1987, pp. 1103 04. 4 Id. 5 Companies that manufacture abroad in non-tax- haven countries generally would not be affected by the bill, since they still will get foreign tax credits for the foreign taxes they pay. 6 Foreign affiliates of U.S. companies that produce goods for foreign markets\u2014not addressed by Senator Dorgan’s bill\u2014may well have a negative trade bal- ance with the United States, insofar as they transfer property from their domestic parent to be used in overseas manufacturing. But it would obviously be far better for the U.S. trade balance\u2014and for Amer- ican jobs\u2014if those final products were manufactured completely in the United States and exported abroad, rather than having much of the manufac- turing process occur overseas. To assert that foreign manufacturing operations by American companies helps the U.S. trade balance is to play games with statistics. For example, suppose an American company was making $100 million in export goods in the U.S. for foreign markets. Now, suppose it moves the assem- bly portion of that manufacturing process overseas, where half the value of the final products is pro- duced. At this point, instead of $100 million in ex- ports, there are only $50 million. America has thus lost exports and jobs\u2014even though the foreign affil- iate itself has a negative trade balance with the United States. For better or worse, however, S. 1355, does not address this situation.\u2211 f THE RUSSIAN ELECTIONS Mr. LEAHY. Mr. President, on June 16, something happened that has tre- mendous implications for the Amer- ican people and for people everywhere. On that day, Russia, which just a few years ago was the greatest threat to democracy in the world, held a demo- cratic election to select its President. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00106 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9315 July 31, 1996 That alone, Mr. President, is reason to celebrate. Despite calls from people across the Russian political spectrum who still do not understand what de- mocracy is about to cancel the elec- tion, the Russian government stuck by its commitment to democracy\u2014 No decisions were taken by secretive Politburos. Parties representing the full spec- trum of political sentiment partici- pated. Candidates crisscrossed that vast country making promises to win the votes of ordinary people. And in the end, most stunning of all, there was a graceful concession speech by the losing candidate, the leader of the Communist party that only a little while ago we regarded as the personi- fication of tyranny, committing the party to challenge irregularities in the election ”in the courts, not in the streets.” Mr. President, this was not a perfect election. There were irregularities. There may well have been instances of ballot box stuffing. I was quite con- cerned about the extent to which media coverage of the election ap- peared to favor one candidate. But it also occurred to me that, if I were a newspaperman covering an election in which one major party had a record of advancing democracy and the freedoms associated with it and the other had a 70-year history of suppressing the free- dom of newspapers like mine, I might have tended to advocacy rather than neutrality too. That is not an excuse, but despite the irregularities, there is general agreement that the will of the Russian people was heard in this elec- tion. The Russian people voted for democ- racy, and the tremendous significance of that should not be lost on anyone. Despite all of the hardship they are ex- periencing. Despite the crime and cor- ruption. Despite their loss of empire. Despite the fact that the standard- bearer of the forces of democracy has made many mistakes, the brutal war in Chechnya being the most egregious, and is in poor health. The Russian people voted for free- dom. Freedom to speak their minds. Freedom to associate. As ultra-nation- alist Vladimir Zhirinovsky, who is not someone I admire, put it in explaining why he would not support the com- munists: freedom to decide where to spend his vacation. For some, it came down to things as simple as that, things which we take for granted. Mr. President, the world has changed profoundly in the last decade. Com- munism as a world force is gone. What- ever the future may bring in terms of the distribution of power in the world, the age of ideological confrontation be- tween communism and democracy is over. While there remain many aggres- sive forces in the world, I cannot help but feel that the world will be a safer place when its two greatest powers are both committed to democracy and the protection of individual rights. And I think we owe credit to Presi- dent Clinton, Secretary of State Chris- topher, and Deputy Secretary Talbott. Over the past 3 years, they have braved the attacks by those, including some in this chamber, who cannot bring them- selves to give up their cold war notions about evil empires and would have us focus only on the vestiges of the old and ugly in Russia and ignore all that is new and promising. Where do we go from here? As the ranking member of the Foreign Oper- ations Subcommittee, I have watched as funding for foreign assistance has been slashed over the past 18 months, including assistance to Russia. Assist- ance to Russia is being phased out over the next 2 years, even though it is obvi- ous that it is going to take the Russian people at least another decade to be able to take control of their own lives instead of expecting the government to do it for them, and that our assistance would be valuable to them. President Yeltsin has won the sup- port of his people to continue reform. But the Russian economy remains a shambles. The Russian Government has no money to finance its reforms. Crime is rampant. There are still pen- sioners on the streets of Moscow hawk- ing pairs of children’s rubber boots in order to survive. Aid from the United States cannot possibly solve these problems directly. The problems are so immense that only the Russian people working together will be able to. But what our aid can do is show them the way. Most Russians still have only a faint notion of what a market econ- omy offers. Most also still carry the perceptions drilled into them by their Soviet masters that Americans are their enemies. I have not been fully satisfied with the results of our aid program in Rus- sia. There has been confusion, a lack of strategic thinking, and boilerplate ap- proaches that did not fit the unique conditions there. Too much of the money has ended up in the pockets of American contractors, without enough to show for it. But some programs have given the Russian people hope for a better future. People-to-people exchanges are an ex- ample of how we can help change old ways of thinking. I believe the thou- sands of exchanges of ordinary citizens that we have sponsored over the last 4 years played a role in President Yeltsin’s victory. Farmer-to-farmer programs. Business exchange pro- grams. Academic exchange programs. Civic organization development projects. They have shown the Russian people what is possible. Americans have learned from these exchanges too. We have learned that the Russian people are not ogres. Like us, they are mostly worried about the welfare of their families. But they are learning for the first time that it is possible to have a system of govern- ment whose primary aim is the defense of individual rights, and which actually serves them. Mr. President, there remains much to criticize in Russia. The democracy that exists there is fragile, and the future unpredictable. The future is far from predictable. There will continue to be setbacks, and instances when Russia behaves in ways that are inconsistent with international norms. I have been horrified by the brutality of the Rus- sian military in Chechnya. While it has been reassuring to see the outpouring of protest against this barbarity by the Russian people themselves, President Yeltsin and his security advisors need to recognize that Chechnya’s future is not going to be decided by bombing its people into submission. Having said that, let us today recog- nize how much has changed for the bet- ter in Russia compared to just a few years ago. And I hope we will also reaf- firm our commitment to support re- form in Russia. We know how to put our aid dollars to good use there, and there is much good yet to be done.\u2211 f YEAR-ROUND SCHOOLS Mr SIMON. Mr. President, recently a friend of mine, Gene Callahan, sent me an editorial from the Evansville Cou- rier suggesting that Evansville look at year-round schools. The reality is the whole Nation should do that. We take the summer months off, in theory, so that our children can go out and harvest the crops. That made sense a century ago and maybe even 60 years ago, but it does not make sense today. If we increased the school year from 180 days to 210, we would still be far be- hind Japan’s 243 days and Germany’s 240 days. And simply adding that 30 days would mean the equivalent of 2 additional years of school by the time the 12th grade is finished. But in re- ality it would be more than that. Any fourth grade teacher will tell you that part of the first weeks of teaching in the fourth grade is revisiting what stu- dents learn in the third grade. The three month lapse makes it more dif- ficult for students starting in the fourth grade. But suggesting year-round schools is not going to be simple. We will have to pay teachers more. We will have to air condition school rooms. In essence, what we will have to do is to make the priority out of education that we must, if we are to be a competitive Nation with the rest of the world. One not so incidental result of that would be that our students would be better prepared, we would gradually re- duce our illiteracy rate, and because students will have more opportunity upon graduation and would not be in the streets in the summer months, the crime rate is likely to drop some. The drop is not likely to be dramatic, but it would help. I commend the editors of the Evans- ville Courier. Mr. President, I ask that the edi- torial from the Courier be printed in the RECORD. The editorial follows: VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00107 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9316 July 31, 1996 [From the Evansville Courier, June 17, 1996] TAKE ANOTHER LOOK AT YEAR-ROUND SCHOOL The Evansville-Vanderburgh School Corp. has good cause to consider starting the school year in mid-August\u2014test-readiness of children is a valid concern in both home and classroom. And in our view, the same argu- ment weighs for future consideration of a year-round school calendar. The school administration has rec- ommended that the School Board approve a calendar that moves up the beginning of school by eight school days, in great part to allow students more time to prepare for state performance testing. The ISTEP tests have been given in the spring, but beginning in the fall, they will be administered the last week in September and first week of October. With students return- ing from a three-month vacation, it will be a challenge for teachers to get them up to school speed in time for the tests. The ear- lier start would buy time for students and teachers. The premise here\u2014that students returning from a long summer vacation are not pre- pared to take a test\u2014seems just cause for consideration of year-round school, such as the plan that will be tried at Lincoln Ele- mentary School on an experimental basis. In fact, children no longer need a three- month vacation; they no longer need to be off that long to work in the fields. Three months away from school is counter- productive to learning. As a result, valuable learning time is needed each fall to reac- quaint children with learning and to refresh what they learned the previous year. The School Board should approve the ad- ministration’s recommendation for the ear- lier school start, and then ask itself if the same rationale doesn’t justify a serious look at year-round school.\u2211 f EXECUTIVE SESSION NOMINATION OF FRANK R. ZA- PATA, OF ARIZONA, TO BE U.S. DISTRICT JUDGE FOR THE DIS- TRICT OF ARIZONA Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Senate im- mediately proceed to executive session to consider the following nomination on the Executive Calendar: Calendar No. 677, the nomination of Frank Za- pata, to be U.S. District Judge for the District of Arizona. I further ask unanimous consent that the nomination be confirmed, the mo- tion to reconsider be laid upon the table, and the President be imme- diately notified of the Senate’s action. The PRESIDING OFFICER. Without objection, it is so ordered. The nomination was considered and confirmed, as follows: Frank R. Zapata, of Arizona, to be United States District Judge for the District of Ari- zona. f NOMINATION OF ANN D. MONT- GOMERY, OF MINNESOTA, TO BE UNITED STATES DISTRICT JUDGE FOR THE DISTRICT OF MINNESOTA Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Senate proceed to consider the following nomi- nation on the Executive Calendar: Cal- endar No. 512, the nomination of Ann Montgomery to be U.S. District Judge for the District of Minnesota. I further ask unanimous consent that the nomination be confirmed, the mo- tion to reconsider be laid upon the table, and the President be imme- diately notified of the Senate’s action. The PRESIDING OFFICER. Is there objection? Mrs. HUTCHISON. I object, Mr. President. The PRESIDING OFFICER. Objec- tion is heard. Mr. DASCHLE addressed the Chair. The PRESIDING OFFICER. The mi- nority leader. Mr. DASCHLE. Would the Senator from Texas wish to state her reason for the objection? Mr. President, could we get the attention of the Senator from Texas? Mr. President, I have to say, if we are going to start playing this game\u2014I have been urging my colleagues to co- operate not 1 day, not 2 days, not a week, not 2 weeks, but ever since the majority leader got elected to that po- sition, every day. The majority leader has done an extraordinary job of work- ing with me. But I must tell you, that kind of act is going to end our cooperation pretty fast. That is unreasonable, not accept- able. And to not even respond. I have helped the Senator from Texas as late as last week. I worked very hard to get her legislation passed and sent over to the House. We got it done. We got it done. We would not have gotten it done. And this is the thanks we get, and this is the kind of cooperation we get in return. Mr. President, it is going to be a long 2 days here and, I must say, an even longer month in September if all the cooperation is expected to come from this side. So we are going to have a lot more to say about this. And before we go into any other unanimous-consent agreements we are going to have a good discussion about what kind of rec- iprocity there is in this institution. But that is very disappointing and very unacceptable. I yield the floor. f LEGISLATIVE SESSION Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Senate now return to legislative session. The PRESIDING OFFICER. Without objection, it is so ordered. f REPEAL OF TRADING WITH INDIANS ACT Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Senate now proceed to the consideration of H.R. 3215 which was received from the House. The PRESIDING OFFICER. The clerk will report. The assistant legislative clerk read as follows: A bill (H.R. 3215) to amend title 18, United States Code, to repeal the provision relating to Federal employees contracting or trading with Indians. The PRESIDING OFFICER. Is there objection to the immediate consider- ation of the bill? There being no objection, the Senate proceeded to consider the bill. TRADING WITH INDIANS ACT REPEAL Mr. KYL. Mr. President, I rise in very strong support of this legislation, H.R. 3215, to repeal the Trading with Indians Act. I would note that the Sen- ate has twice approved measures to re- peal this 19th century law\u2014in Novem- ber 1993, and again last October as part of a bill making technical corrections in Indian laws. Mr. President, I want to begin by thanking the chairman of the Indian Affairs Committee, JOHN MCCAIN, who joined me in sponsoring the Senate companion bill, S. 199, and who encour- aged his committee to incorporate it into last year’s technical corrections measure. I also want to commend Con- gressman J.D. HAYWORTH for cham- pioning the legislation in the House on behalf of his native American constitu- ents. Without his active support, it is safe to say that the House would not have acted on the measure this year. When the Trading with Indians Act was enacted in 1834, it had a very le- gitimate purpose: to protect native Americans from being unduly influ- enced by Federal employees. But, a law that started out with good intentions more than a century ago has become unnecessary, and even counter- productive, today. It established an ab- solute prohibition against commercial trading with Indians by employees of the Indian Health Service and Bureau of Indian Affairs. The problem is that the prohibition does not merely apply to employees, but to family members as well. It extends to transactions in which a Federal employee has an inter- est, either in his or her own name, or in the name of another person, includ- ing a spouse, where the employee bene- fits or appears to benefit from such in- terest. The penalties for violations can be severe: a fine of not more than $5,000, or imprisonment of not more than 6 months, or both. The act further pro- vides that any employee who is found to be in violation should be terminated from Federal employment. This all means that employees could be subject to criminal penalties or fired from their jobs, not for any real or perceived wrongdoing on their part, but merely because they are married to individuals who do business on an In- dian reservation. The nexus of mar- riage is enough to invoke penalties. It means, for example, that an Indian Health Service employee whose spouse operates a small business on a reserva- tion could be fined, imprisoned, or fired. It means that a family member could not apply for a small business loan without jeopardizing the employ- ee’s job. The legislation before us today will correct that injustice without sub- jecting native Americans to the kind of VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00108 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9317 July 31, 1996 abuse that prompted enactment of the law 160 years ago. The protection that the Trading with Indians Act origi- nally offered can now be provided under the Standards of Ethical Con- duct for Government Employees. The intent here is to provide adequate safe- guards against conflicts of interest, while not unreasonably denying indi- viduals and their families the ability to live and work\u2014and create jobs\u2014in their communities. Both Health and Human Services Secretary Donna Shalala and Interior Department Assistant Secretary Ada Deer have expressed support for the legislation to repeal the 1834 act. Sec- retary Shalala, in a letter dated No- vember 17, 1993, noted that repeal could improve the ability of IHS to recruit and retain medical professional em- ployees in remote locations. It is more difficult for IHS to recruit and retain medical professionals to work in re- mote reservation facilities if their spouses are prohibited from engaging in business activities with the local In- dian residents, particularly since em- ployment opportunities for spouses are often very limited in these locations. Let me cite one very specific case in which the law has come into play. The case, which surfaced a couple of years ago, involved Ms. Karen Arviso, who served as the Navajo area IHS health promotion and disease prevention coor- dinator. Ms. Arviso was one of those people who played a particularly crit- ical role during the outbreak of the hantavirus in the Navajo area at the time. She put in long hours traveling to communities across the reservation in an effort to educate people about this mysterious disease. Instead of thanks for her dedication and hard work, Ms. Arviso received a notice that she was to be fired because her husband applied for a small busi- ness loan from the Bureau of Indian Af- fairs. The Trading with Indians Act would require it. What sense does that make? Mr. President, repeal of the Trading with Indians Act is long overdue. I urge the Senate to pass this legislation again today, and finally send it on to the President for his signature. Mr. MCCAIN. Mr. President, I rise today to express my support for H.R. 3215 a bill to repeal certain provisions of laws relating to trading with Indians and to urge its immediate adoption. I am pleased to be joined by Senator JOHN KYL in sponsoring S. 199, the Sen- ate companion to H.R. 3215 to repeal the Trading with Indians Act. H.R. 3215 would address a long- standing problem in Indian policy. I have worked extensively with my col- leagues from Arizona, Senator KYL and Congressman HAYWORTH, to repeal the Trading with Indians Act. The Trading with Indians Act was originally en- acted in the 1800’s to protect Indians from unscrupulous Indian agents and other Federal employees. The prohibi- tions in the Trading with Indians Act were designed to prevent Federal em- ployees from using their positions of trust to engage in private business deals that exploited Indians. These pro- hibitions carried criminal penalties in- cluding a fine of up to $5,000 and re- moval from Federal employment. As time has passed, it has become appar- ent that the law is doing more harm than good. The Trading With Indians Act has had significant adverse impacts on em- ployee retention in the Indian Health Service [IHS] and the Bureau of Indian Affairs [BIA]. The problems stemming from the Trading with Indians Act are well-documented. The way that the law is written allows for the conviction of a Federal employee even when the em- ployee is not directly involved in a business deal with an Indian or an In- dian tribe. Because the prohibitions in the Trading with Indians Act apply to the spouses of IHS and BIA employees, the adverse impacts are far-reaching. For example, if a spouse of an IHS em- ployee is engaged in a business that is wholly unrelated to the BIA or the IHS and does not transact business with the BIA or the IHS, the spouse is still in violation of the Trading with Indians Act. Employee retention in often rural and economically depressed Indian communities is difficult enough with- out the additional deterrent of an out- dated prohibition to force out produc- tive and experienced employees who might otherwise stay. The act even prohibits Indians from the same tribe from engaging in business agreements or contracts entirely unrelated to the scope of the Federal employee’s em- ployment. Because the act applies to agreements between all BIA and IHS employees and all Indians regardless of their proximity or range of influence, it would prohibit a BIA or IHS em- ployee on the Navajo reservation in Ar- izona from selling his car to a Penob- scot Indian from Maine. As tribal governments become more sophisticated and more Indian people become better educated and able to adequately protect themselves against unscrupulous adversaries, the Federal Government must respect these changes by repealing outdated and pa- ternalistic laws which are still on the books. Respect for Indian sovereignty demands that the relics of paternalism fall away as tribal governments expand and grow toward self-reliance and inde- pendence. It is clear that although this statute served an admirable purpose in the 1800’s, it has become anachronistic and should be repealed. The important policies reflected in the Trading with Indians Act are now covered by the Standards of Ethical Conduct for Em- ployees of the Executive Branch. The Standards of Ethical Conduct for Em- ployees of the Executive Branch ade- quately protects the Indian people and tribes served and provides simple guidelines to follow for all Federal em- ployees when it comes to contracts with Indian people and Indian tribes. I would like to express my apprecia- tion for the work of Senator KYL and Congressman HAYWORTH in the devel- opment of this bill and I urge my col- leagues to support passage of H.R. 3215. I ask unanimous consent that the statement of Senator KYL be included in the RECORD immediately following my remarks. Mr. GRASSLEY. Mr. President, I ask unanimous consent that the bill be deemed read a third time and passed, the motion to reconsider be laid upon the table, and that any statements re- lating to the bill appear at the appro- priate place in the RECORD. The PRESIDING OFFICER. Without objection, it is so ordered. The bill (H.R. 3215) was deemed read the third time and passed. f MEASURE READ THE FIRST TIME\u2014H.R. 2391 Mr. GRASSLEY. Mr. President, I un- derstand that H.R. 2391 has arrived from the House. I now ask for its first reading. The PRESIDING OFFICER. The clerk will report. The assistant legislative clerk read as follows: A bill (H.R. 2391) to amend the Fair Labor Standards Act of 1938 to provide compen- satory time for all employees. Mr. GRASSLEY. Mr. President, I now ask for its second reading. The PRESIDING OFFICER. Is there objection? Mr. GRASSLEY. Mr. President, I ob- ject on behalf of the Democrat party. The PRESIDING OFFICER. Objec- tion is heard. f AUTHORIZING CONSTRUCTION OF SMITHSONIAN INSTITUTION NA- TIONAL AIR AND SPACE MU- SEUM DULLES CENTER Mr. GRASSLEY. Mr. President, I ask unanimous consent that the Rules Committee be discharged from further consideration of S. 1995, and, further, that the Senate proceed to its imme- diate consideration. The PRESIDING OFFICER. Without objection, it is so ordered. The clerk will report. The assistant legislative clerk read as follows: A bill (S. 1995) to authorize construction of the Smithsonian Institution National Air and Space Museum Dulles Center at Wash- ington Dulles International Airport, and for other purposes. The PRESIDING OFFICER. Is there objection to the immediate consider- ation of the bill? There being no objection, the Senate proceeded to consider the bill. Mr. GRASSLEY. Mr. President, I ask unanimous consent that the bill be deemed read a third time and passed, the motion to reconsider be laid upon the table, and that any statements re- lating to the bill be placed at the ap- propriate place in the RECORD. The PRESIDING OFFICER. Is there objection? Without objection, it is so ordered. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00109 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9318 July 31, 1996 The bill (S. 1995) was deemed read the third time and passed, as follows: S. 1995 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. CONSTRUCTION OF MUSEUM CEN- TER. The Board of Regents of the Smithsonian Institution is authorized to construct the Smithsonian Institution National Air and Space Museum Dulles Center at Washington Dulles International Airport. SEC. 2. LIMITATION ON USE OF FUNDS. No appropriated funds may be used to pay any expense of the construction authorized by section 1. f MUTUAL AID AGREEMENT BE- TWEEN BRISTOL, VA, AND BRIS- TOL, TN Mr. GRASSLEY. I ask unanimous consent that the Senate now proceed to the consideration of House Joint Reso- lution 166 which was received from the House. The PRESIDING OFFICER. The clerk will report. The assistant legislative clerk read as follows: A joint resolution (H.J. Res. 166) granting consent of Congress to the mutual aid agree- ment between the city of Bristol, Virginia, and the city of Bristol, Tennessee. The PRESIDING OFFICER. Is there objection to the immediate consider- ation of the joint resolution? There being no objection, the Senate proceeded to consider the joint resolu- tion. Mr. GRASSLEY. I ask unanimous consent that the resolution be deemed read the third time and passed, the mo- tion to reconsider be laid upon the table, and that any statements relating to the bill appear at their appropriate place in the RECORD. The PRESIDING OFFICER. Without objection, it is so ordered. The joint resolution (H.J. Res. 166) was deemed read the third time, and passed. f MEASURE READ THE FIRST TIME\u2014S. 2006 Mr. GRASSLEY. Mr. President, it is my understanding S. 2006, introduced today by Senator HATCH, is at the desk and I ask for its first reading. The PRESIDING OFFICER. The clerk will report. The assistant legislative clerk read as follows: A bill (S. 2006), to clarify the intent of Con- gress with respect to the Federal carjacking prohibition. Mr. GRASSLEY. I now ask for its second reading, and I object to my own request on behalf of the Senators on the Democratic side of the aisle. The PRESIDING OFFICER. The ob- jection is heard. The bill will be read the second time on the next legislative day. MEASURE READ FOR THE FIRST TIME\u2014S. 2007 Mr. FORD. Mr. President, I under- stand that S. 2007, introduced today by Senator BIDEN, is at the desk and I ask for its first reading. The PRESIDING OFFICER. The clerk will report. The assistant legislative clerk read as follows: A bill (S. 2007) to clarify the intent of Con- gress with respect to the Federal carjacking prohibition. Mr. FORD. Now, Mr. President, I ask for its second reading, and I will object to my own request on behalf of Sen- ators on the Republican side of the aisle. The PRESIDING OFFICER. Without objection, it is so ordered. The bill will be read for the second time on the next legislative day. f ORDERS FOR THURSDAY, AUGUST 1, 1996 Mr. GRASSLEY. Mr. President, I ask unanimous consent that when the Sen- ate completes its business today it stand in adjournment until the hour of 9:30 a.m. on Thursday, August 1; that immediately following the prayer, the Journal of proceedings be deemed ap- proved to date; the morning hour be deemed to have expired; the time for the two leaders be reserved for their use later in the day, and the Senate immediately proceed to the consider- ation of the conference report to ac- company H.R. 3734, the reconciliation bill, with the reading of the report hav- ing been waived. The PRESIDING OFFICER. Without objection, it is so ordered. f PROGRAM Mr. GRASSLEY. Tomorrow morning the Senate will begin consideration of the reconciliation bill under a statu- tory 10-hour time limitation. It is hoped the Senate will be able to yield back some of that time to allow us to complete action on that important conference report in a reasonable amount of time. Senators can expect votes through- out the day and into the evening, and the Senate may also be asked to con- sider any other appropriation matters or conference reports that become available. f ORDER FOR ADJOURNMENT Mr. GRASSLEY. As long as there is no further business to come before the Senate tonight, I ask the Senate stand in adjournment under the previous order following my own remarks and the remarks of Senator WELLSTONE. The PRESIDING OFFICER. Without objection, it is so ordered. f ELECTRONIC FUNDS TRANSFER PAYMENTS Mr. GRASSLEY. Mr. President, I want to take a few minutes to an- nounce a temporary tax victory for small business taxpayers. The IRS has made a failed attempt to implement new rules for payroll tax deposits. These rules would require many em- ployers to make their biweekly payroll tax deposits electronically. On July 12, I authored a letter to Treasury Secretary Rubin and IRS Commissioner Margaret Milner Rich- ardson. This letter discussed problems that employers and banks are having in understanding new payroll tax de- posit rules and methods. First, my letter asks Secretary Rubin to address specific questions posed by employers and their banks. Employers and their banks have a growing series of questions about the new procedures. Many of these center around the degree of access that IRS has to bank customers’ accounts. Sec- ond, the letter reminds the Secretary that he has authority under the law to provide some regulatory relief for small businesses. Mr. President, I ask unanimous con- sent that the text of my letter be printed in the RECORD. There being no objection, the letter was ordered to be printed in the RECORD, as follows: U.S. SENATE, Washington, DC, July 12, 1996. Secretary ROBERT E. RUBIN, Department of the Treasury, Washington, DC. DEAR SECRETARY RUBIN: This letter is to express our great concern of the impact upon small businesses and their banks of new Electronic Fund Transfer (EFT) rules. We hope that you will act in accordance with Congressional intent to ensure that the regu- lations do not create hardships for small businesses. We also wish that you will an- swer specific questions posed by our con- stituents working in the banking industry. SMALL BUSINESS CONCERNS Because the current EFT rules create new and significant burdens for small businesses, and because the tax code specifically allows for exceptions from the EFT rules for small businesses, we request that you take imme- diate action to clarify the necessary excep- tions well in advance of the January 1, 1997 effective date. Small employers presently utilize the Fed- eral tax deposit (FTD) coupon system and their local bank to make periodic payroll tax deposits with the Federal government. Inter- nal Revenue Code Section 6302(h) seeks to re- duce paperwork by replacing the FTD cou- pon system with an electronic fund transfer system. However, Congress intended, as set out in section 6302(h) and its legislative his- tory, that the regulations prescribe exemp- tions and alternatives to the EFT rules for small businesses. To date, these exemptions and alternatives have not been promulgated. As a result, employers and their banks are confused. The current regulations seem to require EFT compliance by all employers that had made employment tax deposits ex- ceeding $50,000 in 1995. In anticipation of the approaching effective date, the Internal Rev- enue Service has begun the process of edu- cating employers of their new EFT compli- ance requirements. Nonetheless, small and rural employers know that the Congress in- tended that they be exempt, and they are eager to see the intended exemptions. In part, the legislative history of the new law prescribes the following. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00110 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATE S9319 July 31, 1996 ”The Committee [on Finance] intends that the regulations do not create hardships for small businesses.” ”The provision grants the Secretary con- siderable flexibility in drafting the regula- tions and, the Committee [on Finance] urges the Secretary to take into account the needs of small employers, including possible ex- emptions for the very smallest of businesses from the new electronic transfer system.” Small businesses will suffer unintended hardships if your agency is unable to clarify the exemptions in advance of the effective date. It seems that many small businesses will need their banks to affect these new EFT transactions. Because their banks may view this as a new and different service, those banks may find it necessary to require small businesses to pay added fees. Also, be- cause EFT transactions can involve a new variety of either debit or credit transactions, some small business persons are adverse to allowing the IRS the ability to deduct funds from their business accounts without what some may deem as an adequate ”paper trail”. Employers that do not need to com- ply should be spared the anxiety of the rule change. Again, since the tax code anticipates ex- emptions for small and rural businesses, we request that you act promptly to define those exemptions in order to spare these em- ployers the expense and anxiety of attempt- ing to comply. Because employer penalties are involved, and the compliance date is ap- proaching, we think that this requires your immediate attention. BANK CONCERNS Small businesses are not the only ones concerned about the pending EFT rules. Al- though Iowa banks support efforts to mod- ernize our banking system and increase the use of EFT, they have commented on poten- tial problems arising from implementation of these regulations. Since small businesses are not governed by Internal Revenue Serv- ice Regulation E (except sole proprietor- ships), banks question whether proper notice and disclosure requirements will be in place. The following are a list of unanswered ques- tions raised by banks. (1) What degree of access to bank cus- tomers’ accounts is provided to the Internal Revenue Service? Do the regulations give the Internal Revenue Service open access to a bank customer’s account? What protections are in place to guard against unfettered ac- cess and use of information in the customer’s account? (2) A business may authorize a specific transfer to be made for the purpose of paying depository taxes. However, if penalties are assessed by the Internal Revenue Service, would the bank then have the authority or requirement to withdraw additional monies without the customer’s approval from the customer’s bank account to pay these pen- alties? (3) Who is responsible for notifying busi- nesses of transactions involving the bank ac- count? Iowa banks maintain that these are only several of many unanswered questions about the practical applications of the new regula- tions. Small businesses, banks, and the In- ternal Revenue Service all have an interest in assuring the proper and appropriate im- plementation of the regulations. Properly promulgating efficient and effective regula- tions that do not devastate either small businesses or banks requires cooperation amongst all of the parties concerned. Two of the three interested parties, small businesses and banks, have expressed important and pressing concerns. We believe that these questions and concerns should be addressed before implementing regulations that pose unnecessary or burdensome requirements on small business taxpayers or their banks. Thank you in advance for your prompt and considerate attention to these matters. Be- cause taxpayers in our state are eager to clarify these new rules, and because of the coming effective date of January 1, 1997, we would appreciate your efforts to make your response to us before August 23, 1996. Sincerely, CHARLES E. GRASSLEY, United States Senator. GREG GANSKE, Member of Congress. Mr. GRASSLEY. Mr. President, 2 weeks ago, Secretary Rubin responded by letter that he appreciated my ef- forts to inform him of the problems, and that he was reviewing the matter. Today, IRS Commissioner Margaret Milner Richardson announced that the IRS was suspending the 10 percent pen- alty for 6 months. The IRS had origi- nally intended employers who had de- posited $50,000 or more last year to begin to follow the new electronic funds rules by January 1, 1997. Now, though employers are still encouraged to comply, no penalty will be imposed for failure to change deposit methods until after July 1, 1997. Mr. President, though only a tem- porary reprieve, this is a victory for small business employers, and I am proud of my part. I welcome the efforts of Treasury and IRS to make a better second try at educating taxpayers. In my view, tax- payers are the consumers of the serv- ices provided by Treasury and the IRS. I think that good customer service sometimes includes a good second try. I am also enthusiastic about the po- tential for Electronic Funds Transfers or EFT. For large and medium sized employers, EFT could become more ef- ficient and cost effective than the present coupon FTD system. Some small businesses may realize similar economies. Other small businesses should be allowed alternatives. The Treasury Department has also said that it will soon be responding to the questions that were posed in my letter. The response will be in the form of answers to some of the most com- mon questions. Though that response is still forth- coming, I think that the will allay some of the fears that employers and banks have posed. In part, the IRS seems to have simply done a poor job in its initial effort at education. How- ever, I am waiting for the official re- sponse before determining how com- pletely or adequately it answers all of my concerns. Mr. President, I suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The assistant legislative clerk pro- ceeded to call the roll. Mr. WELLSTONE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. A BROKEN AGREEMENT ON A JUDICIAL NOMINATION Mr. WELLSTONE. Mr. President, earlier tonight, at the time of our last vote, I was notified that we had an agreement\u2014and let us call it kind of a code of honor\u2014that Ann Montgomery, a very fine judge, who will be a great judge on the Federal district court in Minnesota, would be confirmed here to- night in the Senate. Mr. President, for really many, many months now, picking up with intensity in the last several months and the last several weeks, I have been in intensive discussions with the majority leader, whom I think has been operating in very good faith. I felt as if I had re- ceived a very firm commitment from him\u2014I believe his word is his bond\u2014 that while there had been some ”soft hold” put on Judge Montgomery, actu- ally at the beginning of this week or by the middle of this week\u2014it was to be tonight\u2014we would move her nomina- tion forward. Mr. President, much to my amaze- ment, after we had an agreement with a clear understanding that this would happen, at the last second one of my colleagues, the Senator from Texas, Senator HUTCHISON, objects. And when the minority leader, Senator DASCHLE, asks her why, there is no response at all. Mr. President, let me just say that it is my firm hope that tomorrow we will have this resolved, and if a Senator has a ”soft hold” on Judge Montgomery, then we should\u2014and I certainly hope the majority leader will do this. I feel as if he had made the commitment to move this nomination forward. Then let us move this forward for a vote. I did not ask for unanimous consent. If we need to have a vote, I would be pleased to debate with any Senator the merits of this nomination. Judge Mont- gomery has received just outstanding support and unbelievable recommenda- tions from across the broadest possible spectrum of the legal community; sup- port from myself and support from my colleague, Senator GRAMS from Min- nesota. So, Mr. President, let me just be crystal clear about it. What is so unfor- tunate is that here you have a fine judge who has been waiting to be dis- trict judge, has been waiting and wait- ing and waiting and waiting. I was just, I say to my colleague from Iowa, pick- ing up the phone to call her. I had just dialed it to say, ”I want you to know the long wait is over. Tonight will be the night. Tell your family. Tell your children.” This is outrageous. And I would ap- preciate it if my colleagues would have the courage to simply defend whatever positions they take, not just announce a hold at the last second and then have nothing to say. Mr. President, I am confident that we will resolve this. I believe the majority leader has given me his word. I think his word is good. I know it is good. But VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00111 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S CONGRESSIONAL RECORD \u2014 SENATES9320 July 31, 1996 I have to say to my colleagues, whom- ever they are\u2014I know it is not the Sen- ator from Iowa\u2014if you have a soft hold and you want to keep it anonymous, that is one of the procedures that is so outrageous to people in the country. We will just move this forward, and we will have debate, and we will have a vote. Mr. President, I am really dis- appointed for Judge Montgomery to- night. I am absolutely determined that this will be resolved by the end of this week. I will do everything I can as a Senator from Minnesota, will use every bit of knowledge that I know about this process and this Senate, and every bit of leverage I have to make sure that this eminently qualified woman becomes a U.S. district court judge. I hope we can work in the spirit of collegiality. I certainly did not see that tonight. Mr. President, I yield the floor. f ADJOURNMENT UNTIL 9:30 A.M. TOMORROW The PRESIDING OFFICER. Under the previous order, the Senate stands in adjournment until 9:30 a.m., Thurs- day, August 1, 1996. Thereupon, the Senate, at 10:09 p.m., adjourned until Thursday, August 1, 1996, at 9:30 a.m. f NOMINATIONS Executive nominations received by the Senate July 31, 1996: IN THE AIR FORCE THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT TO THE GRADE OF LIEUTENANT GENERAL IN THE U.S. AIR FORCE WHILE ASSIGNED TO A POSITION OF IMPOR- TANCE AND RESPONSIBILITY UNDER TITLE 10, UNITED STATES CODE, SECTION 601: To be lieutenant general MAJ. GEN. DAVID J. MCCLOUD, 000 00 0000 IN THE ARMY THE FOLLOWING-NAMED OFFICER FOR APPOINTMENT TO THE GRADE OF LIEUTENANT GENERAL IN THE U.S. ARMY WHILE ASSIGNED TO A POSITION OF IMPORTANCE AND RESPONSIBILITY UNDER TITLE 10, UNITED STATES CODE, SECTION 601(A): To be lieutenant general MAJ. GEN. FREDERICK E. VOLLRATH, 000 00 0000 f CONFIRMATION Executive nomination confirmed by the Senate July 31, 1996: THE JUDICIARY Frank R. Zapata, of Arizona, to be U.S. District Judge for the District of Arizona. VerDate Aug 31 2005 05:36 Jun 20, 2008 Jkt 041999 PO 00000 Frm 00112 Fmt 4624 Sfmt 0634 J:\\ODA16\\1996_F~1\\S31JY6.REC S31JY6m m ah er o n M IK E T E M P w ith S O C IA L S E C U R IT Y N U M B E R S EXTENSIONS OF REMARKS \u2211 This ”bullet” symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor. Matter set in this typeface indicates words inserted or appended, rather than spoken, by a Member of the House on the floor. CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1413July 31, 1996 LEGISLATION INTRODUCED TO CONSTRUCT AIR AND SPACE MU- SEUM AT WASHINGTON DULLES AIRPORT HON. FRANK R. WOLF OF VIRGINIA IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. WOLF. Mr. Speaker, I am pleased today to introduce legislation\u2014along with my col- leagues Representatives BOB LIVINGSTON, SAM JOHNSON, TOM DAVIS, TOM BLILEY, BOB GOODLATTE, JIM MORAN, L.F. PAYNE, RICK BOUCHER, OWEN PICKETT, and NORMAN SISI- SKY\u2014to authorize the Board of Regents of the Smithsonian Institution to construct the Na- tional Air and Space Museum Extension at Washington Dulles International Airport. This legislation represents the next critical step in making the extension a reality and I urge my colleagues to support this bill. The need for this extension is clear. The ex- isting Air and Space Museum on the Mall now faces a critical shortage of critical storage fa- cilities. Current facilities are inadequate, stor- age for larger artifacts is simply not available, and existing storage facilities do not provide controlled climate conditions necessary for the safe preservation of most museum artifacts. Not only that, as a result of current space limi- tations at the Mall Museum, only about 20 per- cent of the Nation’s aircraft collection is on public display. Mr. Speaker, some of our Nation’s most his- toric aircraft are hidden from public view. The Enola Gay, the SR 71 Blackbird spy plane, the space shuttle Enterprise, and many others sit in warehouses because there is no room for these large artifacts at the Mall Museum facility. The extension facility will provide the space necessary to house and exhibit these great artifacts for families who come from all over the country with the Air and Space Mu- seum at the top of their sightseeing list. The Mall Museum is the most popular of the Smithsonian’s museums and the extension is expected to draw significant crowds too. Ap- proximately 7 to 8 million people now visit the Air and Space Museum on the mall and an estimated 2 to 3.5 million visitors are expected annually at the extension. In 1993, the Smithsonian Institution was first authorized to plan and design an Air and Space Museum Extension at Washington Dul- les International Airport and I was pleased to support this effort. In fiscal year 1996, Con- gress and the Commonwealth of Virginia pro- vided funding for planning and design work on the extension. Further work on schematic plans are planned in preparation for the con- struction phase of the project. While Congress has authorized and appro- priated funding for planning and design work, Congress has previously made it clear that no Federal funds are to be made available for the construction portion of the project. Instead, the Smithsonian Institution is responsible for rais- ing private funds for construction of the exten- sion and already, the Air and Space Museum has begun to build a capital campaign infra- structure. A National Air and Space Society membership program was begun in 1995 to generate public support for the museum and the extension and already more than 4,000 people have joined and contributed. The legislation I am introducing today mere- ly authorizes the Board of Regents of the Smithsonian Institution to construct the mu- seum extension and also makes clear that no appropriated funds are to be used to pay any expense of the construction of this facility. The new Director of the Smithsonian Institution, former Federal Aviation Administration Admin- istrator and retired Adm. Donald Engen, has stated that his No. 1 priority will be to wage a national campaign to raise adequate funding for construction and his goal will be accom- plished more effectively once Congress has clearly authorized this construction. Mr. Speaker, the museum extension will sig- nificantly increase the amount of the collection on public display, provide safe and climate- controlled storage facilities, and provide a res- toration facility capable of the handling the largest artifacts in the collection in full view of visitors. Federal funds will not be used for construction of the extension and instead these costs will be paid for by privately raised funds. I urge my colleagues to support the Air and Space Museum Extension project and this leg- islation authorizing its construction. H.R. \u2014. Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. CONSTRUCTION OF MUSEUM CEN- TER. The Board of Regents of the Smithsonian Institution is authorized to construct the Smithsonian Institution National Air and Space Museum Dulles Center at Washington Dulles International Airport. SEC. 2. LIMITATION ON USE OF FUNDS. No appropriated funds may be used to pay any expense of the construction authorized by section 1. f TRIBUTE TO G. HUNTINGTON BANISTER HON. GERALD B.H. SOLOMON OF NEW YORK IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. SOLOMON. Mr. Speaker, a valued and trusted public servant retired from the Federal Government today. G. Huntington Banister, better known as Hunt, served proudly in a dis- tinguished career spanning 31 years. Beginning in 1972, Hunt put his skills to work for America at several agencies. He launched his public career as a Budget Ana- lyst with the Interstate Commerce Commis- sion. From 1976 to 1979, he served as Budget Officer for the Public Health Service’s National Institute on Drug Abuse. He was Financial Manager for the Commodity Futures Trading Commission from 1979 to 1985. But it is in his present position that I came to personally know and respect this fine gen- tleman. In 1985, he joined the staff of the Se- lective Service System as its Controller. He was indispensable at this small but vital Fed- eral agency that is near and dear to my heart. It has a nationwide staff of less than 200 full time people, yet its purpose and mission are enormous. Serving as America’s defense in- surance policy in a still dangerous world, it re- mains ready to mobilize and provide our Na- tion’s Armed Forces with the manpower nec- essary to fight in any future crisis that requires a return to the draft. Earning the admiration and respect of his superiors and subordinates alike, Hunt be- came the Acting Director of Selective Service in February 1994. For 9 months, until the con- firmation of a new Director, he led the Agency at a most critical time in its history. That sum- mer Selective Service faced possible termi- nation during the congressional budget proc- ess. Fortunately, those of us in Congress who appreciate the value of military personnel readiness did not let that happen, and the im- portant role played by the Agency in national security continues today without pause. In no small measure, the very survival of a strong and ready Selective Service System is attributable to the leadership abilities of Hunt Banister. He is a man whose intellect, people skills, and savvy set him apart. It is worthy of note that Hunt is ”Twice the citizen,” having also completed a parallel career as an Army Reserve officer and retiring as a colonel after 30 years of commissioned service, including almost 7 years of active duty and a tour of Vietnam. Throughout his long and distinguished ca- reer, Hunt Banister made a difference. When the going got rough, he remained tough, and his legacy is a more secure America. The citi- zens of this great Nation are in his debt, and wish G. Huntington Banister, his wife Linda, and his children Betsy and Carly, good health and happiness on his well deserved retirement day. f THANK YOU, MEGAN MACHEMAHL, FOR YOUR LOYAL SERVICE HON. JACK FIELDS OF TEXAS IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. FIELDS of Texas. Mr. Speaker, it was with mixed emotions that I announced last De- cember 11 my decision to retire from the House at the conclusion of my current term. As I explained at the time, the decision to re- tire was made more difficult because of the loyalty and dedication of my staff\u2014and be- cause of the genuine friendship I feel for them. Each one of them has served the men and women of Texas’ Eighth Congressional District in an extraordinary way. CONGRESSIONAL RECORD \u2014 Extensions of RemarksE1414 July 31, 1996 Today, I want to thank one member of my staff\u2014Megan Machemahl, my staff assistant in my College Station, TX, district office\u2014for ev- erything she’s done for me and my constitu- ents in the almost 2 years that she has served as my representative in College Station. Megan is a native of Houston who served as an intern in my Washington DC, office from August to December 1994. During her semes- ter-long internship, Megan helped my perma- nent staff track legislation in committee and on the House floor, conduct legislative research, and answer constituent correspondence. She performed each of these tasks with enthu- siasm and great professional skill, and I was grateful for all she did to help. Little did I realize that so soon after she left, she would be rejoining my staff. Shortly after her internship ended and she had returned to Texas A&M University, my staff assistant in the College Station office announced his deci- sion to leave. Remembering what a good job Megan had done during her internship, I of- fered her the opportunity to run the College Station office while she pursued her masters degree. Fortunaely, she agreed. Since 1995, Megan has represented me at events and meetings in the western half of my congressional district, which includes Brazos, Washington, and Aus- tin counties. Also, she has helped coordinate the congressional internship program for my College Station office\u2014recruiting, selecting and training new student interns. She also de- signed a training manual for handling congres- sional casework. Having earned her bachelors degree in jour- nalism from Texas A&M University in August 1995, Megan is now working to her masters degree in educational human resource devel- opment, which she expects to receive in May 1997. Megan is one of those hard-working men and women who make all of us in this institu- tion look better than we deserve. I know she has done that for me, and I appreciate this op- portunity to publicly thank her for the dedica- tion, loyalty, and professionalism she has ex- hibited throughout the years it has been my privilege to know and work with her. Megan’s plans after she earns here masters degree are as yet uncertain, but knowing her as well as I do, I am confident that her profes- sional skills and personal qualities\u2014skills and qualities she has demonstrated in my office\u2014 will lead to continued success in the future. Mr. Speaker, I know you join with me in saying thank you to Megan Machemahl for her loyal service to me, to the men and women of Texas’ Eighth Congressional District, and to this great institution. And I know you join with me in wishing her the very best in all of her future endeavors. f WE’RE GLAD OLIVIA SIMMONS AND DARYL EDWARDS WERE HERE HON. DONALD M. PAYNE OF NEW JERSEY IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. PAYNE of New Jersey. Mr. Speaker, like so many communities across America and some parts of the world, New Jersey’s 10th Congressional District lost some of its mem- bers in the crash of TWA flight 800 on July 17. This evening at the St. Matthew AME Church in Orange, NJ, a memorial service, organized under the direction of Orange Mayor Mims Hackett, is being held for Olivia Simmons, one of the victims. By all accounts, Olivia Simmons was a car- ing individual who cherished life. She did what she could to make life as beneficial as pos- sible for others. Ms. Simmons was a teacher in the Newark school system for 28 years. She taught at the Clinton Avenue School and the Broadway Elementary School. In the past several years, Ms. Simmons was also a school librarian. Ms. Simmons loved the written word and dedicated her life to opening new horizons by encouraging others to appreciate books and other written material. She was an avid, read- er who belonged to literary clubs and the International Reading Association. Ms. Simmons valued multiculturalism. In ad- dition to her teacher\/librarian duties she also was a flight attendant for 21 years. Because of her love and respect for our different cultures, she traveled during weekends and summers. Mr. Speaker, we also lost another in that terrible crash, Daryl Edwards. Mr. Edwards was a flight attendant with TWA for 18 years. He was born in Newark, NJ and raised in East Orange, NJ. He graduated from East Orange High School. He attended and graduated from American University in Washington, DC. One of Mr. Edwards’ delights was cooking. He was an accomplished chef, having been graduated from the Peter Kamp Culinary School in New York City. He owned a catering business. Mr. Edwards gave and received great joy through his culinary art. Mr. Speaker, Olivia Simmons and Daryl Ed- wards were two warm, friendly and caring indi- viduals. Their absence will be felt. However, although we will miss them, we’re glad they were here. f 2002 WINTER OLYMPIC GAMES FACILITATION ACT SPEECH OF HON. JAMES V. HANSEN OF UTAH IN THE HOUSE OF REPRESENTATIVES Tuesday, July 30, 1996 Mr. HANSEN. Mr. Speaker, following is the Congressional Budget Office cost estimate for H.R. 3907, a bill to facilitate the 2002 Winter Olympic Games in the State of Utah at the Snowbasin Ski area, to provide for the acquisi- tion of lands within the Sterling Forest Re- serve, and for other purposes, that passed the House on Tuesday, July 30, 1996. U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, July 29, 1996. Hon. DON YOUNG, Chairman, Committee on Resources, U.S. House of Representatives, Washington, DC. DEAR MR. CHAIRMAN: The Congressional Budget Office has reviewed H.R. 3907, a bill to facilitate the 2002 Winter Olympic Games in the state of Utah at the Snowbasin Ski Area, to provide for the acquisition of lands within the Sterling Forest Reserve, and for other purposes, as introduced in the House of Representatives on July 26, 1996. Assuming appropriation of the necessary sums, CBO es- timates that the federal government would spend $17.5 million over the next several years to implement Title II of this bill. In addition, Title I of the bill would affect di- rect spending; therefore, pay-as-you-go pro- cedures would apply. However, we estimate that any change in direct spending would be insignificant. FEDERAL BUDGETARY IMPACT Title I would authorize and direct the Sec- retary of Agriculture to transfer to the Sun Valley Company 1,230 acres of federally owned land for the Snowbasin Ski Area, lo- cated within the Cache National Forest in Utah. In exchange, the Forest Service would receive about 4,100 acres of privately owned land of roughly equal value located within the Cache National Forest. Based on con- versations with the committee staff, we un- derstand that the map designations are in- tended to be the same as those in H.R. 2402, as reported by the Committee on Resources on December 15, 1995. Based on information from the Forest Service, CBO estimates that this exchange would cause the federal gov- ernment to lose receipts from permit fees to- taling less than $25,000 annually. We esti- mate that no significant change in discre- tionary spending would result from imple- menting this title. Title II would authorize the Secretary of the Interior to transfer funds to the Pali- sades Interstate Park Commission for the purpose of acquiring lands and related inter- ests in the Sterling Forest Reserve in New York. The title would authorize the appro- priation of up to $17.5 million for this pur- pose. In addition, section 202 would authorize the Secretary to exchange unreserved federal lands for about 2,220 acres of nonfederal property in Sterling Forest. The Secretary would be directed to transfer to the commis- sion any land acquired by exchange. Assuming that the entire amounts author- ized for land acquisition would be appro- priated as needed by the commission, CBO estimates that the Secretary of the Interior would transfer $17.5 million to the commis- sion over the next several years. It is un- likely that any land exchanges would be exe- cuted under the authority provided in this title because there is probably no federal land suitable for exchange purposes in New York, and any federal land located in other states could probably not be used for the ex- change without specific legislative author- ity. IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS H.R. 3907 contains no intergovernmental mandates as defined in the Unfunded Man- dates Reform Act of 1995 (Public Law 104 4). The state of Utah would lose a small amount of receipts as a result of the proposed land transfer in Title I because it receives 25 per- cent of the permit fees paid by ski areas on federal lands within the state. The bill would impose no other costs on state, local, or trib- al governments. IMPACT ON THE PRIVATE SECTOR This bill would impose no new private-sec- tor mandates as defined in Public Law 104 4. PREVIOUS CBO ESTIMATES On March 17, 1995, CBO completed a cost estimate for S. 223, the Sterling Forest Pro- tection Act of 1995, as ordered reported by the Senate Committee on Energy and Natu- ral Resources on March 15, 1995. S. 223 also would authorize the appropriation of $17.5 million for acquisition and transfer of the Sterling Forest lands. The Senate bill con- tains other provisions that would have cost the federal government about $200,000. Be- cause these provisions are not included in H.R. 3907, estimated costs for this bill are lower. CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1415July 31, 1996 On December 1, 1995, CBO completed a cost estimate for H.R. 2402, the Snowbasin Land Exchange Act of 1995, as ordered reported by the House Committee on Resources on No- vember 16, 1995. H.R. 2402 contains provisions that are very similar to those of Title I of H.R. 3907, and the estimated costs for those provisions in the two bills are identical. If you wish further details on this esti- mate, we will be pleased to provide them. The CBO staff contacts are Deborah Reis and Victoria V. Heid (for federal costs), who can be reached at 226 2860, and Marjorie Miller (for the state and local impact), who can be reached at 225 3220. Sincerely, JUNE E. O’NEILL, Director. f TRIBUTE TO EVESHAM TOWNSHIP POLICE CHIEF NICHOLAS L. MATTEO HON. JIM SAXTON OF NEW JERSEY IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. SAXTON. Mr. Speaker, I rise to take this opportunity to congratulate and recognize the distinguished career of Chief Nicholas L. Matteo, chief of police for Evesham Township in Burlington County, NJ. Chief Matteo is pre- paring to retire on January 1, 1997 upon com- pletion of more than 30 years of faithful serv- ice to the Evesham Township Police Depart- ment. A native of Medford, NJ, Chief Matteo began his career with the Evesham Township Police Department responding to calls as a patrolman in 1966. As a cop on the beat, Chief Matteo served his community during time of need and emergency situations. Mr. Matteo then ascended to the rank of de- tective first class where he was responsible for interviewing victims, perpetrators, and the fol- low-up of criminal investigations. Patrol sergeant, the next title held by Mr. Matteo, entailed the overseeing of the oper- ations of an entire patrol shift as well as direct supervision of critical incidents. Chief of police is the rank that he has held honorably since 1990. He has been respon- sible for the operation of a large, widely re- spected law enforcement agency. While serv- ing as chief of police, Mr. Matteo has earned the respect of the men and women of the Evesham Township Police Department, as well as residents of Burlington County, by par- ticipating on the Burlington County Chiefs As- sociation Executive Board. In 1996, the Delaware Valley Chiefs Asso- ciation named him to their executive board. This is a most prestigious honor. This appoint- ment highlights Chief Matteo’s genuine con- cern for protecting the safety of the residents of his own community as well as those sur- rounding it. Chief Matteo’s dedication to his community is not limited to his duties and responsibilities as a police officer. He is also keenly aware of the need for racial harmony and tolerance throughout our country. He promotes this ideal through the Coalition of Multi-Culture Under- standing of Burlington and Camden counties, of which he is president. Be it a patrolman, an administrator, or a su- pervisor, Chief Nicholas L. Matteo has been an excellent role model for other uniformed of- ficers and citizens of the United States. Mr. Speaker, I am honored to submit these com- memorative remarks in order to share the many accomplishments of a great man with my colleagues. A man of Nicholas Matteo’s stature and vi- sion is rare indeed. While his distinguished service will be genuinely missed, it gives me great pleasure to recognize him, and to wish him good luck as he brings to a close a long and dignified career with the Evesham Town- ship Police Department. f WILLIAM H. MORTON ENGINE CO. NO. 1 CELEBRATES 125TH ANNI- VERSARY HON. GERALD B.H. SOLOMON OF NEW YORK IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. SOLOMON. Mr. Speaker, anyone who visits my office can’t help but notice the dis- play of fire helmets that dominate my recep- tion area. They’re there for two reasons. First, I had the privilege of being a volunteer fireman in my hometown of Queensbury for more than 20 years, which helps explain the second rea- son, the tremendous respect that experience gave me for those who provide fire protection in our rural areas. Mr. Speaker, in a rural area like the 22d District of New York, fire protection is often solely in the hands of these volunteer compa- nies. In New York State alone they save countless lives and billions of dollars worth of property. That is why the efforts of people like those firefighters in Athens, NY, is so critical. And that’s why, Mr. Speaker, back in 1870 the residents of the growing village of Athens demanded more fire protection and the Wil- liam H. Morton Engine Co. was born in 1871. It was founded based on this need to serve one another. On that note, Mr. Speaker, those are the traits that make me most fond of such commu- nities, the undeniable camaraderie which ex- ists among neighbors. Looking out for one an- other and the good of the whole is what makes places like Athens a great place to live and raise a family. And this concept of com- munity service couldn’t be better exemplified than by the devoted service of the fine men and women who have comprised the William H. Morton Engine Co. No. 1 over its 125-year history. That’s right, for well over a century, this organization has provided critical services for the citizens of Athens on a volunteer basis. As a former volunteer fireman myself, I under- stand, and appreciate, the commitment re- quired to perform such vital public duties. Mr. Speaker, it has become all too seldom that you see fellow citizens put themselves in harms way for the sake of another. While al- most all things have changed over the years, thankfully for the residents of Athens, the members of their fire department have self- lessly performed their duty, without remiss, since back in 1871. You know, I have always said there is noth- ing more all-American than volunteering to help one’s community. By that measure, Mr. Speaker, the members of the William H. Mor- ton Engine Co. No. 1, past and present, are truly great Americans. In that regard, I ask that you, Mr. Speaker, and all Members of the House, join me now in paying tribute to these dedicated men and women. f FUNDING FOR THE FEDERAL MARITIME ACADEMIES HON. JACK FIELDS OF TEXAS IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. FIELDS of Texas. Mr. Speaker, I am deeply concerned about the viability and sus- tainability of our 6 State maritime academies given this bill’s funding level for the Maritime Administration’s operation and training ac- count. This portion of the Commerce, Justice, State appropriations bill does not specifically provide funding for the 6 schools and actually cuts $4.3 million from the operation and train- ing account that was to have funded the schools. The State maritime academies represent a model of State and Federal cost sharing in meeting the Nation’s need for officers for the American flag merchant fleet and other ele- ments of the maritime industry. The students and State governments underwrite most of the schools’ costs. The Federal Government his- torically has assisted the academies by loan- ing them training ships used to meet the Fed- eral mandate for the sea time required to fulfill the Coast Guard licensing requirements. The schools maintain these ships at approximately one-third the cost of maintaining Ready Re- serve Fleet ships. The mission of the State maritime acad- emies is to provide, in partnership with the Federal Government, licensed American mer- chant marine officers by the most cost-effec- tive means. The 6 schools, located in Maine, Massachusetts, New York, Texas, California, and Michigan provide 75 percent of the Na- tion’s licensed mariners. These State maritime academies represent a high return on a modest Federal investment. For only $9.3 million, which represents level funding over the past 7 years, they train and graduate 75 percent of the Nation’s licensed merchant marine offices; maintain a Ready Reserve Fleet ships at one-third the Govern- ment costs; commission an additional 100 Navy and Coast Guard Reserve officers each year; and enjoy a 100 percent job placement rate for graduates. I, along with many others on both sides of the aisle, hope the Senate will fully fund these much-needed State maritime academies. I also urge House appropriations conferees to work with the Senate to restore this funding. f A TRIBUTE TO WOODS MEMORIAL HOSPITAL HON. JOHN J. DUNCAN, JR. OF TENNESSEE IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. DUNCAN. Mr. Speaker, I want to con- gratulate Woods Memorial Hospital in Etowah, TN, for being nationally recognized for its suc- cess in advanced technology as well as its overall business success. In addition to its national recognition, the hospital was honored with the Tennessee CONGRESSIONAL RECORD \u2014 Extensions of RemarksE1416 July 31, 1996 Quality Commitment Award and received ac- creditation with commendation from the Joint Commission on Accreditation of Health Care Organizations earlier this year. These are fine honors which the hospital should be very proud to receive. Despite the growing shortage of quality medical care in our rural communities, Woods Memorial Hospital remains dedicated to pro- viding its patients with the best technology and high quality care from its professional staff. I am proud to have Woods Memorial Hospital in the 2d district of Tennessee. I request that a copy of the article ”Critical Care” which appeared in Inc. Technology be placed in the RECORD at this point. I would like to call it to the attention of my colleagues and other readers of the RECORD. CRITICAL CARE\u2014CASE STUDY (By Joshua Macht) The gurney crashes through the emergency room doors. On it lies a woman, lips pale, fading in and out of consciousness. In the glare of harsh lights, a quickly gathering knot of doctors and nurses steps into crisis mode. Needles, probes, and paddles move in and out of hands; a blood-sample is raced to the hospital laboratory. Moments later the lab sends the test results electronically to the emergency room: the woman’s blood pressure is low; she must be losing blood. Im- ages from a pelvic ultrasound are quickly de- livered to a radiologist. Around the corner, in the operating room, the surgeon prepares for the unscheduled morning performance. Before he scrubs, he dials a voice-mail box and retrieves a radi- ologist’s interpretation of the ultrasound. The diagnosis: a ruptured fallopian tube and massive internal bleeding. The doctors sus- pect an ectopic pregnancy (an inseminated egg attaches to the wall of a fallopian tube instead of the uterus); the embryo has to be removed. Barely an hour and a half after the woman is rushed to the hospital, she’s on the operating table; soon she’s recovering in her hospital bed. A routine crisis for one of the nation’s big- city, high-tech hospitals. Except for one thing. This scene is taking place in tiny Woods Memorial Hospital, a 72-bed non profit hospital in Etowah, Tenn., a rural commu- nity halfway between Chattanooga and Knoxville. Big changes are going on in health care, leaving hospitals across the country reeling from skyrocketing costs, a glut of beds, and all-out efforts by the government and the in- surance industry to reduce treatment and re- imbursement. Large urban hospitals, though they’ve felt the squeeze, are often able to weather the crisis because they’ve invested in sophisticated medical technologies that attract patients and in high-powered infor- mation systems that improve efficiency and manage costs. But smaller hospitals typically don’t have the money or the expertise to practice high- tech medicine or to buy computers. Those are some of the reasons small hospitals are collapsing or being swallowed up by larger competitors at an unprecedented rate. The crisis is all the greater for small hospitals like Woods that are located in rural areas, away from large pools of potential patients and technological know-how. Woods, however, is thriving. Outpatient care is at its highest level ever, while patient revenues swelled from $16 million in 1991 to $28 million last year. Net income, even al- lowing for money that will never be recov- ered from federal, state, and private health- care subsidies, rose to $1.6 million in 1995 from $953,327 in 1991. What makes Woods different? Three and a half years ago, the hospital began to trans- form itself. The focus: cost containment. The method: automation. Led by an adminis- trator who has applied a near-military zeal to the task of automating every aspect of the institution’s operations. Woods has proved that even organizations caught in the vortex of an industry’s downward spiral can buck the trend. Etowah is a sleepy town of 4,500 people, most of them paper-mill and textile workers, on the edge of the Cherokee National Forest. Etowah didn’t get a hospital until 1965. Not surprisingly, when it was built. Woods was a spartan facility: the emergency room was open only during certain hours, and there was no intensive care unit. In fact, there wasn’t an internist within 50 miles. Instead, family practitioners and general surgeons mended everything from sprained ankles to burst appendixes while cases of any complex- ity were referred to larger Bradley Memorial in the next county, the University of Ten- nessee Medical Center in Knoxville, or Er- langer Medical Center, in Chattanooga. Still, Woods was healthy. In most hospitals back then in the fee-for-services days, just about anyone with a medical degree and a stethoscope could make money by patching up a patient and billing the patient’s insur- ance company, few questions asked. In the late 1970s and early 1980s, the hospital, run by a retired air force colonel, added 40 beds to its original 30 and built an intensive care unit. Then came the crunch. In 1983 the federal government stopped paying Medicare reim- bursements based on a hospital’s tally of the actual cost of the care given; instead, it began doling out flat fees based on its esti- mate of what the treatment of a given illness should cost. The payments were especially meager to rural hospitals, on the theory that a hospital’s costs should be much lower out- side a city. Woods’s Medicare reimburse- ments plunged to less than 75% of the cost of treating its Medicare patients, who made up two-thirds of the hospital’s patient popu- lation. With its Medicare operations running deep- ly in the red, the hospital’s cash reserves were soon depleted, leaving no money for im- provements or even upkeep. Tile walls and floors began to crack. Patients waiting to be admitted sat in the lobby on folding chairs. More important, the hospital couldn’t af- ford to keep up with the latest medical tech- nology. That, in turn, made it all but impos- sible to recruit young talent to the staff. One of the few doctors to join the staff in the late 1980s was Charles Cox, who had started at Woods as an orderly in 1976 before going to medical school and whose family owned a dairy farm in the area. ”There really wasn’t much incentive for young doctors to come here,” calls Cox, who would sometimes save patients during the day and do farm chores at night. To make up for the reimbursement short- fall, the hospital tried raising its prices to non-Medicare patients. But that led to a lev- eling off of patients. It was clear that the only way to bridge the gap between Woods’s costs and reimbursements was to reduce costs by improving efficiency. Not an easy task. Inefficiency was in- grained in almost everything that went on at the hospital. Consider patient intake. Pa- tients would wait 30 minutes or more in the dreary lobby while nurses filled in hospital admission forms and then typed hospital bracelets. If a patient needed blood work or X rays, a nurse had to fill in a three-page carbon-copy requisition form and hand-de- liver copies to the lab and to billing. Ah, billing: two women in a cramped office entering the charges for each patient into a bare-bones minicomputer-based system. and that was the high-tech part. They had to pre- pare the special forms for billing third par- ties, like Medicare and Blue Cross of Ten- nessee, by hand and then mail them. Four to six weeks later, when a batch of reimburse- ment checks came in, the switchboard opera- tor would use the time between calls to record the payments in a 30-column ledger. ”Things moved slowly back then,” says Carol Ethridge, chief financial officer and in- formation officer. ”And because everything was done manually, there was plenty of room for error.” When Phil Campbell arrived at Woods in 1990 to take over as CEO, the hospital was $200,000 shy of making its payroll and was struggling to survive. Campbell had been working as associate administrator of a health-care facility in Rome, Ga., when Woods’s board hired him. ”I had wanted to go to a ”rural hospital,” says Campbell. ”But I underestimated how difficult it would be.” For the first few months, Campbell tried to persuade large suppliers to extend the small hospital’s payment schedule. But then, sud- denly, he took the offensive. Most hospitals charge for small items\u2014a Band-Aid (as much as $10 in some hospitals) or a single aspirin (as much as $4 or more a pop). Campbell, who seemed determined to become the Crazy Eddie of health care, decided to give them away. Next he slashed prices on lab work, the hospital’s biggest profit center. Then, as though the county board of trustees weren’t already apoplectic, Campbell presented the group with an expanded budget that called for automating every last department of the small hospital. ”Oh, sure, some employees and citizens thought we were crazy,” says Campbell. ”But I knew we had no choice.” Campbell, a tall imposing figure with the middle-aged-boy looks of a high school foot- ball coach, knows he can come off as a little overbearing. ”My wife tells me I’m more conservative than Rush Limbaugh,” he says, meaning it as a boast. If his administrative style seems somewhat military, it probably is. Campbell spent two years at the U.S. Army’s Fort Stewart in Hinesville, Ga. But Campbell wasn’t a soldier there; he was a student in a master’s of health-services-ad- ministration program run by Central Michi- gan University. Alongside army colonels and majors, Campbell was drilled in the mantras of hard-core health-care management: Im- prove quality. Lower costs. Increase volume. Although he had studied health-care insti- tutes in crisis, he faced the real thing for the first time when he took over at Woods. He was on the front line. And he admits to feel- ing green: ”There was nothing I could have done to prepare for this job.” The single-level brick building looks more like a suburban elementary school than a hospital. In that respect Woods hasn’t changed much from the day it was founded. Inside, though, it’s a different story. To start, almost every inch of every surface has been redone\u2014with carpet, paint, or wall- paper\u2014in mellow lavender and mauve. A ”new” Woods had to look the part. An inte- rior designer chose the color scheme. Other- wise, each department was free to redecorate as it saw fit. But the hospital’s makeover was more than skin deep. Campbell knew that the heart of the transformation would be auto- mation. The only problem was figuring out a way to afford it. The hospital had already so- licited a bid from a computer vendor for an automation package; the bid came in at close to $1 million, about four times what the hospital could conceivably spend. Camp- bell got on the phone to see if he could do better. Exhorting vendors to cut corners and margins wherever possible, explaining that the old health-care gravy train had been de- railed, Campbell finally got the proposal he CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1417July 31, 1996 was looking for; an extensive new system for $250,000. That proposal came from Health Systems Resources Inc., in Atlanta. HSR agreed to install an IBM RS6000 and a UNIX- based work-station, along with 60 terminals and 12 PCs\u2014enough to put every department in the hospital on-line. Now all Campbell had to do was come up with a way to get the system to pay back. The key would be using the system to cut costs. Campbell divided the entire medical staff into small teams, each one with access to a PC and a mission\u2014to examine a dif- ferent element of the hospital’s service with an eye toward reducing waste. Take the pharmacy and therapeutics com- mittee, headed by Brandon Watters, an in- ternist. One of the committee’s tasks: to as- sess the hospital’s use of cephalosporins, a type of antibiotic. Harry Porter, a member of the committee and director of the phar- macy, called up records of what the hospital had been spending on antibiotics. It turned out that in the previous year, Woods’s use of all cephalosporins had gone up 204%, mainly because its use of Rocephin, the most expen- sive antibiotic, had gone up. So Porter, who documents the use of all drugs in the hos- pital, had the computer graph the applica- tions of Rocephin. The chart revealed that 70% of the time the powerful antibiotic was dispensed to treat infection but that 30% of the time it was administered to prevent in- fection in patients undergoing surgery. After a bit of research the committee de- termined that far less expensive (but equally effective) antibiotics could be substituted for the surgical use of Rocephin. The result; an estimated $40,000 savings on Rocephin in 1995. To keep the medical staff up to date with his committee’s findings, Watters im- ports all of his results from Quattro Pro into Microsoft Publisher, which he then uses to publish inPHARMation, the hospital’s phar- macy and therapeutics newsletter. Food waste was another target. Thanks to the dietary and food-services committee headed by Michele Fleming, director of food and nutrition services, Woods now uses a PC spreadsheet to track virtually every aspect of food service, from patient’s satisfaction with portion size to seasoning preferences. As a result, patients are less likely to end up with food they don’t like and won’t eat. Fleming knew, for example, that in the sec- ond quarter of 1995, only 92% of patients said they received the correct seasoning packets with their food. By the fourth quarter the number was up to 100%. To save nurses and administrative employ- ees time, the new system streamlined the la- borious admissions process. Today patients zip from the lobby to their hospital bed in minutes. With just a few keystrokes, an ad- missions clerk enters a new patient’s record into the system and instantly creates an electronic billing form on the main server. The clerk then hits another button to print out an embossed plastic identification card on a special printer. Using an imprint of the card, the clerk can also quickly manufacture a plastic hospital ID bracelet. Because bill- ing and accounting have been integrated into the system, patient charges and insurance bills are tallied electronically during the pa- tient’s stay. Gone, too, are the days of carbon-copy req- uisition forms. Now nurses simply order lab work and diagnostic images through the computer system. In addition, lab equipment has been electronically connected to the mainframe. Now Cindy Glaze, supervisor of the laboratory, can transfer blood-test re- sults from her lab instruments to her com- puter terminal and then, with a keystroke, on to the emergency room, the operating room, or a nursing station. Automation has all but eliminated some of the worst administrative chores. When a nurse electronically orders 500 ccs of eryth- romycin from the pharmacy for a patient, the system automatically charges the pa- tient’s billing record. It used to take weeks for the hospital to finalize patients’ bills; today bills are ready whenever patients are ready to leave the hospital. And no one fills in forms by hand or licks envelopes and mails them off to Blue Cross or Medicare; in- stead, charges are automatically transferred to the proper electronic form, and then, using a dial-up account, a bill is transmitted to the third-party payer. Ethridge says that reimbursement takes about 14 days. As for the new switchboard operator, Vir- ginia Huff, she rests easier knowing that the computer takes care of the Medicare logs. When a doctor orders an MRI for an elderly patient, the charge automatically transfers to an electronic log. Running the log for the entire year takes just a couple of hours of computer processing time. Campbell’s plan has worked. Not only have Wood’s outpatient utilization rates increased by 25%, but the hospital’s net income has nearly doubled in the past five years. Last year outpatient utilization rates actually surpassed inpatient rates\u2014which means higher revenues because insurance compa- nies typically reimburse outpatient proce- dures at a higher rate. After Campbell dropped the prices of lab work, the volume of work in the small lab increases dramati- cally\u2014300,000 tests in 1995, up from 115,000 in 1991. Remarkably the hospital has not raised the prices of care in five years, nor has Campbell added any clerical positions to the staff, even with all the increased billing. ”If we were still keying in bills, we would need at least twice as many people in the billing department alone,” says Ethridge. Fewer nonmedical positions means more dollars to recruit doctors\u2014a critical goal. The average can general $1 million in reve- nues for the hospital annually. Woods uses some of the freed-up money to pay for new recruits’ medical education in exchange for a commitment to practice there. The dif- ference in the opportunities for young doc- tors today and in 1988, when he joined the hospital, is huge, says Cox. ”Today we have all the technology that big urban medical centers have. So doctors can come here and not feel at a disadvantage.” Active recruitment efforts along with a healthy cash surplus have allowed Woods to expand services. For example, Campbell hired Dan Early to direct the new Resource Counseling Center. In addition, to reach Af- rican Americans in the county (a population that traditionally has had trouble accessing health care), Campbell founded the Minority Health Alliance for education and care. Recently the University of Tennessee Med- ical Center in Knoxville chose Woods as one of its first partners in its telemedicine pro- gram, which allows doctors to work via videoconferencing hookups. Woods’s tele- medicine facility is located in what used to be the gift shop. So far the state-of-the-art satellite link has been used primarily for dermatology. But doctors can also keep up to date with the medical advances at U.T. without leaving Etowah. Craig Riley, for ex- ample, an internist, attends live conferences at U.T. via satellite and can even use the live link to complete the continuing medical edu- cation credits he needs to meet Woods’s cred- it requirements. As Woods moves into a new era of health care, Campbell continues to position the small hospital for aggressive growth. Last year Woods joined Galaxy Health Alliance, in Chattanooga, a managed-care network of 13 rural and suburban hospitals in four states. (Woods is also part of another man- aged-care network that includes U.T.) Al- though managed care may represent a con- troversial new road for medicine, few hos- pitals want to be left out of the loop. An Zuvekas, senior research staff scientist at the Center for Health Policy Research at George Washington University Medical Cen- ter, in Washington, D.C., predicts that rural hospitals increasingly are going to depend on advanced electronic networks for their sur- vival. She reasons that it’s more effective for managed-care plans to interact just once with a group of hospitals than to deal with them individually; consequently, says Zuvekas, rural hospitals that are able to share both data and expertise over a wire are going to distinguish themselves as worthy partners in the managed-care relationship. The road ahead is filled with uncertainty. Potential Medicare cuts could make it even more difficult for rural hospitals to make ends meet, and managed care might force many more hospital mergers and acquisi- tions. Still, Campbell has a grand outlook for Woods. On a tour of the hospital, he points out the window to a mound of dirt. ”That will be a state-of-the-art women’s cen- ter,” he says. ”We are finally going to start delivering babies again.” A nearby parking lot will soon be transformed into an ex- panded intensive care unit and emergency room, he adds. Ethridge, meanwhile, is just trying to enjoy the fact that for once Woods isn’t struggling. ”We’ve been waiting six years to slow down,” she says. Given Campbell’s am- bitions, Ethridge probably shouldn’t plan on too long of a lull. f SUPPORT THE FEDERAL PROCUREMENT SYSTEM HON. WILLIAM H. ZELIFF, JR. OF NEW HAMPSHIRE IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. ZELIFF. Mr. Speaker, I am introducing a bill today which will foster the continued par- ticipation of small business in the Federal Government’s procurement system. During my tenure in Congress, I have been closely involved in the procurement reform de- bate. As a member of the key committees of jurisdiction over this issue, Government Re- form and Oversight and Small Business, and in my own experience as a small business- man, I know the importance of the small busi- ness community in Federal procurement. Small business is vital to this Nation’s eco- nomic success. And with enactment of the Federal Acquisition Reform Act, which I strongly supported, Congress created a newly reformed, streamlined procurement system de- signed to assist all businesses. Although recently, agency actions have lim- ited small business participation as prime con- tractors in the procurement process by inap- propriately bundling contract requirements in order to decrease the number of contracts an agency must manage. Government agencies have argued that by bundling these contract requirements, it is simply much easier for them to do their job because they only have to deal with one or two vendors instead of hundreds. Working with only one or two vendors as opposed to working with hundreds of suppliers may be easier for agencies, but limiting Fed- eral contract opportunities to only a few com- panies on a few contracts, is unfair to small businesses. Not only is this practice unfair, it eliminates built-in competition in the Federal CONGRESSIONAL RECORD \u2014 Extensions of RemarksE1418 July 31, 1996 contracting system, which in turn leads to an increase in costs for necessary goods and services paid for by the American taxpayer. This unfair contract bundling is corrected by the legislation before you today. In addition to maintaining the integrity of the procurement reforms passed last Congress and earlier this Congress, the bill directs agencies to avoid unnecessary agency contract consolidations. Removing these inappropriate consolidations ensures that more small business will compete for Federal contracts. This protective measure loudly echoes this Congress’s support for the counsel, assistance and protection of our Nation’s job creators\u2014 small business. By supporting this measure my colleagues will join me in my efforts to support both an efficient and openly competi- tive Federal procurement system. f TECHNICAL CORRECTIONS AND MISCELLANEOUS AMENDMENTS TO TRADE LAWS SPEECH OF HON. NANCY L. JOHNSON OF CONNECTICUT IN THE HOUSE OF REPRESENTATIVES Tuesday, July 30, 1996 Mrs. JOHNSON of Connecticut. Mr. Speak- er, I rise in support of H.R. 3815, a bill to make technical and miscellaneous changes to our trade laws. In particular, I want to call at- tention to a very important section of the bill which is necessary to provide clear direction to the Customs Service, preventing it from im- properly administering country of origin rules. Section 30 of the bill is intended to prevent the Customs Service from proceeding with any ac- tion that would change the status quo for the rules of origin governing the American hand tool industry. Section 30 of the bill represents the Ways and Means Committee’s concern that Cus- toms is attempting to significantly change longstanding rules of origin on which American manufacturers have relied, without authoriza- tion from Congress. First, the contention by Customs that a 1992 decision by the U.S. Court of International Trade in the National Hand Tool case, which upheld a determination by Customs that specific articles were not ”substantially transforme,” directed Customs to abrogate prior determinations for different products involving different domestic process- ing is not supported by the decision of the pre- siding judge. Given the record in the National Hand Tool case, the Government’s contem- poraneous arguments, and the court’s silence as to any intent to overturn precedent, no weight or credibility can be given to the present contention by Customs that National Hand Tool changed the law and now man- dates the revocation of the long-standing rul- ing letters for hand tools manufactured in the United States from imported metal forgings. Second, Customs’ proposal to apply a tariff- shift standard to supplant the traditional case- by-case substantial transformation test which follows the time-tested judicial interpretation of the marking statute and its criteria of changes in name, character, or use has not been au- thorized by Congress. On July 8, 1996, the U.S. Court of International Trade ruled that in attempting to overrule or abrogate the sub- stantial transformation test Customs ”con- travenes Congressional intent, exceeds Cus- toms’ authority to promulgate regulations . . . and therefore is arbitrary and . . . not in ac- cordance with law.” Section 30 of H.R. 3815 is a bipartisan ap- proach adopted unanimously by the committee after extensive debate. It would impose a 1- year moratorium on any actions by the admin- istration to revoke administrative ruling letters in effect on July 17, 1996. Additionally, it would require the Secretary of the Treasury, prior to issuing any significant policy change to the rules of origin, to consult with interested parties, and report to the congressional com- mittees of jurisdiction the rationale for the pro- posed policy change. Under section 30, a pro- posal to revoke longstanding ruling letters re- lied on by hand tool manufacturers at least since the early 1980’s, would constitute a sig- nificant policy change. The moratorium will provide a period for the committees of jurisdiction to review, study and determine the appropriate rules of origin for hand tools manufactured in the United States from imported forgings. The required consulta- tion with the Congress upon the expiration of the moratorium is an added precaution to en- sure that no policy changes are implemented by administrative action that amount to abro- gation of longstanding court rulings and Con- gressional intent. Finally, the moratorium will provide time for the WTO working group on the harmonization of rules of origin to continue their work without interim changes by the Cus- toms Service that may be disruptive to and have potentially profound adverse impact on American hand tool manufacturers and other manufacturing sectors of our economy. At this point, I would also like to submit the following letter from the Joint Industry Group [JIG], a coalition of over 100 companies and associations of importers who have also ex- pressed concerns regarding origin rules. THE JOINT INDUSTRY GROUP, Washington, DC, May 15, 1996. Hon. ROBERT E. RUBIN, Secretary of the Treasury, Department of the Treasury, Washington, DC. DEAR MR. SECRETARY: Earlier this year, Deputy Secretary Summers advised Con- gressman Crane that the Customs Service had been instructed to withhold publication of a final rule that would have extended Part 102 of the Customs Regulations (NAFTA Annex 311 Rules of Origin) to trade with all countries. The Joint Industry Group (JIG) is a coalition of over 100 companies, associa- tions and firms that represent billions of dol- lars annually in trade. Therefore, as import- ers and associations of importers that would have been badly damaged had those rules gone into effect, we were pleased by and fully supported that decision. There now appears to be a concerted effort underway, sponsored by a small group of manufacturers calling itself the American Hand Tool Coalition, to gain a competitive advantage by having the Treasury Depart- ment reverse its position. The implications of applying Part 102 to all trade are very broad and potentially unsettling. The proponents of such action suggest that the Treasury Department could limit it to a specific product, but adoption of rules under Part 102 on a piecemeal basis would be bad policy and set a disastrous precedent. To do so would inevitably lead to an endless suc- cession of changes and or exceptions and a proliferation of different origin rules for dif- ferent industries. Similar problems pre- viously occurred when Customs first imple- mented regulations in 1985 which nominally applied to textile products, but the prin- ciples of which have been extended on a piecemeal basis to all other commodities. From a practical standpoint, it would be vir- tually impossible to adopt any segment of Part 102 without also adopting the Part’s general interpretative rules, many of which are unsatisfactory and result in an unwar- ranted departure from existing law. We respectfully ask the Department to abide by its commitment not to publish the rule that would extend Part 102 to trade from all countries other than our NAFTA partners, Canada and Mexico. Sincerely, EVELYN SUAREZ, Chairperson, Rules of Origin Committee. f GIVE LAW ENFORCEMENT THE TOOLS THEY NEED TO FIGHT TERRORISM HON. VICTOR O. FRAZER OF THE VIRGIN ISLANDS IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. FRAZER. Mr. Speaker, I rise today to urge my colleagues to pass anti-terrorism leg- islation requiring the manufacturers of explo- sives to include chemical markers and smoke- less powders. The American people elected us to this body to do our job. Which is to pass legisla- tion that is in the best interest of this country, not interest of a group of owners. It is time to do our job. During the 104th Congress we have seen the bombing of a Federal building in Okla- homa City which caused the death of 170 people, the standoff between Federal law en- forcement officials and the Freeman group in Montana. Today, the American people are outraged by TWA flight 800 and the Atlanta Centennial Park bombing. The people of the Virgin Is- lands lost a loved one on TWA flight 800, which was a personal loss to me. Mr. Speaker, we have a role to play, which is to pass legislation that will give law enforce- ment the tools that they need to fight terror- ism. f INCENTIVES FOR AGRICULTURE HON. WILLIAM M. THOMAS OF CALIFORNIA IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. THOMAS. Mr. Speaker, 1 million acres of farmland in the United States will be eaten up by parking lots, freeways, and suburban growth this year. In fact, within the hour, one acre of precious farmland in the Central Valley of California will be taken out of production. The Central Valley of California currently produces over $13 billion in agriculture produce and feeds millions in the United States and around the world. Farmland in areas surrounding cities is being displaced by urban development at one of the fastest rates in history and for this reason our farmers have been placed under new pressures. A time can be foreseen in which an area like the Central Valley may not even be capable of feeding it- self because of urban outgrowth. CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1419July 31, 1996 When the great cities of our country were settled, they were developed near rich agricul- tural land to assure an adequate food supply. As urban areas continued to sprawl, many fer- tile acres were consumed and many more were placed at risk. Over the past 10 years, urban sprawl has eaten up over 26 million acres of productive farmland: an area the size of Kentucky has been displaced by urban de- velopment. Most of the farmland lost in the country has been located in urban influenced counties\u2014where the density is at least 25 per- sons per square mile. A recent study by the American Farmland Trust estimated that the farmland in the urban influenced counties was 2.7 times more productive than the remaining U.S. counties. Eighty seven percent of our do- mestic fruit and nut production is also grown in these threatened counties. Every citizen should be concerned with a secure U.S. food supply and preservation of productive lands because the loss of farmland affects more than family farmers. Others af- fected by the land loss include the large agri- culture support sector that ranges from fer- tilizer and equipment suppliers to fruit and vegetable processors. The general public could also face grocery counters half-full of not so fresh, costly produce imported from around the world. Agriculture is a basic and fundamental part of life from the food we eat to the clothes we wear. It is important that dur- ing times of fast growth we take a closer look at how our land is being used and how we can protect those that are being displaced by the urban community. Farming has been placed under new pres- sures that are coupled with the rising costs of this capital intensive business. For example, farmers putting in a wine grap vineyard will encounter 4 years development costs over $17,000 dollars per acre above the land acqui- sition costs. Pistachio farmers should expect at least $7,000 dollars in preproductive costs per acre and olive growers $5,000 dollars an acre. These costs could literally double or tri- ple dependent on the value of the land. Aside from the high start up costs of crops such as orchards and vineyards U.S. farm real estate values also continue to rise. According to statistics compiled by the U.S. Department of Agriculture the value of U.S. farm real es- tate has risen 6.4 percent over the past year to $832 per acre. This $832 figure may be ris- ing, but it still does not nearly reflect the cost of acquiring a prime piece of farmland in high- ly productive, urban-influenced states like Cali- fornia and Florida. An average piece of farm- land in California and Florida is worth over $2,000 and can be worth as much as $17,000. Along with high costs farmers continue to be plagued with storms, disease, and pests that destroy many acres of orchards and vineyards annually. Some of this costly acreage has not even reached a productive state. Crops like tangerines and cherries can take 5 to 6 years to reach productivity. In a natural disaster a farmer with a crop in a preproductive state may have trouble sustaining large losses be- cause he does not have a return on his invest- ment. Most farmers do not realize an actual profit for many years after a productive state is achieved. Natural disasters particularly im- pact small family farms that already have a small profit margin. As a witness to the rate of urbanization in my own district, I have developed two incen- tives that would amend the 1986 tax code and keep families in farming and land in rural uses. I recently introduced H.R. 3749 to amend the tax code to promote replacement of crops destroyed by casualty. This bill will provide an incentive to replant by allowing them to deduct the cost of replanting their de- stroyed crop in the event of freezing tempera- tures, disease, drought, or pests, all events that cannot be controlled. It allows farmers to deduct the costs of replacing key infrastruc- ture. I have also introduced H.R. 520 to make it easier to tranfer farms from generation to gen- eration. According to the U.S. Department of Agriculture the average size farm in the United States is 469 acres. The land alone of an av- erage farm in California is worth over $1 mil- lion and can be worth as much as $8 million on prime farm land. These numbers are the primary reasons that I have introduced H.R. 520 to double the current maximum benefit under the estate tax special valuation deduc- tion. A farmer can be worth millions in terms of acreage but that does not necessarily mean that there is cash to pay estate taxes, or\u2014dur- ing his life\u2014other unexpected costs. This re- sults in many farmers splitting their land up into parcels and selling out to developers just in order to cover their costs. Current tax law that allows for $750,000 in maximum benefits is outdated in accordance to the cost of farming today. After you figure in the value of crops, irrigation systems, im- provements (buildings, etc.), and equipment, the value of today’s farm may be worth almost twice as much. The bills proection of $1,500,000 would allow for more continuity in farm acreage when transferring land between generations, avoiding the need for families to split up their land to pay off the estate tax. Prime agriculture land is being authorized as we speak. Providing these small incentives to America’s farmer would encourage families to stay in farming and secure an abundant food supply for the 21st century. f TRIBUTE TO VFW POST 8162 OF NASSAU, NEW YORK HON. GERALD B.H. SOLOMON OF NEW YORK IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. SOLOMON. Mr. Speaker, as you know, one group I have a particular admiration for is our veterans. It was one of the reasons I asked for a seat on the Veterans’ affairs Com- mittee in my first term, and it’s one of the rea- sons I fought so hard to have the Veterans Administration elevated to a full, cabinet-level department. And one group was always right beside me in such efforts, Veterans of Foreign Wars. I can think of no group that has done more to promote the interests of our Nation’s veterans. Today, I’d like to single out one VFW post, a very special one which is typical of VFW posts across the country. VFW Post 8162 of Nassau, NY is celebrat- ing its 50th anniversary this year. Think of that, Mr. Speaker. It’s first members were, of course, the boys just returning from Europe and the Pacific and every other theater of World War II. Then, in the early 1950’s, they were joined by veterans from the Korean war. In another 15 years, the veterans of the Viet- nam War arrived on the scene. And finally, in this decade, we’ve seen those who served in the Persian Gulf join their older comrades. From its beginning, Post 8162 was made up of citizen heroes, who left their homes and loved ones to undergo incredible hardships and sacrifices, including the supreme sacrifice, in defense of our freedoms. But the majority survived to return home, complete their edu- cations, find jobs, raise families, and become the most respected members of their commu- nities. I’ve met many of the members of Post 8162. I was thinking of them and of other vet- erans like them when Ronald Reagan signed into law my measure making the Veterans Ad- ministration a cabinet department in 1988. With that signature, we made sure the inter- ests of veterans would always have the ear of the U.S. President. It is to those same interests that Post 8162 has so faithfully applied itself for 50 years, since that first beginning on August 12, 1946. Mr. Speaker, I ask you and all members to join me in a special salute to VFW Post 8162 of Nassau, NY, as it celebrates its 50th year. f OUTSTANDING HIGH SCHOOL SENIORS HON. STEVEN SCHIFF OF NEW MEXICO IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. SCHIFF. Mr. Speaker, I rise today to honor the following graduating high school stu- dents from the First Congressional District of New Mexico who have been awarded to the Congressional Certificate of Merit. CERTIFICATE OF MERIT AWARD WINNERS 1996 Albuquerque Evening High School, Vera Lujan; Albuquerque High School, Monica Becerra; Bernalillo High School, Lance Darnell; Cibola High School, Jessica Shaw; Del Norte High School, Kathryn Gruchalla; Eldorado High School, Karli Massey, Matt Kaiser; Estancia High School, Wayne David- son; Evangel Christian Academy, Jonathon E. Rael; Highland High School, Kelly Shan- non McCormick; La Cueva High School, Tracy Carpenter; Los Lunas High School, Ni- cole J. Nagy; Menaul High School, Adam Cherry; Mountainair High School, Jessica Quintana; Rio Grande High School, Robert G. Coleman; Sandia High School, Krista Madril; Sandia Preparatory School, Anne Elizabeth Mannal; High School, St. Pius X High School, Autumn Nicole Grady, Laura C. Miner; Valley High School, Matthew Tennison; and West Mesa, Shane Gutiererz. It is my pleasure to recognize these out- standing students for their academic and lead- ership accomplishments as well as for their participation in school, community service, and civil activities. f CAMPAIGN FINANCE REFORM ACT OF 1996 SPEECH OF HON. JIM KOLBE OF ARIZONA IN THE HOUSE OF REPRESENTATIVES Thursday, July 25, 1996 Mr. KOLBE. Mr. Speaker, I rise in strong support of H.R. 3820, the Campaign Finance CONGRESSIONAL RECORD \u2014 Extensions of RemarksE1420 July 31, 1996 Reform Act. This bill fixes most of the com- monly mentioned problems we see in funding campaign activities. Mr. Speaker, I am especially pleased that this bill would require that at least half of our campaign funds would have to come from within our own district. This change alone makes the bill worth voting for. How often do we hear about special interests inside the belt- way buying elections for an incumbent? This reform means that if your own constituents do not like you well enough to contribute, you will not have resources to get your message out. And along that line, the bill cuts the influ- ence of PAC’s dramatically. Not only is their maximum contribution cut in half, but the can- didate cannot even take the reduced amount if it would put him or her over the 50 percent threshold. This changes the balance of power between PAC’s and individuals. On the other hand, the bill strengthens polit- ical parties, including the local parties. And we all know that real reform begins at the local level. By increasing the amounts that local parties can contribute to the candidate, the candidate will be listening more closely to the folks at home, not to the big national PAC’s. Finally, this bill makes it possible for a can- didate of modest means to run even if he or she is facing a very wealthy opponent or an incumbent with an intimidating war chest. The parties and PAC’s are allowed, under these circumstances, to increase their contributions to level the playing field. I am at a loss to understand why Common Cause would say that anyone who votes for this bill is a ”Protector of Corruption.” If I re- member correctly, they want taxpayers to fund campaigns, a situation that would require an individual to subsidize a candidate for whom he or she would not vote. I think that is cor- rupt. Mr. Speaker, I urge my colleagues to join me in supporting a true reform bill. CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1421July 31, 1996 SENATE COMMITTEE MEETINGS Title IV of Senate Resolution 4, agreed to by the Senate on February 4, 1977, calls for establishment of a sys- tem for a computerized schedule of all meetings and hearings of Senate com- mittees, subcommittees, joint commit- tees, and committees of conference. This title requires all such committees to notify the Office of the Senate Daily Digest\u2014designated by the Rules Com- mittee\u2014of the time, place, and purpose of the meetings, when scheduled, and any cancellations or changes in the meetings as they occur. As an additional procedure along with the computerization of this infor- mation, the Office of the Senate Daily Digest will prepare this information for printing in the Extensions of Remarks section of the CONGRESSIONAL RECORD on Monday and Wednesday of each week. Meetings scheduled for Thursday, August 1, 1996, may be found in the Daily Digest of today’s RECORD. MEETINGS SCHEDULED AUGUST 2 9:30 a.m. Joint Economic To hold hearings to examine the employ- ment-unemployment situation for July. SD 106 10:00 a.m. Finance Social Security and Family Policy Sub- committee To hold hearings to examine how to edu- cate the public about the 1996 report of the Social Security Board of Trustees. SD 215 SEPTEMBER 4 9:30 a.m. Energy and Natural Resources To hold hearings on S. 1678, to abolish the Department of Energy. SD 366 SEPTEMBER 5 2:00 p.m. Energy and Natural Resources Forests and Public Land Management Sub- committee To hold hearings on S. 931, to authorize the construction of the Lewis and Clark Rural Water System and to au- thorize assistance to the Lewis and Clark Rural Water System, Inc., a non- profit corporation, for the planning and construction of the water supply sys- tem, S. 1564, to authorize the Secretary of the Interior to provide loan guaran- tees for water supply, conservation, quality and transmission projects, S. 1565, to supplement the Small Rec- lamation Projects Act of 1956 and to supplement the Federal Reclamation laws by providing for Federal coopera- tion in non-Federal projects and for participation by non-Federal agencies in Federal projects, S. 1649, to extend contracts between the Bureau of Rec- lamation and irrigation districts in Kansas and Nebraska, S. 1719, Texas Reclamation Projects Indebtedness Purchase Act, and S. 1921, to transfer certain facilities at the Minidoka project to Burley Irrigation District. SD 366 SEPTEMBER 11 10:00 a.m. Judiciary To hold hearings to examine competition in the telecommunications industry. SD 226 SEPTEMBER 17 9:30 a.m. Veterans’ Affairs To hold joint hearings with the House Committee on Veterans’ Affairs to re- view the legislative recommendations of the American Legion. 334 Cannon Building POSTPONEMENTS AUGUST 2 10:00 a.m. Judiciary To resume hearings to examine the dis- semination of Federal Bureau of Inves- tigation background investigation re- ports and other information to the White House. SD 226 D847 Wednesday, July 31, 1996 Daily Digest HIGHLIGHTS Senate passed Nuclear Waste Policy Act. Senate agreed to Agriculture Appropriations Conference Report. Senate Chamber Action Routine Proceedings, pages S9209 S9320 Measures Introduced: Five bills and one resolution were introduced, as follows: S. 2004 2008, and S. J. Res. 58. Page S9295 Measures Reported: Reports were made as follows: S. 1311, to establish a National Fitness and Sports Foundation to carry out activities to support and supplement the mission of the President’s Council on Physical Fitness and Sports. (S. Rept. No. 104 340) S. 1735, to establish the United States Tourism Organization as a nongovernmental entity for the purpose of promoting tourism in the United States, with amendments. (S. Rept. No. 104 341) S. 1840, to amend the Federal Trade Commission Act to authorize appropriations for the Federal Trade Commission. (S. Rept. No. 104 342) Report on the Activities of the Committee on the Judiciary of the U.S. Senate During the 103d Con- gress. (S. Rept. No. 104 343) S. 1643, to amend the Older Americans Act of 1965 to authorize appropriations for fiscal years 1997 through 2001, with an amendment in the na- ture of a substitute. (S. Rept. No. 104 344) S. Con. Res. 52, A bill to recognize and encourage the convening of a National Silver Haired Congress. (S. Rept. No. 104 345) S. 1869, to make certain technical corrections in the Indian Health Care Improvement Act. (S. Rept. No. 104 346) Page S9294 Measures Passed: Congressional Adjournment: Senate agreed to H. Con. Res. 203, providing for an adjournment of both Houses. Page S9216 Nuclear Waste Policy Act: By 63 yeas to 37 nays (Vote No. 259), Senate passed S. 1936, to amend the Nuclear Waste Policy Act, after taking action on amendments proposed thereto, as follows: Pages S9209 65 Adopted: By 86 yeas to 12 nays (Vote No. 256) Murkowski Amendment No. 5055, to provide that EPA issue standards for protection of the public from releases of radioactive materials from a permanent repository, to provide for the safe transportation of radioactive materials, to exempt the nuclear waste program from civil service laws, to eliminate the train inspection limitation, to clarify the scope of the Department of Transportation training standards, to eliminate the permanent disposal research provisions, to eliminate the budget priorities regarding construction costs of the interim storage facility, and to clarify routing. Pages S9209 15 Murkowski Amendment No. 5051, to establish compliance requirements. Pages S9222 28 Murkowski Amendment No. 5048, to establish a benefits agreement with the City of Caliente and Lincoln County, Nevada. Pages S9228 34 Rejected: Wellstone Modified Amendment No. 5037, to en- sure that the Secretary of Energy does not accept title to high-level nuclear waste and spent nuclear fuel unless protection of public safety or health or the environment so require. (By 83 yeas to 17 nays (Vote No. 257), Senate tabled the amendment.) Pages S9216 22 Bryan Amendment No. 5075, to specify contrac- tual obligations between the Department of Energy and waste generators. Pages S9234 37 Bryan Amendment No. 5073, to establish that the Secretary of Energy shall comply with all Federal laws and regulations in developing and implement- ing the integrated management system. (By 73 yeas to 27 nays (Vote No. 258), Senate tabled the amend- ment.) Pages S9237 41 CONGRESSIONAL RECORD \u2014 DAILY DIGESTD848 July 31, 1996 Transportation Appropriations, 1997: By 95 yeas to 2 nays (Vote No. 261), Senate passed H.R. 3675, making appropriations for the Department of Transportation and related agencies for the fiscal year ending September 30, 1997, as amended, and taking action on further amendments proposed thereto, as follows: Pages S9265 88 Adopted: Baucus Amendment No. 5141, to require the cal- culation of Federal-aid highway apportionments and allocations for fiscal year 1997 to be determined so that States experience no net effect from a credit to the Highway Trust Fund made in correction of an accounting error made in fiscal year 1994. (By 42 yeas to 57 nays (Vote No. 260), Senate earlier failed to table the amendment.) Pages S9268 75, S9278, S9280 81 Lautenberg (for Wellstone) Amendment No. 5142, to transfer previously appropriated funds among highway projects in Minnesota. Page S9275 Lautenberg (for Wyden) Amendment No. 5143, to provide conditions for the implementation of reg- ulations issued by the Secretary of Transportation that require the sounding of a locomotive horn at highway-rail grade crossings. Pages S9275 78 Lautenberg Amendment No. 5144, to make a technical correction. Page S9279 Lautenberg Amendment No. 5145, to make a technical correction. Page S9279 Cohen Amendment No. 5146, to prevent the De- partment of Transportation from penalizing Maine or New Hampshire for non-compliance with Federal ve- hicle weight limitations. Page S9280 Gramm Amendment No. 5147 (to Amendment No. 5141), to require a review of the reporting of excise tax data by the Department of the Treasury to the Department of Transportation for fiscal year 1994. Pages S9280 81 Senate insisted on its amendments, requested a conference with the House thereon, and the Chair appointed the following conferees: Senators Hatfield, Domenici, Specter, Bond, Gorton, Shelby, Lauten- berg, Byrd, Harkin, Mikulski, and Reid. Pages S9287 88 Federal Employees Indian Contracts Repeal: Senate passed H.R. 3215, to amend title 18, United States Code, to repeal the provision relating to Fed- eral employees contracting or trading with Indians, clearing the measure for the President. Pages S9316 17 Smithsonian Construction: Committee on Rules and Administration was discharged from further con- sideration of S. 1995, to authorize construction of the Smithsonian Institution National Air and Space Museum Dulles Center at Washington Dulles Inter- national Airport, and the bill was then passed. Pages S9317 18 Mutual Aid Agreement: Senate passed H. J. Res. 166, granting the consent of Congress to the Mutual Aid Agreement between the city of Bristol, Virginia, and the city of Bristol, Tennessee, clearing the meas- ure for the President. Page S9318 Budget Reconciliation Conference Report\u2014 Agreement: A unanimous-consent agreement was reached providing for the consideration of the con- ference report on H.R. 3734, to provide for rec- onciliation pursuant to section 201(a)(1) of the con- current resolution on the budget for fiscal year 1997. Page S9318 Nominations Confirmed: Senate confirmed the fol- lowing nominations: Frank R. Zapata, of Arizona, to be United States District Judge for the District of Arizona. Page S9316 Nominations Received: Senate received the follow- ing nominations: 1 Air Force nomination in the rank of general. 1 Army nomination in the rank of general. Page S9320 Messages From the House: Pages S9292 93 Measures Referred: Page S9293 Measures Placed on Calendar: Page S9293 Communications: Pages S9293 94 Executive Reports of Committees: Pages S9294 95 Statements on Introduced Bills: Pages S9295 S9304 Additional Cosponsors: Pages S9304 05 Amendments Submitted: Pages S9305 06 Authority for Committees: Page S9306 Additional Statements: Pages S9306 16 Record Votes: Six record votes were taken today. (Total\u2014261) Pages S9215, S9222, S9241, S9254, S9278, S9287 Adjournment: Senate convened at 9 a.m., and ad- journed at 10:09 p.m., until 9:30 a.m., on Thursday, August 1, 1996. (For Senate’s program, see the re- marks of the Acting Majority Leader in today’s Record on page S9318.) Committee Meetings (Committees not listed did not meet) NOMINATIONS Committee on Armed Services: Committee ordered favor- ably reported the nominations of Alberto Aleman Zubieta, a citizen of the Republic of Panama, to be CONGRESSIONAL RECORD \u2014 DAILY DIGEST D849July 31, 1996 Administrator of the Panama Canal Commission, Ev- erett Alvarez, Jr., of Maryland, to be a Member of the Board of Regents of the Uniformed Services Uni- versity of the Health Sciences, Lt. Gen. Howell M. Estes, III, USAF, for appointment to the grade of general and to be Commander-in-Chief, United States Space Command\/Commander-in-Chief, North American Aerospace Defense Command, Adm. Jay L. Johnson, USN, for reappointment to the grade of ad- miral and to be Chief of Naval Operations, Col. Garry R. Trexler, USAF, for promotion in the Regu- lar Air Force of the United States to the grade of Brigadier General, Brig. Gen. Gerald A. Rudisill, Jr., USA, for promotion in the Reserve of the Army to the grade of Major General, certain nominations on a Navy promotion list received by the Senate on May 17, 1996, certain nominations on an Air Force Reserve appointment list received by the Senate on May 1, 1996, and 3,742 nominations in the Army, Air Force, Navy, and Marine Corps. Prior to this action, committee concluded hearings on the nominations of Lt. Gen. Estes and Adm. Johnson (listed above), after the nominees testified and answered questions in their own behalf. Adm. Johnson was introduced by Senator Burns. EXPORT CONTROL REFORM Committee on Banking, Housing, and Urban Affairs: Subcommittee on International Finance concluded hearings on provisions of H.R. 361, to strengthen multilateral export controls, to reduce United States reliance on unilateral controls, to combat the pro- liferation of weapons of mass destruction and the missiles to deliver them, to prohibit sensitive exports to terrorist countries, to remove cold-war impedi- ments to export competitiveness, and to provide new procedures for ensuring U.S. exporters are treated fairly, after receiving testimony from Representative Roth; William A. Reinsch, Under Secretary of Com- merce for Export Administration; Mitchel B. Wallerstein, Deputy Assistant Secretary of Defense for Counterproliferation Policy; Thomas E. McNa- mara, Assistant Secretary of State for Political Mili- tary Affairs; William T. Archey, American Elec- tronics Association, Washington, D.C.; Thomas T. Connelly, Hardinge Inc., Elmira, New York, on be- half of the Association for Manufacturing Tech- nology; and Richard H. Burgess, Dupont Company, Wilmington, Delaware, on behalf of the Chemical Manufacturers Association. FOOD SECURITY IN AFRICA Committee on Foreign Relations: Subcommittee on Afri- can Affairs concluded hearings to examine the cur- rent state of food security in Africa, the future out- look for world food security, and the role of United States food aid programs, after receiving testimony from Eugene Moos, Under Secretary for Farm and Foreign Agricultural Services, and Mary Chambliss, Deputy Administrator, Export Credits, Foreign Agri- cultural Service, both of the Department of Agri- culture; Leonard M. Rogers, Acting Assistant Ad- ministrator for Humanitarian Response, Agency for International Development; Harold J. Johnson, Asso- ciate Director, International Relations and Trade Is- sues, General Accounting Office; Per Pinstrup-An- dersen, International Food Policy Research Institute, and Judy C. Bryson, Africare, both of Washington, D.C.; and Michael Davies, Cargill, Cobham Surrey, United Kingdom. DRUG TRAFFICKING Committee on the Judiciary: Committee held hearings to examine the drug trafficking situation along the Southwest border of the United States, focusing on Federal, State, and local efforts to develop and pro- mote U.S. counterdrug strategies, receiving testi- mony from Senators Domenici, Gramm, and Hutchison; Gen. Barry R. McCaffrey, Director, Of- fice of National Drug Control Policy; and Douglas Kruhm, Assistant Commissioner for Border Patrol, Immigration and Naturalization Service, and Donald F. Ferrarone, Special Agent in Charge, Houston Field Division, and Harold D. Wankel, Chief of Oper- ations, both of the Drug Enforcement Administra- tion, all of the Department of Justice. Hearings were recessed subject to call. NOMINATIONS Committee on the Judiciary: Committee concluded hearings on the nominations of Richard A. Paez, of California, to be United States Judge for the Ninth Circuit, Wenona Y. Whitfield, to be United States District Judge for the Southern District of Illinois, Clarence J. Sundram, to be United States District Judge for the Northern District of New York, Jo- seph F. Bataillon, to be United States District Judge for the District of Nebraska, Colleen Kollar-Kotelly, to be United States District Judge for the District of Columbia, and Thomas W. Thrash Jr., to be United States District Judge for the Northern Dis- trict of Georgia, after the nominees testified and an- swered questions in their own behalf. Mr. Paez was introduced by Senator Boxer, Mr. Bataillon was in- troduced by Senators Kerrey and Exon, Ms. Kollar- Kotelly was introduced by District of Columbia Del- egate Norton, Mr. Sundram was introduced by Sen- ator Moynihan, Mr. Thrash was introduced by Sen- ator Nunn, and Ms. Whitfield was introduced by Senator Simon. BUSINESS MEETING Committee on the Judiciary: On Tuesday, July 30, Sub- committee on Constitution, Federalism, and Property CONGRESSIONAL RECORD \u2014 DAILY DIGESTD850 July 31, 1996 Rights approved for full committee consideration the following measures: S.J. Res. 8, proposing an amendment to the Con- stitution of the United States to prohibit retroactive increases in taxes; and S. 1990, to authorize funds for fiscal years 1997 and 1998 for the United States Civil Rights Com- mission. PENSION AUDIT IMPROVEMENT ACT Committee on Labor and Human Resources: Committee began mark up of S. 1490, to amend title I of the Employee Retirement Income Security Act of 1974 to improve enforcement of such title and benefit se- curity for participants by adding certain provisions with respect to the auditing of employee benefit plans, but did not complete action thereon, and re- cessed subject to call. h House of Representatives Chamber Action Bills Introduced: 12 public bills, H.R. 3923 3934; 1 private bill, H.R. 3935; and 1 resolution, H. Res. 501 were introduced. Page H9566 Reports Filed: Reports were filed as follows: Revised Subdivision of Budget Totals for Fiscal Year 1997 (H. Rept. 104 727); H.R. 351, to amend the Voting Rights Act of 1965 to eliminate certain provisions relating to bi- lingual voting requirements, amended (H. Rept. 104 728); H. Res. 495, waiving points of order against the conference report to accompany H.R. 3734, to pro- vide for reconciliation pursuant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997 (H. Rept. 104 729); H. Res. 496, providing for consideration of H.R. 3603, making appropriations for Agriculture, Rural Development, Food and Drug Administration, and Related Agencies programs for the fiscal year ending September 30, 1997 (H. Rept. 104 730); H. Res. 497, providing for consideration of H.R. 3517, making appropriations for military construc- tion, family housing, and base realignment and clo- sure for the Department of Defense for the fiscal year ending September 30, 1997 (H. Rept. 104 731); H. Res. 498, providing for consideration of H.R. 3230, to authorize appropriations for fiscal year 1997 for military activities of the Department of Defense, to prescribe military personnel strengths for fiscal year 1997 (H. Rept. 104 732); Conference report on H.R. 3754, making appro- priations for the Legislative Branch for the fiscal year ending September 30, 1997 (H. Rept. 104 733); H. Res. 499, providing for consideration of H.R. 123, to amend title 4, United States Code, to declare English as the official language of the Government of the United States (H. Rept. 104 734); H. Res. 500, waiving a requirement of clause 4(b) of rule XI with respect to consideration of a certain resolution reported from the Committee on Rules (H. Rept. 104 735); and Conference report on H.R. 3103, to amend the Internal Revenue Code of 1986 to improve port- ability and continuity of health insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings ac- counts, to improve access to long-term care services and coverage, and to simplify the administration of health insurance (H. Rept. 104 736). Pages H9473 H9564, H9565 66 Speaker Pro Tempore: Read a letter from the Speaker wherein he appointed Representative Hefley to act as Speaker pro tempore for today. Page H9379 Journal Vote: By a yea and nay vote of 302 yeas to 85 nays with 1 voting ”present”, Roll No. 373, the House agreed to the Speaker’s approval of the Journal of Tuesday, July 30. Pages H9379 80 Use of Exhibit: By a yea-and-nay vote of 386 yeas to 28 nays with 2 voting ”present”, Roll No. 374, agreed to permit the display of an exhibit by Rep- resentative Doggett. By a recorded vote of 232 ayes to 181 noes, Roll No. 375, agreed to the Castle mo- tion to table the Wise motion to reconsider the vote. Pages H9385 86 Motions to Adjourn: By a recorded vote of 76 ayes of 344 noes, Roll No. 376, rejected the Volkmer motion to adjourn. By a recorded vote of 57 ayes to 357 noes, Roll No. 377, rejected the Skaggs motion to adjourn. By a yea-and-nay vote of 50 yeas to 350 nays with 1 voting ”present”, Roll No. 378, rejected the Bonior motion to adjourn. Pages H9386 88 Use of Exhibit: By a yea-and-nay vote of 351 yeas to 53 nays with 2 voting ”present”, Roll No. 379, agreed to permit the display of an exhibit by Rep- resentative Ward. By a recorded vote of 239 ayes to CONGRESSIONAL RECORD \u2014 DAILY DIGEST D851July 31, 1996 172 noes, Roll No. 380, agreed to the Largent mo- tion to table the McDermott motion to reconsider the vote. Pages H9389 91 Personal Responsibility Act: By a yea-and-nay vote of 328 yeas to 101 nays, Roll No. 383, the House agreed to the conference report on H.R. 3734, to provide for reconciliation pursuant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997. Pages H9392 H9424 H. Res. 495, the rule waiving points of order against consideration of the conference report was agreed to by a yea-and-nay vote of 281 yeas to 137 nays, Roll No. 382. Agreed to order the previous question by a yea-and-nay vote of 259 yeas to 164 nays, Roll No. 381. Earlier, agreed to H. Res. 492, waiving a requirement requiring a two-thirds vote to consider a rule on the same day it is reported from the Committee on Rules. Pages H9392 H9403 International Dolphin Conservation Program: By a recorded vote of 316 ayes to 108 noes, Roll No. 385, the House passed H.R. 2823, to amend the Marine Mammal Protection Act of 1972 to support the International Dolphin Conservation Program in the eastern tropical Pacific Ocean. Pages H9431 50 Agreed to the amendment in the nature of a sub- stitute made in order by the rule. Page H9438 42 Rejected the Stubbs amendment that sought to allow tuna destined for U.S. markets to be labeled safe for dolphins only if dolphins are not killed, chased, harassed, injured, or encircled with nets (re- jected by a recorded vote of 161 ayes to 260 noes, Roll No. 384). Pages H9442 49 H. Res. 489, the rule which provided consider- ation of the bill was agreed to earlier by a voice vote. Pages H9424 31 Presidential Veto Message\u2014Teamwork for Em- ployers and Managers: It was made in order that the veto message of the President, together with the accompanying bill, H.R. 743, to amend the Na- tional Labor Relations Act to allow labor manage- ment cooperative efforts that improve economic com- petitiveness in the United States to continue to thrive, be referred to the Committee on Economic and Educational Opportunities. Page H9450 Manzanar Historic Site: The House passed H.R. 3006, to provide for disposal of public lands in sup- port of the Manzanar Historic Site in the State of California. Pages H9452 54 Agreed to the committee amendment; and Page H9454 Agreed to amend the title. Page H9454 Japanese-American World War II Memorial: The House passed H.R. 2636, to transfer jurisdiction over certain parcels of Federal real property located in the District of Columbia. Pages H9454 55 Agreed to the committee amendment. Page H9455 Senate Messages: Messages received from the Senate today appear on pages H9380 and H9387. Quorum Calls\u2014Votes: Seven yea-and-nay votes and six recorded votes developed during the proceedings of the House today and appear on pages H9379 80, H9385, H9386, H9386 87, H9387 88, H9388, H9390, H9390 91, H9402, H9402 03, H9423 24, H9448 49, and H9449 50. There were no quorum calls. Recess: The House recessed at 11:02 p.m. and re- convened at 11:43 p.m. Page H9473 Adjournment: Met at 10 a.m. and adjourned at 11:44 p.m. Committee Meetings NATIONAL SOYBEAN CHECK-OFF PROGRAM Committee on Agriculture: Subcommittee on General Farm Commodities held a hearing to review the Na- tional Soybean Check-Off Program. Testimony was heard from Lon Hatamiya, Administrator, Agricul- tural Marketing Service, USDA; and public wit- nesses. REVISED SECTION 602(b) SUBDIVISION Committee on Appropriations: Approved a revised 602(b) Subdivision for fiscal year 1997. OVERSIGHT\u2014FANNIE MAE AND FREDDIE MAC Committee on Banking and Financial Services: Sub- committee on Capital Markets, Securities and Gov- ernment Sponsored Enterprises continued oversight hearings regarding Fannie Mae and Freddie Mac. Testimony was heard from Aida Alvarez, Director, Office of Federal Housing Enterprise Oversight, De- partment of Housing and Urban Development. Hearings continue tomorrow. 50 STATES COMMEMORATIVE COIN PROGRAM ACT Committee on Banking and Financial Services: Sub- committee on Domestic and International Monetary Policy approved for full Committee action amended H.R. 3793, 50 States Commemorative Coin Program Act. Prior to this action, the Subcommittee held a hearing on this legislation. Testimony was heard from public witnesses. CONGRESSIONAL RECORD \u2014 DAILY DIGESTD852 July 31, 1996 SOLID WASTE DISPOSAL ACT AMENDMENTS Committee on Commerce: Subcommittee on Commerce, Trade, and Hazardous Materials approved for full Committee action amended H.R. 3391, to amend the Solid Waste Disposal Act to require at least 85 percent of funds appropriated to the Environmental Protection Agency from the Leaking Underground Storage Tank Trust Fund to be distributed to States for cooperative agreements for undertaking corrective action and for enforcement of subtitle I of such Act. FDA INTEGRITY ISSUES Committee on Commerce: Subcommittee on Oversight and Investigations held a hearing on FDA Integrity Issues Raised by the Visx, Inc. Document Disclosure. Testimony was heard from public witnesses. DISTRICT OF COLUMBIA ECONOMIC RECOVERY ACT Committee on Government Reform and Oversight: Sub- committee on the District of Columbia held a hear- ing on H.R. 3244, District of Columbia Economic Recovery Act. Testimony was heard from Senator Lieberman; Speaker Gingrich; Thomas Ripy, Legisla- tive Attorney, American Law Division, Congressional Research Service, Library of Congress; and public witnesses. COMMITTEE BUSINESS Committee on House Oversight: Agreed to the introduc- tion of resolutions regarding the Office of Compli- ance Regulations. The Committee approved the following committee resolutions: regulations regarding official internet web sites; and regulations regarding Electronic Com- munications Security. The Committee also received the results of the 1995 House Audit and considered other pending Committee business. U.S. FOREIGN POLICY REVIEW Committee on International Relations: Held a hearing on Review of U.S. Foreign Policy. Testimony was heard from Warren Christopher, Secretary of State. REGULATORY FAIR WARNING ACT Committee on the Judiciary: Continued mark up of H.R. 3307, Regulatory Fair Warning Act. Will continue tomorrow. CONFERENCE REPORT\u2014PERSONAL RESPONSIBILITY ACT Committee on Rules: Granted, by a vote of 6 to 3, a rule waiving all points of order against the con- ference report on H.R. 3734, Personal Responsibility Act, and against its consideration. The rule provides that the conference report shall be considered as read. The yeas and nays are ordered on the adoption of the conference report and on any subsequent re- port or motion to dispose of an amendment between the Houses. The rule provides that the provisions of clause 5(c) of rule XXI (requiring a three-fifths vote on any tax rate increase) shall not apply to the bill, amendments thereto, or conference reports thereon. Testimony was heard from Chairman Kasich and Representatives Shaw, Sabo, Stenholm, Woolsey, Neal, Tanner, Becerra, and Mink. CONFERENCE REPORT\u2014NATIONAL DEFENSE Committee on Rules: Granted, by voice vote, a rule waiving all points of order against the conference re- port on H.R. 3230, National Defense Authorization Act, Fiscal Year 1997, and against its consideration. The rule provides that the conference report shall be considered as read. Testimony was heard from Chair- man Spence. CONFERENCE REPORT\u2014MILITARY CONSTRUCTION APPROPRIATIONS Committee on Rules: Granted, by voice vote, a rule waiving all points of order against the conference on H.R. 3517, making appropriations for military con- struction, family housing, and base realignment and closure for the Department of Defense for Fiscal Year 1997, and against its consideration. The rule pro- vides that the conference report shall be considered as read. Testimony was heard from Representatives Vucanovich and Hefner. CONFERENCE REPORT\u2014AGRICULTURE, RURAL DEVELOPMENT, FDA, AND RELATED AGENCIES APPROPRIATIONS Committee on Rules: Granted, by voice vote, a rule waiving all points of order against the conference re- port on H.R. 3603, making appropriations for Agri- culture, Rural Development, Food and Drug Admin- istration, and Related Agencies programs for the fis- cal year 1997, and against its consideration. The rule provides that the conference report shall be consid- ered as read. Testimony was heard from Representa- tive Skeen. ENGLISH LANGUAGE EMPOWERMENT ACT Committee on Rules: Granted, by voice vote, a modi- fied closed rule providing 1 hour of debate on H.R. 123, English Language Empowerment Act of 1996. The rule waives points of order against consideration of the bill for failure to comply with clause 2(l)(6) of rule XI (three day availability of committee re- ports). The rule makes in order an amendment in the na- ture of a substitute consisting of the text of H.R. CONGRESSIONAL RECORD \u2014 DAILY DIGEST D853July 31, 1996 3898 for further amendment purposes. The rule waives points of order against the amendment in the nature of a substitute for failure to comply with clause 7 of rule XVI (relating to germaneness). The rule provides for the consideration of the amendments printed in the report of the Committee on Rules only in the order specified; if offered by the Member designated in the report; debatable for the time specified in the report, equally divided and controlled by the proponent and an opponent; and which shall not be subject to amendment or a divi- sion of the question in the House or in the Commit- tee of the Whole. The rule waives all points of order against the amendment printed in the report. The rule authorizes the Chair to postpone and cluster votes on amendments. Finally, the rule pro- vides one motion to recommit, with or without in- structions. Testimony was heard from Representa- tives Cunningham, Canady, Martinez, Gene Green of Texas, Romero-Barcelo, Becerra, Jackson-Lee, Rich- ardson, Serrano, Underwood, and Velazquez. WAIVING 2\/3 VOTE REQUIREMENT Committee on Rules: Ordered reported, by voice vote, a resolution waiving clause 4(b) of rule XI (requiring 2\/3 vote to consider a rule on the same day it is re- ported from the Committee on Rules) against a reso- lution reported by the Rules Committee before Au- gust 2, 1996. The resolution applies the waiver to special rules providing for consideration or disposi- tion of a conference report to accompany H.R. 3103, Health Insurance Portability and Accountability Act. SPACE COMMERCIALIZATION PROMOTION ACT Committee on Science: Subcommittee on Space and Aer- onautics held a hearing on Space Commercialization Promotion Act of 1996. Testimony was heard from Lionel S. Johns, Associate Director, Technology, Of- fice of Science and Technology Policy; Spence M. Armstrong, Associate Director, Human Resources and Education, NASA; Robert Davis, Deputy Under Secretary, Space, Department of Defense; and public witnesses. SBA PROGRAMS TO ASSIST VETERANS Committee on Small Business: Subcommittee on Gov- ernment Programs and Subcommittee on Education, Training, Employment and Housing of the Commit- tee on Veterans’ Affairs held a joint hearing on SBA programs to assist veterans in readjusting to civilian life. Testimony was heard from Leon Bechet, Assist- ant Administrator, Veterans Affairs, SBA; and public witnesses. COMMITTEE BUSINESS Committee on Standards of Official Conduct: Met in ex- ecutive session to consider pending business. MISCELLANEOUS MEASURES Committee on Transportation and Infrastructure: Sub- committee on Public Buildings and Grounds ap- proved for full Committee action the following: H.R. 2062, amended, to designate the Health Care Financing Administration building under construc- tion at 7500 Security Boulevard, Baltimore, MD as the ”Helen Delich Bentley Building”; H.R. 3535, to redesignate a Federal building in Suitland, MD, as the ”W. Edwards Deming Federal Building”; H.R. 3576, amended, to designate the U.S. courthouse lo- cated at 401 South Michigan Street in South Bend, IN, as the ”Robert Kurtz Rodibaugh United States Courthouse”; H.R. 3710, amended, to designate a U.S. courthouse located in Tampa, FL, as the ”Sam M. Gibbons United States Courthouse”; 18 Repair and Alteration Resolutions; 1 Lease Resolution; and 2 11(b) Resolutions. REPLACING FEDERAL INCOME TAX\u2014 DOMESTIC MANUFACTURING AND ENERGY AND NATURAL RESOURCES Committee on Ways and Means: Continued hearings on the impact of replacing the Federal Income Tax, with emphasis on domestic manufacturing and on energy and natural resources. Testimony was heard from public witnesses. Joint Meetings BUDGET RECONCILIATION Conferees on Tuesday, July 30, agreed to file a con- ference report on the differences between the Senate- and House-passed versions of H.R. 3734, to provide for reconciliation pursuant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997. NATIONAL DEFENSE AUTHORIZATION ACT Conferees on Tuesday, July 30, agreed to file a con- ference report on the differences between the Senate- and House-passed versions of H.R. 3230, to author- ize funds for fiscal year 1997 for military activities of the Department of Defense, for military construc- tion, and for defense activities of the Department of Energy, and to prescribe personnel strengths for such fiscal year for the Armed Forces. APPROPRIATIONS\u2014AGRICULTURE Conferees on Tuesday, July 30, agreed to file a con- ference report on the differences between the Senate- and House-passed versions of H.R. 3603, making CONGRESSIONAL RECORD \u2014 DAILY DIGESTD854 July 31, 1996 appropriations for Agriculture, Rural Development, Food and Drug Administration, and Related Agen- cies programs for the fiscal year ending September 30, 1997. APPROPRIATIONS\u2014LEGISLATIVE BRANCH Conferees agreed to file a conference report on the dif- ferences between the Senate- and House-passed ver- sions of H.R. 3754, making appropriations for the Legislative Branch for the fiscal year ending Septem- ber 30, 1997. APPROPRIATIONS\u2014DISTRICT OF COLUMBIA Conferees met to resolve the differences between the Senate- and House-passed versions of H.R. 3845, making appropriations for the government of the District of Columbia and other activities chargeable in whole or in part against revenues of said District for the fiscal year ending September 30, 1997, but did not complete action thereon, and recessed subject to call. f NEW PUBLIC LAWS (For last listing of Public Laws, see DAILY DIGEST, p. D844) H.R. 2337, to amend the Internal Revenue Code of 1986 to provide for increased taxpayer protections. Signed July 30, 1996. (P.L. 104 168) BILL VETOED H.R. 743, to amend the National Labor Relations Act to allow labor management cooperative efforts that improve economic competitiveness in the Unit- ed States to continue to thrive. Vetoed July 30, 1996. f COMMITTEE MEETINGS FOR THURSDAY, AUGUST 1, 1996 (Committee meetings are open unless otherwise indicated) Senate Committee on Appropriations, business meeting, to mark up H.R. 3814, making appropriations for the Depart- ments of Commerce, Justice, and State, the Judiciary, and related agencies for the fiscal year ending September 30, 1997, 2 p.m., SD 192. Committee on Armed Services, to hold hearings to examine current U.S. participation in the NATO Implementation Force Mission in Bosnia, 10 a.m., SR 222. Committee on Commerce, Science, and Transportation, to hold hearings on aviation security challenges, 2 p.m., SR 253. Committee on Energy and Natural Resources, Subcommittee on Oversight and Investigations, to hold oversight hear- ings to review the propriety of a commercial lease issued by the Bureau of Land Management and Lake Havasu, Arizona, including its consistency with the Federal Land Policy and Management Act and Department of the Inte- rior land use policies, 9 a.m., SD 366. Full Committee, to hold oversight hearings on the im- plementation of Section 2001, Emergency Timber Sal- vage, of Public Law 104 19, 2 p.m., SD 366. Committee on Environment and Public Works, business meeting, to consider the nominations of Nils J. Diaz, of Florida, and Edward McGaffigan, Jr., of Virginia, each to be a Member of the Nuclear Regulatory Commission, time to be announced, S 216, Capitol. Committee on Foreign Relations, to hold hearings to re- view foreign policy issues, 10 a.m., SD 419. Committee on the Judiciary, business meeting, to mark up S. 1885, the Prosthetic Limb Access Act, S. 1952, Juve- nile Justice and Delinquency Prevention Act, S. 982, Na- tional Information Infrastructure Protection Act, and S.J. Res. 52, proposing an amendment to the Constitution of the United States to protect the rights of victims of crimes, 10 a.m., SD226. Select Committee on Intelligence, to hold hearings to exam- ine terrorism in the United States, 9:30 a.m., SH 216. NOTICE For a Listing of Senate Committee Meetings scheduled ahead, see page E1421 in today’s Record. House Committee on Agriculture, Subcommittee on Livestock, Dairy, and Poultry, hearing on the following bills: H.R. 3393, Family Pet Protection Act of 1996; and H.R. 3398, Pet Safety and Protection Act of 1996, 9:30 a.m., 1300 Longworth. Committee on Banking and Financial Services, Subcommit- tee on Capital Markets, Securities and Government Spon- sored Enterprises, to continue oversight hearings regard- ing Fannie Mae and Freddie Mac, 2 p.m., 2128 Rayburn. Committee on the Budget, to continue hearings on ”How Did We Get Here From There?” A Discussion of the Evolution of the Budget Process from 1974 to the Present, Part III, 10 a.m., 210 Cannon. Committee on Commerce, Subcommittee on Health and Environment, hearing on reauthorization of Existing Pub- lic Health Service Act Programs, 10 a.m., 2123 Rayburn. Committee on Economic and Educational Opportunities, to mark up the following measures: H.R. 3876, Juvenile Crime Control and Delinquency Prevention Act; H.R. 3863, Student Debt Reduction Act of 1996; and H. Res. 470, expressing the sense of the Congress that the De- partment of Education should play a more active role in monitoring and enforcing compliance with the provisions of the Higher Education Act of 1965 related to campus crime, 9:30 a.m., 2175 Rayburn. Committee on Government Reform and Oversight, hearing on Security of FBI Background Files, 9 a.m., 2154 Rayburn. Committee on International Relations, to mark up the fol- lowing: H. Res. 120, supporting the independence and sovereignty of Ukraine and the progress of its political and economic reforms; and H.R. 3916, to make available certain Voice of America and Radio Marti multilingual CONGRESSIONAL RECORD \u2014 DAILY DIGEST D855July 31, 1996 computer readable text and voice recordings, 10:30 a.m., 2172 Rayburn. Committee on the Judiciary, to continue mark up of H.R. 3307, Regulatory Fair Warning Act and H.R. 3565, Vio- lent Youth Crime Act of 1996, 10 a.m., 2141 Rayburn. Subcommittee on Immigration and Claims, oversight hearing regarding the possible shifting of refugee resettle- ment to private organizations, 8 a.m., 2237 Rayburn. Committee on Resources, to mark up the following bills: H.R. 3640, Torres-Martinez Desert Cahuilla Indians Claims Settlement Act; H.R. 3642, California Indian Land Claims Transfer Act; H.R. 2997, to establish certain criteria for administrative procedures to extend Federal recognition to certain Indian groups; H.R. 3671, United Houma Nation Recognition and Land Claims Settlement Act of 1996; H.R. 2591, Indian Federal Recognition Ad- ministrative Procedures Act of 1995; H.R. 3879, North- ern Mariana Islands Delegate Act; H.R. 2512, Crow Creek Sioux Tribe Infrastructure Development Trust Fund Act of 1996; H.R. 2710, Hoopa Valley Reservation South Boundary Correction Act; H.R. 3547, to provide for the conveyance of a parcel of real property in the Apache National Forest in the State of Arizona to the Al- pine Elementary School District 7 to be used for the con- struction of school facilities and related playing fields; H.R. 2693, to require the Secretary of Agriculture to make a minor adjustment in the exterior boundary of the Hells Canyon Wilderness in the States of Oregon and Idaho to exclude an established Forest Service road inad- vertently included in the wilderness; H.R. 1179 Histori- cally Black Colleges and Universities Historic Building Restoration and Preservation Act; H.R. 2392, to amend the Umatilla Basin Project Act to establish boundaries for irrigation districts within the Umatilla Basin; H.R. 3258, to direct the Secretary of the Interior to convey certain real property located within the Carlsbad Project in New Mexico to Carlsbad Irrigation District; S. 1467, Fort Peck Rural County Water Supply System Act of 1995; H.R. 3903, to require the Secretary of the Interior to sell the Sly Park Dam and Reservoir; H.R. 3910, Emergency Drought Relief Act of 1996; S. 811, Water Desaliniza- tion Research and Development Act of 1996; and H.R. 3828, Indian Child Welfare Act Amendments of 1996, 11 a.m., 1324 Longworth. Subcommittee on Fisheries, Wildlife and Oceans, over- sight hearing on the economic effects of the New Eng- land Groundfish Management Plan, 9 a.m., 1334 Long- worth. Subcommittee on Native American and Insular Affairs, hearing on H.R. 3595, to make available to the Santee Sioux Tribe of Nebraska its proportionate share of funds awarded in Docket 74 A to the Sioux Indian Tribe, 2 p.m., 1334 Longworth. Committee on Science, Subcommittee on Energy and Envi- ronment, hearing on funding Department of Energy Re- search and Development in a constrained Budget Envi- ronment, 10 a.m., 2318 Rayburn. Committee on Transportation and Infrastructure, to mark up the following: H.R. 2062, to designate the Health Care Financing Administration building under construc- tion at 7500 Security Boulevard, Baltimore, MD as the ”Helen Delich Bentley Building”; H.R. 3535, to redesig- nate a Federal building in Suitland, MD, as the ”W. Ed- wards Deming Federal Building”; H.R. 3576, to des- ignate the U.S. courthouse located at 401 South Michigan Street in South Bend, IN, as the ”Robert Kurtz Rodibaugh United States Courthouse”; H.R. 3710, to designate a U.S. courthouse located in Tampa, FL, as the ”Sam M. Gibbons United States Courthouse”; GSA Re- pair and Alteration and Lease Prospectuses; 11(b) Resolu- tions; and H.R. 3348, Snow Removal Policy Act of 1996, 9:30 a.m., 2167 Rayburn. Subcommittee on Aviation, hearing on H.R. 1309, to amend title 49, United States Code, to require the use of child safety restraint systems approved by the Secretary of Transportation on commercial aircraft, following full Committee markup, 2167 Rayburn. Subcommittee on Public Buildings and Economic De- velopment, hearing on the oversight of NEXCOM Lease, 1 p.m., 2253 Rayburn. Committee on Ways and Means, Subcommittee on Trade, to continue hearings on the Status and Future Direction of U.S. Trade Policy, with emphasis on U.S. Trade with Sub-Saharan Africa, 10 a.m., 1100 Longworth. Permanent Select Committee on Intelligence, executive hear- ing on Bosnia\/Iran Arms, 11 a.m., H 405 Capitol. CONGRESSIONAL RECORD \u2014 DAILY DIGEST Congressional Record The public proceedings of each House of Congress, as reported bythe Official Reporters thereof, are printed pursuant to directions of the Joint Committee on Printing as authorized by appropriate provisions of Title 44, United States Code, and published for each day that one or both Houses are in session, excepting very infrequent instances when two or more unusually small consecutive issues are printed at one time. \u00b6 Public access to the Congressional Record is available online through GPO Access, a service of the Government Printing Office, free of charge to the user. The online database is updated each day the Congressional Record is published. The database includes both text and graphics from the beginning of the 103d Congress, 2d session (January 1994) forward. It is available on the Wide Area Information Server (WAIS) through the Internet and via asynchronous dial-in. Internet users can access the database by using the World Wide Web; the Superintendent of Documents home page address is http:\/\/www.access.gpo.gov\/suldocs, by using local WAIS client software or by telnet to swais.access.gpo.gov, then login as guest (no password required). Dial-in users should use communications software and modem to call (202) 512 1661; type swais, then login as guest (no password required). For general information about GPO Access, contact the GPO Access User Support Team by sending Internet e-mail to [email protected], or a fax to (202) 512 1262; or by calling (202) 512 1530 between 7 a.m. and 5 p.m. Eastern time, Monday through Friday, except for Federal holidays. \u00b6 The Congressional Record paper and 24x microfiche will be furnished by mail to subscribers, free of postage, at the following prices: paper edition, $112.50 for six months, $225 per year, or purchased for $1.50 per issue, payable in advance; microfiche edition, $118 per year, or purchased for $1.50 per issue payable in advance. The semimonthly Congressional Record Index may be purchased for the same per issue prices. Remit check or money order, made payable to the Superintendent of Documents, directly to the Government Printing Office, Washington, D.C. 20402. \u00b6 Following each session of Congress, the daily Congressional Record is revised, printed, permanently bound and sold by the Superintendent of Documents in individual parts or by sets. \u00b6With the exception of copyrighted articles, there are no restrictions on the republication of material from the Congressional Record. UN UM E PLURIBUS D856 July 31, 1996 Next Meeting of the SENATE 9:30 a.m., Thursday, August 1 Senate Chamber Program for Thursday: Senate will consider the con- ference report on H.R. 3734, Budget Reconciliation. Sen- ate may also consider further appropriations bills and con- ference reports, when available. Next Meeting of the HOUSE OF REPRESENTATIVES 10 a.m., Thursday, August 1 House Chamber Program for Thursday: Consideration of H.R. 123, English as a Common Language of Government Act (modified closed rule, 1 hour of general debate); Consideration of the conference report on H.R. 3103, Health Coverage Availability and Affordability Act (sub- ject to a rule); Consideration of the conference report on H.R. 3517, Military Construction Appropriations (rule waiving all points of order); Consideration of the conference report on H.R. 3603, Agriculture Appropriations (rule waiving all points of order); and Consideration of the conference report on H.R. 3230, Department of Defense Authorization (rule waiving all points of order). Extensions of Remarks, as inserted in this issue HOUSE Duncan, John J., Jr., Tenn., E1415 Fields, Jack, Tex., E1413, E1415 Frazer, Victor O., The Virgin Islands, E1418 Hansen, James V., Utah, E1414 Johnson, Nancy L., Conn., E1418 Kolbe, Jim, Ariz., E1419 Payne, Donald M., N.J., E1414 Saxton, Jim, N.J., E1415 Schiff, Steven, N. Mex., E1419 Solomon, Gerald B.H., N.Y., E1413, E1415, E1419 Thomas, William M., Calif., E1418 Wolf, Frank R., Va., E1413 Zeliff, William H., Jr., N.H., E1417 Superintendent of Documents 2015-06-12T13:56:40-0400 US GPO, Washington, DC 20401 Superintendent of Documents GPO attests that this document has not been altered since it was disseminated by GPO ”

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pdf P.L. 104-193 – TANF Bill – Signed By Clinton on 8-22-96

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” 110 STAT. 2105PUBLIC LAW 104 193\u2014AUG. 22, 1996 Public Law 104 193 104th Congress An Act To provide for reconciliation pursuant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ”Personal Responsibility and Work Opportunity Reconciliation Act of 1996”. SEC. 2. TABLE OF CONTENTS. The table of contents for this Act is as follows: TITLE I\u2014BLOCK GRANTS FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES Sec. 101. Findings. Sec. 102. Reference to Social Security Act. Sec. 103. Block grants to States. Sec. 104. Services provided by charitable, religious, or private organizations. Sec. 105. Census data on grandparents as primary caregivers for their grand- children. Sec. 106. Report on data processing. Sec. 107. Study on alternative outcomes measures. Sec. 108. Conforming amendments to the Social Security Act. Sec. 109. Conforming amendments to the Food Stamp Act of 1977 and related pro- visions. Sec. 110. Conforming amendments to other laws. Sec. 111. Development of prototype of counterfeit-resistant Social Security card re- quired. Sec. 112. Modifications to the job opportunities for certain low-income individuals program. Sec. 113. Secretarial submission of legislative proposal for technical and conforming amendments. Sec. 114. Assuring medicaid coverage for low-income families. Sec. 115. Denial of assistance and benefits for certain drug-related convictions. Sec. 116. Effective date; transition rule. TITLE II\u2014SUPPLEMENTAL SECURITY INCOME Sec. 200. Reference to Social Security Act. Subtitle A\u2014Eligibility Restrictions Sec. 201. Denial of SSI benefits for 10 years to individuals found to have fraudu- lently misrepresented residence in order to obtain benefits simulta- neously in 2 or more States. Sec. 202. Denial of SSI benefits for fugitive felons and probation and parole viola- tors. Sec. 203. Treatment of prisoners. Sec. 204. Effective date of application for benefits. Subtitle B\u2014Benefits for Disabled Children Sec. 211. Definition and eligibility rules. Sec. 212. Eligibility redeterminations and continuing disability reviews. 42 USC 1305 note. Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Aug. 22, 1996 [H.R. 3734] 110 STAT. 2106 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Sec. 213. Additional accountability requirements. Sec. 214. Reduction in cash benefits payable to institutionalized individuals whose medical costs are covered by private insurance. Sec. 215. Regulations. Subtitle C\u2014Additional Enforcement Provision Sec. 221. Installment payment of large past-due supplemental security income ben- efits. Sec. 222. Regulations. Subtitle D\u2014Studies Regarding Supplemental Security Income Program Sec. 231. Annual report on the supplemental security income program. Sec. 232. Study by General Accounting Office. TITLE III\u2014CHILD SUPPORT Sec. 300. Reference to Social Security Act. Subtitle A\u2014Eligibility for Services; Distribution of Payments Sec. 301. State obligation to provide child support enforcement services. Sec. 302. Distribution of child support collections. Sec. 303. Privacy safeguards. Sec. 304. Rights to notification of hearings. Subtitle B\u2014Locate and Case Tracking Sec. 311. State case registry. Sec. 312. Collection and disbursement of support payments. Sec. 313. State directory of new hires. Sec. 314. Amendments concerning income withholding. Sec. 315. Locator information from interstate networks. Sec. 316. Expansion of the Federal Parent Locator Service. Sec. 317. Collection and use of Social Security numbers for use in child support en- forcement. Subtitle C\u2014Streamlining and Uniformity of Procedures Sec. 321. Adoption of uniform State laws. Sec. 322. Improvements to full faith and credit for child support orders. Sec. 323. Administrative enforcement in interstate cases. Sec. 324. Use of forms in interstate enforcement. Sec. 325. State laws providing expedited procedures. Subtitle D\u2014Paternity Establishment Sec. 331. State laws concerning paternity establishment. Sec. 332. Outreach for voluntary paternity establishment. Sec. 333. Cooperation by applicants for and recipients of part A assistance. Subtitle E\u2014Program Administration and Funding Sec. 341. Performance-based incentives and penalties. Sec. 342. Federal and State reviews and audits. Sec. 343. Required reporting procedures. Sec. 344. Automated data processing requirements. Sec. 345. Technical assistance. Sec. 346. Reports and data collection by the Secretary. Subtitle F\u2014Establishment and Modification of Support Orders Sec. 351. Simplified process for review and adjustment of child support orders. Sec. 352. Furnishing consumer reports for certain purposes relating to child sup- port. Sec. 353. Nonliability for financial institutions providing financial records to State child support enforcement agencies in child support cases. Subtitle G\u2014Enforcement of Support Orders Sec. 361. Internal Revenue Service collection of arrearages. Sec. 362. Authority to collect support from Federal employees. Sec. 363. Enforcement of child support obligations of members of the Armed Forces. Sec. 364. Voiding of fraudulent transfers. Sec. 365. Work requirement for persons owing past-due child support. Sec. 366. Definition of support order. Sec. 367. Reporting arrearages to credit bureaus. Sec. 368. Liens. 110 STAT. 2107PUBLIC LAW 104 193\u2014AUG. 22, 1996 Sec. 369. State law authorizing suspension of licenses. Sec. 370. Denial of passports for nonpayment of child support. Sec. 371. International support enforcement. Sec. 372. Financial institution data matches. Sec. 373. Enforcement of orders against paternal or maternal grandparents in cases of minor parents. Sec. 374. Nondischargeability in bankruptcy of certain debts for the support of a child. Sec. 375. Child support enforcement for Indian tribes. Subtitle H\u2014Medical Support Sec. 381. Correction to ERISA definition of medical child support order. Sec. 382. Enforcement of orders for health care coverage. Subtitle I\u2014Enhancing Responsibility and Opportunity for Non-Residential Parents Sec. 391. Grants to States for access and visitation programs. Subtitle J\u2014Effective Dates and Conforming Amendments Sec. 395. Effective dates and conforming amendments. TITLE IV\u2014RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS Sec. 400. Statements of national policy concerning welfare and immigration. Subtitle A\u2014Eligibility for Federal Benefits Sec. 401. Aliens who are not qualified aliens ineligible for Federal public benefits. Sec. 402. Limited eligibility of qualified aliens for certain Federal programs. Sec. 403. Five-year limited eligibility of qualified aliens for Federal means-tested public benefit. Sec. 404. Notification and information reporting. Subtitle B\u2014Eligibility for State and Local Public Benefits Programs Sec. 411. Aliens who are not qualified aliens or nonimmigrants ineligible for State and local public benefits. Sec. 412. State authority to limit eligibility of qualified aliens for State public bene- fits. Subtitle C\u2014Attribution of Income and Affidavits of Support Sec. 421. Federal attribution of sponsor’s income and resources to alien. Sec. 422. Authority for States to provide for attribution of sponsors income and re- sources to the alien with respect to State programs. Sec. 423. Requirements for sponsor’s affidavit of support. Subtitle D\u2014General Provisions Sec. 431. Definitions. Sec. 432. Verification of eligibility for Federal public benefits. Sec. 433. Statutory construction. Sec. 434. Communication between State and local government agencies and the Im- migration and Naturalization Service. Sec. 435. Qualifying quarters. Subtitle E\u2014Conforming Amendments Relating to Assisted Housing Sec. 441. Conforming amendments relating to assisted housing. Subtitle F\u2014Earning Income Credit Denied to Unauthorized Employees Sec. 451. Earned income credit denied to individuals not authorized to be employed in the United States. TITLE V\u2014CHILD PROTECTION Sec. 501. Authority of States to make foster care maintenance payments on behalf of children in any private child care institution. Sec. 502. Extension of enhanced match for implementation of statewide automated child welfare information systems. Sec. 503. National random sample study of child welfare. Sec. 504. Redesignation of section 1123. Sec. 505. Kinship care. TITLE VI\u2014CHILD CARE Sec. 601. Short title and references. Sec. 602. Goals. 110 STAT. 2108 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Sec. 603. Authorization of appropriations and entitlement authority. Sec. 604. Lead agency. Sec. 605. Application and plan. Sec. 606. Limitation on State allotments. Sec. 607. Activities to improve the quality of child care. Sec. 608. Repeal of early childhood development and before- and after-school care requirement. Sec. 609. Administration and enforcement. Sec. 610. Payments. Sec. 611. Annual report and audits. Sec. 612. Report by the Secretary. Sec. 613. Allotments. Sec. 614. Definitions. Sec. 615. Effective date. TITLE VII\u2014CHILD NUTRITION PROGRAMS Subtitle A\u2014National School Lunch Act Sec. 701. State disbursement to schools. Sec. 702. Nutritional and other program requirements. Sec. 703. Free and reduced price policy statement. Sec. 704. Special assistance. Sec. 705. Miscellaneous provisions and definitions. Sec. 706. Summer food service program for children. Sec. 707. Commodity distribution. Sec. 708. Child and adult care food program. Sec. 709. Pilot projects. Sec. 710. Reduction of paperwork. Sec. 711. Information on income eligibility. Sec. 712. Nutrition guidance for child nutrition programs. Subtitle B\u2014Child Nutrition Act of 1966 Sec. 721. Special milk program. Sec. 722. Free and reduced price policy statement. Sec. 723. School breakfast program authorization. Sec. 724. State administrative expenses. Sec. 725. Regulations. Sec. 726. Prohibitions. Sec. 727. Miscellaneous provisions and definitions. Sec. 728. Accounts and records. Sec. 729. Special supplemental nutrition program for women, infants, and children. Sec. 730. Cash grants for nutrition education. Sec. 731. Nutrition education and training. Subtitle C\u2014Miscellaneous Provisions Sec. 741. Coordination of school lunch, school breakfast, and summer food service programs. Sec. 742. Requirements relating to provision of benefits based on citizenship, alienage, or immigration status under the National School Lunch Act, the Child Nutrition Act of 1966, and certain other acts. TITLE VIII\u2014FOOD STAMPS AND COMMODITY DISTRIBUTION Subtitle A\u2014Food Stamp Program Sec. 801. Definition of certification period. Sec. 802. Definition of coupon. Sec. 803. Treatment of children living at home. Sec. 804. Adjustment of thrifty food plan. Sec. 805. Definition of homeless individual. Sec. 806. State option for eligibility standards. Sec. 807. Earnings of students. Sec. 808. Energy assistance. Sec. 809. Deductions from income. Sec. 810. Vehicle allowance. Sec. 811. Vendor payments for transitional housing counted as income. Sec. 812. Simplified calculation of income for the self-employed. Sec. 813. Doubled penalties for violating food stamp program requirements. Sec. 814. Disqualification of convicted individuals. Sec. 815. Disqualification. Sec. 816. Caretaker exemption. Sec. 817. Employment and training. 110 STAT. 2109PUBLIC LAW 104 193\u2014AUG. 22, 1996 Sec. 818. Food stamp eligibility. Sec. 819. Comparable treatment for disqualification. Sec. 820. Disqualification for receipt of multiple food stamp benefits. Sec. 821. Disqualification of fleeing felons. Sec. 822. Cooperation with child support agencies. Sec. 823. Disqualification relating to child support arrears. Sec. 824. Work requirement. Sec. 825. Encouragement of electronic benefit transfer systems. Sec. 826. Value of minimum allotment. Sec. 827. Benefits on recertification. Sec. 828. Optional combined allotment for expedited households. Sec. 829. Failure to comply with other means-tested public assistance programs. Sec. 830. Allotments for households residing in centers. Sec. 831. Condition precedent for approval of retail food stores and wholesale food concerns. Sec. 832. Authority to establish authorization periods. Sec. 833. Information for verifying eligibility for authorization. Sec. 834. Waiting period for stores that fail to meet authorization criteria. Sec. 835. Operation of food stamp offices. Sec. 836. State employee and training standards. Sec. 837. Exchange of law enforcement information. Sec. 838. Expedited coupon service. Sec. 839. Withdrawing fair hearing requests. Sec. 840. Income, eligibility, and immigration status verification systems. Sec. 841. Investigations. Sec. 842. Disqualification of retailers who intentionally submit falsified applica- tions. Sec. 843. Disqualification of retailers who are disqualified under the WIC program. Sec. 844. Collection of overissuances. Sec. 845. Authority to suspend stores violating program requirements pending ad- ministrative and judicial review. Sec. 846. Expanded criminal forfeiture for violations. Sec. 847. Limitation on Federal match. Sec. 848. Standards for administration. Sec. 849. Work supplementation or support program. Sec. 850. Waiver authority. Sec. 851. Response to waivers. Sec. 852. Employment initiatives program. Sec. 853. Reauthorization. Sec. 854. Simplified food stamp program. Sec. 855. Study of the use of food stamps to purchase vitamins and minerals. Sec. 856. Deficit reduction. Subtitle B\u2014Commodity Distribution Programs Sec. 871. Emergency food assistance program. Sec. 872. Food bank demonstration project. Sec. 873. Hunger prevention programs. Sec. 874. Report on entitlement commodity processing. Subtitle C\u2014Electronic Benefit Transfer Systems Sec. 891. Provisions to encourage electronic benefit transfer systems. TITLE IX\u2014MISCELLANEOUS Sec. 901. Appropriation by State legislatures. Sec. 902. Sanctioning for testing positive for controlled substances. Sec. 903. Elimination of housing assistance with respect to fugitive felons and pro- bation and parole violators. Sec. 904. Sense of the Senate regarding the inability of the noncustodial parent to pay child support. Sec. 905. Establishing national goals to prevent teenage pregnancies. Sec. 906. Sense of the Senate regarding enforcement of statutory rape laws. Sec. 907. Provisions to encourage electronic benefit transfer systems. Sec. 908. Reduction of block grants to States for social services; use of vouchers. Sec. 909. Rules relating to denial of earned income credit on basis of disqualified income. Sec. 910. Modification of adjusted gross income definition for earned income credit. Sec. 911. Fraud under means-tested welfare and public assistance programs. Sec. 912. Abstinence education. Sec. 913. Change in reference. 110 STAT. 2110 PUBLIC LAW 104 193\u2014AUG. 22, 1996 TITLE I\u2014BLOCK GRANTS FOR TEM- PORARY ASSISTANCE FOR NEEDY FAMILIES SEC. 101. FINDINGS. The Congress makes the following findings: (1) Marriage is the foundation of a successful society. (2) Marriage is an essential institution of a successful society which promotes the interests of children. (3) Promotion of responsible fatherhood and motherhood is integral to successful child rearing and the well-being of children. (4) In 1992, only 54 percent of single-parent families with children had a child support order established and, of that 54 percent, only about one-half received the full amount due. Of the cases enforced through the public child support enforce- ment system, only 18 percent of the caseload has a collection. (5) The number of individuals receiving aid to families with dependent children (in this section referred to as ”AFDC”) has more than tripled since 1965. More than two-thirds of these recipients are children. Eighty-nine percent of children receiving AFDC benefits now live in homes in which no father is present. (A)(i) The average monthly number of children receiv- ing AFDC benefits\u2014 (I) was 3,300,000 in 1965; (II) was 6,200,000 in 1970; (III) was 7,400,000 in 1980; and (IV) was 9,300,000 in 1992. (ii) While the number of children receiving AFDC bene- fits increased nearly threefold between 1965 and 1992, the total number of children in the United States aged 0 to 18 has declined by 5.5 percent. (B) The Department of Health and Human Services has estimated that 12,000,000 children will receive AFDC benefits within 10 years. (C) The increase in the number of children receiving public assistance is closely related to the increase in births to unmarried women. Between 1970 and 1991, the percent- age of live births to unmarried women increased nearly threefold, from 10.7 percent to 29.5 percent. (6) The increase of out-of-wedlock pregnancies and births is well documented as follows: (A) It is estimated that the rate of nonmarital teen pregnancy rose 23 percent from 54 pregnancies per 1,000 unmarried teenagers in 1976 to 66.7 pregnancies in 1991. The overall rate of nonmarital pregnancy rose 14 percent from 90.8 pregnancies per 1,000 unmarried women in 1980 to 103 in both 1991 and 1992. In contrast, the overall pregnancy rate for married couples decreased 7.3 percent between 1980 and 1991, from 126.9 pregnancies per 1,000 married women in 1980 to 117.6 pregnancies in 1991. (B) The total of all out-of-wedlock births between 1970 and 1991 has risen from 10.7 percent to 29.5 percent and 42 USC 601 note. 110 STAT. 2111PUBLIC LAW 104 193\u2014AUG. 22, 1996 if the current trend continues, 50 percent of all births by the year 2015 will be out-of-wedlock. (7) An effective strategy to combat teenage pregnancy must address the issue of male responsibility, including statutory rape culpability and prevention. The increase of teenage preg- nancies among the youngest girls is particularly severe and is linked to predatory sexual practices by men who are signifi- cantly older. (A) It is estimated that in the late 1980’s, the rate for girls age 14 and under giving birth increased 26 percent. (B) Data indicates that at least half of the children born to teenage mothers are fathered by adult men. Avail- able data suggests that almost 70 percent of births to teenage girls are fathered by men over age 20. (C) Surveys of teen mothers have revealed that a majority of such mothers have histories of sexual and phys- ical abuse, primarily with older adult men. (8) The negative consequences of an out-of-wedlock birth on the mother, the child, the family, and society are well documented as follows: (A) Young women 17 and under who give birth outside of marriage are more likely to go on public assistance and to spend more years on welfare once enrolled. These combined effects of ”younger and longer” increase total AFDC costs per household by 25 percent to 30 percent for 17-year-olds. (B) Children born out-of-wedlock have a substantially higher risk of being born at a very low or moderately low birth weight. (C) Children born out-of-wedlock are more likely to experience low verbal cognitive attainment, as well as more child abuse, and neglect. (D) Children born out-of-wedlock were more likely to have lower cognitive scores, lower educational aspirations, and a greater likelihood of becoming teenage parents them- selves. (E) Being born out-of-wedlock significantly reduces the chances of the child growing up to have an intact marriage. (F) Children born out-of-wedlock are 3 times more likely to be on welfare when they grow up. (9) Currently 35 percent of children in single-parent homes were born out-of-wedlock, nearly the same percentage as that of children in single-parent homes whose parents are divorced (37 percent). While many parents find themselves, through divorce or tragic circumstances beyond their control, facing the difficult task of raising children alone, nevertheless, the negative consequences of raising children in single-parent homes are well documented as follows: (A) Only 9 percent of married-couple families with children under 18 years of age have income below the national poverty level. In contrast, 46 percent of female- headed households with children under 18 years of age are below the national poverty level. (B) Among single-parent families, nearly 1\u20442 of the mothers who never married received AFDC while only 1\u20445 of divorced mothers received AFDC. 110 STAT. 2112 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (C) Children born into families receiving welfare assist- ance are 3 times more likely to be on welfare when they reach adulthood than children not born into families receiv- ing welfare. (D) Mothers under 20 years of age are at the greatest risk of bearing low birth weight babies. (E) The younger the single-parent mother, the less likely she is to finish high school. (F) Young women who have children before finishing high school are more likely to receive welfare assistance for a longer period of time. (G) Between 1985 and 1990, the public cost of births to teenage mothers under the aid to families with depend- ent children program, the food stamp program, and the medicaid program has been estimated at $120,000,000,000. (H) The absence of a father in the life of a child has a negative effect on school performance and peer adjustment. (I) Children of teenage single parents have lower cog- nitive scores, lower educational aspirations, and a greater likelihood of becoming teenage parents themselves. (J) Children of single-parent homes are 3 times more likely to fail and repeat a year in grade school than are children from intact 2-parent families. (K) Children from single-parent homes are almost 4 times more likely to be expelled or suspended from school. (L) Neighborhoods with larger percentages of youth aged 12 through 20 and areas with higher percentages of single-parent households have higher rates of violent crime. (M) Of those youth held for criminal offenses within the State juvenile justice system, only 29.8 percent lived primarily in a home with both parents. In contrast to these incarcerated youth, 73.9 percent of the 62,800,000 children in the Nation’s resident population were living with both parents. (10) Therefore, in light of this demonstration of the crisis in our Nation, it is the sense of the Congress that prevention of out-of-wedlock pregnancy and reduction in out-of-wedlock birth are very important Government interests and the policy contained in part A of title IV of the Social Security Act (as amended by section 103(a) of this Act) is intended to address the crisis. SEC. 102. REFERENCE TO SOCIAL SECURITY ACT. Except as otherwise specifically provided, wherever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. SEC. 103. BLOCK GRANTS TO STATES. (a) IN GENERAL.\u2014Part A of title IV (42 U.S.C. 601 et seq.) is amended\u2014 (1) by striking all that precedes section 418 (as added by section 603(b)(2) of this Act) and inserting the following: 42 USC prec. 601, 601 610, 612, 613, 615 617. 110 STAT. 2113PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”PART A\u2014BLOCK GRANTS TO STATES FOR TEMPORARY ASSISTANCE FOR NEEDY FAMI- LIES ”SEC. 401. PURPOSE. ”(a) IN GENERAL.\u2014The purpose of this part is to increase the flexibility of States in operating a program designed to\u2014 ”(1) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; ”(2) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; ”(3) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for prevent- ing and reducing the incidence of these pregnancies; and ”(4) encourage the formation and maintenance of two-par- ent families. ”(b) NO INDIVIDUAL ENTITLEMENT.\u2014This part shall not be inter- preted to entitle any individual or family to assistance under any State program funded under this part. ”SEC. 402. ELIGIBLE STATES; STATE PLAN. ”(a) IN GENERAL.\u2014As used in this part, the term ‘eligible State’ means, with respect to a fiscal year, a State that, during the 2-year period immediately preceding the fiscal year, has submitted to the Secretary a plan that the Secretary has found includes the following: ”(1) OUTLINE OF FAMILY ASSISTANCE PROGRAM.\u2014 ”(A) GENERAL PROVISIONS.\u2014A written document that outlines how the State intends to do the following: ”(i) Conduct a program, designed to serve all politi- cal subdivisions in the State (not necessarily in a uni- form manner), that provides assistance to needy fami- lies with (or expecting) children and provides parents with job preparation, work, and support services to enable them to leave the program and become self- sufficient. ”(ii) Require a parent or caretaker receiving assist- ance under the program to engage in work (as defined by the State) once the State determines the parent or caretaker is ready to engage in work, or once the parent or caretaker has received assistance under the program for 24 months (whether or not consecutive), whichever is earlier. ”(iii) Ensure that parents and caretakers receiving assistance under the program engage in work activities in accordance with section 407. ”(iv) Take such reasonable steps as the State deems necessary to restrict the use and disclosure of information about individuals and families receiving assistance under the program attributable to funds provided by the Federal Government. ”(v) Establish goals and take action to prevent and reduce the incidence of out-of-wedlock pregnancies, with special emphasis on teenage pregnancies, and establish numerical goals for reducing the illegitimacy 42 USC 602. 42 USC 601. 110 STAT. 2114 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ratio of the State (as defined in section 403(a)(2)(B)) for calendar years 1996 through 2005. ”(vi) Conduct a program, designed to reach State and local law enforcement officials, the education sys- tem, and relevant counseling services, that provides education and training on the problem of statutory rape so that teenage pregnancy prevention programs may be expanded in scope to include men. ”(B) SPECIAL PROVISIONS.\u2014 ”(i) The document shall indicate whether the State intends to treat families moving into the State from another State differently than other families under the program, and if so, how the State intends to treat such families under the program. ”(ii) The document shall indicate whether the State intends to provide assistance under the program to individuals who are not citizens of the United States, and if so, shall include an overview of such assistance. ”(iii) The document shall set forth objective criteria for the delivery of benefits and the determination of eligibility and for fair and equitable treatment, includ- ing an explanation of how the State will provide opportunities for recipients who have been adversely affected to be heard in a State administrative or appeal process. ”(iv) Not later than 1 year after the date of enact- ment of this Act, unless the chief executive officer of the State opts out of this provision by notifying the Secretary, a State shall, consistent with the excep- tion provided in section 407(e)(2), require a parent or caretaker receiving assistance under the program who, after receiving such assistance for 2 months is not exempt from work requirements and is not engaged in work, as determined under section 407(c), to partici- pate in community service employment, with minimum hours per week and tasks to be determined by the State. ”(2) CERTIFICATION THAT THE STATE WILL OPERATE A CHILD SUPPORT ENFORCEMENT PROGRAM.\u2014A certification by the chief executive officer of the State that, during the fiscal year, the State will operate a child support enforcement program under the State plan approved under part D. ”(3) CERTIFICATION THAT THE STATE WILL OPERATE A FOSTER CARE AND ADOPTION ASSISTANCE PROGRAM.\u2014A certification by the chief executive officer of the State that, during the fiscal year, the State will operate a foster care and adoption assist- ance program under the State plan approved under part E, and that the State will take such actions as are necessary to ensure that children receiving assistance under such part are eligible for medical assistance under the State plan under title XIX. ”(4) CERTIFICATION OF THE ADMINISTRATION OF THE PRO- GRAM.\u2014A certification by the chief executive officer of the State specifying which State agency or agencies will administer and supervise the program referred to in paragraph (1) for the fiscal year, which shall include assurances that local govern- ments and private sector organizations\u2014 110 STAT. 2115PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) have been consulted regarding the plan and design of welfare services in the State so that services are provided in a manner appropriate to local populations; and ”(B) have had at least 45 days to submit comments on the plan and the design of such services. ”(5) CERTIFICATION THAT THE STATE WILL PROVIDE INDIANS WITH EQUITABLE ACCESS TO ASSISTANCE.\u2014A certification by the chief executive officer of the State that, during the fiscal year, the State will provide each member of an Indian tribe, who is domiciled in the State and is not eligible for assistance under a tribal family assistance plan approved under section 412, with equitable access to assistance under the State pro- gram funded under this part attributable to funds provided by the Federal Government. ”(6) CERTIFICATION OF STANDARDS AND PROCEDURES TO ENSURE AGAINST PROGRAM FRAUD AND ABUSE.\u2014A certification by the chief executive officer of the State that the State has established and is enforcing standards and procedures to ensure against program fraud and abuse, including standards and procedures concerning nepotism, conflicts of interest among individuals responsible for the administration and supervision of the State program, kickbacks, and the use of political patronage. ”(7) OPTIONAL CERTIFICATION OF STANDARDS AND PROCE- DURES TO ENSURE THAT THE STATE WILL SCREEN FOR AND IDEN- TIFY DOMESTIC VIOLENCE.\u2014 ”(A) IN GENERAL.\u2014At the option of the State, a certifi- cation by the chief executive officer of the State that the State has established and is enforcing standards and proce- dures to\u2014 ”(i) screen and identify individuals receiving assist- ance under this part with a history of domestic violence while maintaining the confidentiality of such individuals; ”(ii) refer such individuals to counseling and supportive services; and ”(iii) waive, pursuant to a determination of good cause, other program requirements such as time limits (for so long as necessary) for individuals receiving assistance, residency requirements, child support cooperation requirements, and family cap provisions, in cases where compliance with such requirements would make it more difficult for individuals receiving assistance under this part to escape domestic violence or unfairly penalize such individuals who are or have been victimized by such violence, or individuals who are at risk of further domestic violence. ”(B) DOMESTIC VIOLENCE DEFINED.\u2014For purposes of this paragraph, the term ‘domestic violence’ has the same meaning as the term ‘battered or subjected to extreme cruelty’, as defined in section 408(a)(7)(C)(iii). ”(b) PUBLIC AVAILABILITY OF STATE PLAN SUMMARY.\u2014The State shall make available to the public a summary of any plan submitted by the State under this section. ”SEC. 403. GRANTS TO STATES. ”(a) GRANTS.\u2014 42 USC 603. 110 STAT. 2116 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(1) FAMILY ASSISTANCE GRANT.\u2014 ”(A) IN GENERAL.\u2014Each eligible State shall be entitled to receive from the Secretary, for each of fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002, a grant in an amount equal to the State family assistance grant. ”(B) STATE FAMILY ASSISTANCE GRANT DEFINED.\u2014As used in this part, the term ‘State family assistance grant’ means the greatest of\u2014 ”(i) 1\u20443 of the total amount required to be paid to the State under former section 403 (as in effect on September 30, 1995) for fiscal years 1992, 1993, and 1994 (other than with respect to amounts expended by the State for child care under subsection (g) or (i) of former section 402 (as so in effect)); ”(ii)(I) the total amount required to be paid to the State under former section 403 for fiscal year 1994 (other than with respect to amounts expended by the State for child care under subsection (g) or (i) of former section 402 (as so in effect)); plus ”(II) an amount equal to 85 percent of the amount (if any) by which the total amount required to be paid to the State under former section 403(a)(5) for emergency assistance for fiscal year 1995 exceeds the total amount required to be paid to the State under former section 403(a)(5) for fiscal year 1994, if, during fiscal year 1994 or 1995, the Secretary approved under former section 402 an amendment to the former State plan with respect to the provision of emergency assist- ance; or ”(iii) 4\u20443 of the total amount required to be paid to the State under former section 403 (as in effect on September 30, 1995) for the 1st 3 quarters of fiscal year 1995 (other than with respect to amounts expended by the State under the State plan approved under part F (as so in effect) or for child care under subsection (g) or (i) of former section 402 (as so in effect)), plus the total amount required to be paid to the State for fiscal year 1995 under former section 403(l) (as so in effect). ”(C) TOTAL AMOUNT REQUIRED TO BE PAID TO THE STATE UNDER FORMER SECTION 403 DEFINED.\u2014As used in this part, the term ‘total amount required to be paid to the State under former section 403’ means, with respect to a fiscal year\u2014 ”(i) in the case of a State to which section 1108 does not apply, the sum of\u2014 ”(I) the Federal share of maintenance assist- ance expenditures for the fiscal year, before reduc- tion pursuant to subparagraph (B) or (C) of section 403(b)(2) (as in effect on September 30, 1995), as reported by the State on ACF Form 231; ”(II) the Federal share of administrative expenditures (including administrative expendi- tures for the development of management informa- tion systems) for the fiscal year, as reported by the State on ACF Form 231; 110 STAT. 2117PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(III) the Federal share of emergency assist- ance expenditures for the fiscal year, as reported by the State on ACF Form 231; ”(IV) the Federal share of expenditures for the fiscal year with respect to child care pursuant to subsections (g) and (i) of former section 402 (as in effect on September 30, 1995), as reported by the State on ACF Form 231; and ”(V) the Federal obligations made to the State under section 403 for the fiscal year with respect to the State program operated under part F (as in effect on September 30, 1995), as determined by the Secretary, including additional obligations or reductions in obligations made after the close of the fiscal year; and ”(ii) in the case of a State to which section 1108 applies, the lesser of\u2014 ”(I) the sum described in clause (i); or ”(II) the total amount certified by the Sec- retary under former section 403 (as in effect during the fiscal year) with respect to the territory. ”(D) INFORMATION TO BE USED IN DETERMINING AMOUNTS.\u2014 ”(i) FOR FISCAL YEARS 1992 AND 1993.\u2014 ”(I) In determining the amounts described in subclauses (I) through (IV) of subparagraph (C)(i) for any State for each of fiscal years 1992 and 1993, the Secretary shall use information available as of April 28, 1995. ”(II) In determining the amount described in subparagraph (C)(i)(V) for any State for each of fiscal years 1992 and 1993, the Secretary shall use information available as of January 6, 1995. ”(ii) FOR FISCAL YEAR 1994.\u2014In determining the amounts described in subparagraph (C)(i) for any State for fiscal year 1994, the Secretary shall use information available as of April 28, 1995. ”(iii) FOR FISCAL YEAR 1995.\u2014 ”(I) In determining the amount described in subparagraph (B)(ii)(II) for any State for fiscal year 1995, the Secretary shall use the information which was reported by the States and estimates made by the States with respect to emergency assistance expenditures and was available as of August 11, 1995. ”(II) In determining the amounts described in subclauses (I) through (III) of subparagraph (C)(i) for any State for fiscal year 1995, the Secretary shall use information available as of October 2, 1995. ”(III) In determining the amount described in subparagraph (C)(i)(IV) for any State for fiscal year 1995, the Secretary shall use information available as of February 28, 1996. ”(IV) In determining the amount described in subparagraph (C)(i)(V) for any State for fiscal year 110 STAT. 2118 PUBLIC LAW 104 193\u2014AUG. 22, 1996 1995, the Secretary shall use information available as of October 5, 1995. ”(E) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002 such sums as are necessary for grants under this paragraph. ”(2) BONUS TO REWARD DECREASE IN ILLEGITIMACY.\u2014 ”(A) IN GENERAL.\u2014Each eligible State shall be entitled to receive from the Secretary a grant for each bonus year for which the State demonstrates a net decrease in out- of-wedlock births. ”(B) AMOUNT OF GRANT.\u2014 ”(i) IF 5 ELIGIBLE STATES.\u2014If there are 5 eligible States for a bonus year, the amount of the grant shall be $20,000,000. ”(ii) IF FEWER THAN 5 ELIGIBLE STATES.\u2014If there are fewer than 5 eligible States for a bonus year, the amount of the grant shall be $25,000,000. ”(C) DEFINITIONS.\u2014As used in this paragraph: ”(i) ELIGIBLE STATE.\u2014 ”(I) IN GENERAL.\u2014The term ‘eligible State’ means a State that the Secretary determines meets the following requirements: ”(aa) The State demonstrates that the number of out-of-wedlock births that occurred in the State during the most recent 2-year period for which such information is available decreased as compared to the number of such births that occurred during the previous 2- year period, and the magnitude of the decrease for the State for the period is not exceeded by the magnitude of the corresponding decrease for 5 or more other States for the period. ”(bb) The rate of induced pregnancy termi- nations in the State for the fiscal year is less than the rate of induced pregnancy termi- nations in the State for fiscal year 1995. ”(II) DISREGARD OF CHANGES IN DATA DUE TO CHANGED REPORTING METHODS.\u2014In making the determination required by subclause (I), the Sec- retary shall disregard\u2014 ”(aa) any difference between the number of out-of-wedlock births that occurred in a State for a fiscal year and the number of out- of-wedlock births that occurred in a State for fiscal year 1995 which is attributable to a change in State methods of reporting data used to calculate the number of out-of-wedlock births; and ”(bb) any difference between the rate of induced pregnancy terminations in a State for a fiscal year and such rate for fiscal year 1995 which is attributable to a change in State methods of reporting data used to calculate such rate. 110 STAT. 2119PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) BONUS YEAR.\u2014The term ‘bonus year’ means fiscal years 1999, 2000, 2001, and 2002. ”(D) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1999 through 2002, such sums as are necessary for grants under this paragraph. ”(3) SUPPLEMENTAL GRANT FOR POPULATION INCREASES IN CERTAIN STATES.\u2014 ”(A) IN GENERAL.\u2014Each qualifying State shall, subject to subparagraph (F), be entitled to receive from the Sec- retary\u2014 ”(i) for fiscal year 1998 a grant in an amount equal to 2.5 percent of the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and ”(ii) for each of fiscal years 1999, 2000, and 2001, a grant in an amount equal to the sum of\u2014 ”(I) the amount (if any) required to be paid to the State under this paragraph for the imme- diately preceding fiscal year; and ”(II) 2.5 percent of the sum of\u2014 ”(aa) the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and ”(bb) the amount (if any) required to be paid to the State under this paragraph for the fiscal year preceding the fiscal year for which the grant is to be made. ”(B) PRESERVATION OF GRANT WITHOUT INCREASES FOR STATES FAILING TO REMAIN QUALIFYING STATES.\u2014Each State that is not a qualifying State for a fiscal year specified in subparagraph (A)(ii) but was a qualifying State for a prior fiscal year shall, subject to subparagraph (F), be entitled to receive from the Secretary for the specified fiscal year, a grant in an amount equal to the amount required to be paid to the State under this paragraph for the most recent fiscal year for which the State was a qualifying State. ”(C) QUALIFYING STATE.\u2014 ”(i) IN GENERAL.\u2014For purposes of this paragraph, a State is a qualifying State for a fiscal year if\u2014 ”(I) the level of welfare spending per poor per- son by the State for the immediately preceding fiscal year is less than the national average level of State welfare spending per poor person for such preceding fiscal year; and ”(II) the population growth rate of the State (as determined by the Bureau of the Census) for the most recent fiscal year for which information is available exceeds the average population growth rate for all States (as so determined) for such most recent fiscal year. ”(ii) STATE MUST QUALIFY IN FISCAL YEAR 1997.\u2014 Notwithstanding clause (i), a State shall not be a qualifying State for any fiscal year after 1998 by reason 110 STAT. 2120 PUBLIC LAW 104 193\u2014AUG. 22, 1996 of clause (i) if the State is not a qualifying State for fiscal year 1998 by reason of clause (i). ”(iii) CERTAIN STATES DEEMED QUALIFYING STATES.\u2014For purposes of this paragraph, a State is deemed to be a qualifying State for fiscal years 1998, 1999, 2000, and 2001 if\u2014 ”(I) the level of welfare spending per poor per- son by the State for fiscal year 1994 is less than 35 percent of the national average level of State welfare spending per poor person for fiscal year 1994; or ”(II) the population of the State increased by more than 10 percent from April 1, 1990 to July 1, 1994, according to the population estimates in publication CB94 204 of the Bureau of the Census. ”(D) DEFINITIONS.\u2014As used in this paragraph: ”(i) LEVEL OF WELFARE SPENDING PER POOR PER- SON.\u2014The term ‘level of State welfare spending per poor person’ means, with respect to a State and a fiscal year\u2014 ”(I) the sum of\u2014 ”(aa) the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and ”(bb) the amount (if any) paid to the State under this paragraph for the immediately preceding fiscal year; divided by ”(II) the number of individuals, according to the 1990 decennial census, who were residents of the State and whose income was below the poverty line. ”(ii) NATIONAL AVERAGE LEVEL OF STATE WELFARE SPENDING PER POOR PERSON.\u2014The term ‘national aver- age level of State welfare spending per poor person’ means, with respect to a fiscal year, an amount equal to\u2014 ”(I) the total amount required to be paid to the States under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; divided by ”(II) the number of individuals, according to the 1990 decennial census, who were residents of any State and whose income was below the poverty line. ”(iii) STATE.\u2014The term ‘State’ means each of the 50 States of the United States and the District of Columbia. ”(E) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal years 1998, 1999, 2000, and 2001 such sums as are necessary for grants under this paragraph, in a total amount not to exceed $800,000,000. ”(F) GRANTS REDUCED PRO RATA IF INSUFFICIENT APPRO- PRIATIONS.\u2014If the amount appropriated pursuant to this paragraph for a fiscal year is less than the total amount 110 STAT. 2121PUBLIC LAW 104 193\u2014AUG. 22, 1996 of payments otherwise required to be made under this paragraph for the fiscal year, then the amount otherwise payable to any State for the fiscal year under this para- graph shall be reduced by a percentage equal to the amount so appropriated divided by such total amount. ”(G) BUDGET SCORING.\u2014Notwithstanding section 257(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985, the baseline shall assume that no grant shall be made under this paragraph after fiscal year 2001. ”(4) BONUS TO REWARD HIGH PERFORMANCE STATES.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall make a grant pursuant to this paragraph to each State for each bonus year for which the State is a high performing State. ”(B) AMOUNT OF GRANT.\u2014 ”(i) IN GENERAL.\u2014Subject to clause (ii) of this subparagraph, the Secretary shall determine the amount of the grant payable under this paragraph to a high performing State for a bonus year, which shall be based on the score assigned to the State under subparagraph (D)(i) for the fiscal year that immediately precedes the bonus year. ”(ii) LIMITATION.\u2014The amount payable to a State under this paragraph for a bonus year shall not exceed 5 percent of the State family assistance grant. ”(C) FORMULA FOR MEASURING STATE PERFORMANCE.\u2014 Not later than 1 year after the date of the enactment of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996, the Secretary, in consultation with the National Governors’ Association and the American Pub- lic Welfare Association, shall develop a formula for measur- ing State performance in operating the State program funded under this part so as to achieve the goals set forth in section 401(a). ”(D) SCORING OF STATE PERFORMANCE; SETTING OF PERFORMANCE THRESHOLDS.\u2014For each bonus year, the Sec- retary shall\u2014 ”(i) use the formula developed under subparagraph (C) to assign a score to each eligible State for the fiscal year that immediately precedes the bonus year; and ”(ii) prescribe a performance threshold in such a manner so as to ensure that\u2014 ”(I) the average annual total amount of grants to be made under this paragraph for each bonus year equals $200,000,000; and ”(II) the total amount of grants to be made under this paragraph for all bonus years equals $1,000,000,000. ”(E) DEFINITIONS.\u2014As used in this paragraph: ”(i) BONUS YEAR.\u2014The term ‘bonus year’ means fiscal years 1999, 2000, 2001, 2002, and 2003. ”(ii) HIGH PERFORMING STATE.\u2014The term ‘high performing State’ means, with respect to a bonus year, an eligible State whose score assigned pursuant to subparagraph (D)(i) for the fiscal year immediately preceding the bonus year equals or exceeds the 110 STAT. 2122 PUBLIC LAW 104 193\u2014AUG. 22, 1996 performance threshold prescribed under subparagraph (D)(ii) for such preceding fiscal year. ”(F) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1999 through 2003 $1,000,000,000 for grants under this paragraph. ”(b) CONTINGENCY FUND.\u2014 ”(1) ESTABLISHMENT.\u2014There is hereby established in the Treasury of the United States a fund which shall be known as the ‘Contingency Fund for State Welfare Programs’ (in this section referred to as the ‘Fund’). ”(2) DEPOSITS INTO FUND.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1997, 1998, 1999, 2000, and 2001 such sums as are necessary for payment to the Fund in a total amount not to exceed $2,000,000,000. ”(3) GRANTS.\u2014 ”(A) PROVISIONAL PAYMENTS.\u2014If an eligible State sub- mits to the Secretary a request for funds under this para- graph during an eligible month, the Secretary shall, subject to this paragraph, pay to the State, from amounts appro- priated pursuant to paragraph (2), an amount equal to the amount of funds so requested. ”(B) PAYMENT PRIORITY.\u2014The Secretary shall make payments under subparagraph (A) in the order in which the Secretary receives requests for such payments. ”(C) LIMITATIONS.\u2014 ”(i) MONTHLY PAYMENT TO A STATE.\u2014The total amount paid to a single State under subparagraph (A) during a month shall not exceed 1\u204412 of 20 percent of the State family assistance grant. ”(ii) PAYMENTS TO ALL STATES.\u2014The total amount paid to all States under subparagraph (A) during fiscal years 1997 through 2001 shall not exceed the total amount appropriated pursuant to paragraph (2). ”(4) ANNUAL RECONCILIATION.\u2014Notwithstanding paragraph (3), at the end of each fiscal year, each State shall remit to the Secretary an amount equal to the amount (if any) by which the total amount paid to the State under paragraph (3) during the fiscal year exceeds\u2014 ”(A) the Federal medical assistance percentage for the State for the fiscal year (as defined in section 1905(b), as in effect on September 30, 1995) of the amount (if any) by which\u2014 ”(i) if the Secretary makes a payment to the State under section 418(a)(2) in the fiscal year\u2014 ”(I) the expenditures under the State program funded under this part for the fiscal year, exclud- ing any amounts made available by the Federal Government (except amounts paid to the State under paragraph (3) during the fiscal year that have been expended by the State) and any amounts expended by the State during the fiscal year for child care; exceeds ”(II) historic State expenditures (as defined in section 409(a)(7)(B)(iii)), excluding the expendi- tures by the State for child care under subsection 110 STAT. 2123PUBLIC LAW 104 193\u2014AUG. 22, 1996 (g) or (i) of section 402 (as in effect during fiscal year 1994) for fiscal year 1994 minus any Federal payment with respect to such child care expendi- tures; or ”(ii) if the Secretary does not make a payment to the State under section 418(a)(2) in the fiscal year\u2014 ”(I) the expenditures under the State program funded under this part for the fiscal year (exclud- ing any amounts made available by the Federal Government, except amounts paid to the State under paragraph (3) during the fiscal year that have been expended by the State); exceeds ”(II) historic State expenditures (as defined in section 409(a)(7)(B)(iii)); multiplied by ”(B) 1\u204412 times the number of months during the fiscal year for which the Secretary makes a payment to the State under this subsection. ”(5) ELIGIBLE MONTH.\u2014As used in paragraph (3)(A), the term ‘eligible month’ means, with respect to a State, a month in the 2-month period that begins with any month for which the State is a needy State. ”(6) NEEDY STATE.\u2014For purposes of paragraph (5), a State is a needy State for a month if\u2014 ”(A) the average rate of\u2014 ”(i) total unemployment in such State (seasonally adjusted) for the period consisting of the most recent 3 months for which data for all States are published equals or exceeds 6.5 percent; and ”(ii) total unemployment in such State (seasonally adjusted) for the 3-month period equals or exceeds 110 percent of such average rate for either (or both) of the corresponding 3-month periods ending in the 2 preceding calendar years; or ”(B) as determined by the Secretary of Agriculture (in the discretion of the Secretary of Agriculture), the monthly average number of individuals (as of the last day of each month) participating in the food stamp program in the State in the then most recently concluded 3-month period for which data are available exceeds by not less than 10 percent the lesser of\u2014 ”(i) the monthly average number of individuals (as of the last day of each month) in the State that would have participated in the food stamp program in the corresponding 3-month period in fiscal year 1994 if the amendments made by titles IV and VIII of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996 had been in effect throughout fiscal year 1994; or ”(ii) the monthly average number of individuals (as of the last day of each month) in the State that would have participated in the food stamp program in the corresponding 3-month period in fiscal year 1995 if the amendments made by titles IV and VIII of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996 had been in effect throughout fiscal year 1995. ”(7) OTHER TERMS DEFINED.\u2014As used in this subsection: 110 STAT. 2124 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) STATE.\u2014The term ‘State’ means each of the 50 States of the United States and the District of Columbia. ”(B) SECRETARY.\u2014The term ‘Secretary’ means the Sec- retary of the Treasury. ”(8) ANNUAL REPORTS.\u2014The Secretary shall annually report to the Congress on the status of the Fund. ”SEC. 404. USE OF GRANTS. ”(a) GENERAL RULES.\u2014Subject to this part, a State to which a grant is made under section 403 may use the grant\u2014 ”(1) in any manner that is reasonably calculated to accom- plish the purpose of this part, including to provide low income households with assistance in meeting home heating and cool- ing costs; or ”(2) in any manner that the State was authorized to use amounts received under part A or F, as such parts were in effect on September 30, 1995. ”(b) LIMITATION ON USE OF GRANT FOR ADMINISTRATIVE PURPOSES.\u2014 ”(1) LIMITATION.\u2014A State to which a grant is made under section 403 shall not expend more than 15 percent of the grant for administrative purposes. ”(2) EXCEPTION.\u2014Paragraph (1) shall not apply to the use of a grant for information technology and computerization needed for tracking or monitoring required by or under this part. ”(c) AUTHORITY TO TREAT INTERSTATE IMMIGRANTS UNDER RULES OF FORMER STATE.\u2014A State operating a program funded under this part may apply to a family the rules (including benefit amounts) of the program funded under this part of another State if the family has moved to the State from the other State and has resided in the State for less than 12 months. ”(d) AUTHORITY TO USE PORTION OF GRANT FOR OTHER PUR- POSES.\u2014 ”(1) IN GENERAL.\u2014A State may use not more than 30 percent of the amount of any grant made to the State under section 403(a) for a fiscal year to carry out a State program pursuant to any or all of the following provisions of law: ”(A) Title XX of this Act. ”(B) The Child Care and Development Block Grant Act of 1990. ”(2) LIMITATION ON AMOUNT TRANSFERABLE TO TITLE XX PROGRAMS.\u2014Notwithstanding paragraph (1), not more than 1\u20443 of the total amount paid to a State under this part for a fiscal year that is used to carry out State programs pursuant to provisions of law specified in paragraph (1) may be used to carry out State programs pursuant to title XX. ”(3) APPLICABLE RULES.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B) of this paragraph, any amount paid to a State under this part that is used to carry out a State program pursuant to a provision of law specified in paragraph (1) shall not be subject to the requirements of this part, but shall be subject to the requirements that apply to Federal funds provided directly under the provision of law to carry out the program, and the expenditure of any amount so used 42 USC 604. 110 STAT. 2125PUBLIC LAW 104 193\u2014AUG. 22, 1996 shall not be considered to be an expenditure under this part. ”(B) EXCEPTION RELATING TO TITLE XX PROGRAMS.\u2014 All amounts paid to a State under this part that are used to carry out State programs pursuant to title XX shall be used only for programs and services to children or their families whose income is less than 200 percent of the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Rec- onciliation Act of 1981) applicable to a family of the size involved. ”(e) AUTHORITY TO RESERVE CERTAIN AMOUNTS FOR ASSIST- ANCE.\u2014A State may reserve amounts paid to the State under this part for any fiscal year for the purpose of providing, without fiscal year limitation, assistance under the State program funded under this part. ”(f) AUTHORITY TO OPERATE EMPLOYMENT PLACEMENT PROGRAM.\u2014A State to which a grant is made under section 403 may use the grant to make payments (or provide job placement vouchers) to State-approved public and private job placement agen- cies that provide employment placement services to individuals who receive assistance under the State program funded under this part. ”(g) IMPLEMENTATION OF ELECTRONIC BENEFIT TRANSFER SYSTEM.\u2014A State to which a grant is made under section 403 is encouraged to implement an electronic benefit transfer system for providing assistance under the State program funded under this part, and may use the grant for such purpose. ”(h) USE OF FUNDS FOR INDIVIDUAL DEVELOPMENT ACCOUNTS.\u2014 ”(1) IN GENERAL.\u2014A State to which a grant is made under section 403 may use the grant to carry out a program to fund individual development accounts (as defined in paragraph (2)) established by individuals eligible for assistance under the State program funded under this part. ”(2) INDIVIDUAL DEVELOPMENT ACCOUNTS.\u2014 ”(A) ESTABLISHMENT.\u2014Under a State program carried out under paragraph (1), an individual development account may be established by or on behalf of an individual eligible for assistance under the State program operated under this part for the purpose of enabling the individual to accumulate funds for a qualified purpose described in subparagraph (B). ”(B) QUALIFIED PURPOSE.\u2014A qualified purpose described in this subparagraph is 1 or more of the following, as provided by the qualified entity providing assistance to the individual under this subsection: ”(i) POSTSECONDARY EDUCATIONAL EXPENSES.\u2014 Postsecondary educational expenses paid from an individual development account directly to an eligible educational institution. ”(ii) FIRST HOME PURCHASE.\u2014Qualified acquisition costs with respect to a qualified principal residence for a qualified first-time homebuyer, if paid from an individual development account directly to the persons to whom the amounts are due. 110 STAT. 2126 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(iii) BUSINESS CAPITALIZATION.\u2014Amounts paid from an individual development account directly to a business capitalization account which is established in a federally insured financial institution and is restricted to use solely for qualified business capitaliza- tion expenses. ”(C) CONTRIBUTIONS TO BE FROM EARNED INCOME.\u2014 An individual may only contribute to an individual develop- ment account such amounts as are derived from earned income, as defined in section 911(d)(2) of the Internal Reve- nue Code of 1986. ”(D) WITHDRAWAL OF FUNDS.\u2014The Secretary shall establish such regulations as may be necessary to ensure that funds held in an individual development account are not withdrawn except for 1 or more of the qualified pur- poses described in subparagraph (B). ”(3) REQUIREMENTS.\u2014 ”(A) IN GENERAL.\u2014An individual development account established under this subsection shall be a trust created or organized in the United States and funded through periodic contributions by the establishing individual and matched by or through a qualified entity for a qualified purpose (as described in paragraph (2)(B)). ”(B) QUALIFIED ENTITY.\u2014As used in this subsection, the term ‘qualified entity’ means\u2014 ”(i) a not-for-profit organization described in sec- tion 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code; or ”(ii) a State or local government agency acting in cooperation with an organization described in clause (i). ”(4) NO REDUCTION IN BENEFITS.\u2014Notwithstanding any other provision of Federal law (other than the Internal Revenue Code of 1986) that requires consideration of 1 or more financial circumstances of an individual, for the purpose of determining eligibility to receive, or the amount of, any assistance or benefit authorized by such law to be provided to or for the benefit of such individual, funds (including interest accruing) in an individual development account under this subsection shall be disregarded for such purpose with respect to any period during which such individual maintains or makes contributions into such an account. ”(5) DEFINITIONS.\u2014As used in this subsection\u2014 ”(A) ELIGIBLE EDUCATIONAL INSTITUTION.\u2014The term ‘eligible educational institution’ means the following: ”(i) An institution described in section 481(a)(1) or 1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1088(a)(1) or 1141(a)), as such sections are in effect on the date of the enactment of this subsection. ”(ii) An area vocational education school (as defined in subparagraph (C) or (D) of section 521(4) of the Carl D. Perkins Vocational and Applied Tech- nology Education Act (20 U.S.C. 2471(4))) which is in any State (as defined in section 521(33) of such Act), as such sections are in effect on the date of the enactment of this subsection. Regulations. 110 STAT. 2127PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) POST-SECONDARY EDUCATIONAL EXPENSES.\u2014The term ‘post-secondary educational expenses’ means\u2014 ”(i) tuition and fees required for the enrollment or attendance of a student at an eligible educational institution, and ”(ii) fees, books, supplies, and equipment required for courses of instruction at an eligible educational institution. ”(C) QUALIFIED ACQUISITION COSTS.\u2014The term ‘quali- fied acquisition costs’ means the costs of acquiring, con- structing, or reconstructing a residence. The term includes any usual or reasonable settlement, financing, or other closing costs. ”(D) QUALIFIED BUSINESS.\u2014The term ‘qualified busi- ness’ means any business that does not contravene any law or public policy (as determined by the Secretary). ”(E) QUALIFIED BUSINESS CAPITALIZATION EXPENSES.\u2014 The term ‘qualified business capitalization expenses’ means qualified expenditures for the capitalization of a qualified business pursuant to a qualified plan. ”(F) QUALIFIED EXPENDITURES.\u2014The term ‘qualified expenditures’ means expenditures included in a qualified plan, including capital, plant, equipment, working capital, and inventory expenses. ”(G) QUALIFIED FIRST-TIME HOMEBUYER.\u2014 ”(i) IN GENERAL.\u2014The term ‘qualified first-time homebuyer’ means a taxpayer (and, if married, the taxpayer’s spouse) who has no present ownership interest in a principal residence during the 3-year period ending on the date of acquisition of the principal residence to which this subsection applies. ”(ii) DATE OF ACQUISITION.\u2014The term ‘date of acquisition’ means the date on which a binding contract to acquire, construct, or reconstruct the principal resi- dence to which this subparagraph applies is entered into. ”(H) QUALIFIED PLAN.\u2014The term ‘qualified plan’ means a business plan which\u2014 ”(i) is approved by a financial institution, or by a nonprofit loan fund having demonstrated fiduciary integrity, ”(ii) includes a description of services or goods to be sold, a marketing plan, and projected financial statements, and ”(iii) may require the eligible individual to obtain the assistance of an experienced entrepreneurial advisor. ”(I) QUALIFIED PRINCIPAL RESIDENCE.\u2014The term ‘quali- fied principal residence’ means a principal residence (within the meaning of section 1034 of the Internal Revenue Code of 1986), the qualified acquisition costs of which do not exceed 100 percent of the average area purchase price applicable to such residence (determined in accordance with paragraphs (2) and (3) of section 143(e) of such Code). ”(i) SANCTION WELFARE RECIPIENTS FOR FAILING TO ENSURE THAT MINOR DEPENDENT CHILDREN ATTEND SCHOOL.\u2014A State to which a grant is made under section 403 shall not be prohibited 110 STAT. 2128 PUBLIC LAW 104 193\u2014AUG. 22, 1996 from sanctioning a family that includes an adult who has received assistance under any State program funded under this part attrib- utable to funds provided by the Federal Government or under the food stamp program, as defined in section 3(h) of the Food Stamp Act of 1977, if such adult fails to ensure that the minor dependent children of such adult attend school as required by the law of the State in which the minor children reside. ”(j) REQUIREMENT FOR HIGH SCHOOL DIPLOMA OR EQUIVA- LENT.\u2014A State to which a grant is made under section 403 shall not be prohibited from sanctioning a family that includes an adult who is older than age 20 and younger than age 51 and who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government or under the food stamp program, as defined in section 3(h) of the Food Stamp Act of 1977, if such adult does not have, or is not working toward attaining, a secondary school diploma or its recognized equivalent unless such adult has been determined in the judgment of medical, psychiatric, or other appropriate profes- sionals to lack the requisite capacity to complete successfully a course of study that would lead to a secondary school diploma or its recognized equivalent. ”SEC. 405. ADMINISTRATIVE PROVISIONS. ”(a) QUARTERLY.\u2014The Secretary shall pay each grant payable to a State under section 403 in quarterly installments, subject to this section. ”(b) NOTIFICATION.\u2014Not later than 3 months before the pay- ment of any such quarterly installment to a State, the Secretary shall notify the State of the amount of any reduction determined under section 412(a)(1)(B) with respect to the State. ”(c) COMPUTATION AND CERTIFICATION OF PAYMENTS TO STATES.\u2014 ”(1) COMPUTATION.\u2014The Secretary shall estimate the amount to be paid to each eligible State for each quarter under this part, such estimate to be based on a report filed by the State containing an estimate by the State of the total sum to be expended by the State in the quarter under the State program funded under this part and such other informa- tion as the Secretary may find necessary. ”(2) CERTIFICATION.\u2014The Secretary of Health and Human Services shall certify to the Secretary of the Treasury the amount estimated under paragraph (1) with respect to a State, reduced or increased to the extent of any overpayment or under- payment which the Secretary of Health and Human Services determines was made under this part to the State for any prior quarter and with respect to which adjustment has not been made under this paragraph. ”(d) PAYMENT METHOD.\u2014Upon receipt of a certification under subsection (c)(2) with respect to a State, the Secretary of the Treas- ury shall, through the Fiscal Service of the Department of the Treasury and before audit or settlement by the General Accounting Office, pay to the State, at the time or times fixed by the Secretary of Health and Human Services, the amount so certified. ”SEC. 406. FEDERAL LOANS FOR STATE WELFARE PROGRAMS. ”(a) LOAN AUTHORITY.\u2014 42 USC 606. 42 USC 605. 110 STAT. 2129PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(1) IN GENERAL.\u2014The Secretary shall make loans to any loan-eligible State, for a period to maturity of not more than 3 years. ”(2) LOAN-ELIGIBLE STATE.\u2014As used in paragraph (1), the term ‘loan-eligible State’ means a State against which a penalty has not been imposed under section 409(a)(1). ”(b) RATE OF INTEREST.\u2014The Secretary shall charge and collect interest on any loan made under this section at a rate equal to the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the period to maturity of the loan. ”(c) USE OF LOAN.\u2014A State shall use a loan made to the State under this section only for any purpose for which grant amounts received by the State under section 403(a) may be used, including\u2014 ”(1) welfare anti-fraud activities; and ”(2) the provision of assistance under the State program to Indian families that have moved from the service area of an Indian tribe with a tribal family assistance plan approved under section 412. ”(d) LIMITATION ON TOTAL AMOUNT OF LOANS TO A STATE.\u2014 The cumulative dollar amount of all loans made to a State under this section during fiscal years 1997 through 2002 shall not exceed 10 percent of the State family assistance grant. ”(e) LIMITATION ON TOTAL AMOUNT OF OUTSTANDING LOANS.\u2014 The total dollar amount of loans outstanding under this section may not exceed $1,700,000,000. ”(f) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appro- priated such sums as may be necessary for the cost of loans under this section. ”SEC. 407. MANDATORY WORK REQUIREMENTS. ”(a) PARTICIPATION RATE REQUIREMENTS.\u2014 ”(1) ALL FAMILIES.\u2014A State to which a grant is made under section 403 for a fiscal year shall achieve the minimum participation rate specified in the following table for the fiscal year with respect to all families receiving assistance under the State program funded under this part: The minimum participation ”If the fiscal year is: rate is: 1997 ……………………………………………………………………….. 25 1998 ……………………………………………………………………….. 30 1999 ……………………………………………………………………….. 35 2000 ……………………………………………………………………….. 40 2001 ……………………………………………………………………….. 45 2002 or thereafter …………………………………………………… 50. ”(2) 2-PARENT FAMILIES.\u2014A State to which a grant is made under section 403 for a fiscal year shall achieve the minimum participation rate specified in the following table for the fiscal year with respect to 2-parent families receiving assistance under the State program funded under this part: The minimum participation ”If the fiscal year is: rate is: 1997 ……………………………………………………………………….. 75 1998 ……………………………………………………………………….. 75 1999 or thereafter …………………………………………………… 90. 42 USC 607. 110 STAT. 2130 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(b) CALCULATION OF PARTICIPATION RATES.\u2014 ”(1) ALL FAMILIES.\u2014 ”(A) AVERAGE MONTHLY RATE.\u2014For purposes of sub- section (a)(1), the participation rate for all families of a State for a fiscal year is the average of the participation rates for all families of the State for each month in the fiscal year. ”(B) MONTHLY PARTICIPATION RATES.\u2014The participa- tion rate of a State for all families of the State for a month, expressed as a percentage, is\u2014 ”(i) the number of families receiving assistance under the State program funded under this part that include an adult or a minor child head of household who is engaged in work for the month; divided by ”(ii) the amount by which\u2014 ”(I) the number of families receiving such assistance during the month that include an adult or a minor child head of household receiving such assistance; exceeds ”(II) the number of families receiving such assistance that are subject in such month to a penalty described in subsection (e)(1) but have not been subject to such penalty for more than 3 months within the preceding 12-month period (whether or not consecutive). ”(2) 2-PARENT FAMILIES.\u2014 ”(A) AVERAGE MONTHLY RATE.\u2014For purposes of sub- section (a)(2), the participation rate for 2-parent families of a State for a fiscal year is the average of the participation rates for 2-parent families of the State for each month in the fiscal year. ”(B) MONTHLY PARTICIPATION RATES.\u2014The participa- tion rate of a State for 2-parent families of the State for a month shall be calculated by use of the formula set forth in paragraph (1)(B), except that in the formula the term ‘number of 2-parent families’ shall be substituted for the term ‘number of families’ each place such latter term appears. ”(3) PRO RATA REDUCTION OF PARTICIPATION RATE DUE TO CASELOAD REDUCTIONS NOT REQUIRED BY FEDERAL LAW.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall prescribe regu- lations for reducing the minimum participation rate other- wise required by this section for a fiscal year by the number of percentage points equal to the number of percentage points (if any) by which\u2014 ”(i) the average monthly number of families receiv- ing assistance during the immediately preceding fiscal year under the State program funded under this part is less than ”(ii) the average monthly number of families that received aid under the State plan approved under part A (as in effect on September 30, 1995) during fiscal year 1995. The minimum participation rate shall not be reduced to the extent that the Secretary determines that the reduction in the number of families receiving such assistance is required by Federal law. Regulations. 110 STAT. 2131PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) ELIGIBILITY CHANGES NOT COUNTED.\u2014The regula- tions required by subparagraph (A) shall not take into account families that are diverted from a State program funded under this part as a result of differences in eligi- bility criteria under a State program funded under this part and eligibility criteria under the State program oper- ated under the State plan approved under part A (as such plan and such part were in effect on September 30, 1995). Such regulations shall place the burden on the Secretary to prove that such families were diverted as a direct result of differences in such eligibility criteria. ”(4) STATE OPTION TO INCLUDE INDIVIDUALS RECEIVING ASSISTANCE UNDER A TRIBAL FAMILY ASSISTANCE PLAN.\u2014For purposes of paragraphs (1)(B) and (2)(B), a State may, at its option, include families in the State that are receiving assist- ance under a tribal family assistance plan approved under section 412. ”(5) STATE OPTION FOR PARTICIPATION REQUIREMENT EXEMP- TIONS.\u2014For any fiscal year, a State may, at its option, not require an individual who is a single custodial parent caring for a child who has not attained 12 months of age to engage in work, and may disregard such an individual in determining the participation rates under subsection (a) for not more than 12 months. ”(c) ENGAGED IN WORK.\u2014 ”(1) GENERAL RULES.\u2014 ”(A) ALL FAMILIES.\u2014For purposes of subsection (b)(1)(B)(i), a recipient is engaged in work for a month in a fiscal year if the recipient is participating in work activities for at least the minimum average number of hours per week specified in the following table during the month, not fewer than 20 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of subsection (d), subject to this subsection: The minimum ”If the month is average number of in fiscal year: hours per week is: 1997 ……………………………………………………………………. 20 1998 ……………………………………………………………………. 20 1999 ……………………………………………………………………. 25 2000 or thereafter ………………………………………………… 30. ”(B) 2-PARENT FAMILIES.\u2014For purposes of subsection (b)(2)(B), an individual is engaged in work for a month in a fiscal year if\u2014 ”(i) the individual is making progress in work activities for at least 35 hours per week during the month, not fewer than 30 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of subsection (d), subject to this subsection; and ”(ii) if the family of the individual receives feder- ally-funded child care assistance and an adult in the family is not disabled or caring for a severely disabled child, the individual’s spouse is making progress in work activities during the month, not fewer than 20 hours per week of which are attributable to an activity 110 STAT. 2132 PUBLIC LAW 104 193\u2014AUG. 22, 1996 described in paragraph (1), (2), (3), (4), (5), or (7) of subsection (d). ”(2) LIMITATIONS AND SPECIAL RULES.\u2014 ”(A) NUMBER OF WEEKS FOR WHICH JOB SEARCH COUNTS AS WORK.\u2014 ”(i) LIMITATION.\u2014Notwithstanding paragraph (1) of this subsection, an individual shall not be considered to be engaged in work by virtue of participation in an activity described in subsection (d)(6) of a State program funded under this part, after the individual has participated in such an activity for 6 weeks (or, if the unemployment rate of the State is at least 50 percent greater than the unemployment rate of the United States, 12 weeks), or if the participation is for a week that immediately follows 4 consecutive weeks of such participation. ”(ii) LIMITED AUTHORITY TO COUNT LESS THAN FULL WEEK OF PARTICIPATION.\u2014For purposes of clause (i) of this subparagraph, on not more than 1 occasion per individual, the State shall consider participation of the individual in an activity described in subsection (d)(6) for 3 or 4 days during a week as a week of participation in the activity by the individual. ”(B) SINGLE PARENT WITH CHILD UNDER AGE 6 DEEMED TO BE MEETING WORK PARTICIPATION REQUIREMENTS IF PAR- ENT IS ENGAGED IN WORK FOR 20 HOURS PER WEEK.\u2014For purposes of determining monthly participation rates under subsection (b)(1)(B)(i), a recipient in a 1-parent family who is the parent of a child who has not attained 6 years of age is deemed to be engaged in work for a month if the recipient is engaged in work for an average of at least 20 hours per week during the month. ”(C) TEEN HEAD OF HOUSEHOLD WHO MAINTAINS SATIS- FACTORY SCHOOL ATTENDANCE DEEMED TO BE MEETING WORK PARTICIPATION REQUIREMENTS.\u2014For purposes of determining monthly participation rates under sub- section (b)(1)(B)(i), a recipient who is a single head of household and has not attained 20 years of age is deemed, subject to subparagraph (D) of this paragraph, to be engaged in work for a month in a fiscal year if the recipi- ent\u2014 ”(i) maintains satisfactory attendance at secondary school or the equivalent during the month; or ”(ii) participates in education directly related to employment for at least the minimum average number of hours per week specified in the table set forth in paragraph (1)(A) of this subsection. ”(D) NUMBER OF PERSONS THAT MAY BE TREATED AS ENGAGED IN WORK BY VIRTUE OF PARTICIPATION IN VOCA- TIONAL EDUCATION ACTIVITIES OR BEING A TEEN HEAD OF HOUSEHOLD WHO MAINTAINS SATISFACTORY SCHOOL ATTEND- ANCE.\u2014For purposes of determining monthly participation rates under paragraphs (1)(B)(i) and (2)(B) of subsection (b), not more than 20 percent of individuals in all families and in 2-parent families may be determined to be engaged in work in the State for a month by reason of participation 110 STAT. 2133PUBLIC LAW 104 193\u2014AUG. 22, 1996 in vocational educational training or deemed to be engaged in work by reason of subparagraph (C) of this paragraph. ”(d) WORK ACTIVITIES DEFINED.\u2014As used in this section, the term ‘work activities’ means\u2014 ”(1) unsubsidized employment; ”(2) subsidized private sector employment; ”(3) subsidized public sector employment; ”(4) work experience (including work associated with the refurbishing of publicly assisted housing) if sufficient private sector employment is not available; ”(5) on-the-job training; ”(6) job search and job readiness assistance; ”(7) community service programs; ”(8) vocational educational training (not to exceed 12 months with respect to any individual); ”(9) job skills training directly related to employment; ”(10) education directly related to employment, in the case of a recipient who has not received a high school diploma or a certificate of high school equivalency; ”(11) satisfactory attendance at secondary school or in a course of study leading to a certificate of general equivalence, in the case of a recipient who has not completed secondary school or received such a certificate; and ”(12) the provision of child care services to an individual who is participating in a community service program. ”(e) PENALTIES AGAINST INDIVIDUALS.\u2014 ”(1) IN GENERAL.\u2014Except as provided in paragraph (2), if an individual in a family receiving assistance under the State program funded under this part refuses to engage in work required in accordance with this section, the State shall\u2014 ”(A) reduce the amount of assistance otherwise payable to the family pro rata (or more, at the option of the State) with respect to any period during a month in which the individual so refuses; or ”(B) terminate such assistance, subject to such good cause and other exceptions as the State may establish. ”(2) EXCEPTION.\u2014Notwithstanding paragraph (1), a State may not reduce or terminate assistance under the State pro- gram funded under this part based on a refusal of an individual to work if the individual is a single custodial parent caring for a child who has not attained 6 years of age, and the individual proves that the individual has a demonstrated inabil- ity (as determined by the State) to obtain needed child care, for 1 or more of the following reasons: ”(A) Unavailability of appropriate child care within a reasonable distance from the individual’s home or work site. ”(B) Unavailability or unsuitability of informal child care by a relative or under other arrangements. ”(C) Unavailability of appropriate and affordable for- mal child care arrangements. ”(f) NONDISPLACEMENT IN WORK ACTIVITIES.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2), an adult in a family receiving assistance under a State program funded under this part attributable to funds provided by the Federal 110 STAT. 2134 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Government may fill a vacant employment position in order to engage in a work activity described in subsection (d). ”(2) NO FILLING OF CERTAIN VACANCIES.\u2014No adult in a work activity described in subsection (d) which is funded, in whole or in part, by funds provided by the Federal Government shall be employed or assigned\u2014 ”(A) when any other individual is on layoff from the same or any substantially equivalent job; or ”(B) if the employer has terminated the employment of any regular employee or otherwise caused an involuntary reduction of its workforce in order to fill the vacancy so created with an adult described in paragraph (1). ”(3) GRIEVANCE PROCEDURE.\u2014A State with a program funded under this part shall establish and maintain a grievance procedure for resolving complaints of alleged violations of para- graph (2). ”(4) NO PREEMPTION.\u2014Nothing in this subsection shall pre- empt or supersede any provision of State or local law that provides greater protection for employees from displacement. ”(g) SENSE OF THE CONGRESS.\u2014It is the sense of the Congress that in complying with this section, each State that operates a program funded under this part is encouraged to assign the highest priority to requiring adults in 2-parent families and adults in single- parent families that include older preschool or school-age children to be engaged in work activities. ”(h) SENSE OF THE CONGRESS THAT STATES SHOULD IMPOSE CERTAIN REQUIREMENTS ON NONCUSTODIAL, NONSUPPORTING MINOR PARENTS.\u2014It is the sense of the Congress that the States should require noncustodial, nonsupporting parents who have not attained 18 years of age to fulfill community work obligations and attend appropriate parenting or money management classes after school. ”(i) REVIEW OF IMPLEMENTATION OF STATE WORK PROGRAMS.\u2014 During fiscal year 1999, the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate shall hold hearings and engage in other appropriate activities to review the implementation of this section by the States, and shall invite the Governors of the States to testify before them regarding such implementation. Based on such hearings, such Committees may introduce such legislation as may be appropriate to remedy any problems with the State programs operated pursuant to this section. ”SEC. 408. PROHIBITIONS; REQUIREMENTS. ”(a) IN GENERAL.\u2014 ”(1) NO ASSISTANCE FOR FAMILIES WITHOUT A MINOR CHILD.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to a family\u2014 ”(A) unless the family includes\u2014 ”(i) a minor child who resides with a custodial parent or other adult caretaker relative of the child; or ”(ii) a pregnant individual; and ”(B) if the family includes an adult who has received assistance under any State program funded under this part attributable to funds provided by the Federal Govern- ment, for 60 months (whether or not consecutive) after 42 USC 608. 110 STAT. 2135PUBLIC LAW 104 193\u2014AUG. 22, 1996 the date the State program funded under this part com- mences (unless an exception described in subparagraph (B), (C), or (D) of paragraph (7) applies). ”(2) REDUCTION OR ELIMINATION OF ASSISTANCE FOR NON- COOPERATION IN ESTABLISHING PATERNITY OR OBTAINING CHILD SUPPORT.\u2014If the agency responsible for administering the State plan approved under part D determines that an individual is not cooperating with the State in establishing paternity or in establishing, modifying, or enforcing a support order with respect to a child of the individual, and the individual does not qualify for any good cause or other exception established by the State pursuant to section 454(29), then the State\u2014 ”(A) shall deduct from the assistance that would other- wise be provided to the family of the individual under the State program funded under this part an amount equal to not less than 25 percent of the amount of such assistance; and ”(B) may deny the family any assistance under the State program. ”(3) NO ASSISTANCE FOR FAMILIES NOT ASSIGNING CERTAIN SUPPORT RIGHTS TO THE STATE.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall require, as a condition of providing assistance to a family under the State program funded under this part, that a member of the family assign to the State any rights the family member may have (on behalf of the family member or of any other person for whom the family member has applied for or is receiving such assistance) to support from any other person, not exceeding the total amount of assistance so provided to the family, which accrue (or have accrued) before the date the family leaves the program, which assignment, on and after the date the family leaves the program, shall not apply with respect to any support (other than support collected pursuant to section 464) which accrued before the family received such assistance and which the State has not collected by\u2014 ”(i) September 30, 2000, if the assignment is executed on or after October 1, 1997, and before Octo- ber 1, 2000; or ”(ii) the date the family leaves the program, if the assignment is executed on or after October 1, 2000. ”(B) LIMITATION.\u2014A State to which a grant is made under section 403 shall not require, as a condition of provid- ing assistance to any family under the State program funded under this part, that a member of the family assign to the State any rights to support described in subpara- graph (A) which accrue after the date the family leaves the program. ”(4) NO ASSISTANCE FOR TEENAGE PARENTS WHO DO NOT ATTEND HIGH SCHOOL OR OTHER EQUIVALENT TRAINING PRO- GRAM.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to an individual who has not attained 18 years of age, is not married, has a minor child at least 12 weeks of age in his or her care, and has not successfully completed a high-school 110 STAT. 2136 PUBLIC LAW 104 193\u2014AUG. 22, 1996 education (or its equivalent), if the individual does not partici- pate in\u2014 ”(A) educational activities directed toward the attain- ment of a high school diploma or its equivalent; or ”(B) an alternative educational or training program that has been approved by the State. ”(5) NO ASSISTANCE FOR TEENAGE PARENTS NOT LIVING IN ADULT-SUPERVISED SETTINGS.\u2014 ”(A) IN GENERAL.\u2014 ”(i) REQUIREMENT.\u2014Except as provided in subparagraph (B), a State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to an individual described in clause (ii) of this subparagraph if the individual and the minor child referred to in clause (ii)(II) do not reside in a place of residence maintained by a parent, legal guardian, or other adult relative of the individual as such parent’s, guardian’s, or adult relative’s own home. ”(ii) INDIVIDUAL DESCRIBED.\u2014 For purposes of clause (i), an individual described in this clause is an individual who\u2014 ”(I) has not attained 18 years of age; and ”(II) is not married, and has a minor child in his or her care. ”(B) EXCEPTION.\u2014 ”(i) PROVISION OF, OR ASSISTANCE IN LOCATING, ADULT-SUPERVISED LIVING ARRANGEMENT.\u2014In the case of an individual who is described in clause (ii), the State agency referred to in section 402(a)(4) shall pro- vide, or assist the individual in locating, a second chance home, maternity home, or other appropriate adult-supervised supportive living arrangement, taking into consideration the needs and concerns of the individual, unless the State agency determines that the individual’s current living arrangement is appro- priate, and thereafter shall require that the individual and the minor child referred to in subparagraph (A)(ii)(II) reside in such living arrangement as a condi- tion of the continued receipt of assistance under the State program funded under this part attributable to funds provided by the Federal Government (or in an alternative appropriate arrangement, should cir- cumstances change and the current arrangement cease to be appropriate). ”(ii) INDIVIDUAL DESCRIBED.\u2014For purposes of clause (i), an individual is described in this clause if the individual is described in subparagraph (A)(ii), and\u2014 ”(I) the individual has no parent, legal guard- ian, or other appropriate adult relative described in subclause (II) of his or her own who is living or whose whereabouts are known; ”(II) no living parent, legal guardian, or other appropriate adult relative, who would otherwise meet applicable State criteria to act as the individ- ual’s legal guardian, of such individual allows the 110 STAT. 2137PUBLIC LAW 104 193\u2014AUG. 22, 1996 individual to live in the home of such parent, guardian, or relative; ”(III) the State agency determines that\u2014 ”(aa) the individual or the minor child referred to in subparagraph (A)(ii)(II) is being or has been subjected to serious physical or emotional harm, sexual abuse, or exploitation in the residence of the individual’s own parent or legal guardian; or ”(bb) substantial evidence exists of an act or failure to act that presents an imminent or serious harm if the individual and the minor child lived in the same residence with the individual’s own parent or legal guardian; or ”(IV) the State agency otherwise determines that it is in the best interest of the minor child to waive the requirement of subparagraph (A) with respect to the individual or the minor child. ”(iii) SECOND-CHANCE HOME.\u2014For purposes of this subparagraph, the term ‘second-chance home’ means an entity that provides individuals described in clause (ii) with a supportive and supervised living arrange- ment in which such individuals are required to learn parenting skills, including child development, family budgeting, health and nutrition, and other skills to promote their long-term economic independence and the well-being of their children. ”(6) NO MEDICAL SERVICES.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide medical services. ”(B) EXCEPTION FOR PREPREGNANCY FAMILY PLANNING SERVICES.\u2014As used in subparagraph (A), the term ‘medical services’ does not include prepregnancy family planning services. ”(7) NO ASSISTANCE FOR MORE THAN 5 YEARS.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to a family that includes an adult who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government, for 60 months (whether or not consecutive) after the date the State program funded under this part commences, subject to this paragraph. ”(B) MINOR CHILD EXCEPTION.\u2014In determining the number of months for which an individual who is a parent or pregnant has received assistance under the State pro- gram funded under this part, the State shall disregard any month for which such assistance was provided with respect to the individual and during which the individual was\u2014 ”(i) a minor child; and ”(ii) not the head of a household or married to the head of a household. ”(C) HARDSHIP EXCEPTION.\u2014 ”(i) IN GENERAL.\u2014The State may exempt a family from the application of subparagraph (A) by reason 110 STAT. 2138 PUBLIC LAW 104 193\u2014AUG. 22, 1996 of hardship or if the family includes an individual who has been battered or subjected to extreme cruelty. ”(ii) LIMITATION.\u2014The number of families with respect to which an exemption made by a State under clause (i) is in effect for a fiscal year shall not exceed 20 percent of the average monthly number of families to which assistance is provided under the State pro- gram funded under this part. ”(iii) BATTERED OR SUBJECT TO EXTREME CRUELTY DEFINED.\u2014For purposes of clause (i), an individual has been battered or subjected to extreme cruelty if the individual has been subjected to\u2014 ”(I) physical acts that resulted in, or threat- ened to result in, physical injury to the individual; ”(II) sexual abuse; ”(III) sexual activity involving a dependent child; ”(IV) being forced as the caretaker relative of a dependent child to engage in nonconsensual sexual acts or activities; ”(V) threats of, or attempts at, physical or sexual abuse; ”(VI) mental abuse; or ”(VII) neglect or deprivation of medical care. ”(D) DISREGARD OF MONTHS OF ASSISTANCE RECEIVED BY ADULT WHILE LIVING ON AN INDIAN RESERVATION OR IN AN ALASKAN NATIVE VILLAGE WITH 50 PERCENT UNEMPLOYMENT.\u2014In determining the number of months for which an adult has received assistance under the State program funded under this part, the State shall disregard any month during which the adult lived on an Indian reservation or in an Alaskan Native village if, during the month\u2014 ”(i) at least 1,000 individuals were living on the reservation or in the village ; and ”(ii) at least 50 percent of the adults living on the reservation or in the village were unemployed. ”(E) RULE OF INTERPRETATION.\u2014Subparagraph (A) shall not be interpreted to require any State to provide assistance to any individual for any period of time under the State program funded under this part. ”(F) RULE OF INTERPRETATION.\u2014This part shall not be interpreted to prohibit any State from expending State funds not originating with the Federal Government on benefits for children or families that have become ineligible for assistance under the State program funded under this part by reason of subparagraph (A). ”(8) DENIAL OF ASSISTANCE FOR 10 YEARS TO A PERSON FOUND TO HAVE FRAUDULENTLY MISREPRESENTED RESIDENCE IN ORDER TO OBTAIN ASSISTANCE IN 2 OR MORE STATES.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide cash assistance to an individual during the 10-year period that begins on the date the individual is convicted in Federal or State court of having made a fraudulent statement or representation with respect to the place of residence of the individual in order to receive assistance simultaneously from 2 or more States under pro- 110 STAT. 2139PUBLIC LAW 104 193\u2014AUG. 22, 1996 grams that are funded under this title, title XIX, or the Food Stamp Act of 1977, or benefits in 2 or more States under the supplemental security income program under title XVI. The preceding sentence shall not apply with respect to a convic- tion of an individual, for any month beginning after the Presi- dent of the United States grants a pardon with respect to the conduct which was the subject of the conviction. ”(9) DENIAL OF ASSISTANCE FOR FUGITIVE FELONS AND PROBATION AND PAROLE VIOLATORS.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to any individual who is\u2014 ”(i) fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the individual flees, for a crime, or an attempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(ii) violating a condition of probation or parole imposed under Federal or State law. The preceding sentence shall not apply with respect to conduct of an individual, for any month beginning after the President of the United States grants a pardon with respect to the conduct. ”(B) EXCHANGE OF INFORMATION WITH LAW ENFORCE- MENT AGENCIES.\u2014If a State to which a grant is made under section 403 establishes safeguards against the use or disclosure of information about applicants or recipients of assistance under the State program funded under this part, the safeguards shall not prevent the State agency administering the program from furnishing a Federal, State, or local law enforcement officer, upon the request of the officer, with the current address of any recipient if the officer furnishes the agency with the name of the recipient and notifies the agency that\u2014 ”(i) the recipient\u2014 ”(I) is described in subparagraph (A); or ”(II) has information that is necessary for the officer to conduct the official duties of the officer; and ”(ii) the location or apprehension of the recipient is within such official duties. ”(10) DENIAL OF ASSISTANCE FOR MINOR CHILDREN WHO ARE ABSENT FROM THE HOME FOR A SIGNIFICANT PERIOD.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance for a minor child who has been, or is expected by a parent (or other caretaker relative) of the child to be, absent from the home for a period of 45 consecutive days or, at the option of the State, such period of not less than 30 and not more than 180 consecu- tive days as the State may provide for in the State plan submitted pursuant to section 402. ”(B) STATE AUTHORITY TO ESTABLISH GOOD CAUSE EXCEPTIONS.\u2014The State may establish such good cause 110 STAT. 2140 PUBLIC LAW 104 193\u2014AUG. 22, 1996 exceptions to subparagraph (A) as the State considers appropriate if such exceptions are provided for in the State plan submitted pursuant to section 402. ”(C) DENIAL OF ASSISTANCE FOR RELATIVE WHO FAILS TO NOTIFY STATE AGENCY OF ABSENCE OF CHILD.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance for an individual who is a parent (or other caretaker relative) of a minor child and who fails to notify the agency admin- istering the State program funded under this part of the absence of the minor child from the home for the period specified in or provided for pursuant to subparagraph (A), by the end of the 5-day period that begins with the date that it becomes clear to the parent (or relative) that the minor child will be absent for such period so specified or provided for. ”(11) MEDICAL ASSISTANCE REQUIRED TO BE PROVIDED FOR CERTAIN FAMILIES HAVING EARNINGS FROM EMPLOYMENT OR CHILD SUPPORT.\u2014 ”(A) EARNINGS FROM EMPLOYMENT.\u2014A State to which a grant is made under section 403 and which has a State plan approved under title XIX shall provide that in the case of a family that is treated (under section 1931(b)(1)(A) for purposes of title XIX) as receiving aid under a State plan approved under this part (as in effect on July 16, 1996), that would become ineligible for such aid because of hours of or income from employment of the caretaker relative (as defined under this part as in effect on such date) or because of section 402(a)(8)(B)(ii)(II) (as so in effect), and that was so treated as receiving such aid in at least 3 of the 6 months immediately preceding the month in which such ineligibility begins, the family shall remain eligible for medical assistance under the State’s plan approved under title XIX for an extended period or periods as provided in section 1925 or 1902(e)(1) (as applicable), and that the family will be appropriately notified of such extension as required by section 1925(a)(2). ”(B) CHILD SUPPORT.\u2014A State to which a grant is made under section 403 and which has a State plan approved under title XIX shall provide that in the case of a family that is treated (under section 1931(b)(1)(A) for purposes of title XIX) as receiving aid under a State plan approved under this part (as in effect on July 16, 1996), that would become ineligible for such aid as a result (wholly or partly) of the collection of child or spousal sup- port under part D and that was so treated as receiving such aid in at least 3 of the 6 months immediately preced- ing the month in which such ineligibility begins, the family shall remain eligible for medical assistance under the State’s plan approved under title XIX for an extended period or periods as provided in section 1931(c)(1). ”(b) INDIVIDUAL RESPONSIBILITY PLANS.\u2014 ”(1) ASSESSMENT.\u2014The State agency responsible for admin- istering the State program funded under this part shall make an initial assessment of the skills, prior work experience, and employability of each recipient of assistance under the program who\u2014 110 STAT. 2141PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) has attained 18 years of age; or ”(B) has not completed high school or obtained a certifi- cate of high school equivalency, and is not attending second- ary school. ”(2) CONTENTS OF PLANS.\u2014 ”(A) IN GENERAL.\u2014On the basis of the assessment made under subsection (a) with respect to an individual, the State agency, in consultation with the individual, may develop an individual responsibility plan for the individual, which\u2014 ”(i) sets forth an employment goal for the individ- ual and a plan for moving the individual immediately into private sector employment; ”(ii) sets forth the obligations of the individual, which may include a requirement that the individual attend school, maintain certain grades and attendance, keep school age children of the individual in school, immunize children, attend parenting and money management classes, or do other things that will help the individual become and remain employed in the private sector; ”(iii) to the greatest extent possible is designed to move the individual into whatever private sector employment the individual is capable of handling as quickly as possible, and to increase the responsibility and amount of work the individual is to handle over time; ”(iv) describes the services the State will provide the individual so that the individual will be able to obtain and keep employment in the private sector, and describe the job counseling and other services that will be provided by the State; and ”(v) may require the individual to undergo appro- priate substance abuse treatment. ”(B) TIMING.\u2014The State agency may comply with para- graph (1) with respect to an individual\u2014 ”(i) within 90 days (or, at the option of the State, 180 days) after the effective date of this part, in the case of an individual who, as of such effective date, is a recipient of aid under the State plan approved under part A (as in effect immediately before such effective date); or ”(ii) within 30 days (or, at the option of the State, 90 days) after the individual is determined to be eligible for such assistance, in the case of any other individual. ”(3) PENALTY FOR NONCOMPLIANCE BY INDIVIDUAL.\u2014In addi- tion to any other penalties required under the State program funded under this part, the State may reduce, by such amount as the State considers appropriate, the amount of assistance otherwise payable under the State program to a family that includes an individual who fails without good cause to comply with an individual responsibility plan signed by the individual. ”(4) STATE DISCRETION.\u2014The exercise of the authority of this subsection shall be within the sole discretion of the State. 110 STAT. 2142 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(c) NONDISCRIMINATION PROVISIONS.\u2014The following provisions of law shall apply to any program or activity which receives funds provided under this part: ”(1) The Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.). ”(2) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794). ”(3) The Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.). ”(4) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.). ”(d) ALIENS.\u2014For special rules relating to the treatment of aliens, see section 402 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. ”SEC. 409. PENALTIES. ”(a) IN GENERAL.\u2014Subject to this section: ”(1) USE OF GRANT IN VIOLATION OF THIS PART.\u2014 ”(A) GENERAL PENALTY.\u2014If an audit conducted under chapter 75 of title 31, United States Code, finds that an amount paid to a State under section 403 for a fiscal year has been used in violation of this part, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter by the amount so used. ”(B) ENHANCED PENALTY FOR INTENTIONAL VIOLA- TIONS.\u2014If the State does not prove to the satisfaction of the Secretary that the State did not intend to use the amount in violation of this part, the Secretary shall further reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter by an amount equal to 5 percent of the State family assist- ance grant. ”(2) FAILURE TO SUBMIT REQUIRED REPORT.\u2014 ”(A) IN GENERAL.\u2014If the Secretary determines that a State has not, within 1 month after the end of a fiscal quarter, submitted the report required by section 411(a) for the quarter, the Secretary shall reduce the grant pay- able to the State under section 403(a)(1) for the imme- diately succeeding fiscal year by an amount equal to 4 percent of the State family assistance grant. ”(B) RESCISSION OF PENALTY.\u2014The Secretary shall rescind a penalty imposed on a State under subparagraph (A) with respect to a report if the State submits the report before the end of the fiscal quarter that immediately suc- ceeds the fiscal quarter for which the report was required. ”(3) FAILURE TO SATISFY MINIMUM PARTICIPATION RATES.\u2014 ”(A) IN GENERAL.\u2014If the Secretary determines that a State to which a grant is made under section 403 for a fiscal year has failed to comply with section 407(a) for the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not more than the applicable percentage of the State family assist- ance grant. 42 USC 609. 110 STAT. 2143PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) APPLICABLE PERCENTAGE DEFINED.\u2014As used in subparagraph (A), the term ‘applicable percentage’ means, with respect to a State\u2014 ”(i) if a penalty was not imposed on the State under subparagraph (A) for the immediately preceding fiscal year, 5 percent; or ”(ii) if a penalty was imposed on the State under subparagraph (A) for the immediately preceding fiscal year, the lesser of\u2014 ”(I) the percentage by which the grant payable to the State under section 403(a)(1) was reduced for such preceding fiscal year, increased by 2 percentage points; or ”(II) 21 percent. ”(C) PENALTY BASED ON SEVERITY OF FAILURE.\u2014The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of non- compliance, and may reduce the penalty if the noncompli- ance is due to circumstances that caused the State to become a needy State (as defined in section 403(b)(6)) dur- ing the fiscal year. ”(4) FAILURE TO PARTICIPATE IN THE INCOME AND ELIGI- BILITY VERIFICATION SYSTEM.\u2014If the Secretary determines that a State program funded under this part is not participating during a fiscal year in the income and eligibility verification system required by section 1137, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not more than 2 percent of the State family assistance grant. ”(5) FAILURE TO COMPLY WITH PATERNITY ESTABLISHMENT AND CHILD SUPPORT ENFORCEMENT REQUIREMENTS UNDER PART D.\u2014Notwithstanding any other provision of this Act, if the Secretary determines that the State agency that admin- isters a program funded under this part does not enforce the penalties requested by the agency administering part D against recipients of assistance under the State program who fail to cooperate in establishing paternity or in establishing, modify- ing, or enforcing a child support order in accordance with such part and who do not qualify for any good cause or other exception established by the State under section 454(29), the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year (without regard to this section) by not more than 5 percent. ”(6) FAILURE TO TIMELY REPAY A FEDERAL LOAN FUND FOR STATE WELFARE PROGRAMS.\u2014If the Secretary determines that a State has failed to repay any amount borrowed from the Federal Loan Fund for State Welfare Programs established under section 406 within the period of maturity applicable to the loan, plus any interest owed on the loan, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter (without regard to this section) by the outstanding loan amount, plus the interest owed on the outstanding amount. The Sec- retary shall not forgive any outstanding loan amount or interest owed on the outstanding amount. ”(7) FAILURE OF ANY STATE TO MAINTAIN CERTAIN LEVEL OF HISTORIC EFFORT.\u2014 110 STAT. 2144 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) IN GENERAL.\u2014The Secretary shall reduce the grant payable to the State under section 403(a)(1) for fiscal year 1998, 1999, 2000, 2001, 2002, or 2003 by the amount (if any) by which qualified State expenditures for the then immediately preceding fiscal year are less than the applicable percentage of historic State expenditures with respect to such preceding fiscal year. ”(B) DEFINITIONS.\u2014As used in this paragraph: ”(i) QUALIFIED STATE EXPENDITURES.\u2014 ”(I) IN GENERAL.\u2014The term ‘qualified State expenditures’ means, with respect to a State and a fiscal year, the total expenditures by the State during the fiscal year, under all State programs, for any of the following with respect to eligible families: ”(aa) Cash assistance. ”(bb) Child care assistance. ”(cc) Educational activities designed to increase self-sufficiency, job training, and work, excluding any expenditure for public education in the State except expenditures which involve the provision of services or assistance to a member of an eligible family which is not generally available to persons who are not members of an eligible family. ”(dd) Administrative costs in connection with the matters described in items (aa), (bb), (cc), and (ee), but only to the extent that such costs do not exceed 15 percent of the total amount of qualified State expenditures for the fiscal year. ”(ee) Any other use of funds allowable under section 404(a)(1). ”(II) EXCLUSION OF TRANSFERS FROM OTHER STATE AND LOCAL PROGRAMS.\u2014Such term does not include expenditures under any State or local pro- gram during a fiscal year, except to the extent that\u2014 ”(aa) the expenditures exceed the amount expended under the State or local program in the fiscal year most recently ending before the date of the enactment of this part; or ”(bb) the State is entitled to a payment under former section 403 (as in effect imme- diately before such date of enactment) with respect to the expenditures. ”(III) ELIGIBLE FAMILIES.\u2014As used in sub- clause (I), the term ‘eligible families’ means fami- lies eligible for assistance under the State program funded under this part, and families that would be eligible for such assistance but for the applica- tion of section 408(a)(7) of this Act or section 402 of the Personal Responsibility and Work Oppor- tunity Reconciliation Act of 1996. ”(ii) APPLICABLE PERCENTAGE.\u2014The term ‘applicable percentage’ means for fiscal years 1997 through 2002, 80 percent (or, if the State meets the 110 STAT. 2145PUBLIC LAW 104 193\u2014AUG. 22, 1996 requirements of section 407(a) for the fiscal year, 75 percent) reduced (if appropriate) in accordance with subparagraph (C)(ii). ”(iii) HISTORIC STATE EXPENDITURES.\u2014The term ‘historic State expenditures’ means, with respect to a State, the lesser of\u2014 ”(I) the expenditures by the State under parts A and F (as in effect during fiscal year 1994) for fiscal year 1994; or ”(II) the amount which bears the same ratio to the amount described in subclause (I) as\u2014 ”(aa) the State family assistance grant, plus the total amount required to be paid to the State under former section 403 for fiscal year 1994 with respect to amounts expended by the State for child care under subsection (g) or (i) of section 402 (as in effect during fiscal year 1994); bears to ”(bb) the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994. Such term does not include any expenditures under the State plan approved under part A (as so in effect) on behalf of individuals covered by a tribal family assistance plan approved under section 412, as deter- mined by the Secretary. ”(iv) EXPENDITURES BY THE STATE.\u2014The term ‘expenditures by the State’ does not include\u2014 ”(I) any expenditures from amounts made available by the Federal Government; ”(II) any State funds expended for the medic- aid program under title XIX; ”(III) any State funds which are used to match Federal funds; or ”(IV) any State funds which are expended as a condition of receiving Federal funds under Fed- eral programs other than under this part. Notwithstanding subclause (IV) of the preceding sen- tence, such term includes expenditures by a State for child care in a fiscal year to the extent that the total amount of such expenditures does not exceed an amount equal to the amount of State expenditures in fiscal year 1994 or 1995 (whichever is greater) that equal the non-Federal share for the programs described in section 418(a)(1)(A). ”(8) SUBSTANTIAL NONCOMPLIANCE OF STATE CHILD SUPPORT ENFORCEMENT PROGRAM WITH REQUIREMENTS OF PART D.\u2014 ”(A) IN GENERAL.\u2014If a State program operated under part D is found as a result of a review conducted under section 452(a)(4) not to have complied substantially with the requirements of such part for any quarter, and the Secretary determines that the program is not complying substantially with such requirements at the time the find- ing is made, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the quarter and each subsequent quarter that ends before the 1st quarter 110 STAT. 2146 PUBLIC LAW 104 193\u2014AUG. 22, 1996 throughout which the program is found to be in substantial compliance with such requirements by\u2014 ”(i) not less than 1 nor more than 2 percent; ”(ii) not less than 2 nor more than 3 percent, if the finding is the 2nd consecutive such finding made as a result of such a review; or ”(iii) not less than 3 nor more than 5 percent, if the finding is the 3rd or a subsequent consecutive such finding made as a result of such a review. ”(B) DISREGARD OF NONCOMPLIANCE WHICH IS OF A TECHNICAL NATURE.\u2014For purposes of subparagraph (A) and section 452(a)(4), a State which is not in full compliance with the requirements of this part shall be determined to be in substantial compliance with such requirements only if the Secretary determines that any noncompliance with such requirements is of a technical nature which does not adversely affect the performance of the State’s program operated under part D. ”(9) FAILURE TO COMPLY WITH 5-YEAR LIMIT ON ASSIST- ANCE.\u2014If the Secretary determines that a State has not com- plied with section 408(a)(1)(B) during a fiscal year, the Sec- retary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to 5 percent of the State family assistance grant. ”(10) FAILURE OF STATE RECEIVING AMOUNTS FROM CONTIN- GENCY FUND TO MAINTAIN 100 PERCENT OF HISTORIC EFFORT.\u2014 If, at the end of any fiscal year during which amounts from the Contingency Fund for State Welfare Programs have been paid to a State, the Secretary finds that the expenditures under the State program funded under this part for the fiscal year (excluding any amounts made available by the Federal Government) are less than 100 percent of historic State expenditures (as defined in paragraph (7)(B)(iii) of this sub- section), the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by the total of the amounts so paid to the State. ”(11) FAILURE TO MAINTAIN ASSISTANCE TO ADULT SINGLE CUSTODIAL PARENT WHO CANNOT OBTAIN CHILD CARE FOR CHILD UNDER AGE 6.\u2014 ”(A) IN GENERAL.\u2014If the Secretary determines that a State to which a grant is made under section 403 for a fiscal year has violated section 407(e)(2) during the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeed- ing fiscal year by an amount equal to not more than 5 percent of the State family assistance grant. ”(B) PENALTY BASED ON SEVERITY OF FAILURE.\u2014The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of non- compliance. ”(12) FAILURE TO EXPEND ADDITIONAL STATE FUNDS TO REPLACE GRANT REDUCTIONS.\u2014If the grant payable to a State under section 403(a)(1) for a fiscal year is reduced by reason of this subsection, the State shall, during the immediately succeeding fiscal year, expend under the State program funded under this part an amount equal to the total amount of such reductions. 110 STAT. 2147PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(b) REASONABLE CAUSE EXCEPTION.\u2014 ”(1) IN GENERAL.\u2014The Secretary may not impose a penalty on a State under subsection (a) with respect to a requirement if the Secretary determines that the State has reasonable cause for failing to comply with the requirement. ”(2) EXCEPTION.\u2014Paragraph (1) of this subsection shall not apply to any penalty under paragraph (7) or (8) of sub- section (a). ”(c) CORRECTIVE COMPLIANCE PLAN.\u2014 ”(1) IN GENERAL.\u2014 ”(A) NOTIFICATION OF VIOLATION.\u2014Before imposing a penalty against a State under subsection (a) with respect to a violation of this part, the Secretary shall notify the State of the violation and allow the State the opportunity to enter into a corrective compliance plan in accordance with this subsection which outlines how the State will correct the violation and how the State will insure continu- ing compliance with this part. ”(B) 60-DAY PERIOD TO PROPOSE A CORRECTIVE COMPLI- ANCE PLAN.\u2014During the 60-day period that begins on the date the State receives a notice provided under sub- paragraph (A) with respect to a violation, the State may submit to the Federal Government a corrective compliance plan to correct the violation. ”(C) CONSULTATION ABOUT MODIFICATIONS.\u2014During the 60-day period that begins with the date the Secretary receives a corrective compliance plan submitted by a State in accordance with subparagraph (B), the Secretary may consult with the State on modifications to the plan. ”(D) ACCEPTANCE OF PLAN.\u2014 A corrective compliance plan submitted by a State in accordance with subparagraph (B) is deemed to be accepted by the Secretary if the Sec- retary does not accept or reject the plan during 60-day period that begins on the date the plan is submitted. ”(2) EFFECT OF CORRECTING VIOLATION.\u2014The Secretary may not impose any penalty under subsection (a) with respect to any violation covered by a State corrective compliance plan accepted by the Secretary if the State corrects the violation pursuant to the plan. ”(3) EFFECT OF FAILING TO CORRECT VIOLATION.\u2014The Sec- retary shall assess some or all of a penalty imposed on a State under subsection (a) with respect to a violation if the State does not, in a timely manner, correct the violation pursuant to a State corrective compliance plan accepted by the Secretary. ”(4) INAPPLICABILITY TO FAILURE TO TIMELY REPAY A FEDERAL LOAN FUND FOR A STATE WELFARE PROGRAM.\u2014This subsection shall not apply to the imposition of a penalty against a State under subsection (a)(6). ”(d) LIMITATION ON AMOUNT OF PENALTIES.\u2014 ”(1) IN GENERAL.\u2014In imposing the penalties described in subsection (a), the Secretary shall not reduce any quarterly payment to a State by more than 25 percent. ”(2) CARRYFORWARD OF UNRECOVERED PENALTIES.\u2014To the extent that paragraph (1) of this subsection prevents the Sec- retary from recovering during a fiscal year the full amount of penalties imposed on a State under subsection (a) of this 110 STAT. 2148 PUBLIC LAW 104 193\u2014AUG. 22, 1996 section for a prior fiscal year, the Secretary shall apply any remaining amount of such penalties to the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year. ”SEC. 410. APPEAL OF ADVERSE DECISION. ”(a) IN GENERAL.\u2014Within 5 days after the date the Secretary takes any adverse action under this part with respect to a State, the Secretary shall notify the chief executive officer of the State of the adverse action, including any action with respect to the State plan submitted under section 402 or the imposition of a penalty under section 409. ”(b) ADMINISTRATIVE REVIEW.\u2014 ”(1) IN GENERAL.\u2014Within 60 days after the date a State receives notice under subsection (a) of an adverse action, the State may appeal the action, in whole or in part, to the Depart- mental Appeals Board established in the Department of Health and Human Services (in this section referred to as the ‘Board’) by filing an appeal with the Board. ”(2) PROCEDURAL RULES.\u2014The Board shall consider an appeal filed by a State under paragraph (1) on the basis of such documentation as the State may submit and as the Board may require to support the final decision of the Board. In deciding whether to uphold an adverse action or any portion of such an action, the Board shall conduct a thorough review of the issues and take into account all relevant evidence. The Board shall make a final determination with respect to an appeal filed under paragraph (1) not less than 60 days after the date the appeal is filed. ”(c) JUDICIAL REVIEW OF ADVERSE DECISION.\u2014 ”(1) IN GENERAL.\u2014Within 90 days after the date of a final decision by the Board under this section with respect to an adverse action taken against a State, the State may obtain judicial review of the final decision (and the findings incor- porated into the final decision) by filing an action in\u2014 ”(A) the district court of the United States for the judicial district in which the principal or headquarters office of the State agency is located; or ”(B) the United States District Court for the District of Columbia. ”(2) PROCEDURAL RULES.\u2014The district court in which an action is filed under paragraph (1) shall review the final deci- sion of the Board on the record established in the administrative proceeding, in accordance with the standards of review pre- scribed by subparagraphs (A) through (E) of section 706(2) of title 5, United States Code. The review shall be on the basis of the documents and supporting data submitted to the Board. ”SEC. 411. DATA COLLECTION AND REPORTING. ”(a) QUARTERLY REPORTS BY STATES.\u2014 ”(1) GENERAL REPORTING REQUIREMENT.\u2014 ”(A) CONTENTS OF REPORT.\u2014Each eligible State shall collect on a monthly basis, and report to the Secretary on a quarterly basis, the following disaggregated case record information on the families receiving assistance under the State program funded under this part: ”(i) The county of residence of the family. 42 USC 611. 42 USC 610. 110 STAT. 2149PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) Whether a child receiving such assistance or an adult in the family is disabled. ”(iii) The ages of the members of such families. ”(iv) The number of individuals in the family, and the relation of each family member to the youngest child in the family. ”(v) The employment status and earnings of the employed adult in the family. ”(vi) The marital status of the adults in the family, including whether such adults have never married, are widowed, or are divorced. ”(vii) The race and educational status of each adult in the family. ”(viii) The race and educational status of each child in the family. ”(ix) Whether the family received subsidized hous- ing, medical assistance under the State plan approved under title XIX, food stamps, or subsidized child care, and if the latter 2, the amount received. ”(x) The number of months that the family has received each type of assistance under the program. ”(xi) If the adults participated in, and the number of hours per week of participation in, the following activities: ”(I) Education. ”(II) Subsidized private sector employment. ”(III) Unsubsidized employment. ”(IV) Public sector employment, work experi- ence, or community service. ”(V) Job search. ”(VI) Job skills training or on-the-job training. ”(VII) Vocational education. ”(xii) Information necessary to calculate participa- tion rates under section 407. ”(xiii) The type and amount of assistance received under the program, including the amount of and reason for any reduction of assistance (including sanctions). ”(xiv) Any amount of unearned income received by any member of the family. ”(xv) The citizenship of the members of the family. ”(xvi) From a sample of closed cases, whether the family left the program, and if so, whether the family left due to\u2014 ”(I) employment; ”(II) marriage; ”(III) the prohibition set forth in section 408(a)(7); ”(IV) sanction; or ”(V) State policy. ”(B) USE OF ESTIMATES.\u2014 ”(i) AUTHORITY.\u2014A State may comply with subparagraph (A) by submitting an estimate which is obtained through the use of scientifically acceptable sampling methods approved by the Secretary. ”(ii) SAMPLING AND OTHER METHODS.\u2014The Sec- retary shall provide the States with such case sampling plans and data collection procedures as the Secretary 110 STAT. 2150 PUBLIC LAW 104 193\u2014AUG. 22, 1996 deems necessary to produce statistically valid esti- mates of the performance of State programs funded under this part. The Secretary may develop and imple- ment procedures for verifying the quality of data submitted by the States. ”(2) REPORT ON USE OF FEDERAL FUNDS TO COVER ADMINIS- TRATIVE COSTS AND OVERHEAD.\u2014The report required by para- graph (1) for a fiscal quarter shall include a statement of the percentage of the funds paid to the State under this part for the quarter that are used to cover administrative costs or overhead. ”(3) REPORT ON STATE EXPENDITURES ON PROGRAMS FOR NEEDY FAMILIES.\u2014The report required by paragraph (1) for a fiscal quarter shall include a statement of the total amount expended by the State during the quarter on programs for needy families. ”(4) REPORT ON NONCUSTODIAL PARENTS PARTICIPATING IN WORK ACTIVITIES.\u2014The report required by paragraph (1) for a fiscal quarter shall include the number of noncustodial parents in the State who participated in work activities (as defined in section 407(d)) during the quarter. ”(5) REPORT ON TRANSITIONAL SERVICES.\u2014The report required by paragraph (1) for a fiscal quarter shall include the total amount expended by the State during the quarter to provide transitional services to a family that has ceased to receive assistance under this part because of employment, along with a description of such services. ”(6) REGULATIONS.\u2014The Secretary shall prescribe such regulations as may be necessary to define the data elements with respect to which reports are required by this subsection. ”(b) ANNUAL REPORTS TO THE CONGRESS BY THE SECRETARY.\u2014 Not later than 6 months after the end of fiscal year 1997, and each fiscal year thereafter, the Secretary shall transmit to the Congress a report describing\u2014 ”(1) whether the States are meeting\u2014 ”(A) the participation rates described in section 407(a); and ”(B) the objectives of\u2014 ”(i) increasing employment and earnings of needy families, and child support collections; and ”(ii) decreasing out-of-wedlock pregnancies and child poverty; ”(2) the demographic and financial characteristics of fami- lies applying for assistance, families receiving assistance, and families that become ineligible to receive assistance; ”(3) the characteristics of each State program funded under this part; and ”(4) the trends in employment and earnings of needy fami- lies with minor children living at home. ”SEC. 412. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES. ”(a) GRANTS FOR INDIAN TRIBES.\u2014 ”(1) TRIBAL FAMILY ASSISTANCE GRANT.\u2014 ”(A) IN GENERAL.\u2014For each of fiscal years 1997, 1998, 1999, 2000, 2001, and 2002, the Secretary shall pay to each Indian tribe that has an approved tribal family assist- ance plan a tribal family assistance grant for the fiscal 42 USC 612. 110 STAT. 2151PUBLIC LAW 104 193\u2014AUG. 22, 1996 year in an amount equal to the amount determined under subparagraph (B), and shall reduce the grant payable under section 403(a)(1) to any State in which lies the service area or areas of the Indian tribe by that portion of the amount so determined that is attributable to expenditures by the State. ”(B) AMOUNT DETERMINED.\u2014 ”(i) IN GENERAL.\u2014The amount determined under this subparagraph is an amount equal to the total amount of the Federal payments to a State or States under section 403 (as in effect during such fiscal year) for fiscal year 1994 attributable to expenditures (other than child care expenditures) by the State or States under parts A and F (as so in effect) for fiscal year 1994 for Indian families residing in the service area or areas identified by the Indian tribe pursuant to subsection (b)(1)(C) of this section. ”(ii) USE OF STATE SUBMITTED DATA.\u2014 ”(I) IN GENERAL.\u2014The Secretary shall use State submitted data to make each determination under clause (i). ”(II) DISAGREEMENT WITH DETERMINATION.\u2014 If an Indian tribe or tribal organization disagrees with State submitted data described under sub- clause (I), the Indian tribe or tribal organization may submit to the Secretary such additional information as may be relevant to making the determination under clause (i) and the Secretary may consider such information before making such determination. ”(2) GRANTS FOR INDIAN TRIBES THAT RECEIVED JOBS FUNDS.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall pay to each eligible Indian tribe for each of fiscal years 1997, 1998, 1999, 2000, 2001, and 2002 a grant in an amount equal to the amount received by the Indian tribe in fiscal year 1994 under section 482(i) (as in effect during fiscal year 1994). ”(B) ELIGIBLE INDIAN TRIBE.\u2014For purposes of subpara- graph (A), the term ‘eligible Indian tribe’ means an Indian tribe or Alaska Native organization that conducted a job opportunities and basic skills training program in fiscal year 1995 under section 482(i) (as in effect during fiscal year 1995). ”(C) USE OF GRANT.\u2014Each Indian tribe to which a grant is made under this paragraph shall use the grant for the purpose of operating a program to make work activities available to members of the Indian tribe. ”(D) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated $7,638,474 for each fiscal year specified in subparagraph (A) for grants under subparagraph (A). ”(b) 3-YEAR TRIBAL FAMILY ASSISTANCE PLAN.\u2014 ”(1) IN GENERAL.\u2014Any Indian tribe that desires to receive a tribal family assistance grant shall submit to the Secretary a 3-year tribal family assistance plan that\u2014 110 STAT. 2152 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) outlines the Indian tribe’s approach to providing welfare-related services for the 3-year period, consistent with this section; ”(B) specifies whether the welfare-related services pro- vided under the plan will be provided by the Indian tribe or through agreements, contracts, or compacts with inter- tribal consortia, States, or other entities; ”(C) identifies the population and service area or areas to be served by such plan; ”(D) provides that a family receiving assistance under the plan may not receive duplicative assistance from other State or tribal programs funded under this part; ”(E) identifies the employment opportunities in or near the service area or areas of the Indian tribe and the manner in which the Indian tribe will cooperate and participate in enhancing such opportunities for recipients of assistance under the plan consistent with any applicable State stand- ards; and ”(F) applies the fiscal accountability provisions of sec- tion 5(f)(1) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450c(f)(1)), relating to the submis- sion of a single-agency audit report required by chapter 75 of title 31, United States Code. ”(2) APPROVAL.\u2014The Secretary shall approve each tribal family assistance plan submitted in accordance with paragraph (1). ”(3) CONSORTIUM OF TRIBES.\u2014Nothing in this section shall preclude the development and submission of a single tribal family assistance plan by the participating Indian tribes of an intertribal consortium. ”(c) MINIMUM WORK PARTICIPATION REQUIREMENTS AND TIME LIMITS.\u2014The Secretary, with the participation of Indian tribes, shall establish for each Indian tribe receiving a grant under this section minimum work participation requirements, appropriate time limits for receipt of welfare-related services under the grant, and penalties against individuals\u2014 ”(1) consistent with the purposes of this section; ”(2) consistent with the economic conditions and resources available to each tribe; and ”(3) similar to comparable provisions in section 407(e). ”(d) EMERGENCY ASSISTANCE.\u2014Nothing in this section shall preclude an Indian tribe from seeking emergency assistance from any Federal loan program or emergency fund. ”(e) ACCOUNTABILITY.\u2014Nothing in this section shall be con- strued to limit the ability of the Secretary to maintain program funding accountability consistent with\u2014 ”(1) generally accepted accounting principles; and ”(2) the requirements of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450 et seq.). ”(f) PENALTIES.\u2014 ”(1) Subsections (a)(1), (a)(6), and (b) of section 409, shall apply to an Indian tribe with an approved tribal assistance plan in the same manner as such subsections apply to a State. ”(2) Section 409(a)(3) shall apply to an Indian tribe with an approved tribal assistance plan by substituting ‘meet mini- mum work participation requirements established under section 412(c)’ for ‘comply with section 407(a)’. 110 STAT. 2153PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(g) DATA COLLECTION AND REPORTING.\u2014Section 411 shall apply to an Indian tribe with an approved tribal family assistance plan. ”(h) SPECIAL RULE FOR INDIAN TRIBES IN ALASKA.\u2014 ”(1) IN GENERAL.\u2014Notwithstanding any other provision of this section, and except as provided in paragraph (2), an Indian tribe in the State of Alaska that receives a tribal family assist- ance grant under this section shall use the grant to operate a program in accordance with requirements comparable to the requirements applicable to the program of the State of Alaska funded under this part. Comparability of programs shall be established on the basis of program criteria developed by the Secretary in consultation with the State of Alaska and such Indian tribes. ”(2) WAIVER.\u2014An Indian tribe described in paragraph (1) may apply to the appropriate State authority to receive a waiver of the requirement of paragraph (1). ”SEC. 413. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES. ”(a) RESEARCH.\u2014The Secretary shall conduct research on the benefits, effects, and costs of operating different State programs funded under this part, including time limits relating to eligibility for assistance. The research shall include studies on the effects of different programs and the operation of such programs on welfare dependency, illegitimacy, teen pregnancy, employment rates, child well-being, and any other area the Secretary deems appropriate. The Secretary shall also conduct research on the costs and benefits of State activities under section 409. ”(b) DEVELOPMENT AND EVALUATION OF INNOVATIVE APPROACHES TO REDUCING WELFARE DEPENDENCY AND INCREASING CHILD WELL-BEING.\u2014 ”(1) IN GENERAL.\u2014The Secretary may assist States in devel- oping, and shall evaluate, innovative approaches for reducing welfare dependency and increasing the well-being of minor children living at home with respect to recipients of assistance under programs funded under this part. The Secretary may provide funds for training and technical assistance to carry out the approaches developed pursuant to this paragraph. ”(2) EVALUATIONS.\u2014In performing the evaluations under paragraph (1), the Secretary shall, to the maximum extent feasible, use random assignment as an evaluation methodology. ”(c) DISSEMINATION OF INFORMATION.\u2014The Secretary shall develop innovative methods of disseminating information on any research, evaluations, and studies conducted under this section, including the facilitation of the sharing of information and best practices among States and localities through the use of computers and other technologies. ”(d) ANNUAL RANKING OF STATES AND REVIEW OF MOST AND LEAST SUCCESSFUL WORK PROGRAMS.\u2014 ”(1) ANNUAL RANKING OF STATES.\u2014The Secretary shall rank annually the States to which grants are paid under section 403 in the order of their success in placing recipients of assist- ance under the State program funded under this part into long-term private sector jobs, reducing the overall welfare case- load, and, when a practicable method for calculating this information becomes available, diverting individuals from for- mally applying to the State program and receiving assistance. 42 USC 613. 110 STAT. 2154 PUBLIC LAW 104 193\u2014AUG. 22, 1996 In ranking States under this subsection, the Secretary shall take into account the average number of minor children living at home in families in the State that have incomes below the poverty line and the amount of funding provided each State for such families. ”(2) ANNUAL REVIEW OF MOST AND LEAST SUCCESSFUL WORK PROGRAMS.\u2014The Secretary shall review the programs of the 3 States most recently ranked highest under paragraph (1) and the 3 States most recently ranked lowest under paragraph (1) that provide parents with work experience, assistance in finding employment, and other work preparation activities and support services to enable the families of such parents to leave the program and become self-sufficient. ”(e) ANNUAL RANKING OF STATES AND REVIEW OF ISSUES RELAT- ING TO OUT-OF-WEDLOCK BIRTHS.\u2014 ”(1) ANNUAL RANKING OF STATES.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall annually rank States to which grants are made under section 403 based on the following ranking factors: ”(i) ABSOLUTE OUT-OF-WEDLOCK RATIOS.\u2014The ratio represented by\u2014 ”(I) the total number of out-of-wedlock births in families receiving assistance under the State program under this part in the State for the most recent fiscal year for which information is avail- able; over ”(II) the total number of births in families receiving assistance under the State program under this part in the State for such year. ”(ii) NET CHANGES IN THE OUT-OF-WEDLOCK RATIO.\u2014The difference between the ratio described in subparagraph (A)(i) with respect to a State for the most recent fiscal year for which such information is available and the ratio with respect to the State for the immediately preceding year. ”(2) ANNUAL REVIEW.\u2014The Secretary shall review the pro- grams of the 5 States most recently ranked highest under paragraph (1) and the 5 States most recently ranked the lowest under paragraph (1). ”(f) STATE-INITIATED EVALUATIONS.\u2014A State shall be eligible to receive funding to evaluate the State program funded under this part if\u2014 ”(1) the State submits a proposal to the Secretary for the evaluation; ”(2) the Secretary determines that the design and approach of the evaluation is rigorous and is likely to yield information that is credible and will be useful to other States; and ”(3) unless otherwise waived by the Secretary, the State contributes to the cost of the evaluation, from non-Federal sources, an amount equal to at least 10 percent of the cost of the evaluation. ”(g) REPORT ON CIRCUMSTANCES OF CERTAIN CHILDREN AND FAMILIES.\u2014 ”(1) IN GENERAL.\u2014Beginning 3 years after the date of the enactment of this Act, the Secretary of Health and Human Services shall prepare and submit to the Committees on Ways and Means and on Economic and Educational Opportunities 110 STAT. 2155PUBLIC LAW 104 193\u2014AUG. 22, 1996 of the House of Representatives and to the Committees on Finance and on Labor and Resources of the Senate annual reports that examine in detail the matters described in para- graph (2) with respect to each of the following groups for the period after such enactment: ”(A) Individuals who were children in families that have become ineligible for assistance under a State pro- gram funded under this part by reason of having reached a time limit on the provision of such assistance. ”(B) Children born after such date of enactment to parents who, at the time of such birth, had not attained 20 years of age. ”(C) Individuals who, after such date of enactment, became parents before attaining 20 years of age. ”(2) MATTERS DESCRIBED.\u2014The matters described in this paragraph are the following: ”(A) The percentage of each group that has dropped out of secondary school (or the equivalent), and the percent- age of each group at each level of educational attainment. ”(B) The percentage of each group that is employed. ”(C) The percentage of each group that has been con- victed of a crime or has been adjudicated as a delinquent. ”(D) The rate at which the members of each group are born, or have children, out-of-wedlock, and the percent- age of each group that is married. ”(E) The percentage of each group that continues to participate in State programs funded under this part. ”(F) The percentage of each group that has health insurance provided by a private entity (broken down by whether the insurance is provided through an employer or otherwise), the percentage that has health insurance provided by an agency of government, and the percentage that does not have health insurance. ”(G) The average income of the families of the members of each group. ”(H) Such other matters as the Secretary deems appro- priate. ”(h) FUNDING OF STUDIES AND DEMONSTRATIONS.\u2014 ”(1) IN GENERAL.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appro- priated $15,000,000 for each of fiscal years 1997 through 2002 for the purpose of paying\u2014 ”(A) the cost of conducting the research described in subsection (a); ”(B) the cost of developing and evaluating innovative approaches for reducing welfare dependency and increasing the well-being of minor children under subsection (b); ”(C) the Federal share of any State-initiated study approved under subsection (f); and ”(D) an amount determined by the Secretary to be necessary to operate and evaluate demonstration projects, relating to this part, that are in effect or approved under section 1115 as of September 30, 1995, and are continued after such date. ”(2) ALLOCATION.\u2014Of the amount appropriated under para- graph (1) for a fiscal year\u2014 110 STAT. 2156 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) 50 percent shall be allocated for the pur- poses described in subparagraphs (A) and (B) of paragraph (1), and ”(B) 50 percent shall be allocated for the purposes described in subparagraphs (C) and (D) of paragraph (1). ”(3) DEMONSTRATIONS OF INNOVATIVE STRATEGIES.\u2014The Secretary may implement and evaluate demonstrations of innovative and promising strategies which\u2014 ”(A) provide one-time capital funds to establish, expand, or replicate programs; ”(B) test performance-based grant-to-loan financing in which programs meeting performance targets receive grants while programs not meeting such targets repay funding on a prorated basis; and ”(C) test strategies in multiple States and types of communities. ”(i) CHILD POVERTY RATES.\u2014 ”(1) IN GENERAL.\u2014Not later than 90 days after the date of the enactment of this part, and annually thereafter, the chief executive officer of each State shall submit to the Sec- retary a statement of the child poverty rate in the State as of such date of enactment or the date of the most recent prior statement under this paragraph. ”(2) SUBMISSION OF CORRECTIVE ACTION PLAN.\u2014Not later than 90 days after the date a State submits a statement under paragraph (1) which indicates that, as a result of the amend- ments made by section 103 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the child poverty rate of the State has increased by 5 percent or more since the most recent prior statement under paragraph (1), the State shall prepare and submit to the Secretary a corrective action plan in accordance with paragraph (3). ”(3) CONTENTS OF PLAN.\u2014A corrective action plan submit- ted under paragraph (2) shall outline the manner in which the State will reduce the child poverty rate in the State. The plan shall include a description of the actions to be taken by the State under such plan. ”(4) COMPLIANCE WITH PLAN.\u2014A State that submits a corrective action plan that the Secretary has found contains the information required by this subsection shall implement the corrective action plan until the State determines that the child poverty rate in the State is less than the lowest child poverty rate on the basis of which the State was required to submit the corrective action plan. ”(5) METHODOLOGY.\u2014The Secretary shall prescribe regula- tions establishing the methodology by which a State shall deter- mine the child poverty rate in the State. The methodology shall take into account factors including the number of children who receive free or reduced-price lunches, the number of food stamp households, and the county-by-county estimates of chil- dren in poverty as determined by the Census Bureau. ”SEC. 414. STUDY BY THE CENSUS BUREAU. ”(a) IN GENERAL.\u2014The Bureau of the Census shall continue to collect data on the 1992 and 1993 panels of the Survey of Income and Program Participation as necessary to obtain such information as will enable interested persons to evaluate the impact 42 USC 614. Regulations. 110 STAT. 2157PUBLIC LAW 104 193\u2014AUG. 22, 1996 of the amendments made by title I of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 on a random national sample of recipients of assistance under State programs funded under this part and (as appropriate) other low-income fami- lies, and in doing so, shall pay particular attention to the issues of out-of-wedlock birth, welfare dependency, the beginning and end of welfare spells, and the causes of repeat welfare spells, and shall obtain information about the status of children participating in such panels. ”(b) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appro- priated $10,000,000 for each of fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002 for payment to the Bureau of the Census to carry out subsection (a). ”SEC. 415. WAIVERS. ”(a) CONTINUATION OF WAIVERS.\u2014 ”(1) WAIVERS IN EFFECT ON DATE OF ENACTMENT OF WEL- FARE REFORM.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B), if any waiver granted to a State under section 1115 of this Act or otherwise which relates to the provision of assistance under a State plan under this part (as in effect on September 30, 1996) is in effect as of the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (other than by section 103(c) of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996) shall not apply with respect to the State before the expiration (determined without regard to any extensions) of the waiver to the extent such amend- ments are inconsistent with the waiver. ”(B) FINANCING LIMITATION.\u2014Notwithstanding any other provision of law, beginning with fiscal year 1996, a State operating under a waiver described in subpara- graph (A) shall be entitled to payment under section 403 for the fiscal year, in lieu of any other payment provided for in the waiver. ”(2) WAIVERS GRANTED SUBSEQUENTLY.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B), if any waiver granted to a State under section 1115 of this Act or otherwise which relates to the provision of assistance under a State plan under this part (as in effect on September 30, 1996) is submitted to the Secretary before the date of the enactment of the Personal Respon- sibility and Work Opportunity Reconciliation Act of 1996 and approved by the Secretary on or before July 1, 1997, and the State demonstrates to the satisfaction of the Sec- retary that the waiver will not result in Federal expendi- tures under title IV of this Act (as in effect without regard to the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) that are greater than would occur in the absence of the waiver, the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (other than by section 103(c) of the Personal Responsibility and Work 42 USC 615. 110 STAT. 2158 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Opportunity Reconciliation Act of 1996) shall not apply with respect to the State before the expiration (determined without regard to any extensions) of the waiver to the extent the amendments made by the Personal Responsibil- ity and Work Opportunity Reconciliation Act of 1996 are inconsistent with the waiver. ”(B) NO EFFECT ON NEW WORK REQUIREMENTS.\u2014Not- withstanding subparagraph (A), a waiver granted under section 1115 or otherwise which relates to the provision of assistance under a State program funded under this part (as in effect on September 30, 1996) shall not affect the applicability of section 407 to the State. ”(b) STATE OPTION TO TERMINATE WAIVER.\u2014 ”(1) IN GENERAL.\u2014A State may terminate a waiver described in subsection (a) before the expiration of the waiver. ”(2) REPORT.\u2014A State which terminates a waiver under paragraph (1) shall submit a report to the Secretary summariz- ing the waiver and any available information concerning the result or effect of the waiver. ”(3) HOLD HARMLESS PROVISION.\u2014 ”(A) IN GENERAL.\u2014Notwithstanding any other provi- sion of law, a State that, not later than the date described in subparagraph (B) of this paragraph, submits a written request to terminate a waiver described in subsection (a) shall be held harmless for accrued cost neutrality liabilities incurred under the waiver. ”(B) DATE DESCRIBED.\u2014The date described in this subparagraph is 90 days following the adjournment of the first regular session of the State legislature that begins after the date of the enactment of the Personal Responsibil- ity and Work Opportunity Reconciliation Act of 1996. ”(c) SECRETARIAL ENCOURAGEMENT OF CURRENT WAIVERS.\u2014 The Secretary shall encourage any State operating a waiver described in subsection (a) to continue the waiver and to evaluate, using random sampling and other characteristics of accepted sci- entific evaluations, the result or effect of the waiver. ”(d) CONTINUATION OF INDIVIDUAL WAIVERS.\u2014A State may elect to continue 1 or more individual waivers described in sub- section (a). ”SEC. 416. ADMINISTRATION. ”The programs under this part and part D shall be administered by an Assistant Secretary for Family Support within the Depart- ment of Health and Human Services, who shall be appointed by the President, by and with the advice and consent of the Senate, and who shall be in addition to any other Assistant Secretary of Health and Human Services provided for by law, and the Sec- retary shall reduce the Federal workforce within the Department of Health and Human Services by an amount equal to the sum of 75 percent of the full-time equivalent positions at such Depart- ment that relate to any direct spending program, or any program funded through discretionary spending, that has been converted into a block grant program under the Personal Responsibility and Work Opportunity Act of 1996 and the amendments made by such Act, and by an amount equal to 75 percent of that portion of the total full-time equivalent departmental management positions at such Department that bears the same relationship to the amount 42 USC 616. 110 STAT. 2159PUBLIC LAW 104 193\u2014AUG. 22, 1996 appropriated for any direct spending program, or any program funded through discretionary spending, that has been converted into a block grant program under the Personal Responsibility and Work Opportunity Act of 1996 and the amendments made by such Act, as such amount relates to the total amount appropriated for use by such Department, and, notwithstanding any other provision of law, the Secretary shall take such actions as may be necessary, including reductions in force actions, consistent with sections 3502 and 3595 of title 5, United States Code, to reduce the full-time equivalent positions within the Department of Health and Human Services by 245 full-time equivalent positions related to the program converted into a block grant under the amendment made by section 2103 of the Personal Responsibility and Work Opportunity Act of 1996, and by 60 full-time equivalent managerial positions in the Department. ”SEC. 417. LIMITATION ON FEDERAL AUTHORITY. ”No officer or employee of the Federal Government may regulate the conduct of States under this part or enforce any pro- vision of this part, except to the extent expressly provided in this part.”; and (2) by inserting after such section 418 the following: ”SEC. 419. DEFINITIONS. ”As used in this part: ”(1) ADULT.\u2014The term ‘adult’ means an individual who is not a minor child. ”(2) MINOR CHILD.\u2014The term ‘minor child’ means an individual who\u2014 ”(A) has not attained 18 years of age; or ”(B) has not attained 19 years of age and is a full- time student in a secondary school (or in the equivalent level of vocational or technical training). ”(3) FISCAL YEAR.\u2014The term ‘fiscal year’ means any 12- month period ending on September 30 of a calendar year. ”(4) INDIAN, INDIAN TRIBE, AND TRIBAL ORGANIZATION.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B), the terms ‘Indian’, ‘Indian tribe’, and ‘tribal organiza- tion’ have the meaning given such terms by section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b). ”(B) SPECIAL RULE FOR INDIAN TRIBES IN ALASKA.\u2014 The term ‘Indian tribe’ means, with respect to the State of Alaska, only the Metlakatla Indian Community of the Annette Islands Reserve and the following Alaska Native regional nonprofit corporations: ”(i) Arctic Slope Native Association. ”(ii) Kawerak, Inc. ”(iii) Maniilaq Association. ”(iv) Association of Village Council Presidents. ”(v) Tanana Chiefs Conference. ”(vi) Cook Inlet Tribal Council. ”(vii) Bristol Bay Native Association. ”(viii) Aleutian and Pribilof Island Association. ”(ix) Chugachmuit. ”(x) Tlingit Haida Central Council. ”(xi) Kodiak Area Native Association. ”(xii) Copper River Native Association. 42 USC 619. 42 USC 617. 110 STAT. 2160 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(5) STATE.\u2014Except as otherwise specifically provided, the term ‘State’ means the 50 States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, and American Samoa.”. (b) GRANTS TO OUTLYING AREAS.\u2014Section 1108 (42 U.S.C. 1308) is amended\u2014 (1) by striking subsections (d) and (e); (2) by redesignating subsection (c) as subsection (f); and (3) by striking all that precedes subsection (c) and inserting the following: ”SEC. 1108. ADDITIONAL GRANTS TO PUERTO RICO, THE VIRGIN ISLANDS, GUAM, AND AMERICAN SAMOA; LIMITATION ON TOTAL PAYMENTS. ”(a) LIMITATION ON TOTAL PAYMENTS TO EACH TERRITORY.\u2014 Notwithstanding any other provision of this Act, the total amount certified by the Secretary of Health and Human Services under titles I, X, XIV, and XVI, under parts A and E of title IV, and under subsection (b) of this section, for payment to any territory for a fiscal year shall not exceed the ceiling amount for the territory for the fiscal year. ”(b) ENTITLEMENT TO MATCHING GRANT.\u2014 ”(1) IN GENERAL.\u2014Each territory shall be entitled to receive from the Secretary for each fiscal year a grant in an amount equal to 75 percent of the amount (if any) by which\u2014 ”(A) the total expenditures of the territory during the fiscal year under the territory programs funded under parts A and E of title IV; exceeds ”(B) the sum of\u2014 ”(i) the amount of the family assistance grant pay- able to the territory without regard to section 409; and ”(ii) the total amount expended by the territory during fiscal year 1995 pursuant to parts A and F of title IV (as so in effect), other than for child care. ”(2) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal years 1997 through 2002, such sums as are necessary for grants under this paragraph. ”(c) DEFINITIONS.\u2014As used in this section: ”(1) TERRITORY.\u2014The term ‘territory’ means Puerto Rico, the Virgin Islands, Guam, and American Samoa. ”(2) CEILING AMOUNT.\u2014The term ‘ceiling amount’ means, with respect to a territory and a fiscal year, the mandatory ceiling amount with respect to the territory, reduced for the fiscal year in accordance with subsection (e), and reduced by the amount of any penalty imposed on the territory under any provision of law specified in subsection (a) during the fiscal year. ”(3) FAMILY ASSISTANCE GRANT.\u2014The term ‘family assist- ance grant’ has the meaning given such term by section 403(a)(1)(B). ”(4) MANDATORY CEILING AMOUNT.\u2014The term ‘mandatory ceiling amount’ means\u2014 ”(A) $107,255,000 with respect to Puerto Rico; ”(B) $4,686,000 with respect to Guam; 110 STAT. 2161PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(C) $3,554,000 with respect to the Virgin Islands; and ”(D) $1,000,000 with respect to American Samoa. ”(5) TOTAL AMOUNT EXPENDED BY THE TERRITORY.\u2014The term ‘total amount expended by the territory’\u2014 ”(A) does not include expenditures during the fiscal year from amounts made available by the Federal Govern- ment; and ”(B) when used with respect to fiscal year 1995, also does not include\u2014 ”(i) expenditures during fiscal year 1995 under subsection (g) or (i) of section 402 (as in effect on September 30, 1995); or ”(ii) any expenditures during fiscal year 1995 for which the territory (but for section 1108, as in effect on September 30, 1995) would have received reimbursement from the Federal Government. ”(d) AUTHORITY TO TRANSFER FUNDS TO CERTAIN PROGRAMS.\u2014 A territory to which an amount is paid under subsection (b) of this section may use the amount in accordance with section 404(d). ”(e) MAINTENANCE OF EFFORT.\u2014The ceiling amount with respect to a territory shall be reduced for a fiscal year by an amount equal to the amount (if any) by which\u2014 ”(1) the total amount expended by the territory under all programs of the territory operated pursuant to the provisions of law specified in subsection (a) (as such provisions were in effect for fiscal year 1995) for fiscal year 1995; exceeds ”(2) the total amount expended by the territory under all programs of the territory that are funded under the provisions of law specified in subsection (a) for the fiscal year that imme- diately precedes the fiscal year referred to in the matter preced- ing paragraph (1).”. (c) ELIMINATION OF CHILD CARE PROGRAMS UNDER THE SOCIAL SECURITY ACT.\u2014 (1) AFDC AND TRANSITIONAL CHILD CARE PROGRAMS.\u2014Sec- tion 402 (42 U.S.C. 602) is amended by striking sub- section (g). (2) AT-RISK CHILD CARE PROGRAM.\u2014 (A) AUTHORIZATION.\u2014Section 402 (42 U.S.C. 602) is amended by striking subsection (i). (B) FUNDING PROVISIONS.\u2014Section 403 (42 U.S.C. 603) is amended by striking subsection (n). SEC. 104. SERVICES PROVIDED BY CHARITABLE, RELIGIOUS, OR PRIVATE ORGANIZATIONS. (a) IN GENERAL.\u2014 (1) STATE OPTIONS.\u2014A State may\u2014 (A) administer and provide services under the pro- grams described in subparagraphs (A) and (B)(i) of paragraph (2) through contracts with charitable, religious, or private organizations; and (B) provide beneficiaries of assistance under the pro- grams described in subparagraphs (A) and (B)(ii) of para- graph (2) with certificates, vouchers, or other forms of disbursement which are redeemable with such organiza- tions. 42 USC 604a. 110 STAT. 2162 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) PROGRAMS DESCRIBED.\u2014The programs described in this paragraph are the following programs: (A) A State program funded under part A of title IV of the Social Security Act (as amended by section 103(a) of this Act). (B) Any other program established or modified under title I or II of this Act, that\u2014 (i) permits contracts with organizations; or (ii) permits certificates, vouchers, or other forms of disbursement to be provided to beneficiaries, as a means of providing assistance. (b) RELIGIOUS ORGANIZATIONS.\u2014The purpose of this section is to allow States to contract with religious organizations, or to allow religious organizations to accept certificates, vouchers, or other forms of disbursement under any program described in sub- section (a)(2), on the same basis as any other nongovernmental provider without impairing the religious character of such organiza- tions, and without diminishing the religious freedom of beneficiaries of assistance funded under such program. (c) NONDISCRIMINATION AGAINST RELIGIOUS ORGANIZATIONS.\u2014 In the event a State exercises its authority under subsection (a), religious organizations are eligible, on the same basis as any other private organization, as contractors to provide assistance, or to accept certificates, vouchers, or other forms of disbursement, under any program described in subsection (a)(2) so long as the programs are implemented consistent with the Establishment Clause of the United States Constitution. Except as provided in subsection (k), neither the Federal Government nor a State receiving funds under such programs shall discriminate against an organization which is or applies to be a contractor to provide assistance, or which accepts certificates, vouchers, or other forms of disbursement, on the basis that the organization has a religious character. (d) RELIGIOUS CHARACTER AND FREEDOM.\u2014 (1) RELIGIOUS ORGANIZATIONS.\u2014A religious organization with a contract described in subsection (a)(1)(A), or which accepts certificates, vouchers, or other forms of disbursement under subsection (a)(1)(B), shall retain its independence from Federal, State, and local governments, including such organiza- tion’s control over the definition, development, practice, and expression of its religious beliefs. (2) ADDITIONAL SAFEGUARDS.\u2014Neither the Federal Govern- ment nor a State shall require a religious organization to\u2014 (A) alter its form of internal governance; or (B) remove religious art, icons, scripture, or other symbols; in order to be eligible to contract to provide assistance, or to accept certificates, vouchers, or other forms of disbursement, funded under a program described in subsection (a)(2). (e) RIGHTS OF BENEFICIARIES OF ASSISTANCE.\u2014 (1) IN GENERAL.\u2014If an individual described in paragraph (2) has an objection to the religious character of the organization or institution from which the individual receives, or would receive, assistance funded under any program described in sub- section (a)(2), the State in which the individual resides shall provide such individual (if otherwise eligible for such assist- ance) within a reasonable period of time after the date of such objection with assistance from an alternative provider Contracts. 110 STAT. 2163PUBLIC LAW 104 193\u2014AUG. 22, 1996 that is accessible to the individual and the value of which is not less than the value of the assistance which the individual would have received from such organization. (2) INDIVIDUAL DESCRIBED.\u2014An individual described in this paragraph is an individual who receives, applies for, or requests to apply for, assistance under a program described in subsection (a)(2). (f) EMPLOYMENT PRACTICES.\u2014A religious organization’s exemp- tion provided under section 702 of the Civil Rights Act of 1964 (42 U.S.C. 2000e 1a) regarding employment practices shall not be affected by its participation in, or receipt of funds from, programs described in subsection (a)(2). (g) NONDISCRIMINATION AGAINST BENEFICIARIES.\u2014Except as otherwise provided in law, a religious organization shall not discriminate against an individual in regard to rendering assistance funded under any program described in subsection (a)(2) on the basis of religion, a religious belief, or refusal to actively participate in a religious practice. (h) FISCAL ACCOUNTABILITY.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), any religious organization contracting to provide assistance funded under any program described in subsection (a)(2) shall be sub- ject to the same regulations as other contractors to account in accord with generally accepted auditing principles for the use of such funds provided under such programs. (2) LIMITED AUDIT.\u2014If such organization segregates Federal funds provided under such programs into separate accounts, then only the financial assistance provided with such funds shall be subject to audit. (i) COMPLIANCE.\u2014Any party which seeks to enforce its rights under this section may assert a civil action for injunctive relief exclusively in an appropriate State court against the entity or agency that allegedly commits such violation. (j) LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES.\u2014 No funds provided directly to institutions or organizations to provide services and administer programs under subsection (a)(1)(A) shall be expended for sectarian worship, instruction, or proselytization. (k) PREEMPTION.\u2014Nothing in this section shall be construed to preempt any provision of a State constitution or State statute that prohibits or restricts the expenditure of State funds in or by religious organizations. SEC. 105. CENSUS DATA ON GRANDPARENTS AS PRIMARY CAREGIVERS FOR THEIR GRANDCHILDREN. (a) IN GENERAL.\u2014Not later than 90 days after the date of the enactment of this Act, the Secretary of Commerce, in carrying out section 141 of title 13, United States Code, shall expand the data collection efforts of the Bureau of the Census (in this section referred to as the ”Bureau”) to enable the Bureau to collect statis- tically significant data, in connection with its decennial census and its mid-decade census, concerning the growing trend of grand- parents who are the primary caregivers for their grandchildren. (b) EXPANDED CENSUS QUESTION.\u2014In carrying out subsection (a), the Secretary of Commerce shall expand the Bureau’s census question that details households which include both grandparents and their grandchildren. The expanded question shall be formulated to distinguish between the following households: 13 USC 141 note. 110 STAT. 2164 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (1) A household in which a grandparent temporarily pro- vides a home for a grandchild for a period of weeks or months during periods of parental distress. (2) A household in which a grandparent provides a home for a grandchild and serves as the primary caregiver for the grandchild. SEC. 106. REPORT ON DATA PROCESSING. (a) IN GENERAL.\u2014Within 6 months after the date of the enact- ment of this Act, the Secretary of Health and Human Services shall prepare and submit to the Congress a report on\u2014 (1) the status of the automated data processing systems operated by the States to assist management in the admin- istration of State programs under part A of title IV of the Social Security Act (whether in effect before or after October 1, 1995); and (2) what would be required to establish a system cap- able of\u2014 (A) tracking participants in public programs over time; and (B) checking case records of the States to determine whether individuals are participating in public programs of 2 or more States. (b) PREFERRED CONTENTS.\u2014The report required by subsection (a) should include\u2014 (1) a plan for building on the automated data processing systems of the States to establish a system with the capabilities described in subsection (a)(2); and (2) an estimate of the amount of time required to establish such a system and of the cost of establishing such a system. SEC. 107. STUDY ON ALTERNATIVE OUTCOMES MEASURES. (a) STUDY.\u2014The Secretary shall, in cooperation with the States, study and analyze outcomes measures for evaluating the success of the States in moving individuals out of the welfare system through employment as an alternative to the minimum participation rates described in section 407 of the Social Security Act. The study shall include a determination as to whether such alternative out- comes measures should be applied on a national or a State-by- State basis and a preliminary assessment of the effects of section 409(a)(7)(C) of such Act. (b) REPORT.\u2014Not later than September 30, 1998, the Secretary shall submit to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Represen- tatives a report containing the findings of the study required by subsection (a). SEC. 108. CONFORMING AMENDMENTS TO THE SOCIAL SECURITY ACT. (a) AMENDMENTS TO TITLE II.\u2014 (1) Section 205(c)(2)(C)(vi) (42 U.S.C. 405(c)(2)(C)(vi)), as so redesignated by section 321(a)(9)(B) of the Social Security Independence and Program Improvements Act of 1994, is amended\u2014 (A) by inserting ”an agency administering a program funded under part A of title IV or” before ”an agency operating”; and (B) by striking ”A or D of title IV of this Act” and inserting ”D of such title”. 42 USC 613 note. 110 STAT. 2165PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) Section 228(d)(1) (42 U.S.C. 428(d)(1)) is amended by inserting ”under a State program funded under” before ”part A of title IV”. (b) AMENDMENTS TO PART B OF TITLE IV.\u2014Section 422(b)(2) (42 U.S.C. 622(b)(2)) is amended\u2014 (1) by striking ”plan approved under part A of this title” and inserting ”program funded under part A”; and (2) by striking ”part E of this title” and inserting ”under the State plan approved under part E”. (c) AMENDMENTS TO PART D OF TITLE IV.\u2014 (1) Section 451 (42 U.S.C. 651) is amended by striking ”aid” and inserting ”assistance under a State program funded”. (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is amended\u2014 (A) by striking ”aid to families with dependent chil- dren” and inserting ”assistance under a State program funded under part A”; (B) by striking ”such aid” and inserting ”such assist- ance”; and (C) by striking ”under section 402(a)(26) or” and insert- ing ”pursuant to section 408(a)(3) or under section”. (3) Section 452(a)(10)(F) (42 U.S.C. 652(a)(10)(F)) is amended\u2014 (A) by striking ”aid under a State plan approved” and inserting ”assistance under a State program funded”; and (B) by striking ”in accordance with the standards referred to in section 402(a)(26)(B)(ii)” and inserting ”by the State”. (4) Section 452(b) (42 U.S.C. 652(b)) is amended in the first sentence by striking ”aid under the State plan approved under part A” and inserting ”assistance under the State pro- gram funded under part A”. (5) Section 452(d)(3)(B)(i) (42 U.S.C. 652(d)(3)(B)(i)) is amended by striking ”1115(c)” and inserting ”1115(b)”. (6) Section 452(g)(2)(A)(ii)(I) (42 U.S.C. 652(g)(2)(A)(ii)(I)) is amended by striking ”aid is being paid under the State’s plan approved under part A or E” and inserting ”assistance is being provided under the State program funded under part A”. (7) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is amended in the matter following clause (iii) by striking ”aid was being paid under the State’s plan approved under part A or E” and inserting ”assistance was being provided under the State program funded under part A”. (8) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended in the matter following subparagraph (B)\u2014 (A) by striking ”who is a dependent child” and inserting ”with respect to whom assistance is being provided under the State program funded under part A”; (B) by inserting ”by the State” after ”found”; and (C) by striking ”to have good cause for refusing to cooperate under section 402(a)(26)” and inserting ”to qual- ify for a good cause or other exception to cooperation pursu- ant to section 454(29)”. (9) Section 452(h) (42 U.S.C. 652(h)) is amended by striking ”under section 402(a)(26)” and inserting ”pursuant to section 408(a)(3)”. 110 STAT. 2166 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (10) Section 453(c)(3) (42 U.S.C. 653(c)(3)) is amended by striking ”aid under part A of this title” and inserting ”assistance under a State program funded under part A”. (11) Section 454(5)(A) (42 U.S.C. 654(5)(A)) is amended\u2014 (A) by striking ”under section 402(a)(26)” and inserting ”pursuant to section 408(a)(3)”; and (B) by striking ”; except that this paragraph shall not apply to such payments for any month following the first month in which the amount collected is sufficient to make such family ineligible for assistance under the State plan approved under part A;” and inserting a comma. (12) Section 454(6)(D) (42 U.S.C. 654(6)(D)) is amended by striking ”aid under a State plan approved” and inserting ”assistance under a State program funded”. (13) Section 456(a)(1) (42 U.S.C. 656(a)(1)) is amended by striking ”under section 402(a)(26)”. (14) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is amended by striking ”402(a)(26)” and inserting ”408(a)(3)”. (15) Section 466(b)(2) (42 U.S.C. 666(b)(2)) is amended by striking ”aid” and inserting ”assistance under a State program funded”. (16) Section 469(a) (42 U.S.C. 669(a)) is amended\u2014 (A) by striking ”aid under plans approved” and insert- ing ”assistance under State programs funded”; and (B) by striking ”such aid” and inserting ”such assist- ance”. (d) AMENDMENTS TO PART E OF TITLE IV.\u2014 (1) Section 470 (42 U.S.C. 670) is amended\u2014 (A) by striking ”would be” and inserting ”would have been”; and (B) by inserting ”(as such plan was in effect on June 1, 1995)” after ”part A”. (2) Section 471(a)(17) (42 U.S.C. 671(a)(17)) is amended by striking ”plans approved under parts A and D” and inserting ”program funded under part A and plan approved under part D”. (3) Section 472(a) (42 U.S.C. 672(a)) is amended\u2014 (A) in the matter preceding paragraph (1)\u2014 (i) by striking ”would meet” and inserting ”would have met”; (ii) by inserting ”(as such sections were in effect on June 1, 1995)” after ”407”; and (iii) by inserting ”(as so in effect)” after ”406(a)”; and (B) in paragraph (4)\u2014 (i) in subparagraph (A)\u2014 (I) by inserting ”would have” after ”(A)”; and (II) by inserting ”(as in effect on June 1, 1995)” after ”section 402”; and (ii) in subparagraph (B)(ii), by inserting ”(as in effect on June 1, 1995)” after ”406(a)”. (4) Section 472(h) (42 U.S.C. 672(h)) is amended to read as follows: ”(h)(1) For purposes of title XIX, any child with respect to whom foster care maintenance payments are made under this sec- tion is deemed to be a dependent child as defined in section 406 (as in effect as of June 1, 1995) and deemed to be a recipient 110 STAT. 2167PUBLIC LAW 104 193\u2014AUG. 22, 1996 of aid to families with dependent children under part A of this title (as so in effect). For purposes of title XX, any child with respect to whom foster care maintenance payments are made under this section is deemed to be a minor child in a needy family under a State program funded under part A of this title and is deemed to be a recipient of assistance under such part. ”(2) For purposes of paragraph (1), a child whose costs in a foster family home or child care institution are covered by the foster care maintenance payments being made with respect to the child’s minor parent, as provided in section 475(4)(B), shall be considered a child with respect to whom foster care maintenance payments are made under this section.”. (5) Section 473(a)(2) (42 U.S.C. 673(a)(2)) is amended\u2014 (A) in subparagraph (A)(i)\u2014 (i) by inserting ”(as such sections were in effect on June 1, 1995)” after ”407”; (ii) by inserting ”(as so in effect)” after ”specified in section 406(a)”; and (iii) by inserting ”(as such section was in effect on June 1, 1995)” after ”403”; (B) in subparagraph (B)(i)\u2014 (i) by inserting ”would have” after ”(B)(i)”; and (ii) by inserting ”(as in effect on June 1, 1995)” after ”section 402”; and (C) in subparagraph (B)(ii)(II), by inserting ”(as in effect on June 1, 1995)” after ”406(a)”. (6) Section 473(b) (42 U.S.C. 673(b)) is amended to read as follows: ”(b)(1) For purposes of title XIX, any child who is described in paragraph (3) is deemed to be a dependent child as defined in section 406 (as in effect as of June 1, 1995) and deemed to be a recipient of aid to families with dependent children under part A of this title (as so in effect) in the State where such child resides. ”(2) For purposes of title XX, any child who is described in paragraph (3) is deemed to be a minor child in a needy family under a State program funded under part A of this title and deemed to be a recipient of assistance under such part. ”(3) A child described in this paragraph is any child\u2014 ”(A)(i) who is a child described in subsection (a)(2), and ”(ii) with respect to whom an adoption assistance agree- ment is in effect under this section (whether or not adoption assistance payments are provided under the agreement or are being made under this section), including any such child who has been placed for adoption in accordance with applicable State and local law (whether or not an interlocutory or other judicial decree of adoption has been issued), or ”(B) with respect to whom foster care maintenance pay- ments are being made under section 472. ”(4) For purposes of paragraphs (1) and (2), a child whose costs in a foster family home or child-care institution are covered by the foster care maintenance payments being made with respect to the child’s minor parent, as provided in section 475(4)(B), shall be considered a child with respect to whom foster care maintenance payments are being made under section 472.”. (e) REPEAL OF PART F OF TITLE IV.\u2014Part F of title IV (42 U.S.C. 681 687) is repealed. 110 STAT. 2168 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (f) AMENDMENT TO TITLE X.\u2014Section 1002(a)(7) (42 U.S.C. 1202(a)(7)) is amended by striking ”aid to families with dependent children under the State plan approved under section 402 of this Act” and inserting ”assistance under a State program funded under part A of title IV”. (g) AMENDMENTS TO TITLE XI.\u2014 (1) Section 1109 (42 U.S.C. 1309) is amended by striking ”or part A of title IV,”. (2) Section 1115 (42 U.S.C. 1315) is amended\u2014 (A) in subsection (a)(2)\u2014 (i) by inserting ”(A)” after ”(2)”; (ii) by striking ”403,”; (iii) by striking the period at the end and inserting ”, and”; and (iv) by adding at the end the following new subparagraph: ”(B) costs of such project which would not otherwise be a permissible use of funds under part A of title IV and which are not included as part of the costs of projects under section 1110, shall to the extent and for the period prescribed by the Secretary, be regarded as a permissible use of funds under such part.”; (B) in subsection (c)(3), by striking ”the program of aid to families with dependent children” and inserting ”part A of such title”; and (C) by striking subsection (b) and redesignating sub- sections (c) and (d) as subsections (b) and (c), respectively. (3) Section 1116 (42 U.S.C. 1316) is amended\u2014 (A) in each of subsections (a)(1), (b), and (d), by striking ”or part A of title IV,”; and (B) in subsection (a)(3), by striking ”404,”. (4) Section 1118 (42 U.S.C. 1318) is amended\u2014 (A) by striking ”403(a),”; (B) by striking ”and part A of title IV,”; and (C) by striking ”, and shall, in the case of American Samoa, mean 75 per centum with respect to part A of title IV”. (5) Section 1119 (42 U.S.C. 1319) is amended\u2014 (A) by striking ”or part A of title IV”; and (B) by striking ”403(a),”. (6) Section 1133(a) (42 U.S.C. 1320b 3(a)) is amended by striking ”or part A of title IV,”. (7) Section 1136 (42 U.S.C. 1320b 6) is repealed. (8) Section 1137 (42 U.S.C. 1320b 7) is amended\u2014 (A) in subsection (b), by striking paragraph (1) and inserting the following: ”(1) any State program funded under part A of title IV of this Act;”; and (B) in subsection (d)(1)(B)\u2014 (i) by striking ”In this subsection\u2014” and all that follows through ”(ii) in” and inserting ”In this sub- section, in”; (ii) by redesignating subclauses (I), (II), and (III) as clauses (i), (ii), and (iii); and (iii) by moving such redesignated material 2 ems to the left. 110 STAT. 2169PUBLIC LAW 104 193\u2014AUG. 22, 1996 (h) AMENDMENT TO TITLE XIV.\u2014Section 1402(a)(7) (42 U.S.C. 1352(a)(7)) is amended by striking ”aid to families with dependent children under the State plan approved under section 402 of this Act” and inserting ”assistance under a State program funded under part A of title IV”. (i) AMENDMENT TO TITLE XVI AS IN EFFECT WITH RESPECT TO THE TERRITORIES.\u2014Section 1602(a)(11), as in effect without regard to the amendment made by section 301 of the Social Security Amendments of 1972 (42 U.S.C. 1382 note), is amended by striking ”aid under the State plan approved” and inserting ”assistance under a State program funded”. (j) AMENDMENT TO TITLE XVI AS IN EFFECT WITH RESPECT TO THE STATES.\u2014Section 1611(c)(5)(A) (42 U.S.C. 1382(c)(5)(A)) is amended to read as follows: ”(A) a State program funded under part A of title IV,”. (k) AMENDMENT TO TITLE XIX.\u2014Section 1902(j) (42 U.S.C. 1396a(j)) is amended by striking ”1108(c)” and inserting ”1108(f)”. SEC. 109. CONFORMING AMENDMENTS TO THE FOOD STAMP ACT OF 1977 AND RELATED PROVISIONS. (a) Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended\u2014 (1) in the second sentence of subsection (a), by striking ”plan approved” and all that follows through ”title IV of the Social Security Act” and inserting ”program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)”; (2) in subsection (d)\u2014 (A) in paragraph (5), by striking ”assistance to families with dependent children” and inserting ”assistance under a State program funded”; and (B) by striking paragraph (13) and redesignating para- graphs (14), (15), and (16) as paragraphs (13), (14), and (15), respectively; (3) in subsection (j), by striking ”plan approved under part A of title IV of such Act (42 U.S.C. 601 et seq.)” and inserting ”program funded under part A of title IV of the Act (42 U.S.C. 601 et seq.)”; and (4) by striking subsection (m). (b) Section 6 of such Act (7 U.S.C. 2015) is amended\u2014 (1) in subsection (c)(5), by striking ”the State plan approved” and inserting ”the State program funded”; and (2) in subsection (e)(6), by striking ”aid to families with dependent children” and inserting ”benefits under a State pro- gram funded”. (c) Section 16(g)(4) of such Act (7 U.S.C. 2025(g)(4)) is amended by striking ”State plans under the Aid to Families with Dependent Children Program under” and inserting ”State programs funded under part A of”. (d) Section 17 of such Act (7 U.S.C. 2026) is amended\u2014 (1) in the first sentence of subsection (b)(1)(A), by striking ”to aid to families with dependent children under part A of title IV of the Social Security Act” and inserting ”or are receiving assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)”; and 110 STAT. 2170 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) in subsection (b)(3), by adding at the end the following new subparagraph: ”(I) The Secretary may not grant a waiver under this paragraph on or after the date of enactment of this subparagraph. Any ref- erence in this paragraph to a provision of title IV of the Social Security Act shall be deemed to be a reference to such provision as in effect on the day before such date.”; (e) Section 20 of such Act (7 U.S.C. 2029) is amended\u2014 (1) in subsection (a)(2)(B) by striking ”operating\u2014” and all that follows through ”(ii) any other” and inserting ”operating any”; and (2) in subsection (b)\u2014 (A) in paragraph (1)\u2014 (i) by striking ”(b)(1) A household” and inserting ”(b) A household”; and (ii) in subparagraph (B), by striking ”training pro- gram” and inserting ”activity”; (B) by striking paragraph (2); and (C) by redesignating subparagraphs (A) through (F) as paragraphs (1) through (6), respectively. (f) Section 5(h)(1) of the Agriculture and Consumer Protection Act of 1973 (Public Law 93 186; 7 U.S.C. 612c note) is amended by striking ”the program for aid to families with dependent children” and inserting ”the State program funded”. (g) Section 9 of the National School Lunch Act (42 U.S.C. 1758) is amended\u2014 (1) in subsection (b)\u2014 (A) in paragraph (2)(C)(ii)(II)\u2014 (i) by striking ”program for aid to families with dependent children” and inserting ”State program funded”; and (ii) by inserting before the period at the end the following: ”that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are com- parable to or more restrictive than those in effect on June 1, 1995”; and (B) in paragraph (6)\u2014 (i) in subparagraph (A)(ii)\u2014 (I) by striking ”an AFDC assistance unit (under the aid to families with dependent children program authorized” and inserting ”a family (under the State program funded”; and (II) by striking ”, in a State” and all that follows through ”9902(2)))” and inserting ”that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995”; and (ii) in subparagraph (B), by striking ”aid to families with dependent children” and inserting ”assistance under the State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable 110 STAT. 2171PUBLIC LAW 104 193\u2014AUG. 22, 1996 to or more restrictive than those in effect on June 1, 1995”; and (2) in subsection (d)(2)(C)\u2014 (A) by striking ”program for aid to families with dependent children” and inserting ”State program funded”; and (B) by inserting before the period at the end the following: ”that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995”. (h) Section 17(d)(2)(A)(ii)(II) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(d)(2)(A)(ii)(II)) is amended\u2014 (1) by striking ”program for aid to families with dependent children established” and inserting ”State program funded”; and (2) by inserting before the semicolon the following: ”that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995”. SEC. 110. CONFORMING AMENDMENTS TO OTHER LAWS. (a) Subsection (b) of section 508 of the Unemployment Com- pensation Amendments of 1976 (42 U.S.C. 603a; Public Law 94 566; 90 Stat. 2689) is amended to read as follows: ”(b) PROVISION FOR REIMBURSEMENT OF EXPENSES.\u2014For pur- poses of section 455 of the Social Security Act, expenses incurred to reimburse State employment offices for furnishing information requested of such offices\u2014 ”(1) pursuant to the third sentence of section 3(a) of the Act entitled ‘An Act to provide for the establishment of a national employment system and for cooperation with the States in the promotion of such system, and for other purposes’, approved June 6, 1933 (29 U.S.C. 49b(a)), or ”(2) by a State or local agency charged with the duty of carrying a State plan for child support approved under part D of title IV of the Social Security Act, shall be considered to constitute expenses incurred in the adminis- tration of such State plan.”. (b) Section 9121 of the Omnibus Budget Reconciliation Act of 1987 (42 U.S.C. 602 note) is repealed. (c) Section 9122 of the Omnibus Budget Reconciliation Act of 1987 (42 U.S.C. 602 note) is repealed. (d) Section 221 of the Housing and Urban-Rural Recovery Act of 1983 (42 U.S.C. 602 note), relating to treatment under AFDC of certain rental payments for federally assisted housing, is repealed. (e) Section 159 of the Tax Equity and Fiscal Responsibility Act of 1982 (42 U.S.C. 602 note) is repealed. (f) Section 202(d) of the Social Security Amendments of 1967 (81 Stat. 882; 42 U.S.C. 602 note) is repealed. (g) Section 903 of the Stewart B. McKinney Homeless Assist- ance Amendments Act of 1988 (42 U.S.C. 11381 note), relating to demonstration projects to reduce number of AFDC families in welfare hotels, is amended\u2014 110 STAT. 2172 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (1) in subsection (a), by striking ”aid to families with dependent children under a State plan approved” and inserting ”assistance under a State program funded”; and (2) in subsection (c), by striking ”aid to families with dependent children in the State under a State plan approved” and inserting ”assistance in the State under a State program funded”. (h) The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is amended\u2014 (1) in section 404C(c)(3) (20 U.S.C. 1070a 23(c)(3)), by strik- ing ”(Aid to Families with Dependent Children)”; and (2) in section 480(b)(2) (20 U.S.C. 1087vv(b)(2)), by striking ”aid to families with dependent children under a State plan approved” and inserting ”assistance under a State program funded”. (i) The Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2301 et seq.) is amended\u2014 (1) in section 231(d)(3)(A)(ii) (20 U.S.C. 2341(d)(3)(A)(ii)), by striking ”The program for aid to dependent children” and inserting ”The State program funded”; (2) in section 232(b)(2)(B) (20 U.S.C. 2341a(b)(2)(B)), by striking ”the program for aid to families with dependent chil- dren” and inserting ”the State program funded”; and (3) in section 521(14)(B)(iii) (20 U.S.C. 2471(14)(B)(iii)), by striking ”the program for aid to families with dependent children” and inserting ”the State program funded”. (j) The Elementary and Secondary Education Act of 1965 (20 U.S.C. 2701 et seq.) is amended\u2014 (1) in section 1113(a)(5) (20 U.S.C. 6313(a)(5)), by striking ”Aid to Families with Dependent Children program” and insert- ing ”State program funded under part A of title IV of the Social Security Act”; (2) in section 1124(c)(5) (20 U.S.C. 6333(c)(5)), by striking ”the program of aid to families with dependent children under a State plan approved under” and inserting ”a State program funded under part A of”; and (3) in section 5203(b)(2) (20 U.S.C. 7233(b)(2))\u2014 (A) in subparagraph (A)(xi), by striking ”Aid to Fami- lies with Dependent Children benefits” and inserting ”assistance under a State program funded under part A of title IV of the Social Security Act”; and (B) in subparagraph (B)(viii), by striking ”Aid to Fami- lies with Dependent Children” and inserting ”assistance under the State program funded under part A of title IV of the Social Security Act”. (k) The 4th proviso of chapter VII of title I of Public Law 99 88 (25 U.S.C. 13d 1) is amended to read as follows: ”Provided further, That general assistance payments made by the Bureau of Indian Affairs shall be made\u2014 ”(1) after April 29, 1985, and before October 1, 1995, on the basis of Aid to Families with Dependent Children (AFDC) standards of need; and ”(2) on and after October 1, 1995, on the basis of standards of need established under the State program funded under part A of title IV of the Social Security Act, except that where a State ratably reduces its AFDC or State pro- gram payments, the Bureau shall reduce general assistance pay- 110 STAT. 2173PUBLIC LAW 104 193\u2014AUG. 22, 1996 ments in such State by the same percentage as the State has reduced the AFDC or State program payment.”. (l) The Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.) is amended\u2014 (1) in section 51(d)(9) (26 U.S.C. 51(d)(9)), by striking all that follows ”agency as” and inserting ”being eligible for finan- cial assistance under part A of title IV of the Social Security Act and as having continually received such financial assistance during the 90-day period which immediately precedes the date on which such individual is hired by the employer.”; (2) in section 3304(a)(16) (26 U.S.C. 3304(a)(16)), by strik- ing ”eligibility for aid or services,” and all that follows through ”children approved” and inserting ”eligibility for assistance, or the amount of such assistance, under a State program funded”; (3) in section 6103(l)(7)(D)(i) (26 U.S.C. 6103(l)(7)(D)(i)), by striking ”aid to families with dependent children provided under a State plan approved” and inserting ”a State program funded”; (4) in section 6103(l)(10) (26 U.S.C. 6103(l)(10))\u2014 (A) by striking ”(c) or (d)” each place it appears and inserting ”(c), (d), or (e)”; and (B) by adding at the end of subparagraph (B) the following new sentence: ”Any return information disclosed with respect to section 6402(e) shall only be disclosed to officers and employees of the State agency requesting such information.”; (5) in section 6103(p)(4) (26 U.S.C. 6103(p)(4)), in the matter preceding subparagraph (A)\u2014 (A) by striking ”(5), (10)” and inserting ”(5)”; and (B) by striking ”(9), or (12)” and inserting ”(9), (10), or (12)”; (6) in section 6334(a)(11)(A) (26 U.S.C. 6334(a)(11)(A)), by striking ”(relating to aid to families with dependent children)”; (7) in section 6402 (26 U.S.C. 6402)\u2014 (A) in subsection (a), by striking ”(c) and (d)” and inserting ”(c), (d), and (e)”; (B) by redesignating subsections (e) through (i) as sub- sections (f) through (j), respectively; and (C) by inserting after subsection (d) the following: ”(e) COLLECTION OF OVERPAYMENTS UNDER TITLE IV A OF THE SOCIAL SECURITY ACT.\u2014The amount of any overpayment to be refunded to the person making the overpayment shall be reduced (after reductions pursuant to subsections (c) and (d), but before a credit against future liability for an internal revenue tax) in accordance with section 405(e) of the Social Security Act (concerning recovery of overpayments to individuals under State plans approved under part A of title IV of such Act).”; and (8) in section 7523(b)(3)(C) (26 U.S.C. 7523(b)(3)(C)), by striking ”aid to families with dependent children” and inserting ”assistance under a State program funded under part A of title IV of the Social Security Act”. (m) Section 3(b) of the Wagner-Peyser Act (29 U.S.C. 49b(b)) is amended by striking ”State plan approved under part A of title IV” and inserting ”State program funded under part A of title IV”. 110 STAT. 2174 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (n) The Job Training Partnership Act (29 U.S.C. 1501 et seq.) is amended\u2014 (1) in section 4(29)(A)(i) (29 U.S.C. 1503(29)(A)(i)), by strik- ing ”(42 U.S.C. 601 et seq.)”; (2) in section 106(b)(6)(C) (29 U.S.C. 1516(b)(6)(C)), by strik- ing ”State aid to families with dependent children records,” and inserting ”records collected under the State program funded under part A of title IV of the Social Security Act,”; (3) in section 121(b)(2) (29 U.S.C. 1531(b)(2))\u2014 (A) by striking ”the JOBS program” and inserting ”the work activities required under title IV of the Social Security Act”; and (B) by striking the second sentence; (4) in section 123(c) (29 U.S.C. 1533(c))\u2014 (A) in paragraph (1)(E), by repealing clause (vi); and (B) in paragraph (2)(D), by repealing clause (v); (5) in section 203(b)(3) (29 U.S.C. 1603(b)(3)), by striking ”, including recipients under the JOBS program”; (6) in subparagraphs (A) and (B) of section 204(a)(1) (29 U.S.C. 1604(a)(1) (A) and (B)), by striking ”(such as the JOBS program)” each place it appears; (7) in section 205(a) (29 U.S.C. 1605(a)), by striking para- graph (4) and inserting the following: ”(4) the portions of title IV of the Social Security Act relating to work activities;”; (8) in section 253 (29 U.S.C. 1632)\u2014 (A) in subsection (b)(2), by repealing subparagraph (C); and (B) in paragraphs (1)(B) and (2)(B) of subsection (c), by striking ”the JOBS program or” each place it appears; (9) in section 264 (29 U.S.C. 1644)\u2014 (A) in subparagraphs (A) and (B) of subsection (b)(1), by striking ”(such as the JOBS program)” each place it appears; and (B) in subparagraphs (A) and (B) of subsection (d)(3), by striking ”and the JOBS program” each place it appears; (10) in section 265(b) (29 U.S.C. 1645(b)), by striking para- graph (6) and inserting the following: ”(6) the portion of title IV of the Social Security Act relating to work activities;”; (11) in the second sentence of section 429(e) (29 U.S.C. 1699(e)), by striking ”and shall be in an amount that does not exceed the maximum amount that may be provided by the State pursuant to section 402(g)(1)(C) of the Social Security Act (42 U.S.C. 602(g)(1)(C))”; (12) in section 454(c) (29 U.S.C. 1734(c)), by striking ”JOBS and”; (13) in section 455(b) (29 U.S.C. 1735(b)), by striking ”the JOBS program,”; (14) in section 501(1) (29 U.S.C. 1791(1)), by striking ”aid to families with dependent children under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)” and inserting ”assistance under the State program funded under part A of title IV of the Social Security Act”; (15) in section 506(1)(A) (29 U.S.C. 1791e(1)(A)), by striking ”aid to families with dependent children” and inserting ”assist- ance under the State program funded”; 110 STAT. 2175PUBLIC LAW 104 193\u2014AUG. 22, 1996 (16) in section 508(a)(2)(A) (29 U.S.C. 1791g(a)(2)(A)), by striking ”aid to families with dependent children” and inserting ”assistance under the State program funded”; and (17) in section 701(b)(2)(A) (29 U.S.C. 1792(b)(2)(A))\u2014 (A) in clause (v), by striking the semicolon and insert- ing ”; and”; and (B) by striking clause (vi). (o) Section 3803(c)(2)(C)(iv) of title 31, United States Code, is amended to read as follows: ”(iv) assistance under a State program funded under part A of title IV of the Social Security Act;”. (p) Section 2605(b)(2)(A)(i) of the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8624(b)(2)(A)(i)) is amended to read as follows: ”(i) assistance under the State program funded under part A of title IV of the Social Security Act;”. (q) Section 303(f)(2) of the Family Support Act of 1988 (42 U.S.C. 602 note) is amended\u2014 (1) by striking ”(A)”; and (2) by striking subparagraphs (B) and (C). (r) The Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 900 et seq.) is amended\u2014 (1) in the first section 255(h) (2 U.S.C. 905(h)), by striking ”Aid to families with dependent children (75 0412 0 1 609);” and inserting ”Block grants to States for temporary assistance for needy families;”; and (2) in section 256 (2 U.S.C. 906)\u2014 (A) by striking subsection (k); and (B) by redesignating subsection (l) as subsection (k). (s) The Immigration and Nationality Act (8 U.S.C. 1101 et seq.) is amended\u2014 (1) in section 210(f) (8 U.S.C. 1160(f)), by striking ”aid under a State plan approved under” each place it appears and inserting ”assistance under a State program funded under”; (2) in section 245A(h) (8 U.S.C. 1255a(h))\u2014 (A) in paragraph (1)(A)(i), by striking ”program of aid to families with dependent children” and inserting ”State program of assistance”; and (B) in paragraph (2)(B), by striking ”aid to families with dependent children” and inserting ”assistance under a State program funded under part A of title IV of the Social Security Act”; and (3) in section 412(e)(4) (8 U.S.C. 1522(e)(4)), by striking ”State plan approved” and inserting ”State program funded”. (t) Section 640(a)(4)(B)(i) of the Head Start Act (42 U.S.C. 9835(a)(4)(B)(i)) is amended by striking ”program of aid to families with dependent children under a State plan approved” and inserting ”State program of assistance funded”. (u) Section 9 of the Act of April 19, 1950 (64 Stat. 47, chapter 92; 25 U.S.C. 639) is repealed. (v) Subparagraph (E) of section 213(d)(6) of the School-To- Work Opportunities Act of 1994 (20 U.S.C. 6143(d)(6)) is amended to read as follows: ”(E) part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) relating to work activities;”. (w) Section 552a(a)(8)(B)(iv)(III) of title 5, United States Code, is amended by striking ”section 464 or 1137 of the Social Security 110 STAT. 2176 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Act” and inserting ”section 404(e), 464, or 1137 of the Social Security Act”. SEC. 111. DEVELOPMENT OF PROTOTYPE OF COUNTERFEIT-RESIST- ANT SOCIAL SECURITY CARD REQUIRED. (a) DEVELOPMENT.\u2014 (1) IN GENERAL.\u2014The Commissioner of Social Security (in this section referred to as the ”Commissioner”) shall, in accord- ance with this section, develop a prototype of a counterfeit- resistant social security card. Such prototype card shall\u2014 (A) be made of a durable, tamper-resistant material such as plastic or polyester, (B) employ technologies that provide security features, such as magnetic stripes, holograms, and integrated circuits, and (C) be developed so as to provide individuals with reliable proof of citizenship or legal resident alien status. (2) ASSISTANCE BY ATTORNEY GENERAL.\u2014The Attorney Gen- eral of the United States shall provide such information and assistance as the Commissioner deems necessary to enable the Commissioner to comply with this section. (b) STUDY AND REPORT.\u2014 (1) IN GENERAL.\u2014The Commissioner shall conduct a study and issue a report to Congress which examines different methods of improving the social security card application process. (2) ELEMENTS OF STUDY.\u2014The study shall include an evaluation of the cost and work load implications of issuing a counterfeit-resistant social security card for all individuals over a 3-, 5-, and 10-year period. The study shall also evaluate the feasibility and cost implications of imposing a user fee for replacement cards and cards issued to individuals who apply for such a card prior to the scheduled 3-, 5-, and 10- year phase-in options. (3) DISTRIBUTION OF REPORT.\u2014The Commissioner shall submit copies of the report described in this subsection along with a facsimile of the prototype card as described in subsection (a) to the Committees on Ways and Means and Judiciary of the House of Representatives and the Committees on Finance and Judiciary of the Senate within 1 year after the date of the enactment of this Act. SEC. 112. MODIFICATIONS TO THE JOB OPPORTUNITIES FOR CERTAIN LOW-INCOME INDIVIDUALS PROGRAM. Section 505 of the Family Support Act of 1988 (42 U.S.C. 1315 note) is amended\u2014 (1) in the heading, by striking ”DEMONSTRATION”; (2) by striking ”demonstration” each place such term appears; (3) in subsection (a), by striking ”in each of fiscal years” and all that follows through ”10” and inserting ”shall enter into agreements with”; (4) in subsection (b)(3), by striking ”aid to families with dependent children under part A of title IV of the Social Secu- rity Act” and inserting ”assistance under the program funded part A of title IV of the Social Security Act of the State in which the individual resides”; (5) in subsection (c)\u2014 42 USC 405 note. 110 STAT. 2177PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) in paragraph (1)(C), by striking ”aid to families with dependent children under title IV of the Social Secu- rity Act” and inserting ”assistance under a State program funded part A of title IV of the Social Security Act”; (B) in paragraph (2), by striking ”aid to families with dependent children under title IV of such Act” and inserting ”assistance under a State program funded part A of title IV of the Social Security Act”; (6) in subsection (d), by striking ”job opportunities and basic skills training program (as provided for under title IV of the Social Security Act)” and inserting ”the State program funded under part A of title IV of the Social Security Act”; and (7) by striking subsections (e) through (g) and inserting the following: ”(e) AUTHORIZATION OF APPROPRIATIONS.\u2014For the purpose of conducting projects under this section, there is authorized to be appropriated an amount not to exceed $25,000,000 for any fiscal year.”. SEC. 113. SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL FOR TECHNICAL AND CONFORMING AMENDMENTS. Not later than 90 days after the date of the enactment of this Act, the Secretary of Health and Human Services and the Commissioner of Social Security, in consultation, as appropriate, with the heads of other Federal agencies, shall submit to the appropriate committees of Congress a legislative proposal proposing such technical and conforming amendments as are necessary to bring the law into conformity with the policy embodied in this title. SEC. 114. ASSURING MEDICAID COVERAGE FOR LOW-INCOME FAMILIES. (a) IN GENERAL.\u2014Title XIX is amended\u2014 (1) by redesignating section 1931 as section 1932; and (2) by inserting after section 1930 the following new section: ”ASSURING COVERAGE FOR CERTAIN LOW-INCOME FAMILIES ”SEC. 1931. (a) REFERENCES TO TITLE IV A ARE REFERENCES TO PRE-WELFARE-REFORM PROVISIONS.\u2014Subject to the succeeding provisions of this section, with respect to a State any reference in this title (or any other provision of law in relation to the operation of this title) to a provision of part A of title IV, or a State plan under such part (or a provision of such a plan), including income and resource standards and income and resource methodologies under such part or plan, shall be considered a reference to such a provision or plan as in effect as of July 16, 1996, with respect to the State. ”(b) APPLICATION OF PRE-WELFARE-REFORM ELIGIBILITY CRITERIA.\u2014 ”(1) IN GENERAL.\u2014For purposes of this title, subject to paragraphs (2) and (3), in determining eligibility for medical assistance\u2014 ”(A) an individual shall be treated as receiving aid or assistance under a State plan approved under part A of title IV only if the individual meets\u2014 42 USC 1396u 1. 42 USC 1396v. 110 STAT. 2178 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(i) the income and resource standards for deter- mining eligibility under such plan, and ”(ii) the eligibility requirements of such plan under subsections (a) through (c) of section 406 and section 407(a), as in effect as of July 16, 1996; and ”(B) the income and resource methodologies under such plan as of such date shall be used in the determination of whether any individual meets income and resource standards under such plan. ”(2) STATE OPTION.\u2014For purposes of applying this section, a State\u2014 ”(A) may lower its income standards applicable with respect to part A of title IV, but not below the income standards applicable under its State plan under such part on May 1, 1988; ”(B) may increase income or resource standards under the State plan referred to in paragraph (1) over a period (beginning after July 16, 1996) by a percentage that does not exceed the percentage increase in the Consumer Price Index for all urban consumers (all items; United States city average) over such period; and ”(C) may use income and resource methodologies that are less restrictive than the methodologies used under the State plan under such part as of July 16, 1996. ”(3) OPTION TO TERMINATE MEDICAL ASSISTANCE FOR FAILURE TO MEET WORK REQUIREMENT.\u2014 ”(A) INDIVIDUALS RECEIVING CASH ASSISTANCE UNDER TANF.\u2014In the case of an individual who\u2014 ”(i) is receiving cash assistance under a State pro- gram funded under part A of title IV, ”(ii) is eligible for medical assistance under this title on a basis not related to section 1902(l), and ”(iii) has the cash assistance under such program terminated pursuant to section 407(e)(1)(B) (as in effect on or after the welfare reform effective date) because of refusing to work, the State may terminate such individual’s eligibility for medical assistance under this title until such time as there no longer is a basis for the termination of such cash assist- ance because of such refusal. ”(B) EXCEPTION FOR CHILDREN.\u2014Subparagraph (A) shall not be construed as permitting a State to terminate medical assistance for a minor child who is not the head of a household receiving assistance under a State program funded under part A of title IV. ”(c) TREATMENT FOR PURPOSES OF TRANSITIONAL COVERAGE PROVISIONS.\u2014 ”(1) TRANSITION IN THE CASE OF CHILD SUPPORT COLLEC- TIONS.\u2014The provisions of section 406(h) (as in effect on July 16, 1996) shall apply, in relation to this title, with respect to individuals (and families composed of individuals) who are described in subsection (b)(1)(A), in the same manner as they applied before such date with respect to individuals who became ineligible for aid to families with dependent children as a result (wholly or partly) of the collection of child or spousal support under part D of title IV. 110 STAT. 2179PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(2) TRANSITION IN THE CASE OF EARNINGS FROM EMPLOY- MENT.\u2014For continued medical assistance in the case of individ- uals (and families composed of individuals) described in sub- section (b)(1)(A) who would otherwise become ineligible because of hours or income from employment, see sections 1925 and 1902(e)(1). ”(d) WAIVERS.\u2014In the case of a waiver of a provision of part A of title IV in effect with respect to a State as of July 16, 1996, or which is submitted to the Secretary before the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and approved by the Secretary on or before July 1, 1997, if the waiver affects eligibility of individuals for medical assistance under this title, such waiver may (but need not) continue to be applied, at the option of the State, in relation to this title after the date the waiver would otherwise expire. ”(e) STATE OPTION TO USE 1 APPLICATION FORM.\u2014Nothing in this section, or part A of title IV, shall be construed as preventing a State from providing for the same application form for assistance under a State program funded under part A of title IV (on or after the welfare reform effective date) and for medical assistance under this title. ”(f) ADDITIONAL RULES OF CONSTRUCTION.\u2014 ”(1) With respect to the reference in section 1902(a)(5) to a State plan approved under part A of title IV, a State may treat such reference as a reference either to a State pro- gram funded under such part (as in effect on and after the welfare reform effective date) or to the State plan under this title. ”(2) Any reference in section 1902(a)(55) to a State plan approved under part A of title IV shall be deemed a reference to a State program funded under such part. ”(3) In applying section 1903(f), the applicable income limitation otherwise determined shall be subject to increase in the same manner as income or resource standards of a State may be increased under subsection (b)(2)(B). ”(g) RELATION TO OTHER PROVISIONS.\u2014The provisions of this section shall apply notwithstanding any other provision of this Act. ”(h) TRANSITIONAL INCREASED FEDERAL MATCHING RATE FOR INCREASED ADMINISTRATIVE COSTS.\u2014 ”(1) IN GENERAL.\u2014Subject to the succeeding provisions of this subsection, the Secretary shall provide that with respect to administrative expenditures described in paragraph (2) the per centum specified in section 1903(a)(7) shall be increased to such percentage as the Secretary specifies. ”(2) ADMINISTRATIVE EXPENDITURES DESCRIBED.\u2014The administrative expenditures described in this paragraph are expenditures described in section 1903(a)(7) that a State dem- onstrates to the satisfaction of the Secretary are attributable to administrative costs of eligibility determinations that (but for the enactment of this section) would not be incurred. ”(3) LIMITATION.\u2014The total amount of additional Federal funds that are expended as a result of the application of this subsection for the period beginning with fiscal year 1997 and ending with fiscal year 2000 shall not exceed $500,000,000. In applying this paragraph, the Secretary shall ensure the equitable distribution of additional funds among the States. 110 STAT. 2180 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(4) TIME LIMITATION.\u2014This subsection shall only apply with respect to a State for expenditures incurred during the first 12 calendar quarters in which the State program funded under part A of title IV (as in effect on and after the welfare reform effective date) is in effect. ”(i) WELFARE REFORM EFFECTIVE DATE.\u2014In this section, the term ‘welfare reform effective date’ means the effective date, with respect to a State, of title I of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (as specified in section 116 of such Act).”. (b) PLAN AMENDMENT.\u2014Section 1902(a) (42 U.S.C. 1396a(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (61), (2) by striking the period at the end of paragraph (62) and inserting ”; and”, and (3) by inserting after paragraph (62) the following new paragraph: ”(63) provide for administration and determinations of eligi- bility with respect to individuals who are (or seek to be) eligible for medical assistance based on the application of section 1931.”. (c) EXTENSION OF WORK TRANSITION PROVISIONS.\u2014Sections 1902(e)(1)(B) and 1925(f) (42 U.S.C. 1396a(e)(1)(B), 1396r 6(f)) are each amended by striking ”1998” and inserting ”2001”. (d) ELIMINATION OF REQUIREMENT OF MINIMUM AFDC PAYMENT LEVELS.\u2014(1) Section 1902(c) (42 U.S.C. 1396a(c)) is amended by striking ”if\u2014” and all that follows and inserting the following: ”if the State requires individuals described in subsection (l)(1) to apply for assistance under the State program funded under part A of title IV as a condition of applying for or receiving medical assistance under this title.”. (2) Section 1903(i) (42 U.S.C. 1396b(i)) is amended by striking paragraph (9). SEC. 115. DENIAL OF ASSISTANCE AND BENEFITS FOR CERTAIN DRUG- RELATED CONVICTIONS. (a) IN GENERAL.\u2014An individual convicted (under Federal or State law) of any offense which is classified as a felony by the law of the jurisdiction involved and which has as an element the possession, use, or distribution of a controlled substance (as defined in section 102(6) of the Controlled Substances Act (21 U.S.C. 802(6))) shall not be eligible for\u2014 (1) assistance under any State program funded under part A of title IV of the Social Security Act, or (2) benefits under the food stamp program (as defined in section 3(h) of the Food Stamp Act of 1977) or any State program carried out under the Food Stamp Act of 1977. (b) EFFECTS ON ASSISTANCE AND BENEFITS FOR OTHERS.\u2014 (1) PROGRAM OF TEMPORARY ASSISTANCE FOR NEEDY FAMILIES.\u2014The amount of assistance otherwise required to be provided under a State program funded under part A of title IV of the Social Security Act to the family members of an individual to whom subsection (a) applies shall be reduced by the amount which would have otherwise been made available to the individual under such part. (2) BENEFITS UNDER THE FOOD STAMP ACT OF 1977.\u2014The amount of benefits otherwise required to be provided to a household under the food stamp program (as defined in section 42 USC 862a. 110 STAT. 2181PUBLIC LAW 104 193\u2014AUG. 22, 1996 3(h) of the Food Stamp Act of 1977), or any State program carried out under the Food Stamp Act of 1977, shall be deter- mined by considering the individual to whom subsection (a) applies not to be a member of such household, except that the income and resources of the individual shall be considered to be income and resources of the household. (c) ENFORCEMENT.\u2014A State that has not exercised its authority under subsection (d)(1)(A) shall require each individual applying for assistance or benefits referred to in subsection (a), during the application process, to state, in writing, whether the individual, or any member of the household of the individual, has been con- victed of a crime described in subsection (a). (d) LIMITATIONS.\u2014 (1) STATE ELECTIONS.\u2014 (A) OPT OUT.\u2014A State may, by specific reference in a law enacted after the date of the enactment of this Act, exempt any or all individuals domiciled in the State from the application of subsection (a). (B) LIMIT PERIOD OF PROHIBITION.\u2014A State may, by law enacted after the date of the enactment of this Act, limit the period for which subsection (a) shall apply to any or all individuals domiciled in the State. (2) INAPPLICABILITY TO CONVICTIONS OCCURRING ON OR BEFORE ENACTMENT.\u2014Subsection (a) shall not apply to convic- tions occurring on or before the date of the enactment of this Act. (e) DEFINITIONS OF STATE.\u2014For purposes of this section, the term ”State” has the meaning given it\u2014 (1) in section 419(5) of the Social Security Act, when refer- ring to assistance provided under a State program funded under part A of title IV of the Social Security Act, and (2) in section 3(m) of the Food Stamp Act of 1977, when referring to the food stamp program (as defined in section 3(h) of the Food Stamp Act of 1977) or any State program carried out under the Food Stamp Act of 1977. (f) RULE OF INTERPRETATION.\u2014Nothing in this section shall be construed to deny the following Federal benefits: (1) Emergency medical services under title XIX of the Social Security Act. (2) Short-term, noncash, in-kind emergency disaster relief. (3)(A) Public health assistance for immunizations. (B) Public health assistance for testing and treatment of communicable diseases if the Secretary of Health and Human Services determines that it is necessary to prevent the spread of such disease. (4) Prenatal care. (5) Job training programs. (6) Drug treatment programs. SEC. 116. EFFECTIVE DATE; TRANSITION RULE. (a) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as otherwise provided in this title, this title and the amendments made by this title shall take effect on July 1, 1997. (2) DELAYED EFFECTIVE DATE FOR CERTAIN PROVISIONS.\u2014 Notwithstanding any other provision of this section, paragraphs (2), (3), (4), (5), (8), and (10) of section 409(a) and section 42 USC 601 note. 110 STAT. 2182 PUBLIC LAW 104 193\u2014AUG. 22, 1996 411(a) of the Social Security Act (as added by the amendments made by section 103(a) of this Act) shall not take effect with respect to a State until, and shall apply only with respect to conduct that occurs on or after, the later of\u2014 (A) July 1, 1997; or (B) the date that is 6 months after the date the Sec- retary of Health and Human Services receives from the State a plan described in section 402(a) of the Social Secu- rity Act (as added by such amendment). (3) GRANTS TO OUTLYING AREAS.\u2014The amendments made by section 103(b) shall take effect on October 1, 1996. (4) ELIMINATION OF CHILD CARE PROGRAMS.\u2014The amend- ments made by section 103(c) shall take effect on October 1, 1996. (5) DEFINITIONS APPLICABLE TO NEW CHILD CARE ENTITLE- MENT.\u2014Sections 403(a)(1)(C), 403(a)(1)(D), and 419(4) of the Social Security Act, as added by the amendments made by section 103(a) of this Act, shall take effect on October 1, 1996. (b) TRANSITION RULES.\u2014Effective on the date of the enactment of this Act: (1) STATE OPTION TO ACCELERATE EFFECTIVE DATE.\u2014 (A) IN GENERAL.\u2014If the Secretary of Health and Human Services receives from a State a plan described in section 402(a) of the Social Security Act (as added by the amendment made by section 103(a)(1) of this Act), then\u2014 (i) on and after the date of such receipt\u2014 (I) except as provided in clause (ii), this title and the amendments made by this title (other than by section 103(c) of this Act) shall apply with respect to the State; and (II) the State shall be considered an eligible State for purposes of part A of title IV of the Social Security Act (as in effect pursuant to the amendments made by such section 103(a)); and (ii) during the period that begins on the date of such receipt and ends on June 30, 1997, there shall remain in effect with respect to the State\u2014 (I) section 403(h) of the Social Security Act (as in effect on September 30, 1995); and (II) all State reporting requirements under parts A and F of title IV of the Social Security Act (as in effect on September 30, 1995), modified by the Secretary as appropriate, taking into account the State program under part A of title IV of the Social Security Act (as in effect pursuant to the amendments made by such section 103(a)). (B) LIMITATIONS ON FEDERAL OBLIGATIONS.\u2014 (i) UNDER AFDC PROGRAM.\u2014The total obligations of the Federal Government to a State under part A of title IV of the Social Security Act (as in effect on September 30, 1995) with respect to expenditures in fiscal year 1997 shall not exceed an amount equal to the State family assistance grant. (ii) UNDER TEMPORARY FAMILY ASSISTANCE PRO- GRAM.\u2014Notwithstanding section 403(a)(1) of the Social Security Act (as in effect pursuant to the amendments 110 STAT. 2183PUBLIC LAW 104 193\u2014AUG. 22, 1996 made by section 103(a) of this Act), the total obligations of the Federal Government to a State under such sec- tion 403(a)(1)\u2014 (I) for fiscal year 1996, shall be an amount equal to\u2014 (aa) the State family assistance grant; multiplied by (bb) 1\u2044366 of the number of days during the period that begins on the date the Secretary of Health and Human Services first receives from the State a plan described in section 402(a) of the Social Security Act (as added by the amendment made by section 103(a)(1) of this Act) and ends on September 30, 1996; and (II) for fiscal year 1997, shall be an amount equal to the lesser of\u2014 (aa) the amount (if any) by which the State family assistance grant exceeds the total obligations of the Federal Government to the State under part A of title IV of the Social Security Act (as in effect on September 30, 1995) with respect to expenditures in fiscal year 1997; or (bb) the State family assistance grant, multiplied by 1\u2044365 of the number of days dur- ing the period that begins on October 1, 1996, or the date the Secretary of Health and Human Services first receives from the State a plan described in section 402(a) of the Social Security Act (as added by the amendment made by section 103(a)(1) of this Act), which- ever is later, and ends on September 30, 1997. (iii) CHILD CARE OBLIGATIONS EXCLUDED IN DETER- MINING FEDERAL AFDC OBLIGATIONS.\u2014As used in this subparagraph, the term ”obligations of the Federal Government to the State under part A of title IV of the Social Security Act” does not include any obliga- tion of the Federal Government with respect to child care expenditures by the State. (C) SUBMISSION OF STATE PLAN FOR FISCAL YEAR 1996 OR 1997 DEEMED ACCEPTANCE OF GRANT LIMITATIONS AND FORMULA AND TERMINATION OF AFDC ENTITLEMENT.\u2014The submission of a plan by a State pursuant to subparagraph (A) is deemed to constitute\u2014 (i) the State’s acceptance of the grant reductions under subparagraph (B) (including the formula for computing the amount of the reduction); and (ii) the termination of any entitlement of any individual or family to benefits or services under the State AFDC program. (D) DEFINITIONS.\u2014As used in this paragraph: (i) STATE AFDC PROGRAM.\u2014The term ”State AFDC program” means the State program under parts A and F of title IV of the Social Security Act (as in effect on September 30, 1995). 110 STAT. 2184 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (ii) STATE.\u2014The term ”State” means the 50 States and the District of Columbia. (iii) STATE FAMILY ASSISTANCE GRANT.\u2014The term ”State family assistance grant” means the State family assistance grant (as defined in section 403(a)(1)(B) of the Social Security Act, as added by the amendment made by section 103(a)(1) of this Act). (2) CLAIMS, ACTIONS, AND PROCEEDINGS.\u2014The amendments made by this title shall not apply with respect to\u2014 (A) powers, duties, functions, rights, claims, penalties, or obligations applicable to aid, assistance, or services provided before the effective date of this title under the provisions amended; and (B) administrative actions and proceedings commenced before such date, or authorized before such date to be commenced, under such provisions. (3) CLOSING OUT ACCOUNT FOR THOSE PROGRAMS TERMI- NATED OR SUBSTANTIALLY MODIFIED BY THIS TITLE.\u2014In closing out accounts, Federal and State officials may use scientifically acceptable statistical sampling techniques. Claims made with respect to State expenditures under a State plan approved under part A of title IV of the Social Security Act (as in effect on September 30, 1995) with respect to assistance or services provided on or before September 30, 1995, shall be treated as claims with respect to expenditures during fiscal year 1995 for purposes of reimbursement even if payment was made by a State on or after October 1, 1995. Each State shall complete the filing of all claims under the State plan (as so in effect) within 2 years after the date of the enactment of this Act. The head of each Federal department shall\u2014 (A) use the single audit procedure to review and resolve any claims in connection with the close out of programs under such State plans; and (B) reimburse States for any payments made for assist- ance or services provided during a prior fiscal year from funds for fiscal year 1995, rather than from funds author- ized by this title. (4) CONTINUANCE IN OFFICE OF ASSISTANT SECRETARY FOR FAMILY SUPPORT.\u2014The individual who, on the day before the effective date of this title, is serving as Assistant Secretary for Family Support within the Department of Health and Human Services shall, until a successor is appointed to such position\u2014 (A) continue to serve in such position; and (B) except as otherwise provided by law\u2014 (i) continue to perform the functions of the Assist- ant Secretary for Family Support under section 417 of the Social Security Act (as in effect before such effective date); and (ii) have the powers and duties of the Assistant Secretary for Family Support under section 416 of the Social Security Act (as in effect pursuant to the amendment made by section 103(a)(1) of this Act). (c) TERMINATION OF ENTITLEMENT UNDER AFDC PROGRAM.\u2014 Effective October 1, 1996, no individual or family shall be entitled to any benefits or services under any State plan approved under 110 STAT. 2185PUBLIC LAW 104 193\u2014AUG. 22, 1996 part A or F of title IV of the Social Security Act (as in effect on September 30, 1995). TITLE II\u2014SUPPLEMENTAL SECURITY INCOME SEC. 200. REFERENCE TO SOCIAL SECURITY ACT. Except as otherwise specifically provided, wherever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. Subtitle A\u2014Eligibility Restrictions SEC. 201. DENIAL OF SSI BENEFITS FOR 10 YEARS TO INDIVIDUALS FOUND TO HAVE FRAUDULENTLY MISREPRESENTED RESIDENCE IN ORDER TO OBTAIN BENEFITS SIMULTA- NEOUSLY IN 2 OR MORE STATES. (a) IN GENERAL.\u2014Section 1611(e) (42 U.S.C. 1382(e)), as amended by section 105(b)(4)(A) of the Contract with America Advancement Act of 1996, is amended by redesignating paragraph (5) as paragraph (3) and by adding at the end the following new paragraph: ”(4)(A) No person shall be considered an eligible individual or eligible spouse for purposes of this title during the 10-year period that begins on the date the person is convicted in Federal or State court of having made a fraudulent statement or representa- tion with respect to the place of residence of the person in order to receive assistance simultaneously from 2 or more States under programs that are funded under title IV, title XIX, or the Food Stamp Act of 1977, or benefits in 2 or more States under the supplemental security income program under this title. ”(B) As soon as practicable after the conviction of a person in a Federal or State court as described in subparagraph (A), an official of such court shall notify the Commissioner of such conviction.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall take effect on the date of the enactment of this Act. SEC. 202. DENIAL OF SSI BENEFITS FOR FUGITIVE FELONS AND PROBA- TION AND PAROLE VIOLATORS. (a) IN GENERAL.\u2014Section 1611(e) (42 U.S.C. 1382(e)), as amended by section 201(a) of this Act, is amended by adding at the end the following new paragraph: ”(5) No person shall be considered an eligible individual or eligible spouse for purposes of this title with respect to any month if during such month the person is\u2014 ”(A) fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the person flees, for a crime, or an attempt to commit a crime, which is a felony under the laws of the place from which the person flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or 42 USC 1382 note. 110 STAT. 2186 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) violating a condition of probation or parole imposed under Federal or State law.”. (b) EXCHANGE OF INFORMATION.\u2014Section 1611(e) (42 U.S.C. 1382(e)), as amended by section 201(a) of this Act and subsection (a) of this section, is amended by adding at the end the following new paragraph: ”(6) Notwithstanding any other provision of law (other than section 6103 of the Internal Revenue Code of 1986), the Commis- sioner shall furnish any Federal, State, or local law enforcement officer, upon the written request of the officer, with the current address, Social Security number, and photograph (if applicable) of any recipient of benefits under this title, if the officer furnishes the Commissioner with the name of the recipient, and other identifying information as reasonably required by the Commissioner to establish the unique identity of the recipient, and notifies the Commissioner that\u2014 ”(A) the recipient\u2014 ”(i) is described in subparagraph (A) or (B) of para- graph (5); and ”(ii) has information that is necessary for the officer to conduct the officer’s official duties; and ”(B) the location or apprehension of the recipient is within the officer’s official duties.”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall take effect on the date of the enactment of this Act. SEC. 203. TREATMENT OF PRISONERS. (a) IMPLEMENTATION OF PROHIBITION AGAINST PAYMENT OF BENEFITS TO PRISONERS.\u2014 (1) IN GENERAL.\u2014Section 1611(e)(1) (42 U.S.C. 1382(e)(1)) is amended by adding at the end the following new subpara- graph: ”(I)(i) The Commissioner shall enter into an agreement, with any interested State or local institution described in clause (i) or (ii) of section 202(x)(1)(A) the primary purpose of which is to confine individuals as described in section 202(x)(1)(A), under which\u2014 ”(I) the institution shall provide to the Commissioner, on a monthly basis and in a manner specified by the Commis- sioner, the names, social security account numbers, dates of birth, confinement commencement dates, and, to the extent available to the institution, such other identifying information concerning the inmates of the institution as the Commissioner may require for the purpose of carrying out paragraph (1); and ”(II) the Commissioner shall pay to any such institution, with respect to each inmate of the institution who is eligible for a benefit under this title for the month preceding the first month throughout which such inmate is in such institution and becomes ineligible for such benefit as a result of the applica- tion of this subparagraph, $400 if the institution furnishes the information described in subclause (I) to the Commissioner within 30 days after the date such individual becomes an inmate of such institution, or $200 if the institution furnishes such information after 30 days after such date but within 90 days after such date. Contracts. 42 USC 1382 note. 110 STAT. 2187PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii)(I) The provisions of section 552a of title 5, United States Code, shall not apply to any agreement entered into under clause (i) or to information exchanged pursuant to such agreement. ”(II) The Commissioner is authorized to provide, on a reimburs- able basis, information obtained pursuant to agreements entered into under clause (i) to any Federal or federally-assisted cash, food, or medical assistance program for eligibility purposes. ”(iii) Payments to institutions required by clause (i)(II) shall be made from funds otherwise available for the payment of benefits under this title and shall be treated as direct spending for purposes of the Balanced Budget and Emergency Deficit Control Act of 1985.”. (2) EFFECTIVE DATE.\u2014The amendment made by this sub- section shall apply to individuals whose period of confinement in an institution commences on or after the first day of the seventh month beginning after the month in which this Act is enacted. (b) STUDY OF OTHER POTENTIAL IMPROVEMENTS IN THE COLLEC- TION OF INFORMATION RESPECTING PUBLIC INMATES.\u2014 (1) STUDY.\u2014The Commissioner of Social Security shall con- duct a study of the desirability, feasibility, and cost of\u2014 (A) establishing a system under which Federal, State, and local courts would furnish to the Commissioner such information respecting court orders by which individuals are confined in jails, prisons, or other public penal, correc- tional, or medical facilities as the Commissioner may require for the purpose of carrying out section 1611(e)(1) of the Social Security Act; and (B) requiring that State and local jails, prisons, and other institutions that enter into agreements with the Commissioner under section 1611(e)(1)(I) of the Social Secu- rity Act furnish the information required by such agree- ments to the Commissioner by means of an electronic or other sophisticated data exchange system. (2) REPORT.\u2014Not later than 1 year after the date of the enactment of this Act, the Commissioner of Social Security shall submit a report on the results of the study conducted pursuant to this subsection to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives. (c) ADDITIONAL REPORT TO CONGRESS.\u2014Not later than October 1, 1998, the Commissioner of Social Security shall provide to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives a list of the institutions that are and are not providing information to the Commissioner under section 1611(e)(1)(I) of the Social Security Act (as added by this section). SEC. 204. EFFECTIVE DATE OF APPLICATION FOR BENEFITS. (a) IN GENERAL.\u2014Subparagraphs (A) and (B) of section 1611(c)(7) (42 U.S.C. 1382(c)(7)) are amended to read as follows: ”(A) the first day of the month following the date such application is filed, or ”(B) the first day of the month following the date such individual becomes eligible for such benefits with respect to such application.”. 42 USC 1382 note. 42 USC 1382 note. 42 USC 1382 note. 110 STAT. 2188 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (b) SPECIAL RULE RELATING TO EMERGENCY ADVANCE PAY- MENTS.\u2014Section 1631(a)(4)(A) (42 U.S.C. 1383(a)(4)(A)) is amended\u2014 (1) by inserting ”for the month following the date the application is filed” after ”is presumptively eligible for such benefits”; and (2) by inserting ”, which shall be repaid through propor- tionate reductions in such benefits over a period of not more than 6 months” before the semicolon. (c) CONFORMING AMENDMENTS.\u2014 (1) Section 1614(b) (42 U.S.C. 1382c(b)) is amended\u2014 (A) by striking ”or requests” and inserting ”, on the first day of the month following the date the application is filed, or, in any case in which either spouse requests”; and (B) by striking ”application or”. (2) Section 1631(g)(3) (42 U.S.C. 1382j(g)(3)) is amended by inserting ”following the month” after ”beginning with the month”. (d) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to applications for benefits under title XVI of the Social Security Act filed on or after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such amendments. (2) BENEFITS UNDER TITLE XVI.\u2014For purposes of this sub- section, the term ”benefits under title XVI of the Social Security Act” includes supplementary payments pursuant to an agree- ment for Federal administration under section 1616(a) of the Social Security Act, and payments pursuant to an agreement entered into under section 212(b) of Public Law 93 66. Subtitle B\u2014Benefits for Disabled Children SEC. 211. DEFINITION AND ELIGIBILITY RULES. (a) DEFINITION OF CHILDHOOD DISABILITY.\u2014Section 1614(a)(3) (42 U.S.C. 1382c(a)(3)), as amended by section 105(b)(1) of the Contract with America Advancement Act of 1996, is amended\u2014 (1) in subparagraph (A), by striking ”An individual” and inserting ”Except as provided in subparagraph (C), an indi- vidual”; (2) in subparagraph (A), by striking ”(or, in the case of an individual under the age of 18, if he suffers from any medically determinable physical or mental impairment of com- parable severity)”; (3) by redesignating subparagraphs (C) through (I) as sub- paragraphs (D) through (J), respectively; (4) by inserting after subparagraph (B) the following new subparagraph: ”(C)(i) An individual under the age of 18 shall be considered disabled for the purposes of this title if that individual has a medically determinable physical or mental impairment, which results in marked and severe functional limitations, and which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. 42 USC 1382 note. 42 USC 1383. 110 STAT. 2189PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) Notwithstanding clause (i), no individual under the age of 18 who engages in substantial gainful activity (determined in accordance with regulations prescribed pursuant to subparagraph (E)) may be considered to be disabled.”; and (5) in subparagraph (F), as redesignated by paragraph (3), by striking ”(D)” and inserting ”(E)”. (b) CHANGES TO CHILDHOOD SSI REGULATIONS.\u2014 (1) MODIFICATION TO MEDICAL CRITERIA FOR EVALUATION OF MENTAL AND EMOTIONAL DISORDERS.\u2014The Commissioner of Social Security shall modify sections 112.00C.2. and 112.02B.2.c.(2) of appendix 1 to subpart P of part 404 of title 20, Code of Federal Regulations, to eliminate references to maladaptive behavior in the domain of personal\/behavorial function. (2) DISCONTINUANCE OF INDIVIDUALIZED FUNCTIONAL ASSESSMENT.\u2014The Commissioner of Social Security shall dis- continue the individualized functional assessment for children set forth in sections 416.924d and 416.924e of title 20, Code of Federal Regulations. (c) MEDICAL IMPROVEMENT REVIEW STANDARD AS IT APPLIES TO INDIVIDUALS UNDER THE AGE OF 18.\u2014Section 1614(a)(4) (42 U.S.C. 1382(a)(4)) is amended\u2014 (1) by redesignating subclauses (I) and (II) of clauses (i) and (ii) of subparagraph (B) as items (aa) and (bb), respectively; (2) by redesignating clauses (i) and (ii) of subparagraphs (A) and (B) as subclauses (I) and (II), respectively; (3) by redesignating subparagraphs (A) through (C) as clauses (i) through (iii), respectively; (4) by inserting before clause (i) (as redesignated by para- graph (3)) the following new subparagraph: ”(A) in the case of an individual who is age 18 or older\u2014”; (5) by inserting after and below subparagraph (A)(iii) (as so redesignated) the following new subparagraph: ”(B) in the case of an individual who is under the age of 18\u2014 ”(i) substantial evidence which demonstrates that there has been medical improvement in the individual’s impairment or combination of impairments, and that such impairment or combination of impairments no longer results in marked and severe functional limitations; or ”(ii) substantial evidence which demonstrates that, as determined on the basis of new or improved diagnostic techniques or evaluations, the individual’s impairment or combination of impairments, is not as disabling as it was considered to be at the time of the most recent prior deci- sion that the individual was under a disability or continued to be under a disability, and such impairment or combina- tion of impairments does not result in marked and severe functional limitations; or”; (6) by redesignating subparagraph (D) as subparagraph (C) and by inserting in such subparagraph ”in the case of any individual,” before ”substantial evidence”; and (7) in the first sentence following subparagraph (C) (as redesignated by paragraph (6)), by\u2014 (A) inserting ”(i)” before ”to restore”; and 42 USC 1382c. 110 STAT. 2190 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (B) inserting ”, or (ii) in the case of an individual under the age of 18, to eliminate or improve the individual’s impairment or combination of impairments so that it no longer results in marked and severe functional limitations” immediately before the period. (d) EFFECTIVE DATES, ETC.\u2014 (1) EFFECTIVE DATES.\u2014 (A) SUBSECTIONS (a) AND (b).\u2014 (i) IN GENERAL.\u2014The provisions of, and amend- ments made by, subsections (a) and (b) of this section shall apply to any individual who applies for, or whose claim is finally adjudicated with respect to, benefits under title XVI of the Social Security Act on or after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such provisions and amendments. (ii) DETERMINATION OF FINAL ADJUDICATION.\u2014For purposes of clause (i), no individual’s claim with respect to such benefits may be considered to be finally adju- dicated before such date of enactment if, on or after such date, there is pending a request for either administrative or judicial review with respect to such claim that has been denied in whole, or there is pend- ing, with respect to such claim, readjudication by the Commissioner of Social Security pursuant to relief in a class action or implementation by the Commissioner of a court remand order. (B) SUBSECTION (c).\u2014The amendments made by sub- section (c) of this section shall apply with respect to benefits under title XVI of the Social Security Act for months begin- ning on or after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such amendments. (2) APPLICATION TO CURRENT RECIPIENTS.\u2014 (A) ELIGIBILITY REDETERMINATIONS.\u2014During the period beginning on the date of the enactment of this Act and ending on the date which is 1 year after such date of enactment, the Commissioner of Social Security shall redetermine the eligibility of any individual under age 18 who is eligible for supplemental security income benefits by reason of disability under title XVI of the Social Security Act as of the date of the enactment of this Act and whose eligibility for such benefits may terminate by reason of the provisions of, or amendments made by, sub- sections (a) and (b) of this section. With respect to any redetermination under this subparagraph\u2014 (i) section 1614(a)(4) of the Social Security Act (42 U.S.C. 1382c(a)(4)) shall not apply; (ii) the Commissioner of Social Security shall apply the eligibility criteria for new applicants for benefits under title XVI of such Act; (iii) the Commissioner shall give such redetermina- tion priority over all continuing eligibility reviews and other reviews under such title; and (iv) such redetermination shall be counted as a review or redetermination otherwise required to be made under section 208 of the Social Security 42 USC 1382c note. 110 STAT. 2191PUBLIC LAW 104 193\u2014AUG. 22, 1996 Independence and Program Improvements Act of 1994 or any other provision of title XVI of the Social Security Act. (B) GRANDFATHER PROVISION.\u2014The provisions of, and amendments made by, subsections (a) and (b) of this sec- tion, and the redetermination under subparagraph (A), shall only apply with respect to the benefits of an individual described in subparagraph (A) for months beginning on or after the later of July 1, 1997, or the date of the redeter- mination with respect to such individual. (C) NOTICE.\u2014Not later than January 1, 1997, the Commissioner of Social Security shall notify an individual described in subparagraph (A) of the provisions of this paragraph. (3) REPORT.\u2014The Commissioner of Social Security shall report to the Congress regarding the progress made in implementing the provisions of, and amendments made by, this section on child disability evaluations not later than 180 days after the date of the enactment of this Act. (4) REGULATIONS.\u2014Notwithstanding any other provision of law, the Commissioner of Social Security shall submit for review to the committees of jurisdiction in the Congress any final regulation pertaining to the eligibility of individuals under age 18 for benefits under title XVI of the Social Security Act at least 45 days before the effective date of such regulation. The submission under this paragraph shall include supporting documentation providing a cost analysis, workload impact, and projections as to how the regulation will effect the future num- ber of recipients under such title. (5) CAP ADJUSTMENT FOR SSI ADMINISTRATIVE WORK REQUIRED BY WELFARE REFORM.\u2014 (A) AUTHORIZATION.\u2014For the additional costs of continuing disability reviews and redeterminations under title XVI of the Social Security Act, there is hereby author- ized to be appropriated to the Social Security Administra- tion, in addition to amounts authorized under section 201(g)(1)(A) of the Social Security Act, $150,000,000 in fiscal year 1997 and $100,000,000 in fiscal year 1998. (B) CAP ADJUSTMENT.\u2014Section 251(b)(2)(H) of the Bal- anced Budget and Emergency Deficit Control Act of 1985, as amended by section 103(b) of the Contract with America Advancement Act of 1996, is amended\u2014 (i) in clause (i)\u2014 (I) in subclause (II) by\u2014 (aa) striking ”$25,000,000” and inserting ”$175,000,000”; and (bb) striking ”$160,000,000” and inserting ”$310,000,000”; and (II) in subclause (III) by\u2014 (aa) striking ”$145,000,000” and inserting ”$245,000,000”; and (bb) striking ”$370,000,000” and inserting ”$470,000,000”; and (ii) by amending clause (ii)(I) to read as follows: ”(I) the term ‘continuing disability reviews’ means reviews or redeterminations as defined under section 201(g)(1)(A) of the Social Security Act and reviews 2 USC 901. 110 STAT. 2192 PUBLIC LAW 104 193\u2014AUG. 22, 1996 and redeterminations authorized under section 211 of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996;”. (C) ADJUSTMENTS.\u2014Section 606(e)(1)(B) of the Congressional Budget Act of 1974 is amended by adding at the end the following new sentences: ”If the adjustments referred to in the preceding sentence are made for an appropriations measure that is not enacted into law, then the Chairman of the Committee on the Budget of the House of Representatives shall, as soon as practicable, reverse those adjustments. The Chairman of the Committee on the Budget of the House of Representatives shall submit any adjustments made under this subparagraph to the House of Representatives and have such adjustments pub- lished in the Congressional Record.”. (D) CONFORMING AMENDMENT.\u2014Section 103(d)(1) of the Contract with America Advancement Act of 1996 (42 U.S.C. 401 note) is amended by striking ”medicaid programs.” and inserting ”medicaid programs, except that the amounts appropriated pursuant to the authorization and discre- tionary spending allowance provisions in section 211(d)(2)(5) of the Personal Responsibility and Work Oppor- tunity Reconciliation Act of 1996 shall be used only for continuing disability reviews and redeterminations under title XVI of the Social Security Act.”. (6) BENEFITS UNDER TITLE XVI.\u2014For purposes of this sub- section, the term ”benefits under title XVI of the Social Security Act” includes supplementary payments pursuant to an agree- ment for Federal administration under section 1616(a) of the Social Security Act, and payments pursuant to an agreement entered into under section 212(b) of Public Law 93 66. SEC. 212. ELIGIBILITY REDETERMINATIONS AND CONTINUING DISABILITY REVIEWS. (a) CONTINUING DISABILITY REVIEWS RELATING TO CERTAIN CHILDREN.\u2014Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as redesignated by section 211(a)(3) of this Act, is amended\u2014 (1) by inserting ”(i)” after ”(H)”; and (2) by adding at the end the following new clause: ”(ii)(I) Not less frequently than once every 3 years, the Commis- sioner shall review in accordance with paragraph (4) the continued eligibility for benefits under this title of each individual who has not attained 18 years of age and is eligible for such benefits by reason of an impairment (or combination of impairments) which is likely to improve (or, at the option of the Commissioner, which is unlikely to improve). ”(II) A representative payee of a recipient whose case is reviewed under this clause shall present, at the time of review, evidence demonstrating that the recipient is, and has been, receiv- ing treatment, to the extent considered medically necessary and available, of the condition which was the basis for providing benefits under this title. ”(III) If the representative payee refuses to comply without good cause with the requirements of subclause (II), the Commis- sioner of Social Security shall, if the Commissioner determines it is in the best interest of the individual, promptly suspend pay- ment of benefits to the representative payee, and provide for pay- Ante, p. 850. 2 USC 665e. 110 STAT. 2193PUBLIC LAW 104 193\u2014AUG. 22, 1996 ment of benefits to an alternative representative payee of the individual or, if the interest of the individual under this title would be served thereby, to the individual. ”(IV) Subclause (II) shall not apply to the representative payee of any individual with respect to whom the Commissioner deter- mines such application would be inappropriate or unnecessary. In making such determination, the Commissioner shall take into consideration the nature of the individual’s impairment (or combina- tion of impairments). Section 1631(c) shall not apply to a finding by the Commissioner that the requirements of subclause (II) should not apply to an individual’s representative payee.”. (b) DISABILITY ELIGIBILITY REDETERMINATIONS REQUIRED FOR SSI RECIPIENTS WHO ATTAIN 18 YEARS OF AGE.\u2014 (1) IN GENERAL.\u2014Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as amended by subsection (a) of this section, is amended by adding at the end the following new clause: ”(iii) If an individual is eligible for benefits under this title by reason of disability for the month preceding the month in which the individual attains the age of 18 years, the Commissioner shall redetermine such eligibility\u2014 ”(I) during the 1-year period beginning on the individual’s 18th birthday; and ”(II) by applying the criteria used in determining the initial eligibility for applicants who are age 18 or older. With respect to a redetermination under this clause, paragraph (4) shall not apply and such redetermination shall be considered a substitute for a review or redetermination otherwise required under any other provision of this subparagraph during that 1- year period.”. (2) CONFORMING REPEAL.\u2014Section 207 of the Social Secu- rity Independence and Program Improvements Act of 1994 (42 U.S.C. 1382 note; 108 Stat. 1516) is hereby repealed. (c) CONTINUING DISABILITY REVIEW REQUIRED FOR LOW BIRTH WEIGHT BABIES.\u2014Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as amended by subsections (a) and (b) of this section, is amended by adding at the end the following new clause: ”(iv)(I) Not later than 12 months after the birth of an individual, the Commissioner shall review in accordance with paragraph (4) the continuing eligibility for benefits under this title by reason of disability of such individual whose low birth weight is a contribut- ing factor material to the Commissioner’s determination that the individual is disabled. ”(II) A review under subclause (I) shall be considered a sub- stitute for a review otherwise required under any other provision of this subparagraph during that 12-month period. ”(III) A representative payee of a recipient whose case is reviewed under this clause shall present, at the time of review, evidence demonstrating that the recipient is, and has been, receiv- ing treatment, to the extent considered medically necessary and available, of the condition which was the basis for providing benefits under this title. ”(IV) If the representative payee refuses to comply without good cause with the requirements of subclause (III), the Commis- sioner of Social Security shall, if the Commissioner determines it is in the best interest of the individual, promptly suspend pay- ment of benefits to the representative payee, and provide for payment of benefits to an alternative representative payee of the 110 STAT. 2194 PUBLIC LAW 104 193\u2014AUG. 22, 1996 individual or, if the interest of the individual under this title would be served thereby, to the individual. ”(V) Subclause (III) shall not apply to the representative payee of any individual with respect to whom the Commissioner deter- mines such application would be inappropriate or unnecessary. In making such determination, the Commissioner shall take into consideration the nature of the individual’s impairment (or combina- tion of impairments). Section 1631(c) shall not apply to a finding by the Commissioner that the requirements of subclause (III) should not apply to an individual’s representative payee.”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to benefits for months beginning on or after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such amendments. SEC. 213. ADDITIONAL ACCOUNTABILITY REQUIREMENTS. (a) REQUIREMENT TO ESTABLISH ACCOUNT.\u2014Section 1631(a)(2) (42 U.S.C. 1383(a)(2)) is amended\u2014 (1) by redesignating subparagraphs (F) and (G) as subpara- graphs (G) and (H), respectively; and (2) by inserting after subparagraph (E) the following new subparagraph: ”(F)(i)(I) Each representative payee of an eligible individual under the age of 18 who is eligible for the payment of benefits described in subclause (II) shall establish on behalf of such individ- ual an account in a financial institution into which such benefits shall be paid, and shall thereafter maintain such account for use in accordance with clause (ii). ”(II) Benefits described in this subclause are past-due monthly benefits under this title (which, for purposes of this subclause, include State supplementary payments made by the Commissioner pursuant to an agreement under section 1616 or section 212(b) of Public Law 93 66) in an amount (after any withholding by the Commissioner for reimbursement to a State for interim assist- ance under subsection (g)) that exceeds the product of\u2014 ”(aa) 6, and ”(bb) the maximum monthly benefit payable under this title to an eligible individual. ”(ii)(I) A representative payee shall use funds in the account established under clause (i) to pay for allowable expenses described in subclause (II). ”(II) An allowable expense described in this subclause is an expense for\u2014 ”(aa) education or job skills training; ”(bb) personal needs assistance; ”(cc) special equipment; ”(dd) housing modification; ”(ee) medical treatment; ”(ff) therapy or rehabilitation; or ”(gg) any other item or service that the Commissioner determines to be appropriate; provided that such expense benefits such individual and, in the case of an expense described in item (bb), (cc), (dd), (ff), or (gg), is related to the impairment (or combination of impairments) of such individual. ”(III) The use of funds from an account established under clause (i) in any manner not authorized by this clause\u2014 42 USC 1382c note. 110 STAT. 2195PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(aa) by a representative payee shall be considered a misapplication of benefits for all purposes of this paragraph, and any representative payee who knowingly misapplies bene- fits from such an account shall be liable to the Commissioner in an amount equal to the total amount of such benefits; and ”(bb) by an eligible individual who is his or her own payee shall be considered a misapplication of benefits for all purposes of this paragraph and the total amount of such benefits so used shall be considered to be the uncompensated value of a disposed resource and shall be subject to the provisions of section 1613(c). ”(IV) This clause shall continue to apply to funds in the account after the child has reached age 18, regardless of whether benefits are paid directly to the beneficiary or through a representative payee. ”(iii) The representative payee may deposit into the account established pursuant to clause (i)\u2014 ”(I) past-due benefits payable to the eligible individual in an amount less than that specified in clause (i)(II), and ”(II) any other funds representing an underpayment under this title to such individual, provided that the amount of such underpayment is equal to or exceeds the maximum monthly benefit payable under this title to an eligible individual. ”(iv) The Commissioner of Social Security shall establish a system for accountability monitoring whereby such representative payee shall report, at such time and in such manner as the Commis- sioner shall require, on activity respecting funds in the account established pursuant to clause (i).”. (b) EXCLUSION FROM RESOURCES.\u2014Section 1613(a) (42 U.S.C. 1382b(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (10); (2) by striking the period at the end of paragraph (11) and inserting ”; and”; and (3) by inserting after paragraph (11) the following new paragraph: ”(12) any account, including accrued interest or other earn- ings thereon, established and maintained in accordance with section 1631(a)(2)(F).”. (c) EXCLUSION FROM INCOME.\u2014Section 1612(b) (42 U.S.C. 1382a(b)) is amended\u2014 (1) by striking ”and” at the end of paragraph (19); (2) by striking the period at the end of paragraph (20) and inserting ”; and”; and (3) by adding at the end the following new paragraph: ”(21) the interest or other earnings on any account estab- lished and maintained in accordance with section 1631(a)(2)(F).”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to payments made after the date of the enactment of this Act. SEC. 214. REDUCTION IN CASH BENEFITS PAYABLE TO INSTITUTIONAL- IZED INDIVIDUALS WHOSE MEDICAL COSTS ARE COVERED BY PRIVATE INSURANCE. (a) IN GENERAL.\u2014Section 1611(e)(1)(B) (42 U.S.C. 1382(e)(1)(B)) is amended by inserting ”or, in the case of an eligible individual who is a child under the age of 18, receiving payments (with 42 USC 1382a note. 110 STAT. 2196 PUBLIC LAW 104 193\u2014AUG. 22, 1996 respect to such individual) under any health insurance policy issued by a private provider of such insurance” after ”section 1614(f)(2)(B),”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to benefits for months beginning 90 or more days after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such amend- ments. SEC. 215. REGULATIONS. Within 3 months after the date of the enactment of this Act, the Commissioner of Social Security shall prescribe such regulations as may be necessary to implement the amendments made by this subtitle. Subtitle C\u2014Additional Enforcement Provision SEC. 221. INSTALLMENT PAYMENT OF LARGE PAST-DUE SUPPLE- MENTAL SECURITY INCOME BENEFITS. (a) IN GENERAL.\u2014Section 1631(a) (42 U.S.C. 1383) is amended by adding at the end the following new paragraph: ”(10)(A) If an individual is eligible for past-due monthly benefits under this title in an amount that (after any withholding for reimbursement to a State for interim assistance under subsection (g)) equals or exceeds the product of\u2014 ”(i) 12, and ”(ii) the maximum monthly benefit payable under this title to an eligible individual (or, if appropriate, to an eligible indi- vidual and eligible spouse), then the payment of such past-due benefits (after any such reimbursement to a State) shall be made in installments as provided in subparagraph (B). ”(B)(i) The payment of past-due benefits subject to this subpara- graph shall be made in not to exceed 3 installments that are made at 6-month intervals. ”(ii) Except as provided in clause (iii), the amount of each of the first and second installments may not exceed an amount equal to the product of clauses (i) and (ii) of subparagraph (A). ”(iii) In the case of an individual who has\u2014 ”(I) outstanding debt attributable to\u2014 ”(aa) food, ”(bb) clothing, ”(cc) shelter, or ”(dd) medically necessary services, supplies or equip- ment, or medicine; or ”(II) current expenses or expenses anticipated in the near term attributable to\u2014 ”(aa) medically necessary services, supplies or equip- ment, or medicine, or ”(bb) the purchase of a home, and such debt or expenses are not subject to reimbursement by a public assistance program, the Secretary under title XVIII, a State plan approved under title XIX, or any private entity legally liable to provide payment pursuant to an insurance policy, pre-paid plan, or other arrangement, the limitation specified in clause (ii) may 42 USC 1382 note. 42 USC 1382 note. 110 STAT. 2197PUBLIC LAW 104 193\u2014AUG. 22, 1996 be exceeded by an amount equal to the total of such debt and expenses. ”(C) This paragraph shall not apply to any individual who, at the time of the Commissioner’s determination that such individ- ual is eligible for the payment of past-due monthly benefits under this title\u2014 ”(i) is afflicted with a medically determinable impairment that is expected to result in death within 12 months; or ”(ii) is ineligible for benefits under this title and the Commissioner determines that such individual is likely to remain ineligible for the next 12 months. ”(D) For purposes of this paragraph, the term ‘benefits under this title’ includes supplementary payments pursuant to an agree- ment for Federal administration under section 1616(a), and pay- ments pursuant to an agreement entered into under section 212(b) of Public Law 93 66.”. (b) CONFORMING AMENDMENT.\u2014Section 1631(a)(1) (42 U.S.C. 1383(a)(1)) is amended by inserting ”(subject to paragraph (10))” immediately before ”in such installments”. (c) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section are effective with respect to past-due benefits payable under title XVI of the Social Security Act after the third month following the month in which this Act is enacted. (2) BENEFITS PAYABLE UNDER TITLE XVI.\u2014For purposes of this subsection, the term ”benefits payable under title XVI of the Social Security Act” includes supplementary payments pursuant to an agreement for Federal administration under section 1616(a) of the Social Security Act, and payments pursu- ant to an agreement entered into under section 212(b) of Public Law 93 66. SEC. 222. REGULATIONS. Within 3 months after the date of the enactment of this Act, the Commissioner of Social Security shall prescribe such regulations as may be necessary to implement the amendments made by this subtitle. Subtitle D\u2014Studies Regarding Supplemental Security Income Program SEC. 231. ANNUAL REPORT ON THE SUPPLEMENTAL SECURITY INCOME PROGRAM. Title XVI (42 U.S.C. 1381 et seq.), as amended by section 105(b)(3) of the Contract with America Advancement Act of 1996, is amended by adding at the end the following new section: ”ANNUAL REPORT ON PROGRAM ”SEC. 1637. (a) Not later than May 30 of each year, the Commis- sioner of Social Security shall prepare and deliver a report annually to the President and the Congress regarding the program under this title, including\u2014 ”(1) a comprehensive description of the program; ”(2) historical and current data on allowances and denials, including number of applications and allowance rates for initial 42 USC 1383f. 42 USC 1383 note. 42 USC 1383 note. 110 STAT. 2198 PUBLIC LAW 104 193\u2014AUG. 22, 1996 determinations, reconsideration determinations, administrative law judge hearings, appeals council reviews, and Federal court decisions; ”(3) historical and current data on characteristics of recipi- ents and program costs, by recipient group (aged, blind, disabled adults, and disabled children); ”(4) historical and current data on prior enrollment by recipients in public benefit programs, including State programs funded under part A of title IV of the Social Security Act and State general assistance programs; ”(5) projections of future number of recipients and program costs, through at least 25 years; ”(6) number of redeterminations and continuing dis- ability reviews, and the outcomes of such redeterminations and reviews; ”(7) data on the utilization of work incentives; ”(8) detailed information on administrative and other pro- gram operation costs; ”(9) summaries of relevant research undertaken by the Social Security Administration, or by other researchers; ”(10) State supplementation program operations; ”(11) a historical summary of statutory changes to this title; and ”(12) such other information as the Commissioner deems useful. ”(b) Each member of the Social Security Advisory Board shall be permitted to provide an individual report, or a joint report if agreed, of views of the program under this title, to be included in the annual report required under this section.”. SEC. 232. STUDY BY GENERAL ACCOUNTING OFFICE. Not later than January 1, 1999, the Comptroller General of the United States shall study and report on\u2014 (1) the impact of the amendments made by, and the provi- sions of, this title on the supplemental security income program under title XVI of the Social Security Act; and (2) extra expenses incurred by families of children receiving benefits under such title that are not covered by other Federal, State, or local programs. TITLE III\u2014CHILD SUPPORT SEC. 300. REFERENCE TO SOCIAL SECURITY ACT. Except as otherwise specifically provided, wherever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. 42 USC 1382 note. 110 STAT. 2199PUBLIC LAW 104 193\u2014AUG. 22, 1996 Subtitle A\u2014Eligibility for Services; Distribution of Payments SEC. 301. STATE OBLIGATION TO PROVIDE CHILD SUPPORT ENFORCE- MENT SERVICES. (a) STATE PLAN REQUIREMENTS.\u2014Section 454 (42 U.S.C. 654) is amended\u2014 (1) by striking paragraph (4) and inserting the following new paragraph: ”(4) provide that the State will\u2014 ”(A) provide services relating to the establishment of paternity or the establishment, modification, or enforce- ment of child support obligations, as appropriate, under the plan with respect to\u2014 ”(i) each child for whom (I) assistance is provided under the State program funded under part A of this title, (II) benefits or services for foster care mainte- nance are provided under the State program funded under part E of this title, or (III) medical assistance is provided under the State plan approved under title XIX, unless, in accordance with paragraph (29), good cause or other exceptions exist; ”(ii) any other child, if an individual applies for such services with respect to the child; and ”(B) enforce any support obligation established with respect to\u2014 ”(i) a child with respect to whom the State provides services under the plan; or ”(ii) the custodial parent of such a child;”; and (2) in paragraph (6)\u2014 (A) by striking ”provide that” and inserting ”provide that\u2014”; (B) by striking subparagraph (A) and inserting the following new subparagraph: ”(A) services under the plan shall be made available to residents of other States on the same terms as to resi- dents of the State submitting the plan;”; (C) in subparagraph (B), by inserting ”on individuals not receiving assistance under any State program funded under part A” after ”such services shall be imposed”; (D) in each of subparagraphs (B), (C), (D), and (E)\u2014 (i) by indenting the subparagraph in the same manner as, and aligning the left margin of the subpara- graph with the left margin of, the matter inserted by subparagraph (B) of this paragraph; and (ii) by striking the final comma and inserting a semicolon; and (E) in subparagraph (E), by indenting each of clauses (i) and (ii) 2 additional ems. (b) CONTINUATION OF SERVICES FOR FAMILIES CEASING TO RECEIVE ASSISTANCE UNDER THE STATE PROGRAM FUNDED UNDER PART A.\u2014Section 454 (42 U.S.C. 654) is amended\u2014 (1) by striking ”and” at the end of paragraph (23); (2) by striking the period at the end of paragraph (24) and inserting ”; and”; and 110 STAT. 2200 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (3) by adding after paragraph (24) the following new para- graph: ”(25) provide that if a family with respect to which services are provided under the plan ceases to receive assistance under the State program funded under part A, the State shall provide appropriate notice to the family and continue to provide such services, subject to the same conditions and on the same basis as in the case of other individuals to whom services are fur- nished under the plan, except that an application or other request to continue services shall not be required of such a family and paragraph (6)(B) shall not apply to the family.”. (c) CONFORMING AMENDMENTS.\u2014 (1) Section 452(b) (42 U.S.C. 652(b)) is amended by striking ”454(6)” and inserting ”454(4)”. (2) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is amended by striking ”454(6)” each place it appears and inserting ”454(4)(A)(ii)”. (3) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is amended by striking ”in the case of overdue support which a State has agreed to collect under section 454(6)” and inserting ”in any other case”. (4) Section 466(e) (42 U.S.C. 666(e)) is amended by striking ”paragraph (4) or (6) of section 454” and inserting ”section 454(4)”. SEC. 302. DISTRIBUTION OF CHILD SUPPORT COLLECTIONS. (a) IN GENERAL.\u2014Section 457 (42 U.S.C. 657) is amended to read as follows: ”SEC. 457. DISTRIBUTION OF COLLECTED SUPPORT. ”(a) IN GENERAL.\u2014Subject to subsection (e), an amount collected on behalf of a family as support by a State pursuant to a plan approved under this part shall be distributed as follows: ”(1) FAMILIES RECEIVING ASSISTANCE.\u2014In the case of a family receiving assistance from the State, the State shall\u2014 ”(A) pay to the Federal Government the Federal share of the amount so collected; and ”(B) retain, or distribute to the family, the State share of the amount so collected. ”(2) FAMILIES THAT FORMERLY RECEIVED ASSISTANCE.\u2014In the case of a family that formerly received assistance from the State: ”(A) CURRENT SUPPORT PAYMENTS.\u2014To the extent that the amount so collected does not exceed the amount required to be paid to the family for the month in which collected, the State shall distribute the amount so collected to the family. ”(B) PAYMENTS OF ARREARAGES.\u2014To the extent that the amount so collected exceeds the amount required to be paid to the family for the month in which collected, the State shall distribute the amount so collected as follows: ”(i) DISTRIBUTION OF ARREARAGES THAT ACCRUED AFTER THE FAMILY CEASED TO RECEIVE ASSISTANCE.\u2014 ”(I) PRE-OCTOBER 1997.\u2014Except as provided in subclause (II), the provisions of this section (other than subsection (b)(1)) as in effect and applied on the day before the date of the enactment of section 302 of the Personal Responsibility and 110 STAT. 2201PUBLIC LAW 104 193\u2014AUG. 22, 1996 Work Opportunity Act Reconciliation of 1996 shall apply with respect to the distribution of support arrearages that\u2014 ”(aa) accrued after the family ceased to receive assistance, and ”(bb) are collected before October 1, 1997. ”(II) POST-SEPTEMBER 1997.\u2014With respect to the amount so collected on or after October 1, 1997 (or before such date, at the option of the State)\u2014 ”(aa) IN GENERAL.\u2014The State shall first distribute the amount so collected (other than any amount described in clause (iv)) to the family to the extent necessary to satisfy any support arrearages with respect to the family that accrued after the family ceased to receive assistance from the State. ”(bb) REIMBURSEMENT OF GOVERNMENTS FOR ASSISTANCE PROVIDED TO THE FAMILY.\u2014 After the application of division (aa) and clause (ii)(II)(aa) with respect to the amount so collected, the State shall retain the State share of the amount so collected, and pay to the Federal Government the Federal share (as defined in subsection (c)(2)) of the amount so collected, but only to the extent necessary to reimburse amounts paid to the family as assistance by the State. ”(cc) DISTRIBUTION OF THE REMAINDER TO THE FAMILY.\u2014To the extent that neither divi- sion (aa) nor division (bb) applies to the amount so collected, the State shall distribute the amount to the family. ”(ii) DISTRIBUTION OF ARREARAGES THAT ACCRUED BEFORE THE FAMILY RECEIVED ASSISTANCE.\u2014 ”(I) PRE-OCTOBER 2000.\u2014Except as provided in subclause (II), the provisions of this section (other than subsection (b)(1)) as in effect and applied on the day before the date of the enactment of section 302 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 shall apply with respect to the distribution of support arrearages that\u2014 ”(aa) accrued before the family received assistance, and ”(bb) are collected before October 1, 2000. ”(II) POST-SEPTEMBER 2000.\u2014Unless, based on the report required by paragraph (4), the Congress determines otherwise, with respect to the amount so collected on or after October 1, 2000 (or before such date, at the option of the State)\u2014 ”(aa) IN GENERAL.\u2014The State shall first distribute the amount so collected (other than any amount described in clause (iv)) to the family to the extent necessary to satisfy any support arrearages with respect to the family 110 STAT. 2202 PUBLIC LAW 104 193\u2014AUG. 22, 1996 that accrued before the family received assist- ance from the State. ”(bb) REIMBURSEMENT OF GOVERNMENTS FOR ASSISTANCE PROVIDED TO THE FAMILY.\u2014 After the application of clause (i)(II)(aa) and division (aa) with respect to the amount so collected, the State shall retain the State share of the amount so collected, and pay to the Federal Government the Federal share (as defined in subsection (c)(2)) of the amount so collected, but only to the extent necessary to reimburse amounts paid to the family as assistance by the State. ”(cc) DISTRIBUTION OF THE REMAINDER TO THE FAMILY.\u2014To the extent that neither divi- sion (aa) nor division (bb) applies to the amount so collected, the State shall distribute the amount to the family. ”(iii) DISTRIBUTION OF ARREARAGES THAT ACCRUED WHILE THE FAMILY RECEIVED ASSISTANCE.\u2014In the case of a family described in this subparagraph, the provi- sions of paragraph (1) shall apply with respect to the distribution of support arrearages that accrued while the family received assistance. ”(iv) AMOUNTS COLLECTED PURSUANT TO SECTION 464.\u2014Notwithstanding any other provision of this sec- tion, any amount of support collected pursuant to section 464 shall be retained by the State to the extent past-due support has been assigned to the State as a condition of receiving assistance from the State, up to the amount necessary to reimburse the State for amounts paid to the family as assistance by the State. The State shall pay to the Federal Government the Federal share of the amounts so retained. To the extent the amount collected pursuant to section 464 exceeds the amount so retained, the State shall distribute the excess to the family. ”(v) ORDERING RULES FOR DISTRIBUTIONS.\u2014For purposes of this subparagraph, unless an earlier effec- tive date is required by this section, effective October 1, 2000, the State shall treat any support arrearages collected, except for amounts collected pursuant to sec- tion 464, as accruing in the following order: ”(I) To the period after the family ceased to receive assistance. ”(II) To the period before the family received assistance. ”(III) To the period while the family was receiving assistance. ”(3) FAMILIES THAT NEVER RECEIVED ASSISTANCE.\u2014In the case of any other family, the State shall distribute the amount so collected to the family. ”(4) FAMILIES UNDER CERTAIN AGREEMENTS.\u2014In the case of a family receiving assistance from an Indian tribe, distribute the amount so collected pursuant to an agreement entered into pursuant to a State plan under section 454(33). 110 STAT. 2203PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(5) STUDY AND REPORT.\u2014Not later than October 1, 1998, the Secretary shall report to the Congress the Secretary’s find- ings with respect to\u2014 ”(A) whether the distribution of post-assistance arrear- ages to families has been effective in moving people off of welfare and keeping them off of welfare; ”(B) whether early implementation of a pre-assistance arrearage program by some States has been effective in moving people off of welfare and keeping them off of wel- fare; ”(C) what the overall impact has been of the amend- ments made by the Personal Responsibility and Work Opportunity Act of 1996 with respect to child support enforcement in moving people off of welfare and keeping them off of welfare; and ”(D) based on the information and data the Secretary has obtained, what changes, if any, should be made in the policies related to the distribution of child support arrearages. ”(b) CONTINUATION OF ASSIGNMENTS.\u2014Any rights to support obligations, which were assigned to a State as a condition of receiv- ing assistance from the State under part A and which were in effect on the day before the date of the enactment of the Personal Responsibility and Work Opportunity Act of 1996, shall remain assigned after such date. ”(c) DEFINITIONS.\u2014As used in subsection (a): ”(1) ASSISTANCE.\u2014The term ‘assistance from the State’ means\u2014 ”(A) assistance under the State program funded under part A or under the State plan approved under part A of this title (as in effect on the day before the date of the enactment of the Personal Responsibility and Work Opportunity Act of 1996); and ”(B) foster care maintenance payments under the State plan approved under part E of this title. ”(2) FEDERAL SHARE.\u2014The term ‘Federal share’ means that portion of the amount collected resulting from the application of the Federal medical assistance percentage in effect for the fiscal year in which the amount is collected. ”(3) FEDERAL MEDICAL ASSISTANCE PERCENTAGE.\u2014The term ‘Federal medical assistance percentage’ means\u2014 ”(A) the Federal medical assistance percentage (as defined in section 1118), in the case of Puerto Rico, the Virgin Islands, Guam, and American Samoa; or ”(B) the Federal medical assistance percentage (as defined in section 1905(b), as in effect on September 30, 1996) in the case of any other State. ”(4) STATE SHARE.\u2014The term ‘State share’ means 100 per- cent minus the Federal share. ”(d) HOLD HARMLESS PROVISION.\u2014If the amounts collected which could be retained by the State in the fiscal year (to the extent necessary to reimburse the State for amounts paid to families as assistance by the State) are less than the State share of the amounts collected in fiscal year 1995 (determined in accordance with section 457 as in effect on the day before the date of the enactment of the Personal Responsibility and Work Opportunity 110 STAT. 2204 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Act of 1996), the State share for the fiscal year shall be an amount equal to the State share in fiscal year 1995. ”(e) GAP PAYMENTS NOT SUBJECT TO DISTRIBUTION UNDER THIS SECTION.\u2014At State option, this section shall not apply to any amount collected on behalf of a family as support by the State (and paid to the family in addition to the amount of assistance otherwise payable to the family) pursuant to a plan approved under this part if such amount would have been paid to the family by the State under section 402(a)(28), as in effect and applied on the day before the date of the enactment of section 302 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. For purposes of subsection (d), the State share of such amount paid to the family shall be considered amounts which could be retained by the State if such payments were reported by the State as part of the State share of amounts collected in fiscal year 1995.”. (b) CONFORMING AMENDMENTS.\u2014 (1) Section 464(a)(1) (42 U.S.C. 664(a)(1)) is amended by striking ”section 457(b)(4) or (d)(3)” and inserting ”section 457”. (2) Section 454 (42 U.S.C. 654) is amended\u2014 (A) in paragraph (11)\u2014 (i) by striking ”(11)” and inserting ”(11)(A)”; and (ii) by inserting after the semicolon ”and”; and (B) by redesignating paragraph (12) as subparagraph (B) of paragraph (11). (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall be effective on October 1, 1996, or earlier at the State’s option. (2) CONFORMING AMENDMENTS.\u2014The amendments made by subsection (b)(2) shall become effective on the date of the enact- ment of this Act. SEC. 303. PRIVACY SAFEGUARDS. (a) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by section 301(b) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (24); (2) by striking the period at the end of paragraph (25) and inserting ”; and”; and (3) by adding after paragraph (25) the following new para- graph: ”(26) will have in effect safeguards, applicable to all con- fidential information handled by the State agency, that are designed to protect the privacy rights of the parties, including\u2014 ”(A) safeguards against unauthorized use or disclosure of information relating to proceedings or actions to establish paternity, or to establish or enforce support; ”(B) prohibitions against the release of information on the whereabouts of 1 party to another party against whom a protective order with respect to the former party has been entered; and ”(C) prohibitions against the release of information on the whereabouts of 1 party to another party if the State has reason to believe that the release of the informa- tion may result in physical or emotional harm to the former party.”. 42 USC 657 note. 110 STAT. 2205PUBLIC LAW 104 193\u2014AUG. 22, 1996 (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall become effective on October 1, 1997. SEC. 304. RIGHTS TO NOTIFICATION OF HEARINGS. (a) IN GENERAL.\u2014Section 454 (42 U.S.C. 654), as amended by section 302(b)(2) of this Act, is amended by inserting after paragraph (11) the following new paragraph: ”(12) provide for the establishment of procedures to require the State to provide individuals who are applying for or receiv- ing services under the State plan, or who are parties to cases in which services are being provided under the State plan\u2014 ”(A) with notice of all proceedings in which support obligations might be established or modified; and ”(B) with a copy of any order establishing or modifying a child support obligation, or (in the case of a petition for modification) a notice of determination that there should be no change in the amount of the child support award, within 14 days after issuance of such order or determina- tion;”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall become effective on October 1, 1997. Subtitle B\u2014Locate and Case Tracking SEC. 311. STATE CASE REGISTRY. Section 454A, as added by section 344(a)(2) of this Act, is amended by adding at the end the following new subsections: ”(e) STATE CASE REGISTRY.\u2014 ”(1) CONTENTS.\u2014The automated system required by this section shall include a registry (which shall be known as the ‘State case registry’) that contains records with respect to\u2014 ”(A) each case in which services are being provided by the State agency under the State plan approved under this part; and ”(B) each support order established or modified in the State on or after October 1, 1998. ”(2) LINKING OF LOCAL REGISTRIES.\u2014The State case registry may be established by linking local case registries of support orders through an automated information network, subject to this section. ”(3) USE OF STANDARDIZED DATA ELEMENTS.\u2014Such records shall use standardized data elements for both parents (such as names, social security numbers and other uniform identifica- tion numbers, dates of birth, and case identification numbers), and contain such other information (such as on case status) as the Secretary may require. ”(4) PAYMENT RECORDS.\u2014Each case record in the State case registry with respect to which services are being provided under the State plan approved under this part and with respect to which a support order has been established shall include a record of\u2014 ”(A) the amount of monthly (or other periodic) support owed under the order, and other amounts (including arrear- ages, interest or late payment penalties, and fees) due or overdue under the order; 42 USC 654 note. 42 USC 654 note. 110 STAT. 2206 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) any amount described in subparagraph (A) that has been collected; ”(C) the distribution of such collected amounts; ”(D) the birth date of any child for whom the order requires the provision of support; and ”(E) the amount of any lien imposed with respect to the order pursuant to section 466(a)(4). ”(5) UPDATING AND MONITORING.\u2014The State agency operat- ing the automated system required by this section shall promptly establish and update, maintain, and regularly mon- itor, case records in the State case registry with respect to which services are being provided under the State plan approved under this part, on the basis of\u2014 ”(A) information on administrative actions and administrative and judicial proceedings and orders relating to paternity and support; ”(B) information obtained from comparison with Federal, State, or local sources of information; ”(C) information on support collections and distribu- tions; and ”(D) any other relevant information. ”(f) INFORMATION COMPARISONS AND OTHER DISCLOSURES OF INFORMATION.\u2014The State shall use the automated system required by this section to extract information from (at such times, and in such standardized format or formats, as may be required by the Secretary), to share and compare information with, and to receive information from, other data bases and information compari- son services, in order to obtain (or provide) information necessary to enable the State agency (or the Secretary or other State or Federal agencies) to carry out this part, subject to section 6103 of the Internal Revenue Code of 1986. Such information comparison activities shall include the following: ”(1) FEDERAL CASE REGISTRY OF CHILD SUPPORT ORDERS.\u2014 Furnishing to the Federal Case Registry of Child Support Orders established under section 453(h) (and update as nec- essary, with information including notice of expiration of orders) the minimum amount of information on child support cases recorded in the State case registry that is necessary to operate the registry (as specified by the Secretary in regulations). ”(2) FEDERAL PARENT LOCATOR SERVICE.\u2014Exchanging information with the Federal Parent Locator Service for the purposes specified in section 453. ”(3) TEMPORARY FAMILY ASSISTANCE AND MEDICAID AGENCIES.\u2014Exchanging information with State agencies (of the State and of other States) administering programs funded under part A, programs operated under a State plan approved under title XIX, and other programs designated by the Secretary, as necessary to perform State agency responsibilities under this part and under such programs. ”(4) INTRASTATE AND INTERSTATE INFORMATION COMPARI- SONS.\u2014Exchanging information with other agencies of the State, agencies of other States, and interstate information net- works, as necessary and appropriate to carry out (or assist other States to carry out) the purposes of this part.”. 110 STAT. 2207PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 312. COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS. (a) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b) and 303(a) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (25); (2) by striking the period at the end of paragraph (26) and inserting ”; and”; and (3) by adding after paragraph (26) the following new para- graph: ”(27) provide that, on and after October 1, 1998, the State agency will\u2014 ”(A) operate a State disbursement unit in accordance with section 454B; and ”(B) have sufficient State staff (consisting of State employees) and (at State option) contractors reporting directly to the State agency to\u2014 ”(i) monitor and enforce support collections through the unit in cases being enforced by the State pursuant to section 454(4) (including carrying out the automated data processing responsibilities described in section 454A(g)); and ”(ii) take the actions described in section 466(c)(1) in appropriate cases.”. (b) ESTABLISHMENT OF STATE DISBURSEMENT UNIT.\u2014Part D of title IV (42 U.S.C. 651 669), as amended by section 344(a)(2) of this Act, is amended by inserting after section 454A the following new section: ”SEC. 454B. COLLECTION AND DISBURSEMENT OF SUPPORT PAY- MENTS. ”(a) STATE DISBURSEMENT UNIT.\u2014 ”(1) IN GENERAL.\u2014In order for a State to meet the require- ments of this section, the State agency must establish and operate a unit (which shall be known as the ‘State disbursement unit’) for the collection and disbursement of payments under support orders\u2014 ”(A) in all cases being enforced by the State pursuant to section 454(4); and ”(B) in all cases not being enforced by the State under this part in which the support order is initially issued in the State on or after January 1, 1994, and in which the income of the noncustodial parent is subject to withholding pursuant to section 466(a)(8)(B). ”(2) OPERATION.\u2014The State disbursement unit shall be operated\u2014 ”(A) directly by the State agency (or 2 or more State agencies under a regional cooperative agreement), or (to the extent appropriate) by a contractor responsible directly to the State agency; and ”(B) except in cases described in paragraph (1)(B), in coordination with the automated system established by the State pursuant to section 454A. ”(3) LINKING OF LOCAL DISBURSEMENT UNITS.\u2014The State disbursement unit may be established by linking local disburse- ment units through an automated information network, subject to this section, if the Secretary agrees that the system will not cost more nor take more time to establish or operate than 42 USC 654b. 110 STAT. 2208 PUBLIC LAW 104 193\u2014AUG. 22, 1996 a centralized system. In addition, employers shall be given 1 location to which income withholding is sent. ”(b) REQUIRED PROCEDURES.\u2014The State disbursement unit shall use automated procedures, electronic processes, and computer- driven technology to the maximum extent feasible, efficient, and economical, for the collection and disbursement of support pay- ments, including procedures\u2014 ”(1) for receipt of payments from parents, employers, and other States, and for disbursements to custodial parents and other obligees, the State agency, and the agencies of other States; ”(2) for accurate identification of payments; ”(3) to ensure prompt disbursement of the custodial parent’s share of any payment; and ”(4) to furnish to any parent, upon request, timely informa- tion on the current status of support payments under an order requiring payments to be made by or to the parent, except that in cases described in subsection (a)(1)(B), the State disbursement unit shall not be required to convert and maintain in automated form records of payments kept pursuant to section 466(a)(8)(B)(iii) before the effective date of this section. ”(c) TIMING OF DISBURSEMENTS.\u2014 ”(1) IN GENERAL.\u2014Except as provided in paragraph (2), the State disbursement unit shall distribute all amounts pay- able under section 457(a) within 2 business days after receipt from the employer or other source of periodic income, if suffi- cient information identifying the payee is provided. ”(2) PERMISSIVE RETENTION OF ARREARAGES.\u2014The State disbursement unit may delay the distribution of collections toward arrearages until the resolution of any timely appeal with respect to such arrearages. ”(d) BUSINESS DAY DEFINED.\u2014As used in this section, the term ‘business day’ means a day on which State offices are open for regular business.”. (c) USE OF AUTOMATED SYSTEM.\u2014Section 454A, as added by section 344(a)(2) and as amended by section 311 of this Act, is amended by adding at the end the following new subsection: ”(g) COLLECTION AND DISTRIBUTION OF SUPPORT PAYMENTS.\u2014 ”(1) IN GENERAL.\u2014The State shall use the automated sys- tem required by this section, to the maximum extent feasible, to assist and facilitate the collection and disbursement of sup- port payments through the State disbursement unit operated under section 454B, through the performance of functions, including, at a minimum\u2014 ”(A) transmission of orders and notices to employers (and other debtors) for the withholding of income\u2014 ”(i) within 2 business days after receipt of notice of, and the income source subject to, such withholding from a court, another State, an employer, the Federal Parent Locator Service, or another source recognized by the State; and ”(ii) using uniform formats prescribed by the Sec- retary; ”(B) ongoing monitoring to promptly identify failures to make timely payment of support; and 110 STAT. 2209PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(C) automatic use of enforcement procedures (includ- ing procedures authorized pursuant to section 466(c)) if payments are not timely made. ”(2) BUSINESS DAY DEFINED.\u2014As used in paragraph (1), the term ‘business day’ means a day on which State offices are open for regular business.”. (d) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall become effective on October 1, 1998. (2) LIMITED EXCEPTION TO UNIT HANDLING PAYMENTS.\u2014 Notwithstanding section 454B(b)(1) of the Social Security Act, as added by this section, any State which, as of the date of the enactment of this Act, processes the receipt of child support payments through local courts may, at the option of the State, continue to process through September 30, 1999, such payments through such courts as processed such payments on or before such date of enactment. SEC. 313. STATE DIRECTORY OF NEW HIRES. (a) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), and 312(a) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (26); (2) by striking the period at the end of paragraph (27) and inserting ”; and”; and (3) by adding after paragraph (27) the following new para- graph: ”(28) provide that, on and after October 1, 1997, the State will operate a State Directory of New Hires in accordance with section 453A.”. (b) STATE DIRECTORY OF NEW HIRES.\u2014Part D of title IV (42 U.S.C. 651 669) is amended by inserting after section 453 the following new section: ”SEC. 453A. STATE DIRECTORY OF NEW HIRES. ”(a) ESTABLISHMENT.\u2014 ”(1) IN GENERAL.\u2014 ”(A) REQUIREMENT FOR STATES THAT HAVE NO DIREC- TORY.\u2014Except as provided in subparagraph (B), not later than October 1, 1997, each State shall establish an auto- mated directory (to be known as the ‘State Directory of New Hires’) which shall contain information supplied in accordance with subsection (b) by employers on each newly hired employee. ”(B) STATES WITH NEW HIRE REPORTING LAW IN EXIST- ENCE.\u2014A State which has a new hire reporting law in existence on the date of the enactment of this section may continue to operate under the State law, but the State must meet the requirements of subsection (g)(2) not later than October 1, 1997, and the requirements of this section (other than subsection (g)(2)) not later than October 1, 1998. ”(2) DEFINITIONS.\u2014As used in this section: ”(A) EMPLOYEE.\u2014The term ’employee’\u2014 ”(i) means an individual who is an employee within the meaning of chapter 24 of the Internal Revenue Code of 1986; and 42 USC 653a. 42 USC 654b note. 110 STAT. 2210 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) does not include an employee of a Federal or State agency performing intelligence or counterintel- ligence functions, if the head of such agency has deter- mined that reporting pursuant to paragraph (1) with respect to the employee could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission. ”(B) EMPLOYER.\u2014 ”(i) IN GENERAL.\u2014The term ’employer’ has the meaning given such term in section 3401(d) of the Internal Revenue Code of 1986 and includes any governmental entity and any labor organization. ”(ii) LABOR ORGANIZATION.\u2014The term ‘labor organization’ shall have the meaning given such term in section 2(5) of the National Labor Relations Act, and includes any entity (also known as a ‘hiring hall’) which is used by the organization and an employer to carry out requirements described in section 8(f)(3) of such Act of an agreement between the organization and the employer. ”(b) EMPLOYER INFORMATION.\u2014 ”(1) REPORTING REQUIREMENT.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subpara- graphs (B) and (C), each employer shall furnish to the Directory of New Hires of the State in which a newly hired employee works, a report that contains the name, address, and social security number of the employee, and the name and address of, and identifying number assigned under section 6109 of the Internal Revenue Code of 1986 to, the employer. ”(B) MULTISTATE EMPLOYERS.\u2014An employer that has employees who are employed in 2 or more States and that transmits reports magnetically or electronically may comply with subparagraph (A) by designating 1 State in which such employer has employees to which the employer will transmit the report described in subparagraph (A), and transmitting such report to such State. Any employer that transmits reports pursuant to this subparagraph shall notify the Secretary in writing as to which State such employer designates for the purpose of sending reports. ”(C) FEDERAL GOVERNMENT EMPLOYERS.\u2014Any depart- ment, agency, or instrumentality of the United States shall comply with subparagraph (A) by transmitting the report described in subparagraph (A) to the National Directory of New Hires established pursuant to section 453. ”(2) TIMING OF REPORT.\u2014Each State may provide the time within which the report required by paragraph (1) shall be made with respect to an employee, but such report shall be made\u2014 ”(A) not later than 20 days after the date the employer hires the employee; or ”(B) in the case of an employer transmitting reports magnetically or electronically, by 2 monthly transmissions (if necessary) not less than 12 days nor more than 16 days apart. ”(c) REPORTING FORMAT AND METHOD.\u2014Each report required by subsection (b) shall be made on a W 4 form or, at the option Notification. 110 STAT. 2211PUBLIC LAW 104 193\u2014AUG. 22, 1996 of the employer, an equivalent form, and may be transmitted by 1st class mail, magnetically, or electronically. ”(d) CIVIL MONEY PENALTIES ON NONCOMPLYING EMPLOYERS.\u2014 The State shall have the option to set a State civil money penalty which shall be less than\u2014 ”(1) $25; or ”(2) $500 if, under State law, the failure is the result of a conspiracy between the employer and the employee to not supply the required report or to supply a false or incomplete report. ”(e) ENTRY OF EMPLOYER INFORMATION.\u2014Information shall be entered into the data base maintained by the State Directory of New Hires within 5 business days of receipt from an employer pursuant to subsection (b). ”(f) INFORMATION COMPARISONS.\u2014 ”(1) IN GENERAL.\u2014Not later than May 1, 1998, an agency designated by the State shall, directly or by contract, conduct automated comparisons of the social security numbers reported by employers pursuant to subsection (b) and the social security numbers appearing in the records of the State case registry for cases being enforced under the State plan. ”(2) NOTICE OF MATCH.\u2014When an information comparison conducted under paragraph (1) reveals a match with respect to the social security number of an individual required to pro- vide support under a support order, the State Directory of New Hires shall provide the agency administering the State plan approved under this part of the appropriate State with the name, address, and social security number of the employee to whom the social security number is assigned, and the name and address of, and identifying number assigned under section 6109 of the Internal Revenue Code of 1986 to, the employer. ”(g) TRANSMISSION OF INFORMATION.\u2014 ”(1) TRANSMISSION OF WAGE WITHHOLDING NOTICES TO EMPLOYERS.\u2014Within 2 business days after the date information regarding a newly hired employee is entered into the State Directory of New Hires, the State agency enforcing the employ- ee’s child support obligation shall transmit a notice to the employer of the employee directing the employer to withhold from the income of the employee an amount equal to the monthly (or other periodic) child support obligation (including any past due support obligation) of the employee, unless the employee’s income is not subject to withholding pursuant to section 466(b)(3). ”(2) TRANSMISSIONS TO THE NATIONAL DIRECTORY OF NEW HIRES.\u2014 ”(A) NEW HIRE INFORMATION.\u2014Within 3 business days after the date information regarding a newly hired employee is entered into the State Directory of New Hires, the State Directory of New Hires shall furnish the informa- tion to the National Directory of New Hires. ”(B) WAGE AND UNEMPLOYMENT COMPENSATION INFORMATION.\u2014The State Directory of New Hires shall, on a quarterly basis, furnish to the National Directory of New Hires extracts of the reports required under section 303(a)(6) to be made to the Secretary of Labor concerning the wages and unemployment compensation paid to individ- uals, by such dates, in such format, and containing such Regulations. 110 STAT. 2212 PUBLIC LAW 104 193\u2014AUG. 22, 1996 information as the Secretary of Health and Human Services shall specify in regulations. ”(3) BUSINESS DAY DEFINED.\u2014As used in this subsection, the term ‘business day’ means a day on which State offices are open for regular business. ”(h) OTHER USES OF NEW HIRE INFORMATION.\u2014 ”(1) LOCATION OF CHILD SUPPORT OBLIGORS.\u2014The agency administering the State plan approved under this part shall use information received pursuant to subsection (f)(2) to locate individuals for purposes of establishing paternity and establish- ing, modifying, and enforcing child support obligations, and may disclose such information to any agent of the agency that is under contract with the agency to carry out such purposes. ”(2) VERIFICATION OF ELIGIBILITY FOR CERTAIN PROGRAMS.\u2014 A State agency responsible for administering a program speci- fied in section 1137(b) shall have access to information reported by employers pursuant to subsection (b) of this section for purposes of verifying eligibility for the program. ”(3) ADMINISTRATION OF EMPLOYMENT SECURITY AND WORKERS’ COMPENSATION.\u2014State agencies operating employ- ment security and workers’ compensation programs shall have access to information reported by employers pursuant to sub- section (b) for the purposes of administering such programs.”. (c) QUARTERLY WAGE REPORTING.\u2014Section 1137(a)(3) (42 U.S.C. 1320b 7(a)(3)) is amended\u2014 (1) by inserting ”(including State and local governmental entities and labor organizations (as defined in section 453A(a)(2)(B)(iii))” after ”employers”; and (2) by inserting ”, and except that no report shall be filed with respect to an employee of a State or local agency perform- ing intelligence or counterintelligence functions, if the head of such agency has determined that filing such a report could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission” after ”paragraph (2)”. (d) DISCLOSURE TO CERTAIN AGENTS.\u2014Section 303(e) (42 U.S.C. 503(e)) is amended by adding at the end the following: ”(5) A State or local child support enforcement agency may disclose to any agent of the agency that is under contract with the agency to carry out the purposes described in paragraph (1)(B) wage information that is disclosed to an officer or employee of the agency under paragraph (1)(A). Any agent of a State or local child support agency that receives wage information under this paragraph shall comply with the safeguards established pursuant to paragraph (1)(B).”. SEC. 314. AMENDMENTS CONCERNING INCOME WITHHOLDING. (a) MANDATORY INCOME WITHHOLDING.\u2014 (1) IN GENERAL.\u2014Section 466(a)(1) (42 U.S.C. 666(a)(1)) is amended to read as follows: ”(1)(A) Procedures described in subsection (b) for the withholding from income of amounts payable as support in cases subject to enforcement under the State plan. ”(B) Procedures under which the income of a person with a support obligation imposed by a support order issued (or modified) in the State before October 1, 1996, if not otherwise subject to withholding under subsection (b), shall become sub- ject to withholding as provided in subsection (b) if arrearages 110 STAT. 2213PUBLIC LAW 104 193\u2014AUG. 22, 1996 occur, without the need for a judicial or administrative hear- ing.”. (2) CONFORMING AMENDMENTS.\u2014 (A) Section 466(b) (42 U.S.C. 666(b)) is amended in the matter preceding paragraph (1), by striking ”subsection (a)(1)” and inserting ”subsection (a)(1)(A)”. (B) Section 466(b)(4) (42 U.S.C. 666(b)(4)) is amended to read as follows: ”(4)(A) Such withholding must be carried out in full compli- ance with all procedural due process requirements of the State, and the State must send notice to each noncustodial parent to whom paragraph (1) applies\u2014 ”(i) that the withholding has commenced; and ”(ii) of the procedures to follow if the noncustodial parent desires to contest such withholding on the grounds that the withholding or the amount withheld is improper due to a mistake of fact. ”(B) The notice under subparagraph (A) of this paragraph shall include the information provided to the employer under paragraph (6)(A).”. (C) Section 466(b)(5) (42 U.S.C. 666(b)(5)) is amended by striking all that follows ”administered by” and inserting ”the State through the State disbursement unit established pursuant to section 454B, in accordance with the require- ments of section 454B.”. (D) Section 466(b)(6)(A) (42 U.S.C. 666(b)(6)(A)) is amended\u2014 (i) in clause (i), by striking ”to the appropriate agency” and all that follows and inserting ”to the State disbursement unit within 7 business days after the date the amount would (but for this subsection) have been paid or credited to the employee, for distribution in accordance with this part. The employer shall with- hold funds as directed in the notice, except that when an employer receives an income withholding order issued by another State, the employer shall apply the income withholding law of the state of the obligor’s principal place of employment in determining\u2014 ”(I) the employer’s fee for processing an income withholding order; ”(II) the maximum amount permitted to be withheld from the obligor’s income; ”(III) the time periods within which the employer must implement the income withholding order and forward the child support payment; ”(IV) the priorities for withholding and allocating income withheld for multiple child support obligees; and ”(V) any withholding terms or conditions not specified in the order. An employer who complies with an income withholding notice that is regular on its face shall not be subject to civil liability to any individual or agency for conduct in compliance with the notice.”; (ii) in clause (ii), by inserting ”be in a standard format prescribed by the Secretary, and” after ”shall”; and (iii) by adding at the end the following new clause: Notice. 110 STAT. 2214 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(iii) As used in this subparagraph, the term ‘business day’ means a day on which State offices are open for regular business.”. (E) Section 466(b)(6)(D) (42 U.S.C. 666(b)(6)(D)) is amended by striking ”any employer” and all that follows and inserting ”any employer who\u2014 ”(i) discharges from employment, refuses to employ, or takes disciplinary action against any noncustodial parent subject to income withholding required by this subsection because of the existence of such withholding and the obliga- tions or additional obligations which it imposes upon the employer; or ”(ii) fails to withhold support from income or to pay such amounts to the State disbursement unit in accordance with this subsection.”. (F) Section 466(b) (42 U.S.C. 666(b)) is amended by adding at the end the following new paragraph: ”(11) Procedures under which the agency administering the State plan approved under this part may execute a withholding order without advance notice to the obligor, includ- ing issuing the withholding order through electronic means.”. (b) DEFINITION OF INCOME.\u2014 (1) IN GENERAL.\u2014Section 466(b)(8) (42 U.S.C. 666(b)(8)) is amended to read as follows: ”(8) For purposes of subsection (a) and this subsection, the term ‘income’ means any periodic form of payment due to an individual, regardless of source, including wages, salaries, commissions, bonuses, worker’s compensation, disability, pay- ments pursuant to a pension or retirement program, and interest.”. (2) CONFORMING AMENDMENTS.\u2014 (A) Subsections (a)(8)(A), (a)(8)(B)(i), (b)(3)(A), (b)(3)(B), (b)(6)(A)(i), and (b)(6)(C), and (b)(7) of section 466 (42 U.S.C. 666(a)(8)(A), (a)(8)(B)(i), (b)(3)(A), (b)(3)(B), (b)(6)(A)(i), and (b)(6)(C), and (b)(7)) are each amended by striking ”wages” each place such term appears and inserting ”income”. (B) Section 466(b)(1) (42 U.S.C. 666(b)(1)) is amended by striking ”wages (as defined by the State for purposes of this section)” and inserting ”income”. (c) CONFORMING AMENDMENT.\u2014Section 466(c) (42 U.S.C. 666(c)) is repealed. SEC. 315. LOCATOR INFORMATION FROM INTERSTATE NETWORKS. Section 466(a) (42 U.S.C. 666(a)) is amended by inserting after paragraph (11) the following new paragraph: ”(12) LOCATOR INFORMATION FROM INTERSTATE NET- WORKS.\u2014Procedures to ensure that all Federal and State agen- cies conducting activities under this part have access to any system used by the State to locate an individual for purposes relating to motor vehicles or law enforcement.”. SEC. 316. EXPANSION OF THE FEDERAL PARENT LOCATOR SERVICE. (a) EXPANDED AUTHORITY TO LOCATE INDIVIDUALS AND ASSETS.\u2014Section 453 (42 U.S.C. 653) is amended\u2014 (1) in subsection (a), by striking all that follows ”subsection (c))” and inserting ”, for the purpose of establishing parentage, establishing, setting the amount of, modifying, or enforcing 110 STAT. 2215PUBLIC LAW 104 193\u2014AUG. 22, 1996 child support obligations, or enforcing child custody or visitation orders\u2014 ”(1) information on, or facilitating the discovery of, the location of any individual\u2014 ”(A) who is under an obligation to pay child support or provide child custody or visitation rights; ”(B) against whom such an obligation is sought; ”(C) to whom such an obligation is owed, including the individual’s social security number (or numbers), most recent address, and the name, address, and employer identification number of the individual’s employer; ”(2) information on the individual’s wages (or other income) from, and benefits of, employment (including rights to or enroll- ment in group health care coverage); and ”(3) information on the type, status, location, and amount of any assets of, or debts owed by or to, any such indi- vidual.”; and (2) in subsection (b)\u2014 (A) in the matter preceding paragraph (1), by striking ”social security” and all that follows through ”absent par- ent” and inserting ”information described in subsection (a)”; and (B) in the flush paragraph at the end, by adding the following: ”No information shall be disclosed to any person if the State has notified the Secretary that the State has reasonable evidence of domestic violence or child abuse and the disclosure of such information could be harmful to the custodial parent or the child of such parent. Informa- tion received or transmitted pursuant to this section shall be subject to the safeguard provisions contained in section 454(26).”. (b) AUTHORIZED PERSON FOR INFORMATION REGARDING VISITATION RIGHTS.\u2014Section 453(c) (42 U.S.C. 653(c)) is amended\u2014 (1) in paragraph (1), by striking ”support” and inserting ”support or to seek to enforce orders providing child custody or visitation rights”; and (2) in paragraph (2), by striking ”, or any agent of such court; and” and inserting ”or to issue an order against a resident parent for child custody or visitation rights, or any agent of such court;”. (c) REIMBURSEMENT FOR INFORMATION FROM FEDERAL AGENCIES.\u2014Section 453(e)(2) (42 U.S.C. 653(e)(2)) is amended in the 4th sentence by inserting ”in an amount which the Secretary determines to be reasonable payment for the information exchange (which amount shall not include payment for the costs of obtaining, compiling, or maintaining the information)” before the period. (d) REIMBURSEMENT FOR REPORTS BY STATE AGENCIES.\u2014Section 453 (42 U.S.C. 653) is amended by adding at the end the following new subsection: ”(g) REIMBURSEMENT FOR REPORTS BY STATE AGENCIES.\u2014The Secretary may reimburse Federal and State agencies for the costs incurred by such entities in furnishing information requested by the Secretary under this section in an amount which the Secretary determines to be reasonable payment for the information exchange (which amount shall not include payment for the costs of obtaining, compiling, or maintaining the information).”. (e) CONFORMING AMENDMENTS.\u2014 110 STAT. 2216 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (1) Sections 452(a)(9), 453(a), 453(b), 463(a), 463(e), and 463(f) (42 U.S.C. 652(a)(9), 653(a), 653(b), 663(a), 663(e), and 663(f)) are each amended by inserting ”Federal” before ”Parent” each place such term appears. (2) Section 453 (42 U.S.C. 653) is amended in the heading by adding ”FEDERAL” before ”PARENT”. (f) NEW COMPONENTS.\u2014Section 453 (42 U.S.C. 653), as amended by subsection (d) of this section, is amended by adding at the end the following new subsections: ”(h) FEDERAL CASE REGISTRY OF CHILD SUPPORT ORDERS.\u2014 ”(1) IN GENERAL.\u2014Not later than October 1, 1998, in order to assist States in administering programs under State plans approved under this part and programs funded under part A, and for the other purposes specified in this section, the Secretary shall establish and maintain in the Federal Parent Locator Service an automated registry (which shall be known as the ‘Federal Case Registry of Child Support Orders’), which shall contain abstracts of support orders and other information described in paragraph (2) with respect to each case in each State case registry maintained pursuant to section 454A(e), as furnished (and regularly updated), pursuant to section 454A(f), by State agencies administering programs under this part. ”(2) CASE INFORMATION.\u2014The information referred to in paragraph (1) with respect to a case shall be such information as the Secretary may specify in regulations (including the names, social security numbers or other uniform identification numbers, and State case identification numbers) to identify the individuals who owe or are owed support (or with respect to or on behalf of whom support obligations are sought to be established), and the State or States which have the case. ”(i) NATIONAL DIRECTORY OF NEW HIRES.\u2014 ”(1) IN GENERAL.\u2014In order to assist States in administering programs under State plans approved under this part and programs funded under part A, and for the other purposes specified in this section, the Secretary shall, not later than October 1, 1997, establish and maintain in the Federal Parent Locator Service an automated directory to be known as the National Directory of New Hires, which shall contain the information supplied pursuant to section 453A(g)(2). ”(2) ENTRY OF DATA.\u2014Information shall be entered into the data base maintained by the National Directory of New Hires within 2 business days of receipt pursuant to section 453A(g)(2). ”(3) ADMINISTRATION OF FEDERAL TAX LAWS.\u2014The Secretary of the Treasury shall have access to the information in the National Directory of New Hires for purposes of administering section 32 of the Internal Revenue Code of 1986, or the advance payment of the earned income tax credit under section 3507 of such Code, and verifying a claim with respect to employment in a tax return. ”(4) LIST OF MULTISTATE EMPLOYERS.\u2014The Secretary shall maintain within the National Directory of New Hires a list of multistate employers that report information regarding newly hired employees pursuant to section 453A(b)(1)(B), and the State which each such employer has designated to receive such information. Establishment. Establishment. 110 STAT. 2217PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(j) INFORMATION COMPARISONS AND OTHER DISCLOSURES.\u2014 ”(1) VERIFICATION BY SOCIAL SECURITY ADMINISTRATION.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall transmit information on individuals and employers maintained under this section to the Social Security Administration to the extent necessary for verification in accordance with subparagraph (B). ”(B) VERIFICATION BY SSA.\u2014The Social Security Administration shall verify the accuracy of, correct, or sup- ply to the extent possible, and report to the Secretary, the following information supplied by the Secretary pursu- ant to subparagraph (A): ”(i) The name, social security number, and birth date of each such individual. ”(ii) The employer identification number of each such employer. ”(2) INFORMATION COMPARISONS.\u2014For the purpose of locat- ing individuals in a paternity establishment case or a case involving the establishment, modification, or enforcement of a support order, the Secretary shall\u2014 ”(A) compare information in the National Directory of New Hires against information in the support case abstracts in the Federal Case Registry of Child Support Orders not less often than every 2 business days; and ”(B) within 2 business days after such a comparison reveals a match with respect to an individual, report the information to the State agency responsible for the case. ”(3) INFORMATION COMPARISONS AND DISCLOSURES OF INFORMATION IN ALL REGISTRIES FOR TITLE IV PROGRAM PUR- POSES.\u2014To the extent and with the frequency that the Sec- retary determines to be effective in assisting States to carry out their responsibilities under programs operated under this part and programs funded under part A, the Secretary shall\u2014 ”(A) compare the information in each component of the Federal Parent Locator Service maintained under this section against the information in each other such compo- nent (other than the comparison required by paragraph (2)), and report instances in which such a comparison reveals a match with respect to an individual to State agencies operating such programs; and ”(B) disclose information in such registries to such State agencies. ”(4) PROVISION OF NEW HIRE INFORMATION TO THE SOCIAL SECURITY ADMINISTRATION.\u2014The National Directory of New Hires shall provide the Commissioner of Social Security with all information in the National Directory. ”(5) RESEARCH.\u2014The Secretary may provide access to information reported by employers pursuant to section 453A(b) for research purposes found by the Secretary to be likely to contribute to achieving the purposes of part A or this part, but without personal identifiers. ”(k) FEES.\u2014 ”(1) FOR SSA VERIFICATION.\u2014The Secretary shall reimburse the Commissioner of Social Security, at a rate negotiated between the Secretary and the Commissioner, for the costs incurred by the Commissioner in performing the verification services described in subsection (j). Reports. Reports. 110 STAT. 2218 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(2) FOR INFORMATION FROM STATE DIRECTORIES OF NEW HIRES.\u2014The Secretary shall reimburse costs incurred by State directories of new hires in furnishing information as required by subsection (j)(3), at rates which the Secretary determines to be reasonable (which rates shall not include payment for the costs of obtaining, compiling, or maintaining such informa- tion). ”(3) FOR INFORMATION FURNISHED TO STATE AND FEDERAL AGENCIES.\u2014A State or Federal agency that receives information from the Secretary pursuant to this section shall reimburse the Secretary for costs incurred by the Secretary in furnishing the information, at rates which the Secretary determines to be reasonable (which rates shall include payment for the costs of obtaining, verifying, maintaining, and comparing the information). ”(l) RESTRICTION ON DISCLOSURE AND USE.\u2014Information in the Federal Parent Locator Service, and information resulting from comparisons using such information, shall not be used or disclosed except as expressly provided in this section, subject to section 6103 of the Internal Revenue Code of 1986. ”(m) INFORMATION INTEGRITY AND SECURITY.\u2014The Secretary shall establish and implement safeguards with respect to the enti- ties established under this section designed to\u2014 ”(1) ensure the accuracy and completeness of information in the Federal Parent Locator Service; and ”(2) restrict access to confidential information in the Federal Parent Locator Service to authorized persons, and restrict use of such information to authorized purposes. ”(n) FEDERAL GOVERNMENT REPORTING.\u2014Each department, agency, and instrumentality of the United States shall on a quar- terly basis report to the Federal Parent Locator Service the name and social security number of each employee and the wages paid to the employee during the previous quarter, except that such a report shall not be filed with respect to an employee of a depart- ment, agency, or instrumentality performing intelligence or counter- intelligence functions, if the head of such department, agency, or instrumentality has determined that filing such a report could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission.”. (g) CONFORMING AMENDMENTS.\u2014 (1) TO PART D OF TITLE IV OF THE SOCIAL SECURITY ACT.\u2014 (A) Section 454(8)(B) (42 U.S.C. 654(8)(B)) is amended to read as follows: ”(B) the Federal Parent Locator Service established under section 453;”. (B) Section 454(13) (42 U.S.C.654(13)) is amended by inserting ”and provide that information requests by parents who are residents of other States be treated with the same priority as requests by parents who are residents of the State submitting the plan” before the semicolon. (2) TO FEDERAL UNEMPLOYMENT TAX ACT.\u2014Section 3304(a)(16) of the Internal Revenue Code of 1986 is amended\u2014 (A) by striking ”Secretary of Health, Education, and Welfare” each place such term appears and inserting ”Sec- retary of Health and Human Services”; (B) in subparagraph (B), by striking ”such information” and all that follows and inserting ”information furnished 110 STAT. 2219PUBLIC LAW 104 193\u2014AUG. 22, 1996 under subparagraph (A) or (B) is used only for the purposes authorized under such subparagraph;”; (C) by striking ”and” at the end of subparagraph (A); (D) by redesignating subparagraph (B) as subpara- graph (C); and (E) by inserting after subparagraph (A) the following new subparagraph: ”(B) wage and unemployment compensation information contained in the records of such agency shall be furnished to the Secretary of Health and Human Services (in accordance with regulations promulgated by such Secretary) as necessary for the purposes of the National Directory of New Hires estab- lished under section 453(i) of the Social Security Act, and”. (3) TO STATE GRANT PROGRAM UNDER TITLE III OF THE SOCIAL SECURITY ACT.\u2014Subsection (h) of section 303 (42 U.S.C. 503) is amended to read as follows: ”(h)(1) The State agency charged with the administration of the State law shall, on a reimbursable basis\u2014 ”(A) disclose quarterly, to the Secretary of Health and Human Services, wage and claim information, as required pursuant to section 453(i)(1), contained in the records of such agency; ”(B) ensure that information provided pursuant to subpara- graph (A) meets such standards relating to correctness and verification as the Secretary of Health and Human Services, with the concurrence of the Secretary of Labor, may find nec- essary; and ”(C) establish such safeguards as the Secretary of Labor determines are necessary to insure that information disclosed under subparagraph (A) is used only for purposes of section 453(i)(1) in carrying out the child support enforcement program under title IV. ”(2) Whenever the Secretary of Labor, after reasonable notice and opportunity for hearing to the State agency charged with the administration of the State law, finds that there is a failure to comply substantially with the requirements of paragraph (1), the Secretary of Labor shall notify such State agency that further payments will not be made to the State until the Secretary of Labor is satisfied that there is no longer any such failure. Until the Secretary of Labor is so satisfied, the Secretary shall make no future certification to the Secretary of the Treasury with respect to the State. ”(3) For purposes of this subsection\u2014 ”(A) the term ‘wage information’ means information regard- ing wages paid to an individual, the social security account number of such individual, and the name, address, State, and the Federal employer identification number of the employer paying such wages to such individual; and ”(B) the term ‘claim information’ means information regard- ing whether an individual is receiving, has received, or has made application for, unemployment compensation, the amount of any such compensation being received (or to be received by such individual), and the individual’s current (or most recent) home address.”. (4) DISCLOSURE OF CERTAIN INFORMATION TO AGENTS OF CHILD SUPPORT ENFORCEMENT AGENCIES.\u2014 Notification. Regulations. 110 STAT. 2220 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) IN GENERAL.\u2014Paragraph (6) of section 6103(l) of the Internal Revenue Code of 1986 (relating to disclosure of return information to Federal, State, and local child support enforcement agencies) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: ”(B) DISCLOSURE TO CERTAIN AGENTS.\u2014The following information disclosed to any child support enforcement agency under subparagraph (A) with respect to any individ- ual with respect to whom child support obligations are sought to be established or enforced may be disclosed by such agency to any agent of such agency which is under contract with such agency to carry out the purposes described in subparagraph (C): ”(i) The address and social security account num- ber (or numbers) of such individual. ”(ii) The amount of any reduction under section 6402(c) (relating to offset of past-due support against overpayments) in any overpayment otherwise payable to such individual.”. (B) CONFORMING AMENDMENTS.\u2014 (i) Paragraph (3) of section 6103(a) of such Code is amended by striking ”(l)(12)” and inserting ”para- graph (6) or (12) of subsection (l)”. (ii) Subparagraph (C) of section 6103(l)(6) of such Code, as redesignated by subsection (a), is amended to read as follows: ”(C) RESTRICTION ON DISCLOSURE.\u2014Information may be disclosed under this paragraph only for purposes of, and to the extent necessary in, establishing and collecting child support obligations from, and locating, individuals owing such obligations.”. (iii) The material following subparagraph (F) of section 6103(p)(4) of such Code is amended by striking ”subsection (l)(12)(B)” and inserting ”paragraph (6)(A) or (12)(B) of subsection (l)”. (h) REQUIREMENT FOR COOPERATION.\u2014The Secretary of Labor and the Secretary of Health and Human Services shall work jointly to develop cost-effective and efficient methods of accessing the information in the various State directories of new hires and the National Directory of New Hires as established pursuant to the amendments made by this subtitle. In developing these methods the Secretaries shall take into account the impact, including costs, on the States, and shall also consider the need to insure the proper and authorized use of wage record information. SEC. 317. COLLECTION AND USE OF SOCIAL SECURITY NUMBERS FOR USE IN CHILD SUPPORT ENFORCEMENT. Section 466(a) (42 U.S.C. 666(a)), as amended by section 315 of this Act, is amended by inserting after paragraph (12) the follow- ing new paragraph: ”(13) RECORDING OF SOCIAL SECURITY NUMBERS IN CERTAIN FAMILY MATTERS.\u2014Procedures requiring that the social security number of\u2014 ”(A) any applicant for a professional license, commer- cial driver’s license, occupational license, or marriage license be recorded on the application; 42 USC 653 note. 110 STAT. 2221PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) any individual who is subject to a divorce decree, support order, or paternity determination or acknowledg- ment be placed in the records relating to the matter; and ”(C) any individual who has died be placed in the records relating to the death and be recorded on the death certificate. For purposes of subparagraph (A), if a State allows the use of a number other than the social security number, the State shall so advise any applicants.”. Subtitle C\u2014Streamlining and Uniformity of Procedures SEC. 321. ADOPTION OF UNIFORM STATE LAWS. Section 466 (42 U.S.C. 666) is amended by adding at the end the following new subsection: ”(f) UNIFORM INTERSTATE FAMILY SUPPORT ACT.\u2014In order to satisfy section 454(20)(A), on and after January 1, 1998, each State must have in effect the Uniform Interstate Family Support Act, as approved by the American Bar Association on February 9, 1993, together with any amendments officially adopted before January 1, 1998 by the National Conference of Commissioners on Uniform State Laws.”. SEC. 322. IMPROVEMENTS TO FULL FAITH AND CREDIT FOR CHILD SUPPORT ORDERS. Section 1738B of title 28, United States Code, is amended\u2014 (1) in subsection (a)(2), by striking ”subsection (e)” and inserting ”subsections (e), (f), and (i)”; (2) in subsection (b), by inserting after the 2nd undesig- nated paragraph the following: ” ‘child’s home State’ means the State in which a child lived with a parent or a person acting as parent for at least 6 consecutive months immediately preceding the time of filing of a petition or comparable pleading for support and, if a child is less than 6 months old, the State in which the child lived from birth with any of them. A period of temporary absence of any of them is counted as part of the 6-month period.”; (3) in subsection (c), by inserting ”by a court of a State” before ”is made”; (4) in subsection (c)(1), by inserting ”and subsections (e), (f), and (g)” after ”located”; (5) in subsection (d)\u2014 (A) by inserting ”individual” before ”contestant”; and (B) by striking ”subsection (e)” and inserting ”sub- sections (e) and (f)”; (6) in subsection (e), by striking ”make a modification of a child support order with respect to a child that is made” and inserting ”modify a child support order issued”; (7) in subsection (e)(1), by inserting ”pursuant to subsection (i)” before the semicolon; (8) in subsection (e)(2)\u2014 (A) by inserting ”individual” before ”contestant” each place such term appears; and (B) by striking ”to that court’s making the modification and assuming” and inserting ”with the State of continuing, 110 STAT. 2222 PUBLIC LAW 104 193\u2014AUG. 22, 1996 exclusive jurisdiction for a court of another State to modify the order and assume”; (9) by redesignating subsections (f) and (g) as subsections (g) and (h), respectively; (10) by inserting after subsection (e) the following new subsection: ”(f) RECOGNITION OF CHILD SUPPORT ORDERS.\u2014If 1 or more child support orders have been issued with regard to an obligor and a child, a court shall apply the following rules in determining which order to recognize for purposes of continuing, exclusive juris- diction and enforcement: ”(1) If only 1 court has issued a child support order, the order of that court must be recognized. ”(2) If 2 or more courts have issued child support orders for the same obligor and child, and only 1 of the courts would have continuing, exclusive jurisdiction under this section, the order of that court must be recognized. ”(3) If 2 or more courts have issued child support orders for the same obligor and child, and more than 1 of the courts would have continuing, exclusive jurisdiction under this section, an order issued by a court in the current home State of the child must be recognized, but if an order has not been issued in the current home State of the child, the order most recently issued must be recognized. ”(4) If 2 or more courts have issued child support orders for the same obligor and child, and none of the courts would have continuing, exclusive jurisdiction under this section, a court may issue a child support order, which must be recog- nized. ”(5) The court that has issued an order recognized under this subsection is the court having continuing, exclusive juris- diction.”; (11) in subsection (g) (as so redesignated)\u2014 (A) by striking ”PRIOR” and inserting ”MODIFIED”; and (B) by striking ”subsection (e)” and inserting ”sub- sections (e) and (f)”; (12) in subsection (h) (as so redesignated)\u2014 (A) in paragraph (2), by inserting ”including the dura- tion of current payments and other obligations of support” before the comma; and (B) in paragraph (3), by inserting ”arrears under” after ”enforce”; and (13) by adding at the end the following new subsection: ”(i) REGISTRATION FOR MODIFICATION.\u2014If there is no individual contestant or child residing in the issuing State, the party or support enforcement agency seeking to modify, or to modify and enforce, a child support order issued in another State shall register that order in a State with jurisdiction over the nonmovant for the purpose of modification.”. SEC. 323. ADMINISTRATIVE ENFORCEMENT IN INTERSTATE CASES. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315 and 317 of this Act, is amended by inserting after paragraph (13) the following new paragraph: ”(14) ADMINISTRATIVE ENFORCEMENT IN INTERSTATE CASES.\u2014Procedures under which\u2014 Courts. 110 STAT. 2223PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A)(i) the State shall respond within 5 business days to a request made by another State to enforce a support order; and ”(ii) the term ‘business day’ means a day on which State offices are open for regular business; ”(B) the State may, by electronic or other means, trans- mit to another State a request for assistance in a case involving the enforcement of a support order, which request\u2014 ”(i) shall include such information as will enable the State to which the request is transmitted to com- pare the information about the case to the information in the data bases of the State; and ”(ii) shall constitute a certification by the re- questing State\u2014 ”(I) of the amount of support under the order the payment of which is in arrears; and ”(II) that the requesting State has complied with all procedural due process requirements applicable to the case; ”(C) if the State provides assistance to another State pursuant to this paragraph with respect to a case, neither State shall consider the case to be transferred to the case- load of such other State; and ”(D) the State shall maintain records of\u2014 ”(i) the number of such requests for assistance received by the State; ”(ii) the number of cases for which the State col- lected support in response to such a request; and ”(iii) the amount of such collected support.”. SEC. 324. USE OF FORMS IN INTERSTATE ENFORCEMENT. (a) PROMULGATION.\u2014Section 452(a) (42 U.S.C. 652(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (9); (2) by striking the period at the end of paragraph (10) (as amended by section 346(a) of this Act) and inserting ”; and”; and (3) by adding at the end the following new paragraph: ”(11) not later than October 1, 1996, after consulting with the State directors of programs under this part, promulgate forms to be used by States in interstate cases for\u2014 ”(A) collection of child support through income withholding; ”(B) imposition of liens; and ”(C) administrative subpoenas.”. (b) USE BY STATES.\u2014Section 454(9) (42 U.S.C. 654(9)) is amended\u2014 (1) by striking ”and” at the end of subparagraph (C); (2) by inserting ”and” at the end of subparagraph (D); and (3) by adding at the end the following new subparagraph: ”(E) not later than March 1, 1997, in using the forms promulgated pursuant to section 452(a)(11) for income withholding, imposition of liens, and issuance of adminis- trative subpoenas in interstate child support cases;”. Records. 110 STAT. 2224 PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 325. STATE LAWS PROVIDING EXPEDITED PROCEDURES. (a) STATE LAW REQUIREMENTS.\u2014Section 466 (42 U.S.C. 666), as amended by section 314 of this Act, is amended\u2014 (1) in subsection (a)(2), by striking the first sentence and inserting the following: ”Expedited administrative and judicial procedures (including the procedures specified in subsection (c)) for establishing paternity and for establishing, modifying, and enforcing support obligations.”; and (2) by inserting after subsection (b) the following new sub- section: ”(c) EXPEDITED PROCEDURES.\u2014The procedures specified in this subsection are the following: ”(1) ADMINISTRATIVE ACTION BY STATE AGENCY.\u2014Procedures which give the State agency the authority to take the following actions relating to establishment of paternity or to establish- ment, modification, or enforcement of support orders, without the necessity of obtaining an order from any other judicial or administrative tribunal, and to recognize and enforce the authority of State agencies of other States to take the following actions: ”(A) GENETIC TESTING.\u2014To order genetic testing for the purpose of paternity establishment as provided in sec- tion 466(a)(5). ”(B) FINANCIAL OR OTHER INFORMATION.\u2014To subpoena any financial or other information needed to establish, modify, or enforce a support order, and to impose penalties for failure to respond to such a subpoena. ”(C) RESPONSE TO STATE AGENCY REQUEST.\u2014To require all entities in the State (including for-profit, nonprofit, and governmental employers) to provide promptly, in response to a request by the State agency of that or any other State administering a program under this part, information on the employment, compensation, and benefits of any individual employed by such entity as an employee or contractor, and to sanction failure to respond to any such request. ”(D) ACCESS TO INFORMATION CONTAINED IN CERTAIN RECORDS.\u2014To obtain access, subject to safeguards on pri- vacy and information security, and subject to the nonliabil- ity of entities that afford such access under this subpara- graph, to information contained in the following records (including automated access, in the case of records main- tained in automated data bases): ”(i) Records of other State and local government agencies, including\u2014 ”(I) vital statistics (including records of mar- riage, birth, and divorce); ”(II) State and local tax and revenue records (including information on residence address, employer, income and assets); ”(III) records concerning real and titled per- sonal property; ”(IV) records of occupational and professional licenses, and records concerning the ownership and control of corporations, partnerships, and other business entities; ”(V) employment security records; 110 STAT. 2225PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(VI) records of agencies administering public assistance programs; ”(VII) records of the motor vehicle depart- ment; and ”(VIII) corrections records. ”(ii) Certain records held by private entities with respect to individuals who owe or are owed support (or against or with respect to whom a support obliga- tion is sought), consisting of\u2014 ”(I) the names and addresses of such indi- viduals and the names and addresses of the employers of such individuals, as appearing in cus- tomer records of public utilities and cable tele- vision companies, pursuant to an administrative subpoena authorized by subparagraph (B); and ”(II) information (including information on assets and liabilities) on such individuals held by financial institutions. ”(E) CHANGE IN PAYEE.\u2014In cases in which support is subject to an assignment in order to comply with a requirement imposed pursuant to part A or section 1912, or to a requirement to pay through the State disbursement unit established pursuant to section 454B, upon providing notice to obligor and obligee, to direct the obligor or other payor to change the payee to the appropriate government entity. ”(F) INCOME WITHHOLDING.\u2014To order income withhold- ing in accordance with subsections (a)(1)(A) and (b) of sec- tion 466. ”(G) SECURING ASSETS.\u2014In cases in which there is a support arrearage, to secure assets to satisfy the arrear- age by\u2014 ”(i) intercepting or seizing periodic or lump-sum payments from\u2014 ”(I) a State or local agency, including unemployment compensation, workers’ compensa- tion, and other benefits; and ”(II) judgments, settlements, and lotteries; ”(ii) attaching and seizing assets of the obligor held in financial institutions; ”(iii) attaching public and private retirement funds; and ”(iv) imposing liens in accordance with subsection (a)(4) and, in appropriate cases, to force sale of property and distribution of proceeds. ”(H) INCREASE MONTHLY PAYMENTS.\u2014For the purpose of securing overdue support, to increase the amount of monthly support payments to include amounts for arrear- ages, subject to such conditions or limitations as the State may provide. Such procedures shall be subject to due process safeguards, including (as appropriate) requirements for notice, opportunity to contest the action, and opportunity for an appeal on the record to an independent administrative or judicial tribunal. ”(2) SUBSTANTIVE AND PROCEDURAL RULES.\u2014The expedited procedures required under subsection (a)(2) shall include the following rules and authority, applicable with respect to all 110 STAT. 2226 PUBLIC LAW 104 193\u2014AUG. 22, 1996 proceedings to establish paternity or to establish, modify, or enforce support orders: ”(A) LOCATOR INFORMATION; PRESUMPTIONS CON- CERNING NOTICE.\u2014Procedures under which\u2014 ”(i) each party to any paternity or child support proceeding is required (subject to privacy safeguards) to file with the tribunal and the State case registry upon entry of an order, and to update as appropriate, information on location and identity of the party, including Social Security number, residential and mail- ing addresses, telephone number, driver’s license num- ber, and name, address, and telephone number of employer; and ”(ii) in any subsequent child support enforcement action between the parties, upon sufficient showing that diligent effort has been made to ascertain the location of such a party, the tribunal may deem State due process requirements for notice and service of proc- ess to be met with respect to the party, upon delivery of written notice to the most recent residential or employer address filed with the tribunal pursuant to clause (i). ”(B) STATEWIDE JURISDICTION.\u2014Procedures under which\u2014 ”(i) the State agency and any administrative or judicial tribunal with authority to hear child support and paternity cases exerts statewide jurisdiction over the parties; and ”(ii) in a State in which orders are issued by courts or administrative tribunals, a case may be transferred between local jurisdictions in the State without need for any additional filing by the petitioner, or service of process upon the respondent, to retain jurisdiction over the parties. ”(3) COORDINATION WITH ERISA.\u2014Notwithstanding sub- section (d) of section 514 of the Employee Retirement Income Security Act of 1974 (relating to effect on other laws), nothing in this subsection shall be construed to alter, amend, modify, invalidate, impair, or supersede subsections (a), (b), and (c) of such section 514 as it applies with respect to any procedure referred to in paragraph (1) and any expedited procedure referred to in paragraph (2), except to the extent that such procedure would be consistent with the requirements of section 206(d)(3) of such Act (relating to qualified domestic relations orders) or the requirements of section 609(a) of such Act (relat- ing to qualified medical child support orders) if the reference in such section 206(d)(3) to a domestic relations order and the reference in such section 609(a) to a medical child support order were a reference to a support order referred to in para- graphs (1) and (2) relating to the same matters, respectively.”. (b) AUTOMATION OF STATE AGENCY FUNCTIONS.\u2014Section 454A, as added by section 344(a)(2) and as amended by sections 311 and 312(c) of this Act, is amended by adding at the end the following new subsection: ”(h) EXPEDITED ADMINISTRATIVE PROCEDURES.\u2014The automated system required by this section shall be used, to the maximum 110 STAT. 2227PUBLIC LAW 104 193\u2014AUG. 22, 1996 extent feasible, to implement the expedited administrative proce- dures required by section 466(c).”. Subtitle D\u2014Paternity Establishment SEC. 331. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT. (a) STATE LAWS REQUIRED.\u2014Section 466(a)(5) (42 U.S.C. 666(a)(5)) is amended to read as follows: ”(5) PROCEDURES CONCERNING PATERNITY ESTAB- LISHMENT.\u2014 ”(A) ESTABLISHMENT PROCESS AVAILABLE FROM BIRTH UNTIL AGE 18.\u2014 ”(i) Procedures which permit the establishment of the paternity of a child at any time before the child attains 18 years of age. ”(ii) As of August 16, 1984, clause (i) shall also apply to a child for whom paternity has not been established or for whom a paternity action was brought but dismissed because a statute of limitations of less than 18 years was then in effect in the State. ”(B) PROCEDURES CONCERNING GENETIC TESTING.\u2014 ”(i) GENETIC TESTING REQUIRED IN CERTAIN CON- TESTED CASES.\u2014Procedures under which the State is required, in a contested paternity case (unless other- wise barred by State law) to require the child and all other parties (other than individuals found under section 454(29) to have good cause and other exceptions for refusing to cooperate) to submit to genetic tests upon the request of any such party, if the request is supported by a sworn statement by the party\u2014 ”(I) alleging paternity, and setting forth facts establishing a reasonable possibility of the req- uisite sexual contact between the parties; or ”(II) denying paternity, and setting forth facts establishing a reasonable possibility of the non- existence of sexual contact between the parties. ”(ii) OTHER REQUIREMENTS.\u2014Procedures which require the State agency, in any case in which the agency orders genetic testing\u2014 ”(I) to pay costs of such tests, subject to recoupment (if the State so elects) from the alleged father if paternity is established; and ”(II) to obtain additional testing in any case if an original test result is contested, upon request and advance payment by the contestant. ”(C) VOLUNTARY PATERNITY ACKNOWLEDGMENT.\u2014 ”(i) SIMPLE CIVIL PROCESS.\u2014Procedures for a sim- ple civil process for voluntarily acknowledging pater- nity under which the State must provide that, before a mother and a putative father can sign an acknowledg- ment of paternity, the mother and the putative father must be given notice, orally and in writing, of the alternatives to, the legal consequences of, and the rights (including, if 1 parent is a minor, any rights afforded due to minority status) and responsibilities that arise from, signing the acknowledgment. 110 STAT. 2228 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) HOSPITAL-BASED PROGRAM.\u2014Such procedures must include a hospital-based program for the vol- untary acknowledgment of paternity focusing on the period immediately before or after the birth of a child. ”(iii) PATERNITY ESTABLISHMENT SERVICES.\u2014 ”(I) STATE-OFFERED SERVICES.\u2014Such proce- dures must require the State agency responsible for maintaining birth records to offer voluntary paternity establishment services. ”(II) REGULATIONS.\u2014 ”(aa) SERVICES OFFERED BY HOSPITALS AND BIRTH RECORD AGENCIES.\u2014The Secretary shall prescribe regulations governing voluntary paternity establishment services offered by hospitals and birth record agencies. ”(bb) SERVICES OFFERED BY OTHER ENTITIES.\u2014The Secretary shall prescribe regu- lations specifying the types of other entities that may offer voluntary paternity establish- ment services, and governing the provision of such services, which shall include a require- ment that such an entity must use the same notice provisions used by, use the same mate- rials used by, provide the personnel providing such services with the same training provided by, and evaluate the provision of such services in the same manner as the provision of such services is evaluated by, voluntary paternity establishment programs of hospitals and birth record agencies. ”(iv) USE OF PATERNITY ACKNOWLEDGMENT AFFIDAVIT.\u2014Such procedures must require the State to develop and use an affidavit for the voluntary acknowledgment of paternity which includes the mini- mum requirements of the affidavit specified by the Secretary under section 452(a)(7) for the voluntary acknowledgment of paternity, and to give full faith and credit to such an affidavit signed in any other State according to its procedures. ”(D) STATUS OF SIGNED PATERNITY ACKNOW- LEDGMENT.\u2014 ”(i) INCLUSION IN BIRTH RECORDS.\u2014Procedures under which the name of the father shall be included on the record of birth of the child of unmarried parents only if\u2014 ”(I) the father and mother have signed a vol- untary acknowledgment of paternity; or ”(II) a court or an administrative agency of competent jurisdiction has issued an adjudication of paternity. Nothing in this clause shall preclude a State agency from obtaining an admission of paternity from the father for submission in a judicial or administrative proceeding, or prohibit the issuance of an order in a judicial or administrative proceeding which bases a legal finding of paternity on an admission of paternity 110 STAT. 2229PUBLIC LAW 104 193\u2014AUG. 22, 1996 by the father and any other additional showing required by State law. ”(ii) LEGAL FINDING OF PATERNITY.\u2014Procedures under which a signed voluntary acknowledgment of paternity is considered a legal finding of paternity, subject to the right of any signatory to rescind the acknowledgment within the earlier of\u2014 ”(I) 60 days; or ”(II) the date of an administrative or judicial proceeding relating to the child (including a proceeding to establish a support order) in which the signatory is a party. ”(iii) CONTEST.\u2014Procedures under which, after the 60-day period referred to in clause (ii), a signed vol- untary acknowledgment of paternity may be challenged in court only on the basis of fraud, duress, or material mistake of fact, with the burden of proof upon the challenger, and under which the legal responsibilities (including child support obligations) of any signatory arising from the acknowledgment may not be sus- pended during the challenge, except for good cause shown. ”(E) BAR ON ACKNOWLEDGMENT RATIFICATION PRO- CEEDINGS.\u2014Procedures under which judicial or administra- tive proceedings are not required or permitted to ratify an unchallenged acknowledgment of paternity. ”(F) ADMISSIBILITY OF GENETIC TESTING RESULTS.\u2014 Procedures\u2014 ”(i) requiring the admission into evidence, for pur- poses of establishing paternity, of the results of any genetic test that is\u2014 ”(I) of a type generally acknowledged as reli- able by accreditation bodies designated by the Sec- retary; and ”(II) performed by a laboratory approved by such an accreditation body; ”(ii) requiring an objection to genetic testing results to be made in writing not later than a specified number of days before any hearing at which the results may be introduced into evidence (or, at State option, not later than a specified number of days after receipt of the results); and ”(iii) making the test results admissible as evi- dence of paternity without the need for foundation testimony or other proof of authenticity or accuracy, unless objection is made. ”(G) PRESUMPTION OF PATERNITY IN CERTAIN CASES.\u2014 Procedures which create a rebuttable or, at the option of the State, conclusive presumption of paternity upon genetic testing results indicating a threshold probability that the alleged father is the father of the child. ”(H) DEFAULT ORDERS.\u2014Procedures requiring a default order to be entered in a paternity case upon a showing of service of process on the defendant and any additional showing required by State law. 110 STAT. 2230 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(I) NO RIGHT TO JURY TRIAL.\u2014Procedures providing that the parties to an action to establish paternity are not entitled to a trial by jury. ”(J) TEMPORARY SUPPORT ORDER BASED ON PROBABLE PATERNITY IN CONTESTED CASES.\u2014Procedures which require that a temporary order be issued, upon motion by a party, requiring the provision of child support pending an administrative or judicial determination of parentage, if there is clear and convincing evidence of paternity (on the basis of genetic tests or other evidence). ”(K) PROOF OF CERTAIN SUPPORT AND PATERNITY ESTABLISHMENT COSTS.\u2014Procedures under which bills for pregnancy, childbirth, and genetic testing are admissible as evidence without requiring third-party foundation testi- mony, and shall constitute prima facie evidence of amounts incurred for such services or for testing on behalf of the child. ”(L) STANDING OF PUTATIVE FATHERS.\u2014Procedures ensuring that the putative father has a reasonable oppor- tunity to initiate a paternity action. ”(M) FILING OF ACKNOWLEDGMENTS AND ADJUDICATIONS IN STATE REGISTRY OF BIRTH RECORDS.\u2014Procedures under which voluntary acknowledgments and adjudications of paternity by judicial or administrative processes are filed with the State registry of birth records for comparison with information in the State case registry.”. (b) NATIONAL PATERNITY ACKNOWLEDGMENT AFFIDAVIT.\u2014Sec- tion 452(a)(7) (42 U.S.C. 652(a)(7)) is amended by inserting ”, and specify the minimum requirements of an affidavit to be used for the voluntary acknowledgment of paternity which shall include the Social Security number of each parent and, after consultation with the States, other common elements as determined by such designee” before the semicolon. (c) CONFORMING AMENDMENT.\u2014Section 468 (42 U.S.C. 668) is amended by striking ”a simple civil process for voluntarily acknowl- edging paternity and”. SEC. 332. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT. Section 454(23) (42 U.S.C. 654(23)) is amended by inserting ”and will publicize the availability and encourage the use of proce- dures for voluntary establishment of paternity and child support by means the State deems appropriate” before the semicolon. SEC. 333. COOPERATION BY APPLICANTS FOR AND RECIPIENTS OF PART A ASSISTANCE. Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(a), and 313(a) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (27); (2) by striking the period at the end of paragraph (28) and inserting ”; and”; and (3) by inserting after paragraph (28) the following new paragraph: ”(29) provide that the State agency responsible for admin- istering the State plan\u2014 ”(A) shall make the determination (and redetermina- tion at appropriate intervals) as to whether an individual who has applied for or is receiving assistance under the State program funded under part A of this title or the 110 STAT. 2231PUBLIC LAW 104 193\u2014AUG. 22, 1996 State program under title XIX is cooperating in good faith with the State in establishing the paternity of, or in establishing, modifying, or enforcing a support order for, any child of the individual by providing the State agency with the name of, and such other information as the State agency may require with respect to, the noncustodial parent of the child, subject to good cause and other exceptions which\u2014 ”(i) shall be defined, taking into account the best interests of the child, and ”(ii) shall be applied in each case, by, at the option of the State, the State agency administer- ing the State program under part A, this part, or title XIX; ”(B) shall require the individual to supply additional necessary information and appear at interviews, hearings, and legal proceedings; ”(C) shall require the individual and the child to submit to genetic tests pursuant to judicial or administrative order; ”(D) may request that the individual sign a voluntary acknowledgment of paternity, after notice of the rights and consequences of such an acknowledgment, but may not require the individual to sign an acknowledgment or otherwise relinquish the right to genetic tests as a condition of cooperation and eligibility for assistance under the State program funded under part A, or the State program under title XIX; and ”(E) shall promptly notify the individual, the State agency administering the State program funded under part A, and the State agency administering the State program under title XIX, of each such determination, and if non- cooperation is determined, the basis therefor.”. Subtitle E\u2014Program Administration and Funding SEC. 341. PERFORMANCE-BASED INCENTIVES AND PENALTIES. (a) DEVELOPMENT OF NEW SYSTEM.\u2014The Secretary of Health and Human Services, in consultation with State directors of pro- grams under part D of title IV of the Social Security Act, shall develop a new incentive system to replace, in a revenue neutral manner, the system under section 458 of such Act. The new system shall provide additional payments to any State based on such State’s performance under such a program. Not later than March 1, 1997, the Secretary shall report on the new system to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate. (b) CONFORMING AMENDMENTS TO PRESENT SYSTEM.\u2014Section 458 (42 U.S.C. 658) is amended\u2014 (1) in subsection (a), by striking ”aid to families with dependent children under a State plan approved under part A of this title” and inserting ”assistance under a program funded under part A”; (2) in subsection (b)(1)(A), by striking ”section 402(a)(26)” and inserting ”section 408(a)(4)”; (3) in subsections (b) and (c)\u2014 Reports. 42 USC 658 note. Notification. 110 STAT. 2232 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) by striking ”AFDC collections” each place it appears and inserting ”title IV A collections”, and (B) by striking ”non-AFDC collections” each place it appears and inserting ”non-title IV A collections”; and (4) in subsection (c), by striking ”combined AFDC\/non- AFDC administrative costs” both places it appears and inserting ”combined title IV A\/non-title IV A administrative costs”. (c) CALCULATION OF PATERNITY ESTABLISHMENT PERCENTAGE.\u2014 (1) Section 452(g)(1)(A) (42 U.S.C. 652(g)(1)(A)) is amended by striking ”75” and inserting ”90”. (2) Section 452(g)(1) (42 U.S.C. 652(g)(1)) is amended\u2014 (A) by redesignating subparagraphs (B) through (E) as subparagraphs (C) through (F), respectively, and by inserting after subparagraph (A) the following new subparagraph: ”(B) for a State with a paternity establishment percentage of not less than 75 percent but less than 90 percent for such fiscal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 2 percentage points;”; and (B) by adding at the end the following new flush sentence: ”In determining compliance under this section, a State may use as its paternity establishment percentage either the State’s IV D paternity establishment percentage (as defined in paragraph (2)(A)) or the State’s statewide paternity establishment percentage (as defined in paragraph (2)(B)).”. (3) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended\u2014 (A) in subparagraph (A)\u2014 (i) in the matter preceding clause (i)\u2014 (I) by striking ”paternity establishment percentage” and inserting ”IV D paternity establishment percentage”; and (II) by striking ”(or all States, as the case may be)”; and (ii) by striking ”and” at the end; and (B) by redesignating subparagraph (B) as subpara- graph (C) and by inserting after subparagraph (A) the following new subparagraph: ”(B) the term ‘statewide paternity establishment percent- age’ means, with respect to a State for a fiscal year, the ratio (expressed as a percentage) that the total number of minor children\u2014 ”(i) who have been born out of wedlock, and ”(ii) the paternity of whom has been established or acknowledged during the fiscal year, bears to the total number of children born out of wedlock during the preceding fiscal year; and”. (4) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is amended\u2014 (A) by striking subparagraph (A) and redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively; and (B) in subparagraph (A) (as so redesignated), by strik- ing ”the percentage of children born out-of-wedlock in a State” and inserting ”the percentage of children in a State who are born out of wedlock or for whom support has not been established”. 110 STAT. 2233PUBLIC LAW 104 193\u2014AUG. 22, 1996 (d) EFFECTIVE DATES.\u2014 (1) INCENTIVE ADJUSTMENTS.\u2014 (A) IN GENERAL.\u2014The system developed under sub- section (a) and the amendments made by subsection (b) shall become effective on October 1, 1999, except to the extent provided in subparagraph (B). (B) APPLICATION OF SECTION 458.\u2014Section 458 of the Social Security Act, as in effect on the day before the date of the enactment of this section, shall be effective for purposes of incentive payments to States for fiscal years before fiscal year 2000. (2) PENALTY REDUCTIONS.\u2014The amendments made by sub- section (c) shall become effective with respect to calendar quar- ters beginning on or after the date of the enactment of this Act. SEC. 342. FEDERAL AND STATE REVIEWS AND AUDITS. (a) STATE AGENCY ACTIVITIES.\u2014Section 454 (42 U.S.C. 654) is amended\u2014 (1) in paragraph (14), by striking ”(14)” and inserting ”(14)(A)”; (2) by redesignating paragraph (15) as subparagraph (B) of paragraph (14); and (3) by inserting after paragraph (14) the following new paragraph: ”(15) provide for\u2014 ”(A) a process for annual reviews of and reports to the Secretary on the State program operated under the State plan approved under this part, including such information as may be necessary to measure State compli- ance with Federal requirements for expedited procedures, using such standards and procedures as are required by the Secretary, under which the State agency will determine the extent to which the program is operated in compliance with this part; and ”(B) a process of extracting from the automated data processing system required by paragraph (16) and transmitting to the Secretary data and calculations concerning the levels of accomplishment (and rates of improvement) with respect to applicable performance indicators (including paternity establishment percentages) to the extent necessary for purposes of sections 452(g) and 458;”. (b) FEDERAL ACTIVITIES.\u2014Section 452(a)(4) (42 U.S.C. 652(a)(4)) is amended to read as follows: ”(4)(A) review data and calculations transmitted by State agencies pursuant to section 454(15)(B) on State program accomplishments with respect to performance indicators for purposes of subsection (g) of this section and section 458; ”(B) review annual reports submitted pursuant to section 454(15)(A) and, as appropriate, provide to the State comments, recommendations for additional or alternative corrective actions, and technical assistance; and ”(C) conduct audits, in accordance with the Government auditing standards of the Comptroller General of the United States\u2014 42 USC 652 note. 42 USC 658 note. 110 STAT. 2234 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(i) at least once every 3 years (or more frequently, in the case of a State which fails to meet the requirements of this part concerning performance standards and reliabil- ity of program data) to assess the completeness, reliability, and security of the data and the accuracy of the reporting systems used in calculating performance indicators under subsection (g) of this section and section 458; ”(ii) of the adequacy of financial management of the State program operated under the State plan approved under this part, including assessments of\u2014 ”(I) whether Federal and other funds made avail- able to carry out the State program are being appro- priately expended, and are properly and fully accounted for; and ”(II) whether collections and disbursements of sup- port payments are carried out correctly and are fully accounted for; and ”(iii) for such other purposes as the Secretary may find necessary;”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall be effective with respect to calendar quarters beginning 12 months or more after the date of the enactment of this Act. SEC. 343. REQUIRED REPORTING PROCEDURES. (a) ESTABLISHMENT.\u2014Section 452(a)(5) (42 U.S.C. 652(a)(5)) is amended by inserting ”, and establish procedures to be followed by States for collecting and reporting information required to be provided under this part, and establish uniform definitions (includ- ing those necessary to enable the measurement of State compliance with the requirements of this part relating to expedited processes) to be applied in following such procedures” before the semicolon. (b) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(a), 313(a), and 333 of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (28); (2) by striking the period at the end of paragraph (29) and inserting ”; and”; and (3) by adding after paragraph (29) the following new para- graph: ”(30) provide that the State shall use the definitions estab- lished under section 452(a)(5) in collecting and reporting information as required under this part.”. SEC. 344. AUTOMATED DATA PROCESSING REQUIREMENTS. (a) REVISED REQUIREMENTS.\u2014 (1) IN GENERAL.\u2014Section 454(16) (42 U.S.C. 654(16)) is amended\u2014 (A) by striking ”, at the option of the State,”; (B) by inserting ”and operation by the State agency” after ”for the establishment”; (C) by inserting ”meeting the requirements of section 454A” after ”information retrieval system”; (D) by striking ”in the State and localities thereof, so as (A)” and inserting ”so as”; (E) by striking ”(i)”; and (F) by striking ”(including” and all that follows and inserting a semicolon. 42 USC 652 note. 110 STAT. 2235PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) AUTOMATED DATA PROCESSING.\u2014Part D of title IV (42 U.S.C. 651 669) is amended by inserting after section 454 the following new section: ”SEC. 454A. AUTOMATED DATA PROCESSING. ”(a) IN GENERAL.\u2014In order for a State to meet the requirements of this section, the State agency administering the State program under this part shall have in operation a single statewide automated data processing and information retrieval system which has the capability to perform the tasks specified in this section with the frequency and in the manner required by or under this part. ”(b) PROGRAM MANAGEMENT.\u2014The automated system required by this section shall perform such functions as the Secretary may specify relating to management of the State program under this part, including\u2014 ”(1) controlling and accounting for use of Federal, State, and local funds in carrying out the program; and ”(2) maintaining the data necessary to meet Federal report- ing requirements under this part on a timely basis. ”(c) CALCULATION OF PERFORMANCE INDICATORS.\u2014In order to enable the Secretary to determine the incentive payments and penalty adjustments required by sections 452(g) and 458, the State agency shall\u2014 ”(1) use the automated system\u2014 ”(A) to maintain the requisite data on State perform- ance with respect to paternity establishment and child support enforcement in the State; and ”(B) to calculate the paternity establishment percent- age for the State for each fiscal year; and ”(2) have in place systems controls to ensure the com- pleteness and reliability of, and ready access to, the data described in paragraph (1)(A), and the accuracy of the calcula- tions described in paragraph (1)(B). ”(d) INFORMATION INTEGRITY AND SECURITY.\u2014The State agency shall have in effect safeguards on the integrity, accuracy, and completeness of, access to, and use of data in the automated system required by this section, which shall include the following (in addi- tion to such other safeguards as the Secretary may specify in regulations): ”(1) POLICIES RESTRICTING ACCESS.\u2014Written policies concerning access to data by State agency personnel, and shar- ing of data with other persons, which\u2014 ”(A) permit access to and use of data only to the extent necessary to carry out the State program under this part; and ”(B) specify the data which may be used for particular program purposes, and the personnel permitted access to such data. ”(2) SYSTEMS CONTROLS.\u2014Systems controls (such as pass- words or blocking of fields) to ensure strict adherence to the policies described in paragraph (1). ”(3) MONITORING OF ACCESS.\u2014Routine monitoring of access to and use of the automated system, through methods such as audit trails and feedback mechanisms, to guard against and promptly identify unauthorized access or use. ”(4) TRAINING AND INFORMATION.\u2014Procedures to ensure that all personnel (including State and local agency staff and 42 USC 654a. 110 STAT. 2236 PUBLIC LAW 104 193\u2014AUG. 22, 1996 contractors) who may have access to or be required to use confidential program data are informed of applicable require- ments and penalties (including those in section 6103 of the Internal Revenue Code of 1986), and are adequately trained in security procedures. ”(5) PENALTIES.\u2014Administrative penalties (up to and including dismissal from employment) for unauthorized access to, or disclosure or use of, confidential data.”. (3) REGULATIONS.\u2014The Secretary of Health and Human Services shall prescribe final regulations for implementation of section 454A of the Social Security Act not later than 2 years after the date of the enactment of this Act. (4) IMPLEMENTATION TIMETABLE.\u2014Section 454(24) (42 U.S.C. 654(24)), as amended by section 303(a)(1) of this Act, is amended to read as follows: ”(24) provide that the State will have in effect an automated data processing and information retrieval system\u2014 ”(A) by October 1, 1997, which meets all require- ments of this part which were enacted on or before the date of enactment of the Family Support Act of 1988, and ”(B) by October 1, 2000, which meets all require- ments of this part enacted on or before the date of the enactment of the Personal Responsibility and Work Oppor- tunity Act of 1996, except that such deadline shall be extended by 1 day for each day (if any) by which the Secretary fails to meet the deadline imposed by section 344(a)(3) of the Personal Responsibility and Work Oppor- tunity Reconciliation Act of 1996;”. (b) SPECIAL FEDERAL MATCHING RATE FOR DEVELOPMENT COSTS OF AUTOMATED SYSTEMS.\u2014 (1) IN GENERAL.\u2014Section 455(a) (42 U.S.C. 655(a)) is amended\u2014 (A) in paragraph (1)(B)\u2014 (i) by striking ”90 percent” and inserting ”the per- cent specified in paragraph (3)”; (ii) by striking ”so much of”; and (iii) by striking ”which the Secretary” and all that follows and inserting ”, and”; and (B) by adding at the end the following new paragraph: ”(3)(A) The Secretary shall pay to each State, for each quarter in fiscal years 1996 and 1997, 90 percent of so much of the State expenditures described in paragraph (1)(B) as the Secretary finds are for a system meeting the requirements specified in section 454(16) (as in effect on September 30, 1995) but limited to the amount approved for States in the advance planning documents of such States submitted on or before September 30, 1995. ”(B)(i) The Secretary shall pay to each State, for each quarter in fiscal years 1996 through 2001, the percentage specified in clause (ii) of so much of the State expenditures described in paragraph (1)(B) as the Secretary finds are for a system meeting the require- ments of sections 454(16) and 454A. ”(ii) The percentage specified in this clause is 80 percent.”. (2) TEMPORARY LIMITATION ON PAYMENTS UNDER SPECIAL FEDERAL MATCHING RATE.\u2014 (A) IN GENERAL.\u2014The Secretary of Health and Human Services may not pay more than $400,000,000 in the aggre- 42 USC 655 note. 42 USC 654a note. 110 STAT. 2237PUBLIC LAW 104 193\u2014AUG. 22, 1996 gate under section 455(a)(3)(B) of the Social Security Act for fiscal years 1996 through 2001. (B) ALLOCATION OF LIMITATION AMONG STATES.\u2014The total amount payable to a State under section 455(a)(3)(B) of such Act for fiscal years 1996 through 2001 shall not exceed the limitation determined for the State by the Sec- retary of Health and Human Services in regulations. (C) ALLOCATION FORMULA.\u2014The regulations referred to in subparagraph (B) shall prescribe a formula for allocat- ing the amount specified in subparagraph (A) among States with plans approved under part D of title IV of the Social Security Act, which shall take into account\u2014 (i) the relative size of State caseloads under such part; and (ii) the level of automation needed to meet the automated data processing requirements of such part. (c) CONFORMING AMENDMENT.\u2014Section 123(c) of the Family Support Act of 1988 (102 Stat. 2352; Public Law 100 485) is repealed. SEC. 345. TECHNICAL ASSISTANCE. (a) FOR TRAINING OF FEDERAL AND STATE STAFF, RESEARCH AND DEMONSTRATION PROGRAMS, AND SPECIAL PROJECTS OF REGIONAL OR NATIONAL SIGNIFICANCE.\u2014Section 452 (42 U.S.C. 652) is amended by adding at the end the following new subsection: ”(j) Out of any money in the Treasury of the United States not otherwise appropriated, there is hereby appropriated to the Secretary for each fiscal year an amount equal to 1 percent of the total amount paid to the Federal Government pursuant to section 457(a) during the immediately preceding fiscal year (as determined on the basis of the most recent reliable data available to the Secretary as of the end of the third calendar quarter following the end of such preceding fiscal year), to cover costs incurred by the Secretary for\u2014 ”(1) information dissemination and technical assistance to States, training of State and Federal staff, staffing studies, and related activities needed to improve programs under this part (including technical assistance concerning State automated systems required by this part); and ”(2) research, demonstration, and special projects of regional or national significance relating to the operation of State programs under this part. The amount appropriated under this subsection shall remain avail- able until expended.”. (b) OPERATION OF FEDERAL PARENT LOCATOR SERVICE.\u2014Section 453 (42 U.S.C. 653), as amended by section 316 of this Act, is amended by adding at the end the following new subsection: ”(o) RECOVERY OF COSTS.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there is hereby appropriated to the Secretary for each fiscal year an amount equal to 2 percent of the total amount paid to the Federal Government pursuant to section 457(a) during the immediately preceding fiscal year (as determined on the basis of the most recent reliable data available to the Secretary as of the end of the third calendar quarter following the end of such preceding fiscal year), to cover costs incurred by the Secretary for operation of the Federal Parent 42 USC 655, 655 note. 110 STAT. 2238 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Locator Service under this section, to the extent such costs are not recovered through user fees.”. SEC. 346. REPORTS AND DATA COLLECTION BY THE SECRETARY. (a) ANNUAL REPORT TO CONGRESS.\u2014 (1) Section 452(a)(10)(A) (42 U.S.C. 652(a)(10)(A)) is amended\u2014 (A) by striking ”this part;” and inserting ”this part, including\u2014”; and (B) by adding at the end the following new clauses: ”(i) the total amount of child support payments collected as a result of services furnished during the fiscal year to individuals receiving services under this part; ”(ii) the cost to the States and to the Federal Government of so furnishing the services; and ”(iii) the number of cases involving families\u2014 ”(I) who became ineligible for assistance under State programs funded under part A during a month in the fiscal year; and ”(II) with respect to whom a child support payment was received in the month;”. (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is amended\u2014 (A) in the matter preceding clause (i)\u2014 (i) by striking ”with the data required under each clause being separately stated for cases” and inserting ”separately stated for cases”; (ii) by striking ”cases where the child was formerly receiving” and inserting ”or formerly received”; (iii) by inserting ”or 1912” after ”471(a)(17)”; and (iv) by inserting ”for” before ”all other”; (B) in each of clauses (i) and (ii), by striking ”, and the total amount of such obligations”; (C) in clause (iii), by striking ”described in” and all that follows and inserting ”in which support was collected during the fiscal year;”; (D) by striking clause (iv); and (E) by redesignating clause (v) as clause (vii), and inserting after clause (iii) the following new clauses: ”(iv) the total amount of support collected during such fiscal year and distributed as current support; ”(v) the total amount of support collected during such fiscal year and distributed as arrearages; ”(vi) the total amount of support due and unpaid for all fiscal years; and”. (3) Section 452(a)(10)(G) (42 U.S.C. 652(a)(10)(G)) is amended by striking ”on the use of Federal courts and”. (4) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended\u2014 (A) in subparagraph (H), by striking ”and”; (B) in subparagraph (I), by striking the period and inserting ”; and”; and (C) by inserting after subparagraph (I) the following new subparagraph: ”(J) compliance, by State, with the standards estab- lished pursuant to subsections (h) and (i).”. 110 STAT. 2239PUBLIC LAW 104 193\u2014AUG. 22, 1996 (5) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended by striking all that follows subparagraph (J), as added by paragraph (4). (b) EFFECTIVE DATE.\u2014The amendments made by subsection (a) shall be effective with respect to fiscal year 1997 and succeeding fiscal years. Subtitle F\u2014Establishment and Modification of Support Orders SEC. 351. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF CHILD SUPPORT ORDERS. Section 466(a)(10) (42 U.S.C. 666(a)(10)) is amended to read as follows: ”(10) REVIEW AND ADJUSTMENT OF SUPPORT ORDERS UPON REQUEST.\u2014 ”(A) 3-YEAR CYCLE.\u2014 ”(i) IN GENERAL.\u2014Procedures under which every 3 years (or such shorter cycle as the State may deter- mine), upon the request of either parent, or, if there is an assignment under part A, upon the request of the State agency under the State plan or of either parent, the State shall with respect to a support order being enforced under this part, taking into account the best interests of the child involved\u2014 ”(I) review and, if appropriate, adjust the order in accordance with the guidelines established pursuant to section 467(a) if the amount of the child support award under the order differs from the amount that would be awarded in accordance with the guidelines; ”(II) apply a cost-of-living adjustment to the order in accordance with a formula developed by the State; or ”(III) use automated methods (including auto- mated comparisons with wage or State income tax data) to identify orders eligible for review, conduct the review, identify orders eligible for adjustment, and apply the appropriate adjustment to the orders eligible for adjustment under any threshold that may be established by the State. ”(ii) OPPORTUNITY TO REQUEST REVIEW OF ADJUST- MENT.\u2014If the State elects to conduct the review under subclause (II) or (III) of clause (i), procedures which permit either party to contest the adjustment, within 30 days after the date of the notice of the adjustment, by making a request for review and, if appropriate, adjustment of the order in accordance with the child support guidelines established pursuant to section 467(a). ”(iii) NO PROOF OF CHANGE IN CIRCUMSTANCES NECESSARY IN 3-YEAR CYCLE REVIEW.\u2014Procedures which provide that any adjustment under clause (i) shall be made without a requirement for proof or show- ing of a change in circumstances. 110 STAT. 2240 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) PROOF OF SUBSTANTIAL CHANGE IN CIRCUMSTANCES NECESSARY IN REQUEST FOR REVIEW OUTSIDE 3-YEAR CYCLE.\u2014Procedures under which, in the case of a request for a review, and if appropriate, an adjustment outside the 3-year cycle (or such shorter cycle as the State may determine) under clause (i), the State shall review and, if the requesting party demonstrates a substantial change in circumstances, adjust the order in accordance with the guidelines established pursuant to section 467(a). ”(C) NOTICE OF RIGHT TO REVIEW.\u2014Procedures which require the State to provide notice not less than once every 3 years to the parents subject to the order informing the parents of their right to request the State to review and, if appropriate, adjust the order pursuant to this para- graph. The notice may be included in the order.”. SEC. 352. FURNISHING CONSUMER REPORTS FOR CERTAIN PURPOSES RELATING TO CHILD SUPPORT. Section 604 of the Fair Credit Reporting Act (15 U.S.C. 1681b) is amended by adding at the end the following new paragraphs: ”(4) In response to a request by the head of a State or local child support enforcement agency (or a State or local government official authorized by the head of such an agency), if the person making the request certifies to the consumer reporting agency that\u2014 ”(A) the consumer report is needed for the purpose of establishing an individual’s capacity to make child support payments or determining the appropriate level of such pay- ments; ”(B) the paternity of the consumer for the child to which the obligation relates has been established or acknowledged by the consumer in accordance with State laws under which the obligation arises (if required by those laws); ”(C) the person has provided at least 10 days’ prior notice to the consumer whose report is requested, by certified or registered mail to the last known address of the consumer, that the report will be requested; and ”(D) the consumer report will be kept confidential, will be used solely for a purpose described in subparagraph (A), and will not be used in connection with any other civil, adminis- trative, or criminal proceeding, or for any other purpose. ”(5) To an agency administering a State plan under section 454 of the Social Security Act (42 U.S.C. 654) for use to set an initial or modified child support award.”. SEC. 353. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL RECORDS TO STATE CHILD SUPPORT ENFORCEMENT AGENCIES IN CHILD SUPPORT CASES. Part D of title IV (42 U.S.C. 651 669) is amended by adding at the end the following: ”SEC. 469A. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL RECORDS TO STATE CHILD SUPPORT ENFORCEMENT AGENCIES IN CHILD SUPPORT CASES. ”(a) IN GENERAL.\u2014Notwithstanding any other provision of Federal or State law, a financial institution shall not be liable under any Federal or State law to any person for disclosing any financial record of an individual to a State child support enforce- 44 USC 649s. 110 STAT. 2241PUBLIC LAW 104 193\u2014AUG. 22, 1996 ment agency attempting to establish, modify, or enforce a child support obligation of such individual. ”(b) PROHIBITION OF DISCLOSURE OF FINANCIAL RECORD OBTAINED BY STATE CHILD SUPPORT ENFORCEMENT AGENCY.\u2014A State child support enforcement agency which obtains a financial record of an individual from a financial institution pursuant to subsection (a) may disclose such financial record only for the pur- pose of, and to the extent necessary in, establishing, modifying, or enforcing a child support obligation of such individual. ”(c) CIVIL DAMAGES FOR UNAUTHORIZED DISCLOSURE.\u2014 ”(1) DISCLOSURE BY STATE OFFICER OR EMPLOYEE.\u2014If any person knowingly, or by reason of negligence, discloses a finan- cial record of an individual in violation of subsection (b), such individual may bring a civil action for damages against such person in a district court of the United States. ”(2) NO LIABILITY FOR GOOD FAITH BUT ERRONEOUS INTERPRETATION.\u2014No liability shall arise under this subsection with respect to any disclosure which results from a good faith, but erroneous, interpretation of subsection (b). ”(3) DAMAGES.\u2014In any action brought under paragraph (1), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of\u2014 ”(A) the greater of\u2014 ”(i) $1,000 for each act of unauthorized disclosure of a financial record with respect to which such defend- ant is found liable; or ”(ii) the sum of\u2014 ”(I) the actual damages sustained by the plaintiff as a result of such unauthorized disclo- sure; plus ”(II) in the case of a willful disclosure or a disclosure which is the result of gross negligence, punitive damages; plus ”(B) the costs (including attorney’s fees) of the action. ”(d) DEFINITIONS.\u2014For purposes of this section\u2014 ”(1) FINANCIAL INSTITUTION.\u2014The term ‘financial institu- tion’ means\u2014 ”(A) a depository institution, as defined in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)); ”(B) an institution-affiliated party, as defined in section 3(u) of such Act (12 U.S.C. 1813(u)); ”(C) any Federal credit union or State credit union, as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752), including an institution-affiliated party of such a credit union, as defined in section 206(r) of such Act (12 U.S.C. 1786(r)); and ”(D) any benefit association, insurance company, safe deposit company, money-market mutual fund, or similar entity authorized to do business in the State. ”(2) FINANCIAL RECORD.\u2014The term ‘financial record’ has the meaning given such term in section 1101 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401).”. 110 STAT. 2242 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Subtitle G\u2014Enforcement of Support Orders SEC. 361. INTERNAL REVENUE SERVICE COLLECTION OF ARREAR- AGES. (a) COLLECTION OF FEES.\u2014Section 6305(a) of the Internal Reve- nue Code of 1986 (relating to collection of certain liability) is amended\u2014 (1) by striking ”and” at the end of paragraph (3); (2) by striking the period at the end of paragraph (4) and inserting ”, and”; (3) by adding at the end the following new paragraph: ”(5) no additional fee may be assessed for adjustments to an amount previously certified pursuant to such section 452(b) with respect to the same obligor.”; and (4) by striking ”Secretary of Health, Education, and Wel- fare” each place it appears and inserting ”Secretary of Health and Human Services”. (b) EFFECTIVE DATE.\u2014The amendments made by this section shall become effective October 1, 1997. SEC. 362. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL EMPLOYEES. (a) CONSOLIDATION AND STREAMLINING OF AUTHORITIES.\u2014Sec- tion 459 (42 U.S.C. 659) is amended to read as follows: ”SEC. 459. CONSENT BY THE UNITED STATES TO INCOME WITHHOLD- ING, GARNISHMENT, AND SIMILAR PROCEEDINGS FOR ENFORCEMENT OF CHILD SUPPORT AND ALIMONY OBLIGATIONS. ”(a) CONSENT TO SUPPORT ENFORCEMENT.\u2014Notwithstanding any other provision of law (including section 207 of this Act and section 5301 of title 38, United States Code), effective January 1, 1975, moneys (the entitlement to which is based upon remunera- tion for employment) due from, or payable by, the United States or the District of Columbia (including any agency, subdivision, or instrumentality thereof) to any individual, including members of the Armed Forces of the United States, shall be subject, in like manner and to the same extent as if the United States or the District of Columbia were a private person, to withholding in accordance with State law enacted pursuant to subsections (a)(1) and (b) of section 466 and regulations of the Secretary under such subsections, and to any other legal process brought, by a State agency administering a program under a State plan approved under this part or by an individual obligee, to enforce the legal obligation of the individual to provide child support or alimony. ”(b) CONSENT TO REQUIREMENTS APPLICABLE TO PRIVATE PER- SON.\u2014With respect to notice to withhold income pursuant to sub- section (a)(1) or (b) of section 466, or any other order or process to enforce support obligations against an individual (if the order or process contains or is accompanied by sufficient data to permit prompt identification of the individual and the moneys involved), each governmental entity specified in subsection (a) shall be subject to the same requirements as would apply if the entity were a private person, except as otherwise provided in this section. 26 USC 6305 note. 110 STAT. 2243PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(c) DESIGNATION OF AGENT; RESPONSE TO NOTICE OR PROCESS\u2014 ”(1) DESIGNATION OF AGENT.\u2014The head of each agency subject to this section shall\u2014 ”(A) designate an agent or agents to receive orders and accept service of process in matters relating to child support or alimony; and ”(B) annually publish in the Federal Register the des- ignation of the agent or agents, identified by title or posi- tion, mailing address, and telephone number. ”(2) RESPONSE TO NOTICE OR PROCESS.\u2014If an agent des- ignated pursuant to paragraph (1) of this subsection receives notice pursuant to State procedures in effect pursuant to sub- section (a)(1) or (b) of section 466, or is effectively served with any order, process, or interrogatory, with respect to an individual’s child support or alimony payment obligations, the agent shall\u2014 ”(A) as soon as possible (but not later than 15 days) thereafter, send written notice of the notice or service (together with a copy of the notice or service) to the individ- ual at the duty station or last-known home address of the individual; ”(B) within 30 days (or such longer period as may be prescribed by applicable State law) after receipt of a notice pursuant to such State procedures, comply with all applicable provisions of section 466; and ”(C) within 30 days (or such longer period as may be prescribed by applicable State law) after effective service of any other such order, process, or interrogatory, respond to the order, process, or interrogatory. ”(d) PRIORITY OF CLAIMS.\u2014If a governmental entity specified in subsection (a) receives notice or is served with process, as pro- vided in this section, concerning amounts owed by an individual to more than 1 person\u2014 ”(1) support collection under section 466(b) must be given priority over any other process, as provided in section 466(b)(7); ”(2) allocation of moneys due or payable to an individual among claimants under section 466(b) shall be governed by section 466(b) and the regulations prescribed under such sec- tion; and ”(3) such moneys as remain after compliance with para- graphs (1) and (2) shall be available to satisfy any other such processes on a first-come, first-served basis, with any such process being satisfied out of such moneys as remain after the satisfaction of all such processes which have been previously served. ”(e) NO REQUIREMENT TO VARY PAY CYCLES.\u2014A governmental entity that is affected by legal process served for the enforcement of an individual’s child support or alimony payment obligations shall not be required to vary its normal pay and disbursement cycle in order to comply with the legal process. ”(f) RELIEF FROM LIABILITY.\u2014 ”(1) Neither the United States, nor the government of the District of Columbia, nor any disbursing officer shall be liable with respect to any payment made from moneys due or payable from the United States to any individual pursuant to legal process regular on its face, if the payment is made in accordance Federal Register, publication. 110 STAT. 2244 PUBLIC LAW 104 193\u2014AUG. 22, 1996 with this section and the regulations issued to carry out this section. ”(2) No Federal employee whose duties include taking actions necessary to comply with the requirements of subsection (a) with regard to any individual shall be subject under any law to any disciplinary action or civil or criminal liability or penalty for, or on account of, any disclosure of information made by the employee in connection with the carrying out of such actions. ”(g) REGULATIONS.\u2014Authority to promulgate regulations for the implementation of this section shall, insofar as this section applies to moneys due from (or payable by)\u2014 ”(1) the United States (other than the legislative or judicial branches of the Federal Government) or the government of the District of Columbia, be vested in the President (or the designee of the President); ”(2) the legislative branch of the Federal Government, be vested jointly in the President pro tempore of the Senate and the Speaker of the House of Representatives (or their des- ignees), and ”(3) the judicial branch of the Federal Government, be vested in the Chief Justice of the United States (or the designee of the Chief Justice). ”(h) MONEYS SUBJECT TO PROCESS.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2), moneys paid or payable to an individual which are considered to be based upon remuneration for employment, for purposes of this section\u2014 ”(A) consist of\u2014 ”(i) compensation paid or payable for personal services of the individual, whether the compensation is denominated as wages, salary, commission, bonus, pay, allowances, or otherwise (including severance pay, sick pay, and incentive pay); ”(ii) periodic benefits (including a periodic benefit as defined in section 228(h)(3)) or other payments\u2014 ”(I) under the insurance system established by title II; ”(II) under any other system or fund estab- lished by the United States which provides for the payment of pensions, retirement or retired pay, annuities, dependents’ or survivors’ benefits, or similar amounts payable on account of personal services performed by the individual or any other individual; ”(III) as compensation for death under any Federal program; ”(IV) under any Federal program established to provide ‘black lung’ benefits; or ”(V) by the Secretary of Veterans Affairs as compensation for a service-connected disability paid by the Secretary to a former member of the Armed Forces who is in receipt of retired or retainer pay if the former member has waived a portion of the retired or retainer pay in order to receive such compensation; and 110 STAT. 2245PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(iii) worker’s compensation benefits paid under Federal or State law but ”(B) do not include any payment\u2014 ”(i) by way of reimbursement or otherwise, to defray expenses incurred by the individual in carrying out duties associated with the employment of the individual; or ”(ii) as allowances for members of the uniformed services payable pursuant to chapter 7 of title 37, United States Code, as prescribed by the Secretaries concerned (defined by section 101(5) of such title) as necessary for the efficient performance of duty. ”(2) CERTAIN AMOUNTS EXCLUDED.\u2014In determining the amount of any moneys due from, or payable by, the United States to any individual, there shall be excluded amounts which\u2014 ”(A) are owed by the individual to the United States; ”(B) are required by law to be, and are, deducted from the remuneration or other payment involved, includ- ing Federal employment taxes, and fines and forfeitures ordered by court-martial; ”(C) are properly withheld for Federal, State, or local income tax purposes, if the withholding of the amounts is authorized or required by law and if amounts withheld are not greater than would be the case if the individual claimed all dependents to which he was entitled (the withholding of additional amounts pursuant to section 3402(i) of the Internal Revenue Code of 1986 may be per- mitted only when the individual presents evidence of a tax obligation which supports the additional withholding); ”(D) are deducted as health insurance premiums; ”(E) are deducted as normal retirement contributions (not including amounts deducted for supplementary cov- erage); or ”(F) are deducted as normal life insurance premiums from salary or other remuneration for employment (not including amounts deducted for supplementary coverage). ”(i) DEFINITIONS.\u2014For purposes of this section\u2014 ”(1) UNITED STATES.\u2014The term ‘United States’ includes any department, agency, or instrumentality of the legislative, judicial, or executive branch of the Federal Government, the United States Postal Service, the Postal Rate Commission, any Federal corporation created by an Act of Congress that is wholly owned by the Federal Government, and the governments of the territories and possessions of the United States. ”(2) CHILD SUPPORT.\u2014The term ‘child support’, when used in reference to the legal obligations of an individual to provide such support, means amounts required to be paid under a judgment, decree, or order, whether temporary, final, or subject to modification, issued by a court or an administrative agency of competent jurisdiction, for the support and maintenance of a child, including a child who has attained the age of majority under the law of the issuing State, or a child and the parent with whom the child is living, which provides for monetary support, health care, arrearages or reimbursement, and which may include other related costs and fees, interest and penalties, income withholding, attorney’s fees, and other relief. 110 STAT. 2246 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(3) ALIMONY.\u2014 ”(A) IN GENERAL.\u2014The term ‘alimony’, when used in reference to the legal obligations of an individual to provide the same, means periodic payments of funds for the support and maintenance of the spouse (or former spouse) of the individual, and (subject to and in accordance with State law) includes separate maintenance, alimony pendente lite, maintenance, and spousal support, and includes attorney’s fees, interest, and court costs when and to the extent that the same are expressly made recoverable as such pursuant to a decree, order, or judgment issued in accord- ance with applicable State law by a court of competent jurisdiction. ”(B) EXCEPTIONS.\u2014Such term does not include\u2014 ”(i) any child support; or ”(ii) any payment or transfer of property or its value by an individual to the spouse or a former spouse of the individual in compliance with any community property settlement, equitable distribution of property, or other division of property between spouses or former spouses. ”(4) PRIVATE PERSON.\u2014The term ‘private person’ means a person who does not have sovereign or other special immunity or privilege which causes the person not to be subject to legal process. ”(5) LEGAL PROCESS.\u2014The term ‘legal process’ means any writ, order, summons, or other similar process in the nature of garnishment\u2014 ”(A) which is issued by\u2014 ”(i) a court or an administrative agency of com- petent jurisdiction in any State, territory, or possession of the United States; ”(ii) a court or an administrative agency of com- petent jurisdiction in any foreign country with which the United States has entered into an agreement which requires the United States to honor the process; or ”(iii) an authorized official pursuant to an order of such a court or an administrative agency of com- petent jurisdiction or pursuant to State or local law; and ”(B) which is directed to, and the purpose of which is to compel, a governmental entity which holds moneys which are otherwise payable to an individual to make a payment from the moneys to another party in order to satisfy a legal obligation of the individual to provide child support or make alimony payments.”. (b) CONFORMING AMENDMENTS.\u2014 (1) TO PART D OF TITLE IV.\u2014Sections 461 and 462 (42 U.S.C. 661 and 662) are repealed. (2) TO TITLE 5, UNITED STATES CODE.\u2014Section 5520a of title 5, United States Code, is amended, in subsections (h)(2) and (i), by striking ”sections 459, 461, and 462 of the Social Security Act (42 U.S.C. 659, 661, and 662)” and inserting ”sec- tion 459 of the Social Security Act (42 U.S.C. 659)”. (c) MILITARY RETIRED AND RETAINER PAY.\u2014 (1) DEFINITION OF COURT.\u2014Section 1408(a)(1) of title 10, United States Code, is amended\u2014 110 STAT. 2247PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) by striking ”and” at the end of subparagraph (B); (B) by striking the period at the end of subparagraph (C) and inserting ”; and”; and (C) by adding after subparagraph (C) the following new subparagraph: ”(D) any administrative or judicial tribunal of a State competent to enter orders for support or maintenance (including a State agency administering a program under a State plan approved under part D of title IV of the Social Security Act), and, for purposes of this subparagraph, the term ‘State’ includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.”. (2) DEFINITION OF COURT ORDER.\u2014Section 1408(a)(2) of such title is amended\u2014 (A) by inserting ”or a support order, as defined in section 453(p) of the Social Security Act (42 U.S.C. 653(p)),” before ”which\u2014”; (B) in subparagraph (B)(i), by striking ”(as defined in section 462(b) of the Social Security Act (42 U.S.C. 662(b)))” and inserting ”(as defined in section 459(i)(2) of the Social Security Act (42 U.S.C. 659(i)(2)))”; and (C) in subparagraph (B)(ii), by striking ”(as defined in section 462(c) of the Social Security Act (42 U.S.C. 662(c)))” and inserting ”(as defined in section 459(i)(3) of the Social Security Act (42 U.S.C. 659(i)(3)))”. (3) PUBLIC PAYEE.\u2014Section 1408(d) of such title is amended\u2014 (A) in the heading, by inserting ”(OR FOR BENEFIT OF)” before ”SPOUSE OR”; and (B) in paragraph (1), in the first sentence, by inserting ”(or for the benefit of such spouse or former spouse to a State disbursement unit established pursuant to section 454B of the Social Security Act or other public payee des- ignated by a State, in accordance with part D of title IV of the Social Security Act, as directed by court order, or as otherwise directed in accordance with such part D)” before ”in an amount sufficient”. (4) RELATIONSHIP TO PART D OF TITLE IV.\u2014Section 1408 of such title is amended by adding at the end the following new subsection: ”(j) RELATIONSHIP TO OTHER LAWS.\u2014In any case involving an order providing for payment of child support (as defined in section 459(i)(2) of the Social Security Act) by a member who has never been married to the other parent of the child, the provisions of this section shall not apply, and the case shall be subject to the provisions of section 459 of such Act.”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall become effective 6 months after the date of the enactment of this Act. SEC. 363. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF MEMBERS OF THE ARMED FORCES. (a) AVAILABILITY OF LOCATOR INFORMATION.\u2014 (1) MAINTENANCE OF ADDRESS INFORMATION.\u2014The Sec- retary of Defense shall establish a centralized personnel locator service that includes the address of each member of the Armed 10 USC 113 note. 42 USC 659 note. 110 STAT. 2248 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Forces under the jurisdiction of the Secretary. Upon request of the Secretary of Transportation, addresses for members of the Coast Guard shall be included in the centralized personnel locator service. (2) TYPE OF ADDRESS.\u2014 (A) RESIDENTIAL ADDRESS.\u2014Except as provided in subparagraph (B), the address for a member of the Armed Forces shown in the locator service shall be the residential address of that member. (B) DUTY ADDRESS.\u2014The address for a member of the Armed Forces shown in the locator service shall be the duty address of that member in the case of a member\u2014 (i) who is permanently assigned overseas, to a vessel, or to a routinely deployable unit; or (ii) with respect to whom the Secretary concerned makes a determination that the member’s residential address should not be disclosed due to national security or safety concerns. (3) UPDATING OF LOCATOR INFORMATION.\u2014Within 30 days after a member listed in the locator service establishes a new residential address (or a new duty address, in the case of a member covered by paragraph (2)(B)), the Secretary concerned shall update the locator service to indicate the new address of the member. (4) AVAILABILITY OF INFORMATION.\u2014The Secretary of Defense shall make information regarding the address of a member of the Armed Forces listed in the locator service avail- able, on request, to the Federal Parent Locator Service estab- lished under section 453 of the Social Security Act. (b) FACILITATING GRANTING OF LEAVE FOR ATTENDANCE AT HEARINGS.\u2014 (1) REGULATIONS.\u2014The Secretary of each military depart- ment, and the Secretary of Transportation with respect to the Coast Guard when it is not operating as a service in the Navy, shall prescribe regulations to facilitate the granting of leave to a member of the Armed Forces under the jurisdiction of that Secretary in a case in which\u2014 (A) the leave is needed for the member to attend a hearing described in paragraph (2); (B) the member is not serving in or with a unit deployed in a contingency operation (as defined in section 101 of title 10, United States Code); and (C) the exigencies of military service (as determined by the Secretary concerned) do not otherwise require that such leave not be granted. (2) COVERED HEARINGS.\u2014Paragraph (1) applies to a hearing that is conducted by a court or pursuant to an administrative process established under State law, in connection with a civil action\u2014 (A) to determine whether a member of the Armed Forces is a natural parent of a child; or (B) to determine an obligation of a member of the Armed Forces to provide child support. (3) DEFINITIONS.\u2014For purposes of this subsection\u2014 (A) The term ”court” has the meaning given that term in section 1408(a) of title 10, United States Code. 10 USC 704 note. 110 STAT. 2249PUBLIC LAW 104 193\u2014AUG. 22, 1996 (B) The term ”child support” has the meaning given such term in section 459(i) of the Social Security Act (42 U.S.C. 659(i)). (c) PAYMENT OF MILITARY RETIRED PAY IN COMPLIANCE WITH CHILD SUPPORT ORDERS.\u2014 (1) DATE OF CERTIFICATION OF COURT ORDER.\u2014Section 1408 of title 10, United States Code, as amended by section 362(c)(4) of this Act, is amended\u2014 (A) by redesignating subsections (i) and (j) as sub- sections (j) and (k), respectively; and (B) by inserting after subsection (h) the following new subsection: ”(i) CERTIFICATION DATE.\u2014It is not necessary that the date of a certification of the authenticity or completeness of a copy of a court order for child support received by the Secretary concerned for the purposes of this section be recent in relation to the date of receipt by the Secretary.”. (2) PAYMENTS CONSISTENT WITH ASSIGNMENTS OF RIGHTS TO STATES.\u2014Section 1408(d)(1) of such title is amended by inserting after the first sentence the following new sentence: ”In the case of a spouse or former spouse who, pursuant to section 408(a)(3) of the Social Security Act (42 U.S.C. 608(a)(4)), assigns to a State the rights of the spouse or former spouse to receive support, the Secretary concerned may make the child support payments referred to in the preceding sentence to that State in amounts consistent with that assignment of rights.”. (3) ARREARAGES OWED BY MEMBERS OF THE UNIFORMED SERVICES.\u2014Section 1408(d) of such title is amended by adding at the end the following new paragraph: ”(6) In the case of a court order for which effective service is made on the Secretary concerned on or after the date of the enactment of this paragraph and which provides for payments from the disposable retired pay of a member to satisfy the amount of child support set forth in the order, the authority provided in paragraph (1) to make payments from the disposable retired pay of a member to satisfy the amount of child support set forth in a court order shall apply to payment of any amount of child support arrearages set forth in that order as well as to amounts of child support that currently become due.”. (4) PAYROLL DEDUCTIONS.\u2014The Secretary of Defense shall begin payroll deductions within 30 days after receiving notice of withholding, or for the first pay period that begins after such 30-day period. SEC. 364. VOIDING OF FRAUDULENT TRANSFERS. Section 466 (42 U.S.C. 666), as amended by section 321 of this Act, is amended by adding at the end the following new subsection: ”(g) LAWS VOIDING FRAUDULENT TRANSFERS.\u2014In order to satisfy section 454(20)(A), each State must have in effect\u2014 ”(1)(A) the Uniform Fraudulent Conveyance Act of 1981; ”(B) the Uniform Fraudulent Transfer Act of 1984; or ”(C) another law, specifying indicia of fraud which create a prima facie case that a debtor transferred income or property to avoid payment to a child support creditor, which the 10 USC 1408 note. 110 STAT. 2250 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Secretary finds affords comparable rights to child support credi- tors; and ”(2) procedures under which, in any case in which the State knows of a transfer by a child support debtor with respect to which such a prima facie case is established, the State must\u2014 ”(A) seek to void such transfer; or ”(B) obtain a settlement in the best interests of the child support creditor.”. SEC. 365. WORK REQUIREMENT FOR PERSONS OWING PAST-DUE CHILD SUPPORT. (a) IN GENERAL.\u2014Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, and 323 of this Act, is amended by inserting after paragraph (14) the following new paragraph: ”(15) PROCEDURES TO ENSURE THAT PERSONS OWING PAST- DUE SUPPORT WORK OR HAVE A PLAN FOR PAYMENT OF SUCH SUPPORT.\u2014 ”(A) IN GENERAL.\u2014Procedures under which the State has the authority, in any case in which an individual owes past-due support with respect to a child receiving assistance under a State program funded under part A, to issue an order or to request that a court or an adminis- trative process established pursuant to State law issue an order that requires the individual to\u2014 ”(i) pay such support in accordance with a plan approved by the court, or, at the option of the State, a plan approved by the State agency administering the State program under this part; or ”(ii) if the individual is subject to such a plan and is not incapacitated, participate in such work activities (as defined in section 407(d)) as the court, or, at the option of the State, the State agency admin- istering the State program under this part, deems appropriate. ”(B) PAST-DUE SUPPORT DEFINED.\u2014For purposes of subparagraph (A), the term ‘past-due support’ means the amount of a delinquency, determined under a court order, or an order of an administrative process established under State law, for support and maintenance of a child, or of a child and the parent with whom the child is living.”. (b) CONFORMING AMENDMENT.\u2014The flush paragraph at the end of section 466(a) (42 U.S.C. 666(a)) is amended by striking ”and (7)” and inserting ”(7), and (15)”. SEC. 366. DEFINITION OF SUPPORT ORDER. Section 453 (42 U.S.C. 653) as amended by sections 316 and 345(b) of this Act, is amended by adding at the end the following new subsection: ”(p) SUPPORT ORDER DEFINED.\u2014As used in this part, the term ‘support order’ means a judgment, decree, or order, whether tem- porary, final, or subject to modification, issued by a court or an administrative agency of competent jurisdiction, for the support and maintenance of a child, including a child who has attained the age of majority under the law of the issuing State, or a child and the parent with whom the child is living, which provides for monetary support, health care, arrearages, or reimbursement, 110 STAT. 2251PUBLIC LAW 104 193\u2014AUG. 22, 1996 and which may include related costs and fees, interest and penalties, income withholding, attorneys’ fees, and other relief.”. SEC. 367. REPORTING ARREARAGES TO CREDIT BUREAUS. Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended to read as follows: ”(7) REPORTING ARREARAGES TO CREDIT BUREAUS.\u2014 ”(A) IN GENERAL.\u2014Procedures (subject to safeguards pursuant to subparagraph (B)) requiring the State to report periodically to consumer reporting agencies (as defined in section 603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)) the name of any noncustodial parent who is delin- quent in the payment of support, and the amount of over- due support owed by such parent. ”(B) SAFEGUARDS.\u2014Procedures ensuring that, in carry- ing out subparagraph (A), information with respect to a noncustodial parent is reported\u2014 ”(i) only after such parent has been afforded all due process required under State law, including notice and a reasonable opportunity to contest the accuracy of such information; and ”(ii) only to an entity that has furnished evidence satisfactory to the State that the entity is a consumer reporting agency (as so defined).”. SEC. 368. LIENS. Section 466(a)(4) (42 U.S.C. 666(a)(4)) is amended to read as follows: ”(4) LIENS.\u2014Procedures under which\u2014 ”(A) liens arise by operation of law against real and personal property for amounts of overdue support owed by a noncustodial parent who resides or owns property in the State; and ”(B) the State accords full faith and credit to liens described in subparagraph (A) arising in another State, when the State agency, party, or other entity seeking to enforce such a lien complies with the procedural rules relating to recording or serving liens that arise within the State, except that such rules may not require judicial notice or hearing prior to the enforcement of such a lien.”. SEC. 369. STATE LAW AUTHORIZING SUSPENSION OF LICENSES. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, and 365 of this Act, is amended by inserting after para- graph (15) the following: ”(16) AUTHORITY TO WITHHOLD OR SUSPEND LICENSES.\u2014 Procedures under which the State has (and uses in appropriate cases) authority to withhold or suspend, or to restrict the use of driver’s licenses, professional and occupational licenses, and recreational licenses of individuals owing overdue support or failing, after receiving appropriate notice, to comply with subpoenas or warrants relating to paternity or child support proceedings.”. SEC. 370. DENIAL OF PASSPORTS FOR NONPAYMENT OF CHILD SUPPORT. (a) HHS CERTIFICATION PROCEDURE.\u2014 110 STAT. 2252 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (1) SECRETARIAL RESPONSIBILITY.\u2014Section 452 (42 U.S.C. 652), as amended by section 345 of this Act, is amended by adding at the end the following new subsection: ”(k)(1) If the Secretary receives a certification by a State agency in accordance with the requirements of section 454(31) that an individual owes arrearages of child support in an amount exceeding $5,000, the Secretary shall transmit such certification to the Sec- retary of State for action (with respect to denial, revocation, or limitation of passports) pursuant to paragraph (2). ”(2) The Secretary of State shall, upon certification by the Secretary transmitted under paragraph (1), refuse to issue a pass- port to such individual, and may revoke, restrict, or limit a passport issued previously to such individual. ”(3) The Secretary and the Secretary of State shall not be liable to an individual for any action with respect to a certification by a State agency under this section.”. (2) STATE AGENCY RESPONSIBILITY.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(b), 313(a), 333, and 343(b) of this Act, is amended\u2014 (A) by striking ”and” at the end of paragraph (29); (B) by striking the period at the end of paragraph (30) and inserting ”; and”; and (C) by adding after paragraph (30) the following new paragraph: ”(31) provide that the State agency will have in effect a procedure for certifying to the Secretary, for purposes of the procedure under section 452(k), determinations that individ- uals owe arrearages of child support in an amount exceeding $5,000, under which procedure\u2014 ”(A) each individual concerned is afforded notice of such determination and the consequences thereof, and an opportunity to contest the determination; and ”(B) the certification by the State agency is furnished to the Secretary in such format, and accompanied by such supporting documentation, as the Secretary may require.”. (b) EFFECTIVE DATE.\u2014This section and the amendments made by this section shall become effective October 1, 1997. SEC. 371. INTERNATIONAL SUPPORT ENFORCEMENT. (a) AUTHORITY FOR INTERNATIONAL AGREEMENTS.\u2014Part D of title IV, as amended by section 362(a) of this Act, is amended by adding after section 459 the following new section: ”SEC. 459A. INTERNATIONAL SUPPORT ENFORCEMENT. ”(a) AUTHORITY FOR DECLARATIONS.\u2014 ”(1) DECLARATION.\u2014The Secretary of State, with the concurrence of the Secretary of Health and Human Services, is authorized to declare any foreign country (or a political subdivision thereof) to be a foreign reciprocating country if the foreign country has established, or undertakes to establish, procedures for the establishment and enforcement of duties of support owed to obligees who are residents of the United States, and such procedures are substantially in conformity with the standards prescribed under subsection (b). ”(2) REVOCATION.\u2014A declaration with respect to a foreign country made pursuant to paragraph (1) may be revoked if the Secretaries of State and Health and Human Services deter- mine that\u2014 42 USC 659a. 42 USC 652 note. 110 STAT. 2253PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) the procedures established by the foreign country regarding the establishment and enforcement of duties of support have been so changed, or the foreign country’s implementation of such procedures is so unsatisfactory, that such procedures do not meet the criteria for such a declaration; or ”(B) continued operation of the declaration is not consistent with the purposes of this part. ”(3) FORM OF DECLARATION.\u2014A declaration under para- graph (1) may be made in the form of an international agree- ment, in connection with an international agreement or cor- responding foreign declaration, or on a unilateral basis. ”(b) STANDARDS FOR FOREIGN SUPPORT ENFORCEMENT PROCEDURES.\u2014 ”(1) MANDATORY ELEMENTS.\u2014Support enforcement proce- dures of a foreign country which may be the subject of a declaration pursuant to subsection (a)(1) shall include the fol- lowing elements: ”(A) The foreign country (or political subdivision thereof) has in effect procedures, available to residents of the United States\u2014 ”(i) for establishment of paternity, and for establishment of orders of support for children and custodial parents; and ”(ii) for enforcement of orders to provide support to children and custodial parents, including procedures for collection and appropriate distribution of support payments under such orders. ”(B) The procedures described in subparagraph (A), including legal and administrative assistance, are provided to residents of the United States at no cost. ”(C) An agency of the foreign country is designated as a Central Authority responsible for\u2014 ”(i) facilitating support enforcement in cases involving residents of the foreign country and residents of the United States; and ”(ii) ensuring compliance with the standards estab- lished pursuant to this subsection. ”(2) ADDITIONAL ELEMENTS.\u2014The Secretary of Health and Human Services and the Secretary of State, in consultation with the States, may establish such additional standards as may be considered necessary to further the purposes of this section. ”(c) DESIGNATION OF UNITED STATES CENTRAL AUTHORITY.\u2014 It shall be the responsibility of the Secretary of Health and Human Services to facilitate support enforcement in cases involving resi- dents of the United States and residents of foreign countries that are the subject of a declaration under this section, by activities including\u2014 ”(1) development of uniform forms and procedures for use in such cases; ”(2) notification of foreign reciprocating countries of the State of residence of individuals sought for support enforcement purposes, on the basis of information provided by the Federal Parent Locator Service; and ”(3) such other oversight, assistance, and coordination activities as the Secretary may find necessary and appropriate. 110 STAT. 2254 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(d) EFFECT ON OTHER LAWS.\u2014States may enter into reciprocal arrangements for the establishment and enforcement of support obligations with foreign countries that are not the subject of a declaration pursuant to subsection (a), to the extent consistent with Federal law.”. (b) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(b), 313(a), 333, 343(b), and 370(a)(2) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (30); (2) by striking the period at the end of paragraph (31) and inserting ”; and”; and (3) by adding after paragraph (31) the following new para- graph: ”(32)(A) provide that any request for services under this part by a foreign reciprocating country or a foreign country with which the State has an arrangement described in section 459A(d)(2) shall be treated as a request by a State; ”(B) provide, at State option, notwithstanding paragraph (4) or any other provision of this part, for services under the plan for enforcement of a spousal support order not described in paragraph (4)(B) entered by such a country (or subdivision); and ”(C) provide that no applications will be required from, and no costs will be assessed for such services against, the foreign reciprocating country or foreign obligee (but costs may at State option be assessed against the obligor).”. SEC. 372. FINANCIAL INSTITUTION DATA MATCHES. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, 365, and 369 of this Act, is amended by inserting after paragraph (16) the following new paragraph: ”(17) FINANCIAL INSTITUTION DATA MATCHES.\u2014 ”(A) IN GENERAL.\u2014Procedures under which the State agency shall enter into agreements with financial institu- tions doing business in the State\u2014 ”(i) to develop and operate, in coordination with such financial institutions, a data match system, using automated data exchanges to the maximum extent fea- sible, in which each such financial institution is required to provide for each calendar quarter the name, record address, social security number or other tax- payer identification number, and other identifying information for each noncustodial parent who main- tains an account at such institution and who owes past-due support, as identified by the State by name and social security number or other taxpayer identifica- tion number; and ”(ii) in response to a notice of lien or levy, encum- ber or surrender, as the case may be, assets held by such institution on behalf of any noncustodial parent who is subject to a child support lien pursuant to paragraph (4). ”(B) REASONABLE FEES.\u2014The State agency may pay a reasonable fee to a financial institution for conducting the data match provided for in subparagraph (A)(i), not to exceed the actual costs incurred by such financial institution. 110 STAT. 2255PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(C) LIABILITY.\u2014A financial institution shall not be liable under any Federal or State law to any person\u2014 ”(i) for any disclosure of information to the State agency under subparagraph (A)(i); ”(ii) for encumbering or surrendering any assets held by such financial institution in response to a notice of lien or levy issued by the State agency as provided for in subparagraph (A)(ii); or ”(iii) for any other action taken in good faith to comply with the requirements of subparagraph (A). ”(D) DEFINITIONS.\u2014For purposes of this paragraph\u2014 ”(i) FINANCIAL INSTITUTION.\u2014The term ‘financial institution’ has the meaning given to such term by section 469A(d)(1). ”(ii) ACCOUNT.\u2014The term ‘account’ means a demand deposit account, checking or negotiable with- drawal order account, savings account, time deposit account, or money-market mutual fund account.”. SEC. 373. ENFORCEMENT OF ORDERS AGAINST PATERNAL OR MATERNAL GRANDPARENTS IN CASES OF MINOR PARENTS. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, 365, 369, and 372 of this Act, is amended by inserting after paragraph (17) the following new paragraph: ”(18) ENFORCEMENT OF ORDERS AGAINST PATERNAL OR MATERNAL GRANDPARENTS.\u2014Procedures under which, at the State’s option, any child support order enforced under this part with respect to a child of minor parents, if the custodial parent of such child is receiving assistance under the State program under part A, shall be enforceable, jointly and sever- ally, against the parents of the noncustodial parent of such child.”. SEC. 374. NONDISCHARGEABILITY IN BANKRUPTCY OF CERTAIN DEBTS FOR THE SUPPORT OF A CHILD. (a) AMENDMENT TO TITLE 11 OF THE UNITED STATES CODE.\u2014 Section 523(a) of title 11, United States Code, is amended\u2014 (1) by striking ”or” at the end of paragraph (16); (2) by striking the period at the end of paragraph (17) and inserting ”; or”; (3) by adding at the end the following: ”(18) owed under State law to a State or municipality that is\u2014 ”(A) in the nature of support, and ”(B) enforceable under part D of title IV of the Social Security Act (42 U.S.C. 601 et seq.).”; and (4) in paragraph (5), by striking ”section 402(a)(26)” and inserting ”section 408(a)(3)”. (b) AMENDMENT TO THE SOCIAL SECURITY ACT.\u2014Section 456(b) (42 U.S.C. 656(b)) is amended to read as follows: ”(b) NONDISCHARGEABILITY.\u2014A debt (as defined in section 101 of title 11 of the United States Code) owed under State law to a State (as defined in such section) or municipality (as defined in such section) that is in the nature of support and that is enforce- able under this part is not released by a discharge in bankruptcy under title 11 of the United States Code.”. 110 STAT. 2256 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (c) APPLICATION OF AMENDMENTS.\u2014The amendments made by this section shall apply only with respect to cases commenced under title 11 of the United States Code after the date of the enactment of this Act. SEC. 375. CHILD SUPPORT ENFORCEMENT FOR INDIAN TRIBES. (a) CHILD SUPPORT ENFORCEMENT AGREEMENTS.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(b), 313(a), 333, 343(b), 370(a)(2), and 371(b) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (31); (2) by striking the period at the end of paragraph (32) and inserting ”; and”; (3) by adding after paragraph (32) the following new para- graph: ”(33) provide that a State that receives funding pursuant to section 428 and that has within its borders Indian country (as defined in section 1151 of title 18, United States Code) may enter into cooperative agreements with an Indian tribe or tribal organization (as defined in subsections (e) and (l) of section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b)), if the Indian tribe or tribal organization demonstrates that such tribe or organization has an established tribal court system or a Court of Indian Offenses with the authority to establish paternity, establish, modify, and enforce support orders, and to enter support orders in accordance with child support guidelines established by such tribe or organization, under which the State and tribe or organization shall provide for the cooperative delivery of child support enforcement services in Indian country and for the forwarding of all funding collected pursuant to the functions performed by the tribe or organization to the State agency, or conversely, by the State agency to the tribe or organization, which shall distribute such funding in accordance with such agreement.”; and (4) by adding at the end the following new sentence: ”Noth- ing in paragraph (33) shall void any provision of any cooperative agreement entered into before the date of the enactment of such paragraph, nor shall such paragraph deprive any State of jurisdiction over Indian country (as so defined) that is law- fully exercised under section 402 of the Act entitled ‘An Act to prescribe penalties for certain acts of violence or intimidation, and for other purposes’, approved April 11, 1968 (25 U.S.C. 1322).”. (b) DIRECT FEDERAL FUNDING TO INDIAN TRIBES AND TRIBAL ORGANIZATIONS.\u2014Section 455 (42 U.S.C. 655) is amended by adding at the end the following new subsection: ”(b) The Secretary may, in appropriate cases, make direct pay- ments under this part to an Indian tribe or tribal organization which has an approved child support enforcement plan under this title. In determining whether such payments are appropriate, the Secretary shall, at a minimum, consider whether services are being provided to eligible Indian recipients by the State agency through an agreement entered into pursuant to section 454(34).”. (c) COOPERATIVE ENFORCEMENT AGREEMENTS.\u2014Paragraph (7) of section 454 (42 U.S.C. 654) is amended by inserting ”and Indian tribes or tribal organizations (as defined in subsections (e) and 11 USC 523 note. 110 STAT. 2257PUBLIC LAW 104 193\u2014AUG. 22, 1996 (l) of section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b))” after ”law enforcement officials”. (d) CONFORMING AMENDMENT.\u2014Subsection (c) of section 428 (42 U.S.C. 628) is amended to read as follows: ”(c) For purposes of this section, the terms ‘Indian tribe’ and ‘tribal organization’ shall have the meanings given such terms by subsections (e) and (l) of section 4 of the Indian Self-Determina- tion and Education Assistance Act (25 U.S.C. 450b), respectively.”. Subtitle H\u2014Medical Support SEC. 381. CORRECTION TO ERISA DEFINITION OF MEDICAL CHILD SUPPORT ORDER. (a) IN GENERAL.\u2014Section 609(a)(2)(B) of the Employee Retire- ment Income Security Act of 1974 (29 U.S.C. 1169(a)(2)(B)) is amended\u2014 (1) by striking ”issued by a court of competent jurisdiction”; (2) by striking the period at the end of clause (ii) and inserting a comma; and (3) by adding, after and below clause (ii), the following: ”if such judgment, decree, or order (I) is issued by a court of competent jurisdiction or (II) is issued through an administrative process established under State law and has the force and effect of law under applicable State law.”. (b) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall take effect on the date of the enactment of this Act. (2) PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1997.\u2014Any amendment to a plan required to be made by an amendment made by this section shall not be required to be made before the 1st plan year beginning on or after January 1, 1997, if\u2014 (A) during the period after the date before the date of the enactment of this Act and before such 1st plan year, the plan is operated in accordance with the require- ments of the amendments made by this section; and (B) such plan amendment applies retroactively to the period after the date before the date of the enactment of this Act and before such 1st plan year. A plan shall not be treated as failing to be operated in accord- ance with the provisions of the plan merely because it operates in accordance with this paragraph. SEC. 382. ENFORCEMENT OF ORDERS FOR HEALTH CARE COVERAGE. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, 365, 369, 372, and 373 of this Act, is amended by inserting after paragraph (18) the following new paragraph: ”(19) HEALTH CARE COVERAGE.\u2014Procedures under which all child support orders enforced pursuant to this part shall include a provision for the health care coverage of the child, and in the case in which a noncustodial parent provides such coverage and changes employment, and the new employer pro- vides health care coverage, the State agency shall transfer notice of the provision to the employer, which notice shall 29 USC 1169 note. Native Americans. 110 STAT. 2258 PUBLIC LAW 104 193\u2014AUG. 22, 1996 operate to enroll the child in the noncustodial parent’s health plan, unless the noncustodial parent contests the notice.”. Subtitle I\u2014Enhancing Responsibility and Opportunity for Non-Residential Parents SEC. 391. GRANTS TO STATES FOR ACCESS AND VISITATION PRO- GRAMS. Part D of title IV (42 U.S.C. 651 669), as amended by section 353 of this Act, is amended by adding at the end the following new section: ”SEC. 469B. GRANTS TO STATES FOR ACCESS AND VISITATION PRO- GRAMS. ”(a) IN GENERAL.\u2014The Administration for Children and Fami- lies shall make grants under this section to enable States to estab- lish and administer programs to support and facilitate noncustodial parents’ access to and visitation of their children, by means of activities including mediation (both voluntary and mandatory), counseling, education, development of parenting plans, visitation enforcement (including monitoring, supervision and neutral drop- off and pickup), and development of guidelines for visitation and alternative custody arrangements. ”(b) AMOUNT OF GRANT.\u2014The amount of the grant to be made to a State under this section for a fiscal year shall be an amount equal to the lesser of\u2014 ”(1) 90 percent of State expenditures during the fiscal year for activities described in subsection (a); or ”(2) the allotment of the State under subsection (c) for the fiscal year. ”(c) ALLOTMENTS TO STATES.\u2014 ”(1) IN GENERAL.\u2014The allotment of a State for a fiscal year is the amount that bears the same ratio to $10,000,000 for grants under this section for the fiscal year as the number of children in the State living with only 1 biological parent bears to the total number of such children in all States. ”(2) MINIMUM ALLOTMENT.\u2014The Administration for Chil- dren and Families shall adjust allotments to States under para- graph (1) as necessary to ensure that no State is allotted less than\u2014 ”(A) $50,000 for fiscal year 1997 or 1998; or ”(B) $100,000 for any succeeding fiscal year. ”(d) NO SUPPLANTATION OF STATE EXPENDITURES FOR SIMILAR ACTIVITIES.\u2014A State to which a grant is made under this section may not use the grant to supplant expenditures by the State for activities specified in subsection (a), but shall use the grant to supplement such expenditures at a level at least equal to the level of such expenditures for fiscal year 1995. ”(e) STATE ADMINISTRATION.\u2014Each State to which a grant is made under this section\u2014 ”(1) may administer State programs funded with the grant, directly or through grants to or contracts with courts, local public agencies, or nonprofit private entities; ”(2) shall not be required to operate such programs on a statewide basis; and 42 USC 669B. 110 STAT. 2259PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(3) shall monitor, evaluate, and report on such programs in accordance with regulations prescribed by the Secretary.”. Subtitle J\u2014Effective Dates and Conforming Amendments SEC. 395. EFFECTIVE DATES AND CONFORMING AMENDMENTS. (a) IN GENERAL.\u2014Except as otherwise specifically provided (but subject to subsections (b) and (c))\u2014 (1) the provisions of this title requiring the enactment or amendment of State laws under section 466 of the Social Security Act, or revision of State plans under section 454 of such Act, shall be effective with respect to periods beginning on and after October 1, 1996; and (2) all other provisions of this title shall become effective upon the date of the enactment of this Act. (b) GRACE PERIOD FOR STATE LAW CHANGES.\u2014The provisions of this title shall become effective with respect to a State on the later of\u2014 (1) the date specified in this title, or (2) the effective date of laws enacted by the legislature of such State implementing such provisions, but in no event later than the 1st day of the 1st calendar quarter beginning after the close of the 1st regular session of the State legislature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature. (c) GRACE PERIOD FOR STATE CONSTITUTIONAL AMENDMENT.\u2014 A State shall not be found out of compliance with any requirement enacted by this title if the State is unable to so comply without amending the State constitution until the earlier of\u2014 (1) 1 year after the effective date of the necessary State constitutional amendment; or (2) 5 years after the date of the enactment of this Act. (d) CONFORMING AMENDMENTS.\u2014 (1) The following provisions are amended by striking ”absent” each place it appears and inserting ”noncustodial”: (A) Section 451 (42 U.S.C. 651). (B) Subsections (a)(1), (a)(8), (a)(10)(E), (a)(10)(F), (f), and (h) of section 452 (42 U.S.C. 652). (C) Section 453(f) (42 U.S.C. 653(f)). (D) Paragraphs (8), (13), and (21)(A) of section 454 (42 U.S.C. 654). (E) Section 455(e)(1) (42 U.S.C. 655(e)(1)). (F) Section 458(a) (42 U.S.C. 658(a)). (G) Subsections (a), (b), and (c) of section 463 (42 U.S.C. 663). (H) Subsections (a)(3)(A), (a)(3)(C), (a)(6), and (a)(8)(B)(ii), the last sentence of subsection (a), and sub- sections (b)(1), (b)(3)(B), (b)(3)(B)(i), (b)(6)(A)(i), (b)(9), and (e) of section 466 (42 U.S.C. 666). (2) The following provisions are amended by striking ”an absent” each place it appears and inserting ”a noncustodial”: 42 USC 654 note. 42 USC 654 note. 42 USC 654 note. 110 STAT. 2260 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) Paragraphs (2) and (3) of section 453(c) (42 U.S.C. 653(c)). (B) Subparagraphs (B) and (C) of section 454(9) (42 U.S.C. 654(9)). (C) Section 456(a)(3) (42 U.S.C. 656(a)(3)). (D) Subsections (a)(3)(A), (a)(6), (a)(8)(B)(i), (b)(3)(A), and (b)(3)(B) of section 466 (42 U.S.C. 666). (E) Paragraphs (2) and (4) of section 469(b) (42 U.S.C. 669(b)). TITLE IV\u2014RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS SEC. 400. STATEMENTS OF NATIONAL POLICY CONCERNING WELFARE AND IMMIGRATION. The Congress makes the following statements concerning national policy with respect to welfare and immigration: (1) Self-sufficiency has been a basic principle of United States immigration law since this country’s earliest immigra- tion statutes. (2) It continues to be the immigration policy of the United States that\u2014 (A) aliens within the Nation’s borders not depend on public resources to meet their needs, but rather rely on their own capabilities and the resources of their families, their sponsors, and private organizations, and (B) the availability of public benefits not constitute an incentive for immigration to the United States. (3) Despite the principle of self-sufficiency, aliens have been applying for and receiving public benefits from Federal, State, and local governments at increasing rates. (4) Current eligibility rules for public assistance and unenforceable financial support agreements have proved wholly incapable of assuring that individual aliens not burden the public benefits system. (5) It is a compelling government interest to enact new rules for eligibility and sponsorship agreements in order to assure that aliens be self-reliant in accordance with national immigration policy. (6) It is a compelling government interest to remove the incentive for illegal immigration provided by the availability of public benefits. (7) With respect to the State authority to make determina- tions concerning the eligibility of qualified aliens for public benefits in this title, a State that chooses to follow the Federal classification in determining the eligibility of such aliens for public assistance shall be considered to have chosen the least restrictive means available for achieving the compelling govern- mental interest of assuring that aliens be self-reliant in accord- ance with national immigration policy. 8 USC 1601. 110 STAT. 2261PUBLIC LAW 104 193\u2014AUG. 22, 1996 Subtitle A\u2014Eligibility for Federal Benefits SEC. 401. ALIENS WHO ARE NOT QUALIFIED ALIENS INELIGIBLE FOR FEDERAL PUBLIC BENEFITS. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsection (b), an alien who is not a qualified alien (as defined in section 431) is not eligible for any Federal public benefit (as defined in subsection (c)). (b) EXCEPTIONS.\u2014 (1) Subsection (a) shall not apply with respect to the fol- lowing Federal public benefits: (A) Medical assistance under title XIX of the Social Security Act (or any successor program to such title) for care and services that are necessary for the treatment of an emergency medical condition (as defined in section 1903(v)(3) of such Act) of the alien involved and are not related to an organ transplant procedure, if the alien involved otherwise meets the eligibility requirements for medical assistance under the State plan approved under such title (other than the requirement of the receipt of aid or assistance under title IV of such Act, supplemental security income benefits under title XVI of such Act, or a State supplementary payment). (B) Short-term, non-cash, in-kind emergency disaster relief. (C) Public health assistance (not including any assist- ance under title XIX of the Social Security Act) for immunizations with respect to immunizable diseases and for testing and treatment of symptoms of communicable diseases whether or not such symptoms are caused by a communicable disease. (D) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consulta- tion with appropriate Federal agencies and departments, which (i) deliver in-kind services at the community level, including through public or private nonprofit agencies; (ii) do not condition the provision of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (iii) are necessary for the protection of life or safety. (E) Programs for housing or community development assistance or financial assistance administered by the Sec- retary of Housing and Urban Development, any program under title V of the Housing Act of 1949, or any assistance under section 306C of the Consolidated Farm and Rural Development Act, to the extent that the alien is receiving such a benefit on the date of the enactment of this Act. (2) Subsection (a) shall not apply to any benefit payable under title II of the Social Security Act to an alien who is lawfully present in the United States as determined by the Attorney General, to any benefit if nonpayment of such benefit would contravene an international agreement described in sec- tion 233 of the Social Security Act, to any benefit if nonpayment would be contrary to section 202(t) of the Social Security Act, 8 USC 1611. 110 STAT. 2262 PUBLIC LAW 104 193\u2014AUG. 22, 1996 or to any benefit payable under title II of the Social Security Act to which entitlement is based on an application filed in or before the month in which this Act becomes law. (c) FEDERAL PUBLIC BENEFIT DEFINED.\u2014 (1) Except as provided in paragraph (2), for purposes of this title the term ”Federal public benefit” means\u2014 (A) any grant, contract, loan, professional license, or commercial license provided by an agency of the United States or by appropriated funds of the United States; and (B) any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assist- ance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States. (2) Such term shall not apply\u2014 (A) to any contract, professional license, or commercial license for a nonimmigrant whose visa for entry is related to such employment in the United States; or (B) with respect to benefits for an alien who as a work authorized nonimmigrant or as an alien lawfully admitted for permanent residence under the Immigration and Nationality Act qualified for such benefits and for whom the United States under reciprocal treaty agree- ments is required to pay benefits, as determined by the Attorney General, after consultation with the Secretary of State. SEC. 402. LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR CERTAIN FEDERAL PROGRAMS. (a) LIMITED ELIGIBILITY FOR SPECIFIED FEDERAL PROGRAMS.\u2014 (1) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in paragraph (2), an alien who is a qualified alien (as defined in section 431) is not eligible for any specified Federal program (as defined in para- graph (3)). (2) EXCEPTIONS.\u2014 (A) TIME-LIMITED EXCEPTION FOR REFUGEES AND ASYLEES.\u2014Paragraph (1) shall not apply to an alien until 5 years after the date\u2014 (i) an alien is admitted to the United States as a refugee under section 207 of the Immigration and Nationality Act; (ii) an alien is granted asylum under section 208 of such Act; or (iii) an alien’s deportation is withheld under sec- tion 243(h) of such Act. (B) CERTAIN PERMANENT RESIDENT ALIENS.\u2014Paragraph (1) shall not apply to an alien who\u2014 (i) is lawfully admitted to the United States for permanent residence under the Immigration and Nationality Act; and (ii)(I) has worked 40 qualifying quarters of cov- erage as defined under title II of the Social Security Act or can be credited with such qualifying quarters as provided under section 435, and (II) in the case 8 USC 1612. 110 STAT. 2263PUBLIC LAW 104 193\u2014AUG. 22, 1996 of any such qualifying quarter creditable for any period beginning after December 31, 1996, did not receive any Federal means-tested public benefit (as provided under section 403) during any such period. (C) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014Paragraph (1) shall not apply to an alien who is lawfully residing in any State and is\u2014 (i) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (ii) on active duty (other than active duty for training) in the Armed Forces of the United States, or (iii) the spouse or unmarried dependent child of an individual described in clause (i) or (ii). (D) TRANSITION FOR ALIENS CURRENTLY RECEIVING BENEFITS.\u2014 (i) SSI.\u2014 (I) IN GENERAL.\u2014With respect to the specified Federal program described in paragraph (3)(A), during the period beginning on the date of the enactment of this Act and ending on the date which is 1 year after such date of enactment, the Commissioner of Social Security shall redetermine the eligibility of any individual who is receiving benefits under such program as of the date of the enactment of this Act and whose eligibility for such benefits may terminate by reason of the provisions of this subsection. (II) REDETERMINATION CRITERIA.\u2014 With respect to any redetermination under subclause (I), the Commissioner of Social Security shall apply the eligibility criteria for new applicants for bene- fits under such program. (III) GRANDFATHER PROVISION.\u2014The provi- sions of this subsection and the redetermination under subclause (I), shall only apply with respect to the benefits of an individual described in sub- clause (I) for months beginning on or after the date of the redetermination with respect to such individual. (IV) NOTICE.\u2014Not later than March 31, 1997, the Commissioner of Social Security shall notify an individual described in subclause (I) of the provisions of this clause. (ii) FOOD STAMPS.\u2014 (I) IN GENERAL.\u2014With respect to the specified Federal program described in paragraph (3)(B), during the period beginning on the date of enact- ment of this Act and ending on the date which is 1 year after the date of enactment, the State agency shall, at the time of the recertification, recertify the eligibility of any individual who is receiving benefits under such program as of the date of enactment of this Act and whose eligibility 110 STAT. 2264 PUBLIC LAW 104 193\u2014AUG. 22, 1996 for such benefits may terminate by reason of the provisions of this subsection. (II) RECERTIFICATION CRITERIA.\u2014With respect to any recertification under subclause (I), the State agency shall apply the eligibility criteria for applicants for benefits under such program. (III) GRANDFATHER PROVISION.\u2014The provi- sions of this subsection and the recertification under subclause (I) shall only apply with respect to the eligibility of an alien for a program for months beginning on or after the date of recertifi- cation, if on the date of enactment of this Act the alien is lawfully residing in any State and is receiving benefits under such program on such date of enactment. (3) SPECIFIED FEDERAL PROGRAM DEFINED.\u2014For purposes of this title, the term ”specified Federal program” means any of the following: (A) SSI.\u2014The supplemental security income program under title XVI of the Social Security Act, including supple- mentary payments pursuant to an agreement for Federal administration under section 1616(a) of the Social Security Act and payments pursuant to an agreement entered into under section 212(b) of Public Law 93 66. (B) FOOD STAMPS.\u2014The food stamp program as defined in section 3(h) of the Food Stamp Act of 1977. (b) LIMITED ELIGIBILITY FOR DESIGNATED FEDERAL PROGRAMS.\u2014 (1) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in section 403 and paragraph (2), a State is authorized to determine the eligibility of an alien who is a qualified alien (as defined in section 431) for any designated Federal program (as defined in paragraph (3)). (2) EXCEPTIONS.\u2014Qualified aliens under this paragraph shall be eligible for any designated Federal program. (A) TIME-LIMITED EXCEPTION FOR REFUGEES AND ASYLEES.\u2014 (i) An alien who is admitted to the United States as a refugee under section 207 of the Immigration and Nationality Act until 5 years after the date of an alien’s entry into the United States. (ii) An alien who is granted asylum under section 208 of such Act until 5 years after the date of such grant of asylum. (iii) An alien whose deportation is being withheld under section 243(h) of such Act until 5 years after such withholding. (B) CERTAIN PERMANENT RESIDENT ALIENS.\u2014An alien who\u2014 (i) is lawfully admitted to the United States for permanent residence under the Immigration and Nationality Act; and (ii)(I) has worked 40 qualifying quarters of cov- erage as defined under title II of the Social Security Act or can be credited with such qualifying quarters as provided under section 435, and (II) in the case of any such qualifying quarter creditable for any period 110 STAT. 2265PUBLIC LAW 104 193\u2014AUG. 22, 1996 beginning after December 31, 1996, did not receive any Federal means-tested public benefit (as provided under section 403) during any such period. (C) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014An alien who is lawfully residing in any State and is\u2014 (i) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (ii) on active duty (other than active duty for training) in the Armed Forces of the United States, or (iii) the spouse or unmarried dependent child of an individual described in clause (i) or (ii). (D) TRANSITION FOR THOSE CURRENTLY RECEIVING BENEFITS.\u2014An alien who on the date of the enactment of this Act is lawfully residing in any State and is receiving benefits under such program on the date of the enactment of this Act shall continue to be eligible to receive such benefits until January 1, 1997. (3) DESIGNATED FEDERAL PROGRAM DEFINED.\u2014For purposes of this title, the term ”designated Federal program” means any of the following: (A) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES.\u2014The program of block grants to States for temporary assistance for needy families under part A of title IV of the Social Security Act. (B) SOCIAL SERVICES BLOCK GRANT.\u2014The program of block grants to States for social services under title XX of the Social Security Act. (C) MEDICAID.\u2014A State plan approved under title XIX of the Social Security Act, other than medical assistance described in section 401(b)(1)(A). SEC. 403. FIVE-YEAR LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR FEDERAL MEANS-TESTED PUBLIC BENEFIT. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsections (b), (c), and (d), an alien who is a qualified alien (as defined in section 431) and who enters the United States on or after the date of the enactment of this Act is not eligible for any Federal means-tested public benefit for a period of 5 years beginning on the date of the alien’s entry into the United States with a status within the meaning of the term ”qualified alien”. (b) EXCEPTIONS.\u2014The limitation under subsection (a) shall not apply to the following aliens: (1) EXCEPTION FOR REFUGEES AND ASYLEES.\u2014 (A) An alien who is admitted to the United States as a refugee under section 207 of the Immigration and Nationality Act. (B) An alien who is granted asylum under section 208 of such Act. (C) An alien whose deportation is being withheld under section 243(h) of such Act. (2) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014An alien who is lawfully residing in any State and is\u2014 8 USC 1613. 110 STAT. 2266 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (B) on active duty (other than active duty for training) in the Armed Forces of the United States, or (C) the spouse or unmarried dependent child of an individual described in subparagraph (A) or (B). (c) APPLICATION OF TERM FEDERAL MEANS-TESTED PUBLIC BENEFIT.\u2014 (1) The limitation under subsection (a) shall not apply to assistance or benefits under paragraph (2). (2) Assistance and benefits under this paragraph are as follows: (A) Medical assistance described in section 401(b)(1)(A). (B) Short-term, non-cash, in-kind emergency disaster relief. (C) Assistance or benefits under the National School Lunch Act. (D) Assistance or benefits under the Child Nutrition Act of 1966. (E) Public health assistance (not including any assist- ance under title XIX of the Social Security Act) for immunizations with respect to immunizable diseases and for testing and treatment of symptoms of communicable diseases whether or not such symptoms are caused by a communicable disease. (F) Payments for foster care and adoption assistance under parts B and E of title IV of the Social Security Act for a parent or a child who would, in the absence of subsection (a), be eligible to have such payments made on the child’s behalf under such part, but only if the foster or adoptive parent (or parents) of such child is a qualified alien (as defined in section 431). (G) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consulta- tion with appropriate Federal agencies and departments, which (i) deliver in-kind services at the community level, including through public or private nonprofit agencies; (ii) do not condition the provision of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (iii) are necessary for the protection of life or safety. (H) Programs of student assistance under titles IV, V, IX, and X of the Higher Education Act of 1965, and titles III, VII, and VIII of the Public Health Service Act. (I) Means-tested programs under the Elementary and Secondary Education Act of 1965. (J) Benefits under the Head Start Act. (K) Benefits under the Job Training Partnership Act. (d) SPECIAL RULE FOR REFUGEE AND ENTRANT ASSISTANCE FOR CUBAN AND HAITIAN ENTRANTS.\u2014The limitation under subsection (a) shall not apply to refugee and entrant assistance activities, authorized by title IV of the Immigration and Nationality Act and section 501 of the Refugee Education Assistance Act of 1980, 110 STAT. 2267PUBLIC LAW 104 193\u2014AUG. 22, 1996 for Cuban and Haitian entrants as defined in section 501(e)(2) of the Refugee Education Assistance Act of 1980. SEC. 404. NOTIFICATION AND INFORMATION REPORTING. (a) NOTIFICATION.\u2014Each Federal agency that administers a program to which section 401, 402, or 403 applies shall, directly or through the States, post information and provide general notifica- tion to the public and to program recipients of the changes regarding eligibility for any such program pursuant to this subtitle. (b) INFORMATION REPORTING UNDER TITLE IV OF THE SOCIAL SECURITY ACT.\u2014Part A of title IV of the Social Security Act is amended by inserting the following new section after section 411: ”SEC. 411A. STATE REQUIRED TO PROVIDE CERTAIN INFORMATION. ”Each State to which a grant is made under section 403 shall, at least 4 times annually and upon request of the Immigration and Naturalization Service, furnish the Immigration and Natu- ralization Service with the name and address of, and other identify- ing information on, any individual who the State knows is unlaw- fully in the United States.”. (c) SSI.\u2014Section 1631(e) of such Act (42 U.S.C. 1383(e)) is amended\u2014 (1) by redesignating the paragraphs (6) and (7) inserted by sections 206(d)(2) and 206(f)(1) of the Social Security Independence and Programs Improvement Act of 1994 (Public Law 103 296; 108 Stat. 1514, 1515) as paragraphs (7) and (8), respectively; and (2) by adding at the end the following new paragraph: ”(9) Notwithstanding any other provision of law, the Commis- sioner shall, at least 4 times annually and upon request of the Immigration and Naturalization Service (hereafter in this para- graph referred to as the ‘Service’), furnish the Service with the name and address of, and other identifying information on, any individual who the Commissioner knows is unlawfully in the United States, and shall ensure that each agreement entered into under section 1616(a) with a State provides that the State shall furnish such information at such times with respect to any individual who the State knows is unlawfully in the United States.”. (d) INFORMATION REPORTING FOR HOUSING PROGRAMS.\u2014Title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended by adding at the end the following new section: ”SEC. 27. PROVISION OF INFORMATION TO LAW ENFORCEMENT AND OTHER AGENCIES. ”Notwithstanding any other provision of law, the Secretary shall, at least 4 times annually and upon request of the Immigration and Naturalization Service (hereafter in this section referred to as the ‘Service’), furnish the Service with the name and address of, and other identifying information on, any individual who the Secretary knows is unlawfully in the United States, and shall ensure that each contract for assistance entered into under section 6 or 8 of this Act with a public housing agency provides that the public housing agency shall furnish such information at such times with respect to any individual who the public housing agency knows is unlawfully in the United States.”. 42 USC 1437y. 42 USC 611a. 8 USC 1614. 110 STAT. 2268 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Subtitle B\u2014Eligibility for State and Local Public Benefits Programs SEC. 411. ALIENS WHO ARE NOT QUALIFIED ALIENS OR NON- IMMIGRANTS INELIGIBLE FOR STATE AND LOCAL PUB- LIC BENEFITS. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsections (b) and (d), an alien who is not\u2014 (1) a qualified alien (as defined in section 431), (2) a nonimmigrant under the Immigration and Nationality Act, or (3) an alien who is paroled into the United States under section 212(d)(5) of such Act for less than one year, is not eligible for any State or local public benefit (as defined in subsection (c)). (b) EXCEPTIONS.\u2014Subsection (a) shall not apply with respect to the following State or local public benefits: (1) Assistance for health care items and services that are necessary for the treatment of an emergency medical condition (as defined in section 1903(v)(3) of the Social Security Act) of the alien involved and are not related to an organ transplant procedure. (2) Short-term, non-cash, in-kind emergency disaster relief. (3) Public health assistance for immunizations with respect to immunizable diseases and for testing and treatment of symp- toms of communicable diseases whether or not such symptoms are caused by a communicable disease. (4) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consultation with appro- priate Federal agencies and departments, which (A) deliver in-kind services at the community level, including through pub- lic or private nonprofit agencies; (B) do not condition the provi- sion of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (C) are necessary for the protection of life or safety. (c) STATE OR LOCAL PUBLIC BENEFIT DEFINED.\u2014 (1) Except as provided in paragraphs (2) and (3), for pur- poses of this subtitle the term ”State or local public benefit” means\u2014 (A) any grant, contract, loan, professional license, or commercial license provided by an agency of a State or local government or by appropriated funds of a State or local government; and (B) any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assist- ance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of a State or local government or by appropriated funds of a State or local government. (2) Such term shall not apply\u2014 8 USC 1621. 110 STAT. 2269PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) to any contract, professional license, or commercial license for a nonimmigrant whose visa for entry is related to such employment in the United States; or (B) with respect to benefits for an alien who as a work authorized nonimmigrant or as an alien lawfully admitted for permanent residence under the Immigration and Nationality Act qualified for such benefits and for whom the United States under reciprocal treaty agree- ments is required to pay benefits, as determined by the Secretary of State, after consultation with the Attorney General. (3) Such term does not include any Federal public benefit under section 4001(c). (d) STATE AUTHORITY TO PROVIDE FOR ELIGIBILITY OF ILLEGAL ALIENS FOR STATE AND LOCAL PUBLIC BENEFITS.\u2014A State may provide that an alien who is not lawfully present in the United States is eligible for any State or local public benefit for which such alien would otherwise be ineligible under subsection (a) only through the enactment of a State law after the date of the enact- ment of this Act which affirmatively provides for such eligibility. SEC. 412. STATE AUTHORITY TO LIMIT ELIGIBILITY OF QUALIFIED ALIENS FOR STATE PUBLIC BENEFITS. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsection (b), a State is authorized to determine the eligibility for any State public benefits of an alien who is a qualified alien (as defined in section 431), a non- immigrant under the Immigration and Nationality Act, or an alien who is paroled into the United States under section 212(d)(5) of such Act for less than one year. (b) EXCEPTIONS.\u2014Qualified aliens under this subsection shall be eligible for any State public benefits. (1) TIME-LIMITED EXCEPTION FOR REFUGEES AND ASYLEES.\u2014 (A) An alien who is admitted to the United States as a refugee under section 207 of the Immigration and Nationality Act until 5 years after the date of an alien’s entry into the United States. (B) An alien who is granted asylum under section 208 of such Act until 5 years after the date of such grant of asylum. (C) An alien whose deportation is being withheld under section 243(h) of such Act until 5 years after such with- holding. (2) CERTAIN PERMANENT RESIDENT ALIENS.\u2014An alien who\u2014 (A) is lawfully admitted to the United States for perma- nent residence under the Immigration and Nationality Act; and (B)(i) has worked 40 qualifying quarters of coverage as defined under title II of the Social Security Act or can be credited with such qualifying quarters as provided under section 435, and (ii) in the case of any such qualifying quarter creditable for any period beginning after December 31, 1996, did not receive any Federal means-tested public benefit (as provided under section 403) during any such period. (3) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014An alien who is lawfully residing in any State and is\u2014 8 USC 1622. 110 STAT. 2270 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (B) on active duty (other than active duty for training) in the Armed Forces of the United States, or (C) the spouse or unmarried dependent child of an individual described in subparagraph (A) or (B). (4) TRANSITION FOR THOSE CURRENTLY RECEIVING BENE- FITS.\u2014An alien who on the date of the enactment of this Act is lawfully residing in any State and is receiving benefits on the date of the enactment of this Act shall continue to be eligible to receive such benefits until January 1, 1997. Subtitle C\u2014Attribution of Income and Affidavits of Support SEC. 421. FEDERAL ATTRIBUTION OF SPONSOR’S INCOME AND RESOURCES TO ALIEN. (a) IN GENERAL.\u2014Notwithstanding any other provision of law, in determining the eligibility and the amount of benefits of an alien for any Federal means-tested public benefits program (as provided under section 403), the income and resources of the alien shall be deemed to include the following: (1) The income and resources of any person who executed an affidavit of support pursuant to section 213A of the Immigra- tion and Nationality Act (as added by section 423) on behalf of such alien. (2) The income and resources of the spouse (if any) of the person. (b) DURATION OF ATTRIBUTION PERIOD.\u2014Subsection (a) shall apply with respect to an alien until such time as the alien\u2014 (1) achieves United States citizenship through naturaliza- tion pursuant to chapter 2 of title III of the Immigration and Nationality Act; or (2)(A) has worked 40 qualifying quarters of coverage as defined under title II of the Social Security Act or can be credited with such qualifying quarters as provided under section 435, and (B) in the case of any such qualifying quarter cred- itable for any period beginning after December 31, 1996, did not receive any Federal means-tested public benefit (as provided under section 403) during any such period. (c) REVIEW OF INCOME AND RESOURCES OF ALIEN UPON RE- APPLICATION.\u2014Whenever an alien is required to reapply for benefits under any Federal means-tested public benefits program, the applicable agency shall review the income and resources attributed to the alien under subsection (a). (d) APPLICATION.\u2014 (1) If on the date of the enactment of this Act, a Federal means-tested public benefits program attributes a sponsor’s income and resources to an alien in determining the alien’s eligibility and the amount of benefits for an alien, this section shall apply to any such determination beginning on the day after the date of the enactment of this Act. (2) If on the date of the enactment of this Act, a Federal means-tested public benefits program does not attribute a spon- sor’s income and resources to an alien in determining the 8 USC 1631. 110 STAT. 2271PUBLIC LAW 104 193\u2014AUG. 22, 1996 alien’s eligibility and the amount of benefits for an alien, this section shall apply to any such determination beginning 180 days after the date of the enactment of this Act. SEC. 422. AUTHORITY FOR STATES TO PROVIDE FOR ATTRIBUTION OF SPONSORS INCOME AND RESOURCES TO THE ALIEN WITH RESPECT TO STATE PROGRAMS. (a) OPTIONAL APPLICATION TO STATE PROGRAMS.\u2014Except as provided in subsection (b), in determining the eligibility and the amount of benefits of an alien for any State public benefits (as defined in section 412(c)), the State or political subdivision that offers the benefits is authorized to provide that the income and resources of the alien shall be deemed to include\u2014 (1) the income and resources of any individual who executed an affidavit of support pursuant to section 213A of the Immigra- tion and Nationality Act (as added by section 423) on behalf of such alien, and (2) the income and resources of the spouse (if any) of the individual. (b) EXCEPTIONS.\u2014Subsection (a) shall not apply with respect to the following State public benefits: (1) Assistance described in section 411(b)(1). (2) Short-term, non-cash, in-kind emergency disaster relief. (3) Programs comparable to assistance or benefits under the National School Lunch Act. (4) Programs comparable to assistance or benefits under the Child Nutrition Act of 1966. (5) Public health assistance for immunizations with respect to immunizable diseases and for testing and treatment of symp- toms of communicable diseases whether or not such symptoms are caused by a communicable disease. (6) Payments for foster care and adoption assistance. (7) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General of a State, after consultation with appropriate agencies and departments, which (A) deliver in-kind services at the community level, including through pub- lic or private nonprofit agencies; (B) do not condition the provi- sion of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (C) are necessary for the protection of life or safety. SEC. 423. REQUIREMENTS FOR SPONSOR’S AFFIDAVIT OF SUPPORT. (a) IN GENERAL.\u2014Title II of the Immigration and Nationality Act is amended by inserting after section 213 the following new section: ”REQUIREMENTS FOR SPONSOR’S AFFIDAVIT OF SUPPORT ”SEC. 213A. (a) ENFORCEABILITY.\u2014(1) No affidavit of support may be accepted by the Attorney General or by any consular officer to establish that an alien is not excludable as a public charge under section 212(a)(4) unless such affidavit is executed as a contract\u2014 ”(A) which is legally enforceable against the sponsor by the sponsored alien, the Federal Government, and by any State (or any political subdivision of such State) which provides any 8 USC 1183a. 8 USC 1632. 110 STAT. 2272 PUBLIC LAW 104 193\u2014AUG. 22, 1996 means-tested public benefits program, but not later than 10 years after the alien last receives any such benefit; ”(B) in which the sponsor agrees to financially support the alien, so that the alien will not become a public charge; and ”(C) in which the sponsor agrees to submit to the jurisdic- tion of any Federal or State court for the purpose of actions brought under subsection (e)(2). ”(2) A contract under paragraph (1) shall be enforceable with respect to benefits provided to the alien until such time as the alien achieves United States citizenship through naturalization pursuant to chapter 2 of title III. ”(b) FORMS.\u2014Not later than 90 days after the date of enactment of this section, the Attorney General, in consultation with the Secretary of State and the Secretary of Health and Human Services, shall formulate an affidavit of support consistent with the provisions of this section. ”(c) REMEDIES.\u2014Remedies available to enforce an affidavit of support under this section include any or all of the remedies described in section 3201, 3203, 3204, or 3205 of title 28, United States Code, as well as an order for specific performance and payment of legal fees and other costs of collection, and include corresponding remedies available under State law. A Federal agency may seek to collect amounts owed under this section in accordance with the provisions of subchapter II of chapter 37 of title 31, United States Code. ”(d) NOTIFICATION OF CHANGE OF ADDRESS.\u2014 ”(1) IN GENERAL.\u2014The sponsor shall notify the Attorney General and the State in which the sponsored alien is currently resident within 30 days of any change of address of the sponsor during the period specified in subsection (a)(2). ”(2) PENALTY.\u2014Any person subject to the requirement of paragraph (1) who fails to satisfy such requirement shall be subject to a civil penalty of\u2014 ”(A) not less than $250 or more than $2,000, or ”(B) if such failure occurs with knowledge that the alien has received any means-tested public benefit, not less than $2,000 or more than $5,000. ”(e) REIMBURSEMENT OF GOVERNMENT EXPENSES.\u2014(1)(A) Upon notification that a sponsored alien has received any benefit under any means-tested public benefits program, the appropriate Federal, State, or local official shall request reimbursement by the sponsor in the amount of such assistance. ”(B) The Attorney General, in consultation with the Secretary of Health and Human Services, shall prescribe such regulations as may be necessary to carry out subparagraph (A). ”(2) If within 45 days after requesting reimbursement, the appropriate Federal, State, or local agency has not received a response from the sponsor indicating a willingness to commence payments, an action may be brought against the sponsor pursuant to the affidavit of support. ”(3) If the sponsor fails to abide by the repayment terms estab- lished by such agency, the agency may, within 60 days of such failure, bring an action against the sponsor pursuant to the affidavit of support. 110 STAT. 2273PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(4) No cause of action may be brought under this subsection later than 10 years after the alien last received any benefit under any means-tested public benefits program. ”(5) If, pursuant to the terms of this subsection, a Federal, State, or local agency requests reimbursement from the sponsor in the amount of assistance provided, or brings an action against the sponsor pursuant to the affidavit of support, the appropriate agency may appoint or hire an individual or other person to act on behalf of such agency acting under the authority of law for purposes of collecting any moneys owed. Nothing in this subsection shall preclude any appropriate Federal, State, or local agency from directly requesting reimbursement from a sponsor for the amount of assistance provided, or from bringing an action against a sponsor pursuant to an affidavit of support. ”(f) DEFINITIONS.\u2014For the purposes of this section\u2014 ”(1) SPONSOR.\u2014The term ‘sponsor’ means an indi- vidual who\u2014 ”(A) is a citizen or national of the United States or an alien who is lawfully admitted to the United States for permanent residence; ”(B) is 18 years of age or over; ”(C) is domiciled in any of the 50 States or the District of Columbia; and ”(D) is the person petitioning for the admission of the alien under section 204.”. (b) CLERICAL AMENDMENT.\u2014The table of contents of such Act is amended by inserting after the item relating to section 213 the following: ”Sec. 213A. Requirements for sponsor’s affidavit of support.”. (c) EFFECTIVE DATE.\u2014Subsection (a) of section 213A of the Immigration and Nationality Act, as inserted by subsection (a) of this section, shall apply to affidavits of support executed on or after a date specified by the Attorney General, which date shall be not earlier than 60 days (and not later than 90 days) after the date the Attorney General formulates the form for such affidavits under subsection (b) of such section. (d) BENEFITS NOT SUBJECT TO REIMBURSEMENT.\u2014Requirements for reimbursement by a sponsor for benefits provided to a sponsored alien pursuant to an affidavit of support under section 213A of the Immigration and Nationality Act shall not apply with respect to the following: (1) Medical assistance described in section 401(b)(1)(A) or assistance described in section 411(b)(1). (2) Short-term, non-cash, in-kind emergency disaster relief. (3) Assistance or benefits under the National School Lunch Act. (4) Assistance or benefits under the Child Nutrition Act of 1966. (5) Public health assistance for immunizations (not includ- ing any assistance under title XIX of the Social Security Act) with respect to immunizable diseases and for testing and treat- ment of symptoms of communicable diseases whether or not such symptoms are caused by a communicable disease. (6) Payments for foster care and adoption assistance under parts B and E of title IV of the Social Security Act for a parent or a child, but only if the foster or adoptive parent 8 USC 1138a note. 8 USC 1138a note. 110 STAT. 2274 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (or parents) of such child is a qualified alien (as defined in section 431). (7) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consultation with appro- priate Federal agencies and departments, which (A) deliver in-kind services at the community level, including through pub- lic or private nonprofit agencies; (B) do not condition the provi- sion of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (C) are necessary for the protection of life or safety. (8) Programs of student assistance under titles IV, V, IX, and X of the Higher Education Act of 1965, and titles III, VII, and VIII of the Public Health Service Act. (9) Benefits under the Head Start Act. (10) Means-tested programs under the Elementary and Secondary Education Act of 1965. (11) Benefits under the Job Training Partnership Act. Subtitle D\u2014General Provisions SEC. 431. DEFINITIONS. (a) IN GENERAL.\u2014Except as otherwise provided in this title, the terms used in this title have the same meaning given such terms in section 101(a) of the Immigration and Nationality Act. (b) QUALIFIED ALIEN.\u2014For purposes of this title, the term ”qualified alien” means an alien who, at the time the alien applies for, receives, or attempts to receive a Federal public benefit, is\u2014 (1) an alien who is lawfully admitted for permanent resi- dence under the Immigration and Nationality Act, (2) an alien who is granted asylum under section 208 of such Act, (3) a refugee who is admitted to the United States under section 207 of such Act, (4) an alien who is paroled into the United States under section 212(d)(5) of such Act for a period of at least 1 year, (5) an alien whose deportation is being withheld under section 243(h) of such Act, or (6) an alien who is granted conditional entry pursuant to section 203(a)(7) of such Act as in effect prior to April 1, 1980. SEC. 432. VERIFICATION OF ELIGIBILITY FOR FEDERAL PUBLIC BENEFITS. (a) IN GENERAL.\u2014Not later than 18 months after the date of the enactment of this Act, the Attorney General of the United States, after consultation with the Secretary of Health and Human Services, shall promulgate regulations requiring verification that a person applying for a Federal public benefit (as defined in section 401(c)), to which the limitation under section 401 applies, is a qualified alien and is eligible to receive such benefit. Such regula- tions shall, to the extent feasible, require that information requested and exchanged be similar in form and manner to information requested and exchanged under section 1137 of the Social Security Act. 8 USC 1642. 8 USC 1641. 110 STAT. 2275PUBLIC LAW 104 193\u2014AUG. 22, 1996 (b) STATE COMPLIANCE.\u2014Not later than 24 months after the date the regulations described in subsection (a) are adopted, a State that administers a program that provides a Federal public benefit shall have in effect a verification system that complies with the regulations. (c) AUTHORIZATION OF APPROPRIATIONS.\u2014There are authorized to be appropriated such sums as may be necessary to carry out the purpose of this section. SEC. 433. STATUTORY CONSTRUCTION. (a) LIMITATION.\u2014 (1) Nothing in this title may be construed as an entitlement or a determination of an individual’s eligibility or fulfillment of the requisite requirements for any Federal, State, or local governmental program, assistance, or benefits. For purposes of this title, eligibility relates only to the general issue of eligibility or ineligibility on the basis of alienage. (2) Nothing in this title may be construed as addressing alien eligibility for a basic public education as determined by the Supreme Court of the United States under Plyler v. Doe (457 U.S. 202)(1982). (b) NOT APPLICABLE TO FOREIGN ASSISTANCE.\u2014This title does not apply to any Federal, State, or local governmental program, assistance, or benefits provided to an alien under any program of foreign assistance as determined by the Secretary of State in consultation with the Attorney General. (c) SEVERABILITY.\u2014If any provision of this title or the applica- tion of such provision to any person or circumstance is held to be unconstitutional, the remainder of this title and the application of the provisions of such to any person or circumstance shall not be affected thereby. SEC. 434. COMMUNICATION BETWEEN STATE AND LOCAL GOVERN- MENT AGENCIES AND THE IMMIGRATION AND NATURALIZATION SERVICE. Notwithstanding any other provision of Federal, State, or local law, no State or local government entity may be prohibited, or in any way restricted, from sending to or receiving from the Immigration and Naturalization Service information regarding the immigration status, lawful or unlawful, of an alien in the United States. SEC. 435. QUALIFYING QUARTERS. For purposes of this title, in determining the number of qualify- ing quarters of coverage under title II of the Social Security Act an alien shall be credited with\u2014 (1) all of the qualifying quarters of coverage as defined under title II of the Social Security Act worked by a parent of such alien while the alien was under age 18, and (2) all of the qualifying quarters worked by a spouse of such alien during their marriage and the alien remains married to such spouse or such spouse is deceased. No such qualifying quarter of coverage that is creditable under title II of the Social Security Act for any period beginning after December 31, 1996, may be credited to an alien under paragraph (1) or (2) if the parent or spouse (as the case may be) of such alien received any Federal means-tested public benefit (as provided 8 USC 1645. 8 USC 1644. 8 USC 1643. 110 STAT. 2276 PUBLIC LAW 104 193\u2014AUG. 22, 1996 under section 403) during the period for which such qualifying quarter of coverage is so credited. Subtitle E\u2014Conforming Amendments Relating to Assisted Housing SEC. 441. CONFORMING AMENDMENTS RELATING TO ASSISTED HOUSING. (a) LIMITATIONS ON ASSISTANCE.\u2014Section 214 of the Housing and Community Development Act of 1980 (42 U.S.C. 1436a) is amended\u2014 (1) by striking ”Secretary of Housing and Urban Develop- ment” each place it appears and inserting ”applicable Secretary”; (2) in subsection (b), by inserting after ”National Housing Act,” the following: ”the direct loan program under section 502 of the Housing Act of 1949 or section 502(c)(5)(D), 504, 521(a)(2)(A), or 542 of such Act, subtitle A of title III of the Cranston-Gonzalez National Affordable Housing Act,”; (3) in paragraphs (2) through (6) of subsection (d), by striking ”Secretary” each place it appears and inserting ”applicable Secretary”; (4) in subsection (d), in the matter following paragraph (6), by striking ”the term ‘Secretary”’ and inserting ”the term ‘applicable Secretary”’; and (5) by adding at the end the following new subsection: ”(h) For purposes of this section, the term ‘applicable Secretary’ means\u2014 ”(1) the Secretary of Housing and Urban Development, with respect to financial assistance administered by such Sec- retary and financial assistance under subtitle A of title III of the Cranston-Gonzalez National Affordable Housing Act; and ”(2) the Secretary of Agriculture, with respect to financial assistance administered by such Secretary.”. (b) CONFORMING AMENDMENTS.\u2014Section 501(h) of the Housing Act of 1949 (42 U.S.C. 1471(h)) is amended\u2014 (1) by striking ”(1)”; (2) by striking ”by the Secretary of Housing and Urban Development”; and (3) by striking paragraph (2). Subtitle F\u2014Earned Income Credit Denied to Unauthorized Employees SEC. 451. EARNED INCOME CREDIT DENIED TO INDIVIDUALS NOT AUTHORIZED TO BE EMPLOYED IN THE UNITED STATES. (a) IN GENERAL.\u2014Section 32(c)(1) of the Internal Revenue Code of 1986 (relating to individuals eligible to claim the earned income credit) is amended by adding at the end the following new subpara- graph: ”(F) IDENTIFICATION NUMBER REQUIREMENT.\u2014The term ‘eligible individual’ does not include any individual who does not include on the return of tax for the taxable year\u2014 ”(i) such individual’s taxpayer identification number, and 110 STAT. 2277PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) if the individual is married (within the mean- ing of section 7703), the taxpayer identification number of such individual’s spouse.”. (b) SPECIAL IDENTIFICATION NUMBER.\u2014Section 32 of such Code is amended by adding at the end the following new subsection: ”(l) IDENTIFICATION NUMBERS.\u2014Solely for purposes of sub- sections (c)(1)(F) and (c)(3)(D), a taxpayer identification number means a social security number issued to an individual by the Social Security Administration (other than a social security number issued pursuant to clause (II) (or that portion of clause (III) that relates to clause (II)) of section 205(c)(2)(B)(i) of the Social Security Act).”. (c) EXTENSION OF PROCEDURES APPLICABLE TO MATHEMATICAL OR CLERICAL ERRORS.\u2014Section 6213(g)(2) of such Code (relating to the definition of mathematical or clerical errors) is amended by striking ”and” at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting a comma, and by inserting after subparagraph (E) the following new subpara- graphs: ”(F) an omission of a correct taxpayer identification number required under section 32 (relating to the earned income credit) to be included on a return, and ”(G) an entry on a return claiming the credit under section 32 with respect to net earnings from self-employ- ment described in section 32(c)(2)(A) to the extent the tax imposed by section 1401 (relating to self-employment tax) on such net earnings has not been paid.”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply with respect to returns the due date for which (without regard to extensions) is more than 30 days after the date of the enactment of this Act. TITLE V\u2014CHILD PROTECTION SEC. 501. AUTHORITY OF STATES TO MAKE FOSTER CARE MAINTE- NANCE PAYMENTS ON BEHALF OF CHILDREN IN ANY PRIVATE CHILD CARE INSTITUTION. Section 472(c)(2) of the Social Security Act (42 U.S.C. 672(c)(2)) is amended by striking ”nonprofit”. SEC. 502. EXTENSION OF ENHANCED MATCH FOR IMPLEMENTATION OF STATEWIDE AUTOMATED CHILD WELFARE INFORMA- TION SYSTEMS. Section 13713(b)(2) of the Omnibus Budget Reconciliation Act of 1993 (42 U.S.C. 674 note; 107 Stat. 657) is amended by striking ”1996” and inserting ”1997”. SEC. 503. NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE. Part B of title IV of the Social Security Act (42 U.S.C. 620 628a) is amended by adding at the end the following: ”SEC. 429A. NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE. ”(a) IN GENERAL.\u2014The Secretary shall conduct a national study based on random samples of children who are at risk of child abuse or neglect, or are determined by States to have been abused or neglected. 42 USC 628b. 26 USC 32 note. 110 STAT. 2278 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(b) REQUIREMENTS.\u2014The study required by subsection (a) shall\u2014 ”(1) have a longitudinal component; and ”(2) yield data reliable at the State level for as many States as the Secretary determines is feasible. ”(c) PREFERRED CONTENTS.\u2014In conducting the study required by subsection (a), the Secretary should\u2014 ”(1) carefully consider selecting the sample from cases of confirmed abuse or neglect; and ”(2) follow each case for several years while obtaining information on, among other things\u2014 ”(A) the type of abuse or neglect involved; ”(B) the frequency of contact with State or local agencies; ”(C) whether the child involved has been separated from the family, and, if so, under what circumstances; ”(D) the number, type, and characteristics of out-of- home placements of the child; and ”(E) the average duration of each placement. ”(d) REPORTS.\u2014 ”(1) IN GENERAL.\u2014From time to time, the Secretary shall prepare reports summarizing the results of the study required by subsection (a). ”(2) AVAILABILITY.\u2014The Secretary shall make available to the public any report prepared under paragraph (1), in writing or in the form of an electronic data tape. ”(3) AUTHORITY TO CHARGE FEE.\u2014The Secretary may charge and collect a fee for the furnishing of reports under para- graph (2). ”(e) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appro- priated to the Secretary for each of fiscal years 1996 through 2002 $6,000,000 to carry out this section.”. SEC. 504. REDESIGNATION OF SECTION 1123. The Social Security Act is amended by redesignating sec- tion 1123, the second place it appears (42 U.S.C. 1320a 1a), as section 1123A. SEC. 505. KINSHIP CARE. Section 471(a) of the Social Security Act (42 U.S.C. 671(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (16); (2) by striking the period at the end of paragraph (17) and inserting ”; and”; and (3) by adding at the end the following: ”(18) provides that the State shall consider giving pref- erence to an adult relative over a non-related caregiver when determining a placement for a child, provided that the relative caregiver meets all relevant State child protection standards.”. TITLE VI\u2014CHILD CARE SEC. 601. SHORT TITLE AND REFERENCES. (a) SHORT TITLE.\u2014This title may be cited as the ”Child Care and Development Block Grant Amendments of 1996”. 42 USC 9801 note. Child Care and Development Block Grant Amendments of 1996. 42 USC 1320a 2a. 110 STAT. 2279PUBLIC LAW 104 193\u2014AUG. 22, 1996 (b) REFERENCES.\u2014Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858 et seq.). SEC. 602. GOALS. Section 658A (42 U.S.C. 9801 note) is amended\u2014 (1) in the section heading by inserting ”AND GOALS” after ”TITLE”; (2) by inserting ”(a) SHORT TITLE.\u2014” before ”This”; and (3) by adding at the end the following: ”(b) GOALS.\u2014The goals of this subchapter are\u2014 ”(1) to allow each State maximum flexibility in developing child care programs and policies that best suit the needs of children and parents within such State; ”(2) to promote parental choice to empower working parents to make their own decisions on the child care that best suits their family’s needs; ”(3) to encourage States to provide consumer education information to help parents make informed choices about child care; ”(4) to assist States to provide child care to parents trying to achieve independence from public assistance; and ”(5) to assist States in implementing the health, safety, licensing, and registration standards established in State regu- lations.”. SEC. 603. AUTHORIZATION OF APPROPRIATIONS AND ENTITLEMENT AUTHORITY. (a) IN GENERAL.\u2014Section 658B (42 U.S.C. 9858) is amended to read as follows: ”SEC. 658B. AUTHORIZATION OF APPROPRIATIONS. ”There is authorized to be appropriated to carry out this sub- chapter $1,000,000,000 for each of the fiscal years 1996 through 2002.”. (b) SOCIAL SECURITY ACT.\u2014Part A of title IV of the Social Security Act (42 U.S.C. 601 617) is amended by adding at the end the following new section: ”SEC. 418. FUNDING FOR CHILD CARE. ”(a) GENERAL CHILD CARE ENTITLEMENT.\u2014 ”(1) GENERAL ENTITLEMENT.\u2014Subject to the amount appro- priated under paragraph (3), each State shall, for the purpose of providing child care assistance, be entitled to payments under a grant under this subsection for a fiscal year in an amount equal to\u2014 ”(A) the sum of the total amount required to be paid to the State under section 403 for fiscal year 1994 or 1995 (whichever is greater) with respect to amounts expended for child care under section\u2014 ”(i) 402(g) of this Act (as such section was in effect before October 1, 1995); and ”(ii) 402(i) of this Act (as so in effect); or 42 USC 618. 42 USC 9858 note. 42 USC 9801 note. 110 STAT. 2280 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) the average of the total amounts required to be paid to the State for fiscal years 1992 through 1994 under the sections referred to in subparagraph (A); whichever is greater. ”(2) REMAINDER.\u2014 ”(A) GRANTS.\u2014The Secretary shall use any amounts appropriated for a fiscal year under paragraph (3), and remaining after the reservation described in paragraph (4) and after grants are awarded under paragraph (1), to make grants to States under this paragraph. ”(B) AMOUNT.\u2014Subject to subparagraph (C), the amount of a grant awarded to a State for a fiscal year under this paragraph shall be based on the formula used for determining the amount of Federal payments to the State under section 403(n) (as such section was in effect before October 1, 1995). ”(C) MATCHING REQUIREMENT.\u2014The Secretary shall pay to each eligible State in a fiscal year an amount, under a grant under subparagraph (A), equal to the Federal medical assistance percentage for such State for fiscal year 1995 (as defined in section 1905(b)) of so much of the expenditures by the State for child care in such year as exceed the State set-aside for such State under paragraph (1)(A) for such year and the amount of State expenditures in fiscal year 1994 or 1995 (whichever is greater) that equal the non-Federal share for the programs described in subparagraph (A) of paragraph (1). ”(D) REDISTRIBUTION.\u2014 ”(i) IN GENERAL.\u2014With respect to any fiscal year, if the Secretary determines (in accordance with clause (ii)) that amounts under any grant awarded to a State under this paragraph for such fiscal year will not be used by such State during such fiscal year for carrying out the purpose for which the grant is made, the Sec- retary shall make such amounts available in the subse- quent fiscal year for carrying out such purpose to one or more States which apply for such funds to the extent the Secretary determines that such States will be able to use such additional amounts for carrying out such purpose. Such available amounts shall be redistributed to a State pursuant to section 403(n) (as such section was in effect before October 1, 1995) by substituting ‘the number of children residing in all States applying for such funds’ for ‘the number of children residing in the United States in the second preceding fiscal year’. ”(ii) TIME OF DETERMINATION AND DISTRIBUTION.\u2014 The determination of the Secretary under clause (i) for a fiscal year shall be made not later than the end of the first quarter of the subsequent fiscal year. The redistribution of amounts under clause (i) shall be made as close as practicable to the date on which such determination is made. Any amount made avail- able to a State from an appropriation for a fiscal year in accordance with this subparagraph shall, for pur- poses of this part, be regarded as part of such State’s 110 STAT. 2281PUBLIC LAW 104 193\u2014AUG. 22, 1996 payment (as determined under this subsection) for the fiscal year in which the redistribution is made. ”(3) APPROPRIATION.\u2014For grants under this section, there are appropriated\u2014 ”(A) $1,967,000,000 for fiscal year 1997; ”(B) $2,067,000,000 for fiscal year 1998; ”(C) $2,167,000,000 for fiscal year 1999; ”(D) $2,367,000,000 for fiscal year 2000; ”(E) $2,567,000,000 for fiscal year 2001; and ”(F) $2,717,000,000 for fiscal year 2002. ”(4) INDIAN TRIBES.\u2014The Secretary shall reserve not less than 1 percent, and not more than 2 percent, of the aggregate amount appropriated to carry out this section in each fiscal year for payments to Indian tribes and tribal organizations. ”(b) USE OF FUNDS.\u2014 ”(1) IN GENERAL.\u2014Amounts received by a State under this section shall only be used to provide child care assistance. Amounts received by a State under a grant under subsection (a)(1) shall be available for use by the State without fiscal year limitation. ”(2) USE FOR CERTAIN POPULATIONS.\u2014A State shall ensure that not less than 70 percent of the total amount of funds received by the State in a fiscal year under this section are used to provide child care assistance to families who are receiv- ing assistance under a State program under this part, families who are attempting through work activities to transition off of such assistance program, and families who are at risk of becoming dependent on such assistance program. ”(c) APPLICATION OF CHILD CARE AND DEVELOPMENT BLOCK GRANT ACT of 1990.\u2014Notwithstanding any other provision of law, amounts provided to a State under this section shall be transferred to the lead agency under the Child Care and Development Block Grant Act of 1990, integrated by the State into the programs established by the State under such Act, and be subject to require- ments and limitations of such Act. ”(d) DEFINITION.\u2014As used in this section, the term ‘State’ means each of the 50 States or the District of Columbia.”. SEC. 604. LEAD AGENCY. Section 658D(b) (42 U.S.C. 9858b(b)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A), by striking ”State” the first place that such appears and inserting ”governmental or nongovernmental”; and (B) in subparagraph (C), by inserting ”with sufficient time and Statewide distribution of the notice of such hear- ing,” after ”hearing in the State”; and (2) in paragraph (2), by striking the second sentence. SEC. 605. APPLICATION AND PLAN. Section 658E (42 U.S.C. 9858c) is amended\u2014 (1) in subsection (b)\u2014 (A) by striking ”implemented\u2014” and all that follows through ”(2)” and inserting ”implemented”; and (B) by striking ”for subsequent State plans”; (2) in subsection (c)\u2014 (A) in paragraph (2)\u2014 (i) in subparagraph (A)\u2014 110 STAT. 2282 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (I) in clause (i) by striking ”, other than through assistance provided under paragraph (3)(C),”; and (II) by striking ”except” and all that follows through ”1992”, and inserting ”and provide a detailed description of the procedures the State will implement to carry out the requirements of this subparagraph”; (ii) in subparagraph (B)\u2014 (I) by striking ”Provide assurances” and insert- ing ”Certify”; and (II) by inserting before the period at the end ”and provide a detailed description of such proce- dures”; (iii) in subparagraph (C)\u2014 (I) by striking ”Provide assurances” and insert- ing ”Certify”; and (II) by inserting before the period at the end ”and provide a detailed description of how such record is maintained and is made available”; (iv) by amending subparagraph (D) to read as follows: ”(D) CONSUMER EDUCATION INFORMATION.\u2014Certify that the State will collect and disseminate to parents of eligible children and the general public, consumer education information that will promote informed child care choices.”; (v) in subparagraph (E), to read as follows: ”(E) COMPLIANCE WITH STATE LICENSING REQUIRE- MENTS.\u2014 ”(i) IN GENERAL.\u2014Certify that the State has in effect licensing requirements applicable to child care services provided within the State, and provide a detailed description of such requirements and of how such requirements are effectively enforced. Nothing in the preceding sentence shall be construed to require that licensing requirements be applied to specific types of providers of child care services. ”(ii) INDIAN TRIBES AND TRIBAL ORGANIZATIONS.\u2014 In lieu of any licensing and regulatory requirements applicable under State and local law, the Secretary, in consultation with Indian tribes and tribal organiza- tions, shall develop minimum child care standards (that appropriately reflect tribal needs and available resources) that shall be applicable to Indian tribes and tribal organization receiving assistance under this subchapter.”; (vi) in subparagraph (F) by striking ”Provide assur- ances” and inserting ”Certify”; (vii) in subparagraph (G) by striking ”Provide assurances” and inserting ”Certify”; and (viii) by striking subparagraphs (H), (I), and (J) and inserting the following: ”(H) MEETING THE NEEDS OF CERTAIN POPULATIONS.\u2014 Demonstrate the manner in which the State will meet the specific child care needs of families who are receiving assistance under a State program under part A of title IV of the Social Security Act, families who are attempting 110 STAT. 2283PUBLIC LAW 104 193\u2014AUG. 22, 1996 through work activities to transition off of such assistance program, and families that are at risk of becoming depend- ent on such assistance program.”; (B) in paragraph (3)\u2014 (i) in subparagraph (A), by striking ”(B) and (C)” and inserting ”(B) through (D)”; (ii) in subparagraph (B)\u2014 (I) by striking ”.\u2014Subject to the reservation contained in subparagraph (C), the” and inserting ”AND RELATED ACTIVITIES.\u2014The”; (II) in clause (i) by striking ”; and” at the end and inserting a period; (III) by striking ”for\u2014” and all that follows through ”section 658E(c)(2)(A)” and inserting ”for child care services on a sliding fee scale basis, activities that improve the quality or availability of such services, and any other activity that the State deems appropriate to realize any of the goals specified in paragraphs (2) through (5) of section 658A(b)”; and (IV) by striking clause (ii); (iii) by amending subparagraph (C) to read as follows: ”(C) LIMITATION ON ADMINISTRATIVE COSTS.\u2014Not more than 5 percent of the aggregate amount of funds available to the State to carry out this subchapter by a State in each fiscal year may be expended for administrative costs incurred by such State to carry out all of its functions and duties under this subchapter. As used in the preceding sentence, the term ‘administrative costs’ shall not include the costs of providing direct services.”; and (iv) by adding at the end thereof the following: ”(D) ASSISTANCE FOR CERTAIN FAMILIES.\u2014A State shall ensure that a substantial portion of the amounts available (after the State has complied with the requirement of sec- tion 418(b)(2) of the Social Security Act with respect to each of the fiscal years 1997 through 2002) to the State to carry out activities under this subchapter in each fiscal year is used to provide assistance to low-income working families other than families described in paragraph (2)(H).”; and (C) in paragraph (4)(A)\u2014 (i) by striking ”provide assurances” and inserting ”certify”; (ii) in the first sentence by inserting ”and shall provide a summary of the facts relied on by the State to determine that such rates are sufficient to ensure such access” before the period; and (iii) by striking the last sentence. SEC. 606. LIMITATION ON STATE ALLOTMENTS. Section 658F(b)(1) (42 U.S.C. 9858d(b)(1)) is amended by striking ”No” and inserting ”Except as provided for in section 658O(c)(6), no”. SEC. 607. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE. Section 658G (42 U.S.C. 9858e) is amended to read as follows: 110 STAT. 2284 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE. ”A State that receives funds to carry out this subchapter for a fiscal year, shall use not less than 4 percent of the amount of such funds for activities that are designed to provide comprehen- sive consumer education to parents and the public, activities that increase parental choice, and activities designed to improve the quality and availability of child care (such as resource and referral services).”. SEC. 608. REPEAL OF EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER-SCHOOL CARE REQUIREMENT. Section 658H (42 U.S.C. 9858f) is repealed. SEC. 609. ADMINISTRATION AND ENFORCEMENT. Section 658I(b) (42 U.S.C. 9858g(b)) is amended\u2014 (1) in paragraph (1), by striking ”, and shall have” and all that follows through ”(2)”; and (2) in the matter following clause (ii) of paragraph (2)(A), by striking ”finding and that” and all that follows through the period and inserting ”finding and shall require that the State reimburse the Secretary for any funds that were improp- erly expended for purposes prohibited or not authorized by this subchapter, that the Secretary deduct from the administra- tive portion of the State allotment for the following fiscal year an amount that is less than or equal to any improperly expended funds, or a combination of such options.”. SEC. 610. PAYMENTS. Section 658J(c) (42 U.S.C. 9858h(c)) is amended\u2014 (1) by striking ”expended” and inserting ”obligated”; and (2) by striking ”3 fiscal years” and inserting ”fiscal year”. SEC. 611. ANNUAL REPORT AND AUDITS. Section 658K (42 U.S.C. 9858i) is amended\u2014 (1) in the section heading by striking ”ANNUAL REPORT” and inserting ”REPORTS”; (2) in subsection (a), to read as follows: ”(a) REPORTS.\u2014 ”(1) COLLECTION OF INFORMATION BY STATES.\u2014 ”(A) IN GENERAL.\u2014A State that receives funds to carry out this subchapter shall collect the information described in subparagraph (B) on a monthly basis. ”(B) REQUIRED INFORMATION.\u2014The information required under this subparagraph shall include, with respect to a family unit receiving assistance under this subchapter information concerning\u2014 ”(i) family income; ”(ii) county of residence; ”(iii) the gender, race, and age of children receiving such assistance; ”(iv) whether the family includes only one parent; ”(v) the sources of family income, including the amount obtained from (and separately identified)\u2014 ”(I) employment, including self-employment; ”(II) cash or other assistance under part A of title IV of the Social Security Act; ”(III) housing assistance; 42 USC 9858e. 110 STAT. 2285PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(IV) assistance under the Food Stamp Act of 1977; and ”(V) other assistance programs; ”(vi) the number of months the family has received benefits; ”(vii) the type of child care in which the child was enrolled (such as family child care, home care, or center-based child care); ”(viii) whether the child care provider involved was a relative; ”(ix) the cost of child care for such families; and ”(x) the average hours per week of such care; during the period for which such information is required to be submitted. ”(C) SUBMISSION TO SECRETARY.\u2014A State described in subparagraph (A) shall, on a quarterly basis, submit the information required to be collected under subparagraph (B) to the Secretary. ”(D) SAMPLING.\u2014The Secretary may disapprove the information collected by a State under this paragraph if the State uses sampling methods to collect such informa- tion. ”(2) BIANNUAL REPORTS.\u2014Not later than December 31, 1997, and every 6 months thereafter, a State described in paragraph (1)(A) shall prepare and submit to the Secretary a report that includes aggregate data concerning\u2014 ”(A) the number of child care providers that received funding under this subchapter as separately identified based on the types of providers listed in section 658P(5); ”(B) the monthly cost of child care services, and the portion of such cost that is paid for with assistance provided under this subchapter, listed by the type of child care services provided; ”(C) the number of payments made by the State through vouchers, contracts, cash, and disregards under public benefit programs, listed by the type of child care services provided; ”(D) the manner in which consumer education informa- tion was provided to parents and the number of parents to whom such information was provided; and ”(E) the total number (without duplication) of children and families served under this subchapter; during the period for which such report is required to be sub- mitted.”; and (2) in subsection (b)\u2014 (A) in paragraph (1) by striking ”a application” and inserting ”an application”; (B) in paragraph (2) by striking ”any agency admin- istering activities that receive” and inserting ”the State that receives”; and (C) in paragraph (4) by striking ”entitles” and inserting ”entitled”. SEC. 612. REPORT BY THE SECRETARY. Section 658L (42 U.S.C. 9858j) is amended\u2014 (1) by striking ”1993” and inserting ”1997”; (2) by striking ”annually” and inserting ”biennially”; and 110 STAT. 2286 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (3) by striking ”Education and Labor” and inserting ”Economic and Educational Opportunities”. SEC. 613. ALLOTMENTS. Section 658O (42 U.S.C. 9858m) is amended\u2014 (1) in subsection (a)\u2014 (A) in paragraph (1)\u2014 (i) by striking ”POSSESSIONS” and inserting ”POSSESSIONS”; (ii) by inserting ”and” after ”States,”; and (iii) by striking ”, and the Trust Territory of the Pacific Islands”; and (B) in paragraph (2), by striking ”more than 3 percent” and inserting ”less than 1 percent, and not more than 2 percent,”; (2) in subsection (c)\u2014 (A) in paragraph (5) by striking ”our” and inserting ”out”; and (B) by adding at the end thereof the following new paragraph: ”(6) CONSTRUCTION OR RENOVATION OF FACILITIES.\u2014 ”(A) REQUEST FOR USE OF FUNDS.\u2014An Indian tribe or tribal organization may submit to the Secretary a request to use amounts provided under this subsection for construction or renovation purposes. ”(B) DETERMINATION.\u2014With respect to a request submitted under subparagraph (A), and except as provided in subparagraph (C), upon a determination by the Secretary that adequate facilities are not otherwise available to an Indian tribe or tribal organization to enable such tribe or organization to carry out child care programs in accord- ance with this subchapter, and that the lack of such facili- ties will inhibit the operation of such programs in the future, the Secretary may permit the tribe or organization to use assistance provided under this subsection to make payments for the construction or renovation of facilities that will be used to carry out such programs. ”(C) LIMITATION.\u2014The Secretary may not permit an Indian tribe or tribal organization to use amounts provided under this subsection for construction or renovation if such use will result in a decrease in the level of child care services provided by the tribe or organization as compared to the level of such services provided by the tribe or organization in the fiscal year preceding the year for which the determination under subparagraph (A) is being made. ”(D) UNIFORM PROCEDURES.\u2014The Secretary shall develop and implement uniform procedures for the solicita- tion and consideration of requests under this paragraph.”; and (3) in subsection (e), by adding at the end thereof the following new paragraph: ”(4) INDIAN TRIBES OR TRIBAL ORGANIZATIONS.\u2014Any portion of a grant or contract made to an Indian tribe or tribal organiza- tion under subsection (c) that the Secretary determines is not being used in a manner consistent with the provision of this subchapter in the period for which the grant or contract is made available, shall be allotted by the Secretary to other 110 STAT. 2287PUBLIC LAW 104 193\u2014AUG. 22, 1996 tribes or organizations that have submitted applications under subsection (c) in accordance with their respective needs.”. SEC. 614. DEFINITIONS. Section 658P (42 U.S.C. 9858n) is amended\u2014 (1) in paragraph (2), in the first sentence by inserting ”or as a deposit for child care services if such a deposit is required of other children being cared for by the provider” after ”child care services”; and (2) by striking paragraph (3); (3) in paragraph (4)(B), by striking ”75 percent” and inserting ”85 percent”; (4) in paragraph (5)(B)\u2014 (A) by inserting ”great grandchild, sibling (if such provider lives in a separate residence),” after ”grandchild,”; (B) by striking ”is registered and”; and (C) by striking ”State” and inserting ”applicable”. (5) by striking paragraph (10); (6) in paragraph (13)\u2014 (A) by inserting ”or” after ”Samoa,”; and (B) by striking ”, and the Trust Territory of the Pacific Islands”; (7) in paragraph (14)\u2014 (A) by striking ”The term” and inserting the following: ”(A) IN GENERAL.\u2014The term”; and (B) by adding at the end thereof the following new subparagraph: ”(B) OTHER ORGANIZATIONS.\u2014Such term includes a Native Hawaiian Organization, as defined in section 4009(4) of the Augustus F. Hawkins-Robert T. Stafford Elementary and Secondary School Improvement Amend- ments of 1988 (20 U.S.C. 4909(4)) and a private nonprofit organization established for the purpose of serving youth who are Indians or Native Hawaiians.”. SEC. 615. EFFECTIVE DATE. (a) IN GENERAL.\u2014Except as provided in subsection (b), this title and the amendments made by this title shall take effect on October 1, 1996. (b) EXCEPTION.\u2014The amendment made by section 603(a) shall take effect on the date of enactment of this Act. TITLE VII\u2014CHILD NUTRITION PROGRAMS Subtitle A\u2014National School Lunch Act SEC. 701. STATE DISBURSEMENT TO SCHOOLS. (a) IN GENERAL.\u2014Section 8 of the National School Lunch Act (42 U.S.C. 1757) is amended\u2014 (1) in the third sentence, by striking ”Nothing” and all that follows through ”educational agency to” and inserting ”The State educational agency may”; (2) by striking the fourth and fifth sentences; 42 USC 9858 note. 110 STAT. 2288 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (3) by redesignating the first through seventh sentences, as amended by paragraph (2), as subsections (a) through (g), respectively; (4) in subsection (b), as redesignated by paragraph (3), by striking ”the preceding sentence” and inserting ”subsection (a)”; and (5) in subsection (d), as redesignated by paragraph (3), by striking ”Such food costs” and inserting ”Use of funds paid to States”. (b) DEFINITION OF CHILD.\u2014Section 12(d) of the National School Lunch Act (42 U.S.C. 1760(d)) is amended by adding at the end the following: ”(9) CHILD.\u2014 ”(A) IN GENERAL.\u2014The term ‘child’ includes an indi- vidual, regardless of age, who\u2014 ”(i) is determined by a State educational agency, in accordance with regulations prescribed by the Sec- retary, to have one or more mental or physical disabil- ities; and ”(ii) is attending any institution, as defined in section 17(a), or any nonresidential public or nonprofit private school of high school grade or under, for the purpose of participating in a school program estab- lished for individuals with mental or physical dis- abilities. ”(B) RELATIONSHIP TO CHILD AND ADULT CARE FOOD PROGRAM.\u2014No institution that is not otherwise eligible to participate in the program under section 17 shall be considered eligible because of this paragraph.”. SEC. 702. NUTRITIONAL AND OTHER PROGRAM REQUIREMENTS. (a) NUTRITIONAL STANDARDS.\u2014Section 9(a) of the National School Lunch Act (42 U.S.C. 1758(a)) is amended\u2014 (1) in paragraph (2)\u2014 (A) by striking ”(2)(A) Lunches” and inserting ”(2) Lunches”; (B) by striking subparagraph (B); and (C) by redesignating clauses (i) and (ii) as subpara- graphs (A) and (B), respectively; (2) by striking paragraph (3); and (3) by redesignating paragraph (4) as paragraph (3). (b) UTILIZATION OF AGRICULTURAL COMMODITIES.\u2014Section 9(c) of the National School Lunch Act (42 U.S.C. 1758(c)) is amended\u2014 (1) in the fifth sentence, by striking ”of the provisions of law referred to in the preceding sentence” and inserting ”provision of law”; and (2) by striking the second, fourth, and sixth sentences. (c) NUTRITIONAL INFORMATION.\u2014Section 9(f) of the National School Lunch Act (42 U.S.C. 1758(f)) is amended\u2014 (1) by striking paragraph (1); (2) by striking ”(2)”; (3) by redesignating subparagraphs (A) through (D) as paragraphs (1) through (4), respectively; (4) by striking paragraph (1), as redesignated by paragraph (3), and inserting the following: ”(1) NUTRITIONAL REQUIREMENTS.\u2014Except as provided in paragraph (2), not later than the first day of the 1996 1997 110 STAT. 2289PUBLIC LAW 104 193\u2014AUG. 22, 1996 school year, schools that are participating in the school lunch or school breakfast program shall serve lunches and breakfasts under the program that\u2014 ”(A) are consistent with the goals of the most recent Dietary Guidelines for Americans published under section 301 of the National Nutrition Monitoring and Related Research Act of 1990 (7 U.S.C. 5341); and ”(B) provide, on the average over each week, at least\u2014 ”(i) with respect to school lunches, 1\u20443 of the daily recommended dietary allowance established by the Food and Nutrition Board of the National Research Council of the National Academy of Sciences; and ”(ii) with respect to school breakfasts, 1\u20444 of the daily recommended dietary allowance established by the Food and Nutrition Board of the National Research Council of the National Academy of Sciences.”; (5) in paragraph (3), as redesignated by paragraph (3)\u2014 (A) by redesignating clauses (i) and (ii) as subpara- graphs (A) and (B), respectively; and (B) in subparagraph (A), as so redesignated, by redesignating subclauses (I) and (II) as clauses (i) and (ii), respectively; and (6) in paragraph (4), as redesignated by paragraph (3)\u2014 (A) by redesignating clauses (i) and (ii) as subpara- graphs (A) and (B), respectively; (B) in subparagraph (A), as redesignated by subpara- graph (A), by redesignating subclauses (I) and (II) as clauses (i) and (ii), respectively; and (C) in subparagraph (A)(ii), as redesignated by subparagraph (B), by striking ”subparagraph (C)” and inserting ”paragraph (3)”. (d) USE OF RESOURCES.\u2014Section 9 of the National School Lunch Act (42 U.S.C. 1758) is amended by striking subsection (h). SEC. 703. FREE AND REDUCED PRICE POLICY STATEMENT. Section 9(b)(2) of the National School Lunch Act (42 U.S.C. 1758(b)(2)) is amended by adding at the end the following: ”(D) FREE AND REDUCED PRICE POLICY STATEMENT.\u2014 After the initial submission, a school food authority shall not be required to submit a free and reduced price policy statement to a State educational agency under this Act unless there is a substantive change in the free and reduced price policy of the school food authority. A routine change in the policy of a school food authority, such as an annual adjustment of the income eligibility guidelines for free and reduced price meals, shall not be sufficient cause for requir- ing the school food authority to submit a policy statement.”. SEC. 704. SPECIAL ASSISTANCE. (a) EXTENSION OF PAYMENT PERIOD.\u2014Section 11(a)(1)(D)(i) of the National School Lunch Act (42 U.S.C. 1759a(a)(1)(D)(i)) is amended by striking ”, on the date of enactment of this subpara- graph,”. (b) ROUNDING RULE FOR LUNCH, BREAKFAST, AND SUPPLEMENT RATES.\u2014 (1) IN GENERAL.\u2014The third sentence of section 11(a)(3)(B) of the National School Lunch Act (42 U.S.C. 1759a(a)(3)(B)) is amended by adding before the period at the end the following: 110 STAT. 2290 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”, except that adjustments to payment rates for meals and supplements served to individuals not determined to be eligible for free or reduced price meals and supplements shall be com- puted to the nearest lower cent increment and based on the unrounded amount for the preceding 12-month period”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall become effective on July 1, 1997. (c) APPLICABILITY OF OTHER PROVISIONS.\u2014Section 11 of the National School Lunch Act (42 U.S.C. 1759a) is amended\u2014 (1) by striking subsection (d); (2) in subsection (e)(2)\u2014 (A) by striking ”The” and inserting ”On request of the Secretary, the”; and (B) by striking ”each month”; and (3) by redesignating subsections (e) and (f), as so amended, as subsections (d) and (e), respectively. SEC. 705. MISCELLANEOUS PROVISIONS AND DEFINITIONS. (a) ACCOUNTS AND RECORDS.\u2014The second sentence of section 12(a) of the National School Lunch Act (42 U.S.C. 1760(a)) is amended by striking ”at all times be available” and inserting ”be available at any reasonable time”. (b) RESTRICTION ON REQUIREMENTS.\u2014Section 12(c) of the National School Lunch Act (42 U.S.C. 1760(c)) is amended by strik- ing ”neither the Secretary nor the State shall” and inserting ”the Secretary shall not”. (c) DEFINITIONS.\u2014Section 12(d) of the National School Lunch Act (42 U.S.C. 1760(d)), as amended by section 701(b), is amended\u2014 (1) in paragraph (1), by striking ”the Trust Territory of the Pacific Islands” and inserting ”the Commonwealth of the Northern Mariana Islands”; (2) by striking paragraphs (3) and (4); and (3) by redesignating paragraphs (1), (2), and (5) through (9) as paragraphs (6), (7), (3), (4), (2), (5), and (1), respectively, and rearranging the paragraphs so as to appear in numerical order. (d) ADJUSTMENTS TO NATIONAL AVERAGE PAYMENT RATES.\u2014 Section 12(f) of the National School Lunch Act (42 U.S.C. 1760(f)) is amended by striking ”the Trust Territory of the Pacific Islands,”. (e) EXPEDITED RULEMAKING.\u2014Section 12(k) of the National School Lunch Act (42 U.S.C. 1760(k)) is amended\u2014 (1) by striking paragraphs (1), (2), and (5); (2) by redesignating paragraphs (3) and (4) as paragraphs (1) and (2), respectively; and (3) in paragraph (1), as redesignated by paragraph (2), by striking ”Guidelines” and inserting ”guidelines contained in the most recent ‘Dietary Guidelines for Americans’ that is published under section 301 of the National Nutrition Mon- itoring and Related Research Act of 1990 (7 U.S.C. 5341)”. (f) WAIVER.\u2014Section 12(l) of the National School Lunch Act (42 U.S.C. 1760(l)) is amended\u2014 (1) in paragraph (2)(A)\u2014 (A) in clause (iii), by adding ”and” at the end; (B) in clause (iv), by striking the semicolon at the end and inserting a period; and (C) by striking clauses (v) through (vii); (2) in paragraph (3)\u2014 42 USC 1759a note. 110 STAT. 2291PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) in subparagraph (A), by striking ”(A)”; and (B) by striking subparagraphs (B) through (D); (3) in paragraph (4)\u2014 (A) in the matter preceding subparagraph (A), by strik- ing ”of any requirement relating” and inserting ”that increases Federal costs or that relates”; (B) by striking subparagraph (D); (C) by redesignating subparagraphs (E) through (N) as subparagraphs (D) through (M), respectively; and (D) in subparagraph (L), as redesignated by subpara- graph (C), by striking ”and” at the end and inserting ”or”; and (4) in paragraph (6)\u2014 (A) by striking ”(A)(i)” and all that follows through ”(B)”; and (B) by redesignating clauses (i) through (iv) as subpara- graphs (A) through (D), respectively. SEC. 706. SUMMER FOOD SERVICE PROGRAM FOR CHILDREN. (a) ESTABLISHMENT OF PROGRAM.\u2014Section 13(a) of the National School Lunch Act (42 U.S.C. 1761(a)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in the first sentence, by striking ”initiate, maintain, and expand” and inserting ”initiate and maintain”; and (B) in subparagraph (E) of the second sentence, by striking ”the Trust Territory of the Pacific Islands,”; and (2) in paragraph (7)(A), by striking ”Except as provided in subparagraph (C), private” and inserting ”Private”. (b) SERVICE INSTITUTIONS.\u2014Section 13(b) of the National School Lunch Act (42 U.S.C. 1761(b)) is amended by striking ”(b)(1)” and all that follows through the end of paragraph (1) and inserting the following: ”(b) SERVICE INSTITUTIONS.\u2014 ”(1) PAYMENTS.\u2014 ”(A) IN GENERAL.\u2014Except as otherwise provided in this paragraph, payments to service institutions shall equal the full cost of food service operations (which cost shall include the costs of obtaining, preparing, and serving food, but shall not include administrative costs). ”(B) MAXIMUM AMOUNTS.\u2014Subject to subparagraph (C), payments to any institution under subparagraph (A) shall not exceed\u2014 ”(i) $1.97 for each lunch and supper served; ”(ii) $1.13 for each breakfast served; and ”(iii) 46 cents for each meal supplement served. ”(C) ADJUSTMENTS.\u2014Amounts specified in subpara- graph (B) shall be adjusted on January 1, 1997, and each January 1 thereafter, to the nearest lower cent increment to reflect changes for the 12-month period ending the preceding November 30 in the series for food away from home of the Consumer Price Index for All Urban Con- sumers published by the Bureau of Labor Statistics of the Department of Labor. Each adjustment shall be based on the unrounded adjustment for the prior 12-month period.”. 110 STAT. 2292 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (c) ADMINISTRATION OF SERVICE INSTITUTIONS.\u2014Section 13(b)(2) of the National School Lunch Act (42 U.S.C. 1761(b)(2)) is amended\u2014 (1) in the first sentence, by striking ”four meals” and insert- ing ”3 meals, or 2 meals and 1 supplement,”; and (2) by striking the second sentence. (d) REIMBURSEMENTS.\u2014Section 13(c)(2) of the National School Lunch Act (42 U.S.C. 1761(c)(2)) is amended\u2014 (1) by striking subparagraphs (A), (C), (D), and (E); (2) by striking ”(B)”; (3) by striking ”, and such higher education institu- tions,”; and (4) by striking ”without application” and inserting ”on showing residence in areas in which poor economic conditions exist or on the basis of income eligibility statements for children enrolled in the program”. (e) ADVANCE PROGRAM PAYMENTS.\u2014Section 13(e)(1) of the National School Lunch Act (42 U.S.C. 1761(e)(1)) is amended\u2014 (1) by striking ”institution: Provided, That (A) the” and inserting ”institution. The”; (2) by inserting ”(excluding a school)” after ”any service institution”; and (3) by striking ”responsibilities, and (B) no” and inserting ”responsibilities. No”. (f) FOOD REQUIREMENTS.\u2014Section 13(f) of the National School Lunch Act (42 U.S.C. 1761(f)) is amended\u2014 (1) by redesignating the first through seventh sentences as paragraphs (1) through (7), respectively; (2) by striking paragraph (3), as redesignated by para- graph (1); (3) in paragraph (4), as redesignated by paragraph (1), by striking ”the first sentence” and inserting ”paragraph (1)”; (4) in subparagraph (B) of paragraph (6), as re- designated by paragraph (1), by striking ”that bacteria levels” and all that follows through the period at the end and inserting ”conformance with standards set by local health authorities.”; and (5) by redesignating paragraphs (4) through (7), as redesig- nated by paragraph (1), as paragraphs (3) through (6), respec- tively. (g) PERMITTING OFFER VERSUS SERVE.\u2014Section 13(f) of the National School Lunch Act (42 U.S.C. 1761(f)), as amended by subsection (f), is amended by adding at the end the following: ”(7) OFFER VERSUS SERVE.\u2014A school food authority partici- pating as a service institution may permit a child attending a site on school premises operated directly by the authority to refuse one or more items of a meal that the child does not intend to consume, under rules that the school uses for school meals programs. A refusal of an offered food item shall not affect the amount of payments made under this section to a school for the meal.”. (h) RECORDS.\u2014The second sentence of section 13(m) of the National School Lunch Act (42 U.S.C. 1761(m)) is amended by striking ”at all times be available” and inserting ”be available at any reasonable time”. (i) REMOVING MANDATORY NOTICE TO INSTITUTIONS.\u2014Section 13(n)(2) of the National School Lunch Act (42 U.S.C. 1761(n)(2)) 110 STAT. 2293PUBLIC LAW 104 193\u2014AUG. 22, 1996 is amended by striking ”, and its plans and schedule for informing service institutions of the availability of the program”. (j) PLAN.\u2014Section 13(n) of the National School Lunch Act (42 U.S.C. 1761(n)), as amended by subsection (i), is amended\u2014 (1) in paragraph (2), by striking ”, including the State’s methods of assessing need”; (2) by striking paragraph (3); (3) in paragraph (4), by striking ”and schedule”; and (4) by redesignating paragraphs (4) through (7) as para- graphs (3) through (6), respectively. (k) MONITORING AND TRAINING.\u2014Section 13(q) of the National School Lunch Act (42 U.S.C. 1761(q)) is amended\u2014 (1) by striking paragraphs (2) and (4); (2) in paragraph (3), by striking ”paragraphs (1) and (2) of this subsection” and inserting ”paragraph (1)”; and (3) by redesignating paragraph (3) as paragraph (2). (l) EXPIRED PROGRAM.\u2014Section 13 of the National School Lunch Act (42 U.S.C. 1761) is amended\u2014 (1) by striking subsection (p); and (2) by redesignating subsections (q) and (r) as subsections (p) and (q), respectively. (m) EFFECTIVE DATE.\u2014The amendments made by subsection (b) shall become effective on January 1, 1997. SEC. 707. COMMODITY DISTRIBUTION. (a) CEREAL AND SHORTENING IN COMMODITY DONATIONS.\u2014Sec- tion 14(b) of the National School Lunch Act (42 U.S.C. 1762a(b)) is amended\u2014 (1) by striking paragraph (1); and (2) by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (b) STATE ADVISORY COUNCIL.\u2014Section 14(e) of the National School Lunch Act (42 U.S.C. 1762a(e)) is amended to read as follows: ”(e) Each State agency that receives food assistance payments under this section for any school year shall consult with representa- tives of schools in the State that participate in the school lunch program with respect to the needs of such schools relating to the manner of selection and distribution of commodity assistance for such program.”. (c) CASH COMPENSATION FOR PILOT PROJECT SCHOOLS.\u2014Section 14(g) of the National School Lunch Act (42 U.S.C. 1762a(g)) is amended by striking paragraph (3). SEC. 708. CHILD AND ADULT CARE FOOD PROGRAM. (a) ESTABLISHMENT OF PROGRAM.\u2014Section 17 of the National School Lunch Act (42 U.S.C. 1766) is amended in the first sentence of subsection (a), by striking ”initiate, maintain, and expand” and inserting ”initiate and maintain”. (b) PAYMENTS TO SPONSOR EMPLOYEES.\u2014Paragraph (2) of the last sentence of section 17(a) of the National School Lunch Act (42 U.S.C. 1766(a)) is amended\u2014 (1) in subparagraph (B), by striking ”and” at the end; (2) in subparagraph (C), by striking the period at the end and inserting ”; and”; and (3) by adding at the end the following: ”(D) in the case of a family or group day care home sponsoring organization that employs more than one employee, the organization does not base payments to an 42 USC 1761 note. 110 STAT. 2294 PUBLIC LAW 104 193\u2014AUG. 22, 1996 employee of the organization on the number of family or group day care homes recruited.”. (c) TECHNICAL ASSISTANCE.\u2014The last sentence of section 17(d)(1) of the National School Lunch Act (42 U.S.C. 1766(d)(1)) is amended by striking ”, and shall provide technical assistance” and all that follows through ”its application”. (d) REIMBURSEMENT OF CHILD CARE INSTITUTIONS.\u2014Section 17(f)(2)(B) of the National School Lunch Act (42 U.S.C. 1766(f)(2)(B)) is amended by striking ”two meals and two supplements or three meals and one supplement” and inserting ”2 meals and 1 supple- ment”. (e) IMPROVED TARGETING OF DAY CARE HOME REIMBURSE- MENTS.\u2014 (1) RESTRUCTURED DAY CARE HOME REIMBURSEMENTS.\u2014Sec- tion 17(f)(3) of the National School Lunch Act (42 U.S.C. 1766(f)(3)) is amended by striking ”(3)(A) Institutions” and all that follows through the end of subparagraph (A) and inserting the following: ”(3) REIMBURSEMENT OF FAMILY OR GROUP DAY CARE HOME SPONSORING ORGANIZATIONS.\u2014 ”(A) REIMBURSEMENT FACTOR.\u2014 ”(i) IN GENERAL.\u2014An institution that participates in the program under this section as a family or group day care home sponsoring organization shall be pro- vided, for payment to a home sponsored by the organization, reimbursement factors in accordance with this subparagraph for the cost of obtaining and prepar- ing food and prescribed labor costs involved in provid- ing meals under this section. ”(ii) TIER I FAMILY OR GROUP DAY CARE HOMES.\u2014 ”(I) DEFINITION OF TIER I FAMILY OR GROUP DAY CARE HOME.\u2014In this paragraph, the term ‘tier I family or group day care home’ means\u2014 ”(aa) a family or group day care home that is located in a geographic area, as defined by the Secretary based on census data, in which at least 50 percent of the children resid- ing in the area are members of households whose incomes meet the income eligibility guidelines for free or reduced price meals under section 9; ”(bb) a family or group day care home that is located in an area served by a school enrolling elementary students in which at least 50 percent of the total number of children enrolled are certified eligible to receive free or reduced price school meals under this Act or the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.); or ”(cc) a family or group day care home that is operated by a provider whose household meets the income eligibility guidelines for free or reduced price meals under section 9 and whose income is verified by the sponsoring organization of the home under regulations established by the Secretary. 110 STAT. 2295PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(II) REIMBURSEMENT.\u2014Except as provided in subclause (III), a tier I family or group day care home shall be provided reimbursement factors under this clause without a requirement for docu- mentation of the costs described in clause (i), except that reimbursement shall not be provided under this subclause for meals or supplements served to the children of a person acting as a family or group day care home provider unless the children meet the income eligibility guidelines for free or reduced price meals under section 9. ”(III) FACTORS.\u2014Except as provided in sub- clause (IV), the reimbursement factors applied to a home referred to in subclause (II) shall be the factors in effect on July 1, 1996. ”(IV) ADJUSTMENTS.\u2014The reimbursement fac- tors under this subparagraph shall be adjusted on July 1, 1997, and each July 1 thereafter, to reflect changes in the Consumer Price Index for food at home for the most recent 12-month period for which the data are available. The reimburse- ment factors under this subparagraph shall be rounded to the nearest lower cent increment and based on the unrounded adjustment in effect on June 30 of the preceding school year. ”(iii) TIER II FAMILY OR GROUP DAY CARE HOMES.\u2014 ”(I) IN GENERAL.\u2014 ”(aa) FACTORS.\u2014Except as provided in subclause (II), with respect to meals or supple- ments served under this clause by a family or group day care home that does not meet the criteria set forth in clause (ii)(I), the reimbursement factors shall be 95 cents for lunches and suppers, 27 cents for breakfasts, and 13 cents for supplements. ”(bb) ADJUSTMENTS.\u2014The factors shall be adjusted on July 1, 1997, and each July 1 thereafter, to reflect changes in the Consumer Price Index for food at home for the most recent 12-month period for which the data are available. The reimbursement factors under this item shall be rounded down to the nearest lower cent increment and based on the unrounded adjustment for the preceding 12-month period. ”(cc) REIMBURSEMENT.\u2014A family or group day care home shall be provided reimburse- ment factors under this subclause without a requirement for documentation of the costs described in clause (i), except that reimburse- ment shall not be provided under this sub- clause for meals or supplements served to the children of a person acting as a family or group day care home provider unless the children meet the income eligibility guide- lines for free or reduced price meals under section 9. 110 STAT. 2296 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(II) OTHER FACTORS.\u2014A family or group day care home that does not meet the criteria set forth in clause (ii)(I) may elect to be provided reimburse- ment factors determined in accordance with the following requirements: ”(aa) CHILDREN ELIGIBLE FOR FREE OR REDUCED PRICE MEALS.\u2014In the case of meals or supplements served under this subsection to children who are members of households whose incomes meet the income eligibility guidelines for free or reduced price meals under section 9, the family or group day care home shall be provided reimbursement factors set by the Secretary in accordance with clause (ii)(III). ”(bb) INELIGIBLE CHILDREN.\u2014In the case of meals or supplements served under this subsection to children who are members of households whose incomes do not meet the income eligibility guidelines, the family or group day care home shall be provided reimbursement factors in accordance with sub- clause (I). ”(III) INFORMATION AND DETERMINATIONS.\u2014 ”(aa) IN GENERAL.\u2014If a family or group day care home elects to claim the factors described in subclause (II), the family or group day care home sponsoring organization serving the home shall collect the necessary income information, as determined by the Secretary, from any parent or other caretaker to make the determinations specified in subclause (II) and shall make the determinations in accord- ance with rules prescribed by the Secretary. ”(bb) CATEGORICAL ELIGIBILITY.\u2014In mak- ing a determination under item (aa), a family or group day care home sponsoring organiza- tion may consider a child participating in or subsidized under, or a child with a parent participating in or subsidized under, a feder- ally or State supported child care or other benefit program with an income eligibility limit that does not exceed the eligibility stand- ard for free or reduced price meals under sec- tion 9 to be a child who is a member of a household whose income meets the income eligibility guidelines under section 9. ”(cc) FACTORS FOR CHILDREN ONLY.\u2014A family or group day care home may elect to receive the reimbursement factors prescribed under clause (ii)(III) solely for the children participating in a program referred to in item (bb) if the home elects not to have income statements collected from parents or other caretakers. ”(IV) SIMPLIFIED MEAL COUNTING AND REPORT- ING PROCEDURES.\u2014The Secretary shall prescribe 110 STAT. 2297PUBLIC LAW 104 193\u2014AUG. 22, 1996 simplified meal counting and reporting procedures for use by a family or group day care home that elects to claim the factors under subclause (II) and by a family or group day care home sponsoring organization that sponsors the home. The proce- dures the Secretary prescribes may include 1 or more of the following: ”(aa) Setting an annual percentage for each home of the number of meals served that are to be reimbursed in accordance with the reimbursement factors prescribed under clause (ii)(III) and an annual percentage of the num- ber of meals served that are to be reimbursed in accordance with the reimbursement factors prescribed under subclause (I), based on the family income of children enrolled in the home in a specified month or other period. ”(bb) Placing a home into 1 of 2 or more reimbursement categories annually based on the percentage of children in the home whose households have incomes that meet the income eligibility guidelines under section 9, with each such reimbursement category carrying a set of reimbursement factors such as the factors prescribed under clause (ii)(III) or subclause (I) or factors established within the range of factors prescribed under clause (ii)(III) and subclause (I). ”(cc) Such other simplified procedures as the Secretary may prescribe. ”(V) MINIMUM VERIFICATION REQUIREMENTS.\u2014 The Secretary may establish any minimum ver- ification requirements that are necessary to carry out this clause.”. (2) GRANTS TO STATES TO PROVIDE ASSISTANCE TO FAMILY OR GROUP DAY CARE HOMES.\u2014Section 17(f)(3) of the National School Lunch Act (42 U.S.C. 1766(f)(3)) is amended by adding at the end the following: ”(D) GRANTS TO STATES TO PROVIDE ASSISTANCE TO FAMILY OR GROUP DAY CARE HOMES.\u2014 ”(i) IN GENERAL.\u2014 ”(I) RESERVATION.\u2014From amounts made avail- able to carry out this section, the Secretary shall reserve $5,000,000 of the amount made available for fiscal year 1997. ”(II) PURPOSE.\u2014The Secretary shall use the funds made available under subclause (I) to pro- vide grants to States for the purpose of providing\u2014 ”(aa) assistance, including grants, to fam- ily and day care home sponsoring organiza- tions and other appropriate organizations, in securing and providing training, materials, automated data processing assistance, and other assistance for the staff of the sponsoring organizations; and ”(bb) training and other assistance to family and group day care homes in the 110 STAT. 2298 PUBLIC LAW 104 193\u2014AUG. 22, 1996 implementation of the amendment to subpara- graph (A) made by section 708(e)(1) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. ”(ii) ALLOCATION.\u2014The Secretary shall allocate from the funds reserved under clause (i)(I)\u2014 ”(I) $30,000 in base funding to each State; and ”(II) any remaining amount among the States, based on the number of family day care homes participating in the program in a State during fiscal year 1995 as a percentage of the number of all family day care homes participating in the program during fiscal year 1995. ”(iii) RETENTION OF FUNDS.\u2014Of the amount of funds made available to a State for fiscal year 1997 under clause (i), the State may retain not to exceed 30 percent of the amount to carry out this subpara- graph. ”(iv) ADDITIONAL PAYMENTS.\u2014Any payments received under this subparagraph shall be in addition to payments that a State receives under subparagraph (A).”. (3) PROVISION OF DATA.\u2014Section 17(f)(3) of the National School Lunch Act (42 U.S.C. 1766(f)(3)), as amended by para- graph (2), is amended by adding at the end the following: ”(E) PROVISION OF DATA TO FAMILY OR GROUP DAY CARE HOME SPONSORING ORGANIZATIONS.\u2014 ”(i) CENSUS DATA.\u2014The Secretary shall provide to each State agency administering a child and adult care food program under this section data from the most recent decennial census survey or other appro- priate census survey for which the data are available showing which areas in the State meet the require- ments of subparagraph (A)(ii)(I)(aa). The State agency shall provide the data to family or group day care home sponsoring organizations located in the State. ”(ii) SCHOOL DATA.\u2014 ”(I) IN GENERAL.\u2014A State agency administer- ing the school lunch program under this Act or the school breakfast program under the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) shall provide to approved family or group day care home sponsoring organizations a list of schools serving elementary school children in the State in which not less than 1\u20442 of the children enrolled are certified to receive free or reduced price meals. The State agency shall collect the data necessary to create the list annually and provide the list on a timely basis to any approved family or group day care home sponsoring organization that requests the list. ”(II) USE OF DATA FROM PRECEDING SCHOOL YEAR.\u2014In determining for a fiscal year or other annual period whether a home qualifies as a tier I family or group day care home under subpara- graph (A)(ii)(I), the State agency administering the 110 STAT. 2299PUBLIC LAW 104 193\u2014AUG. 22, 1996 program under this section, and a family or group day care home sponsoring organization, shall use the most current available data at the time of the determination. ”(iii) DURATION OF DETERMINATION.\u2014For purposes of this section, a determination that a family or group day care home is located in an area that qualifies the home as a tier I family or group day care home (as the term is defined in subparagraph (A)(ii)(I)), shall be in effect for 3 years (unless the determination is made on the basis of census data, in which case the determination shall remain in effect until more recent census data are available) unless the State agency determines that the area in which the home is located no longer qualifies the home as a tier I family or group day care home.”. (4) CONFORMING AMENDMENTS.\u2014Section 17(c) of the National School Lunch Act (42 U.S.C. 1766(c)) is amended by inserting ”except as provided in subsection (f)(3),” after ”For purposes of this section,” each place it appears in para- graphs (1), (2), and (3). (f) REIMBURSEMENT.\u2014Section 17(f) of the National School Lunch Act (42 U.S.C. 1766(f)) is amended\u2014 (1) in paragraph (3)\u2014 (A) in subparagraph (B), by striking the third and fourth sentences; and (B) in subparagraph (C)(ii), by striking ”conduct out- reach” and all that follows through ”may become” and inserting ”assist unlicensed family or group day care homes in becoming”; and (2) in the first sentence of paragraph (4), by striking ”shall” and inserting ”may”. (g) NUTRITIONAL REQUIREMENTS.\u2014Section 17(g)(1) of the National School Lunch Act (42 U.S.C. 1766(g)(1)) is amended\u2014 (1) in subparagraph (A), by striking the second sentence; and (2) in subparagraph (B), by striking the second sentence. (h) ELIMINATION OF STATE PAPERWORK AND OUTREACH BURDEN.\u2014Section 17 of the National School Lunch Act (42 U.S.C. 1766) is amended by striking subsection (k) and inserting the follow- ing: ”(k) TRAINING AND TECHNICAL ASSISTANCE.\u2014A State participat- ing in the program established under this section shall provide sufficient training, technical assistance, and monitoring to facilitate effective operation of the program. The Secretary shall assist the State in developing plans to fulfill the requirements of this sub- section.”. (i) RECORDS.\u2014The second sentence of section 17(m) of the National School Lunch Act (42 U.S.C. 1766(m)) is amended by striking ”at all times” and inserting ”at any reasonable time”. (j) UNNEEDED PROVISION.\u2014Section 17 of the National School Lunch Act is amended by striking subsection (q). (k) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall become effective on the date of enactment of this Act. 42 USC 1766 note. 42 USC 1766. 110 STAT. 2300 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) IMPROVED TARGETING OF DAY CARE HOME REIMBURSE- MENTS.\u2014The amendments made by paragraphs (1) and (4) of subsection (e) shall become effective on July 1, 1997. (3) REGULATIONS.\u2014 (A) INTERIM REGULATIONS.\u2014Not later than January 1, 1997, the Secretary of Agriculture shall issue interim regulations to implement\u2014 (i) the amendments made by paragraphs (1), (3), and (4) of subsection (e); and (ii) section 17(f)(3)(C) of the National School Lunch Act (42 U.S.C. 1766(f)(3)(C)). (B) FINAL REGULATIONS.\u2014Not later than July 1, 1997, the Secretary of Agriculture shall issue final regulations to implement the provisions of law referred to in subpara- graph (A). (l) STUDY OF IMPACT OF AMENDMENTS ON PROGRAM PARTICIPA- TION AND FAMILY DAY CARE LICENSING.\u2014 (1) IN GENERAL.\u2014The Secretary of Agriculture, in conjunc- tion with the Secretary of Health and Human Services, shall study the impact of the amendments made by this section on\u2014 (A) the number of family day care homes participating in the child and adult care food program established under section 17 of the National School Lunch Act (42 U.S.C. 1766); (B) the number of day care home sponsoring organiza- tions participating in the program; (C) the number of day care homes that are licensed, certified, registered, or approved by each State in accord- ance with regulations issued by the Secretary; (D) the rate of growth of the numbers referred to in subparagraphs (A) through (C); (E) the nutritional adequacy and quality of meals served in family day care homes that\u2014 (i) received reimbursement under the program prior to the amendments made by this section but do not receive reimbursement after the amendments made by this section; or (ii) received full reimbursement under the program prior to the amendments made by this section but do not receive full reimbursement after the amend- ments made by this section; and (F) the proportion of low-income children participating in the program prior to the amendments made by this section and the proportion of low-income children partici- pating in the program after the amendments made by this section. (2) REQUIRED DATA.\u2014Each State agency participating in the child and adult care food program under section 17 of the National School Lunch Act (42 U.S.C. 1766) shall submit to the Secretary of Agriculture data on\u2014 (A) the number of family day care homes participating in the program on June 30, 1997, and June 30, 1998; (B) the number of family day care homes licensed, certified, registered, or approved for service on June 30, 1997, and June 30, 1998; and 42 USC 1766 note. 42 USC 1766 note. 110 STAT. 2301PUBLIC LAW 104 193\u2014AUG. 22, 1996 (C) such other data as the Secretary may require to carry out this subsection. (3) SUBMISSION OF REPORT.\u2014Not later than 2 years after the date of enactment of this section, the Secretary of Agri- culture shall submit the study required under this subsection to the Committee on Economic and Educational Opportunities of the House of Representatives and the Committee on Agri- culture, Nutrition, and Forestry of the Senate. SEC. 709. PILOT PROJECTS. (a) UNIVERSAL FREE PILOT.\u2014Section 18(d) of the National School Lunch Act (42 U.S.C. 1769(d)) is amended\u2014 (1) by striking paragraph (3); and (2) by redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively. (b) DEMONSTRATION PROJECT OUTSIDE SCHOOL HOURS.\u2014Sec- tion 18(e) of the National School Lunch Act (42 U.S.C. 1769(e)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A)\u2014 (i) by striking ”(A)”; and (ii) by striking ”shall” and inserting ”may”; and (B) by striking subparagraph (B); and (2) by striking paragraph (5) and inserting the following: ”(5) AUTHORIZATION OF APPROPRIATIONS.\u2014There are authorized to be appropriated to carry out this subsection such sums as are necessary for each of fiscal years 1997 and 1998.”. SEC. 710. REDUCTION OF PAPERWORK. Section 19 of the National School Lunch Act (42 U.S.C. 1769a) is repealed. SEC. 711. INFORMATION ON INCOME ELIGIBILITY. Section 23 of the National School Lunch Act (42 U.S.C. 1769d) is repealed. SEC. 712. NUTRITION GUIDANCE FOR CHILD NUTRITION PROGRAMS. Section 24 of the National School Lunch Act (42 U.S.C. 1769e) is repealed. Subtitle B\u2014Child Nutrition Act of 1966 SEC. 721. SPECIAL MILK PROGRAM. Section 3(a)(3) of the Child Nutrition Act of 1966 (42 U.S.C. 1772(a)(3)) is amended by striking ”the Trust Territory of the Pacific Islands” and inserting ”the Commonwealth of the Northern Mariana Islands”. SEC. 722. FREE AND REDUCED PRICE POLICY STATEMENT. Section 4(b)(1) of the Child Nutrition Act of 1966 (42 U.S.C. 1773(b)(1)) is amended by adding at the end the following: ”(E) FREE AND REDUCED PRICE POLICY STATEMENT.\u2014 After the initial submission, a school food authority shall not be required to submit a free and reduced price policy statement to a State educational agency under this Act unless there is a substantive change in the free and reduced price policy of the school food authority. A routine change 110 STAT. 2302 PUBLIC LAW 104 193\u2014AUG. 22, 1996 in the policy of a school food authority, such as an annual adjustment of the income eligibility guidelines for free and reduced price meals, shall not be sufficient cause for requir- ing the school food authority to submit a policy statement.”. SEC. 723. SCHOOL BREAKFAST PROGRAM AUTHORIZATION. (a) TRAINING AND TECHNICAL ASSISTANCE IN FOOD PREPARA- TION.\u2014Section 4(e)(1)(B) of the Child Nutrition Act of 1966 (42 U.S.C. 1773(e)(1)(B)) is amended by striking the second sentence. (b) EXPANSION OF PROGRAM; STARTUP AND EXPANSION COSTS.\u2014 (1) IN GENERAL.\u2014Section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773) is amended by striking subsections (f) and (g). (2) EFFECTIVE DATE.\u2014The amendments made by paragraph (1) shall become effective on October 1, 1996. SEC. 724. STATE ADMINISTRATIVE EXPENSES. (a) USE OF FUNDS FOR COMMODITY DISTRIBUTION ADMINISTRA- TION; STUDIES.\u2014Section 7 of the Child Nutrition Act of 1966 (42 U.S.C. 1776) is amended\u2014 (1) by striking subsections (e) and (h); and (2) by redesignating subsections (f), (g), and (i) as sub- sections (e), (f), and (g), respectively. (b) APPROVAL OF CHANGES.\u2014Section 7(e) of the Child Nutrition Act of 1966 (42 U.S.C. 1776(e)), as so redesignated, is amended\u2014 (1) by striking ”each year an annual plan” and inserting ”the initial fiscal year a plan”; and (2) by adding at the end the following: ”After submitting the initial plan, a State shall be required to submit to the Secretary for approval only a substantive change in the plan.”. SEC. 725. REGULATIONS. Section 10(b) of the Child Nutrition Act of 1966 (42 U.S.C. 1779(b)) is amended\u2014 (1) in paragraph (1), by striking ”(1)”; and (2) by striking paragraphs (2) through (4). SEC. 726. PROHIBITIONS. Section 11(a) of the Child Nutrition Act of 1966 (42 U.S.C. 1780(a)) is amended by striking ”neither the Secretary nor the State shall” and inserting ”the Secretary shall not”. SEC. 727. MISCELLANEOUS PROVISIONS AND DEFINITIONS. Section 15 of the Child Nutrition Act of 1966 (42 U.S.C. 1784) is amended\u2014 (1) in paragraph (1), by striking ”the Trust Territory of the Pacific Islands” and inserting ”the Commonwealth of the Northern Mariana Islands”; and (2) in the first sentence of paragraph (3)\u2014 (A) in subparagraph (A), by inserting ”and” at the end; and (B) by striking ”, and (C)” and all that follows through ”Governor of Puerto Rico”. SEC. 728. ACCOUNTS AND RECORDS. The second sentence of section 16(a) of the Child Nutrition Act of 1966 (42 U.S.C. 1785(a)) is amended by striking ”at all times be available” and inserting ”be available at any reasonable time”. 42 USC 1773 note. 110 STAT. 2303PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 729. SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN. (a) DEFINITIONS.\u2014Section 17(b) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)) is amended\u2014 (1) in paragraph (15)(B)(iii), by inserting ”of not more than 365 days” after ”accommodation”; and (2) in paragraph (16)\u2014 (A) in subparagraph (A), by adding ”and” at the end; and (B) in subparagraph (B), by striking ”; and” and insert- ing a period; and (C) by striking subparagraph (C). (b) SECRETARY’S PROMOTION OF WIC.\u2014Section 17(c) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(c)) is amended by striking paragraph (5). (c) ELIGIBLE PARTICIPANTS.\u2014Section 17(d) of the Child Nutri- tion Act of 1966 (42 U.S.C. 1786(d)) is amended by striking para- graph (4). (d) NUTRITION EDUCATION.\u2014Section 17(e) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(e)) is amended\u2014 (1) in paragraph (2), by striking the third sentence; (2) in paragraph (4)\u2014 (A) in the matter preceding subparagraph (A), by strik- ing ”shall”; (B) by striking subparagraph (A); (C) by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively; (D) in subparagraph (A), as so redesignated\u2014 (i) by inserting ”shall” before ”provide”; and (ii) by striking ”and” at the end; (E) in subparagraph (B), as so redesignated\u2014 (i) by inserting ”shall” before ”provide”; and (ii) by striking the period at the end and inserting ”; and”; and (F) by adding at the end the following: ”(C) may provide a local agency with materials describing other programs for which a participant in the program may be eligible.”; (3) in paragraph (5), by striking ”The State agency shall ensure that each” and inserting ”Each”; and (4) by striking paragraph (6). (e) STATE PLAN.\u2014Section 17(f) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(f)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A)\u2014 (i) by striking ”annually to the Secretary, by a date specified by the Secretary, a” and inserting ”to the Secretary, by a date specified by the Secretary, an initial”; and (ii) by adding at the end the following: ”After submitting the initial plan, a State shall be required to submit to the Secretary for approval only a sub- stantive change in the plan.”; (B) in subparagraph (C)\u2014 (i) by striking clause (iii) and inserting the following: 110 STAT. 2304 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(iii) a plan to coordinate operations under the program with other services or programs that may benefit participants in, and applicants for, the program;”; (ii) in clause (vi), by inserting after ”in the State” the following: ”(including a plan to improve access to the program for participants and prospective applicants who are employed, or who reside in rural areas)”; (iii) in clause (vii), by striking ”to provide program benefits” and all that follows through ”emphasis on” and inserting ”for”; (iv) by striking clauses (ix), (x), and (xii); (v) in clause (xiii), by striking ”may require” and inserting ”may reasonably require”; (vi) by redesignating clauses (xi) and (xiii), as so amended, as clauses (ix) and (x), respectively; and (vii) in clause (ix), as so redesignated, by adding ”and” at the end; (C) by striking subparagraph (D); and (D) by redesignating subparagraph (E) as subpara- graph (D); (2) by striking paragraphs (6) and (22); (3) in the second sentence of paragraph (5), by striking ”at all times be available” and inserting ”be available at any reasonable time”; (4) in paragraph (9)(B), by striking the second sentence; (5) in the first sentence of paragraph (11), by striking ”, including standards that will ensure sufficient State agency staff”; (6) in paragraph (12), by striking the third sentence; (7) in paragraph (14), by striking ”shall” and inserting ”may”; (8) in paragraph (17), by striking ”and to accommodate” and all that follows through ”facilities”; (9) in paragraph (19), by striking ”shall” and inserting ”may”; and (10) by redesignating paragraphs (7) through (21) as para- graphs (6) through (20), and paragraphs (23) and (24) as para- graphs (21) and (22), respectively. (f) INFORMATION.\u2014Section 17(g) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(g)) is amended\u2014 (1) in paragraph (5), by striking ”the report required under subsection (d)(4)” and inserting ”reports on program participant characteristics”; and (2) by striking paragraph (6). (g) PROCUREMENT OF INFANT FORMULA.\u2014 (1) IN GENERAL.\u2014Section 17(h) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)) is amended\u2014 (A) in paragraph (4)(E), by striking ”and, on” and all that follows through ”(d)(4)”; and (B) in paragraph (8)\u2014 (i) by striking subparagraphs (A), (C), and (M); (ii) in subparagraph (G)\u2014 (I) in clause (i), by striking ”(i)”; and (II) by striking clauses (ii) through (ix); 110 STAT. 2305PUBLIC LAW 104 193\u2014AUG. 22, 1996 (iii) in subparagraph (I), by striking ”Sec- retary\u2014” and all that follows through ”(v) may” and inserting ”Secretary may”; (iv) by redesignating subparagraphs (B) and (D) through (L) as subparagraphs (A) and (B) through (J), respectively; (v) in subparagraph (A)(i), as so redesignated, by striking ”subparagraphs (C), (D), and (E)(iii), in carry- ing out subparagraph (A),” and inserting ”subpara- graphs (B) and (C)(iii),”; (vi) in subparagraph (B)(i), as so redesignated, by striking ”subparagraph (B)” each place it appears and inserting ”subparagraph (A)”; and (vii) in subparagraph (C)(iii), as so redesignated, by striking ”subparagraph (B)” and inserting ”subpara- graph (A)”. (2) APPLICATION.\u2014The amendments made by paragraph (1) shall not apply to a contract for the procurement of infant formula under section 17(h)(8) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)(8)) that is in effect on the date of enactment of this subsection. (h) NATIONAL ADVISORY COUNCIL ON MATERNAL, INFANT, AND FETAL NUTRITION.\u2014Section 17(k)(3) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(k)(3)) is amended by striking ”Secretary shall designate” and inserting ”Council shall elect”. (i) COMPLETED STUDY; COMMUNITY COLLEGE DEMONSTRATION; GRANTS FOR INFORMATION AND DATA SYSTEM.\u2014Section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786) is amended by striking subsections (n), (o), and (p). (j) DISQUALIFICATION OF VENDORS WHO ARE DISQUALIFIED UNDER THE FOOD STAMP PROGRAM.\u2014Section 17 of the Child Nutri- tion Act of 1966 (42 U.S.C. 1786), as amended by subsection (i), is amended by adding at the end the following: ”(n) DISQUALIFICATION OF VENDORS WHO ARE DISQUALIFIED UNDER THE FOOD STAMP PROGRAM.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall issue regulations providing criteria for the disqualification under this section of an approved vendor that is disqualified from accepting bene- fits under the food stamp program established under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.). ”(2) TERMS.\u2014A disqualification under paragraph (1)\u2014 ”(A) shall be for the same period as the disqualification from the program referred to in paragraph (1); ”(B) may begin at a later date than the disqualification from the program referred to in paragraph (1); and ”(C) shall not be subject to judicial or administrative review.”. SEC. 730. CASH GRANTS FOR NUTRITION EDUCATION. Section 18 of the Child Nutrition Act of 1966 (42 U.S.C. 1787) is repealed. SEC. 731. NUTRITION EDUCATION AND TRAINING. (a) FINDINGS.\u2014Section 19 of the Child Nutrition Act of 1966 (42 U.S.C. 1788) is amended\u2014 (1) in subsection (a), by striking ”that\u2014” and all that follows through the period at the end and inserting ”that effec- tive dissemination of scientifically valid information to children Regulations. 42 USC 1786 note. 110 STAT. 2306 PUBLIC LAW 104 193\u2014AUG. 22, 1996 participating or eligible to participate in the school lunch and related child nutrition programs should be encouraged.”; and (2) in subsection (b), by striking ”encourage” and all that follows through ”establishing” and inserting ”establish”. (b) USE OF FUNDS.\u2014Section 19(f) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(f)) is amended\u2014 (1) in paragraph (1)\u2014 (A) by striking subparagraph (B); and (B) in subparagraph (A)\u2014 (i) by striking ”(A)”; (ii) by striking clauses (ix) through (xix); (iii) by redesignating clauses (i) through (viii) and (xx) as subparagraphs (A) through (H) and (I), respec- tively; (iv) in subparagraph (I), as so redesignated, by striking the period at the end and inserting ”; and”; and (v) by adding at the end the following: ”(J) other appropriate related activities, as determined by the State.”; (2) by striking paragraphs (2) and (4); and (3) by redesignating paragraph (3) as paragraph (2). (c) ACCOUNTS, RECORDS, AND REPORTS.\u2014The second sentence of section 19(g)(1) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(g)(1)) is amended by striking ”at all times be available” and inserting ”be available at any reasonable time”. (d) STATE COORDINATORS FOR NUTRITION; STATE PLAN.\u2014Section 19(h) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(h)) is amended\u2014 (1) in the second sentence of paragraph (1)\u2014 (A) by striking ”as provided in paragraph (2) of this subsection”; and (B) by striking ”as provided in paragraph (3) of this subsection”; (2) in paragraph (2), by striking the second and third sentences; and (3) by striking paragraph (3). (e) AUTHORIZATION OF APPROPRIATIONS.\u2014Section 19(i) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(i)) is amended\u2014 (1) in the first sentence of paragraph (2)(A), by striking ”and each succeeding fiscal year”; (2) by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively; and (3) by inserting after paragraph (2) the following: ”(3) FISCAL YEARS 1997 THROUGH 2002.\u2014 ”(A) IN GENERAL.\u2014There are authorized to be appro- priated to carry out this section $10,000,000 for each of fiscal years 1997 through 2002. ”(B) GRANTS.\u2014 ”(i) IN GENERAL.\u2014Grants to each State from the amounts made available under subparagraph (A) shall be based on a rate of 50 cents for each child enrolled in schools or institutions within the State, except that no State shall receive an amount less than $75,000 per fiscal year. ”(ii) INSUFFICIENT FUNDS.\u2014If the amount made available for any fiscal year is insufficient to pay the 110 STAT. 2307PUBLIC LAW 104 193\u2014AUG. 22, 1996 amount to which each State is entitled under clause (i), the amount of each grant shall be ratably reduced.”. (f) ASSESSMENT.\u2014Section 19 of the Child Nutrition Act of 1966 (42 U.S.C. 1788) is amended by striking subsection (j). (g) EFFECTIVE DATE.\u2014The amendments made by subsection (e) shall become effective on October 1, 1996. Subtitle C\u2014Miscellaneous Provisions SEC. 741. COORDINATION OF SCHOOL LUNCH, SCHOOL BREAKFAST, AND SUMMER FOOD SERVICE PROGRAMS. (a) COORDINATION.\u2014 (1) IN GENERAL.\u2014The Secretary of Agriculture shall develop proposed changes to the regulations under the school lunch program under the National School Lunch Act (42 U.S.C. 1751 et seq.), the summer food service program under section 13 of that Act (42 U.S.C. 1761), and the school breakfast program under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773), for the purpose of simplifying and coordinating those programs into a comprehensive meal program. (2) CONSULTATION.\u2014In developing proposed changes to the regulations under paragraph (1), the Secretary of Agriculture shall consult with local, State, and regional administrators of the programs described in such paragraph. (b) REPORT.\u2014Not later than November 1, 1997, the Secretary of Agriculture shall submit to the Committee on Agriculture, Nutri- tion, and Forestry of the Senate and the Committee on Economic and Educational Opportunities of the House of Representatives a report containing the proposed changes developed under sub- section (a). SEC. 742. REQUIREMENTS RELATING TO PROVISION OF BENEFITS BASED ON CITIZENSHIP, ALIENAGE, OR IMMIGRATION STATUS UNDER THE NATIONAL SCHOOL LUNCH ACT, THE CHILD NUTRITION ACT OF 1966, AND CERTAIN OTHER ACTS. (a) SCHOOL LUNCH AND BREAKFAST PROGRAMS.\u2014Notwithstand- ing any other provision of this Act, an individual who is eligible to receive free public education benefits under State or local law shall not be ineligible to receive benefits provided under the school lunch program under the National School Lunch Act (42 U.S.C. 1751 et seq.) or the school breakfast program under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773) on the basis of citizenship, alienage, or immigration status. (b) OTHER PROGRAMS.\u2014 (1) IN GENERAL.\u2014Nothing in this Act shall prohibit or require a State to provide to an individual who is not a citizen or a qualified alien, as defined in section 431(b), benefits under programs established under the provisions of law described in paragraph (2). (2) PROVISIONS OF LAW DESCRIBED.\u2014The provisions of law described in this paragraph are the following: (A) Programs (other than the school lunch program and the school breakfast program) under the National School Lunch Act (42 U.S.C. 1751 et seq.) and the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.). 8 USC 1615. 42 USC 1751 note. 42 USC 1788 note. 110 STAT. 2308 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (B) Section 4 of the Agriculture and Consumer Protec- tion Act of 1973 (7 U.S.C. 612c note). (C) The Emergency Food Assistance Act of 1983 (7 U.S.C 612c note). (D) The food distribution program on Indian reserva- tions established under section 4(b) of the Food Stamp Act of 1977 (7 U.S.C 2013(b)). TITLE VIII\u2014FOOD STAMPS AND COMMODITY DISTRIBUTION Subtitle A\u2014Food Stamp Program SEC. 801. DEFINITION OF CERTIFICATION PERIOD. Section 3(c) of the Food Stamp Act of 1977 (7 U.S.C. 2012(c)) is amended by striking ”Except as provided” and all that follows and inserting the following: ”The certification period shall not exceed 12 months, except that the certification period may be up to 24 months if all adult household members are elderly or disabled. A State agency shall have at least 1 contact with each certified household every 12 months.”. SEC. 802. DEFINITION OF COUPON. Section 3(d) of the Food Stamp Act of 1977 (7 U.S.C. 2012(d)) is amended by striking ”or type of certificate” and inserting ”type of certificate, authorization card, cash or check issued in lieu of a coupon, or access device, including an electronic benefit transfer card or personal identification number,”. SEC. 803. TREATMENT OF CHILDREN LIVING AT HOME. The second sentence of section 3(i) of the Food Stamp Act of 1977 (7 U.S.C. 2012(i)) is amended by striking ”(who are not themselves parents living with their children or married and living with their spouses)”. SEC. 804. ADJUSTMENT OF THRIFTY FOOD PLAN. The second sentence of section 3(o) of the Food Stamp Act of 1977 (7 U.S.C. 2012(o)) is amended\u2014 (1) by striking ”shall (1) make” and inserting the following: ”shall\u2014 ”(1) make”; (2) by striking ”scale, (2) make” and inserting the following: ”scale; ”(2) make”; (3) by striking ”Alaska, (3) make” and inserting the following: ”Alaska; ”(3) make”; and (4) by striking ”Columbia, (4) through” and all that follows through the end of the subsection and inserting the following: ”Columbia; and ”(4) on October 1, 1996, and each October 1 thereafter, adjust the cost of the diet to reflect the cost of the diet in the preceding June, and round the result to the nearest lower dollar increment for each household size, except that on October 1, 1996, the Secretary may not reduce the cost of the diet in effect on September 30, 1996.”. 110 STAT. 2309PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 805. DEFINITION OF HOMELESS INDIVIDUAL. Section 3(s)(2)(C) of the Food Stamp Act of 1977 (7 U.S.C. 2012(s)(2)(C)) is amended by inserting ”for not more than 90 days” after ”temporary accommodation”. SEC. 806. STATE OPTION FOR ELIGIBILITY STANDARDS. Section 5(b) of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)) is amended by striking ”(b) The Secretary” and inserting the following: ”(b) ELIGIBILITY STANDARDS.\u2014Except as otherwise provided in this Act, the Secretary”. SEC. 807. EARNINGS OF STUDENTS. Section 5(d)(7) of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)(7)) is amended by striking ”21” and inserting ”17”. SEC. 808. ENERGY ASSISTANCE. (a) IN GENERAL.\u2014Section 5(d) of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)) is amended by striking paragraph (11) and insert- ing the following: ”(11)(A) any payments or allowances made for the purpose of providing energy assistance under any Federal law (other than part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)), or (B) a 1-time payment or allowance made under a Federal or State law for the costs of weatherization or emergency repair or replacement of an unsafe or inoperative furnace or other heating or cooling device,”. (b) CONFORMING AMENDMENTS.\u2014Section 5(k) of the Food Stamp Act of 1977 (7 U.S.C. 2014(k)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A), by striking ”plan for aid to families with dependent children approved” and inserting ”program funded”; and (B) in subparagraph (B), by striking ”, not including energy or utility-cost assistance,”; (2) in paragraph (2), by striking subparagraph (C) and inserting the following: ”(C) a payment or allowance described in subsection (d)(11);”; and (3) by adding at the end the following: ”(4) THIRD PARTY ENERGY ASSISTANCE PAYMENTS.\u2014 ”(A) ENERGY ASSISTANCE PAYMENTS.\u2014For purposes of subsection (d)(1), a payment made under a State law (other than a law referred to in paragraph (2)(H)) to provide energy assistance to a household shall be considered money payable directly to the household. ”(B) ENERGY ASSISTANCE EXPENSES.\u2014For purposes of subsection (e)(7), an expense paid on behalf of a household under a State law to provide energy assistance shall be considered an out-of-pocket expense incurred and paid by the household.”. SEC. 809. DEDUCTIONS FROM INCOME. (a) IN GENERAL.\u2014Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended by striking subsection (e) and inserting the following: ”(e) DEDUCTIONS FROM INCOME.\u2014 ”(1) STANDARD DEDUCTION.\u2014The Secretary shall allow a standard deduction for each household in the 48 contiguous 110 STAT. 2310 PUBLIC LAW 104 193\u2014AUG. 22, 1996 States and the District of Columbia, Alaska, Hawaii, Guam, and the Virgin Islands of the United States of $134, $229, $189, $269, and $118, respectively. ”(2) EARNED INCOME DEDUCTION.\u2014 ”(A) DEFINITION OF EARNED INCOME.\u2014In this para- graph, the term ‘earned income’ does not include\u2014 ”(i) income excluded by subsection (d); or ”(ii) any portion of income earned under a work supplementation or support program, as defined under section 16(b), that is attributable to public assistance. ”(B) DEDUCTION.\u2014Except as provided in subparagraph (C), a household with earned income shall be allowed a deduction of 20 percent of all earned income to compensate for taxes, other mandatory deductions from salary, and work expenses. ”(C) EXCEPTION.\u2014The deduction described in subpara- graph (B) shall not be allowed with respect to determining an overissuance due to the failure of a household to report earned income in a timely manner. ”(3) DEPENDENT CARE DEDUCTION.\u2014 ”(A) IN GENERAL.\u2014A household shall be entitled, with respect to expenses (other than excluded expenses described in subparagraph (B)) for dependent care, to a dependent care deduction, the maximum allowable level of which shall be $200 per month for each dependent child under 2 years of age and $175 per month for each other dependent, for the actual cost of payments necessary for the care of a dependent if the care enables a household member to accept or continue employment, or training or education that is preparatory for employment. ”(B) EXCLUDED EXPENSES.\u2014The excluded expenses referred to in subparagraph (A) are\u2014 ”(i) expenses paid on behalf of the household by a third party; ”(ii) amounts made available and excluded, for the expenses referred to in subparagraph (A), under sub- section (d)(3); and ”(iii) expenses that are paid under section 6(d)(4). ”(4) DEDUCTION FOR CHILD SUPPORT PAYMENTS.\u2014 ”(A) IN GENERAL.\u2014A household shall be entitled to a deduction for child support payments made by a house- hold member to or for an individual who is not a member of the household if the household member is legally obli- gated to make the payments. ”(B) METHODS FOR DETERMINING AMOUNT.\u2014The Sec- retary may prescribe by regulation the methods, including calculation on a retrospective basis, that a State agency shall use to determine the amount of the deduction for child support payments. ”(5) HOMELESS SHELTER ALLOWANCE.\u2014Under rules pre- scribed by the Secretary, a State agency may develop a standard homeless shelter allowance, which shall not exceed $143 per month, for such expenses as may reasonably be expected to be incurred by households in which all members are homeless individuals but are not receiving free shelter throughout the month. A State agency that develops the allowance may use the allowance in determining eligibility and allotments for the 110 STAT. 2311PUBLIC LAW 104 193\u2014AUG. 22, 1996 households. The State agency may make a household with extremely low shelter costs ineligible for the allowance. ”(6) EXCESS MEDICAL EXPENSE DEDUCTION.\u2014 ”(A) IN GENERAL.\u2014A household containing an elderly or disabled member shall be entitled, with respect to expenses other than expenses paid on behalf of the house- hold by a third party, to an excess medical expense deduc- tion for the portion of the actual costs of allowable medical expenses, incurred by the elderly or disabled member, exclusive of special diets, that exceeds $35 per month. ”(B) METHOD OF CLAIMING DEDUCTION.\u2014 ”(i) IN GENERAL.\u2014A State agency shall offer an eligible household under subparagraph (A) a method of claiming a deduction for recurring medical expenses that are initially verified under the excess medical expense deduction in lieu of submitting information on, or verification of, actual expenses on a monthly basis. ”(ii) METHOD.\u2014The method described in clause (i) shall\u2014 ”(I) be designed to minimize the burden for the eligible elderly or disabled household member choosing to deduct the recurrent medical expenses of the member pursuant to the method; ”(II) rely on reasonable estimates of the expected medical expenses of the member for the certification period (including changes that can be reasonably anticipated based on available informa- tion about the medical condition of the member, public or private medical insurance coverage, and the current verified medical expenses incurred by the member); and ”(III) not require further reporting or verifica- tion of a change in medical expenses if such a change has been anticipated for the certification period. ”(7) EXCESS SHELTER EXPENSE DEDUCTION.\u2014 ”(A) IN GENERAL.\u2014A household shall be entitled, with respect to expenses other than expenses paid on behalf of the household by a third party, to an excess shelter expense deduction to the extent that the monthly amount expended by a household for shelter exceeds an amount equal to 50 percent of monthly household income after all other applicable deductions have been allowed. ”(B) MAXIMUM AMOUNT OF DEDUCTION.\u2014In the case of a household that does not contain an elderly or disabled individual, in the 48 contiguous States and the District of Columbia, Alaska, Hawaii, Guam, and the Virgin Islands of the United States, the excess shelter expense deduction shall not exceed\u2014 ”(i) for the period beginning on the date of enact- ment of this subparagraph and ending on December 31, 1996, $247, $429, $353, $300, and $182 per month, respectively; ”(ii) for the period beginning on January 1, 1997, and ending on September 30, 1998, $250, $434, $357, $304, and $184 per month, respectively; 110 STAT. 2312 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(iii) for fiscal years 1999 and 2000, $275, $478, $393, $334, and $203 per month, respectively; and ”(iv) for fiscal year 2001 and each subsequent fiscal year, $300, $521, $429, $364, and $221 per month, respectively. ”(C) STANDARD UTILITY ALLOWANCE.\u2014 ”(i) IN GENERAL.\u2014In computing the excess shelter expense deduction, a State agency may use a standard utility allowance in accordance with regulations promulgated by the Secretary, except that a State agency may use an allowance that does not fluctuate within a year to reflect seasonal variations. ”(ii) RESTRICTIONS ON HEATING AND COOLING EXPENSES.\u2014An allowance for a heating or cooling expense may not be used in the case of a household that\u2014 ”(I) does not incur a heating or cooling expense, as the case may be; ”(II) does incur a heating or cooling expense but is located in a public housing unit that has central utility meters and charges households, with regard to the expense, only for excess utility costs; or ”(III) shares the expense with, and lives with, another individual not participating in the food stamp program, another household participating in the food stamp program, or both, unless the allowance is prorated between the household and the other individual, household, or both. ”(iii) MANDATORY ALLOWANCE.\u2014 ”(I) IN GENERAL.\u2014A State agency may make the use of a standard utility allowance mandatory for all households with qualifying utility costs if\u2014 ”(aa) the State agency has developed 1 or more standards that include the cost of heating and cooling and 1 or more standards that do not include the cost of heating and cooling; and ”(bb) the Secretary finds that the stand- ards will not result in an increased cost to the Secretary. ”(II) HOUSEHOLD ELECTION.\u2014A State agency that has not made the use of a standard utility allowance mandatory under subclause (I) shall allow a household to switch, at the end of a certifi- cation period, between the standard utility allow- ance and a deduction based on the actual utility costs of the household. ”(iv) AVAILABILITY OF ALLOWANCE TO RECIPIENTS OF ENERGY ASSISTANCE.\u2014 ”(I) IN GENERAL.\u2014Subject to subclause (II), if a State agency elects to use a standard utility allowance that reflects heating or cooling costs, the standard utility allowance shall be made avail- able to households receiving a payment, or on behalf of which a payment is made, under the Low-Income Home Energy Assistance Act of 1981 110 STAT. 2313PUBLIC LAW 104 193\u2014AUG. 22, 1996 (42 U.S.C. 8621 et seq.) or other similar energy assistance program, if the household still incurs out-of-pocket heating or cooling expenses in excess of any assistance paid on behalf of the household to an energy provider. ”(II) SEPARATE ALLOWANCE.\u2014A State agency may use a separate standard utility allowance for households on behalf of which a payment described in subclause (I) is made, but may not be required to do so. ”(III) STATES NOT ELECTING TO USE SEPARATE ALLOWANCE.\u2014A State agency that does not elect to use a separate allowance but makes a single standard utility allowance available to households incurring heating or cooling expenses (other than a household described in subclause (I) or (II) of clause (ii)) may not be required to reduce the allow- ance due to the provision (directly or indirectly) of assistance under the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8621 et seq.). ”(IV) PRORATION OF ASSISTANCE.\u2014For the pur- pose of the food stamp program, assistance pro- vided under the Low-Income Home Energy Assist- ance Act of 1981 (42 U.S.C. 8621 et seq.) shall be considered to be prorated over the entire heat- ing or cooling season for which the assistance was provided.”. (b) CONFORMING AMENDMENT.\u2014Section 11(e)(3) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(3)) is amended by striking ”. Under rules prescribed” and all that follows through ”verifies higher expenses”. SEC. 810. VEHICLE ALLOWANCE. Section 5(g) of the Food Stamp Act of 1977 (7 U.S.C. 2014(g)) is amended by striking paragraph (2) and inserting the following: ”(2) INCLUDED ASSETS.\u2014 ”(A) IN GENERAL.\u2014Subject to the other provisions of this paragraph, the Secretary shall, in prescribing inclu- sions in, and exclusions from, financial resources, follow the regulations in force as of June 1, 1982 (other than those relating to licensed vehicles and inaccessible resources). ”(B) ADDITIONAL INCLUDED ASSETS.\u2014The Secretary shall include in financial resources\u2014 ”(i) any boat, snowmobile, or airplane used for recreational purposes; ”(ii) any vacation home; ”(iii) any mobile home used primarily for vacation purposes; ”(iv) subject to subparagraph (C), any licensed vehicle that is used for household transportation or to obtain or continue employment to the extent that the fair market value of the vehicle exceeds $4,600 through September 30, 1996, and $4,650 beginning October 1, 1996; and 110 STAT. 2314 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(v) any savings or retirement account (including an individual account), regardless of whether there is a penalty for early withdrawal. ”(C) EXCLUDED VEHICLES.\u2014A vehicle (and any other property, real or personal, to the extent the property is directly related to the maintenance or use of the vehicle) shall not be included in financial resources under this paragraph if the vehicle is\u2014 ”(i) used to produce earned income; ”(ii) necessary for the transportation of a physically disabled household member; or ”(iii) depended on by a household to carry fuel for heating or water for home use and provides the primary source of fuel or water, respectively, for the household.”. SEC. 811. VENDOR PAYMENTS FOR TRANSITIONAL HOUSING COUNTED AS INCOME. Section 5(k)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2014(k)(2)) is amended\u2014 (1) by striking subparagraph (F); and (2) by redesignating subparagraphs (G) and (H) as subpara- graphs (F) and (G), respectively. SEC. 812. SIMPLIFIED CALCULATION OF INCOME FOR THE SELF- EMPLOYED. Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014), as amended by title I, is amended by adding at the end the following: ”(m) SIMPLIFIED CALCULATION OF INCOME FOR THE SELF- EMPLOYED.\u2014 ”(1) IN GENERAL.\u2014Not later than 1 year after the date of enactment of this subsection, the Secretary shall establish a procedure by which a State may submit a method, designed to not increase Federal costs, for the approval of the Secretary, that the Secretary determines will produce a reasonable esti- mate of income excluded under subsection (d)(9) in lieu of calculating the actual cost of producing self-employment income. ”(2) INCLUSIVE OF ALL TYPES OF INCOME OR LIMITED TYPES OF INCOME.\u2014The method submitted by a State under paragraph (1) may allow a State to estimate income for all types of self-employment income or may be limited to 1 or more types of self-employment income. ”(3) DIFFERENCES FOR DIFFERENT TYPES OF INCOME.\u2014The method submitted by a State under paragraph (1) may differ for different types of self-employment income.”. SEC. 813. DOUBLED PENALTIES FOR VIOLATING FOOD STAMP PRO- GRAM REQUIREMENTS. Section 6(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2015(b)(1)) is amended\u2014 (1) in clause (i), by striking ”six months” and inserting ”1 year”; and (2) in clause (ii), by striking ”1 year” and inserting ”2 years”. Regulations. 110 STAT. 2315PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 814. DISQUALIFICATION OF CONVICTED INDIVIDUALS. Section 6(b)(1)(iii) of the Food Stamp Act of 1977 (7 U.S.C. 2015(b)(1)(iii)) is amended\u2014 (1) in subclause (II), by striking ”or” at the end; (2) in subclause (III), by striking the period at the end and inserting ”; or”; and (3) by inserting after subclause (III) the following: ”(IV) a conviction of an offense under subsection (b) or (c) of section 15 involving an item covered by subsection (b) or (c) of section 15 having a value of $500 or more.”. SEC. 815. DISQUALIFICATION. (a) IN GENERAL.\u2014Section 6(d) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)) is amended by striking ”(d)(1) Unless otherwise exempted by the provisions” and all that follows through the end of paragraph (1) and inserting the following: ”(d) CONDITIONS OF PARTICIPATION.\u2014 ”(1) WORK REQUIREMENTS.\u2014 ”(A) IN GENERAL.\u2014No physically and mentally fit individual over the age of 15 and under the age of 60 shall be eligible to participate in the food stamp program if the individual\u2014 ”(i) refuses, at the time of application and every 12 months thereafter, to register for employment in a manner prescribed by the Secretary; ”(ii) refuses without good cause to participate in an employment and training program established under paragraph (4), to the extent required by the State agency; ”(iii) refuses without good cause to accept an offer of employment, at a site or plant not subject to a strike or lockout at the time of the refusal, at a wage not less than the higher of\u2014 ”(I) the applicable Federal or State minimum wage; or ”(II) 80 percent of the wage that would have governed had the minimum hourly rate under sec- tion 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) been applicable to the offer of employment; ”(iv) refuses without good cause to provide a State agency with sufficient information to allow the State agency to determine the employment status or the job availability of the individual; ”(v) voluntarily and without good cause\u2014 ”(I) quits a job; or ”(II) reduces work effort and, after the reduc- tion, the individual is working less than 30 hours per week; or ”(vi) fails to comply with section 20. ”(B) HOUSEHOLD INELIGIBILITY.\u2014If an individual who is the head of a household becomes ineligible to participate in the food stamp program under subparagraph (A), the household shall, at the option of the State agency, become ineligible to participate in the food stamp program for a period, determined by the State agency, that does not exceed the lesser of\u2014 110 STAT. 2316 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(i) the duration of the ineligibility of the individual determined under subparagraph (C); or ”(ii) 180 days. ”(C) DURATION OF INELIGIBILITY.\u2014 ”(i) FIRST VIOLATION.\u2014The first time that an individual becomes ineligible to participate in the food stamp program under subparagraph (A), the individual shall remain ineligible until the later of\u2014 ”(I) the date the individual becomes eligible under subparagraph (A); ”(II) the date that is 1 month after the date the individual became ineligible; or ”(III) a date determined by the State agency that is not later than 3 months after the date the individual became ineligible. ”(ii) SECOND VIOLATION.\u2014The second time that an individual becomes ineligible to participate in the food stamp program under subparagraph (A), the individual shall remain ineligible until the later of\u2014 ”(I) the date the individual becomes eligible under subparagraph (A); ”(II) the date that is 3 months after the date the individual became ineligible; or ”(III) a date determined by the State agency that is not later than 6 months after the date the individual became ineligible. ”(iii) THIRD OR SUBSEQUENT VIOLATION.\u2014The third or subsequent time that an individual becomes ineli- gible to participate in the food stamp program under subparagraph (A), the individual shall remain ineli- gible until the later of\u2014 ”(I) the date the individual becomes eligible under subparagraph (A); ”(II) the date that is 6 months after the date the individual became ineligible; ”(III) a date determined by the State agency; or ”(IV) at the option of the State agency, permanently. ”(D) ADMINISTRATION.\u2014 ”(i) GOOD CAUSE.\u2014The Secretary shall determine the meaning of good cause for the purpose of this paragraph. ”(ii) VOLUNTARY QUIT.\u2014The Secretary shall deter- mine the meaning of voluntarily quitting and reducing work effort for the purpose of this paragraph. ”(iii) DETERMINATION BY STATE AGENCY.\u2014 ”(I) IN GENERAL.\u2014Subject to subclause (II) and clauses (i) and (ii), a State agency shall deter- mine\u2014 ”(aa) the meaning of any term used in subparagraph (A); ”(bb) the procedures for determining whether an individual is in compliance with a requirement under subparagraph (A); and 110 STAT. 2317PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(cc) whether an individual is in compli- ance with a requirement under subpara- graph (A). ”(II) NOT LESS RESTRICTIVE.\u2014A State agency may not use a meaning, procedure, or determina- tion under subclause (I) that is less restrictive on individuals receiving benefits under this Act than a comparable meaning, procedure, or deter- mination under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.). ”(iv) STRIKE AGAINST THE GOVERNMENT.\u2014For the purpose of subparagraph (A)(v), an employee of the Federal Government, a State, or a political subdivision of a State, who is dismissed for participating in a strike against the Federal Government, the State, or the political subdivision of the State shall be considered to have voluntarily quit without good cause. ”(v) SELECTING A HEAD OF HOUSEHOLD.\u2014 ”(I) IN GENERAL.\u2014For purposes of this para- graph, the State agency shall allow the household to select any adult parent of a child in the house- hold as the head of the household if all adult household members making application under the food stamp program agree to the selection. ”(II) TIME FOR MAKING DESIGNATION.\u2014A household may designate the head of the household under subclause (I) each time the household is certified for participation in the food stamp pro- gram, but may not change the designation during a certification period unless there is a change in the composition of the household. ”(vi) CHANGE IN HEAD OF HOUSEHOLD.\u2014If the head of a household leaves the household during a period in which the household is ineligible to participate in the food stamp program under subparagraph (B)\u2014 ”(I) the household shall, if otherwise eligible, become eligible to participate in the food stamp program; and ”(II) if the head of the household becomes the head of another household, the household that becomes headed by the individual shall become ineligible to participate in the food stamp program for the remaining period of ineligibility.”. (b) CONFORMING AMENDMENT.\u2014 (1) The second sentence of section 17(b)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2026(b)(2)) is amended by striking ”6(d)(1)(i)” and inserting ”6(d)(1)(A)(i)”. (2) Section 20 of the Food Stamp Act of 1977 (7 U.S.C. 2029) is amended by striking subsection (f) and inserting the following: ”(f) DISQUALIFICATION.\u2014An individual or a household may become ineligible under section 6(d)(1) to participate in the food stamp program for failing to comply with this section.”. 110 STAT. 2318 PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 816. CARETAKER EXEMPTION. Section 6(d)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(2)) is amended by adding at the end the following: ”A State that requested a waiver to lower the age specified in subpara- graph (B) and had the waiver denied by the Secretary as of August 1, 1996, may, for a period of not more than 3 years, lower the age of a dependent child that qualifies a parent or other member of a household for an exemption under subparagraph (B) to between 1 and 6 years of age.”. SEC. 817. EMPLOYMENT AND TRAINING. (a) IN GENERAL.\u2014Section 6(d)(4) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(4)) is amended\u2014 (1) by striking ”(4)(A) Not later than April 1, 1987, each” and inserting the following: ”(4) EMPLOYMENT AND TRAINING.\u2014 ”(A) IN GENERAL.\u2014 ”(i) IMPLEMENTATION.\u2014Each”; (2) in subparagraph (A)\u2014 (A) by inserting ”work,” after ”skills, training,”; and (B) by adding at the end the following: ”(ii) STATEWIDE WORKFORCE DEVELOPMENT SYSTEM.\u2014Each component of an employment and train- ing program carried out under this paragraph shall be delivered through a statewide workforce develop- ment system, unless the component is not available locally through such a system.”; (3) in subparagraph (B)\u2014 (A) in the matter preceding clause (i), by striking the colon at the end and inserting the following: ”, except that the State agency shall retain the option to apply employment requirements prescribed under this subpara- graph to a program applicant at the time of application:”; (B) in clause (i), by striking ”with terms and conditions” and all that follows through ”time of application”; and (C) in clause (iv)\u2014 (i) by striking subclauses (I) and (II); and (ii) by redesignating subclauses (III) and (IV) as subclauses (I) and (II), respectively; (4) in subparagraph (D)\u2014 (A) in clause (i), by striking ”to which the application” and all that follows through ”30 days or less”; (B) in clause (ii), by striking ”but with respect” and all that follows through ”child care”; and (C) in clause (iii), by striking ”, on the basis of” and all that follows through ”clause (ii)” and inserting ”the exemption continues to be valid”; (5) in subparagraph (E), by striking the third sentence; (6) in subparagraph (G)\u2014 (A) by striking ”(G)(i) The State” and inserting ”(G) The State”; and (B) by striking clause (ii); (7) in subparagraph (H), by striking ”(H)(i) The Secretary” and all that follows through ”(ii) Federal funds” and inserting ”(H) Federal funds”; (8) in subparagraph (I)(i)(II), by striking ”, or was in oper- ation,” and all that follows through ”Social Security Act” and 110 STAT. 2319PUBLIC LAW 104 193\u2014AUG. 22, 1996 inserting the following: ”), except that no such payment or reimbursement shall exceed the applicable local market rate”; (9)(A) by striking subparagraphs (K) and (L) and inserting the following: ”(K) LIMITATION ON FUNDING.\u2014Notwithstanding any other provision of this paragraph, the amount of funds a State agency uses to carry out this paragraph (including funds used to carry out subparagraph (I)) for participants who are receiving benefits under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) shall not exceed the amount of funds the State agency used in fiscal year 1995 to carry out this paragraph for participants who were receiving benefits in fiscal year 1995 under a State program funded under part A of title IV of the Act (42 U.S.C. 601 et seq.).”; and (B) by redesignating subparagraphs (M) and (N) as sub- paragraphs (L) and (M), respectively; and (10) in subparagraph (L), as so redesignated\u2014 (A) by striking ”(L)(i) The Secretary” and inserting ”(L) The Secretary”; and (B) by striking clause (ii). (b) FUNDING.\u2014Section 16(h) of the Food Stamp Act of 1977 (7 U.S.C. 2025(h)) is amended by striking ”(h)(1)(A) The Secretary” and all that follows through the end of paragraph (1) and inserting the following: ”(h) FUNDING OF EMPLOYMENT AND TRAINING PROGRAMS.\u2014 ”(1) IN GENERAL.\u2014 ”(A) AMOUNTS.\u2014To carry out employment and training programs, the Secretary shall reserve for allocation to State agencies from funds made available for each fiscal year under section 18(a)(1) the amount of\u2014 ”(i) for fiscal year 1996, $75,000,000; ”(ii) for fiscal year 1997, $79,000,000; ”(iii) for fiscal year 1998, $81,000,000; ”(iv) for fiscal year 1999, $84,000,000; ”(v) for fiscal year 2000, $86,000,000; ”(vi) for fiscal year 2001, $88,000,000; and ”(vii) for fiscal year 2002, $90,000,000. ”(B) ALLOCATION.\u2014The Secretary shall allocate the amounts reserved under subparagraph (A) among the State agencies using a reasonable formula (as determined by the Secretary) that gives consideration to the population in each State affected by section 6(o). ”(C) REALLOCATION.\u2014 ”(i) NOTIFICATION.\u2014A State agency shall promptly notify the Secretary if the State agency determines that the State agency will not expend all of the funds allocated to the State agency under subparagraph (B). ”(ii) REALLOCATION.\u2014On notification under clause (i), the Secretary shall reallocate the funds that the State agency will not expend as the Secretary considers appropriate and equitable. ”(D) MINIMUM ALLOCATION.\u2014Notwithstanding sub- paragraphs (A) through (C), the Secretary shall ensure that each State agency operating an employment and train- 110 STAT. 2320 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ing program shall receive not less than $50,000 for each fiscal year.”. (c) ADDITIONAL MATCHING FUNDS.\u2014Section 16(h)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2025(h)(2)) is amended by inserting before the period at the end the following: ”, including the costs for case management and casework to facilitate the transition from economic dependency to self-sufficiency through work”. (d) REPORTS.\u2014Section 16(h) of the Food Stamp Act of 1977 (7 U.S.C. 2025(h)) is amended\u2014 (1) in paragraph (5)\u2014 (A) by striking ”(5)(A) The Secretary” and inserting ”(5) The Secretary”; and (B) by striking subparagraph (B); and (2) by striking paragraph (6). SEC. 818. FOOD STAMP ELIGIBILITY. The third sentence of section 6(f) of the Food Stamp Act of 1977 (7 U.S.C. 2015(f)) is amended by inserting ”, at State option,” after ”less”. SEC. 819. COMPARABLE TREATMENT FOR DISQUALIFICATION. (a) IN GENERAL.\u2014Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015) is amended by adding at the end the following: ”(i) COMPARABLE TREATMENT FOR DISQUALIFICATION.\u2014 ”(1) IN GENERAL.\u2014If a disqualification is imposed on a member of a household for a failure of the member to perform an action required under a Federal, State, or local law relating to a means-tested public assistance program, the State agency may impose the same disqualification on the member of the household under the food stamp program. ”(2) RULES AND PROCEDURES.\u2014If a disqualification is imposed under paragraph (1) for a failure of an individual to perform an action required under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), the State agency may use the rules and procedures that apply under part A of title IV of the Act to impose the same disqualification under the food stamp program. ”(3) APPLICATION AFTER DISQUALIFICATION PERIOD.\u2014A member of a household disqualified under paragraph (1) may, after the disqualification period has expired, apply for benefits under this Act and shall be treated as a new applicant, except that a prior disqualification under subsection (d) shall be consid- ered in determining eligibility.”. (b) STATE PLAN PROVISIONS.\u2014Section 11(e) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)) is amended\u2014 (1) in paragraph (24), by striking ”and” at the end; (2) in paragraph (25), by striking the period at the end and inserting a semicolon; and (3) by adding at the end the following: ”(26) the guidelines the State agency uses in carrying out section 6(i); and”. (c) CONFORMING AMENDMENT.\u2014Section 6(d)(2)(A) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(2)(A)) is amended by striking ”that is comparable to a requirement of paragraph (1)”. 110 STAT. 2321PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 820. DISQUALIFICATION FOR RECEIPT OF MULTIPLE FOOD STAMP BENEFITS. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 819, is amended by adding at the end the following: ”(j) DISQUALIFICATION FOR RECEIPT OF MULTIPLE FOOD STAMP BENEFITS.\u2014An individual shall be ineligible to participate in the food stamp program as a member of any household for a 10- year period if the individual is found by a State agency to have made, or is convicted in a Federal or State court of having made, a fraudulent statement or representation with respect to the iden- tity or place of residence of the individual in order to receive multiple benefits simultaneously under the food stamp program.”. SEC. 821. DISQUALIFICATION OF FLEEING FELONS. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 820, is amended by adding at the end the following: ”(k) DISQUALIFICATION OF FLEEING FELONS.\u2014No member of a household who is otherwise eligible to participate in the food stamp program shall be eligible to participate in the program as a member of that or any other household during any period during which the individual is\u2014 ”(1) fleeing to avoid prosecution, or custody or confinement after conviction, under the law of the place from which the individual is fleeing, for a crime, or attempt to commit a crime, that is a felony under the law of the place from which the individual is fleeing or that, in the case of New Jersey, is a high misdemeanor under the law of New Jersey; or ”(2) violating a condition of probation or parole imposed under a Federal or State law.”. SEC. 822. COOPERATION WITH CHILD SUPPORT AGENCIES. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 821, is amended by adding at the end the following: ”(l) CUSTODIAL PARENT’S COOPERATION WITH CHILD SUPPORT AGENCIES.\u2014 ”(1) IN GENERAL.\u2014At the option of a State agency, subject to paragraphs (2) and (3), no natural or adoptive parent or other individual (collectively referred to in this subsection as ‘the individual’) who is living with and exercising parental control over a child under the age of 18 who has an absent parent shall be eligible to participate in the food stamp program unless the individual cooperates with the State agency admin- istering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.)\u2014 ”(A) in establishing the paternity of the child (if the child is born out of wedlock); and ”(B) in obtaining support for\u2014 ”(i) the child; or ”(ii) the individual and the child. ”(2) GOOD CAUSE FOR NONCOOPERATION.\u2014Paragraph (1) shall not apply to the individual if good cause is found for refusing to cooperate, as determined by the State agency in accordance with standards prescribed by the Secretary in con- sultation with the Secretary of Health and Human Services. Regulations. 110 STAT. 2322 PUBLIC LAW 104 193\u2014AUG. 22, 1996 The standards shall take into consideration circumstances under which cooperation may be against the best interests of the child. ”(3) FEES.\u2014Paragraph (1) shall not require the payment of a fee or other cost for services provided under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.). ”(m) NONCUSTODIAL PARENT’S COOPERATION WITH CHILD SUP- PORT AGENCIES.\u2014 ”(1) IN GENERAL.\u2014At the option of a State agency, subject to paragraphs (2) and (3), a putative or identified noncustodial parent of a child under the age of 18 (referred to in this subsection as ‘the individual’) shall not be eligible to participate in the food stamp program if the individual refuses to cooperate with the State agency administering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.)\u2014 ”(A) in establishing the paternity of the child (if the child is born out of wedlock); and ”(B) in providing support for the child. ”(2) REFUSAL TO COOPERATE.\u2014 ”(A) GUIDELINES.\u2014The Secretary, in consultation with the Secretary of Health and Human Services, shall develop guidelines on what constitutes a refusal to cooperate under paragraph (1). ”(B) PROCEDURES.\u2014The State agency shall develop procedures, using guidelines developed under subparagraph (A), for determining whether an individual is refusing to cooperate under paragraph (1). ”(3) FEES.\u2014Paragraph (1) shall not require the payment of a fee or other cost for services provided under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.). ”(4) PRIVACY.\u2014The State agency shall provide safeguards to restrict the use of information collected by a State agency administering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.) to purposes for which the information is collected.”. SEC. 823. DISQUALIFICATION RELATING TO CHILD SUPPORT ARREARS. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 822, is amended by adding at the end the following: ”(n) DISQUALIFICATION FOR CHILD SUPPORT ARREARS.\u2014 ”(1) IN GENERAL.\u2014At the option of a State agency, no individual shall be eligible to participate in the food stamp program as a member of any household during any month that the individual is delinquent in any payment due under a court order for the support of a child of the individual. ”(2) EXCEPTIONS.\u2014Paragraph (1) shall not apply if\u2014 ”(A) a court is allowing the individual to delay pay- ment; or ”(B) the individual is complying with a payment plan approved by a court or the State agency designated under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.) to provide support for the child of the individual.”. 110 STAT. 2323PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 824. WORK REQUIREMENT. (a) IN GENERAL.\u2014Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 823, is amended by adding at the end the following: ”(o) WORK REQUIREMENT.\u2014 ”(1) DEFINITION OF WORK PROGRAM.\u2014In this subsection, the term ‘work program’ means\u2014 ”(A) a program under the Job Training Partnership Act (29 U.S.C. 1501 et seq.); ”(B) a program under section 236 of the Trade Act of 1974 (19 U.S.C. 2296); and ”(C) a program of employment and training operated or supervised by a State or political subdivision of a State that meets standards approved by the Governor of the State, including a program under subsection (d)(4), other than a job search program or a job search training program. ”(2) WORK REQUIREMENT.\u2014Subject to the other provisions of this subsection, no individual shall be eligible to participate in the food stamp program as a member of any household if, during the preceding 36-month period, the individual received food stamp benefits for not less than 3 months (consecutive or otherwise) during which the individual did not\u2014 ”(A) work 20 hours or more per week, averaged monthly; ”(B) participate in and comply with the requirements of a work program for 20 hours or more per week, as determined by the State agency; ”(C) participate in and comply with the requirements of a program under section 20 or a comparable program established by a State or political subdivision of a State; or ”(D) receive benefits pursuant to paragraph (3), (4), or (5). ”(3) EXCEPTION.\u2014Paragraph (2) shall not apply to an individual if the individual is\u2014 ”(A) under 18 or over 50 years of age; ”(B) medically certified as physically or mentally unfit for employment; ”(C) a parent or other member of a household with responsibility for a dependent child; ”(D) otherwise exempt under subsection (d)(2); or ”(E) a pregnant woman. ”(4) WAIVER.\u2014 ”(A) IN GENERAL.\u2014On the request of a State agency, the Secretary may waive the applicability of paragraph (2) to any group of individuals in the State if the Secretary makes a determination that the area in which the indi- viduals reside\u2014 ”(i) has an unemployment rate of over 10 per- cent; or ”(ii) does not have a sufficient number of jobs to provide employment for the individuals. ”(B) REPORT.\u2014The Secretary shall report the basis for a waiver under subparagraph (A) to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate. 110 STAT. 2324 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(5) SUBSEQUENT ELIGIBILITY.\u2014 ”(A) REGAINING ELIGIBILITY.\u2014An individual denied eligibility under paragraph (2) shall regain eligibility to participate in the food stamp program if, during a 30- day period, the individual\u2014 ”(i) works 80 or more hours; ”(ii) participates in and complies with the require- ments of a work program for 80 or more hours, as determined by a State agency; or ”(iii) participates in and complies with the require- ments of a program under section 20 or a comparable program established by a State or political subdivision of a State. ”(B) MAINTAINING ELIGIBILITY.\u2014An individual who regains eligibility under subparagraph (A) shall remain eligible as long as the individual meets the requirements of subparagraph (A), (B), or (C) of paragraph (2). ”(C) LOSS OF EMPLOYMENT.\u2014 ”(i) IN GENERAL.\u2014An individual who regained eligi- bility under subparagraph (A) and who no longer meets the requirements of subparagraph (A), (B), or (C) of paragraph (2) shall remain eligible for a consecutive 3-month period, beginning on the date the individual first notifies the State agency that the individual no longer meets the requirements of subparagraph (A), (B), or (C) of paragraph (2). ”(ii) LIMITATION.\u2014An individual shall not receive any benefits pursuant to clause (i) for more than a single 3-month period in any 36-month period. ”(6) OTHER PROGRAM RULES.\u2014Nothing in this subsection shall make an individual eligible for benefits under this Act if the individual is not otherwise eligible for benefits under the other provisions of this Act.”. (b) TRANSITION PROVISION.\u2014The term ”preceding 36-month period” in section 6(o) of the Food Stamp Act of 1977, as added by subsection (a), does not include, with respect to a State, any period before the earlier of\u2014 (1) the date the State notifies recipients of food stamp benefits of the application of section 6(o); or (2) the date that is 3 months after the date of enactment of this Act. SEC. 825. ENCOURAGEMENT OF ELECTRONIC BENEFIT TRANSFER SYSTEMS. (a) IN GENERAL.\u2014Section 7(i) of the Food Stamp Act of 1977 (7 U.S.C. 2016(i)) is amended\u2014 (1) by striking ”(i)(1)(A) Any State” and all that follows through the end of paragraph (1) and inserting the following: ”(i) ELECTRONIC BENEFIT TRANSFERS.\u2014 ”(1) IN GENERAL.\u2014 ”(A) IMPLEMENTATION.\u2014Not later than October 1, 2002, each State agency shall implement an electronic benefit transfer system under which household benefits determined under section 8(a) or 26 are issued from and stored in a central databank, unless the Secretary provides a waiver for a State agency that faces unusual barriers to implementing an electronic benefit transfer system. 7 USC 2015 note. 110 STAT. 2325PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) TIMELY IMPLEMENTATION.\u2014Each State agency is encouraged to implement an electronic benefit transfer sys- tem under subparagraph (A) as soon as practicable. ”(C) STATE FLEXIBILITY.\u2014Subject to paragraph (2), a State agency may procure and implement an electronic benefit transfer system under the terms, conditions, and design that the State agency considers appropriate. ”(D) OPERATION.\u2014An electronic benefit transfer system should take into account generally accepted standard operating rules based on\u2014 ”(i) commercial electronic funds transfer tech- nology; ”(ii) the need to permit interstate operation and law enforcement monitoring; and ”(iii) the need to permit monitoring and investiga- tions by authorized law enforcement agencies.”; (2) in paragraph (2)\u2014 (A) by striking ”effective no later than April 1, 1992,”; (B) in subparagraph (A)\u2014 (i) by striking ”, in any 1 year,”; and (ii) by striking ”on-line”; (C) by striking subparagraph (D) and inserting the following: ”(D)(i) measures to maximize the security of a system using the most recent technology available that the State agency considers appropriate and cost effective and which may include personal identification numbers, photographic identification on electronic benefit transfer cards, and other measures to protect against fraud and abuse; and ”(ii) effective not later than 2 years after the date of enactment of this clause, to the extent practicable, meas- ures that permit a system to differentiate items of food that may be acquired with an allotment from items of food that may not be acquired with an allotment;”; (D) in subparagraph (G), by striking ”and” at the end; (E) in subparagraph (H), by striking the period at the end and inserting ”; and”; and (F) by adding at the end the following: ”(I) procurement standards.”; and (3) by adding at the end the following: ”(7) REPLACEMENT OF BENEFITS.\u2014Regulations issued by the Secretary regarding the replacement of benefits and liability for replacement of benefits under an electronic benefit transfer system shall be similar to the regulations in effect for a paper- based food stamp issuance system. ”(8) REPLACEMENT CARD FEE.\u2014A State agency may collect a charge for replacement of an electronic benefit transfer card by reducing the monthly allotment of the household receiving the replacement card. ”(9) OPTIONAL PHOTOGRAPHIC IDENTIFICATION.\u2014 ”(A) IN GENERAL.\u2014A State agency may require that an electronic benefit card contain a photograph of 1 or more members of a household. ”(B) OTHER AUTHORIZED USERS.\u2014If a State agency requires a photograph on an electronic benefit card under subparagraph (A), the State agency shall establish proce- dures to ensure that any other appropriate member of Regulations. Effective date. 110 STAT. 2326 PUBLIC LAW 104 193\u2014AUG. 22, 1996 the household or any authorized representative of the household may utilize the card. ”(10) APPLICABLE LAW.\u2014Disclosures, protections, respon- sibilities, and remedies established by the Federal Reserve Board under section 904 of the Electronic Fund Transfer Act (15 U.S.C. 1693b) shall not apply to benefits under this Act delivered through any electronic benefit transfer system. ”(11) APPLICATION OF ANTI-TYING RESTRICTIONS TO ELEC- TRONIC BENEFIT TRANSFER SYSTEMS.\u2014 ”(A) DEFINITIONS.\u2014In this paragraph: ”(i) AFFILIATE.\u2014The term ‘affiliate’ has the mean- ing provided the term in section 2(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(k)). ”(ii) COMPANY.\u2014The term ‘company’ has the mean- ing provided the term in section 106(a) of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1971), but shall not include a bank, a bank holding company, or any subsidiary of a bank holding company. ”(iii) ELECTRONIC BENEFIT TRANSFER SERVICE.\u2014 The term ‘electronic benefit transfer service’ means the processing of electronic transfers of household benefits, determined under section 8(a) or 26, if the benefits are\u2014 ”(I) issued from and stored in a central databank; ”(II) electronically accessed by household mem- bers at the point of sale; and ”(III) provided by a Federal or State govern- ment. ”(iv) POINT-OF-SALE SERVICE.\u2014The term ‘point-of- sale service’ means any product or service related to the electronic authorization and processing of pay- ments for merchandise at a retail food store, including credit or debit card services, automated teller machines, point-of-sale terminals, or access to on-line systems. ”(B) RESTRICTIONS.\u2014A company may not sell or provide electronic benefit transfer services, or fix or vary the consid- eration for electronic benefit transfer services, on the condi- tion or requirement that the customer\u2014 ”(i) obtain some additional point-of-sale service from the company or an affiliate of the company; or ”(ii) not obtain some additional point-of-sale service from a competitor of the company or competitor of any affiliate of the company. ”(C) CONSULTATION WITH THE FEDERAL RESERVE BOARD.\u2014Before promulgating regulations or interpreta- tions of regulations to carry out this paragraph, the Sec- retary shall consult with the Board of Governors of the Federal Reserve System.”. (b) SENSE OF CONGRESS.\u2014It is the sense of Congress that a State that operates an electronic benefit transfer system under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) should operate the system in a manner that is compatible with electronic benefit transfer systems operated by other States. 110 STAT. 2327PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 826. VALUE OF MINIMUM ALLOTMENT. The proviso in section 8(a) of the Food Stamp Act of 1977 (7 U.S.C. 2017(a)) is amended by striking ”, and shall be adjusted” and all that follows through ”$5”. SEC. 827. BENEFITS ON RECERTIFICATION. Section 8(c)(2)(B) of the Food Stamp Act of 1977 (7 U.S.C. 2017(c)(2)(B)) is amended by striking ”of more than one month”. SEC. 828. OPTIONAL COMBINED ALLOTMENT FOR EXPEDITED HOUSE- HOLDS. Section 8(c) of the Food Stamp Act of 1977 (7 U.S.C. 2017(c)) is amended by striking paragraph (3) and inserting the following: ”(3) OPTIONAL COMBINED ALLOTMENT FOR EXPEDITED HOUSEHOLDS.\u2014A State agency may provide to an eligible house- hold applying after the 15th day of a month, in lieu of the initial allotment of the household and the regular allotment of the household for the following month, an allotment that is equal to the total amount of the initial allotment and the first regular allotment. The allotment shall be provided in accordance with section 11(e)(3) in the case of a household that is not entitled to expedited service and in accordance with paragraphs (3) and (9) of section 11(e) in the case of a household that is entitled to expedited service.”. SEC. 829. FAILURE TO COMPLY WITH OTHER MEANS-TESTED PUBLIC ASSISTANCE PROGRAMS. Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is amended by striking subsection (d) and inserting the following: ”(d) REDUCTION OF PUBLIC ASSISTANCE BENEFITS.\u2014 ”(1) IN GENERAL.\u2014If the benefits of a household are reduced under a Federal, State, or local law relating to a means-tested public assistance program for the failure of a member of the household to perform an action required under the law or program, for the duration of the reduction\u2014 ”(A) the household may not receive an increased allot- ment as the result of a decrease in the income of the household to the extent that the decrease is the result of the reduction; and ”(B) the State agency may reduce the allotment of the household by not more than 25 percent. ”(2) RULES AND PROCEDURES.\u2014If the allotment of a house- hold is reduced under this subsection for a failure to perform an action required under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), the State agency may use the rules and procedures that apply under part A of title IV of the Act to reduce the allotment under the food stamp program.”. SEC. 830. ALLOTMENTS FOR HOUSEHOLDS RESIDING IN CENTERS. Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is amended by adding at the end the following: ”(f) ALLOTMENTS FOR HOUSEHOLDS RESIDING IN CENTERS.\u2014 ”(1) IN GENERAL.\u2014In the case of an individual who resides in a center for the purpose of a drug or alcoholic treatment program described in the last sentence of section 3(i), a State agency may provide an allotment for the individual to\u2014 ”(A) the center as an authorized representative of the individual for a period that is less than 1 month; and 110 STAT. 2328 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) the individual, if the individual leaves the center. ”(2) DIRECT PAYMENT.\u2014A State agency may require an individual referred to in paragraph (1) to designate the center in which the individual resides as the authorized representative of the individual for the purpose of receiving an allotment.”. SEC. 831. CONDITION PRECEDENT FOR APPROVAL OF RETAIL FOOD STORES AND WHOLESALE FOOD CONCERNS. Section 9(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2018(a)(1)) is amended by adding at the end the following: ”No retail food store or wholesale food concern of a type determined by the Secretary, based on factors that include size, location, and type of items sold, shall be approved to be authorized or reauthorized for participation in the food stamp program unless an authorized employee of the Department of Agriculture, a des- ignee of the Secretary, or, if practicable, an official of the State or local government designated by the Secretary has visited the store or concern for the purpose of determining whether the store or concern should be approved or reauthorized, as appropriate.”. SEC. 832. AUTHORITY TO ESTABLISH AUTHORIZATION PERIODS. Section 9(a) of the Food Stamp Act of 1977 (7 U.S.C. 2018(a)) is amended by adding at the end the following: ”(3) AUTHORIZATION PERIODS.\u2014The Secretary shall estab- lish specific time periods during which authorization to accept and redeem coupons, or to redeem benefits through an elec- tronic benefit transfer system, shall be valid under the food stamp program.”. SEC. 833. INFORMATION FOR VERIFYING ELIGIBILITY FOR AUTHORIZATION. Section 9(c) of the Food Stamp Act of 1977 (7 U.S.C. 2018(c)) is amended\u2014 (1) in the first sentence, by inserting ”, which may include relevant income and sales tax filing documents,” after ”submit information”; and (2) by inserting after the first sentence the following: ”The regulations may require retail food stores and wholesale food concerns to provide written authorization for the Secretary to verify all relevant tax filings with appropriate agencies and to obtain corroborating documentation from other sources so that the accuracy of information provided by the stores and concerns may be verified.”. SEC. 834. WAITING PERIOD FOR STORES THAT FAIL TO MEET AUTHORIZATION CRITERIA. Section 9(d) of the Food Stamp Act of 1977 (7 U.S.C. 2018(d)) is amended by adding at the end the following: ”A retail food store or wholesale food concern that is denied approval to accept and redeem coupons because the store or concern does not meet criteria for approval established by the Secretary may not, for at least 6 months, submit a new application to participate in the program. The Secretary may establish a longer time period under the preceding sentence, including permanent disqualification, that reflects the severity of the basis of the denial.”. 110 STAT. 2329PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 835. OPERATION OF FOOD STAMP OFFICES. Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020), as amended by sections 809(b) and 819(b), is amended\u2014 (1) in subsection (e)\u2014 (A) by striking paragraph (2) and inserting the following: ”(2)(A) that the State agency shall establish procedures governing the operation of food stamp offices that the State agency determines best serve households in the State, including households with special needs, such as households with elderly or disabled members, households in rural areas with low-income members, homeless individuals, households residing on reserva- tions, and households in areas in which a substantial number of members of low-income households speak a language other than English. ”(B) In carrying out subparagraph (A), a State agency\u2014 ”(i) shall provide timely, accurate, and fair service to applicants for, and participants in, the food stamp program; ”(ii) shall develop an application containing the information necessary to comply with this Act; ”(iii) shall permit an applicant household to apply to participate in the program on the same day that the house- hold first contacts a food stamp office in person during office hours; ”(iv) shall consider an application that contains the name, address, and signature of the applicant to be filed on the date the applicant submits the application; ”(v) shall require that an adult representative of each applicant household certify in writing, under penalty of perjury, that\u2014 ”(I) the information contained in the application is true; and ”(II) all members of the household are citizens or are aliens eligible to receive food stamps under section 6(f); ”(vi) shall provide a method of certifying and issuing coupons to eligible homeless individuals, to ensure that participation in the food stamp program is limited to eligible households; and ”(vii) may establish operating procedures that vary for local food stamp offices to reflect regional and local differences within the State. ”(C) Nothing in this Act shall prohibit the use of signatures provided and maintained electronically, storage of records using automated retrieval systems only, or any other feature of a State agency’s application system that does not rely exclusively on the collection and retention of paper applications or other records. ”(D) The signature of any adult under this paragraph shall be considered sufficient to comply with any provision of Federal law requiring a household member to sign an application or statement;”; (B) in paragraph (3)\u2014 (i) by striking ”shall\u2014” and all that follows through ”provide each” and inserting ”shall provide each”; and (ii) by striking ”(B) assist” and all that follows through ”representative of the State agency;”; Regulations. 110 STAT. 2330 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (C) by striking paragraphs (14) and (25); (D)(i) by redesignating paragraphs (15) through (24) as paragraphs (14) through (23), respectively; and (ii) by redesignating paragraph (26), as paragraph (24); and (2) in subsection (i)\u2014 (A) by striking ”(i) Notwithstanding” and all that fol- lows through ”(2)” and inserting the following: ”(i) APPLICATION AND DENIAL PROCEDURES.\u2014 ”(1) APPLICATION PROCEDURES.\u2014Notwithstanding any other provision of law,”; and (B) by striking ”; (3) households” and all that follows through ”title IV of the Social Security Act. No” and insert- ing a period and the following: ”(2) DENIAL AND TERMINATION.\u2014Except in a case of disqualification as a penalty for failure to comply with a public assistance program rule or regulation, no”. SEC. 836. STATE EMPLOYEE AND TRAINING STANDARDS. Section 11(e)(6) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(6)) is amended\u2014 (1) by striking ”that (A) the” and inserting ”that\u2014 ”(A) the”; (2) by striking ”Act; (B) the” and inserting ”Act; and ”(B) the”; (3) in subparagraph (B), by striking ”United States Civil Service Commission” and inserting ”Office of Personnel Management”; and (4) by striking subparagraphs (C) through (E). SEC. 837. EXCHANGE OF LAW ENFORCEMENT INFORMATION. Section 11(e)(8) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(8)) is amended\u2014 (1) by striking ”that (A) such” and inserting the follow- ing: ”that\u2014 ”(A) the”; (2) by striking ”law, (B) notwithstanding” and inserting the following: ”law; ”(B) notwithstanding”; (3) by striking ”Act, and (C) such” and inserting the follow- ing: ”Act; ”(C) the”; and (4) by adding at the end the following: ”(D) notwithstanding any other provision of law, the address, social security number, and, if available, photo- graph of any member of a household shall be made avail- able, on request, to any Federal, State, or local law enforce- ment officer if the officer furnishes the State agency with the name of the member and notifies the agency that\u2014 ”(i) the member\u2014 ”(I) is fleeing to avoid prosecution, or custody or confinement after conviction, for a crime (or attempt to commit a crime) that, under the law of the place the member is fleeing, is a felony (or, in the case of New Jersey, a high mis- demeanor), or is violating a condition of probation or parole imposed under Federal or State law; or 110 STAT. 2331PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(II) has information that is necessary for the officer to conduct an official duty related to sub- clause (I); ”(ii) locating or apprehending the member is an official duty; and ”(iii) the request is being made in the proper exer- cise of an official duty; and ”(E) the safeguards shall not prevent compliance with paragraph (16);”. SEC. 838. EXPEDITED COUPON SERVICE. Section 11(e)(9) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(9)) is amended\u2014 (1) in subparagraph (A), by striking ”five days” and insert- ing ”7 days”; (2) by striking subparagraph (B); (3) by redesignating subparagraphs (C) and (D) as subpara- graphs (B) and (C); (4) in subparagraph (B), as redesignated by paragraph (3), by striking ”five days” and inserting ”7 days”; and (5) in subparagraph (C), as redesignated by paragraph (3), by striking ”, (B), or (C)” and inserting ”or (B)”. SEC. 839. WITHDRAWING FAIR HEARING REQUESTS. Section 11(e)(10) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(10)) is amended by inserting before the semicolon at the end a period and the following: ”At the option of a State, at any time prior to a fair hearing determination under this paragraph, a household may withdraw, orally or in writing, a request by the household for the fair hearing. If the withdrawal request is an oral request, the State agency shall provide a written notice to the household confirming the withdrawal request and providing the household with an opportunity to request a hearing”. SEC. 840. INCOME, ELIGIBILITY, AND IMMIGRATION STATUS VERIFICA- TION SYSTEMS. Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020) is amended\u2014 (1) in subsection (e)(18), as redesignated by section 835(1)(D)\u2014 (A) by striking ”that information is” and inserting ”at the option of the State agency, that information may be”; and (B) by striking ”shall be requested” and inserting ”may be requested”; and (2) by adding at the end the following: ”(p) STATE VERIFICATION OPTION.\u2014Notwithstanding any other provision of law, in carrying out the food stamp program, a State agency shall not be required to use an income and eligibility or an immigration status verification system established under section 1137 of the Social Security Act (42 U.S.C. 1320b 7).”. SEC. 841. INVESTIGATIONS. Section 12(a) of the Food Stamp Act of 1977 (7 U.S.C. 2021(a)) is amended by adding at the end the following: ”Regulations issued pursuant to this Act shall provide criteria for the finding of a violation and the suspension or disqualification of a retail food store or wholesale food concern on the basis of evidence that may Regulations. Notice. 110 STAT. 2332 PUBLIC LAW 104 193\u2014AUG. 22, 1996 include facts established through on-site investigations, inconsistent redemption data, or evidence obtained through a transaction report under an electronic benefit transfer system.”. SEC. 842. DISQUALIFICATION OF RETAILERS WHO INTENTIONALLY SUBMIT FALSIFIED APPLICATIONS. Section 12(b) of the Food Stamp Act of 1977 (7 U.S.C. 2021(b)) is amended\u2014 (1) in paragraph (2), by striking ”and” at the end; (2) in paragraph (3), by striking the period at the end and inserting ”; and”; and (3) by adding at the end the following: ”(4) for a reasonable period of time to be determined by the Secretary, including permanent disqualification, on the knowing submission of an application for the approval or reauthorization to accept and redeem coupons that contains false information about a substantive matter that was a part of the application.”. SEC. 843. DISQUALIFICATION OF RETAILERS WHO ARE DISQUALIFIED UNDER THE WIC PROGRAM. Section 12 of the Food Stamp Act of 1977 (7 U.S.C. 2021) is amended by adding at the end the following: ”(g) DISQUALIFICATION OF RETAILERS WHO ARE DISQUALIFIED UNDER THE WIC PROGRAM.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall issue regulations providing criteria for the disqualification under this Act of an approved retail food store or a wholesale food concern that is disqualified from accepting benefits under the special supple- mental nutrition program for women, infants, and children established under section 17 of the Child Nutrition Act of 1966 (7 U.S.C. 1786). ”(2) TERMS.\u2014A disqualification under paragraph (1)\u2014 ”(A) shall be for the same length of time as the disquali- fication from the program referred to in paragraph (1); ”(B) may begin at a later date than the disqualification from the program referred to in paragraph (1); and ”(C) notwithstanding section 14, shall not be subject to judicial or administrative review.”. SEC. 844. COLLECTION OF OVERISSUANCES. (a) COLLECTION OF OVERISSUANCES.\u2014Section 13 of the Food Stamp Act of 1977 (7 U.S.C. 2022) is amended\u2014 (1) by striking subsection (b) and inserting the following: ”(b) COLLECTION OF OVERISSUANCES.\u2014 ”(1) IN GENERAL.\u2014Except as otherwise provided in this subsection, a State agency shall collect any overissuance of coupons issued to a household by\u2014 ”(A) reducing the allotment of the household; ”(B) withholding amounts from unemployment com- pensation from a member of the household under sub- section (c); ”(C) recovering from Federal pay or a Federal income tax refund under subsection (d); or ”(D) any other means. ”(2) COST EFFECTIVENESS.\u2014Paragraph (1) shall not apply if the State agency demonstrates to the satisfaction of the Regulations. 110 STAT. 2333PUBLIC LAW 104 193\u2014AUG. 22, 1996 Secretary that all of the means referred to in paragraph (1) are not cost effective. ”(3) MAXIMUM REDUCTION ABSENT FRAUD.\u2014If a household received an overissuance of coupons without any member of the household being found ineligible to participate in the pro- gram under section 6(b)(1) and a State agency elects to reduce the allotment of the household under paragraph (1)(A), the State agency shall not reduce the monthly allotment of the household under paragraph (1)(A) by an amount in excess of the greater of\u2014 ”(A) 10 percent of the monthly allotment of the house- hold; or ”(B) $10. ”(4) PROCEDURES.\u2014A State agency shall collect an overissu- ance of coupons issued to a household under paragraph (1) in accordance with the requirements established by the State agency for providing notice, electing a means of payment, and establishing a time schedule for payment.”; and (2) in subsection (d)\u2014 (A) by striking ”as determined under subsection (b) and except for claims arising from an error of the State agency,” and inserting ”, as determined under subsection (b)(1),”; and (B) by inserting before the period at the end the follow- ing: ”or a Federal income tax refund as authorized by section 3720A of title 31, United States Code”. (b) CONFORMING AMENDMENTS.\u2014Section 11(e)(8)(C) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(8)(C)) is amended\u2014 (1) by striking ”and excluding claims” and all that follows through ”such section”; and (2) by inserting before the semicolon at the end the following: ”or a Federal income tax refund as authorized by section 3720A of title 31, United States Code”. (c) RETENTION RATE.\u2014The proviso of the first sentence of sec- tion 16(a) of the Food Stamp Act of 1977 (7 U.S.C. 2025(a)) is amended by striking ”25 percent during the period beginning October 1, 1990” and all that follows through ”section 13(b)(2) which arise” and inserting ”35 percent of the value of all funds or allotments recovered or collected pursuant to sections 6(b) and 13(c) and 20 percent of the value of any other funds or allot- ments recovered or collected, except the value of funds or allotments recovered or collected that arise”. SEC. 845. AUTHORITY TO SUSPEND STORES VIOLATING PROGRAM REQUIREMENTS PENDING ADMINISTRATIVE AND JUDICIAL REVIEW. Section 14(a) of the Food Stamp Act of 1977 (7 U.S.C. 2023(a)) is amended\u2014 (1) by redesignating the first through seventeenth sen- tences as paragraphs (1) through (17), respectively; and (2) by adding at the end the following: ”(18) SUSPENSION OF STORES PENDING REVIEW.\u2014Notwith- standing any other provision of this subsection, any permanent disqualification of a retail food store or wholesale food concern under paragraph (3) or (4) of section 12(b) shall be effective from the date of receipt of the notice of disqualification. If the disqualification is reversed through administrative or Effective date. 110 STAT. 2334 PUBLIC LAW 104 193\u2014AUG. 22, 1996 judicial review, the Secretary shall not be liable for the value of any sales lost during the disqualification period.”. SEC. 846. EXPANDED CRIMINAL FORFEITURE FOR VIOLATIONS. (a) FORFEITURE OF ITEMS EXCHANGED IN FOOD STAMP TRAFFICKING.\u2014The first sentence of section 15(g) of the Food Stamp Act of 1977 (7 U.S.C. 2024(g)) is amended by striking ”or intended to be furnished”. (b) CRIMINAL FORFEITURE.\u2014Section 15 of the Food Stamp Act of 1977 (7 U.S.C. 2024) is amended by adding at the end the following: ”(h) CRIMINAL FORFEITURE.\u2014 ”(1) IN GENERAL.\u2014In imposing a sentence on a person convicted of an offense in violation of subsection (b) or (c), a court shall order, in addition to any other sentence imposed under this section, that the person forfeit to the United States all property described in paragraph (2). ”(2) PROPERTY SUBJECT TO FORFEITURE.\u2014All property, real and personal, used in a transaction or attempted transaction, to commit, or to facilitate the commission of, a violation (other than a misdemeanor) of subsection (b) or (c), or proceeds trace- able to a violation of subsection (b) or (c), shall be subject to forfeiture to the United States under paragraph (1). ”(3) INTEREST OF OWNER.\u2014No interest in property shall be forfeited under this subsection as the result of any act or omission established by the owner of the interest to have been committed or omitted without the knowledge or consent of the owner. ”(4) PROCEEDS.\u2014The proceeds from any sale of forfeited property and any monies forfeited under this subsection shall be used\u2014 ”(A) first, to reimburse the Department of Justice for the costs incurred by the Department to initiate and com- plete the forfeiture proceeding; ”(B) second, to reimburse the Department of Agri- culture Office of Inspector General for any costs the Office incurred in the law enforcement effort resulting in the forfeiture; ”(C) third, to reimburse any Federal or State law enforcement agency for any costs incurred in the law enforcement effort resulting in the forfeiture; and ”(D) fourth, by the Secretary to carry out the approval, reauthorization, and compliance investigations of retail stores and wholesale food concerns under section 9.”. SEC. 847. LIMITATION ON FEDERAL MATCH. Section 16(a)(4) of the Food Stamp Act of 1977 (7 U.S.C. 2025(a)(4)) is amended by inserting after the comma at the end the following: ”but not including recruitment activities,”. SEC. 848. STANDARDS FOR ADMINISTRATION. (a) IN GENERAL.\u2014Section 16 of the Food Stamp Act of 1977 (7 U.S.C. 2025) is amended by striking subsection (b). (b) CONFORMING AMENDMENTS.\u2014 (1) The first sentence of section 11(g) of the Food Stamp Act of 1977 (7 U.S.C. 2020(g)) is amended by striking ”the Secretary’s standards for the efficient and effective administra- tion of the program established under section 16(b)(1) or”. 110 STAT. 2335PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) Section 16(c)(1)(B) of the Food Stamp Act of 1977 (7 U.S.C. 2025(c)(1)(B)) is amended by striking ”pursuant to sub- section (b)”. SEC. 849. WORK SUPPLEMENTATION OR SUPPORT PROGRAM. Section 16 of the Food Stamp Act of 1977 (7 U.S.C. 2025), as amended by section 848(a), is amended by inserting after sub- section (a) the following: ”(b) WORK SUPPLEMENTATION OR SUPPORT PROGRAM.\u2014 ”(1) DEFINITION OF WORK SUPPLEMENTATION OR SUPPORT PROGRAM.\u2014In this subsection, the term ‘work supplementation or support program’ means a program under which, as deter- mined by the Secretary, public assistance (including any bene- fits provided under a program established by the State and the food stamp program) is provided to an employer to be used for hiring and employing a public assistance recipient who was not employed by the employer at the time the public assistance recipient entered the program. ”(2) PROGRAM.\u2014A State agency may elect to use an amount equal to the allotment that would otherwise be issued to a household under the food stamp program, but for the operation of this subsection, for the purpose of subsidizing or supporting a job under a work supplementation or support program estab- lished by the State. ”(3) PROCEDURE.\u2014If a State agency makes an election under paragraph (2) and identifies each household that partici- pates in the food stamp program that contains an individual who is participating in the work supplementation or support program\u2014 ”(A) the Secretary shall pay to the State agency an amount equal to the value of the allotment that the house- hold would be eligible to receive but for the operation of this subsection; ”(B) the State agency shall expend the amount received under subparagraph (A) in accordance with the work supplementation or support program in lieu of providing the allotment that the household would receive but for the operation of this subsection; ”(C) for purposes of\u2014 ”(i) sections 5 and 8(a), the amount received under this subsection shall be excluded from household income and resources; and ”(ii) section 8(b), the amount received under this subsection shall be considered to be the value of an allotment provided to the household; and ”(D) the household shall not receive an allotment from the State agency for the period during which the member continues to participate in the work supplementation or support program. ”(4) OTHER WORK REQUIREMENTS.\u2014No individual shall be excused, by reason of the fact that a State has a work supplementation or support program, from any work require- ment under section 6(d), except during the periods in which the individual is employed under the work supplementation or support program. ”(5) LENGTH OF PARTICIPATION.\u2014A State agency shall provide a description of how the public assistance recipients 110 STAT. 2336 PUBLIC LAW 104 193\u2014AUG. 22, 1996 in the program shall, within a specific period of time, be moved from supplemented or supported employment to employment that is not supplemented or supported. ”(6) DISPLACEMENT.\u2014A work supplementation or support program shall not displace the employment of individuals who are not supplemented or supported.”. SEC. 850. WAIVER AUTHORITY. Section 17(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2026(b)(1)) is amended\u2014 (1) by redesignating subparagraph (B) as subparagraph (C); and (2) in subparagraph (A)\u2014 (A) in the first sentence, by striking ”benefits to eligible households, including” and inserting the following: ”benefits to eligible households, and may waive any requirement of this Act to the extent necessary for the project to be conducted. ”(B) PROJECT REQUIREMENTS.\u2014 ”(i) PROGRAM GOAL.\u2014The Secretary may not con- duct a project under subparagraph (A) unless\u2014 ”(I) the project is consistent with the goal of the food stamp program of providing food assist- ance to raise levels of nutrition among low-income individuals; and ”(II) the project includes an evaluation to determine the effects of the project. ”(ii) PERMISSIBLE PROJECTS.\u2014The Secretary may conduct a project under subparagraph (A) to\u2014 ”(I) improve program administration; ”(II) increase the self-sufficiency of food stamp recipients; ”(III) test innovative welfare reform strate- gies; or ”(IV) allow greater conformity with the rules of other programs than would be allowed but for this paragraph. ”(iii) RESTRICTIONS ON PERMISSIBLE PROJECTS.\u2014 If the Secretary finds that a project under subpara- graph (A) would reduce benefits by more than 20 per- cent for more than 5 percent of households in the area subject to the project (not including any household whose benefits are reduced due to a failure to comply with work or other conduct requirements), the project\u2014 ”(I) may not include more than 15 percent of the State’s food stamp households; and ”(II) shall continue for not more than 5 years after the date of implementation, unless the Sec- retary approves an extension requested by the State agency at any time. ”(iv) IMPERMISSIBLE PROJECTS.\u2014The Secretary may not conduct a project under subparagraph (A) that\u2014 ”(I) involves the payment of the value of an allotment in the form of cash, unless the project was approved prior to the date of enactment of this subparagraph; 110 STAT. 2337PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(II) has the effect of substantially transferring funds made available under this Act to services or benefits provided primarily through another public assistance program, or using the funds for any purpose other than the purchase of food, pro- gram administration, or an employment or train- ing program; ”(III) is inconsistent with\u2014 ”(aa) the last 2 sentences of section 3(i); ”(bb) the last sentence of section 5(a), insofar as a waiver denies assistance to an otherwise eligible household or individual if the household or individual has not failed to comply with any work, behavioral, or other conduct requirement under this or another program; ”(cc) section 5(c)(2); ”(dd) paragraph (2)(B), (4)(F)(i), or (4)(K) of section 6(d); ”(ee) section 8(b); ”(ff) section 11(e)(2)(B); ”(gg) the time standard under section 11(e)(3); ”(hh) subsection (a), (c), (g), (h)(2), or (h)(3) of section 16; ”(ii) this paragraph; or ”(jj) subsection (a)(1) or (g)(1) of sec- tion 20; ”(IV) modifies the operation of section 5 so as to have the effect of\u2014 ”(aa) increasing the shelter deduction to households with no out-of-pocket housing costs or housing costs that consume a low percent- age of the household’s income; or ”(bb) absolving a State from acting with reasonable promptness on substantial reported changes in income or household size (except that this subclause shall not apply with regard to changes related to food stamp deductions); ”(V) is not limited to a specific time period; or ”(VI) waives a provision of section 26. ”(v) ADDITIONAL INCLUDED PROJECTS.\u2014A pilot or experimental project may include”; (B) by striking ”to aid to families with dependent chil- dren under part A of title IV of the Social Security Act” and inserting ”are receiving assistance under a State pro- gram funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)”; and (C) by striking ”coupons. The Secretary” and all that follows through ”Any pilot” and inserting the following: ”coupons. ”(vi) CASH PAYMENT PILOT PROJECTS.\u2014Any pilot”. 110 STAT. 2338 PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 851. RESPONSE TO WAIVERS. Section 17(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2026(b)(1)), as amended by section 850, is amended by adding at the end the following: ”(D) RESPONSE TO WAIVERS.\u2014 ”(i) RESPONSE.\u2014Not later than 60 days after the date of receiving a request for a waiver under subpara- graph (A), the Secretary shall provide a response that\u2014 ”(I) approves the waiver request; ”(II) denies the waiver request and describes any modification needed for approval of the waiver request; ”(III) denies the waiver request and describes the grounds for the denial; or ”(IV) requests clarification of the waiver request. ”(ii) FAILURE TO RESPOND.\u2014If the Secretary does not provide a response in accordance with clause (i), the waiver shall be considered approved, unless the approval is specifically prohibited by this Act. ”(iii) NOTICE OF DENIAL.\u2014On denial of a waiver request under clause (i)(III), the Secretary shall pro- vide a copy of the waiver request and a description of the reasons for the denial to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate.”. SEC. 852. EMPLOYMENT INITIATIVES PROGRAM. Section 17 of the Food Stamp Act of 1977 (7 U.S.C. 2026) is amended by striking subsection (d) and inserting the following: ”(d) EMPLOYMENT INITIATIVES PROGRAM.\u2014 ”(1) ELECTION TO PARTICIPATE.\u2014 ”(A) IN GENERAL.\u2014Subject to the other provisions of this subsection, a State may elect to carry out an employ- ment initiatives program under this subsection. ”(B) REQUIREMENT.\u2014A State shall be eligible to carry out an employment initiatives program under this sub- section only if not less than 50 percent of the households in the State that received food stamp benefits during the summer of 1993 also received benefits under a State pro- gram funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) during the summer of 1993. ”(2) PROCEDURE.\u2014 ”(A) IN GENERAL.\u2014A State that has elected to carry out an employment initiatives program under paragraph (1) may use amounts equal to the food stamp allotments that would otherwise be issued to a household under the food stamp program, but for the operation of this sub- section, to provide cash benefits in lieu of the food stamp allotments to the household if the household is eligible under paragraph (3). ”(B) PAYMENT.\u2014The Secretary shall pay to each State that has elected to carry out an employment initiatives program under paragraph (1) an amount equal to the value of the allotment that each household participating in the 110 STAT. 2339PUBLIC LAW 104 193\u2014AUG. 22, 1996 program in the State would be eligible to receive under this Act but for the operation of this subsection. ”(C) OTHER PROVISIONS.\u2014For purposes of the food stamp program (other than this subsection)\u2014 ”(i) cash assistance under this subsection shall be considered to be an allotment; and ”(ii) each household receiving cash benefits under this subsection shall not receive any other food stamp benefit during the period for which the cash assistance is provided. ”(D) ADDITIONAL PAYMENTS.\u2014Each State that has elected to carry out an employment initiatives program under paragraph (1) shall\u2014 ”(i) increase the cash benefits provided to each household participating in the program in the State under this subsection to compensate for any State or local sales tax that may be collected on purchases of food by the household, unless the Secretary deter- mines on the basis of information provided by the State that the increase is unnecessary on the basis of the limited nature of the items subject to the State or local sales tax; and ”(ii) pay the cost of any increase in cash benefits required by clause (i). ”(3) ELIGIBILITY.\u2014A household shall be eligible to receive cash benefits under paragraph (2) if an adult member of the household\u2014 ”(A) has worked in unsubsidized employment for not less than the preceding 90 days; ”(B) has earned not less than $350 per month from the employment referred to in subparagraph (A) for not less than the preceding 90 days; ”(C)(i) is receiving benefits under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.); or ”(ii) was receiving benefits under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) at the time the member first received cash benefits under this subsection and is no longer eligible for the State program because of earned income; ”(D) is continuing to earn not less than $350 per month from the employment referred to in subparagraph (A); and ”(E) elects to receive cash benefits in lieu of food stamp benefits under this subsection. ”(4) EVALUATION.\u2014A State that operates a program under this subsection for 2 years shall provide to the Secretary a written evaluation of the impact of cash assistance under this subsection. The State agency, with the concurrence of the Sec- retary, shall determine the content of the evaluation.”. SEC. 853. REAUTHORIZATION. The first sentence of section 18(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2027(a)(1)) is amended by striking ”1991 through 1997” and inserting ”1996 through 2002”. 110 STAT. 2340 PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 854. SIMPLIFIED FOOD STAMP PROGRAM. (a) IN GENERAL.\u2014The Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) is amended by adding at the end the following: ”SEC. 26. SIMPLIFIED FOOD STAMP PROGRAM. ”(a) DEFINITION OF FEDERAL COSTS.\u2014In this section, the term ‘Federal costs’ does not include any Federal costs incurred under section 17. ”(b) ELECTION.\u2014Subject to subsection (d), a State may elect to carry out a Simplified Food Stamp Program (referred to in this section as a ‘Program’), statewide or in a political subdivision of the State, in accordance with this section. ”(c) OPERATION OF PROGRAM.\u2014If a State elects to carry out a Program, within the State or a political subdivision of the State\u2014 ”(1) a household in which no members receive assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) may not partici- pate in the Program; ”(2) a household in which all members receive assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) shall automati- cally be eligible to participate in the Program; ”(3) if approved by the Secretary, a household in which 1 or more members but not all members receive assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) may be eligible to participate in the Program; and ”(4) subject to subsection (f), benefits under the Program shall be determined under rules and procedures established by the State under\u2014 ”(A) a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.); ”(B) the food stamp program; or ”(C) a combination of a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) and the food stamp program. ”(d) APPROVAL OF PROGRAM.\u2014 ”(1) STATE PLAN.\u2014A State agency may not operate a Pro- gram unless the Secretary approves a State plan for the oper- ation of the Program under paragraph (2). ”(2) APPROVAL OF PLAN.\u2014The Secretary shall approve any State plan to carry out a Program if the Secretary determines that the plan\u2014 ”(A) complies with this section; and ”(B) contains sufficient documentation that the plan will not increase Federal costs for any fiscal year. ”(e) INCREASED FEDERAL COSTS.\u2014 ”(1) DETERMINATION.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall determine whether a Program being carried out by a State agency is increasing Federal costs under this Act. ”(B) NO EXCLUDED HOUSEHOLDS.\u2014In making a deter- mination under subparagraph (A), the Secretary shall not require the State agency to collect or report any information on households not included in the Program. ”(C) ALTERNATIVE ACCOUNTING PERIODS.\u2014The Sec- retary may approve the request of a State agency to apply 7 USC 2035. 110 STAT. 2341PUBLIC LAW 104 193\u2014AUG. 22, 1996 alternative accounting periods to determine if Federal costs do not exceed the Federal costs had the State agency not elected to carry out the Program. ”(2) NOTIFICATION.\u2014If the Secretary determines that the Program has increased Federal costs under this Act for any fiscal year or any portion of any fiscal year, the Secretary shall notify the State not later than 30 days after the Secretary makes the determination under paragraph (1). ”(3) ENFORCEMENT.\u2014 ”(A) CORRECTIVE ACTION.\u2014Not later than 90 days after the date of a notification under paragraph (2), the State shall submit a plan for approval by the Secretary for prompt corrective action that is designed to prevent the Program from increasing Federal costs under this Act. ”(B) TERMINATION.\u2014If the State does not submit a plan under subparagraph (A) or carry out a plan approved by the Secretary, the Secretary shall terminate the approval of the State agency operating the Program and the State agency shall be ineligible to operate a future Program. ”(f) RULES AND PROCEDURES.\u2014 ”(1) IN GENERAL.\u2014In operating a Program, a State or politi- cal subdivision of a State may follow the rules and procedures established by the State or political subdivision under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) or under the food stamp program. ”(2) STANDARDIZED DEDUCTIONS.\u2014In operating a Program, a State or political subdivision of a State may standardize the deductions provided under section 5(e). In developing the standardized deduction, the State shall consider the work expenses, dependent care costs, and shelter costs of participat- ing households. ”(3) REQUIREMENTS.\u2014In operating a Program, a State or political subdivision shall comply with the requirements of\u2014 ”(A) subsections (a) through (g) of section 7; ”(B) section 8(a) (except that the income of a household may be determined under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)); ”(C) subsection (b) and (d) of section 8; ”(D) subsections (a), (c), (d), and (n) of section 11; ”(E) paragraphs (8), (12), (16), (18), (20), (24), and (25) of section 11(e); ”(F) section 11(e)(10) (or a comparable requirement established by the State under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)); and ”(G) section 16. ”(4) LIMITATION ON ELIGIBILITY.\u2014Notwithstanding any other provision of this section, a household may not receive benefits under this section as a result of the eligibility of the household under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), unless the Secretary determines that any household with income above 130 percent of the poverty guidelines is not eligible for the program.”. 110 STAT. 2342 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (b) STATE PLAN PROVISIONS.\u2014Section 11(e) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)), as amended by sections 819(b) and 835, is amended by adding at the end the following: ”(25) if a State elects to carry out a Simplified Food Stamp Program under section 26, the plans of the State agency for operating the program, including\u2014 ”(A) the rules and procedures to be followed by the State agency to determine food stamp benefits; ”(B) how the State agency will address the needs of households that experience high shelter costs in relation to the incomes of the households; and ”(C) a description of the method by which the State agency will carry out a quality control system under section 16(c).”. (c) CONFORMING AMENDMENTS.\u2014 (1) Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017), as amended by section 830, is amended\u2014 (A) by striking subsection (e); and (B) by redesignating subsection (f) as subsection (e). (2) Section 17 of the Food Stamp Act of 1977 (7 U.S.C. 2026) is amended\u2014 (A) by striking subsection (i); and (B) by redesignating subsections (j) through (l) as sub- sections (i) through (k), respectively. SEC. 855. STUDY OF THE USE OF FOOD STAMPS TO PURCHASE VITAMINS AND MINERALS. (a) IN GENERAL.\u2014The Secretary of Agriculture, in consultation with the National Academy of Sciences and the Center for Disease Control and Prevention, shall conduct a study on the use of food stamps provided under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) to purchase vitamins and minerals. (b) ANALYSIS.\u2014The study shall include\u2014 (1) an analysis of scientific findings on the efficacy of and need for vitamins and minerals, including\u2014 (A) the adequacy of vitamin and mineral intakes in low-income populations, as shown by research and surveys conducted prior to the study; and (B) the potential value of nutritional supplements in filling nutrient gaps that may exist in the United States population as a whole or in vulnerable subgroups in the population; (2) the impact of nutritional improvements (including vita- min or mineral supplementation) on the health status and health care costs of women of childbearing age, pregnant or lactating women, and the elderly; (3) the cost of commercially available vitamin and mineral supplements; (4) the purchasing habits of low-income populations with regard to vitamins and minerals; (5) the impact of using food stamps to purchase vitamins and minerals on the food purchases of low-income house- holds; and (6) the economic impact on the production of agricultural commodities of using food stamps to purchase vitamins and minerals. 7 USC 2026 note. 110 STAT. 2343PUBLIC LAW 104 193\u2014AUG. 22, 1996 (c) REPORT.\u2014Not later than December 15, 1998, the Secretary shall report the results of the study to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate. SEC. 856. DEFICIT REDUCTION. It is the sense of the Committee on Agriculture of the House of Representatives that reductions in outlays resulting from this title shall not be taken into account for purposes of section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 902). Subtitle B\u2014Commodity Distribution Programs SEC. 871. EMERGENCY FOOD ASSISTANCE PROGRAM. (a) DEFINITIONS.\u2014Section 201A of the Emergency Food Assist- ance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended to read as follows: ”SEC. 201A. DEFINITIONS. ”In this Act: ”(1) ADDITIONAL COMMODITIES.\u2014The term ‘additional commodities’ means commodities made available under section 214 in addition to the commodities made available under sec- tions 202 and 203D. ”(2) AVERAGE MONTHLY NUMBER OF UNEMPLOYED PERSONS.\u2014The term ‘average monthly number of unemployed persons’ means the average monthly number of unemployed persons in each State during the most recent fiscal year for which information concerning the number of unemployed per- sons is available, as determined by the Bureau of Labor Statis- tics of the Department of Labor. ”(3) ELIGIBLE RECIPIENT AGENCY.\u2014The term ‘eligible recipi- ent agency’ means a public or nonprofit organiza- tion that\u2014 ”(A) administers\u2014 ”(i) an emergency feeding organization; ”(ii) a charitable institution (including a hospital and a retirement home, but excluding a penal institu- tion) to the extent that the institution serves needy persons; ”(iii) a summer camp for children, or a child nutri- tion program providing food service; ”(iv) a nutrition project operating under the Older Americans Act of 1965 (42 U.S.C. 3001 et seq.), includ- ing a project that operates a congregate nutrition site and a project that provides home-delivered meals; or ”(v) a disaster relief program; ”(B) has been designated by the appropriate State agency, or by the Secretary; and ”(C) has been approved by the Secretary for participa- tion in the program established under this Act. ”(4) EMERGENCY FEEDING ORGANIZATION.\u2014The term ’emer- gency feeding organization’ means a public or nonprofit organization that administers activities and projects (including 110 STAT. 2344 PUBLIC LAW 104 193\u2014AUG. 22, 1996 the activities and projects of a charitable institution, a food bank, a food pantry, a hunger relief center, a soup kitchen, or a similar public or private nonprofit eligible recipient agency) providing nutrition assistance to relieve situations of emergency and distress through the provision of food to needy persons, including low-income and unemployed persons. ”(5) FOOD BANK.\u2014The term ‘food bank’ means a public or charitable institution that maintains an established oper- ation involving the provision of food or edible commodities, or the products of food or edible commodities, to food pantries, soup kitchens, hunger relief centers, or other food or feeding centers that, as an integral part of their normal activities, provide meals or food to feed needy persons on a regular basis. ”(6) FOOD PANTRY.\u2014The term ‘food pantry’ means a public or private nonprofit organization that distributes food to low- income and unemployed households, including food from sources other than the Department of Agriculture, to relieve situations of emergency and distress. ”(7) POVERTY LINE.\u2014The term ‘poverty line’ has the mean- ing provided in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)). ”(8) SOUP KITCHEN.\u2014The term ‘soup kitchen’ means a pub- lic or charitable institution that, as an integral part of the normal activities of the institution, maintains an established feeding operation to provide food to needy homeless persons on a regular basis. ”(9) TOTAL VALUE OF ADDITIONAL COMMODITIES.\u2014The term ‘total value of additional commodities’ means the actual cost of all additional commodities that are paid by the Secretary (including the distribution and processing costs incurred by the Secretary). ”(10) VALUE OF ADDITIONAL COMMODITIES ALLOCATED TO EACH STATE.\u2014The term ‘value of additional commodities allo- cated to each State’ means the actual cost of additional commod- ities allocated to each State that are paid by the Secretary (including the distribution and processing costs incurred by the Secretary).”. (b) STATE PLAN.\u2014Section 202A of the Emergency Food Assist- ance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended to read as follows: ”SEC. 202A. STATE PLAN. ”(a) IN GENERAL.\u2014To receive commodities under this Act, a State shall submit a plan of operation and administration every 4 years to the Secretary for approval. The plan may be amended at any time, with the approval of the Secretary. ”(b) REQUIREMENTS.\u2014Each plan shall\u2014 ”(1) designate the State agency responsible for distributing the commodities received under this Act; ”(2) set forth a plan of operation and administration to expeditiously distribute commodities under this Act; ”(3) set forth the standards of eligibility for recipient agen- cies; and ”(4) set forth the standards of eligibility for individual or household recipients of commodities, which shall require\u2014 ”(A) individuals or households to be comprised of needy persons; and 110 STAT. 2345PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) individual or household members to be residing in the geographic location served by the distributing agency at the time of applying for assistance. ”(c) STATE ADVISORY BOARD.\u2014The Secretary shall encourage each State receiving commodities under this Act to establish a State advisory board consisting of representatives of all entities in the State, both public and private, interested in the distribution of commodities received under this Act.”. (c) AUTHORIZATION OF APPROPRIATIONS FOR ADMINISTRATIVE FUNDS.\u2014Section 204(a)(1) of the Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended\u2014 (1) in the first sentence, by striking ”for State and local” and all that follows through ”under this title” and inserting ”to pay for the direct and indirect administrative costs of the States related to the processing, transporting, and distributing to eligible recipient agencies of commodities provided by the Secretary under this Act and commodities secured from other sources”; and (2) by striking the fourth sentence. (d) DELIVERY OF COMMODITIES.\u2014Section 214 of the Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended\u2014 (1) by striking subsections (a) through (e) and (j); (2) by redesignating subsections (f) through (i) as sub- sections (a) through (d), respectively; (3) in subsection (b), as redesignated by paragraph (2)\u2014 (A) in the first sentence, by striking ”subsection (f) or subsection (j) if applicable,” and inserting ”subsection (a),”; and (B) in the second sentence, by striking ”subsection (f)” and inserting ”subsection (a)”; (4) by striking subsection (c), as redesignated by paragraph (2), and inserting the following: ”(c) ADMINISTRATION.\u2014 ”(1) IN GENERAL.\u2014Commodities made available for each fiscal year under this section shall be delivered at reasonable intervals to States based on the grants calculated under sub- section (a), or reallocated under subsection (b), before December 31 of the following fiscal year. ”(2) ENTITLEMENT.\u2014Each State shall be entitled to receive the value of additional commodities determined under sub- section (a).”; and (5) in subsection (d), as redesignated by paragraph (2), by striking ”or reduce” and all that follows through ”each fiscal year”. (e) TECHNICAL AMENDMENTS.\u2014The Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended\u2014 (1) in the first sentence of section 203B(a), by striking ”203 and 203A of this Act” and inserting ”203A”; (2) in section 204(a), by striking ”title” each place it appears and inserting ”Act”; (3) in the first sentence of section 210(e), by striking ”(except as otherwise provided for in section 214(j))”; and (4) by striking section 212. (f) REPORT ON EFAP.\u2014Section 1571 of the Food Security Act of 1985 (Public Law 99 198; 7 U.S.C. 612c note) is repealed. 110 STAT. 2346 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (g) AVAILABILITY OF COMMODITIES UNDER THE FOOD STAMP PROGRAM.\u2014The Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), as amended by section 854(a), is amended by adding at the end the following: ”SEC. 27. AVAILABILITY OF COMMODITIES FOR THE EMERGENCY FOOD ASSISTANCE PROGRAM. ”(a) PURCHASE OF COMMODITIES.\u2014From amounts made avail- able to carry out this Act, for each of fiscal years 1997 through 2002, the Secretary shall purchase $100,000,000 of a variety of nutritious and useful commodities of the types that the Secretary has the authority to acquire through the Commodity Credit Corpora- tion or under section 32 of the Act entitled ‘An Act to amend the Agricultural Adjustment Act, and for other purposes’, approved August 24, 1935 (7 U.S.C. 612c), and distribute the commodities to States for distribution in accordance with section 214 of the Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note). ”(b) BASIS FOR COMMODITY PURCHASES.\u2014In purchasing commodities under subsection (a), the Secretary shall, to the extent practicable and appropriate, make purchases based on\u2014 ”(1) agricultural market conditions; ”(2) preferences and needs of States and distributing agencies; and ”(3) preferences of recipients.”. (h) EFFECTIVE DATE.\u2014The amendments made by subsection (d) shall become effective on October 1, 1996. SEC. 872. FOOD BANK DEMONSTRATION PROJECT. Section 3 of the Charitable Assistance and Food Bank Act of 1987 (Public Law 100 232; 7 U.S.C. 612c note) is repealed. SEC. 873. HUNGER PREVENTION PROGRAMS. The Hunger Prevention Act of 1988 (Public Law 100 435; 7 U.S.C. 612c note) is amended\u2014 (1) by striking section 110; (2) by striking subtitle C of title II; and (3) by striking section 502. SEC. 874. REPORT ON ENTITLEMENT COMMODITY PROCESSING. Section 1773 of the Food, Agriculture, Conservation, and Trade Act of 1990 (Public Law 101 624; 7 U.S.C. 612c note) is amended by striking subsection (f). Subtitle C\u2014Electronic Benefit Transfer Systems SEC. 891. PROVISIONS TO ENCOURAGE ELECTRONIC BENEFIT TRANSFER SYSTEMS. Section 904 of the Electronic Fund Transfer Act (15 U.S.C. 1693b) is amended\u2014 (1) by striking ”(d) In the event that” and inserting ”(d) APPLICABILITY TO SERVICE PROVIDERS OTHER THAN CERTAIN FINANCIAL INSTITUTIONS.\u2014 ”(1) IN GENERAL.\u2014If”; and (2) by adding at the end the following: 7 USC 612c note. 7 USC 2036. 110 STAT. 2347PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(2) STATE AND LOCAL GOVERNMENT ELECTRONIC BENEFIT TRANSFER SYSTEMS.\u2014 ”(A) DEFINITION OF ELECTRONIC BENEFIT TRANSFER SYSTEM.\u2014In this paragraph, the term ‘electronic benefit transfer system’\u2014 ”(i) means a system under which a government agency distributes needs-tested benefits by establishing accounts that may be accessed by recipients electroni- cally, such as through automated teller machines or point-of-sale terminals; and ”(ii) does not include employment-related pay- ments, including salaries and pension, retirement, or unemployment benefits established by a Federal, State, or local government agency. ”(B) EXEMPTION GENERALLY.\u2014The disclosures, protec- tions, responsibilities, and remedies established under this title, and any regulation prescribed or order issued by the Board in accordance with this title, shall not apply to any electronic benefit transfer system established under State or local law or administered by a State or local government. ”(C) EXCEPTION FOR DIRECT DEPOSIT INTO RECIPIENT’S ACCOUNT.\u2014Subparagraph (B) shall not apply with respect to any electronic funds transfer under an electronic benefit transfer system for a deposit directly into a consumer account held by the recipient of the benefit. ”(D) RULE OF CONSTRUCTION.\u2014No provision of this paragraph\u2014 ”(i) affects or alters the protections otherwise applicable with respect to benefits established by any other provision Federal, State, or local law; or ”(ii) otherwise supersedes the application of any State or local law.”. TITLE IX\u2014MISCELLANEOUS SEC. 901. APPROPRIATION BY STATE LEGISLATURES. (a) IN GENERAL.\u2014Any funds received by a State under the provisions of law specified in subsection (b) shall be subject to appropriation by the State legislature, consistent with the terms and conditions required under such provisions of law. (b) PROVISIONS OF LAW.\u2014The provisions of law specified in this subsection are the following: (1) Part A of title IV of the Social Security Act (relating to block grants for temporary assistance for needy families). (2) The Child Care and Development Block Grant Act of 1990 (relating to block grants for child care). SEC. 902. SANCTIONING FOR TESTING POSITIVE FOR CONTROLLED SUBSTANCES. Notwithstanding any other provision of law, States shall not be prohibited by the Federal Government from testing welfare recipients for use of controlled substances nor from sanctioning welfare recipients who test positive for use of controlled substances. 21 USC 862b. 42 USC 601 note. 110 STAT. 2348 PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 903. ELIMINATION OF HOUSING ASSISTANCE WITH RESPECT TO FUGITIVE FELONS AND PROBATION AND PAROLE VIOLATORS. (a) ELIGIBILITY FOR ASSISTANCE.\u2014The United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended\u2014 (1) in section 6(l)\u2014 (A) in paragraph (5), by striking ”and” at the end; (B) in paragraph (6), by striking the period at the end and inserting ”; and”; and (C) by inserting immediately after paragraph (6) the following new paragraph: ”(7) provide that it shall be cause for immediate termination of the tenancy of a public housing tenant if such tenant\u2014 ”(A) is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the individual flees, for a crime, or attempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(2) is violating a condition of probation or parole imposed under Federal or State law.”; and (2) in section 8(d)(1)(B)\u2014 (A) in clause (iii), by striking ”and” at the end; (B) in clause (iv), by striking the period at the end and inserting ”; and”; and (C) by adding after clause (iv) the following new clause: ”(v) it shall be cause for termination of the tenancy of a tenant if such tenant\u2014 ”(I) is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the individual flees, for a crime, or attempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(II) is violating a condition of probation or parole imposed under Federal or State law;”. (b) PROVISION OF INFORMATION TO LAW ENFORCEMENT AGEN- CIES.\u2014Title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended by adding at the end the following: ”SEC. 27. EXCHANGE OF INFORMATION WITH LAW ENFORCEMENT AGENCIES. ”Notwithstanding any other provision of law, each public hous- ing agency that enters into a contract for assistance under section 6 or 8 of this Act with the Secretary shall furnish any Federal, State, or local law enforcement officer, upon the request of the officer, with the current address, Social Security number, and photo- graph (if applicable) of any recipient of assistance under this Act, if the officer\u2014 ”(1) furnishes the public housing agency with the name of the recipient; and ”(2) notifies the agency that\u2014 ”(A) such recipient\u2014 42 USC 1437z. 42 USC 1437f. 42 USC 1437d. 110 STAT. 2349PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(i) is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the individual flees, for a crime, or attempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(ii) is violating a condition of probation or parole imposed under Federal or State law; or ”(iii) has information that is necessary for the offi- cer to conduct the officer’s official duties; ”(B) the location or apprehension of the recipient is within such officer’s official duties; and ”(C) the request is made in the proper exercise of the officer’s official duties.”. SEC. 904. SENSE OF THE SENATE REGARDING THE INABILITY OF THE NONCUSTODIAL PARENT TO PAY CHILD SUPPORT. It is the sense of the Senate that\u2014 (a) States should diligently continue their efforts to enforce child support payments by the non-custodial parent to the custodial parent, regardless of the employment status or loca- tion of the non-custodial parent; and (b) States are encouraged to pursue pilot programs in which the parents of a non-adult, non-custodial parent who refuses to or is unable to pay child support must\u2014 (1) pay or contribute to the child support owed by the non-custodial parent; or (2) otherwise fulfill all financial obligations and meet all conditions imposed on the non-custodial parent, such as participation in a work program or other related activity. SEC. 905. ESTABLISHING NATIONAL GOALS TO PREVENT TEENAGE PREGNANCIES. (a) IN GENERAL.\u2014Not later than January 1, 1997, the Secretary of Health and Human Services shall establish and implement a strategy for\u2014 (1) preventing out-of-wedlock teenage pregnancies, and (2) assuring that at least 25 percent of the communities in the United States have teenage pregnancy prevention pro- grams in place. (b) REPORT.\u2014Not later than June 30, 1998, and annually there- after, the Secretary shall report to the Congress with respect to the progress that has been made in meeting the goals described in paragraphs (1) and (2) of subsection (a). SEC. 906. SENSE OF THE SENATE REGARDING ENFORCEMENT OF STATUTORY RAPE LAWS. (a) SENSE OF THE SENATE.\u2014It is the sense of the Senate that States and local jurisdictions should aggressively enforce statutory rape laws. (b) JUSTICE DEPARTMENT PROGRAM ON STATUTORY RAPE.\u2014Not later than January 1, 1997, the Attorney General shall establish and implement a program that\u2014 (1) studies the linkage between statutory rape and teenage pregnancy, particularly by predatory older men committing repeat offenses; and Establishment. 42 USC 14016. 42 USC 710 note. 110 STAT. 2350 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) educates State and local criminal law enforcement offi- cials on the prevention and prosecution of statutory rape, focus- ing in particular on the commission of statutory rape by preda- tory older men committing repeat offenses, and any links to teenage pregnancy. (c) VIOLENCE AGAINST WOMEN INITIATIVE.\u2014The Attorney General shall ensure that the Department of Justice’s Violence Against Women initiative addresses the issue of statutory rape, particularly the commission of statutory rape by predatory older men committing repeat offenses. SEC. 907. PROVISIONS TO ENCOURAGE ELECTRONIC BENEFIT TRANSFER SYSTEMS. Section 904 of the Electronic Fund Transfer Act (15 U.S.C. 1693b) is amended\u2014 (1) by striking ”(d) In the event” and inserting ”(d) APPLICABILITY TO SERVICE PROVIDERS OTHER THAN CERTAIN FINANCIAL INSTITUTIONS.\u2014 ”(1) IN GENERAL.\u2014In the event”; and (2) by adding at the end the following new paragraph: ”(2) STATE AND LOCAL GOVERNMENT ELECTRONIC BENEFIT TRANSFER PROGRAMS.\u2014 ”(A) EXEMPTION GENERALLY.\u2014The disclosures, protec- tions, responsibilities, and remedies established under this title, and any regulation prescribed or order issued by the Board in accordance with this title, shall not apply to any electronic benefit transfer program established under State or local law or administered by a State or local government. ”(B) EXCEPTION FOR DIRECT DEPOSIT INTO RECIPIENT’S ACCOUNT.\u2014Subparagraph (A) shall not apply with respect to any electronic funds transfer under an electronic benefit transfer program for deposits directly into a consumer account held by the recipient of the benefit. ”(C) RULE OF CONSTRUCTION.\u2014No provision of this paragraph may be construed as\u2014 ”(i) affecting or altering the protections otherwise applicable with respect to benefits established by Fed- eral, State, or local law; or ”(ii) otherwise superseding the application of any State or local law. ”(D) ELECTRONIC BENEFIT TRANSFER PROGRAM DEFINED.\u2014For purposes of this paragraph, the term ‘elec- tronic benefit transfer program’\u2014 ”(i) means a program under which a government agency distributes needs-tested benefits by establishing accounts to be accessed by recipients electronically, such as through automated teller machines, or point- of-sale terminals; and ”(ii) does not include employment-related pay- ments, including salaries and pension, retirement, or unemployment benefits established by Federal, State, or local governments.”. SEC. 908. REDUCTION OF BLOCK GRANTS TO STATES FOR SOCIAL SERVICES; USE OF VOUCHERS. (a) REDUCTION OF GRANTS.\u2014Section 2003(c) of the Social Secu- rity Act (42 U.S.C. 1397b(c)) is amended\u2014 110 STAT. 2351PUBLIC LAW 104 193\u2014AUG. 22, 1996 (1) by striking ”and” at the end of paragraph (4); and (2) by striking paragraph (5) and inserting the following: ”(5) $2,800,000,000 for each of the fiscal years 1990 through 1995; ”(6) $2,381,000,000 for the fiscal year 1996; ”(7) $2,380,000,000 for each of the fiscal years 1997 through 2002; and ”(8) $2,800,000,000 for the fiscal year 2003 and each succeeding fiscal year.”. (b) AUTHORITY TO USE VOUCHERS.\u2014Section 2002 of such Act (42 U.S.C. 1937a) is amended by adding at the end the following: ”(f) A State may use funds provided under this title to provide vouchers, for services directed at the goals set forth in section 2001, to families, including\u2014 ”(1) families who have become ineligible for assistance under a State program funded under part A of title IV by reason of a durational limit on the provision of such assist- ance; and ”(2) families denied cash assistance under the State pro- gram funded under part A of title IV for a child who is born to a member of the family who is\u2014 ”(A) a recipient of assistance under the program; or ”(B) a person who received such assistance at any time during the 10-month period ending with the birth of the child.”. SEC. 909. RULES RELATING TO DENIAL OF EARNED INCOME CREDIT ON BASIS OF DISQUALIFIED INCOME. (a) REDUCTION IN DISQUALIFIED INCOME THRESHOLD.\u2014 (1) IN GENERAL.\u2014Paragraph (1) of section 32(i) of the Internal Revenue Code of 1986 (relating to denial of credit for individuals having excessive investment income) is amended by striking ”$2,350” and inserting ”$2,200”. (2) ADJUSTMENT FOR INFLATION.\u2014Subsection (j) of section 32 of such Code is amended to read as follows: ”(j) INFLATION ADJUSTMENTS.\u2014 ”(1) IN GENERAL.\u2014In the case of any taxable year beginning after 1996, each of the dollar amounts in subsections (b)(2) and (i)(1) shall be increased by an amount equal to\u2014 ”(A) such dollar amount, multiplied by ”(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 1995’ for ‘calendar year 1992’ in subparagraph (B) thereof. ”(2) ROUNDING.\u2014 ”(A) IN GENERAL.\u2014If any dollar amount in subsection (b)(2), after being increased under paragraph (1), is not a multiple of $10, such dollar amount shall be rounded to the nearest multiple of $10. ”(B) DISQUALIFIED INCOME THRESHOLD AMOUNT.\u2014If the dollar amount in subsection (i)(1), after being increased under paragraph (1), is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.”. (3) CONFORMING AMENDMENT.\u2014Paragraph (2) of section 32(b) of such Code is amended to read as follows: 42 USC 1397a. 110 STAT. 2352 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(2) AMOUNTS.\u2014The earned income amount and the phase- out amount shall be determined as follows: In the case of an eligi- ble individual with: The earned income amount is: The phaseout amount is: 1 qualifying child ……. $6,330 $11,610 2 or more qualifying children. $8,890 $11,610 No qualifying children $4,220 $ 5,280”. (b) DEFINITION OF DISQUALIFIED INCOME.\u2014Paragraph (2) of section 32(i) of such Code (defining disqualified income) is amended by striking ”and” at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting a comma, and by adding at the end the following new subparagraphs: ”(D) the capital gain net income (as defined in section 1222) of the taxpayer for such taxable year, and ”(E) the excess (if any) of\u2014 ”(i) the aggregate income from all passive activities for the taxable year (determined without regard to any amount included in earned income under sub- section (c)(2) or described in a preceding subpara- graph), over ”(ii) the aggregate losses from all passive activities for the taxable year (as so determined). For purposes of subparagraph (E), the term ‘passive activity’ has the meaning given such term by section 469.”. (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 1995. (2) ADVANCE PAYMENT INDIVIDUALS.\u2014In the case of any individual who on or before June 26, 1996, has in effect an earned income eligibility certificate for the individual’s taxable year beginning in 1996, the amendments made by this section shall apply to taxable years beginning after December 31, 1996. SEC. 910. MODIFICATION OF ADJUSTED GROSS INCOME DEFINITION FOR EARNED INCOME CREDIT. (a) IN GENERAL.\u2014Subsections (a)(2)(B), (c)(1)(C), and (f)(2)(B) of section 32 of the Internal Revenue Code of 1986 are each amended by striking ”adjusted gross income” each place it appears and insert- ing ”modified adjusted gross income”. (b) MODIFIED ADJUSTED GROSS INCOME DEFINED.\u2014Section 32(c) of such Code (relating to definitions and special rules) is amended by adding at the end the following new paragraph: ”(5) MODIFIED ADJUSTED GROSS INCOME.\u2014 ”(A) IN GENERAL.\u2014The term ‘modified adjusted gross income’ means adjusted gross income determined without regard to the amounts described in subparagraph (B). ”(B) CERTAIN AMOUNTS DISREGARDED.\u2014An amount is described in this subparagraph if it is\u2014 ”(i) the amount of losses from sales or exchanges of capital assets in excess of gains from such sales 26 USC 32 note. 110 STAT. 2353PUBLIC LAW 104 193\u2014AUG. 22, 1996 or exchanges to the extent such amount does not exceed the amount under section 1211(b)(1), ”(ii) the net loss from estates and trusts, ”(iii) the excess (if any) of amounts described in subsection (i)(2)(C)(ii) over the amounts described in subsection (i)(2)(C)(i) (relating to nonbusiness rents and royalties), and ”(iv) 50 percent of the net loss from the carrying on of trades or businesses, computed separately with respect to\u2014 ”(I) trades or businesses (other than farming) conducted as sole proprietorships, ”(II) trades or businesses of farming conducted as sole proprietorships, and ”(III) other trades or businesses. For purposes of clause (iv), there shall not be taken into account items which are attributable to a trade or business which consists of the performance of services by the tax- payer as an employee.”. (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 1995. (2) ADVANCE PAYMENT INDIVIDUALS.\u2014In the case of any individual who on or before June 26, 1996, has in effect an earned income eligibility certificate for the individual’s taxable year beginning in 1996, the amendments made by this section shall apply to taxable years beginning after December 31, 1996. SEC. 911. FRAUD UNDER MEANS-TESTED WELFARE AND PUBLIC ASSISTANCE PROGRAMS. (a) IN GENERAL.\u2014If an individual’s benefits under a Federal, State, or local law relating to a means-tested welfare or a public assistance program are reduced because of an act of fraud by the individual under the law or program, the individual may not, for the duration of the reduction, receive an increased benefit under any other means-tested welfare or public assistance program for which Federal funds are appropriated as a result of a decrease in the income of the individual (determined under the applicable program) attributable to such reduction. (b) WELFARE OR PUBLIC ASSISTANCE PROGRAMS FOR WHICH FEDERAL FUNDS ARE APPROPRIATED.\u2014For purposes of subsection (a), the term ”means-tested welfare or public assistance program for which Federal funds are appropriated” includes the food stamp program under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), any program of public or assisted housing under title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.), and any State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.). SEC. 912. ABSTINENCE EDUCATION. Title V of the Social Security Act (42 U.S.C. 701 et seq.) is amended by adding at the end the following section: ”SEPARATE PROGRAM FOR ABSTINENCE EDUCATION ”SEC. 510. (a) For the purpose described in subsection (b), the Secretary shall, for fiscal year 1998 and each subsequent fiscal 42 USC 710. 42 USC 608a. 26 USC 32 note. 110 STAT. 2354 PUBLIC LAW 104 193\u2014AUG. 22, 1996 year, allot to each State which has transmitted an application for the fiscal year under section 505(a) an amount equal to the product of\u2014 ”(1) the amount appropriated in subsection (d) for the fiscal year; and ”(2) the percentage determined for the State under section 502(c)(1)(B)(ii). ”(b)(1) The purpose of an allotment under subsection (a) to a State is to enable the State to provide abstinence education, and at the option of the State, where appropriate, mentoring, coun- seling, and adult supervision to promote abstinence from sexual activity, with a focus on those groups which are most likely to bear children out-of-wedlock. ”(2) For purposes of this section, the term ‘abstinence education’ means an educational or motivational program which\u2014 ”(A) has as its exclusive purpose, teaching the social, psychological, and health gains to be realized by abstaining from sexual activity; ”(B) teaches abstinence from sexual activity outside marriage as the expected standard for all school age chil- dren; ”(C) teaches that abstinence from sexual activity is the only certain way to avoid out-of-wedlock pregnancy, sexually transmitted diseases, and other associated health problems; ”(D) teaches that a mutually faithful monogamous rela- tionship in context of marriage is the expected standard of human sexual activity; ”(E) teaches that sexual activity outside of the context of marriage is likely to have harmful psychological and physical effects; ”(F) teaches that bearing children out-of-wedlock is likely to have harmful consequences for the child, the child’s parents, and society; ”(G) teaches young people how to reject sexual advances and how alcohol and drug use increases vulner- ability to sexual advances; and ”(H) teaches the importance of attaining self-sufficiency before engaging in sexual activity. ”(c)(1) Sections 503, 507, and 508 apply to allotments under subsection (a) to the same extent and in the same manner as such sections apply to allotments under section 502(c). ”(2) Sections 505 and 506 apply to allotments under subsection (a) to the extent determined by the Secretary to be appropriate. ”(d) For the purpose of allotments under subsection (a), there is appropriated, out of any money in the Treasury not otherwise appropriated, an additional $50,000,000 for each of the fiscal years 1998 through 2002. The appropriation under the preceding sentence for a fiscal year is made on October 1 of the fiscal year.”. SEC. 913. CHANGE IN REFERENCE. Effective January 1, 1997, the third sentence of section 1902(a) and section 1908(e)(1) of the Social Security Act (42 U.S.C. 1396a(a), 1396g 1(e)(1)) are each amended by striking ”The First Church of Christ, Scientist, Boston, Massachusetts” and inserting ”The Effective date. Effective date. Appropriation authorization. 110 STAT. 2355PUBLIC LAW 104 193\u2014AUG. 22, 1996 LEGISLATIVE HISTORY\u2014H.R. 3734 (S. 1956): HOUSE REPORTS: Nos. 104 651 (Comm. on the Budget) and 104 725 (Comm. of Conference). CONGRESSIONAL RECORD, Vol. 142 (1996): July 17, 18, considered and passed House. July 18, 19, 22, 23, considered and passed Senate, amended, in lieu of S. 1956. July 31, House agreed to conference report. Aug. 1, Senate agreed to conference report. WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 32 (1996): Aug. 22, Presidential remarks and statement. \u00c6 Commission for Accreditation of Christian Science Nursing Organizations\/Facilities, Inc.” each place it appears. Approved August 22, 1996. Superintendent of Documents 2012-03-20T16:44:38-0400 US GPO, Washington, DC 20401 Superintendent of Documents GPO attests that this document has not been altered since it was disseminated by GPO ”

Document P.L. 104-193 Legislative History

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“The Legislative History of P.L. 104-193 All Action The Terrorist Actions at Needy Families (TANF) This bill has resulted in millions of American children enduring deep deep poverty and misery for decades that continues TODAY [bookmark: _GoBack]Caused by both Republicans and Democrats Date Chamber Action 08\/22\/1996 Became Public Law No: 104-193. Type of Action: To President 08\/22\/1996 Signed by President. Type of Action: To President 08\/19\/1996 House Presented to President. 08\/02\/1996 Senate Message on Senate action sent to the House. Type of Action: Floor Consideration 08\/01\/1996 Senate Senate agreed to conference report by Yea-Nay Vote. 78-21. Record Vote No: 262. (consideration: CR S9415) Type of Action: Resolving Differences 08\/01\/1996 Senate Conference report considered in Senate. By Unanimous Consent. Type of Action: Resolving Differences 07\/31\/1996 Senate Conference papers: Senate report and managers’ statement and message on House action held at the desk in Senate. Type of Action: Resolving Differences 07\/31\/1996-5:12pm House On agreeing to the conference report Agreed to by the Yeas and Nays: 328 – 101 (Roll no. 383). (consideration: CR H9424) Type of Action: Resolving Differences 07\/31\/1996-5:12pm House Motions to reconsider laid on the table Agreed to without objection. Type of Action: Resolving Differences 07\/31\/1996-4:52pm House The previous question was ordered without objection. Type of Action: Resolving Differences 07\/31\/1996-3:32pm House DEBATE – Pursuant to the provisions of H. Res. 495, the House proceeded with one hour of debate on the conference report. Type of Action: Floor Consideration 07\/31\/1996-3:32pm House Mr. Kasich brought up conference report H. Rept. 104-725 for consideration under the provisions of H. Res. 495. Type of Action: Resolving Differences 07\/30\/1996-11:56pm House Conference report H. Rept. 104-725 filed. (text of conference report: CR H8829-8958) Type of Action: Resolving Differences 07\/30\/1996-10:46am Conferees agreed to file conference report. Type of Action: Resolving Differences Action By: Both Chambers 07\/25\/1996-3:56pm Conference held. Type of Action: Resolving Differences Action By: Both Chambers 07\/24\/1996-6:50pm House The Speaker appointed conferees: Kasich, Archer, Goodling, Roberts, Bliley, Shaw, Talent, Nussle, Hutchinson, McCrery, Bilirakis, Smith (TX), Johnson (CT), Camp, Franks (CT), Cunningham, Castle, Goodlatte, Sabo, Gibbons, Conyers, de la Garza, Clay, Ford, Miller (CA), Waxman, Stenholm, Kennelly, Levin, Tanner, Becerra, Thurman, and Woolsey. Type of Action: Resolving Differences 07\/24\/1996-6:48pm House Motion to reconsider laid on the table Agreed to without objection. Type of Action: Resolving Differences 07\/24\/1996-6:48pm House On motion that the House instruct conferees Agreed to by recorded vote: 418 – 0 (Roll no. 353). (consideration: CR H8319-8329) Type of Action: Resolving Differences 07\/24\/1996-6:29pm House The previous question was ordered without objection. Type of Action: Resolving Differences 07\/24\/1996-5:19pm House DEBATE – The House proceeded with one hour of debate on the Sabo motion to instruct conferees. The instructions contained in the motion require the managers on the part of the House to do everything possible within the scope of the conference to eliminate any provisions in the House and Senate bills which shift costs to states and local governments and result in an increase in the number of children in poverty; to maximize the availability of Food Stamps and vouchers for goods and services for children to prevent any increase in the number of children thrown into poverty while their parents make the transition from welfare to work; to ensure that the bill preserves Medicaid coverage so that the number of people without access to health care does not increase and more children and old people are not driven into poverty; and to provide that any savings that redound to the Federal Government as a result of Type of Action: Floor Consideration 07\/24\/1996-5:18pm House Mr. Sabo moved that the House instruct conferees. Type of Action: Resolving Differences 07\/24\/1996-5:18pm House On motion that the House disagree to the Senate amendment, and agree to a conference Agreed to without objection. (consideration: CR H8319) Type of Action: Resolving Differences 07\/24\/1996-5:17pm House Mr. Kasich asked unanimous consent that the House disagree to the Senate amendment, and agree to a conference. Type of Action: Resolving Differences 07\/24\/1996 Senate Message on Senate action sent to the House. Type of Action: Floor Consideration 07\/23\/1996 Senate Senate appointed conferees. Kassebaum; Dodd From the Committee on Labor and Human Resources. Type of Action: Resolving Differences 07\/23\/1996 Senate Senate appointed conferees. Roth; Chafee; Grassley; Hatch; Simpson; Moynihan; Bradley; Pryor; Rockefeller From the Committee on Finance. Type of Action: Resolving Differences 07\/23\/1996 Senate Senate appointed conferees. Lugar; Helms; Cochran; Santorum; Leahy; Heflin; Harkin From the Committee on Agriculture, Nutrition, and Forestry. Type of Action: Resolving Differences 07\/23\/1996 Senate Senate insists on its amendment asks for a conference, appoints conferees Domenici; Nickles; Gramm; Exon; Hollings. (consideration: CR S8532) Type of Action: Resolving Differences 07\/23\/1996 Senate Passed Senate in lieu of S. 1956 with an amendment by Yea-Nay Vote. 74-24. Record Vote No: 232. Type of Action: Floor Consideration 07\/23\/1996 Senate Senate struck all after the Enacting Clause and substituted the language of S. 1956amended. Type of Action: Floor Consideration 07\/23\/1996 Senate Measure laid before Senate. (consideration: CR S8527-8532) Type of Action: Floor Consideration 07\/18\/1996 Senate Received in the Senate, read twice. Type of Action: Introduction and Referral 07\/18\/1996-4:34pm House Motion to reconsider laid on the table Agreed to without objection. Type of Action: Floor Consideration 07\/18\/1996-4:34pm House On passage Passed by recorded vote: 256 – 170 (Roll no. 331). Type of Action: Floor Consideration 07\/18\/1996-4:14pm House On motion to recommit with instructions Failed by recorded vote: 203 – 220 (Roll no. 330). (consideration: CR H7988-7989) Type of Action: Floor Consideration 07\/18\/1996-3:57pm House The previous question on the motion to recommit with instructions was ordered without objection. Type of Action: Floor Consideration 07\/18\/1996-3:49pm House DEBATE – The House proceeded with 10 minutes of debate on the Tanner motion. Type of Action: Floor Consideration 07\/18\/1996-3:49pm House Mr. Tanner moved to recommit with instructions to the Committee on the Budget. Type of Action: Floor Consideration 07\/18\/1996-3:48pm House The House adopted the amendment in the nature of a substitute as agreed to by the Committee of the Whole House on the state of the Union. Type of Action: Floor Consideration 07\/18\/1996-3:48pm House The previous question was ordered pursuant to the rule. Type of Action: Floor Consideration 07\/18\/1996-3:47pm House The House rose from the Committee of the Whole House on the state of the Union to report H.R. 3734. Type of Action: Floor Consideration 07\/18\/1996-3:46pm House H.Amdt.1308 On agreeing to the Tanner amendment (A003) Failed by recorded vote: 168 – 258 (Roll no. 329). Type of Action: Floor Consideration 07\/18\/1996-2:08pm House DEBATE – Pursuant to the provisions of H. Res. 482, the Committee of the Whole proceeded with one hour of debate on the Tanner amendment. Type of Action: Floor Consideration 07\/18\/1996-2:08pm House H.Amdt.1308 Amendment (A003) in the nature of a substitute offered by Mr. Tanner. Type of Action: Floor Consideration 07\/18\/1996-2:08pm House The House resolved into Committee of the Whole House on the state of the Union for further consideration. Type of Action: Floor Consideration 07\/18\/1996-2:08pm House Considered as unfinished business. Type of Action: Floor Consideration 07\/18\/1996-2:03pm House Committee of the Whole House on the state of the Union rises leaving H.R. 3734 as unfinished business. Type of Action: Floor Consideration 07\/18\/1996-2:03pm House On motion that the Committee rise Agreed to by voice vote. Type of Action: Floor Consideration 07\/18\/1996-2:03pm House Mr. Young (FL) moved that the Committee rise. Type of Action: Floor Consideration 07\/18\/1996-2:03pm House H.Amdt.1307 On agreeing to the Ney amendment (A002) Agreed to by recorded vote: 239 – 184 (Roll no. 328). Type of Action: Floor Consideration 07\/18\/1996-1:18pm House DEBATE – Pursuant to the provisions of H. Res. 482, the Committee of the Whole proceeded with 20 minutes of debate on the Ney amendment. Type of Action: Floor Consideration 07\/18\/1996-1:18pm House H.Amdt.1307 Amendment (A002) offered by Mr. Ney. Type of Action: Floor Consideration 07\/18\/1996-1:17pm House H.Amdt.1306 Pursuant to the provisions of H. Res. 482, the amendment, as modified, was considered to have been adopted. Type of Action: Floor Consideration 07\/18\/1996-1:17pm House H.Amdt.1306 Rules amendment (A001) modified Pursuant to the provisions of H. Res. 482. The amendment was modified to provide for the Ways and Means and Finance Committees to conduct a review of the states’ implementation of the work participation standards after 3 years; allow states to transfer up to 30% of their annual share of their block grant into other block grant programs; specify that states may extend benefits beyond the 5-year limit using state funds; terminate medicaid health insurance for failure to meet work requirements; and change the distribution of fees collected from non-custodial parents. Type of Action: Floor Consideration 07\/18\/1996-1:17pm House H.Amdt.1306 Amendment (A001) in the nature of a substitute offered by the Committee on Rules. Type of Action: Floor Consideration 07\/18\/1996-10:51am House GENERAL DEBATE – The Committee of the Whole proceeded with two hours of general debate. Type of Action: Floor Consideration 07\/18\/1996-10:47am House Rule provides for consideration of H.R. 3734 with 2 hours of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. An amendment in the nature of a substitute consisting of the text of H.R. 3829, modified by the amendment printed in part 1 of the report of the Committee on Rules accompanying this resolution, shall be considered as adopted in the House and in the Committee of the Whole. The bill, as amended, shall be considered as an original bill and shall be considered as read. Measure will be considered read. Specified amendments are in order. Type of Action: Floor Consideration 07\/18\/1996-10:47am House Considered under the provisions of rule H. Res. 482. (consideration: CR H7796-7990) Type of Action: Floor Consideration 07\/18\/1996-10:47am House The House resolved into Committee of the Whole House on the state of the Union for further consideration. Type of Action: Floor Consideration 07\/18\/1996-10:46am House Considered as unfinished business. Type of Action: Floor Consideration 07\/18\/1996-10:46am House Rule H. Res. 482 passed House. Type of Action: Floor Consideration 07\/17\/1996-11:04pm House Rules Committee Resolution H. Res. 482 Reported to House. Rule provides for consideration of H.R. 3734 with 2 hours of general debate. Previous question shall be considered as ordered without intervening motions except motion to recommit with or without instructions. An amendment in the nature of a substitute consisting of the text of H.R. 3829, modified by the amendment printed in part 1 of the report of the Committee on Rules accompanying this resolution, shall be considered as adopted in the House and in the Committee of the Whole. The bill, as amended, shall be considered as an original bill and shall be considered as read. Measure will be considered read. Specified amendments are in order. Type of Action: Floor Consideration 07\/17\/1996-9:03pm House Committee of the Whole House on the state of the Union rises leaving H.R. 3734 as unfinished business. Type of Action: Floor Consideration 07\/17\/1996-6:42pm House GENERAL DEBATE – Pursuant to the provisions of the unanimous consent agreement, the Committee of the Whole proceeded with two hours of general debate. Type of Action: Floor Consideration 07\/17\/1996-6:42pm House The Speaker designated the Honorable Enid Greene to act as Chairwoman of the Committee. Type of Action: Floor Consideration 07\/17\/1996-6:41pm House The House resolved into Committee of the Whole on the state of the Union pursuant to the unanimous consent agreement. Type of Action: Floor Consideration 07\/17\/1996-6:41pm House Considered by unanimous consent. Type of Action: Floor Consideration 07\/17\/1996-6:39pm House ORDER OF BUSINESS – Mr. Hobson asked unanimous consent that it be in order at any time for the Speaker, pursuant to clause 1(b) of rule XXIII, to declare the House resolved into the Committee of the Whole House on the state of the Union for consideration of the bill H.R. 3734, that the first reading of the bill be dispensed with, that all points of order against consideration of the bill be waived, that general debate be confined to the bill and be limited to two hours equally divided and controlled, that after general debate the Committee of the Whole rise without motion, and that no further consideration of the bill be in order except pursuant to a subsequent order of the House. Agreed to without objection. Type of Action: Floor Consideration 06\/27\/1996 House Placed on the Union Calendar, Calendar No. 330. Type of Action: Calendars 06\/27\/1996 House The House Committee on The Budget reported an original measure, H. Rept. 104-651, by Mr. Kasich. Type of Action: Committee Consideration Action By: House Budget \u00b7 The Legislative History of P.L. 104-193 All Action The Terrorist Actions at Needy Families (TANF) Thes bitt has vesntted in millions of American children enduring deep deep poverty and misery (for decades that continues TODAY – Caused by both Republicans and Democrats ”

pdf Public Law-104-193 – The Horrible TANF Bill

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” 110 STAT. 2105PUBLIC LAW 104 193\u2014AUG. 22, 1996 Public Law 104 193 104th Congress An Act To provide for reconciliation pursuant to section 201(a)(1) of the concurrent resolution on the budget for fiscal year 1997. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ”Personal Responsibility and Work Opportunity Reconciliation Act of 1996”. SEC. 2. TABLE OF CONTENTS. The table of contents for this Act is as follows: TITLE I\u2014BLOCK GRANTS FOR TEMPORARY ASSISTANCE FOR NEEDY FAMILIES Sec. 101. Findings. Sec. 102. Reference to Social Security Act. Sec. 103. Block grants to States. Sec. 104. Services provided by charitable, religious, or private organizations. Sec. 105. Census data on grandparents as primary caregivers for their grand- children. Sec. 106. Report on data processing. Sec. 107. Study on alternative outcomes measures. Sec. 108. Conforming amendments to the Social Security Act. Sec. 109. Conforming amendments to the Food Stamp Act of 1977 and related pro- visions. Sec. 110. Conforming amendments to other laws. Sec. 111. Development of prototype of counterfeit-resistant Social Security card re- quired. Sec. 112. Modifications to the job opportunities for certain low-income individuals program. Sec. 113. Secretarial submission of legislative proposal for technical and conforming amendments. Sec. 114. Assuring medicaid coverage for low-income families. Sec. 115. Denial of assistance and benefits for certain drug-related convictions. Sec. 116. Effective date; transition rule. TITLE II\u2014SUPPLEMENTAL SECURITY INCOME Sec. 200. Reference to Social Security Act. Subtitle A\u2014Eligibility Restrictions Sec. 201. Denial of SSI benefits for 10 years to individuals found to have fraudu- lently misrepresented residence in order to obtain benefits simulta- neously in 2 or more States. Sec. 202. Denial of SSI benefits for fugitive felons and probation and parole viola- tors. Sec. 203. Treatment of prisoners. Sec. 204. Effective date of application for benefits. Subtitle B\u2014Benefits for Disabled Children Sec. 211. Definition and eligibility rules. Sec. 212. Eligibility redeterminations and continuing disability reviews. 42 USC 1305 note. Personal Responsibility and Work Opportunity Reconciliation Act of 1996. Aug. 22, 1996 [H.R. 3734] 110 STAT. 2106 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Sec. 213. Additional accountability requirements. Sec. 214. Reduction in cash benefits payable to institutionalized individuals whose medical costs are covered by private insurance. Sec. 215. Regulations. Subtitle C\u2014Additional Enforcement Provision Sec. 221. Installment payment of large past-due supplemental security income ben- efits. Sec. 222. Regulations. Subtitle D\u2014Studies Regarding Supplemental Security Income Program Sec. 231. Annual report on the supplemental security income program. Sec. 232. Study by General Accounting Office. TITLE III\u2014CHILD SUPPORT Sec. 300. Reference to Social Security Act. Subtitle A\u2014Eligibility for Services; Distribution of Payments Sec. 301. State obligation to provide child support enforcement services. Sec. 302. Distribution of child support collections. Sec. 303. Privacy safeguards. Sec. 304. Rights to notification of hearings. Subtitle B\u2014Locate and Case Tracking Sec. 311. State case registry. Sec. 312. Collection and disbursement of support payments. Sec. 313. State directory of new hires. Sec. 314. Amendments concerning income withholding. Sec. 315. Locator information from interstate networks. Sec. 316. Expansion of the Federal Parent Locator Service. Sec. 317. Collection and use of Social Security numbers for use in child support en- forcement. Subtitle C\u2014Streamlining and Uniformity of Procedures Sec. 321. Adoption of uniform State laws. Sec. 322. Improvements to full faith and credit for child support orders. Sec. 323. Administrative enforcement in interstate cases. Sec. 324. Use of forms in interstate enforcement. Sec. 325. State laws providing expedited procedures. Subtitle D\u2014Paternity Establishment Sec. 331. State laws concerning paternity establishment. Sec. 332. Outreach for voluntary paternity establishment. Sec. 333. Cooperation by applicants for and recipients of part A assistance. Subtitle E\u2014Program Administration and Funding Sec. 341. Performance-based incentives and penalties. Sec. 342. Federal and State reviews and audits. Sec. 343. Required reporting procedures. Sec. 344. Automated data processing requirements. Sec. 345. Technical assistance. Sec. 346. Reports and data collection by the Secretary. Subtitle F\u2014Establishment and Modification of Support Orders Sec. 351. Simplified process for review and adjustment of child support orders. Sec. 352. Furnishing consumer reports for certain purposes relating to child sup- port. Sec. 353. Nonliability for financial institutions providing financial records to State child support enforcement agencies in child support cases. Subtitle G\u2014Enforcement of Support Orders Sec. 361. Internal Revenue Service collection of arrearages. Sec. 362. Authority to collect support from Federal employees. Sec. 363. Enforcement of child support obligations of members of the Armed Forces. Sec. 364. Voiding of fraudulent transfers. Sec. 365. Work requirement for persons owing past-due child support. Sec. 366. Definition of support order. Sec. 367. Reporting arrearages to credit bureaus. Sec. 368. Liens. 110 STAT. 2107PUBLIC LAW 104 193\u2014AUG. 22, 1996 Sec. 369. State law authorizing suspension of licenses. Sec. 370. Denial of passports for nonpayment of child support. Sec. 371. International support enforcement. Sec. 372. Financial institution data matches. Sec. 373. Enforcement of orders against paternal or maternal grandparents in cases of minor parents. Sec. 374. Nondischargeability in bankruptcy of certain debts for the support of a child. Sec. 375. Child support enforcement for Indian tribes. Subtitle H\u2014Medical Support Sec. 381. Correction to ERISA definition of medical child support order. Sec. 382. Enforcement of orders for health care coverage. Subtitle I\u2014Enhancing Responsibility and Opportunity for Non-Residential Parents Sec. 391. Grants to States for access and visitation programs. Subtitle J\u2014Effective Dates and Conforming Amendments Sec. 395. Effective dates and conforming amendments. TITLE IV\u2014RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS Sec. 400. Statements of national policy concerning welfare and immigration. Subtitle A\u2014Eligibility for Federal Benefits Sec. 401. Aliens who are not qualified aliens ineligible for Federal public benefits. Sec. 402. Limited eligibility of qualified aliens for certain Federal programs. Sec. 403. Five-year limited eligibility of qualified aliens for Federal means-tested public benefit. Sec. 404. Notification and information reporting. Subtitle B\u2014Eligibility for State and Local Public Benefits Programs Sec. 411. Aliens who are not qualified aliens or nonimmigrants ineligible for State and local public benefits. Sec. 412. State authority to limit eligibility of qualified aliens for State public bene- fits. Subtitle C\u2014Attribution of Income and Affidavits of Support Sec. 421. Federal attribution of sponsor’s income and resources to alien. Sec. 422. Authority for States to provide for attribution of sponsors income and re- sources to the alien with respect to State programs. Sec. 423. Requirements for sponsor’s affidavit of support. Subtitle D\u2014General Provisions Sec. 431. Definitions. Sec. 432. Verification of eligibility for Federal public benefits. Sec. 433. Statutory construction. Sec. 434. Communication between State and local government agencies and the Im- migration and Naturalization Service. Sec. 435. Qualifying quarters. Subtitle E\u2014Conforming Amendments Relating to Assisted Housing Sec. 441. Conforming amendments relating to assisted housing. Subtitle F\u2014Earning Income Credit Denied to Unauthorized Employees Sec. 451. Earned income credit denied to individuals not authorized to be employed in the United States. TITLE V\u2014CHILD PROTECTION Sec. 501. Authority of States to make foster care maintenance payments on behalf of children in any private child care institution. Sec. 502. Extension of enhanced match for implementation of statewide automated child welfare information systems. Sec. 503. National random sample study of child welfare. Sec. 504. Redesignation of section 1123. Sec. 505. Kinship care. TITLE VI\u2014CHILD CARE Sec. 601. Short title and references. Sec. 602. Goals. 110 STAT. 2108 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Sec. 603. Authorization of appropriations and entitlement authority. Sec. 604. Lead agency. Sec. 605. Application and plan. Sec. 606. Limitation on State allotments. Sec. 607. Activities to improve the quality of child care. Sec. 608. Repeal of early childhood development and before- and after-school care requirement. Sec. 609. Administration and enforcement. Sec. 610. Payments. Sec. 611. Annual report and audits. Sec. 612. Report by the Secretary. Sec. 613. Allotments. Sec. 614. Definitions. Sec. 615. Effective date. TITLE VII\u2014CHILD NUTRITION PROGRAMS Subtitle A\u2014National School Lunch Act Sec. 701. State disbursement to schools. Sec. 702. Nutritional and other program requirements. Sec. 703. Free and reduced price policy statement. Sec. 704. Special assistance. Sec. 705. Miscellaneous provisions and definitions. Sec. 706. Summer food service program for children. Sec. 707. Commodity distribution. Sec. 708. Child and adult care food program. Sec. 709. Pilot projects. Sec. 710. Reduction of paperwork. Sec. 711. Information on income eligibility. Sec. 712. Nutrition guidance for child nutrition programs. Subtitle B\u2014Child Nutrition Act of 1966 Sec. 721. Special milk program. Sec. 722. Free and reduced price policy statement. Sec. 723. School breakfast program authorization. Sec. 724. State administrative expenses. Sec. 725. Regulations. Sec. 726. Prohibitions. Sec. 727. Miscellaneous provisions and definitions. Sec. 728. Accounts and records. Sec. 729. Special supplemental nutrition program for women, infants, and children. Sec. 730. Cash grants for nutrition education. Sec. 731. Nutrition education and training. Subtitle C\u2014Miscellaneous Provisions Sec. 741. Coordination of school lunch, school breakfast, and summer food service programs. Sec. 742. Requirements relating to provision of benefits based on citizenship, alienage, or immigration status under the National School Lunch Act, the Child Nutrition Act of 1966, and certain other acts. TITLE VIII\u2014FOOD STAMPS AND COMMODITY DISTRIBUTION Subtitle A\u2014Food Stamp Program Sec. 801. Definition of certification period. Sec. 802. Definition of coupon. Sec. 803. Treatment of children living at home. Sec. 804. Adjustment of thrifty food plan. Sec. 805. Definition of homeless individual. Sec. 806. State option for eligibility standards. Sec. 807. Earnings of students. Sec. 808. Energy assistance. Sec. 809. Deductions from income. Sec. 810. Vehicle allowance. Sec. 811. Vendor payments for transitional housing counted as income. Sec. 812. Simplified calculation of income for the self-employed. Sec. 813. Doubled penalties for violating food stamp program requirements. Sec. 814. Disqualification of convicted individuals. Sec. 815. Disqualification. Sec. 816. Caretaker exemption. Sec. 817. Employment and training. 110 STAT. 2109PUBLIC LAW 104 193\u2014AUG. 22, 1996 Sec. 818. Food stamp eligibility. Sec. 819. Comparable treatment for disqualification. Sec. 820. Disqualification for receipt of multiple food stamp benefits. Sec. 821. Disqualification of fleeing felons. Sec. 822. Cooperation with child support agencies. Sec. 823. Disqualification relating to child support arrears. Sec. 824. Work requirement. Sec. 825. Encouragement of electronic benefit transfer systems. Sec. 826. Value of minimum allotment. Sec. 827. Benefits on recertification. Sec. 828. Optional combined allotment for expedited households. Sec. 829. Failure to comply with other means-tested public assistance programs. Sec. 830. Allotments for households residing in centers. Sec. 831. Condition precedent for approval of retail food stores and wholesale food concerns. Sec. 832. Authority to establish authorization periods. Sec. 833. Information for verifying eligibility for authorization. Sec. 834. Waiting period for stores that fail to meet authorization criteria. Sec. 835. Operation of food stamp offices. Sec. 836. State employee and training standards. Sec. 837. Exchange of law enforcement information. Sec. 838. Expedited coupon service. Sec. 839. Withdrawing fair hearing requests. Sec. 840. Income, eligibility, and immigration status verification systems. Sec. 841. Investigations. Sec. 842. Disqualification of retailers who intentionally submit falsified applica- tions. Sec. 843. Disqualification of retailers who are disqualified under the WIC program. Sec. 844. Collection of overissuances. Sec. 845. Authority to suspend stores violating program requirements pending ad- ministrative and judicial review. Sec. 846. Expanded criminal forfeiture for violations. Sec. 847. Limitation on Federal match. Sec. 848. Standards for administration. Sec. 849. Work supplementation or support program. Sec. 850. Waiver authority. Sec. 851. Response to waivers. Sec. 852. Employment initiatives program. Sec. 853. Reauthorization. Sec. 854. Simplified food stamp program. Sec. 855. Study of the use of food stamps to purchase vitamins and minerals. Sec. 856. Deficit reduction. Subtitle B\u2014Commodity Distribution Programs Sec. 871. Emergency food assistance program. Sec. 872. Food bank demonstration project. Sec. 873. Hunger prevention programs. Sec. 874. Report on entitlement commodity processing. Subtitle C\u2014Electronic Benefit Transfer Systems Sec. 891. Provisions to encourage electronic benefit transfer systems. TITLE IX\u2014MISCELLANEOUS Sec. 901. Appropriation by State legislatures. Sec. 902. Sanctioning for testing positive for controlled substances. Sec. 903. Elimination of housing assistance with respect to fugitive felons and pro- bation and parole violators. Sec. 904. Sense of the Senate regarding the inability of the noncustodial parent to pay child support. Sec. 905. Establishing national goals to prevent teenage pregnancies. Sec. 906. Sense of the Senate regarding enforcement of statutory rape laws. Sec. 907. Provisions to encourage electronic benefit transfer systems. Sec. 908. Reduction of block grants to States for social services; use of vouchers. Sec. 909. Rules relating to denial of earned income credit on basis of disqualified income. Sec. 910. Modification of adjusted gross income definition for earned income credit. Sec. 911. Fraud under means-tested welfare and public assistance programs. Sec. 912. Abstinence education. Sec. 913. Change in reference. 110 STAT. 2110 PUBLIC LAW 104 193\u2014AUG. 22, 1996 TITLE I\u2014BLOCK GRANTS FOR TEM- PORARY ASSISTANCE FOR NEEDY FAMILIES SEC. 101. FINDINGS. The Congress makes the following findings: (1) Marriage is the foundation of a successful society. (2) Marriage is an essential institution of a successful society which promotes the interests of children. (3) Promotion of responsible fatherhood and motherhood is integral to successful child rearing and the well-being of children. (4) In 1992, only 54 percent of single-parent families with children had a child support order established and, of that 54 percent, only about one-half received the full amount due. Of the cases enforced through the public child support enforce- ment system, only 18 percent of the caseload has a collection. (5) The number of individuals receiving aid to families with dependent children (in this section referred to as ”AFDC”) has more than tripled since 1965. More than two-thirds of these recipients are children. Eighty-nine percent of children receiving AFDC benefits now live in homes in which no father is present. (A)(i) The average monthly number of children receiv- ing AFDC benefits\u2014 (I) was 3,300,000 in 1965; (II) was 6,200,000 in 1970; (III) was 7,400,000 in 1980; and (IV) was 9,300,000 in 1992. (ii) While the number of children receiving AFDC bene- fits increased nearly threefold between 1965 and 1992, the total number of children in the United States aged 0 to 18 has declined by 5.5 percent. (B) The Department of Health and Human Services has estimated that 12,000,000 children will receive AFDC benefits within 10 years. (C) The increase in the number of children receiving public assistance is closely related to the increase in births to unmarried women. Between 1970 and 1991, the percent- age of live births to unmarried women increased nearly threefold, from 10.7 percent to 29.5 percent. (6) The increase of out-of-wedlock pregnancies and births is well documented as follows: (A) It is estimated that the rate of nonmarital teen pregnancy rose 23 percent from 54 pregnancies per 1,000 unmarried teenagers in 1976 to 66.7 pregnancies in 1991. The overall rate of nonmarital pregnancy rose 14 percent from 90.8 pregnancies per 1,000 unmarried women in 1980 to 103 in both 1991 and 1992. In contrast, the overall pregnancy rate for married couples decreased 7.3 percent between 1980 and 1991, from 126.9 pregnancies per 1,000 married women in 1980 to 117.6 pregnancies in 1991. (B) The total of all out-of-wedlock births between 1970 and 1991 has risen from 10.7 percent to 29.5 percent and 42 USC 601 note. 110 STAT. 2111PUBLIC LAW 104 193\u2014AUG. 22, 1996 if the current trend continues, 50 percent of all births by the year 2015 will be out-of-wedlock. (7) An effective strategy to combat teenage pregnancy must address the issue of male responsibility, including statutory rape culpability and prevention. The increase of teenage preg- nancies among the youngest girls is particularly severe and is linked to predatory sexual practices by men who are signifi- cantly older. (A) It is estimated that in the late 1980’s, the rate for girls age 14 and under giving birth increased 26 percent. (B) Data indicates that at least half of the children born to teenage mothers are fathered by adult men. Avail- able data suggests that almost 70 percent of births to teenage girls are fathered by men over age 20. (C) Surveys of teen mothers have revealed that a majority of such mothers have histories of sexual and phys- ical abuse, primarily with older adult men. (8) The negative consequences of an out-of-wedlock birth on the mother, the child, the family, and society are well documented as follows: (A) Young women 17 and under who give birth outside of marriage are more likely to go on public assistance and to spend more years on welfare once enrolled. These combined effects of ”younger and longer” increase total AFDC costs per household by 25 percent to 30 percent for 17-year-olds. (B) Children born out-of-wedlock have a substantially higher risk of being born at a very low or moderately low birth weight. (C) Children born out-of-wedlock are more likely to experience low verbal cognitive attainment, as well as more child abuse, and neglect. (D) Children born out-of-wedlock were more likely to have lower cognitive scores, lower educational aspirations, and a greater likelihood of becoming teenage parents them- selves. (E) Being born out-of-wedlock significantly reduces the chances of the child growing up to have an intact marriage. (F) Children born out-of-wedlock are 3 times more likely to be on welfare when they grow up. (9) Currently 35 percent of children in single-parent homes were born out-of-wedlock, nearly the same percentage as that of children in single-parent homes whose parents are divorced (37 percent). While many parents find themselves, through divorce or tragic circumstances beyond their control, facing the difficult task of raising children alone, nevertheless, the negative consequences of raising children in single-parent homes are well documented as follows: (A) Only 9 percent of married-couple families with children under 18 years of age have income below the national poverty level. In contrast, 46 percent of female- headed households with children under 18 years of age are below the national poverty level. (B) Among single-parent families, nearly 1\u20442 of the mothers who never married received AFDC while only 1\u20445 of divorced mothers received AFDC. 110 STAT. 2112 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (C) Children born into families receiving welfare assist- ance are 3 times more likely to be on welfare when they reach adulthood than children not born into families receiv- ing welfare. (D) Mothers under 20 years of age are at the greatest risk of bearing low birth weight babies. (E) The younger the single-parent mother, the less likely she is to finish high school. (F) Young women who have children before finishing high school are more likely to receive welfare assistance for a longer period of time. (G) Between 1985 and 1990, the public cost of births to teenage mothers under the aid to families with depend- ent children program, the food stamp program, and the medicaid program has been estimated at $120,000,000,000. (H) The absence of a father in the life of a child has a negative effect on school performance and peer adjustment. (I) Children of teenage single parents have lower cog- nitive scores, lower educational aspirations, and a greater likelihood of becoming teenage parents themselves. (J) Children of single-parent homes are 3 times more likely to fail and repeat a year in grade school than are children from intact 2-parent families. (K) Children from single-parent homes are almost 4 times more likely to be expelled or suspended from school. (L) Neighborhoods with larger percentages of youth aged 12 through 20 and areas with higher percentages of single-parent households have higher rates of violent crime. (M) Of those youth held for criminal offenses within the State juvenile justice system, only 29.8 percent lived primarily in a home with both parents. In contrast to these incarcerated youth, 73.9 percent of the 62,800,000 children in the Nation’s resident population were living with both parents. (10) Therefore, in light of this demonstration of the crisis in our Nation, it is the sense of the Congress that prevention of out-of-wedlock pregnancy and reduction in out-of-wedlock birth are very important Government interests and the policy contained in part A of title IV of the Social Security Act (as amended by section 103(a) of this Act) is intended to address the crisis. SEC. 102. REFERENCE TO SOCIAL SECURITY ACT. Except as otherwise specifically provided, wherever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. SEC. 103. BLOCK GRANTS TO STATES. (a) IN GENERAL.\u2014Part A of title IV (42 U.S.C. 601 et seq.) is amended\u2014 (1) by striking all that precedes section 418 (as added by section 603(b)(2) of this Act) and inserting the following: 42 USC prec. 601, 601 610, 612, 613, 615 617. 110 STAT. 2113PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”PART A\u2014BLOCK GRANTS TO STATES FOR TEMPORARY ASSISTANCE FOR NEEDY FAMI- LIES ”SEC. 401. PURPOSE. ”(a) IN GENERAL.\u2014The purpose of this part is to increase the flexibility of States in operating a program designed to\u2014 ”(1) provide assistance to needy families so that children may be cared for in their own homes or in the homes of relatives; ”(2) end the dependence of needy parents on government benefits by promoting job preparation, work, and marriage; ”(3) prevent and reduce the incidence of out-of-wedlock pregnancies and establish annual numerical goals for prevent- ing and reducing the incidence of these pregnancies; and ”(4) encourage the formation and maintenance of two-par- ent families. ”(b) NO INDIVIDUAL ENTITLEMENT.\u2014This part shall not be inter- preted to entitle any individual or family to assistance under any State program funded under this part. ”SEC. 402. ELIGIBLE STATES; STATE PLAN. ”(a) IN GENERAL.\u2014As used in this part, the term ‘eligible State’ means, with respect to a fiscal year, a State that, during the 2-year period immediately preceding the fiscal year, has submitted to the Secretary a plan that the Secretary has found includes the following: ”(1) OUTLINE OF FAMILY ASSISTANCE PROGRAM.\u2014 ”(A) GENERAL PROVISIONS.\u2014A written document that outlines how the State intends to do the following: ”(i) Conduct a program, designed to serve all politi- cal subdivisions in the State (not necessarily in a uni- form manner), that provides assistance to needy fami- lies with (or expecting) children and provides parents with job preparation, work, and support services to enable them to leave the program and become self- sufficient. ”(ii) Require a parent or caretaker receiving assist- ance under the program to engage in work (as defined by the State) once the State determines the parent or caretaker is ready to engage in work, or once the parent or caretaker has received assistance under the program for 24 months (whether or not consecutive), whichever is earlier. ”(iii) Ensure that parents and caretakers receiving assistance under the program engage in work activities in accordance with section 407. ”(iv) Take such reasonable steps as the State deems necessary to restrict the use and disclosure of information about individuals and families receiving assistance under the program attributable to funds provided by the Federal Government. ”(v) Establish goals and take action to prevent and reduce the incidence of out-of-wedlock pregnancies, with special emphasis on teenage pregnancies, and establish numerical goals for reducing the illegitimacy 42 USC 602. 42 USC 601. 110 STAT. 2114 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ratio of the State (as defined in section 403(a)(2)(B)) for calendar years 1996 through 2005. ”(vi) Conduct a program, designed to reach State and local law enforcement officials, the education sys- tem, and relevant counseling services, that provides education and training on the problem of statutory rape so that teenage pregnancy prevention programs may be expanded in scope to include men. ”(B) SPECIAL PROVISIONS.\u2014 ”(i) The document shall indicate whether the State intends to treat families moving into the State from another State differently than other families under the program, and if so, how the State intends to treat such families under the program. ”(ii) The document shall indicate whether the State intends to provide assistance under the program to individuals who are not citizens of the United States, and if so, shall include an overview of such assistance. ”(iii) The document shall set forth objective criteria for the delivery of benefits and the determination of eligibility and for fair and equitable treatment, includ- ing an explanation of how the State will provide opportunities for recipients who have been adversely affected to be heard in a State administrative or appeal process. ”(iv) Not later than 1 year after the date of enact- ment of this Act, unless the chief executive officer of the State opts out of this provision by notifying the Secretary, a State shall, consistent with the excep- tion provided in section 407(e)(2), require a parent or caretaker receiving assistance under the program who, after receiving such assistance for 2 months is not exempt from work requirements and is not engaged in work, as determined under section 407(c), to partici- pate in community service employment, with minimum hours per week and tasks to be determined by the State. ”(2) CERTIFICATION THAT THE STATE WILL OPERATE A CHILD SUPPORT ENFORCEMENT PROGRAM.\u2014A certification by the chief executive officer of the State that, during the fiscal year, the State will operate a child support enforcement program under the State plan approved under part D. ”(3) CERTIFICATION THAT THE STATE WILL OPERATE A FOSTER CARE AND ADOPTION ASSISTANCE PROGRAM.\u2014A certification by the chief executive officer of the State that, during the fiscal year, the State will operate a foster care and adoption assist- ance program under the State plan approved under part E, and that the State will take such actions as are necessary to ensure that children receiving assistance under such part are eligible for medical assistance under the State plan under title XIX. ”(4) CERTIFICATION OF THE ADMINISTRATION OF THE PRO- GRAM.\u2014A certification by the chief executive officer of the State specifying which State agency or agencies will administer and supervise the program referred to in paragraph (1) for the fiscal year, which shall include assurances that local govern- ments and private sector organizations\u2014 110 STAT. 2115PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) have been consulted regarding the plan and design of welfare services in the State so that services are provided in a manner appropriate to local populations; and ”(B) have had at least 45 days to submit comments on the plan and the design of such services. ”(5) CERTIFICATION THAT THE STATE WILL PROVIDE INDIANS WITH EQUITABLE ACCESS TO ASSISTANCE.\u2014A certification by the chief executive officer of the State that, during the fiscal year, the State will provide each member of an Indian tribe, who is domiciled in the State and is not eligible for assistance under a tribal family assistance plan approved under section 412, with equitable access to assistance under the State pro- gram funded under this part attributable to funds provided by the Federal Government. ”(6) CERTIFICATION OF STANDARDS AND PROCEDURES TO ENSURE AGAINST PROGRAM FRAUD AND ABUSE.\u2014A certification by the chief executive officer of the State that the State has established and is enforcing standards and procedures to ensure against program fraud and abuse, including standards and procedures concerning nepotism, conflicts of interest among individuals responsible for the administration and supervision of the State program, kickbacks, and the use of political patronage. ”(7) OPTIONAL CERTIFICATION OF STANDARDS AND PROCE- DURES TO ENSURE THAT THE STATE WILL SCREEN FOR AND IDEN- TIFY DOMESTIC VIOLENCE.\u2014 ”(A) IN GENERAL.\u2014At the option of the State, a certifi- cation by the chief executive officer of the State that the State has established and is enforcing standards and proce- dures to\u2014 ”(i) screen and identify individuals receiving assist- ance under this part with a history of domestic violence while maintaining the confidentiality of such individuals; ”(ii) refer such individuals to counseling and supportive services; and ”(iii) waive, pursuant to a determination of good cause, other program requirements such as time limits (for so long as necessary) for individuals receiving assistance, residency requirements, child support cooperation requirements, and family cap provisions, in cases where compliance with such requirements would make it more difficult for individuals receiving assistance under this part to escape domestic violence or unfairly penalize such individuals who are or have been victimized by such violence, or individuals who are at risk of further domestic violence. ”(B) DOMESTIC VIOLENCE DEFINED.\u2014For purposes of this paragraph, the term ‘domestic violence’ has the same meaning as the term ‘battered or subjected to extreme cruelty’, as defined in section 408(a)(7)(C)(iii). ”(b) PUBLIC AVAILABILITY OF STATE PLAN SUMMARY.\u2014The State shall make available to the public a summary of any plan submitted by the State under this section. ”SEC. 403. GRANTS TO STATES. ”(a) GRANTS.\u2014 42 USC 603. 110 STAT. 2116 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(1) FAMILY ASSISTANCE GRANT.\u2014 ”(A) IN GENERAL.\u2014Each eligible State shall be entitled to receive from the Secretary, for each of fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002, a grant in an amount equal to the State family assistance grant. ”(B) STATE FAMILY ASSISTANCE GRANT DEFINED.\u2014As used in this part, the term ‘State family assistance grant’ means the greatest of\u2014 ”(i) 1\u20443 of the total amount required to be paid to the State under former section 403 (as in effect on September 30, 1995) for fiscal years 1992, 1993, and 1994 (other than with respect to amounts expended by the State for child care under subsection (g) or (i) of former section 402 (as so in effect)); ”(ii)(I) the total amount required to be paid to the State under former section 403 for fiscal year 1994 (other than with respect to amounts expended by the State for child care under subsection (g) or (i) of former section 402 (as so in effect)); plus ”(II) an amount equal to 85 percent of the amount (if any) by which the total amount required to be paid to the State under former section 403(a)(5) for emergency assistance for fiscal year 1995 exceeds the total amount required to be paid to the State under former section 403(a)(5) for fiscal year 1994, if, during fiscal year 1994 or 1995, the Secretary approved under former section 402 an amendment to the former State plan with respect to the provision of emergency assist- ance; or ”(iii) 4\u20443 of the total amount required to be paid to the State under former section 403 (as in effect on September 30, 1995) for the 1st 3 quarters of fiscal year 1995 (other than with respect to amounts expended by the State under the State plan approved under part F (as so in effect) or for child care under subsection (g) or (i) of former section 402 (as so in effect)), plus the total amount required to be paid to the State for fiscal year 1995 under former section 403(l) (as so in effect). ”(C) TOTAL AMOUNT REQUIRED TO BE PAID TO THE STATE UNDER FORMER SECTION 403 DEFINED.\u2014As used in this part, the term ‘total amount required to be paid to the State under former section 403’ means, with respect to a fiscal year\u2014 ”(i) in the case of a State to which section 1108 does not apply, the sum of\u2014 ”(I) the Federal share of maintenance assist- ance expenditures for the fiscal year, before reduc- tion pursuant to subparagraph (B) or (C) of section 403(b)(2) (as in effect on September 30, 1995), as reported by the State on ACF Form 231; ”(II) the Federal share of administrative expenditures (including administrative expendi- tures for the development of management informa- tion systems) for the fiscal year, as reported by the State on ACF Form 231; 110 STAT. 2117PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(III) the Federal share of emergency assist- ance expenditures for the fiscal year, as reported by the State on ACF Form 231; ”(IV) the Federal share of expenditures for the fiscal year with respect to child care pursuant to subsections (g) and (i) of former section 402 (as in effect on September 30, 1995), as reported by the State on ACF Form 231; and ”(V) the Federal obligations made to the State under section 403 for the fiscal year with respect to the State program operated under part F (as in effect on September 30, 1995), as determined by the Secretary, including additional obligations or reductions in obligations made after the close of the fiscal year; and ”(ii) in the case of a State to which section 1108 applies, the lesser of\u2014 ”(I) the sum described in clause (i); or ”(II) the total amount certified by the Sec- retary under former section 403 (as in effect during the fiscal year) with respect to the territory. ”(D) INFORMATION TO BE USED IN DETERMINING AMOUNTS.\u2014 ”(i) FOR FISCAL YEARS 1992 AND 1993.\u2014 ”(I) In determining the amounts described in subclauses (I) through (IV) of subparagraph (C)(i) for any State for each of fiscal years 1992 and 1993, the Secretary shall use information available as of April 28, 1995. ”(II) In determining the amount described in subparagraph (C)(i)(V) for any State for each of fiscal years 1992 and 1993, the Secretary shall use information available as of January 6, 1995. ”(ii) FOR FISCAL YEAR 1994.\u2014In determining the amounts described in subparagraph (C)(i) for any State for fiscal year 1994, the Secretary shall use information available as of April 28, 1995. ”(iii) FOR FISCAL YEAR 1995.\u2014 ”(I) In determining the amount described in subparagraph (B)(ii)(II) for any State for fiscal year 1995, the Secretary shall use the information which was reported by the States and estimates made by the States with respect to emergency assistance expenditures and was available as of August 11, 1995. ”(II) In determining the amounts described in subclauses (I) through (III) of subparagraph (C)(i) for any State for fiscal year 1995, the Secretary shall use information available as of October 2, 1995. ”(III) In determining the amount described in subparagraph (C)(i)(IV) for any State for fiscal year 1995, the Secretary shall use information available as of February 28, 1996. ”(IV) In determining the amount described in subparagraph (C)(i)(V) for any State for fiscal year 110 STAT. 2118 PUBLIC LAW 104 193\u2014AUG. 22, 1996 1995, the Secretary shall use information available as of October 5, 1995. ”(E) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002 such sums as are necessary for grants under this paragraph. ”(2) BONUS TO REWARD DECREASE IN ILLEGITIMACY.\u2014 ”(A) IN GENERAL.\u2014Each eligible State shall be entitled to receive from the Secretary a grant for each bonus year for which the State demonstrates a net decrease in out- of-wedlock births. ”(B) AMOUNT OF GRANT.\u2014 ”(i) IF 5 ELIGIBLE STATES.\u2014If there are 5 eligible States for a bonus year, the amount of the grant shall be $20,000,000. ”(ii) IF FEWER THAN 5 ELIGIBLE STATES.\u2014If there are fewer than 5 eligible States for a bonus year, the amount of the grant shall be $25,000,000. ”(C) DEFINITIONS.\u2014As used in this paragraph: ”(i) ELIGIBLE STATE.\u2014 ”(I) IN GENERAL.\u2014The term ‘eligible State’ means a State that the Secretary determines meets the following requirements: ”(aa) The State demonstrates that the number of out-of-wedlock births that occurred in the State during the most recent 2-year period for which such information is available decreased as compared to the number of such births that occurred during the previous 2- year period, and the magnitude of the decrease for the State for the period is not exceeded by the magnitude of the corresponding decrease for 5 or more other States for the period. ”(bb) The rate of induced pregnancy termi- nations in the State for the fiscal year is less than the rate of induced pregnancy termi- nations in the State for fiscal year 1995. ”(II) DISREGARD OF CHANGES IN DATA DUE TO CHANGED REPORTING METHODS.\u2014In making the determination required by subclause (I), the Sec- retary shall disregard\u2014 ”(aa) any difference between the number of out-of-wedlock births that occurred in a State for a fiscal year and the number of out- of-wedlock births that occurred in a State for fiscal year 1995 which is attributable to a change in State methods of reporting data used to calculate the number of out-of-wedlock births; and ”(bb) any difference between the rate of induced pregnancy terminations in a State for a fiscal year and such rate for fiscal year 1995 which is attributable to a change in State methods of reporting data used to calculate such rate. 110 STAT. 2119PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) BONUS YEAR.\u2014The term ‘bonus year’ means fiscal years 1999, 2000, 2001, and 2002. ”(D) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1999 through 2002, such sums as are necessary for grants under this paragraph. ”(3) SUPPLEMENTAL GRANT FOR POPULATION INCREASES IN CERTAIN STATES.\u2014 ”(A) IN GENERAL.\u2014Each qualifying State shall, subject to subparagraph (F), be entitled to receive from the Sec- retary\u2014 ”(i) for fiscal year 1998 a grant in an amount equal to 2.5 percent of the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and ”(ii) for each of fiscal years 1999, 2000, and 2001, a grant in an amount equal to the sum of\u2014 ”(I) the amount (if any) required to be paid to the State under this paragraph for the imme- diately preceding fiscal year; and ”(II) 2.5 percent of the sum of\u2014 ”(aa) the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and ”(bb) the amount (if any) required to be paid to the State under this paragraph for the fiscal year preceding the fiscal year for which the grant is to be made. ”(B) PRESERVATION OF GRANT WITHOUT INCREASES FOR STATES FAILING TO REMAIN QUALIFYING STATES.\u2014Each State that is not a qualifying State for a fiscal year specified in subparagraph (A)(ii) but was a qualifying State for a prior fiscal year shall, subject to subparagraph (F), be entitled to receive from the Secretary for the specified fiscal year, a grant in an amount equal to the amount required to be paid to the State under this paragraph for the most recent fiscal year for which the State was a qualifying State. ”(C) QUALIFYING STATE.\u2014 ”(i) IN GENERAL.\u2014For purposes of this paragraph, a State is a qualifying State for a fiscal year if\u2014 ”(I) the level of welfare spending per poor per- son by the State for the immediately preceding fiscal year is less than the national average level of State welfare spending per poor person for such preceding fiscal year; and ”(II) the population growth rate of the State (as determined by the Bureau of the Census) for the most recent fiscal year for which information is available exceeds the average population growth rate for all States (as so determined) for such most recent fiscal year. ”(ii) STATE MUST QUALIFY IN FISCAL YEAR 1997.\u2014 Notwithstanding clause (i), a State shall not be a qualifying State for any fiscal year after 1998 by reason 110 STAT. 2120 PUBLIC LAW 104 193\u2014AUG. 22, 1996 of clause (i) if the State is not a qualifying State for fiscal year 1998 by reason of clause (i). ”(iii) CERTAIN STATES DEEMED QUALIFYING STATES.\u2014For purposes of this paragraph, a State is deemed to be a qualifying State for fiscal years 1998, 1999, 2000, and 2001 if\u2014 ”(I) the level of welfare spending per poor per- son by the State for fiscal year 1994 is less than 35 percent of the national average level of State welfare spending per poor person for fiscal year 1994; or ”(II) the population of the State increased by more than 10 percent from April 1, 1990 to July 1, 1994, according to the population estimates in publication CB94 204 of the Bureau of the Census. ”(D) DEFINITIONS.\u2014As used in this paragraph: ”(i) LEVEL OF WELFARE SPENDING PER POOR PER- SON.\u2014The term ‘level of State welfare spending per poor person’ means, with respect to a State and a fiscal year\u2014 ”(I) the sum of\u2014 ”(aa) the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; and ”(bb) the amount (if any) paid to the State under this paragraph for the immediately preceding fiscal year; divided by ”(II) the number of individuals, according to the 1990 decennial census, who were residents of the State and whose income was below the poverty line. ”(ii) NATIONAL AVERAGE LEVEL OF STATE WELFARE SPENDING PER POOR PERSON.\u2014The term ‘national aver- age level of State welfare spending per poor person’ means, with respect to a fiscal year, an amount equal to\u2014 ”(I) the total amount required to be paid to the States under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994; divided by ”(II) the number of individuals, according to the 1990 decennial census, who were residents of any State and whose income was below the poverty line. ”(iii) STATE.\u2014The term ‘State’ means each of the 50 States of the United States and the District of Columbia. ”(E) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal years 1998, 1999, 2000, and 2001 such sums as are necessary for grants under this paragraph, in a total amount not to exceed $800,000,000. ”(F) GRANTS REDUCED PRO RATA IF INSUFFICIENT APPRO- PRIATIONS.\u2014If the amount appropriated pursuant to this paragraph for a fiscal year is less than the total amount 110 STAT. 2121PUBLIC LAW 104 193\u2014AUG. 22, 1996 of payments otherwise required to be made under this paragraph for the fiscal year, then the amount otherwise payable to any State for the fiscal year under this para- graph shall be reduced by a percentage equal to the amount so appropriated divided by such total amount. ”(G) BUDGET SCORING.\u2014Notwithstanding section 257(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985, the baseline shall assume that no grant shall be made under this paragraph after fiscal year 2001. ”(4) BONUS TO REWARD HIGH PERFORMANCE STATES.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall make a grant pursuant to this paragraph to each State for each bonus year for which the State is a high performing State. ”(B) AMOUNT OF GRANT.\u2014 ”(i) IN GENERAL.\u2014Subject to clause (ii) of this subparagraph, the Secretary shall determine the amount of the grant payable under this paragraph to a high performing State for a bonus year, which shall be based on the score assigned to the State under subparagraph (D)(i) for the fiscal year that immediately precedes the bonus year. ”(ii) LIMITATION.\u2014The amount payable to a State under this paragraph for a bonus year shall not exceed 5 percent of the State family assistance grant. ”(C) FORMULA FOR MEASURING STATE PERFORMANCE.\u2014 Not later than 1 year after the date of the enactment of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996, the Secretary, in consultation with the National Governors’ Association and the American Pub- lic Welfare Association, shall develop a formula for measur- ing State performance in operating the State program funded under this part so as to achieve the goals set forth in section 401(a). ”(D) SCORING OF STATE PERFORMANCE; SETTING OF PERFORMANCE THRESHOLDS.\u2014For each bonus year, the Sec- retary shall\u2014 ”(i) use the formula developed under subparagraph (C) to assign a score to each eligible State for the fiscal year that immediately precedes the bonus year; and ”(ii) prescribe a performance threshold in such a manner so as to ensure that\u2014 ”(I) the average annual total amount of grants to be made under this paragraph for each bonus year equals $200,000,000; and ”(II) the total amount of grants to be made under this paragraph for all bonus years equals $1,000,000,000. ”(E) DEFINITIONS.\u2014As used in this paragraph: ”(i) BONUS YEAR.\u2014The term ‘bonus year’ means fiscal years 1999, 2000, 2001, 2002, and 2003. ”(ii) HIGH PERFORMING STATE.\u2014The term ‘high performing State’ means, with respect to a bonus year, an eligible State whose score assigned pursuant to subparagraph (D)(i) for the fiscal year immediately preceding the bonus year equals or exceeds the 110 STAT. 2122 PUBLIC LAW 104 193\u2014AUG. 22, 1996 performance threshold prescribed under subparagraph (D)(ii) for such preceding fiscal year. ”(F) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1999 through 2003 $1,000,000,000 for grants under this paragraph. ”(b) CONTINGENCY FUND.\u2014 ”(1) ESTABLISHMENT.\u2014There is hereby established in the Treasury of the United States a fund which shall be known as the ‘Contingency Fund for State Welfare Programs’ (in this section referred to as the ‘Fund’). ”(2) DEPOSITS INTO FUND.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated for fiscal years 1997, 1998, 1999, 2000, and 2001 such sums as are necessary for payment to the Fund in a total amount not to exceed $2,000,000,000. ”(3) GRANTS.\u2014 ”(A) PROVISIONAL PAYMENTS.\u2014If an eligible State sub- mits to the Secretary a request for funds under this para- graph during an eligible month, the Secretary shall, subject to this paragraph, pay to the State, from amounts appro- priated pursuant to paragraph (2), an amount equal to the amount of funds so requested. ”(B) PAYMENT PRIORITY.\u2014The Secretary shall make payments under subparagraph (A) in the order in which the Secretary receives requests for such payments. ”(C) LIMITATIONS.\u2014 ”(i) MONTHLY PAYMENT TO A STATE.\u2014The total amount paid to a single State under subparagraph (A) during a month shall not exceed 1\u204412 of 20 percent of the State family assistance grant. ”(ii) PAYMENTS TO ALL STATES.\u2014The total amount paid to all States under subparagraph (A) during fiscal years 1997 through 2001 shall not exceed the total amount appropriated pursuant to paragraph (2). ”(4) ANNUAL RECONCILIATION.\u2014Notwithstanding paragraph (3), at the end of each fiscal year, each State shall remit to the Secretary an amount equal to the amount (if any) by which the total amount paid to the State under paragraph (3) during the fiscal year exceeds\u2014 ”(A) the Federal medical assistance percentage for the State for the fiscal year (as defined in section 1905(b), as in effect on September 30, 1995) of the amount (if any) by which\u2014 ”(i) if the Secretary makes a payment to the State under section 418(a)(2) in the fiscal year\u2014 ”(I) the expenditures under the State program funded under this part for the fiscal year, exclud- ing any amounts made available by the Federal Government (except amounts paid to the State under paragraph (3) during the fiscal year that have been expended by the State) and any amounts expended by the State during the fiscal year for child care; exceeds ”(II) historic State expenditures (as defined in section 409(a)(7)(B)(iii)), excluding the expendi- tures by the State for child care under subsection 110 STAT. 2123PUBLIC LAW 104 193\u2014AUG. 22, 1996 (g) or (i) of section 402 (as in effect during fiscal year 1994) for fiscal year 1994 minus any Federal payment with respect to such child care expendi- tures; or ”(ii) if the Secretary does not make a payment to the State under section 418(a)(2) in the fiscal year\u2014 ”(I) the expenditures under the State program funded under this part for the fiscal year (exclud- ing any amounts made available by the Federal Government, except amounts paid to the State under paragraph (3) during the fiscal year that have been expended by the State); exceeds ”(II) historic State expenditures (as defined in section 409(a)(7)(B)(iii)); multiplied by ”(B) 1\u204412 times the number of months during the fiscal year for which the Secretary makes a payment to the State under this subsection. ”(5) ELIGIBLE MONTH.\u2014As used in paragraph (3)(A), the term ‘eligible month’ means, with respect to a State, a month in the 2-month period that begins with any month for which the State is a needy State. ”(6) NEEDY STATE.\u2014For purposes of paragraph (5), a State is a needy State for a month if\u2014 ”(A) the average rate of\u2014 ”(i) total unemployment in such State (seasonally adjusted) for the period consisting of the most recent 3 months for which data for all States are published equals or exceeds 6.5 percent; and ”(ii) total unemployment in such State (seasonally adjusted) for the 3-month period equals or exceeds 110 percent of such average rate for either (or both) of the corresponding 3-month periods ending in the 2 preceding calendar years; or ”(B) as determined by the Secretary of Agriculture (in the discretion of the Secretary of Agriculture), the monthly average number of individuals (as of the last day of each month) participating in the food stamp program in the State in the then most recently concluded 3-month period for which data are available exceeds by not less than 10 percent the lesser of\u2014 ”(i) the monthly average number of individuals (as of the last day of each month) in the State that would have participated in the food stamp program in the corresponding 3-month period in fiscal year 1994 if the amendments made by titles IV and VIII of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996 had been in effect throughout fiscal year 1994; or ”(ii) the monthly average number of individuals (as of the last day of each month) in the State that would have participated in the food stamp program in the corresponding 3-month period in fiscal year 1995 if the amendments made by titles IV and VIII of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996 had been in effect throughout fiscal year 1995. ”(7) OTHER TERMS DEFINED.\u2014As used in this subsection: 110 STAT. 2124 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) STATE.\u2014The term ‘State’ means each of the 50 States of the United States and the District of Columbia. ”(B) SECRETARY.\u2014The term ‘Secretary’ means the Sec- retary of the Treasury. ”(8) ANNUAL REPORTS.\u2014The Secretary shall annually report to the Congress on the status of the Fund. ”SEC. 404. USE OF GRANTS. ”(a) GENERAL RULES.\u2014Subject to this part, a State to which a grant is made under section 403 may use the grant\u2014 ”(1) in any manner that is reasonably calculated to accom- plish the purpose of this part, including to provide low income households with assistance in meeting home heating and cool- ing costs; or ”(2) in any manner that the State was authorized to use amounts received under part A or F, as such parts were in effect on September 30, 1995. ”(b) LIMITATION ON USE OF GRANT FOR ADMINISTRATIVE PURPOSES.\u2014 ”(1) LIMITATION.\u2014A State to which a grant is made under section 403 shall not expend more than 15 percent of the grant for administrative purposes. ”(2) EXCEPTION.\u2014Paragraph (1) shall not apply to the use of a grant for information technology and computerization needed for tracking or monitoring required by or under this part. ”(c) AUTHORITY TO TREAT INTERSTATE IMMIGRANTS UNDER RULES OF FORMER STATE.\u2014A State operating a program funded under this part may apply to a family the rules (including benefit amounts) of the program funded under this part of another State if the family has moved to the State from the other State and has resided in the State for less than 12 months. ”(d) AUTHORITY TO USE PORTION OF GRANT FOR OTHER PUR- POSES.\u2014 ”(1) IN GENERAL.\u2014A State may use not more than 30 percent of the amount of any grant made to the State under section 403(a) for a fiscal year to carry out a State program pursuant to any or all of the following provisions of law: ”(A) Title XX of this Act. ”(B) The Child Care and Development Block Grant Act of 1990. ”(2) LIMITATION ON AMOUNT TRANSFERABLE TO TITLE XX PROGRAMS.\u2014Notwithstanding paragraph (1), not more than 1\u20443 of the total amount paid to a State under this part for a fiscal year that is used to carry out State programs pursuant to provisions of law specified in paragraph (1) may be used to carry out State programs pursuant to title XX. ”(3) APPLICABLE RULES.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B) of this paragraph, any amount paid to a State under this part that is used to carry out a State program pursuant to a provision of law specified in paragraph (1) shall not be subject to the requirements of this part, but shall be subject to the requirements that apply to Federal funds provided directly under the provision of law to carry out the program, and the expenditure of any amount so used 42 USC 604. 110 STAT. 2125PUBLIC LAW 104 193\u2014AUG. 22, 1996 shall not be considered to be an expenditure under this part. ”(B) EXCEPTION RELATING TO TITLE XX PROGRAMS.\u2014 All amounts paid to a State under this part that are used to carry out State programs pursuant to title XX shall be used only for programs and services to children or their families whose income is less than 200 percent of the income official poverty line (as defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Rec- onciliation Act of 1981) applicable to a family of the size involved. ”(e) AUTHORITY TO RESERVE CERTAIN AMOUNTS FOR ASSIST- ANCE.\u2014A State may reserve amounts paid to the State under this part for any fiscal year for the purpose of providing, without fiscal year limitation, assistance under the State program funded under this part. ”(f) AUTHORITY TO OPERATE EMPLOYMENT PLACEMENT PROGRAM.\u2014A State to which a grant is made under section 403 may use the grant to make payments (or provide job placement vouchers) to State-approved public and private job placement agen- cies that provide employment placement services to individuals who receive assistance under the State program funded under this part. ”(g) IMPLEMENTATION OF ELECTRONIC BENEFIT TRANSFER SYSTEM.\u2014A State to which a grant is made under section 403 is encouraged to implement an electronic benefit transfer system for providing assistance under the State program funded under this part, and may use the grant for such purpose. ”(h) USE OF FUNDS FOR INDIVIDUAL DEVELOPMENT ACCOUNTS.\u2014 ”(1) IN GENERAL.\u2014A State to which a grant is made under section 403 may use the grant to carry out a program to fund individual development accounts (as defined in paragraph (2)) established by individuals eligible for assistance under the State program funded under this part. ”(2) INDIVIDUAL DEVELOPMENT ACCOUNTS.\u2014 ”(A) ESTABLISHMENT.\u2014Under a State program carried out under paragraph (1), an individual development account may be established by or on behalf of an individual eligible for assistance under the State program operated under this part for the purpose of enabling the individual to accumulate funds for a qualified purpose described in subparagraph (B). ”(B) QUALIFIED PURPOSE.\u2014A qualified purpose described in this subparagraph is 1 or more of the following, as provided by the qualified entity providing assistance to the individual under this subsection: ”(i) POSTSECONDARY EDUCATIONAL EXPENSES.\u2014 Postsecondary educational expenses paid from an individual development account directly to an eligible educational institution. ”(ii) FIRST HOME PURCHASE.\u2014Qualified acquisition costs with respect to a qualified principal residence for a qualified first-time homebuyer, if paid from an individual development account directly to the persons to whom the amounts are due. 110 STAT. 2126 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(iii) BUSINESS CAPITALIZATION.\u2014Amounts paid from an individual development account directly to a business capitalization account which is established in a federally insured financial institution and is restricted to use solely for qualified business capitaliza- tion expenses. ”(C) CONTRIBUTIONS TO BE FROM EARNED INCOME.\u2014 An individual may only contribute to an individual develop- ment account such amounts as are derived from earned income, as defined in section 911(d)(2) of the Internal Reve- nue Code of 1986. ”(D) WITHDRAWAL OF FUNDS.\u2014The Secretary shall establish such regulations as may be necessary to ensure that funds held in an individual development account are not withdrawn except for 1 or more of the qualified pur- poses described in subparagraph (B). ”(3) REQUIREMENTS.\u2014 ”(A) IN GENERAL.\u2014An individual development account established under this subsection shall be a trust created or organized in the United States and funded through periodic contributions by the establishing individual and matched by or through a qualified entity for a qualified purpose (as described in paragraph (2)(B)). ”(B) QUALIFIED ENTITY.\u2014As used in this subsection, the term ‘qualified entity’ means\u2014 ”(i) a not-for-profit organization described in sec- tion 501(c)(3) of the Internal Revenue Code of 1986 and exempt from taxation under section 501(a) of such Code; or ”(ii) a State or local government agency acting in cooperation with an organization described in clause (i). ”(4) NO REDUCTION IN BENEFITS.\u2014Notwithstanding any other provision of Federal law (other than the Internal Revenue Code of 1986) that requires consideration of 1 or more financial circumstances of an individual, for the purpose of determining eligibility to receive, or the amount of, any assistance or benefit authorized by such law to be provided to or for the benefit of such individual, funds (including interest accruing) in an individual development account under this subsection shall be disregarded for such purpose with respect to any period during which such individual maintains or makes contributions into such an account. ”(5) DEFINITIONS.\u2014As used in this subsection\u2014 ”(A) ELIGIBLE EDUCATIONAL INSTITUTION.\u2014The term ‘eligible educational institution’ means the following: ”(i) An institution described in section 481(a)(1) or 1201(a) of the Higher Education Act of 1965 (20 U.S.C. 1088(a)(1) or 1141(a)), as such sections are in effect on the date of the enactment of this subsection. ”(ii) An area vocational education school (as defined in subparagraph (C) or (D) of section 521(4) of the Carl D. Perkins Vocational and Applied Tech- nology Education Act (20 U.S.C. 2471(4))) which is in any State (as defined in section 521(33) of such Act), as such sections are in effect on the date of the enactment of this subsection. Regulations. 110 STAT. 2127PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) POST-SECONDARY EDUCATIONAL EXPENSES.\u2014The term ‘post-secondary educational expenses’ means\u2014 ”(i) tuition and fees required for the enrollment or attendance of a student at an eligible educational institution, and ”(ii) fees, books, supplies, and equipment required for courses of instruction at an eligible educational institution. ”(C) QUALIFIED ACQUISITION COSTS.\u2014The term ‘quali- fied acquisition costs’ means the costs of acquiring, con- structing, or reconstructing a residence. The term includes any usual or reasonable settlement, financing, or other closing costs. ”(D) QUALIFIED BUSINESS.\u2014The term ‘qualified busi- ness’ means any business that does not contravene any law or public policy (as determined by the Secretary). ”(E) QUALIFIED BUSINESS CAPITALIZATION EXPENSES.\u2014 The term ‘qualified business capitalization expenses’ means qualified expenditures for the capitalization of a qualified business pursuant to a qualified plan. ”(F) QUALIFIED EXPENDITURES.\u2014The term ‘qualified expenditures’ means expenditures included in a qualified plan, including capital, plant, equipment, working capital, and inventory expenses. ”(G) QUALIFIED FIRST-TIME HOMEBUYER.\u2014 ”(i) IN GENERAL.\u2014The term ‘qualified first-time homebuyer’ means a taxpayer (and, if married, the taxpayer’s spouse) who has no present ownership interest in a principal residence during the 3-year period ending on the date of acquisition of the principal residence to which this subsection applies. ”(ii) DATE OF ACQUISITION.\u2014The term ‘date of acquisition’ means the date on which a binding contract to acquire, construct, or reconstruct the principal resi- dence to which this subparagraph applies is entered into. ”(H) QUALIFIED PLAN.\u2014The term ‘qualified plan’ means a business plan which\u2014 ”(i) is approved by a financial institution, or by a nonprofit loan fund having demonstrated fiduciary integrity, ”(ii) includes a description of services or goods to be sold, a marketing plan, and projected financial statements, and ”(iii) may require the eligible individual to obtain the assistance of an experienced entrepreneurial advisor. ”(I) QUALIFIED PRINCIPAL RESIDENCE.\u2014The term ‘quali- fied principal residence’ means a principal residence (within the meaning of section 1034 of the Internal Revenue Code of 1986), the qualified acquisition costs of which do not exceed 100 percent of the average area purchase price applicable to such residence (determined in accordance with paragraphs (2) and (3) of section 143(e) of such Code). ”(i) SANCTION WELFARE RECIPIENTS FOR FAILING TO ENSURE THAT MINOR DEPENDENT CHILDREN ATTEND SCHOOL.\u2014A State to which a grant is made under section 403 shall not be prohibited 110 STAT. 2128 PUBLIC LAW 104 193\u2014AUG. 22, 1996 from sanctioning a family that includes an adult who has received assistance under any State program funded under this part attrib- utable to funds provided by the Federal Government or under the food stamp program, as defined in section 3(h) of the Food Stamp Act of 1977, if such adult fails to ensure that the minor dependent children of such adult attend school as required by the law of the State in which the minor children reside. ”(j) REQUIREMENT FOR HIGH SCHOOL DIPLOMA OR EQUIVA- LENT.\u2014A State to which a grant is made under section 403 shall not be prohibited from sanctioning a family that includes an adult who is older than age 20 and younger than age 51 and who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government or under the food stamp program, as defined in section 3(h) of the Food Stamp Act of 1977, if such adult does not have, or is not working toward attaining, a secondary school diploma or its recognized equivalent unless such adult has been determined in the judgment of medical, psychiatric, or other appropriate profes- sionals to lack the requisite capacity to complete successfully a course of study that would lead to a secondary school diploma or its recognized equivalent. ”SEC. 405. ADMINISTRATIVE PROVISIONS. ”(a) QUARTERLY.\u2014The Secretary shall pay each grant payable to a State under section 403 in quarterly installments, subject to this section. ”(b) NOTIFICATION.\u2014Not later than 3 months before the pay- ment of any such quarterly installment to a State, the Secretary shall notify the State of the amount of any reduction determined under section 412(a)(1)(B) with respect to the State. ”(c) COMPUTATION AND CERTIFICATION OF PAYMENTS TO STATES.\u2014 ”(1) COMPUTATION.\u2014The Secretary shall estimate the amount to be paid to each eligible State for each quarter under this part, such estimate to be based on a report filed by the State containing an estimate by the State of the total sum to be expended by the State in the quarter under the State program funded under this part and such other informa- tion as the Secretary may find necessary. ”(2) CERTIFICATION.\u2014The Secretary of Health and Human Services shall certify to the Secretary of the Treasury the amount estimated under paragraph (1) with respect to a State, reduced or increased to the extent of any overpayment or under- payment which the Secretary of Health and Human Services determines was made under this part to the State for any prior quarter and with respect to which adjustment has not been made under this paragraph. ”(d) PAYMENT METHOD.\u2014Upon receipt of a certification under subsection (c)(2) with respect to a State, the Secretary of the Treas- ury shall, through the Fiscal Service of the Department of the Treasury and before audit or settlement by the General Accounting Office, pay to the State, at the time or times fixed by the Secretary of Health and Human Services, the amount so certified. ”SEC. 406. FEDERAL LOANS FOR STATE WELFARE PROGRAMS. ”(a) LOAN AUTHORITY.\u2014 42 USC 606. 42 USC 605. 110 STAT. 2129PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(1) IN GENERAL.\u2014The Secretary shall make loans to any loan-eligible State, for a period to maturity of not more than 3 years. ”(2) LOAN-ELIGIBLE STATE.\u2014As used in paragraph (1), the term ‘loan-eligible State’ means a State against which a penalty has not been imposed under section 409(a)(1). ”(b) RATE OF INTEREST.\u2014The Secretary shall charge and collect interest on any loan made under this section at a rate equal to the current average market yield on outstanding marketable obligations of the United States with remaining periods to maturity comparable to the period to maturity of the loan. ”(c) USE OF LOAN.\u2014A State shall use a loan made to the State under this section only for any purpose for which grant amounts received by the State under section 403(a) may be used, including\u2014 ”(1) welfare anti-fraud activities; and ”(2) the provision of assistance under the State program to Indian families that have moved from the service area of an Indian tribe with a tribal family assistance plan approved under section 412. ”(d) LIMITATION ON TOTAL AMOUNT OF LOANS TO A STATE.\u2014 The cumulative dollar amount of all loans made to a State under this section during fiscal years 1997 through 2002 shall not exceed 10 percent of the State family assistance grant. ”(e) LIMITATION ON TOTAL AMOUNT OF OUTSTANDING LOANS.\u2014 The total dollar amount of loans outstanding under this section may not exceed $1,700,000,000. ”(f) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appro- priated such sums as may be necessary for the cost of loans under this section. ”SEC. 407. MANDATORY WORK REQUIREMENTS. ”(a) PARTICIPATION RATE REQUIREMENTS.\u2014 ”(1) ALL FAMILIES.\u2014A State to which a grant is made under section 403 for a fiscal year shall achieve the minimum participation rate specified in the following table for the fiscal year with respect to all families receiving assistance under the State program funded under this part: The minimum participation ”If the fiscal year is: rate is: 1997 ……………………………………………………………………….. 25 1998 ……………………………………………………………………….. 30 1999 ……………………………………………………………………….. 35 2000 ……………………………………………………………………….. 40 2001 ……………………………………………………………………….. 45 2002 or thereafter …………………………………………………… 50. ”(2) 2-PARENT FAMILIES.\u2014A State to which a grant is made under section 403 for a fiscal year shall achieve the minimum participation rate specified in the following table for the fiscal year with respect to 2-parent families receiving assistance under the State program funded under this part: The minimum participation ”If the fiscal year is: rate is: 1997 ……………………………………………………………………….. 75 1998 ……………………………………………………………………….. 75 1999 or thereafter …………………………………………………… 90. 42 USC 607. 110 STAT. 2130 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(b) CALCULATION OF PARTICIPATION RATES.\u2014 ”(1) ALL FAMILIES.\u2014 ”(A) AVERAGE MONTHLY RATE.\u2014For purposes of sub- section (a)(1), the participation rate for all families of a State for a fiscal year is the average of the participation rates for all families of the State for each month in the fiscal year. ”(B) MONTHLY PARTICIPATION RATES.\u2014The participa- tion rate of a State for all families of the State for a month, expressed as a percentage, is\u2014 ”(i) the number of families receiving assistance under the State program funded under this part that include an adult or a minor child head of household who is engaged in work for the month; divided by ”(ii) the amount by which\u2014 ”(I) the number of families receiving such assistance during the month that include an adult or a minor child head of household receiving such assistance; exceeds ”(II) the number of families receiving such assistance that are subject in such month to a penalty described in subsection (e)(1) but have not been subject to such penalty for more than 3 months within the preceding 12-month period (whether or not consecutive). ”(2) 2-PARENT FAMILIES.\u2014 ”(A) AVERAGE MONTHLY RATE.\u2014For purposes of sub- section (a)(2), the participation rate for 2-parent families of a State for a fiscal year is the average of the participation rates for 2-parent families of the State for each month in the fiscal year. ”(B) MONTHLY PARTICIPATION RATES.\u2014The participa- tion rate of a State for 2-parent families of the State for a month shall be calculated by use of the formula set forth in paragraph (1)(B), except that in the formula the term ‘number of 2-parent families’ shall be substituted for the term ‘number of families’ each place such latter term appears. ”(3) PRO RATA REDUCTION OF PARTICIPATION RATE DUE TO CASELOAD REDUCTIONS NOT REQUIRED BY FEDERAL LAW.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall prescribe regu- lations for reducing the minimum participation rate other- wise required by this section for a fiscal year by the number of percentage points equal to the number of percentage points (if any) by which\u2014 ”(i) the average monthly number of families receiv- ing assistance during the immediately preceding fiscal year under the State program funded under this part is less than ”(ii) the average monthly number of families that received aid under the State plan approved under part A (as in effect on September 30, 1995) during fiscal year 1995. The minimum participation rate shall not be reduced to the extent that the Secretary determines that the reduction in the number of families receiving such assistance is required by Federal law. Regulations. 110 STAT. 2131PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) ELIGIBILITY CHANGES NOT COUNTED.\u2014The regula- tions required by subparagraph (A) shall not take into account families that are diverted from a State program funded under this part as a result of differences in eligi- bility criteria under a State program funded under this part and eligibility criteria under the State program oper- ated under the State plan approved under part A (as such plan and such part were in effect on September 30, 1995). Such regulations shall place the burden on the Secretary to prove that such families were diverted as a direct result of differences in such eligibility criteria. ”(4) STATE OPTION TO INCLUDE INDIVIDUALS RECEIVING ASSISTANCE UNDER A TRIBAL FAMILY ASSISTANCE PLAN.\u2014For purposes of paragraphs (1)(B) and (2)(B), a State may, at its option, include families in the State that are receiving assist- ance under a tribal family assistance plan approved under section 412. ”(5) STATE OPTION FOR PARTICIPATION REQUIREMENT EXEMP- TIONS.\u2014For any fiscal year, a State may, at its option, not require an individual who is a single custodial parent caring for a child who has not attained 12 months of age to engage in work, and may disregard such an individual in determining the participation rates under subsection (a) for not more than 12 months. ”(c) ENGAGED IN WORK.\u2014 ”(1) GENERAL RULES.\u2014 ”(A) ALL FAMILIES.\u2014For purposes of subsection (b)(1)(B)(i), a recipient is engaged in work for a month in a fiscal year if the recipient is participating in work activities for at least the minimum average number of hours per week specified in the following table during the month, not fewer than 20 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of subsection (d), subject to this subsection: The minimum ”If the month is average number of in fiscal year: hours per week is: 1997 ……………………………………………………………………. 20 1998 ……………………………………………………………………. 20 1999 ……………………………………………………………………. 25 2000 or thereafter ………………………………………………… 30. ”(B) 2-PARENT FAMILIES.\u2014For purposes of subsection (b)(2)(B), an individual is engaged in work for a month in a fiscal year if\u2014 ”(i) the individual is making progress in work activities for at least 35 hours per week during the month, not fewer than 30 hours per week of which are attributable to an activity described in paragraph (1), (2), (3), (4), (5), (6), (7), (8), or (12) of subsection (d), subject to this subsection; and ”(ii) if the family of the individual receives feder- ally-funded child care assistance and an adult in the family is not disabled or caring for a severely disabled child, the individual’s spouse is making progress in work activities during the month, not fewer than 20 hours per week of which are attributable to an activity 110 STAT. 2132 PUBLIC LAW 104 193\u2014AUG. 22, 1996 described in paragraph (1), (2), (3), (4), (5), or (7) of subsection (d). ”(2) LIMITATIONS AND SPECIAL RULES.\u2014 ”(A) NUMBER OF WEEKS FOR WHICH JOB SEARCH COUNTS AS WORK.\u2014 ”(i) LIMITATION.\u2014Notwithstanding paragraph (1) of this subsection, an individual shall not be considered to be engaged in work by virtue of participation in an activity described in subsection (d)(6) of a State program funded under this part, after the individual has participated in such an activity for 6 weeks (or, if the unemployment rate of the State is at least 50 percent greater than the unemployment rate of the United States, 12 weeks), or if the participation is for a week that immediately follows 4 consecutive weeks of such participation. ”(ii) LIMITED AUTHORITY TO COUNT LESS THAN FULL WEEK OF PARTICIPATION.\u2014For purposes of clause (i) of this subparagraph, on not more than 1 occasion per individual, the State shall consider participation of the individual in an activity described in subsection (d)(6) for 3 or 4 days during a week as a week of participation in the activity by the individual. ”(B) SINGLE PARENT WITH CHILD UNDER AGE 6 DEEMED TO BE MEETING WORK PARTICIPATION REQUIREMENTS IF PAR- ENT IS ENGAGED IN WORK FOR 20 HOURS PER WEEK.\u2014For purposes of determining monthly participation rates under subsection (b)(1)(B)(i), a recipient in a 1-parent family who is the parent of a child who has not attained 6 years of age is deemed to be engaged in work for a month if the recipient is engaged in work for an average of at least 20 hours per week during the month. ”(C) TEEN HEAD OF HOUSEHOLD WHO MAINTAINS SATIS- FACTORY SCHOOL ATTENDANCE DEEMED TO BE MEETING WORK PARTICIPATION REQUIREMENTS.\u2014For purposes of determining monthly participation rates under sub- section (b)(1)(B)(i), a recipient who is a single head of household and has not attained 20 years of age is deemed, subject to subparagraph (D) of this paragraph, to be engaged in work for a month in a fiscal year if the recipi- ent\u2014 ”(i) maintains satisfactory attendance at secondary school or the equivalent during the month; or ”(ii) participates in education directly related to employment for at least the minimum average number of hours per week specified in the table set forth in paragraph (1)(A) of this subsection. ”(D) NUMBER OF PERSONS THAT MAY BE TREATED AS ENGAGED IN WORK BY VIRTUE OF PARTICIPATION IN VOCA- TIONAL EDUCATION ACTIVITIES OR BEING A TEEN HEAD OF HOUSEHOLD WHO MAINTAINS SATISFACTORY SCHOOL ATTEND- ANCE.\u2014For purposes of determining monthly participation rates under paragraphs (1)(B)(i) and (2)(B) of subsection (b), not more than 20 percent of individuals in all families and in 2-parent families may be determined to be engaged in work in the State for a month by reason of participation 110 STAT. 2133PUBLIC LAW 104 193\u2014AUG. 22, 1996 in vocational educational training or deemed to be engaged in work by reason of subparagraph (C) of this paragraph. ”(d) WORK ACTIVITIES DEFINED.\u2014As used in this section, the term ‘work activities’ means\u2014 ”(1) unsubsidized employment; ”(2) subsidized private sector employment; ”(3) subsidized public sector employment; ”(4) work experience (including work associated with the refurbishing of publicly assisted housing) if sufficient private sector employment is not available; ”(5) on-the-job training; ”(6) job search and job readiness assistance; ”(7) community service programs; ”(8) vocational educational training (not to exceed 12 months with respect to any individual); ”(9) job skills training directly related to employment; ”(10) education directly related to employment, in the case of a recipient who has not received a high school diploma or a certificate of high school equivalency; ”(11) satisfactory attendance at secondary school or in a course of study leading to a certificate of general equivalence, in the case of a recipient who has not completed secondary school or received such a certificate; and ”(12) the provision of child care services to an individual who is participating in a community service program. ”(e) PENALTIES AGAINST INDIVIDUALS.\u2014 ”(1) IN GENERAL.\u2014Except as provided in paragraph (2), if an individual in a family receiving assistance under the State program funded under this part refuses to engage in work required in accordance with this section, the State shall\u2014 ”(A) reduce the amount of assistance otherwise payable to the family pro rata (or more, at the option of the State) with respect to any period during a month in which the individual so refuses; or ”(B) terminate such assistance, subject to such good cause and other exceptions as the State may establish. ”(2) EXCEPTION.\u2014Notwithstanding paragraph (1), a State may not reduce or terminate assistance under the State pro- gram funded under this part based on a refusal of an individual to work if the individual is a single custodial parent caring for a child who has not attained 6 years of age, and the individual proves that the individual has a demonstrated inabil- ity (as determined by the State) to obtain needed child care, for 1 or more of the following reasons: ”(A) Unavailability of appropriate child care within a reasonable distance from the individual’s home or work site. ”(B) Unavailability or unsuitability of informal child care by a relative or under other arrangements. ”(C) Unavailability of appropriate and affordable for- mal child care arrangements. ”(f) NONDISPLACEMENT IN WORK ACTIVITIES.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2), an adult in a family receiving assistance under a State program funded under this part attributable to funds provided by the Federal 110 STAT. 2134 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Government may fill a vacant employment position in order to engage in a work activity described in subsection (d). ”(2) NO FILLING OF CERTAIN VACANCIES.\u2014No adult in a work activity described in subsection (d) which is funded, in whole or in part, by funds provided by the Federal Government shall be employed or assigned\u2014 ”(A) when any other individual is on layoff from the same or any substantially equivalent job; or ”(B) if the employer has terminated the employment of any regular employee or otherwise caused an involuntary reduction of its workforce in order to fill the vacancy so created with an adult described in paragraph (1). ”(3) GRIEVANCE PROCEDURE.\u2014A State with a program funded under this part shall establish and maintain a grievance procedure for resolving complaints of alleged violations of para- graph (2). ”(4) NO PREEMPTION.\u2014Nothing in this subsection shall pre- empt or supersede any provision of State or local law that provides greater protection for employees from displacement. ”(g) SENSE OF THE CONGRESS.\u2014It is the sense of the Congress that in complying with this section, each State that operates a program funded under this part is encouraged to assign the highest priority to requiring adults in 2-parent families and adults in single- parent families that include older preschool or school-age children to be engaged in work activities. ”(h) SENSE OF THE CONGRESS THAT STATES SHOULD IMPOSE CERTAIN REQUIREMENTS ON NONCUSTODIAL, NONSUPPORTING MINOR PARENTS.\u2014It is the sense of the Congress that the States should require noncustodial, nonsupporting parents who have not attained 18 years of age to fulfill community work obligations and attend appropriate parenting or money management classes after school. ”(i) REVIEW OF IMPLEMENTATION OF STATE WORK PROGRAMS.\u2014 During fiscal year 1999, the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate shall hold hearings and engage in other appropriate activities to review the implementation of this section by the States, and shall invite the Governors of the States to testify before them regarding such implementation. Based on such hearings, such Committees may introduce such legislation as may be appropriate to remedy any problems with the State programs operated pursuant to this section. ”SEC. 408. PROHIBITIONS; REQUIREMENTS. ”(a) IN GENERAL.\u2014 ”(1) NO ASSISTANCE FOR FAMILIES WITHOUT A MINOR CHILD.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to a family\u2014 ”(A) unless the family includes\u2014 ”(i) a minor child who resides with a custodial parent or other adult caretaker relative of the child; or ”(ii) a pregnant individual; and ”(B) if the family includes an adult who has received assistance under any State program funded under this part attributable to funds provided by the Federal Govern- ment, for 60 months (whether or not consecutive) after 42 USC 608. 110 STAT. 2135PUBLIC LAW 104 193\u2014AUG. 22, 1996 the date the State program funded under this part com- mences (unless an exception described in subparagraph (B), (C), or (D) of paragraph (7) applies). ”(2) REDUCTION OR ELIMINATION OF ASSISTANCE FOR NON- COOPERATION IN ESTABLISHING PATERNITY OR OBTAINING CHILD SUPPORT.\u2014If the agency responsible for administering the State plan approved under part D determines that an individual is not cooperating with the State in establishing paternity or in establishing, modifying, or enforcing a support order with respect to a child of the individual, and the individual does not qualify for any good cause or other exception established by the State pursuant to section 454(29), then the State\u2014 ”(A) shall deduct from the assistance that would other- wise be provided to the family of the individual under the State program funded under this part an amount equal to not less than 25 percent of the amount of such assistance; and ”(B) may deny the family any assistance under the State program. ”(3) NO ASSISTANCE FOR FAMILIES NOT ASSIGNING CERTAIN SUPPORT RIGHTS TO THE STATE.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall require, as a condition of providing assistance to a family under the State program funded under this part, that a member of the family assign to the State any rights the family member may have (on behalf of the family member or of any other person for whom the family member has applied for or is receiving such assistance) to support from any other person, not exceeding the total amount of assistance so provided to the family, which accrue (or have accrued) before the date the family leaves the program, which assignment, on and after the date the family leaves the program, shall not apply with respect to any support (other than support collected pursuant to section 464) which accrued before the family received such assistance and which the State has not collected by\u2014 ”(i) September 30, 2000, if the assignment is executed on or after October 1, 1997, and before Octo- ber 1, 2000; or ”(ii) the date the family leaves the program, if the assignment is executed on or after October 1, 2000. ”(B) LIMITATION.\u2014A State to which a grant is made under section 403 shall not require, as a condition of provid- ing assistance to any family under the State program funded under this part, that a member of the family assign to the State any rights to support described in subpara- graph (A) which accrue after the date the family leaves the program. ”(4) NO ASSISTANCE FOR TEENAGE PARENTS WHO DO NOT ATTEND HIGH SCHOOL OR OTHER EQUIVALENT TRAINING PRO- GRAM.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to an individual who has not attained 18 years of age, is not married, has a minor child at least 12 weeks of age in his or her care, and has not successfully completed a high-school 110 STAT. 2136 PUBLIC LAW 104 193\u2014AUG. 22, 1996 education (or its equivalent), if the individual does not partici- pate in\u2014 ”(A) educational activities directed toward the attain- ment of a high school diploma or its equivalent; or ”(B) an alternative educational or training program that has been approved by the State. ”(5) NO ASSISTANCE FOR TEENAGE PARENTS NOT LIVING IN ADULT-SUPERVISED SETTINGS.\u2014 ”(A) IN GENERAL.\u2014 ”(i) REQUIREMENT.\u2014Except as provided in subparagraph (B), a State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to an individual described in clause (ii) of this subparagraph if the individual and the minor child referred to in clause (ii)(II) do not reside in a place of residence maintained by a parent, legal guardian, or other adult relative of the individual as such parent’s, guardian’s, or adult relative’s own home. ”(ii) INDIVIDUAL DESCRIBED.\u2014 For purposes of clause (i), an individual described in this clause is an individual who\u2014 ”(I) has not attained 18 years of age; and ”(II) is not married, and has a minor child in his or her care. ”(B) EXCEPTION.\u2014 ”(i) PROVISION OF, OR ASSISTANCE IN LOCATING, ADULT-SUPERVISED LIVING ARRANGEMENT.\u2014In the case of an individual who is described in clause (ii), the State agency referred to in section 402(a)(4) shall pro- vide, or assist the individual in locating, a second chance home, maternity home, or other appropriate adult-supervised supportive living arrangement, taking into consideration the needs and concerns of the individual, unless the State agency determines that the individual’s current living arrangement is appro- priate, and thereafter shall require that the individual and the minor child referred to in subparagraph (A)(ii)(II) reside in such living arrangement as a condi- tion of the continued receipt of assistance under the State program funded under this part attributable to funds provided by the Federal Government (or in an alternative appropriate arrangement, should cir- cumstances change and the current arrangement cease to be appropriate). ”(ii) INDIVIDUAL DESCRIBED.\u2014For purposes of clause (i), an individual is described in this clause if the individual is described in subparagraph (A)(ii), and\u2014 ”(I) the individual has no parent, legal guard- ian, or other appropriate adult relative described in subclause (II) of his or her own who is living or whose whereabouts are known; ”(II) no living parent, legal guardian, or other appropriate adult relative, who would otherwise meet applicable State criteria to act as the individ- ual’s legal guardian, of such individual allows the 110 STAT. 2137PUBLIC LAW 104 193\u2014AUG. 22, 1996 individual to live in the home of such parent, guardian, or relative; ”(III) the State agency determines that\u2014 ”(aa) the individual or the minor child referred to in subparagraph (A)(ii)(II) is being or has been subjected to serious physical or emotional harm, sexual abuse, or exploitation in the residence of the individual’s own parent or legal guardian; or ”(bb) substantial evidence exists of an act or failure to act that presents an imminent or serious harm if the individual and the minor child lived in the same residence with the individual’s own parent or legal guardian; or ”(IV) the State agency otherwise determines that it is in the best interest of the minor child to waive the requirement of subparagraph (A) with respect to the individual or the minor child. ”(iii) SECOND-CHANCE HOME.\u2014For purposes of this subparagraph, the term ‘second-chance home’ means an entity that provides individuals described in clause (ii) with a supportive and supervised living arrange- ment in which such individuals are required to learn parenting skills, including child development, family budgeting, health and nutrition, and other skills to promote their long-term economic independence and the well-being of their children. ”(6) NO MEDICAL SERVICES.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide medical services. ”(B) EXCEPTION FOR PREPREGNANCY FAMILY PLANNING SERVICES.\u2014As used in subparagraph (A), the term ‘medical services’ does not include prepregnancy family planning services. ”(7) NO ASSISTANCE FOR MORE THAN 5 YEARS.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to a family that includes an adult who has received assistance under any State program funded under this part attributable to funds provided by the Federal Government, for 60 months (whether or not consecutive) after the date the State program funded under this part commences, subject to this paragraph. ”(B) MINOR CHILD EXCEPTION.\u2014In determining the number of months for which an individual who is a parent or pregnant has received assistance under the State pro- gram funded under this part, the State shall disregard any month for which such assistance was provided with respect to the individual and during which the individual was\u2014 ”(i) a minor child; and ”(ii) not the head of a household or married to the head of a household. ”(C) HARDSHIP EXCEPTION.\u2014 ”(i) IN GENERAL.\u2014The State may exempt a family from the application of subparagraph (A) by reason 110 STAT. 2138 PUBLIC LAW 104 193\u2014AUG. 22, 1996 of hardship or if the family includes an individual who has been battered or subjected to extreme cruelty. ”(ii) LIMITATION.\u2014The number of families with respect to which an exemption made by a State under clause (i) is in effect for a fiscal year shall not exceed 20 percent of the average monthly number of families to which assistance is provided under the State pro- gram funded under this part. ”(iii) BATTERED OR SUBJECT TO EXTREME CRUELTY DEFINED.\u2014For purposes of clause (i), an individual has been battered or subjected to extreme cruelty if the individual has been subjected to\u2014 ”(I) physical acts that resulted in, or threat- ened to result in, physical injury to the individual; ”(II) sexual abuse; ”(III) sexual activity involving a dependent child; ”(IV) being forced as the caretaker relative of a dependent child to engage in nonconsensual sexual acts or activities; ”(V) threats of, or attempts at, physical or sexual abuse; ”(VI) mental abuse; or ”(VII) neglect or deprivation of medical care. ”(D) DISREGARD OF MONTHS OF ASSISTANCE RECEIVED BY ADULT WHILE LIVING ON AN INDIAN RESERVATION OR IN AN ALASKAN NATIVE VILLAGE WITH 50 PERCENT UNEMPLOYMENT.\u2014In determining the number of months for which an adult has received assistance under the State program funded under this part, the State shall disregard any month during which the adult lived on an Indian reservation or in an Alaskan Native village if, during the month\u2014 ”(i) at least 1,000 individuals were living on the reservation or in the village ; and ”(ii) at least 50 percent of the adults living on the reservation or in the village were unemployed. ”(E) RULE OF INTERPRETATION.\u2014Subparagraph (A) shall not be interpreted to require any State to provide assistance to any individual for any period of time under the State program funded under this part. ”(F) RULE OF INTERPRETATION.\u2014This part shall not be interpreted to prohibit any State from expending State funds not originating with the Federal Government on benefits for children or families that have become ineligible for assistance under the State program funded under this part by reason of subparagraph (A). ”(8) DENIAL OF ASSISTANCE FOR 10 YEARS TO A PERSON FOUND TO HAVE FRAUDULENTLY MISREPRESENTED RESIDENCE IN ORDER TO OBTAIN ASSISTANCE IN 2 OR MORE STATES.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide cash assistance to an individual during the 10-year period that begins on the date the individual is convicted in Federal or State court of having made a fraudulent statement or representation with respect to the place of residence of the individual in order to receive assistance simultaneously from 2 or more States under pro- 110 STAT. 2139PUBLIC LAW 104 193\u2014AUG. 22, 1996 grams that are funded under this title, title XIX, or the Food Stamp Act of 1977, or benefits in 2 or more States under the supplemental security income program under title XVI. The preceding sentence shall not apply with respect to a convic- tion of an individual, for any month beginning after the Presi- dent of the United States grants a pardon with respect to the conduct which was the subject of the conviction. ”(9) DENIAL OF ASSISTANCE FOR FUGITIVE FELONS AND PROBATION AND PAROLE VIOLATORS.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance to any individual who is\u2014 ”(i) fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the individual flees, for a crime, or an attempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(ii) violating a condition of probation or parole imposed under Federal or State law. The preceding sentence shall not apply with respect to conduct of an individual, for any month beginning after the President of the United States grants a pardon with respect to the conduct. ”(B) EXCHANGE OF INFORMATION WITH LAW ENFORCE- MENT AGENCIES.\u2014If a State to which a grant is made under section 403 establishes safeguards against the use or disclosure of information about applicants or recipients of assistance under the State program funded under this part, the safeguards shall not prevent the State agency administering the program from furnishing a Federal, State, or local law enforcement officer, upon the request of the officer, with the current address of any recipient if the officer furnishes the agency with the name of the recipient and notifies the agency that\u2014 ”(i) the recipient\u2014 ”(I) is described in subparagraph (A); or ”(II) has information that is necessary for the officer to conduct the official duties of the officer; and ”(ii) the location or apprehension of the recipient is within such official duties. ”(10) DENIAL OF ASSISTANCE FOR MINOR CHILDREN WHO ARE ABSENT FROM THE HOME FOR A SIGNIFICANT PERIOD.\u2014 ”(A) IN GENERAL.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance for a minor child who has been, or is expected by a parent (or other caretaker relative) of the child to be, absent from the home for a period of 45 consecutive days or, at the option of the State, such period of not less than 30 and not more than 180 consecu- tive days as the State may provide for in the State plan submitted pursuant to section 402. ”(B) STATE AUTHORITY TO ESTABLISH GOOD CAUSE EXCEPTIONS.\u2014The State may establish such good cause 110 STAT. 2140 PUBLIC LAW 104 193\u2014AUG. 22, 1996 exceptions to subparagraph (A) as the State considers appropriate if such exceptions are provided for in the State plan submitted pursuant to section 402. ”(C) DENIAL OF ASSISTANCE FOR RELATIVE WHO FAILS TO NOTIFY STATE AGENCY OF ABSENCE OF CHILD.\u2014A State to which a grant is made under section 403 shall not use any part of the grant to provide assistance for an individual who is a parent (or other caretaker relative) of a minor child and who fails to notify the agency admin- istering the State program funded under this part of the absence of the minor child from the home for the period specified in or provided for pursuant to subparagraph (A), by the end of the 5-day period that begins with the date that it becomes clear to the parent (or relative) that the minor child will be absent for such period so specified or provided for. ”(11) MEDICAL ASSISTANCE REQUIRED TO BE PROVIDED FOR CERTAIN FAMILIES HAVING EARNINGS FROM EMPLOYMENT OR CHILD SUPPORT.\u2014 ”(A) EARNINGS FROM EMPLOYMENT.\u2014A State to which a grant is made under section 403 and which has a State plan approved under title XIX shall provide that in the case of a family that is treated (under section 1931(b)(1)(A) for purposes of title XIX) as receiving aid under a State plan approved under this part (as in effect on July 16, 1996), that would become ineligible for such aid because of hours of or income from employment of the caretaker relative (as defined under this part as in effect on such date) or because of section 402(a)(8)(B)(ii)(II) (as so in effect), and that was so treated as receiving such aid in at least 3 of the 6 months immediately preceding the month in which such ineligibility begins, the family shall remain eligible for medical assistance under the State’s plan approved under title XIX for an extended period or periods as provided in section 1925 or 1902(e)(1) (as applicable), and that the family will be appropriately notified of such extension as required by section 1925(a)(2). ”(B) CHILD SUPPORT.\u2014A State to which a grant is made under section 403 and which has a State plan approved under title XIX shall provide that in the case of a family that is treated (under section 1931(b)(1)(A) for purposes of title XIX) as receiving aid under a State plan approved under this part (as in effect on July 16, 1996), that would become ineligible for such aid as a result (wholly or partly) of the collection of child or spousal sup- port under part D and that was so treated as receiving such aid in at least 3 of the 6 months immediately preced- ing the month in which such ineligibility begins, the family shall remain eligible for medical assistance under the State’s plan approved under title XIX for an extended period or periods as provided in section 1931(c)(1). ”(b) INDIVIDUAL RESPONSIBILITY PLANS.\u2014 ”(1) ASSESSMENT.\u2014The State agency responsible for admin- istering the State program funded under this part shall make an initial assessment of the skills, prior work experience, and employability of each recipient of assistance under the program who\u2014 110 STAT. 2141PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) has attained 18 years of age; or ”(B) has not completed high school or obtained a certifi- cate of high school equivalency, and is not attending second- ary school. ”(2) CONTENTS OF PLANS.\u2014 ”(A) IN GENERAL.\u2014On the basis of the assessment made under subsection (a) with respect to an individual, the State agency, in consultation with the individual, may develop an individual responsibility plan for the individual, which\u2014 ”(i) sets forth an employment goal for the individ- ual and a plan for moving the individual immediately into private sector employment; ”(ii) sets forth the obligations of the individual, which may include a requirement that the individual attend school, maintain certain grades and attendance, keep school age children of the individual in school, immunize children, attend parenting and money management classes, or do other things that will help the individual become and remain employed in the private sector; ”(iii) to the greatest extent possible is designed to move the individual into whatever private sector employment the individual is capable of handling as quickly as possible, and to increase the responsibility and amount of work the individual is to handle over time; ”(iv) describes the services the State will provide the individual so that the individual will be able to obtain and keep employment in the private sector, and describe the job counseling and other services that will be provided by the State; and ”(v) may require the individual to undergo appro- priate substance abuse treatment. ”(B) TIMING.\u2014The State agency may comply with para- graph (1) with respect to an individual\u2014 ”(i) within 90 days (or, at the option of the State, 180 days) after the effective date of this part, in the case of an individual who, as of such effective date, is a recipient of aid under the State plan approved under part A (as in effect immediately before such effective date); or ”(ii) within 30 days (or, at the option of the State, 90 days) after the individual is determined to be eligible for such assistance, in the case of any other individual. ”(3) PENALTY FOR NONCOMPLIANCE BY INDIVIDUAL.\u2014In addi- tion to any other penalties required under the State program funded under this part, the State may reduce, by such amount as the State considers appropriate, the amount of assistance otherwise payable under the State program to a family that includes an individual who fails without good cause to comply with an individual responsibility plan signed by the individual. ”(4) STATE DISCRETION.\u2014The exercise of the authority of this subsection shall be within the sole discretion of the State. 110 STAT. 2142 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(c) NONDISCRIMINATION PROVISIONS.\u2014The following provisions of law shall apply to any program or activity which receives funds provided under this part: ”(1) The Age Discrimination Act of 1975 (42 U.S.C. 6101 et seq.). ”(2) Section 504 of the Rehabilitation Act of 1973 (29 U.S.C. 794). ”(3) The Americans with Disabilities Act of 1990 (42 U.S.C. 12101 et seq.). ”(4) Title VI of the Civil Rights Act of 1964 (42 U.S.C. 2000d et seq.). ”(d) ALIENS.\u2014For special rules relating to the treatment of aliens, see section 402 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. ”SEC. 409. PENALTIES. ”(a) IN GENERAL.\u2014Subject to this section: ”(1) USE OF GRANT IN VIOLATION OF THIS PART.\u2014 ”(A) GENERAL PENALTY.\u2014If an audit conducted under chapter 75 of title 31, United States Code, finds that an amount paid to a State under section 403 for a fiscal year has been used in violation of this part, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter by the amount so used. ”(B) ENHANCED PENALTY FOR INTENTIONAL VIOLA- TIONS.\u2014If the State does not prove to the satisfaction of the Secretary that the State did not intend to use the amount in violation of this part, the Secretary shall further reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter by an amount equal to 5 percent of the State family assist- ance grant. ”(2) FAILURE TO SUBMIT REQUIRED REPORT.\u2014 ”(A) IN GENERAL.\u2014If the Secretary determines that a State has not, within 1 month after the end of a fiscal quarter, submitted the report required by section 411(a) for the quarter, the Secretary shall reduce the grant pay- able to the State under section 403(a)(1) for the imme- diately succeeding fiscal year by an amount equal to 4 percent of the State family assistance grant. ”(B) RESCISSION OF PENALTY.\u2014The Secretary shall rescind a penalty imposed on a State under subparagraph (A) with respect to a report if the State submits the report before the end of the fiscal quarter that immediately suc- ceeds the fiscal quarter for which the report was required. ”(3) FAILURE TO SATISFY MINIMUM PARTICIPATION RATES.\u2014 ”(A) IN GENERAL.\u2014If the Secretary determines that a State to which a grant is made under section 403 for a fiscal year has failed to comply with section 407(a) for the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not more than the applicable percentage of the State family assist- ance grant. 42 USC 609. 110 STAT. 2143PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) APPLICABLE PERCENTAGE DEFINED.\u2014As used in subparagraph (A), the term ‘applicable percentage’ means, with respect to a State\u2014 ”(i) if a penalty was not imposed on the State under subparagraph (A) for the immediately preceding fiscal year, 5 percent; or ”(ii) if a penalty was imposed on the State under subparagraph (A) for the immediately preceding fiscal year, the lesser of\u2014 ”(I) the percentage by which the grant payable to the State under section 403(a)(1) was reduced for such preceding fiscal year, increased by 2 percentage points; or ”(II) 21 percent. ”(C) PENALTY BASED ON SEVERITY OF FAILURE.\u2014The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of non- compliance, and may reduce the penalty if the noncompli- ance is due to circumstances that caused the State to become a needy State (as defined in section 403(b)(6)) dur- ing the fiscal year. ”(4) FAILURE TO PARTICIPATE IN THE INCOME AND ELIGI- BILITY VERIFICATION SYSTEM.\u2014If the Secretary determines that a State program funded under this part is not participating during a fiscal year in the income and eligibility verification system required by section 1137, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to not more than 2 percent of the State family assistance grant. ”(5) FAILURE TO COMPLY WITH PATERNITY ESTABLISHMENT AND CHILD SUPPORT ENFORCEMENT REQUIREMENTS UNDER PART D.\u2014Notwithstanding any other provision of this Act, if the Secretary determines that the State agency that admin- isters a program funded under this part does not enforce the penalties requested by the agency administering part D against recipients of assistance under the State program who fail to cooperate in establishing paternity or in establishing, modify- ing, or enforcing a child support order in accordance with such part and who do not qualify for any good cause or other exception established by the State under section 454(29), the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year (without regard to this section) by not more than 5 percent. ”(6) FAILURE TO TIMELY REPAY A FEDERAL LOAN FUND FOR STATE WELFARE PROGRAMS.\u2014If the Secretary determines that a State has failed to repay any amount borrowed from the Federal Loan Fund for State Welfare Programs established under section 406 within the period of maturity applicable to the loan, plus any interest owed on the loan, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year quarter (without regard to this section) by the outstanding loan amount, plus the interest owed on the outstanding amount. The Sec- retary shall not forgive any outstanding loan amount or interest owed on the outstanding amount. ”(7) FAILURE OF ANY STATE TO MAINTAIN CERTAIN LEVEL OF HISTORIC EFFORT.\u2014 110 STAT. 2144 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) IN GENERAL.\u2014The Secretary shall reduce the grant payable to the State under section 403(a)(1) for fiscal year 1998, 1999, 2000, 2001, 2002, or 2003 by the amount (if any) by which qualified State expenditures for the then immediately preceding fiscal year are less than the applicable percentage of historic State expenditures with respect to such preceding fiscal year. ”(B) DEFINITIONS.\u2014As used in this paragraph: ”(i) QUALIFIED STATE EXPENDITURES.\u2014 ”(I) IN GENERAL.\u2014The term ‘qualified State expenditures’ means, with respect to a State and a fiscal year, the total expenditures by the State during the fiscal year, under all State programs, for any of the following with respect to eligible families: ”(aa) Cash assistance. ”(bb) Child care assistance. ”(cc) Educational activities designed to increase self-sufficiency, job training, and work, excluding any expenditure for public education in the State except expenditures which involve the provision of services or assistance to a member of an eligible family which is not generally available to persons who are not members of an eligible family. ”(dd) Administrative costs in connection with the matters described in items (aa), (bb), (cc), and (ee), but only to the extent that such costs do not exceed 15 percent of the total amount of qualified State expenditures for the fiscal year. ”(ee) Any other use of funds allowable under section 404(a)(1). ”(II) EXCLUSION OF TRANSFERS FROM OTHER STATE AND LOCAL PROGRAMS.\u2014Such term does not include expenditures under any State or local pro- gram during a fiscal year, except to the extent that\u2014 ”(aa) the expenditures exceed the amount expended under the State or local program in the fiscal year most recently ending before the date of the enactment of this part; or ”(bb) the State is entitled to a payment under former section 403 (as in effect imme- diately before such date of enactment) with respect to the expenditures. ”(III) ELIGIBLE FAMILIES.\u2014As used in sub- clause (I), the term ‘eligible families’ means fami- lies eligible for assistance under the State program funded under this part, and families that would be eligible for such assistance but for the applica- tion of section 408(a)(7) of this Act or section 402 of the Personal Responsibility and Work Oppor- tunity Reconciliation Act of 1996. ”(ii) APPLICABLE PERCENTAGE.\u2014The term ‘applicable percentage’ means for fiscal years 1997 through 2002, 80 percent (or, if the State meets the 110 STAT. 2145PUBLIC LAW 104 193\u2014AUG. 22, 1996 requirements of section 407(a) for the fiscal year, 75 percent) reduced (if appropriate) in accordance with subparagraph (C)(ii). ”(iii) HISTORIC STATE EXPENDITURES.\u2014The term ‘historic State expenditures’ means, with respect to a State, the lesser of\u2014 ”(I) the expenditures by the State under parts A and F (as in effect during fiscal year 1994) for fiscal year 1994; or ”(II) the amount which bears the same ratio to the amount described in subclause (I) as\u2014 ”(aa) the State family assistance grant, plus the total amount required to be paid to the State under former section 403 for fiscal year 1994 with respect to amounts expended by the State for child care under subsection (g) or (i) of section 402 (as in effect during fiscal year 1994); bears to ”(bb) the total amount required to be paid to the State under former section 403 (as in effect during fiscal year 1994) for fiscal year 1994. Such term does not include any expenditures under the State plan approved under part A (as so in effect) on behalf of individuals covered by a tribal family assistance plan approved under section 412, as deter- mined by the Secretary. ”(iv) EXPENDITURES BY THE STATE.\u2014The term ‘expenditures by the State’ does not include\u2014 ”(I) any expenditures from amounts made available by the Federal Government; ”(II) any State funds expended for the medic- aid program under title XIX; ”(III) any State funds which are used to match Federal funds; or ”(IV) any State funds which are expended as a condition of receiving Federal funds under Fed- eral programs other than under this part. Notwithstanding subclause (IV) of the preceding sen- tence, such term includes expenditures by a State for child care in a fiscal year to the extent that the total amount of such expenditures does not exceed an amount equal to the amount of State expenditures in fiscal year 1994 or 1995 (whichever is greater) that equal the non-Federal share for the programs described in section 418(a)(1)(A). ”(8) SUBSTANTIAL NONCOMPLIANCE OF STATE CHILD SUPPORT ENFORCEMENT PROGRAM WITH REQUIREMENTS OF PART D.\u2014 ”(A) IN GENERAL.\u2014If a State program operated under part D is found as a result of a review conducted under section 452(a)(4) not to have complied substantially with the requirements of such part for any quarter, and the Secretary determines that the program is not complying substantially with such requirements at the time the find- ing is made, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the quarter and each subsequent quarter that ends before the 1st quarter 110 STAT. 2146 PUBLIC LAW 104 193\u2014AUG. 22, 1996 throughout which the program is found to be in substantial compliance with such requirements by\u2014 ”(i) not less than 1 nor more than 2 percent; ”(ii) not less than 2 nor more than 3 percent, if the finding is the 2nd consecutive such finding made as a result of such a review; or ”(iii) not less than 3 nor more than 5 percent, if the finding is the 3rd or a subsequent consecutive such finding made as a result of such a review. ”(B) DISREGARD OF NONCOMPLIANCE WHICH IS OF A TECHNICAL NATURE.\u2014For purposes of subparagraph (A) and section 452(a)(4), a State which is not in full compliance with the requirements of this part shall be determined to be in substantial compliance with such requirements only if the Secretary determines that any noncompliance with such requirements is of a technical nature which does not adversely affect the performance of the State’s program operated under part D. ”(9) FAILURE TO COMPLY WITH 5-YEAR LIMIT ON ASSIST- ANCE.\u2014If the Secretary determines that a State has not com- plied with section 408(a)(1)(B) during a fiscal year, the Sec- retary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by an amount equal to 5 percent of the State family assistance grant. ”(10) FAILURE OF STATE RECEIVING AMOUNTS FROM CONTIN- GENCY FUND TO MAINTAIN 100 PERCENT OF HISTORIC EFFORT.\u2014 If, at the end of any fiscal year during which amounts from the Contingency Fund for State Welfare Programs have been paid to a State, the Secretary finds that the expenditures under the State program funded under this part for the fiscal year (excluding any amounts made available by the Federal Government) are less than 100 percent of historic State expenditures (as defined in paragraph (7)(B)(iii) of this sub- section), the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year by the total of the amounts so paid to the State. ”(11) FAILURE TO MAINTAIN ASSISTANCE TO ADULT SINGLE CUSTODIAL PARENT WHO CANNOT OBTAIN CHILD CARE FOR CHILD UNDER AGE 6.\u2014 ”(A) IN GENERAL.\u2014If the Secretary determines that a State to which a grant is made under section 403 for a fiscal year has violated section 407(e)(2) during the fiscal year, the Secretary shall reduce the grant payable to the State under section 403(a)(1) for the immediately succeed- ing fiscal year by an amount equal to not more than 5 percent of the State family assistance grant. ”(B) PENALTY BASED ON SEVERITY OF FAILURE.\u2014The Secretary shall impose reductions under subparagraph (A) with respect to a fiscal year based on the degree of non- compliance. ”(12) FAILURE TO EXPEND ADDITIONAL STATE FUNDS TO REPLACE GRANT REDUCTIONS.\u2014If the grant payable to a State under section 403(a)(1) for a fiscal year is reduced by reason of this subsection, the State shall, during the immediately succeeding fiscal year, expend under the State program funded under this part an amount equal to the total amount of such reductions. 110 STAT. 2147PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(b) REASONABLE CAUSE EXCEPTION.\u2014 ”(1) IN GENERAL.\u2014The Secretary may not impose a penalty on a State under subsection (a) with respect to a requirement if the Secretary determines that the State has reasonable cause for failing to comply with the requirement. ”(2) EXCEPTION.\u2014Paragraph (1) of this subsection shall not apply to any penalty under paragraph (7) or (8) of sub- section (a). ”(c) CORRECTIVE COMPLIANCE PLAN.\u2014 ”(1) IN GENERAL.\u2014 ”(A) NOTIFICATION OF VIOLATION.\u2014Before imposing a penalty against a State under subsection (a) with respect to a violation of this part, the Secretary shall notify the State of the violation and allow the State the opportunity to enter into a corrective compliance plan in accordance with this subsection which outlines how the State will correct the violation and how the State will insure continu- ing compliance with this part. ”(B) 60-DAY PERIOD TO PROPOSE A CORRECTIVE COMPLI- ANCE PLAN.\u2014During the 60-day period that begins on the date the State receives a notice provided under sub- paragraph (A) with respect to a violation, the State may submit to the Federal Government a corrective compliance plan to correct the violation. ”(C) CONSULTATION ABOUT MODIFICATIONS.\u2014During the 60-day period that begins with the date the Secretary receives a corrective compliance plan submitted by a State in accordance with subparagraph (B), the Secretary may consult with the State on modifications to the plan. ”(D) ACCEPTANCE OF PLAN.\u2014 A corrective compliance plan submitted by a State in accordance with subparagraph (B) is deemed to be accepted by the Secretary if the Sec- retary does not accept or reject the plan during 60-day period that begins on the date the plan is submitted. ”(2) EFFECT OF CORRECTING VIOLATION.\u2014The Secretary may not impose any penalty under subsection (a) with respect to any violation covered by a State corrective compliance plan accepted by the Secretary if the State corrects the violation pursuant to the plan. ”(3) EFFECT OF FAILING TO CORRECT VIOLATION.\u2014The Sec- retary shall assess some or all of a penalty imposed on a State under subsection (a) with respect to a violation if the State does not, in a timely manner, correct the violation pursuant to a State corrective compliance plan accepted by the Secretary. ”(4) INAPPLICABILITY TO FAILURE TO TIMELY REPAY A FEDERAL LOAN FUND FOR A STATE WELFARE PROGRAM.\u2014This subsection shall not apply to the imposition of a penalty against a State under subsection (a)(6). ”(d) LIMITATION ON AMOUNT OF PENALTIES.\u2014 ”(1) IN GENERAL.\u2014In imposing the penalties described in subsection (a), the Secretary shall not reduce any quarterly payment to a State by more than 25 percent. ”(2) CARRYFORWARD OF UNRECOVERED PENALTIES.\u2014To the extent that paragraph (1) of this subsection prevents the Sec- retary from recovering during a fiscal year the full amount of penalties imposed on a State under subsection (a) of this 110 STAT. 2148 PUBLIC LAW 104 193\u2014AUG. 22, 1996 section for a prior fiscal year, the Secretary shall apply any remaining amount of such penalties to the grant payable to the State under section 403(a)(1) for the immediately succeeding fiscal year. ”SEC. 410. APPEAL OF ADVERSE DECISION. ”(a) IN GENERAL.\u2014Within 5 days after the date the Secretary takes any adverse action under this part with respect to a State, the Secretary shall notify the chief executive officer of the State of the adverse action, including any action with respect to the State plan submitted under section 402 or the imposition of a penalty under section 409. ”(b) ADMINISTRATIVE REVIEW.\u2014 ”(1) IN GENERAL.\u2014Within 60 days after the date a State receives notice under subsection (a) of an adverse action, the State may appeal the action, in whole or in part, to the Depart- mental Appeals Board established in the Department of Health and Human Services (in this section referred to as the ‘Board’) by filing an appeal with the Board. ”(2) PROCEDURAL RULES.\u2014The Board shall consider an appeal filed by a State under paragraph (1) on the basis of such documentation as the State may submit and as the Board may require to support the final decision of the Board. In deciding whether to uphold an adverse action or any portion of such an action, the Board shall conduct a thorough review of the issues and take into account all relevant evidence. The Board shall make a final determination with respect to an appeal filed under paragraph (1) not less than 60 days after the date the appeal is filed. ”(c) JUDICIAL REVIEW OF ADVERSE DECISION.\u2014 ”(1) IN GENERAL.\u2014Within 90 days after the date of a final decision by the Board under this section with respect to an adverse action taken against a State, the State may obtain judicial review of the final decision (and the findings incor- porated into the final decision) by filing an action in\u2014 ”(A) the district court of the United States for the judicial district in which the principal or headquarters office of the State agency is located; or ”(B) the United States District Court for the District of Columbia. ”(2) PROCEDURAL RULES.\u2014The district court in which an action is filed under paragraph (1) shall review the final deci- sion of the Board on the record established in the administrative proceeding, in accordance with the standards of review pre- scribed by subparagraphs (A) through (E) of section 706(2) of title 5, United States Code. The review shall be on the basis of the documents and supporting data submitted to the Board. ”SEC. 411. DATA COLLECTION AND REPORTING. ”(a) QUARTERLY REPORTS BY STATES.\u2014 ”(1) GENERAL REPORTING REQUIREMENT.\u2014 ”(A) CONTENTS OF REPORT.\u2014Each eligible State shall collect on a monthly basis, and report to the Secretary on a quarterly basis, the following disaggregated case record information on the families receiving assistance under the State program funded under this part: ”(i) The county of residence of the family. 42 USC 611. 42 USC 610. 110 STAT. 2149PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) Whether a child receiving such assistance or an adult in the family is disabled. ”(iii) The ages of the members of such families. ”(iv) The number of individuals in the family, and the relation of each family member to the youngest child in the family. ”(v) The employment status and earnings of the employed adult in the family. ”(vi) The marital status of the adults in the family, including whether such adults have never married, are widowed, or are divorced. ”(vii) The race and educational status of each adult in the family. ”(viii) The race and educational status of each child in the family. ”(ix) Whether the family received subsidized hous- ing, medical assistance under the State plan approved under title XIX, food stamps, or subsidized child care, and if the latter 2, the amount received. ”(x) The number of months that the family has received each type of assistance under the program. ”(xi) If the adults participated in, and the number of hours per week of participation in, the following activities: ”(I) Education. ”(II) Subsidized private sector employment. ”(III) Unsubsidized employment. ”(IV) Public sector employment, work experi- ence, or community service. ”(V) Job search. ”(VI) Job skills training or on-the-job training. ”(VII) Vocational education. ”(xii) Information necessary to calculate participa- tion rates under section 407. ”(xiii) The type and amount of assistance received under the program, including the amount of and reason for any reduction of assistance (including sanctions). ”(xiv) Any amount of unearned income received by any member of the family. ”(xv) The citizenship of the members of the family. ”(xvi) From a sample of closed cases, whether the family left the program, and if so, whether the family left due to\u2014 ”(I) employment; ”(II) marriage; ”(III) the prohibition set forth in section 408(a)(7); ”(IV) sanction; or ”(V) State policy. ”(B) USE OF ESTIMATES.\u2014 ”(i) AUTHORITY.\u2014A State may comply with subparagraph (A) by submitting an estimate which is obtained through the use of scientifically acceptable sampling methods approved by the Secretary. ”(ii) SAMPLING AND OTHER METHODS.\u2014The Sec- retary shall provide the States with such case sampling plans and data collection procedures as the Secretary 110 STAT. 2150 PUBLIC LAW 104 193\u2014AUG. 22, 1996 deems necessary to produce statistically valid esti- mates of the performance of State programs funded under this part. The Secretary may develop and imple- ment procedures for verifying the quality of data submitted by the States. ”(2) REPORT ON USE OF FEDERAL FUNDS TO COVER ADMINIS- TRATIVE COSTS AND OVERHEAD.\u2014The report required by para- graph (1) for a fiscal quarter shall include a statement of the percentage of the funds paid to the State under this part for the quarter that are used to cover administrative costs or overhead. ”(3) REPORT ON STATE EXPENDITURES ON PROGRAMS FOR NEEDY FAMILIES.\u2014The report required by paragraph (1) for a fiscal quarter shall include a statement of the total amount expended by the State during the quarter on programs for needy families. ”(4) REPORT ON NONCUSTODIAL PARENTS PARTICIPATING IN WORK ACTIVITIES.\u2014The report required by paragraph (1) for a fiscal quarter shall include the number of noncustodial parents in the State who participated in work activities (as defined in section 407(d)) during the quarter. ”(5) REPORT ON TRANSITIONAL SERVICES.\u2014The report required by paragraph (1) for a fiscal quarter shall include the total amount expended by the State during the quarter to provide transitional services to a family that has ceased to receive assistance under this part because of employment, along with a description of such services. ”(6) REGULATIONS.\u2014The Secretary shall prescribe such regulations as may be necessary to define the data elements with respect to which reports are required by this subsection. ”(b) ANNUAL REPORTS TO THE CONGRESS BY THE SECRETARY.\u2014 Not later than 6 months after the end of fiscal year 1997, and each fiscal year thereafter, the Secretary shall transmit to the Congress a report describing\u2014 ”(1) whether the States are meeting\u2014 ”(A) the participation rates described in section 407(a); and ”(B) the objectives of\u2014 ”(i) increasing employment and earnings of needy families, and child support collections; and ”(ii) decreasing out-of-wedlock pregnancies and child poverty; ”(2) the demographic and financial characteristics of fami- lies applying for assistance, families receiving assistance, and families that become ineligible to receive assistance; ”(3) the characteristics of each State program funded under this part; and ”(4) the trends in employment and earnings of needy fami- lies with minor children living at home. ”SEC. 412. DIRECT FUNDING AND ADMINISTRATION BY INDIAN TRIBES. ”(a) GRANTS FOR INDIAN TRIBES.\u2014 ”(1) TRIBAL FAMILY ASSISTANCE GRANT.\u2014 ”(A) IN GENERAL.\u2014For each of fiscal years 1997, 1998, 1999, 2000, 2001, and 2002, the Secretary shall pay to each Indian tribe that has an approved tribal family assist- ance plan a tribal family assistance grant for the fiscal 42 USC 612. 110 STAT. 2151PUBLIC LAW 104 193\u2014AUG. 22, 1996 year in an amount equal to the amount determined under subparagraph (B), and shall reduce the grant payable under section 403(a)(1) to any State in which lies the service area or areas of the Indian tribe by that portion of the amount so determined that is attributable to expenditures by the State. ”(B) AMOUNT DETERMINED.\u2014 ”(i) IN GENERAL.\u2014The amount determined under this subparagraph is an amount equal to the total amount of the Federal payments to a State or States under section 403 (as in effect during such fiscal year) for fiscal year 1994 attributable to expenditures (other than child care expenditures) by the State or States under parts A and F (as so in effect) for fiscal year 1994 for Indian families residing in the service area or areas identified by the Indian tribe pursuant to subsection (b)(1)(C) of this section. ”(ii) USE OF STATE SUBMITTED DATA.\u2014 ”(I) IN GENERAL.\u2014The Secretary shall use State submitted data to make each determination under clause (i). ”(II) DISAGREEMENT WITH DETERMINATION.\u2014 If an Indian tribe or tribal organization disagrees with State submitted data described under sub- clause (I), the Indian tribe or tribal organization may submit to the Secretary such additional information as may be relevant to making the determination under clause (i) and the Secretary may consider such information before making such determination. ”(2) GRANTS FOR INDIAN TRIBES THAT RECEIVED JOBS FUNDS.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall pay to each eligible Indian tribe for each of fiscal years 1997, 1998, 1999, 2000, 2001, and 2002 a grant in an amount equal to the amount received by the Indian tribe in fiscal year 1994 under section 482(i) (as in effect during fiscal year 1994). ”(B) ELIGIBLE INDIAN TRIBE.\u2014For purposes of subpara- graph (A), the term ‘eligible Indian tribe’ means an Indian tribe or Alaska Native organization that conducted a job opportunities and basic skills training program in fiscal year 1995 under section 482(i) (as in effect during fiscal year 1995). ”(C) USE OF GRANT.\u2014Each Indian tribe to which a grant is made under this paragraph shall use the grant for the purpose of operating a program to make work activities available to members of the Indian tribe. ”(D) APPROPRIATION.\u2014Out of any money in the Treas- ury of the United States not otherwise appropriated, there are appropriated $7,638,474 for each fiscal year specified in subparagraph (A) for grants under subparagraph (A). ”(b) 3-YEAR TRIBAL FAMILY ASSISTANCE PLAN.\u2014 ”(1) IN GENERAL.\u2014Any Indian tribe that desires to receive a tribal family assistance grant shall submit to the Secretary a 3-year tribal family assistance plan that\u2014 110 STAT. 2152 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) outlines the Indian tribe’s approach to providing welfare-related services for the 3-year period, consistent with this section; ”(B) specifies whether the welfare-related services pro- vided under the plan will be provided by the Indian tribe or through agreements, contracts, or compacts with inter- tribal consortia, States, or other entities; ”(C) identifies the population and service area or areas to be served by such plan; ”(D) provides that a family receiving assistance under the plan may not receive duplicative assistance from other State or tribal programs funded under this part; ”(E) identifies the employment opportunities in or near the service area or areas of the Indian tribe and the manner in which the Indian tribe will cooperate and participate in enhancing such opportunities for recipients of assistance under the plan consistent with any applicable State stand- ards; and ”(F) applies the fiscal accountability provisions of sec- tion 5(f)(1) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450c(f)(1)), relating to the submis- sion of a single-agency audit report required by chapter 75 of title 31, United States Code. ”(2) APPROVAL.\u2014The Secretary shall approve each tribal family assistance plan submitted in accordance with paragraph (1). ”(3) CONSORTIUM OF TRIBES.\u2014Nothing in this section shall preclude the development and submission of a single tribal family assistance plan by the participating Indian tribes of an intertribal consortium. ”(c) MINIMUM WORK PARTICIPATION REQUIREMENTS AND TIME LIMITS.\u2014The Secretary, with the participation of Indian tribes, shall establish for each Indian tribe receiving a grant under this section minimum work participation requirements, appropriate time limits for receipt of welfare-related services under the grant, and penalties against individuals\u2014 ”(1) consistent with the purposes of this section; ”(2) consistent with the economic conditions and resources available to each tribe; and ”(3) similar to comparable provisions in section 407(e). ”(d) EMERGENCY ASSISTANCE.\u2014Nothing in this section shall preclude an Indian tribe from seeking emergency assistance from any Federal loan program or emergency fund. ”(e) ACCOUNTABILITY.\u2014Nothing in this section shall be con- strued to limit the ability of the Secretary to maintain program funding accountability consistent with\u2014 ”(1) generally accepted accounting principles; and ”(2) the requirements of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450 et seq.). ”(f) PENALTIES.\u2014 ”(1) Subsections (a)(1), (a)(6), and (b) of section 409, shall apply to an Indian tribe with an approved tribal assistance plan in the same manner as such subsections apply to a State. ”(2) Section 409(a)(3) shall apply to an Indian tribe with an approved tribal assistance plan by substituting ‘meet mini- mum work participation requirements established under section 412(c)’ for ‘comply with section 407(a)’. 110 STAT. 2153PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(g) DATA COLLECTION AND REPORTING.\u2014Section 411 shall apply to an Indian tribe with an approved tribal family assistance plan. ”(h) SPECIAL RULE FOR INDIAN TRIBES IN ALASKA.\u2014 ”(1) IN GENERAL.\u2014Notwithstanding any other provision of this section, and except as provided in paragraph (2), an Indian tribe in the State of Alaska that receives a tribal family assist- ance grant under this section shall use the grant to operate a program in accordance with requirements comparable to the requirements applicable to the program of the State of Alaska funded under this part. Comparability of programs shall be established on the basis of program criteria developed by the Secretary in consultation with the State of Alaska and such Indian tribes. ”(2) WAIVER.\u2014An Indian tribe described in paragraph (1) may apply to the appropriate State authority to receive a waiver of the requirement of paragraph (1). ”SEC. 413. RESEARCH, EVALUATIONS, AND NATIONAL STUDIES. ”(a) RESEARCH.\u2014The Secretary shall conduct research on the benefits, effects, and costs of operating different State programs funded under this part, including time limits relating to eligibility for assistance. The research shall include studies on the effects of different programs and the operation of such programs on welfare dependency, illegitimacy, teen pregnancy, employment rates, child well-being, and any other area the Secretary deems appropriate. The Secretary shall also conduct research on the costs and benefits of State activities under section 409. ”(b) DEVELOPMENT AND EVALUATION OF INNOVATIVE APPROACHES TO REDUCING WELFARE DEPENDENCY AND INCREASING CHILD WELL-BEING.\u2014 ”(1) IN GENERAL.\u2014The Secretary may assist States in devel- oping, and shall evaluate, innovative approaches for reducing welfare dependency and increasing the well-being of minor children living at home with respect to recipients of assistance under programs funded under this part. The Secretary may provide funds for training and technical assistance to carry out the approaches developed pursuant to this paragraph. ”(2) EVALUATIONS.\u2014In performing the evaluations under paragraph (1), the Secretary shall, to the maximum extent feasible, use random assignment as an evaluation methodology. ”(c) DISSEMINATION OF INFORMATION.\u2014The Secretary shall develop innovative methods of disseminating information on any research, evaluations, and studies conducted under this section, including the facilitation of the sharing of information and best practices among States and localities through the use of computers and other technologies. ”(d) ANNUAL RANKING OF STATES AND REVIEW OF MOST AND LEAST SUCCESSFUL WORK PROGRAMS.\u2014 ”(1) ANNUAL RANKING OF STATES.\u2014The Secretary shall rank annually the States to which grants are paid under section 403 in the order of their success in placing recipients of assist- ance under the State program funded under this part into long-term private sector jobs, reducing the overall welfare case- load, and, when a practicable method for calculating this information becomes available, diverting individuals from for- mally applying to the State program and receiving assistance. 42 USC 613. 110 STAT. 2154 PUBLIC LAW 104 193\u2014AUG. 22, 1996 In ranking States under this subsection, the Secretary shall take into account the average number of minor children living at home in families in the State that have incomes below the poverty line and the amount of funding provided each State for such families. ”(2) ANNUAL REVIEW OF MOST AND LEAST SUCCESSFUL WORK PROGRAMS.\u2014The Secretary shall review the programs of the 3 States most recently ranked highest under paragraph (1) and the 3 States most recently ranked lowest under paragraph (1) that provide parents with work experience, assistance in finding employment, and other work preparation activities and support services to enable the families of such parents to leave the program and become self-sufficient. ”(e) ANNUAL RANKING OF STATES AND REVIEW OF ISSUES RELAT- ING TO OUT-OF-WEDLOCK BIRTHS.\u2014 ”(1) ANNUAL RANKING OF STATES.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall annually rank States to which grants are made under section 403 based on the following ranking factors: ”(i) ABSOLUTE OUT-OF-WEDLOCK RATIOS.\u2014The ratio represented by\u2014 ”(I) the total number of out-of-wedlock births in families receiving assistance under the State program under this part in the State for the most recent fiscal year for which information is avail- able; over ”(II) the total number of births in families receiving assistance under the State program under this part in the State for such year. ”(ii) NET CHANGES IN THE OUT-OF-WEDLOCK RATIO.\u2014The difference between the ratio described in subparagraph (A)(i) with respect to a State for the most recent fiscal year for which such information is available and the ratio with respect to the State for the immediately preceding year. ”(2) ANNUAL REVIEW.\u2014The Secretary shall review the pro- grams of the 5 States most recently ranked highest under paragraph (1) and the 5 States most recently ranked the lowest under paragraph (1). ”(f) STATE-INITIATED EVALUATIONS.\u2014A State shall be eligible to receive funding to evaluate the State program funded under this part if\u2014 ”(1) the State submits a proposal to the Secretary for the evaluation; ”(2) the Secretary determines that the design and approach of the evaluation is rigorous and is likely to yield information that is credible and will be useful to other States; and ”(3) unless otherwise waived by the Secretary, the State contributes to the cost of the evaluation, from non-Federal sources, an amount equal to at least 10 percent of the cost of the evaluation. ”(g) REPORT ON CIRCUMSTANCES OF CERTAIN CHILDREN AND FAMILIES.\u2014 ”(1) IN GENERAL.\u2014Beginning 3 years after the date of the enactment of this Act, the Secretary of Health and Human Services shall prepare and submit to the Committees on Ways and Means and on Economic and Educational Opportunities 110 STAT. 2155PUBLIC LAW 104 193\u2014AUG. 22, 1996 of the House of Representatives and to the Committees on Finance and on Labor and Resources of the Senate annual reports that examine in detail the matters described in para- graph (2) with respect to each of the following groups for the period after such enactment: ”(A) Individuals who were children in families that have become ineligible for assistance under a State pro- gram funded under this part by reason of having reached a time limit on the provision of such assistance. ”(B) Children born after such date of enactment to parents who, at the time of such birth, had not attained 20 years of age. ”(C) Individuals who, after such date of enactment, became parents before attaining 20 years of age. ”(2) MATTERS DESCRIBED.\u2014The matters described in this paragraph are the following: ”(A) The percentage of each group that has dropped out of secondary school (or the equivalent), and the percent- age of each group at each level of educational attainment. ”(B) The percentage of each group that is employed. ”(C) The percentage of each group that has been con- victed of a crime or has been adjudicated as a delinquent. ”(D) The rate at which the members of each group are born, or have children, out-of-wedlock, and the percent- age of each group that is married. ”(E) The percentage of each group that continues to participate in State programs funded under this part. ”(F) The percentage of each group that has health insurance provided by a private entity (broken down by whether the insurance is provided through an employer or otherwise), the percentage that has health insurance provided by an agency of government, and the percentage that does not have health insurance. ”(G) The average income of the families of the members of each group. ”(H) Such other matters as the Secretary deems appro- priate. ”(h) FUNDING OF STUDIES AND DEMONSTRATIONS.\u2014 ”(1) IN GENERAL.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appro- priated $15,000,000 for each of fiscal years 1997 through 2002 for the purpose of paying\u2014 ”(A) the cost of conducting the research described in subsection (a); ”(B) the cost of developing and evaluating innovative approaches for reducing welfare dependency and increasing the well-being of minor children under subsection (b); ”(C) the Federal share of any State-initiated study approved under subsection (f); and ”(D) an amount determined by the Secretary to be necessary to operate and evaluate demonstration projects, relating to this part, that are in effect or approved under section 1115 as of September 30, 1995, and are continued after such date. ”(2) ALLOCATION.\u2014Of the amount appropriated under para- graph (1) for a fiscal year\u2014 110 STAT. 2156 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) 50 percent shall be allocated for the pur- poses described in subparagraphs (A) and (B) of paragraph (1), and ”(B) 50 percent shall be allocated for the purposes described in subparagraphs (C) and (D) of paragraph (1). ”(3) DEMONSTRATIONS OF INNOVATIVE STRATEGIES.\u2014The Secretary may implement and evaluate demonstrations of innovative and promising strategies which\u2014 ”(A) provide one-time capital funds to establish, expand, or replicate programs; ”(B) test performance-based grant-to-loan financing in which programs meeting performance targets receive grants while programs not meeting such targets repay funding on a prorated basis; and ”(C) test strategies in multiple States and types of communities. ”(i) CHILD POVERTY RATES.\u2014 ”(1) IN GENERAL.\u2014Not later than 90 days after the date of the enactment of this part, and annually thereafter, the chief executive officer of each State shall submit to the Sec- retary a statement of the child poverty rate in the State as of such date of enactment or the date of the most recent prior statement under this paragraph. ”(2) SUBMISSION OF CORRECTIVE ACTION PLAN.\u2014Not later than 90 days after the date a State submits a statement under paragraph (1) which indicates that, as a result of the amend- ments made by section 103 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the child poverty rate of the State has increased by 5 percent or more since the most recent prior statement under paragraph (1), the State shall prepare and submit to the Secretary a corrective action plan in accordance with paragraph (3). ”(3) CONTENTS OF PLAN.\u2014A corrective action plan submit- ted under paragraph (2) shall outline the manner in which the State will reduce the child poverty rate in the State. The plan shall include a description of the actions to be taken by the State under such plan. ”(4) COMPLIANCE WITH PLAN.\u2014A State that submits a corrective action plan that the Secretary has found contains the information required by this subsection shall implement the corrective action plan until the State determines that the child poverty rate in the State is less than the lowest child poverty rate on the basis of which the State was required to submit the corrective action plan. ”(5) METHODOLOGY.\u2014The Secretary shall prescribe regula- tions establishing the methodology by which a State shall deter- mine the child poverty rate in the State. The methodology shall take into account factors including the number of children who receive free or reduced-price lunches, the number of food stamp households, and the county-by-county estimates of chil- dren in poverty as determined by the Census Bureau. ”SEC. 414. STUDY BY THE CENSUS BUREAU. ”(a) IN GENERAL.\u2014The Bureau of the Census shall continue to collect data on the 1992 and 1993 panels of the Survey of Income and Program Participation as necessary to obtain such information as will enable interested persons to evaluate the impact 42 USC 614. Regulations. 110 STAT. 2157PUBLIC LAW 104 193\u2014AUG. 22, 1996 of the amendments made by title I of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 on a random national sample of recipients of assistance under State programs funded under this part and (as appropriate) other low-income fami- lies, and in doing so, shall pay particular attention to the issues of out-of-wedlock birth, welfare dependency, the beginning and end of welfare spells, and the causes of repeat welfare spells, and shall obtain information about the status of children participating in such panels. ”(b) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appro- priated $10,000,000 for each of fiscal years 1996, 1997, 1998, 1999, 2000, 2001, and 2002 for payment to the Bureau of the Census to carry out subsection (a). ”SEC. 415. WAIVERS. ”(a) CONTINUATION OF WAIVERS.\u2014 ”(1) WAIVERS IN EFFECT ON DATE OF ENACTMENT OF WEL- FARE REFORM.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B), if any waiver granted to a State under section 1115 of this Act or otherwise which relates to the provision of assistance under a State plan under this part (as in effect on September 30, 1996) is in effect as of the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (other than by section 103(c) of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996) shall not apply with respect to the State before the expiration (determined without regard to any extensions) of the waiver to the extent such amend- ments are inconsistent with the waiver. ”(B) FINANCING LIMITATION.\u2014Notwithstanding any other provision of law, beginning with fiscal year 1996, a State operating under a waiver described in subpara- graph (A) shall be entitled to payment under section 403 for the fiscal year, in lieu of any other payment provided for in the waiver. ”(2) WAIVERS GRANTED SUBSEQUENTLY.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B), if any waiver granted to a State under section 1115 of this Act or otherwise which relates to the provision of assistance under a State plan under this part (as in effect on September 30, 1996) is submitted to the Secretary before the date of the enactment of the Personal Respon- sibility and Work Opportunity Reconciliation Act of 1996 and approved by the Secretary on or before July 1, 1997, and the State demonstrates to the satisfaction of the Sec- retary that the waiver will not result in Federal expendi- tures under title IV of this Act (as in effect without regard to the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996) that are greater than would occur in the absence of the waiver, the amendments made by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (other than by section 103(c) of the Personal Responsibility and Work 42 USC 615. 110 STAT. 2158 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Opportunity Reconciliation Act of 1996) shall not apply with respect to the State before the expiration (determined without regard to any extensions) of the waiver to the extent the amendments made by the Personal Responsibil- ity and Work Opportunity Reconciliation Act of 1996 are inconsistent with the waiver. ”(B) NO EFFECT ON NEW WORK REQUIREMENTS.\u2014Not- withstanding subparagraph (A), a waiver granted under section 1115 or otherwise which relates to the provision of assistance under a State program funded under this part (as in effect on September 30, 1996) shall not affect the applicability of section 407 to the State. ”(b) STATE OPTION TO TERMINATE WAIVER.\u2014 ”(1) IN GENERAL.\u2014A State may terminate a waiver described in subsection (a) before the expiration of the waiver. ”(2) REPORT.\u2014A State which terminates a waiver under paragraph (1) shall submit a report to the Secretary summariz- ing the waiver and any available information concerning the result or effect of the waiver. ”(3) HOLD HARMLESS PROVISION.\u2014 ”(A) IN GENERAL.\u2014Notwithstanding any other provi- sion of law, a State that, not later than the date described in subparagraph (B) of this paragraph, submits a written request to terminate a waiver described in subsection (a) shall be held harmless for accrued cost neutrality liabilities incurred under the waiver. ”(B) DATE DESCRIBED.\u2014The date described in this subparagraph is 90 days following the adjournment of the first regular session of the State legislature that begins after the date of the enactment of the Personal Responsibil- ity and Work Opportunity Reconciliation Act of 1996. ”(c) SECRETARIAL ENCOURAGEMENT OF CURRENT WAIVERS.\u2014 The Secretary shall encourage any State operating a waiver described in subsection (a) to continue the waiver and to evaluate, using random sampling and other characteristics of accepted sci- entific evaluations, the result or effect of the waiver. ”(d) CONTINUATION OF INDIVIDUAL WAIVERS.\u2014A State may elect to continue 1 or more individual waivers described in sub- section (a). ”SEC. 416. ADMINISTRATION. ”The programs under this part and part D shall be administered by an Assistant Secretary for Family Support within the Depart- ment of Health and Human Services, who shall be appointed by the President, by and with the advice and consent of the Senate, and who shall be in addition to any other Assistant Secretary of Health and Human Services provided for by law, and the Sec- retary shall reduce the Federal workforce within the Department of Health and Human Services by an amount equal to the sum of 75 percent of the full-time equivalent positions at such Depart- ment that relate to any direct spending program, or any program funded through discretionary spending, that has been converted into a block grant program under the Personal Responsibility and Work Opportunity Act of 1996 and the amendments made by such Act, and by an amount equal to 75 percent of that portion of the total full-time equivalent departmental management positions at such Department that bears the same relationship to the amount 42 USC 616. 110 STAT. 2159PUBLIC LAW 104 193\u2014AUG. 22, 1996 appropriated for any direct spending program, or any program funded through discretionary spending, that has been converted into a block grant program under the Personal Responsibility and Work Opportunity Act of 1996 and the amendments made by such Act, as such amount relates to the total amount appropriated for use by such Department, and, notwithstanding any other provision of law, the Secretary shall take such actions as may be necessary, including reductions in force actions, consistent with sections 3502 and 3595 of title 5, United States Code, to reduce the full-time equivalent positions within the Department of Health and Human Services by 245 full-time equivalent positions related to the program converted into a block grant under the amendment made by section 2103 of the Personal Responsibility and Work Opportunity Act of 1996, and by 60 full-time equivalent managerial positions in the Department. ”SEC. 417. LIMITATION ON FEDERAL AUTHORITY. ”No officer or employee of the Federal Government may regulate the conduct of States under this part or enforce any pro- vision of this part, except to the extent expressly provided in this part.”; and (2) by inserting after such section 418 the following: ”SEC. 419. DEFINITIONS. ”As used in this part: ”(1) ADULT.\u2014The term ‘adult’ means an individual who is not a minor child. ”(2) MINOR CHILD.\u2014The term ‘minor child’ means an individual who\u2014 ”(A) has not attained 18 years of age; or ”(B) has not attained 19 years of age and is a full- time student in a secondary school (or in the equivalent level of vocational or technical training). ”(3) FISCAL YEAR.\u2014The term ‘fiscal year’ means any 12- month period ending on September 30 of a calendar year. ”(4) INDIAN, INDIAN TRIBE, AND TRIBAL ORGANIZATION.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subparagraph (B), the terms ‘Indian’, ‘Indian tribe’, and ‘tribal organiza- tion’ have the meaning given such terms by section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b). ”(B) SPECIAL RULE FOR INDIAN TRIBES IN ALASKA.\u2014 The term ‘Indian tribe’ means, with respect to the State of Alaska, only the Metlakatla Indian Community of the Annette Islands Reserve and the following Alaska Native regional nonprofit corporations: ”(i) Arctic Slope Native Association. ”(ii) Kawerak, Inc. ”(iii) Maniilaq Association. ”(iv) Association of Village Council Presidents. ”(v) Tanana Chiefs Conference. ”(vi) Cook Inlet Tribal Council. ”(vii) Bristol Bay Native Association. ”(viii) Aleutian and Pribilof Island Association. ”(ix) Chugachmuit. ”(x) Tlingit Haida Central Council. ”(xi) Kodiak Area Native Association. ”(xii) Copper River Native Association. 42 USC 619. 42 USC 617. 110 STAT. 2160 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(5) STATE.\u2014Except as otherwise specifically provided, the term ‘State’ means the 50 States of the United States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, and American Samoa.”. (b) GRANTS TO OUTLYING AREAS.\u2014Section 1108 (42 U.S.C. 1308) is amended\u2014 (1) by striking subsections (d) and (e); (2) by redesignating subsection (c) as subsection (f); and (3) by striking all that precedes subsection (c) and inserting the following: ”SEC. 1108. ADDITIONAL GRANTS TO PUERTO RICO, THE VIRGIN ISLANDS, GUAM, AND AMERICAN SAMOA; LIMITATION ON TOTAL PAYMENTS. ”(a) LIMITATION ON TOTAL PAYMENTS TO EACH TERRITORY.\u2014 Notwithstanding any other provision of this Act, the total amount certified by the Secretary of Health and Human Services under titles I, X, XIV, and XVI, under parts A and E of title IV, and under subsection (b) of this section, for payment to any territory for a fiscal year shall not exceed the ceiling amount for the territory for the fiscal year. ”(b) ENTITLEMENT TO MATCHING GRANT.\u2014 ”(1) IN GENERAL.\u2014Each territory shall be entitled to receive from the Secretary for each fiscal year a grant in an amount equal to 75 percent of the amount (if any) by which\u2014 ”(A) the total expenditures of the territory during the fiscal year under the territory programs funded under parts A and E of title IV; exceeds ”(B) the sum of\u2014 ”(i) the amount of the family assistance grant pay- able to the territory without regard to section 409; and ”(ii) the total amount expended by the territory during fiscal year 1995 pursuant to parts A and F of title IV (as so in effect), other than for child care. ”(2) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appropriated for fiscal years 1997 through 2002, such sums as are necessary for grants under this paragraph. ”(c) DEFINITIONS.\u2014As used in this section: ”(1) TERRITORY.\u2014The term ‘territory’ means Puerto Rico, the Virgin Islands, Guam, and American Samoa. ”(2) CEILING AMOUNT.\u2014The term ‘ceiling amount’ means, with respect to a territory and a fiscal year, the mandatory ceiling amount with respect to the territory, reduced for the fiscal year in accordance with subsection (e), and reduced by the amount of any penalty imposed on the territory under any provision of law specified in subsection (a) during the fiscal year. ”(3) FAMILY ASSISTANCE GRANT.\u2014The term ‘family assist- ance grant’ has the meaning given such term by section 403(a)(1)(B). ”(4) MANDATORY CEILING AMOUNT.\u2014The term ‘mandatory ceiling amount’ means\u2014 ”(A) $107,255,000 with respect to Puerto Rico; ”(B) $4,686,000 with respect to Guam; 110 STAT. 2161PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(C) $3,554,000 with respect to the Virgin Islands; and ”(D) $1,000,000 with respect to American Samoa. ”(5) TOTAL AMOUNT EXPENDED BY THE TERRITORY.\u2014The term ‘total amount expended by the territory’\u2014 ”(A) does not include expenditures during the fiscal year from amounts made available by the Federal Govern- ment; and ”(B) when used with respect to fiscal year 1995, also does not include\u2014 ”(i) expenditures during fiscal year 1995 under subsection (g) or (i) of section 402 (as in effect on September 30, 1995); or ”(ii) any expenditures during fiscal year 1995 for which the territory (but for section 1108, as in effect on September 30, 1995) would have received reimbursement from the Federal Government. ”(d) AUTHORITY TO TRANSFER FUNDS TO CERTAIN PROGRAMS.\u2014 A territory to which an amount is paid under subsection (b) of this section may use the amount in accordance with section 404(d). ”(e) MAINTENANCE OF EFFORT.\u2014The ceiling amount with respect to a territory shall be reduced for a fiscal year by an amount equal to the amount (if any) by which\u2014 ”(1) the total amount expended by the territory under all programs of the territory operated pursuant to the provisions of law specified in subsection (a) (as such provisions were in effect for fiscal year 1995) for fiscal year 1995; exceeds ”(2) the total amount expended by the territory under all programs of the territory that are funded under the provisions of law specified in subsection (a) for the fiscal year that imme- diately precedes the fiscal year referred to in the matter preced- ing paragraph (1).”. (c) ELIMINATION OF CHILD CARE PROGRAMS UNDER THE SOCIAL SECURITY ACT.\u2014 (1) AFDC AND TRANSITIONAL CHILD CARE PROGRAMS.\u2014Sec- tion 402 (42 U.S.C. 602) is amended by striking sub- section (g). (2) AT-RISK CHILD CARE PROGRAM.\u2014 (A) AUTHORIZATION.\u2014Section 402 (42 U.S.C. 602) is amended by striking subsection (i). (B) FUNDING PROVISIONS.\u2014Section 403 (42 U.S.C. 603) is amended by striking subsection (n). SEC. 104. SERVICES PROVIDED BY CHARITABLE, RELIGIOUS, OR PRIVATE ORGANIZATIONS. (a) IN GENERAL.\u2014 (1) STATE OPTIONS.\u2014A State may\u2014 (A) administer and provide services under the pro- grams described in subparagraphs (A) and (B)(i) of paragraph (2) through contracts with charitable, religious, or private organizations; and (B) provide beneficiaries of assistance under the pro- grams described in subparagraphs (A) and (B)(ii) of para- graph (2) with certificates, vouchers, or other forms of disbursement which are redeemable with such organiza- tions. 42 USC 604a. 110 STAT. 2162 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) PROGRAMS DESCRIBED.\u2014The programs described in this paragraph are the following programs: (A) A State program funded under part A of title IV of the Social Security Act (as amended by section 103(a) of this Act). (B) Any other program established or modified under title I or II of this Act, that\u2014 (i) permits contracts with organizations; or (ii) permits certificates, vouchers, or other forms of disbursement to be provided to beneficiaries, as a means of providing assistance. (b) RELIGIOUS ORGANIZATIONS.\u2014The purpose of this section is to allow States to contract with religious organizations, or to allow religious organizations to accept certificates, vouchers, or other forms of disbursement under any program described in sub- section (a)(2), on the same basis as any other nongovernmental provider without impairing the religious character of such organiza- tions, and without diminishing the religious freedom of beneficiaries of assistance funded under such program. (c) NONDISCRIMINATION AGAINST RELIGIOUS ORGANIZATIONS.\u2014 In the event a State exercises its authority under subsection (a), religious organizations are eligible, on the same basis as any other private organization, as contractors to provide assistance, or to accept certificates, vouchers, or other forms of disbursement, under any program described in subsection (a)(2) so long as the programs are implemented consistent with the Establishment Clause of the United States Constitution. Except as provided in subsection (k), neither the Federal Government nor a State receiving funds under such programs shall discriminate against an organization which is or applies to be a contractor to provide assistance, or which accepts certificates, vouchers, or other forms of disbursement, on the basis that the organization has a religious character. (d) RELIGIOUS CHARACTER AND FREEDOM.\u2014 (1) RELIGIOUS ORGANIZATIONS.\u2014A religious organization with a contract described in subsection (a)(1)(A), or which accepts certificates, vouchers, or other forms of disbursement under subsection (a)(1)(B), shall retain its independence from Federal, State, and local governments, including such organiza- tion’s control over the definition, development, practice, and expression of its religious beliefs. (2) ADDITIONAL SAFEGUARDS.\u2014Neither the Federal Govern- ment nor a State shall require a religious organization to\u2014 (A) alter its form of internal governance; or (B) remove religious art, icons, scripture, or other symbols; in order to be eligible to contract to provide assistance, or to accept certificates, vouchers, or other forms of disbursement, funded under a program described in subsection (a)(2). (e) RIGHTS OF BENEFICIARIES OF ASSISTANCE.\u2014 (1) IN GENERAL.\u2014If an individual described in paragraph (2) has an objection to the religious character of the organization or institution from which the individual receives, or would receive, assistance funded under any program described in sub- section (a)(2), the State in which the individual resides shall provide such individual (if otherwise eligible for such assist- ance) within a reasonable period of time after the date of such objection with assistance from an alternative provider Contracts. 110 STAT. 2163PUBLIC LAW 104 193\u2014AUG. 22, 1996 that is accessible to the individual and the value of which is not less than the value of the assistance which the individual would have received from such organization. (2) INDIVIDUAL DESCRIBED.\u2014An individual described in this paragraph is an individual who receives, applies for, or requests to apply for, assistance under a program described in subsection (a)(2). (f) EMPLOYMENT PRACTICES.\u2014A religious organization’s exemp- tion provided under section 702 of the Civil Rights Act of 1964 (42 U.S.C. 2000e 1a) regarding employment practices shall not be affected by its participation in, or receipt of funds from, programs described in subsection (a)(2). (g) NONDISCRIMINATION AGAINST BENEFICIARIES.\u2014Except as otherwise provided in law, a religious organization shall not discriminate against an individual in regard to rendering assistance funded under any program described in subsection (a)(2) on the basis of religion, a religious belief, or refusal to actively participate in a religious practice. (h) FISCAL ACCOUNTABILITY.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), any religious organization contracting to provide assistance funded under any program described in subsection (a)(2) shall be sub- ject to the same regulations as other contractors to account in accord with generally accepted auditing principles for the use of such funds provided under such programs. (2) LIMITED AUDIT.\u2014If such organization segregates Federal funds provided under such programs into separate accounts, then only the financial assistance provided with such funds shall be subject to audit. (i) COMPLIANCE.\u2014Any party which seeks to enforce its rights under this section may assert a civil action for injunctive relief exclusively in an appropriate State court against the entity or agency that allegedly commits such violation. (j) LIMITATIONS ON USE OF FUNDS FOR CERTAIN PURPOSES.\u2014 No funds provided directly to institutions or organizations to provide services and administer programs under subsection (a)(1)(A) shall be expended for sectarian worship, instruction, or proselytization. (k) PREEMPTION.\u2014Nothing in this section shall be construed to preempt any provision of a State constitution or State statute that prohibits or restricts the expenditure of State funds in or by religious organizations. SEC. 105. CENSUS DATA ON GRANDPARENTS AS PRIMARY CAREGIVERS FOR THEIR GRANDCHILDREN. (a) IN GENERAL.\u2014Not later than 90 days after the date of the enactment of this Act, the Secretary of Commerce, in carrying out section 141 of title 13, United States Code, shall expand the data collection efforts of the Bureau of the Census (in this section referred to as the ”Bureau”) to enable the Bureau to collect statis- tically significant data, in connection with its decennial census and its mid-decade census, concerning the growing trend of grand- parents who are the primary caregivers for their grandchildren. (b) EXPANDED CENSUS QUESTION.\u2014In carrying out subsection (a), the Secretary of Commerce shall expand the Bureau’s census question that details households which include both grandparents and their grandchildren. The expanded question shall be formulated to distinguish between the following households: 13 USC 141 note. 110 STAT. 2164 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (1) A household in which a grandparent temporarily pro- vides a home for a grandchild for a period of weeks or months during periods of parental distress. (2) A household in which a grandparent provides a home for a grandchild and serves as the primary caregiver for the grandchild. SEC. 106. REPORT ON DATA PROCESSING. (a) IN GENERAL.\u2014Within 6 months after the date of the enact- ment of this Act, the Secretary of Health and Human Services shall prepare and submit to the Congress a report on\u2014 (1) the status of the automated data processing systems operated by the States to assist management in the admin- istration of State programs under part A of title IV of the Social Security Act (whether in effect before or after October 1, 1995); and (2) what would be required to establish a system cap- able of\u2014 (A) tracking participants in public programs over time; and (B) checking case records of the States to determine whether individuals are participating in public programs of 2 or more States. (b) PREFERRED CONTENTS.\u2014The report required by subsection (a) should include\u2014 (1) a plan for building on the automated data processing systems of the States to establish a system with the capabilities described in subsection (a)(2); and (2) an estimate of the amount of time required to establish such a system and of the cost of establishing such a system. SEC. 107. STUDY ON ALTERNATIVE OUTCOMES MEASURES. (a) STUDY.\u2014The Secretary shall, in cooperation with the States, study and analyze outcomes measures for evaluating the success of the States in moving individuals out of the welfare system through employment as an alternative to the minimum participation rates described in section 407 of the Social Security Act. The study shall include a determination as to whether such alternative out- comes measures should be applied on a national or a State-by- State basis and a preliminary assessment of the effects of section 409(a)(7)(C) of such Act. (b) REPORT.\u2014Not later than September 30, 1998, the Secretary shall submit to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Represen- tatives a report containing the findings of the study required by subsection (a). SEC. 108. CONFORMING AMENDMENTS TO THE SOCIAL SECURITY ACT. (a) AMENDMENTS TO TITLE II.\u2014 (1) Section 205(c)(2)(C)(vi) (42 U.S.C. 405(c)(2)(C)(vi)), as so redesignated by section 321(a)(9)(B) of the Social Security Independence and Program Improvements Act of 1994, is amended\u2014 (A) by inserting ”an agency administering a program funded under part A of title IV or” before ”an agency operating”; and (B) by striking ”A or D of title IV of this Act” and inserting ”D of such title”. 42 USC 613 note. 110 STAT. 2165PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) Section 228(d)(1) (42 U.S.C. 428(d)(1)) is amended by inserting ”under a State program funded under” before ”part A of title IV”. (b) AMENDMENTS TO PART B OF TITLE IV.\u2014Section 422(b)(2) (42 U.S.C. 622(b)(2)) is amended\u2014 (1) by striking ”plan approved under part A of this title” and inserting ”program funded under part A”; and (2) by striking ”part E of this title” and inserting ”under the State plan approved under part E”. (c) AMENDMENTS TO PART D OF TITLE IV.\u2014 (1) Section 451 (42 U.S.C. 651) is amended by striking ”aid” and inserting ”assistance under a State program funded”. (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is amended\u2014 (A) by striking ”aid to families with dependent chil- dren” and inserting ”assistance under a State program funded under part A”; (B) by striking ”such aid” and inserting ”such assist- ance”; and (C) by striking ”under section 402(a)(26) or” and insert- ing ”pursuant to section 408(a)(3) or under section”. (3) Section 452(a)(10)(F) (42 U.S.C. 652(a)(10)(F)) is amended\u2014 (A) by striking ”aid under a State plan approved” and inserting ”assistance under a State program funded”; and (B) by striking ”in accordance with the standards referred to in section 402(a)(26)(B)(ii)” and inserting ”by the State”. (4) Section 452(b) (42 U.S.C. 652(b)) is amended in the first sentence by striking ”aid under the State plan approved under part A” and inserting ”assistance under the State pro- gram funded under part A”. (5) Section 452(d)(3)(B)(i) (42 U.S.C. 652(d)(3)(B)(i)) is amended by striking ”1115(c)” and inserting ”1115(b)”. (6) Section 452(g)(2)(A)(ii)(I) (42 U.S.C. 652(g)(2)(A)(ii)(I)) is amended by striking ”aid is being paid under the State’s plan approved under part A or E” and inserting ”assistance is being provided under the State program funded under part A”. (7) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is amended in the matter following clause (iii) by striking ”aid was being paid under the State’s plan approved under part A or E” and inserting ”assistance was being provided under the State program funded under part A”. (8) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended in the matter following subparagraph (B)\u2014 (A) by striking ”who is a dependent child” and inserting ”with respect to whom assistance is being provided under the State program funded under part A”; (B) by inserting ”by the State” after ”found”; and (C) by striking ”to have good cause for refusing to cooperate under section 402(a)(26)” and inserting ”to qual- ify for a good cause or other exception to cooperation pursu- ant to section 454(29)”. (9) Section 452(h) (42 U.S.C. 652(h)) is amended by striking ”under section 402(a)(26)” and inserting ”pursuant to section 408(a)(3)”. 110 STAT. 2166 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (10) Section 453(c)(3) (42 U.S.C. 653(c)(3)) is amended by striking ”aid under part A of this title” and inserting ”assistance under a State program funded under part A”. (11) Section 454(5)(A) (42 U.S.C. 654(5)(A)) is amended\u2014 (A) by striking ”under section 402(a)(26)” and inserting ”pursuant to section 408(a)(3)”; and (B) by striking ”; except that this paragraph shall not apply to such payments for any month following the first month in which the amount collected is sufficient to make such family ineligible for assistance under the State plan approved under part A;” and inserting a comma. (12) Section 454(6)(D) (42 U.S.C. 654(6)(D)) is amended by striking ”aid under a State plan approved” and inserting ”assistance under a State program funded”. (13) Section 456(a)(1) (42 U.S.C. 656(a)(1)) is amended by striking ”under section 402(a)(26)”. (14) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is amended by striking ”402(a)(26)” and inserting ”408(a)(3)”. (15) Section 466(b)(2) (42 U.S.C. 666(b)(2)) is amended by striking ”aid” and inserting ”assistance under a State program funded”. (16) Section 469(a) (42 U.S.C. 669(a)) is amended\u2014 (A) by striking ”aid under plans approved” and insert- ing ”assistance under State programs funded”; and (B) by striking ”such aid” and inserting ”such assist- ance”. (d) AMENDMENTS TO PART E OF TITLE IV.\u2014 (1) Section 470 (42 U.S.C. 670) is amended\u2014 (A) by striking ”would be” and inserting ”would have been”; and (B) by inserting ”(as such plan was in effect on June 1, 1995)” after ”part A”. (2) Section 471(a)(17) (42 U.S.C. 671(a)(17)) is amended by striking ”plans approved under parts A and D” and inserting ”program funded under part A and plan approved under part D”. (3) Section 472(a) (42 U.S.C. 672(a)) is amended\u2014 (A) in the matter preceding paragraph (1)\u2014 (i) by striking ”would meet” and inserting ”would have met”; (ii) by inserting ”(as such sections were in effect on June 1, 1995)” after ”407”; and (iii) by inserting ”(as so in effect)” after ”406(a)”; and (B) in paragraph (4)\u2014 (i) in subparagraph (A)\u2014 (I) by inserting ”would have” after ”(A)”; and (II) by inserting ”(as in effect on June 1, 1995)” after ”section 402”; and (ii) in subparagraph (B)(ii), by inserting ”(as in effect on June 1, 1995)” after ”406(a)”. (4) Section 472(h) (42 U.S.C. 672(h)) is amended to read as follows: ”(h)(1) For purposes of title XIX, any child with respect to whom foster care maintenance payments are made under this sec- tion is deemed to be a dependent child as defined in section 406 (as in effect as of June 1, 1995) and deemed to be a recipient 110 STAT. 2167PUBLIC LAW 104 193\u2014AUG. 22, 1996 of aid to families with dependent children under part A of this title (as so in effect). For purposes of title XX, any child with respect to whom foster care maintenance payments are made under this section is deemed to be a minor child in a needy family under a State program funded under part A of this title and is deemed to be a recipient of assistance under such part. ”(2) For purposes of paragraph (1), a child whose costs in a foster family home or child care institution are covered by the foster care maintenance payments being made with respect to the child’s minor parent, as provided in section 475(4)(B), shall be considered a child with respect to whom foster care maintenance payments are made under this section.”. (5) Section 473(a)(2) (42 U.S.C. 673(a)(2)) is amended\u2014 (A) in subparagraph (A)(i)\u2014 (i) by inserting ”(as such sections were in effect on June 1, 1995)” after ”407”; (ii) by inserting ”(as so in effect)” after ”specified in section 406(a)”; and (iii) by inserting ”(as such section was in effect on June 1, 1995)” after ”403”; (B) in subparagraph (B)(i)\u2014 (i) by inserting ”would have” after ”(B)(i)”; and (ii) by inserting ”(as in effect on June 1, 1995)” after ”section 402”; and (C) in subparagraph (B)(ii)(II), by inserting ”(as in effect on June 1, 1995)” after ”406(a)”. (6) Section 473(b) (42 U.S.C. 673(b)) is amended to read as follows: ”(b)(1) For purposes of title XIX, any child who is described in paragraph (3) is deemed to be a dependent child as defined in section 406 (as in effect as of June 1, 1995) and deemed to be a recipient of aid to families with dependent children under part A of this title (as so in effect) in the State where such child resides. ”(2) For purposes of title XX, any child who is described in paragraph (3) is deemed to be a minor child in a needy family under a State program funded under part A of this title and deemed to be a recipient of assistance under such part. ”(3) A child described in this paragraph is any child\u2014 ”(A)(i) who is a child described in subsection (a)(2), and ”(ii) with respect to whom an adoption assistance agree- ment is in effect under this section (whether or not adoption assistance payments are provided under the agreement or are being made under this section), including any such child who has been placed for adoption in accordance with applicable State and local law (whether or not an interlocutory or other judicial decree of adoption has been issued), or ”(B) with respect to whom foster care maintenance pay- ments are being made under section 472. ”(4) For purposes of paragraphs (1) and (2), a child whose costs in a foster family home or child-care institution are covered by the foster care maintenance payments being made with respect to the child’s minor parent, as provided in section 475(4)(B), shall be considered a child with respect to whom foster care maintenance payments are being made under section 472.”. (e) REPEAL OF PART F OF TITLE IV.\u2014Part F of title IV (42 U.S.C. 681 687) is repealed. 110 STAT. 2168 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (f) AMENDMENT TO TITLE X.\u2014Section 1002(a)(7) (42 U.S.C. 1202(a)(7)) is amended by striking ”aid to families with dependent children under the State plan approved under section 402 of this Act” and inserting ”assistance under a State program funded under part A of title IV”. (g) AMENDMENTS TO TITLE XI.\u2014 (1) Section 1109 (42 U.S.C. 1309) is amended by striking ”or part A of title IV,”. (2) Section 1115 (42 U.S.C. 1315) is amended\u2014 (A) in subsection (a)(2)\u2014 (i) by inserting ”(A)” after ”(2)”; (ii) by striking ”403,”; (iii) by striking the period at the end and inserting ”, and”; and (iv) by adding at the end the following new subparagraph: ”(B) costs of such project which would not otherwise be a permissible use of funds under part A of title IV and which are not included as part of the costs of projects under section 1110, shall to the extent and for the period prescribed by the Secretary, be regarded as a permissible use of funds under such part.”; (B) in subsection (c)(3), by striking ”the program of aid to families with dependent children” and inserting ”part A of such title”; and (C) by striking subsection (b) and redesignating sub- sections (c) and (d) as subsections (b) and (c), respectively. (3) Section 1116 (42 U.S.C. 1316) is amended\u2014 (A) in each of subsections (a)(1), (b), and (d), by striking ”or part A of title IV,”; and (B) in subsection (a)(3), by striking ”404,”. (4) Section 1118 (42 U.S.C. 1318) is amended\u2014 (A) by striking ”403(a),”; (B) by striking ”and part A of title IV,”; and (C) by striking ”, and shall, in the case of American Samoa, mean 75 per centum with respect to part A of title IV”. (5) Section 1119 (42 U.S.C. 1319) is amended\u2014 (A) by striking ”or part A of title IV”; and (B) by striking ”403(a),”. (6) Section 1133(a) (42 U.S.C. 1320b 3(a)) is amended by striking ”or part A of title IV,”. (7) Section 1136 (42 U.S.C. 1320b 6) is repealed. (8) Section 1137 (42 U.S.C. 1320b 7) is amended\u2014 (A) in subsection (b), by striking paragraph (1) and inserting the following: ”(1) any State program funded under part A of title IV of this Act;”; and (B) in subsection (d)(1)(B)\u2014 (i) by striking ”In this subsection\u2014” and all that follows through ”(ii) in” and inserting ”In this sub- section, in”; (ii) by redesignating subclauses (I), (II), and (III) as clauses (i), (ii), and (iii); and (iii) by moving such redesignated material 2 ems to the left. 110 STAT. 2169PUBLIC LAW 104 193\u2014AUG. 22, 1996 (h) AMENDMENT TO TITLE XIV.\u2014Section 1402(a)(7) (42 U.S.C. 1352(a)(7)) is amended by striking ”aid to families with dependent children under the State plan approved under section 402 of this Act” and inserting ”assistance under a State program funded under part A of title IV”. (i) AMENDMENT TO TITLE XVI AS IN EFFECT WITH RESPECT TO THE TERRITORIES.\u2014Section 1602(a)(11), as in effect without regard to the amendment made by section 301 of the Social Security Amendments of 1972 (42 U.S.C. 1382 note), is amended by striking ”aid under the State plan approved” and inserting ”assistance under a State program funded”. (j) AMENDMENT TO TITLE XVI AS IN EFFECT WITH RESPECT TO THE STATES.\u2014Section 1611(c)(5)(A) (42 U.S.C. 1382(c)(5)(A)) is amended to read as follows: ”(A) a State program funded under part A of title IV,”. (k) AMENDMENT TO TITLE XIX.\u2014Section 1902(j) (42 U.S.C. 1396a(j)) is amended by striking ”1108(c)” and inserting ”1108(f)”. SEC. 109. CONFORMING AMENDMENTS TO THE FOOD STAMP ACT OF 1977 AND RELATED PROVISIONS. (a) Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended\u2014 (1) in the second sentence of subsection (a), by striking ”plan approved” and all that follows through ”title IV of the Social Security Act” and inserting ”program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)”; (2) in subsection (d)\u2014 (A) in paragraph (5), by striking ”assistance to families with dependent children” and inserting ”assistance under a State program funded”; and (B) by striking paragraph (13) and redesignating para- graphs (14), (15), and (16) as paragraphs (13), (14), and (15), respectively; (3) in subsection (j), by striking ”plan approved under part A of title IV of such Act (42 U.S.C. 601 et seq.)” and inserting ”program funded under part A of title IV of the Act (42 U.S.C. 601 et seq.)”; and (4) by striking subsection (m). (b) Section 6 of such Act (7 U.S.C. 2015) is amended\u2014 (1) in subsection (c)(5), by striking ”the State plan approved” and inserting ”the State program funded”; and (2) in subsection (e)(6), by striking ”aid to families with dependent children” and inserting ”benefits under a State pro- gram funded”. (c) Section 16(g)(4) of such Act (7 U.S.C. 2025(g)(4)) is amended by striking ”State plans under the Aid to Families with Dependent Children Program under” and inserting ”State programs funded under part A of”. (d) Section 17 of such Act (7 U.S.C. 2026) is amended\u2014 (1) in the first sentence of subsection (b)(1)(A), by striking ”to aid to families with dependent children under part A of title IV of the Social Security Act” and inserting ”or are receiving assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)”; and 110 STAT. 2170 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) in subsection (b)(3), by adding at the end the following new subparagraph: ”(I) The Secretary may not grant a waiver under this paragraph on or after the date of enactment of this subparagraph. Any ref- erence in this paragraph to a provision of title IV of the Social Security Act shall be deemed to be a reference to such provision as in effect on the day before such date.”; (e) Section 20 of such Act (7 U.S.C. 2029) is amended\u2014 (1) in subsection (a)(2)(B) by striking ”operating\u2014” and all that follows through ”(ii) any other” and inserting ”operating any”; and (2) in subsection (b)\u2014 (A) in paragraph (1)\u2014 (i) by striking ”(b)(1) A household” and inserting ”(b) A household”; and (ii) in subparagraph (B), by striking ”training pro- gram” and inserting ”activity”; (B) by striking paragraph (2); and (C) by redesignating subparagraphs (A) through (F) as paragraphs (1) through (6), respectively. (f) Section 5(h)(1) of the Agriculture and Consumer Protection Act of 1973 (Public Law 93 186; 7 U.S.C. 612c note) is amended by striking ”the program for aid to families with dependent children” and inserting ”the State program funded”. (g) Section 9 of the National School Lunch Act (42 U.S.C. 1758) is amended\u2014 (1) in subsection (b)\u2014 (A) in paragraph (2)(C)(ii)(II)\u2014 (i) by striking ”program for aid to families with dependent children” and inserting ”State program funded”; and (ii) by inserting before the period at the end the following: ”that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are com- parable to or more restrictive than those in effect on June 1, 1995”; and (B) in paragraph (6)\u2014 (i) in subparagraph (A)(ii)\u2014 (I) by striking ”an AFDC assistance unit (under the aid to families with dependent children program authorized” and inserting ”a family (under the State program funded”; and (II) by striking ”, in a State” and all that follows through ”9902(2)))” and inserting ”that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995”; and (ii) in subparagraph (B), by striking ”aid to families with dependent children” and inserting ”assistance under the State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable 110 STAT. 2171PUBLIC LAW 104 193\u2014AUG. 22, 1996 to or more restrictive than those in effect on June 1, 1995”; and (2) in subsection (d)(2)(C)\u2014 (A) by striking ”program for aid to families with dependent children” and inserting ”State program funded”; and (B) by inserting before the period at the end the following: ”that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995”. (h) Section 17(d)(2)(A)(ii)(II) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(d)(2)(A)(ii)(II)) is amended\u2014 (1) by striking ”program for aid to families with dependent children established” and inserting ”State program funded”; and (2) by inserting before the semicolon the following: ”that the Secretary determines complies with standards established by the Secretary that ensure that the standards under the State program are comparable to or more restrictive than those in effect on June 1, 1995”. SEC. 110. CONFORMING AMENDMENTS TO OTHER LAWS. (a) Subsection (b) of section 508 of the Unemployment Com- pensation Amendments of 1976 (42 U.S.C. 603a; Public Law 94 566; 90 Stat. 2689) is amended to read as follows: ”(b) PROVISION FOR REIMBURSEMENT OF EXPENSES.\u2014For pur- poses of section 455 of the Social Security Act, expenses incurred to reimburse State employment offices for furnishing information requested of such offices\u2014 ”(1) pursuant to the third sentence of section 3(a) of the Act entitled ‘An Act to provide for the establishment of a national employment system and for cooperation with the States in the promotion of such system, and for other purposes’, approved June 6, 1933 (29 U.S.C. 49b(a)), or ”(2) by a State or local agency charged with the duty of carrying a State plan for child support approved under part D of title IV of the Social Security Act, shall be considered to constitute expenses incurred in the adminis- tration of such State plan.”. (b) Section 9121 of the Omnibus Budget Reconciliation Act of 1987 (42 U.S.C. 602 note) is repealed. (c) Section 9122 of the Omnibus Budget Reconciliation Act of 1987 (42 U.S.C. 602 note) is repealed. (d) Section 221 of the Housing and Urban-Rural Recovery Act of 1983 (42 U.S.C. 602 note), relating to treatment under AFDC of certain rental payments for federally assisted housing, is repealed. (e) Section 159 of the Tax Equity and Fiscal Responsibility Act of 1982 (42 U.S.C. 602 note) is repealed. (f) Section 202(d) of the Social Security Amendments of 1967 (81 Stat. 882; 42 U.S.C. 602 note) is repealed. (g) Section 903 of the Stewart B. McKinney Homeless Assist- ance Amendments Act of 1988 (42 U.S.C. 11381 note), relating to demonstration projects to reduce number of AFDC families in welfare hotels, is amended\u2014 110 STAT. 2172 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (1) in subsection (a), by striking ”aid to families with dependent children under a State plan approved” and inserting ”assistance under a State program funded”; and (2) in subsection (c), by striking ”aid to families with dependent children in the State under a State plan approved” and inserting ”assistance in the State under a State program funded”. (h) The Higher Education Act of 1965 (20 U.S.C. 1001 et seq.) is amended\u2014 (1) in section 404C(c)(3) (20 U.S.C. 1070a 23(c)(3)), by strik- ing ”(Aid to Families with Dependent Children)”; and (2) in section 480(b)(2) (20 U.S.C. 1087vv(b)(2)), by striking ”aid to families with dependent children under a State plan approved” and inserting ”assistance under a State program funded”. (i) The Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2301 et seq.) is amended\u2014 (1) in section 231(d)(3)(A)(ii) (20 U.S.C. 2341(d)(3)(A)(ii)), by striking ”The program for aid to dependent children” and inserting ”The State program funded”; (2) in section 232(b)(2)(B) (20 U.S.C. 2341a(b)(2)(B)), by striking ”the program for aid to families with dependent chil- dren” and inserting ”the State program funded”; and (3) in section 521(14)(B)(iii) (20 U.S.C. 2471(14)(B)(iii)), by striking ”the program for aid to families with dependent children” and inserting ”the State program funded”. (j) The Elementary and Secondary Education Act of 1965 (20 U.S.C. 2701 et seq.) is amended\u2014 (1) in section 1113(a)(5) (20 U.S.C. 6313(a)(5)), by striking ”Aid to Families with Dependent Children program” and insert- ing ”State program funded under part A of title IV of the Social Security Act”; (2) in section 1124(c)(5) (20 U.S.C. 6333(c)(5)), by striking ”the program of aid to families with dependent children under a State plan approved under” and inserting ”a State program funded under part A of”; and (3) in section 5203(b)(2) (20 U.S.C. 7233(b)(2))\u2014 (A) in subparagraph (A)(xi), by striking ”Aid to Fami- lies with Dependent Children benefits” and inserting ”assistance under a State program funded under part A of title IV of the Social Security Act”; and (B) in subparagraph (B)(viii), by striking ”Aid to Fami- lies with Dependent Children” and inserting ”assistance under the State program funded under part A of title IV of the Social Security Act”. (k) The 4th proviso of chapter VII of title I of Public Law 99 88 (25 U.S.C. 13d 1) is amended to read as follows: ”Provided further, That general assistance payments made by the Bureau of Indian Affairs shall be made\u2014 ”(1) after April 29, 1985, and before October 1, 1995, on the basis of Aid to Families with Dependent Children (AFDC) standards of need; and ”(2) on and after October 1, 1995, on the basis of standards of need established under the State program funded under part A of title IV of the Social Security Act, except that where a State ratably reduces its AFDC or State pro- gram payments, the Bureau shall reduce general assistance pay- 110 STAT. 2173PUBLIC LAW 104 193\u2014AUG. 22, 1996 ments in such State by the same percentage as the State has reduced the AFDC or State program payment.”. (l) The Internal Revenue Code of 1986 (26 U.S.C. 1 et seq.) is amended\u2014 (1) in section 51(d)(9) (26 U.S.C. 51(d)(9)), by striking all that follows ”agency as” and inserting ”being eligible for finan- cial assistance under part A of title IV of the Social Security Act and as having continually received such financial assistance during the 90-day period which immediately precedes the date on which such individual is hired by the employer.”; (2) in section 3304(a)(16) (26 U.S.C. 3304(a)(16)), by strik- ing ”eligibility for aid or services,” and all that follows through ”children approved” and inserting ”eligibility for assistance, or the amount of such assistance, under a State program funded”; (3) in section 6103(l)(7)(D)(i) (26 U.S.C. 6103(l)(7)(D)(i)), by striking ”aid to families with dependent children provided under a State plan approved” and inserting ”a State program funded”; (4) in section 6103(l)(10) (26 U.S.C. 6103(l)(10))\u2014 (A) by striking ”(c) or (d)” each place it appears and inserting ”(c), (d), or (e)”; and (B) by adding at the end of subparagraph (B) the following new sentence: ”Any return information disclosed with respect to section 6402(e) shall only be disclosed to officers and employees of the State agency requesting such information.”; (5) in section 6103(p)(4) (26 U.S.C. 6103(p)(4)), in the matter preceding subparagraph (A)\u2014 (A) by striking ”(5), (10)” and inserting ”(5)”; and (B) by striking ”(9), or (12)” and inserting ”(9), (10), or (12)”; (6) in section 6334(a)(11)(A) (26 U.S.C. 6334(a)(11)(A)), by striking ”(relating to aid to families with dependent children)”; (7) in section 6402 (26 U.S.C. 6402)\u2014 (A) in subsection (a), by striking ”(c) and (d)” and inserting ”(c), (d), and (e)”; (B) by redesignating subsections (e) through (i) as sub- sections (f) through (j), respectively; and (C) by inserting after subsection (d) the following: ”(e) COLLECTION OF OVERPAYMENTS UNDER TITLE IV A OF THE SOCIAL SECURITY ACT.\u2014The amount of any overpayment to be refunded to the person making the overpayment shall be reduced (after reductions pursuant to subsections (c) and (d), but before a credit against future liability for an internal revenue tax) in accordance with section 405(e) of the Social Security Act (concerning recovery of overpayments to individuals under State plans approved under part A of title IV of such Act).”; and (8) in section 7523(b)(3)(C) (26 U.S.C. 7523(b)(3)(C)), by striking ”aid to families with dependent children” and inserting ”assistance under a State program funded under part A of title IV of the Social Security Act”. (m) Section 3(b) of the Wagner-Peyser Act (29 U.S.C. 49b(b)) is amended by striking ”State plan approved under part A of title IV” and inserting ”State program funded under part A of title IV”. 110 STAT. 2174 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (n) The Job Training Partnership Act (29 U.S.C. 1501 et seq.) is amended\u2014 (1) in section 4(29)(A)(i) (29 U.S.C. 1503(29)(A)(i)), by strik- ing ”(42 U.S.C. 601 et seq.)”; (2) in section 106(b)(6)(C) (29 U.S.C. 1516(b)(6)(C)), by strik- ing ”State aid to families with dependent children records,” and inserting ”records collected under the State program funded under part A of title IV of the Social Security Act,”; (3) in section 121(b)(2) (29 U.S.C. 1531(b)(2))\u2014 (A) by striking ”the JOBS program” and inserting ”the work activities required under title IV of the Social Security Act”; and (B) by striking the second sentence; (4) in section 123(c) (29 U.S.C. 1533(c))\u2014 (A) in paragraph (1)(E), by repealing clause (vi); and (B) in paragraph (2)(D), by repealing clause (v); (5) in section 203(b)(3) (29 U.S.C. 1603(b)(3)), by striking ”, including recipients under the JOBS program”; (6) in subparagraphs (A) and (B) of section 204(a)(1) (29 U.S.C. 1604(a)(1) (A) and (B)), by striking ”(such as the JOBS program)” each place it appears; (7) in section 205(a) (29 U.S.C. 1605(a)), by striking para- graph (4) and inserting the following: ”(4) the portions of title IV of the Social Security Act relating to work activities;”; (8) in section 253 (29 U.S.C. 1632)\u2014 (A) in subsection (b)(2), by repealing subparagraph (C); and (B) in paragraphs (1)(B) and (2)(B) of subsection (c), by striking ”the JOBS program or” each place it appears; (9) in section 264 (29 U.S.C. 1644)\u2014 (A) in subparagraphs (A) and (B) of subsection (b)(1), by striking ”(such as the JOBS program)” each place it appears; and (B) in subparagraphs (A) and (B) of subsection (d)(3), by striking ”and the JOBS program” each place it appears; (10) in section 265(b) (29 U.S.C. 1645(b)), by striking para- graph (6) and inserting the following: ”(6) the portion of title IV of the Social Security Act relating to work activities;”; (11) in the second sentence of section 429(e) (29 U.S.C. 1699(e)), by striking ”and shall be in an amount that does not exceed the maximum amount that may be provided by the State pursuant to section 402(g)(1)(C) of the Social Security Act (42 U.S.C. 602(g)(1)(C))”; (12) in section 454(c) (29 U.S.C. 1734(c)), by striking ”JOBS and”; (13) in section 455(b) (29 U.S.C. 1735(b)), by striking ”the JOBS program,”; (14) in section 501(1) (29 U.S.C. 1791(1)), by striking ”aid to families with dependent children under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)” and inserting ”assistance under the State program funded under part A of title IV of the Social Security Act”; (15) in section 506(1)(A) (29 U.S.C. 1791e(1)(A)), by striking ”aid to families with dependent children” and inserting ”assist- ance under the State program funded”; 110 STAT. 2175PUBLIC LAW 104 193\u2014AUG. 22, 1996 (16) in section 508(a)(2)(A) (29 U.S.C. 1791g(a)(2)(A)), by striking ”aid to families with dependent children” and inserting ”assistance under the State program funded”; and (17) in section 701(b)(2)(A) (29 U.S.C. 1792(b)(2)(A))\u2014 (A) in clause (v), by striking the semicolon and insert- ing ”; and”; and (B) by striking clause (vi). (o) Section 3803(c)(2)(C)(iv) of title 31, United States Code, is amended to read as follows: ”(iv) assistance under a State program funded under part A of title IV of the Social Security Act;”. (p) Section 2605(b)(2)(A)(i) of the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8624(b)(2)(A)(i)) is amended to read as follows: ”(i) assistance under the State program funded under part A of title IV of the Social Security Act;”. (q) Section 303(f)(2) of the Family Support Act of 1988 (42 U.S.C. 602 note) is amended\u2014 (1) by striking ”(A)”; and (2) by striking subparagraphs (B) and (C). (r) The Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 900 et seq.) is amended\u2014 (1) in the first section 255(h) (2 U.S.C. 905(h)), by striking ”Aid to families with dependent children (75 0412 0 1 609);” and inserting ”Block grants to States for temporary assistance for needy families;”; and (2) in section 256 (2 U.S.C. 906)\u2014 (A) by striking subsection (k); and (B) by redesignating subsection (l) as subsection (k). (s) The Immigration and Nationality Act (8 U.S.C. 1101 et seq.) is amended\u2014 (1) in section 210(f) (8 U.S.C. 1160(f)), by striking ”aid under a State plan approved under” each place it appears and inserting ”assistance under a State program funded under”; (2) in section 245A(h) (8 U.S.C. 1255a(h))\u2014 (A) in paragraph (1)(A)(i), by striking ”program of aid to families with dependent children” and inserting ”State program of assistance”; and (B) in paragraph (2)(B), by striking ”aid to families with dependent children” and inserting ”assistance under a State program funded under part A of title IV of the Social Security Act”; and (3) in section 412(e)(4) (8 U.S.C. 1522(e)(4)), by striking ”State plan approved” and inserting ”State program funded”. (t) Section 640(a)(4)(B)(i) of the Head Start Act (42 U.S.C. 9835(a)(4)(B)(i)) is amended by striking ”program of aid to families with dependent children under a State plan approved” and inserting ”State program of assistance funded”. (u) Section 9 of the Act of April 19, 1950 (64 Stat. 47, chapter 92; 25 U.S.C. 639) is repealed. (v) Subparagraph (E) of section 213(d)(6) of the School-To- Work Opportunities Act of 1994 (20 U.S.C. 6143(d)(6)) is amended to read as follows: ”(E) part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) relating to work activities;”. (w) Section 552a(a)(8)(B)(iv)(III) of title 5, United States Code, is amended by striking ”section 464 or 1137 of the Social Security 110 STAT. 2176 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Act” and inserting ”section 404(e), 464, or 1137 of the Social Security Act”. SEC. 111. DEVELOPMENT OF PROTOTYPE OF COUNTERFEIT-RESIST- ANT SOCIAL SECURITY CARD REQUIRED. (a) DEVELOPMENT.\u2014 (1) IN GENERAL.\u2014The Commissioner of Social Security (in this section referred to as the ”Commissioner”) shall, in accord- ance with this section, develop a prototype of a counterfeit- resistant social security card. Such prototype card shall\u2014 (A) be made of a durable, tamper-resistant material such as plastic or polyester, (B) employ technologies that provide security features, such as magnetic stripes, holograms, and integrated circuits, and (C) be developed so as to provide individuals with reliable proof of citizenship or legal resident alien status. (2) ASSISTANCE BY ATTORNEY GENERAL.\u2014The Attorney Gen- eral of the United States shall provide such information and assistance as the Commissioner deems necessary to enable the Commissioner to comply with this section. (b) STUDY AND REPORT.\u2014 (1) IN GENERAL.\u2014The Commissioner shall conduct a study and issue a report to Congress which examines different methods of improving the social security card application process. (2) ELEMENTS OF STUDY.\u2014The study shall include an evaluation of the cost and work load implications of issuing a counterfeit-resistant social security card for all individuals over a 3-, 5-, and 10-year period. The study shall also evaluate the feasibility and cost implications of imposing a user fee for replacement cards and cards issued to individuals who apply for such a card prior to the scheduled 3-, 5-, and 10- year phase-in options. (3) DISTRIBUTION OF REPORT.\u2014The Commissioner shall submit copies of the report described in this subsection along with a facsimile of the prototype card as described in subsection (a) to the Committees on Ways and Means and Judiciary of the House of Representatives and the Committees on Finance and Judiciary of the Senate within 1 year after the date of the enactment of this Act. SEC. 112. MODIFICATIONS TO THE JOB OPPORTUNITIES FOR CERTAIN LOW-INCOME INDIVIDUALS PROGRAM. Section 505 of the Family Support Act of 1988 (42 U.S.C. 1315 note) is amended\u2014 (1) in the heading, by striking ”DEMONSTRATION”; (2) by striking ”demonstration” each place such term appears; (3) in subsection (a), by striking ”in each of fiscal years” and all that follows through ”10” and inserting ”shall enter into agreements with”; (4) in subsection (b)(3), by striking ”aid to families with dependent children under part A of title IV of the Social Secu- rity Act” and inserting ”assistance under the program funded part A of title IV of the Social Security Act of the State in which the individual resides”; (5) in subsection (c)\u2014 42 USC 405 note. 110 STAT. 2177PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) in paragraph (1)(C), by striking ”aid to families with dependent children under title IV of the Social Secu- rity Act” and inserting ”assistance under a State program funded part A of title IV of the Social Security Act”; (B) in paragraph (2), by striking ”aid to families with dependent children under title IV of such Act” and inserting ”assistance under a State program funded part A of title IV of the Social Security Act”; (6) in subsection (d), by striking ”job opportunities and basic skills training program (as provided for under title IV of the Social Security Act)” and inserting ”the State program funded under part A of title IV of the Social Security Act”; and (7) by striking subsections (e) through (g) and inserting the following: ”(e) AUTHORIZATION OF APPROPRIATIONS.\u2014For the purpose of conducting projects under this section, there is authorized to be appropriated an amount not to exceed $25,000,000 for any fiscal year.”. SEC. 113. SECRETARIAL SUBMISSION OF LEGISLATIVE PROPOSAL FOR TECHNICAL AND CONFORMING AMENDMENTS. Not later than 90 days after the date of the enactment of this Act, the Secretary of Health and Human Services and the Commissioner of Social Security, in consultation, as appropriate, with the heads of other Federal agencies, shall submit to the appropriate committees of Congress a legislative proposal proposing such technical and conforming amendments as are necessary to bring the law into conformity with the policy embodied in this title. SEC. 114. ASSURING MEDICAID COVERAGE FOR LOW-INCOME FAMILIES. (a) IN GENERAL.\u2014Title XIX is amended\u2014 (1) by redesignating section 1931 as section 1932; and (2) by inserting after section 1930 the following new section: ”ASSURING COVERAGE FOR CERTAIN LOW-INCOME FAMILIES ”SEC. 1931. (a) REFERENCES TO TITLE IV A ARE REFERENCES TO PRE-WELFARE-REFORM PROVISIONS.\u2014Subject to the succeeding provisions of this section, with respect to a State any reference in this title (or any other provision of law in relation to the operation of this title) to a provision of part A of title IV, or a State plan under such part (or a provision of such a plan), including income and resource standards and income and resource methodologies under such part or plan, shall be considered a reference to such a provision or plan as in effect as of July 16, 1996, with respect to the State. ”(b) APPLICATION OF PRE-WELFARE-REFORM ELIGIBILITY CRITERIA.\u2014 ”(1) IN GENERAL.\u2014For purposes of this title, subject to paragraphs (2) and (3), in determining eligibility for medical assistance\u2014 ”(A) an individual shall be treated as receiving aid or assistance under a State plan approved under part A of title IV only if the individual meets\u2014 42 USC 1396u 1. 42 USC 1396v. 110 STAT. 2178 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(i) the income and resource standards for deter- mining eligibility under such plan, and ”(ii) the eligibility requirements of such plan under subsections (a) through (c) of section 406 and section 407(a), as in effect as of July 16, 1996; and ”(B) the income and resource methodologies under such plan as of such date shall be used in the determination of whether any individual meets income and resource standards under such plan. ”(2) STATE OPTION.\u2014For purposes of applying this section, a State\u2014 ”(A) may lower its income standards applicable with respect to part A of title IV, but not below the income standards applicable under its State plan under such part on May 1, 1988; ”(B) may increase income or resource standards under the State plan referred to in paragraph (1) over a period (beginning after July 16, 1996) by a percentage that does not exceed the percentage increase in the Consumer Price Index for all urban consumers (all items; United States city average) over such period; and ”(C) may use income and resource methodologies that are less restrictive than the methodologies used under the State plan under such part as of July 16, 1996. ”(3) OPTION TO TERMINATE MEDICAL ASSISTANCE FOR FAILURE TO MEET WORK REQUIREMENT.\u2014 ”(A) INDIVIDUALS RECEIVING CASH ASSISTANCE UNDER TANF.\u2014In the case of an individual who\u2014 ”(i) is receiving cash assistance under a State pro- gram funded under part A of title IV, ”(ii) is eligible for medical assistance under this title on a basis not related to section 1902(l), and ”(iii) has the cash assistance under such program terminated pursuant to section 407(e)(1)(B) (as in effect on or after the welfare reform effective date) because of refusing to work, the State may terminate such individual’s eligibility for medical assistance under this title until such time as there no longer is a basis for the termination of such cash assist- ance because of such refusal. ”(B) EXCEPTION FOR CHILDREN.\u2014Subparagraph (A) shall not be construed as permitting a State to terminate medical assistance for a minor child who is not the head of a household receiving assistance under a State program funded under part A of title IV. ”(c) TREATMENT FOR PURPOSES OF TRANSITIONAL COVERAGE PROVISIONS.\u2014 ”(1) TRANSITION IN THE CASE OF CHILD SUPPORT COLLEC- TIONS.\u2014The provisions of section 406(h) (as in effect on July 16, 1996) shall apply, in relation to this title, with respect to individuals (and families composed of individuals) who are described in subsection (b)(1)(A), in the same manner as they applied before such date with respect to individuals who became ineligible for aid to families with dependent children as a result (wholly or partly) of the collection of child or spousal support under part D of title IV. 110 STAT. 2179PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(2) TRANSITION IN THE CASE OF EARNINGS FROM EMPLOY- MENT.\u2014For continued medical assistance in the case of individ- uals (and families composed of individuals) described in sub- section (b)(1)(A) who would otherwise become ineligible because of hours or income from employment, see sections 1925 and 1902(e)(1). ”(d) WAIVERS.\u2014In the case of a waiver of a provision of part A of title IV in effect with respect to a State as of July 16, 1996, or which is submitted to the Secretary before the date of the enactment of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and approved by the Secretary on or before July 1, 1997, if the waiver affects eligibility of individuals for medical assistance under this title, such waiver may (but need not) continue to be applied, at the option of the State, in relation to this title after the date the waiver would otherwise expire. ”(e) STATE OPTION TO USE 1 APPLICATION FORM.\u2014Nothing in this section, or part A of title IV, shall be construed as preventing a State from providing for the same application form for assistance under a State program funded under part A of title IV (on or after the welfare reform effective date) and for medical assistance under this title. ”(f) ADDITIONAL RULES OF CONSTRUCTION.\u2014 ”(1) With respect to the reference in section 1902(a)(5) to a State plan approved under part A of title IV, a State may treat such reference as a reference either to a State pro- gram funded under such part (as in effect on and after the welfare reform effective date) or to the State plan under this title. ”(2) Any reference in section 1902(a)(55) to a State plan approved under part A of title IV shall be deemed a reference to a State program funded under such part. ”(3) In applying section 1903(f), the applicable income limitation otherwise determined shall be subject to increase in the same manner as income or resource standards of a State may be increased under subsection (b)(2)(B). ”(g) RELATION TO OTHER PROVISIONS.\u2014The provisions of this section shall apply notwithstanding any other provision of this Act. ”(h) TRANSITIONAL INCREASED FEDERAL MATCHING RATE FOR INCREASED ADMINISTRATIVE COSTS.\u2014 ”(1) IN GENERAL.\u2014Subject to the succeeding provisions of this subsection, the Secretary shall provide that with respect to administrative expenditures described in paragraph (2) the per centum specified in section 1903(a)(7) shall be increased to such percentage as the Secretary specifies. ”(2) ADMINISTRATIVE EXPENDITURES DESCRIBED.\u2014The administrative expenditures described in this paragraph are expenditures described in section 1903(a)(7) that a State dem- onstrates to the satisfaction of the Secretary are attributable to administrative costs of eligibility determinations that (but for the enactment of this section) would not be incurred. ”(3) LIMITATION.\u2014The total amount of additional Federal funds that are expended as a result of the application of this subsection for the period beginning with fiscal year 1997 and ending with fiscal year 2000 shall not exceed $500,000,000. In applying this paragraph, the Secretary shall ensure the equitable distribution of additional funds among the States. 110 STAT. 2180 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(4) TIME LIMITATION.\u2014This subsection shall only apply with respect to a State for expenditures incurred during the first 12 calendar quarters in which the State program funded under part A of title IV (as in effect on and after the welfare reform effective date) is in effect. ”(i) WELFARE REFORM EFFECTIVE DATE.\u2014In this section, the term ‘welfare reform effective date’ means the effective date, with respect to a State, of title I of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (as specified in section 116 of such Act).”. (b) PLAN AMENDMENT.\u2014Section 1902(a) (42 U.S.C. 1396a(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (61), (2) by striking the period at the end of paragraph (62) and inserting ”; and”, and (3) by inserting after paragraph (62) the following new paragraph: ”(63) provide for administration and determinations of eligi- bility with respect to individuals who are (or seek to be) eligible for medical assistance based on the application of section 1931.”. (c) EXTENSION OF WORK TRANSITION PROVISIONS.\u2014Sections 1902(e)(1)(B) and 1925(f) (42 U.S.C. 1396a(e)(1)(B), 1396r 6(f)) are each amended by striking ”1998” and inserting ”2001”. (d) ELIMINATION OF REQUIREMENT OF MINIMUM AFDC PAYMENT LEVELS.\u2014(1) Section 1902(c) (42 U.S.C. 1396a(c)) is amended by striking ”if\u2014” and all that follows and inserting the following: ”if the State requires individuals described in subsection (l)(1) to apply for assistance under the State program funded under part A of title IV as a condition of applying for or receiving medical assistance under this title.”. (2) Section 1903(i) (42 U.S.C. 1396b(i)) is amended by striking paragraph (9). SEC. 115. DENIAL OF ASSISTANCE AND BENEFITS FOR CERTAIN DRUG- RELATED CONVICTIONS. (a) IN GENERAL.\u2014An individual convicted (under Federal or State law) of any offense which is classified as a felony by the law of the jurisdiction involved and which has as an element the possession, use, or distribution of a controlled substance (as defined in section 102(6) of the Controlled Substances Act (21 U.S.C. 802(6))) shall not be eligible for\u2014 (1) assistance under any State program funded under part A of title IV of the Social Security Act, or (2) benefits under the food stamp program (as defined in section 3(h) of the Food Stamp Act of 1977) or any State program carried out under the Food Stamp Act of 1977. (b) EFFECTS ON ASSISTANCE AND BENEFITS FOR OTHERS.\u2014 (1) PROGRAM OF TEMPORARY ASSISTANCE FOR NEEDY FAMILIES.\u2014The amount of assistance otherwise required to be provided under a State program funded under part A of title IV of the Social Security Act to the family members of an individual to whom subsection (a) applies shall be reduced by the amount which would have otherwise been made available to the individual under such part. (2) BENEFITS UNDER THE FOOD STAMP ACT OF 1977.\u2014The amount of benefits otherwise required to be provided to a household under the food stamp program (as defined in section 42 USC 862a. 110 STAT. 2181PUBLIC LAW 104 193\u2014AUG. 22, 1996 3(h) of the Food Stamp Act of 1977), or any State program carried out under the Food Stamp Act of 1977, shall be deter- mined by considering the individual to whom subsection (a) applies not to be a member of such household, except that the income and resources of the individual shall be considered to be income and resources of the household. (c) ENFORCEMENT.\u2014A State that has not exercised its authority under subsection (d)(1)(A) shall require each individual applying for assistance or benefits referred to in subsection (a), during the application process, to state, in writing, whether the individual, or any member of the household of the individual, has been con- victed of a crime described in subsection (a). (d) LIMITATIONS.\u2014 (1) STATE ELECTIONS.\u2014 (A) OPT OUT.\u2014A State may, by specific reference in a law enacted after the date of the enactment of this Act, exempt any or all individuals domiciled in the State from the application of subsection (a). (B) LIMIT PERIOD OF PROHIBITION.\u2014A State may, by law enacted after the date of the enactment of this Act, limit the period for which subsection (a) shall apply to any or all individuals domiciled in the State. (2) INAPPLICABILITY TO CONVICTIONS OCCURRING ON OR BEFORE ENACTMENT.\u2014Subsection (a) shall not apply to convic- tions occurring on or before the date of the enactment of this Act. (e) DEFINITIONS OF STATE.\u2014For purposes of this section, the term ”State” has the meaning given it\u2014 (1) in section 419(5) of the Social Security Act, when refer- ring to assistance provided under a State program funded under part A of title IV of the Social Security Act, and (2) in section 3(m) of the Food Stamp Act of 1977, when referring to the food stamp program (as defined in section 3(h) of the Food Stamp Act of 1977) or any State program carried out under the Food Stamp Act of 1977. (f) RULE OF INTERPRETATION.\u2014Nothing in this section shall be construed to deny the following Federal benefits: (1) Emergency medical services under title XIX of the Social Security Act. (2) Short-term, noncash, in-kind emergency disaster relief. (3)(A) Public health assistance for immunizations. (B) Public health assistance for testing and treatment of communicable diseases if the Secretary of Health and Human Services determines that it is necessary to prevent the spread of such disease. (4) Prenatal care. (5) Job training programs. (6) Drug treatment programs. SEC. 116. EFFECTIVE DATE; TRANSITION RULE. (a) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as otherwise provided in this title, this title and the amendments made by this title shall take effect on July 1, 1997. (2) DELAYED EFFECTIVE DATE FOR CERTAIN PROVISIONS.\u2014 Notwithstanding any other provision of this section, paragraphs (2), (3), (4), (5), (8), and (10) of section 409(a) and section 42 USC 601 note. 110 STAT. 2182 PUBLIC LAW 104 193\u2014AUG. 22, 1996 411(a) of the Social Security Act (as added by the amendments made by section 103(a) of this Act) shall not take effect with respect to a State until, and shall apply only with respect to conduct that occurs on or after, the later of\u2014 (A) July 1, 1997; or (B) the date that is 6 months after the date the Sec- retary of Health and Human Services receives from the State a plan described in section 402(a) of the Social Secu- rity Act (as added by such amendment). (3) GRANTS TO OUTLYING AREAS.\u2014The amendments made by section 103(b) shall take effect on October 1, 1996. (4) ELIMINATION OF CHILD CARE PROGRAMS.\u2014The amend- ments made by section 103(c) shall take effect on October 1, 1996. (5) DEFINITIONS APPLICABLE TO NEW CHILD CARE ENTITLE- MENT.\u2014Sections 403(a)(1)(C), 403(a)(1)(D), and 419(4) of the Social Security Act, as added by the amendments made by section 103(a) of this Act, shall take effect on October 1, 1996. (b) TRANSITION RULES.\u2014Effective on the date of the enactment of this Act: (1) STATE OPTION TO ACCELERATE EFFECTIVE DATE.\u2014 (A) IN GENERAL.\u2014If the Secretary of Health and Human Services receives from a State a plan described in section 402(a) of the Social Security Act (as added by the amendment made by section 103(a)(1) of this Act), then\u2014 (i) on and after the date of such receipt\u2014 (I) except as provided in clause (ii), this title and the amendments made by this title (other than by section 103(c) of this Act) shall apply with respect to the State; and (II) the State shall be considered an eligible State for purposes of part A of title IV of the Social Security Act (as in effect pursuant to the amendments made by such section 103(a)); and (ii) during the period that begins on the date of such receipt and ends on June 30, 1997, there shall remain in effect with respect to the State\u2014 (I) section 403(h) of the Social Security Act (as in effect on September 30, 1995); and (II) all State reporting requirements under parts A and F of title IV of the Social Security Act (as in effect on September 30, 1995), modified by the Secretary as appropriate, taking into account the State program under part A of title IV of the Social Security Act (as in effect pursuant to the amendments made by such section 103(a)). (B) LIMITATIONS ON FEDERAL OBLIGATIONS.\u2014 (i) UNDER AFDC PROGRAM.\u2014The total obligations of the Federal Government to a State under part A of title IV of the Social Security Act (as in effect on September 30, 1995) with respect to expenditures in fiscal year 1997 shall not exceed an amount equal to the State family assistance grant. (ii) UNDER TEMPORARY FAMILY ASSISTANCE PRO- GRAM.\u2014Notwithstanding section 403(a)(1) of the Social Security Act (as in effect pursuant to the amendments 110 STAT. 2183PUBLIC LAW 104 193\u2014AUG. 22, 1996 made by section 103(a) of this Act), the total obligations of the Federal Government to a State under such sec- tion 403(a)(1)\u2014 (I) for fiscal year 1996, shall be an amount equal to\u2014 (aa) the State family assistance grant; multiplied by (bb) 1\u2044366 of the number of days during the period that begins on the date the Secretary of Health and Human Services first receives from the State a plan described in section 402(a) of the Social Security Act (as added by the amendment made by section 103(a)(1) of this Act) and ends on September 30, 1996; and (II) for fiscal year 1997, shall be an amount equal to the lesser of\u2014 (aa) the amount (if any) by which the State family assistance grant exceeds the total obligations of the Federal Government to the State under part A of title IV of the Social Security Act (as in effect on September 30, 1995) with respect to expenditures in fiscal year 1997; or (bb) the State family assistance grant, multiplied by 1\u2044365 of the number of days dur- ing the period that begins on October 1, 1996, or the date the Secretary of Health and Human Services first receives from the State a plan described in section 402(a) of the Social Security Act (as added by the amendment made by section 103(a)(1) of this Act), which- ever is later, and ends on September 30, 1997. (iii) CHILD CARE OBLIGATIONS EXCLUDED IN DETER- MINING FEDERAL AFDC OBLIGATIONS.\u2014As used in this subparagraph, the term ”obligations of the Federal Government to the State under part A of title IV of the Social Security Act” does not include any obliga- tion of the Federal Government with respect to child care expenditures by the State. (C) SUBMISSION OF STATE PLAN FOR FISCAL YEAR 1996 OR 1997 DEEMED ACCEPTANCE OF GRANT LIMITATIONS AND FORMULA AND TERMINATION OF AFDC ENTITLEMENT.\u2014The submission of a plan by a State pursuant to subparagraph (A) is deemed to constitute\u2014 (i) the State’s acceptance of the grant reductions under subparagraph (B) (including the formula for computing the amount of the reduction); and (ii) the termination of any entitlement of any individual or family to benefits or services under the State AFDC program. (D) DEFINITIONS.\u2014As used in this paragraph: (i) STATE AFDC PROGRAM.\u2014The term ”State AFDC program” means the State program under parts A and F of title IV of the Social Security Act (as in effect on September 30, 1995). 110 STAT. 2184 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (ii) STATE.\u2014The term ”State” means the 50 States and the District of Columbia. (iii) STATE FAMILY ASSISTANCE GRANT.\u2014The term ”State family assistance grant” means the State family assistance grant (as defined in section 403(a)(1)(B) of the Social Security Act, as added by the amendment made by section 103(a)(1) of this Act). (2) CLAIMS, ACTIONS, AND PROCEEDINGS.\u2014The amendments made by this title shall not apply with respect to\u2014 (A) powers, duties, functions, rights, claims, penalties, or obligations applicable to aid, assistance, or services provided before the effective date of this title under the provisions amended; and (B) administrative actions and proceedings commenced before such date, or authorized before such date to be commenced, under such provisions. (3) CLOSING OUT ACCOUNT FOR THOSE PROGRAMS TERMI- NATED OR SUBSTANTIALLY MODIFIED BY THIS TITLE.\u2014In closing out accounts, Federal and State officials may use scientifically acceptable statistical sampling techniques. Claims made with respect to State expenditures under a State plan approved under part A of title IV of the Social Security Act (as in effect on September 30, 1995) with respect to assistance or services provided on or before September 30, 1995, shall be treated as claims with respect to expenditures during fiscal year 1995 for purposes of reimbursement even if payment was made by a State on or after October 1, 1995. Each State shall complete the filing of all claims under the State plan (as so in effect) within 2 years after the date of the enactment of this Act. The head of each Federal department shall\u2014 (A) use the single audit procedure to review and resolve any claims in connection with the close out of programs under such State plans; and (B) reimburse States for any payments made for assist- ance or services provided during a prior fiscal year from funds for fiscal year 1995, rather than from funds author- ized by this title. (4) CONTINUANCE IN OFFICE OF ASSISTANT SECRETARY FOR FAMILY SUPPORT.\u2014The individual who, on the day before the effective date of this title, is serving as Assistant Secretary for Family Support within the Department of Health and Human Services shall, until a successor is appointed to such position\u2014 (A) continue to serve in such position; and (B) except as otherwise provided by law\u2014 (i) continue to perform the functions of the Assist- ant Secretary for Family Support under section 417 of the Social Security Act (as in effect before such effective date); and (ii) have the powers and duties of the Assistant Secretary for Family Support under section 416 of the Social Security Act (as in effect pursuant to the amendment made by section 103(a)(1) of this Act). (c) TERMINATION OF ENTITLEMENT UNDER AFDC PROGRAM.\u2014 Effective October 1, 1996, no individual or family shall be entitled to any benefits or services under any State plan approved under 110 STAT. 2185PUBLIC LAW 104 193\u2014AUG. 22, 1996 part A or F of title IV of the Social Security Act (as in effect on September 30, 1995). TITLE II\u2014SUPPLEMENTAL SECURITY INCOME SEC. 200. REFERENCE TO SOCIAL SECURITY ACT. Except as otherwise specifically provided, wherever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. Subtitle A\u2014Eligibility Restrictions SEC. 201. DENIAL OF SSI BENEFITS FOR 10 YEARS TO INDIVIDUALS FOUND TO HAVE FRAUDULENTLY MISREPRESENTED RESIDENCE IN ORDER TO OBTAIN BENEFITS SIMULTA- NEOUSLY IN 2 OR MORE STATES. (a) IN GENERAL.\u2014Section 1611(e) (42 U.S.C. 1382(e)), as amended by section 105(b)(4)(A) of the Contract with America Advancement Act of 1996, is amended by redesignating paragraph (5) as paragraph (3) and by adding at the end the following new paragraph: ”(4)(A) No person shall be considered an eligible individual or eligible spouse for purposes of this title during the 10-year period that begins on the date the person is convicted in Federal or State court of having made a fraudulent statement or representa- tion with respect to the place of residence of the person in order to receive assistance simultaneously from 2 or more States under programs that are funded under title IV, title XIX, or the Food Stamp Act of 1977, or benefits in 2 or more States under the supplemental security income program under this title. ”(B) As soon as practicable after the conviction of a person in a Federal or State court as described in subparagraph (A), an official of such court shall notify the Commissioner of such conviction.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall take effect on the date of the enactment of this Act. SEC. 202. DENIAL OF SSI BENEFITS FOR FUGITIVE FELONS AND PROBA- TION AND PAROLE VIOLATORS. (a) IN GENERAL.\u2014Section 1611(e) (42 U.S.C. 1382(e)), as amended by section 201(a) of this Act, is amended by adding at the end the following new paragraph: ”(5) No person shall be considered an eligible individual or eligible spouse for purposes of this title with respect to any month if during such month the person is\u2014 ”(A) fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the person flees, for a crime, or an attempt to commit a crime, which is a felony under the laws of the place from which the person flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or 42 USC 1382 note. 110 STAT. 2186 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) violating a condition of probation or parole imposed under Federal or State law.”. (b) EXCHANGE OF INFORMATION.\u2014Section 1611(e) (42 U.S.C. 1382(e)), as amended by section 201(a) of this Act and subsection (a) of this section, is amended by adding at the end the following new paragraph: ”(6) Notwithstanding any other provision of law (other than section 6103 of the Internal Revenue Code of 1986), the Commis- sioner shall furnish any Federal, State, or local law enforcement officer, upon the written request of the officer, with the current address, Social Security number, and photograph (if applicable) of any recipient of benefits under this title, if the officer furnishes the Commissioner with the name of the recipient, and other identifying information as reasonably required by the Commissioner to establish the unique identity of the recipient, and notifies the Commissioner that\u2014 ”(A) the recipient\u2014 ”(i) is described in subparagraph (A) or (B) of para- graph (5); and ”(ii) has information that is necessary for the officer to conduct the officer’s official duties; and ”(B) the location or apprehension of the recipient is within the officer’s official duties.”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall take effect on the date of the enactment of this Act. SEC. 203. TREATMENT OF PRISONERS. (a) IMPLEMENTATION OF PROHIBITION AGAINST PAYMENT OF BENEFITS TO PRISONERS.\u2014 (1) IN GENERAL.\u2014Section 1611(e)(1) (42 U.S.C. 1382(e)(1)) is amended by adding at the end the following new subpara- graph: ”(I)(i) The Commissioner shall enter into an agreement, with any interested State or local institution described in clause (i) or (ii) of section 202(x)(1)(A) the primary purpose of which is to confine individuals as described in section 202(x)(1)(A), under which\u2014 ”(I) the institution shall provide to the Commissioner, on a monthly basis and in a manner specified by the Commis- sioner, the names, social security account numbers, dates of birth, confinement commencement dates, and, to the extent available to the institution, such other identifying information concerning the inmates of the institution as the Commissioner may require for the purpose of carrying out paragraph (1); and ”(II) the Commissioner shall pay to any such institution, with respect to each inmate of the institution who is eligible for a benefit under this title for the month preceding the first month throughout which such inmate is in such institution and becomes ineligible for such benefit as a result of the applica- tion of this subparagraph, $400 if the institution furnishes the information described in subclause (I) to the Commissioner within 30 days after the date such individual becomes an inmate of such institution, or $200 if the institution furnishes such information after 30 days after such date but within 90 days after such date. Contracts. 42 USC 1382 note. 110 STAT. 2187PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii)(I) The provisions of section 552a of title 5, United States Code, shall not apply to any agreement entered into under clause (i) or to information exchanged pursuant to such agreement. ”(II) The Commissioner is authorized to provide, on a reimburs- able basis, information obtained pursuant to agreements entered into under clause (i) to any Federal or federally-assisted cash, food, or medical assistance program for eligibility purposes. ”(iii) Payments to institutions required by clause (i)(II) shall be made from funds otherwise available for the payment of benefits under this title and shall be treated as direct spending for purposes of the Balanced Budget and Emergency Deficit Control Act of 1985.”. (2) EFFECTIVE DATE.\u2014The amendment made by this sub- section shall apply to individuals whose period of confinement in an institution commences on or after the first day of the seventh month beginning after the month in which this Act is enacted. (b) STUDY OF OTHER POTENTIAL IMPROVEMENTS IN THE COLLEC- TION OF INFORMATION RESPECTING PUBLIC INMATES.\u2014 (1) STUDY.\u2014The Commissioner of Social Security shall con- duct a study of the desirability, feasibility, and cost of\u2014 (A) establishing a system under which Federal, State, and local courts would furnish to the Commissioner such information respecting court orders by which individuals are confined in jails, prisons, or other public penal, correc- tional, or medical facilities as the Commissioner may require for the purpose of carrying out section 1611(e)(1) of the Social Security Act; and (B) requiring that State and local jails, prisons, and other institutions that enter into agreements with the Commissioner under section 1611(e)(1)(I) of the Social Secu- rity Act furnish the information required by such agree- ments to the Commissioner by means of an electronic or other sophisticated data exchange system. (2) REPORT.\u2014Not later than 1 year after the date of the enactment of this Act, the Commissioner of Social Security shall submit a report on the results of the study conducted pursuant to this subsection to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives. (c) ADDITIONAL REPORT TO CONGRESS.\u2014Not later than October 1, 1998, the Commissioner of Social Security shall provide to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives a list of the institutions that are and are not providing information to the Commissioner under section 1611(e)(1)(I) of the Social Security Act (as added by this section). SEC. 204. EFFECTIVE DATE OF APPLICATION FOR BENEFITS. (a) IN GENERAL.\u2014Subparagraphs (A) and (B) of section 1611(c)(7) (42 U.S.C. 1382(c)(7)) are amended to read as follows: ”(A) the first day of the month following the date such application is filed, or ”(B) the first day of the month following the date such individual becomes eligible for such benefits with respect to such application.”. 42 USC 1382 note. 42 USC 1382 note. 42 USC 1382 note. 110 STAT. 2188 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (b) SPECIAL RULE RELATING TO EMERGENCY ADVANCE PAY- MENTS.\u2014Section 1631(a)(4)(A) (42 U.S.C. 1383(a)(4)(A)) is amended\u2014 (1) by inserting ”for the month following the date the application is filed” after ”is presumptively eligible for such benefits”; and (2) by inserting ”, which shall be repaid through propor- tionate reductions in such benefits over a period of not more than 6 months” before the semicolon. (c) CONFORMING AMENDMENTS.\u2014 (1) Section 1614(b) (42 U.S.C. 1382c(b)) is amended\u2014 (A) by striking ”or requests” and inserting ”, on the first day of the month following the date the application is filed, or, in any case in which either spouse requests”; and (B) by striking ”application or”. (2) Section 1631(g)(3) (42 U.S.C. 1382j(g)(3)) is amended by inserting ”following the month” after ”beginning with the month”. (d) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to applications for benefits under title XVI of the Social Security Act filed on or after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such amendments. (2) BENEFITS UNDER TITLE XVI.\u2014For purposes of this sub- section, the term ”benefits under title XVI of the Social Security Act” includes supplementary payments pursuant to an agree- ment for Federal administration under section 1616(a) of the Social Security Act, and payments pursuant to an agreement entered into under section 212(b) of Public Law 93 66. Subtitle B\u2014Benefits for Disabled Children SEC. 211. DEFINITION AND ELIGIBILITY RULES. (a) DEFINITION OF CHILDHOOD DISABILITY.\u2014Section 1614(a)(3) (42 U.S.C. 1382c(a)(3)), as amended by section 105(b)(1) of the Contract with America Advancement Act of 1996, is amended\u2014 (1) in subparagraph (A), by striking ”An individual” and inserting ”Except as provided in subparagraph (C), an indi- vidual”; (2) in subparagraph (A), by striking ”(or, in the case of an individual under the age of 18, if he suffers from any medically determinable physical or mental impairment of com- parable severity)”; (3) by redesignating subparagraphs (C) through (I) as sub- paragraphs (D) through (J), respectively; (4) by inserting after subparagraph (B) the following new subparagraph: ”(C)(i) An individual under the age of 18 shall be considered disabled for the purposes of this title if that individual has a medically determinable physical or mental impairment, which results in marked and severe functional limitations, and which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. 42 USC 1382 note. 42 USC 1383. 110 STAT. 2189PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) Notwithstanding clause (i), no individual under the age of 18 who engages in substantial gainful activity (determined in accordance with regulations prescribed pursuant to subparagraph (E)) may be considered to be disabled.”; and (5) in subparagraph (F), as redesignated by paragraph (3), by striking ”(D)” and inserting ”(E)”. (b) CHANGES TO CHILDHOOD SSI REGULATIONS.\u2014 (1) MODIFICATION TO MEDICAL CRITERIA FOR EVALUATION OF MENTAL AND EMOTIONAL DISORDERS.\u2014The Commissioner of Social Security shall modify sections 112.00C.2. and 112.02B.2.c.(2) of appendix 1 to subpart P of part 404 of title 20, Code of Federal Regulations, to eliminate references to maladaptive behavior in the domain of personal\/behavorial function. (2) DISCONTINUANCE OF INDIVIDUALIZED FUNCTIONAL ASSESSMENT.\u2014The Commissioner of Social Security shall dis- continue the individualized functional assessment for children set forth in sections 416.924d and 416.924e of title 20, Code of Federal Regulations. (c) MEDICAL IMPROVEMENT REVIEW STANDARD AS IT APPLIES TO INDIVIDUALS UNDER THE AGE OF 18.\u2014Section 1614(a)(4) (42 U.S.C. 1382(a)(4)) is amended\u2014 (1) by redesignating subclauses (I) and (II) of clauses (i) and (ii) of subparagraph (B) as items (aa) and (bb), respectively; (2) by redesignating clauses (i) and (ii) of subparagraphs (A) and (B) as subclauses (I) and (II), respectively; (3) by redesignating subparagraphs (A) through (C) as clauses (i) through (iii), respectively; (4) by inserting before clause (i) (as redesignated by para- graph (3)) the following new subparagraph: ”(A) in the case of an individual who is age 18 or older\u2014”; (5) by inserting after and below subparagraph (A)(iii) (as so redesignated) the following new subparagraph: ”(B) in the case of an individual who is under the age of 18\u2014 ”(i) substantial evidence which demonstrates that there has been medical improvement in the individual’s impairment or combination of impairments, and that such impairment or combination of impairments no longer results in marked and severe functional limitations; or ”(ii) substantial evidence which demonstrates that, as determined on the basis of new or improved diagnostic techniques or evaluations, the individual’s impairment or combination of impairments, is not as disabling as it was considered to be at the time of the most recent prior deci- sion that the individual was under a disability or continued to be under a disability, and such impairment or combina- tion of impairments does not result in marked and severe functional limitations; or”; (6) by redesignating subparagraph (D) as subparagraph (C) and by inserting in such subparagraph ”in the case of any individual,” before ”substantial evidence”; and (7) in the first sentence following subparagraph (C) (as redesignated by paragraph (6)), by\u2014 (A) inserting ”(i)” before ”to restore”; and 42 USC 1382c. 110 STAT. 2190 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (B) inserting ”, or (ii) in the case of an individual under the age of 18, to eliminate or improve the individual’s impairment or combination of impairments so that it no longer results in marked and severe functional limitations” immediately before the period. (d) EFFECTIVE DATES, ETC.\u2014 (1) EFFECTIVE DATES.\u2014 (A) SUBSECTIONS (a) AND (b).\u2014 (i) IN GENERAL.\u2014The provisions of, and amend- ments made by, subsections (a) and (b) of this section shall apply to any individual who applies for, or whose claim is finally adjudicated with respect to, benefits under title XVI of the Social Security Act on or after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such provisions and amendments. (ii) DETERMINATION OF FINAL ADJUDICATION.\u2014For purposes of clause (i), no individual’s claim with respect to such benefits may be considered to be finally adju- dicated before such date of enactment if, on or after such date, there is pending a request for either administrative or judicial review with respect to such claim that has been denied in whole, or there is pend- ing, with respect to such claim, readjudication by the Commissioner of Social Security pursuant to relief in a class action or implementation by the Commissioner of a court remand order. (B) SUBSECTION (c).\u2014The amendments made by sub- section (c) of this section shall apply with respect to benefits under title XVI of the Social Security Act for months begin- ning on or after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such amendments. (2) APPLICATION TO CURRENT RECIPIENTS.\u2014 (A) ELIGIBILITY REDETERMINATIONS.\u2014During the period beginning on the date of the enactment of this Act and ending on the date which is 1 year after such date of enactment, the Commissioner of Social Security shall redetermine the eligibility of any individual under age 18 who is eligible for supplemental security income benefits by reason of disability under title XVI of the Social Security Act as of the date of the enactment of this Act and whose eligibility for such benefits may terminate by reason of the provisions of, or amendments made by, sub- sections (a) and (b) of this section. With respect to any redetermination under this subparagraph\u2014 (i) section 1614(a)(4) of the Social Security Act (42 U.S.C. 1382c(a)(4)) shall not apply; (ii) the Commissioner of Social Security shall apply the eligibility criteria for new applicants for benefits under title XVI of such Act; (iii) the Commissioner shall give such redetermina- tion priority over all continuing eligibility reviews and other reviews under such title; and (iv) such redetermination shall be counted as a review or redetermination otherwise required to be made under section 208 of the Social Security 42 USC 1382c note. 110 STAT. 2191PUBLIC LAW 104 193\u2014AUG. 22, 1996 Independence and Program Improvements Act of 1994 or any other provision of title XVI of the Social Security Act. (B) GRANDFATHER PROVISION.\u2014The provisions of, and amendments made by, subsections (a) and (b) of this sec- tion, and the redetermination under subparagraph (A), shall only apply with respect to the benefits of an individual described in subparagraph (A) for months beginning on or after the later of July 1, 1997, or the date of the redeter- mination with respect to such individual. (C) NOTICE.\u2014Not later than January 1, 1997, the Commissioner of Social Security shall notify an individual described in subparagraph (A) of the provisions of this paragraph. (3) REPORT.\u2014The Commissioner of Social Security shall report to the Congress regarding the progress made in implementing the provisions of, and amendments made by, this section on child disability evaluations not later than 180 days after the date of the enactment of this Act. (4) REGULATIONS.\u2014Notwithstanding any other provision of law, the Commissioner of Social Security shall submit for review to the committees of jurisdiction in the Congress any final regulation pertaining to the eligibility of individuals under age 18 for benefits under title XVI of the Social Security Act at least 45 days before the effective date of such regulation. The submission under this paragraph shall include supporting documentation providing a cost analysis, workload impact, and projections as to how the regulation will effect the future num- ber of recipients under such title. (5) CAP ADJUSTMENT FOR SSI ADMINISTRATIVE WORK REQUIRED BY WELFARE REFORM.\u2014 (A) AUTHORIZATION.\u2014For the additional costs of continuing disability reviews and redeterminations under title XVI of the Social Security Act, there is hereby author- ized to be appropriated to the Social Security Administra- tion, in addition to amounts authorized under section 201(g)(1)(A) of the Social Security Act, $150,000,000 in fiscal year 1997 and $100,000,000 in fiscal year 1998. (B) CAP ADJUSTMENT.\u2014Section 251(b)(2)(H) of the Bal- anced Budget and Emergency Deficit Control Act of 1985, as amended by section 103(b) of the Contract with America Advancement Act of 1996, is amended\u2014 (i) in clause (i)\u2014 (I) in subclause (II) by\u2014 (aa) striking ”$25,000,000” and inserting ”$175,000,000”; and (bb) striking ”$160,000,000” and inserting ”$310,000,000”; and (II) in subclause (III) by\u2014 (aa) striking ”$145,000,000” and inserting ”$245,000,000”; and (bb) striking ”$370,000,000” and inserting ”$470,000,000”; and (ii) by amending clause (ii)(I) to read as follows: ”(I) the term ‘continuing disability reviews’ means reviews or redeterminations as defined under section 201(g)(1)(A) of the Social Security Act and reviews 2 USC 901. 110 STAT. 2192 PUBLIC LAW 104 193\u2014AUG. 22, 1996 and redeterminations authorized under section 211 of the Personal Responsibility and Work Opportunity Rec- onciliation Act of 1996;”. (C) ADJUSTMENTS.\u2014Section 606(e)(1)(B) of the Congressional Budget Act of 1974 is amended by adding at the end the following new sentences: ”If the adjustments referred to in the preceding sentence are made for an appropriations measure that is not enacted into law, then the Chairman of the Committee on the Budget of the House of Representatives shall, as soon as practicable, reverse those adjustments. The Chairman of the Committee on the Budget of the House of Representatives shall submit any adjustments made under this subparagraph to the House of Representatives and have such adjustments pub- lished in the Congressional Record.”. (D) CONFORMING AMENDMENT.\u2014Section 103(d)(1) of the Contract with America Advancement Act of 1996 (42 U.S.C. 401 note) is amended by striking ”medicaid programs.” and inserting ”medicaid programs, except that the amounts appropriated pursuant to the authorization and discre- tionary spending allowance provisions in section 211(d)(2)(5) of the Personal Responsibility and Work Oppor- tunity Reconciliation Act of 1996 shall be used only for continuing disability reviews and redeterminations under title XVI of the Social Security Act.”. (6) BENEFITS UNDER TITLE XVI.\u2014For purposes of this sub- section, the term ”benefits under title XVI of the Social Security Act” includes supplementary payments pursuant to an agree- ment for Federal administration under section 1616(a) of the Social Security Act, and payments pursuant to an agreement entered into under section 212(b) of Public Law 93 66. SEC. 212. ELIGIBILITY REDETERMINATIONS AND CONTINUING DISABILITY REVIEWS. (a) CONTINUING DISABILITY REVIEWS RELATING TO CERTAIN CHILDREN.\u2014Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as redesignated by section 211(a)(3) of this Act, is amended\u2014 (1) by inserting ”(i)” after ”(H)”; and (2) by adding at the end the following new clause: ”(ii)(I) Not less frequently than once every 3 years, the Commis- sioner shall review in accordance with paragraph (4) the continued eligibility for benefits under this title of each individual who has not attained 18 years of age and is eligible for such benefits by reason of an impairment (or combination of impairments) which is likely to improve (or, at the option of the Commissioner, which is unlikely to improve). ”(II) A representative payee of a recipient whose case is reviewed under this clause shall present, at the time of review, evidence demonstrating that the recipient is, and has been, receiv- ing treatment, to the extent considered medically necessary and available, of the condition which was the basis for providing benefits under this title. ”(III) If the representative payee refuses to comply without good cause with the requirements of subclause (II), the Commis- sioner of Social Security shall, if the Commissioner determines it is in the best interest of the individual, promptly suspend pay- ment of benefits to the representative payee, and provide for pay- Ante, p. 850. 2 USC 665e. 110 STAT. 2193PUBLIC LAW 104 193\u2014AUG. 22, 1996 ment of benefits to an alternative representative payee of the individual or, if the interest of the individual under this title would be served thereby, to the individual. ”(IV) Subclause (II) shall not apply to the representative payee of any individual with respect to whom the Commissioner deter- mines such application would be inappropriate or unnecessary. In making such determination, the Commissioner shall take into consideration the nature of the individual’s impairment (or combina- tion of impairments). Section 1631(c) shall not apply to a finding by the Commissioner that the requirements of subclause (II) should not apply to an individual’s representative payee.”. (b) DISABILITY ELIGIBILITY REDETERMINATIONS REQUIRED FOR SSI RECIPIENTS WHO ATTAIN 18 YEARS OF AGE.\u2014 (1) IN GENERAL.\u2014Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as amended by subsection (a) of this section, is amended by adding at the end the following new clause: ”(iii) If an individual is eligible for benefits under this title by reason of disability for the month preceding the month in which the individual attains the age of 18 years, the Commissioner shall redetermine such eligibility\u2014 ”(I) during the 1-year period beginning on the individual’s 18th birthday; and ”(II) by applying the criteria used in determining the initial eligibility for applicants who are age 18 or older. With respect to a redetermination under this clause, paragraph (4) shall not apply and such redetermination shall be considered a substitute for a review or redetermination otherwise required under any other provision of this subparagraph during that 1- year period.”. (2) CONFORMING REPEAL.\u2014Section 207 of the Social Secu- rity Independence and Program Improvements Act of 1994 (42 U.S.C. 1382 note; 108 Stat. 1516) is hereby repealed. (c) CONTINUING DISABILITY REVIEW REQUIRED FOR LOW BIRTH WEIGHT BABIES.\u2014Section 1614(a)(3)(H) (42 U.S.C. 1382c(a)(3)(H)), as amended by subsections (a) and (b) of this section, is amended by adding at the end the following new clause: ”(iv)(I) Not later than 12 months after the birth of an individual, the Commissioner shall review in accordance with paragraph (4) the continuing eligibility for benefits under this title by reason of disability of such individual whose low birth weight is a contribut- ing factor material to the Commissioner’s determination that the individual is disabled. ”(II) A review under subclause (I) shall be considered a sub- stitute for a review otherwise required under any other provision of this subparagraph during that 12-month period. ”(III) A representative payee of a recipient whose case is reviewed under this clause shall present, at the time of review, evidence demonstrating that the recipient is, and has been, receiv- ing treatment, to the extent considered medically necessary and available, of the condition which was the basis for providing benefits under this title. ”(IV) If the representative payee refuses to comply without good cause with the requirements of subclause (III), the Commis- sioner of Social Security shall, if the Commissioner determines it is in the best interest of the individual, promptly suspend pay- ment of benefits to the representative payee, and provide for payment of benefits to an alternative representative payee of the 110 STAT. 2194 PUBLIC LAW 104 193\u2014AUG. 22, 1996 individual or, if the interest of the individual under this title would be served thereby, to the individual. ”(V) Subclause (III) shall not apply to the representative payee of any individual with respect to whom the Commissioner deter- mines such application would be inappropriate or unnecessary. In making such determination, the Commissioner shall take into consideration the nature of the individual’s impairment (or combina- tion of impairments). Section 1631(c) shall not apply to a finding by the Commissioner that the requirements of subclause (III) should not apply to an individual’s representative payee.”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to benefits for months beginning on or after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such amendments. SEC. 213. ADDITIONAL ACCOUNTABILITY REQUIREMENTS. (a) REQUIREMENT TO ESTABLISH ACCOUNT.\u2014Section 1631(a)(2) (42 U.S.C. 1383(a)(2)) is amended\u2014 (1) by redesignating subparagraphs (F) and (G) as subpara- graphs (G) and (H), respectively; and (2) by inserting after subparagraph (E) the following new subparagraph: ”(F)(i)(I) Each representative payee of an eligible individual under the age of 18 who is eligible for the payment of benefits described in subclause (II) shall establish on behalf of such individ- ual an account in a financial institution into which such benefits shall be paid, and shall thereafter maintain such account for use in accordance with clause (ii). ”(II) Benefits described in this subclause are past-due monthly benefits under this title (which, for purposes of this subclause, include State supplementary payments made by the Commissioner pursuant to an agreement under section 1616 or section 212(b) of Public Law 93 66) in an amount (after any withholding by the Commissioner for reimbursement to a State for interim assist- ance under subsection (g)) that exceeds the product of\u2014 ”(aa) 6, and ”(bb) the maximum monthly benefit payable under this title to an eligible individual. ”(ii)(I) A representative payee shall use funds in the account established under clause (i) to pay for allowable expenses described in subclause (II). ”(II) An allowable expense described in this subclause is an expense for\u2014 ”(aa) education or job skills training; ”(bb) personal needs assistance; ”(cc) special equipment; ”(dd) housing modification; ”(ee) medical treatment; ”(ff) therapy or rehabilitation; or ”(gg) any other item or service that the Commissioner determines to be appropriate; provided that such expense benefits such individual and, in the case of an expense described in item (bb), (cc), (dd), (ff), or (gg), is related to the impairment (or combination of impairments) of such individual. ”(III) The use of funds from an account established under clause (i) in any manner not authorized by this clause\u2014 42 USC 1382c note. 110 STAT. 2195PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(aa) by a representative payee shall be considered a misapplication of benefits for all purposes of this paragraph, and any representative payee who knowingly misapplies bene- fits from such an account shall be liable to the Commissioner in an amount equal to the total amount of such benefits; and ”(bb) by an eligible individual who is his or her own payee shall be considered a misapplication of benefits for all purposes of this paragraph and the total amount of such benefits so used shall be considered to be the uncompensated value of a disposed resource and shall be subject to the provisions of section 1613(c). ”(IV) This clause shall continue to apply to funds in the account after the child has reached age 18, regardless of whether benefits are paid directly to the beneficiary or through a representative payee. ”(iii) The representative payee may deposit into the account established pursuant to clause (i)\u2014 ”(I) past-due benefits payable to the eligible individual in an amount less than that specified in clause (i)(II), and ”(II) any other funds representing an underpayment under this title to such individual, provided that the amount of such underpayment is equal to or exceeds the maximum monthly benefit payable under this title to an eligible individual. ”(iv) The Commissioner of Social Security shall establish a system for accountability monitoring whereby such representative payee shall report, at such time and in such manner as the Commis- sioner shall require, on activity respecting funds in the account established pursuant to clause (i).”. (b) EXCLUSION FROM RESOURCES.\u2014Section 1613(a) (42 U.S.C. 1382b(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (10); (2) by striking the period at the end of paragraph (11) and inserting ”; and”; and (3) by inserting after paragraph (11) the following new paragraph: ”(12) any account, including accrued interest or other earn- ings thereon, established and maintained in accordance with section 1631(a)(2)(F).”. (c) EXCLUSION FROM INCOME.\u2014Section 1612(b) (42 U.S.C. 1382a(b)) is amended\u2014 (1) by striking ”and” at the end of paragraph (19); (2) by striking the period at the end of paragraph (20) and inserting ”; and”; and (3) by adding at the end the following new paragraph: ”(21) the interest or other earnings on any account estab- lished and maintained in accordance with section 1631(a)(2)(F).”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to payments made after the date of the enactment of this Act. SEC. 214. REDUCTION IN CASH BENEFITS PAYABLE TO INSTITUTIONAL- IZED INDIVIDUALS WHOSE MEDICAL COSTS ARE COVERED BY PRIVATE INSURANCE. (a) IN GENERAL.\u2014Section 1611(e)(1)(B) (42 U.S.C. 1382(e)(1)(B)) is amended by inserting ”or, in the case of an eligible individual who is a child under the age of 18, receiving payments (with 42 USC 1382a note. 110 STAT. 2196 PUBLIC LAW 104 193\u2014AUG. 22, 1996 respect to such individual) under any health insurance policy issued by a private provider of such insurance” after ”section 1614(f)(2)(B),”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to benefits for months beginning 90 or more days after the date of the enactment of this Act, without regard to whether regulations have been issued to implement such amend- ments. SEC. 215. REGULATIONS. Within 3 months after the date of the enactment of this Act, the Commissioner of Social Security shall prescribe such regulations as may be necessary to implement the amendments made by this subtitle. Subtitle C\u2014Additional Enforcement Provision SEC. 221. INSTALLMENT PAYMENT OF LARGE PAST-DUE SUPPLE- MENTAL SECURITY INCOME BENEFITS. (a) IN GENERAL.\u2014Section 1631(a) (42 U.S.C. 1383) is amended by adding at the end the following new paragraph: ”(10)(A) If an individual is eligible for past-due monthly benefits under this title in an amount that (after any withholding for reimbursement to a State for interim assistance under subsection (g)) equals or exceeds the product of\u2014 ”(i) 12, and ”(ii) the maximum monthly benefit payable under this title to an eligible individual (or, if appropriate, to an eligible indi- vidual and eligible spouse), then the payment of such past-due benefits (after any such reimbursement to a State) shall be made in installments as provided in subparagraph (B). ”(B)(i) The payment of past-due benefits subject to this subpara- graph shall be made in not to exceed 3 installments that are made at 6-month intervals. ”(ii) Except as provided in clause (iii), the amount of each of the first and second installments may not exceed an amount equal to the product of clauses (i) and (ii) of subparagraph (A). ”(iii) In the case of an individual who has\u2014 ”(I) outstanding debt attributable to\u2014 ”(aa) food, ”(bb) clothing, ”(cc) shelter, or ”(dd) medically necessary services, supplies or equip- ment, or medicine; or ”(II) current expenses or expenses anticipated in the near term attributable to\u2014 ”(aa) medically necessary services, supplies or equip- ment, or medicine, or ”(bb) the purchase of a home, and such debt or expenses are not subject to reimbursement by a public assistance program, the Secretary under title XVIII, a State plan approved under title XIX, or any private entity legally liable to provide payment pursuant to an insurance policy, pre-paid plan, or other arrangement, the limitation specified in clause (ii) may 42 USC 1382 note. 42 USC 1382 note. 110 STAT. 2197PUBLIC LAW 104 193\u2014AUG. 22, 1996 be exceeded by an amount equal to the total of such debt and expenses. ”(C) This paragraph shall not apply to any individual who, at the time of the Commissioner’s determination that such individ- ual is eligible for the payment of past-due monthly benefits under this title\u2014 ”(i) is afflicted with a medically determinable impairment that is expected to result in death within 12 months; or ”(ii) is ineligible for benefits under this title and the Commissioner determines that such individual is likely to remain ineligible for the next 12 months. ”(D) For purposes of this paragraph, the term ‘benefits under this title’ includes supplementary payments pursuant to an agree- ment for Federal administration under section 1616(a), and pay- ments pursuant to an agreement entered into under section 212(b) of Public Law 93 66.”. (b) CONFORMING AMENDMENT.\u2014Section 1631(a)(1) (42 U.S.C. 1383(a)(1)) is amended by inserting ”(subject to paragraph (10))” immediately before ”in such installments”. (c) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section are effective with respect to past-due benefits payable under title XVI of the Social Security Act after the third month following the month in which this Act is enacted. (2) BENEFITS PAYABLE UNDER TITLE XVI.\u2014For purposes of this subsection, the term ”benefits payable under title XVI of the Social Security Act” includes supplementary payments pursuant to an agreement for Federal administration under section 1616(a) of the Social Security Act, and payments pursu- ant to an agreement entered into under section 212(b) of Public Law 93 66. SEC. 222. REGULATIONS. Within 3 months after the date of the enactment of this Act, the Commissioner of Social Security shall prescribe such regulations as may be necessary to implement the amendments made by this subtitle. Subtitle D\u2014Studies Regarding Supplemental Security Income Program SEC. 231. ANNUAL REPORT ON THE SUPPLEMENTAL SECURITY INCOME PROGRAM. Title XVI (42 U.S.C. 1381 et seq.), as amended by section 105(b)(3) of the Contract with America Advancement Act of 1996, is amended by adding at the end the following new section: ”ANNUAL REPORT ON PROGRAM ”SEC. 1637. (a) Not later than May 30 of each year, the Commis- sioner of Social Security shall prepare and deliver a report annually to the President and the Congress regarding the program under this title, including\u2014 ”(1) a comprehensive description of the program; ”(2) historical and current data on allowances and denials, including number of applications and allowance rates for initial 42 USC 1383f. 42 USC 1383 note. 42 USC 1383 note. 110 STAT. 2198 PUBLIC LAW 104 193\u2014AUG. 22, 1996 determinations, reconsideration determinations, administrative law judge hearings, appeals council reviews, and Federal court decisions; ”(3) historical and current data on characteristics of recipi- ents and program costs, by recipient group (aged, blind, disabled adults, and disabled children); ”(4) historical and current data on prior enrollment by recipients in public benefit programs, including State programs funded under part A of title IV of the Social Security Act and State general assistance programs; ”(5) projections of future number of recipients and program costs, through at least 25 years; ”(6) number of redeterminations and continuing dis- ability reviews, and the outcomes of such redeterminations and reviews; ”(7) data on the utilization of work incentives; ”(8) detailed information on administrative and other pro- gram operation costs; ”(9) summaries of relevant research undertaken by the Social Security Administration, or by other researchers; ”(10) State supplementation program operations; ”(11) a historical summary of statutory changes to this title; and ”(12) such other information as the Commissioner deems useful. ”(b) Each member of the Social Security Advisory Board shall be permitted to provide an individual report, or a joint report if agreed, of views of the program under this title, to be included in the annual report required under this section.”. SEC. 232. STUDY BY GENERAL ACCOUNTING OFFICE. Not later than January 1, 1999, the Comptroller General of the United States shall study and report on\u2014 (1) the impact of the amendments made by, and the provi- sions of, this title on the supplemental security income program under title XVI of the Social Security Act; and (2) extra expenses incurred by families of children receiving benefits under such title that are not covered by other Federal, State, or local programs. TITLE III\u2014CHILD SUPPORT SEC. 300. REFERENCE TO SOCIAL SECURITY ACT. Except as otherwise specifically provided, wherever in this title an amendment is expressed in terms of an amendment to or repeal of a section or other provision, the reference shall be considered to be made to that section or other provision of the Social Security Act. 42 USC 1382 note. 110 STAT. 2199PUBLIC LAW 104 193\u2014AUG. 22, 1996 Subtitle A\u2014Eligibility for Services; Distribution of Payments SEC. 301. STATE OBLIGATION TO PROVIDE CHILD SUPPORT ENFORCE- MENT SERVICES. (a) STATE PLAN REQUIREMENTS.\u2014Section 454 (42 U.S.C. 654) is amended\u2014 (1) by striking paragraph (4) and inserting the following new paragraph: ”(4) provide that the State will\u2014 ”(A) provide services relating to the establishment of paternity or the establishment, modification, or enforce- ment of child support obligations, as appropriate, under the plan with respect to\u2014 ”(i) each child for whom (I) assistance is provided under the State program funded under part A of this title, (II) benefits or services for foster care mainte- nance are provided under the State program funded under part E of this title, or (III) medical assistance is provided under the State plan approved under title XIX, unless, in accordance with paragraph (29), good cause or other exceptions exist; ”(ii) any other child, if an individual applies for such services with respect to the child; and ”(B) enforce any support obligation established with respect to\u2014 ”(i) a child with respect to whom the State provides services under the plan; or ”(ii) the custodial parent of such a child;”; and (2) in paragraph (6)\u2014 (A) by striking ”provide that” and inserting ”provide that\u2014”; (B) by striking subparagraph (A) and inserting the following new subparagraph: ”(A) services under the plan shall be made available to residents of other States on the same terms as to resi- dents of the State submitting the plan;”; (C) in subparagraph (B), by inserting ”on individuals not receiving assistance under any State program funded under part A” after ”such services shall be imposed”; (D) in each of subparagraphs (B), (C), (D), and (E)\u2014 (i) by indenting the subparagraph in the same manner as, and aligning the left margin of the subpara- graph with the left margin of, the matter inserted by subparagraph (B) of this paragraph; and (ii) by striking the final comma and inserting a semicolon; and (E) in subparagraph (E), by indenting each of clauses (i) and (ii) 2 additional ems. (b) CONTINUATION OF SERVICES FOR FAMILIES CEASING TO RECEIVE ASSISTANCE UNDER THE STATE PROGRAM FUNDED UNDER PART A.\u2014Section 454 (42 U.S.C. 654) is amended\u2014 (1) by striking ”and” at the end of paragraph (23); (2) by striking the period at the end of paragraph (24) and inserting ”; and”; and 110 STAT. 2200 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (3) by adding after paragraph (24) the following new para- graph: ”(25) provide that if a family with respect to which services are provided under the plan ceases to receive assistance under the State program funded under part A, the State shall provide appropriate notice to the family and continue to provide such services, subject to the same conditions and on the same basis as in the case of other individuals to whom services are fur- nished under the plan, except that an application or other request to continue services shall not be required of such a family and paragraph (6)(B) shall not apply to the family.”. (c) CONFORMING AMENDMENTS.\u2014 (1) Section 452(b) (42 U.S.C. 652(b)) is amended by striking ”454(6)” and inserting ”454(4)”. (2) Section 452(g)(2)(A) (42 U.S.C. 652(g)(2)(A)) is amended by striking ”454(6)” each place it appears and inserting ”454(4)(A)(ii)”. (3) Section 466(a)(3)(B) (42 U.S.C. 666(a)(3)(B)) is amended by striking ”in the case of overdue support which a State has agreed to collect under section 454(6)” and inserting ”in any other case”. (4) Section 466(e) (42 U.S.C. 666(e)) is amended by striking ”paragraph (4) or (6) of section 454” and inserting ”section 454(4)”. SEC. 302. DISTRIBUTION OF CHILD SUPPORT COLLECTIONS. (a) IN GENERAL.\u2014Section 457 (42 U.S.C. 657) is amended to read as follows: ”SEC. 457. DISTRIBUTION OF COLLECTED SUPPORT. ”(a) IN GENERAL.\u2014Subject to subsection (e), an amount collected on behalf of a family as support by a State pursuant to a plan approved under this part shall be distributed as follows: ”(1) FAMILIES RECEIVING ASSISTANCE.\u2014In the case of a family receiving assistance from the State, the State shall\u2014 ”(A) pay to the Federal Government the Federal share of the amount so collected; and ”(B) retain, or distribute to the family, the State share of the amount so collected. ”(2) FAMILIES THAT FORMERLY RECEIVED ASSISTANCE.\u2014In the case of a family that formerly received assistance from the State: ”(A) CURRENT SUPPORT PAYMENTS.\u2014To the extent that the amount so collected does not exceed the amount required to be paid to the family for the month in which collected, the State shall distribute the amount so collected to the family. ”(B) PAYMENTS OF ARREARAGES.\u2014To the extent that the amount so collected exceeds the amount required to be paid to the family for the month in which collected, the State shall distribute the amount so collected as follows: ”(i) DISTRIBUTION OF ARREARAGES THAT ACCRUED AFTER THE FAMILY CEASED TO RECEIVE ASSISTANCE.\u2014 ”(I) PRE-OCTOBER 1997.\u2014Except as provided in subclause (II), the provisions of this section (other than subsection (b)(1)) as in effect and applied on the day before the date of the enactment of section 302 of the Personal Responsibility and 110 STAT. 2201PUBLIC LAW 104 193\u2014AUG. 22, 1996 Work Opportunity Act Reconciliation of 1996 shall apply with respect to the distribution of support arrearages that\u2014 ”(aa) accrued after the family ceased to receive assistance, and ”(bb) are collected before October 1, 1997. ”(II) POST-SEPTEMBER 1997.\u2014With respect to the amount so collected on or after October 1, 1997 (or before such date, at the option of the State)\u2014 ”(aa) IN GENERAL.\u2014The State shall first distribute the amount so collected (other than any amount described in clause (iv)) to the family to the extent necessary to satisfy any support arrearages with respect to the family that accrued after the family ceased to receive assistance from the State. ”(bb) REIMBURSEMENT OF GOVERNMENTS FOR ASSISTANCE PROVIDED TO THE FAMILY.\u2014 After the application of division (aa) and clause (ii)(II)(aa) with respect to the amount so collected, the State shall retain the State share of the amount so collected, and pay to the Federal Government the Federal share (as defined in subsection (c)(2)) of the amount so collected, but only to the extent necessary to reimburse amounts paid to the family as assistance by the State. ”(cc) DISTRIBUTION OF THE REMAINDER TO THE FAMILY.\u2014To the extent that neither divi- sion (aa) nor division (bb) applies to the amount so collected, the State shall distribute the amount to the family. ”(ii) DISTRIBUTION OF ARREARAGES THAT ACCRUED BEFORE THE FAMILY RECEIVED ASSISTANCE.\u2014 ”(I) PRE-OCTOBER 2000.\u2014Except as provided in subclause (II), the provisions of this section (other than subsection (b)(1)) as in effect and applied on the day before the date of the enactment of section 302 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 shall apply with respect to the distribution of support arrearages that\u2014 ”(aa) accrued before the family received assistance, and ”(bb) are collected before October 1, 2000. ”(II) POST-SEPTEMBER 2000.\u2014Unless, based on the report required by paragraph (4), the Congress determines otherwise, with respect to the amount so collected on or after October 1, 2000 (or before such date, at the option of the State)\u2014 ”(aa) IN GENERAL.\u2014The State shall first distribute the amount so collected (other than any amount described in clause (iv)) to the family to the extent necessary to satisfy any support arrearages with respect to the family 110 STAT. 2202 PUBLIC LAW 104 193\u2014AUG. 22, 1996 that accrued before the family received assist- ance from the State. ”(bb) REIMBURSEMENT OF GOVERNMENTS FOR ASSISTANCE PROVIDED TO THE FAMILY.\u2014 After the application of clause (i)(II)(aa) and division (aa) with respect to the amount so collected, the State shall retain the State share of the amount so collected, and pay to the Federal Government the Federal share (as defined in subsection (c)(2)) of the amount so collected, but only to the extent necessary to reimburse amounts paid to the family as assistance by the State. ”(cc) DISTRIBUTION OF THE REMAINDER TO THE FAMILY.\u2014To the extent that neither divi- sion (aa) nor division (bb) applies to the amount so collected, the State shall distribute the amount to the family. ”(iii) DISTRIBUTION OF ARREARAGES THAT ACCRUED WHILE THE FAMILY RECEIVED ASSISTANCE.\u2014In the case of a family described in this subparagraph, the provi- sions of paragraph (1) shall apply with respect to the distribution of support arrearages that accrued while the family received assistance. ”(iv) AMOUNTS COLLECTED PURSUANT TO SECTION 464.\u2014Notwithstanding any other provision of this sec- tion, any amount of support collected pursuant to section 464 shall be retained by the State to the extent past-due support has been assigned to the State as a condition of receiving assistance from the State, up to the amount necessary to reimburse the State for amounts paid to the family as assistance by the State. The State shall pay to the Federal Government the Federal share of the amounts so retained. To the extent the amount collected pursuant to section 464 exceeds the amount so retained, the State shall distribute the excess to the family. ”(v) ORDERING RULES FOR DISTRIBUTIONS.\u2014For purposes of this subparagraph, unless an earlier effec- tive date is required by this section, effective October 1, 2000, the State shall treat any support arrearages collected, except for amounts collected pursuant to sec- tion 464, as accruing in the following order: ”(I) To the period after the family ceased to receive assistance. ”(II) To the period before the family received assistance. ”(III) To the period while the family was receiving assistance. ”(3) FAMILIES THAT NEVER RECEIVED ASSISTANCE.\u2014In the case of any other family, the State shall distribute the amount so collected to the family. ”(4) FAMILIES UNDER CERTAIN AGREEMENTS.\u2014In the case of a family receiving assistance from an Indian tribe, distribute the amount so collected pursuant to an agreement entered into pursuant to a State plan under section 454(33). 110 STAT. 2203PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(5) STUDY AND REPORT.\u2014Not later than October 1, 1998, the Secretary shall report to the Congress the Secretary’s find- ings with respect to\u2014 ”(A) whether the distribution of post-assistance arrear- ages to families has been effective in moving people off of welfare and keeping them off of welfare; ”(B) whether early implementation of a pre-assistance arrearage program by some States has been effective in moving people off of welfare and keeping them off of wel- fare; ”(C) what the overall impact has been of the amend- ments made by the Personal Responsibility and Work Opportunity Act of 1996 with respect to child support enforcement in moving people off of welfare and keeping them off of welfare; and ”(D) based on the information and data the Secretary has obtained, what changes, if any, should be made in the policies related to the distribution of child support arrearages. ”(b) CONTINUATION OF ASSIGNMENTS.\u2014Any rights to support obligations, which were assigned to a State as a condition of receiv- ing assistance from the State under part A and which were in effect on the day before the date of the enactment of the Personal Responsibility and Work Opportunity Act of 1996, shall remain assigned after such date. ”(c) DEFINITIONS.\u2014As used in subsection (a): ”(1) ASSISTANCE.\u2014The term ‘assistance from the State’ means\u2014 ”(A) assistance under the State program funded under part A or under the State plan approved under part A of this title (as in effect on the day before the date of the enactment of the Personal Responsibility and Work Opportunity Act of 1996); and ”(B) foster care maintenance payments under the State plan approved under part E of this title. ”(2) FEDERAL SHARE.\u2014The term ‘Federal share’ means that portion of the amount collected resulting from the application of the Federal medical assistance percentage in effect for the fiscal year in which the amount is collected. ”(3) FEDERAL MEDICAL ASSISTANCE PERCENTAGE.\u2014The term ‘Federal medical assistance percentage’ means\u2014 ”(A) the Federal medical assistance percentage (as defined in section 1118), in the case of Puerto Rico, the Virgin Islands, Guam, and American Samoa; or ”(B) the Federal medical assistance percentage (as defined in section 1905(b), as in effect on September 30, 1996) in the case of any other State. ”(4) STATE SHARE.\u2014The term ‘State share’ means 100 per- cent minus the Federal share. ”(d) HOLD HARMLESS PROVISION.\u2014If the amounts collected which could be retained by the State in the fiscal year (to the extent necessary to reimburse the State for amounts paid to families as assistance by the State) are less than the State share of the amounts collected in fiscal year 1995 (determined in accordance with section 457 as in effect on the day before the date of the enactment of the Personal Responsibility and Work Opportunity 110 STAT. 2204 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Act of 1996), the State share for the fiscal year shall be an amount equal to the State share in fiscal year 1995. ”(e) GAP PAYMENTS NOT SUBJECT TO DISTRIBUTION UNDER THIS SECTION.\u2014At State option, this section shall not apply to any amount collected on behalf of a family as support by the State (and paid to the family in addition to the amount of assistance otherwise payable to the family) pursuant to a plan approved under this part if such amount would have been paid to the family by the State under section 402(a)(28), as in effect and applied on the day before the date of the enactment of section 302 of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. For purposes of subsection (d), the State share of such amount paid to the family shall be considered amounts which could be retained by the State if such payments were reported by the State as part of the State share of amounts collected in fiscal year 1995.”. (b) CONFORMING AMENDMENTS.\u2014 (1) Section 464(a)(1) (42 U.S.C. 664(a)(1)) is amended by striking ”section 457(b)(4) or (d)(3)” and inserting ”section 457”. (2) Section 454 (42 U.S.C. 654) is amended\u2014 (A) in paragraph (11)\u2014 (i) by striking ”(11)” and inserting ”(11)(A)”; and (ii) by inserting after the semicolon ”and”; and (B) by redesignating paragraph (12) as subparagraph (B) of paragraph (11). (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall be effective on October 1, 1996, or earlier at the State’s option. (2) CONFORMING AMENDMENTS.\u2014The amendments made by subsection (b)(2) shall become effective on the date of the enact- ment of this Act. SEC. 303. PRIVACY SAFEGUARDS. (a) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by section 301(b) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (24); (2) by striking the period at the end of paragraph (25) and inserting ”; and”; and (3) by adding after paragraph (25) the following new para- graph: ”(26) will have in effect safeguards, applicable to all con- fidential information handled by the State agency, that are designed to protect the privacy rights of the parties, including\u2014 ”(A) safeguards against unauthorized use or disclosure of information relating to proceedings or actions to establish paternity, or to establish or enforce support; ”(B) prohibitions against the release of information on the whereabouts of 1 party to another party against whom a protective order with respect to the former party has been entered; and ”(C) prohibitions against the release of information on the whereabouts of 1 party to another party if the State has reason to believe that the release of the informa- tion may result in physical or emotional harm to the former party.”. 42 USC 657 note. 110 STAT. 2205PUBLIC LAW 104 193\u2014AUG. 22, 1996 (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall become effective on October 1, 1997. SEC. 304. RIGHTS TO NOTIFICATION OF HEARINGS. (a) IN GENERAL.\u2014Section 454 (42 U.S.C. 654), as amended by section 302(b)(2) of this Act, is amended by inserting after paragraph (11) the following new paragraph: ”(12) provide for the establishment of procedures to require the State to provide individuals who are applying for or receiv- ing services under the State plan, or who are parties to cases in which services are being provided under the State plan\u2014 ”(A) with notice of all proceedings in which support obligations might be established or modified; and ”(B) with a copy of any order establishing or modifying a child support obligation, or (in the case of a petition for modification) a notice of determination that there should be no change in the amount of the child support award, within 14 days after issuance of such order or determina- tion;”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall become effective on October 1, 1997. Subtitle B\u2014Locate and Case Tracking SEC. 311. STATE CASE REGISTRY. Section 454A, as added by section 344(a)(2) of this Act, is amended by adding at the end the following new subsections: ”(e) STATE CASE REGISTRY.\u2014 ”(1) CONTENTS.\u2014The automated system required by this section shall include a registry (which shall be known as the ‘State case registry’) that contains records with respect to\u2014 ”(A) each case in which services are being provided by the State agency under the State plan approved under this part; and ”(B) each support order established or modified in the State on or after October 1, 1998. ”(2) LINKING OF LOCAL REGISTRIES.\u2014The State case registry may be established by linking local case registries of support orders through an automated information network, subject to this section. ”(3) USE OF STANDARDIZED DATA ELEMENTS.\u2014Such records shall use standardized data elements for both parents (such as names, social security numbers and other uniform identifica- tion numbers, dates of birth, and case identification numbers), and contain such other information (such as on case status) as the Secretary may require. ”(4) PAYMENT RECORDS.\u2014Each case record in the State case registry with respect to which services are being provided under the State plan approved under this part and with respect to which a support order has been established shall include a record of\u2014 ”(A) the amount of monthly (or other periodic) support owed under the order, and other amounts (including arrear- ages, interest or late payment penalties, and fees) due or overdue under the order; 42 USC 654 note. 42 USC 654 note. 110 STAT. 2206 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) any amount described in subparagraph (A) that has been collected; ”(C) the distribution of such collected amounts; ”(D) the birth date of any child for whom the order requires the provision of support; and ”(E) the amount of any lien imposed with respect to the order pursuant to section 466(a)(4). ”(5) UPDATING AND MONITORING.\u2014The State agency operat- ing the automated system required by this section shall promptly establish and update, maintain, and regularly mon- itor, case records in the State case registry with respect to which services are being provided under the State plan approved under this part, on the basis of\u2014 ”(A) information on administrative actions and administrative and judicial proceedings and orders relating to paternity and support; ”(B) information obtained from comparison with Federal, State, or local sources of information; ”(C) information on support collections and distribu- tions; and ”(D) any other relevant information. ”(f) INFORMATION COMPARISONS AND OTHER DISCLOSURES OF INFORMATION.\u2014The State shall use the automated system required by this section to extract information from (at such times, and in such standardized format or formats, as may be required by the Secretary), to share and compare information with, and to receive information from, other data bases and information compari- son services, in order to obtain (or provide) information necessary to enable the State agency (or the Secretary or other State or Federal agencies) to carry out this part, subject to section 6103 of the Internal Revenue Code of 1986. Such information comparison activities shall include the following: ”(1) FEDERAL CASE REGISTRY OF CHILD SUPPORT ORDERS.\u2014 Furnishing to the Federal Case Registry of Child Support Orders established under section 453(h) (and update as nec- essary, with information including notice of expiration of orders) the minimum amount of information on child support cases recorded in the State case registry that is necessary to operate the registry (as specified by the Secretary in regulations). ”(2) FEDERAL PARENT LOCATOR SERVICE.\u2014Exchanging information with the Federal Parent Locator Service for the purposes specified in section 453. ”(3) TEMPORARY FAMILY ASSISTANCE AND MEDICAID AGENCIES.\u2014Exchanging information with State agencies (of the State and of other States) administering programs funded under part A, programs operated under a State plan approved under title XIX, and other programs designated by the Secretary, as necessary to perform State agency responsibilities under this part and under such programs. ”(4) INTRASTATE AND INTERSTATE INFORMATION COMPARI- SONS.\u2014Exchanging information with other agencies of the State, agencies of other States, and interstate information net- works, as necessary and appropriate to carry out (or assist other States to carry out) the purposes of this part.”. 110 STAT. 2207PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 312. COLLECTION AND DISBURSEMENT OF SUPPORT PAYMENTS. (a) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b) and 303(a) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (25); (2) by striking the period at the end of paragraph (26) and inserting ”; and”; and (3) by adding after paragraph (26) the following new para- graph: ”(27) provide that, on and after October 1, 1998, the State agency will\u2014 ”(A) operate a State disbursement unit in accordance with section 454B; and ”(B) have sufficient State staff (consisting of State employees) and (at State option) contractors reporting directly to the State agency to\u2014 ”(i) monitor and enforce support collections through the unit in cases being enforced by the State pursuant to section 454(4) (including carrying out the automated data processing responsibilities described in section 454A(g)); and ”(ii) take the actions described in section 466(c)(1) in appropriate cases.”. (b) ESTABLISHMENT OF STATE DISBURSEMENT UNIT.\u2014Part D of title IV (42 U.S.C. 651 669), as amended by section 344(a)(2) of this Act, is amended by inserting after section 454A the following new section: ”SEC. 454B. COLLECTION AND DISBURSEMENT OF SUPPORT PAY- MENTS. ”(a) STATE DISBURSEMENT UNIT.\u2014 ”(1) IN GENERAL.\u2014In order for a State to meet the require- ments of this section, the State agency must establish and operate a unit (which shall be known as the ‘State disbursement unit’) for the collection and disbursement of payments under support orders\u2014 ”(A) in all cases being enforced by the State pursuant to section 454(4); and ”(B) in all cases not being enforced by the State under this part in which the support order is initially issued in the State on or after January 1, 1994, and in which the income of the noncustodial parent is subject to withholding pursuant to section 466(a)(8)(B). ”(2) OPERATION.\u2014The State disbursement unit shall be operated\u2014 ”(A) directly by the State agency (or 2 or more State agencies under a regional cooperative agreement), or (to the extent appropriate) by a contractor responsible directly to the State agency; and ”(B) except in cases described in paragraph (1)(B), in coordination with the automated system established by the State pursuant to section 454A. ”(3) LINKING OF LOCAL DISBURSEMENT UNITS.\u2014The State disbursement unit may be established by linking local disburse- ment units through an automated information network, subject to this section, if the Secretary agrees that the system will not cost more nor take more time to establish or operate than 42 USC 654b. 110 STAT. 2208 PUBLIC LAW 104 193\u2014AUG. 22, 1996 a centralized system. In addition, employers shall be given 1 location to which income withholding is sent. ”(b) REQUIRED PROCEDURES.\u2014The State disbursement unit shall use automated procedures, electronic processes, and computer- driven technology to the maximum extent feasible, efficient, and economical, for the collection and disbursement of support pay- ments, including procedures\u2014 ”(1) for receipt of payments from parents, employers, and other States, and for disbursements to custodial parents and other obligees, the State agency, and the agencies of other States; ”(2) for accurate identification of payments; ”(3) to ensure prompt disbursement of the custodial parent’s share of any payment; and ”(4) to furnish to any parent, upon request, timely informa- tion on the current status of support payments under an order requiring payments to be made by or to the parent, except that in cases described in subsection (a)(1)(B), the State disbursement unit shall not be required to convert and maintain in automated form records of payments kept pursuant to section 466(a)(8)(B)(iii) before the effective date of this section. ”(c) TIMING OF DISBURSEMENTS.\u2014 ”(1) IN GENERAL.\u2014Except as provided in paragraph (2), the State disbursement unit shall distribute all amounts pay- able under section 457(a) within 2 business days after receipt from the employer or other source of periodic income, if suffi- cient information identifying the payee is provided. ”(2) PERMISSIVE RETENTION OF ARREARAGES.\u2014The State disbursement unit may delay the distribution of collections toward arrearages until the resolution of any timely appeal with respect to such arrearages. ”(d) BUSINESS DAY DEFINED.\u2014As used in this section, the term ‘business day’ means a day on which State offices are open for regular business.”. (c) USE OF AUTOMATED SYSTEM.\u2014Section 454A, as added by section 344(a)(2) and as amended by section 311 of this Act, is amended by adding at the end the following new subsection: ”(g) COLLECTION AND DISTRIBUTION OF SUPPORT PAYMENTS.\u2014 ”(1) IN GENERAL.\u2014The State shall use the automated sys- tem required by this section, to the maximum extent feasible, to assist and facilitate the collection and disbursement of sup- port payments through the State disbursement unit operated under section 454B, through the performance of functions, including, at a minimum\u2014 ”(A) transmission of orders and notices to employers (and other debtors) for the withholding of income\u2014 ”(i) within 2 business days after receipt of notice of, and the income source subject to, such withholding from a court, another State, an employer, the Federal Parent Locator Service, or another source recognized by the State; and ”(ii) using uniform formats prescribed by the Sec- retary; ”(B) ongoing monitoring to promptly identify failures to make timely payment of support; and 110 STAT. 2209PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(C) automatic use of enforcement procedures (includ- ing procedures authorized pursuant to section 466(c)) if payments are not timely made. ”(2) BUSINESS DAY DEFINED.\u2014As used in paragraph (1), the term ‘business day’ means a day on which State offices are open for regular business.”. (d) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall become effective on October 1, 1998. (2) LIMITED EXCEPTION TO UNIT HANDLING PAYMENTS.\u2014 Notwithstanding section 454B(b)(1) of the Social Security Act, as added by this section, any State which, as of the date of the enactment of this Act, processes the receipt of child support payments through local courts may, at the option of the State, continue to process through September 30, 1999, such payments through such courts as processed such payments on or before such date of enactment. SEC. 313. STATE DIRECTORY OF NEW HIRES. (a) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), and 312(a) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (26); (2) by striking the period at the end of paragraph (27) and inserting ”; and”; and (3) by adding after paragraph (27) the following new para- graph: ”(28) provide that, on and after October 1, 1997, the State will operate a State Directory of New Hires in accordance with section 453A.”. (b) STATE DIRECTORY OF NEW HIRES.\u2014Part D of title IV (42 U.S.C. 651 669) is amended by inserting after section 453 the following new section: ”SEC. 453A. STATE DIRECTORY OF NEW HIRES. ”(a) ESTABLISHMENT.\u2014 ”(1) IN GENERAL.\u2014 ”(A) REQUIREMENT FOR STATES THAT HAVE NO DIREC- TORY.\u2014Except as provided in subparagraph (B), not later than October 1, 1997, each State shall establish an auto- mated directory (to be known as the ‘State Directory of New Hires’) which shall contain information supplied in accordance with subsection (b) by employers on each newly hired employee. ”(B) STATES WITH NEW HIRE REPORTING LAW IN EXIST- ENCE.\u2014A State which has a new hire reporting law in existence on the date of the enactment of this section may continue to operate under the State law, but the State must meet the requirements of subsection (g)(2) not later than October 1, 1997, and the requirements of this section (other than subsection (g)(2)) not later than October 1, 1998. ”(2) DEFINITIONS.\u2014As used in this section: ”(A) EMPLOYEE.\u2014The term ’employee’\u2014 ”(i) means an individual who is an employee within the meaning of chapter 24 of the Internal Revenue Code of 1986; and 42 USC 653a. 42 USC 654b note. 110 STAT. 2210 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) does not include an employee of a Federal or State agency performing intelligence or counterintel- ligence functions, if the head of such agency has deter- mined that reporting pursuant to paragraph (1) with respect to the employee could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission. ”(B) EMPLOYER.\u2014 ”(i) IN GENERAL.\u2014The term ’employer’ has the meaning given such term in section 3401(d) of the Internal Revenue Code of 1986 and includes any governmental entity and any labor organization. ”(ii) LABOR ORGANIZATION.\u2014The term ‘labor organization’ shall have the meaning given such term in section 2(5) of the National Labor Relations Act, and includes any entity (also known as a ‘hiring hall’) which is used by the organization and an employer to carry out requirements described in section 8(f)(3) of such Act of an agreement between the organization and the employer. ”(b) EMPLOYER INFORMATION.\u2014 ”(1) REPORTING REQUIREMENT.\u2014 ”(A) IN GENERAL.\u2014Except as provided in subpara- graphs (B) and (C), each employer shall furnish to the Directory of New Hires of the State in which a newly hired employee works, a report that contains the name, address, and social security number of the employee, and the name and address of, and identifying number assigned under section 6109 of the Internal Revenue Code of 1986 to, the employer. ”(B) MULTISTATE EMPLOYERS.\u2014An employer that has employees who are employed in 2 or more States and that transmits reports magnetically or electronically may comply with subparagraph (A) by designating 1 State in which such employer has employees to which the employer will transmit the report described in subparagraph (A), and transmitting such report to such State. Any employer that transmits reports pursuant to this subparagraph shall notify the Secretary in writing as to which State such employer designates for the purpose of sending reports. ”(C) FEDERAL GOVERNMENT EMPLOYERS.\u2014Any depart- ment, agency, or instrumentality of the United States shall comply with subparagraph (A) by transmitting the report described in subparagraph (A) to the National Directory of New Hires established pursuant to section 453. ”(2) TIMING OF REPORT.\u2014Each State may provide the time within which the report required by paragraph (1) shall be made with respect to an employee, but such report shall be made\u2014 ”(A) not later than 20 days after the date the employer hires the employee; or ”(B) in the case of an employer transmitting reports magnetically or electronically, by 2 monthly transmissions (if necessary) not less than 12 days nor more than 16 days apart. ”(c) REPORTING FORMAT AND METHOD.\u2014Each report required by subsection (b) shall be made on a W 4 form or, at the option Notification. 110 STAT. 2211PUBLIC LAW 104 193\u2014AUG. 22, 1996 of the employer, an equivalent form, and may be transmitted by 1st class mail, magnetically, or electronically. ”(d) CIVIL MONEY PENALTIES ON NONCOMPLYING EMPLOYERS.\u2014 The State shall have the option to set a State civil money penalty which shall be less than\u2014 ”(1) $25; or ”(2) $500 if, under State law, the failure is the result of a conspiracy between the employer and the employee to not supply the required report or to supply a false or incomplete report. ”(e) ENTRY OF EMPLOYER INFORMATION.\u2014Information shall be entered into the data base maintained by the State Directory of New Hires within 5 business days of receipt from an employer pursuant to subsection (b). ”(f) INFORMATION COMPARISONS.\u2014 ”(1) IN GENERAL.\u2014Not later than May 1, 1998, an agency designated by the State shall, directly or by contract, conduct automated comparisons of the social security numbers reported by employers pursuant to subsection (b) and the social security numbers appearing in the records of the State case registry for cases being enforced under the State plan. ”(2) NOTICE OF MATCH.\u2014When an information comparison conducted under paragraph (1) reveals a match with respect to the social security number of an individual required to pro- vide support under a support order, the State Directory of New Hires shall provide the agency administering the State plan approved under this part of the appropriate State with the name, address, and social security number of the employee to whom the social security number is assigned, and the name and address of, and identifying number assigned under section 6109 of the Internal Revenue Code of 1986 to, the employer. ”(g) TRANSMISSION OF INFORMATION.\u2014 ”(1) TRANSMISSION OF WAGE WITHHOLDING NOTICES TO EMPLOYERS.\u2014Within 2 business days after the date information regarding a newly hired employee is entered into the State Directory of New Hires, the State agency enforcing the employ- ee’s child support obligation shall transmit a notice to the employer of the employee directing the employer to withhold from the income of the employee an amount equal to the monthly (or other periodic) child support obligation (including any past due support obligation) of the employee, unless the employee’s income is not subject to withholding pursuant to section 466(b)(3). ”(2) TRANSMISSIONS TO THE NATIONAL DIRECTORY OF NEW HIRES.\u2014 ”(A) NEW HIRE INFORMATION.\u2014Within 3 business days after the date information regarding a newly hired employee is entered into the State Directory of New Hires, the State Directory of New Hires shall furnish the informa- tion to the National Directory of New Hires. ”(B) WAGE AND UNEMPLOYMENT COMPENSATION INFORMATION.\u2014The State Directory of New Hires shall, on a quarterly basis, furnish to the National Directory of New Hires extracts of the reports required under section 303(a)(6) to be made to the Secretary of Labor concerning the wages and unemployment compensation paid to individ- uals, by such dates, in such format, and containing such Regulations. 110 STAT. 2212 PUBLIC LAW 104 193\u2014AUG. 22, 1996 information as the Secretary of Health and Human Services shall specify in regulations. ”(3) BUSINESS DAY DEFINED.\u2014As used in this subsection, the term ‘business day’ means a day on which State offices are open for regular business. ”(h) OTHER USES OF NEW HIRE INFORMATION.\u2014 ”(1) LOCATION OF CHILD SUPPORT OBLIGORS.\u2014The agency administering the State plan approved under this part shall use information received pursuant to subsection (f)(2) to locate individuals for purposes of establishing paternity and establish- ing, modifying, and enforcing child support obligations, and may disclose such information to any agent of the agency that is under contract with the agency to carry out such purposes. ”(2) VERIFICATION OF ELIGIBILITY FOR CERTAIN PROGRAMS.\u2014 A State agency responsible for administering a program speci- fied in section 1137(b) shall have access to information reported by employers pursuant to subsection (b) of this section for purposes of verifying eligibility for the program. ”(3) ADMINISTRATION OF EMPLOYMENT SECURITY AND WORKERS’ COMPENSATION.\u2014State agencies operating employ- ment security and workers’ compensation programs shall have access to information reported by employers pursuant to sub- section (b) for the purposes of administering such programs.”. (c) QUARTERLY WAGE REPORTING.\u2014Section 1137(a)(3) (42 U.S.C. 1320b 7(a)(3)) is amended\u2014 (1) by inserting ”(including State and local governmental entities and labor organizations (as defined in section 453A(a)(2)(B)(iii))” after ”employers”; and (2) by inserting ”, and except that no report shall be filed with respect to an employee of a State or local agency perform- ing intelligence or counterintelligence functions, if the head of such agency has determined that filing such a report could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission” after ”paragraph (2)”. (d) DISCLOSURE TO CERTAIN AGENTS.\u2014Section 303(e) (42 U.S.C. 503(e)) is amended by adding at the end the following: ”(5) A State or local child support enforcement agency may disclose to any agent of the agency that is under contract with the agency to carry out the purposes described in paragraph (1)(B) wage information that is disclosed to an officer or employee of the agency under paragraph (1)(A). Any agent of a State or local child support agency that receives wage information under this paragraph shall comply with the safeguards established pursuant to paragraph (1)(B).”. SEC. 314. AMENDMENTS CONCERNING INCOME WITHHOLDING. (a) MANDATORY INCOME WITHHOLDING.\u2014 (1) IN GENERAL.\u2014Section 466(a)(1) (42 U.S.C. 666(a)(1)) is amended to read as follows: ”(1)(A) Procedures described in subsection (b) for the withholding from income of amounts payable as support in cases subject to enforcement under the State plan. ”(B) Procedures under which the income of a person with a support obligation imposed by a support order issued (or modified) in the State before October 1, 1996, if not otherwise subject to withholding under subsection (b), shall become sub- ject to withholding as provided in subsection (b) if arrearages 110 STAT. 2213PUBLIC LAW 104 193\u2014AUG. 22, 1996 occur, without the need for a judicial or administrative hear- ing.”. (2) CONFORMING AMENDMENTS.\u2014 (A) Section 466(b) (42 U.S.C. 666(b)) is amended in the matter preceding paragraph (1), by striking ”subsection (a)(1)” and inserting ”subsection (a)(1)(A)”. (B) Section 466(b)(4) (42 U.S.C. 666(b)(4)) is amended to read as follows: ”(4)(A) Such withholding must be carried out in full compli- ance with all procedural due process requirements of the State, and the State must send notice to each noncustodial parent to whom paragraph (1) applies\u2014 ”(i) that the withholding has commenced; and ”(ii) of the procedures to follow if the noncustodial parent desires to contest such withholding on the grounds that the withholding or the amount withheld is improper due to a mistake of fact. ”(B) The notice under subparagraph (A) of this paragraph shall include the information provided to the employer under paragraph (6)(A).”. (C) Section 466(b)(5) (42 U.S.C. 666(b)(5)) is amended by striking all that follows ”administered by” and inserting ”the State through the State disbursement unit established pursuant to section 454B, in accordance with the require- ments of section 454B.”. (D) Section 466(b)(6)(A) (42 U.S.C. 666(b)(6)(A)) is amended\u2014 (i) in clause (i), by striking ”to the appropriate agency” and all that follows and inserting ”to the State disbursement unit within 7 business days after the date the amount would (but for this subsection) have been paid or credited to the employee, for distribution in accordance with this part. The employer shall with- hold funds as directed in the notice, except that when an employer receives an income withholding order issued by another State, the employer shall apply the income withholding law of the state of the obligor’s principal place of employment in determining\u2014 ”(I) the employer’s fee for processing an income withholding order; ”(II) the maximum amount permitted to be withheld from the obligor’s income; ”(III) the time periods within which the employer must implement the income withholding order and forward the child support payment; ”(IV) the priorities for withholding and allocating income withheld for multiple child support obligees; and ”(V) any withholding terms or conditions not specified in the order. An employer who complies with an income withholding notice that is regular on its face shall not be subject to civil liability to any individual or agency for conduct in compliance with the notice.”; (ii) in clause (ii), by inserting ”be in a standard format prescribed by the Secretary, and” after ”shall”; and (iii) by adding at the end the following new clause: Notice. 110 STAT. 2214 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(iii) As used in this subparagraph, the term ‘business day’ means a day on which State offices are open for regular business.”. (E) Section 466(b)(6)(D) (42 U.S.C. 666(b)(6)(D)) is amended by striking ”any employer” and all that follows and inserting ”any employer who\u2014 ”(i) discharges from employment, refuses to employ, or takes disciplinary action against any noncustodial parent subject to income withholding required by this subsection because of the existence of such withholding and the obliga- tions or additional obligations which it imposes upon the employer; or ”(ii) fails to withhold support from income or to pay such amounts to the State disbursement unit in accordance with this subsection.”. (F) Section 466(b) (42 U.S.C. 666(b)) is amended by adding at the end the following new paragraph: ”(11) Procedures under which the agency administering the State plan approved under this part may execute a withholding order without advance notice to the obligor, includ- ing issuing the withholding order through electronic means.”. (b) DEFINITION OF INCOME.\u2014 (1) IN GENERAL.\u2014Section 466(b)(8) (42 U.S.C. 666(b)(8)) is amended to read as follows: ”(8) For purposes of subsection (a) and this subsection, the term ‘income’ means any periodic form of payment due to an individual, regardless of source, including wages, salaries, commissions, bonuses, worker’s compensation, disability, pay- ments pursuant to a pension or retirement program, and interest.”. (2) CONFORMING AMENDMENTS.\u2014 (A) Subsections (a)(8)(A), (a)(8)(B)(i), (b)(3)(A), (b)(3)(B), (b)(6)(A)(i), and (b)(6)(C), and (b)(7) of section 466 (42 U.S.C. 666(a)(8)(A), (a)(8)(B)(i), (b)(3)(A), (b)(3)(B), (b)(6)(A)(i), and (b)(6)(C), and (b)(7)) are each amended by striking ”wages” each place such term appears and inserting ”income”. (B) Section 466(b)(1) (42 U.S.C. 666(b)(1)) is amended by striking ”wages (as defined by the State for purposes of this section)” and inserting ”income”. (c) CONFORMING AMENDMENT.\u2014Section 466(c) (42 U.S.C. 666(c)) is repealed. SEC. 315. LOCATOR INFORMATION FROM INTERSTATE NETWORKS. Section 466(a) (42 U.S.C. 666(a)) is amended by inserting after paragraph (11) the following new paragraph: ”(12) LOCATOR INFORMATION FROM INTERSTATE NET- WORKS.\u2014Procedures to ensure that all Federal and State agen- cies conducting activities under this part have access to any system used by the State to locate an individual for purposes relating to motor vehicles or law enforcement.”. SEC. 316. EXPANSION OF THE FEDERAL PARENT LOCATOR SERVICE. (a) EXPANDED AUTHORITY TO LOCATE INDIVIDUALS AND ASSETS.\u2014Section 453 (42 U.S.C. 653) is amended\u2014 (1) in subsection (a), by striking all that follows ”subsection (c))” and inserting ”, for the purpose of establishing parentage, establishing, setting the amount of, modifying, or enforcing 110 STAT. 2215PUBLIC LAW 104 193\u2014AUG. 22, 1996 child support obligations, or enforcing child custody or visitation orders\u2014 ”(1) information on, or facilitating the discovery of, the location of any individual\u2014 ”(A) who is under an obligation to pay child support or provide child custody or visitation rights; ”(B) against whom such an obligation is sought; ”(C) to whom such an obligation is owed, including the individual’s social security number (or numbers), most recent address, and the name, address, and employer identification number of the individual’s employer; ”(2) information on the individual’s wages (or other income) from, and benefits of, employment (including rights to or enroll- ment in group health care coverage); and ”(3) information on the type, status, location, and amount of any assets of, or debts owed by or to, any such indi- vidual.”; and (2) in subsection (b)\u2014 (A) in the matter preceding paragraph (1), by striking ”social security” and all that follows through ”absent par- ent” and inserting ”information described in subsection (a)”; and (B) in the flush paragraph at the end, by adding the following: ”No information shall be disclosed to any person if the State has notified the Secretary that the State has reasonable evidence of domestic violence or child abuse and the disclosure of such information could be harmful to the custodial parent or the child of such parent. Informa- tion received or transmitted pursuant to this section shall be subject to the safeguard provisions contained in section 454(26).”. (b) AUTHORIZED PERSON FOR INFORMATION REGARDING VISITATION RIGHTS.\u2014Section 453(c) (42 U.S.C. 653(c)) is amended\u2014 (1) in paragraph (1), by striking ”support” and inserting ”support or to seek to enforce orders providing child custody or visitation rights”; and (2) in paragraph (2), by striking ”, or any agent of such court; and” and inserting ”or to issue an order against a resident parent for child custody or visitation rights, or any agent of such court;”. (c) REIMBURSEMENT FOR INFORMATION FROM FEDERAL AGENCIES.\u2014Section 453(e)(2) (42 U.S.C. 653(e)(2)) is amended in the 4th sentence by inserting ”in an amount which the Secretary determines to be reasonable payment for the information exchange (which amount shall not include payment for the costs of obtaining, compiling, or maintaining the information)” before the period. (d) REIMBURSEMENT FOR REPORTS BY STATE AGENCIES.\u2014Section 453 (42 U.S.C. 653) is amended by adding at the end the following new subsection: ”(g) REIMBURSEMENT FOR REPORTS BY STATE AGENCIES.\u2014The Secretary may reimburse Federal and State agencies for the costs incurred by such entities in furnishing information requested by the Secretary under this section in an amount which the Secretary determines to be reasonable payment for the information exchange (which amount shall not include payment for the costs of obtaining, compiling, or maintaining the information).”. (e) CONFORMING AMENDMENTS.\u2014 110 STAT. 2216 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (1) Sections 452(a)(9), 453(a), 453(b), 463(a), 463(e), and 463(f) (42 U.S.C. 652(a)(9), 653(a), 653(b), 663(a), 663(e), and 663(f)) are each amended by inserting ”Federal” before ”Parent” each place such term appears. (2) Section 453 (42 U.S.C. 653) is amended in the heading by adding ”FEDERAL” before ”PARENT”. (f) NEW COMPONENTS.\u2014Section 453 (42 U.S.C. 653), as amended by subsection (d) of this section, is amended by adding at the end the following new subsections: ”(h) FEDERAL CASE REGISTRY OF CHILD SUPPORT ORDERS.\u2014 ”(1) IN GENERAL.\u2014Not later than October 1, 1998, in order to assist States in administering programs under State plans approved under this part and programs funded under part A, and for the other purposes specified in this section, the Secretary shall establish and maintain in the Federal Parent Locator Service an automated registry (which shall be known as the ‘Federal Case Registry of Child Support Orders’), which shall contain abstracts of support orders and other information described in paragraph (2) with respect to each case in each State case registry maintained pursuant to section 454A(e), as furnished (and regularly updated), pursuant to section 454A(f), by State agencies administering programs under this part. ”(2) CASE INFORMATION.\u2014The information referred to in paragraph (1) with respect to a case shall be such information as the Secretary may specify in regulations (including the names, social security numbers or other uniform identification numbers, and State case identification numbers) to identify the individuals who owe or are owed support (or with respect to or on behalf of whom support obligations are sought to be established), and the State or States which have the case. ”(i) NATIONAL DIRECTORY OF NEW HIRES.\u2014 ”(1) IN GENERAL.\u2014In order to assist States in administering programs under State plans approved under this part and programs funded under part A, and for the other purposes specified in this section, the Secretary shall, not later than October 1, 1997, establish and maintain in the Federal Parent Locator Service an automated directory to be known as the National Directory of New Hires, which shall contain the information supplied pursuant to section 453A(g)(2). ”(2) ENTRY OF DATA.\u2014Information shall be entered into the data base maintained by the National Directory of New Hires within 2 business days of receipt pursuant to section 453A(g)(2). ”(3) ADMINISTRATION OF FEDERAL TAX LAWS.\u2014The Secretary of the Treasury shall have access to the information in the National Directory of New Hires for purposes of administering section 32 of the Internal Revenue Code of 1986, or the advance payment of the earned income tax credit under section 3507 of such Code, and verifying a claim with respect to employment in a tax return. ”(4) LIST OF MULTISTATE EMPLOYERS.\u2014The Secretary shall maintain within the National Directory of New Hires a list of multistate employers that report information regarding newly hired employees pursuant to section 453A(b)(1)(B), and the State which each such employer has designated to receive such information. Establishment. Establishment. 110 STAT. 2217PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(j) INFORMATION COMPARISONS AND OTHER DISCLOSURES.\u2014 ”(1) VERIFICATION BY SOCIAL SECURITY ADMINISTRATION.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall transmit information on individuals and employers maintained under this section to the Social Security Administration to the extent necessary for verification in accordance with subparagraph (B). ”(B) VERIFICATION BY SSA.\u2014The Social Security Administration shall verify the accuracy of, correct, or sup- ply to the extent possible, and report to the Secretary, the following information supplied by the Secretary pursu- ant to subparagraph (A): ”(i) The name, social security number, and birth date of each such individual. ”(ii) The employer identification number of each such employer. ”(2) INFORMATION COMPARISONS.\u2014For the purpose of locat- ing individuals in a paternity establishment case or a case involving the establishment, modification, or enforcement of a support order, the Secretary shall\u2014 ”(A) compare information in the National Directory of New Hires against information in the support case abstracts in the Federal Case Registry of Child Support Orders not less often than every 2 business days; and ”(B) within 2 business days after such a comparison reveals a match with respect to an individual, report the information to the State agency responsible for the case. ”(3) INFORMATION COMPARISONS AND DISCLOSURES OF INFORMATION IN ALL REGISTRIES FOR TITLE IV PROGRAM PUR- POSES.\u2014To the extent and with the frequency that the Sec- retary determines to be effective in assisting States to carry out their responsibilities under programs operated under this part and programs funded under part A, the Secretary shall\u2014 ”(A) compare the information in each component of the Federal Parent Locator Service maintained under this section against the information in each other such compo- nent (other than the comparison required by paragraph (2)), and report instances in which such a comparison reveals a match with respect to an individual to State agencies operating such programs; and ”(B) disclose information in such registries to such State agencies. ”(4) PROVISION OF NEW HIRE INFORMATION TO THE SOCIAL SECURITY ADMINISTRATION.\u2014The National Directory of New Hires shall provide the Commissioner of Social Security with all information in the National Directory. ”(5) RESEARCH.\u2014The Secretary may provide access to information reported by employers pursuant to section 453A(b) for research purposes found by the Secretary to be likely to contribute to achieving the purposes of part A or this part, but without personal identifiers. ”(k) FEES.\u2014 ”(1) FOR SSA VERIFICATION.\u2014The Secretary shall reimburse the Commissioner of Social Security, at a rate negotiated between the Secretary and the Commissioner, for the costs incurred by the Commissioner in performing the verification services described in subsection (j). Reports. Reports. 110 STAT. 2218 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(2) FOR INFORMATION FROM STATE DIRECTORIES OF NEW HIRES.\u2014The Secretary shall reimburse costs incurred by State directories of new hires in furnishing information as required by subsection (j)(3), at rates which the Secretary determines to be reasonable (which rates shall not include payment for the costs of obtaining, compiling, or maintaining such informa- tion). ”(3) FOR INFORMATION FURNISHED TO STATE AND FEDERAL AGENCIES.\u2014A State or Federal agency that receives information from the Secretary pursuant to this section shall reimburse the Secretary for costs incurred by the Secretary in furnishing the information, at rates which the Secretary determines to be reasonable (which rates shall include payment for the costs of obtaining, verifying, maintaining, and comparing the information). ”(l) RESTRICTION ON DISCLOSURE AND USE.\u2014Information in the Federal Parent Locator Service, and information resulting from comparisons using such information, shall not be used or disclosed except as expressly provided in this section, subject to section 6103 of the Internal Revenue Code of 1986. ”(m) INFORMATION INTEGRITY AND SECURITY.\u2014The Secretary shall establish and implement safeguards with respect to the enti- ties established under this section designed to\u2014 ”(1) ensure the accuracy and completeness of information in the Federal Parent Locator Service; and ”(2) restrict access to confidential information in the Federal Parent Locator Service to authorized persons, and restrict use of such information to authorized purposes. ”(n) FEDERAL GOVERNMENT REPORTING.\u2014Each department, agency, and instrumentality of the United States shall on a quar- terly basis report to the Federal Parent Locator Service the name and social security number of each employee and the wages paid to the employee during the previous quarter, except that such a report shall not be filed with respect to an employee of a depart- ment, agency, or instrumentality performing intelligence or counter- intelligence functions, if the head of such department, agency, or instrumentality has determined that filing such a report could endanger the safety of the employee or compromise an ongoing investigation or intelligence mission.”. (g) CONFORMING AMENDMENTS.\u2014 (1) TO PART D OF TITLE IV OF THE SOCIAL SECURITY ACT.\u2014 (A) Section 454(8)(B) (42 U.S.C. 654(8)(B)) is amended to read as follows: ”(B) the Federal Parent Locator Service established under section 453;”. (B) Section 454(13) (42 U.S.C.654(13)) is amended by inserting ”and provide that information requests by parents who are residents of other States be treated with the same priority as requests by parents who are residents of the State submitting the plan” before the semicolon. (2) TO FEDERAL UNEMPLOYMENT TAX ACT.\u2014Section 3304(a)(16) of the Internal Revenue Code of 1986 is amended\u2014 (A) by striking ”Secretary of Health, Education, and Welfare” each place such term appears and inserting ”Sec- retary of Health and Human Services”; (B) in subparagraph (B), by striking ”such information” and all that follows and inserting ”information furnished 110 STAT. 2219PUBLIC LAW 104 193\u2014AUG. 22, 1996 under subparagraph (A) or (B) is used only for the purposes authorized under such subparagraph;”; (C) by striking ”and” at the end of subparagraph (A); (D) by redesignating subparagraph (B) as subpara- graph (C); and (E) by inserting after subparagraph (A) the following new subparagraph: ”(B) wage and unemployment compensation information contained in the records of such agency shall be furnished to the Secretary of Health and Human Services (in accordance with regulations promulgated by such Secretary) as necessary for the purposes of the National Directory of New Hires estab- lished under section 453(i) of the Social Security Act, and”. (3) TO STATE GRANT PROGRAM UNDER TITLE III OF THE SOCIAL SECURITY ACT.\u2014Subsection (h) of section 303 (42 U.S.C. 503) is amended to read as follows: ”(h)(1) The State agency charged with the administration of the State law shall, on a reimbursable basis\u2014 ”(A) disclose quarterly, to the Secretary of Health and Human Services, wage and claim information, as required pursuant to section 453(i)(1), contained in the records of such agency; ”(B) ensure that information provided pursuant to subpara- graph (A) meets such standards relating to correctness and verification as the Secretary of Health and Human Services, with the concurrence of the Secretary of Labor, may find nec- essary; and ”(C) establish such safeguards as the Secretary of Labor determines are necessary to insure that information disclosed under subparagraph (A) is used only for purposes of section 453(i)(1) in carrying out the child support enforcement program under title IV. ”(2) Whenever the Secretary of Labor, after reasonable notice and opportunity for hearing to the State agency charged with the administration of the State law, finds that there is a failure to comply substantially with the requirements of paragraph (1), the Secretary of Labor shall notify such State agency that further payments will not be made to the State until the Secretary of Labor is satisfied that there is no longer any such failure. Until the Secretary of Labor is so satisfied, the Secretary shall make no future certification to the Secretary of the Treasury with respect to the State. ”(3) For purposes of this subsection\u2014 ”(A) the term ‘wage information’ means information regard- ing wages paid to an individual, the social security account number of such individual, and the name, address, State, and the Federal employer identification number of the employer paying such wages to such individual; and ”(B) the term ‘claim information’ means information regard- ing whether an individual is receiving, has received, or has made application for, unemployment compensation, the amount of any such compensation being received (or to be received by such individual), and the individual’s current (or most recent) home address.”. (4) DISCLOSURE OF CERTAIN INFORMATION TO AGENTS OF CHILD SUPPORT ENFORCEMENT AGENCIES.\u2014 Notification. Regulations. 110 STAT. 2220 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) IN GENERAL.\u2014Paragraph (6) of section 6103(l) of the Internal Revenue Code of 1986 (relating to disclosure of return information to Federal, State, and local child support enforcement agencies) is amended by redesignating subparagraph (B) as subparagraph (C) and by inserting after subparagraph (A) the following new subparagraph: ”(B) DISCLOSURE TO CERTAIN AGENTS.\u2014The following information disclosed to any child support enforcement agency under subparagraph (A) with respect to any individ- ual with respect to whom child support obligations are sought to be established or enforced may be disclosed by such agency to any agent of such agency which is under contract with such agency to carry out the purposes described in subparagraph (C): ”(i) The address and social security account num- ber (or numbers) of such individual. ”(ii) The amount of any reduction under section 6402(c) (relating to offset of past-due support against overpayments) in any overpayment otherwise payable to such individual.”. (B) CONFORMING AMENDMENTS.\u2014 (i) Paragraph (3) of section 6103(a) of such Code is amended by striking ”(l)(12)” and inserting ”para- graph (6) or (12) of subsection (l)”. (ii) Subparagraph (C) of section 6103(l)(6) of such Code, as redesignated by subsection (a), is amended to read as follows: ”(C) RESTRICTION ON DISCLOSURE.\u2014Information may be disclosed under this paragraph only for purposes of, and to the extent necessary in, establishing and collecting child support obligations from, and locating, individuals owing such obligations.”. (iii) The material following subparagraph (F) of section 6103(p)(4) of such Code is amended by striking ”subsection (l)(12)(B)” and inserting ”paragraph (6)(A) or (12)(B) of subsection (l)”. (h) REQUIREMENT FOR COOPERATION.\u2014The Secretary of Labor and the Secretary of Health and Human Services shall work jointly to develop cost-effective and efficient methods of accessing the information in the various State directories of new hires and the National Directory of New Hires as established pursuant to the amendments made by this subtitle. In developing these methods the Secretaries shall take into account the impact, including costs, on the States, and shall also consider the need to insure the proper and authorized use of wage record information. SEC. 317. COLLECTION AND USE OF SOCIAL SECURITY NUMBERS FOR USE IN CHILD SUPPORT ENFORCEMENT. Section 466(a) (42 U.S.C. 666(a)), as amended by section 315 of this Act, is amended by inserting after paragraph (12) the follow- ing new paragraph: ”(13) RECORDING OF SOCIAL SECURITY NUMBERS IN CERTAIN FAMILY MATTERS.\u2014Procedures requiring that the social security number of\u2014 ”(A) any applicant for a professional license, commer- cial driver’s license, occupational license, or marriage license be recorded on the application; 42 USC 653 note. 110 STAT. 2221PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) any individual who is subject to a divorce decree, support order, or paternity determination or acknowledg- ment be placed in the records relating to the matter; and ”(C) any individual who has died be placed in the records relating to the death and be recorded on the death certificate. For purposes of subparagraph (A), if a State allows the use of a number other than the social security number, the State shall so advise any applicants.”. Subtitle C\u2014Streamlining and Uniformity of Procedures SEC. 321. ADOPTION OF UNIFORM STATE LAWS. Section 466 (42 U.S.C. 666) is amended by adding at the end the following new subsection: ”(f) UNIFORM INTERSTATE FAMILY SUPPORT ACT.\u2014In order to satisfy section 454(20)(A), on and after January 1, 1998, each State must have in effect the Uniform Interstate Family Support Act, as approved by the American Bar Association on February 9, 1993, together with any amendments officially adopted before January 1, 1998 by the National Conference of Commissioners on Uniform State Laws.”. SEC. 322. IMPROVEMENTS TO FULL FAITH AND CREDIT FOR CHILD SUPPORT ORDERS. Section 1738B of title 28, United States Code, is amended\u2014 (1) in subsection (a)(2), by striking ”subsection (e)” and inserting ”subsections (e), (f), and (i)”; (2) in subsection (b), by inserting after the 2nd undesig- nated paragraph the following: ” ‘child’s home State’ means the State in which a child lived with a parent or a person acting as parent for at least 6 consecutive months immediately preceding the time of filing of a petition or comparable pleading for support and, if a child is less than 6 months old, the State in which the child lived from birth with any of them. A period of temporary absence of any of them is counted as part of the 6-month period.”; (3) in subsection (c), by inserting ”by a court of a State” before ”is made”; (4) in subsection (c)(1), by inserting ”and subsections (e), (f), and (g)” after ”located”; (5) in subsection (d)\u2014 (A) by inserting ”individual” before ”contestant”; and (B) by striking ”subsection (e)” and inserting ”sub- sections (e) and (f)”; (6) in subsection (e), by striking ”make a modification of a child support order with respect to a child that is made” and inserting ”modify a child support order issued”; (7) in subsection (e)(1), by inserting ”pursuant to subsection (i)” before the semicolon; (8) in subsection (e)(2)\u2014 (A) by inserting ”individual” before ”contestant” each place such term appears; and (B) by striking ”to that court’s making the modification and assuming” and inserting ”with the State of continuing, 110 STAT. 2222 PUBLIC LAW 104 193\u2014AUG. 22, 1996 exclusive jurisdiction for a court of another State to modify the order and assume”; (9) by redesignating subsections (f) and (g) as subsections (g) and (h), respectively; (10) by inserting after subsection (e) the following new subsection: ”(f) RECOGNITION OF CHILD SUPPORT ORDERS.\u2014If 1 or more child support orders have been issued with regard to an obligor and a child, a court shall apply the following rules in determining which order to recognize for purposes of continuing, exclusive juris- diction and enforcement: ”(1) If only 1 court has issued a child support order, the order of that court must be recognized. ”(2) If 2 or more courts have issued child support orders for the same obligor and child, and only 1 of the courts would have continuing, exclusive jurisdiction under this section, the order of that court must be recognized. ”(3) If 2 or more courts have issued child support orders for the same obligor and child, and more than 1 of the courts would have continuing, exclusive jurisdiction under this section, an order issued by a court in the current home State of the child must be recognized, but if an order has not been issued in the current home State of the child, the order most recently issued must be recognized. ”(4) If 2 or more courts have issued child support orders for the same obligor and child, and none of the courts would have continuing, exclusive jurisdiction under this section, a court may issue a child support order, which must be recog- nized. ”(5) The court that has issued an order recognized under this subsection is the court having continuing, exclusive juris- diction.”; (11) in subsection (g) (as so redesignated)\u2014 (A) by striking ”PRIOR” and inserting ”MODIFIED”; and (B) by striking ”subsection (e)” and inserting ”sub- sections (e) and (f)”; (12) in subsection (h) (as so redesignated)\u2014 (A) in paragraph (2), by inserting ”including the dura- tion of current payments and other obligations of support” before the comma; and (B) in paragraph (3), by inserting ”arrears under” after ”enforce”; and (13) by adding at the end the following new subsection: ”(i) REGISTRATION FOR MODIFICATION.\u2014If there is no individual contestant or child residing in the issuing State, the party or support enforcement agency seeking to modify, or to modify and enforce, a child support order issued in another State shall register that order in a State with jurisdiction over the nonmovant for the purpose of modification.”. SEC. 323. ADMINISTRATIVE ENFORCEMENT IN INTERSTATE CASES. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315 and 317 of this Act, is amended by inserting after paragraph (13) the following new paragraph: ”(14) ADMINISTRATIVE ENFORCEMENT IN INTERSTATE CASES.\u2014Procedures under which\u2014 Courts. 110 STAT. 2223PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A)(i) the State shall respond within 5 business days to a request made by another State to enforce a support order; and ”(ii) the term ‘business day’ means a day on which State offices are open for regular business; ”(B) the State may, by electronic or other means, trans- mit to another State a request for assistance in a case involving the enforcement of a support order, which request\u2014 ”(i) shall include such information as will enable the State to which the request is transmitted to com- pare the information about the case to the information in the data bases of the State; and ”(ii) shall constitute a certification by the re- questing State\u2014 ”(I) of the amount of support under the order the payment of which is in arrears; and ”(II) that the requesting State has complied with all procedural due process requirements applicable to the case; ”(C) if the State provides assistance to another State pursuant to this paragraph with respect to a case, neither State shall consider the case to be transferred to the case- load of such other State; and ”(D) the State shall maintain records of\u2014 ”(i) the number of such requests for assistance received by the State; ”(ii) the number of cases for which the State col- lected support in response to such a request; and ”(iii) the amount of such collected support.”. SEC. 324. USE OF FORMS IN INTERSTATE ENFORCEMENT. (a) PROMULGATION.\u2014Section 452(a) (42 U.S.C. 652(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (9); (2) by striking the period at the end of paragraph (10) (as amended by section 346(a) of this Act) and inserting ”; and”; and (3) by adding at the end the following new paragraph: ”(11) not later than October 1, 1996, after consulting with the State directors of programs under this part, promulgate forms to be used by States in interstate cases for\u2014 ”(A) collection of child support through income withholding; ”(B) imposition of liens; and ”(C) administrative subpoenas.”. (b) USE BY STATES.\u2014Section 454(9) (42 U.S.C. 654(9)) is amended\u2014 (1) by striking ”and” at the end of subparagraph (C); (2) by inserting ”and” at the end of subparagraph (D); and (3) by adding at the end the following new subparagraph: ”(E) not later than March 1, 1997, in using the forms promulgated pursuant to section 452(a)(11) for income withholding, imposition of liens, and issuance of adminis- trative subpoenas in interstate child support cases;”. Records. 110 STAT. 2224 PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 325. STATE LAWS PROVIDING EXPEDITED PROCEDURES. (a) STATE LAW REQUIREMENTS.\u2014Section 466 (42 U.S.C. 666), as amended by section 314 of this Act, is amended\u2014 (1) in subsection (a)(2), by striking the first sentence and inserting the following: ”Expedited administrative and judicial procedures (including the procedures specified in subsection (c)) for establishing paternity and for establishing, modifying, and enforcing support obligations.”; and (2) by inserting after subsection (b) the following new sub- section: ”(c) EXPEDITED PROCEDURES.\u2014The procedures specified in this subsection are the following: ”(1) ADMINISTRATIVE ACTION BY STATE AGENCY.\u2014Procedures which give the State agency the authority to take the following actions relating to establishment of paternity or to establish- ment, modification, or enforcement of support orders, without the necessity of obtaining an order from any other judicial or administrative tribunal, and to recognize and enforce the authority of State agencies of other States to take the following actions: ”(A) GENETIC TESTING.\u2014To order genetic testing for the purpose of paternity establishment as provided in sec- tion 466(a)(5). ”(B) FINANCIAL OR OTHER INFORMATION.\u2014To subpoena any financial or other information needed to establish, modify, or enforce a support order, and to impose penalties for failure to respond to such a subpoena. ”(C) RESPONSE TO STATE AGENCY REQUEST.\u2014To require all entities in the State (including for-profit, nonprofit, and governmental employers) to provide promptly, in response to a request by the State agency of that or any other State administering a program under this part, information on the employment, compensation, and benefits of any individual employed by such entity as an employee or contractor, and to sanction failure to respond to any such request. ”(D) ACCESS TO INFORMATION CONTAINED IN CERTAIN RECORDS.\u2014To obtain access, subject to safeguards on pri- vacy and information security, and subject to the nonliabil- ity of entities that afford such access under this subpara- graph, to information contained in the following records (including automated access, in the case of records main- tained in automated data bases): ”(i) Records of other State and local government agencies, including\u2014 ”(I) vital statistics (including records of mar- riage, birth, and divorce); ”(II) State and local tax and revenue records (including information on residence address, employer, income and assets); ”(III) records concerning real and titled per- sonal property; ”(IV) records of occupational and professional licenses, and records concerning the ownership and control of corporations, partnerships, and other business entities; ”(V) employment security records; 110 STAT. 2225PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(VI) records of agencies administering public assistance programs; ”(VII) records of the motor vehicle depart- ment; and ”(VIII) corrections records. ”(ii) Certain records held by private entities with respect to individuals who owe or are owed support (or against or with respect to whom a support obliga- tion is sought), consisting of\u2014 ”(I) the names and addresses of such indi- viduals and the names and addresses of the employers of such individuals, as appearing in cus- tomer records of public utilities and cable tele- vision companies, pursuant to an administrative subpoena authorized by subparagraph (B); and ”(II) information (including information on assets and liabilities) on such individuals held by financial institutions. ”(E) CHANGE IN PAYEE.\u2014In cases in which support is subject to an assignment in order to comply with a requirement imposed pursuant to part A or section 1912, or to a requirement to pay through the State disbursement unit established pursuant to section 454B, upon providing notice to obligor and obligee, to direct the obligor or other payor to change the payee to the appropriate government entity. ”(F) INCOME WITHHOLDING.\u2014To order income withhold- ing in accordance with subsections (a)(1)(A) and (b) of sec- tion 466. ”(G) SECURING ASSETS.\u2014In cases in which there is a support arrearage, to secure assets to satisfy the arrear- age by\u2014 ”(i) intercepting or seizing periodic or lump-sum payments from\u2014 ”(I) a State or local agency, including unemployment compensation, workers’ compensa- tion, and other benefits; and ”(II) judgments, settlements, and lotteries; ”(ii) attaching and seizing assets of the obligor held in financial institutions; ”(iii) attaching public and private retirement funds; and ”(iv) imposing liens in accordance with subsection (a)(4) and, in appropriate cases, to force sale of property and distribution of proceeds. ”(H) INCREASE MONTHLY PAYMENTS.\u2014For the purpose of securing overdue support, to increase the amount of monthly support payments to include amounts for arrear- ages, subject to such conditions or limitations as the State may provide. Such procedures shall be subject to due process safeguards, including (as appropriate) requirements for notice, opportunity to contest the action, and opportunity for an appeal on the record to an independent administrative or judicial tribunal. ”(2) SUBSTANTIVE AND PROCEDURAL RULES.\u2014The expedited procedures required under subsection (a)(2) shall include the following rules and authority, applicable with respect to all 110 STAT. 2226 PUBLIC LAW 104 193\u2014AUG. 22, 1996 proceedings to establish paternity or to establish, modify, or enforce support orders: ”(A) LOCATOR INFORMATION; PRESUMPTIONS CON- CERNING NOTICE.\u2014Procedures under which\u2014 ”(i) each party to any paternity or child support proceeding is required (subject to privacy safeguards) to file with the tribunal and the State case registry upon entry of an order, and to update as appropriate, information on location and identity of the party, including Social Security number, residential and mail- ing addresses, telephone number, driver’s license num- ber, and name, address, and telephone number of employer; and ”(ii) in any subsequent child support enforcement action between the parties, upon sufficient showing that diligent effort has been made to ascertain the location of such a party, the tribunal may deem State due process requirements for notice and service of proc- ess to be met with respect to the party, upon delivery of written notice to the most recent residential or employer address filed with the tribunal pursuant to clause (i). ”(B) STATEWIDE JURISDICTION.\u2014Procedures under which\u2014 ”(i) the State agency and any administrative or judicial tribunal with authority to hear child support and paternity cases exerts statewide jurisdiction over the parties; and ”(ii) in a State in which orders are issued by courts or administrative tribunals, a case may be transferred between local jurisdictions in the State without need for any additional filing by the petitioner, or service of process upon the respondent, to retain jurisdiction over the parties. ”(3) COORDINATION WITH ERISA.\u2014Notwithstanding sub- section (d) of section 514 of the Employee Retirement Income Security Act of 1974 (relating to effect on other laws), nothing in this subsection shall be construed to alter, amend, modify, invalidate, impair, or supersede subsections (a), (b), and (c) of such section 514 as it applies with respect to any procedure referred to in paragraph (1) and any expedited procedure referred to in paragraph (2), except to the extent that such procedure would be consistent with the requirements of section 206(d)(3) of such Act (relating to qualified domestic relations orders) or the requirements of section 609(a) of such Act (relat- ing to qualified medical child support orders) if the reference in such section 206(d)(3) to a domestic relations order and the reference in such section 609(a) to a medical child support order were a reference to a support order referred to in para- graphs (1) and (2) relating to the same matters, respectively.”. (b) AUTOMATION OF STATE AGENCY FUNCTIONS.\u2014Section 454A, as added by section 344(a)(2) and as amended by sections 311 and 312(c) of this Act, is amended by adding at the end the following new subsection: ”(h) EXPEDITED ADMINISTRATIVE PROCEDURES.\u2014The automated system required by this section shall be used, to the maximum 110 STAT. 2227PUBLIC LAW 104 193\u2014AUG. 22, 1996 extent feasible, to implement the expedited administrative proce- dures required by section 466(c).”. Subtitle D\u2014Paternity Establishment SEC. 331. STATE LAWS CONCERNING PATERNITY ESTABLISHMENT. (a) STATE LAWS REQUIRED.\u2014Section 466(a)(5) (42 U.S.C. 666(a)(5)) is amended to read as follows: ”(5) PROCEDURES CONCERNING PATERNITY ESTAB- LISHMENT.\u2014 ”(A) ESTABLISHMENT PROCESS AVAILABLE FROM BIRTH UNTIL AGE 18.\u2014 ”(i) Procedures which permit the establishment of the paternity of a child at any time before the child attains 18 years of age. ”(ii) As of August 16, 1984, clause (i) shall also apply to a child for whom paternity has not been established or for whom a paternity action was brought but dismissed because a statute of limitations of less than 18 years was then in effect in the State. ”(B) PROCEDURES CONCERNING GENETIC TESTING.\u2014 ”(i) GENETIC TESTING REQUIRED IN CERTAIN CON- TESTED CASES.\u2014Procedures under which the State is required, in a contested paternity case (unless other- wise barred by State law) to require the child and all other parties (other than individuals found under section 454(29) to have good cause and other exceptions for refusing to cooperate) to submit to genetic tests upon the request of any such party, if the request is supported by a sworn statement by the party\u2014 ”(I) alleging paternity, and setting forth facts establishing a reasonable possibility of the req- uisite sexual contact between the parties; or ”(II) denying paternity, and setting forth facts establishing a reasonable possibility of the non- existence of sexual contact between the parties. ”(ii) OTHER REQUIREMENTS.\u2014Procedures which require the State agency, in any case in which the agency orders genetic testing\u2014 ”(I) to pay costs of such tests, subject to recoupment (if the State so elects) from the alleged father if paternity is established; and ”(II) to obtain additional testing in any case if an original test result is contested, upon request and advance payment by the contestant. ”(C) VOLUNTARY PATERNITY ACKNOWLEDGMENT.\u2014 ”(i) SIMPLE CIVIL PROCESS.\u2014Procedures for a sim- ple civil process for voluntarily acknowledging pater- nity under which the State must provide that, before a mother and a putative father can sign an acknowledg- ment of paternity, the mother and the putative father must be given notice, orally and in writing, of the alternatives to, the legal consequences of, and the rights (including, if 1 parent is a minor, any rights afforded due to minority status) and responsibilities that arise from, signing the acknowledgment. 110 STAT. 2228 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) HOSPITAL-BASED PROGRAM.\u2014Such procedures must include a hospital-based program for the vol- untary acknowledgment of paternity focusing on the period immediately before or after the birth of a child. ”(iii) PATERNITY ESTABLISHMENT SERVICES.\u2014 ”(I) STATE-OFFERED SERVICES.\u2014Such proce- dures must require the State agency responsible for maintaining birth records to offer voluntary paternity establishment services. ”(II) REGULATIONS.\u2014 ”(aa) SERVICES OFFERED BY HOSPITALS AND BIRTH RECORD AGENCIES.\u2014The Secretary shall prescribe regulations governing voluntary paternity establishment services offered by hospitals and birth record agencies. ”(bb) SERVICES OFFERED BY OTHER ENTITIES.\u2014The Secretary shall prescribe regu- lations specifying the types of other entities that may offer voluntary paternity establish- ment services, and governing the provision of such services, which shall include a require- ment that such an entity must use the same notice provisions used by, use the same mate- rials used by, provide the personnel providing such services with the same training provided by, and evaluate the provision of such services in the same manner as the provision of such services is evaluated by, voluntary paternity establishment programs of hospitals and birth record agencies. ”(iv) USE OF PATERNITY ACKNOWLEDGMENT AFFIDAVIT.\u2014Such procedures must require the State to develop and use an affidavit for the voluntary acknowledgment of paternity which includes the mini- mum requirements of the affidavit specified by the Secretary under section 452(a)(7) for the voluntary acknowledgment of paternity, and to give full faith and credit to such an affidavit signed in any other State according to its procedures. ”(D) STATUS OF SIGNED PATERNITY ACKNOW- LEDGMENT.\u2014 ”(i) INCLUSION IN BIRTH RECORDS.\u2014Procedures under which the name of the father shall be included on the record of birth of the child of unmarried parents only if\u2014 ”(I) the father and mother have signed a vol- untary acknowledgment of paternity; or ”(II) a court or an administrative agency of competent jurisdiction has issued an adjudication of paternity. Nothing in this clause shall preclude a State agency from obtaining an admission of paternity from the father for submission in a judicial or administrative proceeding, or prohibit the issuance of an order in a judicial or administrative proceeding which bases a legal finding of paternity on an admission of paternity 110 STAT. 2229PUBLIC LAW 104 193\u2014AUG. 22, 1996 by the father and any other additional showing required by State law. ”(ii) LEGAL FINDING OF PATERNITY.\u2014Procedures under which a signed voluntary acknowledgment of paternity is considered a legal finding of paternity, subject to the right of any signatory to rescind the acknowledgment within the earlier of\u2014 ”(I) 60 days; or ”(II) the date of an administrative or judicial proceeding relating to the child (including a proceeding to establish a support order) in which the signatory is a party. ”(iii) CONTEST.\u2014Procedures under which, after the 60-day period referred to in clause (ii), a signed vol- untary acknowledgment of paternity may be challenged in court only on the basis of fraud, duress, or material mistake of fact, with the burden of proof upon the challenger, and under which the legal responsibilities (including child support obligations) of any signatory arising from the acknowledgment may not be sus- pended during the challenge, except for good cause shown. ”(E) BAR ON ACKNOWLEDGMENT RATIFICATION PRO- CEEDINGS.\u2014Procedures under which judicial or administra- tive proceedings are not required or permitted to ratify an unchallenged acknowledgment of paternity. ”(F) ADMISSIBILITY OF GENETIC TESTING RESULTS.\u2014 Procedures\u2014 ”(i) requiring the admission into evidence, for pur- poses of establishing paternity, of the results of any genetic test that is\u2014 ”(I) of a type generally acknowledged as reli- able by accreditation bodies designated by the Sec- retary; and ”(II) performed by a laboratory approved by such an accreditation body; ”(ii) requiring an objection to genetic testing results to be made in writing not later than a specified number of days before any hearing at which the results may be introduced into evidence (or, at State option, not later than a specified number of days after receipt of the results); and ”(iii) making the test results admissible as evi- dence of paternity without the need for foundation testimony or other proof of authenticity or accuracy, unless objection is made. ”(G) PRESUMPTION OF PATERNITY IN CERTAIN CASES.\u2014 Procedures which create a rebuttable or, at the option of the State, conclusive presumption of paternity upon genetic testing results indicating a threshold probability that the alleged father is the father of the child. ”(H) DEFAULT ORDERS.\u2014Procedures requiring a default order to be entered in a paternity case upon a showing of service of process on the defendant and any additional showing required by State law. 110 STAT. 2230 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(I) NO RIGHT TO JURY TRIAL.\u2014Procedures providing that the parties to an action to establish paternity are not entitled to a trial by jury. ”(J) TEMPORARY SUPPORT ORDER BASED ON PROBABLE PATERNITY IN CONTESTED CASES.\u2014Procedures which require that a temporary order be issued, upon motion by a party, requiring the provision of child support pending an administrative or judicial determination of parentage, if there is clear and convincing evidence of paternity (on the basis of genetic tests or other evidence). ”(K) PROOF OF CERTAIN SUPPORT AND PATERNITY ESTABLISHMENT COSTS.\u2014Procedures under which bills for pregnancy, childbirth, and genetic testing are admissible as evidence without requiring third-party foundation testi- mony, and shall constitute prima facie evidence of amounts incurred for such services or for testing on behalf of the child. ”(L) STANDING OF PUTATIVE FATHERS.\u2014Procedures ensuring that the putative father has a reasonable oppor- tunity to initiate a paternity action. ”(M) FILING OF ACKNOWLEDGMENTS AND ADJUDICATIONS IN STATE REGISTRY OF BIRTH RECORDS.\u2014Procedures under which voluntary acknowledgments and adjudications of paternity by judicial or administrative processes are filed with the State registry of birth records for comparison with information in the State case registry.”. (b) NATIONAL PATERNITY ACKNOWLEDGMENT AFFIDAVIT.\u2014Sec- tion 452(a)(7) (42 U.S.C. 652(a)(7)) is amended by inserting ”, and specify the minimum requirements of an affidavit to be used for the voluntary acknowledgment of paternity which shall include the Social Security number of each parent and, after consultation with the States, other common elements as determined by such designee” before the semicolon. (c) CONFORMING AMENDMENT.\u2014Section 468 (42 U.S.C. 668) is amended by striking ”a simple civil process for voluntarily acknowl- edging paternity and”. SEC. 332. OUTREACH FOR VOLUNTARY PATERNITY ESTABLISHMENT. Section 454(23) (42 U.S.C. 654(23)) is amended by inserting ”and will publicize the availability and encourage the use of proce- dures for voluntary establishment of paternity and child support by means the State deems appropriate” before the semicolon. SEC. 333. COOPERATION BY APPLICANTS FOR AND RECIPIENTS OF PART A ASSISTANCE. Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(a), and 313(a) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (27); (2) by striking the period at the end of paragraph (28) and inserting ”; and”; and (3) by inserting after paragraph (28) the following new paragraph: ”(29) provide that the State agency responsible for admin- istering the State plan\u2014 ”(A) shall make the determination (and redetermina- tion at appropriate intervals) as to whether an individual who has applied for or is receiving assistance under the State program funded under part A of this title or the 110 STAT. 2231PUBLIC LAW 104 193\u2014AUG. 22, 1996 State program under title XIX is cooperating in good faith with the State in establishing the paternity of, or in establishing, modifying, or enforcing a support order for, any child of the individual by providing the State agency with the name of, and such other information as the State agency may require with respect to, the noncustodial parent of the child, subject to good cause and other exceptions which\u2014 ”(i) shall be defined, taking into account the best interests of the child, and ”(ii) shall be applied in each case, by, at the option of the State, the State agency administer- ing the State program under part A, this part, or title XIX; ”(B) shall require the individual to supply additional necessary information and appear at interviews, hearings, and legal proceedings; ”(C) shall require the individual and the child to submit to genetic tests pursuant to judicial or administrative order; ”(D) may request that the individual sign a voluntary acknowledgment of paternity, after notice of the rights and consequences of such an acknowledgment, but may not require the individual to sign an acknowledgment or otherwise relinquish the right to genetic tests as a condition of cooperation and eligibility for assistance under the State program funded under part A, or the State program under title XIX; and ”(E) shall promptly notify the individual, the State agency administering the State program funded under part A, and the State agency administering the State program under title XIX, of each such determination, and if non- cooperation is determined, the basis therefor.”. Subtitle E\u2014Program Administration and Funding SEC. 341. PERFORMANCE-BASED INCENTIVES AND PENALTIES. (a) DEVELOPMENT OF NEW SYSTEM.\u2014The Secretary of Health and Human Services, in consultation with State directors of pro- grams under part D of title IV of the Social Security Act, shall develop a new incentive system to replace, in a revenue neutral manner, the system under section 458 of such Act. The new system shall provide additional payments to any State based on such State’s performance under such a program. Not later than March 1, 1997, the Secretary shall report on the new system to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate. (b) CONFORMING AMENDMENTS TO PRESENT SYSTEM.\u2014Section 458 (42 U.S.C. 658) is amended\u2014 (1) in subsection (a), by striking ”aid to families with dependent children under a State plan approved under part A of this title” and inserting ”assistance under a program funded under part A”; (2) in subsection (b)(1)(A), by striking ”section 402(a)(26)” and inserting ”section 408(a)(4)”; (3) in subsections (b) and (c)\u2014 Reports. 42 USC 658 note. Notification. 110 STAT. 2232 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) by striking ”AFDC collections” each place it appears and inserting ”title IV A collections”, and (B) by striking ”non-AFDC collections” each place it appears and inserting ”non-title IV A collections”; and (4) in subsection (c), by striking ”combined AFDC\/non- AFDC administrative costs” both places it appears and inserting ”combined title IV A\/non-title IV A administrative costs”. (c) CALCULATION OF PATERNITY ESTABLISHMENT PERCENTAGE.\u2014 (1) Section 452(g)(1)(A) (42 U.S.C. 652(g)(1)(A)) is amended by striking ”75” and inserting ”90”. (2) Section 452(g)(1) (42 U.S.C. 652(g)(1)) is amended\u2014 (A) by redesignating subparagraphs (B) through (E) as subparagraphs (C) through (F), respectively, and by inserting after subparagraph (A) the following new subparagraph: ”(B) for a State with a paternity establishment percentage of not less than 75 percent but less than 90 percent for such fiscal year, the paternity establishment percentage of the State for the immediately preceding fiscal year plus 2 percentage points;”; and (B) by adding at the end the following new flush sentence: ”In determining compliance under this section, a State may use as its paternity establishment percentage either the State’s IV D paternity establishment percentage (as defined in paragraph (2)(A)) or the State’s statewide paternity establishment percentage (as defined in paragraph (2)(B)).”. (3) Section 452(g)(2) (42 U.S.C. 652(g)(2)) is amended\u2014 (A) in subparagraph (A)\u2014 (i) in the matter preceding clause (i)\u2014 (I) by striking ”paternity establishment percentage” and inserting ”IV D paternity establishment percentage”; and (II) by striking ”(or all States, as the case may be)”; and (ii) by striking ”and” at the end; and (B) by redesignating subparagraph (B) as subpara- graph (C) and by inserting after subparagraph (A) the following new subparagraph: ”(B) the term ‘statewide paternity establishment percent- age’ means, with respect to a State for a fiscal year, the ratio (expressed as a percentage) that the total number of minor children\u2014 ”(i) who have been born out of wedlock, and ”(ii) the paternity of whom has been established or acknowledged during the fiscal year, bears to the total number of children born out of wedlock during the preceding fiscal year; and”. (4) Section 452(g)(3) (42 U.S.C. 652(g)(3)) is amended\u2014 (A) by striking subparagraph (A) and redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively; and (B) in subparagraph (A) (as so redesignated), by strik- ing ”the percentage of children born out-of-wedlock in a State” and inserting ”the percentage of children in a State who are born out of wedlock or for whom support has not been established”. 110 STAT. 2233PUBLIC LAW 104 193\u2014AUG. 22, 1996 (d) EFFECTIVE DATES.\u2014 (1) INCENTIVE ADJUSTMENTS.\u2014 (A) IN GENERAL.\u2014The system developed under sub- section (a) and the amendments made by subsection (b) shall become effective on October 1, 1999, except to the extent provided in subparagraph (B). (B) APPLICATION OF SECTION 458.\u2014Section 458 of the Social Security Act, as in effect on the day before the date of the enactment of this section, shall be effective for purposes of incentive payments to States for fiscal years before fiscal year 2000. (2) PENALTY REDUCTIONS.\u2014The amendments made by sub- section (c) shall become effective with respect to calendar quar- ters beginning on or after the date of the enactment of this Act. SEC. 342. FEDERAL AND STATE REVIEWS AND AUDITS. (a) STATE AGENCY ACTIVITIES.\u2014Section 454 (42 U.S.C. 654) is amended\u2014 (1) in paragraph (14), by striking ”(14)” and inserting ”(14)(A)”; (2) by redesignating paragraph (15) as subparagraph (B) of paragraph (14); and (3) by inserting after paragraph (14) the following new paragraph: ”(15) provide for\u2014 ”(A) a process for annual reviews of and reports to the Secretary on the State program operated under the State plan approved under this part, including such information as may be necessary to measure State compli- ance with Federal requirements for expedited procedures, using such standards and procedures as are required by the Secretary, under which the State agency will determine the extent to which the program is operated in compliance with this part; and ”(B) a process of extracting from the automated data processing system required by paragraph (16) and transmitting to the Secretary data and calculations concerning the levels of accomplishment (and rates of improvement) with respect to applicable performance indicators (including paternity establishment percentages) to the extent necessary for purposes of sections 452(g) and 458;”. (b) FEDERAL ACTIVITIES.\u2014Section 452(a)(4) (42 U.S.C. 652(a)(4)) is amended to read as follows: ”(4)(A) review data and calculations transmitted by State agencies pursuant to section 454(15)(B) on State program accomplishments with respect to performance indicators for purposes of subsection (g) of this section and section 458; ”(B) review annual reports submitted pursuant to section 454(15)(A) and, as appropriate, provide to the State comments, recommendations for additional or alternative corrective actions, and technical assistance; and ”(C) conduct audits, in accordance with the Government auditing standards of the Comptroller General of the United States\u2014 42 USC 652 note. 42 USC 658 note. 110 STAT. 2234 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(i) at least once every 3 years (or more frequently, in the case of a State which fails to meet the requirements of this part concerning performance standards and reliabil- ity of program data) to assess the completeness, reliability, and security of the data and the accuracy of the reporting systems used in calculating performance indicators under subsection (g) of this section and section 458; ”(ii) of the adequacy of financial management of the State program operated under the State plan approved under this part, including assessments of\u2014 ”(I) whether Federal and other funds made avail- able to carry out the State program are being appro- priately expended, and are properly and fully accounted for; and ”(II) whether collections and disbursements of sup- port payments are carried out correctly and are fully accounted for; and ”(iii) for such other purposes as the Secretary may find necessary;”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall be effective with respect to calendar quarters beginning 12 months or more after the date of the enactment of this Act. SEC. 343. REQUIRED REPORTING PROCEDURES. (a) ESTABLISHMENT.\u2014Section 452(a)(5) (42 U.S.C. 652(a)(5)) is amended by inserting ”, and establish procedures to be followed by States for collecting and reporting information required to be provided under this part, and establish uniform definitions (includ- ing those necessary to enable the measurement of State compliance with the requirements of this part relating to expedited processes) to be applied in following such procedures” before the semicolon. (b) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(a), 313(a), and 333 of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (28); (2) by striking the period at the end of paragraph (29) and inserting ”; and”; and (3) by adding after paragraph (29) the following new para- graph: ”(30) provide that the State shall use the definitions estab- lished under section 452(a)(5) in collecting and reporting information as required under this part.”. SEC. 344. AUTOMATED DATA PROCESSING REQUIREMENTS. (a) REVISED REQUIREMENTS.\u2014 (1) IN GENERAL.\u2014Section 454(16) (42 U.S.C. 654(16)) is amended\u2014 (A) by striking ”, at the option of the State,”; (B) by inserting ”and operation by the State agency” after ”for the establishment”; (C) by inserting ”meeting the requirements of section 454A” after ”information retrieval system”; (D) by striking ”in the State and localities thereof, so as (A)” and inserting ”so as”; (E) by striking ”(i)”; and (F) by striking ”(including” and all that follows and inserting a semicolon. 42 USC 652 note. 110 STAT. 2235PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) AUTOMATED DATA PROCESSING.\u2014Part D of title IV (42 U.S.C. 651 669) is amended by inserting after section 454 the following new section: ”SEC. 454A. AUTOMATED DATA PROCESSING. ”(a) IN GENERAL.\u2014In order for a State to meet the requirements of this section, the State agency administering the State program under this part shall have in operation a single statewide automated data processing and information retrieval system which has the capability to perform the tasks specified in this section with the frequency and in the manner required by or under this part. ”(b) PROGRAM MANAGEMENT.\u2014The automated system required by this section shall perform such functions as the Secretary may specify relating to management of the State program under this part, including\u2014 ”(1) controlling and accounting for use of Federal, State, and local funds in carrying out the program; and ”(2) maintaining the data necessary to meet Federal report- ing requirements under this part on a timely basis. ”(c) CALCULATION OF PERFORMANCE INDICATORS.\u2014In order to enable the Secretary to determine the incentive payments and penalty adjustments required by sections 452(g) and 458, the State agency shall\u2014 ”(1) use the automated system\u2014 ”(A) to maintain the requisite data on State perform- ance with respect to paternity establishment and child support enforcement in the State; and ”(B) to calculate the paternity establishment percent- age for the State for each fiscal year; and ”(2) have in place systems controls to ensure the com- pleteness and reliability of, and ready access to, the data described in paragraph (1)(A), and the accuracy of the calcula- tions described in paragraph (1)(B). ”(d) INFORMATION INTEGRITY AND SECURITY.\u2014The State agency shall have in effect safeguards on the integrity, accuracy, and completeness of, access to, and use of data in the automated system required by this section, which shall include the following (in addi- tion to such other safeguards as the Secretary may specify in regulations): ”(1) POLICIES RESTRICTING ACCESS.\u2014Written policies concerning access to data by State agency personnel, and shar- ing of data with other persons, which\u2014 ”(A) permit access to and use of data only to the extent necessary to carry out the State program under this part; and ”(B) specify the data which may be used for particular program purposes, and the personnel permitted access to such data. ”(2) SYSTEMS CONTROLS.\u2014Systems controls (such as pass- words or blocking of fields) to ensure strict adherence to the policies described in paragraph (1). ”(3) MONITORING OF ACCESS.\u2014Routine monitoring of access to and use of the automated system, through methods such as audit trails and feedback mechanisms, to guard against and promptly identify unauthorized access or use. ”(4) TRAINING AND INFORMATION.\u2014Procedures to ensure that all personnel (including State and local agency staff and 42 USC 654a. 110 STAT. 2236 PUBLIC LAW 104 193\u2014AUG. 22, 1996 contractors) who may have access to or be required to use confidential program data are informed of applicable require- ments and penalties (including those in section 6103 of the Internal Revenue Code of 1986), and are adequately trained in security procedures. ”(5) PENALTIES.\u2014Administrative penalties (up to and including dismissal from employment) for unauthorized access to, or disclosure or use of, confidential data.”. (3) REGULATIONS.\u2014The Secretary of Health and Human Services shall prescribe final regulations for implementation of section 454A of the Social Security Act not later than 2 years after the date of the enactment of this Act. (4) IMPLEMENTATION TIMETABLE.\u2014Section 454(24) (42 U.S.C. 654(24)), as amended by section 303(a)(1) of this Act, is amended to read as follows: ”(24) provide that the State will have in effect an automated data processing and information retrieval system\u2014 ”(A) by October 1, 1997, which meets all require- ments of this part which were enacted on or before the date of enactment of the Family Support Act of 1988, and ”(B) by October 1, 2000, which meets all require- ments of this part enacted on or before the date of the enactment of the Personal Responsibility and Work Oppor- tunity Act of 1996, except that such deadline shall be extended by 1 day for each day (if any) by which the Secretary fails to meet the deadline imposed by section 344(a)(3) of the Personal Responsibility and Work Oppor- tunity Reconciliation Act of 1996;”. (b) SPECIAL FEDERAL MATCHING RATE FOR DEVELOPMENT COSTS OF AUTOMATED SYSTEMS.\u2014 (1) IN GENERAL.\u2014Section 455(a) (42 U.S.C. 655(a)) is amended\u2014 (A) in paragraph (1)(B)\u2014 (i) by striking ”90 percent” and inserting ”the per- cent specified in paragraph (3)”; (ii) by striking ”so much of”; and (iii) by striking ”which the Secretary” and all that follows and inserting ”, and”; and (B) by adding at the end the following new paragraph: ”(3)(A) The Secretary shall pay to each State, for each quarter in fiscal years 1996 and 1997, 90 percent of so much of the State expenditures described in paragraph (1)(B) as the Secretary finds are for a system meeting the requirements specified in section 454(16) (as in effect on September 30, 1995) but limited to the amount approved for States in the advance planning documents of such States submitted on or before September 30, 1995. ”(B)(i) The Secretary shall pay to each State, for each quarter in fiscal years 1996 through 2001, the percentage specified in clause (ii) of so much of the State expenditures described in paragraph (1)(B) as the Secretary finds are for a system meeting the require- ments of sections 454(16) and 454A. ”(ii) The percentage specified in this clause is 80 percent.”. (2) TEMPORARY LIMITATION ON PAYMENTS UNDER SPECIAL FEDERAL MATCHING RATE.\u2014 (A) IN GENERAL.\u2014The Secretary of Health and Human Services may not pay more than $400,000,000 in the aggre- 42 USC 655 note. 42 USC 654a note. 110 STAT. 2237PUBLIC LAW 104 193\u2014AUG. 22, 1996 gate under section 455(a)(3)(B) of the Social Security Act for fiscal years 1996 through 2001. (B) ALLOCATION OF LIMITATION AMONG STATES.\u2014The total amount payable to a State under section 455(a)(3)(B) of such Act for fiscal years 1996 through 2001 shall not exceed the limitation determined for the State by the Sec- retary of Health and Human Services in regulations. (C) ALLOCATION FORMULA.\u2014The regulations referred to in subparagraph (B) shall prescribe a formula for allocat- ing the amount specified in subparagraph (A) among States with plans approved under part D of title IV of the Social Security Act, which shall take into account\u2014 (i) the relative size of State caseloads under such part; and (ii) the level of automation needed to meet the automated data processing requirements of such part. (c) CONFORMING AMENDMENT.\u2014Section 123(c) of the Family Support Act of 1988 (102 Stat. 2352; Public Law 100 485) is repealed. SEC. 345. TECHNICAL ASSISTANCE. (a) FOR TRAINING OF FEDERAL AND STATE STAFF, RESEARCH AND DEMONSTRATION PROGRAMS, AND SPECIAL PROJECTS OF REGIONAL OR NATIONAL SIGNIFICANCE.\u2014Section 452 (42 U.S.C. 652) is amended by adding at the end the following new subsection: ”(j) Out of any money in the Treasury of the United States not otherwise appropriated, there is hereby appropriated to the Secretary for each fiscal year an amount equal to 1 percent of the total amount paid to the Federal Government pursuant to section 457(a) during the immediately preceding fiscal year (as determined on the basis of the most recent reliable data available to the Secretary as of the end of the third calendar quarter following the end of such preceding fiscal year), to cover costs incurred by the Secretary for\u2014 ”(1) information dissemination and technical assistance to States, training of State and Federal staff, staffing studies, and related activities needed to improve programs under this part (including technical assistance concerning State automated systems required by this part); and ”(2) research, demonstration, and special projects of regional or national significance relating to the operation of State programs under this part. The amount appropriated under this subsection shall remain avail- able until expended.”. (b) OPERATION OF FEDERAL PARENT LOCATOR SERVICE.\u2014Section 453 (42 U.S.C. 653), as amended by section 316 of this Act, is amended by adding at the end the following new subsection: ”(o) RECOVERY OF COSTS.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there is hereby appropriated to the Secretary for each fiscal year an amount equal to 2 percent of the total amount paid to the Federal Government pursuant to section 457(a) during the immediately preceding fiscal year (as determined on the basis of the most recent reliable data available to the Secretary as of the end of the third calendar quarter following the end of such preceding fiscal year), to cover costs incurred by the Secretary for operation of the Federal Parent 42 USC 655, 655 note. 110 STAT. 2238 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Locator Service under this section, to the extent such costs are not recovered through user fees.”. SEC. 346. REPORTS AND DATA COLLECTION BY THE SECRETARY. (a) ANNUAL REPORT TO CONGRESS.\u2014 (1) Section 452(a)(10)(A) (42 U.S.C. 652(a)(10)(A)) is amended\u2014 (A) by striking ”this part;” and inserting ”this part, including\u2014”; and (B) by adding at the end the following new clauses: ”(i) the total amount of child support payments collected as a result of services furnished during the fiscal year to individuals receiving services under this part; ”(ii) the cost to the States and to the Federal Government of so furnishing the services; and ”(iii) the number of cases involving families\u2014 ”(I) who became ineligible for assistance under State programs funded under part A during a month in the fiscal year; and ”(II) with respect to whom a child support payment was received in the month;”. (2) Section 452(a)(10)(C) (42 U.S.C. 652(a)(10)(C)) is amended\u2014 (A) in the matter preceding clause (i)\u2014 (i) by striking ”with the data required under each clause being separately stated for cases” and inserting ”separately stated for cases”; (ii) by striking ”cases where the child was formerly receiving” and inserting ”or formerly received”; (iii) by inserting ”or 1912” after ”471(a)(17)”; and (iv) by inserting ”for” before ”all other”; (B) in each of clauses (i) and (ii), by striking ”, and the total amount of such obligations”; (C) in clause (iii), by striking ”described in” and all that follows and inserting ”in which support was collected during the fiscal year;”; (D) by striking clause (iv); and (E) by redesignating clause (v) as clause (vii), and inserting after clause (iii) the following new clauses: ”(iv) the total amount of support collected during such fiscal year and distributed as current support; ”(v) the total amount of support collected during such fiscal year and distributed as arrearages; ”(vi) the total amount of support due and unpaid for all fiscal years; and”. (3) Section 452(a)(10)(G) (42 U.S.C. 652(a)(10)(G)) is amended by striking ”on the use of Federal courts and”. (4) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended\u2014 (A) in subparagraph (H), by striking ”and”; (B) in subparagraph (I), by striking the period and inserting ”; and”; and (C) by inserting after subparagraph (I) the following new subparagraph: ”(J) compliance, by State, with the standards estab- lished pursuant to subsections (h) and (i).”. 110 STAT. 2239PUBLIC LAW 104 193\u2014AUG. 22, 1996 (5) Section 452(a)(10) (42 U.S.C. 652(a)(10)) is amended by striking all that follows subparagraph (J), as added by paragraph (4). (b) EFFECTIVE DATE.\u2014The amendments made by subsection (a) shall be effective with respect to fiscal year 1997 and succeeding fiscal years. Subtitle F\u2014Establishment and Modification of Support Orders SEC. 351. SIMPLIFIED PROCESS FOR REVIEW AND ADJUSTMENT OF CHILD SUPPORT ORDERS. Section 466(a)(10) (42 U.S.C. 666(a)(10)) is amended to read as follows: ”(10) REVIEW AND ADJUSTMENT OF SUPPORT ORDERS UPON REQUEST.\u2014 ”(A) 3-YEAR CYCLE.\u2014 ”(i) IN GENERAL.\u2014Procedures under which every 3 years (or such shorter cycle as the State may deter- mine), upon the request of either parent, or, if there is an assignment under part A, upon the request of the State agency under the State plan or of either parent, the State shall with respect to a support order being enforced under this part, taking into account the best interests of the child involved\u2014 ”(I) review and, if appropriate, adjust the order in accordance with the guidelines established pursuant to section 467(a) if the amount of the child support award under the order differs from the amount that would be awarded in accordance with the guidelines; ”(II) apply a cost-of-living adjustment to the order in accordance with a formula developed by the State; or ”(III) use automated methods (including auto- mated comparisons with wage or State income tax data) to identify orders eligible for review, conduct the review, identify orders eligible for adjustment, and apply the appropriate adjustment to the orders eligible for adjustment under any threshold that may be established by the State. ”(ii) OPPORTUNITY TO REQUEST REVIEW OF ADJUST- MENT.\u2014If the State elects to conduct the review under subclause (II) or (III) of clause (i), procedures which permit either party to contest the adjustment, within 30 days after the date of the notice of the adjustment, by making a request for review and, if appropriate, adjustment of the order in accordance with the child support guidelines established pursuant to section 467(a). ”(iii) NO PROOF OF CHANGE IN CIRCUMSTANCES NECESSARY IN 3-YEAR CYCLE REVIEW.\u2014Procedures which provide that any adjustment under clause (i) shall be made without a requirement for proof or show- ing of a change in circumstances. 110 STAT. 2240 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) PROOF OF SUBSTANTIAL CHANGE IN CIRCUMSTANCES NECESSARY IN REQUEST FOR REVIEW OUTSIDE 3-YEAR CYCLE.\u2014Procedures under which, in the case of a request for a review, and if appropriate, an adjustment outside the 3-year cycle (or such shorter cycle as the State may determine) under clause (i), the State shall review and, if the requesting party demonstrates a substantial change in circumstances, adjust the order in accordance with the guidelines established pursuant to section 467(a). ”(C) NOTICE OF RIGHT TO REVIEW.\u2014Procedures which require the State to provide notice not less than once every 3 years to the parents subject to the order informing the parents of their right to request the State to review and, if appropriate, adjust the order pursuant to this para- graph. The notice may be included in the order.”. SEC. 352. FURNISHING CONSUMER REPORTS FOR CERTAIN PURPOSES RELATING TO CHILD SUPPORT. Section 604 of the Fair Credit Reporting Act (15 U.S.C. 1681b) is amended by adding at the end the following new paragraphs: ”(4) In response to a request by the head of a State or local child support enforcement agency (or a State or local government official authorized by the head of such an agency), if the person making the request certifies to the consumer reporting agency that\u2014 ”(A) the consumer report is needed for the purpose of establishing an individual’s capacity to make child support payments or determining the appropriate level of such pay- ments; ”(B) the paternity of the consumer for the child to which the obligation relates has been established or acknowledged by the consumer in accordance with State laws under which the obligation arises (if required by those laws); ”(C) the person has provided at least 10 days’ prior notice to the consumer whose report is requested, by certified or registered mail to the last known address of the consumer, that the report will be requested; and ”(D) the consumer report will be kept confidential, will be used solely for a purpose described in subparagraph (A), and will not be used in connection with any other civil, adminis- trative, or criminal proceeding, or for any other purpose. ”(5) To an agency administering a State plan under section 454 of the Social Security Act (42 U.S.C. 654) for use to set an initial or modified child support award.”. SEC. 353. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL RECORDS TO STATE CHILD SUPPORT ENFORCEMENT AGENCIES IN CHILD SUPPORT CASES. Part D of title IV (42 U.S.C. 651 669) is amended by adding at the end the following: ”SEC. 469A. NONLIABILITY FOR FINANCIAL INSTITUTIONS PROVIDING FINANCIAL RECORDS TO STATE CHILD SUPPORT ENFORCEMENT AGENCIES IN CHILD SUPPORT CASES. ”(a) IN GENERAL.\u2014Notwithstanding any other provision of Federal or State law, a financial institution shall not be liable under any Federal or State law to any person for disclosing any financial record of an individual to a State child support enforce- 44 USC 649s. 110 STAT. 2241PUBLIC LAW 104 193\u2014AUG. 22, 1996 ment agency attempting to establish, modify, or enforce a child support obligation of such individual. ”(b) PROHIBITION OF DISCLOSURE OF FINANCIAL RECORD OBTAINED BY STATE CHILD SUPPORT ENFORCEMENT AGENCY.\u2014A State child support enforcement agency which obtains a financial record of an individual from a financial institution pursuant to subsection (a) may disclose such financial record only for the pur- pose of, and to the extent necessary in, establishing, modifying, or enforcing a child support obligation of such individual. ”(c) CIVIL DAMAGES FOR UNAUTHORIZED DISCLOSURE.\u2014 ”(1) DISCLOSURE BY STATE OFFICER OR EMPLOYEE.\u2014If any person knowingly, or by reason of negligence, discloses a finan- cial record of an individual in violation of subsection (b), such individual may bring a civil action for damages against such person in a district court of the United States. ”(2) NO LIABILITY FOR GOOD FAITH BUT ERRONEOUS INTERPRETATION.\u2014No liability shall arise under this subsection with respect to any disclosure which results from a good faith, but erroneous, interpretation of subsection (b). ”(3) DAMAGES.\u2014In any action brought under paragraph (1), upon a finding of liability on the part of the defendant, the defendant shall be liable to the plaintiff in an amount equal to the sum of\u2014 ”(A) the greater of\u2014 ”(i) $1,000 for each act of unauthorized disclosure of a financial record with respect to which such defend- ant is found liable; or ”(ii) the sum of\u2014 ”(I) the actual damages sustained by the plaintiff as a result of such unauthorized disclo- sure; plus ”(II) in the case of a willful disclosure or a disclosure which is the result of gross negligence, punitive damages; plus ”(B) the costs (including attorney’s fees) of the action. ”(d) DEFINITIONS.\u2014For purposes of this section\u2014 ”(1) FINANCIAL INSTITUTION.\u2014The term ‘financial institu- tion’ means\u2014 ”(A) a depository institution, as defined in section 3(c) of the Federal Deposit Insurance Act (12 U.S.C. 1813(c)); ”(B) an institution-affiliated party, as defined in section 3(u) of such Act (12 U.S.C. 1813(u)); ”(C) any Federal credit union or State credit union, as defined in section 101 of the Federal Credit Union Act (12 U.S.C. 1752), including an institution-affiliated party of such a credit union, as defined in section 206(r) of such Act (12 U.S.C. 1786(r)); and ”(D) any benefit association, insurance company, safe deposit company, money-market mutual fund, or similar entity authorized to do business in the State. ”(2) FINANCIAL RECORD.\u2014The term ‘financial record’ has the meaning given such term in section 1101 of the Right to Financial Privacy Act of 1978 (12 U.S.C. 3401).”. 110 STAT. 2242 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Subtitle G\u2014Enforcement of Support Orders SEC. 361. INTERNAL REVENUE SERVICE COLLECTION OF ARREAR- AGES. (a) COLLECTION OF FEES.\u2014Section 6305(a) of the Internal Reve- nue Code of 1986 (relating to collection of certain liability) is amended\u2014 (1) by striking ”and” at the end of paragraph (3); (2) by striking the period at the end of paragraph (4) and inserting ”, and”; (3) by adding at the end the following new paragraph: ”(5) no additional fee may be assessed for adjustments to an amount previously certified pursuant to such section 452(b) with respect to the same obligor.”; and (4) by striking ”Secretary of Health, Education, and Wel- fare” each place it appears and inserting ”Secretary of Health and Human Services”. (b) EFFECTIVE DATE.\u2014The amendments made by this section shall become effective October 1, 1997. SEC. 362. AUTHORITY TO COLLECT SUPPORT FROM FEDERAL EMPLOYEES. (a) CONSOLIDATION AND STREAMLINING OF AUTHORITIES.\u2014Sec- tion 459 (42 U.S.C. 659) is amended to read as follows: ”SEC. 459. CONSENT BY THE UNITED STATES TO INCOME WITHHOLD- ING, GARNISHMENT, AND SIMILAR PROCEEDINGS FOR ENFORCEMENT OF CHILD SUPPORT AND ALIMONY OBLIGATIONS. ”(a) CONSENT TO SUPPORT ENFORCEMENT.\u2014Notwithstanding any other provision of law (including section 207 of this Act and section 5301 of title 38, United States Code), effective January 1, 1975, moneys (the entitlement to which is based upon remunera- tion for employment) due from, or payable by, the United States or the District of Columbia (including any agency, subdivision, or instrumentality thereof) to any individual, including members of the Armed Forces of the United States, shall be subject, in like manner and to the same extent as if the United States or the District of Columbia were a private person, to withholding in accordance with State law enacted pursuant to subsections (a)(1) and (b) of section 466 and regulations of the Secretary under such subsections, and to any other legal process brought, by a State agency administering a program under a State plan approved under this part or by an individual obligee, to enforce the legal obligation of the individual to provide child support or alimony. ”(b) CONSENT TO REQUIREMENTS APPLICABLE TO PRIVATE PER- SON.\u2014With respect to notice to withhold income pursuant to sub- section (a)(1) or (b) of section 466, or any other order or process to enforce support obligations against an individual (if the order or process contains or is accompanied by sufficient data to permit prompt identification of the individual and the moneys involved), each governmental entity specified in subsection (a) shall be subject to the same requirements as would apply if the entity were a private person, except as otherwise provided in this section. 26 USC 6305 note. 110 STAT. 2243PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(c) DESIGNATION OF AGENT; RESPONSE TO NOTICE OR PROCESS\u2014 ”(1) DESIGNATION OF AGENT.\u2014The head of each agency subject to this section shall\u2014 ”(A) designate an agent or agents to receive orders and accept service of process in matters relating to child support or alimony; and ”(B) annually publish in the Federal Register the des- ignation of the agent or agents, identified by title or posi- tion, mailing address, and telephone number. ”(2) RESPONSE TO NOTICE OR PROCESS.\u2014If an agent des- ignated pursuant to paragraph (1) of this subsection receives notice pursuant to State procedures in effect pursuant to sub- section (a)(1) or (b) of section 466, or is effectively served with any order, process, or interrogatory, with respect to an individual’s child support or alimony payment obligations, the agent shall\u2014 ”(A) as soon as possible (but not later than 15 days) thereafter, send written notice of the notice or service (together with a copy of the notice or service) to the individ- ual at the duty station or last-known home address of the individual; ”(B) within 30 days (or such longer period as may be prescribed by applicable State law) after receipt of a notice pursuant to such State procedures, comply with all applicable provisions of section 466; and ”(C) within 30 days (or such longer period as may be prescribed by applicable State law) after effective service of any other such order, process, or interrogatory, respond to the order, process, or interrogatory. ”(d) PRIORITY OF CLAIMS.\u2014If a governmental entity specified in subsection (a) receives notice or is served with process, as pro- vided in this section, concerning amounts owed by an individual to more than 1 person\u2014 ”(1) support collection under section 466(b) must be given priority over any other process, as provided in section 466(b)(7); ”(2) allocation of moneys due or payable to an individual among claimants under section 466(b) shall be governed by section 466(b) and the regulations prescribed under such sec- tion; and ”(3) such moneys as remain after compliance with para- graphs (1) and (2) shall be available to satisfy any other such processes on a first-come, first-served basis, with any such process being satisfied out of such moneys as remain after the satisfaction of all such processes which have been previously served. ”(e) NO REQUIREMENT TO VARY PAY CYCLES.\u2014A governmental entity that is affected by legal process served for the enforcement of an individual’s child support or alimony payment obligations shall not be required to vary its normal pay and disbursement cycle in order to comply with the legal process. ”(f) RELIEF FROM LIABILITY.\u2014 ”(1) Neither the United States, nor the government of the District of Columbia, nor any disbursing officer shall be liable with respect to any payment made from moneys due or payable from the United States to any individual pursuant to legal process regular on its face, if the payment is made in accordance Federal Register, publication. 110 STAT. 2244 PUBLIC LAW 104 193\u2014AUG. 22, 1996 with this section and the regulations issued to carry out this section. ”(2) No Federal employee whose duties include taking actions necessary to comply with the requirements of subsection (a) with regard to any individual shall be subject under any law to any disciplinary action or civil or criminal liability or penalty for, or on account of, any disclosure of information made by the employee in connection with the carrying out of such actions. ”(g) REGULATIONS.\u2014Authority to promulgate regulations for the implementation of this section shall, insofar as this section applies to moneys due from (or payable by)\u2014 ”(1) the United States (other than the legislative or judicial branches of the Federal Government) or the government of the District of Columbia, be vested in the President (or the designee of the President); ”(2) the legislative branch of the Federal Government, be vested jointly in the President pro tempore of the Senate and the Speaker of the House of Representatives (or their des- ignees), and ”(3) the judicial branch of the Federal Government, be vested in the Chief Justice of the United States (or the designee of the Chief Justice). ”(h) MONEYS SUBJECT TO PROCESS.\u2014 ”(1) IN GENERAL.\u2014Subject to paragraph (2), moneys paid or payable to an individual which are considered to be based upon remuneration for employment, for purposes of this section\u2014 ”(A) consist of\u2014 ”(i) compensation paid or payable for personal services of the individual, whether the compensation is denominated as wages, salary, commission, bonus, pay, allowances, or otherwise (including severance pay, sick pay, and incentive pay); ”(ii) periodic benefits (including a periodic benefit as defined in section 228(h)(3)) or other payments\u2014 ”(I) under the insurance system established by title II; ”(II) under any other system or fund estab- lished by the United States which provides for the payment of pensions, retirement or retired pay, annuities, dependents’ or survivors’ benefits, or similar amounts payable on account of personal services performed by the individual or any other individual; ”(III) as compensation for death under any Federal program; ”(IV) under any Federal program established to provide ‘black lung’ benefits; or ”(V) by the Secretary of Veterans Affairs as compensation for a service-connected disability paid by the Secretary to a former member of the Armed Forces who is in receipt of retired or retainer pay if the former member has waived a portion of the retired or retainer pay in order to receive such compensation; and 110 STAT. 2245PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(iii) worker’s compensation benefits paid under Federal or State law but ”(B) do not include any payment\u2014 ”(i) by way of reimbursement or otherwise, to defray expenses incurred by the individual in carrying out duties associated with the employment of the individual; or ”(ii) as allowances for members of the uniformed services payable pursuant to chapter 7 of title 37, United States Code, as prescribed by the Secretaries concerned (defined by section 101(5) of such title) as necessary for the efficient performance of duty. ”(2) CERTAIN AMOUNTS EXCLUDED.\u2014In determining the amount of any moneys due from, or payable by, the United States to any individual, there shall be excluded amounts which\u2014 ”(A) are owed by the individual to the United States; ”(B) are required by law to be, and are, deducted from the remuneration or other payment involved, includ- ing Federal employment taxes, and fines and forfeitures ordered by court-martial; ”(C) are properly withheld for Federal, State, or local income tax purposes, if the withholding of the amounts is authorized or required by law and if amounts withheld are not greater than would be the case if the individual claimed all dependents to which he was entitled (the withholding of additional amounts pursuant to section 3402(i) of the Internal Revenue Code of 1986 may be per- mitted only when the individual presents evidence of a tax obligation which supports the additional withholding); ”(D) are deducted as health insurance premiums; ”(E) are deducted as normal retirement contributions (not including amounts deducted for supplementary cov- erage); or ”(F) are deducted as normal life insurance premiums from salary or other remuneration for employment (not including amounts deducted for supplementary coverage). ”(i) DEFINITIONS.\u2014For purposes of this section\u2014 ”(1) UNITED STATES.\u2014The term ‘United States’ includes any department, agency, or instrumentality of the legislative, judicial, or executive branch of the Federal Government, the United States Postal Service, the Postal Rate Commission, any Federal corporation created by an Act of Congress that is wholly owned by the Federal Government, and the governments of the territories and possessions of the United States. ”(2) CHILD SUPPORT.\u2014The term ‘child support’, when used in reference to the legal obligations of an individual to provide such support, means amounts required to be paid under a judgment, decree, or order, whether temporary, final, or subject to modification, issued by a court or an administrative agency of competent jurisdiction, for the support and maintenance of a child, including a child who has attained the age of majority under the law of the issuing State, or a child and the parent with whom the child is living, which provides for monetary support, health care, arrearages or reimbursement, and which may include other related costs and fees, interest and penalties, income withholding, attorney’s fees, and other relief. 110 STAT. 2246 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(3) ALIMONY.\u2014 ”(A) IN GENERAL.\u2014The term ‘alimony’, when used in reference to the legal obligations of an individual to provide the same, means periodic payments of funds for the support and maintenance of the spouse (or former spouse) of the individual, and (subject to and in accordance with State law) includes separate maintenance, alimony pendente lite, maintenance, and spousal support, and includes attorney’s fees, interest, and court costs when and to the extent that the same are expressly made recoverable as such pursuant to a decree, order, or judgment issued in accord- ance with applicable State law by a court of competent jurisdiction. ”(B) EXCEPTIONS.\u2014Such term does not include\u2014 ”(i) any child support; or ”(ii) any payment or transfer of property or its value by an individual to the spouse or a former spouse of the individual in compliance with any community property settlement, equitable distribution of property, or other division of property between spouses or former spouses. ”(4) PRIVATE PERSON.\u2014The term ‘private person’ means a person who does not have sovereign or other special immunity or privilege which causes the person not to be subject to legal process. ”(5) LEGAL PROCESS.\u2014The term ‘legal process’ means any writ, order, summons, or other similar process in the nature of garnishment\u2014 ”(A) which is issued by\u2014 ”(i) a court or an administrative agency of com- petent jurisdiction in any State, territory, or possession of the United States; ”(ii) a court or an administrative agency of com- petent jurisdiction in any foreign country with which the United States has entered into an agreement which requires the United States to honor the process; or ”(iii) an authorized official pursuant to an order of such a court or an administrative agency of com- petent jurisdiction or pursuant to State or local law; and ”(B) which is directed to, and the purpose of which is to compel, a governmental entity which holds moneys which are otherwise payable to an individual to make a payment from the moneys to another party in order to satisfy a legal obligation of the individual to provide child support or make alimony payments.”. (b) CONFORMING AMENDMENTS.\u2014 (1) TO PART D OF TITLE IV.\u2014Sections 461 and 462 (42 U.S.C. 661 and 662) are repealed. (2) TO TITLE 5, UNITED STATES CODE.\u2014Section 5520a of title 5, United States Code, is amended, in subsections (h)(2) and (i), by striking ”sections 459, 461, and 462 of the Social Security Act (42 U.S.C. 659, 661, and 662)” and inserting ”sec- tion 459 of the Social Security Act (42 U.S.C. 659)”. (c) MILITARY RETIRED AND RETAINER PAY.\u2014 (1) DEFINITION OF COURT.\u2014Section 1408(a)(1) of title 10, United States Code, is amended\u2014 110 STAT. 2247PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) by striking ”and” at the end of subparagraph (B); (B) by striking the period at the end of subparagraph (C) and inserting ”; and”; and (C) by adding after subparagraph (C) the following new subparagraph: ”(D) any administrative or judicial tribunal of a State competent to enter orders for support or maintenance (including a State agency administering a program under a State plan approved under part D of title IV of the Social Security Act), and, for purposes of this subparagraph, the term ‘State’ includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.”. (2) DEFINITION OF COURT ORDER.\u2014Section 1408(a)(2) of such title is amended\u2014 (A) by inserting ”or a support order, as defined in section 453(p) of the Social Security Act (42 U.S.C. 653(p)),” before ”which\u2014”; (B) in subparagraph (B)(i), by striking ”(as defined in section 462(b) of the Social Security Act (42 U.S.C. 662(b)))” and inserting ”(as defined in section 459(i)(2) of the Social Security Act (42 U.S.C. 659(i)(2)))”; and (C) in subparagraph (B)(ii), by striking ”(as defined in section 462(c) of the Social Security Act (42 U.S.C. 662(c)))” and inserting ”(as defined in section 459(i)(3) of the Social Security Act (42 U.S.C. 659(i)(3)))”. (3) PUBLIC PAYEE.\u2014Section 1408(d) of such title is amended\u2014 (A) in the heading, by inserting ”(OR FOR BENEFIT OF)” before ”SPOUSE OR”; and (B) in paragraph (1), in the first sentence, by inserting ”(or for the benefit of such spouse or former spouse to a State disbursement unit established pursuant to section 454B of the Social Security Act or other public payee des- ignated by a State, in accordance with part D of title IV of the Social Security Act, as directed by court order, or as otherwise directed in accordance with such part D)” before ”in an amount sufficient”. (4) RELATIONSHIP TO PART D OF TITLE IV.\u2014Section 1408 of such title is amended by adding at the end the following new subsection: ”(j) RELATIONSHIP TO OTHER LAWS.\u2014In any case involving an order providing for payment of child support (as defined in section 459(i)(2) of the Social Security Act) by a member who has never been married to the other parent of the child, the provisions of this section shall not apply, and the case shall be subject to the provisions of section 459 of such Act.”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall become effective 6 months after the date of the enactment of this Act. SEC. 363. ENFORCEMENT OF CHILD SUPPORT OBLIGATIONS OF MEMBERS OF THE ARMED FORCES. (a) AVAILABILITY OF LOCATOR INFORMATION.\u2014 (1) MAINTENANCE OF ADDRESS INFORMATION.\u2014The Sec- retary of Defense shall establish a centralized personnel locator service that includes the address of each member of the Armed 10 USC 113 note. 42 USC 659 note. 110 STAT. 2248 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Forces under the jurisdiction of the Secretary. Upon request of the Secretary of Transportation, addresses for members of the Coast Guard shall be included in the centralized personnel locator service. (2) TYPE OF ADDRESS.\u2014 (A) RESIDENTIAL ADDRESS.\u2014Except as provided in subparagraph (B), the address for a member of the Armed Forces shown in the locator service shall be the residential address of that member. (B) DUTY ADDRESS.\u2014The address for a member of the Armed Forces shown in the locator service shall be the duty address of that member in the case of a member\u2014 (i) who is permanently assigned overseas, to a vessel, or to a routinely deployable unit; or (ii) with respect to whom the Secretary concerned makes a determination that the member’s residential address should not be disclosed due to national security or safety concerns. (3) UPDATING OF LOCATOR INFORMATION.\u2014Within 30 days after a member listed in the locator service establishes a new residential address (or a new duty address, in the case of a member covered by paragraph (2)(B)), the Secretary concerned shall update the locator service to indicate the new address of the member. (4) AVAILABILITY OF INFORMATION.\u2014The Secretary of Defense shall make information regarding the address of a member of the Armed Forces listed in the locator service avail- able, on request, to the Federal Parent Locator Service estab- lished under section 453 of the Social Security Act. (b) FACILITATING GRANTING OF LEAVE FOR ATTENDANCE AT HEARINGS.\u2014 (1) REGULATIONS.\u2014The Secretary of each military depart- ment, and the Secretary of Transportation with respect to the Coast Guard when it is not operating as a service in the Navy, shall prescribe regulations to facilitate the granting of leave to a member of the Armed Forces under the jurisdiction of that Secretary in a case in which\u2014 (A) the leave is needed for the member to attend a hearing described in paragraph (2); (B) the member is not serving in or with a unit deployed in a contingency operation (as defined in section 101 of title 10, United States Code); and (C) the exigencies of military service (as determined by the Secretary concerned) do not otherwise require that such leave not be granted. (2) COVERED HEARINGS.\u2014Paragraph (1) applies to a hearing that is conducted by a court or pursuant to an administrative process established under State law, in connection with a civil action\u2014 (A) to determine whether a member of the Armed Forces is a natural parent of a child; or (B) to determine an obligation of a member of the Armed Forces to provide child support. (3) DEFINITIONS.\u2014For purposes of this subsection\u2014 (A) The term ”court” has the meaning given that term in section 1408(a) of title 10, United States Code. 10 USC 704 note. 110 STAT. 2249PUBLIC LAW 104 193\u2014AUG. 22, 1996 (B) The term ”child support” has the meaning given such term in section 459(i) of the Social Security Act (42 U.S.C. 659(i)). (c) PAYMENT OF MILITARY RETIRED PAY IN COMPLIANCE WITH CHILD SUPPORT ORDERS.\u2014 (1) DATE OF CERTIFICATION OF COURT ORDER.\u2014Section 1408 of title 10, United States Code, as amended by section 362(c)(4) of this Act, is amended\u2014 (A) by redesignating subsections (i) and (j) as sub- sections (j) and (k), respectively; and (B) by inserting after subsection (h) the following new subsection: ”(i) CERTIFICATION DATE.\u2014It is not necessary that the date of a certification of the authenticity or completeness of a copy of a court order for child support received by the Secretary concerned for the purposes of this section be recent in relation to the date of receipt by the Secretary.”. (2) PAYMENTS CONSISTENT WITH ASSIGNMENTS OF RIGHTS TO STATES.\u2014Section 1408(d)(1) of such title is amended by inserting after the first sentence the following new sentence: ”In the case of a spouse or former spouse who, pursuant to section 408(a)(3) of the Social Security Act (42 U.S.C. 608(a)(4)), assigns to a State the rights of the spouse or former spouse to receive support, the Secretary concerned may make the child support payments referred to in the preceding sentence to that State in amounts consistent with that assignment of rights.”. (3) ARREARAGES OWED BY MEMBERS OF THE UNIFORMED SERVICES.\u2014Section 1408(d) of such title is amended by adding at the end the following new paragraph: ”(6) In the case of a court order for which effective service is made on the Secretary concerned on or after the date of the enactment of this paragraph and which provides for payments from the disposable retired pay of a member to satisfy the amount of child support set forth in the order, the authority provided in paragraph (1) to make payments from the disposable retired pay of a member to satisfy the amount of child support set forth in a court order shall apply to payment of any amount of child support arrearages set forth in that order as well as to amounts of child support that currently become due.”. (4) PAYROLL DEDUCTIONS.\u2014The Secretary of Defense shall begin payroll deductions within 30 days after receiving notice of withholding, or for the first pay period that begins after such 30-day period. SEC. 364. VOIDING OF FRAUDULENT TRANSFERS. Section 466 (42 U.S.C. 666), as amended by section 321 of this Act, is amended by adding at the end the following new subsection: ”(g) LAWS VOIDING FRAUDULENT TRANSFERS.\u2014In order to satisfy section 454(20)(A), each State must have in effect\u2014 ”(1)(A) the Uniform Fraudulent Conveyance Act of 1981; ”(B) the Uniform Fraudulent Transfer Act of 1984; or ”(C) another law, specifying indicia of fraud which create a prima facie case that a debtor transferred income or property to avoid payment to a child support creditor, which the 10 USC 1408 note. 110 STAT. 2250 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Secretary finds affords comparable rights to child support credi- tors; and ”(2) procedures under which, in any case in which the State knows of a transfer by a child support debtor with respect to which such a prima facie case is established, the State must\u2014 ”(A) seek to void such transfer; or ”(B) obtain a settlement in the best interests of the child support creditor.”. SEC. 365. WORK REQUIREMENT FOR PERSONS OWING PAST-DUE CHILD SUPPORT. (a) IN GENERAL.\u2014Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, and 323 of this Act, is amended by inserting after paragraph (14) the following new paragraph: ”(15) PROCEDURES TO ENSURE THAT PERSONS OWING PAST- DUE SUPPORT WORK OR HAVE A PLAN FOR PAYMENT OF SUCH SUPPORT.\u2014 ”(A) IN GENERAL.\u2014Procedures under which the State has the authority, in any case in which an individual owes past-due support with respect to a child receiving assistance under a State program funded under part A, to issue an order or to request that a court or an adminis- trative process established pursuant to State law issue an order that requires the individual to\u2014 ”(i) pay such support in accordance with a plan approved by the court, or, at the option of the State, a plan approved by the State agency administering the State program under this part; or ”(ii) if the individual is subject to such a plan and is not incapacitated, participate in such work activities (as defined in section 407(d)) as the court, or, at the option of the State, the State agency admin- istering the State program under this part, deems appropriate. ”(B) PAST-DUE SUPPORT DEFINED.\u2014For purposes of subparagraph (A), the term ‘past-due support’ means the amount of a delinquency, determined under a court order, or an order of an administrative process established under State law, for support and maintenance of a child, or of a child and the parent with whom the child is living.”. (b) CONFORMING AMENDMENT.\u2014The flush paragraph at the end of section 466(a) (42 U.S.C. 666(a)) is amended by striking ”and (7)” and inserting ”(7), and (15)”. SEC. 366. DEFINITION OF SUPPORT ORDER. Section 453 (42 U.S.C. 653) as amended by sections 316 and 345(b) of this Act, is amended by adding at the end the following new subsection: ”(p) SUPPORT ORDER DEFINED.\u2014As used in this part, the term ‘support order’ means a judgment, decree, or order, whether tem- porary, final, or subject to modification, issued by a court or an administrative agency of competent jurisdiction, for the support and maintenance of a child, including a child who has attained the age of majority under the law of the issuing State, or a child and the parent with whom the child is living, which provides for monetary support, health care, arrearages, or reimbursement, 110 STAT. 2251PUBLIC LAW 104 193\u2014AUG. 22, 1996 and which may include related costs and fees, interest and penalties, income withholding, attorneys’ fees, and other relief.”. SEC. 367. REPORTING ARREARAGES TO CREDIT BUREAUS. Section 466(a)(7) (42 U.S.C. 666(a)(7)) is amended to read as follows: ”(7) REPORTING ARREARAGES TO CREDIT BUREAUS.\u2014 ”(A) IN GENERAL.\u2014Procedures (subject to safeguards pursuant to subparagraph (B)) requiring the State to report periodically to consumer reporting agencies (as defined in section 603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f)) the name of any noncustodial parent who is delin- quent in the payment of support, and the amount of over- due support owed by such parent. ”(B) SAFEGUARDS.\u2014Procedures ensuring that, in carry- ing out subparagraph (A), information with respect to a noncustodial parent is reported\u2014 ”(i) only after such parent has been afforded all due process required under State law, including notice and a reasonable opportunity to contest the accuracy of such information; and ”(ii) only to an entity that has furnished evidence satisfactory to the State that the entity is a consumer reporting agency (as so defined).”. SEC. 368. LIENS. Section 466(a)(4) (42 U.S.C. 666(a)(4)) is amended to read as follows: ”(4) LIENS.\u2014Procedures under which\u2014 ”(A) liens arise by operation of law against real and personal property for amounts of overdue support owed by a noncustodial parent who resides or owns property in the State; and ”(B) the State accords full faith and credit to liens described in subparagraph (A) arising in another State, when the State agency, party, or other entity seeking to enforce such a lien complies with the procedural rules relating to recording or serving liens that arise within the State, except that such rules may not require judicial notice or hearing prior to the enforcement of such a lien.”. SEC. 369. STATE LAW AUTHORIZING SUSPENSION OF LICENSES. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, and 365 of this Act, is amended by inserting after para- graph (15) the following: ”(16) AUTHORITY TO WITHHOLD OR SUSPEND LICENSES.\u2014 Procedures under which the State has (and uses in appropriate cases) authority to withhold or suspend, or to restrict the use of driver’s licenses, professional and occupational licenses, and recreational licenses of individuals owing overdue support or failing, after receiving appropriate notice, to comply with subpoenas or warrants relating to paternity or child support proceedings.”. SEC. 370. DENIAL OF PASSPORTS FOR NONPAYMENT OF CHILD SUPPORT. (a) HHS CERTIFICATION PROCEDURE.\u2014 110 STAT. 2252 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (1) SECRETARIAL RESPONSIBILITY.\u2014Section 452 (42 U.S.C. 652), as amended by section 345 of this Act, is amended by adding at the end the following new subsection: ”(k)(1) If the Secretary receives a certification by a State agency in accordance with the requirements of section 454(31) that an individual owes arrearages of child support in an amount exceeding $5,000, the Secretary shall transmit such certification to the Sec- retary of State for action (with respect to denial, revocation, or limitation of passports) pursuant to paragraph (2). ”(2) The Secretary of State shall, upon certification by the Secretary transmitted under paragraph (1), refuse to issue a pass- port to such individual, and may revoke, restrict, or limit a passport issued previously to such individual. ”(3) The Secretary and the Secretary of State shall not be liable to an individual for any action with respect to a certification by a State agency under this section.”. (2) STATE AGENCY RESPONSIBILITY.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(b), 313(a), 333, and 343(b) of this Act, is amended\u2014 (A) by striking ”and” at the end of paragraph (29); (B) by striking the period at the end of paragraph (30) and inserting ”; and”; and (C) by adding after paragraph (30) the following new paragraph: ”(31) provide that the State agency will have in effect a procedure for certifying to the Secretary, for purposes of the procedure under section 452(k), determinations that individ- uals owe arrearages of child support in an amount exceeding $5,000, under which procedure\u2014 ”(A) each individual concerned is afforded notice of such determination and the consequences thereof, and an opportunity to contest the determination; and ”(B) the certification by the State agency is furnished to the Secretary in such format, and accompanied by such supporting documentation, as the Secretary may require.”. (b) EFFECTIVE DATE.\u2014This section and the amendments made by this section shall become effective October 1, 1997. SEC. 371. INTERNATIONAL SUPPORT ENFORCEMENT. (a) AUTHORITY FOR INTERNATIONAL AGREEMENTS.\u2014Part D of title IV, as amended by section 362(a) of this Act, is amended by adding after section 459 the following new section: ”SEC. 459A. INTERNATIONAL SUPPORT ENFORCEMENT. ”(a) AUTHORITY FOR DECLARATIONS.\u2014 ”(1) DECLARATION.\u2014The Secretary of State, with the concurrence of the Secretary of Health and Human Services, is authorized to declare any foreign country (or a political subdivision thereof) to be a foreign reciprocating country if the foreign country has established, or undertakes to establish, procedures for the establishment and enforcement of duties of support owed to obligees who are residents of the United States, and such procedures are substantially in conformity with the standards prescribed under subsection (b). ”(2) REVOCATION.\u2014A declaration with respect to a foreign country made pursuant to paragraph (1) may be revoked if the Secretaries of State and Health and Human Services deter- mine that\u2014 42 USC 659a. 42 USC 652 note. 110 STAT. 2253PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(A) the procedures established by the foreign country regarding the establishment and enforcement of duties of support have been so changed, or the foreign country’s implementation of such procedures is so unsatisfactory, that such procedures do not meet the criteria for such a declaration; or ”(B) continued operation of the declaration is not consistent with the purposes of this part. ”(3) FORM OF DECLARATION.\u2014A declaration under para- graph (1) may be made in the form of an international agree- ment, in connection with an international agreement or cor- responding foreign declaration, or on a unilateral basis. ”(b) STANDARDS FOR FOREIGN SUPPORT ENFORCEMENT PROCEDURES.\u2014 ”(1) MANDATORY ELEMENTS.\u2014Support enforcement proce- dures of a foreign country which may be the subject of a declaration pursuant to subsection (a)(1) shall include the fol- lowing elements: ”(A) The foreign country (or political subdivision thereof) has in effect procedures, available to residents of the United States\u2014 ”(i) for establishment of paternity, and for establishment of orders of support for children and custodial parents; and ”(ii) for enforcement of orders to provide support to children and custodial parents, including procedures for collection and appropriate distribution of support payments under such orders. ”(B) The procedures described in subparagraph (A), including legal and administrative assistance, are provided to residents of the United States at no cost. ”(C) An agency of the foreign country is designated as a Central Authority responsible for\u2014 ”(i) facilitating support enforcement in cases involving residents of the foreign country and residents of the United States; and ”(ii) ensuring compliance with the standards estab- lished pursuant to this subsection. ”(2) ADDITIONAL ELEMENTS.\u2014The Secretary of Health and Human Services and the Secretary of State, in consultation with the States, may establish such additional standards as may be considered necessary to further the purposes of this section. ”(c) DESIGNATION OF UNITED STATES CENTRAL AUTHORITY.\u2014 It shall be the responsibility of the Secretary of Health and Human Services to facilitate support enforcement in cases involving resi- dents of the United States and residents of foreign countries that are the subject of a declaration under this section, by activities including\u2014 ”(1) development of uniform forms and procedures for use in such cases; ”(2) notification of foreign reciprocating countries of the State of residence of individuals sought for support enforcement purposes, on the basis of information provided by the Federal Parent Locator Service; and ”(3) such other oversight, assistance, and coordination activities as the Secretary may find necessary and appropriate. 110 STAT. 2254 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(d) EFFECT ON OTHER LAWS.\u2014States may enter into reciprocal arrangements for the establishment and enforcement of support obligations with foreign countries that are not the subject of a declaration pursuant to subsection (a), to the extent consistent with Federal law.”. (b) STATE PLAN REQUIREMENT.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(b), 313(a), 333, 343(b), and 370(a)(2) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (30); (2) by striking the period at the end of paragraph (31) and inserting ”; and”; and (3) by adding after paragraph (31) the following new para- graph: ”(32)(A) provide that any request for services under this part by a foreign reciprocating country or a foreign country with which the State has an arrangement described in section 459A(d)(2) shall be treated as a request by a State; ”(B) provide, at State option, notwithstanding paragraph (4) or any other provision of this part, for services under the plan for enforcement of a spousal support order not described in paragraph (4)(B) entered by such a country (or subdivision); and ”(C) provide that no applications will be required from, and no costs will be assessed for such services against, the foreign reciprocating country or foreign obligee (but costs may at State option be assessed against the obligor).”. SEC. 372. FINANCIAL INSTITUTION DATA MATCHES. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, 365, and 369 of this Act, is amended by inserting after paragraph (16) the following new paragraph: ”(17) FINANCIAL INSTITUTION DATA MATCHES.\u2014 ”(A) IN GENERAL.\u2014Procedures under which the State agency shall enter into agreements with financial institu- tions doing business in the State\u2014 ”(i) to develop and operate, in coordination with such financial institutions, a data match system, using automated data exchanges to the maximum extent fea- sible, in which each such financial institution is required to provide for each calendar quarter the name, record address, social security number or other tax- payer identification number, and other identifying information for each noncustodial parent who main- tains an account at such institution and who owes past-due support, as identified by the State by name and social security number or other taxpayer identifica- tion number; and ”(ii) in response to a notice of lien or levy, encum- ber or surrender, as the case may be, assets held by such institution on behalf of any noncustodial parent who is subject to a child support lien pursuant to paragraph (4). ”(B) REASONABLE FEES.\u2014The State agency may pay a reasonable fee to a financial institution for conducting the data match provided for in subparagraph (A)(i), not to exceed the actual costs incurred by such financial institution. 110 STAT. 2255PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(C) LIABILITY.\u2014A financial institution shall not be liable under any Federal or State law to any person\u2014 ”(i) for any disclosure of information to the State agency under subparagraph (A)(i); ”(ii) for encumbering or surrendering any assets held by such financial institution in response to a notice of lien or levy issued by the State agency as provided for in subparagraph (A)(ii); or ”(iii) for any other action taken in good faith to comply with the requirements of subparagraph (A). ”(D) DEFINITIONS.\u2014For purposes of this paragraph\u2014 ”(i) FINANCIAL INSTITUTION.\u2014The term ‘financial institution’ has the meaning given to such term by section 469A(d)(1). ”(ii) ACCOUNT.\u2014The term ‘account’ means a demand deposit account, checking or negotiable with- drawal order account, savings account, time deposit account, or money-market mutual fund account.”. SEC. 373. ENFORCEMENT OF ORDERS AGAINST PATERNAL OR MATERNAL GRANDPARENTS IN CASES OF MINOR PARENTS. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, 365, 369, and 372 of this Act, is amended by inserting after paragraph (17) the following new paragraph: ”(18) ENFORCEMENT OF ORDERS AGAINST PATERNAL OR MATERNAL GRANDPARENTS.\u2014Procedures under which, at the State’s option, any child support order enforced under this part with respect to a child of minor parents, if the custodial parent of such child is receiving assistance under the State program under part A, shall be enforceable, jointly and sever- ally, against the parents of the noncustodial parent of such child.”. SEC. 374. NONDISCHARGEABILITY IN BANKRUPTCY OF CERTAIN DEBTS FOR THE SUPPORT OF A CHILD. (a) AMENDMENT TO TITLE 11 OF THE UNITED STATES CODE.\u2014 Section 523(a) of title 11, United States Code, is amended\u2014 (1) by striking ”or” at the end of paragraph (16); (2) by striking the period at the end of paragraph (17) and inserting ”; or”; (3) by adding at the end the following: ”(18) owed under State law to a State or municipality that is\u2014 ”(A) in the nature of support, and ”(B) enforceable under part D of title IV of the Social Security Act (42 U.S.C. 601 et seq.).”; and (4) in paragraph (5), by striking ”section 402(a)(26)” and inserting ”section 408(a)(3)”. (b) AMENDMENT TO THE SOCIAL SECURITY ACT.\u2014Section 456(b) (42 U.S.C. 656(b)) is amended to read as follows: ”(b) NONDISCHARGEABILITY.\u2014A debt (as defined in section 101 of title 11 of the United States Code) owed under State law to a State (as defined in such section) or municipality (as defined in such section) that is in the nature of support and that is enforce- able under this part is not released by a discharge in bankruptcy under title 11 of the United States Code.”. 110 STAT. 2256 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (c) APPLICATION OF AMENDMENTS.\u2014The amendments made by this section shall apply only with respect to cases commenced under title 11 of the United States Code after the date of the enactment of this Act. SEC. 375. CHILD SUPPORT ENFORCEMENT FOR INDIAN TRIBES. (a) CHILD SUPPORT ENFORCEMENT AGREEMENTS.\u2014Section 454 (42 U.S.C. 654), as amended by sections 301(b), 303(a), 312(b), 313(a), 333, 343(b), 370(a)(2), and 371(b) of this Act, is amended\u2014 (1) by striking ”and” at the end of paragraph (31); (2) by striking the period at the end of paragraph (32) and inserting ”; and”; (3) by adding after paragraph (32) the following new para- graph: ”(33) provide that a State that receives funding pursuant to section 428 and that has within its borders Indian country (as defined in section 1151 of title 18, United States Code) may enter into cooperative agreements with an Indian tribe or tribal organization (as defined in subsections (e) and (l) of section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b)), if the Indian tribe or tribal organization demonstrates that such tribe or organization has an established tribal court system or a Court of Indian Offenses with the authority to establish paternity, establish, modify, and enforce support orders, and to enter support orders in accordance with child support guidelines established by such tribe or organization, under which the State and tribe or organization shall provide for the cooperative delivery of child support enforcement services in Indian country and for the forwarding of all funding collected pursuant to the functions performed by the tribe or organization to the State agency, or conversely, by the State agency to the tribe or organization, which shall distribute such funding in accordance with such agreement.”; and (4) by adding at the end the following new sentence: ”Noth- ing in paragraph (33) shall void any provision of any cooperative agreement entered into before the date of the enactment of such paragraph, nor shall such paragraph deprive any State of jurisdiction over Indian country (as so defined) that is law- fully exercised under section 402 of the Act entitled ‘An Act to prescribe penalties for certain acts of violence or intimidation, and for other purposes’, approved April 11, 1968 (25 U.S.C. 1322).”. (b) DIRECT FEDERAL FUNDING TO INDIAN TRIBES AND TRIBAL ORGANIZATIONS.\u2014Section 455 (42 U.S.C. 655) is amended by adding at the end the following new subsection: ”(b) The Secretary may, in appropriate cases, make direct pay- ments under this part to an Indian tribe or tribal organization which has an approved child support enforcement plan under this title. In determining whether such payments are appropriate, the Secretary shall, at a minimum, consider whether services are being provided to eligible Indian recipients by the State agency through an agreement entered into pursuant to section 454(34).”. (c) COOPERATIVE ENFORCEMENT AGREEMENTS.\u2014Paragraph (7) of section 454 (42 U.S.C. 654) is amended by inserting ”and Indian tribes or tribal organizations (as defined in subsections (e) and 11 USC 523 note. 110 STAT. 2257PUBLIC LAW 104 193\u2014AUG. 22, 1996 (l) of section 4 of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450b))” after ”law enforcement officials”. (d) CONFORMING AMENDMENT.\u2014Subsection (c) of section 428 (42 U.S.C. 628) is amended to read as follows: ”(c) For purposes of this section, the terms ‘Indian tribe’ and ‘tribal organization’ shall have the meanings given such terms by subsections (e) and (l) of section 4 of the Indian Self-Determina- tion and Education Assistance Act (25 U.S.C. 450b), respectively.”. Subtitle H\u2014Medical Support SEC. 381. CORRECTION TO ERISA DEFINITION OF MEDICAL CHILD SUPPORT ORDER. (a) IN GENERAL.\u2014Section 609(a)(2)(B) of the Employee Retire- ment Income Security Act of 1974 (29 U.S.C. 1169(a)(2)(B)) is amended\u2014 (1) by striking ”issued by a court of competent jurisdiction”; (2) by striking the period at the end of clause (ii) and inserting a comma; and (3) by adding, after and below clause (ii), the following: ”if such judgment, decree, or order (I) is issued by a court of competent jurisdiction or (II) is issued through an administrative process established under State law and has the force and effect of law under applicable State law.”. (b) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall take effect on the date of the enactment of this Act. (2) PLAN AMENDMENTS NOT REQUIRED UNTIL JANUARY 1, 1997.\u2014Any amendment to a plan required to be made by an amendment made by this section shall not be required to be made before the 1st plan year beginning on or after January 1, 1997, if\u2014 (A) during the period after the date before the date of the enactment of this Act and before such 1st plan year, the plan is operated in accordance with the require- ments of the amendments made by this section; and (B) such plan amendment applies retroactively to the period after the date before the date of the enactment of this Act and before such 1st plan year. A plan shall not be treated as failing to be operated in accord- ance with the provisions of the plan merely because it operates in accordance with this paragraph. SEC. 382. ENFORCEMENT OF ORDERS FOR HEALTH CARE COVERAGE. Section 466(a) (42 U.S.C. 666(a)), as amended by sections 315, 317, 323, 365, 369, 372, and 373 of this Act, is amended by inserting after paragraph (18) the following new paragraph: ”(19) HEALTH CARE COVERAGE.\u2014Procedures under which all child support orders enforced pursuant to this part shall include a provision for the health care coverage of the child, and in the case in which a noncustodial parent provides such coverage and changes employment, and the new employer pro- vides health care coverage, the State agency shall transfer notice of the provision to the employer, which notice shall 29 USC 1169 note. Native Americans. 110 STAT. 2258 PUBLIC LAW 104 193\u2014AUG. 22, 1996 operate to enroll the child in the noncustodial parent’s health plan, unless the noncustodial parent contests the notice.”. Subtitle I\u2014Enhancing Responsibility and Opportunity for Non-Residential Parents SEC. 391. GRANTS TO STATES FOR ACCESS AND VISITATION PRO- GRAMS. Part D of title IV (42 U.S.C. 651 669), as amended by section 353 of this Act, is amended by adding at the end the following new section: ”SEC. 469B. GRANTS TO STATES FOR ACCESS AND VISITATION PRO- GRAMS. ”(a) IN GENERAL.\u2014The Administration for Children and Fami- lies shall make grants under this section to enable States to estab- lish and administer programs to support and facilitate noncustodial parents’ access to and visitation of their children, by means of activities including mediation (both voluntary and mandatory), counseling, education, development of parenting plans, visitation enforcement (including monitoring, supervision and neutral drop- off and pickup), and development of guidelines for visitation and alternative custody arrangements. ”(b) AMOUNT OF GRANT.\u2014The amount of the grant to be made to a State under this section for a fiscal year shall be an amount equal to the lesser of\u2014 ”(1) 90 percent of State expenditures during the fiscal year for activities described in subsection (a); or ”(2) the allotment of the State under subsection (c) for the fiscal year. ”(c) ALLOTMENTS TO STATES.\u2014 ”(1) IN GENERAL.\u2014The allotment of a State for a fiscal year is the amount that bears the same ratio to $10,000,000 for grants under this section for the fiscal year as the number of children in the State living with only 1 biological parent bears to the total number of such children in all States. ”(2) MINIMUM ALLOTMENT.\u2014The Administration for Chil- dren and Families shall adjust allotments to States under para- graph (1) as necessary to ensure that no State is allotted less than\u2014 ”(A) $50,000 for fiscal year 1997 or 1998; or ”(B) $100,000 for any succeeding fiscal year. ”(d) NO SUPPLANTATION OF STATE EXPENDITURES FOR SIMILAR ACTIVITIES.\u2014A State to which a grant is made under this section may not use the grant to supplant expenditures by the State for activities specified in subsection (a), but shall use the grant to supplement such expenditures at a level at least equal to the level of such expenditures for fiscal year 1995. ”(e) STATE ADMINISTRATION.\u2014Each State to which a grant is made under this section\u2014 ”(1) may administer State programs funded with the grant, directly or through grants to or contracts with courts, local public agencies, or nonprofit private entities; ”(2) shall not be required to operate such programs on a statewide basis; and 42 USC 669B. 110 STAT. 2259PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(3) shall monitor, evaluate, and report on such programs in accordance with regulations prescribed by the Secretary.”. Subtitle J\u2014Effective Dates and Conforming Amendments SEC. 395. EFFECTIVE DATES AND CONFORMING AMENDMENTS. (a) IN GENERAL.\u2014Except as otherwise specifically provided (but subject to subsections (b) and (c))\u2014 (1) the provisions of this title requiring the enactment or amendment of State laws under section 466 of the Social Security Act, or revision of State plans under section 454 of such Act, shall be effective with respect to periods beginning on and after October 1, 1996; and (2) all other provisions of this title shall become effective upon the date of the enactment of this Act. (b) GRACE PERIOD FOR STATE LAW CHANGES.\u2014The provisions of this title shall become effective with respect to a State on the later of\u2014 (1) the date specified in this title, or (2) the effective date of laws enacted by the legislature of such State implementing such provisions, but in no event later than the 1st day of the 1st calendar quarter beginning after the close of the 1st regular session of the State legislature that begins after the date of the enactment of this Act. For purposes of the previous sentence, in the case of a State that has a 2-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature. (c) GRACE PERIOD FOR STATE CONSTITUTIONAL AMENDMENT.\u2014 A State shall not be found out of compliance with any requirement enacted by this title if the State is unable to so comply without amending the State constitution until the earlier of\u2014 (1) 1 year after the effective date of the necessary State constitutional amendment; or (2) 5 years after the date of the enactment of this Act. (d) CONFORMING AMENDMENTS.\u2014 (1) The following provisions are amended by striking ”absent” each place it appears and inserting ”noncustodial”: (A) Section 451 (42 U.S.C. 651). (B) Subsections (a)(1), (a)(8), (a)(10)(E), (a)(10)(F), (f), and (h) of section 452 (42 U.S.C. 652). (C) Section 453(f) (42 U.S.C. 653(f)). (D) Paragraphs (8), (13), and (21)(A) of section 454 (42 U.S.C. 654). (E) Section 455(e)(1) (42 U.S.C. 655(e)(1)). (F) Section 458(a) (42 U.S.C. 658(a)). (G) Subsections (a), (b), and (c) of section 463 (42 U.S.C. 663). (H) Subsections (a)(3)(A), (a)(3)(C), (a)(6), and (a)(8)(B)(ii), the last sentence of subsection (a), and sub- sections (b)(1), (b)(3)(B), (b)(3)(B)(i), (b)(6)(A)(i), (b)(9), and (e) of section 466 (42 U.S.C. 666). (2) The following provisions are amended by striking ”an absent” each place it appears and inserting ”a noncustodial”: 42 USC 654 note. 42 USC 654 note. 42 USC 654 note. 110 STAT. 2260 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) Paragraphs (2) and (3) of section 453(c) (42 U.S.C. 653(c)). (B) Subparagraphs (B) and (C) of section 454(9) (42 U.S.C. 654(9)). (C) Section 456(a)(3) (42 U.S.C. 656(a)(3)). (D) Subsections (a)(3)(A), (a)(6), (a)(8)(B)(i), (b)(3)(A), and (b)(3)(B) of section 466 (42 U.S.C. 666). (E) Paragraphs (2) and (4) of section 469(b) (42 U.S.C. 669(b)). TITLE IV\u2014RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS SEC. 400. STATEMENTS OF NATIONAL POLICY CONCERNING WELFARE AND IMMIGRATION. The Congress makes the following statements concerning national policy with respect to welfare and immigration: (1) Self-sufficiency has been a basic principle of United States immigration law since this country’s earliest immigra- tion statutes. (2) It continues to be the immigration policy of the United States that\u2014 (A) aliens within the Nation’s borders not depend on public resources to meet their needs, but rather rely on their own capabilities and the resources of their families, their sponsors, and private organizations, and (B) the availability of public benefits not constitute an incentive for immigration to the United States. (3) Despite the principle of self-sufficiency, aliens have been applying for and receiving public benefits from Federal, State, and local governments at increasing rates. (4) Current eligibility rules for public assistance and unenforceable financial support agreements have proved wholly incapable of assuring that individual aliens not burden the public benefits system. (5) It is a compelling government interest to enact new rules for eligibility and sponsorship agreements in order to assure that aliens be self-reliant in accordance with national immigration policy. (6) It is a compelling government interest to remove the incentive for illegal immigration provided by the availability of public benefits. (7) With respect to the State authority to make determina- tions concerning the eligibility of qualified aliens for public benefits in this title, a State that chooses to follow the Federal classification in determining the eligibility of such aliens for public assistance shall be considered to have chosen the least restrictive means available for achieving the compelling govern- mental interest of assuring that aliens be self-reliant in accord- ance with national immigration policy. 8 USC 1601. 110 STAT. 2261PUBLIC LAW 104 193\u2014AUG. 22, 1996 Subtitle A\u2014Eligibility for Federal Benefits SEC. 401. ALIENS WHO ARE NOT QUALIFIED ALIENS INELIGIBLE FOR FEDERAL PUBLIC BENEFITS. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsection (b), an alien who is not a qualified alien (as defined in section 431) is not eligible for any Federal public benefit (as defined in subsection (c)). (b) EXCEPTIONS.\u2014 (1) Subsection (a) shall not apply with respect to the fol- lowing Federal public benefits: (A) Medical assistance under title XIX of the Social Security Act (or any successor program to such title) for care and services that are necessary for the treatment of an emergency medical condition (as defined in section 1903(v)(3) of such Act) of the alien involved and are not related to an organ transplant procedure, if the alien involved otherwise meets the eligibility requirements for medical assistance under the State plan approved under such title (other than the requirement of the receipt of aid or assistance under title IV of such Act, supplemental security income benefits under title XVI of such Act, or a State supplementary payment). (B) Short-term, non-cash, in-kind emergency disaster relief. (C) Public health assistance (not including any assist- ance under title XIX of the Social Security Act) for immunizations with respect to immunizable diseases and for testing and treatment of symptoms of communicable diseases whether or not such symptoms are caused by a communicable disease. (D) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consulta- tion with appropriate Federal agencies and departments, which (i) deliver in-kind services at the community level, including through public or private nonprofit agencies; (ii) do not condition the provision of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (iii) are necessary for the protection of life or safety. (E) Programs for housing or community development assistance or financial assistance administered by the Sec- retary of Housing and Urban Development, any program under title V of the Housing Act of 1949, or any assistance under section 306C of the Consolidated Farm and Rural Development Act, to the extent that the alien is receiving such a benefit on the date of the enactment of this Act. (2) Subsection (a) shall not apply to any benefit payable under title II of the Social Security Act to an alien who is lawfully present in the United States as determined by the Attorney General, to any benefit if nonpayment of such benefit would contravene an international agreement described in sec- tion 233 of the Social Security Act, to any benefit if nonpayment would be contrary to section 202(t) of the Social Security Act, 8 USC 1611. 110 STAT. 2262 PUBLIC LAW 104 193\u2014AUG. 22, 1996 or to any benefit payable under title II of the Social Security Act to which entitlement is based on an application filed in or before the month in which this Act becomes law. (c) FEDERAL PUBLIC BENEFIT DEFINED.\u2014 (1) Except as provided in paragraph (2), for purposes of this title the term ”Federal public benefit” means\u2014 (A) any grant, contract, loan, professional license, or commercial license provided by an agency of the United States or by appropriated funds of the United States; and (B) any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assist- ance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of the United States or by appropriated funds of the United States. (2) Such term shall not apply\u2014 (A) to any contract, professional license, or commercial license for a nonimmigrant whose visa for entry is related to such employment in the United States; or (B) with respect to benefits for an alien who as a work authorized nonimmigrant or as an alien lawfully admitted for permanent residence under the Immigration and Nationality Act qualified for such benefits and for whom the United States under reciprocal treaty agree- ments is required to pay benefits, as determined by the Attorney General, after consultation with the Secretary of State. SEC. 402. LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR CERTAIN FEDERAL PROGRAMS. (a) LIMITED ELIGIBILITY FOR SPECIFIED FEDERAL PROGRAMS.\u2014 (1) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in paragraph (2), an alien who is a qualified alien (as defined in section 431) is not eligible for any specified Federal program (as defined in para- graph (3)). (2) EXCEPTIONS.\u2014 (A) TIME-LIMITED EXCEPTION FOR REFUGEES AND ASYLEES.\u2014Paragraph (1) shall not apply to an alien until 5 years after the date\u2014 (i) an alien is admitted to the United States as a refugee under section 207 of the Immigration and Nationality Act; (ii) an alien is granted asylum under section 208 of such Act; or (iii) an alien’s deportation is withheld under sec- tion 243(h) of such Act. (B) CERTAIN PERMANENT RESIDENT ALIENS.\u2014Paragraph (1) shall not apply to an alien who\u2014 (i) is lawfully admitted to the United States for permanent residence under the Immigration and Nationality Act; and (ii)(I) has worked 40 qualifying quarters of cov- erage as defined under title II of the Social Security Act or can be credited with such qualifying quarters as provided under section 435, and (II) in the case 8 USC 1612. 110 STAT. 2263PUBLIC LAW 104 193\u2014AUG. 22, 1996 of any such qualifying quarter creditable for any period beginning after December 31, 1996, did not receive any Federal means-tested public benefit (as provided under section 403) during any such period. (C) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014Paragraph (1) shall not apply to an alien who is lawfully residing in any State and is\u2014 (i) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (ii) on active duty (other than active duty for training) in the Armed Forces of the United States, or (iii) the spouse or unmarried dependent child of an individual described in clause (i) or (ii). (D) TRANSITION FOR ALIENS CURRENTLY RECEIVING BENEFITS.\u2014 (i) SSI.\u2014 (I) IN GENERAL.\u2014With respect to the specified Federal program described in paragraph (3)(A), during the period beginning on the date of the enactment of this Act and ending on the date which is 1 year after such date of enactment, the Commissioner of Social Security shall redetermine the eligibility of any individual who is receiving benefits under such program as of the date of the enactment of this Act and whose eligibility for such benefits may terminate by reason of the provisions of this subsection. (II) REDETERMINATION CRITERIA.\u2014 With respect to any redetermination under subclause (I), the Commissioner of Social Security shall apply the eligibility criteria for new applicants for bene- fits under such program. (III) GRANDFATHER PROVISION.\u2014The provi- sions of this subsection and the redetermination under subclause (I), shall only apply with respect to the benefits of an individual described in sub- clause (I) for months beginning on or after the date of the redetermination with respect to such individual. (IV) NOTICE.\u2014Not later than March 31, 1997, the Commissioner of Social Security shall notify an individual described in subclause (I) of the provisions of this clause. (ii) FOOD STAMPS.\u2014 (I) IN GENERAL.\u2014With respect to the specified Federal program described in paragraph (3)(B), during the period beginning on the date of enact- ment of this Act and ending on the date which is 1 year after the date of enactment, the State agency shall, at the time of the recertification, recertify the eligibility of any individual who is receiving benefits under such program as of the date of enactment of this Act and whose eligibility 110 STAT. 2264 PUBLIC LAW 104 193\u2014AUG. 22, 1996 for such benefits may terminate by reason of the provisions of this subsection. (II) RECERTIFICATION CRITERIA.\u2014With respect to any recertification under subclause (I), the State agency shall apply the eligibility criteria for applicants for benefits under such program. (III) GRANDFATHER PROVISION.\u2014The provi- sions of this subsection and the recertification under subclause (I) shall only apply with respect to the eligibility of an alien for a program for months beginning on or after the date of recertifi- cation, if on the date of enactment of this Act the alien is lawfully residing in any State and is receiving benefits under such program on such date of enactment. (3) SPECIFIED FEDERAL PROGRAM DEFINED.\u2014For purposes of this title, the term ”specified Federal program” means any of the following: (A) SSI.\u2014The supplemental security income program under title XVI of the Social Security Act, including supple- mentary payments pursuant to an agreement for Federal administration under section 1616(a) of the Social Security Act and payments pursuant to an agreement entered into under section 212(b) of Public Law 93 66. (B) FOOD STAMPS.\u2014The food stamp program as defined in section 3(h) of the Food Stamp Act of 1977. (b) LIMITED ELIGIBILITY FOR DESIGNATED FEDERAL PROGRAMS.\u2014 (1) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in section 403 and paragraph (2), a State is authorized to determine the eligibility of an alien who is a qualified alien (as defined in section 431) for any designated Federal program (as defined in paragraph (3)). (2) EXCEPTIONS.\u2014Qualified aliens under this paragraph shall be eligible for any designated Federal program. (A) TIME-LIMITED EXCEPTION FOR REFUGEES AND ASYLEES.\u2014 (i) An alien who is admitted to the United States as a refugee under section 207 of the Immigration and Nationality Act until 5 years after the date of an alien’s entry into the United States. (ii) An alien who is granted asylum under section 208 of such Act until 5 years after the date of such grant of asylum. (iii) An alien whose deportation is being withheld under section 243(h) of such Act until 5 years after such withholding. (B) CERTAIN PERMANENT RESIDENT ALIENS.\u2014An alien who\u2014 (i) is lawfully admitted to the United States for permanent residence under the Immigration and Nationality Act; and (ii)(I) has worked 40 qualifying quarters of cov- erage as defined under title II of the Social Security Act or can be credited with such qualifying quarters as provided under section 435, and (II) in the case of any such qualifying quarter creditable for any period 110 STAT. 2265PUBLIC LAW 104 193\u2014AUG. 22, 1996 beginning after December 31, 1996, did not receive any Federal means-tested public benefit (as provided under section 403) during any such period. (C) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014An alien who is lawfully residing in any State and is\u2014 (i) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (ii) on active duty (other than active duty for training) in the Armed Forces of the United States, or (iii) the spouse or unmarried dependent child of an individual described in clause (i) or (ii). (D) TRANSITION FOR THOSE CURRENTLY RECEIVING BENEFITS.\u2014An alien who on the date of the enactment of this Act is lawfully residing in any State and is receiving benefits under such program on the date of the enactment of this Act shall continue to be eligible to receive such benefits until January 1, 1997. (3) DESIGNATED FEDERAL PROGRAM DEFINED.\u2014For purposes of this title, the term ”designated Federal program” means any of the following: (A) TEMPORARY ASSISTANCE FOR NEEDY FAMILIES.\u2014The program of block grants to States for temporary assistance for needy families under part A of title IV of the Social Security Act. (B) SOCIAL SERVICES BLOCK GRANT.\u2014The program of block grants to States for social services under title XX of the Social Security Act. (C) MEDICAID.\u2014A State plan approved under title XIX of the Social Security Act, other than medical assistance described in section 401(b)(1)(A). SEC. 403. FIVE-YEAR LIMITED ELIGIBILITY OF QUALIFIED ALIENS FOR FEDERAL MEANS-TESTED PUBLIC BENEFIT. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsections (b), (c), and (d), an alien who is a qualified alien (as defined in section 431) and who enters the United States on or after the date of the enactment of this Act is not eligible for any Federal means-tested public benefit for a period of 5 years beginning on the date of the alien’s entry into the United States with a status within the meaning of the term ”qualified alien”. (b) EXCEPTIONS.\u2014The limitation under subsection (a) shall not apply to the following aliens: (1) EXCEPTION FOR REFUGEES AND ASYLEES.\u2014 (A) An alien who is admitted to the United States as a refugee under section 207 of the Immigration and Nationality Act. (B) An alien who is granted asylum under section 208 of such Act. (C) An alien whose deportation is being withheld under section 243(h) of such Act. (2) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014An alien who is lawfully residing in any State and is\u2014 8 USC 1613. 110 STAT. 2266 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (B) on active duty (other than active duty for training) in the Armed Forces of the United States, or (C) the spouse or unmarried dependent child of an individual described in subparagraph (A) or (B). (c) APPLICATION OF TERM FEDERAL MEANS-TESTED PUBLIC BENEFIT.\u2014 (1) The limitation under subsection (a) shall not apply to assistance or benefits under paragraph (2). (2) Assistance and benefits under this paragraph are as follows: (A) Medical assistance described in section 401(b)(1)(A). (B) Short-term, non-cash, in-kind emergency disaster relief. (C) Assistance or benefits under the National School Lunch Act. (D) Assistance or benefits under the Child Nutrition Act of 1966. (E) Public health assistance (not including any assist- ance under title XIX of the Social Security Act) for immunizations with respect to immunizable diseases and for testing and treatment of symptoms of communicable diseases whether or not such symptoms are caused by a communicable disease. (F) Payments for foster care and adoption assistance under parts B and E of title IV of the Social Security Act for a parent or a child who would, in the absence of subsection (a), be eligible to have such payments made on the child’s behalf under such part, but only if the foster or adoptive parent (or parents) of such child is a qualified alien (as defined in section 431). (G) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consulta- tion with appropriate Federal agencies and departments, which (i) deliver in-kind services at the community level, including through public or private nonprofit agencies; (ii) do not condition the provision of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (iii) are necessary for the protection of life or safety. (H) Programs of student assistance under titles IV, V, IX, and X of the Higher Education Act of 1965, and titles III, VII, and VIII of the Public Health Service Act. (I) Means-tested programs under the Elementary and Secondary Education Act of 1965. (J) Benefits under the Head Start Act. (K) Benefits under the Job Training Partnership Act. (d) SPECIAL RULE FOR REFUGEE AND ENTRANT ASSISTANCE FOR CUBAN AND HAITIAN ENTRANTS.\u2014The limitation under subsection (a) shall not apply to refugee and entrant assistance activities, authorized by title IV of the Immigration and Nationality Act and section 501 of the Refugee Education Assistance Act of 1980, 110 STAT. 2267PUBLIC LAW 104 193\u2014AUG. 22, 1996 for Cuban and Haitian entrants as defined in section 501(e)(2) of the Refugee Education Assistance Act of 1980. SEC. 404. NOTIFICATION AND INFORMATION REPORTING. (a) NOTIFICATION.\u2014Each Federal agency that administers a program to which section 401, 402, or 403 applies shall, directly or through the States, post information and provide general notifica- tion to the public and to program recipients of the changes regarding eligibility for any such program pursuant to this subtitle. (b) INFORMATION REPORTING UNDER TITLE IV OF THE SOCIAL SECURITY ACT.\u2014Part A of title IV of the Social Security Act is amended by inserting the following new section after section 411: ”SEC. 411A. STATE REQUIRED TO PROVIDE CERTAIN INFORMATION. ”Each State to which a grant is made under section 403 shall, at least 4 times annually and upon request of the Immigration and Naturalization Service, furnish the Immigration and Natu- ralization Service with the name and address of, and other identify- ing information on, any individual who the State knows is unlaw- fully in the United States.”. (c) SSI.\u2014Section 1631(e) of such Act (42 U.S.C. 1383(e)) is amended\u2014 (1) by redesignating the paragraphs (6) and (7) inserted by sections 206(d)(2) and 206(f)(1) of the Social Security Independence and Programs Improvement Act of 1994 (Public Law 103 296; 108 Stat. 1514, 1515) as paragraphs (7) and (8), respectively; and (2) by adding at the end the following new paragraph: ”(9) Notwithstanding any other provision of law, the Commis- sioner shall, at least 4 times annually and upon request of the Immigration and Naturalization Service (hereafter in this para- graph referred to as the ‘Service’), furnish the Service with the name and address of, and other identifying information on, any individual who the Commissioner knows is unlawfully in the United States, and shall ensure that each agreement entered into under section 1616(a) with a State provides that the State shall furnish such information at such times with respect to any individual who the State knows is unlawfully in the United States.”. (d) INFORMATION REPORTING FOR HOUSING PROGRAMS.\u2014Title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended by adding at the end the following new section: ”SEC. 27. PROVISION OF INFORMATION TO LAW ENFORCEMENT AND OTHER AGENCIES. ”Notwithstanding any other provision of law, the Secretary shall, at least 4 times annually and upon request of the Immigration and Naturalization Service (hereafter in this section referred to as the ‘Service’), furnish the Service with the name and address of, and other identifying information on, any individual who the Secretary knows is unlawfully in the United States, and shall ensure that each contract for assistance entered into under section 6 or 8 of this Act with a public housing agency provides that the public housing agency shall furnish such information at such times with respect to any individual who the public housing agency knows is unlawfully in the United States.”. 42 USC 1437y. 42 USC 611a. 8 USC 1614. 110 STAT. 2268 PUBLIC LAW 104 193\u2014AUG. 22, 1996 Subtitle B\u2014Eligibility for State and Local Public Benefits Programs SEC. 411. ALIENS WHO ARE NOT QUALIFIED ALIENS OR NON- IMMIGRANTS INELIGIBLE FOR STATE AND LOCAL PUB- LIC BENEFITS. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsections (b) and (d), an alien who is not\u2014 (1) a qualified alien (as defined in section 431), (2) a nonimmigrant under the Immigration and Nationality Act, or (3) an alien who is paroled into the United States under section 212(d)(5) of such Act for less than one year, is not eligible for any State or local public benefit (as defined in subsection (c)). (b) EXCEPTIONS.\u2014Subsection (a) shall not apply with respect to the following State or local public benefits: (1) Assistance for health care items and services that are necessary for the treatment of an emergency medical condition (as defined in section 1903(v)(3) of the Social Security Act) of the alien involved and are not related to an organ transplant procedure. (2) Short-term, non-cash, in-kind emergency disaster relief. (3) Public health assistance for immunizations with respect to immunizable diseases and for testing and treatment of symp- toms of communicable diseases whether or not such symptoms are caused by a communicable disease. (4) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consultation with appro- priate Federal agencies and departments, which (A) deliver in-kind services at the community level, including through pub- lic or private nonprofit agencies; (B) do not condition the provi- sion of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (C) are necessary for the protection of life or safety. (c) STATE OR LOCAL PUBLIC BENEFIT DEFINED.\u2014 (1) Except as provided in paragraphs (2) and (3), for pur- poses of this subtitle the term ”State or local public benefit” means\u2014 (A) any grant, contract, loan, professional license, or commercial license provided by an agency of a State or local government or by appropriated funds of a State or local government; and (B) any retirement, welfare, health, disability, public or assisted housing, postsecondary education, food assist- ance, unemployment benefit, or any other similar benefit for which payments or assistance are provided to an individual, household, or family eligibility unit by an agency of a State or local government or by appropriated funds of a State or local government. (2) Such term shall not apply\u2014 8 USC 1621. 110 STAT. 2269PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) to any contract, professional license, or commercial license for a nonimmigrant whose visa for entry is related to such employment in the United States; or (B) with respect to benefits for an alien who as a work authorized nonimmigrant or as an alien lawfully admitted for permanent residence under the Immigration and Nationality Act qualified for such benefits and for whom the United States under reciprocal treaty agree- ments is required to pay benefits, as determined by the Secretary of State, after consultation with the Attorney General. (3) Such term does not include any Federal public benefit under section 4001(c). (d) STATE AUTHORITY TO PROVIDE FOR ELIGIBILITY OF ILLEGAL ALIENS FOR STATE AND LOCAL PUBLIC BENEFITS.\u2014A State may provide that an alien who is not lawfully present in the United States is eligible for any State or local public benefit for which such alien would otherwise be ineligible under subsection (a) only through the enactment of a State law after the date of the enact- ment of this Act which affirmatively provides for such eligibility. SEC. 412. STATE AUTHORITY TO LIMIT ELIGIBILITY OF QUALIFIED ALIENS FOR STATE PUBLIC BENEFITS. (a) IN GENERAL.\u2014Notwithstanding any other provision of law and except as provided in subsection (b), a State is authorized to determine the eligibility for any State public benefits of an alien who is a qualified alien (as defined in section 431), a non- immigrant under the Immigration and Nationality Act, or an alien who is paroled into the United States under section 212(d)(5) of such Act for less than one year. (b) EXCEPTIONS.\u2014Qualified aliens under this subsection shall be eligible for any State public benefits. (1) TIME-LIMITED EXCEPTION FOR REFUGEES AND ASYLEES.\u2014 (A) An alien who is admitted to the United States as a refugee under section 207 of the Immigration and Nationality Act until 5 years after the date of an alien’s entry into the United States. (B) An alien who is granted asylum under section 208 of such Act until 5 years after the date of such grant of asylum. (C) An alien whose deportation is being withheld under section 243(h) of such Act until 5 years after such with- holding. (2) CERTAIN PERMANENT RESIDENT ALIENS.\u2014An alien who\u2014 (A) is lawfully admitted to the United States for perma- nent residence under the Immigration and Nationality Act; and (B)(i) has worked 40 qualifying quarters of coverage as defined under title II of the Social Security Act or can be credited with such qualifying quarters as provided under section 435, and (ii) in the case of any such qualifying quarter creditable for any period beginning after December 31, 1996, did not receive any Federal means-tested public benefit (as provided under section 403) during any such period. (3) VETERAN AND ACTIVE DUTY EXCEPTION.\u2014An alien who is lawfully residing in any State and is\u2014 8 USC 1622. 110 STAT. 2270 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) a veteran (as defined in section 101 of title 38, United States Code) with a discharge characterized as an honorable discharge and not on account of alienage, (B) on active duty (other than active duty for training) in the Armed Forces of the United States, or (C) the spouse or unmarried dependent child of an individual described in subparagraph (A) or (B). (4) TRANSITION FOR THOSE CURRENTLY RECEIVING BENE- FITS.\u2014An alien who on the date of the enactment of this Act is lawfully residing in any State and is receiving benefits on the date of the enactment of this Act shall continue to be eligible to receive such benefits until January 1, 1997. Subtitle C\u2014Attribution of Income and Affidavits of Support SEC. 421. FEDERAL ATTRIBUTION OF SPONSOR’S INCOME AND RESOURCES TO ALIEN. (a) IN GENERAL.\u2014Notwithstanding any other provision of law, in determining the eligibility and the amount of benefits of an alien for any Federal means-tested public benefits program (as provided under section 403), the income and resources of the alien shall be deemed to include the following: (1) The income and resources of any person who executed an affidavit of support pursuant to section 213A of the Immigra- tion and Nationality Act (as added by section 423) on behalf of such alien. (2) The income and resources of the spouse (if any) of the person. (b) DURATION OF ATTRIBUTION PERIOD.\u2014Subsection (a) shall apply with respect to an alien until such time as the alien\u2014 (1) achieves United States citizenship through naturaliza- tion pursuant to chapter 2 of title III of the Immigration and Nationality Act; or (2)(A) has worked 40 qualifying quarters of coverage as defined under title II of the Social Security Act or can be credited with such qualifying quarters as provided under section 435, and (B) in the case of any such qualifying quarter cred- itable for any period beginning after December 31, 1996, did not receive any Federal means-tested public benefit (as provided under section 403) during any such period. (c) REVIEW OF INCOME AND RESOURCES OF ALIEN UPON RE- APPLICATION.\u2014Whenever an alien is required to reapply for benefits under any Federal means-tested public benefits program, the applicable agency shall review the income and resources attributed to the alien under subsection (a). (d) APPLICATION.\u2014 (1) If on the date of the enactment of this Act, a Federal means-tested public benefits program attributes a sponsor’s income and resources to an alien in determining the alien’s eligibility and the amount of benefits for an alien, this section shall apply to any such determination beginning on the day after the date of the enactment of this Act. (2) If on the date of the enactment of this Act, a Federal means-tested public benefits program does not attribute a spon- sor’s income and resources to an alien in determining the 8 USC 1631. 110 STAT. 2271PUBLIC LAW 104 193\u2014AUG. 22, 1996 alien’s eligibility and the amount of benefits for an alien, this section shall apply to any such determination beginning 180 days after the date of the enactment of this Act. SEC. 422. AUTHORITY FOR STATES TO PROVIDE FOR ATTRIBUTION OF SPONSORS INCOME AND RESOURCES TO THE ALIEN WITH RESPECT TO STATE PROGRAMS. (a) OPTIONAL APPLICATION TO STATE PROGRAMS.\u2014Except as provided in subsection (b), in determining the eligibility and the amount of benefits of an alien for any State public benefits (as defined in section 412(c)), the State or political subdivision that offers the benefits is authorized to provide that the income and resources of the alien shall be deemed to include\u2014 (1) the income and resources of any individual who executed an affidavit of support pursuant to section 213A of the Immigra- tion and Nationality Act (as added by section 423) on behalf of such alien, and (2) the income and resources of the spouse (if any) of the individual. (b) EXCEPTIONS.\u2014Subsection (a) shall not apply with respect to the following State public benefits: (1) Assistance described in section 411(b)(1). (2) Short-term, non-cash, in-kind emergency disaster relief. (3) Programs comparable to assistance or benefits under the National School Lunch Act. (4) Programs comparable to assistance or benefits under the Child Nutrition Act of 1966. (5) Public health assistance for immunizations with respect to immunizable diseases and for testing and treatment of symp- toms of communicable diseases whether or not such symptoms are caused by a communicable disease. (6) Payments for foster care and adoption assistance. (7) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General of a State, after consultation with appropriate agencies and departments, which (A) deliver in-kind services at the community level, including through pub- lic or private nonprofit agencies; (B) do not condition the provi- sion of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (C) are necessary for the protection of life or safety. SEC. 423. REQUIREMENTS FOR SPONSOR’S AFFIDAVIT OF SUPPORT. (a) IN GENERAL.\u2014Title II of the Immigration and Nationality Act is amended by inserting after section 213 the following new section: ”REQUIREMENTS FOR SPONSOR’S AFFIDAVIT OF SUPPORT ”SEC. 213A. (a) ENFORCEABILITY.\u2014(1) No affidavit of support may be accepted by the Attorney General or by any consular officer to establish that an alien is not excludable as a public charge under section 212(a)(4) unless such affidavit is executed as a contract\u2014 ”(A) which is legally enforceable against the sponsor by the sponsored alien, the Federal Government, and by any State (or any political subdivision of such State) which provides any 8 USC 1183a. 8 USC 1632. 110 STAT. 2272 PUBLIC LAW 104 193\u2014AUG. 22, 1996 means-tested public benefits program, but not later than 10 years after the alien last receives any such benefit; ”(B) in which the sponsor agrees to financially support the alien, so that the alien will not become a public charge; and ”(C) in which the sponsor agrees to submit to the jurisdic- tion of any Federal or State court for the purpose of actions brought under subsection (e)(2). ”(2) A contract under paragraph (1) shall be enforceable with respect to benefits provided to the alien until such time as the alien achieves United States citizenship through naturalization pursuant to chapter 2 of title III. ”(b) FORMS.\u2014Not later than 90 days after the date of enactment of this section, the Attorney General, in consultation with the Secretary of State and the Secretary of Health and Human Services, shall formulate an affidavit of support consistent with the provisions of this section. ”(c) REMEDIES.\u2014Remedies available to enforce an affidavit of support under this section include any or all of the remedies described in section 3201, 3203, 3204, or 3205 of title 28, United States Code, as well as an order for specific performance and payment of legal fees and other costs of collection, and include corresponding remedies available under State law. A Federal agency may seek to collect amounts owed under this section in accordance with the provisions of subchapter II of chapter 37 of title 31, United States Code. ”(d) NOTIFICATION OF CHANGE OF ADDRESS.\u2014 ”(1) IN GENERAL.\u2014The sponsor shall notify the Attorney General and the State in which the sponsored alien is currently resident within 30 days of any change of address of the sponsor during the period specified in subsection (a)(2). ”(2) PENALTY.\u2014Any person subject to the requirement of paragraph (1) who fails to satisfy such requirement shall be subject to a civil penalty of\u2014 ”(A) not less than $250 or more than $2,000, or ”(B) if such failure occurs with knowledge that the alien has received any means-tested public benefit, not less than $2,000 or more than $5,000. ”(e) REIMBURSEMENT OF GOVERNMENT EXPENSES.\u2014(1)(A) Upon notification that a sponsored alien has received any benefit under any means-tested public benefits program, the appropriate Federal, State, or local official shall request reimbursement by the sponsor in the amount of such assistance. ”(B) The Attorney General, in consultation with the Secretary of Health and Human Services, shall prescribe such regulations as may be necessary to carry out subparagraph (A). ”(2) If within 45 days after requesting reimbursement, the appropriate Federal, State, or local agency has not received a response from the sponsor indicating a willingness to commence payments, an action may be brought against the sponsor pursuant to the affidavit of support. ”(3) If the sponsor fails to abide by the repayment terms estab- lished by such agency, the agency may, within 60 days of such failure, bring an action against the sponsor pursuant to the affidavit of support. 110 STAT. 2273PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(4) No cause of action may be brought under this subsection later than 10 years after the alien last received any benefit under any means-tested public benefits program. ”(5) If, pursuant to the terms of this subsection, a Federal, State, or local agency requests reimbursement from the sponsor in the amount of assistance provided, or brings an action against the sponsor pursuant to the affidavit of support, the appropriate agency may appoint or hire an individual or other person to act on behalf of such agency acting under the authority of law for purposes of collecting any moneys owed. Nothing in this subsection shall preclude any appropriate Federal, State, or local agency from directly requesting reimbursement from a sponsor for the amount of assistance provided, or from bringing an action against a sponsor pursuant to an affidavit of support. ”(f) DEFINITIONS.\u2014For the purposes of this section\u2014 ”(1) SPONSOR.\u2014The term ‘sponsor’ means an indi- vidual who\u2014 ”(A) is a citizen or national of the United States or an alien who is lawfully admitted to the United States for permanent residence; ”(B) is 18 years of age or over; ”(C) is domiciled in any of the 50 States or the District of Columbia; and ”(D) is the person petitioning for the admission of the alien under section 204.”. (b) CLERICAL AMENDMENT.\u2014The table of contents of such Act is amended by inserting after the item relating to section 213 the following: ”Sec. 213A. Requirements for sponsor’s affidavit of support.”. (c) EFFECTIVE DATE.\u2014Subsection (a) of section 213A of the Immigration and Nationality Act, as inserted by subsection (a) of this section, shall apply to affidavits of support executed on or after a date specified by the Attorney General, which date shall be not earlier than 60 days (and not later than 90 days) after the date the Attorney General formulates the form for such affidavits under subsection (b) of such section. (d) BENEFITS NOT SUBJECT TO REIMBURSEMENT.\u2014Requirements for reimbursement by a sponsor for benefits provided to a sponsored alien pursuant to an affidavit of support under section 213A of the Immigration and Nationality Act shall not apply with respect to the following: (1) Medical assistance described in section 401(b)(1)(A) or assistance described in section 411(b)(1). (2) Short-term, non-cash, in-kind emergency disaster relief. (3) Assistance or benefits under the National School Lunch Act. (4) Assistance or benefits under the Child Nutrition Act of 1966. (5) Public health assistance for immunizations (not includ- ing any assistance under title XIX of the Social Security Act) with respect to immunizable diseases and for testing and treat- ment of symptoms of communicable diseases whether or not such symptoms are caused by a communicable disease. (6) Payments for foster care and adoption assistance under parts B and E of title IV of the Social Security Act for a parent or a child, but only if the foster or adoptive parent 8 USC 1138a note. 8 USC 1138a note. 110 STAT. 2274 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (or parents) of such child is a qualified alien (as defined in section 431). (7) Programs, services, or assistance (such as soup kitchens, crisis counseling and intervention, and short-term shelter) specified by the Attorney General, in the Attorney General’s sole and unreviewable discretion after consultation with appro- priate Federal agencies and departments, which (A) deliver in-kind services at the community level, including through pub- lic or private nonprofit agencies; (B) do not condition the provi- sion of assistance, the amount of assistance provided, or the cost of assistance provided on the individual recipient’s income or resources; and (C) are necessary for the protection of life or safety. (8) Programs of student assistance under titles IV, V, IX, and X of the Higher Education Act of 1965, and titles III, VII, and VIII of the Public Health Service Act. (9) Benefits under the Head Start Act. (10) Means-tested programs under the Elementary and Secondary Education Act of 1965. (11) Benefits under the Job Training Partnership Act. Subtitle D\u2014General Provisions SEC. 431. DEFINITIONS. (a) IN GENERAL.\u2014Except as otherwise provided in this title, the terms used in this title have the same meaning given such terms in section 101(a) of the Immigration and Nationality Act. (b) QUALIFIED ALIEN.\u2014For purposes of this title, the term ”qualified alien” means an alien who, at the time the alien applies for, receives, or attempts to receive a Federal public benefit, is\u2014 (1) an alien who is lawfully admitted for permanent resi- dence under the Immigration and Nationality Act, (2) an alien who is granted asylum under section 208 of such Act, (3) a refugee who is admitted to the United States under section 207 of such Act, (4) an alien who is paroled into the United States under section 212(d)(5) of such Act for a period of at least 1 year, (5) an alien whose deportation is being withheld under section 243(h) of such Act, or (6) an alien who is granted conditional entry pursuant to section 203(a)(7) of such Act as in effect prior to April 1, 1980. SEC. 432. VERIFICATION OF ELIGIBILITY FOR FEDERAL PUBLIC BENEFITS. (a) IN GENERAL.\u2014Not later than 18 months after the date of the enactment of this Act, the Attorney General of the United States, after consultation with the Secretary of Health and Human Services, shall promulgate regulations requiring verification that a person applying for a Federal public benefit (as defined in section 401(c)), to which the limitation under section 401 applies, is a qualified alien and is eligible to receive such benefit. Such regula- tions shall, to the extent feasible, require that information requested and exchanged be similar in form and manner to information requested and exchanged under section 1137 of the Social Security Act. 8 USC 1642. 8 USC 1641. 110 STAT. 2275PUBLIC LAW 104 193\u2014AUG. 22, 1996 (b) STATE COMPLIANCE.\u2014Not later than 24 months after the date the regulations described in subsection (a) are adopted, a State that administers a program that provides a Federal public benefit shall have in effect a verification system that complies with the regulations. (c) AUTHORIZATION OF APPROPRIATIONS.\u2014There are authorized to be appropriated such sums as may be necessary to carry out the purpose of this section. SEC. 433. STATUTORY CONSTRUCTION. (a) LIMITATION.\u2014 (1) Nothing in this title may be construed as an entitlement or a determination of an individual’s eligibility or fulfillment of the requisite requirements for any Federal, State, or local governmental program, assistance, or benefits. For purposes of this title, eligibility relates only to the general issue of eligibility or ineligibility on the basis of alienage. (2) Nothing in this title may be construed as addressing alien eligibility for a basic public education as determined by the Supreme Court of the United States under Plyler v. Doe (457 U.S. 202)(1982). (b) NOT APPLICABLE TO FOREIGN ASSISTANCE.\u2014This title does not apply to any Federal, State, or local governmental program, assistance, or benefits provided to an alien under any program of foreign assistance as determined by the Secretary of State in consultation with the Attorney General. (c) SEVERABILITY.\u2014If any provision of this title or the applica- tion of such provision to any person or circumstance is held to be unconstitutional, the remainder of this title and the application of the provisions of such to any person or circumstance shall not be affected thereby. SEC. 434. COMMUNICATION BETWEEN STATE AND LOCAL GOVERN- MENT AGENCIES AND THE IMMIGRATION AND NATURALIZATION SERVICE. Notwithstanding any other provision of Federal, State, or local law, no State or local government entity may be prohibited, or in any way restricted, from sending to or receiving from the Immigration and Naturalization Service information regarding the immigration status, lawful or unlawful, of an alien in the United States. SEC. 435. QUALIFYING QUARTERS. For purposes of this title, in determining the number of qualify- ing quarters of coverage under title II of the Social Security Act an alien shall be credited with\u2014 (1) all of the qualifying quarters of coverage as defined under title II of the Social Security Act worked by a parent of such alien while the alien was under age 18, and (2) all of the qualifying quarters worked by a spouse of such alien during their marriage and the alien remains married to such spouse or such spouse is deceased. No such qualifying quarter of coverage that is creditable under title II of the Social Security Act for any period beginning after December 31, 1996, may be credited to an alien under paragraph (1) or (2) if the parent or spouse (as the case may be) of such alien received any Federal means-tested public benefit (as provided 8 USC 1645. 8 USC 1644. 8 USC 1643. 110 STAT. 2276 PUBLIC LAW 104 193\u2014AUG. 22, 1996 under section 403) during the period for which such qualifying quarter of coverage is so credited. Subtitle E\u2014Conforming Amendments Relating to Assisted Housing SEC. 441. CONFORMING AMENDMENTS RELATING TO ASSISTED HOUSING. (a) LIMITATIONS ON ASSISTANCE.\u2014Section 214 of the Housing and Community Development Act of 1980 (42 U.S.C. 1436a) is amended\u2014 (1) by striking ”Secretary of Housing and Urban Develop- ment” each place it appears and inserting ”applicable Secretary”; (2) in subsection (b), by inserting after ”National Housing Act,” the following: ”the direct loan program under section 502 of the Housing Act of 1949 or section 502(c)(5)(D), 504, 521(a)(2)(A), or 542 of such Act, subtitle A of title III of the Cranston-Gonzalez National Affordable Housing Act,”; (3) in paragraphs (2) through (6) of subsection (d), by striking ”Secretary” each place it appears and inserting ”applicable Secretary”; (4) in subsection (d), in the matter following paragraph (6), by striking ”the term ‘Secretary”’ and inserting ”the term ‘applicable Secretary”’; and (5) by adding at the end the following new subsection: ”(h) For purposes of this section, the term ‘applicable Secretary’ means\u2014 ”(1) the Secretary of Housing and Urban Development, with respect to financial assistance administered by such Sec- retary and financial assistance under subtitle A of title III of the Cranston-Gonzalez National Affordable Housing Act; and ”(2) the Secretary of Agriculture, with respect to financial assistance administered by such Secretary.”. (b) CONFORMING AMENDMENTS.\u2014Section 501(h) of the Housing Act of 1949 (42 U.S.C. 1471(h)) is amended\u2014 (1) by striking ”(1)”; (2) by striking ”by the Secretary of Housing and Urban Development”; and (3) by striking paragraph (2). Subtitle F\u2014Earned Income Credit Denied to Unauthorized Employees SEC. 451. EARNED INCOME CREDIT DENIED TO INDIVIDUALS NOT AUTHORIZED TO BE EMPLOYED IN THE UNITED STATES. (a) IN GENERAL.\u2014Section 32(c)(1) of the Internal Revenue Code of 1986 (relating to individuals eligible to claim the earned income credit) is amended by adding at the end the following new subpara- graph: ”(F) IDENTIFICATION NUMBER REQUIREMENT.\u2014The term ‘eligible individual’ does not include any individual who does not include on the return of tax for the taxable year\u2014 ”(i) such individual’s taxpayer identification number, and 110 STAT. 2277PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(ii) if the individual is married (within the mean- ing of section 7703), the taxpayer identification number of such individual’s spouse.”. (b) SPECIAL IDENTIFICATION NUMBER.\u2014Section 32 of such Code is amended by adding at the end the following new subsection: ”(l) IDENTIFICATION NUMBERS.\u2014Solely for purposes of sub- sections (c)(1)(F) and (c)(3)(D), a taxpayer identification number means a social security number issued to an individual by the Social Security Administration (other than a social security number issued pursuant to clause (II) (or that portion of clause (III) that relates to clause (II)) of section 205(c)(2)(B)(i) of the Social Security Act).”. (c) EXTENSION OF PROCEDURES APPLICABLE TO MATHEMATICAL OR CLERICAL ERRORS.\u2014Section 6213(g)(2) of such Code (relating to the definition of mathematical or clerical errors) is amended by striking ”and” at the end of subparagraph (D), by striking the period at the end of subparagraph (E) and inserting a comma, and by inserting after subparagraph (E) the following new subpara- graphs: ”(F) an omission of a correct taxpayer identification number required under section 32 (relating to the earned income credit) to be included on a return, and ”(G) an entry on a return claiming the credit under section 32 with respect to net earnings from self-employ- ment described in section 32(c)(2)(A) to the extent the tax imposed by section 1401 (relating to self-employment tax) on such net earnings has not been paid.”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply with respect to returns the due date for which (without regard to extensions) is more than 30 days after the date of the enactment of this Act. TITLE V\u2014CHILD PROTECTION SEC. 501. AUTHORITY OF STATES TO MAKE FOSTER CARE MAINTE- NANCE PAYMENTS ON BEHALF OF CHILDREN IN ANY PRIVATE CHILD CARE INSTITUTION. Section 472(c)(2) of the Social Security Act (42 U.S.C. 672(c)(2)) is amended by striking ”nonprofit”. SEC. 502. EXTENSION OF ENHANCED MATCH FOR IMPLEMENTATION OF STATEWIDE AUTOMATED CHILD WELFARE INFORMA- TION SYSTEMS. Section 13713(b)(2) of the Omnibus Budget Reconciliation Act of 1993 (42 U.S.C. 674 note; 107 Stat. 657) is amended by striking ”1996” and inserting ”1997”. SEC. 503. NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE. Part B of title IV of the Social Security Act (42 U.S.C. 620 628a) is amended by adding at the end the following: ”SEC. 429A. NATIONAL RANDOM SAMPLE STUDY OF CHILD WELFARE. ”(a) IN GENERAL.\u2014The Secretary shall conduct a national study based on random samples of children who are at risk of child abuse or neglect, or are determined by States to have been abused or neglected. 42 USC 628b. 26 USC 32 note. 110 STAT. 2278 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(b) REQUIREMENTS.\u2014The study required by subsection (a) shall\u2014 ”(1) have a longitudinal component; and ”(2) yield data reliable at the State level for as many States as the Secretary determines is feasible. ”(c) PREFERRED CONTENTS.\u2014In conducting the study required by subsection (a), the Secretary should\u2014 ”(1) carefully consider selecting the sample from cases of confirmed abuse or neglect; and ”(2) follow each case for several years while obtaining information on, among other things\u2014 ”(A) the type of abuse or neglect involved; ”(B) the frequency of contact with State or local agencies; ”(C) whether the child involved has been separated from the family, and, if so, under what circumstances; ”(D) the number, type, and characteristics of out-of- home placements of the child; and ”(E) the average duration of each placement. ”(d) REPORTS.\u2014 ”(1) IN GENERAL.\u2014From time to time, the Secretary shall prepare reports summarizing the results of the study required by subsection (a). ”(2) AVAILABILITY.\u2014The Secretary shall make available to the public any report prepared under paragraph (1), in writing or in the form of an electronic data tape. ”(3) AUTHORITY TO CHARGE FEE.\u2014The Secretary may charge and collect a fee for the furnishing of reports under para- graph (2). ”(e) APPROPRIATION.\u2014Out of any money in the Treasury of the United States not otherwise appropriated, there are appro- priated to the Secretary for each of fiscal years 1996 through 2002 $6,000,000 to carry out this section.”. SEC. 504. REDESIGNATION OF SECTION 1123. The Social Security Act is amended by redesignating sec- tion 1123, the second place it appears (42 U.S.C. 1320a 1a), as section 1123A. SEC. 505. KINSHIP CARE. Section 471(a) of the Social Security Act (42 U.S.C. 671(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (16); (2) by striking the period at the end of paragraph (17) and inserting ”; and”; and (3) by adding at the end the following: ”(18) provides that the State shall consider giving pref- erence to an adult relative over a non-related caregiver when determining a placement for a child, provided that the relative caregiver meets all relevant State child protection standards.”. TITLE VI\u2014CHILD CARE SEC. 601. SHORT TITLE AND REFERENCES. (a) SHORT TITLE.\u2014This title may be cited as the ”Child Care and Development Block Grant Amendments of 1996”. 42 USC 9801 note. Child Care and Development Block Grant Amendments of 1996. 42 USC 1320a 2a. 110 STAT. 2279PUBLIC LAW 104 193\u2014AUG. 22, 1996 (b) REFERENCES.\u2014Except as otherwise expressly provided, whenever in this title an amendment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Child Care and Development Block Grant Act of 1990 (42 U.S.C. 9858 et seq.). SEC. 602. GOALS. Section 658A (42 U.S.C. 9801 note) is amended\u2014 (1) in the section heading by inserting ”AND GOALS” after ”TITLE”; (2) by inserting ”(a) SHORT TITLE.\u2014” before ”This”; and (3) by adding at the end the following: ”(b) GOALS.\u2014The goals of this subchapter are\u2014 ”(1) to allow each State maximum flexibility in developing child care programs and policies that best suit the needs of children and parents within such State; ”(2) to promote parental choice to empower working parents to make their own decisions on the child care that best suits their family’s needs; ”(3) to encourage States to provide consumer education information to help parents make informed choices about child care; ”(4) to assist States to provide child care to parents trying to achieve independence from public assistance; and ”(5) to assist States in implementing the health, safety, licensing, and registration standards established in State regu- lations.”. SEC. 603. AUTHORIZATION OF APPROPRIATIONS AND ENTITLEMENT AUTHORITY. (a) IN GENERAL.\u2014Section 658B (42 U.S.C. 9858) is amended to read as follows: ”SEC. 658B. AUTHORIZATION OF APPROPRIATIONS. ”There is authorized to be appropriated to carry out this sub- chapter $1,000,000,000 for each of the fiscal years 1996 through 2002.”. (b) SOCIAL SECURITY ACT.\u2014Part A of title IV of the Social Security Act (42 U.S.C. 601 617) is amended by adding at the end the following new section: ”SEC. 418. FUNDING FOR CHILD CARE. ”(a) GENERAL CHILD CARE ENTITLEMENT.\u2014 ”(1) GENERAL ENTITLEMENT.\u2014Subject to the amount appro- priated under paragraph (3), each State shall, for the purpose of providing child care assistance, be entitled to payments under a grant under this subsection for a fiscal year in an amount equal to\u2014 ”(A) the sum of the total amount required to be paid to the State under section 403 for fiscal year 1994 or 1995 (whichever is greater) with respect to amounts expended for child care under section\u2014 ”(i) 402(g) of this Act (as such section was in effect before October 1, 1995); and ”(ii) 402(i) of this Act (as so in effect); or 42 USC 618. 42 USC 9858 note. 42 USC 9801 note. 110 STAT. 2280 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) the average of the total amounts required to be paid to the State for fiscal years 1992 through 1994 under the sections referred to in subparagraph (A); whichever is greater. ”(2) REMAINDER.\u2014 ”(A) GRANTS.\u2014The Secretary shall use any amounts appropriated for a fiscal year under paragraph (3), and remaining after the reservation described in paragraph (4) and after grants are awarded under paragraph (1), to make grants to States under this paragraph. ”(B) AMOUNT.\u2014Subject to subparagraph (C), the amount of a grant awarded to a State for a fiscal year under this paragraph shall be based on the formula used for determining the amount of Federal payments to the State under section 403(n) (as such section was in effect before October 1, 1995). ”(C) MATCHING REQUIREMENT.\u2014The Secretary shall pay to each eligible State in a fiscal year an amount, under a grant under subparagraph (A), equal to the Federal medical assistance percentage for such State for fiscal year 1995 (as defined in section 1905(b)) of so much of the expenditures by the State for child care in such year as exceed the State set-aside for such State under paragraph (1)(A) for such year and the amount of State expenditures in fiscal year 1994 or 1995 (whichever is greater) that equal the non-Federal share for the programs described in subparagraph (A) of paragraph (1). ”(D) REDISTRIBUTION.\u2014 ”(i) IN GENERAL.\u2014With respect to any fiscal year, if the Secretary determines (in accordance with clause (ii)) that amounts under any grant awarded to a State under this paragraph for such fiscal year will not be used by such State during such fiscal year for carrying out the purpose for which the grant is made, the Sec- retary shall make such amounts available in the subse- quent fiscal year for carrying out such purpose to one or more States which apply for such funds to the extent the Secretary determines that such States will be able to use such additional amounts for carrying out such purpose. Such available amounts shall be redistributed to a State pursuant to section 403(n) (as such section was in effect before October 1, 1995) by substituting ‘the number of children residing in all States applying for such funds’ for ‘the number of children residing in the United States in the second preceding fiscal year’. ”(ii) TIME OF DETERMINATION AND DISTRIBUTION.\u2014 The determination of the Secretary under clause (i) for a fiscal year shall be made not later than the end of the first quarter of the subsequent fiscal year. The redistribution of amounts under clause (i) shall be made as close as practicable to the date on which such determination is made. Any amount made avail- able to a State from an appropriation for a fiscal year in accordance with this subparagraph shall, for pur- poses of this part, be regarded as part of such State’s 110 STAT. 2281PUBLIC LAW 104 193\u2014AUG. 22, 1996 payment (as determined under this subsection) for the fiscal year in which the redistribution is made. ”(3) APPROPRIATION.\u2014For grants under this section, there are appropriated\u2014 ”(A) $1,967,000,000 for fiscal year 1997; ”(B) $2,067,000,000 for fiscal year 1998; ”(C) $2,167,000,000 for fiscal year 1999; ”(D) $2,367,000,000 for fiscal year 2000; ”(E) $2,567,000,000 for fiscal year 2001; and ”(F) $2,717,000,000 for fiscal year 2002. ”(4) INDIAN TRIBES.\u2014The Secretary shall reserve not less than 1 percent, and not more than 2 percent, of the aggregate amount appropriated to carry out this section in each fiscal year for payments to Indian tribes and tribal organizations. ”(b) USE OF FUNDS.\u2014 ”(1) IN GENERAL.\u2014Amounts received by a State under this section shall only be used to provide child care assistance. Amounts received by a State under a grant under subsection (a)(1) shall be available for use by the State without fiscal year limitation. ”(2) USE FOR CERTAIN POPULATIONS.\u2014A State shall ensure that not less than 70 percent of the total amount of funds received by the State in a fiscal year under this section are used to provide child care assistance to families who are receiv- ing assistance under a State program under this part, families who are attempting through work activities to transition off of such assistance program, and families who are at risk of becoming dependent on such assistance program. ”(c) APPLICATION OF CHILD CARE AND DEVELOPMENT BLOCK GRANT ACT of 1990.\u2014Notwithstanding any other provision of law, amounts provided to a State under this section shall be transferred to the lead agency under the Child Care and Development Block Grant Act of 1990, integrated by the State into the programs established by the State under such Act, and be subject to require- ments and limitations of such Act. ”(d) DEFINITION.\u2014As used in this section, the term ‘State’ means each of the 50 States or the District of Columbia.”. SEC. 604. LEAD AGENCY. Section 658D(b) (42 U.S.C. 9858b(b)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A), by striking ”State” the first place that such appears and inserting ”governmental or nongovernmental”; and (B) in subparagraph (C), by inserting ”with sufficient time and Statewide distribution of the notice of such hear- ing,” after ”hearing in the State”; and (2) in paragraph (2), by striking the second sentence. SEC. 605. APPLICATION AND PLAN. Section 658E (42 U.S.C. 9858c) is amended\u2014 (1) in subsection (b)\u2014 (A) by striking ”implemented\u2014” and all that follows through ”(2)” and inserting ”implemented”; and (B) by striking ”for subsequent State plans”; (2) in subsection (c)\u2014 (A) in paragraph (2)\u2014 (i) in subparagraph (A)\u2014 110 STAT. 2282 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (I) in clause (i) by striking ”, other than through assistance provided under paragraph (3)(C),”; and (II) by striking ”except” and all that follows through ”1992”, and inserting ”and provide a detailed description of the procedures the State will implement to carry out the requirements of this subparagraph”; (ii) in subparagraph (B)\u2014 (I) by striking ”Provide assurances” and insert- ing ”Certify”; and (II) by inserting before the period at the end ”and provide a detailed description of such proce- dures”; (iii) in subparagraph (C)\u2014 (I) by striking ”Provide assurances” and insert- ing ”Certify”; and (II) by inserting before the period at the end ”and provide a detailed description of how such record is maintained and is made available”; (iv) by amending subparagraph (D) to read as follows: ”(D) CONSUMER EDUCATION INFORMATION.\u2014Certify that the State will collect and disseminate to parents of eligible children and the general public, consumer education information that will promote informed child care choices.”; (v) in subparagraph (E), to read as follows: ”(E) COMPLIANCE WITH STATE LICENSING REQUIRE- MENTS.\u2014 ”(i) IN GENERAL.\u2014Certify that the State has in effect licensing requirements applicable to child care services provided within the State, and provide a detailed description of such requirements and of how such requirements are effectively enforced. Nothing in the preceding sentence shall be construed to require that licensing requirements be applied to specific types of providers of child care services. ”(ii) INDIAN TRIBES AND TRIBAL ORGANIZATIONS.\u2014 In lieu of any licensing and regulatory requirements applicable under State and local law, the Secretary, in consultation with Indian tribes and tribal organiza- tions, shall develop minimum child care standards (that appropriately reflect tribal needs and available resources) that shall be applicable to Indian tribes and tribal organization receiving assistance under this subchapter.”; (vi) in subparagraph (F) by striking ”Provide assur- ances” and inserting ”Certify”; (vii) in subparagraph (G) by striking ”Provide assurances” and inserting ”Certify”; and (viii) by striking subparagraphs (H), (I), and (J) and inserting the following: ”(H) MEETING THE NEEDS OF CERTAIN POPULATIONS.\u2014 Demonstrate the manner in which the State will meet the specific child care needs of families who are receiving assistance under a State program under part A of title IV of the Social Security Act, families who are attempting 110 STAT. 2283PUBLIC LAW 104 193\u2014AUG. 22, 1996 through work activities to transition off of such assistance program, and families that are at risk of becoming depend- ent on such assistance program.”; (B) in paragraph (3)\u2014 (i) in subparagraph (A), by striking ”(B) and (C)” and inserting ”(B) through (D)”; (ii) in subparagraph (B)\u2014 (I) by striking ”.\u2014Subject to the reservation contained in subparagraph (C), the” and inserting ”AND RELATED ACTIVITIES.\u2014The”; (II) in clause (i) by striking ”; and” at the end and inserting a period; (III) by striking ”for\u2014” and all that follows through ”section 658E(c)(2)(A)” and inserting ”for child care services on a sliding fee scale basis, activities that improve the quality or availability of such services, and any other activity that the State deems appropriate to realize any of the goals specified in paragraphs (2) through (5) of section 658A(b)”; and (IV) by striking clause (ii); (iii) by amending subparagraph (C) to read as follows: ”(C) LIMITATION ON ADMINISTRATIVE COSTS.\u2014Not more than 5 percent of the aggregate amount of funds available to the State to carry out this subchapter by a State in each fiscal year may be expended for administrative costs incurred by such State to carry out all of its functions and duties under this subchapter. As used in the preceding sentence, the term ‘administrative costs’ shall not include the costs of providing direct services.”; and (iv) by adding at the end thereof the following: ”(D) ASSISTANCE FOR CERTAIN FAMILIES.\u2014A State shall ensure that a substantial portion of the amounts available (after the State has complied with the requirement of sec- tion 418(b)(2) of the Social Security Act with respect to each of the fiscal years 1997 through 2002) to the State to carry out activities under this subchapter in each fiscal year is used to provide assistance to low-income working families other than families described in paragraph (2)(H).”; and (C) in paragraph (4)(A)\u2014 (i) by striking ”provide assurances” and inserting ”certify”; (ii) in the first sentence by inserting ”and shall provide a summary of the facts relied on by the State to determine that such rates are sufficient to ensure such access” before the period; and (iii) by striking the last sentence. SEC. 606. LIMITATION ON STATE ALLOTMENTS. Section 658F(b)(1) (42 U.S.C. 9858d(b)(1)) is amended by striking ”No” and inserting ”Except as provided for in section 658O(c)(6), no”. SEC. 607. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE. Section 658G (42 U.S.C. 9858e) is amended to read as follows: 110 STAT. 2284 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”SEC. 658G. ACTIVITIES TO IMPROVE THE QUALITY OF CHILD CARE. ”A State that receives funds to carry out this subchapter for a fiscal year, shall use not less than 4 percent of the amount of such funds for activities that are designed to provide comprehen- sive consumer education to parents and the public, activities that increase parental choice, and activities designed to improve the quality and availability of child care (such as resource and referral services).”. SEC. 608. REPEAL OF EARLY CHILDHOOD DEVELOPMENT AND BEFORE- AND AFTER-SCHOOL CARE REQUIREMENT. Section 658H (42 U.S.C. 9858f) is repealed. SEC. 609. ADMINISTRATION AND ENFORCEMENT. Section 658I(b) (42 U.S.C. 9858g(b)) is amended\u2014 (1) in paragraph (1), by striking ”, and shall have” and all that follows through ”(2)”; and (2) in the matter following clause (ii) of paragraph (2)(A), by striking ”finding and that” and all that follows through the period and inserting ”finding and shall require that the State reimburse the Secretary for any funds that were improp- erly expended for purposes prohibited or not authorized by this subchapter, that the Secretary deduct from the administra- tive portion of the State allotment for the following fiscal year an amount that is less than or equal to any improperly expended funds, or a combination of such options.”. SEC. 610. PAYMENTS. Section 658J(c) (42 U.S.C. 9858h(c)) is amended\u2014 (1) by striking ”expended” and inserting ”obligated”; and (2) by striking ”3 fiscal years” and inserting ”fiscal year”. SEC. 611. ANNUAL REPORT AND AUDITS. Section 658K (42 U.S.C. 9858i) is amended\u2014 (1) in the section heading by striking ”ANNUAL REPORT” and inserting ”REPORTS”; (2) in subsection (a), to read as follows: ”(a) REPORTS.\u2014 ”(1) COLLECTION OF INFORMATION BY STATES.\u2014 ”(A) IN GENERAL.\u2014A State that receives funds to carry out this subchapter shall collect the information described in subparagraph (B) on a monthly basis. ”(B) REQUIRED INFORMATION.\u2014The information required under this subparagraph shall include, with respect to a family unit receiving assistance under this subchapter information concerning\u2014 ”(i) family income; ”(ii) county of residence; ”(iii) the gender, race, and age of children receiving such assistance; ”(iv) whether the family includes only one parent; ”(v) the sources of family income, including the amount obtained from (and separately identified)\u2014 ”(I) employment, including self-employment; ”(II) cash or other assistance under part A of title IV of the Social Security Act; ”(III) housing assistance; 42 USC 9858e. 110 STAT. 2285PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(IV) assistance under the Food Stamp Act of 1977; and ”(V) other assistance programs; ”(vi) the number of months the family has received benefits; ”(vii) the type of child care in which the child was enrolled (such as family child care, home care, or center-based child care); ”(viii) whether the child care provider involved was a relative; ”(ix) the cost of child care for such families; and ”(x) the average hours per week of such care; during the period for which such information is required to be submitted. ”(C) SUBMISSION TO SECRETARY.\u2014A State described in subparagraph (A) shall, on a quarterly basis, submit the information required to be collected under subparagraph (B) to the Secretary. ”(D) SAMPLING.\u2014The Secretary may disapprove the information collected by a State under this paragraph if the State uses sampling methods to collect such informa- tion. ”(2) BIANNUAL REPORTS.\u2014Not later than December 31, 1997, and every 6 months thereafter, a State described in paragraph (1)(A) shall prepare and submit to the Secretary a report that includes aggregate data concerning\u2014 ”(A) the number of child care providers that received funding under this subchapter as separately identified based on the types of providers listed in section 658P(5); ”(B) the monthly cost of child care services, and the portion of such cost that is paid for with assistance provided under this subchapter, listed by the type of child care services provided; ”(C) the number of payments made by the State through vouchers, contracts, cash, and disregards under public benefit programs, listed by the type of child care services provided; ”(D) the manner in which consumer education informa- tion was provided to parents and the number of parents to whom such information was provided; and ”(E) the total number (without duplication) of children and families served under this subchapter; during the period for which such report is required to be sub- mitted.”; and (2) in subsection (b)\u2014 (A) in paragraph (1) by striking ”a application” and inserting ”an application”; (B) in paragraph (2) by striking ”any agency admin- istering activities that receive” and inserting ”the State that receives”; and (C) in paragraph (4) by striking ”entitles” and inserting ”entitled”. SEC. 612. REPORT BY THE SECRETARY. Section 658L (42 U.S.C. 9858j) is amended\u2014 (1) by striking ”1993” and inserting ”1997”; (2) by striking ”annually” and inserting ”biennially”; and 110 STAT. 2286 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (3) by striking ”Education and Labor” and inserting ”Economic and Educational Opportunities”. SEC. 613. ALLOTMENTS. Section 658O (42 U.S.C. 9858m) is amended\u2014 (1) in subsection (a)\u2014 (A) in paragraph (1)\u2014 (i) by striking ”POSSESSIONS” and inserting ”POSSESSIONS”; (ii) by inserting ”and” after ”States,”; and (iii) by striking ”, and the Trust Territory of the Pacific Islands”; and (B) in paragraph (2), by striking ”more than 3 percent” and inserting ”less than 1 percent, and not more than 2 percent,”; (2) in subsection (c)\u2014 (A) in paragraph (5) by striking ”our” and inserting ”out”; and (B) by adding at the end thereof the following new paragraph: ”(6) CONSTRUCTION OR RENOVATION OF FACILITIES.\u2014 ”(A) REQUEST FOR USE OF FUNDS.\u2014An Indian tribe or tribal organization may submit to the Secretary a request to use amounts provided under this subsection for construction or renovation purposes. ”(B) DETERMINATION.\u2014With respect to a request submitted under subparagraph (A), and except as provided in subparagraph (C), upon a determination by the Secretary that adequate facilities are not otherwise available to an Indian tribe or tribal organization to enable such tribe or organization to carry out child care programs in accord- ance with this subchapter, and that the lack of such facili- ties will inhibit the operation of such programs in the future, the Secretary may permit the tribe or organization to use assistance provided under this subsection to make payments for the construction or renovation of facilities that will be used to carry out such programs. ”(C) LIMITATION.\u2014The Secretary may not permit an Indian tribe or tribal organization to use amounts provided under this subsection for construction or renovation if such use will result in a decrease in the level of child care services provided by the tribe or organization as compared to the level of such services provided by the tribe or organization in the fiscal year preceding the year for which the determination under subparagraph (A) is being made. ”(D) UNIFORM PROCEDURES.\u2014The Secretary shall develop and implement uniform procedures for the solicita- tion and consideration of requests under this paragraph.”; and (3) in subsection (e), by adding at the end thereof the following new paragraph: ”(4) INDIAN TRIBES OR TRIBAL ORGANIZATIONS.\u2014Any portion of a grant or contract made to an Indian tribe or tribal organiza- tion under subsection (c) that the Secretary determines is not being used in a manner consistent with the provision of this subchapter in the period for which the grant or contract is made available, shall be allotted by the Secretary to other 110 STAT. 2287PUBLIC LAW 104 193\u2014AUG. 22, 1996 tribes or organizations that have submitted applications under subsection (c) in accordance with their respective needs.”. SEC. 614. DEFINITIONS. Section 658P (42 U.S.C. 9858n) is amended\u2014 (1) in paragraph (2), in the first sentence by inserting ”or as a deposit for child care services if such a deposit is required of other children being cared for by the provider” after ”child care services”; and (2) by striking paragraph (3); (3) in paragraph (4)(B), by striking ”75 percent” and inserting ”85 percent”; (4) in paragraph (5)(B)\u2014 (A) by inserting ”great grandchild, sibling (if such provider lives in a separate residence),” after ”grandchild,”; (B) by striking ”is registered and”; and (C) by striking ”State” and inserting ”applicable”. (5) by striking paragraph (10); (6) in paragraph (13)\u2014 (A) by inserting ”or” after ”Samoa,”; and (B) by striking ”, and the Trust Territory of the Pacific Islands”; (7) in paragraph (14)\u2014 (A) by striking ”The term” and inserting the following: ”(A) IN GENERAL.\u2014The term”; and (B) by adding at the end thereof the following new subparagraph: ”(B) OTHER ORGANIZATIONS.\u2014Such term includes a Native Hawaiian Organization, as defined in section 4009(4) of the Augustus F. Hawkins-Robert T. Stafford Elementary and Secondary School Improvement Amend- ments of 1988 (20 U.S.C. 4909(4)) and a private nonprofit organization established for the purpose of serving youth who are Indians or Native Hawaiians.”. SEC. 615. EFFECTIVE DATE. (a) IN GENERAL.\u2014Except as provided in subsection (b), this title and the amendments made by this title shall take effect on October 1, 1996. (b) EXCEPTION.\u2014The amendment made by section 603(a) shall take effect on the date of enactment of this Act. TITLE VII\u2014CHILD NUTRITION PROGRAMS Subtitle A\u2014National School Lunch Act SEC. 701. STATE DISBURSEMENT TO SCHOOLS. (a) IN GENERAL.\u2014Section 8 of the National School Lunch Act (42 U.S.C. 1757) is amended\u2014 (1) in the third sentence, by striking ”Nothing” and all that follows through ”educational agency to” and inserting ”The State educational agency may”; (2) by striking the fourth and fifth sentences; 42 USC 9858 note. 110 STAT. 2288 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (3) by redesignating the first through seventh sentences, as amended by paragraph (2), as subsections (a) through (g), respectively; (4) in subsection (b), as redesignated by paragraph (3), by striking ”the preceding sentence” and inserting ”subsection (a)”; and (5) in subsection (d), as redesignated by paragraph (3), by striking ”Such food costs” and inserting ”Use of funds paid to States”. (b) DEFINITION OF CHILD.\u2014Section 12(d) of the National School Lunch Act (42 U.S.C. 1760(d)) is amended by adding at the end the following: ”(9) CHILD.\u2014 ”(A) IN GENERAL.\u2014The term ‘child’ includes an indi- vidual, regardless of age, who\u2014 ”(i) is determined by a State educational agency, in accordance with regulations prescribed by the Sec- retary, to have one or more mental or physical disabil- ities; and ”(ii) is attending any institution, as defined in section 17(a), or any nonresidential public or nonprofit private school of high school grade or under, for the purpose of participating in a school program estab- lished for individuals with mental or physical dis- abilities. ”(B) RELATIONSHIP TO CHILD AND ADULT CARE FOOD PROGRAM.\u2014No institution that is not otherwise eligible to participate in the program under section 17 shall be considered eligible because of this paragraph.”. SEC. 702. NUTRITIONAL AND OTHER PROGRAM REQUIREMENTS. (a) NUTRITIONAL STANDARDS.\u2014Section 9(a) of the National School Lunch Act (42 U.S.C. 1758(a)) is amended\u2014 (1) in paragraph (2)\u2014 (A) by striking ”(2)(A) Lunches” and inserting ”(2) Lunches”; (B) by striking subparagraph (B); and (C) by redesignating clauses (i) and (ii) as subpara- graphs (A) and (B), respectively; (2) by striking paragraph (3); and (3) by redesignating paragraph (4) as paragraph (3). (b) UTILIZATION OF AGRICULTURAL COMMODITIES.\u2014Section 9(c) of the National School Lunch Act (42 U.S.C. 1758(c)) is amended\u2014 (1) in the fifth sentence, by striking ”of the provisions of law referred to in the preceding sentence” and inserting ”provision of law”; and (2) by striking the second, fourth, and sixth sentences. (c) NUTRITIONAL INFORMATION.\u2014Section 9(f) of the National School Lunch Act (42 U.S.C. 1758(f)) is amended\u2014 (1) by striking paragraph (1); (2) by striking ”(2)”; (3) by redesignating subparagraphs (A) through (D) as paragraphs (1) through (4), respectively; (4) by striking paragraph (1), as redesignated by paragraph (3), and inserting the following: ”(1) NUTRITIONAL REQUIREMENTS.\u2014Except as provided in paragraph (2), not later than the first day of the 1996 1997 110 STAT. 2289PUBLIC LAW 104 193\u2014AUG. 22, 1996 school year, schools that are participating in the school lunch or school breakfast program shall serve lunches and breakfasts under the program that\u2014 ”(A) are consistent with the goals of the most recent Dietary Guidelines for Americans published under section 301 of the National Nutrition Monitoring and Related Research Act of 1990 (7 U.S.C. 5341); and ”(B) provide, on the average over each week, at least\u2014 ”(i) with respect to school lunches, 1\u20443 of the daily recommended dietary allowance established by the Food and Nutrition Board of the National Research Council of the National Academy of Sciences; and ”(ii) with respect to school breakfasts, 1\u20444 of the daily recommended dietary allowance established by the Food and Nutrition Board of the National Research Council of the National Academy of Sciences.”; (5) in paragraph (3), as redesignated by paragraph (3)\u2014 (A) by redesignating clauses (i) and (ii) as subpara- graphs (A) and (B), respectively; and (B) in subparagraph (A), as so redesignated, by redesignating subclauses (I) and (II) as clauses (i) and (ii), respectively; and (6) in paragraph (4), as redesignated by paragraph (3)\u2014 (A) by redesignating clauses (i) and (ii) as subpara- graphs (A) and (B), respectively; (B) in subparagraph (A), as redesignated by subpara- graph (A), by redesignating subclauses (I) and (II) as clauses (i) and (ii), respectively; and (C) in subparagraph (A)(ii), as redesignated by subparagraph (B), by striking ”subparagraph (C)” and inserting ”paragraph (3)”. (d) USE OF RESOURCES.\u2014Section 9 of the National School Lunch Act (42 U.S.C. 1758) is amended by striking subsection (h). SEC. 703. FREE AND REDUCED PRICE POLICY STATEMENT. Section 9(b)(2) of the National School Lunch Act (42 U.S.C. 1758(b)(2)) is amended by adding at the end the following: ”(D) FREE AND REDUCED PRICE POLICY STATEMENT.\u2014 After the initial submission, a school food authority shall not be required to submit a free and reduced price policy statement to a State educational agency under this Act unless there is a substantive change in the free and reduced price policy of the school food authority. A routine change in the policy of a school food authority, such as an annual adjustment of the income eligibility guidelines for free and reduced price meals, shall not be sufficient cause for requir- ing the school food authority to submit a policy statement.”. SEC. 704. SPECIAL ASSISTANCE. (a) EXTENSION OF PAYMENT PERIOD.\u2014Section 11(a)(1)(D)(i) of the National School Lunch Act (42 U.S.C. 1759a(a)(1)(D)(i)) is amended by striking ”, on the date of enactment of this subpara- graph,”. (b) ROUNDING RULE FOR LUNCH, BREAKFAST, AND SUPPLEMENT RATES.\u2014 (1) IN GENERAL.\u2014The third sentence of section 11(a)(3)(B) of the National School Lunch Act (42 U.S.C. 1759a(a)(3)(B)) is amended by adding before the period at the end the following: 110 STAT. 2290 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”, except that adjustments to payment rates for meals and supplements served to individuals not determined to be eligible for free or reduced price meals and supplements shall be com- puted to the nearest lower cent increment and based on the unrounded amount for the preceding 12-month period”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall become effective on July 1, 1997. (c) APPLICABILITY OF OTHER PROVISIONS.\u2014Section 11 of the National School Lunch Act (42 U.S.C. 1759a) is amended\u2014 (1) by striking subsection (d); (2) in subsection (e)(2)\u2014 (A) by striking ”The” and inserting ”On request of the Secretary, the”; and (B) by striking ”each month”; and (3) by redesignating subsections (e) and (f), as so amended, as subsections (d) and (e), respectively. SEC. 705. MISCELLANEOUS PROVISIONS AND DEFINITIONS. (a) ACCOUNTS AND RECORDS.\u2014The second sentence of section 12(a) of the National School Lunch Act (42 U.S.C. 1760(a)) is amended by striking ”at all times be available” and inserting ”be available at any reasonable time”. (b) RESTRICTION ON REQUIREMENTS.\u2014Section 12(c) of the National School Lunch Act (42 U.S.C. 1760(c)) is amended by strik- ing ”neither the Secretary nor the State shall” and inserting ”the Secretary shall not”. (c) DEFINITIONS.\u2014Section 12(d) of the National School Lunch Act (42 U.S.C. 1760(d)), as amended by section 701(b), is amended\u2014 (1) in paragraph (1), by striking ”the Trust Territory of the Pacific Islands” and inserting ”the Commonwealth of the Northern Mariana Islands”; (2) by striking paragraphs (3) and (4); and (3) by redesignating paragraphs (1), (2), and (5) through (9) as paragraphs (6), (7), (3), (4), (2), (5), and (1), respectively, and rearranging the paragraphs so as to appear in numerical order. (d) ADJUSTMENTS TO NATIONAL AVERAGE PAYMENT RATES.\u2014 Section 12(f) of the National School Lunch Act (42 U.S.C. 1760(f)) is amended by striking ”the Trust Territory of the Pacific Islands,”. (e) EXPEDITED RULEMAKING.\u2014Section 12(k) of the National School Lunch Act (42 U.S.C. 1760(k)) is amended\u2014 (1) by striking paragraphs (1), (2), and (5); (2) by redesignating paragraphs (3) and (4) as paragraphs (1) and (2), respectively; and (3) in paragraph (1), as redesignated by paragraph (2), by striking ”Guidelines” and inserting ”guidelines contained in the most recent ‘Dietary Guidelines for Americans’ that is published under section 301 of the National Nutrition Mon- itoring and Related Research Act of 1990 (7 U.S.C. 5341)”. (f) WAIVER.\u2014Section 12(l) of the National School Lunch Act (42 U.S.C. 1760(l)) is amended\u2014 (1) in paragraph (2)(A)\u2014 (A) in clause (iii), by adding ”and” at the end; (B) in clause (iv), by striking the semicolon at the end and inserting a period; and (C) by striking clauses (v) through (vii); (2) in paragraph (3)\u2014 42 USC 1759a note. 110 STAT. 2291PUBLIC LAW 104 193\u2014AUG. 22, 1996 (A) in subparagraph (A), by striking ”(A)”; and (B) by striking subparagraphs (B) through (D); (3) in paragraph (4)\u2014 (A) in the matter preceding subparagraph (A), by strik- ing ”of any requirement relating” and inserting ”that increases Federal costs or that relates”; (B) by striking subparagraph (D); (C) by redesignating subparagraphs (E) through (N) as subparagraphs (D) through (M), respectively; and (D) in subparagraph (L), as redesignated by subpara- graph (C), by striking ”and” at the end and inserting ”or”; and (4) in paragraph (6)\u2014 (A) by striking ”(A)(i)” and all that follows through ”(B)”; and (B) by redesignating clauses (i) through (iv) as subpara- graphs (A) through (D), respectively. SEC. 706. SUMMER FOOD SERVICE PROGRAM FOR CHILDREN. (a) ESTABLISHMENT OF PROGRAM.\u2014Section 13(a) of the National School Lunch Act (42 U.S.C. 1761(a)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in the first sentence, by striking ”initiate, maintain, and expand” and inserting ”initiate and maintain”; and (B) in subparagraph (E) of the second sentence, by striking ”the Trust Territory of the Pacific Islands,”; and (2) in paragraph (7)(A), by striking ”Except as provided in subparagraph (C), private” and inserting ”Private”. (b) SERVICE INSTITUTIONS.\u2014Section 13(b) of the National School Lunch Act (42 U.S.C. 1761(b)) is amended by striking ”(b)(1)” and all that follows through the end of paragraph (1) and inserting the following: ”(b) SERVICE INSTITUTIONS.\u2014 ”(1) PAYMENTS.\u2014 ”(A) IN GENERAL.\u2014Except as otherwise provided in this paragraph, payments to service institutions shall equal the full cost of food service operations (which cost shall include the costs of obtaining, preparing, and serving food, but shall not include administrative costs). ”(B) MAXIMUM AMOUNTS.\u2014Subject to subparagraph (C), payments to any institution under subparagraph (A) shall not exceed\u2014 ”(i) $1.97 for each lunch and supper served; ”(ii) $1.13 for each breakfast served; and ”(iii) 46 cents for each meal supplement served. ”(C) ADJUSTMENTS.\u2014Amounts specified in subpara- graph (B) shall be adjusted on January 1, 1997, and each January 1 thereafter, to the nearest lower cent increment to reflect changes for the 12-month period ending the preceding November 30 in the series for food away from home of the Consumer Price Index for All Urban Con- sumers published by the Bureau of Labor Statistics of the Department of Labor. Each adjustment shall be based on the unrounded adjustment for the prior 12-month period.”. 110 STAT. 2292 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (c) ADMINISTRATION OF SERVICE INSTITUTIONS.\u2014Section 13(b)(2) of the National School Lunch Act (42 U.S.C. 1761(b)(2)) is amended\u2014 (1) in the first sentence, by striking ”four meals” and insert- ing ”3 meals, or 2 meals and 1 supplement,”; and (2) by striking the second sentence. (d) REIMBURSEMENTS.\u2014Section 13(c)(2) of the National School Lunch Act (42 U.S.C. 1761(c)(2)) is amended\u2014 (1) by striking subparagraphs (A), (C), (D), and (E); (2) by striking ”(B)”; (3) by striking ”, and such higher education institu- tions,”; and (4) by striking ”without application” and inserting ”on showing residence in areas in which poor economic conditions exist or on the basis of income eligibility statements for children enrolled in the program”. (e) ADVANCE PROGRAM PAYMENTS.\u2014Section 13(e)(1) of the National School Lunch Act (42 U.S.C. 1761(e)(1)) is amended\u2014 (1) by striking ”institution: Provided, That (A) the” and inserting ”institution. The”; (2) by inserting ”(excluding a school)” after ”any service institution”; and (3) by striking ”responsibilities, and (B) no” and inserting ”responsibilities. No”. (f) FOOD REQUIREMENTS.\u2014Section 13(f) of the National School Lunch Act (42 U.S.C. 1761(f)) is amended\u2014 (1) by redesignating the first through seventh sentences as paragraphs (1) through (7), respectively; (2) by striking paragraph (3), as redesignated by para- graph (1); (3) in paragraph (4), as redesignated by paragraph (1), by striking ”the first sentence” and inserting ”paragraph (1)”; (4) in subparagraph (B) of paragraph (6), as re- designated by paragraph (1), by striking ”that bacteria levels” and all that follows through the period at the end and inserting ”conformance with standards set by local health authorities.”; and (5) by redesignating paragraphs (4) through (7), as redesig- nated by paragraph (1), as paragraphs (3) through (6), respec- tively. (g) PERMITTING OFFER VERSUS SERVE.\u2014Section 13(f) of the National School Lunch Act (42 U.S.C. 1761(f)), as amended by subsection (f), is amended by adding at the end the following: ”(7) OFFER VERSUS SERVE.\u2014A school food authority partici- pating as a service institution may permit a child attending a site on school premises operated directly by the authority to refuse one or more items of a meal that the child does not intend to consume, under rules that the school uses for school meals programs. A refusal of an offered food item shall not affect the amount of payments made under this section to a school for the meal.”. (h) RECORDS.\u2014The second sentence of section 13(m) of the National School Lunch Act (42 U.S.C. 1761(m)) is amended by striking ”at all times be available” and inserting ”be available at any reasonable time”. (i) REMOVING MANDATORY NOTICE TO INSTITUTIONS.\u2014Section 13(n)(2) of the National School Lunch Act (42 U.S.C. 1761(n)(2)) 110 STAT. 2293PUBLIC LAW 104 193\u2014AUG. 22, 1996 is amended by striking ”, and its plans and schedule for informing service institutions of the availability of the program”. (j) PLAN.\u2014Section 13(n) of the National School Lunch Act (42 U.S.C. 1761(n)), as amended by subsection (i), is amended\u2014 (1) in paragraph (2), by striking ”, including the State’s methods of assessing need”; (2) by striking paragraph (3); (3) in paragraph (4), by striking ”and schedule”; and (4) by redesignating paragraphs (4) through (7) as para- graphs (3) through (6), respectively. (k) MONITORING AND TRAINING.\u2014Section 13(q) of the National School Lunch Act (42 U.S.C. 1761(q)) is amended\u2014 (1) by striking paragraphs (2) and (4); (2) in paragraph (3), by striking ”paragraphs (1) and (2) of this subsection” and inserting ”paragraph (1)”; and (3) by redesignating paragraph (3) as paragraph (2). (l) EXPIRED PROGRAM.\u2014Section 13 of the National School Lunch Act (42 U.S.C. 1761) is amended\u2014 (1) by striking subsection (p); and (2) by redesignating subsections (q) and (r) as subsections (p) and (q), respectively. (m) EFFECTIVE DATE.\u2014The amendments made by subsection (b) shall become effective on January 1, 1997. SEC. 707. COMMODITY DISTRIBUTION. (a) CEREAL AND SHORTENING IN COMMODITY DONATIONS.\u2014Sec- tion 14(b) of the National School Lunch Act (42 U.S.C. 1762a(b)) is amended\u2014 (1) by striking paragraph (1); and (2) by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (b) STATE ADVISORY COUNCIL.\u2014Section 14(e) of the National School Lunch Act (42 U.S.C. 1762a(e)) is amended to read as follows: ”(e) Each State agency that receives food assistance payments under this section for any school year shall consult with representa- tives of schools in the State that participate in the school lunch program with respect to the needs of such schools relating to the manner of selection and distribution of commodity assistance for such program.”. (c) CASH COMPENSATION FOR PILOT PROJECT SCHOOLS.\u2014Section 14(g) of the National School Lunch Act (42 U.S.C. 1762a(g)) is amended by striking paragraph (3). SEC. 708. CHILD AND ADULT CARE FOOD PROGRAM. (a) ESTABLISHMENT OF PROGRAM.\u2014Section 17 of the National School Lunch Act (42 U.S.C. 1766) is amended in the first sentence of subsection (a), by striking ”initiate, maintain, and expand” and inserting ”initiate and maintain”. (b) PAYMENTS TO SPONSOR EMPLOYEES.\u2014Paragraph (2) of the last sentence of section 17(a) of the National School Lunch Act (42 U.S.C. 1766(a)) is amended\u2014 (1) in subparagraph (B), by striking ”and” at the end; (2) in subparagraph (C), by striking the period at the end and inserting ”; and”; and (3) by adding at the end the following: ”(D) in the case of a family or group day care home sponsoring organization that employs more than one employee, the organization does not base payments to an 42 USC 1761 note. 110 STAT. 2294 PUBLIC LAW 104 193\u2014AUG. 22, 1996 employee of the organization on the number of family or group day care homes recruited.”. (c) TECHNICAL ASSISTANCE.\u2014The last sentence of section 17(d)(1) of the National School Lunch Act (42 U.S.C. 1766(d)(1)) is amended by striking ”, and shall provide technical assistance” and all that follows through ”its application”. (d) REIMBURSEMENT OF CHILD CARE INSTITUTIONS.\u2014Section 17(f)(2)(B) of the National School Lunch Act (42 U.S.C. 1766(f)(2)(B)) is amended by striking ”two meals and two supplements or three meals and one supplement” and inserting ”2 meals and 1 supple- ment”. (e) IMPROVED TARGETING OF DAY CARE HOME REIMBURSE- MENTS.\u2014 (1) RESTRUCTURED DAY CARE HOME REIMBURSEMENTS.\u2014Sec- tion 17(f)(3) of the National School Lunch Act (42 U.S.C. 1766(f)(3)) is amended by striking ”(3)(A) Institutions” and all that follows through the end of subparagraph (A) and inserting the following: ”(3) REIMBURSEMENT OF FAMILY OR GROUP DAY CARE HOME SPONSORING ORGANIZATIONS.\u2014 ”(A) REIMBURSEMENT FACTOR.\u2014 ”(i) IN GENERAL.\u2014An institution that participates in the program under this section as a family or group day care home sponsoring organization shall be pro- vided, for payment to a home sponsored by the organization, reimbursement factors in accordance with this subparagraph for the cost of obtaining and prepar- ing food and prescribed labor costs involved in provid- ing meals under this section. ”(ii) TIER I FAMILY OR GROUP DAY CARE HOMES.\u2014 ”(I) DEFINITION OF TIER I FAMILY OR GROUP DAY CARE HOME.\u2014In this paragraph, the term ‘tier I family or group day care home’ means\u2014 ”(aa) a family or group day care home that is located in a geographic area, as defined by the Secretary based on census data, in which at least 50 percent of the children resid- ing in the area are members of households whose incomes meet the income eligibility guidelines for free or reduced price meals under section 9; ”(bb) a family or group day care home that is located in an area served by a school enrolling elementary students in which at least 50 percent of the total number of children enrolled are certified eligible to receive free or reduced price school meals under this Act or the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.); or ”(cc) a family or group day care home that is operated by a provider whose household meets the income eligibility guidelines for free or reduced price meals under section 9 and whose income is verified by the sponsoring organization of the home under regulations established by the Secretary. 110 STAT. 2295PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(II) REIMBURSEMENT.\u2014Except as provided in subclause (III), a tier I family or group day care home shall be provided reimbursement factors under this clause without a requirement for docu- mentation of the costs described in clause (i), except that reimbursement shall not be provided under this subclause for meals or supplements served to the children of a person acting as a family or group day care home provider unless the children meet the income eligibility guidelines for free or reduced price meals under section 9. ”(III) FACTORS.\u2014Except as provided in sub- clause (IV), the reimbursement factors applied to a home referred to in subclause (II) shall be the factors in effect on July 1, 1996. ”(IV) ADJUSTMENTS.\u2014The reimbursement fac- tors under this subparagraph shall be adjusted on July 1, 1997, and each July 1 thereafter, to reflect changes in the Consumer Price Index for food at home for the most recent 12-month period for which the data are available. The reimburse- ment factors under this subparagraph shall be rounded to the nearest lower cent increment and based on the unrounded adjustment in effect on June 30 of the preceding school year. ”(iii) TIER II FAMILY OR GROUP DAY CARE HOMES.\u2014 ”(I) IN GENERAL.\u2014 ”(aa) FACTORS.\u2014Except as provided in subclause (II), with respect to meals or supple- ments served under this clause by a family or group day care home that does not meet the criteria set forth in clause (ii)(I), the reimbursement factors shall be 95 cents for lunches and suppers, 27 cents for breakfasts, and 13 cents for supplements. ”(bb) ADJUSTMENTS.\u2014The factors shall be adjusted on July 1, 1997, and each July 1 thereafter, to reflect changes in the Consumer Price Index for food at home for the most recent 12-month period for which the data are available. The reimbursement factors under this item shall be rounded down to the nearest lower cent increment and based on the unrounded adjustment for the preceding 12-month period. ”(cc) REIMBURSEMENT.\u2014A family or group day care home shall be provided reimburse- ment factors under this subclause without a requirement for documentation of the costs described in clause (i), except that reimburse- ment shall not be provided under this sub- clause for meals or supplements served to the children of a person acting as a family or group day care home provider unless the children meet the income eligibility guide- lines for free or reduced price meals under section 9. 110 STAT. 2296 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(II) OTHER FACTORS.\u2014A family or group day care home that does not meet the criteria set forth in clause (ii)(I) may elect to be provided reimburse- ment factors determined in accordance with the following requirements: ”(aa) CHILDREN ELIGIBLE FOR FREE OR REDUCED PRICE MEALS.\u2014In the case of meals or supplements served under this subsection to children who are members of households whose incomes meet the income eligibility guidelines for free or reduced price meals under section 9, the family or group day care home shall be provided reimbursement factors set by the Secretary in accordance with clause (ii)(III). ”(bb) INELIGIBLE CHILDREN.\u2014In the case of meals or supplements served under this subsection to children who are members of households whose incomes do not meet the income eligibility guidelines, the family or group day care home shall be provided reimbursement factors in accordance with sub- clause (I). ”(III) INFORMATION AND DETERMINATIONS.\u2014 ”(aa) IN GENERAL.\u2014If a family or group day care home elects to claim the factors described in subclause (II), the family or group day care home sponsoring organization serving the home shall collect the necessary income information, as determined by the Secretary, from any parent or other caretaker to make the determinations specified in subclause (II) and shall make the determinations in accord- ance with rules prescribed by the Secretary. ”(bb) CATEGORICAL ELIGIBILITY.\u2014In mak- ing a determination under item (aa), a family or group day care home sponsoring organiza- tion may consider a child participating in or subsidized under, or a child with a parent participating in or subsidized under, a feder- ally or State supported child care or other benefit program with an income eligibility limit that does not exceed the eligibility stand- ard for free or reduced price meals under sec- tion 9 to be a child who is a member of a household whose income meets the income eligibility guidelines under section 9. ”(cc) FACTORS FOR CHILDREN ONLY.\u2014A family or group day care home may elect to receive the reimbursement factors prescribed under clause (ii)(III) solely for the children participating in a program referred to in item (bb) if the home elects not to have income statements collected from parents or other caretakers. ”(IV) SIMPLIFIED MEAL COUNTING AND REPORT- ING PROCEDURES.\u2014The Secretary shall prescribe 110 STAT. 2297PUBLIC LAW 104 193\u2014AUG. 22, 1996 simplified meal counting and reporting procedures for use by a family or group day care home that elects to claim the factors under subclause (II) and by a family or group day care home sponsoring organization that sponsors the home. The proce- dures the Secretary prescribes may include 1 or more of the following: ”(aa) Setting an annual percentage for each home of the number of meals served that are to be reimbursed in accordance with the reimbursement factors prescribed under clause (ii)(III) and an annual percentage of the num- ber of meals served that are to be reimbursed in accordance with the reimbursement factors prescribed under subclause (I), based on the family income of children enrolled in the home in a specified month or other period. ”(bb) Placing a home into 1 of 2 or more reimbursement categories annually based on the percentage of children in the home whose households have incomes that meet the income eligibility guidelines under section 9, with each such reimbursement category carrying a set of reimbursement factors such as the factors prescribed under clause (ii)(III) or subclause (I) or factors established within the range of factors prescribed under clause (ii)(III) and subclause (I). ”(cc) Such other simplified procedures as the Secretary may prescribe. ”(V) MINIMUM VERIFICATION REQUIREMENTS.\u2014 The Secretary may establish any minimum ver- ification requirements that are necessary to carry out this clause.”. (2) GRANTS TO STATES TO PROVIDE ASSISTANCE TO FAMILY OR GROUP DAY CARE HOMES.\u2014Section 17(f)(3) of the National School Lunch Act (42 U.S.C. 1766(f)(3)) is amended by adding at the end the following: ”(D) GRANTS TO STATES TO PROVIDE ASSISTANCE TO FAMILY OR GROUP DAY CARE HOMES.\u2014 ”(i) IN GENERAL.\u2014 ”(I) RESERVATION.\u2014From amounts made avail- able to carry out this section, the Secretary shall reserve $5,000,000 of the amount made available for fiscal year 1997. ”(II) PURPOSE.\u2014The Secretary shall use the funds made available under subclause (I) to pro- vide grants to States for the purpose of providing\u2014 ”(aa) assistance, including grants, to fam- ily and day care home sponsoring organiza- tions and other appropriate organizations, in securing and providing training, materials, automated data processing assistance, and other assistance for the staff of the sponsoring organizations; and ”(bb) training and other assistance to family and group day care homes in the 110 STAT. 2298 PUBLIC LAW 104 193\u2014AUG. 22, 1996 implementation of the amendment to subpara- graph (A) made by section 708(e)(1) of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. ”(ii) ALLOCATION.\u2014The Secretary shall allocate from the funds reserved under clause (i)(I)\u2014 ”(I) $30,000 in base funding to each State; and ”(II) any remaining amount among the States, based on the number of family day care homes participating in the program in a State during fiscal year 1995 as a percentage of the number of all family day care homes participating in the program during fiscal year 1995. ”(iii) RETENTION OF FUNDS.\u2014Of the amount of funds made available to a State for fiscal year 1997 under clause (i), the State may retain not to exceed 30 percent of the amount to carry out this subpara- graph. ”(iv) ADDITIONAL PAYMENTS.\u2014Any payments received under this subparagraph shall be in addition to payments that a State receives under subparagraph (A).”. (3) PROVISION OF DATA.\u2014Section 17(f)(3) of the National School Lunch Act (42 U.S.C. 1766(f)(3)), as amended by para- graph (2), is amended by adding at the end the following: ”(E) PROVISION OF DATA TO FAMILY OR GROUP DAY CARE HOME SPONSORING ORGANIZATIONS.\u2014 ”(i) CENSUS DATA.\u2014The Secretary shall provide to each State agency administering a child and adult care food program under this section data from the most recent decennial census survey or other appro- priate census survey for which the data are available showing which areas in the State meet the require- ments of subparagraph (A)(ii)(I)(aa). The State agency shall provide the data to family or group day care home sponsoring organizations located in the State. ”(ii) SCHOOL DATA.\u2014 ”(I) IN GENERAL.\u2014A State agency administer- ing the school lunch program under this Act or the school breakfast program under the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.) shall provide to approved family or group day care home sponsoring organizations a list of schools serving elementary school children in the State in which not less than 1\u20442 of the children enrolled are certified to receive free or reduced price meals. The State agency shall collect the data necessary to create the list annually and provide the list on a timely basis to any approved family or group day care home sponsoring organization that requests the list. ”(II) USE OF DATA FROM PRECEDING SCHOOL YEAR.\u2014In determining for a fiscal year or other annual period whether a home qualifies as a tier I family or group day care home under subpara- graph (A)(ii)(I), the State agency administering the 110 STAT. 2299PUBLIC LAW 104 193\u2014AUG. 22, 1996 program under this section, and a family or group day care home sponsoring organization, shall use the most current available data at the time of the determination. ”(iii) DURATION OF DETERMINATION.\u2014For purposes of this section, a determination that a family or group day care home is located in an area that qualifies the home as a tier I family or group day care home (as the term is defined in subparagraph (A)(ii)(I)), shall be in effect for 3 years (unless the determination is made on the basis of census data, in which case the determination shall remain in effect until more recent census data are available) unless the State agency determines that the area in which the home is located no longer qualifies the home as a tier I family or group day care home.”. (4) CONFORMING AMENDMENTS.\u2014Section 17(c) of the National School Lunch Act (42 U.S.C. 1766(c)) is amended by inserting ”except as provided in subsection (f)(3),” after ”For purposes of this section,” each place it appears in para- graphs (1), (2), and (3). (f) REIMBURSEMENT.\u2014Section 17(f) of the National School Lunch Act (42 U.S.C. 1766(f)) is amended\u2014 (1) in paragraph (3)\u2014 (A) in subparagraph (B), by striking the third and fourth sentences; and (B) in subparagraph (C)(ii), by striking ”conduct out- reach” and all that follows through ”may become” and inserting ”assist unlicensed family or group day care homes in becoming”; and (2) in the first sentence of paragraph (4), by striking ”shall” and inserting ”may”. (g) NUTRITIONAL REQUIREMENTS.\u2014Section 17(g)(1) of the National School Lunch Act (42 U.S.C. 1766(g)(1)) is amended\u2014 (1) in subparagraph (A), by striking the second sentence; and (2) in subparagraph (B), by striking the second sentence. (h) ELIMINATION OF STATE PAPERWORK AND OUTREACH BURDEN.\u2014Section 17 of the National School Lunch Act (42 U.S.C. 1766) is amended by striking subsection (k) and inserting the follow- ing: ”(k) TRAINING AND TECHNICAL ASSISTANCE.\u2014A State participat- ing in the program established under this section shall provide sufficient training, technical assistance, and monitoring to facilitate effective operation of the program. The Secretary shall assist the State in developing plans to fulfill the requirements of this sub- section.”. (i) RECORDS.\u2014The second sentence of section 17(m) of the National School Lunch Act (42 U.S.C. 1766(m)) is amended by striking ”at all times” and inserting ”at any reasonable time”. (j) UNNEEDED PROVISION.\u2014Section 17 of the National School Lunch Act is amended by striking subsection (q). (k) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall become effective on the date of enactment of this Act. 42 USC 1766 note. 42 USC 1766. 110 STAT. 2300 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) IMPROVED TARGETING OF DAY CARE HOME REIMBURSE- MENTS.\u2014The amendments made by paragraphs (1) and (4) of subsection (e) shall become effective on July 1, 1997. (3) REGULATIONS.\u2014 (A) INTERIM REGULATIONS.\u2014Not later than January 1, 1997, the Secretary of Agriculture shall issue interim regulations to implement\u2014 (i) the amendments made by paragraphs (1), (3), and (4) of subsection (e); and (ii) section 17(f)(3)(C) of the National School Lunch Act (42 U.S.C. 1766(f)(3)(C)). (B) FINAL REGULATIONS.\u2014Not later than July 1, 1997, the Secretary of Agriculture shall issue final regulations to implement the provisions of law referred to in subpara- graph (A). (l) STUDY OF IMPACT OF AMENDMENTS ON PROGRAM PARTICIPA- TION AND FAMILY DAY CARE LICENSING.\u2014 (1) IN GENERAL.\u2014The Secretary of Agriculture, in conjunc- tion with the Secretary of Health and Human Services, shall study the impact of the amendments made by this section on\u2014 (A) the number of family day care homes participating in the child and adult care food program established under section 17 of the National School Lunch Act (42 U.S.C. 1766); (B) the number of day care home sponsoring organiza- tions participating in the program; (C) the number of day care homes that are licensed, certified, registered, or approved by each State in accord- ance with regulations issued by the Secretary; (D) the rate of growth of the numbers referred to in subparagraphs (A) through (C); (E) the nutritional adequacy and quality of meals served in family day care homes that\u2014 (i) received reimbursement under the program prior to the amendments made by this section but do not receive reimbursement after the amendments made by this section; or (ii) received full reimbursement under the program prior to the amendments made by this section but do not receive full reimbursement after the amend- ments made by this section; and (F) the proportion of low-income children participating in the program prior to the amendments made by this section and the proportion of low-income children partici- pating in the program after the amendments made by this section. (2) REQUIRED DATA.\u2014Each State agency participating in the child and adult care food program under section 17 of the National School Lunch Act (42 U.S.C. 1766) shall submit to the Secretary of Agriculture data on\u2014 (A) the number of family day care homes participating in the program on June 30, 1997, and June 30, 1998; (B) the number of family day care homes licensed, certified, registered, or approved for service on June 30, 1997, and June 30, 1998; and 42 USC 1766 note. 42 USC 1766 note. 110 STAT. 2301PUBLIC LAW 104 193\u2014AUG. 22, 1996 (C) such other data as the Secretary may require to carry out this subsection. (3) SUBMISSION OF REPORT.\u2014Not later than 2 years after the date of enactment of this section, the Secretary of Agri- culture shall submit the study required under this subsection to the Committee on Economic and Educational Opportunities of the House of Representatives and the Committee on Agri- culture, Nutrition, and Forestry of the Senate. SEC. 709. PILOT PROJECTS. (a) UNIVERSAL FREE PILOT.\u2014Section 18(d) of the National School Lunch Act (42 U.S.C. 1769(d)) is amended\u2014 (1) by striking paragraph (3); and (2) by redesignating paragraphs (4) and (5) as paragraphs (3) and (4), respectively. (b) DEMONSTRATION PROJECT OUTSIDE SCHOOL HOURS.\u2014Sec- tion 18(e) of the National School Lunch Act (42 U.S.C. 1769(e)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A)\u2014 (i) by striking ”(A)”; and (ii) by striking ”shall” and inserting ”may”; and (B) by striking subparagraph (B); and (2) by striking paragraph (5) and inserting the following: ”(5) AUTHORIZATION OF APPROPRIATIONS.\u2014There are authorized to be appropriated to carry out this subsection such sums as are necessary for each of fiscal years 1997 and 1998.”. SEC. 710. REDUCTION OF PAPERWORK. Section 19 of the National School Lunch Act (42 U.S.C. 1769a) is repealed. SEC. 711. INFORMATION ON INCOME ELIGIBILITY. Section 23 of the National School Lunch Act (42 U.S.C. 1769d) is repealed. SEC. 712. NUTRITION GUIDANCE FOR CHILD NUTRITION PROGRAMS. Section 24 of the National School Lunch Act (42 U.S.C. 1769e) is repealed. Subtitle B\u2014Child Nutrition Act of 1966 SEC. 721. SPECIAL MILK PROGRAM. Section 3(a)(3) of the Child Nutrition Act of 1966 (42 U.S.C. 1772(a)(3)) is amended by striking ”the Trust Territory of the Pacific Islands” and inserting ”the Commonwealth of the Northern Mariana Islands”. SEC. 722. FREE AND REDUCED PRICE POLICY STATEMENT. Section 4(b)(1) of the Child Nutrition Act of 1966 (42 U.S.C. 1773(b)(1)) is amended by adding at the end the following: ”(E) FREE AND REDUCED PRICE POLICY STATEMENT.\u2014 After the initial submission, a school food authority shall not be required to submit a free and reduced price policy statement to a State educational agency under this Act unless there is a substantive change in the free and reduced price policy of the school food authority. A routine change 110 STAT. 2302 PUBLIC LAW 104 193\u2014AUG. 22, 1996 in the policy of a school food authority, such as an annual adjustment of the income eligibility guidelines for free and reduced price meals, shall not be sufficient cause for requir- ing the school food authority to submit a policy statement.”. SEC. 723. SCHOOL BREAKFAST PROGRAM AUTHORIZATION. (a) TRAINING AND TECHNICAL ASSISTANCE IN FOOD PREPARA- TION.\u2014Section 4(e)(1)(B) of the Child Nutrition Act of 1966 (42 U.S.C. 1773(e)(1)(B)) is amended by striking the second sentence. (b) EXPANSION OF PROGRAM; STARTUP AND EXPANSION COSTS.\u2014 (1) IN GENERAL.\u2014Section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773) is amended by striking subsections (f) and (g). (2) EFFECTIVE DATE.\u2014The amendments made by paragraph (1) shall become effective on October 1, 1996. SEC. 724. STATE ADMINISTRATIVE EXPENSES. (a) USE OF FUNDS FOR COMMODITY DISTRIBUTION ADMINISTRA- TION; STUDIES.\u2014Section 7 of the Child Nutrition Act of 1966 (42 U.S.C. 1776) is amended\u2014 (1) by striking subsections (e) and (h); and (2) by redesignating subsections (f), (g), and (i) as sub- sections (e), (f), and (g), respectively. (b) APPROVAL OF CHANGES.\u2014Section 7(e) of the Child Nutrition Act of 1966 (42 U.S.C. 1776(e)), as so redesignated, is amended\u2014 (1) by striking ”each year an annual plan” and inserting ”the initial fiscal year a plan”; and (2) by adding at the end the following: ”After submitting the initial plan, a State shall be required to submit to the Secretary for approval only a substantive change in the plan.”. SEC. 725. REGULATIONS. Section 10(b) of the Child Nutrition Act of 1966 (42 U.S.C. 1779(b)) is amended\u2014 (1) in paragraph (1), by striking ”(1)”; and (2) by striking paragraphs (2) through (4). SEC. 726. PROHIBITIONS. Section 11(a) of the Child Nutrition Act of 1966 (42 U.S.C. 1780(a)) is amended by striking ”neither the Secretary nor the State shall” and inserting ”the Secretary shall not”. SEC. 727. MISCELLANEOUS PROVISIONS AND DEFINITIONS. Section 15 of the Child Nutrition Act of 1966 (42 U.S.C. 1784) is amended\u2014 (1) in paragraph (1), by striking ”the Trust Territory of the Pacific Islands” and inserting ”the Commonwealth of the Northern Mariana Islands”; and (2) in the first sentence of paragraph (3)\u2014 (A) in subparagraph (A), by inserting ”and” at the end; and (B) by striking ”, and (C)” and all that follows through ”Governor of Puerto Rico”. SEC. 728. ACCOUNTS AND RECORDS. The second sentence of section 16(a) of the Child Nutrition Act of 1966 (42 U.S.C. 1785(a)) is amended by striking ”at all times be available” and inserting ”be available at any reasonable time”. 42 USC 1773 note. 110 STAT. 2303PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 729. SPECIAL SUPPLEMENTAL NUTRITION PROGRAM FOR WOMEN, INFANTS, AND CHILDREN. (a) DEFINITIONS.\u2014Section 17(b) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(b)) is amended\u2014 (1) in paragraph (15)(B)(iii), by inserting ”of not more than 365 days” after ”accommodation”; and (2) in paragraph (16)\u2014 (A) in subparagraph (A), by adding ”and” at the end; and (B) in subparagraph (B), by striking ”; and” and insert- ing a period; and (C) by striking subparagraph (C). (b) SECRETARY’S PROMOTION OF WIC.\u2014Section 17(c) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(c)) is amended by striking paragraph (5). (c) ELIGIBLE PARTICIPANTS.\u2014Section 17(d) of the Child Nutri- tion Act of 1966 (42 U.S.C. 1786(d)) is amended by striking para- graph (4). (d) NUTRITION EDUCATION.\u2014Section 17(e) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(e)) is amended\u2014 (1) in paragraph (2), by striking the third sentence; (2) in paragraph (4)\u2014 (A) in the matter preceding subparagraph (A), by strik- ing ”shall”; (B) by striking subparagraph (A); (C) by redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), respectively; (D) in subparagraph (A), as so redesignated\u2014 (i) by inserting ”shall” before ”provide”; and (ii) by striking ”and” at the end; (E) in subparagraph (B), as so redesignated\u2014 (i) by inserting ”shall” before ”provide”; and (ii) by striking the period at the end and inserting ”; and”; and (F) by adding at the end the following: ”(C) may provide a local agency with materials describing other programs for which a participant in the program may be eligible.”; (3) in paragraph (5), by striking ”The State agency shall ensure that each” and inserting ”Each”; and (4) by striking paragraph (6). (e) STATE PLAN.\u2014Section 17(f) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(f)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A)\u2014 (i) by striking ”annually to the Secretary, by a date specified by the Secretary, a” and inserting ”to the Secretary, by a date specified by the Secretary, an initial”; and (ii) by adding at the end the following: ”After submitting the initial plan, a State shall be required to submit to the Secretary for approval only a sub- stantive change in the plan.”; (B) in subparagraph (C)\u2014 (i) by striking clause (iii) and inserting the following: 110 STAT. 2304 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(iii) a plan to coordinate operations under the program with other services or programs that may benefit participants in, and applicants for, the program;”; (ii) in clause (vi), by inserting after ”in the State” the following: ”(including a plan to improve access to the program for participants and prospective applicants who are employed, or who reside in rural areas)”; (iii) in clause (vii), by striking ”to provide program benefits” and all that follows through ”emphasis on” and inserting ”for”; (iv) by striking clauses (ix), (x), and (xii); (v) in clause (xiii), by striking ”may require” and inserting ”may reasonably require”; (vi) by redesignating clauses (xi) and (xiii), as so amended, as clauses (ix) and (x), respectively; and (vii) in clause (ix), as so redesignated, by adding ”and” at the end; (C) by striking subparagraph (D); and (D) by redesignating subparagraph (E) as subpara- graph (D); (2) by striking paragraphs (6) and (22); (3) in the second sentence of paragraph (5), by striking ”at all times be available” and inserting ”be available at any reasonable time”; (4) in paragraph (9)(B), by striking the second sentence; (5) in the first sentence of paragraph (11), by striking ”, including standards that will ensure sufficient State agency staff”; (6) in paragraph (12), by striking the third sentence; (7) in paragraph (14), by striking ”shall” and inserting ”may”; (8) in paragraph (17), by striking ”and to accommodate” and all that follows through ”facilities”; (9) in paragraph (19), by striking ”shall” and inserting ”may”; and (10) by redesignating paragraphs (7) through (21) as para- graphs (6) through (20), and paragraphs (23) and (24) as para- graphs (21) and (22), respectively. (f) INFORMATION.\u2014Section 17(g) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(g)) is amended\u2014 (1) in paragraph (5), by striking ”the report required under subsection (d)(4)” and inserting ”reports on program participant characteristics”; and (2) by striking paragraph (6). (g) PROCUREMENT OF INFANT FORMULA.\u2014 (1) IN GENERAL.\u2014Section 17(h) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)) is amended\u2014 (A) in paragraph (4)(E), by striking ”and, on” and all that follows through ”(d)(4)”; and (B) in paragraph (8)\u2014 (i) by striking subparagraphs (A), (C), and (M); (ii) in subparagraph (G)\u2014 (I) in clause (i), by striking ”(i)”; and (II) by striking clauses (ii) through (ix); 110 STAT. 2305PUBLIC LAW 104 193\u2014AUG. 22, 1996 (iii) in subparagraph (I), by striking ”Sec- retary\u2014” and all that follows through ”(v) may” and inserting ”Secretary may”; (iv) by redesignating subparagraphs (B) and (D) through (L) as subparagraphs (A) and (B) through (J), respectively; (v) in subparagraph (A)(i), as so redesignated, by striking ”subparagraphs (C), (D), and (E)(iii), in carry- ing out subparagraph (A),” and inserting ”subpara- graphs (B) and (C)(iii),”; (vi) in subparagraph (B)(i), as so redesignated, by striking ”subparagraph (B)” each place it appears and inserting ”subparagraph (A)”; and (vii) in subparagraph (C)(iii), as so redesignated, by striking ”subparagraph (B)” and inserting ”subpara- graph (A)”. (2) APPLICATION.\u2014The amendments made by paragraph (1) shall not apply to a contract for the procurement of infant formula under section 17(h)(8) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(h)(8)) that is in effect on the date of enactment of this subsection. (h) NATIONAL ADVISORY COUNCIL ON MATERNAL, INFANT, AND FETAL NUTRITION.\u2014Section 17(k)(3) of the Child Nutrition Act of 1966 (42 U.S.C. 1786(k)(3)) is amended by striking ”Secretary shall designate” and inserting ”Council shall elect”. (i) COMPLETED STUDY; COMMUNITY COLLEGE DEMONSTRATION; GRANTS FOR INFORMATION AND DATA SYSTEM.\u2014Section 17 of the Child Nutrition Act of 1966 (42 U.S.C. 1786) is amended by striking subsections (n), (o), and (p). (j) DISQUALIFICATION OF VENDORS WHO ARE DISQUALIFIED UNDER THE FOOD STAMP PROGRAM.\u2014Section 17 of the Child Nutri- tion Act of 1966 (42 U.S.C. 1786), as amended by subsection (i), is amended by adding at the end the following: ”(n) DISQUALIFICATION OF VENDORS WHO ARE DISQUALIFIED UNDER THE FOOD STAMP PROGRAM.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall issue regulations providing criteria for the disqualification under this section of an approved vendor that is disqualified from accepting bene- fits under the food stamp program established under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.). ”(2) TERMS.\u2014A disqualification under paragraph (1)\u2014 ”(A) shall be for the same period as the disqualification from the program referred to in paragraph (1); ”(B) may begin at a later date than the disqualification from the program referred to in paragraph (1); and ”(C) shall not be subject to judicial or administrative review.”. SEC. 730. CASH GRANTS FOR NUTRITION EDUCATION. Section 18 of the Child Nutrition Act of 1966 (42 U.S.C. 1787) is repealed. SEC. 731. NUTRITION EDUCATION AND TRAINING. (a) FINDINGS.\u2014Section 19 of the Child Nutrition Act of 1966 (42 U.S.C. 1788) is amended\u2014 (1) in subsection (a), by striking ”that\u2014” and all that follows through the period at the end and inserting ”that effec- tive dissemination of scientifically valid information to children Regulations. 42 USC 1786 note. 110 STAT. 2306 PUBLIC LAW 104 193\u2014AUG. 22, 1996 participating or eligible to participate in the school lunch and related child nutrition programs should be encouraged.”; and (2) in subsection (b), by striking ”encourage” and all that follows through ”establishing” and inserting ”establish”. (b) USE OF FUNDS.\u2014Section 19(f) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(f)) is amended\u2014 (1) in paragraph (1)\u2014 (A) by striking subparagraph (B); and (B) in subparagraph (A)\u2014 (i) by striking ”(A)”; (ii) by striking clauses (ix) through (xix); (iii) by redesignating clauses (i) through (viii) and (xx) as subparagraphs (A) through (H) and (I), respec- tively; (iv) in subparagraph (I), as so redesignated, by striking the period at the end and inserting ”; and”; and (v) by adding at the end the following: ”(J) other appropriate related activities, as determined by the State.”; (2) by striking paragraphs (2) and (4); and (3) by redesignating paragraph (3) as paragraph (2). (c) ACCOUNTS, RECORDS, AND REPORTS.\u2014The second sentence of section 19(g)(1) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(g)(1)) is amended by striking ”at all times be available” and inserting ”be available at any reasonable time”. (d) STATE COORDINATORS FOR NUTRITION; STATE PLAN.\u2014Section 19(h) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(h)) is amended\u2014 (1) in the second sentence of paragraph (1)\u2014 (A) by striking ”as provided in paragraph (2) of this subsection”; and (B) by striking ”as provided in paragraph (3) of this subsection”; (2) in paragraph (2), by striking the second and third sentences; and (3) by striking paragraph (3). (e) AUTHORIZATION OF APPROPRIATIONS.\u2014Section 19(i) of the Child Nutrition Act of 1966 (42 U.S.C. 1788(i)) is amended\u2014 (1) in the first sentence of paragraph (2)(A), by striking ”and each succeeding fiscal year”; (2) by redesignating paragraphs (3) and (4) as paragraphs (4) and (5), respectively; and (3) by inserting after paragraph (2) the following: ”(3) FISCAL YEARS 1997 THROUGH 2002.\u2014 ”(A) IN GENERAL.\u2014There are authorized to be appro- priated to carry out this section $10,000,000 for each of fiscal years 1997 through 2002. ”(B) GRANTS.\u2014 ”(i) IN GENERAL.\u2014Grants to each State from the amounts made available under subparagraph (A) shall be based on a rate of 50 cents for each child enrolled in schools or institutions within the State, except that no State shall receive an amount less than $75,000 per fiscal year. ”(ii) INSUFFICIENT FUNDS.\u2014If the amount made available for any fiscal year is insufficient to pay the 110 STAT. 2307PUBLIC LAW 104 193\u2014AUG. 22, 1996 amount to which each State is entitled under clause (i), the amount of each grant shall be ratably reduced.”. (f) ASSESSMENT.\u2014Section 19 of the Child Nutrition Act of 1966 (42 U.S.C. 1788) is amended by striking subsection (j). (g) EFFECTIVE DATE.\u2014The amendments made by subsection (e) shall become effective on October 1, 1996. Subtitle C\u2014Miscellaneous Provisions SEC. 741. COORDINATION OF SCHOOL LUNCH, SCHOOL BREAKFAST, AND SUMMER FOOD SERVICE PROGRAMS. (a) COORDINATION.\u2014 (1) IN GENERAL.\u2014The Secretary of Agriculture shall develop proposed changes to the regulations under the school lunch program under the National School Lunch Act (42 U.S.C. 1751 et seq.), the summer food service program under section 13 of that Act (42 U.S.C. 1761), and the school breakfast program under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773), for the purpose of simplifying and coordinating those programs into a comprehensive meal program. (2) CONSULTATION.\u2014In developing proposed changes to the regulations under paragraph (1), the Secretary of Agriculture shall consult with local, State, and regional administrators of the programs described in such paragraph. (b) REPORT.\u2014Not later than November 1, 1997, the Secretary of Agriculture shall submit to the Committee on Agriculture, Nutri- tion, and Forestry of the Senate and the Committee on Economic and Educational Opportunities of the House of Representatives a report containing the proposed changes developed under sub- section (a). SEC. 742. REQUIREMENTS RELATING TO PROVISION OF BENEFITS BASED ON CITIZENSHIP, ALIENAGE, OR IMMIGRATION STATUS UNDER THE NATIONAL SCHOOL LUNCH ACT, THE CHILD NUTRITION ACT OF 1966, AND CERTAIN OTHER ACTS. (a) SCHOOL LUNCH AND BREAKFAST PROGRAMS.\u2014Notwithstand- ing any other provision of this Act, an individual who is eligible to receive free public education benefits under State or local law shall not be ineligible to receive benefits provided under the school lunch program under the National School Lunch Act (42 U.S.C. 1751 et seq.) or the school breakfast program under section 4 of the Child Nutrition Act of 1966 (42 U.S.C. 1773) on the basis of citizenship, alienage, or immigration status. (b) OTHER PROGRAMS.\u2014 (1) IN GENERAL.\u2014Nothing in this Act shall prohibit or require a State to provide to an individual who is not a citizen or a qualified alien, as defined in section 431(b), benefits under programs established under the provisions of law described in paragraph (2). (2) PROVISIONS OF LAW DESCRIBED.\u2014The provisions of law described in this paragraph are the following: (A) Programs (other than the school lunch program and the school breakfast program) under the National School Lunch Act (42 U.S.C. 1751 et seq.) and the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.). 8 USC 1615. 42 USC 1751 note. 42 USC 1788 note. 110 STAT. 2308 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (B) Section 4 of the Agriculture and Consumer Protec- tion Act of 1973 (7 U.S.C. 612c note). (C) The Emergency Food Assistance Act of 1983 (7 U.S.C 612c note). (D) The food distribution program on Indian reserva- tions established under section 4(b) of the Food Stamp Act of 1977 (7 U.S.C 2013(b)). TITLE VIII\u2014FOOD STAMPS AND COMMODITY DISTRIBUTION Subtitle A\u2014Food Stamp Program SEC. 801. DEFINITION OF CERTIFICATION PERIOD. Section 3(c) of the Food Stamp Act of 1977 (7 U.S.C. 2012(c)) is amended by striking ”Except as provided” and all that follows and inserting the following: ”The certification period shall not exceed 12 months, except that the certification period may be up to 24 months if all adult household members are elderly or disabled. A State agency shall have at least 1 contact with each certified household every 12 months.”. SEC. 802. DEFINITION OF COUPON. Section 3(d) of the Food Stamp Act of 1977 (7 U.S.C. 2012(d)) is amended by striking ”or type of certificate” and inserting ”type of certificate, authorization card, cash or check issued in lieu of a coupon, or access device, including an electronic benefit transfer card or personal identification number,”. SEC. 803. TREATMENT OF CHILDREN LIVING AT HOME. The second sentence of section 3(i) of the Food Stamp Act of 1977 (7 U.S.C. 2012(i)) is amended by striking ”(who are not themselves parents living with their children or married and living with their spouses)”. SEC. 804. ADJUSTMENT OF THRIFTY FOOD PLAN. The second sentence of section 3(o) of the Food Stamp Act of 1977 (7 U.S.C. 2012(o)) is amended\u2014 (1) by striking ”shall (1) make” and inserting the following: ”shall\u2014 ”(1) make”; (2) by striking ”scale, (2) make” and inserting the following: ”scale; ”(2) make”; (3) by striking ”Alaska, (3) make” and inserting the following: ”Alaska; ”(3) make”; and (4) by striking ”Columbia, (4) through” and all that follows through the end of the subsection and inserting the following: ”Columbia; and ”(4) on October 1, 1996, and each October 1 thereafter, adjust the cost of the diet to reflect the cost of the diet in the preceding June, and round the result to the nearest lower dollar increment for each household size, except that on October 1, 1996, the Secretary may not reduce the cost of the diet in effect on September 30, 1996.”. 110 STAT. 2309PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 805. DEFINITION OF HOMELESS INDIVIDUAL. Section 3(s)(2)(C) of the Food Stamp Act of 1977 (7 U.S.C. 2012(s)(2)(C)) is amended by inserting ”for not more than 90 days” after ”temporary accommodation”. SEC. 806. STATE OPTION FOR ELIGIBILITY STANDARDS. Section 5(b) of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)) is amended by striking ”(b) The Secretary” and inserting the following: ”(b) ELIGIBILITY STANDARDS.\u2014Except as otherwise provided in this Act, the Secretary”. SEC. 807. EARNINGS OF STUDENTS. Section 5(d)(7) of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)(7)) is amended by striking ”21” and inserting ”17”. SEC. 808. ENERGY ASSISTANCE. (a) IN GENERAL.\u2014Section 5(d) of the Food Stamp Act of 1977 (7 U.S.C. 2014(d)) is amended by striking paragraph (11) and insert- ing the following: ”(11)(A) any payments or allowances made for the purpose of providing energy assistance under any Federal law (other than part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)), or (B) a 1-time payment or allowance made under a Federal or State law for the costs of weatherization or emergency repair or replacement of an unsafe or inoperative furnace or other heating or cooling device,”. (b) CONFORMING AMENDMENTS.\u2014Section 5(k) of the Food Stamp Act of 1977 (7 U.S.C. 2014(k)) is amended\u2014 (1) in paragraph (1)\u2014 (A) in subparagraph (A), by striking ”plan for aid to families with dependent children approved” and inserting ”program funded”; and (B) in subparagraph (B), by striking ”, not including energy or utility-cost assistance,”; (2) in paragraph (2), by striking subparagraph (C) and inserting the following: ”(C) a payment or allowance described in subsection (d)(11);”; and (3) by adding at the end the following: ”(4) THIRD PARTY ENERGY ASSISTANCE PAYMENTS.\u2014 ”(A) ENERGY ASSISTANCE PAYMENTS.\u2014For purposes of subsection (d)(1), a payment made under a State law (other than a law referred to in paragraph (2)(H)) to provide energy assistance to a household shall be considered money payable directly to the household. ”(B) ENERGY ASSISTANCE EXPENSES.\u2014For purposes of subsection (e)(7), an expense paid on behalf of a household under a State law to provide energy assistance shall be considered an out-of-pocket expense incurred and paid by the household.”. SEC. 809. DEDUCTIONS FROM INCOME. (a) IN GENERAL.\u2014Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014) is amended by striking subsection (e) and inserting the following: ”(e) DEDUCTIONS FROM INCOME.\u2014 ”(1) STANDARD DEDUCTION.\u2014The Secretary shall allow a standard deduction for each household in the 48 contiguous 110 STAT. 2310 PUBLIC LAW 104 193\u2014AUG. 22, 1996 States and the District of Columbia, Alaska, Hawaii, Guam, and the Virgin Islands of the United States of $134, $229, $189, $269, and $118, respectively. ”(2) EARNED INCOME DEDUCTION.\u2014 ”(A) DEFINITION OF EARNED INCOME.\u2014In this para- graph, the term ‘earned income’ does not include\u2014 ”(i) income excluded by subsection (d); or ”(ii) any portion of income earned under a work supplementation or support program, as defined under section 16(b), that is attributable to public assistance. ”(B) DEDUCTION.\u2014Except as provided in subparagraph (C), a household with earned income shall be allowed a deduction of 20 percent of all earned income to compensate for taxes, other mandatory deductions from salary, and work expenses. ”(C) EXCEPTION.\u2014The deduction described in subpara- graph (B) shall not be allowed with respect to determining an overissuance due to the failure of a household to report earned income in a timely manner. ”(3) DEPENDENT CARE DEDUCTION.\u2014 ”(A) IN GENERAL.\u2014A household shall be entitled, with respect to expenses (other than excluded expenses described in subparagraph (B)) for dependent care, to a dependent care deduction, the maximum allowable level of which shall be $200 per month for each dependent child under 2 years of age and $175 per month for each other dependent, for the actual cost of payments necessary for the care of a dependent if the care enables a household member to accept or continue employment, or training or education that is preparatory for employment. ”(B) EXCLUDED EXPENSES.\u2014The excluded expenses referred to in subparagraph (A) are\u2014 ”(i) expenses paid on behalf of the household by a third party; ”(ii) amounts made available and excluded, for the expenses referred to in subparagraph (A), under sub- section (d)(3); and ”(iii) expenses that are paid under section 6(d)(4). ”(4) DEDUCTION FOR CHILD SUPPORT PAYMENTS.\u2014 ”(A) IN GENERAL.\u2014A household shall be entitled to a deduction for child support payments made by a house- hold member to or for an individual who is not a member of the household if the household member is legally obli- gated to make the payments. ”(B) METHODS FOR DETERMINING AMOUNT.\u2014The Sec- retary may prescribe by regulation the methods, including calculation on a retrospective basis, that a State agency shall use to determine the amount of the deduction for child support payments. ”(5) HOMELESS SHELTER ALLOWANCE.\u2014Under rules pre- scribed by the Secretary, a State agency may develop a standard homeless shelter allowance, which shall not exceed $143 per month, for such expenses as may reasonably be expected to be incurred by households in which all members are homeless individuals but are not receiving free shelter throughout the month. A State agency that develops the allowance may use the allowance in determining eligibility and allotments for the 110 STAT. 2311PUBLIC LAW 104 193\u2014AUG. 22, 1996 households. The State agency may make a household with extremely low shelter costs ineligible for the allowance. ”(6) EXCESS MEDICAL EXPENSE DEDUCTION.\u2014 ”(A) IN GENERAL.\u2014A household containing an elderly or disabled member shall be entitled, with respect to expenses other than expenses paid on behalf of the house- hold by a third party, to an excess medical expense deduc- tion for the portion of the actual costs of allowable medical expenses, incurred by the elderly or disabled member, exclusive of special diets, that exceeds $35 per month. ”(B) METHOD OF CLAIMING DEDUCTION.\u2014 ”(i) IN GENERAL.\u2014A State agency shall offer an eligible household under subparagraph (A) a method of claiming a deduction for recurring medical expenses that are initially verified under the excess medical expense deduction in lieu of submitting information on, or verification of, actual expenses on a monthly basis. ”(ii) METHOD.\u2014The method described in clause (i) shall\u2014 ”(I) be designed to minimize the burden for the eligible elderly or disabled household member choosing to deduct the recurrent medical expenses of the member pursuant to the method; ”(II) rely on reasonable estimates of the expected medical expenses of the member for the certification period (including changes that can be reasonably anticipated based on available informa- tion about the medical condition of the member, public or private medical insurance coverage, and the current verified medical expenses incurred by the member); and ”(III) not require further reporting or verifica- tion of a change in medical expenses if such a change has been anticipated for the certification period. ”(7) EXCESS SHELTER EXPENSE DEDUCTION.\u2014 ”(A) IN GENERAL.\u2014A household shall be entitled, with respect to expenses other than expenses paid on behalf of the household by a third party, to an excess shelter expense deduction to the extent that the monthly amount expended by a household for shelter exceeds an amount equal to 50 percent of monthly household income after all other applicable deductions have been allowed. ”(B) MAXIMUM AMOUNT OF DEDUCTION.\u2014In the case of a household that does not contain an elderly or disabled individual, in the 48 contiguous States and the District of Columbia, Alaska, Hawaii, Guam, and the Virgin Islands of the United States, the excess shelter expense deduction shall not exceed\u2014 ”(i) for the period beginning on the date of enact- ment of this subparagraph and ending on December 31, 1996, $247, $429, $353, $300, and $182 per month, respectively; ”(ii) for the period beginning on January 1, 1997, and ending on September 30, 1998, $250, $434, $357, $304, and $184 per month, respectively; 110 STAT. 2312 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(iii) for fiscal years 1999 and 2000, $275, $478, $393, $334, and $203 per month, respectively; and ”(iv) for fiscal year 2001 and each subsequent fiscal year, $300, $521, $429, $364, and $221 per month, respectively. ”(C) STANDARD UTILITY ALLOWANCE.\u2014 ”(i) IN GENERAL.\u2014In computing the excess shelter expense deduction, a State agency may use a standard utility allowance in accordance with regulations promulgated by the Secretary, except that a State agency may use an allowance that does not fluctuate within a year to reflect seasonal variations. ”(ii) RESTRICTIONS ON HEATING AND COOLING EXPENSES.\u2014An allowance for a heating or cooling expense may not be used in the case of a household that\u2014 ”(I) does not incur a heating or cooling expense, as the case may be; ”(II) does incur a heating or cooling expense but is located in a public housing unit that has central utility meters and charges households, with regard to the expense, only for excess utility costs; or ”(III) shares the expense with, and lives with, another individual not participating in the food stamp program, another household participating in the food stamp program, or both, unless the allowance is prorated between the household and the other individual, household, or both. ”(iii) MANDATORY ALLOWANCE.\u2014 ”(I) IN GENERAL.\u2014A State agency may make the use of a standard utility allowance mandatory for all households with qualifying utility costs if\u2014 ”(aa) the State agency has developed 1 or more standards that include the cost of heating and cooling and 1 or more standards that do not include the cost of heating and cooling; and ”(bb) the Secretary finds that the stand- ards will not result in an increased cost to the Secretary. ”(II) HOUSEHOLD ELECTION.\u2014A State agency that has not made the use of a standard utility allowance mandatory under subclause (I) shall allow a household to switch, at the end of a certifi- cation period, between the standard utility allow- ance and a deduction based on the actual utility costs of the household. ”(iv) AVAILABILITY OF ALLOWANCE TO RECIPIENTS OF ENERGY ASSISTANCE.\u2014 ”(I) IN GENERAL.\u2014Subject to subclause (II), if a State agency elects to use a standard utility allowance that reflects heating or cooling costs, the standard utility allowance shall be made avail- able to households receiving a payment, or on behalf of which a payment is made, under the Low-Income Home Energy Assistance Act of 1981 110 STAT. 2313PUBLIC LAW 104 193\u2014AUG. 22, 1996 (42 U.S.C. 8621 et seq.) or other similar energy assistance program, if the household still incurs out-of-pocket heating or cooling expenses in excess of any assistance paid on behalf of the household to an energy provider. ”(II) SEPARATE ALLOWANCE.\u2014A State agency may use a separate standard utility allowance for households on behalf of which a payment described in subclause (I) is made, but may not be required to do so. ”(III) STATES NOT ELECTING TO USE SEPARATE ALLOWANCE.\u2014A State agency that does not elect to use a separate allowance but makes a single standard utility allowance available to households incurring heating or cooling expenses (other than a household described in subclause (I) or (II) of clause (ii)) may not be required to reduce the allow- ance due to the provision (directly or indirectly) of assistance under the Low-Income Home Energy Assistance Act of 1981 (42 U.S.C. 8621 et seq.). ”(IV) PRORATION OF ASSISTANCE.\u2014For the pur- pose of the food stamp program, assistance pro- vided under the Low-Income Home Energy Assist- ance Act of 1981 (42 U.S.C. 8621 et seq.) shall be considered to be prorated over the entire heat- ing or cooling season for which the assistance was provided.”. (b) CONFORMING AMENDMENT.\u2014Section 11(e)(3) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(3)) is amended by striking ”. Under rules prescribed” and all that follows through ”verifies higher expenses”. SEC. 810. VEHICLE ALLOWANCE. Section 5(g) of the Food Stamp Act of 1977 (7 U.S.C. 2014(g)) is amended by striking paragraph (2) and inserting the following: ”(2) INCLUDED ASSETS.\u2014 ”(A) IN GENERAL.\u2014Subject to the other provisions of this paragraph, the Secretary shall, in prescribing inclu- sions in, and exclusions from, financial resources, follow the regulations in force as of June 1, 1982 (other than those relating to licensed vehicles and inaccessible resources). ”(B) ADDITIONAL INCLUDED ASSETS.\u2014The Secretary shall include in financial resources\u2014 ”(i) any boat, snowmobile, or airplane used for recreational purposes; ”(ii) any vacation home; ”(iii) any mobile home used primarily for vacation purposes; ”(iv) subject to subparagraph (C), any licensed vehicle that is used for household transportation or to obtain or continue employment to the extent that the fair market value of the vehicle exceeds $4,600 through September 30, 1996, and $4,650 beginning October 1, 1996; and 110 STAT. 2314 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(v) any savings or retirement account (including an individual account), regardless of whether there is a penalty for early withdrawal. ”(C) EXCLUDED VEHICLES.\u2014A vehicle (and any other property, real or personal, to the extent the property is directly related to the maintenance or use of the vehicle) shall not be included in financial resources under this paragraph if the vehicle is\u2014 ”(i) used to produce earned income; ”(ii) necessary for the transportation of a physically disabled household member; or ”(iii) depended on by a household to carry fuel for heating or water for home use and provides the primary source of fuel or water, respectively, for the household.”. SEC. 811. VENDOR PAYMENTS FOR TRANSITIONAL HOUSING COUNTED AS INCOME. Section 5(k)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2014(k)(2)) is amended\u2014 (1) by striking subparagraph (F); and (2) by redesignating subparagraphs (G) and (H) as subpara- graphs (F) and (G), respectively. SEC. 812. SIMPLIFIED CALCULATION OF INCOME FOR THE SELF- EMPLOYED. Section 5 of the Food Stamp Act of 1977 (7 U.S.C. 2014), as amended by title I, is amended by adding at the end the following: ”(m) SIMPLIFIED CALCULATION OF INCOME FOR THE SELF- EMPLOYED.\u2014 ”(1) IN GENERAL.\u2014Not later than 1 year after the date of enactment of this subsection, the Secretary shall establish a procedure by which a State may submit a method, designed to not increase Federal costs, for the approval of the Secretary, that the Secretary determines will produce a reasonable esti- mate of income excluded under subsection (d)(9) in lieu of calculating the actual cost of producing self-employment income. ”(2) INCLUSIVE OF ALL TYPES OF INCOME OR LIMITED TYPES OF INCOME.\u2014The method submitted by a State under paragraph (1) may allow a State to estimate income for all types of self-employment income or may be limited to 1 or more types of self-employment income. ”(3) DIFFERENCES FOR DIFFERENT TYPES OF INCOME.\u2014The method submitted by a State under paragraph (1) may differ for different types of self-employment income.”. SEC. 813. DOUBLED PENALTIES FOR VIOLATING FOOD STAMP PRO- GRAM REQUIREMENTS. Section 6(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2015(b)(1)) is amended\u2014 (1) in clause (i), by striking ”six months” and inserting ”1 year”; and (2) in clause (ii), by striking ”1 year” and inserting ”2 years”. Regulations. 110 STAT. 2315PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 814. DISQUALIFICATION OF CONVICTED INDIVIDUALS. Section 6(b)(1)(iii) of the Food Stamp Act of 1977 (7 U.S.C. 2015(b)(1)(iii)) is amended\u2014 (1) in subclause (II), by striking ”or” at the end; (2) in subclause (III), by striking the period at the end and inserting ”; or”; and (3) by inserting after subclause (III) the following: ”(IV) a conviction of an offense under subsection (b) or (c) of section 15 involving an item covered by subsection (b) or (c) of section 15 having a value of $500 or more.”. SEC. 815. DISQUALIFICATION. (a) IN GENERAL.\u2014Section 6(d) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)) is amended by striking ”(d)(1) Unless otherwise exempted by the provisions” and all that follows through the end of paragraph (1) and inserting the following: ”(d) CONDITIONS OF PARTICIPATION.\u2014 ”(1) WORK REQUIREMENTS.\u2014 ”(A) IN GENERAL.\u2014No physically and mentally fit individual over the age of 15 and under the age of 60 shall be eligible to participate in the food stamp program if the individual\u2014 ”(i) refuses, at the time of application and every 12 months thereafter, to register for employment in a manner prescribed by the Secretary; ”(ii) refuses without good cause to participate in an employment and training program established under paragraph (4), to the extent required by the State agency; ”(iii) refuses without good cause to accept an offer of employment, at a site or plant not subject to a strike or lockout at the time of the refusal, at a wage not less than the higher of\u2014 ”(I) the applicable Federal or State minimum wage; or ”(II) 80 percent of the wage that would have governed had the minimum hourly rate under sec- tion 6(a)(1) of the Fair Labor Standards Act of 1938 (29 U.S.C. 206(a)(1)) been applicable to the offer of employment; ”(iv) refuses without good cause to provide a State agency with sufficient information to allow the State agency to determine the employment status or the job availability of the individual; ”(v) voluntarily and without good cause\u2014 ”(I) quits a job; or ”(II) reduces work effort and, after the reduc- tion, the individual is working less than 30 hours per week; or ”(vi) fails to comply with section 20. ”(B) HOUSEHOLD INELIGIBILITY.\u2014If an individual who is the head of a household becomes ineligible to participate in the food stamp program under subparagraph (A), the household shall, at the option of the State agency, become ineligible to participate in the food stamp program for a period, determined by the State agency, that does not exceed the lesser of\u2014 110 STAT. 2316 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(i) the duration of the ineligibility of the individual determined under subparagraph (C); or ”(ii) 180 days. ”(C) DURATION OF INELIGIBILITY.\u2014 ”(i) FIRST VIOLATION.\u2014The first time that an individual becomes ineligible to participate in the food stamp program under subparagraph (A), the individual shall remain ineligible until the later of\u2014 ”(I) the date the individual becomes eligible under subparagraph (A); ”(II) the date that is 1 month after the date the individual became ineligible; or ”(III) a date determined by the State agency that is not later than 3 months after the date the individual became ineligible. ”(ii) SECOND VIOLATION.\u2014The second time that an individual becomes ineligible to participate in the food stamp program under subparagraph (A), the individual shall remain ineligible until the later of\u2014 ”(I) the date the individual becomes eligible under subparagraph (A); ”(II) the date that is 3 months after the date the individual became ineligible; or ”(III) a date determined by the State agency that is not later than 6 months after the date the individual became ineligible. ”(iii) THIRD OR SUBSEQUENT VIOLATION.\u2014The third or subsequent time that an individual becomes ineli- gible to participate in the food stamp program under subparagraph (A), the individual shall remain ineli- gible until the later of\u2014 ”(I) the date the individual becomes eligible under subparagraph (A); ”(II) the date that is 6 months after the date the individual became ineligible; ”(III) a date determined by the State agency; or ”(IV) at the option of the State agency, permanently. ”(D) ADMINISTRATION.\u2014 ”(i) GOOD CAUSE.\u2014The Secretary shall determine the meaning of good cause for the purpose of this paragraph. ”(ii) VOLUNTARY QUIT.\u2014The Secretary shall deter- mine the meaning of voluntarily quitting and reducing work effort for the purpose of this paragraph. ”(iii) DETERMINATION BY STATE AGENCY.\u2014 ”(I) IN GENERAL.\u2014Subject to subclause (II) and clauses (i) and (ii), a State agency shall deter- mine\u2014 ”(aa) the meaning of any term used in subparagraph (A); ”(bb) the procedures for determining whether an individual is in compliance with a requirement under subparagraph (A); and 110 STAT. 2317PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(cc) whether an individual is in compli- ance with a requirement under subpara- graph (A). ”(II) NOT LESS RESTRICTIVE.\u2014A State agency may not use a meaning, procedure, or determina- tion under subclause (I) that is less restrictive on individuals receiving benefits under this Act than a comparable meaning, procedure, or deter- mination under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.). ”(iv) STRIKE AGAINST THE GOVERNMENT.\u2014For the purpose of subparagraph (A)(v), an employee of the Federal Government, a State, or a political subdivision of a State, who is dismissed for participating in a strike against the Federal Government, the State, or the political subdivision of the State shall be considered to have voluntarily quit without good cause. ”(v) SELECTING A HEAD OF HOUSEHOLD.\u2014 ”(I) IN GENERAL.\u2014For purposes of this para- graph, the State agency shall allow the household to select any adult parent of a child in the house- hold as the head of the household if all adult household members making application under the food stamp program agree to the selection. ”(II) TIME FOR MAKING DESIGNATION.\u2014A household may designate the head of the household under subclause (I) each time the household is certified for participation in the food stamp pro- gram, but may not change the designation during a certification period unless there is a change in the composition of the household. ”(vi) CHANGE IN HEAD OF HOUSEHOLD.\u2014If the head of a household leaves the household during a period in which the household is ineligible to participate in the food stamp program under subparagraph (B)\u2014 ”(I) the household shall, if otherwise eligible, become eligible to participate in the food stamp program; and ”(II) if the head of the household becomes the head of another household, the household that becomes headed by the individual shall become ineligible to participate in the food stamp program for the remaining period of ineligibility.”. (b) CONFORMING AMENDMENT.\u2014 (1) The second sentence of section 17(b)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2026(b)(2)) is amended by striking ”6(d)(1)(i)” and inserting ”6(d)(1)(A)(i)”. (2) Section 20 of the Food Stamp Act of 1977 (7 U.S.C. 2029) is amended by striking subsection (f) and inserting the following: ”(f) DISQUALIFICATION.\u2014An individual or a household may become ineligible under section 6(d)(1) to participate in the food stamp program for failing to comply with this section.”. 110 STAT. 2318 PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 816. CARETAKER EXEMPTION. Section 6(d)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(2)) is amended by adding at the end the following: ”A State that requested a waiver to lower the age specified in subpara- graph (B) and had the waiver denied by the Secretary as of August 1, 1996, may, for a period of not more than 3 years, lower the age of a dependent child that qualifies a parent or other member of a household for an exemption under subparagraph (B) to between 1 and 6 years of age.”. SEC. 817. EMPLOYMENT AND TRAINING. (a) IN GENERAL.\u2014Section 6(d)(4) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(4)) is amended\u2014 (1) by striking ”(4)(A) Not later than April 1, 1987, each” and inserting the following: ”(4) EMPLOYMENT AND TRAINING.\u2014 ”(A) IN GENERAL.\u2014 ”(i) IMPLEMENTATION.\u2014Each”; (2) in subparagraph (A)\u2014 (A) by inserting ”work,” after ”skills, training,”; and (B) by adding at the end the following: ”(ii) STATEWIDE WORKFORCE DEVELOPMENT SYSTEM.\u2014Each component of an employment and train- ing program carried out under this paragraph shall be delivered through a statewide workforce develop- ment system, unless the component is not available locally through such a system.”; (3) in subparagraph (B)\u2014 (A) in the matter preceding clause (i), by striking the colon at the end and inserting the following: ”, except that the State agency shall retain the option to apply employment requirements prescribed under this subpara- graph to a program applicant at the time of application:”; (B) in clause (i), by striking ”with terms and conditions” and all that follows through ”time of application”; and (C) in clause (iv)\u2014 (i) by striking subclauses (I) and (II); and (ii) by redesignating subclauses (III) and (IV) as subclauses (I) and (II), respectively; (4) in subparagraph (D)\u2014 (A) in clause (i), by striking ”to which the application” and all that follows through ”30 days or less”; (B) in clause (ii), by striking ”but with respect” and all that follows through ”child care”; and (C) in clause (iii), by striking ”, on the basis of” and all that follows through ”clause (ii)” and inserting ”the exemption continues to be valid”; (5) in subparagraph (E), by striking the third sentence; (6) in subparagraph (G)\u2014 (A) by striking ”(G)(i) The State” and inserting ”(G) The State”; and (B) by striking clause (ii); (7) in subparagraph (H), by striking ”(H)(i) The Secretary” and all that follows through ”(ii) Federal funds” and inserting ”(H) Federal funds”; (8) in subparagraph (I)(i)(II), by striking ”, or was in oper- ation,” and all that follows through ”Social Security Act” and 110 STAT. 2319PUBLIC LAW 104 193\u2014AUG. 22, 1996 inserting the following: ”), except that no such payment or reimbursement shall exceed the applicable local market rate”; (9)(A) by striking subparagraphs (K) and (L) and inserting the following: ”(K) LIMITATION ON FUNDING.\u2014Notwithstanding any other provision of this paragraph, the amount of funds a State agency uses to carry out this paragraph (including funds used to carry out subparagraph (I)) for participants who are receiving benefits under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) shall not exceed the amount of funds the State agency used in fiscal year 1995 to carry out this paragraph for participants who were receiving benefits in fiscal year 1995 under a State program funded under part A of title IV of the Act (42 U.S.C. 601 et seq.).”; and (B) by redesignating subparagraphs (M) and (N) as sub- paragraphs (L) and (M), respectively; and (10) in subparagraph (L), as so redesignated\u2014 (A) by striking ”(L)(i) The Secretary” and inserting ”(L) The Secretary”; and (B) by striking clause (ii). (b) FUNDING.\u2014Section 16(h) of the Food Stamp Act of 1977 (7 U.S.C. 2025(h)) is amended by striking ”(h)(1)(A) The Secretary” and all that follows through the end of paragraph (1) and inserting the following: ”(h) FUNDING OF EMPLOYMENT AND TRAINING PROGRAMS.\u2014 ”(1) IN GENERAL.\u2014 ”(A) AMOUNTS.\u2014To carry out employment and training programs, the Secretary shall reserve for allocation to State agencies from funds made available for each fiscal year under section 18(a)(1) the amount of\u2014 ”(i) for fiscal year 1996, $75,000,000; ”(ii) for fiscal year 1997, $79,000,000; ”(iii) for fiscal year 1998, $81,000,000; ”(iv) for fiscal year 1999, $84,000,000; ”(v) for fiscal year 2000, $86,000,000; ”(vi) for fiscal year 2001, $88,000,000; and ”(vii) for fiscal year 2002, $90,000,000. ”(B) ALLOCATION.\u2014The Secretary shall allocate the amounts reserved under subparagraph (A) among the State agencies using a reasonable formula (as determined by the Secretary) that gives consideration to the population in each State affected by section 6(o). ”(C) REALLOCATION.\u2014 ”(i) NOTIFICATION.\u2014A State agency shall promptly notify the Secretary if the State agency determines that the State agency will not expend all of the funds allocated to the State agency under subparagraph (B). ”(ii) REALLOCATION.\u2014On notification under clause (i), the Secretary shall reallocate the funds that the State agency will not expend as the Secretary considers appropriate and equitable. ”(D) MINIMUM ALLOCATION.\u2014Notwithstanding sub- paragraphs (A) through (C), the Secretary shall ensure that each State agency operating an employment and train- 110 STAT. 2320 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ing program shall receive not less than $50,000 for each fiscal year.”. (c) ADDITIONAL MATCHING FUNDS.\u2014Section 16(h)(2) of the Food Stamp Act of 1977 (7 U.S.C. 2025(h)(2)) is amended by inserting before the period at the end the following: ”, including the costs for case management and casework to facilitate the transition from economic dependency to self-sufficiency through work”. (d) REPORTS.\u2014Section 16(h) of the Food Stamp Act of 1977 (7 U.S.C. 2025(h)) is amended\u2014 (1) in paragraph (5)\u2014 (A) by striking ”(5)(A) The Secretary” and inserting ”(5) The Secretary”; and (B) by striking subparagraph (B); and (2) by striking paragraph (6). SEC. 818. FOOD STAMP ELIGIBILITY. The third sentence of section 6(f) of the Food Stamp Act of 1977 (7 U.S.C. 2015(f)) is amended by inserting ”, at State option,” after ”less”. SEC. 819. COMPARABLE TREATMENT FOR DISQUALIFICATION. (a) IN GENERAL.\u2014Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015) is amended by adding at the end the following: ”(i) COMPARABLE TREATMENT FOR DISQUALIFICATION.\u2014 ”(1) IN GENERAL.\u2014If a disqualification is imposed on a member of a household for a failure of the member to perform an action required under a Federal, State, or local law relating to a means-tested public assistance program, the State agency may impose the same disqualification on the member of the household under the food stamp program. ”(2) RULES AND PROCEDURES.\u2014If a disqualification is imposed under paragraph (1) for a failure of an individual to perform an action required under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), the State agency may use the rules and procedures that apply under part A of title IV of the Act to impose the same disqualification under the food stamp program. ”(3) APPLICATION AFTER DISQUALIFICATION PERIOD.\u2014A member of a household disqualified under paragraph (1) may, after the disqualification period has expired, apply for benefits under this Act and shall be treated as a new applicant, except that a prior disqualification under subsection (d) shall be consid- ered in determining eligibility.”. (b) STATE PLAN PROVISIONS.\u2014Section 11(e) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)) is amended\u2014 (1) in paragraph (24), by striking ”and” at the end; (2) in paragraph (25), by striking the period at the end and inserting a semicolon; and (3) by adding at the end the following: ”(26) the guidelines the State agency uses in carrying out section 6(i); and”. (c) CONFORMING AMENDMENT.\u2014Section 6(d)(2)(A) of the Food Stamp Act of 1977 (7 U.S.C. 2015(d)(2)(A)) is amended by striking ”that is comparable to a requirement of paragraph (1)”. 110 STAT. 2321PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 820. DISQUALIFICATION FOR RECEIPT OF MULTIPLE FOOD STAMP BENEFITS. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 819, is amended by adding at the end the following: ”(j) DISQUALIFICATION FOR RECEIPT OF MULTIPLE FOOD STAMP BENEFITS.\u2014An individual shall be ineligible to participate in the food stamp program as a member of any household for a 10- year period if the individual is found by a State agency to have made, or is convicted in a Federal or State court of having made, a fraudulent statement or representation with respect to the iden- tity or place of residence of the individual in order to receive multiple benefits simultaneously under the food stamp program.”. SEC. 821. DISQUALIFICATION OF FLEEING FELONS. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 820, is amended by adding at the end the following: ”(k) DISQUALIFICATION OF FLEEING FELONS.\u2014No member of a household who is otherwise eligible to participate in the food stamp program shall be eligible to participate in the program as a member of that or any other household during any period during which the individual is\u2014 ”(1) fleeing to avoid prosecution, or custody or confinement after conviction, under the law of the place from which the individual is fleeing, for a crime, or attempt to commit a crime, that is a felony under the law of the place from which the individual is fleeing or that, in the case of New Jersey, is a high misdemeanor under the law of New Jersey; or ”(2) violating a condition of probation or parole imposed under a Federal or State law.”. SEC. 822. COOPERATION WITH CHILD SUPPORT AGENCIES. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 821, is amended by adding at the end the following: ”(l) CUSTODIAL PARENT’S COOPERATION WITH CHILD SUPPORT AGENCIES.\u2014 ”(1) IN GENERAL.\u2014At the option of a State agency, subject to paragraphs (2) and (3), no natural or adoptive parent or other individual (collectively referred to in this subsection as ‘the individual’) who is living with and exercising parental control over a child under the age of 18 who has an absent parent shall be eligible to participate in the food stamp program unless the individual cooperates with the State agency admin- istering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.)\u2014 ”(A) in establishing the paternity of the child (if the child is born out of wedlock); and ”(B) in obtaining support for\u2014 ”(i) the child; or ”(ii) the individual and the child. ”(2) GOOD CAUSE FOR NONCOOPERATION.\u2014Paragraph (1) shall not apply to the individual if good cause is found for refusing to cooperate, as determined by the State agency in accordance with standards prescribed by the Secretary in con- sultation with the Secretary of Health and Human Services. Regulations. 110 STAT. 2322 PUBLIC LAW 104 193\u2014AUG. 22, 1996 The standards shall take into consideration circumstances under which cooperation may be against the best interests of the child. ”(3) FEES.\u2014Paragraph (1) shall not require the payment of a fee or other cost for services provided under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.). ”(m) NONCUSTODIAL PARENT’S COOPERATION WITH CHILD SUP- PORT AGENCIES.\u2014 ”(1) IN GENERAL.\u2014At the option of a State agency, subject to paragraphs (2) and (3), a putative or identified noncustodial parent of a child under the age of 18 (referred to in this subsection as ‘the individual’) shall not be eligible to participate in the food stamp program if the individual refuses to cooperate with the State agency administering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.)\u2014 ”(A) in establishing the paternity of the child (if the child is born out of wedlock); and ”(B) in providing support for the child. ”(2) REFUSAL TO COOPERATE.\u2014 ”(A) GUIDELINES.\u2014The Secretary, in consultation with the Secretary of Health and Human Services, shall develop guidelines on what constitutes a refusal to cooperate under paragraph (1). ”(B) PROCEDURES.\u2014The State agency shall develop procedures, using guidelines developed under subparagraph (A), for determining whether an individual is refusing to cooperate under paragraph (1). ”(3) FEES.\u2014Paragraph (1) shall not require the payment of a fee or other cost for services provided under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.). ”(4) PRIVACY.\u2014The State agency shall provide safeguards to restrict the use of information collected by a State agency administering the program established under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.) to purposes for which the information is collected.”. SEC. 823. DISQUALIFICATION RELATING TO CHILD SUPPORT ARREARS. Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 822, is amended by adding at the end the following: ”(n) DISQUALIFICATION FOR CHILD SUPPORT ARREARS.\u2014 ”(1) IN GENERAL.\u2014At the option of a State agency, no individual shall be eligible to participate in the food stamp program as a member of any household during any month that the individual is delinquent in any payment due under a court order for the support of a child of the individual. ”(2) EXCEPTIONS.\u2014Paragraph (1) shall not apply if\u2014 ”(A) a court is allowing the individual to delay pay- ment; or ”(B) the individual is complying with a payment plan approved by a court or the State agency designated under part D of title IV of the Social Security Act (42 U.S.C. 651 et seq.) to provide support for the child of the individual.”. 110 STAT. 2323PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 824. WORK REQUIREMENT. (a) IN GENERAL.\u2014Section 6 of the Food Stamp Act of 1977 (7 U.S.C. 2015), as amended by section 823, is amended by adding at the end the following: ”(o) WORK REQUIREMENT.\u2014 ”(1) DEFINITION OF WORK PROGRAM.\u2014In this subsection, the term ‘work program’ means\u2014 ”(A) a program under the Job Training Partnership Act (29 U.S.C. 1501 et seq.); ”(B) a program under section 236 of the Trade Act of 1974 (19 U.S.C. 2296); and ”(C) a program of employment and training operated or supervised by a State or political subdivision of a State that meets standards approved by the Governor of the State, including a program under subsection (d)(4), other than a job search program or a job search training program. ”(2) WORK REQUIREMENT.\u2014Subject to the other provisions of this subsection, no individual shall be eligible to participate in the food stamp program as a member of any household if, during the preceding 36-month period, the individual received food stamp benefits for not less than 3 months (consecutive or otherwise) during which the individual did not\u2014 ”(A) work 20 hours or more per week, averaged monthly; ”(B) participate in and comply with the requirements of a work program for 20 hours or more per week, as determined by the State agency; ”(C) participate in and comply with the requirements of a program under section 20 or a comparable program established by a State or political subdivision of a State; or ”(D) receive benefits pursuant to paragraph (3), (4), or (5). ”(3) EXCEPTION.\u2014Paragraph (2) shall not apply to an individual if the individual is\u2014 ”(A) under 18 or over 50 years of age; ”(B) medically certified as physically or mentally unfit for employment; ”(C) a parent or other member of a household with responsibility for a dependent child; ”(D) otherwise exempt under subsection (d)(2); or ”(E) a pregnant woman. ”(4) WAIVER.\u2014 ”(A) IN GENERAL.\u2014On the request of a State agency, the Secretary may waive the applicability of paragraph (2) to any group of individuals in the State if the Secretary makes a determination that the area in which the indi- viduals reside\u2014 ”(i) has an unemployment rate of over 10 per- cent; or ”(ii) does not have a sufficient number of jobs to provide employment for the individuals. ”(B) REPORT.\u2014The Secretary shall report the basis for a waiver under subparagraph (A) to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate. 110 STAT. 2324 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(5) SUBSEQUENT ELIGIBILITY.\u2014 ”(A) REGAINING ELIGIBILITY.\u2014An individual denied eligibility under paragraph (2) shall regain eligibility to participate in the food stamp program if, during a 30- day period, the individual\u2014 ”(i) works 80 or more hours; ”(ii) participates in and complies with the require- ments of a work program for 80 or more hours, as determined by a State agency; or ”(iii) participates in and complies with the require- ments of a program under section 20 or a comparable program established by a State or political subdivision of a State. ”(B) MAINTAINING ELIGIBILITY.\u2014An individual who regains eligibility under subparagraph (A) shall remain eligible as long as the individual meets the requirements of subparagraph (A), (B), or (C) of paragraph (2). ”(C) LOSS OF EMPLOYMENT.\u2014 ”(i) IN GENERAL.\u2014An individual who regained eligi- bility under subparagraph (A) and who no longer meets the requirements of subparagraph (A), (B), or (C) of paragraph (2) shall remain eligible for a consecutive 3-month period, beginning on the date the individual first notifies the State agency that the individual no longer meets the requirements of subparagraph (A), (B), or (C) of paragraph (2). ”(ii) LIMITATION.\u2014An individual shall not receive any benefits pursuant to clause (i) for more than a single 3-month period in any 36-month period. ”(6) OTHER PROGRAM RULES.\u2014Nothing in this subsection shall make an individual eligible for benefits under this Act if the individual is not otherwise eligible for benefits under the other provisions of this Act.”. (b) TRANSITION PROVISION.\u2014The term ”preceding 36-month period” in section 6(o) of the Food Stamp Act of 1977, as added by subsection (a), does not include, with respect to a State, any period before the earlier of\u2014 (1) the date the State notifies recipients of food stamp benefits of the application of section 6(o); or (2) the date that is 3 months after the date of enactment of this Act. SEC. 825. ENCOURAGEMENT OF ELECTRONIC BENEFIT TRANSFER SYSTEMS. (a) IN GENERAL.\u2014Section 7(i) of the Food Stamp Act of 1977 (7 U.S.C. 2016(i)) is amended\u2014 (1) by striking ”(i)(1)(A) Any State” and all that follows through the end of paragraph (1) and inserting the following: ”(i) ELECTRONIC BENEFIT TRANSFERS.\u2014 ”(1) IN GENERAL.\u2014 ”(A) IMPLEMENTATION.\u2014Not later than October 1, 2002, each State agency shall implement an electronic benefit transfer system under which household benefits determined under section 8(a) or 26 are issued from and stored in a central databank, unless the Secretary provides a waiver for a State agency that faces unusual barriers to implementing an electronic benefit transfer system. 7 USC 2015 note. 110 STAT. 2325PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) TIMELY IMPLEMENTATION.\u2014Each State agency is encouraged to implement an electronic benefit transfer sys- tem under subparagraph (A) as soon as practicable. ”(C) STATE FLEXIBILITY.\u2014Subject to paragraph (2), a State agency may procure and implement an electronic benefit transfer system under the terms, conditions, and design that the State agency considers appropriate. ”(D) OPERATION.\u2014An electronic benefit transfer system should take into account generally accepted standard operating rules based on\u2014 ”(i) commercial electronic funds transfer tech- nology; ”(ii) the need to permit interstate operation and law enforcement monitoring; and ”(iii) the need to permit monitoring and investiga- tions by authorized law enforcement agencies.”; (2) in paragraph (2)\u2014 (A) by striking ”effective no later than April 1, 1992,”; (B) in subparagraph (A)\u2014 (i) by striking ”, in any 1 year,”; and (ii) by striking ”on-line”; (C) by striking subparagraph (D) and inserting the following: ”(D)(i) measures to maximize the security of a system using the most recent technology available that the State agency considers appropriate and cost effective and which may include personal identification numbers, photographic identification on electronic benefit transfer cards, and other measures to protect against fraud and abuse; and ”(ii) effective not later than 2 years after the date of enactment of this clause, to the extent practicable, meas- ures that permit a system to differentiate items of food that may be acquired with an allotment from items of food that may not be acquired with an allotment;”; (D) in subparagraph (G), by striking ”and” at the end; (E) in subparagraph (H), by striking the period at the end and inserting ”; and”; and (F) by adding at the end the following: ”(I) procurement standards.”; and (3) by adding at the end the following: ”(7) REPLACEMENT OF BENEFITS.\u2014Regulations issued by the Secretary regarding the replacement of benefits and liability for replacement of benefits under an electronic benefit transfer system shall be similar to the regulations in effect for a paper- based food stamp issuance system. ”(8) REPLACEMENT CARD FEE.\u2014A State agency may collect a charge for replacement of an electronic benefit transfer card by reducing the monthly allotment of the household receiving the replacement card. ”(9) OPTIONAL PHOTOGRAPHIC IDENTIFICATION.\u2014 ”(A) IN GENERAL.\u2014A State agency may require that an electronic benefit card contain a photograph of 1 or more members of a household. ”(B) OTHER AUTHORIZED USERS.\u2014If a State agency requires a photograph on an electronic benefit card under subparagraph (A), the State agency shall establish proce- dures to ensure that any other appropriate member of Regulations. Effective date. 110 STAT. 2326 PUBLIC LAW 104 193\u2014AUG. 22, 1996 the household or any authorized representative of the household may utilize the card. ”(10) APPLICABLE LAW.\u2014Disclosures, protections, respon- sibilities, and remedies established by the Federal Reserve Board under section 904 of the Electronic Fund Transfer Act (15 U.S.C. 1693b) shall not apply to benefits under this Act delivered through any electronic benefit transfer system. ”(11) APPLICATION OF ANTI-TYING RESTRICTIONS TO ELEC- TRONIC BENEFIT TRANSFER SYSTEMS.\u2014 ”(A) DEFINITIONS.\u2014In this paragraph: ”(i) AFFILIATE.\u2014The term ‘affiliate’ has the mean- ing provided the term in section 2(k) of the Bank Holding Company Act of 1956 (12 U.S.C. 1841(k)). ”(ii) COMPANY.\u2014The term ‘company’ has the mean- ing provided the term in section 106(a) of the Bank Holding Company Act Amendments of 1970 (12 U.S.C. 1971), but shall not include a bank, a bank holding company, or any subsidiary of a bank holding company. ”(iii) ELECTRONIC BENEFIT TRANSFER SERVICE.\u2014 The term ‘electronic benefit transfer service’ means the processing of electronic transfers of household benefits, determined under section 8(a) or 26, if the benefits are\u2014 ”(I) issued from and stored in a central databank; ”(II) electronically accessed by household mem- bers at the point of sale; and ”(III) provided by a Federal or State govern- ment. ”(iv) POINT-OF-SALE SERVICE.\u2014The term ‘point-of- sale service’ means any product or service related to the electronic authorization and processing of pay- ments for merchandise at a retail food store, including credit or debit card services, automated teller machines, point-of-sale terminals, or access to on-line systems. ”(B) RESTRICTIONS.\u2014A company may not sell or provide electronic benefit transfer services, or fix or vary the consid- eration for electronic benefit transfer services, on the condi- tion or requirement that the customer\u2014 ”(i) obtain some additional point-of-sale service from the company or an affiliate of the company; or ”(ii) not obtain some additional point-of-sale service from a competitor of the company or competitor of any affiliate of the company. ”(C) CONSULTATION WITH THE FEDERAL RESERVE BOARD.\u2014Before promulgating regulations or interpreta- tions of regulations to carry out this paragraph, the Sec- retary shall consult with the Board of Governors of the Federal Reserve System.”. (b) SENSE OF CONGRESS.\u2014It is the sense of Congress that a State that operates an electronic benefit transfer system under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) should operate the system in a manner that is compatible with electronic benefit transfer systems operated by other States. 110 STAT. 2327PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 826. VALUE OF MINIMUM ALLOTMENT. The proviso in section 8(a) of the Food Stamp Act of 1977 (7 U.S.C. 2017(a)) is amended by striking ”, and shall be adjusted” and all that follows through ”$5”. SEC. 827. BENEFITS ON RECERTIFICATION. Section 8(c)(2)(B) of the Food Stamp Act of 1977 (7 U.S.C. 2017(c)(2)(B)) is amended by striking ”of more than one month”. SEC. 828. OPTIONAL COMBINED ALLOTMENT FOR EXPEDITED HOUSE- HOLDS. Section 8(c) of the Food Stamp Act of 1977 (7 U.S.C. 2017(c)) is amended by striking paragraph (3) and inserting the following: ”(3) OPTIONAL COMBINED ALLOTMENT FOR EXPEDITED HOUSEHOLDS.\u2014A State agency may provide to an eligible house- hold applying after the 15th day of a month, in lieu of the initial allotment of the household and the regular allotment of the household for the following month, an allotment that is equal to the total amount of the initial allotment and the first regular allotment. The allotment shall be provided in accordance with section 11(e)(3) in the case of a household that is not entitled to expedited service and in accordance with paragraphs (3) and (9) of section 11(e) in the case of a household that is entitled to expedited service.”. SEC. 829. FAILURE TO COMPLY WITH OTHER MEANS-TESTED PUBLIC ASSISTANCE PROGRAMS. Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is amended by striking subsection (d) and inserting the following: ”(d) REDUCTION OF PUBLIC ASSISTANCE BENEFITS.\u2014 ”(1) IN GENERAL.\u2014If the benefits of a household are reduced under a Federal, State, or local law relating to a means-tested public assistance program for the failure of a member of the household to perform an action required under the law or program, for the duration of the reduction\u2014 ”(A) the household may not receive an increased allot- ment as the result of a decrease in the income of the household to the extent that the decrease is the result of the reduction; and ”(B) the State agency may reduce the allotment of the household by not more than 25 percent. ”(2) RULES AND PROCEDURES.\u2014If the allotment of a house- hold is reduced under this subsection for a failure to perform an action required under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), the State agency may use the rules and procedures that apply under part A of title IV of the Act to reduce the allotment under the food stamp program.”. SEC. 830. ALLOTMENTS FOR HOUSEHOLDS RESIDING IN CENTERS. Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017) is amended by adding at the end the following: ”(f) ALLOTMENTS FOR HOUSEHOLDS RESIDING IN CENTERS.\u2014 ”(1) IN GENERAL.\u2014In the case of an individual who resides in a center for the purpose of a drug or alcoholic treatment program described in the last sentence of section 3(i), a State agency may provide an allotment for the individual to\u2014 ”(A) the center as an authorized representative of the individual for a period that is less than 1 month; and 110 STAT. 2328 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) the individual, if the individual leaves the center. ”(2) DIRECT PAYMENT.\u2014A State agency may require an individual referred to in paragraph (1) to designate the center in which the individual resides as the authorized representative of the individual for the purpose of receiving an allotment.”. SEC. 831. CONDITION PRECEDENT FOR APPROVAL OF RETAIL FOOD STORES AND WHOLESALE FOOD CONCERNS. Section 9(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2018(a)(1)) is amended by adding at the end the following: ”No retail food store or wholesale food concern of a type determined by the Secretary, based on factors that include size, location, and type of items sold, shall be approved to be authorized or reauthorized for participation in the food stamp program unless an authorized employee of the Department of Agriculture, a des- ignee of the Secretary, or, if practicable, an official of the State or local government designated by the Secretary has visited the store or concern for the purpose of determining whether the store or concern should be approved or reauthorized, as appropriate.”. SEC. 832. AUTHORITY TO ESTABLISH AUTHORIZATION PERIODS. Section 9(a) of the Food Stamp Act of 1977 (7 U.S.C. 2018(a)) is amended by adding at the end the following: ”(3) AUTHORIZATION PERIODS.\u2014The Secretary shall estab- lish specific time periods during which authorization to accept and redeem coupons, or to redeem benefits through an elec- tronic benefit transfer system, shall be valid under the food stamp program.”. SEC. 833. INFORMATION FOR VERIFYING ELIGIBILITY FOR AUTHORIZATION. Section 9(c) of the Food Stamp Act of 1977 (7 U.S.C. 2018(c)) is amended\u2014 (1) in the first sentence, by inserting ”, which may include relevant income and sales tax filing documents,” after ”submit information”; and (2) by inserting after the first sentence the following: ”The regulations may require retail food stores and wholesale food concerns to provide written authorization for the Secretary to verify all relevant tax filings with appropriate agencies and to obtain corroborating documentation from other sources so that the accuracy of information provided by the stores and concerns may be verified.”. SEC. 834. WAITING PERIOD FOR STORES THAT FAIL TO MEET AUTHORIZATION CRITERIA. Section 9(d) of the Food Stamp Act of 1977 (7 U.S.C. 2018(d)) is amended by adding at the end the following: ”A retail food store or wholesale food concern that is denied approval to accept and redeem coupons because the store or concern does not meet criteria for approval established by the Secretary may not, for at least 6 months, submit a new application to participate in the program. The Secretary may establish a longer time period under the preceding sentence, including permanent disqualification, that reflects the severity of the basis of the denial.”. 110 STAT. 2329PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 835. OPERATION OF FOOD STAMP OFFICES. Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020), as amended by sections 809(b) and 819(b), is amended\u2014 (1) in subsection (e)\u2014 (A) by striking paragraph (2) and inserting the following: ”(2)(A) that the State agency shall establish procedures governing the operation of food stamp offices that the State agency determines best serve households in the State, including households with special needs, such as households with elderly or disabled members, households in rural areas with low-income members, homeless individuals, households residing on reserva- tions, and households in areas in which a substantial number of members of low-income households speak a language other than English. ”(B) In carrying out subparagraph (A), a State agency\u2014 ”(i) shall provide timely, accurate, and fair service to applicants for, and participants in, the food stamp program; ”(ii) shall develop an application containing the information necessary to comply with this Act; ”(iii) shall permit an applicant household to apply to participate in the program on the same day that the house- hold first contacts a food stamp office in person during office hours; ”(iv) shall consider an application that contains the name, address, and signature of the applicant to be filed on the date the applicant submits the application; ”(v) shall require that an adult representative of each applicant household certify in writing, under penalty of perjury, that\u2014 ”(I) the information contained in the application is true; and ”(II) all members of the household are citizens or are aliens eligible to receive food stamps under section 6(f); ”(vi) shall provide a method of certifying and issuing coupons to eligible homeless individuals, to ensure that participation in the food stamp program is limited to eligible households; and ”(vii) may establish operating procedures that vary for local food stamp offices to reflect regional and local differences within the State. ”(C) Nothing in this Act shall prohibit the use of signatures provided and maintained electronically, storage of records using automated retrieval systems only, or any other feature of a State agency’s application system that does not rely exclusively on the collection and retention of paper applications or other records. ”(D) The signature of any adult under this paragraph shall be considered sufficient to comply with any provision of Federal law requiring a household member to sign an application or statement;”; (B) in paragraph (3)\u2014 (i) by striking ”shall\u2014” and all that follows through ”provide each” and inserting ”shall provide each”; and (ii) by striking ”(B) assist” and all that follows through ”representative of the State agency;”; Regulations. 110 STAT. 2330 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (C) by striking paragraphs (14) and (25); (D)(i) by redesignating paragraphs (15) through (24) as paragraphs (14) through (23), respectively; and (ii) by redesignating paragraph (26), as paragraph (24); and (2) in subsection (i)\u2014 (A) by striking ”(i) Notwithstanding” and all that fol- lows through ”(2)” and inserting the following: ”(i) APPLICATION AND DENIAL PROCEDURES.\u2014 ”(1) APPLICATION PROCEDURES.\u2014Notwithstanding any other provision of law,”; and (B) by striking ”; (3) households” and all that follows through ”title IV of the Social Security Act. No” and insert- ing a period and the following: ”(2) DENIAL AND TERMINATION.\u2014Except in a case of disqualification as a penalty for failure to comply with a public assistance program rule or regulation, no”. SEC. 836. STATE EMPLOYEE AND TRAINING STANDARDS. Section 11(e)(6) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(6)) is amended\u2014 (1) by striking ”that (A) the” and inserting ”that\u2014 ”(A) the”; (2) by striking ”Act; (B) the” and inserting ”Act; and ”(B) the”; (3) in subparagraph (B), by striking ”United States Civil Service Commission” and inserting ”Office of Personnel Management”; and (4) by striking subparagraphs (C) through (E). SEC. 837. EXCHANGE OF LAW ENFORCEMENT INFORMATION. Section 11(e)(8) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(8)) is amended\u2014 (1) by striking ”that (A) such” and inserting the follow- ing: ”that\u2014 ”(A) the”; (2) by striking ”law, (B) notwithstanding” and inserting the following: ”law; ”(B) notwithstanding”; (3) by striking ”Act, and (C) such” and inserting the follow- ing: ”Act; ”(C) the”; and (4) by adding at the end the following: ”(D) notwithstanding any other provision of law, the address, social security number, and, if available, photo- graph of any member of a household shall be made avail- able, on request, to any Federal, State, or local law enforce- ment officer if the officer furnishes the State agency with the name of the member and notifies the agency that\u2014 ”(i) the member\u2014 ”(I) is fleeing to avoid prosecution, or custody or confinement after conviction, for a crime (or attempt to commit a crime) that, under the law of the place the member is fleeing, is a felony (or, in the case of New Jersey, a high mis- demeanor), or is violating a condition of probation or parole imposed under Federal or State law; or 110 STAT. 2331PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(II) has information that is necessary for the officer to conduct an official duty related to sub- clause (I); ”(ii) locating or apprehending the member is an official duty; and ”(iii) the request is being made in the proper exer- cise of an official duty; and ”(E) the safeguards shall not prevent compliance with paragraph (16);”. SEC. 838. EXPEDITED COUPON SERVICE. Section 11(e)(9) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(9)) is amended\u2014 (1) in subparagraph (A), by striking ”five days” and insert- ing ”7 days”; (2) by striking subparagraph (B); (3) by redesignating subparagraphs (C) and (D) as subpara- graphs (B) and (C); (4) in subparagraph (B), as redesignated by paragraph (3), by striking ”five days” and inserting ”7 days”; and (5) in subparagraph (C), as redesignated by paragraph (3), by striking ”, (B), or (C)” and inserting ”or (B)”. SEC. 839. WITHDRAWING FAIR HEARING REQUESTS. Section 11(e)(10) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(10)) is amended by inserting before the semicolon at the end a period and the following: ”At the option of a State, at any time prior to a fair hearing determination under this paragraph, a household may withdraw, orally or in writing, a request by the household for the fair hearing. If the withdrawal request is an oral request, the State agency shall provide a written notice to the household confirming the withdrawal request and providing the household with an opportunity to request a hearing”. SEC. 840. INCOME, ELIGIBILITY, AND IMMIGRATION STATUS VERIFICA- TION SYSTEMS. Section 11 of the Food Stamp Act of 1977 (7 U.S.C. 2020) is amended\u2014 (1) in subsection (e)(18), as redesignated by section 835(1)(D)\u2014 (A) by striking ”that information is” and inserting ”at the option of the State agency, that information may be”; and (B) by striking ”shall be requested” and inserting ”may be requested”; and (2) by adding at the end the following: ”(p) STATE VERIFICATION OPTION.\u2014Notwithstanding any other provision of law, in carrying out the food stamp program, a State agency shall not be required to use an income and eligibility or an immigration status verification system established under section 1137 of the Social Security Act (42 U.S.C. 1320b 7).”. SEC. 841. INVESTIGATIONS. Section 12(a) of the Food Stamp Act of 1977 (7 U.S.C. 2021(a)) is amended by adding at the end the following: ”Regulations issued pursuant to this Act shall provide criteria for the finding of a violation and the suspension or disqualification of a retail food store or wholesale food concern on the basis of evidence that may Regulations. Notice. 110 STAT. 2332 PUBLIC LAW 104 193\u2014AUG. 22, 1996 include facts established through on-site investigations, inconsistent redemption data, or evidence obtained through a transaction report under an electronic benefit transfer system.”. SEC. 842. DISQUALIFICATION OF RETAILERS WHO INTENTIONALLY SUBMIT FALSIFIED APPLICATIONS. Section 12(b) of the Food Stamp Act of 1977 (7 U.S.C. 2021(b)) is amended\u2014 (1) in paragraph (2), by striking ”and” at the end; (2) in paragraph (3), by striking the period at the end and inserting ”; and”; and (3) by adding at the end the following: ”(4) for a reasonable period of time to be determined by the Secretary, including permanent disqualification, on the knowing submission of an application for the approval or reauthorization to accept and redeem coupons that contains false information about a substantive matter that was a part of the application.”. SEC. 843. DISQUALIFICATION OF RETAILERS WHO ARE DISQUALIFIED UNDER THE WIC PROGRAM. Section 12 of the Food Stamp Act of 1977 (7 U.S.C. 2021) is amended by adding at the end the following: ”(g) DISQUALIFICATION OF RETAILERS WHO ARE DISQUALIFIED UNDER THE WIC PROGRAM.\u2014 ”(1) IN GENERAL.\u2014The Secretary shall issue regulations providing criteria for the disqualification under this Act of an approved retail food store or a wholesale food concern that is disqualified from accepting benefits under the special supple- mental nutrition program for women, infants, and children established under section 17 of the Child Nutrition Act of 1966 (7 U.S.C. 1786). ”(2) TERMS.\u2014A disqualification under paragraph (1)\u2014 ”(A) shall be for the same length of time as the disquali- fication from the program referred to in paragraph (1); ”(B) may begin at a later date than the disqualification from the program referred to in paragraph (1); and ”(C) notwithstanding section 14, shall not be subject to judicial or administrative review.”. SEC. 844. COLLECTION OF OVERISSUANCES. (a) COLLECTION OF OVERISSUANCES.\u2014Section 13 of the Food Stamp Act of 1977 (7 U.S.C. 2022) is amended\u2014 (1) by striking subsection (b) and inserting the following: ”(b) COLLECTION OF OVERISSUANCES.\u2014 ”(1) IN GENERAL.\u2014Except as otherwise provided in this subsection, a State agency shall collect any overissuance of coupons issued to a household by\u2014 ”(A) reducing the allotment of the household; ”(B) withholding amounts from unemployment com- pensation from a member of the household under sub- section (c); ”(C) recovering from Federal pay or a Federal income tax refund under subsection (d); or ”(D) any other means. ”(2) COST EFFECTIVENESS.\u2014Paragraph (1) shall not apply if the State agency demonstrates to the satisfaction of the Regulations. 110 STAT. 2333PUBLIC LAW 104 193\u2014AUG. 22, 1996 Secretary that all of the means referred to in paragraph (1) are not cost effective. ”(3) MAXIMUM REDUCTION ABSENT FRAUD.\u2014If a household received an overissuance of coupons without any member of the household being found ineligible to participate in the pro- gram under section 6(b)(1) and a State agency elects to reduce the allotment of the household under paragraph (1)(A), the State agency shall not reduce the monthly allotment of the household under paragraph (1)(A) by an amount in excess of the greater of\u2014 ”(A) 10 percent of the monthly allotment of the house- hold; or ”(B) $10. ”(4) PROCEDURES.\u2014A State agency shall collect an overissu- ance of coupons issued to a household under paragraph (1) in accordance with the requirements established by the State agency for providing notice, electing a means of payment, and establishing a time schedule for payment.”; and (2) in subsection (d)\u2014 (A) by striking ”as determined under subsection (b) and except for claims arising from an error of the State agency,” and inserting ”, as determined under subsection (b)(1),”; and (B) by inserting before the period at the end the follow- ing: ”or a Federal income tax refund as authorized by section 3720A of title 31, United States Code”. (b) CONFORMING AMENDMENTS.\u2014Section 11(e)(8)(C) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)(8)(C)) is amended\u2014 (1) by striking ”and excluding claims” and all that follows through ”such section”; and (2) by inserting before the semicolon at the end the following: ”or a Federal income tax refund as authorized by section 3720A of title 31, United States Code”. (c) RETENTION RATE.\u2014The proviso of the first sentence of sec- tion 16(a) of the Food Stamp Act of 1977 (7 U.S.C. 2025(a)) is amended by striking ”25 percent during the period beginning October 1, 1990” and all that follows through ”section 13(b)(2) which arise” and inserting ”35 percent of the value of all funds or allotments recovered or collected pursuant to sections 6(b) and 13(c) and 20 percent of the value of any other funds or allot- ments recovered or collected, except the value of funds or allotments recovered or collected that arise”. SEC. 845. AUTHORITY TO SUSPEND STORES VIOLATING PROGRAM REQUIREMENTS PENDING ADMINISTRATIVE AND JUDICIAL REVIEW. Section 14(a) of the Food Stamp Act of 1977 (7 U.S.C. 2023(a)) is amended\u2014 (1) by redesignating the first through seventeenth sen- tences as paragraphs (1) through (17), respectively; and (2) by adding at the end the following: ”(18) SUSPENSION OF STORES PENDING REVIEW.\u2014Notwith- standing any other provision of this subsection, any permanent disqualification of a retail food store or wholesale food concern under paragraph (3) or (4) of section 12(b) shall be effective from the date of receipt of the notice of disqualification. If the disqualification is reversed through administrative or Effective date. 110 STAT. 2334 PUBLIC LAW 104 193\u2014AUG. 22, 1996 judicial review, the Secretary shall not be liable for the value of any sales lost during the disqualification period.”. SEC. 846. EXPANDED CRIMINAL FORFEITURE FOR VIOLATIONS. (a) FORFEITURE OF ITEMS EXCHANGED IN FOOD STAMP TRAFFICKING.\u2014The first sentence of section 15(g) of the Food Stamp Act of 1977 (7 U.S.C. 2024(g)) is amended by striking ”or intended to be furnished”. (b) CRIMINAL FORFEITURE.\u2014Section 15 of the Food Stamp Act of 1977 (7 U.S.C. 2024) is amended by adding at the end the following: ”(h) CRIMINAL FORFEITURE.\u2014 ”(1) IN GENERAL.\u2014In imposing a sentence on a person convicted of an offense in violation of subsection (b) or (c), a court shall order, in addition to any other sentence imposed under this section, that the person forfeit to the United States all property described in paragraph (2). ”(2) PROPERTY SUBJECT TO FORFEITURE.\u2014All property, real and personal, used in a transaction or attempted transaction, to commit, or to facilitate the commission of, a violation (other than a misdemeanor) of subsection (b) or (c), or proceeds trace- able to a violation of subsection (b) or (c), shall be subject to forfeiture to the United States under paragraph (1). ”(3) INTEREST OF OWNER.\u2014No interest in property shall be forfeited under this subsection as the result of any act or omission established by the owner of the interest to have been committed or omitted without the knowledge or consent of the owner. ”(4) PROCEEDS.\u2014The proceeds from any sale of forfeited property and any monies forfeited under this subsection shall be used\u2014 ”(A) first, to reimburse the Department of Justice for the costs incurred by the Department to initiate and com- plete the forfeiture proceeding; ”(B) second, to reimburse the Department of Agri- culture Office of Inspector General for any costs the Office incurred in the law enforcement effort resulting in the forfeiture; ”(C) third, to reimburse any Federal or State law enforcement agency for any costs incurred in the law enforcement effort resulting in the forfeiture; and ”(D) fourth, by the Secretary to carry out the approval, reauthorization, and compliance investigations of retail stores and wholesale food concerns under section 9.”. SEC. 847. LIMITATION ON FEDERAL MATCH. Section 16(a)(4) of the Food Stamp Act of 1977 (7 U.S.C. 2025(a)(4)) is amended by inserting after the comma at the end the following: ”but not including recruitment activities,”. SEC. 848. STANDARDS FOR ADMINISTRATION. (a) IN GENERAL.\u2014Section 16 of the Food Stamp Act of 1977 (7 U.S.C. 2025) is amended by striking subsection (b). (b) CONFORMING AMENDMENTS.\u2014 (1) The first sentence of section 11(g) of the Food Stamp Act of 1977 (7 U.S.C. 2020(g)) is amended by striking ”the Secretary’s standards for the efficient and effective administra- tion of the program established under section 16(b)(1) or”. 110 STAT. 2335PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) Section 16(c)(1)(B) of the Food Stamp Act of 1977 (7 U.S.C. 2025(c)(1)(B)) is amended by striking ”pursuant to sub- section (b)”. SEC. 849. WORK SUPPLEMENTATION OR SUPPORT PROGRAM. Section 16 of the Food Stamp Act of 1977 (7 U.S.C. 2025), as amended by section 848(a), is amended by inserting after sub- section (a) the following: ”(b) WORK SUPPLEMENTATION OR SUPPORT PROGRAM.\u2014 ”(1) DEFINITION OF WORK SUPPLEMENTATION OR SUPPORT PROGRAM.\u2014In this subsection, the term ‘work supplementation or support program’ means a program under which, as deter- mined by the Secretary, public assistance (including any bene- fits provided under a program established by the State and the food stamp program) is provided to an employer to be used for hiring and employing a public assistance recipient who was not employed by the employer at the time the public assistance recipient entered the program. ”(2) PROGRAM.\u2014A State agency may elect to use an amount equal to the allotment that would otherwise be issued to a household under the food stamp program, but for the operation of this subsection, for the purpose of subsidizing or supporting a job under a work supplementation or support program estab- lished by the State. ”(3) PROCEDURE.\u2014If a State agency makes an election under paragraph (2) and identifies each household that partici- pates in the food stamp program that contains an individual who is participating in the work supplementation or support program\u2014 ”(A) the Secretary shall pay to the State agency an amount equal to the value of the allotment that the house- hold would be eligible to receive but for the operation of this subsection; ”(B) the State agency shall expend the amount received under subparagraph (A) in accordance with the work supplementation or support program in lieu of providing the allotment that the household would receive but for the operation of this subsection; ”(C) for purposes of\u2014 ”(i) sections 5 and 8(a), the amount received under this subsection shall be excluded from household income and resources; and ”(ii) section 8(b), the amount received under this subsection shall be considered to be the value of an allotment provided to the household; and ”(D) the household shall not receive an allotment from the State agency for the period during which the member continues to participate in the work supplementation or support program. ”(4) OTHER WORK REQUIREMENTS.\u2014No individual shall be excused, by reason of the fact that a State has a work supplementation or support program, from any work require- ment under section 6(d), except during the periods in which the individual is employed under the work supplementation or support program. ”(5) LENGTH OF PARTICIPATION.\u2014A State agency shall provide a description of how the public assistance recipients 110 STAT. 2336 PUBLIC LAW 104 193\u2014AUG. 22, 1996 in the program shall, within a specific period of time, be moved from supplemented or supported employment to employment that is not supplemented or supported. ”(6) DISPLACEMENT.\u2014A work supplementation or support program shall not displace the employment of individuals who are not supplemented or supported.”. SEC. 850. WAIVER AUTHORITY. Section 17(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2026(b)(1)) is amended\u2014 (1) by redesignating subparagraph (B) as subparagraph (C); and (2) in subparagraph (A)\u2014 (A) in the first sentence, by striking ”benefits to eligible households, including” and inserting the following: ”benefits to eligible households, and may waive any requirement of this Act to the extent necessary for the project to be conducted. ”(B) PROJECT REQUIREMENTS.\u2014 ”(i) PROGRAM GOAL.\u2014The Secretary may not con- duct a project under subparagraph (A) unless\u2014 ”(I) the project is consistent with the goal of the food stamp program of providing food assist- ance to raise levels of nutrition among low-income individuals; and ”(II) the project includes an evaluation to determine the effects of the project. ”(ii) PERMISSIBLE PROJECTS.\u2014The Secretary may conduct a project under subparagraph (A) to\u2014 ”(I) improve program administration; ”(II) increase the self-sufficiency of food stamp recipients; ”(III) test innovative welfare reform strate- gies; or ”(IV) allow greater conformity with the rules of other programs than would be allowed but for this paragraph. ”(iii) RESTRICTIONS ON PERMISSIBLE PROJECTS.\u2014 If the Secretary finds that a project under subpara- graph (A) would reduce benefits by more than 20 per- cent for more than 5 percent of households in the area subject to the project (not including any household whose benefits are reduced due to a failure to comply with work or other conduct requirements), the project\u2014 ”(I) may not include more than 15 percent of the State’s food stamp households; and ”(II) shall continue for not more than 5 years after the date of implementation, unless the Sec- retary approves an extension requested by the State agency at any time. ”(iv) IMPERMISSIBLE PROJECTS.\u2014The Secretary may not conduct a project under subparagraph (A) that\u2014 ”(I) involves the payment of the value of an allotment in the form of cash, unless the project was approved prior to the date of enactment of this subparagraph; 110 STAT. 2337PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(II) has the effect of substantially transferring funds made available under this Act to services or benefits provided primarily through another public assistance program, or using the funds for any purpose other than the purchase of food, pro- gram administration, or an employment or train- ing program; ”(III) is inconsistent with\u2014 ”(aa) the last 2 sentences of section 3(i); ”(bb) the last sentence of section 5(a), insofar as a waiver denies assistance to an otherwise eligible household or individual if the household or individual has not failed to comply with any work, behavioral, or other conduct requirement under this or another program; ”(cc) section 5(c)(2); ”(dd) paragraph (2)(B), (4)(F)(i), or (4)(K) of section 6(d); ”(ee) section 8(b); ”(ff) section 11(e)(2)(B); ”(gg) the time standard under section 11(e)(3); ”(hh) subsection (a), (c), (g), (h)(2), or (h)(3) of section 16; ”(ii) this paragraph; or ”(jj) subsection (a)(1) or (g)(1) of sec- tion 20; ”(IV) modifies the operation of section 5 so as to have the effect of\u2014 ”(aa) increasing the shelter deduction to households with no out-of-pocket housing costs or housing costs that consume a low percent- age of the household’s income; or ”(bb) absolving a State from acting with reasonable promptness on substantial reported changes in income or household size (except that this subclause shall not apply with regard to changes related to food stamp deductions); ”(V) is not limited to a specific time period; or ”(VI) waives a provision of section 26. ”(v) ADDITIONAL INCLUDED PROJECTS.\u2014A pilot or experimental project may include”; (B) by striking ”to aid to families with dependent chil- dren under part A of title IV of the Social Security Act” and inserting ”are receiving assistance under a State pro- gram funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)”; and (C) by striking ”coupons. The Secretary” and all that follows through ”Any pilot” and inserting the following: ”coupons. ”(vi) CASH PAYMENT PILOT PROJECTS.\u2014Any pilot”. 110 STAT. 2338 PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 851. RESPONSE TO WAIVERS. Section 17(b)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2026(b)(1)), as amended by section 850, is amended by adding at the end the following: ”(D) RESPONSE TO WAIVERS.\u2014 ”(i) RESPONSE.\u2014Not later than 60 days after the date of receiving a request for a waiver under subpara- graph (A), the Secretary shall provide a response that\u2014 ”(I) approves the waiver request; ”(II) denies the waiver request and describes any modification needed for approval of the waiver request; ”(III) denies the waiver request and describes the grounds for the denial; or ”(IV) requests clarification of the waiver request. ”(ii) FAILURE TO RESPOND.\u2014If the Secretary does not provide a response in accordance with clause (i), the waiver shall be considered approved, unless the approval is specifically prohibited by this Act. ”(iii) NOTICE OF DENIAL.\u2014On denial of a waiver request under clause (i)(III), the Secretary shall pro- vide a copy of the waiver request and a description of the reasons for the denial to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate.”. SEC. 852. EMPLOYMENT INITIATIVES PROGRAM. Section 17 of the Food Stamp Act of 1977 (7 U.S.C. 2026) is amended by striking subsection (d) and inserting the following: ”(d) EMPLOYMENT INITIATIVES PROGRAM.\u2014 ”(1) ELECTION TO PARTICIPATE.\u2014 ”(A) IN GENERAL.\u2014Subject to the other provisions of this subsection, a State may elect to carry out an employ- ment initiatives program under this subsection. ”(B) REQUIREMENT.\u2014A State shall be eligible to carry out an employment initiatives program under this sub- section only if not less than 50 percent of the households in the State that received food stamp benefits during the summer of 1993 also received benefits under a State pro- gram funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) during the summer of 1993. ”(2) PROCEDURE.\u2014 ”(A) IN GENERAL.\u2014A State that has elected to carry out an employment initiatives program under paragraph (1) may use amounts equal to the food stamp allotments that would otherwise be issued to a household under the food stamp program, but for the operation of this sub- section, to provide cash benefits in lieu of the food stamp allotments to the household if the household is eligible under paragraph (3). ”(B) PAYMENT.\u2014The Secretary shall pay to each State that has elected to carry out an employment initiatives program under paragraph (1) an amount equal to the value of the allotment that each household participating in the 110 STAT. 2339PUBLIC LAW 104 193\u2014AUG. 22, 1996 program in the State would be eligible to receive under this Act but for the operation of this subsection. ”(C) OTHER PROVISIONS.\u2014For purposes of the food stamp program (other than this subsection)\u2014 ”(i) cash assistance under this subsection shall be considered to be an allotment; and ”(ii) each household receiving cash benefits under this subsection shall not receive any other food stamp benefit during the period for which the cash assistance is provided. ”(D) ADDITIONAL PAYMENTS.\u2014Each State that has elected to carry out an employment initiatives program under paragraph (1) shall\u2014 ”(i) increase the cash benefits provided to each household participating in the program in the State under this subsection to compensate for any State or local sales tax that may be collected on purchases of food by the household, unless the Secretary deter- mines on the basis of information provided by the State that the increase is unnecessary on the basis of the limited nature of the items subject to the State or local sales tax; and ”(ii) pay the cost of any increase in cash benefits required by clause (i). ”(3) ELIGIBILITY.\u2014A household shall be eligible to receive cash benefits under paragraph (2) if an adult member of the household\u2014 ”(A) has worked in unsubsidized employment for not less than the preceding 90 days; ”(B) has earned not less than $350 per month from the employment referred to in subparagraph (A) for not less than the preceding 90 days; ”(C)(i) is receiving benefits under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.); or ”(ii) was receiving benefits under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) at the time the member first received cash benefits under this subsection and is no longer eligible for the State program because of earned income; ”(D) is continuing to earn not less than $350 per month from the employment referred to in subparagraph (A); and ”(E) elects to receive cash benefits in lieu of food stamp benefits under this subsection. ”(4) EVALUATION.\u2014A State that operates a program under this subsection for 2 years shall provide to the Secretary a written evaluation of the impact of cash assistance under this subsection. The State agency, with the concurrence of the Sec- retary, shall determine the content of the evaluation.”. SEC. 853. REAUTHORIZATION. The first sentence of section 18(a)(1) of the Food Stamp Act of 1977 (7 U.S.C. 2027(a)(1)) is amended by striking ”1991 through 1997” and inserting ”1996 through 2002”. 110 STAT. 2340 PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 854. SIMPLIFIED FOOD STAMP PROGRAM. (a) IN GENERAL.\u2014The Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) is amended by adding at the end the following: ”SEC. 26. SIMPLIFIED FOOD STAMP PROGRAM. ”(a) DEFINITION OF FEDERAL COSTS.\u2014In this section, the term ‘Federal costs’ does not include any Federal costs incurred under section 17. ”(b) ELECTION.\u2014Subject to subsection (d), a State may elect to carry out a Simplified Food Stamp Program (referred to in this section as a ‘Program’), statewide or in a political subdivision of the State, in accordance with this section. ”(c) OPERATION OF PROGRAM.\u2014If a State elects to carry out a Program, within the State or a political subdivision of the State\u2014 ”(1) a household in which no members receive assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) may not partici- pate in the Program; ”(2) a household in which all members receive assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) shall automati- cally be eligible to participate in the Program; ”(3) if approved by the Secretary, a household in which 1 or more members but not all members receive assistance under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) may be eligible to participate in the Program; and ”(4) subject to subsection (f), benefits under the Program shall be determined under rules and procedures established by the State under\u2014 ”(A) a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.); ”(B) the food stamp program; or ”(C) a combination of a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) and the food stamp program. ”(d) APPROVAL OF PROGRAM.\u2014 ”(1) STATE PLAN.\u2014A State agency may not operate a Pro- gram unless the Secretary approves a State plan for the oper- ation of the Program under paragraph (2). ”(2) APPROVAL OF PLAN.\u2014The Secretary shall approve any State plan to carry out a Program if the Secretary determines that the plan\u2014 ”(A) complies with this section; and ”(B) contains sufficient documentation that the plan will not increase Federal costs for any fiscal year. ”(e) INCREASED FEDERAL COSTS.\u2014 ”(1) DETERMINATION.\u2014 ”(A) IN GENERAL.\u2014The Secretary shall determine whether a Program being carried out by a State agency is increasing Federal costs under this Act. ”(B) NO EXCLUDED HOUSEHOLDS.\u2014In making a deter- mination under subparagraph (A), the Secretary shall not require the State agency to collect or report any information on households not included in the Program. ”(C) ALTERNATIVE ACCOUNTING PERIODS.\u2014The Sec- retary may approve the request of a State agency to apply 7 USC 2035. 110 STAT. 2341PUBLIC LAW 104 193\u2014AUG. 22, 1996 alternative accounting periods to determine if Federal costs do not exceed the Federal costs had the State agency not elected to carry out the Program. ”(2) NOTIFICATION.\u2014If the Secretary determines that the Program has increased Federal costs under this Act for any fiscal year or any portion of any fiscal year, the Secretary shall notify the State not later than 30 days after the Secretary makes the determination under paragraph (1). ”(3) ENFORCEMENT.\u2014 ”(A) CORRECTIVE ACTION.\u2014Not later than 90 days after the date of a notification under paragraph (2), the State shall submit a plan for approval by the Secretary for prompt corrective action that is designed to prevent the Program from increasing Federal costs under this Act. ”(B) TERMINATION.\u2014If the State does not submit a plan under subparagraph (A) or carry out a plan approved by the Secretary, the Secretary shall terminate the approval of the State agency operating the Program and the State agency shall be ineligible to operate a future Program. ”(f) RULES AND PROCEDURES.\u2014 ”(1) IN GENERAL.\u2014In operating a Program, a State or politi- cal subdivision of a State may follow the rules and procedures established by the State or political subdivision under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.) or under the food stamp program. ”(2) STANDARDIZED DEDUCTIONS.\u2014In operating a Program, a State or political subdivision of a State may standardize the deductions provided under section 5(e). In developing the standardized deduction, the State shall consider the work expenses, dependent care costs, and shelter costs of participat- ing households. ”(3) REQUIREMENTS.\u2014In operating a Program, a State or political subdivision shall comply with the requirements of\u2014 ”(A) subsections (a) through (g) of section 7; ”(B) section 8(a) (except that the income of a household may be determined under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)); ”(C) subsection (b) and (d) of section 8; ”(D) subsections (a), (c), (d), and (n) of section 11; ”(E) paragraphs (8), (12), (16), (18), (20), (24), and (25) of section 11(e); ”(F) section 11(e)(10) (or a comparable requirement established by the State under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.)); and ”(G) section 16. ”(4) LIMITATION ON ELIGIBILITY.\u2014Notwithstanding any other provision of this section, a household may not receive benefits under this section as a result of the eligibility of the household under a State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.), unless the Secretary determines that any household with income above 130 percent of the poverty guidelines is not eligible for the program.”. 110 STAT. 2342 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (b) STATE PLAN PROVISIONS.\u2014Section 11(e) of the Food Stamp Act of 1977 (7 U.S.C. 2020(e)), as amended by sections 819(b) and 835, is amended by adding at the end the following: ”(25) if a State elects to carry out a Simplified Food Stamp Program under section 26, the plans of the State agency for operating the program, including\u2014 ”(A) the rules and procedures to be followed by the State agency to determine food stamp benefits; ”(B) how the State agency will address the needs of households that experience high shelter costs in relation to the incomes of the households; and ”(C) a description of the method by which the State agency will carry out a quality control system under section 16(c).”. (c) CONFORMING AMENDMENTS.\u2014 (1) Section 8 of the Food Stamp Act of 1977 (7 U.S.C. 2017), as amended by section 830, is amended\u2014 (A) by striking subsection (e); and (B) by redesignating subsection (f) as subsection (e). (2) Section 17 of the Food Stamp Act of 1977 (7 U.S.C. 2026) is amended\u2014 (A) by striking subsection (i); and (B) by redesignating subsections (j) through (l) as sub- sections (i) through (k), respectively. SEC. 855. STUDY OF THE USE OF FOOD STAMPS TO PURCHASE VITAMINS AND MINERALS. (a) IN GENERAL.\u2014The Secretary of Agriculture, in consultation with the National Academy of Sciences and the Center for Disease Control and Prevention, shall conduct a study on the use of food stamps provided under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.) to purchase vitamins and minerals. (b) ANALYSIS.\u2014The study shall include\u2014 (1) an analysis of scientific findings on the efficacy of and need for vitamins and minerals, including\u2014 (A) the adequacy of vitamin and mineral intakes in low-income populations, as shown by research and surveys conducted prior to the study; and (B) the potential value of nutritional supplements in filling nutrient gaps that may exist in the United States population as a whole or in vulnerable subgroups in the population; (2) the impact of nutritional improvements (including vita- min or mineral supplementation) on the health status and health care costs of women of childbearing age, pregnant or lactating women, and the elderly; (3) the cost of commercially available vitamin and mineral supplements; (4) the purchasing habits of low-income populations with regard to vitamins and minerals; (5) the impact of using food stamps to purchase vitamins and minerals on the food purchases of low-income house- holds; and (6) the economic impact on the production of agricultural commodities of using food stamps to purchase vitamins and minerals. 7 USC 2026 note. 110 STAT. 2343PUBLIC LAW 104 193\u2014AUG. 22, 1996 (c) REPORT.\u2014Not later than December 15, 1998, the Secretary shall report the results of the study to the Committee on Agriculture of the House of Representatives and the Committee on Agriculture, Nutrition, and Forestry of the Senate. SEC. 856. DEFICIT REDUCTION. It is the sense of the Committee on Agriculture of the House of Representatives that reductions in outlays resulting from this title shall not be taken into account for purposes of section 252 of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. 902). Subtitle B\u2014Commodity Distribution Programs SEC. 871. EMERGENCY FOOD ASSISTANCE PROGRAM. (a) DEFINITIONS.\u2014Section 201A of the Emergency Food Assist- ance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended to read as follows: ”SEC. 201A. DEFINITIONS. ”In this Act: ”(1) ADDITIONAL COMMODITIES.\u2014The term ‘additional commodities’ means commodities made available under section 214 in addition to the commodities made available under sec- tions 202 and 203D. ”(2) AVERAGE MONTHLY NUMBER OF UNEMPLOYED PERSONS.\u2014The term ‘average monthly number of unemployed persons’ means the average monthly number of unemployed persons in each State during the most recent fiscal year for which information concerning the number of unemployed per- sons is available, as determined by the Bureau of Labor Statis- tics of the Department of Labor. ”(3) ELIGIBLE RECIPIENT AGENCY.\u2014The term ‘eligible recipi- ent agency’ means a public or nonprofit organiza- tion that\u2014 ”(A) administers\u2014 ”(i) an emergency feeding organization; ”(ii) a charitable institution (including a hospital and a retirement home, but excluding a penal institu- tion) to the extent that the institution serves needy persons; ”(iii) a summer camp for children, or a child nutri- tion program providing food service; ”(iv) a nutrition project operating under the Older Americans Act of 1965 (42 U.S.C. 3001 et seq.), includ- ing a project that operates a congregate nutrition site and a project that provides home-delivered meals; or ”(v) a disaster relief program; ”(B) has been designated by the appropriate State agency, or by the Secretary; and ”(C) has been approved by the Secretary for participa- tion in the program established under this Act. ”(4) EMERGENCY FEEDING ORGANIZATION.\u2014The term ’emer- gency feeding organization’ means a public or nonprofit organization that administers activities and projects (including 110 STAT. 2344 PUBLIC LAW 104 193\u2014AUG. 22, 1996 the activities and projects of a charitable institution, a food bank, a food pantry, a hunger relief center, a soup kitchen, or a similar public or private nonprofit eligible recipient agency) providing nutrition assistance to relieve situations of emergency and distress through the provision of food to needy persons, including low-income and unemployed persons. ”(5) FOOD BANK.\u2014The term ‘food bank’ means a public or charitable institution that maintains an established oper- ation involving the provision of food or edible commodities, or the products of food or edible commodities, to food pantries, soup kitchens, hunger relief centers, or other food or feeding centers that, as an integral part of their normal activities, provide meals or food to feed needy persons on a regular basis. ”(6) FOOD PANTRY.\u2014The term ‘food pantry’ means a public or private nonprofit organization that distributes food to low- income and unemployed households, including food from sources other than the Department of Agriculture, to relieve situations of emergency and distress. ”(7) POVERTY LINE.\u2014The term ‘poverty line’ has the mean- ing provided in section 673(2) of the Community Services Block Grant Act (42 U.S.C. 9902(2)). ”(8) SOUP KITCHEN.\u2014The term ‘soup kitchen’ means a pub- lic or charitable institution that, as an integral part of the normal activities of the institution, maintains an established feeding operation to provide food to needy homeless persons on a regular basis. ”(9) TOTAL VALUE OF ADDITIONAL COMMODITIES.\u2014The term ‘total value of additional commodities’ means the actual cost of all additional commodities that are paid by the Secretary (including the distribution and processing costs incurred by the Secretary). ”(10) VALUE OF ADDITIONAL COMMODITIES ALLOCATED TO EACH STATE.\u2014The term ‘value of additional commodities allo- cated to each State’ means the actual cost of additional commod- ities allocated to each State that are paid by the Secretary (including the distribution and processing costs incurred by the Secretary).”. (b) STATE PLAN.\u2014Section 202A of the Emergency Food Assist- ance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended to read as follows: ”SEC. 202A. STATE PLAN. ”(a) IN GENERAL.\u2014To receive commodities under this Act, a State shall submit a plan of operation and administration every 4 years to the Secretary for approval. The plan may be amended at any time, with the approval of the Secretary. ”(b) REQUIREMENTS.\u2014Each plan shall\u2014 ”(1) designate the State agency responsible for distributing the commodities received under this Act; ”(2) set forth a plan of operation and administration to expeditiously distribute commodities under this Act; ”(3) set forth the standards of eligibility for recipient agen- cies; and ”(4) set forth the standards of eligibility for individual or household recipients of commodities, which shall require\u2014 ”(A) individuals or households to be comprised of needy persons; and 110 STAT. 2345PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(B) individual or household members to be residing in the geographic location served by the distributing agency at the time of applying for assistance. ”(c) STATE ADVISORY BOARD.\u2014The Secretary shall encourage each State receiving commodities under this Act to establish a State advisory board consisting of representatives of all entities in the State, both public and private, interested in the distribution of commodities received under this Act.”. (c) AUTHORIZATION OF APPROPRIATIONS FOR ADMINISTRATIVE FUNDS.\u2014Section 204(a)(1) of the Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended\u2014 (1) in the first sentence, by striking ”for State and local” and all that follows through ”under this title” and inserting ”to pay for the direct and indirect administrative costs of the States related to the processing, transporting, and distributing to eligible recipient agencies of commodities provided by the Secretary under this Act and commodities secured from other sources”; and (2) by striking the fourth sentence. (d) DELIVERY OF COMMODITIES.\u2014Section 214 of the Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended\u2014 (1) by striking subsections (a) through (e) and (j); (2) by redesignating subsections (f) through (i) as sub- sections (a) through (d), respectively; (3) in subsection (b), as redesignated by paragraph (2)\u2014 (A) in the first sentence, by striking ”subsection (f) or subsection (j) if applicable,” and inserting ”subsection (a),”; and (B) in the second sentence, by striking ”subsection (f)” and inserting ”subsection (a)”; (4) by striking subsection (c), as redesignated by paragraph (2), and inserting the following: ”(c) ADMINISTRATION.\u2014 ”(1) IN GENERAL.\u2014Commodities made available for each fiscal year under this section shall be delivered at reasonable intervals to States based on the grants calculated under sub- section (a), or reallocated under subsection (b), before December 31 of the following fiscal year. ”(2) ENTITLEMENT.\u2014Each State shall be entitled to receive the value of additional commodities determined under sub- section (a).”; and (5) in subsection (d), as redesignated by paragraph (2), by striking ”or reduce” and all that follows through ”each fiscal year”. (e) TECHNICAL AMENDMENTS.\u2014The Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note) is amended\u2014 (1) in the first sentence of section 203B(a), by striking ”203 and 203A of this Act” and inserting ”203A”; (2) in section 204(a), by striking ”title” each place it appears and inserting ”Act”; (3) in the first sentence of section 210(e), by striking ”(except as otherwise provided for in section 214(j))”; and (4) by striking section 212. (f) REPORT ON EFAP.\u2014Section 1571 of the Food Security Act of 1985 (Public Law 99 198; 7 U.S.C. 612c note) is repealed. 110 STAT. 2346 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (g) AVAILABILITY OF COMMODITIES UNDER THE FOOD STAMP PROGRAM.\u2014The Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), as amended by section 854(a), is amended by adding at the end the following: ”SEC. 27. AVAILABILITY OF COMMODITIES FOR THE EMERGENCY FOOD ASSISTANCE PROGRAM. ”(a) PURCHASE OF COMMODITIES.\u2014From amounts made avail- able to carry out this Act, for each of fiscal years 1997 through 2002, the Secretary shall purchase $100,000,000 of a variety of nutritious and useful commodities of the types that the Secretary has the authority to acquire through the Commodity Credit Corpora- tion or under section 32 of the Act entitled ‘An Act to amend the Agricultural Adjustment Act, and for other purposes’, approved August 24, 1935 (7 U.S.C. 612c), and distribute the commodities to States for distribution in accordance with section 214 of the Emergency Food Assistance Act of 1983 (Public Law 98 8; 7 U.S.C. 612c note). ”(b) BASIS FOR COMMODITY PURCHASES.\u2014In purchasing commodities under subsection (a), the Secretary shall, to the extent practicable and appropriate, make purchases based on\u2014 ”(1) agricultural market conditions; ”(2) preferences and needs of States and distributing agencies; and ”(3) preferences of recipients.”. (h) EFFECTIVE DATE.\u2014The amendments made by subsection (d) shall become effective on October 1, 1996. SEC. 872. FOOD BANK DEMONSTRATION PROJECT. Section 3 of the Charitable Assistance and Food Bank Act of 1987 (Public Law 100 232; 7 U.S.C. 612c note) is repealed. SEC. 873. HUNGER PREVENTION PROGRAMS. The Hunger Prevention Act of 1988 (Public Law 100 435; 7 U.S.C. 612c note) is amended\u2014 (1) by striking section 110; (2) by striking subtitle C of title II; and (3) by striking section 502. SEC. 874. REPORT ON ENTITLEMENT COMMODITY PROCESSING. Section 1773 of the Food, Agriculture, Conservation, and Trade Act of 1990 (Public Law 101 624; 7 U.S.C. 612c note) is amended by striking subsection (f). Subtitle C\u2014Electronic Benefit Transfer Systems SEC. 891. PROVISIONS TO ENCOURAGE ELECTRONIC BENEFIT TRANSFER SYSTEMS. Section 904 of the Electronic Fund Transfer Act (15 U.S.C. 1693b) is amended\u2014 (1) by striking ”(d) In the event that” and inserting ”(d) APPLICABILITY TO SERVICE PROVIDERS OTHER THAN CERTAIN FINANCIAL INSTITUTIONS.\u2014 ”(1) IN GENERAL.\u2014If”; and (2) by adding at the end the following: 7 USC 612c note. 7 USC 2036. 110 STAT. 2347PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(2) STATE AND LOCAL GOVERNMENT ELECTRONIC BENEFIT TRANSFER SYSTEMS.\u2014 ”(A) DEFINITION OF ELECTRONIC BENEFIT TRANSFER SYSTEM.\u2014In this paragraph, the term ‘electronic benefit transfer system’\u2014 ”(i) means a system under which a government agency distributes needs-tested benefits by establishing accounts that may be accessed by recipients electroni- cally, such as through automated teller machines or point-of-sale terminals; and ”(ii) does not include employment-related pay- ments, including salaries and pension, retirement, or unemployment benefits established by a Federal, State, or local government agency. ”(B) EXEMPTION GENERALLY.\u2014The disclosures, protec- tions, responsibilities, and remedies established under this title, and any regulation prescribed or order issued by the Board in accordance with this title, shall not apply to any electronic benefit transfer system established under State or local law or administered by a State or local government. ”(C) EXCEPTION FOR DIRECT DEPOSIT INTO RECIPIENT’S ACCOUNT.\u2014Subparagraph (B) shall not apply with respect to any electronic funds transfer under an electronic benefit transfer system for a deposit directly into a consumer account held by the recipient of the benefit. ”(D) RULE OF CONSTRUCTION.\u2014No provision of this paragraph\u2014 ”(i) affects or alters the protections otherwise applicable with respect to benefits established by any other provision Federal, State, or local law; or ”(ii) otherwise supersedes the application of any State or local law.”. TITLE IX\u2014MISCELLANEOUS SEC. 901. APPROPRIATION BY STATE LEGISLATURES. (a) IN GENERAL.\u2014Any funds received by a State under the provisions of law specified in subsection (b) shall be subject to appropriation by the State legislature, consistent with the terms and conditions required under such provisions of law. (b) PROVISIONS OF LAW.\u2014The provisions of law specified in this subsection are the following: (1) Part A of title IV of the Social Security Act (relating to block grants for temporary assistance for needy families). (2) The Child Care and Development Block Grant Act of 1990 (relating to block grants for child care). SEC. 902. SANCTIONING FOR TESTING POSITIVE FOR CONTROLLED SUBSTANCES. Notwithstanding any other provision of law, States shall not be prohibited by the Federal Government from testing welfare recipients for use of controlled substances nor from sanctioning welfare recipients who test positive for use of controlled substances. 21 USC 862b. 42 USC 601 note. 110 STAT. 2348 PUBLIC LAW 104 193\u2014AUG. 22, 1996 SEC. 903. ELIMINATION OF HOUSING ASSISTANCE WITH RESPECT TO FUGITIVE FELONS AND PROBATION AND PAROLE VIOLATORS. (a) ELIGIBILITY FOR ASSISTANCE.\u2014The United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended\u2014 (1) in section 6(l)\u2014 (A) in paragraph (5), by striking ”and” at the end; (B) in paragraph (6), by striking the period at the end and inserting ”; and”; and (C) by inserting immediately after paragraph (6) the following new paragraph: ”(7) provide that it shall be cause for immediate termination of the tenancy of a public housing tenant if such tenant\u2014 ”(A) is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the individual flees, for a crime, or attempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(2) is violating a condition of probation or parole imposed under Federal or State law.”; and (2) in section 8(d)(1)(B)\u2014 (A) in clause (iii), by striking ”and” at the end; (B) in clause (iv), by striking the period at the end and inserting ”; and”; and (C) by adding after clause (iv) the following new clause: ”(v) it shall be cause for termination of the tenancy of a tenant if such tenant\u2014 ”(I) is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the individual flees, for a crime, or attempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(II) is violating a condition of probation or parole imposed under Federal or State law;”. (b) PROVISION OF INFORMATION TO LAW ENFORCEMENT AGEN- CIES.\u2014Title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.) is amended by adding at the end the following: ”SEC. 27. EXCHANGE OF INFORMATION WITH LAW ENFORCEMENT AGENCIES. ”Notwithstanding any other provision of law, each public hous- ing agency that enters into a contract for assistance under section 6 or 8 of this Act with the Secretary shall furnish any Federal, State, or local law enforcement officer, upon the request of the officer, with the current address, Social Security number, and photo- graph (if applicable) of any recipient of assistance under this Act, if the officer\u2014 ”(1) furnishes the public housing agency with the name of the recipient; and ”(2) notifies the agency that\u2014 ”(A) such recipient\u2014 42 USC 1437z. 42 USC 1437f. 42 USC 1437d. 110 STAT. 2349PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(i) is fleeing to avoid prosecution, or custody or confinement after conviction, under the laws of the place from which the individual flees, for a crime, or attempt to commit a crime, which is a felony under the laws of the place from which the individual flees, or which, in the case of the State of New Jersey, is a high misdemeanor under the laws of such State; or ”(ii) is violating a condition of probation or parole imposed under Federal or State law; or ”(iii) has information that is necessary for the offi- cer to conduct the officer’s official duties; ”(B) the location or apprehension of the recipient is within such officer’s official duties; and ”(C) the request is made in the proper exercise of the officer’s official duties.”. SEC. 904. SENSE OF THE SENATE REGARDING THE INABILITY OF THE NONCUSTODIAL PARENT TO PAY CHILD SUPPORT. It is the sense of the Senate that\u2014 (a) States should diligently continue their efforts to enforce child support payments by the non-custodial parent to the custodial parent, regardless of the employment status or loca- tion of the non-custodial parent; and (b) States are encouraged to pursue pilot programs in which the parents of a non-adult, non-custodial parent who refuses to or is unable to pay child support must\u2014 (1) pay or contribute to the child support owed by the non-custodial parent; or (2) otherwise fulfill all financial obligations and meet all conditions imposed on the non-custodial parent, such as participation in a work program or other related activity. SEC. 905. ESTABLISHING NATIONAL GOALS TO PREVENT TEENAGE PREGNANCIES. (a) IN GENERAL.\u2014Not later than January 1, 1997, the Secretary of Health and Human Services shall establish and implement a strategy for\u2014 (1) preventing out-of-wedlock teenage pregnancies, and (2) assuring that at least 25 percent of the communities in the United States have teenage pregnancy prevention pro- grams in place. (b) REPORT.\u2014Not later than June 30, 1998, and annually there- after, the Secretary shall report to the Congress with respect to the progress that has been made in meeting the goals described in paragraphs (1) and (2) of subsection (a). SEC. 906. SENSE OF THE SENATE REGARDING ENFORCEMENT OF STATUTORY RAPE LAWS. (a) SENSE OF THE SENATE.\u2014It is the sense of the Senate that States and local jurisdictions should aggressively enforce statutory rape laws. (b) JUSTICE DEPARTMENT PROGRAM ON STATUTORY RAPE.\u2014Not later than January 1, 1997, the Attorney General shall establish and implement a program that\u2014 (1) studies the linkage between statutory rape and teenage pregnancy, particularly by predatory older men committing repeat offenses; and Establishment. 42 USC 14016. 42 USC 710 note. 110 STAT. 2350 PUBLIC LAW 104 193\u2014AUG. 22, 1996 (2) educates State and local criminal law enforcement offi- cials on the prevention and prosecution of statutory rape, focus- ing in particular on the commission of statutory rape by preda- tory older men committing repeat offenses, and any links to teenage pregnancy. (c) VIOLENCE AGAINST WOMEN INITIATIVE.\u2014The Attorney General shall ensure that the Department of Justice’s Violence Against Women initiative addresses the issue of statutory rape, particularly the commission of statutory rape by predatory older men committing repeat offenses. SEC. 907. PROVISIONS TO ENCOURAGE ELECTRONIC BENEFIT TRANSFER SYSTEMS. Section 904 of the Electronic Fund Transfer Act (15 U.S.C. 1693b) is amended\u2014 (1) by striking ”(d) In the event” and inserting ”(d) APPLICABILITY TO SERVICE PROVIDERS OTHER THAN CERTAIN FINANCIAL INSTITUTIONS.\u2014 ”(1) IN GENERAL.\u2014In the event”; and (2) by adding at the end the following new paragraph: ”(2) STATE AND LOCAL GOVERNMENT ELECTRONIC BENEFIT TRANSFER PROGRAMS.\u2014 ”(A) EXEMPTION GENERALLY.\u2014The disclosures, protec- tions, responsibilities, and remedies established under this title, and any regulation prescribed or order issued by the Board in accordance with this title, shall not apply to any electronic benefit transfer program established under State or local law or administered by a State or local government. ”(B) EXCEPTION FOR DIRECT DEPOSIT INTO RECIPIENT’S ACCOUNT.\u2014Subparagraph (A) shall not apply with respect to any electronic funds transfer under an electronic benefit transfer program for deposits directly into a consumer account held by the recipient of the benefit. ”(C) RULE OF CONSTRUCTION.\u2014No provision of this paragraph may be construed as\u2014 ”(i) affecting or altering the protections otherwise applicable with respect to benefits established by Fed- eral, State, or local law; or ”(ii) otherwise superseding the application of any State or local law. ”(D) ELECTRONIC BENEFIT TRANSFER PROGRAM DEFINED.\u2014For purposes of this paragraph, the term ‘elec- tronic benefit transfer program’\u2014 ”(i) means a program under which a government agency distributes needs-tested benefits by establishing accounts to be accessed by recipients electronically, such as through automated teller machines, or point- of-sale terminals; and ”(ii) does not include employment-related pay- ments, including salaries and pension, retirement, or unemployment benefits established by Federal, State, or local governments.”. SEC. 908. REDUCTION OF BLOCK GRANTS TO STATES FOR SOCIAL SERVICES; USE OF VOUCHERS. (a) REDUCTION OF GRANTS.\u2014Section 2003(c) of the Social Secu- rity Act (42 U.S.C. 1397b(c)) is amended\u2014 110 STAT. 2351PUBLIC LAW 104 193\u2014AUG. 22, 1996 (1) by striking ”and” at the end of paragraph (4); and (2) by striking paragraph (5) and inserting the following: ”(5) $2,800,000,000 for each of the fiscal years 1990 through 1995; ”(6) $2,381,000,000 for the fiscal year 1996; ”(7) $2,380,000,000 for each of the fiscal years 1997 through 2002; and ”(8) $2,800,000,000 for the fiscal year 2003 and each succeeding fiscal year.”. (b) AUTHORITY TO USE VOUCHERS.\u2014Section 2002 of such Act (42 U.S.C. 1937a) is amended by adding at the end the following: ”(f) A State may use funds provided under this title to provide vouchers, for services directed at the goals set forth in section 2001, to families, including\u2014 ”(1) families who have become ineligible for assistance under a State program funded under part A of title IV by reason of a durational limit on the provision of such assist- ance; and ”(2) families denied cash assistance under the State pro- gram funded under part A of title IV for a child who is born to a member of the family who is\u2014 ”(A) a recipient of assistance under the program; or ”(B) a person who received such assistance at any time during the 10-month period ending with the birth of the child.”. SEC. 909. RULES RELATING TO DENIAL OF EARNED INCOME CREDIT ON BASIS OF DISQUALIFIED INCOME. (a) REDUCTION IN DISQUALIFIED INCOME THRESHOLD.\u2014 (1) IN GENERAL.\u2014Paragraph (1) of section 32(i) of the Internal Revenue Code of 1986 (relating to denial of credit for individuals having excessive investment income) is amended by striking ”$2,350” and inserting ”$2,200”. (2) ADJUSTMENT FOR INFLATION.\u2014Subsection (j) of section 32 of such Code is amended to read as follows: ”(j) INFLATION ADJUSTMENTS.\u2014 ”(1) IN GENERAL.\u2014In the case of any taxable year beginning after 1996, each of the dollar amounts in subsections (b)(2) and (i)(1) shall be increased by an amount equal to\u2014 ”(A) such dollar amount, multiplied by ”(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 1995’ for ‘calendar year 1992’ in subparagraph (B) thereof. ”(2) ROUNDING.\u2014 ”(A) IN GENERAL.\u2014If any dollar amount in subsection (b)(2), after being increased under paragraph (1), is not a multiple of $10, such dollar amount shall be rounded to the nearest multiple of $10. ”(B) DISQUALIFIED INCOME THRESHOLD AMOUNT.\u2014If the dollar amount in subsection (i)(1), after being increased under paragraph (1), is not a multiple of $50, such amount shall be rounded to the next lowest multiple of $50.”. (3) CONFORMING AMENDMENT.\u2014Paragraph (2) of section 32(b) of such Code is amended to read as follows: 42 USC 1397a. 110 STAT. 2352 PUBLIC LAW 104 193\u2014AUG. 22, 1996 ”(2) AMOUNTS.\u2014The earned income amount and the phase- out amount shall be determined as follows: In the case of an eligi- ble individual with: The earned income amount is: The phaseout amount is: 1 qualifying child ……. $6,330 $11,610 2 or more qualifying children. $8,890 $11,610 No qualifying children $4,220 $ 5,280”. (b) DEFINITION OF DISQUALIFIED INCOME.\u2014Paragraph (2) of section 32(i) of such Code (defining disqualified income) is amended by striking ”and” at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting a comma, and by adding at the end the following new subparagraphs: ”(D) the capital gain net income (as defined in section 1222) of the taxpayer for such taxable year, and ”(E) the excess (if any) of\u2014 ”(i) the aggregate income from all passive activities for the taxable year (determined without regard to any amount included in earned income under sub- section (c)(2) or described in a preceding subpara- graph), over ”(ii) the aggregate losses from all passive activities for the taxable year (as so determined). For purposes of subparagraph (E), the term ‘passive activity’ has the meaning given such term by section 469.”. (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 1995. (2) ADVANCE PAYMENT INDIVIDUALS.\u2014In the case of any individual who on or before June 26, 1996, has in effect an earned income eligibility certificate for the individual’s taxable year beginning in 1996, the amendments made by this section shall apply to taxable years beginning after December 31, 1996. SEC. 910. MODIFICATION OF ADJUSTED GROSS INCOME DEFINITION FOR EARNED INCOME CREDIT. (a) IN GENERAL.\u2014Subsections (a)(2)(B), (c)(1)(C), and (f)(2)(B) of section 32 of the Internal Revenue Code of 1986 are each amended by striking ”adjusted gross income” each place it appears and insert- ing ”modified adjusted gross income”. (b) MODIFIED ADJUSTED GROSS INCOME DEFINED.\u2014Section 32(c) of such Code (relating to definitions and special rules) is amended by adding at the end the following new paragraph: ”(5) MODIFIED ADJUSTED GROSS INCOME.\u2014 ”(A) IN GENERAL.\u2014The term ‘modified adjusted gross income’ means adjusted gross income determined without regard to the amounts described in subparagraph (B). ”(B) CERTAIN AMOUNTS DISREGARDED.\u2014An amount is described in this subparagraph if it is\u2014 ”(i) the amount of losses from sales or exchanges of capital assets in excess of gains from such sales 26 USC 32 note. 110 STAT. 2353PUBLIC LAW 104 193\u2014AUG. 22, 1996 or exchanges to the extent such amount does not exceed the amount under section 1211(b)(1), ”(ii) the net loss from estates and trusts, ”(iii) the excess (if any) of amounts described in subsection (i)(2)(C)(ii) over the amounts described in subsection (i)(2)(C)(i) (relating to nonbusiness rents and royalties), and ”(iv) 50 percent of the net loss from the carrying on of trades or businesses, computed separately with respect to\u2014 ”(I) trades or businesses (other than farming) conducted as sole proprietorships, ”(II) trades or businesses of farming conducted as sole proprietorships, and ”(III) other trades or businesses. For purposes of clause (iv), there shall not be taken into account items which are attributable to a trade or business which consists of the performance of services by the tax- payer as an employee.”. (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), the amendments made by this section shall apply to taxable years beginning after December 31, 1995. (2) ADVANCE PAYMENT INDIVIDUALS.\u2014In the case of any individual who on or before June 26, 1996, has in effect an earned income eligibility certificate for the individual’s taxable year beginning in 1996, the amendments made by this section shall apply to taxable years beginning after December 31, 1996. SEC. 911. FRAUD UNDER MEANS-TESTED WELFARE AND PUBLIC ASSISTANCE PROGRAMS. (a) IN GENERAL.\u2014If an individual’s benefits under a Federal, State, or local law relating to a means-tested welfare or a public assistance program are reduced because of an act of fraud by the individual under the law or program, the individual may not, for the duration of the reduction, receive an increased benefit under any other means-tested welfare or public assistance program for which Federal funds are appropriated as a result of a decrease in the income of the individual (determined under the applicable program) attributable to such reduction. (b) WELFARE OR PUBLIC ASSISTANCE PROGRAMS FOR WHICH FEDERAL FUNDS ARE APPROPRIATED.\u2014For purposes of subsection (a), the term ”means-tested welfare or public assistance program for which Federal funds are appropriated” includes the food stamp program under the Food Stamp Act of 1977 (7 U.S.C. 2011 et seq.), any program of public or assisted housing under title I of the United States Housing Act of 1937 (42 U.S.C. 1437 et seq.), and any State program funded under part A of title IV of the Social Security Act (42 U.S.C. 601 et seq.). SEC. 912. ABSTINENCE EDUCATION. Title V of the Social Security Act (42 U.S.C. 701 et seq.) is amended by adding at the end the following section: ”SEPARATE PROGRAM FOR ABSTINENCE EDUCATION ”SEC. 510. (a) For the purpose described in subsection (b), the Secretary shall, for fiscal year 1998 and each subsequent fiscal 42 USC 710. 42 USC 608a. 26 USC 32 note. 110 STAT. 2354 PUBLIC LAW 104 193\u2014AUG. 22, 1996 year, allot to each State which has transmitted an application for the fiscal year under section 505(a) an amount equal to the product of\u2014 ”(1) the amount appropriated in subsection (d) for the fiscal year; and ”(2) the percentage determined for the State under section 502(c)(1)(B)(ii). ”(b)(1) The purpose of an allotment under subsection (a) to a State is to enable the State to provide abstinence education, and at the option of the State, where appropriate, mentoring, coun- seling, and adult supervision to promote abstinence from sexual activity, with a focus on those groups which are most likely to bear children out-of-wedlock. ”(2) For purposes of this section, the term ‘abstinence education’ means an educational or motivational program which\u2014 ”(A) has as its exclusive purpose, teaching the social, psychological, and health gains to be realized by abstaining from sexual activity; ”(B) teaches abstinence from sexual activity outside marriage as the expected standard for all school age chil- dren; ”(C) teaches that abstinence from sexual activity is the only certain way to avoid out-of-wedlock pregnancy, sexually transmitted diseases, and other associated health problems; ”(D) teaches that a mutually faithful monogamous rela- tionship in context of marriage is the expected standard of human sexual activity; ”(E) teaches that sexual activity outside of the context of marriage is likely to have harmful psychological and physical effects; ”(F) teaches that bearing children out-of-wedlock is likely to have harmful consequences for the child, the child’s parents, and society; ”(G) teaches young people how to reject sexual advances and how alcohol and drug use increases vulner- ability to sexual advances; and ”(H) teaches the importance of attaining self-sufficiency before engaging in sexual activity. ”(c)(1) Sections 503, 507, and 508 apply to allotments under subsection (a) to the same extent and in the same manner as such sections apply to allotments under section 502(c). ”(2) Sections 505 and 506 apply to allotments under subsection (a) to the extent determined by the Secretary to be appropriate. ”(d) For the purpose of allotments under subsection (a), there is appropriated, out of any money in the Treasury not otherwise appropriated, an additional $50,000,000 for each of the fiscal years 1998 through 2002. The appropriation under the preceding sentence for a fiscal year is made on October 1 of the fiscal year.”. SEC. 913. CHANGE IN REFERENCE. Effective January 1, 1997, the third sentence of section 1902(a) and section 1908(e)(1) of the Social Security Act (42 U.S.C. 1396a(a), 1396g 1(e)(1)) are each amended by striking ”The First Church of Christ, Scientist, Boston, Massachusetts” and inserting ”The Effective date. Effective date. Appropriation authorization. 110 STAT. 2355PUBLIC LAW 104 193\u2014AUG. 22, 1996 LEGISLATIVE HISTORY\u2014H.R. 3734 (S. 1956): HOUSE REPORTS: Nos. 104 651 (Comm. on the Budget) and 104 725 (Comm. of Conference). CONGRESSIONAL RECORD, Vol. 142 (1996): July 17, 18, considered and passed House. July 18, 19, 22, 23, considered and passed Senate, amended, in lieu of S. 1956. July 31, House agreed to conference report. Aug. 1, Senate agreed to conference report. WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 32 (1996): Aug. 22, Presidential remarks and statement. \u00c6 Commission for Accreditation of Christian Science Nursing Organizations\/Facilities, Inc.” each place it appears. Approved August 22, 1996. Superintendent of Documents 2012-03-20T16:44:38-0400 US GPO, Washington, DC 20401 Superintendent of Documents GPO attests that this document has not been altered since it was disseminated by GPO ”

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” Congressional Record UN UM E PLURIBUS United States of America PROCEEDINGS AND DEBATES OF THE 104th CONGRESS, SECOND SESSION b This symbol represents the time of day during the House proceedings, e.g., b 1407 is 2:07 p.m. Matter set in this typeface indicates words inserted or appended, rather than spoken, by a Member of the House on the floor. H9567 House of Representatives Vol. 142 WASHINGTON, THURSDAY, AUGUST 1, 1996 No. 116 The House met at 10 a.m. The Chaplain, Rev. James David Ford, D.D., offered the following pray- er: We are aware, O God, that the thoughts we think are translated into words and our words are transposed into action and all that we do has great effect on us and those whom we rep- resent and serve. Remind us day by day, O God, that what we think or say or do has a profound impression on the meaning and substance of all things. May Your word of peace be made known in our lives and may all we ask or think or do bring glory to Your cre- ation and serve people whatever their need. In Your name, we pray. Amen. f THE JOURNAL The SPEAKER. The Chair has exam- ined the Journal of the last day’s pro- ceedings and announces to the House his approval thereof. Pursuant to clause 1, rule I, the Jour- nal stands approved. f PLEDGE OF ALLEGIANCE The SPEAKER. Will the gentleman from New Jersey [Mr. PALLONE] come forward and lead the House in the Pledge of Allegiance. Mr. PALLONE led the Pledge of Alle- giance as follows: I pledge allegiance to the Flag of the United States of America, and to the Repub- lic for which it stands, one nation under God, indivisible, with liberty and justice for all. f MESSAGE FROM THE SENATE A message from the Senate by Mr. Lundregan, one of its clerks, an- nounced that the Senate had passed without amendment, a bill and a joint resolution of the House of the following titles: H.R. 3215. An act to amend title 18, United States Code, to repeal the provision relating to Federal employees contracting or trading with Indians. H.J. Res. 166. Joint resolution granting the consent of Congress to the Mutual Aid Agreement between the city of Bristol, Vir- ginia, and the city of Bristol, Tennessee. The message also announced that the Senate had passed bills of the following titles, in which the concurrence of the House is requested: S. 1936. An act to amend the Nuclear Waste Policy Act of 1982. S. 1995. An act to authorize construction of the Smithsonian Institution National Air and Space Museum Dulles Center at Wash- ington Dulles International Airport, and for other purposes. f ANNOUNCEMENT BY THE SPEAKER The SPEAKER. The Chair will make a statement. On May 25, 1995, the Chair took the opportunity to reiterate guidelines on the prohibition against former Mem- bers exercising floor privileges during the consideration of a matter in which they have a personal or pecuniary in- terest or are employed or retained as a lobbyist. Clause 3 of House rule XXXII and the subsequent guidelines issued by pre- vious Speakers on this matter make it clear that consideration of legislative measures is not limited solely to those pending before the House. Consider- ation also includes all bills and resolu- tions either which have been called up by a full committee or subcommittee or on which hearings have been held by a full committee or subcommittee of the House. Former Members can be prohibited from privileges of the floor, the Speak- er’s lobby and respective Cloakrooms should it be ascertained they have di- rect interests in legislation that is be- fore a subcommittee, full committee, or the House. Not only do those cir- cumstances prohibit former Members but the fact that a former Member is employed or retained by a lobbying or- ganization attempting to directly or indirectly influence pending legislation is cause for prohibiting access to the House Chamber. First announced by Speaker O’Neill on January 6, 1977, again on June 7, 1978, and by Speaker Foley in 1994, the guidelines were intended to prohibit former Members from using their floor privileges under the restrictions laid out in this rule. This restriction ex- tends not only to the House floor but adjacent rooms, the Cloakrooms, and the Speaker’s lobby. Members who have reason to know that a former Member is on the floor inconsistent with clause 3, rule XXXII should notify the Sergeant at Arms promptly. f ANNOUNCEMENT BY THE SPEAKER The SPEAKER. The Chair will enter- tain ten 1 minutes on each side. f THIS CONGRESS THE MOST PRODUCTIVE IN DECADES (Mr. ARMEY asked and was given permission to address the House for 1 minute and to revise and extend his re- marks.) Mr. ARMEY. Mr. Speaker, I want to congratulate the Republican Congress on the work that it is achieving this week in culmination of what has been years of hard work. Yesterday the President agreed to sign our welfare reform measure and we passed it overwhelmingly through this body. We are going to go out now and address the needs of the American working men and women and the American family. After this week is over, if the Presi- dent again agrees to sign the work be- fore this body, men and women work- ing in America will no longer have to be afraid to change jobs, will no longer have to be concerned that they will CONGRESSIONAL RECORD \u2014 HOUSEH9568 August 1, 1996 lose their insurance portability, will no longer have to be disadvantaged if they are self-employed in the acquisition of the insurance that best fits their fami- ly’s needs. In addition to that, given the terrible burdens that fall on the family when two parents are working outside the home, we have an opportunity to allow them to have the choice, in legislation we will pass through this House this week, to choose between overtime and flex time so that those families that value time with their children more than the extra money may be free to choose for that configuration of com- pensation and time that best suits the needs of the family. These are indeed good days for the families of America, and I must say, Mr. Speaker, I am so proud of the work that is done by this Republican Con- gress, the most productive Congress in decades. f KENNEDY HEALTH INSURANCE RE- FORM BILL BROUGHT TO HOUSE FLOOR (Mr. PALLONE asked and was given permission to address the House for 1 minute and to revise and extend his re- marks.) Mr. PALLONE. Mr. Speaker, it is a testimony to President Clinton and to the Democrats in Congress that the Kennedy health insurance reform bill will finally be brought to the floor in the House of Representatives today. It was not until President Clinton this year, in his State of the Union ad- dress, said that he wanted to see health care reform and that people could take their health insurance with them when they changed jobs or lost jobs, or that they would not be barred from health insurance because of preexisting medi- cal conditions, it was not until the President came forward and said he wanted that bill, a clean bill passed, that finally we were able to, grudg- ingly, get the Republican leadership to move this health insurance reform bill. Even so, the Republican leadership constantly tried to kill and destroy the bill by throwing in the poison pill of medical savings accounts. Finally, the bill that comes to the floor today is es- sentially a clean bill. There is some provision for MSA’s but it is a very small provision. It was the recognition of the fact that only a clean bill, as promulgated and as preached by President Clinton, could pass this House and pass the Sen- ate, it was only when the Republican leadership understood that, that it was possible to bring this bill to the floor today. f CONGRESS REFORMS HEALTH CARE AND WELFARE THIS WEEK (Mr. GANSKE asked and was given permission to address the House for 1 minute and to revise and extend his re- marks.) Mr. GANSKE. Mr. Speaker, today we take up the Health Insurance Port- ability and Accountability Act of 1996. This bill is long overdue. The American people have demanded this kind of change for many years. We will provide genuine health care reform, expand ac- cessibility, ensure portability, and all without a Government takeover of the health care sector. This bill fights fraud and abuse, it al- lows the self-employed to increase their health care deductible, it estab- lishes medical savings accounts, and it provides deductions for long-term care. This is a win-win proposal for the American people. We will provide ex- panded health care coverage without creating huge new bureaucracies. In fact, we will give more power to indi- viduals to make their own decisions on health insurance. Mr. Speaker, the debate gets pretty hot sometimes, but this week alone we will have reformed health care and wel- fare. I want to salute my colleagues on both sides of the aisle who have helped make this the most productive Con- gress in a generation. f CONFERENCE REPORT ON H.R. 3448, SMALL BUSINESS JOB PROTEC- TION ACT OF 1996 Mr. ARCHER submitted the follow- ing conference report and statement on the bill (H.R. 3448) to provide tax relief for small businesses, to protect jobs, to create opportunities, to increase the take home pay of workers, to amend the Portal-to-Portal Act of 1947 relat- ing to the payment of wages to employ- ees who use employer owned vehicles, and to amend the Fair Labor Standards Act of 1938 to increase the minimum wage rate and to prevent job loss by providing flexibility to employers in complying with minimum wage and overtime requirements under that Act: CONFERENCE REPORT (H. REPT. 104 737) The committee of conference on the dis- agreeing votes of the two Houses on the amendments of the Senate to the bill (H.R. 3448), to provide tax relief for small busi- nesses, to protect jobs, to create opportuni- ties, to increase the take home pay of work- ers, to amend the Portal-to-Portal Act of 1947 relating to the payment of wages to em- ployees who use employer owned vehicles, and to amend the Fair Labor Standards Act of 1938 to increase the minimum wage rate and to prevent job loss by providing flexibil- ity to employers in complying with mini- mum wage and overtime requirements under that Act, having met, after full and free con- ference, have agreed to recommend and do recommend to their respective Houses as fol- lows: TITLE I That the House recede from its disagree- ment to the amendment of the Senate num- bered 1, and agree to the same with an amendment as follows: In lieu of the matter proposed to be in- serted by the Senate amendment, insert the following: (b) TABLE OF CONTENTS.\u2014 Sec. 1. Short title; table of contents. TITLE I\u2014SMALL BUSINESS AND OTHER TAX PROVISIONS Sec. 1101. Amendment of 1986 Code. Sec. 1102. Underpayments of estimated tax. Subtitle A\u2014Expensing; Etc. Sec. 1111. Increase in expense treatment for small businesses. Sec. 1112. Treatment of employee tips. Sec. 1113. Treatment of storage of product sam- ples. Sec. 1114. Treatment of certain charitable risk pools. Sec. 1115. Treatment of dues paid to agricul- tural or horticultural organiza- tions. Sec. 1116. Clarification of employment tax sta- tus of certain fishermen. Sec. 1117. Modifications of tax-exempt bond rules for first-time farmers. Sec. 1118. Newspaper distributors treated as di- rect sellers. Sec. 1119. Application of involuntary conver- sion rules to presidentially de- clared disasters. Sec. 1120. Class life for gas station convenience stores and similar structures. Sec. 1121. Treatment of abandonment of lessor improvements at termination of lease. Sec. 1122. Special rules relating to determina- tion whether individuals are em- ployees for purposes of employ- ment taxes. Sec. 1123. Treatment of housing provided to em- ployees by academic health cen- ters. Subtitle B\u2014Extension of Certain Expiring Provisions Sec. 1201. Work opportunity tax credit. Sec. 1202. Employer-provided educational as- sistance programs. Sec. 1203. FUTA exemption for alien agricul- tural workers. Sec. 1204. Research credit. Sec. 1205. Orphan drug tax credit. Sec. 1206. Contributions of stock to private foundations. Sec. 1207. Extension of binding contract date for biomass and coal facilities. Sec. 1208. Moratorium for excise tax on diesel fuel sold for use or used in diesel- powered motorboats. Subtitle C\u2014Provisions Relating to S Corporations Sec. 1301. S corporations permitted to have 75 shareholders. Sec. 1302. Electing small business trusts. Sec. 1303. Expansion of post-death qualification for certain trusts. Sec. 1304. Financial institutions permitted to hold safe harbor debt. Sec. 1305. Rules relating to inadvertent termi- nations and invalid elections. Sec. 1306. Agreement to terminate year. Sec. 1307. Expansion of post-termination transi- tion period. Sec. 1308. S corporations permitted to hold sub- sidiaries. Sec. 1309. Treatment of distributions during loss years. Sec. 1310. Treatment of S corporations under subchapter C. Sec. 1311. Elimination of certain earnings and profits. Sec. 1312. Carryover of disallowed losses and deductions under at-risk rules al- lowed. Sec. 1313. Adjustments to basis of inherited S stock to reflect certain items of in- come. Sec. 1314. S corporations eligible for rules appli- cable to real property subdivided for sale by noncorporate tax- payers. Sec. 1315. Financial institutions. Sec. 1316. Certain exempt organizations allowed to be shareholders. Sec. 1317. Effective date. Subtitle D\u2014Pension Simplification CHAPTER 1\u2014SIMPLIFIED DISTRIBUTION RULES Sec. 1401. Repeal of 5-year income averaging for lump-sum distributions. CONGRESSIONAL RECORD \u2014 HOUSE H9569August 1, 1996 Sec. 1402. Repeal of $5,000 exclusion of employ- ees’ death benefits. Sec. 1403. Simplified method for taxing annuity distributions under certain em- ployer plans. Sec. 1404. Required distributions. CHAPTER 2\u2014INCREASED ACCESS TO RETIREMENT PLANS SUBCHAPTER A\u2014SIMPLE SAVINGS PLANS Sec. 1421. Establishment of savings incentive match plans for employees of small employers. Sec. 1422. Extension of simple plan to 401(k) ar- rangements. SUBCHAPTER B\u2014OTHER PROVISIONS Sec. 1426. Tax-exempt organizations eligible under section 401(k). Sec. 1427. Homemakers eligible for full IRA de- duction. CHAPTER 3\u2014NONDISCRIMINATION PROVISIONS Sec. 1431. Definition of highly compensated em- ployees; repeal of family aggrega- tion. Sec. 1432. Modification of additional participa- tion requirements. Sec. 1433. Nondiscrimination rules for qualified cash or deferred arrangements and matching contributions. Sec. 1434. Definition of compensation for sec- tion 415 purposes. CHAPTER 4\u2014MISCELLANEOUS PROVISIONS Sec. 1441. Plans covering self-employed individ- uals. Sec. 1442. Elimination of special vesting rule for multiemployer plans. Sec. 1443. Distributions under rural cooperative plans. Sec. 1444. Treatment of governmental plans under section 415. Sec. 1445. Uniform retirement age. Sec. 1446. Contributions on behalf of disabled employees. Sec. 1447. Treatment of deferred compensation plans of State and local govern- ments and tax-exempt organiza- tions. Sec. 1448. Trust requirement for deferred com- pensation plans of State and local governments. Sec. 1449. Transition rule for computing maxi- mum benefits under section 415 limitations. Sec. 1450. Modifications of section 403(b). Sec. 1451. Special rules relating to joint and survivor annuity explanations. Sec. 1452. Repeal of limitation in case of defined benefit plan and defined contribu- tion plan for same employee; ex- cess distributions. Sec. 1453. Tax on prohibited transactions. Sec. 1454. Treatment of leased employees. Sec. 1455. Uniform penalty provisions to apply to certain pension reporting re- quirements. Sec. 1456. Retirement benefits of ministers not subject to tax on net earnings from self-employment. Sec. 1457. Sample language for spousal consent and qualified domestic relations forms. Sec. 1458. Treatment of length of service awards to volunteers performing fire fighting or prevention services, emergency medical services, or ambulance services. Sec. 1459. Alternative nondiscrimination rules for certain plans that provide for early participation. Sec. 1460. Clarification of application of ERISA to insurance company general ac- counts. Sec. 1461. Special rules for chaplains and self- employed ministers. Sec. 1462. Definition of highly compensated em- ployee for pre-ERISA rules for church plans. Sec. 1463. Rule relating to investment in con- tract not to apply to foreign mis- sionaries. Sec. 1464. Waiver of excise tax on failure to pay liquidity shortfall. Sec. 1465. Date for adoption of plan amend- ments. Subtitle E\u2014Foreign Simplification Sec. 1501. Repeal of inclusion of certain earn- ings invested in excess passive as- sets. Subtitle F\u2014Revenue Offsets PART I\u2014GENERAL PROVISIONS Sec. 1601. Modifications of Puerto Rico and possession tax credit. Sec. 1602. Repeal of exclusion for interest on loans used to acquire employer se- curities. Sec. 1603. Certain amounts derived from foreign corporations treated as unrelated business taxable income. Sec. 1604. Depreciation under income forecast method. Sec. 1605. Repeal of exclusion for punitive dam- ages and for damages not attrib- utable to physical injuries or sick- ness. Sec. 1606. Repeal of diesel fuel tax rebate to purchasers of diesel-powered automobiles and light trucks. Sec. 1607. Extension and phasedown of luxury passenger automobile tax. Sec. 1608. Termination of future tax-exempt bond financing for local fur- nishers of electricity and gas. Sec. 1609. Extension of Airport and Airway Trust Fund excise taxes. Sec. 1610. Basis adjustment to property held by corporation where stock in cor- poration is replacement property under involuntary conversion rules. Sec. 1611. Treatment of certain insurance con- tracts on retired lives. Sec. 1612. Treatment of modified guaranteed contracts. Sec. 1613. Treatment of contributions in aid of construction. Sec. 1614. Election to cease status as qualified scholarship funding corporation. Sec. 1615. Certain tax benefits denied to indi- viduals failing to provide tax- payer identification numbers. Sec. 1616. Repeal of bad debt reserve method for thrift savings associations. Sec. 1617. Exclusion for energy conservation subsidies limited to subsidies with respect to dwelling units. PART II\u2014FINANCIAL ASSET SECURITIZATION INVESTMENTS Sec. 1621. Financial Asset Securitization Invest- ment Trusts. Subtitle G\u2014Technical Corrections Sec. 1701. Coordination with other subtitles. Sec. 1702. Amendments related to Revenue Rec- onciliation Act of 1990. Sec. 1703. Amendments related to Revenue Rec- onciliation Act of 1993. Sec. 1704. Miscellaneous provisions. Subtitle H\u2014Other Provisions Sec. 1801. Exemption from diesel fuel dyeing re- quirements with respect to certain States. Sec. 1802. Treatment of certain university ac- counts. Sec. 1803. Modifications to excise tax on ozone- depleting chemicals. Sec. 1804. Tax-exempt bonds for sale of Alaska Power Administration facility. Sec. 1805. Nonrecognition treatment for certain transfers by common trust funds to regulated investment compa- nies. Sec. 1806. Qualified State tuition programs. Sec. 1807. Adoption assistance. Sec. 1808. Removal of barriers to interethnic adoption. Sec. 1809. 6-month delay of electronic fund transfer requirement. Subtitle I\u2014Foreign Trust Tax Compliance Sec. 1901. Improved information reporting on foreign trusts. Sec. 1902. Comparable penalties for failure to file return relating to transfers to foreign entities. Sec. 1903. Modifications of rules relating to for- eign trusts having one or more United States beneficiaries. Sec. 1904. Foreign persons not to be treated as owners under grantor trust rules. Sec. 1905. Information reporting regarding for- eign gifts. Sec. 1906. Modification of rules relating to for- eign trusts which are not grantor trusts. Sec. 1907. Residence of trusts, etc. Subtitle J\u2014Generalized System of Preferences Sec. 1951. Short title. Sec. 1952. Generalized System of Preferences. Sec. 1953. Effective date. Sec. 1954. Conforming amendments. TITLE II\u2014PAYMENT OF WAGES Sec. 2101. Short title. Sec. 2102. Proper compensation for use of em- ployer vehicles. Sec. 2103. Effective date. Sec. 2104. Minimum wage increase. Sec. 2105. Fair Labor Standards Act Amend- ments. TITLE I\u2014SMALL BUSINESS AND OTHER TAX PROVISIONS SEC. 1101. AMENDMENT OF 1986 CODE. Except as otherwise expressly provided, when- ever in this title an amendment or repeal is ex- pressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1986. SEC. 1102. UNDERPAYMENTS OF ESTIMATED TAX. No addition to the tax shall be made under section 6654 or 6655 of the Internal Revenue Code of 1986 (relating to failure to pay estimated tax) with respect to any underpayment of an in- stallment required to be paid before the date of the enactment of this Act to the extent such underpayment was created or increased by any provision of this title. Subtitle A\u2014Expensing; Etc. SEC. 1111. INCREASE IN EXPENSE TREATMENT FOR SMALL BUSINESSES. (a) GENERAL RULE.\u2014Paragraph (1) of section 179(b) (relating to dollar limitation) is amended to read as follows: ”(1) DOLLAR LIMITATION.\u2014The aggregate cost which may be taken into account under sub- section (a) for any taxable year shall not exceed the following applicable amount: ”If the taxable year The applicable begins in: amount is: 1997 ……………………… 18,000 1998 ……………………… 18,500 1999 ……………………… 19,000 2000 ……………………… 20,000 2001 or 2002 ……………. 24,000 2003 or thereafter …….. 25,000.”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1996. SEC. 1112. TREATMENT OF EMPLOYEE TIPS. (a) EMPLOYEE CASH TIPS.\u2014 (1) REPORTING REQUIREMENT NOT CONSID- ERED.\u2014Subparagraph (A) of section 45B(b)(1) (relating to excess employer social security tax) is amended by inserting ”(without regard to whether such tips are reported under section 6053)” after ”section 3121(q)”. (2) TAXES PAID.\u2014Subsection (d) of section 13443 of the Revenue Reconciliation Act of 1993 CONGRESSIONAL RECORD \u2014 HOUSEH9570 August 1, 1996 is amended by inserting ”, with respect to serv- ices performed before, on, or after such date” after ”1993”. (3) EFFECTIVE DATE.\u2014The amendments made by this subsection shall take effect as if included in the amendments made by, and the provisions of, section 13443 of the Revenue Reconciliation Act of 1993. (b) TIPS FOR EMPLOYEES DELIVERING FOOD OR BEVERAGES.\u2014 (1) IN GENERAL.\u2014Paragraph (2) of section 45B(b) is amended to read as follows: ”(2) ONLY TIPS RECEIVED FOR FOOD OR BEV- ERAGES TAKEN INTO ACCOUNT.\u2014In applying paragraph (1), there shall be taken into account only tips received from customers in connection with the providing, delivering, or serving of food or beverages for consumption if the tipping of employees delivering or serving food or bev- erages by customers is customary.”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall apply to tips received for services performed after December 31, 1996. SEC. 1113. TREATMENT OF STORAGE OF PRODUCT SAMPLES. (a) IN GENERAL.\u2014Paragraph (2) of section 280A(c) is amended by striking ”inventory” and inserting ”inventory or product samples”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall apply to taxable years beginning after December 31, 1995. SEC. 1114. TREATMENT OF CERTAIN CHARITABLE RISK POOLS. (a) GENERAL RULE.\u2014Section 501 (relating to exemption from tax on corporations, certain trusts, etc.) is amended by redesignating sub- section (n) as subsection (o) and by inserting after subsection (m) the following new sub- section: ”(n) CHARITABLE RISK POOLS.\u2014 ”(1) IN GENERAL.\u2014For purposes of this title\u2014 ”(A) a qualified charitable risk pool shall be treated as an organization organized and oper- ated exclusively for charitable purposes, and ”(B) subsection (m) shall not apply to a quali- fied charitable risk pool. ”(2) QUALIFIED CHARITABLE RISK POOL.\u2014For purposes of this subsection, the term ‘qualified charitable risk pool’ means any organization\u2014 ”(A) which is organized and operated solely to pool insurable risks of its members (other than risks related to medical malpractice) and to provide information to its members with respect to loss control and risk management, ”(B) which is comprised solely of members that are organizations described in subsection (c)(3) and exempt from tax under subsection (a), and ”(C) which meets the organizational require- ments of paragraph (3). ”(3) ORGANIZATIONAL REQUIREMENTS.\u2014An or- ganization (hereinafter in this subsection re- ferred to as the ‘risk pool’) meets the organiza- tional requirements of this paragraph if\u2014 ”(A) such risk pool is organized as a nonprofit organization under State law provisions author- izing risk pooling arrangements for charitable organizations, ”(B) such risk pool is exempt from any income tax imposed by the State (or will be so exempt after such pool qualifies as an organization ex- empt from tax under this title), ”(C) such risk pool has obtained at least $1,000,000 in startup capital from nonmember charitable organizations, ”(D) such risk pool is controlled by a board of directors elected by its members, and ”(E) the organizational documents of such risk pool require that\u2014 ”(i) each member of such pool shall at all times be an organization described in subsection (c)(3) and exempt from tax under subsection (a), ”(ii) any member which receives a final deter- mination that it no longer qualifies as an orga- nization described in subsection (c)(3) shall im- mediately notify the pool of such determination and the effective date of such determination, and ”(iii) each policy of insurance issued by the risk pool shall provide that such policy will not cover the insured with respect to events occur- ring after the date such final determination was issued to the insured. An organization shall not cease to qualify as a qualified charitable risk pool solely by reason of the failure of any of its members to continue to be an organization described in subsection (c)(3) if, within a reasonable period of time after such pool is notified as required under subparagraph (C)(ii), such pool takes such action as may be reasonably necessary to remove such member from such pool. ”(4) OTHER DEFINITIONS.\u2014For purposes of this subsection\u2014 ”(A) STARTUP CAPITAL.\u2014The term ‘startup capital’ means any capital contributed to, and any program-related investments (within the meaning of section 4944(c)) made in, the risk pool before such pool commences operations. ”(B) NONMEMBER CHARITABLE ORGANIZA- TION.\u2014The term ‘nonmember charitable organi- zation’ means any organization which is de- scribed in subsection (c)(3) and exempt from tax under subsection (a) and which is not a member of the risk pool and does not benefit (directly or indirectly) from the insurance coverage provided by the pool to its members.” (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall apply to taxable years beginning after the date of the enactment of this Act. SEC. 1115. TREATMENT OF DUES PAID TO AGRI- CULTURAL OR HORTICULTURAL OR- GANIZATIONS. (a) GENERAL RULE.\u2014Section 512 (defining un- related business taxable income) is amended by adding at the end the following new subsection: ”(d) TREATMENT OF DUES OF AGRICULTURAL OR HORTICULTURAL ORGANIZATIONS.\u2014 ”(1) IN GENERAL.\u2014If\u2014 ”(A) an agricultural or horticultural organi- zation described in section 501(c)(5) requires an- nual dues to be paid in order to be a member of such organization, and ”(B) the amount of such required annual dues does not exceed $100, in no event shall any portion of such dues be treated as derived by such organization from an unrelated trade or business by reason of any benefits or privileges to which members of such organization are entitled. ”(2) INDEXATION OF $100 AMOUNT.\u2014In the case of any taxable year beginning in a calendar year after 1995, the $100 amount in paragraph (1) shall be increased by an amount equal to\u2014 ”(A) $100, multiplied by ”(B) the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, by substituting ‘calendar year 1994’ for ‘calendar year 1992’ in subparagraph (B) thereof. ”(3) DUES.\u2014For purposes of this subsection, the term ‘dues’ means any payment (whether or not designated as dues) which is required to be made in order to be recognized by the organiza- tion as a member of the organization.”. (b) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014The amendment made by this section shall apply to taxable years begin- ning after December 31, 1986. (2) TRANSITIONAL RULE.\u2014If\u2014 (A) for purposes of applying part III of sub- chapter F of chapter 1 of the Internal Revenue Code of 1986 to any taxable year beginning be- fore January 1, 1987, an agricultural or horti- cultural organization did not treat any portion of membership dues received by it as income de- rived in an unrelated trade or business, and (B) such organization had a reasonable basis for not treating such dues as income derived in an unrelated trade or business, then, for purposes of applying such part III to any such taxable year, in no event shall any portion of such dues be treated as derived in an unrelated trade or business. (3) REASONABLE BASIS.\u2014For purposes of para- graph (2), an organization shall be treated as having a reasonable basis for not treating mem- bership dues as income derived in an unrelated trade or business if the taxpayer’s treatment of such dues was in reasonable reliance on any of the following: (A) Judicial precedent, published rulings, technical advice with respect to the organiza- tion, or a letter ruling to the organization. (B) A past Internal Revenue Service audit of the organization in which there was no assess- ment attributable to the reclassification of mem- bership dues for purposes of the tax on unre- lated business income. (C) Long-standing recognized practice of agri- cultural or horticultural organizations. SEC. 1116. CLARIFICATION OF EMPLOYMENT TAX STATUS OF CERTAIN FISHERMEN. (a) CLARIFICATION OF EMPLOYMENT TAX STA- TUS.\u2014 (1) AMENDMENTS OF INTERNAL REVENUE CODE OF 1986.\u2014 (A) DETERMINATION OF SIZE OF CREW.\u2014Sub- section (b) of section 3121 (defining employment) is amended by adding at the end the following new sentence: ”For purposes of paragraph (20), the operating crew of a boat shall be treated as normally made up of fewer than 10 individuals if the average size of the operating crew on trips made during the preceding 4 calendar quarters consisted of fewer than 10 individuals.”. (B) CERTAIN CASH REMUNERATION PER- MITTED.\u2014Subparagraph (A) of section 3121(b)(20) is amended to read as follows: ”(A) such individual does not receive any cash remuneration other than as provided in subparagraph (B) and other than cash remu- neration\u2014 ”(i) which does not exceed $100 per trip; ”(ii) which is contingent on a minimum catch; and ”(iii) which is paid solely for additional duties (such as mate, engineer, or cook) for which ad- ditional cash remuneration is traditional in the industry,”. (C) CONFORMING AMENDMENT.\u2014Section 6050A(a) is amended by striking ”and” at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting ”; and”, and by adding at the end the following new paragraph: ”(5) any cash remuneration described in sec- tion 3121(b)(20)(A).”. (2) AMENDMENT OF SOCIAL SECURITY ACT.\u2014 (A) DETERMINATION OF SIZE OF CREW.\u2014Sub- section (a) of section 210 of the Social Security Act is amended by adding at the end the follow- ing new sentence: ”For purposes of paragraph (20), the operating crew of a boat shall be treated as normally made up of fewer than 10 individuals if the average size of the operating crew on trips made during the preceding 4 calendar quarters consisted of fewer than 10 individuals.”. (B) CERTAIN CASH REMUNERATION PER- MITTED.\u2014Subparagraph (A) of section 210(a)(20) of such Act is amended to read as follows: ”(A) such individual does not receive any ad- ditional compensation other than as provided in subparagraph (B) and other than cash remu- neration\u2014 ”(i) which does not exceed $100 per trip; ”(ii) which is contingent on a minimum catch; and ”(iii) which is paid solely for additional duties (such as mate, engineer, or cook) for which ad- ditional cash remuneration is traditional in the industry,”. (3) EFFECTIVE DATES.\u2014 (A) IN GENERAL.\u2014The amendments made by this subsection shall apply to remuneration paid\u2014 (i) after December 31, 1994, and (ii) after December 31, 1984, and before Janu- ary 1, 1995, unless the payor treated such remu- neration (when paid) as being subject to tax CONGRESSIONAL RECORD \u2014 HOUSE H9571August 1, 1996 under chapter 21 of the Internal Revenue Code of 1986. (B) REPORTING REQUIREMENT.\u2014The amend- ment made by paragraph (1)(C) shall apply to remuneration paid after December 31, 1996. (b) INFORMATION REPORTING.\u2014 (1) IN GENERAL.\u2014Subpart B of part III of sub- chapter A of chapter 68 (relating to information concerning transactions with other persons) is amended by inserting after section 6050Q the following new section: ”SEC. 6050R. RETURNS RELATING TO CERTAIN PURCHASES OF FISH. ”(a) REQUIREMENT OF REPORTING.\u2014Every person\u2014 ”(1) who is engaged in the trade or business of purchasing fish for resale from any person en- gaged in the trade or business of catching fish; and ”(2) who makes payments in cash in the course of such trade or business to such a per- son of $600 or more during any calendar year for the purchase of fish, shall make a return (at such times as the Sec- retary may prescribe) described in subsection (b) with respect to each person to whom such a payment was made during such calendar year. ”(b) RETURN.\u2014A return is described in this subsection if such return\u2014 ”(1) is in such form as the Secretary may pre- scribe, and ”(2) contains\u2014 ”(A) the name, address, and TIN of each per- son to whom a payment described in subsection (a)(2) was made during the calendar year; ”(B) the aggregate amount of such payments made to such person during such calendar year and the date and amount of each such payment, and ”(C) such other information as the Secretary may require. ”(c) STATEMENT TO BE FURNISHED WITH RE- SPECT TO WHOM INFORMATION IS REQUIRED.\u2014 Every person required to make a return under subsection (a) shall furnish to each person whose name is required to be set forth in such return a written statement showing\u2014 ”(1) the name and address of the person re- quired to make such a return, and ”(2) the aggregate amount of payments to the person required to be shown on the return. The written statement required under the pre- ceding sentence shall be furnished to the person on or before January 31 of the year following the calendar year for which the return under subsection (a) is required to be made. ”(d) DEFINITIONS.\u2014For purposes of this sec- tion: ”(1) CASH.\u2014The term ‘cash’ has the meaning given such term by section 6050I(d). ”(2) FISH.\u2014The term ‘fish’ includes other forms of aquatic life.”. (2) TECHNICAL AMENDMENTS.\u2014 (A) Subparagraph (A) of section 6724(d)(1) is amended by striking ”or” at the end of clause (vi), by striking ”and” at the end of clause (vii) and inserting ”or”, and by adding at the end the following new clause: ”(viii) section 6050R (relating to returns relat- ing to certain purchases of fish), and”. (B) Paragraph (2) of section 6724(d) is amend- ed by redesignating subparagraphs (R) through (U) as subparagraphs (S) through (V), respec- tively, and by inserting after subparagraph (Q) the following new subparagraph: ”(R) section 6050R(c) (relating to returns re- lating to certain purchases of fish),”. (C) The table of sections for subpart B of part III of subchapter A of chapter 68 is amended by inserting after the item relating to 6050Q the fol- lowing new item: ”Sec. 6050R. Returns relating to certain pur- chases of fish.”. (3) EFFECTIVE DATE.\u2014The amendments made by this subsection shall apply to payments made after December 31, 1997. SEC. 1117. MODIFICATIONS OF TAX-EXEMPT BOND RULES FOR FIRST-TIME FARMERS. (a) ACQUISITION FROM RELATED PERSON AL- LOWED.\u2014Section 147(c)(2) (relating to exception for first-time farmers) is amended by adding at the end the following new subparagraph: ”(G) ACQUISITION FROM RELATED PERSON.\u2014 For purposes of this paragraph and section 144(a), the acquisition by a first-time farmer of land or personal property from a related person (within the meaning of section 144(a)(3)) shall not be treated as an acquisition from a related person, if\u2014 ”(i) the acquisition price is for the fair market value of such land or property, and ”(ii) subsequent to such acquisition, the relat- ed person does not have a financial interest in the farming operation with respect to which the bond proceeds are to be used.”. (b) SUBSTANTIAL FARMLAND AMOUNT DOU- BLED.\u2014Clause (i) of section 147(c)(2)(E) (defin- ing substantial farmland) is amended by strik- ing ”15 percent” and inserting ”30 percent”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to bonds issued after the date of the enactment of this Act. SEC. 1118. NEWSPAPER DISTRIBUTORS TREATED AS DIRECT SELLERS. (a) IN GENERAL.\u2014Section 3508(b)(2)(A) is amended by striking ”or” at the end of clause (i), by inserting ”or” at the end of clause (ii), and by inserting after clause (ii) the following new clause: ”(iii) is engaged in the trade or business of the delivering or distribution of newspapers or shop- ping news (including any services directly relat- ed to such trade or business),”. (b) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to services performed after December 31, 1995. SEC. 1119. APPLICATION OF INVOLUNTARY CON- VERSION RULES TO PRESI- DENTIALLY DECLARED DISASTERS. (a) IN GENERAL.\u2014Section 1033(h) is amended by redesignating paragraphs (2) and (3) as para- graphs (3) and (4), respectively, and by inserting after paragraph (1) the following new para- graph: ”(2) TRADE OR BUSINESS AND INVESTMENT PROPERTY.\u2014If a taxpayer’s property held for productive use in a trade or business or for in- vestment is compulsorily or involuntarily con- verted as a result of a Presidentially declared disaster, tangible property of a type held for productive use in a trade or business shall be treated for purposes of subsection (a) as prop- erty similar or related in service or use to the property so converted.”. (b) CONFORMING AMENDMENTS.\u2014Section 1033(h) is amended\u2014 (1) by striking ”residence” in paragraph (3) (as redesignated by subsection (a)) and inserting ”property”, (2) by striking ”PRINCIPAL RESIDENCES” in the heading and inserting ”PROPERTY”, and (3) by striking ”(1) IN GENERAL.\u2014” and insert- ing ”(1) PRINCIPAL RESIDENCES.\u2014”. (c) EXPANSION OF OKLAHOMA CITY ENTER- PRISE COMMUNITY.\u2014Notwithstanding sections 1391 and 1392(a)(3)(D) of the Internal Revenue Code of 1986, the boundaries of the enterprise community for Oklahoma City, Oklahoma, des- ignated by the Secretary of Housing and Urban Development on December 21, 1994, may be ex- tended with respect to census tracts located in the area damaged due to the bombing of the Al- fred P. Murrah Federal Building in Oklahoma City on April 19, 1995, primarily in the area bounded on the south by Robert S. Kerr Avenue, on the north by North 13th Street, on the east by Oklahoma Avenue, and on the west by Shartel Avenue. (d) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to disasters declared after December 31, 1994, in taxable years ending after such date. (2) SUBSECTION (c).\u2014Subsection (c) shall take effect on the date of the enactment of this Act. SEC. 1120. CLASS LIFE FOR GAS STATION CON- VENIENCE STORES AND SIMILAR STRUCTURES. (a) IN GENERAL.\u2014Section 168(e)(3)(E) (classifying certain property as 15-year prop- erty) is amended by striking ”and” at the end of clause (i), by striking the period at the end of clause (ii) and inserting ”, and”, and by adding at the end the following new clause: ”(iii) any section 1250 property which is a re- tail motor fuels outlet (whether or not food or other convenience items are sold at the out- let).”. (b) CONFORMING AMENDMENT.\u2014Subparagraph (B) of section 168(g)(3) is amended by inserting after the item relating to subparagraph (E)(ii) in the table contained therein the following new item: ”(E)(iii) ……………………………………….. 20” (c)EFFECTIVE DATE.\u2014The amendments made by this section shall apply to property which is placed in service on or after the date of the en- actment of this Act and to which section 168 of the Internal Revenue Code of 1986 applies after the amendment made by section 201 of the Tax Reform Act of 1986. A taxpayer may elect (in such form and manner as the Secretary of the Treasury may prescribe) to have such amend- ments apply with respect to any property placed in service before such date and to which such section so applies. SEC. 1121 TREATMENT OF ABANDONMENT OF LESSOR IMPROVEMENTS AT TERMI- NATION OF LEASE. (a) IN GENERAL.\u2014Paragraph (8) of section 168(i) is amended to read as follows: ”(8) TREATMENT OF LEASEHOLD IMPROVE- MENTS.\u2014 ”(A) IN GENERAL.\u2014In the case of any building erected (or improvements made) on leased prop- erty, if such building or improvement is property to which this section applies, the depreciation deduction shall be determined under the provi- sions of this section. ”(B) TREATMENT OF LESSOR IMPROVEMENTS WHICH ARE ABANDONED AT TERMINATION OF LEASE.\u2014An improvement\u2014 ”(i) which is made by the lessor of leased property for the lessee of such property, and ”(ii) which is irrevocably disposed of or aban- doned by the lessor at the termination of the lease by such lessee, shall be treated for purposes of determining gain or loss under this title as disposed of by the les- sor when so disposed of or abandoned.”. (b) EFFECTIVE DATE.\u2014Subparagraph (B) of section 168(i)(8) of the Internal Revenue Code of 1986, as added by the amendment made by sub- section (a), shall apply to improvements dis- posed of or abandoned after June 12, 1996. SEC. 1122. SPECIAL RULES RELATING TO DETER- MINATION WHETHER INDIVIDUALS ARE EMPLOYEES FOR PURPOSES OF EMPLOYMENT TAXES. (a) IN GENERAL.\u2014Section 530 of the Revenue Act of 1978 is amended by adding at the end the following new subsection: ”(e) SPECIAL RULES FOR APPLICATION OF SEC- TION.\u2014 ”(1) NOTICE OF AVAILABILITY OF SECTION.\u2014An officer or employee of the Internal Revenue Service shall, before or at the commencement of any audit inquiry relating to the employment status of one or more individuals who perform services for the taxpayer, provide the taxpayer with a written notice of the provisions of this section. ”(2) RULES RELATING TO STATUTORY STAND- ARDS.\u2014For purposes of subsection (a)(2)\u2014 ”(A) a taxpayer may not rely on an audit commenced after December 31, 1996, for purposes of subparagraph (B) thereof unless such audit included an examination for employment tax purposes of whether the individual involved (or any individual holding a position substantially similar to the position held by the individual in- volved) should be treated as an employee of the taxpayer, CONGRESSIONAL RECORD \u2014 HOUSEH9572 August 1, 1996 ”(B) in no event shall the significant segment requirement of subparagraph (C) thereof be con- strued to require a reasonable showing of the practice of more than 25 percent of the industry (determined by not taking into account the tax- payer), and ”(C) in applying the long-standing recognized practice requirement of subparagraph (C) there- of\u2014 ”(i) such requirement shall not be construed as requiring the practice to have continued for more than 10 years, and ”(ii) a practice shall not fail to be treated as long-standing merely because such practice began after 1978. ”(3) AVAILABILITY OF SAFE HARBORS.\u2014Noth- ing in this section shall be construed to provide that subsection (a) only applies where the indi- vidual involved is otherwise an employee of the taxpayer. ”(4) BURDEN OF PROOF.\u2014 ”(A) IN GENERAL.\u2014If\u2014 ”(i) a taxpayer establishes a prima facie case that it was reasonable not to treat an individual as an employee for purposes of this section, and ”(ii) the taxpayer has fully cooperated with reasonable requests from the Secretary of the Treasury or his delegate, then the burden of proof with respect to such treatment shall be on the Secretary. ”(B) EXCEPTION FOR OTHER REASONABLE BASIS.\u2014In the case of any issue involving whether the taxpayer had a reasonable basis not to treat an individual as an employee for purposes of this section, subparagraph (A) shall only apply for purposes of determining whether the taxpayer meets the requirements of subpara- graph (A), (B), or (C) of subsection (a)(2). ”(5) PRESERVATION OF PRIOR PERIOD SAFE HARBOR.\u2014If\u2014 ”(A) an individual would (but for the treat- ment referred to in subparagraph (B)) be deemed not to be an employee of the taxpayer under subsection (a) for any prior period, and ”(B) such individual is treated by the tax- payer as an employee for employment tax pur- poses for any subsequent period, then, for purposes of applying such taxes for such prior period with respect to the taxpayer, the individual shall be deemed not to be an em- ployee. ”(6) SUBSTANTIALLY SIMILAR POSITION.\u2014For purposes of this section, the determination as to whether an individual holds a position substan- tially similar to a position held by another indi- vidual shall include consideration of the rela- tionship between the taxpayer and such individ- uals.”. (b) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014The amendment made by this section shall apply to periods after Decem- ber 31, 1996. (2) NOTICE BY INTERNAL REVENUE SERVICE.\u2014 Section 530(e)(1) of the Revenue Act of 1978 (as added by subsection (a)) shall apply to audits which commence after December 31, 1996. (3) BURDEN OF PROOF.\u2014 (A) IN GENERAL.\u2014Section 530(e)(4) of the Rev- enue Act of 1978 (as added by subsection (a)) shall apply to disputes involving periods after December 31, 1996. (B) NO INFERENCE.\u2014Nothing in the amend- ments made by this section shall be construed to infer the proper treatment of the burden of proof with respect to disputes involving periods before January 1, 1997. SEC. 1123. TREATMENT OF HOUSING PROVIDED TO EMPLOYEES BY ACADEMIC HEALTH CENTERS. (a) IN GENERAL.\u2014Paragraph (4) of section 119(d) (relating to lodging furnished by certain educational institutions to employees) is amend- ed to read as follows: ”(4) EDUCATIONAL INSTITUTION, ETC.\u2014For purposes of this subsection\u2014 ”(A) IN GENERAL.\u2014The term ‘educational in- stitution’ means\u2014 ”(i) an institution described in section 170(b)(1)(A)(ii) (or an entity organized under State law and composed of public institutions so described), or ”(ii) an academic health center. ”(B) ACADEMIC HEALTH CENTER.\u2014For pur- poses of subparagraph (A), the term ‘academic health center’ means an entity\u2014 ”(i) which is described in section 170(b)(1)(A)(iii), ”(ii) which receives (during the calendar year in which the taxable year of the taxpayer be- gins) payments under subsection (d)(5)(B) or (h) of section 1886 of the Social Security Act (relat- ing to graduate medical education), and ”(iii) which has as one of its principal pur- poses or functions the providing and teaching of basic and clinical medical science and research with the entity’s own faculty.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to taxable years be- ginning after December 31, 1995. Subtitle B\u2014Extension of Certain Expiring Provisions SEC. 1201. WORK OPPORTUNITY TAX CREDIT. (a) AMOUNT OF CREDIT.\u2014Subsection (a) of section 51 (relating to amount of credit) is amended by striking ”40 percent” and inserting ”35 percent”. (b) MEMBERS OF TARGETED GROUPS.\u2014Sub- section (d) of section 51 is amended to read as follows: ”(d) MEMBERS OF TARGETED GROUPS.\u2014For purposes of this subpart\u2014 ”(1) IN GENERAL.\u2014An individual is a member of a targeted group if such individual is\u2014 ”(A) a qualified IV A recipient, ”(B) a qualified veteran, ”(C) a qualified ex-felon, ”(D) a high-risk youth, ”(E) a vocational rehabilitation referral, ”(F) a qualified summer youth employee, or ”(G) a qualified food stamp recipient. ”(2) QUALIFIED IV A RECIPIENT.\u2014 ”(A) IN GENERAL.\u2014The term ‘qualified IV A recipient’ means any individual who is certified by the designated local agency as being a mem- ber of a family receiving assistance under a IV A program for at least a 9-month period ending during the 9-month period ending on the hiring date. ”(B) IV A PROGRAM.\u2014For purposes of this paragraph, the term ‘IV A program’ means any program providing assistance under a State plan approved under part A of title IV of the Social Security Act (relating to assistance for needy families with minor children) and any successor of such program. ”(3) QUALIFIED VETERAN.\u2014 ”(A) IN GENERAL.\u2014The term ‘qualified vet- eran’ means any veteran who is certified by the designated local agency as being\u2014 ”(i) a member of a family receiving assistance under a IV A program (as defined in paragraph (2)(B)) for at least a 9-month period ending dur- ing the 12-month period ending on the hiring date, or ”(ii) a member of a family receiving assistance under a food stamp program under the Food Stamp Act of 1977 for at least a 3-month period ending during the 12-month period ending on the hiring date. ”(B) VETERAN.\u2014For purposes of subpara- graph (A), the term ‘veteran’ means any indi- vidual who is certified by the designated local agency as\u2014 ”(i)(I) having served on active duty (other than active duty for training) in the Armed Forces of the United States for a period of more than 180 days, or ”(II) having been discharged or released from active duty in the Armed Forces of the United States for a service-connected disability, and ”(ii) not having any day during the 60-day period ending on the hiring date which was a day of extended active duty in the Armed Forces of the United States. For purposes of clause (ii), the term ‘extended active duty’ means a period of more than 90 days during which the individual was on active duty (other than active duty for training). ”(4) QUALIFIED EX-FELON.\u2014The term ‘quali- fied ex-felon’ means any individual who is cer- tified by the designated local agency\u2014 ”(A) as having been convicted of a felony under any statute of the United States or any State, ”(B) as having a hiring date which is not more than 1 year after the last date on which such individual was so convicted or was re- leased from prison, and ”(C) as being a member of a family which had an income during the 6 months immediately pre- ceding the earlier of the month in which such income determination occurs or the month in which the hiring date occurs, which, on an an- nual basis, would be 70 percent or less of the Bureau of Labor Statistics lower living stand- ard. Any determination under subparagraph (C) shall be valid for the 45-day period beginning on the date such determination is made. ”(5) HIGH-RISK YOUTH.\u2014 ”(A) IN GENERAL.\u2014The term ‘high-risk youth’ means any individual who is certified by the designated local agency\u2014 ”(i) as having attained age 18 but not age 25 on the hiring date, and ”(ii) as having his principal place of abode within an empowerment zone or enterprise com- munity. ”(B) YOUTH MUST CONTINUE TO RESIDE IN ZONE.\u2014In the case of a high-risk youth, the term ‘qualified wages’ shall not include wages paid or incurred for services performed while such youth’s principal place of abode is outside an empowerment zone or enterprise community. ”(6) VOCATIONAL REHABILITATION REFER- RAL.\u2014The term ‘vocational rehabilitation refer- ral’ means any individual who is certified by the designated local agency as\u2014 ”(A) having a physical or mental disability which, for such individual, constitutes or results in a substantial handicap to employment, and ”(B) having been referred to the employer upon completion of (or while receiving) rehabili- tative services pursuant to\u2014 ”(i) an individualized written rehabilitation plan under a State plan for vocational rehabili- tation services approved under the Rehabilita- tion Act of 1973, or ”(ii) a program of vocational rehabilitation carried out under chapter 31 of title 38, United States Code. ”(7) QUALIFIED SUMMER YOUTH EMPLOYEE.\u2014 ”(A) IN GENERAL.\u2014The term ‘qualified sum- mer youth employee’ means any individual\u2014 ”(i) who performs services for the employer be- tween May 1 and September 15, ”(ii) who is certified by the designated local agency as having attained age 16 but not 18 on the hiring date (or if later, on May 1 of the cal- endar year involved), ”(iii) who has not been an employee of the employer during any period prior to the 90-day period described in subparagraph (B)(i), and ”(iv) who is certified by the designated local agency as having his principal place of abode within an empowerment zone or enterprise com- munity. ”(B) SPECIAL RULES FOR DETERMINING AMOUNT OF CREDIT.\u2014For purposes of applying this subpart to wages paid or incurred to any qualified summer youth employee\u2014 ”(i) subsection (b)(2) shall be applied by sub- stituting ‘any 90-day period between May 1 and September 15’ for ‘the 1-year period beginning with the day the individual begins work for the employer’, and ”(ii) subsection (b)(3) shall be applied by sub- stituting ‘$3,000’ for ‘$6,000’. The preceding sentence shall not apply to an in- dividual who, with respect to the same em- ployer, is certified as a member of another tar- geted group after such individual has been a qualified summer youth employee. CONGRESSIONAL RECORD \u2014 HOUSE H9573August 1, 1996 ”(C) YOUTH MUST CONTINUE TO RESIDE IN ZONE.\u2014Paragraph (5)(B) shall apply for pur- poses of subparagraph (A)(iv). ”(8) QUALIFIED FOOD STAMP RECIPIENT.\u2014 ”(A) IN GENERAL.\u2014The term ‘qualified food stamp recipient’ means any individual who is certified by the designated local agency\u2014 ”(i) as having attained age 18 but not age 25 on the hiring date, and ”(ii) as being a member of a family\u2014 ”(I) receiving assistance under a food stamp program under the Food Stamp Act of 1977 for the 6-month period ending on the hiring date, or ”(II) receiving such assistance for at least 3 months of the 5-month period ending on the hir- ing date, in the case of a member of a family who ceases to be eligible for such assistance under section 6(o) of the Food Stamp Act of 1977. ”(B) PARTICIPATION INFORMATION.\u2014Notwith- standing any other provision of law, the Sec- retary of the Treasury and the Secretary of Ag- riculture shall enter into an agreement to pro- vide information to designated local agencies with respect to participation in the food stamp program. ”(9) HIRING DATE.\u2014The term ‘hiring date’ means the day the individual is hired by the em- ployer. ”(10) DESIGNATED LOCAL AGENCY.\u2014The term ‘designated local agency’ means a State employ- ment security agency established in accordance with the Act of June 6, 1933, as amended (29 U.S.C. 49 49n). ”(11) SPECIAL RULES FOR CERTIFICATIONS.\u2014 ”(A) IN GENERAL.\u2014An individual shall not be treated as a member of a targeted group unless\u2014 ”(i) on or before the day on which such indi- vidual begins work for the employer, the em- ployer has received a certification from a des- ignated local agency that such individual is a member of a targeted group, or ”(ii)(I) on or before the day the individual is offered employment with the employer, a pre- screening notice is completed by the employer with respect to such individual, and ”(II) not later than the 21st day after the in- dividual begins work for the employer, the em- ployer submits such notice, signed by the em- ployer and the individual under penalties of perjury, to the designated local agency as part of a written request for such a certification from such agency. For purposes of this paragraph, the term ‘pre- screening notice’ means a document (in such form as the Secretary shall prescribe) which contains information provided by the individual on the basis of which the employer believes that the individual is a member of a targeted group. ”(B) INCORRECT CERTIFICATIONS.\u2014If\u2014 ”(i) an individual has been certified by a des- ignated local agency as a member of a targeted group, and ”(ii) such certification is incorrect because it was based on false information provided by such individual, the certification shall be revoked and wages paid by the employer after the date on which notice of revocation is received by the employer shall not be treated as qualified wages. ”(C) EXPLANATION OF DENIAL OF REQUEST.\u2014If a designated local agency denies a request for certification of membership in a targeted group, such agency shall provide to the person making such request a written explanation of the rea- sons for such denial.”. (c) MINIMUM EMPLOYMENT PERIOD.\u2014Para- graph (3) of section 51(i) (relating to certain in- dividuals ineligible) is amended to read as fol- lows: ”(3) INDIVIDUALS NOT MEETING MINIMUM EM- PLOYMENT PERIOD.\u2014No wages shall be taken into account under subsection (a) with respect to any individual unless such individual ei- ther\u2014 ”(A) is employed by the employer at least 180 days (20 days in the case of a qualified summer youth employee), or ”(B) has completed at least 400 hours (120 hours in the case of a qualified summer youth employee) of services performed for the em- ployer.”. (d) TERMINATION.\u2014Paragraph (4) of section 51(c) (relating to wages defined) is amended to read as follows: ”(4) TERMINATION.\u2014The term ‘wages’ shall not include any amount paid or incurred to an individual who begins work for the employer\u2014 ”(A) after December 31, 1994, and before Octo- ber 1, 1996, or ”(B) after September 30, 1997.”. (e) REDESIGNATION OF CREDIT.\u2014 (1) Sections 38(b)(2), 41(b)(2)(D)(iii), 45A(b)(1)(B), 51 (a) and (g), and 196(c) are each amended in the text by striking ”targeted jobs credit” each place it appears and inserting ”work opportunity credit”. (2) The subpart heading for subpart F of part IV of subchapter A of chapter 1 is amended by striking ”Targeted Jobs Credit” and inserting ”Work Opportunity Credit”. (3) The table of subparts for such part IV is amended by striking ”targeted jobs credit” and inserting ”work opportunity credit”. (4) The headings for sections 41(b)(2)(D)(iii) and 1396(c)(3) are each amended by striking ”TARGETED JOBS CREDIT” and inserting ”WORK OPPORTUNITY CREDIT”. (5) The heading for subsection (j) of section 51 is amended by striking ”TARGETED JOBS CRED- IT” and inserting ”WORK OPPORTUNITY CRED- IT”. (f) TECHNICAL AMENDMENT.\u2014Paragraph (1) of section 51(c) is amended by striking ”, sub- section (d)(8)(D),”. (g) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to individuals who begin work for the employer after September 30, 1996. SEC. 1202. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE PROGRAMS. (a) EXTENSION.\u2014Subsection (d) of section 127 (relating to educational assistance programs) is amended by striking ”December 31, 1994.” and inserting ”May 31, 1997. In the case of any tax- able year beginning in 1997, only expenses paid with respect to courses beginning before July 1, 1997, shall be taken into account in determining the amount excluded under this section.”. (b) LIMITATION TO EDUCATION BELOW GRAD- UATE LEVEL.\u2014The last sentence of section 127(c)(1) is amended by inserting before the pe- riod the following: ”, and such term also does not include any payment for, or the provision of any benefits with respect to, any graduate level course of a kind normally taken by an individ- ual pursuing a program leading to a law, busi- ness, medical, or other advanced academic or professional degree”. (c) EFFECTIVE DATES.\u2014 (1) EXTENSION.\u2014The amendment made by sub- section (a) shall apply to taxable years begin- ning after December 31, 1994. (2) GRADUATE EDUCATION.\u2014The amendment made by subsection (b) shall apply with respect to expenses relating to courses beginning after June 30, 1996. (3) EXPEDITED PROCEDURES.\u2014The Secretary of the Treasury shall establish expedited proce- dures for the refund of any overpayment of taxes imposed by the Internal Revenue Code of 1986 which is attributable to amounts excluded from gross income during 1995 or 1996 under sec- tion 127 of such Code, including procedures waiving the requirement that an employer ob- tain an employee’s signature where the em- ployer demonstrates to the satisfaction of the Secretary that any refund collected by the em- ployer on behalf of the employee will be paid to the employee. SEC. 1203. FUTA EXEMPTION FOR ALIEN AGRI- CULTURAL WORKERS. (a) IN GENERAL.\u2014Subparagraph (B) of section 3306(c)(1) (defining employment) is amended by striking ”before January 1, 1995,”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall apply to services per- formed after December 31, 1994. SEC. 1204. RESEARCH CREDIT. (a) IN GENERAL.\u2014Subsection (h) of section 41 (relating to credit for research activities) is amended to read as follows: ”(h) TERMINATION.\u2014 ”(1) IN GENERAL.\u2014This section shall not apply to any amount paid or incurred\u2014 ”(A) after June 30, 1995, and before July 1, 1996, or ”(B) after May 31, 1997. Notwithstanding the preceding sentence, in the case of a taxpayer making an election under subsection (c)(4) for its first taxable year begin- ning after June 30, 1996, and before July 1, 1997, this section shall apply to amounts paid or in- curred during the first 11 months of such tax- able year. ”(2) COMPUTATION OF BASE AMOUNT.\u2014In the case of any taxable year with respect to which this section applies to a number of days which is less than the total number of days in such taxable year, the base amount with respect to such taxable year shall be the amount which bears the same ratio to the base amount for such year (determined without regard to this para- graph) as the number of days in such taxable year to which this section applies bears to the total number of days in such taxable year.”. (b) BASE AMOUNT FOR START-UP COMPA- NIES.\u2014Clause (i) of section 41(c)(3)(B) (relating to start-up companies) is amended to read as follows: ”(i) TAXPAYERS TO WHICH SUBPARAGRAPH AP- PLIES.\u2014The fixed-base percentage shall be de- termined under this subparagraph if\u2014 ”(I) the first taxable year in which a taxpayer had both gross receipts and qualified research expenses begins after December 31, 1983, or ”(II) there are fewer than 3 taxable years be- ginning after December 31, 1983, and before Jan- uary 1, 1989, in which the taxpayer had both gross receipts and qualified research expenses.”. (c) ELECTION OF ALTERNATIVE INCREMENTAL CREDIT.\u2014Subsection (c) of section 41 is amended by redesignating paragraphs (4) and (5) as para- graphs (5) and (6), respectively, and by inserting after paragraph (3) the following new para- graph: ”(4) ELECTION OF ALTERNATIVE INCREMENTAL CREDIT.\u2014 ”(A) IN GENERAL.\u2014At the election of the tax- payer, the credit determined under subsection (a)(1) shall be equal to the sum of\u2014 ”(i) 1.65 percent of so much of the qualified research expenses for the taxable year as ex- ceeds 1 percent of the average described in sub- section (c)(1)(B) but does not exceed 1.5 percent of such average, ”(ii) 2.2 percent of so much of such expenses as exceeds 1.5 percent of such average but does not exceed 2 percent of such average, and ”(iii) 2.75 percent of so much of such expenses as exceeds 2 percent of such average. ”(B) ELECTION.\u2014An election under this para- graph may be made only for the first taxable year of the taxpayer beginning after June 30, 1996. Such an election shall apply to the taxable year for which made and all succeeding taxable years unless revoked with the consent of the Secretary.”. (d) INCREASED CREDIT FOR CONTRACT RE- SEARCH EXPENSES WITH RESPECT TO CERTAIN RESEARCH CONSORTIA.\u2014Paragraph (3) of section 41(b) is amended by adding at the end the fol- lowing new subparagraph: ”(C) AMOUNTS PAID TO CERTAIN RESEARCH CONSORTIA.\u2014 ”(i) IN GENERAL.\u2014Subparagraph (A) shall be applied by substituting ’75 percent’ for ’65 per- cent’ with respect to amounts paid or incurred by the taxpayer to a qualified research consor- tium for qualified research on behalf of the tax- payer and 1 or more unrelated taxpayers. For purposes of the preceding sentence, all persons CONGRESSIONAL RECORD \u2014 HOUSEH9574 August 1, 1996 treated as a single employer under subsection (a) or (b) of section 52 shall be treated as related taxpayers. ”(ii) QUALIFIED RESEARCH CONSORTIUM.\u2014The term ‘qualified research consortium’ means any organization which\u2014 ”(I) is described in section 501(c)(3) or 501(c)(6) and is exempt from tax under section 501(a), ”(II) is organized and operated primarily to conduct scientific research, and ”(III) is not a private foundation.”. (e) CONFORMING AMENDMENT.\u2014Subparagraph (D) of section 28(b)(1) is amended by inserting ”, and before July 1, 1996, and periods after May 31, 1997” after ”June 30, 1995”. (f) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in para- graph (2), the amendments made by this section shall apply to taxable years ending after June 30, 1996. (2) SUBSECTIONS (c) AND (d).\u2014The amend- ments made by subsections (c) and (d) shall apply to taxable years beginning after June 30, 1996. (3) ESTIMATED TAX.\u2014The amendments made by this section shall not be taken into account under section 6654 or 6655 of the Internal Reve- nue Code of 1986 (relating to failure to pay esti- mated tax) in determining the amount of any in- stallment required to be paid for a taxable year beginning in 1997. SEC. 1205. ORPHAN DRUG TAX CREDIT. (a) RECATEGORIZED AS A BUSINESS CREDIT.\u2014 (1) IN GENERAL.\u2014Section 28 (relating to clini- cal testing expenses for certain drugs for rare diseases or conditions) is transferred to subpart D of part IV of subchapter A of chapter 1, in- serted after section 45B, and redesignated as section 45C. (2) CONFORMING AMENDMENT.\u2014Subsection (b) of section 38 (relating to general business credit) is amended by striking ”plus” at the end of paragraph (10), by striking the period at the end of paragraph (11) and inserting ”, plus”, and by adding at the end the following new paragraph: ”(12) the orphan drug credit determined under section 45C(a).”. (3) CLERICAL AMENDMENTS.\u2014 (A) The table of sections for subpart B of such part IV is amended by striking the item relating to section 28. (B) The table of sections for subpart D of such part IV is amended by adding at the end the fol- lowing new item: ”Sec. 45C. Clinical testing expenses for cer- tain drugs for rare diseases or conditions.”. (b) CREDIT TERMINATION.\u2014Subsection (e) of section 45C, as redesignated by subsection (a)(1), is amended to read as follows: ”(e) TERMINATION.\u2014This section shall not apply to any amount paid or incurred\u2014 ”(1) after December 31, 1994, and before July 1, 1996, or ”(2) after May 31, 1997.”. (c) NO PRE-JULY 1, 1996 CARRYBACKS.\u2014Sub- section (d) of section 39 (relating to carryback and carryforward of unused credits) is amended by adding at the end the following new para- graph: ”(7) NO CARRYBACK OF SECTION 45C CREDIT BE- FORE JULY 1, 1996.\u2014No portion of the unused business credit for any taxable year which is at- tributable to the orphan drug credit determined under section 45C may be carried back to a tax- able year ending before July 1, 1996.”. (d) ADDITIONAL CONFORMING AMENDMENTS.\u2014 (1) Section 45C(a), as redesignated by sub- section (a)(1), is amended by striking ”There shall be allowed as a credit against the tax im- posed by this chapter for the taxable year” and inserting ”For purposes of section 38, the credit determined under this section for the taxable year is”. (2) Section 45C(d), as so redesignated, is amended by striking paragraph (2) and by re- designating paragraphs (3), (4), and (5) as para- graphs (2), (3), and (4). (3) Section 29(b)(6)(A) is amended by striking ”sections 27 and 28” and inserting ”section 27”. (4) Section 30(b)(3)(A) is amended by striking ”sections 27, 28, and 29” and inserting ”sections 27 and 29”. (5) Section 53(d)(1)(B) is amended\u2014 (A) by striking ”or not allowed under section 28 solely by reason of the application of section 28(d)(2)(B),” in clause (iii), and (B) by striking ”or not allowed under section 28 solely by reason of the application of section 28(d)(2)(B)” in clause (iv)(II). (6) Section 55(c)(2) is amended by striking ”28(d)(2),”. (7) Section 280C(b) is amended\u2014 (A) by striking ”section 28(b)” in paragraph (1) and inserting ”section 45C(b)”, (B) by striking ”section 28” in paragraphs (1) and (2)(A) and inserting ”section 45C”, and (C) by striking ”subsection (d)(2) thereof” in paragraphs (1) and (2)(A) and inserting ”section 38(c)”. (e) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to amounts paid or incurred in taxable years ending after June 30, 1996. SEC. 1206. CONTRIBUTIONS OF STOCK TO PRI- VATE FOUNDATIONS. (a) IN GENERAL.\u2014Subparagraph (D) of section 170(e)(5) (relating to special rule for contribu- tions of stock for which market quotations are readily available) is amended to read as follows: ”(D) TERMINATION.\u2014This paragraph shall not apply to contributions made\u2014 ”(i) after December 31, 1994, and before July 1, 1996, or ”(ii) after May 31, 1997.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to contributions made after June 30, 1996. SEC. 1207. EXTENSION OF BINDING CONTRACT DATE FOR BIOMASS AND COAL FA- CILITIES. (a) IN GENERAL.\u2014Subparagraph (A) of section 29(g)(1) (relating to extension of certain facili- ties) is amended by striking ”January 1, 1997” and inserting ”July 1, 1998” and by striking ”January 1, 1996” and inserting ”January 1, 1997”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall take effect on the date of the enactment of this Act. SEC. 1208. MORATORIUM FOR EXCISE TAX ON DIE- SEL FUEL SOLD FOR USE OR USED IN DIESEL-POWERED MOTORBOATS. Subparagraph (D) of section 4041(a)(1) (relat- ing to the imposition of tax on diesel fuel and special motor fuels) is amended by redesignating clauses (i) and (ii) as clauses (ii) and (iii), re- spectively, and by inserting before clause (ii) (as redesignated) the following new clause: ”(i) no tax shall be imposed by subsection (a) or (d)(1) during the period beginning on the date which is 7 days after the date of the enact- ment of the Small Business Job Protection Act of 1996 and ending on December 31, 1997,”. Subtitle C\u2014Provisions Relating to S Corporations SEC. 1301. S CORPORATIONS PERMITTED TO HAVE 75 SHAREHOLDERS. Subparagraph (A) of section 1361(b)(1) (defin- ing small business corporation) is amended by striking ”35 shareholders” and inserting ”75 shareholders”. SEC. 1302. ELECTING SMALL BUSINESS TRUSTS. (a) GENERAL RULE.\u2014Subparagraph (A) of sec- tion 1361(c)(2) (relating to certain trusts per- mitted as shareholders) is amended by inserting after clause (iv) the following new clause: ”(v) An electing small business trust.”. (b) CURRENT BENEFICIARIES TREATED AS SHAREHOLDERS.\u2014Subparagraph (B) of section 1361(c)(2) is amended by adding at the end the following new clause: ”(v) In the case of a trust described in clause (v) of subparagraph (A), each potential current beneficiary of such trust shall be treated as a shareholder; except that, if for any period there is no potential current beneficiary of such trust, such trust shall be treated as the shareholder during such period.”. (c) ELECTING SMALL BUSINESS TRUST DE- FINED.\u2014Section 1361 (defining S corporation) is amended by adding at the end the following new subsection: ”(e) ELECTING SMALL BUSINESS TRUST DE- FINED.\u2014 ”(1) ELECTING SMALL BUSINESS TRUST.\u2014For purposes of this section\u2014 ”(A) IN GENERAL.\u2014Except as provided in sub- paragraph (B), the term ‘electing small business trust’ means any trust if\u2014 ”(i) such trust does not have as a beneficiary any person other than (I) an individual, (II) an estate, or (III) an organization described in paragraph (2), (3), (4), or (5) of section 170(c) which holds a contingent interest and is not a potential current beneficiary, ”(ii) no interest in such trust was acquired by purchase, and ”(iii) an election under this subsection applies to such trust. ”(B) CERTAIN TRUSTS NOT ELIGIBLE.\u2014The term ‘electing small business trust’ shall not in- clude\u2014 ”(i) any qualified subchapter S trust (as de- fined in subsection (d)(3)) if an election under subsection (d)(2) applies to any corporation the stock of which is held by such trust, and ”(ii) any trust exempt from tax under this subtitle. ”(C) PURCHASE.\u2014For purposes of subpara- graph (A), the term ‘purchase’ means any ac- quisition if the basis of the property acquired is determined under section 1012. ”(2) POTENTIAL CURRENT BENEFICIARY.\u2014For purposes of this section, the term ‘potential cur- rent beneficiary’ means, with respect to any pe- riod, any person who at any time during such period is entitled to, or at the discretion of any person may receive, a distribution from the prin- cipal or income of the trust. If a trust disposes of all of the stock which it holds in an S cor- poration, then, with respect to such corporation, the term ‘potential current beneficiary’ does not include any person who first met the require- ments of the preceding sentence during the 60- day period ending on the date of such disposi- tion. ”(3) ELECTION.\u2014An election under this sub- section shall be made by the trustee. Any such election shall apply to the taxable year of the trust for which made and all subsequent taxable years of such trust unless revoked with the con- sent of the Secretary. ”(4) CROSS REFERENCE.\u2014 ”For special treatment of electing small business trusts, see section 641(d).”. (d) TAXATION OF ELECTING SMALL BUSINESS TRUSTS.\u2014Section 641 (relating to imposition of tax on trusts) is amended by adding at the end the following new subsection: ”(d) SPECIAL RULES FOR TAXATION OF ELECT- ING SMALL BUSINESS TRUSTS.\u2014 ”(1) IN GENERAL.\u2014For purposes of this chap- ter\u2014 ”(A) the portion of any electing small business trust which consists of stock in 1 or more S cor- porations shall be treated as a separate trust, and ”(B) the amount of the tax imposed by this chapter on such separate trust shall be deter- mined with the modifications of paragraph (2). ”(2) MODIFICATIONS.\u2014For purposes of para- graph (1), the modifications of this paragraph are the following: ”(A) Except as provided in section 1(h), the amount of the tax imposed by section 1(e) shall be determined by using the highest rate of tax set forth in section 1(e). ”(B) The exemption amount under section 55(d) shall be zero. ”(C) The only items of income, loss, deduc- tion, or credit to be taken into account are the following: CONGRESSIONAL RECORD \u2014 HOUSE H9575August 1, 1996 ”(i) The items required to be taken into ac- count under section 1366. ”(ii) Any gain or loss from the disposition of stock in an S corporation. ”(iii) To the extent provided in regulations, State or local income taxes or administrative ex- penses to the extent allocable to items described in clauses (i) and (ii). No deduction or credit shall be allowed for any amount not described in this paragraph, and no item described in this paragraph shall be appor- tioned to any beneficiary. ”(D) No amount shall be allowed under para- graph (1) or (2) of section 1211(b). ”(3) TREATMENT OF REMAINDER OF TRUST AND DISTRIBUTIONS.\u2014For purposes of determining\u2014 ”(A) the amount of the tax imposed by this chapter on the portion of any electing small business trust not treated as a separate trust under paragraph (1), and ”(B) the distributable net income of the entire trust, the items referred to in paragraph (2)(C) shall be excluded. Except as provided in the preceding sentence, this subsection shall not affect the taxation of any distribution from the trust. ”(4) TREATMENT OF UNUSED DEDUCTIONS WHERE TERMINATION OF SEPARATE TRUST.\u2014If a portion of an electing small business trust ceases to be treated as a separate trust under para- graph (1), any carryover or excess deduction of the separate trust which is referred to in section 642(h) shall be taken into account by the entire trust. ”(5) ELECTING SMALL BUSINESS TRUST.\u2014For purposes of this subsection, the term ‘electing small business trust’ has the meaning given such term by section 1361(e)(1).”. (e) TECHNICAL AMENDMENT.\u2014Paragraph (1) of section 1366(a) is amended by inserting ”, or of a trust or estate which terminates,” after ”who dies”. SEC. 1303. EXPANSION OF POST-DEATH QUALI- FICATION FOR CERTAIN TRUSTS. Subparagraph (A) of section 1361(c)(2) (relat- ing to certain trusts permitted as shareholders) is amended\u2014 (1) by striking ”60-day period” each place it appears in clauses (ii) and (iii) and inserting ”2- year period”, and (2) by striking the last sentence in clause (ii). SEC. 1304. FINANCIAL INSTITUTIONS PERMITTED TO HOLD SAFE HARBOR DEBT. Clause (iii) of section 1361(c)(5)(B) (defining straight debt) is amended by striking ”or a trust described in paragraph (2)” and inserting ”a trust described in paragraph (2), or a person which is actively and regularly engaged in the business of lending money”. SEC. 1305. RULES RELATING TO INADVERTENT TERMINATIONS AND INVALID ELEC- TIONS. (a) GENERAL RULE.\u2014Subsection (f) of section 1362 (relating to inadvertent terminations) is amended to read as follows: ”(f) INADVERTENT INVALID ELECTIONS OR TER- MINATIONS.\u2014If\u2014 ”(1) an election under subsection (a) by any corporation\u2014 ”(A) was not effective for the taxable year for which made (determined without regard to sub- section (b)(2)) by reason of a failure to meet the requirements of section 1361(b) or to obtain shareholder consents, or ”(B) was terminated under paragraph (2) or (3) of subsection (d), ”(2) the Secretary determines that the cir- cumstances resulting in such ineffectiveness or termination were inadvertent, ”(3) no later than a reasonable period of time after discovery of the circumstances resulting in such ineffectiveness or termination, steps were taken\u2014 ”(A) so that the corporation is a small busi- ness corporation, or ”(B) to acquire the required shareholder con- sents, and ”(4) the corporation, and each person who was a shareholder in the corporation at any time during the period specified pursuant to this subsection, agrees to make such adjustments (consistent with the treatment of the corpora- tion as an S corporation) as may be required by the Secretary with respect to such period, then, notwithstanding the circumstances result- ing in such ineffectiveness or termination, such corporation shall be treated as an S corporation during the period specified by the Secretary.”. (b) LATE ELECTIONS, ETC.\u2014Subsection (b) of section 1362 is amended by adding at the end the following new paragraph: ”(5) AUTHORITY TO TREAT LATE ELECTIONS, ETC., AS TIMELY.\u2014If\u2014 ”(A) an election under subsection (a) is made for any taxable year (determined without regard to paragraph (3)) after the date prescribed by this subsection for making such election for such taxable year or no such election is made for any taxable year, and ”(B) the Secretary determines that there was reasonable cause for the failure to timely make such election, the Secretary may treat such an election as timely made for such taxable year (and para- graph (3) shall not apply).”. (c) EFFECTIVE DATE.\u2014The amendments made by subsection (a) and (b) shall apply with re- spect to elections for taxable years beginning after December 31, 1982. SEC. 1306. AGREEMENT TO TERMINATE YEAR. Paragraph (2) of section 1377(a) (relating to pro rata share) is amended to read as follows: ”(2) ELECTION TO TERMINATE YEAR.\u2014 ”(A) IN GENERAL.\u2014Under regulations pre- scribed by the Secretary, if any shareholder ter- minates the shareholder’s interest in the cor- poration during the taxable year and all af- fected shareholders and the corporation agree to the application of this paragraph, paragraph (1) shall be applied to the affected shareholders as if the taxable year consisted of 2 taxable years the first of which ends on the date of the termi- nation. ”(B) AFFECTED SHAREHOLDERS.\u2014For purposes of subparagraph (A), the term ‘affected share- holders’ means the shareholder whose interest is terminated and all shareholders to whom such shareholder has transferred shares during the taxable year. If such shareholder has trans- ferred shares to the corporation, the term ‘af- fected shareholders’ shall include all persons who are shareholders during the taxable year.”. SEC. 1307. EXPANSION OF POST-TERMINATION TRANSITION PERIOD. (a) IN GENERAL.\u2014Paragraph (1) of section 1377(b) (relating to post-termination transition period) is amended by striking ”and” at the end of subparagraph (A), by redesignating subpara- graph (B) as subparagraph (C), and by inserting after subparagraph (A) the following new sub- paragraph: ”(B) the 120-day period beginning on the date of any determination pursuant to an audit of the taxpayer which follows the termination of the corporation’s election and which adjusts a subchapter S item of income, loss, or deduction of the corporation arising during the S period (as defined in section 1368(e)(2)), and”. (b) DETERMINATION DEFINED.\u2014Paragraph (2) of section 1377(b) is amended by striking sub- paragraphs (A) and (B), by redesignating sub- paragraph (C) as subparagraph (B), and by in- serting before subparagraph (B) (as so redesig- nated) the following new subparagraph: ”(A) a determination as defined in section 1313(a), or”. (c) REPEAL OF SPECIAL AUDIT PROVISIONS FOR SUBCHAPTER S ITEMS.\u2014 (1) GENERAL RULE.\u2014Subchapter D of chapter 63 (relating to tax treatment of subchapter S items) is hereby repealed. (2) CONSISTENT TREATMENT REQUIRED.\u2014Sec- tion 6037 (relating to return of S corporation) is amended by adding at the end the following new subsection: ”(c) SHAREHOLDER’S RETURN MUST BE CON- SISTENT WITH CORPORATE RETURN OR SEC- RETARY NOTIFIED OF INCONSISTENCY.\u2014 ”(1) IN GENERAL.\u2014A shareholder of an S cor- poration shall, on such shareholder’s return, treat a subchapter S item in a manner which is consistent with the treatment of such item on the corporate return. ”(2) NOTIFICATION OF INCONSISTENT TREAT- MENT.\u2014 ”(A) IN GENERAL.\u2014In the case of any sub- chapter S item, if\u2014 ”(i)(I) the corporation has filed a return but the shareholder’s treatment on his return is (or may be) inconsistent with the treatment of the item on the corporate return, or ”(II) the corporation has not filed a return, and ”(ii) the shareholder files with the Secretary a statement identifying the inconsistency, paragraph (1) shall not apply to such item. ”(B) SHAREHOLDER RECEIVING INCORRECT IN- FORMATION.\u2014A shareholder shall be treated as having complied with clause (ii) of subpara- graph (A) with respect to a subchapter S item if the shareholder\u2014 ”(i) demonstrates to the satisfaction of the Secretary that the treatment of the subchapter S item on the shareholder’s return is consistent with the treatment of the item on the schedule furnished to the shareholder by the corporation, and ”(ii) elects to have this paragraph apply with respect to that item. ”(3) EFFECT OF FAILURE TO NOTIFY.\u2014In any case\u2014 ”(A) described in subparagraph (A)(i)(I) of paragraph (2), and ”(B) in which the shareholder does not com- ply with subparagraph (A)(ii) of paragraph (2), any adjustment required to make the treatment of the items by such shareholder consistent with the treatment of the items on the corporate re- turn shall be treated as arising out of mathe- matical or clerical errors and assessed according to section 6213(b)(1). Paragraph (2) of section 6213(b) shall not apply to any assessment re- ferred to in the preceding sentence. ”(4) SUBCHAPTER S ITEM.\u2014For purposes of this subsection, the term ‘subchapter S item’ means any item of an S corporation to the ex- tent that regulations prescribed by the Secretary provide that, for purposes of this subtitle, such item is more appropriately determined at the corporation level than at the shareholder level. ”(5) ADDITION TO TAX FOR FAILURE TO COM- PLY WITH SECTION.\u2014 ”For addition to tax in the case of a share- holder’s negligence in connection with, or dis- regard of, the requirements of this section, see part II of subchapter A of chapter 68.”. (3) CONFORMING AMENDMENTS.\u2014 (A) Section 1366 is amended by striking sub- section (g). (B) Subsection (b) of section 6233 is amended to read as follows: ”(b) SIMILAR RULES IN CERTAIN CASES.\u2014If a partnership return is filed for any taxable year but it is determined that there is no entity for such taxable year, to the extent provided in reg- ulations, rules similar to the rules of subsection (a) shall apply.”. (C) The table of subchapters for chapter 63 is amended by striking the item relating to sub- chapter D. SEC. 1308. S CORPORATIONS PERMITTED TO HOLD SUBSIDIARIES. (a) IN GENERAL.\u2014Paragraph (2) of section 1361(b) (defining ineligible corporation) is amended by striking subparagraph (A) and by redesignating subparagraphs (B), (C), (D), and (E) as subparagraphs (A), (B), (C), and (D), re- spectively. (b) TREATMENT OF CERTAIN WHOLLY OWNED S CORPORATION SUBSIDIARIES.\u2014Section 1361(b) (defining small business corporation) is amended by adding at the end the following new para- graph: CONGRESSIONAL RECORD \u2014 HOUSEH9576 August 1, 1996 ”(3) TREATMENT OF CERTAIN WHOLLY OWNED SUBSIDIARIES.\u2014 ”(A) IN GENERAL.\u2014For purposes of this title\u2014 ”(i) a corporation which is a qualified sub- chapter S subsidiary shall not be treated as a separate corporation, and ”(ii) all assets, liabilities, and items of income, deduction, and credit of a qualified subchapter S subsidiary shall be treated as assets, liabil- ities, and such items (as the case may be) of the S corporation. ”(B) QUALIFIED SUBCHAPTER S SUBSIDIARY.\u2014 For purposes of this paragraph, the term ‘quali- fied subchapter S subsidiary’ means any domes- tic corporation which is not an ineligible cor- poration (as defined in paragraph (2)), if\u2014 ”(i) 100 percent of the stock of such corpora- tion is held by the S corporation, and ”(ii) the S corporation elects to treat such cor- poration as a qualified subchapter S subsidiary. ”(C) TREATMENT OF TERMINATIONS OF QUALI- FIED SUBCHAPTER S SUBSIDIARY STATUS.\u2014For purposes of this title, if any corporation which was a qualified subchapter S subsidiary ceases to meet the requirements of subparagraph (B), such corporation shall be treated as a new cor- poration acquiring all of its assets (and assum- ing all of its liabilities) immediately before such cessation from the S corporation in exchange for its stock. ”(D) ELECTION AFTER TERMINATION.\u2014If a cor- poration’s status as a qualified subchapter S subsidiary terminates, such corporation (and any successor corporation) shall not be eligible to make\u2014 ”(i) an election under subparagraph (B)(ii) to be treated as a qualified subchapter S subsidi- ary, or ”(ii) an election under section 1362(a) to be treated as an S corporation, before its 5th taxable year which begins after the 1st taxable year for which such termination was effective, unless the Secretary consents to such election.”. (c) CERTAIN DIVIDENDS NOT TREATED AS PAS- SIVE INVESTMENT INCOME.\u2014Paragraph (3) of section 1362(d) is amended by adding at the end the following new subparagraph: ”(F) TREATMENT OF CERTAIN DIVIDENDS.\u2014If an S corporation holds stock in a C corporation meeting the requirements of section 1504(a)(2), the term ‘passive investment income’ shall not include dividends from such C corporation to the extent such dividends are attributable to the earnings and profits of such C corporation de- rived from the active conduct of a trade or busi- ness.”. (d) CONFORMING AMENDMENTS.\u2014 (1) Subsection (c) of section 1361 is amended by striking paragraph (6). (2) Subsection (b) of section 1504 (defining in- cludible corporation) is amended by adding at the end the following new paragraph: ”(8) An S corporation.”. SEC. 1309. TREATMENT OF DISTRIBUTIONS DUR- ING LOSS YEARS. (a) ADJUSTMENTS FOR DISTRIBUTIONS TAKEN INTO ACCOUNT BEFORE LOSSES.\u2014 (1) Subparagraph (A) of section 1366(d)(1) (re- lating to losses and deductions cannot exceed shareholder’s basis in stock and debt) is amend- ed by striking ”paragraph (1)” and inserting ”paragraphs (1) and (2)(A)”. (2) Subsection (d) of section 1368 (relating to certain adjustments taken into account) is amended by adding at the end the following new sentence: ”In the case of any distribution made during any taxable year, the adjusted basis of the stock shall be determined with regard to the adjust- ments provided in paragraph (1) of section 1367(a) for the taxable year.”. (b) ACCUMULATED ADJUSTMENTS ACCOUNT.\u2014 Paragraph (1) of section 1368(e) (relating to ac- cumulated adjustments account) is amended by adding at the end the following new subpara- graph: ”(C) NET LOSS FOR YEAR DISREGARDED.\u2014 ”(i) IN GENERAL.\u2014In applying this section to distributions made during any taxable year, the amount in the accumulated adjustments ac- count as of the close of such taxable year shall be determined without regard to any net nega- tive adjustment for such taxable year. ”(ii) NET NEGATIVE ADJUSTMENT.\u2014For pur- poses of clause (i), the term ‘net negative adjust- ment’ means, with respect to any taxable year, the excess (if any) of\u2014 ”(I) the reductions in the account for the tax- able year (other than for distributions), over ”(II) the increases in such account for such taxable year.”. (c) CONFORMING AMENDMENTS.\u2014Subpara- graph (A) of section 1368(e)(1) is amended\u2014 (1) by striking ”as provided in subparagraph (B)” and inserting ”as otherwise provided in this paragraph”, and (2) by striking ”section 1367(b)(2)(A)” and in- serting ”section 1367(a)(2)”. SEC. 1310. TREATMENT OF S CORPORATIONS UNDER SUBCHAPTER C. Subsection (a) of section 1371 (relating to ap- plication of subchapter C rules) is amended to read as follows: ”(a) APPLICATION OF SUBCHAPTER C RULES.\u2014 Except as otherwise provided in this title, and except to the extent inconsistent with this sub- chapter, subchapter C shall apply to an S cor- poration and its shareholders.”. SEC. 1311. ELIMINATION OF CERTAIN EARNINGS AND PROFITS. (a) IN GENERAL.\u2014If\u2014 (1) a corporation was an electing small busi- ness corporation under subchapter S of chapter 1 of the Internal Revenue Code of 1986 for any taxable year beginning before January 1, 1983, and (2) such corporation is an S corporation under subchapter S of chapter 1 of such Code for its first taxable year beginning after December 31, 1996, the amount of such corporation’s accumulated earnings and profits (as of the beginning of such first taxable year) shall be reduced by an amount equal to the portion (if any) of such ac- cumulated earnings and profits which were ac- cumulated in any taxable year beginning before January 1, 1983, for which such corporation was an electing small business corporation under such subchapter S. (b) CONFORMING AMENDMENTS.\u2014 (1) Paragraph (3) of section 1362(d), as amend- ed by section 1308, is amended\u2014 (A) by striking ”SUBCHAPTER C” in the para- graph heading and inserting ”ACCUMULATED”, (B) by striking ”subchapter C” in subpara- graph (A)(i)(I) and inserting ”accumulated”, and (C) by striking subparagraph (B) and redesig- nating the following subparagraphs accord- ingly. (2)(A) Subsection (a) of section 1375 is amend- ed by striking ”subchapter C” in paragraph (1) and inserting ”accumulated”. (B) Paragraph (3) of section 1375(b) is amend- ed to read as follows: ”(3) PASSIVE INVESTMENT INCOME, ETC.\u2014The terms ‘passive investment income’ and ‘gross re- ceipts’ have the same respective meanings as when used in paragraph (3) of section 1362(d).”. (C) The section heading for section 1375 is amended by striking ”SUBCHAPTER C” and inserting ”ACCUMULATED”. (D) The table of sections for part III of sub- chapter S of chapter 1 is amended by striking ”subchapter C” in the item relating to section 1375 and inserting ”accumulated”. (3) Clause (i) of section 1042(c)(4)(A) is amend- ed by striking ”section 1362(d)(3)(D)” and in- serting ”section 1362(d)(3)(C)”. SEC. 1312. CARRYOVER OF DISALLOWED LOSSES AND DEDUCTIONS UNDER AT-RISK RULES ALLOWED. Paragraph (3) of section 1366(d) (relating to carryover of disallowed losses and deductions to post-termination transition period) is amended by adding at the end the following new sub- paragraph: ”(D) AT-RISK LIMITATIONS.\u2014To the extent that any increase in adjusted basis described in subparagraph (B) would have increased the shareholder’s amount at risk under section 465 if such increase had occurred on the day preced- ing the commencement of the post-termination transition period, rules similar to the rules de- scribed in subparagraphs (A) through (C) shall apply to any losses disallowed by reason of sec- tion 465(a).”. SEC. 1313. ADJUSTMENTS TO BASIS OF INHER- ITED S STOCK TO REFLECT CERTAIN ITEMS OF INCOME. (a) IN GENERAL.\u2014Subsection (b) of section 1367 (relating to adjustments to basis of stock of shareholders, etc.) is amended by adding at the end the following new paragraph: ”(4) ADJUSTMENTS IN CASE OF INHERITED STOCK.\u2014 ”(A) IN GENERAL.\u2014If any person acquires stock in an S corporation by reason of the death of a decedent or by bequest, devise, or inherit- ance, section 691 shall be applied with respect to any item of income of the S corporation in the same manner as if the decedent had held di- rectly his pro rata share of such item. ”(B) ADJUSTMENTS TO BASIS.\u2014The basis deter- mined under section 1014 of any stock in an S corporation shall be reduced by the portion of the value of the stock which is attributable to items constituting income in respect of the dece- dent.”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall apply in the case of dece- dents dying after the date of the enactment of this Act. SEC. 1314. S CORPORATIONS ELIGIBLE FOR RULES APPLICABLE TO REAL PROP- ERTY SUBDIVIDED FOR SALE BY NONCORPORATE TAXPAYERS. (a) IN GENERAL.\u2014Subsection (a) of section 1237 (relating to real property subdivided for sale) is amended by striking ”other than a cor- poration” in the material preceding paragraph (1) and inserting ”other than a C corporation”. (b) CONFORMING AMENDMENT.\u2014Subparagraph (A) of section 1237(a)(2) is amended by inserting ”an S corporation which included the taxpayer as a shareholder,” after ”controlled by the tax- payer,”. SEC. 1315. FINANCIAL INSTITUTIONS. Subparagraph (A) of section 1361(b)(2) (defin- ing ineligible corporation), as redesignated by section 1308(a), is amended to read as follows: ”(A) a financial institution which uses the re- serve method of accounting for bad debts de- scribed in section 585,”. SEC. 1316. CERTAIN EXEMPT ORGANIZATIONS AL- LOWED TO BE SHAREHOLDERS. (a) ELIGIBILITY TO BE SHAREHOLDERS.\u2014 (1) IN GENERAL.\u2014Subparagraph (B) of section 1361(b)(1) (defining small business corporation) is amended to read as follows: ”(B) have as a shareholder a person (other than an estate, a trust described in subsection (c)(2), or an organization described in sub- section (c)(7)) who is not an individual,”. (2) ELIGIBLE EXEMPT ORGANIZATIONS.\u2014Section 1361(c) (relating to special rules for applying subsection (b)) is amended by adding at the end the following new paragraph: ”(7) CERTAIN EXEMPT ORGANIZATIONS PER- MITTED AS SHAREHOLDERS.\u2014For purposes of subsection (b)(1)(B), an organization which is\u2014 ”(A) described in section 401(a) or 501(c)(3), and ”(B) exempt from taxation under section 501(a), may be a shareholder in an S corporation.”. (b) CONTRIBUTIONS OF S CORPORATION STOCK.\u2014Section 170(e)(1) (relating to certain contributions of ordinary income and capital gain property) is amended by adding at the end the following new sentence: ”For purposes of CONGRESSIONAL RECORD \u2014 HOUSE H9577August 1, 1996 applying this paragraph in the case of a chari- table contribution of stock in an S corporation, rules similar to the rules of section 751 shall apply in determining whether gain on such stock would have been long-term capital gain if such stock were sold by the taxpayer.”. (c) TREATMENT OF INCOME.\u2014Section 512 (re- lating to unrelated business taxable income), as amended by section 1113, is amended by adding at the end the following new subsection: ”(e) SPECIAL RULES APPLICABLE TO S COR- PORATIONS.\u2014 ”(1) IN GENERAL.\u2014If an organization de- scribed in section 1361(c)(7) holds stock in an S corporation\u2014 ”(A) such interest shall be treated as an inter- est in an unrelated trade or business; and ”(B) notwithstanding any other provision of this part\u2014 ”(i) all items of income, loss, or deduction taken into account under section 1366(a), and ”(ii) any gain or loss on the disposition of the stock in the S corporation shall be taken into account in computing the unrelated business taxable income of such orga- nization. ”(2) BASIS REDUCTION.\u2014Except as provided in regulations, for purposes of paragraph (1), the basis of any stock acquired by purchase (within the meaning of section 1012) shall be reduced by the amount of any dividends received by the or- ganization with respect to the stock.”. (d) CERTAIN BENEFITS NOT APPLICABLE TO S CORPORATIONS.\u2014 (1) CONTRIBUTION TO ESOPS.\u2014Paragraph (9) of section 404(a) (relating to certain contribu- tions to employee ownership plans) is amended by inserting at the end the following new sub- paragraph: ”(C) S CORPORATIONS.\u2014This paragraph shall not apply to an S corporation.”. (2) DIVIDENDS ON EMPLOYER SECURITIES.\u2014 Paragraph (1) of section 404(k) (relating to de- duction for dividends on certain employer secu- rities) is amended by striking ”a corporation” and inserting ”a C corporation”. (3) EXCHANGE TREATMENT.\u2014Subparagraph (A) of section 1042(c)(1) (defining qualified securi- ties) is amended by striking ”domestic corpora- tion” and inserting ”domestic C corporation”. (e) CONFORMING AMENDMENT.\u2014Clause (i) of section 1361(e)(1)(A), as added by section 1302, is amended by striking ”which holds a contingent interest and is not a potential current bene- ficiary”. (f) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to taxable years be- ginning after December 31, 1997. SEC. 1317. EFFECTIVE DATE. (a) IN GENERAL.\u2014Except as otherwise pro- vided in this subtitle, the amendments made by this subtitle shall apply to taxable years begin- ning after December 31, 1996. (b) TREATMENT OF CERTAIN ELECTIONS UNDER PRIOR LAW.\u2014For purposes of section 1362(g) of the Internal Revenue Code of 1986 (relating to election after termination), any termination under section 1362(d) of such Code in a taxable year beginning before January 1, 1997, shall not be taken into account. Subtitle D\u2014Pension Simplification CHAPTER 1\u2014SIMPLIFIED DISTRIBUTION RULES SEC. 1401. REPEAL OF 5-YEAR INCOME AVERAG- ING FOR LUMP-SUM DISTRIBUTIONS. (a) IN GENERAL.\u2014Subsection (d) of section 402 (relating to taxability of beneficiary of employ- ees’ trust) is amended to read as follows: ”(d) TAXABILITY OF BENEFICIARY OF CERTAIN FOREIGN SITUS TRUSTS.\u2014For purposes of sub- sections (a), (b), and (c), a stock bonus, pension, or profit-sharing trust which would qualify for exemption from tax under section 501(a) except for the fact that it is a trust created or orga- nized outside the United States shall be treated as if it were a trust exempt from tax under sec- tion 501(a).”. (b) CONFORMING AMENDMENTS.\u2014 (1) Subparagraph (D) of section 402(e)(4) (re- lating to other rules applicable to exempt trusts) is amended to read as follows: ”(D) LUMP-SUM DISTRIBUTION.\u2014For purposes of this paragraph\u2014 ”(i) IN GENERAL.\u2014The term ‘lump sum dis- tribution’ means the distribution or payment within one taxable year of the recipient of the balance to the credit of an employee which be- comes payable to the recipient\u2014 ”(I) on account of the employee’s death, ”(II) after the employee attains age 591\u20442, ”(III) on account of the employee’s separation from service, or ”(IV) after the employee has become disabled (within the meaning of section 72(m)(7)), from a trust which forms a part of a plan de- scribed in section 401(a) and which is exempt from tax under section 501 or from a plan de- scribed in section 403(a). Subclause (III) of this clause shall be applied only with respect to an individual who is an employee without regard to section 401(c)(1), and subclause (IV) shall be ap- plied only with respect to an employee within the meaning of section 401(c)(1). For purposes of this clause, a distribution to two or more trusts shall be treated as a distribution to one recipi- ent. For purposes of this paragraph, the balance to the credit of the employee does not include the accumulated deductible employee contribu- tions under the plan (within the meaning of sec- tion 72(o)(5)). ”(ii) AGGREGATION OF CERTAIN TRUSTS AND PLANS.\u2014For purposes of determining the bal- ance to the credit of an employee under clause (i)\u2014 ”(I) all trusts which are part of a plan shall be treated as a single trust, all pension plans maintained by the employer shall be treated as a single plan, all profit-sharing plans main- tained by the employer shall be treated as a sin- gle plan, and all stock bonus plans maintained by the employer shall be treated as a single plan, and ”(II) trusts which are not qualified trusts under section 401(a) and annuity contracts which do not satisfy the requirements of section 404(a)(2) shall not be taken into account. ”(iii) COMMUNITY PROPERTY LAWS.\u2014The pro- visions of this paragraph shall be applied with- out regard to community property laws. ”(iv) AMOUNTS SUBJECT TO PENALTY.\u2014This paragraph shall not apply to amounts described in subparagraph (A) of section 72(m)(5) to the extent that section 72(m)(5) applies to such amounts. ”(v) BALANCE TO CREDIT OF EMPLOYEE NOT TO INCLUDE AMOUNTS PAYABLE UNDER QUALIFIED DOMESTIC RELATIONS ORDER.\u2014For purposes of this paragraph, the balance to the credit of an employee shall not include any amount payable to an alternate payee under a qualified domestic relations order (within the meaning of section 414(p)). ”(vi) TRANSFERS TO COST-OF-LIVING ARRANGE- MENT NOT TREATED AS DISTRIBUTION.\u2014For pur- poses of this paragraph, the balance to the cred- it of an employee under a defined contribution plan shall not include any amount transferred from such defined contribution plan to a quali- fied cost-of-living arrangement (within the meaning of section 415(k)(2)) under a defined benefit plan. ”(vii) LUMP-SUM DISTRIBUTIONS OF ALTERNATE PAYEES.\u2014If any distribution or payment of the balance to the credit of an employee would be treated as a lump-sum distribution, then, for purposes of this paragraph, the payment under a qualified domestic relations order (within the meaning of section 414(p)) of the balance to the credit of an alternate payee who is the spouse or former spouse of the employee shall be treated as a lump-sum distribution. For purposes of this clause, the balance to the credit of the alternate payee shall not include any amount payable to the employee.”. (2) Section 402(c) (relating to rules applicable to rollovers from exempt trusts) is amended by striking paragraph (10). (3) Paragraph (1) of section 55(c) (defining regular tax) is amended by striking ”shall not include any tax imposed by section 402(d) and”. (4) Paragraph (8) of section 62(a) (relating to certain portion of lump-sum distributions from pension plans taxed under section 402(d)) is hereby repealed. (5) Section 401(a)(28)(B) (relating to coordina- tion with distribution rules) is amended by strik- ing clause (v). (6) Subparagraph (B)(ii) of section 401(k)(10) (relating to distributions that must be lump-sum distributions) is amended to read as follows: ”(ii) LUMP-SUM DISTRIBUTION.\u2014For purposes of this subparagraph, the term ‘lump-sum dis- tribution’ has the meaning given such term by section 402(e)(4)(D) (without regard to sub- clauses (I), (II), (III), and (IV) of clause (i) thereof).”. (7) Section 406(c) (relating to termination of status as deemed employee not to be treated as separation from service for purposes of limita- tion of tax) is hereby repealed. (8) Section 407(c) (relating to termination of status as deemed employee not to be treated as separation from service for purposes of limita- tion of tax) is hereby repealed. (9) Section 691(c) (relating to deduction for es- tate tax) is amended by striking paragraph (5). (10) Paragraph (1) of section 871(b) (relating to imposition of tax) is amended by striking ”section 1, 55, or 402(d)(1)” and inserting ”sec- tion 1 or 55”. (11) Subsection (b) of section 877 (relating to alternative tax) is amended by striking ”section 1, 55, or 402(d)(1)” and inserting ”section 1 or 55”. (12) Section 4980A(c)(4) is amended\u2014 (A) by striking ”to which an election under section 402(d)(4)(B) applies” and inserting ”(as defined in section 402(e)(4)(D)) with respect to which the individual elects to have this para- graph apply”, (B) by adding at the end the following new flush sentence: ”An individual may elect to have this para- graph apply to only one lump-sum distribu- tion.”, and (C) by striking the heading and inserting: ”(4) SPECIAL ONE-TIME ELECTION.\u2014”. (13) Section 402(e) is amended by striking paragraph (5). (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to taxable years begin- ning after December 31, 1999. (2) RETENTION OF CERTAIN TRANSITION RULES.\u2014The amendments made by this section shall not apply to any distribution for which the taxpayer is eligible to elect the benefits of section 1122 (h)(3) or (h)(5) of the Tax Reform Act of 1986. Notwithstanding the preceding sen- tence, individuals who elect such benefits after December 31, 1999, shall not be eligible for 5-year averaging under section 402(d) of the Internal Revenue Code of 1986 (as in effect immediately before such amendments). SEC. 1402. REPEAL OF $5,000 EXCLUSION OF EM- PLOYEES’ DEATH BENEFITS. (a) IN GENERAL.\u2014Subsection (b) of section 101 is hereby repealed. (b) CONFORMING AMENDMENTS.\u2014 (1) Subsection (c) of section 101 is amended by striking ”subsection (a) or (b)” and inserting ”subsection (a)”. (2) Sections 406(e) and 407(e) are each amend- ed by striking paragraph (2) and by redesignat- ing paragraph (3) as paragraph (2). (3) Section 7701(a)(20) is amended by striking ”, for the purpose of applying the provisions of section 101(b) with respect to employees’ death benefits”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply with respect to dece- dents dying after the date of the enactment of this Act. CONGRESSIONAL RECORD \u2014 HOUSEH9578 August 1, 1996 SEC. 1403. SIMPLIFIED METHOD FOR TAXING AN- NUITY DISTRIBUTIONS UNDER CER- TAIN EMPLOYER PLANS. (a) GENERAL RULE.\u2014Subsection (d) of section 72 (relating to annuities; certain proceeds of en- dowment and life insurance contracts) is amended to read as follows: ”(d) SPECIAL RULES FOR QUALIFIED EM- PLOYER RETIREMENT PLANS.\u2014 ”(1) SIMPLIFIED METHOD OF TAXING ANNUITY PAYMENTS.\u2014 ”(A) IN GENERAL.\u2014In the case of any amount received as an annuity under a qualified em- ployer retirement plan\u2014 ”(i) subsection (b) shall not apply, and ”(ii) the investment in the contract shall be recovered as provided in this paragraph. ”(B) METHOD OF RECOVERING INVESTMENT IN CONTRACT.\u2014 ”(i) IN GENERAL.\u2014Gross income shall not in- clude so much of any monthly annuity payment under a qualified employer retirement plan as does not exceed the amount obtained by divid- ing\u2014 ”(I) the investment in the contract (as of the annuity starting date), by ”(II) the number of anticipated payments de- termined under the table contained in clause (iii) (or, in the case of a contract to which sub- section (c)(3)(B) applies, the number of monthly annuity payments under such contract). ”(ii) CERTAIN RULES MADE APPLICABLE.\u2014Rules similar to the rules of paragraphs (2) and (3) of subsection (b) shall apply for purposes of this paragraph. ”(iii) NUMBER OF ANTICIPATED PAYMENTS.\u2014 ”If the age of the primary annuitant on the annuity starting date is: The number of anticipated payments is: Not more than 55 … 360 More than 55 but not more than 60 ….. 310 More than 60 but not more than 65 ….. 260 More than 65 but not more than 70 ….. 210 More than 70 ……… 160. ”(C) ADJUSTMENT FOR REFUND FEATURE NOT APPLICABLE.\u2014For purposes of this paragraph, investment in the contract shall be determined under subsection (c)(1) without regard to sub- section (c)(2). ”(D) SPECIAL RULE WHERE LUMP SUM PAID IN CONNECTION WITH COMMENCEMENT OF ANNUITY PAYMENTS.\u2014If, in connection with the com- mencement of annuity payments under any qualified employer retirement plan, the taxpayer receives a lump sum payment\u2014 ”(i) such payment shall be taxable under sub- section (e) as if received before the annuity starting date, and ”(ii) the investment in the contract for pur- poses of this paragraph shall be determined as if such payment had been so received. ”(E) EXCEPTION.\u2014This paragraph shall not apply in any case where the primary annuitant has attained age 75 on the annuity starting date unless there are fewer than 5 years of guaran- teed payments under the annuity. ”(F) ADJUSTMENT WHERE ANNUITY PAYMENTS NOT ON MONTHLY BASIS.\u2014In any case where the annuity payments are not made on a monthly basis, appropriate adjustments in the applica- tion of this paragraph shall be made to take into account the period on the basis of which such payments are made. ”(G) QUALIFIED EMPLOYER RETIREMENT PLAN.\u2014For purposes of this paragraph, the term ‘qualified employer retirement plan’ means any plan or contract described in paragraph (1), (2), or (3) of section 4974(c). ”(2) TREATMENT OF EMPLOYEE CONTRIBUTIONS UNDER DEFINED CONTRIBUTION PLANS.\u2014For pur- poses of this section, employee contributions (and any income allocable thereto) under a de- fined contribution plan may be treated as a sep- arate contract.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply in cases where the annuity starting date is after the 90th day after the date of the enactment of this Act. SEC. 1404. REQUIRED DISTRIBUTIONS. (a) IN GENERAL.\u2014Section 401(a)(9)(C) (defin- ing required beginning date) is amended to read as follows: ”(C) REQUIRED BEGINNING DATE.\u2014For pur- poses of this paragraph\u2014 ”(i) IN GENERAL.\u2014The term ‘required begin- ning date’ means April 1 of the calendar year following the later of\u2014 ”(I) the calendar year in which the employee attains age 701\u20442, or ”(II) the calendar year in which the employee retires. ”(ii) EXCEPTION.\u2014Subclause (II) of clause (i) shall not apply\u2014 ”(I) except as provided in section 409(d), in the case of an employee who is a 5-percent owner (as defined in section 416) with respect to the plan year ending in the calendar year in which the employee attains age 701\u20442, or ”(II) for purposes of section 408 (a)(6) or (b)(3). ”(iii) ACTUARIAL ADJUSTMENT.\u2014In the case of an employee to whom clause (i)(II) applies who retires in a calendar year after the calendar year in which the employee attains age 701\u20442, the employee’s accrued benefit shall be actuarially increased to take into account the period after age 701\u20442 in which the employee was not receiv- ing any benefits under the plan. ”(iv) EXCEPTION FOR GOVERNMENTAL AND CHURCH PLANS.\u2014Clauses (ii) and (iii) shall not apply in the case of a governmental plan or church plan. For purposes of this clause, the term ‘church plan’ means a plan maintained by a church for church employees, and the term ‘church’ means any church (as defined in sec- tion 3121(w)(3)(A)) or qualified church-con- trolled organization (as defined in section 3121(w)(3)(B)).”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall apply to years beginning after December 31, 1996. CHAPTER 2\u2014INCREASED ACCESS TO RETIREMENT PLANS Subchapter A\u2014Simple Savings Plans SEC. 1421. ESTABLISHMENT OF SAVINGS INCEN- TIVE MATCH PLANS FOR EMPLOYEES OF SMALL EMPLOYERS. (a) IN GENERAL.\u2014Section 408 (relating to indi- vidual retirement accounts) is amended by re- designating subsection (p) as subsection (q) and by inserting after subsection (o) the following new subsection: ”(p) SIMPLE RETIREMENT ACCOUNTS.\u2014 ”(1) IN GENERAL.\u2014For purposes of this title, the term ‘simple retirement account’ means an individual retirement plan (as defined in section 7701(a)(37))\u2014 ”(A) with respect to which the requirements of paragraphs (3), (4), and (5) are met; and ”(B) with respect to which the only contribu- tions allowed are contributions under a quali- fied salary reduction arrangement. ”(2) QUALIFIED SALARY REDUCTION ARRANGE- MENT.\u2014 ”(A) IN GENERAL.\u2014For purposes of this sub- section, the term ‘qualified salary reduction ar- rangement’ means a written arrangement of an eligible employer under which\u2014 ”(i) an employee eligible to participate in the arrangement may elect to have the employer make payments\u2014 ”(I) as elective employer contributions to a simple retirement account on behalf of the em- ployee, or ”(II) to the employee directly in cash, ”(ii) the amount which an employee may elect under clause (i) for any year is required to be expressed as a percentage of compensation and may not exceed a total of $6,000 for any year, ”(iii) the employer is required to make a matching contribution to the simple retirement account for any year in an amount equal to so much of the amount the employee elects under clause (i)(I) as does not exceed the applicable percentage of compensation for the year, and ”(iv) no contributions may be made other than contributions described in clause (i) or (iii). ”(B) EMPLOYER MAY ELECT 2-PERCENT NON- ELECTIVE CONTRIBUTION.\u2014 ”(i) IN GENERAL.\u2014An employer shall be treat- ed as meeting the requirements of subparagraph (A)(iii) for any year if, in lieu of the contribu- tions described in such clause, the employer elects to make nonelective contributions of 2 per- cent of compensation for each employee who is eligible to participate in the arrangement and who has at least $5,000 of compensation from the employer for the year. If an employer makes an election under this subparagraph for any year, the employer shall notify employees of such election within a reasonable period of time before the 60-day period for such year under paragraph (5)(C). ”(ii) COMPENSATION LIMITATION.\u2014The com- pensation taken into account under clause (i) for any year shall not exceed the limitation in effect for such year under section 401(a)(17). ”(C) DEFINITIONS.\u2014For purposes of this sub- section\u2014 ”(i) ELIGIBLE EMPLOYER.\u2014 ”(I) IN GENERAL.\u2014The term ‘eligible employer’ means, with respect to any year, an employer which had no more than 100 employees who re- ceived at least $5,000 of compensation from the employer for the preceding year. ”(II) 2-YEAR GRACE PERIOD.\u2014An eligible em- ployer who establishes and maintains a plan under this subsection for 1 or more years and who fails to be an eligible employer for any sub- sequent year shall be treated as an eligible em- ployer for the 2 years following the last year the employer was an eligible employer. If such fail- ure is due to any acquisition, disposition, or similar transaction involving an eligible em- ployer, the preceding sentence shall apply only in accordance with rules similar to the rules of section 410(b)(6)(C)(i). ”(ii) APPLICABLE PERCENTAGE.\u2014 ”(I) IN GENERAL.\u2014The term ‘applicable per- centage’ means 3 percent. ”(II) ELECTION OF LOWER PERCENTAGE.\u2014An employer may elect to apply a lower percentage (not less than 1 percent) for any year for all em- ployees eligible to participate in the plan for such year if the employer notifies the employees of such lower percentage within a reasonable period of time before the 60-day election period for such year under paragraph (5)(C). An em- ployer may not elect a lower percentage under this subclause for any year if that election would result in the applicable percentage being lower than 3 percent in more than 2 of the years in the 5-year period ending with such year. ”(III) SPECIAL RULE FOR YEARS ARRANGEMENT NOT IN EFFECT.\u2014If any year in the 5-year period described in subclause (II) is a year prior to the first year for which any qualified salary reduc- tion arrangement is in effect with respect to the employer (or any predecessor), the employer shall be treated as if the level of the employer matching contribution was at 3 percent of com- pensation for such prior year. ”(D) ARRANGEMENT MAY BE ONLY PLAN OF EM- PLOYER.\u2014 ”(i) IN GENERAL.\u2014An arrangement shall not be treated as a qualified salary reduction ar- rangement for any year if the employer (or any predecessor employer) maintained a qualified plan with respect to which contributions were made, or benefits were accrued, for service in any year in the period beginning with the year such arrangement became effective and ending with the year for which the determination is being made. ”(ii) QUALIFIED PLAN.\u2014For purposes of this subparagraph, the term ‘qualified plan’ means a CONGRESSIONAL RECORD \u2014 HOUSE H9579August 1, 1996 plan, contract, pension, or trust described in subparagraph (A) or (B) of section 219(g)(5). ”(E) COST-OF-LIVING ADJUSTMENT.\u2014The Sec- retary shall adjust the $6,000 amount under sub- paragraph (A)(ii) at the same time and in the same manner as under section 415(d), except that the base period taken into account shall be the calendar quarter ending September 30, 1996, and any increase under this subparagraph which is not a multiple of $500 shall be rounded to the next lower multiple of $500. ”(3) VESTING REQUIREMENTS.\u2014The require- ments of this paragraph are met with respect to a simple retirement account if the employee’s rights to any contribution to the simple retire- ment account are nonforfeitable. For purposes of this paragraph, rules similar to the rules of subsection (k)(4) shall apply. ”(4) PARTICIPATION REQUIREMENTS.\u2014 ”(A) IN GENERAL.\u2014The requirements of this paragraph are met with respect to any simple retirement account for a year only if, under the qualified salary reduction arrangement, all em- ployees of the employer who\u2014 ”(i) received at least $5,000 in compensation from the employer during any 2 preceding years, and ”(ii) are reasonably expected to receive at least $5,000 in compensation during the year, are eligible to make the election under para- graph (2)(A)(i) or receive the nonelective con- tribution described in paragraph (2)(B). ”(B) EXCLUDABLE EMPLOYEES.\u2014An employer may elect to exclude from the requirement under subparagraph (A) employees described in section 410(b)(3). ”(5) ADMINISTRATIVE REQUIREMENTS.\u2014The re- quirements of this paragraph are met with re- spect to any simplified retirement account if, under the qualified salary reduction arrange- ment\u2014 ”(A) an employer must\u2014 ”(i) make the elective employer contributions under paragraph (2)(A)(i) not later than the close of the 30-day period following the last day of the month with respect to which the contribu- tions are to be made, and ”(ii) make the matching contributions under paragraph (2)(A)(iii) or the nonelective con- tributions under paragraph (2)(B) not later than the date described in section 404(m)(2)(B), ”(B) an employee may elect to terminate par- ticipation in such arrangement at any time dur- ing the year, except that if an employee so ter- minates, the arrangement may provide that the employee may not elect to resume participation until the beginning of the next year, and ”(C) each employee eligible to participate may elect, during the 60-day period before the begin- ning of any year (and the 60-day period before the first day such employee is eligible to partici- pate), to participate in the arrangement, or to modify the amounts subject to such arrange- ment, for such year. ”(6) DEFINITIONS.\u2014For purposes of this sub- section\u2014 ”(A) COMPENSATION.\u2014 ”(i) IN GENERAL.\u2014The term ‘compensation’ means amounts described in paragraphs (3) and (8) of section 6051(a). ”(ii) SELF-EMPLOYED.\u2014In the case of an em- ployee described in subparagraph (B), the term ‘compensation’ means net earnings from self-em- ployment determined under section 1402(a) with- out regard to any contribution under this sub- section. ”(B) EMPLOYEE.\u2014The term ’employee’ in- cludes an employee as defined in section 401(c)(1). ”(C) YEAR.\u2014The term ‘year’ means the cal- endar year. ”(7) USE OF DESIGNATED FINANCIAL INSTITU- TION.\u2014A plan shall not be treated as failing to satisfy the requirements of this subsection or any other provision of this title merely because the employer makes all contributions to the indi- vidual retirement accounts or annuities of a des- ignated trustee or issuer. The preceding sen- tence shall not apply unless each plan partici- pant is notified in writing (either separately or as part of the notice under subsection (l)(2)(C)) that the participant’s balance may be trans- ferred without cost or penalty to another indi- vidual account or annuity in accordance with subsection (d)(3)(G).”. (b) TAX TREATMENT OF SIMPLE RETIREMENT ACCOUNTS.\u2014 (1) DEDUCTIBILITY OF CONTRIBUTIONS BY EM- PLOYEES.\u2014 (A) Section 219(b) (relating to maximum amount of deduction) is amended by adding at the end the following new paragraph: ”(4) SPECIAL RULE FOR SIMPLE RETIREMENT ACCOUNTS.\u2014This section shall not apply with respect to any amount contributed to a simple retirement account established under section 408(p).”. (B) Section 219(g)(5)(A) (defining active par- ticipant) is amended by striking ”or” at the end of clause (iv) and by adding at the end the fol- lowing new clause: ”(vi) any simple retirement account (within the meaning of section 408(p)), or”. (2) DEDUCTIBILITY OF EMPLOYER CONTRIBU- TIONS.\u2014Section 404 (relating to deductions for contributions of an employer to pension, etc. plans) is amended by adding at the end the fol- lowing new subsection: ”(m) SPECIAL RULES FOR SIMPLE RETIREMENT ACCOUNTS.\u2014 ”(1) IN GENERAL.\u2014Employer contributions to a simple retirement account shall be treated as if they are made to a plan subject to the require- ments of this section. ”(2) TIMING.\u2014 ”(A) DEDUCTION.\u2014Contributions described in paragraph (1) shall be deductible in the taxable year of the employer with or within which the calendar year for which the contributions were made ends. ”(B) CONTRIBUTIONS AFTER END OF YEAR.\u2014 For purposes of this subsection, contributions shall be treated as made for a taxable year if they are made on account of the taxable year and are made not later than the time prescribed by law for filing the return for the taxable year (including extensions thereof).”. (3) CONTRIBUTIONS AND DISTRIBUTIONS.\u2014 (A) Section 402 (relating to taxability of bene- ficiary of employees’ trust) is amended by add- ing at the end the following new subsection: ”(k) TREATMENT OF SIMPLE RETIREMENT AC- COUNTS.\u2014Rules similar to the rules of para- graphs (1) and (3) of subsection (h) shall apply to contributions and distributions with respect to a simple retirement account under section 408(p).”. (B) Section 408(d)(3) is amended by adding at the end the following new subparagraph: ”(G) SIMPLE RETIREMENT ACCOUNTS.\u2014This paragraph shall not apply to any amount paid or distributed out of a simple retirement account (as defined in subsection (p)) unless\u2014 ”(i) it is paid into another simple retirement account, or ”(ii) in the case of any payment or distribu- tion to which section 72(t)(6) does not apply, it is paid into an individual retirement plan.”. (C) Clause (i) of section 457(c)(2)(B) is amend- ed by striking ”section 402(h)(1)(B)” and insert- ing ”section 402(h)(1)(B) or (k)”. (4) PENALTIES.\u2014 (A) EARLY WITHDRAWALS.\u2014Section 72(t) (re- lating to additional tax in early distributions) is amended by adding at the end the following new paragraph: ”(6) SPECIAL RULES FOR SIMPLE RETIREMENT ACCOUNTS.\u2014In the case of any amount received from a simple retirement account (within the meaning of section 408(p)) during the 2-year pe- riod beginning on the date such individual first participated in any qualified salary reduction arrangement maintained by the individual’s em- ployer under section 408(p)(2), paragraph (1) shall be applied by substituting ’25 percent’ for ’10 percent’.”. (B) FAILURE TO REPORT.\u2014Section 6693 is amended by redesignating subsection (c) as sub- section (d) and by inserting after subsection (b) the following new subsection: ”(c) PENALTIES RELATING TO SIMPLE RETIRE- MENT ACCOUNTS.\u2014 ”(1) EMPLOYER PENALTIES.\u2014An employer who fails to provide 1 or more notices required by section 408(l)(2)(C) shall pay a penalty of $50 for each day on which such failures continue. ”(2) TRUSTEE PENALTIES.\u2014A trustee who fails\u2014 ”(A) to provide 1 or more statements required by the last sentence of section 408(i) shall pay a penalty of $50 for each day on which such fail- ures continue, or ”(B) to provide 1 or more summary descrip- tions required by section 408(l)(2)(B) shall pay a penalty of $50 for each day on which such fail- ures continue. ”(3) REASONABLE CAUSE EXCEPTION.\u2014No pen- alty shall be imposed under this subsection with respect to any failure which the taxpayer shows was due to reasonable cause.”. (5) REPORTING REQUIREMENTS.\u2014 (A) Section 408(l) is amended by adding at the end the following new paragraph: ”(2) SIMPLE RETIREMENT ACCOUNTS.\u2014 ”(A) NO EMPLOYER REPORTS.\u2014Except as pro- vided in this paragraph, no report shall be re- quired under this section by an employer main- taining a qualified salary reduction arrange- ment under subsection (p). ”(B) SUMMARY DESCRIPTION.\u2014The trustee of any simple retirement account established pur- suant to a qualified salary reduction arrange- ment under subsection (p) shall provide to the employer maintaining the arrangement, each year a description containing the following in- formation: ”(i) The name and address of the employer and the trustee. ”(ii) The requirements for eligibility for par- ticipation. ”(iii) The benefits provided with respect to the arrangement. ”(iv) The time and method of making elections with respect to the arrangement. ”(v) The procedures for, and effects of, with- drawals (including rollovers) from the arrange- ment. ”(C) EMPLOYEE NOTIFICATION.\u2014The employer shall notify each employee immediately before the period for which an election described in subsection (p)(5)(C) may be made of the employ- ee’s opportunity to make such election. Such no- tice shall include a copy of the description de- scribed in subparagraph (B).”. (B) Section 408(l) is amended by striking ”An employer” and inserting the following: ”(1) IN GENERAL.\u2014An employer”. (6) REPORTING REQUIREMENTS.\u2014Section 408(i) is amended by adding at the end the following new flush sentence: ”In the case of a simple retirement account under subsection (p), only one report under this subsection shall be required to be submitted each calendar year to the Secretary (at the time pro- vided under paragraph (2)) but, in addition to the report under this subsection, there shall be furnished, within 30 days after each calendar year, to the individual on whose behalf the ac- count is maintained a statement with respect to the account balance as of the close of, and the account activity during, such calendar year.”. (7) EXEMPTION FROM TOP-HEAVY PLAN RULES.\u2014Section 416(g)(4) (relating to special rules for top-heavy plans) is amended by adding at the end the following new subparagraph: ”(G) SIMPLE RETIREMENT ACCOUNTS.\u2014The term ‘top-heavy plan’ shall not include a simple retirement account under section 408(p).”. (8) EMPLOYMENT TAXES.\u2014 (A) Paragraph (5) of section 3121(a) is amend- ed by striking ”or” at the end of subparagraph (F), by inserting ”or” at the end of subpara- graph (G), and by adding at the end the follow- ing new subparagraph: CONGRESSIONAL RECORD \u2014 HOUSEH9580 August 1, 1996 ”(H) under an arrangement to which section 408(p) applies, other than any elective contribu- tions under paragraph (2)(A)(i) thereof,”. (B) Section 209(a)(4) of the Social Security Act is amended by inserting ”; or (J) under an ar- rangement to which section 408(p) of such Code applies, other than any elective contributions under paragraph (2)(A)(i) thereof” before the semicolon at the end thereof. (C) Paragraph (5) of section 3306(b) is amend- ed by striking ”or” at the end of subparagraph (F), by inserting ”or” at the end of subpara- graph (G), and by adding at the end the follow- ing new subparagraph: ”(H) under an arrangement to which section 408(p) applies, other than any elective contribu- tions under paragraph (2)(A)(i) thereof,”. (D) Paragraph (12) of section 3401(a) is amended by adding the following new subpara- graph: ”(D) under an arrangement to which section 408(p) applies; or”. (9) CONFORMING AMENDMENTS.\u2014 (A) Section 280G(b)(6) is amended by striking ”or” at the end of subparagraph (B), by strik- ing the period at the end of subparagraph (C) and inserting ”, or” and by adding after sub- paragraph (C) the following new subparagraph: ”(D) a simple retirement account described in section 408(p).”. (B) Section 402(g)(3) is amended by striking ”and” at the end of subparagraph (B), by strik- ing the period at the end of subparagraph (C) and inserting ”, and”, and by adding after sub- paragraph (C) the following new subparagraph: ”(D) any elective employer contribution under section 408(p)(2)(A)(i).”. (C) Subsections (b), (c), (m)(4)(B), and (n)(3)(B) of section 414 are each amended by in- serting ”408(p),” after ”408(k),”. (D) Section 4972(d)(1)(A) is amended by strik- ing ”and” at the end of clause (ii), by striking the period at the end of clause (iii) and inserting ”, and”, and by adding after clause (iii) the fol- lowing new clause: ”(iv) any simple retirement account (within the meaning of section 408(p)).”. (c) REPEAL OF SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSIONS.\u2014Section 408(k)(6) is amended by adding at the end the following new subparagraph: ”(H) TERMINATION.\u2014This paragraph shall not apply to years beginning after December 31, 1996. The preceding sentence shall not apply to a simplified employee pension if the terms of such pension, as in effect on December 31, 1996, provide that an employee may make the election described in subparagraph (A).”. (d) MODIFICATIONS OF ERISA.\u2014 (1) REPORTING REQUIREMENTS.\u2014Section 101 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1021) is amended by redesignat- ing subsection (g) as subsection (h) and by in- serting after subsection (f) the following new subsection: ”(g) SIMPLE RETIREMENT ACCOUNTS.\u2014 ”(1) NO EMPLOYER REPORTS.\u2014Except as pro- vided in this subsection, no report shall be re- quired under this section by an employer main- taining a qualified salary reduction arrange- ment under section 408(p) of the Internal Reve- nue Code of 1986. ”(2) SUMMARY DESCRIPTION.\u2014The trustee of any simple retirement account established pur- suant to a qualified salary reduction arrange- ment under section 408(p) of such Code shall provide to the employer maintaining the ar- rangement each year a description containing the following information: ”(A) The name and address of the employer and the trustee. ”(B) The requirements for eligibility for par- ticipation. ”(C) The benefits provided with respect to the arrangement. ”(D) The time and method of making elections with respect to the arrangement. ”(E) The procedures for, and effects of, with- drawals (including rollovers) from the arrange- ment. ”(3) EMPLOYEE NOTIFICATION.\u2014The employer shall notify each employee immediately before the period for which an election described in section 408(p)(5)(C) of such Code may be made of the employee’s opportunity to make such elec- tion. Such notice shall include a copy of the de- scription described in paragraph (2).” (2) FIDUCIARY DUTIES.\u2014Section 404(c) of such Act (29 U.S.C. 1104(c)) is amended by inserting ”(1)” after ”(c)”, by redesignating paragraphs (1) and (2) as subparagraphs (A) and (B), re- spectively, and by adding at the end the follow- ing new paragraph: ”(2) In the case of a simple retirement account established pursuant to a qualified salary re- duction arrangement under section 408(p) of the Internal Revenue Code of 1986, a participant or beneficiary shall, for purposes of paragraph (1), be treated as exercising control over the assets in the account upon the earliest of\u2014 ”(A) an affirmative election among investment options with respect to the initial investment of any contribution, ”(B) a rollover to any other simple retirement account or individual retirement plan, or ”(C) one year after the simple retirement ac- count is established. No reports, other than those required under sec- tion 101(g), shall be required with respect to a simple retirement account established pursuant to such a qualified salary reduction arrange- ment.”. (e) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to taxable years be- ginning after December 31, 1996. SEC. 1422. EXTENSION OF SIMPLE PLAN TO 401(k) ARRANGEMENTS. (a) ALTERNATIVE METHOD OF SATISFYING SEC- TION 401(k) NONDISCRIMINATION TESTS.\u2014Section 401(k) (relating to cash or deferred arrange- ments) is amended by adding at the end the fol- lowing new paragraph: ”(11) ADOPTION OF SIMPLE PLAN TO MEET NON- DISCRIMINATION TESTS.\u2014 ”(A) IN GENERAL.\u2014A cash or deferred ar- rangement maintained by an eligible employer shall be treated as meeting the requirements of paragraph (3)(A)(ii) if such arrangement meets\u2014 ”(i) the contribution requirements of subpara- graph (B), ”(ii) the exclusive plan requirements of sub- paragraph (C), and ”(iii) the vesting requirements of section 408(p)(3). ”(B) CONTRIBUTION REQUIREMENTS.\u2014 ”(i) IN GENERAL.\u2014The requirements of this subparagraph are met if, under the arrange- ment\u2014 ”(I) an employee may elect to have the em- ployer make elective contributions for the year on behalf of the employee to a trust under the plan in an amount which is expressed as a per- centage of compensation of the employee but which in no event exceeds $6,000, ”(II) the employer is required to make a matching contribution to the trust for the year in an amount equal to so much of the amount the employee elects under subclause (I) as does not exceed 3 percent of compensation for the year, and ”(III) no other contributions may be made other than contributions described in subclause (I) or (II). ”(ii) EMPLOYER MAY ELECT 2-PERCENT NON- ELECTIVE CONTRIBUTION.\u2014An employer shall be treated as meeting the requirements of clause (i)(II) for any year if, in lieu of the contribu- tions described in such clause, the employer elects (pursuant to the terms of the arrange- ment) to make nonelective contributions of 2 percent of compensation for each employee who is eligible to participate in the arrangement and who has at least $5,000 of compensation from the employer for the year. If an employer makes an election under this subparagraph for any year, the employer shall notify employees of such election within a reasonable period of time before the 60th day before the beginning of such year. ”(C) EXCLUSIVE PLAN REQUIREMENT.\u2014The re- quirements of this subparagraph are met for any year to which this paragraph applies if no con- tributions were made, or benefits were accrued, for services during such year under any quali- fied plan of the employer on behalf of any em- ployee eligible to participate in the cash or de- ferred arrangement, other than contributions described in subparagraph (B). ”(D) DEFINITIONS AND SPECIAL RULE.\u2014 ”(i) DEFINITIONS.\u2014For purposes of this para- graph, any term used in this paragraph which is also used in section 408(p) shall have the meaning given such term by such section. ”(ii) COORDINATION WITH TOP-HEAVY RULES.\u2014 A plan meeting the requirements of this para- graph for any year shall not be treated as a top- heavy plan under section 416 for such year.”. (b) ALTERNATIVE METHODS OF SATISFYING SECTION 401(m) NONDISCRIMINATION TESTS.\u2014 Section 401(m) (relating to nondiscrimination test for matching contributions and employee contributions) is amended by redesignating paragraph (10) as paragraph (11) and by adding after paragraph (9) the following new para- graph: ”(10) ALTERNATIVE METHOD OF SATISFYING TESTS.\u2014A defined contribution plan shall be treated as meeting the requirements of para- graph (2) with respect to matching contributions if the plan\u2014 ”(A) meets the contribution requirements of subparagraph (B) of subsection (k)(11), ”(B) meets the exclusive plan requirements of subsection (k)(11)(C), and ”(C) meets the vesting requirements of section 408(p)(3).”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to plan years begin- ning after December 31, 1996. Subchapter B\u2014Other Provisions SEC. 1426. TAX-EXEMPT ORGANIZATIONS ELIGI- BLE UNDER SECTION 401(k). (a) IN GENERAL.\u2014Subparagraph (B) of section 401(k)(4) is amended to read as follows: ”(B) ELIGIBILITY OF STATE AND LOCAL GOV- ERNMENTS AND TAX-EXEMPT ORGANIZATIONS.\u2014 ”(i) TAX-EXEMPTS ELIGIBLE.\u2014Except as pro- vided in clause (ii), any organization exempt from tax under this subtitle may include a qualified cash or deferred arrangement as part of a plan maintained by it. ”(ii) GOVERNMENTS INELIGIBLE.\u2014A cash or de- ferred arrangement shall not be treated as a qualified cash or deferred arrangement if it is part of a plan maintained by a State or local government or political subdivision thereof, or any agency or instrumentality thereof. This clause shall not apply to a rural cooperative plan or to a plan of an employer described in clause (iii). ”(iii) TREATMENT OF INDIAN TRIBAL GOVERN- MENTS.\u2014An employer which is an Indian tribal government (as defined in section 7701(a)(40)), a subdivision of an Indian tribal government (de- termined in accordance with section 7871(d)), an agency or instrumentality of an Indian tribal government or subdivision thereof, or a corpora- tion chartered under Federal, State, or tribal law which is owned in whole or in part by any of the foregoing may include a qualified cash or deferred arrangement as part of a plan main- tained by the employer.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to plan years begin- ning after December 31, 1996, but shall not apply to any cash or deferred arrangement to which clause (i) of section 1116(f)(2)(B) of the Tax Re- form Act of 1986 applies. SEC. 1427. HOMEMAKERS ELIGIBLE FOR FULL IRA DEDUCTION. (a) SPOUSAL IRA COMPUTED ON BASIS OF COMPENSATION OF BOTH SPOUSES.\u2014Subsection (c) of section 219 (relating to special rules for CONGRESSIONAL RECORD \u2014 HOUSE H9581August 1, 1996 certain married individuals) is amended to read as follows: ”(c) SPECIAL RULES FOR CERTAIN MARRIED IN- DIVIDUALS.\u2014 ”(1) IN GENERAL.\u2014In the case of an individual to whom this paragraph applies for the taxable year, the limitation of paragraph (1) of sub- section (b) shall be equal to the lesser of\u2014 ”(A) the dollar amount in effect under sub- section (b)(1)(A) for the taxable year, or ”(B) the sum of\u2014 ”(i) the compensation includible in such indi- vidual’s gross income for the taxable year, plus ”(ii) the compensation includible in the gross income of such individual’s spouse for the tax- able year reduced by the amount allowed as a deduction under subsection (a) to such spouse for such taxable year. ”(2) INDIVIDUALS TO WHOM PARAGRAPH (1) AP- PLIES.\u2014Paragraph (1) shall apply to any indi- vidual if\u2014 ”(A) such individual files a joint return for the taxable year, and ”(B) the amount of compensation (if any) in- cludible in such individual’s gross income for the taxable year is less than the compensation includible in the gross income of such individ- ual’s spouse for the taxable year.”. (b) CONFORMING AMENDMENTS.\u2014 (1) Paragraph (2) of section 219(f) (relating to other definitions and special rules) is amended by striking ”subsections (b) and (c)” and insert- ing ”subsection (b)”. (2) Section 219(g)(1) is amended by striking ”(c)(2)” and inserting ”(c)(1)(A)”. (3) Section 408(d)(5) is amended by striking ”$2,250” and inserting ”the dollar amount in ef- fect under section 219(b)(1)(A)”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to taxable years be- ginning after December 31, 1996. CHAPTER 3\u2014NONDISCRIMINATION PROVISIONS SEC. 1431. DEFINITION OF HIGHLY COM- PENSATED EMPLOYEES; REPEAL OF FAMILY AGGREGATION. (a) IN GENERAL.\u2014Paragraph (1) of section 414(q) (defining highly compensated employee) is amended to read as follows: ”(1) IN GENERAL.\u2014The term ‘highly com- pensated employee’ means any employee who\u2014 ”(A) was a 5-percent owner at any time dur- ing the year or the preceding year, or ”(B) for the preceding year\u2014 ”(i) had compensation from the employer in excess of $80,000, and ”(ii) if the employer elects the application of this clause for such preceding year, was in the top-paid group of employees for such preceding year. The Secretary shall adjust the $80,000 amount under subparagraph (B) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quar- ter ending September 30, 1996.”. (b) REPEAL OF FAMILY AGGREGATION RULES.\u2014 (1) IN GENERAL.\u2014Paragraph (6) of section 414(q) is hereby repealed. (2) COMPENSATION LIMIT.\u2014Paragraph (17)(A) of section 401(a) is amended by striking the last sentence. (3) DEDUCTION.\u2014Subsection (l) of section 404 is amended by striking the last sentence. (c) CONFORMING AMENDMENTS.\u2014 (1)(A) Subsection (q) of section 414 is amended by striking paragraphs (2), (5), and (12) and by redesignating paragraphs (3), (4), (7), (8), (9), (10), and (11) as paragraphs (2) through (8), re- spectively. (B) Sections 129(d)(8)(B), 401(a)(5)(D)(ii), 408(k)(2)(C), and 416(i)(1)(D) are each amended by striking ”section 414(q)(7)” and inserting ”section 414(q)(4)”. (C) Section 416(i)(1)(A) is amended by striking ”section 414(q)(8)” and inserting ”section 414(q)(5)”. (D) Subparagraph (A) of section 414(r)(2) is amended by striking ”subsection (q)(8)” and in- serting ”subsection (q)(5)”. (E) Section 414(q)(5), as redesignated by sub- paragraph (A), is amended by striking ”under paragraph (4), or the number of officers taken into account under paragraph (5)”. (2) Section 1114(c)(4) of the Tax Reform Act of 1986 is amended by adding at the end the follow- ing new sentence: ”Any reference in this para- graph to section 414(q) shall be treated as a ref- erence to such section as in effect on the day be- fore the date of the enactment of the Small Business Job Protection Act of 1996.”. (d) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to years beginning after December 31, 1996, except that in determining whether an employee is a highly compensated employee for years beginning in 1997, such amendments shall be treated as having been in effect for years beginning in 1996. (2) FAMILY AGGREGATION.\u2014The amendments made by subsection (b) shall apply to years be- ginning after December 31, 1996. SEC. 1432. MODIFICATION OF ADDITIONAL PAR- TICIPATION REQUIREMENTS. (a) GENERAL RULE.\u2014Section 401(a)(26)(A) (re- lating to additional participation requirements) is amended to read as follows: ”(A) IN GENERAL.\u2014In the case of a trust which is a part of a defined benefit plan, such trust shall not constitute a qualified trust under this subsection unless on each day of the plan year such trust benefits at least the lesser of\u2014 ”(i) 50 employees of the employer, or ”(ii) the greater of\u2014 ”(I) 40 percent of all employees of the em- ployer, or ”(II) 2 employees (or if there is only 1 em- ployee, such employee).”. (b) SEPARATE LINE OF BUSINESS TEST.\u2014Sec- tion 401(a)(26)(G) (relating to separate line of business) is amended by striking ”paragraph (7)” and inserting ”paragraph (2)(A) or (7)”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to years beginning after December 31, 1996. SEC. 1433. NONDISCRIMINATION RULES FOR QUALIFIED CASH OR DEFERRED AR- RANGEMENTS AND MATCHING CON- TRIBUTIONS. (a) ALTERNATIVE METHODS OF SATISFYING SECTION 401(k) NONDISCRIMINATION TESTS.\u2014Sec- tion 401(k) (relating to cash or deferred arrange- ments), as amended by section 1422, is amended by adding at the end the following new para- graph: ”(12) ALTERNATIVE METHODS OF MEETING NON- DISCRIMINATION REQUIREMENTS.\u2014 ”(A) IN GENERAL.\u2014A cash or deferred ar- rangement shall be treated as meeting the re- quirements of paragraph (3)(A)(ii) if such ar- rangement\u2014 ”(i) meets the contribution requirements of subparagraph (B) or (C), and ”(ii) meets the notice requirements of subpara- graph (D). ”(B) MATCHING CONTRIBUTIONS.\u2014 ”(i) IN GENERAL.\u2014The requirements of this subparagraph are met if, under the arrange- ment, the employer makes matching contribu- tions on behalf of each employee who is not a highly compensated employee in an amount equal to\u2014 ”(I) 100 percent of the elective contributions of the employee to the extent such elective con- tributions do not exceed 3 percent of the employ- ee’s compensation, and ”(II) 50 percent of the elective contributions of the employee to the extent that such elective contributions exceed 3 percent but do not exceed 5 percent of the employee’s compensation. ”(ii) RATE FOR HIGHLY COMPENSATED EMPLOY- EES.\u2014The requirements of this subparagraph are not met if, under the arrangement, the rate of matching contribution with respect to any elective contribution of a highly compensated employee at any rate of elective contribution is greater than that with respect to an employee who is not a highly compensated employee. ”(iii) ALTERNATIVE PLAN DESIGNS.\u2014If the rate of any matching contribution with respect to any rate of elective contribution is not equal to the percentage required under clause (i), an ar- rangement shall not be treated as failing to meet the requirements of clause (i) if\u2014 ”(I) the rate of an employer’s matching con- tribution does not increase as an employee’s rate of elective contributions increase, and ”(II) the aggregate amount of matching con- tributions at such rate of elective contribution is at least equal to the aggregate amount of match- ing contributions which would be made if matching contributions were made on the basis of the percentages described in clause (i). ”(C) NONELECTIVE CONTRIBUTIONS.\u2014The re- quirements of this subparagraph are met if, under the arrangement, the employer is re- quired, without regard to whether the employee makes an elective contribution or employee con- tribution, to make a contribution to a defined contribution plan on behalf of each employee who is not a highly compensated employee and who is eligible to participate in the arrangement in an amount equal to at least 3 percent of the employee’s compensation. ”(D) NOTICE REQUIREMENT.\u2014An arrangement meets the requirements of this paragraph if, under the arrangement, each employee eligible to participate is, within a reasonable period be- fore any year, given written notice of the em- ployee’s rights and obligations under the ar- rangement which\u2014 ”(i) is sufficiently accurate and comprehen- sive to appraise the employee of such rights and obligations, and ”(ii) is written in a manner calculated to be understood by the average employee eligible to participate. ”(E) OTHER REQUIREMENTS.\u2014 ”(i) WITHDRAWAL AND VESTING RESTRIC- TIONS.\u2014An arrangement shall not be treated as meeting the requirements of subparagraph (B) or (C) of this paragraph unless the requirements of subparagraphs (B) and (C) of paragraph (2) are met with respect to all employer contribu- tions (including matching contributions) taken into account in determining whether the re- quirements of subparagraphs (B) and (C) of this paragraph are met. ”(ii) SOCIAL SECURITY AND SIMILAR CONTRIBU- TIONS NOT TAKEN INTO ACCOUNT.\u2014An arrange- ment shall not be treated as meeting the require- ments of subparagraph (B) or (C) unless such requirements are met without regard to sub- section (l), and, for purposes of subsection (l), employer contributions under subparagraph (B) or (C) shall not be taken into account. ”(F) OTHER PLANS.\u2014An arrangement shall be treated as meeting the requirements under sub- paragraph (A)(i) if any other plan maintained by the employer meets such requirements with respect to employees eligible under the arrange- ment.”. (b) ALTERNATIVE METHODS OF SATISFYING SECTION 401(m) NONDISCRIMINATION TESTS.\u2014 Section 401(m) (relating to nondiscrimination test for matching contributions and employee contributions), as amended by section 1422(b), is amended by redesignating paragraph (11) as paragraph (12) and by adding after paragraph (10) the following new paragraph: ”(11) ALTERNATIVE METHOD OF SATISFYING TESTS.\u2014 ”(A) IN GENERAL.\u2014A defined contribution plan shall be treated as meeting the require- ments of paragraph (2) with respect to matching contributions if the plan\u2014 ”(i) meets the contribution requirements of subparagraph (B) or (C) of subsection (k)(12), ”(ii) meets the notice requirements of sub- section (k)(12)(D), and ”(iii) meets the requirements of subparagraph (B). ”(B) LIMITATION ON MATCHING CONTRIBU- TIONS.\u2014The requirements of this subparagraph are met if\u2014 ”(i) matching contributions on behalf of any employee may not be made with respect to an CONGRESSIONAL RECORD \u2014 HOUSEH9582 August 1, 1996 employee’s contributions or elective deferrals in excess of 6 percent of the employee’s compensa- tion, ”(ii) the rate of an employer’s matching con- tribution does not increase as the rate of an em- ployee’s contributions or elective deferrals in- crease, and ”(iii) the matching contribution with respect to any highly compensated employee at any rate of an employee contribution or rate of elective deferral is not greater than that with respect to an employee who is not a highly compensated employee.”. (c) YEAR FOR COMPUTING NONHIGHLY COM- PENSATED EMPLOYEE PERCENTAGE.\u2014 (1) CASH OR DEFERRED ARRANGEMENTS.\u2014Sec- tion 401(k)(3)(A) is amended\u2014 (A) by striking ”such year” in clause (ii) and inserting ”the plan year”, (B) by striking ”for such plan year” in clause (ii) and inserting ”for the preceding plan year”, and (C) by adding at the end the following new sentence: ”An arrangement may apply clause (ii) by using the plan year rather than the pre- ceding plan year if the employer so elects, except that if such an election is made, it may not be changed except as provided by the Secretary.”. (2) MATCHING AND EMPLOYEE CONTRIBU- TIONS.\u2014Section 401(m)(2)(A) is amended\u2014 (A) by inserting ”for such plan year” after ”highly compensated employees”, (B) by inserting ”for the preceding plan year” after ”eligible employees” each place it appears in clause (i) and clause (ii), and (C) by adding at the end the following flush sentence: ”This subparagraph may be applied by using the plan year rather than the preceding plan year if the employer so elects, except that if such an election is made, it may not be changed ex- cept as provided the Secretary.”. (d) SPECIAL RULE FOR DETERMINING AVERAGE DEFERRAL PERCENTAGE FOR FIRST PLAN YEAR, ETC.\u2014 (1) Paragraph (3) of section 401(k) is amended by adding at the end the following new sub- paragraph: ”(E) For purposes of this paragraph, in the case of the first plan year of any plan (other than a successor plan), the amount taken into account as the actual deferral percentage of nonhighly compensated employees for the pre- ceding plan year shall be\u2014 ”(i) 3 percent, or ”(ii) if the employer makes an election under this subclause, the actual deferral percentage of nonhighly compensated employees determined for such first plan year.”. (2) Paragraph (3) of section 401(m) is amended by adding at the end the following: ”Rules simi- lar to the rules of subsection (k)(3)(E) shall apply for purposes of this subsection.”. (e) DISTRIBUTION OF EXCESS CONTRIBUTIONS AND EXCESS AGGREGATE CONTRIBUTIONS.\u2014 (1) Subparagraph (C) of section 401(k)(8) (re- lating to arrangement not disqualified if excess contributions distributed) is amended by striking ”on the basis of the respective portions of the excess contributions attributable to each of such employees” and inserting ”on the basis of the amount of contributions by, or on behalf of, each of such employees”. (2) Subparagraph (C) of section 401(m)(6) (re- lating to method of distributing excess aggregate contributions) is amended by striking ”on the basis of the respective portions of such amounts attributable to each of such employees” and in- serting ”on the basis of the amount of contribu- tions on behalf of, or by, each such employee”. (f) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to years beginning after December 31, 1998. (2) EXCEPTIONS.\u2014The amendments made by subsections (c), (d), and (e) shall apply to years beginning after December 31, 1996. SEC. 1434. DEFINITION OF COMPENSATION FOR SECTION 415 PURPOSES. (a) GENERAL RULE.\u2014Section 415(c)(3) (defin- ing participant’s compensation) is amended by adding at the end the following new subpara- graph: ”(D) CERTAIN DEFERRALS INCLUDED.\u2014The term ‘participant’s compensation’ shall in- clude\u2014 ”(i) any elective deferral (as defined in section 402(g)(3)), and ”(ii) any amount which is contributed or de- ferred by the employer at the election of the em- ployee and which is not includible in the gross income of the employee by reason of section 125 or 457.”. (b) CONFORMING AMENDMENTS.\u2014 (1) Section 414(q)(4), as redesignated by sec- tion 1431, is amended to read as follows: ”(4) COMPENSATION.\u2014For purposes of this subsection, the term ‘compensation’ has the meaning given such term by section 415(c)(3).”. (2) Section 414(s)(2) is amended by inserting ”not” after ”elect” in the text and heading thereof. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to years beginning after December 31, 1997. CHAPTER 4\u2014MISCELLANEOUS PROVISIONS SEC. 1441. PLANS COVERING SELF-EMPLOYED IN- DIVIDUALS. (a) AGGREGATION RULES.\u2014Section 401(d) (re- lating to additional requirements for qualifica- tion of trusts and plans benefiting owner-em- ployees) is amended to read as follows: ”(d) CONTRIBUTION LIMIT ON OWNER-EMPLOY- EES.\u2014A trust forming part of a pension or prof- it-sharing plan which provides contributions or benefits for employees some or all of whom are owner-employees shall constitute a qualified trust under this section only if, in addition to meeting the requirements of subsection (a), the plan provides that contributions on behalf of any owner-employee may be made only with re- spect to the earned income of such owner-em- ployee which is derived from the trade or busi- ness with respect to which such plan is estab- lished.”. (b) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to years beginning after December 31, 1996. SEC. 1442. ELIMINATION OF SPECIAL VESTING RULE FOR MULTIEMPLOYER PLANS. (a) AMENDMENTS TO 1986 CODE.\u2014Paragraph (2) of section 411(a) (relating to minimum vest- ing standards) is amended\u2014 (1) by striking ”subparagraph (A), (B), or (C)” and inserting ”subparagraph (A) or (B)”; and (2) by striking subparagraph (C). (b) AMENDMENTS TO ERISA.\u2014Paragraph (2) of section 203(a) of the Employee Retirement In- come Security Act of 1974 (29 U.S.C. 1053(a)) is amended\u2014 (1) by striking ”subparagraph (A), (B), or (C)” and inserting ”subparagraph (A) or (B)”; and (2) by striking subparagraph (C). (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to plan years begin- ning on or after the earlier of\u2014 (1) the later of\u2014 (A) January 1, 1997, or (B) the date on which the last of the collective bargaining agreements pursuant to which the plan is maintained terminates (determined with- out regard to any extension thereof after the date of the enactment of this Act), or (2) January 1, 1999. Such amendments shall not apply to any indi- vidual who does not have more than 1 hour of service under the plan on or after the 1st day of the 1st plan year to which such amendments apply. SEC. 1443. DISTRIBUTIONS UNDER RURAL COOP- ERATIVE PLANS. (a) DISTRIBUTIONS FOR HARDSHIP OR AFTER A CERTAIN AGE.\u2014Section 401(k)(7) is amended by adding at the end the following new subpara- graph: ”(C) SPECIAL RULE FOR CERTAIN DISTRIBU- TIONS.\u2014A rural cooperative plan which includes a qualified cash or deferred arrangement shall not be treated as violating the requirements of section 401(a) or of paragraph (2) merely by rea- son of a hardship distribution or a distribution to a participant after attainment of age 591\u20442. For purposes of this section, the term ‘hardship distribution’ means a distribution described in paragraph (2)(B)(i)(IV) (without regard to the limitation of its application to profit-sharing or stock bonus plans).”. (b) PUBLIC UTILITY DISTRICTS.\u2014Clause (i) of section 401(k)(7)(B) (defining rural cooperative) is amended to read as follows: ”(i) any organization which\u2014 ”(I) is engaged primarily in providing electric service on a mutual or cooperative basis, or ”(II) is engaged primarily in providing electric service to the public in its area of service and which is exempt from tax under this subtitle or which is a State or local government (or an agency or instrumentality thereof), other than a municipality (or an agency or instrumentality thereof),”. (c) EFFECTIVE DATES.\u2014 (1) DISTRIBUTIONS.\u2014The amendments made by subsection (a) shall apply to distributions after the date of the enactment of this Act. (2) PUBLIC UTILITY DISTRICTS.\u2014The amend- ments made by subsection (b) shall apply to plan years beginning after December 31, 1996. SEC. 1444. TREATMENT OF GOVERNMENTAL PLANS UNDER SECTION 415. (a) COMPENSATION LIMIT.\u2014Subsection (b) of section 415 is amended by adding immediately after paragraph (10) the following new para- graph: ”(11) SPECIAL LIMITATION RULE FOR GOVERN- MENTAL PLANS.\u2014In the case of a governmental plan (as defined in section 414(d)), subpara- graph (B) of paragraph (1) shall not apply.”. (b) TREATMENT OF CERTAIN EXCESS BENEFIT PLANS.\u2014 (1) IN GENERAL.\u2014Section 415 is amended by adding at the end the following new subsection: ”(m) TREATMENT OF QUALIFIED GOVERN- MENTAL EXCESS BENEFIT ARRANGEMENTS.\u2014 ”(1) GOVERNMENTAL PLAN NOT AFFECTED.\u2014In determining whether a governmental plan (as defined in section 414(d)) meets the requirements of this section, benefits provided under a quali- fied governmental excess benefit arrangement shall not be taken into account. Income accru- ing to a governmental plan (or to a trust that is maintained solely for the purpose of providing benefits under a qualified governmental excess benefit arrangement) in respect of a qualified governmental excess benefit arrangement shall constitute income derived from the exercise of an essential governmental function upon which such governmental plan (or trust) shall be ex- empt from tax under section 115. ”(2) TAXATION OF PARTICIPANT.\u2014For purposes of this chapter\u2014 ”(A) the taxable year or years for which amounts in respect of a qualified governmental excess benefit arrangement are includible in gross income by a participant, and ”(B) the treatment of such amounts when so includible by the participant, shall be determined as if such qualified govern- mental excess benefit arrangement were treated as a plan for the deferral of compensation which is maintained by a corporation not ex- empt from tax under this chapter and which does not meet the requirements for qualification under section 401. ”(3) QUALIFIED GOVERNMENTAL EXCESS BENE- FIT ARRANGEMENT.\u2014For purposes of this sub- section, the term ‘qualified governmental excess benefit arrangement’ means a portion of a gov- ernmental plan if\u2014 ”(A) such portion is maintained solely for the purpose of providing to participants in the plan CONGRESSIONAL RECORD \u2014 HOUSE H9583August 1, 1996 that part of the participant’s annual benefit otherwise payable under the terms of the plan that exceeds the limitations on benefits imposed by this section, ”(B) under such portion no election is pro- vided at any time to the participant (directly or indirectly) to defer compensation, and ”(C) benefits described in subparagraph (A) are not paid from a trust forming a part of such governmental plan unless such trust is main- tained solely for the purpose of providing such benefits.”. (2) COORDINATION WITH SECTION 457.\u2014Sub- section (e) of section 457 is amended by adding at the end the following new paragraph: ”(14) TREATMENT OF QUALIFIED GOVERN- MENTAL EXCESS BENEFIT ARRANGEMENTS.\u2014Sub- sections (b)(2) and (c)(1) shall not apply to any qualified governmental excess benefit arrange- ment (as defined in section 415(m)(3)), and bene- fits provided under such an arrangement shall not be taken into account in determining wheth- er any other plan is an eligible deferred com- pensation plan.”. (3) CONFORMING AMENDMENT.\u2014Paragraph (2) of section 457(f) is amended by striking ”and” at the end of subparagraph (C), by striking the period at the end of subparagraph (D) and in- serting ”, and”, and by inserting immediately thereafter the following new subparagraph: ”(E) a qualified governmental excess benefit arrangement described in section 415(m).”. (c) EXEMPTION FOR SURVIVOR AND DISABILITY BENEFITS.\u2014Paragraph (2) of section 415(b) is amended by adding at the end the following new subparagraph: ”(I) EXEMPTION FOR SURVIVOR AND DISABILITY BENEFITS PROVIDED UNDER GOVERNMENTAL PLANS.\u2014Subparagraph (C) of this paragraph and paragraph (5) shall not apply to\u2014 ”(i) income received from a governmental plan (as defined in section 414(d)) as a pension, an- nuity, or similar allowance as the result of the recipient becoming disabled by reason of per- sonal injuries or sickness, or ”(ii) amounts received from a governmental plan by the beneficiaries, survivors, or the estate of an employee as the result of the death of the employee.”. (d) REVOCATION OF GRANDFATHER ELEC- TION.\u2014 (1) IN GENERAL.\u2014Subparagraph (C) of section 415(b)(10) is amended by adding at the end the following new clause: ”(ii) REVOCATION OF ELECTION.\u2014An election under clause (i) may be revoked not later than the last day of the third plan year beginning after the date of the enactment of this clause. The revocation shall apply to all plan years to which the election applied and to all subsequent plan years. Any amount paid by a plan in a taxable year ending after the revocation shall be includible in income in such taxable year under the rules of this chapter in effect for such tax- able year, except that, for purposes of applying the limitations imposed by this section, any por- tion of such amount which is attributable to any taxable year during which the election was in effect shall be treated as received in such tax- able year.”. (2) CONFORMING AMENDMENT.\u2014Subparagraph (C) of section 415(b)(10) is amended by striking ”This” and inserting: ”(i) IN GENERAL.\u2014This”. (e) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by subsections (a), (b), and (c) shall apply to years beginning after December 31, 1994. The amend- ments made by subsection (d) shall apply with respect to revocations adopted after the date of the enactment of this Act. (2) TREATMENT FOR YEARS BEGINNING BEFORE JANUARY 1, 1995.\u2014Nothing in the amendments made by this section shall be construed to imply that a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986) fails to satisfy the requirements of section 415 of such Code for any taxable year beginning before January 1, 1995. SEC. 1445. UNIFORM RETIREMENT AGE. (a) DISCRIMINATION TESTING.\u2014Paragraph (5) of section 401(a) (relating to special rules relat- ing to nondiscrimination requirements) is amended by adding at the end the following new subparagraph: ”(F) SOCIAL SECURITY RETIREMENT AGE.\u2014For purposes of testing for discrimination under paragraph (4)\u2014 ”(i) the social security retirement age (as de- fined in section 415(b)(8)) shall be treated as a uniform retirement age, and ”(ii) subsidized early retirement benefits and joint and survivor annuities shall not be treated as being unavailable to employees on the same terms merely because such benefits or annuities are based in whole or in part on an employee’s social security retirement age (as so defined).”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to years beginning after December 31, 1996. SEC. 1446. CONTRIBUTIONS ON BEHALF OF DIS- ABLED EMPLOYEES. (a) ALL DISABLED PARTICIPANTS RECEIVING CONTRIBUTIONS.\u2014Section 415(c)(3)(C) is amend- ed by adding at the end the following: ”If a de- fined contribution plan provides for the con- tinuation of contributions on behalf of all par- ticipants described in clause (i) for a fixed or de- terminable period, this subparagraph shall be applied without regard to clauses (ii) and (iii).”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to years beginning after December 31, 1996. SEC. 1447. TREATMENT OF DEFERRED COM- PENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EX- EMPT ORGANIZATIONS. (a) SPECIAL RULES FOR PLAN DISTRIBU- TIONS.\u2014Paragraph (9) of section 457(e) (relating to other definitions and special rules) is amend- ed to read as follows: ”(9) BENEFITS NOT TREATED AS MADE AVAIL- ABLE BY REASON OF CERTAIN ELECTIONS, ETC.\u2014 ”(A) TOTAL AMOUNT PAYABLE IS $3,500 OR LESS.\u2014The total amount payable to a partici- pant under the plan shall not be treated as made available merely because the participant may elect to receive such amount (or the plan may distribute such amount without the partici- pant’s consent) if\u2014 ”(i) such amount does not exceed $3,500, and ”(ii) such amount may be distributed only if\u2014 ”(I) no amount has been deferred under the plan with respect to such participant during the 2-year period ending on the date of the distribu- tion, and ”(II) there has been no prior distribution under the plan to such participant to which this subparagraph applied. A plan shall not be treated as failing to meet the distribution requirements of subsection (d) by reason of a distribution to which this subpara- graph applies. ”(B) ELECTION TO DEFER COMMENCEMENT OF DISTRIBUTIONS.\u2014The total amount payable to a participant under the plan shall not be treated as made available merely because the partici- pant may elect to defer commencement of dis- tributions under the plan if\u2014 ”(i) such election is made after amounts may be available under the plan in accordance with subsection (d)(1)(A) and before commencement of such distributions, and ”(ii) the participant may make only 1 such election.”. (b) COST-OF-LIVING ADJUSTMENT OF MAXIMUM DEFERRAL AMOUNT.\u2014Subsection (e) of section 457, as amended by section 1444(b)(2) (relating to governmental plans), is amended by adding at the end the following new paragraph: ”(15) COST-OF-LIVING ADJUSTMENT OF MAXI- MUM DEFERRAL AMOUNT.\u2014The Secretary shall adjust the $7,500 amount specified in subsections (b)(2) and (c)(1) at the same time and in the same manner as under section 415(d), except that the base period shall be the calendar quar- ter ending September 30, 1994, and any increase under this paragraph which is not a multiple of $500 shall be rounded to the next lowest multiple of $500.”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to taxable years be- ginning after December 31, 1996. SEC. 1448. TRUST REQUIREMENT FOR DEFERRED COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS. (a) IN GENERAL.\u2014Section 457 is amended by adding at the end the following new subsection: ”(g) GOVERNMENTAL PLANS MUST MAINTAIN SET-ASIDES FOR EXCLUSIVE BENEFIT OF PARTICI- PANTS.\u2014 ”(1) IN GENERAL.\u2014A plan maintained by an eligible employer described in subsection (e)(1)(A) shall not be treated as an eligible de- ferred compensation plan unless all assets and income of the plan described in subsection (b)(6) are held in trust for the exclusive benefit of par- ticipants and their beneficiaries. ”(2) TAXABILITY OF TRUSTS AND PARTICI- PANTS.\u2014For purposes of this title\u2014 ”(A) a trust described in paragraph (1) shall be treated as an organization exempt from tax- ation under section 501(a), and ”(B) notwithstanding any other provision of this title, amounts in the trust shall be includ- ible in the gross income of participants and beneficiaries only to the extent, and at the time, provided in this section. ”(3) CUSTODIAL ACCOUNTS AND CONTRACTS.\u2014 For purposes of this subsection, custodial ac- counts and contracts described in section 401(f) shall be treated as trusts under rules similar to the rules under section 401(f).”. (b) CONFORMING AMENDMENT.\u2014Paragraph (6) of section 457(b) is amended by inserting ”except as provided in subsection (g),” before ”which provides that”. (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as provided in para- graph (2), the amendments made by this section shall apply to assets and income described in section 457(b)(6) of the Internal Revenue Code of 1986 held by a plan on and after the date of the enactment of this Act. (2) TRANSITION RULE.\u2014In the case of a plan in existence on the date of the enactment of this Act, a trust need not be established by reason of the amendments made by this section before January 1, 1999. SEC. 1449. TRANSITION RULE FOR COMPUTING MAXIMUM BENEFITS UNDER SEC- TION 415 LIMITATIONS. (a) IN GENERAL.\u2014Subparagraph (A) of section 767(d)(3) of the Uruguay Round Agreements Act is amended to read as follows: ”(A) EXCEPTION.\u2014A plan that was adopted and in effect before December 8, 1994, shall not be required to apply the amendments made by subsection (b) with respect to benefits accrued before the earlier of\u2014 ”(i) the later of the date a plan amendment applying the amendments made by subsection (b) is adopted or made effective, or ”(ii) the first day of the first limitation year beginning after December 31, 1999. Determinations under section 415(b)(2)(E) of the Internal Revenue Code of 1986 before such ear- lier date shall be made with respect to such ben- efits on the basis of such section as in effect on December 7, 1994 (except that the modification made by section 1449(b) of the Small Business Job Protection Act of 1996 shall be taken into account), and the provisions of the plan as in effect on December 7, 1994, but only if such pro- visions of the plan meet the requirements of such section (as so in effect).”. (b) MODIFICATION OF CERTAIN ASSUMPTIONS FOR ADJUSTING BENEFITS OF DEFINED BENEFIT PLANS FOR EARLY RETIREES.\u2014Subparagraph (E) of section 415(b)(2) (relating to limitation on cer- tain assumptions) is amended\u2014 (1) by striking ”Except as provided in clause (ii), for purposes of adjusting any benefit or lim- itation under subparagraph (B) or (C),” in CONGRESSIONAL RECORD \u2014 HOUSEH9584 August 1, 1996 clause (i) and inserting ”For purposes of adjust- ing any limitation under subparagraph (C) and, except as provided in clause (ii), for purposes of adjusting any benefit under subparagraph (B),”, and (2) by striking ”For purposes of adjusting the benefit or limitation of any form of benefit sub- ject to section 417(e)(3),” in clause (ii) and in- serting ”For purposes of adjusting any benefit under subparagraph (B) for any form of benefit subject to section 417(e)(3),”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall take effect as if included in the provisions of section 767 of the Uruguay Round Agreements Act. (d) TRANSITIONAL RULE.\u2014In the case of a plan that was adopted and in effect before De- cember 8, 1994, if\u2014 (1) a plan amendment was adopted or made effective on or before the date of the enactment of this Act applying the amendments made by section 767 of the Uruguay Round Agreements Act, and (2) within 1 year after the date of the enact- ment of this Act, a plan amendment is adopted which repeals the amendment referred to in paragraph (1), the amendment referred to in paragraph (1) shall not be taken into account in applying sec- tion 767(d)(3)(A) of the Uruguay Round Agree- ments Act, as amended by subsection (a). SEC. 1450. MODIFICATIONS OF SECTION 403(b). (a) MULTIPLE SALARY REDUCTION AGREE- MENTS PERMITTED.\u2014 (1) GENERAL RULE.\u2014For purposes of section 403(b) of the Internal Revenue Code of 1986, the frequency that an employee is permitted to enter into a salary reduction agreement, the salary to which such an agreement may apply, and the ability to revoke such an agreement shall be de- termined under the rules applicable to cash or deferred elections under section 401(k) of such Code. (2) CONSTRUCTIVE RECEIPT.\u2014Section 402(e)(3) is amended by inserting ”or which is part of a salary reduction agreement under section 403(b)” after ”section 401(k)(2))”. (3) EFFECTIVE DATE.\u2014This subsection shall apply to taxable years beginning after December 31, 1995. (b) TREATMENT OF INDIAN TRIBAL GOVERN- MENTS.\u2014 (1) IN GENERAL.\u2014In the case of any contract purchased in a plan year beginning before Jan- uary 1, 1995, section 403(b) of the Internal Reve- nue Code of 1986 shall be applied as if any ref- erence to an employer described in section 501(c)(3) of the Internal Revenue Code of 1986 which is exempt from tax under section 501 of such Code included a reference to an employer which is an Indian tribal government (as de- fined by section 7701(a)(40) of such Code), a sub- division of an Indian tribal government (deter- mined in accordance with section 7871(d) of such Code), an agency or instrumentality of an Indian tribal government or subdivision thereof, or a corporation chartered under Federal, State, or tribal law which is owned in whole or in part by any of the foregoing. (2) ROLLOVERS.\u2014Solely for purposes of apply- ing section 403(b)(8) of such Code to a contract to which paragraph (1) applies, a qualified cash or deferred arrangement under section 401(k) of such Code shall be treated as if it were a plan or contract described in clause (ii) of section 403(b)(8)(A) of such Code. (c) ELECTIVE DEFERRALS.\u2014 (1) IN GENERAL.\u2014Subparagraph (E) of section 403(b)(1) is amended to read as follows: ”(E) in the case of a contract purchased under a salary reduction agreement, the con- tract meets the requirements of section 401(a)(30),”. (2) EFFECTIVE DATE.\u2014The amendment made by this subsection shall apply to years begin- ning after December 31, 1995, except a contract shall not be required to meet any change in any requirement by reason of such amendment be- fore the 90th day after the date of the enactment of this Act. SEC. 1451. SPECIAL RULES RELATING TO JOINT AND SURVIVOR ANNUITY EXPLA- NATIONS. (a) AMENDMENT TO INTERNAL REVENUE CODE.\u2014Section 417(a) is amended by adding at the end the following new paragraph: ”(7) SPECIAL RULES RELATING TO TIME FOR WRITTEN EXPLANATION.\u2014Notwithstanding any other provision of this subsection\u2014 ”(A) EXPLANATION MAY BE PROVIDED AFTER ANNUITY STARTING DATE.\u2014 ”(i) IN GENERAL.\u2014A plan may provide the written explanation described in paragraph (3)(A) after the annuity starting date. In any case to which this subparagraph applies, the applicable election period under paragraph (6) shall not end before the 30th day after the date on which such explanation is provided. ”(ii) REGULATORY AUTHORITY.\u2014The Secretary may by regulations limit the application of clause (i), except that such regulations may not limit the period of time by which the annuity starting date precedes the provision of the writ- ten explanation other than by providing that the annuity starting date may not be earlier than termination of employment. ”(B) WAIVER OF 30-DAY PERIOD.\u2014A plan may permit a participant to elect (with any applica- ble spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day requirement under subpara- graph (A)) if the distribution commences more than 7 days after such explanation is provided.” (b) AMENDMENT TO ERISA.\u2014Section 205(c) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1055(c)) is amended by adding at the end the following new paragraph: ”(8) Notwithstanding any other provision of this subsection\u2014 ”(A)(i) A plan may provide the written expla- nation described in paragraph (3)(A) after the annuity starting date. In any case to which this subparagraph applies, the applicable election period under paragraph (7) shall not end before the 30th day after the date on which such expla- nation is provided. ”(ii) The Secretary may by regulations limit the application of clause (i), except that such regulations may not limit the period of time by which the annuity starting date precedes the provision of the written explanation other than by providing that the annuity starting date may not be earlier than termination of employment. ”(B) A plan may permit a participant to elect (with any applicable spousal consent) to waive any requirement that the written explanation be provided at least 30 days before the annuity starting date (or to waive the 30-day require- ment under subparagraph (A)) if the distribu- tion commences more than 7 days after such ex- planation is provided.” (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to plan years begin- ning after December 31, 1996. SEC. 1452. REPEAL OF LIMITATION IN CASE OF DEFINED BENEFIT PLAN AND DE- FINED CONTRIBUTION PLAN FOR SAME EMPLOYEE; EXCESS DISTRIBU- TIONS. (a) IN GENERAL.\u2014Section 415(e) is repealed. (b) EXCESS DISTRIBUTIONS.\u2014Section 4980A is amended by adding at the end the following new subsection: ”(g) LIMITATION ON APPLICATION.\u2014This sec- tion shall not apply to distributions during years beginning after December 31, 1996, and be- fore January 1, 2000, and such distributions shall be treated as made first from amounts not described in subsection (f).”. (c) CONFORMING AMENDMENTS.\u2014 (1) Paragraph (1) of section 415(a) is amend- ed\u2014 (A) by adding ”or” at the end of subpara- graph (A), (B) by striking ”, or” at the end of subpara- graph (B) and inserting a period, and (C) by striking subparagraph (C). (2) Subparagraph (B) of section 415(b)(5) is amended by striking ”and subsection (e)”. (3) Paragraph (1) of section 415(f) is amended by striking ”subsections (b), (c), and (e)” and inserting ”subsections (b) and (c)”. (4) Subsection (g) of section 415 is amended by striking ”subsections (e) and (f)” in the last sentence and inserting ”subsection (f)”. (5) Clause (i) of section 415(k)(2)(A) is amend- ed to read as follows: ”(i) any contribution made directly by an em- ployee under such an arrangement shall not be treated as an annual addition for purposes of subsection (c), and”. (6) Clause (ii) of section 415(k)(2)(A) is amend- ed by striking ”subsections (c) and (e)” and in- serting ”subsection (c)”. (7) Section 416 is amended by striking sub- section (h). (d) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014Except as provided in para- graph (2), the amendments made by this section shall apply to limitation years beginning after December 31, 1999. (2) EXCESS DISTRIBUTIONS.\u2014The amendment made by subsection (b) shall apply to years be- ginning after December 31, 1996. SEC. 1453. TAX ON PROHIBITED TRANSACTIONS. (a) IN GENERAL.\u2014Section 4975(a) is amended by striking ”5 percent” and inserting ”10 per- cent”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to prohibited trans- actions occurring after the date of the enact- ment of this Act. SEC. 1454. TREATMENT OF LEASED EMPLOYEES. (a) GENERAL RULE.\u2014Subparagraph (C) of sec- tion 414(n)(2) (defining leased employee) is amended to read as follows: ”(C) such services are performed under pri- mary direction or control by the recipient.”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall apply to years beginning after December 31, 1996, but shall not apply to any relationship determined under an Internal Revenue Service ruling issued before the date of the enactment of this Act pursuant to section 414(n)(2)(C) of the Internal Revenue Code of 1986 (as in effect on the day before such date) not to involve a leased employee. SEC. 1455. UNIFORM PENALTY PROVISIONS TO APPLY TO CERTAIN PENSION RE- PORTING REQUIREMENTS. (a) PENALTIES.\u2014 (1) STATEMENTS.\u2014Paragraph (1) of section 6724(d) is amended by striking ”and” at the end of subparagraph (A), by striking the period at the end of subparagraph (B) and inserting ”, and”, and by inserting after subparagraph (B) the following new subparagraph: ”(C) any statement of the amount of pay- ments to another person required to be made to the Secretary under\u2014 ”(i) section 408(i) (relating to reports with re- spect to individual retirement accounts or annu- ities), or ”(ii) section 6047(d) (relating to reports by em- ployers, plan administrators, etc.).”. (2) REPORTS.\u2014Paragraph (2) of section 6724(d) is amended by striking ”or” at the end of sub- paragraph (U), by striking the period at the end of subparagraph (V) and inserting a comma, and by inserting after subparagraph (V) the fol- lowing new subparagraphs: ”(W) section 408(i) (relating to reports with re- spect to individual retirement plans) to any per- son other than the Secretary with respect to the amount of payments made to such person, or ”(X) section 6047(d) (relating to reports by plan administrators) to any person other than the Secretary with respect to the amount of pay- ments made to such person.”. (b) MODIFICATION OF REPORTABLE DES- IGNATED DISTRIBUTIONS.\u2014 CONGRESSIONAL RECORD \u2014 HOUSE H9585August 1, 1996 (1) SECTION 408.\u2014Subsection (i) of section 408 (relating to individual retirement account re- ports) is amended by inserting ”aggregating $10 or more in any calendar year” after ”distribu- tions”. (2) SECTION 6047.\u2014Paragraph (1) of section 6047(d) (relating to reports by employers, plan administrators, etc.) is amended by adding at the end the following new sentence: ”No return or report may be required under the preceding sentence with respect to distributions to any person during any year unless such distribu- tions aggregate $10 or more.”. (c) QUALIFYING ROLLOVER DISTRIBUTIONS.\u2014 Section 6652(i) is amended\u2014 (1) by striking ”the $10” and inserting ”$100”, and (2) by striking ”$5,000” and inserting ”$50,000”. (d) CONFORMING AMENDMENTS.\u2014 (1) Paragraph (1) of section 6047(f) is amended to read as follows: ”(1) For provisions relating to penalties for failures to file returns and reports required under this section, see sections 6652(e), 6721, and 6722.”. (2) Subsection (e) of section 6652 is amended by adding at the end the following new sen- tence: ”This subsection shall not apply to any return or statement which is an information re- turn described in section 6724(d)(1)(C)(ii) or a payee statement described in section 6724(d)(2)(X).”. (3) Subsection (a) of section 6693 is amended by adding at the end the following new sen- tence: ”This subsection shall not apply to any report which is an information return described in section 6724(d)(1)(C)(i) or a payee statement described in section 6724(d)(2)(W).”. (e) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to returns, reports, and other statements the due date for which (determined without regard to extensions) is after December 31, 1996. SEC. 1456. RETIREMENT BENEFITS OF MINISTERS NOT SUBJECT TO TAX ON NET EARN- INGS FROM SELF-EMPLOYMENT. (a) IN GENERAL.\u2014Section 1402(a)(8) (defining net earning from self-employment) is amended by inserting ”, but shall not include in such net earnings from self-employment the rental value of any parsonage or any parsonage allowance (whether or not excludable under section 107) provided after the individual retires, or any other retirement benefit received by such indi- vidual from a church plan (as defined in section 414(e)) after the individual retires” before the semicolon at the end. (b) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to years beginning before, on, or after December 31, 1994. SEC. 1457. SAMPLE LANGUAGE FOR SPOUSAL CONSENT AND QUALIFIED DOMES- TIC RELATIONS FORMS. (a) DEVELOPMENT OF SAMPLE LANGUAGE.\u2014Not later than January 1, 1997, the Secretary of the Treasury shall develop\u2014 (1) sample language for inclusion in a form for the spousal consent required under section 417(a)(2) of the Internal Revenue Code of 1986 and section 205(c)(2) of the Employee Retirement Income Security Act of 1974 which\u2014 (A) is written in a manner calculated to be understood by the average person, and (B) discloses in plain form\u2014 (i) whether the waiver to which the spouse consents is irrevocable, and (ii) whether such waiver may be revoked by a qualified domestic relations order, and (2) sample language for inclusion in a form for a qualified domestic relations order described in section 414(p)(1)(A) of such Code and section 206(d)(3)(B)(i) of such Act which\u2014 (A) meets the requirements contained in such sections, and (B) the provisions of which focus attention on the need to consider the treatment of any lump sum payment, qualified joint and survivor an- nuity, or qualified preretirement survivor annu- ity. (b) PUBLICITY.\u2014The Secretary of the Treasury shall include publicity for the sample language developed under subsection (a) in the pension outreach efforts undertaken by the Secretary. SEC. 1458. TREATMENT OF LENGTH OF SERVICE AWARDS TO VOLUNTEERS PERFORM- ING FIRE FIGHTING OR PREVENTION SERVICES, EMERGENCY MEDICAL SERVICES, OR AMBULANCE SERV- ICES. (a) IN GENERAL.\u2014Paragraph (11) of section 457(e) (relating to deferred compensation plans of State and local governments and tax-exempt organizations) is amended to read as follows: ”(11) CERTAIN PLANS EXCLUDED.\u2014 ”(A) IN GENERAL.\u2014The following plans shall be treated as not providing for the deferral of compensation: ”(i) Any bona fide vacation leave, sick leave, compensatory time, severance pay, disability pay, or death benefit plan. ”(ii) Any plan paying solely length of service awards to bona fide volunteers (or their bene- ficiaries) on account of qualified services per- formed by such volunteers. ”(B) SPECIAL RULES APPLICABLE TO LENGTH OF SERVICE AWARD PLANS.\u2014 ”(i) BONA FIDE VOLUNTEER.\u2014An individual shall be treated as a bona fide volunteer for pur- poses of subparagraph (A)(ii) if the only com- pensation received by such individual for per- forming qualified services is in the form of\u2014 ”(I) reimbursement for (or a reasonable allow- ance for) reasonable expenses incurred in the performance of such services, or ”(II) reasonable benefits (including length of service awards), and nominal fees for such serv- ices, customarily paid by eligible employers in connection with the performance of such serv- ices by volunteers. ”(ii) LIMITATION ON ACCRUALS.\u2014A plan shall not be treated as described in subparagraph (A)(ii) if the aggregate amount of length of serv- ice awards accruing with respect to any year of service for any bona fide volunteer exceeds $3,000. ”(C) QUALIFIED SERVICES.\u2014For purposes of this paragraph, the term ‘qualified services’ means fire fighting and prevention services, emergency medical services, and ambulance services.”. (b) EXEMPTION FROM SOCIAL SECURITY TAXES.\u2014 (1) Subsection (a)(5) of section 3121, as amend- ed by section 1421, is amended by striking ”(or)” at the end of subparagraph (G), by inserting ”or” at the end of subparagraph (H), and by adding at the end the following new subpara- graph: ”(I) under a plan described in section 457(e)(11)(A)(ii) and maintained by an eligible employer (as defined in section 457(e)(1)).”. (2) Section 209(a)(4) of the Social Security Act is amended by inserting ”; or (K) under a plan described in section 457(e)(11)(A)(ii) of the Inter- nal Revenue Code of 1986 and maintained by an eligible employer (as defined in section 457(e)(1) of such Code)” before the semicolon at the end thereof. (c) EFFECTIVE DATE.\u2014 (1) SUBSECTION (a).\u2014The amendment made by subsection (a) shall apply to accruals of length of service awards after December 31, 1996. (2) SUBSECTION (b).\u2014The amendments made by subsection (b) shall apply to remuneration paid after December 31, 1996. SEC. 1459. ALTERNATIVE NONDISCRIMINATION RULES FOR CERTAIN PLANS THAT PROVIDE FOR EARLY PARTICIPA- TION. (a) CASH OR DEFERRED ARRANGEMENTS.\u2014 Paragraph (3) of section 401(k) (relating to ap- plication of participation and discrimination standards), as amended by section 1433(d)(1) of this Act, is amended by adding at the end the following new subparagraph: ”(F) SPECIAL RULE FOR EARLY PARTICIPA- TION.\u2014If an employer elects to apply section 410(b)(4)(B) in determining whether a cash or deferred arrangement meets the requirements of subparagraph (A)(i), the employer may, in de- termining whether the arrangement meets the requirements of subparagraph (A)(ii), exclude from consideration all eligible employees (other than highly compensated employees) who have not met the minimum age and service require- ments of section 410(a)(1)(A).”. (b) MATCHING CONTRIBUTIONS.\u2014Paragraph (5) of section 401(m) (relating to employees taken into consideration) is amended by adding at the end the following new subparagraph: ”(C) SPECIAL RULE FOR EARLY PARTICIPA- TION.\u2014If an employer elects to apply section 410(b)(4)(B) in determining whether a plan meets the requirements of section 410(b), the em- ployer may, in determining whether the plan meets the requirements of paragraph (2), exclude from consideration all eligible employees (other than highly compensated employees) who have not met the minimum age and service require- ments of section 410(a)(1)(A).”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to plan years begin- ning after December 31, 1998. SEC. 1460. CLARIFICATION OF APPLICATION OF ERISA TO INSURANCE COMPANY GENERAL ACCOUNTS. (a) IN GENERAL.\u2014Section 401 of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1101) is amended by adding at the end the following new subsection: ”(c)(1)(A) Not later than June 30, 1997, the Secretary shall issue proposed regulations to provide guidance for the purpose of determin- ing, in cases where an insurer issues 1 or more policies to or for the benefit of an employee ben- efit plan (and such policies are supported by as- sets of such insurer’s general account), which assets held by the insurer (other than plan as- sets held in its separate accounts) constitute as- sets of the plan for purposes of this part and section 4975 of the Internal Revenue Code of 1986 and to provide guidance with respect to the application of this title to the general account assets of insurers. ”(B) The proposed regulations under subpara- graph (A) shall be subject to public notice and comment until September 30, 1997. ”(C) The Secretary shall issue final regula- tions providing the guidance described in sub- paragraph (A) not later than December 31, 1997. ”(D) Such regulations shall only apply with respect to policies which are issued by an in- surer on or before December 31, 1998, to or for the benefit of an employee benefit plan which is supported by assets of such insurer’s general ac- count. With respect to policies issued on or be- fore December 31, 1998, such regulations shall take effect at the end of the 18-month period fol- lowing the date on which such regulations be- come final. ”(2) The Secretary shall ensure that the regu- lations issued under paragraph (1)\u2014 ”(A) are administratively feasible, and ”(B) protect the interests and rights of the plan and of its participants and beneficiaries (including meeting the requirements of para- graph (3)). ”(3) The regulations prescribed by the Sec- retary pursuant to paragraph (1) shall require, in connection with any policy issued by an in- surer to or for the benefit of an employee benefit plan to the extent that the policy is not a guar- anteed benefit policy (as defined in subsection (b)(2)(B))\u2014 ”(A) that a plan fiduciary totally independent of the insurer authorize the purchase of such policy (unless such purchase is a transaction ex- empt under section 408(b)(5)), ”(B) that the insurer describe (in such form and manner as shall be prescribed in such regu- lations), in annual reports and in policies issued to the policyholder after the date on which such regulations are issued in final form pursuant to paragraph (1)(C) \u2014 CONGRESSIONAL RECORD \u2014 HOUSEH9586 August 1, 1996 ”(i) a description of the method by which any income and expenses of the insurer’s general ac- count are allocated to the policy during the term of the policy and upon the termination of the policy, and ”(ii) for each report, the actual return to the plan under the policy and such other financial information as the Secretary may deem appro- priate for the period covered by each such an- nual report, ”(C) that the insurer disclose to the plan fidu- ciary the extent to which alternative arrange- ments supported by assets of separate accounts of the insurer (which generally hold plan assets) are available, whether there is a right under the policy to transfer funds to a separate account and the terms governing any such right, and the extent to which support by assets of the insur- er’s general account and support by assets of separate accounts of the insurer might pose dif- fering risks to the plan, and ”(D) that the insurer manage those assets of the insurer which are assets of such insurer’s general account (irrespective of whether any such assets are plan assets) with the care, skill, prudence, and diligence under the cir- cumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enter- prise of a like character and with like aims, tak- ing into account all obligations supported by such enterprise. ”(4) Compliance by the insurer with all re- quirements of the regulations issued by the Sec- retary pursuant to paragraph (1) shall be deemed compliance by such insurer with sec- tions 404, 406, and 407 with respect to those as- sets of the insurer’s general account which sup- port a policy described in paragraph (3). ”(5)(A) Subject to subparagraph (B), any reg- ulations issued under paragraph (1) shall not take effect before the date on which such regu- lations become final. ”(B) No person shall be subject to liability under this part or section 4975 of the Internal Revenue Code of 1986 for conduct which oc- curred before the date which is 18 months fol- lowing the date described in subparagraph (A) on the basis of a claim that the assets of an in- surer (other than plan assets held in a separate account) constitute assets of the plan, except\u2014 ”(i) as otherwise provided by the Secretary in regulations intended to prevent avoidance of the regulations issued under paragraph (1), or ”(ii) as provided in an action brought by the Secretary pursuant to paragraph (2) or (5) of section 502(a) for a breach of fiduciary respon- sibilities which would also constitute a violation of Federal or State criminal law. The Secretary shall bring a cause of action de- scribed in clause (ii) if a participant, bene- ficiary, or fiduciary demonstrates to the satis- faction of the Secretary that a breach described in clause (ii) has occurred. ”(6) Nothing in this subsection shall preclude the application of any Federal criminal law. ”(7) For purposes of this subsection, the term ‘policy’ includes a contract.”. (b) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014Except as provided in para- graph (2), the amendment made by this section shall take effect on January 1, 1975. (2) CIVIL ACTIONS.\u2014The amendment made by this section shall not apply to any civil action commenced before November 7, 1995. SEC. 1461. SPECIAL RULES FOR CHAPLAINS AND SELF-EMPLOYED MINISTERS. (a) IN GENERAL.\u2014Section 414(e) (defining church plan) is amended by adding at the end the following new paragraph: ”(5) SPECIAL RULES FOR CHAPLAINS AND SELF- EMPLOYED MINISTERS.\u2014 ”(A) CERTAIN MINISTERS MAY PARTICIPATE.\u2014 For purposes of this part\u2014 ”(i) IN GENERAL.\u2014An employee of a church or a convention or association of churches shall in- clude a duly ordained, commissioned, or licensed minister of a church who, in connection with the exercise of his or her ministry\u2014 ”(I) is a self-employed individual (within the meaning of section 401(c)(1)(B)), or ”(II) is employed by an organization other than an organization described in section 501(c)(3). ”(ii) TREATMENT AS EMPLOYER AND EM- PLOYEE.\u2014 ”(I) SELF-EMPLOYED.\u2014A minister described in clause (i)(I) shall be treated as his or her own employer which is an organization described in section 501(c)(3) and which is exempt from tax under section 501(a). ”(II) OTHERS.\u2014A minister described in clause (i)(II) shall be treated as employed by an orga- nization described in section 501(c)(3) and ex- empt from tax under section 501(a). ”(B) SPECIAL RULES FOR APPLYING SECTION 403(b) TO SELF-EMPLOYED MINISTERS.\u2014In the case of a minister described in subparagraph (A)(i)(I)\u2014 ”(i) the minister’s includible compensation under section 403(b)(3) shall be determined by reference to the minister’s earned income (with- in the meaning of section 401(c)(2)) from such ministry rather than the amount of compensa- tion which is received from an employer, and ”(ii) the years (and portions of years) in which such minister was a self-employed indi- vidual (within the meaning of section 401(c)(1)(B)) with respect to such ministry shall be included for purposes of section 403(b)(4). ”(C) EFFECT ON NON-DENOMINATIONAL PLANS.\u2014If a duly ordained, commissioned, or li- censed minister of a church in the exercise of his or her ministry participates in a church plan (within the meaning of this section) and in the exercise of such ministry is employed by an em- ployer not eligible to participate in such church plan, then such employer may exclude such minister from being treated as an employee of such employer for purposes of applying sections 401(a)(3), 401(a)(4), and 401(a)(5), as in effect on September 1, 1974, and sections 401(a)(4), 401(a)(5), 401(a)(26), 401(k)(3), 401(m), 403(b)(1)(D) (including section 403(b)(12)), and 410 to any stock bonus, pension, profit-sharing, or annuity plan (including an annuity described in section 403(b) or a retirement income account described in section 403(b)(9)). The Secretary shall prescribe such regulations as may be nec- essary or appropriate to carry out the purpose of, and prevent the abuse of, this subparagraph. ”(D) COMPENSATION TAKEN INTO ACCOUNT ONLY ONCE.\u2014If any compensation is taken into account in determining the amount of any con- tributions made to, or benefits to be provided under, any church plan, such compensation shall not also be taken into account in deter- mining the amount of any contributions made to, or benefits to be provided under, any other stock bonus, pension, profit-sharing, or annuity plan which is not a church plan.” (b) CONTRIBUTIONS BY CERTAIN MINISTERS TO RETIREMENT INCOME ACCOUNTS.\u2014Section 404(a) (relating to deduction for contributions of an employer to an employees’ trust or annuity plan and compensation under a deferred-payment plan) is amended by adding at the end the fol- lowing new paragraph: ”(10) CONTRIBUTIONS BY CERTAIN MINISTERS TO RETIREMENT INCOME ACCOUNTS.\u2014In the case of contributions made by a minister described in section 414(e)(5) to a retirement income account described in section 403(b)(9) and not by a per- son other than such minister, such contribu- tions\u2014 ”(A) shall be treated as made to a trust which is exempt from tax under section 501(a) and which is part of a plan which is described in section 401(a), and ”(B) shall be deductible under this subsection to the extent such contributions do not exceed the limit on elective deferrals under section 402(g), the exclusion allowance under section 403(b)(2), or the limit on annual additions under section 415. For purposes of this paragraph, all plans in which the minister is a participant shall be treated as one plan.”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to years beginning after December 31, 1996. SEC. 1462. DEFINITION OF HIGHLY COM- PENSATED EMPLOYEE FOR PRE- ERISA RULES FOR CHURCH PLANS. (a) IN GENERAL.\u2014Section 414(q) (defining highly compensated employee), as amended by section 1431(c)(1)(A) of this Act, is amended by adding at the end the following new paragraph: ”(7) CERTAIN EMPLOYEES NOT CONSIDERED HIGHLY COMPENSATED AND EXCLUDED EMPLOY- EES UNDER PRE-ERISA RULES FOR CHURCH PLANS.\u2014In the case of a church plan (as defined in subsection (e)), no employee shall be consid- ered an officer, a person whose principal duties consist of supervising the work of other employ- ees, or a highly compensated employee for any year unless such employee is a highly com- pensated employee under paragraph (1) for such year.”. (b) SAFEHARBOR AUTHORITY.\u2014The Secretary of the Treasury may design nondiscrimination and coverage safe harbors for church plans. (c) EFFECTIVE DATE.\u2014The amendments made by subsection (a) shall apply to years beginning after December 31, 1996. SEC. 1463. RULE RELATING TO INVESTMENT IN CONTRACT NOT TO APPLY TO FOR- EIGN MISSIONARIES. (a) IN GENERAL.\u2014The last sentence of section 72(f) is amended by inserting ”, or to the extent such credits are attributable to services per- formed as a foreign missionary (within the meaning of section 403(b)(2)(D)(iii))” before the end period. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to taxable years be- ginning after December 31, 1996. SEC. 1464. WAIVER OF EXCISE TAX ON FAILURE TO PAY LIQUIDITY SHORTFALL. (a) IN GENERAL.\u2014Section 4971(f) (relating to failure to pay liquidity shortfall) is amended by adding at the end the following new paragraph: ”(4) WAIVER BY SECRETARY.\u2014If the taxpayer establishes to the satisfaction of the Secretary that\u2014 ”(A) the liquidity shortfall described in para- graph (1) was due to reasonable cause and not willful neglect, and ”(B) reasonable steps have been taken to rem- edy such liquidity shortfall, the Secretary may waive all or part of the tax imposed by this subsection.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall take effect as if included in the amendment made by clause (ii) of section 751(a)(9)(B) of the Retirement Protection Act of 1994 (108 Stat. 5020). SEC. 1465. DATE FOR ADOPTION OF PLAN AMEND- MENTS. If any amendment made by this subtitle re- quires an amendment to any plan or annuity contract, such amendment shall not be required to be made before the first day of the first plan year beginning on or after January 1, 1998, if\u2014 (1) during the period after such amendment takes effect and before such first plan year, the plan or contract is operated in accordance with the requirements of such amendment, and (2) such amendment applies retroactively to such period. In the case of a governmental plan (as defined in section 414(d) of the Internal Revenue Code of 1986), this section shall be applied by sub- stituting ”2000” for ”1998”. Subtitle E\u2014Foreign Simplification SEC. 1501. REPEAL OF INCLUSION OF CERTAIN EARNINGS INVESTED IN EXCESS PASSIVE ASSETS. (a) IN GENERAL.\u2014 (1) REPEAL OF INCLUSION.\u2014Paragraph (1) of section 951(a) (relating to amounts included in gross income of United States shareholders) is CONGRESSIONAL RECORD \u2014 HOUSE H9587August 1, 1996 amended by striking subparagraph (C), by strik- ing ”; and” at the end of subparagraph (B) and inserting a period, and by adding ”and” at the end of subparagraph (A). (2) REPEAL OF INCLUSION AMOUNT.\u2014Section 956A (relating to earnings invested in excess passive assets) is repealed. (b) CONFORMING AMENDMENTS.\u2014 (1) Subparagraph (G) of section 904(d)(3), as amended by section 1703(i)(1), is amended by striking ”subparagraph (B) or (C) of section 951(a)(1)” and inserting ”section 951(a)(1)(B)”. (1) Paragraph (1) of section 956(b) is amended to read as follows: ”(1) APPLICABLE EARNINGS.\u2014For purposes of this section, the term ‘applicable earnings’ means, with respect to any controlled foreign corporation, the sum of\u2014 ”(A) the amount (not including a deficit) re- ferred to in section 316(a)(1), and ”(B) the amount referred to in section 316(a)(2), but reduced by distributions made during the taxable year and by earnings and profits de- scribed in section 959(c)(1).”. (2) Paragraph (3) of section 956(b) is amended to read as follows: ”(3) SPECIAL RULE WHERE CORPORATION CEASES TO BE CONTROLLED FOREIGN CORPORA- TION.\u2014If any foreign corporation ceases to be a controlled foreign corporation during any tax- able year\u2014 ”(A) the determination of any United States shareholder’s pro rata share shall be made on the basis of stock owned (within the meaning of section 958(a)) by such shareholder on the last day during the taxable year on which the for- eign corporation is a controlled foreign corpora- tion, ”(B) the average referred to in subsection (a)(1)(A) for such taxable year shall be deter- mined by only taking into account quarters end- ing on or before such last day, and ”(C) in determining applicable earnings, the amount taken into account by reason of being described in paragraph (2) of section 316(a) shall be the portion of the amount so described which is allocable (on a pro rata basis) to the part of such year during which the corporation is a controlled foreign corporation.”.. (3) Subsection (a) of section 959 (relating to exclusion from gross income of previously taxed earnings and profits) is amended by adding ”or” at the end of paragraph (1), by striking ”or” at the end of paragraph (2), and by strik- ing paragraph (3). (4) Subsection (a) of section 959 is amended by striking ”paragraphs (2) and (3)” in the last sentence and inserting ”paragraph (2)”. (5) Subsection (c) of section 959 is amended by adding at the end the following flush sentence: ”References in this subsection to section 951(a)(1)(C) and subsection (a)(3) shall be treat- ed as references to such provisions as in effect on the day before the date of the enactment of the Small Business Job Protection Act of 1996.”. (6) Paragraph (1) of section 959(f) is amended to read as follows: ”(1) IN GENERAL.\u2014For purposes of this sec- tion, amounts that would be included under subparagraph (B) of section 951(a)(1) (deter- mined without regard to this section) shall be treated as attributable first to earnings de- scribed in subsection (c)(2), and then to earn- ings described in subsection (c)(3).”. (7) Paragraph (2) of section 959(f) is amended by striking ”subparagraphs (B) and (C) of sec- tion 951(a)(1)” and inserting ”section 951(a)(1)(B)”. (8) Subsection (b) of section 989 is amended by striking ”subparagraph (B) or (C) of section 951(a)(1)” and inserting ”section 951(a)(1)(B)”. (9) Paragraph (9) of section 1297(b) is amend- ed by striking ”subparagraph (B) or (C) of sec- tion 951(a)(1)” and inserting ”section 951(a)(1)(B)”. (10) Subsections (d)(3)(B) and (e)(2)(B)(ii) of section 1297 are each amended by striking ”or section 956A”. (11) Subparagraph (G) of section 904(d)(3) is amended by striking ”subparagraph (B) or (C) of section 951(a)(1)” and inserting ”section 951(a)(1)(B)”. (c) CLERICAL AMENDMENT.\u2014The table of sec- tions for subpart F of part III of subchapter N of chapter 1 is amended by striking the item re- lating to section 956A. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to taxable years of foreign corporations beginning after December 31, 1996, and to taxable years of United States shareholders within which or with which such taxable years of foreign corporations end. Subtitle F\u2014Revenue Offsets PART I\u2014GENERAL PROVISIONS SEC. 1601. TERMINATION OF PUERTO RICO AND POSSESSION TAX CREDIT. (a) IN GENERAL.\u2014Section 936 is amended by adding at the end the following new subsection: ”(j) TERMINATION.\u2014 ”(1) IN GENERAL.\u2014Except as otherwise pro- vided in this subsection, this section shall not apply to any taxable year beginning after De- cember 31, 1995. ”(2) TRANSITION RULES FOR ACTIVE BUSINESS INCOME CREDIT.\u2014Except as provided in para- graph (3)\u2014 ”(A) ECONOMIC ACTIVITY CREDIT.\u2014In the case of an existing credit claimant\u2014 ”(i) with respect to a possession other than Puerto Rico, and ”(ii) to which subsection (a)(4)(B) does not apply, the credit determined under subsection (a)(1)(A) shall be allowed for taxable years beginning after December 31, 1995, and before January 1, 2002. ”(B) SPECIAL RULE FOR REDUCED CREDIT.\u2014 ”(i) IN GENERAL.\u2014In the case of an existing credit claimant to which subsection (a)(4)(B) ap- plies, the credit determined under subsection (a)(1)(A) shall be allowed for taxable years be- ginning after December 31, 1995, and before Jan- uary 1, 1998. ”(ii) ELECTION IRREVOCABLE AFTER 1997.\u2014An election under subsection (a)(4)(B)(iii) which is in effect for the taxpayer’s last taxable year be- ginning before 1997 may not be revoked unless it is revoked for the taxpayer’s first taxable year beginning in 1997 and all subsequent taxable years. ”(C) ECONOMIC ACTIVITY CREDIT FOR PUERTO RICO.\u2014 ”For economic activity credit for Puerto Rico, see section 30A. ”(3) ADDITIONAL RESTRICTED CREDIT.\u2014 ”(A) IN GENERAL.\u2014In the case of an existing credit claimant\u2014 ”(i) the credit under subsection (a)(1)(A) shall be allowed for the period beginning with the first taxable year after the last taxable year to which subparagraph (A) or (B) of paragraph (2), whichever is appropriate, applied and end- ing with the last taxable year beginning before January 1, 2006, except that ”(ii) the aggregate amount of taxable income taken into account under subsection (a)(1)(A) for any such taxable year shall not exceed the adjusted base period income of such claimant. ”(B) COORDINATION WITH SUBSECTION (a)(4).\u2014 The amount of income described in subsection (a)(1)(A) which is taken into account in apply- ing subsection (a)(4) shall be such income as re- duced under this paragraph. ”(4) ADJUSTED BASE PERIOD INCOME.\u2014For purposes of paragraph (3)\u2014 ”(A) IN GENERAL.\u2014The term ‘adjusted base period income’ means the average of the infla- tion-adjusted possession incomes of the corpora- tion for each base period year. ”(B) INFLATION-ADJUSTED POSSESSION IN- COME.\u2014For purposes of subparagraph (A), the inflation-adjusted possession income of any cor- poration for any base period year shall be an amount equal to the sum of\u2014 ”(i) the possession income of such corporation for such base period year, plus ”(ii) such possession income multiplied by the inflation adjustment percentage for such base period year. ”(C) INFLATION ADJUSTMENT PERCENTAGE.\u2014 For purposes of subparagraph (B), the inflation adjustment percentage for any base period year means the percentage (if any) by which\u2014 ”(i) the CPI for 1995, exceeds ”(ii) the CPI for the calendar year in which the base period year for which the determina- tion is being made ends. For purposes of the preceding sentence, the CPI for any calendar year is the CPI (as defined in section 1(f)(5)) for such year under section 1(f)(4). ”(D) INCREASE IN INFLATION ADJUSTMENT PER- CENTAGE FOR GROWTH DURING BASE YEARS.\u2014The inflation adjustment percentage (determined under subparagraph (C) without regard to this subparagraph) for each of the 5 taxable years referred to in paragraph (5)(A) shall be in- creased by\u2014 ”(i) 5 percentage points in the case of a tax- able year ending during the 1-year period end- ing on October 13, 1995; ”(ii) 10.25 percentage points in the case of a taxable year ending during the 1-year period ending on October 13, 1994; ”(iii) 15.76 percentage points in the case of a taxable year ending during the 1-year period ending on October 13, 1993; ”(iv) 21.55 percentage points in the case of a taxable year ending during the 1-year period ending on October 13, 1992; and ”(v) 27.63 percentage points in the case of a taxable year ending during the 1-year period ending on October 13, 1991. ”(5) BASE PERIOD YEAR.\u2014For purposes of this subsection\u2014 ”(A) IN GENERAL.\u2014The term ‘base period year’ means each of 3 taxable years which are among the 5 most recent taxable years of the corpora- tion ending before October 14, 1995, determined by disregarding\u2014 ”(i) one taxable year for which the corpora- tion had the largest inflation-adjusted posses- sion income, and ”(ii) one taxable year for which the corpora- tion had the smallest inflation-adjusted posses- sion income. ”(B) CORPORATIONS NOT HAVING SIGNIFICANT POSSESSION INCOME THROUGHOUT 5-YEAR PE- RIOD.\u2014 ”(i) IN GENERAL.\u2014If a corporation does not have significant possession income for each of the most recent 5 taxable years ending before October 14, 1995, then, in lieu of applying sub- paragraph (A), the term ‘base period year’ means only those taxable years (of such 5 tax- able years) for which the corporation has sig- nificant possession income; except that, if such corporation has significant possession income for 4 of such 5 taxable years, the rule of sub- paragraph (A)(ii) shall apply. ”(ii) SPECIAL RULE.\u2014If there is no year (of such 5 taxable years) for which a corporation has significant possession income\u2014 ”(I) the term ‘base period year’ means the first taxable year ending on or after October 14, 1995, but ”(II) the amount of possession income for such year which is taken into account under paragraph (4) shall be the amount which would be determined if such year were a short taxable year ending on September 30, 1995. ”(iii) SIGNIFICANT POSSESSION INCOME.\u2014For purposes of this subparagraph, the term ‘signifi- cant possession income’ means possession in- come which exceeds 2 percent of the possession income of the taxpayer for the taxable year (of the period of 6 taxable years ending with the first taxable year ending on or after October 14, 1995) having the greatest possession income. ”(C) ELECTION TO USE ONE BASE PERIOD YEAR.\u2014 CONGRESSIONAL RECORD \u2014 HOUSEH9588 August 1, 1996 ”(i) IN GENERAL.\u2014At the election of the tax- payer, the term ‘base period year’ means\u2014 ”(I) only the last taxable year of the corpora- tion ending in calendar year 1992, or ”(II) a deemed taxable year which includes the first ten months of calendar year 1995. ”(ii) BASE PERIOD INCOME FOR 1995.\u2014In deter- mining the adjusted base period income of the corporation for the deemed taxable year under clause (i)(II), the possession income shall be annualized and shall be determined without re- gard to any extraordinary item. ”(iii) ELECTION.\u2014An election under this sub- paragraph by any possession corporation may be made only for the corporation’s first taxable year beginning after December 31, 1995, for which it is a possession corporation. The rules of subclauses (II) and (III) of subsection (a)(4)(B)(iii) shall apply to the election under this subparagraph. ”(D) ACQUISITIONS AND DISPOSITIONS.\u2014Rules similar to the rules of subparagraphs (A) and (B) of section 41(f)(3) shall apply for purposes of this subsection. ”(6) POSSESSION INCOME.\u2014For purposes of this subsection, the term ‘possession income’ means, with respect to any possession, the income re- ferred to in subsection (a)(1)(A) determined with respect to that possession. In no event shall pos- session income be treated as being less than zero. ”(7) SHORT YEARS.\u2014If the current year or a base period year is a short taxable year, the ap- plication of this subsection shall be made with such annualizations as the Secretary shall pre- scribe. ”(8) SPECIAL RULES FOR CERTAIN POSSES- SIONS.\u2014 ”(A) IN GENERAL.\u2014In the case of an existing credit claimant with respect to an applicable possession, this section (other than the preced- ing paragraphs of this subsection) shall apply to such claimant with respect to such applicable possession for taxable years beginning after De- cember 31, 1995, and before January 1, 2006. ”(B) APPLICABLE POSSESSION.\u2014For purposes of this paragraph, the term ‘applicable posses- sion’ means Guam, American Samoa, and the Commonwealth of the Northern Mariana Is- lands. ”(9) EXISTING CREDIT CLAIMANT.\u2014For pur- poses of this subsection\u2014 ”(A) IN GENERAL.\u2014The term ‘existing credit claimant’ means a corporation\u2014 ”(i)(I) which was actively conducting a trade or business in a possession on October 13, 1995, and ”(II) with respect to which an election under this section is in effect for the corporation’s tax- able year which includes October 13, 1995, or ”(ii) which acquired all of the assets of a trade or business of a corporation which\u2014 ”(I) satisfied the requirements of subclause (I) of clause (i) with respect to such trade or busi- ness, and ”(II) satisfied the requirements of subclause (II) of clause (i). ”(B) NEW LINES OF BUSINESS PROHIBITED.\u2014If, after October 13, 1995, a corporation which would (but for this subparagraph) be an existing credit claimant adds a substantial new line of business (other than in an acquisition described in subparagraph (A)(ii)), such corporation shall cease to be treated as an existing credit claimant as of the close of the taxable year ending before the date of such addition. ”(C) BINDING CONTRACT EXCEPTION.\u2014If, on October 13, 1995, and at all times thereafter, there is in effect with respect to a corporation a binding contract for the acquisition of assets to be used in, or for the sale of assets to be pro- duced from, a trade or business, the corporation shall be treated for purposes of this paragraph as actively conducting such trade or business on October 13, 1995. The preceding sentence shall not apply if such trade or business is not ac- tively conducted before January 1, 1996. ”(10) SEPARATE APPLICATION TO EACH POSSES- SION.\u2014For purposes of determining\u2014 ”(A) whether a taxpayer is an existing credit claimant, and ”(B) the amount of the credit allowed under this section, this subsection (and so much of this section as relates to this subsection) shall be applied sepa- rately with respect to each possession.”. (b) ECONOMIC ACTIVITY CREDIT FOR PUERTO RICO.\u2014 (1) IN GENERAL.\u2014Subpart B of part IV of sub- chapter A of chapter 1 is amended by adding at the end the following new section: ”SEC. 30A. PUERTO RICAN ECONOMIC ACTIVITY CREDIT. ”(a) ALLOWANCE OF CREDIT.\u2014 ”(1) IN GENERAL.\u2014Except as otherwise pro- vided in this section, if the conditions of both paragraph (1) and paragraph (2) of subsection (b) are satisfied with respect to a qualified do- mestic corporation, there shall be allowed as a credit against the tax imposed by this chapter an amount equal to the portion of the tax which is attributable to the taxable income, from sources without the United States, from\u2014 ”(A) the active conduct of a trade or business within Puerto Rico, or ”(B) the sale or exchange of substantially all of the assets used by the taxpayer in the active conduct of such trade or business. In the case of any taxable year beginning after December 31, 2001, the aggregate amount of tax- able income taken into account under the pre- ceding sentence (and in applying subsection (d)) shall not exceed the adjusted base period income of such corporation, as determined in the same manner as under section 936(j). ”(2) QUALIFIED DOMESTIC CORPORATION.\u2014For purposes of paragraph (1), the term ‘qualified domestic corporation’ means a domestic corpora- tion\u2014 ”(A) which is an existing credit claimant with respect to Puerto Rico, and ”(B) with respect to which section 936(a)(4)(B) does not apply for the taxable year. ”(3) SEPARATE APPLICATION.\u2014For purposes of determining\u2014 ”(A) whether a taxpayer is an existing credit claimant with respect to Puerto Rico, and ”(B) the amount of the credit allowed under this section, this section (and so much of section 936 as re- lates to this section) shall be applied separately with respect to Puerto Rico. ”(b) CONDITIONS WHICH MUST BE SATIS- FIED.\u2014The conditions referred to in subsection (a) are\u2014 ”(1) 3-YEAR PERIOD.\u2014If 80 percent or more of the gross income of the qualified domestic cor- poration for the 3-year period immediately pre- ceding the close of the taxable year (or for such part of such period immediately preceding the close of such taxable year as may be applicable) was derived from sources within a possession (determined without regard to section 904(f)). ”(2) TRADE OR BUSINESS.\u2014If 75 percent or more of the gross income of the qualified domes- tic corporation for such period or such part thereof was derived from the active conduct of a trade or business within a possession. ”(c) CREDIT NOT ALLOWED AGAINST CERTAIN TAXES.\u2014The credit provided by subsection (a) shall not be allowed against the tax imposed by\u2014 ”(1) section 59A (relating to environmental tax), ”(2) section 531 (relating to the tax on accu- mulated earnings), ”(3) section 541 (relating to personal holding company tax), or ”(4) section 1351 (relating to recoveries of for- eign expropriation losses). ”(d) LIMITATIONS ON CREDIT FOR ACTIVE BUSINESS INCOME.\u2014The amount of the credit de- termined under subsection (a) for any taxable year shall not exceed the sum of the following amounts: ”(1) 60 percent of the sum of\u2014 ”(A) the aggregate amount of the qualified domestic corporation’s qualified possession wages for such taxable year, plus ”(B) the allocable employee fringe benefit ex- penses of the qualified domestic corporation for such taxable year. ”(2) The sum of\u2014 ”(A) 15 percent of the depreciation allowances for the taxable year with respect to short-life qualified tangible property, ”(B) 40 percent of the depreciation allowances for the taxable year with respect to medium-life qualified tangible property, and ”(C) 65 percent of the depreciation allowances for the taxable year with respect to long-life qualified tangible property. ”(3) If the qualified domestic corporation does not have an election to use the method described in section 936(h)(5)(C)(ii) (relating to profit split) in effect for the taxable year, the amount of the qualified possession income taxes for the taxable year allocable to nonsheltered income. ”(e) ADMINISTRATIVE PROVISIONS.\u2014For pur- poses of this title\u2014 ”(1) the provisions of section 936 (including any applicable election thereunder) shall apply in the same manner as if the credit under this section were a credit under section 936(a)(1)(A) for a domestic corporation to which section 936(a)(4)(A) applies, ”(2) the credit under this section shall be treated in the same manner as the credit under section 936, and ”(3) a corporation to which this section ap- plies shall be treated in the same manner as if it were a corporation electing the application of section 936. ”(f) DEFINITIONS.\u2014For purposes of this sec- tion, any term used in this section which is also used in section 936 shall have the same meaning given such term by section 936. ”(g) APPLICATION OF SECTION.\u2014This section shall apply to taxable years beginning after De- cember 31, 1995, and before January 1, 2006.”. (2) CONFORMING AMENDMENTS.\u2014 (A) Paragraph (1) of section 55(c) is amended by striking ”and the section 936 credit allowable under section 27(b)” and inserting ”, the section 936 credit allowable under section 27(b), and the Puerto Rican economic activity credit under sec- tion 30A”. (B) Subclause (I) of section 56(g)(4)(C)(ii) is amended\u2014 (i) by inserting ”30A,” before ”936”, and (ii) by striking ”and (i)” and inserting ”, (i), and (j)”. (C) Clause (iii) of section 56(g)(4)(C) is amend- ed by adding at the end the following new sub- clause: ”(VI) APPLICATION TO SECTION 30A CORPORA- TIONS.\u2014References in this clause to section 936 shall be treated as including references to sec- tion 30A.”. (D) Subsection (b) of section 59 is amended by striking ”section 936,” and all that follows and inserting ”section 30A or 936, alternative mini- mum taxable income shall not include any in- come with respect to which a credit is deter- mined under section 30A or 936.”. (E) The table of sections for subpart B of part IV of subchapter A of chapter 1 is amended by adding at the end the following new item: ”Sec. 30A. Puerto Rican economic activity cred- it.”. (F)(i) The heading for subpart B of part IV of subchapter A of chapter 1 is amended to read as follows: ”Subpart B\u2014Other Credits”. (ii) The table of subparts for part IV of sub- chapter A of chapter 1 is amended by striking the item relating to subpart B and inserting the following new item: ”Subpart B. Other credits.”. (c) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014Except as provided in para- graph (2), the amendments made by this section shall apply to taxable years beginning after De- cember 31, 1995. CONGRESSIONAL RECORD \u2014 HOUSE H9589August 1, 1996 (2) SPECIAL RULE FOR QUALIFIED POSSESSION SOURCE INVESTMENT INCOME.\u2014The amendments made by this section shall not apply to qualified possession source investment income received or accrued before July 1, 1996, without regard to the taxable year in which received or accrued. (3) SPECIAL TRANSITION RULE FOR PAYMENT OF ESTIMATED TAX INSTALLMENT.\u2014In determining the amount of any installment due under sec- tion 6655 of the Internal Revenue Code of 1986 after the date of the enactment of this Act and before October 1, 1996, only 1\u20442 of any increase in tax (for the taxable year for which such install- ment is made) by reason of the amendments made by subsections (a) and (b) shall be taken into account. Any reduction in such installment by reason of the preceding sentence shall be re- captured by increasing the next required install- ment for such year by the amount of such re- duction. SEC. 1602. REPEAL OF EXCLUSION FOR INTEREST ON LOANS USED TO ACQUIRE EM- PLOYER SECURITIES. (a) IN GENERAL.\u2014Section 133 (relating to in- terest on certain loans used to acquire employer securities) is hereby repealed. (b) CONFORMING AMENDMENTS.\u2014 (1) Subparagraph (B) of section 291(e)(1) is amended by striking clause (iv) and by redesig- nating clause (v) as clause (iv). (2) Section 812 is amended by striking sub- section (g). (3) Paragraph (5) of section 852(b) is amended by striking subparagraph (C). (4) Paragraph (2) of section 4978(b) is amend- ed by striking subparagraph (A) and all that follows and inserting the following: ”(A) first from qualified securities to which section 1042 applied acquired during the 3-year period ending on the date of the disposition, be- ginning with the securities first so acquired, and ”(B) then from any other employer securities. If subsection (d) applies to a disposition, the dis- position shall be treated as made from employer securities in the opposite order of the preceding sentence.”. (5)(A) Section 4978B (relating to tax on dis- position of employer securities to which section 133 applied) is hereby repealed. (B) The table of sections for chapter 43 is amended by striking the item relating to section 4978B. (6) Subsection (e) of section 6047 is amended by striking paragraphs (1), (2), and (3) and in- serting the following new paragraphs: ”(1) any employer maintaining, or the plan administrator (within the meaning of section 414(g)) of, an employee stock ownership plan which holds stock with respect to which section 404(k) applies to dividends paid on such stock, or ”(2) both such employer or plan adminis- trator,”. (7) Subsection (f) of section 7872 is amended by striking paragraph (12). (8) The table of sections for part III of sub- chapter B of chapter 1 is amended by striking the item relating to section 133. (c) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to loans made after the date of the enactment of this Act. (2) REFINANCINGS.\u2014The amendments made by this section shall not apply to loans made after the date of the enactment of this Act to refi- nance securities acquisition loans (determined without regard to section 133(b)(1)(B) of the In- ternal Revenue Code of 1986, as in effect on the day before the date of the enactment of this Act) made on or before such date or to refinance loans described in this paragraph if\u2014 (A) the refinancing loans meet the require- ments of section 133 of such Code (as so in ef- fect), (B) immediately after the refinancing the principal amount of the loan resulting from the refinancing does not exceed the principal amount of the refinanced loan (immediately be- fore the refinancing), and (C) the term of such refinancing loan does not extend beyond the last day of the term of the original securities acquisition loan. For purposes of this paragraph, the term ”secu- rities acquisition loan” includes a loan from a corporation to an employee stock ownership plan described in section 133(b)(3) of such Code (as so in effect). (3) EXCEPTION.\u2014Any loan made pursuant to a binding written contract in effect before June 10, 1996, and at all times thereafter before such loan is made, shall be treated for purposes of paragraphs (1) and (2) as a loan made on or be- fore the date of the enactment of this Act. SEC. 1603. CERTAIN AMOUNTS DERIVED FROM FOREIGN CORPORATIONS TREATED AS UNRELATED BUSINESS TAXABLE INCOME. (a) GENERAL RULE.\u2014Subsection (b) of section 512 (relating to modifications) is amended by adding at the end the following new paragraph: ”(17) TREATMENT OF CERTAIN AMOUNTS DE- RIVED FROM FOREIGN CORPORATIONS.\u2014 ”(A) IN GENERAL.\u2014Notwithstanding para- graph (1), any amount included in gross income under section 951(a)(1)(A) shall be included as an item of gross income derived from an unre- lated trade or business to the extent the amount so included is attributable to insurance income (as defined in section 953) which, if derived di- rectly by the organization, would be treated as gross income from an unrelated trade or busi- ness. There shall be allowed all deductions di- rectly connected with amounts included in gross income under the preceding sentence. ”(B) EXCEPTION.\u2014 ”(i) IN GENERAL.\u2014Subparagraph (A) shall not apply to income attributable to a policy of in- surance or reinsurance with respect to which the person (directly or indirectly) insured is\u2014 ”(I) such organization, ”(II) an affiliate of such organization which is exempt from tax under section 501(a), or ”(III) a director or officer of, or an individual who (directly or indirectly) performs services for, such organization or affiliate but only if the insurance covers primarily risks associated with the performance of services in connection with such organization or affiliate. ”(ii) AFFILIATE.\u2014For purposes of this sub- paragraph\u2014 ”(I) IN GENERAL.\u2014The determination as to whether an entity is an affiliate of an organiza- tion shall be made under rules similar to the rules of section 168(h)(4)(B). ”(II) SPECIAL RULE.\u2014Two or more organiza- tions (and any affiliates of such organizations) shall be treated as affiliates if such organiza- tions are colleges or universities described in section 170(b)(1)(A)(ii) or organizations de- scribed in section 170(b)(1)(A)(iii) and partici- pate in an insurance arrangement that provides for any profits from such arrangement to be re- turned to the policyholders in their capacity as such. ”(C) REGULATIONS.\u2014The Secretary shall pre- scribe such regulations as may be necessary or appropriate to carry out the purposes of this paragraph, including regulations for the appli- cation of this paragraph in the case of income paid through 1 or more entities or between 2 or more chains of entities.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to amounts included in gross income in any taxable year beginning after December 31, 1995. SEC. 1604. DEPRECIATION UNDER INCOME FORE- CAST METHOD. (a) GENERAL RULE.\u2014Section 167 (relating to depreciation) is amended by redesignating sub- section (g) as subsection (h) and by inserting after subsection (f) the following new sub- section: ”(g) DEPRECIATION UNDER INCOME FORECAST METHOD.\u2014 ”(1) IN GENERAL.\u2014If the depreciation deduc- tion allowable under this section to any tax- payer with respect to any property is determined under the income forecast method or any similar method\u2014 ”(A) the income from the property to be taken into account in determining the depreciation de- duction under such method shall be equal to the amount of income earned in connection with the property before the close of the 10th taxable year following the taxable year in which the property was placed in service, ”(B) the adjusted basis of the property shall only include amounts with respect to which the requirements of section 461(h) are satisfied, ”(C) the depreciation deduction under such method for the 10th taxable year beginning after the taxable year in which the property was placed in service shall be equal to the adjusted basis of such property as of the beginning of such 10th taxable year, and ”(D) such taxpayer shall pay (or be entitled to receive) interest computed under the look-back method of paragraph (2) for any recomputation year. ”(2) LOOK-BACK METHOD.\u2014The interest com- puted under the look-back method of this para- graph for any recomputation year shall be de- termined by\u2014 ”(A) first determining the depreciation deduc- tions under this section with respect to such property which would have been allowable for prior taxable years if the determination of the amounts so allowable had been made on the basis of the sum of the following (instead of the estimated income from such property)\u2014 ”(i) the actual income earned in connection with such property for periods before the close of the recomputation year, and ”(ii) an estimate of the future income to be earned in connection with such property for pe- riods after the recomputation year and before the close of the 10th taxable year following the taxable year in which the property was placed in service, ”(B) second, determining (solely for purposes of computing such interest) the overpayment or underpayment of tax for each such prior taxable year which would result solely from the applica- tion of subparagraph (A), and ”(C) then using the adjusted overpayment rate (as defined in section 460(b)(7)), compounded daily, on the overpayment or underpayment determined under subparagraph (B). For purposes of the preceding sentence, any cost incurred after the property is placed in service (which is not treated as a separate property under paragraph (5)) shall be taken into ac- count by discounting (using the Federal mid- term rate determined under section 1274(d) as of the time such cost is incurred) such cost to its value as of the date the property is placed in service. The taxpayer may elect with respect to any property to have the preceding sentence not apply to such property. ”(3) EXCEPTION FROM LOOK-BACK METHOD.\u2014 Paragraph (1)(D) shall not apply with respect to any property which had a cost basis of $100,000 or less. ”(4) RECOMPUTATION YEAR.\u2014For purposes of this subsection, except as provided in regula- tions, the term ‘recomputation year’ means, with respect to any property, the 3d and the 10th taxable years beginning after the taxable year in which the property was placed in serv- ice, unless the actual income earned in connec- tion with the property for the period before the close of such 3d or 10th taxable year is within 10 percent of the income earned in connection with the property for such period which was taken into account under paragraph (1)(A). ”(5) SPECIAL RULES.\u2014 ”(A) CERTAIN COSTS TREATED AS SEPARATE PROPERTY.\u2014For purposes of this subsection, the following costs shall be treated as separate prop- erties: CONGRESSIONAL RECORD \u2014 HOUSEH9590 August 1, 1996 ”(i) Any costs incurred with respect to any property after the 10th taxable year beginning after the taxable year in which the property was placed in service. ”(ii) Any costs incurred after the property is placed in service and before the close of such 10th taxable year if such costs are significant and give rise to a significant increase in the in- come from the property which was not included in the estimated income from the property. ”(B) SYNDICATION INCOME FROM TELEVISION SERIES.\u2014In the case of property which is 1 or more episodes in a television series, income from syndicating such series shall not be required to be taken into account under this subsection be- fore the earlier of\u2014 ”(i) the 4th taxable year beginning after the date the first episode in such series is placed in service, or ”(ii) the earliest taxable year in which the taxpayer has an arrangement relating to the fu- ture syndication of such series. ”(C) SPECIAL RULES FOR FINANCIAL EXPLOI- TATION OF CHARACTERS, ETC.\u2014For purposes of this subsection, in the case of television and mo- tion picture films, the income from the property shall include income from the exploitation of characters, designs, scripts, scores, and other in- cidental income associated with such films, but only to the extent that such income is earned in connection with the ultimate use of such items by, or the ultimate sale of merchandise to, per- sons who are not related persons (within the meaning of section 267(b)) to the taxpayer. ”(D) COLLECTION OF INTEREST.\u2014For purposes of subtitle F (other than sections 6654 and 6655), any interest required to be paid by the taxpayer under paragraph (1) for any recomputation year shall be treated as an increase in the tax im- posed by this chapter for such year. ”(E) DETERMINATIONS.\u2014For purposes of para- graph (2), determinations of the amount of in- come earned in connection with any property shall be made in the same manner as for pur- poses of applying the income forecast method; except that any income from the disposition of such property shall be taken into account. ”(F) TREATMENT OF PASS-THRU ENTITIES.\u2014 Rules similar to the rules of section 460(b)(4) shall apply for purposes of this subsection.” (b) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendment made by subsection (a) shall apply to property placed in service after September 13, 1995. (2) BINDING CONTRACTS.\u2014The amendment made by subsection (a) shall not apply to any property produced or acquired by the taxpayer pursuant to a written contract which was bind- ing on September 13, 1995, and at all times there- after before such production or acquisition. (3) UNDERPAYMENTS OF INCOME TAX.\u2014No ad- dition to tax shall be made under section 6662 of such Code as a result of the application of sub- section (d) of that section (relating to substan- tial understatements of income tax) with respect to any underpayment of income tax for any tax- able year ending before such date of enactment, to the extent such underpayment was created or increased by the amendments made by sub- section (a). SEC. 1605. REPEAL OF EXCLUSION FOR PUNITIVE DAMAGES AND FOR DAMAGES NOT ATTRIBUTABLE TO PHYSICAL INJU- RIES OR SICKNESS. (a) IN GENERAL.\u2014Paragraph (2) of section 104(a) (relating to compensation for injuries or sickness) is amended to read as follows: ”(2) the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as peri- odic payments) on account of personal physical injuries or physical sickness;”. (b) EMOTIONAL DISTRESS AS SUCH TREATED AS NOT PHYSICAL INJURY OR PHYSICAL SICKNESS.\u2014 Section 104(a) is amended by striking the last sentence and inserting the following new sen- tence: ”For purposes of paragraph (2), emo- tional distress shall not be treated as a physical injury or physical sickness. The preceding sen- tence shall not apply to an amount of damages not in excess of the amount paid for medical care (described in subparagraph (A) or (B) of section 213(d)(1)) attributable to emotional dis- tress.”. (c) APPLICATION OF PRIOR LAW FOR STATES IN WHICH ONLY PUNITIVE DAMAGES MAY BE AWARDED IN WRONGFUL DEATH ACTIONS.\u2014Sec- tion 104 is amended by redesignating subsection (c) as subsection (d) and by inserting after sub- section (b) the following new subsection: ”(c) APPLICATION OF PRIOR LAW IN CERTAIN CASES.\u2014The phrase ‘(other than punitive dam- ages)’ shall not apply to punitive damages awarded in a civil action\u2014 ”(1) which is a wrongful death action, and ”(2) with respect to which applicable State law (as in effect on September 13, 1995 and with- out regard to any modification after such date) provides, or has been construed to provide by a court of competent jurisdiction pursuant to a decision issued on or before September 13, 1995, that only punitive damages may be awarded in such an action. This subsection shall cease to apply to any civil action filed on or after the first date on which the applicable State law ceases to provide (or is no longer construed to provide) the treatment described in paragraph (2).”. (d) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014Except as provided in para- graph (2), the amendments made by this section shall apply to amounts received after the date of the enactment of this Act, in taxable years end- ing after such date. (2) EXCEPTION.\u2014The amendments made by this section shall not apply to any amount re- ceived under a written binding agreement, court decree, or mediation award in effect on (or is- sued on or before) September 13, 1995. SEC. 1606. REPEAL OF DIESEL FUEL TAX REBATE TO PURCHASERS OF DIESEL-POW- ERED AUTOMOBILES AND LIGHT TRUCKS. (a) IN GENERAL.\u2014Section 6427 (relating to fuels not used for taxable purposes) is amended by striking subsection (g). (b) CONFORMING AMENDMENTS.\u2014 (1) Paragraph (3) of section 34(a) is amended to read as follows: ”(3) under section 6427 with respect to fuels used for nontaxable purposes or resold during the taxable year (determined without regard to section 6427(k)).”. (2) Paragraphs (1) and (2)(A) of section 6427(i) are each amended\u2014 (A) by striking ”(g),”, and (B) by striking ”(or a qualified diesel powered highway vehicle purchased)” each place it ap- pears. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to vehicles purchased after the date of the enactment of this Act. SEC. 1607. EXTENSION AND PHASEDOWN OF LUX- URY PASSENGER AUTOMOBILE TAX. (a) EXTENSION.\u2014Subsection (f) of section 4001 is amended by striking ”1999” and inserting ”2002”. (b) PHASEDOWN.\u2014Section 4001 is amended by redesignating subsection (f) (as amended by sub- section (a) of this section) as subsection (g) and by inserting after subsection (e) the following new subsection: ”(f) PHASEDOWN.\u2014For sales occurring in cal- endar years after 1995 and before 2003, sub- section (a) shall be applied by substituting for ’10 percent’ the percentage determined in ac- cordance with the following table: ”If the calendar year is: The percentage is: 1996 …………………………… 9 percent 1997 …………………………… 8 percent 1998 …………………………… 7 percent 1999 …………………………… 6 percent 2000 …………………………… 5 percent 2001 …………………………… 4 percent 2002 …………………………… 3 percent.”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply with respect to sales occurring after the date which is 7 days after the date of the enactment of this Act. SEC. 1608. TERMINATION OF FUTURE TAX-EX- EMPT BOND FINANCING FOR LOCAL FURNISHERS OF ELECTRICITY AND GAS. (a) IN GENERAL.\u2014Section 142(f) (relating to local furnishing of electric energy or gas) is amended by adding at the end the following new paragraphs: ”(3) TERMINATION OF FUTURE FINANCING.\u2014For purposes of this section, no bond may be issued as part of an issue described in subsection (a)(8) with respect to a facility for the local furnishing of electric energy or gas on or after the date of the enactment of this paragraph unless\u2014 ”(A) the facility will\u2014 ”(i) be used by a person who is engaged in the local furnishing of that energy source on Janu- ary 1, 1997, and ”(ii) be used to provide service within the area served by such person on January 1, 1997, (or within a county or city any portion of which is within such area), or ”(B) the facility will be used by a successor in interest to such person for the same use and within the same service area as described in sub- paragraph (A). ”(4) ELECTION TO TERMINATE TAX-EXEMPT BOND FINANCING BY CERTAIN FURNISHERS.\u2014 ”(A) IN GENERAL.\u2014In the case of a facility fi- nanced with bonds issued before the date of the enactment of this paragraph which would cease to be tax-exempt by reason of the failure to meet the local furnishing requirement of subsection (a)(8) as a result of a service area expansion, such bonds shall not cease to be tax-exempt bonds (and section 150(b)(4) shall not apply) if the person engaged in such local furnishing by such facility makes an election described in sub- paragraph (B). ”(B) ELECTION.\u2014An election is described in this subparagraph if it is an election made in such manner as the Secretary prescribes, and such person (or its predecessor in interest) agrees that\u2014 ”(i) such election is made with respect to all facilities for the local furnishing of electric en- ergy or gas, or both, by such person, ”(ii) no bond exempt from tax under section 103 and described in subsection (a)(8) may be is- sued on or after the date of the enactment of this paragraph with respect to all such facilities of such person, ”(iii) any expansion of the service area\u2014 ”(I) is not financed with the proceeds of any exempt facility bond described in subsection (a)(8), and ”(II) is not treated as a nonqualifying use under the rules of paragraph (2), and ”(iv) all outstanding bonds used to finance the facilities for such person are redeemed not later than 6 months after the later of\u2014 ”(I) the earliest date on which such bonds may be redeemed, or ”(II) the date of the election. ”(C) RELATED PERSONS.\u2014For purposes of this paragraph, the term ‘person’ includes a group of related persons (within the meaning of section 144(a)(3)) which includes such person.”. (b) NO INFERENCE WITH RESPECT TO OUT- STANDING BONDS.\u2014The use of the term ”person” in section 142(f)(3) of the Internal Revenue Code of 1986, as added by subsection (a), shall not be construed to affect the tax-exempt status of in- terest on any bonds issued before the date of the enactment of this Act. SEC. 1609. EXTENSION OF AIRPORT AND AIRWAY TRUST FUND EXCISE TAXES. (a) FUEL TAX.\u2014 (1) Subparagraph (A) of section 4091(b)(3) is amended to read as follows: ”(A) The rate of tax specified in paragraph (1) shall be 4.3 cents per gallon\u2014 ”(i) after December 31, 1995, and before the date which is 7 calendar days after the date of CONGRESSIONAL RECORD \u2014 HOUSE H9591August 1, 1996 the enactment of the Small Business Job Protec- tion Act of 1996, and ”(ii) after December 31, 1996.”. (2) Section 4081(d) is amended\u2014 (A) by adding at the end the following new paragraph: ”(3) AVIATION GASOLINE.\u2014After December 31, 1996, the rate of tax specified in subsection (a)(2)(A)(i) on aviation gasoline shall be 4.3 cents per gallon.”, and (B) by inserting ”(other than the tax on avia- tion gasoline)” after ”subsection (a)(2)(A)”. (3) Section 4041(c)(5) is amended by inserting ”, and during the period beginning on the date which is 7 calendar days after the date of the enactment of the Small Business Job Protection Act of 1996 and ending on December 31, 1996” after ”December 31, 1995”. (b) TICKET TAXES.\u2014Sections 4261(g) and 4271(d) are each amended by striking ”January 1, 1996” and inserting ”January 1, 1996, and to transportation beginning on or after the date which is 7 calendar days after the date of the enactment of the Small Business Job Protection Act of 1996 and before January 1, 1997”. (c) TRANSFERS TO AIRPORT AND AIRWAY TRUST FUND.\u2014 (1) Subsection (b) of section 9502 is amended by striking ”January 1, 1996” each place it ap- pears and inserting ”January 1, 1997”. (2) Paragraph (3) of section 9502(f) is amended to read as follows: ”(3) TERMINATION.\u2014Notwithstanding the pre- ceding provisions of this subsection, the Airport and Airway Trust Fund financing rate shall be zero with respect to\u2014 ”(A) taxes imposed after December 31, 1995, and before the date which is 7 calendar days after the date of the enactment of the Small Business Job Protection Act of 1996, and ”(B) taxes imposed after December 31, 1996.”. (3) Subsection (d) of section 9502 is amended by adding at the end the following new para- graph: ”(5) TRANSFERS FROM AIRPORT AND AIRWAY TRUST FUND ON ACCOUNT OF REFUNDS OF TAXES ON TRANSPORTATION BY AIR.\u2014The Secretary of the Treasury shall pay from time to time from the Airport and Airway Trust Fund into the general fund of the Treasury amounts equiva- lent to the amounts paid after December 31, 1995, under section 6402 (relating to authority to make credits or refunds) or section 6415 (relating to credits or refunds to persons who collected certain taxes) in respect of taxes under sections 4261 and 4271.”. (d) EXCISE TAX EXEMPTION FOR CERTAIN EMERGENCY MEDICAL TRANSPORTATION BY AIR AMBULANCE.\u2014Subsection (f) of section 4261 (re- lating to imposition of tax on transportation by air) is amended to read as follows: ”(f) EXEMPTION FOR AIR AMBULANCES PRO- VIDING CERTAIN EMERGENCY MEDICAL TRANS- PORTATION.\u2014No tax shall be imposed under this section or section 4271 on any air transportation for the purpose of providing emergency medical services\u2014 ”(1) by helicopter, or ”(2) by a fixed-wing aircraft equipped for and exclusively dedicated to acute care emergency medical services.”. (e) EXEMPTION FOR CERTAIN HELICOPTER USES.\u2014Subsection (e) of section 4261 is amended by adding at the end the following new sen- tence: ”In the case of helicopter transportation described in paragraph (1), this subsection shall be applied by treating each flight segment as a distinct flight.”. (f) FLIGHT-BY-FLIGHT DETERMINATION OF AVAILABILITY FOR HIRE FOR AFFILIATED GROUPS.\u2014Section 4282 is amended by redesig- nating subsection (b) as subsection (c) and by inserting after subsection (a) the following new subsection: ”(b) AVAILABILITY FOR HIRE.\u2014For purposes of subsection (a), the determination of whether an aircraft is available for hire by persons who are not members of an affiliated group shall be made on a flight-by-flight basis.” (g) CONSOLIDATION OF TAXES ON AVIATION GASOLINE.\u2014 (1) IN GENERAL.\u2014Subparagraph (A) of section 4081(a)(2) (relating to imposition of tax on gaso- line and diesel fuel) is amended by redesignating clause (ii) as clause (iii) and by striking clause (i) and inserting the following: ”(i) in the case of gasoline other than avia- tion gasoline, 18.3 cents per gallon, ”(ii) in the case of aviation gasoline, 19.3 cents per gallon, and”. (2) TERMINATION.\u2014Subsection (d) of section 4081 is amended by redesignating paragraph (2) as paragraph (3) and by inserting after para- graph (1) the following new paragraph: ”(2) AVIATION GASOLINE.\u2014On and after Janu- ary 1, 1997, the rate specified in subsection (a)(2)(A)(ii) shall be 4.3 cents per gallon.” (3) REPEAL OF RETAIL LEVEL TAX.\u2014 (A) Subsection (c) of section 4041 is amended by striking paragraphs (2) and (3) and by redes- ignating paragraphs (4) and (5) as paragraphs (2) and (3), respectively. (B) Paragraph (3) of section 4041(c), as redes- ignated by paragraph (1), is amended by strik- ing ”paragraphs (1) and (2)” and inserting ”paragraph (1)”. (4) CONFORMING AMENDMENTS.\u2014 (A) Paragraph (1) of section 4041(k) is amend- ed by adding ”and” at the end of subparagraph (A), by striking ”, and” at the end of subpara- graph (B) and inserting a period, and by strik- ing subparagraph (C). (B) Paragraph (1) of section 4081(d) is amend- ed by striking ”each rate of tax specified in sub- section (a)(2)(A)” and inserting ”the rates of tax specified in clauses (i) and (iii) of subsection (a)(2)(A)”. (C) Sections 6421(f)(2)(A) and 9502(f)(1)(A) are each amended by striking ”section 4041(c)(4)” and inserting ”section 4041(c)(2)”. (D) Paragraph (2) of section 9502(b) is amend- ed by striking ”14 cents” and inserting ”15 cents”. (h) FLOOR STOCKS TAXES ON AVIATION FUEL.\u2014 (1) IMPOSITION OF TAX.\u2014In the case of avia- tion fuel on which tax was imposed under sec- tion 4091 of the Internal Revenue Code of 1986 before the tax-increase date described in para- graph (3)(A)(i) and which is held on such date by any person, there is hereby imposed a floor stocks tax of 17.5 cents per gallon. (2) LIABILITY FOR TAX AND METHOD OF PAY- MENT.\u2014 (A) LIABILITY FOR TAX.\u2014A person holding aviation fuel on a tax-increase date to which the tax imposed by paragraph (1) applies shall be liable for such tax. (B) METHOD OF PAYMENT.\u2014The tax imposed by paragraph (1) shall be paid in such manner as the Secretary shall prescribe. (C) TIME FOR PAYMENT.\u2014The tax imposed by paragraph (1) with respect to any tax-increase date shall be paid on or before the first day of the 7th month beginning after such tax-increase date. (3) DEFINITIONS.\u2014For purposes of this sub- section\u2014 (A) TAX INCREASE DATE.\u2014The term ”tax-in- crease date” means the date which is 7 calendar days after the date of the enactment of this Act. (B) AVIATION FUEL.\u2014The term ”aviation fuel” has the meaning given such term by section 4093 of such Code. (C) HELD BY A PERSON.\u2014Aviation fuel shall be considered as ”held by a person” if title thereto has passed to such person (whether or not deliv- ery to the person has been made). (D) SECRETARY.\u2014The term ”Secretary” means the Secretary of the Treasury or his delegate. (4) EXCEPTION FOR EXEMPT USES.\u2014The tax im- posed by paragraph (1) shall not apply to avia- tion fuel held by any person on any tax-in- crease date exclusively for any use for which a credit or refund of the entire tax imposed by sec- tion 4091 of such Code is allowable for aviation fuel purchased on or after such tax-increase date for such use. (5) EXCEPTION FOR CERTAIN AMOUNTS OF FUEL.\u2014 (A) IN GENERAL.\u2014No tax shall be imposed by paragraph (1) on aviation fuel held on any tax- increase date by any person if the aggregate amount of aviation fuel held by such person on such date does not exceed 2,000 gallons. The pre- ceding sentence shall apply only if such person submits to the Secretary (at the time and in the manner required by the Secretary) such infor- mation as the Secretary shall require for pur- poses of this paragraph. (B) EXEMPT FUEL.\u2014For purposes of subpara- graph (A), there shall not be taken into account fuel held by any person which is exempt from the tax imposed by paragraph (1) by reason of paragraph (4). (C) CONTROLLED GROUPS.\u2014For purposes of this paragraph\u2014 (i) CORPORATIONS.\u2014 (I) IN GENERAL.\u2014All persons treated as a con- trolled group shall be treated as 1 person. (II) CONTROLLED GROUP.\u2014The term ”con- trolled group” has the meaning given to such term by subsection (a) of section 1563 of such Code; except that for such purposes the phrase ”more than 50 percent” shall be substituted for the phrase ”at least 80 percent” each place it appears in such subsection. (ii) NONINCORPORATED PERSONS UNDER COM- MON CONTROL.\u2014Under regulations prescribed by the Secretary, principles similar to the principles of clause (i) shall apply to a group of persons under common control where 1 or more of such persons is not a corporation. (6) OTHER LAW APPLICABLE.\u2014All provisions of law, including penalties, applicable with respect to the taxes imposed by section 4091 of such Code shall, insofar as applicable and not incon- sistent with the provisions of this subsection, apply with respect to the floor stock taxes im- posed by paragraph (1) to the same extent as if such taxes were imposed by such section 4091. (i) EFFECTIVE DATE.\u2014The amendments made by this section shall take effect on the 7th cal- endar day after the date of the enactment of this Act, except that the amendments made by subsection (b) shall not apply to any amount paid before such date. SEC. 1610. BASIS ADJUSTMENT TO PROPERTY HELD BY CORPORATION WHERE STOCK IN CORPORATION IS RE- PLACEMENT PROPERTY UNDER IN- VOLUNTARY CONVERSION RULES. (a) IN GENERAL.\u2014Subsection (b) of section 1033 is amended to read as follows: ”(b) BASIS OF PROPERTY ACQUIRED THROUGH INVOLUNTARY CONVERSION.\u2014 ”(1) CONVERSIONS DESCRIBED IN SUBSECTION (a)(1).\u2014If the property was acquired as the re- sult of a compulsory or involuntary conversion described in subsection (a)(1), the basis shall be the same as in the case of the property so con- verted\u2014 ”(A) decreased in the amount of any money received by the taxpayer which was not ex- pended in accordance with the provisions of law (applicable to the year in which such conversion was made) determining the taxable status of the gain or loss upon such conversion, and ”(B) increased in the amount of gain or de- creased in the amount of loss to the taxpayer recognized upon such conversion under the law applicable to the year in which such conversion was made. ”(2) CONVERSIONS DESCRIBED IN SUBSECTION (a)(2).\u2014In the case of property purchased by the taxpayer in a transaction described in sub- section (a)(2) which resulted in the nonrecogni- tion of any part of the gain realized as the re- sult of a compulsory or involuntary conversion, the basis shall be the cost of such property de- creased in the amount of the gain not so recog- nized; and if the property purchased consists of more than 1 piece of property, the basis deter- mined under this sentence shall be allocated to the purchased properties in proportion to their respective costs. CONGRESSIONAL RECORD \u2014 HOUSEH9592 August 1, 1996 ”(3) PROPERTY HELD BY CORPORATION THE STOCK OF WHICH IS REPLACEMENT PROPERTY.\u2014 ”(A) IN GENERAL.\u2014If the basis of stock in a corporation is decreased under paragraph (2), an amount equal to such decrease shall also be applied to reduce the basis of property held by the corporation at the time the taxpayer ac- quired control (as defined in subsection (a)(2)(E)) of such corporation. ”(B) LIMITATION.\u2014Subparagraph (A) shall not apply to the extent that it would (but for this subparagraph) require a reduction in the aggregate adjusted bases of the property of the corporation below the taxpayer’s adjusted basis of the stock in the corporation (determined im- mediately after such basis is decreased under paragraph (2)). ”(C) ALLOCATION OF BASIS REDUCTION.\u2014The decrease required under subparagraph (A) shall be allocated\u2014 ”(i) first to property which is similar or relat- ed in service or use to the converted property, ”(ii) second to depreciable property (as de- fined in section 1017(b)(3)(B)) not described in clause (i), and ”(iii) then to other property. ”(D) SPECIAL RULES.\u2014 ”(i) REDUCTION NOT TO EXCEED ADJUSTED BASIS OF PROPERTY.\u2014No reduction in the basis of any property under this paragraph shall ex- ceed the adjusted basis of such property (deter- mined without regard to such reduction). ”(ii) ALLOCATION OF REDUCTION AMONG PROP- ERTIES.\u2014If more than 1 property is described in a clause of subparagraph (C), the reduction under this paragraph shall be allocated among such property in proportion to the adjusted bases of such property (as so determined).”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall apply to involuntary con- versions occurring after the date of the enact- ment of this Act. SEC. 1611. TREATMENT OF CERTAIN INSURANCE CONTRACTS ON RETIRED LIVES. (a) GENERAL RULE.\u2014 (1) Paragraph (2) of section 817(d) (defining variable contract) is amended by striking ”or” at the end of subparagraph (A), by striking ”and” at the end of subparagraph (B) and in- serting ”or”, and by inserting after subpara- graph (B) the following new subparagraph: ”(C) provides for funding of insurance on re- tired lives as described in section 807(c)(6), and”. (2) Paragraph (3) of section 817(d) is amended by striking ”or” at the end of subparagraph (A), by striking the period at the end of sub- paragraph (B) and inserting ”, or”, and by in- serting after subparagraph (B) the following new subparagraph: ”(C) in the case of funds held under a con- tract described in paragraph (2)(C), the amounts paid in, or the amounts paid out, reflect the in- vestment return and the market value of the segregated asset account.”. (b) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to taxable years be- ginning after December 31, 1995. SEC. 1612. TREATMENT OF MODIFIED GUARAN- TEED CONTRACTS. (a) GENERAL RULE.\u2014Subpart E of part I of subchapter L of chapter 1 (relating to defini- tions and special rules) is amended by inserting after section 817 the following new section: ”SEC. 817A. SPECIAL RULES FOR MODIFIED GUAR- ANTEED CONTRACTS. ”(a) COMPUTATION OF RESERVES.\u2014In the case of a modified guaranteed contract, clause (ii) of section 807(e)(1)(A) shall not apply. ”(b) SEGREGATED ASSETS UNDER MODIFIED GUARANTEED CONTRACTS MARKED TO MAR- KET.\u2014 ”(1) IN GENERAL.\u2014In the case of any life in- surance company, for purposes of this subtitle\u2014 ”(A) Any gain or loss with respect to a seg- regated asset shall be treated as ordinary in- come or loss, as the case may be. ”(B) If any segregated asset is held by such company as of the close of any taxable year\u2014 ”(i) such company shall recognize gain or loss as if such asset were sold for its fair market value on the last business day of such taxable year, and ”(ii) any such gain or loss shall be taken into account for such taxable year. Proper adjustment shall be made in the amount of any gain or loss subsequently realized for gain or loss taken into account under the pre- ceding sentence. The Secretary may provide by regulations for the application of this subpara- graph at times other than the times provided in this subparagraph. ”(2) SEGREGATED ASSET.\u2014For purposes of paragraph (1), the term ‘segregated asset’ means any asset held as part of a segregated account referred to in subsection (d)(1) under a modified guaranteed contract. ”(c) SPECIAL RULE IN COMPUTING LIFE INSUR- ANCE RESERVES.\u2014For purposes of applying sec- tion 816(b)(1)(A) to any modified guaranteed contract, an assumed rate of interest shall in- clude a rate of interest determined, from time to time, with reference to a market rate of interest. ”(d) MODIFIED GUARANTEED CONTRACT DE- FINED.\u2014For purposes of this section, the term ‘modified guaranteed contract’ means a contract not described in section 817\u2014 ”(1) all or part of the amounts received under which are allocated to an account which, pur- suant to State law or regulation, is segregated from the general asset accounts of the company and is valued from time to time with reference to market values, ”(2) which\u2014 ”(A) provides for the payment of annuities, ”(B) is a life insurance contract, or ”(C) is a pension plan contract which is not a life, accident, or health, property, casualty, or liability contract, ”(3) for which reserves are valued at market for annual statement purposes, and ”(4) which provides for a net surrender value or a policyholder’s fund (as defined in section 807(e)(1)). If only a portion of a contract is not described in section 817, such portion shall be treated for purposes of this section as a separate contract. ”(e) REGULATIONS.\u2014The Secretary may pre- scribe regulations\u2014 ”(1) to provide for the treatment of market value adjustments under sections 72, 7702, 7702A, and 807(e)(1)(B), ”(2) to determine the interest rates applicable under sections 807(c)(3), 807(d)(2)(B), and 812 with respect to a modified guaranteed contract annually, in a manner appropriate for modified guaranteed contracts and, to the extent appro- priate for such a contract, to modify or waive the applicability of section 811(d), ”(3) to provide rules to limit ordinary gain or loss treatment to assets constituting reserves for modified guaranteed contracts (and not other assets) of the company, ”(4) to provide appropriate treatment of trans- fers of assets to and from the segregated ac- count, and ”(5) as may be necessary or appropriate to carry out the purposes of this section.”. (b) CLERICAL AMENDMENT.\u2014The table of sec- tions for subpart E of part I of subchapter L of chapter 1 is amended by inserting after the item relating to section 817 the following new item: ”Sec. 817A. Special rules for modified guaran- teed contracts.”. (c) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to taxable years begin- ning after December 31, 1995. (2) TREATMENT OF NET ADJUSTMENTS.\u2014Except as provided in paragraph (3), in the case of any taxpayer required by the amendments made by this section to change its calculation of reserves to take into account market value adjustments and to mark segregated assets to market for any taxable year\u2014 (A) such changes shall be treated as a change in method of accounting initiated by the tax- payer, (B) such changes shall be treated as made with the consent of the Secretary, and (C) the adjustments required by reason of sec- tion 481 of the Internal Revenue Code of 1986, shall be taken into account as ordinary income by the taxpayer for the taxpayer’s first taxable year beginning after December 31, 1995. (3) LIMITATION ON LOSS RECOGNITION AND ON DEDUCTION FOR RESERVE INCREASES.\u2014 (A) LIMITATION ON LOSS RECOGNITION.\u2014 (i) IN GENERAL.\u2014The aggregate loss recog- nized by reason of the application of section 481 of the Internal Revenue Code of 1986 with re- spect to section 817A(b) of such Code (as added by this section) for the first taxable year of the taxpayer beginning after December 31, 1995, shall not exceed the amount included in the tax- payer’s gross income for such year by reason of the excess (if any) of\u2014 (I) the amount of life insurance reserves as of the close of the prior taxable year, over (II) the amount of such reserves as of the be- ginning of such first taxable year, to the extent such excess is attributable to sub- section (a) of such section 817A. Notwithstand- ing the preceding sentence, the adjusted basis of each segregated asset shall be determined as if all such losses were recognized. (ii) DISALLOWED LOSS ALLOWED OVER PE- RIOD.\u2014The amount of the loss which is not al- lowed under clause (i) shall be allowed ratably over the period of 7 taxable years beginning with the taxpayer’s first taxable year beginning after December 31, 1995. (B) LIMITATION ON DEDUCTION FOR INCREASE IN RESERVES.\u2014 (i) IN GENERAL.\u2014The deduction allowed for the first taxable year of the taxpayer beginning after December 31, 1995, by reason of the appli- cation of section 481 of such Code with respect to section 817A(a) of such Code (as added by this section) shall not exceed the aggregate built-in gain recognized by reason of the appli- cation of such section 481 with respect to section 817A(b) of such Code (as added by this section) for such first taxable year. (ii) DISALLOWED DEDUCTION ALLOWED OVER PERIOD.\u2014The amount of the deduction which is disallowed under clause (i) shall be allowed rat- ably over the period of 7 taxable years beginning with the taxpayer’s first taxable year beginning after December 31, 1995. (iii) BUILT-IN GAIN.\u2014For purposes of this sub- paragraph, the built-in gain on an asset is the amount equal to the excess of\u2014 (I) the fair market value of the asset as of the beginning of the first taxable year of the tax- payer beginning after December 31, 1995, over (II) the adjusted basis of such asset as of such time. SEC. 1613. TREATMENT OF CONTRIBUTIONS IN AID OF CONSTRUCTION. (a) TREATMENT OF CONTRIBUTIONS IN AID OF CONSTRUCTION.\u2014 (1) IN GENERAL.\u2014Section 118 (relating to con- tributions to the capital of a corporation) is amended\u2014 (A) by redesignating subsection (c) as sub- section (e), and (B) by inserting after subsection (b) the fol- lowing new subsections: ”(c) SPECIAL RULES FOR WATER AND SEWER- AGE DISPOSAL UTILITIES.\u2014 ”(1) GENERAL RULE.\u2014For purposes of this sec- tion, the term ‘contribution to the capital of the taxpayer’ includes any amount of money or other property received from any person (wheth- er or not a shareholder) by a regulated public utility which provides water or sewerage dis- posal services if\u2014 ”(A) such amount is a contribution in aid of construction, ”(B) in the case of contribution of property other than water or sewerage disposal facilities, such amount meets the requirements of the ex- penditure rule of paragraph (2), and CONGRESSIONAL RECORD \u2014 HOUSE H9593August 1, 1996 ”(C) such amount (or any property acquired or constructed with such amount) is not in- cluded in the taxpayer’s rate base for rate- making purposes. ”(2) EXPENDITURE RULE.\u2014An amount meets the requirements of this paragraph if\u2014 ”(A) an amount equal to such amount is ex- pended for the acquisition or construction of tangible property described in section 1231(b)\u2014 ”(i) which is the property for which the con- tribution was made or is of the same type as such property, and ”(ii) which is used predominantly in the trade or business of furnishing water or sewerage dis- posal services, ”(B) the expenditure referred to in subpara- graph (A) occurs before the end of the second taxable year after the year in which such amount was received, and ”(C) accurate records are kept of the amounts contributed and expenditures made, the expend- itures to which contributions are allocated, and the year in which the contributions and expend- itures are received and made. ”(3) DEFINITIONS.\u2014For purposes of this sub- section\u2014 ”(A) CONTRIBUTION IN AID OF CONSTRUC- TION.\u2014The term ‘contribution in aid of con- struction’ shall be defined by regulations pre- scribed by the Secretary, except that such term shall not include amounts paid as service charges for starting or stopping services. ”(B) PREDOMINANTLY.\u2014The term ‘predomi- nantly’ means 80 percent or more. ”(C) REGULATED PUBLIC UTILITY.\u2014The term ‘regulated public utility’ has the meaning given such term by section 7701(a)(33), except that such term shall not include any utility which is not required to provide water or sewerage dis- posal services to members of the general public in its service area. ”(4) DISALLOWANCE OF DEDUCTIONS AND CRED- ITS; ADJUSTED BASIS.\u2014Notwithstanding any other provision of this subtitle, no deduction or credit shall be allowed for, or by reason of, any expenditure which constitutes a contribution in aid of construction to which this subsection ap- plies. The adjusted basis of any property ac- quired with contributions in aid of construction to which this subsection applies shall be zero. ”(d) STATUTE OF LIMITATIONS.\u2014If the tax- payer for any taxable year treats an amount as a contribution to the capital of the taxpayer de- scribed in subsection (c), then\u2014 ”(1) the statutory period for the assessment of any deficiency attributable to any part of such amount shall not expire before the expiration of 3 years from the date the Secretary is notified by the taxpayer (in such manner as the Secretary may prescribe) of\u2014 ”(A) the amount of the expenditure referred to in subparagraph (A) of subsection (c)(2), ”(B) the taxpayer’s intention not to make the expenditures referred to in such subparagraph, or ”(C) a failure to make such expenditure with- in the period described in subparagraph (B) of subsection (c)(2), and ”(2) such deficiency may be assessed before the expiration of such 3-year period notwith- standing the provisions of any other law or rule of law which would otherwise prevent such as- sessment.”. (2) CONFORMING AMENDMENT.\u2014Section 118(b) is amended by inserting ”except as provided in subsection (c),” before ”the term”. (3) EFFECTIVE DATE.\u2014The amendments made by this subsection shall apply to amounts re- ceived after June 12, 1996. (b) RECOVERY METHOD AND PERIOD FOR WATER UTILITY PROPERTY.\u2014 (1) REQUIREMENT TO USE STRAIGHT LINE METH- OD.\u2014Section 168(b)(3) is amended by adding at the end the following new subparagraph: ”(F) Water utility property described in sub- section (e)(5).”. (2) 25-YEAR RECOVERY PERIOD.\u2014The table con- tained in section 168(c)(1) is amended by insert- ing the following item after the item relating to 20-year property: ”Water utility property …….. 25 years”. (3) WATER UTILITY PROPERTY.\u2014 (A) IN GENERAL.\u2014Section 168(e) is amended by adding at the end the following new paragraph: ”(5) WATER UTILITY PROPERTY.\u2014The term ‘water utility property’ means property\u2014 ”(A) which is an integral part of the gather- ing, treatment, or commercial distribution of water, and which, without regard to this para- graph, would be 20-year property, and ”(B) any municipal sewer.”. (B) CONFORMING AMENDMENTS.\u2014Section 168 is amended\u2014 (i) by striking subparagraph (F) of subsection (e)(3), and (ii) by striking the item relating to subpara- graph (F) in the table in subsection (g)(3). (4) ALTERNATIVE SYSTEM.\u2014Clause (iv) of sec- tion 168(g)(2)(C) is amended by inserting ”or water utility property” after ”tunnel bore”. (5) EFFECTIVE DATE.\u2014The amendments made by this subsection shall apply to property placed in service after June 12, 1996, other than prop- erty placed in service pursuant to a binding contract in effect before June 10, 1996, and at all times thereafter before the property is placed in service. SEC. 1614. ELECTION TO CEASE STATUS AS QUALIFIED SCHOLARSHIP FUNDING CORPORATION. (a) IN GENERAL.\u2014Subsection (d) of section 150 (relating to definitions and special rules) is amended by adding at the end the following new paragraph: ”(3) ELECTION TO CEASE STATUS AS QUALIFIED SCHOLARSHIP FUNDING CORPORATION.\u2014 ”(A) IN GENERAL.\u2014Any qualified scholarship funding bond, and qualified student loan bond, outstanding on the date of the issuer’s election under this paragraph (and any bond (or series of bonds) issued to refund such a bond) shall not fail to be a tax-exempt bond solely because the issuer ceases to be described in subpara- graphs (A) and (B) of paragraph (2) if the issuer meets the requirements of subparagraphs (B) and (C) of this paragraph. ”(B) ASSETS AND LIABILITIES OF ISSUER TRANS- FERRED TO TAXABLE SUBSIDIARY.\u2014The require- ments of this subparagraph are met by an issuer if\u2014 ”(i) all of the student loan notes of the issuer and other assets pledged to secure the repay- ment of qualified scholarship funding bond in- debtedness of the issuer are transferred to an- other corporation within a reasonable period after the election is made under this paragraph; ”(ii) such transferee corporation assumes or otherwise provides for the payment of all of the qualified scholarship funding bond indebtedness of the issuer within a reasonable period after the election is made under this paragraph; ”(iii) to the extent permitted by law, such transferee corporation assumes all of the respon- sibilities, and succeeds to all of the rights, of the issuer under the issuer’s agreements with the Secretary of Education in respect of student loans; ”(iv) immediately after such transfer, the is- suer, together with any other issuer which has made an election under this paragraph in re- spect of such transferee, hold all of the senior stock in such transferee corporation; and ”(v) such transferee corporation is not exempt from tax under this chapter. ”(C) ISSUER TO OPERATE AS INDEPENDENT OR- GANIZATION DESCRIBED IN SECTION 501(C)(3).\u2014The requirements of this subparagraph are met by an issuer if, within a reasonable period after the transfer referred to in subparagraph (B)\u2014 ”(i) the issuer is described in section 501(c)(3) and exempt from tax under section 501(a); ”(ii) the issuer no longer is described in sub- paragraphs (A) and (B) of paragraph (2); and ”(iii) at least 80 percent of the members of the board of directors of the issuer are independent members. ”(D) SENIOR STOCK.\u2014For purposes of this paragraph, the term ‘senior stock’ means stock\u2014 ”(i) which participates pro rata and fully in the equity value of the corporation with all other common stock of the corporation but which has the right to payment of liquidation proceeds prior to payment of liquidation pro- ceeds in respect of other common stock of the corporation; ”(ii) which has a fixed right upon liquidation and upon redemption to an amount equal to the greater of\u2014 ”(I) the fair market value of such stock on the date of liquidation or redemption (whichever is applicable); or ”(II) the fair market value of all assets trans- ferred in exchange for such stock and reduced by the amount of all liabilities of the corpora- tion which has made an election under this paragraph assumed by the transferee corpora- tion in such transfer; ”(iii) the holder of which has the right to re- quire the transferee corporation to redeem on a date that is not later than 10 years after the date on which an election under this paragraph was made and pursuant to such election such stock was issued; and ”(iv) in respect of which, during the time such stock is outstanding, there is not outstanding any equity interest in the corporation having any liquidation, redemption or dividend rights in the corporation which are superior to those of such stock. ”(E) INDEPENDENT MEMBER.\u2014The term ‘inde- pendent member’ means a member of the board of directors of the issuer who (except for services as a member of such board) receives no com- pensation directly or indirectly\u2014 ”(i) for services performed in connection with such transferee corporation, or ”(ii) for services as a member of the board of directors or as an officer of such transferee cor- poration. For purposes of clause (ii), the term ‘officer’ in- cludes any individual having powers or respon- sibilities similar to those of officers. ”(F) COORDINATION WITH CERTAIN PRIVATE FOUNDATION TAXES.\u2014For purposes of sections 4942 (relating to the excise tax on a failure to distribute income) and 4943 (relating to the ex- cise tax on excess business holdings), the trans- feree corporation referred to in subparagraph (B) shall be treated as a functionally related business (within the meaning of section 4942(j)(4)) with respect to the issuer during the period commencing with the date on which an election is made under this paragraph and end- ing on the date that is the earlier of\u2014 ”(i) the last day of the last taxable year for which more than 50 percent of the gross income of such transferee corporation is derived from, or more than 50 percent of the assets (by value) of such transferee corporation consists of, stu- dent loan notes incurred under the Higher Edu- cation Act of 1965; or ”(ii) the last day of the taxable year of the is- suer during which occurs the date which is 10 years after the date on which the election under this paragraph is made. ”(G) ELECTION.\u2014An election under this para- graph may be revoked only with the consent of the Secretary.”. (b) EFFECTIVE DATE.\u2014The amendment made by this section shall take effect on the date of the enactment of this Act. SEC. 1615. CERTAIN TAX BENEFITS DENIED TO IN- DIVIDUALS FAILING TO PROVIDE TAXPAYER IDENTIFICATION NUM- BERS. (a) PERSONAL EXEMPTION.\u2014 (1) IN GENERAL.\u2014Section 151 (relating to al- lowance of deductions for personal exemptions) is amended by adding at the end the following new subsection: ”(e) IDENTIFYING INFORMATION REQUIRED.\u2014 No exemption shall be allowed under this sec- tion with respect to any individual unless the TIN of such individual is included on the return claiming the exemption.”. CONGRESSIONAL RECORD \u2014 HOUSEH9594 August 1, 1996 (2) CONFORMING AMENDMENTS.\u2014 (A) Subsection (e) of section 6109 is repealed. (B) Section 6724(d)(3) is amended by adding ”and” at the end of subparagraph (C), by strik- ing subparagraph (D), and by redesignating subparagraph (E) as subparagraph (D). (b) DEPENDENT CARE CREDIT.\u2014Subsection (e) of section 21 (relating to expenses for household and dependent care services necessary for gain- ful employment) is amended by adding at the end the following new paragraph: ”(10) IDENTIFYING INFORMATION REQUIRED WITH RESPECT TO QUALIFYING INDIVIDUALS.\u2014No credit shall be allowed under this section with respect to any qualifying individual unless the TIN of such individual is included on the return claiming the credit.”. (c) EXTENSION OF PROCEDURES APPLICABLE TO MATHEMATICAL OR CLERICAL ERRORS.\u2014Section 6213(g)(2) (relating to the definition of mathe- matical or clerical errors), as amended by the Personal Responsibility and Work Opportunity Reconciliation Act of 1996, is amended by strik- ing ”and’ at the end of subparagraph (F), by striking the period at the end of subparagraph (G) and inserting ”, and”, and by inserting at the end the following new subparagraph: ”(H) an omission of a correct TIN required under section 21 (relating to expenses for house- hold and dependent care services necessary for gainful employment) or section 151 (relating to allowance of deductions for personal exemp- tions).”. (d) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply with respect to returns the due date for which (without regard to exten- sions) is on or after the 30th day after the date of the enactment of this Act. (2) SPECIAL RULE FOR 1995 AND 1996.\u2014In the case of returns for taxable years beginning in 1995 or 1996, a taxpayer shall not be required by the amendments made by this section to provide a taxpayer identification number for a child who is born after October 31, 1995, in the case of a taxable year beginning in 1995 or November 30, 1996, in the case of a taxable year beginning in 1996. SEC. 1616. REPEAL OF BAD DEBT RESERVE METH- OD FOR THRIFT SAVINGS ASSOCIA- TIONS. (a) IN GENERAL.\u2014Section 593 (relating to re- serves for losses on loans) is amended by adding at the end the following new subsections: ”(f) TERMINATION OF RESERVE METHOD.\u2014 Subsections (a), (b), (c), and (d) shall not apply to any taxable year beginning after December 31, 1995. ”(g) 6-YEAR SPREAD OF ADJUSTMENTS.\u2014 ”(1) IN GENERAL.\u2014In the case of any taxpayer who is required by reason of subsection (f) to change its method of computing reserves for bad debts\u2014 ”(A) such change shall be treated as a change in a method of accounting, ”(B) such change shall be treated as initiated by the taxpayer and as having been made with the consent of the Secretary, and ”(C) the net amount of the adjustments re- quired to be taken into account by the taxpayer under section 481(a)\u2014 ”(i) shall be determined by taking into ac- count only applicable excess reserves, and ”(ii) as so determined, shall be taken into ac- count ratably over the 6-taxable year period be- ginning with the first taxable year beginning after December 31, 1995. ”(2) APPLICABLE EXCESS RESERVES.\u2014 ”(A) IN GENERAL.\u2014For purposes of paragraph (1), the term ‘applicable excess reserves’ means the excess (if any) of\u2014 ”(i) the balance of the reserves described in subsection (c)(1) (other than the supplemental reserve) as of the close of the taxpayer’s last taxable year beginning before January 1, 1996, over ”(ii) the lesser of\u2014 ”(I) the balance of such reserves as of the close of the taxpayer’s last taxable year begin- ning before January 1, 1988, or ”(II) the balance of the reserves described in subclause (I), reduced in the same manner as under section 585(b)(2)(B)(ii) on the basis of the taxable years described in clause (i) and this clause. ”(B) SPECIAL RULE FOR THRIFTS WHICH BE- COME SMALL BANKS.\u2014In the case of a bank (as defined in section 581) which was not a large bank (as defined in section 585(c)(2)) for its first taxable year beginning after December 31, 1995\u2014 ”(i) the balance taken into account under subparagraph (A)(ii) shall not be less than the amount which would be the balance of such re- serves as of the close of its last taxable year be- ginning before such date if the additions to such reserves for all taxable years had been deter- mined under section 585(b)(2)(A), and ”(ii) the opening balance of the reserve for bad debts as of the beginning of such first tax- able year shall be the balance taken into ac- count under subparagraph (A)(ii) (determined after the application of clause (i) of this sub- paragraph). The preceding sentence shall not apply for pur- poses of paragraphs (5) and (6) or subsection (e)(1). ”(3) RECAPTURE OF PRE-1988 RESERVES WHERE TAXPAYER CEASES TO BE BANK.\u2014If, during any taxable year beginning after December 31, 1995, a taxpayer to which paragraph (1) applied is not a bank (as defined in section 581), para- graph (1) shall apply to the reserves described in paragraph (2)(A)(ii) and the supplemental re- serve; except that such reserves shall be taken into account ratably over the 6-taxable year pe- riod beginning with such taxable year. ”(4) SUSPENSION OF RECAPTURE IF RESIDEN- TIAL LOAN REQUIREMENT MET.\u2014 ”(A) IN GENERAL.\u2014In the case of a bank which meets the residential loan requirement of subparagraph (B) for the first taxable year be- ginning after December 31, 1995, or for the fol- lowing taxable year\u2014 ”(i) no adjustment shall be taken into account under paragraph (1) for such taxable year, and ”(ii) such taxable year shall be disregarded in determining\u2014 ”(I) whether any other taxable year is a tax- able year for which an adjustment is required to be taken into account under paragraph (1), and ”(II) the amount of such adjustment. ”(B) RESIDENTIAL LOAN REQUIREMENT.\u2014A taxpayer meets the residential loan requirement of this subparagraph for any taxable year if the principal amount of the residential loans made by the taxpayer during such year is not less than the base amount for such year. ”(C) RESIDENTIAL LOAN.\u2014For purposes of this paragraph, the term ‘residential loan’ means any loan described in clause (v) of section 7701(a)(19)(C) but only if such loan is incurred in acquiring, constructing, or improving the property described in such clause. ”(D) BASE AMOUNT.\u2014For purposes of sub- paragraph (B), the base amount is the average of the principal amounts of the residential loans made by the taxpayer during the 6 most recent taxable years beginning on or before December 31, 1995. At the election of the taxpayer who made such loans during each of such 6 taxable years, the preceding sentence shall be applied without regard to the taxable year in which such principal amount was the highest and the taxable year in such principal amount was the lowest. Such an election may be made only for the first taxable year beginning after such date, and, if made for such taxable year, shall apply to the succeeding taxable year unless revoked with the consent of the Secretary. ”(E) CONTROLLED GROUPS.\u2014In the case of a taxpayer which is a member of any controlled group of corporations described in section 1563(a)(1), subparagraph (B) shall be applied with respect to such group. ”(5) CONTINUED APPLICATION OF FRESH START UNDER SECTION 585 TRANSITIONAL RULES.\u2014In the case of a taxpayer to which paragraph (1) ap- plied and which was not a large bank (as de- fined in section 585(c)(2)) for its first taxable year beginning after December 31, 1995: ”(A) IN GENERAL.\u2014For purposes of determin- ing the net amount of adjustments referred to in section 585(c)(3)(A)(iii), there shall be taken into account only the excess (if any) of the reserve for bad debts as of the close of the last taxable year before the disqualification year over the balance taken into account by such taxpayer under paragraph (2)(A)(ii) of this subsection. ”(B) TREATMENT UNDER ELECTIVE CUT-OFF METHOD.\u2014For purposes of applying section 585(c)(4)\u2014 ”(i) the balance of the reserve taken into ac- count under subparagraph (B) thereof shall be reduced by the balance taken into account by such taxpayer under paragraph (2)(A)(ii) of this subsection, and ”(ii) no amount shall be includible in gross in- come by reason of such reduction. ”(6) SUSPENDED RESERVE INCLUDED AS SECTION 381(c) ITEMS.\u2014The balance taken into account by a taxpayer under paragraph (2)(A)(ii) of this subsection and the supplemental reserve shall be treated as items described in section 381(c). ”(7) CONVERSIONS TO CREDIT UNIONS.\u2014In the case of a taxpayer to which paragraph (1) ap- plied which becomes a credit union described in section 501(c) and exempt from taxation under section 501(a)\u2014 ”(A) any amount required to be included in the gross income of the credit union by reason of this subsection shall be treated as derived from an unrelated trade or business (as defined in section 513), and ”(B) for purposes of paragraph (3), the credit union shall not be treated as if it were a bank. ”(8) REGULATIONS.\u2014The Secretary shall pre- scribe such regulations as may be necessary to carry out this subsection and subsection (e), in- cluding regulations providing for the applica- tion of such subsections in the case of acquisi- tions, mergers, spin-offs, and other reorganiza- tions.” (b) CONFORMING AMENDMENTS.\u2014 (1) Subsection (d) of section 50 is amended by adding at the end the following new sentence: ”Paragraphs (1)(A), (2)(A), and (4) of the sec- tion 46(e) referred to in paragraph (1) of this subsection shall not apply to any taxable year beginning after December 31, 1995.” (2) Subsection (e) of section 52 is amended by striking paragraph (1) and by redesignating paragraphs (2) and (3) as paragraphs (1) and (2), respectively. (3) Subsection (a) of section 57 is amended by striking paragraph (4). (4) Section 246 is amended by striking sub- section (f). (5) Clause (i) of section 291(e)(1)(B) is amend- ed by striking ”or to which section 593 applies”. (6) Subparagraph (A) of section 585(a)(2) is amended by striking ”other than an organiza- tion to which section 593 applies”. (7)(A) The material preceding subparagraph (A) of section 593(e)(1) is amended by striking ”by a domestic building and loan association or an institution that is treated as a mutual sav- ings bank under section 591(b)” and inserting ”by a taxpayer having a balance described in subsection (g)(2)(A)(ii)”. (B) Subparagraph (B) of section 593(e)(1) is amended to read as follows: ”(B) then out of the balance taken into ac- count under subsection (g)(2)(A)(ii) (properly adjusted for amounts charged against such re- serves for taxable years beginning after Decem- ber 31, 1987),”. (C) The second sentence of section 593(e)(1) is amended by striking ”the association or an in- stitution that is treated as a mutual savings bank under section 591(b)” and inserting ”a taxpayer having a balance described in sub- section (g)(2)(A)(ii)”. (D) The third sentence of section 593(e)(1) is amended by striking ”an association” and in- serting ”a taxpayer having a balance described in subsection (g)(2)(A)(ii)”. CONGRESSIONAL RECORD \u2014 HOUSE H9595August 1, 1996 (E) Paragraph (1) of section 593(e) is amended by adding at the end the following new sen- tence: ”This paragraph shall not apply to any distribution of all of the stock of a bank (as de- fined in section 581) to another corporation if, immediately after the distribution, such bank and such other corporation are members of the same affiliated group (as defined in section 1504) and the provisions of section 5(e) of the Federal Deposit Insurance Act (as in effect on December 31, 1995) or similar provisions are in effect.” (8) Section 595 is hereby repealed. (9) Section 596 is hereby repealed. (10) Subsection (a) of section 860E is amend- ed\u2014 (A) by striking ”Except as provided in para- graph (2), the” in paragraph (1) and inserting ”The”, (B) by striking paragraphs (2) and (4) and re- designating paragraphs (3), (5), and (6) as para- graphs (2), (3), and (4), respectively, (C) by striking in paragraph (2) (as so redesig- nated) all that follows ”subsection” and insert- ing a period, and (D) by striking the last sentence of paragraph (4) (as so redesignated). (11) Paragraph (3) of section 992(d) is amend- ed by striking ”or 593”. (12) Section 1038 is amended by striking sub- section (f). (13) Clause (ii) of section 1042(c)(4)(B) is amended by striking ”or 593”. (14) Subsection (c) of section 1277 is amended by striking ”or to which section 593 applies”. (15) Subparagraph (B) of section 1361(b)(2) is amended by striking ”or to which section 593 applies”. (16) The table of sections for part II of sub- chapter H of chapter 1 is amended by striking the items relating to sections 595 and 596. (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014Except as otherwise provided in this subsection, the amendments made by this section shall apply to taxable years beginning after December 31, 1995. (2) SUBSECTION (b)(7)(B).\u2014The amendments made by subsection (b)(7)(B) shall not apply to any distribution with respect to preferred stock if\u2014 (A) such stock is outstanding at all times after October 31, 1995, and before the distribution, and (B) such distribution is made before the date which is 1 year after the date of the enactment of this Act (or, in the case of stock which may be redeemed, if later, the date which is 30 days after the earliest date that such stock may be re- deemed). (3) SUBSECTION (b)(8).\u2014The amendment made by subsection (b)(8) shall apply to property ac- quired in taxable years beginning after Decem- ber 31, 1995. (4) SUBSECTION (b)(10).\u2014The amendments made by subsection (b)(10) shall not apply to any residual interest held by a taxpayer if such interest has been held by such taxpayer at all times after October 31, 1995. SEC. 1617. EXCLUSION FOR ENERGY CONSERVA- TION SUBSIDIES LIMITED TO SUB- SIDIES WITH RESPECT TO DWELLING UNITS. (a) IN GENERAL.\u2014Paragraph (1) of section 136(c) (defining energy conservation measure) is amended by striking ”energy demand\u2014” and all that follows and inserting ”energy demand with respect to a dwelling unit.” (b) CONFORMING AMENDMENTS.\u2014 (1) Subsection (a) of section 136 is amended to read as follows: ”(a) EXCLUSION.\u2014Gross income shall not in- clude the value of any subsidy provided (di- rectly or indirectly) by a public utility to a cus- tomer for the purchase or installation of any en- ergy conservation measure.” (2) Paragraph (2) of section 136(c) is amend- ed\u2014 (A) by striking subparagraph (A) and by re- designating subparagraphs (B) and (C) as sub- paragraphs (A) and (B), respectively, and (B) by striking ”AND SPECIAL RULES” in the paragraph heading. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to amounts received after December 31, 1996, unless received pursu- ant to a written binding contract in effect on September 13, 1995, and at all times thereafter. PART II\u2014FINANCIAL ASSET SECURITIZATION INVESTMENTS SEC. 1621. FINANCIAL ASSET SECURITIZATION IN- VESTMENT TRUSTS. (a) IN GENERAL.\u2014Subchapter M of chapter 1 is amended by adding at the end the following new part: ”PART V\u2014FINANCIAL ASSET SECURITIZATION INVESTMENT TRUSTS ”Sec. 860H. Taxation of a FASIT; other general rules. ”Sec. 860I. Gain recognition on contributions to a FASIT and in other cases. ”Sec. 860J. Non-FASIT losses not to offset cer- tain FASIT inclusions. ”Sec. 860K. Treatment of transfers of high-yield interests to disqualified holders. ”Sec. 860L. Definitions and other special rules. ”SEC. 860H. TAXATION OF A FASIT; OTHER GEN- ERAL RULES. ”(a) TAXATION OF FASIT.\u2014A FASIT as such shall not be subject to taxation under this sub- title (and shall not be treated as a trust, part- nership, corporation, or taxable mortgage pool). ”(b) TAXATION OF HOLDER OF OWNERSHIP IN- TEREST.\u2014In determining the taxable income of the holder of the ownership interest in a FASIT\u2014 ”(1) all assets, liabilities, and items of income, gain, deduction, loss, and credit of a FASIT shall be treated as assets, liabilities, and such items (as the case may be) of such holder, ”(2) the constant yield method (including the rules of section 1272(a)(6)) shall be applied under an accrual method of accounting in de- termining all interest, acquisition discount, original issue discount, and market discount and all premium deductions or adjustments with respect to each debt instrument of the FASIT, ”(3) there shall not be taken into account any item of income, gain, or deduction allocable to a prohibited transaction, and ”(4) interest accrued by the FASIT which is exempt from tax imposed by this subtitle shall, when taken into account by such holder, be treated as ordinary income. ”(c) TREATMENT OF REGULAR INTERESTS.\u2014For purposes of this title\u2014 ”(1) a regular interest in a FASIT, if not oth- erwise a debt instrument, shall be treated as a debt instrument, ”(2) section 163(e)(5) shall not apply to such an interest, and ”(3) amounts includible in gross income with respect to such an interest shall be determined under an accrual method of accounting. ”SEC. 860I. GAIN RECOGNITION ON CONTRIBU- TIONS TO A FASIT AND IN OTHER CASES. ”(a) TREATMENT OF PROPERTY ACQUIRED BY FASIT.\u2014 ”(1) PROPERTY ACQUIRED FROM HOLDER OF OWNERSHIP INTEREST OR RELATED PERSON.\u2014If property is sold or contributed to a FASIT by the holder of the ownership interest in such FASIT (or by a related person) gain (if any) shall be recognized to such holder (or person) in an amount equal to the excess (if any) of such property’s value under subsection (d) on the date of such sale or contribution over its ad- justed basis on such date. ”(2) PROPERTY ACQUIRED OTHER THAN FROM HOLDER OF OWNERSHIP INTEREST OR RELATED PERSON.\u2014Property which is acquired by a FASIT other than in a transaction to which paragraph (1) applies shall be treated\u2014 ”(A) as having been acquired by the holder of the ownership interest in the FASIT for an amount equal to the FASIT’s cost of acquiring such property, and ”(B) as having been sold by such holder to the FASIT at its value under subsection (d) on such date. ”(b) GAIN RECOGNITION ON PROPERTY OUTSIDE FASIT WHICH SUPPORTS REGULAR INTERESTS.\u2014 If property held by the holder of the ownership interest in a FASIT (or by any person related to such holder) supports any regular interest in such FASIT\u2014 ”(1) gain shall be recognized to such holder (or person) in the same manner as if such holder (or person) had sold such property at its value under subsection (d) on the earliest date such property supports such an interest, and ”(2) such property shall be treated as held by such FASIT for purposes of this part. ”(c) DEFERRAL OF GAIN RECOGNITION.\u2014The Secretary may prescribe regulations which\u2014 ”(1) provide that gain otherwise recognized under subsection (a) or (b) shall not be recog- nized before the earliest date on which such property supports any regular interest in such FASIT or any indebtedness of the holder of the ownership interest (or of any person related to such holder), and ”(2) provide such adjustments to the other provisions of this part to the extent appropriate in the context of the treatment provided under paragraph (1). ”(d) VALUATION.\u2014For purposes of this sec- tion\u2014 ”(1) IN GENERAL.\u2014The value of any property under this subsection shall be\u2014 ”(A) in the case of a debt instrument which is not traded on an established securities market, the sum of the present values of the reasonably expected payments under such instrument deter- mined (in the manner provided by regulations prescribed by the Secretary)\u2014 ”(i) as of the date of the event resulting in the gain recognition under this section, and ”(ii) by using a discount rate equal to 120 per- cent of the applicable Federal rate (as defined in section 1274(d)), or such other discount rate specified in such regulations, compounded semi- annually, and ”(B) in the case of any other property, its fair market value. ”(2) SPECIAL RULE FOR REVOLVING LOAN AC- COUNTS.\u2014For purposes of paragraph (1)\u2014 ”(A) each extension of credit (other than the accrual of interest) on a revolving loan account shall be treated as a separate debt instrument, and ”(B) payments on such extensions of credit having substantially the same terms shall be ap- plied to such extensions beginning with the ear- liest such extension. ”(e) SPECIAL RULES.\u2014 ”(1) NONRECOGNITION RULES NOT TO APPLY.\u2014 Gain required to be recognized under this sec- tion shall be recognized notwithstanding any other provision of this subtitle. ”(2) BASIS ADJUSTMENTS.\u2014The basis of any property on which gain is recognized under this section shall be increased by the amount of gain so recognized. ”SEC. 860J. NON-FASIT LOSSES NOT TO OFFSET CERTAIN FASIT INCLUSIONS. ”(a) IN GENERAL.\u2014The taxable income of the holder of the ownership interest or any high- yield interest in a FASIT for any taxable year shall in no event be less than the sum of\u2014 ”(1) such holder’s taxable income determined solely with respect to such interests (including gains and losses from sales and exchanges of such interests), and ”(2) the excess inclusion (if any) under section 860E(a)(1) for such taxable year. ”(b) COORDINATION WITH SECTION 172.\u2014Any increase in the taxable income of any holder of the ownership interest or a high-yield interest in a FASIT for any taxable year by reason of sub- section (a) shall be disregarded\u2014 ”(1) in determining under section 172 the amount of any net operating loss for such tax- able year, and ”(2) in determining taxable income for such taxable year for purposes of the 2nd sentence of section 172(b)(2). CONGRESSIONAL RECORD \u2014 HOUSEH9596 August 1, 1996 ”(c) COORDINATION WITH MINIMUM TAX.\u2014For purposes of part VI of subchapter A of this chapter\u2014 ”(1) the reference in section 55(b)(2) to taxable income shall be treated as a reference to taxable income determined without regard to this sec- tion, ”(2) the alternative minimum taxable income of any holder of the ownership interest or a high-yield interest in a FASIT for any taxable year shall in no event be less than such holder’s taxable income determined solely with respect to such interests, and ”(3) any increase in taxable income under this section shall be disregarded for purposes of com- puting the alternative tax net operating loss de- duction. ”(d) AFFILIATED GROUPS.\u2014All members of an affiliated group filing a consolidated return shall be treated as 1 taxpayer for purposes of this section. ”SEC. 860K. TREATMENT OF TRANSFERS OF HIGH- YIELD INTERESTS TO DISQUALIFIED HOLDERS. ”(a) GENERAL RULE.\u2014In the case of any high- yield interest which is held by a disqualified holder\u2014 ”(1) the gross income of such holder shall not include any income (other than gain) attrib- utable to such interest, and ”(2) amounts not includible in the gross in- come of such holder by reason of paragraph (1) shall be included (at the time otherwise includ- ible under paragraph (1)) in the gross income of the most recent holder of such interest which is not a disqualified holder. ”(b) EXCEPTIONS.\u2014Rules similar to the rules of paragraphs (4) and (7) of section 860E(e) shall apply to the tax imposed by reason of the inclu- sion in gross income under subsection (a). ”(c) DISQUALIFIED HOLDER.\u2014For purposes of this section, the term ‘disqualified holder’ means any holder other than\u2014 ”(1) an eligible corporation (as defined in sec- tion 860L(a)(2)), or ”(2) a FASIT. ”(d) TREATMENT OF INTERESTS HELD BY SECU- RITIES DEALERS.\u2014 ”(1) IN GENERAL.\u2014Subsection (a) shall not apply to any high-yield interest held by a dis- qualified holder if such holder is a dealer in se- curities who acquired such interest exclusively for sale to customers in the ordinary course of business (and not for investment). ”(2) CHANGE IN DEALER STATUS.\u2014 ”(A) IN GENERAL.\u2014In the case of a dealer in securities which is not an eligible corporation (as defined in section 860L(a)(2)), if\u2014 ”(i) such dealer ceases to be a dealer in securi- ties, or ”(ii) such dealer commences holding the high- yield interest for investment, there is hereby imposed (in addition to other taxes) an excise tax equal to the product of the highest rate of tax specified in section 11(b)(1) and the income of such dealer attributable to such interest for periods after the date of such cessation or commencement. ”(B) HOLDING FOR 31 DAYS OR LESS.\u2014For pur- poses of subparagraph (A)(ii), a dealer shall not be treated as holding an interest for investment before the 32d day after the date such dealer ac- quired such interest unless such interest is so held as part of a plan to avoid the purposes of this paragraph. ”(C) ADMINISTRATIVE PROVISIONS.\u2014The defi- ciency procedures of subtitle F shall apply to the tax imposed by this paragraph. ”(e) TREATMENT OF HIGH-YIELD INTERESTS IN PASS-THRU ENTITIES.\u2014 ”(1) IN GENERAL.\u2014If a pass-thru entity (as de- fined in section 860E(e)(6)) issues a debt or eq- uity interest\u2014 ”(A) which is supported by any regular inter- est in a FASIT, and ”(B) which has an original yield to maturity which is greater than each of\u2014 ”(i) the sum determined under clauses (i) and (ii) of section 163(i)(1)(B) with respect to such debt or equity interest, and ”(ii) the yield to maturity to such entity on such regular interest (determined as of the date such entity acquired such interest), there is hereby imposed on the pass-thru entity a tax (in addition to other taxes) equal to the product of the highest rate of tax specified in section 11(b)(1) and the income of the holder of such debt or equity interest which is properly attributable to such regular interest. For pur- poses of the preceding sentence, the yield to ma- turity of any equity interest shall be determined under regulations prescribed by the Secretary. ”(2) EXCEPTION.\u2014Paragraph (1) shall not apply to arrangements not having as a principal purpose the avoidance of the purposes of this subsection. ”SEC. 860L. DEFINITIONS AND OTHER SPECIAL RULES. ”(a) FASIT.\u2014 ”(1) IN GENERAL.\u2014For purposes of this title, the terms ‘financial asset securitization invest- ment trust’ and ‘FASIT’ mean any entity\u2014 ”(A) for which an election to be treated as a FASIT applies for the taxable year, ”(B) all of the interests in which are regular interests or the ownership interest, ”(C) which has only 1 ownership interest and such ownership interest is held directly by an el- igible corporation, ”(D) as of the close of the 3rd month begin- ning after the day of its formation and at all times thereafter, substantially all of the assets of which (including assets treated as held by the entity under section 860I(b)(2)) consist of per- mitted assets, and ”(E) which is not described in section 851(a). A rule similar to the rule of the last sentence of section 860D(a) shall apply for purposes of this paragraph. ”(2) ELIGIBLE CORPORATION.\u2014For purposes of paragraph (1)(C), the term ‘eligible corporation’ means any domestic C corporation other than\u2014 ”(A) a corporation which is exempt from, or is not subject to, tax under this chapter, ”(B) an entity described in section 851(a) or 856(a), ”(C) a REMIC, and ”(D) an organization to which part I of sub- chapter T applies. ”(3) ELECTION.\u2014An entity (otherwise meeting the requirements of paragraph (1)) may elect to be treated as a FASIT. Except as provided in paragraph (5), such an election shall apply to the taxable year for which made and all subse- quent taxable years unless revoked with the consent of the Secretary. ”(4) TERMINATION.\u2014If any entity ceases to be a FASIT at any time during the taxable year, such entity shall not be treated as a FASIT after the date of such ceasation. ”(5) INADVERTENT TERMINATIONS, ETC.\u2014Rules similar to the rules of section 860D(b)(2)(B) shall apply to inadvertent failures to qualify or re- main qualified as a FASIT. ”(6) PERMITTED ASSETS NOT TREATED AS IN- TEREST IN FASIT.\u2014Except as provided in regula- tions prescribed by the Secretary, any asset which is a permitted asset at the time acquired by a FASIT shall not be treated at any time as an interest in such FASIT. ”(b) INTERESTS IN FASIT.\u2014For purposes of this part\u2014 ”(1) REGULAR INTEREST.\u2014 ”(A) IN GENERAL.\u2014The term ‘regular interest’ means any interest which is issued by a FASIT after the startup date with fixed terms and which is designated as a regular interest if\u2014 ”(i) such interest unconditionally entitles the holder to receive a specified principal amount (or other similar amount), ”(ii) interest payments (or other similar amounts), if any, with respect to such interest are determined based on a fixed rate, or, except as otherwise provided by the Secretary, at a variable rate permitted under section 860G(a)(1)(B)(i), ”(iii) such interest does not have a stated ma- turity (including options to renew) greater than 30 years (or such longer period as may be per- mitted by regulations), ”(iv) the issue price of such interest does not exceed 125 percent of its stated principal amount, and ”(v) the yield to maturity on such interest is less than the sum determined under section 163(i)(1)(B) with respect to such interest. An interest shall not fail to meet the require- ments of clause (i) merely because the timing (but not the amount) of the principal payments (or other similar amounts) may be contingent on the extent that payments on debt instruments held by the FASIT are made in advance of an- ticipated payments and on the amount of in- come from permitted assets. ”(B) HIGH-YIELD INTERESTS.\u2014 ”(i) IN GENERAL.\u2014The term ‘regular interest’ includes any high-yield interest. ”(ii) HIGH-YIELD INTEREST.\u2014The term ‘high- yield interest’ means any interest which would be described in subparagraph (A) but for\u2014 ”(I) failing to meet the requirements of one or more of clauses (i), (iv), or (v) thereof, or ”(II) failing to meet the requirement of clause (ii) thereof but only if interest payments (or other similar amounts), if any, with respect to such interest consist of a specified portion of the interest payments on permitted assets and such portion does not vary during the period such in- terest is outstanding. ”(2) OWNERSHIP INTEREST.\u2014The term ‘owner- ship interest’ means the interest issued by a FASIT after the startup day which is designated as an ownership interest and which is not a reg- ular interest. ”(c) PERMITTED ASSETS.\u2014For purposes of this part\u2014 ”(1) IN GENERAL.\u2014The term ‘permitted asset’ means\u2014 ”(A) cash or cash equivalents, ”(B) any debt instrument (as defined in sec- tion 1275(a)(1)) under which interest payments (or other similar amounts), if any, at or before maturity meet the requirements applicable under clause (i) or (ii) of section 860G(a)(1)(B), ”(C) foreclosure property, ”(D) any asset\u2014 ”(i) which is an interest rate or foreign cur- rency notional principal contract, letter of cred- it, insurance, guarantee against payment de- faults, or other similar instrument permitted by the Secretary, and ”(ii) which is reasonably required to guaran- tee or hedge against the FASIT’s risks associ- ated with being the obligor on interests issued by the FASIT, ”(E) contract rights to acquire debt instru- ments described in subparagraph (B) or assets described in subparagraph (D), ”(F) any regular interest in another FASIT, and ”(G) any regular interest in a REMIC. ”(2) DEBT ISSUED BY HOLDER OF OWNERSHIP INTEREST NOT PERMITTED ASSET.\u2014The term ‘per- mitted asset’ shall not include any debt instru- ment issued by the holder of the ownership in- terest in the FASIT or by any person related to such holder or any direct or indirect interest in such a debt instrument. The preceding sentence shall not apply to cash equivalents and to any other investment specified in regulations pre- scribed by the Secretary. ”(3) FORECLOSURE PROPERTY.\u2014 ”(A) IN GENERAL.\u2014The term ‘foreclosure prop- erty’ means property\u2014 ”(i) which would be foreclosure property under section 856(e) (determined without regard to paragraph (5) thereof) if such property were real property acquired by a real estate invest- ment trust, and ”(ii) which is acquired in connection with the default or imminent default of a debt instrument held by the FASIT unless the security interest in CONGRESSIONAL RECORD \u2014 HOUSE H9597August 1, 1996 such property was created for the principal pur- pose of permitting the FASIT to invest in such property. Solely for purposes of subsection (a)(1), the de- termination of whether any property is fore- closure property shall be made without regard to section 856(e)(4). ”(B) AUTHORITY TO REDUCE GRACE PERIOD.\u2014 In the case of property other than real property and other than personal property incident to real property, the Secretary may by regulation reduce for purposes of subparagraph (A) the pe- riods otherwise applicable under paragraphs (2) and (3) of section 856(e). ”(d) STARTUP DAY.\u2014For purposes of this part\u2014 ”(1) IN GENERAL.\u2014The term ‘startup day’ means the date designated in the election under subsection (a)(3) as the startup day of the FASIT. Such day shall be the beginning of the first taxable year of the FASIT. ”(2) TREATMENT OF PROPERTY HELD ON START- UP DAY.\u2014All property held (or treated as held under section 860I(c)(2)) by an entity as of the startup day shall be treated as contributed to such entity on such day by the holder of the ownership interest in such entity. ”(e) TAX ON PROHIBITED TRANSACTIONS.\u2014 ”(1) IN GENERAL.\u2014There is hereby imposed for each taxable year of a FASIT a tax equal to 100 percent of the net income derived from prohib- ited transactions. Such tax shall be paid by the holder of the ownership interest in the FASIT. ”(2) PROHIBITED TRANSACTIONS.\u2014For pur- poses of this part, the term ‘prohibited trans- action’ means\u2014 ”(A) the receipt of any income derived from any asset that is not a permitted asset, ”(B) except as provided in paragraph (3), the disposition of any permitted asset, ”(C) the receipt of any income derived from any loan originated by the FASIT, and ”(D) the receipt of any income representing a fee or other compensation for services (other than any fee received as compensation for a waiver, amendment, or consent under permitted assets (other than foreclosure property) held by the FASIT). ”(3) EXCEPTION FOR INCOME FROM CERTAIN DISPOSITIONS.\u2014 ”(A) IN GENERAL.\u2014Paragraph (2)(B) shall not apply to a disposition which would not be a pro- hibited transaction (as defined in section 860F(a)(2)) by reason of\u2014 ”(i) clause (ii), (iii), or (iv) of section 860F(a)(2)(A), or ”(ii) section 860F(a)(5), if the FASIT were treated as a REMIC and debt instruments described in subsection (c)(1)(B) were treated as qualified mortgages. ”(B) SUBSTITUTION OF DEBT INSTRUMENTS; RE- DUCTION OF OVER-COLLATERALIZATION.\u2014Para- graph (2)(B) shall not apply to\u2014 ”(i) the substitution of a debt instrument de- scribed in subsection (c)(1)(B) for another debt instrument which is a permitted asset, or ”(ii) the distribution of a debt instrument con- tributed by the holder of the ownership interest to such holder in order to reduce over- collateralization of the FASIT, but only if a principal purpose of acquiring the debt instrument which is disposed of was not the recognition of gain (or the reduction of a loss) as a result of an increase in the market value of the debt instrument after its acquisition by the FASIT. ”(C) LIQUIDATION OF CLASS OF REGULAR IN- TERESTS.\u2014Paragraph (2)(B) shall not apply to the complete liquidation of any class of regular interests. ”(4) NET INCOME.\u2014For purposes of this sub- section, net income shall be determined in ac- cordance with section 860F(a)(3). ”(f) COORDINATION WITH OTHER PROVI- SIONS.\u2014 ”(1) WASH SALES RULES.\u2014Rules similar to the rules of section 860F(d) shall apply to the own- ership interest in a FASIT. ”(2) SECTION 475.\u2014Except as provided by the Secretary by regulations, if any security which is sold or contributed to a FASIT by the holder of the ownership interest in such FASIT was re- quired to be marked-to-market under section 475 by such holder, section 475 shall continue to apply to such security; except that in applying section 475 while such security is held by the FASIT, the fair market value of such security for purposes of section 475 shall not be less than its value under section 860I(d). ”(g) RELATED PERSON.\u2014For purposes of this part, a person (hereinafter in this subsection re- ferred to as the ‘related person’) is related to any person if\u2014 ”(1) the related person bears a relationship to such person specified in section 267(b) or section 707(b)(1), or ”(2) the related person and such person are engaged in trades or businesses under common control (within the meaning of subsections (a) and (b) of section 52). For purposes of paragraph (1), in applying sec- tion 267(b) or 707(b)(1), ’20 percent’ shall be sub- stituted for ’50 percent’. ”(h) REGULATIONS.\u2014The Secretary shall pre- scribe such regulations as may be necessary or appropriate to carry out the purposes of this part, including regulations to prevent the abuse of the purposes of this part through trans- actions which are not primarily related to securitization of debt instruments by a FASIT.”. (b) TECHNICAL AMENDMENTS.\u2014 (1) Paragraph (2) of section 26(b) is amended by striking ”and” at the end of subparagraph (M), by striking the period at the end of sub- paragraph (N) and inserting ”, and”, and by adding at the end the following new subpara- graph: ”(O) section 860K (relating to treatment of transfers of high-yield interests to disqualified holders).”. (2) Paragraph (6) of section 56(g) is amended by striking ”or REMIC” and inserting ”REMIC, or FASIT”. (3) Clause (ii) of section 382(l)(4)(B) is amend- ed by striking ”or a REMIC to which part IV of subchapter M applies” and inserting ”a REMIC to which part IV of subchapter M applies, or a FASIT to which part V of subchapter M ap- plies”. (4) Paragraph (1) of section 582(c) is amended by inserting ”, and any regular interest in a FASIT,” after ”REMIC”. (5) Subparagraph (E) of section 856(c)(6) is amended by adding at the end the following new sentence: ”The principles of the preceding provisions of this subparagraph shall apply to regular interests in a FASIT.”. (6) Paragraph (3) of section 860G(a) is amend- ed by striking ”and” at the end of subpara- graph (B), by striking the period at the end of subparagraph (C) and inserting ”, and”, and by inserting after subparagraph (C) the following new subparagraph: ”(D) any regular interest in a FASIT which is transferred to, or purchased by, the REMIC as described in clauses (i) and (ii) of subparagraph (A) but only if 95 percent or more of the value of the assets of such FASIT is at all times attrib- utable to obligations described in subparagraph (A) (without regard to such clauses).”. (7) Subparagraph (C) of section 1202(e)(4) is amended by striking ”or REMIC” and inserting ”REMIC, or FASIT”. (8) Clause (xi) of section 7701(a)(19)(C) is amended to read as follows: ”(xi) any regular or residual interest in a REMIC, and any regular interest in a FASIT, but only in the proportion which the assets of such REMIC or FASIT consist of property de- scribed in any of the preceding clauses of this subparagraph; except that if 95 percent or more of the assets of such REMIC or FASIT are assets described in clauses (i) through (x), the entire interest in the REMIC or FASIT shall qualify.”. (9) Subparagraph (A) of section 7701(i)(2) is amended by inserting ”or a FASIT” after ”a REMIC”. (c) CLERICAL AMENDMENT.\u2014The table of parts for subchapter M of chapter 1 is amended by adding at the end the following new item: ”Part V. Financial asset securitization invest- ment trusts.”. (d) EFFECTIVE DATE.\u2014The amendments made by this section shall take effect on September 1, 1997. (e) TREATMENT OF EXISTING SECURITIZATION ENTITIES.\u2014 (1) IN GENERAL.\u2014In the case of the holder of the ownership interest in a pre-effective date FASIT\u2014 (A) gain shall not be recognized under section 860L(d)(2) of the Internal Revenue Code of 1986 on property deemed contributed to the FASIT, and (B) gain shall not be recognized under section 860I of such Code on property contributed to such FASIT, until such property (or portion thereof) ceases to be properly allocable to a pre-FASIT interest. (2) ALLOCATION OF PROPERTY TO PRE-FASIT IN- TEREST.\u2014For purposes of paragraph (1), prop- erty shall be allocated to a pre-FASIT interest in such manner as the Secretary of the Treasury may prescribe, except that all property in a FASIT shall be treated as properly allocable to pre-FASIT interests if the fair market value of all such property does not exceed 107 percent of the aggregate principal amount of all outstand- ing pre-FASIT interests. (3) DEFINITIONS.\u2014For purposes of this sub- section\u2014 (A) PRE-EFFECTIVE DATE FASIT.\u2014The term ”pre-effective date FASIT” means any FASIT if the entity (with respect to which the election under section 860L(a)(3) of such Code was made) is in existence on August 31, 1997. (B) PRE-FASIT INTEREST.\u2014The term ”pre- FASIT interest” means any interest in the en- tity referred to in subparagraph (A) which was issued before the startup day (other than any interest held by the holder of the ownership in- terest in the FASIT). Subtitle G\u2014Technical Corrections SEC. 1701. COORDINATION WITH OTHER SUB- TITLES. For purposes of applying the amendments made by any subtitle of this title other than this subtitle, the provisions of this subtitle shall be treated as having been enacted immediately be- fore the provisions of such other subtitles. SEC. 1702. AMENDMENTS RELATED TO REVENUE RECONCILIATION ACT OF 1990. (a) AMENDMENTS RELATED TO SUBTITLE A.\u2014 (1) Subparagraph (B) of section 59(j)(3) is amended by striking ”section 1(i)(3)(B)” and in- serting ”section 1(g)(3)(B)”. (2) Clause (i) of section 151(d)(3)(C) is amend- ed by striking ”joint of a return” and inserting ”joint return”. (b) AMENDMENTS RELATED TO SUBTITLE B.\u2014 (1) Paragraph (1) of section 11212(e) of the Revenue Reconciliation Act of 1990 is amended by striking ”Paragraph (1) of section 6724(d)” and inserting ”Subparagraph (B) of section 6724(d)(1)”. (2)(A) Subparagraph (B) of section 4093(c)(2), as in effect before the amendments made by the Revenue Reconciliation Act of 1993, is amended by inserting before the period ”unless such fuel is sold for exclusive use by a State or any politi- cal subdivision thereof”. (B) Paragraph (4) of section 6427(l), as in ef- fect before the amendments made by the Reve- nue Reconciliation Act of 1993, is amended by inserting before the period ”unless such fuel was used by a State or any political subdivision thereof”. (3) Paragraph (1) of section 6416(b) is amend- ed by striking ”chapter 32 or by section 4051” and inserting ”chapter 31 or 32”. (4) Section 7012 is amended\u2014 (A) by striking ”production or importation of gasoline” in paragraph (3) and inserting ”taxes on gasoline and diesel fuel”, and CONGRESSIONAL RECORD \u2014 HOUSEH9598 August 1, 1996 (B) by striking paragraph (4) and redesignat- ing paragraphs (5) and (6) as paragraphs (4) and (5), respectively. (5) Subsection (c) of section 5041 is amended by striking paragraph (6) and by inserting the following new paragraphs: ”(6) CREDIT FOR TRANSFEREE IN BOND.\u2014If\u2014 ”(A) wine produced by any person would be eligible for any credit under paragraph (1) if re- moved by such person during the calendar year, ”(B) wine produced by such person is removed during such calendar year by any other person (hereafter in this paragraph referred to as the ‘transferee’) to whom such wine was transferred in bond and who is liable for the tax imposed by this section with respect to such wine, and ”(C) such producer holds title to such wine at the time of its removal and provides to the transferee such information as is necessary to properly determine the transferee’s credit under this paragraph, then, the transferee (and not the producer) shall be allowed the credit under paragraph (1) which would be allowed to the producer if the wine re- moved by the transferee had been removed by the producer on that date. ”(7) REGULATIONS.\u2014The Secretary may pre- scribe such regulations as may be necessary to carry out the purposes of this subsection, in- cluding regulations\u2014 ”(A) to prevent the credit provided in this subsection from benefiting any person who pro- duces more than 250,000 wine gallons of wine during a calendar year, and ”(B) to assure proper reduction of such credit for persons producing more than 150,000 wine gallons of wine during a calendar year.”. (6) Paragraph (3) of section 5061(b) is amend- ed to read as follows: ”(3) section 5041(f),”. (7) Section 5354 is amended by inserting ”(tak- ing into account the appropriate amount of credit with respect to such wine under section 5041(c))” after ”any one time”. (c) AMENDMENTS RELATED TO SUBTITLE C.\u2014 (1) Paragraph (4) of section 56(g) is amended by redesignating subparagraphs (I) and (J) as subparagraphs (H) and (I), respectively. (2) Subparagraph (B) of section 6724(d)(1) is amended\u2014 (A) by striking ”or” at the end of clause (xii), and (B) by striking the period at the end of clause (xiii) and inserting ”, or”. (3) Subsection (g) of section 6302 is amended by inserting ”, 22,” after ”chapters 21”. (4) The earnings and profits of any insurance company to which section 11305(c)(3) of the Rev- enue Reconciliation Act of 1990 applies shall be determined without regard to any deduction al- lowed under such section; except that, for pur- poses of applying sections 56 and 902, and sub- part F of part III of subchapter N of chapter 1 of the Internal Revenue Code of 1986, such de- duction shall be taken into account. (5) Subparagraph (D) of section 6038A(e)(4) is amended\u2014 (A) by striking ”any transaction to which the summons relates” and inserting ”any affected taxable year”, and (B) by adding at the end thereof the following new sentence: ”For purposes of this subpara- graph, the term ‘affected taxable year’ means any taxable year if the determination of the amount of tax imposed for such taxable year is affected by the treatment of the transaction to which the summons relates.”. (6) Subparagraph (A) of section 6621(c)(2) is amended by adding at the end thereof the fol- lowing new flush sentence: ”The preceding sentence shall be applied with- out regard to any such letter or notice which is withdrawn by the Secretary.”. (7) Clause (i) of section 6621(c)(2)(B) is amend- ed by striking ”this subtitle” and inserting ”this title”. (d) AMENDMENTS RELATED TO SUBTITLE D.\u2014 (1) Notwithstanding section 11402(c) of the Revenue Reconciliation Act of 1990, the amend- ment made by section 11402(b)(1) of such Act shall apply to taxable years ending after Decem- ber 31, 1989. (2) Clause (ii) of section 143(m)(4)(C) is amended\u2014 (A) by striking ”any month of the 10-year pe- riod” and inserting ”any year of the 4-year pe- riod”, (B) by striking ”succeeding months” and in- serting ”succeeding years”, and (C) by striking ”over the remainder of such period (or, if lesser, 5 years)” and inserting ”to zero over the succeeding 5 years”. (e) AMENDMENTS RELATED TO SUBTITLE E.\u2014 (1)(A) Clause (ii) of section 56(d)(1)(B) is amended to read as follows: ”(ii) appropriate adjustments in the applica- tion of section 172(b)(2) shall be made to take into account the limitation of subparagraph (A).”. (B) For purposes of applying sections 56(g)(1) and 56(g)(3) of the Internal Revenue Code of 1986 with respect to taxable years beginning in 1991 and 1992, the reference in such sections to the alternative tax net operating loss deduction shall be treated as including a reference to the deduction under section 56(h) of such Code as in effect before the amendments made by section 1915 of the Energy Policy Act of 1992. (2) Clause (i) of section 613A(c)(3)(A) is amended by striking ”the table contained in”. (3) Section 6501 is amended\u2014 (A) by striking subsection (m) (relating to defi- ciency attributable to election under section 44B) and by redesignating subsections (n) and (o) as subsections (m) and (n), respectively, and (B) by striking ”section 40(f) or 51(j)” in sub- section (m) (as redesignated by subparagraph (A)) and inserting ”section 40(f), 43, or 51(j)”. (4) Subparagraph (C) of section 38(c)(2) (as in effect on the day before the date of the enact- ment of the Revenue Reconciliation Act of 1990) is amended by inserting before the period at the end of the first sentence the following: ”and without regard to the deduction under section 56(h)”. (5) The amendment made by section 1913(b)(2)(C)(i) of the Energy Policy Act of 1992 shall apply to taxable years beginning after De- cember 31, 1990. (f) AMENDMENTS RELATED TO SUBTITLE F.\u2014 (1)(A) Section 2701(a)(3) is amended by adding at the end thereof the following new subpara- graph: ”(C) VALUATION OF QUALIFIED PAYMENTS WHERE NO LIQUIDATION, ETC. RIGHTS.\u2014In the case of an applicable retained interest which is described in subparagraph (B)(i) but not sub- paragraph (B)(ii), the value of the distribution right shall be determined without regard to this section.”. (B) Section 2701(a)(3)(B) is amended by insert- ing ”CERTAIN” before ”QUALIFIED” in the head- ing thereof. (C) Sections 2701 (d)(1) and (d)(4) are each amended by striking ”subsection (a)(3)(B)” and inserting ”subsection (a)(3) (B) or (C)”. (2) Clause (i) of section 2701(a)(4)(B) is amended by inserting ”(or, to the extent pro- vided in regulations, the rights as to either in- come or capital)” after ”income and capital”. (3)(A) Section 2701(b)(2) is amended by adding at the end thereof the following new subpara- graph: ”(C) APPLICABLE FAMILY MEMBER.\u2014For pur- poses of this subsection, the term ‘applicable family member’ includes any lineal descendant of any parent of the transferor or the transfer- or’s spouse.”. (B) Section 2701(e)(3) is amended\u2014 (i) by striking subparagraph (B), and (ii) by striking so much of paragraph (3) as precedes ”shall be treated as holding” and in- serting: ”(3) ATTRIBUTION OF INDIRECT HOLDINGS AND TRANSFERS.\u2014An individual”. (C) Section 2704(c)(3) is amended by striking ”section 2701(e)(3)(A)” and inserting ”section 2701(e)(3)”. (4) Clause (i) of section 2701(c)(1)(B) is amend- ed to read as follows: ”(i) a right to distributions with respect to any interest which is junior to the rights of the transferred interest,”. (5)(A) Clause (i) of section 2701(c)(3)(C) is amended to read as follows: ”(i) IN GENERAL.\u2014Payments under any inter- est held by a transferor which (without regard to this subparagraph) are qualified payments shall be treated as qualified payments unless the transferor elects not to treat such payments as qualified payments. Payments described in the preceding sentence which are held by an appli- cable family member shall be treated as qualified payments only if such member elects to treat such payments as qualified payments.”. (B) The first sentence of section 2701(c)(3)(C)(ii) is amended to read as follows: ”A transferor or applicable family member hold- ing any distribution right which (without re- gard to this subparagraph) is not a qualified payment may elect to treat such right as a qualified payment, to be paid in the amounts and at the times specified in such election.”. (C) The time for making an election under the second sentence of section 2701(c)(3)(C)(i) of the Internal Revenue Code of 1986 (as amended by subparagraph (A)) shall not expire before the due date (including extensions) for filing the transferor’s return of the tax imposed by section 2501 of such Code for the first calendar year ending after the date of enactment. (6) Section 2701(d)(3)(A)(iii) is amended by striking ”the period ending on the date of”. (7) Subclause (I) of section 2701(d)(3)(B)(ii) is amended by inserting ”or the exclusion under section 2503(b),” after ”section 2523,”. (8) Section 2701(e)(5) is amended\u2014 (A) by striking ”such contribution to capital or such redemption, recapitalization, or other change” in subparagraph (A) and inserting ”such transaction”, and (B) by striking ”the transfer” in subpara- graph (B) and inserting ”such transaction”. (9) Section 2701(d)(4) is amended by adding at the end thereof the following new subpara- graph: ”(C) TRANSFER TO TRANSFERORS.\u2014In the case of a taxable event described in paragraph (3)(A)(ii) involving a transfer of an applicable retained interest from an applicable family mem- ber to a transferor, this subsection shall con- tinue to apply to the transferor during any pe- riod the transferor holds such interest.”. (10) Section 2701(e)(6) is amended by inserting ”or to reflect the application of subsection (d)” before the period at the end thereof. (11)(A) Section 2702(a)(3)(A) is amended\u2014 (i) by striking ”to the extent” and inserting ”if” in clause (i), (ii) by striking ”or” at the end of clause (i), (iii) by striking the period at the end of clause (ii) and inserting ”, or”, and (iv) by adding at the end thereof the following new clause: ”(iii) to the extent that regulations provide that such transfer is not inconsistent with the purposes of this section.”. (B)(i) Section 2702(a)(3) is amended by strik- ing ”incomplete transfer” each place it appears and inserting ”incomplete gift”. (ii) The heading for section 2702(a)(3)(B) is amended by striking ”INCOMPLETE TRANSFER” and inserting ”INCOMPLETE GIFT”. (g) AMENDMENTS RELATED TO SUBTITLE G.\u2014 (1)(A) Subsection (a) of section 1248 is amend- ed\u2014 (i) by striking ”, or if a United States person receives a distribution from a foreign corpora- tion which, under section 302 or 331, is treated as an exchange of stock” in paragraph (1), and (ii) by adding at the end thereof the following new sentence: ”For purposes of this section, a United States person shall be treated as having CONGRESSIONAL RECORD \u2014 HOUSE H9599August 1, 1996 sold or exchanged any stock if, under any provi- sion of this subtitle, such person is treated as re- alizing gain from the sale or exchange of such stock.”. (B) Paragraph (1) of section 1248(e) is amend- ed by striking ”, or receives a distribution from a domestic corporation which, under section 302 or 331, is treated as an exchange of stock”. (C) Subparagraph (B) of section 1248(f)(1) is amended by striking ”or 361(c)(1)” and inserting ”355(c)(1), or 361(c)(1)”. (D) Paragraph (1) of section 1248(i) is amend- ed to read as follows: ”(1) IN GENERAL.\u2014If any shareholder of a 10- percent corporate shareholder of a foreign cor- poration exchanges stock of the 10-percent cor- porate shareholder for stock of the foreign cor- poration, such 10-percent corporate shareholder shall recognize gain in the same manner as if the stock of the foreign corporation received in such exchange had been\u2014 ”(A) issued to the 10-percent corporate share- holder, and ”(B) then distributed by the 10-percent cor- porate shareholder to such shareholder in re- demption or liquidation (whichever is appro- priate). The amount of gain recognized by such 10-per- cent corporate shareholder under the preceding sentence shall not exceed the amount treated as a dividend under this section.”. (2) Section 897 is amended by striking sub- section (f). (3) Paragraph (13) of section 4975(d) is amend- ed by striking ”section 408(b)” and inserting ”section 408(b)(12)”. (4) Clause (iii) of section 56(g)(4)(D) is amend- ed by inserting ”, but only with respect to tax- able years beginning after December 31, 1989” before the period at the end thereof. (5)(A) Paragraph (11) of section 11701(a) of the Revenue Reconciliation Act of 1990 (and the amendment made by such paragraph) are here- by repealed, and section 7108(r)(2) of the Reve- nue Reconciliation Act of 1989 shall be applied as if such paragraph (and amendment) had never been enacted. (B) Subparagraph (A) shall not apply to any building if the owner of such building estab- lishes to the satisfaction of the Secretary of the Treasury or his delegate that such owner rea- sonably relied on the amendment made by such paragraph (11). (h) AMENDMENTS RELATED TO SUBTITLE H.\u2014 (1)(A) Clause (vi) of section 168(e)(3)(B) is amended by striking ”or” at the end of sub- clause (I), by striking the period at the end of subclause (II) and inserting ”, or”, and by add- ing at the end thereof the following new sub- clause: ”(III) is described in section 48(l)(3)(A)(ix) (as in effect on the day before the date of the enact- ment of the Revenue Reconciliation Act of 1990).”. (B) Subparagraph (B) of section 168(e)(3) (re- lating to 5-year property) is amended by adding at the end the following flush sentence: ”Nothing in any provision of law shall be con- strued to treat property as not being described in clause (vi)(I) (or the corresponding provisions of prior law) by reason of being public utility property (within the meaning of section 48(a)(3)).”. (C) Subparagraph (K) of section 168(g)(4) is amended by striking ”section 48(a)(3)(A)(iii)” and inserting ”section 48(l)(3)(A)(ix) (as in ef- fect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)”. (2) Clause (ii) of section 172(b)(1)(E) is amend- ed by striking ”subsection (m)” and inserting ”subsection (h)”. (3) Sections 805(a)(4)(E), 832(b)(5)(C)(ii)(II), and 832(b)(5)(D)(ii)(II) are each amended by striking ”243(b)(5)” and inserting ”243(b)(2)”. (4) Subparagraph (A) of section 243(b)(3) is amended by inserting ”of” after ”In the case”. (5) The subsection heading for subsection (a) of section 280F is amended by striking ”INVEST- MENT TAX CREDIT AND”. (6) Clause (i) of section 1504(c)(2)(B) is amend- ed by inserting ”section” before ”243(b)(2)”. (7) Paragraph (3) of section 341(f) is amended by striking ”351, 361, 371(a), or 374(a)” and in- serting ”351, or 361”. (8) Paragraph (2) of section 243(b) is amended to read as follows: ”(2) AFFILIATED GROUP.\u2014For purposes of this subsection: ”(A) IN GENERAL.\u2014The term ‘affiliated group’ has the meaning given such term by section 1504(a), except that for such purposes sections 1504(b)(2), 1504(b)(4), and 1504(c) shall not apply. ”(B) GROUP MUST BE CONSISTENT IN FOREIGN TAX TREATMENT.\u2014The requirements of para- graph (1)(A) shall not be treated as being met with respect to any dividend received by a cor- poration if, for any taxable year which includes the day on which such dividend is received\u2014 ”(i) 1 or more members of the affiliated group referred to in paragraph (1)(A) choose to any extent to take the benefits of section 901, and ”(ii) 1 or more other members of such group claim to any extent a deduction for taxes other- wise creditable under section 901.”. (9) The amendment made by section 11813(b)(17) of the Revenue Reconciliation Act of 1990 shall be applied as if the material strick- en by such amendment included the closing pa- renthesis after ”section 48(a)(5)”. (10) Paragraph (1) of section 179(d) is amend- ed by striking ”in a trade or business” and in- serting ”a trade or business”. (11) Subparagraph (E) of section 50(a)(2) is amended by striking ”section 48(a)(5)(A)” and inserting ”section 48(a)(5)”. (12) The amendment made by section 11801(c)(9)(G)(ii) of the Revenue Reconciliation Act of 1990 shall be applied as if it struck ”Sec- tion 422A(c)(2)” and inserted ”Section 422(c)(2)”. (13) Subparagraph (B) of section 424(c)(3) is amended by striking ”a qualified stock option, an incentive stock option, an option granted under an employee stock purchase plan, or a re- stricted stock option” and inserting ”an incen- tive stock option or an option granted under an employee stock purchase plan”. (14) Subparagraph (E) of section 1367(a)(2) is amended by striking ”section 613A(c)(13)(B)” and inserting ”section 613A(c)(11)(B)”. (15) Subparagraph (B) of section 460(e)(6) is amended by striking ”section 167(k)” and in- serting ”section 168(e)(2)(A)(ii)”. (16) Subparagraph (C) of section 172(h)(4) is amended by striking ”subsection (b)(1)(M)” and inserting ”subsection (b)(1)(E)”. (17) Section 6503 is amended\u2014 (A) by redesignating the subsection relating to extension in case of certain summonses as sub- section (j), and (B) by redesignating the subsection relating to cross references as subsection (k). (18) Paragraph (4) of section 1250(e) is hereby repealed. (19) Paragraph (1) of section 179(d) is amend- ed by adding at the end the following new sen- tence: ”Such term shall not include any prop- erty described in section 50(b) and shall not in- clude air conditioning or heating units.”. ”(i) EFFECTIVE DATE.\u2014Except as otherwise expressly provided, any amendment made by this section shall take effect as if included in the provision of the Revenue Reconciliation Act of 1990 to which such amendment relates.”. SEC. 1703. AMENDMENTS RELATED TO REVENUE RECONCILIATION ACT OF 1993. (a) AMENDMENT RELATED TO SECTION 13114.\u2014 Paragraph (2) of section 1044(c) is amended to read as follows: ”(2) PURCHASE.\u2014The taxpayer shall be con- sidered to have purchased any property if, but for subsection (d), the unadjusted basis of such property would be its cost within the meaning of section 1012.”. (b) AMENDMENTS RELATED TO SECTION 13142.\u2014 (1) Subparagraph (B) of section 13142(b)(6) of the Revenue Reconciliation Act of 1993 is amended to read as follows: ”(B) FULL-TIME STUDENTS, WAIVER AUTHOR- ITY, AND PROHIBITED DISCRIMINATION.\u2014The amendments made by paragraphs (2), (3), and (4) shall take effect on the date of the enactment of this Act.”. (2) Subparagraph (C) of section 13142(b)(6) of such Act is amended by striking ”paragraph (2)” and inserting ”paragraph (5)”. (c) AMENDMENT RELATED TO SECTION 13161.\u2014 (1) IN GENERAL.\u2014Subsection (e) of section 4001 (relating to inflation adjustment) is amended to read as follows: ”(e) INFLATION ADJUSTMENT.\u2014 ”(1) IN GENERAL.\u2014The $30,000 amount in sub- section (a) and section 4003(a) shall be increased by an amount equal to\u2014 ”(A) $30,000, multiplied by ”(B) the cost-of-living adjustment under sec- tion 1(f)(3) for the calendar year in which the vehicle is sold, determined by substituting ‘cal- endar year 1990’ for ‘calendar year 1992’ in sub- paragraph (B) thereof. ”(2) ROUNDING.\u2014If any amount as adjusted under paragraph (1) is not a multiple of $2,000, such amount shall be rounded to the next lowest multiple of $2,000.”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall take effect on the date of the enactment of this Act. (d) AMENDMENT RELATED TO SECTION 13201.\u2014 Clause (ii) of section 135(b)(2)(B) is amended by inserting before the period at the end thereof the following: ”, determined by substituting ‘cal- endar year 1989’ for ‘calendar year 1992’ in sub- paragraph (B) thereof”. (e) AMENDMENTS RELATED TO SECTION 13203.\u2014 Subsection (a) of section 59 is amended\u2014 (1) by striking ”the amount determined under section 55(b)(1)(A)” in paragraph (1)(A) and (2)(A)(i) and inserting ”the pre-credit tentative minimum tax”, (2) by striking ”specified in section 55(b)(1)(A)” in paragraph (1)(C) and inserting ”specified in subparagraph (A)(i) or (B)(i) of section 55(b)(1) (whichever applies)”, (3) by striking ”which would be determined under section 55(b)(1)(A)” in paragraph (2)(A)(ii) and inserting ”which would be the pre-credit tentative minimum tax”, and (4) by adding at the end thereof the following new paragraph: ”(3) PRE-CREDIT TENTATIVE MINIMUM TAX.\u2014 For purposes of this subsection, the term ‘pre- credit tentative minimum tax’ means\u2014 ”(A) in the case of a taxpayer other than a corporation, the amount determined under the first sentence of section 55(b)(1)(A)(i), or ”(B) in the case of a corporation, the amount determined under section 55(b)(1)(B)(i).”. (f) AMENDMENT RELATED TO SECTION 13221.\u2014 Sections 1201(a) and 1561(a) are each amended by striking ”last sentence” each place it ap- pears and inserting ”last 2 sentences”. (g) AMENDMENTS RELATED TO SECTION 13222.\u2014 (1) Subparagraph (B) of section 6033(e)(1) is amended by adding at the end thereof the fol- lowing new clause: ”(iii) COORDINATION WITH SECTION 527(f).\u2014 This subsection shall not apply to any amount on which tax is imposed by reason of section 527(f).”. (2) Clause (i) of section 6033(e)(1)(B) is amend- ed by striking ”this subtitle” and inserting ”sec- tion 501”. (h) AMENDMENT RELATED TO SECTION 13225.\u2014 Paragraph (3) of section 6655(g) is amended by striking all that follows ” ‘3rd month’ ” in the sentence following subparagraph (C) and insert- ing ”, subsection (e)(2)(A) shall be applied by substituting ‘2 months’ for ‘3 months’ in clause (i)(I), the election under clause (i) of subsection (e)(2)(C) may be made separately for each in- stallment, and clause (ii) of subsection (e)(2)(C) shall not apply.”. CONGRESSIONAL RECORD \u2014 HOUSEH9600 August 1, 1996 (i) AMENDMENTS RELATED TO SECTION 13231.\u2014 (1) Subparagraph (G) of section 904(d)(3) is amended by striking ”section 951(a)(1)(B)” and inserting ”subparagraph (B) or (C) of section 951(a)(1)”. (2) Paragraph (1) of section 956A(b) is amend- ed to read as follows: ”(1) the amount (not including a deficit) re- ferred to in section 316(a)(1) to the extent such amount was accumulated in prior taxable years beginning after September 30, 1993, and”. (3) Subsection (f) of section 956A is amended by inserting before the period at the end thereof: ”and regulations coordinating the provisions of subsections (c)(3)(A) and (d)”. (4) Subsection (b) of section 958 is amended by striking ”956(b)(2)” each place it appears and inserting ”956(c)(2)”. (5)(A) Subparagraph (A) of section 1297(d)(2) is amended by striking ”The adjusted basis of any asset” and inserting ”The amount taken into account under section 1296(a)(2) with re- spect to any asset”. (B) The paragraph heading of paragraph (2) of section 1297(d) is amended to read as follows: ”(2) AMOUNT TAKEN INTO ACCOUNT.\u2014”. (6) Subsection (e) of section 1297 is amended by inserting ”For purposes of this part\u2014” after the subsection heading. (j) AMENDMENT RELATED TO SECTION 13241.\u2014 Subparagraph (B) of section 40(e)(1) is amended to read as follows: ”(B) for any period before January 1, 2001, during which the rates of tax under section 4081(a)(2)(A) are 4.3 cents per gallon.”. (k) AMENDMENT RELATED TO SECTION 13242.\u2014 Paragraph (4) of section 6427(f) is amended by striking ”1995” and inserting ”1999”. (l) AMENDMENT RELATED TO SECTION 13261.\u2014 Clause (iii) of section 13261(g)(2)(A) of the Reve- nue Reconciliation Act of 1993 is amended by striking ”by the taxpayer” and inserting ”by the taxpayer or a related person”. (m) AMENDMENT RELATED TO SECTION 13301.\u2014 Subparagraph (B) of section 1397B(d)(5) is amended by striking ”preceding”. (n) CLERICAL AMENDMENTS.\u2014 (1) Subsection (d) of section 39 is amended\u2014 (A) by striking ”45” in the heading of para- graph (5) and inserting ”45A”, and (B) by striking ”45” in the heading of para- graph (6) and inserting ”45B”. (2) Subparagraph (A) of section 108(d)(9) is amended by striking ”paragraph (3)(B)” and in- serting ”paragraph (3)(C)”. (3) Subparagraph (C) of section 143(d)(2) is amended by striking the period at the end there- of and inserting a comma. (4) Clause (ii) of section 163(j)(6)(E) is amend- ed by striking ”which is a” and inserting ”which is”. (5) Subparagraph (A) of section 1017(b)(4) is amended by striking ”subsection (b)(2)(D)” and inserting ”subsection (b)(2)(E)”. (6) So much of section 1245(a)(3) as precedes subparagraph (A) thereof is amended to read as follows: ”(3) SECTION 1245 PROPERTY.\u2014For purposes of this section, the term ‘section 1245 property’ means any property which is or has been prop- erty of a character subject to the allowance for depreciation provided in section 167 and is ei- ther\u2014”. (7) Paragraph (2) of section 1394(e) is amend- ed\u2014 (A) by striking ”(i)” and inserting ”(A)”, and (B) by striking ”(ii)” and inserting ”(B)”. (8) Subsection (m) of section 6501 (as redesig- nated by section 1602) is amended by striking ”or 51(j)” and inserting ”45B, or 51(j)”. (9)(A) The section 6714 added by section 13242(b)(1) of the Revenue Reconciliation Act of 1993 is hereby redesignated as section 6715. (B) The table of sections for part I of sub- chapter B of chapter 68 is amended by striking ”6714” in the item added by such section 13242(b)(2) of such Act and inserting ”6715”. (10) Paragraph (2) of section 9502(b) is amend- ed by inserting ”and before” after ”1982,”. (11) Subsection (a)(3) of section 13206 of the Revenue Reconciliation Act of 1993 is amended by striking ”this section” and inserting ”this subsection”. (12) Paragraph (1) of section 13215(c) of the Revenue Reconciliation Act of 1993 is amended by striking ”Public Law 92 21” and inserting ”Public Law 98 21”. (13) Paragraph (2) of section 13311(e) of the Revenue Reconciliation Act of 1993 is amended by striking ”section 1393(a)(3)” and inserting ”section 1393(a)(2)”. (14) Subparagraph (B) of section 117(d)(2) is amended by striking ”section 132(f)” and insert- ing ”section 132(h)”. (o) EFFECTIVE DATE.\u2014Any amendment made by this section shall take effect as if included in the provision of the Revenue Reconciliation Act of 1993 to which such amendment relates. SEC. 1704. MISCELLANEOUS PROVISIONS. (a) APPLICATION OF AMENDMENTS MADE BY TITLE XII OF OMNIBUS BUDGET RECONCILIATION ACT OF 1990.\u2014Except as otherwise expressly provided, whenever in title XII of the Omnibus Budget Reconciliation Act of 1990 an amend- ment or repeal is expressed in terms of an amendment to, or repeal of, a section or other provision, the reference shall be considered to be made to a section or other provision of the Inter- nal Revenue Code of 1986. (b) TREATMENT OF CERTAIN AMOUNTS UNDER HEDGE BOND RULES.\u2014 (1) IN GENERAL.\u2014Clause (iii) of section 149(g)(3)(B) is amended to read as follows: ”(iii) AMOUNTS HELD PENDING REINVESTMENT OR REDEMPTION.\u2014Amounts held for not more than 30 days pending reinvestment or bond re- demption shall be treated as invested in bonds described in clause (i).”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall take effect as if included in the amendments made by section 7651 of the Omnibus Budget Reconciliation Act of 1989. (c) TREATMENT OF CERTAIN DISTRIBUTIONS UNDER SECTION 1445.\u2014 (1) IN GENERAL.\u2014Paragraph (3) of section 1445(e) is amended by adding at the end thereof the following new sentence: ”Rules similar to the rules of the preceding provisions of this paragraph shall apply in the case of any dis- tribution to which section 301 applies and which is not made out of the earnings and profits of such a domestic corporation.”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall apply to distributions after the date of the enactment of this Act. (d) TREATMENT OF CERTAIN CREDITS UNDER SECTION 469.\u2014 (1) IN GENERAL.\u2014Subparagraph (B) of section 469(c)(3) is amended by adding at the end there- of the following new sentence: ”If the preceding sentence applies to the net income from any property for any taxable year, any credits al- lowable under subpart B (other than section 27(a)) or D of part IV of subchapter A for such taxable year which are attributable to such property shall be treated as credits not from a passive activity to the extent the amount of such credits does not exceed the regular tax liability of the taxpayer for the taxable year which is al- locable to such net income.”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall apply to taxable years beginning after December 31, 1986. (e) TREATMENT OF DISPOSITIONS UNDER PAS- SIVE LOSS RULES.\u2014 (1) IN GENERAL.\u2014Subparagraph (A) of section 469(g)(1) is amended to read as follows: ”(A) IN GENERAL.\u2014If all gain or loss realized on such disposition is recognized, the excess of\u2014 ”(i) any loss from such activity for such tax- able year (determined after the application of subsection (b)), over ”(ii) any net income or gain for such taxable year from all other passive activities (determined after the application of subsection (b)), shall be treated as a loss which is not from a passive activity.”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall apply to taxable years beginning after December 31, 1986. (f) MISCELLANEOUS AMENDMENTS TO FOREIGN PROVISIONS.\u2014 (1) COORDINATION OF UNIFIED ESTATE TAX CREDIT WITH TREATIES.\u2014Subparagraph (A) of section 2102(c)(3) is amended by adding at the end thereof the following new sentence: ”For purposes of the preceding sentence, property shall not be treated as situated in the United States if such property is exempt from the tax imposed by this subchapter under any treaty ob- ligation of the United States.”. (2) TREATMENT OF CERTAIN INTEREST PAID TO RELATED PERSON.\u2014 (A) Subparagraph (B) of section 163(j)(1) is amended by inserting before the period at the end thereof the following: ”(and clause (ii) of paragraph (2)(A) shall not apply for purposes of applying this subsection to the amount so treat- ed)”. (B) Subsection (j) of section 163 is amended by redesignating paragraph (7) as paragraph (8) and by inserting after paragraph (6) the follow- ing new paragraph: ”(7) COORDINATION WITH PASSIVE LOSS RULES, ETC.\u2014This subsection shall be applied before sections 465 and 469.”. (C) The amendments made by this paragraph shall apply as if included in the amendments made by section 7210(a) of the Revenue Rec- onciliation Act of 1989. (3) TREATMENT OF INTEREST ALLOCABLE TO EF- FECTIVELY CONNECTED INCOME.\u2014 (A) IN GENERAL.\u2014 (i) Subparagraph (B) of section 884(f)(1) is amended by striking ”to the extent” and all that follows down through ”subparagraph (A)” and inserting ”to the extent that the allocable interest exceeds the interest described in sub- paragraph (A)”. (ii) The second sentence of section 884(f)(1) is amended by striking ”reasonably expected” and all that follows down through the period at the end thereof and inserting ”reasonably expected to be allocable interest.”. (iii) Paragraph (2) of section 884(f) is amended to read as follows: ”(2) ALLOCABLE INTEREST.\u2014For purposes of this subsection, the term ‘allocable interest’ means any interest which is allocable to income which is effectively connected (or treated as ef- fectively connected) with the conduct of a trade or business in the United States.”. (B) EFFECTIVE DATE.\u2014The amendments made by subparagraph (A) shall take effect as if in- cluded in the amendments made by section 1241(a) of the Tax Reform Act of 1986. (4) CLARIFICATION OF SOURCE RULE.\u2014 (A) IN GENERAL.\u2014Paragraph (2) of section 865(b) is amended by striking ”863(b)” and in- serting ”863”. (B) EFFECTIVE DATE.\u2014The amendment made by subparagraph (A) shall take effect as if in- cluded in the amendments made by section 1211 of the Tax Reform Act of 1986. (5) REPEAL OF OBSOLETE PROVISIONS.\u2014 (A) Paragraph (1) of section 6038(a) is amend- ed by striking ”, and” at the end of subpara- graph (E) and inserting a period, and by strik- ing subparagraph (F). (B) Subsection (b) of section 6038A is amended by adding ”and” at the end of paragraph (2), by striking ”, and” at the end of paragraph (3) and inserting a period, and by striking para- graph (4). (g) CLARIFICATION OF TREATMENT OF MEDI- CARE ENTITLEMENT UNDER COBRA PROVI- SIONS.\u2014 (1) IN GENERAL.\u2014 (A) Subclause (V) of section 4980B(f)(2)(B)(i) is amended to read as follows: ”(V) MEDICARE ENTITLEMENT FOLLOWED BY QUALIFYING EVENT.\u2014In the case of a qualifying event described in paragraph (3)(B) that occurs less than 18 months after the date the covered employee became entitled to benefits under title CONGRESSIONAL RECORD \u2014 HOUSE H9601August 1, 1996 XVIII of the Social Security Act, the period of coverage for qualified beneficiaries other than the covered employee shall not terminate under this clause before the close of the 36-month pe- riod beginning on the date the covered employee became so entitled.”. (B) Clause (v) of section 602(2)(A) of the Em- ployee Retirement Income Security Act of 1974 is amended to read as follows: ”(v) MEDICARE ENTITLEMENT FOLLOWED BY QUALIFYING EVENT.\u2014In the case of a qualifying event described in section 603(2) that occurs less than 18 months after the date the covered em- ployee became entitled to benefits under title XVIII of the Social Security Act, the period of coverage for qualified beneficiaries other than the covered employee shall not terminate under this subparagraph before the close of the 36- month period beginning on the date the covered employee became so entitled.”. (C) Clause (iv) of section 2202(2)(A) of the Public Health Service Act is amended to read as follows: ”(iv) MEDICARE ENTITLEMENT FOLLOWED BY QUALIFYING EVENT.\u2014In the case of a qualifying event described in section 2203(2) that occurs less than 18 months after the date the covered employee became entitled to benefits under title XVIII of the Social Security Act, the period of coverage for qualified beneficiaries other than the covered employee shall not terminate under this subparagraph before the close of the 36- month period beginning on the date the covered employee became so entitled.”. (2) EFFECTIVE DATE.\u2014The amendments made by this subsection shall apply to plan years be- ginning after December 31, 1989. (h) TREATMENT OF CERTAIN REMIC INCLU- SIONS.\u2014 (1) IN GENERAL.\u2014Subsection (a) of section 860E is amended by adding at the end thereof the following new paragraph: ”(6) COORDINATION WITH MINIMUM TAX.\u2014For purposes of part VI of subchapter A of this chapter\u2014 ”(A) the reference in section 55(b)(2) to tax- able income shall be treated as a reference to taxable income determined without regard to this subsection, ”(B) the alternative minimum taxable income of any holder of a residual interest in a REMIC for any taxable year shall in no event be less than the excess inclusion for such taxable year, and ”(C) any excess inclusion shall be disregarded for purposes of computing the alternative tax net operating loss deduction. The preceding sentence shall not apply to any organization to which section 593 applies, except to the extent provided in regulations prescribed by the Secretary under paragraph (2).”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall take effect as if included in the amendments made by section 671 of the Tax Reform Act of 1986 unless the taxpayer elects to apply such amendment only to taxable years beginning after the date of the enactment of this Act. (i) EXEMPTION FROM HARBOR MAINTENANCE TAX FOR CERTAIN PASSENGERS.\u2014 (1) IN GENERAL.\u2014Subparagraph (D) of section 4462(b)(1) (relating to special rule for Alaska, Hawaii, and possessions) is amended by insert- ing before the period the following: ”, or pas- sengers transported on United States flag vessels operating solely within the State waters of Alas- ka or Hawaii and adjacent international wa- ters”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall take effect as if included in the amendments made by section 1402(a) of the Harbor Maintenance Revenue Act of 1986. (j) AMENDMENTS RELATED TO REVENUE PROVI- SIONS OF ENERGY POLICY ACT OF 1992.\u2014 (1) Effective with respect to taxable years be- ginning after December 31, 1990, subclause (II) of section 53(d)(1)(B)(iv) is amended to read as follows: ”(II) the adjusted net minimum tax for any taxable year is the amount of the net minimum tax for such year increased in the manner pro- vided in clause (iii).”. (2) Subsection (g) of section 179A is redesig- nated as subsection (f). (3) Subparagraph (E) of section 6724(d)(3) is amended by striking ”section 6109(f)” and in- serting ”section 6109(h)”. (4)(A) Subsection (d) of section 30 is amend- ed\u2014 (i) by inserting ”(determined without regard to subsection (b)(3))” before the period at the end of paragraph (1) thereof, and (ii) by adding at the end thereof the following new paragraph: ”(4) ELECTION TO NOT TAKE CREDIT.\u2014No cred- it shall be allowed under subsection (a) for any vehicle if the taxpayer elects to not have this section apply to such vehicle.”. (B) Subsection (m) of section 6501 (as redesig- nated by section 1602) is amended by striking ”section 40(f)” and inserting ”section 30(d)(4), 40(f)”. (5) Subclause (III) of section 501(c)(21)(D)(ii) is amended by striking ”section 101(6)” and in- serting ”section 101(7)” and by striking ”1752(6)” and inserting ”1752(7)”. (6) Paragraph (1) of section 1917(b) of the En- ergy Policy Act of 1992 shall be applied as if ”at a rate” appeared instead of ”at the rate” in the material proposed to be stricken. (7) Paragraph (2) of section 1921(b) of the En- ergy Policy Act of 1992 shall be applied as if a comma appeared after ”(2)” in the material pro- posed to be stricken. (8) Subsection (a) of section 1937 of the Energy Policy Act of 1992 shall be applied as if ”Sub- part B” appeared instead of ”Subpart C”. (k) TREATMENT OF QUALIFIED FOOTBALL COACHES PLAN.\u2014 (1) IN GENERAL.\u2014For purposes of the Internal Revenue Code of 1986, a qualified football coaches plan\u2014 (A) shall be treated as a multiemployer collec- tively bargained plan, and (B) notwithstanding section 401(k)(4)(B) of such Code, may include a qualified cash and de- ferred arrangement under section 401(k) of such Code. (2) QUALIFIED FOOTBALL COACHES PLAN.\u2014For purposes of this subsection, the term ”qualified football coaches plan” means any defined con- tribution plan which is established and main- tained by an organization\u2014 (A) which is described in section 501(c) of such Code, (B) the membership of which consists entirely of individuals who primarily coach football as full-time employees of 4-year colleges or univer- sities described in section 170(b)(1)(A)(ii) of such Code, and (C) which was in existence on September 18, 1986. (3) EFFECTIVE DATE.\u2014This subsection shall apply to years beginning after December 22, 1987. (l) DETERMINATION OF UNRECOVERED INVEST- MENT IN ANNUITY CONTRACT.\u2014 (1) IN GENERAL.\u2014Subparagraph (A) of section 72(b)(4) is amended by inserting ”(determined without regard to subsection (c)(2))” after ”con- tract”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall take effect as if included in the amendments made by section 1122(c) of the Tax Reform Act of 1986. (m) MODIFICATIONS TO ELECTION TO INCLUDE CHILD’S INCOME ON PARENT’S RETURN.\u2014 (1) ELIGIBILITY FOR ELECTION.\u2014Clause (ii) of section 1(g)(7)(A) (relating to election to include certain unearned income of child on parent’s re- turn) is amended to read as follows: ”(ii) such gross income is more than the amount described in paragraph (4)(A)(ii)(I) and less than 10 times the amount so described,”. (2) COMPUTATION OF TAX.\u2014Subparagraph (B) of section 1(g)(7) (relating to income included on parent’s return) is amended\u2014 (A) by striking ”$1,000” in clause (i) and in- serting ”twice the amount described in para- graph (4)(A)(ii)(I)”, and (B) by amending subclause (II) of clause (ii) to read as follows: ”(II) for each such child, 15 percent of the lesser of the amount described in paragraph (4)(A)(ii)(I) or the excess of the gross income of such child over the amount so described, and”. (3) MINIMUM TAX.\u2014Subparagraph (B) of sec- tion 59(j)(1) is amended by striking ”$1,000” and inserting ”twice the amount in effect for the taxable year under section 63(c)(5)(A)”. (4) EFFECTIVE DATE.\u2014The amendments made by this subsection shall apply to taxable years beginning after December 31, 1995. (n) TREATMENT OF CERTAIN VETERANS’ REEM- PLOYMENT RIGHTS.\u2014 (1) IN GENERAL.\u2014Section 414 is amended by adding at the end the following new subsection: ”(u) SPECIAL RULES RELATING TO VETERANS’ REEMPLOYMENT RIGHTS UNDER USERRA.\u2014 ”(1) TREATMENT OF CERTAIN CONTRIBUTIONS MADE PURSUANT TO VETERANS’ REEMPLOYMENT RIGHTS.\u2014If any contribution is made by an em- ployer or an employee under an individual ac- count plan with respect to an employee, or by an employee to a defined benefit plan that pro- vides for employee contributions, and such con- tribution is required by reason of such employ- ee’s rights under chapter 43 of title 38, United States Code, resulting from qualified military service, then\u2014 ”(A) such contribution shall not be subject to any otherwise applicable limitation contained in section 402(g), 402(h), 403(b), 404(a), 404(h), 408, 415, or 457, and shall not be taken into account in applying such limitations to other contribu- tions or benefits under such plan or any other plan, with respect to the year in which the con- tribution is made, ”(B) such contribution shall be subject to the limitations referred to in subparagraph (A) with respect to the year to which the contribution re- lates (in accordance with rules prescribed by the Secretary), and ”(C) such plan shall not be treated as failing to meet the requirements of section 401(a)(4), 401(a)(26), 401(k)(3), 401(k)(11), 401(k)(12), 401(m), 403(b)(12), 408(k)(3), 408(k)(6), 408(p), 410(b), or 416 by reason of the making of (or the right to make) such contribution. For purposes of the preceding sentence, any elective deferral or employee contribution made under paragraph (2) shall be treated as required by reason of the employee’s rights under such chapter 43. ”(2) REEMPLOYMENT RIGHTS UNDER USERRA WITH RESPECT TO ELECTIVE DEFERRALS.\u2014 ”(A) IN GENERAL.\u2014For purposes of this sub- chapter and section 457, if an employee is enti- tled to the benefits of chapter 43 of title 38, United States Code, with respect to any plan which provides for elective deferrals, the em- ployer sponsoring the plan shall be treated as meeting the requirements of such chapter 43 with respect to such elective deferrals only if such employer\u2014 ”(i) permits such employee to make additional elective deferrals under such plan (in the amount determined under subparagraph (B) or such lesser amount as is elected by the em- ployee) during the period which begins on the date of the reemployment of such employee with such employer and has the same length as the lesser of\u2014 ”(I) the product of 3 and the period of quali- fied military service which resulted in such rights, and ”(II) 5 years, and ”(ii) makes a matching contribution with re- spect to any additional elective deferral made pursuant to clause (i) which would have been required had such deferral actually been made during the period of such qualified military service. ”(B) AMOUNT OF MAKEUP REQUIRED.\u2014The amount determined under this subparagraph CONGRESSIONAL RECORD \u2014 HOUSEH9602 August 1, 1996 with respect to any plan is the maximum amount of the elective deferrals that the individ- ual would have been permitted to make under the plan in accordance with the limitations re- ferred to in paragraph (1)(A) during the period of qualified military service if the individual had continued to be employed by the employer during such period and received compensation as determined under paragraph (7). Proper ad- justment shall be made to the amount deter- mined under the preceding sentence for any elective deferrals actually made during the pe- riod of such qualified military service. ”(C) ELECTIVE DEFERRAL.\u2014For purposes of this paragraph, the term ‘elective deferral’ has the meaning given such term by section 402(g)(3); except that such term shall include any deferral of compensation under an eligible deferred compensation plan (as defined in sec- tion 457(b)). ”(D) AFTER-TAX EMPLOYEE CONTRIBUTIONS.\u2014 References in subparagraphs (A) and (B) to elective deferrals shall be treated as including references to employee contributions. ”(3) CERTAIN RETROACTIVE ADJUSTMENTS NOT REQUIRED.\u2014For purposes of this subchapter and subchapter E, no provision of chapter 43 of title 38, United States Code, shall be construed as re- quiring\u2014 ”(A) any crediting of earnings to an employee with respect to any contribution before such contribution is actually made, or ”(B) any allocation of any forfeiture with re- spect to the period of qualified military service. ”(4) LOAN REPAYMENT SUSPENSIONS PER- MITTED.\u2014If any plan suspends the obligation to repay any loan made to an employee from such plan for any part of any period during which such employee is performing service in the uni- formed services (as defined in chapter 43 of title 38, United States Code), whether or not quali- fied military service, such suspension shall not be taken into account for purposes of section 72(p), 401(a), or 4975(d)(1). ”(5) QUALIFIED MILITARY SERVICE.\u2014For pur- poses of this subsection, the term ‘qualified mili- tary service’ means any service in the uniformed services (as defined in chapter 43 of title 38, United States Code) by any individual if such individual is entitled to reemployment rights under such chapter with respect to such service. ”(6) INDIVIDUAL ACCOUNT PLAN.\u2014For pur- poses of this subsection, the term ‘individual ac- count plan’ means any defined contribution plan (including any tax-sheltered annuity plan under section 403(b), any simplified employee pension under section 408(k), any qualified sal- ary reduction arrangement under section 408(p), and any eligible deferred compensation plan (as defined in section 457(b)). ”(7) COMPENSATION.\u2014For purposes of sections 403(b)(3), 415(c)(3), and 457(e)(5), an employee who is in qualified military service shall be treated as receiving compensation from the em- ployer during such period of qualified military service equal to\u2014 ”(A) the compensation the employee would have received during such period if the employee were not in qualified military service, deter- mined based on the rate of pay the employee would have received from the employer but for absence during the period of qualified military service, or ”(B) if the compensation the employee would have received during such period was not rea- sonably certain, the employee’s average com- pensation from the employer during the 12- month period immediately preceding the quali- fied military service (or, if shorter, the period of employment immediately preceding the qualified military service). ”(8) USERRA REQUIREMENTS FOR QUALIFIED RETIREMENT PLANS.\u2014For purposes of this sub- chapter and section 457, an employer sponsoring a retirement plan shall be treated as meeting the requirements of chapter 43 of title 38, United States Code, only if each of the following re- quirements is met: ”(A) An individual reemployed under such chapter is treated with respect to such plan as not having incurred a break in service with the employer maintaining the plan by reason of such individual’s period of qualified military service. ”(B) Each period of qualified military service served by an individual is, upon reemployment under such chapter, deemed with respect to such plan to constitute service with the employer maintaining the plan for the purpose of deter- mining the nonforfeitability of the individual’s accrued benefits under such plan and for the purpose of determining the accrual of benefits under such plan. ”(C) An individual reemployed under such chapter is entitled to accrued benefits that are contingent on the making of, or derived from, employee contributions or elective deferrals only to the extent the individual makes payment to the plan with respect to such contributions or deferrals. No such payment may exceed the amount the individual would have been per- mitted or required to contribute had the individ- ual remained continuously employed by the em- ployer throughout the period of qualified mili- tary service. Any payment to such plan shall be made during the period beginning with the date of reemployment and whose duration is 3 times the period of the qualified military service (but not greater than 5 years). ”(9) PLANS NOT SUBJECT TO TITLE 38.\u2014This subsection shall not apply to any retirement plan to which chapter 43 of title 38, United States Code, does not apply. ”(10) REFERENCES.\u2014For purposes of this sec- tion, any reference to chapter 43 of title 38, United States Code, shall be treated as a ref- erence to such chapter as in effect on December 12, 1994 (without regard to any subsequent amendment).”. (2) AMENDMENT TO ERISA.\u2014Section 408(b)(1) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 1148(b)) is amended by adding at the end the following new sentence: ”A loan made by a plan shall not fail to meet the re- quirements of the preceding sentence by reason of a loan repayment suspension described under section 414(u)(4) of the Internal Revenue Code of 1986.” (3) EFFECTIVE DATE.\u2014The amendments made by this subsection shall be effective as of Decem- ber 12, 1994. (o) REPORTING OF REAL ESTATE TRANS- ACTIONS.\u2014 (1) IN GENERAL.\u2014Paragraph (3) of section 6045(e) (relating to prohibition of separate charge for filing return) is amended by adding at the end the following new sentence: ”Nothing in this paragraph shall be construed to prohibit the real estate reporting person from taking into account its cost of complying with such require- ment in establishing its charge (other than a separate charge for complying with such re- quirement) to any customer for performing serv- ices in the case of a real estate transaction.”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall take effect as if included in section 1015(e)(2)(A) of the Technical and Miscellaneous Revenue Act of 1988. (p) CLARIFICATION OF DENIAL OF DEDUCTION FOR STOCK REDEMPTION EXPENSES. (1) IN GENERAL.\u2014Paragraph (1) of section 162(k) is amended by striking ”the redemption of its stock” and inserting ”the reacquisition of its stock or of the stock of any related person (as defined in section 465(b)(3)(C))”. (2) CERTAIN DEDUCTIONS PERMITTED.\u2014Sub- paragraph (A) of section 162(k)(2) is amended by striking ”or” at the end of clause (i), by redesig- nating clause (ii) as clause (iii), and by insert- ing after clause (i) the following new clause: ”(ii) deduction for amounts which are prop- erly allocable to indebtedness and amortized over the term of such indebtedness, or”. (3) CLERICAL AMENDMENT.\u2014The subsection heading for subsection (k) of section 162 is amended by striking ”REDEMPTION” and insert- ing ”REACQUISITION”. (4) EFFECTIVE DATE.\u2014 (A) IN GENERAL.\u2014Except as provided in sub- paragraph (B), the amendments made by this subsection shall apply to amounts paid or in- curred after September 13, 1995, in taxable years ending after such date. (B) PARAGRAPH (2).\u2014The amendment made by paragraph (2) shall take effect as if included in the amendment made by section 613 of the Tax Reform Act of 1986. (q) CLERICAL AMENDMENT TO SECTION 404.\u2014 (1) IN GENERAL.\u2014Paragraph (1) of section 404(j) is amended by striking ”(10)” and insert- ing ”(9)”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall take effect as if included in the amendments made by section 713(d)(4)(A) of the Deficit Reduction Act of 1984. (r) PASSIVE INCOME NOT TO INCLUDE FSC IN- COME, ETC.\u2014 (1) IN GENERAL.\u2014Paragraph (2) of section 1296(b) is amended by striking ”or” at the end of subparagraph (B), by striking the period at the end of subparagraph (C) and inserting ”, or”, and by inserting after subparagraph (C) the following new subparagraph: ”(D) which is foreign trade income of a FSC or export trade income of an export trade cor- poration (as defined in section 971).”. (2) EFFECTIVE DATE.\u2014The amendment made by paragraph (1) shall take effect as if included in the amendments made by section 1235 of the Tax Reform Act of 1986. (s) TECHNICAL CORRECTION OF INTERMEDIATE SANCTIONS PROVISIONS.\u2014 (1) Subparagraph (C) of section 6652(c)(1) is amended by striking ”$10” and inserting ”$20”, and by striking ”$5,000” and inserting ”$10,000”. (2) Subparagraph (D) of section 6652(c)(1) is amended by striking ”$10” and inserting ”$20”. (t) MISCELLANEOUS CLERICAL AMENDMENTS.\u2014 (1) Subclause (II) of section 56(g)(4)(C)(ii) is amended by striking ”of the subclause” and in- serting ”of subclause”. (2) Paragraph (2) of section 72(m) is amended by inserting ”and” at the end of subparagraph (A), by striking subparagraph (B), and by redes- ignating subparagraph (C) as subparagraph (B). (3) Paragraph (2) of section 86(b) is amended by striking ”adusted” and inserting ”adjusted”. (4)(A) The heading for section 112 is amended by striking ”COMBAT PAY” and inserting ”COMBAT ZONE COMPENSATION”. (B) The item relating to section 112 in the table of sections for part III of subchapter B of chapter 1 is amended by striking ”combat pay” and inserting ”combat zone compensation”. (C) Paragraph (1) of section 3401(a) is amend- ed by striking ”combat pay” and inserting ”combat zone compensation”. (5) Clause (i) of section 172(h)(3)(B) is amend- ed by striking the comma at the end thereof and inserting a period. (6) Clause (ii) of section 543(a)(2)(B) is amend- ed by striking ”section 563(c)” and inserting ”section 563(d)”. (7) Paragraph (1) of section 958(a) is amended by striking ”sections 955(b)(1) (A) and (B), 955(c)(2)(A)(ii), and 960(a)(1)” and inserting ”section 960(a)(1)”. (8) Subsection (g) of section 642 is amended by striking ”under 2621(a)(2)” and inserting ”under section 2621(a)(2)”. (9) Section 1463 is amended by striking ”this subsection” and inserting ”this section”. (10) Subsection (k) of section 3306 is amended by inserting a period at the end thereof. (11) The item relating to section 4472 in the table of sections for subchapter B of chapter 36 is amended by striking ”and special rules”. (12) Paragraph (3) of section 5134(c) is amend- ed by striking ”section 6662(a)” and inserting ”section 6665(a)”. (13) Paragraph (2) of section 5206(f) is amend- ed by striking ”section 5(e)” and inserting ”sec- tion 105(e)”. CONGRESSIONAL RECORD \u2014 HOUSE H9603August 1, 1996 (14) Paragraph (1) of section 6050B(c) is amended by striking ”section 85(c)” and insert- ing ”section 85(b)”. (15) Subsection (k) of section 6166 is amended by striking paragraph (6). (16) Subsection (e) of section 6214 is amended to read as follows: ”(e) CROSS REFERENCE.\u2014 ”For provision giving Tax Court jurisdic- tion to order a refund of an overpayment and to award sanctions, see section 6512(b)(2).”. (17) The section heading for section 6043 is amended by striking the semicolon and inserting a comma. (18) The item relating to section 6043 in the table of sections for subpart B of part III of sub- chapter A of chapter 61 is amended by striking the semicolon and inserting a comma. (19) The table of sections for part I of sub- chapter A of chapter 68 is amended by striking the item relating to section 6662. (20)(A) Section 7232 is amended\u2014 (i) by striking ”LUBRICATING OIL,” in the heading, and (ii) by striking ”lubricating oil,” in the text. (B) The table of sections for part II of sub- chapter A of chapter 75 is amended by striking ”lubricating oil,” in the item relating to section 7232. (21) Paragraph (1) of section 6701(a) of the Omnibus Budget Reconciliation Act of 1989 is amended by striking ”subclause (IV)” and in- serting ”subclause (V)”. (22) Clause (ii) of section 7304(a)(2)(D) of such Act is amended by striking ”subsection (c)(2)” and inserting ”subsection (c)”. (23) Paragraph (1) of section 7646(b) of such Act is amended by striking ”section 6050H(b)(1)” and inserting ”section 6050H(b)(2)”. (24) Paragraph (10) of section 7721(c) of such Act is amended by striking ”section 6662(b)(2)(C)(ii)” and inserting ”section 6661(b)(2)(C)(ii)”. (25) Subparagraph (A) of section 7811(i)(3) of such Act is amended by inserting ”the first place it appears” before ”in clause (i)”. (26) Paragraph (10) of section 7841(d) of such Act is amended by striking ”section 381(a)” and inserting ”section 381(c)”. (27) Paragraph (2) of section 7861(c) of such Act is amended by inserting ”the second place it appears” before ”and inserting”. (28) Paragraph (1) of section 460(b) is amend- ed by striking ”the look-back method of para- graph (3)” and inserting ”the look-back method of paragraph (2)”. (29) Subparagraph (C) of section 50(a)(2) is amended by striking ”subsection (c)(4)” and in- serting ”subsection (d)(5)”. (30) Subparagraph (B) of section 172(h)(4) is amended by striking the material following the heading and preceding clause (i) and inserting ”For purposes of subsection (b)(2)\u2014”. (31) Subparagraph (A) of section 355(d)(7) is amended by inserting ”section” before ”267(b)”. (32) Subparagraph (C) of section 420(e)(1) is amended by striking ”mean” and inserting ”means”. (33) Paragraph (4) of section 537(b) is amend- ed by striking ”section 172(i)” and inserting ”section 172(f)”. (34) Subparagraph (B) of section 613(e)(1) is amended by striking the comma at the end thereof and inserting a period. (35) Paragraph (4) of section 856(a) is amend- ed by striking ”section 582(c)(5)” and inserting ”section 582(c)(2)”. (36) Sections 904(f)(2)(B)(i) and 907(c)(4)(B)(iii) are each amended by inserting ”(as in effect on the day before the date of the enactment of the Revenue Reconciliation Act of 1990)” after ”section 172(h)”. (37) Subsection (b) of section 936 is amended by striking ”subparagraphs (D)(ii)(I)” and in- serting ”subparagraphs (D)(ii)”. (38) Subsection (c) of section 2104 is amended by striking ”subparagraph (A), (C), or (D) of section 861(a)(1)” and inserting ”section 861(a)(1)(A)”. (39) Subparagraph (A) of section 280A(c)(1) is amended to read as follows: ”(A) as the principal place of business for any trade or business of the taxpayer,”. (40) Section 6038 is amended by redesignating the subsection relating to cross references as subsection (f). (41) Clause (iv) of section 6103(e)(1)(A) is amended by striking all that follows ”provisions of” and inserting ”section 1(g) or 59(j);”. (42) The subsection (f) of section 6109 of the Internal Revenue Code of 1986 which was added by section 2201(d) of Public Law 101 624 is re- designated as subsection (g). (43) Subsection (b) of section 7454 is amended by striking ”section 4955(e)(2)” and inserting ”section 4955(f)(2)”. (44) Subsection (d) of section 11231 of the Rev- enue Reconciliation Act of 1990 shall be applied as if ”comma” appeared instead of ”period” and as if the paragraph (9) proposed to be added ended with a comma. (45) Paragraph (1) of section 11303(b) of the Revenue Reconciliation Act of 1990 shall be ap- plied as if ”paragraph” appeared instead of ”subparagraph” in the material proposed to be stricken. (46) Subsection (f) of section 11701 of the Reve- nue Reconciliation Act of 1990 is amended by in- serting ”(relating to definitions)” after ”section 6038(e)”. (47) Subsection (i) of section 11701 of the Reve- nue Reconciliation Act of 1990 shall be applied as if ”subsection” appeared instead of ”section” in the material proposed to be stricken. (48) Subparagraph (B) of section 11801(c)(2) of the Revenue Reconciliation Act of 1990 shall be applied as if ”section 56(g)” appeared instead of ”section 59(g)”. (49) Subparagraph (C) of section 11801(c)(8) of the Revenue Reconciliation Act of 1990 shall be applied as if ”reorganizations” appeared in- stead of ”reorganization” in the material pro- posed to be stricken. (50) Subparagraph (H) of section 11801(c)(9) of the Revenue Reconciliation Act of 1990 shall be applied as if ”section 1042(c)(1)(B)” appeared instead of ”section 1042(c)(2)(B)”. (51) Subparagraph (F) of section 11801(c)(12) of the Revenue Reconciliation Act of 1990 shall be applied as if ”and (3)” appeared instead of ”and (E)”. (52) Subparagraph (A) of section 11801(c)(22) of the Revenue Reconciliation Act of 1990 shall be applied as if ”chapters 21” appeared instead of ”chapter 21” in the material proposed to be stricken. (53) Paragraph (3) of section 11812(b) of the Revenue Reconciliation Act of 1990 shall be ap- plied by not executing the amendment therein to the heading of section 42(d)(5)(B). (54) Clause (i) of section 11813(b)(9)(A) of the Revenue Reconciliation Act of 1990 shall be ap- plied as if a comma appeared after ”(3)(A)(ix)” in the material proposed to be stricken. (55) Subparagraph (F) of section 11813(b)(13) of the Revenue Reconciliation Act of 1990 shall be applied as if ”tax” appeared after ”invest- ment” in the material proposed to be stricken. (56) Paragraph (19) of section 11813(b) of the Revenue Reconciliation Act of 1990 shall be ap- plied as if ”Paragraph (20) of section 1016(a), as redesignated by section 11801,” appeared in- stead of ”Paragraph (21) of section 1016(a)”. (57) Paragraph (5) section 8002(a) of the Sur- face Transportation Revenue Act of 1991 shall be applied as if ”4481(e)” appeared instead of ”4481(c)”. (58) Section 7872 is amended\u2014 (A) by striking ”foregone” each place it ap- pears in subsections (a) and (e)(2) and inserting ”forgone”, and (B) by striking ”FOREGONE” in the heading for subsection (e) and the heading for para- graph (2) of subsection (e) and inserting ”FOR- GONE”. (59) Paragraph (7) of section 7611(h) is amend- ed by striking ”approporiate” and inserting ”appropriate”. (60) The heading of paragraph (3) of section 419A(c) is amended by striking ”SEVERENCE” and inserting ”SEVERANCE”. (61) Clause (ii) of section 807(d)(3)(B) is amended by striking ”Commissoners’ ” and in- serting ”Commissioners’ ”. (62) Subparagraph (B) of section 1274A(c)(1) is amended by striking ”instument” and inserting ”instrument”. (63) Subparagraph (B) of section 724(d)(3) by striking ”Subparagaph” and inserting ”Sub- paragraph”. (64) The last sentence of paragraph (2) of sec- tion 42(c) is amended by striking ”of 1988”. (65) Paragraph (1) of section 9707(d) is amend- ed by striking ”diligence,” and inserting ”dili- gence”. (66) Subsection (c) of section 4977 is amended by striking ”section 132(i)(2)” and inserting ”section 132(h)”. (67) The last sentence of section 401(a)(20) is amended by striking ”section 211” and inserting ”section 521”. (68) Subparagraph (A) of section 402(g)(3) is amended by striking ”subsection (a)(8)” and in- serting ”subsection (e)(3)”. (69) The last sentence of section 403(b)(10) is amended by striking ”an direct” and inserting ”a direct”. (70) Subparagraph (A) of section 4973(b)(1) is amended by striking ”sections 402(c)” and in- serting ”section 402(c)”. (71) Paragraph (12) of section 3405(e) is amended by striking ”(b)(3)” and inserting ”(b)(2)”. (72) Paragraph (41) of section 521(b) of the Unemployment Compensation Amendments of 1992 shall be applied as if ”section” appeared instead of ”sections” in the material proposed to be stricken. (73) Paragraph (27) of section 521(b) of the Unemployment Compensation Amendments of 1992 shall be applied as if ”Section 691(c)(5)” appeared instead of ”Section 691(c)”. (74) Paragraph (5) of section 860F(a) is amended by striking ”paragraph (1)” and in- serting ”paragraph (2)”. (75) Paragraph (1) of section 415(k) is amend- ed by adding ”or” at the end of subparagraph (C), by striking subparagraphs (D) and (E), and by redesignating subparagraph (F) as subpara- graph (D). (76) Paragraph (2) of section 404(a) is amend- ed by striking ”(18),”. (77) Clause (ii) of section 72(p)(4)(A) is amend- ed to read as follows: ”(ii) SPECIAL RULE.\u2014The term ‘qualified em- ployer plan’ shall include any plan which was (or was determined to be) a qualified employer plan or a government plan.”. (78) Sections 461(i)(3)(C) and 1274(b)(3)(B)(i) are each amended by striking ”section 6662(d)(2)(C)(ii)” and inserting ”section 6662(d)(2)(C)(iii)”. (79) Subsection (a) of section 164 is amended by striking the paragraphs relating to the gen- eration-skipping tax and the environmental tax imposed by section 59A and by inserting after paragraph (3) the following new paragraphs: ”(4) The GST tax imposed on income distribu- tions. ”(5) The environmental tax imposed by section 59A.”. (80) Subclause (I) of section 936(a)(4)(A)(ii) is amended by striking ”deprecation” and insert- ing ”depreciation”. Subtitle H\u2014Other Provisions SEC. 1801. EXEMPTION FROM DIESEL FUEL DYE- ING REQUIREMENTS WITH RESPECT TO CERTAIN STATES. (a) IN GENERAL.\u2014Section 4082 (relating to ex- emptions for diesel fuel) is amended by redesig- nating subsections (c) and (d) as subsections (d) and (e), respectively, and by inserting after sub- section (b) the following new subsection: CONGRESSIONAL RECORD \u2014 HOUSEH9604 August 1, 1996 ”(c) EXCEPTION TO DYEING REQUIREMENTS.\u2014 Paragraph (2) of subsection (a) shall not apply with respect to any diesel fuel\u2014 ”(1) removed, entered, or sold in a State for ultimate sale or use in an area of such State during the period such area is exempted from the fuel dyeing requirements under subsection (i) of section 211 of the Clean Air Act (as in ef- fect on the date of the enactment of this sub- section) by the Administrator of the Environ- mental Protection Agency under paragraph (4) of such subsection (i) (as so in effect), and ”(2) the use of which is certified pursuant to regulations issued by the Secretary.” (b) EFFECTIVE DATE.\u2014The amendments made by this section shall apply with respect to fuel removed, entered, or sold on or after the first day of the first calendar quarter beginning after the date of the enactment of this Act. SEC. 1802. TREATMENT OF CERTAIN UNIVERSITY ACCOUNTS. (a) IN GENERAL.\u2014For purposes of subsection (s) of section 3121 of the Internal Revenue Code of 1986 (relating to concurrent employment by 2 or more employers)\u2014 (1) the following entities shall be deemed to be related corporations that concurrently employ the same individual: (A) a State university which employs health professionals as faculty members at a medical school, and (B) an agency account of a State university which is described in subparagraph (A) and from which there is distributed to such faculty members payments forming a part of the com- pensation that the State, or such State univer- sity, as the case may be, agrees to pay to such faculty members, but only if\u2014 (i) such agency account is authorized by State law and receives the funds for such payments from a faculty practice plan described in section 501(c)(3) of such Code and exempt from tax under section 501(a) of such Code, (ii) such payments are distributed by such agency account to such faculty members who render patient care at such medical school, and (iii) such faculty members comprise at least 30 percent of the membership of such faculty prac- tice plan, and (2) remuneration which is disbursed by such agency account to any such faculty member of the medical school described in paragraph (1)(A) shall be deemed to have been actually disbursed by the State, or such State university, as the case may be, as a common paymaster and not to have been actually disbursed by such agency account. (b) EFFECTIVE DATE.\u2014The provisions of sub- section (a) shall apply to remuneration paid after December 31, 1996. SEC. 1803. MODIFICATIONS TO EXCISE TAX ON OZONE-DEPLETING CHEMICALS. (a) RECYCLED HALON.\u2014 (1) IN GENERAL.\u2014Section 4682(d)(1) (relating to recycling) is amended by inserting ”, or on any recycled halon imported from any country which is a signatory to the Montreal Protocol on Substances that Deplete the Ozone Layer” before the period at the end. (2) CERTIFICATION SYSTEM.\u2014The Secretary of the Treasury, after consultation with the Ad- ministrator of the Environmental Protection Agency, shall develop a certification system to ensure compliance with the recycling require- ment for imported halon under section 4682(d)(1) of the Internal Revenue Code of 1986, as amend- ed by paragraph (1). (b) CHEMICALS USED AS PROPELLANTS IN ME- TERED-DOSE INHALERS TAX-EXEMPT.\u2014Para- graph (4) of section 4682(g) (relating to phase-in of tax on certain substances) is amended to read as follows: ”(4) CHEMICALS USED AS PROPELLANTS IN ME- TERED-DOSE INHALERS.\u2014 ”(A) TAX-EXEMPT.\u2014 ”(i) IN GENERAL.\u2014No tax shall be imposed by section 4681 on\u2014 ”(I) any use of any substance as a propellant in metered-dose inhalers, or ”(II) any qualified sale by the manufacturer, producer, or importer of any substance. ”(ii) QUALIFIED SALE.\u2014For purposes of clause (i), the term ‘qualified sale’ means any sale by the manufacturer, producer, or importer of any substance\u2014 ”(I) for use by the purchaser as a propellant in metered-dose inhalers, or ”(II) for resale by the purchaser to a 2d pur- chaser for such use by the 2d purchaser. The preceding sentence shall apply only if the manufacturer, producer, and importer, and the 1st and 2d purchasers (if any) meet such reg- istration requirements as may be prescribed by the Secretary. ”(B) OVERPAYMENTS.\u2014If any substance on which tax was paid under this subchapter is used by any person as a propellant in metered- dose inhalers, credit or refund without interest shall be allowed to such person in an amount equal to the tax so paid. Amounts payable under the preceding sentence with respect to uses during the taxable year shall be treated as described in section 34(a) for such year unless claim thereof has been timely filed under this subparagraph.” (c) EFFECTIVE DATES.\u2014 (1) RECYCLED HALON.\u2014 (A) IN GENERAL.\u2014Except as provided in sub- paragraph (B), the amendment made by sub- section (a)(1) shall take effect on January 1, 1997. (B) HALON-1211.\u2014In the case of Halon-1211, the amendment made by subsection (a)(1) shall take effect on January 1, 1998. (2) METERED-DOSE INHALERS.\u2014The amend- ment made by subsection (b) shall take effect on the 7th day after the date of the enactment of this Act. SEC. 1804. TAX-EXEMPT BONDS FOR SALE OF ALASKA POWER ADMINISTRATION FACILITY. Sections 142(f)(3) (as added by section 1608) and 147(d) of the Internal Revenue Code of 1986 shall not apply in determining whether any pri- vate activity bond issued after the date of the enactment of this Act and used to finance the acquisition of the Snettisham hydroelectric project from the Alaska Power Administration is a qualified bond for purposes of such Code. SEC. 1805. NONRECOGNITION TREATMENT FOR CERTAIN TRANSFERS BY COMMON TRUST FUNDS TO REGULATED IN- VESTMENT COMPANIES. (a) GENERAL RULE.\u2014Section 584 (relating to common trust funds) is amended by redesignat- ing subsection (h) as subsection (i) and by in- serting after subsection (g) the following new subsection: ”(h) NONRECOGNITION TREATMENT FOR CER- TAIN TRANSFERS TO REGULATED INVESTMENT COMPANIES.\u2014 ”(1) IN GENERAL.\u2014If\u2014 ”(A) a common trust fund transfers substan- tially all of its assets to one or more regulated investment companies in exchange solely for stock in the company or companies to which such assets are so transferred, and ”(B) such stock is distributed by such common trust fund to participants in such common trust fund in exchange solely for their interests in such common trust fund, no gain or loss shall be recognized by such com- mon trust fund by reason of such transfer or distribution, and no gain or loss shall be recog- nized by any participant in such common trust fund by reason of such exchange. ”(2) BASIS RULES.\u2014 ”(A) REGULATED INVESTMENT COMPANY.\u2014The basis of any asset received by a regulated invest- ment company in a transfer referred to in para- graph (1)(A) shall be the same as it would be in the hands of the common trust fund. ”(B) PARTICIPANTS.\u2014The basis of the stock which is received in an exchange referred to in paragraph (1)(B) shall be the same as that of the property exchanged. If stock in more than one regulated investment company is received in such exchange, the basis determined under the preceding sentence shall be allocated among the stock in each such company on the basis of re- spective fair market values. ”(3) TREATMENT OF ASSUMPTIONS OF LIABIL- ITY.\u2014 ”(A) IN GENERAL.\u2014In determining whether the transfer referred to in paragraph (1)(A) is in exchange solely for stock in one or more regu- lated investment companies, the assumption by any such company of a liability of the common trust fund, and the fact that any property transferred by the common trust fund is subject to a liability, shall be disregarded. ”(B) SPECIAL RULE WHERE ASSUMED LIABIL- ITIES EXCEED BASIS.\u2014 ”(i) IN GENERAL.\u2014If, in any transfer referred to in paragraph (1)(A), the assumed liabilities exceed the aggregate adjusted bases (in the hands of the common trust fund) of the assets transferred to the regulated investment company or companies\u2014 ”(I) notwithstanding paragraph (1), gain shall be recognized to the common trust fund on such transfer in an amount equal to such ex- cess, ”(II) the basis of the assets received by the regulated investment company or companies in such transfer shall be increased by the amount so recognized, and ”(III) any adjustment to the basis of a partici- pant’s interest in the common trust fund as a re- sult of the gain so recognized shall be treated as occurring immediately before the exchange re- ferred to in paragraph (1)(B). If the transfer referred to in paragraph (1)(A) is to two or more regulated investment companies, the basis increase under subclause (II) shall be allocated among such companies on the basis of the respective fair market values of the assets received by each of such companies. ”(ii) ASSUMED LIABILITIES.\u2014For purposes of clause (i), the term ‘assumed liabilities’ means the aggregate of\u2014 ”(I) any liability of the common trust fund as- sumed by any regulated investment company in connection with the transfer referred to in para- graph (1)(A), and ”(II) any liability to which property so trans- ferred is subject. ”(4) COMMON TRUST FUND MUST MEET DIVER- SIFICATION RULES.\u2014This subsection shall not apply to any common trust fund which would not meet the requirements of section 368(a)(2)(F)(ii) if it were a corporation. For pur- poses of the preceding sentence, Government se- curities shall not be treated as securities of an issuer in applying the 25-percent and 50-percent test and such securities shall not be excluded for purposes of determining total assets under clause (iv) of section 368(a)(2)(F).”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall apply to transfers after December 31, 1995. SEC. 1806. QUALIFIED STATE TUITION PRO- GRAMS. (a) IN GENERAL.\u2014Subchapter F of chapter 1 (relating to exempt organizations) is amended by adding at the end the following new part: ”PART VIII\u2014QUALIFIED STATE TUITION PROGRAMS ”Sec. 529. Qualified State tuition programs. ”SEC. 529. QUALIFIED STATE TUITION PRO- GRAMS. ”(a) GENERAL RULE.\u2014A qualified State tui- tion program shall be exempt from taxation under this subtitle. Notwithstanding the preced- ing sentence, such program shall be subject to the taxes imposed by section 511 (relating to im- position of tax on unrelated business income of charitable organizations). ”(b) QUALIFIED STATE TUITION PROGRAM.\u2014 For purposes of this section\u2014 ”(1) IN GENERAL.\u2014The term ‘qualified State tuition program’ means a program established CONGRESSIONAL RECORD \u2014 HOUSE H9605August 1, 1996 and maintained by a State or agency or instru- mentality thereof\u2014 ”(A) under which a person\u2014 ”(i) may purchase tuition credits or certifi- cates on behalf of a designated beneficiary which entitle the beneficiary to the waiver or payment of qualified higher education expenses of the beneficiary, or ”(ii) may make contributions to an account which is established for the purpose of meeting the qualified higher education expenses of the designated beneficiary of the account, and ”(B) which meets the other requirements of this subsection. ”(2) CASH CONTRIBUTIONS.\u2014A program shall not be treated as a qualified State tuition pro- gram unless it provides that purchases or con- tributions may only be made in cash. ”(3) REFUNDS.\u2014A program shall not be treat- ed as a qualified State tuition program unless it imposes a more than de minimis penalty on any refund of earnings from the account which are not\u2014 ”(A) used for qualified higher education ex- penses of the designated beneficiary, ”(B) made on account of the death or disabil- ity of the designated beneficiary, or ”(C) made on account of a scholarship (or al- lowance or payment described in section 135(d)(1) (B) or (C)) received by the designated beneficiary to the extent the amount of the re- fund does not exceed the amount of the scholar- ship, allowance, or payment. ”(4) SEPARATE ACCOUNTING.\u2014A program shall not be treated as a qualified State tuition pro- gram unless it provides separate accounting for each designated beneficiary. ”(5) NO INVESTMENT DIRECTION.\u2014A program shall not be treated as a qualified State tuition program unless it provides that any contributor to, or designated beneficiary under, such pro- gram may not direct the investment of any con- tributions to the program (or any earnings thereon). ”(6) NO PLEDGING OF INTEREST AS SECURITY.\u2014 A program shall not be treated as a qualified State tuition program if it allows any interest in the program or any portion thereof to be used as security for a loan. ”(7) PROHIBITION ON EXCESS CONTRIBUTIONS.\u2014 A program shall not be treated as a qualified State tuition program unless it provides ade- quate safeguards to prevent contributions on be- half of a designated beneficiary in excess of those necessary to provide for the qualified higher education expenses of the beneficiary. ”(c) TAX TREATMENT OF DESIGNATED BENE- FICIARIES AND CONTRIBUTORS.\u2014 ”(1) IN GENERAL.\u2014Except as otherwise pro- vided in this subsection, no amount shall be in- cludible in gross income of\u2014 ”(A) a designated beneficiary under a quali- fied State tuition program, or ”(B) a contributor to such program on behalf of a designated beneficiary, with respect to any distribution or earnings under such program. ”(2) CONTRIBUTIONS.\u2014In no event shall a con- tribution to a qualified State tuition program on behalf of a designated beneficiary be treated as a taxable gift for purposes of chapter 12. ”(3) DISTRIBUTIONS.\u2014 ”(A) IN GENERAL.\u2014Any distribution under a qualified State tuition program shall be includ- ible in the gross income of the distributee in the manner as provided under section 72 to the ex- tent not excluded from gross income under any other provision of this chapter. ”(B) IN-KIND DISTRIBUTIONS.\u2014Any benefit furnished to a designated beneficiary under a qualified State tuition program shall be treated as a distribution to the beneficiary. ”(C) CHANGE IN BENEFICIARIES.\u2014 ”(i) ROLLOVERS.\u2014Subparagraph (A) shall not apply to that portion of any distribution which, within 60 days of such distribution, is trans- ferred to the credit of another designated bene- ficiary under a qualified State tuition program who is a member of the family of the designated beneficiary with respect to which the distribu- tion was made. ”(ii) CHANGE IN DESIGNATED BENEFICIARIES.\u2014 Any change in the designated beneficiary of an interest in a qualified State tuition program shall not be treated as a distribution for pur- poses of subparagraph (A) if the new bene- ficiary is a member of the family of the old bene- ficiary. ”(D) OPERATING RULES.\u2014For purposes of ap- plying section 72\u2014 ”(i) to the extent provided by the Secretary, all qualified State tuition programs of which an individual is a designated beneficiary shall be treated as one program, ”(ii) all distributions during a taxable year shall be treated as one distribution, and ”(iii) the value of the contract, income on the contract, and investment in the contract shall be computed as of the close of the calendar year in which the taxable year begins. ”(4) ESTATE TAX INCLUSION.\u2014The value of any interest in any qualified State tuition pro- gram which is attributable to contributions made by an individual to such program on be- half of any designated beneficiary shall be in- cludible in the gross estate of the contributor for purposes of chapter 11. ”(5) SPECIAL RULE FOR APPLYING SECTION 2503(e).\u2014For purposes of section 2503(e), the waiver (or payment to an educational institu- tion) of qualified higher education expenses of a designated beneficiary under a qualified State tuition program shall be treated as a qualified transfer. ”(d) REPORTING REQUIREMENTS.\u2014 ”(1) IN GENERAL.\u2014If there is a distribution to any individual with respect to an interest in a qualified State tuition program during any cal- endar year, each officer or employee having control of the qualified State tuition program or their designee shall make such reports as the Secretary may require regarding such distribu- tion to the Secretary and to the designated ben- eficiary or the individual to whom the distribu- tion was made. Any such report shall include such information as the Secretary may pre- scribe. ”(2) TIMING OF REPORTS.\u2014Any report required by this subsection\u2014 ”(A) shall be filed at such time and in such matter as the Secretary prescribes, and ”(B) shall be furnished to individuals not later than January 31 of the calendar year fol- lowing the calendar year to which such report relates. ”(e) OTHER DEFINITIONS AND SPECIAL RULES.\u2014For purposes of this section\u2014 ”(1) DESIGNATED BENEFICIARY.\u2014The term ‘designated beneficiary’ means\u2014 ”(A) the individual designated at the com- mencement of participation in the qualified State tuition program as the beneficiary of amounts paid (or to be paid) to the program, ”(B) in the case of a change in beneficiaries described in subsection (c)(2)(C), the individual who is the new beneficiary, and ”(C) in the case of an interest in a qualified State tuition program purchased by a State or local government or an organization described in section 501(c)(3) and exempt from taxation under section 501(a) as part of a scholarship program operated by such government or orga- nization, the individual receiving such interest as a scholarship. ”(2) MEMBER OF FAMILY.\u2014The term ‘member of the family’ has the same meaning given such term as section 2032A(e)(2). ”(3) QUALIFIED HIGHER EDUCATION EX- PENSES.\u2014The term ‘qualified higher education expenses’ means tuition, fees, books, supplies, and equipment required for the enrollment or at- tendance of a designated beneficiary at an eligi- ble educational institution (as defined in section 135(c)(3)). ”(4) APPLICATION OF SECTION 514.\u2014An interest in a qualified State tuition program shall not be treated as debt for purposes of section 514.”. (b) CONFORMING AMENDMENTS.\u2014 (1) Section 135(d)(1) is amended by striking ”or” at the end of subparagraph (B), by strik- ing the period at the end of subparagraph (C) and inserting ”, or”, and by adding at the end the following new subparagraph: ”(D) a payment, waiver, or reimbursement of qualified higher education expenses under a qualified State tuition program (within the meaning of section 529(b)).” (2) The table of parts for subchapter F of chapter 1 is amended by adding at the end the following new item: ”Part VIII. Qualified State tuition programs.” (c) EFFECTIVE DATES.\u2014 (1) IN GENERAL.\u2014The amendments made by this section shall apply to taxable years ending after the date of the enactment of this Act. (2) TRANSITION RULE.\u2014If\u2014 (A) a State or agency or instrumentality thereof maintains, on the date of the enactment of this Act, a program under which persons may purchase tuition credits or certificates on behalf of, or make contributions for education expenses of, a designated beneficiary, and (B) such program meets the requirements of a qualified State tuition program before the later of\u2014 (i) the date which is 1 year after such date of enactment, or (ii) the first day of the first calendar quarter after the close of the first regular session of the State legislature that begins after such date of enactment, the amendments made by this section shall apply to contributions (and earnings allocable thereto) made before the date such program meets the requirements of such amendments without regard to whether any requirements of such amendments are met with respect to such contributions and earnings. For purposes of subparagraph (B)(ii), if a State has a 2-year legislative session, each year of such session shall be deemed to be a separate regular session of the State legislature. SEC. 1807. ADOPTION ASSISTANCE. (a) IN GENERAL.\u2014Subpart A of part IV of sub- chapter A of chapter 1 (relating to nonrefund- able personal credits) is amended by inserting after section 22 the following new section: ”SEC. 23. ADOPTION EXPENSES. ”(a) ALLOWANCE OF CREDIT.\u2014 ”(1) IN GENERAL.\u2014In the case of an individ- ual, there shall be allowed as a credit against the tax imposed by this chapter the amount of the qualified adoption expenses paid or incurred by the taxpayer. ”(2) YEAR CREDIT ALLOWED.\u2014The credit under paragraph (1) with respect to any expense shall be allowed\u2014 ”(A) for the taxable year following the taxable year during which such expense is paid or in- curred, or ”(B) in the case of an expense which is paid or incurred during the taxable year in which the adoption becomes final, for such taxable year. ”(b) LIMITATIONS.\u2014 ”(1) DOLLAR LIMITATION.\u2014The aggregate amount of qualified adoption expenses which may be taken into account under subsection (a) for all taxable years with respect to the adop- tion of a child by the taxpayer shall not exceed $5,000 ($6,000, in the case of a child with special needs). ”(2) INCOME LIMITATION.\u2014 ”(A) IN GENERAL.\u2014The amount allowable as a credit under subsection (a) for any taxable year shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so allowable (determined without regard to this paragraph but with regard to paragraph (1)) as\u2014 ”(i) the amount (if any) by which the tax- payer’s adjusted gross income exceeds $75,000, bears to ”(ii) $40,000. ”(B) DETERMINATION OF ADJUSTED GROSS IN- COME.\u2014For purposes of subparagraph (A), ad- justed gross income shall be determined\u2014 CONGRESSIONAL RECORD \u2014 HOUSEH9606 August 1, 1996 ”(i) without regard to sections 911, 931, and 933, and ”(ii) after the application of sections 86, 135, 137, 219, and 469. ”(3) DENIAL OF DOUBLE BENEFIT.\u2014 ”(A) IN GENERAL.\u2014No credit shall be allowed under subsection (a) for any expense for which a deduction or credit is allowed under any other provision of this chapter. ”(B) GRANTS.\u2014No credit shall be allowed under subsection (a) for any expense to the ex- tent that funds for such expense are received under any Federal, State, or local program. ”(c) CARRYFORWARDS OF UNUSED CREDIT.\u2014If the credit allowable under subsection (a) for any taxable year exceeds the limitation imposed by section 26(a) for such taxable year reduced by the sum of the credits allowable under this subpart (other than this section), such excess shall be carried to the succeeding taxable year and added to the credit allowable under sub- section (a) for such taxable year. No credit may be carried forward under this subsection to any taxable year following the fifth taxable year after the taxable year in which the credit arose. For purposes of the preceding sentence, credits shall be treated as used on a first-in first-out basis. ”(d) DEFINITIONS.\u2014For purposes of this sec- tion\u2014 ”(1) QUALIFIED ADOPTION EXPENSES.\u2014The term ‘qualified adoption expenses’ means rea- sonable and necessary adoption fees, court costs, attorney fees, and other expenses\u2014 ”(A) which are directly related to, and the principal purpose of which is for, the legal adoption of an eligible child by the taxpayer, ”(B) which are not incurred in violation of State or Federal law or in carrying out any sur- rogate parenting arrangement, ”(C) which are not expenses in connection with the adoption by an individual of a child who is the child of such individual’s spouse, and ”(D) which are not reimbursed under an em- ployer program or otherwise. ”(2) ELIGIBLE CHILD.\u2014The term ‘eligible child’ means any individual\u2014 ”(A) who\u2014 ”(i) has not attained age 18, or ”(ii) is physically or mentally incapable of caring for himself, and ”(B) in the case of qualified adoption ex- penses paid or incurred after December 31, 2001, who is a child with special needs. ”(3) CHILD WITH SPECIAL NEEDS.\u2014The term ‘child with special needs’ means any child if\u2014 ”(A) a State has determined that the child cannot or should not be returned to the home of his parents, ”(B) such State has determined that there ex- ists with respect to the child a specific factor or condition (such as his ethnic background, age, or membership in a minority or sibling group, or the presence of factors such as medical condi- tions or physical, mental, or emotional handi- caps) because of which it is reasonable to con- clude that such child cannot be placed with adoptive parents without providing adoption as- sistance, and ”(C) such child is a citizen or resident of the United States (as defined in section 217(h)(3)). ”(e) SPECIAL RULES FOR FOREIGN ADOP- TIONS.\u2014In the case of an adoption of a child who is not a citizen or resident of the United States (as defined in section 217(h)(3))\u2014 ”(1) subsection (a) shall not apply to any qualified adoption expense with respect to such adoption unless such adoption becomes final, and ”(2) any such expense which is paid or in- curred before the taxable year in which such adoption becomes final shall be taken into ac- count under this section as if such expense were paid or incurred during such year. ”(f) FILING REQUIREMENTS.\u2014 ”(1) MARRIED COUPLES MUST FILE JOINT RE- TURNS.\u2014Rules similar to the rules of paragraphs (2), (3), and (4) of section 21(e) shall apply for purposes of this section. ”(2) TAXPAYER MUST INCLUDE TIN.\u2014 ”(A) In general.\u2014No credit shall be allowed under this section with respect to any eligible child unless the taxpayer includes (if known) the name, age, and TIN of such child on the re- turn of tax for the taxable year. ”(B) OTHER METHODS.\u2014The Secretary may, in lieu of the information referred to in subpara- graph (A), require other information meeting the purposes of subparagraph (A), including identi- fication of an agent assisting with the adoption. ”(g) BASIS ADJUSTMENTS.\u2014For purposes of this subtitle, if a credit is allowed under this section for any expenditure with respect to any property, the increase in the basis of such prop- erty which would (but for this subsection) result from such expenditure shall be reduced by the amount of the credit so allowed. ”(h) REGULATIONS.\u2014The Secretary shall pre- scribe such regulations as may be appropriate to carry out this section and section 137, including regulations which treat unmarried individuals who pay or incur qualified adoption expenses with respect to the same child as 1 taxpayer for purposes of applying the dollar limitation in subsection (b)(1) of this section and in section 137(b)(1).” (b) EXCLUSION OF AMOUNTS RECEIVED UNDER EMPLOYER’S ADOPTION ASSISTANCE PRO- GRAMS.\u2014Part III of subchapter B of chapter 1 (relating to items specifically excluded from gross income) is amended by redesignating sec- tion 137 as section 138 and by inserting after section 136 the following new section: ”SEC. 137. ADOPTION ASSISTANCE PROGRAMS. ”(a) IN GENERAL.\u2014Gross income of an em- ployee does not include amounts paid or ex- penses incurred by the employer for qualified adoption expenses in connection with the adop- tion of a child by an employee if such amounts are furnished pursuant to an adoption assist- ance program. ”(b) LIMITATIONS.\u2014 ”(1) DOLLAR LIMITATION.\u2014The aggregate amount excludable from gross income under sub- section (a) for all taxable years with respect to the adoption of a child by the taxpayer shall not exceed $5,000 ($6,000, in the case of a child with special needs). ”(2) INCOME LIMITATION.\u2014The amount ex- cludable from gross income under subsection (a) for any taxable year shall be reduced (but not below zero) by an amount which bears the same ratio to the amount so excludable (determined without regard to this paragraph but with re- gard to paragraph (1)) as\u2014 ”(A) the amount (if any) by which the tax- payer’s adjusted gross income exceeds $75,000, bears to ”(B) $40,000. ”(3) DETERMINATION OF ADJUSTED GROSS IN- COME.\u2014For purposes of paragraph (2), adjusted gross income shall be determined\u2014 ”(A) without regard to this section and sec- tions 911, 931, and 933, and ”(B) after the application of sections 86, 135, 219, and 469. ”(c) ADOPTION ASSISTANCE PROGRAM.\u2014For purposes of this section, an adoption assistance program is a separate written plan of an em- ployer for the exclusive benefit of such employ- er’s employees\u2014 ”(1) under which the employer provides such employees with adoption assistance, and ”(2) which meets requirements similar to the requirements of paragraphs (2), (3), (5), and (6) of section 127(b). An adoption reimbursement program operated under section 1052 of title 10, United States Code (relating to armed forces) or section 514 of title 14, United States Code (relating to members of the Coast Guard) shall be treated as an adop- tion assistance program for purposes of this sec- tion. ”(d) QUALIFIED ADOPTION EXPENSES.\u2014For purposes of this section, the term ‘qualified adoption expenses’ has the meaning given such term by section 23(d) (determined without regard to reimbursements under this section). ”(e) CERTAIN RULES TO APPLY.\u2014Rules similar to the rules of subsections (e), (f), and (g) of sec- tion 23 shall apply for purposes of this section. ”(f) TERMINATION.\u2014This section shall not apply to amounts paid or expenses incurred after December 31, 2001.” (c) CONFORMING AMENDMENTS.\u2014 (1) Subparagraph (C) of section 25(e)(1) is amended by inserting ”and section 23” after ”this section”. (2) Sections 86(b)(2)(A) and 135(c)(4)(A) are each amended by inserting ”137,” before ”911”. (3) Clause (i) of section 219(g)(3)(A) is amend- ed by inserting ”, 137,” before ”and 911”. (4) Clause (ii) of section 469(i)(3)(E) is amend- ed to read as follows: ”(ii) the amounts excludable from gross in- come under sections 135 and 137,”. (5) Subsection (a) of section 1016 is amended by striking ”and” at the end of paragraph (24), by striking the period at the end of paragraph (25) and inserting ”, and”, and by adding at the end the following new paragraph: ”(26) to the extent provided in sections 23(g) and 137(e).” (6) The table of sections for subpart A of part IV of subchapter A of chapter 1 is amended by inserting after the item relating to section 22 the following new item: ”Sec. 23. Adoption expenses.” (7) The table of sections for part III of sub- chapter B of chapter 1 is amended by striking the item relating to section 137 and inserting the following: ”Sec. 137. Adoption assistance programs. ”Sec. 138. Cross reference to other Acts.” (d) STUDY AND REPORT.\u2014The Secretary of the Treasury shall study the effect on adoptions of the tax credit and gross income exclusion es- tablished by the amendments made by this sec- tion and shall submit a report regarding the study to the Committee on Finance of the Sen- ate and the Committee on Ways and Means of the House of Representatives not later than Jan- uary 1, 2000. (e) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to taxable years be- ginning after December 31, 1996. SEC. 1808. REMOVAL OF BARRIERS TO INTERETH- NIC ADOPTION. (a) STATE PLAN REQUIREMENTS.\u2014Section 471(a) of the Social Security Act (42 U.S.C 671(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (16); (2) by striking the period at the end of para- graph (17) and inserting ”; and”; and (3) by adding at the end the following: ”(18) not later than January 1, 1997, provides that neither the State nor any other entity in the State that receives funds from the Federal Government and is involved in adoption or fos- ter care placements may\u2014 ”(A) deny to any person the opportunity to become an adoptive or a foster parent, on the basis of the race, color, or national origin of the person, or of the child, involved; or ”(B) delay or deny the placement of a child for adoption or into foster care, on the basis of the race, color, or national origin of the adop- tive or foster parent, or the child, involved.”. (b) ENFORCEMENT.\u2014Section 474 of such Act (42 U.S.C. 674) is amended by adding at the end the following: ”(d)(1) If, during any quarter of a fiscal year, a State’s program operated under this part is found, as a result of a review conducted under section 1123A, or otherwise, to have violated sec- tion 471(a)(18) with respect to a person or to have failed to implement a corrective action plan within a period of time not to exceed 6 months with respect to such violation, then, notwithstanding subsection (a) of this section CONGRESSIONAL RECORD \u2014 HOUSE H9607August 1, 1996 and any regulations promulgated under section 1123A(b)(3), the Secretary shall reduce the amount otherwise payable to the State under this part, for that fiscal year quarter and for any subsequent quarter of such fiscal year, until the State program is found, as a result of a subsequent review under section 1123A, to have implemented a corrective action plan with respect to such violation, by\u2014 ”(A) 2 percent of such otherwise payable amount, in the case of the 1st such finding for the fiscal year with respect to the State; ”(B) 3 percent of such otherwise payable amount, in the case of the 2nd such finding for the fiscal year with respect to the State; or ”(C) 5 percent of such otherwise payable amount, in the case of the 3rd or subsequent such finding for the fiscal year with respect to the State. In imposing the penalties described in this para- graph, the Secretary shall not reduce any fiscal year payment to a State by more than 5 percent. ”(2) Any other entity which is in a State that receives funds under this part and which vio- lates section 471(a)(18) during a fiscal year quarter with respect to any person shall remit to the Secretary all funds that were paid by the State to the entity during the quarter from such funds. ”(3)(A) Any individual who is aggrieved by a violation of section 471(a)(18) by a State or other entity may bring an action seeking relief from the State or other entity in any United States district court. ”(B) An action under this paragraph may not be brought more than 2 years after the date the alleged violation occurred. ”(4) This subsection shall not be construed to affect the application of the Indian Child Wel- fare Act of 1978.”. (c) CIVIL RIGHTS.\u2014 (1) PROHIBITED CONDUCT.\u2014A person or gov- ernment that is involved in adoption or foster care placements may not\u2014 (A) deny to any individual the opportunity to become an adoptive or a foster parent, on the basis of the race, color, or national origin of the individual, or of the child, involved; or (B) delay or deny the placement of a child for adoption or into foster care, on the basis of the race, color, or national origin of the adoptive or foster parent, or the child, involved. (2) ENFORCEMENT.\u2014Noncompliance with para- graph (1) is deemed a violation of title VI of the Civil Rights Act of 1964. (3) NO EFFECT ON THE INDIAN CHILD WELFARE ACT OF 1978.\u2014This subsection shall not be con- strued to affect the application of the Indian Child Welfare Act of 1978. (d) CONFORMING AMENDMENT.\u2014Section 553 of the Howard M. Metzenbaum Multiethnic Place- ment Act of 1994 (42 U.S.C. 5115a) is repealed. SEC. 1809. 6-MONTH DELAY OF ELECTRONIC FUND TRANSFER REQUIREMENT. Notwithstanding any other provision of law, the increase in the applicable required percent- ages for fiscal year 1997 in clauses (i)(IV) and (ii)(IV) of section 6302(h)(2)(C) of the Internal Revenue Code of 1986 shall not take effect before July 1, 1997. Subtitle I\u2014Foreign Trust Tax Compliance SEC. 1901. IMPROVED INFORMATION REPORTING ON FOREIGN TRUSTS. (a) IN GENERAL.\u2014Section 6048 (relating to re- turns as to certain foreign trusts) is amended to read as follows: ”SEC. 6048. INFORMATION WITH RESPECT TO CERTAIN FOREIGN TRUSTS. ”(a) NOTICE OF CERTAIN EVENTS.\u2014 ”(1) GENERAL RULE.\u2014On or before the 90th day (or such later day as the Secretary may pre- scribe) after any reportable event, the respon- sible party shall provide written notice of such event to the Secretary in accordance with para- graph (2). ”(2) CONTENTS OF NOTICE.\u2014The notice re- quired by paragraph (1) shall contain such in- formation as the Secretary may prescribe, in- cluding\u2014 ”(A) the amount of money or other property (if any) transferred to the trust in connection with the reportable event, and ”(B) the identity of the trust and of each trustee and beneficiary (or class of beneficiaries) of the trust. ”(3) REPORTABLE EVENT.\u2014For purposes of this subsection\u2014 ”(A) IN GENERAL.\u2014The term ‘reportable event’ means\u2014 ”(i) the creation of any foreign trust by a United States person, ”(ii) the transfer of any money or property (directly or indirectly) to a foreign trust by a United States person, including a transfer by reason of death, and ”(iii) the death of a citizen or resident of the United States if\u2014 ”(I) the decedent was treated as the owner of any portion of a foreign trust under the rules of subpart E of part I of subchapter J of chapter 1, or ”(II) any portion of a foreign trust was in- cluded in the gross estate of the decedent. ”(B) EXCEPTIONS.\u2014 ”(i) FAIR MARKET VALUE SALES.\u2014Subpara- graph (A)(ii) shall not apply to any transfer of property to a trust in exchange for consider- ation of at least the fair market value of the transferred property. For purposes of the pre- ceding sentence, consideration other than cash shall be taken into account at its fair market value and the rules of section 679(a)(3) shall apply. ”(ii) DEFERRED COMPENSATION AND CHARI- TABLE TRUSTS.\u2014Subparagraph (A) shall not apply with respect to a trust which is\u2014 ”(I) described in section 402(b), 404(a)(4), or 404A, or ”(II) determined by the Secretary to be de- scribed in section 501(c)(3). ”(4) RESPONSIBLE PARTY.\u2014For purposes of this subsection, the term ‘responsible party’ means\u2014 ”(A) the grantor in the case of the creation of an inter vivos trust, ”(B) the transferor in the case of a reportable event described in paragraph (3)(A)(ii) other than a transfer by reason of death, and ”(C) the executor of the decedent’s estate in any other case. ”(b) UNITED STATES GRANTOR OF FOREIGN TRUST.\u2014 ”(1) IN GENERAL.\u2014If, at any time during any taxable year of a United States person, such person is treated as the owner of any portion of a foreign trust under the rules of subpart E of part I of subchapter J of chapter 1, such person shall be responsible to ensure that\u2014 ”(A) such trust makes a return for such year which sets forth a full and complete accounting of all trust activities and operations for the year, the name of the United States agent for such trust, and such other information as the Secretary may prescribe, and ”(B) such trust furnishes such information as the Secretary may prescribe to each United States person (i) who is treated as the owner of any portion of such trust or (ii) who receives (directly or indirectly) any distribution from the trust. ”(2) TRUSTS NOT HAVING UNITED STATES AGENT.\u2014 ”(A) IN GENERAL.\u2014If the rules of this para- graph apply to any foreign trust, the determina- tion of amounts required to be taken into ac- count with respect to such trust by a United States person under the rules of subpart E of part I of subchapter J of chapter 1 shall be de- termined by the Secretary. ”(B) UNITED STATES AGENT REQUIRED.\u2014The rules of this paragraph shall apply to any for- eign trust to which paragraph (1) applies unless such trust agrees (in such manner, subject to such conditions, and at such time as the Sec- retary shall prescribe) to authorize a United States person to act as such trust’s limited agent solely for purposes of applying sections 7602, 7603, and 7604 with respect to\u2014 ”(i) any request by the Secretary to examine records or produce testimony related to the proper treatment of amounts required to be taken into account under the rules referred to in subparagraph (A), or ”(ii) any summons by the Secretary for such records or testimony. The appearance of persons or production of records by reason of a United States person being such an agent shall not subject such per- sons or records to legal process for any purpose other than determining the correct treatment under this title of the amounts required to be taken into account under the rules referred to in subparagraph (A). A foreign trust which ap- points an described in this subparagraph shall not be considered to have an office or a perma- nent establishment in the United States, or to be engaged in a trade or business in the United States, solely because of the activities of such agent pursuant to this subsection. ”(C) OTHER RULES TO APPLY.\u2014Rules similar to the rules of paragraphs (2) and (4) of section 6038A(e) shall apply for purposes of this para- graph. ”(c) REPORTING BY UNITED STATES BENE- FICIARIES OF FOREIGN TRUSTS.\u2014 ”(1) IN GENERAL.\u2014If any United States person receives (directly or indirectly) during any tax- able year of such person any distribution from a foreign trust, such person shall make a return with respect to such trust for such year which includes\u2014 ”(A) the name of such trust, ”(B) the aggregate amount of the distribu- tions so received from such trust during such taxable year, and ”(C) such other information as the Secretary may prescribe. ”(2) INCLUSION IN INCOME IF RECORDS NOT PROVIDED.\u2014 ”(A) IN GENERAL.\u2014If adequate records are not provided to the Secretary to determine the prop- er treatment of any distribution from a foreign trust, such distribution shall be treated as an accumulation distribution includible in the gross income of the distributee under chapter 1. To the extent provided in regulations, the preceding sentence shall not apply if the foreign trust elects to be subject to rules similar to the rules of subsection (b)(2)(B). ”(B) APPLICATION OF ACCUMULATION DIS- TRIBUTION RULES.\u2014For purposes of applying section 668 in a case to which subparagraph (A) applies, the applicable number of years for pur- poses of section 668(a) shall be 1\u20442 of the number of years the trust has been in existence. ”(d) SPECIAL RULES.\u2014 ”(1) DETERMINATION OF WHETHER UNITED STATES PERSON MAKES TRANSFER OR RECEIVES DISTRIBUTION.\u2014For purposes of this section, in determining whether a United States person makes a transfer to, or receives a distribution from, a foreign trust, the fact that a portion of such trust is treated as owned by another per- son under the rules of subpart E of part I of subchapter J of chapter 1 shall be disregarded. ”(2) DOMESTIC TRUSTS WITH FOREIGN ACTIVI- TIES.\u2014To the extent provided in regulations, a trust which is a United States person shall be treated as a foreign trust for purposes of this section and section 6677 if such trust has sub- stantial activities, or holds substantial property, outside the United States. ”(3) TIME AND MANNER OF FILING INFORMA- TION.\u2014Any notice or return required under this section shall be made at such time and in such manner as the Secretary shall prescribe. ”(4) MODIFICATION OF RETURN REQUIRE- MENTS.\u2014The Secretary is authorized to suspend or modify any requirement of this section if the Secretary determines that the United States has no significant tax interest in obtaining the re- quired information.”. (b) INCREASED PENALTIES.\u2014Section 6677 (re- lating to failure to file information returns with CONGRESSIONAL RECORD \u2014 HOUSEH9608 August 1, 1996 respect to certain foreign trusts) is amended to read as follows: ”SEC. 6677. FAILURE TO FILE INFORMATION WITH RESPECT TO CERTAIN FOREIGN TRUSTS. ”(a) CIVIL PENALTY.\u2014In addition to any criminal penalty provided by law, if any notice or return required to be filed by section 6048\u2014 ”(1) is not filed on or before the time provided in such section, or ”(2) does not include all the information re- quired pursuant to such section or includes in- correct information, the person required to file such notice or return shall pay a penalty equal to 35 percent of the gross reportable amount. If any failure de- scribed in the preceding sentence continues for more than 90 days after the day on which the Secretary mails notice of such failure to the per- son required to pay such penalty, such person shall pay a penalty (in addition to the amount determined under the preceding sentence) of $10,000 for each 30-day period (or fraction there- of) during which such failure continues after the expiration of such 90-day period. In no event shall the penalty under this subsection with respect to any failure exceed the gross re- portable amount. ”(b) SPECIAL RULES FOR RETURNS UNDER SEC- TION 6048(b).\u2014In the case of a return required under section 6048(b)\u2014 ”(1) the United States person referred to in such section shall be liable for the penalty im- posed by subsection (a), and ”(2) subsection (a) shall be applied by sub- stituting ‘5 percent’ for ’35 percent’. ”(c) GROSS REPORTABLE AMOUNT.\u2014For pur- poses of subsection (a), the term ‘gross report- able amount’ means\u2014 ”(1) the gross value of the property involved in the event (determined as of the date of the event) in the case of a failure relating to section 6048(a), ”(2) the gross value of the portion of the trust’s assets at the close of the year treated as owned by the United States person in the case of a failure relating to section 6048(b)(1), and ”(3) the gross amount of the distributions in the case of a failure relating to section 6048(c). ”(d) REASONABLE CAUSE EXCEPTION.\u2014No pen- alty shall be imposed by this section on any fail- ure which is shown to be due to reasonable cause and not due to willful neglect. The fact that a foreign jurisdiction would impose a civil or criminal penalty on the taxpayer (or any other person) for disclosing the required infor- mation is not reasonable cause. ”(e) DEFICIENCY PROCEDURES NOT TO APPLY.\u2014Subchapter B of chapter 63 (relating to deficiency procedures for income, estate, gift, and certain excise taxes) shall not apply in re- spect of the assessment or collection of any pen- alty imposed by subsection (a).”. (c) CONFORMING AMENDMENTS.\u2014 (1) Paragraph (2) of section 6724(d) is amend- ed by striking ”or” at the end of subparagraph (S), by striking the period at the end of subpara- graph (T) and inserting ”, or”, and by inserting after subparagraph (T) the following new sub- paragraph: ”(U) section 6048(b)(1)(B) (relating to foreign trust reporting requirements).”. (2) The table of sections for subpart B of part III of subchapter A of chapter 61 is amended by striking the item relating to section 6048 and in- serting the following new item: ”Sec. 6048. Information with respect to certain foreign trusts.”. (3) The table of sections for part I of sub- chapter B of chapter 68 is amended by striking the item relating to section 6677 and inserting the following new item: ”Sec. 6677. Failure to file information with re- spect to certain foreign trusts.”. (d) EFFECTIVE DATES.\u2014 (1) REPORTABLE EVENTS.\u2014To the extent relat- ed to subsection (a) of section 6048 of the Inter- nal Revenue Code of 1986, as amended by this section, the amendments made by this section shall apply to reportable events (as defined in such section 6048) occurring after the date of the enactment of this Act. (2) GRANTOR TRUST REPORTING.\u2014To the extent related to subsection (b) of such section 6048, the amendments made by this section shall apply to taxable years of United States persons beginning after December 31, 1995. (3) REPORTING BY UNITED STATES BENE- FICIARIES.\u2014To the extent related to subsection (c) of such section 6048, the amendments made by this section shall apply to distributions re- ceived after the date of the enactment of this Act. SEC. 1902. COMPARABLE PENALTIES FOR FAIL- URE TO FILE RETURN RELATING TO TRANSFERS TO FOREIGN ENTITIES. (a) IN GENERAL.\u2014Section 1494 is amended by adding at the end the following new subsection: ”(c) PENALTY.\u2014In the case of any failure to file a return required by the Secretary with re- spect to any transfer described in section 1491, the person required to file such return shall be liable for the penalties provided in section 6677 in the same manner as if such failure were a failure to file a notice under section 6048(a).”. (b) EFFECTIVE DATE.\u2014The amendment made by subsection (a) shall apply to transfers after the date of the enactment of this Act. SEC. 1903. MODIFICATIONS OF RULES RELATING TO FOREIGN TRUSTS HAVING ONE OR MORE UNITED STATES BENE- FICIARIES. (a) TREATMENT OF TRUST OBLIGATIONS, ETC.\u2014 (1) Paragraph (2) of section 679(a) is amended by striking subparagraph (B) and inserting the following: ”(B) TRANSFERS AT FAIR MARKET VALUE.\u2014To any transfer of property to a trust in exchange for consideration of at least the fair market value of the transferred property. For purposes of the preceding sentence, consideration other than cash shall be taken into account at its fair market value.”. (2) Subsection (a) of section 679 (relating to foreign trusts having one or more United States beneficiaries) is amended by adding at the end the following new paragraph: ”(3) CERTAIN OBLIGATIONS NOT TAKEN INTO ACCOUNT UNDER FAIR MARKET VALUE EXCEP- TION.\u2014 ”(A) IN GENERAL.\u2014In determining whether paragraph (2)(B) applies to any transfer by a person described in clause (ii) or (iii) of sub- paragraph (C), there shall not be taken into ac- count\u2014 ”(i) except as provided in regulations, any ob- ligation of a person described in subparagraph (C), and ”(ii) to the extent provided in regulations, any obligation which is guaranteed by a person de- scribed in subparagraph (C). ”(B) TREATMENT OF PRINCIPAL PAYMENTS ON OBLIGATION.\u2014Principal payments by the trust on any obligation referred to in subparagraph (A) shall be taken into account on and after the date of the payment in determining the portion of the trust attributable to the property trans- ferred. ”(C) PERSONS DESCRIBED.\u2014The persons de- scribed in this subparagraph are\u2014 ”(i) the trust, ”(ii) any grantor or beneficiary of the trust, and ”(iii) any person who is related (within the meaning of section 643(i)(2)(B)) to any grantor or beneficiary of the trust.”. (b) EXEMPTION OF TRANSFERS TO CHARITABLE TRUSTS.\u2014Subsection (a) of section 679 is amend- ed by striking ”section 404(a)(4) or 404A” and inserting ”section 6048(a)(3)(B)(ii)”. (c) OTHER MODIFICATIONS.\u2014Subsection (a) of section 679 is amended by adding at the end the following new paragraphs: ”(4) SPECIAL RULES APPLICABLE TO FOREIGN GRANTOR WHO LATER BECOMES A UNITED STATES PERSON.\u2014 ”(A) IN GENERAL.\u2014If a nonresident alien indi- vidual has a residency starting date within 5 years after directly or indirectly transferring property to a foreign trust, this section and sec- tion 6048 shall be applied as if such individual transferred to such trust on the residency start- ing date an amount equal to the portion of such trust attributable to the property transferred by such individual to such trust in such transfer. ”(B) TREATMENT OF UNDISTRIBUTED INCOME.\u2014 For purposes of this section, undistributed net income for periods before such individual’s resi- dency starting date shall be taken into account in determining the portion of the trust which is attributable to property transferred by such in- dividual to such trust but shall not otherwise be taken into account. ”(C) RESIDENCY STARTING DATE.\u2014For pur- poses of this paragraph, an individual’s resi- dency starting date is the residency starting date determined under section 7701(b)(2)(A). ”(5) OUTBOUND TRUST MIGRATIONS.\u2014If\u2014 ”(A) an individual who is a citizen or resident of the United States transferred property to a trust which was not a foreign trust, and ”(B) such trust becomes a foreign trust while such individual is alive, then this section and section 6048 shall be ap- plied as if such individual transferred to such trust on the date such trust becomes a foreign trust an amount equal to the portion of such trust attributable to the property previously transferred by such individual to such trust. A rule similar to the rule of paragraph (4)(B) shall apply for purposes of this paragraph.”. (d) MODIFICATIONS RELATING TO WHETHER TRUST HAS UNITED STATES BENEFICIARIES.\u2014 Subsection (c) of section 679 is amended by add- ing at the end the following new paragraph: ”(3) CERTAIN UNITED STATES BENEFICIARIES DISREGARDED.\u2014A beneficiary shall not be treat- ed as a United States person in applying this section with respect to any transfer of property to foreign trust if such beneficiary first became a United States person more than 5 years after the date of such transfer.”. (e) TECHNICAL AMENDMENT.\u2014Subparagraph (A) of section 679(c)(2) is amended to read as fol- lows: ”(A) in the case of a foreign corporation, such corporation is a controlled foreign corporation (as defined in section 957(a)),”. (f) REGULATIONS.\u2014Section 679 is amended by adding at the end the following new subsection: ”(d) REGULATIONS.\u2014The Secretary shall pre- scribe such regulations as may be necessary or appropriate to carry out the purposes of this section.”. (g) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to transfers of prop- erty after February 6, 1995. SEC. 1904. FOREIGN PERSONS NOT TO BE TREAT- ED AS OWNERS UNDER GRANTOR TRUST RULES. (a) GENERAL RULE.\u2014 (1) Subsection (f) of section 672 (relating to special rule where grantor is foreign person) is amended to read as follows: ”(f) SUBPART NOT TO RESULT IN FOREIGN OWNERSHIP.\u2014 ”(1) IN GENERAL.\u2014Notwithstanding any other provision of this subpart, this subpart shall apply only to the extent such application results in an amount (if any) being currently taken into account (directly or through 1 or more enti- ties) under this chapter in computing the income of a citizen or resident of the United States or a domestic corporation. ”(2) EXCEPTIONS.\u2014 ”(A) CERTAIN REVOCABLE AND IRREVOCABLE TRUSTS.\u2014Paragraph (1) shall not apply to any portion of a trust if\u2014 ”(i) the power to revest absolutely in the grantor title to the trust property to which such portion is attributable is exercisable solely by the grantor without the approval or consent of any other person or with the consent of a relat- ed or subordinate party who is subservient to the grantor, or CONGRESSIONAL RECORD \u2014 HOUSE H9609August 1, 1996 ”(ii) the only amounts distributable from such portion (whether income or corpus) during the lifetime of the grantor are amounts distributable to the grantor or the spouse of the grantor. ”(B) COMPENSATORY TRUSTS.\u2014Except as pro- vided in regulations, paragraph (1) shall not apply to any portion of a trust distributions from which are taxable as compensation for services rendered. ”(3) SPECIAL RULES.\u2014Except as otherwise pro- vided in regulations prescribed by the Sec- retary\u2014 ”(A) a controlled foreign corporation (as de- fined in section 957) shall be treated as a domes- tic corporation for purposes of paragraph (1), and ”(B) paragraph (1) shall not apply for pur- poses of applying section 1296. ”(4) RECHARACTERIZATION OF PURPORTED GIFTS.\u2014In the case of any transfer directly or indirectly from a partnership or foreign corpora- tion which the transferee treats as a gift or be- quest, the Secretary may recharacterize such transfer in such circumstances as the Secretary determines to be appropriate to prevent the avoidance of the purposes of this subsection. ”(5) SPECIAL RULE WHERE GRANTOR IS FOREIGN PERSON.\u2014If\u2014 ”(A) but for this subsection, a foreign person would be treated as the owner of any portion of a trust, and ”(B) such trust has a beneficiary who is a United States person, such beneficiary shall be treated as the grantor of such portion to the extent such beneficiary has made (directly or indirectly) transfers of property (other than in a sale for full and ade- quate consideration) to such foreign person. For purposes of the preceding sentence, any gift shall not be taken into account to the extent such gift would be excluded from taxable gifts under section 2503(b). ”(6) REGULATIONS.\u2014The Secretary shall pre- scribe such regulations as may be necessary or appropriate to carry out the purposes of this subsection, including regulations providing that paragraph (1) shall not apply in appropriate cases.”. (2) The last sentence of subsection (c) of sec- tion 672 is amended by inserting ”subsection (f) and” before ”sections 674”. (b) CREDIT FOR CERTAIN TAXES.\u2014 (1) Paragraph (2) of section 665(d) is amended by adding at the end the following new sen- tence: ”Under rules or regulations prescribed by the Secretary, in the case of any foreign trust of which the settlor or another person would be treated as owner of any portion of the trust under subpart E but for section 672(f), the term ‘taxes imposed on the trust’ includes the alloca- ble amount of any income, war profits, and ex- cess profits taxes imposed by any foreign coun- try or possession of the United States on the set- tlor or such other person in respect of trust in- come.”. (2) Paragraph (5) of section 901(b) is amended by adding at the end the following new sen- tence: ”Under rules or regulations prescribed by the Secretary, in the case of any foreign trust of which the settlor or another person would be treated as owner of any portion of the trust under subpart E but for section 672(f), the allo- cable amount of any income, war profits, and excess profits taxes imposed by any foreign country or possession of the United States on the settlor or such other person in respect of trust income.”. (c) DISTRIBUTIONS BY CERTAIN FOREIGN TRUSTS THROUGH NOMINEES.\u2014 (1) Section 643 is amended by adding at the end the following new subsection: ”(h) DISTRIBUTIONS BY CERTAIN FOREIGN TRUSTS THROUGH NOMINEES.\u2014For purposes of this part, any amount paid to a United States person which is derived directly or indirectly from a foreign trust of which the payor is not the grantor shall be deemed in the year of pay- ment to have been directly paid by the foreign trust to such United States person.”. (2) Section 665 is amended by striking sub- section (c). (d) EFFECTIVE DATE.\u2014 (1) IN GENERAL.\u2014Except as provided by para- graph (2), the amendments made by this section shall take effect on the date of the enactment of this Act. (2) EXCEPTION FOR CERTAIN TRUSTS.\u2014The amendments made by this section shall not apply to any trust\u2014 (A) which is treated as owned by the grantor under section 676 or 677 (other than subsection (a)(3) thereof) of the Internal Revenue Code of 1986, and (B) which is in existence on September 19, 1995. The preceding sentence shall not apply to the portion of any such trust attributable to any transfer to such trust after September 19, 1995. (e) TRANSITIONAL RULE.\u2014If\u2014 (1) by reason of the amendments made by this section, any person other than a United States person ceases to be treated as the owner of a portion of a domestic trust, and (2) before January 1, 1997, such trust becomes a foreign trust, or the assets of such trust are transferred to a foreign trust, no tax shall be imposed by section 1491 of the Internal Revenue Code of 1986 by reason of such trust becoming a foreign trust or the assets of such trust being transferred to a foreign trust. SEC. 1905. INFORMATION REPORTING REGARD- ING FOREIGN GIFTS. (a) IN GENERAL.\u2014Subpart A of part III of sub- chapter A of chapter 61 is amended by inserting after section 6039E the following new section: ”SEC. 6039F. NOTICE OF LARGE GIFTS RECEIVED FROM FOREIGN PERSONS. ”(a) IN GENERAL.\u2014If the value of the aggre- gate foreign gifts received by a United States person (other than an organization described in section 501(c) and exempt from tax under section 501(a)) during any taxable year exceeds $10,000, such United States person shall furnish (at such time and in such manner as the Secretary shall prescribe) such information as the Secretary may prescribe regarding each foreign gift re- ceived during such year. ”(b) FOREIGN GIFT.\u2014For purposes of this sec- tion, the term ‘foreign gift’ means any amount received from a person other than a United States person which the recipient treats as a gift or bequest. Such term shall not include any qualified transfer (within the meaning of section 2503(e)(2)) or any distribution properly disclosed in a return under section 6048(c). ”(c) PENALTY FOR FAILURE TO FILE INFORMA- TION.\u2014 ”(1) IN GENERAL.\u2014If a United States person fails to furnish the information required by sub- section (a) with respect to any foreign gift with- in the time prescribed therefor (including exten- sions)\u2014 ”(A) the tax consequences of the receipt of such gift shall be determined by the Secretary, and ”(B) such United States person shall pay (upon notice and demand by the Secretary and in the same manner as tax) an amount equal to 5 percent of the amount of such foreign gift for each month for which the failure continues (not to exceed 25 percent of such amount in the ag- gregate). ”(2) REASONABLE CAUSE EXCEPTION.\u2014Para- graph (1) shall not apply to any failure to re- port a foreign gift if the United States person shows that the failure is due to reasonable cause and not due to willful neglect. ”(d) COST-OF-LIVING ADJUSTMENT.\u2014In the case of any taxable year beginning after Decem- ber 31, 1996, the $10,000 amount under sub- section (a) shall be increased by an amount equal to the product of such amount and the cost-of-living adjustment for such taxable year under section 1(f)(3), except that subparagraph (B) thereof shall be applied by substituting ‘1995’ for ‘1992’. ”(e) REGULATIONS.\u2014The Secretary shall pre- scribe such regulations as may be necessary or appropriate to carry out the purposes of this section.”. (b) CLERICAL AMENDMENT.\u2014The table of sec- tions for such subpart is amended by inserting after the item relating to section 6039E the fol- lowing new item: ”Sec. 6039F. Notice of large gifts received from foreign persons.”. (c) EFFECTIVE DATE.\u2014The amendments made by this section shall apply to amounts received after the date of the enactment of this Act in taxable years ending after such date. SEC. 1906. MODIFICATION OF RULES RELATING TO FOREIGN TRUSTS WHICH ARE NOT GRANTOR TRUSTS. (a) MODIFICATION OF INTEREST CHARGE ON ACCUMULATION DISTRIBUTIONS.\u2014Subsection (a) of section 668 (relating to interest charge on ac- cumulation distributions from foreign trusts) is amended to read as follows: ”(a) GENERAL RULE.\u2014For purposes of the tax determined under section 667(a)\u2014 ”(1) INTEREST DETERMINED USING UNDERPAY- MENT RATES.\u2014The interest charge determined under this section with respect to any distribu- tion is the amount of interest which would be determined on the partial tax computed under section 667(b) for the period described in para- graph (2) using the rates and the method under section 6621 applicable to underpayments of tax. ”(2) PERIOD.\u2014For purposes of paragraph (1), the period described in this paragraph is the pe- riod which begins on the date which is the ap- plicable number of years before the date of the distribution and which ends on the date of the distribution. ”(3) APPLICABLE NUMBER OF YEARS.\u2014For pur- poses of paragraph (2)\u2014 ”(A) IN GENERAL.\u2014The applicable number of years with respect to a distribution is the num- ber determined by dividing\u2014 ”(i) the sum of the products described in sub- paragraph (B) with respect to each undistrib- uted income year, by ”(ii) the aggregate undistributed net income. The quotient determined under the preceding sentence shall be rounded under procedures pre- scribed by the Secretary. ”(B) PRODUCT DESCRIBED.\u2014For purposes of subparagraph (A), the product described in this subparagraph with respect to any undistributed income year is the product of\u2014 ”(i) the undistributed net income for such year, and ”(ii) the sum of the number of taxable years between such year and the taxable year of the distribution (counting in each case the undis- tributed income year but not counting the tax- able year of the distribution). ”(4) UNDISTRIBUTED INCOME YEAR.\u2014For pur- poses of this subsection, the term ‘undistributed income year’ means any prior taxable year of the trust for which there is undistributed net in- come, other than a taxable year during all of which the beneficiary receiving the distribution was not a citizen or resident of the United States. ”(5) DETERMINATION OF UNDISTRIBUTED NET INCOME.\u2014Notwithstanding section 666, for pur- poses of this subsection, an accumulation dis- tribution from the trust shall be treated as re- ducing proportionately the undistributed net in- come for undistributed income years. ”(6) PERIODS BEFORE 1996.\u2014Interest for the portion of the period described in paragraph (2) which occurs before January 1, 1996, shall be de- termined\u2014 ”(A) by using an interest rate of 6 percent, and ”(B) without compounding until January 1, 1996.”. (b) ABUSIVE TRANSACTIONS.\u2014Section 643(a) is amended by inserting after paragraph (6) the following new paragraph: ”(7) ABUSIVE TRANSACTIONS.\u2014The Secretary shall prescribe such regulations as may be nec- essary or appropriate to carry out the purposes CONGRESSIONAL RECORD \u2014 HOUSEH9610 August 1, 1996 of this part, including regulations to prevent avoidance of such purposes.”. (c) TREATMENT OF LOANS FROM TRUSTS.\u2014 (1) IN GENERAL.\u2014Section 643 (relating to defi- nitions applicable to subparts A, B, C, and D) is amended by adding at the end the following new subsection: ”(i) LOANS FROM FOREIGN TRUSTS.\u2014For pur- poses of subparts B, C, and D\u2014 ”(1) GENERAL RULE.\u2014Except as provided in regulations, if a foreign trust makes a loan of cash or marketable securities directly or indi- rectly to\u2014 ”(A) any grantor or beneficiary of such trust who is a United States person, or ”(B) any United States person not described in subparagraph (A) who is related to such grantor or beneficiary, the amount of such loan shall be treated as a distribution by such trust to such grantor or beneficiary (as the case may be). ”(2) DEFINITIONS AND SPECIAL RULES.\u2014For purposes of this subsection\u2014 ”(A) CASH.\u2014The term ‘cash’ includes foreign currencies and cash equivalents. ”(B) RELATED PERSON.\u2014 ”(i) IN GENERAL.\u2014A person is related to an- other person if the relationship between such persons would result in a disallowance of losses under section 267 or 707(b). In applying section 267 for purposes of the preceding sentence, sec- tion 267(c)(4) shall be applied as if the family of an individual includes the spouses of the mem- bers of the family. ”(ii) ALLOCATION.\u2014If any person described in paragraph (1)(B) is related to more than one person, the grantor or beneficiary to whom the treatment under this subsection applies shall be determined under regulations prescribed by the Secretary. ”(C) EXCLUSION OF TAX-EXEMPTS.\u2014The term ‘United States person’ does not include any en- tity exempt from tax under this chapter. ”(D) TRUST NOT TREATED AS SIMPLE TRUST.\u2014 Any trust which is treated under this subsection as making a distribution shall be treated as not described in section 651. ”(3) SUBSEQUENT TRANSACTIONS REGARDING LOAN PRINCIPAL.\u2014If any loan is taken into ac- count under paragraph (1), any subsequent transaction between the trust and the original borrower regarding the principal of the loan (by way of complete or partial repayment, satisfac- tion, cancellation, discharge, or otherwise) shall be disregarded for purposes of this title.”. (2) TECHNICAL AMENDMENT.\u2014Paragraph (8) of section 7872(f) is amended by inserting ”, 643(i),” before ”or 1274” each place it appears. (d) EFFECTIVE DATES.\u2014 (1) INTEREST CHARGE.\u2014The amendment made by subsection (a) shall apply to distributions after the date of the enactment of this Act. (2) ABUSIVE TRANSACTIONS.\u2014The amendment made by subsection (b) shall take effect on the date of the enactment of this Act. (3) LOANS FROM TRUSTS.\u2014The amendment made by subsection (c) shall apply to loans of cash or marketable securities made after Septem- ber 19, 1995. SEC. 1907. RESIDENCE OF TRUSTS, ETC. (a) TREATMENT AS UNITED STATES PERSON.\u2014 (1) IN GENERAL.\u2014Paragraph (30) of section 7701(a) is amended by striking ”and” at the end of subparagraph (C) and by striking subpara- graph (D) and by inserting the following new subparagraphs: ”(D) any estate (other than a foreign estate, within the meaning of paragraph (31)), and ”(E) any trust if\u2014 ”(i) a court within the United States is able to exercise primary supervision over the adminis- tration of the trust, and ”(ii) one or more United States fiduciaries have the authority to control all substantial de- cisions of the trust.”. (2) CONFORMING AMENDMENT.\u2014Paragraph (31) of section 7701(a) is amended to read as follows: ”(31) FOREIGN ESTATE OR TRUST.\u2014 ”(A) FOREIGN ESTATE.\u2014The term ‘foreign es- tate’ means an estate the income of which, from sources without the United States which is not effectively connected with the conduct of a trade or business within the United States, is not includible in gross income under subtitle A. ”(B) FOREIGN TRUST.\u2014The term ‘foreign trust’ means any trust other than a trust described in subparagraph (E) of paragraph (30).”. (3) EFFECTIVE DATE.\u2014The amendments made by this subsection shall apply\u2014 (A) to taxable years beginning after December 31, 1996, or (B) at the election of the trustee of a trust, to taxable years ending after the date of the enact- ment of this Act. Such an election, once made, shall be irrev- ocable. (b) DOMESTIC TRUSTS WHICH BECOME FOREIGN TRUSTS.\u2014 (1) IN GENERAL.\u2014Section 1491 (relating to im- position of tax on transfers to avoid income tax) is amended by adding at the end the following new flush sentence: ”If a trust which is not a foreign trust becomes a foreign trust, such trust shall be treated for purposes of this section as having transferred, immediately before becoming a foreign trust, all of its assets to a foreign trust.”. (2) EFFECTIVE DATE.\u2014The amendment made by this subsection shall take effect on the date of the enactment of this Act. Subtitle J\u2014Generalized System of Preferences SEC. 1951. SHORT TITLE. This subtitle may be cited as the ”GSP Re- newal Act of 1996”. SEC. 1952. GENERALIZED SYSTEM OF PREF- ERENCES. (a) IN GENERAL.\u2014Title V of the Trade Act of 1974 is amended to read as follows: ”TITLE V\u2014GENERALIZED SYSTEM OF PREFERENCES ”SEC. 501. AUTHORITY TO EXTEND PREF- ERENCES. ”The President may provide duty-free treat- ment for any eligible article from any bene- ficiary developing country in accordance with the provisions of this title. In taking any such action, the President shall have due regard for\u2014 ”(1) the effect such action will have on fur- thering the economic development of developing countries through the expansion of their ex- ports; ”(2) the extent to which other major developed countries are undertaking a comparable effort to assist developing countries by granting general- ized preferences with respect to imports of prod- ucts of such countries; ”(3) the anticipated impact of such action on United States producers of like or directly com- petitive products; and ”(4) the extent of the beneficiary developing country’s competitiveness with respect to eligible articles. ”SEC. 502. DESIGNATION OF BENEFICIARY DEVEL- OPING COUNTRIES. ”(a) AUTHORITY TO DESIGNATE COUNTRIES.\u2014 ”(1) BENEFICIARY DEVELOPING COUNTRIES.\u2014 The President is authorized to designate coun- tries as beneficiary developing countries for pur- poses of this title. ”(2) LEAST-DEVELOPED BENEFICIARY DEVELOP- ING COUNTRIES.\u2014The President is authorized to designate any beneficiary developing country as a least-developed beneficiary developing country for purposes of this title, based on the consider- ations in section 501 and subsection (c) of this section. ”(b) COUNTRIES INELIGIBLE FOR DESIGNA- TION.\u2014 ”(1) SPECIFIC COUNTRIES.\u2014The following countries may not be designated as beneficiary developing countries for purposes of this title: ”(A) Australia. ”(B) Canada. ”(C) European Union member states. ”(D) Iceland. ”(E) Japan. ”(F) Monaco. ”(G) New Zealand. ”(H) Norway. ”(I) Switzerland. ”(2) OTHER BASES FOR INELIGIBILITY.\u2014The President shall not designate any country a beneficiary developing country under this title if any of the following applies: ”(A) Such country is a Communist country, unless\u2014 ”(i) the products of such country receive non- discriminatory treatment, ”(ii) such country is a WTO Member (as such term is defined in section 2(10) of the Uruguay Round Agreements Act) (19 U.S.C. 3501(10)) and a member of the International Monetary Fund, and ”(iii) such country is not dominated or con- trolled by international communism. ”(B) Such country is a party to an arrange- ment of countries and participates in any action pursuant to such arrangement, the effect of which is\u2014 ”(i) to withhold supplies of vital commodity resources from international trade or to raise the price of such commodities to an unreason- able level, and ”(ii) to cause serious disruption of the world economy. ”(C) Such country affords preferential treat- ment to the products of a developed country, other than the United States, which has, or is likely to have, a significant adverse effect on United States commerce. ”(D)(i) Such country\u2014 ”(I) has nationalized, expropriated, or other- wise seized ownership or control of property, in- cluding patents, trademarks, or copyrights, owned by a United States citizen or by a cor- poration, partnership, or association which is 50 percent or more beneficially owned by United States citizens, ”(II) has taken steps to repudiate or nullify an existing contract or agreement with a United States citizen or a corporation, partnership, or association which is 50 percent or more bene- ficially owned by United States citizens, the ef- fect of which is to nationalize, expropriate, or otherwise seize ownership or control of property, including patents, trademarks, or copyrights, so owned, or ”(III) has imposed or enforced taxes or other exactions, restrictive maintenance or oper- ational conditions, or other measures with re- spect to property, including patents, trade- marks, or copyrights, so owned, the effect of which is to nationalize, expropriate, or other- wise seize ownership or control of such prop- erty, unless clause (ii) applies. ”(ii) This clause applies if the President deter- mines that\u2014 ”(I) prompt, adequate, and effective com- pensation has been or is being made to the citi- zen, corporation, partnership, or association re- ferred to in clause (i), ”(II) good faith negotiations to provide prompt, adequate, and effective compensation under the applicable provisions of international law are in progress, or the country described in clause (i) is otherwise taking steps to discharge its obligations under international law with re- spect to such citizen, corporation, partnership, or association, or ”(III) a dispute involving such citizen, cor- poration, partnership, or association over com- pensation for such a seizure has been submitted to arbitration under the provisions of the Con- vention for the Settlement of Investment Dis- putes, or in another mutually agreed upon forum, and the President promptly furnishes a copy of such determination to the Senate and House of Representatives. CONGRESSIONAL RECORD \u2014 HOUSE H9611August 1, 1996 ”(E) Such country fails to act in good faith in recognizing as binding or in enforcing arbitral awards in favor of United States citizens or a corporation, partnership, or association which is 50 percent or more beneficially owned by United States citizens, which have been made by arbitrators appointed for each case or by perma- nent arbitral bodies to which the parties in- volved have submitted their dispute. ”(F) Such country aids or abets, by granting sanctuary from prosecution to, any individual or group which has committed an act of inter- national terrorism. ”(G) Such country has not taken or is not taking steps to afford internationally recognized worker rights to workers in the country (includ- ing any designated zone in that country). Subparagraphs (D), (E), (F), and (G) shall not prevent the designation of any country as a beneficiary developing country under this title if the President determines that such designation will be in the national economic interest of the United States and reports such determination to the Congress with the reasons therefor. ”(c) FACTORS AFFECTING COUNTRY DESIGNA- TION.\u2014In determining whether to designate any country as a beneficiary developing country under this title, the President shall take into ac- count\u2014 ”(1) an expression by such country of its de- sire to be so designated; ”(2) the level of economic development of such country, including its per capita gross national product, the living standards of its inhabitants, and any other economic factors which the Presi- dent deems appropriate; ”(3) whether or not other major developed countries are extending generalized preferential tariff treatment to such country; ”(4) the extent to which such country has as- sured the United States that it will provide equi- table and reasonable access to the markets and basic commodity resources of such country and the extent to which such country has assured the United States that it will refrain from en- gaging in unreasonable export practices; ”(5) the extent to which such country is pro- viding adequate and effective protection of in- tellectual property rights; ”(6) the extent to which such country has taken action to\u2014 ”(A) reduce trade distorting investment prac- tices and policies (including export performance requirements); and ”(B) reduce or eliminate barriers to trade in services; and ”(7) whether or not such country has taken or is taking steps to afford to workers in that coun- try (including any designated zone in that country) internationally recognized worker rights. ”(d) WITHDRAWAL, SUSPENSION, OR LIMITA- TION OF COUNTRY DESIGNATION.\u2014 ”(1) IN GENERAL.\u2014The President may with- draw, suspend, or limit the application of the duty-free treatment accorded under this title with respect to any country. In taking any ac- tion under this subsection, the President shall consider the factors set forth in section 501 and subsection (c) of this section. ”(2) CHANGED CIRCUMSTANCES.\u2014The President shall, after complying with the requirements of subsection (f)(2), withdraw or suspend the des- ignation of any country as a beneficiary devel- oping country if, after such designation, the President determines that as the result of changed circumstances such country would be barred from designation as a beneficiary devel- oping country under subsection (b)(2). Such country shall cease to be a beneficiary develop- ing country on the day on which the President issues an Executive order or Presidential procla- mation revoking the designation of such country under this title. ”(3) ADVICE TO CONGRESS.\u2014The President shall, as necessary, advise the Congress on the application of section 501 and subsection (c) of this section, and the actions the President has taken to withdraw, to suspend, or to limit the application of duty-free treatment with respect to any country which has failed to adequately take the actions described in subsection (c). ”(e) MANDATORY GRADUATION OF BENE- FICIARY DEVELOPING COUNTRIES.\u2014If the Presi- dent determines that a beneficiary developing country has become a ‘high income’ country, as defined by the official statistics of the Inter- national Bank for Reconstruction and Develop- ment, then the President shall terminate the designation of such country as a beneficiary de- veloping country for purposes of this title, effec- tive on January 1 of the second year following the year in which such determination is made. ”(f) CONGRESSIONAL NOTIFICATION.\u2014 ”(1) NOTIFICATION OF DESIGNATION.\u2014 ”(A) IN GENERAL.\u2014Before the President des- ignates any country as a beneficiary developing country under this title, the President shall no- tify the Congress of the President’s intention to make such designation, together with the con- siderations entering into such decision. ”(B) DESIGNATION AS LEAST-DEVELOPED BENE- FICIARY DEVELOPING COUNTRY.\u2014At least 60 days before the President designates any country as a least-developed beneficiary developing coun- try, the President shall notify the Congress of the President’s intention to make such designa- tion. ”(2) NOTIFICATION OF TERMINATION.\u2014If the President has designated any country as a bene- ficiary developing country under this title, the President shall not terminate such designation unless, at least 60 days before such termination, the President has notified the Congress and has notified such country of the President’s inten- tion to terminate such designation, together with the considerations entering into such deci- sion. ”SEC. 503. DESIGNATION OF ELIGIBLE ARTICLES. ”(a) ELIGIBLE ARTICLES.\u2014 ”(1) DESIGNATION.\u2014 ”(A) IN GENERAL.\u2014Except as provided in sub- section (b), the President is authorized to des- ignate articles as eligible articles from all bene- ficiary developing countries for purposes of this title by Executive order or Presidential procla- mation after receiving the advice of the Inter- national Trade Commission in accordance with subsection (e). ”(B) LEAST-DEVELOPED BENEFICIARY DEVEL- OPING COUNTRIES.\u2014Except for articles described in subparagraphs (A), (B), and (E) of subsection (b)(1) and articles described in paragraphs (2) and (3) of subsection (b), the President may, in carrying out section 502(d)(1) and subsection (c)(1) of this section, designate articles as eligi- ble articles only for countries designated as least-developed beneficiary developing countries under section 502(a)(2) if, after receiving the ad- vice of the International Trade Commission in accordance with subsection (e) of this section, the President determines that such articles are not import-sensitive in the context of imports from least-developed beneficiary developing countries. ”(C) THREE-YEAR RULE.\u2014If, after receiving the advice of the International Trade Commis- sion under subsection (e), an article has been formally considered for designation as an eligi- ble article under this title and denied such des- ignation, such article may not be reconsidered for such designation for a period of 3 years after such denial. ”(2) RULE OF ORIGIN.\u2014 ”(A) GENERAL RULE.\u2014The duty-free treatment provided under this title shall apply to any eli- gible article which is the growth, product, or manufacture of a beneficiary developing coun- try if\u2014 ”(i) that article is imported directly from a beneficiary developing country into the customs territory of the United States; and ”(ii) the sum of\u2014 ”(I) the cost or value of the materials pro- duced in the beneficiary developing country or any two or more such countries that are mem- bers of the same association of countries and are treated as one country under section 507(2), plus ”(II) the direct costs of processing operations performed in such beneficiary developing coun- try or such member countries, is not less than 35 percent of the appraised value of such article at the time it is entered. ”(B) EXCLUSIONS.\u2014An article shall not be treated as the growth, product, or manufacture of a beneficiary developing country by virtue of having merely undergone\u2014 ”(i) simple combining or packaging oper- ations, or ”(ii) mere dilution with water or mere dilution with another substance that does not materially alter the characteristics of the article. ”(3) REGULATIONS.\u2014The Secretary of the Treasury, after consulting with the United States Trade Representative, shall prescribe such regulations as may be necessary to carry out paragraph (2), including, but not limited to, regulations providing that, in order to be eligible for duty-free treatment under this title, an arti- cle\u2014 ”(A) must be wholly the growth, product, or manufacture of a beneficiary developing coun- try, or ”(B) must be a new or different article of com- merce which has been grown, produced, or man- ufactured in the beneficiary developing country. ”(b) ARTICLES THAT MAY NOT BE DESIGNATED AS ELIGIBLE ARTICLES.\u2014 ”(1) IMPORT SENSITIVE ARTICLES.\u2014The Presi- dent may not designate any article as an eligible article under subsection (a) if such article is within one of the following categories of import- sensitive articles: ”(A) Textile and apparel articles which were not eligible articles for purposes of this title on January 1, 1994, as this title was in effect on such date. ”(B) Watches, except those watches entered after June 30, 1989, that the President specifi- cally determines, after public notice and com- ment, will not cause material injury to watch or watch band, strap, or bracelet manufacturing and assembly operations in the United States or the United States insular possessions. ”(C) Import-sensitive electronic articles. ”(D) Import-sensitive steel articles. ”(E) Footwear, handbags, luggage, flat goods, work gloves, and leather wearing apparel which were not eligible articles for purposes of this title on January 1, 1995, as this title was in ef- fect on such date. ”(F) Import-sensitive semimanufactured and manufactured glass products. ”(G) Any other articles which the President determines to be import-sensitive in the context of the Generalized System of Preferences. ”(2) ARTICLES AGAINST WHICH OTHER ACTIONS TAKEN.\u2014An article shall not be an eligible arti- cle for purposes of this title for any period dur- ing which such article is the subject of any ac- tion proclaimed pursuant to section 203 of this Act (19 U.S.C. 2253) or section 232 or 351 of the Trade Expansion Act of 1962 (19 U.S.C. 1862, 1981). ”(3) AGRICULTURAL PRODUCTS.\u2014No quantity of an agricultural product subject to a tariff- rate quota that exceeds the in-quota quantity shall be eligible for duty-free treatment under this title. ”(c) WITHDRAWAL, SUSPENSION, OR LIMITA- TION OF DUTY-FREE TREATMENT; COMPETITIVE NEED LIMITATION.\u2014 ”(1) IN GENERAL.\u2014The President may with- draw, suspend, or limit the application of the duty-free treatment accorded under this title with respect to any article, except that no rate of duty may be established with respect to any article pursuant to this subsection other than the rate which would apply but for this title. In taking any action under this subsection, the President shall consider the factors set forth in sections 501 and 502(c). ”(2) COMPETITIVE NEED LIMITATION.\u2014 CONGRESSIONAL RECORD \u2014 HOUSEH9612 August 1, 1996 ”(A) BASIS FOR WITHDRAWAL OF DUTY-FREE TREATMENT.\u2014 ”(i) IN GENERAL.\u2014Except as provided in clause (ii) and subject to subsection (d), when- ever the President determines that a beneficiary developing country has exported (directly or in- directly) to the United States during any cal- endar year beginning after December 31, 1995\u2014 ”(I) a quantity of an eligible article having an appraised value in excess of the applicable amount for the calendar year, or ”(II) a quantity of an eligible article equal to or exceeding 50 percent of the appraised value of the total imports of that article into the United States during any calendar year, the President shall, not later than July 1 of the next calendar year, terminate the duty-free treatment for that article from that beneficiary developing country. ”(ii) ANNUAL ADJUSTMENT OF APPLICABLE AMOUNT.\u2014For purposes of applying clause (i), the applicable amount is\u2014 ”(I) for 1996, $75,000,000, and ”(II) for each calendar year thereafter, an amount equal to the applicable amount in effect for the preceding calendar year plus $5,000,000. ”(B) COUNTRY DEFINED.\u2014For purposes of this paragraph, the term ‘country’ does not include an association of countries which is treated as one country under section 507(2), but does in- clude a country which is a member of any such association. ”(C) REDESIGNATIONS.\u2014A country which is no longer treated as a beneficiary developing coun- try with respect to an eligible article by reason of subparagraph (A) may, subject to the consid- erations set forth in sections 501 and 502, be re- designated a beneficiary developing country with respect to such article if imports of such article from such country did not exceed the lim- itations in subparagraph (A) during the preced- ing calendar year. ”(D) LEAST-DEVELOPED BENEFICIARY DEVEL- OPING COUNTRIES.\u2014Subparagraph (A) shall not apply to any least-developed beneficiary devel- oping country. ”(E) ARTICLES NOT PRODUCED IN THE UNITED STATES EXCLUDED.\u2014Subparagraph (A)(i)(II) shall not apply with respect to any eligible arti- cle if a like or directly competitive article was not produced in the United States on January 1, 1995. ”(F) DE MINIMIS WAIVERS.\u2014 ”(i) IN GENERAL.\u2014The President may dis- regard subparagraph (A)(i)(II) with respect to any eligible article from any beneficiary devel- oping country if the aggregate appraised value of the imports of such article into the United States during the preceding calendar year does not exceed the applicable amount for such pre- ceding calendar year. ”(ii) APPLICABLE AMOUNT.\u2014For purposes of applying clause (i), the applicable amount is\u2014 ”(I) for calendar year 1996, $13,000,000, and ”(II) for each calendar year thereafter, an amount equal to the applicable amount in effect for the preceding calendar year plus $500,000. ”(d) WAIVER OF COMPETITIVE NEED LIMITA- TION.\u2014 ”(1) IN GENERAL.\u2014The President may waive the application of subsection (c)(2) with respect to any eligible article of any beneficiary devel- oping country if, before July 1 of the calendar year beginning after the calendar year for which a determination described in subsection (c)(2)(A) was made with respect to such eligible article, the President\u2014 ”(A) receives the advice of the International Trade Commission under section 332 of the Tar- iff Act of 1930 on whether any industry in the United States is likely to be adversely affected by such waiver, ”(B) determines, based on the considerations described in sections 501 and 502(c) and the ad- vice described in subparagraph (A), that such waiver is in the national economic interest of the United States, and ”(C) publishes the determination described in subparagraph (B) in the Federal Register. ”(2) CONSIDERATIONS BY THE PRESIDENT.\u2014In making any determination under paragraph (1), the President shall give great weight to\u2014 ”(A) the extent to which the beneficiary de- veloping country has assured the United States that such country will provide equitable and reasonable access to the markets and basic com- modity resources of such country, and ”(B) the extent to which such country pro- vides adequate and effective protection of intel- lectual property rights. ”(3) OTHER BASES FOR WAIVER.\u2014The Presi- dent may waive the application of subsection (c)(2) if, before July 1 of the calendar year be- ginning after the calendar year for which a de- termination described in subsection (c)(2) was made with respect to a beneficiary developing country, the President determines that\u2014 ”(A) there has been a historical preferential trade relationship between the United States and such country, ”(B) there is a treaty or trade agreement in force covering economic relations between such country and the United States, and ”(C) such country does not discriminate against, or impose unjustifiable or unreasonable barriers to, United States commerce, and the President publishes that determination in the Federal Register. ”(4) LIMITATIONS ON WAIVERS.\u2014 ”(A) IN GENERAL.\u2014The President may not ex- ercise the waiver authority under this sub- section with respect to a quantity of an eligible article entered during any calendar year begin- ning after 1995, the aggregate appraised value of which equals or exceeds 30 percent of the aggre- gate appraised value of all articles that entered duty-free under this title during the preceding calendar year. ”(B) OTHER WAIVER LIMITS.\u2014The President may not exercise the waiver authority provided under this subsection with respect to a quantity of an eligible article entered during any cal- endar year beginning after 1995, the aggregate appraised value of which exceeds 15 percent of the aggregate appraised value of all articles that have entered duty-free under this title during the preceding calendar year from those bene- ficiary developing countries which for the pre- ceding calendar year\u2014 ”(i) had a per capita gross national product (calculated on the basis of the best available in- formation, including that of the International Bank for Reconstruction and Development) of $5,000 or more; or ”(ii) had exported (either directly or indi- rectly) to the United States a quantity of arti- cles that was duty-free under this title that had an aggregate appraised value of more than 10 percent of the aggregate appraised value of all articles that entered duty-free under this title during that year. ”(C) CALCULATION OF LIMITATIONS.\u2014There shall be counted against the limitations imposed under subparagraphs (A) and (B) for any cal- endar year only that value of any eligible arti- cle of any country that\u2014 ”(i) entered duty-free under this title during such calendar year; and ”(ii) is in excess of the value of that article that would have been so entered during such calendar year if the limitations under subsection (c)(2)(A) applied. ”(5) EFFECTIVE PERIOD OF WAIVER.\u2014Any waiver granted under this subsection shall re- main in effect until the President determines that such waiver is no longer warranted due to changed circumstances. ”(e) INTERNATIONAL TRADE COMMISSION AD- VICE.\u2014Before designating articles as eligible ar- ticles under subsection (a)(1), the President shall publish and furnish the International Trade Commission with lists of articles which may be considered for designation as eligible ar- ticles for purposes of this title. The provisions of sections 131, 132, 133, and 134 shall be complied with as though action under section 501 and this section were action under section 123 to carry out a trade agreement entered into under section 123. ”(f) SPECIAL RULE CONCERNING PUERTO RICO.\u2014No action under this title may affect any tariff duty imposed by the Legislature of Puerto Rico pursuant to section 319 of the Tariff Act of 1930 on coffee imported into Puerto Rico. ”SEC. 504. REVIEW AND REPORT TO CONGRESS. The President shall submit an annual report to the Congress on the status of internationally recognized worker rights within each bene- ficiary developing country. ”SEC. 505. DATE OF TERMINATION. ”No duty-free treatment provided under this title shall remain in effect after May 31, 1997. ”SEC. 506. AGRICULTURAL EXPORTS OF BENE- FICIARY DEVELOPING COUNTRIES. ”The appropriate agencies of the United States shall assist beneficiary developing coun- tries to develop and implement measures de- signed to assure that the agricultural sectors of their economies are not directed to export mar- kets to the detriment of the production of food- stuffs for their citizenry. ”SEC. 507. DEFINITIONS. ”For purposes of this title: ”(1) BENEFICIARY DEVELOPING COUNTRY.\u2014The term ‘beneficiary developing country’ means any country with respect to which there is in ef- fect an Executive order or Presidential procla- mation by the President designating such coun- try as a beneficiary developing country for pur- poses of this title. ”(2) COUNTRY.\u2014The term ‘country’ means any foreign country or territory, including any over- seas dependent territory or possession of a for- eign country, or the Trust Territory of the Pa- cific Islands. In the case of an association of countries which is a free trade area or customs union, or which is contributing to comprehen- sive regional economic integration among its members through appropriate means, including, but not limited to, the reduction of duties, the President may by Executive order or Presi- dential proclamation provide that all members of such association other than members which are barred from designation under section 502(b) shall be treated as one country for purposes of this title. ”(3) ENTERED.\u2014The term ‘entered’ means en- tered, or withdrawn from warehouse for con- sumption, in the customs territory of the United States. ”(4) INTERNATIONALLY RECOGNIZED WORKER RIGHTS.\u2014The term ‘internationally recognized worker rights’ includes\u2014 ”(A) the right of association; ”(B) the right to organize and bargain collec- tively; ”(C) a prohibition on the use of any form of forced or compulsory labor; ”(D) a minimum age for the employment of children; and ”(E) acceptable conditions of work with re- spect to minimum wages, hours of work, and oc- cupational safety and health. ”(5) LEAST-DEVELOPED BENEFICIARY DEVELOP- ING COUNTRY.\u2014The term ‘least-developed bene- ficiary developing country’ means a beneficiary developing country that is designated as a least- developed beneficiary developing country under section 502(a)(2).”. (b) TABLE OF CONTENTS.\u2014The items relating to title V in the table of contents of the Trade Act of 1974 are amended to read as follows: ”TITLE V\u2014GENERALIZED SYSTEM OF PREFERENCES ”Sec. 501. Authority to extend preferences. ”Sec. 502. Designation of beneficiary develop- ing countries. ”Sec. 503. Designation of eligible articles. ”Sec. 504. Review and reports to Congress. ”Sec. 505. Date of termination. CONGRESSIONAL RECORD \u2014 HOUSE H9613August 1, 1996 1 The amount permitted to be expensed under Code section 179 is increased by up to an additional $20,000 for certain property placed in service by a business located in an empowerment zone (sec. 1397A). ”Sec. 506. Agricultural exports of beneficiary developing countries. ”Sec. 507. Definitions.”. SEC. 1953. EFFECTIVE DATE. (a) IN GENERAL.\u2014The amendments made by this subtitle apply to articles entered on or after October 1, 1996. (b) RETROACTIVE APPLICATION.\u2014 (1) GENERAL RULE.\u2014Notwithstanding section 514 of the Tariff Act of 1930 or any other provi- sion of law and subject to subsection (c)\u2014 (A) any article that was entered\u2014 (i) after July 31, 1995, and (ii) before January 1, 1996, and to which duty-free treatment under title V of the Trade Act of 1974 would have applied if the entry had been made on July 31, 1995, shall be liquidated or reliquidated as free of duty, and the Secretary of the Treasury shall refund any duty paid with respect to such entry, and (B) any article that was entered\u2014 (i) after December 31, 1995, and (ii) before October 1, 1996, and to which duty-free treatment under title V of the Trade Act of 1974 (as amended by this sub- title) would have applied if the entry had been made on or after October 1, 1996, shall be liq- uidated or reliquidated as free of duty, and the Secretary of the Treasury shall refund any duty paid with respect to such entry. (2) LIMITATION ON REFUNDS.\u2014No refund shall be made pursuant to this subsection before Octo- ber 1, 1996. (3) ENTRY.\u2014As used in this subsection, the term ”entry” includes a withdrawal from ware- house for consumption. (c) REQUESTS.\u2014Liquidation or reliquidation may be made under subsection (b) with respect to an entry only if a request therefor is filed with the Customs Service, within 180 days after the date of the enactment of this Act, that con- tains sufficient information to enable the Cus- toms Service\u2014 (1) to locate the entry; or (2) to reconstruct the entry if it cannot be lo- cated. SEC. 1954. CONFORMING AMENDMENTS. (a) TRADE LAWS.\u2014 (1) Section 1211(b) of the Omnibus Trade and Competitiveness Act of 1988 (19 U.S.C. 3011(b)) is amended\u2014 (A) in paragraph (1), by striking ”(19 U.S.C. 2463(a), 2464(c)(3))” and inserting ”(as in effect on July 31, 1995)”; and (B) in paragraph (2), by striking ”(19 U.S.C. 2464(c)(1))” and inserting the following: ”(as in effect on July 31, 1995)”. (2) Section 203(c)(7) of the Andean Trade Pref- erence Act (19 U.S.C. 3202(c)(7)) is amended by striking ”502(a)(4)” and inserting ”507(4)”. (3) Section 212(b)(7) of the Caribbean Basin Economic Recovery Act (19 U.S.C. 2702(b)(7)) is amended by striking ”502(a)(4)” and inserting ”507(4)”. (4) General note 3(a)(iv)(C) of the Harmonized Tariff Schedule of the United States is amended by striking ”sections 503(b) and 504(c)” and in- serting ”subsections (a), (c), and (d) of section 503”. (5) Section 201(a)(2) of the North American Free Trade Agreement Implementation Act (19 U.S.C. 3331(a)(2)) is amended by striking ”502(a)(2) of the Trade Act of 1974 (19 U.S.C. 2462(a)(2))” and inserting ”502(f)(2) of the Trade Act of 1974”. (6) Section 131 of the Uruguay Round Agree- ments Act (19 U.S.C. 3551) is amended in sub- sections (a) and (b)(1) by striking ”502(a)(4)” and inserting ”507(4)”. (b) OTHER LAWS.\u2014 (1) Section 871(f)(2)(B) of the Internal Reve- nue Code of 1986 is amended by striking ”within the meaning of section 502” and inserting ”under title V”. (2) Section 2202(8) of the Export Enhancement Act of 1988 (15 U.S.C. 4711(8)) is amended by striking ”502(a)(4)” and inserting ”507(4)”. (3) Section 231A(a) of the Foreign Assistance Act of 1961 (22 U.S.C. 2191a(a)) is amended\u2014 (A) in paragraph (1) by striking ”502(a)(4) of the Trade Act of 1974 (19 U.S.C. 2462(a)(4))” and inserting ”507(4) of the Trade Act of 1974”; (B) in paragraph (2) by striking ”505(c) of the Trade Act of 1974 (19 U.S.C. 2465(c))” and in- serting ”504 of the Trade Act of 1974”; and (C) in paragraph (4) by striking ”502(a)(4)” and inserting ”507(4)”. (4) Section 1621(a)(1) of the International Fi- nancial Institutions Act (22 U.S.C. 262p 4p(a)(1)) is amended by striking ”502(a)(4)” and inserting ”507(4)”. (5) Section 103B of the Agricultural Act of 1949 (7 U.S.C. 1444 2) is amended in subsections (a)(5)(F)(v) and (n)(1)(C) by striking ”503(d) of the Trade Act of 1974 (19 U.S.C. 2463(d))” and inserting ”503(b)(3) of the Trade Act of 1974”. And the Senate agree to the same. TITLE II That the House recede from its disagree- ment to the amendments of the Senate num- bered 2 and 3 and agree to the same. That the House recede from its disagree- ment to the amendment of the Senate num- bered 4 and agree to the same with an amendment as follows: On page 236, line 12 of the House engrossed bill, strike ”Act” and insert ”This section and sections 2102 and 2103”; and on page 237, line 4 of the House engrossed bill, strike ”section 1” and insert ”section 2102”; and the Senate agree to the same. That the House recede from its disagree- ment to the amendment of the Senate num- bered 5 and agree to the same with an amendment as follows: On page 237, line 18 of the House engrossed bill, strike ”June 30, 1996” and insert ”Sep- tember 30, 1996”; on line 19, strike ”July 1, 1996” and insert ”October 1, 1996”; beginning in line 20 strike ”after the expiration of such year” and insert ”beginning September 1, 1997”; and after line 21, insert the following: (c) CONFORMING AMENDMENT.\u2014Section 6 of such Act (29 U.S.C. 206) is amended by strik- ing subsection (c). And the Senate agree to the same. That the House recede from its disagree- ment to the amendment of the Senate num- bered 6 and agree to the same with an amendment as follows: On page 239, line 1 of the House engrossed bill, strike ”next to”; in line 3 of such page strike ”to read as follows” and insert ”by striking ‘previous sentence’ and inserting ‘preceding 2 sentences’ and by striking ‘(1)’ and ‘(2)’ and such section is amended by striking the next to last sentence and insert- ing the following”; and in line 15 of such page strike ”cash”; and the Senate agree to the same. From the Committee on Ways and Means, for consideration of the House bill (except for title II) and the Senate amendment num- bered 1, and modifications committed to con- ference: BILL ARCHER, PHIL CRANE, BILL THOMAS, SAM GIBBONS, CHARLES B. RANGEL, As additional conferees from the Committee on Economic and Educational Opportunities, for consideration of secs. 1704(h)(1)(B) and 1704(l) of the House bill and secs. 1421(d), 1442(b), 1442(c), 1451, 1457, 1460(b), 1460(c), 1461, 1465, and 1704(h)(1)(B) of the Senate amend- ment numbered 1, and modifications com- mitted to conference: WILLIAM F. GOODLING, CASS BALLENGER, As additional conferees from the Committee on Economic and Educational Opportunities, for consideration of title II of the House bill and the Senate amendments numbered 2 6, and modifications committed to conference: WILLIAM F. GOODLING, H.W. FAWELL, FRANK RIGGS, WILLIAM L. CLAY, MAJOR R. OWENS, MAURICE HINCHEY, Managers on the Part of the House. From the Committee on Labor and Human Resources: NANCY LANDON KASSEBAUM, EDWARD M. KENNEDY, JIM JEFFORDS, From the Committee on Finance: BILL ROTH, JOHN H. CHAFEE, CHUCK GRASSLEY, ORIN G. HATCH, AL SIMPSON, LARRY PRESSLER, DANIEL P. MOYNIHAN, MAX BAUCUS, DAVID PRYOR, JOHN D. ROCKEFELLER IV, Managers on the Part of the Senate. JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE The managers on the part of the House and the Senate at the conference on the disagree- ing votes of the two Houses on the amend- ments of the Senate to the bill (H.R. 3448) to provide tax relief for small businesses, to protect jobs, to create opportunities, to in- crease the take home pay of workers, to amend the Portal-to-Portal Act of 1947 relat- ing to the payment of wages to employees who use employer owned vehicles, and to amend the Fair Labor Standards Act of 1938 to increase the minimum wage rate and to prevent job loss by providing flexibility to employers in complying with minimum wage and overtime requirements under that Act, submit the following joint statement to the House and the Senate in explanation of the effect of the action agreed upon by the man- agers and recommended in the accompany- ing conference report: I. SMALL BUSINESS AND OTHER TAX PROVISIONS A. SMALL BUSINESS PROVISIONS 1. INCREASE IN EXPENSING FOR SMALL BUSINESSES (Sec. 1111 of the House bill and the Senate amendment.) Present law In lieu of depreciation, a taxpayer with a sufficiently small amount of annual invest- ment may elect to deduct up to $17,500 of the cost of qualifying property placed in service for the taxable year (sec. 179).1 In general, qualifying property is defined as depreciable tangible personal property that is purchased for use in the active conduct of a trade or business. The $17,500 amount is reduced (but not below zero) by the amount by which the cost of qualifying property placed in service during the taxable year exceeds $200,000. In addition, the amount eligible to be expensed for a taxable year may not exceed the tax- able income of the taxpayer for the year that is derived from the active conduct of a trade or business (determined without regard to this provision). Any amount that is not al- lowed as a deduction because of the taxable income limitation may be carried forward to succeeding taxable years (subject to similar limitations). House bill The House bill increases the $17,500 amount allowed to be expensed under Code section CONGRESSIONAL RECORD \u2014 HOUSEH9614 August 1, 1996 2 See discussion in Part VII (Tax Technical Correc- tions Provisions) below, regarding the Senate amendment clarification of the present-law provi- sion that horses are qualified property for purposes of section 179. 179 to $25,000. The increase is phased in as follows: Taxable year begin- ning in\u2014 Maximum expensing 1996 ……………………………………….. $18,500 1997 ……………………………………….. 19,000 1998 ……………………………………….. 20,000 1999 ……………………………………….. 21,000 2000 ……………………………………….. 22,000 2001 ……………………………………….. 23,000 2002 ……………………………………….. 23,500 2003 and thereafter ………………….. 25,000 Effective date.\u2014The provision is effective for property placed in service in taxable years beginning after December 31, 1995, sub- ject to the phase-in schedule set forth above. Senate amendment 2 The Senate amendment increases the $17,500 amount allowed to be expensed under Code section 179 to $25,000. The increase is phased in as follows: Taxable year begin- ning in\u2014 Maximum expensing 1997 ……………………………………….. $18,000 1998 ……………………………………….. 18,500 1999 ……………………………………….. 19,000 2000 ……………………………………….. 20,000 2001 ……………………………………….. 24,000 2002 ……………………………………….. 24,000 2003 and thereafter ………………….. 25,000 Effective date.\u2014The provision is effective for property placed in service in taxable years beginning after December 31, 1996, sub- ject to the phase-in schedule set forth above. Conference agreement The conference agreement follows the Sen- ate amendment. 2. TAX CREDIT FOR SOCIAL SECURITY TAXES PAID WITH RESPECT TO EMPLOYEE CASH TIPS (Sec. 1112 of the House bill and the Senate amendment.) Present law Employee tip income is treated as em- ployer-provided wages for purposes of the Federal Insurance Contributions Act (”FICA”). Employees are required to report to the employer the amount of tips received. The Omnibus Budget Reconciliation Act of 1993 (”OBRA 1993”) provided a business tax credit with respect to certain employer FICA taxes paid with respect to tips treated as paid by the employer. The credit applies to tips received from customers in connection with the provision of food or beverages for consumption on the premises of an establish- ment with respect to which the tipping of employees is customary. OBRA 1993 provided that the FICA tip credit is effective for taxes paid after December 31, 1993. Temporary Treasury regulations provide that the tax credit is available only with respect to tips reported by the employee. The temporary regulations also provide that the credit is ef- fective for FICA taxes paid by an employer after December 31, 1993, with respect to tips received for services performed after Decem- ber 31, 1993. House bill The provision clarifies the credit with re- spect to employer FICA taxes paid on tips by providing that the credit is (1) available whether or not the employee reported the tips on which the employer FICA taxes were paid pursuant to section 6053(a), and (2) effec- tive with respect to taxes paid after Decem- ber 31, 1993, regardless of when the services with respect to which the tips are received were performed. The provision also modifies the credit so that it applies with respect to tips received from customers in connection with the deliv- ery or serving of food or beverages, regard- less of whether the food or beverages are for consumption on the premises of the estab- lishment. Effective date.\u2014The clarifications relating to the effective date and nonreported tips are effective as if included in OBRA 1993. The provision expanding the tip credit to the pro- vision of food or beverages not for consump- tion on the premises of the establishment is effective with respect to FICA taxes paid on tips received with respect to services per- formed after December 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 3. HOME OFFICE DEDUCTION: TREATMENT OF STORAGE OF PRODUCT SAMPLES (Sec. 1113 of the House bill.) Present law A taxpayer’s business use of his or her home may give rise to a deduction for the business portion of expenses related to oper- ating the home (e.g., a portion of rent or de- preciation and repairs). Code section 280A(c)(1) provides, however, that business deductions generally are allowed only with respect to a portion of a home that is used exclusively and regularly in one of the fol- lowing ways: (1) as the principal place of business for a trade or business; (2) as a place of business used to meet with patients, cli- ents, or customers in the normal course of the taxpayer’s trade or business; or (3) in connection with the taxpayer’s trade or busi- ness, if the portion so used constitutes a sep- arate structure not attached to the dwelling unit. In the case of an employee, the Code further requires that the business use of the home must be for the convenience of the em- ployer (sec. 280A(c)(1)). These rules apply to houses, apartments, condominiums, mobile homes, boats, and other similar property used as the taxpayer’s home (sec. 280A(f)(1)). Section 280A(c)(2) contains a special rule that allows a home office deduction for busi- ness expenses related to a space within a home that is used on a regular (even if not exclusive) basis as a storage unit for the in- ventory of the taxpayer’s trade or business of selling products at retail or wholesale, but only if the home is the sole fixed location of such trade or business. Home office deductions may not be claimed if they create (or increase) a net loss from a business activity, although such de- ductions may be carried over to subsequent taxable years (sec. 280A(c)(5)). House bill The House bill clarifies that the special rule contained in present-law section 280A(c)(2) permits deductions for expenses re- lated to a storage unit in a taxpayer’s home regularly used for inventory or product sam- ples (or both) of the taxpayer’s trade or busi- ness of selling products at retail or whole- sale, provided that the home is the sole fixed location of such trade or business. Effective date\u2014The provision applies to tax- able years beginning after December 31, 1995. Senate amendment No provision. Conference agreement The conference agreement follows the House bill. 4. TREATMENT OF CERTAIN CHARITABLE RISK POOLS (Sec. 1114 of the House bill.) Present law Organizations described in section 501(c)(3) (which are referred to as ”charities”) gen- erally are exempt from Federal income tax and are eligible to receive tax-deductible contributions and to use the proceeds of tax- exempt financing. Section 501(c)(3) requires that an organization be organized and oper- ated exclusively for a charitable or other specifically enumerated exempt purpose in order to qualify for tax-exempt status under that section. Section 501(c)(3) requires that an organiza- tion that is organized and operated exclu- sively for charitable purposes is entitled to tax-exempt status under that section only if the organization satisfies the additional re- quirements that no part of its net earnings inures to the benefit of any private individ- ual or shareholder (referred to as the ”pri- vate inurement test”) and only if the organi- zation does not engage in political campaign activity on behalf of (or in opposition to) any candidate for public office and does not en- gage in substantial lobbying activities. Section 501(m) provides that an organiza- tion described in section 501(c)(3) or 501(c)(4) of the Code is exempt from tax only if no substantial part of its activities consists of providing commercial-type insurance. For purposes of this rule, commercial-type insur- ance does not include insurance provided at substantially below cost to a class of chari- table recipients. Present law does not specifically accord tax-exempt status to an organization that pools insurable risks of a group of tax-ex- empt organizations described in section 501(c)(3). House bill Under the House bill, a qualified charitable risk pool is treated as organized and oper- ated exclusively for charitable purposes. The provision make inapplicable to a qualified charitable risk pool the present-law rule under section 501(m) that a charitable orga- nization described in section 501(c)(3) is ex- empt from tax only if no substantial part of its activities consists of providing commer- cial-type insurance. The House bill defines a qualified chari- table risk pool as an organization organized and operated solely to pool insurable risks of its members (other than medical malpractice risks) and to provide information to its members with respect to loss control and risk management. Because a qualified chari- table risk pool must be organized and oper- ated solely to pool insurable risks of its members and to provide information to members with respect to loss control and risk management, no profit may be accorded to any member of the organization other than through providing members with insur- ance coverage below the cost of comparable commercial coverage and through providing members with loss control and risk manage- ment information. Only charitable tax-ex- empt organizations described in section 501(c)(3) may be members of a qualified char- itable risk pool. The House bill further requires that a qualified risk pool is required to (1) be orga- nized as a nonprofit organization under State law authorizing risk pooling for chari- table organizations; (2) be exempt from State income tax; (3) obtain at least $1 million in startup capital from nonmember charitable organizations; (4) be controlled by a board of directors elected by its members; and (5) pro- vide in its organizational documents that members must be tax-exempt charitable or- ganizations at all times, and if a member loses that status it must immediately notify the organization, and that no insurance cov- erage applies to a member after the date of any final determination that the member no longer qualifies as a tax-exempt charitable organization. To be entitled to tax-exempt status under section 501(c)(3), a qualified charitable risk CONGRESSIONAL RECORD \u2014 HOUSE H9615August 1, 1996 pool described in the provision also must sat- isfy the other requirements of that section (i.e., the private inurement test and the pro- hibition of political campaign activities and substantial lobbying). Effective date.\u2014The provision applies to taxable years beginning after the date of en- actment. Senate amendment No provision. Conference agreement The conference agreement follows the House bill. 5. TREATMENT OF DUES PAID TO AGRICULTURAL OR HORTICULTURAL ORGANIZATIONS (Sec. 1115 of the House bill and sec. 1113 of the Senate amendments.) Present law Tax-exempt organizations generally are subject to the unrelated business income tax (”UBIT”) on income derived from a trade or business regularly carried on that is not sub- stantially related to the performance of the organization’s tax-exempt functions (secs. 511 514). Dues payments made to a member- ship organization generally are not subject to the UBIT. However, several courts have held that, with respect to postal labor orga- nizations, dues payments were subject to the UBIT when received from individuals who were not postal workers, but who became ”associate” members for the purpose of ob- taining health insurance available to mem- bers of the organization. See National League of Postmasters of the United States v. Commis- sioner, No. 95 2646 (4th Cir. 1996), American Postal Workers Union, AFL CIO v. United States, 925 F.2d 480 (D.C. Cir. 1991), National Association of Postal Supervisors v. United States, 944 F.2d 859 (Fed. Cir. 1991). In Rev. Proc. 95 21 (issued March 23, 1995), the IRS set forth its position regarding when associate member dues payments received by an organization described in section 501(c)(5) will be treated as subject to the UBIT. The IRS stated that dues payments from associ- ate members will not be treated as subject to UBIT unless, for the relevant period, ”the as- sociate member category has been formed or availed of for the principal purpose of pro- ducing unrelated business income.” Thus, under Rev. Proc. 95 21, the focus of the in- quiry is upon the organization’s purposes in forming the associate member category (and whether the purposes of that category of membership are substantially related to the organization’s exempt purposes other than through the production of income) rather than upon the motive of the individuals who join as associate members. House bill Under the House bill, if an agricultural or horticultural organization described in sec- tion 501(c)(5) requires annual dues not ex- ceeding $100 to be paid in order to be a mem- ber of such organization, then in no event will any portion of such dues be subject to the UBIT by reason of any benefits or privi- leges to which members of such organization are entitled. For taxable years beginning after 1995, the $100 amount will be indexed for inflation. The term ”dues” is defined as ”any payment required to be made in order to be recognized by the organization as a member of the organization.” Thus, if a per- son is recognized as a member of an organi- zation by virtue of having paid annual dues for his or her membership, then any subse- quent payments made by that person during the year to purchase another membership in the same organization (covering the same period) would not be within the scope of the provision. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1994. Senate amendment Same as the House bill, except that the Senate amendment applies to taxable years beginning after December 31, 1986. The Sen- ate amendment also provides transitional re- lief to agricultural or horticultural organiza- tions that had a reasonable basis for not treating membership dues received prior to January 1, 1987, as unrelated business in- come. In such cases, no portion of such dues will be treated as derived from an unrelated trade or business. Conference agreement The conference agreement follows the Sen- ate amendment. The conferees intend that, if a person makes a single payment that enti- tles the person to be recognized as a member of the organization for more than twelve months, then such payment may be prorated to determine whether annual dues exceed the $100 cap (as adjusted for inflation). 6. CLARIFY EMPLOYMENT TAX STATUS OF CERTAIN FISHERMEN (Sec. 1116(a) of the House bill and sec. 1114 of the Senate amendment.) Present law Under present law, service as a crew mem- ber on a fishing vessel is generally excluded from the definition of employment for pur- poses of income tax withholding on wages and for purposes of the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA) taxes if the operating crew of the boat normally consists of fewer than 10 individuals, the individual receives a share of the catch based on the total catch, and the individual does not re- ceive cash remuneration other than proceeds from the sale of the individual’s share of the catch. If a crew member receives any other cash, e.g., payment for services as an engi- neer, the exemption from FICA and FUTA taxes does not apply. Crew members to which the exemption applies are subject to self-employment taxes. Special reporting re- quirements apply to the operators of boats on which exempt crew members serve. House bill The operating crew of a boat is treated as normally made up of fewer than 10 individ- uals if the average size of the operating crew on trips made during the preceding 4 cal- endar quarters consisted of fewer than 10 in- dividuals. In addition, the exemption applies if the crew member receives certain cash payments. The cash payments cannot exceed $100 per trip, is contingent on a minimum catch, and is paid solely for additional duties (e.g., as mate, engineer, or cook) for which additional cash remuneration is customary. Effective date.\u2014The provision applies to re- muneration paid after December 31, 1996. In addition, the provision applies to remunera- tion paid after December 31, 1996. In addi- tion, the provision applies to remuneration paid after December 31, 1984, and before Jan- uary 1, 1997, unless the payor treated such re- muneration when paid as subject to FICA taxes. Senate amendment The Senate amendment is the same as the House bill. Effective date.\u2014The provision applies to re- muneration paid after December 31, 1994. In addition, the provision applies to remunera- tion paid after December 31, 1984, and before January 1, 1995, unless the payer treated such remuneration when paid as subject to FICA taxes. Conference agreement The conference agreement follows the House bill and the Senate amendment. Effective date.\u2014The conference agreement follows the Senate amendment. 7. REPORTING REQUIREMENTS FOR PURCHASERS OF FISH (Sec. 1116(b) of the House bill.) Present law Under present law, a person engaged in a trade or business who make payments during the calendar year of $600 or more to a person for ”rent, salaries, wages, premiums, annu- ities, compensations, remunerations, emolu- ments, or other fixed or determinable gains, profits, or other income” must file an infor- mation return with the Internal Revenue Service reporting the amount of such pay- ments, as well as the name, address, and tax- payer identification number of the person to whom such payments were made (Code sec. 6041). A similar statement must also be fur- nished to the person to whom such payments were made. Treasury regulations provide that payments for ”merchandise” are not re- quired to be reported under this provision (Treas. reg. sec. 1.6041 3(d)). Consequently, information reporting is generally not re- quired with respect to purchases of fish or other forms of aquatic life. Information re- porting is required by a person engaged in a trade or business who, in the course of that trade or business, receives more than $10,000 in cash in one transaction (or several related transactions) (Code sec. 6050I). House bill The provision requires persons engaged in the trade or business of purchasing fish for resale who pay more than $600 in cash in a calendar year for fish or other forms of aquatic life from any seller engaged in the trade or business of catching fish to file in- formation reports with the Secretary regard- ing such purchases. A copy of the report must be provided to the seller. Effective date.\u2014The provision is effective for purchases made after December 31, 1996. Senate amendment No provision. Conference agreement The conference agreement follows the House bill. Effective date.\u2014The provision is effective for purchases made after December 31, 1997. 8. MODIFY RULES GOVERNING ISSUANCE OF TAX- EXEMPT BONDS FOR FIRST-TIME FARMERS (Sec. 1115 of the Senate amendment.) Present law Interest on bonds issued by State and local governments to provide financing to private persons is taxable unless an exception is pro- vided in the Internal Revenue Code. One such exception allows State and local govern- ments to issue bonds to finance loans to first-time farmers for the acquisition of land (and limited amounts of related depreciable farm property) if the purchasers will be the principal user of the property and will mate- rially participate in the farming operation in which the property is to be used. A first-time farmer is defined as an indi- vidual who has at no time owned farm land in excess of 15 percent of the median size of the farm in the county in which such land is located, and the fair market value of the land has not at any time when held by the individual exceeded $125,000. Under general rules governing issuance of tax-exempt bonds, working capital financing (including purchases from related parties) is precluded. House bill No provision. Senate amendment The Senate amendment makes two modi- fications to the rules governing issuance of tax-exempt bonds for first-time farmers. First, the definition of first-time farmer is CONGRESSIONAL RECORD \u2014 HOUSEH9616 August 1, 1996 broadened to include an individual who has at no time owned farm land in excess of 30 percent of the median size farm in the coun- ty. Second, these bonds may be used to fi- nance purchases between related parties pro- vide that: (1) the price paid reflects the fair market value of the property and, (2) the seller has no financial interest in the farm- ing operation conducted on the land after the bond-financed sale occurs. Effective date.\u2014For financing provided with bonds issued after the date of enactment. Conference agreement The conference agreement follows the Sen- ate amendment with a clarification relating to the circumstances in which a related sell- er is treated as having a continuing financial interest in bond-financed farmland. In gen- eral, the conferees intend that such a seller will not be treated as have a financial inter- est if the seller. (a) has no more than a ten-percent interest in the capital or profits in a partnership comprising the farm; (b) has no more than a ten-percent stock interest in a corporation comprising the farm; (c) has no more ten-percent of the bene- ficial interest in a trust comprising the farm; (d) is not a principal user of the farm; or (e) has no other direct or indirect owner- ship or use of the farm which has as a prin- cipal purposes, the avoidance of this provi- sion. The conferees further intend that issuers making loans to finance related party sales provide appropriate notice to borrowers of these restrictions and of the fact that bond- proceeds may not be re-transferred from sell- ers to purchasers as part of efforts (e.g., step- transactions) to transfer both property fi- nanced with the bond proceeds and the bond proceeds received by the seller. 9. CLARIFY TREATMENT OF NEWSPAPER DIS- TRIBUTORS AND CARRIERS AS DIRECT SELLERS (Sec. 1116 of the Senate amendment.) Present law For Federal tax purposes, there are two classifications of workers: a worker is either an employee of the service recipient or an independent contractor. Significant tax con- sequences result from the classification of a worker as an employee or independent con- tractor. These differences relate to withhold an employment tax requirements, as well as the ability to exclude certain types of com- pensation from income or take tax deduc- tions for certain expenses. Some of these consequences favor employee status, while others favor independent contractor status. For example, an employee may exclude from gross income employer-provided benefits such as pension, health, and group-term life insurance benefits. On the other hand, an independent contractor can establish his or her own pension plan and deduct contribu- tions to the plan. An independent contractor also has greater ability to deduct work-relat- ed expenses. Under present law, the determination of whether a worker is an employee or an inde- pendent contractor is generally made under a common-law facts and circumstances test that seeks to determine whether the service provider is subject to the control of the serv- ice recipient, not only as to the nature of the work performed, but the circumstances under which it is performed. Under a special safe harbor rule (sec. 530 of the Revenue Act of 1978), a service recipient may treat a worker as an independent contractor for em- ployment tax purposes even though the worker is an employee under the common- law test if the service recipient has a reason- able basis for treating the worker as an inde- pendent contractor and certain other re- quirements are met. In addition to the common-law test, there are also some persons who are treated by statute as either employees or independent contractors. For example, ”direct sellers” are deemed to be independent contractors. A direct seller is a person engaged in the trade or business of selling consumer products in the home or otherwise than in a permanent retail establishment, if substantially all the remuneration for the performance of the services is directly related to sales or other output rather than to the number of hours worked, and the services performed by the person are performed pursuant to a written contract between such person and the service recipient and such contract provides that the person will not be treated as an employee for Federal tax purposes. The newspaper industry has generally taken the position that newspaper distribu- tors and carriers should be treated as direct sellers for income and employment tax pur- poses. The Internal Revenue Service has gen- erally taken the position that the direct sell- er rules do not apply to newspaper distribu- tors and carriers operating under an agency distribution system (i.e., where the publisher retains title to the newspapers). House bill No provision. Senate amendment The Senate amendment clarifies the treat- ment of qualifying newspaper distributors and carriers as direct sellers. Under the Sen- ate amendment, a person engaged in the trade or business of the delivery or distribu- tion of newspapers or shopping news (includ- ing any services that are directly related to such trade or business such as solicitation of customers of collection of receipts) qualifies as a direct seller, provided substantially all the remuneration for the performance of the services is directly related to sales or other output rather than to the number of hours worked, and the services performed by the person are performed pursuant to a written contract between such person and the service recipient and such contract provides that the person will not be treated as an employee for Federal tax purposes. The Senate amend- ment is intended to apply to newspaper dis- tributors and carriers whether or not they hire others to assist in the delivery of news- papers. The Senate amendment also applies to newspaper distributors and carriers oper- ating under either a buy-sell distribution system (i.e., where the newspaper distribu- tors or carriers purchase the newspapers from the publisher) or an agency distribution system. For example, newspaper distributors and carriers operating under an agency dis- tribution system who are paid based on the number of papers delivered and have an ap- propriate written agreement qualify as di- rect sellers. The status of newspaper dis- tributors and carriers who do not qualify as direct sellers under the Senate amendment continue to be determined under present-law rules. No inference is intended with respect to the employment status of newspaper dis- tributors and carriers prior to the effective date of the Senate amendment. Further, the provision is intended to clarify the worker classification issue for income and employ- ment taxes only. The provision is not in- tended to have any impact whatsoever on the interpretation or applicability of Fed- eral, State, or local labor laws. Effective date\u2014The provision is effective with respect to services performed after De- cember 31, 1995. Conference agreement The conference agreement follows the Sen- ate amendment. 10. APPLICATION OF INVOLUNTARY CONVERSION RULES TO PROPERTY DAMAGED AS A RESULT OF PRESIDENTIALLY DECLARED DISASTERS (Sec. 1117 of the Senate amendment.) Present law A taxpayer may elect not to recognize gain with respect to property that is involuntar- ily converted if the taxpayer acquires within an applicable period property similar or re- lated in service or use. If the taxpayer does not replace the converted property with property similar or related in service or use, then gain generally is recognized. House bill No provision. Senate amendment Any tangible property acquired and held for productive use in a business is treated as similar or related in service or use to prop- erty that (1) was held for investment or for productive use in a business and (2) was in- voluntarily converted as a result of a Presi- dentially declared disaster. Effective date.\u2014The Senate amendment is effective for disasters for which a Presi- dential declaration is made after December 31, 1994, in taxable years ending after that date. Conference agreement The conference agreement follows the Sen- ate amendment, with the modification that the boundaries of the enterprise community for Oklahoma City designated by the Sec- retary of Housing and Urban Development on December 21, 1994, may be extended with re- spect to the census tracts located in the area damaged by the bombing of the Alfred P. Murrah Federal Building in Oklahoma City on April 19, 1995. The modification is effec- tive on the date of enactment. 11. ESTABLISH 15-YEAR RECOVERY PERIOD FOR RETAIL MOTOR FUELS OUTLET STORES (Sec. 1118 of the Senate amendment.) Present law Under present law, depreciation for prop- erty used in the retail gasoline trade is cal- culated under section 168 using a 15-year re- covery period and the 150-percent declining balance method. Nonresidential real prop- erty is depreciated using a 39-year recovery period and the straight-line method. It is un- derstood that taxpayers generally have taken the position that convenience stores and other buildings installed at retail motor fuels outlets have a 15-year recovery period. The IRS, in a position described in a recent Coordinated Issues Paper, generally limits the application of the 15-year recovery pe- riod to instances where the structure: (1) is 1,400 square feet or less or (2) meets a 50-per- cent test. The 50-percent test is met if: (1) 50 percent or more of the gross revenues that are generated from the building are derived from petroleum sales and (2) 50 percent or more of the floor space in the building is de- voted to petroleum marketing sales. House bill No provision. Senate amendment The Senate amendment provides that 15- year property includes any section 1250 prop- erty (generally, depreciable real property) that is a retail motor fuels outlet (whether or not food or other convenience items are sold at the outlet). A retail motor fuels out- let does not include any facility related to petroleum or natural gas trunk pipelines or to any section 1250 property used only to an insubstantial extent in the retail marketing of petroleum or petroleum products. Effective date.\u2014The provision is effective for property placed in service on or after the date of enactment and to which the amend- ments made by section 201 of the Tax Reform CONGRESSIONAL RECORD \u2014 HOUSE H9617August 1, 1996 3 See Treas. Reg. sec. 1.119 1(a)(2)(ii)(c) and 1.119 1(f)(Example 7). 4 The Internal Revenue Service (”IRS”) has devel- oped a list of 20 factors that may be examined in de- termining whether an employer-employee relation- ship exists. Rev. Rul. 87 41, 1987 1, C.B. 296. 5 Employee or Independent Contractor?, at 3 4 (July 15, 1996)(hereinafter the ”IRS Training Guide”). 6 IRS Training Guide, at 3 6; TAM 9443002 (Decem- ber 3, 1993). 7 See e.g., Lambert’s Nursery and Landscaping, Inc. v. U.S., 894 F.2d 154 (5th Cir. 1990) (”It is not nec- essary to determine whether [taxpayer’s] workers were independent contractors or employees for em- ployment tax purposes.”) J & J Cab Service, Inc. v. U.S., 75 AFTR2d No. 95 618 (W.D. N.C. 1995) (”Section 530 relief may be granted irrespective of whether in- dividuals were incorrectly treated as other than em- ployees”); Queensgate Dental Family Practice, Inc. v. U.S., 91 2 USTC No. 50,536 (M.D. Pa. 1991) (disagree- ing with the IRS’ contention that the court must first determine worker classification before apply- ing section 530). 8 H. Rept. No. 1748 (95th Cong., 2d Sess., 5 (1978)). The conference agreement to the Revenue Act of 1978 adopted the provisions of the House bill and therefore incorporates this legislative history. 9 See e.g., TAM 9443002 (December 3, 1993); TAM 9330007 (April 28, 1993). 10 IRS Training Guide, at 3 19. Act of 1986 apply (i.e., property subject to the modified Accelerated Cost Recovery Sys- tem of sec. 168). The taxpayer may elect the application of the provision for property placed in service prior to the date of enact- ment. Conference agreement The conference agreement follows the Sen- ate amendment. A taxpayer may elect the application of the provision for qualified property placed in service prior to the date of enactment. The conferees clarify that if a taxpayer has al- ready treated qualified property that was placed in service before the date of enact- ment as 15-year property, the taxpayer will be deemed to have made the election with re- spect to such property. 12. TREATMENT OF LEASEHOLD IMPROVEMENTS (Sec. 1119 of the Senate amendment.) Present law A taxpayer generally recovers the adjusted basis of property for purposes of determining gain or loss upon the disposition of the prop- erty. Upon the termination of a lease, the adjusted basis of leasehold improvements that were made, but are not retained, by a lessee are taken into account to compute gain or loss by the lessee. The proper treat- ment of the adjusted basis of improvements made by a lessor upon termination of a lease is less clear. It appears that it is the position of the Internal Revenue Service that lease- hold improvements made by a lessor that constitute structural components of a build- ing must be continued to be depreciated in the same manner as the underlying real property, even if such improvements are re- tired at the end of the lease term. Some les- sors, on the other hand, may be taking the position that a leasehold improvement is a property separate and distinct from the un- derlying building and that an abandonment loss under section 165 is allowable at the end of the lease term for the adjusted basis of the property. House bill No provision. Senate amendment A lessor of leased property that disposes of a leasehold improvement which was made by the lessor for the lessee of the property may take the adjusted basis of the improvement into account for purposes of determining gain or loss, if the improvement is irrev- ocably disposed of or abandoned by the lessee at the termination of the lease. Effective date.\u2014The provision is effective for leasehold improvements disposed of after June 12, 1996. No inference is intended as to the proper treatment of such dispositions be- fore June 13, 1996. Conference agreement The conference agreement follows the Sen- ate amendment. The conferees wish to clar- ify that the provision does not apply to the extent section 280B of present law applies to the demolition of a structure, a portion of which may include leasehold improvements. 13. INCREASE DEDUCTIBILITY OF BUSINESS MEAL EXPENSES OF CERTAIN SEAFOOD PROCESSING FACILITIES (Sec. 1120 of the Senate amendment.) Present law In general, 50 percent of meal and enter- tainment expenses incurred in connection with a trade or business that are ordinary and necessary (and not lavish or extrava- gant) are deductive (sec. 274). Food or bev- erage expenses are fully deductible provided that they are (1) required by Federal law to be provided to crew members of a commer- cial vessel, (2) provided to crew members of similar commercial vessels not operated on the oceans, or (3) provided on certain oil or gas platforms or drilling rigs. House bill No provision. Senate amendment The Senate amendment adds remote sea- food processing facilities located in the Unit- ed States north of 53 degrees north latitude to the present-law of entities not subject to the 50 percent limitation on the deductibil- ity of business meals. Consequently, these expenses are fully deductible. A seafood processing facility is remote when there are insufficient eating facilities in the vicinity of the employer’s premises.3 Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Conference agreement The conference agreement does not include the Senate amendment provision. 14. PROVIDE A LOWER RATE OF TAX ON CERTAIN HARD CIDERS (Sec. 1121 of the Senate amendment.) Present law Distilled spirits are taxed at a rate of $13.50 per proof gallon; beer is taxed at a rate of $18 per barrel (approximately 58 cents per gal- lon); and still wines of 14 percent alcohol or less are taxed at a rate of $1.07 per wine gal- lon. Higher rates of tax are applied to wines with great alcohol content and sparking wines. Certain small wineries may claim a credit against the excise tax on wine of 90 cents per wine gallon on the first 100,000 gallons on wine produced annually. Certain small brew- eries pay a reduced tax of $7.00 per barrel (approximately 22.6 cents per gallon) on the first 60,000 barrels of beer produced annually. Apple cider containing alcohol is classified and taxed as wine. House Bill No provision. Senate amendment The Senate amendment adjusts the tax rate on apple cider having an alcohol content of no more than seven percent to 22.6 cents per gallon. Effective date.\u2014The provision is effective for apple cider removed after December 31, 1996. Conference agreement The conference agreement does not include the Senate amendment. 15. MODIFICATIONS TO SECTION 530 OF THE REVENUE ACT OF 1978 (Sec. 1122 of the Senate amendment.) Present law In general For Federal tax purposes, there are two classifications of workers: a worker is either an employee of the service recipient or an independent contractor. In general, the de- termination of whether an employer-em- ployee relationship exists for Federal tax purposes is made under a common-law test. Treasury regulations provide that an em- ployer-employee relationship generally ex- ists if the person contracting for services has the right to control not only the result of the services, but also the means by which that result is accomplished.4 Section 530 With increased enforcement of the employ- ment tax laws beginning in the late 1960s, controversies developed between the IRS and taxpayers as to whether businesses had cor- rectly classified certain workers as self em- ployed rather than as employees. In response to this problem, the Congress enacted sec- tion 530 of the Revenue Act of 1978 (”section 530”). That provision generally allows a tax- payer to treat a worker as not being an em- ployee for employment tax purposes (but not income tax purposes), regardless of the indi- vidual’s actual status under the common-law test, unless the taxpayer has no reasonable basis for such treatment. It is the position of the IRS, based on legis- lative history, that section 530 can only apply after a determination has been made that a worker is an employee under the com- mon-law test.5 The IRS does not require the taxpayer to concede or agree to a determina- tion that the worker is an employee.6 How- ever, several courts that have explicitly con- sidered the question have held that section 530 relief is available irrespective of whether there has been an initial determination of worker classification under the common law.7 Under section 530, a reasonable basis for treating a worker as an independent contrac- tor is considered to exist if the taxpayer (1) reasonably relied on published rulings or ju- dicial precedent, (2) reasonably relied on past IRS audit practice with respect to the taxpayer, (3) reasonably relief on long-stand- ing recognized practice of a significant seg- ment of the (industry of which the taxpayer is a member, or (4) has any other reasonable basis for treating a worker as an independent contractor. The legislative history states that section 530 is to be ”construed liberally in favor of taxpayers.” 8 Under section 530, reliance on judicial precedent, published rulings, technical ad- vice with respect to the taxpayer, or a letter ruling to the taxpayer is deemed a reason- able basis for treating a worker as an inde- pendent contractor. If a taxpayer relies on this safe harbor, the IRS will look to see whether the facts of the judicial precedent or published ruling are sufficiently similar to the taxpayer’s facts.9 Under the prior-audit safe harbor, reason- able reliance is generally found to exist if the IRS failed to raise an employment tax issue on audit, even though the audit was not related to employment tax matters. A taxpayer can also rely on a prior audit in which an employment tax issue was raised, but was resolved in favor of the taxpayer. According to the IRS, an ”audit” must in- volve an examination of the taxpayer’s books and records; mere inquiries from an IRS service center or a ”compliance check” to determine whether a taxpayer has filed all returns will not suffice.10 In order to rely on a prior audit, the IRS requires that the tax- payer must have treated the workers at issue CONGRESSIONAL RECORD \u2014 HOUSEH9618 August 1, 1996 11 IRS Training Guide, at 3 20. 12 IRS Training Guide, at 3 24. 13 IRS Training Guide, at 3 24. 14 IRS Training Guide, at 3 25. 15 In re Bentley, 73 AFTR2d No. 94 667 (Bkrtcy. E.D. Tenn. 1994). 16 REAG, Inc. v. U.S., 801 F.Supp. 494 (W.D. Okla. 1992). 17 IRS Training Guide, at 3 11. 18 801 F.Supp. 494 (W.D. Okla. 1992). 19 785 F.Supp. 913 (D. Kan. 1992). 20 IRS Training Guide, at 3 6. 21 H. Rept. No. 1748 (95th Cong., 2d Sess., 5 (1978)). The conference agreement to the Revenue Act of 1978 adopted the provisions of the House bill and therefore incorporates this legislative history. 22 900 F.Supp. 101 (E.D. Mich. 1995). See also REAG. Inc. v. U.S., 801 F.Supp. 494 (W.D. Okla. 1992) (a tax- payer need only show a substantial rational basis for its decision to treat the workers as independent con- tractors). 23 77 F.3d 236 (8th Cir. 1996) See also Springfield v. U.S., 1996 U.S. App. LEXIS 15879 (9th Cir. 1996) (tax- payer has the burden to show it satisfies the require- ments of section 530 by a preponderance of the evi- dence). 24 For example, the taxpayer must establish a prima facie case that it reasonably satisfies the re- quirements of section 530 for not treating the work- er as an employee, including the reporting consist- ency and consistency among workers with substan- tially similar positions requirements, and the re- quirement that the taxpayer have a reasonable basis for not treating the worker as an employee. 25 The provision is generally intended to codify the holding in McClellan v. U.S., discussed above, with respect to the burden of proof in section 530 cases. as independent contractors during the period covered by the prior audit.11 A taxpayer is also treated as having a rea- sonable basis for treating a worker as an independent contractor under section 530 if the taxpayer reasonably relied on long- standing recognized practice of a significant segment of the industry in which the tax- payer is engaged. Section 530 does not specify a period of time in order for a practice to be long stand- ing. The IRS Training Guide provides that a practice is presumed to be long standing if it existed for 10 years or more.12 the IRS Train- ing Guide recognizes that a taxpayer may use the industry practice safe harbor even if it began business after 1978 or the industry came into existence after 1978.13 However, the IRS Training Guide provides that if the industry practice changed by the time the taxpayer joined the industry, the taxpayer cannot rely on the former practice. Neither section 530, nor the legislative his- tory, provides a clear standard as to what constitutes a significant segment of a tax- payer’s industry. The IRS Training Guide provides that the determination will be based on the facts and circumstances.14 A few courts have addressed this issue. In one case, the IRS argued that a significant seg- ment of the industry means more than 50 percent of the industry.15 However, that court held that a significant segment is less than a majority of the firms in an industry. Another court held that 15 out of 84 industry respondents (18 percent) treating workers as independent contractors would constitute a significant segment of an industry.16 Even if a taxpayer is unable to rely on one of the three safe harbors described above, a taxpayer may still be entitled to relief under section 530 if the taxpayer has any other rea- sonable basis for treating a worker as an independent contractor. The relief under section 530 is available with respect to an individual only if certain additional requirements are satisfied. The taxpayer must not have treated the individ- ual as an employee for any period, and for periods since 1978 all Federal tax returns, in- cluding information returns, must have been filed on a basis consistent with treating such individual as an independent contractor. Further, the taxpayer (or a predecessor) must not have treated any individual hold- ing a substantially similar position as an employee for purposes of employment taxes for any period beginning after 1977. Whether workers are similarly situated is dependent on the facts and circumstances. The IRS Training Guide states that a ”sub- stantially similar position exists if the job functions, duties, and responsibilities are substantially similar and the control and su- pervision of those duties and responsibilities is substantially similar.”17 There have been a few court decisions ad- dressing this issue. For example, in REAG, Inc. v. U.S.,18 the court held that the position of appraisers who were owner-officers of the business was not substantially similar to ap- praisers who were not owners since the owner-officers had managerial responsibil- ities. By contrast, in Lowen Corp. v. U.S.,19 the court found that all workers engaged in the business of selling real estate signs had substantially similar positions even though some were salaried and had to file daily re- ports while others were paid by commission and did not have to file such reports. The IRS Training Guide states that the burden of proof is on the taxpayer to dem- onstrate that it had a reasonable basis for treating a worker as an independent contrac- tor.20 However, in light of the Congressional instruction in the legislative history to con- strue section 530 liberally,21 courts appear to be split as to how stringent a burden to apply. In McClellan v. U.S.,22 the court held that section 530 requires the ”taxpayer to come forward with an explanation and enough evi- dence to establish prima facie grounds for a finding of reasonableness. . . . [T]his thresh- old burden is relatively low, and can be met with any reasonableness showing. Once the taxpayer has made this prima facie showing, the burden then shifts to the IRS to verify or refute the taxpayer’s explanation.” By con- trast, in Boles Trucking, Inc., v. U.S.,23 the court held that the burden is on the taxpayer to show, based on a preponderance of the evi- dence, that it had a reasonable basis for treating workers as independent contractors. Under section 1706 of the Tax Reform Act of 1986, section 530 does not apply in the case of an individual who, pursuant to an ar- rangement between the taxpayer and an- other person, provides services for such other person as an engineer; designer, drafter, computer programmer, systems analyst, or other similarly skilled worker engaged in a similar line of work. Thus, the determina- tion of whether such individuals are employ- ees or self employed is made in accordance with the common-law test. House bill No provision. Senate amendment The Senate amendment makes several clarifications of and modifications to section 530. First, under the Senate amendment, a worker does not have to otherwise be an em- ployee of the taxpayer in order for section 530 to apply. The provision is intended to re- verse the IRS position, as stated in the IRS Training Guide, that there first must be a determination that the worker is an em- ployee under the common law standards be- fore application of section 530. The Senate amendment modifies the prior audit safe harbor so that taxpayers may not rely on an audit commencing after December 31, 1996, unless such audit included an exam- ination for employment tax purposes of whether the worker involved (or any worker holding a position substantially similar to the position held by the worker involved) should be treated as an employee of the tax- payer. The provision does not affect the abil- ity of taxpayers to rely on prior audits that commenced before January 1, 1997, even though the audit was not related to employ- ment tax matters, as under present law. Under the Senate amendment, section 530 does not apply with respect to a worker un- less the taxpayer and the worker sign a statement (at such time and in such manner as the Secretary may prescribe) which pro- vides that the worker will not be treated as an employee for employment tax purposes. Also, the Senate amendment provides that an officer or employee of the IRS must, at (or before) the commencement of an audit involving worker classification issues, pro- vide the taxpayer with written notice of the provisions of section 530. The Senate amendment makes a number of changes to the industry practice safe harbor. First, the Senate amendment provides that a significant segment of the taxpayer’s indus- try under the industry practice safe harbor does not require a reasonable showing of the practice of more than 25 percent of an indus- try (determined without taking into account the taxpayer). The provision is intended to be a safe harbor; a lower percentage may constitute a significant segment of the tax- payer’s industry based on the particular facts and circumstances. The Senate amendment also provides that an industry practice need not have continued for more than 10 years in order for the indus- try practice to be considered long standing. As with the significant segment safe harbor, this provision is intended to be a safe harbor; an industry practice in existence for a short- er period of time may be considered long standing based on the particular facts and circumstances. In addition, the Senate amendment clarifies that an industry prac- tice will not fail to be treated as long stand- ing merely because such practice began after 1978. Consequently, the provision clarifies that new industries can take advantage of section 530. The Senate amendment modifies the bur- den of proof in section 530 cases by providing that if a taxpayer establishes a prima facie case that it was reasonable not to treat a worker as an employee for purposes of sec- tion 530,24 the burden of proof shifts to the IRS with respect to such treatment.25 In order for the shift in burden of proof to occur, the taxpayer must fully cooperate with reasonable requests by the IRS for in- formation relevant to the taxpayer’s treat- ment of the worker as an independent con- tractor under section 530. It is intended that a request by the IRS will not be treated as reasonable if complying with the request would be impracticable given the particular circumstances and the relative costs in- volved. The shift in the burden of proof does not apply for purposes of determining wheth- er the taxpayer had any other reasonable basis for treating the worker as an independ- ent contractor, but does apply to all other aspects of section 530. So, for example, pro- vided the taxpayer establishes its prima facie case and fully cooperates with the IRS’ reasonable requests, the burden of proof shifts to the IRS with respect to all other as- pects of section 530, including whether the taxpayer had a reasonable basis for treating the worker as an independent contractor under the judicial or administrative prece- dent, prior audit, or long-standing industry practice safe harbors, whether the taxpayer filed all Federal tax returns on a basis con- sistent with treating the worker as an inde- pendent contractor, and whether the tax- payer treated any worker holding a substan- tially similar position as an employee. No inference is intended with respect to the ap- plication of the burden of proof in section 530 CONGRESSIONAL RECORD \u2014 HOUSE H9619August 1, 1996 cases prior to the effective date of this provi- sion. The Senate amendment also provides that if a taxpayer prospectively changes its treat- ment of workers from independent contrac- tors to employees for employment tax pur- poses, such a change will not affect the ap- plicability of section 530 with respect to such workers for prior periods. Finally, the Senate amendment provides that, in determining whether a worker holds a substantially similar position to another worker, the relationship of the parties must be one of the factors taken into account. Effective date.\u2014The provisions generally apply to periods after December 31, 1996. The provision regarding the burden of proof ap- plies to disputes with respect to periods after December 31, 1996. In the case of workers en- gaged to perform services for a taxpayer be- fore January 1, 1997, the provision requiring a written statement that such workers are not employees for employment tax purposes is effective for periods after December 31, 1997 (unless the taxpayer elects to apply the provision earlier). The provision requiring the IRS to notify taxpayers of the provisions of section 530 applies to audits commencing after December 31, 1996. Conference agreement The conference agreement follows the Sen- ate amendment, with the following modifica- tions: The conference agreement deletes the writ- ten statement requirement in the Senate amendment. The conferees wish to clarify the notice that the IRS must provide to taxpayers at (or before) the commencement of an audit inquiry involving worker classification is- sues. The conferees recognize that, in many cases, the portion of an audit involving worker classification issues will not arise until after the examination of the taxpayer begins. In that case, the notice need only be given at the time the worker classification issue is first raised with the taxpayer. With respect to the burden of proof in sec- tion 530 cases, the conferees intend that a re- quest for information by the IRS will not be treated as reasonable if (1) it does not relate to the particular basis on which the taxpayer relied for establishing its reasonable basis, or (2) complying with the request would be impracticable given the particular cir- cumstances and the relative costs involved. With respect to the substantially similar position provision, the conferees clarify that consideration of the relationship between a taxpayer and a worker includes consider- ation of the degree of supervision and con- trol of the worker by the taxpayer. 16. EMPLOYEE HOUSING FOR CERTAIN MEDICAL RESEARCH INSTITUTIONS (Sec. 1123 of the Senate amendment.) Present law Under Code section 119(d), employees of an educational institution described in Code section 170(b)(1)(A)(ii) do not have to include in income the fair market value of campus housing as long as the rent is at least five percent of the appraised value of the hous- ing. If the rent is less than the five-percent safe harbor, there is inclusion into income to the extent that the rent that was charged falls short of the lesser of five percent of the appraised value or the average of rents paid by individuals (other than employees or stu- dents of the educational institution) for similar lodging provided by the institution. House bill No provision. Senate amendment The Senate amendment treats as ”edu- cational institutions” for purposes of Code section 119(d) certain medical research insti- tutions (”academic health centers”) that en- gage in basic and clinical research, have a regular faculty and teach a curriculum in basic and clinical research to students in at- tendance at the institution. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1995. Conference agreement The conference agreement follows the Sen- ate amendment, with a further modification that treats as ”educational institutions” for purposes of Code section 119(d) certain enti- ties (”university systems”) organized under State law composed of public institutions de- scribed in Code section 170(b)(1)(A)(ii). The conferees intend that, for purposes of the present-law requirement of Code section 119(d)(3)(A) that the employee housing be provided on (or in the proximity of) a cam- pus of the employer, a campus of one of the component educational institutions of a uni- versity system should be considered to be a campus of the university system. B. EXTENSION OF CERTAIN EXPIRING PROVISIONS 1. WORK OPPORTUNITY TAX CREDIT (Sec. 1201 of House bill and the Senate amendment.) Present law Prior to January 1, 1995, the targeted jobs tax credit was available on an elective basis for employers hiring individuals from one or more of nine targeted groups. The credit gen- erally was equal to 40 percent of qualified first-year wages (up to $6,000) for maximum credit of $2,400. House bill General rules.\u2014The House bill replaces the targeted jobs tax credit with the ”work op- portunity tax credit”. The new credit is available on an elective basis for employers hiring individuals from one or more of seven targeted groups. The credit generally is equal to 35 percent of qualified first-year wages. Minimum employment period.\u2014Under the House bill, no credit is allowed for wages paid unless the eligible individual is em- ployed by the employer for at least 180 days (20 days in the case of a qualified summer youth employee) or 500 hours (120 hours in the case of a qualified summer youth em- ployee). Certification of members of targeted groups.\u2014 In general, under the House bill, an individ- ual is not treated as a member of a targeted group unless: (1) on or before the day the in- dividual begins work for the employer, the employer, the employer received in writing a certification from the designated local agen- cy that the individual is a member of a spe- cific targeted group, or (2) on or before the day the individual is offered work with the employer, a pre-screening notice is com- pleted with respect to that individual by the employer and within 14 days after the indi- vidual begins work for the employer, the em- ployer submits such notice, signed by the employer and the individual under penalties of perjury, to the designated local agency as part of a written request for certification. The pre-screening notice will contain the in- formation provided to the employer by the individual that forms the basis of the em- ployer’s belief that the individual is a mem- ber of a targeted group. Effective date.\u2014Wages paid or incurred to a qualified individual who begins work for an employer after June 30, 1996, and before July 1, 1997. Senate amendment General rules.\u2014Same as the House bill with the addition of an eighth targeted group, in- dividuals 18 to 24 who are in families that have been receiving food stamps for at least a three-month period ending on the date of hire. Minimum employment period.\u2014Under the Senate amendment, no credit is allowed for wages paid unless the eligible individual is employed by the employer for at least 180 days (20 in the case of a qualified summer youth employee) or 375 hours (120 hours in the case of a qualified summer youth em- ployee). Certification of members of targeted groups.\u2014 Same as House bill except that it replaces the 14-day rule with a 21-day rule for submis- sion of pre-screening notice. Effective date.\u2014Wages paid or incurred to a qualified individual who begins work for an employer after September 30, 1996, and before October 1, 1997. Conference agreement General rules.\u2014The conference agreement generally follows the Senate amendment with one modification to the food stamps category. Under the modification, members of the eighth targeted group are individuals aged 18 24 who are in families that have been receiving food stamps for at least a six- month (rather than a three-month) period ending on the date of hire. In the case of families that cease to be eligible for food stamps under section 6(o) of the Food Stamp Act of 1977, the six-month requirement is re- placed with a requirement that the family has been receiving food stamps for at least three of the five months ending on the date of hire. Minimum employment period.\u2014Under the conference agreement, no credit is allowed for wages paid unless the eligible individual is employed by the employer for at least 180 days (20 in the case of a qualified summer youth employee) or 400 hours (120 hours in the case of a qualified summer youth em- ployee). Certification of members of targeted groups.\u2014 The conference agreement follows the Sen- ate amendment. Effective date.\u2014The conference agreement follows the Senate amendment. 2. EMPLOYER-PROVIDED EDUCATIONAL ASSISTANCE (Sec. 1202 of the House bill and the Senate amendment.) Present and prior law For taxable years beginning before Janu- ary 1, 1995, an employee’s gross income and wages did not include amounts paid or in- curred by the employer for educational as- sistance provided to the employee if such amounts were paid or incurred pursuant to an educational assistance program that met certain requirements. This exclusion, which expired for taxable years beginning after De- cember 31, 1994, was limited to $5,250 of edu- cational assistance with respect to an indi- vidual during a calendar year. The exclusion applied whether or not the education was job related. In the absence of this exclusion, edu- cational assistance is excludable from in- come only if it is related to the employee’s current job. The provision extends the exclusion for employer-provided educational assistance for taxable years beginning after December 31, 1994, and before January 1, 1997. After De- cember 31, 1995, the exclusion would not apply with respect to graduate education. To the extent employers have previously filed Forms W 2 reporting the amount of educational assistance provided as taxable wages, present Treasury regulations require the employer to file Forms W 2c (i.e., cor- rected Forms W 2) with the Internal Reve- nue Service.26 It is intended that employers CONGRESSIONAL RECORD \u2014 HOUSEH9620 August 1, 1996 26 Treasury regulation section 31.6051 1(c). 27 The Omnibus Budget Reconciliation Act of 1993 included a special rule designed to gradually recom- pute a start-up firm’s fixed-base percentage based on its actual research experience. Under this special rule, a start-up firm (i.e., any taxpayer that did not have gross receipts in at least three years during the 1984 1988 period) will be assigned a fixed-base per- centage of 3 percent for each of its first five taxable years after 1993 in which it incurs qualified research expenditures. In the event that the research credit is extended beyond the scheduled June 30, 1995 expira- tion date, a start-up firm’s fixed-base percentage for its sixth through tenth taxable years after 1993 in which it incurs qualified research expenditures will be a phased-in ratio based on its actual research ex- perience. For all subsequent taxable years, the tax- payer’s fixed-base percentage will be its actual ratio of qualified research expenditures to gross receipts for any five years selected by the taxpayer from its fifth through tenth taxable years after 1993 (sec. 41(c)(3)(B)). 28 In applying the start-up firm rules, the test is whether a taxpayer, in fact, both incurred research expenses (which under the present-law rules would be qualified research expenses) and had gross re- ceipts in a particular year, not whether the taxpayer claimed a research tax credit for that year. also be required to provide copies of Form W 2c to affected employees. The Secretary is directed to establish ex- pedited procedures for the refund of any overpayment of taxes paid on excludable educational assistance provided in 1995 and 1996, including procedures for waiving the re- quirement that an employer obtain an em- ployee’s signature if the employer dem- onstrates to the satisfaction of the Secretary that any refund collected by the employer on behalf of the employee will be paid to the employee. Because the exclusion is extended, no in- terest and penalties should be imposed if an employer failed to withhold income and em- ployment taxes on excludable educational assistance or failed to report such edu- cational assistance. Further, it is intended that the Secretary establish expedited proce- dures for refunding any interest and pen- alties relating to educational assistance pre- viously paid. Effective date.\u2014The provision is effective with respect to taxable years beginning after December 31, 1994, and before January 1, 1997. Senate amendment The provision is the same as the House bill, except that the exclusion is extended for an additional year, through December 31, 1997, and the Senate amendment does not preclude application of the exclusion to graduate courses. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1994, and before January 1, 1998. Conference agreement The conference agreement follows the House bill, with the following modifications. The exclusion expires with respect to courses beginning after May 31, 1997. The exclusion for graduate courses applies in 1995. In 1996, the exclusion for graduate courses does not apply to courses beginning after June 30, 1996. 3. PERMANENT EXTENSION OF FUTA EXEMPTION FOR ALIEN AGRICULTURAL WORKERS (Sec. 1203 of the House bill.) Present law Generally, the Federal unemployment tax (”FUTA”) is imposed on farm operators who (1) employ 10 or more agricultural workers for some portion of 20 different days, each beginning in a different calendar week or (2) have a quarterly payroll for agricultural services of at least $20,000. An exclusion from FUTA was provided, however, for labor per- formed by an alien admitted to the United States to perform agricultural labor under section 214(c) and 101(a)(15)(H) of the Immi- gration and Nationality Act. This exclusion was effective for labor performed before Jan- uary 1, 1995. House bill The House bill permanently extends the FUTA exemption for alien agricultural workers. Effective date.\u2014Labor performed on or after January 1, 1995. Senate amendment No provision. Conference agreement The conference agreement includes the House bill provision. 4. RESEARCH AND EXPERIMENTAL TAX CREDIT (Sec. 1203 of the Senate amendment.) Present and prior law General rule Prior to July 1, 1995, section 41 of the In- ternal Revenue Code provided for a research tax credit equal to 20 percent of the amount by which a taxpayer’s qualified research ex- penditures for a taxable year exceeded its base amount for that year. The research tax credit expired and does not apply to amounts paid or incurred after June 30, 1995. A 20-percent research tax credit also ap- plied to the excess of (1) 100 percent of cor- porate cash expenditures (including grants or contributions) paid for basic research con- ducted by universities (and certain nonprofit scientific research organizations) over (2) the sum of (a) the greater of two minimum basic research floors plus (b) an amount reflecting any decrease in nonresearch giving to uni- versities by the corporation as compared to such giving during a fixed-base period, as ad- justed for inflation. This separate credit computation is commonly referred to as the ”university basic research credit” (see sec. 41(e)). Computation of allowable credit Except for certain university basic re- search payments made by corporations, the research tax credit applies only to the extent that the taxpayers’ qualified research ex- penditures for the current taxable year ex- ceed its base amount. The base amount for the current year generally is computed by multiplying the taxpayer’s ”fixed-base per- centage” by the average amount of the tax- payer’s gross receipts for the four preceding years. If a taxpayer both incurred qualified research expenditures and had gross receipts during each of at least three years from 1984 through 1988, then its ”fixed-base percent- age” is the ratio that its total qualified re- search expenditures for the 1984 1988 period bears to its total gross receipts for that pe- riod (subject to a maximum ratio of .16). All other taxpayers (so-called ”start-up firms”) are assigned a fixed-base percentage of 3 per- cent.27 In computing the credit, a taxpayer’s base amount may not be less than 50 percent of its current-year qualified research expendi- tures. To prevent artificial increases in research expenditures among commonly controlled or otherwise related entities, research expendi- tures and gross receipts of the taxpayer are aggregated with research expenditures and gross receipts of certain related persons for purposes of computing any allowable credit (sec. 41(f)(l)). Special rules apply for comput- ing the credit when a major portion of a business changes hands, under which quali- fied research expenditures and gross receipts for periods prior to the change or ownership of a trade or business are treated as trans- ferred with the trade or business that gave rise to those expenditures and receipts for purposes of recomputing a taxpayer’s fixed- base percentage (sec. 41(f)(3)). Eligible expenditures Qualified research expenditures eligible for the research tax credit consist of (1) ”in- house” expenses of the taxpayer for wages and supplies attributable to qualified re- search; (2) certain time-sharing costs for computer use in qualified research; and (3) 65 percent of amounts paid by the taxpayer for qualified research conducted on the tax- payer’s behalf (so-called ”contract research expenses”). To be eligible for the credit, the research must not only satisfy the requirements of present-law section 174 but must be under- taken for the purpose of discovering informa- tion that is technological in nature, the ap- plication of which is intended to be useful in the development of a new or improved busi- ness component of the taxpayer, and must pertain to functional aspects, performance, reliability, or quality of a business compo- nent. Research does not qualify for the cred- it if substantially all of the activities relate to style, taste, cosmetic, or seasonal design factors (sec. 41(d)(3)). In addition, research does not qualify for the credit if conducted after the beginning of commercial produc- tion of the business component, if related to the adaptation of an existing business com- ponent to a particular customer’s require- ments, if related to the duplication of an ex- isting business component from a physical examination of the component itself or cer- tain other information, or if related to cer- tain efficiency surveys, market research or development, or routine quality control (sec. 41(d)(4)). Expenditures attributable to research that is conducted outside the United States do not enter into the credit computation. In ad- dition, the credit is not available for re- search in the social sciences, arts, or human- ities, nor is it available for research to the extent funded by any grant, contract, or oth- erwise by another person (or governmental entity). House bill No provision. Senate amendment The Senate amendment extends the re- search tax credit for 18 months\u2014i.e., for the period July 1, 1996, through December 31, 1997 (with a special rule for taxpayers who elect the alternative incremental research credit regime, as described below). The Senate amendment also expand the definition of ”start-up firms” under section 41(c)(3)(B)(I) to include any firm if the first taxable year in which such firm had both gross receipts and qualified research ex- penses began after 1983.28 In addition, the Senate amendment allow taxpayers to elect an alternative incremen- tal research credit regime. If a taxpayer elects to be subject to this alternative re- gime, the taxpayer is assigned a three-tiered fixed-base percentage (that is lower than the fixed-base percentage otherwise applicable under present law) and the credit rate like- wise is reduced. Under the alternative credit regime, a credit rate of 1.65 percent applies to the extent that a taxpayer’s current-year research expenses exceed a base amount computed by using a fixed-base percentage of 1 percent (i.e., the base amount equals 1 per- cent of the taxpayer’s average gross receipts for the four preceding years) but do not ex- ceed a base amount computed by using a fixed-base percentage of 1.5 percent. A credit rate of 2.2 percent applies to the extent that a taxpayer’s current-year research expenses exceed a base amount computed by using a fix-base percentage of 1.5 percent but do not exceed a base amount computed by using a fixed-base percentage of 2 percent. A credit rate of 2.75 percent applies to the extent that CONGRESSIONAL RECORD \u2014 HOUSE H9621August 1, 1996 29 To the extent that the orphan drug tax credit could not be used by reason of the minimum tax limitation, the taxpayer’s minimum tax credit was increased (sec. 53(d)(1)(B)(iii)). 30 The amount of the deduction allowable for a tax- able year with respect to a charitable contribution may be reduced depending on the type of property contributed, the type of charitable organization to which the property is contributed, and the income of the taxpayer (sec. 170(b) and 170(e)). 31 As part of the Omnibus Budget Reconciliation Act of 1993, Congress eliminated the treatment of contributions of appreciated property (real, per- sonal, and intangible) as a tax preference for alter- native minimum tax (AMT) purposes. Thus, if a tax- payer makes a gift to charity of property (other than short-term gain, inventory, or other ordinary income property, or gifts to private foundations) that is real property, intangible property, or tan- gible personal property the use of which is related to the donee’s tax-exempt purpose, the taxpayer is al- lowed to claim the same fair-market-value deduc- tion for both regular tax and AMT purposes (subject to present-law percentage limitations). a taxpayer’s current-year research expenses exceed a base amount computed by using a fixed-base percentage of 2 percent. An elec- tion to be subject to this alternative incre- mental credit regime may be made only for a taxpayer’s first taxable year beginning after June 30, 1996, and such an election ap- plies to that taxable year and all subsequent years unless revoked with the consent of the Secretary of the Treasury. Under the amend- ment, if a taxpayer elects the alternative in- cremental credit regime for its first taxable year beginning after June 30, 1996, and before July 1, 1997, then all qualified research ex- penses paid or incurred during such taxable year and the first six months of the follow- ing taxable year are treated as qualified re- search expenses for purposes of computing the taxpayer’s credit under the alternative incremental credit regime. The Senate amendment also provide for a special rule for payments made to certain nonprofit research consortia. Under this spe- cial rule, 75 percent of amounts paid to a re- search consortium for qualified research is treated as qualified research expenses eligi- ble for the research credit (rather than 65 percent under the present-law section 41(b)(3) rule governing contract research expenses) if (1) such research consortium is a tax-exempt organization that is described in section 501(c)(3) (other than a private foundation) or section 501(c)(6) and is organized and oper- ated primarily to conduct scientific re- search, and (2) such qualified research is con- ducted by the consortium on behalf of the taxpayer and one or more persons not relat- ed to the taxpayer. Effective date.\u2014Under the Senate amend- ment, extension of the research tax credit is effective for expenditures paid or incurred during the period July 1, 1996, through De- cember 31, 1997 (with a special rule for tax- payers who elect the alternative incremental research credit regime). The modification to the definition of ”start-up firms” is effective for taxable years ending after June 30, 1996. Taxpayers may elect the alternative re- search credit regime (with lower fixed-base percentages and lower credit rates) for the first taxable year beginning after June 30, 1996, and before July 1, 1997, and the credit is available with respect to all qualified re- search expenses incurred during such taxable year and during the first six months of the following taxable year. The rule that treats 75 percent of qualified research consortium payments as qualified research expenses is effective for taxable years beginning after June 30, 1996. Conference agreement The conference agreement extends the re- search tax credit for 11 months\u2014i.e., for the period July 1, 1996, through May 31, 1997 (with a special rule for taxpayers who elect the alternative incremental research credit regime, as described below). The conference agreement includes the provision in the Senate amendment to ex- pand the definition of ”start-up firms” under section 41(c)(3)(B)(I). The conference agreement includes the provision in the Senate amendment to allow taxpayers to elect an alternative incremen- tal research credit regime, with the modi- fication that, if a taxpayer elects the alter- native incremental credit regime for its first taxable year beginning after June 30, 1996, and before July 1, 1997, then all qualified re- search expenses paid or incurred during the first 11 months of such taxable year are treated as qualified research expenses for purposes of computing the taxpayers’s credit under the alternative incremental credit re- gime. The conference agreement includes the special rule of the Senate amendment that treats 75 percent (rather than 65 percent) of payments made to certain nonprofit research consortia as qualified research expenses. In addition, the conference agreement pro- vides that research credit amounts earned under the conference agreement may not be taken into account in computing estimated tax payments required to be paid for taxable years beginning in 1997. Effective date.\u2014Under the conference agree- ment, extension of the research tax credit is effective for expenditures paid or incurred during the period July 1, 1996, through May 31, 1997 with a special rule for taxpayers who elect the alternative incremental research credit regime. The modification to the defi- nition of ”start-up firms” is effective for taxable years ending after June 30, 1996. Tax- payers may elect the alternative research credit regime (with lower fixed-base percent- ages and lower credit rates) for the first tax- able year beginning after June 30, 1996, and before July 1, 1997, and the credit is available with respect to all qualified research ex- penses incurred during the first 11 months of such taxable year. The rule that treats 75 percent of qualified research consortium payments as qualified research expenses is effective for taxable years beginning after June 30, 1996. 5. ORPHAN DRUG TAX CREDIT (Sec. 1204 of the Senate amendment.) Present and prior law Prior to January 1, 1995, a 50-percent non- refundable tax credit was allowed for quali- fied clinical testing expenses incurred in testing of certain drugs for rare diseases or conditions, generally referred to as ”orphan drugs.” Qualified testing expenses are costs incurred to test an orphan drug after the drug has been approved for human testing by the Food and Drug Administration (FDA) but before the drug has been approved for sale by the FDA. A rare disease or condition is defined as one that (1) affects less than 200,000 persons in the United States, or (2) af- fects more than 200,000 persons, but for which there is no reasonable expectation that busi- nesses could recoup the costs of developing a drug for such disease or condition for U.S. sales of the drug. These rare diseases and conditions include Huntington’s disease, myoclonus, ALS (Lou Gehrig’s disease), Tourette’s syndrome, and Duchenne’s dys- trophy (a form of muscular dystrophy). Under prior law, the orphan drug tax credit could be claimed by a taxpayer only to the extent that its regular tax liability for the year the credit was earned exceeded its ten- tative minimum tax for the year, after regu- lar tax was reduced by nonrefundable per- sonal credits and the foreign tax credit.29 Un- used credits could not be carried back or car- ried forward to reduce taxes in other years. The orphan drug tax credit expired after December 31, 1994. House bill No provision. Senate amendment The Senate amendment extends the orphan drug tax credit for 18 months\u2014i.e., for the period July 1, 1996, through December 31, 1997. In addition, the Senate amendment allows taxpayers to carry back unused credits to three years preceding the year the credit is earned and to carry forward unused credits to 15 years following the year the credit is earned. Effective date.\u2014The Senate amendment ap- plies to qualified clinical testing expenses paid or incurred during the period July 1, 1996, through December 31, 1997. The provi- sion allowing for the carry back and carry forward of unused credits is effective for tax- able years ending after June 30, 1996. No por- tion of the unused business credit that is at- tributable to the orphan drug credit could be carried back under section 39 to a taxable year ending before July 1, 1996. Conference agreement The conference agreement extends the or- phan drug tax credit for 11 months\u2014i.e., for the period July 1, 1996, through May 31, 1997. In addition, the conference agreement in- cludes the provision of the Senate amend- ment that allows taxpayers to carry back unused credits to three years preceding the year the credit is earned and to carry for- ward unused credits to 15 years following the year the credit is earned. Effective date.\u2014The conference agreement applies to qualified clinical testing expenses paid or incurred during the period July 1, 1996, through May 31, 1997. The provision al- lowing for the carry back and carry forward of unused credits is effective for taxable years ending after June 30, 1996. No portion of the unused business credit that is attrib- utable to the orphan drug credit could be carried back under section 39 to a taxable year ending before July 1, 1996. 6. CONTRIBUTIONS OF STOCK TO PRIVATE FOUNDATIONS (Sec. 1205 of the Senate amendment.) Present and prior law In computing taxable income, a taxpayer who itemizes deductions generally is allowed to deduct the fair market value of property contributed to a charitable organization. 30 However, in the case of a charitable con- tribution of short-term gain, inventory, or other ordinary income property, the amount of the deduction generally is limited to the taxpayer’s basis in the property. In the case of a charitable contribution of tangible per- sonal property, the deduction is limited to the taxpayer’s basis in such property if the use by the recipient charitable organization is unrelated to the organization’s tax-exempt purpose. 31 In cases involving contributions to a pri- vate foundation (other than certain private operating foundations), the amount of the deduction is limited to the taxpayer’s basis in the property. However, under a special rule contained in section 170(e)(5), taxpayers were allowed a deduction equal to the fair market value of ”qualified appreciated stock” contributed to a private foundation prior to January 1, 1995. Qualified appre- ciated stock was defined as publicly traded stock which is capital gain property. The fair-market-value deduction for qualified ap- preciated stock donations applied only to the extent that total donations made by the donor to private foundations of stock in a particular corporation did not exceed 10 per- cent of the outstanding stock of that cor- poration. For this purpose, an individual was CONGRESSIONAL RECORD \u2014 HOUSEH9622 August 1, 1996 32 If, during this period, a taxpayer contributes qualified appreciated stock as defined in section 170(e)(5) and the amount of such contribution ex- ceeds the percentage limitation under section 170(b)(1)(D), the excess may be carried over to suc- ceeding taxable years. See, e.g., LTR 9444029, LTR 9424020. treated as making all contributions that were made by any member of the individual’s family. This special rule contained in section 170(e)(5) expired after December 31, 1994. House bill No provision. Senate amendment The Senate amendment extends the special rule contained in section 170(e)(5) for 18 months\u2014i.e., for contributions of qualified appreciated stock made to private founda- tions during the period July 1, 1996, through December 31, 1997. Effective date.\u2014The provision is effective for contributions of qualified appreciated stock to private foundations made during the period July 1, 1996, through December 31, 1997. Conference agreement The conference agreement extends the spe- cial rule contained in section 170(e)(5) for 11 months\u2014i.e., for contributions of qualified appreciated stock made to private founda- tions during the period July 1, 1996, through May 31, 1997. 32 Effective date.\u2014The provision is effective for contributions of qualified appreciated stock to private foundations made during the period July 1, 1996, through May 31, 1997. 7. TAX CREDIT FOR PRODUCING FUEL FROM A NONCONVENTIONAL SOURCE (Sec. 1206 of the Senate amendment.) Present law Certain fuels produced from ”nonconven- tional sources” and sold to unrelated parties are eligible for an income tax credit equal to $3 (generally adjusted for inflation) per bar- rel or BTU oil barrel equivalent (sec. 29). Qualified fuels must be produced within the United States. Qualified fuels include: (1) oil produced from shale and tar sands; (2) gas produced from geopressured brine, Devonian shale, coal seams, tight formations (”tight sands”), or biomass; and (3) liquid, gaseous, or solid synthetic fuels produced from coal (includ- ing lignite). In general, the credit is available only with respect to fuels produced from wells drilled or facilities placed in service after December 31, 1979, and before January 1, 1993. An excep- tion extends the January 1, 1993 expiration date for facilities producing gas from bio- mass and synthetic fuel from coal if the fa- cility producing the fuel is placed in service before January 1, 1997, pursuant to a binding contract entered into before January 1, 1996. The credit may be claimed for qualified fuels produced and sold before January 1, 2003 (in the case of nonconventional sources subject to the January 1, 1993 expiration date) or January 1, 2008 (in the case of bio- mass gas and synthetic fuel facilities eligible for the extension period). House bill No provision. Senate amendment The Senate amendment extends the bind- ing contract date for facilities producing synthetic fuels from coal and gas from bio- mass until the date which is six months after the date of the provision’s enactment, and the placed in service date for two years. The present sunset on producing qualifying for the credit is not changed. Therefore, under the provision, synthetic fuels from coal and gas from biomass pro- duced from a facility placed in service before January 1, 1999, pursuant to a binding con- tract entered into before the date which is six months after the date of the provision’s enactment, will be eligible for the tax credit if produced before January 1, 2008. Effective date.\u2014The provision is effective on the date of enactment. Conference agreement The conference agreement follows the Sen- ate amendment with two modifications. First, the conference agreement extends the binding contract date for facilities producing synthetic fuels from coal and gas from bio- mass through December 31, 1996, rather than for six months after the date of enactment as would have been provided in the Senate amendment. Second, the conference agree- ment extends the placed in service date for eighteen months, rather than for two years as would have been provided in the Senate amendment. The conference agreement does not change the present-law sunset on produc- tion qualifying for the credit. Therefore, under the conference agree- ment, synthetic fuels from coal and gas from biomass produced from a facility placed in service before July 1, 1998, pursuant to a binding contract entered into before January 1, 1997, will be eligible for the tax credit if produced before January 1, 2008. Effective date.\u2014The provision is effective on the date of enactment. 8. SUSPEND IMPOSITION OF DIESEL FUEL TAX ON RECREATIONAL MOTORBOATS (Sec. 1207 of the Senate amendment.) Present law Diesel fuel used in recreational motorboats is subject to a 24.4 cents-per-gallon excise tax through December 31, 1999. This tax was enacted by the Omnibus Budget Reconcili- ation Act of 1993 as a revenue offset for re- peal of the excise tax on certain luxury boats. Revenues from this tax are retained in the General Fund. The diesel fuel tax is imposed on removal of the fuel from a registered terminal facil- ity (i.e., at the ”terminal rack”). Present law provides that tax is imposed on all diesel fuel removed from terminal facilities unless the fuel is destined for a nontaxable use and is indelibly dyed pursuant to Treasury De- partment regulations. If fuel on which tax is paid at the terminal rack (i.e., undyed diesel fuel) ultimately is used in a nontaxable use, a refund is allowed. Depending on the aggre- gate amount of tax to be refunded, this re- fund may be claimed either by a direct filing with the Internal Revenue Service or as a credit against income tax. Dyed diesel fuel (fuel on which no tax is paid) may not be used in a taxable use. Present law imposes a penalty equal to the greater of $10 per gallon or $1,000 on persons found to be violating this prohibition. House bill No provision. Senate amendment The Senate amendment provides that no tax will be imposed on diesel fuel used in rec- reational motorboats during the period be- ginning seven days after the date of enact- ment through December 31, 1997. In addition, the Senate Finance Commit- tee requested that the Treasury Department study possible alternatives to the current collection regime for motoboat diesel fuel that will provide comparable compliance with the law, and report to the House Com- mittee on Ways and Means and the Senate Committee on Finance no later than April 1, 1997. Effective date.\u2014The provision is effective on the date of enactment. Conference agreement The conference agreement follows the Sen- ate amendment. 9. EXTENSION OF TRANSITION RULE FOR CERTAIN PUBLICLY TRADED PARTNERSHIPS (Sec. 1208 of the Senate amendment.) Present law Present law provides that, in general, a publicly traded partnership is treated as a corporation for Federal income tax purposes. An exception is provided for certain partner- ships, 90 percent or more of whose gross in- come is passive-type income (as defined for purposes of the provision). A publicly traded partnership is any partnership if (1) partner- ship interests are traded on an established securities market, or (2) partnership inter- ests are readily tradable on a secondary mar- ket (or the substantial equivalent). This pro- vision was added by the Omnibus Budget Reconciliation Act of 1987 (the ”1987 Act”), and applied generally to taxable years begin- ning after December 31, 1987. The 1987 Act provided a 10-year grand- father rule for certain existing partnerships. Thus, the provision becomes effective for such existing partnerships for taxable years beginning after December 31, 1997. The 1987 Act provides that an existing partnership is one: (1) which was a publicly traded partner- ship on December 17, 1987; (2) with respect to which a registration statement indicating that such partnership was to be a publicly traded partnership was filed with the Securi- ties and Exchange commission on or before December 17, 1987, or (3) with respect to which an application was filed with a State regulatory commission on or before Decem- ber 17, 1987 seeking permission to restructure a portion of a corporation as a publicly trad- ed partnership. A partnership ceases to be treated as an existing partnership if it adds a substantial new line of business after De- cember 17,1987. House bill No provision. Senate amendment The Senate amendment provides a two- year extension of the ten-year grandfather rule for existing partnerships. Thus, under the Senate amendment, the present-law pro- vision treating publicly traded partnerships as corporations applies to existing partner- ships for taxable years beginning after De- cember 31, 1999. Effective date.\u2014The provision takes effect as if included in the 1987 Act. Conference agreement The conference agreement does not include the Senate amendment provision. C. PROVISIONS RELATING TO S. CORPORATIONS 1. S CORPORATIONS PERMITTED TO HAVE 75 SHAREHOLDERS (Sec. 1301 of the House bill and the Senate amendment.) Present law The taxable income or loss of an S corpora- tion is taken into account by the corpora- tion’s shareholders, rather than by the en- tity, whether or not such income is distrib- uted. A small business corporation may elect to be treated as an S corporation. A ”small business corporation” is defined as a domes- tic corporation which is not an ineligible corporation and which does not have (1) more than 35 shareholders, (2) as a share- holder, a person (other than certain trusts or estates) who is not an individual, (3) a non- resident alien as a shareholder, and (4) more than one class of stock. For purposes of the 35-shareholder limitation, a husband and wife are treated as one shareholder. House bill The House bill increases maximum number of eligible shareholders from 35 to 75. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. CONGRESSIONAL RECORD \u2014 HOUSE H9623August 1, 1996 Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 2. ELECTING SMALL BUSINESS TRUSTS (Sec. 1302 of the House bill and the Senate amendment.) Present law Under present law, trusts other than grant- or trusts, voting trusts, certain testa- mentary trusts and ”qualified subchapter S trusts” may not be shareholders in an S cor- poration. A ”qualified subchapter S trust” is a trust which, under its terms, (1) is required to have only one current income beneficiary (for life), (2) any corpus distributed during the life of the beneficiary must be distrib- uted to the beneficiary, (3) the beneficiary’s income interest must terminate at the ear- lier of the beneficiary’s death or the termi- nation of the trust, and (4) if the trust termi- nates during the beneficiary’s life, the trust assets must be distributed to the beneficiary. All the income (as defined for local law pur- poses) must be currently distributed to that beneficiary. The beneficiary is treated as the owner of the portion of the trust consisting of the stock in the S corporation. House bill In general The House bill allows stock in an S cor- poration to be held by certain trusts (”elect- ing small business trusts”). In order to qual- ify for this treatment, all beneficiaries of the trust must be individuals or estates eligible to be S corporation shareholders, except that charitable organizations may hold contin- gent remainder interests. No interest in the trust may be acquired by purchase. For this purpose, ”purchase” means any acquisition of property with a cost basis (determined under sec. 1012). Thus, interests in the trust must be acquired by reason of gift, bequest, etc. A trust must elect to be treated as an electing small business trust. Each potential current beneficiary of the trust is counted as a shareholder for pur- poses of the proposed 75 shareholder limita- tion (or if there were no potential current beneficiaries, the trust would be treated as the shareholder). A potential current income beneficiary means any person, with respect to the applicable period, who is entitled to, or at the discretion of any person may re- ceive, a distribution from the principal or in- come of the trust. Treatment of items relating to S corporation stock The portion of the trust which consists of stock in one or more S corporations is treat- ed as a separate trust for purposes of com- puting the income tax attributable to the S corporation stock held by the trust. The trust is taxed at the highest individual rate (currently, 39.6 percent on ordinary income and 28 percent on net capital gain) on this portion of the trust’s income. The taxable in- come attributable to this portion includes (1) the items of income, loss, or deduction allo- cated to it as an S corporation shareholder under the rules of subchapter S, (2) gain or loss from the sale of the S corporation stock, and (3) to the extent provided in regulations, any state or local income taxes and adminis- trative expenses of the trust properly alloca- ble to the S corporation stock. Otherwise al- lowable capital losses are allowed only to the extent of capital gains. In computing the trust’s income tax on this portion of the trust, no deduction is al- lowed for amounts distributed to bene- ficiaries, and no deduction or credit is al- lowed for any item other than the items de- scribed above. This income is not included in the distributable net income of the trust, and thus is not included in the beneficiaries’ income. No item relating to the S corpora- tion stock could be apportioned to any bene- ficiary. On the termination of all or any portion of an electing small business trust the loss carryovers or excess deductions referred to in section 642(h) is taken into account by the entire trust, subject to the usual rules on termination of the entire trust. Treatment of remainder of items held by trust In determining the tax liability with re- gard to the remaining portion of the trust, the items taken into account by the sub- chapter S portion of the trust are dis- regarded. Although distributions from the trust are deductible in computing the tax- able income on this portion of the trust, under the usual rules of subchapter J, the trust’s distributable net income does not in- clude any income attributable to the S cor- poration stock. Termination of trust and conforming amend- ment applicable to all trusts Where the trust terminates before the end of the S corporation’s taxable year, the trust takes into account its pro rata share of S corporation items for its final year. The bill makes a conforming amendment applicable to all trusts and estates clarifying that this is the present-law treatment of trusts and estates that terminate before the end of the S corporation’s taxable year. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 3. EXPANSION OF POST-DEATH QUALIFICATION FOR CERTAIN TRUSTS (Sec. 1303 of the House bill and the Senate amendment.) Present law Under present law, trusts other than grant- or trusts, voting trusts, certain testa- mentary trusts and ”qualified subchapter S trusts” may not be shareholders in a S cor- poration. A grantor trust may remain an S corporation shareholder for 60 days after the death of the grantor. The 60-day period is ex- tended to two years if the entire corpus of the trust is includable in the gross estate of the deemed owner. In addition, a trust may be an S corporation shareholder for 60 days after the transfer of S corporation pursuant to a will. House bill The House bill expands the post-death holding period to two years for all testa- mentary trusts. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 4. FINANCIAL INSTITUTIONS PERMITTED TO HOLD SAFE HARBOR DEBT (Sec. 1304 of the House bill and the Senate amendment.) Present law A small business corporation eligible to be an S corporation may not have more than one class of stock. Certain debt (”straight debt”) is not treated as a second class of stock so long as such debt is an uncondi- tional promise to pay on demand or on a specified date a sum certain in money if: (1) the interest rate (and interest payment dates) are not contingent on profits, the bor- rower’s discretion, or similar factors; (2) there is no convertibility (directly or indi- rectly) into stock, and (3) the creditor is an individual (other than a nonresident alien), an estate, or certain qualified trusts. House bill The definition of ”straight debt” is ex- panded to include debt held by creditors, other than individuals, that are actively and regularly engaged in the business of lending money. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 5. RULES RELATING TO INADVERTENT TERMINATIONS AND INVALID ELECTIONS (Sec. 1305 of the House bill and the Senate amendment.) Present law Under present law, if the Internal Revenue Service (”IRS”) determines that a corpora- tion’s Subchapter S election is inadvertently terminated, the IRS can waive the effect of the terminating event for any period if the corporation timely corrects the event and if the corporation and shareholders agree to be treated as if the election had been in effect for that period. Such waivers generally are obtained through the issuance of a private letter ruling. Present law does not grant the IRS the ability to waive the effect of an in- advertent invalid Subchapter S election. In addition, under present law, a small business corporation must elect to be an S corporation no later than the 15th day of the third month of the taxable year for which the election is effective. The IRS may not validate a late election. House bill Under the House bill, the authority of the IRS to waive the effect of an inadvertent ter- mination is extended to allow the Service to waive the effect of an invalid election caused by an inadvertent failure to qualify as a small business corporation or to obtain the required shareholder consents (including elections regarding qualified subchapter S trusts), or both. The House bill also allows the IRS to treat a late Subchapter S election as timely where the Service determines that there was reasonable cause for the failure to make the election timely. It is intended that the IRS be reasonable in exercising this au- thority and apply standards that are similar to those applied under present law to inad- vertent subchapter S terminations and other late or invalid elections. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1982. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. The conferees wish to clarify that in exercising the authority provided under the provision, the IRS may consider relevant information provided by any affected shareholder (includ- ing a person who became a shareholder in a subsequent year) before determining the va- lidity of the S election for the taxable year in question. 6. AGREEMENT TO TERMINATE YEAR (Sec. 1306 of the House bill and the Senate amendment.) CONGRESSIONAL RECORD \u2014 HOUSEH9624 August 1, 1996 Present law In general, each item of S corporation in- come, deduction and loss is allocated to shareholders on a per-share, per-day basis. However, if any shareholder terminates his or her interest in an S corporation during a taxable year, the S corporation, with the consent of all its shareholders, may elect to allocate S corporation items by closing its books as of the date of such termination rather than apply the per-share, per-day rule. House bill The House bill provides that, under regula- tions to be prescribed by the Secretary of the Treasury, the election to close the books of the S corporation upon the termination of a shareholder’s interest is made by all affected shareholders and the corporation, rather than by all shareholders. The closing of the books applies only to the affected sharehold- ers. For this purpose, ”affected sharehold- ers” means any shareholder whose interest is terminated and all shareholders to whom such shareholder has transferred shares dur- ing the year. If a shareholder transferred shares to the corporation, ”affected share- holders” includes all persons who were shareholders during the year. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 7. EXPANSION OF POST-TERMINATION TRANSITION PERIOD (Sec. 1307 of the House bill and the Senate amendment.) Present law Distributions made by a former S corpora- tion during its post-termination period are treated in the same manner as if the dis- tributions were made by an S corporation (e.g., treated by shareholders as nontaxable distributions to the extent of the accumu- lated adjustment account). Distributions made after the post-termination period are generally treated as made by a C corporation (i.e., treated by shareholders as taxable divi- dends to the extent of earnings and profits). The ”post-termination period” is the pe- riod beginning on the day after the last day of the last taxable year of the S corporation and ending on the later of: (1) a date that is one year later, or (2) the due date for filing the return for the last taxable year and the 120-day period beginning on the date of a de- termination that the corporation’s S cor- poration election had terminated for a pre- vious taxable year. In addition, the audit procedures adopted by the Tax Equity and Fiscal Responsibility Act of 1982 (”TEFRA”) with respect to part- nerships also apply to S corporations. Thus, the tax treatment of items is determined at the corporate, rather than individual level. House bill The present-law definition of post-termi- nation period is expanded to include the 120- day period beginning on the date of any de- termination pursuant to an audit of the tax- payer that follows the termination of the S corporation’s election and that adjusts a subchapter S item of income, loss or deduc- tion of the S corporation during the S pe- riod. In addition, the definition of ”deter- mination” is expanded to include a final dis- position of the Secretary of the Treasury of a claim for refund and, under regulations, certain agreements between the Secretary and any person, relating to the tax liability of the person. In addition, the House bill repeals the TEFRA audit provisions applicable to S cor- porations and would provide other rules to require consistency between the returns of the S corporation and its shareholders. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 8. S CORPORATIONS PERMITTED TO HOLD SUBSIDIARIES (Sec. 1308 of the House bill and the Senate amendment.) Present law A small business corporation may not be a member of an affiliated group of corpora- tions (other than by reason of ownership in certain inactive corporations). Thus, an S corporation may not own 80 percent or more of the stock of another corporation (whether an S corporation or a C corporation). In addition, a small business corporation may not have as a shareholder another cor- poration (whether an S corporation or a C corporation). House bill An S corporation is allowed to own 80 per- cent or more of the stock of a C corporation. The C corporation subsidiary could elect to join in the filing of a consolidated return with its affiliated C corporations. An S cor- poration is not allowed to join in such elec- tion. Dividends received by an S corporation from a C corporation in which the S corpora- tion has an 80 percent or greater ownership stake is not treated as passive investment income for purposes of sections 1362 and 1375 to the extent the dividends are attributable to the earnings and profits of the C corpora- tion derived from the active conduct of a trade or business. In addition, an S corporation is allowed to own a qualified subchapter S subsidiary. The term ”qualified subchapter S subsidiary” means a domestic corporation that is not an ineligible corporation (i.e., a corporation that would be eligible to be an S corporation if the stock of the corporation were held di- rectly by the shareholders of its parent S corporation) if (1) 100 percent of the stock of the subsidiary were held by its S corporation parent and (2) for which the parent elects to treat as a qualified subchapter S subsidiary. Under the election, the qualified subchapter S subsidiary is not treated as a separate cor- poration and all the assets, liabilities, and items of income, deduction, and credit of the subsidiary are treated as the assets, liabil- ities, and items of income, deduction, and credit of the parent S corporation. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 9. TREATMENT OF DISTRIBUTIONS DURING LOSS YEARS (Sec. 1309 of the House bill and the Senate amendment.) Present law Under present law, the amount of loss an S corporation shareholder may take into ac- count for a taxable year cannot exceed the sum of the shareholder’s adjusted basis in his or her stock of the corporation and the ad- justed basis in any indebtedness of the cor- poration to the shareholder. Any excess loss is carried forward. Any distribution to a shareholder by an S corporation generally is tax-free to the shareholder to the extent of the sharehold- er’s adjusted basis of his or her stock. The shareholder’s adjusted basis is reduced by the tax-free amount of the distribution. Any distribution in excess of the shareholder’s adjusted basis is treated as gain from the sale or exchange of property. Under present law, income (whether or not taxable) and expenses (whether or not de- ductible) serve, respectively, to increase and decrease an S corporation shareholder’s basis in the stock of the corporation. These rules require that the adjustments to basis for items of both income and loss for any tax- able year apply before the adjustment for distributions applies. These rules limiting losses and allowing tax-free distributions up to the amount of the shareholder’s adjusted basis are similar in certain respects to the rules governing the treatment of losses and cash distributions by partnerships. Under the partnership rules (unlike the S corporation rules), for any tax- able year, a partner’s basis is first increased by items of income, then decreased by dis- tributions, and finally is decreased by losses for that year. In addition, if the S corporation has accu- mulated earnings and profits, any distribu- tion in excess of the amount in an ”accumu- lated adjustments account” will be treated as a dividend (to the extent of the accumu- lated earnings and profits). A dividend dis- tribution does not reduce the adjusted basis of the shareholder’s stock. The ”accumu- lated adjustments account” generally is the amount of the accumulated undistributed post-1982 gross income less deductions. House bill The House bill provides that the adjust- ments for distributions made by an S cor- poration during a taxable year are taken into account before applying the loss limita- tion for the year. Thus, distributions during a year reduce the adjusted basis for purposes of determining the allowable loss for the year, but the loss for a year does not reduce the adjusted basis for purposes of determin- ing the tax status of the distributions made during that year. The House bill also provides that in deter- mining the amount in the accumulated ad- justment account for purposes of determin- ing the tax treatment of distributions made during a taxable year by an S corporation having accumulated earnings and profits, net negative adjustments (i.e., the excess of losses and deductions over income) for that taxable year are disregarded. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 10. TREATMENT OF S CORPORATIONS UNDER SUBCHAPTER C (Sec. 1310 of the House bill and the Senate amendment.) Present law Present law contains several provisions re- lating to the treatment of S corporations as corporations generally for purpose of the In- ternal Revenue Code. First, under present law, the taxable in- come of an S corporation is computed in the same manner as in the case of an individual (sec. 1363(b)). Under this rule, the provisions of the Code governing the computation of CONGRESSIONAL RECORD \u2014 HOUSE H9625August 1, 1996 33 PLR 8818049, (Feb. 10, 1988). 34 PLR 9245004, (July 28, 1992). taxable income which are applicable only to corporations, such as the dividends received deduction, do not apply to S corporations. Second, except as otherwise provided by the Internal Revenue Code and except to the extent inconsistent with subchapter S, sub- chapter C (i.e., the rules relating to cor- porate distributions and adjustments) ap- plies to an S corporation and its sharehold- ers (sec. 1371(a)(1)). Under this second rule, provisions such as the corporate reorganiza- tion provisions apply to S corporations. Thus, a C corporation may merge into an S corporation tax-free. Finally, an S corporation in its capacity as a shareholder of another corporation is treated as an individual for purposes of sub- chapter C (sec. 1371(a)(2)). In 1988, the Inter- nal Revenue Service took the position that this rule prevents the tax-free liquidation of a C corporation into an S corporation be- cause a C corporation cannot liquidate tax- free when owned by an individual share- holder.33 In 1992, the Internal Revenue Serv- ice reversed its position, stating that the prior ruling was incorrect.34 House bill The House bill repeals the rule that treats an S corporation in its capacity as a share- holder of another corporation as an individ- ual. Thus, the provision clarifies that the liquidation of a C corporation into an S cor- poration will be governed by the generally applicable subchapter C rules, including the provisions of sections 332 and 337 allowing the tax-free liquidation of a corporation into its parent corporation. Following a tax-free liquidation, the built-in gains of the liq- uidating corporation may later be subject to tax under section 1374 upon a subsequent dis- position. An S corporation also will be eligi- ble to make a section 338 election (assuming all the requirements are otherwise met), re- sulting in immediate recognition of all the acquired C corporation’s gains and losses (and the resulting imposition of a tax). The repeal of this rule does not change the general rule governing the computation of income of an S corporation. For example, it does not allow an S corporation, or its share- holders, to claim a dividends received deduc- tion with respect to dividends received by the S corporation, or to treat any item of in- come or deduction in a manner inconsistent with the treatment accorded to individual taxpayers. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 11. ELIMINATION OF CERTAIN EARNINGS AND PROFITS (Sec. 1311 of the House bill and the Senate amendment.) Present law Under present law, the accumulated earn- ings and profits of a corporation are not in- creased for any year in which an election to be treated as an S corporation is in effect. However, under the subchapter S rules in ef- fect before revision in 1982, a corporation electing subchapter S for a taxable year in- creased its accumulated earnings and profits if its earnings and profits for the year ex- ceeded both its taxable income for the year and its distributions out of that year’s earn- ings and profits. As a result of this rule, a shareholder may later be required to include in his or her income the accumulated earn- ings and profits when it is distributed by the corporation. The 1982 revision to subchapter S repealed this rule for earnings attributable to taxable years beginning after 1982 but did not do so for previously accumulated S cor- poration earnings and profits. House bill The House bill provides that if a corpora- tion is an S corporation for its first taxable year beginning after December 31, 1995, the accumulated earnings and profits of the cor- poration as of the beginning of that year is reduced by the accumulated earnings and profits (if any) accumulated in any taxable year beginning before January 1, 1983, for which the corporation was an electing small business corporation under subchapter S. Thus, such a corporation’s accumulated earnings and profits are solely attributable to taxable years for which an S election was not in effect. This rule is generally consist- ent with the change adopted in 1982 limiting the S shareholder’s taxable income attrib- utable to S corporation earnings to his or her share of the taxable income of the S cor- poration. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 12. CARRYOVER OF DISALLOWED LOSSES AND DEDUCTIONS UNDER THE AT-RISK RULES (Sec. 1312 of the House bill and the Senate amendment.) Present law Under section 1366, the amount of loss an S corporation shareholder may take into ac- count cannot exceed the sum of the share- holder’s adjusted basis in his or her stock of the corporation and the unadjusted basis in any indebtedness of the corporation to the shareholder. Any disallowed loss is carried forward to the next taxable year. Any loss that is disallowed for the last taxable year of the S corporation may be carried forward to the post-termination period. The ”post-ter- mination period” is the period beginning on the day after the last day of the last taxable year of the S corporation and ending on the later of: (1) a date that is one year later, or (2) the due date for filing the return for the last taxable year and the 120-day period be- ginning on the date of a determination that the corporation’s S corporation election had terminated for a previous taxable year. In addition, under section 465, a share- holder of an S corporation may not deduct losses that are flowed through from the cor- poration to the extent the shareholder is not ”at-risk” with respect to the loss. Any loss not deductible in one taxable year because of the at-risk rules is carried forward to the next taxable year. House bill Losses of an S corporation that are sus- pended under the at-risk rules of section 465 are carried forward to the S corporation’s post-termination period. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 13. ADJUSTMENTS TO BASIS OF INHERITED S STOCK TO REFLECT CERTAIN ITEMS OF INCOME (Sec. 1313 of the house bill and the Senate amendment.) Present law Income in respect to a decedent (”IRD”) generally consists of items of gross income that accrued during the decedent’s lifetime but were not includible in the decedent’s in- come before his or her death under his or her method of accounting. IRD is includible in the income of the person acquiring the right to receive such item. A deduction for the es- tate tax attributable to an item of IRD is al- lowed to such person (sec. 681(c)). The cost or basis of property acquired from a decedent is its fair market value at the date of death (or alternate valuation date if that date is elect- ed for estate tax purposes). This basis is often referred to as ”stepped-up basis.” Prop- erty that constitutes a right to receive IRD does not receive a stepped-up basis. The basis of a partnership interest or cor- porate stock acquired from a decedent gen- erally is stepped-up at death. Under Treas- ury regulations, the basis of a partnership interest acquired from a decedent is reduced to the extent that its value is attributable to items constituting IRD (Treas. reg. sec. 1.742 1). This rule insures that the items of IRD held by a partnership are not later off- set by a loss arising from a stepped-up basis. Although S corporation income is taxed to its shareholders in a manner similar to the taxation of a partnership and its partners, no comparable regulation require a reduction in the basis of stock in an S corporation ac- quired from a decedent where the S corpora- tion holds items of IRD. House bill The House bill provides that a person ac- quiring stock in an S corporation from a de- cedent would treat as IRD his or her pro rata share of any item of income of the corpora- tion that would have been IRD if that item had been acquired directly from the dece- dent. Where an item is treated as IRD, a de- duction for the estate tax attributable to the item generally will be allowed under the pro- visions of section 691(c). The stepped-up basis in the stock in an S corporation acquired from a decedent is reduced by the extent to which the value of the stock is attributable to items consisting of IRD. This basis rule is comparable to the present-law partnership rule. Effective date.\u2014The provision applies with respect to decedent dying after the date of enactment. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 14. S CORPORATION ELIGIBLE FOR RULES APPLI- CABLE TO REAL PROPERTY SUBDIVIDED FOR SALE BY NONCORPORATE TAXPAYERS (Sec. 1314 of the House bill and the Senate amendment.) Present law Under present-law section 1237, a lot or parcel of land held by a taxpayer other than a corporation generally is not treated as or- dinary income property solely by reason of the land being subdivided if: (1) such parcel had not previously been held as ordinary in- come property and if in the year of sale, the taxpayer did not hold other real property; (2) no substantial improvement has been made on the land by the taxpayer, a related party, a lessee, or a government; and (3) the land has been held by the taxpayer for five years. House bill The House bill allows the present-law cap- ital gains presumption in the case of land held by an S corporation. It is expected that rules similar to the attribution rules for partnerships will apply to S corporation (Treas. reg. sec. 1. 1237 1(b)(3)). CONGRESSIONAL RECORD \u2014 HOUSEH9626 August 1, 1996 Effective date.\u2014The provision is effective for sales in taxable years beginning after De- cember 31, 1996. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 15. CERTAIN FINANCIAL INSTITUTIONS AS ELIGIBLE CORPORATIONS (Sec. 1315 of the Senate amendment.) Present law A small business corporation may elect to be treated as an S corporation. A ”small business corporation” is defined as a domes- tic corporation which is not an ineligible corporation and which meets certain other requirements. An ”ineligible corporation” means any corporation which is a member of an affiliated group, certain depository finan- cial institutions (i.e., banks, domestic sav- ings and loan associations, mutual savings banks, and certain cooperative banks), cer- tain insurance companies, a section 936 cor- poration, or a DISC or former DISC. House bill No provision. Senate amendment A bank (as defined in sec. 581) is allowed to be an eligible small business corporation un- less such institution uses a reserve method of accounting for bad debts. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1996. Conference agreement The conference agreement follows the Sen- ate amendment. 16. CERTAIN TAX-EXEMPT ENTITIES ALLOWED TO BE SHAREHOLDERS (Sec. 1316 of the Senate amendment.) Present law A tax-exempt organization described in section 401(a) (relating to qualified retire- ment plan trusts) or section 501(c)(3) (relat- ing to certain charitable organizations) can- not be a shareholder in an S corporation. House bill No provision. Senate amendment Tax-exempt organizations described in Code sections 401(a) and 501(c)(3) (”qualified tax-exempt shareholders”) are allowed to be shareholders in S corporations. For purposes of determining the number of shareholders of an S corporation, a qualified tax-exempt shareholder will count as one shareholder. Items of income or loss of an S corporation will flow-through to qualified tax-exempt shareholders as unrelated business taxable income (”UBTI”), regardless of the source or nature of such income (e.g., passive income of an S corporation will flow through to the qualified tax-exempt shareholders as UBTI.) In addition, gain or loss on the sale or other disposition of stock of an S corporation by a qualified tax-exempt shareholder will be treated as UBTI. In addition, certain special tax rules relat- ing to employee stock ownership plans (”ESOPs”) will not apply with respect to S corporation stock held by the ESOP. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1997. Conference agreement The conference agreement generally fol- lows the Senate amendment. In addition, the conference agreement provides that if a qualified tax-exempt shareholder acquired, by purchase, stock in an S corporation (whether such stock was acquired when the corporation was a C or an S corporation) and receives a dividend distribution with respect to such S corporation stock (i.e., a distribu- tion of subchapter C earnings and profits), except as provided in regulations the share- holder must reduce its basis in the stock by the amount of the dividend. Regulations may provide that the basis reduction only would apply to the extent the dividend is deemed to be allocable to subchapter C earnings and profits that accrued on or before the date of acquisition. 17. REELECTING SUBCHAPTER S STATUS (Sec. 1315(b) of the House bill and sec. 1317(b) of the Senate amendment.) Present law A small business corporation that termi- nates its subchapter S election (whether by revocation or otherwise) may not make an- other election to be an S corporation for five taxable years unless the Secretary of the Treasury consents to such election. House bill For purposes of the five-year rule, any ter- mination of subchapter S status in effect im- mediately before the date of enactment of the proposal is not be taken into account. Thus, any small business corporation that had terminated its S corporation election within the five-year period before the date of enactment may re-elect subchapter S status upon enactment of the bill without the con- sent of the Secretary of the Treasury. Effective date.\u2014The provision is effective for terminations occurring in a taxable year beginning before January 1, 1997. Senate amendment Same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. II. PENSION SIMPLIFICATION PROVISIONS A. SIMPLIFIED DISTRIBUTION RULES (Secs. 1401 1404 of the House bill and the Senate amendment.) Present law In general, a distribution of benefits from a tax-favored retirement arrangement (i.e., a qualified plan, a qualified annuity plan, and a tax-sheltered annuity contract (sec. 403(b) annuity)) generally is includable in gross in- come in the year it is paid or distributed under the rules relating to the taxation of annuities. Lump-sum distributions Lump-sum distributions from qualified plans and qualified annuity plans are eligible for special 5-year forward averaging. In gen- eral, a lump-sum distribution is a distribu- tion within one taxable year of the balance to the credit of an employee that becomes payable to the recipient first, on account of the death of the employee, second, after the employee attains age 591\u20442, third, on account of the employee’s separation from service, or fourth, in the case of self-employed individ- uals, on account of disability. Lump-sum treatment is not available for distributions from a tax-sheltered annuity. A taxpayer is permitted to make an elec- tion with respect to a lump-sum distribution received on or after the employee attains age 591\u20442 to use 5-year forward income averaging under the tax rates in effect for the taxable year in which the distribution is made. In general, this election allows the taxpayer to pay a separate tax on the lump-sum distribu- tion that approximates the tax that would be due if the lump-sum distribution were re- ceived in 5 equal installments. If the election is made, the taxpayer is entitled to deduct the amount of the lump-sum distribution from gross income. Only one such election on or after 591\u20442 may be made with respect to any employee. Under the Tax Reform Act of 1986 (the ”1986 Act”), individuals who attained age 50 by January 1, 1986, can elect to use 10-year averaging (under the rates in effect prior to the 1986 Act) in lieu of 50 year averaging. In addition, such individuals may elect to re- tain capital gains treatment with respect to the pre-1974 portion of a lump sum distribu- tion. Exclusion of $5,000 for employer-provided death benefits Under present law, the beneficiary or es- tate of a deceased employee generally can exclude up to $5,000 in benefits paid by or on behalf of an employer by reason of the em- ployee’s death (sec. 101(b)). Recovery of basis Amounts received as an annuity under a qualified plan generally are includable in in- come in the year received, except to the ex- tent they represent the return of the recipi- ent’s investment in the contract (i.e., basis). Under present law, a pro-rata basis recovery rule generally applies, so that the portion of any annuity payment that represents non- taxable return of basis is determined by ap- plying an exclusion ratio equal to the em- ployee’s total investment in the contract di- vided by the total expected payments over the term of the annuity. Under a simplified alternative method pro- vided by the IRS, the taxable portion of qualifying annuity payments is determined under a simplified exclusion ratio method. In no event can the total amount excluded from income as nontaxable return of basis be greater than the recipient’s total investment in the contract. Required distributions Present law provides uniform minimum distribution rules generally applicable to all types of tax-favored retirement vehicles, in- cluding qualified plans and annuities, IRAs, and tax-sheltered annuities. Under present law, a qualified plan is re- quired to provide that the entire interest of each participant will be distributed begin- ning no later than the participant’s required beginning date (sec. 401(a)(9)). The required beginning date is generally April 1 of the cal- endar year following the calendar year in which the plan participant or IRA owner at- tains age 701\u20442. In the case of a governmental plan or a church plan, the required beginning date is the later of first, such April 1, or sec- ond, the April 1 of the year following the year in which the participant retires. House bill Lump-sum distributions The House bill repeals 5-year averaging for lump-sum distributions from qualified plans. Thus, the House bill repeals the separate tax paid on a lump-sum distribution and also re- peals the deduction from gross income for taxpayers who elect to pay the separate tax on a lump-sum distribution. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1998. The House bill preserves the ability of certain individuals to elect 10-year aver- aging and capital gains treatment as pro- vided under the Tax Reform Act of 1986. Exclusion of $5,000 for employer-provided death benefits The House bill repeals the $5,000 exclusion for employer-provided death benefits. Effective date.\u2014The provision applies with respect to decedents dying after date of en- actment. Recovery of basis The House bill provides that basis recovery on payments from qualified plans generally CONGRESSIONAL RECORD \u2014 HOUSE H9627August 1, 1996 is determined under a method similar to the present-law simplified alternative method provided by the IRS. The portion of each an- nuity payment that represents a return of basis equals to the employee’s total basis as of the annuity starting date, divided by the number of anticipated payments under the following table: Age Number of payments: Not more than 55 …………………………. 360 56 60 …………………………………………… 310 61 65 …………………………………………… 260 66 70 …………………………………………… 210 More than 70 ……………………………….. 160 Effective date.\u2014The provision is effective with respect to annuity starting dates begin- ning 90 days after the date of enactment. Required distributions The House bill modifies the rule that re- quires all participants in qualified plans to commence distributions by age 701\u20442 without regard to whether the participant is still em- ployed by the employer and generally re- places it with the rule in effect prior to the Tax Reform Act of 1986. Under the House bill, distributions generally are required to begin by April 1 of the calendar year following the later of first, the calendar year in which the employee attains age 701\u20442 or second, the cal- endar year in which the employee retires. However, in the case of a 5-percent owner of the employer, distributions are required to begin no later than the April 1 of the cal- endar year following the year in which the 5- percent owner attains age 701\u20442. In addition, in the case of an employee (other than a 5-percent owner) who retires in a calendar year after attaining age 701\u20442, the House bill generally requires the employee’s accrued benefit to be actuarially increased to take into account the period after age 701\u20442 in which the employee was not receiving benefits under the plan. Thus, under the House bill, the employee’s accrued benefit is required to reflect the value of benefits that the employee would have received if the em- ployee had retired at age 701\u20442 and had begun receiving benefits at that time. The actuarial adjustment rule and the rule requiring 5-percent owners to begin distribu- tions after attainment of age 701\u20442 does not apply, under the House bill, in the case of a governmental plan or church plan. Effective date.\u2014The provision is effective for years beginning after December 31, 1996. If a participant is currently receiving dis- tributions, but does not have to under the provision, it is intended that a plan (or annu- ity contract) could (but would not be re- quired to) permit the participant, with his or her consent, with his or her consent to stop receiving distributions until such distribu- tions are required under the provision. Senate amendment Lump-sum distributions The Senate amendment is the same as the House bill. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1999. Exclusion of $5,000 for employer-provided death benefits The Senate amendment is the same as the House bill. Recovery of basis The Senate amendment is the same as the House bill. Required distributions The Senate amendment is the same as the House bill. Conference agreement Lump-sum distributions The conference agreement follows the Sen- ate amendment. Exclusion of $5,000 for employer-provided death benefits The conference agreement follows the Sen- ate amendment. Recovery of basis The conference agreement follows the Sen- ate amendment. Required distributions The conference agreement follows the House bill and the Senate amendment. The conferees intend that the actuarial adjust- ment rule does not apply in the case of a de- fined contribution plan. B. INCREASED ACCESS TO RETIREMENT SAVINGS PLANS 1. ESTABLISH SIMPLE RETIREMENT PLANS FOR EMPLOYEES OF SMALL EMPLOYERS (Secs. 1421 1422 of the House bill and the Senate amendment.) Present law Present law does not contain rules relating to SIMPLE retirement plans. However, present law does provide a number of ways in which individuals can save for retirement on a tax-favored basis. These include employer- sponsored retirement plans that meet the re- quirements of the Internal Revenue Code (a ”qualified plan”) and individual retirement arrangements (”IRAs”). Employees can earn significant retirement benefits under em- ployer-sponsored retirement plans. However, in order to receive tax-favored treatment, such plans must comply with a variety of rules, including complex nondiscrimination and administrative rules (including top- heavy rules). Such plans are also subject to certain requirements under the labor law provisions of the Employee Retirement In- come Security Act of 1974 (”ERISA”). Contributions to an IRA can also be made by an employer at the election of an em- ployee under a salary reduction simplified employee pension (”SARSEP”). Under SARSEPs, which are not qualified plans, em- ployees can elect to have contributions made to the SARSEP or to receive the contribu- tions in cash. The amount elects to have contributed to the SARSEP is not currently includible in income. House bill In general The House bill creates a simplified retire- ment plan for small business called the sav- ings incentive match plan for employees (”SIMPLE”) retirement plan. SIMPLE plans can be adopted by employers who employ 100 or fewer employees on any day during the year and who do not maintain another em- ployer-sponsor retirement plan. A SIMPLE plan can be either an IRA for each employee or part of a qualified cash or deferred ar- rangement (”401(k) plan”). If established in IRA form, a SIMPLE plan is not subject to the nondiscrimination rules generally appli- cable to qualified plans (including the top- heavy rules) and simplified reporting re- quirements apply. Within limits, contribu- tions to a SIMPLE plan are not taxable until withdrawn. A SIMPLE plan can also be adopted as part of a 401(k) plan. In that case, the plan does not have to satisfy the special non- discrimination tests applicable to 401(k) plans and is not subject to the top-heavy rules. The other qualified plan rules continue to apply. SIMPLE retirement plans in IRA form. In general.\u2014A SIMPLE retirement plan al- lows employees to make elective contribu- tions to an IRA. Employee contributions have to be expressed as a percentage of the employee’s compensation, and cannot exceed $6,000 per year. The $6,000 dollar limit is in- dexed for inflation in $500 increments. Under the House bill, the employer is re- quired to satisfy one of two contribution for- mulas. Under the matching contribution for- mula, the employer generally is required to match employee elective contributions on a dollar-for-dollar basis up to 3 percent of the employee’s compensation. Under a special rule, the employer can elect a lower percent- age matching contribution for all employees (but not less than 1 percent of each employ- ee’s compensation). A lower percentage can- not be elected for more than 2 out of any 5 years. Alternatively, for any year, in lieu of mak- ing matching contributions, an employer may elect to make a 2 percent of compensa- tion nonelective contribution on behalf of each eligible employee with at least $5,000 in compensation for such year. No contribu- tions other than employee elective contribu- tions and required employer matching con- tributions (or, alternatively, required em- ployer nonelective contributions) can be made to a SIMPLE account. Each employee of the employer who re- ceived at least $5,000 in compensation from the employer during any 2 prior years and who is reasonably expected to receive at least $5,000 in compensation during the year generally must be eligible to participate in the SIMPLE plan. Self-employed individuals can participate in a SIMPLE plan. All contributions to an employee’s SIM- PLE account have to be fully vested. Tax treatment of SIMPLE accounts, contribu- tions, and distributions.\u2014Contributions to a SIMPLE account generally are deductible by the employer. In the case of matching con- tributions, the employer is allowed a deduc- tion for a year only if the contributions are made by the due date (including extensions) for the employer’s tax return. Contributions to a SIMPLE account are excludable from the employee’s income. SIMPLE accounts, like IRAs, are not subject to tax. Distribu- tions from a SIMPLE retirement account generally are taxed under the rules applica- ble to IRAs. Thus, they are includable in in- come when withdrawn. Tax-free rollovers can be made from one SIMPLE account to another. A SIMPLE account can be rolled over to an IRA on a tax-free basis after a two-year period has expired since the indi- vidual first participated in the SIMPLE plan. To the extent an employee is no longer participating in a SIMPLE plan (e.g., the employee has terminated employment) and 2 years have expired since the employee first participated in the SIMPLE plan, the em- ployee’s SIMPLE account is treated as an IRA. Early withdrawals from a SIMPLE account generally are subject to the 10-percent early withdrawal tax applicable to IRAs. However, withdrawals of contributions during the 2- year period beginning on the date the em- ployee first participated in the SIMPLE plan are subject to a 25-percent early withdrawal tax (rather than 10 percent). Employer matching or nonelective con- tributions to a SIMPLE account are not treated as wages for employment tax pur- poses. Administrative requirements.\u2014Each eligible employee can elect, with the 30-day period before the beginning of any year (or the 30- day period before first becoming eligible to participate), to participate in the SIMPLE plan (i.e., to make elective deferrals), and to modify any previous elections regarding the amount of contributions. An employer is re- quired to contribute employees’ elective de- ferrals to the employee’s SIMPLE account within 30 days after the end of the month to which the contributions relate. Employees must be allowed to terminate participation in the SIMPLE plan at any time during the year (i.e., to stop making contributions). The CONGRESSIONAL RECORD \u2014 HOUSEH9628 August 1, 1996 plan can provide that an employee who ter- minates participation cannot resume partici- pation until the following year. A plan can permit (but is not required to permit) an in- dividual to make other changes to his or her salary reduction contribution election dur- ing the year (e.g., reduce contributions). It is intended that an employer is permitted to designate a SIMPLE account trustee to which contributions on behalf of eligible em- ployees are made. Definitions.\u2014For purposes of the rules re- lating to SIMPLE plans, compensation means compensation required to be reported by the employer on Form W 2, plus any elec- tive deferrals of the employee. In the case of a self-employed individual, compensation means net earnings from self-employment. The term employer includes the employer and related employers. Related employers include trades or businesses under common control (whether incorporated or not), con- trolled groups of corporations, and affiliated service groups. In addition, the leased em- ployee rules apply. SIMPLE 401(k) plans In general, under the House bill, a cash or deferred arrangement (i.e., 401(k) plan), is deemed to satisfy the special nondiscrimina- tion tests applicable to employee elective de- ferrals and employer matching contributions if the plan satisfies the contribution require- ments applicable to SIMPLE plans. In addi- tion, the plan is not subject to the top-heavy rules for any year for which this safe harbor is satisfied. The plan is subject to the other qualified plan rules. The safe harbor is satisfied if, for the year, the employer does not maintain another qualified plan and (1) employees’ elective de- ferrals are limited to no more than $6,000, (2) the employer matches employees’ elective deferrals up to 3 percent of compensation (or, alternatively, makes a 2 percent of com- pensation nonelective contribution on behalf of all eligible employees with at least $5,000 in compensation), and (3) no other contribu- tions are made to the arrangement. Con- tributions under the safe harbor have to be 100 percent vested. The employer cannot re- duce the matching percentage below 3 per- cent of compensation. Repeal of SARSEPs Under the House bill, SARSEPs are re- pealed. Effective date The provision relating to SIMPLE plans are effective for years beginning after De- cember 31, 1996. The repeal of SARSEPs ap- plies to years beginning after December 31, 1996, unless the SARSEP was established be- fore January 1, 1997. Consequently, an em- ployer is not permitted to establish a SARSEP after December 31, 1996. SARSEPs established before January 1, 1997, can con- tinue to receive contributions under present- law rules, and new employees of the em- ployer hired after December 31, 1996, can par- ticipate in the SARSEP in accordance with such rules. Senate amendment The Senate amendment is the same as the House bill, except for the following modifica- tions. Under the Senate amendment, a SIMPLE plan can be adopted by employers who em- ployed 100 employees or less with at least $5,000 in compensation for the preceding year. Employers who no longer qualify are given a 2-year grace period to continue to maintain the plan. Under the Senate amendment, eligible em- ployees are given 60 days before the begin- ning of any year (or the 60-day period before first beginning eligible to participate in the plan) to elect to participate in the SIMPLE plan. For purposes of the 2 percent of compensa- tion nonelective contribution formula, no more than $150,000 of compensation can be taken into account in any year with respect to any eligible employee. The Senate amendment clarifies that an employer is permitted to designate a SIM- PLE account trustee to which contributions on behalf of eligible employees are made. The Senate amendment also amends title I of ERISA to provide that only simplified re- porting requirements apply to SIMPLE plans and so that the employer (and any other plan fiduciary) will not be subject to fiduciary li- ability resulting from the employee (or bene- ficiary) exercising control over the assets in the SIMPLE account. For this purpose, an employee (or beneficiary) is treated as exer- cising control over the assets in his or her account upon the earlier of (1) an affirmative election with respect to the initial invest- ment of any contributions, (2) a rollover con- tribution (including a trustee-to-trustee transfer) to another SIMPLE account or IRA, or (3) one year after the SIMPLE ac- count is established. Conference agreement The conference agreement follows the Sen- ate amendment. 2. TAX-EXEMPT ORGANIZATIONS ELIGIBLE UNDER SECTION 401(K) (Sec. 1426 of the House bill and the Senate amendment.) Present law Under present law, tax-exempt and State and local government organizations are gen- erally prohibited from establishing qualified cash or deferred arrangements (sec. 401(k) plans. Qualified cash or deferred arrange- ments (1) or rural cooperatives, (2) adopted by State and local governments before May 6, 1986, or (3) adopted by tax-exempt organi- zations before July 2, 1986, are not subject to this prohibition. House bill The House bill allows tax-exempt organiza- tions (including, for this purpose, Indian tribal governments, a subdivision of an In- dian tribal government, an agency or instru- mentality of an Indian tribal government or subdivision thereof, or a corporation char- tered under Federal, State, or tribal law which is owned in whole or in part by any of such entities) to maintain qualified cash or deferred arrangements. The House bill re- tains the present-law prohibition against the maintenance of cash or deferred arrange- ments by State and local governments ex- cept to the extent it may apply to Indian tribal governments. Effective date.\u2014The provision is effective for plan years beginning after December 31, 1996. Senate amendment The Senate amendment is the same as the House bill, except that the legislative his- tory to the Senate amendment provides that no inference is intended with respect to whether Indian tribal governments are per- mitted to maintain qualified cash or deferred arrangements under present law. Conference agreement The conference agreement follows the Sen- ate amendment. Thus, under the conference agreement, no inference is intended with re- spect to whether Indian tribal governments are permitted to maintain qualified cash or deferred arrangements under present law. 3. SPOUSAL IRAS (Sec. 1427 of the Senate amendment.) Present law Within limits, an individual is allowed a deduction for contributions to an individual retirement account or an individual retire- ment annuity (an ”IRA”). An individual gen- erally is not subject to income tax on amounts held on an IRA, including earnings on contributions, until the amounts are withdrawn from the IRA. Under present law, the maximum deduct- ible contribution that can be made to an IRA generally is the lesser $2,000 or 100 percent of an individual’s compensation (earned income in the case of a self-employed individual). In the case of a married individual whose spouse has no compensation (or elects to be treated as having no compensation), the $2,000 maximum limit on IRA contributions is increased to $2,250. House bill No provision. Senate amendment. The Senate amendment permits deductible IRA contributions of up to $2,000 to be made for each spouse (including, for example, a homemaker who does not work outside the home) if the combined compensation of both spouses is at least equal to the contributed amount. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1996. Conference agreement The conference agreement follows the Sen- ate amendment. C. NONDISCRIMINATION PROVISIONS 1. DEFINITION OF HIGHLY COMPENSATED EM- PLOYEES AND REPEAL OF FAMILY AGGREGA- TION RULES (Sec. 1431 of the House bill and the Senate amendment.) Present law Definition of highly compensated employee An employee, including a self-employed in- dividual, is treated as highly compensated if, at any time during the year or the preceding year, the employee (1) was a 5-percent owner of the employer, (2) received more than $100,000 (for 1996) in annual compensation from the employer, (3) received more than $66,000 (for 1996) in annual compensation from the employer and was one of the top- paid 20 percent of employees during the same year, or (4) was an officer of the employer who received compensation in excess of $60,000 (for 1996). If, for any year, no officer has compensation in excess of the threshold, then the highest paid officer of the employer is treated as a highly compensated em- ployee. Family aggregation rules A special rule applies with respect to the treatment of family members of certain highly compensated employees for purposes of the nondiscrimination rules applicable to qualified plans. Under the special rule, if an employee is a family member of either a 5- percent owner or 1 of the top-10 highly com- pensated employees by compensation, then any compensation paid to such family mem- ber and any contribution or benefit under the plan on behalf of such family member is aggregated with the compensation paid and contributions or benefits on behalf of the 5- percent owner or the highly compensated employee in the top-10 employees by com- pensation. Similar family aggregation rules apply with respect to the $150,000 (for 1996) limit on compensation that may be taken into ac- count under a qualified plan (sec. 401(a)(17)) and for deduction purposes (sec. 404(1)). House bill Definition of highly compensated employee Under the House bill, an employee is treat- ed as highly compensated if the employee (1) was a 5-percent owner of the employer at any CONGRESSIONAL RECORD \u2014 HOUSE H9629August 1, 1996 tie during the year or the preceding year or (2) had compensation for the preceding year in excess of $80,000 (indexed for inflation) and the employee was in the top 20 percent em- ployees by compensation for such year. The House bill also repeals the rule requiring the highest paid officer to be treated as a highly compensated employee. Effective date.\u2014The provision is effective for years beginning after December 31, 1996. Family aggregation rules The House bill repeals the family aggrega- tion rules. Effective date.\u2014The provision is effective for years beginning after December 31, 1996. Senate amendment Definition of highly compensated employee The Senate amendment is the same as the House bill, except an employee who had com- pensation for the preceding year in excess of $80,000 is treated as highly compensated without regard to whether the employee was in the top 20 percent of employees by com- pensation. Family aggregation rules The Senate amendment is the same as the House bill. Conference agreement Definition of highly compensated employee The conference agreement follows the House bill and the Senate amendment. Thus, under the conference agreement, a plan may elect for a plan year to use either the defini- tion of highly compensated employee in the House bill or the Senate amendment. Family aggregation rules The conference agreement follows the House bill and the Senate amendment. 2. MODIFICATION OF ADDITIONAL PARTICIPATION REQUIREMENTS (Sec. 1432 of the House bill and the Senate amendment.) Present law Under present law, a plan is not a qualified plan unless it benefits no fewer than the less- er of (a) 50 employees of the employer or (b) 40 percent of all employees of the employer (sec. 401(a)(26)). This requirement may not be satisfied by aggregating comparable plans, but may be applied separately to different lines of business of the employer. A line of business of the employer does not qualify as a separate line of business unless it has at least 50 employees. House bill The House bill provides that the minimum participation rule applies only to defined benefit pension plans. In addition, the House bill provides that a defined benefit pension plan does not satisfy the rule unless it bene- fits no fewer than the lesser of (1) 50 employ- ees or (2) the greater of (a) 40 percent of all employees of the employer or (b) 2 employees (1 employee if there is only 1 employee). The House bill provides that the require- ment that a line of business has at least 50 employees does not apply in determining whether a plan satisfies the minimum par- ticipation rule on a separate line of business basis. Effective date.\u2014The provision is effective for years beginning after December 31, 1996. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 3. NONDISCRIMINATION RULES FOR QUALIFIED CASH OR DEFERRED ARRANGEMENTS AND MATCHING CONTRIBUTIONS (Sec. 1433 of the House bill and the Senate amendment.) Present law Under present law, a special non- discrimination test applies to qualified cash or deferred arrangements (sec. 401(k) plans). The special nondiscrimination test is satis- fied if the actual deferral percentage (”ADP”) for eligible highly compensated em- ployees for a plan year is equal to or less than either (1) 125 percent of the ADP of all nonhighly compensated employees eligible to defer under the arrangement or (2) the lesser of 200 percent of the ADP of all eligible nonhighly compensated employees or such ADP plus 2 percentage points. Employer matching contributions and after-tax employee contributions under qualified defined contribution plans are sub- ject to a special nondiscrimination test (the actual contribution percentage (”ACP”) test) similar to the special nondiscrimina- tion test applicable to qualified cash or de- ferred arrangements. Employer matching contributions that satisfy certain require- ments can be used to satisfy the ADP test, but, to the extent so used, such contribu- tions cannot be considered when calculating the ACP test. A plan that would otherwise fail to meet the special nondiscrimination test for quali- fied cash or deferred arrangements is not treated as failing such test if excess con- tributions (with allocable income) are dis- tributed to the employee or, in accordance with Treasury regulations, recharacterized as after-tax employee contributions. For purposes of this rule, in determining the amount of excess contributions and the em- ployees to whom they are allocated, the elec- tive deferrals of highly compensated employ- ees are reduced in the order of their actual deferral percentage beginning with those highly compensated employees with the highest actual deferral percentages. A simi- lar rule applies to employer matching con- tributions. House bill Prior-year data The House bill modifies the special non- discrimination tests applicable to elective deferrals and employer matching and after- tax employee contributions to provide that the maximum permitted actual deferral per- centage (and actual contribution percentage) for highly compensated employees for the year is determined by reference to the actual deferral percentage (and actual contribution percentage) for nonhighly compensated em- ployees for the preceding, rather than the current, year. A special rule applies for the first plan year. Alternatively, under the House bill, an em- ployer is allowed to elect to use the current year actual deferral percentage (and actual contribution percentage). Such an election can be revoked only as provided by the Sec- retary. Safe harbor for cash or deferred arrangements The House bill provides that a cash or de- ferred arrangement satisfies the special non- discrimination tests if the plan satisfies one of two contribution requirements and satis- fies a notice requirement. A plan satisfies the contribution require- ments under the safe harbor rule for quali- fied cash or deferred arrangements if the plan either first, satisfies a matching con- tribution requirement or second, the em- ployer makes a nonelective contribution to a defined contribution plan of at least 3 per- cent of an employee’s compensation on be- half of each nonhighly compensated em- ployee who is eligible to participate in the arrangement without regard to whether the employee makes elective contributions under the arrangement. A plan satisfies the matching contribution requirement if, under the arrangement: first, the employer makes a matching contribu- tion on behalf of each nonhighly com- pensated employee that is equal to (a) 100 percent of the employee’s elective contribu- tions up to 3 percent of compensation and (b) 50 percent of the employee’s elective con- tributions from 3 to 5 percent of compensa- tion; and second, the rate of match with re- spect to any elective contribution for highly compensated employees is not greater than the rate of match for nonhighly compensated employees. Alternatively, if the rate of matching con- tribution with respect to any rate of elective contribution requirement is not equal to the percentages described in the preceding para- graph, the matching contribution require- ment will be deemed to be satisfied if first, the rate of an employer’s matching contribu- tion does not increase as an employer’s rate of elective contribution increases and sec- ond, the aggregate amount of matching con- tributions at such rate of elective contribu- tion at least equals the aggregate amount of matching contributions that would be made if matching contributions satisfied the above percentage requirements. Employer matching and nonelective con- tributions used to satisfy the contribution requirements of the safe harbor rules are re- quired to be nonforfeitable and are subject to the restrictions on withdrawals that apply to an employee’s elective deferrals under a qualified cash or deferred arrangement (sec. 401(k)(2)(B) and (C)). It is intended that em- ployer matching and nonelective contribu- tions used to satisfy the contribution re- quirements of the safe harbor rules can be used to satisfy other qualified retirement plan nondiscrimination rules (except the spe- cial nondiscrimination test applicable to em- ployer matching contributions (the ACP test)). So, for example, a cross-tested defined contribution plan that includes a qualified cash or deferred arrangement can consider such employer matching and nonelective contributions in testing. The notice requirement is satisfied if each employee eligible to participate in the ar- rangement is given written notice, within a reasonable period before any year, of the em- ployee’s rights and obligations under the ar- rangement. Alternative method of satisfying special non- discrimination test for matching contribu- tions The House bill provides a safe harbor method of satisfying the special non- discrimination test applicable to employer matching contributions (the ACP test). Under this safe harbor, a plan is treated as meeting the special nondiscrimination test if first, the plan meets the contribution and notice requirements applicable under the safe harbor method of satisfying the special nondiscrimination requirement for qualified cash or deferred arrangements, and second, the plan satisfies a special limitation on matching contributions. The limitation on matching contributions is satisfied if: first, the employer matching contributions on behalf of any employee may not be made with respect to employee con- tributions or elective deferrals in excess of 6 percent of compensation; second, the rate of an employer’s matching contribution does not increase as the rate of an employee’s contributions or elective deferrals increases; and third, the matching contribution with respect to any highly compensated employee at any rate of employee contribution or elec- tive deferral is not greater than that with re- spect to an employee who is not highly com- pensated. Any after-tax employee contributions made under the qualified cash or deferred ar- rangement will continue to be tested under CONGRESSIONAL RECORD \u2014 HOUSEH9630 August 1, 1996 the ACP test. Employer matching and non- elective contributions used to satisfy the safe harbor rules for qualified cash or de- ferred arrangements cannot be considered in calculating such test. However, employer matching and nonelective contributions in excess of the amount required to satisfy the safe harbor rules for qualified cash or de- ferred arrangements can be taken into ac- count in calculating such test. Distribution of excess contributions and excess aggressive contributions The House bill provides that the total amount of excess contributions (and excess aggregate contributions) is determined as under present law, but the distribution of ex- cess contributions (and excess aggregate contributions) are required to be made on the basis of the amount of contribution by, or on behalf of, each highly compensated em- ployee. Thus, excess contributions (and ex- cess aggregate contributions) are deemed at- tributable first to those highly compensated employees who have the greatest dollar amount of elective deferrals. Effective date The provisions relating to use of prior-year data and the distribution of excess contribu- tions and excess aggregate contributions are effective for years beginning after December 31, 1996. The provisions providing for a safe harbor for qualified cash or deferred arrange- ments and the alternative method of satisfy- ing the special nondiscrimination test for matching contributions are effective for years beginning after December 31, 1988. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 4. DEFINITION OF COMPENSATION FOR PURPOSES OF THE LIMITS ON CONTRIBUTIONS AND BENE- FITS (Sec. 1434 of the House bill and the Senate amendment.) Present law Present law imposes limits on contribu- tions and benefits under qualified plans based on the type of plan. For purposes of these limits, present law provides that the definition of compensation generally does not include elective employee contributions to certain employee benefit plans. House bill The House bill provides that elective defer- rals to section 401(k) plans and similar ar- rangements, elective contributions to non- qualified deferred compensation plans of tax- exempt employers and State and local gov- ernments (sec. 457 plans), and salary reduc- tion contributions to a cafeteria plan are considered compensation for purposes of the limits on contributions and benefits. Effective date.\u2014The provision is effective for years beginning after December 31, 1997. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. D. MISCELLANEOUS PENSION SIMPLIFICATION 1. PLAN COVERING SELF-EMPLOYED INDIVIDUALS (Sec. 1441 of the House bill and the Senate amendment.) PRESENT LAW Under present law, certain special aggrega- tion rules apply to plans maintained by owner employees of unincorporated busi- nesses that do not apply to other qualified plans (sec. 401(d)(1) and (2)). House bill The House bill eliminates the special ag- gregation rules that apply to plans main- tained by self-employed individuals that do not apply to other qualified plans. Effective date.\u2014The provision is effective for years beginning after December 31, 1996. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 2. ELIMINATION OF SPECIAL VESTING RULE FOR MULTIEMPLOYER PLANS (Sec. 1442 of the House bill and the Senate amendment.) Present law Under present law, except in the case of multiemployer plans, a plan is not a quali- fied plan unless a participant’s employer- provided benefit vests at least as rapidly as under one of two alternative minimum vest- ing schedules. A plan satisfies the first schedule if a participant acquires a non- forfeitable right to 100 percent of the partici- pant’s accrued benefit derived from employer contributions upon the participant’s comple- tion of 5 years of service. A plan satisfies the second schedule if a participant has a non- forfeitable right to at least 10 percent of the participant’s accrued benefit derived from employer contributions after 3 years of serv- ice, 40 percent at the end of 4 years of serv- ice, 60 percent at the end of 5 years of serv- ice, 80 percent at the end of 6 years of serv- ice, and 100 percent at the end of 7 years of service. In the case of a multiemployer plan, a par- ticipant’s accrued benefit derived from em- ployer contributions is required to be 100- percent vested no later than upon the par- ticipant’s completion of 10 years of service. This special rule applies only to employees covered by the plan pursuant to a collective bargaining agreement. House bill The House bill conforms the vesting rules for multiemployer plans to the rules applica- ble to other qualified plans. Effective date.\u2014The provision is effective for plan years beginning on or after the ear- lier of (1) the later of January 1, 1997, or the date on which the last of the collective bar- gaining agreements pursuant to which the plan is maintained terminates, or (2) Janu- ary 1, 1999, with respect to participants with an hour of service after the effective date. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 3. DISTRIBUTIONS UNDER RURAL COOPERATIVE PLANS (Sec. 1443 of the House bill and the Senate amendment.) Present law A qualified cash or deferred arrangement can permit withdrawals of employee elective deferrals only after the earlier of (1) the par- ticipant’s separation from service, death, or disability, (2) termination of the arrange- ment, or (3) in the case of a profit-sharing or stock bonus plan, the attainment of age 591\u20442 or the occurrence of a hardship of the partic- ipant. In the case of a money purchase pen- sion plan, including a rural cooperative plan, withdrawals by participants cannot occur upon attainment of age 591\u20442 or upon hard- ship. House bill The House bill provides that a rural coop- erative plan that includes a cash or deferred arrangement may permit distributions to plan participants after the attainment of age 591\u20442 or on account of hardship. In addition, the definition of a rural cooperative is ex- panded to include certain public utility dis- tricts. Effective date.\u2014The provision generally is effective for distributions after the date of enactment. The modifications to the defini- tion of a rural cooperative apply to plan years beginning after December 31, 1996. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 4. TREATMENT OF GOVERNMENTAL PLANS UNDER SECTION 415 (Sec. 1444 of the House bill and the Senate amendment.) Present law Present law imposes limits on contribu- tions and benefits under qualified plans based on the type of plan (sec. 415). Certain special rules apply to State and local govern- mental plans under which such plans may provide benefits greater than those per- mitted by the limits on benefits applicable to plans maintained by private employers. In the case of defined benefit pension plans, the limit on the annual retirement benefit is the lesser of (1) 100 percent of com- pensation or (2) $120,000 (indexed for infla- tion). The dollar limit is reduced in the case of early retirement or if the employee has less than 10 years of plan participation. House bill The House bill makes the following modi- fications to the limits on contributions and benefits as applied to governmental plans: (1) the 100 percent of compensation limitation on defined benefit pension plan benefits would not apply; and (2) the early retirement reduction and the 10-year phase-in of the de- fined benefit pension plan dollar limit would not apply to certain disability and survivor benefits. The House bill also permits State and local government employers to maintain excess benefit plans without regard to the limits on unfunded deferred compensation arrange- ments of State and local government em- ployers (sec. 457). Effective date\u2014The provision is effective for years beginning after December 31, 1994. No inference is intended with respect to whether a governmental plan complies with the re- quirements of section 415 with respect to years beginning before January 1, 1995. With respect to such years, the Secretary is di- rected to enforce the requirements of section 415 consistent with the provision. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 5. UNIFORM RETIREMENT AGE (Sec. 1445 of the House bill and the Senate amendment.) Present law A qualified plan generally must provide that payment of benefits under the plan must begin no later than 60 days after the end of the plan year in which the participant reaches age 65. Also, for purpose of the vest- ing and benefit accrual rules, normal retire- ment age generally can be no later than age 65. For purposes of applying the limits on contributions and benefits (sec. 415), Social Security retirement age is generally used as CONGRESSIONAL RECORD \u2014 HOUSE H9631August 1, 1996 35 Under section 72(p), a loan from a plan is treated as a distribution unless the loan generally (1) does not exceed certain limits (generally, the lesser of $50,000 or one-half of the participant’s vested plan benefit; (2) must be repaid within 5 years; and (3) must be amortized on a substantially level basis with payments at least quarterly. retirement age. The Social Security retire- ment age as used for such purposed is pres- ently age 65, but is scheduled to gradually increase. House bill The House bill provides that for purposes of the general nondiscrimination rules (sec. 401(a)(4)) the Social Security retirement age (as defined in sec. 415) is a uniform retire- ment age and that subsidized early retire- ment benefits and joint and survivor annu- ities are not treated as not being available to employees on the same terms merely be- cause they are based on an employee’s Social Security retirement age (as defined in sec. 415). Effective date.\u2014The provision is effective for years beginning after December 31, 1996. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 6. CONTRIBUTIONS ON BEHALF OF DISABLED EMPLOYEES (Sec. 1446 of the House bill and the Senate amendment.) Present law Under present law, an employer may elect to continue deductible contributions to a de- fined contribution plan on behalf of an em- ployee who is permanently and totally dis- abled. For purposes of the limit on annual additions (sec. 415(c)), the compensation of a disabled employee is deemed to be equal to the annualized compensation of the em- ployee prior to the employee’s becoming dis- abled. Contributions are not permitted on behalf of disabled employees who were offi- cer, owners, or highly compensated before they become disabled. House bill The House bill provides that the special rule for contributions on behalf of disabled employees is applicable without an employer election and to highly compensated employ- ees if the defined contribution plan provides for the continuation of contributions on be- half of all participants who are permanently and totally disabled. Effective date.\u2014The provision is effective for years beginning after December 31, 1996. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 7. TREATMENT OF DEFERRED COMPENSATION PLANS OF STATE AND LOCAL GOVERNMENTS AND TAX-EXEMPT ORGANIZATIONS (Sec. 1447 of the House bill and the Senate amendment.) Present law Under an unfunded deferred compensation plan of a State or local government or a tax- exempt organization (a ”sec. 457 plan”), an employee who elects to defer the receipt of current compensation is taxed on the amounts deferred when such amounts are paid or made available. The maximum an- nual deferral under such a plan is the lesser of (1) $7,500 or (2) 331\u20443 percent of compensa- tion (net of the deferral). Amounts deferred under a section 457 plan may not be made available to an employee before the earliest of (1) the calendar year in which the participant attains age 701\u20442, (2) when the participant is separated from the service with the employer, or (3) when the participant is faced with an unforeseeable emergency. Benefits under a section 357 plan are not treated as made available if the participant may elect to receive a lump sum payable after separation from service and within 60 days of the election. This exception is avail- able only if the total amount payable to the participant under the plan does not exceed $3,500 and no additional amounts may be de- ferred under the plan with respect to the par- ticipant. House bill The House bill makes three changes to the rules governing section 457 plans. The House bill: (1) permits in-service dis- tributions of accounts that do not exceed $3,500 under certain circumstances; (2) in- creases the number of elections that can be made with respect to the time distributions must begin under the plan; and (3) provides for indexing (in $500 increments) of the dollar limit on deferrals. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1996. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 8. TRUST REQUIREMENT FOR DEFERRED COM- PENSATION PLANS OF STATE AND LOCAL GOV- ERNMENTS (Sec. 1448 of the House bill and the Senate amendment.) Present law Until deferrals under an unfunded deferred compensation plan of a State or local gov- ernment or a tax-exempt organization (a ”sec. 457 plan”) are made available to a plan participant, the amounts deferred, all prop- erty and rights purchased with such amounts, and all income attributable to such amounts, property, or rights must remain solely the property and rights of the em- ployer, subject only to the claims of the em- ployer’s general creditors. House bill Under the House bill, all amounts deferred under a section 457 plan maintained by a State and local governmental employer have to be held in trust (or custodial account or annuity contract) for the exclusive benefit of employees. The trust (or custodial account or annuity contract) is provided tax-exempt status. Amounts are not considered made available merely because they are held in a trust, custodial account, or annuity con- tract. Effective date.\u2014The provision generally is effective with respect to amounts held on or after the date of enactment. In the case of amounts deferred before the date of enact- ment (and income thereon), the trust re- quirement does not have to be satisfied until January 1, 1999. Senate amendment The Senate amendment is the same as the House bill. Effective date.\u2014The Senate amendment is the same as the House bill, except that in the case of plans in existence on the date of enactment, the trust requirement does not have to be satisfied until January 1, 1999. Thus, deferrals prior to and after the date of enactment (and earnings thereon) do not have to be held in trust (or custodial account or annuity contract) until January 1, 1999. Conference agreement The conference agreement follows the House bill and the Senate amendment. The conference agreement clarifies that amounts held in trust (or custodial account or annu- ity contract), may be loaned to plan partici- pants (or beneficiaries) pursuant to rules ap- plicable to loans from qualified plans (sec. 72(p)).35 A section 457 plan is not required to permit loans. The conferees intend that the income inclusion rules in the Code (secs. 83 and 402(b), do not apply to amounts deferred under the section 457 plan (and income there- on) merely because such amounts are con- tributed to the trust (or custodial account or annuity contract). Effective date.\u2014The conference agreement follows the House bill and the Senate amend- ment. Under the conference agreement, in the case of plans in existence on the date of enactment, the trust requirement does not have to be satisfied until January 1, 1999. Thus, deferrals prior to and after the date of enactment (and earnings thereon) do not have to be held in trust (or custodial account or annuity contract) until January 1, 1999. 9. CORRECTION OF GATT INTEREST AND MORTAL- ITY RATE PROVISIONS IN THE RETIREMENT PROTECTION ACT (Sec. 1449 of the House bill and the Senate amendment.) Present law The Retirement Protection Act of 1994, en- acted as part of the implementing legislation for the General Agreement on Tariffs and Trade (”GATT”), modified the acturial as- sumptions that must be used in adjusting benefits and limitations. In general, in ad- justing a benefit that is payable in a form other than a straight life annuity and in ad- justing the dollar limitation if benefits begin before age 62, the interest rate to be used cannot be less than the greater of 5 percent or the rate specified in the plan. Under GATT, if the benefit is payable in a form subject to the requirements of section 417(e)(3), then the interest rate on 30-year Treasury securities is substituted for 5 per- cent. Also under GATT, for purposes of ad- justing any limit or benefit, the mortality table prescribed by the Secretary must be used. This provision of GATT is generally effec- tive as of the first day of the first limitation year beginning in 1995. GATT made similar changes to the inter- est rate and mortality assumptions used to calculate the value of lump-sum distribu- tions for purposes of the rule permitting in- voluntary dispositions of certain accrued benefits. In the case of a plan adopted and in effect before December 8, 1995, those provi- sions do not apply before the earlier of (1) the date a plan amendment applying the new assumption is adopted or made effective (whichever is later), or (2) the first day of the first plan year beginning after December 31, 1999. House bill The House bill conforms the effective date of the new interest rate and mortality as- sumptions that must be used under section 415 to calculate the limits on benefits and contributions to the effective date of the provision relating to the calculation of lump-sum distributions. This rule applies only in the case of plans that were adopted and in effect before the date of enactment of GATT (December 8, 1994). To the extent plans have already been amended to reflect the new assumptions, plan sponsors are per- mitted within 1 year of the date of enact- ment to amend the plan to reverse retro- actively such amendment. The House bill also repeals the GATT pro- vision which requires that if the benefit is CONGRESSIONAL RECORD \u2014 HOUSEH9632 August 1, 1996 payable before age 62 in a form subject to the requirements of section 417(e)(3) (e.g., lump sum), then the interest rate to be used to re- duce the dollar limit on benefits under sec- tion 415 cannot be less than the greater of the rate on 30-year Treasury securities or the rate specified in the plan. Consequently, regardless of the form of benefit, the interest rate to be used cannot be less than the great- er of 5 percent or the rate specified in the plan. Effective date.\u2014The provision is effective as if included in GATT. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 10. MULTIPLE SALARY REDUCTION AGREEMENTS PERMITTED UNDER SECTION 403(B) (Sec. 1450(a) of the House bill and the Sen- ate amendment.) Present law Under Treasury regulations, a participant in a tax-sheltered annuity plan (sec. 403(b)) is not permitted to enter into more than one salary reduction agreement in any taxable year. These restrictions do not apply to other elective deferral arrangements such as a qualified cash or deferred arrangement (sec. 401(k)). House bill Under the House bill, for participants in a tax-sheltered annuity plan, the frequency that a salary reduction agreement may be entered into the compensation to which such agreement applies, and the ability to revoke such agreement shall be determined under the rules applicable to qualified cash or de- ferred arrangements. Effective date.\u2014The provision is effective for taxable years beginning after December 31, 1995. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 11. TREATMENT OF INDIAN TRIBAL GOVERNMENTS UNDER SECTION 403(B) (Sec. 1450(b) of the House bill and the Sen- ate amendment.) Present law Under present law, certain tax-exempt em- ployers and certain State and local govern- ment educational organizations are per- mitted to maintain tax-sheltered annuity plans (sec. 403(b)). Indian tribal governments are treated as States for this purpose, so cer- tain educational organizations associated with a tribal government are eligible to maintain tax-sheltered annuity plans. House bill The House bill provides that any section 403(b) annuity contract purchased in a plan year beginning before January 1, 1995, by an Indian tribal government will be treated as purchased by an entity permitted to main- tain a tax-sheltered annuity plan. The House bill also provides that such contracts may be rolled over into a section 401(k) plan main- tained by the Indian tribal government. Effective date.\u2014The provision is effective on the date of enactment. Senate amendment The Senate amendment provides that any section 403(b) annuity contract purchased in a plan year beginning before January 1, 1997, by an Indian tribal government will be treat- ed as purchased by an entity permitted to maintain a tax-sheltered annuity plan. The Senate amendment also provides that such contracts may be rolled over into a section 401(k) plan maintained by the Indian tribal government. In addition, beginning January 1, 1997, In- dian tribal governments are permitted to maintain tax-sheltered annuity plans. Effective date.\u2014The provision generally is effective on the date of enactment, except that the provision permitting Indian tribal governments to maintain tax-sheltered an- nuity plans is effective for taxable years be- ginning after December 31, 1996. Conference agreement The conference agreement follows the House bill. 12. APPLICATION OF ELECTIVE DEFERRAL LIMIT TO SECTION 403(B) CONTRACTS (Sec. 1450(c) of the House bill and the Sen- ate amendment.) Present law A tax-sheltered annuity plan must provide that elective deferrals made under the plan on behalf of an employee may not exceed the annual limit on elective deferrals ($9,500 for 1996). Plans that do not comply with this re- quirement may lose their tax-favored status. House bill Under the House bill, each tax-sheltered annuity contract, not the tax-sheltered an- nuity plan, must provide that elective defer- rals made under the contract may not exceed the annual limit on elective deferrals. It is intended that the contract terms be given ef- fect in order for this requirement to be satis- fied. Effective date.\u2014The provision is effective for years beginning after December 31, 1995, except that an annuity contract is not re- quired to meet any change in any require- ment by reason of the provision before the 90th day after the date of enactment. No in- ference is intended as to whether the exclu- sion of elective deferrals from gross income by employees who have not exceeded the an- nual limit on elective deferrals is affected to the extent other employees exceed the an- nual limit prior to the effective date of this provision. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 13. WAIVER OF MINIMUM WAITING PERIOD FOR QUALIFIED PLAN DISTRIBUTIONS (Sec. 1451 of the House bill.) Present law Under present law, in the case of a quali- fied joint and survivor annuity (”QJSA”), a written explanation of the form of benefit must generally be provided to participants no less than 30 days and no more than 90 days before the annuity starting date. Tem- porary Treasury regulations provide that a plan may permit a participant to elect (with any applicable spousal consent) a distribu- tion with an annuity starting date before 30 days have elapsed since the explanation was provided, as long as the distribution com- mences more than seven days after the ex- planation was provided. House bill The House bill provides that the minimum period between the date the explanation of the qualified joint and survivor annuity is provided and the annuity starting date does not apply if it is waived by the participant and, if applicable, the participant’s spouse. Effective date.\u2014The provision is effective with respect to plan years beginning after December 31, 1996. Senate amendment No provision. Conference agreement The conference agreement codifies the pro- vision in the temporary Treasury regula- tions which provides that a plan may permit a participant to elect (with any applicable spousal consent) a distribution with an an- nuity starting date before 30 days have elapsed since the explanation was provided, as long as the distribution commences more than seven days after the explanation was provided. The conference agreement also provides that a plan is permitted to provide the explanation after the annuity starting date if the distribution commences at least 30 days after such explanation was provided, subject to the same waiver of the 30-day min- imum waiting period as described above. This is intended to allow retroactive pay- ments of benefits which are attributable to the period before the explanation was pro- vided. 14. EXPANSION OF PBGC MISSING PARTICIPANT PROGRAM (Sec. 1451 of the Senate amendment.) Present law The Retirement Protection Act (”RPA”), enacted as part of the legislation implement- ing the General Agreement on Tariffs and Trade (”GATT”) in 1994, provided special rules for the payment of benefits with re- spect to missing participants under a termi- nating single-employer defined benefit plan covered by the Pension Benefit Guaranty Corporation (”PBFC”). These rules generally required the plan administrator to (1) trans- fer the missing participant’s designated ben- efit to the PBGC or purchase an annuity from an insurer to satisfy the benefit liabil- ity, and (2) provide the PBGC with such in- formation and certifications with respect to the benefits or annuity as the PBGC may specify. The missing participant program does not apply to multiemployer defined benefit plans, defined contribution plans, and defined benefit plans not covered by the PBGC (generally governmental plans, church plans, and plans sponsored by professional service employers with less than 25 employ- ees). House bill No provision. Senate amendment The missing participant program is gen- erally expanded to be available to multiem- ployer defined benefit plans, defined con- tribution plans, and defend benefit plans not covered by the PBGC (other than govern- mental and church plans). Under the Senate amendment, the present law missing partici- pant program applicable to single-employer defined benefits plans applies to a terminat- ing muiltiemployer defined benefit plan under rules prescribed by the PBGC. In the case of a terminating defined con- tribution plan or a terminating defined bene- fit plan not covered by the PBGC, the miss- ing participant program does not apply un- less the plan elects to transfer a missing par- ticipant’s benefits to the PBGC. To the ex- tent provided in regulations issued by the PBGC, the administrator of the plan making such an election is required to provide the PBGC with information with respect to the benefits of a missing participant. Upon loca- tion of the missing participant, the missing participant’s benefits would be paid by the PBGC in a lump sum or in such other form as specified in regulations. Effective date.\u2014The provisions is effective with respect to distribution made on or after the date final regulations implementing the provision are issued by the PBGC. Conference agreement The conference agreement does not include the Senate amendment provision. CONGRESSIONAL RECORD \u2014 HOUSE H9633August 1, 1996 15. REPEAL OF COMBINED PLAN LIMIT (Sec. 1452 of the House bill and the Senate amendment.) Present law Combined plan limit Present law provides limits on contribu- tions and benefits under qualified retirement plans based on the type of plan (i.e., based on whether the plan is a defined contribution plan or a defined benefit pension plan). In the case of a defined contribution plan, an- nual contributions are generally limited to the lesser of $30,000 (for 1996) and 25 percent of compensation. In the case of a defined benefit pension plan, the annual benefit is generally limited to the lesser of $120,000 (for 1996) and 100 percent of the participant’s av- erage compensation for the highest 3 years. An overall limit applies if an individual is a participant in both a defined benefit pension plan and a defined contribution plan (called the combined plan limit). Excess distribution tax Present law imposes a 15-percent excise tax on excess distributions from qualified retire- ment plans, tax-sheltered annuities, and IRAs. Excess distributions are generally the aggregate amount of retirement distribu- tions from such plans during any calendar year in excess of $150,000 (or $750,000 in the case of a lump-sum distribution). An addi- tional 15-percent estate tax is also imposed on an individual’s excess retirement accumu- lation. House bill Combined plan limit The House bill repeals the combined plan limit. Effective date.\u2014The provision repealing the combined plan limit is effective with respect to limitation years beginning after Decem- ber 31, 1998. Excess distribution tax Until the repeal of the combined plan limit is effective, the House bill suspends the ex- cise tax on excess distributions. The addi- tional estate tax on excess accumulations continues to apply. Effective date.\u2014The provision relating to the excise tax on excess distributions is ef- fective with respect to distributions received in 1996, 1997, and 1998. Senate amendment Combined plan limit The Senate amendment is the same as the House bill. Effective date.\u2014The provision repealing the combined plan limit is effective with respect to limitation years beginning after Decem- ber 31, 1999. Excess distribution tax The Senate amendment is the same as the House bill. Effective date.\u2014The provision relating to the excise tax on excess distribution is effec- tive with respect to distributions received in 1997, 1998, and 1999. Conference agreement Combined plan limit The conference agreement follows the Sen- ate amendment. Excess distribution tax The conference agreement follows the Sen- ate amendment. 16. TAX ON PROHIBITED TRANSACTIONS (Sec. 1453 of the House bill and the Senate amendment.) Present law Present law prohibits certain transactions (prohibited transactions) between a qualified plan and a disqualified person in order to prevent with a close relationship to the qualified plan from using that relationship to the detriment of plan participants and beneficiaries. A two-tier excise tax is im- posed on prohibited transactions. The initial level tax is equal to 5 percent of the amount involved with respect to the transaction. If the transaction is not corrected within a cer- tain period, a tax equal to 100 percent of the amount involved may be imposed. House bill The House bill increases the initial-level prohibited transaction tax from 5 percent to 10 percent. Effective date.\u2014The provision is effective with respect to prohibited transactions occuring after the date of enactment. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 17. TREATMENT OF LEASED EMPLOYEES (Sec. 1454 of the House bill and the Senate amendment.) Present law An individual (a leased employee) who per- forms services for another person (the recipi- ent) may be required to be treated as the re- cipient’s employee for various employee ben- efit provisions, if the services are performed pursuant to an agreement between the recip- ient and any other person (the leasing orga- nization) who is otherwise treated as the in- dividual’s employer (sec. 414(n)). The individ- ual is to be treated as the recipient’s em- ployee only if the individual has performed services for the recipient on a substantially full-time basis for a year, and the services are of a type historically performed by em- ployees in the recipient’s business field. An individual who otherwise would be treated as a recipient’s leased employee will not be treated as such an employee if the in- dividual participates in a safe harbor plan maintained by the leasing organization meeting certain requirements. Each leased employee is to be treated as an employee of the recipient, regardless of the existence of a safe harbor plan, if more than 20 percent of an employer’s nonhighly compensated workforce are leased. House bill Under the House bill, the present-law ”his- torically performed” test is replaced with a new test under which an individual is not considered a leased employee unless the indi- vidual’s services are performed under pri- mary direction or control by the service re- cipient. As under present law, the determina- tion of whether someone is a leased em- ployee is made after determining whether the individual is a common-law employee of the recipient. Thus, an individual who is not a common-law employee of the service recip- ient could nevertheless be a leased employee of the service recipient. Similarly, the fact that a person is or is not found to perform services under primary direction or control of the recipient for purposes of the employee leasing rules is not determinative of whether the person is or is not a common-law em- ployee of the recipient. Whether services are performed by an indi- vidual under primary direction or control by the service recipient depends on the facts and circumstances. In general, primary di- rection and control means that the service recipient exercises the majority of direction and control over the individual. Factors that are relevant in determining whether primary direction or control exists include whether the individual is required to comply with in- structions of the service recipient about when, where, and how he or she is to perform the services, whether the services must be performed by a particular person, whether the individual is subject to the supervision of the service recipient, and whether the indi- vidual must perform services in the order or sequence set by the service recipient. Fac- tors that generally are not relevant in deter- mining whether such direction or control ex- ists include whether the service recipient has the right to hire or fire the individual and whether the individual works for others. For example, an individual who works under the direct supervision of the service recipient would be considered to be subject to primary direction or control of the service recipient even if another company hired and trained the individual, had the ultimate (but unexercised) legal right to control the indi- vidual, paid his wages, withheld his employ- ment and income taxes, and had the exclu- sive right to fire him. Thus, for example, temporary secretaries, receptionists, word processing personnel and similar office per- sonnel who are subject to the day-to-day control of the employer in essentially the same manner as a common law employee are treated as leased employees if the period of service threshold is reached. On the other hand, an individual who is a common-law employee of Company A who performs services for Company B on the busi- ness premises of Company B under the super- vision of Company A would generally not be considered to be under primary direction or control of Company B. The supervision by Company A must be more than nominal, however, and not merely a mechanism to avoid the literal language of the direction or control test. An example of the situation in the preced- ing paragraph might be a work crew that comes into a factory to install, repair, main- tain, or modify equipment or machinery at the factory. The work crew includes a super- visor who is an employee of the equipment (or equipment repair) company and who has the authority to direct and control the crew, and who actually does exercise such direc- tion and control. In this situation, the super- visor and his or her crew are required to comply with the safety and environmental precautions of the manufacturer, and the su- pervisor is in frequent communication with the employees of the manufacturer. As an- other example, certain professionals (e.g., at- torneys, accountants, actuaries, doctors, computer programmers, systems analysts, and engineers) who regularly make use of their own judgment and discretion on mat- ters of importance in the performance of their services and are guided by professional, legal, or industry standards, are not leased employees even though the common law em- ployer does not closely supervise the profes- sional on a continuing basis, and the service recipient requires the services to be per- formed on site and according to certain stages, techniques, and timetables. In addi- tion to the example above, outside profes- sionals who maintain their own businesses (e.g., attorneys, accountants, actuaries, doc- tors, computer programmers, systems ana- lysts, and engineers) generally would not be considered to be subject to such primary di- rection or control. Under the direction or control test, cleri- cal and similar support staff (e.g., secretaries and nurses in a doctor’s office), generally would be considered to be subject to primary direction or control of the service recipient and would be leased employees provided the other requirements of section 414(n) are met. In many cases, the ”historically per- formed” test is overly broad, and results in the unintended treatment of individuals as leased employees. One of the principal pur- poses for changing the leased employee rules CONGRESSIONAL RECORD \u2014 HOUSEH9634 August 1, 1996 is to relieve the unnecessary hardship and uncertainty created for employers in these circumstances. However, it is not intended that the direction or control test enable em- ployers to engage in abusive practices. Thus, it is intended that the Secretary interpret and apply the leased employee rules in a manner so as to prevent abuses. This ability to prevent abuses under the leasing rules is in addition to the present-law authority of the Secretary under section 414(o). For ex- ample, one potentially abusive situation ex- ists where the benefit arrangements of the service recipient overwhelmingly favor its highly compensated employees, the em- ployer has no or very few nonhighly com- pensated common-law employees, yet the employer makes substantial use of the serv- ices of nonhighly compensated individuals who are not its common-law employees. Effective date.\u2014The provision is effective for years beginning after December 31, 1996, except that the House bill would not apply to relationships that have been previously de- termined by an IRS ruling not to involve leased employees. In applying the leased em- ployee rules to years beginning before the ef- fective date, it is intended that the Sec- retary use a reasonable interpretation of the statute to apply the leasing rules to prevent abuse. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 18. UNIFORM PENALTY PROVISIONS TO APPLY TO CERTAIN PENSION REPORTING REQUIREMENTS (Sec. 1455 of the House bill and the Senate amendment.) Present law Any person who fails to file an information report with the IRS on or before the pre- scribed filing date is subject to penalties for each failure. A different, flat-amount pen- alty applies for each failure to provide infor- mation reports to the IRS or statements to payees relating to pension payments. House bill The House bill incorporates into the gen- eral penalty structure the penalties for fail- ure to provide information reports relating to pension payments to the IRS and to re- cipients. Effective date.\u2014The provision is effective with respect to returns and statements the due date for which is after December 31, 1996. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 19. RETIREMENT BENEFITS OF MINISTERS NOT SUBJECT TO TAX ON NET EARNINGS FROM SELF-EMPLOYMENT (Sec. 1456 of the House bill and the Senate amendment.) Present law Under present law, certain benefits pro- vided to ministers after they retire are sub- ject to self-employment tax. House bill The House bill provides that retirement benefits received from a church plan after a minister retires, and the rental value or al- lowance of a parsonage (including utilities) furnished to a minister after retirement, are not subject to self-employment taxes. Effective date.\u2014The provision is effective for years beginning before, on, or after De- cember 31, 1994. Senate amendment The Senate amendment is the same as the House bill. Conference agreement The conference agreement follows the House bill and the Senate amendment. 20. TREASURY TO PROVIDE MODEL FORMS FOR SPOUSAL CONSENT AND QUALIFIED DOMESTIC RELATIONS ORDERS (Sec. 1457 of the Senate amendment.) Present law Present law contains a number of rules de- signed to provide income to the surviving spouse of a deceased employee. Under these spousal protection rules, defined benefit pen- sion plans and money purchase pension plans are required to provide that vested retire- ment benefits with a present value in excess of $3,500 are payable in the form of a quali- fied joint and survivor annuity (”QJSA”) or, in the case of a participant who dies before the annuity starting date, a qualified pre- retirement survivor annuity (”QPSA”). Ben- efits from a plan subject to the survivor ben- efit rules may be paid in a form other than a QJSA or QPSA if the participant waives the QJSA or QPSA (or both) and the applica- ble notice, election, and spousal consent re- quirements are satisfied. Also, under present law, benefits under a qualified retirement plan are subject to pro- hibitions against assignment or alienation of benefits. An exception to this rule generally applies in the case of plan benefits paid to a former spouse pursuant to a qualified domes- tic relations order (”QDRO”). House bill No provision. Senate amendment Model spousal consent form The Secretary is required to develop a model spousal consent from, no later than January 1, 1997, waving the QJSA and QPSA forms of benefit. Such form must be written in a manner calculated to be understood by the average person, and must disclose in plain form whether the waiver is irrevocable and that it may be revoked by a QDRO. Model QDRO The Secretary is required to develop a model QDRO, no later than January 1, 1997, which satisfies the requirements of a QDRO under present law, and the provisions of which focus attention on the need to con- sider the treatment of any lump sum pay- ment, QJSA, or QPSA. Effective date The provisions are effective on the date of enactment. Conference agreement The conference agreement follows the Sen- ate amendment, except that instead of devel- oping a model spousal consent form and a model QDRO, the Secretary must develop sample language for inclusion in a spousal consent form and QDRO. 21. TREATMENT OF LENGTH OF SERVICE AWARDS FOR CERTAIN VOLUNTEERS UNDER SECTION 457 (Sec. 1458 of the Senate amendment.) Present law Compensation deferred under an eligible deferred compensation plan of a tax-exempt or governmental employer that meets cer- tain requirements (a ”sec. 457 plan”) is not includible in gross income until paid or made available. One of the requirements for a sec- tion 457 plan is that the maximum annual amount that can be deferred is the lesser of $7,500 or 331\u20443 percent of the individual’s tax- able compensation. Amounts deferred under plans of tax-ex- empt and governmental employers that do not meet the requirements of section 457 (other than amounts deferred under tax- qualified retirement plans, section 403(b) an- nuities and certain other plans) are includ- ible in gross income in the first year in which there is no substantial risk of forfeit- ure of such amounts. House bill No provision. Senate amendment Under the Senate amendment, the require- ments of section 457 do not apply to any plan paying solely length of service awards to bona fide volunteers (or their beneficiaries) on account of fire fighting and prevention, emergency medical, and ambulance services performed by such volunteers. An individual is considered a ”bona fide volunteer” if the only compensation received by such individ- ual for performing such services is reim- bursement (or a reasonable allowance) for expenses incurred in the performance of such services, or reasonable benefits (including length of service awards) and nominal fees for such services customarily paid by tax-ex- empt or governmental employers in connec- tion with the performance of such services by volunteers. Under the Senate amendment, a length of service award plan will not qual- ify for this special treatment under section 457 if the aggregate amount of length of serv- ice awards accruing with respect to any year of service for any bona fide volunteer ex- ceeds $3,000. In addition, any amounts exempt from the requirements of section 457 under the Senate amendment are not considered wages for purposes of the Federal Insurance Contribu- tion Act (”FICA”) taxes. Effective date.\u2014The provision applies to ac- cruals of length of service awards after De- cember 31, 1996. Conference agreement The conference agreement follows the Sen- ate amendment. 22. ALTERNATIVE NONDISCRIMINATION RULES FOR CERTAIN PLANS THAT PROVIDE FOR EARLY PARTICIPATION (Sec. 1459 of the Senate amendment.) Present law Under present law, a special non- discrimination test applies to qualified cash or deferred arrangements (sec. 401(k) plans). The special nondiscrimination test is satis- fied if the actual deferral percentage (”ADP”) for eligible highly compensated em- ployees for a plan year is equal to or less than either (1) 125 percent of the ADP of all nonhighly compensated employees eligible to defer under the arrangement or (2) the lesser of 200 percent of the ADP of all eligible nonhighly compensated employees or such ADP plus 2 percentage points. Employer matching contributions and after-tax em- ployee contributions under qualified defined contribution plans are subject to a special nondiscrimination test (the actual contribu- tion percentage (”ACP”) test) similar to the special nondiscrimination test applicable to qualified cash or deferred arrangements. In general, a plan need not permit employ- ees to enter a plan prior to the attainment of age 21 and the completion of 1 year service. For purposes of the nondiscrimination rules (including the ADP and ACP tests), an em- ployer that chooses less restrictive entry conditions (e.g., age 18 rather than age 21) may choose ”separate testing” under which all employees who have not met the statu- tory age and service entry maximums are disregarded, provided that the plan satisfies the nondiscrimination rules taking into ac- count only those employees whose age and service are less than the statutory age and service maximums. Thus, for example, such a CONGRESSIONAL RECORD \u2014 HOUSE H9635August 1, 1996 36 As with the QJSA, this benefit would be the ac- tuarial equivalent of a single life annuity for the life of the participant. 37 Interpretive Bulletin 1975 2, 29 CFR section 2509.75 2(b) (1992). The term ”general account” refers to all assets of an insurance company which are not legally segregated and allocated to separate ac- counts. The assets in a general account are derived from all classes of business and support the insurer’s obligations on an unsegregated basis, with no par- ticular assets being specifically committed to meet the obligations under any particular contract or pol- icy. 38 John Hancock Mutual Life Insurance Company v. Harris Trust and Savings Bank, 510 U.S. 86 (1993). 39 The Senate amendment provides that the term policy includes a contract. plan would apply one ADP test for employees who are over age 21 with 1 year of service, under which the plan would disregard elec- tive contributions for other employees, and a second ADP test looking solely at elective contribution for employees under age 21 or who have not completed 1 year of service. House bill No provision. Senate amendment Under the Senate amendment, for purposes of the ADP test, a section 401(k) plan may elect to disregard employees (other than highly compensated employees) eligible to participate before they have completed 1 year of service and reached age 21, provided the plan separately satisfies the minimum coverage rules (sec. 410(b)) taking into ac- count only those employees who have not completed 1 year of service or are under age 21. Instead of applying two separate ADP tests, such a plan could apply a single ADP test that compares the ADP for all highly compensated employees who are eligible to make elective contributions with the ADP for those nonhighly compensated employees who are eligible to make elective contribu- tions and who have completed one year of service and reached age 21. A similar rule ap- plies for purposes of the ACP test. Effective date.\u2014The provision is effective for plan years beginning after December 31, 1998. Conference agreement The conference agreement follows the Sen- ate amendment. 23. MODIFICATIONS OF JOINT AND SURVIVOR ANNUITY REQUIREMENTS (Sec. 1460 of the Senate amendment.) Present law Present law contains a number of rules de- signed to provide income to the surviving spouse of a deceased employee. These rules are in both the Internal Revenue Code and title I of the Employee Retirement Income Security Act of 1974, as amended. Under the spousal protection rules, defined benefit pension plans and money purchase pension plans are required to provide that vested retirement benefits with a present value in excess of $3,500 are payable in the form of a qualified joint and survivor annu- ity (”QJSA”) or, in the case of a participant who dies before the annuity starting date, a qualified preretirement survivor annuity (”QPSA”). A QJSA is generally defined as an annuity for the life of the participant with a survivor annuity for the life of the spouse which is not less than 50 percent of (and not greater than 100 percent of) the amount of the participant’s annuity, and which is the actuarial equivalent of a single life annuity for the life of the participant. A QPSA is generally defined as an annuity for the life of the surviving spouse of the participant, the payments of which are not less than the amount which would be payable as a survi- vor annuity under the plan’s QJSA. The survivor benefit rules do not apply to defined contribution plans other than money purchase pension plans if (1) the plan pro- vides that, upon the death of the participant, the participant’s accrued benefit is payable to the participant’s surviving spouse, (2) the participant does not elect payment of bene- fits in the form of an annuity, and (3) the plan is not a transferee plan of a plan subject to the joint and survivor rules. Benefits from a plan subject to the survi- vor benefit rules may be paid in a form other than a QJSA or QPSA if the participant waives the QJSA or QPSA and the applicable notice, election, and spousal consent require- ments are satisfied. Similarly, under a de- fined contribution plan not subject to the survivor benefit rules, the spouse can con- sent to have benefits paid to another bene- ficiary. House bill No provision. Senate amendment Under the Senate amendment, if a plan provides as its QJSA a benefit which pro- vides a survivor annuity for the life of the spouse which is not equal to 662\u20443 percent of the amount of the participant’s annuity, the plan is required to provide the participant with an election to receive an annuity for the life of the participant with a survivor an- nuity for the life of the spouse which is 662\u20443 percent of the amount of the participant’s annuity.36 If the participant makes such an election the benefit received is treated as a QJSA for purposes of the qualified plan re- quirements; however the fact that such an election is offered does not affect how the QPSA is calculated. In other words, the QPSA continues to be based on the regular QJSA provided under the plan. Effective date.\u2014The provision is effective for plan years beginning after December 31, 1996. However, plans in existence on the date of enactment do not have to comply with the requirements of the amendment before the plan year immediately following the first plan year in which any amendment to the plan that is otherwise made becomes effec- tive. Conference agreement The conference agreement does not include the Senate amendment provision. 24. CLARIFICATION OF APPLICATION OF ERISA TO INSURANCE COMPANY GENERAL ACCOUNTS (Sec. 1461 of the Senate amendment.) Present law The Employee Retirement Income Secu- rity Act of 1974 (”ERISA”) imposes certain fiduciary requirements (including restric- tions on certain prohibited transactions) with respect to the assets of an employee benefit plan (”plan assets”). The Inter- national Revenue Code of 1986 (the ”Code”) imposes an excise tax in the case of certain prohibited transactions involving plan as- sets. In 1975, the Department of Labor issued guidance providing that if an insurance com- pany issues a contract or policy of insurance to an employee benefit plan and places the consideration for such contract or policy in its general asset account, the assets in such account are not considered to be plan as- sets.37 In 1993, the Supreme Court 38 ruled that certain assets held in an insurance com- pany’s general account should be considered plan assets. House bill No provision. Senate amendment Under the Senate amendment, not later than December 31, 1996, the Secretary of Labor is required to issue proposed regula- tions providing guidance for the purpose of determining, in cases where an insurer issues 1 or more policies (supported by the assets of the insurer’s general account) to or for the benefit of an employee benefit plan, which assets of the insurer (other than plan assets held in its separate account) constitute plan assets for purposes of the fiduciary rules of ERISA and the prohibited transaction provi- sions of the Code. Such proposed regulations must be subject to public notice and com- ment until March 31, 1997, and the Secretary of Labor is required to issue final regulations by June 30, 1997. Any regulations issued by the Secretary of Labor in accordance with the Senate amendment generally could not take effect before the date on which such regulations became final. In issuing regulations, the Secretary of Labor would have to ensure that such regu- lations are administratively feasible and are designed to protect the interests and rights of the plan and of the plans participants and beneficiaries. In issuing regulations, the Sec- retary of Labor may exclude any assets of the insurer with respect to its operations, products, or services from treatment as plan assets. Further, the regulations would have to provide that plan assets do not include as- sets which are not treated as plan assets under present law because they are (1) assets of an investment company registered under the Investment Company Act of 1940, or (2) assets of an insurer with respect to a guaran- teed benefit policy issued by such insurer. Under the Senate amendment, no person is liable under ERISA or the Code for conduct which occurred prior to the date which is 18 months following the effective date of the final regulations on the basis of a claim that the assets of the insurer (other than plan as- sets held in a separate account) constituted plan assets, except as otherwise provided by the Secretary of Labor in order to prevent avoidance of the guidance in the regulations or as provided in an action brought by the Secretary of Labor under ERISA’s enforce- ment provisions for a breach of fiduciary re- sponsibility which would also constitute a violation of Federal criminal law or con- stitute a felony under applicable State law.39 The Senate amendment does not preclude the application of any Federal criminal law. Effective date.\u2014The provision generally would be effective on January 1, 1975. How- ever, the provision would not apply to any civil action commenced before January 7, 1995. Conference agreement The conference agreement follows the Sen- ate amendment with the following modifica- tions. Proposed regulations need not be issued by the Secretary of Labor until June 30, 1997. Such proposed regulations will be subject to public notice and comment until September 30, 1997. Final regulations need not be issued until December 31, 1997. Such regulations will only apply with re- spect to a policy issued by an insurer on or before December 31, 1998. In the case of such a policy, the regulations will take effect at the end of the 18 month period following the date such regulations become final. New policies issued after December 31, 1998, will be subject to the fiduciary obligations under ERISA. In issuing regulations, the Secretary of Labor must ensure that such regulations protect the interests and rights of the plan and of its participants and beneficiaries as opposed to ensuring that such regulations are designed to protect the interests and rights of the plan and of its participants and beneficiaries. Under the conference agreement, in con- nection with any policy (other than a guar- anteed benefit policy) issued by an insurer to CONGRESSIONAL RECORD \u2014 HOUSEH9636 August 1, 1996 40 With respect to certain provisions (e.g., the ex- emption for church plans from nondiscrimination requirements applicable to tax-sheltered annuities), the more limited definition of church under the em- ployment tax rules applies (secs. 3121(w)(3)(A) and (B)). or for the benefit of an employee benefit plan, the regulations issued by the Secretary of Labor must require (1) that a plan fidu- ciary totally independent of the insurer au- thorize the purchase of such policy (unless it is the purchase of a life insurance, health in- surance, or annuity contract exempt from ERISA’s prohibited transaction rules); (2) that after the date final regulations are is- sued the insurer provide periodic reports to the policyholder disclosing the method by which any income or expenses of the insur- er’s general account are allocated to the pol- icy and disclosing the actual return to the plan under the policy and such other finan- cial information the Secretary may deem ap- propriate; and (3) that the insurer disclose to the plan fiduciary the extent to which alter- native arrangements supported by assets of separate accounts of the insurer are avail- able, whether there is a right under the pol- icy to transfer funds to a separate account and the terms governing any such right, and the extent to which support by assets of the insurer’s general account and support by as- sets of separate accounts of the insurer might pose differing risks to the plan; and (4) that the insurer must manage general ac- count assets with the level of care, skill, pru- dence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such mat- ters would use in the conduct of an enter- prise of a like character and with like aims, taking into account all obligations sup- ported by such enterprise. Under the Conference agreement, compli- ance by the insurer with all the require- ments of the regulations issued by the Sec- retary of Labor will be deemed compliance by such insurer with ERISA’s fiduciary du- ties, prohibited transactions, and limitations on holding employer securities and employer real property provisions (ERISA secs. 404, 406, and 407). 25. CHURCH PENSION PLAN SIMPLIFICATION (Secs. 1462 1464 of the Senate amendment.) Present law In general, a church plan is a plan estab- lished and maintained for employees (or their beneficiaries) by a church or a church convention or association of churches that is exempt from tax (sec. 414(e)). Church plans include plans maintained by an organization, whether a corporation or otherwise, that has as its principal purpose or function the ad- ministration or funding of a plan or program for providing retirement or welfare benefits for the employees of the church or conven- tion or association of churches. Employees of a church include any minister, regardless of the source of his or her compensation, and an employee of an organization which is ex- empt from tax and which is controlled by or associated with a church or a convention or association of churches.40 Plans maintained by churches and certain church-controlled organizations are exempt from certain of the requirements applicable to pension plans under the Code pursuant to the Employee Retirement Income Security Act of 1974 (as amended) (”ERISA”). For ex- ample, such plans are not subject to ERISA’s vesting, coverage, and funding requirements. In some cases, such plans are subject to pro- visions in effect before the enactment of ERISA. Under the rules in effect before ERISA, a plan cannot discriminate in favor of officers, shareholder, persons whose prin- cipal duties consist in supervising the work of other employees, or highly compensated employees. Church plans may elect to waive the exemption from the qualification rules (sec. 410(d)). Electing plans become subject to all the tax Code (sec. 401(a)) qualification requirements, Title I of ERISA, the excise tax on prohibited transactions, and partici- pation in the pension plan termination in- surance program administered by the Pen- sion Benefit Guaranty Corporation. Certain eligible employers may maintain tax-sheltered annuity plans (sec. 403(b)). These plans provide tax-deferred retirement savings for employees of public education in- stitutions and employees of certain tax-ex- empt organizations (including churches and certain organizations associated with churches). In addition to tax-sheltered annu- ities, alternative funding mechanisms that provide similar tax benefits include church- maintained retirement income accounts (sec. 403(b)(9)). For purposes of determining an employee’s investment in the contract under the rules relating to taxation of annuities, amounts contributed by the employer are included as investment in the contract, but only to the extent that such amounts were includible in the gross income of the employee or, if such amounts had been paid directly to the em- ployee, would not have been includible in in- come. However, amounts contributed by the employer which, if they had been paid di- rectly to the employee, would have been ex- cludable under section 911 are not treated as investment in the contract, except to the ex- tent attributable to services performed be- fore January 1, 1963. House bill No provision. Senate amendment The Senate amendment allows self-em- ployed ministers to participate in a church plan. For purposes of the definition of a church plan, a self-employed minister is treated as his or her own employer and as if the employer were a tax-exempt organiza- tion under section 501(c)(3). The earned in- come of the self-employed minister is treat- ed as his or her compensation. Self-employed ministers are able to deduct their contribu- tions. In addition, ministers employed by an or- ganization other than a church are treated as if employed by a church. Thus, such min- isters can also participate in a church plan. The Senate amendment provides that if a minister is employed by an employer that is not eligible to maintain a church plan, the minister is not taken into account by that employer in applying nondiscrimination rules. The Senate amendment permits retire- ment income accounts to be established for self-employed minister. The Senate amendment provides that church plans subject to the pre-ERISA non- discrimination rules are to apply the same definition of highly compensated employee as other pension plans, rather than the pre- ERISA rule relating to employees who are officers, shareholders, persons whose prin- cipal duties consist of supervising the work of other employees or highly compensated employees. The Senate amendment provides that the Secretary of the Treasury may develop safe harbor rules for church plans under the ap- plicable coverage and nondiscrimination rules. The Senate amendment provides that, in the case of foreign missionaries, amounts contributed to a plan by the employer are in- vestment in the contract even though the amounts, if paid directly to the employee would have been excludable under section 911. Effective date.\u2014The provision is effective for years beginning after December 31, 1996. Conference agreement The conference agreement follows the Sen- ate amendment with technical modifica- tions. 26. INCREASE IN MULTIEMPLOYER PLAN BENEFITS GUARANTEED (Sec. 1465 of the Senate amendment.) Present law The Pension Benefit Guaranty Corporation (”PBGC”) guarantees benefits of workers under multiemployer plans. The monthly guarantee is equal to the participant’s years of service multiplied by the sum of (1) 100 percent of the first $5 of the monthly benefit accrual rate, and (2) 75 percent of the next $15 of the accrual rate. House bill No provision. Senate amendment The Senate amendment generally adjusts the amount guaranteed under multiemployer plans to account for changes in the Social Security wage index since 1980. Under the Senate amendment, the monthly benefit guaranteed by the PBGC is generally in- creased to the participant’s years of service multiplied by the sum of (1) 100 percent of the first $11 of the monthly benefit accrual rate, and (2) 75 percent of the next $33 of the accrual rate. The maximum annual guaran- tee for a retiree with 30 years of service is generally increased to $12,870. The increase in guaranteed multiemployer plan benefits only applies in the case of mul- tiemployer plans which first receive finan- cial assistance from the PBGC during the ap- plicable period. The applicable period is the period beginning on the date of enactment and ending on the last day of the first fiscal year in which the surplus in the PBGC’s mul- tiemployer insurance program is less than half of the surplus for the fiscal year ending September 30, 1995, as reflected in the State- ment of Financial Condition in the PBGC’s 1995 Annual Report. In determining the sur- plus in the multiemployer insurance pro- gram in any fiscal year, the PBGC is re- quired to use the same actuarial assump- tions that it used in determining the surplus for the fiscal year ending September 30, 1995. If the PBGC surplus declines by more than 50 percent, benefits of participants in multiem- ployer plans that first received financial as- sistance from the PBGC during the applica- ble period would continue to be guaranteed at the increased level; however, other bene- fits would be guaranteed at the present-law levels. The guaranteed benefit level would not automatically increase if the surplus in- creases. Effective date.\u2014The provision is effective on the date of enactment. Conference agreement The conference agreement does not include the Senate amendment provision. 27. WAIVER OF EXCISE TAX ON FAILURE TO PAY LIQUIDITY SHORTFALL (Sec. 1466 of the Senate amendment.) Present law A provision in the Retirement Protection Act of 1994, enacted as part of the imple- menting legislation for the General Agree- ment on Tariffs and Trade (”GATT”), gen- erally requires certain underfunded single- employer defined benefit plans to make quarterly contributions sufficient to main- tain liquid plan assets, i.e., cash and market- able securities, at an amount approximately equal to three times the total trust disburse- ments for the preceding 12-month period. This liquidity requirement only applies to underfunded single-employer defined benefit CONGRESSIONAL RECORD \u2014 HOUSE H9637August 1, 1996 41 A plan is a small plan if it had 100 or fewer par- ticipants on each day during the plan year (as deter- mined in Code sec. 412(l)(6)). plans (other than small plans) 41 that (1) are required to make quarterly installments of their estimated minimum funding contribu- tion for the plan year, and (2) have a liquid- ity shortfall for any quarter during the plan year. A plan has a liquidity shortfall if its liquid assets as of the last day of the quarter are less than the base amount for the quarter. Liquid assets are cash, marketable securities and such other assets as specified by the Sec- retary. The base amount for the quarter is an amount equal to the product of three times the adjusted disbursements from the plan for the 12 months ending on the last day of the last month preceding the quarterly in- stallment due date. If the base amount ex- ceeds the product of two times the sum of adjusted disbursements for the 36 months ending on the last day of the last month pre- ceding the quarterly installment due date, and an enrolled actuary certifies to the sat- isfaction of the Secretary that the excess is the result of nonrecurring circumstances, such nonrecurring circumstances are not in- cluded in the base amount. For purposes of determining the base amount, adjusted dis- bursements mean the amount of all disburse- ments from the plan’s trust, including pur- chases of annuities, payments of single sums, other benefit payments, and administrative expenses reduced by the product of the plan’s funded current liability percentage for the plan year and the sum of the purchases of an- nuities, payments of single sums, and such other disbursements as the Secretary pro- vides in regulations. The amount of the required quarterly in- stallment for defined benefit plans that have a liquidity shortfall for any quarter is the greater of the quarterly installment or the liquidity shortfall. The amount of the liquid- ity shortfall must be paid in the form of liq- uid assets. It may not be paid by the applica- tion of credit balances in the funding stand- ard account. The amount of any liquidity shortfall payment when added to prior in- stallments for the plan year cannot exceed the amount necessary to increase the funded current liability percentage of the plan to 100 percent taking into account the expected increase in current liability due to benefits accruing during the plan year. If a liquidity shortfall payment is not made, then the plan sponsor is subject to a nondeductible excise tax equal to 10 percent of the amount of the outstanding liquidity shortfall. A liquidity shortfall payment is no longer considered outstanding on the earlier of (1) the last day of a later quarter for which the plan does not have a liquidity shortfall or (2) the date on which the liquid- ity shortfall for a later quarter is timely paid. If the liquidity shortfall remains out- standing after four quarters, the excise tax increases to 100 percent. House bill No provision. Senate amendment The Senate amendment gives the Sec- retary authority to waive all or part of the excise tax imposed for a failure to make a li- quidity shortfall payment if the plan sponsor establishes to the satisfaction of the Sec- retary that the liquidity shortfall was due to reasonable cause and not willful neglect and reasonable steps have been taken to remedy such shortfall. Effective date.\u2014The provision is effective as if included in GATT. Conference agreement The conference agreement follows the Sen- ate amendment. 28. TREATMENT OF MULTIEMPLOYER PLANS UNDER SECTION 415 (Sec. 1467 of the Senate amendment.) Present law Present law imposes limits on contribu- tions and benefits under qualified plans based on the type of plan. In the case of de- fined benefit pension plans, the limit on the annual retirement benefit is the lesser of (1) 100 percent of compensation or (2) $120,000 (indexed for inflation). The dollar limit is re- duced in the case of early retirement or if the employee has less than 10 years of plan participation. House bill No provision. Senate amendment The Senate amendment makes the follow- ing modifications to the limits on contribu- tions and benefits as applied to multiem- ployer plans: (1) the 100 percent of compensation limita- tion on defined benefit pension plan benefits does not apply; and (2) the early retirement reduction and the 10-year phase-in of the defined benefit pen- sion plan dollar limit does not apply to cer- tain disability and survivor benefits. Effective date.\u2014The provision applies to multiemployer plans for years beginning after December 31, 1996. Conference agreement The conference agreement does not include the Senate amendment provision. 29. PAYMENT OF LUMP-SUM CREDIT FOR FORMER SPOUSES OF FEDERAL EMPLOYEES (Sec. 1468 of the Senate amendment.) Present law When a Federal employee or former Fed- eral employee dies, any contribution to his or her credit in the Civil Service Retirement and Disability Fund must be paid to whom- ever the employee designated to receive that contribution. If no designation was made, there is a statutory order of precedence be- ginning with the surviving spouse. There is no provision in law that permits a domestic relations order to interfere with these ar- rangements. Thus, if an employee agreed in a divorce settlement to designate a former spouse to receive these funds, and later des- ignated another individual, present law would require payment of the funds to the other individual. By contrast, under present law, an employee’s annuity and survivor ben- efits are subject to the provisions of a do- mestic relations order. House bill No provision. Senate amendment The payment of contributions to the em- ployee’s credit in the Civil Service Retire- ment and Disability Fund is subject to the provisions of a domestic relations order, in the same way as the employee’s annuity and survivor benefits. Thus, a domestic relations order on file with the Office of Personnel Management supersedes any designation of beneficiary by the employee. Effective date.\u2014The provision is effective with respect to deaths occurring after the 90th day after the date of enactment. Conference agreement The conference agreement does not include the Senate amendment. 30. DATE FOR ADOPTION OF PLAN AMENDMENTS (Sec. 1459 of the House bill and sec. 1469 of the Senate amendment.) Present law Plan amendments to reflect amendments to the law generally must be made by the time prescribed by law for filing the income tax return of the employer for the employ- er’s taxable year in which the change in law occurs. House bill The House bill generally provides that any amendments to a plan or annuity contract required by the pension simplification amendments would not be required to be made before the first plan year beginning on or after January 1, 1997. The date for amend- ments is extended to the first plan year be- ginning on or after January 1, 1999, in the case of a governmental plan. Effective date.\u2014The provision is effective on the date of enactment. Senate amendment The Senate amendment is the same as the House bill. Conference agreement Under the conference agreement, any amendments to a plan or annuity contract required by the pension simplification amendments would not be required to be made before the first plan year beginning on or after January 1, 1998. The date for amend- ments is extended to the first plan year be- ginning on or after January 1, 2000, in the case of a governmental plan. Effective date.\u2014The provision is effective on the date of enactment. IV. FOREIGN SIMPLIFICATION PROVISION 1. REPEAL OF EXCESS PASSIVE ASSETS PROVISION (Sec. 1501 of the House bill.) Present law Under the rules of subpart F (secs. 951 964), certain 10-percent U.S. shareholders of a con- trolled foreign corporation (CFC) are re- quired to include in income currently for U.S. tax purposes certain earnings of the CFC, whether or not such earnings are actu- ally distributed currently to the sharehold- ers. The 10-percent U.S. shareholders of a CFC are subject to current U.S. tax on their shares of certain income earned by the CFC (referred to as ”subpart F income”). The 10- percent U.S. shareholders are also subject to current U.S. tax on their shares of the CFC’s earnings to the extent such earnings are in- vested by the CFC in certain U.S. property. In addition to these current inclusion rules, the Omnibus Budget Reconciliation Act of 1993 enacted section 956A, which ap- plies another current inclusion rule to U.S. shareholders of a CFC. Section 956A requires the 10-percent U.S. shareholder of a CFC to include in income currently their shares of the CFC’s earnings to the extent such earn- ings are invested by the CFC in excess pas- sive assets. A CFC generally is treated as having excess passive assets if the average of the amounts of its passive assets exceeds 25 percent of the average of the amounts of its total assets; this calculation requires a quar- terly determination of the CFC’s passive as- sets and total assets. House bill The House bill repeals section 956A. Effective date.\u2014The provision applies to taxable years of foreign corporations begin- ning after December 31, 1996, and taxable years of U.S. shareholders with or within which such taxable years of foreign corpora- tions end. Senate amendment No provision. Conference agreement The conference agreement follows the House bill. V. OTHER PROVISIONS 1. EXEMPT ALASKA FROM DIESEL DYEING RE- QUIREMENT WHILE ALASKA IS EXEMPT FROM SIMILAR CLEAN AIR ACT DYEING REQUIRE- MENT (Sec. 1801 of the Senate amendment.) CONGRESSIONAL RECORD \u2014 HOUSEH9638 August 1, 1996 Present law An excise tax totaling 24.3 cents per gallon is imposed on diesel fuel. In the case of fuel used in highway transportation, 20 cents per gallon is dedicated to the Highway Trust Fund. The remaining portion of this tax is imposed on transportation generally and is retained in the General Fund. The diesel fuel tax is imposed on removal of the fuel from a pipeline or barge terminal facility (i.e., at the ”terminal rack”). Present law provides that tax is imposed on all diesel fuel removed from terminal facili- ties unless the fuel is destined for a non- taxable use and is indelibly dyed pursuant to Treasury Department regulations. In general, the diesel fuel tax does not apply to non-transportation uses of the fuel. A specific exemption is provided for off-high- way business uses (e.g., use as fuel powering off-highway equipment). Use as heating oil also is exempt. (Most fuel commonly referred to a heating oil is diesel fuel.) The tax also does not apply to fuel used on a farm for farming purposes or by State and local gov- ernments, to exported fuels, and to fuel used in commercial shipping. Fuel used by inter- city buses and trains is partially exempt from the diesel fuel tax. A similar dyeing regime exists for diesel fuel under the Clean Air Act. That Act pro- hibits the use on highways, of diesel fuel with a sulfur content exceeding prescribed levels. This ”high sulfur” diesel fuel is re- quired to be dyed by the EPA. The State of Alaska generally was exempted from the Clean Air Act, but not the excise tax, dyeing regime for three years (until October 1, 1996) (urban areas) or permanently (remote areas). House bill No provision Senate amendment The Senate amendment provides that die- sel fuel sold in the State of Alaska will be exempt from the diesel dyeing requirement during the period when that State is exempt from the Clean Air Act dyeing requirements. Thus, subject to a certification procedure to be developed by the Treasury Department, undyed diesel fuel which is destined for a nontaxable use may be removed from termi- nals without payment of tax through Sep- tember 30, 1996 (urban areas, unless extended by the Environmental Protection Agency) or permanently (remote areas). Effective date.\u2014Effective beginning with the first calendar quarter after the date of enactment. Conference agreement The conference agreement follows the Sen- ate amendment 2. APPLICATION OF COMMON PAYMASTER RULES TO CERTAIN AGENCY ACCOUNTS AT STATE UNI- VERSITIES (Sec. 1802 of the Senate amendment.) Present law In general, the OASDI portion of FICA taxes are payable with respect to employee remuneration not in excess of a contribution base. If an employee works for more than one employer during a year, these taxes are payable for each employer up to the con- tribution base. Under the common pay- master rule if an individual works for two or more related corporations, the remuneration may be treated as being from one employer and therefore taxable for one contribution base. Section 125 of Social Security Amend- ments of 1983 provided a common paymaster rule for certain State universities that em- ploy health care professionals as faculty members at a medical school and at a tax-ex- empt faculty practice plan. This rule does not explicitly apply to situations where com- pensation is made through a university agen- cy account and not directly by a medical school faculty practice plan. House bill No provision. Senate amendment The Senate amendment establishes a com- mon paymaster rule in cases where: (1) a State or State university provides remunera- tion pursuant to a single contract of employ- ment to certain health care professionals as members of its medical school faculty; and (2) as agency account at such institution also provides remuneration to such health care professionals. The agency account must receive funds for the remuneration from a faculty practice plan described in section 501(c)(3) of the Code. The payments may only be distributed by the agency account to fac- ulty members who render patient care at the medical school. The faculty members receiv- ing payments must comprise at least 30 per- cent of the membership of the faculty prac- tice plan. Effective date.\u2014Remuneration paid after December 31, 1996. It is intended that, with respect to years before the effective date, the Secretary apply present law in a manner consistent with the proposal. Conference agreement The conference agreement includes the Senate amendment provision. 3. MODIFICATIONS TO EXCISE TAX ON OZONE- DEPLETING CHEMICALS a. Exempt imported recycled halons from the excise tax on ozone-depleting chemicals (Sec. 1803(a) of the bill.) Present law An excise tax is imposed on the sale or use by the manufacturer or importer of certain ozone-depleting chemicals (Code sec. 4681). The amount of tax generally is determined by multiplying the base tax amount applica- ble for the calendar year by an ozone-deplet- ing factor assigned to each taxable chemical. The base tax amount is $5.80 per pound in 1996 and will increase by 45 cents per pound per year thereafter. The ozone-depleting fac- tors for taxable halons are 3 for halon-1211, 10 for halon-1301, and 6 for halon-2402. Taxable chemicals that are recovered and recycled within the United States are ex- empt from tax. House bill No provision. Senate amendment The Senate amendment extends the ex- emption from tax for domestically recovered and recycled ozone-depleting chemicals to imported recycled halons. The exemption for imported recycled halons applies only to such chemicals imported from countries that are signatories to the Montreal Protocol on Substances that Deplete the Ozone Layer. Effective date.\u2014The provision is effective for chemicals imported after December 31, 1996. Conference agreement The conference agreement follows the Sen- ate amendment with a modification to the effective date. Effective date.\u2014The provision is effective for halon-1301 and halon-2402 imported after December 31, 1996, and for halon-1211 im- ported after December 31, 1997. b. Exempt chemicals used in metered-dose inhalers from the excise tax on ozone-de- pleting chemicals (Sec. 1803(b) of the bill.) Present law An excise tax is imposed on the sale or use by the manufacturer or importer of certain ozone-depleting chemicals (Code sec. 4681). The amount of tax generally is determined by multiplying the base tax amount applica- ble for the calendar year by an ozone-deplet- ing factor assigned to each taxable chemical. The base tax amount is $5.80 per pound in 1996 and will increase by 45 cents per pound per year thereafter. A reduced rate of tax of $1.67 per pound ap- plies to chemicals used as propellants in me- tered-dose inhalers (sec. 4682(g)(4)). House bill No provision. Senate amendment The Senate amendment exempts chemicals used as propellants in metered-dose inhalers from the excise tax on ozone-depleting chemicals. Effective date.\u2014The provision is effective for chemicals sold or used seven days after the date of enactment. Conference agreement The conference agreement follows the Sen- ate amendment. 4. TAX-EXEMPT BONDS FOR THE SALE OF THE ALASKA POWER ADMINISTRATION FACILITY (Sec. 1804 of the Senate amendment.) Present law Interest on State and local government bonds to provide financing to private parties (private activity bonds) is taxable unless an exception is provided in the Internal Reve- nue Code. One such exception relates to the financing of facilities for the furnishing of electricity and gas. Most private activity bonds are subject to annual State volume limits of the greater of $50 per resident of the State or $150 million. Additionally, persons acquiring existing property financed with most private activity bonds must satisfy a rehabilitation require- ment as a condition of the financing. House bill No provision. Senate amendment Provides an exception from the general re- habilitation requirement for private activity bonds used to acquire existing property for certain bonds to finance the acquisition of the Snettisham hydroelectric project for the Alaska Power Administration pursuant to legislation that has been enacted authorizing that transaction. These bonds are subject to the State of Alaska’s private activity bond volume limit. Effective date.\u2014Bonds issued after the date of enactment. Conference agreement The conference agreement follows the Sen- ate amendment. 5. ALLOW BANK COMMON TRUST FUNDS TO TRANSFER ASSETS TO REGULATED INVEST- MENT COMPANIES WITHOUT TAXATION (Sec. 1805 of the Senate amendment.) Present law Common trust funds A common trust fund is a fund maintained by a bank exclusively for the collective in- vestment and reinvestment of monies con- tributed by the bank in its capacity as a trustee, executor, administrator, guardian, or custodian of certain accounts and in con- formity with rules and regulations of the Board of Governors of the Federal Reserve System or the Comptroller of the Currency pertaining to the collective investment of trust funds by national banks (sec. 584(a)). The common trust fund is not subject to tax and is not treated as a corporation (sec. 584(b)). Each participant in a common trust fund includes his proportional share of com- mon trust fund income, whether or not the CONGRESSIONAL RECORD \u2014 HOUSE H9639August 1, 1996 42 The bill specifically provides that an interest in a qualified State tuition program will not be treated as debt for purposes of the UBIT debt-financed prop- erty rules (sec. 514). Consequently, a qualified State tuition program’s investment income will not con- stitute debt-financed property income subject to the UBIT merely because the program accepts contribu- tions and is obligated to pay out (or refund) such contributions and certain earnings thereon to des- ignated beneficiaries or to contributors. However, investment income of a qualified State tuition pro- gram could be subject to the UBIT as debt-financed property income to the extent the program acquires indebtedness when investing the contributions made on behalf of designated beneficiaries. 43 The bill allows for a change in designated bene- ficiaries, so long as the new beneficiary is a member of the family of the old beneficiary. 44 For this purpose, the term ”member of the fam- ily” is defined under present-law section 2032A(e)(2). 45 Thus, a State need not impose a monetary pen- alty when a refund is made from a qualified State tuition program in order to cover medical expenses incurred by (or on behalf of) a designated bene- ficiary who suffers a disabling illness (and who could be any member of the same family of the originally designated beneficiary). 46 Specifically, the bill provides that any distribu- tion under a qualified State tuition program shall be includible in the gross income of the distributee in the same manner as provided under present-law sec- tion 72 to the extent not excluded from gross income under any other provision of the Code. income is distributed or distributable (sec. 584(c)). No gain or loss is realized by the fund upon admission or withdrawal of a participant. Participants generally treat their admission to the fund as the purchase of an interest. Withdrawals from the fund generally are treated as the sale of an interest by the par- ticipant (sec. 584(e)). Regulated investment companies (”RICs”) A RIC also is treated as a conduit for Fed- eral income tax purposes. Conduit treatment is accorded by allowing the RIC a deduction for dividend distributions to its sharehold- ers. Present law is unclear as to the tax con- sequences when a common trust fund trans- fers its assets to one or more RICs. House bill No provision. Senate amendment In general, the Senate amendment permits a common trust fund to transfer substan- tially all of its assets to one or more RICs without gain or loss being recognized by the fund or its participants. The fund must transfer its assets to the RICs solely in ex- change for shares of the RICs, and the fund must then distribute the RIC shares to the fund’s participants in exchange for the par- ticipants’ interests in the fund. The basis of any asset received by a RIC will be the basis of the asset in the hands of the fund prior to transfer (increased by the amount of gain recognized by reason of the rule regarding the assumption of liabilities). In addition, the basis of any RIC shares that are received by a fund participant will be an allocable portion of the participant’s basis in the interests exchanged. If stock in more than one RIC is received in exchange for as- sets of a common trust fund, the basis of the shares in each RIC shall be determined by al- locating the basis of common fund assets used in the exchange among the shares of each RIC received in the exchange on the basis of the respective fair market values of the RICs. The tax-free transfer is not available to a common trust fund with assets that are not diversified under the requirements of section 368(a)(2)(F)(ii), except that the diversifica- tion test is modified so that Government se- curities are not to be included as securities of an issuer and are to be included in deter- mining total assets for purposes of the 25- and 50-percent tests. Effective date.\u2014The provision is effective for transfers after December 31, 1995. Conference agreement The conference agreement follows the Sen- ate amendment. In order to qualify for the provision, the transfer by the common trust fund to the RIC must occur after December 31, 1995. The conferees intend that there is no requirement for qualification that the trans- fer of assets by the common trust fund to one or more RICs and the distribution of RIC shares to participants in the common trust fund be made contemporaneously or pursu- ant to a single plan. 6. TREATMENT OF QUALIFIED STATE TUITION PROGRAMS (Sec. 1806 of the Senate amendment.) Present law In Michigan v. United States, 40 F.3d 817 (6th Cir. 1994), the Sixth Circuit held that the Michigan Education Trust, an entity created by the State of Michigan to operate a pre- paid tuition payment program, is an integral part of the State, and, thus, the investment income realized by the Trust is not currently subject to Federal income tax. The Trust was established to receive advance payments of college tuition, invest the money, and ul- timately make disbursements under a pro- gram that allows beneficiaries to attend any of the State’s public colleges or universities without further tuition costs for a year or more (depending on the terms of the con- tract). Section 115 of the Code provides that gross income does not include income derived from any public utility or the exercise of any es- sential governmental function and accruing to a State or any political subdivision there- of, or the District of Columbia. Section 2501 imposes a Federal gift tax on certain transfers of property by gift. Section 2503(e) specifically excludes from gifts sub- ject to tax under section 2501 any ”qualified transfer,” which includes any amount paid on behalf of an individual as tuition to an educational institution (as described in sec. 170(b)(1)(A)(ii)) for the education or training of such individual. On June 11, 1996, the Treasury Department issued final regulations under the original issue discount (”OID”) provisions of the Code (secs. 163(e) and 1271 through 1275), including regulations relating to debt instruments that provide for contingent payments (see TD 8674). These regulations specifically pro- vide that they do not apply to contracts is- sued pursuant to State-sponsored prepaid tuition programs, whether or not the con- tracts are debt instruments. In addition, the IRS announced in Rev. Proc. 96 34 that it will not issue advance rulings or determina- tion letters regarding State-sponsored pre- paid tuition plans because issues that arise under such plans are being studied. House bill No provision. Senate amendment The Senate amendment provides tax-ex- empt status to ”qualified State tuition pro- grams,” meaning programs established and maintained by a State (or agency or instru- mentality thereof) under which persons may (1) purchase tuition credits or certificates on behalf of a designated beneficiary that enti- tle the beneficiary to a waiver or payment of qualified higher education expenses of the beneficiary, or (2) make contributions to an account that is established for the sole pur- pose of meeting qualified higher education expenses of the designated beneficiary of the account. ”Qualified higher education ex- penses” are defined at tuition, fees, books, and equipment required for enrollment or at- tendance at a college or university (or cer- tain vocational schools). The Senate amend- ment specifically provides that, although a qualified State tuition program generally is exempt from Federal income tax, such a pro- gram is subject to the unrelated business in- come tax (UBIT).42 A qualified State tuition program is re- quired to provide that purchases or contribu- tions only be made in cash. Contributors and beneficiaries are not allowed to direct any investments made on their behalf by the pro- gram. The program is required to maintain a separate accounting for each designated ben- eficiary. A specified individual must be des- ignated as the beneficiary at the commence- ment of participation in a qualified State tuition program (i.e., when contributions are first made to purchase an interest in such a program 43), unless interests in such a pro- gram are purchased by a State or local gov- ernment or a tax-exempt charity described in section 501(c)(3) as part of a scholarship program operated by such government or charity under which beneficiaries to be named in the future will receive such inter- ests as scholarships. A transfer of credits (or other amounts) from one account benefiting one designated beneficiary to another ac- count benefiting a different beneficiary will be considered a distribution (as will a change in the designated beneficiary of an interest in a qualified State tuition program) unless the beneficiaries are members of the same family.44 Earnings on an account may be re- funded to a contributor or beneficiary, but the State or instrumentality must impose a more than de minimis monetary penalty un- less the refund is (1) used for qualified higher education expenses of the beneficiary, (2) made on account of the death or disability of the beneficiary,45 or (3) made on account of a scholarship received by the designated bene- ficiary to the extent the amount refunded does not exceed the amount of the scholar- ship used for higher education expenses. A qualified State tuition program may not allow any interest in the program or any portion thereof to be used as security for a loan. In addition, the Senate amendment pro- vides that no amount shall be included in the gross income of a contributor to, or bene- ficiary of, a qualified State tuition program with respect to any distribution from, or earnings under, such program, except that (1) amounts distributed or educational bene- fits provided to a beneficiary (e.g., when the beneficiary attends college) will be included in the beneficiary’s gross income (unless ex- cludable under another Code section) to the extent such amount or the value of the edu- cational benefits exceeds contributions made on behalf of the beneficiary, and (2) amounts distributed to a contributor (e.g., when a parent or other relative receives a refund) will be included in the contributor’s gross in- come to the extent such amounts exceed con- tributions made by that person.46 The Senate amendment further provides that, for purposes of present-law section 2503(e), contributions made by an individual to a qualified State tuition program are treated as a qualified transfer and, thus, not subject to Federal gift tax. Effective date.\u2014The provision is effective for taxable years ending after the date of en- actment. The bill also includes a transition rule providing that if (1) a State maintains (on the date of enactment) a program under which persons may purchase tuition credits on behalf of, or make contributions for edu- cational expenses of, a designated bene- ficiary, and (2) such program meets the re- quirements of a qualified State tuition pro- gram before the later of (a) one year after the date of enactment, or (b) the first day of the first calendar quarter after the close of CONGRESSIONAL RECORD \u2014 HOUSEH9640 August 1, 1996 47 In this regard, the conferees intend that if a qualified State tuition program issues a check in the names of both the designated beneficiary and an educational institution at which the beneficiary in- curs (or will incur) qualified higher education ex- penses, then the issuance of the check will be con- sidered a payment of qualified higher education ex- penses to an educational institution if the check (after endorsement by the beneficiary) is deposited in the institution’s bank account. the first regular session of the State legisla- ture that begins after the date of enactment, then the provisions of the bill will apply to contributions (and earnings allocable there- to) made before the date the program meets the requirements of a qualified State tuition program, without regard to whether the re- quirements of a qualified State tuition pro- gram are satisfied with respect to such con- tributions and earnings (e.g., even if the in- terest in the tuition or educational savings program covers not only qualified higher education expenses but also room and board expenses). Conference agreement The conference agreement generally fol- lows the Senate amendment, with the follow- ing modifications: (1) A program will not be treated as a qualified State tuition program unless it provides adequate safeguards to prevent con- tributions on behalf of a designated bene- ficiary in excess of those necessary to pro- vide for the qualified higher education ex- penses of the beneficiary. (2) Contributions made to a qualified State tuition program will be treated as incom- plete gifts for Federal gift tax purposes. Thus, any Federal gift tax consequences will be determined at the time that a distribu- tion is made from an account under the pro- gram. (3) The waiver (or payment) of qualified higher education expenses of a designated beneficiary by (or to) an educational institu- tion under a qualified State tuition program will be treated as a qualified transfer for pur- poses of present-law section 2503(e).47 (4) Amounts contributed to a qualified State tuition program (and earnings there- on) will be included in the contributor’s es- tate for Federal estate tax purposes in the event that the contributor dies before such amounts are distributed under the program. The conference agreement provides that any distribution under a qualified State tui- tion program shall be includible in the gross income of the distributee in the manner as provided under section 72 to the extent not excluded from gross income under any other provision of the Internal Revenue Code. Thus, the conferees understand that if matching-grant amounts are distributed to (or on behalf of) a beneficiary as part of a qualified State tuition program, then such matching-grant amounts still may be ex- cluded from the gross income of the bene- ficiary as a scholarship under present-law section 117. Effective date.\u2014The conference agreement follows the Senate amendment. 7. ADOPTION ASSISTANCE (Sec. 101 of H.R. 3286.) Present law Present law does not provide a tax credit for adoption expenses. Also, present law does not provide an exclusion from gross income for employer-provided adoption assistance. The Federal Adoption Assistance program (a Federal outlay program) provides financial assistance for the adoption of certain special needs children. In general, a special needs child is defined as a child who (1) according to a State determination, could not or should not be returned to the home of the birth parents and (2) on account of a specific factor or condition (such as ethnic back- ground, age, membership in a minority or sibling group, medical condition, or physical, mental or emotional handicap), could not reasonably be expected to be adopted unless adoption assistance is provided. Specifically, the program provides assistance for adoption expenses for those special needs children re- ceiving Federally assisted adoption assist- ance payments as well as special needs chil- dren in private and State-funded programs. The maximum Federal reimbursement is $1,000 per special needs child. Reimbursable expenses include those nonrecurring costs di- rectly associated with the adoption process such as legal costs, social service review, and transportation costs. House bill Tax credit No provision. However, H.R. 3286 provides taxpayers with a maximum nonrefundable credit against income tax liability of $5,000 per child for qualified adoption expenses paid or incurred by the taxpayer. Any unused adoption credit may be carried forward by the taxpayer for up to five years. Qualified adoption expenses are reasonable and nec- essary adoption fees, court costs, attorneys’ fees and other expenses that are directly re- lated to the legal adoption of an eligible child. In the case of an international adop- tion, the credit is not available unless the adoption is finalized. An eligible child is an individual (1) who has not attained age 18 as of the time of the adoption, or (2) who is physically or mentally incapable of caring for himself or herself. No credit is allowed for expenses incurred (1) in violation of State or Federal law, (2) in carrying out any surro- gate parenting arrangement, or (3) in con- nection with the adoption of a child of the taxpayer’s spouse. The credit is phased out ratably for taxpayers with modified adjusted gross income (AGI) above $75,000, and is fully phased out at $115,000 of modified AGI. The credit is not allowed for any expenses for which a grant is received under any Fed- eral, State, or local program. This limit, however, does not apply in the case of special needs adoptions. Exclusion from income The proposal provides a maximum $5,000 exclusion from the gross income of an em- ployee for specified certain adoption ex- penses paid by the employer. The $5,000 limit is a per child limit, not an annual limitation. The exclusion is phased out ratably for tax- payers with modified AGI above $75,000 and is fully phased out at $115,000 of modified AGI. No credit is allowed for adoption expenses paid or reimbursed under an adoption assist- ance program. Effective date The House bill is effective for taxable years beginning after December 31, 1996. Senate amendment Tax credit The Senate amendment to H.R. 3286 is the same as the House bill, with three changes: (1) The maximum credit is increased from $5,000 to $6,000 in the case of special needs adoptions. (2) The credit for non-special needs adop- tions is repealed for expenses paid or in- curred after December 31, 2000. (3) No credit is allowed in the case of spe- cial needs adoptions for expenses for which a grant is received under any Federal, State or local program. Exclusion from income The Senate amendment to H.R. 3286 is the same as the House bill except: (1) The maximum exclusion is increased from $5,000 to $6,000 in the case of special needs adoptions. (2) The exclusion is repealed after Decem- ber 31, 2000. Effective date The Senate amendment to H.R. 3286 is the same as the House bill. Conference agreement Tax credit The conference agreement follows the Sen- ate amendment provision of H.R. 3286 with four modifications: (1) The repeal of the credit for non-special needs adoptions is delayed for one year. Therefore, the credit for non-special needs adoptions is not available for expenses paid or incurred after December 31, 2001. (2) Special needs foreign adoptions are lim- ited to a maximum credit of $5,000 (rather than $6,000) for qualified adoption expenses until December 31, 2001, at which time the credit for special needs foreign adoptions is also repealed. (3) The taxpayer is required to provide available information about the name, age, and taxpayer identification number of each adopted child. (4) Otherwise, qualified adoption expenses paid in one taxable year are not taken into account for purposes of the credit until the next taxable year unless the expenses are in- curred in the year the adoption becomes final. Exclusion from income The conference agreement follows the Sen- ate amendment provision of H.R. 3286 with three modifications; (1) The repeal of the exclusion is delayed for one year. Therefore, the exclusion is not available for expenses paid or incurred after December 31, 2001. (2) Special needs foreign adoptions are lim- ited to a maximum exclusion of $5,000 (rather than $6,000) for qualified adoption expenses until December 31, 2001, at which time the exclusion is repealed. (3) The taxpayer is required to provide available information about the name, age, and taxpayer identification number of each adopted child. Taxpayer identification numbers The conference committee is concerned that problems may arise in processing tax returns of adopting parents because of un- avoidable delays involved in obtaining a so- cial security number of a child who is being adopted. The conference understands that the Internal Revenue Service recognizes these concerns and is committed to working with the Congress to develop as soon as pos- sible an administrative solution that mini- mizes the burdens imposed on adopting par- ents while balancing processing and poten- tial compliance considerations. Effective date The conference agreement follows the House bill and the Senate amendment. The conferees wish to clarify the operation of the effective date by way of an example. Suppose that, in the course of attempting to adopt a child, a taxpayer incurs $1,000 in qualified adoption expenses in November, 1996, and an additional $3,000 in qualified adoption expenses in February, 1997, when the adoption becomes final. The taxpayer is entitled to claim a credit for tax year 1997 only with respect to the $3,000 of qualified adoption expenses in February, 1997. The tax- payer is never entitled to claim a credit with respect to the $1,000 in qualified adoption ex- penses in November, 1996, because those ex- penses were incurred prior to the effective date of this provision. 8. SIX-MONTH DELAY IN IMPLEMENTATION OF ELECTRONIC FUND TRANSFER SYSTEM FOR COLLECTION OF CERTAIN TAXES Present law Employers are required to withhold income taxes and FICA taxes from wages paid to CONGRESSIONAL RECORD \u2014 HOUSE H9641August 1, 1996 48 Treasury had earlier developed TAXLINK as the prototype for EFTPS. TAXLINK has been oper- ational for several years; EFTPS is currently be- coming operational. Employers currently using TAXLINK will ultimately be required to participate in EFTPS. their employees. Employers also are liable for their portion of FICA taxes, excise taxes, and estimated payments of their corporate income tax liability. The Code requires the development and im- plementation of an electronic fund transfer system to remit these taxes and convey de- posit information directly to the Treasury (Code sec. 6302(h)). The Electronic Federal Tax Payment System (”EFTPS”) was devel- oped by Treasury in response to this require- ment.48 Employers must enroll with one of two private contractors hired by the Treas- ury. After enrollment, employers generally initiate deposits either by telephone or by computer. The new system is phased in over a period of years by increasing each year the percent- age of total taxes subject to the new EFTPS system. For fiscal year 1994, 3 percent of the total taxes are required to be made by elec- tronic fund transfer. These percentages in- creased gradually for fiscal years 1995 and 1996. For fiscal year 1996, the percentage was 20.1 percent (30 percent for excise taxes and corporate estimated tax payments). For fis- cal year 1997, these percentages increased significantly, to 58.3 percent (60 percent for excise taxes and corporate estimated tax payments). The specific implementation method required to achieve the target per- centages is set forth in Treasury regulations. Implementation began with the largest de- positors. Treasury has implemented the 1997 percentages by requiring that all employers who deposit more than $50,000 in 1995 must begin using EFTPS by January 1, 1997. House bill No provision. Senate amendment No provision. Conference agreement The conferees are concerned that the ini- tial mailing by IRS to employers that in- formed them of the 1997 requirements con- fused many of these employers. The con- ferees believe that it is necessary to provide additional time prior to implementation of the 1997 requirements so that employers may be better informed about their responsibil- ities. Accordingly, the conference agreement provides that the increase in the required percentages for fiscal year 1997 (which, pur- suant to Treasury regulations, was to take effect on January 1, 1997) shall not take ef- fect until July 1, 1997. Effective date.\u2014The provision is effective on the date of enactment. VI. REVENUE OFFSETS 1. MODIFICATIONS OF THE PUERTO RICO AND POSSESSION TAX CREDIT (Sec. 1601 of the bill and the Senate amend- ment.) Present law Certain domestic corporations with busi- ness operations in the U.S. possessions (in- cluding, for this purpose, Puerto Rico and the U.S. Virgin Islands) may elect the Puer- to Rico and possession tax credit which gen- erally eliminates the U.S. tax on certain in- come related to their operations in the pos- sessions. In contrast to the foreign tax cred- it, the Puerto Rico and possession tax credit is a ”tax sparing” credit. That is, the credit is granted whether or not the electing cor- poration pays income tax to the possession. Income eligible for the credit under this pro- vision falls into two broad categories: (1) possession business income, which is derived from the active conduct of a trade or busi- ness within a U.S. possession or from the sale or exchange of substantially all of the assets that were used in such a trade or busi- ness; and (2) qualified possession source in- vestment income (”QPSII”), which is attrib- utable to the investment in the possession or in certain Caribbean Basin countries of funds derived from the active conduct of a posses- sion business. In order to qualify for the Puerto Rico and possession tax credit for a taxable year, a do- mestic corporation must satisfy two condi- tions. First, the corporation must derive at least 80 percent of it gross income for the three-year period immediately preceding the close of the taxable year from sources within a possession. Second, the corporation must derive at least 75 percent of its gross income for that same period from the active conduct of a possession business. A domestic corporation that has elected the Puerto Rico and possession tax credit and that satisfies these two conditions for a taxable year generally is entitled to a credit based on the U.S. tax attributable to the sum of the taxpayer’s possession business income and its QPSII. However, the amount of the credit attributable to possession business in- come is subject to the limitations enacted by the Omnibus Budget Reconciliation Act of 1993. Under the economic activity limit, the amount of the credit with respect to such in- come cannot exceed an amount equal to the sum of (i) 60 percent of the taxpayer’s quali- fying wage and fringe benefit expenses, (ii) specified percentages of the taxpayer’s de- preciation allowances with respect to quali- fying tangible property, and (iii) in certain cases, the taxpayer’s qualifying possession income taxes. The credit calculated under the economic activity limit is referred to herein as the ”wage credit.” In the alter- native, the taxpayer may elect to apply a limit equal to the applicable percentage of the credit that would otherwise be allowable with respect to possession business income; the applicable percentage is phased down to 50 percent for 1995, 45 percent for 1997, and 40 percent for 1998 and thereafter. The credit calculated under the applicable percentage limit is referred to herein as the ”income credit.” The amount of the Puerto Rico and possession tax House bill In general.\u2014The House bill generally re- peals the Puerto Rico and possession tax credit for taxable years beginning after De- cember 31, 1995. However, the House bill pro- vides grandfather rules under which a cor- poration that is an existing credit claimant would be eligible to claim credits for a tran- sition period. A special transition rule ap- plies to the credit attributable to operations in Guam, American Samoa, and the Com- monwealth of the Northern Mariana Islands. For taxable years beginning after Decem- ber 31, 1995, the Puerto Rico and possession tax credit applies only to a corporation that qualifies as an existing credit claimant (as defined below). The determination of wheth- er a corporation is an existing credit claim- ant is made separately for each possession. A corporation that is an existing credit claim- ant with respect to a possession is entitled to the credit for income from such possession for taxable years beginning after December 31, 1995, subject to the limitations described below. The credit, subject to such limita- tions, is computed separately for each pos- session with respect to which the corpora- tion is an existing credit claimant. The Puerto Rico and possession tax credit attributable to QPSII is eliminated for tax- able years beginning after December 31, 1995. For taxable years beginning after December 31, 1995, the Puerto Rico and possession tax credit is available only with respect to pos- session business income. The computation of the Puerto Rico and possession tax credit at- tributable to possession business income dur- ing the grandfather period depends upon whether the corporation is using the eco- nomic activity limit or the applicable per- centage limit. Wage credit.\u2014For corporations that are ex- isting credit claimants with respect to a pos- session and that use the wage credit method, the possession tax credit attributable to business income from the possession (deter- mined under the wage credit method) contin- ues to be determined as under present law for taxable years beginning after December 31, 1995 and before January 1, 2002. For tax- able years beginning after December 31, 2001 and before January 1, 2006, the corporation’s possession business income that is eligible for the wage credit is subject to a cap com- puted as described below. For taxable years beginning in 2006 and thereafter, the credit attributable to possession business income (determined under the wage credit method) is eliminated. The House bill adds to the Code a new sec- tion which provides a credit determined under the wage credit method for business income from Puerto Rico. Such credit is computed under the rules described above with respect to the possession tax credit de- termined under the wage credit method. Such section applies for taxable years begin- ning after December 31, 1995 and before Janu- ary 1, 2006. Income credit.\u2014For corporations that are existing credit claimants with respect to a possession and that elected to use the in- come credit method and not to use the wage credit method, the Puerto Rico and posses- sion tax credit attributable to business in- come from the possession continues to be de- termined as under present law for taxable years beginning after December 31, 1995 and before January 1, 1998. For taxable years be- ginning after December 31, 1997 and before January 1, 2006, the corporation’s possession business income tax is eligible for the credit is subject to a cap computed as described below. For taxable years beginning in 2006 and thereafter, the credit attributable to possession business income (determined under the income credit method) is elimi- nated. A corporation that had elected to use the income credit method is permitted to revoke that election under present law. Under the House bill, such a revocation is required to be made not later than with respect to the first taxable year beginning after December 31, 1996; such revocation, if made, applies to such taxable year and to all subsequent tax- able years. Accordingly, a corporation that had an election in effect to use the income credit method could revoke such election ef- fective for its taxable year beginning in 1997 and thereafter; such corporation would con- tinue to use the income credit method for its taxable year beginning in 1996 and would use the wage credit method for its taxable year beginning in 1997 and thereafter. Computation of income cap.\u2014The cap on a corporation’s possession business income that is eligible for the Puerto Rico and pos- session tax credit is computed based on the corporation’s possession business income for the base period years (”average adjusted base period possession business income”). Average adjusted base period possession business income is the average of the ad- justed possession business income for each of the corporation’s base period years. For the purpose of this computation, the corpora- tion’s possession business income for a base period year is adjusted by an inflation factor that reflects inflation from such year to 1995. CONGRESSIONAL RECORD \u2014 HOUSEH9642 August 1, 1996 In addition, as a proxy for real growth in in- come throughout the base period, the infla- tion factor is increased by 5 percentage points compounded for each year from such year to the corporation’s first taxable year beginning on or after October 14, 1995. The corporation’s base period years gen- erally are three of the corporation’s five most recent years ending before October 14, 1995, determined by disregarding the taxable years in which the adjusted possession busi- ness incomes were highest and lowest. For purposes of this computation, only years in which the corporation had significant posses- sion business income are taken into account. A corporation is considered to have signifi- cant possession business income for a tax- able year if such income exceeds two percent of the corporation’s possession business in- come for the each of the six taxable years ending with the first taxable year ending on or after October 14, 1995. If the corporation has significant possession business income for only four of the five most recent taxable years ending before October 14, 1995, the base period years are determined by disregarding the year in which the corporation’s posses- sion business income was lowest. If the cor- poration has significant possession business income for three years or fewer of such five years, then the base period years are all such years. If there is no year of such five taxable years in which the corporation has signifi- cant possession business income, then the corporation is permitted to use as its base period its first taxable year ending on or after October 14, 1995; for this purpose, the amount of possession business income taken into account is the annualized amount of such income for the portion of the year ended September 30, 1995. As one alternative, the corporation may elect to use its taxable year ending in 1992 as its base period (with the adjusted possession business income for such year constituting its cap). As another alternative, the corpora- tion may elect to use as its cap the annualized amount of its possession business income for the first ten months of calendar year 1995, calculated by excluding any ex- traordinary items (as determined under gen- erally accepted accounting principles) for such period. For this purpose, it is intended that transactions with a related party that are not in the ordinary course of business will be considered to be extraordinary items. If a corporation’s possession business in- come in a year for which the cap is applica- ble exceeds the cap, then the corporation’s possession business income for purposes of computing its Puerto Rico and possession tax credit for the year is an amount equal to the cap. The corporation’s credit continues to be subject to either the economic activity limit or the applicable percentage limit, with such limit applied to the corporation’s possession business income as reduced to re- flect the application of the cap. Qualification as existing credit claimant.\u2014A corporation is an existing credit claimant with respect to a possession if (1) the cor- poration is engaged in the active conduct of a trade or business within the possession on October 13, 1995, and (2) the corporation has elected the benefits of the Puerto Rico and possession tax credit pursuant to an election which is in effect for its taxable year that in- cludes October 13, 1995. A corporation that adds a substantial new line of business after October 13, 1995, ceases to be an existing credit claimant as of the beginning of the taxable year during which such new line of business is added. For purposes of these rules, a corporation is treated as engaged in the active conduct of a trade or business within a possession on October 13, 1995, if such corporation is en- gaged in the active conduct of such trade or business before January 1, 1996, and such cor- poration has in effect on October 13, 1995, a binding contract for the acquisition of assets to be used in, or the sale of property to be produced in, such trade or business. For ex- ample, if a corporation has in effect on Octo- ber 13, 1995, binding contracts for the lease of a facility and the purchase of machinery to be used in manufacturing business in a pos- session and if the corporation begins actively conducting that manufacturing business in the possession before January 1, 1996, that corporation would be an existing credit claimant. A change in the ownership of a corporation will not affect its status as an existing credit claimant. In determining whether a corporation has added a substantial new line of business, the Committee intends that principles similar to those reflected in Treas. Reg. section 1.7704 2(d) (relating to the transition rules for ex- isting publicly traded partnerships) apply. For example, a corporation that modifies its current production methods, expands exist- ing facilities, or adds new facilities to sup- port the production of its current product lines and products within the same four-digit Industry Number Standard Industrial Classi- fication Code (Industry SIC Code) will not be considered to have added a substantial new line of business. In this regard, the Commit- tee intends that the fact that a business which is added is assigned a different four- digit Industry SIC Code than is assigned to an existing business of the corporation will not automatically cause the corporation to be considered to have added a new line of business. For example, a pharmaceutical cor- poration that begins manufacturing a new drug will not be considered to have added a new line of business. Moreover, a pharma- ceutical corporation that begins to manufac- ture a complete product from the bulk active chemical through the finished dosage form, a process that may be assigned two separate four-digit Industry SIC Codes, will not be considered to have added a new line of busi- ness even though it was previously engaged in activities that involved only a portion of the entire manufacturing process from bulk chemicals to finished dosages. The Commit- tee further intends that, in the case of a merger of affiliated possession corporations that are existing credit claimants, the cor- poration that survives the merger will not be considered to have added a substantial new line of business by reason of its operation of the existing business of the affiliate that was merged into it. Special rules for certain possessions.\u2014A spe- cial transition rule applies to the Puerto Rico and possession tax credit with respect to operations in Guam, American Samoa, and the Commonwealth of the Northern Mar- iana Islands. For any taxable year beginning after December 31, 1995, and before January 1, 2006, a corporation that is an existing cred- it claimant with respect to one of these pos- sessions for such year continues to deter- mine its credit with respect to operations in such possession as under present law. For taxable years beginning in 2006 and there- after, the Puerto Rico and possession tax credit with respect to operations in Guam, American Samoa, and the Commonwealth of the Northern Mariana Islands is eliminated. Effective date.\u2014The House bill is effective for taxable years beginning after December 31, 1995. Senate amendment The Senate amendment is the same as the House bill with three modifications. Under the Senate amendment, the Puerto Rico and possession tax credit attributable to QPSII continues to be allowed for QPSII earned before July 1, 1996. Under the Senate amendment, a corpora- tion that is an existing credit claimant con- tinues to be eligible to claim credits under the wage credit method for taxable years be- ginning after December 31, 2005. For taxable years beginning in 2006 and thereafter, in computing the economic activity limit on the wage credit, the percentage of the cor- poration’s qualifying wage and fringe benefit expenses that is taken into account is re- duced from 60 percent of 40 percent. The cor- poration’s business income that is eligible for the wage credit continues to be subject to the income cap. For taxable years beginning in 2006 and thereafter, a corporation that is an existing credit claimant with respect to Guam, American Samoa, or the Common- wealth of the Northern Mariana Islands con- tinues to be eligible to claim credits under the wage credit method, determined under the foregoing rules, with respect to its oper- ations in such possession. Under the Senate amendment, the Treas- ury Department is directed to study the ef- fect on the economy of Puerto Rico of the wage credit (under present law and as amended), including an analysis of the im- pact of such credit on unemployment rates and economic growth. The Treasury Depart- ment is directed to submit to the House Committee on Ways and Means and the Sen- ate Committee on Finance reports on its findings with respect to the impact of the wage credit within two years of the date of enactment and every four years thereafter. Effective date.\u2014Same as the House bill. Conference agreement The conference agreement follows the House bill with modifications. Under the conference agreement, as under the Senate amendment, the Puerto Rico and possession tax credit attributable to QPSII continues to be allowed for QPSII earned be- fore July 1, 1996. The conferees note that the repeal of the credit for QPSII will have the effect of eliminating a provision that has supported economic development and trade- related growth in the Caribbean Basin and served U.S. interests in the region. The loss of this program should not be interpreted as a loss of U.S. interest in the region. The con- ferees continue to support efforts furthering stable commercial and economic relations in that region. Under the conference agreement, a cor- poration that acquires all the assets of a trade or business of an existing credit claim- ant will qualify as an existing credit claim- ant. The adjusted base period income of the existing credit claimant from which the as- sets are acquired is divided between such corporation and the corporation that ac- quires such assets. It is intended that regula- tions or other guidance will prevent tax- payers from abusing this rule through trans- actions that manipulate base period income amounts. Under the conference agreement, for pur- poses of estimated tax payments due before October 1, 1996, a taxpayer whose tax liabil- ity is increased by reason of the modifica- tions of the Puerto Rico and possession tax credit is not required to make a deposit with respect to more than 50 percent of such in- crease; any amount not deposited by such date will be required to be deposited, without penalty or interest, on the next estimated tax payment due date. 2. REPEAL 50-PERCENT INTEREST INCOME EXCLU- SION FOR FINANCIAL INSTITUTION LOANS TO ESOP’S (Sec. 1602 of the House bill and the Senate amendment.) Present law A bank, insurance company, regulated in- vestment company, or a corporation actively engaged in the business of lending money may generally exclude from gross income 50 CONGRESSIONAL RECORD \u2014 HOUSE H9643August 1, 1996 49 If the commercial-type insurance activities con- stitute a substantial part of the organization’s ac- tivities, the organization will not be tax-exempt under section 501(c)(3) or (c)(4) (sec. 501(m)(1)). 50The Internal Revenue Service has concluded in private letter rulings, which are not to be used or cited as precedent, that subpart F inclusions are treated as dividends received by the United States shareholders (a tax-exempt entity) for purposes of computing the shareholder’s UBTI (see LTRs 9407007 (November 12, 1993), 90227051 (April 13, 1990), 9024086 (March 22, 1990), 9024026 (March 15, 1990), 8922047 (March 6, 1989), 8836037 (June 14, 1988), 8819034 (Feb- ruary 10, 1988)). However, the IRS issued on private ruling in which it concluded that subpart F inclu- sions are treated as if the underlying income were realized directly by the United States shareholder (a tax-exempt entity) for purposes of computing the shareholder’s UBTI (see LTR 9043039 (July 30, 1990)). This ruling gave no explanation for the IRS’s depar- ture from the position in its prior rulings, and the IRS reiterated in a subsequent ruling the position that subpart F inclusions are characterized as divi- dends for purposes of computing UBTI. Moreover, the application of the look-through rule in the rul- ing in question did not affect the ultimate result in the ruling because the income to which the subpart F inclusion was attributable was of a type that was excludible from UBTI. The conferees believe that LTR 9043039 (July 30, 1990) is incorrect in its applica- tion of a look-through rule in characterizing income inclusions under subpart F for unrelated business in- come tax purposes. 51 In Transamerica Corp. v. U.S., 999 F.2d 1362, (9th Cir. 1993), the Ninth Circuit overturned the District Court and held that, for purposes of applying the in- come forecast method to a film, the ”cost of a film” includes ”participation” and ”residual” payments (i.e., payments to producers, writers, directors, ac- tors, guilds, and others based on a percentage of the profits from the film) even though these payments were contingent on the occurrence of future events. It is unclear to what extent, if any, the Transamerica decision applies to amounts incurred after the en- actment of the economic performance rules of Code section 461(h), as contained in the Deficit Reduction Act of 1984. percent of interest received on an ESOP loan (sec. 133). The 50-percent interest exclusion only applies if: (1) immediately after the ac- quisition of securities with the loan pro- ceeds, the ESOP owns more than 50 percent of the outstanding stock or more than 50 per- cent of the total value of all outstanding stock of the corporation; (2) the ESOP loan term will not exceed 15 years; and (3) the ESOP provides for full pass-through voting to participants on all allocated shares ac- quired or transferred in connection with the loan. House bill The provision repeals the 50-percent inter- est exclusion with respect to ESOP’s. Effective date.\u2014The provision generally is effective with respect to loans made after October 13, 1995. The repeal of the exclusion does not apply to the refinancing of an ESOP loan originally made on or before October 13, 1995, provided: (1) such refinancing loan oth- erwise meets the requirements of section 133 in effect on or before October 13, 1993; (2) the outstanding principal amount of the loan is not increased; and (3) the term of the refi- nancing loan does not extend beyond the term of the original ESOP loan. Senate amendment Same as the House bill. Effective date.\u2014The provision is effective with respect to loans made after the date of enactment, other than loans made pursuant to a written binding contract in effect before June 10, 1996, and at all times thereafter be- fore such loan is made. The repeal of the 50- percent interest exclusion does not apply to the refinancing of an ESOP loan originally made on or before the date of enactment or pursuant to a binding contract in effect be- fore June 10, 1996, provided: (1) such refinanc- ing loan otherwise meets the requirements of section 133 in effect on the day before the date of enactment; (2) the outstanding prin- cipal amount of the loan is not increased; and (3) the term of the refinancing loan does not extend beyond the term of the original ESOP loan. Conference agreement The conference agreement follows the Sen- ate amendment. 3. APPLY LOOK-THROUGH RULE FOR PURPOSES OF CHARACTERIZING CERTAIN SUBPART F IN- SURANCE INCOME AS UNRELATED BUSINESS TAXABLE INCOME (Sec. 1602 of the House bill.) Present law An organization that is exempt from tax by reason of Code section 501(a) (e.g., a char- ity, business league, or qualified pension trust) is nonetheless subject to tax on its un- related business taxable income (UBTI) (sec. 511). Unrelated business taxable income gen- erally excludes dividend income (sec. 512(b)(1)). Special rules apply to a tax-exempt organi- zation described in section 501(c)(3) or (c)(4) (i.e., a charity or social welfare or organiza- tion) that is engaged in commercial-type in- surance activities. Such activities are treat- ed as an unrelated trade or business and the tax-exempt organization is subject to tax on the income from such insurance activities (including investment income that might otherwise be excluded from the definition of unrelated business taxable income) under subchapter L (sec. 501(m)(2)).49 Accordingly, a tax-exempt organization described in sec- tion 501(c)(3) or (c)(4) generally is subject to tax on its income from commercial-type in- surance activities in the same manner as a taxable insurance company. A tax-exempt organization that conducts insurance activities through a foreign cor- poration is not subject to U.S. tax with re- spect to such activities. Under the subpart F rules, the United States shareholders (as de- fined in sec. 951(b)) of a controlled foreign corporation (CFC) are required to include in income currently their shares of certain in- come of the CFC, whether or not such in- come is actually distributed to the share- holders. This current inclusion rule applies to certain insurance income of the CFC (sec. 953). However, income inclusions under sub- part F have been characterized as dividends for unrelated business income tax purposes.50 Accordingly, insurance earned by the CFC that is includible in income currently under subpart F by the taxable United States shareholders of the CFC is excluded from un- related business taxable income in the case of a shareholder that is a tax-exempt organi- zation. House bill The House bill applies a look-through rule in characterizing certain subpart F insur- ance income for unrelated business income tax purposes. Under the House bill, the look- through rule applies to amounts that con- stitute insurance income currently includ- ible in gross income under the subpart F rules and that are not attributable to the in- surance of risks of (1) the tax-exempt organi- zation itself, (2) certain tax-exempt affiliates of such organization, or (3) an officer or di- rector of, or an individual who (directly or indirectly) performs services for, the tax-ex- empt organization (or certain tax-exempt af- filiates) provided that the insurance covers primarily risks associated with the individ- ual’s performance of services in connection with the tax-exempt organization (or tax-ex- empt affiliates). For purposes of this provi- sion, a tax-exempt organization is an affili- ate of another tax-exempt organization if (1) the two organizations have significant com- mon purposes and substantial common mem- bership of (2) the two organizations have di- rectly or indirectly substantial common di- rection or control. Effective date.\u2014The provision applies to amounts includible in gross income in tax- able years beginning after December 31, 1995. Senate amendment No provision. Conference agreement The conference agreement follows the House bill with one modification. For pur- poses of the provision, two or more organiza- tions generally are treated as affiliates if such organizations are colleges or univer- sities described in section 170(b)(1)(A)(ii) or hospitals or other medical entities described in section 170(b)(1)(A)(iii). Accordingly, in applying the provision to two or more such organizations that are the shareholders of a CFC, the exceptions from the look-through rule apply to each shareholder’s share of the income attributable to insurance of risks of all such shareholders; the look-through rule applies to a shareholder’s share of any in- come attributable to insurance of risks of a third party. 4. DEPRECIATION UNDER THE INCOME FORECAST METHOD (Sec. 1604 of the House bill.) Present law In general A taxpayer generally must capitalize the cost of property used in a trade or business and is allowed to recover such cost over time through allowances for depreciation or amor- tization. The ”income forecast” method is an allow- able method for calculating depreciation for certain property. Under the income forecast method, the depreciation deduction for a taxable year for a property is determined by multiplying the cost of the property 51 (less estimated salvage value) by a fraction, the numerator of which is the income generated by the property during the year and the de- nominator of which is the total forecasted or estimated income to be derived from the property during its useful life. The income forecast method has been held to be applica- ble for computing depreciation deductions for motion picture films, television films and taped shows, books, patents, master sound recordings and video games. The total fore- casted or estimated income to be derived from a property is to be based on the condi- tions known to exist at the end of the period for which depreciation is claimed. House bill The House bill makes several amendments to the income forecast method of determin- ing depreciation deductions. First, the bill provides that income to be taken into account under the income fore- cast method includes all estimated income generated by the property. In applying this rule, a taxpayer generally need not take into account income expected to be generated after the close of the tenth taxable year after the year the property was placed in service. Pursuant to a special rule, in the case of television and motion picture films, the income from the property shall include income from the financial exploitation of characters, designs, scripts, scores, and other incidental income associated with such films, but only to the extent the income is earned in connection with the ultimate use of such items by, or the ultimate sale of mer- chandise to, persons who are not related to the taxpayer (within the meaning of sec. 267(b)). In addition, pursuant to another spe- cial rule, if a taxpayer produces a television series and initially does not anticipate syn- dicating the episodes from the series, the CONGRESSIONAL RECORD \u2014 HOUSEH9644 August 1, 1996 52 No inference is intended as to the proper applica- tion of section 461(h) to the income forecast method under present law. 53 The ”look-back” method of the provision resem- bles the look-back method applicable to long-term contracts accounted for under the percentage-of- completion method of present-law sec. 460. forecasted income for the episodes of the first three years of the series need not take into account any future syndication fees (un- less the taxpayer enters into an arrangement to syndicate such episodes during such pe- riod). The 10th-taxable-year rule, the finan- cial exploitation rule, and the syndication rule apply for purposes of the lookback method described below. Second, the adjusted basis of property that may be taken into account under the income forecast method only will include amounts that satisfy the economic performance standard of section 461(h). Finally, taxpayers that claim depreciation deductions under the income forecast meth- od are required to pay (or would receive) in- terest based on the recalculation of deprecia- tion under a ”look-back” method. The ”look-back” method is applied in any ”re- computation year” by (1) comparing depre- ciation deductions that had been claimed in prior periods to depreciation deductions that would have been claimed had the taxpayer used actual, rather than estimated, total in- come from the property; (2) determining the hypothetical overpayment or underpayment of tax based on this recalculated deprecia- tion; and (3) applying the overpayment rate of section 6621 of the Code. Except as pro- vided in Treasury regulations, a ”recomputa- tion year” is the third and tenth taxable year after the taxable year the property was placed in service, unless the actual income from the property for each taxable year end- ing with or before the close of such years was within 10 percent of the estimated income from the property for such years. Property that had a basis of $100,000 or less when placed in service is not subject to the look- back method. Effective date.\u2014The provision is effective for property placed in service after Septem- ber 13, 1995, unless placed in service pursuant to a binding written contract in effect on such date and all times thereafter. Senate amendment No provision. A similar provision was con- tained in section 402 of the Senate amend- ment to H.R. 3286, the ”Adoption, Promotion and Stability Act of 1996,” as favorably re- ported by the Senate Finance Committee on June 12, 1996. Conference agreement The conference agreement follows the pro- vision that was contained in section 402 of the Senate amendment to H.R. 3286, the ”Adoption, Promotion and Stability Act of 1996,” as favorably reported by the Senate Finance Committee on June 12, 1996. Thus, the conference agreement provides the fol- lowing modifications to the income forecast method of present law. Determination of estimated income First, the agreement provides that income to be taken into account under the income forecast method includes all estimated in- come generated by the property. In applying this rule, a taxpayer generally need not take into account income expected to be gen- erated after the close of the tenth taxable year after the year the property was placed in service. In the case of a film, television show, or similar property, such income in- cludes, but is not necessarily limited to, in- come form foreign and domestic theatrical, television, and other releases and syndica- tions; and video tape releases, sales, rentals, and syndications. Pursuant to a special rule, in the case of television and motion picture films, the in- come from the property shall include income from the financial exploitation of char- acters, designs, scripts, scores, and other in- cidental income associated with such films, but only to the extent the income is earned in connection with the ultimate use of such items by, or the ultimate sale of merchan- dise to, persons who are not related to the taxpayer (within the meaning of sec. 267(b)). As an example of this special rule, assume a taxpayer produces a motion picture the sub- ject of which is the adventures of a newly- created fictional character. If the taxpayer produces dolls or T-shirts using the char- acter’s image, income from the sales of these products by the taxpayer to consumers would be taken into account in determining depreciation for the motion picture under the income forecast method. Similarly, if the taxpayer enters into any licensing or similar agreement with an unrelated party with respect to the use of the image, such li- censing income would be taken into account in determining depreciation for the motion picture. However, if the taxpayer uses the character’s image to promote a ride at an amusement park that is wholly-owned by the taxpayer, no portion of the admission fees for the amusement park are to be taken into account under the income forecast method with respect to the motion picture. In addition, pursuant to another special rule, if a taxpayer produces a television se- ries and initially does not anticipate syn- dicating the episodes from the series, the forecasted income for the episodes of the first three years of the series need not take into account any future syndication fees (un- less the taxpayer enters into an arrangement to syndicate such episodes during such pe- riod). The 10th-taxable-year rule, the financial exploitation rule, and the syndication rule apply for purposes of the look-back method described below. Determination and treatment of costs of prop- erty The adjusted basis of property that may be taken into account under the income fore- cast method only will include amounts that satisfy the economic performance standard of section 461(h).52 For this purpose, if the taxpayer incurs a noncontingent liability to acquire property subject to the income fore- cast method from another person, economic performance will be deemed to occur with re- spect to such noncontingent liability when the property is provided to the taxpayer. In addition, the recurring item exception of section 461(h)(3) will apply in a manner simi- lar to the way such exception applies under present law. Thus, expenditures that relate to an item of property that are incurred in the taxable year following the taxable year in which the property is placed in service may be taken into account in the year the property is placed in service to the extent such expenditures meet the recurring item exception for such year. Any costs that are taken into account after the property is placed in service are treated as a separate piece of property to the extent (1) such amounts are significant and are expected to give rise to a significant in- crease in the income from the property that was not included in the estimated income from the property, or (2) such costs are in- curred more than 10 years after the property was placed in service. To the extent costs are incurred more than 10 years after the prop- erty was placed in service and give rise to a separate piece of property for which no in- come is generated, such costs may be written off and deducted they are incurred. For ex- ample, assume a taxpayer places property subject to the income forecast method in service during a taxable year and all income from the property is generated in the follow- ing four-year period. If the taxpayer incurs additional costs with respect to that prop- erty more than 10 years later (e.g., a pay- ment pursuant to a deferred contingent com- pensation arrangement to a person that pro- duced the property), such costs may be de- ducted in the year incurred provided no more income is generated with respect to such costs or the original property. Any costs that are not recovered by the end of the tenth taxable year after the prop- erty was placed in service may be taken into account as depreciation in such year. Look-back method Finally, taxpayers that claim depreciation deductions under the income forecast meth- od are required to pay (or would receive) in- terest based on the recalculation of deprecia- tion under a ”look-back” method.53 The ”look-back” method is applied in any ”re- computation year” by (1) comparing depre- ciation deductions that had been claimed in prior periods of depreciation deductions that would have been claimed had the taxpayer used actual, rather than estimated, total in- come from the property; (2) determining the hypothetical overpayment or underpayment of tax based on this recalculated deprecia- tion; and (3) applying the overpayment rate of section 6621 of the Code. Except as provided in Treasury regula- tions, a ”recomputation year” is the third and tenth taxable year after the taxable year the property was placed in service, unless the actual income from the property for each taxable year ending with or before the close of such years was within 10 percent of the es- timated income from the property for such years. The Secretary of the Treasury has the authority to allow a taxpayer to delay the initial application of the look-back method where the taxpayer may be expected to have significant income from the property after the third taxable year after the taxable year the property was placed in service (e.g., the Treasury Secretary may exercise such au- thority where the depreciable life of the property is expected to be longer than three years). In applying the look-back method, any cost that is taken into account after the property was placed in service may be taken into account by discounting (using the Fed- eral mid-term rate determined under sec. 1274(d) as of the time the costs were taken into account) such cost to its value as of the date the property was placed in service. Property that had an unadjusted basis of $100,000 or less is not subject to the look- back method. For this purpose, ”unadjusted basis” means the total capitalized cost of a property as of the close of a recomputation year. The agreement provides a simplified look- back method for pass-through entities. Effective date The agreement is effective for property placed in service after September 13, 1995, unless produced or acquired pursuant to a binding written contract in effect on such date and all times thereafter. For this pur- pose, the binding contract exception may apply to a written contract in effect on the relevant dates if that contract binds a tax- payer to produce, license or deliver property that will be used by the other party to the contract once the property is produced. The agreement may apply to property placed in service in taxable years that ended before the date of enactment of this Act. The agreement waives additions to tax imposed under sections 6654, 6655, and 6662(d) for any CONGRESSIONAL RECORD \u2014 HOUSE H9645August 1, 1996 54 The Supreme Court recently agreed to decide whether punitive damages awarded in a physical in- jury lawsuit are excludable from gross income. O’gilvie v. U.S., 66 F.3d 1550 (10th Cir. 1995), cert. granted, 64 U.S.L.W. 36+39 (U.S. March 25, 1996) (No. 95 966). Also, the Tax Court recently held that if pu- nitive damages are not of a compensatory nature, they are not excludable from income, regardless of whether the underlying claim involved a physical injury or physical sickness. Bagley v. Commissioner, 105 T.C. No. 27 (1995). 55 Schleier v. Commissioner, 115 S. Ct. 2159 (1995). 56 It is intended that the term emotional distress includes symptoms (e.g., insomnia, headaches, stom- ach disorders) which may result from such emo- tional distress. underpayments of tax or estimated tax for any taxable year ending before the date of enactment of this Act to the extent the underpayment was created or increased by the changes made to the income forecast method of depreciation by the provision. The application of the agreement (including the look-back method) is not waived for any tax- able year that ends after the date of enact- ment of this Act. 5. MODIFY EXCLUSION OF DAMAGES RECEIVED ON ACCOUNT OF PERSONAL INJURY OR SICKNESS (Sec. 1605 of the House bill and sec. 1603 of the Senate amendment.) Present law Under present law, gross income does not include any damages received (whether by suit or agreement and whether as lump sums or as periodic payments) on account of per- sonal injury or sickness (sec. 104(a)(2)). The exclusion from gross income of dam- ages received on account of personal injury or sickness specifically does not apply to pu- nitive damages received in connection with a case not involving physical injury or sick- ness. Courts presently differ as to whether the exclusion applies to punitive damages re- ceived in connection with a case involving a physical injury or physical sickness.54 Cer- tain States provide that, in the case of claims under a wrongful death statute, only punitive damages may be awarded. Courts have interpreted the exclusion from gross income of damages received on account of personal injury or sickness broadly in some cases to cover awards for personal in- jury that do not relate to a physical injury or sickness. For example, some courts have held that the exclusion applies to damages in cases involving certain forms of employment discrimination and injury to reputation where there is no physical injury or sickness. The damages received in these cases gen- erally consist of back pay and other awards intended to compensate the claimant for lost wages or lost profits. The Supreme Court re- cently held that damages received based on a claim under the Age Discrimination in Em- ployment Act could not be excluded from in- come.55 In light of the Supreme Court deci- sion, the internal Revenue Service has sus- pended existing guidance on the tax treat- ment of damages received on account of other forms of employment discrimination. House bill Include in income all punitive damages The House bill provides that the exclusion from gross income does not apply to any pu- nitive damages received on account of per- sonal injury or sickness whether or not re- lated to a physical injury or physical sick- ness. Under the House bill, present law con- tinues to apply to punitive damages received in a wrongful death action if the applicable State law (as in effect on September 13, 1995 without regard to subsequent modification) provides, or has been construed to provide by a court decision issued on or before such date, that only punitive damages may be awarded in a wrongful death action. No in- ference is intended as to the application of the exclusion to punitive damages prior to the effective date of the House bill in con- nection with a case involving a physical in- jury or physical sickness. Include in income damage recoveries for non- physical injuries The House bill provides that the exclusion from gross income only applies to damages received on account of a personal physical injury or physical sickness. If an action has its origin in a physical injury or physical sickness, then all damages (other than puni- tive damages) that flow therefrom are treat- ed as payments received on account of phys- ical injury or physical sickness whether or not the recipient of the damages is the in- jured party. For example, damages (other than punitive damages) received by an indi- vidual on account of a claim for loss of con- sortium due to the physical injury or phys- ical sickness of such individual’s spouse are excludable from gross income. In addition, damages (other than punitive damages) re- ceived on account of a claim of wrongful death continue to be excludable from taxable income as under present law. The House bill also specifically provides that emotional distress is not considered a physical injury or physical sickness.56 Thus, the exclusion from gross income does not apply to any damages received (other than for medical expenses as discussed below) based on a claim of employment discrimina- tion or injury to reputation accompanied by a claim of emotional distress. Because all damages received on account of physical in- jury or physical sickness are excludable from gross income, the exclusion from gross in- come applies to any damages received based on a claim of emotional distress that is at- tributable to a physical injury or physical sickness. In addition, the exclusion from gross income specifically applies to the amount of damages received that is not in excess of the amount paid for medical care attributable to emotional distress. No inference is intended as to the applica- tion of the exclusion to damages prior to the effective date of the House bill in connection with a case not involving a physical injury or physical sickness. Effective date.\u2014The provisions generally are effective with respect to amounts re- ceived after June 30, 1996. The provisions do not apply to amounts received under a writ- ten binding agreement, court decree, or me- diation award in effect on (or issued on or be- fore) September 13, 1995. Senate amendment Include in income all punitive damages The Senate amendment is the same as the House bill. Include in income damage recoveries for non- physical injuries No provision. Conference agreement Include in income all punitive damages The conference agreement follows the House bill and the Senate amendment. Include in income damage recoveries for non- physical injuries The conference agreement follows the House bill. Effective date.\u2014The provision generally are effective with respect to amounts received after date of enactment. The provisions do not apply to amounts received under a writ- ten binding agreement, court decree, or me- diation award in effect on (or issued on or be- fore) September 13, 1995. 6. REPEAL ADVANCE REFUNDS OF DIESEL FUEL TAX FOR PURCHASERS OF DIESEL-POWERED AUTOMOBILES, VANS AND LIGHT TRUCKS (Sec. 1606 of the House bill.) Present Law Excise taxes are imposed on gasoline (14 cents per gallon) and diesel fuel (20 cents per gallon) to fund the Federal Highway Trust Fund. Before 1985, the gasoline and diesel fuel tax rates were the same. The predomi- nate highway use of diesel fuel is by trucks. In 1984, the diesel excise tax rate was in- creased above the gasoline tax as the reve- nue offset for a reduction in the annual heavy truck use tax. Because automobiles, vans, and light trucks did not benefit from the use tax reductions, a provision was en- acted allowing first purchasers of model year 1979 and later diesel-powered automobiles and light trucks a tax credit to offset this in- creased diesel fuel tax. The credit is $102 for automobiles and $198 for vans and light trucks. House bill The House bill repeals the tax credit for purchasers of diesel-powered automobiles, vans and light trucks. Effective date.\u2014Vehicles purchased after the date of enactment. Senate amendment No provision. Conference agreement The conference agreement follows the House bill. 7. EXTENSION AND PHASEOUT OF EXCISE TAX ON LUXURY AUTOMOBILES (Sec. 1604 of the bill and sec. 4001 of the Code.) Present law Present law imposes an excise tax on the sale of an automobile whose price exceeds a designated threshold, currently $34,000. The excise tax is imposed at a rate of 10-percent on the excess of the sales price above the designated threshold. The $34,000 threshold is indexed for inflation. The tax applies to sales before January 1, 2000. House bill No provision. Senate amendment The Senate amendment extends and phases out the luxury tax on automobiles. The tax rate is reduced by one percentage point per year beginning in 1996. The tax rate for sales (on or after the date of enactment plus seven days) in 1996 is 9 percent. The tax rate for sales in 1997 is 8 percent. The tax rate for sales in 1998 is 7 percent. The tax rate for sales in 1999 is 6 percent. The tax rate for sales in 2000 is 5 percent. The tax rate for sales in 2001 is 4 percent. The tax rate for sales in 2002 is 3 percent. The tax will expire after December 31, 2002. Effective date.\u2014The provision is effective for sales on or after date of enactment plus seven days. Conference agreement The conference agreement follows the Sen- ate amendment. 8. ALLOW CERTAIN PERSONS ENGAGED IN THE LOCAL FURNISHING OF ELECTRICITY OR GAS TO ELECT NOT TO BE ELIGIBLE FOR FUTURE TAX-EXEMPT BOND FINANCING (Sec. 1605 of the amendment.) Interest on State and local government bonds generally is excluded from income ex- cept where the bonds are issued to provide fi- nancing for private parties. Present law in- cludes several exceptions, however, that allow tax-exempt bonds to be used to provide financing for certain specifically identified private parties. One such exception allows tax-exempt bonds to be issued to finance fa- cilities for the furnishing of electricity or gas by private parties if the area served by the facilities does not exceed (1) two contig- uous counties or (2) a city and a contiguous CONGRESSIONAL RECORD \u2014 HOUSEH9646 August 1, 1996 county (commonly referred to as the ”local furnishing” of electricity or gas). Most private activity tax-exempt bonds are subject to general State private activity bond volume limits of $50 per resident of the State ($150 million, if greater) per year. Tax- exempt bonds for facilities used in the local furnishing of electricity or gas are subject to this limit. Like most other private bene- ficiaries of tax-exempt bonds, borrowers using tax-exempt bonds to finance these fa- cilities are denied interest deductions on the debt underlying the bonds if the facilities cease to be used in qualified local furnishing activities. Additionally, as with all tax-ex- empt bonds, if the use of facilities financed with the bonds changes to a use a not quali- fied for tax-exempt financing after the debt is incurred, interest on the bonds becomes taxable unless certain safe harbor standards are satisfied. House bill No provision. Senate amendment The Senate amendment allows persons that have received tax-exempt financing of facilities that currently qualify as used in the local furnishing of electricity or gas to elect to terminate their qualification for this tax-exempt financing and to expand their service areas without incurring the present-law loss of interest deductions and loss of tax-exemption penalties if\u2014 (1) no additional bonds are issued for facili- ties of the person making the election (or were issued for any predecessor) after the date of the provision’s enactment; (2) the expansion of the person’s service area is not financed with any tax-exempt bond proceeds; and (3) all outstanding tax-exempt bounds of the person making the election (and any predecessor) are redeemed no later than six months after the earliest date on which re- demption is not prohibited under the terms of the bonds, as issued, (or six months after the election, if later). Except as described below, the provision further limits the local furnishing exception to bonds for facilities of (1) of persons that qualified as engaged in that activity on the date of the provision’s enactment and (2) that serve areas served by those persons on that date. The area which is considered to be served on the date of the provision’s enact- ment consists of the geographic area in which service actually is being provided on that date. Service initially provided after the date of enactment to a new customer within that area (e.g., as a result of new con- struction or of a change in heating fuel type) is not treated as a service area expansion. For purposes of this requirement, a change in the identity of a person serving an area is disregarded if the change is the result of a corporate reorganization where the area served remains unchanged and there is com- mon ownership of both the predecessor and successor entities. To facilitate compliance with electric and gas industry restructuring now in progress, the Senate amendment fur- ther permits continued qualification of suc- cessor entities under a ”step-in-the-shoes” rule without regard to common ownership if the service provided remains unchanged and the area served after the facilities are trans- ferred does not exceed the service area before the transfer. For example, if facilities of a person engaged in local furnishing are sold to another person, the purchaser (when it en- gages in otherwise qualified local furnishing activities) is eligible for continued tax-ex- empt financing to the same extent that the seller would have been had the sale not oc- curred if the service provided and the area served by the facilities do not change. Similarly, a purchaser ”steps into the shoes” of its seller with regard to eligibility (or the lack thereof) for making the election to terminate its status as engaged in local furnishing without imposition of certain penalties on outstanding tax-exempt bonds. For example, if a person engaged in local fur- nishing activities on the date of the provi- sion’s enactment receives financing from tax-exempt bonds issued after the date of the provision’s enactment (and is thereby ineli- gible to make the election), any purchaser from that person likewise is ineligible. Effective date.\u2014The Senate amendment is effective on the date of enactment. Conference agreement The conference agreement follows the Sen- ate amendment, with two modifications to the portion of the provision that generally limits the benefit of tax-exempt financing to persons engaged in local furnishing activi- ties on the date of the provision’s enact- ment. First, the conference agreement al- lows certain expansions of existing local fur- nishing service areas to occur after the effec- tive date of the provision without affecting continued qualification under the local fur- nishing exception, both within the existing service area and in the expansion area. Under this modification, a qualified local furnishing service area which includes a por- tion of a city or a county on the effective date of the provision may be expanded after that date to include other portions of the same city or county. For example, if a gas utility’s service area on the effective date of the provision includes only an urban section of a county, a subsequent expansion of the utility’s service area to include rural por- tions of the same county (e.g., as a result of population growth), does not in itself pre- clude qualification of the entire, expanded service area as a local furnishing area. This exception does not, however, allow expansion of local furnishing service areas beyond the borders of a city or county where service is being provided on the effective date of the provision or interconnection of facilities serving those areas with other facilities or persons in a manner not permitted under present law. Second, the date by which an entity must be engaged in local furnishing activities (i.e., have facilities for local furnishing placed in service in that activity) as a condition of re- ceiving future tax-exempt financing is de- layed until January 1, 1997 (rather than the date of the provision’s enactment). The conferees also wish to clarify several questions that have risen since passage of the Senate amendment with respect to the limitation on future eligibility under the local furnishing exception. First, because the conference agreement precludes issuance of tax-exempt bonds except for local furnishers engaged in that activity on January 1, 1997 (and successors in interest), the statutory wording of the provision differs from the tra- ditional focus of the local furnishing excep- tion on a two county (or city and contiguous county) area without regard to the entity providing the service. The statutory ref- erences to ”persons” engaged in the local furnishing of electricity or gas contained in the conference agreement are intended to prevent new entities (other than successors in interest) from qualifying for tax-exempt financing under the local furnishing excep- tion. They are not to be construed in a man- ner affecting the tax-exempt status of inter- est on any outstanding bonds or the receipt of additional tax-exempt financing by an ex- isting local furnisher, provided that the fa- cilities financed with those bonds are used at all times in qualified local furnishing activi- ties (defined under present law as modified by the conference agreement) and the bonds comply otherwise with the Internal Revenue Code’s requirements for tax-exemption. Second, the conferees are aware that present-law disregards certain transmission of electricity pursuant to FERC orders in de- termining whether a facility is used in the local furnishing of electricity. The con- ference agreement retains the relevant stat- utory rule to that effect, and the conferees intend no change in that rule. Third, the conferees wish to clarify, by ex- ample, the application of the restriction on qualified local furnishing activities con- tained in this portion of the conference agreement to certain utility transactions such as those that may be expected to occur as a result of deregulation of the electric and gas industries. Example (1).\u2014As part of a corporate reorga- nization, an existing local furnishing utility sells a portion of its service area to a third party. The retained portion of the utility’s service territory continues to qualify for tax-exempt financing under the local fur- nishing exception provided that no viola- tions of that exception such as an impermis- sible interconnection with facilities outside the area occur. The determination of wheth- er the portion of the service territory that is sold to a third party continues to qualify under the local furnishing exception depends on the manner in which the purchaser pro- vides service in the area it acquires. If, for example, the purchaser operates in the area which it purchases in a manner that other- wise qualifies under the local furnishing ex- ception, the purchaser is treated as a succes- sor in interest to the seller and facilities for the area that is sold continue to be treated as used in local furnishing. However, if that area is merged into, or impermissibly (under present-law rules) and interconnected with, another service area that does not qualify as a local furnishing area after the transaction, the successor in interest rule does not pre- serve the status as a local furnishing area of the area sold. Example (2).\u2014Two independent utilities, both qualifying as engaged in local furnish- ing on the effective date of the provision, serve adjoining areas. The utilities decide to adjust their common service area boundary line to eliminate irregular geographic pat- terns. The parties to this transaction may be treated as successors in interest with respect to the area each acquires if the resulting service areas each qualify under the local furnishing exception (as modified by the con- ference agreement). Example (3).\u2014Assume the facts of Example (2), except the area acquired by one of the utilities is in a county where it did not pro- vide service before the boundary line adjust- ments, and the utility’s resulting service area includes all or part of three counties. That utility would no longer qualify as en- gaged in local furnishing under present law. The result is the same under the conference agreement. Example (4).\u2014Assume the facts of Example (2), except the utilities merge into a single company with a single service area. If the re- sulting combined service area of the new company does not exceed two counties (or a city and a contiguous county), the new com- pany continues to be eligible for tax-exempt financing as a successor in interest. Example (5).\u2014Assume that a local furnish- ing utility decides to contract with a newly- formed independent power generating ven- ture to construct a generating plant that will sell electricity to it exclusively for use in its service area. Tax-exempt bonds may not be issued under the local furnishing ex- ception for construction of the generating plant. The independent power producer was neither engaged in the local furnishing of electricity to the service area involved on the effective date of the conference agree- ment’s restriction nor is it a successor in in- terest under the agreement. CONGRESSIONAL RECORD \u2014 HOUSE H9647August 1, 1996 57 Rev. Rul. 770405, 1977 2 C.B. 381; Rev. Rul. 76 394, 1976 2 C.B. 355. Effective date.\u2014These provisions are effec- tive on the date of the conference agree- ment’s enactment. 9. REPEAL OF FINANCIAL INSTITUTION TRANSI- TION RULE TO INTEREST ALLOCATION RULES Present law For foreign tax credit purposes, taxpayers generally are required to allocate and appor- tion interest expense U.S. and foreign source income based on the proportion of the tax- payer’s total assets in each location. Such allocation and apportionment is required to be made for affiliated groups (as defined in sec. 864(e)(5)) as a whole rather than on a subsidiary-by-subsidiary basis. However, cer- tain types of financial institutions that are members of an affiliated group are treated as members of a separate affiliated group for purposes of allocating and apportioning their interest expense. Section 1215(c)(5) of the Tax Reform Act of 1986 (P.L. 99 145, 100 Stat. 2548) includes a targeted rule which treats a cer- tain corporation as a financial institution for this purpose. House bill No provision. Senate amendment No provision. However section 1606 of the Senate amendment to H.R. 3448 (Small Busi- ness Job Protection Act of 1996) contained a provision that repeals section 1215(c)(5) of the Tax Reform Act of 1986. Effective date.\u2014Taxable years beginning after December 31, 1995. Conference agreement The conference agreement does not include the Senate amendment provision. 10. EXTENSION OF AIRPORT AND AIRWAY TRUST FUND EXCISE TAXES (Sec. 1607 of the Senate amendment and secs. 4041, 4081, 4261, and 4271 of the Code) Present law Extension of aviation taxes Before January 1, 1996, the following excise taxes were imposed to fund the Airport and Airway Trust Fund: (1) a 10-percent tax on domestic air passenger tickets; (2) a 6.25-per- cent tax on domestic air freight waybills; (3) a $6-per-person tax on international air de- partures; (4) a 17.5 cents-per-gallon tax on jet fuel used in noncommercial aviation; and (5) a 15-cents-per-gallon tax on gasoline used in noncommercial aviation (14 cents per gallon of this tax continues, with the revenues being deposited in the Highway Trust Fund). In addition, jet fuel and gasoline used in non- commercial aviation are subject to a tax of 4.3 cents per gallon, the revenues of which are deposited in the General Fund of the Treasury. Prior to January 1, 1996, of the total tax of 19.3 cents per gallon imposed on gasoline used in noncommercial aviation, 18.3 cents per gallon was collected when the gasoline was removed from a pipeline or barge terminal. The remaining 1 cent per gallon was imposed at the retail level. Exemption for certain medical air transpor- tation An exemption is provided from the air pas- senger and air freight taxes for emergency medical helicopter transportation if the heli- copter does not take off from or land at Fed- erally assisted airports or otherwise use Fed- eral aviation facilities or services. Exemption for helicopters used in exploration or development of hard minerals or oil or gas An exemption is provided from the air pas- senger tax for helicopter transportation for exploration, development, or removal of hard minerals or oil or gas if the helicopter does not take off from or land at Federally as- sisted airports or otherwise use Federal avia- tion facilities or services. Transportation of employees of affiliated com- panies Generally, when employees fly on their employer’s aircraft, the fuel tax applies, but when a company flies other passengers for compensation or hire, the passenger ticket tax applies. Employees of affiliated corpora- tions do not cause the air ticket tax to apply. The Internal Revenue Service has in- terpreted the use limitation of present-law section 4282 on an all-or nothing basis relat- ing to aircraft of affiliated groups. That is, if an aircraft is available for hire by persons outside the affiliated group, all amounts paid for transportation, including charges among members of an affiliated group, are subject to the passenger ticket tax rather than the fuels tax.57 House bill No provision. Senate amendment Extension of aviation taxes The five Airport and Airway Trust Fund excise taxes are reinstated at the pre-1996 rates for the period beginning seven days after the date of enactment through April 15, 1997. Exemption for certain medical air transpor- tation The Senate amendment: (1) expands the ex- emption for emergency medical helicopters to also include fixed-wing aircraft equipped for and exclusively dedicated to acute care emergency medical services; and (2) removes the reference to non-use of Federally as- sisted airports or other Federal aviation fa- cilities or services for such medical aircraft to qualify for the exemption. Exemption for helicopters used in exploration or development of hard minerals or oil or gas The Senate amendment provides that the exemption for such helicopter transportation applies on a flight segment basis. Effective date.\u2014The Senate amendment ap- plies for transportation or fuel sold begin- ning seven days after the date of enactment. The air passenger and air freight taxes do not apply to any amount paid before that date, even if for transportation occurring during the reinstatement period. Conference agreement The conference agreement follows the Sen- ate amendment with three modifications. First, the conference agreement reinstates the five Airport and Airway Trust Fund ex- cise taxes at the pre-1996 rates for the period beginning seven calendar days after the date of enactment and through December 1, 1996 (rather than through April 15, 1997). Second, the conference agreement consoli- dates imposition of the aviation gasoline ex- cise tax, with the entire 19.3-cents-per-gallon rate being imposed when the gasoline is re- moved from a pipeline or barge terminal fa- cility. Third, the conference agreement provides that the determination of which tax, the pas- senger ticket tax or the fuels tax, applies to flights of aircraft of affiliated groups of cor- porations will be made on a flight-by-flight basis. Effective date,\u2014Same as Senate amend- ment. 11. MODIFY BASIS ADJUSTMENT RULES UNDER SECTION 1033 (Sec. 1608 of the Senate amendment.) Present law Under section 1033, gain realized by a tax- payer from certain involuntary conversions of property is deferred to the extent the tax- payer purchases property similar or related in service of use to the converted property within a specified replacement period of time. The replacement property may be ac- quired directly or by acquiring control of a corporation (generally, 80 percent of the stock of the corporation) that owns replace- ment property. The taxpayer’s basis in the replacement property generally is the same as the taxpayer’s basis in the converted property, decreased by the amount of any money or loss recognized on the conversion, and increased by the amount of any gain rec- ognized on the conversion. In cases in which a taxpayer purchases stock as replacement property, the taxpayer generally reduces the basis of the stock, but does not reduce the basis of the underlying assets. Thus, the re- duction in the basis of the stock generally does not result in reduced depreciation de- ductions where the corporation holds depre- ciable property, and may result in the tax- payer having more aggregate depreciable basis after the acquisition of replacement property than before the involuntary conver- sion. House bill No provision. Senate amendment The Senate amendment provides that where the taxpayer satisfies the replacement property requirement of section 1033 by ac- quiring stock in a corporation, the corpora- tion generally will reduce its adjusted bases in its assets by the amount by which the tax- payer reduces its basis in the stock. The cor- poration’s adjusted bases in its assets will not be reduced, in the aggregate, below the taxpayer’s basis is its stock (determined after the appropriate basis adjustment for the stock). In addition, the basis of any indi- vidual asset will not be reduced below zero. The basis reduction first is applied to: (1) property that is similar or related in service or use to the converted property, then (2) to other depreciable property, then (3) to other property. Effective date.\u2014The provision applies to in- voluntary conversions occurring after the date of enactment. Conference agreement The conference agreement follows the Sen- ate amendment. 12. EXTENSION OF WITHHOLDING TO CERTAIN GAMBLING WINNINGS (Sec. 1609 of the Senate amendment.) Present law In general, proceeds from a wagering trans- action are subject to withholding at a rate of 28 percent if the proceeds exceed $5,000 and are at least 300 times as large as the amount wagered. No withholding tax is imposed on winnings from bingo or keno. House bill No provision. Senate amendment The Senate amendment imposes withhold- ing on proceeds from bingo or keno wagering transactions at a rate of 28 percent if such proceeds exceed $5,000, regardless of the odds of the wager. Effective date.\u2014The provision is effective 30 days after the date of enactment. Conference agreement The conference agreement does not include the Senate amendment provision. 13. TREATMENT OF CERTAIN INSURANCE CONTRACTS ON RETIRED LIVES (Sec. 1610 of the Senate amendment.) Present law Life insurance companies are allowed a de- duction for any net increase in reserves and are required to include in income any net de- crease in reserves. The reserve of a life insur- ance company for any contract is the greater CONGRESSIONAL RECORD \u2014 HOUSEH9648 August 1, 1996 58 The wash sale rules of section 1091 of the Code are not to apply to any loss that is required to be taken into account solely by reason of the mark-to- market requirement. 59 The provision applies only to a pension plan con- tract that is not a life, accident or health, property, casualty, or liability contract. of the net surrender value of the contract or the reserve determined under Federally pre- scribed rules. In no event, however, may the amount of the reserve for tax purposes for any contract at any time exceed the amount of the reserve for annual statement purposes. Special rules are provided in the case of a variable contract. Under these rules, the re- serve for a variable contract is adjusted by (1) subtracting any amount that has been added to the reserve by reason of apprecia- tion in the value of assets underlying such contract, and (2) adding any amount that has been subtracted from the reserve by reason of depreciation in the value of assets under- lying such contract. In addition, the basis of each asset underlying a variable contract is adjusted for appreciation or depreciation to the extent the reserve is adjusted. A variable contract generally is defined as any annuity or life insurance contract (1) that provides for the allocation of all or part of the amounts received under the contract to an account that is segregated from the general asset accounts of the company, and (2) under which, in the case of an annuity contract, the amounts paid in, or the amounts paid out, reflect the investment re- turn and the market value of the segregated asset account, or, in the case of a life insur- ance contract, the amount of the death bene- fit (or the period of coverage) is adjusted on the basis of the investment return and the market value of the segregated asset ac- count. A pension plan contract that is not a life, accident, or health, property, casualty, or liability insurance contract is treated as an annuity contract for purposes of this defi- nition. House bill No provision. Senate amendment The Senate amendment provides that a variable contract is to include a contract that provides for the funding of group term life or group accident and health insurance on retired lives if: (1) the contract provides for the allocation of all or part of the amounts received under the contract to an account that is segregated from the general asset account of the company; and (2) the amounts paid in, or the amounts paid out, under the contract reflect the investment re- turn and the market value of the segregated asset account underlying the contract. Thus, the reserve for such a contract is to be adjusted by (1) subtracting any amount that has been added to the reserve by reason of appreciation in the value of assets under- lying such contract, and (2) adding any amount that has been subtracted from the reserve by reason of depreciation in the value of assets underlying such contract. In addition, the basis of each asset underlying the contract is to be adjusted for apprecia- tion or depreciation to the extent that the reserve is adjusted. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1995. Conference agreement The conference agreement follows the Sen- ate amendment. 14. TREATMENT OF MODIFIED GUARANTEED CONTRACTS Present law Life insurance companies are allowed a de- duction for any net increase in reserves and are required to include in income any net de- crease in reserves. The reserve of a life insur- ance company for any contract is the greater of the net surrender value of the contract or the reserve determined under Federally pre- scribed rules. The net surrender value of a contract is the cash surrender value reduced by any surrender penalty, except that any market value adjustment required on surren- der is not taken into account. In no event, however, may the amount of the reserve for tax purposes for any contract at any time exceed the amount of the reserve for annual statement purposes. In general, assets held for investment are treated as capital assets. Any gain or loss from the sale or exchange of a capital asset is treated as a capital gain or loss and is taken into account for the taxable year in which the asset is sold or exchanged. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement generally ap- plies a mark-to-market regime to assets held as part of a segregated account under a modified guaranteed contract issued by a life insurance company. Gain or loss with re- spect to such assets held as of the close of any taxable year are taken into account for that year (even though the assets have not been sold or exchanged),58 and are treated as ordinary. If gain or loss is taken into ac- count by reason of the mark-to-market re- quirement, then the amount of gain or loss subsequently realized as a result of sale, ex- change, or other disposition of the asset, or as a result of the application of the mark-to- market requirement is appropriately ad- justed to reflect such gain or loss. In addi- tion, the reserve for a modified guaranteed contract is determined by taking into ac- count the market value adjustment required on surrender of the contract. A modified guaranteed contract is defined as any life insurance contract, annuity con- tract or pension plan contract 59 that is not a variable contract (within the meaning of Code section 817), and that satisfies the fol- lowing requirements. All or part of the amounts received under the contract must be allocated to an account which, pursuant to State law or regulation, is segregated from the general asset accounts of the com- pany and is valued from time to time by ref- erence to market values. The reserves for the contract must be val- ued at market for annual statement purposes and the Federally prescribed reserve for the contract under section 807(d)(2) must be val- ued at market. Further, a modified guaran- teed contract includes only a contract that provides either for a net surrender value or for a policyholder’s fund (within the meaning of section 807(e)(1)). It is intended that a pol- icyholder’s fund be more than de minimis. For example, Treasury regulations could provide that a policyholder’s fund that rep- resents 15 percent or less of the insurer’s re- serve for the contract under section 807, and that is attributable to employee contribu- tions, would be considered de minimis. If only a portion of the contract is not de- scribed in section 817, that portion is treated as a separate contract for purposes of the provision. The Treasury Department is authorized to issue regulations that provide for the appli- cation of the mark-to-market requirement at times other than the close of a taxable year or the last business day of a taxable year. The Treasury Department is also au- thorized to issue such regulations as may be necessary or appropriate to carry out the purposes of the provision and to provide for treatment of modified guaranteed contracts under sections 72, 7702, and 7702A. In addi- tion, the Treasury Department is authorized to determine the interest rates applicable under section 807(c)(3), 807(d)(2)(B) and 812 with respect to modified guaranteed con- tracts annually, calculating such rates as ap- propriate for modified guaranteed contracts. The Treasury Department has discretion to determine an appropriate rate that is a cur- rent market rate, which could be deter- mined, for example, either by using a rate that is appropriate for the obligations under the contract to which the reserve relates, or by taking into account the yield on the as- sets underlying the contract. The Treasury Department may exercise this authority by issuing a periodic announcement of the ap- propriate market interest rates or formula for determining such rates. The Treasury De- partment is also authorized, to the extent appropriate for such a contract, to modify or waive section 811(d). The Treasury Department is also author- ized to provide rules limiting the ordinary treatment provided under the provision to gain or loss on those assets properly taken into account in calculating the reserve for Federal tax purposes (and necessary to sup- port such reserves) for modified guaranteed contracts, and to provide rules for limiting such treatment with respect to other assets (such as assets representing surplus of the company). Particular concern has been ex- pressed about characterization of gain or loss as ordinary under the provision in trans- actions that would otherwise either (1) have to meet the requirements of the hedging ex- ception to the straddle rules to receive this treatment, or (2) by treated as capital trans- actions under present law. It is intended that the mark-to-market treatment apply to all assets held as part of a segregated account established under the provision, even though ordinary treatment may not apply (pursuant to Treasury regulatory authority) to assets held as part of the segregated account that are not necessary to support the reserve for modified guaranteed contracts. The conference agreement authorizes the Treasury Department to prescribe regula- tions that provide for the treatment of as- sets transferred to or from a segregated ac- count. This regulatory authority is provided because of concern that taxpayers may exer- cise selective ordinary loss (or income or gain) recognition by virtue of the ordinary treatment under the provision. One example of selective ordinary loss recognition could arise if assets are always marked to market when transferred out of the segregated ac- count. For example, if at the beginning of the taxable year an asset in the segregated account is worth $1,000, but declines to $900 in July, the taxpayer might choose to recog- nize $100 of ordinary loss while continuing to own the asset, simply by transferring it out of the segregated account in July and replac- ing $1,000 of cash (for example) in the seg- regated account. It is intended that the regulations relating to asset transfers will forestall opportunities for selective recognition of ordinary items. Prior to the issuance of these regulations, the following rules shall apply. If an asset is transferred to a segregated account, gain or loss attributable to the pe- riod during which the asset was not in the segregated account is taken into account when the asset is actually sold, and retains the character (as ordinary or capital) prop- erly attributable to that period. Appropriate adjustments are made to the basis of the asset to reflect gain or loss attributable to that period. If an asset is transferred out of a seg- regated account, the transfer is deemed to CONGRESSIONAL RECORD \u2014 HOUSE H9649August 1, 1996 occur on the last business day of the taxable year and gain or loss with respect to the transferred asset is taken into account as of that day. Loss with respect to such trans- ferred asset is treated as ordinary to the ex- tent of the lesser of (1) the loss (if any) that would have been recognized if the asset had been sold for its fair market value on the last business day of the taxable year (or the date the asset was actually sold by the tax- payer, if earlier) or (2) the loss (if any) that would have been recognized if the asset had been sold for its fair market value on the date of the transfer. A similar rule applies for gains. Proper adjustment is made in the amount of any gain or loss subsequently re- alized to reflect gain or loss under the provi- sion. For example, assume that a capital asset in the segregated account that is worth $1,000 at the beginning of the year is trans- ferred out of the segregated account in July at a value of $900, is retained by the company and is worth $950 on the last business day of the taxable year. A $50 ordinary loss is taken into account with respect to the asset for the taxable year (the difference Between $1,000 and $950). The asset is not marked to market in any subsequent year under the provision, provide that it is not transferred back to the segregated account. As an additional example, assume that a capital asset in the segregated account that is worth $1,000 at the beginning of the year is transferred out of the segregated accounted in July at a value of $900, is retained by the company and continues to decline in value to $850 on the last business day of the taxable year. A $100 ordinary loss ($1,000 less $900) and a $50 capital loss ($900 less $850) is taken into account with respect to the asset for the taxable year. Effective date.\u2014The provision applies to taxable years beginning after December 31, 1995. A taxpayer that is required to (1) change its calculation of reserves to take into account market value adjustments and (2) mark to market its segregated assets in order to comply with the requirements of the provision is treated as having initiated changes in methods of accounting and as having received the consent of the Treasury Department to make such changes. Except as otherwise provided in special rules (described below), the section 481(a) ad- justments required by reason of the changes in method of accounting are to be taken into account as ordinary income for the tax- payer’s first taxable year beginning after De- cember 31, 1995. Special rules providing for a seven-year spread apply in the case of certain losses (if any), and in the case of certain reserve in- creases (if any), in order to limit selective loss recognition or selective minimization of gain recognition. Thus, the seven-year spread rule applies when the taxpayer’s sec- tion 481(a) adjustment is negative. First, if, for the taxpayer’s first taxable year beginning after December 31, 1995, (1) the aggregate amount of the loss recognized by reason of the change in method of ac- counting with respect to segregated assets under modified guaranteed contracts (i.e., the switch to a mark-to-market regime for such assets) exceeds (2) the amount include in income by reason of the change in method of accounting with respect to reserves (i.e., the change permitting a market value ad- justment to be taken into account with re- spect to a modified guaranteed contract), then the excess is not allowed as a deduction in the taxpayer’s first taxable year begin- ning after December 31, 1995. Rather, such excess is allowed ratably over the period of seven taxable years beginning with the tax- payer’s first taxable year beginning after De- cember 31, 1995. The adjusted basis of each such segregated asset is nevertheless deter- mined as if such losses were realized in the taxpayer’s first taxable year beginning after December 31, 1995. Second, if, for the taxpayer’s first taxable year beginning after December 31, 1995, (1) the aggregate amount the taxpayer’s deduc- tion that arises by reason of the change in method of accounting with respect to re- serves (i.e., the change permitting a market value adjustment to be taken into account with respect to a modified guaranteed con- tract), exceeds (2) the aggregate amount of the gain recognized by reason of the change in method of accounting with respect to seg- regated assets under modified guaranteed contracts (i.e., the switch to a mark-to-mar- ket regime for such assets), then the excess is not allowed as a deduction in the tax- payer’s first taxable year beginning after De- cember 31, 1995. Rather, such excess is al- lowed ratably over the period of seven tax- able years beginning with the taxpayer’s first taxable year beginning after December 31, 1995. 15. TREATMENT OF CONTRIBUTIONS IN AID OF CONSTRUCTION FOR WATER UTILITIES (Sec. 1611(a) of the Senate amendment.) Present and prior law The gross income of a corporation does not include contributions to its capital. A con- tribution to the capital of a corporation does not include any contribution in aid of con- struction or any other contribution as a cus- tomer or potential customer. Prior to the enactment of the Tax Reform Act of 1986 (”1986 Act”), a regulated public utility that provided electric energy, gas water, or sewage disposal services was al- lowed to treat any amount of money or prop- erty received from any person as a tax-free contribution to its capital so long as such amount: (1) was a contribution in aid of con- struction; and (2) was not included in the taxpayer’s rate base for rate-making pur- poses. A contribution in aid of construction did not include a connection fee. The basis of any property acquired with a contribution in aid of construction was zero. If the contribution was in property other than electric energy, gas, steam, water, or sewerage disposal facilities, such contribu- tion was not includible in the utility’s gross income so long as: (1) an amount at least equal to the amount of the contribution was expended for the acquisition or construction of tangible property that was used predomi- nantly in the trade or business of furnishing utility services; (2) the expenditure occurred before the end of the second taxable year after the year that the contribution was re- ceived; and (3) certain records were kept with respect to the contribution and the ex- penditure. In addition, the status of limita- tions for the assessment of deficiencies was extended in the case of these contributions. These rules were repealed by the 1986 Act. Thus, after the 1986 Act, the receipt by a utility of a contribution in aid of construc- tion is includible in the gross income of the utility, and the basis of property received or constructed pursuant to the contribution is not reduced. House bill No. provision. Senate amendment The Senate amendment restores the con- tributions in aid of construction provisions that were repealed by the 1986 Act for regu- lated public utilities that provide water or sewerage disposal services. Effective date.\u2014The provision is effective for amounts received after June 12, 1996. Conference agreement The conference agreement follows the Sen- ate amendment. 16. REQUIRE WATER UTILITY PROPERTY TO BE DEPRECIATED OVER 25 YEARS (Sec. 1611(b) of the Senate amendment.) Present law Property used by a water utility in the gathering, treatment, and commercial dis- tribution of water and municipal sewers are depreciated over a 20-year period for regular tax purposes. The depreciation method gen- erally applicable to property with a recovery period of 20 years is the 150-percent declining balance method (switching to the straight- line method in the year that maximizes the depreciation deduction). The straight-line method applies to property with a recovery period over 20 years. House bill No provision. Senate amendment The Senate amendment provides that water utility property will be depreciated using a 25-year recovery period and the straight-line method for regular tax pur- poses. For this purpose, ”water utility prop- erty” means (1) property that is an integral part of the gathering, treatment, or commer- cial distribution of water, and that, without regard to the proposal, would have had a re- covery period of 20 years and (2) any munici- pal sewer. Such property generally is de- scribed in Asset Classes 49.3 and 51 of Reve- nue Procedure 87 56, 1987 2 C.B. 674. The Sen- ate amendment does not change the class lives of water utility property for purposes of the alternative depreciation system of sec- tion 168(g). Effective date.\u2014The provision is effective for property placed in service after June 12, 1996, other than property placed in service pursuant to a binding contract in effect be- fore June 10, 1996, and at all times thereafter before the property is placed in service. Conference agreement The conference agreement follows the Sen- ate amendment. 17. ALLOW CONVERSION OF SCHOLARSHIP FUND- ING CORPORATION TO TAXABLE CORPORATION (Sec. 1621 of the Senate amendment.) Present law Qualified scholarship funding corporations are nonprofit corporations established and operated exclusively for the purpose of ac- quiring student loan notes incurred under the Higher Education Act of 1965 (sec. 150(d)). In addition, a qualified scholarship funding corporation must be required by its cor- porate charter and bylaws, or under State law, to devote any income (after payment of expenses, debt service and the creation of re- serves for the same) to the purchase of addi- tional student loan notes or to pay over any income to the United States. In general, State and local government bonds issued to finance private loans (e.g., student loans) are taxable private activity bonds. However, interest on qualified student loan bonds is tax-exempt. Qualified scholar- ship funding corporations are eligible issuers of qualified student loan bonds. The Internal Revenue Code restricts the di- rect and indirect investment of bond pro- ceeds in higher yielding investments and re- quires that profits on investments that are unrelated to the government purpose for which the bonds are issued be rebated to the United States. Special allowance payments (SAP) made by the Department of Education are treated as interest on notes and, there- fore, are permitted arbitrage that need not be rebated to the United States. Generally, a private foundation and dis- qualified persons may, in the aggregate, own 20 percent of the voting stock of a function- ally unrelated corporation. CONGRESSIONAL RECORD \u2014 HOUSEH9650 August 1, 1996 House bill No provision. Senate amendment In general.\u2014The amendment would provide that a nonprofit student loan funding cor- poration may elect to cease its status as a qualified scholarship funding corporation. If the corporation meets the requirements out- lined below, such an election would not cause any bond outstanding as of the date of the issuer’s election and any bond issued to refund such a bond to fail to be a qualified student loan bond. Once made, an election could be revoked only with the consent of the Secretary of the Treasury. After making the election, the issuer would not be author- ized to issue any new bonds. Requirements.\u2014First, upon making the election, the issuer would be required to transfer all of the student loan notes to an- other, taxable, corporation in exchange for senior stock of such corporation within a reasonable period of time after the election is made. Immediately after the transfer, the issuer, and any other issuer who made the election, would be required to hold all of the senior stock of the corporation. Senior stock is stock whose rights to dividends, liquida- tion or redemption rights are not inferior to those of any other class of stock and that (1) participates pro rata and fully in the equity value of any other common stock of the cor- poration, (2) has the right to payments re- ceivable in liquidation prior to any other stock in the corporation, (3) upon liquidation or redemption, has a fixed right to receive the greater of (a) the fair market value of the stock at the date of liquidation or re- demption or (b) the net fair market value of all assets transferred to the corporation by the issuer, and (4) has a right to require its redemption by a date which is not later than 10 years after the date that the election is made. Second, the transferee corporation would be required to assume or otherwise provide for the payment of all the qualified scholar- ship funding bond indebtedness of the issuer within a reasonable period after the election. Third, immediately after the transfer, the issuer (i.e., the nonprofit student loan fund- ing corporation) would be required to be- come a charitable organization (described in section 501(c)(3) that is exempt from tax under section 501(a)), at least 80 percent of the members of its board of directors must be independent members, and it must hold all of the senior stock of the corporation. Excess business holdings.\u2014For purposes of the excess business holding restrictions im- posed on a private foundation, the charity would not be required to divest its ownership in a corporation most of whose assets are student loan notes incurred under the Higher Education Act of 1965. Effective date.\u2014The amendment would be effective on the date of enactment. Conference agreement The conference agreement follows the Sen- ate amendment. 18. APPLY MATHEMATICAL OR CLERICAL ERROR PROCEDURES FOR DEPENDENCY EXEMPTIONS AND FILING STATUS WHEN CORRECT TAX- PAYER IDENTIFICATION NUMBERS ARE NOT PROVIDED (Sec. 1613 of the Senate amendment.) Present law In general Individuals who claim personal exemptions for dependents must include on their tax re- turn the name and taxpayer identification number (TIN) of each dependent. For returns filed with respect to tax year 1996, individ- uals must provide a TIN for all dependents born on or before November 30, 1996. For re- turns filed with respect to tax year 1997 and all subsequent years, individuals must pro- vide TINs for all dependents, regardless of their age. An individual’s TIN is generally that individual’s social security number. If the individual fails to provide a correct TIN for a dependent, the Internal revenue Service may impose a $50 penalty. Mathematical or clerical errors The IRS may summarily assess additional tax due as a result of a mathematical or cler- ical error without sending the taxpayer a no- tice of deficiency and giving the taxpayer an opportunity to petition the Tax Court. Where the IRS uses the summary assessment procedure for mathematical or clerical er- rors, the taxpayer must be given an expla- nation of the asserted error and a period of 60 days to request that the IRS abate its as- sessments. The IRS may not proceed to col- lect the amount of the assessment until the taxpayer has agreed to it or has allowed the 60-day period for objecting to expire. If the taxpayer files a request for abatement of the assessment specified in the notice, the IRS must abate the assessment. Any reassess- ment of the abated amount is subject to the ordinary deficiency procedures. The request for abatement of the assessment is the only procedure a taxpayer may use prior to pay- ing the assessed amount in order to contest an assessment arising out of a mathematical or clerical error. Once the assessment is sat- isfied, however, the taxpayer may file a claim for refund if he or she believes the as- sessment was made in error. House bill No provision. Senate amendment If an individual fails to provide a correct TIN for a dependent, the IRS is authorized to deny the dependency exemption. Such a change also has indirect consequences for other tax benefits currently conditioned on being able to claim a dependency exemption (e.g., head of household filing status and the dependent care credit). In addition, the fail- ure to provide a correct TIN for a dependent will be treated as a mathematical or clerical error and thus any notification that the tax- payer owes additional tax because of that failure will not be treated as a notice of defi- ciency. Effective date.\u2014The provision is effective for tax returns for which the due date (with- out regard to extensions) is 30 days or more after the date of enactment. For taxable years beginning in 1995, no requirement to obtain a TIN applies in the case of depend- ents born after October 31, 1995. For taxable years beginning in 1996, no requirement to obtain a TIN applies in the case of depend- ents born after November 30, 1996. Conference agreement The conference agreement follows the Sen- ate amendment. 19. TREATMENT OF FINANCIAL ASSET SECURITIZATION INVESTMENT TRUSTS (”FASITS”) (Sec. 1621 of the Senate amendment.) Present law An individual can own income-producing assets directly, or indirectly through an en- tity (i.e., a corporation, partnership, or trust). Where an individual owns assets through an entity (e.g., a corporation), the nature of the interest in the entity (e.g., stock of a corporation) is different than the nature of the assets held by the entity (e.g., assets of the corporation). Securitization is the process of converting one type of asset into another and generally involves the use of an entity separate from the underlying assets. In the case of securitization of debt instruments, the in- struments created in the securitization typi- cally have different maturities and charac- teristics than the debt instruments that are securitized. Entities used in securitization include en- tities that are subject to tax (e.g., a corpora- tion), conduit entities that generally are not subject to tax (e.g., a partnership, grantor trust, or real estate mortgage investment conduit (”REMIC”)), or partial-conduit enti- ties that generally are subject to tax only to the extent income is not distributed to own- ers (e.g., a trust, real estate investment trust (”REIT”), or regulated investment company (”RIC”)). There is no statutory entity that facili- tates the securitization of revolving, non- mortgage debt obligations. House bill No provision. Senate amendment In general The Senate amendment would create a new type of statutory entity called a ”financial asset securitization investment trust” (”FASIT”) that facilitates the securitization of debt obligations such as credit card re- ceivables, home equity loans, and auto loans. A FASIT generally will not be taxable; the FASIT’s taxable income or net loss will flow through to the owner of the FASIT. The ownership interest of a FASIT gen- erally will be required to be entirely held by a single domestic C corporation. The Finance Committee expected that the Treasury De- partment will issue guidance on how this rule would apply to cases in which the entity that owns the FASIT joins in the filing of a consolidated return with other members of the group that wish to hold an ownership in- terest in the FASIT. In addition, a FASIT generally may hold only qualified debt obli- gations, and certain other specified assets, and will be subject to certain restrictions on its activities. An entity that qualifies as a FASIT can issue instruments that meet cer- tain specified requirements and treat those instruments as debt for Federal income tax purposes. Instruments issued by a FASIT bearing yields to maturity over five percent- age points above the yield to maturity on specified United States government obliga- tions (i.e., ”high-yield interests”) must be held, directly or indirectly, only by domestic C corporations that are not exempt from in- come tax. Qualification as a FASIT In general.\u2014To qualify as a FASIT, an en- tity must: (1) make an election to be treated as a FASIT for the year of the election and all subsequent years; (2) have assets substan- tially all of which (including assets that the FASIT is treated as owning because they support regular interests) are specified types called ”permitted assets;” (3) have non-own- ership interests be certain specified types of debt instruments called ”regular interests”; (4) have a single ownership interest which is held by an ”eligible holder”; and (5) not qualify as a RIC. Any entity, including a cor- poration, partnership, or trust may be treat- ed as a FASIT. In addition, a segregated pool of assets may qualify as a FASIT. Election to be a FASIT.\u2014Once an election to be a FASIT is made, the election applies from the date specified in the election and all subsequent years until the entity ceases to be a FASIT. The manner of making the election to be a FASIT is to determined by the Secretary of the Treasury. If an election to be a FASIT is made after the initial year of an entity, all of the assets in the entity at the time of the FASIT election are deemed contributed to the FASIT at that time and, CONGRESSIONAL RECORD \u2014 HOUSE H9651August 1, 1996 60 The Senate amendment provided transitional re- lief under which gain in pre-effective date entities that make a FASIT election may be deferred. 61 Variable interest rates that would meet this standard include variable interest rates described in Treasury Income Tax Regulations 1.860G-1(a)(3). 62 The Senate amendment treats cooperatives as disqualified holders since cooperatives, like RICs and REITs, are treated as pass-through entities and, also like the owners of RICs and REITs, the coopera- tive’s members and patrons need not be C corpora- tions. 63 for this purpose, a ”qualified liquidation” has the same meaning as it does purposes of the exemp- tion from the tax on prohibited transactions of a REMIC in section 860F(a)(4). 64 Regular interests in a FASIT 95 percent or more of whose assets are real estate mortgages are treat- ed as real estate assets where relevant (e.g., secs. 856, 593, 7701(a)(19)). 65 Under this rule, no high-yield interests will be treated as issued where the FASIT directly issues such interests to a disqualified holder. accordingly, any gain (but not loss) on such assets will be recognized at that time.60 Ceasing to be a FASIT.\u2014Once an entity ceases to be a FASIT, it is not a FASIT for that year or any subsequent year. Nonethe- less, an entity can continue to be a FASIT where the Treasury Department determines that the entity inadvertently ceases to be a FASIT, steps are taken reasonably soon after it is discovered that the entity ceased being a FASIT so that it again qualifies as a FASIT, and the FASIT and its owner take those steps that the Treasury Department deems necessary. An entity will cease quali- fying as a FASIT if the entity’s owner ceases being an eligible corporation. Loss of FASIT status is to be treated as if all of the regular interests of the FASIT were retired and then reissued without the application of the rule which deems regular interests of a FASIT to be debt. The Finance Committee understood that this treatment could result in the cre- ation of cancellation of indebtedness income where the new instruments deemed to be is- sued are treated as stock under general tax principles. Permitted assets. In general.\u2014For an entity or arrangement to qualify as a FASIT, sub- stantially all of its assets must consist of the following ”permitted assets”: (1) cash and cash equivalents; (2) certain permitted debt instruments; (3) certain foreclosure property; (4) certain instruments or con- tracts that represent a hedge or guarantee of debt held or issued by the FASIT; (5) con- tract rights to acquire permitted debt in- struments or hedges; and (6) a regular inter- est in another FASIT. A FASIT must meet the asset test at the 90th day after its forma- tion and at all times thereafter. Permitted assets may be acquired at any time by a FASIT, including any time after its forma- tion. Permitted debt instruments.\u2014A debt instru- ment will be a permitted asset only if the in- strument is indebtedness for Federal income tax purposes including trade receivables, regular interests in a real estate mortgage investment conduit (REMIC), or regular in- terests issued by another FASIT and it bears (1) fixed interest or (2) variable interest of a type that relates to qualified variable rate debt (as defined in Treasury regulations pre- scribed under sec. 860G(a)(1)(B)). Except for cash equivalents, permitted debt obligations cannot be obligations issued, directly or in- directly, by the owner of the FASIT or a re- lated person. Foreclosure property.\u2014Permitted assets in- clude property acquired on default (or immi- nent default) of debt instruments, swap con- tracts, forward contracts, or similar con- tracts held by the FASIT that would be fore- closure property to a REIT (under sec. 856(e)) if the property that was acquired by fore- closure by the FASIT was real property or would be foreclosure property to a REIT but for certain leases entered into or construc- tion performed (as described in sec. 856(e)(4)) while held by the FASIT. Hedges.\u2014Permitted assets include interest rate or foreign currency notional principal contracts, letters of credit, insurance, guar- antees against payment defaults, notional principal contracts that are ”in the money,” or other similar instruments as permitted under Treasury regulations, which are rea- sonably required to guarantee or hedge against the FASIT’s risks associated with being the obligor of regular interests. An in- strument is a hedge if it results in risk re- duction as described in Treasury regulation section 1.1221-2. ”Regular interests” of a FASIT.\u2014Under the Senate amendment, ”regular interests” of a FASIT, including ”high-yield interests,” are treated as debt for Federal income tax pur- poses regardless of whether instruments with similar terms issued by non-FASITs might be characterized as equity under general tax principles. To be treated as a ”regular inter- est,” an instrument must have fixed terms and must: (1) unconditionally entitle the holder to receive a specified principal amount; (2) pay interest that is based on (a) one or more rates that are fixed, (b) rates that measure contemporaneous variations in the cost of newly borrowed funds,61 or (c) to the extent permitted by Treasury regula- tions, variable rates allowed to regular inter- ests of a REMIC if the FASIT would other- wise qualify as a REMIC; (3) have a term to maturity of no more than 30 years, except as permitted by Treasury regulations; (4) be is- sued to the public with a premium of not more than 25 percent of its stated principal amount; and (5) have a yield to maturity de- termined on the date of issue of no more than five percentage points above the appli- cable Federal rate (AFR) for the calendar month in which the instrument is issued. A FASIT also may issue high-yield debt in- struments, which includes any debt instru- ment issued by a FASIT that meets the sec- ond and third conditions described above, so long as such interests are not held by a dis- qualified holder. A ”disqualified holder” gen- erally is any holder other than (1) a domestic C corporation that does not qualify as a RIC, REIT, REMIC, or cooperative 62 or (2) a deal- er who acquires FASIT debt for resale to cus- tomers in the ordinary course of business. An excise tax is imposed at the highest cor- porate rate on a dealer if there is a change in dealer status or if the holding of the instru- ment is for investment purposes. A 31-day grace period is granted before ownership of an interest held by a dealer generally could be treated as held by the FASIT owner for investment purposes. Permitted ownership holder.\u2014A permitted holder of the ownership interest in a FASIT generally is a non-exempt domestic C cor- poration, other than a corporation that qualifies as a RIC, REIT, REMIC, or coopera- tive. Transfers to non-permitted holders of high- yield interests A transfer of a high-yield interest to a dis- qualified holder is to be ignored for Federal income tax purposes. Thus, such a transferor will continue to be liable for any taxes due with respect to the transferred interest. Taxation of a FASIT In general.\u2014A FASIT generally is not sub- ject to tax. Instead, all of the FASIT’s assets and liabilities are treated as assets and li- abilities of the FASIT’s owner and any in- come, gain, deduction or loss of the FASIT is allocable directly to its owner. Accordingly, income tax rules applicable to a FASIT (e.g., related party rules, sec. 871(h), sec. 165(g)(2)) are to be applied in the same manner as they apply to the FASIT’s owner. Any securities held by the FASIT that are treated as held by its owner are treated as held for invest- ment. The taxable income of a FASIT is cal- culated using an accrual method of account- ing. The constant yield method and prin- ciples that apply for purposes of determining OID accrual on debt obligations whose prin- cipal is subject to acceleration apply to all debt obligations held by a FASIT to cal- culate the FASIT’s interest and discount in- come and premium deductions or adjust- ments. For this purpose, a FASIT’s income does not include any income subject to the 100-percent penalty excise tax on prohibited transactions. Income from prohibited transactions..\u2014The owner of a FASIT is required to pay a pen- alty excise tax equal to 100 percent of net in- come derived from (1) an asset that is not a permitted asset, (2) any disposition of an asset other than a permitted disposition, (3) any income attributable to loans originated by the FASIT, and (4) compensation for serv- ices (other than fees for a waiver, amend- ment, or consent under permitted assets not acquired through foreclosure). A permitted disposition is any disposition of any per- mitted asset (1) arising from complete liq- uidation of a class of regular interests (i.e., a qualified liquidation63), (2) incident to the foreclosure, default, or imminent default of the asset, (3) incident to the bankruptcy or insolvency of the FASIT, (4) necessary to avoid a default on any indebtedness of the FASIT attributable to a default (or immi- nent default) on an asset of the FASIT, (5) to facilitate a clean-up call, (6) to substitute a permitted debt instrument for another such instrument, or (7) in order to reduce over- collateralization where a principal purpose of the disposition was not to avoid recogni- tion of gain arising from an increase in its market value after its acquisition by the FASIT. Notwithstanding this rule, the owner of a FASIT may currently deduct its losses incurred in prohibited transactions in com- puting its taxable income for the year of the loss. Taxation of interests in the FASIT Taxation of holders of regular interests.\u2014In general.\u2014A holder of a regular interest, in- cluding a high-yield interest, is taxed in the same manner as a holder of any other debt instrument, except that the regular interest holder is required to account for income re- lating to the interest on an accrual method of accounting, regardless of the method of accounting otherwise used by the holder.64 High-yield interests.\u2014Holders of high-yield interests are not allowed to use net operat- ing losses to offset any income derived from the high-yield debt. Any net operating loss carryover shall be computed by disregarding any income arising by reason of the dis- allowed loss. In addition, a transfer of a high-yield in- terest to a disqualified holder is not recog- nized for Federal income tax purposes such that the transferor will continue to be taxed on the income from the high-yield interest unless the transferee provides the transferor with an affidavit that the transferee is not a disqualified person or the Treasury Sec- retary determines that the high-yield inter- est is no longer held by a disqualified person and a corporate tax has been paid on the in- come from the high-yield interest while it was held by a disqualified person.65 High- yield interests may be held without a cor- porate tax being imposed on the income from the high-yield interest where the interest is held by a dealer in securities who acquired such high-yield interest for sale in the ordi- nary course of his business as a securities CONGRESSIONAL RECORD \u2014 HOUSEH9652 August 1, 1996 66 Ownership interests in a FASIT 95 percent or more of whose assets are real estate mortgages are treated as real estate assets where relevant (e.g., secs. 856, 593, 7701(a)(19)). 67 For this purpose, supporting assets includes any assets that are reasonably expected to directly or in- directly pay regular interests or to otherwise secure or collateralize regular interests. In the case where there is a commitment to make additional contribu- tions to a FASIT, any such assets will not be treated as supporting the FASIT until they are transferred to the FASIT or set aside for such use. 68 In the case of a securities dealer which may be an eligible holder, the Finance Committee under- stood that the mark-to-market rule of section 475 will not apply to an ownership interest in a FASIT or assets held in the FASIT. dealer. In such a case, a corporate tax is im- posed on such a dealer if his reason for hold- ing the high-yield interest changes to invest- ment. There is a presumption that the dealer has not changed his intent for holding high- yield instruments to investment for the first 31 days he holds such interests unless such holding is part of a plan to avoid the restric- tion on holding of high-yield interests by dis- qualified persons. Where a pass-through entity (other than a FASIT) issues either debt or equity instru- ments that are secured by regular interests in a FASIT and such instruments bear a yield to maturity greater than the yield on the regular iterests and the applicable Fed- eral rate plus five percentage points (deter- mined on date that the pass-through entity acquires the regular interests in the FASIT) and the pass-through entity issued such debt or equity with a principal purpose of avoid- ing the rule that high-yield interests be held by corporations, then an excise tax is im- posed on the pass-through entity at a rate equal to the highest corporate rate on the in- come of any holder of such instrument at- tributable to the regular interests. Taxation of holder of ownership interest.\u2014All of the FASIT’s assets and liabilities are treated as assets and liabilities of the holder of a FASIT ownership interest and that owner takes into account all of the FASIT’s income, gain, deduction, or loss in comput- ing its taxable income or net loss for the tax- able year. The character of the income to the holder of an ownership interest is the same as its character to the FASIT, except tax-ex- empt interest is taken into income of the holder as ordinary income.66 Losses on assets contributed to the FASIT are not allowed upon their contribution, but may be allowed to the FASIT owner upon their disposition by the FASIT. A special rule provides that the holder of a FASIT ownership interest cannot offset income or gain from the FASIT ownership interest with any other losses. Any net operating loss carryover of the FASIT owner shall be com- puted by disregarding any income arising by reason arising by reason of a disallowed loss. For purposes of the alternative minimum tax, the owner’s taxable income is deter- mined without regard to the minimum FASIT income. The alternative minimum taxable income of the FASIT owner cannot be less than the FASIT income for that year, and the alternative minimum tax net operat- ing loss deduction is computed without re- gard to the minimum FASIT income. Transfers to FASITs Gain generally is recognized immediately by the owner of the FASIT upon the transfer of assets to a FASIT. Assets that are ac- quired by the FASIT from someone other than its owner are treated as if they were ac- quired by the owner and then contributed to the FASIT. In addition, any assets of the FASIT owner or a related person that are used to support 67 FASIT regular interests are treated as contributed to the FASIT and, thus, any gain on any such assets also will be recognized at the earliest date that such as- sets support any FASIT’s regular interests.68 To the extent provided by Treasury regula- tions, gain recognition on the contributed assets may be deferred until such assets sup- port regular interests issued by the FASIT or any indebtedness of the owner or related person. These regulations my adjust other statutory FASIT provisions to the extent such provisions are inconsistent with such regulations. For example, such regulations may disqualify certain assets as permitted assets. The basis of any FASIT assets is in- creased by the amount of the taxable gain recognized on the contribution of the assets to the FASIT. Valuation rules In general, except in the case of debt in- struments, the value of FASIT assets is their fair market value. In the case of debt instru- ments that are traded on an established se- curities market, then the market price will be used for purposes of determining the amount of gain realized upon contribution of such assets to a FASIT. Nonetheless, the Senate amendment contained special rules for valuing other debt instruments for pur- poses of computing gain on the transfer to a FASIT. Under these rules, the value of such debt instruments is the sum of the present values of the reasonably expected cash flows from such obligations discounted over the weighted average life of such assets. The dis- count rate is 120 percent of the applicable Federal rate, compounded semiannually, or such other rate that the Treasury Secretary shall prescribe by regulations. For purposes of determining the value of a pool of revolv- ing loan accounts having substantially the same terms, each extension of credit (other than the accrual of interest) is treated as a separate debt instrument and the maturity of the instruments is determined using the reasonably anticipated periodic payment rate at which principal payments will be made as a proportion of their aggregate out- standing principal assuming that payments are applied to the earliest credit extensions. The Finance Committee understood that rea- sonably expected cash flows from loans will reflect nonpayment (i.e., losses), early pay- ments (i.e., prepayments), and reasonable costs of servicing the loans. This value shall be used in determining the amount of gain realized upon the contribution of assets to a FASIT even though that value may be dif- ferent than the value of such assets would be applying a willing buyer\/willing seller stand- ard. Related person For purposes of the FASIT rules, a person is related to another person if that person bears a relationship to the other person spec- ified in sections 267(b) or 707(b)(1), using a 20- percent ownership test instead of the 50-per- cent test, or such persons are engaged in trades or businesses under common control as determined under sections 52(a) or (b). Related amendments For purposes of the wash sale rule (sec. 1091), an ownership interest of a FASIT is treated as a ”security.” In addition, an own- ership interest in a FASIT and a residual in- terest in a pool of debt obligations that are substantially similar to the debt obligations in the FASIT shall be treated as ”substan- tially identical stock or securities”. Finally, the wash sale period begins six months be- fore, and ends six months after, the sale of the ownership interest of the FASIT. Effective date The Senate amendment would take effect on the date of enactment. The Senate amendment provided a special transition rule for entities (e.g., a trust whose interests are taxed like a partnership) that were in ex- istence on June 10, 1996, that subsequently elect to be a FASIT (called a ”pre-effective date FASIT”). Under the special transitional rule, gain is not recognized on property con- tributed, or deemed contributed, to the FASIT to the extent that any such property is allocable to interests issued by a ”pre-ef- fective date FASIT” (called a ”pre-FASIT interest”). The portion of such property that is allocable to pre-FASIT interests is to be determined by the Treasury Secretary, ex- cept that the property of the entity allocable to ”pre-FASIT interests” shall not be less than 107 percent of the aggregate principal amounts of outstanding ”pre-FASIT inter- ests.” Conference agreement The conference agreement follows the Sen- ate amendment with the following changes and clarifications: The conference agreement modifies the rule under which property that is acquired by a FASIT from someone other than the FASIT’s owner or a person related to the FASIT’s owner is treated as being first ac- quired by the FASIT’s owner who then trans- fers that asset to the FASIT. The conference modification would clarify that the deemed acquisition by the FASIT’s owner would be for the FASIT’s cost in acquiring that asset from the non-owner or related person. The conference agreement makes a tech- nical modification to the rule which deems gain to be recognized on assets held by the owner of the FASIT or a related person that support any regular interest of the FASIT to clarify that the gain will be deemed realized to the related person when the assets which support a regular interest in the FASIT is held by that related person. The conference agreement clarifies that the taxable income of the holder of the own- ership interest or a high-yield interest, that may not be offset by non-FASIT losses, in- cludes gain and loss from the sale of the ownership interest or high-yield interest. In addition, the conference agreement coordi- nates the rule that limits a taxpayer’s abil- ity to offset REMIC excess inclusion income against net operating losses with this simi- lar rule under the FASIT provisions. The conference agreement provides that the taxable income of a holder of a FASIT ownership interest cannot be less than the taxable income with respect to the FASIT interest applies to any consolidated group of corporations of which the holder is a member as if the group were a single taxpayer. The conference agreement makes a tech- nical modification to the wording of a waiver of the rule that treats transfers of high-yield interest to disqualified persons as being inef- fective such that the income for such high- yield interests will remain includable in the gross income of the transferor in computing its tax. The conference agreement limits the rule of the Senate amendment that imposes a corporate tax on a pass-thru entity that is- sues a debt or equity interest that is sup- ported by a regular interest in a FASIT and has high yield to cases where a principal pur- pose of such arrangement is the avoidance of the restriction that high-yield interests be held only by qualified holders. The conference agreement modifies the rule of the Senate amendment which deals with terminations of a FASIT to provide that such terminations become effective on the date of the termination, instead of the beginning of the FASIT’s taxable year in which the termination occurs. The conference agreement provides that an asset which was a permitted asset at the time that it was acquired by the FASIT shall not be treated as an interest in the FASIT, CONGRESSIONAL RECORD \u2014 HOUSE H9653August 1, 1996 except to the extent provided by regulation issued by the Treasury Secretary. Thus, an instrument acquired by the FASIT as a hedge (e.g., an interest rate swap) will not later become an interest in the FASIT when there is later an obligation by the FASIT to make payments to the counterparty under that hedge instrument. The conference agreement clarifies that a FASIT may issue regular instruments with fixed rates or, except as provided by regula- tions issued by Treasury Secretary, variable rates permitted to be issued by real estate mortgage investment conduits (”REMICs”). The conference agreement clarifies that ”interest-only instruments” (”IOs”) may be issued by a FASIT as high-yield instruments if the instrument makes payments which consist of a specified portion of the interest payments in permitted assets and that por- tion does not vary throughout the life of that instrument. The conference agreement clarifies that foreclosure property, which may be per- mitted asset of a FASIT, includes property acquired by foreclosure even though the ac- quired property is not real property. The conference agreement also grants the Treas- ury Secretary the power to reduce by regula- tions the two-year period that foreclosure property may be held as a permitted asset of the FASIT. The conference agreement clarifies the ap- plication of section 475 to a securities dealer that holds an ownership interest in a FASIT. Under this clarification, except as provided in Treasury regulations, if section 475 applies to securities before their transfer to the FASIT, section 475 will continue to apply to securities that have been transferred (or deemed transferred) to the FASIT, except that the amount realized under the mark-to- market rule of section 475 shall be the great- er of the securities’ value under present law or their value determined under the special valuation rules applicable to FASITs. The conference agreement deletes in tech- nical amendments the rules that treat an ownership interests in a FASIT (a) as a non- capital asset of a bank or (b) as a permitted asset of a real estate investment trust (”REIT”). The conference agreement provides that a regular interest, but not an ownership inter- est, in a FASIT is treated as a qualified mortgage of a real estate mortgage invest- ment conduit (”REMIC”) if 95 percent or more of the value of the FASIT’s assets con- sists, at all times, of real estate mortgages. The conference agreement clarifies that a regular interest, but not an ownership inter- est, in a FASIT is treated as a qualifying asset for purposes of the definition of a do- mestic building and loan association so long as at least 95 percent of the assets of the FASIT are, at all times, qualified assets. The conference agreement delays the effec- tive date of the provision from the date of enactment of the provision to September 1, 1997, and extends the special transitional rule to any entity created before that date. The conferees expect that, prior to Septem- ber 1, 1997, Treasury will issue guidance on how the ownership rule would apply to cases in which the entity that owns the FASIT joins in the filing of a consolidated return with other members of the group that wish to hold an ownership interest in the FASIT. 20. REVISION OF EXPATRIATION TAX RULES (Secs. 1631 1633 of the Senate amendment.) Present law Individuals who relinquish U.S. citizenship with a principal purpose of avoiding U.S. taxes are subject to special tax provisions for 10 years after expatriation. The determina- tion of who is a U.S. citizen for tax purposes, and when such citizenship is lost, is governed by the provisions of the Immigration and na- tionality Act, 8 U.S.C. section 1401, et. seq. An individual who relinquishes his U.S. citizenship with a principal purpose of avoid- ing U.S. taxes is subject to tax on his or her U.S. source income at the rates applicable to U.S. citizens, rather than the rates applica- ble to other non-resident aliens, for 10 years after expatriation. In addition, the scope of items treated as U.S. source income for this purpose is broader than those items gen- erally considered to be U.S. source income. For example, gains on the sale of personal property located in the United States and gains on the sale or exchange of stock or se- curities issued by U.S. persons are treated as U.S. source income. This alternative method of income taxation applies only if it results in a higher U.S. tax liability. Rules applicable in the estate and gift tax contexts expand the categories of items that are subject to the gift and estate taxes in the case of a U.S. citizen who relinquished citi- zenship with a principal purpose of avoiding U.S. taxes within the 10-year period ending on the date of the transfer. For example, U.S. property held through a foreign cor- poration controlled by such individual and related persons is included in his or her es- tate and gifts of U.S.-situs intangible prop- erty by such individual are subject to the gift tax. House bill No provision. Senate amendment The Senate amendment replaces the present-law expatriation income tax rules with rules that generally subject certain U.S. citizens who relinquish their U.S. citi- zenship and certain long-term U.S. residents who relinquish their U.S. residency to tax on the net unrealized gain in their property as if such property were sold for fair market value on the expatriation date. The Senate amendment modifies the present-law expa- triation estate and gift tax rules to apply to certain long-term U.S. residents and to pro- vide that, for purposes of applying such rules, certain persons would be treated as having relinquished citizenship or residency for a principal purpose of avoiding U.S. taxes. The Senate amendment also imposes information reporting and sharing obliga- tions with respect to U.S. citizens who relin- quish their citizenship and long-term resi- dents whose U.S. residency is terminated. Effective date.\u2014The provision generally is effective for U.S. citizens whose date of re- linquishment of citizenship occurs on or after February 6, 1995 and for long-term resi- dents who terminate their U.S. residency on or after such date. Conference agreement The conference agreement does not include the Senate amendment provision. 21. MODIFY TREATMENT OF FOREIGN TRUSTS (Secs. 411 417 of H.R. 3286.) Present law Inbound grantor trusts with foreign grantors Under the grantor trust rules (secs. 671 679), a grantor that retains certain rights or powers generally is treated as the owner of the trust’s assets without regard to whether the grantor is a domestic or foreign person. Under these rules, U.S. trust beneficiaries are not subject to U.S. tax on distributions from a trust where a foreign grantor is treat- ed as owner of the trust, even though no tax may be imposed on the trust income by any jurisdiction. In addition, a special rule pro- vides that if a U.S. beneficiary of an inbound grantor trust transfers property to the for- eign grantor by gift, that U.S. beneficiary is treated as the grantor of the trust to the ex- tent of the transfer. Foreign trusts that are no grantor trusts Under the accumulation distribution rules (which generally apply to distributions from a trust in excess of the trust’s distributable net income for the taxable year), a distribu- tion by a foreign nongrantor trust of pre- viously accumulated income generally is taxed at the U.S. beneficiary’s average mar- ginal rate for the prior 5 years, plus interest (secs. 666 and 667). Interest is computed at a fixed annual rate of 6 percent, with no compounding (sec. 668). If adequate records of the trust are not available to determine the proper application of the rules relating to accumulation distributions to any dis- tribution from a trust, the distribution is treated as an accumulation distribution out of income earned during the first year of the trust (sec. 666(d)). If a foreign nongrantor trust makes a loan to one of its beneficiaries, the principal of such a loan generally is not taxable as in- come to the beneficiary. Outbound foreign grantor trusts with U.S. grantors Under the grantor trust rules, a U.S. per- son that transfers property to a foreign trust generally is treated as the owner of the por- tion of the trust comprising that property for any taxable year in which there is a U.S. beneficiary of any portion of the trust (sec. 679(a)). This treatment generally does not apply, however, to transfers by reason of death, to transfers made before the trans- feror became a U.S. person, or to transfers that represent sales or exchanges of property at fair market value where gain is recognized to the transferor. Residence of trusts A trust is treated as foreign if it is not sub- ject to U.S. income taxation on its income that is neither derived from U.S. sources nor effectively connected with the conduct of a U.S. trade or business. Thus, if a trust is taxed in a manner similar to a nonresident alien individual, it is considered to be a for- eign trusts. Any other trust is treated as do- mestic. Section 1491 generally imposes a 35-percent excise tax on a U.S. person that transfers ap- preciated property to certain foreign enti- ties, including a foreign trust. In the case of a domestic trust that changes its situs and becomes a foreign trust, it is unclear wheth- er property has been transferred from a U.S. person to a foreign entity and, thus, whether the transfer is subject to the excise tax. Information reporting and penalties related to foreign trusts Any U.S. person that creates a foreign trust or transfers money or property to a for- eign trust is required to report that event to the Treasury Department without regard to whether the trust is a grantor or a non- grantor trust. Similarly, any U.S. person that transfers property to a foreign trust that has one or more U.S. beneficiaries is re- quired to report annually to the Treasury Department. In addition, any U.S. person that makes a transfer described in section 1491 is required to report the transfer to the Treasury Department. Any person that fails to file a required re- port with respect to the creation of, or a transfer to, a foreign trust may be subject to a penalty of 5 percent of the amount trans- ferred to the foreign trust. Similarly, any person that fails to file a required annual re- port with respect to a foreign trust with U.S. beneficiaries may be subject to a penalty of 5 percent of the value of the corpus of the trust at the close of the taxable year. The maximum amount of the penalty imposed under either case may not exceed $1,000. A reasonable cause exception is available. CONGRESSIONAL RECORD \u2014 HOUSEH9654 August 1, 1996 69 The exception does not apply to the portion of any such trust attributable to any transfers made after September 19, 1995. 70 For this purpose, a family member is generally defined as a brother, sister, spouse, ancestor or lin- eal descendant. 71 See discussion below for reporting requirements under the House bill with respect to certain foreign gifts and bequests received by a U.S. person. 72 For this purpose, a person generally would be treated as related to the grantor or beneficiary if the relationship between such person and the grant- or or beneficiary would result in a disallowance of losses under section 267 or 707(b), except that in ap- plying section 267(c)(4) an individual’s family in- cludes the spouses of the members of the family. 73 For this purpose, a person is treated as related to the grantor or beneficiary if the relationship be- tween such person and the grantor or beneficiary would result in a disallowance of losses under sec- tion 267 or 707(b), except that in applying section 267(c)(4) an individual’s family includes the spouses of the members of the family. Reporting of foreign gifts There is no requirement to report gifts or bequests from foreign sources. House bill No provision. However, sections 411 417 of H.R. 3286 (Adoption Promotion and Stability Act of 1996) contains the following provi- sions: Inbound grantor trusts with foreign grantors The House bill generally applies only to the extent it results, directly or indirectly, in income or other amounts (if any) being currently taken into account in computing the income of a U.S. citizen or resident or a domestic corporation. Certain exceptions apply to this rule. Under one exception, the grantor trust rules continue to apply to the portion of a trust where that portion of the trust is revocable by the grantor either with- out approval of another person or with the consent of a related or subordinate party who is subservient to the grantor. Under an- other exception, the grantor trust rules con- tinue to apply to the portion of a trust where the only amounts distributable from that portion during the lifetime of the grantor are to the grantor or the grantor’s spouse. The general rule denying grantor trust sta- tus does not apply to trusts established to pay compensation, and certain trusts in ex- istence as of September 19, 1995 provided that such trust is treated as owned by the grantor under section 676 or 677 (other than sec. 677(a)(3)).69 In addition, the grantor trust rules generally apply where the grantor is a controlled foreign corporation (as defined in sec. 957). Finally, the grantor trust rules continue to apply in determining whether a foreign corporation is characterized as a pas- sive foreign investment company (”PFIC”). Thus, a foreign corporation cannot avoid PFIC status by transferring its assets to a grantor trust. If a U.S. beneficiary, or a family member of such a beneficiary,70 of an inbound grantor trust transfers property to the foreign grant- or, such beneficiary generally is treated as a grantor of a portion of the trust to the ex- tent of the transfer. This rule applies with- out regard to whether the foreign grantor is otherwise treated as the owner of any por- tion of such trust. However, this rule does not apply if the transfer is a sale of the prop- erty for full and adequate consideration or if the transfer is a gift that qualifies for the annual exclusion described in section 2503(b). The House bill provides a special rule that allows the Secretary of the Treasury to re- characterize a transfer, directly or indi- rectly, from a partnership or foreign cor- poration which the transferee treats as a gift or bequest, to prevent the avoidance of the purpose of section 672(f).71 In a case where a foreign person (that would be treated as the owner of a trust but for the above rule) actu- ally pays tax on the income of the trust to a foreign country, it is anticipated that Treas- ury regulations will provide that, for foreign tax credit purposes, U.S. beneficiaries that are subject to U.S. income tax on the same income will be treated as having paid the foreign taxes that are paid by the foreign grantor. Any resulting foreign tax credits would be subject to applicable foreign tax credit limitations. The House bill provides a transition rule for any domestic trust that has a foreign grantor that is treated as the owner of the trust under present law, but becomes a non- grantor trust under the bill. If such a trust becomes a foreign trust before January 1, 1997, or if the assets of such a trust are trans- ferred to a foreign trust before that date, such trust is exempt from the excise tax on transfers to a foreign trust otherwise im- posed by section 1491. However, the House bill’s new reporting requirements and pen- alties are applicable to such a trust and its beneficiaries. In addition, the assets of such a trust will be treated as if they were re- contributed to a nongrantor trust by the for- eign grantor, with no recognition of gain or loss, on the date the trust ceases to be treat- ed as a grantor trust. The nongrantor trust will have the same basis in such assets as did the grantor on the date the trust ceases to be treated as a grantor trust. Effective date.\u2014The provisions described in this part are effective on the date of enact- ment. Foreign trusts that are not grantor trusts The House bill changes the interest rate applicable to accumulation distributions from foreign trusts from simple interest at a fixed rate of 6 percent to compound interest determined in the same manner as interest imposed on underpayments of tax under sec- tion 6621(a)(2). Simple interest is accrued at the rate of 6 percent through 1995. Beginning on January 1, 1996, however, compound inter- est based on the underpayment rate is im- posed not only on tax amounts determined under the accumulation distribution rules but also on the total simple interest for pre- 1996 periods, if any. For purposes of comput- ing the interest charge, the accumulation distribution is allocated proportionately to prior trust years in which the trust has un- distributed net income (and the beneficiary receiving the distribution was a U.S. citizen or resident), rather than to the earliest of such years. An accumulation distribution is treated as reducing proportionately the un- distributed net income from prior years. In the case of a loan of cash or marketable securities by the foreign trust to a U.S. grantor or a U.S. beneficiary (or a U.S. per- son related to such grantor or beneficiary72 ), except, to the extent provided by Treasury regulations, the House bill treats the full amount of the loan as distributed to the grantor or beneficiary. It is expected that Treasury regulations will provide an excep- tion from this treatment for loans with arm’s-length terms. In applying this excep- tion, it is further expected that consider- ation be given to whether there is a reason- able expectation that a loan will be repaid. In addition, any subsequent transaction be- tween the trust and the original borrower re- garding the principal of the loan (e.g., repay- ment) is disregarded for all purposes of the Code. This provision does not apply to loans made to persons that are exempt from U.S. income tax. Effective date.\u2014The provision to modify the interest charge on accumulation distribu- tions applies to distributions after the date of enactment. The provision with respect to loans to U.S. grantors, U.S. beneficiaries or a related U.S. person related to such a grant- or or beneficiary applies to loans made after September 19, 1995. Outbound foreign grantor trusts with U.S. grantors The House bill makes several modifica- tions to the general rule of section 679(a)(1) under which a U.S. person who transfer prop- erty to a foreign trust generally is treated as the owner of the portion of the trust com- prising that property for any taxable year in which there is a U.S. beneficiary of the trust. The House bill also contains an amendment to conform the definition of certain foreign corporations the income of which is deemed to be accumulated for the benefit of a U.S. beneficiary to the definition controlled for- eign corporations (as defined in sec. 957(a)). Sale or exchange at market value.\u2014Present law contains several exceptions to grantor trust treatment under section 679(a)(1) de- scribed above. Under one of the exceptions, grantor trust treatment does not result from a transfer of property by a U.S. person to a foreign trust in the form of a sale or ex- change at fair market value where gain is recognized to the transferor. In determining whether the trust paid fair markets value to the transferor, the House bill provides that obligations issued (or, to the extent provided by regulations, guaranteed) by the trust, by any grantor or beneficiary of the trust, or by any person related to any grantor or bene- ficiary 73 (referred to as ”trust obligations”) generally are not taken into account except as provided in Treasury regulations. It is ex- pected that Treasury regulations will pro- vide an exception from this treatment for loans with arm’s-length terms. In applying this exception, it is further expected that consideration be given to whether there is a reasonable expectation that a loan will be re- paid. Principal payments by the trust on any such trust obligations generally will reduce the portion of the trust attributable to the property transferred (i.e., the portion of which the transferor is treated as the grant- or). Other transfers.\u2014The House bill adds new exception to the general rule of section 679(a)(1) described above. Under the House bill, a transfer of property to certain chari- table trusts is exempt from the application of the rules treating foreign trusts with U.S. grantors and U.S. beneficiaries as grantor trusts. Transferors or beneficiaries who become U.S. persons.\u2014The House bill applies the rule of section 679(a)(1) to certain foreign persons who transfer property to a foreign trust and subsequently become U.S. persons. A non- resident alien individual who transfers prop- erty, directly or indirectly, to a foreign trust and then becomes a resident of the United States within 5 years after the transfer gen- erally is treated as making a transfer to the foreign trust on the individual’s U.S. resi- dency starting date (as defined in sec. 7701(b)(2)(A)). The amount of the deemed transfer is the portion of the trust (including undistributed earnings) attributable to the property previously transferred. Con- sequently, the individual generally is treated under section 679(a)(1) as the owner of that portion of the trust in any taxable year in which the trust has U.S. beneficiaries. Outbound trust migrations.\u2014The House bill applies the rules of section 679(a)(1) to a U.S. person who transferred property to a domes- tic trust if the trust subsequently becomes a foreign trust while the transferor is still alive. Such a person is deemed to make a transfer to the foreign trust on the date of the migration. The amount of the deemed transfer is the portion of the trust (including undistributed earnings) attributable to the property previously transferred. Con- sequently, the individual generally is treated CONGRESSIONAL RECORD \u2014 HOUSE H9655August 1, 1996 under the rules of section 679(a)(1) as the owner of that portion of the trust in any tax- able year in which the trust has U.S. bene- ficiaries. Effective date.\u2014The provisions to amend section 679 apply to transfers of property after February 6, 1995. Anti-abuse regulatory authority The House bill includes an anti-abuse rule which authorizes the Secretary of the Treas- ury to issue regulations, on or after the date of enactment, that may be necessary or ap- propriate to carry out the purposes of the rules applicable to estates, trusts and bene- ficiaries, including regulations to prevent the avoidance of those purposes. Effective date.\u2014The provision is effective on the date of enactment. Residence of trusts The House bill establishes a two-part ob- jective test for determining for tax purposes whether a trust is foreign or domestic. If both parts of the test are satisfied, the trust is treated as domestic. Under the first part of the proposed test, if a U.S. court (i.e., Fed- eral, State, or local) exercises primary su- pervision over the administration of the trust, the trust is treated as domestic. Under the second part of the proposed test, in order for a trust to be treated as domestic, one or more U.S. fiduciaries must have the author- ity to control all substantial decisions of the trust. Under the House bill, if a domestic trust changes its situs and becomes a foreign trust, the trust is treated as having made a transfer of its assets to a foreign trust and is subject to the 35-percent excise tax imposed by present-law section 1491 unless one of the exceptions to this excise tax is applicable. Effective date.\u2014The provision to modify the treatment of a trust as a U.S. person applies to taxable years beginning after December 31, 1996. In addition, if the trustee of a trust so elects, the provision would apply to tax- able years ending after the date of enact- ment. The amendment to section 1491 is ef- fective on the date of enactment. Information reporting and penalties relating to foreign trusts The House bill generally requires the grantor, transferor or executor (i.e., the ”re- sponsible party”) to file information returns with the Treasury Department upon the oc- currence of certain events. The term ”re- portable event” generally means the cre- ation of any foreign trust by a U.S. person, the direct and indirect transfer of any money or property to a foreign trust, including a transfer by reason of death, and the death of a U.S. citizen or resident if any portion of a foreign trust was included in the gross estate of the decedent. In addition, a U.S. owner of any portion of a foreign trust generally is re- quired to ensure that the trust files an an- nual return to provide full accounting of all the trust activities for the taxable year. Fi- nally, any U.S. person that receives (directly or indirectly) any distribution from a foreign trust generally is required to file a return to report the name of the trust, the aggregate amount of the distributions received, and other information that the Secretary of the Treasury may prescribe. Under the House bill, a person that fails to provide the required notice or return in cases involving the transfer of property to a new or existing foreign trust, or a distribution by a foreign trust to a U.S. person, is subject to an initial penalty equal to 35 percent of the gross reportable amount. A failure to provide an annual reporting of trust activities will result in an initial penalty equal to 5 percent of the gross reportable amount. The House bill provides that if a U.S. owner of any portion of a foreign trust fails to appoint a limited U.S. agent to accept service of process with respect to any re- quests and summons by the Secretary of the Treasury in connection with the tax treat- ment of any items related to the trust, the Secretary may determine the tax con- sequences of amounts to be taken into ac- count under the grantor trust rules. In cases where adequate records are not provided to the Secretary to determine the proper treat- ment of any distributions from a foreign trust, the distribution is includible in the gross income of the U.S. distributee and is treated as an accumulation distribution from the middle year of a foreign trust (i.e., computed by taking the number of years that the trust has been in existence divided by 2) for purposes of computing the interest charge applicable to such distribution, un- less the foreign trust elects to have a U.S. agent for the limited purpose of accepting service of process (as described above). Under the House bill, a person that fails to provide the required notice or return in cases involving the transfer of property to a new or existing foreign trust, or a distribution by a foreign trust to a U.S. person, is subject to an initial penalty equal to 35 percent of the gross reportable amount (generally the value of the property involved in the transaction). A failure to provide an annual reporting of trust activities will result in an initial pen- alty equal to 5 percent of the gross report- able amount. An additional $10,000 penalty is imposed for continued failure for each 30-day period (or fraction thereof) beginning 90 days after the Treasury Department notifies the responsible party of such failure. Such pen- alties are subject to a reasonable cause ex- ception. In no event will the total amount of penalties exceed the gross reportable amount. Effective date.\u2014The reporting requirements and applicable penalties generally apply to reportable events occurring or distributions received after the date of enactment. The an- nual reporting requirement and penalties ap- plicable to U.S. grantors apply to taxable years of such persons beginning after Decem- ber 31, 1995. REPORTING OF FOREIGN GIFTS The House bill generally requires any U.S. person (other than certain tax-exempt orga- nizations) that receives purported gifts or bequests from foreign sources total more than $10,000 during the taxable year to report them to the Treasury Department. The threshold for this reporting requirement is indexed for inflation. The definition of a gift to a U.S. person for this purpose excludes amounts that are qualified tuition or medi- cal payments made on behalf of the U.S. per- son, as defined for gift tax purposes (sec. 2503(e)(2)), and amounts that are distribu- tions to a U.S. beneficiary of a foreign trust if such amounts are properly disclosed under the reporting requirements of the House bill. If the U.S. person fails, without reasonable cause, to report foreign gifts as required, the Secretary of the Treasury is authorized to determine the tax treatment of the unre- ported gifts. It is intended that the Treasury Secretary’s exercise of its authority to make such a determination will be subject to judi- cial review under a arbitrary or capricious standard, which provides a high degree of deference to such determination. In addition, the U.S. person is subject to a penalty equal to 5 percent of the amount of the gift for each month that the failure continues, with the total penalty not to exceed 25 percent of such amount. Effective date.\u2014The provision applies to amounts received after the date of enact- ment. Senate amendment No provision. Conference agreement The conference agreement adopts the House bill provision of H.R. 3286 with one modification and two clarifications. If a U.S. beneficiary of an unbound grantor trust transfers property to a foreign grantor, such beneficiary generally is treated as a grantor of a portion of the trust to the ex- tent of the transfer. Under the conference agreement, this provision generally does not apply transfers by a family member of such a beneficiary. The conferees wish to clarify that in exer- cising its regulatory authority to treat a U.S. trust as a foreign trust for purposes of information reporting purposes, the Sec- retary of the Treasury will take into account the information that such a trust reported under the domestic trust reporting rules. Under the House bill, the section 1491 ex- cise tax applies when a domestic trust changes its situs and becomes a foreign trust after the date of enactment. In addition, under the House bill, a trustee may elect to apply the new objective test for determining the residence of a trust to the taxable year of the trust ending after the date of enact- ment. The conferees wish to clarify that when a trustee makes this election, and thereby changes the situs of a trust from do- mestic to foreign, the trust is treated as hav- ing made an outbound transfer of its assets on the date of such election. Consequently, the section 1491 excise tax will apply to such a transfer. 22. TREATMENT OF BAD DEBT DEDUCTIONS OF THRIFT INSTITUTIONS (Sec. 401 of the H.R. 3103 and sec. 611 of the Senate amendment to H.R. 3103.) Present law Generally, a taxpayer engaged in a trade or business may deduct the amount of any debt that becomes wholly or partially worthless during the year (the ”specific charge-off” method of sec. 166). Certain thrift institu- tions (building and loan associations, mutual savings banks, or cooperative banks) are al- lowed deductions for bad debts under rules more favorable than those granted to other taxpayers (and more favorable than the rules applicable to other financial institutions). Qualified thrift institutions may compute deductions for bad debts using either the spe- cific charge-off method or the reserve meth- od of section 593. To qualify for this reserve method, a thrift institution must meet an asset test, requiring that 60 percent of its as- sets consist of ”qualifying assets” (generally cash, government obligations, and loans se- cured by residential real property). This per- centage must be computed at the close of the taxable year, or at the option of the tax- payer, as the annual average of monthly, quarterly, or semiannual computations of similar percentages. If a thrift institution uses the reserve method of accounting, it must establish and maintain a reserve for bad debts and charge actual losses against the reserve, and is al- lowed a deduction for annual additions to re- store the reserve to its permitted balance. Under section 593, a thrift institution annu- ally may elect to calculate its addition to its bad debt reserve under either (1) the ”per- centage of taxable income” method applica- ble only to thrift institutions, or (2) the ”ex- perience” method that also is available to small banks. Under the ”percentage of taxable income” method, a thrift institution generally is al- lowed a deduction for an addition to its bad debt reserve equal to 8 percent of its taxable income (determined without regard to this deduction and with additional adjustments). Under the experience method, a thrift insti- tution generally is allowed a deduction for CONGRESSIONAL RECORD \u2014 HOUSEH9656 August 1, 1996 74 Under present-law section 581, the definition of a ”bank” includes a thrift institution. 75 The provisions of the conference agreement will apply to a thrift institution that has a taxable year that begins after December 31, 1995, even if such tax- able year is a short taxable year that comes to a close because the thrift institution is acquired by a non-thrift institution. In addition, a thrift institution that uses a reserve method described in section 593 will be deemed to have changed its method of computing reserves for bad debts even though such institution will be al- lowed to use the reserve method of section 585. Simi- larly, a large thrift institution will be deemed to have changed its method of computing reserves for bad debts even through such institution used the ex- perience-method portion of section 593 in lieu of the percentage-of-taxable-income method of section 593. 76 The balance of a taxpayer’s pre-1988 reserves is reduced if the taxpayer’s loan portfolio had de- creased since 1988. The permitted balance of a tax- payer’s pre-1988 reserves is reduced by multiplying such balance by the ratio of the balance of the tax- payer’s loans outstanding at the close of the last taxable beginning before 1996, to the balance of the taxpayer’s loans outstanding at the close of the last taxable beginning before 1988. This reduction is re- quired for both large and small banks. an addition to its bad debt reserve equal to the greater of: (1) an amount based on its ac- tual average experience for losses in the cur- rent and five preceding taxable years, or (2) an amount necessary to restore the reserve to its balance as of the close of the base year. For taxable years beginning before 1988, the ”base year” was the last taxable year before the most recent adoption of the experience method (i.e., generally, the last year the taxpayer was on the percentage of taxable income method). For taxable years beginning after 1987, the base year is the last taxable year beginning before 1988. Prior to 1988, computing bad debts under a ”base year” rule allowed a thrift institution to claim a deduction for bad debts for an amount at least equal to the institution’s ac- tual losses that were charged off during the taxable year. If a thrift institution becomes a commer- cial bank, or if the institution fails to satisfy the 60-percent qualified asset test, it is re- quired to change its method of accounting for bad debts and, under proposed Treasury regulations, is required to recapture its bad debt reserve. The percentage-of-taxable-in- come portion of the reserve generally is in- cluded in income ratably over a 6-taxable year period. The experience method portion of the reserve is not restored to income if the former thrift institution qualifies as a small bank. If the former thrift institution is treated as a large bank, the experience meth- od portion of the reserve is restored to in- come ratably over a 6-taxable year period, or under the 4-year recapture method or the cut-off method described above. In addition, a thrift institution may be subject to a form of reserve recapture even if the institution continues to qualify for the percentage of taxable income method. Spe- cifically, if a thrift institution distributes to its shareholders an amount in excess of its post-1951 earnings and profits, such excess is deemed to be distributed from the nonexperi- ence potion of the institution’s bad debt re- serve and is restored to income. In the case of any distribution in redemption of stock or in partial or complete liquidation of an insti- tution, the distribution is treated as first coming from the nonexperience potion of the bad debt reserves of the institution (sec. 593(e)). House bill No provision in H.R. 3448. Section 401 of H.R. 3103, the ”Health Coverage Availability and Affordability Act of 1996,” as passed by the House of Representatives on March 28, 1996, contained the following provision. Repeal of section 593 The bill repeals the section 593 reserve method of account for bad debts by thrift in- stitutions, effective for taxable years begin- ning after 1995. Thrift institutions that would be treated as small banks (as deter- mined under sec. 585(c)(2)) are allowed to uti- lize the experience method applicable to such institutions, while thrift institutions that are treated as large banks are required to use only the specific charge-off method. Treatment of recapture of bad debt reserves In general.\u2014A thrift institution required to change its method of computing reserves for bad debts will treat such change as a change in a method of accounting, initiated by the taxpayer, and having been made with the consent of the Secretary of the Treasury. Any section 481(a) adjustment required to be taken into account with respect to such change generally will be determined solely with respect to the ”applicable excess re- serves” of the taxpayer. The amount of ap- plicable excess reserves shall be taken into account ratably over a six-taxable year pe- riod, beginning with the first taxable year beginning after 1995, subject to the residen- tial loan requirement described below. In the case of a thrift institution that becomes a large bank, the amount of the institution’s applicable excess reserves generally is the excess of (1) the balance of its reserves de- scribed in section 593(c)(1) other than its sup- plemental reserve for losses on loans (i.e., its reserve for losses on qualifying real property loans and its reserve for losses on non- qualifying loans) as of the close of its last taxable year beginning before January 1, 1996, over (2) the balance of such reserves (i.e., its reserve for losses on qualifying real property loans and its reserve for losses on nonqualifying loans) as of the close of its last taxable year beginning before January 1, 1988 (i.e., the ”pre-1988 reserves”). Similar rules would apply to small banks. The balance of the pre-1988 reserves is sub- ject to the provisions of section 593(e) (re- quiring recapture in the case of certain ex- cess distributions to, and redemptions of, shareholders). In addition, the balances of the pre-1988 reserve and the supplemental re- serve will be treated as tax attributes to which section 381 applies. Certain internal reorganizations of a group of thrift institu- tions will not be treated as distributions to shareholders for purposes of section 593(e). Further, if a taxpayer no longer qualifies as a bank (as defined by sec. 581), the balances of the taxpayer’s pre-1988 reserve and supple- ment reserves are restored to income ratably over a six-year period, beginning in the tax- able year the taxpayer no longer qualifies as a bank. Residential loan requirement.\u2014Under a spe- cial rule, if the taxpayer meets the ”residen- tial loan requirement” for a taxable year, the recapture of the applicable excess re- serves otherwise required to be taken into account as a section 481(a) adjustment for such year will be suspended. A taxpayer meets the residential loan requirement if, for the taxable year, the principal amount of residential loans made by the taxpayer dur- ing the year is not less than its base amount. The residential loan requirement is applica- ble only for taxable years that begin after December 31, 1995, and before January 1, 1998, and must be applied separately with respect to each such year. Treatment of conversions to credit unions The bill provides that if a thrift institution to which the repeal of section 593 applies be- comes a credit union, the credit union will be treated as a institution that is not a bank and any section 481(a) adjustment required to be included in gross income will be treat- ed as derived from an unrelated trade or business. Effective date The provision general is effective for tax- able years beginning after December 31, 1995. The amendments to section 593(e) do not apply to certain distributions with respect to preferred stock. Senate amendment No provision in the Senate amendment to H.R. 3448. Section 611 of the Senate amend- ment to H.R. 3103, the ”Health Coverage Availability and Affordability Act of 1996,” as passed by the Senate on April 23, 1996, contained a provision similar to the provi- sion in the House-passed version of H.R. 3103. Conference agreement The conference agreement generally fol- lows the provision in the House-and Senate- passed versions of H.R. 3103, with modifica- tions. The following describes the provisions of the conference agreement. Repeal of section 593 The conference agreement repeals the sec- tion 593 reserve method of accounting for bad debts by thrift institutions, effective for tax- able years beginning after 1995. Thrift insti- tutions that would be treated as small banks 74 are allowed to utilize the experience method applicable to such institutions, while thrift institutions that are treated as large banks are required to use only the specific charge-off method. Thus, the percentage of taxable income method of accounting for bad debts is no longer available for any financial institution. The conference agreement also repeals the following present-law provisions that only apply to thrift institutions to which section 593 applies: (1) the denial of a portion of certain tax credits to a thrift in- stitution (sec. 50(d)(1)); (2) the special rules with respect to the foreclosure of property securing loans of a thrift institution (sec. 595); (3) the reduction in the dividends re- ceived reduction of a thrift institution (sec. 596); and (4) the ability of a thrift institution to use a net operating loss to offset its in- come from a residual interest in REMIC (sec. 860E(a)(2)). Treatment of recapture of bad debt reserves In general.\u2014A thrift institution required to change its method of computing reserves for bad debts will treat such change as a change in a method of accounting initiated by the taxpayer, and having been made with the consent of the Secretary of the Treasury.75 Any section 481(a) adjustment required to be taken into account with respect to such change generally will be determined solely with respect to the ”applicable excess re- serves” of the taxpayer. The amount of ap- plicable excess reserves shall be taken into account ratably over a six-taxable year pe- riod, beginning with the first taxable year beginning after 1995, subject to the residen- tial loan requirement described below. In the case of a thrift institution that becomes a ”large bank” (as determined under sec. 585(c)(2)), the amount of the institution’s ap- plicable excess reserves generally is the ex- cess of (1) the balance of its reserves de- scribed in section 593(c)(1) other than its sup- plemental reserve for losses on loans (i.e., its reserve for losses on qualifying real property loans and its reserve for losses on non- qualifying loans) as of the close of its last taxable year beginning before January 1, 1996, over (2) the balance of such reserves (i.e., its reserve for losses on qualifying real property loans and its reserve for losses on nonqualifying loans) as of the close of its last taxable year beginning before January 1, 1988 (i.e., the ”pre-1988 reserves”).76 Thus, a thrift institution that is treated as a large bank generally is required to recapture its post-1987 additions to its bad debt reserves, CONGRESSIONAL RECORD \u2014 HOUSE H9657August 1, 1996 77 The conferees expect that in the case of the merger, acquisition, spin-off, or other reorganiza- tion involving only thrift institutions, section 593(e) as modified by the conference agreement, will con- tinue to be applied in a manner similar to the way section 593(e) is applied under present law. However, guidance will be needed in the case of transactions where one of the parties to the trans- action is not a thrift institution. Guidance may be needed because the issue of whether section 593(e) applies in the case where a thrift institution is merged into a bank generally does not arise under present law because such merger results in a charter change and, under proposed Treasury regulations, requires full bad debt reserve recapture. 78 If the acquiring bank is a former thrift institu- tion itself and the pre-1988 reserves of neither insti- tution are restored to income pursuant to the merg- er, the conferees expect that the pre-1988 reserves and the post-1951 earnings and profits of the two in- stitutions will be combined for purposes of the con- tinued application of section 593(e) with respect to the combined institution. 79 For this purpose, as under present law, if a mul- tifamily structure securing a loan is used in part for nonresidential purposes, the entire loan will be deemed a residential real property loan if the planned residential use exceeds 80 percent of the property’s planned use (determined as of the time the loan is made). In addition, loans made to finance the acquisition or development of land will be deemed to be loans secured by an interest in residen- tial real property if, under regulations prescribed by the Secretary of the Treasury, there is a reasonable assurance that the property will become residential real property within a period of three years from the date of acquisition of the land. 80 For example, adjustments will be required with respect to the reporting of multifamily dwellings in order to distinguish home purchase, home improve- ment, and refinancing loans. whether such additions are made pursuant to the percentage of taxable income method or the experience method. The timing of this recapture may be delayed for a one- or two- year period to the extent the residential loan requirement described below applies. In the case of a thrift institution that be- comes a ”small bank” (as determined under sec. 585(c)(2)), the amount of the institution’s applicable excess reserves will be the excess of (1) the balance of its reserves described in section 593(c)(1) as of the close of its last tax- able year beginning before January 1, 1996, over (2) the greater of the balance of: (a) its pre-1988 reserves or (b) what the institution’s reserves would have been at the close of its last taxable year beginning before January 1, 1996, had the institution always used the ex- perience method described in section 585(b)(2)(A) (i.e., the six-year average meth- od). For purposes of the future application of section 585, the beginning balance of the small bank’s reserve for its first taxable year beginning after December 31, 1995, will be the greater of the two amounts described in (2) in the preceding sentence, and the balance of the reserve at the close of the base year (for purposes of sec. 585(b)(2)(B)) will be the amount of its pre-1988 reserves. The residen- tial loan requirement described below also applies to small banks. If such small bank later becomes a large bank, any section 481(a) adjustment amount required to be taken into account under section 585(c)(3) will not include any portion of the bank’s pre-1988 reserve. Similarly, if the bank elects the cut-off method to implement its conver- sion to large bank status, the amount of the reserve against which the bank charges its actual losses will not include any portion of the bank’s pre-1988 reserve and the amount by which the pre-1988 reserve exceeds actual losses will not be included in gross income. The balance of the pre-1988 reserves is sub- ject to the provisions of section 593(e), as modified by the conference agreement (re- quiring recapture in the case of certain ex- cess distributions to, and redemptions of, shareholders). Thus, section 593(e) will apply to an institution regardless of whether the institution becomes a commercial bank or remains a thrift institution. In addition, the balances of the pre-1988 reserve and the sup- plemental reserve will be treated as tax at- tributes to which section 381 applies. The conferees expect that Treasury regulations will provide rules for the application of sec- tion 593(e) in the case of mergers, acquisi- tions, spin-offs, and other reorganizations of thrift and other institutions. 77 The conferees believe that any such regulations should pro- vide that, if the stock of an institution with a pre-1988 reserve is acquired by another de- pository institution, the pre-1988 reserve will not be restored to income by reason of the acquisition. Similarly, if an institution with a pre-1988 reserve is merged or liquidated tax-free into a bank, the pre-1988 reserve should not be restored to income by reason of the merger or liquidation. Rather, the bank will inherit the pre-1988 reserve and the post-1951 earnings and profits of the former thrift institution and section 593(e) will apply to the bank as if it were a thrift insti- tution. That is, the pre-1988 reserve will be restored into income in the case of any dis- tribution in redemption of the stock of the bank or in partial or complete liquidation of the bank following the merger or liquida- tion. In the case of any other distribution, the pre-1988 reserve will not be restored to income unless the distribution is in excess of the sum of the post-1951 earnings and profits inherited from the thrift institution and the post-1913 earnings and profits of the acquir- ing bank. 78 The conferees expect that Treas- ury regulations will address the case where the shareholders of an institution with a pre- 1988 reserve are ”cashed out” in a taxable merger of the institution and a bank. Such regulations may provide that the pre-1988 re- serve may be restored to income if such re- demption represents a concealed distribution from the former thrift institution. For exam- ple, cash received by former thrift sharehold- ers pursuant to a taxable reverse merger may represent a concealed distribution if, immediately preceding the merger, the ac- quiring bank had no available resources to distribute and its existing debt structure, in- denture restriction, financial condition, or regulatory capital requirements precluded it from borrowing money for purposes of mak- ing the cash payment to the former thrift shareholders. No inference is intended by the conferees as to the application of section 593(e) to these and similar transactions under present law. Further, if a taxpayer no longer qualifies as a bank (as defined by sec. 581), the bal- ances of the taxpayer’s pre-1988 reserve and supplemental reserves are restored to in- come ratably over a six-year period, begin- ning in the taxable year the taxpayer no longer qualifies as a bank. Residential loan requirement.\u2014Under a spe- cial rule, if the taxpayer meets the ‘residen- tial loan requirement” for a taxable year, the recapture of the applicable excess re- serve otherwise required to be taken into ac- count as a section 481(a) adjustment for such year will be suspended. A taxpayer meets the residential loan requirement if, for the tax- able year, the principal amount of residen- tial loans made by the taxpayer during the year is not less than its base amount. The residential loan requirement is applicable only for taxable years that begin after De- cember 31, 1995, and before January 1, 1998, and must be applied separately with respect to each such year. Thus, all taxpayers are re- quired to recapture their applicable excess reserves within six, seven, or eight years after the effective date of the provision. The ”base amount” of a taxpayer means the average of the principal amounts of the residential loans made by the taxpayer dur- ing the six most recent taxable years begin- ning before January 1, 1996. At the election of the taxpayer, the base amount may be computed by disregarding the taxable years within that six-year period in which the principal amounts of loans made during such years were highest and lowest. This election must be made for the first taxable year be- ginning after December 31, 1995, and applies to the succeeding taxable year unless re- voked with the consent of the Secretary of the Treasury or his delegate. For purposes of the residential loan re- quirement, a loan will be deemed to be ”made” by a financial institution to the ex- tent the institution is, in fact, the principal source of the loan financing. Thus, any loan only can be ”made” once. The conferees ex- pect that loans ”made” by a financial insti- tution may include, but are not limited to, loans (1) originated directly by the institu- tion through its place of business or its em- ployees, (2) closed in the name of the institu- tion, (3) originated by a broker that acts as an agent for the institution, and (4) origi- nated by another person (other than a finan- cial institution) and that are acquired by the institution pursuant to a pre-existing, en- forceable agreement to acquire such loans. In addition, Treasury regulations also may provide that loans ”made” by a financial in- stitution may include loans originated by another person (other than a financial insti- tution) acquired by the institution soon after origination if such acquisition is pursu- ant to a customary practice of acquiring such loans from such person. A loan acquired by a financial institution from another fi- nancial institution generally will be consid- ered to be made by the transferor rather than the transferee of the loan; however, such loan may be completely disregarded if a principal purpose of the transfer was to allow the transferor to meet the residential loan requirement. A loan may be considered to be made by a financial institution even if such institution has an arrangement to transfer such loan to the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation. For purposes of the residential loan re- quirement, a ”residential loan” is a loan de- scribed in section 7701(a)(19)(C)(v) (generally, loans secured by residential real and church property and certain mobile homes),79 but only to the extent the loan is made to the owner of the property to acquire, construct, or improve the property. Thus, mortgage refinancings and home equity loans are not considered to be residential loans, except to the extent the proceeds of the loan are used to acquire, construct, or improve qualified residential real property. The conferees un- derstand that pursuant to the Home Mort- gage Disclosure Act, financial institutions are required to disclose the purpose for which loans are made. The conferees further understand that for purposes of this disclo- sure, institutions are required to classify loans as home purchase loans, home im- provement loans, refinancings, and multi- family dwelling loans (whether for purchase, improvement or refinancing of such prop- erty). The conferees expect that taxpayers (and the Secretary of the Treasury in pro- mulgating guidance) may take such report- ing into account, and make such adjust- ments as are appropriate,80 in determining: (1) whether or not a loan qualifies as a ”resi- dential loan” and (2) whether the institution ”made” the loan. A taxpayer must use con- sistent standards for determining whether loans qualify as residential loans made by the institution both for purposes of deter- mining its base amount and for purposes of CONGRESSIONAL RECORD \u2014 HOUSEH9658 August 1, 1996 determining whether it met the residential loan requirement for a taxable year. The residential loan requirement is deter- mined on a controlled group basis. Thus, for example, if a controlled group consists of two thrift institutions with applicable excess reserves that are wholly-owned by a bank, the residential loan requirement will be met (or not met) with respect to both thrift insti- tutions by comparing the principal amount of the residential loans made by all three members of the group during the taxable year to the group’s base amount. The group’s base amount will be the average principal amount of residential loans made by all three members of the group during the base period. The election to disregard the high and low taxable years during the 6-year base period also would be applied on a controlled group basis (i.e., generally by treating the members of the group as one taxpayer so that all members of the group must join in the election, and the same corresponding years of each member would be so dis- regarded). Treasury regulations may provide rules for the application of the residential loan re- quirement in the case of mergers, acquisi- tions, and other reorganizations of thrift and other institutions. For example, the balance of a taxpayer’s applicable excess reserve will be treated as a tax attribute to which sec- tion 381 applies. Thus, if an institution with an applicable excess reserve is acquired in a tax-free reorganization, the conferees expect that balance of such reserve will not be im- mediately restored to income but will con- tinue to be subject to the residential loan re- quirement in the hands of the acquirer. The conferees further expect that if a financial institution joins or merges into (or leaves) a group of financial institutions, the base amount of the acquiring (or remaining) group will be appropriately adjusted to re- flect the base amount of the acquired (or de- parting) institution for purposes of deter- mining whether the group meets the residen- tial loan requirement for the year of the ac- quisition (or departure) and subsequent years. Similarly, if a controlled group of in- stitutions had made an election to disregard its high and low years in computing its base amount, it is anticipated that such election shall be binding on any institution that sub- sequently joins the group and the election shall be applied to the new member by dis- regarding the high and low years of the new member even if such years do not correspond to the years applicable to the other members of the group. Treatment of conversions to credit unions The conference agreement provides that if a thrift institution to which the repeal of section 593 applies becomes a credit union, the credit union will be treated as an institu- tion that is not a bank and any section 481(a) adjustment required to be included in gross income will be treated as derived from an un- related trade or business. Thus, if a thrift in- stitution becomes a credit union in its first taxable year beginning after December 31, 1995, the entire balance of the institution’s bad debt reserve will be included in income, and subject to tax, over a six-year period be- ginning with such taxable year. No inference is intended as to the Federal income tax treatment of any other aspect of the conver- sion of a financial institution to a credit union. Effective date.\u2014The repeal of section 593 is effective for taxable years beginning after December 31, 1995. The repeal of section 595 is effective for property acquired in taxable years beginning after December 31, 1995. The amendment to section 860E does not apply to any residual interest in a REMIC held by the taxpayer on October 31, 1995, and at all times thereafter. The amendment to section 593(e)(1)(B) does not apply to any distributions with respect to preferred stock (including redemptions of such stock) if: (1) such stock was issued and outstanding as of November 1, 1995, and at all times thereafter before the distribution and (2) such distribution is made within the later of (a) one year after the date of enactment of this Act or (b) if the stock is redeemable by the issuer or a related party, 30 days after the date such stock first may be redeemed. For this purpose, the first date a preferred stock may be redeemed is the day upon which the issuer or a related party has the right to call the stock, regardless of the amount of call premium. 23. REMOVE BUSINESS EXCLUSION FOR ENERGY SUBSIDIES PROVIDED BY PUBLIC UTILITIES (Sec. 401 of H.R. 3286.) Present law Internal Revenue Code section 136, as added by the Energy Policy Act of 1992, pro- vides an exclusion from the gross income of a customer of a public utility for the value of any subsidy provided by the utility for the purchase or installation of an energy con- servation measure with respect to a dwelling unit (as defined by sec. 280A(f)(1)). In addi- tion, for subsidies received after 1994, section 136 provides a partial exclusion from gross income for the value of any subsidy provided by a utility for the purchase or installation of an energy conservation measure with re- spect to property that is not a dwelling unit. The amount of the exclusion is 40 percent of the value for subsidies received in 1995, 50 percent of the value for subsidies received in 1996, and 65 percent of the value for subsidies received after 1996. For this purpose, an energy conservation measure is any installation or modification primarily designed to reduce consumption of electricity or natural gas or to improve the management of energy demand with respect to property. With respect to property other than a dwelling unit, an energy conservation measure includes ”specially defined energy property” (generally, property described in sec. 48(l)(5) of the Code as in effect on the day before the date of enactment of the Rev- enue Reconciliation Act of 1990). The exclusion does not apply to payments made to or from a qualified cogeneration fa- cility or a qualifying small power production facility pursuant to section 210 of the Public Utility Regulatory Policy Act of 1978. Section 136 denies a deduction or credit to a taxpayer (or in appropriate cases requires a reduction in the adjusted basis of property of a taxpayer) for any expenditure to the ex- tent that a subsidy related to the expendi- ture was excluded from the gross income of the taxpayer. House bill No provision in H.R. 3448. Section 401 of H.R. 3286, the ”Adoption Promotion and Sta- bility Act of 1996,” as passed by the House, repeals the partial exclusion for any subsidy provided by a utility for the purchase or in- stallation of an energy conservation measure with respect to property that is not a dwell- ing unit. Effective date.\u2014The provision is effective for subsidies received after December 31, 1996, unless received pursuant to a binding written contract in effect on September 13, 1995, and all times thereafter. Senate amendment No provision. Conference agreement The conference agreement follows the pro- vision in H.R. 3286. VII. TAX TECHNICAL CORRECTIONS PROVISIONS House bill The House bill contains technical, clerical, and conforming amendments to the Revenue Reconciliation Act of 1990, the Revenue Rec- onciliation Act of 1993, and other recently enacted tax legislation. Senate amendment The Senate amendment is the same as the House bill, except as follows: (a) Expiration date of special ethanol blender refund (sec. 1703(k) of the Senate amend- ment) The Senate amendment corrects a 1990 drafting error by conforming the expiration date for an excise tax expedited refund provi- sion for gasohol blenders to that for gasoline tax provisions generally. (b) Estate tax freezes (sec. 1702(f) of the House bill and the Senate amendment) The House bill includes a provision (also contained in prior technical corrections bills) to provide a special definition of ”ap- plicable family member” for purposes of de- termining control under section 2701 of the Code (relating to special valuation rules in case of transfers of certain interests in cor- porations or partnerships). The Senate amendment does not include this provision. (c) Certain property not treated as section 179 property (sec. 1704(u) of the House bill and sec. 1702(h)(19) of the Senate amend- ment) The House bill includes a provision deny- ing the section 179 expensing allowance to (1) property described in section 50(b) (generally property used outside the United States, property used in connection with furnishing lodging, property used by tax exempt organi- zations, governments and foreign persons); (2) air conditioning or heating units; and (3) horses. The provision is effective for prop- erty placed in service after May 14, 1996. The Senate amendment does not deny the expensing allowance for horses. The provi- sion in the Senate amendment is effective as if included in the Revenue Reconciliation Act of 1990. Conference agreement The conference agreement follows the House bill and the Senate amendment with respect to identical provisions, with one modification. That modification deletes the technical correction related to a Tax Reform Act of 1986 transition rule allowing tax-ex- empt bonds to be issued for certain facilities. The 1986 provision to which that technical correction relates expired after December 31, 1990, and the correction has been rendered moot by passage of time. With regard to the differing provisions, the conference agreement includes the following: (a) Expiration date of special ethanol blender refund The conference agreement follows the Sen- ate amendment. (b) Estate tax freezes The conference agreement follows the House bill. (c) Certain property not treated as section 179 property The conference agreement follows the Sen- ate amendment. (d) Intermediate sanctions penalty provisions The conference agreement corrects a draft- ing error in the Taxpayer Bill of Rights II (H.R. 2337) with respect to the additional fil- ing and disclosure rules imposed on certain tax-exempt organizations as part of the in- termediate sanctions provisions. The con- ference agreement increases (from $10 to $20 per each day of failure) present-law penalties that apply when a tax-exempt organization fails to allow public inspection of its annual returns (sec. 6652(c)(1)(C)) or fails to allow public inspection of its application for rec- ognition of tax-exempt status (sec. CONGRESSIONAL RECORD \u2014 HOUSE H9659August 1, 1996 6652(c)(1)(D)). In addition, the conference agreement increases the section 6652(c)(1)(C) maximum penalty with respect to any one return from $5,000 to $10,000. TRADE PROVISIONS GENERALIZED SYSTEM OF PREFERENCES Subtitle J of Title I of the conference agreement, the Generalized System of Pref- erences (GSP) Renewal Act of 1996, is a sub- stitute amendment to Title V of the Trade Act of 1974, which expired on July 31, 1995. As indicated below, the conference agreement reinstates several provisions of expired law without change. 1. BASIC AUTHORITY Expired law Section 501 of the Trade Act of 1974, as amended, (Generalized System of Pref- erences) grants authority to the President to provide duty-free treatment to imports of el- igible articles from designated Beneficiary Developing Countries (BDCs), subject to cer- tain conditions and limitations. House bill No provision. Senate amendment No provision. Conference Agreement The conference agreement reinstates the expired section 501 of Title V, without change. 2. DESIGNATION OF BENEFICIARY DEVELOPING COUNTRIES Expired law Section 502 of the Trade Act of 1974 sets forth both the procedures for designating countries as Beneficiary Developing Coun- tries (BDCs) and the conditions for such des- ignation. This section establishes conditions for designation which are mandatory and others which are discretionary. With regard to mandatory conditions, the President is prohibited from designating any country for GSP benefits which is a developed country listed in section 502(b). Further, the term ”country” is defined as any foreign country, and overseas dependent territory or posses- sion of a foreign country, or the Trust Terri- tory of the Pacific Islands. Under Section 502(b), the President is pro- hibited from designating specific developed countries as BDCs: Australia, Austria, Can- ada, European Union member states, Fin- land, Iceland, Japan, Monaco, New Zealand, Norway, Sweden, and Switzerland. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement amends the defi- nition of country to include ”any territory” and deletes the reference in section 502(b) to Austria, Finland, and Sweden which are now European Union member states. 3. MANDATORY CONDITIONS Expired law Under section 502(c) the President is pro- hibited from designating as a BDC a country which: (a) is a Communist country, unless (i) its products receive non-discriminatory most- favored-nation (MFN) treatment, (ii) it is a GATT Contracting Party and a member of the International Monetary Fund (IMF), and (iii) it is not dominated or controlled by international communism; (b) is an OPEC member, or a party to an- other arrangement, and participates in an action the effect of which is to withhold sup- plies of vital commodity resources from international trade or raise their price to an unreasonable level and to cause disruption of the world economy, subject to trade agree- ment exemptions consistent with objectives under the Trade Act of 1974; (c) affords ”reverse preferences” having or likely to have a significant adverse effect on U.S. commerce, unless the President receives satisfactory assurances of elimination before January 1, 1976; (d) has nationalized or expropriated U.S. property, or taken similar actions, unless compensation is made, being negotiated, or in arbitration; (e) fails to recognize as binding or enforce arbitral awards in favor of U.S. citizens; (f) aids or abets, by granting sanctuary from prosecution to, any individual or group which has committed an act of international terrorism; and (g) has not taken or is not taking steps to afford internationally recognized worker rights to its workers. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement reinstates ex- pired law, except, with respect to mandatory conditions: in (a)(ii), replaces ”is a GATT contracting party” with ”is a Member of the World Trade Organization.”; in (b), deletes the reference to OPEC member and the ex- emption authority; in (c), deletes the satis- factory assurances exemption for reverse preferences. 4. DISCRETIONARY CRITERIA Expired law Under section 502(c) of the Trade Act of 1974 the President must take into account a list of factors in determining whether to des- ignate a country a BDC, including whether or not other major developed countries are granting GSP to the country, whether or not the country has taken or is taking steps to afford its workers internationally recognized workers rights, and the extent to which the country is providing adequate and effective intellectual property protection. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement makes no sub- stantive change to the expired provision, but makes a technical change to the intellectual property rights criterion. 5. GRADUATION OF BDC’s Expired law Countries are graduated from GSP eligi- bility if the per capita GNP of any BDC for any year exceeds a dollar limit ($11,800 in 1994), indexed annually under a formula starting with the base amount of $500 in 1984. When the income level reaches this amount, such country is subject to a 25, rather than 50, percent competitive need import share limit on all eligible articles for up to the fol- lowing two years. After that time, the coun- try is no longer treated as a BDC. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement substitutes ”high income” country as designated by the World Bank (approximately $8,600 per capita GNP in 1994), for the per capita GNP index- ing formula in current law. Thus, if the President determines that a BDC has become a ”high income” country as designated by the World Bank, the President is required to remove the country from eligibility under the program. Although the Conference agree- ment would reinstate a transition period of up to two years for country graduation from the GSP program, it would eliminate appli- cation of the 25 percent competitive need limit during this phase-out period. 6. DESIGNATION OF ELIGIBLE ARTICLES a. Exempted products Expired law Under Section 503 of the Trade Act of 1974 the President may not designate any article as GSP eligible within the following cat- egories of import-sensitive articles: (a) textile and apparel articles which are subject to textile agreements; (b) watches, except watches entered after June 30, 1989 that the President determines will not cause material injury to watch or watch band, strap, or bracelet manufactur- ing and assembly operations in the United States or U.S. insular possessions; (c) import-sensitive electronic articles; (d) import-sensitive steel articles; (e) footwear, handbags, luggage, flat goods, work gloves, and leather wearing apparel which were not GSP eligible articles on April 1, 1984; (f) import-sensitive semi-manufactured and manufactured glass products; and (g) any other articles the President deter- mines to be import-sensitive in the context of GSP. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement reinstates pro- visions of expired law, except, with respect to changes in the following statutory exemp- tions: in (a), it replaces the expired provision with exemption of textile and apparel arti- cles which were not GSP eligible on January 1, 1994 and; in (e) it applies exemption to footwear and related articles which were not GSP eligible on January 1, 1995. b. Three-year rule Expired law Each year the U.S. Trade Representative (USTR) conducts an interagency review process in which products can be added to or removed from the GSP program, or in which a country’s compliance with eligibility re- quirements can be reviewed. The reviews are normally based on petitions filed by inter- ested parties, but may also be self-initiated by USTR. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement prohibits con- sideration of an article for designation of eli- gibility for three years following formal con- sideration and denial of that article. c. Least developing countries (LDDCs) Expired law No provision. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement provides specific authority for the President to designate any article that is the growth, product, or manu- facture of a least-developed developing coun- try (LDDC) as an eligible article with respect CONGRESSIONAL RECORD \u2014 HOUSEH9660 August 1, 1996 to imports from LDDCs, if, after receiving advice from the International Trade Com- mission, the President determines such an article is not import-sensitive in the context of imports from LDDCs. This authority does not apply to statutorily exempt articles\u2014 textiles and apparel, footwear and related ar- ticles, and watches. The President shall no- tify Congress at least 60 days in advance of LDDC designations. LDDC designations will be based on overall economic and discre- tionary criteria for country designation under the GSP program. 7. LIMITS ON PREFERENTIAL AUTHORITY Expired law Under Section 504 of the Trade Act of 1974, the President may withdraw, suspend, or limit GSP duty-free treatment with respect to any article or any country, except that no duty may be established other than the rate of duty which would otherwise apply (the MFN rate), after considering both the policy objectives and the discretionary BDC des- ignation favors of the GSP program. The President shall withdraw or suspend the BDC designation of any country if he determines that, as a result of changed circumstances, the country would be barred from designa- tion. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement reinstates ex- pired law. 8. COMPETITIVE NEED LIMITS Expired law Whenever the President determines that exports by any BDC to the United States of a GSP eligible article during any year\u2014 (a) exceed a dollar limit ($122 million in 1995) based on $25 million adjusted annually relative to changes in the U.S. GNP since 1974, or (b) equal or exceed a 50 percent share of the total value of U.S. imports of the article, then, no later than July 1 of the next year, such country is not treated as a BDC with re- spect to such article. Not later than January 4, 1987, and periodi- cally thereafter, the President must conduct a general review of eligible articles and, if he determines that a BDC has demonstrated a sufficient degree of competitiveness relative to other BDCs on any eligible article, then a lower competitive need dollar limit ($41.9 million in 1993, indexed annually from 1984 base) and 25 percent total import share limit apply. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement reduces the basic competitive need limit to $75 million for any year beginning January 1, 1996, and substitutes a standard annual increase of $5 million for the indexing formula in expired law. The 50 percent import share limit is re- instated. The conference agreement deletes the general review requirements and the lower competitive need limits. 9. AUTHORITY TO WAIVE COMPETITIVE NEED LIMITS Expired law The President may waive the dollar and import share competitive need limits on any eligible article of any BDC if he (1) receives ITC advice on the likely effect of the waiver on any U.S. industry; (2) determines, based on the overall GSP and discretionary coun- try designation considerations and the ITC advice, that the waiver is in the U.S. na- tional economic interest; and (3) publishes the determination in the Federal Register. The import share competitive need limit may be disregarded if total U.S. imports of the eligible article during the preceding year do not exceed a de minimis amount of $5 mil- lion adjusted annually ($13.4 million in 1994) according to changes in u.S. GNP since 1979. The import share competitive need limit does not apply to any eligible article if a like or directly competitive article was not pro- duced in the United States as of January 3, 1985. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement reinstates the expired waiver authority. Under the con- ference Agreement the import share com- petitive need limit does not apply if the arti- cle is not produced in the United States as of January 1, 1995. The conference Agreement also reinstates the de minimis import provi- sion, but substitutes $13 million in 1996 and a standard annual increase of $500,000 begin- ning January 1, 1996 for the indexing formula in expired law. 10. OTHER PROVISIONS REGARDING WAIVER AU- THORITY, REPORTS, AND AGRICULTURE EX- PORTS a. Waiver trade limits Expired law Under section 504(c)(3)(D) of the Trade Act of 1974, the President may not exercise the competitive need waiver authority in any year on imports of eligible articles exceed- ing: (a) 30 percent of total GSP duty-free im- ports during the preceding year, or (b) 15 percent of total GSP duty-free im- ports during the preceding year from BDCs which had (i) a per capita GNP of $5,000 or more, or (ii) exported to the United States more than 10 percent of total GSP duty-free imports during that year. The President may waive competitive need limits in certain cases where there has been a historical preferential trade relationship between the United States and that country. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement reinstates pro- visions in expired law regarding waiver trade limits, and historical preferences. b. Report on workers rights Expired law The President must submit an annual re- port to the Congress on the status of inter- nationally recognized workers’ rights within each BDC. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement reinstates ex- pired law. c. Agriculture exports Expired law Section 506 requires that appropriate U.S. agencies assist BDCs in developing and im- plementing measures designed to ensure that the production of agricultural sectors of their economies is not directed to export markets, to the detriment of the foodstuff production for their citizens. House bill No provision. Senate bill No provision. Conference agreement The conference agreement reinstates ex- pired law. 11. PROVISIONS REGARDING TERMINATION AND EFFECTIVE DATES Expired law No duty-free treatment shall remain in ef- fect after July 31, 1995. House bill No provision. Senate amendment No provision. Conference agreement The conference agreement reauthorizes the program for one year, ten months, to termi- nate on May 31, 1997. The effective date of the extension of the GSP program is October 1, 1996. However, the conference agreement also provides that, notwithstanding section 514 of the Tariff Act of 1930 or any other pro- vision of law, the entry (1) of any article to which duty-free treatment under Title V of the Trade Act of 1974 would have applied if the entry had been made on July 31, 1995, and (2) that was made after July 31, 1995, and be- fore January 1, 1996, shall be liquidated or re- liquidated as free of duty and the Secretary of the Treasury shall refund any duty paid, upon proper request filed with the appro- priate customs officer, within 180 days after the date of enactment. Further, the con- ference agreement provides that notwith- standing section 514 of the Tariff Act of 1930 or any other provision of law, the entry (1) of any article to which duty-free treatment under Title V of 1974 (as amended by this Title) would have applied if the entry had been made on or after October 1, 1996, and (2) that was made after December 31, 1995, and before October 1, 1996, shall be liquidated or reliquidated as free of duty and the Sec- retary of the Treasury shall refund any duty paid, upon proper request filed with the ap- propriate customs officer, within 180 days after the date of enactment. Although im- porters would be entitled to request such re- funds after the date of enactment of the bill, reimbursement of duties would occur only after the beginning of fiscal year 1997 (Octo- ber 1, 1996). REMOVAL OF BARRIERS TO INTERETHNIC ADOPTION Present law State law governs adoption and foster care placement. Many States permit race match- ing of foster and adoptive parents with chil- dren either in regulation, statute, policy, or practice. The Howard M. Metzenbaum Multi- ethnic Placement Act of 1994 (”Metzenbaum Act”, Public Law 103 382) permits States to consider race and ethnicity in selecting a foster care or adoptive home, but States can- not delay or deny the placement of the child solely on the basis of race, color, or national origin. Noncompliance with the Metzenbaum Act is deemed a violation of Title VI of the Civil Rights Act of 1964. House bill Section 553 of the Metzenbaum Act is re- pealed. In addition, Section 471 of the Social Security Act is amended to prohibit a State or other entity that receives Federal assist- ance from denying to any person the oppor- tunity to become an adoptive or a foster par- ent on the basis of the race, color, or na- tional origin of the person or of the child in- volved. Similarly, so State or other entity CONGRESSIONAL RECORD \u2014 HOUSE H9661August 1, 1996 receiving Federal funds can delay or deny the placement of a child for adoption or fos- ter care in making a placement, on the basis of the race, color, or national origin of the adoptive or foster parent or the child in- volved. Section 474 of the Social Security Act is amended to require the Secretary of the De- partment of Health and Human Services (HHS) to reduce the amount of Federal foster care and adoption funds provided to the State through Title IV E if the State pro- gram is found in violation of this provision as a result of a review conducted under Sec- tion 1123 of the Social Security Act. States found to be in violation would have their quarterly funds reduced by 2 percent for the first violation, by 5 percent for the second violation, and by 10 percent for the third or subsequent violation. Private entities found to be in violation of this provision for a quarter are required to return to the Secretary all federal funds re- ceived from the State during the quarter. Any individual who is harmed by a violation of this provision may seek redress in any United States district court. An action under this provision may not be brought more than two years after the alleged violation oc- curred. Noncompliance with this provision con- stitutes a violation of Title VI of the Civil Rights Act of 1964. The Indian Child Welfare Act of 1978 is not affected by changes made in this title. Effective date.\u2014This provision applies upon enactment (except States must meet the State plan requirement provision of bill sec- tion 201(a) not later than January 1, 1997). Senate amendment The Senate amendment is the same as the House bill, except that the Senate amend- ment clarifies that the Secretary of HHS shall apply penalties in conformance with section 1123 procedures to include an oppor- tunity for the State to adopt and implement a corrective action plan. The provision clari- fies that penalties will be assessed on a fiscal year basis. The amendment limits to 25 per- cent the maximum amount the Secretary of HHS can reduce a State’s grant in a quarter. Conference agreement The conference agreement follows the House bill and the Senate amendment with modifications. If the State has failed to cor- rect the violation within six months (or less, at the Secretary’s discretion), the Secretary shall impose penalties. The amount of the graduated penalties or set at 2, 3, and 5 per- cent respectively. The total amount of pen- alties which can be applied in a fiscal year cannot exceed 5 percent of a State’s total IV E grant. The Indian Child Welfare Act of 1978 is not affected by changes made in this title. Effective date.\u2014The provisions related to civil rights enforcement are effective upon enactment. The provisions related to State plan requirements are effective on January 1, 1997. TITLE II Senate Amendments 2 through 6: Senate amendments 2 through 6 made technical cor- rections in the section numbering in title II of the House bill. The House receded from its disagreement to Senate amendments 2 through 6 with technical changes to the House bill and other changes described in this statement. 1. EMPLOYEE COMMUTING FLEXIBILITY ACT House bill The House bill would clarify the Portal-to- Portal Act of 1947 to allow employers and employees to agree on the use of employer- provided vehicles to commute to and from work at the beginning and end of the work- day, without the commuting time being treated as hours of work. Senate amendment Same. Conference agreement Follow House and Senate language. 2. MINIMUM WAGE INCREASE House bill The House bill would increase the mini- mum wage in two increments. Beginning July 1, 1996 the minimum wage would in- crease from $4.25 to $4.75, and beginning July 1, 1997 the minimum wage would increase from $4.75 to $5.15. Senate amendment Same. Conference agreement Beginning October 1, 1996, the minimum wage would increase from $4.25 to $4.75, and beginning September 1, 1997, the minimum wage would increase from $4.75 to $5.15. The conference agreement also makes a technical change to avoid retroactively increasing the minimum wage in Puerto Rico by also strik- ing section 6(c) of the Fair Labor Standards Act. 3. COMPUTER PROFESSIONALS EXEMPTION House bill The House bill specifies that computer pro- fessionals who are paid at least $27.63 per hour (maintaining current law) are exempt from overtime wages. Senate amendment Same. Conference agreement Follow House and Senate language. 4. TIP CREDIT House bill The Fair Labor Standards Act (FLSA) cur- rently contains a tip credit system whereby employers of tipped employees may count tips received by the worker for up to 50 per- cent of the employer’s minimum wage obli- gation. In the event that an employee’s cash wages and tips do not meet the statutory minimum wage, the employer must contrib- ute the amount of wages necessary for the employee to make at least the minimum wage. The House bill sets the cash wage paid by employers to tipped employees at $2.13 and allows tips to be counted toward the remain- der of the minimum wage obligation. The employer would be required to make up any difference the minimum wage and the com- bination of $2.13 plus tips to ensure that each employee makes at least the minimum wage. Senate amendment Same. Conference agreement Follows House and Senate language except makes technical changes including the tech- nical change of deleting the word ”cash” be- fore ”wage” where it appears in paragraph (2). 5. OPPORTUNITY WAGE House bill The House bill allows employers to pay new hires under 20 years of age not less than $4.25 per hour for the first 90 days (calendar days\u2014not days of work) after the employee is hired. The House bill contains protections for current workers by prohibiting employ- ers from taking any action to displace any employee in order to hire a worker at the op- portunity wage. Senate amendment Same. Conference agreement Follow House and Senate language. CONGRESSIONAL RECORD \u2014 HOUSEH9662 August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSE H9663August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSEH9664 August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSE H9665August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSEH9666 August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSE H9667August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSEH9668 August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSE H9669August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSEH9670 August 1, 1996 From the Committee on Ways and Means, for consideration of the House bill (except for title II) and the Senate amendment num- bered 1, and modifications committed to con- ference: BILL ARCHER, PHIL CRANE, BILL THOMAS, SAM GIBBONS, CHARLES B. RANGEL, As additional conferees from the Committee on Economic and Educational Opportunities, for consideration of secs. 1704(h)(1)(B) and 1704(l) of the House bill and secs. 1421(d), 1442(b), 1442(c), 1451, 1457, 1460(b), 1460(c), 1461, 1465, and 1704(h)(1)(B) of the Senate amend- ment numbered 1, and modifications com- mitted to conference: WILLIAM F. GOODLING, CASS BALLENGER, As additional conferees from the Committee on Economic and Educational Opportunities, for consideration of title II of the House bill and the Senate amendments numbered 2 6, and modifications committed to conference: WILLIAM F. GOODLING, H.W. FAWELL, FRANK RIGGS, WILLIAM L. CLAY, MAJOR R. OWENS, MAURICE HINCHEY, Managers on the Part of the House. From the Committee on Labor and Human Resources: NANCY LANDON KASSEBAUM, EDWARD M. KENNEDY, JIM JEFFORDS, From the Committee on Finance: BILL ROTH, JOHN H. CHAFEE, CHUCK GRASSLEY, ORRIN G. HATCH, AL SIMPSON, LARRY PRESSLER, DANIEL P. MOYNIHAN, MAX BAUCUS, DAVID PRYOR, JOHN D. ROCKEFELLER IV, Managers on the Part of the Senate. N O T I C E Incomplete record of House proceedings. Except for concluding business which follows, today’s House proceedings will be continued in the next issue of the Record. CONFERENCE REPORT ON H.R. 3845, DISTRICT OF COLUMBIA APPRO- PRIATIONS ACT, 1997 Mr. BONILLA submitted the follow- ing conference report and statement on the bill (H.R. 3845) making appropria- tions for the government of the Dis- trict of Columbia and other activities chargeable in whole or in part against the revenues of said District for the fis- cal year ending September 30, 1997, and for other purposes: CONFERENCE REPORT (H. REPT. 104 740) The committee of conference on the dis- agreeing votes of the two Houses on the amendments of the Senate to the bill (H.R. 3845) ”making appropriations for the govern- ment of the District of Columbia and other activities chargeable in whole or in part against the revenues of said District for the fiscal year ending September 30, 1997, and for other purposes,” having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows: That the Senate recede from its amend- ments numbered 3, 4, 5, 6, and 7. That the House recede from its disagree- ment to the amendments of the Senate num- bered 9, 12, and 13, and agree to the same. Amendment numbered 1: That the House recede from its disagree- ment to the amendment of the Senate num- bered 1, and agree to the same with an amendment, as follows: In lieu of the matter stricken by said amendment, insert the following: That funds expended for the Office of the Mayor are not to exceed $2,109,000, of which $632,000 is from intra-District funds: Provided further, That $327,000 of the funds for the Office of the Mayor shall be transferred to the Department of Ad- ministrative Services as reimbursement for occu- pancy costs, including costs for telephone, elec- tricity and other services: Provided further,; and the Senate agree to the same. Amendment numbered 2: That the House recede from its disagree- ment to the amendment of the Senate num- bered 2, and agree to the same with an amendment, as follows: Delete the matter stricken by said amend- ment, and on page 3, after line 4 of the House engrossed bill, H.R. 3845, insert the follow- ing: FEDERAL CONTRIBUTION FOR REPAIR OF DRINKING WATER SYSTEM For a Federal contribution to the District of Columbia Financial Responsibility and Manage- ment Assistance Authority for contracting with a private entity (or entities) to carry out a pro- gram to inspect, flush, and repair the drinking water distribution system of the District of Co- lumbia, $1,000,000. , and on page 4, line 13 of the House engrossed bill, H.R. 3845, strike all after ”funds)” down through and including ”Columbia” on page 5, line 11. And the Senate agree to the same. Amendment number 8: That the House recede from its disagree- ment to the amendment of the Senate num- bered 8, and agree to the same with an amendment, as follows: Retain the matter proposed in said amend- ment, and on page 31, line 5 of the House engrossed bill, H.R. 3845, strike ”, prior to October 1, 1996,”. And the Senate agree to the same. Amendment number 10: That the House recede from its disagree- ment to the amendment of the Senate num- bered 10, and agree to the same with an amendment, as follows: Delete the matter proposed and restore the matter stricken amended as follows: In lieu of the first sum named in the mat- ter restored insert: $74,000,000; and the Sen- ate agree to the same. Amendment number 11: That the House recede from its disagree- ment to the amendment of the Senate num- bered 11, and agree to the same with an amendment, as follows: Delete the matter proposed and restore the matter stricken amended as follows: In lieu of subsection (a) in the matter re- stored insert: (a) The heads of all personnel of the offices, together with all other District of Columbia ac- counting, budget, and financial management personnel (including personnel of independent agencies but not including personnel of the leg- islative and judicial branches of the District government), shall be appointed by, shall serve at the pleasure of, and shall act under the direc- tion and control of the Chief Financial Officer: The Office of the Treasurer. The Controller of the District of Columbia. The Office of the Budget. The Office of Financial Information Services. The Department of Finance and Revenue. The District of Columbia Financial Respon- sibility and Management Assistance Authority established pursuant to Public Law 104 8, ap- proved April 17, 1995, may remove such individ- uals from office for cause, after consultation with the Mayor and the Chief Financial Officer. And the Senate agree to the same. Amendment numbered 14: That the House recede from its disagree- ment to the amendment of the Senate num- bered 14, and agree to the same with an amendment, as follows: In lieu of the matter proposed by said amendment, insert the following: SEC. 149. ENERGY AND WATER SAVINGS AT DIS- TRICT OF COLUMBIA FACILITIES. (a) REDUCTION IN FACILITY ENERGY COSTS AND WATER CONSUMPTION.\u2014 IN GENERAL.\u2014The Director of the District of Columbia Office of Energy shall, subject to the contract approval provisions of Public Law 104 8\u2014 (A) develop a comprehensive plan to identify and accomplish energy conservation measures to achieve maximum cost-effective energy and water savings; (B) enter into innovative financing and con- tractual mechanisms including, but not limited to utility demand-side management programs and energy savings performance contracts and water conservation performance contracts: Pro- vided, That the terms of such contracts do not exceed twenty-five years; and (C) permit and encourage each department or agency and other instrumentality of the District of Columbia to participate in programs con- ducted by any gas, electric or water utility of the management of electricity or gas demand or for energy or water conservation. REDUCTION IN MINIMUM NUMBER OF MEMBERS OF THE BOARD OF TRUSTEES OF AMERICAN UNIVER- SITY SEC. 150. The first section of the Act entitled ”an Act to incorporate the American Univer- sity”, approved February 24, 1893 (27 Stat. 476), is amended by striking ”forty” and inserting ”twenty-five”. WAIVER OF CONGRESSIONAL REVIEW FOR CERTAIN COUNCIL ACTS SEC. 151. Notwithstanding section 602(c)(1) of the District of Columbia Self-Government and Governmental Reorganization Act, each of the following District of Columbia acts shall take ef- fect on the date of the enactment of this act: (1) The District of Columbia Real Property Tax Lien Assignment or Sale and Transfer Amendment Act of 1996 (D.C. Act 11 353). (2) The Telecommunications Competition Act of 1996 (D.C. Act 11 300). (3) The Mortgage Lenders and Brokers Act of 1996 (D.C. Act 11 309). And the Senate agree to the same. JAMES T. WALSH, HENRY BONILLA, JACK KINGSTON, CONGRESSIONAL RECORD \u2014 HOUSE H9671August 1, 1996 R.P. FRELINGHUYSEN, MARK W. NEUMANN, MIKE PARKER, BOB LIVINGSTON, JULIAN C. DIXON, JOSE\u0301 E. SERRANO, MARCY KAPTUR, DAVID R. OBEY, Managers on the Part of the House. JAMES M. JEFFORDS, BEN NIGHTHORSE CAMPBELL, MARK O. HATFIELD, HERB KOHL (Except amendments No. 6 and No. 7) DANIEL K. INOUYE, (Except amendments No. 6 and No. 7), Managers on the Part of the Senate. JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE The managers on the part of the House and the Senate at the conference on the disagree- ing votes of the two Houses on the amend- ments of the Senate to the bill (H.R. 3845) making appropriations for the government of the District of Columbia and other activities chargeable in whole or in part against the revenues of said District for the fiscal year ending September 30, 1997, and for other pur- poses, submit the following joint statement to the House and the Senate in explanation of the effect of the actions agreed upon by the managers and recommended in the ac- companying conference report. The conference agreement on the District of Columbia Appropriations Act, 1997, incor- porates some of the provisions of both the House and Senate versions of the bill. The language and allocations set forth in House Report 104 689 and Senate Report 104 328 should be complied with unless specifically addressed in the accompanying bill and statement of the managers to the contrary. A summary chart appears after the expla- nation for amendment 5 showing the Federal appropriations by account and the allocation of District funds by agency or office under each appropriation title showing the fiscal year 1996 appropriation, the control board distribution for fiscal year 1996, and the fis- cal year 1997 request, House and Senate rec- ommendations and conference allowance. DEFICIT SPENDING AND LONG-TERM DEFICIT BORROWING The conferees are concerned with the insid- ious aspects of long-term borrowing to fund deficit spending. The conferees note that the actual deficit for fiscal year 1995 was only $25,000,000 when the accounting adjustments of $29,000,000 are factored out. For fiscal year 1996, the deficit was esti- mated at $20,000,000 at the time the Presi- dent signed the appropriations Act; however, in testimony provided by the Chief Financial Officer to the House Committee on Appro- priations on May 15, 1996, the deficit was pro- jected at $116,000,000, a 580 percent increase. While the deficit was relatively small in fis- cal year 1995, it is projected to increase sig- nificantly in fiscal year 1996. The District is proposing to borrow $500,000,000 long term to fund the accumu- lated deficit caused by overspending and fu- ture projected deficits. The cost of this pro- posal is $435,000,000 in interest costs that will have to be paid from current operating reve- nues in addition to the $500,000,000 in prin- cipal that will have to be repaid. Said an- other way, instead of the $435,000,000 being used to benefit District taxpayers in the form of teachers and counselors for edu- cation programs, police activities and fire services as well as programs to meet various social needs, those hundreds of millions of dollars will be used for interest payments to bondholders thus depriving the citizens of the District the use of scarce revenues for basic city services. The insidious nature of deficit borrowing is that it allows higher spending that satisfies immediate needs while at the same time entrapping current and future taxpayers into making interest payments on funds borrowed to pay for goods and services that were provided in the past. This $435,000,000 is in addition to the $150,000,000 in interest payments being made on the $336,000,000 in deficit borrowings made in fiscal year 1991. Long-term borrowings for capital projects, on the other hand, are entirely appropriate because the projects on which those funds are spent last for the period during which those borrowings are repaid so that the tax- payers at the time the payments are made are able to benefit from those projects. This is not the case with long-term borrowings for deficit spending. Every effort should be made by the Mayor, the Council and the control board to avoid deficit spending and thus alle- viate the need to obligate future taxpayers to pay for the overspending of those who pre- ceded them. The accumulated deficit at the end of fis- cal year 1995 totaled $378,000,000 which was computed by subtracting total assets from total liabilities in the General Fund and re- sulted in liabilities exceeding assets avail- able to satisfy those liabilities. However, an analysis of the liabilities reveals that ap- proximately $312,000,000 will either not re- quire a use of cash or are long term in na- ture. For example, $142,000,000 is deferred revenue, which is a record of cash already re- ceived that will be recorded as revenue earned in fiscal year 1996. The cash is already in the General Fund’s cash account. Another $170,000,000 is recorded as accrued liabilities which are estimates of payments that may be made sometime in the distant future, such as payments resulting from claims and judgments, disputes from grant claims, and possible Medicaid payments subject to audits of reimbursement claims. Thus, only about $66,000,000 of the remaining excess liabilities over assets of the accumulated deficit may need to be paid in fiscal year 1996. Given this analysis it appears that a long-term borrow- ing of $500,000,000 should be carefully ana- lyzed and avoided by pursuing other options. A very high priority should be given to liv- ing within the current revenues. An analysis of the District’s cash account to determine the pattern of overspending since fiscal year 1991 when $336,000,000 was borrowed to fund the accumulated deficit re- veals that the District over spent an average of $71,000,000 per year. It should be noted that this amount reflects increases and decreases in both the accounts receivable and the ac- counts payable so that a deferral of the use of cash would not artificially inflate the bal- ance in the cash account. This amount is ap- proximately the amount of the projected fis- cal year 1997 deficit of $74,000,000 rec- ommended in this conference agreement. The Mayor and the Control Board Chairman recently stated that there were several ways of reducing the projected fiscal year 1997 def- icit. These recommendations as well as those made by the many financial advisers who have testified and published reports on the various ways the city can reduce the costs of operating the Nation’s Capital should be pur- sued vigorously. Testimony at recent and past hearings as well as reports from financial advisors to the city and meetings with District and control board officials have documented the con- cerns and inherent problems in borrowing long-term to finance operating deficits. The officials cited several ways to reduce the projected deficit for fiscal year 1997; the ad- visors have testified that future requests by the District to fund an operating deficit should not be approved; and testimony indi- cates that a change in one item, Medicaid, among several other items, would eliminate the city’s deficit and result in a surplus. Ef- forts should be pursued immediately on these items that will save District taxpayers and the Federal Government hundreds of millions of dollars instead of spending scarce local revenues on interest costs to bond- holders. Long-term borrowing for deficit spending does not resolve the problems caused by overspending\u2014rather it increases the accu- mulated deficit and postpones the tough de- cisions that have to be made. Deficit financ- ing carries a very high cost that has serious negative consequences to the financial health and quality of life of the community. QUALITY OF DISTRICT’S DRINKING WATER The conferees are deeply concerned about recent violations of Federal drinking water quality standards and the continuing prob- lems that beset the drinking water supply and distribution system for the District of Columbia. The Federal Environmental Pro- tection Agency (EPA) recently completed a preliminary investigation of the water qual- ity problems attributed to the District’s water distribution system and concluded that there is an urgent and immediate need for the District to implement steps to assure the integrity of drinking water quality in the District. Among the most important of these recommended actions is that the Dis- trict hire a private contractor or contractors to flush the drinking water distribution sys- tem completely, and to inspect and repair water valves. The conferees agree that there is a strong Federal interest in assuring that those who visit, live, and work in the Nation’s Capital have safe water to drink. Accordingly, the conference agreement includes $1,000,000 in Federal funds for this purpose under amend- ment number 2. These funds are provided to the Financial Control Board to contract with a private entity or entities to conduct the inspection, flushing and repair work rec- ommended by the EPA. The conferees direct the control board to consult with the De- partment of Public Works, the D.C. Water and Sewer Authority and the EPA in imple- menting this activity. Further, the conferees encourage the control board to move expedi- tiously to contract for the work in anticipa- tion of the funds provided in the accompany- ing bill becoming available on October 1, 1996. YCARE 2000 PRIVATE-PUBLIC PARTNERSHIP The conferees fully support the YCARE 2000 program sponsored by the YMCA of Met- ropolitan Washington. The program provides work-readiness, conflict resolution training, tutoring, socialization and other skills to at- risk District youth who are in the age range of 5 to 18 years old. The conferees believe that YCARE 2000 is an example of an effi- cient and well-managed private-public part- nership which can provide social services to improve the lives of the city’s young people. The conferees note that the Council of the District of Columbia has formally recognized the achievements of the YCARE 2000 initia- tive in a July 11, 1995 resolution. In order to provide and facilitate private- public partnerships such as YCARE 2000 and in order to reach at-risk youth most effi- ciently, the conferees request that the Mayor, the City Council, and the Board of Education work with organizations like the YMCA to locate such programs on or near school property. In addition, the conferees request that the Mayor consult with rep- resentatives of private, not-for-profit com- munity organizations with demonstrated ex- perience and expertise in providing services CONGRESSIONAL RECORD \u2014 HOUSEH9672 August 1, 1996 to children and youth in the District and, to the extent financial constraints permit, make funds available to such groups for such services on the condition that the groups provide equal matching amounts. FEDERAL FUNDS FEDERAL CONTRIBUTION FOR REPAIR OF DRINKING WATER SYSTEM The conference agreement, under amend- ment number 2, includes a Federal contribu- tion of $1,000,000 to the District of Columbia Financial Responsibility and Management Assistance Authority for contracting with private entities to inspect, flush, and repair the drinking water distribution system in the District. A discussion of the quality of the district’s drinking water appears earlier in this statement. DISTRICT FUNDS GOVERNMENTAL DIRECTION AND SUPPORT Amendment No. 1: Limits the fiscal year 1997 budget for the Office of the Mayor to $2,109,000 of which $632,000 is from intra-Dis- trict funds instead of $1,753,000 of which $632,000 is from intra-District funds as pro- posed by the House and $2,209,000 of which $632,000 is from intra-District funds as pro- posed by the Senate and provides that $327,000 of the $2,109,000 shall be transferred to the Department of Administrative Serv- ices as reimbursement for occupancy costs, including costs for telephone, electricity and other services. Amendment No. 2: Deletes a proviso pro- posed by the House and stricken by the Sen- ate and further deletes a proviso before and a proviso that followed the proviso stricken by the Senate concerning the District of Co- lumbia Housing Finance Agency and inserts a new heading and paragraph appropriating $1,000,000 in Federal funds to the District of Columbia Financial Responsibility and Man- agement Assistance Authority for contract- ing with private entities to carry out a pro- gram to inspect, flush, and repair the drink- ing water distribution system in the Dis- trict. The conference action deletes language as requested in the consensus budget that eliminates the requirement for the District of Columbia Housing Finance Agency to repay the District’s general fund $10,591,000 appropriated for fiscal years 1980 through 1992 to finance the Agency’s operations. Ac- cording to District officials, retaining the language requires the Agency to carry the debt on its books and creates a negative fi- nancial picture thereby making it difficult and more costly for the Agency to access capital markets. The debt was determined by the District’s independent auditors to be ”uncollectible” and is fully reserved for in the District’s Comprehensive Annual Finan- cial Report (CAFR) (see page 34, fiscal year 1995 CAFR). An earlier communication from District officials requested that the language be retained. See amendment number 12 for language ”forgiving” the Agency from the repayment requirement. The conference action also appropriates $1,000,000 for a Federal contribution to the District of Columbia Financial Responsibil- ity and Management Assistance Authority for contracting with private entities to in- spect, flush, and repair the city’s water dis- tribution system which has fallen into dis- repair. A discussion of the quality of the Dis- trict’s drinking water appears earlier in this statement. PUBLIC SAFETY AND JUSTICE (INCLUDING TRANSFER OF FUNDS) Amendment No. 3: Deletes language pro- posed by the Senate that would have modi- fied the appropriations title to indicate that this appropriation included a transfer of funds. The transfer of funds in amendment number 4 has not been agreed to by the con- ferees. Amendment No. 4: Deletes a proviso pro- posed by the Senate that would have trans- ferred $651,000 from the Department of Public Works to the District of Columbia Court System for maintenance and repair of ele- vators\/escalators, heating, ventilation, and air conditioning systems, fire alarms and se- curity systems, materials and services for building maintenance and repair, and trash removal. The conferees are extremely concerned and disappointed that the Department of Public Works has failed to provide maintenance and repair services to the District of Columbia Courts in a professional manner, permitting necessary maintenance and repair contracts to lapse and causing greater expenses and disruptions as a result. While the conference agreement retains this responsibility in the Department of Public Works, the conferees expect this will not happen again. The conference action reflects a realloca- tion of building occupancy costs totaling $2,347,000 from the Superior Court’s budget to the Court System’s budget because the pay- ments are made from that particular budget. This reallocation was requested by District officials. CAPITAL OUTLAY (INCLUDING RESCISSIONS) Amendment No. 5: Provides an increase of $46,923,000 for construction projects as pro- posed by the House instead of $75,923,000 as proposed by the Senate. The reduction of $29,000,000 below the amount proposed by the Senate reflects the deletion of duplicate cap- ital outlay authority initially provided in the fiscal year 1996 appropriations act (Pub- lic Law 104 234) for Facility Condition As- sessment ($1,000,000) and Financial Control System or FMS ($28,000,000). The amount ap- proved in fiscal year 1996 under ”Capital Out- lay” is available for two years for the initial obligation after which the authority remains available until exhausted. The House and Senate versions of the bill for fiscal year 1997 include an increase of $3,123,000 for the FMS which when added to the $28,000,000 in the fis- cal year 1996 act will provide a total of $31,123,000 for FMS work. SUMMARY TABLE OF CONFERENCE RECOMMENDATIONS BY AGENCY A summary table showing the Federal ap- propriations by account and the allocation of District funds by agency or office under each appropriation title for fiscal year 1996, the control board distribution for fiscal year 1996, and the fiscal year 1997 request, House and Senate recommendations and conference allowance follows: CONGRESSIONAL RECORD \u2014 HOUSE H9673August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSEH9674 August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSE H9675August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSEH9676 August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSE H9677August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSEH9678 August 1, 1996 CONGRESSIONAL RECORD \u2014 HOUSE H9679August 1, 1996 GENERAL PROVISIONS Amendment No. 6: Restores language in section 129 proposed by the House and strick- en by the Senate that prohibits the use of any funds in this Act for any abortion except to save the life of the mother or in cases of rape or incest. Amendment No. 7: Restores language in section 130 proposed by the House and strick- en by the Senate that prohibits the use of any funds in this Act (1) for any system of registration of unmarried cohabiting couples or (2) to implement or enforce the District’s Domestic Partners Act. Amendment No. 8: Inserts language in sec- tion 132 that adds the Financial Control Board to the entities in section 132 that are to receive monthly reports from the Board of Education as proposed by the Senate and de- letes language in section 126 that would have prohibited the expenditure of funds by agen- cies for which a reorganization plan is re- quired but has not been approved by the City Council prior to October 1, 1996. The lan- guage remaining in section 126 continues the prohibition on expenditures for such agen- cies until the City Council approves the re- quired reorganization plans but removes the October 1, 1996 deadline for City Council ap- proval. Amendment No. 9: Adds the Financial Con- trol Board to the entities in section 133 that are to receive monthly reports from the Uni- versity of the District of Columbia as pro- posed by the Senate. CEILING ON EXPENSES AND DEFICIT Amendment No. 10: Amends language pro- posed by the House and stricken by the Sen- ate in section 141 (1) establishing a ceiling on fiscal year 1997 operating expenses from all funds of $5,108,913,000 of which $134,528,000 are from intra-District funds as proposed by the House and stricken by the Senate; (2) limit- ing the operating deficit from all funds for fiscal year 1997 to $74,000,000 instead of $40,000,000 as proposed by the House and stricken by the Senate, and (3) requiring the Chief Financial Officer and the Financial Control Board to take such steps as are nec- essary to meet these requirements including the apportioning of appropriations and funds by the Chief Financial Officer during fiscal year 1997 as proposed by the House and stricken by the Senate. The conferees urge the Mayor, the City Council, and the control board to use every means possible to reduce the costs of operat- ing the Nation’s Capital and make every ef- fort to avoid deficit spending. CHIEF FINANCIAL OFFICER POWERS Amendment No. 11: Amends language in section 142 proposed by the House and the Senate to clarify that all financial personnel in the executive branch of the District gov- ernment, including all independent agencies and excluding the legislative and judicial branches of the District Government, are under the exclusive control of the Chief Fi- nancial Officer instead of all financial per- sonnel in the executive branch of the Dis- trict government as proposed by the House and all financial personnel except those in the legislative and judicial branches as pro- posed by the Senate. The clarification is re- quired to insure that the financial personnel of each independent agency in the District, without exception, are appointed by, serve at the pleasure of, and act under the direction and control of the Chief Financial Officer. The conferees do not expect any misinter- pretation of the intent of this statute and di- rect the Chief Financial Officer to notify, in writing, the Committees on Appropriations as well as the respective authorizing com- mittees of the House and the Senate of any person of any executive branch agency in- cluding any independent agency who fails to comply with the requirements of this section within five calendar days of the failure to comply. HOUSING FINANCE AGENCY Amendment No. 12: Inserts a new section 147 as proposed by the Senate that forgives the District of Columbia Housing Finance Agency from the requirement to repay the District’s general fund for $10,591,000 appro- priated during fiscal years 1980 1992 for the operations of the Agency. See also amend- ment number 2 for a further discussion of this issue. SCHOOL REFORM Amendment No. 13: Inserts a new section 148 as proposed by the Senate that amends section 2561(b) of the District of Columbia School Reform Act of 1995 (Public Law 104 134) to exclude Executive Order 11246 from being waived for construction or mainte- nance projects coordinated through the Fed- eral General Services Administration for the District’s public school facilities. Executive Order 11246 governs civil rights protections for Federal government construction con- tracts. OTHER GENERAL PROVISIONS Amendment No. 14: Inserts new general provisions numbered 149, 150 and 151 instead of a new general provision numbered 149 as proposed by the Senate. The additional gen- eral provisions were requested by the House authorizing committee and concurred in by the Senate authorizing committee. A brief explanation of each of these general provi- sions follows. Language agreed to by the conferees in section 149 proposed by the Senate author- izes the District of Columbia Energy Office, subject to control board review, to negotiate energy performance contracts for periods up to 25 years with energy service companies who will provide investment capital to re- duce energy consumption in District facili- ties. Through this method, the energy serv- ice companies will install energy efficient lighting, heating, and cooling systems using their investment capital with their payback coming in future years from a portion of the money saved when the energy bills are low- ered. It is estimated that the District gov- ernment could realize annual savings of $50,000,000 in its energy costs through this program. Language requested by the House authoriz- ing committee and agreed to by the con- ferees in section 150 reduces the minimum size of the Board of Trustees of American University from 40 to 25. According to the authorizing committee, this change was re- quested by the University. Language requested by the House authoriz- ing committee and agreed to by the con- ferees in section 151 waives the 30-day con- gressional layover period for three specific pieces of legislation already approved by the District government. The Tax Lien Act of 1996 (D.C. Act 11 353) will expedite the Dis- trict’s ability to sell $50,000,000 in uncol- lected property taxes in return for $44,000,000 in cash. The authorizing committee stated that this transaction could not move ahead in a timely manner unless the review period is waived. Section 151 also waives the 30-day congressional layover for the Telecommuni- cations Competition Act of 1996 (D.C. Act 11 300) and the Mortgage Lenders and Brokers Act of 1996 (D.C. Act 11 309) which together comprise the District’s efforts to implement the Federal Telecommunications Act. The District’s Telecommunications Act opens the District’s market to telecommunications services providers. The Mortgage Lenders and Brokers Act regulates mortgage lenders in the District and also contains substantive amendments to the Telecommunications Act. CONFERENCE TOTAL\u2014WITH COMPARISONS The total new budget (obligational) au- thority for the fiscal year 1997 recommended by the Committee of Conference, with com- parisons to the fiscal year 1996 amount, the 1997 budget estimates, and the House and Senate bills for 1997 follow: Federal funds New budget (obligational) authority, fiscal year 1996 …………………………… $712,070,000 Budget estimates of new (obligational) authority, fiscal year 1997 ……………. 769,842,000 House bill, fiscal year 1997 717,772,000 Senate bill, fiscal year 1997 717,772,000 Conference agreement, fis- cal year 1997 ……………….. 718,772,000 Conference agreement compared with: New budget (obligational) author- ity, fiscal year 1996 …… 6,702,000 Budget estimates of new (obligational) author- ity, fiscal year 1997 …… (51,070,000) House bill, fiscal year 1997 ………………………… 1,000,000 Senate bill, fiscal year 1997 ………………………… 1,000,000 District of Columbia Funds New budget (obligational) authority, fiscal year 1996 1 4,930,7000,000 Budget estimates of new (obligational) authority, fiscal year 1997 …………….. 5,050,308,000 House bill, fiscal year 1997 … 5,021,308,000 Senate bill, fiscal year 1997 5,050,308,000 Conference agreement, fiscal year 1997 …………………….. 5,021,308,000 Conference agreement com- pared with: New budget (obligational) authority, fiscal year 1996 ………………………… 90,608,000 Budget estimates of new (obligational) authority, fiscal year 1997 ………….. (29,000,000) House bill, fiscal year 1997 0 Senate bill, fiscal year 1997 (29,000,000) 1 Excludes $165,339,000 in intra-District funds for com- parability purposes with fiscal year 1997 which excludes intra-District funds. JAMES T. WALSH, HENRY BONILLA, JACK KINGSTON, R.P. FRELINGHUYSEN, MARK W. NEUMANN, MIKE PARKER, BOB LIVINGSTON, JULIAN C. DIXON, JOSE\u0301 E. SERRANO, MARCY KAPTUR, DAVID R. OBEY, Managers on the Part of the House. JAMES M. JEFFORDS, BEN NIGHTHORSE CAMPBELL, MARK O. HATFIELD, (Except amendments No. 6 and No. 7), HERB KOHL, (Except amendments No. 6 and No. 7), DANIEL K. INOUYE, Managers on the Part of the Senate. f CONFERENCE REPORT ON S. 1316, SAFE DRINKING WATER ACT AMENDMENTS OF 1996 Mr. BLILEY submitted the following conference report and statement on the CONGRESSIONAL RECORD \u2014 HOUSEH9680 August 1, 1996 Senate bill (S. 1316) to reauthorize and amend title XIV of the Public Health Service Act (commonly known as the ”Safe Drinking Water Act”), and for other purposes: CONFERENCE REPORT (H. REPT. 104 741) The committee of conference on the dis- agreeing votes of the two Houses on the amendment of the House to the bill (S. 1316), to reauthorize and amend title XIV of the Public Health Service Act (commonly known as the ”Safe Drinking Water Act”), and for other purposes, having met, after full and free conference, have agreed to recommend and do recommend to their respective Houses as follows: That the Senate recede from its disagree- ment to the amendment of the House and agree to the same with an amendment as fol- lows: In lieu of the matter proposed to be in- serted by the House amendment, insert the following: SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) SHORT TITLE.\u2014This Act may be cited as the ”Safe Drinking Water Act Amendments of 1996”. (b) TABLE OF CONTENTS.\u2014 Sec. 1. Short title; table of contents. Sec. 2. References; effective date; disclaimer. Sec. 3. Findings. TITLE I\u2014AMENDMENTS TO SAFE DRINKING WATER ACT Sec. 101. Definitions. Sec. 102. General authority. Sec. 103. Risk assessment, management, and communication. Sec. 104. Standard-setting. Sec. 105. Treatment technologies for small sys- tems. Sec. 106. Limited alternative to filtration. Sec. 107. Ground water disinfection. Sec. 108. Effective date for regulations. Sec. 109. Arsenic, sulfate, and radon. Sec. 110. Recycling of filter backwash. Sec. 111. Technology and treatment techniques. Sec. 112. State primacy. Sec. 113. Enforcement; judicial review. Sec. 114. Public notification. Sec. 115. Variances. Sec. 116. Small systems variances. Sec. 117. Exemptions. Sec. 118. Lead plumbing and pipes. Sec. 119. Capacity development. Sec. 120. Authorization of appropriations for certain ground water programs. Sec. 121. Amendments to section 1442. Sec. 122. Technical assistance. Sec. 123. Operator certification. Sec. 124. Public water system supervision pro- gram. Sec. 125. Monitoring and information gather- ing. Sec. 126. Occurrence data base. Sec. 127. Drinking Water Advisory Council. Sec. 128. New York City watershed protection program. Sec. 129. Federal agencies. Sec. 130. State revolving loan funds. Sec. 131. State ground water protection grants. Sec. 132. Source water assessment. Sec. 133. Source water petition program. Sec. 134. Water conservation plan. Sec. 135. Drinking water assistance to colonias. Sec. 136. Estrogenic substances screening pro- gram. Sec. 137. Drinking water studies. TITLE II\u2014DRINKING WATER RESEARCH Sec. 201. Drinking water research authoriza- tion. Sec. 202. Scientific research review. Sec. 203. National center for ground water re- search. TITLE III\u2014MISCELLANEOUS PROVISIONS Sec. 301. Water return flows. Sec. 302 Transfer of funds. Sec. 303. Grants to Alaska to improve sanitation in rural and Native villages. Sec. 304. Sense of the Congress. Sec. 305. Bottled drinking water standards. Sec. 306. Washington Aqueduct. Sec. 307. Wastewater assistance to colonias. Sec. 308. Prevention and control of zebra mussel infestation of Lake Champlain. TITLE IV\u2014ADDITIONAL ASSISTANCE FOR WATER INFRASTRUCTURE AND WATER- SHEDS Sec. 401. National program. TITLE V\u2014CLERICAL AMENDMENTS Sec. 501. Clerical amendments. SEC. 2. REFERENCES; EFFECTIVE DATE; DIS- CLAIMER. (a) REFERENCES TO SAFE DRINKING WATER ACT.\u2014Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in terms of an amendment to, or re- peal of, a section or other provision, the ref- erence shall be considered to be made to that section or other provision of title XIV of the Public Health Service Act (commonly known as the ”Safe Drinking Water Act”) (42 U.S.C. 300f et seq.). (b) EFFECTIVE DATE.\u2014Except as otherwise specified in this Act or in the amendments made by this Act, this Act and the amendments made by this Act shall take effect on the date of en- actment of this Act. (c) DISCLAIMER.\u2014Except for the provisions of section 302 (relating to transfers of funds), noth- ing in this Act or in any amendments made by this Act to title XIV of the Public Health Service Act (commonly known as the ”Safe Drinking Water Act”) or any other law shall be construed by the Administrator of the Environmental Pro- tection Agency or the courts as affecting, modi- fying, expanding, changing, or altering\u2014 (1) the provisions of the Federal Water Pollu- tion Control Act; (2) the duties and responsibilities of the Ad- ministrator under that Act; or (3) the regulation or control of point or nonpoint sources of pollution discharged into waters covered by that Act. The Administrator shall identify in the agency’s annual budget all funding and full-time equiva- lents administering such title XIV separately from funding and staffing for the Federal Water Pollution Control Act. SEC. 3. FINDINGS. The Congress finds that\u2014 (1) safe drinking water is essential to the pro- tection of public health; (2) because the requirements of the Safe Drinking Water Act (42 U.S.C. 300f et seq.) now exceed the financial and technical capacity of some public water systems, especially many small public water systems, the Federal Govern- ment needs to provide assistance to communities to help the communities meet Federal drinking water requirements; (3) the Federal Government commits to main- taining and improving its partnership with the States in the administration and implementation of the Safe Drinking Water Act; (4) States play a central role in the implemen- tation of safe drinking water programs, and States need increased financial resources and appropriate flexibility to ensure the prompt and effective development and implementation of drinking water programs; (5) the existing process for the assessment and selection of additional drinking water contami- nants needs to be revised and improved to en- sure that there is a sound scientific basis for set- ting priorities in establishing drinking water regulations; (6) procedures for assessing the health effects of contaminants establishing drinking water standards should be revised to provide greater opportunity for public education and participa- tion; (7) in considering the appropriate level of reg- ulation for contaminants in drinking water, risk assessment, based on sound and objective science, and benefit-cost analysis are important analytical tools for improving the efficiency and effectiveness of drinking water regulations to protect human health; (8) more effective protection of public health requires\u2014 (A) a Federal commitment to set priorities that will allow scarce Federal, State, and local re- sources to be targeted toward the drinking water problems of greatest public health concern; (B) maximizing the value of the different and complementary strengths and responsibilities of the Federal and State governments in those States that have primary enforcement respon- sibility for the Safe Drinking Water Act; and (C) prevention of drinking water contamina- tion through well-trained system operators, water systems with adequate managerial, tech- nical, and financial capacity, and enhanced protection of source waters of public water sys- tems; (9) compliance with the requirements of the Safe Drinking Water Act continues to be a con- cern at public water systems experiencing tech- nical and financial limitations, and Federal, State, and local governments need more re- sources and more effective authority to attain the objectives of the Safe Drinking Water Act; and (10) consumers served by public water systems should be provided with information on the source of the water they are drinking and its quality and safety, as well as prompt notifica- tion of any violation of drinking water regula- tions. TITLE I\u2014AMENDMENTS TO SAFE DRINKING WATER ACT SEC. 101. DEFINITIONS. (a) IN GENERAL.\u2014Section 1401 (42 U.S.C. 300f) is amended as follows: (1) In paragraph (1)\u2014 (A) in subparagraph (D), by inserting ”ac- cepted methods for” before ”quality control”; and (B) by adding at the end the following: ”At any time after promulgation of a regulation re- ferred to in this paragraph, the Administrator may add equally effective quality control and testing procedures by guidance published in the Federal Register. Such procedures shall be treat- ed as an alternative for public water systems to the quality control and testing procedures listed in the regulation.”. (2) In paragraph (13)\u2014 (A) by striking ”The” and inserting ”(A) Ex- cept as provided in subparagraph (B), the”; and (B) by adding at the end the following: ”(B) For purposes of section 1452, the term ‘State’ means each of the 50 States, the District of Columbia, and the Commonwealth of Puerto Rico.”. (3) In paragraph (14), by adding at the end the following: ”For purposes of section 1452, the term includes any Native village (as defined in section 3(c) of the Alaska Native Claims Settle- ment Act (43 U.S.C. 1602(c))).”. (4) By adding at the end the following: ”(15) COMMUNITY WATER SYSTEM.\u2014The term ‘community water system’ means a public water system that\u2014 ”(A) serves at least 15 service connections used by year-round residents of the area served by the system; or ”(B) regularly serves at least 25 year-round residents. ”(16) NONCOMMUNITY WATER SYSTEM.\u2014The term ‘noncommunity water system’ means a public water system that is not a community water system.”. (b) PUBLIC WATER SYSTEM.\u2014 (1) IN GENERAL.\u2014Section 1401(4) (42 U.S.C. 300f(4)) is amended as follows: (A) In the first sentence, by striking ”piped water for human consumption” and inserting CONGRESSIONAL RECORD \u2014 HOUSE H9681August 1, 1996 ”water for human consumption through pipes or other constructed conveyances”. (B) By redesignating subparagraphs (A) and (B) as clauses (i) and (ii), respectively. (C) By striking ”(4) The” and inserting the following: ”(4) PUBLIC WATER SYSTEM.\u2014 ”(A) IN GENERAL.\u2014The”; and (D) by adding at the end the following: ”(B) CONNECTIONS.\u2014 ”(i) IN GENERAL.\u2014For purposes of subpara- graph (A), a connection to a system that deliv- ers water by a constructed conveyance other than a pipe shall not be considered a connec- tion, if\u2014 ”(I) the water is used exclusively for purposes other than residential uses (consisting of drink- ing, bathing, and cooking, or other similar uses); ”(II) the Administrator or the State (in the case of a State exercising primary enforcement responsibility for public water systems) deter- mines that alternative water to achieve the equivalent level of public health protection pro- vided by the applicable national primary drink- ing water regulation is provided for residential or similar uses for drinking and cooking; or ”(III) the Administrator or the State (in the case of a State exercising primary enforcement responsibility for public water systems) deter- mines that the water provided for residential or similar uses for drinking, cooking, and bathing is centrally treated or treated at the point of entry by the provider, a pass-through entity, or the user to achieve the equivalent level of pro- tection provided by the applicable national pri- mary drinking water regulations. ”(ii) IRRIGATION DISTRICTS.\u2014An irrigation dis- trict in existence prior to May 18, 1994, that pro- vides primarily agricultural service through a piped water system with only incidental residen- tial or similar use shall not be considered to be a public water system if the system or the resi- dential or similar users of the system comply with subclause (II) or (III) of clause (i). ”(C) TRANSITION PERIOD.\u2014A water supplier that would be a public water system only as a result of modifications made to this paragraph by the Safe Drinking Water Act Amendments of 1996 shall not be considered a public water sys- tem for purposes of the Act until the date that is two years after the date of enactment of this subparagraph. If a water supplier does not serve 15 service connections (as defined in subpara- graphs (A) and (B)) or 25 people at any time after the conclusion of the 2-year period, the water supplier shall not be considered a public water system.”. (2) GAO STUDY.\u2014The Comptroller General of the United States shall undertake a study to\u2014 (A) ascertain the numbers and locations of in- dividuals and households relying for their resi- dential water needs, including drinking, bath- ing, and cooking (or other similar uses) on irri- gation water systems, mining water systems, in- dustrial water systems, or other water systems covered by section 1401(4)(B) of the Safe Drink- ing Water Act that are not public water systems subject to the Safe Drinking Water Act; (B) determine the sources and costs and af- fordability (to users and systems) of water used by such populations for their residential water needs; and (C) review State and water system compliance with the exclusion provisions of section 1401(4)(B) of such Act. The Comptroller General shall submit a report to the Congress within 3 years after the date of en- actment of this Act containing the results of such study. SEC. 102. GENERAL AUTHORITY. (a) STANDARDS.\u2014Section 1412(b) (42 U.S.C. 300g 1(b)) is amended by striking ”(b)(1)” and all that follows through the end of paragraph (3) and inserting the following: ”(b) STANDARDS.\u2014 ”(1) IDENTIFICATION OF CONTAMINANTS FOR LISTING.\u2014 ”(A) GENERAL AUTHORITY.\u2014The Adminis- trator shall, in accordance with the procedures established by this subsection, publish a maxi- mum contaminant level goal and promulgate a national primary drinking water regulation for a contaminant (other than a contaminant re- ferred to in paragraph (2) for which a national primary drinking water regulation has been pro- mulgated as of the date of enactment of the Safe Drinking Water Act Amendments of 1996) if the Administrator determines that\u2014 ”(i) the contaminant may have an adverse ef- fect on the health of persons; ”(ii) the contaminant is known to occur or there is a substantial likelihood that the con- taminant will occur in public water systems with a frequency and at levels of public health concern; and ”(iii) in the sole judgment of the Adminis- trator, regulation of such contaminant presents a meaningful opportunity for health risk reduc- tion for persons served by public water systems. ”(B) REGULATION OF UNREGULATED CONTAMI- NANTS.\u2014 ”(i) LISTING OF CONTAMINANTS FOR CONSIDER- ATION.\u2014(I) Not later than 18 months after the date of enactment of the Safe Drinking Water Act Amendments of 1996 and every 5 years thereafter, the Administrator, after consultation with the scientific community, including the Science Advisory Board, after notice and oppor- tunity for public comment, and after considering the occurrence data base established under sec- tion 1445(g), shall publish a list of contaminants which, at the time of publication, are not sub- ject to any proposed or promulgated national primary drinking water regulation, which are known or anticipated to occur in public water systems, and which may require regulation under this title. ”(II) The unregulated contaminants consid- ered under subclause (I) shall include, but not be limited to, substances referred to in section 101(14) of the Comprehensive Environmental Re- sponse, Compensation, and Liability Act of 1980, and substances registered as pesticides under the Federal Insecticide, Fungicide, and Rodenticide Act. ”(III) The Administrator’s decision whether or not to select an unregulated contaminant for a list under this clause shall not be subject to ju- dicial review. ”(ii) DETERMINATION TO REGULATE.\u2014(I) Not later than 5 years after the date of enactment of the Safe Drinking Water Act Amendments of 1996, and every 5 years thereafter, the Adminis- trator shall, after notice of the preliminary de- termination and opportunity for public com- ment, for not fewer than 5 contaminants in- cluded on the list published under clause (i), make determinations of whether or not to regu- late such contaminants. ”(II) A determination to regulate a contami- nant shall be based on findings that the criteria of clauses (i), (ii), and (iii) of subparagraph (A) are satisfied. Such findings shall be based on the best available public health information, in- cluding the occurrence data base established under section 1445(g). ”(III) The Administrator may make a deter- mination to regulate a contaminant that does not appear on a list under clause (i) if the deter- mination to regulate is made pursuant to sub- clause (II). ”(IV) A determination under this clause not to regulate a contaminant shall be considered final agency action and subject to judicial re- view. ”(iii) REVIEW.\u2014Each document setting forth the determination for a contaminant under clause (ii) shall be available for public comment at such time as the determination is published. ”(C) PRIORITIES.\u2014In selecting unregulated contaminants for consideration under subpara- graph (B), the Administrator shall select con- taminants that present the greatest public health concern. The Administrator, in making such selection, shall take into consideration, among other factors of public health concern, the effect of such contaminants upon subgroups that comprise a meaningful portion of the gen- eral population (such as infants, children, preg- nant women, the elderly, individuals with a his- tory of serious illness, or other subpopulations) that are identifiable as being at greater risk of adverse health effects due to exposure to con- taminants in drinking water than the general population. ”(D) URGENT THREATS TO PUBLIC HEALTH.\u2014 The Administrator may promulgate an interim national primary drinking water regulation for a contaminant without making a determination for the contaminant under paragraph (4)(C), or completing the analysis under paragraph (3)(C), to address an urgent threat to public health as determined by the Administrator after consulta- tion with and written response to any comments provided by the Secretary of Health and Human Services, acting through the director of the Cen- ters for Disease Control and Prevention or the director of the National Institutes of Health. A determination for any contaminant in accord- ance with paragraph (4)(C) subject to an interim regulation under this subparagraph shall be is- sued, and a completed analysis meeting the re- quirements of paragraph (3)(C) shall be pub- lished, not later than 3 years after the date on which the regulation is promulgated and the regulation shall be repromulgated, or revised if appropriate, not later than 5 years after that date. ”(E) REGULATION.\u2014For each contaminant that the Administrator determines to regulate under subparagraph (B), the Administrator shall publish maximum contaminant level goals and promulgate, by rule, national primary drinking water regulations under this sub- section. The Administrator shall propose the maximum contaminant level goal and national primary drinking water regulation for a con- taminant not later than 24 months after the de- termination to regulate under subparagraph (B), and may publish such proposed regulation concurrent with the determination to regulate. The Administrator shall publish a maximum contaminant level goal and promulgate a na- tional primary drinking water regulation within 18 months after the proposal thereof. The Ad- ministrator, by notice in the Federal Register, may extend the deadline for such promulgation for up to 9 months. ”(F) HEALTH ADVISORIES AND OTHER AC- TIONS.\u2014The Administrator may publish health advisories (which are not regulations) or take other appropriate actions for contaminants not subject to any national primary drinking water regulation. ”(2) SCHEDULES AND DEADLINES.\u2014 ”(A) IN GENERAL.\u2014In the case of the contami- nants listed in the Advance Notice of Proposed Rulemaking published in volume 47, Federal Register, page 9352, and in volume 48, Federal Register, page 45502, the Administrator shall publish maximum contaminant level goals and promulgate national primary drinking water regulations\u2014 ”(i) not later than 1 year after June 19, 1986, for not fewer than 9 of the listed contaminants; ”(ii) not later than 2 years after June 19, 1986, for not fewer than 40 of the listed contaminants; and ”(iii) not later than 3 years after June 19, 1986, for the remainder of the listed contami- nants. ”(B) SUBSTITUTION OF CONTAMINANTS.\u2014If the Administrator identifies a drinking water con- taminant the regulation of which, in the judg- ment of the Administrator, is more likely to be protective of public health (taking into account the schedule for regulation under subparagraph (A)) than a contaminant referred to in subpara- graph (A), the Administrator may publish a maximum contaminant level goal and promul- gate a national primary drinking water regula- tion for the identified contaminant in lieu of regulating the contaminant referred to in sub- paragraph (A). Substitutions may be made for CONGRESSIONAL RECORD \u2014 HOUSEH9682 August 1, 1996 not more than 7 contaminants referred to in subparagraph (A). Regulation of a contaminant identified under this subparagraph shall be in accordance with the schedule applicable to the contaminant for which the substitution is made. ”(C) DISINFECTANTS AND DISINFECTION BY- PRODUCTS.\u2014The Administrator shall promulgate an Interim Enhanced Surface Water Treatment Rule, a Final Enhanced Surface Water Treat- ment Rule, a Stage I Disinfectants and Disinfec- tion Byproducts Rule, and a Stage II Disinfect- ants and Disinfection Byproducts Rule in ac- cordance with the schedule published in volume 59, Federal Register, page 6361 (February 10, 1994), in table III.13 of the proposed Information Collection Rule. If a delay occurs with respect to the promulgation of any rule in the schedule referred to in this subparagraph, all subsequent rules shall be completed as expeditiously as practicable but no later than a revised date that reflects the interval or intervals for the rules in the schedule.”. (b) APPLICABILITY OF PRIOR REQUIREMENTS.\u2014 The requirements of subparagraphs (C) and (D) of section 1412(b)(3) of the Safe Drinking Water Act as in effect before the date of enactment of this Act, and any obligation to promulgate regu- lations pursuant to such subparagraphs not promulgated as of the date of enactment of this Act, are superseded by the amendments made by subsection (a). (c) CONFORMING AMENDMENTS.\u2014(1) Section 1415(d) (42 U.S.C. 300g 4(d)) is amended by striking ”1412(b)(3)” and inserting ”1412(b)”. (2) Section 1412(a)(3) (42 U.S.C. 300g 1(a)(3)) is amended by striking ”paragraph (1), (2), or (3) of” in each place it appears. SEC. 103. RISK ASSESSMENT, MANAGEMENT, AND COMMUNICATION. Section 1412(b) (42 U.S.C. 300g 1(b)) is amend- ed by inserting after paragraph (2) the follow- ing: ”(3) RISK ASSESSMENT, MANAGEMENT, AND COMMUNICATION.\u2014 ”(A) USE OF SCIENCE IN DECISIONMAKING.\u2014In carrying out this section, and, to the degree that an Agency action is based on science, the Ad- ministrator shall use\u2014 ”(i) the best available, peer-reviewed science and supporting studies conducted in accordance with sound and objective scientific practices; and ”(ii) data collected by accepted methods or best available methods (if the reliability of the method and the nature of the decision justifies use of the data). ”(B) PUBLIC INFORMATION.\u2014In carrying out this section, the Administrator shall ensure that the presentation of information on public health effects is comprehensive, informative, and un- derstandable. The Administrator shall, in a doc- ument made available to the public in support of a regulation promulgated under this section, specify, to the extent practicable\u2014 ”(i) each population addressed by any esti- mate of public health effects; ”(ii) the expected risk or central estimate of risk for the specific populations; ”(iii) each appropriate upper-bound or lower- bound estimate of risk; ”(iv) each significant uncertainty identified in the process of the assessment of public health effects and studies that would assist in resolving the uncertainty; and ”(v) peer-reviewed studies known to the Ad- ministrator that support, are directly relevant to, or fail to support any estimate of public health effects and the methodology used to rec- oncile inconsistencies in the scientific data. ”(C) HEALTH RISK REDUCTION AND COST ANAL- YSIS.\u2014 ”(i) MAXIMUM CONTAMINANT LEVELS.\u2014When proposing any national primary drinking water regulation that includes a maximum contami- nant level, the Administrator shall, with respect to a maximum contaminant level that is being considered in accordance with paragraph (4) and each alternative maximum contaminant level that is being considered pursuant to para- graph (5) or (6)(A), publish, seek public com- ment on, and use for the purposes of paragraphs (4), (5), and (6) an analysis of each of the fol- lowing: ”(I) Quantifiable and nonquantifiable health risk reduction benefits for which there is a fac- tual basis in the rulemaking record to conclude that such benefits are likely to occur as the re- sult of treatment to comply with each level. ”(II) Quantifiable and nonquantifiable health risk reduction benefits for which there is a fac- tual basis in the rulemaking record to conclude that such benefits are likely to occur from re- ductions in co-occurring contaminants that may be attributed solely to compliance with the max- imum contaminant level, excluding benefits re- sulting from compliance with other proposed or promulgated regulations. ”(III) Quantifiable and nonquantifiable costs for which there is a factual basis in the rule- making record to conclude that such costs are likely to occur solely as a result of compliance with the maximum contaminant level, including monitoring, treatment, and other costs and ex- cluding costs resulting from compliance with other proposed or promulgated regulations. ”(IV) The incremental costs and benefits asso- ciated with each alternative maximum contami- nant level considered. ”(V) The effects of the contaminant on the general population and on groups within the general population such as infants, children, pregnant women, the elderly, individuals with a history of serious illness, or other subpopula- tions that are identified as likely to be at greater risk of adverse health effects due to exposure to contaminants in drinking water than the gen- eral population. ”(VI) Any increased health risk that may occur as the result of compliance, including risks associated with co-occurring contami- nants. ”(VII) Other relevant factors, including the quality and extent of the information, the un- certainties in the analysis supporting subclauses (I) through (VI), and factors with respect to the degree and nature of the risk. ”(ii) TREATMENT TECHNIQUES.\u2014When propos- ing a national primary drinking water regula- tion that includes a treatment technique in ac- cordance with paragraph (7)(A), the Adminis- trator shall publish and seek public comment on an analysis of the health risk reduction benefits and costs likely to be experienced as the result of compliance with the treatment technique and alternative treatment techniques that are being considered, taking into account, as appropriate, the factors described in clause (i). ”(iii) APPROACHES TO MEASURE AND VALUE BENEFITS.\u2014The Administrator may identify valid approaches for the measurement and valu- ation of benefits under this subparagraph, in- cluding approaches to identify consumer will- ingness to pay for reductions in health risks from drinking water contaminants. ”(iv) AUTHORIZATION.\u2014There are authorized to be appropriated to the Administrator, acting through the Office of Ground Water and Drink- ing Water, to conduct studies, assessments, and analyses in support of regulations or the devel- opment of methods, $35,000,000 for each of fiscal years 1996 through 2003.”. SEC. 104. STANDARD-SETTING. (a) IN GENERAL.\u2014Section 1412(b) (42 U.S.C. 300g 1(b)) is amended as follows: (1) In paragraph (4)\u2014 (A) by striking ”(4) Each” and inserting the following: ”(4) GOALS AND STANDARDS.\u2014 ”(A) MAXIMUM CONTAMINANT LEVEL GOALS.\u2014 Each”; (B) in the last sentence\u2014 (i) by striking ”Each national” and inserting the following: ”(B) MAXIMUM CONTAMINANT LEVELS.\u2014 Ex- cept as provided in paragraphs (5) and (6), each national”; and (ii) by striking ”maximum level” and inserting ”maximum contaminant level”; and (C) by adding at the end the following: ”(C) DETERMINATION.\u2014At the time the Admin- istrator proposes a national primary drinking water regulation under this paragraph, the Ad- ministrator shall publish a determination as to whether the benefits of the maximum contami- nant level justify, or do not justify, the costs based on the analysis conducted under para- graph (3)(C).”. (2) By striking ”(5) For the” and inserting the following: ”(D) DEFINITION OF FEASIBLE.\u2014For the”. (3) In the second sentence of paragraph (4)(D) (as so designated), by striking ”paragraph (4)” and inserting ”this paragraph”. (4) By striking ”(6) Each national” and in- serting the following: ”(E) FEASIBLE TECHNOLOGIES.\u2014 ”(i) IN GENERAL.\u2014Each national”. (5) In paragraph (4)(E)(i) (as so designated), by striking ”this paragraph” and inserting ”this subsection”. (6) By inserting after paragraph (4) (as so amended) the following: ”(5) ADDITIONAL HEALTH RISK CONSIDER- ATIONS.\u2014 ”(A) IN GENERAL.\u2014Notwithstanding para- graph (4), the Administrator may establish a maximum contaminant level for a contaminant at a level other than the feasible level, if the technology, treatment techniques, and other means used to determine the feasible level would result in an increase in the health risk from drinking water by\u2014 ”(i) increasing the concentration of other con- taminants in drinking water; or ”(ii) interfering with the efficacy of drinking water treatment techniques or processes that are used to comply with other national primary drinking water regulations. ”(B) ESTABLISHMENT OF LEVEL.\u2014If the Ad- ministrator establishes a maximum contaminant level or levels or requires the use of treatment techniques for any contaminant or contami- nants pursuant to the authority of this para- graph\u2014 ”(i) the level or levels or treatment techniques shall minimize the overall risk of adverse health effects by balancing the risk from the contami- nant and the risk from other contaminants the concentrations of which may be affected by the use of a treatment technique or process that would be employed to attain the maximum con- taminant level or levels; and ”(ii) the combination of technology, treatment techniques, or other means required to meet the level or levels shall not be more stringent than is feasible (as defined in paragraph (4)(D)). ”(6) ADDITIONAL HEALTH RISK REDUCTION AND COST CONSIDERATIONS.\u2014 ”(A) IN GENERAL.\u2014Notwithstanding para- graph (4), if the Administrator determines based on an analysis conducted under paragraph (3)(C) that the benefits of a maximum contami- nant level promulgated in accordance with paragraph (4) would not justify the costs of complying with the level, the Administrator may, after notice and opportunity for public comment, promulgate a maximum contaminant level for the contaminant that maximizes health risk reduction benefits at a cost that is justified by the benefits. ”(B) EXCEPTION.\u2014The Administrator shall not use the authority of this paragraph to pro- mulgate a maximum contaminant level for a contaminant, if the benefits of compliance with a national primary drinking water regulation for the contaminant that would be promulgated in accordance with paragraph (4) experienced by\u2014 ”(i) persons served by large public water sys- tems; and ”(ii) persons served by such other systems as are unlikely, based on information provided by the States, to receive a variance under section 1415(e) (relating to small system variances); CONGRESSIONAL RECORD \u2014 HOUSE H9683August 1, 1996 would justify the costs to the systems of comply- ing with the regulation. This subparagraph shall not apply if the contaminant is found al- most exclusively in small systems eligible under section 1415(e) for a small system variance. ”(C) DISINFECTANTS AND DISINFECTION BY- PRODUCTS.\u2014The Administrator may not use the authority of this paragraph to establish a maxi- mum contaminant level in a Stage I or Stage II national primary drinking water regulation (as described in paragraph (2)(C)) for contaminants that are disinfectants or disinfection byprod- ucts, or to establish a maximum contaminant level or treatment technique requirement for the control of cryptosporidium. The authority of this paragraph may be used to establish regula- tions for the use of disinfection by systems rely- ing on ground water sources as required by paragraph (8). ”(D) JUDICIAL REVIEW.\u2014A determination by the Administrator that the benefits of a maxi- mum contaminant level or treatment require- ment justify or do not justify the costs of com- plying with the level shall be reviewed by the court pursuant to section 1448 only as part of a review of a final national primary drinking water regulation that has been promulgated based on the determination and shall not be set aside by the court under that section unless the court finds that the determination is arbitrary and capricious.”. (b) DISINFECTANTS AND DISINFECTION BYPROD- UCTS.\u2014The Administrator of the Environmental Protection Agency may use the authority of sec- tion 1412(b)(5) of the Safe Drinking Water Act (as amended by this Act) to promulgate the Stage I and Stage II Disinfectants and Disinfec- tion Byproducts Rules as proposed in volume 59, Federal Register, page 38668 (July 29, 1994). The considerations used in the development of the July 29, 1994, proposed national primary drink- ing water regulation on disinfectants and dis- infection byproducts shall be treated as consist- ent with such section 1412(b)(5) for purposes of such Stage I and Stage II rules. (c) REVIEW OF STANDARDS.\u2014Section 1412(b)(9) (42 U.S.C. 300g 1(b)(9)) is amended to read as follows: ”(9) REVIEW AND REVISION.\u2014The Adminis- trator shall, not less often than every 6 years, review and revise, as appropriate, each national primary drinking water regulation promulgated under this title. Any revision of a national pri- mary drinking water regulation shall be promul- gated in accordance with this section, except that each revision shall maintain, or provide for greater, protection of the health of persons.”. SEC. 105. TREATMENT TECHNOLOGIES FOR SMALL SYSTEMS. Section 1412(b)(4)(E) (42 U.S.C. 300g 1(b)(4)(E)) is amended by adding at the end the following: ”(ii) LIST OF TECHNOLOGIES FOR SMALL SYS- TEMS.\u2014The Administrator shall include in the list any technology, treatment technique, or other means that is affordable, as determined by the Administrator in consultation with the States, for small public water systems serving\u2014 ”(I) a population of 10,000 or fewer but more than 3,300; ”(II) a population of 3,300 or fewer but more than 500; and ”(III) a population of 500 or fewer but more than 25; and that achieves compliance with the maximum contaminant level or treatment technique, in- cluding packaged or modular systems and point- of-entry or point-of-use treatment units. Point- of-entry and point-of-use treatment units shall be owned, controlled and maintained by the public water system or by a person under con- tract with the public water system to ensure proper operation and maintenance and compli- ance with the maximum contaminant level or treatment technique and equipped with mechan- ical warnings to ensure that customers are auto- matically notified of operational problems. The Administrator shall not include in the list any point-of-use treatment technology, treatment technique, or other means to achieve compliance with a maximum contaminant level or treatment technique requirement for a microbial contami- nant (or an indicator of a microbial contami- nant). If the American National Standards In- stitute has issued product standards applicable to a specific type of point-of-entry or point-of- use treatment unit, individual units of that type shall not be accepted for compliance with a maximum contaminant level or treatment tech- nique requirement unless they are independ- ently certified in accordance with such stand- ards. In listing any technology, treatment tech- nique, or other means pursuant to this clause, the Administrator shall consider the quality of the source water to be treated. ”(iii) LIST OF TECHNOLOGIES THAT ACHIEVE COMPLIANCE.\u2014Except as provided in clause (v), not later than 2 years after the date of enact- ment of this clause and after consultation with the States, the Administrator shall issue a list of technologies that achieve compliance with the maximum contaminant level or treatment tech- nique for each category of public water systems described in subclauses (I), (II), and (III) of clause (ii) for each national primary drinking water regulation promulgated prior to the date of enactment of this paragraph. ”(iv) ADDITIONAL TECHNOLOGIES.\u2014The Ad- ministrator may, at any time after a national primary drinking water regulation has been pro- mulgated, supplement the list of technologies de- scribing additional or new or innovative treat- ment technologies that meet the requirements of this paragraph for categories of small public water systems described in subclauses (I), (II), and (III) of clause (ii) that are subject to the regulation. ”(v) TECHNOLOGIES THAT MEET SURFACE WATER TREATMENT RULE.\u2014Within one year after the date of enactment of this clause, the Admin- istrator shall list technologies that meet the Sur- face Water Treatment Rule for each category of public water systems described in subclauses (I), (II), and (III) of clause (ii).”. SEC. 106. LIMITED ALTERNATIVE TO FILTRATION. Section 1412(b)(7)(C) (42 U.S.C. 300g 1(b)(7)(C)) is amended by adding the following after clause (iv): ”(v) As an additional alternative to the regu- lations promulgated pursuant to clauses (i) and (iii), including the criteria for avoiding filtra- tion contained in 40 CFR 141.71, a State exercis- ing primary enforcement responsibility for pub- lic water systems may, on a case-by-case basis, and after notice and opportunity for public com- ment, establish treatment requirements as an al- ternative to filtration in the case of systems hav- ing uninhabited, undeveloped watersheds in consolidated ownership, and having control over access to, and activities in, those water- sheds, if the State determines (and the Adminis- trator concurs) that the quality of the source water and the alternative treatment require- ments established by the State ensure greater re- moval or inactivation efficiencies of pathogenic organisms for which national primary drinking water regulations have been promulgated or that are of public health concern than would be achieved by the combination of filtration and chlorine disinfection (in compliance with this section).”. SEC. 107. GROUND WATER DISINFECTION. Paragraph (8) of section 1412(b) (42 U.S.C. 300g 1(b)(8)) is amended by moving the margins of such paragraph 2 ems to the right and by striking the first sentence and inserting the fol- lowing: ”DISINFECTION.\u2014At any time after the end of the 3-year period that begins on the date of enactment of the Safe Drinking Water Act Amendments of 1996, but not later than the date on which the Administrator promulgates a Stage II rulemaking for disinfectants and disinfection byproducts (as described in paragraph (2)(C)), the Administrator shall also promulgate na- tional primary drinking water regulations re- quiring disinfection as a treatment technique for all public water systems, including surface water systems and, as necessary, ground water systems. After consultation with the States, the Administrator shall (as part of the regulations) promulgate criteria that the Administrator, or a State that has primary enforcement responsibil- ity under section 1413, shall apply to determine whether disinfection shall be required as a treatment technique for any public water system served by ground water.”. SEC. 108. EFFECTIVE DATE FOR REGULATIONS. Section 1412(b)(10) (42 U.S.C. 300g 1(b)(10)) is amended to read as follows: ”(10) EFFECTIVE DATE.\u2014A national primary drinking water regulation promulgated under this section (and any amendment thereto) shall take effect on the date that is 3 years after the date on which the regulation is promulgated un- less the Administrator determines that an earlier date is practicable, except that the Adminis- trator, or a State (in the case of an individual system), may allow up to 2 additional years to comply with a maximum contaminant level or treatment technique if the Administrator or State (in the case of an individual system) deter- mines that additional time is necessary for cap- ital improvements.”. SEC. 109. ARSENIC, SULFATE, AND RADON. (a) ARSENIC AND SULFATE.\u2014Section 1412(b) (42 U.S.C. 300g 1(b)) is amended by inserting after paragraph (11) the following: ”(12) CERTAIN CONTAMINANTS.\u2014 ”(A) ARSENIC.\u2014 ”(i) SCHEDULE AND STANDARD.\u2014Notwithstand- ing the deadlines set forth in paragraph (1), the Administrator shall promulgate a national pri- mary drinking water regulation for arsenic pur- suant to this subsection, in accordance with the schedule established by this paragraph. ”(ii) STUDY PLAN.\u2014Not later than 180 days after the date of enactment of this paragraph, the Administrator shall develop a comprehensive plan for study in support of drinking water rulemaking to reduce the uncertainty in assess- ing health risks associated with exposure to low levels of arsenic. In conducting such study, the Administrator shall consult with the National Academy of Sciences, other Federal agencies, and interested public and private entities. ”(iii) COOPERATIVE AGREEMENTS.\u2014In carrying out the study plan, the Administrator may enter into cooperative agreements with other Federal agencies, State and local governments, and other interested public and private entities. ”(iv) PROPOSED REGULATIONS.\u2014The Adminis- trator shall propose a national primary drinking water regulation for arsenic not later than Jan- uary 1, 2000. ”(v) FINAL REGULATIONS.\u2014Not later than Jan- uary 1, 2001, after notice and opportunity for public comment, the Administrator shall promul- gate a national primary drinking water regula- tion for arsenic. ”(vi) AUTHORIZATION.\u2014There are authorized to be appropriated $2,500,000 for each of fiscal years 1997 through 2000 for the studies required by this paragraph. ”(B) SULFATE.\u2014 ”(i) ADDITIONAL STUDY.\u2014Prior to promulgat- ing a national primary drinking water regula- tion for sulfate, the Administrator and the Di- rector of the Centers for Disease Control and Prevention shall jointly conduct an additional study to establish a reliable dose-response rela- tionship for the adverse human health effects that may result from exposure to sulfate in drinking water, including the health effects that may be experienced by groups within the gen- eral population (including infants and travel- ers) that are potentially at greater risk of ad- verse health effects as the result of such expo- sure. The study shall be conducted in consulta- tion with interested States, shall be based on the best available, peer-reviewed science and sup- porting studies conducted in accordance with CONGRESSIONAL RECORD \u2014 HOUSEH9684 August 1, 1996 sound and objective scientific practices, and shall be completed not later than 30 months after the date of enactment of the Safe Drinking Water Act Amendments of 1996. ”(ii) DETERMINATION.\u2014The Administrator shall include sulfate among the 5 or more con- taminants for which a determination is made pursuant to paragraph (3)(B) not later than 5 years after the date of enactment of the Safe Drinking Water Act Amendments of 1996. ”(iii) PROPOSED AND FINAL RULE.\u2014Notwith- standing the deadlines set forth in paragraph (2), the Administrator may, pursuant to the au- thorities of this subsection and after notice and opportunity for public comment, promulgate a final national primary drinking water regula- tion for sulfate. Any such regulation shall in- clude requirements for public notification and options for the provision of alternative water supplies to populations at risk as a means of complying with the regulation in lieu of a best available treatment technology or other means.”. (b) RADON.\u2014Section 1412(b) (42 U.S.C. 300g 1(b)) is amended by inserting after paragraph (12) the following: ”(13) RADON IN DRINKING WATER.\u2014 ”(A) NATIONAL PRIMARY DRINKING WATER REG- ULATION.\u2014Notwithstanding paragraph (2), the Administrator shall withdraw any national pri- mary drinking water regulation for radon pro- posed prior to the date of enactment of this paragraph and shall propose and promulgate a regulation for radon under this section, as amended by the Safe Drinking Water Act Amendments of 1996. ”(B) RISK ASSESSMENT AND STUDIES.\u2014 ”(i) ASSESSMENT BY NAS.\u2014Prior to proposing a national primary drinking water regulation for radon, the Administrator shall arrange for the National Academy of Sciences to prepare a risk assessment for radon in drinking water using the best available science in accordance with the requirements of paragraph (3). The risk assess- ment shall consider each of the risks associated with exposure to radon from drinking water and consider studies on the health effects of radon at levels and under conditions likely to be expe- rienced through residential exposure. The risk assessment shall be peer-reviewed. ”(ii) STUDY OF OTHER MEASURES.\u2014The Ad- ministrator shall arrange for the National Acad- emy of Sciences to prepare an assessment of the health risk reduction benefits associated with various mitigation measures to reduce radon lev- els in indoor air. The assessment may be con- ducted as part of the risk assessment authorized by clause (i) and shall be used by the Adminis- trator to prepare the guidance and approve State programs under subparagraph (G). ”(iii) OTHER ORGANIZATION.\u2014If the National Academy of Sciences declines to prepare the risk assessment or studies required by this subpara- graph, the Administrator shall enter into a con- tract or cooperative agreement with another independent, scientific organization to prepare such assessments or studies. ”(C) HEALTH RISK REDUCTION AND COST ANAL- YSIS.\u2014Not later than 30 months after the date of enactment of this paragraph, the Administrator shall publish, and seek public comment on, a health risk reduction and cost analysis meeting the requirements of paragraph (3)(C) for poten- tial maximum contaminant levels that are being considered for radon in drinking water. The Ad- ministrator shall include a response to all sig- nificant public comments received on the analy- sis with the preamble for the proposed rule pub- lished under subparagraph (D). ”(D) PROPOSED REGULATION.\u2014Not later than 36 months after the date of enactment of this paragraph, the Administrator shall propose a maximum contaminant level goal and a national primary drinking water regulation for radon pursuant to this section. ”(E) FINAL REGULATION.\u2014Not later than 12 months after the date of the proposal under sub- paragraph (D), the Administrator shall publish a maximum contaminant level goal and promul- gate a national primary drinking water regula- tion for radon pursuant to this section based on the risk assessment prepared pursuant to sub- paragraph (B) and the health risk reduction and cost analysis published pursuant to sub- paragraph (C). In considering the risk assess- ment and the health risk reduction and cost analysis in connection with the promulgation of such a standard, the Administrator shall take into account the costs and benefits of control programs for radon from other sources. ”(F) ALTERNATIVE MAXIMUM CONTAMINANT LEVEL.\u2014If the maximum contaminant level for radon in drinking water promulgated pursuant to subparagraph (E) is more stringent than nec- essary to reduce the contribution to radon in in- door air from drinking water to a concentration that is equivalent to the national average con- centration of radon in outdoor air, the Adminis- trator shall, simultaneously with the promulga- tion of such level, promulgate an alternative maximum contaminant level for radon that would result in a contribution of radon from drinking water to radon levels in indoor air equivalent to the national average concentra- tion of radon in outdoor air. If the Adminis- trator promulgates an alternative maximum con- taminant level under this subparagraph, the Administrator shall, after notice and oppor- tunity for public comment and in consultation with the States, publish guidelines for State pro- grams, including criteria for multimedia meas- ures to mitigate radon levels in indoor air, to be used by the States in preparing programs under subparagraph (G). The guidelines shall take into account data from existing radon mitiga- tion programs and the assessment of mitigation measures prepared under subparagraph (B). ”(G) MULTIMEDIA RADON MITIGATION PRO- GRAMS.\u2014 ”(i) IN GENERAL.\u2014A State may develop and submit a multimedia program to mitigate radon levels in indoor air for approval by the Adminis- trator under this subparagraph. If, after notice and the opportunity for public comment, such program is approved by the Administrator, pub- lic water systems in the State may comply with the alternative maximum contaminant level pro- mulgated under subparagraph (F) in lieu of the maximum contaminant level in the national pri- mary drinking water regulation promulgated under subparagraph (E). ”(ii) ELEMENTS OF PROGRAMS.\u2014State pro- grams may rely on a variety of mitigation meas- ures including public education, testing, train- ing, technical assistance, remediation grant and loan or incentive programs, or other regulatory or nonregulatory measures. The effectiveness of elements in State programs shall be evaluated by the Administrator based on the assessment pre- pared by the National Academy of Sciences under subparagraph (B) and the guidelines pub- lished by the Administrator under subparagraph (F). ”(iii) APPROVAL.\u2014The Administrator shall ap- prove a State program submitted under this paragraph if the health risk reduction benefits expected to be achieved by the program are equal to or greater than the health risk reduc- tion benefits that would be achieved if each public water system in the State complied with the maximum contaminant level promulgated under subparagraph (E). The Administrator shall approve or disapprove a program submit- ted under this paragraph within 180 days of re- ceipt. A program that is not disapproved during such period shall be deemed approved. A pro- gram that is disapproved may be modified to ad- dress the objections of the Administrator and be resubmitted for approval. ”(iv) REVIEW.\u2014The Administrator shall peri- odically, but not less often than every 5 years, review each multimedia mitigation program ap- proved under this subparagraph to determine whether it continues to meet the requirements of clause (iii) and shall, after written notice to the State and an opportunity for the State to correct any deficiency in the program, withdraw ap- proval of programs that no longer comply with such requirements. ”(v) EXTENSION.\u2014If, within 90 days after the promulgation of an alternative maximum con- taminant level under subparagraph (F), the Governor of a State submits a letter to the Ad- ministrator committing to develop a multimedia mitigation program under this subparagraph, the effective date of the national primary drink- ing water regulation for radon in the State that would be applicable under paragraph (10) shall be extended for a period of 18 months. ”(vi) LOCAL PROGRAMS.\u2014In the event that a State chooses not to submit a multimedia mitiga- tion program for approval under this subpara- graph or has submitted a program that has been disapproved, any public water system in the State may submit a program for approval by the Administrator according to the same criteria, conditions, and approval process that would apply to a State program. The Administrator shall approve a multimedia mitigation program if the health risk reduction benefits expected to be achieved by the program are equal to or greater than the health risk reduction benefits that would result from compliance by the public water system with the maximum contaminant level for radon promulgated under subpara- graph (E).”. SEC. 110. RECYCLING OF FILTER BACKWASH. Section 1412(b) (42 U.S.C. 300g 1(b)) is amend- ed by adding the following new paragraph after paragraph (13): ”(14) RECYCLING OF FILTER BACKWASH.\u2014The Administrator shall promulgate a regulation to govern the recycling of filter backwash water within the treatment process of a public water system. The Administrator shall promulgate such regulation not later than 4 years after the date of enactment of the Safe Drinking Water Act Amendments of 1996 unless such recycling has been addressed by the Administrator’s En- hanced Surface Water Treatment Rule prior to such date.”. SEC. 111. TECHNOLOGY AND TREATMENT TECH- NIQUES. (a) VARIANCE TECHNOLOGIES.\u2014Section 1412(b) (42 U.S.C. 300g 1(b)) is amended by adding the following new paragraph after paragraph (14): ”(15) VARIANCE TECHNOLOGIES.\u2014 ”(A) IN GENERAL.\u2014At the same time as the Administrator promulgates a national primary drinking water regulation for a contaminant pursuant to this section, the Administrator shall issue guidance or regulations describing the best treatment technologies, treatment techniques, or other means (referred to in this paragraph as ‘variance technology’) for the contaminant that the Administrator finds, after examination for efficacy under field conditions and not solely under laboratory conditions, are available and affordable, as determined by the Administrator in consultation with the States, for public water systems of varying size, considering the quality of the source water to be treated. The Adminis- trator shall identify such variance technologies for public water systems serving\u2014 ”(i) a population of 10,000 or fewer but more than 3,300; ”(ii) a population of 3,300 or fewer but more than 500; and ”(iii) a population of 500 or fewer but more than 25, if, considering the quality of the source water to be treated, no treatment technology is listed for public water systems of that size under para- graph (4)(E). Variance technologies identified by the Administrator pursuant to this para- graph may not achieve compliance with the maximum contaminant level or treatment tech- nique requirement of such regulation, but shall achieve the maximum reduction or inactivation efficiency that is affordable considering the size of the system and the quality of the source water. The guidance or regulations shall not re- quire the use of a technology from a specific manufacturer or brand. CONGRESSIONAL RECORD \u2014 HOUSE H9685August 1, 1996 ”(B) LIMITATION.\u2014The Administrator shall not identify any variance technology under this paragraph, unless the Administrator has deter- mined, considering the quality of the source water to be treated and the expected useful life of the technology, that the variance technology is protective of public health. ”(C) ADDITIONAL INFORMATION.\u2014The Admin- istrator shall include in the guidance or regula- tions identifying variance technologies under this paragraph any assumptions supporting the public health determination referred to in sub- paragraph (B), where such assumptions concern the public water system to which the technology may be applied, or its source waters. The Ad- ministrator shall provide any assumptions used in determining affordability, taking into consid- eration the number of persons served by such systems. The Administrator shall provide as much reliable information as practicable on per- formance, effectiveness, limitations, costs, and other relevant factors including the applicabil- ity of variance technology to waters from sur- face and underground sources. ”(D) REGULATIONS AND GUIDANCE.\u2014Not later than 2 years after the date of enactment of this paragraph and after consultation with the States, the Administrator shall issue guidance or regulations under subparagraph (A) for each national primary drinking water regulation pro- mulgated prior to the date of enactment of this paragraph for which a variance may be granted under section 1415(e). The Administrator may, at any time after a national primary drinking water regulation has been promulgated, issue guidance or regulations describing additional variance technologies. The Administrator shall, not less often than every 7 years, or upon re- ceipt of a petition supported by substantial in- formation, review variance technologies identi- fied under this paragraph. The Administrator shall issue revised guidance or regulations if new or innovative variance technologies become available that meet the requirements of this paragraph and achieve an equal or greater re- duction or inactivation efficiency than the vari- ance technologies previously identified under this subparagraph. No public water system shall be required to replace a variance technology during the useful life of the technology for the sole reason that a more efficient variance tech- nology has been listed under this subpara- graph.”. (b) AVAILABILITY OF INFORMATION ON SMALL SYSTEM TECHNOLOGIES.\u2014Section 1445 (42 U.S.C. 300j 4) is amended by adding the following new subsection after subsection (g): ”(h) AVAILABILITY OF INFORMATION ON SMALL SYSTEM TECHNOLOGIES.\u2014For purposes of sec- tions 1412(b)(4)(E) and 1415(e) (relating to small system variance program), the Administrator may request information on the characteristics of commercially available treatment systems and technologies, including the effectiveness and performance of the systems and technologies under various operating conditions. The Admin- istrator may specify the form, content, and sub- mission date of information to be submitted by manufacturers, States, and other interested per- sons for the purpose of considering the systems and technologies in the development of regula- tions or guidance under sections 1412(b)(4)(E) and 1415(e).”. SEC. 112. STATE PRIMACY. (a) STATE PRIMARY ENFORCEMENT RESPON- SIBILITY.\u2014Section 1413 (42 U.S.C. 300g 2) is amended as follows: (1) In subsection (a), by amending paragraph (1) to read as follows: ”(1) has adopted drinking water regulations that are no less stringent than the national pri- mary drinking water regulations promulgated by the Administrator under subsections (a) and (b) of section 1412 not later than 2 years after the date on which the regulations are promul- gated by the Administrator, except that the Ad- ministrator may provide for an extension of not more than 2 years if, after submission and re- view of appropriate, adequate documentation from the State, the Administrator determines that the extension is necessary and justified;”. (2) By adding at the end the following sub- section: ”(c) INTERIM PRIMARY ENFORCEMENT AU- THORITY.\u2014A State that has primary enforce- ment authority under this section with respect to each existing national primary drinking water regulation shall be considered to have pri- mary enforcement authority with respect to each new or revised national primary drinking water regulation during the period beginning on the effective date of a regulation adopted and submitted by the State with respect to the new or revised national primary drinking water reg- ulation in accordance with subsection (b)(1) and ending at such time as the Administrator makes a determination under subsection (b)(2)(B) with respect to the regulation.”. (b) EMERGENCY PLANS.\u2014Section 1413(a)(5) (42 U.S.C. 300g 2(a)(5)) is amended by inserting after ”emergency circumstances” the following: ”including earthquakes, floods, hurricanes, and other natural disasters, as appropriate”. SEC. 113. ENFORCEMENT; JUDICIAL REVIEW. (a) IN GENERAL.\u2014Section 1414 (42 U.S.C. 300g 3) is amended as follows: (1) In subsection (a)\u2014 (A) in paragraph (1)\u2014 (i) in subparagraph (A)\u2014 (I) in clause (i), by striking ”any national pri- mary drinking water regulation in effect under section 1412” and inserting ”any applicable re- quirement”; and (II) by striking ”with such regulation or re- quirement” and inserting ”with the require- ment”; and (ii) in subparagraph (B), by striking ”regula- tion or” and inserting ”applicable”; and (B) by striking paragraph (2) and inserting the following: ”(2) ENFORCEMENT IN NONPRIMACY STATES.\u2014 ”(A) IN GENERAL.\u2014If, on the basis of informa- tion available to the Administrator, the Admin- istrator finds, with respect to a period in which a State does not have primary enforcement re- sponsibility for public water systems, that a public water system in the State\u2014 ”(i) for which a variance under section 1415 or an exemption under section 1416 is not in effect, does not comply with any applicable require- ment; or ”(ii) for which a variance under section 1415 or an exemption under section 1416 is in effect, does not comply with any schedule or other re- quirement imposed pursuant to the variance or exemption; the Administrator shall issue an order under subsection (g) requiring the public water system to comply with the requirement, or commence a civil action under subsection (b). ”(B) NOTICE.\u2014If the Administrator takes any action pursuant to this paragraph, the Adminis- trator shall notify an appropriate local elected official, if any, with jurisdiction over the public water system of the action prior to the time that the action is taken.”. (2) In the first sentence of subsection (b), by striking ”a national primary drinking water regulation” and inserting ”any applicable re- quirement”. (3) In subsection (g)\u2014 (A) in paragraph (1), by striking ”regulation, schedule, or other” each place it appears and inserting ”applicable”; (B) in paragraph (2)\u2014 (i) in the first sentence\u2014 (I) by striking ”effect until after notice and opportunity for public hearing and,” and in- serting ”effect,”; and (II) by striking ”proposed order” and insert- ing ”order”; and (ii) in the second sentence, by striking ”pro- posed to be”; and (C) in paragraph (3)\u2014 (i) by striking subparagraph (B) and inserting the following: ”(B) In a case in which a civil penalty sought by the Administrator under this paragraph does not exceed $5,000, the penalty shall be assessed by the Administrator after notice and oppor- tunity for a public hearing (unless the person against whom the penalty is assessed requests a hearing on the record in accordance with sec- tion 554 of title 5, United States Code). In a case in which a civil penalty sought by the Adminis- trator under this paragraph exceeds $5,000, but does not exceed $25,000, the penalty shall be as- sessed by the Administrator after notice and op- portunity for a hearing on the record in accord- ance with section 554 of title 5, United States Code.”; and (ii) in subparagraph (C), by striking ”para- graph exceeds $5,000” and inserting ”subsection for a violation of an applicable requirement ex- ceeds $25,000”. (4) By adding at the end the following: ”(h) CONSOLIDATION INCENTIVE.\u2014 ”(1) IN GENERAL.\u2014An owner or operator of a public water system may submit to the State in which the system is located (if the State has pri- mary enforcement responsibility under section 1413) or to the Administrator (if the State does not have primary enforcement responsibility) a plan (including specific measures and schedules) for\u2014 ”(A) the physical consolidation of the system with 1 or more other systems; ”(B) the consolidation of significant manage- ment and administrative functions of the system with 1 or more other systems; or ”(C) the transfer of ownership of the system that may reasonably be expected to improve drinking water quality. ”(2) CONSEQUENCES OF APPROVAL.\u2014If the State or the Administrator approves a plan pur- suant to paragraph (1), no enforcement action shall be taken pursuant to this part with respect to a specific violation identified in the approved plan prior to the date that is the earlier of the date on which consolidation is completed ac- cording to the plan or the date that is 2 years after the plan is approved. ”(i) DEFINITION OF APPLICABLE REQUIRE- MENT.\u2014In this section, the term ‘applicable re- quirement’ means\u2014 ”(1) a requirement of section 1412, 1414, 1415, 1416, 1417, 1441, or 1445; ”(2) a regulation promulgated pursuant to a section referred to in paragraph (1); ”(3) a schedule or requirement imposed pursu- ant to a section referred to in paragraph (1); and ”(4) a requirement of, or permit issued under, an applicable State program for which the Ad- ministrator has made a determination that the requirements of section 1413 have been satisfied, or an applicable State program approved pursu- ant to this part.”. (b) STATE AUTHORITY FOR ADMINISTRATIVE PENALTIES.\u2014Section 1413(a) (42 U.S.C. 300g 2(a)) is amended\u2014 (1) by striking ”and” at the end of paragraph (4); (2) by striking the period at the end of para- graph (5) and inserting ”; and”; and (3) by adding at the end the following: ”(6) has adopted authority for administrative penalties (unless the constitution of the State prohibits the adoption of the authority) in a maximum amount\u2014 ”(A) in the case of a system serving a popu- lation of more than 10,000, that is not less than $1,000 per day per violation; and ”(B) in the case of any other system, that is adequate to ensure compliance (as determined by the State); except that a State may establish a maximum limitation on the total amount of administrative penalties that may be imposed on a public water system per violation.”. (c) JUDICIAL REVIEW.\u2014Section 1448(a) (42 U.S.C. 300j 7(a)) is amended\u2014 CONGRESSIONAL RECORD \u2014 HOUSEH9686 August 1, 1996 (1) in paragraph (2) of the first sentence, by inserting ”final” after ”any other”; (2) in the second sentence, by striking ”or is- suance of the order” and inserting ”or any other final Agency action”; and (3) by adding at the end the following ”In any petition concerning the assessment of a civil penalty pursuant to section 1414(g)(3)(B), the petitioner shall simultaneously send a copy of the complaint by certified mail to the Adminis- trator and the Attorney General. The court shall set aside and remand the penalty order if the court finds that there is not substantial evi- dence in the record to support the finding of a violation or that the assessment of the penalty by the Administrator constitutes an abuse of discretion.”. (d) EMERGENCY POWERS.\u2014Section 1431(b) (42 U.S.C. 300i(b)) is amended by striking ”$5,000” and inserting ”$15,000”. SEC. 114. PUBLIC NOTIFICATION. (a) PUBLIC WATER SYSTEMS.\u2014Section 1414(c) (42 U.S.C. 300g 3(c)) is amended to read as fol- lows: ”(c) NOTICE TO PERSONS SERVED.\u2014 ”(1) IN GENERAL.\u2014Each owner or operator of a public water system shall give notice of each of the following to the persons served by the sys- tem: ”(A) Notice of any failure on the part of the public water system to\u2014 ”(i) comply with an applicable maximum con- taminant level or treatment technique require- ment of, or a testing procedure prescribed by, a national primary drinking water regulation; or ”(ii) perform monitoring required by section 1445(a). ”(B) If the public water system is subject to a variance granted under subsection (a)(1)(A), (a)(2), or (e) of section 1415 for an inability to meet a maximum contaminant level requirement or is subject to an exemption granted under sec- tion 1416, notice of\u2014 ”(i) the existence of the variance or exemp- tion; and ”(ii) any failure to comply with the require- ments of any schedule prescribed pursuant to the variance or exemption. ”(C) Notice of the concentration level of any unregulated contaminant for which the Admin- istrator has required public notice pursuant to paragraph (2)(E). ”(2) FORM, MANNER, AND FREQUENCY OF NO- TICE.\u2014 ”(A) IN GENERAL.\u2014The Administrator shall, by regulation, and after consultation with the States, prescribe the manner, frequency, form, and content for giving notice under this sub- section. The regulations shall\u2014 ”(i) provide for different frequencies of notice based on the differences between violations that are intermittent or infrequent and violations that are continuous or frequent; and ”(ii) take into account the seriousness of any potential adverse health effects that may be in- volved. ”(B) STATE REQUIREMENTS.\u2014 ”(i) IN GENERAL.\u2014A State may, by rule, estab- lish alternative notification requirements\u2014 ”(I) with respect to the form and content of notice given under and in a manner in accord- ance with subparagraph (C); and ”(II) with respect to the form and content of notice given under subparagraph (D). ”(ii) CONTENTS.\u2014The alternative requirements shall provide the same type and amount of in- formation as required pursuant to this sub- section and regulations issued under subpara- graph (A). ”(iii) RELATIONSHIP TO SECTION 1413.\u2014Nothing in this subparagraph shall be construed or ap- plied to modify the requirements of section 1413. ”(C) VIOLATIONS WITH POTENTIAL TO HAVE SE- RIOUS ADVERSE EFFECTS ON HUMAN HEALTH.\u2014 Regulations issued under subparagraph (A) shall specify notification procedures for each violation by a public water system that has the potential to have serious adverse effects on human health as a result of short-term expo- sure. Each notice of violation provided under this subparagraph shall\u2014 ”(i) be distributed as soon as practicable after the occurrence of the violation, but not later than 24 hours after the occurrence of the viola- tion; ”(ii) provide a clear and readily understand- able explanation of\u2014 ”(I) the violation; ”(II) the potential adverse effects on human health; ”(III) the steps that the public water system is taking to correct the violation; and ”(IV) the necessity of seeking alternative water supplies until the violation is corrected; ”(iii) be provided to the Administrator or the head of the State agency that has primary en- forcement responsibility under section 1413 as soon as practicable, but not later than 24 hours after the occurrence of the violation; and ”(iv) as required by the State agency in gen- eral regulations of the State agency, or on a case-by-case basis after the consultation re- ferred to in clause (iii), considering the health risks involved\u2014 ”(I) be provided to appropriate broadcast media; ”(II) be prominently published in a newspaper of general circulation serving the area not later than 1 day after distribution of a notice pursu- ant to clause (i) or the date of publication of the next issue of the newspaper; or ”(III) be provided by posting or door-to-door notification in lieu of notification by means of broadcast media or newspaper. ”(D) WRITTEN NOTICE.\u2014 ”(i) IN GENERAL.\u2014Regulations issued under subparagraph (A) shall specify notification pro- cedures for violations other than the violations covered by subparagraph (C). The procedures shall specify that a public water system shall provide written notice to each person served by the system by notice (I) in the first bill (if any) prepared after the date of occurrence of the vio- lation, (II) in an annual report issued not later than 1 year after the date of occurrence of the violation, or (III) by mail or direct delivery as soon as practicable, but not later than 1 year after the date of occurrence of the violation. ”(ii) FORM AND MANNER OF NOTICE.\u2014The Ad- ministrator shall prescribe the form and manner of the notice to provide a clear and readily un- derstandable explanation of the violation, any potential adverse health effects, and the steps that the system is taking to seek alternative water supplies, if any, until the violation is cor- rected. ”(E) UNREGULATED CONTAMINANTS.\u2014The Ad- ministrator may require the owner or operator of a public water system to give notice to the per- sons served by the system of the concentration levels of an unregulated contaminant required to be monitored under section 1445(a). ”(3) REPORTS.\u2014 ”(A) ANNUAL REPORT BY STATE.\u2014 ”(i) IN GENERAL.\u2014Not later than January 1, 1998, and annually thereafter, each State that has primary enforcement responsibility under section 1413 shall prepare, make readily avail- able to the public, and submit to the Adminis- trator an annual report on violations of na- tional primary drinking water regulations by public water systems in the State, including vio- lations with respect to (I) maximum contami- nant levels, (II) treatment requirements, (III) variances and exemptions, and (IV) monitoring requirements determined to be significant by the Administrator after consultation with the States. ”(ii) DISTRIBUTION.\u2014The State shall publish and distribute summaries of the report and indi- cate where the full report is available for re- view. ”(B) ANNUAL REPORT BY ADMINISTRATOR.\u2014 Not later than July 1, 1998, and annually there- after, the Administrator shall prepare and make available to the public an annual report summa- rizing and evaluating reports submitted by States pursuant to subparagraph (A) and no- tices submitted by public water systems serving Indian Tribes provided to the Administrator pursuant to subparagraph (C) or (D) of para- graph (2) and making recommendations con- cerning the resources needed to improve compli- ance with this title. The report shall include in- formation about public water system compliance on Indian reservations and about enforcement activities undertaken and financial assistance provided by the Administrator on Indian res- ervations, and shall make specific recommenda- tions concerning the resources needed to im- prove compliance with this title on Indian res- ervations. ”(4) CONSUMER CONFIDENCE REPORTS BY COM- MUNITY WATER SYSTEMS.\u2014 ”(A) ANNUAL REPORTS TO CONSUMERS.\u2014The Administrator, in consultation with public water systems, environmental groups, public in- terest groups, risk communication experts, and the States, and other interested parties, shall issue regulations within 24 months after the date of enactment of this paragraph to require each community water system to mail to each customer of the system at least once annually a report on the level of contaminants in the drink- ing water purveyed by that system (referred to in this paragraph as a ‘consumer confidence re- port’). Such regulations shall provide a brief and plainly worded definition of the terms ‘max- imum contaminant level goal’, ‘maximum con- taminant level’, ‘variances’, and ‘exemptions’ and brief statements in plain language regard- ing the health concerns that resulted in regula- tion of each regulated contaminant. The regula- tions shall also include a brief and plainly worded explanation regarding contaminants that may reasonably be expected to be present in drinking water, including bottled water. The regulations shall also provide for an Environ- mental Protection Agency toll-free hotline that consumers can call for more information and ex- planation. ”(B) CONTENTS OF REPORT.\u2014The consumer confidence reports under this paragraph shall include, but not be limited to, each of the fol- lowing: ”(i) Information on the source of the water purveyed. ”(ii) A brief and plainly worded definition of the terms ‘maximum contaminant level goal’, ‘maximum contaminant level’, ‘variances’, and ‘exemptions’ as provided in the regulations of the Administrator. ”(iii) If any regulated contaminant is detected in the water purveyed by the public water sys- tem, a statement setting forth (I) the maximum contaminant level goal, (II) the maximum con- taminant level, (III) the level of such contami- nant in such water system, and (IV) for any regulated contaminant for which there has been a violation of the maximum contaminant level during the year concerned, the brief statement in plain language regarding the health concerns that resulted in regulation of such contaminant, as provided by the Administrator in regulations under subparagraph (A). ”(iv) Information on compliance with na- tional primary drinking water regulations, as required by the Administrator, and notice if the system is operating under a variance or exemp- tion and the basis on which the variance or ex- emption was granted. ”(v) Information on the levels of unregulated contaminants for which monitoring is required under section 1445(a)(2) (including levels of cryptosporidium and radon where States deter- mine they may be found). ”(vi) A statement that the presence of con- taminants in drinking water does not nec- essarily indicate that the drinking water poses a health risk and that more information about contaminants and potential health effects can be obtained by calling the Environmental Pro- tection Agency hotline. CONGRESSIONAL RECORD \u2014 HOUSE H9687August 1, 1996 A public water system may include such addi- tional information as it deems appropriate for public education. The Administrator may, for not more than 3 regulated contaminants other than those referred to in subclause (IV) of clause (iii), require a consumer confidence re- port under this paragraph to include the brief statement in plain language regarding the health concerns that resulted in regulation of the contaminant or contaminants concerned, as provided by the Administrator in regulations under subparagraph (A). ”(C) COVERAGE.\u2014The Governor of a State may determine not to apply the mailing require- ment of subparagraph (A) to a community water system serving fewer than 10,000 persons. Any such system shall\u2014 ”(i) inform, in the newspaper notice required by clause (iii) or by other means, its customers that the system will not be mailing the report as required by subparagraph (A); ”(ii) make the consumer confidence report available upon request to the public; and ”(iii) publish the report referred to in sub- paragraph (A) annually in one or more local newspapers serving the area in which customers of the system are located. ”(D) ALTERNATIVE TO PUBLICATION.\u2014For any community water system which, pursuant to subparagraph (C), is not required to meet the mailing requirement of subparagraph (A) and which serves 500 persons or fewer, the commu- nity water system may elect not to comply with clause (i) or (iii) of subparagraph (C). If the community water system so elects, the system shall, at a minimum\u2014 ”(i) prepare an annual consumer confidence report pursuant to subparagraph (B); and ”(ii) provide notice at least once per year to each of its customers by mail, by door-to-door delivery, by posting or by other means author- ized by the regulations of the Administrator that the consumer confidence report is available upon request. ”(E) ALTERNATIVE FORM AND CONTENT.\u2014A State exercising primary enforcement respon- sibility may establish, by rule, after notice and public comment, alternative requirements with respect to the form and content of consumer confidence reports under this paragraph.”. (b) BOTTLED WATER STUDY.\u2014Not later than 18 months after the date of enactment of this Act, the Administrator of the Food and Drug Administration, in consultation with the Admin- istrator of the Environmental Protection Agen- cy, shall publish for public notice and comment a draft study on the feasibility of appropriate methods, if any, of informing customers of the contents of bottled water. The Administrator of the Food and Drug Administration shall publish a final study not later than 30 months after the date of enactment of this Act. SEC. 115. VARIANCES. The second sentence of section 1415(a)(1)(A) (42 U.S.C. 300g 4(a)(1)(A)) is amended\u2014 (1) by striking ”only be issued to a system after the system’s application of” and inserting ”be issued to a system on condition that the sys- tem install”; and (2) by inserting before the period at the end the following: ”, and based upon an evaluation satisfactory to the State that indicates that al- ternative sources of water are not reasonably available to the system”. SEC. 116. SMALL SYSTEMS VARIANCES. (a) SMALL SYSTEM VARIANCES.\u2014Section 1415 (42 U.S.C. 300g 4) is amended by adding at the end the following: ”(e) SMALL SYSTEM VARIANCES.\u2014 ”(1) IN GENERAL.\u2014A State exercising primary enforcement responsibility for public water sys- tems under section 1413 (or the Administrator in nonprimacy States) may grant a variance under this subsection for compliance with a require- ment specifying a maximum contaminant level or treatment technique contained in a national primary drinking water regulation to\u2014 ”(A) public water systems serving 3,300 or fewer persons; and ”(B) with the approval of the Administrator pursuant to paragraph (9), public water systems serving more than 3,300 persons but fewer than 10,000 persons, if the variance meets each requirement of this subsection. ”(2) AVAILABILITY OF VARIANCES.\u2014A public water system may receive a variance pursuant to paragraph (1), if\u2014 ”(A) the Administrator has identified a vari- ance technology under section 1412(b)(15) that is applicable to the size and source water quality conditions of the public water system; ”(B) the public water system installs, oper- ates, and maintains, in accordance with guid- ance or regulations issued by the Administrator, such treatment technology, treatment technique, or other means; and ”(C) the State in which the system is located determines that the conditions of paragraph (3) are met. ”(3) CONDITIONS FOR GRANTING VARIANCES.\u2014A variance under this subsection shall be available only to a system\u2014 ”(A) that cannot afford to comply, in accord- ance with affordability criteria established by the Administrator (or the State in the case of a State that has primary enforcement responsibil- ity under section 1413), with a national primary drinking water regulation, including compliance through\u2014 ”(i) treatment; ”(ii) alternative source of water supply; or ”(iii) restructuring or consolidation (unless the Administrator (or the State in the case of a State that has primary enforcement responsibil- ity under section 1413) makes a written deter- mination that restructuring or consolidation is not practicable); and ”(B) for which the Administrator (or the State in the case of a State that has primary enforce- ment responsibility under section 1413) deter- mines that the terms of the variance ensure ade- quate protection of human health, considering the quality of the source water for the system and the removal efficiencies and expected useful life of the treatment technology required by the variance. ”(4) COMPLIANCE SCHEDULES.\u2014A variance granted under this subsection shall require com- pliance with the conditions of the variance not later than 3 years after the date on which the variance is granted, except that the Adminis- trator (or the State in the case of a State that has primary enforcement responsibility under section 1413) may allow up to 2 additional years to comply with a variance technology, secure an alternative source of water, restructure or con- solidate if the Administrator (or the State) de- termines that additional time is necessary for capital improvements, or to allow for financial assistance provided pursuant to section 1452 or any other Federal or State program. ”(5) DURATION OF VARIANCES.\u2014The Adminis- trator (or the State in the case of a State that has primary enforcement responsibility under section 1413) shall review each variance granted under this subsection not less often than every 5 years after the compliance date established in the variance to determine whether the system remains eligible for the variance and is conform- ing to each condition of the variance. ”(6) INELIGIBILITY FOR VARIANCES.\u2014A vari- ance shall not be available under this subsection for\u2014 ”(A) any maximum contaminant level or treatment technique for a contaminant with re- spect to which a national primary drinking water regulation was promulgated prior to Jan- uary 1, 1986; or ”(B) a national primary drinking water regu- lation for a microbial contaminant (including a bacterium, virus, or other organism) or an indi- cator or treatment technique for a microbial contaminant. ”(7) REGULATIONS AND GUIDANCE.\u2014 ”(A) IN GENERAL.\u2014Not later than 2 years after the date of enactment of this subsection and in consultation with the States, the Admin- istrator shall promulgate regulations for variances to be granted under this subsection. The regulations shall, at a minimum, specify\u2014 ”(i) procedures to be used by the Adminis- trator or a State to grant or deny variances, in- cluding requirements for notifying the Adminis- trator and consumers of the public water system that a variance is proposed to be granted (in- cluding information regarding the contaminant and variance) and requirements for a public hearing on the variance before the variance is granted; ”(ii) requirements for the installation and proper operation of variance technology that is identified (pursuant to section 1412(b)(15)) for small systems and the financial and technical capability to operate the treatment system, in- cluding operator training and certification; ”(iii) eligibility criteria for a variance for each national primary drinking water regulation, in- cluding requirements for the quality of the source water (pursuant to section 1412(b)(15)(A)); and ”(iv) information requirements for variance applications. ”(B) AFFORDABILITY CRITERIA.\u2014Not later than 18 months after the date of enactment of the Safe Drinking Water Act Amendments of 1996, the Administrator, in consultation with the States and the Rural Utilities Service of the Department of Agriculture, shall publish infor- mation to assist the States in developing afford- ability criteria. The affordability criteria shall be reviewed by the States not less often than every 5 years to determine if changes are needed to the criteria. ”(8) REVIEW BY THE ADMINISTRATOR.\u2014 ”(A) IN GENERAL.\u2014The Administrator shall periodically review the program of each State that has primary enforcement responsibility for public water systems under section 1413 with re- spect to variances to determine whether the variances granted by the State comply with the requirements of this subsection. With respect to affordability, the determination of the Adminis- trator shall be limited to whether the variances granted by the State comply with the afford- ability criteria developed by the State. ”(B) NOTICE AND PUBLICATION.\u2014If the Admin- istrator determines that variances granted by a State are not in compliance with affordability criteria developed by the State and the require- ments of this subsection, the Administrator shall notify the State in writing of the deficiencies and make public the determination. ”(9) APPROVAL OF VARIANCES.\u2014A State pro- posing to grant a variance under this subsection to a public water system serving more than 3,300 and fewer than 10,000 persons shall submit the variance to the Administrator for review and approval prior to the issuance of the variance. The Administrator shall approve the variance if it meets each of the requirements of this sub- section. The Administrator shall approve or dis- approve the variance within 90 days. If the Ad- ministrator disapproves a variance under this paragraph, the Administrator shall notify the State in writing of the reasons for disapproval and the variance may be resubmitted with modi- fications to address the objections stated by the Administrator. ”(10) OBJECTIONS TO VARIANCES.\u2014 ”(A) BY THE ADMINISTRATOR.\u2014The Adminis- trator may review and object to any variance proposed to be granted by a State, if the objec- tion is communicated to the State not later than 90 days after the State proposes to grant the variance. If the Administrator objects to the granting of a variance, the Administrator shall notify the State in writing of each basis for the objection and propose a modification to the vari- ance to resolve the concerns of the Adminis- trator. The State shall make the recommended CONGRESSIONAL RECORD \u2014 HOUSEH9688 August 1, 1996 modification or respond in writing to each objec- tion. If the State issues the variance without re- solving the concerns of the Administrator, the Administrator may overturn the State decision to grant the variance if the Administrator deter- mines that the State decision does not comply with this subsection. ”(B) PETITION BY CONSUMERS.\u2014Not later than 30 days after a State exercising primary enforce- ment responsibility for public water systems under section 1413 proposes to grant a variance for a public water system, any person served by the system may petition the Administrator to ob- ject to the granting of a variance. The Adminis- trator shall respond to the petition and deter- mine whether to object to the variance under subparagraph (A) not later than 60 days after the receipt of the petition. ”(C) TIMING.\u2014No variance shall be granted by a State until the later of the following: ”(i) 90 days after the State proposes to grant a variance. ”(ii) If the Administrator objects to the vari- ance, the date on which the State makes the rec- ommended modifications or responds in writing to each objection.”. SEC. 117. EXEMPTIONS. (a) IN GENERAL.\u2014Section 1416 (42 U.S.C. 300g 5) is amended as follows: (1) In subsection (a)(1)\u2014 (A) by inserting after ”(which may include economic factors” the following: ”, including qualification of the public water system as a system serving a disadvantaged community pur- suant to section 1452(d)”; and (B) by inserting after ”treatment technique re- quirement,” the following: ”or to implement measures to develop an alternative source of water supply,”. (2) In subsection (a), by striking ”and” at the end of paragraph (2), striking the period at the end of paragraph (3) and inserting ”; and” and by adding the following at the end thereof: ”(4) management or restructuring changes (or both) cannot reasonably be made that will result in compliance with this title or, if compliance cannot be achieved, improve the quality of the drinking water.”. (3) In subsection (b)(1)(A)\u2014 (A) by striking ”(including increments of progress)” and inserting ”(including increments of progress or measures to develop an alter- native source of water supply)”; and (B) by striking ”requirement and treatment” and inserting ”requirement or treatment”. (4) In subsection (b)(2)\u2014 (A) by striking ”(except as provided in sub- paragraph (B))” in subparagraph (A) and all that follows through ”3 years after the date of the issuance of the exemption if” in subpara- graph (B) and inserting the following: ”not later than 3 years after the otherwise applicable compliance date established in section 1412(b)(10). ”(B) No exemption shall be granted unless”; (B) in subparagraph (B)(i), by striking ”with- in the period of such exemption” and inserting ”prior to the date established pursuant to sec- tion 1412(b)(10)”; (C) in subparagraph (B)(ii), by inserting after ”such financial assistance” the following: ”or assistance pursuant to section 1452, or any other Federal or State program is reasonably likely to be available within the period of the exemp- tion”; (D) in subparagraph (C)\u2014 (i) by striking ”500 service connections” and inserting ”a population of 3,300”; and (ii) by inserting ”, but not to exceed a total of 6 years,” after ”for one or more additional 2- year periods”; and (E) by adding at the end the following: ”(D) LIMITATION.\u2014A public water system may not receive an exemption under this section if the system was granted a variance under section 1415(e).”. (b) LIMITED ADDITIONAL COMPLIANCE PE- RIOD.\u2014(1) The State of New York, on a case-by- case basis and after notice and an opportunity of at least 60 days for public comment, may allow an additional period for compliance with the Surface Water Treatment Rule established pursuant to section 1412(b)(7)(C) of the Safe Drinking Water Act in the case of unfiltered systems in Essex, Columbia, Greene, Dutchess, Rensselaer, Schoharie, Saratoga, Washington, and Warren Counties serving a population of less than 5,000, which meet appropriate disinfec- tion requirements and have adequate watershed protections, so long as the State determines that the public health will be protected during the duration of the additional compliance period and the system agrees to implement appropriate control measures as determined by the State. (2) The additional compliance period referred to in paragraph (1) shall expire on the earlier of the date 3 years after the date on which the Ad- ministrator identifies appropriate control tech- nology for the Surface Water Treatment Rule for public water systems in the category that in- cludes such system pursuant to section 1412(b)(4)(E) of the Safe Drinking Water Act or 5 years after the date of enactment of the Safe Drinking Water Act Amendments of 1996. SEC. 118. LEAD PLUMBING AND PIPES. Section 1417 (42 U.S.C. 300g 6) is amended as follows: (1) In subsection (a), by striking paragraph (1) and inserting the following: ”(1) PROHIBITIONS.\u2014 ”(A) IN GENERAL.\u2014No person may use any pipe, any pipe or plumbing fitting or fixture, any solder, or any flux, after June 19, 1986, in the installation or repair of\u2014 ”(i) any public water system; or ”(ii) any plumbing in a residential or nonresi- dential facility providing water for human con- sumption, that is not lead free (within the meaning of sub- section (d)). ”(B) LEADED JOINTS.\u2014Subparagraph (A) shall not apply to leaded joints necessary for the re- pair of cast iron pipes.”. (2) In subsection (a)(2)(A), by inserting ”owner or operator of a” after ”Each”. (3) By adding at the end of subsection (a) the following: ”(3) UNLAWFUL ACTS.\u2014Effective 2 years after the date of enactment of this paragraph, it shall be unlawful\u2014 ”(A) for any person to introduce into com- merce any pipe, or any pipe or plumbing fitting or fixture, that is not lead free, except for a pipe that is used in manufacturing or industrial processing; ”(B) for any person engaged in the business of selling plumbing supplies, except manufactur- ers, to sell solder or flux that is not lead free; or ”(C) for any person to introduce into com- merce any solder or flux that is not lead free un- less the solder or flux bears a prominent label stating that it is illegal to use the solder or flux in the installation or repair of any plumbing providing water for human consumption.”. (4) In subsection (d)\u2014 (A) by striking ”lead, and” in paragraph (1) and inserting ”lead;”; (B) by striking ”lead.” in paragraph (2) and inserting ”lead; and”; and (C) by adding at the end the following: ”(3) when used with respect to plumbing fit- tings and fixtures, refers to plumbing fittings and fixtures in compliance with standards es- tablished in accordance with subsection (e).”. (5) By adding at the end the following: ”(e) PLUMBING FITTINGS AND FIXTURES.\u2014 ”(1) IN GENERAL.\u2014The Administrator shall provide accurate and timely technical informa- tion and assistance to qualified third-party cer- tifiers in the development of voluntary stand- ards and testing protocols for the leaching of lead from new plumbing fittings and fixtures that are intended by the manufacturer to dis- pense water for human ingestion. ”(2) STANDARDS.\u2014 ”(A) IN GENERAL.\u2014If a voluntary standard for the leaching of lead is not established by the date that is 1 year after the date of enactment of this subsection, the Administrator shall, not later than 2 years after the date of enactment of this subsection, promulgate regulations setting a health-effects-based performance standard es- tablishing maximum leaching levels from new plumbing fittings and fixtures that are intended by the manufacturer to dispense water for human ingestion. The standard shall become ef- fective on the date that is 5 years after the date of promulgation of the standard. ”(B) ALTERNATIVE REQUIREMENT.\u2014If regula- tions are required to be promulgated under sub- paragraph (A) and have not been promulgated by the date that is 5 years after the date of en- actment of this subsection, no person may im- port, manufacture, process, or distribute in com- merce a new plumbing fitting or fixture, in- tended by the manufacturer to dispense water for human ingestion, that contains more than 4 percent lead by dry weight.”. SEC. 119. CAPACITY DEVELOPMENT. Part B (42 U.S.C. 300g et seq.) is amended by adding after section 1419 the following: ”CAPACITY DEVELOPMENT ”SEC. 1420. (a) STATE AUTHORITY FOR NEW SYSTEMS.\u2014A State shall receive only 80 percent of the allotment that the State is otherwise enti- tled to receive under section 1452 (relating to State loan funds) unless the State has obtained the legal authority or other means to ensure that all new community water systems and new nontransient, noncommunity water systems commencing operation after October 1, 1999, demonstrate technical, managerial, and finan- cial capacity with respect to each national pri- mary drinking water regulation in effect, or likely to be in effect, on the date of commence- ment of operations. ”(b) SYSTEMS IN SIGNIFICANT NONCOMPLI- ANCE.\u2014 ”(1) LIST.\u2014Beginning not later than 1 year after the date of enactment of this section, each State shall prepare, periodically update, and submit to the Administrator a list of community water systems and nontransient, noncommunity water systems that have a history of significant noncompliance with this title (as defined in guidelines issued prior to the date of enactment of this section or any revisions of the guidelines that have been made in consultation with the States) and, to the extent practicable, the rea- sons for noncompliance. ”(2) REPORT.\u2014Not later than 5 years after the date of enactment of this section and as part of the capacity development strategy of the State, each State shall report to the Administrator on the success of enforcement mechanisms and ini- tial capacity development efforts in assisting the public water systems listed under paragraph (1) to improve technical, managerial, and financial capacity. ”(3) WITHHOLDING.\u2014The list and report under this subsection shall be considered part of the capacity development strategy of the State re- quired under subsection (c) of this section for purposes of the withholding requirements of sec- tion 1452(a)(1)(G)(i) (relating to State loan funds). ”(c) CAPACITY DEVELOPMENT STRATEGY.\u2014 ”(1) IN GENERAL.\u2014Beginning 4 years after the date of enactment of this section, a State shall receive only\u2014 ”(A) 90 percent in fiscal year 2001; ”(B) 85 percent in fiscal year 2002; and ”(C) 80 percent in each subsequent fiscal year, of the allotment that the State is otherwise enti- tled to receive under section 1452 (relating to State loan funds), unless the State is developing and implementing a strategy to assist public water systems in acquiring and maintaining technical, managerial, and financial capacity. ”(2) CONTENT.\u2014In preparing the capacity de- velopment strategy, the State shall consider, so- licit public comment on, and include as appro- priate\u2014 CONGRESSIONAL RECORD \u2014 HOUSE H9689August 1, 1996 ”(A) the methods or criteria that the State will use to identify and prioritize the public water systems most in need of improving tech- nical, managerial, and financial capacity; ”(B) a description of the institutional, regu- latory, financial, tax, or legal factors at the Federal, State, or local level that encourage or impair capacity development; ”(C) a description of how the State will use the authorities and resources of this title or other means to\u2014 ”(i) assist public water systems in complying with national primary drinking water regula- tions; ”(ii) encourage the development of partner- ships between public water systems to enhance the technical, managerial, and financial capac- ity of the systems; and ”(iii) assist public water systems in the train- ing and certification of operators; ”(D) a description of how the State will estab- lish a baseline and measure improvements in ca- pacity with respect to national primary drinking water regulations and State drinking water law; and ”(E) an identification of the persons that have an interest in and are involved in the de- velopment and implementation of the capacity development strategy (including all appropriate agencies of Federal, State, and local govern- ments, private and nonprofit public water sys- tems, and public water system customers). ”(3) REPORT.\u2014Not later than 2 years after the date on which a State first adopts a capacity development strategy under this subsection, and every 3 years thereafter, the head of the State agency that has primary responsibility to carry out this title in the State shall submit to the Governor a report that shall also be available to the public on the efficacy of the strategy and progress made toward improving the technical, managerial, and financial capacity of public water systems in the State. ”(4) REVIEW.\u2014The decisions of the State under this section regarding any particular pub- lic water system are not subject to review by the Administrator and may not serve as the basis for withholding funds under section 1452. ”(d) FEDERAL ASSISTANCE.\u2014 ”(1) IN GENERAL.\u2014The Administrator shall support the States in developing capacity devel- opment strategies. ”(2) INFORMATIONAL ASSISTANCE.\u2014 ”(A) IN GENERAL.\u2014Not later than 180 days after the date of enactment of this section, the Administrator shall\u2014 ”(i) conduct a review of State capacity devel- opment efforts in existence on the date of enact- ment of this section and publish information to assist States and public water systems in capac- ity development efforts; and ”(ii) initiate a partnership with States, public water systems, and the public to develop infor- mation for States on recommended operator cer- tification requirements. ”(B) PUBLICATION OF INFORMATION.\u2014The Ad- ministrator shall publish the information devel- oped through the partnership under subpara- graph (A)(ii) not later than 18 months after the date of enactment of this section. ”(3) PROMULGATION OF DRINKING WATER REG- ULATIONS.\u2014In promulgating a national primary drinking water regulation, the Administrator shall include an analysis of the likely effect of compliance with the regulation on the technical, financial, and managerial capacity of public water systems. ”(4) GUIDANCE FOR NEW SYSTEMS.\u2014Not later than 2 years after the date of enactment of this section, the Administrator shall publish guid- ance developed in consultation with the States describing legal authorities and other means to ensure that all new community water systems and new nontransient, noncommunity water systems demonstrate technical, managerial, and financial capacity with respect to national pri- mary drinking water regulations. ”(e) VARIANCES AND EXEMPTIONS.\u2014Based on information obtained under subsection (c)(3), the Administrator shall, as appropriate, modify regulations concerning variances and exemp- tions for small public water systems to ensure flexibility in the use of the variances and ex- emptions. Nothing in this subsection shall be in- terpreted, construed, or applied to affect or alter the requirements of section 1415 or 1416. ”(f) SMALL PUBLIC WATER SYSTEMS TECH- NOLOGY ASSISTANCE CENTERS.\u2014 ”(1) GRANT PROGRAM.\u2014The Administrator is authorized to make grants to institutions of higher learning to establish and operate small public water system technology assistance cen- ters in the United States. ”(2) RESPONSIBILITIES OF THE CENTERS.\u2014The responsibilities of the small public water system technology assistance centers established under this subsection shall include the conduct of training and technical assistance relating to the information, performance, and technical needs of small public water systems or public water systems that serve Indian Tribes. ”(3) APPLICATIONS.\u2014Any institution of higher learning interested in receiving a grant under this subsection shall submit to the Administrator an application in such form and containing such information as the Administrator may re- quire by regulation. ”(4) SELECTION CRITERIA.\u2014The Administrator shall select recipients of grants under this sub- section on the basis of the following criteria: ”(A) The small public water system tech- nology assistance center shall be located in a State that is representative of the needs of the region in which the State is located for address- ing the drinking water needs of small and rural communities or Indian Tribes. ”(B) The grant recipient shall be located in a region that has experienced problems, or may reasonably be foreseen to experience problems, with small and rural public water systems. ”(C) The grant recipient shall have access to expertise in small public water system tech- nology management. ”(D) The grant recipient shall have the capa- bility to disseminate the results of small public water system technology and training programs. ”(E) The projects that the grant recipient pro- poses to carry out under the grant are necessary and appropriate. ”(F) The grant recipient has regional support beyond the host institution. ”(5) CONSORTIA OF STATES.\u2014At least 2 of the grants under this subsection shall be made to consortia of States with low population den- sities. ”(6) AUTHORIZATION OF APPROPRIATIONS.\u2014 There are authorized to be appropriated to make grants under this subsection $2,000,000 for each of the fiscal years 1997 through 1999, and $5,000,000 for each of the fiscal years 2000 through 2003. ”(g) ENVIRONMENTAL FINANCE CENTERS.\u2014 ”(1) IN GENERAL.\u2014The Administrator shall provide initial funding for one or more univer- sity-based environmental finance centers for ac- tivities that provide technical assistance to State and local officials in developing the capacity of public water systems. Any such funds shall be used only for activities that are directly related to this title. ”(2) NATIONAL CAPACITY DEVELOPMENT CLEAR- INGHOUSE.\u2014The Administrator shall establish a national public water system capacity develop- ment clearinghouse to receive and disseminate information with respect to developing, improv- ing, and maintaining financial and managerial capacity at public water systems. The Adminis- trator shall ensure that the clearinghouse does not duplicate other federally supported clearing- house activities. ”(3) CAPACITY DEVELOPMENT TECHNIQUES.\u2014 The Administrator may request an environ- mental finance center funded under paragraph (1) to develop and test managerial, financial, and institutional techniques for capacity devel- opment. The techniques may include capacity assessment methodologies, manual and computer based public water system rate models and cap- ital planning models, public water system con- solidation procedures, and regionalization mod- els. ”(4) AUTHORIZATION OF APPROPRIATIONS.\u2014 There are authorized to be appropriated to carry out this subsection $1,500,000 for each of the fis- cal years 1997 through 2003. ”(5) LIMITATION.\u2014No portion of any funds made available under this subsection may be used for lobbying expenses.”. SEC. 120. AUTHORIZATION OF APPROPRIATIONS FOR CERTAIN GROUND WATER PRO- GRAMS. (a) CRITICAL AQUIFER PROTECTION.\u2014Section 1427 (42 U.S.C. 300h 6) is amended as follows: (1) Subsection (b)(1) is amended by striking ”not later than 24 months after the enactment of the Safe Drinking Water Act Amendments of 1986”. (2) The table in subsection (m) is amended by adding at the end the following: ”1992 2003 …………………… 15,000,000.”. (b) WELLHEAD PROTECTION AREAS.\u2014The table in section 1428(k) (42 U.S.C. 300h 7(k)) is amended by adding at the end the following: ”1992 2003 …………………… 30,000,000.”. (c) UNDERGROUND INJECTION CONTROL GRANT.\u2014The table in section 1443(b)(5) (42 U.S.C. 300j 2(b)(5)) is amended by adding at the end the following: ”1992 2003 …………………… 15,000,000.”. SEC. 121. AMENDMENTS TO SECTION 1442. Section 1442 (42 U.S.C. 300j 1) is amended\u2014 (1) by redesignating paragraph (3) of sub- section (b) as paragraph (3) of subsection (d) and moving such paragraph to appear after paragraph (2) of subsection (d); (2) by striking subsection (b) (as so amended); (3) by redesignating subparagraph (B) of sub- section (a)(2) as subsection (b) and moving such subsection to appear after subsection (a); (4) in subsection (a)\u2014 (A) by striking paragraph (2) (as so amended) and inserting the following: ”(2) INFORMATION AND RESEARCH FACILI- TIES.\u2014In carrying out this title, the Adminis- trator is authorized to\u2014 ”(A) collect and make available information pertaining to research, investigations, and dem- onstrations with respect to providing a depend- ably safe supply of drinking water, together with appropriate recommendations in connec- tion with the information; and ”(B) make available research facilities of the Agency to appropriate public authorities, insti- tutions, and individuals engaged in studies and research relating to this title.”; (B) by striking paragraph (3); and (C) by redesignating paragraph (11) as para- graph (3) and moving such paragraph to appear before paragraph (4). SEC. 122. TECHNICAL ASSISTANCE. Section 1442(e) (42 U.S.C. 300j 1(e)) is amend- ed to read as follows: ”(e) TECHNICAL ASSISTANCE.\u2014The Adminis- trator may provide technical assistance to small public water systems to enable such systems to achieve and maintain compliance with applica- ble national primary drinking water regula- tions. Such assistance may include circuit-rider and multi-State regional technical assistance programs, training, and preliminary engineering evaluations. The Administrator shall ensure that technical assistance pursuant to this sub- section is available in each State. Each non- profit organization receiving assistance under this subsection shall consult with the State in which the assistance is to be expended or other- wise made available before using assistance to undertake activities to carry out this subsection. There are authorized to be appropriated to the Administrator to be used for such technical as- sistance $15,000,000 for each of the fiscal years 1997 through 2003. No portion of any State loan CONGRESSIONAL RECORD \u2014 HOUSEH9690 August 1, 1996 fund established under section 1452 (relating to State loan funds) and no portion of any funds made available under this subsection may be used for lobbying expenses. Of the total amount appropriated under this subsection, 3 percent shall be used for technical assistance to public water systems owned or operated by Indian Tribes.”. SEC. 123. OPERATOR CERTIFICATION. Part B (42 U.S.C. 300g et seq.) is amended by adding the following after section 1418: ”OPERATOR CERTIFICATION ”SEC. 1419. (a) GUIDELINES.\u2014Not later than 30 months after the date of enactment of the Safe Drinking Water Act Amendments of 1996 and in cooperation with the States, the Administrator shall publish guidelines in the Federal Register, after notice and opportunity for comment from interested persons, including States and public water systems, specifying minimum standards for certification (and recertification) of the op- erators of community and nontransient non- community public water systems. Such guide- lines shall take into account existing State pro- grams, the complexity of the system, and other factors aimed at providing an effective program at reasonable cost to States and public water systems, taking into account the size of the sys- tem. ”(b) STATE PROGRAMS.\u2014Beginning 2 years after the date on which the Administrator pub- lishes guidelines under subsection (a), the Ad- ministrator shall withhold 20 percent of the funds a State is otherwise entitled to receive under section 1452 unless the State has adopted and is implementing a program for the certifi- cation of operators of community and nontran- sient noncommunity public water systems that meets the requirements of the guidelines pub- lished pursuant to subsection (a) or that has been submitted in compliance with subsection (c) and that has not been disapproved. ”(c) EXISTING PROGRAMS.\u2014For any State ex- ercising primary enforcement responsibility for public water systems or any other State which has an operator certification program, the guidelines under subsection (a) shall allow the State to enforce such program in lieu of the guidelines under subsection (a) if the State sub- mits the program to the Administrator within 18 months after the publication of the guidelines unless the Administrator determines (within 9 months after the State submits the program to the Administrator) that such program is not substantially equivalent to such guidelines. In making this determination, an existing State program shall be presumed to be substantially equivalent to the guidelines, notwithstanding program differences, based on the size of systems or the quality of source water, providing the State program meets the overall public health objectives of the guidelines. If disapproved, the program may be resubmitted within 6 months after receipt of notice of disapproval. ”(d) EXPENSE REIMBURSEMENT.\u2014 ”(1) IN GENERAL.\u2014The Administrator shall provide reimbursement for the costs of training, including an appropriate per diem for unsalaried operators, and certification for per- sons operating systems serving 3,300 persons or fewer that are required to undergo training pur- suant to this section. ”(2) STATE GRANTS.\u2014The reimbursement shall be provided through grants to States with each State receiving an amount sufficient to cover the reasonable costs for training all such operators in the State, as determined by the Adminis- trator, to the extent required by this section. Grants received by a State pursuant to this paragraph shall first be used to provide reim- bursement for training and certification costs of persons operating systems serving 3,300 persons or fewer. If a State has reimbursed all such costs, the State may, after notice to the Admin- istrator, use any remaining funds from the grant for any of the other purposes authorized for grants under section 1452. ”(3) AUTHORIZATION.\u2014There are authorized to be appropriated to the Administrator to pro- vide grants for reimbursement under this section $30,000,000 for each of fiscal years 1997 through 2003. ”(4) RESERVATION.\u2014If the appropriation made pursuant to paragraph (3) for any fiscal year is not sufficient to satisfy the requirements of paragraph (1), the Administrator shall, prior to any other allocation or reservation, reserve such sums as necessary from the funds appropriated pursuant to section 1452(m) to provide reim- bursement for the training and certification costs mandated by this subsection.”. SEC. 124. PUBLIC WATER SYSTEM SUPERVISION PROGRAM. Section 1443(a) (42 U.S.C. 300j 2(a)) is amend- ed as follows: (1) Paragraph (7) is amended to read as fol- lows: ”(7) AUTHORIZATION.\u2014For the purpose of making grants under paragraph (1), there are authorized to be appropriated $100,000,000 for each of fiscal years 1997 through 2003.”. (2) By adding at the end the following: ”(8) RESERVATION OF FUNDS BY THE ADMINIS- TRATOR.\u2014If the Administrator assumes the pri- mary enforcement responsibility of a State pub- lic water system supervision program, the Ad- ministrator may reserve from funds made avail- able pursuant to this subsection an amount equal to the amount that would otherwise have been provided to the State pursuant to this sub- section. The Administrator shall use the funds reserved pursuant to this paragraph to ensure the full and effective administration of a public water system supervision program in the State. ”(9) STATE LOAN FUNDS.\u2014 ”(A) RESERVATION OF FUNDS.\u2014For any fiscal year for which the amount made available to the Administrator by appropriations to carry out this subsection is less than the amount that the Administrator determines is necessary to supplement funds made available pursuant to paragraph (8) to ensure the full and effective administration of a public water system super- vision program in a State, the Administrator may reserve from the funds made available to the State under section 1452 (relating to State loan funds) an amount that is equal to the amount of the shortfall. This paragraph shall not apply to any State not exercising primary enforcement responsibility for public water sys- tems as of the date of enactment of the Safe Drinking Water Act Amendments of 1996. ”(B) DUTY OF ADMINISTRATOR.\u2014If the Admin- istrator reserves funds from the allocation of a State under subparagraph (A), the Adminis- trator shall carry out in the State each of the activities that would be required of the State if the State had primary enforcement authority under section 1413.”. SEC. 125. MONITORING AND INFORMATION GATH- ERING. (a) REVIEW OF EXISTING REQUIREMENTS.\u2014 Paragraph (1) of section 1445(a) (42 U.S.C. 300j 4(a)(1)) is amended to read as follows: ”(1)(A) Every person who is subject to any re- quirement of this title or who is a grantee, shall establish and maintain such records, make such reports, conduct such monitoring, and provide such information as the Administrator may rea- sonably require by regulation to assist the Ad- ministrator in establishing regulations under this title, in determining whether such person has acted or is acting in compliance with this title, in administering any program of financial assistance under this title, in evaluating the health risks of unregulated contaminants, or in advising the public of such risks. In requiring a public water system to monitor under this sub- section, the Administrator may take into consid- eration the system size and the contaminants likely to be found in the system’s drinking water. ”(B) Every person who is subject to a national primary drinking water regulation under section 1412 shall provide such information as the Ad- ministrator may reasonably require, after con- sultation with the State in which such person is located if such State has primary enforcement responsibility for public water systems, on a case-by-case basis, to determine whether such person has acted or is acting in compliance with this title. ”(C) Every person who is subject to a national primary drinking water regulation under section 1412 shall provide such information as the Ad- ministrator may reasonably require to assist the Administrator in establishing regulations under section 1412 of this title, after consultation with States and suppliers of water. The Adminis- trator may not require under this subparagraph the installation of treatment equipment or proc- ess changes, the testing of treatment technology, or the analysis or processing of monitoring sam- ples, except where the Administrator provides the funding for such activities. Before exercising this authority, the Administrator shall first seek to obtain the information by voluntary submis- sion. ”(D) The Administrator shall not later than 2 years after the date of enactment of this sub- paragraph, after consultation with public health experts, representatives of the general public, and officials of State and local govern- ments, review the monitoring requirements for not fewer than 12 contaminants identified by the Administrator, and promulgate any nec- essary modifications.”. (b) MONITORING RELIEF.\u2014Part B is amended by adding the following new section after sec- tion 1417 (42 U.S.C. 300g 6): ”MONITORING OF CONTAMINANTS ”SEC. 1418. (a) INTERIM MONITORING RELIEF AUTHORITY.\u2014 ”(1) IN GENERAL.\u2014A State exercising primary enforcement responsibility for public water sys- tems may modify the monitoring requirements for any regulated or unregulated contaminants for which monitoring is required other than mi- crobial contaminants (or indicators thereof), disinfectants and disinfection byproducts or cor- rosion byproducts for an interim period to pro- vide that any public water system serving 10,000 persons or fewer shall not be required to con- duct additional quarterly monitoring during an interim relief period for such contaminants if\u2014 ”(A) monitoring, conducted at the beginning of the period for the contaminant concerned and certified to the State by the public water system, fails to detect the presence of the contaminant in the ground or surface water supplying the public water system; and ”(B) the State, considering the hydrogeology of the area and other relevant factors, deter- mines in writing that the contaminant is un- likely to be detected by further monitoring dur- ing such period. ”(2) TERMINATION; TIMING OF MONITORING.\u2014 The interim relief period referred to in para- graph (1) shall terminate when permanent mon- itoring relief is adopted and approved for such State, or at the end of 36 months after the date of enactment of the Safe Drinking Water Act Amendments of 1996, whichever comes first. In order to serve as a basis for interim relief, the monitoring conducted at the beginning of the period must occur at the time determined by the State to be the time of the public water system’s greatest vulnerability to the contaminant con- cerned in the relevant ground or surface water, taking into account in the case of pesticides the time of application of the pesticide for the source water area and the travel time for the pesticide to reach such waters and taking into account, in the case of other contaminants, seasonality of precipitation and contaminant travel time. ”(b) PERMANENT MONITORING RELIEF AU- THORITY.\u2014 ”(1) IN GENERAL.\u2014Each State exercising pri- mary enforcement responsibility for public water systems under this title and having an approved CONGRESSIONAL RECORD \u2014 HOUSE H9691August 1, 1996 source water assessment program may adopt, in accordance with guidance published by the Ad- ministrator, tailored alternative monitoring re- quirements for public water systems in such State (as an alternative to the monitoring re- quirements for chemical contaminants set forth in the applicable national primary drinking water regulations) where the State concludes that (based on data available at the time of adoption concerning susceptibility, use, occur- rence, or wellhead protection, or from the State’s drinking water source water assessment program) such alternative monitoring would provide assurance that it complies with the Ad- ministrator’s guidelines. The State program must be adequate to assure compliance with, and enforcement of, applicable national primary drinking water regulations. Alternative monitor- ing shall not apply to regulated microbiological contaminants (or indicators thereof), disinfect- ants and disinfection byproducts, or corrosion byproducts. The preceding sentence is not in- tended to limit other authority of the Adminis- trator under other provisions of this title to grant monitoring flexibility. ”(2) GUIDELINES.\u2014 ”(A) IN GENERAL.\u2014The Administrator shall issue, after notice and comment and at the same time as guidelines are issued for source water assessment under section 1453, guidelines for States to follow in proposing alternative mon- itoring requirements under paragraph (1) for chemical contaminants. The Administrator shall publish such guidelines in the Federal Register. The guidelines shall assure that the public health will be protected from drinking water contamination. The guidelines shall require that a State alternative monitoring program apply on a contaminant-by-contaminant basis and that, to be eligible for such alternative monitoring program, a public water system must show the State that the contaminant is not present in the drinking water supply or, if present, it is reli- ably and consistently below the maximum con- taminant level. ”(B) DEFINITION.\u2014For purposes of subpara- graph (A), the phrase ‘reliably and consistently below the maximum contaminant level’ means that, although contaminants have been detected in a water supply, the State has sufficient knowledge of the contamination source and ex- tent of contamination to predict that the maxi- mum contaminant level will not be exceeded. In determining that a contaminant is reliably and consistently below the maximum contaminant level, States shall consider the quality and com- pleteness of data, the length of time covered and the volatility or stability of monitoring results during that time, and the proximity of such re- sults to the maximum contaminant level. Wide variations in the analytical results, or analyt- ical results close to the maximum contaminant level, shall not be considered to be reliably and consistently below the maximum contaminant level. ”(3) EFFECT OF DETECTION OF CONTAMI- NANTS.\u2014The guidelines issued by the Adminis- trator under paragraph (2) shall require that if, after the monitoring program is in effect and op- erating, a contaminant covered by the alter- native monitoring program is detected at levels at or above the maximum contaminant level or is no longer reliably or consistently below the maximum contaminant level, the public water system must either\u2014 ”(A) demonstrate that the contamination source has been removed or that other action has been taken to eliminate the contamination problem; or ”(B) test for the detected contaminant pursu- ant to the applicable national primary drinking water regulation. ”(4) STATES NOT EXERCISING PRIMARY EN- FORCEMENT RESPONSIBILITY.\u2014The Governor of any State not exercising primary enforcement responsibility under section 1413 on the date of enactment of this section may submit to the Ad- ministrator a request that the Administrator modify the monitoring requirements established by the Administrator and applicable to public water systems in that State. After consultation with the Governor, the Administrator shall mod- ify the requirements for public water systems in that State if the request of the Governor is in accordance with each of the requirements of this subsection that apply to alternative monitoring requirements established by States that have primary enforcement responsibility. A decision by the Administrator to approve a request under this clause shall be for a period of 3 years and may subsequently be extended for periods of 5 years. ”(c) TREATMENT AS NPDWR.\u2014All monitoring relief granted by a State to a public water sys- tem for a regulated contaminant under sub- section (a) or (b) shall be treated as part of the national primary drinking water regulation for that contaminant. ”(d) OTHER MONITORING RELIEF.\u2014Nothing in this section shall be construed to affect the au- thority of the States under applicable national primary drinking water regulations to alter monitoring requirements through waivers or other existing authorities. The Administrator shall periodically review and, as appropriate, revise such authorities.”. (c) UNREGULATED CONTAMINANTS.\u2014Section 1445(a) (42 U.S.C. 300j 4(a)) is amended by strik- ing paragraphs (2) through (8) and inserting the following: ”(2) MONITORING PROGRAM FOR UNREGULATED CONTAMINANTS.\u2014 ”(A) ESTABLISHMENT.\u2014The Administrator shall promulgate regulations establishing the criteria for a monitoring program for unregu- lated contaminants. The regulations shall re- quire monitoring of drinking water supplied by public water systems and shall vary the fre- quency and schedule for monitoring require- ments for systems based on the number of per- sons served by the system, the source of supply, and the contaminants likely to be found, ensur- ing that only a representative sample of systems serving 10,000 persons or fewer are required to monitor. ”(B) MONITORING PROGRAM FOR CERTAIN UN- REGULATED CONTAMINANTS.\u2014 ”(i) INITIAL LIST.\u2014Not later than 3 years after the date of enactment of the Safe Drinking Water Act Amendments of 1996 and every 5 years thereafter, the Administrator shall issue a list pursuant to subparagraph (A) of not more than 30 unregulated contaminants to be mon- itored by public water systems and to be in- cluded in the national drinking water occur- rence data base maintained pursuant to sub- section (g). ”(ii) GOVERNORS’ PETITION.\u2014The Adminis- trator shall include among the list of contami- nants for which monitoring is required under this paragraph each contaminant recommended in a petition signed by the Governor of each of 7 or more States, unless the Administrator deter- mines that the action would prevent the listing of other contaminants of a higher public health concern. ”(C) MONITORING PLAN FOR SMALL AND ME- DIUM SYSTEMS.\u2014 ”(i) IN GENERAL.\u2014Based on the regulations promulgated by the Administrator, each State may develop a representative monitoring plan to assess the occurrence of unregulated contami- nants in public water systems that serve a popu- lation of 10,000 or fewer in that State. The plan shall require monitoring for systems representa- tive of different sizes, types, and geographic lo- cations in the State. ”(ii) GRANTS FOR SMALL SYSTEM COSTS.\u2014From funds reserved under section 1452(o) or appro- priated under subparagraph (H), the Adminis- trator shall pay the reasonable cost of such test- ing and laboratory analysis as are necessary to carry out monitoring under the plan. ”(D) MONITORING RESULTS.\u2014Each public water system that conducts monitoring of un- regulated contaminants pursuant to this para- graph shall provide the results of the monitoring to the primary enforcement authority for the system. ”(E) NOTIFICATION.\u2014Notification of the avail- ability of the results of monitoring programs re- quired under paragraph (2)(A) shall be given to the persons served by the system. ”(F) WAIVER OF MONITORING REQUIREMENT.\u2014 The Administrator shall waive the requirement for monitoring for a contaminant under this paragraph in a State, if the State demonstrates that the criteria for listing the contaminant do not apply in that State. ”(G) ANALYTICAL METHODS.\u2014The State may use screening methods approved by the Adminis- trator under subsection (i) in lieu of monitoring for particular contaminants under this para- graph. ”(H) AUTHORIZATION OF APPROPRIATIONS.\u2014 There are authorized to be appropriated to carry out this paragraph $10,000,000 for each of the fiscal years 1997 through 2003.”. (d) SCREENING METHODS.\u2014Section 1445 (42 U.S.C. 300j 4) is amended by adding the follow- ing after subsection (h): ”(i) SCREENING METHODS.\u2014The Administrator shall review new analytical methods to screen for regulated contaminants and may approve such methods as are more accurate or cost-effec- tive than established reference methods for use in compliance monitoring.”. SEC. 126. OCCURRENCE DATA BASE. Section 1445 (42 U.S.C. 300j 4) is amended by adding the following new subsection after sub- section (f): ”(g) OCCURRENCE DATA BASE.\u2014 ”(1) IN GENERAL.\u2014Not later than 3 years after the date of enactment of the Safe Drinking Water Act Amendments of 1996, the Adminis- trator shall assemble and maintain a national drinking water contaminant occurrence data base, using information on the occurrence of both regulated and unregulated contaminants in public water systems obtained under sub- section (a)(1)(A) or subsection (a)(2) and reliable information from other public and private sources. ”(2) PUBLIC INPUT.\u2014In establishing the occur- rence data base, the Administrator shall solicit recommendations from the Science Advisory Board, the States, and other interested parties concerning the development and maintenance of a national drinking water contaminant occur- rence data base, including such issues as the structure and design of the data base, data input parameters and requirements, and the use and interpretation of data. ”(3) USE.\u2014The data shall be used by the Ad- ministrator in making determinations under sec- tion 1412(b)(1) with respect to the occurrence of a contaminant in drinking water at a level of public health concern. ”(4) PUBLIC RECOMMENDATIONS.\u2014The Admin- istrator shall periodically solicit recommenda- tions from the appropriate officials of the Na- tional Academy of Sciences and the States, and any person may submit recommendations to the Administrator, with respect to contaminants that should be included in the national drinking water contaminant occurrence data base, in- cluding recommendations with respect to addi- tional unregulated contaminants that should be listed under subsection (a)(2). Any recommenda- tion submitted under this clause shall be accom- panied by reasonable documentation that\u2014 ”(A) the contaminant occurs or is likely to occur in drinking water; and ”(B) the contaminant poses a risk to public health. ”(5) PUBLIC AVAILABILITY.\u2014The information from the data base shall be available to the pub- lic in readily accessible form. ”(6) REGULATED CONTAMINANTS.\u2014With respect to each contaminant for which a national pri- mary drinking water regulation has been estab- lished, the data base shall include information on the detection of the contaminant at a quan- tifiable level in public water systems (including CONGRESSIONAL RECORD \u2014 HOUSEH9692 August 1, 1996 detection of the contaminant at levels not con- stituting a violation of the maximum contami- nant level for the contaminant). ”(7) UNREGULATED CONTAMINANTS.\u2014With re- spect to contaminants for which a national pri- mary drinking water regulation has not been es- tablished, the data base shall include\u2014 ”(A) monitoring information collected by pub- lic water systems that serve a population of more than 10,000, as required by the Adminis- trator under subsection (a); ”(B) monitoring information collected from a representative sampling of public water systems that serve a population of 10,000 or fewer; and ”(C) other reliable and appropriate monitor- ing information on the occurrence of the con- taminants in public water systems that is avail- able to the Administrator.”. SEC. 127. DRINKING WATER ADVISORY COUNCIL. The second sentence of section 1446(a) (42 U.S.C. 300j 6(a)) is amended by inserting before the period at the end the following: ”, of which two such members shall be associated with small, rural public water systems”. SEC. 128. NEW YORK CITY WATERSHED PROTEC- TION PROGRAM. Section 1443 (42 U.S.C. 300j 2) is amended by adding at the end the following: ”(d) NEW YORK CITY WATERSHED PROTECTION PROGRAM.\u2014 ”(1) IN GENERAL.\u2014The Administrator is au- thorized to provide financial assistance to the State of New York for demonstration projects implemented as part of the watershed program for the protection and enhancement of the qual- ity of source waters of the New York City water supply system, including projects that dem- onstrate, assess, or provide for comprehensive monitoring and surveillance and projects nec- essary to comply with the criteria for avoiding filtration contained in 40 CFR 141.71. Dem- onstration projects which shall be eligible for fi- nancial assistance shall be certified to the Ad- ministrator by the State of New York as satisfy- ing the purposes of this subsection. In certifying projects to the Administrator, the State of New York shall give priority to monitoring projects that have undergone peer review. ”(2) REPORT.\u2014Not later than 5 years after the date on which the Administrator first provides assistance pursuant to this paragraph, the Gov- ernor of the State of New York shall submit a report to the Administrator on the results of projects assisted. ”(3) MATCHING REQUIREMENTS.\u2014Federal as- sistance provided under this subsection shall not exceed 50 percent of the total cost of the protec- tion program being carried out for any particu- lar watershed or ground water recharge area. ”(4) AUTHORIZATION.\u2014There are authorized to be appropriated to the Administrator to carry out this subsection for each of fiscal years 1997 through 2003, $15,000,000 for the purpose of pro- viding assistance to the State of New York to carry out paragraph (1).”. SEC. 129. FEDERAL AGENCIES. (a) IN GENERAL.\u2014Section 1447 (42 U.S.C. 300j 6) is amended by redesignating subsection (c) as subsection (d) and by striking subsections (a) and (b) and inserting the following: ”(a) IN GENERAL.\u2014Each department, agency, and instrumentality of the executive, legislative, and judicial branches of the Federal Govern- ment\u2014 ”(1) owning or operating any facility in a wellhead protection area; ”(2) engaged in any activity at such facility resulting, or which may result, in the contami- nation of water supplies in any such area; ”(3) owning or operating any public water system; or ”(4) engaged in any activity resulting, or which may result in, underground injection which endangers drinking water (within the meaning of section 1421(d)(2)), shall be subject to, and comply with, all Fed- eral, State, interstate, and local requirements, both substantive and procedural (including any requirement for permits or reporting or any pro- visions for injunctive relief and such sanctions as may be imposed by a court to enforce such re- lief), respecting the protection of such wellhead areas, respecting such public water systems, and respecting any underground injection in the same manner and to the same extent as any per- son is subject to such requirements, including the payment of reasonable service charges. The Federal, State, interstate, and local substantive and procedural requirements referred to in this subsection include, but are not limited to, all administrative orders and all civil and adminis- trative penalties and fines, regardless of wheth- er such penalties or fines are punitive or coer- cive in nature or are imposed for isolated, inter- mittent, or continuing violations. The United States hereby expressly waives any immunity otherwise applicable to the United States with respect to any such substantive or procedural requirement (including, but not limited to, any injunctive relief, administrative order or civil or administrative penalty or fine referred to in the preceding sentence, or reasonable service charge). The reasonable service charges referred to in this subsection include, but are not limited to, fees or charges assessed in connection with the processing and issuance of permits, renewal of permits, amendments to permits, review of plans, studies, and other documents, and in- spection and monitoring of facilities, as well as any other nondiscriminatory charges that are assessed in connection with a Federal, State, interstate, or local regulatory program respect- ing the protection of wellhead areas or public water systems or respecting any underground injection. Neither the United States, nor any agent, employee, or officer thereof, shall be im- mune or exempt from any process or sanction of any State or Federal Court with respect to the enforcement of any such injunctive relief. No agent, employee, or officer of the United States shall be personally liable for any civil penalty under any Federal, State, interstate, or local law concerning the protection of wellhead areas or public water systems or concerning under- ground injection with respect to any act or omission within the scope of the official duties of the agent, employee, or officer. An agent, em- ployee, or officer of the United States shall be subject to any criminal sanction (including, but not limited to, any fine or imprisonment) under any Federal or State requirement adopted pur- suant to this title, but no department, agency, or instrumentality of the executive, legislative, or judicial branch of the Federal Government shall be subject to any such sanction. The Presi- dent may exempt any facility of any depart- ment, agency, or instrumentality in the execu- tive branch from compliance with such a re- quirement if he determines it to be in the para- mount interest of the United States to do so. No such exemption shall be granted due to lack of appropriation unless the President shall have specifically requested such appropriation as a part of the budgetary process and the Congress shall have failed to make available such re- quested appropriation. Any exemption shall be for a period not in excess of 1 year, but addi- tional exemptions may be granted for periods not to exceed 1 year upon the President’s mak- ing a new determination. The President shall re- port each January to the Congress all exemp- tions from the requirements of this section granted during the preceding calendar year, to- gether with his reason for granting each such exemption. ”(b) ADMINISTRATIVE PENALTY ORDERS.\u2014 ”(1) IN GENERAL.\u2014If the Administrator finds that a Federal agency has violated an applica- ble requirement under this title, the Adminis- trator may issue a penalty order assessing a penalty against the Federal agency. ”(2) PENALTIES.\u2014The Administrator may, after notice to the agency, assess a civil penalty against the agency in an amount not to exceed $25,000 per day per violation. ”(3) PROCEDURE.\u2014Before an administrative penalty order issued under this subsection be- comes final, the Administrator shall provide the agency an opportunity to confer with the Ad- ministrator and shall provide the agency notice and an opportunity for a hearing on the record in accordance with chapters 5 and 7 of title 5, United States Code. ”(4) PUBLIC REVIEW.\u2014 ”(A) IN GENERAL.\u2014Any interested person may obtain review of an administrative penalty order issued under this subsection. The review may be obtained in the United States District Court for the District of Columbia or in the United States District Court for the district in which the viola- tion is alleged to have occurred by the filing of a complaint with the court within the 30-day pe- riod beginning on the date the penalty order be- comes final. The person filing the complaint shall simultaneously send a copy of the com- plaint by certified mail to the Administrator and the Attorney General. ”(B) RECORD.\u2014The Administrator shall promptly file in the court a certified copy of the record on which the order was issued. ”(C) STANDARD OF REVIEW.\u2014The court shall not set aside or remand the order unless the court finds that there is not substantial evidence in the record, taken as a whole, to support the finding of a violation or that the assessment of the penalty by the Administrator constitutes an abuse of discretion. ”(D) PROHIBITION ON ADDITIONAL PEN- ALTIES.\u2014The court may not impose an addi- tional civil penalty for a violation that is subject to the order unless the court finds that the as- sessment constitutes an abuse of discretion by the Administrator.” ”(c) LIMITATION ON STATE USE OF FUNDS COL- LECTED FROM FEDERAL GOVERNMENT.\u2014Unless a State law in effect on the date of enactment of the Safe Drinking Water Act Amendments of 1996 or a State constitution requires the funds to be used in a different manner, all funds col- lected by a State from the Federal Government from penalties and fines imposed for violation of any substantive or procedural requirement re- ferred to in subsection (a) shall be used by the State only for projects designed to improve or protect the environment or to defray the costs of environmental protection or enforcement.”. (b) CITIZEN ENFORCEMENT.\u2014(1) The first sen- tence of section 1449(a) (42 U.S.C. 300j 8(a)) is amended\u2014 (A) in paragraph (1), by striking ”, or” and inserting a semicolon; (B) in paragraph (2), by striking the period at the end and inserting ”; or”; and (C) by adding at the end the following: ”(3) for the collection of a penalty by the United States Government (and associated costs and interest) against any Federal agency that fails, by the date that is 18 months after the ef- fective date of a final order to pay a penalty as- sessed by the Administrator under section 1429(b), to pay the penalty.”. (2) Subsection (b) of section 1449 (42 U.S.C. 300j 8(b)) is amended by striking the period at the end of paragraph (2) and inserting ”; or” and by adding the following new paragraph after paragraph (2): ”(3) under subsection (a)(3) prior to 60 days after the plaintiff has given notice of such ac- tion to the Attorney General and to the Federal agency.”. (c) WASHINGTON AQUEDUCT.\u2014Section 1447 (42 U.S.C. 300j 6) is amended by adding at the end the following: ”(e) WASHINGTON AQUEDUCT.\u2014The Secretary of the Army shall not pass the cost of any pen- alty assessed under this title on to any cus- tomer, user, or other purchaser of drinking water from the Washington Aqueduct system, including finished water from the Dalecarlia or McMillan treatment plant.”. SEC. 130. STATE REVOLVING LOAN FUNDS. Part E (42 U.S.C. 300j et seq.) is amended by adding the following new section after section 1451: CONGRESSIONAL RECORD \u2014 HOUSE H9693August 1, 1996 ”STATE REVOLVING LOAN FUNDS ”SEC. 1452. (a) GENERAL AUTHORITY.\u2014 ”(1) GRANTS TO STATES TO ESTABLISH STATE LOAN FUNDS.\u2014 ”(A) IN GENERAL.\u2014The Administrator shall offer to enter into agreements with eligible States to make capitalization grants, including letters of credit, to the States under this sub- section to further the health protection objec- tives of this title, promote the efficient use of fund resources, and for other purposes as are specified in this title. ”(B) ESTABLISHMENT OF FUND.\u2014To be eligible to receive a capitalization grant under this sec- tion, a State shall establish a drinking water treatment revolving loan fund (referred to in this section as a ‘State loan fund’) and comply with the other requirements of this section. Each grant to a State under this section shall be deposited in the State loan fund established by the State, except as otherwise provided in this section and in other provisions of this title. No funds authorized by other provisions of this title to be used for other purposes specified in this title shall be deposited in any State loan fund. ”(C) EXTENDED PERIOD.\u2014The grant to a State shall be available to the State for obligation during the fiscal year for which the funds are authorized and during the following fiscal year, except that grants made available from funds provided prior to fiscal year 1997 shall be avail- able for obligation during each of the fiscal years 1997 and 1998. ”(D) ALLOTMENT FORMULA.\u2014Except as other- wise provided in this section, funds made avail- able to carry out this section shall be allotted to States that have entered into an agreement pur- suant to this section (other than the District of Columbia) in accordance with\u2014 ”(i) for each of fiscal years 1995 through 1997, a formula that is the same as the formula used to distribute public water system supervision grant funds under section 1443 in fiscal year 1995, except that the minimum proportionate share established in the formula shall be 1 per- cent of available funds and the formula shall be adjusted to include a minimum proportionate share for the State of Wyoming and the District of Columbia; and ”(ii) for fiscal year 1998 and each subsequent fiscal year, a formula that allocates to each State the proportional share of the State needs identified in the most recent survey conducted pursuant to subsection (h), except that the mini- mum proportionate share provided to each State shall be the same as the minimum proportionate share provided under clause (i). ”(E) REALLOTMENT.\u2014The grants not obligated by the last day of the period for which the grants are available shall be reallotted accord- ing to the appropriate criteria set forth in sub- paragraph (D), except that the Administrator may reserve and allocate 10 percent of the re- maining amount for financial assistance to In- dian Tribes in addition to the amount allotted under subsection (i) and none of the funds real- lotted by the Administrator shall be reallotted to any State that has not obligated all sums allot- ted to the State pursuant to this section during the period in which the sums were available for obligation. ”(F) NONPRIMACY STATES.\u2014The State allot- ment for a State not exercising primary enforce- ment responsibility for public water systems shall not be deposited in any such fund but shall be allotted by the Administrator under this subparagraph. Pursuant to section 1443(a)(9)(A) such sums allotted under this subparagraph shall be reserved as needed by the Administrator to exercise primary enforcement responsibility under this title in such State and the remainder shall be reallotted to States exercising primary enforcement responsibility for public water sys- tems for deposit in such funds. Whenever the Administrator makes a final determination pur- suant to section 1413(b) that the requirements of section 1413(a) are no longer being met by a State, additional grants for such State under this title shall be immediately terminated by the Administrator. This subparagraph shall not apply to any State not exercising primary en- forcement responsibility for public water systems as of the date of enactment of the Safe Drinking Water Act Amendments of 1996. ”(G) OTHER PROGRAMS.\u2014 ”(i) NEW SYSTEM CAPACITY.\u2014Beginning in fis- cal year 1999, the Administrator shall withhold 20 percent of each capitalization grant made pursuant to this section to a State unless the State has met the requirements of section 1420(a) (relating to capacity development) and shall withhold 10 percent for fiscal year 2001, 15 per- cent for fiscal year 2002, and 20 percent for fis- cal year 2003 if the State has not complied with the provisions of section 1420(c) (relating to ca- pacity development strategies). Not more than a total of 20 percent of the capitalization grants made to a State in any fiscal year may be with- held under the preceding provisions of this clause. All funds withheld by the Administrator pursuant to this clause shall be reallotted by the Administrator on the basis of the same ratio as is applicable to funds allotted under subpara- graph (D). None of the funds reallotted by the Administrator pursuant to this paragraph shall be allotted to a State unless the State has met the requirements of section 1420 (relating to ca- pacity development). ”(ii) OPERATOR CERTIFICATION.\u2014The Adminis- trator shall withhold 20 percent of each capital- ization grant made pursuant to this section un- less the State has met the requirements of 1419 (relating to operator certification). All funds withheld by the Administrator pursuant to this clause shall be reallotted by the Administrator on the basis of the same ratio as applicable to funds allotted under subparagraph (D). None of the funds reallotted by the Administrator pursu- ant to this paragraph shall be allotted to a State unless the State has met the requirements of sec- tion 1419 (relating to operator certification). ”(2) USE OF FUNDS.\u2014Except as otherwise au- thorized by this title, amounts deposited in a State loan fund, including loan repayments and interest earned on such amounts, shall be used only for providing loans or loan guarantees, or as a source of reserve and security for leveraged loans, the proceeds of which are deposited in a State loan fund established under paragraph (1), or other financial assistance authorized under this section to community water systems and nonprofit noncommunity water systems, other than systems owned by Federal agencies. Financial assistance under this section may be used by a public water system only for expendi- tures (not including monitoring, operation, and maintenance expenditures) of a type or category which the Administrator has determined, through guidance, will facilitate compliance with national primary drinking water regula- tions applicable to the system under section 1412 or otherwise significantly further the health protection objectives of this title. The funds may also be used to provide loans to a system re- ferred to in section 1401(4)(B) for the purpose of providing the treatment described in section 1401(4)(B)(i)(III). The funds shall not be used for the acquisition of real property or interests therein, unless the acquisition is integral to a project authorized by this paragraph and the purchase is from a willing seller. Of the amount credited to any State loan fund established under this section in any fiscal year, 15 percent shall be available solely for providing loan as- sistance to public water systems which regularly serve fewer than 10,000 persons to the extent such funds can be obligated for eligible projects of public water systems. ”(3) LIMITATION.\u2014 ”(A) IN GENERAL.\u2014Except as provided in sub- paragraph (B), no assistance under this section shall be provided to a public water system that\u2014 ”(i) does not have the technical, managerial, and financial capability to ensure compliance with the requirements of this title; or ”(ii) is in significant noncompliance with any requirement of a national primary drinking water regulation or variance. ”(B) RESTRUCTURING.\u2014A public water system described in subparagraph (A) may receive as- sistance under this section if\u2014 ”(i) the use of the assistance will ensure com- pliance; and ”(ii) if subparagraph (A)(i) applies to the sys- tem, the owner or operator of the system agrees to undertake feasible and appropriate changes in operations (including ownership, manage- ment, accounting, rates, maintenance, consoli- dation, alternative water supply, or other proce- dures) if the State determines that the measures are necessary to ensure that the system has the technical, managerial, and financial capability to comply with the requirements of this title over the long term. ”(C) REVIEW.\u2014Prior to providing assistance under this section to a public water system that is in significant noncompliance with any re- quirement of a national primary drinking water regulation or variance, the State shall conduct a review to determine whether subparagraph (A)(i) applies to the system. ”(b) INTENDED USE PLANS.\u2014 ”(1) IN GENERAL.\u2014After providing for public review and comment, each State that has en- tered into a capitalization agreement pursuant to this section shall annually prepare a plan that identifies the intended uses of the amounts available to the State loan fund of the State. ”(2) CONTENTS.\u2014An intended use plan shall include\u2014 ”(A) a list of the projects to be assisted in the first fiscal year that begins after the date of the plan, including a description of the project, the expected terms of financial assistance, and the size of the community served; ”(B) the criteria and methods established for the distribution of funds; and ”(C) a description of the financial status of the State loan fund and the short-term and long-term goals of the State loan fund. ”(3) USE OF FUNDS.\u2014 ”(A) IN GENERAL.\u2014An intended use plan shall provide, to the maximum extent practicable, that priority for the use of funds be given to projects that\u2014 ”(i) address the most serious risk to human health; ”(ii) are necessary to ensure compliance with the requirements of this title (including require- ments for filtration); and ”(iii) assist systems most in need on a per household basis according to State affordability criteria. ”(B) LIST OF PROJECTS.\u2014Each State shall, after notice and opportunity for public com- ment, publish and periodically update a list of projects in the State that are eligible for assist- ance under this section, including the priority assigned to each project and, to the extent known, the expected funding schedule for each project. ”(c) FUND MANAGEMENT.\u2014Each State loan fund under this section shall be established, maintained, and credited with repayments and interest. The fund corpus shall be available in perpetuity for providing financial assistance under this section. To the extent amounts in the fund are not required for current obligation or expenditure, such amounts shall be invested in interest bearing obligations. ”(d) ASSISTANCE FOR DISADVANTAGED COMMU- NITIES.\u2014 ”(1) LOAN SUBSIDY.\u2014Notwithstanding any other provision of this section, in any case in which the State makes a loan pursuant to sub- section (a)(2) to a disadvantaged community or to a community that the State expects to become a disadvantaged community as the result of a proposed project, the State may provide addi- tional subsidization (including forgiveness of principal). ”(2) TOTAL AMOUNT OF SUBSIDIES.\u2014For each fiscal year, the total amount of loan subsidies CONGRESSIONAL RECORD \u2014 HOUSEH9694 August 1, 1996 made by a State pursuant to paragraph (1) may not exceed 30 percent of the amount of the cap- italization grant received by the State for the year. ”(3) DEFINITION OF DISADVANTAGED COMMU- NITY.\u2014In this subsection, the term ‘disadvan- taged community’ means the service area of a public water system that meets affordability cri- teria established after public review and com- ment by the State in which the public water sys- tem is located. The Administrator may publish information to assist States in establishing af- fordability criteria. ”(e) STATE CONTRIBUTION.\u2014Each agreement under subsection (a) shall require that the State deposit in the State loan fund from State mon- eys an amount equal to at least 20 percent of the total amount of the grant to be made to the State on or before the date on which the grant payment is made to the State, except that a State shall not be required to deposit such amount into the fund prior to the date on which each grant payment is made for fiscal years 1994, 1995, 1996, and 1997 if the State deposits the State contribution amount into the State loan fund prior to September 30, 1999. ”(f) TYPES OF ASSISTANCE.\u2014Except as other- wise limited by State law, the amounts deposited into a State loan fund under this section may be used only\u2014 ”(1) to make loans, on the condition that\u2014 ”(A) the interest rate for each loan is less than or equal to the market interest rate, in- cluding an interest free loan; ”(B) principal and interest payments on each loan will commence not later than 1 year after completion of the project for which the loan was made, and each loan will be fully amortized not later than 20 years after the completion of the project, except that in the case of a disadvan- taged community (as defined in subsection (d)(3)), a State may provide an extended term for a loan, if the extended term\u2014 ”(i) terminates not later than the date that is 30 years after the date of project completion; and ”(ii) does not exceed the expected design life of the project; ”(C) the recipient of each loan will establish a dedicated source of revenue (or, in the case of a privately owned system, demonstrate that there is adequate security) for the repayment of the loan; and ”(D) the State loan fund will be credited with all payments of principal and interest on each loan; ”(2) to buy or refinance the debt obligation of a municipality or an intermunicipal or inter- state agency within the State at an interest rate that is less than or equal to the market interest rate in any case in which a debt obligation is in- curred after July 1, 1993; ”(3) to guarantee, or purchase insurance for, a local obligation (all of the proceeds of which finance a project eligible for assistance under this section) if the guarantee or purchase would improve credit market access or reduce the inter- est rate applicable to the obligation; ”(4) as a source of revenue or security for the payment of principal and interest on revenue or general obligation bonds issued by the State if the proceeds of the sale of the bonds will be de- posited into the State loan fund; and ”(5) to earn interest on the amounts deposited into the State loan fund. ”(g) ADMINISTRATION OF STATE LOAN FUNDS.\u2014 ”(1) COMBINED FINANCIAL ADMINISTRATION.\u2014 Notwithstanding subsection (c), a State may (as a convenience and to avoid unnecessary admin- istrative costs) combine, in accordance with State law, the financial administration of a State loan fund established under this section with the financial administration of any other revolving fund established by the State if other- wise not prohibited by the law under which the State loan fund was established and if the Ad- ministrator determines that\u2014 ”(A) the grants under this section, together with loan repayments and interest, will be sepa- rately accounted for and used solely for the pur- poses specified in subsection (a); and ”(B) the authority to establish assistance pri- orities and carry out oversight and related ac- tivities (other than financial administration) with respect to assistance remains with the State agency having primary responsibility for administration of the State program under sec- tion 1413, after consultation with other appro- priate State agencies (as determined by the State): Provided, That in nonprimacy States eli- gible to receive assistance under this section, the Governor shall determine which State agency will have authority to establish priorities for fi- nancial assistance from the State loan fund. ”(2) COST OF ADMINISTERING FUND.\u2014Each State may annually use up to 4 percent of the funds allotted to the State under this section to cover the reasonable costs of administration of the programs under this section, including the recovery of reasonable costs expended to estab- lish a State loan fund which are incurred after the date of enactment of this section, and to provide technical assistance to public water sys- tems within the State. For fiscal year 1995 and each fiscal year thereafter, each State may use up to an additional 10 percent of the funds al- lotted to the State under this section\u2014 ”(A) for public water system supervision pro- grams under section 1443(a); ”(B) to administer or provide technical assist- ance through source water protection programs; ”(C) to develop and implement a capacity de- velopment strategy under section 1420(c); and ”(D) for an operator certification program for purposes of meeting the requirements of section 1419, if the State matches the expenditures with at least an equal amount of State funds. At least half of the match must be additional to the amount expended by the State for public water supervision in fiscal year 1993. An additional 2 percent of the funds annually allotted to each State under this section may be used by the State to provide technical assistance to public water systems serving 10,000 or fewer persons in the State. Funds utilized under subparagraph (B) shall not be used for enforcement actions. ”(3) GUIDANCE AND REGULATIONS.\u2014The Ad- ministrator shall publish guidance and promul- gate regulations as may be necessary to carry out the provisions of this section, including\u2014 ”(A) provisions to ensure that each State com- mits and expends funds allotted to the State under this section as efficiently as possible in accordance with this title and applicable State laws; ”(B) guidance to prevent waste, fraud, and abuse; and ”(C) guidance to avoid the use of funds made available under this section to finance the ex- pansion of any public water system in anticipa- tion of future population growth. The guidance and regulations shall also ensure that the States, and public water systems receiv- ing assistance under this section, use account- ing, audit, and fiscal procedures that conform to generally accepted accounting standards. ”(4) STATE REPORT.\u2014Each State administer- ing a loan fund and assistance program under this subsection shall publish and submit to the Administrator a report every 2 years on its ac- tivities under this section, including the find- ings of the most recent audit of the fund and the entire State allotment. The Administrator shall periodically audit all State loan funds es- tablished by, and all other amounts allotted to, the States pursuant to this section in accord- ance with procedures established by the Comp- troller General. ”(h) NEEDS SURVEY.\u2014The Administrator shall conduct an assessment of water system capital improvement needs of all eligible public water systems in the United States and submit a report to the Congress containing the results of the as- sessment within 180 days after the date of enact- ment of the Safe Drinking Water Act Amend- ments of 1996 and every 4 years thereafter. ”(i) INDIAN TRIBES.\u2014 ”(1) IN GENERAL.\u201411\u20442 percent of the amounts appropriated annually to carry out this section may be used by the Administrator to make grants to Indian Tribes and Alaska Native vil- lages that have not otherwise received either grants from the Administrator under this section or assistance from State loan funds established under this section. The grants may only be used for expenditures by tribes and villages for public water system expenditures referred to in sub- section (a)(2). ”(2) USE OF FUNDS.\u2014Funds reserved pursuant to paragraph (1) shall be used to address the most significant threats to public health associ- ated with public water systems that serve In- dian Tribes, as determined by the Administrator in consultation with the Director of the Indian Health Service and Indian Tribes. ”(3) ALASKA NATIVE VILLAGES.\u2014In the case of a grant for a project under this subsection in an Alaska Native village, the Administrator is also authorized to make grants to the State of Alaska for the benefit of Native villages. An amount not to exceed 4 percent of the grant amount may be used by the State of Alaska for project manage- ment. ”(4) NEEDS ASSESSMENT.\u2014The Administrator, in consultation with the Director of the Indian Health Service and Indian Tribes, shall, in ac- cordance with a schedule that is consistent with the needs surveys conducted pursuant to sub- section (h), prepare surveys and assess the needs of drinking water treatment facilities to serve Indian Tribes, including an evaluation of the public water systems that pose the most sig- nificant threats to public health. ”(j) OTHER AREAS.\u2014Of the funds annually available under this section for grants to States, the Administrator shall make allotments in ac- cordance with section 1443(a)(4) for the Virgin Islands, the Commonwealth of the Northern Mariana Islands, American Samoa, and Guam. The grants allotted as provided in this sub- section may be provided by the Administrator to the governments of such areas, to public water systems in such areas, or to both, to be used for the public water system expenditures referred to in subsection (a)(2). The grants, and grants for the District of Columbia, shall not be deposited in State loan funds. The total allotment of grants under this section for all areas described in this subsection in any fiscal year shall not exceed 0.33 percent of the aggregate amount made available to carry out this section in that fiscal year. ”(k) OTHER AUTHORIZED ACTIVITIES.\u2014 ”(1) IN GENERAL.\u2014Notwithstanding subsection (a)(2), a State may take each of the following actions: ”(A) Provide assistance, only in the form of a loan, to one or more of the following: ”(i) Any public water system described in sub- section (a)(2) to acquire land or a conservation easement from a willing seller or grantor, if the purpose of the acquisition is to protect the source water of the system from contamination and to ensure compliance with national primary drinking water regulations. ”(ii) Any community water system to imple- ment local, voluntary source water protection measures to protect source water in areas delin- eated pursuant to section 1453, in order to facili- tate compliance with national primary drinking water regulations applicable to the system under section 1412 or otherwise significantly further the health protection objectives of this title. Funds authorized under this clause may be used to fund only voluntary, incentive-based mecha- nisms. ”(iii) Any community water system to provide funding in accordance with section 1454(a)(1)(B)(i). ”(B) Provide assistance, including technical and financial assistance, to any public water CONGRESSIONAL RECORD \u2014 HOUSE H9695August 1, 1996 system as part of a capacity development strat- egy developed and implemented in accordance with section 1420(c). ”(C) Make expenditures from the capitaliza- tion grant of the State for fiscal years 1996 and 1997 to delineate and assess source water protec- tion areas in accordance with section 1453, ex- cept that funds set aside for such expenditure shall be obligated within 4 fiscal years. ”(D) Make expenditures from the fund for the establishment and implementation of wellhead protection programs under section 1428. ”(2) LIMITATION.\u2014For each fiscal year, the total amount of assistance provided and expend- itures made by a State under this subsection may not exceed 15 percent of the amount of the capitalization grant received by the State for that year and may not exceed 10 percent of that amount for any one of the following activities: ”(A) To acquire land or conservation ease- ments pursuant to paragraph (1)(A)(i). ”(B) To provide funding to implement vol- untary, incentive-based source water quality protection measures pursuant to clauses (ii) and (iii) of paragraph (1)(A). ”(C) To provide assistance through a capacity development strategy pursuant to paragraph (1)(B). ”(D) To make expenditures to delineate or as- sess source water protection areas pursuant to paragraph (1)(C). ”(E) To make expenditures to establish and implement wellhead protection programs pursu- ant to paragraph (1)(D). ”(3) STATUTORY CONSTRUCTION.\u2014Nothing in this section creates or conveys any new author- ity to a State, political subdivision of a State, or community water system for any new regulatory measure, or limits any authority of a State, po- litical subdivision of a State or community water system. ”(l) SAVINGS.\u2014The failure or inability of any public water system to receive funds under this section or any other loan or grant program, or any delay in obtaining the funds, shall not alter the obligation of the system to comply in a time- ly manner with all applicable drinking water standards and requirements of this title. ”(m) AUTHORIZATION OF APPROPRIATIONS.\u2014 There are authorized to be appropriated to carry out the purposes of this section $599,000,000 for the fiscal year 1994 and $1,000,000,000 for each of the fiscal years 1995 through 2003. To the ex- tent amounts authorized to be appropriated under this subsection in any fiscal year are not appropriated in that fiscal year, such amounts are authorized to be appropriated in a subse- quent fiscal year (prior to the fiscal year 2004). Such sums shall remain available until ex- pended. ”(n) HEALTH EFFECTS STUDIES.\u2014From funds appropriated pursuant to this section for each fiscal year, the Administrator shall reserve $10,000,000 for health effects studies on drinking water contaminants authorized by the Safe Drinking Water Act Amendments of 1996. In al- locating funds made available under this sub- section, the Administrator shall give priority to studies concerning the health effects of cryptosporidium (as authorized by section 1458(c)), disinfection byproducts (as authorized by section 1458(c)), and arsenic (as authorized by section 1412(b)(12)(A)), and the implementa- tion of a plan for studies of subpopulations at greater risk of adverse effects (as authorized by section 1458(a)). ”(o) MONITORING FOR UNREGULATED CON- TAMINANTS.\u2014From funds appropriated pursuant to this section for each fiscal year beginning with fiscal year 1998, the Administrator shall re- serve $2,000,000 to pay the costs of monitoring for unregulated contaminants under section 1445(a)(2)(C). ”(p) DEMONSTRATION PROJECT FOR STATE OF VIRGINIA.\u2014Notwithstanding the other provi- sions of this section limiting the use of funds de- posited in a State loan fund from any State al- lotment, the State of Virginia may, as a single demonstration and with the approval of the Vir- ginia General Assembly and the Administrator, conduct a program to demonstrate alternative approaches to intergovernmental coordination to assist in the financing of new drinking water facilities in the following rural communities in southwestern Virginia where none exists on the date of enactment of the Safe Drinking Water Act Amendments of 1996 and where such com- munities are experiencing economic hardship: Lee County, Wise County, Scott County, Dickenson County, Russell County, Buchanan County, Tazewell County, and the city of Nor- ton, Virginia. The funds allotted to that State and deposited in the State loan fund may be loaned to a regional endowment fund for the purpose set forth in this subsection under a plan to be approved by the Administrator. The plan may include an advisory group that includes representatives of such counties. ”(q) SMALL SYSTEM TECHNICAL ASSISTANCE.\u2014 The Administrator may reserve up to 2 percent of the total funds appropriated pursuant to sub- section (m) for each of the fiscal years 1997 through 2003 to carry out the provisions of sec- tion 1442(e) (relating to technical assistance for small systems), except that the total amount of funds made available for such purpose in any fiscal year through appropriations (as author- ized by section 1442(e)) and reservations made pursuant to this subsection shall not exceed the amount authorized by section 1442(e). ”(r) EVALUATION.\u2014The Administrator shall conduct an evaluation of the effectiveness of the State loan funds through fiscal year 2001. The evaluation shall be submitted to the Congress at the same time as the President submits to the Congress, pursuant to section 1108 of title 31, United States Code, an appropriations request for fiscal year 2003 relating to the budget of the Environmental Protection Agency.”. SEC. 131. STATE GROUND WATER PROTECTION GRANTS. Part C (42 U.S.C. 300j et seq.) is amended by adding at the end the following: ”STATE GROUND WATER PROTECTION GRANTS ”SEC. 1429. (a) IN GENERAL.\u2014The Adminis- trator may make a grant to a State for the de- velopment and implementation of a State pro- gram to ensure the coordinated and comprehen- sive protection of ground water resources within the State. ”(b) GUIDANCE.\u2014Not later than 1 year after the date of enactment of the Safe Drinking Water Act Amendments of 1996, and annually thereafter, the Administrator shall publish guid- ance that establishes procedures for application for State ground water protection program as- sistance and that identifies key elements of State ground water protection programs. ”(c) CONDITIONS OF GRANTS.\u2014 ”(1) IN GENERAL.\u2014The Administrator shall award grants to States that submit an applica- tion that is approved by the Administrator. The Administrator shall determine the amount of a grant awarded pursuant to this paragraph on the basis of an assessment of the extent of ground water resources in the State and the likelihood that awarding the grant will result in sustained and reliable protection of ground water quality. ”(2) INNOVATIVE PROGRAM GRANTS.\u2014The Ad- ministrator may also award a grant pursuant to this subsection for innovative programs pro- posed by a State for the prevention of ground water contamination. ”(3) ALLOCATION OF FUNDS.\u2014The Adminis- trator shall, at a minimum, ensure that, for each fiscal year, not less than 1 percent of funds made available to the Administrator by appro- priations to carry out this section are allocated to each State that submits an application that is approved by the Administrator pursuant to this section. ”(4) LIMITATION ON GRANTS.\u2014No grant awarded by the Administrator may be used for a project to remediate ground water contamina- tion. ”(d) AMOUNT OF GRANTS.\u2014The amount of a grant awarded pursuant to paragraph (1) shall not exceed 50 percent of the eligible costs of car- rying out the ground water protection program that is the subject of the grant (as determined by the Administrator) for the 1-year period be- ginning on the date that the grant is awarded. The State shall pay a State share to cover the costs of the ground water protection program from State funds in an amount that is not less than 50 percent of the cost of conducting the program. ”(e) EVALUATIONS AND REPORTS.\u2014Not later than 3 years after the date of enactment of the Safe Drinking Water Act Amendments of 1996, and every 3 years thereafter, the Administrator shall evaluate the State ground water protection programs that are the subject of grants awarded pursuant to this section and report to the Con- gress on the status of ground water quality in the United States and the effectiveness of State programs for ground water protection. ”(f) AUTHORIZATION OF APPROPRIATIONS.\u2014 There are authorized to be appropriated to carry out this section $15,000,000 for each of fiscal years 1997 through 2003.”. SEC. 132. SOURCE WATER ASSESSMENT. (a) IN GENERAL.\u2014Part E (42 U.S.C. 300j et seq.) is amended by adding at the end the fol- lowing: ”SOURCE WATER QUALITY ASSESSMENT ”SEC. 1453. (a) SOURCE WATER ASSESSMENT.\u2014 ”(1) GUIDANCE.\u2014Within 12 months after the date of enactment of the Safe Drinking Water Act Amendments of 1996, after notice and com- ment, the Administrator shall publish guidance for States exercising primary enforcement re- sponsibility for public water systems to carry out directly or through delegation (for the pro- tection and benefit of public water systems and for the support of monitoring flexibility) a source water assessment program within the State’s boundaries. Each State adopting modi- fications to monitoring requirements pursuant to section 1418(b) shall, prior to adopting such modifications, have an approved source water assessment program under this section and shall carry out the program either directly or through delegation. ”(2) PROGRAM REQUIREMENTS.\u2014A source water assessment program under this subsection shall\u2014 ”(A) delineate the boundaries of the assess- ment areas in such State from which one or more public water systems in the State receive supplies of drinking water, using all reasonably available hydrogeologic information on the sources of the supply of drinking water in the State and the water flow, recharge, and dis- charge and any other reliable information as the State deems necessary to adequately deter- mine such areas; and ”(B) identify for contaminants regulated under this title for which monitoring is required under this title (or any unregulated contami- nants selected by the State, in its discretion, which the State, for the purposes of this sub- section, has determined may present a threat to public health), to the extent practical, the ori- gins within each delineated area of such con- taminants to determine the susceptibility of the public water systems in the delineated area to such contaminants. ”(3) APPROVAL, IMPLEMENTATION, AND MON- ITORING RELIEF.\u2014A State source water assess- ment program under this subsection shall be submitted to the Administrator within 18 months after the Administrator’s guidance is issued under this subsection and shall be deemed ap- proved 9 months after the date of such submittal unless the Administrator disapproves the pro- gram as provided in section 1428(c). States shall begin implementation of the program imme- diately after its approval. The Administrator’s approval of a State program under this sub- section shall include a timetable, established in consultation with the State, allowing not more CONGRESSIONAL RECORD \u2014 HOUSEH9696 August 1, 1996 than 2 years for completion after approval of the program. Public water systems seeking mon- itoring relief in addition to the interim relief provided under section 1418(a) shall be eligible for monitoring relief, consistent with section 1418(b), upon completion of the assessment in the delineated source water assessment area or areas concerned. ”(4) TIMETABLE.\u2014The timetable referred to in paragraph (3) shall take into consideration the availability to the State of funds under section 1452 (relating to State loan funds) for assess- ments and other relevant factors. The Adminis- trator may extend any timetable included in a State program approved under paragraph (3) to extend the period for completion by an addi- tional 18 months. ”(5) DEMONSTRATION PROJECT.\u2014The Adminis- trator shall, as soon as practicable, conduct a demonstration project, in consultation with other Federal agencies, to demonstrate the most effective and protective means of assessing and protecting source waters serving large metropoli- tan areas and located on Federal lands. ”(6) USE OF OTHER PROGRAMS.\u2014To avoid du- plication and to encourage efficiency, the pro- gram under this section may make use of any of the following: ”(A) Vulnerability assessments, sanitary sur- veys, and monitoring programs. ”(B) Delineations or assessments of ground water sources under a State wellhead protection program developed pursuant to this section. ”(C) Delineations or assessments of surface or ground water sources under a State pesticide management plan developed pursuant to the Pesticide and Ground Water State Management Plan Regulation (subparts I and J of part 152 of title 40, Code of Federal Regulations), promul- gated under section 3(d) of the Federal Insecti- cide, Fungicide, and Rodenticide Act (7 U.S.C. 136a(d)). ”(D) Delineations or assessments of surface water sources under a State watershed initiative or to satisfy the watershed criterion for deter- mining if filtration is required under the Surface Water Treatment Rule (section 141.70 of title 40, Code of Federal Regulations). ”(E) Delineations or assessments of surface or ground water sources under programs or plans pursuant to the Federal Water Pollution Con- trol Act. ”(7) PUBLIC AVAILABILITY.\u2014The State shall make the results of the source water assessments conducted under this subsection available to the public. ”(b) APPROVAL AND DISAPPROVAL.\u2014For provi- sions relating to program approval and dis- approval, see section 1428(c).”. (b) APPROVAL AND DISAPPROVAL OF STATE PROGRAMS.\u2014Section 1428 (42 U.S.C. 300h 7) is amended as follows: (1) Amend the first sentence of subsection (c)(1) to read as follows: ”If, in the judgment of the Administrator, a State program or portion thereof under subsection (a) is not adequate to protect public water systems as required by sub- section (a) or a State program under section 1453 or section 1418(b) does not meet the applicable requirements of section 1453 or section 1418(b), the Administrator shall disapprove such pro- gram or portion thereof.”. (2) Add after the second sentence of sub- section (c)(1) the following: ”A State program developed pursuant to section 1453 or section 1418(b) shall be deemed to meet the applicable requirements of section 1453 or section 1418(b) unless the Administrator determines within 9 months of the receipt of the program that such program (or portion thereof) does not meet such requirements.”. (3) In the third sentence of subsection (c)(1) and in subsection (c)(2), strike ”is inadequate” and insert ”is disapproved”. (4) In subsection (b), add the following before the period at the end of the first sentence: ”and source water assessment programs under section 1453”. SEC. 133. SOURCE WATER PETITION PROGRAM. (a) IN GENERAL.\u2014Part E (42 U.S.C. 300j et seq.) is amended by adding at the end the fol- lowing: ”SOURCE WATER PETITION PROGRAM ”SEC. 1454. (a) PETITION PROGRAM.\u2014 ”(1) IN GENERAL.\u2014 ”(A) ESTABLISHMENT.\u2014A State may establish a program under which an owner or operator of a community water system in the State, or a mu- nicipal or local government or political subdivi- sion of a State, may submit a source water qual- ity protection partnership petition to the State requesting that the State assist in the local de- velopment of a voluntary, incentive-based part- nership, among the owner, operator, or govern- ment and other persons likely to be affected by the recommendations of the partnership, to\u2014 ”(i) reduce the presence in drinking water of contaminants that may be addressed by a peti- tion by considering the origins of the contami- nants, including to the maximum extent prac- ticable the specific activities that affect the drinking water supply of a community; ”(ii) obtain financial or technical assistance necessary to facilitate establishment of a part- nership, or to develop and implement rec- ommendations of a partnership for the protec- tion of source water to assist in the provision of drinking water that complies with national pri- mary drinking water regulations with respect to contaminants addressed by a petition; and ”(iii) develop recommendations regarding vol- untary and incentive-based strategies for the long-term protection of the source water of com- munity water systems. ”(B) FUNDING.\u2014Each State may\u2014 ”(i) use funds set aside pursuant to section 1452(k)(1)(A)(iii) by the State to carry out a pro- gram described in subparagraph (A), including assistance to voluntary local partnerships for the development and implementation of partner- ship recommendations for the protection of source water such as source water quality as- sessment, contingency plans, and demonstration projects for partners within a source water area delineated under section 1453(a); and ”(ii) provide assistance in response to a peti- tion submitted under this subsection using funds referred to in subsection (b)(2)(B). ”(2) OBJECTIVES.\u2014The objectives of a petition submitted under this subsection shall be to\u2014 ”(A) facilitate the local development of vol- untary, incentive-based partnerships among owners and operators of community water sys- tems, governments, and other persons in source water areas; and ”(B) obtain assistance from the State in iden- tifying resources which are available to imple- ment the recommendations of the partnerships to address the origins of drinking water con- taminants that may be addressed by a petition (including to the maximum extent practicable the specific activities contributing to the pres- ence of the contaminants) that affect the drink- ing water supply of a community. ”(3) CONTAMINANTS ADDRESSED BY A PETI- TION.\u2014A petition submitted to a State under this subsection may address only those contami- nants\u2014 ”(A) that are pathogenic organisms for which a national primary drinking water regulation has been established or is required under section 1412; or ”(B) for which a national primary drinking water regulation has been promulgated or pro- posed and that are detected by adequate mon- itoring methods in the source water at the in- take structure or in any collection, treatment, storage, or distribution facilities by the commu- nity water systems at levels\u2014 ”(i) above the maximum contaminant level; or ”(ii) that are not reliably and consistently below the maximum contaminant level. ”(4) CONTENTS.\u2014A petition submitted under this subsection shall, at a minimum\u2014 ”(A) include a delineation of the source water area in the State that is the subject of the peti- tion; ”(B) identify, to the maximum extent prac- ticable, the origins of the drinking water con- taminants that may be addressed by a petition (including to the maximum extent practicable the specific activities contributing to the pres- ence of the contaminants) in the source water area delineated under section 1453; ”(C) identify any deficiencies in information that will impair the development of rec- ommendations by the voluntary local partner- ship to address drinking water contaminants that may be addressed by a petition; ”(D) specify the efforts made to establish the voluntary local partnership and obtain the par- ticipation of\u2014 ”(i) the municipal or local government or other political subdivision of the State with ju- risdiction over the source water area delineated under section 1453; and ”(ii) each person in the source water area de- lineated under section 1453\u2014 ”(I) who is likely to be affected by rec- ommendations of the voluntary local partner- ship; and ”(II) whose participation is essential to the success of the partnership; ”(E) outline how the voluntary local partner- ship has or will, during development and imple- mentation of recommendations of the voluntary local partnership, identify, recognize and take into account any voluntary or other activities already being undertaken by persons in the source water area delineated under section 1453 under Federal or State law to reduce the likeli- hood that contaminants will occur in drinking water at levels of public health concern; and ”(F) specify the technical, financial, or other assistance that the voluntary local partnership requests of the State to develop the partnership or to implement recommendations of the part- nership. ”(b) APPROVAL OR DISAPPROVAL OF PETI- TIONS.\u2014 ”(1) IN GENERAL.\u2014After providing notice and an opportunity for public comment on a petition submitted under subsection (a), the State shall approve or disapprove the petition, in whole or in part, not later than 120 days after the date of submission of the petition. ”(2) APPROVAL.\u2014The State may approve a pe- tition if the petition meets the requirements es- tablished under subsection (a). The notice of ap- proval shall, at a minimum, include for informa- tional purposes\u2014 ”(A) an identification of technical, financial, or other assistance that the State will provide to assist in addressing the drinking water contami- nants that may be addressed by a petition based on\u2014 ”(i) the relative priority of the public health concern identified in the petition with respect to the other water quality needs identified by the State; ”(ii) any necessary coordination that the State will perform of the program established under this section with programs implemented or planned by other States under this section; and ”(iii) funds available (including funds avail- able from a State revolving loan fund estab- lished under title VI of the Federal Water Pollu- tion Control Act (33 U.S.C. 1381 et seq.) or sec- tion 1452; ”(B) a description of technical or financial as- sistance pursuant to Federal and State pro- grams that is available to assist in implementing recommendations of the partnership in the peti- tion, including\u2014 ”(i) any program established under the Fed- eral Water Pollution Control Act (33 U.S.C. 1251 et seq.); ”(ii) the program established under section 6217 of the Coastal Zone Act Reauthorization Amendments of 1990 (16 U.S.C. 1455b); ”(iii) the agricultural water quality protection program established under chapter 2 of subtitle D of title XII of the Food Security Act of 1985 (16 U.S.C. 3838 et seq.); CONGRESSIONAL RECORD \u2014 HOUSE H9697August 1, 1996 ”(iv) the sole source aquifer protection pro- gram established under section 1427; ”(v) the community wellhead protection pro- gram established under section 1428; ”(vi) any pesticide or ground water manage- ment plan; ”(vii) any voluntary agricultural resource management plan or voluntary whole farm or whole ranch management plan developed and implemented under a process established by the Secretary of Agriculture; and ”(viii) any abandoned well closure program; and ”(C) a description of activities that will be un- dertaken to coordinate Federal and State pro- grams to respond to the petition. ”(3) DISAPPROVAL.\u2014If the State disapproves a petition submitted under subsection (a), the State shall notify the entity submitting the peti- tion in writing of the reasons for disapproval. A petition may be resubmitted at any time if\u2014 ”(A) new information becomes available; ”(B) conditions affecting the source water that is the subject of the petition change; or ”(C) modifications are made in the type of as- sistance being requested. ”(c) GRANTS TO SUPPORT STATE PROGRAMS.\u2014 ”(1) IN GENERAL.\u2014The Administrator may make a grant to each State that establishes a program under this section that is approved under paragraph (2). The amount of each grant shall not exceed 50 percent of the cost of admin- istering the program for the year in which the grant is available. ”(2) APPROVAL.\u2014In order to receive grant as- sistance under this subsection, a State shall sub- mit to the Administrator for approval a plan for a source water quality protection partnership program that is consistent with the guidance published under subsection (d). The Adminis- trator shall approve the plan if the plan is con- sistent with the guidance published under sub- section (d). ”(d) GUIDANCE.\u2014 ”(1) IN GENERAL.\u2014Not later than 1 year after the date of enactment of this section, the Ad- ministrator, in consultation with the States, shall publish guidance to assist\u2014 ”(A) States in the development of a source water quality protection partnership program; and ”(B) municipal or local governments or politi- cal subdivisions of a State and community water systems in the development of source water quality protection partnerships and in the as- sessment of source water quality. ”(2) CONTENTS OF THE GUIDANCE.\u2014The guid- ance shall, at a minimum\u2014 ”(A) recommend procedures for the approval or disapproval by a State of a petition submitted under subsection (a); ”(B) recommend procedures for the submission of petitions developed under subsection (a); ”(C) recommend criteria for the assessment of source water areas within a State; and ”(D) describe technical or financial assistance pursuant to Federal and State programs that is available to address the contamination of sources of drinking water and to develop and re- spond to petitions submitted under subsection (a). ”(e) AUTHORIZATION OF APPROPRIATIONS.\u2014 There are authorized to be appropriated to carry out this section $5,000,000 for each of the fiscal years 1997 through 2003. Each State with a plan for a program approved under subsection (b) shall receive an equitable portion of the funds available for any fiscal year. ”(f) STATUTORY CONSTRUCTION.\u2014Nothing in this section\u2014 ”(1)(A) creates or conveys new authority to a State, political subdivision of a State, or commu- nity water system for any new regulatory meas- ure; or ”(B) limits any authority of a State, political subdivision, or community water system; or ”(2) precludes a community water system, mu- nicipal or local government, or political subdivi- sion of a government from locally developing and carrying out a voluntary, incentive-based, source water quality protection partnership to address the origins of drinking water contami- nants of public health concern.”. (b) SENSE OF THE CONGRESS.\u2014It is the sense of the Congress that each State in establishing pri- orities under section 606(c)(1) of the Federal Water Pollution Control Act should give special consideration to projects that are eligible for funding under that Act and have been rec- ommended pursuant to a petition submitted under section 1454 of the Safe Drinking Water Act. SEC. 134. WATER CONSERVATION PLAN. Part E (42 U.S.C. 300j et seq.) is amended by adding at the end the following: ”WATER CONSERVATION PLAN ”SEC. 1455. (a) GUIDELINES.\u2014Not later than 2 years after the date of enactment of the Safe Drinking Water Act Amendments of 1996, the Administrator shall publish in the Federal Reg- ister guidelines for water conservation plans for public water systems serving fewer than 3,300 persons, public water systems serving between 3,300 and 10,000 persons, and public water sys- tems serving more than 10,000 persons, taking into consideration such factors as water avail- ability and climate. ”(b) LOANS OR GRANTS.\u2014Within 1 year after publication of the guidelines under subsection (a), a State exercising primary enforcement re- sponsibility for public water systems may re- quire a public water system, as a condition of receiving a loan or grant from a State loan fund under section 1452, to submit with its applica- tion for such loan or grant a water conservation plan consistent with such guidelines.”. SEC. 135. DRINKING WATER ASSISTANCE TO COLONIAS. Part E (42 U.S.C. 300j et seq.) is amended by adding the following new section at the end thereof: ”ASSISTANCE TO COLONIAS ”SEC. 1456. (a) DEFINITIONS.\u2014As used in this section: ”(1) BORDER STATE.\u2014The term ‘border State’ means Arizona, California, New Mexico, and Texas. ”(2) ELIGIBLE COMMUNITY.\u2014The term ‘eligible community’ means a low-income community with economic hardship that\u2014 ”(A) is commonly referred to as a colonia; ”(B) is located along the United States-Mexico border (generally in an unincorporated area); and ”(C) lacks a safe drinking water supply or adequate facilities for the provision of safe drinking water for human consumption. ”(b) GRANTS TO ALLEVIATE HEALTH RISKS.\u2014 The Administrator of the Environmental Protec- tion Agency and the heads of other appropriate Federal agencies are authorized to award grants to a border State to provide assistance to eligible communities to facilitate compliance with na- tional primary drinking water regulations or otherwise significantly further the health pro- tection objectives of this title. ”(c) USE OF FUNDS.\u2014Each grant awarded pursuant to subsection (b) shall be used to pro- vide assistance to one or more eligible commu- nities with respect to which the residents are subject to a significant health risk (as deter- mined by the Administrator or the head of the Federal agency making the grant) attributable to the lack of access to an adequate and afford- able drinking water supply system. ”(d) COST SHARING.\u2014The amount of a grant awarded pursuant to this section shall not ex- ceed 50 percent of the costs of carrying out the project that is the subject of the grant. ”(e) AUTHORIZATION OF APPROPRIATIONS.\u2014 There are authorized to be appropriated to carry out this section $25,000,000 for each of the fiscal years 1997 through 1999.”. SEC. 136. ESTROGENIC SUBSTANCES SCREENING PROGRAM. Part E (42 U.S.C. 300j et seq.) is amended by adding at the end the following: ”ESTROGENIC SUBSTANCES SCREENING PROGRAM ”SEC. 1457. In addition to the substances re- ferred to in section 408(p)(3)(B) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 346a(p)(3)(B)) the Administrator may provide for testing under the screening program authorized by section 408(p) of such Act, in accordance with the provisions of section 408(p) of such Act, of any other substance that may be found in sources of drinking water if the Administrator determines that a substantial population may be exposed to such substance.”. SEC. 137. DRINKING WATER STUDIES. Part E (42 U.S.C. 300j et seq.) is amended by adding after section 1457 the following: ”DRINKING WATER STUDIES ”SEC. 1458. (a) SUBPOPULATIONS AT GREATER RISK.\u2014 ”(1) IN GENERAL.\u2014The Administrator shall conduct a continuing program of studies to identify groups within the general population that may be at greater risk than the general population of adverse health effects from expo- sure to contaminants in drinking water. The study shall examine whether and to what degree infants, children, pregnant women, the elderly, individuals with a history of serious illness, or other subpopulations that can be identified and characterized are likely to experience elevated health risks, including risks of cancer, from con- taminants in drinking water. ”(2) REPORT.\u2014Not later than 4 years after the date of enactment of this subsection and peri- odically thereafter as new and significant infor- mation becomes available, the Administrator shall report to the Congress on the results of the studies. ”(b) BIOLOGICAL MECHANISMS.\u2014The Adminis- trator shall conduct biomedical studies to\u2014 ”(1) understand the mechanisms by which chemical contaminants are absorbed, distrib- uted, metabolized, and eliminated from the human body, so as to develop more accurate physiologically based models of the phenomena; ”(2) understand the effects of contaminants and the mechanisms by which the contaminants cause adverse effects (especially noncancer and infectious effects) and the variations in the ef- fects among humans, especially subpopulations at greater risk of adverse effects, and between test animals and humans; and ”(3) develop new approaches to the study of complex mixtures, such as mixtures found in drinking water, especially to determine the pros- pects for synergistic or antagonistic interactions that may affect the shape of the dose-response relationship of the individual chemicals and mi- crobes, and to examine noncancer endpoints and infectious diseases, and susceptible individ- uals and subpopulations. ”(c) STUDIES ON HARMFUL SUBSTANCES IN DRINKING WATER.\u2014 ”(1) DEVELOPMENT OF STUDIES.\u2014The Admin- istrator shall, not later than 180 days after the date of enactment of this section and after con- sultation with the Secretary of Health and Human Services, the Secretary of Agriculture, and, as appropriate, the heads of other Federal agencies, conduct the studies described in para- graph (2) to support the development and imple- mentation of the most current version of each of the following: ”(A) Enhanced Surface Water Treatment Rule (59 Fed. Reg. 38832 (July 29, 1994)). ”(B) Disinfectant and Disinfection Byprod- ucts Rule (59 Fed. Reg. 38668 (July 29, 1994)). ”(C) Ground Water Disinfection Rule (avail- ability of draft summary announced at (57 Fed. Reg. 33960; July 31, 1992)). ”(2) CONTENTS OF STUDIES.\u2014The studies re- quired by paragraph (1) shall include, at a mini- mum, each of the following: ”(A) Toxicological studies and, if warranted, epidemiological studies to determine what levels of exposure from disinfectants and disinfection byproducts, if any, may be associated with de- velopmental and birth defects and other poten- tial toxic end points. CONGRESSIONAL RECORD \u2014 HOUSEH9698 August 1, 1996 ”(B) Toxicological studies and, if warranted, epidemiological studies to quantify the carcino- genic potential from exposure to disinfection by- products resulting from different disinfectants. ”(C) The development of dose-response curves for pathogens, including cryptosporidium and the Norwalk virus. ”(3) AUTHORIZATION OF APPROPRIATIONS.\u2014 There are authorized to be appropriated to carry out this subsection $12,500,000 for each of fiscal years 1997 through 2003. ”(d) WATERBORNE DISEASE OCCURRENCE STUDY.\u2014 ”(1) SYSTEM.\u2014The Director of the Centers for Disease Control and Prevention, and the Ad- ministrator shall jointly\u2014 ”(A) within 2 years after the date of enact- ment of this section, conduct pilot waterborne disease occurrence studies for at least 5 major United States communities or public water sys- tems; and ”(B) within 5 years after the date of enact- ment of this section, prepare a report on the findings of the pilot studies, and a national esti- mate of waterborne disease occurrence. ”(2) TRAINING AND EDUCATION.\u2014The Director and Administrator shall jointly establish a na- tional health care provider training and public education campaign to inform both the profes- sional health care provider community and the general public about waterborne disease and the symptoms that may be caused by infectious agents, including microbial contaminants. In developing such a campaign, they shall seek comment from interested groups and individ- uals, including scientists, physicians, State and local governments, environmental groups, public water systems, and vulnerable populations. ”(3) FUNDING.\u2014There are authorized to be ap- propriated for each of the fiscal years 1997 through 2001, $3,000,000 to carry out this sub- section. To the extent funds under this sub- section are not fully appropriated, the Adminis- trator may use not more than $2,000,000 of the funds from amounts reserved under section 1452(n) for health effects studies for purposes of this subsection. The Administrator may transfer a portion of such funds to the Centers for Dis- ease Control and Prevention for such pur- poses.”. TITLE II\u2014DRINKING WATER RESEARCH SEC. 201. DRINKING WATER RESEARCH AUTHOR- IZATION. Other than amounts authorized to be appro- priated to the Administrator of the Environ- mental Protection Agency under other titles of this Act, there are authorized to be appropriated such additional sums as may be necessary for drinking water research for fiscal years 1997 through 2003. The annual total of such addi- tional sums authorized to be appropriated under this section shall not exceed $26,593,000. SEC. 202. SCIENTIFIC RESEARCH REVIEW. (a) IN GENERAL.\u2014The Administrator shall\u2014 (1) develop a strategic plan for drinking water research activities throughout the Environ- mental Protection Agency (in this section re- ferred to as the ”Agency”); (2) integrate that strategic plan into ongoing Agency planning activities; and (3) review all Agency drinking water research to ensure the research\u2014 TITLE III\u2014MISCELLANEOUS PROVISIONS SEC. 301. WATER RETURN FLOWS. Section 3013 of Public Law 102 486 (42 U.S.C. 13551) is repealed. SEC. 302. TRANSFER OF FUNDS. (a) IN GENERAL.\u2014Notwithstanding any other provision of law, at any time after the date 1 year after a State establishes a State loan fund pursuant to section 1452 of the Safe Drinking Water Act but prior to fiscal year 2002, a Gov- ernor of the State may\u2014 (1) reserve up to 33 percent of a capitalization grant made pursuant to such section 1452 and add the funds reserved to any funds provided to the State pursuant to section 601 of the Federal Water Pollution Control Act (33 U.S.C. 1381); and (2) reserve in any year a dollar amount up to the dollar amount that may be reserved under paragraph (1) for that year from capitalization grants made pursuant to section 601 of such Act (33 U.S.C. 1381) and add the reserved funds to any funds provided to the State pursuant to sec- tion 1452 of the Safe Drinking Water Act. (b) REPORT.\u2014Not later than 4 years after the date of enactment of this Act, the Administrator shall submit a report to the Congress regarding the implementation of this section, together with the Administrator’s recommendations, if any, for modifications or improvement. (c) STATE MATCH.\u2014Funds reserved pursuant to this section shall not be considered to be a State match of a capitalization grant required pursuant to section 1452 of the Safe Drinking Water Act or the Federal Water Pollution Con- trol Act (33 U.S.C. 1251 et seq.). SEC. 303. GRANTS TO ALASKA TO IMPROVE SANI- TATION IN RURAL AND NATIVE VIL- LAGES. (a) IN GENERAL.\u2014The Administrator of the Environmental Protection Agency may make grants to the State of Alaska for the benefit of rural and Native villages in Alaska to pay the Federal share of the cost of\u2014 (1) the development and construction of public water systems and wastewater systems to im- prove the health and sanitation conditions in the villages; and (2) training, technical assistance, and edu- cational programs relating to the operation and management of sanitation services in rural and Native villages. (b) FEDERAL SHARE.\u2014The Federal share of the cost of the activities described in subsection (a) shall be 50 percent. (c) ADMINISTRATIVE EXPENSES.\u2014The State of Alaska may use an amount not to exceed 4 per- cent of any grant made available under this subsection for administrative expenses necessary to carry out the activities described in sub- section (a). (d) CONSULTATION WITH THE STATE OF ALAS- KA.\u2014The Administrator shall consult with the State of Alaska on a method of prioritizing the allocation of grants under subsection (a) accord- ing to the needs of, and relative health and sanitation conditions in, each eligible village. (e) AUTHORIZATION OF APPROPRIATIONS.\u2014 There are authorized to be appropriated $15,000,000 for each of the fiscal years 1997 through 2000 to carry out this section. SEC. 304. SENSE OF THE CONGRESS. It is the sense of the Congress that appropria- tions for grants under section 130 (relating to New York City watershed), section 137 (relating to colonias), and section 303 (relating to Alaska Native villages) should not be provided if such appropriations would prevent the adequate cap- italization of State revolving loan funds. SEC. 305. BOTTLED DRINKING WATER STAND- ARDS. Section 410 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 349) is amended as fol- lows: (1) By striking ”Whenever” and inserting ”(a) Except as provided in subsection (b), when- ever”. (2) By adding at the end the following new subsection: ”(b)(1) Not later than 180 days before the ef- fective date of a national primary drinking water regulation promulgated by the Adminis- trator of the Environmental Protection Agency for a contaminant under section 1412 of the Safe Drinking Water Act (42 U.S.C. 300g 1), the Sec- retary shall promulgate a standard of quality regulation under this subsection for that con- taminant in bottled water or make a finding that such a regulation is not necessary to pro- tect the public health because the contaminant is contained in water in public water systems (as defined under section 1401(4) of such Act (42 U.S.C. 300f(4))) but not in water used for bottled drinking water. The effective date for any such standard of quality regulation shall be the same as the effective date for such national primary drinking water regulation, except for any stand- ard of quality of regulation promulgated by the Secretary before the date of enactment of the Safe Drinking Water Act Amendments of 1996 for which (as of such date of enactment) an ef- fective date had not been established. In the case of a standard of quality regulation to which such exception applies, the Secretary shall promulgate monitoring requirements for the contaminants covered by the regulation not later than 2 years after such date of enactment. ”(2) A regulation issued by the Secretary as provided in this subsection shall include any monitoring requirements that the Secretary de- termines appropriate for bottled water. ”(3) A regulation issued by the Secretary as provided in this subsection shall require the fol- lowing: ”(A) In the case of contaminants for which a maximum contaminant level is established in a national primary drinking water regulation under section 1412 of the Safe Drinking Water Act (42 U.S.C. 300g 1), the regulation under this subsection shall establish a maximum contami- nant level for the contaminant in bottled water which is no less stringent than the maximum contaminant level provided in the national pri- mary drinking water regulation. ”(B) In the case of contaminants for which a treatment technique is established in a national primary drinking water regulation under section 1412 of the Safe Drinking Water Act (42 U.S.C. 300g 1), the regulation under this subsection shall require that bottled water be subject to re- quirements no less protective of the public health than those applicable to water provided by public water systems using the treatment technique required by the national primary drinking water regulation. ”(4)(A) If the Secretary does not promulgate a regulation under this subsection within the pe- riod described in paragraph (1), the national primary drinking water regulation referred to in paragraph (1) shall be considered, as of the date on which the Secretary is required to establish a regulation under paragraph (1), as the regula- tion applicable under this subsection to bottled water. ”(B) In the case of a national primary drink- ing water regulation that pursuant to subpara- graph (A) is considered to be a standard of qual- ity regulation, the Secretary shall, not later than the applicable date referred to in such sub- paragraph, publish in the Federal Register a no- tice\u2014 ”(i) specifying the contents of such regula- tion, including monitoring requirements; and ”(ii) providing that for purposes of this para- graph the effective date for such regulation is the same as the effective date for the regulation for purposes of the Safe Drinking Water Act (or, if the exception under paragraph (1) applies to the regulation, that the effective date for the regulation is not later than 2 years and 180 days after the date of enactment of the Safe Drinking Water Act Amendments of 1996).”. SEC. 306. WASHINGTON AQUEDUCT. (a) DEFINITIONS.\u2014In this section: (1) NON-FEDERAL PUBLIC WATER SUPPLY CUS- TOMER.\u2014The terms ”non-Federal public water supply customer” and ”customer” mean\u2014 (A) the District of Columbia; (B) Arlington County, Virginia; and (C) the city of Falls Church, Virginia. (2) SECRETARY.\u2014The term ”Secretary” means the Secretary of the Army, acting through the Chief of Engineers. (3) VALUE TO THE GOVERNMENT.\u2014The term ”value to the Government” means the net present value of a contract entered into under subsection (e)(2), calculated in accordance with subparagraphs (A) and (B) of section 502(5) of CONGRESSIONAL RECORD \u2014 HOUSE H9699August 1, 1996 the Congressional Budget Act of 1974 (2 U.S.C. 66la(5)), other than section 502(5)(B)(I) of the Act, as though the contract provided for repay- ment of a direct loan to a customer. (4) WASHINGTON AQUEDUCT.\u2014The term ”Washington Aqueduct” means the Washington Aqueduct facilities and related facilities owned by the Federal Government as of the date of en- actment of this Act, including\u2014 (A) the dams, intake works, conduits, and pump stations that capture and transport raw water from the Potomac River to the Dalecarlia Reservoir; (B) the infrastructure and appurtenances used to treat water taken from the Potomac River to potable standards; and (C) related water distribution facilities. (b) REGIONAL ENTITY.\u2014 (1) IN GENERAL.\u2014The Congress encourages and grants consent to the customers to establish a non-Federal public or private entity, or to enter into an agreement with an existing non- Federal public or private entity, to\u2014 (A) receive title to the Washington Aqueduct; and (B) operate, maintain, and manage the Wash- ington Aqueduct in a manner that adequately represents all interests of its customers. (2) CONSIDERATION.\u2014If an entity receiving title to the Washington Aqueduct is not com- posed entirely of non-Federal public water sup- ply customers, the entity shall consider the cus- tomers’ historical provision of equity for the Aq- ueduct. (3) PRIORITY ACCESS.\u2014The customers shall have priority access to any water produced by the Washington Aqueduct. (4) CONSENT OF THE CONGRESS.\u2014The Congress grants consent to the customers to enter into any interstate agreement or compact required to carry out this section. (5) STATUTORY CONSTRUCTION.\u2014This section shall not preclude the customers from pursuing any option regarding ownership, operation, maintenance, and management of the Washing- ton Aqueduct. (c) PROGRESS REPORT AND PLAN.\u2014Not later than 1 year after the date of enactment of this Act, the Secretary shall report to the Committee on Environment and Public Works of the Senate and the Committee on Transportation and In- frastructure of the House of Representatives on any progress in achieving the objectives of sub- section (b)(1) and shall submit a plan for the transfer of ownership, operation, maintenance, and management of the Washington Aqueduct to a non-Federal public or private entity. Such plan shall include a detailed consideration of any proposal to transfer such ownership, main- tenance, or management to a private entity. (d) TRANSFER.\u2014 (1) IN GENERAL.\u2014Subject to subsection (b)(2), the other provisions of this subsection, and any other terms and conditions the Secretary consid- ers appropriate to protect the interests of the United States, the Secretary shall, not later than 3 years after the date of enactment of this Act and with the consent of a majority of the customers and without consideration to the Fed- eral Government, transfer all right, title, and in- terest of the United States in the Washington Aqueduct, and its real property, facilities, and personalty, to a non-Federal, public or private entity. Approval of such transfer shall not be unreasonably withheld by the Secretary. (2) ADEQUATE CAPABILITIES.\u2014The Secretary shall transfer ownership of the Washington Aq- ueduct under paragraph (1) only if the Sec- retary determines, after opportunity for public input, that the entity to receive ownership of the Aqueduct has the technical, managerial, and financial capability to operate, maintain, and manage the Aqueduct. (3) RESPONSIBILITIES.\u2014The Secretary shall not transfer title under this subsection unless the entity to receive title assumes full respon- sibility for performing and financing the oper- ation, maintenance, repair, replacement, reha- bilitation, and necessary capital improvements of the Washington Aqueduct so as to ensure the continued operation of the Washington Aque- duct consistent with the Aqueduct’s intended purpose of providing an uninterrupted supply of potable water sufficient to meet the current and future needs of the Aqueduct’s service area. (e) BORROWING AUTHORITY.\u2014 (1) BORROWING.\u2014 (A) IN GENERAL.\u2014Subject to the other provi- sions of this paragraph and paragraph (2), the Secretary is authorized to borrow from the Treasury of the United States such amounts for fiscal years 1997, 1998, and 1999 as are sufficient to cover any obligations that the Army Corps of Engineers is required to incur in carrying out capital improvements during fiscal years 1997, 1998, and 1999 for the Washington Aqueduct to ensure continued operation of the Aqueduct until such time as a transfer of title to the Aque- duct has taken place. (E) LIMITATION.\u2014The amount borrowed by the Secretary under subparagraph (A) may not exceed $29,000,000 for fiscal year 1997, $24,000,000 for fiscal year 1998, and $22,000,000 for fiscal year 1999. (C) AGREEMENT.\u2014Amounts borrowed under subparagraph (A) may only be used for capital improvements agreed to by the Army Corps of Engineers and the customers. (D) TERMS OF BORROWING.\u2014 (i) IN GENERAL.\u2014The Secretary of the Treas- ury shall provide the funds borrowed under sub- paragraph (A) under such terms and conditions as the Secretary of Treasury determines to be necessary and in the public interest and subject to the contracts required under paragraph (2). (ii) TERM.\u2014The term of any loan made under subparagraph (A) shall be for a period of not less than 20 years. (iii) PREPAYMENT.\u2014There shall be no penalty for the prepayment of any amounts borrowed under subparagraph (A). (2) CONTRACTS WITH CUSTOMERS.\u2014 (A) IN GENERAL.\u2014The borrowing authority under paragraph (1)(A) shall be effective only after the Chief of Engineers has entered into contracts with each customer under which the customer commits to repay a pro rata share (based on water purchase) of the principal and interest owed by the Secretary to the Secretary of the Treasury under paragraph (1). (B) PREPAYMENT.\u2014Any customer may repay, at any time, the pro rata share of the principal and interest then owed by the customer and out- standing, or any portion thereof, without pen- alty. (C) RISK OF DEFAULT.\u2014Under each of the con- tracts, the customer that enters into the contract shall commit to pay any additional amount nec- essary to fully offset the risk of default on the contract. (D) OBLIGATIONS.\u2014Each contract under sub- paragraph (A) shall include such terms and con- ditions as the Secretary of the Treasury may re- quire so that the value to the Government of the contracts entered into under subparagraph (A) is estimated to be equal to the obligations of the Army Corps of Engineers for carrying out cap- ital improvements at the Washington Aqueduct at the time that each series of contracts is en- tered into. (E) OTHER CONDITIONS.\u2014Each contract en- tered into under subparagraph (A) shall\u2014 (i) provide that the customer pledges future income only from fees assessed for principal and interest payments required by such contracts and costs to operate and maintain the Washing- ton Aqueduct; (ii) provide the United States priority in re- gard to income from fees assessed to operate and maintain the Washington Aqueduct; and (iii) include other conditions consistent with this section that the Secretary of the Treasury determines to be appropriate. (3) LIMITATIONS.\u2014 (A) BORROWING AUTHORITY.\u2014The Secretary’s borrowing authority for making capital im- provements at the Washington Aqueduct under paragraph (1) shall not extend beyond fiscal year 1999. (B) OBLIGATION AUTHORITY.\u2014Upon expiration of the borrowing authority exercised under paragraph (1), the Secretary shall not obligate funds for making capital improvements at the Washington Aqueduct except funds which are provided in advance by the customers. This limi- tation does not affect the Secretary’s authority to conduct normal operation and maintenance activities, including minor repair and replace- ment work. (4) IMPACT ON IMPROVEMENT PROGRAM.\u2014Not later than 180 days after the date of enactment of this Act, the Secretary, in consultation with other Federal agencies, shall transmit to the Committee on Environment and Public Works of the Senate and the Committee on Transpor- tation and Infrastructure of the House of Rep- resentatives a report that assesses the impact of the borrowing authority provided under this subsection on the near-term improvement projects in the Washington Aqueduct Improve- ment Program, work scheduled, and the finan- cial liability to be incurred. (f) REISSUANCE OF NPDES PERMIT.\u2014Prior to reissuing a National Pollutant Discharge Elimi- nation System (NPDES) permit for the Washing- ton Aqueduct, the Administrator of the Environ- mental Protection Agency shall consult with the customers and the Secretary regarding opportu- nities for more efficient water facility configura- tions that might be achieved through various possible transfers of the Washington Aqueduct. Such consultation shall include specific consid- eration of concerns regarding a proposed solids recovery facility, and may include a public hearing. SEC. 307. WASTEWATER ASSISTANCE TO COLONIAS. (a) DEFINITIONS.\u2014As used in this section: (1) BORDER STATE.\u2014The term ”border State” means Arizona, California, New Mexico, and Texas. (2) ELIGIBLE COMMUNITY.\u2014The term ”eligible community” means a low-income community with economic hardship that\u2014 (A) is commonly referred to as a colonia; (B) is located along the United States-Mexico border (generally in an unincorporated area); and (C) lacks basic sanitation facilities such as household plumbing or a proper sewage disposal system. (3) TREATMENT WORKS.\u2014The term ”treatment works” has the meaning provided in section 212(2) of the Federal Water Pollution Control Act (33 U.S.C. 1292(2)). (b) GRANTS FOR WASTEWATER ASSISTANCE.\u2014 The Administrator of the Environmental Protec- tion Agency and the heads of other appropriate Federal agencies are authorized to award grants to a border State to provide assistance to eligible communities for the planning, design, and con- struction or improvement of sewers, treatment works, and appropriate connections for wastewater treatment. (c) USE OF FUNDS.\u2014Each grant awarded pur- suant to subsection (b) shall be used to provide assistance to one or more eligible communities with respect to which the residents are subject to a significant health risk (as determined by the Administrator or the head of the Federal agency making the grant) attributable to the lack of access to an adequate and affordable treatment works for wastewater. (d) COST SHARING.\u2014The amount of a grant awarded pursuant to this section shall not ex- ceed 50 percent of the costs of carrying out the project that is the subject of the grant. (e) AUTHORIZATION OF APPROPRIATIONS.\u2014 There are authorized to be appropriated to carry out this section $25,000,000 for each of the fiscal years 1997 through 1999. CONGRESSIONAL RECORD \u2014 HOUSEH9700 August 1, 1996 SEC. 308. PREVENTION AND CONTROL OF ZEBRA MUSSEL INFESTATION OF LAKE CHAMPLAIN. (a) FINDINGS.\u2014Section 1002(a) of the Non- indigenous Aquatic Nuisance Prevention and Control Act of 1990 (16 U.S.C. 4701(a)) is amend- ed as follows: (1) By striking ”and” at the end of paragraph (3). (2) By striking the period at the end of para- graph (4) and inserting ”; and”. (3) By adding at the end the following new paragraph; ”(5) the zebra mussel was discovered on Lake Champlain during 1993 and the opportunity ex- ists to act quickly to establish zebra mussel con- trols before Lake Champlain is further infested and management costs escalate.”. (b) EX OFFICIO MEMBERS OF AQUATIC NUI- SANCE SPECIES TASK FORCE.\u2014Section 1201(c) of such Act (16 U.S.C. 4721(c)) is amended by in- serting ”, the Lake Champlain Basin Program,” after ”Great Lakes Commission”. TITLE IV\u2014ADDITIONAL ASSISTANCE FOR WATER INFRASTRUCTURE AND WATER- SHEDS SEC. 401. NATIONAL PROGRAM. (a) TECHNICAL AND FINANCIAL ASSISTANCE.\u2014 The Administrator of the Environmental Protec- tion Agency may provide technical and finan- cial assistance in the form of grants to States (1) for the construction, rehabilitation, and im- provement of water supply systems, and (2) con- sistent with nonpoint source management pro- grams established under section 319 of the Fed- eral Water Pollution Control Act, for source water quality protection programs to address pollutants in navigable waters for the purpose of making such waters usable by water supply systems. (b) LIMITATION.\u2014Not more than 30 percent of the amounts appropriated to carry out this sec- tion in a fiscal year may be used for source water quality protection programs described in subsection (a)(2). (c) CONDITION.\u2014As a condition to receiving assistance under this section, a State shall en- sure that such assistance is carried out in the most cost-effective manner, as determined by the State. (d) AUTHORIZATION OF APPROPRIATIONS.\u2014 (1) UNCONDITIONAL AUTHORIZATION.\u2014There are authorized to be appropriated to carry out this section $25,000,000 for each of fiscal years 1997 through 2003. Such sums shall remain available until expended. (2) CONDITIONAL AUTHORIZATION.\u2014In addition to amounts authorized under paragraph (1), there are authorized to be appropriated to carry out this title $25,000,000 for each of fiscal years 1997 through 2003, provided that such author- ization shall be in effect for a fiscal year only if at least 75 percent of the total amount of funds authorized to be appropriated for such fiscal year by section 1452(m) of the Safe Drinking Water Act are appropriated. (e) ACQUISITION OF LANDS.\u2014Assistance pro- vided with funds made available under this title may be used for the acquisition of lands and other interests in lands; however, nothing in this title authorizes the acquisition of lands or other interests in lands from other than willing sellers. (f) FEDERAL SHARE.\u2014The Federal share of the cost of activities for which grants are made under this title shall be 50 percent. (g) DEFINITIONS.\u2014In this section, the follow- ing definitions apply: (1) STATE.\u2014The term ”State” means a State, the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, Amer- ican Samoa, and the Commonwealth of the Northern Mariana Islands. (2) WATER SUPPLY SYSTEM.\u2014The term ”water supply system” means a system for the provision to the public of piped water for human con- sumption if such system has at least 15 service connections or regularly serves at least 25 indi- viduals and a draw and fill system for the provi- sion to the public of water for human consump- tion. Such term does not include a system owned by a Federal agency. Such term includes (A) any collection, treatment, storage, and distribu- tion facilities under control of the operator of such system and used primarily in connection with such system, and (B) any collection or pretreatment facilities not under such control that are used primarily in connection with such system. TITLE V\u2014CLERICAL AMENDMENTS SEC. 501. CLERICAL AMENDMENTS. (a) PART B.\u2014Part B (42 U.S.C. 300g et seq.) is amended as follows: (1) In section 1412(b), move the margins of paragraph (11) 2 ems to the right. (2) In section 1412(b)(8), strike ”1442(g)” and insert ”1442(e)”. (3) In section 1415(a)(1)(A), insert ”the” be- fore ”time the variance is granted”. (b) PART C.\u2014Part C (42 U.S.C. 300h et seq.) is amended as follows: (1) In section 1421(b)(3)(B)(i), strike ”number or States” and inserting ”number of States”. (2) In section 1427(k), strike ”this subsection” and inserting ”this section”. (c) PART E.\u2014Section 1441(f) (42 U.S.C. 300j(f)) is amended by inserting a period at the end. (d) SECTION 1465(b).\u2014Section 1465(b) (42 U.S.C. 300j 25(b)) is amended by striking ”as by” and inserting ”by”. (e) SHORT TITLE.\u2014Section 1 of Public Law 93 523 (88 Stat. 1600) is amended by inserting ”of 1974” after ”Act” the second place it appears and title XIV of the Public Health Service Act is amended by inserting the following immediately before part A: ”SHORT TITLE ”SEC. 1400. This title may be cited as the ‘Safe Drinking Water Act’.”. (f) TECHNICAL AMENDMENTS TO SECTION HEADINGS.\u2014 (1) The section heading and subsection des- ignation of subsection (a) of section 1417 (42 U.S.C. 300g 6) are amended to read as follows: ”PROHIBITION ON USE OF LEAD PIPES, SOLDER, AND FLUX ”SEC. 1417. (a)”. (2) The section heading and subsection des- ignation of subsection (a) of section 1426 (42 U.S.C. 300h 5) are amended to read as follows: ”REGULATION OF STATE PROGRAMS ”SEC. 1426. (a)”. (3) The section heading and subsection des- ignation of subsection (a) of section 1427 (42 U.S.C. 300h 6) are amended to read as follows: ”SOLE SOURCE AQUIFER DEMONSTRATION PROGRAM ”SEC. 1427. (a)”. (4) The section heading and subsection des- ignation of subsection (a) of section 1428 (42 U.S.C. 300h 7) are amended to read as follows: ”STATE PROGRAMS TO ESTABLISH WELLHEAD PROTECTION AREAS ”SEC. 1428. (a)”. (5) The section heading and subsection des- ignation of subsection (a) of section 1432 (42 U.S.C. 300i 1) are amended to read as follows: ”TAMPERING WITH PUBLIC WATER SYSTEMS ”SEC. 1432. (a)”. (6) The section heading and subsection des- ignation of subsection (a) of section 1451 (42 U.S.C. 300j 11) are amended to read as follows: ”INDIAN TRIBES ”SEC. 1451. (a)”. (7) The section heading and first word of sec- tion 1461 (42 U.S.C. 300j 21) are amended to read as follows: ”DEFINITIONS ”SEC. 1461. As”. (8) The section heading and first word of sec- tion 1462 (42 U.S.C. 300j 22) are amended to read as follows: ”RECALL OF DRINKING WATER COOLERS WITH LEAD-LINED TANKS ”SEC. 1462. For”. (9) The section heading and subsection des- ignation of subsection (a) of section 1463 (42 U.S.C. 300j 23) are amended to read as follows: ”DRINKING WATER COOLERS CONTAINING LEAD ”SEC. 1463. (a)”. (10) The section heading and subsection des- ignation of subsection (a) of section 1464 (42 U.S.C. 300j 24) are amended to read as follows: ”LEAD CONTAMINATION IN SCHOOL DRINKING WATER ”SEC. 1464. (a)”. (11) The section heading and subsection des- ignation of subsection (a) of section 1465 (42 U.S.C. 300j 25) are amended to read as follows: ”FEDERAL ASSISTANCE FOR STATE PROGRAMS RE- GARDING LEAD CONTAMINATION IN SCHOOL DRINKING WATER ”SEC. 1465. (a)”. And the House agree to the same. From the Committee on Commerce, for con- sideration of the Senate bill (except for secs. 28(a) and 28(e)) and the House amendment (except for title V), and modifications com- mitted to conference: TOM BLILEY, MIKE BILIRAKIS, MIKE CRAPO, BRIAN P. BILBRAY, From the Committee on Commerce, for con- sideration of secs. 28(a) and 28(e) of the Sen- ate bill, and modifications committed to conference: TOM BLILEY, MIKE BILIRAKIS, As additional conferees from the Committee on Science, for the consideration of that por- tion of section 3 that adds a new sec. 1478 and secs. 23, 25(f), and 28(f) of the Senate bill, and that portion of sec. 308 that adds a new sec. 1452(n) and sec. 402 and title VI of the House amendment, and modifications committed to conference: ROBERT S. WALKER, DANA ROHRABACHER, TIM ROEMER, As additional conferees from the Committee on Transportation and Infrastructure, for the consideration of that portion of sec. 3 that adds a new sec. 1471(c) and secs. 9, 17, 22(d), 25(a), 25(g), 28(a), 28(e), 28(h), and 28(i) of the Senate bill, and title V of the House amendment and modifications committed to conference: BUD SHUSTER, SHERWOOD BOEHLERT, ZACH WAMP, ROBERT A. BORSKI, ROBERT MENENDEZ, Provided, Mr. Blute is appointed in lieu of Mr. Wamp for consideration of title V of the House amendment: PETER BLUTE, Managers on the Part of the House. JOHN H. CHAFEE, DIRK KEMPTHORNE, CRAIG THOMAS, JOHN WARNER, MAX BAUCUS, HARRY REID, FRANK LAUTENBERG, Managers on the Part of the Senate. Joint Explanatory Statement of the Committee on Conference The managers on the part of the House and the Senate at the conference on the disagree- ing votes of the two Houses on the amend- ments of the House to the bill S. 1316, to re- authorize and amend Title XIV of the Public Health Service Act (commonly known as the ”Safe Drinking Water Act”), and for other purposes, submit the following joint state- ment to the House and the Senate in expla- nation of the effect of the action agreed upon CONGRESSIONAL RECORD \u2014 HOUSE H9701August 1, 1996 by the managers and recommended in the ac- companying conference report: The House amendment to the text of the Senate bill struck all of the Senate bill after the enacting clause and inserted a substitute text. The Senate recedes from its disagreement to the amendment of the House with an amendment that is a substitute for the Sen- ate bill and the House amendment. The conference agreement on S. 1316, the Safe Drinking Water Act Amendments of 1996, provides (1) revisions to the procedures, process, and criteria for regulating contami- nants in drinking water to protect the public health; (2) special programs to help small public water systems meet the requirements of the Act; (3) provisions to promote cost-ef- fectiveness in new drinking water regula- tions; (4) increased flexibility for water sup- pliers where consistent with public health; (5) new programs to promote the proper oper- ation of public water systems; (6) substantial new Federal financial and technical assist- ance to help water suppliers meet the re- quirements of the Act and to help States in carrying out programs under the Act; (7) re- finements and new programs to improve pro- tection of public health from drinking water contamination; and (8) consumers with infor- mation on the source of the water they are drinking and its quality and safety. Certain matters agreed to in conference are noted below. TITLE I\u2014AMENDMENTS TO SAFE DRINKING WATER ACT Maximum contaminant level goals (sec. 104(a)) The Senate recedes from its legislative provision and report language (found in Sen- ate Report 104 169, pages 30 33) with respect to maximum contaminant level goals for carcinogens. The House recedes from all its report language on the same subject (House Report 104 632, the first paragraph on page 28). The Conferees agree that the Safe Drink- ing Water Act Amendments of 1996 make no changes to the provision or legislative his- tory for maximum contaminant level goals. Disinfectants and disinfection by-products (sec. 104(b)) The conference agreement addresses the application of amended section 1412(b)(5) to the Environmental protection Agency’s pro- posed Stage I and Stage II regulations for disinfectants and disinfection byproducts. Public water systems use disinfectants to kill harmful microbial contaminants that can cause serious illness or even death. How- ever, disinfectants and their resulting by- products also may pose risks, including po- tential increases in cancer rates and liver and kidney damage. The regulation of both risks from microbial contaminants and risks from disinfectants and disinfection byprod- ucts presents the Environmental Protection Agency (EPA) with a unique challenge. Nonetheless, controls for cryptosporidium and disinfection byproducts are widely con- sidered to be a pressing and high priority for improving drinking water safety. In November 1992, EPA convened a nego- tiated rulemaking to examine both the prop- er strategy for combating cryptosporidium and other microbial contaminants and to consider threats to human health from the use of disinfectants commonly employed to combat microbial contaminants. EPA had determined to use the negotiated rule- making process because the Agency believed that ”the available occurrence, treatment and health effects data were inadequate to address EPA’s concern about the tradeoff be- tween risks from disinfectants and disinfec- tion byproducts and microbial pathogen risk, and wanted all stakeholders to participate in the decision-making on setting proposed standards.” (59 Fed. Reg. 38670, July 29, 1994). Representatives from EPA, State and local government, water suppliers, public health organizations and environmental groups, among others, worked for nearly two years to reach agreement on a framework for regu- lating both microbial contaminants and dis- infection byproducts. The framework will re- sult in rules for controlling disinfection by- products and an Enhanced Surface Water Treatment Rule to address risks posed from microbial organisms. The package of rules when fully implemented is expected to mini- mize exposures to harmful microbial con- taminants while reducing exposure to dis- infection byproducts that present a health risk by optimizing the use of disinfectants and other means of water treatment. The negotiating committee agreed that a two-step process was necessary to address the microbial and disinfectants and disinfec- tion by-products issues. The July 29, 1994 Federal Register notice thus proposes both Stage I and Stage II levels of control. The Stage I provisions set limits for two prin- cipal classes of chlorination byproducts, as well as limits for specific byproducts result- ing from other disinfection processes, at lev- els deemed appropriate as a first step stand- ard based on current information. More stringent Stage II controls were also pro- posed for the two classes of chlorination by- products but a second round of negotiations is envisioned. In the meantime, EPA is con- ducting an agreed-upon regime of health ef- fects research and water quality monitoring which will be used both to finalize the dis- infection byproduct rule and the Enhanced Surface Water Treatment Rule (as provided for by the parties’ agreement) and for the second round of negotiations. ”Based on this information and new data generated through research,” EPA ”will reevaluate the Stage 2 regulations and repropose, as appropriate, depending on criteria agreed on in a second regulatory negotiation (or similar rule de- velopment process)” (59 Fed. Reg. 38743). The Conferees acknowledge the delicate balance that was struck by the parties in structuring the settlement of these com- plicated and difficult issues, and encourages the parties to continue according to the ne- gotiated agreement. The negotiated agree- ment contains an over-arching set of prin- ciples to guide the individual rulemakings which incorporated consideration of various factors. The Conferees intend that all addi- tional negotiations weigh the same factors that guided the development of the proposed rule. Specifically, all further negotiations for the Stage II regulations for the control of disinfection byproducts should follow and be consistent with the considerations that led to an agreement regarding the proposed rule for Stage I. In order to preserve the progress made, there has been considerable care taken to en- sure that the new provisions of this con- ference agreement not conflict with the par- ties’ agreement nor disrupt the implementa- tion of the regulatory actions. To do other- wise would substantially disrupt, if not de- stroy, the next round of negotiations and lead to unnecessary delays in protecting pub- lic health. For this reason, the conference agreement precludes the use of the new au- thority in section 1412(b)(6) to establish max- imum contaminant levels for the Stage I and Stage II rulemakings for disinfectants or dis- infection byproducts or to establish a na- tional primary drinking water maximum contaminant level or treatment technique for cryptosporidium. The Conferees recognize, however, that the development of this regulatory package has required the negotiators to consider complex issues of risk, costs, affordability, feasible technology, and health benefits. It is the Conferees’ view that the proposed rule that has been produced is consistent with the ”risk-risk” provision set out in new section 1412(b)(5). Therefore, Section 104(b) makes clear that the Administrator may use the authority of section 1412(b)(5) to promulgate Stage I and Stage II rules. However, it is also the Conferees’ intent that no provision of Section 1412(b)(5) be interpreted to force an alteration of the negotiated agreement. Finally, Section 104(b) of the conference agreement provides that for the purpose of promulgating Stage I and Stage II regula- tions for disinfection and disinfection by- products, the consideration that the Admin- istrator used in the development of the July 29, 1994 proposal for such regulation are to be considered consistent with section 1412(b)(5). These considerations included risk, cost, af- fordability, feasible technology, and health benefits. The Conferees intend with this lan- guage to ensure that the negotiators and ul- timately the Administrator are authorized to consider these factors in the same manner as these considerations were used in develop- ing the Stage I proposed rule. In the convening process for both the nego- tiating and technical advisory committees for Stage II of the Disinfectant\/Disinfection By-Products rulemaking, the Administrator should consider for inclusion appropriate representatives of all interested parties, in- cluding State and local governments, public water systems, public interest groups, public health organizations, and experts on chemi- cal disinfectants, their use and alternative disinfection process and their technologies. Arsenic (sec. 109) The Conferees encourage EPA to work with the American Water Works Association Research Foundation (AWWARF) to carry out the study projects authorized by new section 1412(b)(12)(A) if AWWARF contrib- utes matching funds. Consumer confidence reports (sec. 114(a)) The Administrator may, in regulations, permit the notification requirement of sub- paragraph (A) to be satisfied by a means other than postal delivery, such as personal delivery or electronic mail, if the Adminis- trator determines that the alternative means will provide equivalent notice to indi- vidual customers. EPA regulations should include a clear statement that all drinking water, including bottled water, contains contaminants, usu- ally at levels below the threshold that would present a health risk to humans. The pres- ence of contaminants in drinking water does not necessarily indicate that the drinking water is unsafe for human consumption. If consumers have any questions regarding the levels of contaminants detected in their drinking water or the safety of their drink- ing water, they should be directed to contact either their drinking water supplier or EPA at the toll-free hotline number. Bottled water study (sec. 114(b)) The conference agreement provides that the Administrator of the FDA shall provide a study of the feasibility of appropriate methods, if any, of informing customers of the contents of bottled water. The study is intended to provide information on the fea- sibility of informing customers concerning the contents of bottled water, and is not in- tended to prejudge the question of whether such information requirements are nec- essary. Exemptions (sec. 117) Management changes referred to in the conference agreement may include rate in- creases, accounting changes, the hiring of consultants, the appointment of a technician with expertise in operating such systems, contractual arrangements for a more effi- cient and capable system for joint operation, CONGRESSIONAL RECORD \u2014 HOUSEH9702 August 1, 1996 or other reasonable strategies to improve ca- pacity. Restructuring changes referred in the conference agreement may include owner- ship change, physical consolidation with an- other system, or other measures to other- wise improve customer base and gain econo- mies of scale. Capacity development (sec. 119) The phrase ”legal authority or other means” is intended to require a State to have the actual authority to ensure that all new community water systems demonstrate the technical, managerial and financial ca- pacity to comply with the Safe Drinking Water Act. These could include regulations, training, and bonding requirements. States are also to adopt and implement a capacity development strategy. This is in- tended to encourage States to continue to focus resources on capacity development ini- tiatives. States are required to consider, so- licit public comment on, and include as deemed appropriate by the State, a number of elements and criteria. The Conferees do not expect that every State will adopt the same capacity develop- ment strategy and do not expect States to include elements in section 142(c) that the States determine are not appropriate. It is not expected that every State will give the same consideration to each of the elements listed in section 1420(c). Rather, the Con- ferees expect that, as suggested by existing State capacity development programs, State capacity development strategies developed under this section will very according to the unique needs of the State. The Conferees en- courage this diversity and indicate that EPA should give deference to a State’s determina- tion as to content and manner of implemen- tation of a State plan, so long as the State has solicited and considered public comment on the listed elements and has adopted a strategy that incorporates appropriate provi- sions. Operator certification reimbursement (sec. 123) New subsection 1419(c) requires the Admin- istrator to provide reimbursement for the costs of training, including an appropriate per diem for unsalaried operators, and cer- tification for persons operating systems serving 3,300 persons or fewer that are re- quired to undergo training pursuant to sec- tion 1419. The Conferees do not consider the term ”unsalaried operators” to include the persons who receive compensation at an hourly rate, professional consultants, and employees of circuit-rider programs. State revolving loan funds (sec. 130) The administrator is to include, in the guidance for State loan fund programs to avoid use of the funds to finance expansion of any public water system in anticipation of future population growth. The Adminis- trator is not to preclude the use of SRF fi- nancing for facilities with the capacity nec- essary to meet the objectives of the Safe Drinking Water Act for the population to be served by the facility over its useful life. States are allowed to jointly manage the corpus of the new drinking water State loan fund with other revolving loan funds. The re- quirement that the funds be used solely for purposes that meet the objectives of the Safe Drinking Water Act does not preclude bond pooling arrangements, including cross- collateralization, provided that revenues from the bonds are allocated to the purposes of the Safe Drinking Water Act in the same portion as the funds are used as security for the bonds. Estrogenic substances screening program (sec. 136) Section 404 of H.R. 3604 as reported out of the House Committee on Commerce formed the basis for section 408(p)(3)(B) of the Fed- eral Food, Drug, and Cosmetic Act (21 U.S.C. 346a(p)(3) (an estrogenic substances screen- ing program). Section 136 of the Safe Drink- ing Water Act Amendments of 1996 adds to the authority of the Administrator to pro- vide for testing of substances that may be found in sources of drinking water if the Ad- ministrator determines that a substantial population may be exposed to such sub- stances. The Conferees agree that the treat- ment of substances addressed under this sec- tion shall be consistent with the Report of the Commerce Committee (House Rep. 104 632, Part I, pp. 55 58). TITLE II\u2014DRINKING WATER RESEARCH Clarifications made in conference The House Committee on Commerce and the House Committee on Science have the following understanding on clarifications made in conference. This understanding has no impact on the operation of law. In reconciling the text of H.R. 3604, the Safe Drinking Water Act Amendments of 1996, with the text of S. 1316, the Safe Drink- ing Water Act Amendments of 1995, the Con- ference Committee agreed to minor word changes, such as from ”research” to ”study”, and citation changes and deletions, including the deletion of references in the House passed version of section 601. None of these minor changes should be considered to lessen or enhance the House Committee on Science’s jurisdictional claim to environ- mental research involving drinking water is- sues. None of these minor changes should be considered to lessen or enhance the House Committee on Commerce’s jurisdictional claim to biomedical research involving drinking water issues. TITLE III\u2014MISCELLANEOUS PROVISIONS Transfer of funds (sec. 302) The following represents an understanding between the House Committee on Commerce and the House Committee on Transportation and Infrastructure. This understanding has no impact on the operation of law. The House Commerce Committee, which has jurisdiction over the Safe Drinking Water Act, and the House Transportation and Infrastructure Committee, which has ju- risdiction over the Federal Water Pollution Control Act, agree to share jurisdiction over the free-standing provision in section 302 of the Safe Drinking Water Act Amendments of 1996 involving transfer of revolving loan funds. This provision allows for the transfer of funds, under specified terms and condi- tions, between the Safe Drinking Water State Revolving Loan Fund which is under the exclusive jurisdiction of the Commerce Committee and the Clean Water State Re- volving Fund which is under the exclusive jurisdiction of the Transportation and Infra- structure Committee. For matters directly amending section 302, the two Committees agree that each should be given equal weight in bill referrals, con- ference appointments, and other jurisdic- tional assignments. For instance, a bill to amend section 302 to increase the percentage amount that may be transferred between the two revolving funds would be in the joint ju- risdiction of the two Committees. Likewise, a direct or indirect amendment to the provi- sions of section 302 would be in the commit- tees’ joint jurisdiction. Enactment of this freestanding section does not give the Commerce Committee any jurisdiction over the Federal Water Pollu- tion Control Act, nor does it give the Trans- portation and Infrastructure Committee any jurisdiction over the Safe Drinking Water Act. Jurisdiction for changes that amend provisions of the Federal Water Pollution Control Act or the Safe Drinking Water Act should be determined without regard to sec- tion 302. Thus, for example, a bill to change or impose conditions or limitations on the criteria applicable to a State for the receipt or expenditure of revolving funds under the Safe Drinking Water Act or Federal Pollu- tion Control Act would be in the sole juris- diction of the Committee on Commerce or the Committee on Transportation and Infra- structure respectively. Washington Aqueduct (sec. 306) The Senate bill authorized the Secretary of the Army acting through the Chief of Engi- neers to borrow from the Secretary of the Treasury funds necessary to make capital improvements to the Washington Aqueduct. The Washington Aqueduct provides drinking water to the three wholesale customers of the District of Columbia and the Virginia ju- risdictions of Arlington County and the City of Falls Church. Amounts borrowed from the Treasury are to be repaid by the customers. The Washington Aqueduct system consists of the Dalecarlia and McMillan water treat- ment plants located in Washington, D.C. The system was constructed in 1853 and is under the control of the U.S. Army Corps of Engi- neers for appropriate management and main- tenance. The conference agreement modifies the Senate provision to authorize for three years the Secretary of the Army to borrow from the Secretary of the Treasury funds to fi- nance capital improvements necessary to as- sure continued operation of the Washington Aqueduct. The conference agreement encourages and provides a process for the establishment of a regional entity\u2014or the use of an existing en- tity\u2014to own, operate, maintain and manage the Washington Aqueduct in a manner that fully represents all interests of the non-Fed- eral public water supply customers. The Sec- retary of the Army is directed to transfer within the three year period all right, title, and interest in Washington Aqueduct after receiving the consent of a majority of the customers. The Conferees express a strong preference for a consensus among all of the customers prior to any transfer of the Wash- ington Aqueduct under this section. TITLE IV\u2014ADDITIONAL ASSISTANCE FOR WATER INFRASTRUCTURE AND WATERSHEDS The conference agreement includes the House provision regarding the national grants program for water infrastructure and watershed, with a modification to provide that $25 million per year is conditioned on the appropriation of 75 percent for the amounts authorized per year for the drink- ing water state loan fund. Provisions on the New York City Watershed and Alaska rural and Native villages are contained in other ti- tles of the conference agreement. As in the House bill, section 401(a) estab- lishes a national program for technical and financial assistance grants for water supply systems and source water quality protection programs. The Administrator is directed to provide priority consideration to the follow- ing: (1) Drinking water infrastructure projects for areas described in section 313 of the Water Resources Development Act of 1992 (P.L. 102 580); (2) Construction of an alternative water supply system for the area referred to in sec- tion 219(c)(5) of the Water Resources Devel- opment Act of 1992 (P.L. 102 580); (3) Attleboro, Massachusetts, and Worces- ter, Massachusetts, for ratepayer assistance relating to water infrastructure facilities, in addition to other assistance in the form of low interest loans and negative interest rates; (4) Buffalo, New York, for construction, re- habilitation, and improvement of water treatment facilities; CONGRESSIONAL RECORD \u2014 HOUSE H9703August 1, 1996 (5) Bad Axe, Michigan, for connection of its drinking water system to the municipal sys- tem in Port Austin, Michigan; (6) Georgetown, Illinois, for construction and related activities intended to increase the capacity of the City’s water supply res- ervoir and enhance source water quality pro- tection; (7) Morgan County, Tennessee, for water line extensions and related infrastructure as- sistance; (8) Northwest Iowa, for water infrastruc- ture facilities that are either part of or sepa- rate from the proposed Lewis and Clark Rural Water System; (9) Olney, Illinois for construction of new water tower and Millstone Water District, Harrisburg, Illinois for completion of Phase I of a water line extension project; (10) Philadelphia, Pennsylvania, acting through the Fairmount Park Commission, for improvement and restoration of aquatic systems at Pennypack Park; (11) San Bernardino County, California, for water infrastructure assistance related to the Mojave River Pipeline; (12) Springfield, Illinois, for financial and technical assistance to complete the plan- ning, design, and construction of a water supply reservoir; (13) Tenino, Washington, for water supply infrastructure, including work related to wells, hydrants, and water lines; (14) Madison, Ohio, for waterline replace- ment and booster station needs; (15) Bridger Valley Joint Board, Wyoming, for the study and construction of needed im- provements in the water supply system; (16) Treasure Valley Hydrologic Project, to study the Treasure Valley aquifer system to develop a better understanding of the re- gional hydraulic stresses and their impacts on source waters in the Boise Basin; (17) Beuna Borough, New Jersey, to reme- diate mercury levels in the water supply and to provide alternative drinking water for residents; (18) Projects for areas described in section 219(c) (16) and (17) of the Water Resources De- velopment Act of 1992; (19) Berlin, New Hampshire, for a filtration plant and associated facilities; (20) South Tahoe Public Utility District to replace the export pipeline for reclaimed water; (21) Projects described in section 307 of the Water Resources Development Act of 1992; (22) Cranston, Rhode Island, for a wastewater regional connector system; (23) Funding for construction of filtration plants in Connecticut; and (24) Perth Amboy, New Jersey, to protect the drinking water supply through multi- media programs to remediate pollution in the Runyon Watershed. TITLE V\u2014CLERICAL AMENDMENTS The conference agreement makes mis- cellaneous technical and clerical changes. From the Committee on Commerce, for con- sideration of the Senate bill (except for secs. 28(a) and 28(e)) and the House amendment (except for title V), and modifications com- mitted to conference: TOM BLILEY, MIKE BILIRAKIS, MIKE CRAPO, BRIAN P. BILBRAY, From the Committee on Commerce, for con- sideration of secs. 28(a) and 28(e) of the Sen- ate bill, and modifications committed to conference: TOM BLILEY, MIKE BILIRAKIS, As additional conferees from the Committee on Science, for the consideration of that por- tion of section 3 that adds a new sec. 1478 and secs. 23, 25(f), and 28(f) of the Senate bill, and that portion of sec. 308 that adds a new sec. 1452(n) and sec. 402 and title VI of the House amendment, and modifications committed to conference: ROBERT S. WALKER, DANA ROHRABACHER, TIM ROEMER, As additional conferees from the Committee on Transportation and Infrastructure, for the consideration of that portion of sec. 3 that adds a new sec. 1471(c) and secs. 9, 17, 22(d), 25(a), 25(g), 28(a), 28(e), 28(h), and 28(i) of the Senate bill, and title V of the House amendment and modifications committed to conference: BUD SHUSTER, SHERWOOD BOEHLERT, ZACK WAMP, ROBERT A. BORSKI, ROBERT MENENDEZ, Provided, Mr. Blute is appointed in lieu of Mr. Wamp for consideration of title V of the House amendment: PETER BLUTE, Managers on the Part of the House. JOHN H. CHAFEE, DIRK KEMPTHORNE, CRAIG THOMAS, JOHN WARNER, MAX BAUCUS, HARRY REID, FRANK LAUTENBERG, Managers on the Part of the Senate. f SPECIAL ORDERS GRANTED By unanimous consent, permission to address the House, following the legis- lative program and any special orders heretofore entered, was granted to: (The following Members (at the re- quest of Ms. JACKSON-LEE of Texas) to revise and extend their remarks and in- clude extraneous material:) Ms. COLLINS of Illinois, for 5 minutes, today. Mr. KLINK, for 5 minutes, today. Mr. PALLONE, for 5 minutes, today. Ms. JACKSON-LEE of Texas, for 5 min- utes, today. (The following Members (at the re- quest of Mr. THOMAS) to revise and ex- tend their remarks and include extra- neous material:) Mr. NORWOOD, for 5 minutes, today. Mr. MCINTOSH, for 5 minutes, on Au- gust 2. Mr. ENGLISH of Pennsylvania, for 5 minutes, today. Mrs. KELLY, for 5 minutes, today. Mr. GOSS, for 5 minutes, on August 2. Mr. ROHRABACHER, for 5 minutes, today. Mr. KINGSTON, for 5 minutes, today. Mr. TALENT, for 5 minutes, today. Mrs. JOHNSON of Connecticut, for 5 minutes, on August 2. f EXTENSION OF REMARKS By unanimous consent, permission to revise and extend remarks was granted to: (The following Members (at the re- quest of Ms. JACKSON-LEE of Texas) and to include extraneous matter:) Mr. KANJORKSKI. Mr. LIPINSKI. Mr. HAMILTON. Mr. MENENDEZ. Mr. KLECZKA. Mr. BONIOR. Ms. HARMAN. Mr. CARDIN. Mr. TORRICELLI. Mr. CLAY. Mr. LEVIN. Mr. WYNN. Mr. DELLUMS. Mr. ORTON. Mr. KENNEDY of Massachusetts. Mr. SABO. Mr. BARRETT of Wisconsin. Mr. TOWNS. Mr. LAFALCE. Mr. BLUMENAUER. Mrs. MALONEY. Mr. BARCIA. (The following Members (at the re- quest of Mr. THOMAS, and to include ex- traneous matter:) Mrs. SEASTRAND. Mr. DAVIS. Mr. HOKE. Mr. YOUNG of Alaska. Mr. FIELDS of Texas. Mr. TORKILDSEN. Mr. DORNAN. Mr. GILMAN in two instances. Mr. FORBES in two instances. Mr. KOLBE. Mr. WOLF. Mr. PORTER. Mr. CASTLE. Mr. SMITH of New Jersey. Mr. SHAW. Mr. GEKAS. Mr. COBURN. Mr. COMBEST. Mr. SOLOMON. Mrs. MORELLA. Mr. THOMAS. Mr. BUNNING of Kentucky. Mr. CAMPBELL. Mr. ROHRABACHER. Mr. TALENT. (The following Members (at the re- quest of Mr. GOSS) and to include ex- traneous matter:) Mr. HAYWORTH. Mr. WALKER. Mr. MCINNIS. Ms. ESHOO. Mr. HAMILTON. Mr. RICHARDSON. Mr. FORBES. Mr. STUPAK. Mr. LOWEY. Mr. LAHOOD. Mr. PAYNE of New Jersey. f ENROLLED BILLS AND JOINT RESOLUTION SIGNED Mr. THOMAS, from the Committee on House Oversight, reported that that committee had examined and found truly enrolled bills and a joint resolu- tion of the House of the following ti- tles, which were thereupon signed by the Speaker: H.R. 1051. An act to provide for the exten- sion of certain hydroelectric projects located in the State of West Virginia. H.R. 3215. An act to amend title 18, United States Code, to repeal the provision relating to Federal employees contracting or trading with Indians. H.R. 3663. An act to amend the District of Columbia Self-Government and Govern- mental Reorganization Act to permit the CONGRESSIONAL RECORD \u2014 HOUSEH9704 August 1, 1996 Council of the District of Columbia to au- thorize the issuance of revenue bonds with respect to water and sewer facilities, and for other purposes. H.J. Res. 166. Joint resolution granting the consent of Congress to the mutual aid agree- ment between the city of Bristol, Virginia, and the city of Bristol, Tennessee. f SENATE ENROLLED BILLS AND JOINT RESOLUTION SIGNED The SPEAKER announced his signa- ture to enrolled bills and a joint resolu- tion of the Senate of the following ti- tles: S. 1757. An act to amend the Developmen- tal Disabilities Assistance and Bill of rights Act to extend the Act, and for other pur- poses. S. 531. An act to authorize a circuit judge who has taken part in an in banc hearing of a case to continue to participate in that case after taking senior status, and for other pur- poses. S.J. Res. 20. Joint resolution granting the consent of Congress to the compact to pro- vide for joint natural resource management and enforcement of laws and regulations per- taining to natural resources and boating at the Jennings Randolph Lake Project lying in Garrett County, Maryland and Mineral County, West Virginia, entered into between the States of West Virginia and Maryland. f BILLS PRESENTED TO THE PRESIDENT Mr. THOMAS, from the Committee on House Oversight, reported that that committee did on this day present to the President, for his approval, bills of the House of the following title: H.R. 1051. An act to provide for the exten- sion of certain hydroelectric projects in the State of West Virginia. H.R. 3663. To amend the District of Colum- bia Self-Government and Governmental Re- organization Act to permit the Council of the District of Columbia to authorize the is- suance of revenue bonds with respect to water and sewer facilities, and for other pur- poses. f ADJOURNMENT Mr. GOSS. Mr. Speaker, I move that the House do now adjourn. The motion was agreed to; accord- ingly (at 12 o’clock and 50 minutes a.m.), the House adjourned until today, August 2, 1996, at 9 a.m. f EXECUTIVE COMMUNICATIONS, ETC. Under clause 2 of rule XXIV, execu- tive communications were taken from the Speaker’s table and referred as fol- lows: 4491. A letter from the Acting Director, Of- fice of Management and Budget, transmit- ting OMB’s estimate of the amount of change in outlays or receipts, as the case may be, in each fiscal year through fiscal year 2002 resulting from passage of H.R. 419 and H.R. 701, pursuant to Public Law 101 508, section 13101(a) (104 Stat. 1388 581); to the Committee on the Budget. 4492. A letter from the Assistant Secretary for Pension and Welfare Benefits, Depart- ment of Labor, transmitting the Depart- ment’s final rule\u2014Class Exemption To Per- mit Certain Authorized Transactions Be- tween Plans and Parties in Interest [Applica- tion No. D 10031] received August 1, 1996, pur- suant to 5 U.S.C. 801(a)(1)(A); to the Commit- tee on Economic and Educational Opportuni- ties. 4493. A letter from the Managing Director, Federal Communications Commission, trans- mitting the Commission’s final rule\u2014Revi- sion of the Commission’s Rules to Ensure Compatibility with Enhanced 911 Emergency Calling Systems [CC Docket No. 94 102] re- ceived August 1, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Commerce. 4494. A letter from the Secretary of Health and Human Services, transmitting the De- partment’s final rule\u2014Medicaid Program; Medicaid Eligibility Quality Control, Pro- gressive Reductions in Federal Financial Participation for fiscal years 1982 1984, Pay- ment for Physician Billing for Clinical Lab- oratory Services, and Utilization Control of Skilled Nursing Facility Services: Removal of Obsolete Requirements (Health Care Fi- nancing Administration) (RIN: 0938 AH31) re- ceived August 1, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Commerce. 4495. A letter from the Assistant Secretary for Legislative Affairs, Department of State, transmitting notification of a proposed man- ufacturing license agreement for production of major military equipment with Israel (Transmittal No. DTC 44 96), pursuant to 22 U.S.C. 2776(d); to the Committee on Inter- national Relations. 4496. A letter from the Chairman, District of Columbia Financial Responsibility and Management Assistance Authority, trans- mitting a letter making recommendations for the purpose of promoting financial re- sponsibility in the District of Columbia gov- ernment, pursuant to Public Law 104 8, sec- tion 207(a) (109 Stat. 133); to the Committee on Government Reform and Oversight. 4497. A letter from the Assistant Secretary for Export Administration, Department of Commerce, transmitting the Department’s final rule\u2014Biological Warfare Experts Group Meeting: Implementation of Changes to Ex- port Administration Regulations; ECCNs 1C991, 1C61B, 1B71E, and 1C91F (RIN: 0694 AB37) received August 1, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Re- sources. 4498. A letter from the Director, Federal Bureau of Prisons, transmitting the Bureau’s final rule\u2014Central Inmate Monitoring (CIM) System (RIN: 1120 AA43) received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on the Judiciary. 4499. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Establishment of Class E Airspace; Grants Pass, Oregon (Federal Aviation Administration) [Airspace Docket No. 96 ANM 015], pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transportation and Infrastructure. 4500. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Establishment of Class E Airspace; Libby Montana (Federal Aviation Administration) [Airspace Docket No. 96 ANM 013] received August 1, 1996, pur- suant to 5 U.S.C. 801(a)(1)(A); to the Commit- tee on Transportation and Infrastructure. 4501. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Airworthiness Directives; McDonnell Douglas Model DC 9 and DC 9 80 Series Airplanes, and C 9 (Mili- tary) Airplanes, Equipped with a Ventral Afr Pressure Bulkhead (Federal Aviation Admin- istration) [Docket No. 95 NM 186 AD; Amendment 39 9704; AD 96 16 04] (RIN: 2120 AA64) received August 1, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transporatation and Infrastructure. 4502. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Drawbridge Op- eration Regulations; Saginaw River, MI (U.S. Coast Guard) [CGD09 96 003] (RIN: 2115 AE47) received August 1, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transpor- tation and Infrastructure. 4503. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Special Local Regulations; City of Palm Beach, FL (U.S. Coast Guard) [CGD07 96 045] (RIN: 2115 AE46) received August 1, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transpor- tation and Infrastructure. 4504. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Regulated Navigation Area: Boston Harbor, Spectacle Island, Boston, MA (U.S. Coast Guard) [CGD1 96 068] (RIN: 2115 AE84) received Au- gust 1, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transportation and In- frastructure. 4505. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Drawbridge Op- eration Regulations; Ebey Slough, Marysville, Washington (U.S. Coast Guard) [CGD13 96 002] (RIN: 2115 AE47) received Au- gust 1, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transportation and In- frastructure. 4506. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Drawbridge Op- eration Regulations: Snohomish River, Ever- ett, WA (U.S. Coast Guard) [CGD13 96 001] (RIN: 2115 AE47) received August 1, 1996, pur- suant to 5 U.S.C. 801(a)(1)(A); to the Commit- tee on Transportation and Infrastructure. 4507. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Drawbridge Op- eration Regulations; Red River, Louisiana (U.S. Coast Guard) [CGD08 96 025] (RIN: 2115 AE47) received August 1, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transportation and Infrastructure. 4508. A letter from the General Counsel, Department of Transportation, transmitting the Department’s final rule\u2014Safety Zone Regulation; Seafair’s U.S. Navy Blue Angels Air Show, Elliot Bay, Seattle, Washington (U.S. Coast Guard) [CGD13 96 015] (RIN: 2115 AA97) received August 1, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Transportation and Infrastructure. 4509. A letter from the National Director, Tax Forms and Publications Division, Inter- nal Revenue Service, transmitting the Serv- ice’s final rule\u2014requirements for preparing acceptable substitute information returns to be filed with the Internal Revenue Service (IRS), and for furnishing recipient state- ments (Revenue Procedure 96 42) received July 31, 1996, pursuant to 5 U.S.C. 801(a)(1)(A); to the Committee on Ways and Means. f REPORTS OF COMMITTEES ON PUBLIC BILLS AND RESOLUTIONS Under clause 2 of rule XIII, reports of committees were delivered to the Clerk for printing and reference to the proper calendar, as follows: Mr. ARCHER: Committee of conference. Conference report on H.R. 3448. A bill to pro- vide tax relief for small businesses, to pro- tect jobs, to create opportunities, to increase the take home pay of workers, and for other purposes (Rept. 104 737). Ordered to be print- ed. Mr. GOSS: Committee on Rules. House Resolution 502. Resolution waiving points of CONGRESSIONAL RECORD \u2014 HOUSE H9705August 1, 1996 order against the conference report to ac- company the bill (H.R. 3103) to amend the In- ternal Revenue Code of 1986 to improve port- ability and continuity of health insurance coverage in the group and individual mar- kets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings accounts, to improve access to long-term care services and coverage, to simplify the administration of health insurance, and for other purposes (Rept. 104 738). Referred to the House Cal- endar. Mr. SOLOMON: Committee on Rules. House Resolution 503. Resolution waiving points of order against the conference report to accompany the bill (H.R. 3448) to provide tax relief for small businesses, to protect jobs, to create opportunities, to increase the take home pay of workers, to amend the Por- tal-to-Portal Act of 1947 relating to the pay- ment of wages to employees who use em- ployer owned vehicles, and to amend the Fair Labor Standards Act of 1938 to increase the minimum wage rate and to prevent job loss by providing flexibility to employers in complying with minimum wage and over- time requirements under that act (Rept. 104 739). Referred to the House Calendar. Mr. WALSH: Committee of conference. Conference report on H.R. 3845. A bill mak- ing appropriations for the government of the District of Columbia and other activities chargeable in whole or in part against reve- nues of said District for the fiscal year end- ing September 30, 1997, and for other pur- poses (Rept. 104 740). Ordered to be printed. Mr. BLILEY: Committee of Conference. Conference report on S. 1316. An act to reau- thorize and amend title XIV of the Public Health Service Act, commonly known as the ”Safe Drinking Water Act”, and for other purposes (Rept. 104 741). Ordered to be print- ed. Mr. YOUNG of Alaska: Committee on Re- sources. H.R. 3378. A bill to amend the Indian Health Care Improvement Act to extend the demonstration program for direct billing Medicare, Medicaid, and other third party payors (Rept. 104 742 Pt. 1). The Committee on Commerce discharged from further con- sideration. Referred to the Committee of the White House on the State of the Union. Mr. MCINNIS: Committee on Rules. House Resolution 507. Resolution waiving points of order against the conference report to ac- company the bill (S. 1316) to reauthorize and amend title XIV of the Public Health Service Act commonly known as the ”Safe Drinking Water Act”, and for other purposes (Rept. 104 743). Referred to the House Calendar. Mr. GOSS: Committee on Rules. House Resolution 508. Resolution providing for con- sideration of a certain motion to suspend the rules (Rept. 104 744). Referred to the House Calendar. DISCHARGE OF COMMITTEE Pursuant to clause 5 of rule X the Committee on Commerce discharged from further consideration. H.R. 3121 referred to the Committee of the Whole House on the State of the Union. f PUBLIC BILLS AND RESOLUTIONS Under clause 5 of rule X and clause 4 of rule XXII, public bills and resolu- tions were introduced and severally re- ferred as follows: By Mr. WALKER (for himself, Mr. SEN- SENBRENNER, Mr. LARGENT, Mr. WELDON of Florida, Mr. ROHRABACHER, Mr. HILLEARY, Mr. STOCKMAN, Mr. DAVIS, Mr. CALVERT, Mr. BAKER of California, Mrs. SEASTRAND, and Mr. TIAHRT): H.R. 3936. A bill to encourage the develop- ment of a commercial space industry in the United States, and for other purposes; to the Committee on Science, and in addition to the Committee on Government Reform and Oversight, for a period to be subsequently de- termined by the Speaker, in each case for consideration of such provisions as fall with- in the jurisdiction of the committee con- cerned. By Mr. COBURN (for himself, Ms. MOL- INARI, Mr. DELAY, Mrs. FOWLER, Mr. WELDON of Florida, Mr. NORWOOD, Mr. HUTCHINSON, Mr. LARGENT, Mr. SOUDER, Mr. STOCKMAN, Mr. DORNAN, and Mr. HOSTETTLER): H.R. 3937. A bill to amend title XIX of the Social Security Act with respect to prevent- ing the transmission of the human immunodeficiency virus, commonly known as HIV, and for other purposes; to the Com- mittee on Commerce. By Mr. FILNER (for himself, Mr. MONTGOMERY, Mr. EVANS, Mr. KEN- NEDY of Massachusetts, Mr. EDWARDS, Mr. CLEMENT, Mr. TEJEDA, Mr. BAESLER, Mr. CLYBURN, Mr. BISHOP, Ms. BROWN of Florida, and Mr. MAS- CARA): H.R. 3938. A bill to amend title 38, United States Code, to provide for a Veterans’ Em- ployment and Training Bill of Rights, to strengthen preference for veterans in hiring, and for other purposes; to the Committee on Veterans’ Affairs. By Mr. FOX (for himself, Mr. STUMP, Mr. MONTGOMERY, Mr. HAYWORTH, Mr. WELDON of Pennsylvania, Mr. WELLER, Mr. DAVIS, Mr. BARR, Mr. SMITH of New Jersey, Mr. BARRETT of Nebraska, Mr. FLANAGAN, Mr. LONGLEY, Mr. SAXTON, Mr. SHADEGG, Mr. TIAHRT, Mr. FORBES, Mr. SPENCE, Mr. ENGLISH of Pennsylvania, Mr. MASCARA, Mr. MCHALE, Mr. SOLOMON, Mr. DORNAN, Mr. WATTS of Okla- homa, Mr. CHAMBLISS, Mr. NORWOOD, Mr. STEARNS, Mr. HANCOCK, Mr. GUTKNECHT, Mr. CALVERT, and Mr. RIGGS): H.R. 3939. A bill to amend title 38, United States Code, to authorize the Secretary of Veterans Affairs to offer a loan guaranted by an adjustable rate mortgage under chapter 37 of such title; to the Committee on Veterans’ Affairs. By Mrs. LOWEY (for herself, Mr. CAS- TLE, Mrs. JOHNSON of Connecticut, Mrs. CLAYTON, Mr. PORTER, Mrs. THURMAN, and Mrs. MORELLA): H.R. 3940. A bill to provide for a reduction in the rate of teenage pregnancy through the evaluation of public and private prevention programs, and for other purposes; to the Committee on Commerce. By Mr. NADLER: H.R. 3941. A bill to designate the U.S. courthouse located at 500 Pearl Street in New York City, NY, as the ”Ted Weiss Unit- ed States Courthouse”; to the Committee on Transportation and Infrastructure. By Mr. NEY (for himself, Mr. HOSTETTLER, Mr. SPRATT, Mr. CREMEANS, Mr. CLYBURN, Mr. GILLMOR, Mr. MCHUGH, Mr. INGLIS of South Carolina, and Mr. WICKER): H.R. 3942. A bill to amend title XVIII of the Social Security Act to permit the geographic reclassification of hospitals for purposes of disproportionate share hospitals for purposes of disproportionate share hospital payment adjustments under the Medicare Program; to the Committee on Ways and Means. By Mr. PETRI: H.R. 3943. A bill to amend the Internal Rev- enue Code of 1986 to replace the current earned income credit and the personal ex- emption for children with a refundable credit for families and a refundable credit for each child, and for other purposes; to the Commit- tee on Ways and Means. By Mr. TAYLOR of North Carolina: H.R. 3944. A bill to permit States to en- force certain State requirements for the la- beling of bottled spring water; to the Com- mittee on Commerce. H.R. 3945. A bill to require the Federal Communications Commission to promote ad- ditional sharing of broadcasting tower facili- ties to reduce the impact on local commu- nities of station towers; to the Committee on Commerce. By Mr. TORRICELLI (for himself, Mr. EVANS, Mr. LAFALCE, and Mr. MOAK- LEY): H.R. 3946. A bill to amend title 28 of the United States Code to provide for a remedy against the United States for claims based upon conduct involving human experimen- tation, to provide a remedy against the Unit- ed States with respect to constitutional and human rights violations, and for other pur- poses; to the Committee on the Judiciary. By Mr. TIAHRT (for himself, Mr. SOUDER, Mr. LARGENT, Mr. HOEKSTRA, Mr. COOLEY, Mr. GUTKNECHT, Mr. LI- PINSKI, Mr. GRAHAM, Mr. LEWIS of Kentucky, Mr. TALENT, Mr. STOCK- MAN, Mr. HUTCHINSON, Mr. BARTLETT of Maryland, Mr. ENSIGN, Mr. BARR, Mr. DORNAN, and Mr. CALVERT): H.R. 3947. A bill to amend the General Edu- cation Provisions Act to allow parents ac- cess to certain information; to the Commit- tee on Economic and Educational Opportuni- ties. By Mr. HEFLEY: H.R. 3948. A bill to amend the Federal Water Pollution Control Act to provide for the use of biological monitoring and whole effluent toxicity test in connection with pub- licly owned treatment works, and for other purposes; to the Committee on Transpor- tation and Infrastructure. By Ms. JACKSON-LEE (for herself, Mr. CONYERS, Ms. NORTON, Mr. FRAZER, Mr. FLAKE, Mrs. LOWEY, Mr. RANGEL, Mr. HASTINGS of Florida, Ms. MILLENDER-MCDONALD, Ms. DELAURO, Mr. CLYBURN, Mr. HILLIARD, Mr. WYNN, Mr. LEWIS of Georgia, Mr. PAYNE of New Jersey, Mrs. CLAYTON, Mr. OWENS, Mr. FIELDS of Louisiana, Mr. CUMMINGS, Miss. COLLINS of Michigan, Mr. SCHUMER, Mr. SCOTT, Mr. PASTOR, Mrs. MEEK of Florida, Ms. BROWN of Florida, Ms. MCKINNEY, Mr. FOGLIETTA, Mr. RICHARDSON, Mr. COLEMAN, Ms. EDDIE BERNICE JOHN- SON of Texas, Mr. JACKSON, Mrs. COL- LINS of Illinois, Mr. ENGEL, Mrs. SCHROEDER, Mrs. MALONEY, Ms. VELAZQUEZ, Mr. GUTIERREZ, Mr. CARDIN, Mr. SERRANO, Mr. BECERRA, Mr. GIBBONS, Mr. NADLER, Mr. KEN- NEDY of Rhode Island, Mr. CLAY, and Ms. LOFGREN): H. Con. Res. 206. Concurrent resolution ex- pressing the sense of Congress with respect to the threat to the security of American citizens and the U.S. Government posed by armed militia and other paramilitary groups and organizations; to the Committee on the Judiciary. By Mr. THOMAS: H. Res. 207. Concurrent resolution approv- ing certain regulations to implement provi- sions of the Congressional Accountability Act of 1995 relating to labor-management re- lations with respect to covered employees, other than employees of the House of Rep- resentatives and employees of the Senate, and for other purposes; to the Committee on House Oversight, and in addition to the Com- mittee on Economic and Educational Oppor- tunities, for a period to be subsequently de- termined by the Speaker, in each case for CONGRESSIONAL RECORD \u2014 HOUSEH9706 August 1, 1996 consideration of such provisions as fall with- in the jurisdiction of the committee con- cerned. By Mr. THOMAS: H. Res. 504. Resolution approving certain regulations to implement provisions of the Congressional Accountability Act of 1995 re- lating to labor-management relations with respect to employing offices and covered em- ployees of the House of Representatives, and for other purposes; to the Committee on House Oversight, and in addition to the Com- mittee on Economic and Educational Oppor- tunities, for a period to be subsequently de- termined by the Speaker, in each case for consideration of such provisions as fall with- in the jurisdiction of the committee con- cerned. By Mr. FOX: H. Res. 505. Resolution amending the Rules of the House of Representatives to take away the power of the Committee on Rules to re- port rules or orders waiving the germaneness requirement; to the Committee on Rules. By Mrs. MORELLA: H. Con. Res. 506. Resolution expressing the sense of the Congress that all parents should be afforded the opportunity to plan ahead for their children’s college education through tuition prepayment plans that guarantee college for their offspring at a fixed price; to the Committee on Economic and Edu- cational Opportunities. f PRIVATE BILLS AND RESOLUTIONS Under clause 1 of rule XXII, private bills and resolutions were introduced and severally referred as follows: Mr. PETE GEREN of Texas introduced a bill (H.R. 3949) for the relief of Senior Master Sergeant William L. Sullivan, U.S. Air Force; which was referred to the Committee on the Judiciary. ADDITIONAL SPONSORS Under clause 4 of rule XXII, sponsors were added to public bills and resolu- tions as follows: H.R. 163: Mr. SCHIFF. H.R. 573: Mr. MANTON. H.R. 820: Mr. WHITFIELD, Mr. WILLIAMS, and Mr. WYNN. H.R. 911: Mr. COMBEST. H.R. 1406: Ms. KAPTUR and Mr. MENENDEZ. H.R. 1462: Mr. HEFNER, Mr. TANNER, Mr. KLUG, Mr. SHAYS, Mr. LEVIN, Mr. THORNTON, Mr. SPRATT, and Mr. MONTGOMERY. H.R. 2173: Mr. ZIMMER. H.R. 2396: Mr. CRAPO, Mr. HEFLEY, Mr. MASCARA, Mr. JEFFERSON, Mr. ZIMMER, Mr. SCARBOROUGH, Mr. MORAN, and Mr. MANZULLO. H.R. 2421: Mr. WALSH. H.R. 2508: Mr. WYNN. H.R. 2654: Mr. MILLER of California and Mr. WATT of North Carolina. H.R. 2701: Mr. JOHNSTON of Florida. H.R. 2741: Mr. MANZULLO. H.R. 2757: Mr. CHAMBLISS and Ms. FURSE. H.R. 2820: Mr. MICA. H.R. 2822: Mr. SKEEN. H.R. 2900: Mr. HERGER, Ms. PRYCE, and Mr. BLUMENAUER. H.R. 2962: Mr. QUINN. H.R. 2964: Mr. SPRATT. H.R. 3000: Mr. BEREUTER. H.R. 3079: Mr. OLVER. H.R. 3117: Mr. BOUCHER. H.R. 3142: Mr. DIAZ-BALART and Mr. BUNNING of Kentucky. H.R. 3150: Mr. SPRATT. H.R. 3206: Mr. FUNDERBURK. H.R. 3207: Mrs. KELLY. H.R. 3252: Mr. FOGLIETTA. H.R. 3409: Ms. MCKINNEY. H.R. 3447: Ms. FURSE. H.R. 3477: Mrs. CLAYTON. H.R. 3480: Mr. BALLENGER. H.R. 3488: Mr. NADLER. H.R. 3518: Mr. HERGER, Mr. COX, Mr. RADANOVICH, Mr. MOORHEAD, Mr. FAZIO of California, and Mr. RIGGS. H.R. 3521: Mr. JOHNSTON of Florida. H.R. 3560: Mr. LIPINSKI. H.R. 3576: Mr. JACOBS, Mr. HAMILTON, Mr. VISCLOSKY, Mr. MYERS of Indiana, and Mr. MCINTOSH. H.R. 3609: Mr. FRANK of Massachusetts and Mr. RANGEL. H.R. 3630: Mr. CALVERT. H.R. 3647: Mr. PETE GEREN of Texas. H.R. 3693: Mr. HINCHEY and Mr. FIELDS of Texas. H.R. 3700: Mr. GOODLATTE and Mr. BOEHNER. H.R. 3710: Ms. EDDIE BERNICE JOHNSON of Texas, Mr. STEARNS, Mr. COSTELLO, Ms. DANNER, and Mr. POMEROY. H.R. 3713: Mr. MANTON, Ms. KAPTUR and Mr. JOHNSTON of Florida. H.R. 3724: Mr. TORRICELLI. H.R. 3729: Ms. BROWN of Florida. H.R. 3747: Mr. FROST and Mr. FLAKE. H.R. 3748: Mr. STUDDS. H.R. 3753: Mr. OBERSTAR and Mr. SMITH of Texas. H.R. 3757: Mr. EVANS. H.R. 3792: Mr. HAYWORTH. H.R. 3839: Ms. DANNER and Mr. COYNE. H.R. 3841: Mr. DAVIS. H.R. 3849: Mr. COLLINS of Georgia and Mr. GILMAN. H.R. 3872: Mr. ENGLISH of Pennsylvania, Mr. SOLOMON, and Mr. WELDON of Pennsylva- nia. H.R. 3905: Mr. WATTS of Oklahoma and Mr. LIPINSKI. H. Con. Res 200: Mrs. MYRICK, Mr. HUNTER, Mr. ENGLISH of Pennsylvania, Mr. KIM, Mr. MANTON, Mr. PORTER, and Mr. SAXTON. H. Res. 266: Ms. WOOLSEY, Ms. LOFGREN, Ms. NORTON, Mr. RADANOVICH, Mr. EVANS, Mrs. SCHROEDER, and Mr. ACKERMAN. H. Res. 484: Mr. WYNN, Ms. FURSE, AND Mr. SPRATT. Congressional Record UN UM E PLURIBUS United States of America PROCEEDINGS AND DEBATES OF THE 104th CONGRESS, SECOND SESSION \u2211 This ”bullet” symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor. S9321 Senate Vol. 142 WASHINGTON, THURSDAY, AUGUST 1, 1996 No. 116 The Senate met at 9:30 a.m., and was called to order by the President pro tempore [Mr. THURMOND]. PRAYER The Chaplain, Dr. Lloyd John Ogilvie, offered the following prayer: Gracious God, whose presence and power are revealed to the heart that longs for Your guidance, to the mind that humbly seeks Your truth, and to those who are united in oneness to serve You in a great cause, we ask that this time of prayer be an authentic ex- perience of communion with You that issues forth into an authentic unity of purpose to glorify You in all that we do today. We seek to receive Your presence continually, to think of You consist- ently, and to trust You constantly. We urgently need divine wisdom for our leadership of this Nation. We have dis- covered that this only comes in a reli- ant relationship with You. Prayer en- larges our minds and hearts until they are able to be channels for the flow of Your spirit. You are Yourself the an- swer to our prayers. As we move through this day, may we see each problem, perplexity, or person as an opportunity to practice Your presence and accept Your per- spective and patience. We do not want to forget You, Lord, but when we do, interrupt our thoughts and bring us back to an awareness that You are waiting to bless us and to equip us to lead with vision and courage. Thus, may our work be our worship this day. In the name of our Lord and Savior. Amen. f RECOGNITION OF THE MAJORITY LEADER The PRESIDENT pro tempore. The able majority leader, Senator LOTT, is recognized. Mr. LOTT. I thank the Chair. SCHEDULE Mr. LOTT. Mr. President, yesterday I witnessed what I think was probably the best day of legislating on both sides of the aisle and on both sides of the Capitol that I have seen in many, many years. Beginning here in the Sen- ate, we did complete action on the nu- clear waste disposal legislation. It took a lot of effort, a lot of cooperation, and I think everybody deserves a lot of credit for the way it was handled. Also, I want to commend the chair- man of the Transportation Appropria- tions Committee and his ranking mem- ber. I think they put in an Olympic performance. Even though the hurdles were movable at times, they continued to persist and were able to complete the transportation appropriations bill, and we appreciate the chairman’s ef- forts on that; also on a whole variety of conferences. Conferences were lit- erally meeting all over the Capitol yes- terday, on MilCon appropriations, on health insurance reform, small busi- ness relief package, minimum wage, on safe drinking water, on the terrorism task force. Everybody was working hard, and I really was very impressed with the effort that everybody put into the day yesterday. I hope we can rep- licate that again today. This morning the Senate will imme- diately turn to the consideration of the reconciliation bill conference report re- garding welfare reform. That con- ference report will be considered under the statutory debate time limitation of 10 hours equally divided. I hope it will not take the full 10 hours. I know a lot of Senators want to be heard, and cer- tainly they have that right in this time limit. But I hope maybe we can yield back some of that time so that we can take up conference reports. We have a couple of them that we will probably have to vote on. The D.C. appropria- tions conference report and military construction conference report will probably both have to be voted on. This conference report is not amend- able. Therefore, a vote on the adoption of the report will occur on the expira- tion or yielding back of debate time. Following disposition of the reconcili- ation bill conference report, the Senate may be asked to turn to consideration of other available conference reports or appropriations bills. After we have votes on the con- ference reports, it is my intention at this time to go to the HUD VA appro- priations bill. The chairman, the Sen- ator from Missouri, Mr. BOND, and the ranking member, Ms. MIKULSKI, have been very patient and understanding; their bill has slipped so we could move other, supposedly less controversial bills, but I hope we can take up the HUD VA appropriations bill late this afternoon or even tonight. Therefore, rollcall votes can be expected through- out today’s session and probably into the night. I yield the floor, Mr. President. Mr. FORD addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Kentucky. Mr. FORD. Mr. President, let me say to the majority leader on behalf of the Democratic leader that we intend to cooperate with him as much as we can, but I might say to the majority leader, as he understood, the Democratic lead- er was quite upset last night when one of the judges had an objection. That level of cooperation kind of broke open last night. So I just want to advise the majority leader that we will be attempting to continue to help him through the day, but it received a bump last evening. Mr. LOTT. Mr. President, I under- stand that, and I understand that we will be in very close touch with the dis- tinguished assistant minority leader, the whip, to make sure that when votes do occur today they are in coordina- tion with the Democratic leader’s CONGRESSIONAL RECORD \u2014 SENATES9322 August 1, 1996 schedule, because we know he has some other things with which he is con- cerned. We understand about the bumps in the road, but it is kind of like the hur- dles on the Transportation appropria- tions bill the Senator from New Jersey helped work through. You just keep moving forward. You deal with them, and you find a way to handle these problems, and we will keep working with Senators to see that we can do that. I yield the floor. f RESERVATION OF LEADER TIME The PRESIDING OFFICER (Mr. DEWINE). Under the previous order, leadership time is reserved. f PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILI- ATION ACT OF 1996\u2014CONFERENCE REPORT The PRESIDING OFFICER. Under the previous order, the Senate will now proceed to the consideration of the conference report to accompanying H.R. 3734, which the clerk will report. The assistant legislative clerk read as follows: The committee of conference on the dis- agreeing votes of the two Houses on the amendment of the Senate to the bill (H.R. 3734) to provide for reconciliation pursuant to section 201(a)(1) of the current resolution on the budget for fiscal year 1997 having met, after full and free conference, have agreed to recommend and do recommend to their re- spective Houses this report, signed by a ma- jority of the conferees. (The conference report is printed in the House proceedings of the RECORD of July 30, 1996.) Mr. DOMENICI addressed the Chair. The PRESIDING OFFICER. The Sen- ator from New Mexico. Mr. DOMENICI. Mr. President, as I understand it, there are 10 hours equal- ly divided. I hope we do not use 10 hours, and I will not take very long. I will yield rather quickly to the chair- man of the Finance Committee. If he would permit me to give just a quick oversight, I will yield on our side. But I do wish to announce there are a num- ber of Senators who want to speak. I hope we do not have any lag time be- tween speakers. The Senators who have asked to speak are HATCH, GRAMM, SPECTER, HUTCHISON, SIMPSON, COATS, and GORTON. Some have indicated they want to speak as much as 10 to 20 min- utes. I am clearly going to have plenty of time to accommodate them. I hope they will be watching here so that we do not have big periods of time when we are in a quorum call. Mr. President, we come to the end of a long journey today to reform our Federal-State welfare programs. We take this final step today to send to the President of the United States for his announced signature the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. As vice chairman of the welfare rec- onciliation conference, I wish to first thank the people who did the bulk of the work to bring this conference to a quick conclusion. On our side, I thank in particular Senator ROTH, the chair- man of the Finance Committee, who sits here. Without his diligent work and that of his excellent staff, we would not be here. I also thank, Sen- ator LUGAR, who chairs the Agriculture Committee. For some it is not quite understood why a welfare bill can in- clude agriculture issues. Of all of the nutrition programs that are a part of this package, most of them come with- in the jurisdiction of the Agriculture Committee, from food stamps on down. Obviously Senator LUGAR and his very dedicated staff must be given very high praise on our side of the aisle for their work. These two distinguished chairmen and their staffs, from what I under- stood, worked tirelessly this last week. I was with them some of the time. I know of no other budget reconciliation conference in our history that was completed as quickly as this\u2014less than 1 week. Now, obviously, the House and Sen- ate have passed bills that were some- what similar\u2014we have been at this a number of times. In fact, we have here- tofore sent to the President two bills that passed both the House and Senate and he vetoed them. So, completing the conference report in 1 week seemed to us to be an achievable goal. And, in- deed, they have exceeded our expecta- tion and finished in slightly less than a week. I believe part of the reason why this conference was completed so quickly is because the work on this issue has been in progress since the beginning of the 104th Congress, which began almost a year and a half ago. Welfare reform was one of the top legislative agenda items of this Congress. The former Repub- lican leader, Senator Bob Dole, our candidate for President, made welfare reform a centerpiece of our broader ef- fort to reform the Federal Government and return power back to the States and communities. For that, I want to indicate my great praise for our can- didate for President, and our former leader. He had a lot to do with us being here today. In addition, the national Governors, both Republicans and Democrats, have worked over the last year, both with the Congress and the administration, to help us make as informed judgments as we can. This legislation truly represents and reflects the beginning of an open part- nership with the States. This openness will be critical to its long-term suc- cess. We finally have decided what we should have decided a long time ago, that the States should not be our jun- ior partners: who we tell how to do ev- erything, do not listen to, and do not let make any innovative changes or do anything different from State to State. For too long we have assumed that one shoe fits all and that the States better do as we say because we are paying some or most of the bill. We have decided that the States and Governors and legislatures out there in America are as concerned about the poor as we are. They are concerned about their well-being and as con- cerned, if not more so, about the status of welfare in their States\u2014a program that was built upon and built upon over the past 60 years, but never contained any elements which were truly an in- centive to go to work, or to improve your own personal responsibility and take better care of yourselves, and thus of your children. It had become as if people were locked in poverty, kind of waiting around for the next minimal cash benefit check and whatever else went with it. The rewards were not great. The money was not very much. But of those who got on it, many of them stayed on it forever because there were no tools to help them get their educations and look for jobs. There were not job placement approaches. All of that will change when this bill becomes law. The essence of the new welfare will be more like workfare. Welfare offices will turn into work placement offices, into job training of- fices, into places where people can go to find out how to improve their skills and what help they can have while they are doing that, such as enhanced child care. We put a great deal of re- sources in here, because we want many of the people who are single heads of households, who have a couple of chil- dren, to be able to become trained and educated. So we have provided about $14 billion over the next 6 years in this bill, in order to help parents who want to go find jobs with those things that they need to take care of their children in the interim. The spirit of bipartisanship is here today also. The President’s statement yesterday indicates he would sign this legislation, after having vetoed two previous attempts at welfare reform. Our Senators may describe what we have done differently, but from my standpoint I describe it in five simple ways: First, we want to encourage and make people work. We believe work is the best thing to make people feel more self-esteem. It builds personal re- sponsibility\u2014which is precisely the op- posite of the ethic we have built into the welfare program heretofore. Able- bodied persons who seek assistance should seek work and employment, and only after failing to find employment should they turn to the taxpayer for assistance. Second, simple as it sounds, we ask parents to take care of their children. We stress personal responsibility and create incentives for families to stay together. We reestablish one simple rule, parents should take care of their children first. Accordingly, we track down and punish deadbeat fathers and mothers. Third, we change the culture of welfare. This is a culture that has CONGRESSIONAL RECORD \u2014 SENATE S9323August 1, 1996 dominated and poisoned our good in- tentions for the last 61 years. We do away with the concept of an entitle- ment to a cash benefit. Welfare will have a 5-year time limit for any recipi- ents. No longer will welfare be a way of life. It will be a helping hand\u2014and not a handout. Fourth, we cut endless, unnecessary Federal regulations and bureaucracies and bureaucrats by turning power and flexibility over to the States and com- munities. That is where help for those in need can best be determined and best be delivered, and where innovation will flourish. Better ways to do things will be found. Fifth, and finally, this is a budget reconciliation bill, and these reforms will slow the growth of Federal and State spending for these programs. Spending on the programs in this bill: the new temporary assistance for needy families block grant\u2014temporary assistance for needy families block grant, I repeat that\u2014this is a new pro- gram, and a new child care block grant program, and the reformed food stamp, SSI, child nutrition, foster care\u2014all of these, along with the earned-income tax credit and other programs will in- crease from $100 billion this year to nearly $130 billion per year 6 years from now. Total spending over the next 6 years for these programs will exceed $700 billion. For those who say we are not going to provide for those in need that were heretofore on welfare, let me repeat: The combined programs will increase from nearly $100 billion this year to $130 billion per year in 6 years, hardly a reduction in expenditures. Let me re- peat, the total programs that I have just described, food stamps, SSI, child nutrition, foster care, the block grant program for child care, the new block grant to take the place of AFDC, which we will call temporary assistance for needy families\u2014all of those programs will seek, from the taxpayers of Amer- ica, $700 billion over the next 6 years. Nevertheless, our taxpayers should know that we will save, we will save them, about $55 billion. This program in its reformed and more efficient mode will cost $55 billion less than it was assumed to cost if we had left ev- erything alone and kept the entitle- ments wherever they were. I believe much of these savings are going to be achieved because we are making the programs work better. We are going to be pushing people to do what they should have been doing all along\u2014get off the rolls into work, off dependence into independence, off looking to somebody else for respon- sibility and looking to themselves. And everywhere we turn, in this bill, there are provisions for those who just can- not do it. There are emergency set- asides, emergency allowances, there are provisions, where it just cannot be done, to provide some of what must be provided in addition to the basic pro- gram. I would like to quote one of our very distinguished Senators, Senator RICK SANTORUM\u2014for whom I also extend my great appreciation for his help on the floor on many occasions during the de- bate on welfare. He stood here in my stead and he did a remarkable job. He came to the Senate well informed on this subject. He, at one point, said: ”Welfare reform has been and will con- tinue to be a contentious issue. This legislation is tough love.” I concur. And I do not believe there is anything wrong with that either. I have some concerns about provisions in this legislation. Other Members will have their particular concerns, and the President has expressed his. Unfortu- nately or fortunately, depending on your philosophy of governance, it is possible and probable that even with the President’s signature we will not have seen the last of welfare reform. When he has signed it, we will probably see a completed law and we will carry it out. In due course, we will see there are some areas that need some repair, some fixing. But I believe, under any circumstance, with a bill that is as much on the right track as this\u2014al- though perhaps imperfect in certain areas\u2014we should proceed. We should let the reform move along. For today, I believe, that the best hope we have to fulfill the promise we all made to the American public to change these programs as we have known them\u2014is to pass this bill over- whelmingly. Making such fundamental changes to programs, some of which are 60 years old, will surely require adjustments and additional tuning as we begin to see how this legislation unfolds. But for those who seem frightened of this change, and for those who want to find the areas where they have concern and that might need some repair in the fu- ture, I merely ask, is it possible that this welfare reform program can be worse than what we have? I cannot believe that it is; because in a land of opportunity with untold chances for people to succeed on their own and move ahead with personal achievement and responsibility, in a land with plenty of that, one thing that stands out as a testimonial to failure on the part of our legislative bodies and the executive branch is the welfare program of this country. This program, for the most part, moves people in the opposite direction of mainstream op- portunity in America, and for many it locks them there. We must unlock their opportunity potential. For today, I believe this is our best opportunity to change the culture of welfare and, once again, I repeat, to provide in every way possible a hand up, an opportunity up, not a handout. I believe these Americans who are locked in welfare as we know it today are anxiously waiting in their minds and in their hearts for a better way of life. What we are saying, is we hope we are providing that for you. We hope we are giving many of you an opportunity to get out of welfare and get into some- thing that is more like what most Americans have the opportunity to be a part of. In short, I believe this legislation is the best hope we have today to provide some real hope for a future for those families and children in our society who, in many, many instances, are to- tally without hope. But we need to be honest and sober. I believe proponents and opponents may be overstating the results, but I believe the overwhelming consequences of this bill will be posi- tive. The legislation represents a fun- damental change in social policy. We elected officials should not assume that this legislation is perfect. The one thing the last 61 years should have taught us is that no one can be all- knowing. So let us be proud of this significant accomplishment today. I believe it is the right legislation for the future. But let us also remain vigilant and sober. Many people’s lives will be affected by this critical legislation, and we hope for most of the overwhelming percent- age it is for the better. Again, I congratulate the Members of the House and Senate who have worked to help bring this legislation before us today. I am hopeful that we will put an end shortly to welfare as it is. Mr. LAUTENBERG addressed the Chair. The PRESIDING OFFICER (Mr. FAIRCLOTH). Who yields time? Mr. DOMENICI. Mr. President, I yield the floor. Mr. LAUTENBERG. I thank the man- ager. The PRESIDING OFFICER. The Sen- ator from New Jersey. Mr. LAUTENBERG. Mr. President, let me start off by saying that I great- ly respect my colleague on the other side of the aisle, the manager and the chairman of the Budget Committee. I listened to him carefully, and I know that he is a man of compassion and concern. I have seen it manifested in many ways: his interest in the men- tally ill, his interest in the disabled. This is someone who cares about peo- ple. So when I talk about my difference in view, this is my personal perspective and, by no means do I intend to criti- cize the distinguished Senator from New Mexico. Mr. President, I take this oppor- tunity, acting as the minority manager on this conference report, to make my remarks, and they reflect my opinion. This is not a consensus view that I have mustered; this is the opinion of the Senator from New Jersey, who has been on the Budget Committee for some time and draws on some experi- ence from my corporate world, as I dis- cuss my perspective. This is a historic and peculiar time for the U.S. Senate. The body is on the verge of ending a 60-year guarantee that poor children in this country might not go hungry. I salute the at- tempts to solve the problem. I am right with all the others, including the President of the United States, in wanting to solve the problem. CONGRESSIONAL RECORD \u2014 SENATES9324 August 1, 1996 The question is not whether one wants to solve the problem; the ques- tion is, how do you solve it? This is going to be a test not only of our pock- etbooks and our resources, but of our hearts as well. Though I have heard it described as bleeding hearts, I am will- ing to accept the nomenclature that has applied, because having had my life experience when in the Depression years my family was, to use the expres- sion, dirt poor, and my father had to go to work on a WPA program, it was a humiliating experience for him to have to go to work on a Government pro- gram. But he buried his pride for a mo- ment, and he did what he could to sup- port his family. I don’t know many people who want to humiliate themselves standing in a line waiting for their welfare check. Yes, there are some cheats out there and there are druggies and there are drunks. They are out there, there is no question about it, but a lot of those people are simply people who have not yet discovered a way out of their mis- ery and their poverty. Women with children, many of them unwed\u2014I do not approve of that condi- tion, but that is life. The punishment should never exceed the deed, and that is what I fear, Mr. President, we are about to do in this body of ours, in our beloved country. For 60 years, we could rest easier at night and be sure Amer- ican children had a minimum safety net. The bill before us takes away this peace of mind and throws up to 1,100,000 children into poverty, according to a study by the Urban Institute. I agree, the welfare system is in need of repair, and I believe that it needs to promote work and self-sufficiency, pride and dignity. That is going to make the difference. I think it should also, however, pro- tect children and, unfortunately, I am not certain at all that this so-called welfare reform does it. First, the Republican bill does not promote work. It asks for work. It de- mands work. I heard the distinguished chairman of the Budget Committee say we can make people work. That is a re- quirement for welfare recipients. But it does not require the resources to put people to work. In fact, CBO said that most States would be unlikely to satisfy this work requirement for several reasons. One major reason is that this bill cuts fund- ing for work programs by combining all welfare programs into a capped block grant. Second, the Republican bill hurts children. It would make deep cuts in the Food Stamp Program, which mil- lions of children rely on for their nutri- tional needs. It would also end the guarantee that children will always have the safety net. Under this bill, a State could adopt a 60-day time limit, and after that the children would be cut off from the safety net entirely. The State would not even be required to provide a child with a voucher for food, clothing, or medical care. When you take all of these policies together, this bill will put an estimated approxi- mately 1.1 million children into pov- erty. And this is a conservative esti- mate. It could be higher. Mr. President, my conscience does not permit me to vote for a bill that will likely plunge children into pov- erty. I had an experience some years ago when I was at the Earth summit in Brazil with the now Vice President of the United States and other Senators, Republican and Democrat. We were dining at a restaurant, facing a beau- tiful harbor in Rio. The restaurants were separated by rows of shrubs\u2014 beautiful places, a marvelous atmos- phere. I saw a light brown hand reach through the bush and take food off the table. Children starving, thousands of them, sometimes chased by the police, sometimes shot at because they crowd- ed the doors. Mr. President, a child who is hungry will go to any means, as will an adult, to satisfy their hunger. I am worried about that. I cannot vote to leave our children unprotected. I was one of only 11 Democrats to vote against the origi- nal Senate welfare bill that would have put 1.2 million children into poverty. I voted against the conference report on this bill that would have doomed 1.5 million children to the same fate. I will vote against this bill for the same rea- son. We dare not abandon our children. Mr. President, I hold a different vi- sion of what the safety net in this country should be. I am concerned, frightened, that this bill will leave children hungry and homeless. I am afraid the streets of our Nation’s cities might someday look like the streets of the cities of Brazil. Walk around there and you see children begging for money, begging for food, and even at 8 and 9 years old engaging in prostitu- tion. Tragically, that is what happens to societies that abandon their children. When we don’t protect our kids, they resort to their own means to survive. I do not want to see that happen in this country. I want to see this country in- vest in children. I think we should invest more in child care and health and nutrition so that our kids can become independent, productive citizens. I want to give them the opportunity to live the Amer- ican dream like I and so many in this room had the good fortune to do. If we do not, we will create a permanent underclass in this country. We will have millions of children with no pro- tection, and we are going to doom them to failure. Mr. President, as a member of the Budget Committee, I also want to com- ment on the priorities that are re- flected in this reconciliation bill. De- spite the fact that this bill is only lim- ited to safety net programs, it is still considered a reconciliation bill. The bill receives the same protections as a budget-balancing bill, but there is no balanced budget in it. This reconcili- ation bill seeks to cut the deficit only by attacking safety net programs for poor children, for legal immigrants. There are no cuts in corporate loop- holes or tax breaks, despite the fact that the tax expenditures cost the Fed- eral Treasury over $400 billion a year. There are no such savings in this bill. There are no grazing fee increases, no mining royalties, no savings in the military budget or NASA’s budget. The only cuts in this bill come from women and children. This reconcili- ation bill gives new meaning to putting women and children first. Mr. President, I realize that this bill is going to pass. I understand the President clearly has indicated that he is going to sign it. However, as the dis- tinguished Senator from New Mexico mentioned, the President and many of us are determined to examine a pack- age of changes next year to soften the blow of the harsh provisions in this bill. Mr. President, we have seen the reac- tion of people regarding this bill. When you hear from the mayor of one of the world’s most distinguished cities, New York City Mayor Giuliani, he is wor- ried about where they get the money in the block grants to supply the job training, the child care support. He is concerned, as are many mayors across the country we have heard from. Mr. President, I will, for a moment, just relate an experience that I had when I ran a corporation, a big cor- poration. When I left to come to the U.S. Senate, we had over 16,000 employ- ees, a very successful company. We were a company, founded in New Jer- sey, that tried to work within our com- munity. The company still has its headquarters in New Jersey and em- ploys almost 30,000 people today. I always tried, since I came from a poor background of hard-working, hon- est people who always wanted to keep their heads high and always wanted to do the right thing and not ask anybody for anything\u2014but there were times when we needed help. If I did not have the GI bill, Mr. President, I doubt that I would be standing in front of the U.S. Senate and the American people today. So, we were very conscientious, my partners and I, about trying to under- stand what was happening around us. We began to hire people, or we at- tempted to hire people, who were lit- erally unemployable with job after job, short-term employment, and then back on the streets. We brought people into the computer room, not into the factory. We did not have a factory. I was in the computer business. We brought them into the computer room, and we had one star- tling success among several people that we worked with. The reason for that success was very interesting. The rea- sons for failure were obvious, because though we would give these people a job, and they would be enthusiastic about it for a couple days, as soon as they got back into their environment and as soon as they were faced with CONGRESSIONAL RECORD \u2014 SENATE S9325August 1, 1996 poverty and despair and drugs and crime, they fell right back in the trap. They were useless as employees in very short order. But the one person who succeeded so well, we got an apartment for her, and we moved her, helped her move from her ghetto area to a more middle-class area. The success was astounding. This woman, when we hired her, she was 25 years old. She had very limited edu- cation. She became a computer room supervisor\u2014a good job\u2014and went on to become a part of management in the company. It was a startling success, because it was not that we said, you have to go to work and have to show up on time. We said that to everybody. You say that to all of your employees. All of them do not do it. It needs train- ing. It needs commitment. Mr. President, I hope that this bill that is being considered today, this reconciliation bill, will not be the first step toward larger problems than we can understand today, toward the kind of situation where America turns its heart into stone and says, OK, we are here as accountants, we are here to cut the budget. I want to cut the budget. I have pro- grams to cut the budget to arrive at a balanced budget. I know what happens in the corporate world when your ex- penses get too high and your revenues too low. You make changes, make them selectively. We did not just cut every department if we had to reduce expenses. Maybe it was time to cut the marketing department or the produc- tion department or the products design department. But I always thought about the long term. We are abandon- ing the long term. What we are doing is giving a lot of people political satisfac- tion, those who work here and those who are outside who hear us on TV and the radio. Mr. President, I make my remarks in the full context of the realization of where we are. This bill has lots of sup- port. I am not, I promise you\u2014not\u2014at- tempting or trying to influence people to vote against it. I am stating the case as I see it. I hope it will in some way encourage others to think very deeply about their decision to vote. I thank you and yield the floor. Mr. DOMENICI. Mr. President, how much time does the distinguished Sen- ator from Delaware desire? Mr. ROTH. Ten minutes. Mr. DOMENICI. I yield up to 15 min- utes to the Senator from Delaware, Senator ROTH. Mr. ROTH. First of all, let me thank the distinguished Senator from New Mexico for his gracious remarks about me and my staff. I just point out that we would not have been able to com- plete the reconciliation within a week if it had not been for his leadership, for the assistance and help that he pro- vided at any time when it became nec- essary in the difficult negotiations that had to take place. I want to pub- licly thank the Senator for his con- tribution. Mr. President, this day is a remark- able turning point in the lives of mil- lions of American families and genera- tions to come. This is the day we will reorder our confused and confounding system of welfare. A world spinning out of control will be brought back into proper course. It will return to order not through the power of Wash- ington but through personal respon- sibility and work opportunity, the very title of this important legislation. I say to my distinguished friend from New Jersey that what we seek to do here is to provide the same kind of op- portunity that was given to him, through help to go to college, but par- ticularly as he tried to help that lady into the mainstream of life by giving her meaningful work. I think that is what we are all seeking to do together. Mr. President, this is the third time welfare reform will have passed in the 104th Congress. The issue of welfare re- form has been frequently and passion- ately debated over these past months, and rightly so. The effects and con- sequences of the welfare system in some way touches us all. During this time, the Finance Com- mittee has held 19 hearings and taken testimony from 90 witnesses. We have found that the current AFDC program, as it was designed in the 1930’s, aban- doned many families long ago as a sta- tistic of long-term dependency in con- temporary society. The current welfare system has failed the very families it was intended to serve. If the present welfare system was working so well we would not be here today. I think that is a point well worth underscoring because the fact is, as the record shows, that this current system has not been good for children. For anyone who believes that it has, I recommend you read the findings sec- tion of this legislation. I have yet to hear anyone defend the present system as good for children. I point out that in 1965 there were 3.3 million children on AFDC; by 1992, that had risen to over 9 million children. In 1992, 9 million children were on welfare, AFDC, despite the fact that the total number of children in this country has declined. Last year, the Department of Health and Human Services estimated if we do nothing, 12 million will be on AFDC in 10 years. I reemphasize once again that the present system is not good for children. But the record clearly demonstrates the contrary\u2014that instead of being good, we find more and more children being trapped in a system and into de- pendency on welfare. As I said, to do nothing is absolutely unacceptable. Mr. President, 90 percent of the children on AFDC live without one of their parents. Only a fraction of welfare families are engaged in work. The current welfare system has cheat- ed the children of what they need most\u2014among these is hope, the nec- essary condition of liberation from de- pendency. The key to their success will not be found in Washington but in the timeless values of family and work. Opponents of welfare believe that the States lack either the compassion or the capacity, or both, to serve needy families. They are wrong. We promised welfare reform and we have kept our promise. Our legislation is built upon the original principles from which we have never waivered. This is a biparti- san bill. Half of the Senate Democratic Members who served on the conference voted for the bill when it passed the Senate by an overwhelming margin. Yesterday, this conference report passed the House of Representatives by a vote of 328 to 101. Half of the Demo- crats in the House of Representatives voted for this bill. I believe that dem- onstrates the bipartisan spirit upon which we have approached welfare re- form. A number of people deserve our thanks and credit for giving us this op- portunity today. First, let me give credit and thanks to Senator Bob Dole, our former majority leader. Even after welfare reform had been vetoed twice, Bob Dole insisted that we could and should remain steadfast in our fun- damental principles and achieve wel- fare reform. Bob Dole introduced a wel- fare bill before he left the Senate which was, frankly, the benchmark of our conference report before us. His last advice to me was to make sure this job gets done this year. I have to say, Mr. President, today’s action reflects his work, reflects his vision, reflects his leadership. Our Nation’s Governors, most espe- cially the lead Governors on welfare and Medicaid reform, people like John Engler, Tommy Thompson, Mike Leavitt, Tom Carper, Bob Miller, Lawton Chiles, and Roy Romer deserve our thanks and credit for their work to make welfare reform a reality. I look forward to working with them again to face the challenge of Medicaid reform. Even though Senator MOYNIHAN does not support our legislation, I want to thank him for his work and insights into this extremely complex world of welfare. Perhaps no one has done more over the past three decades than Sen- ator MOYNIHAN to bring the alarming growth in welfare to the Nation’s at- tention. President Clinton has announced his support for this hard-won conference report and he is to be congratulated for that decision. It is the right thing to do. Mr. President, while the present wel- fare system is full of excuses, the wel- fare reform legislation being presented to the American people today is indeed a bold challenge. And while the present system quietly accepts the dependency of more than 9 million children, our proposal speaks loudly to them and in- sists that they, too, must be among the heirs to the blessings of this great Na- tion. Welfare reform is about helping fami- lies find the freedom and independence we take so much for granted. Mr. President, this legislation clearly points the way to that independence. CONGRESSIONAL RECORD \u2014 SENATES9326 August 1, 1996 But the road to independence does not begin or end in Washington. Independ- ence begins with living up to one’s re- sponsibilities. This is echoed through the legislation with the provisions on work, time-limited benefits, limits on benefits for noncitizens, and strong child support enforcement reforms. Mr. President, I urge adoption of the conference report. I yield the floor. Mr. WYDEN addressed the Chair. The PRESIDING OFFICER. The Chair recognizes the Senator from Or- egon. Mr. WYDEN. Mr. President, I yield myself 15 minutes. Mr. President, there is a concrete reason for voting for this less-than-perfect bill. For millions of Americans, this legislation can be a tool for turning the welfare check into a trampoline for opportunity and inde- pendence. I know this because my home State of Oregon has achieved it. Once more, the State of Oregon has marked a path for the Nation. By put- ting in place our welfare reform pro- gram, known as Jobs Plus, we have shown the Nation that it is possible to be both tough and compassionate. With our Jobs Plus Program, we have been able to have strong work requirements and critically needed child care and medical care for folks coming off of welfare. The plan is working for both taxpayers and those coming off of wel- fare. And as the President said yester- day, today’s legislation can spark more States into going with the kind of ap- proach we have at home. Mr. President, a few years ago, an Or- egonian approached me on the street and said, ”You know, for me, welfare is kind of like ‘economic methadone.’ You guys send me a check. The checks always come, but you people never let me do anything to break out, to get off welfare.” This legislation provides the way to break out\u2014a real key for unlocking the riddle of welfare dependency. I think it is an opportunity to remake this sys- tem that doesn’t work for those who are in it and doesn’t work for the tax- payers who pay for it. Take child care, for example. Child care is an absolute prerequisite to changing welfare. I chaired hearings looking at the child care issue, and we heard heartbreaking accounts of how, again and again, women would get off of welfare, they would be doing well in the private sector, but their child care would fall apart just as they were get- ting back on their feet. This bill provides $3.5 billion more than current law for that critically needed child care. That increase of $3.5 billion in child care is going to be abso- lutely critical to helping folks get off welfare. In addition, as several of my col- leagues have noted, child support is strengthened. I am also pleased that Medicaid is protected as a guarantee for all of our Nation’s children. Now, at the beginning of this Con- gress, there was a lot of talk about or- phanages. A lot of us did not particu- larly think that all of these orphanages were exactly Boys Town, and nobody seemed to zero in on the question that if an orphanage was Boys Town, it would come with a big price tag for taxpayers. So a lot of us thought that we ought to do something better. I worked very hard to develop a new ap- proach known as ”Kinship Care.” What the Kinship Care amendment says is that the Nation’s grandparents\u2014the millions of loving grandparents\u2014would get first preference when a youngster from a broken home needs help. In- stead of sending the children away, the grandparents, if they met the child custody standards, would get first pref- erence. Along with Congresswoman EL- EANOR HOLMES NORTON, Congressman CLAY SHAW, and Senator DAN COATS, on a bipartisan basis, we all worked to- gether on this kinship care amend- ment. Now, as we look to the 21st century when, as a result of the population trends and demographics, there are going to be many more grandparents, we have an opportunity to keep fami- lies together, to use a new model known as kinship care to provide lov- ing care for youngsters in a cost-effec- tive way. Mr. President, this legislation doesn’t meet my definition of perfec- tion. I will say that I, frankly, detest a couple of these provisions\u2014particu- larly, what was done with the food stamp shelter deduction and the legal immigrant provisions. So this legisla- tion doesn’t meet my textbook stand- ard of what would constitute perfec- tion. I, like a number of our other Sen- ators, am going to fight very hard to make changes in this area. As I think it is critical to do, we ought to be con- structive and we ought to look at use- ful ways that Senators can work on a bipartisan basis for changes. For example, there has been a lot of talk in this Congress about the idea of a lock box, the idea of special accounts so that when the spending is reduced, those funds are protected for deficit re- duction. I have supported that concept. I think the lock box makes sense. Frankly, I think we ought to look at a new idea, and we can call it the lunch box. We could make sure that when you eliminate some of those tax loop- holes, when you go after wasteful spending, some of those funds could be put in what I call the lunch box, and we could use these savings to try fresh approaches to ensure that all Ameri- cans have access to good nutrition. I think there are a number of new, inno- vative approaches that we ought to try and that are going to be needed, even after this bill is enacted and signed into law. At the end of the day, Mr. President, the question, to me, is straightforward: Is this legislation better than the sta- tus quo? Is it better than the system that an Oregonian told me was like economic methadone? I think that when you look at the child care provi- sions, at the Medicaid guarantee, when you look at the opportunity for States to follow the path that Oregon has fol- lowed with our Jobs Plus Program, I believe you see the case for supporting this legislation. I intend to vote for it. Mr. President, I yield the floor. Mr. DOMENICI. Mr. President, as manager of the time on this side, I want to indicate that Senator GORTON will be recognized to take my place, and he will have up to 15 minutes, and then he will indicate thereafter the se- quence until I arrive back on the floor. The PRESIDING OFFICER. The Chair recognizes the Senator from Washington State. Mr. GORTON. Mr. President, I great- ly admire those who, during the course of this debate over the last year and a half, expressed great confidence in the consequences of the passage of this bill or of its predecessors. I expressed that admiration both for those who are as confident that the bill will end a cul- ture of dependency as for those who view with alarm what they believe will vastly increase poverty among the peo- ple of the United States. While I ad- mire their certainty, I cannot join in it. I must say, Mr. President, that I am not at all certain of what the con- sequences of the passage of this bill will be. I hope and I am inclined to be- lieve that they will primarily be posi- tive, but I cannot be certain. In that regard, Mr. President, I agree fully with the views expressed yesterday in the Washington Post by Robert Sam- uelson, and I will quote three sentences of his review: The exercise aims to promote self-reliance by making it harder for people to rely on government. Without the threat of extra suf- fering, people would have no reason to change. What can’t be predicted is how the good and bad will balance. Mr. President, I find that entire col- umn to be so persuasive\u2014and not at all, incidentally, to be so similar to my own views\u2014that I ask unanimous con- sent that the entire column be printed in full at the end of my remarks. The PRESIDING OFFICER. Without objection, it is so ordered. (See exhibit 1.) Mr. GORTON. Mr. President, on the other hand, what I do know and what I feel confident in stating is that our present welfare system is a tragic and destructive failure. At the very least, the present system has been accom- panied by a massive increase in the very conditions that it was designed to alleviate: illegitimacy, family breakup, a negative attitude toward work, a cul- ture of dependency. At most, our present system has been a contributing cause to those conditions. I should also like to observe, Mr. President, that those who oppose this bill, by and large, are those who indi- vidually\u2014or whose philosophy\u2014have guided and managed the system that this bill in large part dismantles. These people, these ideas clearly represent the conventional wisdom, a conven- tional wisdom that has guided and pro- duced every change in welfare policy in CONGRESSIONAL RECORD \u2014 SENATE S9327August 1, 1996 this country, or almost every such change, for at least the past 30 years. Their present advice is to view with alarm these changes, to attempt to preserve the status quo, except to ask that we do a little bit more of what we have been doing with these last several decades. Mr. President, that conventional wis- dom is bankrupt and ought to be aban- doned, not only for the sake of our so- ciety as a whole but for the sake of the supposed beneficiaries of these welfare policies. Those of us who support this legisla- tion, these changes, hope with some reason that this bill will increase in- centives to work, some of those incen- tives being positive and some negative. We hope, with some reason, that it will result in strong disincentives for teen- age pregnancy and illegitimacy. We are convinced that it will require greater male parental support for their chil- dren. But the heart of this bill\u2014not with total consistency, after all, with the compromises that have entered into it\u2014but the heart of this proposal is consistent with my own uncertainties about specific consequences resulting from specific policies. That central fea- ture is to end the absolute entitlement to welfare, to end the detailed Federal regulation of the way in which welfare policies are administered by the State, to end the massive bureaucratic inter- ference with every detail of welfare policy, and to encourage\u2014for that mat- ter, to require\u2014a wide range of experi- mentation in welfare policies among our 50 States. I suppose that States which really want to pay for even more generous welfare systems than they have at the present time will be able to find a way to do so, and that there may be a hand- ful of such States. Perhaps more sig- nificantly, those States that want to adopt tough work requirements will be able to do so. Those States that want to provide for greater training and child care will be able to do so. Those States that want to impose strong dis- incentives against dependency will be able to do so. In fact, in a relatively short period of time after the passage of this bill, we will have 50 distinct and different sys- tems of welfare in the United States. We will learn just how much private sector charities can and will do in the welfare field. We know that in certain areas they have been magnificently successful at much lower cost than any government-run program. How much that private sector effort can be in- creased we simply do not know at the present time, but we will learn as a re- sult of this bill. As a consequence, 5 years from now or 10 years from now, I believe that we will know far more about which wel- fare policies work and which do not. Perhaps we will even know enough to lead us wisely to a more centralized system of adopting those policies which seem to have worked well. I sus- pect, I hope, and I think this 50-State experimentation will probably be suc- cessful enough so that our successors will wish it to continue. Mr. President, I am gratified but not at all surprised that a poll-driven President of the United States has agreed to sign this bill. That agree- ment means that we are talking here, debating here, something real\u2014real changes in policy with a real impact on our society and on our citizens. It would be very difficult to do worse than we have been doing over the course of the last several decades. We have a marvelous opportunity to do far better. The time has come to act. The day is at hand on which we will act. I commend this magnificent new ex- periment to my colleagues. EXHIBIT 1 [From the Washington Post, July 31, 1996] FOR BETTER OR WORSE? (By Robert J. Samuelson) We are now hearing a lot about the prom- ise and peril of ”welfare reform.” To its champions, the legislation nearing congres- sional approval would destroy the ”culture of dependency.” Critics see it as further im- poverishing many poor families. Both are correct. The exercise aims to promote self- reliance by making it harder for people to rely on government. Without the threat of extra suffering, people would have no reason to change. What can’t be predicted is how the good and bad will balance. I have put ”welfare reform” in quotes, pre- cisely because ”reform” is a term of art. It is automatically attached to any scheme for social change, from ”campaign finance re- form” to ”school reform.” In debates about these proposals, the protagonists act as if they can easily foretell the effects, for good or ill. As often as not, this convenient fiction spawns ”reforms” with many unintended consequences. The process is now in full swing with ”welfare reform.” The combatants regularly issue confident predictions and shrill denunciations that de- pict a fixed future. Last week, for example, the Urban Institute, a research group, re- leased a study estimating that the House- passed welfare bill would increase the num- ber of people in poverty by 2.6 million people, including 1.1 million children. Naturally, op- ponents of the legislation seized upon this to emphasize how bad it is. But a close look at the study shows that its conclusions ought to be highly qualified. The House and Senate bills would give states great flexibility to run their welfare programs within broad federal guidelines. Total lifetime federal benefits would be lim- ited to five years, though states could ex- empt 20 percent of their caseloads. States would be pressured through complex regula- tions to move most mothers into some type of ”work” within two years. After making some assumptions about state programs, the Urban Institute study estimates that the loss of benefits would outweigh the increase in earnings from jobs. This could happen. The study’s assump- tions aren’t implausible. But uncertainties abound. First, the full rise of people in pov- erty would occur only in 2002 after all the bill’s provisions took effect. Between now and then, Congress (or the states) could make changes if things went badly. This is especially true of one of the bill’s worst pro- visions: the denial of many benefits, includ- ing food stamps, to legal immigrants. That alone accounts for about two-fifths of the bills’ benefit cuts. Second, the increase in the poor would be much less\u2014only 800,000 and not 2.6 million\u2014 if the Urban Institute had used the govern- ment’s official definition of poverty. I cite this difference not because I think the Urban Institute deliberately inflated the impact of ”welfare reform” but because it shows how perceptions can be shaped by somewhat arbi- trary statistics. (For numbers freaks, the difference arises because the government definition counts only cash income to determine who falls below the poverty line: $15,141 for a family of four in 1994. Excluded are benefits such as food stamps that substitute for cash. The Urban Institute counts many of these bene- fits. As a result, the Urban Institute finds many fewer poor people; but if welfare re- form cuts non-cash benefits, the impact on recorded poverty is greater. Still, the num- ber of poor by the Urban Institute’s count\u2014 even after adding 2.6 million\u2014would be al- most 25 percent lower than under the govern- ment count). Statistics aside, what matters are people. Would more be made better or worse off by ”welfare reform”? Unfortunately, we can’t answer that, because we can’t predict all of ”reform’s” effects. The Urban Institute ex- amines one aspect of change: the shift from welfare to work. The study assumes that two-thirds of mothers who lost welfare would get jobs\u2014many part-time\u2014paying about $6 an hour. That wouldn’t offset all the lost benefits. But this may miss some other fa- vorable effects. Stingy welfare would dis- courage some out-of-wedlock births and prompt some parents to marry. ”The main route off welfare for good is marriage,” says Douglas Besharov of the American Enter- prise Institute. How large might these changes be? Neither Besharov nor anyone else knows. But the so- cial climate is shifting, and ”welfare re- form” is simply a part of the change. Harsh- er welfare may reinforce the message that many teens are hearing elsewhere; and the impact may be amplified by tougher enforce- ment of child support payments and more prosecution for statutory rape of older men who prey on young girls. Teens account for 29 percent of out-of-wedlock births; the worst aspects of the ”welfare problem” would diminish if, somehow, these preg- nancies would drop. The case for the present ”welfare reform” is that, despite many flaws, it would disrupt the existing system. As Mickey Kaus argues in Newsweek, we may discover what works and what doesn’t. Some states would empha- size job training and child care for welfare mothers; others would impose harsh time limits. All could be forced to examine how charities, churches and self-help groups can best aid vulnerable families. This process is already occurring through ”waivers” grant- ed to states to modify existing federal rules; the legislation would give change further im- petus. We ought to be sober about the possibili- ties. We are dealing with the most stubborn problems of poverty\u2014family breakdown, low skills and human relationships. Changing how people behave isn’t easy. Indeed, new government figures show that out-of-wed- lock births continue to rise, as Charles Mur- ray notes in the Weekly Standard. In 1994, they were 32.6 percent of all births, up from 23 percent in 1990. These numbers are an ar- gument for assaulting the status quo and a reminder of how hard it will be to change. The remaining drama over the welfare bill is mostly political: Will President Clinton sign it? And who then\u2014a Republican Con- gress or a Democratic president\u2014will get the credit or blame for enacting or killing ”re- form”? However the drama ends, the welfare dilemma will endure. It is this: How can a CONGRESSIONAL RECORD \u2014 SENATES9328 August 1, 1996 decent society protect those who can’t pro- tect themselves without being so generous that it subverts personal responsibility? No one on either side of this bitter debate has an obvious answer. Mr. WELLSTONE addressed the Chair. The PRESIDING OFFICER. The Chair recognizes the Senator from Min- nesota. Mr. WELLSTONE. I thank the Chair. Mr. President, I am here to speak, but out of deference to Senator MOY- NIHAN, who is ranking member of the Finance Committee and, more impor- tantly, who has shown an intellectual and personal public policy commit- ment, probably unlike anyone in the Senate, I will suggest the absence of a quorum so we can see whether or not Senator MOYNIHAN wants to speak now. If not, I will speak. Mr. President, I suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. WELLSTONE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. WELLSTONE. Mr. President, while we are waiting, I wish to insert into the RECORD an op-ed piece today by Frances Fox Piven in the New York Times called ”From Workhouse to Workfare.” This is a very powerful piece. It con- cludes with the statement that the ”facts don’t seem to matter” in the de- bate over this welfare bill. ”We may have to relive the misery and moral disintegration of England in the 19th century to learn what happens when society deserts its most vulnerable members.” That is the conclusion of this article. I ask unanimous consent that it be printed in the CONGRESSIONAL RECORD. There being no objection, the article was ordered to be printed in the RECORD, as follows: [From the New York Times] FROM WORKHOUSE TO WORKFARE (By Frances Fox Piven) If Bill Clinton, as an Oxford student, had studied the history of the poor in early 19th century England, he might not have decided to sign the welfare reform bill. Eminent English social thinkers developed a justification for an 1834 law that elimi- nated relief for the poor. Learned arguments showed that giving them even meager quan- tities of bread and coal harmed both the larger society and the poor themselves. Never mind the rapid enclosure by the rich of commonly used agricultural land; never mind the displacement of hand-loom weavers by mechanized factories; never mind the de- cline in the earnings of rural workers. The real causes of poverty and demoralization were not to be found in these large economic changes, the thinkers said, but rather in the too-generous relief for the poor. The solution was to stop giving relief to people in their own homes; instead, survival for the family meant entering prison-like workhouses. The misery and reduced life spans that en- sued were well-documented not only by his- torians but ultimately by Parliament, which investigated the workhouses and the riots against them. England came to learn that the theory that relief itself caused poverty was wrong, and replaced the Poor Law with a modern system of social assistance. No matter what England learned, the Unit- ed States Government is eagerly following the 1834 script by ending Federal responsibil- ity for welfare and turning it over to the states. The arguments are the same: welfare encourages young women to quit school or work and have out-of-wedlock babies. Once on the doll these women become trapped in dependency, unable to summon the initiative to get a job or to raise their children prop- erty. Welfare, in short is responsible for the spread of moral rot in society. Never mind low wages and irregular work; never mind the spreading social disorganiza- tion to which they lead; never mind changes in family and sexual norms occurring among all classes and in all Western countries. The solution is to slash welfare. ”Tough love,” it is said, will deter young women from having babies and force those already raising chil- dren to go to work. But slashing welfare does not create stable jobs or raise wages. It will have the opposite effect. By crowding the low-wage labor mar- ket with hundreds of thousands of desperate mothers, it will drive wages down. The basic economic realities of high unem- ployment levels and falling wages for less- educated workers; guarantee a clamaity in the making\u2014and not only for welfare moth- ers It is true that the United States has a higher proportion of single-parent families than other Western countries. But since other rich countries provide far more gener- ous assistance to single mothers, this very fact suggests that welfare has little to do with it. Other facts also argue against the welfare- causes-illegitimacy argument. Most obvious, welfare benefits set by the states have de- clined sharply since 1975, while the out-of- wedlock birth rate has risen nationwide. In addition, there is no discernible relationship between the widely varying levels of benefits provided by the states and the out-of-wed- lock birth rates in the states. But fact don’t seem to matter. We may have to relive the misery and moral distintegration of England in the 19th cen- tury to learn with happens when a society deserts its most vulnerable members. Mr. WELLSTONE. I thank the Chair. I suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. MOYNIHAN. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. MOYNIHAN. Mr. President, yes- terday, after the President announced he would sign this legislation, I said: ”The President has made his decision. Let us hope that it is for the best.” Today, I continue to hope for the best, even if I fear the worst. As I have stated on this floor many times, this legislation does not reform aid to families with dependent chil- dren; it simply abolishes it. It termi- nates the basic Federal commitment of support for dependent children in hopes of altering the behavior of their moth- ers. We are putting those children at risk with absolutely no evidence that this radical idea has even the slightest chance of success. In our haste to enact this bill\u2014any bill\u2014before the November elections, we have chosen to ignore what little we do know about the subject of poverty. Just 2 days ago, on July 30, 11 of the Nation’s leading researchers in this field issued a statement urging us not to do this. Among them were seven current and former directors of the In- stitute for Research on Poverty at the University of Wisconsin established in the aftermath of the Economic Oppor- tunity Act of 1964. Scholars of the stat- ure of Sheldon Danziger of the Univer- sity of Michigan; Irwin Garfinkel of Co- lumbia University; Eugene Smolensky of the University of California at Berkeley; and Edward Gramlich of the University of Michigan. They write: As researchers who have dedicated years to the study of poverty, the labor market, and public assistance, we oppose the welfare re- form legislation under consideration by Con- gress. The best available evidence is that this legislation would substantially increase poverty and destitution while doing too lit- tle to change the welfare system to one that provides greater opportunity for families in return for demanding greater responsibility. Real welfare reform would not impose deep food stamp cuts on poor families with chil- dren, the working poor, the elderly, the dis- abled, and the unemployed. It would not eliminate the safety net for most poor legal immigrants, including the very old and the infirm. It would not place at risk poor chil- dren whose parents are willing to work but are unable to find unsubsidized employment. It would not back up work requirements with the resources needed to make them ef- fective. We strongly support an overhaul of the na- tion’s welfare system. But the pending legis- lation will make a troubled welfare system worse. It is not meaningful welfare reform. It should not become law. I repeat what these social scientists have concluded: ”The best available evidence is that this legislation would substantially increase poverty and des- titution.” What is the evidence? Dr. Paul Offner, the distinguished Commissioner of Health Care Finance for the District of Columbia, summarized it nicely last week. Respected research organizations such as the Urban Institute here in Washington, and the Manpower Dem- onstration Research Corporation in New York have, over the years, under- taken careful evaluations of various welfare reform demonstration projects. As Offner recounts, they found that welfare caseloads were reduced in only 4 of the 23 welfare demonstrations they studied. Dr. Offner points out that even the program in Riverside, CA, which is re- garded by many experts as the most successful ever, has achieved caseload reductions of less than 10 percent. This should not surprise us; it is not easy to change human behavior. Not- withstanding this fact, the premise of this legislation is that the behavior of certain adults can be changed by mak- ing the lives of their children as CONGRESSIONAL RECORD \u2014 SENATE S9329August 1, 1996 wretched as possible. This is a fear- some assumption. In my view. It is cer- tainly not a conservative one. If we acknowledge the difficulty in bringing about the transition from wel- fare to work, we must recognize that putting people to work on a large scale would require a large-scale public jobs program, and that would require a great deal of money. Let me say that Democrats were the first to fail in this regard. In the com- pany of Sargent Shriver and Adam Yarmolinsky, I attended the Cabinet meeting in the spring of 1964 where we presented the plans for a war on pov- erty. Our principal proposal, backed by Secretary of Labor Willard Wirtz, was a massive jobs program, along Works Progress Administration lines, to be fi- nanced by a cigarette tax. President Johnson listened for a moment or two; announced that in that election year we were cutting taxes, not raising them. He thereupon picked up the tele- phone attached to the Cabinet table, called someone, somewhere, about something else, and the war on poverty was lost before it began. This legislation is even worse. In fact, this legislation provides some $55 billion less over the next 6 years. There are work requirements in the bill, but we seem tacitly willing to admit they will never be met. Dr. June O’Neill, Director of the Congressional Budget Office, has been most forthcom- ing on this subject. The CBO report on this bill bluntly states that Given the costs and administrative com- plexities involved, CBO assumes that most states would simply accept penalties rather than implement the [work] requirements. What else does the evidence show? It shows quite clearly that the central feature of this legislation, the time limit, will affect millions of children. CBO estimates that ”under current de- mographic assumptions, this provision could reduce cash assistance rolls by 30 to 40 percent” within the decade. I should say that again: 30 to 40 percent of the caseload will be cut off in less than 10 years’ time. Let me put that in terms of how many children will be cut off. Accord- ing to the Urban Institute, 3,500,000 children will be dropped from the rolls in 2001. By 2005, 4,896,000 children will be cut off. The Urban Institute has also esti- mated, in a report released just last Friday, July 26, that this bill will cause 2.6 million persons to fall below the poverty line; 1.1 million of those impoverished will be children. To say nothing of those persons already living in poverty. They will be pushed even further below the poverty line; The av- erage loss in income for families al- ready below the poverty line will be $1,040 per year. I note that the Urban Institute’s estimates are based on quite conservative assumptions, so the ac- tual impact could well be even worse than predicted. I cite this evidence because it is im- portant that we cast our votes with full knowledge of the consequences. This information has been widely available, and I have made these arguments on the floor previously, so I believe we are all on notice of the implications for children. The implications of this legislation for our State and local governments are another matter. These are not widely known, but they will be very real indeed. On Thursday of last week, 2 days after the Senate passed its ver- sion of this legislation, I received in the mail a four-page letter from the Honorable Rudolph W. Giuliani, mayor of the city of New York. He wrote of his concern that the major provisions of the bill would impose huge new costs on New York City totaling some $900 million per year. The mayor listed the added costs to New York City as fol- lows: $380 million for child care for wel- fare recipients; $290 million for aid to legal immigrants; $100 million to sup- port persons dropped from Federal rolls due to time limits; $100 million for work programs. Mayor Giuliani wrote that the bill’s ban on Federal assistance for legal im- migrants was of particular concern to New York City, where 30 percent of the population is foreign-born. The sum of $900 million a year is a lot of money. New York City’s total annual budget is $33 billion. And other, smaller local governments will also be hit hard. The total additional cost to New York State will be in the neighborhood of $1.3 billion per year. We estimate the loss of Federal funds to some of our larger counties as follows: Albany County $15 million; Erie County $75 million; Monroe County $60 million; Onondaga County $30 million; West- chester County $45 million. These are sums that New York State and New York City simply cannot af- ford. It will be ruinous for us. In March of this year, the New York State Fi- nancial Control Board reported that ”the city’s finances continue to dete- riorate.” The board said that over the next 4 years, the growth in New York City’s spending will be more than dou- ble the growth in its income. Spending will grow by approximately 2 percent per year, while revenues will grow by less than 1 percent. In the absence of this welfare legislation, the gap be- tween the city’s outlays and revenues will increase by $400 million annually. With the new additional costs imposed by this bill, the annual increase in the shortfall will more than triple. New York will not be alone in this, of course. Senator FEINSTEIN said on the floor last week that the bill will cost California $17 billion over 6 years, or about $3 billion annually. Other States\u2014Illinois, Texas, Florida\u2014will also bear immense new burdens. I won- der if they are ready for what is com- ing. More importantly, I wonder if the Nation is ready for the social change this legislation will set in motion. There are great issues of principle at stake here, as leaders of the religious community have said with such clarity and force. Bishop Anthony M. Pilla, president of the National Conference of Catholic Bishops, wrote to the Presi- dent on Friday to urge that this bill be vetoed. Quoting St. Matthew’s Gospel, Bishop Pilla wrote that ”the moral measure of our society is how we treat ‘the least among us.’ ” I know what the outcome will be today, but before we cast our votes, I hope Senators will ask themselves how this legislation will treat the least among us. I began these remarks with a com- ment on language. The conference re- port before us is not welfare reform, it is welfare repeal. It is the first step in dismantling the social contract that has been in place in the United States since at least the 1930’s. Do not doubt that Social Security itself, which is to say insured retirement benefits, will be next. The bill will be called the Indi- vidual Retirement Account Insurance Act. Something such. John Westergaard points out that this legis- lation breaks the social contract of the 1930’s. We would care for the elderly, the unemployed, the dependent chil- dren. Drop the latter; watch the others fall. Fred C. Ikle has coined the fine term ”semantic infiltration” to describe the technique in international relations whereby one party persuades another to use its terms to discuss the issues being negotiated. We now have its do- mestic counterpart in egregious dis- play. Recalling George Orwell’s essay, ”Politics and the English Language,” we would do well to be wary. Henry Friedlander has reminded us recently of the stages by which genocide evolved from the soothing and supportive no- tion of euthanasia. And so to one other matter of lan- guage. We are told that this legislation is a defeat for liberals. We are assured in private, and it is hinted at in print, that many of the President’s most lib- eral advisers opposed this legislation. Liberals are said to have lost. This is nonsense. It is conservatives who have lost. For the best part of 2 years now, I have pointed out that the principal\u2014 and most principled\u2014opponents of this legislation were conservative social scientists who for years have argued against liberal nostrums for changing society with the argument that no one knows enough to mechanistically change society. Typically liberals think otherwise; to the extent that lib- erals can be said to think at all. The current batch in the White House, now busily assuring us they were against this all along, are simply lying, albeit they probably don’t know when they are lying. They have only the flimsiest grasp of social reality; thinking all things doable and equally undoable. As, for example, the horror of this legisla- tion. By contrast, the conservative so- cial scientists\u2014James Q. Wilson, Law- rence Mead, John DeIulio, William CONGRESSIONAL RECORD \u2014 SENATES9330 August 1, 1996 Bennett\u2014have warned over and over that this is radical legislation, with al- together unforeseeable consequences, many of which will surely be loath- some. All honor to them. They have kept to their principles. Honor on high as well to the Catholic bishops, who admit- tedly have an easier task with matters of this sort. When principles are at issue, they simply look them up. Too many liberals, alas, simply make them up. Mr. President, I thank the Senate for its courteous attention. I thank my friend from Minnesota for reserving this time for me, seeing to it I was able to speak, and I yield the floor. Mr. DOMENICI addressed the Chair. The PRESIDING OFFICER (Mr. INHOFE). The Senator from New Mex- ico. Mr. DOMENICI. Mr. President, under the assumed rotation, I now yield 10 minutes to Senator ASHCROFT of Mis- souri, and then I assume we will go back to the other side. Mr. MOYNIHAN. Mr. President, I am not sure that I am managing the time. I am ranking member of finance here. I yield, in sequence, the Senator from Minnesota as much time as he requires. Mr. DOMENICI. Mr. President, before the Senator proceeds, might I just say to Republican Senators, we have a very long list of those who would like to speak. It seems now that you can kind of judge that in 25 minutes or so we will need another Senator. I hope you can contact us and see if we can ar- range it so there are no big lulls on the floor and we can get our work done as soon as possible. Mr. ASHCROFT addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Missouri. Mr. ASHCROFT. Thank you, Mr. President. I thank the Senator from New Mexico for yielding me the time. Our responsibility in acting on a failed welfare system is as profound a responsibility in responding to the peo- ple of this country as we have ever had. The fundamental role and responsibil- ity of Government is to call people to their highest and best, not trap them at their lowest and least. In spite of the good intentions of the welfare program, which we have poured billions of dollars into, hundreds of bil- lions of dollars, we have ended up trap- ping people at their lowest and least rather than calling people or prompt- ing people to their highest and best. The real objective of our legislation here ought to be to change the char- acter of welfare. We need to change it from a system which has provided ca- reers and conditions that lasted a life- time to a system that instead of pro- viding a condition provides a transi- tion, that moves people from poverty into opportunity, that moves people from indolence into industry, that moves people from welfare into work. No longer can we afford a system that not only provides people a condition or a career, but goes beyond trapping in- dividuals and goes to trapping genera- tions. One of the real problems of our wel- fare system is that we have children who are trapped in welfare and they be- come welfare careerists themselves, and their children are then trapped in welfare. The truth of the matter is that the prisoners of war in the war on pov- erty have been the children of America. There are more children in poverty today than there were when we started the war on poverty, and it is a clear in- dication that the system is a tragic failure as it relates to human beings\u2014 children who have lost their lives, chil- dren who have lost their opportunity, children who have lost their spirit, children who fall into a net which was designed to save them, but instead be- comes a net to ensnare them. A good industrialist friend of mine says that your system is perfectly de- signed to give you what you are get- ting. I do not know anyone in America who believes that what we are getting is the right thing. We are getting high- er rates of illegitimacy. We are getting higher rates of dependency. We are finding ourselves with individuals stay- ing on welfare longer and longer peri- ods of time. Is that what we want? Is what we are getting what we need? Ab- solutely not. The system may not have been in- tended to give us what we are getting, but the design of the system is what causes us to get what we are getting, and it is our responsibility, it is a sa- cred charge of ours given to us by the American people, and they have made it fundamentally and unmistakably clear that they want different out- comes, they want different results. They do not want more dependency, they do not want more illegitimacy, they do not want more careers and gen- erations on welfare. They want less, because they want people to be free. They want children to have an opportunity to look toward the U.S. Senate or toward the Presi- dency or toward being a captain of in- dustry or developing their own busi- ness. They do not want people trapped in an intergenerational net of ensnarement, rather than a net of safe- ty. So it is incumbent upon us to make fundamental changes, fundamental changes in the way this system treats people. We can no longer allow Government to be the instrument of ensnarement, of entrapment. We must make Govern- ment an instrument of liberation, of opportunity, of industry and develop- ment. That is why it is so important that we end this one-size-fits-all Wash- ington approach which says that every- body will respond the same and all the systems are to be uniform, and move welfare programs back to the States and allow them to experiment and do what works. I often laugh when I think of the one- size-fits-all term. We have almost come to believe it. Can you imagine if we were to send off for a catalog and get a catalog that said, ”One size of pajamas fits all for your family”? I know what would happen in my family. We would get five pairs of pajamas. They would be one size but they would fit none be- cause we are pretty different. The great family of America is dif- ferent. States and communities have different characteristics and at- tributes, and they need to be able to shape, to tailor, to fashion what they do from a block grant that gives them broad discretion and authority. Yes, they need for the block grant to be lim- ited. They need to have the energy of limited resources to drive the creativ- ity of solving the problem. No one ever solved a problem when the supply was infinite. No one ever works to conserve energy as long as it is free. You start to pay the heating bill and you learn to close the door, you learn to shut the windows, you learn to caulk the cracks. And when we put limits on the amount of money we are going to spend on welfare, we will start caulking the cracks and start stopping up the places where we have leakage. And it is not a leakage finan- cially. We are talking about leakage of the great human resource of America. We are looking at the Olympics. Boy, they are inspiring. But how much chance would we have in basketball or volleyball or baseball if we did not send our full team onto the field, if we told some of them, ”You’re to sit over there on the side and not to be productive. We’ll call you the welfare reserves”? We would not win. And we will not win as a Nation if we do not get all of our players into the operation of being what this Nation is all about. That is being capable of helping yourselves and helping others and being so good at what you are doing that the world beats a path to your door. That is why we need these block grants where States will tailor their programs to meet the needs in their own States and do what is necessary to move people out of conditions, lifelong conditions of welfare, to signal that this is a transition, not a condition. You are to be moving out of here. And fundamental, one of the acts of genius in this bill, in addition to the block grant, is the fact that there is a 5-year limit. We say to people, it is an insurance policy, so that when you have trouble you can fall into the welfare net but you cannot live there, you cannot stay there. It is not a place for you to be forever because, once 5 years is used up, that is a lifetime limit. We really should be saying to people, do not ever be on there for more than 2 consecutive years, ever. Frankly, our welfare sys- tem should never be a place where you are not preparing for the next stage of your life. Welfare becomes a transition instead of a condition, a fundamental characteristic. The block grant is im- portant about that. The senior Senator from Missouri, KIT BOND, is a personal friend of mine. CONGRESSIONAL RECORD \u2014 SENATE S9331August 1, 1996 He has a phrase, ”experience is what you get when you expected something else.” Over the last 30 years, I think we expected something else from this so- called War on Poverty and Great Soci- ety program, but we got something dif- ferent from what we expected. We got children without fathers and we got homes without discipline and we got streets without safety and we got gen- erations locked\u2014locked\u2014out of oppor- tunity, without education. We expected something different. But our experience is what we got. And our experience has not been very positive. But I want you to know that there have been a few bright lights over the last 30 years that signal to us how we could make changes, how we could ac- tually change the behavior of people, how we could help them move from being dependent to being independent, the glorious state of liberty and free- dom, what America is all about. Those bright lights have been in the nongovernmental sector primarily. They have been the Salvation Army, the Boys and Girls Clubs, the missions, and homeless shelters that have been run by the nongovernmental entities who are energized by a calling which is beyond the calling of duty that comes from government. It is a calling of hu- manity that God stirs in our hearts. One of the primary features of this bill is that States will be allowed to contract with organizations like the Boys and Girls Clubs and the Salvation Army and charitable organizations that specialize in hope and opportunity and who care, who care for the people trapped on welfare, not just as welfare statistics, but care for them after they leave the condition of welfare. These groups have a lifelong interest in help- ing people make it all the way to the top, not just over the threshold. I have to say that our experience tells us that not everyone in the wel- fare system has wanted to see everyone leave the system. Sometimes we have had too much interest in how many people we could have on welfare in- stead of how many people we could move off welfare. Significantly, the provisions of this bill would allow char- itable and even faith-based operations to compete for contracts or to partici- pate in voucher programs to help peo- ple. It does it with safeguards, so that if a person is offended by virtue of being involved with a faith-based orga- nization, they would be free to get their assistance from some other pro- vider. These faith-based organizations have in the past\u2014many times the smaller ones who did not have large legal de- partments\u2014have been afraid of accept- ing governmental funds in order to help the poor. They have been afraid of being sued. I know the Salvation Army, in one setting, was sued and had to settle for a quarter of a million dol- lars, a matter which absolutely under- mined and eroded the capacity of the Salvation Army to help the poor. We know they do as good a job as any. I just want to say that this bill is the kind of change that America has been asking for. Is it perfect? No. At least the way I was raised, in order to get perfection you had to die and go to Heaven. I want to go to Heaven. But I had not planned on going today. And since we ought to do what we can while we are here, let us take as good as we can get and shape it and fashion it, but not assume we have all the answers in Washington. Send it back to the States, give States the opportunity to tailor it in ways that will help people simply move from dependence to inde- pendence, from careers of welfare and the condition of welfare, the intergenerational things of welfare, to a transition of welfare that moves from welfare to work. I believe that it is fundamentally im- portant that we carry through and pass this measure. And I thank the Presi- dent of the United States for his will- ingness to sign this measure. I believe this measure will help save the lives of children and it will help save the lives of individuals for generations to come. The PRESIDING OFFICER. The Sen- ator’s time has expired. Mr. ASHCROFT. I thank the Chair. I observe the absence of a quorum. The bill clerk proceeded to call the roll. Mr. WELLSTONE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. BOND. Mr. President, may I ask of my colleague if he would consent that after he finishes I be recognized? Mr. WELLSTONE. Mr. President, that would be fine. The PRESIDING OFFICER. The Chair advises the Senator from Mis- souri that arrangement has been made, and the Senator from Minnesota is rec- ognized. Mr. BOND. I thank the Chair. Mr. WELLSTONE. Mr. President, first of all, I ask unanimous consent that a representative sample of edi- torials on this subject be printed in the RECORD. There being no objection, the mate- rial was ordered to be printed in the RECORD, as follows: [From the Star Tribune, July 31, 1996] WELFARE BILL\u2014IT DESERVES A FORTHRIGHT VETO For most of his presidency, Bill Clinton has tried to have it both ways on welfare. He’s curried favor with both welfare’s tough- talking reformers and its defenders. He’s ar- gued both for changes, such as work require- ments and time limits, and for preservation of welfare’s protections for poor children. It’s understandable that congressional Re- publicans would want their final-offer, elec- tion-year welfare bill to force the president to show his true stripes. They’ve crafted a bill that ought to do just that. The bill that’s moving toward the House and Senate floors is one Clinton might be tempted to sign for political reasons. But he should veto it, for moral reasons. If he doesn’t, he will have put the lie to all his claims of concern for the well-being of the nation’s most vulnerable children. For all its reformist window-dressing, the bill that emerged from conference commit- tee Monday is too hard on America’s poor. It doesn’t spend enough money to hold the line against hunger, or to make workable the re- quirement that a job take the place of wel- fare within two years after benefits start. The bill’s goal of quickly replacing welfare checks with paychecks is something most Americans support. But making that happen in a way that gives poor families lasting self- sufficiency takes more than the hammer of a time limit. It takes job training, counseling, public-works jobs where private employment is unavailable, child care and transportation. Those tools cost money. This bill doesn’t provide it. As a result, in the name of overcoming poverty, this bill would likely push some of America’s least employable adults and their children into more desperate circumstances. And, because of the bill’s big cuts in food- stamp spending, that desperation could well include hunger. Admittedly, the food-stamp provisions in the final bill aren’t as extreme as earlier versions. A guarantee of food- stamp eligibility\u2014though not of food-stamp amounts\u2014was preserved for families with children. No so for unemployed adults with- out dependents. They’d be cut off from the government’s food lifeline after six months. The welfare bill is especially punitive to- ward legal immigrants. Under this legisla- tion, the nation’s official message to its le- gitimate newcomers would be, ”You are wel- come only as long as you remain gainfully employed.” A down-on-his-luck immigrant could get no cash assistance whatsoever from his new country. Had Clinton more boldly taken sides in the nation’s welfare debate earlier in his presi- dency, a bill this harsh might not be heading toward his desk a few months before an elec- tion. He should have been calling all along for more realistic and compassionate reform, the kind that spends more in the short term in order to redeem lives in the long term. Here’s hoping Clinton has learned that presidential equivocation carries a high price\u2014and that his equivocation on welfare ends with a forthright veto of the bill Con- gress is about to send him. [From the Philadelphia Inquirer, July 22, 1996] REFORM ON THE CHEAP Who’ll blink on this latest shot at changing welfare? And, in the long run, who’ll wind up paying for it? Voters liked Bill Clinton’s promise to ”end welfare as we know it.” So Republicans are aching to show he didn’t mean it. The result is a game of political chicken that’s far more likely to hurt poor Americans than to uplift them. The Republican Congress is about to dare the President to veto a wrong-headed bill that would cut welfare spending, toughen the rules, and shift a lot of decision-making to the states. Since this would be his third straight veto of a so-called welfare reform bill, Mr. Clinton may blink. It’s possible he’ll sign a bill that pretends the feds can turn welfare into a helpful, job-oriented net- work even as they squeeze about $10 billion a year in savings from the system. That’s a pipe dream. Unfortunately, if he does veto it and a bet- ter, bipartisan plan doesn’t emerge, Mr. Clin- ton will have to follow through on a promise that he made last week to give himself polit- ical cover on this emotional issue. Absent a bill, he vowed to issue an executive order let- ting states cut off benefits after two years. The terms of this order are still in the works. But it could let penny-pinching states give welfare recipients far too little help to- ward employment and self-sufficiency. CONGRESSIONAL RECORD \u2014 SENATES9332 August 1, 1996 That’s the basic problem with what Con- gress is cooking up. It pretends that helping poor people become self-sufficient doesn’t cost more money in the short term. But it does cost more, for child care, for training, for government-created jobs for those who can’t find work in the private sector. Com- mitted reformers such as Gov. Tommy Thompson, the Wisconsin Republican, are up-front about this. Chances are, the public will respond posi- tively to major parts of the GOP package, such as a two-year limit on benefits before work is required, and a lifetime limit of five years. But work requirements are meaning- less if there aren’t enough low-skilled jobs available. If politicians are serious about breaking the cycle of dependency, govern- ment has to be an employer of last resort. By promising to act on his own, Mr. Clin- ton was trying to show Republicans that\u2014 politically\u2014they need a welfare bill more than he does. He was trying to coax Repub- licans toward compromise. The House did consider a bipartisan plan sponsored by Reps. Mike Castle (R., Del.) and John Tanner (D., Tenn.)\u2014a plan whose spending cuts weren’t so extreme. But it died when only eight House Republicans were willing to buck their leaders and line up with Mr. Castle. Since Republicans seem uninterested in a sensible, bipartisan reform, Mr. Clinton should get his veto pen ready. As for the ex- ecutive order he promised\u2014every bit the po- litical gimmick that Republicans charged\u2014 it should be loaded with conditions to pro- tect poor families from politicians peddling welfare reform on a dime. [From the Washington Post, July 25, 1996] A CHILDREN’S VETO ”I just don’t want to do anything that hurts kids,” President Clinton said as the Senate passed its supposed reform of welfare the other day. Why did the sentence strike us as yet another cynical manipulation of the welfare issue for political purposes? Be- cause if Mr. Clinton were determined not to hurt children, he would have indicated days ago that he intended to veto this legislation or any bill remotely like it. Instead, he, the Senate’s Democrats and moderate Republicans continued to try to prettify the bill around the edges. A couple of the amendments that they succeeded in making were consequential, and they may yet make more in conference. But mainly these are marginal and cosmetic changes. They are sops to conscience meant to justify a regressive vote that for political reasons these politicians are afraid not to cast. They are determined to vote in this selection year in favor of a bill that bears the label ”wel- fare reform”; it doesn’t matter that the label is not deserved. The president and his followers are the prisoners of four years of sloganeering on the subject that he himself set off. It was he who, in an effort to preempt the welfare issue and show himself to be a different kind of Democrat, famously promised in the 1992 campaign to end the system as we know it. He set off a process that he could not con- trol, in part because he has been unwilling to take the tough and unpopular positions nec- essary to control it. No one\u2014or very few, anyway\u2014would argue that the current welfare system is a good one. Mr. Clinton was and remains right to try to change it. But his original position also was right\u2014that the change should in- volve equal amounts of added pressure on welfare mothers to go to work and additional resources to help them make the move suc- cessfully. The current bills fail to provide the resources; they walk away from the sec- ond half of the strategy. They would disman- tle the federal welfare program, limit future federal aid and shift to the states a financial burden that many states will find hard to meet. An eighth of the children in the coun- try now are on welfare. No one can know for sure how many would be affected adversely by the legislation, but the best guess seems to be that at least a million more children would end up living below the poverty line. A fifth of the children in the country already are there. The bills would disestablish or greatly weaken the food stamp program as well, while basically cutting off federal benefits to legal immigrants\u2014people who are legiti- mately here and theoretically welcome but have not become U.S. citizens. Technically, this is budget-balancing legislation, a rec- onciliation bill. The noble-sounding legisla- tion, a reconciliation bill. The noble-sound- ing budget-balancing process of a year ago has come down to a bill that would cut only programs for the poor, and programs on which people who are black and brown par- ticularly depend. This legislation can’t be fixed. Senate Mi- nority Leader Tom Daschle, who opposed it the other day, said that even though there were only 25 votes against, he was sure that a veto, if it were cast, would be sustained. We have no doubt that’s so. It is another way of saying that if only the president would take the lead and provide the political cover, instead of joining in stripping it away, he could\u2014and should\u2014defend to the voters. If instead he signs the bill, he no doubt will claim it as a triumph, but in moral and pol- icy terms it will be the low point of his presi- dency. [From the Buffalo, NY News, July 23, 1996] DON’T LET RUSH TO WELFARE ‘REFORM’ LEAVE SOME OF NEEDY WITHOUT HELP What if time limit is reached and there’s no job to get? In his eagerness to outflank Republicans on the welfare issue and sign almost any- thing billed as ”reform,” President Clinton should resist the urge to abandon the long- established concept that there is a national interest in helping the poor become self-suf- ficient. That is the chief danger now as Washing- ton’s warring factions undertake a mad scramble to produce some sort of welfare leg- islation before taking time off to go into full campaign mode. The Republican-led Congress made sensible welfare legislation a little more possible last week by dropping plans to attach Medicaid reform to the welfare bill and to turn Medic- aid into a block-grant program controlled by the states. Ending the guarantee of medical care for the poor never made any sense because the impoverished deserve health care as much as they deserve help with life’s other basic ne- cessities. But it also doesn’t make any sense to end the federal guarantee of food and other aid for those who play by the rules and whose only offense is that they’re impoverished. Nor does imposing time limits on welfare recipients make sense except in cases where they refuse to work even though a job is available. The poor\u2014and their children\u2014 should not be blamed for economic cycles that may well make finding a job impossible at any given time. Those are bedrock principles that the na- tion\u2014and the president\u2014should not forsake amid an understandable distaste for the small percentage of welfare recipients who are slackers. Unfortunately, the House the other day cast aside those principles by passing a re- form plan that ends welfare as a federal enti- tlement program that takes care of all who deserve help. Instead, the House bill would slash funding and turn the reduced money over to states in block grants. The states could then structure programs largely as they please, ending the national safety net and competing with one another in a ”race to the bottom” as they cut bene- fits and drive out the poor. That’s no way for an enlightened nation to lift its most vulnerable people. But the final bill that emerges from House-Senate nego- tiations seems sure now to take that tack. The other failure of the GOP approach is its time limits regardless of job availability. Clinton, too, recently endorsed time limits, saying the White House will administra- tively impose a two-year limit but that his action would be unnecessary if Congress could produce an acceptable reform plan. Details of the new White House initiative\u2014 such as how to protect children whose par- ents get cut off\u2014have yet to be worked out. But in addition to safeguarding kids, the new rule should safeguard those who simply can’t find work through no fault of their own. These basic safeguards should be part of whatever reform bill ultimately reaches the president’s desk. If they are not, he should use the same veto pen he’s waved at other times\u2014regardless of what the calender says about the election season. [From the Atlanta Constitution, July 28, 1996] WELFARE BILLS SUFFER FROM POLITICS The welfare system must be reformed, and the goal of that reform must be twofold: It must reinforce a work ethic that has fal- tered among some welfare recipients; It must protect the children of poor Ameri- cans from hunger and deprivation in an in- creasingly fickle economy. Unfortunately, the reform effort making its way through Congress focuses too much on the first goal and too little on the second. That’s not surprising. From the life experi- ence of prosperous, middle-aged, college-edu- cated white males\u2014which describes most of the members of Congress\u2014the rewards of the work ethic seem obvious. It gives you a six- figure salary, a taxpayer-provided staff and free parking, among other things. But from the perspective of an unemployed mother trying to raise two kids on welfare, the case can seem a little cloudier. Usually, the family lives in an inner city or isolated rural area, where jobs are scarce and transportation difficult. If the mother overcomes those obstacles and gets a job, and if she works 40 hours per week, every week of the year at $5.10 an hour\u2014which is 20 percent above the minimum wage\u2014she stands to make a grand total of $10,608 a year. In the process, she may also lose health insurance for her family, because most low- wage jobs do not include a benefits package. Imagine trying to raise two children on $10,000 a year in today’s economy. Child care alone would take a huge chunk of her pay. She has the option, of course, of choosing not to pay for child care, to leave her chil- dren on their own while she’s working. Given our problems with juvenile crime, that’s not a choice to encourage. If welfare reform is to work, it has to make work a viable option. It must subsidize child care for that working mother. It must ex- tend health insurance coverage for the work- ing poor. And it must offer training and edu- cation, so that she has at least the hope of rising out of that $5.10-an-hour job into something better. Some of those steps cost money, at least in the short term. In the long term, such re- form will benefit the mother; benefit her CONGRESSIONAL RECORD \u2014 SENATE S9333August 1, 1996 children, to whom she is a role model; and benefit society, which is currently losing the value of her labor and incurring the expense of supporting her and her children. The House and Senate have passed sepa- rate but similar welfare bills, and are trying to resolve their differences and send a meas- ure to President Clinton for his signature. Their effort is fatally flawed, however, be- cause in addition to the goals listed above, Congress is using the legislation to pursue two less admirable goals. It is trying to balance the budget on the backs of the poor. Even though true welfare reform will cost more money in the short term, and even though entitlement programs for the middle class are far more expensive than welfare programs, deficit cutters have focused on the poor, cutting $60 billion from food stamps and other programs over the next six years. The bill is calculated as an election-year dare to Clinton. He has made clear his un- easiness with the bill’s impact on poor chil- dren, but has nonetheless indicated a will- ingness to consider signing the Senate’s more reasonable approach. But Republicans seem intent on forcing him to veto the legis- lation. As Bob Dole grumbled on the cam- paign trail, ”He’s not going to get that bill. He’s going to get a tougher bill.” And as House Speaker Newt Gingrich put it, ”I believe we win from this point on no matter what happens.” Welfare reform is important, but appar- ently less important than election-year poli- ticking. [From the Chicago Tribune, July 21, 1996] PLAYING ‘GOTCHA!’ ON WELFARE REFORM The House passed a new welfare bill Thurs- day, and the talk afterward was not of what the bill would mean for the children and adults who depend on the kindness of the taxpayers, but of a political calculus. ”In the end,” said House Majority Leader Dick Armey, ”the president is going to have to make a determination whether or not he’s going to sign this bill and satisfy the Amer- ican people while he alienates his left-wing political base, or if he’s going to veto the bill in order to satisfy the left wing of the Demo- crat Party and thereby alienate the Amer- ican people.” In other words, ”Gotcha!” And that pretty much captures what’s been wrong from the beginning with the effort to legislate welfare reform. Clinton has ex- ploited the issue to establish his bona fides as a ”new Democrat.” The Republicans, sus- pecting insincerity on Clinton’s part, have used it to bash him and back him into a cor- ner. Suffusing the entire debate have been two notions, one simply wrongheaded and the other both wrongheaded and pernicious. The first is that reforming welfare is a way to save money. It is not, at least initially. Done properly\u2014that is, with the purpose of getting welfare parents into the work force\u2014 reform will actually cost more money, for job training, child care and so forth. (And whatever else the 9 million children on wel- fare suffer from, it is not from having too much money spent on them.) The second notion, which partisans on nei- ther side have done enough to counter, is that welfare reform is about getting black layabouts off the public dole. In fact, most welfare recipients are not black. But that continues to be the accepted stereotype and, one suspects, a substantial motivator of the welfare-reform push. In its broad outlines, the newly passed House bill differs little from the measure that Clinton vetoed earlier this year. It ends welfare as a federal entitlement and converts it into a program of block grants to the states, which would be free, within very broad limits, to devise their own programs of poor support. This devolution is a good idea. Clinton has acknowledged that implicitly by granting numerous waivers for state welfare experi- ments over the last 31\u20442 years. Perhaps the most promising such experiment, Wiscon- sin’s W 2 program, which substitutes private and public jobs for cash assistance and ought to be the paradigm for all welfare, is await- ing waiver approval even now. But eliminating welfare’s entitlement sta- tus is a grievous error of historic propor- tions. Indeed, Sen. Carol Mosely-Braum (D- Ill.) did not exaggerate when she called it an ”abomination.” That the world’s richest nation would not guarantee help for poor children\u2014and Aid to Families With Dependent Children is noth- ing except a vast childcare program\u2014is out- rageous. It represents not progress but re- gression. And while Dick Armey may be con- vinced that that’s what the American people want, we are not. Mr. WELLSTONE. Mr. President, I do want to talk about this piece of leg- islation. I have heard some discussion about doing good. Let me start out with what is a very important frame- work to me as a Senator from Min- nesota. It is a question. Will this legis- lation, if passed, signed into law by the President, create more poverty and more hunger among children in Amer- ica? And if the answer to that question is yes, then my vote is no. Mr. President, we were discussing welfare reform several years ago, and we said that we should move from wel- fare to work, that that would include job training, education training, mak- ing sure the jobs were available that single parents\u2014mostly mothers\u2014could support their children on, and a com- mitment to child care. Just about every single scholar in the United States of America has said that this is what reform is all about. You have to invest some additional re- sources. Then, in the long run, not only are the mothers and children better off, but we are all better off. That is real welfare reform. Slashing close to $60 billion in low-income assistance is not reform, colleagues. It is punitive, it is harsh, and it is extreme. Mr. President, we have been focusing in this Congress on the budget deficit. I think, today, what we see in the U.S. Senate is a spiritual deficit because, Mr. President, I know some of my col- leagues do not want to look at this. They push their gaze away from un- pleasant facts and an unpleasant re- ality. Sometimes people do not want to know what they do not want to know. Mr. President, the evidence is irref- utable and irreducible: This legisla- tion, once enacted into law, will create more poverty and hunger among chil- dren in America. That is not reform. Mr. President, we have here about $28 billion of cuts in nutrition assistance. I believe when the President spoke yes- terday he was trying to say that does not have anything to do with reform, and he intends to fix that next Con- gress. But I worry about what will hap- pen now. Mr. President, 70 percent of the citizens that will be affected by these cuts in food nutrition programs are children, 50 percent of the families have incomes of under $6,300 a year. Our incomes are $130,000 a year. Mr. President, there will be a $3 bil- lion cut over the next 6 years in food assistance, nutrition assistance, even for families who pay over 50 percent of their monthly income for housing costs. So now we put families in our country\u2014poor families, poor children\u2014 in the situation of ”eat or heat,” but they do not get both. At the same time, my colleagues keep wanting to cut low-income energy assistance pro- grams. This is goodness? This is good- ness? Mr. President, I was involved in the anti-hunger struggles in the South. I saw it in North Carolina, and I remind my colleagues, maybe they want to go back and look at the expose\u0301s, look at the Field Foundation report, look at the CBS report, ”Hunger USA.” Where are the national media? Why are we not seeing documentaries right now about poverty in America? Mr. President, the Food Stamp Pro- gram, which we dramatically expanded in the late 1960’s and early 1970’s, with Richard Nixon, a Republican, leading the way, has been the most effective and important safety-net practice in this country. As a result of expanding that program, we dramatically reduce hunger and malnutrition among chil- dren in America. Now we are turning the clock back, and some of my colleagues are calling this reform. Mr. President, how did it get to be reform, to cut by 20 percent food nutrition assistance for a poor, 80- year-old woman? How dare you call it reform. That is not reform. How did it get to be reform to slash nutrition pro- grams that are so important in making sure that children have an adequate diet? How dare you call it reform. That is not reform. How did it get to be re- form to essentially eliminate all of the assistance for legal immigrants, people who pay taxes and work? How dare you call that reform. That has not a thing to do with reform. The Urban Institute came out with a report several weeks ago. Isabel Saw- hill, one of the very best, said this leg- islation will impoverish an additional 1.1 million children. We have had these analyses before. The Office of Manage- ment and Budget had a similar analy- sis. So did the Department of Health and Human Services. How dare you call a piece of legislation that will lead to more poverty among children in Amer- ica reform? Marian Wright Edelman of the Chil- dren’s Defense Fund is right: To call this piece of legislation reform is like calling catsup a vegetable. Except this time it is more serious, because many more children, many more elderly, many more children with disabilities will be affected. CONGRESSIONAL RECORD \u2014 SENATES9334 August 1, 1996 Mr. President, the evidence is really irreducible and irrefutable. Bob Green- stein, who has won the MacArthur Ge- nius Award for his work, crunched the numbers about what it means in per- sonal terms, real terms for the most vulnerable citizens in America, but my colleagues are too worried about polls. They are too worried about the politics of it, and they turn their gaze away from all this. Mr. President, I do not particularly care about words like ”entitlement.” But I do think as a nation we are a community, and up until the passage of this legislation, if signed into law, we as a nation said, as a community we will make sure there is a floor beneath which no child can fall in America. Now we have eliminated that floor. We are now saying as a Senate that there will no longer be any floor beneath which no child can fall. And you call that reform? Mr. President, we had a proposal out here on the floor of the Senate that said, if you are going to cut people off from work, if you are going to cut peo- ple off from welfare, at least require the States to provide vouchers. The CBO tells us we do not have the money for the job training slots, and people will not necessarily find work, and then you will cut the adult off work. So we added an amendment that said, ”For God’s sake, at least make sure there are vouchers for Pampers, for health care, for food for the children.” That amendment was rejected. So we have no requirement that at the very minimum, even if you are going to cut a parent off of welfare, at least make sure the law of the land says that every State from Mississippi to Missouri to Minnesota to California to Georgia, that at least there will be vouchers for Pampers, for food, for medical assistance, and you vote ”no” and you say there will be no vouchers. And you call that reform? Mr. President, in the Senate, I intro- duced an amendment, and it was ac- cepted. It said in all too many cases, too many of these women have been victims of domestic violence, they have been battered, and welfare is the only alternative for too many women to a very abusive and dangerous situation at home. So every State will be re- quired to have services for these women and not force people off the rolls if, in fact, there needs to be addi- tional support. It took Monica Seles 2 years to play tennis again after she was attacked. Imagine what it would be like to be beaten up over and over again. That amendment was knocked out in the conference\u2014no national requirement, no protection. Maybe it will be done in the States and maybe it won’t. Mr. President, I had a safety valve amendment. It was defeated. Senator KERRY from Massachusetts had an- other one which was watered down, but important. It was knocked out in con- ference committee. It said, why don’t we at least look at what we have done, and if in fact there is more poverty and hunger, then we will take corrective action in 2 years. That was knocked out in conference committee. You call that reform? Mr. President, let me be crystal clear. You focus on work, you focus on job training, you focus on education, you focus on making sure that families can make a transition from welfare to work, and that is great. Eliminating services for legal immigrants, draco- nian cuts in food nutrition programs for children and the elderly, deep cuts in assistance for children with disabil- ities\u2014none of this has anything to do with reform. This is done in the name of deficit reduction. When I had an amendment on the floor that dealt with all of the breaks that go to some of the oil companies, or tobacco companies, or pharma- ceutical companies, that was defeated. When we had a budget that called for $12 billion more than the Pentagon wanted and we tried to eliminate that, that was defeated. But now when it comes to poor children in America, who clearly are invisible here in Wash- ington, DC\u2014at least in the Congress\u2014 faceless and voiceless, how generous we are with their suffering. And you dare to call that reform? You dare to say that, in the name of children, when you are passing a piece of legislation that every single study says will increase poverty and hunger among children. Vote for it for political reasons, but you can’t get away with calling it re- form. It is reverse reform. It is reform- atory, it is punitive, it is harsh, it is extreme. It targets the most vulnerable citizens in America\u2014poor children. Mr. President, in this insurance re- form bill we are going to be dealing with, late last night someone inserted a 2-year monopoly patent extension for an anti-arthritis drug, a special inter- est gift to one drug company, because then you don’t have the generic drugs. Late last night, someone put this into the insurance reform bill. There you go. There is some welfare for a pharma- ceutical company. But they are the heavy hitters. They have the lobbyists. They are well-connected. We do just fine by them. But for these poor chil- dren, who very few Members of the Senate even know, we are all too gen- erous with their suffering. Mr. President, I had an amendment that was passed by a 99-to-0 vote that said the Senate shall not take any ac- tion that shall create more hunger or homelessness among children. Now we are slashing $28 billion in food nutri- tion programs with the harshest effect being on children in America. Can my colleagues reconcile that for me? I would love to debate someone on this. I doubt whether there will be debate on it, because the evidence is clear. Mr. President, President Clinton said yesterday that he will sign the bill, and he said that he will work hard, I pre- sume next Congress, to correct what he thinks is wrong. He pointed out that these draconian cuts in food nutrition programs and in assistance to legal im- migrants are wrong, they have nothing to do with reform. He is absolutely right. Personally, it is difficult for me to say, well, with the exception of these draconian cuts in food assistance pro- grams for children and the elderly, with the exception of these draconian cuts for children with disabilities, and draconian cuts for legal immigrants, this is a pretty good bill otherwise. I can’t make that argument. But I will work with the President because, clear- ly, this is going to pass, and, quite clearly, corrective action is going to have to be taken next Congress. But, for myself, Mr. President, I am a Senator from the great State of Min- nesota. As Senator Hubert Humphrey said, the test case for a society or gov- ernment is how we treat people in the twilight of their lives\u2014the elderly; how we treat people at the dawn of their lives\u2014the children; and how we treat people in the shadow of their lives\u2014the poor, and those that are struggling with disabilities. We have failed that test miserably with this piece of legis- lation. Mr. President, I come from a State that I think leads the Nation in its commitment to children and its com- mitment to fairness and its commit- ment to opportunity. As a Senator from Minnesota that is up for reelec- tion this year, there can be one zillion attack ads\u2014and there already have been many, and there will be many more\u2014and I will not vote for legisla- tion that impoverishes more children in America. That is not the right thing to do. That is not a Minnesota vote. Mr. President, in my next term as a U.S. Senator from Minnesota, I am going to embark on a poverty tour in our country. I am going to bring tele- vision with me, and I am going to bring media with me, and I am going to visit these children. I am going to visit some of these poor, elderly people. I am going to visit these families. I am going to visit these legal immigrants. I am going to have my Nation focus its attention, and I am going to have my colleagues, Republicans and Democrats alike, focus their attention on these vulnerable citizens. And, if in fact we see the harshness, the additional pov- erty, and the additional malnutrition, which is exactly what is going to hap- pen, I am going to bring all those pic- tures and all of those voices and all of those faces and all of those children and all of those elderly people back to the floor of the U.S. Senate, and we will correct the terrible mistake we are making in this legislation. Mr. President, I yield the floor. f AGRICULTURE, RURAL DEVELOP- MENT, FOOD AND DRUG ADMIN- ISTRATION, AND RELATED AGENCIES APPROPRIATIONS ACT, 1997 CONFERENCE REPORT The PRESIDING OFFICER. The con- ference report will be stated. CONGRESSIONAL RECORD \u2014 SENATE S9335August 1, 1996 The legislative clerk read as follows: The committee on conference on the dis- agreeing votes of the two Houses on the amendments of the Senate to the bill (H.R. 3603) a bill making appropriations for Agri- culture, Rural Development, Food and Drug Administration, and Related Agencies pro- grams for the fiscal year ending September 30, 1997, and for other purposes, having met, after full and free conference, have agreed to recommend and do recommend to their re- spective Houses this report, signed by a ma- jority of the conferees. (The conference report is printed in the House proceedings of the RECORD of July 30, 1996.) Mr. COCHRAN. Mr. President, I present for the Senate’s approval today the conference report on H.R. 3603, the fiscal year 1997 Agriculture, Rural De- velopment, Food and Drug Administra- tion, and Related Agencies Appropria- tions Act. The conference agreement provides total appropriations of $53.3 billion. This is $10 billion less than the fiscal year 1996 enacted level and $5 billion less than the level requested by the President. It is $1 billion less than the total appropriations recommended by the Senate-passed bill and $228 million more than the level recommended by the House bill. Including congressional budget scorekeeping adjustments and prior- year spending actions, this conference agreement provides total discretionary spending for fiscal year 1997 of $12.96 billion in budget authority and $13.34 billion in outlays. These amounts are within the subcommittee’s discre- tionary spending allocations. The committee of conference on this bill considered 147 amendments in dis- agreement between the two Houses. I believe it is a credit to the all members of this subcommittee who served as conferees on the part of the Senate and to the House Members who served on the conference committee that we were able to resolve our differences and reach a conference agreement 6 days after the Senate passed the bill. I would like to thank the ranking mem- ber of the subcommittee, the Senator from Arkansas, Mr. BUMPERS; the chairman of the House subcommittee who chaired the conference, the Con- gressman from New Mexico, Mr. SKEEN; the ranking member of the House sub- committee, the Congressman from Illi- nois, Mr. DURBIN; as well as all House and Senate members of the conference committee for their support and co- operation in this regard. It is with a great deal of pride that I can say this Appropriations Sub- committee has done its work, complet- ing action on this appropriations bill to assure that funding for those agen- cies it covers is in place before the start of the new fiscal year. Senate adoption of this conference report today is the final step necessary to allow this measure to be sent to the President for signature into law. We have every indication that the bill will be signed by the President. Approximately $40.4 billion, close to 76 percent of the total new budget au- thority provided, is provided for domes- tic food programs administered by the U.S. Department of Agriculture. These include food stamps; commodity assist- ance; the special supplemental nutri- tion program for women, infants, and children; and the school lunch and breakfast programs. This is $58 million below the House bill level and $906 mil- lion below the Senate level. The dif- ference from the Senate recommended level is principally due to the fact that the Senate receded to the House on the amount for the Food Stamp Program contingency reserve which was $900 million below the Senate bill level. For agriculture programs, the con- ference report recommends a total of $7.5 billion, $104 million more than the House-recommended level and $19 mil- lion more than the Senate bill level. This amount includes $1.1 billion for agricultural research and education, $426 million for extension activities, $438 million for the Animal Plant Health and Inspection Service, $574 million\u2014the full budget request level\u2014 for the Food Safety and Inspection Service, $746 million for the Farm Service Agency, and $64 million for the Office of Risk Assessment. For conservation programs, the con- ference report recommends $770 mil- lion, $2 million more than the House bill level and $20 million less than the level recommended by the Senate. For rural economic and community development programs, the bill rec- ommends $2 billion, $136 million more than the House level and $108 million less than the Senate bill level. Included in this amount is $556.9 million for the Rural Utilities Assistance Program, which combines funding for rural water and waste disposal loans and grants and solid waste management grants. This represents an increase of $79 mil- lion over the 1996 level. The bill also provides a total loan level of $3.5 bil- lion for rural housing loan programs, the same as the level approved by the House and Senate, and $519 million over the 1996 level. For foreign assistance and related programs of the Department of Agri- culture, the bill recommends $131 mil- lion for the Foreign Agricultural Serv- ice, including $27.5 million for the Co- operator Program; a total program level of $1.1 billion for the Public Law 480 Food for Peace Program, including a program level of $240.8 million for title I, $837 million for title II, and $29.5 million for title III. Mr. President, this bill provides fund- ing for many essential programs, pro- grams which enhance and support the productivity of our agricultural sector, which provide essential services to the small and rural communities of this Nation, which conserve and protect our natural resources, and which provide needed food assistance, not only to those abroad but to assure no Amer- ican goes hungry. Many of these pro- grams are worthy of additional fund- ing. However, we are also working to reduce the overall costs of Government and to assure efficiencies in the oper- ation of Government programs. This bill is consistent with our overall budg- etary and policy goals. Mr. President, the conference report we present to the Senate today reflects a mutually satisfactory resolution of the differences between the two Houses. It does so in a manner which reflects the funding requirements of the many programs and activities cov- ered by the bill within the limited re- sources available. I recommend its adoption by my col- leagues. REGARDING THE CENTER FOR APPLIED AQUACULTURE IN HAWAII Mr. INOUYE. Mr. President, over the years, the Congress has been support- ive of utilizing Hawaii’s unique envi- ronment to develop important science- based aquaculture technology and to demonstrate and provide that tech- nology to the U.S. aquaculture indus- try. With initial construction funding for Hawaii’s Center for Applied Aqua- culture in 1988 and subsequent install- ments in 1994 and 1995, enough money has been appropriated in the Coopera- tive State Research, Education and Ex- tension Service’s buildings and facili- ties account to complete construction of a full-fledged aquaculture research and precommercialization facility in the Hawaiian Islands. The dynamic proposal for the Center for Applied Aquaculture has grown to demonstrate the importance of a core research facility together with sat- ellite facilities, including grow-out ponds to demonstrate new technology on a larger than laboratory precommercialization scale, protected quarantine facilities to ensure the all- important maintenance of disease free fish stock, and a hatchery to supply fry to the research and demonstration components. Hawaii’s island geography and the physical limitations of the core re- search facility dictate the establish- ment of the essential satellite dem- onstration, quarantine and hatchery facilities on neighboring islands. There would be no question about building these integral components if the core research site could accommodate them properly. However, with no further ap- propriation and with the support of the Agriculture Department for the sat- ellite components, all of this can still be accomplished in Hawaii. I would hope that my colleagues, Chairman COCHRAN and Senator BUMPERS, could support this vision of Hawaii’s Center for Applied Aquaculture, which will not only provide for a total package of groundbreaking aquaculture tech- nology that can be demonstrated at a level to make it viable for private com- mercial investment, but will also give the Federal Government the highest and best use of its investment over the last 8 years. Mr. COCHRAN. I agree with my col- league from Hawaii and recommend that the Department favorably con- sider the Center for Applied Aqua- culture’s plans to establish a complete CONGRESSIONAL RECORD \u2014 SENATES9336 August 1, 1996 aquaculture research and precommercialization facility in Ha- waii. Mr. BUMPERS. I would like to asso- ciate myself with Senator COCHRAN’s comments on this matter and urge the Department to respond positively to the Center for Applied Aquaculture’s proposal for a core aquaculture tech- nology development facility together with integral satellite facilities to demonstrate those technologies for the benefit of U.S. aquaculture industry. Mr. INOUYE. I very much appreciate my colleagues’ interest and support for enhancing the U.S. aquaculture indus- try by developing, testing, and trans- ferring science-based technology to the commercial aquaculture sector. HORTICULTURAL AND WATER MANAGEMENT RESEARCH LABORATORY Mrs. BOXER. Mr. President, I would like to ask the ranking member of the Senate Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration and Re- lated Agencies about a facility impor- tant to U.S. agricultural research and the State of California. The President’s budget request included $22 million for construction of a Horticultural and Water Management Research Labora- tory at Palier, CA. This facility will be operated by the Agricultural Research Service [ARS], the research arm of the Department of Agriculture. This facility will contribute greatly to solutions for many of the problems facing our farmers and others reliant on proper management of our natural resources. The facility will conduct critically important research on water management, postharvest quality, in- sect control and quarantine operations. All these functions are becoming in- creasingly important as we all try to balance the needs of water users, envi- ronmental protection, and the mainte- nance of a safe and abundant food sup- ply. Currently, this research is housed in inadequate and inappropriate space, with many researchers using parked trailers as office and laboratory facili- ties. I agree with the President that this facility must be completed as soon as possible in order to upgrade our Na- tion’s research capabilities and con- tinue to make our farmers competitive in growing world markets. I would like to know if the Senator can share with me the views of the con- ferees of the pending appropriations bill regarding this important project. Mr. BUMPERS. I would like to re- spond to the Senator from California by stating that I and the other con- ferees are very aware of this budget item and agree that construction should commence at the earliest pos- sible date. I am happy to report that the Senate bill included $11 million for this facil- ity. I wish we could have provided the full amount requested by the Senator from California, but our allocation, being severely reduced from the pre- vious year, prevented us from meeting her full request. Unfortunately, the House provided no funding for this project. As the Senator knows, once construc- tion begins, any delays in project com- pletion eventually result in greater cost. There were a number of ARS fa- cility projects nearing completion that could be completed in fiscal year 1997. Accordingly, the conferees decided to complete those projects before allocat- ing funds for new facilities in order to better manage our limited resources. There was discussion about the mer- its of the Palier laboratory during House and Senate conference negotia- tions. It is intended that by completing ongoing projects, which will be no longer the subject of future appropria- tions, we will be able to provide higher levels of funding for other priority needs. If we can provide full funding for the Palier facility next year, it will serve the double benefits of assisting the U.S. agricultural industry and helping us use our fiscal resources more efficiently. Although it is impossible now to know what our allocation will be for fiscal year 1998, it is clear that if pro- vided adequate resources, it would be to everyone’s advantage to provide full funding for the Palier laboratory in the fiscal year 1998 appropriations bill. Mrs. BOXER. I thank the Senator for his explanation and I look forward to working with him again next year on this important project. Mr. DOMENICI. Mr. President, the Senate is considering the conference report accompanying H.R. 3603, the ag- riculture, rural development and relat- ed agencies appropriations bill for fis- cal year 1997. The conference agreement provides $52.3 billion in new budget authority [BA] and $44.9 billion in new outlays to fund most of the programs of the De- partment of Agriculture and other re- lated agencies. All of the funding in this bill is for nondefense purposes. When outlays from prior-year appro- priations and other adjustments are taken into account, the final bill totals $55.3 billion in BA and $54.2 billion in outlays for fiscal year 1997. Including mandatory savings, the subcommittee is $158 million in BA and $71 million in outlays below its 602(b) allocation. The final conference agreement in- cludes legislative changes in manda- tory programs totaling $505 million and $484 million in outlays. The savings from these provisions are then used to pay for discretionary spending in the bill. The majority of these mandatory savings come from provisions limiting the standard deduction under the Food Stamp Program. CBO scores these sav- ings at $345 million in both BA and out- lays for fiscal year 1997. The Senate will soon take up the conference report on the Personal Re- sponsibility and Work Opportunity Reconciliation Act of 1996\u2014the long- awaited welfare reform bill\u2014that has gained bipartisan support and a com- mitment from the President to sign this bill into law. This historic measure includes iden- tical savings from freezing the food stamp standard deduction. By counting these savings in both bills, which are expected to be signed by the President, we give up additional deficit reduction by the amount of the duplicate manda- tory savings. These mandatory savings assist the subcommittee in completing the appro- priations bill well within its current 602(b) allocation. For discretionary spending, the final bill is $991 million in BA and $774 million in outlays below the President’s budget request. The final bill is $159 million in BA above the House-passed bill, and $9 million in outlays below the House-passed bill. The conference agreement is $884 mil- lion in BA and $694 million in outlays below the 1996 level. I am pleased that the conferees re- tained the language I requested requir- ing competitive bidding for WIC infant formula. This provision will ensure that in these times of tight budgets we maximize the benefits we get from the dollars we spend on this important pro- gram. It is estimated that up to one quarter of the WIC caseload\u20141.5 million chil- dren and pregnant women\u2014is served as a result of the $1 billion in savings gen- erated from competitive bidding for in- fant formula. I thank the distinguished sub- committee chairman for including this provision in the bill and retaining the language in conference. Mr. President, I ask unanimous con- sent that a table displaying the Senate Budget Committee scoring of the final bill be printed in the RECORD. AGRICULTURE SUBCOMMITTEE: SPENDING TOTALS\u2014 CONFERENCE REPORT [Fiscal year 1997, dollars in millions] Budget authority Outlays Nondefense discretionary: Outlays from prior-year BA and other actions completed ………………………………………………… ……………. $3,853 H.R. 3603, conference report ………………………….. $12,960 9,487 Scorekeeping adjustment ……………………………….. ……………. ……………. Subtotal nondefense discretionary ………………. 12,960 13,340 Mandatory: Outlays from prior-year BA and other actions completed ………………………………………………… 497 3,533 H.R. 3603, conference report ………………………….. 39,385 35,435 Adjustment to conform mandatory programs with Budget …………………………………………………….. ……………. ……………. Resolution assumptions …………………………….. 2,418 1,845 Subtotal mandatory …………………………………… 42,300 40,813 Adjusted bill total ……………………………………… 55,260 54,153 Senate Subcommittee 602(b) allocation: Defense discretionary …………………………………….. ……………. ……………. Nondefense discretionary ……………………………….. 13,118 13,411 Violent crime reduction trust fund ………………….. ……………. ……………. Mandatory …………………………………………………….. 42,300 40,813 Total allocation …………………………………………. 55,418 54,224 Adjusted bill total compared to Senate Subcommit- tee 602(b) allocation: Defense discretionary …………………………………….. ……………. ……………. Nondefense discretionary ……………………………….. \u00a5158 \u00a571 Violent crime reduction trust fund ………………….. ……………. ……………. Mandatory …………………………………………………….. ……………. ……………. Total allocation …………………………………………. \u00a5158 \u00a571 Note: Details may not add to totals due to rounding. Totals adjusted for consistency with current scorekeeping conventions. Prepared by SBC Majority Staff, July 31, 1996, 06:50 p.m. MEDGUIDE Mr. COATS. Mr. President, I want to engage the Senator from Mississippi, Senator COCHRAN, the chairman of the CONGRESSIONAL RECORD \u2014 SENATE S9337August 1, 1996 Senate Appropriations Subcommittee on Agriculture, about his understand- ing of the provision included in the conference report of the fiscal year 1997 Agriculture appropriations bill relat- ing to the FDA’s proposed medguide regulation. Am I correct in saying that the con- ferees retained the language in the con- ference report that was adopted by the full Senate last week? Mr. COCHRAN. Yes, Senator. This conference report retains the language, as adopted by the Senate, that pre- vents further finalization or implemen- tation of the medguide regulation. Mr. COATS. At this point, I would like to make sure I understand that this provision does not preclude the FDA from using its existing authority to require, on a drug-by-drug basis, the provision of written information pre- pared by the manufacturer to consum- ers about prescription drugs that pose a serious risk. We have been informed by the FDA that it will only be required to use its existing authority to require patient information for a very limited number of products. Mr. COCHRAN. That is the commit- tee’s understanding, as well. The com- mittee believes that the FDA’s current authority to require written patient in- formation is essential for certain pre- scription drugs, on a drug-by-drug basis, in cases where they pose a seri- ous risk to the patient if used inappro- priately. Mr. COATS. I thank the Chairman for clarifying this and appreciate his leadership and assistance in helping us craft a compromise that is acceptable to the committee and to the FDA. MEDICATION GUIDES Mr. KENNEDY. The provision we are enacting on medication guides places certain limitations on the FDA regard- ing its pending medication guide regu- lation as it pertains to voluntary infor- mation provided by pharmacists. How- ever, as you know, there was another part of the pending FDA regulation that was not intended to be affected by this provision. That was the FDA’s in- tention to require FDA-approved pa- tient leaflets for drugs that pose a seri- ous and significant public health risk. Those would be drugs that cannot be used appropriately without specific written information provided to the pa- tient. Although the instances in which such leaflets would be required would be very small\u2014no more than three or four per year\u2014it is critical that FDA have the flexibility to use regulations to ensure that these drugs can be safe- ly used, as was specifically provided for in the House language of H.R. 3603 as well as in the Senate report accom- panying H.R. 3603 which stated ”this provision is not to be construed as pro- hibiting the FDA from using its exist- ing authority or regulatory authority to require as part of the manufactur- ers’ approved product labeling the dis- pensing of written information inserts to consumers on a case-by-case basis with select prescription drugs to meet certain patient safety requirements.” Mr. BUMPERS. Your understanding is correct. As we noted in the Senate report accompanying H.R. 3603 at the time, the provision covering the vol- untary medication leaflet program was not to be construed as applying in any way to the FDA’s use of its existing au- thority to require patient leaflets for drugs that can cause severe birth de- fects, have serious adverse reactions when used with other drugs, and simi- lar instances that pose a serious and significant public health risk. The PRESIDING OFFICER. Under the order of yesterday, the 31st of July, 1996, the Senate having received the conference report on H.R. 3603, the ag- riculture appropriations bill, the con- ference report is agreed to, and the mo- tion to reconsider is laid on the table. The conference report was agreed to. f PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILI- ATION ACT OF 1996\u2014CONFERENCE REPORT The Senate continued with the con- sideration of the conference report. Mr. DOMENICI addressed the Chair. The PRESIDING OFFICER. The Sen- ator from New Mexico. UNANIMOUS-CONSENT AGREEMENT Mr. DOMENICI. Mr. President, at the request of the minority, they desire one block of time, instead of rotation, between 12 and 1. I checked with our side. We are willing to do that provided that, for instance, they go from 12 to 1 and then from 1:15 to 2:15 we have a block of time. We assume that while this is the welfare bill that the minor- ity intends to speak on a related sub- ject\u2014the economy and the current eco- nomic news. And we would like from 1:15 to 2:15 to speak to that same sub- ject. I will control that 1 hour and be here myself with other Senators. I ask unanimous consent that we pro- ceed now to Senator BOND, 10 minutes; Senator KOHL, 3 minutes; if Senator HUTCHISON arrives, she takes 7; if not, we rotate and have a Democrat; then at the hour of 12 o’clock the Democrats have 1 hour under the control of whom- ever they designate for discussion on the floor of the Senate; and, then at 1:15 the Republicans have 1 hour until 2:15. That means there are 15 minutes in between. Let us just say we will fill that in with Senators who desire to speak. I propose that as a consent re- quest. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. DOMENICI. I thank the Chair. The PRESIDING OFFICER. The Sen- ator from Missouri. Mr. BOND. Mr. President, I thank the Chair. I begin by expressing my sincere thanks and appreciation to the man- agers of the bill, particularly to my good friend, the Budget Committee chairman, the Senator from New Mex- ico, Senator DOMENICI. The fact that we have this measure before us today reflects not only all the practice we have had in passing welfare bills but reflects the great skill, the compas- sion, and the wisdom that he has exer- cised throughout this process. I think all of us are deeply indebted to the tre- mendous skill he has shown in keeping us on track to bring us to this day. Mr. DOMENICI. Will the Senator yield for a question? Mr. BOND. I am happy to yield. Mr. DOMENICI. I ask whatever time I use be added to his time. Does the Senator recall the hours spent in the Budget Committee putting together the first balanced budget reso- lution in 30 years, and then the floor debate which lasted for the entire time allowed, and then all of the amend- ments at the end? We did them all with 1 minute intervening, and then a rec- onciliation bill. We did all that was re- quired to get a balanced budget. Mr. BOND. I recall it as it if were yesterday. Mr. DOMENICI. I also managed them both, and I spent more hours on the floor of the Senate and more votes oc- curred than any period in modern his- tory of the Senate. I might say from time to time\u2014you would agree, would you not\u2014that we had thought perhaps that work was all in vain, at least for this year, but, as a matter of fact, in only a year, we have welfare reform doing away with the 60 years when peo- ple have been imprisoned by this sys- tem. It was all worthwhile. Mr. BOND. Mr. President, I say that I well remember that. It only height- ened my admiration for the Senator from New Mexico. It was a wonderful experience which I hope not to have to go through again but it was only be- cause of his skill, good humor, wisdom, and kind judgment that we were able to accomplish that work. And it is truly a credit to his ability and his leadership. Mr. President, today the Senate will take another historic step in trying to curb the size of Government and pro- vide for new approaches to help fami- lies in poverty. I am enthusiastic about this welfare reform legislation which we will pass today because it will basi- cally take control from the impersonal inefficient Washington welfare bu- reaucracies and the dead hand of Con- gress and return that to State and local governments who are closer to the people, giving them the freedom to implement new ways to fight poverty. There can be no doubt that the cur- rent system is a failure. That should be the one thing that is agreed upon by Republicans, Democrats, liberals, con- servatives, and anyone else who is con- cerned about their fellow man today. It is cruel to adults who are treated like numbers when they need public assist- ance. It is even crueler to the children because it encourages a lifetime of de- pendency and they are raised in an at- mosphere without hope. The current system discourages work but it encour- ages illegitimacy. The current welfare CONGRESSIONAL RECORD \u2014 SENATES9338 August 1, 1996 system does not punish poor behavior\u2014 even behavior which threatens chil- dren, like not sending them to school, or not seeing that they receive their immunizations. The current welfare system does not even punish drug abuse among parents who may be wel- fare recipients. I am pleased that this conference re- port contains a provision which I au- thored that deals with an outrageous problem that came to my attention as a result of some efforts by the good folks in my home State of Sedalia, MO. In Sedalia, a private employer was try- ing to hire workers at a $6.50 per hour wage to process food. The employer worked with the local Family Services Division office and had some welfare recipients come out and get jobs. That was a win-win for those folks who got jobs, and for all of us in Missouri as taxpayers. Some of the recipients were interviewed and then hired. They now have good paying jobs. They are paying taxes. They are not living off the Gov- ernment. They are contributing mem- bers of society. They can take pride in what they are doing for themselves and their families. However, a few folks did not get a job because they failed a mandatory drug test. They were not hired, unbelievably and terribly unfortunately, because of Federal rules and regulations. The State of Missouri cannot sanction those welfare recipients even though they were known to abuse drugs. They simply met their obligation by showing up for the work interview with drugs in their systems, and as a result of the Federal requirements they were sent back to get their food stamps without having to take a job. Mr. President, what kind of perverse incentive is that? That is the incentive we have seen too many times in the welfare system today. The people of Missouri are fed up with it. They know it is not working. It is costing money, and not helping the people that it should help. This is an absurd result. It harms the recipients because no one forces them to be responsible for their actions. It certainly harms the chil- dren of the drug users because their parents have no incentive. They need not get off drugs to continue to get their assistance. Of course, I would say on a much broader scale it is unfair to all of us as taxpayers who have to fi- nance those habits and provide support for those who are using drugs. I think this is just one example that shows clearly that the Washington bu- reaucracy, the congressionally man- dated and controlled scheme, cannot serve the needs of the millions of poor people in this country. The fact is in States like Massachusetts, Indiana, Wisconsin, and Utah where Governors have been able to take a tougher ap- proach, welfare rolls have dropped, re- cipients have found jobs, and deadbeat dads have been forced to take respon- sibility for their children. Those are the results that we hope to duplicate throughout the country in this reform of welfare. I am pleased that President Clinton has decided to join us, and I think the overwhelming number of Americans who really want to end welfare as we know it. Countless Americans and I have been terribly disappointed. I felt cheated\u2014not just once but on two pre- vious occasions\u2014when we worked very hard in this body and with overwhelm- ing bipartisan support passed meaning- ful welfare reform. Those measures were vetoed, protecting the welfare system and its bureaucrats as it exists. Apparently the President has decided to give the American people what they want\u2014real welfare reform. For some reason, an old story just came into my mind about a politician back home who had held a position for some time. When the clamor of the people got too great, he changed his po- sition. A friend of mine went up to him and said, ”Congratulations. I see you finally have seen the light.” He shook his head sadly, and said, ”No. I just felt the heat.” But for whatever reason, the change was welcome in that situation. It has been said on this floor to those of us who support this welfare reform, ”How can you dare call it welfare re- form?” How can we dare call it reform? And they contend it would lead to more poverty. It was said that the evi- dence is irrefutable. Yes, Mr. President, the evidence is ir- refutable. What the current system has done is to force more and more families and more and more children into wel- fare dependency. It has deprived the children and the families of the respon- sibility that each and every American citizen has the right to enjoy and the obligation to use. Those who oppose change in the current system must ex- plain and defend the system that has forced so many more families and their children into poverty. With this great federally controlled, congressionally mandated, Washing- ton-bureaucracy-run poverty system, we have seen the number of families and children in poverty skyrocket. Those who take a poverty tour and want to go out and look at the faces of the welfare recipients, I tell them I have seen those faces, and I have felt the shame that the current system we have is not getting them off welfare. When you go out and look at the peo- ple who are trapped in the system today, remember, it is the current sys- tem that has trapped them. Their plight is the direct responsibility of the system that we are here today to change, to give them an opportunity, to give them an incentive, to give them some encouragement to get off welfare, to help them reestablish themselves as responsible, contributing members of the community, able and willing to take care of their children. To say, as has been said on this floor, that we are abandoning children be- cause we are turning back to the States the opportunity to devise, re- vise, improve and implement a welfare system is to ignore reality. I had the opportunity to serve on the other side of this intergovernmental program for 8 years as Governor of Mis- souri. As we tried to implement the Federal programs handed down from Washington, we found time and time again that what may have been well-in- tentioned and what sounded like a good idea when it was expounded upon in this body and in the other body, when great ideas from Washington came down as to how we were going to im- prove the system, what they did was hamstring our ability to shape a sys- tem that would serve our people and help them get off welfare. Too often we have been tied up in red tape and bureaucracy. This now is an opportunity to let the States that do care and that are concerned about those in poverty develop means of get- ting them off welfare and into work. I urge my colleagues to support this measure, and I thank those who have worked so hard for its passage. I yield the floor. The PRESIDING OFFICER. The Sen- ator’s time has expired. Mr. KOHL addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Wisconsin. Mr. KOHL. I thank the Chair. Mr. President, today, the Senate will take what is perhaps its most signifi- cant action in my years in this body. Today, we will send to the President a bill that abolishes the failed Federal welfare program. We will send to the President a bill that gives hope to more than 12 million mothers and chil- dren who have too long been left alone in a culture of despair and poverty. I want to make clear a point that may have been lost in the partisan pol- itics that has surrounded this legisla- tion. This bill is not about punishing welfare recipients. This bill is not about turning our backs on families that have been broken and impover- ished for too long. This bill is about hope. It is about giving hope to moth- ers who want to provide a better life for their children. It is about giving hope to children who do not deserve to be imprisoned in a life of crime, hunger and despair. It is about giving hope to communities that want to see their tax dollars go to build their neighborhoods up and not to tear local families down. As a result of bipartisan input, there are many positive changes in this bill that improve upon previous welfare bills. Child care funding is increased by $4 billion, while health and safety standards for child care facilities are preserved. The School Lunch Program is maintained. The Food Stamp Pro- gram remains a guarantee. Programs to prevent child abuse and neglect are continued, and, perhaps most impor- tantly, basic Medicaid health coverage is retained. There are also provisions in this leg- islation that I cannot support and I will work to change. We will not turn our backs on the people in commu- nities this legislation is meant to help. As the States submit their plans and as the provisions in this bill take effect, we will continue to monitor them. We CONGRESSIONAL RECORD \u2014 SENATE S9339August 1, 1996 will make sure that our new welfare system pulls people and communities up, gives them hope, gives them oppor- tunity and makes them strong. Yes, today is the beginning of the end of welfare as we know it, and it is good news for the families who have been trapped too long by hopelessness. Today begins a new commitment to bringing the poorest members of com- munities a new beginning, a chance to build their families, an opportunity for their children’s future. This legislation is not about hate. This legislation is about hope. And so I urge my col- leagues to support the conference re- port. I thank the Chair. Mr. KERREY addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Nebraska. Mr. KERREY. I understand there is unanimous consent for Senator HUTCHISON, who is not here, to speak. I ask unanimous consent to be allowed to speak for 10 minutes. The PRESIDING OFFICER (Mr. ASHCROFT). Is there objection? Without objection, it is so ordered. Mr. KERREY. Mr. President, many good and honorable Senators will vote for this bill today, and their votes and the signature of the President, in my judgment, in no way takes away from their good intentions to make this wel- fare system better. I do not intend to say or suggest that they are mean-spir- ited or they are heading in the wrong direction, or anything of the sort. I come to the floor intending to vote against this bill and would like to ex- plain why. I think this piece of legisla- tion in the context of our budget and the context of our economy will not make things better. Those who believe this new law will make life better for poor Americans who depend upon Gov- ernment payments for family support, for food stamps, for supplemental secu- rity income, the earned-income tax credit, child nutrition, foster care, and the social service block grant, have of- fered at least three, as I have heard them, three principal arguments with which I strongly agree. First, I agree that our current wel- fare system has failed because it penal- izes work and rewards behavior which is contrary to the core American val- ues of family, personal responsibility and self-discipline. I agree that States need far more flexibility and authority in designing systems which are appropriate for their varying needs and circumstances. And I agree that deficit reduction will help low-income Americans by promoting growth and job creation. My decision to vote no on this piece of legislation is based upon disagree- ments, strong disagreements with some of the ideas I have heard promoted in favor of this legislation. First, I do not agree that income sup- port all by itself promotes self-destruc- tive dependency, lazy behavior, out-of- wedlock births, and many other things that I have heard offered on this floor. I have been dependent on a generous Government check from the taxpayers of this country for 27 years since I was injured in the war in Vietnam. That check has not made me lazy. I have not had one child out of wedlock. I am not dependent upon the Government. I am grateful to my country and willing to give it back in kind. My motivation predated the decision by a generous nation to say that if you are disabled in the war, we are going to provide you with monthly income sup- port, and we are not going to torment you and constantly challenge you and require you to come in and justify your existence to a Government bureaucrat every single time we think that maybe we do not like what you are doing. I do not agree that increased welfare spending has caused many of the soci- etal problems we face, nor do I agree with the corollary argument that is of- tentimes made that we spend a dis- proportionate amount of our GDP on the poor. First, as to welfare causing problems, Mr. President, I would like to read just a few of the economic changes that have occurred in the last 30 years and ask my colleagues to consider what their impact could have been. Thirty years ago, most communities had laws that said that you could not open your business on Sunday. But as a consequence of a desire to do more business on Sunday, that seventh day that was reserved for the Sabbath, we now have in every community not only stores open on Sunday but open 24 hours a day. Guess who is working in those stores? Not those of us who make over $100,000 a year. We are shopping. We are playing golf. But it is those lower income families who are out there working. You could make a much better case, Mr. President, that that change in the law has been destructive of families, has been hurtful of communities. I do not make this argument, by the way, but there is no question there have been significant changes in this coun- try as a result of changing our Sunday closing laws. And consider these economic facts. In 1945, 75 percent of the world’s GNP was in the United States; in 1970, it was 50 percent; in 1992, it was 25 percent; in 1995, it was down to a fifth. In 1969, 9 of the 10 largest banks in the world were in the United States. Today, the top U.S. bank is No. 30. In the auto market, the U.S. share was 90 percent, today it is 55 percent. For manufacturing wages versus the rest of the world, we were No. 1 in 1969. In 1994 we are No. 5, after Japan, Germany, France, and Italy. We have shifted from a manufactur- ing to a service economy over the last 30 years, and a worker out there, who is not protected as a consequence of being a Member of Congress, a worker out there has to compete against all of those people in the world. He has to compete against people in India who are willing to work for 40 cents an hour, against people in China who are willing to work for 36 cents an hour, against many nations who are willing to pay their people who work 50 cents to a dollar an hour. This has put a tre- mendous pressure upon people who have lower wages. Mr. President, near- ly 30 million people in the work force earn less than $7 an hour. Rather than merely focusing our at- tention on how to get people off of wel- fare, it is far more important for us to ask ourselves the question: In an age when we have an international econ- omy, where we have that kind of pres- sure upon wages, where we have that kind of pressure on skills\u2014and by the way, I would likely vote for this pro- posal if it had more money in there for education. We have title 1 students today who are not being taken care of. In Nebraska we have 30,000 students who qualify based upon their income, another 30,000 who qualify based upon math and science skills. We have 12,000 black students in the Omaha Public School System. Only 25 percent of those who graduate have a proficiency in mathematics. We are not fully fund- ing Head Start. We do not say to all Americans, ”Don’t worry about it, you will be able to go to college.” In Ne- braska, working families take out a second mortgage on their homes in order to be able to send their kids to the land grant college\u2014a college that was supposed to make it possible for everybody to be able to go to school. If we had money for education in this legislation, if it was said we are going to do those things we know work\u2014we know Head Start works, particularly title 1\u2014at a cost of $800 per child per year. And to half of the people who need it, based upon their performance in math and reading, we say we do not have the money for you. When it comes time to build the next generation of attack fighter, we have the money for that. We have another $30 or $40 billion to build the Harrier, because we are afraid of God knows what. Actually, we are afraid of coun- tries to whom we have sold F 16’s. All of a sudden we are building a great fear of a new threat out there. We are not afraid, but we ought to be afraid, of what happens when our graduates from high school, in an international econ- omy, cannot read, cannot write, cannot do multistat mathematics, cannot do the things that all of us know in an international economy they have to be able to do if they expect to earn the living that we would like to see all Americans be able to, in fact, earn. Another presumption I hear is we are spending too much on the poor. These programs we are addressing\u2014I under- stand we have Medicaid and it is about $25 billion just for acute care for the poor. And we have some housing pro- grams, some are low and moderate, some just for the poor. But just for these programs themselves we are going to spend 1.4 percent of the GDP. We have a $7 trillion GDP right now. These programs represent about $102 billion. CONGRESSIONAL RECORD \u2014 SENATES9340 August 1, 1996 We are not going to address Social Security, Medicare, or benefits that go to people like me who have substantial income but still receive a Government check. We are not going to do any of that. We are going to go after people who have low incomes and we are going to say: You are really the problem. We have to take our deficit toll upon you. Mr. President, 1.42 percent, going to 1.5 percent of the Nation’s economy. By the way, for my colleagues, I be- lieve there is a relationship between our economy and what we can afford. I am an advocate of economic growth, I want our tax, regulatory, and spending policies to promote growth. Our wealth does determine how much we are able to give to those who are less fortunate, whose lives have been affected by some disaster or another, who are struggling to compete in this economy of ours. But, for gosh shakes, 1.5 percent is hardly what I would call an excessive tithe. Indeed, under this proposal in- stead of going from 1.42 and adding 8 hundredths of a percent, we are going to go from 1.42 to 1.38. You have not heard me come and say I think these cuts are draconian and people are going to be foraging in the street for food. But I do not think a generous Nation that has our children in the classroom saying we are ”one Nation, under God, indivisible, with liberty and justice for all,” can look at this and say 1.4 percent of our GDP going to poor Americans is excessive and it is something we are not able to afford. In addition, I make over $100,000 a year. I have not heard anybody come down and say, ”Bob, this is what we think your contribution ought to be for deficit reduction.” I have not heard anybody come to me and say, ”We think you ought to give up a little bit, too.” I think concerns about equity when we are doing deficit reduction are legitimate and need to be surfaced. I hope, in the aftermath of this bill’s passage and signing, we are able, in 1997, as we look at our budget, to ad- just not just our entitlement programs, and those entitlement programs that are going to upper-income American, and say we are going to try to provide additional discretionary money for education and for low-income people so we can deal with many of the underly- ing problems that both the supporters and opponents of this legislation have addressed. I do not believe we can have a liberal democracy and a free enter- prise system of capitalism, I do not be- lieve we can say to our people you have to compete in a global society and we are going to try to keep the trade bar- riers as low as possible, I do not believe that any of that works unless we are willing to do those things that we know work. We are not doing them today. We are saying we are short for Titler 1, we are short for Head Start, we are short for college loans, short for all these other things. I think it will, indeed, come back to haunt us. We do know what we can do as a fol- low-on to this legislation. As I indi- cated, if there were more resources here for education, for training, for those things that would actually pro- vide what I would consider to be a rea- sonable safety net in an international economy, I would likely support it. Let me give one final example. The previous occupant of the chair, Senator INHOFE, introduced a piece of legisla- tion dealing with limbs for low-income working families. He identified a very important problem. The problem is this. We spent $1 bil- lion for all prostheses in America, arms and legs. That is about a fourth of what we spend on antacids to cure our stress, half of what we spend to feed our dogs and cats\u2014hardly what I call an exces- sive expenditure. But if you are a working family that does not have health insurance and have an income of $15,000 a year and your 10-year-old daughter loses her leg above the knee and you go to your prosthesist and find out the prosthese will cost $12,000, what do you do? You cannot afford it. So you consider trying to do the same sorts of things that are being done for Third World nations. Can we use used parts to try to assemble a limb and an arm for this 10-year-old child to be able to make life better? I mention this only because all the arguments about wanting to provide an incentive for work are not going to be effective unless we, as a follow-up to this legislation, not only provide in the appropriations process the money need- ed to educate our people, but also as a follow-up, we consider this fundamen- tal question: What kind of safety net do we want to provide for the citizens of the world’s strongest economy and the world’s most successful democracy? I yield the floor. The PRESIDING OFFICER. The Sen- ator from Louisiana. Mr. BREAUX. Mr. President, I in- quire of the Chair, what is the order of business? The PRESIDING OFFICER. Demo- crats control the time between now and 1 o’clock. Mr. BREAUX. Mr. President, under that agreement, I yield myself 10 min- utes. The PRESIDING OFFICER. The Sen- ator is recognized. Mr. BREAUX. Let me start by ac- knowledging that following my good friend from Nebraska, who is indeed a close friend, I have a great deal of re- spect for his opinions, even though we disagree on the merits of the welfare legislation that will pass the Senate today as it passed the House yesterday. There is a great deal of second-guess- ing about the President’s decision yes- terday to sign the welfare bill. We have had statements by various Members as to whether it was a good idea or a bad idea. I think his decision was the cor- rect decision, and it also, at the same time, is a very courageous decision. I know it was tough, but I think, ulti- mately, in signing the bill, the Presi- dent will be doing the right thing. I think one thing that is clear, cer- tainly when you get outside of Wash- ington, is that the American people know that the current welfare system does not serve very well the people who are on it, who it was intended to help, nor does it serve very well the people who are paying for it: the American taxpayer. It simply is not working when you see generation after generation of fam- ilies who have been on welfare assist- ance continue to be on welfare assist- ance. The goal of any welfare reform is to end welfare, not to continue it, not to perpetuate it. Since 1935, we have seen families really who have been locked in a prison of welfare dependency and have been shackled by the concepts that have continued generation after generation and decade after decade. The question is not should we change the system but how we change it. I think the President was absolutely correct in setting out the priorities. Welfare reform should be tough on work but good for kids. While that is a simple and catchy phrase, it also is the basis for the legislation that we are going to adopt. This bill is tough on work, but it says welfare is not going to be permanent, that it should be temporary, that it is a maximum of 5 years in a person’s lifetime, and States can come up with a shorter period if they want. The goal of making work part of wel- fare reform is that we should be turn- ing welfare offices, that for too long have only been an office giving out a check, into an office that helps people find a job. It was interesting this morn- ing, a local TV station was interview- ing a number of people who were actu- ally on welfare, mothers with small children, who said they agreed with this legislation. They did not want to be on welfare for the rest of their lives. They wanted the welfare office to be a workfare office. They wanted the wel- fare office to be a job placement office. They wanted the welfare office to help them get off welfare. I think this legis- lation will do exactly that. The bill, I think, is very important in some of the things it does do, such as child care. This legislation provides about $14 billion for child care, particu- larly for mothers with small children, so that child care will be available so they can go to work. That is about $5 billion more than under the current law and $4 billion more than in the bill that the President was forced to veto because it was not good for children. This bill, in fact, is good for children. I was interested in some who have said, ”Well, after 5 years, we’re just going to abandon families.” There is nothing further from the truth. We were looking over the various pro- grams that would still be available after the 5-year period is reached. There are some 49 Federal programs that are available for families and would continue to be available for fam- ilies after they have reached their time limit of 5 years. CONGRESSIONAL RECORD \u2014 SENATE S9341August 1, 1996 This country, as strong as we are, is not going to be deserting families, is not going to be deserting children of families who have exceeded the time limit. There will still be a large num- ber of programs that will provide direct assistance to these families after they have reached their time limit. This bill, I think, goes a long ways to correcting problems that the President addressed when he first vetoed the wel- fare bill. For instance, we maintain health care coverage through Medicaid for all those families who are eligible today, even though a State may change their welfare program. We clearly say that families that are on AFDC today will continue to be eligible for health care, and this, indeed, is very impor- tant. In addition to the child care, the President had very strong concerns about just arbitrarily block granting the Food Stamp Program, which is a Federal program, to the States. This bill guarantees that additional benefits will be available when need increases, such as during a recession. The pro- gram would still essentially be a Fed- eral program. It would not be block granted to the States. I think, on balance, the President of the United States was absolutely cor- rect and being courageous in saying, ”Yes, we are going to change the sys- tem; yes, we are going to try some- thing different. And, yes, we are going to be tough on work for people who can work and, yet, at the same time, do good for children of those families.” I think that is incredibly important. f GOOD ECONOMIC NEWS Mr. BREAUX. Mr. President, let me take a couple of minutes to comment on something else, and that is the eco- nomic news that was announced today, which I personally am very proud of, as I think every Member of this Congress can be, and this administration can be proud of the news. I know when I look at my own State of Louisiana, Louisiana’s unemploy- ment in 1992 was 8.2 percent; 8.2 percent of the people in my State did not have a job. Today, the unemployment rate is 6.9 percent, a substantial drop. In 1992, the growth rate in this coun- try was 2.7 percent, and the deficit stood at $290 billion. Today’s growth rate figures of 4.2 percent is incredible progress, and we should be proud of it. Hopefully, we are moving in the right direction with regard to the Federal deficit. In 1992, we looked at a Federal deficit that had staggered up to $290 billion. Today’s figures we are estimating are somewhere between $115 billion and $130 billion\u2014still too high, but real progress. I was interested in just this week\u2014 and these are not just figures that apply in Washington. A lot of people back home say, ”Well, some Depart- ment in Washington issued figures I don’t really understand.” The home- town paper in New Orleans has a spe- cial report just this week on the econ- omy in my State of Louisiana. It shows what we are talking about on the floor today, about this good economic news in Washington is good economic news throughout the United States of Amer- ica. This is a special in the Times-Pica- yune in New Orleans. It says in com- parison: A decade ago, the economic world as New Orleans knew it seemed over. The oil boom that had turned into the oil slowdown was now the oil bust. Almost before anyone knew what had hap- pened, tens of thousands of jobs had dis- appeared from the local economy. . . Fast forward to 1996. Traffic is bustling\u2014 On all of our roads and highways: Houses in prime neighborhoods seemingly sell in seconds. Banks are cheerfully adver- tising their services or rates. The oil and gas business looks pretty good. Residential building contracts in New Or- leans, Baton Rouge and statewide are up through June from a year ago 11 percent for this area, 29 percent for the State. Get the picture? ”Fundamentally, the State’s economy is in great shape,” said Hibernia Corp. President Stephen Hansell. What I am trying to point out is that this is good news in my State and, I daresay, in the other 49 States as well. I was interested in how the article concluded: The Federal Government didn’t manufac- ture it. And they talk about other things that didn’t have anything to do with it. I want to make the point that I think the actions here in Washington did, in fact, have something to do with it. I think the 1993 Deficit Reduction Act had something to do with this. Many of my colleagues said this is going to destroy the economy of Amer- ica; this Deficit Reduction Act is a ter- rible thing. The news today is that the results are in and the news is good news. The tough things that we had to do in 1993 to get this country back on a course of economic recovery have worked, and there should be celebra- tion in the Congress for recognizing that something that was very difficult to do, in fact, was done. The deficit went from $290 billion to $115 billion to $130 billion. I say to the writers of this editorial that that had something to do with that economic boom. That meant that there was more money for private citizens, more money for the private economy to be able to borrow, to invest, to expand their businesses and to create jobs. That had a direct effect on the news today in my State and other States that things are on the right track, the economy is strong, that more jobs are being created. And it just cannot hap- pen by accident. Some of the tough things we had to face when we voted for the 1993 Deficit Reduction Act in fact was very much a part of the economic recovery that we are seeing in Louisiana and the other 49 States. So I think we can all be proud to say that Government does sometimes do the right thing, even though at the time we do it there may be a great deal of questioning whether it is the right thing. Today the results are in and it was the right thing to do. And we will continue to do that. I think that we, as Democrats, can be proud of our activity in that area. I feel very strongly that we, as Demo- crats, can still promote economic growth by tax cuts that are paid for, the bipartisan group Chafee-Breaux, so- called, promoted a capital gains tax cut that was paid for. I think that is very important. We should continue to consider tax cuts for the economic growth. But we ought to make sure they are paid for, that they do not in- crease the deficit. A tax cut that mere- ly increases the deficit may be easy to pass but it is bad economic policy. So I think that we should move for- ward with tax cuts of which I do sup- port. The President has supported tax cuts. The $10,000 tuition tax deduction is one. The penalty-free withdrawals from individual retirement accounts for educational expenses is another good economic policy that will be paid for. There is the HOPE scholarship tax cut, $1,500, again, which is a move in the right direction. So I think that we as Democrats can be proud of the re- sults that are in today, and continue to look at new ideas in terms of tax cuts that are paid for to promote economic growth and development in this coun- try. Mr. President, I join with my col- leagues on both sides of the aisle to continue to do what is necessary to promote the economic growth that we now see in the United States. Mr. President, I yield the floor. The PRESIDING OFFICER. Who yields time? Mr. EXON addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Nebraska. Mr. EXON. Mr. President, per a pre- vious agreement that I understand has been entered into, at this time I would like to set aside 1 hour of the 5 hours allowed to this side of the aisle on the debate on the welfare conference report to talk about some other economic matters that several Members on this side of the aisle, including this Sen- ator, would like to address. So if it is convenient and agreeable to those on that side of the aisle, we would like to proceed in that fashion at this point. The PRESIDING OFFICER. The Chair would inform the Senator that the Democrats are in control of time between 12 and 1 o’clock under the cur- rent order that is under discussion. Mr. EXON. How much time has been consumed on the economic debate up until now? Mr. CONRAD. None. Mr. EXON. How much of the 1 hour has been used? The PRESIDING OFFICER. Twenty- two minutes. Mr. EXON. Twenty-two minutes. Then I would like to ask that the re- mainder of that time proceed, and if CONGRESSIONAL RECORD \u2014 SENATES9342 August 1, 1996 necessary, although we hope it will not be necessary, to accommodate those who wish to speak on this subject, I may ask unanimous consent for a few additional minutes after the time ex- pires. I would like to advise those on that side of that fact. I believe the Senator from North Da- kota was seeking recognition. The PRESIDING OFFICER. The Sen- ator from North Dakota. Mr. CONRAD. I thank the Chair. This morning the Commerce Depart- ment delivered extremely good news on the Nation’s economy. The Commerce Department reports that the economy grew at a rate of 4.2 percent in the sec- ond quarter. Mr. President, these figures confirm that the economy under President Clinton is strong, it is growing, and it is creating jobs. We all recall what the economy was like before this adminis- tration came into office. In 1991 the economy was in recession. By 1992 the budget deficit had ballooned to $290 bil- lion. America was in trouble. Then President Clinton came into of- fice. He offered a bold plan of deficit re- duction to strengthen the Nation’s economy. That plan passed by the Democratic Congress has delivered su- perb results. And today we can report on what has happened. In August 1993, a Democratic Con- gress and a Democratic President en- acted into law a historic deficit-reduc- tion plan. That plan was designed to reduce the deficit by $500 billion over 5 years. Unlike any other deficit-reduc- tion plan that we have seen since I have been here, that plan delivered on its promise. Mr. President, we recall very well what our friends on the other side of the aisle said during that historic de- bate. They said that the economic plan passed by the Democratic Congress and supported by the Democratic President would crater the economy. I can remember so well the Repub- lican majority leader standing at his desk telling us that if we enacted that plan there would be economic ruination. He was wrong. But he was not alone in being wrong. Virtually every Member on the other side as- serted that if we passed this bold eco- nomic plan to reduce the deficit and strengthen the economy it would do just the reverse. They said\u2014and they said repeatedly\u2014if we passed that plan the deficit would go up, not down, that economic growth would be reduced, not increased, that joblessness would mul- tiply. Mr. President, they were wrong. They were dead wrong. And now we can look at the record to see precisely what has happened. Former Senator Dole said, ”Presi- dent Clinton knows * * * the American people know that the plan does not tackle the deficit head-on.” Mr. Dole was wrong. Representative ARMEY, now the ma- jority leader in the House of Represent- atives said, ”The impact on job cre- ation is going to be devastating.” Mr. ARMEY was wrong. He was dead wrong. Senator GRAMM of Texas said this: ”I want to predict here tonight if we adopt this bill, the American economy is going to get weaker, not stronger. The deficit 4 years from today will be higher than it is today, and not lower.” Senator GRAMM of Texas was wrong. He was dead wrong. Mr. President, all we have to do is look at the record. Let us start with the testimony of the head of the Fed- eral Reserve, Mr. Greenspan, before the Senate Banking Committee about the economic plan to reduce the deficit. It was supported by the President and passed by Democrats in Congress. Mr. Greenspan said about the deficit reduction in President Clinton’s 1993 economic plan\u2014and I quote\u2014”an un- questioned factor in contributing to the improvement in economic activity that occurred thereafter.” That is not a spokesman for the Democratic party. That is the Chair- man of the Federal Reserve Board, Alan Greenspan, talking about what the Clinton economic plan has meant to this country. Just to be certain no one forgets what has happened, with respect to the record on deficit reduction, let’s look at this chart, which shows the Reagan record, the Bush record, and the Clin- ton record on deficit reduction. President Reagan came into office in 1981. The deficit stood at just under $80 billion. Under his economic plan that passed the Congress\u2014we recall the Re- publicans controlled the Senate from 1981 to 1987\u2014he got his economic plan passed, and what happened? The deficit skyrocketed. It just about tripled under President Reagan’s economic plan. Then we saw some reduction as steps were taken to rein in the increas- ing budget deficit. Then President Bush took over. President Bush saw the deficit go, on his watch, from $153 billion a year to $290 billion in 1992. The deficit was out of control. President Clinton came in, in 1993. And each year of his administration the deficit has been reduced, and re- duced significantly, from $290 billion in the last year of the Bush administra- tion to $130 billion estimated this year. In fact, the deficit may come in at less than $120 billion this year. The def- icit has been cut more than half during the Clinton administration. It is di- rectly attributable to the plan that we passed, the economic plan that we passed, in 1993. The President also, when he was run- ning for President, promised he would produce with his economic plan 8 mil- lion new jobs in the 4 years of his first term. We can now look at the record. The President has done better than he promised. Instead of 8 million new jobs, the economy under his economic plan, a plan passed by the Democratic Con- gress, has produced 10 million new jobs. The President has done a superb job of running this Nation’s economy. Not only has the job creation record of this administration been outstand- ing, the economic growth we now see has also been much better than pre- vious administrations. Mr. President, if we look at private sector economic growth in the Clinton years, we see it is averaging over 3.1 percent. In fact, with the news this morning, we now know it has averaged 3.2 percent. That is in comparison to private sector eco- nomic growth in the Bush years of 1.3 percent\u2014a dramatic improvement in economic growth in the private sector in this country under the Clinton eco- nomic plan. It does not stop there. There is more good news. The misery index\u2014that is something we have talked a lot about in the past. That is a calculation of the unemployment rate and the rate of in- flation. The misery index is at its low- est level since 1968. What a remarkable economic record this administration has to take to the American people. It does not stop there. There is more good news. The unemployment rate in December of 1992 was 7.3 percent. In June 1996, the unemployment rate has declined to 5.3 percent. The unemploy- ment rate has been below 6 percent for 22 consecutive months. This chart shows what we have seen in terms of the reduction in unemployed people in America from a rate of 7.3 percent when President Clinton came into of- fice to 5.3 percent today\u2014about a 30- percent reduction in unemployment. Mr. President, it is clear, the eco- nomic game plan that President Clin- ton put before this Congress, that was passed without any help from Repub- lican Members, has led to a superb re- sult, a dramatic reduction in the defi- cit, a dramatic increase in jobs, a dra- matic increase in economic growth, a significant reduction in the misery index, the lowest level since 1968. Mr. President, the good news does not stop there, either. If we look at real business fixed investment, again we see the record from 1985 to 1996, and we see the real business fixed invest- ment, as a result of the Clinton eco- nomic plan, has taken off like a scald- ed cat, the largest increase in business fixed investment in over 30 years. This is truly a remarkable economic record. I have to remind our friends on the other side of the aisle, when we put this plan into place, they predicted it would be nothing but bad news. They said it would crater the economy, it would increase the deficit. They said it would reduce all of the things that we want to see increase, and increase all the things we want to see reduced. They were wrong. They were dead wrong. This economic plan, a plan that was passed without a single Republican vote, has produced remarkable re- sults\u2014by some measures, the strongest economy in 30 years. This is a record of economic success that should not be in- terrupted. Mr. President, I think the record is clear. The Clinton administration has CONGRESSIONAL RECORD \u2014 SENATE S9343August 1, 1996 delivered on its economic promises. In fact, it has exceeded its promises on economic performance. That is one sig- nificant reason this President ought to be continued in office. I thank the Chair. I yield the floor. Mr. EXON. Mr. President, how much time does the Senator have left on the 1 hour? The PRESIDING OFFICER. Twenty- five minutes. Mr. DODD. Mr. President, I need about 10 minutes, but we may end up in a discussion, so we may take a couple of Members’ time and combine it, and we may not need quite as much. Mr. EXON. Since I have several other requests, I yield 7 minutes to the Sen- ator from Connecticut. I have to do that or we will run right out of time. Mr. DODD. I understand. Maybe be- cause we used more time on the welfare debate and we did not start this discus- sion until about 12:20, we might be able to get an extension. Mr. EXON. I suggested that. Mr. DODD. Let me commend my col- league from North Dakota for his com- ments and observations\u2014I see both my colleagues from North Dakota here\u2014in talking about this news this morning. This is great news. Obviously, when you have the gross domestic product growing at an annual rate of 4.2 per- cent, the strongest growth rate in 2 years, that is very, very good news for jobs, security, and opportunity for vir- tually every person in this country. Certainly all of us, regardless of party, I presume, would be celebrating this magnificent news that portends well for this country as we, in the re- maining years of this decade, get ready to enter the new century. My colleague from North Dakota points out what the situation was like 31\u20442 years ago. There are many people here who will count on the American people having a short memory, that they will forget how things were 36 months ago, what we were living under in this country, where we had unem- ployment rates of 7 percent. Those were the identifiable rates. I argue it was much higher than 7 percent in many parts of the country. The job growth rate, 36 months ago or a little more than that, was at its lowest level since the Great Depression. The Fed- eral deficit was hovering around $300 billion a year, $290 to $300 billion. The dollar was at the highest level in American history. That was the situa- tion a little more than 36 months ago. Where are we today? A gross domes- tic product growth rate of 4.2 percent, unemployment a little above 5 percent across the country, 10 million new jobs created in a little over 36 months, the deficit at its lowest level in almost a generation. Back in 1992, the President said, ”I will cut it in half in 4 years.” Even the President was wrong. It has been a 60 percent reduction in the defi- cit rate in the last little more than 36 months. Private sector job growth has soared, soared in the last number of months. I point out, if I can, the deficit reduc- tion numbers on this chart, which highlight a major issue. We have made a herculean effort over the last several years to reduce this deficit. As my colleague from North Dakota points out, we did not have a single vote on the other side in the deficit re- duction plan, not a single vote in ei- ther body\u2014the House of Representa- tives or the Senate\u2014in support of our deficit reduction plan in 1993. Yet we now see what has happened. In 1980, the annual deficit was at $74 billion; be- tween 1981 and 1992, the annual deficit rate climbed to almost $300 billion. In around 36 months we have taken that $290 billion figure and reduced it to $117 billion. In fact, this very number of $117 billion would be zero were it not for just the deficit that we accumu- lated between 1981 and 1992. And let me say this. We would be in balance today, were it not for the debt run up by the previous two Presidents. Just the interest payments on the debt accumulated in those 12 years has cre- ated this $117 billion figure. For the first time in many years, we now find ourselves where receipts of the Federal Government exceed our expenditures but for interest on the debt that was accumulated in those years. It is a tre- mendous accomplishment, a tremen- dous accomplishment. It is really the linchpin, I think, in what has occurred in other economic areas, how the mar- kets are reacting, how Main Street is reacting, the fact we have been able to create the kind of growth we have seen. We have had 4 years of deficit reduc- tion. You have to go back to 1840, more than a century ago, a century and a half ago, when we had four consecutive years of deficit reduction. Miracu- lously, it has happened because a lot of people cast some courageous votes. In fact, the opposition, the Repub- licans, tried to shut down the Govern- ment twice over deficit reduction. I raise all of that because, next week, I am told, we are going to have a pro- posal made by the other side\u2014presum- ably by the presumptive candidate for the Republican nomination\u2014that will call for tax cuts of roughly $600 billion. I suspect most of them are going to benefit the more affluent in our coun- try and are going to blow a $600 billion hole in the progress we’ve made on def- icit reduction. What was all the talk about in this previous Congress if not deficit reduc- tion? With 10 weeks to go before elec- tion day, all of a sudden we get this suggestion of a $600 billion tax cut coming along, and many people are warning the candidate and others that you would create real havoc in the economy if that were adopted. It is cer- tainly going to make it almost impos- sible for us to reach the goals that I be- lieved we were all committed to achieving here over the next several years. Of course, where is the savings going to come from in this $600 billion tax cut that will be proposed? It is almost as if we are treating the public like they are fools. Does any- body believe, with 10 or 11 weeks to go before election day, with a $600 billion tax proposal, that it isn’t totally moti- vated by trying to bring some life to a moribund campaign and do so by jeop- ardizing the economic gains we have made? I think most people are going to see through that. What is tragic about it is that we have Candidate Bob Dole contrasted with Senator and Chairman Bob Dole. If Bob Dole were sitting in the U.S. Senate or were chairman of the Finance Committee, he would ridi- cule the idea. He would rightly see it as unraveling agreements that we have al- ready achieved to try to balance the budget in 7 years. In fact, all the pro- posals on constitutional amendments to achieve a balanced budget would ap- pear to be nothing more than a lot of rhetoric. We are being told how these tax breaks may be paid for. One report says that, of the $600 billion in tax cuts, $240 billion would be coming from offsets in increased tax revenues resulting from increased growth\u2014$240 billion is com- ing from increased revenues from in- creased growth. Boy, that is a rosy sce- nario, if I ever heard one. The same people who proposed this insisted a year or so ago that we use conservative economic growth numbers when we start trying to make up for this. Where does the other $360 billion come from if you are going to pay for this tax cut you are talking about? Well, stop me if this sounds familiar to you, but if last year is any indication, it is going to come from Medicaid, education, Medi- care, and the environment. That is what they tried last time around. One analysis has a $313 billion cut coming in the Medicare program. The PRESIDING OFFICER. The time of the Senator has expired. Mr. DODD. I ask unanimous consent for an additional 3 minutes. Mr. DORGAN. I yield the Senator 3 additional minutes. Mr. DODD. Mr. President, I will ask my colleague to engage on this point. I am very concerned. I hope that cooler heads will prevail in this campaign sea- son and that suggestions like this will be put in the trash bin where they be- long, at a time when we are moving forward and achieving deficit reduction numbers, the economy is growing, the gross domestic product numbers and the unemployment levels are moving in the right direction. This is a time to come together. No- body expects perfection here. Our Re- publican friends made a huge mistake in their predictions about the 1993 budget reduction efforts. All of us have made mistakes. So why not admit you made a mistake? It was a bad vote. You should have supported it, and you did not. Collectively, we have come to- gether and the country is moving in the right direction. I hope we won’t destroy what has been a very significant effort over the last number of months to move the country in the proper direction by re- ducing this deficit, resulting, I believe, CONGRESSIONAL RECORD \u2014 SENATES9344 August 1, 1996 in the kind of gross domestic product growth numbers that we are seeing here today, the unemployment num- bers that are moving us in the right di- rection. This is not a time to try to pander to the American public with the suggestion of massive tax cuts for the affluent, paid for by rosy economic fig- ures that are unrealistic and cuts in the very programs we have fought to defend. Mr. President, I would love to be proven wrong. I would be delighted if next week came and went and all the talk about these wild schemes\u2014wild schemes\u2014to try to breathe life into a campaign by jeopardizing the Amer- ican economy and the direction we are going, was shelved and we got back to a more rational, thoughtful approach on how to continue the kind of eco- nomic growth numbers we have seen here this morning and offer some real promise to the American people. With that, Mr. President, I will yield whatever time remains to my col- leagues from Nebraska or North Da- kota. Mr. EXON. How much time does the Senator from Nebraska have remain- ing? The PRESIDING OFFICER. The Sen- ator has 14 minutes. Mr. EXON. Mr. President, I yield 5 minutes to my friend from North Da- kota, followed by 5 minutes for this Senator from Nebraska and 4 minutes to the Senator from Massachusetts, in that order. The PRESIDING OFFICER. The Sen- ator from North Dakota is recognized. Mr. DORGAN. Does the Senator from Nebraska intend to try to get addi- tional time? We had talked about an hour, and we were not able to start be- cause they were talking about welfare reform. Mr. EXON. Mr. President, I do not see the Republican leader on the floor at this time. I will try to get that time. If people want more time, I will be glad to yield. We are trying to be very fair with the time. Everybody would like to have lots of time, but I only have 14 minutes remaining as of now. I am con- serving that as best I can. Mr. DORGAN. Mr. President, we had talked about trying to have a block of time to talk about the economy. The reason we wanted to do that is because this is very important. This is the question that most people in this coun- try ask themselves, and families re- flect on this: Is this country moving in the right direction or the wrong direc- tion? Are we on the right track, or are we on the wrong road? Those are the questions people ask. We are not here suggesting that ev- erything is wonderful in America. We have a country that faces a lot of chal- lenges. There is no question about that. But we have a country that has gone through an immediate past period causing significant problems, requiring significant remedies, but a country that has begun to address those things head-on. I want to take us back just a bit to a new President that came to town, who said, ”I have a new idea. I have consulted with a man named Laffer, an economist, who has a new graph and curve, the Laffer curve.” The Laffer curve says that, if you give folks at the upper end of the income brackets big tax cuts, you actually collect more money because it will filter down and everybody at the bottom will get damp. That is trickle-down economics. So there were big, big tax cuts given, espe- cially to the people at the top. The re- sult was that we ran into massive defi- cits, unparalleled in the history of this country\u2014massive budget deficits. The rich got richer, the people at the top, during that period. The top 1 percent of Americans had a 66-percent increase in their financial wealth just from 1983 to 1989. The bottom 80 percent lost 3 per- cent of their wealth. So some people did very well\u2014just the top 1 percent. But almost all the rest of the people did not do well at all under this cir- cumstance. Well, we had a new President come to town again in 1992. He started in Janu- ary 1993. He recognized immediately that we faced an enormously serious problem. This country was not going to grow and was not going to realize its potential unless we dealt head-on with this deficit problem. We had a vote here in the U.S. Senate on a deficit re- duction plan. I voted for it. I told the people I represented why I voted for it, why I thought it was important for this country. I have never apologized for voting for it. I felt it was the right thing to do. Was it a good political thing to do? No, not at all. There were some people who sat in these chairs who lost their seats in the Senate over that vote. They had the courage to stand up and say, ”Count me in. I want to address this deficit. I want to suggest that we take the medi- cine necessary to do this.” So the deficit began to come down. We did not get one vote on the other side of the aisle. We got a lot of claims on the other side of the aisle. I see the Senator from Texas is here to visit with us today. I recall his claim. His claim was it is going to lead directly to a recession. But it was not just him. Many others did the same thing. ”The sky is going to fall in. There is going to be a big recession.” What happened was the deficit fell. This is what happened to the deficit under President Reagan, under Presi- dent Bush, and why he did not win re- election, by the way. That line was still going up; and the deficit under President Clinton. He understood that, unless we tackled this problem, this country could not realize its economic potential. Are we done tackling this problem? No. But this has been a success because we had more jobs and more economic growth. What was the news this morning? The news was in the last quarter this country grew at 4.2 percent of eco- nomic growth, a very robust rate. The fact is this economy is still growing. Why? Because we are doing the right things. We are not perfect, but we are at least doing the right things. I want to mention one additional point. It is important. We have another plan by a guy who wants to be Presi- dent next January. He has a new plan\u2014 across-the-board massive tax cuts, which, of course, will benefit the high- income people and cause a hemorrhag- ing of a new Federal deficit. That is the new plan. At least it has a new title. The PRESIDING OFFICER (Mr. CAMPBELL). The Senator’s time has ex- pired. Mr. DORGAN. May I have 1 more minute? Mr. EXON. Mr. President, how much time does the Senator have remaining? The PRESIDING OFFICER. The Sen- ator has remaining the time between now and 1 o’clock. Mr. EXON. I yield 1 more minute to the Senator from North Dakota. The PRESIDING OFFICER. The Sen- ator from North Dakota. Mr. DORGAN. I appreciate the Sen- ator’s generosity. The plan for across-the-board tax re- ductions that they would implement next January, which would increase the deficit, is augmented by what they are doing with the midnight oil right now. For the last couple of nights they were in the back room and are going to bring a bill to the floor of the Senate in a matter of hours, I assume, that has this in it: opening another tax loop- hole, several hundred millions of dol- lars. Amway has been asking for it. So they get it. Who is going to get the brandnew tax loophole of $300 million? That is the so- lution coming from the other side of the aisle. How do you fix what is wrong in America? Increase the deficits by cutting taxes for upper income folks and do secret deals in the back room to bring to the floor of the Senate some- thing that exports American jobs and gives new tax breaks to big corpora- tions that do not need it. I yield the remainder of my time. f PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILI- ATION ACT OF 1996\u2014CONFERENCE REPORT. The Senate continued with the con- sideration of the conference report. Mr. EXON. Mr. President, how much time do I have remaining? The PRESIDING OFFICER. The Sen- ator has 3 minutes 44 seconds. Mr. EXON. Mr. President, the Sen- ator from Nebraska will save his re- marks that have to be said to the U.S. Senate for a later time. I ask unanimous consent that the re- mainder of my time of 31\u20442 minutes be yielded to the Senator from Massachu- setts and that, at the time of the 1 o’clock time period, an additional 15 minutes off the bill to discuss the con- ference report before us be yielded to the Senator from Massachusetts. CONGRESSIONAL RECORD \u2014 SENATE S9345August 1, 1996 The PRESIDING OFFICER. Is there objection? Mr. GRAMM. Reserving the right to object, could I hear it again? Mr. EXON. I am simply saying that the Senator has 31\u20442 minutes remaining. I want to yield that time to the Sen- ator from Massachusetts. Following that, the Senator from Massachusetts would be recognized for an additional 15 minutes off the bill for the remarks that he has to make. Mr. GRAMM. Mr. President, I was scheduled by our prior agreement to begin speaking at 1, and the time was to revert over to our side. I am here, having rearranged my schedule on the basis of this. So, while I always like to accommo- date the Senator, we had an agree- ment. Our colleagues have had an op- portunity now for an extended period of time to present their views to the world, which were very interesting and very enlightening. But our turn comes at 1 o’clock. So I feel constrained to object. The PRESIDING OFFICER. Objec- tion is heard. Mr. EXON. I have only asked that he be recognized at 1 o’clock. We did not know of the agreement. The PRESIDING OFFICER. The Chair will clarify. The time for the Democratic side is between 12 and 1. At 1 o’clock there is to be 15 minutes of time available for either side, presum- ably to be shared. Mr. GRAMM. To come back to our side. Mr. EXON. Mr. President, I yield the time remaining between now and 1 o’clock plus 15 minutes off the bill to the Senator from Massachusetts. Mr. KENNEDY addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Massachusetts. Mr. KENNEDY. Mr. President, it is my understanding, I say to the Senator from Texas, that we had the time going up to 1:15. That is what I was notified. That is why I am over here, and I ar- ranged my schedule accordingly. The honorable and widely shared goal of welfare reform is to end welfare as a way of life and make it a way station to work. If we accept that indisputable propo- sition, then the two most important principles of welfare reform should be to move able-bodied adults on welfare into the work force, while protecting their children from hunger and want. This legislation tragically fails on both counts. It fails to provide what is necessary to move people from welfare to work. But it will push over 1 million more children into poverty. People on welfare will get a lecture, but they won’t get a job, and their children will suffer. To call this bill welfare reform is nonsense. It’s welfare retreat. Reform means improvement\u2014solving the prob- lem. This bill will bring damage to countless families across America. To label this legislation reform is no more accurate than to call the demolition of a house remodeling. It is also wrong to describe this bill as affecting only families on welfare. Its provisions will harm working fami- lies as well. More than a fifth of all American families with children\u20148.2 million households\u2014will see a substan- tial decline in their family income if this bill becomes law; 1.1 million chil- dren will be pushed below the poverty line by this bill. The majority of these children live in families headed by a working parent. What’s in a label? For families, this is an abandon-hope-bill, a back-to-pov- erty-bill, a you-don’t-count-bill, a deny-the-American-dream-bill. The average annual income loss will be significant\u2014$1,300 per family. This bill is supposed to encourage work. It makes no sense to reduce support for low-income working families. Cruelly, and intentionally, the authors of this legislation have chosen to do just that. Their real goal is not welfare reform. They are Robin Hoods in reverse\u2014rob- bing the poor to pay for undeserved tax breaks for the rich. If this legislation honestly intended to move people from welfare to work, we would focus on steps to make them employable. Of the parents whose fami- lies will be denied assistance after the time limits, only a third have a high school degree. Yet three-quarters of the available jobs in today’s economy require a high school diploma. Sixty percent of those jobs require at least some job experience. Yet this legisla- tion does little about helping recipi- ents obtain the education and job training they need in order to get real jobs in the real world. In this Repub- lican Congress, even the existing mea- ger level of Federal support for such programs is in jeopardy. According to the Congressional Budg- et Office, Federal funding in the com- ing years is approximately $10 billion less than the amount needed to meet the work requirements in the bill. Without adequate job training, a con- gressional command that people on welfare go to work is no more enforce- able than the mythical king’s com- mand to the tide not to roll in to the shore. Proponents of this bill cannot credibly claim that it is about fiscal responsibility. It is about misguided priorities, for which America will pay an enormous cost in years to come. Some $28 billion of the savings from this legislation will come from reduc- tions in food stamps. Approximately 70 percent of the food stamps being elimi- nated go to families with children. As a result, 14 million children will have their food stamp benefits reduced or cut off. Whether Republicans admit it or not, passage of this legislation clear- ly demonstrates that this Senate does not consider nutrition and health a pri- ority for children. The Republican ma- jority obviously considers billion dol- lar tax breaks for the wealthy to be a much higher priority. All we have to do is look at the most recent Carnegie Commission study on children and nutrition. Children that do not receive adequate nutrition from 18 months to 3 years fail to develop the kind of brain development that is es- sential and necessary for academic achievement and for social adjustment. Numerous studies have shown that children who do not receive balanced meals in the early stages of their lives are much less likely to succeed in high school, much more likely to drop out, much more likely to be involved in crime, and much more likely to be on welfare in future years. Yet, this bill includes harsh cuts in nutrition pro- grams. Almost half of the $60 billion in cuts are in nutrition programs. Who are the beneficiaries of those nutrition pro- grams? By and large they are children. The children are the ones who are pay- ing the price of this so-called welfare reform bill so that there can be tax benefits and tax breaks for the wealthi- est individuals in this country. In all, Republicans are proposing to take the $60 billion over the next 6 years from programs supporting poor children and families. Their votes be- tray their true priorities. As President Kennedy warned in his Inaugural Ad- dress, ”If a free society cannot help the many who are poor, it cannot save the few who are rich.” Our Republican friends claim that they are not abandoning poor families. They say they are giving States more flexibility to provide for their needs. But that flexibility is a mirage. Sub- stantial restrictions are being placed on State discretion. This bill will actu- ally prevent States from using Federal funds to assist large numbers of chil- dren who now have support. No funds contained in the welfare block grant can be used to assist chil- dren whose families reached the 5-year time limit. This harsh bill even pro- hibits Federal welfare funds from being used to provide vouchers for the most basic needs of these children. This will be no small problem for the States. Close to 4 million children will be in this category when the bill is fully im- plemented. In addition, in another shockingly cruel breach of trust, Federal funds can no longer be used to provide for chil- dren who are legal immigrants, who lawfully reside within our commu- nities. Their need for food, clothing, shelter and medical care is being dumped entirely on the States. All the studies that have been done with regard to legal immigrant chil- dren show that they use the AFDC pro- gram less than Native Americans and they pay their fair share of Federal, State, and local taxes. We are not talking about illegal im- migrants. For the first time in history, Congress will ban legal immigrants from most assistance programs. This Republican bill permanently bans legal immigrants from SSI and food stamps. It bans them for 5 years from Medicaid, AFDC, and other pro- grams. It gives States the option of CONGRESSIONAL RECORD \u2014 SENATES9346 August 1, 1996 going even further and permanently banning them from Medicaid, AFDC, and the social service block grants. While we are debating this bill, the Olympics are going on in Atlanta. Forty-seven members of the American Olympic team are immigrants\u201447 of them are representing and competing for the United States of America. But under this legislation, these 47 Ameri- cans would have been denied nutrition programs, help, and assistance if they had needed them as children. Hundreds of thousands of legal immi- grant children will be robbed of a safe- ty net by this bill. Hopefully, they have sponsors who can care for them when they need help because otherwise this bill leaves them out in the cold. But half of all legal immigrants do not have sponsors. What happens to those children when their families fall on hard times? In our recent immigration bill, we permit 140,000 individuals to come into the United States on special skills pro- grams. They are not sponsored. They do not have someone to deem to. Now, what happens to them? What happens to them if they fall on hard times? They do not have a sponsor. They and their children are effectively cut off from any kind of help and as- sistance\u2014even in an emergency. These are individuals and families who come here legally. By and large, they are family members\u2014sons, daugh- ters, and parents\u2014of American citi- zens. These are people who play our the rules, pay their taxes, and serve in the Armed Forces. They can be drafted. They can volunteer. We have hundreds of them in Bosnia today. But they would not, as children, have been eligi- ble for nutrition programs or even tem- porary benefits if their parents fell on hard times. They are future citizens trying to make it in this country. When they grow up, they become American citi- zens. Yet this bill repays them by ban- ning them from assistance if they need any help. Perhaps the cruelest provision in this bill is the ban on assistance under Med- icaid for legal immigrants giving birth. Their children being born are American citizens. This outrageous provision means that these American citizen ba- bies will not get the care, attention, and healthy start in life that other American children receive. These ba- bies are doomed to unsupervised home deliveries, substandard care, and a life- time of potential handicaps if they fail to get adequate medical care during birth. If Congress will not strike that shameful provision down, perhaps the Supreme Court will. The prohibition on assistance to older children also makes no sense. Many children will be affected and harmed, but many others will not. It depends entirely on where they are born. Children born in the United States are U.S. citizens and will be eli- gible for assistance, even if their par- ents are legal immigrants. But children born overseas will be caught by the ban. This is a wonderful anomaly. So the children in the same family will be treated differently, depending on where they were born. The older brother will be able to get assistance and the younger sister will not. That is the wonderful logic of this so-called wel- fare reform. This result is fundamen- tally unfair. These children are future citizens. Like all other children in America, they need and deserve good health and nutrition. If the Federal Government abandons them, communities will suf- fer. When immigrant children get sick, they infect other children. I assume that our good friends on the Ways and Means and Finance Committees under- stand what happens in every school- room in America. When children get sick, they still communicate. Anybody who has children understands that when a bug gets into second, third, or fourth grade kids\u2014most of his or her classmates will also get sick. By ban- ning immigrant children from Medic- aid we are also banning them from school-based care, which is part of Medicaid in most States. These children will not be able to go down to the nurse’s office, get some at- tention, and perhaps be sent home to avoid serious illness and to avoid in- fecting other children in the class. They will not even be able to get in the door. If they try to see the nurse, the nurse cannot treat them because they are immigrants. They have no private insurance, and they are banned from Medicaid. If the illness gets worse, their parents may take them to the local emergency room\u2014a very expen- sive alternative and not likely to be pursued unless the illness seems se- vere\u2014which will add to the costs of our health care system. This is welfare re- form under this bill. The Republican bill also bans legal immigrant children from SSI, which provides assistance to the blind and disabled. Nine thousand legal immi- grant children suffer from those condi- tions. They have some of the most complex and life-threatening needs of all. As a practical matter, such cases often involve tragic accidents, where expensive, long-term care is needed to deal with their debilitating conditions. If SSI is not available, children lit- erally will die. Nutrition is vital to the development of a child. Immigrant children are no exception. Without access to food stamps, some immigrant children will suffer a lifetime of anemia, stunted growth, and even permanent brain damage. This bill is not welfare reform for legal immigrants. It is cruelty writ- ten large into law. It will push families deeper into poverty with no chance of escape, and the victims will be inno- cent children. Shame on the Repub- lican majority in Congress for washing its hands of their plight. This legislation also contains finan- cial penalties for States unable to move children on welfare into employ- ment as quickly as the bill mandates. Yet the bill refuses to provide the nec- essary level of job training support and child care assistance. It is better in child care assistance than previous bills, but still short of what is nec- essary to meet those employment tar- gets. In fact, many of the strongest advo- cates of this legislation want to reduce Federal funding for job training. The Congressional Budget Office estimates that only 10 to 15 of the 50 States will be able to meet the work requirements in the legislation. So, in reality, we are setting up the States to fail, rather than giving them the tools they need to succeed. Another aspect of this legislation which will seriously hurt the States. The funding which each State will re- ceive is not adjusted for population growth or for the impact of recessions. If the number of families legitimately seeking assistance in a State expands, the State will receive no proportional increase in funds. The small contin- gency fund does not even begin to meet the potential need. The State alone will be responsible for meeting the need, often at a time when that State is least able to respond. The inevitable result of this legisla- tion on the States will not be sensible new flexibility, but enormous new fi- nancial pressures. This bill can only encourage a race to the bottom, in which States compete to have the harshest climate for low income fami- lies. Inevitably, States bow to such pressures. They cannot control the na- tional economy. Congress is supposed to represent the national interest. We should not be creating an irresponsible system that punishes States which try to meet the needs of their citizens while rewarding those which do not. Americans want genuine welfare re- form. But that does not mean they will support this legislation once they look behind the Republican bumper sticker slogan. Genuine welfare reform means moving welfare recipients into jobs, while assuring that the basic needs of their children are met during the tran- sition. This legislation will not achieve either of these goals. It will leave many welfare recipients unemployable in the real world. It will leave their children ill-fed, ill-clothed, and ill- housed. This Republican Congress has nothing to be proud of for forcing this bill into law. By the votes we cast today, we are not improving the quality of life in America. The gap between rich and poor will be wider, the bonds which tie families together will be weaker, and the dreams of millions of children will be farther from reach. The best that can be said about this bad bill is that the day it is signed into law must be the day we roll up our sleeves and start working together to clean up the mess it will bear. I intend to do all I can to persuade Congress to act this year to eliminate at least some CONGRESSIONAL RECORD \u2014 SENATE S9347August 1, 1996 of the most damaging and least respon- sible provisions in this bill. I yield the floor. Mr. DOMENICI. Mr. President, I sug- gest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. DOMENICI. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Under a previous order, the hour be- tween 1:15 and 2:15 will be under the control of the majority. The Senator from New Mexico [Mr. DOMENICI] is rec- ognized. f THE ECONOMY Mr. DOMENICI. Mr. President, I want to say to Senators who want to speak on the welfare bill, clearly we do not have to use our whole hour in re- buttal of the Democrats. If there are a few Senators who want to come down and engage in that, fine. If not, we will move to Senators like Senator SMITH, who wants to speak on the subject matter before us. Mr. President, to me it is very inter- esting that, on a bill dealing with wel- fare and the most fundamental reform of social policy in 60 years, that Demo- crats want to change the subject. They want to talk about the economy, so let us talk about the economy for awhile. We are all heartened today to hear that the economy grew by 4.2 percent in the second quarter. The administra- tion has certainly taken an oppor- tunity to champion today’s growth. Let me say, however, that before we get too exhilarated about today’s an- nouncement, I think we should look at some of the less rosy economic facts that the administration is not talking about. These are the major reasons why Americans feel insecure about their future. To start with, we have had the weak- est recovery of this century during the early 1990’s, with growth averaging only 2.5 percent. In contrast, the 1980’s recovery recorded average yearly growth of 4.1 percent over the same time period. I guarantee, that while this appears to be a small difference, it is enormous. It is enormous. The rea- son why growth has been compara- tively weak is that President Clinton has had the second weakest productiv- ity growth of any President in the last 50 years, second only to President Carter. Let me repeat, the second-low- est productivity growth in 50 years. What that means is that, clearly, those who worry about inflation and are fearful of too much growth find some reason to be worried when they find that productivity increases have been so meager during this administra- tion. Without productivity increases, a increase in noninflationary, trend growth is virtually impossible in to- day’s demographic environment. In keeping with weak productivity growth, there has been virtually no gain in real wages, virtually no gain in real wages. Real average hourly earn- ings in 1992 were $7.42. Today, they are $7.43, a very big gain of 1 cent. No won- der Americans are worried. No wonder we are finding anxiety about the fu- ture. No wonder they are saying that we do not think we are on the right path, because they see taxes going up and average real wages being stagnant. Clearly, the gain in real average hourly earnings, from 1992’s $7.42 to today’s $7.43, is nothing. With this backdrop, you can see how today’s impressive headline growth doesn’t mean anything to ordinary citizens, since the benefits of growth are not filtering back to them. They just continue to work hard and wonder why they are not getting ahead. Wage stagnancy can be seen in an- other, equally troubling way as well. Family income is stagnating. Despite the ongoing economic recovery, aver- age annual growth in real median fam- ily income has been only 0.2 percent under President Clinton. Under Ronald Reagan, the growth in real family in- come was four times as fast. Low productivity, stagnant real wages, and lackluster family income growth strike a louder chord with the American people than does today’s an- nouncement. They are wondering what is happening to their economy as it ap- plies to their paycheck and their fami- lies, and they are not impressed with announcements that say things are getting better and that this growth is phenomenal, when they are feeling the reality of what I just described: vir- tually no gain in real wages and stag- nating family incomes. Another point is being missed, and it is very relevant\u2014rising tax burdens. This is one of the main reasons for poor productivity growth, no gain in real wages, stagnating family incomes. In 1992, the ratio of Federal tax revenues to GDP was 18.4 percent; by 1995, this had climbed to 19.3 percent. That means that the portion of GDP going to taxes, went up almost 1 per- cent. Those who think the tax in- creases of the last 3 years are good be- cause of who they impact and who they do not, still have to answer the ques- tions: What happened to productivity growth? What happened to real wages, that is real average hourly wages? What happened to family incomes? By diverting resources from the private sector toward the less efficient public sector, there are fewer funds available for household saving and investment. This leads to lower productivity, lower wages and lower standards of living for the average citizen. Let’s go on to yet another item that ought to temper the enthusiasm about the announcement of a 4.2 percent GDP growth in the last quarter: the lowest personal savings rate in 50 years. As mentioned above, we believe that the Clinton tax hikes have played a large role in this dubious milestone. Every- body believes that for America to in- crease its productivity, to get the wages up, to get the family incomes up that we must increase our savings so that American business, large and small, have resources to grow with. And yet, we have the lowest personal savings rate in 50 years. This is unsurprising when much of what is saved is taxed away and, thus, personal savings are reduced. Let’s look at another one of Presi- dent Clinton’s economic legacies. We now have the worst income inequality in 50 years. So for those who think they solved the problem of income in- equality\u2014the highs and the lows\u2014by raising taxes and saying we are only raising taxes on the higher brackets, they are in for a great surprise. It does not generate more equality between the low earners and the high earners in America. Inequality got worse with the tax increase, the largest in American history, that apparently prides itself in saying it didn’t tax moderate-income people, it only taxed the high brackets. What is the purpose of it? The pur- pose of it, if we have one, is to lower the deficit and make us grow more and perhaps bridge the inequality gap by letting the wage-earner part of this go up, none of which happened. The idea is to use a constructive strategy of boost- ing growth for the lower and middle in- come families and not use a destructive strategy of socking it to the rich. I’ll say it again, the latter strategy just doesn’t fix the grave problem of in- equality. Let’s also look at soaring trade defi- cits\u2014this is something not even men- tioned these days. It goes right along with the bad news that is being kind of overshadowed by one fact: That for one quarter, the gross domestic product went up some 4.2 percent. The Clinton trade deficit is three times as large as under President Bush, despite postwar lows in the dollar ver- sus the German mark and the Japanese yen that should have created smaller trade deficits. Instead, we got larger deficits. However, given meager levels of U.S. saving, this worsening external position should not surprise us. A byproduct of accumulated trade and current deficits is soaring foreign indebtedness. In 1995, foreigners owned $815 billion more of our securities than we owned of theirs. This is a 40-percent increase since 1994. This is not a fear today, but over the long run, we are placing our future in the hands of for- eign banks. It is even more of a worry when we realize that foreign debt serv- ice is a net loss to U.S. incomes and constitutes a steady mortgaging away of our children’s future living stand- ards. Lastly, I want to turn to jobs. The administration has been particularly proud of their job growth figures. How- ever, the breakdown of these jobs is far less encouraging than they suggest. Do you realize that 10 percent of the jobs created under Clinton have been tem- porary jobs. These are not good jobs. CONGRESSIONAL RECORD \u2014 SENATES9348 August 1, 1996 Studies have shown that temporary workers are paid as much as 34 percent below their occupational counterparts. This is a way to get lower wages, not higher. I even more troubled when I see the type of jobs that these temporary positions are displacing. Since 1995, 252,000 well-paying manufacturing jobs have been lost. This is why real aver- age hourly earnings have been so stag- nant under President Clinton. At day’s end, I have a hard time understanding why the administration is so pleased with generating jobs that do not gen- erate rising wages. So those who came to the floor brag- ging about the performance of this economy did not seek to share with the American people the facts about this economy that cause most Americans to say we are not moving in the right di- rection. You can give all the song and dance about what it means to have an increase in the gross domestic product in the second quarter, but if the Amer- ican people are feeling what I have just described\u2014stagnation in real wages; family income extremely stagnant and very, very low; increase in general taxes; lowest personal savings rate in 50 years\u2014than this growth means noth- ing to them. It’s time to be honest with the American people about these un- derlying weaknesses in the economy\u2014 if we won’t admit to them, how can we set out legislation to improve them. I submit that the tax increases im- posed under President Clinton, for all they can talk about the increases in revenues, I submit that that is most re- sponsible for all of these negatives that I have stated here. I have begun to be- lieve that it is imperative that we un- derstand we cannot have increased pro- ductivity, real wage gains, family in- come, average family income going up if we have higher tax rates. We must have lower tax rates if we expect that to occur. We cannot lose sight of things we must be doing. But what I have just been describing seems to me, having been briefed by many economists, to be the absolute crux of why there is such lack of stability and such anxiety among Americans because of stagna- tion in their pocketbooks, in their checkbooks. I will yield the floor to any Senator who wants to speak on this subject. I yield as much time as Senator MACK desires. The PRESIDING OFFICER. The Sen- ator from Florida, [Mr. MACK], is rec- ognized for such time as he desires. Mr. DOMENICI. Mr. President, I say to Senator MACK, we have five or six Senators who want to speak along with us. We have assigned 10 minutes. Is that satisfactory? Mr. MACK. That will be wonderful. Mr. DOMENICI. I yield 10 minutes. The PRESIDING OFFICER. The Sen- ator from Florida is recognized for 10 minutes. Mr. MACK. Thank you, Mr. Presi- dent. I thank the Senator for yielding me this time. I do believe that the issue we are dis- cussing is an important one, even though I must admit many folks, when you start talking about economics and the statistics related to that, have a tendency for their eyes to glaze over. But we are really talking about the en- gine that provides the hope and oppor- tunity for the future. The engine of growth is what will allow for the for- mation of new businesses and the cre- ation of new jobs in America. So the subject is an extremely important one. I appreciate the opportunity to address it. Earlier today, a report came out on the growth rate of the economy. That growth rate for the second quarter of the year was stated at 4.2 percent, which is good growth, and I think we ought to be pleased with what has hap- pened. But what the administration is try- ing to create, or why they are so ex- tremely excited about this growth number, really kind of belies the other things that they have been saying. Let me try to put that in perspective. Earlier this year the President, dur- ing his State of the Union Message to a joint session of the Congress, said that this economy is the strongest economy in three decades. Well, if it is the strongest economy in three dec- ades, then there is no reason to be ex- cited about 4.2 percent growth. We should have been expecting that kind of growth each quarter, quarter after each quarter. But that is simply not the case. In fact, I think the numbers will show that for the four previous quar- ters the economic growth was less than 2 percent. That is nothing to get ex- cited about. In fact, the effect on the American families is significant. I will get back to that point in a few min- utes. I want to try to put into context what has happened to the economy, picking up on the point of 4.2 percent growth. There is a lot of excitement down at the White House about that. But if we look at the rate of growth that the economy has experienced since President Clinton took office, it is 2.4 percent, and that is including this new quarter, 2.4 percent. Keep that fig- ure in mind. I will continue to mention that number. I will first compare it to the growth the economy was experiencing the year before President Clinton became Presi- dent. The growth rate of the economy at that time was 3.7 percent. For the last 31\u20442 years the growth rate in the economy has been 2.4 percent under President Clinton. You might say that is not a fair re- flection to just pick one year and com- pare the growth in the economy to that one year. Well, let us take the 10 pre- ceding years, the 10 years prior to President Clinton taking office. The growth in the economy was 3.2 percent. President Clinton wants us to believe that he has created the strongest econ- omy in three decades. I believe he is now using the words the ”strongest economy in a generation.” I remind you again, the growth under President Clinton is 2.4 percent. Again, somebody might say that that period of time is not a fair reflection of what has happened over a period of time. So I will just again focus in on the last five expansions. If you take the last five periods of growth that the country has experienced, we know that that growth averaged 4.4 percent. Com- pare that again to the growth of the Clinton years of 2.4 percent. To go back even further, since World War II the country’s growth rate has averaged 3.3 percent. The President of the United States during his joint ses- sion speech told the American people that this is the strongest economy in 3 decades. But, Mr. President, I really do not have to worry about those numbers in really trying to get that message out because I have listened to the Amer- ican people. I have listened to the peo- ple in my State. I have listened to the families who are struggling, who are working harder today and have less to show for it. We all hear it. We hear it in the sense of the anxiety that they express. We hear it in the fears they have about the future. We hear it in their concern about their children, what their opportunity will be as their children grow up. There is a lot of insecurity in Amer- ica today. I am not sure that a lot of Americans have at this point been able to articulate what that is. But they know that there is something wrong. They know that they have not reaped the benefits of the ”strongest economy in three decades.” All my point there is to say that President Clinton may be saying one thing about the economy, but the people in this country under- stand that this is just not right. He is not accurate. I have one additional chart, which is the first time I have seen this. It is the first time I have used it. It is a chart that has gone back to 1870\u2014not 1970\u2014 1870. We have charted out every single expansionary period in the U.S. econ- omy since 1870. We have added the growth during the Clinton years. That is this last bar. As we look from now all the way back to 1870, this chart indicates that this is not the fastest growing economy, not the strongest economy in three dec- ades. It shows it as being the weakest economy in over 100 years. Let me say that again. This is the weakest econ- omy in over 100 years. So, Mr. President, I am making the point that while we should be pleased that we have experienced some growth in the economy in this last quarter, people should put it in context. There could be some reason for excitement if there was a sense that the number that we heard this morning would continue into the third quarter and into the fourth quarter and into the next year. But that is not what economists are telling us. They are telling us that the second half of this year is in fact going to be weak. It is going to be somewhere CONGRESSIONAL RECORD \u2014 SENATE S9349August 1, 1996 in the 2 to 2.5 percent growth range. That is not coming from just one econ- omist. This is coming from a number of different groups of economists. The so- called blue chip forecasts are in the 2.5 percent range. Wall Street Journal, somewhere in the 2 to 2.5 percent range. CBO forecasted I believe about 2.5 percent growth through the balance of this year. So while there is excitement, I am telling you, Mr. President, this is a short-lived excitement. We are going to hear a lot about it from the Clinton ad- ministration. But I suggest that the people in this country understand from their own experiences that this econ- omy is not providing them with the op- portunities that they hope for them- selves and for their children. I will use one additional graph here. It compares real median household in- come for the period of time from 1983 to 1992. Real median household income, $33,119. The Clinton average, 1993, 1994, $32,153, almost $1,000 less. And, yes, these are figures that have taken infla- tion into consideration. On average $1,000 less. We have also calculated out, for ex- ample, what would have happened if the growth rate in the economy had been, say, similar to the 10 years prior to President Clinton taking office. How would that have affected the average family in America? And do you know what the number is? It is $260 a month in loss of income because we are grow- ing at this rate versus this rate. That is why the American people are concerned about the future. That is why they are worried about their op- portunities. You cannot, Mr. President, layer on American business and Amer- ican families a whole new layer of more Government, higher taxes, more spending, more Washington intrusions, more Washington involvement. You cannot layer all of that additional Washington interference and not ex- pect the economy to slow down. So in conclusion, I say, Mr. Presi- dent, that the economic policies of the Clinton administration are robbing America of its economic potential. I yield the floor. The PRESIDING OFFICER. Who yields time? Mr. DOMENICI. I want to thank Sen- ator MACK, not only for what he said today, but his constant vigilance with regard to what is really important for the average family. I think it is pretty clear, would you not agree, that whatever the good news that is being announced on that side of the aisle, that it is the working people and the average families in America that are asking: If that is true, how come nothing is happening to my pay- check? How come nothing is happening to my family income, which is in stag- nation? Those are the issues causing the anxiety out there. Am I correct in that? Mr. MACK. I say to the Senator, I think you are absolutely correct. If you will give me just a moment to tell one little story. Mr. DOMENICI. Please. Mr. MACK. I think it reflects on the feelings of lots of Americans. I think about the family where both the hus- band and wife work and get up way be- fore dawn, and in our large cities in America, commuting for a long period of time to get to work, working all day, both of them, getting back home after dark. The only time that they have off, the weekends, if things go right. And they see all of their re- sources being taxed by every level of government. Mr. DOMENICI. You got it. Mr. MACK. For programs and serv- ices they believe have failed and do not work. And they are tired of it. And they are not feeling what one would ex- pect would be the results of the fastest growing economy in 3 decades. Mr. DOMENICI. Before the Senator arrived we spoke of stagnant family in- come. That is what is causing the anxi- ety. Real median family income was vir- tually motionless from 1992 to 1994. That is the last year for which we have data available. Under President Clin- ton, it has risen only two-tenths of a percent per year on average. Family in- come is below the level that it was in 1991 under President Bush. During the Reagan tenure, yearly family income growth was four times as fast. That might account for a poll back then say- ing people thought we were on the right track and a poll today saying they think we are on the wrong track. Does that seem to be a correct analy- sis? Mr. MACK. Absolutely. What con- cerns me is that most people do not know or have not been told that during the Reagan years, in which we tried to reduce the size and scope of Govern- ment to reduce the tax burden, provid- ing incentives for business creation and capital incentive, that during those years family incomes went up. They went up consistently. I can remember our former colleague, Senator Wirth, teaming up with now- Vice President GORE, coming to the floor and talking about this tragedy that has occurred in America from roughly 1973 to 1992, just talking about from one point to the next point, how incomes had gone down, but refused to tell people that during the Reagan years, those 7 years of growth, that American families were better off and American workers were better off. Mr. DOMENICI. Senator BENNETT, I believe, was next, and we have reserved 5 minutes. The PRESIDING OFFICER. The Sen- ator from Utah, Senator BENNETT, is recognized for 5 minutes. Mr. BENNETT. Thank you, Mr. President. I do not want to repeat some of the arguments that have been made, but I want to talk about one aspect of the numbers that have been discussed today so glowingly described by the President. They look upon the last quarter and say, ”Isn’t this magnificent? We are growing at over 4 percent a year.” And I agree that a quarter in that atmos- phere is a wonderful thing. What were they saying just two quar- ters ago when they were growing at 0.3 percent a year? One quarter does not control what happens in a year. It can be a seasonable circumstance. It can respond to any one of the series of one- time events. You need to look at things over time. I would like to look at one number over time that we have been hearing about in the Clinton administration crowing about the tremendous eco- nomic performance, and that is taxes. We all know that President Clinton made raising taxes the centerpiece of his economic program. He promised when he ran in 1992 that he would cut taxes. But he said when he got into of- fice: I have suddenly discovered that things are far worse than I ever recog- nized, much worse than I realized. I not only cannot deliver on my promise to cut tax rates, I must give you in- creased tax rates, or the economy is going to be destroyed. So we had in- creased tax rates in the United States. He is now saying: Well, you see, be- cause I had the wisdom and the cour- age to raise tax rates, we are getting all this tremendous revenue, and now I am responsible for the fact the deficit is coming down. I point out a few things. If we go back to the last year in which the Reagan tax structure was in place, which was 1989, taxes from individuals were producing revenue to the Govern- ment at the rate of 8.6 percent of our gross domestic product. Then President Bush broke his tax pledge, and we had the tax increase in rates from Presi- dent Bush. Then Mr. Clinton broke his tax pledge, and we had the increase in rates. What happened to revenue? Rev- enue as a percentage of gross domestic product went down, Mr. President\u2014not up, down\u2014from 8.6, where it had been in 1989, down to 8 percent. It started to come back up in 1995. It was 8.4\u2014still not as good as we had during the Reagan years, but coming back a little. How is it possible, people say to me, that when you raise rates you see reve- nue go down? Stop and think about what happens in the real world all the time. I use the example of Ford Motor. They introduced what they thought was a marvelous new car, the Ford Taurus. They thought there would be so much demand for it they could raise rates. They call them ”prices,” but since we are talking about Government we will use ”rates.” They will raise the rates on the new car. It hit the market- place. The marketplace reacted by not buying Tauruses. What did Ford do? They lowered the rates and increased their sales and thereby increased the revenue that they were getting from the sale of the introduction of that new model. Around here we do not understand that principle. But every businessman in the United States understands it and uses it every day. You raise your CONGRESSIONAL RECORD \u2014 SENATES9350 August 1, 1996 prices, you lower your prices, depend- ing on what the market tells you. Here we just feed the numbers into the com- puter, and whatever the computer tells us, we say that is automatically the way it is going to be. So President Bush, and then Presi- dent Clinton, raised tax rates only to see revenue as a percentage of the economy go down, and even now in this wonderful report the President gives us, the tax revenue has not yet gotten back to the level that it was prior to the time when they told us that in- creased taxes were good for us. Mr. President, I do not believe that increased tax rates are good for us. I think what we should focus on in the Government is tax revenue, how much money we get in from the economy in order to pay our bills and deal with the deficit. I recommend we go back to the revenue levels that we were getting in the days of the Ronald Reagan cir- cumstance when we were getting 8.6 percent of the gross domestic product coming from individual taxpayers, rather than the anemic 8 percent we hit in the Clinton administration. Referring to the charts quoted by my friend from Florida, Senator MACK, the increase has been the lowest of any ex- pansion we have had. Just think, Mr. President, what we would have in terms of revenue for the Government and relief from the budget deficit if we had had a historic rate of growth in this expansion and 8.6 percent of that coming in in the form of revenue. We would be better off than the Clintons are claiming we are today. Do not get carried away with a single order or with rhetoric in an election year. Keep our understanding on the historic pattern that tells us the best way to see growth in our economy is when we have tax rates that allow Americans to earn more and then to keep more so they can do more in their own lives, instead of having Govern- ment make all of the decisions. I yield the floor. Mr. ROTH. Mr. President, I yield my- self 5 minutes. First, let me address the good news. Yes, the good news that we received this morning from the Commerce De- partment is that the GDP for the sec- ond quarter of this year is a strong 4.2 percent. This is up from the anemic growth rate of 0.3 percent in the last quarter 1995, and the first quarter 1996 growth rate of 2 percent. However, Mr. President, let me re- mind my colleagues that the average growth rate since 1990 is a weak 1.9 per- cent. This is, in my opinion, unaccept- able. Let me refer my colleagues to a Busi- ness Week cover story in their July 8, 1996, edition. The cover reads ”Eco- nomic Growth\u2014Don’t be fooled by to- day’s strong statistics. And don’t be suckered by the political rhetoric. America needs faster growth.” While the Business Week feature story goes on to outline their proposals for stronger growth, they highlight critical issues that we must address; namely, increasing savings and invest- ment, balancing the budget, and re- forming the Tax Code. Mr. President, it is the Republicans in Congress who have addressed these issues and will continue to fight for real tax reform in the coming years. Also, a few weeks ago the Office of Management and Budget’s new esti- mates of the deficit for fiscal year 1996 is $117 billion, down from the $211 bil- lion target that Bill Clinton called for in his budget. The deficit is down be- cause a Republican Congress forced the President to control spending. Despite five Presidential vetoes\u2014remember those vetoes\u2014congressional Repub- licans successfully managed to rescind nearly $40 billion in domestic discre- tionary spending from this administra- tion’s top-heavy budget. This represents a good start, but it is only a start. Had Bill Clinton not been so wild with the veto pen\u2014had he not vetoed the balanced budget amend- ment\u2014we’d be even farther down the road. The deficit reduction we’re cele- brating is for the short term. Long-term trends show increasing deficits. They show an upward trend, and Congress\u2014along with the Presi- dent\u2014have a responsibility to reverse deficit growth. Toward this end, our objective must go beyond controlling the spending side of the equation. Excessive taxation is as dangerous to the welfare of Amer- ican families as is excessive spending, perhaps even more so. These dangerous trends must be re- versed. We are moving in the right di- rection to control Federal spending, now we must also push for tax reform to strengthen the economy. Make no mistake about my feelings on this debate. I’m on record as a pro- ponent of meaningful tax cuts, and this will be the direction I intend to move. Holding the line on spending and stimulating optimal economic growth through responsible tax reform are the only ways that we will effectively find the resources and means necessary to meet the challenges and the enjoy the opportunities the future has to offer. Mr. President, I yield 5 minutes to Senator KYL. The PRESIDING OFFICER. The Sen- ator from Arizona. Mr. KYL. Mr. President, I thank the Senator from Delaware for making this time available to talk about this im- portant matter this afternoon. I was reminded of the fabler, Stephen Lea- cock, who wrote the story about the fleas riding on the back of a chariot. They looked back and said, ”My, what a fine cloud of dust we have made.” It seems to me that Bill Clinton’s crow- ing about the latest GDP figures is analogous. If it were not for the Repub- lican Congress, as Senator ROTH just pointed out, ensuring that the budget deficit went down to the extent it did, we would not have these GDP figures that begin to show some promise. As Senator ROTH pointed out, if the Presi- dent had not vetoed the balanced budg- et we sent up, the figures would be even better. So I don’t think this is the time for the President to be crowing. There is another point here, too, Mr. President. We should be very leery of these preliminary statistics. It has been pointed out that the first-quarter GDP figures this year were actually overrated by 21 percent. The correct number was 2.2 percent growth. But they were originally estimated at 2.8 percent. So we need to be a little cau- tious about bragging too much about the figures before they are verified. Third, as has been pointed out before in this debate, the overall economic performance during the Clinton admin- istration is very poor. It is an annual growth rate of 2.3 percent, compared, for example, with 3.7 percent growth the year before the President took of- fice. If you take the entire decade be- fore he took office, it was 3.2 percent. So the President has very little to crow about with respect to the overall per- formance of the economy. There is a final and most important point here, though, that I think needs to be addressed. The Senator from Utah, Senator BENNETT, made the point a moment ago. It has to do with the plight of the average American. We can quote these GDP statistics all we want. But what about the average American family? How does all of this affect them? The fact of the matter is that the average American family is not doing so good. The news there is not good. Households have lost, not gained, $2,100 in take-home pay during the 1990’s. That is a 5-percent decline. If you look at the 1980’s, families in- creased their income by 11 percent, or $4,100. That was the increase in median family income during the 1980’s, mostly the Reagan decade, but the first part of the Bush administration as well. If you look at the Clinton decade, the 1990’s, median household income has actually dropped $2,100. So it is fine for the GDP to be finally showing some strength, but in terms of the average American family, it has not yet trans- lated into a benefit to them. In the 1990’s, by the way, it is the rich who have been gaining, to the ex- tent that there is any gain, and not the middle- and lower-income workers. Consumer debt has hit an all-time high of just over $1 trillion\u2014a 44-percent in- crease during the Clinton years. Personal bankruptcies were at an all- time high last year. Why is this? Be- cause of the Clinton crunch, Mr. Presi- dent, and the historically high tax rates. Americans today are paying the highest percentage of taxes in the peacetime history of the Nation\u201438.2 percent. I think it bears repeating that this is the highest percentage of their income that Americans have paid in taxes during peacetime in this coun- try’s history. That is the Clinton crunch. That is why the GDP statistics, as good as they may be, are not being translated into benefit for the average American CONGRESSIONAL RECORD \u2014 SENATE S9351August 1, 1996 family. The stagnation of wages and in- comes and the economic anxiety people feel is the result of three things\u2014the weak performance of the economy under President Clinton, high taxes, and the burdensome regulation of the Clinton administration. These are what have hindered people’s ability to get ahead. Just a month ago, on July 4, we cele- brated Independence Day in this coun- try. I would note that July 3 is also ”independence day” for the people in this country, because, until July 3, Americans literally had been working for the Government. In other words, if they had applied all of their income to taxes, it would not have been until July 3 that they would have fulfilled all of their tax obligations. From then on, they began working for themselves. So it is really the Clinton crunch that has caused so many problems for American families. Until we can (a) get the economy moving again, and (b) re- duce this burden of regulation and tax- ation on the American people, these generalized statistics are not going to translate into any real benefit for the average American family. Mr. D’AMATO. Mr. President, I yield Senator ABRAHAM 5 minutes. Mr. ABRAHAM. Mr. President, I, too, would like to put into perspective the statements made earlier today on the other side of the aisle relating to the economy. While it may be true that in this one quarter, growth statistics are up; the fact is, for this Presidency, as was clearly documented by the Senator from Florida earlier, growth has been anemic, 2.3 percent, the lowest eco- nomic growth for any recovery in this country, literally, in this century. What is also important, as was point- ed out, is the fact that the median fam- ily income of America’s working fami- lies has stayed stagnant. What has not stayed stagnant is the rate of taxes paid by those average families. That has been going up, as the Senator just indicated, to an all-time record high of over 20 percent. That is why American families are feeling a squeeze. They are working harder, their incomes are not going up, but their Federal taxes are going up. We need to address that, Mr. President. Now, earlier today, we heard from the other side of the aisle several crit- ics of letting Americans keep more of what they earn. Tax cuts were criti- cized. It is not surprising that it came from the other side of the aisle; it is the other side of this aisle that voted in 1993 for the largest tax increase in the history of this country. Let us talk about the kind of tax cuts that can help America’s families, like those we saw in the 1960’s under a Democratic Presidency and in the 1980’s under a Republican Presidency. Those tax cuts stimulated economic growth and created millions of jobs for working Americans. Those tax cuts also stimulated the chance for this economy to grow, and grow at record rates. In the 1980’s we saw economic growth that greatly eclipsed what we are see- ing this year. It is interesting. Not- withstanding the criticism that was leveled earlier at those tax cuts, and notwithstanding the myths that have been created about those tax cuts, the truth is those tax cuts did stimulate far greater revenue to the Federal Gov- ernment from taxpaying Americans, because the economy did grow, and it grew at record levels, especially during the 1980’s. It is interesting also as to who paid those increased taxes. It was people at the highest ends of the income spec- trum who, freed from the high-tax bur- dens, decided to invest and risk their dollars in creating new jobs and eco- nomic growth. That is what we had. We had economic growth. We had more jobs, and we had higher tax revenues to the Federal Government. Interestingly, in the 1990’s when tax rates were raised, upper income groups are paying less and lower and middle- income groups are paying more because the upper income groups have found ways to shelter their income to avoid taxation. In the 1980’s they did not do it. They used their moneys to create jobs and opportunity, and paid more taxes. The other myth that I think needs to be exploded here today is the myth that somehow cutting taxes created the deficits that we had in the 1980’s. The fact is, revenues increased during the 1980’s after the tax cuts by approxi- mately 56 percent. What increased fast- er was Federal spending in virtually every dimension by almost 70 percent. That differential, Mr. President, is the reason we saw deficits increase\u2014defi- cits increase\u2014under a Democratic-con- trolled House of Representatives. So, Mr. President, let us put this in perspective. Under this Presidency, me- dian family income has remained stag- nant while taxes have gone up. Under this Presidency, the growth rate has been the most anemic in any recovery of the Nation’s history over the past century. That is not a track record of great accomplishment no matter how much it is sugar-coated. What we need to do is to give the working families of this country a chance to really keep up with the needs that they have by being allowed to keep more of what they earn, and a chance for the people who create jobs and opportunity to have the incentives to invest, to risk and to create entre- preneurial activity that will give us the jobs we need for the balance of this century and the next. Thank you very much. Mr. D’AMATO. Mr. President, I yield 5 minutes to the Senator from Georgia, Mr. COVERDELL. The PRESIDING OFFICER. The Sen- ator from Georgia has 5 minutes. Mr. COVERDELL. Mr. President, as everyone has said here this morning, we have had a trail of good news from the other side on the economy. I go back to a quote: We have the most solid American economy in a generation. That was President Clinton’s remark on July 6 of 1996. But perhaps of equal standing, perhaps even more, are these quotes. I have heard so much on this side of the aisle about what the real status of the economy is, but I have been taken with the remarks on the economy from the other side of the aisle: We have an anemic rate of economic growth. I repeat: We have an anemic rate of economic growth. Senator BYRON DORGAN on June 20, 1996, in the CONGRESSIONAL RECORD. Or how about this one: When I go home, I hear a lot of anxiety from farmers, small business people and fam- ilies just trying to make a living wage. In fact, wages have stagnated. For many middle class working families, every year it seems harder and harder to make ends meet. Mr. President, that is the statement of Senator TOM DASCHLE, the minority leader, and that statement was made on June 20, 1996. Here is another: Even though some Clinton administration economic advisers have begun to highlight certain positive economic news, it is still true that for many, especially low and mod- erate income working people, the economic recovery is spotty, partial and has failed to increase their real take home pay. That is Senator PAUL WELLSTONE of Minnesota, May 2, 1996. Here is another one: We all know that the American people are anxious about their economic future. They are worried about the security of their jobs and their ability to take care of their fami- lies. That is Senator JOE LIEBERMAN, the colleague of Senator DODD, who is on the floor. That was a statement made on May 17, 1996. DASCHLE, WELLSTONE, LIEBERMAN, DORGAN, all contemporary statements reflecting anxiousness and anxiety among the average working families in America, and they are right. In a re- cent article in the Washington Times, we read that last month 63 percent of the American people said the country was on the wrong track compared with only 24 percent who thought it was on the right track. It says: A lot of people say their income is not keeping them ahead of the cost of living. Only 10 to 15 percent say they are doing bet- ter. So the remarks by DORGAN, DASCHLE, LIEBERMAN, and WELLSTONE are right on the mark. The middle class, the av- erage working family does not feel very good today. Why would that be? I can tell you one reason, Mr. President. It is because their checking account has $2,000 to $3,000 less since President Clinton came to office than they had in that account before he came to office. I might add, that is about a 7 percent reduction in their disposable income. The average Georgia family today has to forfeit over half its wages to one CONGRESSIONAL RECORD \u2014 SENATES9352 August 1, 1996 government or another now, over half. If Thomas Jefferson were here today, he would roll into his grave that it would ever come to the point that over half a family’s income is being consumed by the Federal, State, or local government. And here we are, with this administration having taken another $2,000 to $3,000 out of a family who only has about $25,000 of dispos- able income. That is like a 10 percent reduction in their disposable income in just 36 months. So it does not take a rocket scientist to figure out why there is so much anxiety in the work- ing family. They have less to work with. The median household income has declined from $33,119 to $32,000. Job lock: Anemic economic growth has frozen many workers into jobs they would like to leave for better employ- ment, but they are afraid those jobs will not be there if they try to go someplace else. Or how about credit cards? The delin- quent payments on credit cards, which is a real consumer-connected device across our country, are the worst they have ever been in 50 years. Why? Be- cause we have, by Federal policy, pushed the average family to the wall. And the policies of this administration have created the anemic economy, just as Senator DASCHLE has alluded to. Those policies have reduced the dispos- able income in that family’s checking account and they have made middle America very worried. Mr. GRASSLEY. Mr. President, but for the strength, determination and leadership of the Republicans in the Congress\u2014and I am referring to this and past Congresses\u2014we would not today have a better budget situation or have an article like the one which was printed in the Wall Street Journal this morning. But for the economic wisdom of the Federal Reserve and the steady guiding hand of its chairman, Alan Greenspan, we would not today have the economic footing that we need to be closer to a balanced budget than we have been in recent years. There are two facts of economic life. One is that Republicans have been more steadfast and committed to bal- ancing the budget than has the Presi- dent. I remind my colleagues of the ve- toes he issued on our attempts to bal- ance the budget last year. But for our steadfastness and commitment to this goal, but for Republican leadership, this President would be no where near to working on a balanced budget. The second is a fact that this Senator addressed during Chairman Green- span’s confirmation. The Federal Re- serve has played, and continues to play, a crucial role in stabilizing the economy and maintaining investor confidence in the face of big spending Congresses. This confidence has lead to increased participation by some Ameri- cans in the stock market. This in- creased capital investment is what has led to new jobs, and expansion. The President has raised taxes, though. The Clinton tax increases have taken away from all Americans’ ability to take care of their families. The Clin- ton tax increases have decreased the amount of money which mothers and fathers have to buy necessities for their children. This is wrong. Several of my colleagues have very accurately described the reality of the so-called Clinton economic growth rate. I wish to associate myself with their remarks. The charts which they have shown the Senate depict an econ- omy which is not growing as fast as past economic expansions. In fact one of the charts show that this is the weakest economy in 100 years. Another of the charts clearly shows what has happened to real medium household income. It has decreased. As the Senator from Florida pointed out, real medium household income in the years between 1983 1992 was $33,119. During the Clinton years of 1993 1994 real median household income dropped to $32,153. No wonder American workers are concerned about their future. This drop in income hurts hard working Ameri- cans. Let us continue to reform Govern- ment programs, as we are with this welfare reform legislation. And let us continue our efforts in Congress to bal- ance the budget. This is true economic stimulation. This will lead to real eco- nomic growth. This will put more money into the pockets of Americans. Mr. D’AMATO. Mr. President, I yield 5 minutes to the Senator from Texas. The PRESIDING OFFICER. The Sen- ator from Texas. Mr. GRAMM. Excuse me, I thought I had 10 minutes on welfare. Mr. D’AMATO. We are running a lit- tle behind. We would appreciate it if you could keep it\u2014 Mr. GRAMM. Mr. President, let me just reschedule time to talk about wel- fare. Mr. D’AMATO. If the Senator would like to be yielded 10 minutes, why don’t we start, instead of just talking about it. Mr. GRAMM. All right. The PRESIDING OFFICER. The Sen- ator from Texas. Mr. GRAMM. Mr. President, it is an incredible paradox that while today we celebrate one of the most dramatic leg- islative victories certainly in this Con- gress and in the last decade, we are here responding to our Democratic col- leagues who came over to give us a les- son in perverted economics this morn- ing. They tell us how things are great because they had the courage to raise taxes, and if only we had raised taxes more and spent more, things would even be better. I personally do not be- lieve the American people are going to adopt that brand of economics. I would simply like to say that if we had not raised taxes in 1993, but rather had cut spending and adopted the bal- anced budget amendment to the Con- stitution, the economy would be stronger, and we would not be having an economic recovery, which happens to be one of the weakest economic re- coveries in any postwar period. f PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILI- ATION ACT OF 1996\u2014CONFERENCE REPORT The Senate continued with the con- sideration of the conference report. Mr. GRAMM. Mr. President, let me now talk about welfare. We are going to pass here in the Senate tonight a welfare reform bill that has the prom- ise of dramatically changing a system which has failed in America. Let me begin by talking about the failure. In the past 30 years, we have spent $5.4 trillion on welfare programs; pro- grams where we were trying to help poor people. Nobody in America knows what a trillion dollars is. So let me try to put that number in perspective. If you take the total value of all buildings, all plants and equipment, and all productive tools in American industry and agriculture combined, they are worth about $5 trillion. So if you want to know how much we have invested in the old welfare pro- gram over the past 30 years, it is roughly the equivalent of the value of all buildings, all plants and equipment, and all of the tools of all the workers in the United States of America. No so- ciety in history has ever invested more money trying to help needy people than the United States of America has invested. Yet, what has been the result of all of those good intentions? What has been the result of that investment? The re- sult of that investment, 30 years later, is that we have as many poor people today as we had 30 years ago. They are poorer today, they are more dependent on the Government today, and by any definition of quality of life, fulfillment, or happiness, people are worse off today than they were when we started the current welfare system. When we started the War on Poverty in the mid-1960s, two-parent families were the norm in poor families in America. Today, two-parent families are the exception. Since 1965, the ille- gitimacy rate has tripled. I know that we have colleagues on the other side of the aisle who are going to lament the passage of this new welfare reform bill. But I do not see how anybody with a straight face, or a clear conscience, can defend the status quo in welfare. Our current welfare program has failed. It has driven fa- thers out of the household. It has made mothers dependent. It has taken away people’s dignity. It has bred child abuse and neglect, and filled the streets of our cities with crime. And we are here today to change it. Let me outline what our program does. I think if each of us looks back to a period when our ancestors first came to America, or back to a time when those who have gone before us found themselves poor, we are going to find that there are two things that get indi- viduals and nations out of poverty. CONGRESSIONAL RECORD \u2014 SENATE S9353August 1, 1996 Those two things are work and family. I think it is instructive to note that those are the two things that we have never applied to the current welfare program of the United States of Amer- ica. The bill before us asks people to work. It says that able-bodied men and women will be required to work in order to receive benefits. It sets a time limit so that people cannot make wel- fare a way of life. It seeks to change the incentives within the welfare sys- tem. And I believe the time has come to change those incentives within the welfare system. So what we have done in adopting this bill is make some very simple changes. No. 1, we have said that unless you are disabled, welfare is not a per- manent program. It is a temporary pro- gram. We are going to help you for up to 5 years. We are going to train you. But at the end of 5 years, you are going to have to work. We have also in this program given the States the ability to run their own programs. We believe that the Federal Government does not have all the wis- dom in the world, and that States should run welfare. What we have done is we have taken a federally-run pro- gram, we have taken the funds that we have spent on that program, and we have given that money to the States so that, rather than have one program, each State in the Union can tailor its program to meet its individual needs. I believe that we have put together a positive program. It is a program that asks people to work. It is a program that tries to make Americans inde- pendent. It is a program that for the first time uses work and family to help families in America escape welfare and to escape poverty. I think this is a major achievement. I am very proud of this bill, and I hope we can get a sound vote for it. I know there will be those who say that the President, in committing to sign this bill, is going to end up taking credit for it. I do not believe the Amer- ican people care who gets credit for this bill. We know that had there been no Republican majority in both Houses of Congress, we would never have passed this bill. We know that without a Republican majority in both Houses of Congress, we would not have a man- datory work requirement. We would not be changing welfare as we know it. But it seems to me that the return we are going to get for adopting this bill is worth letting the President take a sub- stantial amount of credit for it. I think this is a major step in the right direction. I am very proud of this bill. I commend it to my colleagues. I yield the floor. Mr. D’AMATO addressed the Chair. The PRESIDING OFFICER. The Sen- ator from New York. Mr. D’AMATO. Mr. President, I yield myself 5 minutes. The PRESIDING OFFICER. The Sen- ator from New York has 5 minutes. Mr. D’AMATO. Mr. President, let me reflect, if I might, not only on the economy but more particularly as to the impact, the adverse impact that the brutal welfare program\u2014brutal, one that entraps people\u2014has had on this country. It has not been beneficial. We have seen welfare spending move from approximately $29 billion in 1980 to something in the area of $128 billion today. Incredible. This is a program that was intended to help people tem- porarily, those people who were dis- abled, those people who, through no fault of their own, found themselves without a job. The lessons of history, confirmed by the evidence immediately before me, show con- clusively that continued dependence upon re- lief induces a spiritual and moral disintegra- tion fundamentally destructive to the na- tional fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is in violation of the traditions of America. Mr. President, those were the words spoken by Franklin Delano Roosevelt when President Roosevelt gave his sec- ond annual message to the people on January 4, 1935. Indeed, how prophetic; 60 years later we see his admonition that where welfare becomes a long- term program, it is fundamentally de- structive to the national fiber, and that it is a narcotic to the human spir- it, and it is a violation of the tradi- tions of America. That is exactly what the welfare pro- grams have done to this country. And let me say, as difficult as is the politi- cal process of campaigns and elections, thank God it is an election year; there is one good thing that has come about, and that is welfare reform. Let me also suggest that without there having been a Republican Con- gress pushing, working, challenging, there is no way that we would have had any opportunity to pass a bill. And to those who are critical of the reform, let me say that no bill is perfect, but to continue business as usual, as if all is well, would have been a kind of con- spiracy, a conspiracy to continue to keep our people on that narcotic. Abso- lutely not acceptable. I have to tell you, if you want to get this economy going, then we have to give educational opportunity a helping hand and move people who have be- come dependent, dependent upon that welfare narcotic, that drug, that drug that President Roosevelt warned us about, off of the welfare rolls into a system of work. To those of my colleagues who have legitimate concerns that there may be some imperfections, we will deal with those. We have the ability to fix them. We have the ability to make the bill a better bill. But to do nothing, to sit back, to languish in the bureaucracy of entrapping people, keeping people from meeting the opportunities that this country has of freedom, real freedom, freedom to participate, freedom to un- dertake a challenge, is morally de- structive and is wrong. This change is long overdue. So if there this is anything good that comes from those elections and the partisanship back and forth and the bickering, I say this welfare reform, in my mind, would never have taken place\u2014never, never have taken place were it not for this election. Mr. President, I am pleased to have worked for this program. Workfare, not welfare, is long overdue. Mr. President, I yield to the Senator from New Hampshire for 5 minutes. The PRESIDING OFFICER. The Sen- ator from New Hampshire. Mr. SMITH. Mr. President, I wonder if the Senator from New York could make that 10 minutes? Mr. D’AMATO. I yield 10 minutes to the Senator from New Hampshire. Mr. SMITH. Mr. President, I rise in very strong support of the welfare re- form bill, H.R. 3734, that is before the Senate at this time. This is historic legislation that the Senate later will be passing by an overwhelming major- ity\u2014a bipartisan majority, I might add. There will be some who will be voting for this today because they are caught up in the wave of welfare re- form and there will be others of us who will be voting for it because we caused the wave. But it really does not matter because the result will be the same. This Republican Congress has gotten it done. After all the years and years of talk, we have finally gotten it done. We sent the President two bills. He vetoed both of them. This is the third at- tempt. He now says he will sign it. The Senator from New York has al- ready quoted President Franklin Roo- sevelt who, in 1935, talked about what welfare, or in those days they called it relief, does to a society and does to a family. It does destroy the human spir- it and it is a violation of the traditions of America, as Franklin Roosevelt cor- rectly said in 1935. Mr. President, in terms of welfare, we did declare a war on poverty, and pov- erty won. That is the problem. This program has not worked. When some- thing does not work, we have to try something new. It does not mean we say we have all the answers, but it does mean we have to try. In 1965, per capita welfare spending was $197. By 1993, per capita welfare spending was $1,255. That is a 600-per- cent increase. For all this increased spending, have we seen a corresponding drop in poverty? No, we have not. In 1965, 17 percent of Americans lived in poverty. In 1993 it is a little over 15 percent, barely a change. So we need to try something new, which is why this Republican Party has fought so hard to make these changes. This is historic because it ends a 60- year status of welfare as a Federal cash entitlement. As a result, once this bill becomes law, no person will be able to choose welfare as a way of life. And no person will be entitled to cash benefits from the Federal Government simply because he or she chooses not to work. It is amazing some of my colleagues can defend this failed system, where people who make $18,000 or $19,000 a year, working hard with their bare CONGRESSIONAL RECORD \u2014 SENATES9354 August 1, 1996 hands to make just enough money to put food on their tables and pay taxes, we should ask those people to continue paying forever for somebody who won’t work. Won’t\u2014not can’t, won’t. Because that is what welfare is all about. Yes, there are some who cannot and they are not going to slip through the net. It is the ones who won’t work. Yet, time after time after time, speaker after speaker after speaker in this body has defended this system, saying people who work hard for a living, trying to put food on the table, trying to pay their mortgages, trying to get their kids through college, working hard, paying their taxes\u2014honest, hard-work- ing Americans\u2014should continue to pay for people who won’t work. We are changing it. That is why this is historic. The President, in announc- ing he was going to sign this bill, kind of apologized for signing it, if you lis- ten to his remarks. But again, the re- sult is the same. He is going to sign it. We will get the results. So I give him credit for signing it. It took him a lit- tle while to get there, but he is there. As the Senator from Texas said a few moments ago, ask yourself this ques- tion. Would we have welfare reform, would we have workfare today, were it not for people in a Republican Congress who pushed and pushed and pushed to get it through this Congress and into the White House where the President can sign it? I think the answer is: Obvi- ously, no, we would not have. By dra- matically cutting the Federal welfare bureaucracy and replacing it with block grants to the States, this bill recognizes the best hope for making welfare programs successful lies in shifting major responsibilities for their administration to a level of govern- ment where innovation and experimen- tation can flourish. This is a giant step toward reinvigorating federalism in our system of Government. I heard the Senator from Massachu- setts, Senator KENNEDY, earlier in the debate, talking as if somehow all these people were going to slip through the safety nets because the Federal Gov- ernment no longer is assuming respon- sibility. We all know that we have 50 Governors out there, frankly, Demo- crats and Republicans\u2014I have con- fidence in those people. I do not think any Governor in any State in the Union is going to put a starving child on the street. I will believe that when I see it. That is not going to happen and we all know it. It is an outrage to define this welfare reform in those kinds of terms. Governor Steve Merrill, the Governor of New Hampshire, using my State as an example, is a compassionate, decent man and a good Governor. He is not going to let that happen. I want him to have this program. I want him to be able to administer this program, this block grant, because in the State of New Hampshire, Governor Merrill and the legislature and the others who work every day in these welfare pro- grams, know who the needy people are. They also know how to help them find work. That is compassion and it is compassion at the local level, where it should be. Because people in Washing- ton, DC, do not know all the answers, in case you have not figured that out yet. No Governor is going to let a child starve and it is an outrage and an in- sult for anybody to even insinuate it rather than say it. Our Governors have been leading the way, from both par- ties. President Clinton, when he was Governor, talked about welfare reform and as a Presidential candidate said he would end welfare as we know it. He knew then as a Governor it was not working, which is why he spoke out about it. This is landmark legislation. This is dramatic. This is the kind of thing that I have been working on for all the years that I have been in Con- gress, and I am so happy just to see it come to fruition. I am going to be pleased and proud to work with Governor Merrill and see that this program is administered properly to help the people in the State who need help. This is a huge accomplishment just to get this bill through this Senate and the House and on the President’s desk. Mr. President, this bill transforms welfare from a handout that fosters de- pendency into a temporary helping hand for those who fall on hard times. It places a 5-year lifetime limit on re- ceiving welfare benefits and requires able-bodied adults to work after 2 years. Surely after 5 years, an able-bodied individual can find a job. Of course, they can find a job, if you want to find a job. But you are not going to want to find a job if somebody is taking care of you all the time. When I was a kid, I had a favorite uncle, Uncle George. He used to sell toys, and I used to look forward to Uncle George coming around with toys. My family at sometime would say, ”If Uncle George keeps coming around, we won’t have to buy toys for little Bobby,” because they expected it. Where is the respect for the people who are paying the bills? It is not the Federal Government paying these bills for people who will not work. It is the taxpayers. It is the hard-working men and women across America who work hard for a living. There is no reason why this is an entitlement for some- body who does not work. There is not a person out in America today who does not have the compas- sion in their heart to help somebody who needs help. We see it every time there is a tragedy. Whether it is the TWA bombing, a flood, earthquake, American people are always stepping forward in a compassionate, helpful way to help their fellow man. It hap- pens every day. It is happening now, and it is not going to stop because we pass a bill that says people who will not work cannot get benefits for the rest of their lives. Mr. President, another very impor- tant point here is that this bill cracks down on the so-called deadbeat dad by requiring that father to pay child sup- port, and it mandates that welfare ap- plicants must assist in establishing the paternity of their children in order to qualify for their benefits. What is wrong with that? That is re- sponsibility, Mr. President. I am also pleased that this bill takes a number of steps toward ending the abuse of the welfare system by those legal immigrants who come to Amer- ica, not to go to work but to go on wel- fare. That is not true with every person who comes to America, it is not true with most people who come to Amer- ica, but it is true with some, and they ought not to be getting welfare bene- fits if they are not an American citizen while Americans who are working hard, trying to pay their bills are pro- viding it. That is simply wrong. It ought to stop, and this bill does stop it. But it also provides when you are spon- sored, the sponsor can assume some re- sponsibility for you. If they want to bring you to America, they can assume some responsibility. That is what built this country\u2014responsibility, not run- ning away from it. Deeming is a good policy. Nonciti- zens, after all, remain, by definition, citizens of other countries. They should not, in all fairness, expect to be supported by Americans who are not their fellow citizens. Finally, Mr. President, H.R. 3734 pro- vides a total of $22 billion to help the States provide child care for parents who are participating in work and job training programs. It also provides ad- ditional grants for States that experi- ence high unemployment or surges in their welfare populations. Mr. President, I commend those among my colleagues in the Senate who have worked long and hard to make this such a strong, landmark welfare reform bill. I also commend a former colleague\u2014Senator Bob Dole\u2014 for working tirelessly since the begin- ning of this historic 104th Congress to deliver landmark welfare reform for the American people. Thank you, Mr. President. I yield the floor. Mr. EXON. Mr. President, I yield 7 minutes to the Senator from Maryland. The PRESIDING OFFICER. The Sen- ator from Maryland. Mr. SARBANES. Mr. President, I thank the distinguished Senator from Nebraska. Mr. President, a number of my col- leagues have talked about their very deep concerns about various aspects of this legislation, including the esti- mates that go as high as 1 million more children being thrown into poverty, the very harsh cut in food stamps that is contained in this legislation, the limi- tation on the time period for receiving food stamps, which will hit workers who have been laid off and their fami- lies very hard in the years to come, the extreme cuts in benefits for disabled children and the treatment of legal\u2014 not illegal, but legal, and I stress CONGRESSIONAL RECORD \u2014 SENATE S9355August 1, 1996 that\u2014legal immigrants coming into the country. These are people who, under our laws, are legitimately in the country, and yet, if they encounter personal disaster financially, we are not going to provide any help to them. All of these factors constitute a valid basis for voting against this bill. I am not going to go back over those issues. They have been discussed at some length by others. There is an- other matter I wish to discuss, another dimension to this legislation which I think is another strong reason to op- pose this legislation which I intend to do. And that dimension is the situation we will confront in times of economic downturn and recession. All of the dis- cussion here is about the limitations and constraints that are being placed upon existing programs in the context of current economic circumstances. Current economic circumstances are a 5.3-percent unemployment rate across the country. But we must con- sider the question of what is going to happen when we have a downturn in the business cycle. People are discuss- ing this legislation almost as though the business cycle has been repealed and is not going to happen again. This legislation provides block grants to the States. The size of those grants does not vary with such factors as unemployment or the poverty rate, and, therefore, in recessions, States will face rising caseloads and cor- responding large gaps in funding for as- sistance programs. The bill has a contingency fund of $2 billion, but it is completely inad- equate\u2014completely inadequate\u2014it fails to address this issue. Let me just give you an example. In our Nation’s most recent recession during the Bush administration in the period from 1989 to 1992, the Federal share of welfare spending increased 36 percent\u2014an addi- tional amount of $7.2 billion over the four years\u2014that is, almost four times the contingency fund. There was a 35-percent increase in the number of children in poverty over those years. This was a period when the unemployment rate rose from 5.3 per- cent to a high of 7.7 percent. What are the States going to do under this legislation when a recession hits and more and more people slip into poverty, people lose their jobs, they are out of work? Under the current system, the Federal Government assures to the States additional money for each of the additional persons who are placed into dire circumstances by a worsening economy. Under this bill, no such sup- port. This bill essentially gives the State a block grant based on 1994 fig- ures, and that’s it. Much of the discussion has been about the difficulty of handling the sit- uation under current economic cir- cumstances and the problems are very real and severe. What happens when you get an economic downturn and the number of people showing up in the poverty category on the unemployment rolls is on the increase, rising very sub- stantially? Are the States then going to come up with more money in order to handle this problem? Our experience to date is every time a recession strikes the States come in and say, ”We need help. We’re con- strained. We can’t deal with this reces- sion. Look what this recession has done to our sources of revenue. Our sources of revenue are down. We can’t handle the situation.” That is what they say today when the Federal assistance is automatically adjusted. What are they going to say next year or the year after and the year after that when a recession comes along, when people are added to the un- employment rolls, out of a job, families go into poverty? Where are the re- sources then going to come from? Under the current system, the Fed- eral Government, since President Roo- sevelt, assumed an obligation to pro- vide help to the States to help them work through this situation. Now the Federal Government automatically steps in when a recession hits. That will not be the case in the future under this legislation. It is true there is a contingency fund. But as I said, it is totally inadequate for any recession of any consequence, let alone a very deep recession as we experienced under President Reagan in the early 1980’s, or just the recession we experienced in the early 1990’s dur- ing the Bush administration when the unemployment rate went from 5.3 to 7.7 percent. That was its peak, 7.7 percent, contrasted with the Reagan recession where it went just shy of 11 percent un- employment. In the Bush recession in the 1990’s, the fact of the matter is that there was about a 40-percent increase in the Fed- eral expenditure on welfare during that recession period. This bill fails to ad- dress the consequences of such an eco- nomic downturn. The PRESIDING OFFICER. The Sen- ator’s time has expired. Mr. SARBANES. Will the Senator yield me 1 more minute? Mr. EXON. I am glad to. Mr. SARBANES. Mr. President, this bill does not do that. The Federal Gov- ernment is out of it in terms of assur- ing the States that the full burden of recession will not fall upon them. In the last recession, when the unemploy- ment rate went close to 8 percent, mil- lions of Americans lost their jobs and had a difficult time finding new jobs. What is going to happen in the next recession? Does anyone realistically believe that the States will step in and pick up the burden? Even now with ad- ditional Federal assistance the States come in during a recession and say, ”We can’t handle our situation because our revenues have been impacted by the recession.” What is going to hap- pen is you will have literally millions of people affected by the economic downturn and without any support. No additional Federal assistance as now, because of the block grant provision. We will pay dearly for failing to pro- vide a fail-safe mechanism against an economic downturn. The consequences will be such that we will rue this day. The PRESIDING OFFICER. The Sen- ator’s time has expired. Mr. SARBANES. I yield the floor. Mr. EXON addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Nebraska. Mr. EXON. Will the Chair kindly ad- vise the Senator when I have used 15 minutes? I yield such time as is nec- essary to myself. Mr. DOMENICI. I think we rotate. Mr. EXON. Before the chairman came in, we had three Republicans in a row. I thought that we would proceed\u2014\u2014 Mr. DOMENICI. They were part of the 1 hour where you had 1 hour and\u2014\u2014 Mr. EXON. No, they were not. They were after that. I yield the floor. Mr. DOMENICI. I ask Senator NICK- LES, do you need 15 minutes? Mr. NICKLES. Yes. The PRESIDING OFFICER. The Sen- ator from Oklahoma. Mr. NICKLES. Mr. President, first, I wish to congratulate and compliment our colleague from New Mexico for his leadership on this bill. In addition, I compliment Senator ROTH, Chairman ARCHER in the House, and Chairman CLAY SHAW for putting this bill to- gether, as well as Chairman KASICH in the House. I would like to go back a little farther and also compliment Sen- ator Dole and Speaker GINGRICH for laying the groundwork for fundamental welfare reform, fundamental welfare reform that is long overdue, fundamen- tal welfare reform that today will have bipartisan support. I am very pleased with that and I am pleased the Presi- dent said he would sign this bill. He is correct in making that deci- sion. I know he agonized over it. He was not sure what he was going to do. That is evidenced by the fact he vetoed two similar bills earlier. He actually vetoed a bill in January, a bill that passed the Senate with 87 votes. I thought that veto was a mistake. I thought that veto was a repudiation of his campaign statement when he said we need to end welfare as we know it. When candidate Bill Clinton made the statement, ”We need to end welfare as we know it,” I applauded it. I thought he was exactly right. Unfortu- nately, I think welfare had become a way of life for far too many families. Maybe that was their fault, maybe it was Congress’ fault. I think most of the welfare programs that we have were well-intentioned, but many have had very suspect results. In addressing the issue of welfare, on January 4, 1935 Franklin D. Roosevelt said that: The lessons of history, confirmed by the evidence immediately before me, show con- clusively that continued dependence upon re- lief induces a spiritual and moral disintegra- tion fundamentally destructive to the na- tional fiber. To dole out relief in this way is to administer a narcotic, a subtle destroyer of the human spirit. It is inimicable to the dictates of sound policy. It is a violation of the traditions of America. CONGRESSIONAL RECORD \u2014 SENATES9356 August 1, 1996 That was in his second annual mes- sage to the country. He was right. Maybe he was a little bit prophetic be- cause, if you look at what has hap- pened in our welfare system, we now have under the Federal Government 334 federally controlled welfare programs. The Federal Government determines who is eligible, for how long, and for how much they will receive. We have 156 job training programs stacked on top of each other, all with good inten- tions but a lot with results that are not very desirable, results that in many cases have not helped a lot of the in- tended beneficiaries and certainly have not helped taxpayers. This Congress has done several his- toric things. I have been around here now for 16 years. This Congress, for the first time, has actually passed some re- form and some curtailment of the growth of entitlement programs. We passed it in the Balanced Budget Act, but the President vetoed it so that did not become law. We passed it in the welfare bill, but the President vetoed that and it did not become law. We passed entitlement reform in the farm bill, a historic rewrite of decades of farm policy. That was a good bill. The President signed it. I compliment him for signing it. Now we are passing welfare reform. Is the bill perfect? No. But it is a good, giant step in the right direction. I am pleased the President will sign it. Mr. President, this bill does change the way we do welfare. The so-called AFDC, aid to families with dependent children, will no longer be a cash enti- tlement. We are reforming its entitle- ment status. The current program says that if you meet eligibility standards\u2014 in other words, if you are poor\u2014you can receive this benefit for the rest of your life. There is no real incentive to get off. There is no real incentive to go to work. We are really falling into ex- actly what Franklin Delano Roosevelt said. We are destroying human spirit. So now we have a chance to fix that in this bill today. This is a giant leap. Again, I mentioned that I am pleased President Clinton is signing this bill. But if you look at the bill he intro- duced, his bill was a continuation of the entitlement of aid to families with dependent children. They would go on continually. It was a continuation of an entitlement. Today we are breaking that continu- ation. We are going to say that we trust the States. I have heard some of my colleagues say, ”Wait a minute. What about the kids?” What we are doing is taking this money and we are going to give this cash welfare program to the States and let them determine eligibility. I happen to think that the States are just as concerned, maybe even more concerned than we are about kids in their own territory. What makes people think that the source of all wisdom comes from Wash- ington, DC, that Washington, DC, should determine who is eligible and who is not? Who can make the best de- termination of those requirements? I believe the individual States can. In this bill we have work require- ments. We have time limits. We have a 5-year lifetime limit. I think we have taken some big steps in the right direc- tion. So I want to compliment Senator ROTH and Senator DOMENICI, Senator Dole, and others. Also, I would like to make a couple of other comments. I have heard the President say we have cut too much in food stamps. In this bill we require able-bodied adults age 18 to 50 with no dependents, no kids, to work 20 hours a week, with the exception that they have 3 months in a 3-year period when they can receive food stamps. Other than that they are going to have to work at least 20 hours a week. That is real reform. I know my colleague from North Carolina thinks that is right. Under current law you can receive food stamps forever. Eligibility is pret- ty easy. If you meet these income re- quirements, you can receive food stamps. There is not a time limit. Under this bill we are telling able-bod- ied people, now you are going to have to get a job. There are now going to be work re- quirements in order to receive welfare. You are going to have to get a job. We turn the money over to the States, yes, but it is a transition. We call it tem- porary assistance for needy families. It is temporary assistance; it is not a way of life. It is not a system that we are setting up where people can receive this income forever, as many families do under the current system. There was an investigation in areas of my State that had drug problems and crime problems, and I learned a lit- tle bit about the drugs and the crime. But I probably learned a little bit more about welfare. This area had a very high incidence of crime and drug prob- lems but had an even higher incidence of welfare dependency. As a matter of fact, I talked to a young person who had a couple of kids and found out that, yes, she had been on welfare for a few years and her mother had also been on welfare for several years. I was thinking, we have to break this cycle. What about the kids? I looked at her kids, and I really felt sorry for them, and they were growing up, now the third generation of a welfare family. We have to break that trap of welfare dependency. This bill will help give people a hand up and not just a hand out; to where they will be able to go to work; where we provide job training; where we have child care; where we have an oppor- tunity for people to climb up out of this welfare dependency cycle. This is a giant step in the right direction. With the old system, if they met the income standards, then they kept get- ting the cash. There is no limit whatso- ever. So this bill is, again, a very posi- tive step in the right direction toward rewarding work, encouraging work, en- couraging people to become independ- ent, and not dependent on taxpayers. I compliment Senator Dole and others who are responsible. I want to correct some misstatements that have been made by the President and other people. The President stated yesterday that the reason why he is signing the bill is that it allows States to use Federal money for vouchers for children and for par- ents who cannot find work after the time limit has expired. The President says he lobbied for this. To clarify, we did not put money in specifically under the welfare bill, but we have said they can use money under title XX, the So- cial Services Block Grant, for those purposes. That is the same policy we had in the bill H.R. 4, that unfortu- nately the President vetoed. There was not really a change in that area. President Clinton made a statement saying the congressional leadership in- sisted on attaching to this extraor- dinarily important bill a provision that will hurt legal immigrants in America, people working hard for their families, paying taxes and serving in our mili- tary. Well, the President is wrong. Just to state the facts, noncitizens who work for their families, pay taxes, can become eligible for welfare in two ways under this bill. First, they can become citizens. If they become citizens, they can qualify for any benefits any other American can. Second, even if they de- cide not to become citizens, they can become eligible for welfare by working and paying Social Security payroll taxes for 40 quarters, basically 10 years. Third, and this is most important, noncitizens who serve in our military are eligible for welfare under this bill. The bill explicitly exempts them from the bans on welfare to non-Americans. It is in the bill. I was surprised by the President’s statement. His statement was this: ”You can serve in our military, you may get killed for defending America, but if somebody mugs you on a street corner or you get cancer or get hit by a car, or the same thing happens to your children, we are not going to give you assistance anymore.” Mr. President, President Clinton is wrong. As I mentioned, people who serve in our military, veterans and their dependents all continue to be eli- gible for assistance under this bill, this is title 4, page 5. So are refugee and asylees and people who pay Social Se- curity taxes for 40 quarters, title 4, page 5. People mugged on a street cor- ner or hit by a car, whether or not they are citizens and whether or not they work and whether or not they are in the country legally or illegally, qualify for emergency medical assistance under this bill. I think it is important we stay with the facts. President Clinton also said yesterday, ”I challenge every State to adopt the reforms that Wisconsin, Or- egon, Missouri, and other States are proposing to do.” Fact: On May 18, President Clinton spoke favorably of CONGRESSIONAL RECORD \u2014 SENATE S9357August 1, 1996 the welfare waiver application submit- ted by the State of Wisconsin: ”Wis- consin is making a solid welfare reform plan. I pledge my administration will work with Wisconsin to make an effec- tive transition to a new vision of wel- fare. States can keep on sending me these strong welfare proposals, and I will keep on signing them.” That was May 18. Guess what? Wisconsin’s waiv- er was proposed on May 26, over 2 months ago, and he has not signed it yet. President Clinton, before a speech of National Governors’ Association in 1995, told the Governors he would act on their waiver application within 30 days, some of which have taken well over a year, some almost 2 years. It has been 60 days since the Wisconsin waiv- er. We tried to put the Wisconsin waiv- er into the bill to make it applicable. We get a message, according to Speak- er GINGRICH, that if it is in the bill, the President will veto it. At the same time he was bragging on Wisconsin’s waiver and their new approach yester- day on national TV, he was telling us if we put it in the bill, he would veto the bill. Mr. President, I could go on. I think it is important we not try to scare peo- ple, that we stay with the facts, that we do try to do what is right. Let me make a couple of other com- ments. I heard the President and other people saying this bill is too hard on noncitizens, on legal aliens. We elimi- nate benefits for illegals; what about noncitizens who are legally here? We make some changes. The President and others say we went too far. Let’s look at what we did. Our legis- lation has a priority that says fun- damentally we should take care of Americans. When aliens come to this country, their sponsors pledge to sup- port them and they sign a statement that says they will not become a public charge. People come to this country voluntarily. If noncitizens want to stay in this country, they sign a statement saying they will not become a public charge. We will start holding them to that statement and hold their sponsors who also signed the statement saying, ”We will make sure they do not be- come a public charge; we will make sure they do what they committed to do.” I think that is very important. I might mention a couple things about taxpayers. If you look at the number of noncitizens currently receiv- ing SSI, Social Security supplemental income, in 1982 there were almost 128,000 noncitizens receiving SSI; in 1994 that number had increased by al- most sixfold, and there were 738,000 noncitizens receiving SSI. The program has exploded since 1982\u2014almost six times as many. What happens is a whole lot of people determine they can come to the United States not asking for a land of oppor- tunity to grow and build and expand, they come to the United States for a handout. What did they do? They re- ceived SSI and Medicaid. They received a lot of Government assistance. Thank you very much, taxpayer, and the spon- sors who signed statements saying, ”We will take care of them and make sure they do not become a charge to the Federal Government.” But who have not done their share, they have not held up their side of the bargain when they said they would not become a charge to the American taxpayers, and they did. We are saying they have a couple of choices. If they want to become citi- zens, they will be eligible for benefits. If they do not become citizens, that is certainly their option, but they do not have the option to say, ”Yes, take care of us, taxpayers.” If they pay taxes for 40 quarters then they could become eli- gible for benefits. A couple of other comments. We deny noncitizens from receiving food stamps until they become citizens or pay taxes for 10 years. We did the same thing with food stamps. Why should someone come to the United States as a nonciti- zen and say, ”Give me food stamps”? Some people have criticized this by saying, ”Wait, cuts in food stamps are draconian.” We spent $26.2 billion this year in food stamps. In the year 2002, if you listen to some of the rhetoric, you would think we cut that in half. That is not the case. In the year 2002, 6 years from now, we will spend over $30 billion in food stamps. So we are spending more money in food stamps every year, but we are saying to the people who are noncitizens who come to the United States, they are not automatically en- titled to continue receiving benefits forever. Mr. President, I have several charts to be printed in the RECORD, and I com- pliment my friend and colleague from New Mexico for his leadership. I men- tioned food stamps, and I will mention SSI, the growth rates in SSI. In 1980, SSI cost the taxpayers $6 bil- lion; in 1996, it costs $24 billion, four times as much. This program is explod- ing. The growth rates in SSI for the last 5 years are 10 percent, 14 percent, 21 percent, 18 percent, and 20 percent. The program has exploded in many, many cases because noncitizens have said this is a good way to get on a gravy train. We need to close that abuse. We do that under this bill. I think that is positive reform. I ask unanimous consent to have printed in the RECORD charts to sub- stantiate these facts. There being no objection, the mate- rial was ordered to be printed in the RECORD, as follows: FEDERAL SPENDING ON MAJOR WELFARE PROGRAMS [Current law in billions of dollars] Year Outlays Growth(dollars) Growth (percent) FOOD STAMPS 1980 …………………………………. 9 ………………… ……………….. 1981 …………………………………. 11 2 24 1982 …………………………………. 11 (0) \u00a53 1983 …………………………………. 12 1 7 1984 …………………………………. 12 (0) \u00a52 1985 …………………………………. 12 0 1 1986 …………………………………. 12 (0) \u00a51 1987 …………………………………. 12 0 0 FEDERAL SPENDING ON MAJOR WELFARE PROGRAMS\u2014 Continued [Current law in billions of dollars] Year Outlays Growth(dollars) Growth (percent) 1988 …………………………………. 12 1 6 1989 …………………………………. 13 1 4 1990 …………………………………. 15 2 17 1991 …………………………………. 19 4 25 1992 …………………………………. 23 4 21 1993 …………………………………. 25 2 11 1994 …………………………………. 25 0 0 1995 …………………………………. 26 1 4 1996 …………………………………. 26 0 1 1997 …………………………………. 28 2 7 1998 …………………………………. 30 2 6 1999 …………………………………. 31 1 5 2000 …………………………………. 32 1 4 2001 …………………………………. 34 1 4 2002 …………………………………. 35 1 4 FAMILY SUPPORT* 1980 …………………………………. 7 ………………… ……………….. 1981 …………………………………. 8 1 12 1982 …………………………………. 8 (0) \u00a52 1983 …………………………………. 8 0 5 1984 …………………………………. 9 1 6 1985 …………………………………. 9 0 3 1986 …………………………………. 10 1 8 1987 …………………………………. 11 1 6 1988 …………………………………. 11 0 3 1989 …………………………………. 11 0 4 1990 …………………………………. 12 1 9 1991 …………………………………. 14 1 11 1992 …………………………………. 16 2 16 1993 …………………………………. 16 0 3 1994 …………………………………. 17 1 6 1995 …………………………………. 18 1 6 1996 …………………………………. 18 0 2 1997 …………………………………. 19 0 2 1998 …………………………………. 19 1 3 1999 …………………………………. 20 1 3 2000 …………………………………. 21 1 3 2001 …………………………………. 21 1 3 2002 …………………………………. 22 1 3 SSI 1980 …………………………………. 6 ………………… ……………….. 1981 …………………………………. 7 1 11 1982 …………………………………. 7 0 6 1983 …………………………………. 7 1 7 1984 …………………………………. 8 1 12 1985 …………………………………. 9 0 6 1986 …………………………………. 9 1 8 1987 …………………………………. 10 1 6 1988 …………………………………. 11 1 13 1989 …………………………………. 11 0 0 1990 …………………………………. 13 1 10 1991 …………………………………. 14 2 14 1992 …………………………………. 17 3 21 1993 …………………………………. 20 3 18 1994 …………………………………. 24 4 20 1995 …………………………………. 25 1 2 1996 …………………………………. 24 (1) \u00a54 1997 …………………………………. 28 4 16 1998 …………………………………. 30 2 8 1999 …………………………………. 33 2 8 2000 …………………………………. 38 5 17 2001 …………………………………. 35 (3) \u00a59 2002 …………………………………. 40 6 17 CHILD NUTRITION 1980 …………………………………. 4 ………………… ……………….. 1981 …………………………………. 4 0 0 1982 …………………………………. 3 (1) \u00a514 1983 …………………………………. 3 0 10 1984 …………………………………. 4 0 9 1985 …………………………………. 4 0 3 1986 …………………………………. 4 0 3 1987 …………………………………. 4 0 5 1988 …………………………………. 4 0 8 1989 …………………………………. 5 0 7 1990 …………………………………. 5 0 9 1991 …………………………………. 6 1 12 1992 …………………………………. 6 0 7 1993 …………………………………. 7 1 10 1994 …………………………………. 7 0 6 1995 …………………………………. 8 1 13 1996 …………………………………. 8 1 7 1997 …………………………………. 9 0 6 1998 …………………………………. 9 1 6 1999 …………………………………. 10 1 6 2000 …………………………………. 11 1 6 2001 …………………………………. 11 1 6 2002 …………………………………. 12 1 5 EARNED INCOME CREDIT 1980 …………………………………. 1 ………………… ……………….. 1981 …………………………………. 1 0 0 1982 …………………………………. 1 (0) \u00a58 1983 …………………………………. 1 0 0 1984 …………………………………. 1 0 0 1985 …………………………………. 2 0 38 1986 …………………………………. 2 0 25 1987 …………………………………. 2 0 1 1988 …………………………………. 4 2 91 1989 …………………………………. 6 2 47 1990 …………………………………. 7 1 11 1991 …………………………………. 7 0 8 1992 …………………………………. 11 4 51 1993 …………………………………. 13 2 23 1994 …………………………………. 16 3 20 1995 …………………………………. 19 4 22 1996 …………………………………. 23 3 18 CONGRESSIONAL RECORD \u2014 SENATES9358 August 1, 1996 FEDERAL SPENDING ON MAJOR WELFARE PROGRAMS\u2014 Continued [Current law in billions of dollars] Year Outlays Growth(dollars) Growth (percent) 1997 …………………………………. 24 2 8 1998 …………………………………. 25 1 3 1999 …………………………………. 26 1 4 2000 …………………………………. 27 1 4 2001 …………………………………. 28 1 4 2002 …………………………………. 29 1 3 TOTAL 1980 …………………………………. 27 ………………… ……………….. 1981 …………………………………. 31 4 14 1982 …………………………………. 30 (1) \u00a52 1983 …………………………………. 32 2 7 1984 …………………………………. 34 1 5 1985 …………………………………. 35 1 4 1986 …………………………………. 37 2 5 1987 …………………………………. 38 1 4 1988 …………………………………. 43 5 12 1989 …………………………………. 46 3 7 1990 …………………………………. 51 5 12 1991 …………………………………. 59 8 15 1992 …………………………………. 72 13 22 1993 …………………………………. 81 9 12 1994 …………………………………. 89 8 10 1995 …………………………………. 96 7 8 1996 …………………………………. 100 4 4 1997 …………………………………. 108 8 8 1998 …………………………………. 114 6 5 1999 …………………………………. 120 6 5 2000 …………………………………. 129 9 8 2001 …………………………………. 129 0 0 2002 …………………………………. 139 10 7 *Family Support includes AFDC, child care, child support enforcement, and JOBS. Sources: CBO & OMB. Prepared by the Office of Senator Don Nickles. Mr. NICKLES. I thank my colleague from New Mexico and my colleague from Nebraska for yielding. Mr. DOMENICI. First, I am not sure everyone that has sent the message down that they want to speak will speak, but without wrap-up by our leader and without any wrap-up by me, there are 14 Senators on our side who have requested some time to speak. I ask the Parliamentarian, how much time remains on the Republican side under the 5 hours? The PRESIDING OFFICER. Approxi- mately 2 hours and 15 minutes. Mr. DOMENICI. That still means with 14 Senators, we clearly will not be able to give 20 or 25 minutes to every- one. We hope we can keep everyone to somewhere around 10 minutes or less. Having said that, Senator EXON has not even spoken today. He is next, and he will choose as much time as he wants, obviously. Following him, my understanding is that Senator SPECTER of Pennsylvania will speak on our side. Who will speak on your side? Mr. EXON. Senator MOSELEY-BRAUN, who was here at 9:30 this morning try- ing to speak, will follow me. Mr. DOMENICI. Senator FAIRCLOTH will be next. Mr. EXON. Following Senator MOSELEY-BRAUN, Senator BRADLEY. Mr. DOMENICI. All right. We know that many other Senators on this side want to speak. Since Senator GRASS- LEY is here, I am going to say that, on our side, he will follow Senator FAIRCLOTH. Senator CHAFEE wants to speak, also. Where would the Senator go next on the Democratic side? Mr. EXON. Mr. President, may I in- quire from the Chair, are there 2 hours left on the Republican side? I thought when I inquired a half an hour ago, at that time there were 2 hours on the Re- publican side and 2 hours 20 minutes on our side. Now I understand that the Chair said the Republicans had 2 hours 15 minutes left. The PRESIDING OFFICER (Mr. KEMPTHORNE). The Republicans have approximately 2 hours 15 minutes re- maining. The reason is that there was an inadvertent addition that was made on the time allowed. Mr. EXON. How much time do I have remaining? The PRESIDING OFFICER. Two hours twenty-one minutes. Mr. EXON. I thank the Chair. Mr. DOMENICI. Can we go beyond that and get a couple more sequenced in? Who was the last one? Mr. EXON. Senator BRADLEY. I have 8 or 10 other speakers. I do not have a scenario beyond Senator BRADLEY. Mr. DOMENICI. On our side, when the time arrives, the next Senator would be Senator CHAFEE, and then Senator GREGG is after the Senators I had previously announced. If any other Senators have difficult times, call us and we will try to put them in sooner. As soon as we can schedule you in, we will. Come down and tell us. So the order on our side is Senators SPECTER, FAIRCLOTH, GRASSLEY, CHAFEE, and GREGG. Mr. EXON. Mr. President, many of my colleagues have given very thoughtful and rigorous descriptions of the economic growth of our Nation under the dedicated leadership of President Clinton. Much of that growth is due to the deficit reduction in the President’s 1993 budget that we passed with strictly Democratic votes, and not a single Republican vote in either the House or the Senate. The Federal Reserve Chairman, Alan Greenspan, agrees. He said, earlier this year, that President Clinton’s budget was ”an un- questioned factor in contributing to the improvement in economic activity that occurred thereafter.” Mr. President, we have been on the right course since we passed the 1993 deficit reduction plan. At that time, dire predictions were made on that side of the aisle. If anybody is interested in those, I would be glad to supply the doomsday forecast if that became law\u2014 which it did\u2014from that side of the aisle. In 1992, the deficit was $290 billion, the highest dollar level in history. Today, thanks to the President’s budg- et, it has been cut more than in half, to $117 billion. That is living up to both your promises and the promises that have been emphasized so often in de- bate here. I don’t customarily use charts, but I want to put up a chart that may have been used before, which drives this point home. I suggest, Mr. President, that this may be the best kept secret in America. In 1980, when President Carter was President of the United States, we had a deficit of $74 billion for that year. That was an awful lot of money. I re- member how concerned we were about that. Several years later, after 1980, in the intervening 12 years of Republican Presidents\u2014first Ronald Reagan and then George Bush\u2014and supply side eco- nomics, that deficit loomed from a high $74 billion, we thought, to $290 bil- lion. When President Bill Clinton be- came President of the United States, look what has happened since then under his leadership. That deficit has been more than cut in half, to the 1996 projection of $117 billion. I don’t know what tells the history of success in this particular area more than a chart like this, which is factual. I ask anyone to challenge it. The Re- publicans like to carp a lot about the President’s 1993 budget. A distin- guished Republican said that President Clinton’s taking credit for deficit re- duction is like a rooster crowing very loudly at sunrise. I say to my Repub- lican friend that the President has every right to crow, if you want to use that word. He has every right to lay claim to reducing the deficit, because that he has done. That enormous fiscal egg laid by the previous two Republican administra- tions had to be attacked by someone, and President Bill Clinton did the job. Facts are facts. He has cut it more than in half. As much as I am gratified by the eco- nomic and fiscal performance of the current administration, I am deeply concerned with what is being said by the Republican campaign to challenge this administration. The same folks who were part of the fiscal wrecking crew in the 1980’s, and who voted against the only real deficit reduction plan in the 1990’s, are now ready to sab- otage the 21st century with billions of dollars in new tax cuts, which they don’t pay for. That is more of the sup- ply-side economics that got us into this mess in the first place. Mr. President, I ask my colleagues here, and I ask the people of the United States, why on Earth would Bob Dole change his mind from a strict and sound fiscal conservative and become the Willy Loman of supply-side eco- nomics and perhaps destroy the econ- omy by going back on this track? Mr. President, the lessons learned in the 1980’s through the 1992 period are very clear: You can’t grow your way out of tax breaks of this magnitude. That is why President Clinton came into office, saddled with a $290 billion deficit. Supply-side economics, or so- called dynamic scoring are, at best, a toss of the dice. To gamble the fiscal integrity of our Nation on such speculation is totally irresponsible. It is shameless. It is truly shameless. Only it is a way of dis- guising the true costs of tax cuts. How did they make up for them with the supply-side economics, or voodoo economics, to use a Republican phrase, from the period 1980 to 1992 that caused this? Fed Chairman Alan Greenspan said, ”We must avoid resting key legislative decisions on controversial estimates of CONGRESSIONAL RECORD \u2014 SENATE S9359August 1, 1996 revenues and outlays.” We sure did that from the period 1980 to 1992. I find it curious, Mr. President, that the advocates of supply-side Dole tax cuts seem to be trying to cash two fis- cal dividends at the same time. And it will not work. On the one hand, they want to take credit for the fiscal divi- dend that the Congressional Budget Of- fice said we will get from the conserv- ative fiscal policies needed to balance the budget. On the other hand, they want to simultaneously take credit for a fiscal dividend that would come from the stimulative fiscal policies of a tax cut. We have a record to show what happens when you go down that road. I hope the American voters will find out quickly what the Dole medicine show is really trying to sell. It is pure poison, and it hurts. The American people reject out of hand the heartless reductions, indeed, in the latest Repub- lican 7-year budget plan. I tell my fel- low Americans that these needs pale in comparison to what may lie ahead if we follow their lead to supply-side eco- nomics once more. Those reductions from real need will be twice as bad if we have to pay for the total tax breaks that are about to come. That is right, Mr. President. That is right, and all should understand that President Clinton cut the deficit in half, as evidenced by this chart. Bob Dole wants to double the amount that the Republicans are taking from ordi- nary Americans to pay for his $600 bil- lion or so in tax breaks for the wealthy. The American people know and the American people understand who is heading in the right direction, and it is President Bill Clinton. Mr. President, an important part of all of this\u2014to keep the promises that were made during the campaign\u2014is the matter of the welfare reform bill that is presently before the body. Mr. President, the conference report that is before us in the Senate today is not the best possible welfare bill, but it may be the best welfare bill that this divided and weary Congress can pass. I salute my good friend, the chair- man of the Budget Committee, for doing his able best, and he did a lot to smooth over the rough edges of the House measure, and there were many. I also want to compliment the tena- cious and effective work of the Senator from Rhode Island, Senator CHAFEE, in the conference committee. This is a better bill for their efforts. Throughout the consideration of this bill, my primary concern has been with our Nation’s children. A hungry child should be an affront to all men and women of good will. I am at a loss to understand why the Republican leadership felt it necessary to force their caucus to vote against al- lowing States to provide noncash vouchers for children’s food and cloth- ing under the State’s block grant. The conference report allows States to use another program for that purpose, but provides no additional funds, and has even reduced that program by 15 per- cent below the baseline. It is certainly not the intention of this Senator to throw more children into poverty, or to create more want in our land of plenty. Should this legisla- tion become law, I would hope that we monitor its effects very carefully. We are giving the States more powers and flexibility; with that will come new re- sponsibilities. A midcourse correction may be needed 2 or 3 years hence, if the critics are right and the number of children living in poverty swells. I am heartened, however, that the conference moderated some of the very worst of the welfare bill and retained many of the improvements added by the Senate. For example, there was the Kasich food stamp amendment that was cruel and heartless in the extreme. It limited unemployed people without kids to only 3 months of food stamps in their adult lifetime. Thank goodness cooler heads prevailed. Eligibility has now been modified to 3 months for any 3-year period, with an additional 3 months if one is laid off. I was also most gratified that the conference retained the Chafee amend- ment maintaining current eligibility standards for Medicaid, as well as the Conrad amendment eliminating the food stamp block grant. These two amendments were critical to this Sen- ator’s support of the conference report. Removing them would have been tanta- mount to pulling the keystone from an arch. Bipartisan support for this bill would have collapsed. I and many of my Democratic col- leagues will vote for this conference re- port today. We do so with some mis- givings, but also with the sincere hope and desire that we are helping our fel- low citizens to reclaim the dignity and pride that comes from work and pro- viding for one’s family\u2014no matter how humble the calling. I hope our efforts prove worthy of both those we are try- ing to help and the American people who have asked for reform. I hear a great deal these days about ending welfare as we know it. But to this Senator, that does not mean end- ing our responsibility to our fellow man. It does not mean just cutting off the welfare check, and then cutting and running on our poor. Mr. President, our responsibilities do not end with this bill. Quite the con- trary. As we ask those who have been in welfare’s rut to become bread- winners, it is our responsibility to pro- vide them with a living wage through an increase in the minimum wage. Since few minimum-wage jobs offer it, we must also help them find afford- able, available, and accessible health care, especially for their children. We must assist too with education and job training to help them get and hold bet- ter jobs. Mr. President, one final observation. I believe that this will be the sole rec- onciliation bill of the three promised by the Republican majority to make it to the President’s desk. Their grotesque Medicare and Medic- aid bills are being locked up in the attic, out of sight of the electorate. The tax breaks may, however, be a dif- ferent story. We hear rumors that, if Bob Dole’s numbers plummet any fur- ther, we may see some tax breaks shoot up to the front of the legislative agenda. I am deeply concerned that the Republican majority may try to use the welfare savings we achieve today to justify their tax breaks. Some things never change. Other things certainly have changed. Senator Bob Dole once scorned supply- siders, but Candidate Dole is now a fel- low traveler. He has jettisoned the hard, dirty work of cutting spending, and now peddles comforting tales about tax cuts that pay for themselves. They did not pay for themselves in the 1980 to 1992 period, and they will not pay for themselves between now and the turn of the century and there- after. These policies that they are trying to invoke once again evidently broke the bank in the 1980’s. We will repeat this foolhardiness again under the new name of dynamic scorekeeping and supply-side economics. A rosy scenario is a rosy scenario by any name. I pray for the sake of our children and grand- children that the Republican majority reclaims its wits. The bill before us today asks those who receive a helping hand to take re- sponsibility for their lives and to find work. I will vote for the bill. In the same vein, I ask those who have been entrusted with the fiscal responsibility of the Nation not to fritter it away. Face up to your responsibilities. Do not pander. Do not promise what can- not be delivered. Do not hide behind economic fairy tales. It will take hard work to balance the budget. It is high time that we get back to work with the rest of America and do our job right. Mr. President, I reserve the remain- der of my time. Mr. SPECTER addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Pennsylvania. Mr. EXON. Mr. President, one further item for insertion into the RECORD. The President yesterday delivered a statement indicating he would sign the welfare bill when it is presented to him. I ask unanimous consent that a copy of that statement be printed in the RECORD. There being no objection, the state- ment was ordered to be printed in the RECORD, as follows: THE WHITE HOUSE, July 31, 1996. STATEMENT BY THE PRESIDENT The PRESIDENT. Good afternoon. When I ran for President four years ago, I pledged to end welfare as we know it. I have worked very hard for four years to do just that. Today, the Congress will vote on legislation that gives us a chance to live up to that promise\u2014to transform a broken system that traps too many people in a cycle of depend- ence to one that emphasizes work and inde- pendence; to give people on welfare a chance to draw as paycheck, not a welfare check. It gives us a better chance to give those on welfare what we want for all families in CONGRESSIONAL RECORD \u2014 SENATES9360 August 1, 1996 America, the opportunity to succeed at home and at work. For those reasons I will sign it into law. The legislation is, however, far from perfect. These are parts of it that are wrong, and I will address those parts in a moment. But, on balance, this bill is a real step for- ward for our country, our values and for peo- ple who are on welfare. For 15 years I have worked on this problem, as governor and as a President. I’ve spent time in welfare of- fices, I have talked to mothers on welfare who desperately want the chance to work and support their families independently. A long time ago I concluded that the current welfare system undermines the basic values of work, responsibility and family, trapping generation after generation in dependency and hurting the very people it was designed to help. Today we have an historic opportunity to make welfare what it was meant to be\u2014a second chance, not a way of life. And even though the bill has serious flaws that are un- related to welfare reform, I believe we have a duty to seize the opportunity it gives us to end welfare as we know it. Over the past three and a half years I have done everything in my power as President to promote work and responsibility, working with 41 states to give them 69 welfare reform experiments. We have also required teen mothers to stay in school, required federal employees to pay their child support, cracked down on people who owe child support and crossed state lines. As a result, child support collections are up 40 percent, to $11 billion, and there are 1.3 million fewer people on welfare today than there were when I took office. From the out- set, however, I have also worked with mem- bers of both parties in Congress to achieve a national welfare reform bill that will make work and responsibility the law of the land. I made my principles for real welfare reform very clear from the beginning. First and foremost, it should be about moving people from welfare to work. It should impose time limits on welfare. It should give people the child care and the health care they need to move from welfare to work without hurting their children. It should crack down on child support enforcement and it should protect our children. This legislation meets these principles. It gives us a chance we haven’t had before\u2014to break the cycle of dependency that has ex- isted for millions and millions of our fellow citizens, exiling them from the world of work that gives structure, meaning, and dignity to most of our lives. We’ve come a long way in this debate. It’s important to remember that not so very long ago, at the beginning of this very Congress, some wanted to put poor children in orphan- ages and take away all help for mothers sim- ply because they were poor, young and un- married. Last year the Republican majority in Congress sent me legislation that had its priorities backward. It was soft on work and tough on children. It failed to provide child care and health care. It imposed deep and un- acceptable cuts in school lunches, child wel- fare and help for disabled children. The bill came to me twice and I vetoed it twice. The bipartisan legislation before the Con- gress today is significantly better than the bills I vetoed. Many of the worst elements I objected to are out of it. And many of the improvements I asked for are included. First, the new bill is strong on work. It provides $4 billion more for child care so that mothers can move from welfare to work, and protects their children by maintaining health and safety standards for day care. These things are very important. You cannot ask some- body on welfare to go to work if they’re going to neglect their children in doing it. It gives states powerful performance incen- tives to place people in jobs. It requires states to hold up their end of the bargain by maintain their own spending on welfare. And it gives states the capacity to create jobs by taking money now used for welfare checks and giving it to employers as income sub- sidies as an incentive to hire people, or being used to create community service jobs. Second, this new bill is better for children than the two I vetoed. It keeps the national nutritional safety net intact by eliminating the food stamp cap and the optional block grant. It drops the deep cuts and devastating changes in school lunch, child welfare and help for disabled children. It allow states to use federal money to provide vouchers for children whose parents can’t find work after the time limits expire. And it preserves the national guarantee of health care for poor children, the disabled, pregnant women, the elderly and people on welfare. Just as important, this bill continues to include the child support enforcement meas- ures I proposed two years ago, the most sweeping crackdown on deadbeat parents in history. If every parent paid the child sup- port they should, we could move 800,000 women and children off welfare immediately. With this bill we say to parents, if you don’t pay the child support you owe, we will gar- nish your wages, take away your drivers li- cense, track you across state lines and, as necessary, make you work off what you owe. It is a very important advance that could only be achieved in legislation. I did not have the executive authority to do this with- out a bill. So I will sign this bill. First and foremost because the current system is broken. Sec- ond, because Congress has made many of the changes I sought. And, third, because even though serious problems remain in the non- welfare reform provisions of the bill, this is the best chance we will have for a long, long time to complete the work of ending welfare as we know it by moving people from welfare to work, demanding responsibility and doing better by children. However, I want to be very clear. Some parts of this bill still go too far. And I am de- termined to see that those areas are cor- rected. First, I am concerned that although we have made great strides to maintain the national nutritional safety net, this bill still cuts deeper than it should in nutritional as- sistance, mostly for working families with children. In the budget talks, we reached a tentative agreement on $21 billion in food stamp savings over the next several years. They are included in this bill. However, the congressional majority in- sisted on another cut we did not agree to, re- pealing a reform adopted four years ago in Congress, which was to go into effect next year. It’s called the Excess Shelter Reduc- tion, which helps some of our hardest pressed working families. Finally, we were going to treat working families with children the same way we treat senior citizens who draw food stamps today. Now, blocking this change, I believe\u2014I know\u2014will make it harder for some of our hardest pressed work- ing families with children. This provision is a mistake, and I will work to correct it. Second, I am deeply disappointed that the congressional leadership insisted on attach- ing to this extraordinarily important bill a provision that will hurt legal immigrants in America, people who work hard for their families, pay taxes, serve in our military. This provision has nothing to do with wel- fare reform. It is simply a budget-saving measure, and it is not right. These immigrant families with children who fall on hard times through no fault of their own\u2014for example because they face the same risks the rest of us do from accidents, from criminal assaults, from serious ill- nesses\u2014they should be eligible for medical and other help when they need it. The Re- publican majority could never have passed such a provision standing alone. You see that in the debate in the immigration bill, for example, over the Gallegly amendment and the question of education of undocu- mented and illegal immigrant children. This provision will cause great stress for states, for localities, for medical facilities that have to serve large numbers of legal im- migrants. It is just wrong to say to people, we’ll let you work here, you’re helping our country, you’ll pay taxes, you serve in our military, you may get killed defending America\u2014but if somebody mugs you on a street corner or you get cancer or you get hit by a car or the same thing happens to your children, we’re not going to give you assist- ance any more. I am convinced this would never have passed alone and I am convinced when we send legislation to Congress to cor- rect it, it will be corrected. In the meantime, let me also say that I in- tend to take further executive action direct- ing the INS to continue to work to remove the bureaucratic roadblocks to citizenship to all eligible, legal immigrants. I will do ev- erything in my power, in other words, to make sure that this bill lifts people up and does not become an excuse for anyone to turn their backs on this problem or on peo- ple who are generally in need through no fault of their own. This bill must also not let anyone off the hook. The states asked for this responsibility, now they have to shoul- der it and not run away from it. We have to make sure that in the coming years reform and change actually result in moving people from welfare to work. The business community must provide greater private sector jobs that people on welfare need to build good lives and strong families. I challenge every state to adopt the reforms that Wisconsin, Oregon, Missouri and other states are proposing to do, to take the money that used to be available for wel- fare checks and offer it to the private sector as wage subsidies to begin to hire these peo- ple, to give them a chance to build their families and build their lives. All of us have to rise to this challenge and see that\u2014this reform not as a chance to demonize or de- mean anyone, but instead as an opportunity to bring everyone fully into the mainstream of American life, to give them a chance to share in the prosperity and the promise that most of our people are enjoying today. And we here in Washington must continue to do everything in our power to reward work and to expand opportunity for all peo- ple. The Earned Income Tax Credit which we expanded in 1993 dramatically, is now re- warding the work of 15 million working fami- lies. I am pleased that congressional efforts to gut this tax cut for the hardest pressed working people have been blocked. This leg- islation preserves the EITC and its benefits for working families. Now we must increase the minimum wage, which also will benefit millions of working people with families and help them to offset the impact of some of the nutritional cuts in this bill. Through these efforts, we all have to rec- ognize, as I said in 1992, the best anti-poverty program is still a job. I want to congratulate the members of Congress in both parties who worked together on this welfare reform leg- islation. I want to challenge them to put pol- itics aside and continue to work together to meet our other challenges and to correct the problems that are still there with this legis- lation. I am convinced that it does present an historic opportunity to finish the work of ending welfare as we know it, and that is why I have decided to sign it. Q. Mr. President, some civil rights groups and children’s advocacy groups still say that CONGRESSIONAL RECORD \u2014 SENATE S9361August 1, 1996 they believe that this is going to hurt chil- dren. I wonder what your response is to that. And, also, it took you a little while to decide whether you would go along with this bill or not. Can you give us some sense of what you and your advisers kind of talked about and the mood in the White House over this? The PRESIDENT. Sure. Well, first of all, the conference was not completed until late last evening, and there were changes being made in the bill right up to the very end. So when I went to bed last night, I didn’t know what the bill said. And this was supposed to be a day off for me, and when I got up and I real- ized that the conference had completed its work late last night and that the bill was scheduled for a vote late this afternoon, after I did a little work around the house this morning, I came in and we went to work I think about 11:00. And we simply\u2014we got everybody in who had an interest in this and we went through every provision of the bill, line by line, so that I made sure that I understood exactly what had come out of the conference. And then I gave everybody in the administration who has there a chance to voice their opin- ion on it and to explore what their views were and what our options were. And as soon as we finished the meeting, I went in and had a brief talk with the Vice President and with Mr. Panetta, and I told them that I had de- cided that, on balance, I should sign the bill. And then we called this press conference. Q. And what about the civil rights groups\u2014 The PRESIDENT. I would say to them that there are some groups who basically have never agreed with me on this, who never agreed that we should do anything to give the states much greater flexibility on this if it meant doing away with the individual en- titlement to the welfare check. And that is still, I think, the central objection to most of the groups. My view about that is that for a very long time it’s hard to say that we’ve had anything that approaches a uniform AFDC system when the benefits range from a low of $187 a month to a high of $655 a month for a family of three or four. And I think that the system we have is not working. It works for half the people who just use it for a little while and get off. It will continue to work for them. I think the states will continue to provide for them. For the other half of the people who are trapped on it, it is not working. And I be- lieve that the child support provisions here, the child care provisions here, the protection of the medical benefits\u2014indeed, the expan- sion of the medical guarantee now from 1998 to 2002, mean that on balance these families will be better off. I think the problems in this bill are in the non-welfare reform provi- sions, in the nutritional provisions that I mentioned and especially in the legal immi- grant provisions that I mentioned. Q. Mr. President, it seems likely there will be a kind of political contest to see who gets the credit or the blame on this measure. Sen- ator Dole is out with a statement calling\u2014 saying that you’ve been brought along to sign his bill. Are you concerned at all that you will be seen as having been kind of dragged into going along with something that you originally promised to do and that this will look like you signing onto a Repub- lican initiative? The PRESIDENT. No. First of all, because I don’t\u2014you know, if we’re doing the right thing there will be enough credit to go around. And if we’re doing the wrong thing there will be enough blame to go around. I’m not worried about that. I’ve always wanted to work with Senator Dole and others. And before he left the Senate, I asked him not to leave the budget negotiations. So I’m not worried about that. But that’s a pretty hard case to make, since I vetoed their previous bills twice and since while they were talking about it we were doing it. It’s now generally accepted by everybody who has looked at the evidence that we effected what the New York Times called a quiet revolution in welfare. There are 1.3 million fewer people on welfare today than there were when I took office. But there are limits to what we can do with these waivers. We couldn’t get the child support enforcement. We couldn’t get the extra child care. Those are two things that we had to have legislation to do. And the third thing is we needed to put all the states in a position where they had to move right now to try to create more jobs. So far\u2014I know that we had Wisconsin and earlier, Or- egon, and I believe Missouri. And I think those are the only three states, for example, that had taken up the challenge that I gave to the governors in Vermont a couple of years ago to start taking the welfare pay- ments and use it for wage subsidies to the private sector to actually create jobs. You can’t tell people to go to work if there is no job out there. So now they all have the power and they have financial incentives to create jobs, plus we’ve got the child care locked in and the medical care locked in and the child support enforcement locked in. None of this could have happened without legislation. That’s why I thought this legislation was impor- tant. Q. Mr. President, some of the critics of this bill say that the flaws will be very hard to fix because that will involve adding to the budget and in the current political climate adding the expenditures is politically impos- sible. How would you respond to that? The PRESIDENT. Well, it just depends on what your priorities are. For one thing, it will be somewhat easier to balance the budg- et now in the time period because the deficit this year is $23 billion less than it was the last time we did our budget calculations. So we’ve lowered that base $23 billion this year. Now, in the out years it still come up, but there’s some savings there that we could turn around and put back into this. Next, if you look at\u2014my budget corrects it right now. I had $42 billion in savings, this bill has about $57 billion in savings. You could correct all these problems that I men- tioned with money to spare in the gap there. So when we get down to the budget negotia- tions either at the end of this year or at the beginning of next year, I think the American people will say we can stand marginally smaller tax cuts, for example, or cut some- where else to cure this problem of immi- grants and children, to cure the nutritional problems. We’re not talking about vast amounts of money over a six year period. It’s not a big budget number and I think it can easily be fixed given where we are in the budget negotiations. Q. The last couple days in these meetings among your staff and this morning, would you say there was no disagreement among people in the administration about what you should do? Some disagreement? A lot of dis- agreement? The PRESIDENT. No, I would say that there was\u2014first of all, I have rarely been as im- pressed with the people who work in this ad- ministration on any issue as I have been on this. There was significant disagreement among my advisers about whether this bill should be signed or vetoed, but 100 percent of them recognized the power of the arguments on the other side. It was a very moving thing. Today the conversation was almost 100 percent about the merits of the bill and not the political implications of it. Because I think those things are very hard to cal- culate anyway. I think they’re virtually im- possible. I have tried to thank all of them person- ally, including those who are here in the room and those who are not here, because they did have differences of opinion about whether we should sign or veto, but each side recognized the power of the arguments on the other side. And 100 percent of them, just like 100 percent of the Congress, recognized that we needed to change fundamentally the framework within which welfare operates in this country. The only question was whether the problems in the non-welfare reform pro- visions were so great that they would justify a veto and giving up what might be what I’m convinced is our last best chance to fun- damentally change the system. Q. Mr. President, even in spite of all the details of this, you as a Democrat are actu- ally helping to dismantle something that was put in place by Democrats 60 years ago. Did that give you pause, that overarching question? The PRESIDENT. No. No, because it was put in place 60 years ago when the poverty popu- lation of America was fundamentally dif- ferent than it is now. As Senator Moynihan\u2014 you know, Senator Moynihan strongly dis- agrees with me on this\u2014but as he has point- ed out repeatedly, when welfare was created the typical welfare recipient was a miner’s widow with no education, small children, husband dies in the mine, no expectation that there was a job for the widow to do or that she ever could do it, very few out-of- wedlock pregnancies and births. The whole dynamics were different then. So I have always thought that the Demo- cratic party should be on the side of creating opportunity and promoting empowerment and responsibility for people, and a system that was in place 60 years ago that worked for the poverty population then is not the one we need now. But that’s why I have worked so hard too to veto previous bills. That does not mean I think we can walk away from the guarantee that our party gave on Medicaid, the guarantee our party gave on nutrition, the guarantee our party gave in school lunches, because that has not changed. But the nature of the poverty popu- lation is so different now that I am con- vinced we have got to be willing to experi- ment, to try to work to find ways to break the cycle of dependency that keeps dragging folks down. And I think the states are going to find out pretty quickly that they’re going to have to be willing to invest something in these peo- ple to make sure that they can go to work in the ways that I suggested. Yes, one last question. Q. Mr. President, you have mentioned Sen- ator Moynihan. Have you spoken to him or other congressional leaders, especially con- gressional Democrats? And what was the conversation and reaction to your indica- tion? The PRESIDENT. Well, I talked to him as re- cently, I think, as about a week ago. When we went up to meet with the TWA families, we talked about it again. And, you know, I have an enormous amount of respect for him. And he has been a powerful and cogent critic of this whole move. I’ll just have to hope that in this one case I’m right and he’s wrong\u2014because I have an enormous regard for him. And I’ve spoken to a number of other Democrats, and some think I’m right and some don’t. This is a case where, you know, I have been working with this issue for such a long time\u2014a long time before it became\u2014to go back to Mr. Hume’s question\u2014a long time before it became a cause celeb in Washington or anyone tried to make it a partisan politi- cal issue. It wasn’t much of a political hot potato when I first started working on it. I just was concerned that the system didn’t CONGRESSIONAL RECORD \u2014 SENATES9362 August 1, 1996 seem to be working. And I was most con- cerned about those who were trapped on it and their children and the prospect that their children would be trapped on it. I think we all have to admit here\u2014we all need a certain level of humility today. We are trying to continue a process that I’ve been pushing for three and a half years. We’re trying to get the legal changes we need in federal law that will work to move these folks to a position of independence where they can support their children and their lives as workers and in families will be stronger. But if this were an easy question, we wouldn’t have had the two and a half hour discussion with my advisers today and we’d all have a lot more answers than we do. But I’m convinced that we’re moving in the right direction. I’m convinced it’s an opportunity we should seize. I’m convinced that we have to change the two problems in this bill that are not related to welfare reform, that were just sort of put under the big shade of the tree here, that are part of this budget strat- egy with which I disagree. And I’m convinced when we bring those things out into the light of day we will be able to do it. And I think some Republicans will agree with us and we’ll be able to get what we need to do to change it. Thank you. The PRESS. Thank you. The PRESIDING OFFICER. The Sen- ator from New Mexico is recognized. Mr. DOMENICI. I understand Senator SPECTER is next, and I might ask, will the Senator yield me 1 minute without losing his right? Mr. SPECTER. I do. Mr. DOMENICI. Mr. President, if I was representing President Clinton, as my good friend from Nebraska has, I would be trying to divert attention to what Senator Dole might do. I would be diverting attention away from Sen- ator Dole who might cut taxes for the American people because, speaking of a dismal record, the President seeks to hide behind a statistic that says we have had great economic growth. But the big fairy tale, to borrow a word from my friend from Nebraska, is that we have had the second lowest produc- tivity growth in 50 years; real-wage growth is the lowest in 32 years; stag- nant family incomes like we have never seen; tax burdens have risen sharply, almost 1 whole percent more of tax burden on the American people. That is why they do not think we are doing very well. That is why they say: What is happening to our salaries and our wages? Now, having said that, clearly if I had that record, I would be worried and trying to set up a smokescreen as to what Bob Dole might do when they do not even have the slightest idea what Bob Dole is going to do; he has not told anyone. We anxiously await a plan which will dramatically improve these kinds of economic facts. That is what we hope for. I thank the Senator for yielding time to me. Mr. SPECTER addressed the Chair. The PRESIDING OFFICER. Who yields time to the Senator from Penn- sylvania? Mr. DOMENICI. I have already yield- ed to him in sequence. I stated it, but I did not state how much time. Mr. SPECTER. I may be able to do it in less than the 20 minutes I request. I will try to. Mr. DOMENICI. I hope the Senator will try. The Senator is yielded up to 20 minutes. The PRESIDING OFFICER. The Sen- ator from Pennsylvania is recognized. Mr. SPECTER. Mr. President, I sup- port the welfare reform bill with sub- stantial reservations. I support the welfare reform bill because I think it is our best chance to break a pattern which has existed for decades where people rely upon welfare and find them- selves dependent upon welfare and have no way to break out of the welfare cycle, the welfare chain to find jobs. I believe this legislation, while far from perfect\u2014it does not contain many amendments that I voted for\u2014is the best chance to do it at this time. This legislation has advanced to this stage with substantial bipartisan sup- port; 23 of 46 Democrats voted for this bill. The President of the United States has stated his intention to sign the bill when it reaches his desk if the con- ference report is passed. It seems to be a very high probability. One of my colleagues on the Repub- lican side has voted against the bill be- cause it is not tough enough, not strong enough in limiting welfare bene- fits. Those are some of the indicators that this bill perhaps is, if not bal- anced, about as good a job as we could do given the problems of our society and given the problems of a campaign year. I think it does not advance our cause at all to talk about Bob Dole and Willy Loman or to talk about a Republican majority coming to its wits, but, in- stead, to try in a bipartisan way to fashion welfare reform which will serve the American people, which will help take those on welfare off welfare, be- cause I think it is certainly true that people on welfare would much rather have a job and not be on welfare, and to try to take away the burden of this entitlement on our society. The issue of welfare reform is some- thing which this Senator has been con- cerned about for a long time. In the 99th Congress, I cosponsored S. 2578 and S. 2579 with Senator MOYNIHAN, those bills being directed toward improving the welfare system. In the 100th Con- gress, I introduced similar legislation on a bipartisan basis with Senator DODD, and then worked closely with Senator MOYNIHAN on the legislation that first became comprehensive wel- fare reform on the 1988 Family Welfare Reform Act, which was signed by Presi- dent Reagan. This year, after welfare reform had faded from the picture, after the Presi- dent’s vetoes, I joined my colleague from Delaware, Senator BIDEN, on June 12 in introducing bipartisan legislation captioned S. 1867, which was an iden- tical bill to a bipartisan bill introduced by Congressman CASTLE and Congress- man TANNER in the House. The Biden-Specter bill was not suc- cessful, nor was the Chafee-Breaux pro- posal successful, both of which would have eased the problems for children and eased the problems for immigrants, and I think made for a more orderly transition on welfare reform. I regret very much that Senator BREAUX’s amendment did not pass, Senator BREAUX’s amendment being di- rected to provide vouchers for children beyond the 5 years. Senator FORD’s amendment did not pass. It was a nar- row vote. I supported it. It would have provided noncash benefits after 5 years. We have crafted a bill here which takes out a good bit of the inflexibility which was presented in the legislation by the House of Representatives and comes somewhat close to the bill which passed the Senate last year by a lop- sided vote of 87 to 12. Mr. President, this bill does provide an opportunity for those who are on welfare to take a job which they would have never taken before because there are many jobs which pay less than their welfare benefits. Why would someone take a job which pays less than their welfare benefits? They stay on welfare. This legislation, going to a core issue, will provide an opportunity for someone to take a job which pays less than welfare, which that individual would not now take since welfare pays more, because there will be flexibility to add a supplement, so that there will be a supplement from welfare funds, which means the welfare payment is less and the individual will be getting more with his lower wage in the pri- vate sector and the welfare supple- ment, and will have the benefit of Med- icaid where the employer does not pay health benefits. So there is an oppor- tunity to move from the welfare roll to the payroll. This legislation provides that able- bodied individuals will be limited as to how long they can be on welfare, re- ceiving 2 years of assistance if they are not working; lifetime benefits are lim- ited to a maximum of 5 years, but the States do have flexibility to provide a hardship exemption up to 20 percent of the State’s caseload if those require- ments are not met. This, I think, is re- alistically calculated to encourage able-bodied men to work. With respect to finding jobs, there is job training provided and flexibility to the States, and the States are given substantial incentive to take individ- uals off the welfare rolls. This legislation also moves to a core problem of teenage mothers who are on welfare with the requirement that they live at home unless there is some show- ing that there is brutality at home or something which is incompatible with living at home. But the teenage moth- ers are required to live at home. They are required either to be in school or on jobs or in job training, and there is a very substantial amount of funding in this bill for child care so that moth- ers can realistically do that. There are some provisions in this leg- islation which I think should have been CONGRESSIONAL RECORD \u2014 SENATE S9363August 1, 1996 corrected. I think the amendments of- fered to leave noncitizens on the wel- fare rolls and apply the limitations only to the future would have been more sensible so people who come into the United States would have notice that they are not going to have the benefits. I think the moratorium which was suggested on Medicaid benefits would have been sensible. This bill provides for tough enforce- ment measures for child support, so parents have an obligation to support their children. When you take a look at this legisla- tion in its totality, it is a step in the right direction. It has been crafted in a contentious political year where there are deep political divisions in the Con- gress, so there is a substantial block of Democratic support\u201423 Democrat Sen- ators having voted for it; an equal number on the other side. The Presi- dent, a Democrat, has stated his inten- tion to sign the conference report. There is very substantial support on the Republican side, with one Repub- lican Senator having voted against it because it gives too much to welfare recipients. But there is a real need to move ahead, to try to give people an opportunity to have jobs. During my tenure as district attor- ney of Philadelphia, I saw many people in that big city trapped in the welfare cycle. I think, when they have an op- portunity to take a job which is a low- paying job, they are not going to take it today if they lose medical benefits under Medicaid and they get less on the low-paying job than they have on welfare. But, when you have flexibility with the States\u2014and there are many examples where the States have moved ahead on a flexible system, Wisconsin, illustratively, Michigan, illustratively, and other States. Governor Thompson is ending welfare, not just talking about it but ending welfare in 1997\u2014 this welfare bill goes a substantial dis- tance. I know it is going to result in some holes in the safety net. But we will have an opportunity to revisit those is- sues. But taken as a whole, my view is it is a significant step forward, and that is why I am supporting it. I yield the remainder of my time and yield the floor. The PRESIDING OFFICER. Who yields time to the Senator from Illi- nois? The Senator from Illinois is rec- ognized. Ms. MOSELEY-BRAUN. Mr. Presi- dent, I understand the Senator from Nebraska is not on the floor as yet. The PRESIDING OFFICER. The Sen- ator may yield herself time. Ms. MOSELEY-BRAUN. I will do so. Mr. EXON. Will the Senator yield for a question? Ms. MOSELEY-BRAUN. I yield to the Senator from Nebraska for a question. The PRESIDING OFFICER. The Sen- ator from Nebraska. Mr. EXON. Mr. President, I thank my colleague for yielding. Before she starts in on her speech, which I assume is on her objection to the welfare bill, but she may be talking about econom- ics because she has been very much in- volved in things that we need to do to shape up America, I want to ask her a question. Did the Senator hear when the Senator from New Mexico made quite a point in answer to my disserta- tion on supply-side economics and sky- rocketing deficits that have been cor- rected and turned around by President Clinton? He was complaining about the productivity of America. If we want to look at the productiv- ity of America, I think we ought to put that in terms that people can under- stand: not productivity, but job growth. The percentage of change on an annual basis during the Reagan\/ Bush years\u2014and I think it is consistent because I talked about the Reagan\/ Bush years and the skyrocketing defi- cits that were created then\u2014all during those Reagan\/Bush years, the private sector job growth was 1.6 percent. Under President Clinton it is 2.9 per- cent. That says something about pro- ductivity, does it not? Does that not say also something about jobs and job creation, which is what the economy is all about? Ms. MOSELEY-BRAUN. It certainly does. Mr. EXON. I thank my friend from Il- linois. Ms. MOSELEY-BRAUN. Mr. Presi- dent, I say to my colleague from Ne- braska, my colleague referenced the fact that I am kind of an armchair economist. I like these issues. But I must tell you, I find it more than a lit- tle ironic on a day on which we are talking about how well the American economy is doing, we are declaring de- feat and failure on our response to pov- erty and throwing in the towel on poor children in America. I point out, in the first instance, I have heard a lot of discussion about the numbers pertaining to this welfare ”reform” debate, about how much money is being spent. For the general public, it sounds like an awful lot of money because that is what we do here. We talk about a budget that is almost $2 trillion. So the numbers associated with welfare, which impacts very dra- matically on the lives of the most vul- nerable people in our society, sound like an awful lot of money. Still, all told, those numbers relate to about\u2014 well, actually less than 1 percent of the Federal budget. It is 1 percent of the Federal budget, but that has an impact on Americans, particularly American children who are poor, greater than the other 99 percent that we spend. I just want to put that in context. Mr. President, the French have an expression, if I may in my broken French, ”plus ca change, plus c’est la meme chose,” and it means essentially the more things change the more they remain the same. The fact of the mat- ter is, this bill no more warrants the title ”reform” than any of its prede- cessors. This bill is still an abomina- tion, which is what I called the pre- vious bill, and I intend to vote against it for precisely that reason\u2014and I keep coming back to the question, and no one has answered the question: What about the children? What happens to them when all is said and done, with all the cuts and the changes that we are making in this legislation? When I talk about the children, I talk about them in the context that, again, welfare is simply a response to poverty. The system is broken. It needs to be reformed and fixed. The problem, however, is that, that is not what this bill does. Welfare reform should not be about pushing people, and pushing chil- dren particularly, into poverty. The Urban Institute has concluded that 1.1 million children will be thrown into poverty by this bill. Estimates for previous welfare bills passed by the Congress were 1.5 million children thrown into poverty. Now 1.1 million is less than 1.5 million, but it is still too many. The earlier Senate bill would have cut off 170,000 children in my home State of Illinois because their families had reached the time limits. That is about 28 percent of the children presently receiving the AFDC subsidy in my State. I want to talk about AFDC again, the misconceptions and the welfare my- thology, because there has been a whole lot of conversation about how this system is broken, let us turn it over to the States, let us let them do it. That is where I come back to the notion that we have ”been there, done that.” This is called ”back to the fu- ture.” I have to mention that the Presiding Officer and I worked together, when we first got here, on the whole question of unfunded mandates and the relation- ship between State and Federal Gov- ernment. But it is precisely that rela- tionship that is at the base of the de- bate going on here. For those who do not know the history, I want to refer my colleagues to the history of what happened before we had a national safe- ty net for poor children in this coun- try. I have referenced previously this issue, I am looking at the spring 1995 issue of Chicago History magazine. I want to read the title of the article, ”Friendless Foundlings and Homeless Half-Orphans.” I never read the first line, which I think I will share with my colleagues. It says: In 19th century Chicago, the debate over the care of needy children raised issues of Government versus private control and insti- tutional versus family care. Mr. President, that is exactly the ar- gument I have heard all day long on this welfare debate in this Senate today. So we are facing some of the same issues and some of the same ques- tions that came up in our country 100 years ago. Let me show you what State flexibil- ity got us last time, Mr. President. The last time we had State flexibility, we had children sleeping in the streets, which was the first poster. CONGRESSIONAL RECORD \u2014 SENATES9364 August 1, 1996 Here is another one. This is another part of the experiment, again, the his- tory that people maybe have forgotten. The fact is, they were scooping chil- dren up from the alleys in New York, shipping them to Rockford, IL, and auctioning them off. This is what hap- pened with poor children. This is the ”Asylum Children”: A company of children, mostly boys, from the New York juvenile asylum will arrive in Rockford, IL, and remain until evening. * * * they are from 7 to 15 years of age. * * * Homes are wanted for these children with farmers. * * *” This is the response States came up with before we had a national safety net. I have another poster which another response by states called the orphan trains. To be candid, maybe Speaker GINGRICH really had studied the history when he talked about we will just have to put these kids in orphanages. That is what happened at the turn of cen- tury. They took children from the alleys of New York, put them on trains and took them out West to give them homes. Some are still living and can give testimony to what happened be- fore we had a national safety net for poor children in this country, and get- ting rid of that safety net is what this so-called welfare reform is all about. We are rending that safety net apart just because it has not worked. Mr. President, I submit to you, it may not have worked, but we can do better by way of reforming it. This is not reform. Real welfare reform would mean we give people jobs, we give them some way to work, we give them some way to take care of themselves, we give them some way to take care of their children. That would be real welfare re- form. That is not what this legislation does. Mr. DOMENICI. I wonder if the Sen- ator will yield for a question. Ms. MOSELEY-BRAUN. Only if it will not take from my 20 minutes. Mr. DOMENICI. I ask it be on my time. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. DOMENICI. In all those cases you described, 1900 in Chicago, 19th century, do you have any idea how much the States and the National Gov- ernment was spending on these kinds of poor people then? Ms. MOSELEY-BRAUN. It depended on the State. In fact, I commend the article to my colleague. What they say here is depending on the State\u2014some States had better programs for han- dling poor children than others\u2014in fact, one of the tragic things about it, and I was kind of ashamed, my State of Illinois did not do well with poor chil- dren. Mr. DOMENICI. I was wondering if you knew how much we were going to be spending on these programs, includ- ing food stamps, which is an entitle- ment. One-hundred thirty billion dol- lars. Ms. MOSELEY-BRAUN. I say to my colleague, I am prepared to debate this with you, but, in the first place, again, that is less than 1 percent of the budg- et. We spend that much in an afternoon on some other programs that I know my esteemed colleague supports. But I also point out to my colleague that this bill cuts $54 billion from these pro- grams over the next 6 years in the name of welfare reform, with most of the cuts coming out of food stamps and coming out of help for legal immi- grants. The real problem, Mr. President, is that this bill is not designed to move people from welfare to work. There is not an adequate investment in child care, in job training or in job creation, factors which are critical to moving people into the work force. Instead, this bill is arguably about saving money. The $54 billion cut sim- ply represents, and I again go back to unfunded mandates, a shift in funding from the Federal to the State and the local governments. Poor people are not going to go away the day this legisla- tion goes into effect, and in light of the fact we have failed to provide for any employment, we have failed to create any jobs, we have failed to provide ade- quate child care funding, we have failed to address the fundamental cau- sations of poverty, the fundamental reasons they are poor to begin with, e.g., they do not have a job to take care of themselves. And, we are talking about the able-bodied people. Unfortu- nately, the fine print of this bill also has an effect on non-able-bodied people as well. Nonetheless, the fact is, with regard to able-bodied, anybody who can work should work, and anybody who can work ought to take care of their own children. But this bill makes no provi- sion for that, and that is the fun- damental problem. On October 1, the effective date of this legislation, there still will be areas in this country with excessive poverty and excessive unem- ployment. Those people, Mr. President, are not going to go away. I point out that the Congressional Budget Office has said that most States will not and cannot meet the work requirements in this bill. That alone should tell us that something is wrong with this picture. If the work re- quirements are not met, and that means the people do not have jobs and families then get cut off because of the time limits in the bill, then what hap- pens? What do these people do with their children? Do we put them on trains and send them out West? Do we scoop them out of alleys and auction them off? What are we going to do with the children? That is the essential question that has not been answered: What happens to the children once the time limits are reached, once the assistance is cut off? There is no provision for them. Even assuming for a moment the 20-percent cushion that is given in here, the kind of hardship exemption that States can use or the title XX funding, the entire program along with the title XX fund- ing are cut about 15 percent in this bill. This entire thing is predicated on cut- ting money. So you are talking about less money for a problem that is going to result in the great unanswerable about what it is we do with children. Are we going to have the State and local governments pick up the costs as- sociated with the children of the job- less poor? Or are we going to then say, ”Well, private charities can pick it up”? What do we do about these chil- dren? And then, Mr. President, and this is where we get to Speaker GINGRICH’s re- mark about orphanages, what do you do when you have someone who has reached the time limit, has children, still does not have a job and cannot feed those children? Do we then start child custody cases in the State courts of this Nation? Do we then put them in orphanages, as the Speaker suggested? No one has answered that question. Mr. President, I have a friend who is a juvenile court judge back in Illinois, and she tells me that she already is seeing cases that come in as child ne- glect cases which really are a reflec- tion of people who do not have enough money to take care of their children. She is seeing that happen already. Mr. President, this legislation that we are calling by the misnomer of ”re- form” is going to exacerbate that prob- lem. This bill does not provide enough money for people to go to work. It does not provide any job training, it does not provide any jobs, it does not pro- vide any education, it does not provide adequate child care, and we are going to see an increase in costs passed along to State and local governments. On the child care question, are we now going to also see an increase in latchkey kids and ”home alone” chil- dren, because the bill requires for those who do get employed that they go work. So if you are able-bodied and can find a job, you must, under this legisla- tion, come off welfare, you have reached the limit, you have to go to work. What if you have a 3-year old child? Where does that child go? There is inadequate money, as the Presiding Officer, I know, is well aware, inad- equate money to pay for child care. The Governors and the mayors will discover that this bill, which in the be- ginning looked like it offered them something significant, is really a Tro- jan horse. We are going to deliver to the Governors and the mayors the re- sponsibility for masses of poor children that we, as national legislators, do not want to face. I ask unanimous consent to have printed in the RECORD a letter from the National Association of Counties urg- ing us to vote against this welfare bill because, and I quote, ”counties will bear the brunt of the cost shift and will be left with only two options: to cut es- sential services, such as law enforce- ment and fire protection, or to raise local taxes.” There being no objection, the letter was ordered to be printed in the RECORD, as follows: CONGRESSIONAL RECORD \u2014 SENATE S9365August 1, 1996 NATIONAL ASSOCIATION OF COUNTIES, Washington, DC, July 30, 1996. DEAR SENATOR: The National Association of Counties (NACo) urges you to vote against the conference agreement on welfare reform (H.R. 3747). If this bill is enacted, counties will bear the brunt of the cost shift and will be left with only two options: to cut essen- tial services, such as law enforcement and fire protection, or raise local taxes. Counties are already developing more efficient welfare programs, but there is no way we can absorb the federal government’s costs all at once. NACo has long standing policy supporting the entitlement nature of Aid to Families with Dependent Children (AFDC) and oppos- ing funding caps including those in the legis- lation. Ending the entitlement for AFDC es- sentially dismantles the federal safety net for children. We also oppose the denial of benefits to legal immigrants. NACo has consistently op- posed denying Supplemental Security In- come and Food Stamps to this population. These provisions will disproportionately af- fect counties in states with large immigrant populations. The California State Associa- tion of Counties estimates that the legal im- migrant exclusions will cost California coun- ties more than $10 billion over six years. Counties are also deeply concerned about the legislation’s work requirements. Because of the funding cap, the bill lacks the suffi- cient funds to meet these requirements and operate welfare to work programs efficiently and could result in substantial unfunded mandates. Minnesota counties alone said that they would need to spend about $44 mil- lion to meet the work requirements for FY 1997. Since the participation rates increase every year, this cost will increase as well. Able-bodied individuals should be expected to work, but effective programs require sub- stantial initial investments and counties cannot be expected to pick up the full costs. The bill will ultimately shift costs and li- abilities, create new unfunded mandates upon local governments, and penalize low in- come families. NACo therefore urges you to vote against the conference agreement. Sincerely, MICHAEL HIGHTOWER, President. Ms. MOSELEY-BRAUN. Mr. Presi- dent, no one is here to argue that the current welfare system is a wonderful and perfect response to poverty. It is not. We do want to encourage inde- pendence. We do want to encourage family structure. We want to discour- age illegitimacy, give people an oppor- tunity to come together, create fami- lies, raise their children and take care of them themselves. We want to inspire hope in our peo- ple. We want to lift Americans out of poverty. Poverty should be something we have conquered in this great Nation with such a healthy economy as we heard tell about today. But we have not gotten there. As we tinker with this situation, as we try to work this situation, we can- not just say we are going to slash the money, cut the money, send it to the States and try to do reform on the cheap, which is what this bill does. Governor Thompson\u2014and it has been talked about as the great welfare ex- periment out of Wisconsin\u2014Governor Thompson acknowledges that welfare reform has to encompass jobs, child care, and creation of real opportunity for people. That costs money. You can- not do it on the cheap. And that is not what is in this legislation. Believe it or not, Mr. President, I ac- tually pray that this approach is going to work. I mean, it is hard to say. I pray it will because, quite frankly, I do not want to see the harm that this his- tory suggests that we are about to visit again. I do not want to see this happen to anybody, particularly poor children in a country as great as ours. But I have to tell you something. I believe that it is a fundamentally flawed premise that if you simply stop giving people assistance, if you stop helping them with their subsistence, they will go to work and stop having babies. If this bill cures illegitimacy, dependency, joblessness and hopeless- ness, I will congratulate my colleagues who support this legislation. However, Mr. President, I tell you it is not likely to happen. For all of the rhetoric about reform- ing the welfare system and helping the poor take care of themselves, this bill provides nothing\u2014nothing\u2014to help them get there. Cutting the income of the poorest Americans will not reduce the number of poor babies. It will not. It is not likely that we will cure the problem of dependency by just cutting people off and telling them their chil- dren’s needs can just fall off the edge of the Earth. That is why the legislation is so flawed. Mr. President, I also question wheth- er or not the savings in this bill com- ing from food stamps and the elimi- nation of benefits for illegal aliens is going to help move people from depend- ency to independency. I doubt this leg- islation is going to do anything about providing protections for children after all title XX, the social services block grants, are cut in this legislation by some 15 percent. So we are doing, I think, great harm to children. There are some, Mr. Presi- dent, who suggest that this bill is not perfect, that we can fix the flaws later. I do not think, Mr. President, that it is appropriate for us to play games and to be so generous with the suffering of the poor, with the potential and the effect on their lives this legislation suggests. We do not have the luxury of guessing in this area and making policy based on mythology and not on fact. This system may be broken, but the fact is that it affects the lives of real people. We have been talking in this Cham- ber about the States and their inter- ests, about the system and how it oper- ates or does not operate. The fact is, they are real people, real lives and real faces and real feelings and children who deserve a chance in this, the great- est country on the planet. We are not giving them this chance, Mr. President, with this legislation. That is why I do not believe that we can call this reform in good conscience. I believe that, unfortunately, this is again back to the future, to the poli- tics of 100 years ago, where we saw this happen before in history. They were not any more or less compassionate than we are today. This Senate does not hold a monop- oly on vision or compassion or political will. The fact of the matter is, we are responding, this legislation is a re- sponse to the same political will that existed at the time. We have met the challenge of pov- erty, and we have declared failure, and we have declared retreat. I think that is a real ironic situation for us to face in light of the good economic news that was given today. In closing, Mr. President, I say to you this. I hope that the political cal- culation that says that we can experi- ment like this based on the vulner- ability and the lack of political clout of people who do not vote or who can- not vote, I believe that that is political expediency. It does a disgrace to the well intentions of the Members of this body. I know this bill is going to pass. It has the votes. And this is my third time giving a speech on this subject. But I can tell you, Mr. President, we are going back to the future. This is history repeating itself. And all we can do is pray that the harm to the chil- dren does not become what everything tells us it is likely to be. I yield to the Senator from Washington. Mr. GORTON addressed the Chair. The PRESIDING OFFICER. Based on a previous agreement, the next Senator to be recognized would be the Senator from North Carolina. The Senator from Washington, as the floor manager, is recognized. Mr. GORTON. Mr. President, that is correct. I think we do have an agree- ment to go back and forth. And just simply for\u2014\u2014 Ms. MOSELEY-BRAUN addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Illinois. Ms. MOSELEY-BRAUN. Except, I say to my colleague from Washington, I be- lieve, Mr. President, I had 20 minutes allocated to me. I do not believe I have used up the 20 minutes. The PRESIDING OFFICER. All time has expired. Ms. MOSELEY-BRAUN. All time has expired? All right. Thank you. Mr. GORTON. Mr. President, just for Republican purposes, the next four Re- publicans listed in order are Senators FAIRCLOTH, GRASSLEY, CHAFEE and GREGG in that order. But, as I under- stand, we go back and forth. So after Senator FAIRCLOTH, the Democrat will be\u2014is that Senator BRADLEY or Sen- ator BOXER? Senator BRADLEY. I yield 10 minutes to the Senator from North Carolina. The PRESIDING OFFICER. The Chair may clarify. The Democratic order would be the Senator from New Jersey, then the Senator from North Dakota, the junior Senator from the State of Washington, and then the Sen- ator from Montana. Mr. BRADLEY addressed the Chair. The PRESIDING OFFICER. The Sen- ator from New Jersey. Mr. BRADLEY. Mr. President, it is my understanding that after I speak, CONGRESSIONAL RECORD \u2014 SENATES9366 August 1, 1996 then it would be the Senator from Cali- fornia. I know the Senator from New Jersey speaks after the Senator from North Carolina. The Senator from North Carolina shall speak, and then I will speak. The PRESIDING OFFICER. The Sen- ator from North Carolina is recognized for 10 minutes. Mr. FAIRCLOTH. Mr. President, I had asked for 15 minutes. I see I was al- located 10. I think that will probably handle it. But I had been granted 15. Mr. GORTON. If the Senator would yield, we are beginning to run out of time. The next three Republicans are even going to get 10 minutes. So we hope the Senator can do it in that. Mr. FAIRCLOTH. I hope I run out of speech before I run out of time. Mr. President, I said many times, and many times over, that in this welfare debate we have not addressed the root cause of welfare, and that is illegit- imacy. The root cause of welfare de- pendency is illegitimacy. Until we ad- dress that, we will not have addressed the root cause of welfare. And my be- lief has only been strengthened by what I have seen during this year of welfare debate. Some of the weaker points in the welfare bill have been strengthened by the conference. The conference report contains a provision for work for wel- fare recipients, a concept known as pay for performance. If you have ever heard of anything ludicrous, it would be being paid not to perform work. Only in the Federal Government, only in the welfare system could anybody conceive of not having to work to get paid, where that would be an unusual con- cept that you had to require pay for performance. It is incomprehensible to me that anybody would be paid that did not perform. To truly reform welfare, we have to reverse the current welfare policies which subsidize and promote self-de- structive behavior and illegitimacy. These policies are and have destroyed the family. This conference report will serve as a good starting point for changing wel- fare in a culture that is based entirely on a system of personal responsibility. That is where we need to return to\u2014a system based on personal responsibil- ity. I have heard several times here today that we could correct the mistakes in this bill at a later date. I think by cor- recting mistakes, they meant make it a softer, weaker bill. I hope we will cor- rect the mistakes by making it a stronger, better bill and put more em- phasis on personal responsibility. I had hoped this bill would contain, like a previous conference report, a provision known as the family cap. In plain language, the family cap says that if you are a welfare recipient drawing AFDC and have more children, you do not get more money for having more children. We did not put that in this bill. We absolutely should have. It is one of the glaring weaknesses of it, that you can continue to have children and continue to be paid by the taxpayers. The middle class American family that wants to have children has to prepare, to plan, to save, to accept, to take on the re- sponsibility of having children. At the same time, we are taking their tax money to support these people who are not accepting personal responsibility and having children, on and on and on. We are taxing the working people that plan to have children. We are taking their money to pay for this irrespon- sible behavior. Today, more than one in every third child is born out of wedlock, and in many communities it can go up to 85 percent. Children born out of wedlock are three times more likely to be on welfare when they become adults, and children raised in single-parent homes are six times more likely to be poor and twice as likely to commit crimes. It is clear that the cost of this has become an extreme burden on the American people. Each year, half a million children are born to teenage mothers. Over 75 percent of these occur out of wedlock. The estimated cost to the American people, our taxpayers, are $29 billion to care for society’s part in child-bearing adolescents under 18. That is the stated cost to the American people. I commend the conferees who were able to restore an important provision of the bill. This is the funding for the abstinence education program which I initially offered as an amendment to our first Senate bill. Abstinence edu- cation has worked in those counties, cities, and States that have put it in. It has done as much or more to break the cycle of out-of-wedlock pregnancies and teenage welfare recipients as any- thing we have done. I plan to continue to promote this program and to intro- duce it again in later bills. After 30 years of the so-called Great Society, we are on the verge of passing legislation that will return welfare to what it was supposed to have been 50 or 60 years ago. Actually, when it was first began, it was temporary help for responsible individuals who had fallen on hard times. It is no longer that. We have converted it to a way of life in which generation after generation after generation receive welfare. It is not temporary help for those people who have had a hard time. No, we have taxed these people; we have spent $5.2 trillion to create the worst system that was ever made. Nobody likes it. It is long since time that we change what we have been doing. It is not designed for people on hard times. It is designed as a way of life for people who choose not to work. With the $5.2 trillion we put into it\u2014 $5.2 trillion is very close to the exact amount of our national debt\u2014we have more poverty than we had when we started. When we started this program of AFDC about 33 or 34 years ago, less than 7 percent of the children were born out of wedlock. By subsidizing il- legitimacy, we now have it to over 37 percent of the children, and it is rap- idly rising. It is even agreed by the President that it will soon exceed 50 percent of the children in this country. It is long since time that we do some- thing about it. This bill makes a start. This bill makes a start. We are going to see the States that fully implement the work requirements, that fully im- plement the requirements that people work for their welfare, they are going to see such a great response and reduc- tion in their welfare rolls until they will be applauded, and the other States will attempt to emulate and copy what they are doing. I hope most of the States will take advantage of the opportunity given them to cut their welfare rolls, and they will see a dramatic reduction and the other States will attempt to emu- late. The real test ahead will be changing the lives of today’s welfare recipients by helping them become self-sufficient and ensuring that fewer and fewer peo- ple will come to need welfare. That is the real purpose of what we are trying to do, bring people to accept personal responsibility. I believe this bill will do it. I intend to support it. The PRESIDING OFFICER (Mr. THOMPSON). The Senator from New Jer- sey. How much time does the Senator yield himself? Mr. BRADLEY. I yield myself 9 min- utes. Mr. President, this conference report on welfare reform is a politician’s dream, a poor person’s nightmare, and a continuing source of anger and frus- tration for the taxpaying public that wants real welfare reform. First, what about the politician’s dream? Welfare, AFDC, $15 billion out of a $1.5 trillion budget has been a po- litical football in this country for gen- erations; in some cases, a racialized po- litical football, as politician after poli- tician created in the mind of the public the idea that black women had chil- dren so they could collect $64 per month for that third child in New Jer- sey. This bill allows those politicians, those Federal politicians, to end wel- fare and claim they will end poverty and illegitimacy and mind-numbing bureaucracy with one stroke. You can send a signal to multiple constitu- encies under this welfare reform bill. Mr. President, this bill is a poor per- son’s nightmare. The Urban Institute says, as a result of this bill, there will be 2.6 million more people in America living in poverty, 1.1 million more chil- dren living in poverty, and they will be living 20 percent deeper in poverty. The gap between their income and the pov- erty level will be 20 percent lower. We say to send it back to the States and they can take care of it. Mr. Presi- dent, you have an economic downturn in the States, and they have a fixed amount of this money in a block grant. There is nothing that prevents them from cutting this poor person’s grant CONGRESSIONAL RECORD \u2014 SENATE S9367August 1, 1996 more, cutting benefits, saying you can- not go beyond 3 years, 2 years, 1 year. There are no requirements that we put in this bill. It is a poor person’s night- mare. Mr. President, it is a continuing source of anger and frustration for our taxpaying public that wants real wel- fare reform. When the public hears ”end welfare as we know it,” they think ”end welfare.” When people hear that people are going to have to work for welfare, they believe what politi- cians say\u2014beware. If you believe what politicians say in this bill, that you have to work for welfare, imagine how surprised those individuals who have believed the politicians’ rhetoric about work and welfare, imagine how sur- prised they are going to be when they find out that States can pay about a $50 bounty per person instead of put- ting money up to put people to work. The nonpartisan Congressional Budg- et Office says that most States will simply ignore the request to put people to work and instead pay the 5 percent, $50 penalty for the failure to meet the work requirements. It will pay them to do that. Just taking one example, the biggest city, New York City, which operates the largest work program in this coun- try. Only 32,000 welfare recipients are in it out of 850,000 New Yorkers on wel- fare. The reason? Not because they do not want to do it\u2014lack of money to create jobs. The mayor of New York City said that to meet the work requirements in the bill, the city would need $100 mil- lion more than it will receive in this block grant. It can’t do it, and so it will pay less, pay the $50 bounty per person, to get out from under that work requirement. The politicians who claim the bill will put people to work will suddenly discover a lot of people are not working. Imagine, there are those who think this bill will promote marriage. This bill will not promote marriage at all. This bill will not promote two-parent families. This bill will not promote re- ward for marriage. This bill will not promote reward for work or penalties for additional children. This bill will not change the face of the bureaucrat that sits in his or her State office lis- tening coldly to whatever is said, re- sponding in a way that is at least in- sensitive and often demeaning. This bill will not change that. Imagine you are a taxpaying citizen in a State that has tough economic times. The State will have a lot more people on welfare, and their block grant may not cover them. The only way you are going to get more is by raising taxes. Imagine how you would feel when a State three or four States over from you is in good times and it gets its block grant and only has to de- ploy 80 percent to welfare and can use the rest to give its citizens tax cuts. That is why you need a national pro- gram, not a program of block grants. For those who believe in this remark- able federalism, anybody who thinks the State legislatures in Trenton, Al- bany, Sacramento, or wherever, are going to be more sensitive to issues re- lated to people who are poor or to chil- dren who are poor than national legis- lators, I have a bridge I would like to sell you shortly after I finish speaking. Mr. President, why is this bill such a mistake, in addition to the points that I have made? Well, when I left a small town on the banks of the Mississippi in Missouri, outside St. Louis, and went to college in New Jersey\u2014a decision that changed my life\u2014in St. Louis, 13 percent of the kids born that year were born to single parents. In 1994, 63 per- cent were born to single parents, and 85 percent of the black children were born to single parents. If we were honest about this, Mr. President, we would admit that no one knows what will change this around. No one knows what combination of incentives and pen- alties and values will begin to change this. That is why what we need is a Federal commitment and State experi- mentation, with a lot of different kinds of combinations of programs. Then maybe we can get the mix that will break this rising number of children in this country born into single-parent homes. But what this bill creates is State chaos, not State experimentation. What this bill does is simply pass the buck from Federal politicians to State politicians; one group of politicians take the pot of money and give it to another group. Let us have a baseline. What is the illegitimacy rate in cities in this country? What is the poverty rate? What is the unemployment rate? What is the violence or crime rate? In 5 years, let us see whether this bill has miraculously changed all those statis- tics for the better because, deep down, that is the claim of this kind of legisla- tion, built on generations of using this issue as a code word for a lot of other things in American politics. Mr. President, welfare was not the cause of these rising illegitimacy rates, and so-called welfare reform in this bill will not be the solution. The silver lin- ing\u2014if there is a silver lining in this bill\u2014is the child support enforcement provisions. They are the provisions that say that if you father a child, you have an obligation to support that child. I strongly support those parts of this bill. But, Mr. President, I regret to say that the rest of this bill is sorely lacking. I admit that it is a politician’s dream, a message to multiple constitu- encies. But it is a poor person’s night- mare, and it is a source of continuing anger and frustration for the taxpaying public that wants real welfare reform and will not get it in this bill. Mr. GORTON. Mr. President, I yield 10 minutes to the senior Senator from Iowa. Mrs. BOXER. Will the Senator yield for a unanimous consent request? Mr. GRASSLEY. If it doesn’t come off my time. Mrs. BOXER. I ask unanimous con- sent that following Senator GRASSLEY, I be allowed to address the Senate for 9 minutes on another subject. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. COATS. Mr. President, are we following an order of going back and forth? Mrs. BOXER. I am on the Democratic list. Mr. GORTON. Yes. The PRESIDING OFFICER. There is a suggested list, but it is not formally agreed to. Mr. GRASSLEY. First of all, Mr. President, we all should thank Presi- dent Clinton for keeping his campaign promise of 1992 to end welfare as we know it. He announced yesterday that he would sign our legislation. After two vetoes of very similar welfare re- form legislation that we passed last year, we were beginning to wonder whether or not he was serious about that campaign promise of 1992. We are glad now to know, after 4 years of talk, that he is serious about ending welfare as we know it and that he won’t be stonewalling anymore and that he will be doing what he, as a Governor, said ought to be done\u2014return more author- ity over to the States. So we thank him. We also know that Congress has made a very serious effort to reform welfare. The last was in 1988. Such wel- fare reform was supposed to move peo- ple from welfare to work, to save the taxpayers money, to reduce those on the rolls, to move people to self-suffi- ciency. All of those things were pro- claimed in that 1988 legislation that passed 96 to 1. Now, 8 years later, we see 3 million more people on the welfare rolls. We see billions of dollars more being spent, and we also conclude that reform of the system, regardless of our good inten- tions and the reform that we were wanting to enact, did not happen. The current welfare system has failed. The programs were well-in- tended, but they proved to be ineffi- cient, they proved to be unfair and, most importantly, they proved to dam- age those they were meant to help. We are concerned about the children. Our present welfare program was passed decades ago out of concern for children. But after six decades, we find that our children are the POW’s of the war on poverty. This has not helped our children. It has not strengthened our families. And we are insistent, in this legislation, upon making up for those wrongs of the past. In other words, to help our children. I said that the last time Congress tried reform we failed. We built upon what we had been doing for 60 years\u2014 to have everything run from Washing- ton; to micromanage everything from Washington. But now, as we change the approach for the first time in 6 dec- ades, it is not as, Senator BRADLEY tried to imply, just some casual effort to send it back to the States to solve all of our problems. No. We send it CONGRESSIONAL RECORD \u2014 SENATES9368 August 1, 1996 back to the States because we have seen the States succeed where we have failed. I said that we wanted to move people from welfare to work. We want- ed to save the taxpayers’ money. We wanted to make people self-sufficient. We have failed. But we have seen States succeed. My own State of Iowa in 3 years of reforms has 12 percent less people on welfare; that is 4,000 less people on wel- fare. The monthly checks have gone down from $371 to $335, not because we want to spend less to help families, but because there are more families work- ing and earning income. And as a State we have seen the highest percentage of welfare recipients in the Nation in the work force at over 33 percent. Under the waiver Iowa received, we have a control group which is still under the old program. And in that control group under the old program, only 19 percent of the people have moved from welfare to work. Of those in the new program, over 33 percent of the people have moved from welfare to work. So my State, Wisconsin, Michigan, and many other States, have a track record of succeeding on welfare reform where the Congress in our last attempt in 1988 has failed. These local and State solutions can be\u2014and are\u2014more innovative and tar- geted. They promote new opportuni- ties. I think they are doing what every welfare reform intends to accomplish\u2014 moving people from dependency to self- sufficiency, building self-esteem, mov- ing people from welfare to work, saving the taxpayer dollars, and, most impor- tantly, ending the hopelessness that welfare recipients have experienced. In the process of passing this legisla- tion\u2014we are saving the taxpayers’ over $55 billion. We are limiting the amount of time that people can be on welfare to a 5-year lifetime limit. We are help- ing recipients find jobs because they have to do this within 2 years of join- ing the program. States can do better if they want to. We are turning over the management of these programs to the States be- cause they do a better job. We do it by block grants to give the States more freedom to use their money. We are still going to have food stamp pro- grams and child nutrition programs. But these programs as well are going to be reformed. Most importantly, individual people have a responsibility, other than the taxpayers, to take first and primary care of their own families. Absentee dads are required to do better in pro- viding for their kids. This in the end will do a better job than our giving government aid to the children in need. We are going to get more for our money. Yet, we also provide for growth in this program at 4.3 percent annu- ally. What we are hoping for here is to make sure that we provide hope for the future. Families that want self-esteem but do not have it will have the oppor- tunity to restore it again as they work off a system that is a dead end. Part of the hope of the future is not only that we pass this welfare reform and do good for people who are on wel- fare, but we hope that we are able to energize this economy so that there are more jobs not only for those who are leaving welfare for work but for people who have never been on welfare. We need to create jobs and good paying jobs at that. We have seen during this administra- tion a 2.4-percent growth, the slowest growth of any administration since World War II except the administration of President Nixon. If we had been ex- periencing the growth on average that other Presidencies have had, we would have had many more jobs created. And we would not have the situation where productivity growth has averaged a meager six-tenths of a percent per year under President Clinton’s tenure com- pared to the 1 and one-tenth percent average pace that we have had since 1973. That productivity per worker is going to mean more wages, more job opportunities, and more take-home pay. I yield the floor. Mrs. BOXER addressed the Chair. The PRESIDING OFFICER. The Sen- ator from California. Mrs. BOXER. Thank you, Mr. Presi- dent. First, I ask unanimous consent to have printed in the RECORD a number of editorials from newspapers in my home State of California in opposition to this welfare reform bill. There being no objection, the mate- rial was ordered to be printed in the RECORD, as follows: [From the Fresno Bee, July 27, 1996] BACKWARD WELFARE REFORM Bills passed by Congress go too far; the president should use his veto pen and de- mand a better legislative effort. Once again, Congress has passed welfare bills that are more about saving dollars and winning votes than reshaping lives. As much as Americans may want to reform welfare, they don’t want a system that goes from a hand-out to the back of the hand. The House bill passed last week and a simi- lar bill passed Tuesday by the Senate would end the 60-year-old federal guarantee of as- sistance to poor children. In its place, the bills substitute block grants to the states, which would have wide power to set eligi- bility rules for assistance, but would be re- quired to cut off recipients after two years if they did not find work. Aid over a lifetime would be limited to five years. There’s a wide consensus that welfare needs to be converted to a jobs-oriented sys- tem. But moving welfare recipients, many of whom lack a high school diploma or market- able skills is a complex and expensive busi- ness. The most serious of the state workfare reforms, put forward by Republican gov- ernors in Michigan and Wisconsin, recognize that reform must make upfront invest- ments\u2014in things like job training, child care and transportation\u2014if long-term welfare re- cipients or teen-age mothers are going to move into jobs and achieve self-sufficiency. But the bills passed by Congress are more punitive than supportive. The House bill aims to save $60 billion over the next six yeas. That means many states will not re- ceive adequate federal funds to move welfare recipients into work or to provide expanded assistance in times of recession, when job losses push more families into need. Welfare reform doesn’t require shredding the safety net for children and workers; the House bill attacks it with a cleaver. It cuts food stamp dollars and removes eligibility for adults after three months if they aren’t working. That means people who worked a lifetime would be left in hunger after three months if severe unemployment, such as California has recently endured, prevented them from finding jobs. The bill would also deny food stamps to legal immigrants, re- gardless how hard they work. Moderate Republicans and Democrats tried to add protections for children and working families with amendments that provide vouchers for services to children whose par- ents can’t find work after the time limits. But the GOP majority defeated them. Now the last line of defense for decency is once again President Clinton’s veto pen. Having twice vetoed bad welfare bills, the president’s political advisers are pushing him to sign any welfare bill that looks like it will redeem his 1992 pledge to reform wel- fare. But Clinton has already proved his wel- fare reform credentials by approving federal waivers for state reforms. He’s already ush- ered in a new era in social policy around the country. It isn’t necessary to sign a bad bill to ”end welfare as we know it”; Clinton should de- mand a bill that replaces welfare with some- thing more promising than a stingy plan that would put a million more kids in pov- erty, strap local governments and take the safety net away from millions of working families. [From the Los Angeles Times, Aug. 1, 1996] IT’S WELFARE REFORM AT CALIFORNIA’S EXPENSE When President Clinton signs the com- promise welfare bill, as he says he will, the financial brunt will fall on California, home to more immigrants than any other state. This is unfair to California taxpayers. Immi- gration is a national issue and its effects should be shouldered evenly. But that’s not what’s going to happen. At least 40% of all legal immigrants live in this state, and half of those in California re- side in Los Angeles County. When needy non- citizens lose their federal benefits under the welfare reform most of them obviously will turn to the counties and the state for assist- ance. They cannot legally be denied. But how to pay for it? State and county governments are re- quired to provide aid to all needy legal resi- dents. Expect lines of elderly, blind or dis- abled immigrants at relief agencies, for they will no longer be eligible for federal benefits. Needy noncitizens will also lose access to federal food stamps. All this adds up to gen- eral relief at local expense. Immigrants have been popular scapegoats in Congress and were especially so in nego- tiations on welfare reform. Though the im- migrant poor account for a mere 5% of fed- eral social spending, cuts in their benefits are expected to produce 60% of the planned welfare savings. For California, that load off the federal budget could stick state tax- payers with more than $1 billion in new bills. The punishing elements of this welfare re- form distract from the positive provisions of the bill, such as greater flexibility for states in designing their own programs to put wel- fare recipients to work, a major theme of the national reform. Another key compromise allows states to provide non-cash vouches for diapers and other child-care items to welfare mothers who have exhausted the five-year limit on cash benefits under the bill. CONGRESSIONAL RECORD \u2014 SENATE S9369August 1, 1996 American children, however, will no longer be entitled to federal subsistence aid simply because their families are poor. The national safety net established by President Franklin D. Roosevelt in the 1930s is, in essence, evaporating. The changes could plunge an es- timated 1.1 million children deeper into pov- erty. Poor parents will be able to receive benefits for two years. A time limit is cer- tainly appropriate, but should recipients be cut off if they are responsibly looking for work? Some of these changes are shameful, but it is the political will of a Congress determined to decentralize the system, partly in re- sponse to the pressure of a presidential elec- tion year. The threat to legal immigrants, people working and living in the United States under a green card or other protection, is the most obvious fault of the legislation. Presi- dent Clinton says he believes, as do most Americans, that welfare should be a second chance, not a way of life. But legal immi- grants won’t get even temporary federal aid, even if they had paid taxes for years before losing a job, losing a limb or losing the in- come provided by spouse. By signing the welfare reform legislation, Clinton will be able to say he fulfilled a key campaign promise to ”end welfare as we know it.” But he won’t be able to say that he lived up to his more recent assertion that children ”need to come out ahead.” [From the Sacramento Bee, July 30, 1996] CLINTON’S WELFARE TEST Bill Clinton, the man from Hope, ran for president as the candidate who would do something for children and the forgotten working families who played by the rules but found themselves falling behind in the eco- nomic race. But that promise won’t mean much if he does not veto the misshapen wel- fare reform bill headed for his desk. No American leader has spoken more pas- sionately than has Clinton about how the de- clining wages of workers in the bottom half of the job market have dragged millions of full-time workers and their families into poverty and raised child poverty rates to lev- els unseen anywhere else in the industri- alized world. Yet instead of offering hope and assistance to those struggling families, Con- gress’ pending welfare reform bill delivers them a cruel body blow. Lost in the attention lavished on the bill’s overhaul of Aid to Families with Dependent Children, the grant program that goes pri- marily to single, nonworking mothers of poor children, are the totally unnecessary cuts the legislation would make in food stamps, the key safety net program for low- income working people. According to the Congressional Budget Office, nearly half the $61 billion the bill cuts would come from nu- trition programs. Those cuts spell more suffering for families and children. An analysis by the Urban Insti- tute projects that the changes would push 2.6 million more people below the poverty level, 1.1 million of them children. Altogether more than 5 million working families would lose an average of $1,000 a year in income if the bill becomes law. There’s a widespread consensus that wel- fare must be reformed to reduce long-term dependency and encourage work and per- sonal responsibility. But the current bill, un- derfunded and overly punitive, ignores every- thing we have learned over the last decade about moving welfare recipients into the job market. More than half of welfare recipients lack a high school education at a time when labor markets put a premium on education and skills. Two-thirds live in central cities, places from which employers have fled. At their most successful, past efforts to move welfare recipients into jobs, such as the GAIN program in Riverside County, have re- duced welfare rolls by only 10 percent and in- comes of welfare recipients by a few hundred dollars a month. Yet the welfare bill requires states to move half of all recipients into jobs, even though, according to Congress’ own experts, the bill falls $12 billion shy of full funding for the work program. Even if one heroically as- sumes that two-thirds of welfare families would find permanent employment, the bill’s five-year lifetime limit on benefits would leave 1 million families\u2014adults and children alike\u2014without any source of income. The president knows welfare reform doesn’t require the sacrifice of millions of young lives. If Clinton doesn’t have the gumption and leadership skills to stand up and explain to the country the difference be- tween real welfare reform and Congress’ act of callousness, what differentiates him from his Republican opponents? [From the Fresno Bee, Aug. 1, 1996] CLINTON’S WELFARE SURRENDER President’s reasoning for acquiesing on re- form bill, despite ”serious flaws,” is barely credible and clearly a political calculation. President Clinton eloquently explained Wednesday the flaws in Congress’ welfare re- form bill. It will punish hundreds of thou- sands of low-income working families by cut- ting back their food stamps, he said. It will take away the federal safety net from legal resident workers who have paid their taxes and played by the rules. It will leave vulner- able poor children whose parents can’t find jobs within the bill’s five-year time limits. And after explaining all the reasons why this bill is wrong, Clinton announced he would sign it. It was the least principled act of a presidency in which principle has often run a poor second. Clinton’s rationale for signing the bill, de- spite its ”serious flaws,” is barely credible. No one doubts that the welfare reform core of the bill, which turns welfare from a fed- eral entitlement into a block grant for state- designed programs to assist needy families and move them into the workplace, could be passed again by this or subsequent Con- gresses. There’s widespread consensus that the current welfare system is broken. But if Clinton truly believes be can fix the flaws in this bill, he belongs to a very small church. In an era of sound bites and attack ads, what Congress, Democratic or Repub- lican, will soon dare to restore federal safety net programs for legal immigrants, no mat- ter how needy or deserving? At a time of growing budget stringency, what are the chances that Congress, once having slashed food stamp spending, will reverse course and come to the aid of the working poor? No matter how hard he tries to decorate his action with policy arguments, Clinton’s decision to sign this bill came down to a bru- tal political calculation born of a failure of leadership on this issue. Had Clinton made welfare reform a top pri- ority in 1993, he could have shaped the na- tional debate and produced a new system that protected children even as it enforced our values about work and personal respon- sibility. Instead, he left the issues to be de- fined by a GOP Congress more intent on budget savings than shaping a humane and workable welfare alternative. He thus put himself in a political position where oppos- ing a bad bill could be made to look like op- position to reform. And now, for his failure of leadership and political nerve, children and the working poor will pay. [From the San Francisco Chronicle, July 22, 1996] WELFARE BILL TOO HARSH Members of the U.S. Senate had a chance Friday to maintain a valid 60-year federal commitment to help the truly needy while still moving toward a work-oriented welfare program. They didn’t take it, and unless the lawmakers significantly change direction this week, President Clinton has an obliga- tion to veto the third welfare reform bill that comes before him. Clearly, Clinton wants desperately to sign an election-year bill that will allow him to say he made good on his 1992 campaign prom- ise to ”end welfare as we know it.” And the American public is squarely on the side of both the president and the many members of Congress who want welfare to become a work program and not remain in never-ending handout. But the Republican bill as currently con- stituted goes way too far in taking away the federal government’s duty to see that chil- dren do not go hungry or homeless. History shows that states do not always take care of the neediest among us, even when they make the best possible effort to find work. The federal government should maintain authority over welfare programs, a responsibility that would be taken away with the Republican plan to give states wel- fare money in block grants. On Friday, the Senate turned down Demo- cratic amendments that would have altered the Republican plan to ensure that children could continue to receive federal help even after their parents were cut off. For that reason alone, the bill should be rejected. While the culture of welfare as en- titlement clearly must change, wholesale abandonment of the most helpless is not ac- ceptable. The Clinton administration has been lib- eral in its granting of federal waivers to allow states to try their own get-tough wel- fare-to-work programs, and the president has said he would continue to allow creative state initiatives. Democrats are going to try again this week to amend the GOP bill. But so far, ad- ministrative directives, not legislation, offer the best hope for welfare reform. [From the San Francisco Examiner, July 24, 1996] PUNISHING THE POOR The Dictionary defines ”reform” as ”to make better” and ”welfare” as ”the state of being or doing well,” It’s a pity that corrup- tion of the language hasn’t been added to the federal Penal Code. Otherwise, members of the 104th Congress would be sentenced to an afternoon in the stocks, splattered with rot- ten vegetables. Bad enough that they have produced a package of kick-the-poor legislation that is callous, cruel, marble-hearted and mean spirited. Worse, this vote-pandering measure has been given a supremely cynical label, ”welfare reform.” The richest nation on Earth, with a mili- tary budget of $260 billion, is led these days by politicians who assert with a straight face that federal funds for public assistance and support services are causes, not symptoms, of what’s wrong with our society. In its latest version, the welfare bill would shop federal funds to each of the 50 states in the hopeful expectation that their governors and legislators can come up with effective programs that will end poverty as we know it. This is not a joke. Conservatives say they want to end the propensity on liberals to throw money at the poor without doing much to beak cycles of dependency. And yet, given the punitive CONGRESSIONAL RECORD \u2014 SENATES9370 August 1, 1996 rhetoric by well-fed politicians of both par- ties, we’re not surprised that the expulsion of families from welfare is not accompanied by funds or mandates for training, schooling or child-care programs. Sure, let’s get able-bodied men and women off the dole. But let’s remember that 9 mil- lion children are among the 14 million people who now get monthly survival checks under the federal-state programs called AFDC, or Aid of Families With Dependent Children. Most AFDC parents are single moms, few with job skills or work experience. Perhaps their problems will go away if state bureau- crats replace federal bureaucrats, but we doubt it. It’s one thing to want to fix the enormous disappointments and dilemmas of the na- tion’s 60-year-old programs of federal aid to the poor, but it’s another for Congress to dump the responsibilities on the states in the name of ”reform.” This is particularly galling for California, because ”welfare re- form” proposals included a cutoff of social and health services for the state’s legal im- migrants. And we’ll have to make up the dif- ference. ”Reform” is supposed to make things bet- ter, not worse. It doesn’t make sense from any viewpoint, including the cry for govern- mental thrift, to create a terrible situation where children will be forced into orphan- ages or jails at many times the expense of AFDC. Sen Daniel Moynihan, D-N.Y. says the ”reform” amounts to ”legislative child abuse.” [From the Los Angeles Times, July 18, 1996] PASSING THE BUCK ON WELFARE Tucked into the Republicans’ welfare re- form package in Congress is a wrongheaded proposal to cut benefits and social services to most immigrants who are legally in the United States but who have not yet become citizens. Under the proposal, Washington, which is seeking ways to finance federal wel- fare reform, would shift billions of dollars in costs to states and counties. The provision should be rejected. Sen. Bob Graham, a Florida Democrat, plans to offer an amendment to the bill to strike out restrictions on public benefits to legal immigrants. a host of eligibility issues ranging from student aid to Medicaid for legal immigrants already is part of a sepa- rate immigration bill now in conference committee. There is no logic in including those matters in a welfare bill. The two is- sues should be handled separately. The welfare bill now proposes to help fi- nance the costs of reform by cutting $23 bil- lion over six years in benefits to legal immi- grants, including children and the elderly. This would be an unfair and punitive move against legal immigrants who have played by the rules. The bill would make most legal immi- grants now in the country ineligible for Sup- plemental Security Income (SSI) and food stamps. Future legal immigrants (except for refugees and asylum seekers) would be ineli- gible for most other federal means-tested benefits (including AFDC and nonemergency Medicaid services) during their first five years in the country. The cutbacks would disproportionately hit California, Florida, New York and Texas, the states with the biggest immigrant popu- lations. California alone could lose $10 bil- lion, or about 40% of the proposed $23 billion in benefit reductions. Those ineligible for such benefits would have to turn elsewhere for aid. In Los Angeles County, for example, if all affected SSI recipients sought general assistance relief instead it would cost the county $236 million annually. The cost shift- ing could have potentially disastrous results for the already fiscally strapped county. The immigration bill now under consider- ation already includes $5.6 billion in savings from tightening eligibility requirements for legal immigrants on a variety of federal pro- grams, including Medicaid. the attempt to use welfare reform to slip through further curbs on public assistance to legal immi- grants should be called what it is\u2014a deplor- able money grab by Washington that can only hurt California. Mrs. BOXER. Mr. President, thank you. Mr. President, I am putting in the RECORD a number of editorials. From the Fresno Bee in the conserv- ative heartland of my State that says: Once again, Congress has passed welfare bills that are more about saving dollars and winning votes than reshaping lives. The Los Angeles Times wrote: The financial brunt will fall on California, home to more immigrants than any other State. This is unfair to California taxpayers. Immigration is a national issue and its ef- fects should be shouldered evenly. In another L.A. Times editorial: Passing the Buck on Welfare. U.S. provi- sion affecting immigrants would hit States and counties. The one from the San Francisco Ex- aminer: Punishing the poor. San Francisco Chronicle: Welfare Bill Too Harsh. Wholesale deser- tion of the most helpless is not acceptable. And they go on. So, today I stand here for welfare re- form but against this bill. I am voting no, because I am not for punishing kids, and I am not for punishing Cali- fornia or other States that have most of our legal immigrants. Saying that I am for welfare reform but against this bill is not inconsist- ent. My desire for reform was expressed by my vote for the Senate welfare bill last year in the two Democratic leader- ship welfare reform proposals. Mr. President, those bills were tough on work, compassionate to children, and cracked down on parents who were ir- responsible. It was interesting to note the Sen- ator from Iowa talking about how this bill goes after deadbeat dads. Well, I want to note that my deadbeat parent amendment which unanimously passed in the Senate bill last year is gone from this bill. My amendment would have cut off benefits to deadbeat par- ents who refuse to pay their overdue child support. I think the proponents of this bill seem to be more interested in getting tough with the kids than their deadbeat parents. The provisions to cut assistance to legal immigrants will cost California an estimated $9 to $10 billion over the 6 years of the bill. Of all the legal im- migrants in the United States on sup- plemental security income, which is help to the aged, blind, and disabled, and of those on AFDC, which is help for families with children, 52 percent live in my home State of California. Among those who would be cut off are elderly immigrants who are too disabled to naturalize and young legal immigrant children. Let us face it. For every move we make, there is a counter move. For every action we take, there is a reac- tion. And speaking as a former county supervisor from the County of Marin, I can tell you at the bottom line it will be California’s counties that will feel the brunt. When your county super- visors come in to see you to tell you about the increase in homelessness and helplessness, I hope then at least you will be ready to take some action. In Los Angeles County, the effects will be staggering. Senator FEINSTEIN and I have been contacted by their elected officials. In Los Angeles, 190,000 legal residents could be cut off of AFDC; 93,000 legal residents will lose SSI, which is assistance for the aged, the blind, and the disabled; 250,000 legal residents will lose their food stamps; and 240,000 legal residents could lose their Medicaid. Los Angeles County could be faced with a cost shift of $236 million per year under this bill. And if the State of California opts to bar Medicaid cov- erage to legal immigrants, it could shift an additional $100 million per year to the County of Los Angeles. The conference report will place Cali- fornia at serious risk of a huge nega- tive impact on health services. Again, for every action there is a reaction. Our public hospitals and our children’s hospitals that got reimbursed for these medical costs will no doubt have to downsize, shut down, cut back, and shift costs. And the bottom line is, if legal immigrants cannot receive Med- icaid, all Californians and all Ameri- cans will be placed at greater risk of communicable diseases because these people will not be treated. Senator FEINSTEIN and I worked hard on an amendment which said this very simply. This is a massive change of law. Let us phase in the changes to our legal immigrants. Many of these legal immigrants came here escaping perse- cution. Many of them do not have sponsors to pick up the tab. They have no one else to turn to. If we are going to change the rules, Senator FEINSTEIN and I said, make it prospective. Unfor- tunately, the conference report did not move in that direction. It really amazes me to think about the message we are sending to an asylee or a refugee who risked their life to get to this country. Many of them are working. Many of them are paying taxes, and doing well. If they fall on hard times, they are out. They are out of luck. And the costs will be shifted to the counties. Many of these legal immigrants are children. We profess to care about chil- dren. Look in the eyes of a child before you cast this vote, because this bill will subject even more children to pov- erty. I have to tell you, the Urban Insti- tute says more than 1 million children will be thrust into poverty under this bill. I hope that we can move quickly after this bill passes and is signed\u2014and we know that is going to happen\u2014to soften the blow on children. CONGRESSIONAL RECORD \u2014 SENATE S9371August 1, 1996 I could not believe when this Senate turned down the Breaux-Chafee amend- ment. The Breaux-Chafee amendment did not get the 60 votes it needed. Do you know what it said? That if little children are cut off because for some reason their parents cannot find work within the mandated time period, chil- dren cannot get any help to get dia- pers; they cannot get any help to get special medicine, school supplies, or other necessary items. This is the United States of America. We know that a nation is judged by how it treats its most vulnerable peo- ple. And I do not think it asks very much of very healthy U.S. Senators with big fat paychecks, big fat pay- checks, to provide for vouchers for a baby who is unfortunate enough to be in a family with a mom who, even if she tries every day, cannot land a job. That was it for me. I thank my colleagues very much for bearing with me. This bill is not fair to my State. That is clear. That is why nearly every major newspaper in Cali- fornia has said it is wrong. This bill is not fair to innocent children. For that reason, I stand here for welfare reform and against this bill which will bring harm to children and which will bring harm to my State. I hope we can miti- gate its ill effects. I thank the Chair. I yield the floor. Mr. GORTON addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Washington. Mr. GORTON. I yield 10 minutes to the Senator from Rhode Island. The PRESIDING OFFICER. The Sen- ator from Rhode Island. Mr. CHAFEE. Mr. President, I would appreciate it if I could be notified when I have 1 minute remaining. I am pleased today to speak in behalf of the welfare proposal which came from conference. It is a good bill, and while there are areas which still could be improved, overall I think it is a positive first step toward real welfare reform. Indeed, it does represent a compromise. The administration had some thoughts they contributed. Obvi- ously, the House did, and clearly, of course, the Senate did. We can no longer continue the cur- rent welfare system. I think that is clear. This system has encouraged long-term dependency, and that has been addressed several times this after- noon and this morning. There is one thing we all know, that the surest pre- scription for a life of poverty is to be born to young, to unmarried, and to poor parents. It is time to give the States a chance to improve the lives of all these poor families. This bill does that. It turns the AFDC Program over to the States and allows them, the States, to create pro- grams suited to the needs of the resi- dents of those States. We are doing this with very few restrictions on the States. Indeed, we can practically rat- tle off the restrictions. The States will be required to impose time limits on benefits. The States will have to meet tough work participation rates. But how they achieve these goals is left al- most entirely to the State and to the local government. I would like to see more Federal oversight of the program. I was on the conference. I presented my views but did not prevail in that particular area. The Governors insist that they will do the right thing and we ought to have confidence in them. I am hopeful, indeed optimistic, that they will, but I certainly will be keeping a close eye on the progress in this area. While we are giving the States maxi- mum flexibility, there are several im- portant protections in this bill. First, we have ensured that families who lose cash benefits because of changes in the State’s cash assistance program, those families will still be entitled to receive Medicaid. If the State goes down, low- ers the level at which an individual can qualify for cash assistance, the fami- lies still receive Medicaid based on the old formula. This is the critical provi- sion for the success of welfare reform. In the last 2 years, in the Finance Committee welfare reform hearings, one thing we heard over and over is that we cannot pull the rug out from beneath these poor families. In order to be able to support themselves, they must have Medicaid coverage. I am very pleased that this bill includes the amendment Senator BREAUX and I sponsored to continue Medicaid cov- erage for these individuals. Earlier versions of welfare reform in- cluded block grants in several child welfare and foster care programs. I have long believed that despite the name ”child welfare”\u2014that is a mis- nomer, Mr. President. Child welfare is not a cash or an in-kind assistance to poor families. Child welfare programs deal with abused children. It deals with neglected children regardless of their income. It does not have anything to do with a poor child. Child welfare pro- grams deal with neglected and abused children regardless of income. So, child welfare has no place in a welfare reform bill, and I am pleased we were able to have those block grants removed. We stay with the present entitlement system in the child welfare program. The present welfare bill has also made more cuts to the children’s SSI program than I would have liked to have seen. That is the way it started off, with rather severe cuts. This bill is much less damaging in that area. It does tighten the eligibility for partici- pation in children’s SSI programs, but retains cash assistance for those chil- dren who remain eligible. This is the right thing to do. These families are under enormous strains, families with SSI children, and they need the bene- fits, the cash assistance that comes so they can care for those children. I want to pay special tribute to Senator CONRAD, who worked with me and oth- ers to achieve this compromise. Welfare, as we know, has always been a shared responsibility between the States and the Federal Government. That will continue under this bill. It is true that States ought to have a finan- cial incentive to reduce the welfare caseloads. We all agree with that. How- ever, when they are reducing these caseloads, they should benefit from it, but also the Federal Government ought to benefit from it, too. That is why we provide that, if the States reduce their spending below a percentage mark, Federal dollars will be reduced like- wise. In other words, the Federal Gov- ernment will share in the savings. There is one thing that does bother me about this bill, and that is the de- nial of benefits to legal immigrants. I think the bill is harsh in that area. We made some improvements, in other words we made it less harsh, because we allow States to decide whether to extend Medicaid coverage to legal im- migrants. In other words, the States still have the option to extend Medic- aid coverage to legal immigrants. I had hoped during the legislative process, consideration here and the conference, we might have mitigated some of the harsher provisions, espe- cially those affecting currently elderly and currently disabled recipients. I think it is very tough to take away some of the benefits of those individ- uals that they are currently enjoying. In closing, I congratulate those who worked so hard to reach this agree- ment. Former Senator Dole deserves a lot of credit for laying the groundwork for this bill. Senator ROTH picked up after Senator Dole left and helped steer this bill through the Senate. On the other side of the aisle, my colleague from the centrist coalition, my col- league Senator BREAUX, did splendid work to forge a compromise between the two parties. On the other side of the Capitol, Con- gressman Shaw and Congressman Ar- cher were dedicated to this cause for some time and deserve a lot of credit. So my congratulations to each and all, and to all here who worked hard to make this bill a success, the success I believe it can be. It is not perfect. We all recognize that. But there are a lot of very fine provisions in this bill. I yield the remainder of my time. The PRESIDING OFFICER. Who yields time? Mr. CHAFEE. Mr. President, the time is on the other side now. The PRESIDING OFFICER. The Sen- ator from North Dakota. Mr. CONRAD. Mr. President, I rise today to indicate that I will support this welfare reform legislation. I do it with some reservations. I think any- body who has been deeply involved in this process understands that there are weaknesses in this legislation and that there are risks. But, make no mistake, there are risks in sticking with the sta- tus quo. The status quo cannot be de- fended. The current system does not work and is unlikely to work in the fu- ture. I have visited with literally dozens of welfare recipients and with people who CONGRESSIONAL RECORD \u2014 SENATES9372 August 1, 1996 work in the current welfare system. I cannot find anyone who believes the current system is a good one. I cannot find taxpayers who support it, who be- lieve in it. I cannot find welfare recipi- ents who believe in it. I cannot find the people who work to deliver the services who believe in it. Without exception they say to me, ”There has to be a bet- ter way.” I do not know if we found the best way in this welfare reform legisla- tion, but I do know it is time to try something different. I have concluded from my conversa- tions with welfare recipients that there is very little question that the current system is encouraging children to have children. I do not know how one can conclude otherwise. When we set up a system in which we say to a young woman, in many cases a child, that if you leave home, we will see that you have an apartment, that you get assist- ance, the precondition is that you have a child, what kind of system have we set up here? I talked to one of my col- leagues who met with a number of wel- fare mothers in the last several weeks. He asked them the direct question, ”Did the fact that there is a welfare system that you knew would support you and provide an apartment to you encourage you to have a child?” About half of them denied that it contributed to their decision, but about half of them said, ”Yes, Senator, it did con- tribute to my making the decision to have a child, because I knew I could get an apartment, I could get assistance, and that I could move away from a family situation.” In many cases that family situation is not a very pleasant one. That does not make sense for our so- ciety, to have structured a system that encourages children to have children. That is a disaster. I say to my col- leagues who have talked about their concern for children, and in every case I believe they are well motivated and feel deeply that we need to protect children, I share in that belief. The question is, how we do it? It is not in children’s interests to be born to chil- dren. That is a disaster. We know what happens in those circumstances. In case after case it leads to more pov- erty, more crime, more abuse. Children are not prepared to have children. We need to take away the incentive that is in the current system for that to occur. There are many parts of this bill that concern me. I believe the percentage that is allowed for hardship cases, and therefore exempt from the time limits, is unrealistic. I think that is going to have to be revisited in the future. I per- sonally believe there are marginal peo- ple in our society, people who, either because of mental disability or phys- ical disability, simply are unable to hold full-time employment. A 20-per- cent hardship exemption is not suffi- cient to cope with the percentage of our population that simply will never be fully employable. I think we are going to have to revisit that issue. But there has been much done to im- prove this legislation from where it started. I was very pleased my amend- ment to maintain a Federal safety net in the food assistance programs was adopted here on the Senate floor and was kept in conference. I think that is critically important. That provides the food safety net for millions of Ameri- cans, one that adjusts automatically for natural disasters or severe eco- nomic downturns. I also think the provisions that were adopted that were offered by Senator CHAFEE and Senator BREAUX to main- tain the Medicaid coverage was criti- cally important to this legislation. I salute my colleagues, Senator CHAFEE and Senator BREAUX, for their amendment. That was maintained largely intact in conference and was critically important. So, Mr. President, there are defects here. I think we all recognize that. I think we all understand that this is going to have to be revisited. But we have also heard from the Nation’s Gov- ernors. They have told us, ”You can trust us, we are going to be responsible with this charge.” I say to them, we will be watching, we will be watching very carefully what you do, and we urge you to step forward and shoulder this responsibil- ity with great seriousness. They have insisted there is not the flexibility and the resources to address the problems of poverty and welfare without these changes. They have as- sured Congress and the American peo- ple they care as much about the well- being of children and other vulnerable populations as Federal representatives and that they are in a better situation to target these resources. We take them at their word. They have pledged to protect these populations, and Con- gress is going to hold them to their word. While this bill gives States flexibility they insist they need to end the prob- lems associated with welfare, I want to be clear. Congress maintains the right and the duty to intervene in the future if States, in fact, do not live up to their word and run their programs in an ar- bitrary or capricious manner. We are counting on the States to live up to this responsibility. I take them at their word, and I have confidence that in each of the States, the Gov- ernor and the State legislature will step forward to shoulder these obliga- tions in a serious and responsible way. I am confident that in my home State of North Dakota that will be the case. I conclude by saying to my col- leagues, in looking at the risk associ- ated with any change, clearly there is a cause for concern, but the status quo cannot be defended. It is time for a change. The time is now. We will have other opportunities to address short- comings in this legislation. I intend to support this bill. I thank the Chair and yield back any time I have remaining. Mr. GORTON. Mr. President, I yield 10 minutes to the junior Senator from Indiana. The PRESIDING OFFICER. The Sen- ator from Indiana. Mr. COATS. Mr. President, with the passage of this welfare reform legisla- tion, I think we can confidently state that the New Deal is old news. As we all know, this legislation will end the Federal Government’s entitlement to welfare, an entitlement created 6 dec- ades ago during the New Deal. Yet, the reason that it must be overturned is found in the reasoning of Franklin Roosevelt himself who said, ”When any man or woman goes on the dole, some- thing happens to them mentally, and the quicker they’re taken off the dole the better it is for them the rest of their lives.” He added: ”We must preserve not only the bodies of the unemployed from destitution, but also their self-respect, their self-reliance, and courage and de- termination.” The welfare reforms that we will pass today are designed not just to save money and reduce waste, although those are important goals, but they are also designed to help restore certain basic values: self-respect and self-reli- ance. Some critics have claimed that these welfare reforms will lead to catas- trophe. Mr. President, I suggest the ca- tastrophe has already arrived. It is ob- vious in an exploding population of fa- therless children, rising violence in our cities and streets, suburbs and rural towns, endless dependence and frac- tured families. No one can honestly de- fend the current system as compas- sionate. No one can be proud of the re- sults of the last 30 years. We are tired of good intentions and dismal results. We need to take another path. This legislation that we are propos- ing is not experimental nor it is not untested. It is rooted in proven prin- ciples of American tradition. It trans- fers powers to the States where that power should have belonged all along. It emphasizes the dignity of work. It shows compassion, but it also expects individual responsibility, and it begins to encourage private and religious in- stitutions as partners in social re- newal. Mr. President, I am pleased that the personal responsibility agreements that I authored, along with Senator HARKIN, are part of this final welfare package. States like Indiana and Iowa have used these agreements as effec- tive tools, moving thousands of citi- zens from welfare to work. The welfare bill we are passing today gives States the options to include those personal responsibility agreements in their wel- fare programs, and I hope they will fol- low the examples of Indiana and Iowa. I have argued in the past, Mr. Presi- dent, that devolution of power to the State governments is necessary but not complete. Such devolution encourages innovation, but State government is still government, prone to the same problems of ineffective bureaucracy and red tape that we see in Washing- ton, and that is why I am glad this leg- islation gives States the opportunity CONGRESSIONAL RECORD \u2014 SENATE S9373August 1, 1996 and the option to contract with faith- based organizations without forcing those institutions to compromise their spiritual identity. This, I believe, is the beginning of an important idea. It is also important to remember that the reforms that we are passing today directly affect human lives. That is the only measure of our achieve- ment. I am convinced on the evidence of 3 decades that people need independ- ence, work, responsibility and hope far more than they need endless checks from the Federal Government. Our current system treats the dis- advantaged as merely material, to be fed and forgotten. We need to be treat- ing them as human beings with high hopes and high potential. When you ex- pect nothing of an individual, you be- little them. We must stop belittling the able-bodied poor in America with low expectations. Mr. President, I argue that there is a next step to welfare reform, a step that this Congress and this President, or whoever occupies the Presidency, needs to address in the next Congress. We need to go beyond Government. We need to begin to encourage and strengthen, nurture and expand those mediating institutions of family, com- munity, volunteer associations of char- ity, of church, faith-based charities\u2014 those institutions that offer real solu- tions and real hope. We need to begin to look at trans- forming our society by transforming lives one at a time inside out. For the most part, this is work that cannot be done by institutions of government. Government can feed the body and help train the mind, but it cannot nurture the soul or renew the spirit. This is the work of institutions outside of govern- ment. This shift of authority in resources can be accomplished in many ways, but we need to recognize tradition and the time-honored practice of reaching out to the poor in effective ways, giving them renewed hope, renewed spirit, a renewed place in American society. It has not been accomplished in an effec- tive way by institutions of government but can be effective by institutions outside of government. How do we make this transition? Be- cause it will be a transition, and nor- mally the problem is such that it will require a significant increase in the in- volvement of these institutions. But it is important because they are the in- stitutions that bring about the real so- lutions and bring about real hope. I propose the charity tax credit as a means of beginning this process, a way in which the taxpayer can designate on a joint basis up to $1,000 of taxes other- wise due the Government as charitable contributions to institutions that have dedicated themselves to the propo- sition of alleviating or preventing pov- erty. Who wouldn’t rather give $1,000 of their hard-earned money to institu- tions like Habitat for Humanity, rath- er than Housing and Urban Develop- ment, if you really care about provid- ing decent, affordable housing to low- income individuals? For those concerned about fatherless children, who wouldn’t believe that $1,000 of their money would be better served through Boys and Girls Clubs or Big Brothers and Big Sisters or other mentoring organizations, rather than giving it to ”Big Brother” in Washing- ton? For those concerned about the home- less on our streets, who wouldn’t rath- er support the gospel missions and church feeding programs, Catholic Charities and other organizations that reach out to those in our local commu- nities, rather than turning the money over to HHS, where, by some esti- mates, over two-thirds of the money fueled by the Federal social welfare system never goes to the poor? It goes to those above the poverty line; it gets eaten up in bureaucracy, administra- tion, fraud, and abuse. It has created a compassion fatigue in this country where people have no faith that their tax dollars, sometimes generously given and well-intended to help those most in need, ever reach those most in need. This is a stark alternative that can be provided to the individual without the constraints of the first amendment. They can give it to secular or nonsecu- lar institutions, faith-based institu- tions which have proven and dem- onstrated their capability of providing services to the poor far more effec- tively, with far better results, at a fraction of the cost of Government. These are the institutions that we need to strengthen. And this, I hope, will be the agenda of the next Congress as we move to the next step of welfare reform, to defining compassion in an effective way, the spirit of the Amer- ican people, which has always been generous, which has always reached out to help those in need, which re- sponds to emergencies time and time again, which provides and allows grain farmers from the Midwest to ship grain down to famine areas and drought areas of other areas of our country, which cause people to jump on planes and trains and buses and go to the lat- est hurricane area or ravaged area to pitch in, on a volunteer basis, to help their fellows Americans. We are a country of generous spirit, yet a country that has lost confidence in the ability of Government to effec- tively deliver compassion to those in need. So let use energize, renew and strengthen and nourish and encourage those institutions in our own commu- nities that are making a difference in people’s lives. Community activist Robert Woodson makes the point that, . . . every social problem [in America], no matter how severe, is currently being de- feated somewhere, by some religious or com- munity group. This is one of America’s great, untold stories. No alternative ap- proach to our cultural crisis holds such promise, because these institutions have re- sources denied to government at every level\u2014[the resources of] love, spiritual vital- ity, and true compassion. It is time to pub- licly, creatively, and actively take their side in the struggle to recivilize American soci- ety. Mr. President, I yield the floor. Mrs. MURRAY addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Washington. Mrs. MURRAY. Mr. President, I yield myself 10 minutes. The PRESIDING OFFICER. The Sen- ator from Washington. Mrs. MURRAY. Mr. President, it is clear that most Americans agree we need to change welfare as we know it. Our current system does not work, not for those on public assistance and not for those who pay for it. The American people feel strongly that personal responsibility has to be a part of this country’s welfare system. I could not agree more. Mr. President, for nearly 4 years I have spent countless hours examining the current welfare structure, talking to participants and listening to the frustrations of both reformers and peo- ple on public assistance. This Senate has debated many ideas for welfare reform. I have worked with my colleagues to do everything pos- sible to help create a welfare bill that will move able-bodied adults off wel- fare and into work. The transition from welfare to work is the core of this policy debate. But my concern is this. We are creating a system in which peo- ple will not get a welfare check, but they will not be able to get a paycheck either. If people leave welfare, but are not qualified or cannot find work, they are faced with one fundamental problem: The grocery bill is still there, and there is no way to feed their kids. My vote on this final welfare bill is one of the most difficult I have had to cast. There are no easy answers. I want welfare to be reformed. I hear from those recipients who complain that the current system does not work. There is too little job training. There is too lit- tle child care. And the programs try to fit every single welfare recipient into one single mold. As this bill worked its way through the Senate and House, I have sponsored and cosponsored numerous amend- ments to protect the well-being of chil- dren, from preventive and emergency health care, nutritious meals, safe child care, illiteracy, issues that are important because they affect the abil- ity of parents to move successfully from welfare to work while they are still taking care of their own kids. I agree with President Clinton that this welfare reform bill makes signifi- cant strides toward ending welfare as we know it. It will help put some peo- ple back to work and end the cycle of dependency that this system is accused of breeding. It will give more flexibil- ity to the States and allow for more local decisionmaking authority. But I also agree with President Clin- ton that this bill has serious flaws. CONGRESSIONAL RECORD \u2014 SENATES9374 August 1, 1996 Nine million children will be cut off from services. Legal immigrant chil- dren will be ineligible for almost all Federal and State services, other than in an emergency, leaving them hungry, uneducated and desperate on our streets. One-half of the $60 billion cut in spending will come from nutrition pro- grams. It will have a dramatic impact on the very individuals who need the most help today in this country, and that is our children. It has been clear for quite some time that this bill is going to be passed by an overwhelming majority and signed by the President, but I realize that I cannot in good conscience support a bill that will put so many of our chil- dren in jeopardy. Mr. President, I am the only former preschool teacher to serve in the U.S. Senate. I have looked into the faces of 2- and 3- and 4-year-olds who are hun- gry every single day. I have worked as a parent education instructor with adults who have lost their jobs. Food stamps provided the only chance they had to feed their children while they desperately were looking for work. I knew immediately when a child in my class was unable to learn and felt frightened because of tough financial times at home, and I saw the effects those kids had on all the other kids in my classroom. Many times I have sat and listened to young women whose lives have been devastated. They have been left alone to care for young children. They have no job skills and no ability to go to work because their full-time job was being a mom. For me, the bottom line in the wel- fare reform discussion is, what will happen to our Nation’s children? What will happen to those children I held in my lap in my preschool? For me, it is a risk that I am not willing to take. It is vital that parents return to work. But we have to help ensure that our children receive adequate health care, nutrition, and are not left home alone or, worse, to wander on our streets. When this welfare reform proposal passes, we have to ask, what is next? This bill only tells people what the Federal Government will not do any- more. In its place will come 50 different experiments in 50 different States. It may help some people, and it most cer- tainly will hurt others. But whether it works or not, from this day forward I believe that we have to begin a na- tional commitment to our children and to give them a fair chance, every one of them, at succeeding in life. We all want a country where every child is secure, where every person can be a contributing member of our soci- ety and our economy, and where the world around us is a healthy and safe place to live. No one disagrees with that. To make sure it happens, we have to start a discussion in every single community and neighborhood and every single dinner table in this Na- tion. We have to ask, what is impor- tant to us as Americans? Are we going to be a compassionate Nation? When push comes to shove, are we going to help our neighbors when they need it? And if, as I suspect, the answer is yes, we are going to have to say how. In the aftermath of this welfare reform bill, these are the questions that every one of us as adults in this country will have to answer. I am not going to dwell on changes brought about in this welfare reform. Instead, I am going to aggressively seek answers to the questions I have raised, and I will reaffirm my own com- mitment to children. I will work for constructive solutions to problems that arise in the future. I have already formed a bipartisan working group within the Senate to help develop and create ideas to help adults find more time to spend with our young children. And I formed an advisory group at home in Washington on youth involvement to help support this effort. Hopefully, the people of this country will ultimately work to create the kind of communities that we can all be proud of. But, Mr. President, one good thing will come out of this for sure that will happen as a result of us passing welfare reform. Finally, we will no longer, ei- ther here on the floor of the Senate or in living rooms across this country, be able to blame welfare as the cause of our Nation’s problems. After today, in- stead, perhaps, we can all sit down and work to agree on what we can do to keep our young children in this coun- try healthy and secure and educated and growing up in a country that we are all proud of. I yield the floor. Mr. GORTON. Mr. President, I yield 10 minutes to the Senator from New Hampshire. Mr. GREGG. I wish to rise in support of this welfare proposal, and I con- gratulate the Members of the Senate who have worked so hard. I want to mention three reasons why I think this is an appropriate action to take. First, this is one of the five major programs which is weighing down the Federal budget and which is causing us to careen towards bank- ruptcy as a Nation in the beginning of the next century if we do not address the Federal spending patterns. The other four are the farm programs, the Medicare and Medicaid Programs, and Social Security. We have addressed the farm pro- grams. Now we are addressing the wel- fare programs. That is two out of the five major entitlement programs that will be addressed as a result of this bill by this Congress. That is a major step forward. If this were a game of Myst\u2014 which it is not, but it is as complicated as a game of Myst\u2014we would have got- ten through two levels. We have three levels to go and, hopefully, we will con- tinue to pursue those aggressively. The bill involves returning to the States significant flexibility over man- aging the welfare accounts. This means better services for our citizens. It is that simple. There is a certain arro- gance in this town, a certain elitism in this town that tends to believe all the ideas, all the feelings of goodness, all the compassion is confined within the corridors of Washington. Well, it is not true. The fact is, in our States at our State legislative level and in our cities and at our county level, there is not only great compassion but there is an extraordinary knowledge. That knowl- edge and compassion would be brought to bear on the welfare programs of this country as a result of this bill. I know, for example, that in New Hampshire we will get a lot more serv- ices for actually less dollars, and our people will be better taken care of as a result of this flexibility being returned to the States. Third, there is the cultural issue. This represents a significant cultural change in the way we address the issue of welfare in this country. We are no longer creating this atmosphere of de- pendency. We are no longer undermin- ing generation after generation of indi- viduals relative to their own self- worth. We are saying to people: ”You are important, you do have self-worth, you should have self-respect, you should be working and taking care of yourself and your families and obtain- ing the personal respect and confidence that comes from undertaking that ap- proach.” It is a cultural shift. Obviously, it will not impact the en- tire culture. Obviously, there are a lot of people on welfare who deserve to be there. For some percentage, and it will not be a dramatic percentage, I admit to that, they will be moving off the welfare rolls because they will have to go to work, something they have not done before. That will be very positive, I think, for them and for this society generally. So I believe this is a very good bill and something that takes us in the right direction in the area of fiscal sol- vency, in the area of managing govern- ment policy through flexibility at the State level, and in the area of how we approach the cultural issue of caring for people who are less fortunate or in hard times. I also want to address today just briefly, because it is a topic that I am intimately involved with as chairman of the Commerce, State, and Justice Committee, the issue of terrorism\u2014one minor area, a secondary point to what is going on here today, but I want to raise this point at this time. We just reported out of the full Ap- propriations Committee a bill, the Commerce, State, Justice bill, which had a major initiative in the area of terrorism, countering terrorism, trying to get some comprehensive planning into the issue of how we approach it as a Federal Government, and beefing up those projects that are going on in those agencies, such as the FBI, that are trying to counter especially inter- national terrorism. It is a major step CONGRESSIONAL RECORD \u2014 SENATE S9375August 1, 1996 forward. We have actually been work- ing on this for months. It is ironic it came to fruition today, so soon after the Atlanta bombing, but it is a very important step. Second, we cannot do all this at the Federal level. The issue of countering terrorism cannot entirely be accom- plished by the Government. There has to be a change of attitude within our population as to how we approach the terrorists. I made a proposal today which I think moves along that issue a little bit\u2014not dramatically, but a little bit\u2014 but it is important. We see on the Internet today a massive amount of in- formation about how to make weapons, how to make bombs, how to use instru- ments of death. Now, the Internet is a Wild West of information. I have no in- terest in regulating it. I think that would be a mistake. There are, today, developing a whole series of industries that develop the information and infor- mation access in the area of Internet, people like America Online, Comp USA, Yahoo, Netscape, Magellan\u2014the list goes on and on. What I have done today is write a let- ter to the CEO’s of these various orga- nizations and asked them to exercise a little common sense and a little com- munity value and to expunge from their database access capability of items which are clearly directed at cre- ating bombs. I had my staff quickly run the Internet. I wanted to do it quickly, so I had my staff do it. They came up with, on their first test under the question of ”explosive,” they came up with an identification of how to make a bomb, which was followed by ”leaving your bomb in your favorite airport and Government building.” That is the type of information that should not be accessed easily through some sort of accessing agency. So I have asked the leaders of these various industries to think about it, to think about putting into their processes some sort of self-voluntary block that eliminates the ability to easily access this type of information which is so pa- tently inappropriate. I hope they will take such action. I yield the floor. Mr. DODD. Will the Senator yield? Mr. GREGG. I am happy to yield to the Senator. Mr. DODD. I commend my colleague from New Hampshire. I hope everyone listens to his last remarks on this sub- ject matter and that people will heed his advice. This is a serious matter. Our colleague from Arkansas, Sen- ator BUMPERS, yesterday I think, made similar comments and brought to the floor the documentation that came off computers on this information. I think his advice is extremely worthwhile. Mr. GREGG. I can show the Senator a copy of the letter and have him be a cosponsor, as well as any other Sen- ators. Mr. BAUCUS. I yield myself 5 min- utes. I first want to very much thank my colleague from California, Senator FEINSTEIN, and Senator DODD of Con- necticut for very generously and gra- ciously yielding me their time and al- lowing me to proceed ahead of them. I thank the Senators. Mr. President, I rise today in strong support of welfare reform. The welfare reform debate is emotional, we all know that. It is complex, that is clear. But I must say I find almost universal agreement that today’s Federal welfare program does not do what we would ex- pect of a welfare system. It does not help people get back on their feet and back to work. It does not promote worth or promote personal re- sponsibility or self-sufficiency. Most of us envisioned a different system, a wel- fare system that encourages personal responsibility, one that encourages work and self-sufficiency, one that lets States like Montana create their own systems that make sense to their State’s own unique problems, one that protects children, helps keep families together, prevents communities from deteriorating, and is fair to taxpayers. The Nation’s welfare problems took a long time to develop, and they will take some time to solve. Our solutions will not come overnight. We have to work on them. I believe this proposal is a clean break with the past and a good start for the future. It is based on two essential elements that encourage work and self-sufficiency. First, there will be a time limit on welfare assistance to make sure that people have an incentive to leave wel- fare and move to work; second, we will remove some obstacles that now deter people on welfare from moving to work. They will have more help avail- able for child care, and Medicaid will still be there to provide basic health care. I might add, Mr. President, that the imminent passage of the increase in minimum wage will be a big boom, will be a big part of the solution to welfare reform. On the whole, I believe this effort re- flects the views and values of Mon- tanans and of Americans. Undoubtedly, it is not perfect, and we can learn from experience. We can and will improve it as time goes by. However, it is a good start and a step we have to take. Finally, I am glad that the President has chosen to sign it. It was not an easy decision. But it is time that the system reflects the consensus now ex- isting in America for welfare reform. I believe this bill is a good start. It is not perfect. Nothing is perfect. But we cannot let perfection be the envy of the good. It is a good start, and I believe we will have many opportunities to im- prove upon it as days, months, and years go by. I yield the floor. Mrs. HUTCHISON. I yield myself up to 10 minutes. Mr. President, this is landmark legis- lation, and it is a pivotal point in our Nation’s history and future. What it does, this bill before the Senate, it does, indeed, change welfare as we know it. This is what the hard-working Amer- ican people have been asking Congress to do for years. It limits welfare to 2 years for able-bodied individuals, and there will be a 5-year lifetime on wel- fare for any individual in our country. Mr. President, this sends a message to the working people of our country that, yes, we understand how hard it is to make ends meet. All Americans work hard. Welfare recipients should not be an exception. If we have uniform requirements for work, we will then say that this Nation is a Nation that has a work ethic and values people who are trying to be productive citizens. This bill requires all able-bodied wel- fare recipients to work within 2 years, or lose their benefits. States will be re- quired to have 50 percent of their wel- fare recipients working by 2002. And to ensure that child care is available for a single parent, this bill provides an ad- ditional $4.5 billion more than current law for child care. So we are making sure that there is a safety net, while at the same time we are going to save the taxpayers of our country $58 billion. Now, I want to put this in perspective just to show what the American people are seeing in our welfare system as it is today. In many States, welfare systems provide the most perverse incentives. In 40 States, welfare pays more than an $8 per hour job. In 17 States, it pays more than a $10 per hour job. In six States, and in the District of Columbia, welfare pays more than a $12 per hour job\u2014more than two times the mini- mum wage. In nine States, welfare pays more than the average first-year salary of a teacher. In 29 States, it pays more than the average starting salary for a secretary. In the six most generous States in this Nation, bene- fits exceed the entry-level salary for a computer programmer. Mr. President, no wonder our welfare system is broken. No wonder the Amer- ican people are saying that we must have relief from a system that would pay more to people who do not work than a teacher, a computer program- mer, or a person making $12 an hour that is getting up every morning, put- ting their lunch together, and walking out the door to make a living for his or her family. Mr. President, what we are doing here tonight is saying that those peo- ple have a value in our society. And people who can work, but won’t, will not be any better off than the person who gets up, puts his or her lunch in a box, goes to work, and is a productive citizen of this country. This is indeed landmark reform. It is fair. It will stop a system that has be- come a cancer on our society. It will give self-worth to the people who will now have to work for any benefits they receive. And it will say to hard-work- ing Americans that are struggling to make ends meet, ”You have a value and we appreciate you in this country, and you will not have to work to sup- port someone who can work, but choos- es not to.” CONGRESSIONAL RECORD \u2014 SENATES9376 August 1, 1996 Thank you, Mr. President. I yield the remainder of my time. Mr. DODD addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Connecticut. Mr. DODD. Mr. President, will the Senator from Nebraska yield me up to 15 minutes? Mr. EXON. Yes, I yield the Senator 15 minutes. Mr. DODD. Mr. President, let me begin by saying that I respect those who support this legislation, and I re- spect the President for making the de- cision he did. But may I also begin by saying that I respectfully disagree with their decisions. Mr. President, I have served now in this body for almost 18 years. I served in the Congress for 22 years. I have dedicated a good part of my service in the U.S. Senate, as many of my col- leagues know, to issues affecting chil- dren. In fact, one of the first things I ever did as a part of the Senate was form the first children’s caucus, along with Senator SPECTER from Pennsylva- nia. DAN COATS of Indiana and I were the authors of the family and medical leave legislation. It took 7 years to adopt that. It went through two vetoes before being signed into law by Presi- dent Clinton in the early days of his administration in 1993. Senator ORRIN HATCH and I were the authors of the child care block grant, which is a sub- ject of much discussion here today. I note, with some irony, that when I offered amendments a year ago to in- crease the child care funding in the early welfare reform proposals, only two Members of the majority party supported the increase for child care funding. Nonetheless, I am delighted to hear such strong, ringing endorsements for the child care block grant, consid- ering it took us so many years to bring it the support it has now. There are nu- merous other pieces of legislation over the years that I am proud to have been associated with that affect children. While there are certainly significant deficiencies, in my view, in this legisla- tion, affecting legal immigrants, af- fecting working adults, I want to focus my remarks, if I can, Mr. President, on children. I say that because the over- whelming majority of the people who will be affected by this legislation are children. We are a Nation of some 275 million people in the United States\u2014a very diverse and rich people. Of the total population of this country, it is worthwhile, I think, to note that we are talking about 13 million Americans out of 270 million Americans who re- ceive some form of aid to families with dependent children from the U.S. Gov- ernment. There are local welfare pro- grams. And there are State programs. But the Federal Government’s commit- ment to welfare affects 13 million Americans. Of the 13 million Ameri- cans, almost 9 million are children under the age of 18, and 4 million are adults. Of the 9 million who are chil- dren, 80 percent of the 9 million are under the age of 12, and 50 percent of the 9 million are under the age of 6. So we are talking about 4 million adults and 4 to 5 million infants and young children, in effect, who will be affected by this legislation. We also know that roughly 2 million of the 4 million adults are unemployable under any situation. They are either seri- ously ill, or disabled, and will not be affected by this legislation because they cannot work. So our goal is to put 1 to 2 million of the 4 million adults on AFDC, who are able-bodied and can work, to work. This is 1 to 2 million people out of a na- tion of 270 million people. My concern is that, in our efforts to do that, we are placing in jeopardy, and at significant risk, for the first time in a half-cen- tury, the 9 million children in this country who are also the recipients of public assistance. So it is with a great deal of sadness, Mr. President, that I rise today, know- ing that in less than 2 or 3 hours from now, America’s national legislature will vote overwhelmingly to sever com- pletely its more than one-half century of support for the most vulnerable of our people\u2014our children. For over 60 years, Mr. President, through 10 Presidents, hundreds of U.S. Congressmen and Congresswomen, Sen- ators, Democrats, Republicans, lib- erals, moderates, and conservatives, we have tried to improve the opportunities for all Americans. Certain issues were always in conflict, and I suspect they always will be. But with regard to one constituency, one group of Americans, there was never any serious division. We in America take care of our chil- dren. There is a national interest, I argue, and there has been for decades, to pro- tect the most innocent and defenseless in our society. Whether you were a child from Eastport, ME, or San Diego, CA, if all else failed, your National Government, your country, would not let you go hungry, would not let you be denied medical care, and would not deny you basic shelter. No matter how irresponsible your parents may have been, no matter how neglectful your community or State, your country, America, would absolutely guarantee, as a last resort, a safety net of basic care. In less than a few hours, Mr. Presi- dent, we will end, after half a century, that basic fundamental guarantee to these children. Am I opposed to reforming welfare? Absolutely not. But let us put this issue in perspective. We are talking about 9 million children\u2014many of whom have no other protection at all because of the circumstances in which they are raised\u2014who count on their Government as a last resort to be of help. Let me be starkly clear about what this legislation does. Under this bill, States can cut off benefits. They can- not provide work opportunities. There is no requirement for them to do so. They can set shorter and shorter time limits, if they so desire. They can cut off families completely without mak- ing any accommodation for their chil- dren. And no matter how draconian these measures may be, this National Government will stand by and do noth- ing. It is worth noting that virtually all religious groups in this country and their leaders oppose this piece of legis- lation. Let me share with you the views of Bishop Anthony Pilla on be- half of the Catholic Bishops: The test of welfare reform is whether it will enhance the lives and dignity of poor children and their families. The moral meas- ure of our society is how we treat the least amongst us. This legislation fails these tests and fails our Nation. What is more, we are considering this legislation with the benefit of data showing that the bill will push at least 1.1 million children into poverty in this country and worsen the situation of children already in poverty by 20 per- cent. Let us consider, if you will, for just one moment that instead of dealing with welfare reform here, we were deal- ing with a piece of legislation affecting American businesses. And assume for 1 minute, if you will, that we were pro- vided data by credible sources that said as a result of this bill, if it were to be- come law, 1 million business people would fail as a result of your actions. I would just inquire: How long would that legislation last on the floor of the U.S. Senate? We would not be told that it is a ”minor inconvenience” and somehow ”we may fix that later.” We would not spend 1 minute considering a piece of legislation that would cause 1 million business people to fail. And, yet, when 1 million children may fail and already poor children will be pushed into even more difficult cir- cumstances, we are told over and over again that somehow we will fix that down the road. I cannot support a piece of legisla- tion that would take 1 million innocent children and push them into poverty with a vague hope that some day we may do something to correct that situ- ation. These numbers should make all of us take pause and seriously consider the dire implications of our actions. I know many people argue that the current welfare system does not serve our chil- dren well. I do not disagree. But replac- ing a system in need of reform with a worse system is no solution at all. In fact, it is irresponsible. There is no jus- tification, in my view, to try some- thing different at any cost; namely, abandoning a national commitment to children for the sake of change. Again, I applaud the improvements that were made in this bill, and they have been recited by others. It, cer- tainly, is better than what was consid- ered a year ago in a number of aspects. But despite those improvements, there are still elements in this legislation which make it fundamentally flawed. The Congressional Budget Office esti- mates that between 2.5 and 3.5 million CONGRESSIONAL RECORD \u2014 SENATE S9377August 1, 1996 children would be affected by the 5- year cutoff of benefits in this bill. I have no objection to setting time lim- its on adults. In my State, it is 2 years. Experiments like that make sense, to see if they work. What I do not under- stand is that no matter how difficult you want to be on the parent, how do you look into the face of a 6-year-old child who, through no fault of their own, are born into difficult cir- cumstances and say that regardless of the flaws of their parents, the irrespon- sibility of their parents, they must pay the price? I do not understand that logic or that thinking. It seems to me that if we know this welfare bill will increase the number of poor children, we should, at the very least, make some provisions for chil- dren whose parents have reached the time limit and are cut off from assist- ance. But this bill prohibits\u2014and I em- phasize this\u2014this bill prohibits even providing vouchers to children whose parents have hit the 5-year time limit. In fact, it does not even grant the State the option to provide noncash aid to infants and toddlers. This is not only a step backward, but, in my view, it is an unconscionable re- treat from a 60-year-old commitment that Republicans and Democrats, 10 American Presidents, and Congresses have made on behalf of America’s chil- dren. Some will argue that the conference agreement says that States can use the title XX social services block grant to provide vouchers for these families and children. But I ask my colleagues to look at the provisions of the bill that cut this block grant by 15 percent. We are reducing the very block grants we are now telling States they can use to provide for these benefits. I truly believe that if we were serious about ensuring the safety net for chil- dren in this bill, we would do it out- right and not come up with fancy ac- counting methods that provide no guarantees for children whatsoever. This legislation does not provide enough funds, quite frankly, to meet the work requirements of the bill. This bill has the goal of putting welfare re- cipients to work. I applaud that. Yet, it fails to provide adequate funds to reach that very growth. We are setting ourselves up for a fail- ure. The Congressional Budget Office estimates that this bill is $12 billion short of funds needed to meet the work requirements\u2014$2 billion more than the shortfall of the Senate bill which was passed last year. The same Congres- sional Budget Office says that most States will not succeed in meeting the work requirements. They will just ac- cept the penalty of reduction in funds. Do our friends here who support this legislation think that millions of jobs for welfare recipients will simply ap- pear out of the air? Will millions of welfare recipients, most of whom want to work, I would argue, magically find jobs? Not unless they receive the as- sistance, the training, and the edu- cational help which leads to job cre- ation. In this bill, they will receive no such help at all. While we see movement on child care\u2014again, I applaud that\u2014this con- ference agreement retreats on a criti- cally important child care provision. Let me emphasize this point. Both the House and Senate bills contain pro- visions that prohibit a State from sanctioning a family if the mother could not work because she could not obtain nor afford child care for chil- dren age 10 and under. The conference agreement, which we are about to vote on, moves that age threshold from 10 years of age to 5 years of age, at the re- quest, I am told, of some Governors. Currently, approximately 2.4 million children on AFDC are between the ages of 6 and 10. The families of these chil- dren could lose all of their benefits as a result of a work sanction because the parent could not find adequate child care for a 7-year-old, an 8-year-old, or a 9-year-old. This bill encourages parents to go to work and leave a child at home, without supervision, at a time when we are talking about family val- ues and parents caring for their chil- dren. We put these parents in the catch-22 situation, either they lose benefits or leave their child\u2014a 6- 7- or 8-year old at home alone. I do not un- derstand, again, the logic of that kind of thinking. I know that the Governors have ar- gued that the protection for children 10 and under would make it hard for them to meet the work requirements in the legislation. But that sort of argument points out flawed thinking in this bill. I think all of us understand the need for child care. Latchkey children are a serious problem in our society. I fail to understand how Governors who argue that a provision which protects kids who are 6- 7- and 8-years old would im- pede their ability to meet work re- quirements. Governors, at the very least, should be able to guarantee to children age 10 and under that they will not be left at home without care. Additionally, the food stamp cuts in the conference agreement are deeper than last year’s vetoed welfare bill and deeper than last year’s Senate-passed bill. The conference agreement would cut food stamps by about 20 percent. Families with children\u2014not single adults\u2014families with children will bear the greatest burden. Two-thirds of the cuts in food stamps will hit families with children. Additionally, the bill limits food stamps to unemployed adults not rais- ing children to just 3 months in a 3- year period with no hardship exemp- tion whatsoever. If we were in a period of high unemployment in this country, with people being laid off from jobs through no fault of their own, how do you explain to someone who has worked for many, many years and finds himself without a job, that he will be cut off from some basic necessities to allow him to exist? And there’s no ex- emption whatsoever to account for eco- nomic difficulties. The Congressional Budget Office esti- mates that in an average month, under this provision, 1 million poor, unem- ployed individuals who are willing to work and have worked in many cases and would take a workfare slot, if one were available, would be denied food stamps because they cannot find work. Finally, Mr. President, I want to mention the treatment of legal immi- grants in this legislation, which I know is of great concern to our colleagues from California and Florida and New York and others. This bill, in my view, is a repudiation of the legacy of immigration that has defined our country for more than 200 years. We are talking about legal im- migrants now. It is this influx of immigrants from diverse cultures and distant lands that has made this country a shining exam- ple to the entire world. That is why millions of people across the globe have come to our Nation. To say to legal immigrants who pay taxes, who get drafted and serve in our military that we are going to deny them basic protections after we have invited them to come here in a legal status because they do not vote and they are an easy target I think is a mistake. It was the promise of the American dream that brought my family to this country from Ireland. And it was the desire for a better life that brought millions of other immigrants to Amer- ica, whether they came over on the Mayflower or if they came to our land in just the past few days. The fact is, nearly every Senator in this body is a descendant of immi- grants. The attack, in this legislation, on legal immigrants is mean-spirited and punitive. This bill is more interested in reduc- ing the deficit than maintaining our commitment to legal immigration. This bill bans legal immigrants\u2014 children and the disabled\u2014from food stamps and SSI. When people lose SSI, they lose their health coverage under Medicaid. I fear that we’ll see people who have paid taxes wheeled out of nursing homes as a result of this bill. The legal immigrant provisions of this bill will shift substantial costs on to local governments. In the words of Mayor Guiliani of New York: By restricting legal immigrants’ access to most Federal programs, immigration, in ef- fect, becomes a local responsibility. Welfare reform should not diminish Federal respon- sibility for immigration policy or shift cost to local governments. But that’s exactly what this bill does. CONCLUSION In closing, let me say, Mr. President, that welfare reform is by no means easy. If we are to change the cycle of dependency and encourage work among welfare recipients, we must make tough decisions. CONGRESSIONAL RECORD \u2014 SENATES9378 August 1, 1996 But, in the end, those decisions must always be weighed against their effect on poor children. Our success will not be judged by how much we reduce the welfare rolls, but how we help those who are left behind. This bill fails that test\u2014on both ac- counts. President Franklin Roosevelt once said that: ”The test of our progress is not whether we add more to the abun- dance of those who have too much; it is whether we provide enough for those who have too little.” For those in our Nation who have too little, we are providing only crumbs. If welfare recipients are to revel in the hopes and aspirations of the Amer- ican dream then they must be provided with the tools and opportunities to make those dreams a reality. This bill fails those Americans and it fails our commitment to the most vul- nerable and poorest citizens in our Na- tion. I know this is a futile effort, but I urge my colleagues in the remaining few hours to consider that we are about to sever the lifeline to 9 million chil- dren in this country for the sake of putting 1 to 2 million adults to work. This incredibly misguided policy is not in balance and ought to be defeated. Mr. SHELBY addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Alabama. Mr. SHELBY. Mr. President, I rise in strong support of the conference report to the Personal Responsibility and Work Opportunity Act of 1996. The American people I believe have de- manded welfare reform, and I am pleased that the Congress has not yielded in its commitment to pass much needed and long overdue com- prehensive welfare reform. Our current welfare system is a death sentence. It is a death sentence to the human spir- it, the family, and the hopes and dreams of millions of children in Amer- ica. The welfare system today encour- ages dependency, facilitates the break- down of the family, demoralizes the human spirit, and undermines the work ethic that built our Nation. For a third time this Congress has delivered legis- lation to address the failures of the welfare state and provide reforms that I believe will free the poor from being trapped in a cycle of dependency. This bill is the boldest statement we can make in the current political environ- ment, and I am pleased that the Presi- dent has finally pledged to keep his promise to end welfare as we know it. Mr. President, the imperative for welfare reform is manifest. The Amer- ican taxpayers have spent more than $5.4 trillion since President Johnson declared a war on poverty. But after spending this massive sum, we are no closer to having a Great Society than if we had done nothing. In fact, the poverty rate in America has actually increased over the past 28 years. The reason for this is simple: Welfare has become a way of life. The modern wel- fare State is rife with financial incen- tives for mothers to remain unmarried. Eighty percent of children in many low-income communities in America are born in homes without a father. It is virtually impossible for a young unwed mother with no work skills to escape the welfare trap as we know it today. This has done nothing to stop the ravaging of our cities and the sky- rocketing of violent crime. People have become dependent on welfare because it completely destroys the need to work and the natural in- centive to become self-sufficient. For more than 30 years the message of the welfare state is that the Government will take care of you. It is a punitive form of assistance. It punishes those who want to work and want to succeed. It punishes those mothers who want to get married and have a husband to help raise the children. Where is the compassion in this present welfare program? It is not there. Only the beltway establishment would dare suggest that providing monthly benefits is more compas- sionate than fostering the natural in- clination in every human being to reach your full potential. However, with the enactment of this bill, Con- gress will require welfare recipients to work in exchange for benefits for the first time. By imposing a 5-year life- time limit on welfare benefits, the message of the reformed welfare state is that we will provide temporary as- sistance to help during hardship as you return to self-sufficiency. The bill we vote on today begins to repair a very badly broken welfare state in other ways. It puts healthy in- centives in our welfare system. The generous package of welfare benefits available in America is a magnet for literally hundreds of thousands of legal and illegal immigrants. I do not believe this is just, and this bill properly de- nies welfare to noncitizens. Also, the Government will no longer tell young women, ”If you have chil- dren you are not able to support and you are willing to raise them without a father the Government will reward you and pick up the tab.” That is the wrong message. This legislation allows States to end additional cash payments to unwed mothers who have additional children while collecting welfare. The bill also permits States to deny cash to unwed teenage mothers and instead provide them with other forms of as- sistance. It is good for children to see both their parents in the morning, and this bill provides the mechanisms that will make this the norm, not the excep- tion. This legislation represents real wel- fare reform. The monster that was cre- ated over the last 30 years will not change overnight, but we take a sig- nificant step today. This bill ensures that welfare finally will benefit, not harm, its beneficiaries. I urge all my colleagues to adopt this landmark leg- islation. Mrs. FEINSTEIN addressed the Chair. The PRESIDING OFFICER. The Sen- ator from California is recognized. Mrs. FEINSTEIN. Thank you, Mr. President. I ask to be recognized for 13 minutes. The PRESIDING OFFICER. Without objection, it is so ordered. Mrs. FEINSTEIN. Mr. President, I would like to read you an excerpt from an editorial in yesterday’s Sacramento Bee which, I believe, sums up the bill we are about to vote on There is a widespread consensus that wel- fare must be reformed to reduce long-term dependency and encourage work and per- sonal responsibility. But the current bill, un- derfunded and overly punitive, ignores every- thing we have learned over the last decade about moving welfare recipients into the job market. More than half of the welfare recipients lack a high school education at a time when labor markets put a premium on education and skills. Two-thirds live in central cities, places from which employers have fled. At their most successful, past efforts to move welfare recipients into jobs, such as the GAIN program in Riverside have reduced welfare roles by only 10 percent and incomes of welfare recipients by a few hundred dol- lars a month. Yet the welfare bill requires states to move half of all recipients into jobs, even though, according to Congress’ own experts, the bill falls $12 billion shy of funding for the work program. Even if one heroically assumes that two-thirds of welfare families would find permanent employment, the bill’s five- year lifetime limit on benefits would leave 1 million families\u2014adults and children alike\u2014 without any source of income. Mr. President, I am very dis- appointed that I must oppose the wel- fare reform bill as presented to this body by the House-Senate conference committee. I had hoped that the bill that emerged from the conference com- mittee would be one that California could live with, because, I think it is clear that, with 32 million people, no State in the Union has as much to gain or as much to lose from welfare reform. Unfortunately, this bill remains one in which California loses, and loses big. California is being asked to foot the bill for changing welfare as we know it\u2014and that is wrong. One-third of the estimated $55 billion savings in this bill comes from one State: California. California faces a loss of more than $16 billion over the next 6 years as a result of this bill, more when you add reduc- tions in State funds under the new rules and potentially much more if our welfare caseload continues to increase at the current pace. The losses to California are stagger- ing: Up to $9 billion in cuts to Federal aid for legal immigrants, $4.2 billion in cuts in food stamps, and as much as $3 billion in AFDC funds over the next 6 years. Not only is this bill unfair to Califor- nia on its face, it is seriously flawed in a number of critically important areas. The contingency funds provided in this bill\u2014$2 billion\u2014are too little. California alone, I predict, can and will need the entire amount. Work requirements are an impossible goal. The heart of this bill, moving CONGRESSIONAL RECORD \u2014 SENATE S9379August 1, 1996 people from welfare to work, rests on the unknown and probably the impos- sible. No state, to my knowledge, in 6 years has been able to move 50 percent of its welfare caseload into jobs, as this bill requires. California will have an impossible hurdle to move the required 20 percent of its welfare caseload into jobs in 1 year, let alone 50 percent in 6 years. In order to meet the 20 percent work requirement in this bill, Califor- nia would have to find jobs next year for more than 166,000 current adult wel- fare recipients. But, in the last 2 years, the State added an average of only 300,000 people total to payrolls in non- farm jobs. How do we possibly create enough jobs to increase employment by another 50 percent\u2014especially for a work force that is largely unskilled and under educated? California is a State that has all but lost its produc- tion base and is now producing either high-skilled jobs or hamburger flippers at minimum wage. In order to move people into work, there must be affordable child care for parents. This bill does not provide any- where near enough funds. The child care block grant in this bill is awarded to States based on their current utili- zation of Federal child care funds. In California, there are approximately 1.8 million children on AFDC. California currently provides child care subsidies and\/or slots to approximately 200,000 children. The Child Care Law Center estimates that under the welfare re- form bill, as more parents are required to work, as many as 418,000 additional preschool children and 650,000 children aged 5 to 13 may need child care. This would be a 600 percent increase in need for child care slots. This bill does not come near the amount of child care dollars that would be needed in California to do this job. The conference bill is actually worse than the Senate bill in handling Ameri- ca’s ultimate safety net: Food Stamps. The conference bill cuts food stamps by 20 percent. California loses $4.2 billion. Last year, an average of 1.2 million households\u2014more than 3.2 million peo- ple\u2014in California relied on food stamps each month. California’s unemploy- ment rate is still high at 7.2 percent\u2014 2 percentage points above the national rate of 5.3 percent. 1,117,000 people are out of work today\u2014more than the en- tire populations of nine States. This bill would limit food stamps for an able-bodied adult with no children to a total of 3 months over a period of 3 years. If that person becomes unem- ployed, they would only be able to re- ceive an additional 3 months of food stamps in that same 3-year period. This bill would also bar all legal immigrants from receiving food stamps\u2014there is no exemption for elderly, disabled, or chil- dren. The shelter deduction in this bill is a case in point which demonstrates that, however well intentioned this bill might be, it lacks a fundamental foot- hold in reality when it comes to Cali- fornia. The shelter deduction allows families with children to deduct a maximum of $247, with an increase to $300 in the year 2001, from their income level when applying for aid\u2014ostensibly to com- pensate for the cost of housing. In the vast majority of the popu- lation centers in California, particu- larly in urban areas, you can not find a place to rent for that amount of money. In San Francisco, the average rent is between $750 and $1,000 per month. So this deduction is so low that it is virtually useless in California. California is not the only loser in this welfare bill. America’s children lose as well. In a rush to deliver a wel- fare reform bill\u2014any welfare bill\u2014be- fore the November elections, this bill is the moral equivalent of a dear John letter to our Nation’s needy children. Under this bill, 3.3 million children nationwide and 1.8 million children in California could lose AFDC after the 5- year limit. Children of undocumented immigrants would not even be allowed to buy federally subsidized school lunches. Recent studies by Children Now and the Urban Institute estimated that this welfare plan would thrust an additional 1.1 million children into poverty conditions in the United States. The Senate rejected moderate amendments sought by the White House as well as members of both par- ties to provide noncash assistance to children whose parents lose their bene- fits in the form of vouchers for food, clothing and other basic necessities. The voucher language included in the conference report is an empty-handed gesture allowing states to rob Peter to pay Paul because it adds no new funds to provide basic necessities to children whose parents lose benefits. The major cost shift to California comes from the elimination of Federal assistance for legal immigrants, most of whom are elderly, blind, and dis- abled\u2014all of them poor\u2014who came to this country under terms agreed to by the Federal Government. And yet, the Federal Government will not bear the cost of changing the terms of that deal\u2014the cost of this policy shift will be forced onto States and counties. Let me be clear: I am all for changing U.S. immigration policies to hold spon- sors of legal immigrants legally bound to provide financial support to their sponsees. But to change this policy on those already in this country\u2014retro- actively\u2014and thus summarily dropping hundreds of thousands of elderly and disabled immigrants from Federal sup- port programs like SSI, food stamps, and AFDC onto already overburdened county assistance programs, is not only an abdication of Federal respon- sibility\u2014to me it is unconscionable. The impact of this cost shift to Cali- fornia counties could be catastrophic. An estimated 722,939 legal immi- grants in California\u2014many of whom are aged, blind, and elderly\u2014would lose SSI, AFDC, and food stamps under this bill. Los Angeles County\u2014the most im- pacted area nationwide\u2014estimates that 93,000 noncitizen legal immigrants will lose SSI under this bill, at a poten- tial cost of more than $236 million each year in county general assistance funds. Los Angeles also estimates that the restriction on future immigrants re- ceiving nonemergency Medicaid serv- ices would result in $100 million in ad- ditional costs\u2014much higher unless the State comes up with the funds to pro- vide coverage to noncitizens. San Francisco County estimates that the cost of county funded general as- sistance could increase $74 million under the legal immigrant provisions in this bill\u2014an increase of more than 250 percent. Other counties in California are studying the impact of this legislation and coming up with similar financial horror stories. Twelve of the top twen- ty metropolitan areas in the country that are impacted most severely by this bill are in California. The State of California indicated by its budget that it has no ability or in- tention of stepping in to fill the fund- ing gap this bill creates. Governor Wil- son’s State budget for fiscal year 1996 1997 assumes the immigrant provisions in this legislation will pass and legal immigrants will no longer be eligible for assistance. California’s legislative analyst’s re- port indicates that Governor Wilson’s budget: . . . assumes enactment of federal legisla- tion barring most legal immigrants from re- ceiving SSI\/SSP benefits starting January 1, 1997. The budget assume savings of $91 mil- lion from this proposal. That is from the ”Legislative Ana- lyst’s Report, 1996 97 Budget.” While we in Washington sit in our ivory tower and pat ourselves on the back for changing welfare as we know it, the real impact of this bill will land on real people who are too old or too sick to care for themselves, and whose families\u2014if they have one\u2014have no ability to help them. Let me put some faces and names on this welfare bill for you: A 73-year-old woman who asked not to be named came to the United States as a refugee from Vietnam in 1981. She sold everything she owned to pay for her passage on a boat for her and her mother. Her mother died on the trip over. She moved to San Francisco in 1985 and fell ill with kidney disease. She currently depends on SSI and Med- icaid to pay for dialysis and other med- ical care. Her only relative in the Unit- ed States is a goddaughter who cannot afford to care for her. She has applied for citizenship, but may not pass the English proficiency exam. Maria, who lives in Los Angeles, came to the United States in 1973 when she was 62 years old to live with her daughter. In 1984, her daughter had a stroke at work which rsulted in two cerebral aneurysms. Following the stroke, her daughter was unable to CONGRESSIONAL RECORD \u2014 SENATES9380 August 1, 1996 work and therefore unable to support Maria as she had done for the previous 11 years. Maria received both SSI and Medicaid. Neither Maria nor her daugh- ter would be able to survive on her daughter’s disability income alone. Thank you, Mr. President. I yield back the remainder of my time. The PRESIDING OFFICER. Who yields time? The Senator from Vir- ginia. Mr. WARNER. Mr. President, I yield 7 minutes to myself. The PRESIDING OFFICER. The Sen- ator from Virginia is recognized for 7 minutes. Mr. WARNER. Mr. President, like so many of my colleagues, I have had the opportunity to actually visit\u2014this time Norfolk, VA a few days ago\u2014a center which is providing job training for welfare recipients. The first thing I was impressed with was a collection of about 12 rooms. It was absolutely spot- less. The staff of this nonprofit organi- zation had many volunteers who came in to work with their welfare clients. In this instance I only saw welfare mothers, or some perhaps who did not have children, and largely minorities. All was neat and clean, and they showed up meticulously on time at this center with a spirit of ”can do\u2014we will overcome our handicaps if only you will reach out and give us a helping hand.” That is what this bill does. It should be called the helping hand bill. Each of us in our lifetime has experienced peri- ods when you had to reach out a help- ing hand. Most have the opportunity to do it regularly. I can remember at one point serving in the U.S. military with men, in this instance, who could not read and write, but they received a helping hand and quickly learned those military skills, that they could at that learning level, and became key mem- bers of fighting teams, in this instance, in the Navy. I will never forget that. All they asked for was a helping hand, and that is what this bill is designed to do and will do if we will just give it a fair chance. I regret to hear, largely from the other side of the aisle, these cries that we have done a wrong. We have not done a wrong. We have listened to the American people. Sixty-five percent of the American people, or higher, agree that the system in Washington has not worked. It was given a fair chance. It was given an enormous sum of money. One piece of paper says we have spent, as a nation, more money on welfare than the cost of all military actions in this century. This is a substantial amount of money. Yet, the casualties in terms of the families, particularly the children, have been very high. Why not give the States and the local communities the opportunity now to make this system work? We all know that there are per- sons less fortunate than ourselves, and all they want is a helping hand. Reach out, that is what we should do. As this bill goes forth\u2014the President has now indicated, for reasons of his own, after two vetoes he will sign this one\u2014let’s send it forth in a spirit of can do, like the people I met in the welfare center in Norfolk. We do not want it to arrive on the doorstep in the several States, down in the small towns and villages of my State and your States with a message, ”It isn’t going to work.” But it is there, so let’s send it in the spirit of give it the best shot. I ask, are not the people in the com- munities, large and small, all across this Nation as well qualified as the in- numerable army of bureaucrats here in the Nation’s Capital who, for half a century, have worked with this? Are they not as well qualified? I say abso- lutely yes, and let’s give them a chance to make it work. I am not satisfied with every provi- sion in this bill. I sided with the Sen- ator from Louisiana, JOHN BREAUX, to give more funds and support to the children. I was concerned. I voted against a majority on my side of the aisle. There is not a person in this Chamber who is not concerned as to ex- actly what will happen to children. But let me tell you, in the communities in my State, and I say in the commu- nities in your States, they are not going to let the children be injured, ir- respective of however the law is writ- ten. They will find a way to make it work and protect those children far better than we can as bureaucrats in Washington. They will make it work. If there are legislative changes need- ed, I assure you, the citizens of my great State will come to my doorstep very promptly and say, ”Senator, we’re trying to make this bill work, but we need a change here,” or a change there. And I am confident I will step forward, as will others on both sides of the aisle, and make those changes to make this piece of legislation work. Families living side by side, one re- ceiving welfare, one getting up and going to work\u2014the friction between them, the discontent right in the same street in the same neighborhood\u2014is in- tolerable. We have to stop that. We are providing a disincentive for those who are getting out of bed and trying to go to work. Within the welfare ranks, we may be taking a gamble, but I will bet that there are a substantial number on welfare who want to come forward and, with a helping hand, make this piece of legislation work. It is incumbent on those welfare peo- ple to have a willingness to break out of the system. They may be shy, they may be reticent, and we will be pa- tient, but they have to go to work. There are able-bodied people in all these communities\u2014and I have seen them and you have seen them\u2014who will step forward and gently but firmly and decisively extend that hand to make it work and to quickly come back if children or other aspects of this program are not working and inform the Members of Congress so we can fix it. Mr. President, this is a great day for our country. We have come to the real- ization that one of the major entitle- ment programs has not lived up to its expectations. It has created scenes in every town in America which are to- tally unacceptable in this day and time. Let’s make this piece of legisla- tion work. Let’s send it out of here and praise the efforts that we have made in response to the direct plea of the American people to fix this system by sending it from Washington back to where it belongs\u2014hometown USA. I yield the floor. Mr. SIMON addressed the Chair. The PRESIDING OFFICER (Mr. BEN- NETT). The Senator from Illinois. Mr. SIMON. Mr. President, I yield myself 7 minutes. The PRESIDING OFFICER. The Sen- ator is recognized. Mr. SIMON. Mr. President, let’s face it, our choice is: hurting poor people and gaining some votes in the process, or appearing to stand for something that we all know needs change and los- ing votes but not hurting poor people. My friend from Virginia, for whom I have great respect, says this is a help- ing-hand bill. The Urban Institute says we are going to put 2.6 million more Americans into poverty, 1.1 million more children. That is not the kind of helping hand we need. We already have 24 percent of our children living in pov- erty. No other Western industrialized nation is anywhere close to that, and we are compounding the evil. I am supporting Bill Clinton for re- election. In many ways, he leaves a good legacy. But let no one make any mistake about it, he is marring his leg- acy by signing this bill. He may gain a few more votes on November 5, but he is hurting history’s judgment of what he is doing as President. This is not welfare reform. This is po- litical public relations. I heard one of my colleagues, for whom I have great respect, say we have to change the system of children hav- ing children. Of course we have to change the system of children having children. But this bill does not do one thing in that direction. And it should be added that the birthrate among peo- ple who have welfare is going down, and going down significantly. Second, I say to you, Mr. President, we have about a million teenage preg- nancies each year, about 400,000 of which end up in abortions, inciden- tally. What we know is those who are high school dropouts are much more likely to be involved in teenage preg- nancies. You want to do something about that? Let us put some money into education, not this phony bill that is going to cause great harm. Will Durant and his wife have writ- ten great histories: ”Reformation,” ”The Age of Napoleon,” and so forth. But Will Durant wrote a small book called ”The Meaning of History.” In that small book, in ”The Meaning of History,” he said: ”This is the history of nations, that those who are more fortunate economically continue to pile up benefits, and they press down CONGRESSIONAL RECORD \u2014 SENATE S9381August 1, 1996 those who are less fortunate until those who are less fortunate eventually revolt.” What are we doing here in this ses- sion of Congress? We are giving the Pentagon, this fiscal year, $11 billion more than they requested. We are going to have some kind of tax cuts that particularly benefit those of us in this Chamber who are more fortunate economically. And with this bill, for the next 6 years, we will be cutting back $9.2 billion a year from poor peo- ple. I am for genuine welfare reform, but genuine welfare reform requires provid- ing jobs for people of limited ability and providing day care. I have a bill in that says you cannot be on welfare more than 5 weeks\u2014in some ways, tougher than this\u2014but then the Fed- eral Government has a WPA type of job available. We screen people as they come in, and if they cannot read and write, we get them into a program. If you have no marketable skill, you get them to a technical school or a com- munity college. That would be genuine welfare reform. But as Gov. Tommy Thompson has pointed out\u2014a Republican, inciden- tally\u2014if you are going to have welfare reform, you are going to have to put in more money upfront, not less money. I like Senator FEINSTEIN’s remark that this is the moral equivalent of a ”Dear John” letter to the poor people of the Nation. She is, unfortunately, right. In October\u2014the Presiding Officer is someone who has a sense of history\u2014in October, we have Roosevelt History Month because we thought at that point we would dedicate the Roosevelt memorial. It looks like now it will not be ready then. But we will celebrate, that month, when we had a great na- tional leader who lifted the poor people of this Nation. Two months prior to that, we are going to celebrate by pushing down the poor people of this Nation. Let us be very practical. A woman who lives in Robert Taylor homes in the south side of Chicago, desperately poor, lives in a public housing project, has three children, and with this bill\u2014 and she has very limited skills because she went to poor schools, probably can barely read and write\u2014with this bill we are saying to her, you can at the most stay on welfare 5 years, maybe only 2, but we are not going to provide any job for you, we are not going to have any day care for your children. What does that woman do if she wants to feed her children? Does she take to the streets in crime? Does she become a prostitute? I do not know, nor does anyone else in this Chamber. Let me pay tribute to two people here, one who just spoke against this before, Senator CHRIS DODD, who is the Democratic national chairman and who is interested in votes. But despite being Democratic national chairman, despite the stand taken by President Clinton, CHRIS DODD stood here and said this is bad for the children of America. And PAUL WELLSTONE, up for reelection, showing great, great courage. The PRESIDING OFFICER. The Sen- ator’s time has expired. Mr. SIMON. I yield myself 30 addi- tional seconds. The PRESIDING OFFICER. The Sen- ator is recognized. Mr. SIMON. When my friend from Virginia, Senator WARNER, said the States will protect people, I think of the bill we finally passed when I was over in the House to protect children who wanted to go to school who had disabilities. The States said, ”If you’re in a wheelchair, if you’re blind, if you’re deaf, sorry, we’re not going to force education for them.” The major- ity of the mentally retarded were not being given any help by our public schools. The Federal Government came along and said, ”You are entitled to this.” The Federal Government pro- tected people with disabilities, and the Federal Government should protect poor people in this Nation. We are not doing it with this legislation. Mr. GRASSLEY addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Iowa. Mr. GRASSLEY. I yield to the Sen- ator from Ohio 8 minutes. The PRESIDING OFFICER. The Sen- ator from Ohio. Mr. DEWINE. Thank you, Mr. Presi- dent. This legislation that we will pass in the next 2 hours is truly historic. It recognizes, literally for the first time in 60 years, that when it comes to lift- ing people out of poverty, Washington does not have all the answers. In fact, I think most of us know Washington has really few answers in this area, be- cause the true innovation, the true changes that we have seen in the last decade in regard to welfare reform has come from the States. That is what this bill will foster. That is what this bill will allow. Mr. President, there has been a great deal of controversy about many parts of this bill, but I believe what unites just about everyone in this debate is a realization that the current system simply is not working, that the status quo is unacceptable. We disagree about what should replace that system. That is why one chief merit of this bill is that it gives the States the flexi- bility to reinvent welfare, to find out what works, what does not work, and once we find out what works, to build on that. That experimentation has al- ready started in the States. The only thing that is holding it back, frankly, is the Federal Government. And this bill allows for more experimentation, it allows for new ideas. Mr. President, compared to the cur- rent system, a failed, top-down system that fosters the cycle of dependency that blights so many parts of America, this is a huge improvement. And there are other improvements, Mr. President, in this bill as well. This bill reestablishes the connection between work and income, the time- honored idea that people should work to get income. The current welfare sys- tem cut the nexus between working and making money. This was one of the great mistakes of our social welfare policy. People do need a hand up. They need help. And this welfare bill gives them a hand up. I am also very pleased, Mr. President, the bill includes a ”rainy day” contin- gency fund for the States. As a former Lieutenant Governor, I know how vul- nerable a State’s budget is to an eco- nomic downturn. Many States, such as my home State of Ohio, are required by law to balance their budget every sin- gle year, no matter how hard the eco- nomic times are. We need to make sure that the poorest Americans are taken care of when that contingency arises, thus the contingency fund in this bill. That is why, Mr. President, I offered the amendment for the contingency fund last year. I applaud the conferees and the leadership for the decision to include that contingency fund in this package as well. I also think this bill’s crackdown on unpaid child support is a terrific idea and long overdue. As a former county prosecutor, I dealt with these child support cases all the time, and I can tell you that when child support goes up, the welfare rolls go down. It is as simple as that. One provision in this bill that I am particularly proud of is one I proposed as an amendment to last year’s welfare reform bill. It has been included in this bill as well. It would give States added tools in their efforts to track down the bank accounts of deadbeat parents. Mr. President, in this bill, we are strengthening the States as they at- tempt to go after the delinquent and deadbeat parents. It is absolutely es- sential that we strengthen the ethic of personal responsibility in this way. We need to make it absolutely clear\u2014 America demands that parents be re- sponsible for their children. Deadbeat parents cannot be allowed to walk away from their responsibilities. In this bill, we deal with that. We also provide a strong safety net at the same time, a strong safety net for people who need help. The bill passed the House by a broad bipartisan vote, 328 to 101. I expect it will pass the Senate overwhelmingly later this evening. I applaud the President for his decision to sign this bill. My only re- gret is that we lost time. We lost a year. Last year, the President had wel- fare reform before him. He decided to veto the bill. This bill is no different, not significantly different in any way. I am pleased to see that the President has changed his mind and that he now intends to sign the bill. Today, the American people can be proud of this legislative process. We are about to pass a bill in a couple of hours that offers the best hope in our lifetime for breaking the cycle of pov- erty. It is a bill that provides hope, hope for the people on welfare, and hope for the idea that we can change CONGRESSIONAL RECORD \u2014 SENATES9382 August 1, 1996 welfare, change the system that clearly has not worked. It has been a system that has kept people down, a system that has promoted illegitimacy, a sys- tem that has not given people hope. Today we take a major step to change that. Mr. President, let me conclude by stating that we have heard a lot of comments today on this floor about children. I think we should not fail to realize that the chief victim of the cur- rent welfare system, the chief victims, are the children. If anyone doubts that, talk to families who are on welfare. Talk to the children. I believe the chief benefit of this bill, quite frankly, is the hope it holds for these children. I thank the Chair and I yield the floor. Mr. ABRAHAM. In the absence of a speaker on the Democratic side, I yield myself up to 10 minutes to speak at this time. The PRESIDING OFFICER. The Sen- ator from Michigan. Mr. ABRAHAM. Mr. President, as we come to the conclusion of this debate, I think we should be proud of the ef- forts of the Senate and of the Congress. For the better part of 2 years we have now been working toward, I think, a very positive conclusion to the debate on how we assist those in our society who are the most needy. It is clear from an examination of the past 25 to 30 years that the so-called war on poverty has been, at least up until now, won by poverty. Although trillions of dollars, over $5 trillion, has been spent during this past 25 to 30 years to try to fight that war, we find today virtually the same percentage, if not a greater percentage, of Americans below the poverty line than was the case when the war began. We have spent, as I say, a lot of time debating in this Congress and in previous Con- gresses why that is the case. It is quite clear, and I think acknowl- edged now by virtually everybody who has been involved in this debate, that the process, the welfare system in this country, is a principal reason why the war has not been won. Some would say, yes, there is a problem, but we have yet to come to the proper solution to that problem. However, I disagree. Indeed, we have worked very hard for, as I say, almost 2 years in this Con- gress, building on work done in pre- vious Congresses, to find the solution. I believe this legislation, although maybe not ideal from the perspective of any single Member, including the one from Michigan, is, nevertheless, a major step in the right direction. I believe this approach will work, Mr. President. It will work for a variety of reasons. First, it will work because it vests far more flexibility and far more decisionmaking and far more authority in the 50 States. There may have been a time in this country when some States and communities did not step up to their obligations to assist those in need. That is certainly not the case today. I do not know of one person in this Senate who has stood up here and said: ”My State will fail; my State will not take care of people; my State can- not meet the challenge; my State is less compassionate than the National Government.” I have not heard one Member say that. That is because not one Member could say that, Mr. Presi- dent. The States are as compassionate and as capable and more knowledgeable about the problems confronted by their citizens than bureaucrats in Washing- ton. This legislation gives those States the chance to translate their compas- sion and their insight and their exper- tise into the action it will take to as- sist people in need to move out of pov- erty and on to the economic ladder. This legislation works, also, Mr. President, because it changes the in- centives. Yes, we place some tough standards in this legislation, incentives to people to get out of the welfare de- pendency role and on to and into the work force. We put time limits. We put the kind of tough standards that will cause people to understand that pov- erty is not the way of life, that welfare is not the way of life, and to seek the assistance of government at all levels to obtain the training and the assist- ance and the help it will take to move into productive work. It changes the incentives in the right direction. The legislation is important, also, Mr. President, because for the first time it allows us to begin addressing one of the most important problems we confront in this country, the problem of the rising rate of illegitimacy, of out-of-wedlock births in America. We provide in the legislation incentives for States to find ways to solve the grow- ing number of out-of-wedlock birth sit- uations, incentives in the form of more dollars for the various problems if States can address effectively these is- sues and these problems, and do so without increasing the abortion rate at the same time. Finally, this legislation makes sense, Mr. President, because it means less bureaucracy. In my State of Michigan, we think we have a pretty darn good formula for addressing the problems that confront our most needy citizens. Too often, however, Washington bu- reaucracy and red tape make it impos- sible to accomplish our objectives. Just to put it in perspective, when we talk to people in our Family Independ- ence Agency\u2014it used to be called the Department of Social Services; we tried to change the title to change the philosophy as to our objectives in that agency\u2014the front-line case workers, the people who are supposed to be out there at the front line assisting folks to get out of poverty and on to the eco- nomic ladder, two-thirds of their time is not spent helping people get off wel- fare. Two-thirds of their time is spent filling out paperwork, almost all of it coming from Washington. We believe in our State, for example, that we can take what is now a 30-page form that must be filled out by folks who are going to go on to assistance programs and reduce it to about 5 pages, one- sixth the size of the form that cur- rently is used. The time the case work- er would have spent filling out the other 24 pages can now be spent helping the recipient figure out what training programs and what strategies will work to give them an opportunity to be productive and to get on the economic ladder. We think we should have the flexibility to get rid of the bureaucracy and to get rid of all that paperwork and concentrate on the true challenge that we have. For these reasons, I think the pro- gram that we are about to pass tonight is a sensible approach. I think it will do two things. I think it will help the people who need help and give con- fidence to people who have lost it in our system, the people who pay the bills, the taxpayers, who are frustrated by what they see as a losing war on poverty, confidence we are moving in the right direction. I think that will translate, Mr. President, into more support for social agencies across our States and in our communities, for charitable organizations, for other types of approaches that will assist government in getting the job done. Finally, let me conclude with a com- ment about one particular topic that has been discussed at great length dur- ing this debate. That is the issue of children. We all have different perspec- tives on this, of course. As I look back at the last 30 years, as I hear story after story from the people in our so- cial service agencies about families in a cycle of dependency, about kids with- out hope, of rising crime rates among young people, of increased drug usage rates, of kids having kids, I can’t help but think that what we have today has to be changed if we really care about helping kids. If we really want to help the children, we certainly should not, in any sense, continue this legacy, con- tinue the system that has created so much unhappiness and so much hope- lessness. Let us replace the hopelessness with hope, Mr. President. Let us finally put all the words and all the rhetoric of many years of campaigns and Con- gresses into action. Let us do it to- night. Let us finish the job and move in a new direction. Let us solve the prob- lem. Let us help our most needy citi- zens in the best way possible. I yield the floor. Mr. EXON. Mr. President, I yield 7 minutes to the Senator from Massa- chusetts. The PRESIDING OFFICER. The Sen- ator from Massachusetts is recognized. Mr. KERRY. Mr. President, I thank the Chair. Last year, I voted for the bill that the Senate passed 87 12 that went to conference committee. The conference committee moved signifi- cantly back, so much so that the Presi- dent saw fit to veto it. I voted for the bill that came back. I voted for the bill that went to the conference committee this year. I listened very carefully to CONGRESSIONAL RECORD \u2014 SENATE S9383August 1, 1996 the comments today of my colleagues about this bill that comes back from the conference committee. This bill that returns to the floor contains a number of important im- provements from the bill that was ve- toed last year. The agreement before us assures that almost all categories of citizens who are willing to work who are now eligible for Medicaid will con- tinue to be eligible for health care in the future. The bill increases child care funding levels by $4 billion over that which was vetoed. It doesn’t include the optional food stamp block grant, so our Nation will continue to have a na- tional nutritional safety net that is below that which I think is necessary. The new bill also maintains the child care health and safety protections con- tained in the current law and rein- states a quality set-aside. Additionally, whereas the vetoed bill block granted administration and child-placement services funding, this bill before us retains the current law on child protection entitlement pro- grams and services. And, finally, com- pared to the vetoed bill, this new bill increases the contingency fund from $1 billion to $2 billion to provide States with more protection during an eco- nomic downturn. Perhaps most important in the new bill is the child-support enforcement measures. These enormously signifi- cant changes will result in the most sweeping crackdown on deadbeat par- ents in history. As the President said yesterday, with this bill, we say to par- ents that if you don’t pay the child support you owe, you are going to have your wages garnisheed, your driver’s li- cense taken away, and people will be chased across State lines and tracked, and, if necessary, people will have to work off what they owe. That is a mon- umental shift in attitude and culture; although, ultimately, I believe without equivocation, that we will have to go further toward a national system, be- cause one-third of all child-support cases are interstate cases. The meas- ures contained in this bill will dra- matically improve the child-support system so children can get the support they need and deserve. Notwithstanding these good ad- vances, Mr. President, I have also lis- tened carefully to my colleagues on the floor, those who oppose it. There is not one of them who has not expressed le- gitimate concerns, legitimate fears. I respect those concerns and those fears, and I do not believe that there is one of them who does not want welfare change in this Nation. But I do believe we are voting today on a fundamental decision about change and what we are going to try to do. The fact is that we are really codifying what 40 States are already involved in, because there are waivers all across this land. And we are codifying something for a period of 5 years, a 5-year experiment, during which time, the 5 years, the full amount of time that people have before they would be cut off, will not have yet expired. We will be reconsidering it be- fore that date comes. I believe that my colleagues who have cited problems that still remain with this bill are correct. But there is no way to a certainty, Mr. President, to say what the interaction will be with those who will go to work, those who will benefit from the increased minimum wage, those families that will benefit by increased purchasing power from the combination of work and minimum wage, and therefore less need for food stamps. There is no way to say to an absolute certainty what the impact of a new culture will be on children or the relationship of family. What we do know is that it will be new, and what we do know is that it carries risks. Mr. President, we also know some things to a certainty. I agree with the President and col- leagues who come to the floor that, al- though we made great strides to main- tain the fundamental nutritional safe- ty net, we do cut deeper than necessary in this bill. And I am disappointed in the bill’s provisions on legal immi- grants. Legal immigrants are people who pay taxes, they can be drafted, and they are in this country completely le- gally. The harmful provisions that are in this bill have nothing to do with welfare reform. They are fundamen- tally a savings mechanism. I will do ev- erything in my power, Mr. President, to see that we change those measures as rapidly as possible to adjust. But as the President said yesterday, immigrant families with children who fall on hard times through no fault of their own should be eligible for medical and other help when they need it. If you are mugged on a street corner or are in an accident or you get cancer or the same thing happens to your chil- dren, we are a society that should pro- vide some assistance. I will do every- thing in my power to fight for that. Finally, I was also disappointed that we weren’t able to have the vouchers for children as a matter of automatic. But, Mr. President, as I balance the eq- uities of this bill, the need for change, against those things that we can rem- edy and against the experiment that is already taking place in this country, it is my belief that the bill before us will ultimately provide a leverage for change that will also change the dy- namic of the debate in this country, and that is why, ultimately, I choose to vote for the change and choose to vote for this bill. For years now, the poverty rate for children has already been going up in America. We have the highest poverty rate of any industrial nation in the world. But when we come to the floor of the U.S. Senate to try to do some- thing for children, we are told, well, now, wait a minute, their parents don’t want to work, or it is the welfare sys- tem that created the problem. In fact, the welfare debate that has been so adequately distorted in so many re- gards obscures the real debate about children and about how you put people to work. Mr. President, I am convinced that by taking that off the table, we are, in fact, going to begin the real debate in this Nation today about how we ade- quately take care of those kids. The PRESIDING OFFICER. The time of the Senator has expired. Mr. KERRY. I ask for 1 additional minute. Mr. EXON. I have exactly 1 minute left. I yield that 1 minute only to the Senator from Massachusetts. Mr. KERRY. Thank you. Mr. Presi- dent, I believe that, by taking this away, providing we are vigilant and providing we all mean what we say, providing we are prepared to do what we ought to do in conscience, we will now begin to focus on the children of this country and we will begin to focus on the real work of how you put people to work. I believe that is the most im- portant debate that the country can have and take away from it any dema- goguery or artificiality that is placed in front of us about welfare or stereo- types with respect to it. I believe it is an important change. Yes, people ought to work. Hard- working American citizens should not be required to carry people. But we also have to be honest about the dif- ficulties of some of our population try- ing to actually find that work. We should not hurt children. I want to spend every ounce of en- ergy I have, Mr. President, on the floor of the Senate to stop the business of the Senate, if necessary, to guarantee that we fulfill that commitment as we judge how this works over the next months and years. I thank the Chair. Mr. EXON. Mr. President, I yield 5 minutes to the Senator from Arkansas. The PRESIDING OFFICER. The Sen- ator from Arkansas. Mr. BUMPERS. Thank you, Mr. President. I thank the distinguished floor manager from Nebraska. Mr. President, let me say, first, that nobody knows better than I that our welfare system does not work very well. Everyone who is going to vote against this bill today said they do not like the system, that it is broke. There is a lot of truth in that. There are a number of reasons I am going to vote against this bill. First, the bill is not going to address those deficiencies we all know exist in the system. Second, I am going to vote against it because it discriminates against my home State of Arkansas in a massive way. Children in my State will get $390 a year. Children in Massa- chusetts will get $4,200 a year; in Wash- ington, DC, $2,200 a year. You tell me why a child in Arkansas is worth $390 a year and $4,200 in Massachusetts. You expect me to vote for a formula like that, one that does not even take into consideration how many poor children are in your State? Everybody hates welfare. I am not too crazy about it myself. But I will tell you one thing. I have seen it first- hand. I have been in the ghettos of my CONGRESSIONAL RECORD \u2014 SENATES9384 August 1, 1996 State in the Delta. I can tell you it is not a pretty picture. Mr. President, I find it rather perverse that 535 men and women who make $133,000 a year will be voting on whether children are going to eat or not, whether their mothers are going to eat or not. Never has such an important piece of legislation been crafted in such a high- ly charged political environment. Ev- erybody understands precisely what the politics of this whole thing are. The election is coming up. So we have to do it. I said the other day that there ought to be a rule in the Congress against considering bills like this dur- ing an election year. The American people detest welfare. I understand that. But there ought to be a rule against considering these kinds of bills that affect the very fiber of this Nation in an election year. This is the first time in my lifetime we have deliberately and knowingly and with some elation turned our back on the children of this Nation. I still believe those Methodist Sunday school stories I heard about ”blessed are the poor.” I used to be one of them. We are going to kick people off wel- fare and tell them to get a job. I would like to invite all of my colleagues to go to the Arkansas Delta. I will pick out a dozen communities for you to visit, and then you tell me after you have kicked these mothers off welfare where they are going to get a job; 50 percent of these mothers will be kicked off the welfare rolls after the first 2 years. There are no jobs. We could not even find it in our hearts to provide vouchers for mothers so they could provide diapers, medi- cines, and other necessities for chil- dren. We wouldn’t even give them a voucher to buy nonfood products for their children. I can’t vote for this. We have one out of every five chil- dren in this country in poverty. You think of it. One out of every five chil- dren in this country, 20 percent, now live in poverty. Every single study of this bill says there will be a minimum of 1 million to 2.5 million children added to those rolls within 5 years. Oh, Mr. President, I could go on and on about why I am not going to vote for this bill. Simply, I just can’t find it in my heart to vote for a bill that I consider to be punitive. Punitive to- ward whom? Not just some lethargic person on welfare, but innocent chil- dren. If you are a legal alien and the school district wants to take your child, that is their business. We are not going to pay for it. So if you are a legal alien, you have a right to be here, you work here, you pay taxes here, and you send your child down to the school. They may take your child, but they will not let him go to the lunchroom because the Federal Government pays that bill, and ”We ain’t paying.” We are not going to pay it. I have heard it said that 47 members of our Olympic team are legal aliens, or children of legal aliens. Tonight, instead of honor- ing them during the Olympics, we are turning are backs on them. So, Mr. President, I admit I am soft- hearted. I am very compassionate to- ward children and women. So I just simply cannot vote for this bill. I wish everybody well, and I hope it works. I do not believe it will. I yield the floor. Mr. SANTORUM. Mr. President, I yield myself 15 minutes. The PRESIDING OFFICER. The Sen- ator from Pennsylvania is recognized. Mr. SANTORUM. Thank you, Mr. President. Mr. President, I speak as someone who has worked on this issue for now 4 years. This is a very meaningful thing for me personally. But I think, as I look at this legislation and as I look at the process it has been through, I can’t help but think what we are doing here is probably the most significant piece of social welfare legislation that we passed maybe since the mid-1960’s, and I would even suggest possibly since the 1930’s. So it is a very significant day. We are making monumental decisions here that are going to affect millions of people. I understand that the passions run very high on both sides of the aisle on how desperately we need these changes, as some suggest, and how erroneous these decisions are by others who op- pose the bill. If I can for a moment, because I know there has been a lot of debate about why we need to make these changes and what the bill does or does not do, or should or should not do, let me talk for a minute as to how this bill got here. I think, if you look back at the gen- esis of this proposal, you have to go back to the House of Representatives. A task force was put together by NEWT GINGRICH, a task force on welfare re- form when we were in the minority over in the House back in 1993. He asked me, as the ranking member on the Ways and Means Subcommittee of Human Resources, to chair a task force of members of the subcommittee and other people, including the former Gov- ernor of Delaware, MICHAEL CASTLE, the Governor from Missouri, and a few others, to sit down and try to put to- gether a bill that would follow through on ending welfare as we know it. We got all sorts of testimony from people. We talked to literally hundreds of people all over the country about the problems in the welfare system and listened to all of the experts and pseudoexperts on the issue of welfare\u2014 frankly, not just from conservatives but from across the spectrum\u2014as to the pitfalls that we might encounter. Let me first state that this was an extraordinary thing to do. We actually took this very seriously. When you are in the minority, when you work on a major issue like this, most people do not pay much attention to what you do. ”You are not going to pass this bill. It is not going to become law.” So there is sometimes a feeling, ”Well, let’s just sort of put together what we can, sort of patch together some popu- lar ideas, throw it out, and it will get a story for 1 day and no one will pay much attention to it after that.” I can tell you that myself, NANCY JOHNSON, CLAY SHAW, MICHAEL CASTLE, and a whole lot of other folks who were in the House last term took this as a real serious responsibility. We met lit- erally for, I think, 6 or 7 months, every week, hours upon hours each week, just over every single item in the legisla- tion. It was a wonderful experience for me. But I think it was a great experience for all of us to see the real complex- ities of what we are dealing with. I think we got a real understanding of some of the concerns that Members have expressed here. We came out with a bill in November of 1993. It addressed for the first time issues like the paternal establishments which are in this bill. The provisions we wrote in this bill almost 3 years ago are almost identical. In fact, I suggest they maybe are identical to the provi- sions that are in the bill today that we addressed\u2014the issue, for the first time ever, of immigration and benefits to legal aliens. It was the first time the bill had come up and addressed that issue. And those provisions are in this bill today. We addressed the issue of illegit- imacy. Again, that was a word that, frankly, we were not supposed to use anymore. It was a politically incorrect word. You were supposed to use the word ”out-of-wedlock birth.” We ad- dressed that issue for the first time and really brought the attention of the wel- fare debate on this scourge in our Na- tion. I know it has been cited here before, but in 1965, the illegitimacy rate in this country was about 5 or 6 percent. Today a third of the children in this country are born out of wedlock. I am not saying that welfare is the sole cause of that. It certainly is not. But it certainly is a contributing factor, in my mind and, I think, in other people’s minds. We were trying to come up with ideas, some of which were included, and, frankly, a lot were not. But we pushed the envelope for the first time. We put this in the forefront and made it an issue of debate. Yes; we had time limits on welfare. Yes; we had work re- quirements\u2014real work requirements. And those time limits of 2 years with- out having to work and 5 years total on welfare are in this bill today. If you go back and look at that origi- nal draft, I think you are going to see a lot of similarities in child support en- forcement and a whole host of other areas that are in the bill today. And I think it is a remarkable compliment to the men and women who worked in that group that their hard work, seem- ingly fruitless at the time because we were a minority, had absolutely no hope that we would ever be in the ma- jority but cared enough\u2014I think that is the point I am trying to make\u2014we cared enough about this system and the destruction that the system was CONGRESSIONAL RECORD \u2014 SENATE S9385August 1, 1996 causing, we cared enough to spend hours and hours of time to put together a bill that we felt truly would change welfare and end the despair and the de- pendency that this system has created. So I congratulate my friends in the House who made a tremendous con- tribution to the original bill, and I con- gratulate others for the successor bills, the bills that were introduced in the Senate by Senator Packwood and in the House subsequently by CLAY SHAW, who was a member of that original working group. They took the next log- ical step and moved the ball forward on a few issues, fell back a little bit on others, but that is how the legislative process works. We tried to meet the concerns of, frankly, both sides of the aisle. And I know when Senator Pack- wood, and then subsequently when Sen- ator ROTH took over the Finance Com- mittee, we actually crafted a bill here on the Senate floor last year that got 87 votes and then recrafted another bill, very similar to the bill that passed last year, and got 74 votes, and I sus- pect we will get maybe even a few more than that this time around. They did the same thing in the House and con- tinued to get more bipartisan support as we worked through some of the dif- ficult issues of welfare reform. The core of those bills remains the same, and that is that we are going to do something about illegitimacy. There is an incentive now sponsored by Senator ABRAHAM, one of the improve- ments to the bill, for States to reduce their illegitimacy rates, and there is a cash bonus for States that are able to reduce that statistic, that cruel statis- tic to children. And I say cruel because go through all of the evaluation cri- teria: Children who are born to single- parent households are more likely to be poor, are more likely to be on wel- fare, more likely to do poorer in school, more likely to be victims of crime. You can go on down the list. We are doing no favors to children when fathers are told that they are expend- able. In the welfare system that we are creating here today, fathers are no longer expendable. Fathers are going to be required to be responsible for the children. Mothers are going to be re- quired to cooperate with the Govern- ment in establishing paternity\u2014two things that were in the original bill that we drafted 3 years ago that have stood the test of time and scrutiny in both Houses of Congress, because it is the right thing to do. We have stood up and said families are important under this bill. We have stood up and said communities are important. Senator ASHCROFT, in another good addition to this bill, said that reli- gious, civic, and nonprofit organiza- tions in the local communities are going to be much more able to be part of the system of welfare, of support of the poor than they are today, are going to be eligible for more funds and more opportunities to help the poor, which they do much better, much more effi- ciently, but, frankly, even if they did not do it more efficiently, they do it more compassionately. They do it with love for their neighbors and the people in their communities, not out of some sense of duty because it is their job. We have changed welfare in this bill, and we have done it over a long proc- ess. Those who would suggest this is just something that was thrown to- gether at the last minute before an election do not know the work, or ei- ther choose not to recognize the work that has been put into this bill, the time and the debate, the hours of the debate here on the floor and over in the House, in the conference committees, to try to come up with a carefully crafted bill that is truly compassionate and not compassionate in the sense that the Federal Government is going to go out and take care of every per- son’s need who is poor. I think we have shown that that sys- tem is truly not compassionate because when the Federal Government comes in and takes care of every aspect or every need that even a child has, then the Federal Government, in fact, becomes the replacement for the others whose responsibility it truly should be to take care of that child. We have said to the father, again, you are not nec- essary. We have said to mothers, you do not have to work; we will provide\u2014 some distant bureaucrat will send a check to provide for you. That is not compassion. Compassion is having a system that builds families so there is an environment there for children to flourish. Compassion is a system that supports neighborhoods and civic organizations, mediating in- stitutions that DAN COATS talks about so often that provide the values and community support for families that they need to help take care of children, to create the neighborhoods where chil- dren are no longer afraid to go out and play on the playground because they could step on some drug-infected nee- dle. No, this bill is all about creating a community, creating a support net- work and environment at the level most important to that child as op- posed to that bureaucrat sitting behind the bulletproof window passing out the check every month, saying to that per- son on the other end receiving that check that you, because of your pov- erty, are unable to provide for yourself and your children and you need to be dependent upon us for your life. The Senator from Arkansas said it is a tragedy that one in five children in this country are in poverty, and I agree it is a tragedy. And he said it is going to get worse. I suggest he is wrong. I suggest the tragedy is as bad as it is going to get, and there are plenty of or- ganizations as a result of this bill that are going to get the opportunity to step forward, including the family. I feel very good about what we are doing here, and I would say, as my friend and colleague in the House, CLAY SHAW, said many times, I am not sug- gesting this bill is perfect. I grant you this bill is not perfect. No bill is per- fect. But I can guarantee you that this is a dramatic step forward that this country has asked for and is getting from a Congress that is listening. Yes, we will make mistakes. Unlike those who crafted the current system in the thirties and in the 1960’s, we are going to be willing to come back here and look at those mistakes. We are going to be willing to come back and face those problems, because we under- stand, unlike those who crafted the last system, that we do not have all the answers here, that we do not have the omnipotence here to decide what is best for everyone. This is a grand experiment, one that we must take if we are going to save children in this country and, more im- portantly, to save the fabric of Amer- ica for the next and future generations. Mr. President, I yield the floor. Mr. EXON addressed the Chair. The PRESIDING OFFICER. The Sen- ator from Nebraska. Mr. EXON. Mr. President, I advise Senators on both sides of the aisle that we have 11 minutes remaining. I am about to yield 7 minutes to the Senator from Florida. There will be 2 minutes to Senator HEFLIN and 2 minutes to Senator FORD. I yield 7 minutes to the Senator from Florida. The PRESIDING OFFICER. The Sen- ator from Florida. Mr. GRAHAM. Mr. President, when we voted on this matter a few days ago, I voted ”no.” Today, I am going to vote for the conference report, and I wish to explain why I am taking that position. As I assessed the conference report, it seemed to me that we had basically two options. One option was to wait until there was a better point at which to commence and continue our effort at welfare reform and be prepared to accept the status quo until that second opportunity presented itself. I felt that was likely to be a long time from to- night. The second option is to accept a clearly less than perfect bill, I would say, accept a flawed bill, but one which represents a step in a multistep process leading toward a fundamental transi- tion from a welfare system that has fo- cused on providing for the needs of a dependent population to a welfare sys- tem that provides the ladder by which people can move from dependence to independence. I believe it is more ap- propriate to take that second road. I believe this is the time to take that leap of faith. To use some statistics from my State of Florida, 3 years ago, in 1993, we had an unemployment rate of 7 percent. We had 254,000 persons who were on the AFDC caseload. That is 254,000 families that were on AFDC. Today, in 1996, we have a 200,000 AFDC caseload, a reduc- tion of 54,000 in 3 years. That says that we are in a period of a strong economy, creating jobs, providing people with the opportunity within the current sys- tem to get off welfare and to get a job. CONGRESSIONAL RECORD \u2014 SENATES9386 August 1, 1996 I think that is the ideal environment in which, now, to have this new system which will be giving to the 200,000 who are still on welfare the means by which they can get a job and end dependence. If we cannot make this transition work under the economic conditions that exist in my State and most of the States of America in the summer of 1996, then I doubt we will see a time in the foreseeable future when we could make this system work. It is for that reason that our Gov- ernor has announced his support for this program. It is for that reason our legislature has passed its own version of welfare reform, building on impor- tant demonstration projects in our State which have tested out what is going to be required in order to make this new system achieve its objective. I stated candidly that this is a bill which is far from perfect, and which has some flaws. That presents, as I be- lieve the Senator from Pennsylvania just stated, the agenda for our action in the future. I suggest two areas in which I think that attention should be focused. One of those is on the basic fi- nancial arrangement between the Fed- eral Government and the States. We start this in a period of prosperity. We know the business cycle has not yet been repealed. There will be times when we will return to the cir- cumstances of the early 1990’s, when we had unemployment rates ranging from 7.4 to 8.3 percent. We need to relook at our financial relationships to assure that we have the flexibility, the elas- ticity in order to protect States during those downturns. We need to also look at the issue of fairness of allocation. I continue to be distressed at the fact that we are using the old method of allocating Federal funds, the formula that we developed for the system we are now rejecting as we move into the new system. I suggest that is inappropriate, an inappropriate bit of baggage we are carrying with us and it is going to be a heavy piece of baggage, in terms of achieving the ob- jectives of moving people from welfare to work, particularly in States such as Arkansas, which start this process as very low beneficiary States and are therefore restricted in the amount of funds they will have available. The second area in which I believe we need to focus our attention is on the issue of legal aliens. It confounds me as to why legal aliens were brought into this bill, which has, as its title, welfare reform. That has very little relation- ship with the severe cutbacks in bene- fits for legal aliens. These are our par- ents and grandparents of just a genera- tion or two ago, who came to this country seeking the freedom of Amer- ica. Now, those who have followed them in that 200-year quest for those values of America, we are now putting into a second-class status. There is no relationship to the goals we are trying to achieve in welfare reform. It has a lot to do with the fact this is a voice- less, vulnerable population, from which we can seek some additional resources in order to meet our budgetary goals. Let us be clear, this is a budget issue, not a welfare reform issue as we speak of legal aliens. And it is going to be a major budget issue for those commu- nities which have sizable numbers of legal aliens who will now become an unpaid charge to the local public hos- pital. So that area will also require our attention. The PRESIDING OFFICER. The time of the Senator has expired. Mr. GRAHAM. Mr. President, I con- clude by saying it is with a leap of faith that we undertake this initiative. I think we are doing it at a time which gives us the greatest hope and expecta- tion that faith will be justified. Mr. DOMENICI. Mr. President, Sen- ator SIMPSON is next. I believe he has asked us for 10 minutes? Up to 10 min- utes. The PRESIDING OFFICER. The Sen- ator from Wyoming. Mr. SIMPSON. Mr. President, I thank Senator DOMENICI, always, for his courtesy, his kindness and his gen- erosity in what he does for all of us; and to recognize once again how hard he works. And, also, Senator EXON, who came here to this body when I did. I do not think anyone realizes the task of the chairman and ranking member of the Budget Committee and what they do. Through the years I have watched with awe, as they deal with every sin- gle issue that confronts us and do it with a steadiness and skill that is envi- able. I do mean that. I think we have a good measure here. It has certainly been through the grinder. We have all looked at it care- fully. There is nothing new in it. I sup- port it. I served on the Finance Com- mittee. I listened to the hearings. I tried to add my own dimension of ac- tivity and support to it in its passage. So I commend those who have worked so hard on this issue. I commend the President who has indicated he will sign the bill. There are some troubling things in there for me. One especially, because I did not have any real active participa- tion in it, and that is with regard to the benefits to legal immigrants of the United States. There is a great dif- ference between an illegal immigrant and a permanent resident alien. We should not be making distinctions on permanent resident aliens, in my mind, to the degree here. I did not participate in any aspect of that because I felt it would detract from what I was trying to do with legal and illegal immigra- tion\u2014which we have dealt with, and legal immigration, which we did not deal with. Next year, when legal immigration goes up from 900,000 to 1 million people, the people of America will wonder what we did in this Congress. But I think we will deal with the issue of illegal immi- gration. We are not far from resolving that. MENTAL HEALTH PARITY Mr. SIMPSON. Mr. President, let me just say I am deeply troubled the con- ferees for the health insurance bill have apparently decided to not include any form of mental health parity on the final bill. In April, 68 Senators voted aye on an amendment by Sen- ators DOMENICI and WELLSTONE that would prohibit health plans from dis- criminating against people who have mental illness. This amendment was not a sense-of-the-Senate proposal or some meaningless resolution. We do plenty of those in this place. They al- ways come back to haunt us, but we do them all the time\u2014sense-of-the-Senate this, sense-of-the-Senate that. That is not what this was. It was a real piece of legislation. It was real legislation that expressly prohibited health plans from imposing treatment limits and financial require- ments on services for mental illness that are not also imposed with respect to physical ailments. It was deeply gratifying to me personally to see so many Senators cast a rollcall vote, clearly ”on the record,” in bipartisan support of ending this terribly unfair discrimination. It is discrimination, that is what it is. We talk about that all day in here. If there is ever a more blatant form of discrimination, I do not know what it is. To think we still carry such a stig- ma in society of mental illness is dark ages stuff. So 3 months later, I am absolutely stunned that we are unable to gain sup- port for the Domenici-Wellstone com- promise which represents a very mere ”slice,”\u2014a minuscule slice\u2014of the original amendment that received 68 votes. All this compromise would require is that mental health ”parity” be achieved with respect to annual pay- ment limit caps and lifetime caps. I think it is rather curious that the conferees rejected this compromise, held tough for so long and, at the same time they accepted another com- promise on medical savings accounts which received only 46 votes on the Senate floor, and I am one of the 46 who voted for medical savings ac- counts. I am pleased we were able to work out an agreement on that aspect of the bill, but I certainly must question why the same spirit of cooperation was no- where to be found when the issue of mental health was considered. I am especially troubled that some of the special interest groups\u2014boy, have they been sharpening their fangs in this session of the legislature; I have felt a little of it\u2014have been so aggres- sive in lobbying against this com- promise. To say that this small meas- ure of parity is too costly is absolutely utterly absurd. As Senator DOMENICI pointed out, this entire bill is a man- date. To single out this one lone lonely mental health provision and label it as a costly mandate when the whole thing CONGRESSIONAL RECORD \u2014 SENATE S9387August 1, 1996 is a mandate is a classic example of ab- surdity and discrimination. Yes I will use the term one more time. Sadly, that is what this debate is now all about. Discrimination is surely not something new to those who suffer from mental illness, I say to my col- leagues. They have had it for a life- time, and the stigma hangs and it is demeaning and it is wrong. It is not something we should accept without a good fight. I have deepest admiration and re- spect for my friend Senator KASSE- BAUM. She too came here when I did. I would certainly hate to see her work product injured or disrupted, but I re- spectfully urge my colleagues to con- sider what we are doing, and I hope Senators DOMENICI and WELLSTONE will work toward some other result, and I will work with them in that objective. It is time to rid ourselves of this tragedy of stigma and discrimination. To see the business community do what they have done with regard to this issue deserves closer attention from all of us on this and other issues of the day where they apparently feel a great strength surging through their muscles and they do things they never did before. We will address that at some future time, too. I certainly respect those who have worked so hard to bring this about and will certainly give my full energies to seeing if we cannot get a better result. I thank the Chair. Mr. DOMENICI addressed the Chair. The PRESIDING OFFICER. The Sen- ator from New Mexico. Mr. DOMENICI. Mr. President, I thank Senator SIMPSON. I think he will join me in saying, as both of us talk to the business community about what they have done here, we want to ac- knowledge that some very good busi- nesses in America already have decided to cover mental illness, and none of our remarks are directed at them. There are many self-insured and otherwise who are doing a good job of considering this discrimination. I thank him for his remarks. f PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILI- ATION ACT OF 1996\u2014CONFERENCE REPORT The Senate continued with the con- sideration of the conference report. Mr. EXON. Mr. President, I yield 2 minutes to the Senator from Alabama. The PRESIDING OFFICER. The Sen- ator from Alabama. Mr. HEFLIN. Mr. President, 1 week ago, I voted for the welfare reform leg- islation that passed the Senate. Pre- viously, I had supported two alter- natives\u2014one a Democratic version and the other a bipartisan alternative. Al- though both these attempts failed, some of their provisions were adopted into the bill that passed, making if far better by providing a wider safety net for children and the poor. The conference report before us now is not as good as I would like. It prob- ably is not anyone’s ideal plan for wel- fare reform. Frankly, I think the Sen- ate’s version was preferable to this conference report. But, while some pro- visions within the legislation are still troubling and need to be reworked down the road, at least we are off to a good start in reforming a system that we all agree to a good start in reform- ing a system that we all agree is bro- ken and needs to be overhauled. One thing is certain: regardless of its short- comings, this bill is a product of sin- cere efforts to end the harmful depend- ency and other severe short-comings which currently exist in our welfare system. Throughout this debate and these difficult negotiations, I have been impressed with the diligence, te- nacity, and honesty which Members have displayed in trying to come up with an acceptable plan to end welfare as we know it. The measure we are considering today does, in fact, represent a change in philosophy in how we think about children and families. This is the most significant and sweeping change in the social compact of our Nation since the New Deal. Its strength is that it over- hauls our welfare system without the harshness of previous bills that have been vetoed. The two vetoes, along with the threat of a third, served the purpose of eliminating the extreme measures that made the previous bills unacceptable\u2014even harmful. For example, we have now rightly recognized that a mother with young children who wants to work will have access to adequate child-care. Also among its vast improvements is the fact that child nutrition programs, such as the school lunch program, are not block granted. The same is true of the Food Stamp Program. I had grave fears that block-granting these kinds of nutrition programs would impose tremendous burdens on States like Ala- bama, which over the years has suf- fered from several periods of budget proration and economic recession. Pro- grams like these aimed at helping chil- dren and the poor would have faced drastic cuts if they had been block- granted. This measure raises the cap on the contingency fund from $1 billion to $2 billion to provide States with more protection during economic downturns. It also adds a new trigger mechanism based on the food stamp caseload. It in- cludes some provisions for States to es- tablish objective criteria for delivery of benefits and to ensure equitable and fair treatment. This welfare reform legislation, while not as sound as the Senate-passed plan, is still a vast improvement over the Republican bills which were vetoed. As I stated earlier, I still have some res- ervations surrounding certain provi- sions contained in the measure. But I believe, overall, that the positive out- weighs the negative. I think the com- promise we have struck is a major step in the right direction, and an overall positive effort at making welfare more of a helping hand in getting people on their feet economically. Our debate over the last few months has been both constructive and produc- tive. We now have a bill before us which is a testament to the Congress and its leadership\u2014majority and mi- nority. In essence, it is a product of the Congress’ legislative process working as it was designed to work. We have seen some hard-fought bat- tles and witnessed significant changes from the original bill after some in- tense debate and good-faith negotia- tions between the two sides of the aisle. Each side has made concessions, while holding firm to certain core prin- ciples. We have arrived at agreements on several major issues. As a result, we now have a bill that contains stronger work provisions and that is not as harsh on children. While there are un- doubtedly problems still remaining in the legislation that will have to be ad- dressed down the road, this com- promise is an overall positive step for reforming welfare, reducing depend- ency, and offering a brighter future for millions of American families. Mr. President, except for the bal- anced budget constitutional amend- ment, this welfare reform bill is argu- ably the most important legislation we will tackle in this or any other Con- gress. There is no doubt that our cur- rent system is failing welfare recipi- ents and taxpayers alike. I am pleased to join my colleagues and the Presi- dent in taking advantage of this his- toric opportunity and enacting reforms which will empower recipients to break cycles of dependency, to focus on work and responsibility, and to become suc- cessful and productive citizens. Mr. BURNS. Mr. President, I rise today to talk about this important issue before us\u2014perhaps the most im- portant initiative undertaken by the 104th Congress\u2014welfare reform. For the last nineteen months, Congress has been embroiled in an enormous debate over how best to reform our welfare system. There has been a lot of talk about ending welfare ”as we know it”, but for the most part, it has been just talk and no action. Today, however, the Senate stands close to passing leg- islation that I believe will make the much-needed changes in the way our welfare system operates. I think many of my colleagues on both sides of the aisle, as well as a ma- jority of my fellow Montanans, would agree that our welfare system needs improving. I am glad we agree that changes need to be made in our welfare system so that our assistance programs are more effective and less costly. Let’s face it, however, we don’t need this leg- islation to know that the welfare sys- tem has failed miserably. The truth is, the system is not working as it was in- tended\u2014as a temporary assistance to help people until they can get back to work. Over the last thirty years, the system has become a way of life, not because those receiving assistance don’t want to work, but because the CONGRESSIONAL RECORD \u2014 SENATES9388 August 1, 1996 system makes it tough, even discour- ages people, to get off welfare. Although we all know that this bill before us today will not solve all the problems with the current welfare sys- tem, it does take a giant step toward reversing years of failed social welfare policy. This bill will end welfare as a way of life for many Americans. By re- quiring most able-bodied adults to go to work within two years and by put- ting a five-year limit on welfare assist- ance, we are making great strides for- ward in putting people back to work. I have to believe that most people would rather work than be on welfare. And it pleases me to no end that the tough and real work requirements contained in this bill will get folks off the welfare roles and into a productive job, job training program or community serv- ice. There is no doubt there will be ex- ceptions, but the goal of welfare reform is independence, not government reli- ance. This bill also contains provisions to strengthen families and personal re- sponsibility, something I think is es- sential to getting at the root of our welfare problems. In a scant few dec- ades, we have seen the demise of fami- lies and family values in our country. And illegitimacy rates are rising to al- most dangerous levels. These are the things that are contributing most to the decline in our society. More and more children are growing up without a father, without a solid family to sup- port them, and crime statistics show that kids who are raised without a fa- ther commit more crimes. I think our welfare system, though designed to as- sist folks and born of good-hearted in- tentions, has served to fuel some of the social problems we face today. It is clear that our present welfare system encourages young mothers to have children, and many of those children are not being cared for. Though it is impossible to legislate, this bill takes a giant step forward in addressing these problems by encouraging families to stay together, providing more re- sources for child care and enhancing child support enforcement and domes- tic violence measures. Perhaps the fact that is most impor- tant to me personally, by passing this bill we will give the states flexibility to design programs that will work best for their residents. Currently, the Fed- eral Government has so many rules and regulations that when States want to try something innovative to reform the welfare system, like my home State of Montana, the barriers are often times too great. Over the last 7 years, I have spoken with the folks who administer the welfare programs in my State and time and time again they ask for the opportunity and flexibility to run the welfare system as they see fit. And by block granting funds to the States and letting States set many of their own program rules, this bill will allow the decisionmaking to be done at the state and local level, not by Washington bu- reaucrats. There is no doubt in my mind this will serve both our Nation and, specifically, the people of my State well. After all, Montanans do know what is best for Montana. The bill does all this and will still succeed in reducing welfare spending by roughly $55 billion over 6 years. Given our Nation’s budget problems, that’s an important fact. I realize that there are many Ameri- cans, including a number of folks in Montana, who have serious concerns with this legislation. Folks seem to be particularly troubled by the possibility that this bill will actually increase poverty and fails to provide a nutri- tional ”safety net” for our Nation’s needy families. I appreciate and under- stand these concerns\u2014no one wants to push more children and families into misery. In fact, I have been an ardent supporter of nutrition programs in the past, especially those for children, and I have made every effort to protect them throughout the current welfare reform process. The reality is, however, that the American taxpayer is not getting his money’s worth when it comes to many of the current assistance programs and the tragic state of the welfare system makes reforming the system all the more urgent. What’s more, there have been those who have suggested that this bill is heartless and out to punish children and immigrants. In response to those who would make such accusa- tions, I would join with many of my colleagues in asking if the current wel- fare system is not already punishing\u2014 even degrading\u2014children and other folks it is supposed to help? Why do we insist on protecting, or at least not re- forming, a system that promotes a cul- ture of dependency and poverty? As for the immigration provisions contained in the bill, perhaps Senator SANTORUM summed it up best when he noted that as we become the retirement home for the rest of the world, the taxpayers of this country are picking up the tab. To that end, the goal of this welfare re- form bill is not to punish, favor or dis- criminate against anyone or any group. Its intent is not to promote and strengthen the system. It is con- structed to end the cycle of generational dependency and irrespon- sibility promoted by the current wel- fare system. Mr. President, we have a historic op- portunity today to change a system that has consistently failed poor Amer- icans. I want to thank the Governors and all of those who have worked so hard, in both parties, to bring this leg- islation to this point. I particularly want to commend the Republican lead- ership for leading the way on this issue. Though Bob Dole may not be with us on the Senate floor today, I also want to thank him for his efforts and dedication in ending welfare as we know it. I also want to congratulate President Clinton on his announcement yesterday. Though the President has resisted real welfare reform by casting two vetoes on similar bills in the past, he has realized that the American peo- ple want this bill and that bipartisan cooperation is needed to reform this broken system. And with the over- whelming bipartisan support in the House yesterday, it looks as though we are seeing our way clear to bring about the much needed reforms with what I believe will be the right kinds of re- sults. In closing, Mr. President, it was al- most exactly 1 year ago\u2014in fact, it was August 9, 1995\u2014that I stood on the floor of this esteemed chamber and spoke about how much I was looking forward to the upcoming welfare re- form debate. I spoke about how excited I was to see some real changes in how Americans perceive welfare, how wel- fare is paid out, and the direction our country was headed. There were a num- ber of goals then that I was looking for in welfare reform legislation. Would it promote and strengthen the family? Would it give more flexibility to the States, allowing each State to design a system that best suits their needs? Would it include strong work require- ments to get folks back into the work- place? Would it address our growing problem with illegitimacy and teenage pregnancy? Mr. President, I think we have addressed these issues with this legislation. It is now a year later. During this time, a number of differing opinions have been offered\u2014suggestions put forth\u2014on how best to achieve these goals. It has been a very slow process indeed\u2014but I think that most of us would agree that welfare reform is still very necessary and this bill does that. Business as usual was not working in August 1995 or even in November 1992, and it is not working now. All Ameri- cans deserve the chance to succeed, whether they are poor or not. I think this bill gives all of us the chance to do just that. Let’s not squander this op- portunity. I yield the floor. Ms. MIKULSKI. Mr. President, I will vote for this bill because maintaining the status quo is unacceptable. The other alternative is to do nothing. I vote for this bill, having reservations, but believing it is the right thing to do. We Democrats have made 36 impor- tant improvements in this bill that protect the most vulnerable, the chil- dren. But there are still yellow flashing lights, warnings regarding the bill’s safety net for children. We will need to monitor them closely. On balance, though, I believe the poor and the taxpayers will be better off because we are voting for this bill. We all acknowledge that our current welfare system does not work. It has failed to move people from welfare to work, and has created a culture of pov- erty that has ensnared generations of our most vulnerable citizens in poverty and dependency. I believe in the capac- ity of people to better their lives and build a better future for themselves and their families. The current welfare system does not provide people with CONGRESSIONAL RECORD \u2014 SENATE S9389August 1, 1996 the tools they need to do that. Welfare should be a way to a better life not a way of life. The current welfare system is dys- functional and destructive to the poor. I have worked to change that. I have fought for a plan, which I helped to write, that was firm on work and de- manded responsibility from those who find themselves on public assistance, but that protected children. I will vote for this bill because it is greatly improved over the original Re- publican bill which the Senate debated last year. There are some 36 improve- ments in the bill, improvements which I fought for and which are drawn large- ly from the Democratic alternative bill which I co-authored with Democratic leader Senator DASCHLE and Senator BREAUX. Our Democratic alternative provided people with the tools to move from welfare to work. It demanded work of all able-bodied adults. It removed the key barriers to work\u2014such as lack of adequate child care and inadequate job skills. Our bill ensured that no child would go without health care or ade- quate nutritional assistance because of the failings of their parents. It ensured that when we aimed at the parent we did not hit the child. I am proud of my work on the Demo- cratic alternative bill. I am proud that we gained the support of every Demo- cratic Member of this body. I regret that it was rejected by the other party. But thanks to the persistent advocacy of our Democratic leadership, of which I am a member, many of the provisions of the Democratic alternative were adopted in the bill that the Senate passed. They are now in this legisla- tion. These improvements have helped to make this a more acceptable bill. I’m particularly proud of my role in fighting for child abuse programs, for child care health and safety standards and for the health care safety net. I of- fered amendments on these issues and fought for their adoption. From day one, I insisted that we could not do anything in this bill to lessen our commitment to fighting child abuse. I am pleased that this bill no longer includes provisions which would have replaced Federal child abuse and protection programs with an inadequate block grant. As a former child protection worker, I know how vital these programs are for taking care of children who have suffered from abuse or neglect. I fought to keep current Federal child care health and safety standards. Along with Senator DODD, I offered an amendment to restore those standards which the other party was prepared to abandon. I fought to maintain those standards because I believe strongly that parents should have every assur- ance that when they place their chil- dren in child care, they will be pro- tected from infectious diseases, from unsafe buildings and playground haz- ards, and that the child care worker will know basic first aid. This is a sig- nificant improvement in the bill. I also fought for a health care safety net for children. I wanted to make sure that children would still be eligible for Medicaid coverage even if their parents failed to meet the work requirements of this bill. This bill contains the pro- vision I fought for to ensure that chil- dren will still have access to health care. I was an energetic and enthusiastic advocate for other improvements to the bill, such as the provisions to pro- vide funding for child care, to exempt mothers with infant children from the work requirements, and the provision that ensures that a mom with a pre- schooler cannot be penalized for not working if she can’t find or afford child care. These are all important measures to protect children, and I am pleased that we were successful in having them included in this bill. The protections for children are significantly better than in previous bills we have consid- ered. So I acknowledge that this bill has been improved in important ways from the conference report that I opposed and which the President vetoed last year. And I believe the strong support for the Democratic alternative bill is what made these improvements pos- sible. While I will vote ”yes” today, there are yellow flashing lights that give me pause. They must be monitored me- ticulously. And all of us who vote for this bill must be prepared to make modifications if the safety net for chil- dren and the working poor becomes tattered. A key yellow flashing light for me is the bill’s changes in the rules for the food stamp program. Changes in the ex- cess shelter deduction could harm the working poor\u2014those families that pay over half their income for housing. Other changes will severely limit food stamps for adults without children who lose their jobs. Another yellow flashing light for me is the bill’s restrictions on assistance for children of legal immi- grants, who have not yet obtained their goals of citizenship. Another yel- low flashing light for me is the bill’s provisions for meeting the needs of children whose parents reach the 5- year time limit for benefits and still do not have work. I fought for a require- ment that States must assess and meet the basic subsistence needs of those children through vouchers or other non-cash assistance. The conference agreement did not include what I advo- cated, but it gives States the option to use their title XX, social service block grant funds, to provide vouchers to meet the needs of children. Mr. President, today we must face facts. We cannot make the perfect the enemy of the good. And so I will vote for this bill. The American people and I want welfare reform. And I believe the people currently mired in poverty, who have not been well-served by the current welfare system, deserve better. There are over 9 million children cur- rently on welfare. Under the current system, that number is estimated to grow to 12 million in 10 years. We owe it to those children to give their par- ents every incentive to leave welfare behind and to lift themselves and their families out of poverty. I will vote yes today. But I will be standing sentry and will be in the fore- front in fighting for any changes need- ed to prevent the safety net for chil- dren from being tattered. Mr. HELMS. Mr. President, future historians are likely to regard this as a momentous occasion in Congress\u2014a welfare bill is finally about to be ap- proved by Congress and signed by the President\u2014a bill which will effectively drive a nail in the coffin of the Great Society. This welfare reform bill proposes to set welfare policy on the right course. It requires welfare recipients to work; It promotes family and the work ethic; and It exercises sound fiscal responsibil- ity. In addition, this legislation will in- sist that illegal aliens must not receive welfare and that non-citizens cannot hereafter lawfully receive most Federal welfare benefits during their first 5 years in the United States. These legislative goals are tough, but fair. Requiring welfare recipients to work provides the hammer that can break the cycle of poverty and depend- ency. As matters now stand, the aver- age welfare recipient stays at the pub- lic trough for 13 years. This bill re- verses that folly; it proclaims for all to hear that welfare must not be a way of life. Equally important, Mr. President, this legislation is fair to taxpayers be- cause it saves $55 billion of taxpayers’ money. The average American worker in 1993 paid $3,357 in taxes just to sup- port welfare recipients. Taxpayers are sick and tired of working hard, paying taxes and watching folks on welfare get a free ride. Mr. President, the taxpayers can be thankful that this bill contains tough work requirements for food stamp re- cipients. On several occasions, includ- ing during the conference, I took the position that Congress should require able-bodied food stamp recipients go to work before they receive free food stamps. The original Senate welfare bill al- lowed recipients to receive free food stamps for 6 months every year with no work requirement. Now, Congress is sending a bill to the President that will require food stamp recipients to work 20 hours per week for an average of 11 months per year or be thrown off the welfare rolls. This is a giant step for- ward from current law which gives folks a free lunch at taxpayer’s ex- pense. Mr. President, when the liberal poli- ticians pushed through their welfare system more than 30 years ago, the American people were assured that welfare would not become a way of life. CONGRESSIONAL RECORD \u2014 SENATES9390 August 1, 1996 And when Lyndon Johnson signed the war on poverty legislation in 1964, he promised, ”The days of the dole in our county are numbered.” Unfortunately, 30 years after this war began, the days have numbered to about 11,680\u2014and we’re still counting. Since Congress obediently embarked down the road called the Great Soci- ety, the result has been the most mas- sive Federal spending in history, in- creased poverty and untold millions of Americans trapped in the welfare cycle. The Great Society has been a monumental failure, but it got a lot of promising politicians elected because they promised everything to every- body. But with the enactment of the bill, the days of the Great Society are coming to a close. The cost of welfare programs has now reached a budget-busting $345 billion a year. During the past three decades, welfare spending has cost the American taxpayers $5.4 trillion. It may come as a surprise that welfare programs have cost 70 percent more than the war against Germany and Japan in World War II. What, Mr. President, do we have to show for these exorbitant expendi- tures? An increase in the poverty rate. As of 1993, 15.1 percent of Americans were in poverty, compared to 13 per- cent in 1964, a 2-percent growth. Mr. President, the human devasta- tion caused by rising illegitimacy rates and the breakdown of the family is even more troubling than the cost of welfare programs. Government pro- grams of any magnitude carry with them a cargo of unintended con- sequences. In welfare, like most other things, you reap what you sow. For 30 years, the welfare system rewarded idleness and illegitimacy and there has been a marked increase in both. Mr. President, I emphasize that no- body is opposed to helping those who are less fortunate. Americans, as indi- viduals and communities, have a re- sponsibility to help those who cannot help themselves. That responsibility cannot and should not be abdicated. But we must help them by teaching them to ”help themselves” as Presi- dent Kennedy once stated. This legislation will help those on welfare because it restores the Amer- ican work ethic which once was one of the cornerstones of this Nation. In ad- dition, this bill takes a step in the right direction in helping reduce the rising illegitimacy rates by providing funds for abstinence education, and by allowing States the option of denying benefits to welfare recipients who al- ready have children living on the pub- lic dole. An Associated Press poll showed re- cently that 69 percent of Americans favor a 5-year limit on welfare pay- ments. Likewise, most Americans obvi- ously don’t think it’s right that work- ing people are required to give up a substantial percentage of taxes to sup- port people who refuse to work. Mr. President, the majority of Amer- icans are calling for welfare reform. Welfare entitlements must be replaced by limited handouts conditional on self-improvement and work. Mr. ROBB. Mr. President, I rise to support the welfare reform legislation pending before this body. I do so with both reluctance and hope. My reluctance stems from some very real concerns I have with this bill. First, I am concerned that we fail to give States the resources they need to do the job right. I am willing to pay more in the short term to bring about economic independence in the long term. Second, like the President, I am extremely uncomfortable with both the level of cuts to the Food Stamp Pro- gram and the severity of the restric- tions on legal immigrants. We cannot simply abandon our obligation to pro- tect the most vulnerable among us. And, finally, I am troubled by specific provisions of this bill\u2014like the one dealing with mothers with young chil- dren who do not work because they cannot find child care. The conference lowered the age from 11 to 6\u2014and this is wrong, Mr. President. If we want mothers to move from welfare to work, we have to ensure they have child care for their young children. I will vote for this bill believing strongly that it is not our final word on welfare reform. And I’m prepared to work with the administration and with my colleagues here in the Congress to address the concerns that I have\u2014and that I know others have\u2014with this leg- islation. But, Mr. President, like the Presi- dent of the United States, I also believe strongly that the opportunity before us is one we cannot let slip away. We sim- ply cannot allow another generation of American children to fall victim to a welfare system that fosters dependency rather than opportunity, that has be- come for far too many children, not a second chance, but a way of life. I will vote for this bill, Mr. Presi- dent, because I believe it contains the incentives needed to bring people out of poverty and into the economic main- stream. It contains tough work re- quirements, time limits on benefits and nearly $4 billion in new money for child care. It protects health care for current populations and allows States to use Federal money to provide non- cash vouchers for children whose par- ents meet the time limits. It emphasizes work and responsibil- ity. It includes a strong community service component, which teaches both the value and the obligations of citi- zenship. But I know, Mr. President, that all the positive incentives in the world mean nothing if there are no jobs at the end of the line\u2014and that the best social policy of all is economic growth. That is why I believe that the first edition of welfare reform was approved by this Congress in l993 with the pas- sage of the President’s deficit reduc- tion plan. We can approve legislation today that aims at moving people from welfare to work because we do so amidst a strong, vital economy. In less than 4 years, our economy has created over l0 million new jobs\u2014most of them in the private sector\u2014and we have the lowest unemployment rate in 6 years. As we bring down our deficit, we en- hance our ability to invest in our peo- ple. And as we strengthen our econ- omy, we provide new avenues of oppor- tunity for poor Americans to enter the economic mainstream. We cannot just give incentives to move people from welfare to work, Mr. President. We have to also better in- vest in programs that give them the tools to succeed\u2014programs like edu- cation and job training. Mr. President, I have outlined my reservations about this bill, and I am committed to working in the coming months to remedy these concerns. But my hope for this bill transcends the ability of individual mothers to ex- change a welfare check every month for a pay check. For every time a welfare recipient earns a living wage, at least one more child in America sees their role model go to work in the morning, earn a sal- ary, pay their bills, believe a little more in their own ability and self- worth, and live in a world that is infi- nitely stronger because they contrib- ute to it. And every time a welfare recipient earns a living wage, at least one more child in America escapes from what could become a cycle of dependency and hopelessness that is inherently unAmerican\u2014and which we have an op- portunity and an obligation to break. Although only history will tell for sure, I will vote for this bill because I believe it is the first step in breaking the cycle of poverty which has sapped the optimism and the opportunity of too many generations of innocent American children. Mr. President, I thank the chair and I yield the floor. Mr. LUGAR. Mr. President, as we end the debate on the welfare reform con- ference report, I would like to make several acknowledgements of effort in bringing forward this truly historic legislation. First, I want to congratulate Chair- man DOMENICI and Chairman ROTH and thank them for their leadership. As chairman of the Agriculture Commit- tee, I am pleased to have been a part- ner with them in crafting this bill. I also want to thank my staff on the Agriculture Committee for their ef- forts throughout this 104th Congress to make welfare reform a reality. Staff di- rector Chuck Conner, as always, con- tributed strong leadership. Dave John- son and Beth Johnson worked tire- lessly to develop proposals that both meet our budget goals and continue to deliver assistance to the needy. They were assisted ably over the past year by Bill Sims, who has returned to the U.S. Secret Service. Special thanks are also due to Joe Richardson of the Congressional Research Service, whose knowledge of the very complicated nu- trition assistance programs was invalu- able. CONGRESSIONAL RECORD \u2014 SENATE S9391August 1, 1996 The legislative process that cul- minates here in the Senate today sometimes seemed like a rollercoaster ride with no end. Frustration and long hours were common for my staff. But they have my sincere thanks for their efforts. They should be very proud of this landmark bill. In the final analysis, this welfare re- form legislation represents the best of our democratic process. After much de- bate, a proposal of potentially monu- mental importance is about to be ap- proved overwhelmingly by a Repub- lican-led Congress, and a Democrat President will sign it. I hope we will someday be able to look back at this bill as a major step toward restoring the public’s confidence in the ability of its elected leaders to respond to our Nation’s pressing needs. Mr. DORGAN. Mr. President, the bill before us represents a historic oppor- tunity to change and improve the wel- fare system in this country. Today’s Washington Post headline proclaims that this bill represents a ”basic shift in philosophy” about welfare in this country. It is true that this bill sends a strong message. That message is: welfare should not be a way of life. We are say- ing that welfare should be a safety net\u2014a first step toward achieving inde- pendence and self-reliance. But this is not a major change from the way most Americans view the wel- fare system. We are a compassionate nation, and we accept our responsibil- ity to help those who are less fortu- nate, who are on the bottom rung of the economic ladder, and those\u2014espe- cially children and the elderly\u2014who are unable to help themselves. This basic notion is embedded in our social policy, and this bill does not\u2014can not\u2014change that fundamental view. Our task in drafting this bill has been to ensure that the safety net will al- ways be there for those families need- ing assistance to get over a temporary setback. I will vote for the welfare reform bill today because I think we need to make some changes in our welfare system. I believe that this bill represents a sig- nificant improvement over last year’s conference report, which I opposed be- cause it did not provide an adequate safety net for poor children. Specifi- cally, this bill does not include the deep levels of cuts in child nutrition programs or an optional block grant for food stamps. It permits States to use Federal money to provide noncash assistance, or vouchers for children. And it preserves a national guarantee for access to health care for pregnant women and children. This bill also takes the right first steps toward encouraging and reward- ing work. It requires welfare recipients to work after receiving benefits for 2 years, and backs up that requirement with the support families need to move from welfare into the workplace. The bill provides $4 billion more for child care and maintains strong health and safety standards for day care. It gives recipients flexibility to use some of their time on assistance to get the education they need to find and keep a job. The bill also gives States more flexibility to use Federal dollars to cre- ate new jobs for welfare recipients, and preserves the earned income tax credit for working families. All of these pro- visions work together to give welfare parents the support they need so they can afford to leave welfare and enter the workplace. When combined with the minimum wage increase that I hope the Senate will approve in the next few days, it is a significant move in the right direction for America’s working families. While I have reservations about the block grant approach presented in this legislation, the bill does take steps to ensure that States will follow through on their obligation to spend Federal welfare dollars to move people up and out of poverty. Most importantly, we require States to maintain a signifi- cant portion of their own contributions for welfare programs. While the main- tenance-of-effort provisions are not as strong as I would have liked them to be, they are a major improvement over last year’s bill. One of the most important parts of this bill is its tough child support pro- visions. Nationwide, only 18 percent of child support cases referred to State agencies for collection result in pay- ments by the absent parent. Yesterday, the President pointed out that, if every parent paid the child support they should, we could move 800,000 women and children off welfare immediately. This bill takes the necessary steps to move us toward demanding responsibil- ity from both parents, and I whole- heartedly support this effort. Having said why I am voting for the bill, let me now explain that I remain concerned about some of its provisions. One specific area that we will have to adjust with follow-up legislation is the bill’s change to the rules for determin- ing eligibility for food stamps. The bill repeals a provision that would have helped families who are forced to pay a higher-than-average percentage of their income for shelter and heating costs. In my state of North Dakota, heating costs take a big bite out of every family’s income. For a poor fam- ily, this can mean choosing between heat and food. The excess shelter de- duction that was scheduled to go into effect next year would have gone a long way toward eliminating the need for that painful decision, and I intend to work to see that provision restored in separate legislation. We must also address a punitive measure that denies food stamps to Americans who are looking for but have not been able to find work. The conference bill places a 3-month limit on the receipt of food stamps by jobless adults between the ages of 18 to 50. I am certain that each of us knows someone\u2014a brother, an uncle, a cous- in\u2014who is out of work, has been look- ing for work every day, but has not been able to find a job because no work is available. In rural North Dakota, un- fortunately, we are not creating a lot of jobs, and finding work may take more than 3 months. It is simply mean- spirited to deny an unemployed person food assistance while they are looking for work, and I will work to fix that. Despite these concerns, this bill is, on balance, a responsible bill. It moves toward achieving the right balance of personal responsibility and giving peo- ple the tools they need to move up and out of poverty. I will support this bill today, and I will work to fix those areas that need improvement. Mr. GRASSLEY. I am pleased that we are here for this final step in the process of ending welfare as we know it. Just yesterday, President Clinton made clear that he will sign this con- ference report. After weeks of obfusca- tion, President Clinton finally has made clear that he will act on his promise to end welfare as we have known it and sign this dramatic change in the welfare system. After all we have been through in the last 18 months, I have to admit that I was be- ginning to feel like a broken record. We passed 2 different welfare bills under the able leadership of former Senate majority leader Bob Dole. In both cases, the President vetoed those efforts. From the President’s most recent re- marks, apparently out hard work has paid off and he is finally going to ap- prove our efforts. Interestingly, Doug Besharov, a resident scholar at the American Enterprise Institute, and known expert on the welfare program, says that the new bill is not signifi- cantly different from the 2 previous proposals. A Washington Times article of yesterday quoted Mr. Besharov as saying, ”This business about ‘how much’ improved is a certain amount of political rhetoric.” In my judgment, Mr. Besharov is being kind in his remarks. This bill, in fact, is significantly the same as pre- vious efforts. In the last 30 years we have spent more than $5 trillion to fight the war on poverty. Unfortunately, we have lost. The child poverty rate in our na- tion is .8 percent higher than it is was when we started this process 30 years ago. So what have the families on wel- fare gotten for their difficulties? And what have the taxpayers gotten for their money? For all we have invested, we have made no progress. Clearly, something is not working. The reconciliation bill before us takes a new approach to an old prob- lem. it restores power and authority to the States to create their own systems to meet the needs of low-income citi- zens. Iowa is a perfect example of success. Iowa overwhelming passed legislation in April 1993 to change welfare in the State. In order to implement their plan, the State had to seek 18 initial Federal waivers and more since. Al- though the State wanted to implement CONGRESSIONAL RECORD \u2014 SENATES9392 August 1, 1996 a statewide program, in order to obtain their initial waiver, they were required to have a control group of 5 to 10 per- cent who would remain under old AFDC policies. In October of 1993, the work incen- tives and family stability policy changes were implemented. At that time, there were over 36,000 families re- ceiving assistance, with an average monthly benefit of over $373. Last week I received the latest State figures. Iowa’s caseload is down 12.6 percent to under 32,000 families. The average monthly benefit is down 11.7 percent to $330. In January 1994, Iowa implemented its personal responsibility contracts. A family commits to pursue independ- ence and the State commits to provide supports. Before the State imple- mented reform, only 18 percent of Iowa welfare families had earned income. The most recent numbers show that over 33 percent of all welfare families are earning income now. With Iowa’s success as a backdrop, it is easy to understand why States want welfare reform, not waiver reform. Another reason is the frustration States feel when seeking a waiver. Though President Clinton has ex- pressed glowing support for the Wis- consin welfare waiver it has not been signed. If the President is for the Wis- consin waiver, why can’t he approve it? Even yesterday during his CNN inter- view, the President challenged other States to follow Wisconsin’s lead in re- forming their welfare system. Once again we see him saying one thing and doing another. The reconciliation bill before us also provides for a lifetime limit of 5 years for welfare benefits. This means that there is an actual measurable end so that parents are held accountable for their choices. When working Americans do not show up for work, they are not paid and are likely to lose their job. They want welfare recipients to live with the same reality. Taxpaying Americans do not understand why their hard work is subsidizing those who are not working. Mr. President, again, I want to say that I am pleased that the President has finally agreed to sign this con- ference report. I think this is an his- toric effort on the part of Congress and it is appropriate for him to sign this legislation. I look forward with anticipation to what our outstanding Governors and State leaders will do with the freedom and responsibility we are entrusting to them. Mr. FEINGOLD. Mr. President, I will vote for the welfare reform conference report. I do so with grave reservations about many specific provisions. Like President Clinton, I think the cuts in nutrition programs are too deep and they can and should be corrected. Like President Clinton, I am con- cerned about the treatment of legal immigrants\u2014people who followed the rules and came here under our legal immigration laws. Many have contrib- uted in numerous ways to their com- munities. They are taxpayers and workers who, like all of us, may be- come ill or unemployed. This bill slams the door on them to a variety of pro- grams in a manner that is neither ap- propriate nor necessary. There are other provisions of the final bill that I feel are too harsh and should be changed. But the overall effort at reforming the current welfare system is one that I support. When I campaigned for the U.S. Sen- ate in 1992, I said then, and I continue to strongly believe, that if people can work, they should work. The focus of this bill is to encourage people to work, rather than remain on welfare. I support that goal. I also believe that the States should have more flexibility to design pro- grams to meet the needs of their resi- dents. I do not believe that detailed prescriptions from Washington, DC are the answer to the problems afflicting the current welfare system. Nationwide, the current welfare sys- tem is a disaster. It keeps families trapped in poverty. It discourages self-sufficiency. It cre- ates unnecessary barriers to those try- ing to move from welfare to the work force. It forces recipients and local offi- cials to wade through piles of bureau- cratic red-tape. It fosters dependency, discourages initiative, and dampens the spirits of those in need. We must do better. We must change the status quo. We must provide a new, flexible approach that will help people work and get off welfare. This bill has improved dramatically from the original Republican proposal of last year. Many of the draconian provisions have been dropped. The Medicaid safety net has been re- stored for vulnerable children, the aged and disabled. Child care funds have been significantly increased and efforts to roll back Federal health and safety standards for child care were defeated. Attempts to dismantle the food stamp program and child protection programs failed. The effort to impose a family cap\u2014a penalty for having a child when on welfare\u2014was rejected by a biparti- san majority in the Senate. Mainte- nance of effort provisions were re- tained, helping to assure that Federal dollars do not simply replace State dol- lars. There are other provisions of the bill that I am disappointed about. I am dis- appointed that the conference agree- ment did not include an important im- provement made during the Senate de- bate which expanded the educational activities that welfare recipients could take part in. In addition, the bill is too punitive on mothers who cannot work because of lack of affordable child care. There are vast areas that should have been improved. I believe that those of us who vote for this measure have an obligation to watch closely as it is being imple- mented to make sure that it works, works fairly, and that if changes are needed, they are enacted. I am deeply concerned about the opposition of many individuals whose opinions I re- spect. I share their concerns that in an effort to get able-bodied adults to enter the workforce, we do not inadvertently punish innocent children. But we are faced with the choice of supporting this bill or maintaining the current system. I vote to change the system. Mr. FRIST. Mr. President, I rise in strong support of the welfare reform bill. I applaud the bipartisan effort that has taken place to end welfare as we know it, but most importantly I ap- plaud the efforts of the former major- ity leader, Senator Dole for his efforts in helping to shed some light on the problem of America’s children living in poverty. Mr. President, the most vital invest- ment that we can make in America’s future is our children. If there has been any one single pledge that I have made to the people of Tennessee, it was that I would spend my time in Washington working tirelessly to protect the Amer- ican family but most importantly our Nation’s children. In the real world, beyond the Wash- ington Beltway, everyone knows that the real investment and sacrifice on be- half of children is not made by govern- ment do-gooders, educrats, Members of Congress, or social workers. The real investment and sacrifice is made by parents. Mr. President, few in Washington un- derstand this fact more than I do. As the father of three young boys, it is my belief that we should not be asking the question ”what should the Government do for our children?” Instead our ques- tion should be ”what must we do to get parents to do more?” I strongly believe that our children do not need more Government spending but a mother and a father who care about them. My Republican colleagues and I pledged to return to families some- thing more than a program or a slogan. We have tried to return resources to families, rather than the Federal Gov- ernment, to help them in raising their children. Our devotion to our Nation’s children is demonstrated in our agenda of strengthened families, safer streets, and stronger communities. Our agenda has included: A balanced budget that saves tomor- row’s generations from crushing debt levels\u2014because of Washington spend- ing, each child born this year already owes more than $187,000 just to pay their share of interest on the debt. A $500-per-child tax credit to ease the pressures on families and allow parents to spend more time with their kids. Adoption reforms, including an adop- tion tax credit, to make adoptions more frequent, less expensive, more se- cure, and designed to make it easier to place children in loving homes. Tough crime legislation to protect our children from violent criminal predators. CONGRESSIONAL RECORD \u2014 SENATE S9393August 1, 1996 Welfare reform that lifts families out of poverty and into work, provides for child care, introduces the toughest child support enforcement standards ever considered by Congress, and real reform that reverses the destructive ef- fects of the $5 trillion War on Poverty that has failed so many of our children. Education reforms which empower parents, teachers, school boards and the local communities instead of the Washington bureaucracy. This includes solid reforms which would enable low- income parents to send their children to quality public, private, and religious schools. Unfortunately, our efforts to enact much of these pro-family items has been stymied by the President’s veto or through filibusters here in Congress. The President vetoed the $500-per-child tax credit, thus refusing to ease the fi- nancial burden that so many families feel today, a financial burden that often results in parents spending less and less time with their kids. The President has vetoed a balanced budg- et, a budget which would have given the children of Tennessee freedom from the repercussions of Washington’s de- structive spending habits. Right now, because of the traditional Washington habit of spending now and passing on the bills to future genera- tions, your children and my children will face a lifetime tax burden of more than 80 percent. Imagine that\u2014more than three-quarters of their income will be taken away to pay for the debts we have left behind. That to me is truly immoral. That is why I worked tirelessly last year to pass a balanced budget, the first balanced budget in al- most 30 years. A balanced budget would have put a stop to reckless Washington spending and would have allowed us to pay our bills\u2014not pass them on to our grandchildren. The bottom line is: a balanced budget helps to secure a bet- ter future for our children\u2014and the President vetoed it. Mr. President, my Republican Col- leagues and I understand that many children are trapped in poverty or fail- ing schools, with little hope of achiev- ing a better life than their parents. During the past year and a half, we have made it our priority to lift the lives and hopes of these children. In ad- dition to lifting the crushing debt bur- den, we must recognize this immediate, abusive, and destructive threat to the lives of America’s children: the liberal welfare state. Nothing punishes single parents and children more than the current welfare system. Our Federal Government is fix- ated with a system that is riddled with perverse incentives which discourage work and marriage while encouraging illegitimacy and long-term depend- ency. Designed as a system to help children, our current welfare system has ended up damaging and abusing the very children it has intended to save. Consider the facts: Between 1965 and 1994, welfare spend- ing cost taxpayers $5.4 trillion in con- stant 1993 dollars. There are 77 overlapping welfare pro- grams to assist Americans officially designated as poor. Total welfare spending in the United States, in 1993 exceeded $324 billion. Of this spending, 72 percent is Federal and 28 percent is State. About 90 percent of all State welfare spending is on feder- ally designed welfare programs. The cost of the war on poverty has been some 70 percent greater than the price tag for defeating Germany and Japan in World War II, after adjusting for inflation. Welfare spending is so large it is dif- ficult to comprehend. One way to make it more tangible is to recognize that, on average, the cost of the welfare sys- tem amounted to $3,357 in taxes from each household that paid Federal in- come tax in 1993. A final way to assess the growth in welfare spending is to compare it to the increase in spending on other gov- ernment functions: Since President Johnson launched the War on Poverty in 1965, means-test- ed welfare spending by Federal, State, and local governments has grown more rapidly than spending on all other major government functions. In 1965, the United States spent 17 cents on welfare for each dollar spent on national defense. By 1993, this had risen to $1.11 on welfare for each dollar spent on defense. In 1965, the United States spent 29 cents on welfare for every dollar spent on primary, secondary, and post-sec- ondary education by all levels of gov- ernment. By 1993, the United States spent 91 cents on welfare for every dol- lar spent on education. Even if the analysis is restricted to welfare spending on cash, food, hous- ing, and energy programs, the trends are virtually identical. Since the be- ginning of the War on Poverty, means- tested cash, food, housing, and energy programs have grown more rapidly than defense, education, or Social Se- curity. After $5.4 trillion has been spent on welfare there remains little to cheer about. The onset of the War on Poverty coincided with the disintegration of the low-income family and the rapid increase in illegitimacy. Overall, 30 percent of American children are born to single mothers. We have spent more money on welfare programs since 1965 than on all the wars we have fought this century, yet people are poorer and more dependent than ever. These are just a few of the ways that Federal Government’s welfare policies and social programs are actually work- ing against the American family and our children. I believe that we have a responsibility to provide a safety net\u2014 helping those who, by no fault of their own, have fallen on hard times. It is the right thing to do. But when we help people who are able, and yet make no effort to help themselves, we destroy the individual and undermine the very principles of personal responsibility in which our society was founded on. And this is what has happened. It is clear that our Great Society na- tional urban policy has not helped peo- ple. It has destroyed them. It has not kept families together. It has torn them apart. It has not turned the urban areas of America into shining cities on a hill, it has made them war zones where residents live in fear. Our inner cities should be a symbol of what is right about America. Unfortunately, they have become examples\u2014dying ex- amples\u2014of everything gone wrong with government policy. Mr. President, this bill changes that harmful government policy. I firmly believe that most of Ameri- ca’s children are being raised in loving, caring families that struggle every day to ensure that their children have a chance at achieving the American Dream. But I also know that many of these same families are filled with guilt, at not spending enough time with their kids because both parents must work to make ends meet. While Washington cannot alleviate these par- ents’ guilt\u2014the 104th Congress has acted to ease the tremendous pressures and burdens on struggling families. Too many single moms are near pov- erty because their child support checks are nowhere to be found. Just since President Clinton was elected, 175,000 women, mostly single moms, have slipped into poverty. Through the ef- forts by my colleagues in the House and the Senate, this welfare reform bill holds fathers accountable for their child support, putting in place the toughest ”deadbeat dads” provisions anywhere in the country. We increased child care funds by $4 billion over cur- rent law in order to help single parents make the successful transition from welfare to work. Our children are suf- fering from the current welfare state. We must reverse this trend, to make welfare a helping hand, not a way of life. Changing the welfare system will help children. Encouraging families to stay together will help children. Put- ting welfare recipients back to work will help children. Restoring the work ethic will help children. Improving the quality of local education will help children. Encouraging spirituality will help children. Spending more on the current broken Washington welfare system will not help children. It’s time we take away the blindfold and accept reality. We have to rebuild parents, families, and communities, but you can not do it from inside the beltway. It has to be done at home, in school and at church. Mr. President, the most important thing that we as a nation can do for our children, does not come from the Congress or even the White House. Rather, it must come from within all of us\u2014a commitment to read to your son or daughter, a commitment to at- tend church with your child and fam- ily, coaching your son or daughter’s little league team, and becoming in- volved in the education of your son or daughter. Mr. President, our children are the future of this great country. CONGRESSIONAL RECORD \u2014 SENATES9394 August 1, 1996 I urge my colleagues to vote for this historic bill. I yield the floor. Mr. PELL. Mr. President, when the welfare reform bill was before us last week, I said that I could not let my de- sire to vote for reform cloud my judg- ment about the bill, and about the seri- ous flaws which I perceived in it. The bill has been returned to us from con- ference with some of those flaws rem- edied, but alas not all, and the omis- sions to my mind are determinative. And so once again, I shall vote against the bill. I am especially concerned about the bill’s undeservedly harsh treatment of legal immigrants. I note with dismay that nearly half of the $56 billion that would be saved by this bill comes from the denial of benefits to people in this category. More often then not, legal immigrants are hard-working, tax pay- ing individuals who deeply appreciate the freedom and opportunity of U.S. citizenship, which they hope to attain. To deny them so many of the benefits that they might legitimately need as they build a life here, seems unfair and unjustified. While I applaud President Clinton’s assurance that this grievous flaw in the bill will be corrected by fu- ture legislation, the provision amounts to justice denied, here and now, and I cannot bring myself to vote for it. I remain concerned, moreover, about the practical consequences of ceasing to treat welfare as an entitlement and replacing it with block grants. But what this means is that this Nation will cease to respond to anyone in great need, as a matter of right, and that some people in need may be cut off simply because we have shifted this serious national problem to the States, and we have done so without providing them with adequate support to address the problem. I am particularly con- cerned that some States, including my own State of Rhode Island which has just enacted a new welfare program, may be penalized if they choose to have a welfare program which is relatively more liberal than the Federal law. Also troubling is the retention of cuts in food stamp spending, projected at roughly $24 billion over 6 years. Un- employed workers without children will be hard hit, as will legal immi- grants. Finally, I continue to be deeply con- cerned about the plight of children. I simply cannot believe that eliminating an entitlement which ensures that all poor children get the food, clothing, and shelter that they need can move us individually or as a society down the path we all want to go. While some im- provements were made in conference, the fact remains that children will be the ones most vulnerable to the vagar- ies of variable State welfare programs. Mr. President, it is with real regret, then, that I cast a ”no” vote on this welfare reform legislation. I recognize that the bill achieves many important broad objectives which are clearly de- sired by the public at large\u2014including work requirements, time limits on ben- efits and job creation incentives. But looking at the final product, I cannot say that what we have before us is bet- ter than what we now have. The bill is, as the Senator from New York [Mr. MOYNIHAN] reminded us ”radical legis- lation with unforeseeable con- sequences.” Better to reject it now than try to make up for its deficiencies in the future. Mr. LEAHY. Mr. President, it is the understanding of welfare conferees re- garding the reconciliation bill that that bill exempts electronic benefits transfers from coverage of the Elec- tronic Funds Transfer Act. The Depart- ment of Agriculture is empowered to establish regulations which will pro- vide some protections against recipi- ents’ loss of benefits through electronic transfer systems. We encourage the De- partment of Health and Human Serv- ices [HHS] to develop similar regula- tions which will require procedures to minimize the losses of benefits for aid to families with dependent children re- cipients. It is also the conferees’ under- standing that nothing in this bill in any way prevents or discourages HHS from promulgating these essential reg- ulations. Mr. HATCH. Mr. President, today we take the first big step in ending the era of big government. Today, we send the states the authority to design their own programs for the needy. We move one step further away from the one- size-fits-all approach that comes from a Federal bureaucracy far removed from individual state environments and constituencies. This bill com- pletely changes the very nature of wel- fare from one of endless individual en- titlement to one of temporary assist- ance and personal responsibility. This legislation is the result of a truly bipartisan process. I want to thank my colleagues for their work in crafting a compromise that can be sup- ported by a majority of both parties. I also want to congratulate the Presi- dent for joining this effort. While we all wondered whether, after vetoing welfare reform twice in the last year, he would sign this measure, I am de- lighted that he has announced his sup- port for this bill. I commend him for this decision. This is a great victory for Congress, for the President, for the States, for the taxpayers, and, above all, for the needy families of America. Do we know exactly what will happen after this bill is passed? No. No one is blessed with that kind of omniscience. The current system provides an excel- lent illustration of the uncertainty of the future. The current system was well-intentioned at its inception. No one was deliberately trying to create a cycle of dependency or despair for beneficiaries who much too often found themselves locked into the system. However, the current system has turned out to be just that, destroying the very spirit of those who are receiv- ing benefits. Through hindsight, we can see that the approaches taken in the current system have not, do not, and will not work. It has been a near total failure despite its worthy intentions. We have learned from this experi- ence. We have not crafted this welfare reform proposal out of whole cloth. We did not simply dream it up. We re- viewed the findings of academics; we heard hours and hours of testimony; we poured over statistics; and we listened to our constituents. The result is a welfare system built on a new paradigm\u2014a ”can do” philos- ophy that must be infused into recipi- ents and administrators alike. In designing a new approach to as- sisting the needy, we have looked to those programs that are successful in moving people to work and helping them become independent. The States have been moving in this direction and have been designing innovative and successful programs for several years. My own State of Utah is in the third year of a successful demonstration project that has just gone statewide. The Single Parent Employment Dem- onstration [SPED] has 90 percent of the caseload actively participating in work activities, utilizes the use of education and training to provide basic job skils, and has been successful in moving par- ticipants into unsubsidized, private sector jobs. This bill will continue this trend and allow the States to continue to design comprehensive programs to address their unique constituencies, needs, and resources. Mr. President, this bill is not perfect. There are several things included in this bill that I don’t agree with. There are many things that aren’t in this bill that I think should be there. There are even some things that I think need to be changed. I would particularly like to see an expansion of the use of edu- cation and training to provide job skills for long-term employment, changes made in the language regard- ing existing State waivers, and a broader compromise on Medicaid eligi- bility to provide a level of administra- tive relief to the States. However, the core reforms contained in this bill far, far outweigh these con- cerns. This bill contains block grants to States and gives them the oppor- tunity to design their own systems\u2014 systems that will provide not only the wherewithal to transition people into jobs, such as child care, but also sys- tems that have dignity, hope, and inde- pendence as the primary goals. Throughout this debate, we heard from many who were concerned about the effects that these reforms could have on native Americans. I am pleased that this conference report retains sev- eral provisions addressing these con- cerns. The most important of these provisions is the native American trib- al allocation provision. I would like to thank my colleagues for working with me to address this issue. The tribal allocation provisions in this bill will provide tribal govern- ments the same opportunities and re- sponsibilities as the States to receive CONGRESSIONAL RECORD \u2014 SENATE S9395August 1, 1996 direct funding and the flexibility to de- sign their own programs based on the unique geographical and cultural needs of tribal members. This represents a significant shift in thought and Fed- eral policy. Through provisions like these, this legislation reinforces the Federal Government’s commitment for Indian self-determination and self-gov- ernance. Mr. President, we have heard from the American taxpayers in no uncer- tain terms that they are tired of pay- ing for people to do nothing. Families who are getting up to work every day and are still struggling to make ends meet are tired of seeing families re- ceiving assistance with virtually no ob- ligation to work for it. This bill changes all that. Under this legisla- tion, people must work for their bene- fits. No longer will beneficiaries be able to continue to receive benefits for nothing. Families receiving assistance will now be given the resources and op- portunity to receive job training and education and to move into work and independence. The legislation provides child care and other support services to these families. Mr. President, we have heard much during this debate about the children and about how this bill is bad for chil- dren. This bill is not bad for children. If there is a program that has been cruel to children, it is the current sys- tem. How can anyone say that a pro- gram that traps our families in a hope- less cycle of dependency is good for and helps children? The current system may throw money at the problem of poverty, but it does not provide a solu- tion. This bill provides a solution, a way out of the dependency cycle. This bill gives needy children back the things that money can’t buy\u2014hope, dignity, self esteem, and a way out of long-term dependency. The best way we can help needy children in the long run is to give their parents the skills and re- sources\u2014and, yes, motivation\u2014to enter and be successful in the labor market. It can be done. Many have done it. Many more can be successful under the new system of assistance and incentives incorporated in this bill. Mr. President, this bill is not the end of the welfare reform debate. Congress will continue to review and reform pro- grams for the needy of this country. The reforms contained in this bill will continue to be monitored and evalu- ated. We can even see some technical corrections that could be made in the near future. I assure my colleagues and the American people that the passage of this legislation does not signal the end of congressional interest in the welfare programs. Passing this legisla- tion is only the first, most important step in a long ongoing process. Not only is this bill only the first step in reforming the welfare system, it is also the first step in tackling the seemingly insurmountable problem of ever-growing entitlement programs and balancing the Federal budget. This is not a plateau but rather a ledge on the way to the top of the mountain. Congress must continue to look at other entitlement programs for the needy. We must look at the Medicaid Program, at Medicare, at programs for the disabled, and yes, even Social Secu- rity. Without reforming these pro- grams, this country will find itself digging itself deeper and deeper into a black hole with no way to get itself out. But, more importantly, our citi- zens who have come to rely on these programs will wake up one day to find that these programs have met with fis- cal disaster and are no longer viable. Just as important as the fiscal aspect of reforming these programs is the evaluation of the role and values of the Federal Government. We must reform the very nature of Federal programs from one of dependency to one of inde- pendence and transition. I encourage my colleagues to continue this fight. We must not stop here at the first vic- tory over big government, but rather continue the process of reviewing the role of the Federal Government and of reforming those programs that are holding us back on the way to a pros- perous and secure 21st century. Mr. INOUYE. Mr. President, I regret that the conferees on the welfare re- form bill have decided to report out a measure that is short-sighted and puni- tive to children, the disabled, and legal immigrants. I realize that the Presi- dent has indicated that he will sign this bill into law, but I have concerns, as have already been expressed by the President in his recent statement, with many of its provisions. Preliminary estimates that this measure will push an additional 1.3 million children nationwide into pov- erty. Once families have reached the 5- year time limit for receiving assistance in this legislation, they will have no recourse for assistance if a poor econ- omy leave them without the possibility of finding employment. Legal immigrants, including those who have been in this country for some time already, will be prevented from participating in all Federal means- tested programs, including the Food Stamp and Medicaid Programs. This measure also cuts $23 billion from the Food Stamp Program over the next 6 years. It also limits benefits for those out of work without minor chil- dren to 3 months total in a 3-year pe- riod. This measure will cause much grief in Hawaii. The State is already at its limit in its ability to assist those liv- ing in poverty, and the changes in the Federal law will only exacerbate a bid situation I believe that the intent of a welfare reform bill should be to make it easier for families to make the transition from welfare to work. This bill does not provide adequate resources for States to provide the necessary support for families to do so. For these reasons, I will vote against the conference re- port. However, I wish to commend the con- ferees for including in the bill that will now go before the President important provisions that would: First, provide child support enforcement services and funding to Indian tribes; second, au- thorize a State to exempt any Indian tribe from the 5-year limitation on par- ticipation for any Indian residing on an Indian reservation where the resident Indian population is 1,000 or more and where the unemployment rate is 50 per- cent or higher; and third, establish a 3 percent set-aside for American Indian tribal governments in the child care development block grant. Given the President’s statement of his intent to sign his measure into law, I am pleased that the conferees have given special attention to the very serious needs of tribal communities. Mr. PRESSLER. Mr. President, in 1935 Franklin Roosevelt had the fore- sight to realize that a welfare system that replaces real work with handouts was doomed to fail the very individuals it was intended to assist. In FDR’s own words, The lessons of history * * * show conclu- sively that continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. To dole out relief in this way is to ad- minister a narcotic, a subtle destroyer of the human spirit. I am pleased that America’s long, costly drug addiction to the easy, in- sidious welfare drug may be beginning to end today. Destructive generational dependency, illegitimacy, fraud, waste, abuse, and neglect soon will be re- placed with greater self-sufficiency, re- sponsibility and pride. The bill before us would change the welfare system and the lives of many Americans for the better. Welfare was meant to be a safety net, not a way of life. This bill would restore the values of personal responsibility and self-suf- ficiency by making work, not Govern- ment benefits, the centerpiece of public welfare policy. I am proud to be a part of the team that has brought this his- toric legislation to the Senate and, soon, to the President’s desk. Why did the welfare system fail? The value of work was replaced with a handout, instead of a hand-up. The wel- fare system eroded the American work ethic. In many cases, welfare recipients today can sit at home and make double the minimum wage. Work, as my col- leagues and staff know all too well, is a character building process. For gen- erations, South Dakotans dem- onstrated this principle, that a hard- work ethic provides for themselves and their families. Imagine how they must feel when their tax dollars are used to support Americans who need not work. I can tell you how they feel\u2014upset. That is why we needed workfare. Workfare may seem innovative here in Washington, but it’s not a new idea. Fifteen years ago, South Dakotans sought to develop new solutions for CONGRESSIONAL RECORD \u2014 SENATES9396 August 1, 1996 their welfare system. South Dakota wanted workfare, not welfare. With the reforms it has implemented, South Da- kota has succeeded in decreasing its welfare caseload by 17 percent and saved taxpayers $5.6 million. Those re- forms, considered radical at that time, will the vision of the future for the rest of the country when the bill before us become law. Governor Janklow first pursued workfare in the early 1980’s, and former Governor Miller and our late Governor Mickleson continued with further reforms. I also want to ac- knowledge and commend Deputy Sec- retary Mike Vogel, Social Services Secretary, Jim Ellenbecker, Denny Pelkofer, Donna Keller, Judy Heinz, Julie Osnes, and the rest of the staff at the South Dakota Department of So- cial Services for their efforts to make welfare reform a reality in South Da- kota. When today’s bill becomes law, these innovators will have even greater freedom to succeed where the Federal Government has failed. I am pleased that the final bill in- cludes workfare amendments I had in- cluded during the Finance Committee’s markup of welfare reform. These amendments ensure that welfare re- cipients will put in a full workweek, just as other Americans do, in order to receive benefits. My amendments also increase the number of welfare recipi- ents who must work and tighten liberal loopholes that have allowed people to avoid real work. This historic legislation is a dra- matic turn to decentralization of gov- ernment. We are putting greater faith and trust in the states to operate their own welfare programs. I am confident South Dakotans will do better than Washington bureaucrats. No longer will the Federal Government apply a one-size-fits-all welfare system run by bureaucrats. Indeed, the Federal agen- cies responsible for welfare will be drastically reduced. States will have the flexibility to seek solutions and al- ternatives to welfare problems. This bill also would do something very revo- lutionary for the native American com- munity\u2014 it would give them the oppor- tunity to run their own welfare pro- grams. This is a great opportunity for them to seek innovative solutions as well. This bill is not just about chang- ing the welfare culture, but also the big Government culture. We change both for the better. Workfare is not just about restoring responsibility at the individual and State level, it is about protecting chil- dren in need. This workfare bill would ensure that children have quality food and shelter. This bill would increase our investment in child care by $4.5 bil- lion and increase federal child protec- tion and neglect funding by $200 mil- lion over current law. What this bill eliminates is cumbersome bureaucracy and needless regulations. We also strengthen child support en- forcement and give States new tools to crack down on deadbeat parents. These reforms represent the toughest child support laws ever passed by Congress. The past welfare system fostered ille- gitimacy and discouraged marriage and parental responsibility. This welfare reform would promote the basic family unit, and crack down on those who de- liberately walk away from meeting the needs of their children. More and more children are growing up without the moral guidance and financial support of parents, especially fathers. This is a tragedy of our time. I am also pleased the final bill in- cludes provisions I authored to crack down on food stamp fraud and prisoner fraud. Last year, I was shocked to learn the extent to which prisoners are able to continue receiving welfare ben- efits. The workfare bill before us once and for all puts an end to cash pay- ments to alcohol and drug addicts in prison. It also would, reward States that crack down on food stamp recipi- ents who abuse the welfare system. Al- though my home State’s food stamp program is ranked first in the Nation, each year $1.7 billion is lost nationally through food stamp fraud, waste, and abuse. My provision would give addi- tional incentive to crack down on those who abuse the welfare system. I want to extend my thanks to the staff at the South Dakota Office of Recovery and Investigations, specifically Marty Armstrong, for their diligent and effec- tive work on this matter. Several years ago, President Clinton promised America he would change welfare as we know it. Our former col- league and majority leader, Bob Dole, made the same promise. Last year Con- gress delivered on that promise. We passed workfare. Unfortunately, Presi- dent Clinton vetoed that workfare bill. The President vetoed workfare again as part of our balanced budget plan. Thanks to Chairman ROTH, Senator DOMENICI, and so many others we didn’t quit. We produced another workfare bill. I am pleased the President has said he will do the right thing this time and support this workfare legisla- tion. I want to thank the conferees for their quick action in approving the welfare bill. Again, I am proud to have played a significant role in this effort to enact workfare legislation. The workfare bill before us will end welfare dependency by requiring work and placing a time limit on benefits. To- morrow’s welfare system would encour- age people to become more self-suffi- cient and productive members of soci- ety, as was intended many years ago. Americans deserve more than a hand- out for today, they deserve the hope and happiness that come through per- sonal financial independence and the self-realization of work. Welfare reform ensures a better future for all Ameri- cans. Mr. BYRD. Mr. President, as the Sen- ate debates the Conference Report on H.R. 3734, the Personal Responsibility and Work Opportunity Act, Senators are considering one of the most signifi- cant pieces of legislation to come be- fore this body in the current Congress. Indeed, if this legislation is approved today\u2014and the President signs it as he has indicated\u2014this welfare reform leg- islation may be the very hallmark of the 104th Congress. This being said, Mr. President, it is important that all Sen- ators pay heed to the vast and complex changes that this legislation would ef- fectuate on federal welfare policy. I in- tend to support the Conference Report on H.R. 3734 because I believe it rep- resents a necessary departure from a welfare system that few will deny is fundamentally flawed. My overall sup- port of this legislation notwithstand- ing, I do harbor certain reservations about the possible effects of certain as- pects of this welfare reform initiative on our neediest citizens. With this in mind, Mr. President, allow me to ex- plain why I believe that this legisla- tion, even with its potential defi- ciencies, represents a marked improve- ment over ”welfare as we know it.” Mr. President, by combining many of the current federal welfare programs into a single Temporary Assistance for Needy Families Block Grant, H.R. 3734 would effectively end the federal enti- tlement to welfare assistance and give the States expanded control over their respective welfare programs. Under the bill’s provisions, each State must es- tablish objective criteria for determin- ing eligibility and providing ”fair and equitable” treatment for its welfare re- cipients. In order to receive their full block grant, States would have to en- force rigid work requirements for wel- fare recipients and provide adequate child care resources to families with children. Moreover, H.R. 3734 stipulates that States, in order to receive their full block grant, must continue to spend at least 75 percent of the amount they spent on cash assistance programs in fiscal year 1995. And, importantly, H.R. 3734 would limit welfare recipients to five years of benefits and would re- quire most welfare recipients to work at least 30 hours per week by the year 2000. In addition, to protect children of families whose 5 years of assistance have expired, H.R. 3734 permits States to use funds from their Social Services Block Grant to provide vouchers for food for children. Finally, the legislation permanently bans illegal immigrants from receiving any Federal benefits, and bans legal immigrants from receiving most assist- ance for the first five years of their residency in this country. Mr. President, having mentioned the various aspects of this welfare reform legislation that I believe will improve our system of welfare, I must also al- lude to a particular provision of the bill that I believe may have unneces- sarily negative effects on many of the neediest welfare recipients. Specifi- cally, I am concerned about the food stamp work requirements included in this legislation, which would limit adults without dependent children to just 3 months of food stamps every 3 years. Unemployed laid-off workers CONGRESSIONAL RECORD \u2014 SENATE S9397August 1, 1996 would be given an additional three months, and areas with unemployment of ten percent or more would also be given a waiver from the work require- ments. Nevertheless, Mr. President, these provisions represent a significant departure from the Senate-passed wel- fare bill, and they also embody a com- plete departure from our national pol- icy of providing our needy with the most basic safety net: food. On the sur- face, it might seem that the two ex- emptions from the work requirement provide a safety net. Yet, the Congres- sional Budget Office has reported that States will not be able to create the necessary jobs or workfare slots for in- dividuals that are likely to be sub- jected to these new work requirements. Mr. President, the Senate-passed measure, like the measure before us now, would penalize States for not cre- ating the necessary jobs or workfare programs. However, this bill goes fur- ther than that by including provisions that would also punish an individual who simply cannot find a job or a workfare slot available. While osten- sibly intended to target those who could work but choose not to, this pro- vision may in fact have the worst ef- fect on vulnerable individuals who want to work but cannot find a job. In- deed, this issue warrants careful watching. I believe the conferees would have better served this country by adopting the Senate food stamp work requirements. While this legislation is not perfect, it represents what I believe to be a rea- sonable attempt to restore the concept of welfare to its original purpose: a temporary ”safety net” for those who have fallen on hard times. Welfare should not be a permanent way of life for those among us who are able to work. The cost of such misguided poli- cies is far greater than the dollars spent on providing benefits to those who choose not to work because, in time, they foster dependence and indo- lence among recipients and their fami- lies. This argument is not new. Presi- dent Nixon, in addressing the Nation on welfare reform in 1969 said, ”If we take the route of the permanent hand- out, the American character will itself be impoverished.” Mr. President, I agree fully with President Nixon’s statement and that is why I support this conference report. (At the request of Mr. DASCHLE, the following statement was ordered to be printed in the RECORD.) \u2211 Mr. PRYOR. Mr. President, today, I will be unavoidably absent from the Senate, as I am in Arkansas on a fam- ily matter. However, I feel it is impor- tant to express my support for this welfare reform measure and discuss briefly the reasons for my support. My concerns in the debate over wel- fare reform stem from proposals that would outright dismantle the safety net in this country. For decades, the Federal Government has assumed the responsibility to help those that can- not help themselves. The welfare re- form bill before us shifts much of that responsibility to the States. I voted against last week’s Senate version of the welfare bill with the hope that I could improve it in the conference committee. In some ways it has im- proved, in others it has not. Even so, if I were able to vote for this bill today, I would. I am not going to say this bill before us today is perfect. It is not. But I cannot justify keeping the current system. There are more in- dividuals in poverty now than ever be- fore. I believe we have a responsibility to seek new ways to help people help themselves. Our current system fails at this task and we must recognize this fact. Welfare as we know it has not effec- tively emphasized work or pulled indi- viduals out of poverty. I do not like all of the provisions in this bill, but I can not support the status quo. In the past week I have heard from many people in Arkansas about welfare reform. They know how the current program works in places like Little Rock, and in Camden, in Fayetteville, and across the Arkansas Delta. They can see that the current program needs reform. Under this bill, States will be given the flexibility to reform welfare to meet the needs of that State. Yester- day, President Clinton said that the welfare population today is different than the one 60 years ago. It is also true that the welfare population today differs from State to State. Individuals on welfare in Arkansas face different problems and have different strengths than those in New York or California. This legislation will give States the op- portunity to design a welfare program unique to that State. It is a big respon- sibility we hand over to the States today. I pray they act wisely.\u2211 Mr. JEFFORDS. Mr. President, I rise today to voice my support for the legis- lation upon which we are about to vote. We have been working on this bill for a year and a half and we’ve been back to the drafting table several times. Today, though, we’re going to pass this bill and we have the Presi- dent’s assurance that he’ll sign it. I am truly pleased to have been part of this historic effort, and I want to thank my colleagues on both sides of the aisle for their hard work and dedication to re- forming welfare. Does my support mean that I believe we’ve got the perfect bill and all of our concerns have been addressed? Do I think we’ve finished the job and we can forget about welfare for another thirty years? Certainly not. No one thinks that this is the perfect approach to re- forming welfare. Many of us would like to see less in cuts to food stamps; we would prefer more support for children. In particular, we’re emphasizing work in a way that we never have be- fore\u2014and let me stress that I think we are emphasizing that goal, and I com- mend the bill on that point. Even so, we’re not doing nearly as much as we need to do to ensure that jobs are available for people, and that people have the education and training they need to fill the available jobs. We’ve spent a fair amount of time and energy this session talking about job training. As we all know, reconciliation on this issue has eluded us to date. We must address this issue. The first thing peo- ple need to get and hold down a job is a good education. Too often, I think, we assume that to mean a college edu- cation. That is not necessarily true. In the next Congress, I hope we will renew our discussion of how to link education and job training so that people are able to fulfill the expectations of the jobs that are available. Our international competitors have been leaders in making the important link between education and work. Ger- many for example, has long been a model for vocational education. As early as the sixth grade, students opt for a college-prep or vocational edu- cation program. Over and over we’ve said people need to get off welfare and get back to work. I agree with that. We’ve said ”you can always get a job at McDonalds.” There are two flaws with this flippant argu- ment. One is that a person doesn’t earn a living wage at a fast-food res- taurant\u2014but we’ve had that debate. The other flaw with the argument is that even the fast food industry jobs are not as available as we’d like to be- lieve. A 1995 Columbia University study of fast-food minimum wage job open- ings found that 14 people applied for every opening. Among those rejected, 14 percent hadn’t found work a year later. What are we going to do for these people? What are we going to do about this problem? While this bill makes some nods in that direction, I think perhaps its big- gest failing is it fails to recognize all the work we need to do to get people back to work. So far, the necessary re- sources in education and job training far exceed the available resources. Job training and education are an invest- ment that will yield us incredible re- turns. Last year the Department of Education released a study that found that ”a 10 percent increase in the edu- cational attainment of a company’s workforce resulted in an 8.6 percent in- crease in productivity. Whereas a 10- percent increase in the value of capital stock such as tools, buildings, and ma- chinery only resulted in a 3.4 percent increase in productivity.” I won’t be- labor this point, but education and job training are issues I will continue to work on, and I urge my colleagues to do the same. I think all of us realize that it will be our responsibility to monitor the ef- fects of this bill, to improve and en- hance those provisions that seem to work well, and to revisit those provi- sions that are unproductive or fall short of what’s needed, such as those surrounding job training and education that I have just highlighted. This bill is not perfect. Even so, the system we have now is not working and CONGRESSIONAL RECORD \u2014 SENATES9398 August 1, 1996 we need to move forward now. The bill before us takes important steps in the right direction, and is clearly pref- erable to the welfare program we’ve ar- rived at after 30 years under the old system. We enacted this system 30 years ago to combat poverty, and the truth is\u2014 this system hasn’t worked. In 1965, 3.3 million children received AFDC bene- fits. In 1990, 7.7 million kids received AFDC benefits, and in 1994 9.6 million children received AFDC. At the same time, between 1965 and 1990, the actual number of children in the United States declined by nearly 5 million. Clearly, the current system isn’t work- ing, and because of that there is strong support in this country and in this Congress to reform welfare. Furthermore, the current system has developed into one that permits, even encourages, a lifestyle of dependence. Under the system we have now, 65 per- cent of families on welfare will be de- pendent for at least eight years. One in eight children in this country is on welfare, and nearly one in five mothers in inner cities is on welfare. Without welfare reform, millions more children will grow up dependent on welfare. Under the current system, children who grow up in families dependent on welfare are twice as likely to rely on welfare when they become adults. It is clear that for many people, welfare has become a way of life. The bill before us will terminate reli- ance on Federal assistance as a way of life. We end this reliance by terminat- ing cash assistance after 5 years of re- ceiving benefits. After two years, we require people to get jobs. This is real welfare reform. Time limits are un- precedented at the Federal level. Five years of benefits allow adequate time for most people to get their feet under them and get back on the road to sup- porting themselves. But even after 5 years the line is not a hard and fast one. There can be exceptions. The bill allows a 20 percent hardship exemption for the really difficult cases. So even though we say ”5 years and you’re off,” even then there’s some leeway. Another strength of this reform bill is that it retains the Federal safety net for nutrition benefits. One of the changes I worked hard on in the Senate version of the bill was the food stamp block grant. We eliminated the block grant option last week, and the con- ference bill retains the food stamp en- titlement. The entitlement ensures that food stamps will always be avail- able to our most vulnerable popu- lations: children, the very poor, and the elderly. And food stamps will be available even after the eligibility for cash assistance has ended. I want to thank my colleagues for joining me and voting to strike the optional block grant. Another difference between this bill and the ones we’ve considered pre- viously is the money provided for child care. This bill fulfills the Governors’ and the President’s request for addi- tional child care funds, and as a result we’ll be spending $4.5 billion above cur- rent law on child care. In addition, the bill retains minimal health and safety standards for child care, and it main- tains a quality set-aside from child care block grant funds so we might bet- ter focus on encouraging and develop- ing good child care for our children. Fi- nally, this bill requires that the Sec- retary report to the Congress on how children are affected by welfare policy change; additionally, it requires the states to report on their child poverty rates. If the child poverty rate in- creases by more than 5 percent, then immediate corrective action is re- quired. I mention all of these factors because they contribute to my willing- ness to support this bill, and also be- cause they illustrate that the drafters are concerned about children and in- tend to monitor the effect of this bill and follow up to ensure that we are bringing about the positive change we’re attempting to achieve. In conclusion, let me speak briefly on how this bill will affect Vermont. I was pleased to learn that the Governor of my home State, Gov. Howard Dean, has spoken positively of this bill. While he shares the concerns that many of us have, Gov. Dean thinks that Vermont can come out ahead under the provi- sions of this bill. Vermont is currently operating its welfare program under a waiver. Not only does this bill allow the State to continue its first-in-the- nation reform project, the Governor recognizes that the calculations used to determine the size of the Federal block grants mean that Vermont will have more money to spend on its wel- fare program. While I am on this subject, I would like to take a moment to voice my sup- port and praise for those states, like Vermont, that have already under- taken welfare reform through waivers and demonstration projects. I am pleased that we will allow those waiver projects to continue. But let me urge clarification on what I consider to be a confusing and counter-intuitive provision in the bill. Under the provisions of the bill setting forth the guidelines for the temporary assistance for needy families block grants we have a section that gives States the option of continuing the waiver projects already underway. In fact, the section goes so far as to re- quire the Secretary to encourage any State operating under a waiver to both continue the waiver and to evaluate the result of the waiver so that other States may make use of the valuable information to be gained from these demonstration projects. However, under the hold-harmless provisions of this waiver section, we seem to forgive the accrued liability of States that choose to terminate their waiver projects. Our intent, I believe is to forgive the accrued liability of those States, like Vermont, that choose to continue their waiver projects. To take any other stance except one that also wipes those slates clean would give States incentive to terminate their waivers. States like Vermont that are already conducting demonstration projects should be encouraged and sup- ported in their efforts to continue those projects. I understand that there may be an opportunity to revisit that issue soon, and I urge my colleagues to ensure that we’re creating incentives to continue the waivers that are prom- ising, rather than offering incentive to terminate those projects. Another aspect of the bill that is very important to Vermont is the as- surance that, as under current law, LIHEAP benefits will not be counted as income for purposes of determining food stamp eligibility. This provision is very important to poor people in cold regions of the country who may rely on both LIHEAP benefits and food stamp benefits. There was a provision in both the House and Senate bills that would have forced people to choose between heating and eating, and I thank my Senate colleagues for accepting my amendment to strike those provisions. I also want to thank my colleagues who worked on the conference commit- tee for working to maintain the Senate bill provisions on this issue. Mr. President, I agree with my col- leagues who say this bill has flaws, and I look forward to working with them next year and in future years as we continue to work towards the proper balance between self-sufficiency and Gvernment assistance. In spite of its weaknesses, I think this is a good bill. We’ve worked hard over the past year and a half to get to this point and I think we’ve made some very positive changes that will help all Americans to be productive and contributing citi- zens. I will be pleased to vote ”yes” on final passage. Mr. BIDEN. Mr. President, since 1987, when I first proposed an overhaul of the welfare system, I have argued that welfare recipients should be required to work. None long years later, I am pleased that it is finally about to hap- pen. It has been a long road. I was pil- loried by many of my friends back then for even suggesting the idea of requir- ing work. Today, I think everyone here believes that work should be the premise of our welfare system. It was unthinkable a few short years ago, that we would limit the time that people could collect welfare benefits. Today, I think that is a proposition on which nearly everyone here agrees. And, on the other side of the aisle, it was just a few short months ago, that many were unwilling to invest suffi- cient amounts in child care so that the children of welfare mothers would be taken care of when their mothers went to work. We have come a long way toward reaching agreement on how best to re- form our failed welfare system. And, much of that meeting of the minds is reflected in this bill. So, I will vote for it, although I believe it could have been better. CONGRESSIONAL RECORD \u2014 SENATE S9399August 1, 1996 I would feel much more comfortable if we were here today debating and vot- ing on the Bipartisan Welfare Reform Act that Senator SPECTER and I intro- duced in the Senate and that Rep- resentatives CASTLE and TANNER intro- duced in the House. It was more realis- tic in putting people to work; it was more compassionate to the children who did not ask to be born in poverty; and it was a model of bipartisanship from the very beginning. Unfortunately, the Biden-Specter, or Castle-Tanner, bill is not a choice fac- ing us today. Today, we have but one choice: this bill with its flaws or the current flawed system. And, in weigh- ing the alternatives, the flawed\u2014I should say failed\u2014status quo is simply no longer an alternative. The culture of welfare must be re- placed with the culture of work. The culture of dependence must be replaced with the culture of self-sufficiency and personal responsibility. And, the cul- ture of permanence must no longer be a way of life. I will vote for this bill, Mr. President, because it is a step to- ward changing the culture. This bill will require welfare recipi- ents to work in exchange for their ben- efits, and it will limit the amount of time that families can receive welfare. The bill will increase our investment in child care so that welfare mothers can go to work, and it will go after the deadbeat dads who refuse to support their own children. Finally, it will crack down on fraud in the Food Stamp Program. These are important and crucial changes that need to be made in our failed welfare system. They have been my priorities in reforming welfare, and this bill meets those goals. But, we should not fool ourselves. There will be people, many of them children, who will fall through the cracks because of this bill. I do not know how many. I have heard numbers thrown around on how many more poor children there will be under this bill. To tell the truth, no one knows for sure. But, there will be some. And, for that, we should not brag or boast or pound our collective chests or, as one Member of the other body did yester- day, claim that this will be great for America. However, that’s not a reason for fail- ing to move forward. It is a reason for watching closely what happens as we move forward. As this new welfare sys- tem is implemented, we must monitor it with a microscopic eye. And, I hope the authors of this legislation will be as willing to make corrections if cor- rections are needed as many of us have been willing to vote for a good, but not perfect, bill. And, this is not a perfect bill. In fact, I do not even believe this is the best bill we could have written. But, it is a good bill. And, it is time to move for- ward. Mr. COHEN. Mr. President, about 11 months ago, the Senate passed a wel- fare reform bill by an overwhelming 87 to 12 margin. That vote demonstrated that there was strong, bipartisan agreement that the current welfare system needs a dramatic overhaul. After almost a year of discussion relat- ing to the best way to reform the cur- rent system, it is satisfying that the same bipartisan spirit will be present when we vote on a welfare reform plan for third time. The current system, with its trade- mark entitlement programs, has been only marginally successful in providing for the most basic needs of low-income people, and has been a dismal failure in encouraging recipients to become inde- pendent. While we supported changes in 1988 to emphasize work in our welfare sys- tem\u2014those reforms included so many exemptions that the incentives to work were seriously undermined. Those re- forms did not do enough to help us dis- tinguish those who had fallen on hard times and needed a helping hand from those who simply refused to act in a disciplined and responsible manner. When welfare is a Federal entitlement, it is very difficult to make that dis- tinction. The legislation before us today will put welfare recipients on notice that their time on the system is limited. We are offering them assistance with child care, health care, and training to be- come self-sufficient. In return, recipi- ents are expected to put in time im- proving their education, participating in training, and getting a job to get off the system permanently. As recipients increase their efforts to comply with these new requirements, States must understand the respon- sibility they are accepting with the flexibility gained from the block grant. The Federal Government is ending the 60-year philosophy that anyone at any- time is entitled to cash assistance. The philosophy has changed to: we will help someone get a job and keep a job by providing child care and health care for a specified period of time. This shift in philosophy means that the cul- ture of State welfare offices must evolve into the culture of a job place- ment service where the focus is getting jobs, not mailing checks. This legislation also takes a big step forward to reinforce the importance of families in society. Regrettably, too many of our young people are growing up without two parents involved in their lives; 92 percent of AFDC families have no father in the home. This bill recognizes that reducing out-of-wed- lock births is an important goal, but does not prescribe Federal solutions that would hamstring the ability of States to try different approaches. One of the most essential ingredients for self-sufficiency is the availability of child care. By funding child care ac- tivities at almost $22 billion, States will have the resources they need to de- sign successful return-to-work pro- grams. With this enhanced funding, parents will have some assurance that their children will be cared for in safe settings. As the President indicated yesterday, this bill is not perfect. One of my prin- ciple concerns is the impact of cuts in food stamps on the working poor. Food stamp benefits do not extend just to families on AFDC. The Food Stamp Program plays an important role in helping poor, working families make ends meet. Food stamps are the front-line de- fense against poverty, providing a min- imum safety net of 1 out of every 10 people in Maine. This program has proven vital in improving the health of our children and the elderly, and pro- tecting people with disabilities. We need to ensure that this program re- tains its vital mission: to ensure that families have enough resources to buy food. One of the most important provisions in this bill is the emphasis on the col- lection of child support and establish- ing paternity for children born out-of- wedlock. Child support collections con- tinue to increase across the Nation. The Republican bill includes provision which will encourage even greater in- creases in child support collections. By taking a tougher stand to establish and then enforce child support orders, some of the families currently tied to the welfare system may be able to get loose. It is obvious that no one likes the current system. Governors don’t like it, welfare recipients don’t like it, and the public believes that welfare pro- grams serve only those people who want to take advantage of the system. As a result, support for antipoverty programs has eroded drastically in re- cent years. By injecting a work ethic into our welfare system and emphasizing self- sufficiency, which this bill does\u2014we are on the right track. This bill comes very close to providing resources and incentives that will improve our anti- poverty programs, but I also hope we will continue to work to ensure that our most vulnerable populations are protected. Mr. GLENN. Mr. President, today the Senate will be voting to transform the Nation’s welfare system. Despite some changes, I believe that the fundamen- tal flaws of the Senate and House passed bills remain and therefore I will vote against the conference report. Children and low-income working men and women will be the victims of this legislation. There are already far too many poor children in this country and I believe that this bill will in the end cause many more children to live in poverty. I am particularly concerned that in Ohio alone, as many as 43,500 children will be pushed into poverty by the implementation of the bill before us. Mr. President, I cannot support leg- islation that would cause this kind of harm. I have been concerned from the start that simply washing our hands of the Federal responsibility for welfare and turning it over to States is no guaran- tee of success. This is risky policy and CONGRESSIONAL RECORD \u2014 SENATES9400 August 1, 1996 there will no longer be any mechanism for guaranteeing a national safety net for our poorest families. I am concerned that the work re- quirements in the bill can not be met. States that do not meet employment goals will lose part of their block grants. Penalties would rise from 5 per- cent in the first year to 21 percent in the ninth year. The Congressional Budget Office has already reported that most States will be unable to meet the work requirements. This legislation lacks the necessary commitment or re- sources to help people move from pov- erty to meaningful employment. It does not provide any specific funding for States to help people find or train themselves for better-paying jobs. Rather than moving people off welfare and onto work, this bill emphasizes cutting off welfare. While I support reform that promotes personal responsibility and community initiatives, I cannot support legislation which undermines the national safety net and reduces resources for hungry families. Mr. GRAHAM. Mr. President, during consideration of the Senate reconcili- ation bill, two definitions regarding immigrants, section 2403(c)(1), and in section 2423, section 213(A)(f)(2), were stricken because they contained mate- rial that was not under the jurisdiction of the Finance Committee. Specifically the definitions denied all means-tested benefits to immigrants including bene- fits subject to appropriations. The Parliamentarian also agreed that the provisions violated another section of the Byrd rule, section 313(b)(1)(D). Section 313(b)(1)(D) pro- hibits language in a reconciliation bill or conference report if the deficit re- duction is merely incidental to the larger policy changes contained within the provision. The Parliamentarian agreed that since the reconciliation process is confined to mandatory spending, expanding the scope of provi- sions to include benefits provided by discretionary spending was a violation of the Byrd rule. The conferees were certainly notified about these rulings and the offending provisions were not included in the conference report. Moreover, would the Senator agree that, when the Senate struck these sec- tions as violating the Byrd rule, the Senate’s intent was to prevent the de- nial of services in appropriated pro- grams such as those that provide serv- ices to victims of domestic violence and child abuse, the maternal and child health block grant, social services block grant, community health centers and migrant health centers? Does the Senator agree that recipients of appro- priated funds are not forced to conduct checks on citizenship and immigration status when providing community services? Mr. KENNEDY. Yes. Under the Byrd rule, the budget reconciliation process cannot be used to change discretionary spending programs. Only mandatory spending is affected. Mr. GRAHAM. Is this consistent with the understanding of the Senator from Nebraska as well? Mr. EXON. Yes. As ranking minority member of the Budget Committee, I have been concerned to ensure that the budget reconciliation process is limited to affecting mandatory spending and is not misused to achieve other objec- tives. Budget reconciliation’s depar- ture from ordinary Senate rules of de- bate must be carefully limited to its original and proper purpose. Our col- leagues on the other side of the aisle shared this view when they agreed to strike the offending provisions from the Senate bill. Mr. GRAHAM. Would the Senator agree that the version of the bill rec- ommended in this conference report is consistent with this understanding? Mr. EXON. Yes. These provisions stayed out of the bill in conference, as the conferees sought to avoid another challenge on the Senate floor that these provisions violated the Byrd rule. This manifests our intent to keep this bill within the proper parameters of budget reconciliation. Mr. President, changes in discre- tionary programs on a reconciliation bill, such as the ones mentioned by the Senator from Florida and the Senator from Massachusetts, result in no direct budgetary savings and are therefore ex- traneous under the Byrd rule. During floor consideration of this legislation, we struck section 2403(c)(1), and in section 2423, section 213(A)(f)(2) because they contained material that was not under the jurisdiction of the Finance Committee, namely many dis- cretionary programs, because they vio- lated section 313(b)(1)(C) of the Budget Act. These provisions also provide no budgetary savings, and violating the intent of section 313(b)(1)(A) of the Budget Act, but because they were cleverly embedded in language which did provide direct budgetary savings, it was difficult to fully enforce the Byrd rule. Nonetheless, it is clear that this bill should not be used to make changes in discretionary programs, and those who look to interpret the action of the Congress should take this into account. Mr. President, the purpose of the Byrd rule is to prevent reconciliation bills from being loaded up with provi- sions, such as these, that have no budg- etary impact. This is important be- cause reconciliation bills move in the Senate under special rules which limit amendment and time for debate. With- out the protections provided by the Byrd rule, it would be far too easy to take advantage of the privileged nature of reconciliation to enact controversial items without proper consideration in the Senate. Allowing reconciliation to be used in this manner fundamentally undermines the basic nature of the Senate’s rules which protect the voice of the minority and damages the Sen- ate as an institution. For this reason, I feel it is important to bring these provisions to the atten- tion of the Senate, and I thank the Senators for their efforts. Mr. LEVIN. Mr. President, today, the Senate will reach a milestone in the long and sometimes twisting journey of welfare reform legislation. The Senate will pass this bill, as the House of Rep- resentatives did yesterday. The Presi- dent has told the Nation that he will sign it, and soon it will become law. I will vote in favor of this bill because it is a step toward ending the present sys- tem which simply does not work and replacing it with a system which re- quires and rewards work. I wish, how- ever, that we had before us a reform bill which I could wholeheartedly, without reservation, endorse and sup- port. I would greatly prefer a bill, for example, like the work first legislation which contained a Federal safety net for children and which I cosponsored with Senator DASCHLE and many of my colleagues or even like the bipartisan Biden-Specter approach which I voted for in the Senate. The bill before us is an improvement over the legislation which I opposed last year and which the President ve- toed because, among other things, it provides more support for child care, retains needed child protection pro- grams and services, includes my amendment strengthening the work re- quirement, does not block grant food stamp assistance, requires a greater maintenance of effort from the States, and doubles the contingency fund to help States in times of economic down- turn. However, it contains a number of serious flaws. That is why it is a mile- stone and not a final destination. It will need repairs. As the President has indicated, there are aspects of this leg- islation which the Congress will be re- quired to revisit. And beyond that, I believe that this kind of sweeping re- form involves an element of risk. Al- though our efforts are directed toward improving the system, recognizing within the welfare system the principle of the value of work, assuring the pro- tection of children and reasserting the responsibility of absent parents to their children, we cannot possibly be sure that all the effects of such sweep- ing reform will be those intended. For that reason, the Congress must remain vigilant in its oversight and monitor- ing of the impacts of this legislation. We must stand ready to address nega- tive impacts. If critics are fully correct and there is a large increase in the numbers of American children who find themselves impoverished, we must stand ready to remedy quickly the de- fects in this bill. For a number of years, I have been working toward reform of the welfare system. The existing system has failed. It does not serve families and children well. It does not serve the American taxpayer well. It was created to meet the needs of families in hard times. Un- fortunately, for far too many, what was intended as a safety net has too often become a way of life, a cycle of depend- ency. It is wrong to allow such a sys- tem to continue. CONGRESSIONAL RECORD \u2014 SENATE S9401August 1, 1996 Meaningful reform should protect children and establish the principle that able-bodied people work. It should tighten child support enforcement laws and be more effective in getting absent fathers to support their children. the bill before us represents a constructive effort. The funding levels in this bill are aimed at assuring that adequate child care resources will be available for children as single parents make the transition into work. Those levels are significantly improved over last year’s bill. This strengthens the work require- ment because it better assures that States can effectively move people into job training, private sector employ- ment, and community service jobs. The bill will provide the kind of flexibility which the States have been asking for. Now, they must step up to the task and meet their responsibility. If they fail, this reform will fail because it is built on the foundation of getting able-bod- ied people back to work. I am particularly pleased that this legislation includes my amendment which I first offered last year which greatly strengthens the work require- ment in the bill. The original legisla- tion required able-bodied recipients to work within 2 years of receipt of bene- fits. My amendment adds a provision which requires that unless an able-bod- ied person is in a private sector job, school, or job training, the State must offer, and the recipient must accept community service employment within 2 months of receipt of benefits. As I have said, I am deeply concerned by several provisions contained in this legislation. I am afraid that the reduc- tions in food stamp assistance may go too far, although the conference com- mittee added $1 billion in food stamp assistance back in. Also, while some language was added in the conference to allow States to use some funds under this bill to provide noncash vouchers for minimum safetynet sup- port to children of families which lose their benefits they have reached the 5- year limit on assistance, I believe such minimum aid should be mandated. We will want to monitor how the States handle this problem. And, I am con- cerned that the provisions included, de- nying benefits to legal immigrants, are too harsh. I particularly object to the impact on legal immigrants who are al- ready in the United States and on legal immigrants who come here, work hard, and then may unfortunately become disabled. As the President stated yes- terday, these provisions don’t belong in a bill relating to welfare reform. I am also concerned by a provision in the bill which did not appear in either the House-passed or Senate-passed bill. Both the House and the Senate bills prohibited penalties against single cus- todial parents with children under 11 years old who cannot find adequate, af- fordable child care, as determined by the State. Inexplicably, the conference committee changed that provision to lower the protected age to children under the age of 6. Again, I think this is a matter which Congress should monitor closely as it is applied in the States, and revisit it, soon. Mr. President, the decision on this bill is a difficult and a close one. But, I believe we must reform the broken welfare system which currently serves America’s children poorly and serves the American taxpayer poorly. But, as we move forward on a bipartisan basis, we must vigilantly work with the States, to make this reform successful, to get people back to work, and to im- prove the lives of America’s most vul- nerable children, with an on-going commitment that mistakes will be ad- dressed, and shortfalls will be reevalu- ated. Mr. HATFIELD. Mr. President, the Personal Responsibility and Work Op- portunity Reconciliation Act of 1996 moves our Nation in a positive direc- tion by reforming our current welfare system. Not only does it eliminate the entitlement status of welfare, but the bill requires those able-bodied recipi- ents who can work, to work. In addi- tion, the bill provides $4.5 billion more for child care than current law, main- tains Medicaid eligibility for those citizens who qualify for assistance, and allows those States who are operating under Federal waivers to continue to do so. The child care and Medicaid pro- visions in this bill will allow welfare recipients to better make the transi- tion to work. Also, the Federal Govern- ment, by allowing States to continue with their innovative welfare reform programs, will see continued successes, as in Oregon, in welfare reform. As chairman of the Appropriations Committee, and while currently em- broiled in the appropriations process, my experience has taught me all too well the dire consequences of continu- ing, without change, entitlement pro- grams that we do not, and cannot con- trol. We can no longer keep spending until all needs are met. These entitle- ment programs place a great burden on the Appropriations Committee and more importantly, a burden on the many other needs of our Nation. Only through a commitment to pro- viding better opportunities for those living in poverty will we find a solution to poverty. We can achieve a reduction in welfare spending while working to transition the impoverished, out of poverty. The recent vote in the Senate to increase the minimum wage is an in- dication of Congress’ commitment to ensure that in the area of employment, a minimum standard is assured. How- ever, Congress cannot eliminate pov- erty by merely raising the minimum wage. There is a cycle of poverty which is passed from generation to genera- tion, and it is the root causes of this poverty that must be addressed: a lack of education and access to upward so- cial, and economic stability. Education is the key to the success of society. Citizens without the opportunity to educate themselves, to increase knowl- edge and skills, will weaken in despair, maintaining the status quo at best. In my home State of Oregon, the Gov- ernor’s office, county commissioners, and the Oregon Workforce Quality Council, are only a few among many who have worked towards improving job training. As a result of the efforts in Oregon, in only a few years Oregon has reduced their welfare roles by al- most 25 percent. By progressing to- wards a seamless link amongst differ- ing human resource agencies, Oregon has made outstanding progress in inte- grating education, employment, and training programs. These are key links in ending the cycle of poverty. Thus, I am pleased to see waiver language con- tained in this bill which will continue the welfare reform process. With this added flexibility Oregon will be able to continue its extraordinary welfare pro- gram. Mr. President, we have chosen to ad- dress welfare reform and Medicaid re- form separately; a decision which I cannot fully support. Welfare reform is an integrated effort which includes: child care, effective job training and quality health care. To end welfare as we know it we must allow our citizens the opportunity to climb out of the welfare trap and become productive citizens of our Nation. Without an inte- grated approach the entire system is placed in jeopardy. Thus, I am dis- mayed that we did not reform Medicaid while reforming welfare, for they are an integrated pair. However, I am sat- isfied at this point to know that Medic- aid will remain intact for our citizens who are fulfilling the work require- ments of this bill. Furthermore, I am pleased that the State of Oregon will continue to operate its Medicaid sys- tem under the Oregon health plan. Under the Oregon health plan, my State has enrolled 114,000 more Orego- nians who would otherwise not have had access to health care. The Oregon health plan required numerous Federal waivers to achieve this success, and I am hopeful that Medicaid reform, whenever enacted, will have similar success as in Oregon. I ask unanimous consent to have printed in the RECORD a letter from the State of Oregon endorsing this bill. There being no objection, the letter was ordered to be printed in the RECORD, as follows: OREGON DEPARTMENT OF HUMAN RESOURCES, Salem, OR, July 31, 1996. Hon. MARK O. HATFIELD, United States Senator, Washington, DC. DEAR SENATOR HATFIELD: Thank you for your ongoing work with us on both our wel- fare reform waivers and the current pending legislation. Your assistance has made it pos- sible for Oregon to continue to improve upon its extraordinarily successful strategies to move families from poverty to employment. Regarding the current bill, it is my under- standing that the conference committee has allowed states the option to determine if, after a five-year period following enactment, qualified aliens (generally speaking, legally residing non-citizens) would remain eligible for Medicaid coverage. With this issue re- solved, the Department of Human Resources CONGRESSIONAL RECORD \u2014 SENATES9402 August 1, 1996 is satisfied that the bill will allow the State to have more flexibility and success in help- ing Oregon families become self-sufficient than would be possible under current law. Sincerely, GARY WEEKS, Director. Mr. HATFIELD. In Oregon, we are re- ducing our welfare roles by training our workers and putting people to work. This is being accomplished through a concerted effort of local, State and Federal officials striving to- gether towards a common goal of put- ting people to work. We are dem- onstrating that welfare reform is an in- tegrated system of job training, child care, personal responsibility, and health care. Mr. BINGAMAN. Mr. President, today the Senate will vote to change the Nation’s welfare system. While I hope these changes will make people’s lives better, I greatly fear that these changes will do far more harm than good. Let me say I believe the country needs welfare reform, and I strongly support some portions of this bill. I support requiring all able-bodied re- cipients to work, turning welfare of- fices into employment offices, provid- ing adequate child care and requiring strong child support enforcement. This bill achieves some of these goals, but I am deeply concerned that it will push more people into poverty instead of lifting them out. I am encouraged by the President’s commitment to pursue these concerns and come back next year to propose changes to this legislation. In fact, I wish we had incorporated those changes in this bill. I have been hopeful that this Con- gress would achieve real welfare re- form. A good bill would encourage adults to work without threatening the well-being of children or legal immi- grants or the States that need welfare assistance most. I originally voted for welfare reform legislation in the Sen- ate with hopes of ultimately achieving this goal. Unfortunately, this has not hap- pened. In the highly politicized envi- ronment in which we find ourselves, I fear that we are trading an admittedly imperfect system for one that may prove to be far worse for our Nation’s children and poor. That is why I am voting against the conference report before us. I have been persuaded that this bill will hurt New Mexico. While under this bill, States may have substantial dis- cretion on how they administer welfare benefits, it is equally clear that they will have substantially less money with which to administer those bene- fits. I believe this bill will increase the number of children living in poverty in our State. Relative to other States, low per capita income states like New Mexico will suffer. According to the New Mexico Human Services Depart- ment, the number of families on wel- fare is increasing in New Mexico\u2014from an 18,400 caseload in 1989 to 34,000 cases per month in 1996. New Mexico cannot easily absorb funding cuts when the caseload is growing and the State budget is not. This bill requires progressively more hours of work, from a greater percent of each State’s caseload every year, with States losing cumulatively more funding each year they fail to hit their targets. While I am a strong proponent of work requirements as an integral part of welfare reform, I am skeptical of this approach. Currently, unemployment in New Mexico is 6.8 percent, higher than the national average of 5.3 percent. While we have experienced a recent period of high job creation, many of those new jobs are concentrated in our urban cen- ters and are not likely to be accessible to those who live in rural areas. And what will happen to New Mexico in the event of an economic downturn, when rates of job creation are not so high? This bill provides a penalty of a 5 per- cent cut in Federal funds for the State’s block grant that will be in- creased to a maximum of 21 percent cut should targets be missed in consecutive years. The National Governors’ Asso- ciation [NGA] shares the concern that many States will have difficulty in meeting the work requirements. This will leave States with the choice of using State and local funds for edu- cation, training, and child care, or throwing more people off the rolls so it will be easier to hit their work targets, or cutting far back on benefits. The nonpartisan Congressional Budg- et Office has said that, over 6 years, this bill falls $12 billion short of the funding needed to meet the work re- quirements of this legislation, and about $2.4 billion short in child care re- sources. Currently, the caseload in New Mexico is growing. Who will be forced to pick up the shortfall? State and local governments will. Last year in New Mexico, 239,000 re- cipients in 87,000 households relied on food stamps. About $28 billion in sav- ings realized by this bill will be in food stamps. Such cuts to funding benefits erode the integrity of the safety net for those who need it most. I say again that we are trading in an imperfect system for one that may prove much worse. Our common goal is to eliminate public assistance as a way of life while preserving temporary protections for those truly in need. We can do this without denying the basic needs of in- nocent children and without driving State and local governments further into debt. I look forward to voting for the necessary amendments to this leg- islation in the next Congress. Mr. DOMENICI. Mr. President, I am pleased that the welfare reform con- ference report includes a suggestion I made to the conferees. Before final passage in the Senate, I suggested that we delete a direct spending appropriation that was in the Senate-passed bill\u2014section 2211(e)(5). This provision would have given the Social Security Administration [SSA] $300 million in entitlement funding for administrative costs associated with welfare reform. Although it is important to make sure SSA gets the funds it needs to im- plement welfare reform, I oppose creat- ing new entitlement spending for Fed- eral agencies. As an alternative, I suggested that we build upon a process that is already in current law and which adjusts the discretionary spending caps to accom- modate additional funding in the ap- propriations process for SSA to do con- tinuing disability reviews. I am pleased that the conferees ac- cepted this approach. Let me also clarify one issue. The language in the conference re- port provides that the chairman of the House Budget Committee must take back the cap adjustment in the event the President vetoes the bill. For the record, we do not need this explicit authority in the Senate. The chairman of the Senate Budget Com- mittee already has the authority to re- verse adjustments of this kind in the event the legislation does not become law. Mr. LIEBERMAN. Mr. President, I rise to support the conference report and welfare reform. The Congress and the administration have worked now for over 3 years to re- form the shameful situation in which millions of Americans on welfare find themselves. Parents seeking work are discouraged from doing so by the cur- rent system. Teenage mothers languish alone in households without the sup- port of their children’s fathers and often without proper adult supervision. Welfare as we know it has allowed these societal ills to fester and drain increasingly large amounts of public assistance funds. The current system has made it too easy for young men to father children without assuming ei- ther the financial or emotional respon- sibilities of parenthood. For too long, society has assumed the responsibility of caring for poor children with welfare checks, while not placing expectations of accountability upon the young par- ents. Too many families face the daily burden of survival, unemployment, and society’s suspicion of their unwilling- ness to change their situation. The provisions of this conference agreement can ensure that our welfare system will finally reflect a respect for two of the most fundamental values of our society\u2014an adherence to the Amer- ican work ethic balanced with a com- passion for those truly unable to care for themselves. This bill redirects hard-earned tax dollars toward achiev- ing employment opportunities for adults and improvements in the qual- ity of life of children. First and foremost, it eliminates the possibility of receiving public assist- ance without any intention of making some kind of a contribution to society in return. Beneficiaries will be aware CONGRESSIONAL RECORD \u2014 SENATE S9403August 1, 1996 that from the day they receive their first check, the clock will be ticking. Society is fulfilling an obligations to help them get back on their feet, and they in turn are obligated to make every effort to receive job training or education and to find employment. The employment of parents will enrich their children not only financially, but morally as well. In watching their par- ents benefit from educational opportu- nities and engage in gainful employ- ment, children may embrace a valuable work ethic and eventually be better able to free themselves from the cycle of poverty and welfare dependence in which they are currently entrapped. States will also have an incentive to help beneficiaries find work. Welfare offices should become employment of- fices as States strive to move recipi- ents into the work force in order to earn a performance bonus from the Federal Government. The conference bill also holds the hope of protecting children and reduc- ing welfare spending by attacking the problem of unmarried teen parenthood. Welfare will no longer encourage the proliferation of single and uneducated parents by automatically and uncondi- tionally underwriting the mothers who bear children out of wedlock. Children born out of wedlock are shown by stud- ies to be three times more likely to be on welfare as adults than their peers. By implementing this bill, however, the Federal Government will require States to combat this problem and hopefully prevent it in a number of ways. First, paternity must be estab- lished for all children born out of wed- lock at birth as a condition for receiv- ing assistance, and fathers will be re- quired to pay child support and set a good example for their children by en- gaging in either private sector or com- munity service jobs. Mothers must live with an adult parent or relative or in an adult-supervised, strictly run Sec- ond Chance Home where they can learn skills necessary to the proper manage- ment and care of a child and household. A further condition of receiving assist- ance is a commitment to educational advancement. Young mothers must stay in a school or training program as a condition of continuing to receive welfare checks. This welfare reform bill will addi- tionally work to prevent a new genera- tion from entering into the cycle of early parenthood and welfare depend- ence by making it a national goal to lower teen pregnancy rates. It estab- lishes a national campaign that will as- sure the creation of teen pregnancy prevention programs in at least 25 per- cent of American communities by 1997. It includes two amendments which I authored with the intent of combating this problem. One will require the Jus- tice Department as well as the States to crack down on what studies show is a class of older men\u2014many of them predatory\u2014who father the children of young girls in the majority of teen pregnancy cases. The second amend- ment requires States to reserve a por- tion of their social service block grant funds for programs and services that educate young people about the con- sequences of premarital pregnancy. As we reduce the number of teens who be- come pregnant, we will be increasing the number of children who are able to enjoy a childhood without deprevation. There are other aspects of this legis- lation which have been framed with the protection of children in mind. For ex- ample, minor children continue to re- ceive Medicaid even if their parents lose coverage as a penalty for not get- ting off of welfare into job training and work. Families can also be eligible for transitional Medicaid coverage as they move from welfare to work. These pro- visions are vital as many parents cur- rently refrain from finding jobs and moving off welfare for fear of losing the medical coverage for their children that welfare provides. Mr. President, this bill provides a significant improvement over the Sen- ate-passed bill in allowing States to provide needy children of parents who go off of welfare with vouchers through the title XXblock grant. The legisla- tion also answers the all-important question of who will care for the chil- dren as their mothers and fathers move into the world of education and work. We have designated $13.8 billion\u2014a sub- stantial increase\u2014to be spent just on child care over the next 6 years, and we have retained child care health and safety standards. Moveover, we will not penalize mothers with children under the next 6 years, and we have retained child care health and safety standards. Moreover, we will not penalize mothers with children under the age of 6 who do not accept employment because they cannot find or afford child care. I would have preferred the retention of the Senate provision in this regard which allowed the mothers of children age 6 to 11 who cannot find adequate, affordable child care to stay home with them without penalty. Mr. President, this is a good bill\u2014a giant step forward from the welfare status quo\u2014but it is no more perfect than any other bill that has passed the Senate on a big, complicated problem. I am especially concerned by the food stamp provision which is a real break with what was agreed to in the Senate- passed bill. It limits the receipt of food stamps by jobless individuals who do not have children to 3 months out of a 3-year period and allows no hardship exemptions. This is far harsher than the Senate provision which allowed jobless individuals to receive food stamps for 6 months out of each year as well as a 20-percent hardship exemp- tion. Food stamps are also now cut for households receiving energy assistance, a proposal not included in the Senate bill. The conference report also cuts the cap on the shelter deduction by $42 and takes away food stamps for more families with children who pay over half their income for housing. And I re- main very concerned about the ban on food stamps, Medicaid, and other as- sistance for legal immigrants; it has no good place in a welfare-to-work bill. As the President has urged, we must keep these issues in mind for repair in the future even as we recognize that this legislation is definitely an im- provement in the current welfare pro- gram. In voting for this bill, we will re- alize an historic opportunity to meet President Clinton’s call to ”end welfare as we know it.” We will have also prov- en to the American people that the Federal Government is capable of bringing about change through biparti- san cooperation. This is not the end of welfare reform but it is the largest step forward we have taken to improve the way Amer- ica cares for its poor, and tries to make real for them the dreams of equal op- portunity, which is the driving impulse of our history. I thank the Chair and yield the floor. Mr. GRAHAM. I wonder if my col- league could address one point on this bill. I notice that the term ”Federal means-tested public benefit” was de- fined in previous versions of the bill. However, in this conference report, no definition is provided. Mr. CHAFEE. It is my understanding that the Parliamentarian noted that the previous definitions of ”Federal means-tested public benefit” were broad enough to include discretionary spending. According to the Par- liamentarian, that inclusion caused the definition to violate Section 313(b)(1)(D) of the Byrd rule, which pre- vents reconciliation legislation from extending its scope to items that pro- vide merely incidental deficit reduc- tion, that is, discretionary programs. Therefore, when the bill was consid- ered in conference, I understand that there was an intentional effort to en- sure this provision complied with Byrd rule by omitting the definition of that particular term. In other words, then, the term ”Fed- eral means-tested public benefit”\u2014if it is to be in compliance with the Byrd rule\u2014does not refer to discretionary programs. I would assume that pro- grams such as funding for community health centers, as well as the maternal and child health block grant, would not be impacted. Mr. GRAHAM. I thank the Senator for clarifying that point. Mr. DOMENICI. Mr. President, I be- lieve our last Senator, other than the leader and myself, is Senator THUR- MOND, and he would like 8 minutes. We have plenty of time, so I give him 8 minutes. The PRESIDING OFFICER. The Sen- ator from South Carolina. Mr. THURMOND. Mr. President, I rise in support of the conference report to H.R. 3734, the Personal Responsibil- ity and Work Opportunity Reconcili- ation Act of 1996. This legislation re- forms welfare to emphasize fundamen- tal American values. It rewards work and self reliance, promotes personal re- sponsibility, and renews a sense of hope CONGRESSIONAL RECORD \u2014 SENATES9404 August 1, 1996 in the future. Additionally, the bill slows the growth of Federal welfare spending, thus reducing the Federal budget deficit by $55 billion over 6 years. The measure does provide suffi- cient increases in spending to protect vulnerable populations. This Congress previously passed two welfare reform bills. The President subsequently vetoed those bills, despite his 1992 campaign pledge to end welfare as we know it. I hope as we send him another bill, that the President will fi- nally keep his pledge on this issue, and sign the bill. Mr. President, more than 30 years ago the Federal Government declared its War on Poverty. Since then, the number of individuals receiving aid to families with dependent children has more than tripled. Over two-thirds of these recipients are children. The in- crease in the number of children re- ceiving public assistance is closely re- lated to the dramatic increase in births to unmarried women, particularly to teenage young women. Mr. President, the War on Poverty has inflicted many casualties. Multiple generations of children have grown to adulthood, con- tinuing welfare as a way of life. Moth- ers and children have been abandoned. Families have been destroyed by long- term dependence on Government. The War on Poverty has been costly, both in terms of human suffering and tax- payer dollars spent. In contrast, this reform measure takes steps to promote stable families and discourage illegitimacy. We recog- nize many children in America are vul- nerable. In response to this need, the bill guarantees they will continue to receive the support they need. In doing so, the prospects of children in welfare families are greatly improved. Mr. President, the measure before us is built on five main principles, which I believe are supported by residents of South Carolina and by the American people in general. I would like to brief- ly summarize these pillars of welfare reform. First, welfare should not be a way of life. By placing lifetime limits on bene- fits, this bill ensures that welfare will be temporary assistance to those who are in need. The second principle is work, not welfare. Able-bodied beneficiaries will, for the first time ever, be required to work for their benefits. This principle is designed to restore dignity to the in- dividual and fairness to the system. Third, welfare for noncitizens and fel- ons will be limited. The bill provides adequate exceptions for emergency benefits, for refugees, and for those who have contributed to this Nation by paying taxes for 10 years or through military service. Fourth, the bill encourages personal responsibility to halt rising illegit- imacy rates. This legislation seeks to counter that trend by increasing ef- forts to establish paternity and enforce child support orders. Furthermore, the bill encourages the formation and maintenance of two-parent families. Finally, this legislation returns re- sponsibility and flexibility to the States. The national Government has an obligation to promote the general welfare of the United States. At the same time, we know that those who are closest to the problem are better able to provide for the specific welfare of needy individuals. This bill establishes general guidelines and provides broad cash welfare and child care block grants. With this flexibility States can design programs that meet local condi- tions and particular needs. Mr. President, like the two vetoed bills that preceded it, this bill has many provisions that will encourage work and education, lessen dependency on the Government, and foster an envi- ronment to reduce unwed and teen pregnancy. The legislation also ensures that needy Americans will receive a wide range of services including cash assistance, child care, food stamps, medical care, child nutrition, and dis- ability payments. The bill also con- tains strong provisions related to child support enforcement, child protection, foster care, and adoption assistance. I compliment the managers of the bill who have brought historic reform to our welfare system. This bill de- serves our support. I thank the Chair and yield the floor. Mr. DOMENICI addressed the Chair. The PRESIDING OFFICER. The Sen- ator from New Mexico. Mr. DOMENICI. I yield 2 minutes off our side to Senator FORD to go along with whatever he has. The PRESIDING OFFICER. The Sen- ator from Kentucky. Mr. EXON. I yield 2 minutes on our side to the Senator from Kentucky. Mr. FORD. Mr. President, I thank my friend from New Mexico for allowing me to have a couple minutes. Mr. President, I think we need to be very careful to put this bill into per- spective. Yes, it will modify a system that no one defends. Yes, it will give States more flexibility to deal with their poorest citizens. Yes, it will pro- vide more for child care than H.R. 4, easing one of the greatest barriers for those on welfare who want to work. All of these things are good reasons for supporting this bill. But I find some of the predictions of what this bill will do to be a bit of a stretch. It is being suggested by some that this bill will reduce the poverty rate, the illigitimacy rate, the teen pregnancy rate, the crime rate, and just about every other kind of rate you can imagine. We hear that this bill pro- vides dynamic opportunities for edu- cation and training and is the oppor- tunity that people who are poor in this country have been asking for. Well, I hope the strongest supporters of this bill are right. Sometimes I won- der when I listen to some of these speeches just how many poor people some of my colleagues have ever met. Maybe they could come to eastern Ken- tucky. Maybe then they could under- stand how difficult it is to determine whether a lack of personal responsibil- ity or a lack of opportunity is the greater cause of poverty. For those of us in the middle of the political spectum, this is a tough vote. When I hear some of the predictions about what this bill will do, I am skep- tical. I have a hard time figuring out how it will affect my State. We have been doing some innovative things in Kentucky with welfare re- form. We are one of the 10 States left that has not obtained a Federal waiver from welfare laws\u2014something you hear so much about in Washington today. Yet we are 1 of the top 10 States in re- ducing our welfare rolls\u2014reducing wel- fare rolls without a waiver\u201423-percent reduction since January 1993. We have tried a lot of things to put people to work. Our current Governor is looking at even broader changes\u2014maybe this bill will allow him to do most things without having to worry about a waiv- er request, and that is a good thing. But when I talk to those in my State about why our welfare rolls have come down, the most important reason I hear about is the improvement in the economy. I remember how tough the vote was in 1993 on the deficit reduc- tion package. I believe that vote had a lot to do with the strength of our econ- omy today. In many ways, that bill may have been much more important in reducing welfare rolls and putting people to work than the welfare bill be- fore us today. And speaking of predictions, I re- member the predictions that opponents of deficit reduction made in 1993. They said the 1993 deficit reduction package would cause a recession, cost jobs, in- crease inflation, cause interest rates to rise, fail to reduce the deficit below $200 billion, and shake up the stock market. Guess what, Mr. President? Our friends who made these predictions were zero for six. That kind of batting average won’t even get you in the minor leagues. Just this morning, we learned that the economy grew in the second quarter at an extremely strong annual rate of 4.2 percent. We have a healthy, growing economy, and the def- icit has been cut from $290 billion to $117 billion and may go below that. These are important reasons why the welfare rolls are down in my State by 23 percent. Some of our colleagues who made those wrong predictions about the 1993 deficit reduction package are the same ones making the boldest predictions about what this welfare bill will do. So I am skeptical. I am willing to support, and will sup- port, this conference report for the steps it takes in the right direction. But we need to monitor the impact of this bill very carefully. About the only thing we know for sure is that it will reduce the growth in welfare spending by about $55 billion over the next 6 years. We hope it will achieve some of the other things that are being pre- dicted today, and at least give our Gov- ernors and State legislatures more CONGRESSIONAL RECORD \u2014 SENATE S9405August 1, 1996 flexibility in experimenting and de- signing programs which address pov- erty. I hope that we will see more suc- cess at the State level. But somehow, I am also quite certain that as we mon- itor the impact of this bill, we will quickly find out that this is not the end of the welfare reform debate, and that future Congresses will find there is much more work to be done. I thank the Chair and yield the floor. Mr. DOMENICI addressed the Chair. The PRESIDING OFFICER. The Sen- ator from New Mexico. Mr. DOMENICI. Senator ROTH start- ed off today following me. Since he is the chairman of the committee that wrote most of this, we thought it might be appropriate that he give the closing argument. We have saved time for him. I yield 5 minutes to Senator ROTH. Mr. ROTH. Mr. President, in these last few minutes before we put August 1, 1996, into the history books as the day we end the welfare system as we know it, I will close with a few obser- vations and some important acknowl- edgments. Last February, after welfare reform had been vetoed twice, the Nation’s Governors restarted today’s legislation by reaching a unanimous agreement to reform welfare. Gov. John Engler of Michigan testified before the Finance Committee later that month and put this entire debate into its proper per- spective. He said: Just consider the Washington Post head- line describing what the governors’ policy\u2014 adopted unanimously with the support of our most conservative and most liberal governor and everybody in between\u2014meant. The Post headline read, ”Governors reform plan would break with 60 years of policy.” Governor Engler went on to say: Remember what the governors propose is changing a law that has been the basis of federal policy for 60 years and remember how counterproductive these policies have been. They punish parents who work too much. They punish mothers and fathers that want to stay together. They punish working families who save money. They reward teenagers who have babies out of wedlock, and the list is longer. Mr. President, this 60-year-old wel- fare system rewards the behavior which leads to poverty and punishes the behavior which leads out of pov- erty. Yes, it is time to end this system. Mr. President, this legislation is about personal responsibility and work opportunity. Work is not only about earning our daily bread. Work is an in- tegral part of the human condition. A parent’s work also teaches the values necessary to prepare the next genera- tion for its responsibilities. We can all be proud of our work today because it will make a profound difference in the lives of millions of Americans. It will go down as one of the most important legislative achievements not only in this Congress, but in many, many years. This is a historic week for a historic Congress. In a matter of weeks, we have moved from gridlock to winning gold medals. Welfare reform is cer- tainly one of our gold medal achieve- ments. I end by again thanking Senator DO- MENICI for his leadership in orchestrat- ing this legislation through the proc- ess. I want to extend my thanks to the Finance Committee conferees, Senator CHAFEE, Senator GRASSLEY, Senator HATCH, and Senator SIMPSON for their extraordinary assistance and coopera- tion. The contributions of Senator NICK- LES, Senator GRAMM, and Senator SANTORUM as we moved through the conference cannot be overstated. They played key roles in assuring this legis- lation would meet all of our objectives, especially with respect to tough work requirements. Let me compliment the majority leader, Senator LOTT, getting this con- ference report completed. This is a major accomplishment in the brief time of his leadership position. Our former majority leader and col- league, Bob Dole deserves as much credit for this legislation as anyone. When the tough decisions needed to be made, and there were plenty through this process, he demonstrated the lead- ership we all look to. I extend my congratulations and thanks to those Members in the House of Representatives who have worked so hard on this issue. It was a privilege to work with Chairmen BILL ARCHER, CLAY SHAW, BILL GOODLING, and TOM BLILEY over these months. I extend the thanks of everyone to both the majority and minority staffs of the leadership, the Finance Commit- tee, especially Lindy Paull, Frank Polk, Ginny Koops, and Dennis Smith, the Budget Committee, and the Agri- culture Committee, for their work. There are too many to name individ- ually and I would not want to fail to mention anyone. I do thank each of them. I also extend those same thanks to the respective staffs in the House, most especially to Ron Haskins, Matt Weidinger, Cassie Bevin, and Margaret Pratt at the Committee on Ways and Means. We should remember that until a few weeks ago, Medicaid was included in this package, so the staffs at Finance and the House Commerce Committee who worked on Medicaid should be rec- ognized, especially Susan Dull, the First Heinz Fellow working in Con- gress. Of course, the committee work can- not be done without the help of those staff members at Legislative Counsels in both the Senate and House, espe- cially Ruth Ernst, and Mark Mathiesen. I extend our thanks to those at the Congressional Budget Office, especially Jean Hearne, Robin Rudowitz, Sheila Dacy, Justin Lattice, and Kathy Ruffin; the Congressional Research Service, most especially, Vee Burke, Gene Falk, and Melvina Ford; and the General Accounting Office, especially, Greg Dybalski and Jerry Fastrup. Let me mention something else that is historical about this day which has been overlooked. I know of no other time in which con- gressional and State officials and staffs have worked so closely together on an issue. For months, Governors John Engler, Tommy Thompson, and Mike Leavitt have given so generously of their time, support, and the power of ideas. They truly deserve the thanks of the Amer- ican people. They have donated the talent and ex- pertise of their staffs, especially LeAnne Redick, Kathy Tobin, who also worked on this legislation as a staff member of the Finance Committee, Jo- anne Neumann and Mary Kay Mantho. Mr. President, this will indeed be a day to remember. Thank you and con- gratulations to all the Republicans in the House and Senate who stuck to our principles and stuck together to make this a reality. Together we have made a difference. Mr. DOMENICI. Mr. President, I be- lieve we have a few moments left. The PRESIDING OFFICER. The Sen- ator has 7 minutes and 15 seconds. Mr. DOMENICI. I will use 5 minutes, then yield the balance to our leader. While I have during the day given deference to this being a very biparti- san effort, and while I have from time to time and during the day said we are glad the President is going to sign this measure, I take a few minutes of my closing time to thank the Republicans in the U.S. Senate and Republicans in the U.S. House, because I think it is obvious the President of the United States came into office promising the end of welfare as we know it, and for 2 years during his administration he had Democrats in the Senate and Demo- crats in the House and no welfare re- form was achieved. Now, while we are glad to have the President saying, ”Yes, I will sign this bill,” I do not think it ought to escape anyone that there would be no welfare reform if the Republicans had not taken control of the U.S. House and the U.S. Senate. I believe I can say that with a degree of certainty, be- cause I worked on reconciliation bills and budget bills that called for reform for at least 10 years and nothing hap- pened. So I say thank you to the American people who elected the Republican Members to the House and Republican Members to the Senate, because to- night we celebrate a very, very signifi- cant achievement. As we moved through the Chamber of the Senate with our efforts to get a balanced budg- et, I say to most Republicans it was truly a difficult job to stand here and ask you to vote for all those tough items, as we moved a budget resolution toward balance, and a reconciliation bill, a big bill changing the law, only to find that the President did not agree. I believe tonight the fruits of that ef- fort are going to be realized and a pro- gram that has not worked for millions CONGRESSIONAL RECORD \u2014 SENATES9406 August 1, 1996 of Americans will begin to work in their behalf, as it works for all Ameri- cans who get jobs and assume personal responsibility. For tonight we say if 60 years ago, or even 30 years ago, or even 10 years ago, if we would have looked at this program and said it is inconsist- ent with everything that is good about America, for it locks people in poverty and denies them the interest and en- thusiasm to get a job\u2014for many, many years the welfare laws of America were administered by people who were wor- ried about the sociological problems of the poor. I am hopeful that across America the offices that are helping welfare people will be job training, will be jobs-ori- ented, will be talking about training and education, and how people can get off welfare instead of finding ways to assure them that they can stay on. This bill is going to say most Ameri- cans work, and we are going to ask that welfare recipients work. We will give them training. We will give them child care. But we will say, you ought to work because through work, you get responsibility, and through responsibil- ity, you and your families get the joy of living. Second, simple as it sounds, we are going to ask parents to take care of their children. We stress personal re- sponsibility. I can predict that across this land, as millions of welfare recipi- ents who are not working and have children get jobs, guess who will be the happiest about it? Their children. For they do not like it any more than any- one else that they are locked in, and so are their parents, in poverty. Third, we are going to change the culture of welfare. How obvious it is\u2014 had we changed this culture a few dec- ades ago and said the principle of wel- fare is a short-lived assistance while you attempt to get a job and take care of yourself, we would not have the wel- fare problem we have in America today. Fourth, we will end the futile and cumbersome regulations of the Federal Government and its bureaucrats who set such stringent requirements that they assume a degree of arbitrariness that people cannot even make sense of getting on and off of welfare, and those running them in the State govern- ments are constantly looking through five volumes of regulations to see just what they can do. Fifth, and finally, and this should not go in any sheepish manner as if we are embarrassed to say it, we are going to save money. What is wrong with that? The taxpayers of America have been paying for a program that does not work. They will be paying now for a program that at least has a chance of working. I am very hopeful those leaders, in- cluding the Catholic hierarchy of America, who I generally talk to and seek advice from, I am hopeful that they understand there is a lot more to welfare reform and to trying to help the poor people than to continue pro- grams that exchange money and give them benefits, for they, too, may find them more responsible and more inde- pendent and doing for themselves. I be- lieve this has a chance of working, and I think when we adopt it tonight, it is going to be historic. I ask unanimous consent that a de- tailed analysis of the savings to the Federal budget in all categories, made by June O’Neill, dated August 1 be printed in the RECORD. There being no objection, the mate- rial was ordered to be printed in the RECORD, as follows: U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, August 1, 1996. Hon. PETE V. DOMENICI, Chairman, Committee on the Budget, U.S. Sen- ate, Washington, DC. DEAR MR. CHAIRMAN: The Congressional Budget Office (CBO) has reviewed the Con- ference Report on H.R. 3734, the Personal Re- sponsibility and Work Opportunity Rec- onciliation Act of 1996. The bill would re- place federal payments under the current Aid to Families with Dependent Children program with a block grant to states, re- strict the eligibility of legal aliens for wel- fare benefits, modify the benefits and eligi- bility requirements in the Food Stamp pro- gram, increase funding for child care pro- grams, and tighten the eligibility require- ments for disabled children under the Sup- plemental Security Income program. Although the estimate assumes that the bill will be enacted by September 1, 1996, its impact on direct spending and revenues in 1996 is estimated to be negligible. The bill would reduce federal spending by $3.0 billion in 1997 and by $54.1 billion over the 1997 2002 period, as well as increase revenues by $60 million and $394 million over these respec- tive periods. Detailed tables are enclosed. For the most part, the underlying assump- tions and methodology are described in CBO’s estimates for the House- and Senate- reported versions of the bill (see House Re- port 104 651 and Senate Print 104 59). In addition to its federal budgetary im- pacts, the bill would have a significant im- pact on the budgets of state, local, and tribal governments. A statement on the intergov- ernmental and private-sector mandates in the bill is also enclosed. If you wish further details on this esti- mate, we will be pleased to provide them. Sincerely, JUNE E. O’NEILL, Director. SUMMARY TABLE.\u2014FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1966; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1966; ASSUMES ENACTMENT DATE BY SEPTEMBER 1, 1966 [By fiscal year, in millions of dollars] 1995 1996 1997 1998 1999 2000 2001 2002 7 year total Projected Direct Spending Under Current Law: Family Support Payments a …………………………………………………………………………………………………….. 18,066 18,371 18,805 19,307 19,935 20,557 21,245 21,937 Food Stamp Program b …………………………………………………………………………………………………………… 25,554 26,220 28,094 28,702 31,092 32,476 33,847 35,283 Supplemental Security Income ………………………………………………………………………………………………… 24,510 24,017 27,904 30,210 32,576 37,995 34,515 40,348 Medicaid ………………………………………………………………………………………………………………………………. 89,070 95,766 105,081 115,438 126,306 138,514 151,512 166.444 Child Nutrition c …………………………………………………………………………………………………………………….. 7,899 8,428 8,898 9,450 10,012 10,580 11,166 11,767 Old-Age, Survivors and Disability Insurance …………………………………………………………………………….. 333,273 348,186 365,403 383,402 402,351 422,412 444,081 466,767 Foster Care d …………………………………………………………………………………………………………………………. 3,282 3,840 4,285 4,667 5,083 5,506 5,960 6,433 Social Services Block Grant ……………………………………………………………………………………………………. 2,797 2,880 3,010 3,050 3,000 2,920 2,870 2,840 Earned Income Tax Credit ………………………………………………………………………………………………………. 15,224 18,440 20,191 20,894 21,691 22,586 23,412 24,157 Maternal and Child Health …………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 Total …………………………………………………………………………………………………………………………….. 519,715 546,168 581,571 616,140 652,106 693,186 728,608 775,976 Proposed Changes: Family Support Payments a …………………………………………………………………………………………………….. 0 (*) 868 882 897 762 456 \u00a5146 3,720 Food Stamp Program b …………………………………………………………………………………………………………… 0 (*) \u00a52,093 \u00a53,939 \u00a54,129 \u00a54,194 \u00a54,334 \u00a54,568 \u00a523,260 Supplemental Security Income ………………………………………………………………………………………………… 0 (*) \u00a5793 \u00a53,526 \u00a54,280 \u00a54,824 \u00a54,344 \u00a54,958 \u00a522,725 Mediciad ………………………………………………………………………………………………………………………………. 0 0 \u00a538 \u00a5514 \u00a5567 \u00a5581 \u00a5948 \u00a51,433 4,082 Child Nutrition c …………………………………………………………………………………………………………………….. 0 (*) \u00a5128 \u00a5403 \u00a5494 \u00a5553 \u00a5605 \u00a5670 \u00a52,853 Old-Age, Survivors and Disability Insurance …………………………………………………………………………….. 0 0 \u00a55 \u00a510 \u00a515 \u00a515 \u00a520 \u00a520 \u00a585 Foster Care d …………………………………………………………………………………………………………………………. 0 (*) 68 25 16 31 41 51 232 Social Services Block Grant ……………………………………………………………………………………………………. 0 0 \u00a5375 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a52,475 Earned Income Tax Credit ………………………………………………………………………………………………………. 0 0 \u00a5445 \u00a5456 \u00a5463 \u00a5480 \u00a5493 \u00a5515 \u00a52,852 Maternal and Child Health …………………………………………………………………………………………………….. 0 0 18 35 50 50 50 50 253 Total …………………………………………………………………………………………………………………………….. 0 (*) \u00a52,923 \u00a58,326 \u00a59,404 \u00a510,224 \u00a510,618 \u00a512,630 \u00a554,127 Revenues: Earned Income Tax Credit ………………………………………………………………………………………………. 0 (*) 60 61 62 65 68 78 394 Net Deficit Effect ………………………………………………………………………………………………………………………….. 0 (*) \u00a52,983 \u00a58,387 \u00a59,466 \u00a510,289 \u00a510,688 \u00a512,706 \u00a554,521 Projected Direct Spending Under Proposal: Family Support Payments a …………………………………………………………………………………………………….. 18,086 18,371 19,673 20,189 20,832 21,319 21,701 21,791 Food Stamp Program b …………………………………………………………………………………………………………… 25,554 26,220 26,001 25,763 26,963 28,282 29,513 30,715 Supplemental Security Income ………………………………………………………………………………………………… 24,510 24,017 27,111 26,684 28,296 33,171 30,171 36,390 Medicaid ………………………………………………………………………………………………………………………………. 89,070 95,786 105,043 114,924 125,799 137,573 150,564 165,011 Child Nutrition c …………………………………………………………………………………………………………………….. 7,898 8,428 8,770 9,047 8,516 10,027 10,561 11,097 Old-Age, Survivors and Disability Insurance …………………………………………………………………………….. 333,273 348,186 365,398 383,382 402,336 422,397 44,061 486,747 Foster Care d …………………………………………………………………………………………………………………………. 3,282 3,840 4,363 4,712 5,099 5,537 6,001 6,484 Social Services Block Grant ……………………………………………………………………………………………………. 2,797 2,880 2,636 2,630 2,560 2,500 2,450 2,420 Earned Income Tax Credit ………………………………………………………………………………………………………. 15,224 18,440 19,748 20,438 21,228 22,106 22,919 23,642 Maternal and Child Health …………………………………………………………………………………………………….. 0 0 16 35 50 50 50 50 CONGRESSIONAL RECORD \u2014 SENATE S9407August 1, 1996 SUMMARY TABLE.\u2014FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1966; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1966; ASSUMES ENACTMENT DATE BY SEPTEMBER 1, 1966\u2014Continued [By fiscal year, in millions of dollars] 1995 1996 1997 1998 1999 2000 2001 2002 7 year total Total …………………………………………………………………………………………………………………………….. 519,715 546,168 578,748 607,814 642,701 682,982 717,991 763,347 *Amounts less than $500,000. a Under current law, Family Support Payments include spending on Aid to Families with Dependent Children (AFDC), AFDC-related child care, administrative costs for child support enforcement, net federal savings from child support col- lections, and the Job Opportunities and Basic Skills Training program (JOBS). Under proposed law, Family Support Payments would include spending on the Temporary Assistance for Needy Families Block Grant, administrative costs for child support enforcement, the Child Care Block Grant, and net federal savings from child support collections. b Food Stamps includes Nutrition Assistance for Puerto Rico under both current law and proposed law, and the Emergency Food Assistance Program under proposed law. c Child Nutrition Programs refer to direct spending authorized by the National School Lunch Act and the Child Nutrition Act. d Under current law, Foster Care Includes Foster Care, Adoption Assistance, Independent Living, and Family Preservation and Support. Notes: Details may not add to totals because of rounding. SUMMARY TABLE II.\u2014FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE I\u2014TEMPORARY ASSISTANCE FOR NEEDY FAMILIES BLOCK GRANT; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1996; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996 [By fiscal year, in millions of dollars] 1996 1997 1998 1999 2000 2001 2002 7-yeartotal Direct Spending: Title I: Temporary Assistance for Needy Families Block Grant Budget Authority ……………………………………………………………………………………………………………………………………………………………… 10 \u00a5212 \u00a51,125 \u00a5969 \u00a5837 \u00a51,109 \u00a51,839 \u00a56,100 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) \u00a5571 \u00a5945 \u00a5819 \u00a5667 \u00a51,064 \u00a51,814 \u00a55,889 Title II: Supplemental Security Income Budget Authority ……………………………………………………………………………………………………………………………………………………………… (*) \u00a5408 \u00a51,031 \u00a51,525 \u00a51,869 \u00a51,729 \u00a52,048 \u00a58,610 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) \u00a5408 \u00a51,031 \u00a51,525 \u00a51,869 \u00a51,729 \u00a52,048 \u00a58,610 Title III: Child Support Enforcement Budget Authority ……………………………………………………………………………………………………………………………………………………………… 88 \u00a521 144 168 183 110 74 746 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) 25 148 173 183 110 74 712 Title IV: Restricting Welfare and Public Benefits for Aliens Budget Authority ……………………………………………………………………………………………………………………………………………………………… (*) \u00a51,174 \u00a53,947 \u00a54,311 \u00a54,652 \u00a54,525 \u00a55,038 \u00a523,655 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) \u00a51,174 \u00a53,947 \u00a54,311 \u00a54,652 \u00a54,525 \u00a55,038 \u00a523,655 Title V: Child Protection Budget Authority ……………………………………………………………………………………………………………………………………………………………… 6 86 6 6 6 6 6 122 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) 68 25 6 6 6 6 117 Title VI: Child Care Budget Authority ……………………………………………………………………………………………………………………………………………………………… (*) 1,957 2,067 2,167 2,367 2,567 2,717 13,852 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) 1,635 1,975 2,082 2,227 2,377 2,482 12,778 Title VII: Child Nutrition Programs Budget Authority ……………………………………………………………………………………………………………………………………………………………… (*) \u00a5151 \u00a5449 \u00a5505 \u00a5563 \u00a5615 \u00a5680 \u00a52,963 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) \u00a5126 \u00a5403 \u00a5494 \u00a5553 \u00a5605 \u00a5670 \u00a52,853 Title VIII: Food Stamps and Commodity Distribution Budget Authority ……………………………………………………………………………………………………………………………………………………………… (*) \u00a51,792 \u00a53,539 \u00a53,918 \u00a54,282 \u00a54,580 \u00a54,990 \u00a523,103 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) \u00a51,792 \u00a53,539 \u00a53,918 \u00a54,282 \u00a54,580 \u00a54,990 \u00a523,103 Title IX: Miscellaneous Budget Authority ……………………………………………………………………………………………………………………………………………………………… (*) \u00a5591 \u00a5594 \u00a5597 \u00a5608 \u00a5618 \u00a5634 \u00a53,642 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) \u00a5578 \u00a5609 \u00a5597 \u00a5608 \u00a5618 \u00a5634 \u00a53,644 Total Direct Spending: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 104 \u00a52,296 \u00a58,468 \u00a59,504 \u00a510,265 \u00a510,493 \u00a512,430 \u00a553,353 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) \u00a52,923 \u00a58,326 \u00a59,404 \u00a510,224 \u00a510,618 \u00a512,630 \u00a554,127 Direct spending: Repeal AFDC, Emergency Assistance, and JOBS: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… (*) \u00a58,021 \u00a516,550 \u00a517,003 \u00a517,439 \u00a517,893 \u00a518,342 \u00a519,247 Outlays …………………………………………………………………………………………………………………………………………………………………… (*) \u00a57,925 \u00a516,510 \u00a516,973 \u00a517,409 \u00a517,863 \u00a518,322 \u00a595,001 Repeal of Child Care Programs: a Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 \u00a51,405 \u00a51,480 \u00a51,540 \u00a51,595 \u00a51,655 \u00a51,715 \u00a59,390 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 \u00a51,345 \u00a51,475 \u00a51,535 \u00a51,590 \u00a51,650 \u00a51,710 \u00a59,305 Authorize Temporary Family Assistance Block Grant: b Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… (*) 8,368 16,389 16,389 16,389 16,389 16,389 90,314 Outlays …………………………………………………………………………………………………………………………………………………………………… (*) 8,300 16,389 16,389 16,389 16,389 16,389 90,246 Population and Poverty Adjustment to the Temporary Family Assistance Block Grant: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 0 87 174 261 278 0 800 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 0 87 174 261 278 0 800 Food Stamp Program: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 0 \u00a55 \u00a510 \u00a515 \u00a515 0 \u00a545 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 0 \u00a55 \u00a510 \u00a515 \u00a515 0 \u00a545 Contingency Fund: c Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 107 210 313 393 473 565 2,061 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 107 210 313 393 473 565 2,061 Food Stamp Program: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 \u00a55 \u00a515 \u00a520 \u00a525 \u00a530 \u00a535 \u00a5130 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 \u00a55 \u00a515 \u00a520 \u00a525 \u00a530 \u00a535 \u00a5130 Study by the Bureau of the Census: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 10 10 10 10 10 10 10 70 Outlays …………………………………………………………………………………………………………………………………………………………………… (*) 4 18 10 10 10 10 62 Research, Evaluations, and National Studies: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 15 15 15 15 15 15 90 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 3 15 15 15 15 15 78 Grants to Indian Tribes that received JOBS Funds: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 8 8 8 8 8 8 46 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 6 8 8 8 8 8 44 Grants to Territories: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 116 116 116 116 116 116 696 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 116 116 116 116 116 116 696 Penalties for State Failure to Meet Work Requirements: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 0 0 \u00a550 \u00a550 \u00a550 \u00a550 \u00a5200 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 0 0 \u00a550 \u00a550 \u00a550 \u00a550 \u00a5200 Grants to States that Reduce Out-of-Wedlock Births: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 0 0 50 50 50 50 200 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 0 0 50 50 50 50 200 Bonus to Reward High Performance States: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 0 0 200 200 200 200 800 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 0 0 200 200 200 200 800 Hold States Harmless for Cost-Neutrality Liabilities: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 50 0 0 0 0 0 50 CONGRESSIONAL RECORD \u2014 SENATES9408 August 1, 1996 SUMMARY TABLE II.\u2014FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE I\u2014TEMPORARY AS- SISTANCE FOR NEEDY FAMILIES BLOCK GRANT; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1996; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996\u2014Continued [By fiscal year, in millions of dollars] 1996 1997 1998 1999 2000 2001 2002 7-yeartotal Outlays …………………………………………………………………………………………………………………………………………………………………… 0 50 0 0 0 0 0 50 Establish Rainy Day Loan Fund: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 Extension of Transitional Medicaid Benefits: Medicaid: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 0 0 180 390 400 210 1,180 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 0 0 180 390 400 210 1,180 Increased Medicaid Administrative Payment: Medicaid: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 500 0 0 0 0 0 500 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 75 135 135 135 20 0 500 Effect of the Temporary Assistance Block Grant on the Food Stamp Program: Food Stamp Program: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 45 90 170 430 560 695 1,990 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 45 90 170 430 560 695 1,990 Effect of the Temporary Assistance Block Grant on the Foster Care Program: Foster Care Program: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 0 0 10 25 35 45 115 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 0 0 10 25 35 45 115 Effect of the Temporary Assistance Block Grant on the Medicaid Program: d Medicaid: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 Total Direct Spending, Title I, by account: Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 10 \u00a5752 \u00a51,195 \u00a51,319 \u00a51,642 \u00a52,059 \u00a52,754 \u00a59,710 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 \u00a5684 \u00a51,142 \u00a51,284 \u00a51,607 \u00a52,024 \u00a52,729 \u00a59,459 Food Stamp Program: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 40 70 140 390 515 660 1,815 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 40 70 140 390 515 660 1,815 Foster Care Program: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 0 0 10 25 35 45 115 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 0 0 10 25 35 45 115 Medicaid: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 500 0 180 390 400 210 1,680 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 75 135 315 525 420 210 1,680 Direct Spending Total All Accounts\u2014Title I: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 10 \u00a5212 \u00a51,125 \u00a5989 \u00a5837 \u00a51,109 \u00a51,839 \u00a56,100 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 \u00a5569 \u00a5937 \u00a5819 \u00a5667 \u00a51,054 \u00a51,814 \u00a55,859 * Amounts less than $500,000. a Funds for existing child care programs are repealed by this title, but equal or greater funding for similar activities is restored in Title VI. bStates have the option to begin to operate under the Temporary Assistance for Needy Families Block Grant any time after enactment of this bill. A few states may opt to do so in FY 1996 creating small savings in the AFDC, Emergency Assistance, and JOBS programs and small costs in the TANF program. c The bill appropriates $2 billion for the contingency fund for use in years 1997 through 2001. The estimate shows costs of the contingency fund in 2002 because section 257(b)(2) of the Balanced Budget and Emergency Deficit Control Act of 1985 requires that the baseline shall assume that mandatory programs greater than $50 million dollars are continued. d The bill retains categorical eligibility for Medicaid for families that meet the eligibility criteria for Aid to Families with Dependent Children as they are in current law. FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE II\u2014SUPPLEMENTAL SECURITY INCOME; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1996; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996 [By fiscal year, in millions of dollars] 1996 1997 1998 1999 2000 2001 2002 7-yeartotal Direct Spending: SSI Benefits to Certain Children: Supplemental Security Income: Budget Authority ……………………………………………………………………………………………………………………………………………………… (*) \u00a5125 \u00a5925 \u00a51,450 \u00a51,800 \u00a51,675 \u00a52,000 \u00a57,975 Outlays …………………………………………………………………………………………………………………………………………………………………… (*) \u00a5125 \u00a5925 \u00a51,450 \u00a51,800 \u00a51,675 \u00a52,000 \u00a57,975 Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………… (*) (a) (a) (a) (a) (a) (a) (a) Outlays …………………………………………………………………………………………………………………………………………………………………… (*) (a) (a) (a) (a) (a) (a) (a) Food stamps: b Budget Authority ……………………………………………………………………………………………………………………………………………………… (*) 20 130 210 240 265 290 1,155 Outlays …………………………………………………………………………………………………………………………………………………………………… (*) 20 130 210 240 265 290 1,155 Medicaid: Budget Authority ……………………………………………………………………………………………………………………………………………………… (*) \u00a55 \u00a525 \u00a540 \u00a545 \u00a555 \u00a560 \u00a5230 Outlays …………………………………………………………………………………………………………………………………………………………………… (*) \u00a55 \u00a525 \u00a540 \u00a545 \u00a555 \u00a560 \u00a5230 Subtotal provision: Budget Authority ……………………………………………………………………………………………………………………………………………………… (*) \u00a5110 \u00a5820 \u00a51,280 \u00a51,605 \u00a51,465 \u00a51,770 \u00a57,050 Outlays …………………………………………………………………………………………………………………………………………………………………… (*) \u00a5110 \u00a5820 \u00a51,280 \u00a51,605 \u00a51,465 \u00a51,770 \u00a57,050 Reduction in SSI Benefits to Certain Hospitalized Children With Private Insurance: Supplemental Security Income: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 \u00a540 \u00a555 \u00a560 \u00a570 \u00a560 \u00a565 \u00a5350 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 \u00a540 \u00a555 \u00a560 \u00a570 \u00a560 \u00a565 \u00a5350 Funding for Cost of Reviews: c Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 (c) (c) 0 0 0 0 0 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 (c) (c) 0 0 0 0 0 End Payment of Pro-Rated Benefits for Month of Application: Supplemental Security Income: Budget Authority ……………………………………………………………………………………………………………………………………………………… (*) \u00a555 \u00a5130 \u00a5150 \u00a5160 \u00a5165 \u00a5175 \u00a5835 Outlays …………………………………………………………………………………………………………………………………………………………………… (*) \u00a555 \u00a5130 \u00a5150 \u00a5160 \u00a5165 \u00a5175 \u00a5835 Pay Large Retroactive Benefit Amounts in Installments: Supplemental Security Income: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 \u00a5200 \u00a515 \u00a515 \u00a515 \u00a515 \u00a515 \u00a5275 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 \u00a5200 \u00a515 \u00a515 \u00a515 \u00a515 \u00a515 \u00a5275 Tighten Restrictions on Payment of Social Security Benefits to Prisoners: Make Payments to Prison Officials Who Report Ineligible Re- cipients: Old-Age, Survivors and Disability Insurance\u2014benefits saved: d Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 \u00a55 \u00a510 \u00a515 \u00a515 \u00a520 \u00a520 \u00a585 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 \u00a55 \u00a510 \u00a515 \u00a515 \u00a520 \u00a520 \u00a585 Supplemental Security income\u2014benefits saved: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 (*) \u00a55 \u00a510 \u00a510 \u00a510 \u00a510 \u00a545 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 (*) \u00a55 \u00a510 \u00a510 \u00a510 \u00a510 \u00a545 Old-Age, Survivors and Disability Insurance\u2014payments to prison officials: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 Supplemental Security income\u2014payments to prison officials: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 2 4 5 6 6 7 30 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 2 4 5 6 6 7 30 CONGRESSIONAL RECORD \u2014 SENATE S9409August 1, 1996 FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE II\u2014SUPPLEMENTAL SECURITY INCOME; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1996; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996\u2014Continued [By fiscal year, in millions of dollars] 1996 1997 1998 1999 2000 2001 2002 7-yeartotal Subtotal, provision: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 \u00a53 \u00a511 \u00a520 \u00a519 \u00a524 \u00a523 \u00a5100 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 \u00a53 \u00a511 \u00a520 \u00a519 \u00a524 \u00a523 \u00a5100 Total Direct Spending: Supplemental Security Income: Budget Authority ……………………………………………………………………………………………………………………………………………………………… (*) \u00a5418 \u00a51,126 \u00a51,680 \u00a52,049 \u00a51,919 \u00a52.258 \u00a59,450 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) \u00a5418 \u00a51,126 \u00a51,680 \u00a52,049 \u00a51,919 \u00a52.258 \u00a59,450 Food Stamps: b Budget Authority: …………………………………………………………………………………………………………………………………………………………….. (*) 20 130 210 240 265 290 1,155 Outlay …………………………………………………………………………………………………………………………………………………………………………….. (*) 20 130 210 240 265 290 1,155 Medicaid: Budget Authority: …………………………………………………………………………………………………………………………………………………………….. (*) \u00a55 \u00a525 \u00a540 \u00a545 \u00a555 \u00a560 \u00a5230 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) \u00a55 \u00a525 \u00a540 \u00a545 \u00a555 \u00a560 \u00a5230 Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………………… (*) (a) (a) (a) (a) (a) (a) (a) Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) (a) (a) (a) (a) (a) (a) (a) Old-Age, Survivors and Disability Insurance: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 \u00a55 \u00a510 \u00a515 \u00a515 \u00a520 \u00a520 \u00a585 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 \u00a55 \u00a510 \u00a515 \u00a515 \u00a520 \u00a520 \u00a585 Total All Accounts: Budget Authority ………………………………………………………………………………………………………………………………………………………………………….. (*) \u00a5408 \u00a51,031 \u00a51,525 \u00a51,869 \u00a51,729 \u00a52,048 \u00a58,610 Outlays ……………………………………………………………………………………………………………………………………………………………………………………….. (*) \u00a5408 \u00a51,031 \u00a51,525 \u00a51,869 \u00a51,729 \u00a52,048 \u00a58,610 * Denotes less than $500,000. a Proposed to be block-granted elsewhere in the bill. b Includes interactions with other food stamp provisions of the bill. c The bill proposes an adjustment to the discretionary spending caps of $150 million in 1997 and $100 million in 1998 to cover the costs of reviewing 300,000 to 400,000 children on the SSI rolls under the new, tighter criteria. The bill does not, however, directly appropriate that money. Its availability remains contingent on future appropriation action. In addition to those one-time costs of $250 million or more, the bill would require that most disabled children who qual- ify even under the tighter eligibility criteria be reviewed every 3 years to see if their medical condition has improved. That cost, which CBO estimates at about $100 million a year beginning in 1998, could be met by raising the caps on discretionary spending as permitted in P.L. 104 121. The cap adjustment in that law, however, was designed to cover periodic reviews and not the heavy volume of one-time reviews that would be mandated in 1997 by this legislation. d The provision would encourage prison officials to exchange data with SSA by paying them up to $400 for providing information that helps to identify each inmate who receives SSI (and whose benefits should therefore be suspended). In the course of checking that information, SSA would find that some inmates collect OASDI. Therefore, although the language makes no mention of OASDI, savings in that program would result. FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE III\u2014CHILD SUPPORT ENFORCEMENT; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996 [Outlays by fiscal year, in millions of dollars] 1996 1997 1998 1999 2000 2001 2002 1997 2002 New enforcement techniques: State directory of new hires: Family support payment …………………………………………………………………………………………………………………………………………………… 0 0 \u00a51 \u00a54 \u00a56 \u00a59 \u00a510 \u00a530 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 \u00a51 \u00a57 \u00a512 \u00a518 \u00a521 \u00a559 Mediciad …………………………………………………………………………………………………………………………………………………………………………. 0 0 \u00a53 \u00a511 \u00a520 \u00a531 \u00a538 \u00a5102 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 0 \u00a55 \u00a521 \u00a538 \u00a558 \u00a570 \u00a5192 State laws providing expedited enforcement of child support: Family support payment …………………………………………………………………………………………………………………………………………………… 0 0 0 \u00a517 \u00a535 \u00a555 \u00a577 \u00a5185 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 0 \u00a56 \u00a513 \u00a521 \u00a530 \u00a570 Mediciad …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 \u00a55 \u00a511 \u00a518 \u00a526 \u00a559 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 0 0 \u00a528 \u00a559 \u00a594 \u00a5133 \u00a5314 State laws concerning paternity: Family support payment …………………………………………………………………………………………………………………………………………………… 0 \u00a516 \u00a518 \u00a520 \u00a522 \u00a524 \u00a526 \u00a5127 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 \u00a53 \u00a53 \u00a54 \u00a54 \u00a54 \u00a55 \u00a523 Mediciad …………………………………………………………………………………………………………………………………………………………………………. 0 \u00a52 \u00a52 \u00a52 \u00a53 \u00a53 \u00a53 \u00a515 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 \u00a521 \u00a523 \u00a526 \u00a529 \u00a531 \u00a534 \u00a5164 Suspend drivers’ licenses: Family support payment …………………………………………………………………………………………………………………………………………………… 0 \u00a54 \u00a59 \u00a514 \u00a519 \u00a520 \u00a521 \u00a588 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 \u00a52 \u00a55 \u00a58 \u00a512 \u00a512 \u00a513 \u00a552 Mediciad …………………………………………………………………………………………………………………………………………………………………………. 0 \u00a51 \u00a53 \u00a55 \u00a57 \u00a58 \u00a59 \u00a535 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 \u00a57 \u00a517 \u00a527 \u00a538 \u00a541 \u00a543 \u00a5175 Adoption of uniform state laws: Family support payment …………………………………………………………………………………………………………………………………………………… 0 10 2 \u00a57 \u00a511 \u00a515 \u00a521 \u00a541 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 \u00a51 \u00a53 \u00a54 \u00a56 \u00a59 \u00a524 Mediciad …………………………………………………………………………………………………………………………………………………………………………. 0 0 \u00a52 \u00a53 \u00a56 \u00a58 \u00a511 \u00a530 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 10 \u00a51 \u00a513 \u00a521 \u00a529 \u00a541 \u00a595 Subtotal new enforcement ……………………………………………………………………………………………………………………………………………. 0 \u00a519 \u00a546 \u00a5115 \u00a5185 \u00a5254 \u00a5322 \u00a5940 Lost AFDC collections due to reduced cases funded by black grant funds: Family support payment …………………………………………………………………………………………………………………………………………………… 0 0 29 63 142 200 224 658 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 Mediciad …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 0 29 63 142 200 224 658 Eliminate $50 passthrough and exclude gap payments from distribution rules at state option: Family support payment …………………………………………………………………………………………………………………………………………………… 0 \u00a5222 \u00a5236 \u00a5260 \u00a5285 \u00a5311 \u00a5336 \u00a51,850 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 114 122 139 147 164 171 857 Mediciad …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 \u00a5108 \u00a5114 \u00a5121 \u00a5139 \u00a5147 \u00a5165 \u00a5793 Distribute child support arrears to former AFDC familes first: Family support payment …………………………………………………………………………………………………………………………………………………… 0 0 62 69 76 148 183 539 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 \u00a511 \u00a512 \u00a514 \u00a527 \u00a533 \u00a596 Mediciad …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 0 51 57 63 122 150 442 Hold states harmless for lower child support collections: Family support payment …………………………………………………………………………………………………………………………………………………… 0 0 17 29 34 39 29 148 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 Mediciad …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 0 17 29 34 39 29 148 Other Provisions with Bugetary Implications: Automated data processing development: Family support payment …………………………………………………………………………………………………………………………………………………… (*) 83 91 129 129 8 0 440 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 Medicaid …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Subtotal ……………………………………………………………………………………………………………………………………………………………………… (*) 83 91 129 129 8 0 440 Automated data processing operation and maintenance: Family support payment …………………………………………………………………………………………………………………………………………………… 0 12 55 52 52 46 40 257 CONGRESSIONAL RECORD \u2014 SENATES9410 August 1, 1996 FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE III\u2014CHILD SUPPORT ENFORCEMENT; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996\u2014Continued [Outlays by fiscal year, in millions of dollars] 1996 1997 1998 1999 2000 2001 2002 1997 2002 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 Medicaid …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 12 55 52 52 46 40 257 Technical assistance to state programs: Family support payment …………………………………………………………………………………………………………………………………………………… (*) 48 51 50 48 47 45 290 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 Medicaid …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Subtotal ……………………………………………………………………………………………………………………………………………………………………… (*) 48 51 50 48 47 45 290 State obligation to provide services: Family support payment …………………………………………………………………………………………………………………………………………………… 0 0 0 3 11 22 39 75 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 Medicaid …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 0 0 3 11 22 39 75 Federal and state reviews and audits: Family support payment …………………………………………………………………………………………………………………………………………………… 0 3 3 3 3 3 3 20 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 Medicaid …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 3 3 3 3 3 3 20 Grants to States for Visition: Family support payment …………………………………………………………………………………………………………………………………………………… (*) 10 10 10 10 10 10 60 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 Medicaid …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Subtotal ……………………………………………………………………………………………………………………………………………………………………… (*) 10 10 10 10 10 10 60 Optional Modification of Support Orders: Family support payment …………………………………………………………………………………………………………………………………………………… 0 \u00a55 0 10 15 15 20 55 Food stamp program ……………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 Medicaid …………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Subtotal ……………………………………………………………………………………………………………………………………………………………………… 0 \u00a55 0 10 15 15 20 55 Subtotal, Other provisions …………………………………………………………………………………………………………………………………………….. (*) 151 210 258 269 151 157 1,197 Total, by account: Family support payment …………………………………………………………………………………………………………………………………………………………… (*) \u00a581 57 99 142 103 101 421 Food stamp program ……………………………………………………………………………………………………………………………………………………………….. 0 109 100 99 88 76 62 533 Medicaid …………………………………………………………………………………………………………………………………………………………………………………. 0 \u00a53 \u00a58 \u00a527 \u00a546 \u00a568 \u00a588 \u00a5242 Total …………………………………………………………………………………………………………………………………………………………………………………… (*) 25 148 172 184 110 74 712 *Amount less than $500,000. **Budget authority is generally equal to the outlay shown in this table. Where this is not the case, budget authority is shown here: Fam- ily Support Payments Budget Authority\u2014 Automated data processing development …………………………………………………………………………………………………………………………………………… 42 42 91 129 129 8 0 440 Technical assistance to state programs …………………………………………………………………………………………………………………………………………….. 36 44 47 46 48 47 45 314 Grants to States for visitation ………………………………………………………………………………………………………………………………………………………….. 10 10 10 10 10 10 10 70 All other provisions ………………………………………………………………………………………………………………………………………………………………………….. 0 \u00a5222 \u00a595 \u00a591 \u00a545 38 45 ……………. Family support payments: Total BA …………………………………………………………………………………………………………………………………………………… 88 \u00a5127 53 95 142 103 101 455 FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE IV\u2014RESTRICTING WELFARE AND PUBLIC BENEFITS FOR ALIENS; AS ORDERED REPORTED BY THE COMMITTEE ON CONFERENCE ON JULY 31, 1996; ASSUMED TO BE ENACTED BY SEPTEMBER 1, 1996 [By fiscal year, in millions of dollars] 1996 1997 1998 1999 2000 2001 2002 7-yeartotal Direct Spending: Supplemental Security Income: Budget Authority ……………………………………………………………………………………………………………………………………………………………… (1) \u00a5375 \u00a52,400 \u00a52,600 \u00a52,775 \u00a52,425 \u00a52,700 \u00a513,275 Outlays …………………………………………………………………………………………………………………………………………………………………………… (1) \u00a5375 \u00a52,400 \u00a52,600 \u00a52,775 \u00a52,425 \u00a52,700 \u00a513,275 Medicaid: Budget Authority ……………………………………………………………………………………………………………………………………………………………… (1) \u00a5105 \u00a5615 \u00a5815 \u00a51,015 \u00a51,245 \u00a51,495 \u00a55,290 Outlays …………………………………………………………………………………………………………………………………………………………………………… (1) \u00a5105 \u00a5615 \u00a5815 \u00a51,015 \u00a51,245 \u00a51,495 \u00a55,290 Family Support Payments: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 (2) (2) (2) (2) (2) (2) (2) Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 (2) (2) (2) (2) (2) (2) (2) Food Stamps: 3 Budget Authority ……………………………………………………………………………………………………………………………………………………………… (1) \u00a5470 \u00a5700 \u00a5660 \u00a5630 \u00a5610 \u00a5590 \u00a53,660 Outlays …………………………………………………………………………………………………………………………………………………………………………… (1) \u00a5470 \u00a5700 \u00a5660 \u00a5630 \u00a5610 \u00a5590 \u00a53,660 Child nutrition: 4 Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 Earned income tax credit: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 \u00a5224 \u00a5232 \u00a5236 \u00a5242 \u00a5245 \u00a5251 \u00a51,430 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 \u00a5224 \u00a5232 \u00a5236 \u00a5242 \u00a5245 \u00a5251 \u00a51,430 Total Direct Spending: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 \u00a51,174 \u00a53,947 \u00a54,311 \u00a54,662 \u00a54,525 \u00a55,036 \u00a523,655 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 \u00a51,174 \u00a53,947 \u00a54,311 \u00a54,662 \u00a54,525 \u00a55,036 \u00a523,655 Revenues: Earned income tax credit ………………………………………………………………………………………………………………………………………………….. 0 28 29 29 30 30 31 177 Deficit Effect …………………………………………………………………………………………………………………………………………………………………………………… (1) \u00a51,202 \u00a53,976 \u00a54,340 \u00a54,692 \u00a54,555 \u00a55,067 \u00a523,832 1 Denotes less than $500,000. 2 Proposed to be block-granted elsewhere in the bill. 3 Includes interactions with other food stamp provisions of the bill. 4 Section 742 of the bill, in Title VII, specifically states that benefits under the school breakfast and school lunch programs shall not be contingent on students’ immigration or citizenship status. Therefore, CBO estimates no savings in the child nutrition program from the proposed restrictions contained in Title IV on immigrants’ eligibility for federal benefits. Note: The CBO estimate assumes that the proposed exemption for public health programs that provide immunizations will be modified or interpreted to permit continued Medicaid funding for pediatric vaccines. FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE V\u2014CHILD PROTECTION; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1996; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996 [By fiscal year, in millions of dollars] 1996 1997 1998 1999 2000 2001 2002 1996 2002 Direct Spending: Extend Enhanced Match Rate for Computer Purchases for Foster Care Data Collection: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 80 0 0 0 0 0 80 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 66 14 0 0 0 0 80 National Random Sample Study of Child Welfare: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 6 6 6 6 6 6 6 42 CONGRESSIONAL RECORD \u2014 SENATE S9411August 1, 1996 FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE V\u2014CHILD PROTECTION; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1996; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996\u2014Continued [By fiscal year, in millions of dollars] 1996 1997 1998 1999 2000 2001 2002 1996 2002 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) 2 11 6 6 6 6 37 Total Direct Spending: Foster Care: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 6 86 6 6 6 6 6 122 Outlays …………………………………………………………………………………………………………………………………………………………………………… (*) 68 25 6 6 6 6 117 FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE VI\u2014CHILD CARE; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1996; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996 [By fiscal year, in millions of dollars] 1996 1997 1998 1999 2000 2001 2002 1996 2002 Direct Spending: New Child Care Block Grant: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 1,967 2,067 2,167 2,367 2,567 2,717 13,852 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 1,635 1,975 2,082 2,227 2,377 2,482 12,778 Note: For states to draw down the child care block grant remainder, this subtitle requires them to maintain the greater of fiscal year 1994 or 1995 spending. FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE VII\u2014CHILD NUTRITION PROGRAMS; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1996; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996 [Outlays by fiscal year, in millions of dollars] Section 1996 1997 1998 1999 2000 2001 2002 1996 2002 Direct Spending: 704 Special assistance: Extension of payment period: Budget Authority ……………………………………………………………………………………………………………………………………………………… ……………. (*) (*) 1 1 1 1 4 Outlays …………………………………………………………………………………………………………………………………………………………………… ……………. (*) (*) 1 1 1 1 4 Rounding rules for lunch, breakfast, and supplement rates: Budget Authority ……………………………………………………………………………………………………………………………………………………… ……………. \u00a52 \u00a515 \u00a515 \u00a515 \u00a515 \u00a515 \u00a577 Outlays …………………………………………………………………………………………………………………………………………………………………… ……………. \u00a51 \u00a510 \u00a515 \u00a515 \u00a515 \u00a515 \u00a571 706 Summer food service program for children: Budget Authority ……………………………………………………………………………………………………………………………………………………… ……………. \u00a524 \u00a529 \u00a529 \u00a534 \u00a534 \u00a539 \u00a5189 Outlays …………………………………………………………………………………………………………………………………………………………………… ……………. \u00a518 \u00a529 \u00a529 \u00a534 \u00a534 \u00a539 \u00a5184 708 Child and adult care food program: Budget Authority ……………………………………………………………………………………………………………………………………………………… ……………. \u00a5105 \u00a5380 \u00a5430 \u00a5480 \u00a5535 \u00a5595 \u00a52,525 Outlays …………………………………………………………………………………………………………………………………………………………………… ……………. \u00a590 \u00a5340 \u00a5420 \u00a5470 \u00a5525 \u00a5585 \u00a52,430 723 School breakfast program authorization: Budget Authority ……………………………………………………………………………………………………………………………………………………… ……………. \u00a510 \u00a515 \u00a522 \u00a525 \u00a522 \u00a522 \u00a5116 Outlays …………………………………………………………………………………………………………………………………………………………………… ……………. \u00a58 \u00a514 \u00a521 \u00a525 \u00a522 \u00a522 \u00a5112 731 Nutrition education and training programs: Budget Authority ……………………………………………………………………………………………………………………………………………………… ……………. \u00a510 \u00a510 \u00a510 \u00a510 \u00a510 \u00a510 \u00a560 Outlays …………………………………………………………………………………………………………………………………………………………………… ……………. \u00a510 \u00a510 \u00a510 \u00a510 \u00a510 \u00a510 \u00a560 Total Child Nutrition Programs: Direct Spending: Budget Authority ……………………………………………………………………………………………………………………………………………………………… ……………. \u00a5151 \u00a5449 \u00a5505 \u00a5563 \u00a5615 \u00a5680 \u00a52,963 Outlays …………………………………………………………………………………………………………………………………………………………………………… ……………. \u00a5128 \u00a5403 \u00a5494 \u00a5553 \u00a5605 \u00a5670 \u00a52,853 *Less than $500,000. Note: Details may not add to totals because of rounding. FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE VIII\u2014FOOD STAMPS AND COMMODITY DISTRIBUTION; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1996; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996 [Outlays by fiscal year, in millions of dollars] Section 1996 1997 1998 1999 2000 2001 2002 1996 2002 801 Definition of certification period ………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 802 Definition of coupon ……………………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 803 Treatment of children living at home ……………………………………………………………………………………………………………………………………….. 0 \u00a5115 \u00a5245 \u00a5255 \u00a5265 \u00a5280 \u00a5290 \u00a51,450 804 Adjustment of thrifty food plan ……………………………………………………………………………………………………………………………………………….. 0 \u00a5935 \u00a5980 \u00a51,025 \u00a51,070 \u00a51,115 \u00a51,155 \u00a56,280 805 Definition of homeless individual …………………………………………………………………………………………………………………………………………….. 0 (*) (*) (*) (*) (*) (*) (*) 806 State option for eligibility standards ………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 807 Earnings of students ………………………………………………………………………………………………………………………………………………………………. 0 \u00a510 \u00a510 \u00a510 \u00a510 \u00a515 \u00a515 \u00a570 808 Energy assistance ………………………………………………………………………………………………………………………………………………………………….. 0 \u00a5125 \u00a5170 \u00a5175 \u00a5175 \u00a5180 \u00a5180 \u00a51,005 809 Deductions from income: Standard deduction at $134 each year a …………………………………………………………………………………………………………………………… 0 0 \u00a5555 \u00a5770 \u00a5990 \u00a51,220 \u00a51,465 \u00a55,000 Homeless shelter allowance ……………………………………………………………………………………………………………………………………………… 0 \u00a51 \u00a51 \u00a52 \u00a53 \u00a53 \u00a55 \u00a515 Cap excess shelter deduction at $247 through 12\/31\/96. $250 from 1\/1\/97 through FY98 $275 in FY99 and FY00 and $300 in each later fiscal year …………………………………………………………………………………………………………………………………………………… 0 \u00a5350 \u00a5570 \u00a5505 \u00a5565 \u00a5490 \u00a5550 \u00a53,030 State option for mandatory standard utility allowance and otherwise allow change between SUA and actual costs only at recertifi- cation …………………………………………………………………………………………………………………………………………………………………………………. 0 \u00a535 \u00a570 \u00a575 \u00a580 \u00a580 \u00a585 \u00a5425 810 Vehicle Allowance at $4,650 FY97 2002 ………………………………………………………………………………………………………………………………….. 0 \u00a545 \u00a5140 \u00a5175 \u00a5200 \u00a5225 \u00a5245 \u00a51,030 811 Vendor payments for transitional housing counted as income ……………………………………………………………………………………………………. 0 \u00a510 \u00a510 \u00a510 \u00a510 \u00a510 \u00a510 \u00a560 812 Simplified calculation of income for the self-employed ……………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 813 Doubled penalties for violating Food Stamp program requirements …………………………………………………………………………………………….. 0 (*) (*) (*) (*) (*) (*) (*) 814 Disqualification of convicted individuals ………………………………………………………………………………………………………………………………….. 0 (*) (*) (*) (*) (*) (*) (*) 815 Disqualification ……………………………………………………………………………………………………………………………………………………………………… 0 \u00a55 \u00a55 \u00a55 \u00a55 \u00a55 \u00a55 \u00a530 816 Caretaker exemption ……………………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 817 Employment and training ………………………………………………………………………………………………………………………………………………………… 0 2 6 9 11 13 15 56 818 Food stamp eligibility ……………………………………………………………………………………………………………………………………………………………… 0 \u00a515 \u00a521 \u00a527 \u00a527 \u00a527 \u00a527 \u00a5145 819 Comparable treatment for disqualification ……………………………………………………………………………………………………………………………….. 0 \u00a520 \u00a520 \u00a520 \u00a520 \u00a520 \u00a525 \u00a5125 820 Disqualification for receipt of multiple food stamp benefits ………………………………………………………………………………………………………. 0 \u00a55 \u00a55 \u00a55 \u00a55 \u00a55 \u00a55 \u00a530 821 Disqualification of fleeing felons ……………………………………………………………………………………………………………………………………………… 0 (*) (*) (*) (*) (*) (*) (*) 822 Cooperation with child support agencies Option to require custodial parent cooperation: Food Stamps …………………………………………………………………………………………………………………………………………………………………………… 0 \u00a55 \u00a510 \u00a515 \u00a520 \u00a520 \u00a520 \u00a590 Family Support Payments …………………………………………………………………………………………………………………………………………………………. 0 5 10 10 15 15 15 70 823 Disqualification relating to child support arrears ………………………………………………………………………………………………………………………. 0 \u00a55 \u00a515 \u00a525 \u00a525 \u00a530 \u00a530 \u00a5130 824 Work requirement …………………………………………………………………………………………………………………………………………………………………… 0 \u00a5160 \u00a5830 \u00a5960 \u00a51,010 \u00a51,050 \u00a51,100 \u00a55,110 825 Encourage electronic benefit transfer system ……………………………………………………………………………………………………………………………. 0 (*) (*) (*) (*) (*) (*) (*) 826 Value of minimum allotment …………………………………………………………………………………………………………………………………………………… 0 0 \u00a530 \u00a530 \u00a530 \u00a535 \u00a535 \u00a5160 827 Benefits on recertification ……………………………………………………………………………………………………………………………………………………….. 0 \u00a525 \u00a525 \u00a525 \u00a525 \u00a530 \u00a530 \u00a5160 828 Optional combined allotment for expedited households ……………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 829 Failure to comply with other means-tested public assistance programs ……………………………………………………………………………………… 0 \u00a525 \u00a525 \u00a525 \u00a525 \u00a525 \u00a525 \u00a5150 CONGRESSIONAL RECORD \u2014 SENATES9412 August 1, 1996 FEDERAL BUDGET EFFECTS OF H.R. 3734, THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE VIII\u2014FOOD STAMPS AND COMMODITY DISTRIBUTION; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1996; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996\u2014Continued [Outlays by fiscal year, in millions of dollars] Section 1996 1997 1998 1999 2000 2001 2002 1996 2002 830 Allotments for households residing in centers …………………………………………………………………………………………………………………………… 0 (*) (*) (*) (*) (*) (*) (*) 831 Condition precedent for approval of retail stores and wholesale food concerns ……………………………………………………………………………. 0 0 0 0 0 0 0 0 832 Authority to establish authorization periods ………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 833 Information for verifying eligibility for authorization ………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 834 Waiting period for stores that fail to meet authorization criteria ………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 835 Operation of food stamp offices ………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 836 State employee and training standards ……………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 837 Exchange of law enforcement information ………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 838 Expedited coupon service ………………………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 839 Withdrawing fair hearing requests …………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 840 Income, eligibility, and immigration status verification systems …………………………………………………………………………………………………. 0 \u00a55 \u00a55 \u00a55 \u00a55 \u00a55 \u00a55 \u00a530 841 Investigations ………………………………………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 842 Disqualification of retailers who intentionally submit falsified applications …………………………………………………………………………………. 0 0 0 0 0 0 0 0 843 Disqualification of retailers who are disqualified under the WIC program ……………………………………………………………………………………. 0 0 0 0 0 0 0 0 844 Collection of overissuances ……………………………………………………………………………………………………………………………………………………… 0 \u00a525 \u00a530 \u00a530 \u00a525 \u00a525 \u00a530 \u00a5165 845 Authority to suspend stores violating program requirements pending administrative and judicial review ……………………………………….. 0 0 0 0 0 0 0 0 846 Expanded criminal forfeiture for violations ……………………………………………………………………………………………………………………………….. 0 (b) (b) (b) (b) (b) (b) (b) 847 Limitation of federal match …………………………………………………………………………………………………………………………………………………….. 0 \u00a52 \u00a52 \u00a52 \u00a52 \u00a52 \u00a52 \u00a512 848 Standards for administration …………………………………………………………………………………………………………………………………………………… 0 0 0 0 0 0 0 0 849 Work supplementation or support program ……………………………………………………………………………………………………………………………….. 0 5 15 20 30 30 30 130 850 Waiver authority …………………………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 851 Response to waivers ………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 852 Employment initiatives program ………………………………………………………………………………………………………………………………………………. 0 \u00a51 \u00a52 \u00a52 \u00a52 \u00a52 \u00a52 \u00a511 853 Reauthorization ………………………………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 854 Simplified Food Stamp program ………………………………………………………………………………………………………………………………………………. 0 0 5 10 20 20 25 80 855 A study of the use of food stamps to purchase vitamins and minerals ………………………………………………………………………………………. 0 0 0 0 0 0 0 0 856 Deficit reduction …………………………………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 871 Emergency Food Assistance program ……………………………………………………………………………………………………………………………………….. 0 100 100 100 100 100 100 600 872 Food bank demonstration project …………………………………………………………………………………………………………………………………………….. 0 0 0 0 0 0 0 0 873 Hunger prevention programs ……………………………………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 874 Report on entitlement commodity processing ……………………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 891 Provisions to encourage electronic benefit systems c …………………………………………………………………………………………………………………. 0 0 0 0 0 0 0 0 Interactions among provisions ………………………………………………………………………………………………………………………………………………….. 0 20 101 111 136 141 166 674 Total Food Stamp Program: Budget Authority ……………………………………………………………………………………………………………………………………………………………………… 0 \u00a51,792 \u00a53,539 \u00a53,918 \u00a54,282 \u00a54,580 \u00a54,990 \u00a523,103 Outlays …………………………………………………………………………………………………………………………………………………………………………………… 0 \u00a51,792 \u00a53,539 \u00a53,918 \u00a54,282 \u00a54,580 \u00a54,990 \u00a523,103 *Less than $500,000. Note: Details may not add to totals because of rounding. a No savings are shown in fiscal year 1997 for setting the standard deduction at $134 because the fiscal year 1997 Agriculture Appropriations Act which cleared the Congress before this bill cleared, contained a similar provision. b Any proceeds from this provision would be used to reimburse law enforcement agencies or for retail compliance investigations. Thus, CBO estimates no net effect on the federal budget, though funds could be received in one year and not spent until a later year. c This provision is included elsewhere in the bill. If the exemption from Regulation ”e” were not enacted, there likely would be costs to the federal government. CBO estimates these costs would be small. FEDERAL BUDGET EFFECTS OF THE PERSONAL RESPONSIBILITY AND WORK OPPORTUNITY RECONCILIATION ACT OF 1996; TITLE IX\u2014MISCELLANEOUS; AS ORDERED REPORTED BY THE COMMITTEE OF CONFERENCE ON JULY 31, 1996; ASSUMES ENACTMENT BY SEPTEMBER 1, 1996. [By fiscal year in millions of dollars] Section 1996 1997 1998 1999 2000 2001 2002 1996 2002 Direct Spending and Revenues: 908 Reduction in block grants to States for social services: Social Services Block Grant: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a52,520 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 \u00a5375 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a52,475 909 Denial of earned income credit on basis of disqualified income: a Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 \u00a5170 \u00a5168 \u00a5151 \u00a5146 \u00a5152 \u00a5160 \u00a5947 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 \u00a5170 \u00a5168 \u00a5151 \u00a5146 \u00a5152 \u00a5160 \u00a5947 Revenue ………………………………………………………………………………………………………………………………………………………………………….. 0 26 27 27 23 23 25 151 Net Deficit Effect …………………………………………………………………………………………………………………………………………………………….. 0 \u00a5196 \u00a5195 \u00a5178 \u00a5169 \u00a5175 \u00a5185 \u00a51,098 910 Modification of adjusted gross income definition for earned income credits: a Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 \u00a598 \u00a5106 \u00a5112 \u00a5120 \u00a5129 \u00a5138 \u00a5704 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 \u00a598 \u00a5106 \u00a5112 \u00a5120 \u00a5129 \u00a5138 \u00a5704 Revenue ………………………………………………………………………………………………………………………………………………………………………….. 0 15 18 20 22 25 28 128 Net Deficit Effect …………………………………………………………………………………………………………………………………………………………….. 0 \u00a5113 \u00a5125 \u00a5133 \u00a5141 \u00a5154 \u00a5166 \u00a5832 911 Abstinence Education: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 50 50 50 50 50 50 300 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 18 35 50 50 50 50 253 Interaction among revenue provisions: Budget Authority ……………………………………………………………………………………………………………………………………………………………… 0 47 50 36 28 33 34 229 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 47 50 36 28 33 34 229 Revenue ………………………………………………………………………………………………………………………………………………………………………….. 0 \u00a59 \u00a513 \u00a514 \u00a510 \u00a510 \u00a56 \u00a562 Net Deficit Effect …………………………………………………………………………………………………………………………………………………………….. 0 56 63 50 38 43 40 291 Total Miscellaneous\u2014Title IX: Direct Spending: Social Services Block Grant: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a52,520 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 \u00a5375 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a5420 \u00a52,475 Earned Income Tax Credit: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 \u00a5221 \u00a5224 \u00a5227 \u00a5238 \u00a5248 \u00a5264 \u00a51,422 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 \u00a5221 \u00a5224 \u00a5227 \u00a5238 \u00a5248 \u00a5264 \u00a51,422 Maternal and Child Health Services Block Grant: Budget Authority ……………………………………………………………………………………………………………………………………………………… 0 50 50 50 50 50 50 300 Outlays …………………………………………………………………………………………………………………………………………………………………… 0 18 35 50 50 50 50 253 Total All Accounts: Budget Authority ……………………………………………………………………………………………………………………………………………………………………… 0 \u00a5591 \u00a5594 \u00a5597 \u00a5608 \u00a5618 \u00a5634 \u00a5e,642 Outlays …………………………………………………………………………………………………………………………………………………………………………… 0 \u00a5578 \u00a5609 \u00a5597 \u00a5608 \u00a5618 \u00a5634 \u00a53,644 Revenues: Revenue a ………………………………………………………………………………………………………………………………………………………………………… 0 32 32 33 35 38 47 217 a Estimates provided by the Joint Committee on Taxation. Components may not sum to totals because of rounding. CONGRESSIONAL BUDGET OFFICE: CONFERENCE AGREEMENT ON H.R. 3754, ESTIMATED COST OF INTERGOVERNMENTAL AND PRIVATE SEC- TOR MANDATES, AUGUST 1, 1996 INTERGOVERNMENTAL MANDATES CBO cannot determine if the bill contains intergovernmental mandates that would im- pose costs exceeding the $50 million thresh- old established in the Unfunded Mandates Reform Act of 1995 (Public Law 104 4). At issue is a provision dealing with an increase in child poverty. Temporary Assistance for Needy Families (TANF). The bill would require a state to carry out a corrective action plan if it deter- mines that the rate of child poverty in- creases by five percent in a given year as a result of carrying out its new program for needy families. Depending on how this re- quirement is enforced, it may constitute a mandate when it is combined with the reduc- tion in federal funding for needy families and the work requirements of the bill. Under the work requirements, a state would be re- quired to have 50 percent of certain families that are receiving assistance in work activi- ties by fiscal year 2002. Under Public Law 104 4, an increase in the stringency of conditions of assistance or a CONGRESSIONAL RECORD \u2014 SENATE S9413August 1, 1996 reduction in federal funding for an entitle- ment program under which the federal gov- ernment spends more than $500 million annu- ally is considered a mandate only if state, local, or tribal governments lack the author- ity under that program to amend their own financial or programmatic responsibilities to continue providing required services. The bill does not specify how this child- poverty requirement would be enforced. On the one hand, if a state would be allowed simply to submit a corrective action plan but would not be required to take action to reduce child poverty, then the requirement, by itself or in combination with the other changes, would not constitute a mandate be- cause the state would have the flexibility to reduce caseloads and benefit levels in re- sponse to the federal requirements and re- duced federal funding. On the other hand, if the bill would require a state to reduce child poverty (and a mechanism was developed to enforce that requirement) then it may con- stitute a mandate when it is combined with the funding reductions contained in the bill and the work requirements. Even if the requirement is stringently en- forced, however, states may still have suffi- cient flexibility to meet all the requirements of the bill without devoting more state funds to the TANF program. States, not an outside party, would determine whether the rate of child poverty has increased by 5 percent. In addition, the majority of people currently receiving Aid to Families with Dependent Child (the program that TANF would re- place) are already in poverty, so that rate of child poverty might not increase signifi- cantly even if these people lose benefits. Child support. The bill would mandate changes in the operation and financing of the state child enforcement systems. The pri- mary changes include using new enforcement techniques, eliminating a current $50 pay- ment to welfare recipients for whom child support is collected, and allowing former public assistance recipients to keep a greater share of their support collections. The net savings from these mandates would exceed the costs by $200 million to $500 million an- nually over the next six years. Restricting Welfare and Public Benefits for Aliens and Supplemental Security Income. CBO estimates that the new mandates con- tained in the portion of the bill titled Re- stricting Welfare and Public Benefits for Aliens would not be significant. However, the bill would reduce the size of an existing mandate. Current law requires states that supplement federal Supplemental Security Income (SSI) either to maintain their sup- plemental payments levels at or above 1983 amounts or to maintain their annual expend- itures at a level at least equal to the level from the previous years. Once a state elects to supplement SSI, federal law requires it to continue in order to remain eligible for Med- icaid payments. Because the bill would re- strict eligibility for SSI, primarily for aliens and disabled children, states would no longer have to maintain their supplements for these individuals. CBO estimates that states could save roughly $750 million annually by fiscal year 1998. Other Titles. Two other titles of the bill\u2014 Child Nutrition and Food Stamps\u2014contain intergovernmental mandates, but the total cost of the mandates would be significantly less than the $50 million threshold. PRIVATE SECTOR MANDATES The bill contains several private sector mandates as defined in Public Law 104 4. CBO estimates that the direct cost to the private sector of those provisions would be $65 million in fiscal year 1997 and would total about $1.0 billion over the five-year period from 1997 through 2001, as shown in the fol- lowing table. [Fiscal year (dollars in millions)] 1997 1998 1999 2000 2001 Requirement on Employers ………… $10 $10 $10 $10 Requirement on Sponsors of New Immigrants …… $5 20 55 195 400 Changes in the Earned Income Credit ………….. 60 61 62 65 68 Requirement on Employers. The child sup- port provisions of the bill include a require- ment that employers provide information on all new employees to new-hire directories maintained by the states. This provision would impose a direct cost on private sector employers of approximately $10 million per year once it became effective in 1998. Based on data from the Bureau of the Census, CBO estimates that private employers hire over 30 million new workers each year. Even so, the cost to private employers of complying with this mandate would be expected to be relatively small. Many states already re- quire some or all employers to provide this information, so that a federal mandate would only impose additional costs on a sub- set of employers. In addition, employers could comply with the mandate by simply mailing or faxing a copy of the worker’s W 4 form to the state agency, or by transmit- ting the information electronically. Requirement on Sponsors of New Immigrants. The bill would also impose a new require- ment on individuals who sign affidavits of support for legal immigrants by making fu- ture affidavits legally binding. This require- ment would impose a direct cost on the spon- sors estimated to be $5 million in 1997, rising to $400 million in 2001. This estimate rep- resents the additional cost to sponsors of providing the support to immigrants that would be required under the bill. The added costs are larger after the first three years be- cause of the new responsibility sponsors would have to provide support after a three- year deeming period. Changes in the Earned Income Credit. Fi- nally, the bill would make several changes in the Earned Income Credit. The bill would modify adjusted gross income by disregard- ing certain losses, expand the definition of disqualified income and index the threshold, and strengthen compliance. The Joint Com- mittee on Taxation estimates that the direct mandate cost of these changes would be $60 million in 1997, increasing to $68 million in 2001. These estimates include only the reve- nue effect of the changes in the credit, and not the effect on federal outlays. Mr. DOMENICI. I yield the floor. Mr. LOTT. Mr. President, I believe the Democratic leader is on his way and will be prepared to close on that side, and I will go immediately follow- ing that. Until he arrives, I suggest the ab- sence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The assistant legislative clerk pro- ceeded to call the roll. Mr. DASCHLE. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. DASCHLE. Mr. President, after 18 months, we are about to pass welfare reform. It has been a long, divisive de- bate about the direction our Nation will follow on fundamental social pol- icy. The initial bill, approved by the House last year, I think, by virtually any standard, was an extreme piece of legislation. As a result, it enjoyed very little public support. Twice the Presi- dent vetoed extreme legislation, and that resulted in far more bipartisan co- operation in the ensuing months. It is clear that there is a consensus on many concepts relating to welfare reform. Most of us believe the current system is not working, that welfare must be reformed, that welfare as a way of life must end. There is a consen- sus about the need for work, that able- bodied people should work, that there should not be welfare for those who are unwilling to work. There is a consensus about the need to allow States flexibil- ity and a recognition that South Da- kota is different from New York and different from California. There is a consensus that the lack of child care is a major barrier to work, that States need to provide adequate funds to help parents afford it, that the current law with regard to health and safety stand- ards must be maintained and even im- proved, and that child care needs to be- come more available and certainly more affordable. So there are points on which there is common ground and a great deal of agreement. The welfare debate has come a long way since those early months when the President felt com- pelled to veto that extreme legislation. There have been many areas where bi- partisan progress in reducing the bar- riers that I have just discussed has been made. The debate began on wel- fare reform with not $1 for child care money, with not $1 for child care to be provided under any circumstances. Now, in this legislation, there is $14 billion to assist parents’ efforts to se- cure child care. The debate began over a House bill with absolutely no guarantee of Medic- aid coverage for families under any cir- cumstances. Now families moving from welfare to work will continue to re- ceive health care during a 1-year tran- sition period. We have made bipartisan progress in other areas, too. This bill improves the Nation’s child support enforcement system. It improves the Nation’s sup- plemental security program for the dis- abled children of our country. We dropped the proposals to block grant food stamps and eliminate the national nutrition safety net, and we dropped proposals to block grant child abuse funds, which would have undermined our Nation’s child protection system. So, Mr. President, this bill does rep- resent progress. In these areas, and in others, I think it is fair to say that we have come a good distance. But in a de- mocracy everybody has to make their own assessment. We have our own in- ternal comfort zone. We have our own sense of what is right. From phone calls I have received from my State of South Dakota, and letters I received from across the country, the views are as diverse outside Washington as they are here in the Senate. Every Senator, every Representative, and the President of the United States must make his or her own judgment CONGRESSIONAL RECORD \u2014 SENATES9414 August 1, 1996 and draw his or her own lines. It is bet- ter than when we started. We began having a threshold for which there could be agreement and consensus on items that I have discussed. Thought- ful people will disagree about where we go from here, how we can assess that progress, and whether or not this marks enough progress to stop now. For many, including this Senator, it is a tough call. There is no crystal ball. Nobody can predict with certainty the effect of this bill. It will improve, in some ways, the welfare system that we have right now. I think that is a given. But will it help move welfare recipients to work? We can only hope that it does. Will it en- sure that children are protected? We can only hope that it does. Is there a guaranteed safety net for children in the future? On that answer, in my view, Mr. President, the answer is not even hopeful. The answer, in my view, is no. Is this the last point? Is this the only point? There are others. But the fact is that this important issue affecting 100 percent of the future population is not resolved. On that issue, we can do better. We all want reform. We want to re- quire people to work. But we also want to protect children who can’t protect themselves. We have to be careful to balance those goals. The need a meaningful safety net for children\u2014a guarantee that they will not pay for the mistakes or circumstances of their parents\u2014 ought to be paramount for every one of us as we make our decision tonight. Mr. President, we need vouchers to ensure children’s basic needs are met when their parents reach the time lim- its, and you can’t find vouchers in this bill\u2014not to any meaningful extent. We need a contingency for emergencies. When we went through the last reces- sion, this country drew down more than $6 billion in emergency AFDC funds an 18-month period. These were the resources necessary to provide the safety net, especially for children who otherwise had nothing\u2014$6 billion. You know what is in this bill? We have about $2 billion in contingency funds. We may be more than $4 billion under- funded the next time we have a reces- sion in this country. Then what hap- pens? The level of nutrition cuts continue to concern me as well. I am not com- fortable reducing food stamp benefits for families with children who pay more than 50 percent of their income in rent. We do not treat the elderly that way, and we should not. And we should not treat children that way, either. Nu- trition cuts have nothing to do with work, nothing to do with reforming welfare. It is an attack on the essential nutritional safety net in this country, and we ought to recognize it as that. I support strong work requirements. But the work requirements in this bill are inadequately funded. This is some- thing that we ought to be concerned about, and the Congressional Budget Office says that most States in the country, when this legislation passes, will fail to meet the work require- ments. They will not even be close. We all agree that the lack of afford- able child care is a barrier to work. The Senate and House bills said moth- ers with elementary school children could not be sanctioned or terminated from assistance if they don’t find child care or cannot afford it, but the con- ference bill precludes sanctions only for mothers with children under 6. The distinguished Senator from Connecti- cut addressed this point earlier this afternoon. I am concerned that this is an impossible choice for mothers. A mother’s choice is to go to work in order to receive assistance, leaving a child of 7 or 8 alone after school, or not to go to work and lose the help she needs to feed and clothe her child. What a choice. Mr. President, that is not a choice that you and I and the rest of this body can be comfortable with. Frankly, I am very troubled about the treatment of legal immigrants. There is no assistance for illegal immi- grants, and perhaps that is appro- priate. But this bill attacks legal im- migrants. I am not talking about those who cross our borders in the dead of night. Individuals who have followed the rules, paid taxes in this country, and gone to fight in other parts of the world for this country are now going to be told that there is nothing, no help whatsoever, even when they des- perately need it through no fault of their own. It was 100 years ago that my grand- parents came to this country with the promise of 160 acres of soil. They came with a lot of hopes and dreams about what this country could provide for them and their grandchildren and for all of the Daschles to follow. They came here for freedom. They came here in the belief that this would be a better life. We joked about the Government betting you 160 acres of land that you could not survive it on for 5 years in South Dakota. If you could survive for 5 years, it was yours. They got off the railroad, they built a sod house, and survived. But the Government gave them the opportunity to survive, gave them the license to be Americans, and I am here 100 years later because that happened. We do not have any more land to give, but I sure hope we can still give dreams. I hope that there are still peo- ple out there who believe that the free- dom that they can find in this great country of ours, for all of the things this country can provide, ought to be ample reason to come to this country and give it their best. But we are saying we are not going to help you; we are going to punish you if you even try. That is not American. My grandparents could not have come with this law in effect 100 years ago. So, Mr. President, it is with some sadness that we have come to the con- clusion that we cannot do better than this. But we are going to pass this leg- islation tonight with the understand- ing that there are some very severe de- ficiencies. Is it an improvement over what we passed a year ago? Yes. Can we do better? I think we all know in our heart of hearts that the answer to that is also yes. I hope that we can agree when it is signed into law that we will go back, without much time to waste, and at- tempt as best as we can to fix those de- ficiencies so we do not punish children, so we do not send the wrong message to people who want to be Americans, so we recognize that this country is still all that it can be, so we can work to- gether to make it an even better one. I yield the floor. Mr. LOTT addressed the Chair. The PRESIDING OFFICER. The ma- jority leader. Mr. LOTT. Mr. President, I believe we have some 21\u20442 minutes left, and be- yond that I will use my leader time. Mr. President, over the years we have watched a program that we started some 60 years ago with very good in- tentions to help the weak and the genuinely poor people in this country to be able to get some degree of tem- porary assistance to help them exist. We have watched over the years as the taxpayers of this country worked hard to try to look after their families, tried to get clothes to put their chil- dren in school, and pay their taxes. Then they began to wonder, who was thinking about them? Because they saw this program continue to grow and build, and they saw it continue to cost more and more billions of dollars, and they saw abuses. Then they started to worry. What about the children that are getting locked into this system of welfare dependency? Over the years it moved in that di- rection\u2014to where we have disaffection on all sides; those who pay the bills for the welfare program and those who are on the program. People ask: Who is it really helping? Is it really giving peo- ple a lift out of poverty, or it is it lock- ing them in? Does it really help the children when the parents are not able to get a job, they do not have the training, the education, nor the day care to be able to really get a job? Who is the real loser? The children have be- come the losers of this program. It has become a program of dependency with- out a way out. That is what this bill is really about. I am happy that the Senate is about to take this final action on this monu- mental accomplishment, a bipartisan accomplishment on a bill that is enti- tled ”Personal Responsibility and Work Opportunity Act of 1996.” We call it welfare reform, but that is the real title. That is what it is really about\u2014 personal responsibility; taking advan- tage of the program when you really need it on a temporary basis, to give you an opportunity to exercise your re- sponsibilities and get off the system and get into a job\u2014work opportunity. That is the American way; to have an CONGRESSIONAL RECORD \u2014 SENATE S9415August 1, 1996 opportunity to get what you need tem- porarily with training to go out and get a job and look after your family. It has been a long haul with more than a few dead-ends. But we stuck with it. We forged the kind of com- promises that were needed to move it ahead, and at last we have come to our destination: ending the destructive welfare cycle. That is what this is all about. There is more than enough credit to go around. But I think special tribute clearly should be given to the Senator from Delaware, Senator ROTH. He has pulled off a gold medal performance this week. He was lead chairman on the welfare reform bill. He was the chair- man that negotiated the agreement on the small business tax relief bill, and he was the lead participant in the health insurance reform legislation; a tremendous week. We are all indebted to Senator ROTH for that great work. I know it has been exhausting, but I know you are extremely proud of the accomplishment that you have in this bill and those other bills. Of course, the venerable chairman of the Budget Committee, Senator DO- MENICI, hangs in there. It was going to be maybe just a few hours and then it looked like it was going to be the full 10 hours. He has to do it over and over again. He has been a partner with the Senator from Delaware. They have done a great job. He is the most knowl- edgeable Member that we have on how we deal with these budget issues. Senator NICKLES, at my request, was representative of the leadership in a lot of the negotiations. That youngster from Pennsylvania, Senator RICK SANTORUM, he was great. He came to the floor one night. He did his job. He knew his subject matter. He has been working on it for 2 years\u2014actually longer than that. I guess about 4 years. He really knows the intricacies of this bill. It has been bipartisan, House and Senate. The vote in the House, 328 to 101. That looks mighty broad to me in its support and its bipartisanship. In the Senate, Senator BREAUX was involved and helpful as we went along. Senator LIEBERMAN, I read his article, I believe, in a New York newspaper last week, an excellent article. So I think we have truly made this bipartisan. It is an effort of which we can be proud. Also, I have to say this. A lot of cred- it goes to the man whom I succeeded as majority leader. Bob Dole worked on this effort, pushed this effort, would not let it end, helped get it through, not once but twice, and was committed to getting it done again this year for the third time. Without his leadership, without his determination, without his commitment, we would not be here to- night passing this welfare reform pack- age. In my opinion, it should truly be called the Dole Welfare Reform Pack- age. The last time I spoke on the Senate floor about welfare, I expressed the hope then that President Clinton would not again veto the reform bill that we had come up with on welfare. And I did have an opportunity over the past 2 weeks to talk with him about it. There were some changes made that he had hoped for in the bill, and so I am, frankly, greatly satisfied that he has announced he will, indeed, sign this bill into law. So now our country begins a great transition. It will be complicated and difficult and probably will require fine tuning on our part in the future, but we have made a start. We have made a commitment. We signed on to the blue- print for the most profound restructur- ing of public assistance since the New Deal. This legislation will end the Federal entitlement to welfare and replace it with block grants to the States. All by itself, that makes this landmark legis- lation. But the flexibility for the States and the Governors, I think, will work well. They are close to the prob- lems. They will be able to use the money where it is needed the greatest to help the people who need it the most. More than that, for the first time ever we are legislatively imposing time limits on the receipt of welfare on an endless basis, and for the first time ever we are applying a meaningful work requirement that can help recipi- ents make the move\u2014and we know it is not always an easy one\u2014from depend- ence to independence. That is what we desire and we hope for all Americans. This bill responds to a consensus among the American peo- ple by ending most welfare for nonciti- zens. It strengthens our child support enforcement and paternity establish- ment requirements. It combats fraud and abuse of welfare programs and will save the taxpayers about $54.5 billion over the next 6 years. We can be proud of this package, and we can build on it in the months ahead as we seek to improve Medicaid and other programs of assistance to the needy. We are going to be working with the Governors to make sure that this bill sets the pattern for a new era of co- operation between the States and the Federal Government. Again, I thank everyone whose dili- gence and patience brought us this far. There is an old saying: ”Well begun is only half done.” Today, the herculean task of comprehensive welfare reform is, indeed, well begun and much more than half done. With the lessons we have learned in this effort, we can finish the job for the benefit of both the taxpayers of Amer- ica and the poor in the months ahead. I yield the floor. Mr. President, I ask for the yeas and nays. The PRESIDING OFFICER (Mr. SMITH). Is there a sufficient second? There is a sufficient second. The yeas and nays were ordered. The PRESIDING OFFICER. The question is on agreeing to the con- ference report to accompany H.R. 3734, the Budget Reconciliation Act of 1997. The yeas and nays have been ordered. The clerk will call the roll. The legislative clerk called the roll. [Disturbance in the Gallery] The PRESIDING OFFICER. The clerk will cease until order is restored. The Sergeant at Arms is directed to restore order. The Senate will come to order. The clerk will resume the call of the roll. The legislative clerk resumed the call of the roll. Mr. FORD. I announce that the Sen- ator from Arkansas [Mr. PRYOR] is nec- essarily absent. The PRESIDING OFFICER. Are there any other Senators in the Chamber who desire to vote? The result was announced\u2014yeas 78, nays 21, as follows: [Rollcall Vote No. 262 Leg.] YEAS\u201478 Abraham Ashcroft Baucus Bennett Biden Bond Breaux Brown Bryan Burns Byrd Campbell Chafee Coats Cochran Cohen Conrad Coverdell Craig D’Amato DeWine Domenici Dorgan Exon Faircloth Feingold Ford Frahm Frist Gorton Graham Gramm Grams Grassley Gregg Harkin Hatch Hatfield Heflin Helms Hollings Hutchison Inhofe Jeffords Johnston Kassebaum Kempthorne Kerry Kohl Kyl Levin Lieberman Lott Lugar Mack McCain McConnell Mikulski Murkowski Nickles Nunn Pressler Reid Robb Rockefeller Roth Santorum Shelby Simpson Smith Snowe Specter Stevens Thomas Thompson Thurmond Warner Wyden NAYS\u201421 Akaka Bingaman Boxer Bradley Bumpers Daschle Dodd Feinstein Glenn Inouye Kennedy Kerrey Lautenberg Leahy Moseley-Braun Moynihan Murray Pell Sarbanes Simon Wellstone NOT VOTING\u20141 Pryor The conference report was agreed to. Mr. BOND. Mr. President, I move to reconsider the vote by which the con- ference report was agreed to. Mr. NICKLES. I move to lay that mo- tion on the table. The motion to lay on the table was agreed to. The PRESIDING OFFICER. The Sen- ate will come to order. Members will stop conversations so the Chair can recognize the majority leader. Mr. WELLSTONE. Mr. President, can we have order in the Chamber? The PRESIDING OFFICER. The Sen- ate will come to order. Will Senators please take their conversations to the Cloakroom? f MEASURES PLACED ON CAL- ENDAR\u2014S. 2006, S. 2007 and H.R. 2391 The PRESIDING OFFICER. The clerk will now read three bills for the second time. CONGRESSIONAL RECORD \u2014 SENATES9416 August 1, 1996 The assistant legislative clerk read as follows: A bill (S. 2006) to clarify the intent of Con- gress with respect to the Federal carjacking prohibition. A bill (S. 2007) to clarify the intent of Con- gress with respect to the Federal carjacking prohibition. A bill (H.R. 2391) to amend the Fair Labor Standards Act of 1938 to provide compen- satory time for all employees. Mr. LOTT. Mr. President, I object to further consideration at this time. The PRESIDING OFFICER. Objec- tion is heard. The bills will be placed on the calendar. The PRESIDING OFFICER. The ma- jority leader. f THE SENATE’S SCHEDULE Mr. LOTT. Mr. President, I know that Senators are waiting to see what might be the schedule for the remain- der of the evening. There are a number of discussions underway now on a num- ber of issues that we would like to get completed before we leave this week- end. I want to say again tonight, as I did this morning, I really think that the last 2 days have involved a lot of tre- mendous legislative good work by Members on both sides of the aisle. I do not ever recall having ever seen as many bipartisan conferences in as many places at one time as yesterday. Yesterday morning, I really didn’t think it would be possible to reach an agreement on the conference report on health insurance reform, on safe drink- ing water, and, of course, we already reached agreement on welfare reform, and before the night was out, even the small business tax relief package and minimum wage. It looks like there will be an agreement also on illegal immi- gration. I don’t know exactly when all of those will move, but it is my fervent hope that all that work will not be for nought before we leave. We would like to be able to bring up some appropria- tions conference reports that have been completed. The legislative appropria- tions conference report is ready. We hope to be able to get to the military construction appropriations conference report, if not tonight, tomorrow. That probably will require a vote, since we didn’t vote on it when it went through earlier, and the District of Co- lumbia appropriations conference re- port will also probably require a vote. We would like to do those either to- night or in the morning. And we would like to also get the conference reports that have been agreed to: the health in- surance conference report, the safe drinking water conference report, the small business tax relief package with minimum wage, and if there are other conference reports that could become available later on. The Department of Defense authorization conference re- port is available, too. So we have several conference re- ports that we could get done tonight or tomorrow with just a little coopera- tion. There are some nominations that we think we can move forward. We have been working on those today. I think we can get some of those moved. So it is my hope that we could get those done. Also, I would want to move to the HUD VA appropriations bill. I know the chairman is here, Senator BOND, who has been very patiently waiting his appropriations opportunity. The Senator from Maryland is here ready to go. So if we could have a few unani- mous-consent requests and work through those, then we would try to go to the HUD VA appropriations bill. I just want to make the Members aware of that. We need to have some additional discussions here in the next few minutes. If we could come to some agreements, then we should be able to notify the Members within 30 minutes what they can expect for the remainder of the evening and whether or not there would be any recorded votes to- night. I would be prepared to yield the floor and observe the absence of a quorum, Mr. President, where we could work on a couple issues, and we would let the Members know as soon as possible thereafter. I yield the floor, Mr. Presi- dent, and I suggest the absence of a quorum. The PRESIDING OFFICER. The clerk will call the roll. The legislative clerk proceeded to call the roll. Mr. LOTT. Mr. President, I ask unan- imous consent that the order for the quorum call be rescinded. The PRESIDING OFFICER. Without objection, it is so ordered. Mr. LOTT. Mr. President, I do not be- lieve we have been able to come to a satisfactory resolution of some of our concerns that Senators have on both sides of the aisle. We have had a very productive week and a good day. It is already 20 until 9. I know several Sen- ators have had other things on their minds today, so I do not see any sense in pressing the point too far tonight. I do feel constrained to ask for at least two unanimous-consent requests. We will see what happens. Then, de- pending on that, we will be able to make some further announcement. f UNANIMOUS-CONSENT REQUEST\u2014 CONFERENCE REPORT TO AC- COMPANY H.R. 3754 Mr. LOTT. Mr. President, with re- gard to the legislative branch appro- priations conference report, I ask unanimous consent that the Senate now turn to the conference report to accompany H.R. 3754, the legislative branch appropriations bill, that the conference report be considered as hav- ing been read and agreed to, and the motion to reconsider be laid upon the table. Mr. WELLSTONE. Mr. President, re- serving the right to object, and I do ob- ject. The PRESIDING OFFICER. Objec- tion is heard. Mr. LOTT. You did object? All right. Mr. President, we have been hoping to go to the HUD VA appropriations bill for over a week now, but because we were assured on various bills that they would take just a short period of time, we have been able to move through eight appropriations bills. I appreciate the success we have had with that. But this is the one that we need to go to and get done so that we do not have to have a Saturday session. It is my intent to complete this bill even if it does involve going to a Satur- day session. It would be nice if we could put that down tonight so that the chairman and the ranking member could get some work done. But we can do that tomor- row, and then we can finish up or we can work on that on Saturday. It is al- ready in my mind that we are going to be here Saturday. So I have been feel- ing all day that this is really kind of Wednesday, and so tomorrow is only Thursday by my body clock. f UNANIMOUS-CONSENT REQUEST\u2014 H.R. 3666 Mr. LOTT. Mr. President, I ask unan- imous consent that the Senate now turn to the consideration of the HUD VA appropriations bill, H.R. 3666. The PRESIDING OFFICER. Is there objection? Mr. WELLSTONE. Reserving the right to object, and the majority leader has been working in very good faith. I appreciate it. I just let my colleagues know that this is not my first choice, but month after month after month I have been very patient. The last several weeks I have been very patient. I think the ma- jority leader would be the first person to say I have worked through the proc- ess. We have a very gifted judge, Henne- pin County Judge Ann Montgomery. I thought there was a clear agreement that she would be cleared last night. That did not happen. It is not my choice that somebody objected. I have heard no substantive reasons given to that objection, and that is why I object to moving forward. I am going to fight very hard for Ann Montgomery because she is an im- mensely talented, gifted judge, with broad support in Minnesota, broad sup- port in the legal community. What has been going on here is just or fair to her. That is why I object. Mr. LOTT. Mr. President, if I could respond, first, let me announce that was the last vote tonight. There will be no further votes tonight. We will begin tomorrow morning at 10:30 on Friday morning. I think all the Members know I have been trying to work through these judges. We have, I think, cleared 16 judges from across the country. Some of them had some problems. We were able to look into those problems, and CONGRESSIONAL RECORD \u2014 SENATE S9417August 1, 1996 Senators have spent time working through those lists. That is how we have been able to move 16 of them. We are working on another one right now. I think maybe it will be cleared. Let me emphasize this: Judges quite often are somewhat controversial. Sen- ators have different views on that. Sen- ators have a right to express them- selves on it. The time may come when we will have to move some of these judges. My approach is always to see what the problems are and see if we can work through them. We will keep working on this one. I am hoping maybe tomorrow we can satisfy con- cerns. Sometimes what happens with these, it is not just the judge, but it gets in- volved with other issues, other legisla- tive issues, and you have to deal with those problems before you can deal with the next problem. We worked on that. I think we made real progress. The Senate, I think, would have to acknowledge that I have worked steadily at it. I think we have approved an average of at least one a day for the last 3 weeks. Mr. NICKLES. Will the Senator yield? Mr. LOTT. I am happy to yield to the Senator. Mr. NICKLES. I have been here a lit- tle while, and I cannot remember any- body objecting to moving to an appro- priations bill because they did not get a judge confirmed. I will give one example. I remember we had a judge in Oklahoma that I was trying to get confirmed in 1992 and the Democrats were in control of the Sen- ate. George Mitchell was the majority leader. I kept trying to get the judge moved, the nomination moved. The nominee was Frank Keating. There was no opponent, but we kept having a hold. To make the story short, we never could get his nomination placed before the Senate. He would have been an outstanding judge. There was kind of a roving hold on it, primarily in- spired by my good friend and colleague from Ohio, Senator Metzenbaum, who is no longer with us. The point being, we had an outstand- ing person, but we did not hold up any appropriations bill. We did fuss about it, and we groaned about it, and maybe griped about it, but I want to thank Senator Metzenbaum for putting a hold on Frank Keating because he is now the Governor of Oklahoma. Judges have been held for different reasons, maybe good reasons, maybe bad reasons, but a lot of times it hap- pens. However, I am not familiar with the holding of major pieces of legisla- tion, particularly appropriations bills, hostage. I hope we are able to work through this and do our bills. We know we have to do the appropriations bills, and I am hopeful we will be able to move forward. I congratulate the majority leader and the minority leader. I think this week has been a very constructive week. The welfare bill that just passed is certainly historic, and the legisla- tion that we will have before the Sen- ate tomorrow dealing with health care, dealing with small business tax relief, is also very important. I hope we will be able to complete that as well. Mr. LOTT. I yield to the distin- guished chairman of the HUD, VA Ap- propriations Subcommittee, if he would like to make a comment. Mr. BOND. Mr. President, I appre- ciate very much the efforts of the ma- jority leader. I assure you that the ranking member, Senator MIKULSKI, and I have worked long and hard with many Members to accommodate the in- terests Members have. We were pre- pared to negotiate time agreements so we could move this expeditiously. The matters involved in this bill in- clude the funding for the Veterans Ad- ministration, the funding for the Hous- ing and Urban Development, funding for EPA\u2014there seems to be a great deal of concern about drinking water facilities; those funds are appropriated in this bill\u2014Environmental Protection Agency, NASA, National Science Foun- dation. It had been our hope that by working with and being responsive to the concerns of Members on both sides of the aisle, with respect to what is, frankly, a very complicated bill, that we could wrap this up so we would not have to impinge upon any Saturday or Sunday activities that our colleagues may have. Mr. President, that is why I am deep- ly disappointed. The ranking member and I have been ready since last Wednesday to go forward on this bill. It is a complicated bill. I had hoped we would be able to go tonight. I am very disappointed, personally, and for the agencies and the people working with us. Let me say at this point that we have worked together prior to the bill com- ing to the floor. The ranking member and I have agreed that we can accept a significant number of amendments that have been presented to our staff. If there are other amendments, we ask Senators to bring them to us or to our staffs tonight so we may determine if we can accept them or work with the Members to gain accommodation on them. I have approved, as has my colleague, a number of colloquies that will be ready to go if we are able to move to this bill tomorrow. I think there are perhaps three or four issues which would require a vote, and we would like to work with the leadership and get short-time agreements on these votes, reserving everybody the right to sub- mit additional comments for the RECORD so we can handle this in an ex- peditious manner. We understand how controversial the issues can be. We think we can deal with it in a timely fashion. I ask that people who do have amend- ments, questions, colloquies, please contact us tonight and perhaps we can move expeditiously tomorrow. I share the leader’s disappointment that we are not able to do this tonight. With cooperation in bringing the amendments to us tonight, perhaps we can deal with the issues in a timely fashion tomorrow. I thank the majority leader, and I thank the Chair. Mr. WELLSTONE. I will take just 1 minute. I know the minority leader wants to speak on this. Let me just say I heard the word ”controversial” used. Judge Ann Mont- gomery has the support of both Sen- ators from Minnesota. She has the broadest possible support in the legal community, the highest possible marks from the ABA. She is imminently qualified. I would be more than pleased for someone to move this. I do not ask for unanimous consent, although I think that is the best way to do it. I would be willing to debate this nominee with anybody. Just to be very clear, as far as the delay, I was not the one that put the hold on Judge Montgomery. I am not the one that has objected to moving forward. Other Senators have. I am just doing what any Senator would do from any State, which is that I am fighting hard for a woman who richly deserves to be Federal district judge. There is no reason in the world why anybody should be trying to stop this. This woman came out of committee back in March. She has been waiting and waiting and waiting, and I have pa- tiently worked through the process. I am absolutely convinced the major- ity leader is working in good faith, and I look forward to working this out to- morrow. I apologize to my colleague from Missouri, who is a friend whom I respect. I am not the one that has de- layed this. Mr. DASCHLE. Mr. President, we don’t need to rehash all the history on this. I think it is fair to say that there has been a tremendous amount of co- operation this month. I pledged my ef- forts to the new majority leader when he became leader and indicated that I wanted to work with him. I think that fact has now been well-documented. The distinguished Senator from New Hampshire was in the chair last night, and I applaud him for his willingness to preside at late hours. As he was presid- ing last night, it seems to me that the cooperation stopped. Before last night, we had another in- dication of the degree to which we were going to work on both sides to move things along, with the clear under- standing on both sides that we had to finish the executive calendar on judge- ships this month. The distinguished majority leader said that he would try to help us get that done. I said I would try to work with you to accommodate all of the specific pieces of legislation that need to be addressed so long as we can continue to work in good faith to- ward those ends. Last night, it stopped. So, Mr. President, we have no choice but to continue to find a way with which to resolve this impasse. We need to finish the four circuit court judges, CONGRESSIONAL RECORD \u2014 SENATES9418 August 1, 1996 plus the other district judges that re- main on the executive calendar this week. The distinguished Senator from Oklahoma made a good point that there have been holds in the past on in- dividual judges. I will not deny that. But I think it is important that we em- phasize that, in 1992, under similar cir- cumstances, the majority at that time, the Democratic majority, confirmed 66 district and circuit judges. On July 1 of this year, not one, zero judges had been confirmed. Now we have confirmed, I believe, 16. So we are making progress. But we can’t be expected to allow the balance that we had agreed to to be disrupted. If we can continue to find ways to cooperate and work together, all of the pieces of legislation that the distinguished majority leader men- tioned, I think, are possible. Realisti- cally, I don’t think we are going to be able to do the VA HUD bill this week, but I do believe that all of the con- ference reports and things that the ma- jority leader mentioned are things we ought to be able to work together to achieve before we recess. But we have to get those judges done, as we earlier agreed to do. If we can do the judges, we can do the legislation. That balance is something that I think we have made very clear from the beginning. I hope we can work together to make that happen. I yield the floor. f JUDICIAL NOMINATIONS Mr. LEVIN. Mr. President, I wonder if the majority leader would help us out a bit with this question. It was my understanding that, early in July, the majority leader had indicated an inten- tion to work through all of the judges on the calendar, and that if there was an objection, the objection would be re- quired to be stated, and then the ma- jority leader would attempt to move to the confirmation of each of the judges on this calendar. I am particularly in- terested in a court of appeals judge, Eric Clay, from Michigan, who has the support of both Senators from Michi- gan. I know the majority leader has spoken to my colleague, Senator ABRA- HAM, and me about Mr. Clay. My question is this: Is it still the hope of the majority leader to call each of the names of the judges that are on the calendar and see if there is an ob- jection, and if there is, to move to the confirmation of each of the circuit court judges, as well as district court judges, on this calendar? Is that still the intention of the majority leader be- fore we recess? Mr. LOTT. It is my intent to con- tinue to try to work through these matters. I never indicated, in any way, that I could guarantee that we would get them all done. There are objections to some of them, and multiple objec- tions to some of them. But I will con- tinue to work on them one at a time, because you can’t work six or seven at a time. It has worked pretty well. And I am working on that one. I have talked to the other Senator from Michigan, Senator ABRAHAM, about this judge. We are looking into what might be the problems and what might be done. Let me say this. Circuit judges are viewed very differently than dis- trict judges for a lot of reasons, and we can discuss that some other night. But that is not to say that we will not con- tinue to work on it. Mrs. BOXER. Will the Senator from Michigan yield to me for a question? Mr. LEVIN. Yes. I yield the floor. Mrs. BOXER. I really want to thank the majority leader for doing all this. I want to make the point to the Senator from Texas, and others who have prob- lems with this, that you are talking about real people when you stand here late at night and object. Sometimes we forget that. I think Senator WELLSTONE was very real last night when he came back and he was on the phone ready to tell this particular nominee that all was well. I happen to know two judges on that list from California. Their lives are on hold. They are human beings, just as we are. Many have been waiting for months and months. I say to the ma- jority leader, please, do all you can, be- cause pretty soon we are going to come down here with photographs of the families that are in limbo. They don’t know. Some of them are closing other practices up. It is a hardship on the families. These are wonderful people. These are people who came out of those committees, many of them without one objection. These are people who have support of both Senators, in many cases, Republican and Democrat alike. So we really changed course here when many of us understood it was going to go a certain way. It is very hard, I think, on the people whose lives are af- fected, their children and their spouses. So I hope we can work together for the good of, frankly, these people and their families and the criminal justice system. I don’t think it does any good to have these judgeships vacant. Jus- tice needs to be done, and it is hard to serve it when you don’t have the judge- ships filled. I yield the floor. Mr. LOTT. Mr. President, I am going to have to respond to some of that. There are real people, also, whose lives would be affected by these appoint- ments. These are not administration appointees who will serve at the pleas- ure of the President for a year or 4 years. These are lifetime appointments to the Federal judiciary, and it is very important who these people are\u2014 Mrs. BOXER. Yes, it is. Mr. LOTT. And how they are going to rule. We should look not only at their education, background, and qualifica- tions, but also\u2014particularly when it comes to circuit judges\u2014what is their philosophy with regard to the judiciary and how they may be ruling. We have a legitimate responsibility to ask those questions. I have to tell you, we have all been through this. I have had a cou- ple of judges that I have been inter- ested in, one from the Fifth Circuit Court of Appeals. He is a great guy, a great lawyer, Harvard educated, with all the credentials. He did not make it in 1992. That is the way it goes. Some people did not like him because he was a very conservative lawyer. I think the philosophy does make a difference when it comes to the circuit. I want to emphasize here that, when we start painting this mosaic about this person and the family going to be affected, we have a right to think about all the families whose lives will be affected by some of the ridiculous decisions we see in the Federal judici- ary, and the activism where they start writing laws, which is our job. I never intended to infer, in any way, or imply that I could guarantee that all these would be done or that I would even vote for all of them. All I said was that I would work through this list and I would try, because I didn’t know any of them, not a single one of them, when I started out. I started down the list, at the direc- tion of my predecessor, I got to know some of them and worked through them. I tried to move four en bloc one night, and because we did not have all of them on the list, it was objected to by a Senator. I thought we had worked it out. Later, I tried to move the same four judges again that nobody objected to, except when I brought it to the floor, a Democratic Senator objected because his judge was not on the list. And then the majority leader left, and I said, well, maybe I can work through more of them. I got it up to nine judges. One night, I came to the floor and we had 10 that had cleared on the hotline. I even talked to a couple Sen- ators as they hit the ground at the air- port trying to get them done. At the last minute, one of those dropped by the wayside. I tried nine judges, and I had an objection from a Democrat when I was trying to clear nine judges. I think at least five or six of those were supported by Democrats. So I said, OK, that hasn’t worked. In an abundance of good faith, I said I will do them one-by- one. I brought up one. It was objected to. But then I started working it with the minority leader. He started working it with his people. And then we started to move with the ones that were really not controversial. We got four or five done. Then we got five more done. And I think it is 15 or 16\u201416 that we are working through the process. I really must say that the minority leader was fair in his remarks of how we talked about it. We work together on it. We will just keep moving through the process. But again these are not insignificant. These are big-time, lifetime, high-paid jobs that are going to affect our lives, and, if we do not know who they are, if we do not ask questions, then we will be shirking our responsibilities. But we will continue working on these judges. Just like the Senator CONGRESSIONAL RECORD \u2014 SENATE S9419August 1, 1996 from Michigan said, we will talk more about that. Mrs. BOXER. Will the leader yield? Mr. LOTT. Certainly; I am happy to yield. Mrs. BOXER. I thank the leader for yielding. I appreciate what he is say- ing. He is so right about that. I have to say having had the real, great privilege to get a number of judges through this U.S. Senate\u2014 Mr. LOTT. There was one from Cali- fornia that we moved. Mrs. BOXER. Absolutely. I want to say that the committee is doing its job. They were very clear with all of us\u2014 the Republican Senators\u2014saying we want to make sure when you bring peo- ple up that they have Republican sup- port as well as Democratic support in their committees. And it has been, frankly, a joy for me to work to bring these types of people who have that type of bipartisan support. But I guess the one point that I just want to make\u2014and I will not belabor this any longer\u2014is that I heard the Senator from Minnesota say that he would be delighted to debate this. He is ready. Mr. LOTT. Let me say in this case that I have already told him. If I could reclaim my time for a moment, it is relevant. If we can’t get it worked out, I intend to move it, and we’ll have a debate. But here is one of my problems. We have a few hours left here. We have a lot of work that we need to get done that you want, and that we want. So I plead with everybody. Let us keep our heads cool. Let us keep talking. Also, I again say that I think it would be a major mistake\u2014a major mistake\u2014for Senators to hold up health insurance reform, safe drinking water, small business tax relief, and minimum wage, if we can’t work through all of these things tomorrow. I plead with you not to do that. I urge you not to do it. Let us get these conferences that we have worked together on in a biparti- san way. I understand there is some ob- jection maybe to the illegal immigra- tion bill. I do not know the details of the negotiations there. But this is something the American people feel outraged about. We can’t control ille- gal immigration in this country. But if there is some problem with the way it was handled we will take that into con- sideration. There are three of these conference reports which everybody has pretty much signed on to. They have problems with them. Mr. NICKLES. Will the Senator yield? Mr. LOTT. Yes. Mr. NICKLES. I just want to say that I appreciate the comments, and this has been informative. In the last couple of months, if my figures are correct, there have been 23 judges on the Executive Calendar ready for confirmation by the Senate. We have confirmed 16. We have 7 still left on the calendar. So I tell my colleagues on the other side who might be frustrated that is a pretty good batting average. That is 16 out of 23 in this period of time. I admit that hardly\u2014I think maybe one judge was confirmed prior to that time. Also, just while we are looking at this, I mention Frank Keating who was not confirmed in 1992. And my col- league, Senator DASCHLE, mentioned that we confirmed 66 judges in 1992, which is a lot. That is correct. But we also had 58 nominations pending at the end of 1992. Right now the total nomi- nations of judges on the calendar\u2014and that have been nominated\u2014the total is 28. So, if you look at the total percent- age of those we have on the percent- age\u2014 Mr. LOTT. That is, those on the cal- endar and those still pending in the Ju- diciary. Mr. NICKLES. Still pending before the Judiciary Committee. So the only thing you have had on your plate is that there has been 23 judges on the Executive Calendar. The Senate has now confirmed 16. There are 7 remaining. So I would say that in the past month the majority leader has been very cooperative in the fact that he has moved 16 out of 23. That is 70 percent of the judges. So I think he has been very coopera- tive in working with all Senators. Mr. LAUTENBERG addressed the Chair. The PRESIDING OFFICER. The Sen- ator from New Jersey. Mr. LAUTENBERG. Mr. President, I thank the President. I just ask the majority leader to ex- tend the courtesy, if he can. I want to add my compliments to those that he has already received for such a good job, and I think too in a most serious way. He has tried to\u2014 Mr. LOTT. One of those was from New Jersey, if the Senator will yield. Mr. LAUTENBERG. Absolutely. Mr. LOTT. We ran into a little prob- lem, and we worked it out. Mr. LAUTENBERG. To use an ex- pression, ”I don’t have a judge in this fight.” So I want you to know that. [Laughter]. I enjoy not only working with him but my kind, friendly tete-a-tete with the majority leader. I ask the majority leader whether or not in reality these judges did not move tonight because they had some- thing to do with something else? Is there some legislative redress that is being sought here, a judge is being held hostage, and people seeking justice are being held hostage because we are not processing their cases in an expeditious fashion? I ask the majority leader be- cause it was suggested to me that per- haps there was something that I might do to help it along here. I just would like to know whether or not there is some particular piece of legislation that may have offended someone that has them out here say- ing, ”No. I am going to object to judges. I am going to object to any- thing that goes on in this place, and I do not care what the consequences are. I object to the legislation.” Could I possibly be correct in my assumption, Mr. Leader? Mr. LOTT. I do not think it has ever happened in the Senate before; that one matter would be impacted by an unrelated matter in another area. Why, of course, everything in the Senate is tangled up and related to something else. I do not guess there is any rela- tionship between the judge not moving tonight and the objections to taking up the HUD and Veterans appropriations bill. Why, of course, they are related. But I have found the way you do that, you get all tangled up, and you work with them, and quite often they manage to work themselves out and we get the job done. But they are related. Look. You know that Senators on both sides of the aisle feel strongly not only about the judges but about the legislation. People are worried when you have a bill that involves a stalking of women and children that you really care about, and you think that there is a mistake there, and it is a bill that is universally supported. When that bill gets tangled up in the course of events, a Senator gets excited about that, and upset about that. When a Senator feels like his or her rights are trampled upon, they move and they take advan- tage of whatever rights they have. My attitude with the Senator from Minnesota tonight was, ”Look. I un- derstand. You are doing what you have to do.” And we will see what we can do with his problem that has been affected by another problem. We will work them all. Yes. They are all related. There is nothing new in that. Mr. LAUTENBERG. The majority leader\u2014like my name\u2014is frank, and I appreciate that candor. Because, if we are talking about the stalking bill here that passed the Senate that is over in the House, it carries an amendment by me that says wife beaters, child beat- ers, spouse abusers should not have a gun. Apparently there is an objection. ”We are concerned about that. We want to give those guys guns. What did they do? Beat up their wives? That is not a crime.” One judge said, ”I hate to give a noncriminal a criminal sen- tence.” One judge was so tough that he gave a man who murdered his wife in Baltimore County 18 months with time to be served on weekends. He murdered his wife. The judge said, ”I do not like to really punish someone like the criminals. They are not really a crimi- nal. All they did”\u2014he did not say this. I am saying it. ”All he did was murder his wife.” So I am asking for my amendment and that bill to be carried along, and now suddenly I hear that has some- thing to do with the approval of judges, which now has us tangled up in appro- priations bills. I think it is pitiful that someone would object as we saw here CONGRESSIONAL RECORD \u2014 SENATES9420 August 1, 1996 last night; the Senator objected to an order that the minority leader re- quested and refused to answer a ques- tion\u2014refused, turned around and walked out. This place is deteriorating into a sorry condition. But I know the majority leader is working on it. I think it is very important that peo- ple across the country hear that eight judges are not being appointed because of a piece of legislation that would pre- vent wife beaters and child abusers from getting guns. I think that is pret- ty important. I hope the public hears it and listens to it, and I hope the press hears it and listens to it. I say to the majority leader, my apologies for this little tirade, but I had to kind of get it off my chest. I thank the Senator. Mr. LOTT addressed the Chair. The PRESIDING OFFICER. The ma- jority leader. f MORNING BUSINESS Mr. LOTT. Mr. President, I ask unan- imous consent there now be a period for the transaction of morning business with Senators permitted to speak for up to 5 minutes each. The PRESIDING OFFICER. Without objection, it is so ordered. f THE RUSSIAN ELECTIONS Mr. LEAHY. Mr. President, on June 16, something happened that has tre- mendous implications for the Amer- ican people and for people everywhere. On that day, Russia, which just a few years ago was the greatest threat to democracy in the world, held a demo- cratic election to select its President. That alone, Mr. President, is reason to celebrate. Despite calls from people across the Russian political spectrum who still do not understand what de- mocracy is about to cancel the elec- tion, the Russian Government stuck by its commitment to democracy\u2014 No decisions were taken by secretive Politburos. Parties representing the full spec- trum of political sentiment partici- pated. Candidates crisscrossed that vast country making promises to win the votes of ordinary people. And in the end, most stunning of all, there was a graceful concession speech by the losing candidate, the leader of the Communist party that only a little while ago we regarded as the personi- fication of tyranny, committing the party to challenge irregularities in the election ”in the courts, not in the streets.” Mr. President, this was not a perfect election. There were irregularities. There may well have been instances of ballot box stuffing. I was quite con- cerned about the extent to which media coverage of the election ap- peared to favor one candidate. But it also occurred to me that, if I were a newspaperman covering an election in which one major party had a record of advancing democracy and the freedoms associated with it and the other had a 70-year history of suppressing the free- dom of newspapers like mine, I might have tended to advocacy rather than neutrality too. That is not an excuse, but despite the irregularities, there is general agreement that the will of the Russian people was heard in this elec- tion. The Russian people voted for democ- racy, and the tremendous significance of that should not be lost on anyone. Despite all of the hardship they are ex- periencing. Despite the crime and cor- ruption. Despite their loss of empire. Despite the fact that the standard- bearer of the forces of democracy has made many mistakes, the brutal war in Chechnya being the most egregious, and is in poor health. The Russian people voted for free- dom. Freedom to speak their minds. Freedom to associate. As ultra-nation- alist Vladimir Zhirinovsky, who is not someone I admire, put it in explaining why he would not support the com- munists: freedom to decide where to spend his vacation. For some, it came down to things as simple as that, things which we take for granted. Mr. President, the world has changed profoundly in the last decade. Com- munism as a world force is gone. What- ever the future may bring in terms of the distribution of power in the world, the age of ideological confrontation be- tween communism and democracy is over. While there remain many aggres- sive forces in the world, I cannot help but feel that the world will be a safer place when its two greatest powers are both committed to democracy and the protection of individual rights. And I think we owe credit to Presi- dent Clinton, Secretary of State Chris- topher, and Deputy Secretary Talbott. Over the past three years, they have braved the attacks by those, including some in this chamber, who cannot bring themselves to give up their cold war notions about evil empires and would have us focus only on the vestiges of the old and ugly in Russia and ignore all that is new and promis- ing. Where do we go from here? As the ranking member of the Foreign Oper- ations Subcommittee, I have watched as funding for foreign assistance has been slashed over the past 18 months, including assistance to Russia. Assist- ance to Russia is being phased out over the next 2 years, even though it is obvi- ous that it is going to take the Russian people at least another decade to be able to take control of their own lives instead of expecting the government to do it for them, and that our assistance would be valuable to them. President Yeltsin has won the sup- port of his people to continue reform. But the Russian economy remains a shambles. The Russian Government has no money to finance its reforms. Crime is rampant. There are still pen- sioners on the streets of Moscow hawk- ing pairs of children’s rubber boots in order to survive. Aid from the United States cannot possibly solve these problems directly. The problems are so immense that only the Russian people working together will be able to. But what our aid can do is show them the way. Most Russians still have only a faint notion of what a market econ- omy offers. Most also still carry the perceptions drilled into them by their Soviet masters that Americans are their enemies. I have not been fully satisfied with the results of our aid program in Rus- sia. There has been confusion, a lack of strategic thinking, and boilerplate ap- proaches that did not fit the unique conditions there. Too much of the money has ended up in the pockets of American contractors, without enough to show for it. But some programs have given the Russian people hope for a better future. People-to-people exchanges are an ex- ample of how we can help change old ways of thinking. I believe the thou- sands of exchanges of ordinary citizens that we have sponsored over the last 4 years played a role in President Yeltsin’s victory. Farmer-to-farmer programs. Business exchange pro- grams. Academic exchange programs. Civic organization development projects. They have shown the Russian people what is possible. Americans have learned from these exchanges too. We have learned that the Russian people are not ogres. Like us, they are mostly worried about the welfare of their families. But they are learning for the first time that it is possible to have a system of govern- ment whose primary aim is the defense of individual rights, and which actually serves them. Mr. President, there remains much to criticize in Russia. The democracy that exists there is fragile, and the future unpredictable. There will continue to be setbacks, and instances when Russia behaves in ways that are inconsistent with international norms. I have been horrified by the brutality of the Rus- sian military in Chechnya. While it has been reassuring to see the outpouring of protest against this barbarity by the Russian people themselves, President Yeltsin and his security advisors need to recognize that Chechnya’s future is not going to be decided by bombing its people into submission. Having said that, let us today recog- nize how much has changed for the bet- ter in Russia compared to just a few years ago. And I hope we will also reaf- firm our commitment to support re- form in Russia. We know how to put our aid dollars to good use there, and there is much good yet to be done. f TRIBUTE TO THE LATE HARRY M. ”MAC” JOHNSTON Mr. THURMOND. Mr. President, the emergence of South Carolina as a cen- ter for business and industry is due to many factors including a temperate climate, a trained and enthusiastic CONGRESSIONAL RECORD \u2014 SENATE S9421August 1, 1996 workforce, cooperative government of- ficials, and not the least significant, community leaders committed to bringing new jobs into their towns, cities, and counties. One of the fastest growing areas of the Palmetto State is the region known as the Upstate, and a gentleman by the name of Harry M. ”Mac” Johnston, played a key role in business development in Union County, until his recent and untimely death. Mr. Johnston served as the director of the Union County Development Board for slightly more than 2 years, a short tenure to be certain. Despite the brevity of his administration, cut trag- ically short by a stroke, Mr. Johnston managed to achieve several important accomplishments that will be of great benefit to his fellow citizens. Thanks to the efforts of the late Mr. Johnston, the historic Buffalo Mill was purchased and re-opened, Union County was named as the home of South Carolina’s new Juvenile Justice facility, and Up- state residents will celebrate commu- nity spirit this fall at the first ever ”Uniquely Union Festival.” Without question, these are three excellent ex- amples of Mr. Johnston’s abilities as a civic booster and promoter of Union County, and had his life not been ended so abruptly, I am confident that he would have continued to have played an important role in the development of Union County. Mr. President, the impact Mr. John- ston had in Union County was tremen- dous. He was a very capable and well liked man, and in memory of the many contributions he made to his commu- nity, the County Council recently voted to name the new county indus- trial park after this man. This is a fit- ting tribute to a person who dedicated so much of his efforts to making our State a better place to live. I commend the Union County Council on the honor they have paid Mr. Johnston and I ex- tend my deepest condolences to his family on the loss they have suffered. f RETIREMENT OF AMBASSADOR DAVID COLSON Mr. PELL. Mr. President, I take the floor today to pay tribute to a distin- guished civil servant, Ambassador David A. Colson. Ambassador Colson is Deputy Assistant Secretary for Oceans in the Bureau of Oceans and Inter- national Environmental and Scientific Affairs. He will retire from 25 years of Government service on August 2; his departure is a loss to the Department of State and a loss to our country. Dave Colson’s career is an exemplar of public service. In 1966, he graduated from college and joined the Peace Corps, serving for 2 years as a teacher in Liberia. Thereafter, he enlisted in the United States Marine Corps. Upon completion of his tour of duty in 1971, he returned to law school. In 1975, he began working for the Department of State, the organization which has en- joyed the benefits of his efforts ever since. Dave progressed rapidly up the career ladder at State. First as Attorney-Ad- viser, then as Assistant Legal Adviser, and finally as Deputy Assistant Sec- retary. He received a career appoint- ment to the Senior Civil Service after only six years working in the Legal Ad- visers office. Since 1991, he has served with the rank of Ambassador. Mr. President, those are titles and ranks. They are impressive, but they speak little to Dave’s accomplishments and service to our country. The true measure of his contributions lies in the body of international law that he leaves behind and the people whose lives are better because of his work. In these areas, his achievements are le- gion. At the Foreign Relations Committee, Ambassador Colson is best known for his expertise in the area of living ma- rine resources. In the past three Con- gresses, he appeared before our Com- mittee to testify on numerous marine resource treaties. Each of these ad- vanced the interests of the United States and its citizens. Each of them improved the conservation of in the world’s marine resources. Each of them developed further the framework of international law that governs the use of ocean space. And each of them was brought about either in large or partial measure through Ambassador Colson’s efforts. Dave Colson’s accomplishments are not, however, confined to living marine resources. As Deputy Assistant Sec- retary for the OES Bureau at the State Department, he has been extensively involved in a variety of issues includ- ing the Law of the Sea Convention, the London Dumping Convention, a num- ber of maritime boundary negotiations, navigation issues, and a range of mat- ter associated with the Arctic and Ant- arctic. Simply put, Dave Colson became one of the leading experts in the world on oceans. He is to be commended for his invaluable and lasting contributions. I wish him all the best as he embarks on this new phase of his life. f THE VERY BAD DEBT BOXSCORE Mr. HELMS. Mr. President, at the close of business yesterday, Wednes- day, July 31, the Federal debt stood at $5,188,888,625,925.87. On a per capita basis, every man, woman, and child in America owes $19,550.80 as his or her share of that debt. f MAINTAINING OUR PARTNERSHIP WITH ISRAEL Mr. PRESSLER. Mr. President, I want to take this opportunity to com- ment on our nation’s continued sup- port with its chief ally in the Middle East, Israel. Last week, the Senate completed action on the Fiscal Year 1997 Foreign Operations Appropriations Bill. The final legislation soon will be brought before us. This legislation rep- resents the annual opportunity for Congress to demonstrate its clear sup- port for the people of Israel. This year is no exception. Both House and Senate bills would continue last year’s investment levels to Israel\u2014 $1.2 billion for economic assistance and $1.8 billion in military aid. I commend the House and Senate Chairmen of the Foreign Operations Appropriations Subcommittee\u2014Senator MCCONNELL and Congressman CALLAHAN for their efforts to maintain our full commit- ment to the people of Israel. I have been a strong critique of for- eign aid excess. However, I firmly be- lieve that one of the wisest invest- ments we can make is to the economic viability and national security of Is- rael. Failure to maintain that commit- ment could pose even greater costs in the future\u2014costs in lost jobs, lost op- portunities and far worse, even lost lives. I have been concerned of late with the proliferation of advanced weapons to nations that traditionally have been hostile to Israel’s existence. In the past year, Iran has acquired advanced cruise missiles from China, and has engaged in an aggressive campaign to develop a nuclear weapons and ballistic missile program. It also recently was reported that Syria may have obtained ad- vanced ballistic missile technology from China. It is no secret that Syria is seeking to develop a far more capable ballistic missile than the Scud missiles that rained down on Israel during the Gulf War. Given these developments, it is crucial that Israel maintains a tech- nological edge in its defense systems. Our continued support of Israel’s de- fense, therefore, is vital. Mr. President, as we all know, just a few weeks ago, a joint session of Con- gress was held in order to hear an ad- dress by the newly elected Prime Min- ister of Israel, Binyamin Netanyahu. We witnessed a stirring speech. Prime Minister Netanyahu deserves our con- gratulations for articulating a thoughtful vision for the people of his country. Perhaps most important, the people of Israel deserve our congratulations for demonstrating their commitment to democratic values. For nearly a half century, the people of Israel have built and preserved a democracy despite con- stant hardship and hostility. The re- cent elections are proof that the people of Israel are determined to withstand pressures from without and within to maintain a democracy, build a vibrant economy and achieve peace and secu- rity in the entire region. Prime Minister Netanyahu came to Washington as Israel’s first popularly elected Prime Minister. Rather than be the choice of a governing coalition, Prime Minister Netanyahu is the peo- ple’s choice. The people chose him to lead the Israeli government, rather than the government itself. The Prime Minister’s speech to Con- gress demonstrated his appreciation and understanding of the American-Is- raeli partnership\u2014a partnership that CONGRESSIONAL RECORD \u2014 SENATES9422 August 1, 1996 goes beyond common political and strategic bonds. Both nations share a common set of values \u2014values of free- dom, individual responsibility, and hope and opportunity. The Prime Min- ister noted that it was no coincidence that the birth of Israel coincided with the rise of the United States as the world’s preeminent power. He is right. I also was particularly heartened with the Prime Minister’s assurances that he is committed to establishing real peace in the region. Indeed, he ar- ticulated a clear, commonsense vision of how peace can be established. He called this vision the ”three pillars of peace.” The pillars being security, reci- procity, and democracy and human rights. Americans should understand and appreciate each one of these pil- lars. It was Ronald Reagan who popular- ized the maxim ”peace through strength.” Actually, as Prime Minister Netanyahu reminded us, that maxim has its origin in Hebrew verse, which when translated, reads as follows: ”God will give strength to His people; God will bless His people with peace.” We are a nation long blessed with peace be- cause we always made the defense of this nation a high priority. America’s combined economic and military power provided the strength needed to secure a peaceful victory in the Cold War. Similarly, we cannot undermine Isra- el’s security in the name of peace. That, in essence, was what the Israeli elections were all about. Therefore, we should not question Is- rael’s commitment to peace if it de- mands as a prerequisite an end to ter- rorist aggression, or state-sponsored attacks against Israeli citizens and cities. We should not second guess Isra- el’s desire to move the peace process forward if it demands as a prerequisite that existing peace agreements be re- spected by all sides. We should embrace these conditions for they have at their core the values of any true democ- racy\u2014the values of personal freedom and the rule of law. In essence, that is what Israel is seeking from its neigh- bors. American know peace cannot exist without respect for individual rights and the rule of law. The people of Israel should expect no less. I applaud Prime Minister Netanyahu for being unwilling to believe that Is- rael will remain the Middle East’s one lone democracy. There is no reason that the shared traditions of our two countries\u2014human rights, democracy, free speech, religious tolerance\u2014can- not be the growing traditions in any part of the world. Democracy has seen advances in Asia and Africa. The Mid- dle East should not be immune to its benefits, one of them being a lasting peace. Prime Minister Netanyahu under- stood and demonstrated to all of us that democracy is the ultimate method to achieve peace. After all, as he cor- rectly pointed out, ”modern democ- racies do not initiate aggression.” That being the clear case, and understanding the values inherent in democracies, there should be no question in the minds of those who seek peace, that the Middle East’s lone democracy should be the sole sovereign of the city of Jerusalem. I am pleased that Con- gress took a stand for one, unified city of Jerusalem by voting to move our Embassy there. Is it no surprise that under a unified democratic system, Je- rusalem has witnessed peace and pro- tection to members of all nationalities that have come to worship there? Cer- tainly, it is no surprise to Americans. We know, as Prime Minister Netanyahu said, that a city divided is not a city at peace or tolerant of its di- versity. Mr. President, let me conclude my remarks with the subject I started with\u2014our continued support for Israel. Prime Minister Netanyahu has vowed that he would like to take Israel down the road of less reliance on U.S. eco- nomic assistance, and greater reliance on the powerful forces of capitalism and free markets. I commend him for setting his nation on this course of eco- nomic independence. This decision demonstrates his confidence with his fellow citizens of Israel to build a vi- brant, strong, self-reliant nation. That being the course he has set, the best we in the United States can do is help him and the people of Israel achieve that admirable goal. As a U.S. Senator, I have watched and admired a brave and determined people build a democracy under brutal circumstances that more than tested their resolve. This past year was no ex- ception. It has been a year that wit- nessed the assassination of Israel’s great leader, Yitzhak Rabin, repeated terrorist attacks, and a very conten- tious election. Through it all, the peo- ple of Israel stood strong, holding to its values and its belief that their home, their country, will stand strong, pros- perous and at peace. The people of the United States cannot help but admire that determination. The people of the United States stand ready to help the people of Israel as they move down a road of peace, security and economic self-reliance. f OREGON COAST AQUARIUM Mr. HATFIELD. Mr. President, for 30 years I have had the pleasure of rep- resenting a State known for its empha- sis on educating its citizens on the im- portance of understanding and preserv- ing their surrounding environment. The Oregon Coast Aquarium serves as a wonderful example of this unique spirit of conservation. Visitors at the Oregon Coast Aquar- ium are able to experience the indige- nous coastal habitat and view many ex- amples of marine creatures and plant life. However, the aquarium is much more than a collection of exhibits, it is an education center. The theme chases a raindrop from the moment it drops from the sky and hits the Coast Range, until it reaches its final destination, the Pacific Ocean. By following this path through numerous interactive ex- hibits, theaters, and touch pools, chil- dren and adults alike are able to learn about the native Oregon coastal envi- ronment and its important function. Located just south of Newport along the scenic Oregon coastline, the Oregon Coast Aquarium has recently become the rehabilitation center for the 16- year-old orca whale Keiko, known for his role in the movie ”Free Willy.” The aquarium was selected by the Earth Is- land Institute, whose job it was to find a suitable new home for the 21-foot- long and 7,000-pound killer whale, as the only facility in the country that satisfied the necessary criteria. Keiko was transported, via a UPS B 130 cargo jet, to the aquarium from an amuse- ment park in Mexico, where his health had been rapidly deteriorating. Since his arrival in January, Keiko has steadily improved and is moving ever closer to the goal of his eventual re- lease. I am honored today to recognize the Oregon Coast Aquarium and welcome the most recent addition to our coastal waters. On Sunday, July 28, 1996, the New York Times published a full page arti- cle on Keiko and the Oregon Coast Aquarium. Mr. President, I ask unanimous con- sent that a copy of this article be printed in the RECORD. There being no objection, the article was ordered to be printed in the RECORD, as follows: [From the New York Times, July 28, 1996] WILLY NOT FREE, BUT MENDING (By Donald S. Olson) On Jan. 7 of this year thousands of people lined Highway 101 south of Newport, Ore., to welcome a 7,720-pound, 21-foot-long celebrity from Mexico City. Keiko, the 16-year-old orca whale who starred in the movie ”Free Willy,” arrived by U.P.S. B 130 cargo jet. He was loaded onto a flatbed truck and hauled past cheering crowds to his new home, the Oregon Coast Aquarium. Several aquariums wanted Keiko, but the Oregon Coast was cho- sen because it was the only one with the space to build a pool large enough to reha- bilitate him for possible release into the wild\u2014the first such attempt ever made with a captive orca. Since it opened in 1992, the magnificent 37- acre facility, about two and a half hours southwest of Portland, has drawn me back to Newport and the coastal region around Yequina Bay several times. Situated on the bay’s south side, adjacent to an estuary teeming with wildlife, the aquarium is de- signed in the vernacular of seaside buildings such as boat sheds, with imaginative interior detail. The pillars, for instance, are cast with sandy reliefs of marine life, and the doorhandles are octopus tentacles and heron heads cast in bronze. A sculptured school of 150 thrashing coho salmon hanging in the front entry hall leads to the first exhibit, where a short video in- troduces the concept behind the aquarium. Following the course of a raindrop that falls in the Coast Range, trickles down streams, flows into rivers, washes through wetlands and finally reaches the sea, the galleries, ar- ranged in a circular pattern, present a cross- section of various coastal habitats linked by water into one vast inter-connected marine ecosystem. CONGRESSIONAL RECORD \u2014 SENATE S9423August 1, 1996 The first gallery focuses on Oregon’s sandy beaches, which support crabs, shrimps, sea stars, sea pens and sand dollars. The flatfish, whose camouflage abilities are highlighted in a special tank, is one of the stranger crea- tures on view. As it grows it changes color, its eyes migrate toward one another, and it begins to swim sideways. A central floor-to- ceiling walk-around tank recreates the pier- and-pilings environment found along New- port’s Bay Front. Leopard sharks, smelt and tubesnouts glide in and out among the piers, barnacles and anemones attach themselves to pilings. A favorite spot for children (and many adults) is the Touch Pool in the next gallery, called Rocky Shores. Here, under the genial tutelage of aquarium volunteers, visitors can gently stroke starfish and chitons. Smaller tanks contain oddities like the grunt sculpin, which crawls or leaps across rocks with broad, fingerlike fins, the pea sized spiny lumpsucker and the decorated war bonnet. An array of delicate anemones wave their pulpy pink, white and purple tentacles in other tanks. Visitors often gasp in surprise when they enter the Coastal Waters Gallery and see the central moon jellies exhibit. The glass of the oval-shaped tank magnifies these pink, brainless beauties as they gracefully pal- pitate up toward the top and drift down again. Sea nettles, another jellyfish species, look like aquatic, caramel-colored Art Nou- veau lampshades, and the fragile bell jellies resemble tiny transparent light bulbs. For sheer creepiness, on the other hand, nothing compares with the hagfish, coiled like a pale, bloated sausage in its own tank. This repul- sive creature covers dead fish with a glaze of slime, swims inside, and proceeds to eat its way out again. A close runner-up in the ugly department is the huge, primitive-looking wolf-eel, which uses its mouthful of buck teeth to crush shellfish. The circular route of the galleries brings the visitor to the long covered portico near the entrance, beyond which are the outdoor exhibits\u2014four acres of specially constructed caves, cliffs and pools that distinguish this aquarium. Both aboveground and through underwater viewing windows visitors can watch sea lions, seals, sea otters, octopuses and sea- birds. The otters, rescued as infants from the Exxon Valdez oil spill in Alaska, are the only animals not indigenous to Oregon. They look cuddly and playful, but they’re very terri- torial and aggressive. Cody, the 80-pound male, has smashed the protective glass win- dow on more than one occasion. Keiko, of course, is now the star attrac- tion, housed in his own state-of-the-art pool, 150 feet long, 75 feet wide and 25 feet deep. Although Keiko did not come to the aquar- ium to perform, his trainers have devised a series of brain games and high-energy reme- dial workouts\u2014including breaches, barrel rolls, bows and high-speed swims\u2014to im- prove his physical abilities and keep him mentally challenged. To the delight of visi- tors, he also spends a great deal of time at the underwater viewing windows, watching the people watch him. The Free Willy-Keiko Foundation, which now owns the animal, will make the final de- cision regarding his release. After Life magazine brought Keiko’s plight to the public’s attention in 1993 and children around the world bombarded the Warner Brothers Studio with letters demanding to know why ”Free Willy” was ailing and still in captivity the studio hired Earth Island In- stitute, an environmental advocacy group headquartered in San Francisco, to find a fa- cility where the whale\u2014then a ton under- weight, with a collapsed doral fin and skin lesions\u2014could be rehabilitated. The institute set up the Free Willy-Keiko Foundation, and Warner Brothers donated $2 million of the $7.3 million needed to com- plete his new pool. The rest of the money, for relocation, veterinary care and penses (such as the 120,000 pounds of fresh- frozen fish Keiko will eat every year), has come from private donations. The goal of the foundation and the Oregon Coast Aquarium is to make Keiko well enough to so that he can eventually be returned to his family pod. Already there are signs that his health is steadily improving, his veterinarian and oth- ers at the aquarium say. He is eating nearly twice as much as he did in Mexico City, and because of the change in water chemistry\u2014 he now swims in cold fresh seawater instead of warm chlorinated water\u2014he’s shed a layer of skin, including patches of lesions near his tail flukes and pectoral flippers. Dr. Lanny Cornell, his veterinarian, re- cently stressed, however, that while the ini- tial news is good, ”it’s a very short time to make long-term predictions about his even- tual recovery.” Other factors beside Keiko’s health must also be taken into consideration before he can be considered ready for life in the wild. For one thing, each orca pod communicates with its own ”dialect” based on geographic location. Keiko can’t be released into the Pa- cific because he wouldn’t be able to commu- nicate with the West Coast orcas. Willy had been captured off the coast of Iceland; ma- rine biologists must find his original pod, and it’s possible that they may no longer be alive. In the meantime, from underwater viewing windows, visitors now have a chance to see an orca explore an environment that recreates a portion of his natural habitat. Since Keiko’s arrival, Newport, a small coastal town on the north side of Yaquina Bay, has experienced a major tourist boom. From the aquarium it takes about five minutes to reach the town via the Yaquina Bay Bridge, build in 1932 to 1936 as a W.P.A. project. South Jetty, the oldest on the West Coast, extends far out into the Pacific, protecting the entrance into the bay. The section of Newport that stretches along Highway 101 is little more than an anonymous-looking strip mall, but a couple of areas still preserve remnants of the old fishing community’s crusty past. Nye Beach, a neighborhood that fronts on the Pacific Ocean just west of Highway 101, is full of the weathered, unpretentious cot- tages and beach shacks that until recently characterized Newport and most Oregon coastal towns. The Sylvia Beach Hotel, a former board- inghouse that is now a cozy hotel, is perched above the broad, white-sand beach. From Highway 101, the road curves down past a Coast Guard station to Bay Boulevard, the main street where Newport’s beleaguered fishing industry is still headquartered. The Bay Front, with its assortment of seafood restaurants, is a good place to sample fresh local fish, oysters, shrimp, mussels, crabs, geoducks (pronounced gooey-ducks) and clams. White clam chowder, thick as pud- ding, is a staple in these parts. More seafood to go can be found, uncooked, at the indoor counters of the bayside canneries and fish- processing plants. In seconds they can clean, crack and package a whole Dungeness crab, one of the sweetest-tasting crustaceans in existence. The Bay Front is the liveliest spot in Newport. In addition to local craft, antiques, gift and candy shops, there’s Mariner Square, with a child-pleasing Ripley’s Believe It or Not. Dozens of colorful trawlers still dock at Newport’s marina, chugging out to fish for cod, flounder, tuna, shrimp and oysters. But the recent, federally imposed quotas on salmon and halibut has slowed the town’s charter-boat business. Strolling along the narrow bayside side- walks, visitors are often surprised to hear the grunting gutteral barks of nearby sea lions. There are so many male sea lions in Yaquina Bay that residents call it the Bach- elor Club. The females stay in the sea with their young, but the hulking males like to congregate on waterside docks. The stretch of Highway 101 from Newport to Lincoln City, 22 miles north, is filled with a spectacular array of the saltwater habitats recreated at the aquarium. One of the best areas for viewing coastal wildlife is Yaquina Head, on the northern outskirts of Newport. Here, in the water and on the rocks below Oregon’s oldest lighthouse, a gleaming white tower activated in 1873, a raucous assort- ment of harbor seals, sea lions, cormorants, murres, puffins and guilemots make their home. This is also a good spot for whale watching in the wild. If the spring and early summer more than 18,000 gray whales pass by on their seasonal migration from Alaska to Baja California. Once or twice a year orca whales, such as Keiko, also make their way into Yaquina Bay. After gulping down whatever fish is available\u2014and often a sea lion or two they swim back to the open sea. They bay itself is a thriving oceanic ecocenter. Not only does it support 200 species of birds, but it is so clean that every day at high tide the Oregon Coast Aquarium pumps two million gallons of water directly from the bay into their tanks and another two million into Keiko’s pool. f IN TRIBUTE TO JOHN PAUL BOLLMAN Mr. HATFIELD. Mr. President, today I come to the floor to pay tribute to a great man who has dedicated his life to helping people and families in need. John Paul Bollman has grown up in the small town of Dallas, OR. His family has made funeral service their life’s work and as a result, he has helped thousands of people cope with the most difficult loss a family can experience. Over the past 4 decades he has worked tirelessly to help people in need by ex- tending kindness and compassion to ac- quaintances and strangers alike, each as if they were an old friend. A man of conviction, he is deeply admired by his peers, respected for his principles, and highly regarded as a noteworthy civic leader. Throughout his life he has em- bodied the true sense of a Christian. He has helped all people, doing so humbly and with great adoration from his com- munity. John has spent countless hours work- ing for the betterment of the commu- nity and has achieved a number of sig- nificant accomplishments as a result. Serving on the boards of the local school district, the education service district, the local hospital, along with numerous civic and professional boards, John has dedicated his time to improving the community at all levels. Whether he has taken the time to offer a helping hand, a kind word, or a heart- felt gesture, he is always available for those who need him. He recognizes that people are busy today and don’t always CONGRESSIONAL RECORD \u2014 SENATES9424 August 1, 1996 want to invest their time helping in a classroom or teaching a high school student about a business or profession, so John leads by example and hopes that his involvement will encourage others to give of their time as well. He realizes that an opportunity to explore a career path at a young age can make the difference between providing a child an incentive to stay in school and dropping out. For many young people, John has shown them the connection and the importance of receiving a good education. Over the years, many fortunate peo- ple have had a unique opportunity to learn from this man who has made helping others his life’s work. Follow- ing in the steps of his father, John en- tered the funeral service in 1960. It was with a great deal of pride, that John welcomed his son Michael into the family business 10 years ago, to follow in the footsteps of his father and grandfather before him. I share a great fondness for the Bollman family, for it was John’s grandfather, Dr. L.A. Bollman that brought me into this world 74 years ago. I have known four generations of this family and have seen the attributes of his father and grandfather in John and have seen them passed on to his children. His daughter Amy worked in my offices in Washington, DC and Oregon and I saw in her the qualities of her father. She, too, is an outstanding role model in her community. We need more people like John Bollman\u2014people willing to give their time and their hearts to help oth- ers. Mr. President, I would like to take this opportunity to thank John for his tireless service to those in need and let him know that his selfless dedication to his profession and his community does not go without recognition and appreciation. The town of Dallas, OR and all who know him are both fortu- nate and blessed. John Paul Bollman embodies the words of Ralph Waldo Emerson in his famous poem entitled Success: To laugh often and much; to win the re- spect of intelligent people and the affection of children; to earn the appreciation of hon- est critics and endure the betrayal of false friends; to appreciate beauty, to find the best in others; to leave the world a bit better, whether by a healthy child, a garden patch or a redeemed social condition; to know even one life has breathed easier because you have lived. This is to have succeeded. f TRIBUTE TO NINA H. REEVES Mr. HEFLIN. Mr. President, my friend Nina Reeves will soon be retiring from her position as youth director of the North Alabama Conference of the United Methodist Church after nearly 50 years. She will be leaving her post in August 1996 after the conference’s international peace camp. The official publication of the North Alabama Con- ference, the Voice, published a tribu- tary interview with Nina in its April issue, saying, If the North Alabama Conference has an icon, then Nina H. Reeves definitely would be that person * * * From thousands of youth and hundreds of events, the ministry of Nina Reeves stretches from the lives of each youth she has touched throughout the years. Nina Reeves grew up in Yazoo City, MS and was reared as a Presbyterian. She went on to attend Millsaps College and later graduate school at the Uni- versity of Alabama, earning a master’s degree in physical education and recre- ation. After working part time for the Wesley Foundation, she joined the North Alabama Conference at the early age of 22. She had planned to be a teacher, but, even though she didn’t know that much about the Methodist Church at the time, took the position as youth director at the persistent urg- ing of Brother V.H. Hawkins, who vowed to teach her everything she needed to know. Hawkins had seen her at work leading folk dancing, story- telling, and recreation at a Tuscaloosa Methodist Church. She calls herself the oldest living youth worker. Each year, Nina has brought a large group of Methodist youth from all over north Alabama to Washington each year. While in the capital, they met with Government leaders to get ac- quainted with public affairs and the po- litical process. They also visited the United Nations headquarters in New York City. The annual breakfast town meetings with the Alabama congres- sional delegation at the Capitol com- plex were truly outstanding and in- formative. I was always impressed with these young people, since they seemed to have a genuine interest in Govern- ment and world affairs. They also tend- ed to be intellectually curious and quite progressive in their thinking, be- lieving that they had the ability to make a real difference in their commu- nities, State, Nation, and world. Nina Reeves deserves much of the credit for instilling these kinds of positive atti- tudes in the youth to whom she min- istered and offered guidance over the years. I am pleased to commend and con- gratulate Nina Reeves for her nearly 50 years of service to the Methodist youth of north Alabama. She has been their spiritual guide, their teacher, and their friend. She will be greatly missed, and never really replaced, but her immeas- urable contributions and life of service in shaping the leaders of tomorrow will never be forgotten. I wish her all the best as she enters the well-deserved re- tirement phase of her life. f TRIBUTE TO GRADY LILES Mr. HEFLIN. Mr. President, Grady Liles, the moving figure behind bring- ing the NCAA division II national championship game and with it na- tional recognition to the Shoals area of north Alabama, will be honored for his outstanding community leadership on September 5, 1996, at the Florence, AL, Conference Center. He also originated the idea of the Harlon Hill Trophy to honor the top collegiate football player in division II. It is named after a former University of North Alabama player who went on to star with the Chicago Bears, winning the Jim Thorpe Award in the mid-1950’s. In 1985, Grady helped organize and es- tablish the Shoals National Champion- ship Committee, which made a success- ful bid to host the NCAA division II football championship game. The na- tionally televised game has been played in the Shoals for 10 years. Grady Liles is a native of Florence and was the 1947 golden gloves boxing champion and the 1950 middle-weight champion in the U.S. Marine Corps. In 1957, he helped organize the Florence rescue squad, which was the first vol- unteer squad in north Alabama. He served as a firefighter for 13 years and was selected Alabama’s fireman of the year in 1965. In 1963, he had successfully lobbied for the approval of the State fireman’s bill, which regulates and con- trols the maximum working hours for city firefighters. This bill was the first to help firefighters on a Statewide level. Grady is a man of many awards. He was named ”outstanding young man” by the Jaycees in 1965 and 1967 and that same year was selected for outstanding personalities of the south in 1967. In 1968, he received the Distinguished Service Award after saving the life of an infant who had stopped breathing through mouth-to-mouth resuscita- tion. He was selected Shoals citizen of the year in 1987. He is a member of the Florence Civitan Club, Shoals Chamber of Com- merce, American Legion, Knights of Phythias, and Shrine Club. He is also president of the UNA Sportsman’s Club and the National Harlon Hill Award Committee and chairman of the Shoals National Championship Committee. I am pleased to commend and con- gratulate Grady Liles for all his ener- getic boosterism and tireless commu- nity leadership. I wish him all the best for a memorable night of honor and roasting on September 5 in Florence. f THE 39TH ANNUAL RED SALTSMAN PICNIC Mr. FORD. Mr. President, next Mon- day evening will mark the 39th annual Red Saltsman picnic in Sorgho, KY. For a few hours that evening a little town of less than 100 people will be the hot spot for the evening; host to thou- sands of people listening to good music, eating barbecue and bringing each other up to date on the latest political happenings. It’s all thanks to the good will of Katherine and Red Saltsman who 39 years ago just wanted to say thanks to the regulars at their restaurant known as the fish house of the south. That lit- tle picnic for family and friends just sort of grew. Now, you’ll not only find friends and patrons of Red’s restaurant, but politi- cians beating a path to the picnic as well. They know that if they want to CONGRESSIONAL RECORD \u2014 SENATE S9425August 1, 1996 get their message out, they have to first convince the political movers and shakers who come to Red’s. But perhaps the best things about this picnic is that no matter how big the picnic gets, it’s always Red’s pic- nic. Oh there’s a bigger spread and it’s become a permanent stop on the Ken- tucky campaign trail, but the good in- tentions of one man and his family to say thanks and give back to the com- munity are still at the heart of this picnic. Red and his family are pillars of this community. They’re constantly doing far more than their part to ensure Ken- tucky is the kind of place each of us can call home. And so in a way, this picnic reminds us how much we each can do to make our communities thrive. And for that reason\u2014more than the good food and music\u2014we are all grateful to Red Saltsman. f AGRICULTURE CONFERENCE RE- PORT\u2014PUBLIC LAW 480 FUNDING Mr. LEAHY. In the Appropriations Committee’s Subcommittee on Agri- culture, Rural Development and Relat- ed Agencies’ conference, on July 30, the conferees accepted a proposal to reduce the Senate’s title III funding level by $10.5 million and increase title I fund- ing by approximately $7.9 million. I do not serve on the subcommittee but I am concerned about the implications of this action. I would like to hear from the Senator from Iowa, who has expertise on the subject through his years of service both on the Agri- culture Committee and on the Agri- culture Appropriations Subcommittee. Senator HARKIN, what are your thoughts about this action? Mr. HARKIN. I thank the distin- guished Senator from Vermont for rais- ing this issue. His work on food aid is- sues has been unsurpassed. It was under his leadership as chairman of the Senate Committee on Agriculture, Nu- trition, and Forestry in 1990 and as ranking member during the 1996 farm bill, that the Public Law 480 Food for Peace program continues to benefit the world’s starving and undernourished people. I share the concerns of the Senator from Vermont regarding the funding level for the title III Food Aid Program adopted in conference. It would have been much better, in my view, to have retained the Senate level of funding for title III. Title III is an important tool in combating the long-term obstacles to food security, yet it has been cut significantly over the past several years. The title III fiscal year 1995 funding level was down by well over 50 percent from fiscal year 1994, and the number of countries receiving title III food aid dropped from 13 in fiscal year 1994 to 7 in fiscal year 1995. Title III serves the poorest and most food-deficient countries. In times of shrinking budgets, it is especially im- portant that in using the available funds priority be given to addressing the most pressing needs. Unfortu- nately, the $40 million contained in the President’s budget and in the Senate bill already represented a substantial cut in title III funding, as compared to $50 million in fiscal year 1996, $117.4 million in fiscal year 1995, $255.1 in fis- cal year 1994, and $333.6 million in fis- cal year 1993. So I believe that at a minimum the title III funding should have been maintained at the $40 mil- lion level in the President’s budget and the Senate bill. Mr. LEAHY. I thank the Senator for his comments. I share his concern that by cutting this program we are cutting aid to those populations that are the most needy. I can only hope that this occurred because of a lack of under- standing about what this program does and what populations it serves. These programs are now tightly focused on the poorest, most food-deficit countries in the world such as Bangladesh and Ethiopia. Let me give an example of the way the program operates: Title III wheat in Ethiopia has been used to capitalize an emergency reserve. This has helped to stabilize grain markets, while pro- viding a cushion against periodic drought. Under this program Private Voluntary Organizations such as Catholic Relief Services and Care can borrow from this reserve to meet emer- gency requirements, with a promise to replenish the reserve in the future. Without this facility we would have greater requirements for costly emer- gency feeding programs. So here’s a way, in a time when we are cutting back on total food aid dol- lars, that we can help alleviate prob- lems before they become expensive emergency situations. I think the U.S. Congress should be in favor of this type of preventive activity. Mr. HARKIN. The Senator from Ver- mont is certainly correct in his com- ments about the title III program. The focus of title III is on structural, policy reforms and activities that directly af- fect or improve food production and consumption, including nutrition. Helping the poorest, most food-defi- cient countries address these issues will help them see their way to food se- curity. Reforms achieved through title III are an important tool in a longer term strategy for poorer developing countries. Mr. LEAHY. I understand that the Senator from Iowa also shares my grave concerns about the consistent re- ductions in our funding of the Public Law 480 Food for Peace Program\u2014a key part of our global effort to foster international food security throughout the globe. Mr. HARKIN. The Senator from Ver- mont is correct. In addition to our dis- cussion about title III, I would like to speak about my deep concern regarding the overall cuts in funding for the Pub- lic Law 480 Food for Peace Program in recent years. These cuts, combined with higher commodity prices and the virtual disappearance of surplus com- modities, have caused a dramatic re- duction in the volume of U.S. food aid. Since fiscal year 1993, total food aid provided by the United States has dropped by about two-thirds\u2014from 8 million metric tons to about 2.8 million metric tons this fiscal year. The United States has been generous in providing food aid. Since its incep- tion in 1954, our Food for Peace Pro- gram has delivered over 372 million metric tons of food to needy coun- tries\u2014and Americans sincerely want to help alleviate world hunger. We also re- alize that Public Law 480 assistance works to our own benefit. It is a win- win proposition for our farmers and ag- ricultural businesses. In the short term, purchases for Public Law 480 shipments strengthen markets for U.S. commodities. Over the long term, Pub- lic Law 480 helps develop world mar- kets for U.S. agricultural exports. Forty-three nations that once received U.S. foreign aid are now among the top consumers of U.S. agricultural prod- ucts. It is very unfortunate that these cuts in Public Law 480 are occurring at a time when world food aid needs are growing dramatically. These needs are expected to double by 2002 according to a report by USDA’s Economic Research Service issued in October 1995. Regret- tably, as U.S. food aid tonnages have dropped, so have those of other donor nations, resulting in only about 6 mil- lion metric tons of food aid annually to meet need amounting to some 27 mil- lion metric tons of food. Over 800 million people on Earth are now chronically undernourished. The people hardest hit are young children and pregnant and lactating mothers who are deprived of adequate nutrition at the most critical times in their lives because of abject poverty and horrible living conditions. They suffer from fre- quent illness, poor growth and develop- ment, lack of productivity, and early death. Mr. LEAHY. The Senator is correct. Under the Public Law 480 program, each title addresses a vital, yet dif- ferent need and population group. These titles are like tools in a toolbox. Each one has a vital function; each one is needed but at different times. Mr. HARKIN. We have discussed the importance of title III in targeting countries with low incomes, high in- fant mortality, and low caloric in- takes. Title II is similarly focused on addressing the critical needs of the hungry and malnourished. Title II saves lives through emergency assist- ance and improves health, incomes, and living conditions through develop- ment programs conducted by private voluntary organizations. It is particularly important that title II have enough resources so that emer- gency food aid demands do not consume resources that would other- wise be available for the development component of title II carried out by CONGRESSIONAL RECORD \u2014 SENATES9426 August 1, 1996 PVOs. Eroding these development pro- grams\u2014which are critical to alleviat- ing poverty and hunger over the long term\u2014to meet overriding emergency demands is surely a stark example of eating one’s seed corn. By contrast, the title I market devel- opment program serves a completely different population. Title I is impor- tant to U.S. agriculture and to foreign market development\u2014and I am con- cerned about the funding cuts it has suffered\u2014but I also believe that we must seek a reasonable balance among the three titles in light of pressing human needs. Given the growing need for food aid and the reductions in Public Law 480 funding, I encourage the administra- tion to make full use of its authority to focus the limited Public Law 480 funds on meeting the priority needs of the poorest and most food-deficient countries. Mr. LEAHY. I agree with the Senator from Iowa and I know that we can work in concert with the administra- tion and the Congress to ensure that our limited food aid resources are ef- fectively used to promote food secu- rity. f MESSAGES FROM THE PRESIDENT Messages from the President of the United States were communicated to the Senate by Mr. Sherman Williams, one of his secretaries. EXECUTIVE MESSAGES REFERRED As in executive session the Presiding Officer laid before the Senate messages from the President of the United States submitting a withdrawal and sundry nominations which were re- ferred to the appropriate committees. (The nominations received today are printed at the end of the Senate pro- ceedings.) f MESSAGES FROM THE HOUSE At 11:15 a.m., a message from the House of Representatives, delivered by Ms. Geotz, one of its reading clerks, an- nounced that the House passed the fol- lowing bills, in which it requests the concurrence of the Senate: H.R. 3006. An act to provide for disposal of public lands in support of the Manzanar His- toric Site in the State of California, and for other purposes. H.R. 2823. An act to amend the Marine Mammal Protection Act of 1972 to support the International Dolphin Conservation Pro- gram in the eastern tropical Pacific Ocean, and for other purposes. H.R. 2636. An act to transfer jurisdiction over certain parcels of Federal real property located in the District of Columbia, and for other purposes. ENROLLED BILLS SIGNED The message also announced that the Speaker has signed the following en- rolled bills: H.R. 1051. An act to provide for the exten- sion of certain hydroelectric projects located in the State of West Virginia. H.R. 3663. An act to amend the District of Columbia Self-Government and Govern- mental Reorganization Act to permit the Council of the District of Columbia to au- thorize the issuance of revenue bonds with respect to water and sewer facilities, and for other purposes. S. 531. An act to authorize a circuit judge who has taken part in an in banc hearing of a case to continue to participate in that case after taking senior status, and for other pur- poses. S. 1757. An act to amend the Developmen- tal Disabilities Assistance and Bill of Rights Act to extend the Act, and for other pur- poses. S.J. Res. 20. Joint resolution granting the consent of Congress to the compact to pro- vide for joint natural resource management and enforcement of laws and regulations per- taining to natural resources and boating at the Jennings Randolph Lake Project lying in Garrett County, Maryland and Mineral County, West Virginia, entered into between the States of West Virginia and Maryland. The enrolled bills were signed subse- quently by the President pro tempore [Mr. THURMOND]. The message further announced that the House agrees to the report of the committee of conference on the dis- agreeing votes of the two Houses on the amendments of the Senate to the bill (H.R. 3603) making appropriations for Agriculture, Rural Development, Food and Drug Administration, and Related Agencies programs for the fis- cal year ending September 30, 1997, and for other purposes. The message also announced that the House agrees to the report of the com- mittee of conference on the disagreeing votes of the two Houses on the amend- ments of the Senate to the bill (H.R. 3754) making appropriations for the legislative branch for the fiscal year ending September 30, 1997, and for other purposes. At 6:04 p.m., a message from the House of Representatives, delivered by Ms. Goetz, one of its reading clerks, an- nounced that the Speaker has signed the following enrolled bill and joint resolution: H.R. 3215. An act to amend title 18, United States Code, to repeal the provision relating to Federal employees contracting or trading with Indians. H.J. Res. 166. Joint resolution granting the consent of Congress to the Mutual Aid Agreement between the city of Bristol, Vir- ginia, and the city of Bristol, Tennessee. f MEASURES REFERRED The following bills were read the first and second times by unanimous con- sent and referred as indicated: H.R. 2636. An act to transfer jurisdiction over certain parcels of Federal real property located in the District of Columbia, and for other purposes; to the Committee on Energy and Natural Resources. H.R. 2823. An act to amend the Marine Mammal Protection Act of 1972 to support the International Dolphin Conservation Pro- gram in the eastern tropical Pacific Ocean, and for other purposes; to the Committee on Commerce, Science, and Transportation. H.R. 3006. An act to provide for disposal of public lands in support of the Manzanar Na- tional Historic Site in the State of Califor- nia, and for other purposes; to the Commit- tee on Energy and Natural Resources. MEASURES PLACED ON THE CALENDAR The following measures were read the second time and placed on the cal- endar: S. 2006. A bill to clarify the intent of Con- gress with respect to the Federal carjacking prohibition. S. 2007. A bill to clarify the intent of Con- gress with respect to the Federal carjacking prohibition. H.R. 2391. An Act to amend the Fair Labor Standards Act of 1938 to provide compen- satory time for all employees. f ENROLLED BILLS AND JOINT RESOLUTION PRESENTED The Secretary of the Senate reported that on August 1, 1996, he had pre- sented to the President of the United States, the following enrolled bills and joint resolution: S. 531. An act to authorize a circuit judge who has taken part in an in banc hearing of a case to continue to participate in that case after taking senior status, and for other pur- poses. S. 1757. An act to amend the Development Disabilities Assistance and Bill of Rights Act to extend the act, and for other purposes. S.J. Res, 20. Joint resolution granting the consent of Congress to the compact to pro- vide for joint natural resource management and enforcement of laws and regulations per- taining to natural resources and boating at the Jennings Randolph Lake Project lying in Garrett County, Maryland and Mineral County, West Virginia, entered into between the States of West Virginia and Maryland. f EXECUTIVE AND OTHER COMMUNICATIONS The following communications were laid before the Senate, together with accompanying papers, reports, and doc- uments, which were referred as indi- cated: EC 3574. A communication from the Ad- ministrator of the Agricultural Marketing Service, Department of Agriculture, trans- mitting, pursuant to law, the report of a rule entitled ”Irish Potatoes Grown in Certain Designated Counties in Idaho, and Malheur County, Oregon,” received on July 29, 1996; to the Committee on Agriculture, Nutrition, and Forestry. EC 3575. A communication from the Ad- ministrator of the Agricultural Marketing Service, Department of Agriculture, trans- mitting, pursuant to law, the report of a rule entitled ”Sweet Onions Grown in the Walla Walla Valley of Southeast Washington and Northeast Oregon,” received on July 26, 1996; to the Committee on Agriculture, Nutrition, and Forestry. EC 3576. A communication from the Acting Under Secretary for Food Safety and Inspec- tion Service, Department of Agriculture, transmitting, pursuant to law, the report of a rule entitled ”Use of Trisodium Phosphate on Raw Chilled Poultry Carcasses,” (RIN0583 AB65) received on July 25, 1996; to the Committee on Agriculture, Nutrition, and Forestry. EC 3577. A communication from the Sec- retary of the Department of Agriculture, transmitting, pursuant to law, a report on animal welfare enforcement for fiscal year 1995; to the Committee on Agriculture, Nu- trition, and Forestry. EC 3578. A communication from the Under Secretary of Defense, transmitting, pursuant CONGRESSIONAL RECORD \u2014 SENATE S9427August 1, 1996 to law, the report of a violation of the Antideficiency Act; to the Committee on Ap- propriations. EC 3579. A communication from the Pro- grams and Legislation Division, Office of Legislative Liaison, Department of the Air Force, transmitting, a notice concerning a multi-function cost comparison; to the Com- mittee on Armed Services. EC 3580. A communication from the Pro- grams and Legislation Division, Office of Legislative Liaison, Department of the Air Force, transmitting, a notice concerning a multi-function cost comparison; to the Com- mittee on Armed Services. EC 3581. A communication from the Pro- grams and Legislation Division, Office of Legislative Liaison, Department of the Air Force, transmitting, a notice concerning a multi-function cost comparison; to the Com- mittee on Armed Services. EC 3582. A communication from the Clerk of the Court of Federal Claims, transmitting, pursuant to law, a report on two legal ques- tions relative to cable television; to the Committee on Armed Services. EC 3583. A communication from the Sec- retary of Transportation, transmitting, a draft of proposed legislation to provide for adjustments to capital and operating assist- ance grants for the public transit program, and for other purposes; to the Committee on Banking, Housing, and Urban Affairs. EC 3584. A communication from the Legis- lative and Regulatory Activities Division, Comptroller of the Currency, Administrator of National Banks, transmitting, pursuant to law, the report of a rule entitled ”Manage- ment Official Interlocks,” (RIN1557 AB39, 3064 AB71, 1150 AA95) received on July 25, 1996; to the Committee on Banking, Housing, and Urban Affairs. EC 3585. A communication from the Acting Director, Office of Management and Informa- tion, National Marine Fisheries Service, Na- tional Oceanic and Atmospheric Administra- tion, Department of Commerce, transmit- ting, pursuant to law, the report of a rule en- titled ”West Coast Salmon Fisheries,” (RIN0648 ZA20) received on July 29, 1996; to the Committee on Commerce, Science, and Transportation. EC 3586. A communication from the Gen- eral Counsel of the Department of Transpor- tation, transmitting, pursuant to law, the re- port of a rule entitled ”Airworthiness Direc- tives,” (RIN2120 AA64) received on July 29, 1996; to the Committee on Commerce, Science, and Transportation. EC 3587. A communication from the Sec- retary of Transportation, transmitting, a draft of proposed legislation to renew and improve certain activities of the National Highway Traffic Safety Administration for fiscal year 1997; to the Committee on Com- merce, Science, and Transportation. EC 3588. A communication from the Acting Director of the Office of Fisheries Conserva- tion and Management, National Marine Fish- eries Service, National Oceanic and Atmos- pheric Administration, Department of Com- merce, transmitting, pursuant to law, the re- port of a rule entitled ”Fisheries of the Northeastern United States,” (RIN0648 AI02) received on July 26, 1996; to the Committee on Commerce, Science, and Transportation. EC 3589. A communication from the Acting Director of the Office of Fisheries Conserva- tion and Management, National Marine Fish- eries Service, National Oceanic and Atmos- pheric Administration, Department of Com- merce, transmitting, pursuant to law, the re- port of a rule entitled ”Atlantic Tuna Fish- eries,” received on July 26, 1996; to the Com- mittee on Commerce, Science, and Transpor- tation. EC 3590. A communication from the Acting Director of the Office of Fisheries Conserva- tion and Management, National Marine Fish- eries Service, National Oceanic and Atmos- pheric Administration, Department of Com- merce, transmitting, pursuant to law, the re- port of a rule entitled ”Atlantic Tuna Fish- eries,” (RIN0648 AI29) on July 26, 1996; to the Committee on Commerce, Science, and Transportation. EC 3591. A communication from the Office of the Managing Director, Federal Commu- nications Commission, transmitting, pursu- ant to law, a report relative to the Tele- communications Act of 1996; to the Commit- tee on Commerce, Science, and Transpor- tation. EC 3592. A communication from the Sec- retary of Energy, transmitting, a draft of proposed legislation relative to department assets; to the Committee on Energy and Nat- ural Resources. EC 3593. A communication from the Sec- retary of Energy, transmitting, pursuant to law, the report of rebates from the Low- Level Radioactive Waste Surcharge Escrow Account for calendar year 1995; to the Com- mittee on Energy and Natural Resources. EC 3594. A communication from the Con- gressional Review Coordinator, Animal and Plant Health Inspection Service, Department of Agriculture, transmitting, pursuant to law, the report of a rule entitled ”Horses From Mexico,” received on July 31, 1996; to the Committee on Agriculture, Nutrition, and Forestry. EC 3595. A communication from the Ad- ministrator of the Agricultural Marketing Service, Department of Agriculture, trans- mitting, pursuant to law, the report of a rule entitled ”Dried Prunes Produced in Califor- nia,” received on July 31, 1996; to the Com- mittee on Agriculture, Nutrition,and For- estry. EC 3596. A communication from the Man- aging Director, Federal Housing Finance Board, transmitting, pursuant to law, the re- port of a rule entitled ”Modification of Defi- nition of Deposits in Banks or Trust Compa- nies,” received on July 30, 1996; to the Com- mittee on Banking, Housing, and Urban Af- fairs. EC 3597. A communication from the Gen- eral Counsel of the Federal Emergency Man- agement Agency, transmitting, pursuant to law, the report of a rule entitled ”National Flood Insurance Program,” (RIN3067 AC26) received on July 30, 1996; to the Committee on Banking, Housing, and Urban Affairs. EC 3598. A communication from the Assist- ant Secretary for Export Administration, Department of Commerce, transmitting, pur- suant to law, the report of a rule entitled ”Biological Warfare Experts Group Meeting: Implementation of Changes to Export Ad- ministration Regulations,” (RIN0694 AB37) received on July 31, 1996; to the Committee on Banking, Housing, and Urban Affairs. EC 3599. A communication from the Acting Director of the Office of Management and Budget, Executive Office of the President, transmitting, pursuant to law, the report on direct spending or receipts legislation within five days of enactment; to the Committee on the Budget. EC 3600. A communication from the Acting Director of the Office of Management and Budget, Executive Office of the President, transmitting, pursuant to law, the report on direct spending or receipts legislation within five days of enactment; to the Committee on the Budget. EC 3601. A communication from the Acting Director, Office of Fisheries Conservation and Management, National Marine Fisheries Service, National Oceanic and Atmospheric Administration, Department of Commerce, transmitting, pursuant to law, a rule con- cerning the groundfish of the Bering Sea and Aleutian Islands area; to the Committee on Commerce, Science, and Transportation. EC 3602. A communication from the Direc- tor of the National Marine Fisheries Service, National Oceanic and Atmospheric Adminis- tration, Department of Commerce, transmit- ting, pursuant to law, a rule concerning fish- eries of the Exclusive Economic Zone off Alaska, (RIN0648 AH03) received on July 30, 1996; to the Committee on Commerce, Science, and Transportation. EC 3603. A communication from the Acting Director, Office of Fisheries Conservation and Management, National Marine Fisheries Service, National Oceanic and Atmospheric Administration, Department of Commerce, transmitting, pursuant to law, the report of six rules including a rule relative to a scal- lop fishery off Alaska, (RIN0648 AF81) re- ceived on July 30, 1996; to the Committee on Commerce, Science, and Transportation. EC 3604. A communication from the Man- aging Director of the Federal Communica- tions Commission, transmitting, pursuant to law, a report relative to domestic, inter- state, and interexchange telephone services; to the Committee on Commerce, Science, and Transportation. EC 3605. A communication from the Chair of the Federal Energy Regulatory Commis- sion, transmitting, pursuant to law, a rule entitled ”Oil Pipelines Cost-of-Service Filing Requirements,” received on July 26, 1996; to the Committee on Energy and Natural Re- sources. EC 3606. A communication from the Direc- tor of the Office of Surface Mining, Reclama- tion and Enforcement, Department of the In- terior, transmitting, pursuant to law, a rule concerning the Wyoming Regulatory Pro- gram, (WY022FOR) received on July 30, 1996; to the Committee on Energy and Natural Re- sources. EC 3607. A communication from the Direc- tor of the Office of Regulatory Management and Information, transmitting, pursuant to law, the report of three rules including a rule entitled ”Illinois: Final Authorization of Re- visions to State Hazardous Waste Manage- ment,” (FRL5544 9, 5540 6, 5545 2) received on July 31, 1996; to the Committee on Environ- ment and Public Works. EC 3608. A communication from the Direc- tor of the Office of Regulatory Management and Information, transmitting, pursuant to law, the report of three rules including a rule entitled ”Cypermethrin; Pesticide Toler- ance,” (FRL5544 8, 5389 6, 5387 5) received on July 26, 1996; to the Committee on Environ- ment and Public Works. EC 3609. A communication from the Direc- tor of the Office of Regulatory Management and Information, transmitting, pursuant to law, the report of eleven rules including a rule entitled ”Fenpropathrin; Pesticide Tol- erance” (FRL5388 1, 5372 6, 5388 2, 5387 2, 5385 3, 5386 8, 5543 7, 5539 9, 5543 6, 5535 3, 5535 2); to the Committee on Environment and Public Works. EC 3610. A communication from the Sec- retary of Health and Human Services, trans- mitting, pursuant to law, the report of a rule entitled ”Medicaid Program” (RIN0938 AH31), received on July 31, 1996; to the Com- mittee on Finance. EC 3611. A communication from the Chief of the Regulations Unit, Internal Revenue Service, Department of the Treasury, trans- mitting, pursuant to law, the report of a rule entitled ”Notice 96 40,” received on July 30, 1996; to the Committee on Finance. EC 3612. A communication from the Regu- latory Policy Officer, Bureau of Alcohol, To- bacco and Firearms, Department of the Treasury, transmitting, pursuant to law, the report of a rule entitled ”Commerce in Ex- plosives” (RIN1512 AB61), received on July 25, 1996; to the Committee on Finance. EC 3613. A communication from the Chief of the Regulations Unit, Internal Revenue CONGRESSIONAL RECORD \u2014 SENATES9428 August 1, 1996 Service, Department of the Treasury, trans- mitting, pursuant to law, the report of a rule entitled ”Notice 96 38,” received on July 29, 1996; to the Committee on Finance. EC 3614. A communication from the Fiscal Assistant Secretary, Department of the Treasury, transmitting, pursuant to law, a report of the Treasury Bulletin for calendar year 1996; to the Committee on Finance. EC 3615. A communication from the Regu- latory Policy Officer, Bureau of Alcohol, To- bacco and Firearms, Department of the Treasury, transmitting, pursuant to law, the report of a rule concerning ammunition feed- ing devices (RIN1512 AB35), received on July 26, 1996; to the Committee on Finance. f REPORTS OF COMMITTEES The following reports of committees were submitted: By Mr. HATFIELD, from the Committee on Appropriations: Special Report entitled ”Revised Alloca- tion to Subcommittees of Budget Totals from the Concurrent Resolution for Fiscal Year 1996” (Rept. No. 104 347). By Mr. MCCAIN, from the Committee on Indian Affairs, without amendment: H.R. 2464. A bill to amend Public Law 103 93 to provide additional lands within the State of Utah for the Goshute Indian Res- ervation, and for other purposes (Rept. No. 104 348). S. 199. A bill to repeal certain provisions of law relating to trading with Indians (Rept. No. 104 349). By Mr. HATCH, from the Committee on the Judiciary, without amendment: S. 1952. A bill to amend the Juvenile Jus- tice and Delinquency Prevention Act of 1974, and for other purposes. f EXECUTIVE REPORTS OF COMMITTEES The following executive reports of committees were submitted: By Mr. CHAFEE, from the Committee on Environment and Public Works: Nils J. Diaz, of Florida, to be a Member of the Nuclear Regulatory Commission for the term of five years expiring June 30, 2001. Edward McGaffigan, Jr., of Virginia, to be a Member of the Nuclear Regulatory Com- mission for the term of five years expiring June 30, 2000. (The above nominations were re- ported with the recommendation that they be confirmed.) f INTRODUCTION OF BILLS AND JOINT RESOLUTIONS The following bills and joint resolu- tions were introduced, read the first and second time by unanimous con- sent, and referred as indicated: By Mr. BREAUX: S. 2009. A bill to amend the Oil Pollution Act of 1990, and for other purposes; to the Committee on Commerce, Science, and Transportation. By Mr. HATCH (for himself, Mr. SANTORUM, Mr. GREGG, Mr. WARNER, Mr. SIMPSON, Mr. THURMOND, Mr. D’AMATO, and Mr. FAIRCLOTH): S. 2010. A bill to amend title 18, United States Code, to exempt qualified current and former law enforcement officers from State laws prohibiting the carrying of concealed firearms, and for other purposes; to the Com- mittee on the Judiciary. By Mr. SIMPSON (by request): S. 2011. A bill to ensure that appropriated funds are not used for operation of golf courses on real property controlled by the Department of Veterans Affairs; to the Com- mittee on Veterans’ Affairs. S. 2012. A bill to redesignate the title of the National Cemetery System and the posi- tion of the Director of the National Ceme- tery System; to the Committee on Veterans Affairs. By Mr. MCCAIN (for himself, Mr. COATS, Mr. STEVENS, Mrs. HUTCHISON, Mr. ABRAHAM, Mr. ASHCROFT, and Mr. LOTT): S. 2013. A bill to amend title 31, United States Code, to provide for continuing appro- priations in the absence of regular appropria- tions; to the Committee on Appropriations. By Mr. JOHNSTON (for himself and Mr. BREAUX): S. 2014. A bill to authorize the Secretary of the Interior to acquire property adjacent to the city of New Orleans, Orleans Parish, Louisiana, for inclusion in the Bayou Sauvage National Wildlife Refuge, and for other purposes; to the Committee on Envi- ronment and Public Works. By Mr. DOMENICI: S. 2015. A bill to convey certain real prop- erty located within the Carlsbad Project in New Mexico to the Carlsbad Irrigation Dis- trict; to the Committee on Energy and Natu- ral Resources. By Mr. DORGAN (for himself, Mr. BYRD, Mr. HEFLIN, Mr. CAMPBELL, Mr. WELLSTONE, Mr. HOLLINGS, Mr. INOUYE, and Mr. D’AMATO): S. 2016. A bill to assess the impact of the NAFTA, to require further negotiation of certain provisions of the NAFTA, and to pro- vide for the withdrawal from the NAFTA un- less certain conditions are met; to the Com- mittee on Finance. f SUBMISSION OF CONCURRENT AND SENATE RESOLUTIONS The following concurrent resolutions and Senate resolutions were read, and referred (or acted upon), as indicated: By Mr. DODD (for himself, Mr. D’AMATO, Mr. LIEBERMAN, Mr. MOY- NIHAN, Mr. WARNER, Mr. ROBB, Mr. BRADLEY, and Mr. LAUTENBERG): S. Res. 286. Resolution to commend Oper- ation Sail for its advancement of brother- hood among nations, its continuing com- memoration of the history of the United States, and its nurturing of young cadets through training in seamanship; to the Com- mittee on the Judiciary. f STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS By Mr. BREAUX: S. 2009. A bill to amend the Oil Pollu- tion Act of 1990, and for other purposes; to the Committee on Commerce, Science, and Transportation. THE OIL POLLUTION ACT AMENDMENTS OF 1996 \u2211 Mr. BREAUX. Mr. President, I intro- duce legislation to improve marine safety in the transportation of oil and petroleum products and to enhance the safety of our waterway navigational systems. It has been over 7 years since the Senate approved legislation ad- dressing a comprehensive program reg- ulating the transportation of oil and petroleum products, and mandating a system of responding to oilspills. Since the enactment of the Oil Pollution Act of 1990, there has been a marked im- provement in the safety of maritime transportation of oil. According to a recent study, after 1990, the volume of oil pollution from maritime sources in U.S. waters dropped precipitously, and has been reduced by over 75 percent. In addition, there has been a decreasing number of large volume oilspills. For instance, in the 5-year period between 1986 and the end of 1990, there were an average of 25 major and medium oil- spills per year, however, since 1990, the average number of large and medium spills decreased 33 percent to approxi- mately 16 per year. Despite these in- creases in safety there are other steps that can be taken to improve safety, and the bill I am introducing today will continue the improvement of the safe transportation of oil and other pe- troleum products. During consideration of the Oil Pol- lution Act, the Senate Commerce Com- mittee held four hearings on the six different bills that were referred to the Commerce Committee. The end Senate legislative product incorporated the Commerce Committee’s provisions on: The operations of oil tankers, enhanced Coast Guard authority to regulate the conduct of oil tankers and merchant marine personnel, requirements on Vessel Traffic Services [VTS] systems, marine oil transportation-related re- search, and oilspill contingency re- sponse plans as they pertain to vessels and offshore facilities. The Senate bill also included the Committee on Envi- ronment and Public Works provisions creating the Oil Spill Liability Trust Fund, increasing liability limits, and oilspill contingency response planning as it pertains to onshore facililities. I am introducing this legislation today to build on the Commerce Com- mittee marine safety improvements that were incorporated into the Oil Pollution Act of 1990. Title I of the bill would require the Coast Guard to final- ize regulations on operational meas- ures required for single-hull tankers, add certain new safety requirements for the tug-barge industry, and man- date a minimum underkeel clearance level for tank vessels. The bill also would create incentives to induce ves- sel operators to switch from single hulled vessels to double-hulled vessels in advance of their mandated phase out. The bill simplifies the procedures for resolution of oilspill claims, and al- lows vessel operators to consolidate all claims in one Federal proceeding. Title II of the bill will provide the National Oceanic and Atmospheric Ad- ministration [NOAA] with the author- ity to allow emergency regulations for fishing grounds closures to respond to health emergencies and oilspills. The bill would also require NOAA to pro- vide scientific support on oilspill infor- mation. Also included in title II are provisions which would authorize a grant program to establish a non- regulatory program for reducing the risk of oilspills, and authorize NOAA to CONGRESSIONAL RECORD \u2014 SENATE S9429August 1, 1996 use the Oil Spill Liability Trust Fund for nautical charting. We are facing a critical juncture in the modernization of nautical charts, the United States has a responsibility to provide marine nautical chart users with accurate charts, and this provision would help NOAA to provide the shipping public with the most up-to-date navigational information. This provision also in- cludes the authority to utilize private contractors to accomplish nautical charting objectives, and transfers the aeronautical charting responsibilities to the Federal Aviation Administra- tion. Title III of the bill modernizes the regulations governing deepwater ports. When the Deepwater Port Act was en- acted in 1974, it was projected that there would be numerous deepwater port facilities. In fact, there is only one deepwater port in existence today. The provisions of this title will help mod- ernize the regulations, and conform the existing regulations to the realities of deepwater port operation. Mr. President, I look forward to con- tinuing the effort to upgrade the safety of marine operations in the navigable waterways of the United States, and I ask unanimous consent that the text of the bill be printed in the RECORD. There being no objection, the bill was ordered to be printed in the RECORD, as follows: S. 2009 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ”Oil Pollu- tion Act Amendments of 1996”. TITLE I\u2014OIL POLLUTION ACT AMENDMENTS SEC. 101. COMPLETION OF FINAL REGULATIONS UNDER SECTION 4115(b). The Secretary of the department in which the Coast Guard is operating shall issue a final rule under Section 4115(b) of the Oil Pollution Act of 1990 (46 U.S.C. 3703a note) with respect to operations elements not later than September 30, 1996. SEC. 102. TOWING VESSEL SAFETY. (a) SINGLE HULL BARGE REQUIREMENTS.\u2014 (1) PREVENTION MEASURES.\u2014Subtitle I of title IV of the Oil Pollution Act of 1990 (46 U.S.C. 3703a note), as amended by adding at the end the following: ”SEC. 4119. SINGLE HULL BARGE REQUIRE- MENTS. ”The Secretary shall issue rules to require that a single hull barge over 5,000 gross tons operating in open ocean or coastal waters that is affected by this section have at least 1 of the following: ”(1) a crew member on board and an oper- able anchor; ”(2) an emergency system on board the vessel towing the barge to retrieve the barge if the tow line ruptures; or ”(3) any other measure that provides com- parable protection against grounding of the barge as that provided by a measure de- scribed in paragraph (1) or (2). ”SEC. 4120. MINIMUM UNDER-KEEL CLEARANCES FOR TANK VESSELS. ”The captain of the port for each port in which any tank vessel operates shall estab- lish, in consultation with local marine trans- portation industry officials, a minimum under-keel clearance for the vessel when en- tering the port or place of destination and when departing port, taking into account local navigational considerations.”. (2) CLERICAL AMENDMENT.\u2014Section 2 of the Oil Pollution Act of 1990 is amended by add- ing at the end of the table of sections for subtitle I of title IV the following items: ”Sec. 4119. Single hull barge requirements. ”Sec. 4220. Minimum under-keel clearances for tank vessels.”. (b) REQUIREMENT FOR FIRE SUPPRESSION DEVICES.\u2014Section 4102 of title 46, United States Code, is amended by adding at the end the following: ”(f)(1) The Secretary\u2014 ”(A) in consultation with the Towing Safe- ty Advisory Committee; and ”(B) taking into consideration the charac- teristics, methods of operation, and nature of the service of towering vessels, may require, to the extent appropriate, the installation, maintenance, and use of a fire suppression system or other equipment to provide adequate assurance that an onboard fire can be suppressed under reasonably fore- seeable circumstances.”. SEC. 103. REPORTS. (a) STUDY ON LIGHTERING REGULATIONS.\u2014 Within 12 months after the date of enact- ment of this Act, the Secretary of Transpor- tation shall review existing requirements for lightering operations in the United States Exclusive Economic Zone to ensure the safe transfer of oil at sea while imposing no undue economic burdens, as compared to ac- cepted international standards, on tank ves- sels transporting oil to or from the United States and report to the Committee on Com- merce, Science, and Transportation of the Senate and the Committee on Transpor- tation and Infrastructure of the House of Representatives. (b) STUDY ON TANKER LANES.\u2014The Sec- retary of Transportation shall coordinate with the Marine Board of the National Re- search Council on a study of how the des- ignation of waters through which tank ves- sels transport oil, and the designation of shipping lanes for tank vessels, affect the risk of an oil spill. The Marine Board shall recommend to the Secretary any changes to designations of waters that would reduce the risk of oil spills to a minimum level of risk, and report its recommendations to the Com- mittee on Commerce, Science, and Transpor- tation of the Senate and the Committee on Transportation and Infrastructure of the House of Representatives. SEC. 104. CASUALTY REPORTING REQUIRE- MENTS. (a) SUBMISSION OF PLAN.\u2014Not later than one year after enactment of this Act, the Secretary of Transportation shall, in con- sultation with appropriate State agencies, submit to the Committee on Transportation and Infrastructure of the House of Rep- resentatives and the Committee on Com- merce, Science, and Transportation of the Senate a plan to increase reporting of vessel accidents to appropriate State law enforce- ment officials. (b) PENALTIES FOR VIOLATING REPORTING REQUIREMENTS.\u2014Section 6103(a) of title 46, United States Code, is amended by inserting ”or 6102” after ”6101” Code, is amended by inserting ”or 6102” after ”6101” the second place it appears. SEC. 105. DOUBLE HULL INCENTIVES. (a) SECURED LENDERS AND CERTAIN OWN- ERS.\u2014Paragraph (26) of section 1001 of the Oil Pollution Act of 1990 (33 U.S.C. 2710) is amended by striking ”the vessel,” and in- serting ”the vessel, but does not include (i) a person having a security interest in, or secu- rity title to, any vessel under a contract of conditional sale, equipment trust, chattel or corporate mortgage, or other instrument of similar nature, nor (ii) a lessor or charterer of any vessel under a bona fide lease or de- mise charter, unless such person, lessor, or charterer has actual possession or control, or participates in the management, of the ves- sel at the time of a discharge of oil,”. (b) APPLICATION LIMITED TO SINGLE HULL TANKERS AND DOUBLE HULL TANK VESSELS MORE THAN 20 YEARS OLD.\u2014Subsection (c) of section 1004 of the Oil Pollution Act of 1990 (33 U.S.C. 2704) is amended by adding at the end the following: ”(4) APPLICATION LIMITED.\u2014Subparagraph (B) of paragraph (1) of this subsection applies only to\u2014 ”(A) single hull tank vessels; and ”(B) double hull tank vessels more than 20 years of age.”. SEC 106. CONCURSUS. Section 1017(c) of the Oil Pollution Act of 1990 (33 U.S.C. 2717(c)) is amended by striking subsection (c) and inserting the following: ”(c) PROCEDURE.\u2014 ”(1) The responsible party or guarantor may, within 6 months after a claimant shall have presented a claim under section 1013 for costs or damages under section 1002, file a petition in the appropriate United States District Court for limitation of, or exonera- tion from, liability pursuant to sections 1003 or 1004 of this Act. After an action is com- menced under this paragraph in a court, that court shall retain jurisdiction over the ac- tions without regard to whether the re- quested relief is granted. The responsible party or its guarantor shall demonstrate to the court evidence of financial responsibility approved by the Secretary, as required by section 1016. ”(2) Upon compliance with the require- ments of paragraph (1), all claims and pro- ceedings, other than claims presented to the responsible party under section 1013(a), shall cease, and, upon application of the respon- sible party, the District Court shall enjoin the further prosecution of any action or pro- ceeding in any State or United States court against the vessel, responsible party, guaran- tor, or their property with respect to any claim arising under this Act. The court shall issue a notice to all persons asserting claims with respect to which the complaint seeks limitation or exoneration, requiring them to present their respective claims upon the re- sponsible party pursuant to section 1013(a). If a claim is not settled by the responsible party or guarantor as provided in section 1013(c), then those persons may file their re- spective claims with the clerk of the court within such time and in such manner as the court may direct. ”(3) Nothing in this section shall preclude a person from filing a concurrent limitation action under section 4203 of the Revised Statutes of the United States (46 U.S.C. App. 183), commonly known as the Limited Liabil- ity Act.”. SEC. 107. IN REM JURISDICTION. Section 1002 of the Oil Pollution Act of 1990 (33 U.S.C. 2702) is amended by adding at the end the following: ”(e) IN REM JURISDICTION.\u2014A vessel that discharges or poses a substantial threat of a discharge of oil, within the meaning of sub- section (a) of this section, shall be liable for the removal costs and damages specified in subsection (b) that result from the incident. The costs and damages shall constitute a maritime lien on the vessel and may be re- covered in an action in rem in the district court of the United States for any district within which the vessel is found.”. SEC. 108. LIMITED DOUBLE HULL EXEMPTIONS. (a) IN GENERAL.\u2014The double hull construc- tion requirements of section 3703a of title 46, United States Code, do not apply to\u2014 CONGRESSIONAL RECORD \u2014 SENATES9430 August 1, 1996 (1) a vessel documented under chapter 121 of title 46, United States Code, that was equipped with a double hull before August 12, 1992; (2) a barge of less than 1,500 gross tons car- rying refined petroleum product in bulk as cargo in or adjacent to waters of the Bering Sea, Chukchi Sea, and Arctic Ocean and wa- ters tributary thereto and in the waters of the Aleutian Islands and the Alaskan Penin- sula west of 155 degrees west longitude; or (3) a vessel in the National Defense Reserve Fleet pursuant to section 11 of the Merchant Ship Sales Act of 1946 (50 U.S.C. App. 1744). (b) AUTHORITY OF THE SECRETARY OF TRANSPORTATION.\u2014 (1) OPERATION OF BARGES IN OTHER WA- TERS.\u2014The operation of barges described in subsection (a)(2) outside waters described in that subsection shall be on such conditions as the Secretary of Transportation may re- quire. (2) NO EFFECT ON OTHER AUTHORITY OF THE SECRETARY.\u2014Except as provided in sub- section (a), nothing in this section affects the authority of the Secretary of Transpor- tation to regulate the construction, oper- ation, or manning of barges and vessels in accordance with applicable laws and regula- tions. (c) BARGE DEFINED.\u2014For purposes of this section, the term ”barge” has the meaning given that term in section 2101 of title 46, United States Code. SEC. 109. OIL SPILL RESPONSE VESSELS. (a) DESCRIPTION.\u2014Section 2101 of title 46, United States Code, is amended\u2014 (1) by redesignating paragraph (20a) as (20b); and (2) by inserting after paragraph (20) the fol- lowing new paragraph: ”(20a) ‘oil spill response vessel’ means a vessel that is designated in its certificate of inspection as such a vessel, or that is adapt- ed to respond to a discharge of oil or a haz- ardous material.”. (b) EXEMPTION FROM LIQUID BULK CARRIAGE REQUIREMENTS.\u2014Section 3702 of title 46, United States Code, is amended by adding at the end thereof the following: ”(f) This chapter does not apply to an oil spill response vessel if\u2014 ”(1) the vessel is used only in response-re- lated activities; or ”(2) the vessel is\u2014 ”(A) not more than 500 gross tons; ”(B) designated in its certificate of inspec- tion as an oil spill response vessel; and ”(C) engaged in response-related activi- ties.”. (c) MANNING.\u2014Section 8104(p) of title 46, United States Code, is amended to read as follows: ”(p) The Secretary may prescribe the watchstanding and work hours requirements for an oil spill response vessel.”. (d) MINIMUM NUMBER OF LICENSED INDIVID- UALS.\u2014Section 8301(e) of title 46, United States Code, is amended to read as follows: ”(e) The Secretary may prescribe the mini- mum number of licensed individuals for an oil spill response vessel.”. (e) MERCHANT MARINER DOCUMENT RE- QUIREMENTS.\u2014Section 8701(a) of title 46, United States Code, is amended\u2014 (1) by striking ”and” after the semicolon at the end of paragraph (7), (2) by striking the period at the end of paragraph (8) and inserting a semicolon and ”and”; and (3) by adding at the end thereof the follow- ing new paragraph: ”(9) the Secretary may prescribe the indi- viduals required to hold a merchant mari- ner’s document serving onboard an oil spill response vessel.”. (f) EXEMPTION FROM TOWING VESSEL RE- QUIREMENT.\u2014Section 8905 of title 46, United States Code, is amended by adding at the end the following new subsection: ”(c) Section 8904 of this title does not apply to an oil spill response vessel while en- gaged in oil spill response or training activi- ties.”. (g) INSPECTION REQUIREMENT.\u2014Section 3301 of title 46, United States Code, is amended by adding at the end the following new para- graph: ”(14) oil spill response vessels.”. TITLE II\u2014MARINE SCIENCE ENHANCE- MENT FOR OIL SPILL PREVENTION AND RESPONSE SEC. 201. OPENING AND CLOSING OF FISHING GROUNDS. Section 305(c) of the Magnuson Fishery Conservation and Management Act (16 U.S.C. 1855(c)) is amended by striking paragraph (3) and by inserting the following after para- graph (2): ”(3) Any emergency regulation which changes an existing fishery management plan shall be treated as an amendment to such plan for the period in which such regu- lation is in effect. Any emergency regulation promulgated under this subsection\u2014 ”(A) shall be published in the Federal Reg- ister together with the reasons therefor; ”(B) shall, except as provided in subpara- graph (C), remain in effect for not more than 180 days after the date of publication, and may be extended by publication in the Fed- eral Register for an additional period of not more than 180 days, provided the public has had an opportunity to comment on the emer- gency regulation, and, in the case of a Coun- cil recommendation for emergency regula- tions, the Council is actively preparing a fishery management plan, amendment, or proposed regulations to address the emer- gency on a permanent basis; ”(C) that responds to a public health emer- gency or an oil spill may remain in effect until the circumstances that created the emergency no longer exist, provided that the public has an opportunity to comment after the regulation is published and, in the case of a public health emergency, the Secretary of Health and Human Services concurs with the Secretary’s action; and ”(D) may be terminated by the Secretary at an earlier date by publication in the Fed- eral Register of a notice of termination, ex- cept for emergency regulations promulgated under paragraph (2) in which case such early termination may be made only upon the agreement of the Secretary and the Council concerned.”. SEC. 202. NOAA SCIENTIFIC SUPPORT. Section 4202(b) of the Oil Pollution Act of 1990 (33 U.S.C. 1321 note) is amended by add- ing at the end the following: ”(5) SCIENTIFIC SUPPORT TEAM.\u2014 ”(A) ESTABLISHMENT.\u2014Not later than 6 months after the date of enactment of the Oil Pollution Act Amendments of 1996, the Under Secretary of Commerce for Oceans and Atmosphere shall establish and maintain a scientific support team to respond, as re- quired, to oil spills covered by this Act. ”(B) PURPOSE.\u2014The purpose of the sci- entific support team shall be to provide use- ful or necessary scientific information and support to the Federal On-Scene Coordina- tor, primarily in coastal and navigable wa- ters, and to recommend any measures that will serve to mitigate adverse ecological im- pact as a consequence of the spill. ”(C) PARTICIPATION BY SCIENTISTS WITH EX- PERTISE.\u2014The scientific support team\u2014 ”(i) shall be compromised of scientists who are experts in the trajectories of oil spills and hazardous material releases, oil and haz- ardous material behavior and transpor- tation, environmental impacts, and recovery from spills, releases, and related removal ac- tions, environmental trade-off analyses, en- vironmental aspects of contingency plan- ning, and association management tools; and ”(ii) may include local or regional sci- entists identified in the area contingency plan with expertise which would help ensure a more effective response.”. SEC 203. ACCESS TO USEFUL AND NECESSARY IN- FORMATION. (A) ESTABLISHMENT OF INFORMATION CLEAR- INGHOUSE.\u2014Section 7001(a) the Oil Pollution Act of 1990 (33 U.S.C. 2761(a)) is amended\u2014 (1) by striking ”may designate” at the end of paragraph (3) and all that follows through ”representative” and inserting ”may des- ignate. A representative”; and (2) by adding at the end the following: ”(4) DISSEMINATION OF INFORMATION.\u2014The Interagency Committee shall disseminate and compile information regarding previous spills, including data from universities, re- search institutions, State governments, and other nations, as appropriate.”. (b) REQUIREMENT THAT NATIONAL RESPONSE UNITS MAINTAIN INFORMATION ON ENVIRON- MENTAL EFFECTS OF OIL SPILLS.\u2014Section 311(j) of the Federal Water Pollution Control Act (33 U.S.C. 1321(j)) is amended by adding at the end the following: ”(9) The Under Secretary of Commerce and the Secretary of the Interior, through the United States Fish and Wildlife Service, in coordination with appropriate agencies, shall maintain and update a body of informa- tion on the environmental effects of various types of oil spills an how best to mitigate those effects, which shall be kept in a form that is readily transmittable to response teams responding to a spill under this Act;”. SEC. 204. NOAA PROGRAM TO REDUCE OIL SPILL RISK AND IMPROVE NAVIGATION SAFETY. (a) REDUCTION OF OIL SPILL RISK\u2014 (1) IN GENERAL.\u2014The Administrator of the National Oceanic and Atmospheric Adminis- tration shall establish a cost-effective, non- regulatory program to reduce the risk of oil spills through improving navigation safety, promote prompt and effective response and remediation when oil spills occur, enhance recovery and restoration efforts, and ad- vance other purposes of this Act. Such a pro- gram shall\u2014 (A) focus on particular geographic areas at risk from spills of oil or hazardous materials; (B) collaborate closely with local maritime commerce and coastal management inter- ests, including private industry, local, state, and federal agencies, and other appropriate institutions; (C) include a matching grant program to provide initial funding for local forums com- prised of maritime commerce and coastal management interests to advance navigation safety and other oil or hazardous materials spill prevention activities, to improve re- sponse and remediation, and to enhance the restoration of coastal zone resources. Grants made under this section shall be matched with 25 percent nonfederal funds in the first two years of the program, and 50 percent thereafter; (D) promote efficiencies by involving, to the extent appropriate and practical, capa- bilities offered by National Oceanic and At- mospheric Administration and other federal and state programs that could further the purposes of this section; and (E) meet multiple navigation or coastal management needs to the extent practicable. (2) LOCAL OR REGIONAL ELEMENTS.\u2014Local or regional elements for this program shall be developed in consultation with local mari- time commerce and coastal management communities. Program elements may in- clude, but are not limited to\u2014 (A) local forums to promote safe naviga- tion, effective oil spill or hazardous material CONGRESSIONAL RECORD \u2014 SENATE S9431August 1, 1996 spill response and remediation, restoration, and related coastal management activities; (B) Physical Oceanographic Real Time Systems and other technologies that further safe navigation and oil and hazardous mate- rials spill response and restoration, and other coastal management activities; (C) research and development on means to improve the safety of oil transport, the effi- cacy of oil and hazardous materials spill re- sponse, remediation techniques, and restora- tion practices; (D) activities to improve the delivery of navigation, weather, vessel traffic, and other information required for safe navigation; (E) providing information collected pursu- ant to the National Oceanographic and At- mospheric Administration’s navigation and positioning responsibilities in formats useful in oil spill response, remediation, and res- toration activities; and (F) other activities as appropriate consist- ent with the purposes of this Act, the Coast- al Zone Management Act of 1972 and the Na- tional Ocean Service navigation and posi- tioning and coastal management authorities. (3) IMPLEMENTATION.\u2014The Administrator shall phase the implementation of this pro- gram by region such that it is operating na- tionally within 5 years of the date of the en- actment of this Act. (4) AUTHORIZATION.\u2014For purposes of this subsection, there is authorized to be appro- priated $2,000,000 in the first year, $3,000,000 in the second year, and $5,000,000 for each succeeding fiscal year. SEC. 205. NOAA MARINE SERVICES MODERNIZA- TION. (a) IN GENERAL.\u2014For the purposes of mod- ernizing the Administration’s services that support safe and efficient maritime naviga- tion, and accelerating the public availability of improved navigation services and prod- ucts, the Administrator is authorized to withdraw from the Oil Spill Liability Trust Fund established by the Oil Pollution Act of 1990 an amount not to exceed $15,000,000 per year to remain available until expended, for each of 10 fiscal years commencing with the first fiscal year after the enactment of this provision. (b) USE OF FUNDS.\u2014Funds available to the Administration pursuant to subsection (a) shall be used exclusively to pay the costs of enabling, modernizing, enhancing, or ex- panding the capabilities of the Administra- tion to conduct, either directly or by con- tract, programs and activities related to commercial marine navigation, including\u2014 (1) the nautical charting program; (2) marine tides and circulation programs; (3) charting survey ship support, including support provided by private contractors; and (4) marine weather services applicable to commercial navigation safety in the waters of the United States. (c) CHARTING SURVEY SHIP SUPPORT.\u2014The Administration shall obtain charting survey ship support from private sector contractors to the maximum extent feasible consistent with\u2014 (1) maintaining quality control over navi- gation products and services to protect the public interest in navigation safety and pre- vention of maritime accidents, and to pro- tect the United States from liability for gaining to ensure such quality control; and (2) maintaining within the Administration the scientific and technical capabilities nec- essary to perform, or oversee contractor per- formance of, all aspects of the development of marine navigation products and services. (d) TRANSFER OF AERONAUTICAL CHART- ING.\u2014 (1) IN GENERAL.\u2014The following functions are transferred from the National Oceanic and Atmospheric Administration to the Fed- eral Aviation Administration: (A) The functions vested in the Secretary of Commerce by sections 1 and 2 of the Act of August 6, 1947 (33 U.S.C. 883a and 883b) re- lating to aeronautical surveys for the pur- poses of aeronautical charting and the com- pilation, printing, and distribution of aero- nautical charts. (B) The functions vested in the Secretary of Commerce by section 1307 of title 44, Unit- ed States Code, relating to establishment of prices at which aeronautical charts and re- lated products may be sold. (C) So much of the functions of the Sec- retary of Commerce and the Department of Commerce as is incidental to or necessary for the performance by, or under, the Admin- istrator of the Federal Aviation Administra- tion of the functions transferred by this sub- section or that relate primarily to those functions. (2) INCIDENTAL TRANSFERS.\u2014 (A) So much of the personnel, property, records, and unexpended balances of appro- priations, allocations, and other funds em- ployed, used, held, available, or to be made available in connection with the functions transferred to the Administrator of the Fed- eral Aviation Administration by this section as the Director of the Office of Management and Budget shall determine shall be trans- ferred to the Federal Aviation Administra- tion at such time as the Director shall di- rect. (B) Such other measures as the Director of the Office of Management and Budget deter- mines to be necessary in order to effectuate the transfers described in paragraph (1) of this subsection shall be carried out in such manner as the Director shall direct. (3) EFFECTIVE DATE.\u2014The transfers made by this subsection shall be completed not later than September 30, 1998. TITLE III\u2014DEEPWATER PORT MODERNIZATION SEC. 301. SHORT TITLE. This title may be cited as the ”Deepwater Port Modernization Act”. SEC. 302. DECLARATIONS OF PURPOSE AND POL- ICY. (a) PURPOSES.\u2014The purposes of this title are to\u2014 (1) update and improve the Deepwater Port Act of 1974; (2) assure that the regulation of deepwater ports is not more burdensome or stringent than necessary in comparison to the regula- tion of other modes of importing or trans- porting oil; (3) recognize that deepwater ports are gen- erally subject to effective competition from alternative transportation modes and elimi- nate, for as long as a port remains subject to effective competition, unnecessary Federal regulatory oversight or involvement in the ports’ business and economic decisions; and (4) promote innovation, flexibility, and ef- ficiency in the management and operation of deepwater ports by removing or reducing any duplicative, unnecessary, or overly burden- some Federal regulations or license provi- sions. (b) POLICY.\u2014Section 2(a) of the Deepwater Port Act of 1974 (33 U.S.C. 1501(a)) is amend- ed\u2014 (1) by striking ”and” at the end of para- graph (3); (2) by striking the period at the end of paragraph (4) and inserting a semicolon; and (3) by inserting at the end the following; ”(5) promote the construction and oper- ation of deepwater ports as a safe and effec- tive means of importing oil into the United States and transporting oil from the outer continental shelf while minimizing tanker traffic and the risks attendant thereto; and ”(6) promote oil production on the outer continental shelf by affording an economic and safe means of transportation of outer continental shelf oil to the United States mainland.”. SEC. 303. DEFINITIONS. (a) ANTITRUST LAWS.\u2014Section 3 of the Deepwater Port Act of 1974 (33 U.S.C. 1502) is amended\u2014 (1) by striking paragraph (3); and (2) by redesignating paragraphs (4) through (19) as paragraphs (3) through (18), respec- tively. (b) DEEPWATER PORT.\u2014The first sentence of section 3(9) of such Act, as redesignated by subsection (a), is amended by striking ”such structures,” and all that follows through ”section 23.” and inserting the following; ”structures, located beyond the territorial sea and off the coast of the United States and which are used or intended for use as a port or terminal for the transportation, stor- age, and further handling of oil for transpor- tation to any State, except as otherwise pro- vided in section 23, and for other uses not in- consistent with the purposes of this Act, in- cluding transportation of oil from the United States, outer continental shelf.”. SEC. 304. LICENSES. (a) ELIMINATION OF UTILIZATION RESTRIC- TIONS.\u2014Section 4(a) of the Deepwater Port Act of 1974 (33 U.S.C. 1503(a)) is amended by striking the last sentence. (b) ELIMINATION OF PRECONDITION TO LI- CENSING.\u2014Section 4(c) of such Act (33 U.S.C. 1503(c)) is amended\u2014 (1) by striking paragraph (7); and (2) by redesignating paragraphs (8), (9), and (10) as paragraphs (7), (8), and (9), respec- tively. (c) CONDITIONS PRESCRIBED BY SEC- RETARY.\u2014Section 4(e)(1) of such Act (33 U.S.C. 1503(e)) is amended by striking the first sentence and inserting the following: ”In issuing a license for the ownership, con- struction, and operation of a deepwater port, the Secretary shall prescribe those condi- tions which the Secretary deems necessary to carry out the provisions and requirements of this Act or which are otherwise required by any Federal department or agency pursu- ant to the terms of this Act. To the extent practicable, conditions required to carry out the provisions and requirements of this Act shall be addressed in license conditions rath- er than by regulation and, to the extent practicable, the license shall allow a deep- water port’s operating procedures to be stat- ed in an operations manual, approved by the Coast Guard, in accordance with section 10(a) of this Act, rather than in detailed and specific license conditions or regulations; ex- cept that basic standards and conditions shall be addressed in regulations.”. (d) ELIMINATION OF RESTRICTION ON TRANS- FERS.\u2014Section 4(e)(2) of such Act (33 U.S.C. 1503(e)(2)) is amended by striking ”applica- tion” and inserting ”license”. (e) FINDINGS REQUIRED FOR TRANSFERS.\u2014 Section 4(f) of such Act (33 U.S.C. 1503(f)) is amended to read as follows: ”(f) AMENDMENTS, TRANSFERS, AND REIN- STATEMENTS.\u2014The Secretary may amend, transfer, or reinstate a license issued under this Act if the Secretary finds that the amendment, transfer, or reinstatement is consistent with the requirements of this Act.”. SEC. 305. INFORMATIONAL FILINGS. Section 5(c) of the Deepwater Port Act of 1974 (33 U.S.C. 1504(c)) is amended by adding the following: ”(3) Upon written request of any person subject to this subsection, the Secretary may make a determination in writing to ex- empt such person from any of the informa- tional filing provisions enumerated in this subsection or the regulations implementing this section if the Secretary determines that CONGRESSIONAL RECORD \u2014 SENATES9432 August 1, 1996 such information is not necessary to facili- tate the Secretary’s determinations under section 4 of this Act and that such exemp- tion will not limit public review and evalua- tion of the deepwater port project.”. SEC. 306. ANTITRUST REVIEW. Section 7 of the Deepwater Port Act of 1974 (33 U.S.C. 1506) is repealed. SEC. 7. OPERATION. (a) AS COMMON CARRIER.\u2014Section 8(a) of the Deepwater Port Act of 1974 (33 U.S.C. 1507(a)) is amended by inserting after ”sub- title IV of title 49, United States Code,” the following: ”and shall accept, transport, or convey without discrimination all oil deliv- ered to the deepwater port with respect to which its licensed is issued,”. (b) CONFORMING AMENDMENT.\u2014Section 8(b) of such Act is amended by striking the first sentence and the first 3 words of the second sentence and inserting the following: ”A li- censee is not discriminating under this sec- tion and”. SEC. 308. MARINE ENVIRONMENTAL PROTECTION AND NAVIGATIONAL SAFETY. Section 10(a) of the Deepwater Port Act of 1974 (33 U.S.C. 1509(a)) is amended\u2014 (1) by inserting after ”international law” the following: ”and the provision of adequate opportunities for public involvement”; and (2) by striking ”shall prescribe by regula- tion and enforce procedures with respect to any deepwater port, including, but not lim- ited to,” and inserting the following: ”shall prescribe and enforce procedures, either by regulation (for basic standards and condi- tions) or by the licensee’s operations man- ual, with respect to”. By Mr. HATCH (for himself, Mr. SANTORUM, Mr. GREGG, Mr. WARNER, Mr. SIMPSON, Mr. THURMOND, Mr. D’AMATO, and Mr. FAIRCLOTH): S. 2010. A bill to amend title 18, Unit- ed States Code, to exempt qualified current and former law enforcement of- ficers from State laws prohibiting the carrying of concealed firearms, and for other purposes; to the Committee on the Judiciary. THE COMMUNITY PROTECTION INITIATIVE OF 1996 Mr. HATCH. Mr. President, today I am introducing the community protec- tion initiative of 1996. This bill will ex- empt current and former law enforce- ment officers from State and local laws prohibiting the carrying of concealed firearms. In so doing, this bill will adopt a clear, uniform rule in place of the various State and local laws that are on the books today. This bill has the support of many law enforcement organizations and individ- uals, including the Law Enforcement Alliance of America, Fraternal Order of Police, National Association of Po- lice Organizations, National Sheriffs Association, National Troopers Coali- tion, Southern Police Benevolent Asso- ciation, National Law Enforcement Council, the Salt Lake City police chief, the Salt Lake County sheriff, and the Utah Highway Patrol Associa- tion. This bill will prove to be a useful ad- dition to our laws in several ways. This bill will enhance public safety. It will do so by potentially placing thousands of additional police officers on the streets of America\u2014at no additional cost to the public. Law enforcement of- ficers are highly trained professionals. Their classroom teaching, as well as their experience in the field, are the most valuable weapons that they pos- sess. But all of that skill and experi- ence will be of little benefit for a police officer if he cannot prevent A crime from occurring because he is unable to carry the firearm his community has authorized him to carry as part of his job. This bill puts more police on the street, at no cost to the taxpayer. That result alone is a valuable one. But there is more. The bill will help law enforcement officers protect them- selves and their families when they travel interstate. By itself, that is a valuable benefit. Any one police officer may make scores of arrests throughout his career, and an officer may not al- ways remember the face of every sus- pect that he apprehends. Many crimi- nals, however, remember. They remem- ber the face of the judge, the face of the prosecutor, and, most importantly, the face of the arresting officer. This bill enables police to protect them- selves and their families in the face of these long memories. Currently, police officers can protect themselves when they remain within their jurisdictions on-duty. If those jurisdictions permit, officers can carry their firearms off- duty. This bill would allow each quali- fied police officer to travel out of State without being at risk of criminal as- sault. A firearm is an important tool in a battle with a criminal, especially an armed one. A firearm in the hands of a trained police officer, when off duty, will make our streets safer. For private citizens, a firearm is best compared to a fire extinguisher, because each one is a piece of emergency, lifesaving equip- ment. But for police officers, a firearm is a necessary tool of his profession. We expect that police officers will in- tervene to prevent crimes from occur- ring. No, we demand that police offi- cers carry out that responsibility. That is why we train them in law enforce- ment; and that is why we give them a badge; that is why we give them a gun. This bill will ensure that we do not dis- arm the police just because they have traveled interstate. There are more than 600,000 State and local law enforcement officers in more than 17,000 police agencies. This bill would allow those officers, and many of their retired colleagues, to carry fire- arms when they travel out of State. That puts each of those officers on the streets in the service of law enforce- ment in this Nation. To be sure, only some police officers will take advantage of this provision. But we know that there will be some officers who prevent some crimes and who prevent some people from becom- ing victims. At the same time, this bill achieves those benefits in a careful manner. It does not allow unqualified officer to carry firearms interstate. Rather, it re- quires current police officers to be in good standing to take advantage of the benefits of this bill. The bill also does not allow all retired police officers to carry firearms. Before a retired police officer can carry a concealed firearm under this bill, the bill requires that the retired officer be authorized by his or her State of residence to carry a concealed firearm within that State. Finally, this bill does not authorize the carrying of firearms on aircraft. I look forward to working with my colleagues on a bipartisan basis in moving this legislation. In the House, Representative CUNNINGHAM of Califor- nia has introduced a similar measure. Together, we can bring about passage of a bill that will protect the public, our Nation’s law enforcement officers, and their families. By Mr. SIMPSON (by request): S. 2011. A bill to ensure that appro- priated funds are not used for oper- ation of golf courses on real property controlled by the Department of Veter- ans Affairs; to the Committee on Vet- erans’ Affairs. VETERANS AFFAIRS LEGISLATION Mr. SIMPSON. Mr. President, as chairman of the Veterans’ Affairs Com- mittee, I have today introduced, at the request of the Secretary of Veterans Affairs, S. 2011, a bill relating to the use of appropriated funds for the oper- ation and maintenance of golf courses on real property controlled by the De- partment of Veterans Affairs. The Sec- retary of Veterans Affairs submitted this legislation to the President of the Senate by letter dated June 20, 1996. My introduction of this measure is in keeping with the policy which I have adopted of generally introducing\u2014so that there will be specific bills to which my colleagues and others may direct their attention and comments\u2014 all administration-proposed draft legis- lation referred to the Veterans’ Affairs Committee. Thus, I reserve the right to support or oppose the provisions of, as well as any amendment to, this legisla- tion. Mr. President, I ask unanimous con- sent that the text of the bill be printed in the RECORD, together with the trans- mittal letter and the enclosed analysis of the draft legislation. There being no objection, the mate- rials were ordered to be printed in the RECORD, as follows: S. 2011 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, That SEC. 2. (a) The Secretary of Veterans Af- fairs shall ensure that no funds appropriated by Congress are used for the maintenance and operation of golf courses on real prop- erty within the control of the Department of Veterans Affairs. (b) Notwithstanding any other provision of law, the Secretary may provide for the main- tenance and operation of golf courses on real property within the control of the Depart- ment by\u2014 (1) entering into leases or other arrange- ments for a period not to exceed 20 years with (i) Department of Veterans Affairs em- ployee associations; (ii) other nonFederal nonprofit organizations; or (iii) private enti- ties; or CONGRESSIONAL RECORD \u2014 SENATE S9433August 1, 1996 (2) entering into enhanced use leases under section 8162 of the title 38, United States Code, without regard to sections 8163 and 8168 of title 38, United States Code. (c) In making any arrangement under sub- section (b), the Secretary shall, to the extent the Secretary considers appropriate, seek to provide for therapeutic work opportunities for VA patients and members participating in programs authorized by section 1718 of title 38, United States Code. (d) Notwithstanding any other provision of law, funds generated in connection with the use of real property within the control of the Department of Veterans Affairs that is used for a golf course shall be retained by the De- partment for such uses as the Secretary deems appropriate. (e) The Secretary of Veterans Affairs shall, before leasing a golf course on real property within the control of the Department, con- sider the option of excessing the golf course to the General Services Administration so that the property can be screened for rede- ployment by another Executive Agency. ANALYSIS The draft bill contains the enactment sec- tion, which is section one, and a section two which contains five subsections. Subsection (a) prohibits the Secretary of Veterans Affairs from using funds appro- priated by the Congress for the maintenance and operation of golf courses at VA health care facilities. Subsection (b) would authorize the Sec- retary to provide for the maintenance and operation of golf courses at VA health care facilities by leasing the property to VA em- ployee associations or other non-Federal nonprofit organizations. Examples of other nonprofit organizations are a local govern- ment, or a veterans service organization. Subsection (b) would also authorize the Sec- retary to enter into enhanced use leases of golf course properties without regard to lim- itations set forth in section 8163 and 8168 of title 38, United States Code. Section 8168 limits the number of enhanced use leases the Secretary may enter into, and could be a barrier to the leasing of the golf courses. Section 8163 establishes a process by which properties are designated for enhanced use leasing. It is unnecessary to follow that process for the golf courses as the bill itself designates the properties subject to such leasing. Subsection (c) would provide that in exer- cising the authority in subsection (b) to make arrangements for the operation of golf courses, the Secretary may, if appropriate, seek to provide for therapeutic work oppor- tunities for patients. Thus, for example, the Secretary might include in a lease, a provi- sion calling for the lessor to enter into an ar- rangement with a VA compensated work therapy program to have patients perform golf course maintenance. Subsection (d) would permit VA to retain any funds generated by VA real property used as a golf course. Subsection (e) would require the Secretary, before leasing the property, to consider excessing the property for use by another Executive Agency. THE SECRETARY OF VETERANS AFFAIRS, Washington, DC, June 20, 1996. Hon. AL GORE, President of the Senate, Washington, DC. DEAR MR. PRESIDENT: There is transmitted herewith a draft bill, ”To ensure that no ap- propriated funds are used for the operation and maintenance of golf courses on real property controlled by the Department of Veterans Affairs.” We request that it be re- ferred to the appropriate committee for prompt consideration and enactment. For many years VA has operated golf courses at a number of its medical facilities to provide patient therapy and recreation. Generally, these golf courses were in exist- ence at the hospital facilities at the time the Department acquired the facilities. The courses are often quite small with only 9- holes, and are located at facilities with large psychiatric patient populations. Currently 22 VA golf courses exist. VA can no longer justify the expenditure of medical care appropriations for the oper- ation of golf courses. Scarce resources used for maintenance and operation of the courses can be more appropriately used for the direct provision of medical care to veterans. In some instances opportunities may exist to use the property more appropriately. In other instances, continued operation of a golf course may be warranted, but a better mechanism may exist for maintaining and operating the course. Accordingly, the De- partment has determined that it will no longer directly operate golf courses using ap- propriated funds. In the last several months, the Department has looked at various mechanisms for divest- ing itself of golf course operations. However, legal impediments exist to pursuing some options. The enclosed draft bill would statu- torily authorize the Secretary to provide for the maintenance and operation of golf courses in various ways without using any appropriated funds. The draft bill would prohibit the use of ap- propriated funds to operate golf courses, and would provide specific mechanisms for con- tinuing golf course operations. The bill would permit the Secretary to lease or make other arrangements with VA employee asso- ciations or other non-federal nonprofit enti- ties to have them operate the courses. Such a nonprofit entity might include the local community where the VA facility is located. The bill would also allow the Secretary to arrange for operation of a course by a pri- vate organization. Finally, it would also au- thorize VA to enter into enhanced use leases of golf course properties. Another provision in the bill would provide that in making arrangements for operation of golf courses, the Secretary should, if ap- propriate, seek to provide for therapeutic work opportunities for VA patients. VA com- pensated work therapy programs are always searching for ways to provide certain pa- tients with therapeutic work. In the lease of a golf course, it might be possible to require the lessee to make an arrangement with a VA work therapy program to use patient workers. Finally, the bill would require the Secretary to consider divesting golf courses altogether before entering into lease ar- rangements. This bill would affect direct spending and receipts; therefore, it is subject to the pay- as-you-go requirement of the Omnibus Budg- et Reconciliation Act of 1990. OMB estimates that the pay-as-you-go effect of this proposal is zero. The Office of Management and Budget ad- vises that there is no objection to the sub- mission of this draft bill from the standpoint of the Administration’s program. Sincerely yours, JESSE BROWN. By Mr. SIMPSON (by request): S. 2012. A bill to redesignate the title of the National Cemetery System and the position of the Director of the Na- tional Cemetery System; to the Com- mittee on Veterans’ Affairs. NATIONAL CEMETERY ADMINISTRATION LEGISLATION Mr. SIMPSON. Mr. President, as chairman of the Veterans’ Affairs Com- mittee, I have today introduced, at the request of the Secretary of Veterans Affairs, S. 2012, a bill to redesignate the National Cemetery System as the ”National Cemetery Administration,” and to redesignate the position of Di- rector, National Cemetery System as ”Assistant Secretary, Memorial Af- fairs.” The Secretary of Veterans Af- fairs submitted this legislation to the President of the Senate by letter dated June 24, 1996. My introduction of this measure is in keeping with the policy which I have adopted of generally introducing\u2014so that there will be specific bills to which my colleagues and others may direct their attention and comments\u2014 all administration-proposed draft legis- lation referred to the Veterans’ Affairs Committee. Thus, I reserve the right to support or oppose the provisions of, as well as any amendment to, this legisla- tion. Mr. President, I ask unanimous con- sent that the text of the bill be printed in the RECORD, together with the trans- mittal letter. There being no objection, the mate- rials were ordered to be printed in the RECORD, as follows: S. 2012 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. REDESIGNATION OF TITLE OF NA- TIONAL CEMETERY SYSTEM. The title of the National Cemetery System of the Department of Veterans Affairs is hereby redesignated as the National Ceme- tery Administration. SEC. 2. REDESIGNATION OF POSITION OF DIREC- TOR OF THE NATIONAL CEMETERY SYSTEM. The position of Director of the National Cemetery System of the Department of Vet- erans Affairs is hereby redesignated as As- sistant Secretary for Memorial Affairs. SEC. 3. ASSISTANT SECRETARIES. Section 308(a) of title 38, United States Code, is amended by\u2014 (a) in subsection (a) thereof, changing the period at the end of the first sentence of that subsection to a comma and adding the fol- lowing at the end of that sentence: ”in addi- tion to the Assistant Secretary for Memorial Affairs”; (b) in subsection (b) thereof, by inserting ”other than the Assistant Secretary for Me- morial Affairs” after ”Assistant Secretar- ies”; and (c) in subsection (c) thereof, by inserting ”pursuant to subsection (b)” after ”Assist- ant Secretary”. SEC. 4. TITLE 38 CONFORMING AMENDMENTS. (a) Title 38, United States Code, is amend- ed by striking out ”director of the National Cemetery System” each place it appears (in- cluding in headings and tables) and inserting in lieu thereof ”Assistant Secretary for Me- morial Affairs”. (b) Section 301(c) of title 38, United States Code, is amended by striking out ”System” in subsection (c)(4) and inserting in lieu thereof ”Administration”. (c) Section 307 of title 38, United States Code, is amended\u2014 (1) by striking out ”a” in the first sentence and inserting in lieu thereof ”an”; CONGRESSIONAL RECORD \u2014 SENATES9434 August 1, 1996 (2) by striking out ”Director” in the sec- ond sentence and inserting in lieu thereof ”Assistant Secretary for Memorial Affairs”; and (3) by striking out ”System” in the second sentence and inserting in lieu thereof ”Ad- ministration”. (d)(1) Section 2306(d) of title 38, United States Code, is amended by striking out ”within the National Cemetery System” in the first sentence of subsection (d)(1) and in- serting in lieu thereof ”under the control of the National Cemetery Administration”. (2) Section 2306(d) of title 38, United States Code, is amended by striking out ”within the National Cemetery System” in subsection (d)(2) and inserting in lieu thereof ”under the control of the National Cemetery Adminis- tration”. (e)(1) The table of sections at the beginning of chapter 24 of title 38, United States Code, is amended by striking out ”Establishment of National Cemetery System; composition of such system; appointment of director.” and inserting in lieu thereof ”Establishment of National Cemetery Administration; au- thority of such administration; appointment of Assistant Secretary.”. (2) The heading of section 2400 of title 38, United States Code, is amended by striking out ”Establishment of National Cemetery System; composition of such system; ap- pointment of director” and inserting in lieu thereof ”Establishment of National Ceme- tery Administration; authority of such ad- ministration; appointment of Assistant Sec- retary”. (3) Section 2400(a) of title 38, United States Code, is amended by striking out ”shall be within the Department a National Cemetery System” in the first sentence and inserting in lieu thereof ”is within the Department a National Cemetery Administration respon- sible” in the first sentence and by striking out ”Such system” in the second sentence and inserting in lieu thereof ”The National Cemetery Administration”. (4) Section 2400(b) of title 38, United States Code, is amended by striking out ”The Na- tional Cemetery System” and inserting ”Na- tional cemeteries and other facilities under the control of the National Cemetery Admin- istration” in lieu thereof. (5) Section 2402 of title 38, United States Code, is amended by striking out ”in the Na- tional Cemetery System” and inserting ”under the control of the National Cemetery Administration” in lieu thereof. (6) Section 2403(c) of title 38, United States Code, is amended by striking out ”in the Na- tional Cemetery System created by this chapter” and inserting ”under the control of the National Cemetery Administration” in lieu thereof. (7) Section 2405(c) of title 38, United States Code, is amended by striking out ”within the National Cemetery System” and inserting in lieu thereof ”under the control of the Na- tional Cemetery Administration” and by striking out ”within such System” and in- serting in lieu thereof ”under the control such Administration”. (8) Section 2408(c) of title 38, United States Code, is amended by striking out ”in the Na- tional Cemetery System” in subsection (c)(1) and inserting ”under the control of the Na- tional Cemetery Administration” in lieu thereof. SEC. 5. EXECUTIVE SCHEDULE CONFORMING AMENDMENT. Section 5315 of title 5. United States Code, is amended by striking out ”(6)” following ”Assistant Secretaries, Department of Vet- erans Affairs” and inserting in lieu thereof ”(7)” and by striking out ”Director of the National Cemetery System.” SEC. 6. REFERENCES IN OTHER LAWS. (a) Any reference to the National Cemetery System in any Federal law, Executive order, rule, regulation, delegation of authority, or document of or pertaining to the Depart- ment of Veterans Affairs, which reference pertains to the organization within that De- partment which controls the Department’s national cemeteries shall be deemed to refer to the National Cemetery Administration. (b) Any reference to the Director of the Na- tional Cemetery System in any Federal law, Executive order, rule, regulation, delegation of authority, or document of or pertaining to the Department of Veterans Affairs shall be deemed to refer to the Assistant Secretary for Memorial Affairs. THE SECRETARY OF VETERANS AFFAIRS, Washington, DC, June 24, 1996. Hon. ALBERT GORE, President of the Senate, Washington, DC. DEAR MR. PRESIDENT: Transmittal here- with is a draft bill to redesignate the Na- tional Cemetery System (NCS) as the ”Na- tional Cemetery Administration” and the Director of the National Cemetery System as the ”Assistant Secretary for Memorial Af- fairs.” The legislation would elevate the NCS to the same organizational status within the Department of Veterans Affairs (VA) as the Veterans Health Administration (VHA) and the Veterans Benefits Administration (VBA). I request that this draft bill be referred to the appropriate committee for prompt con- sideration and enactment. On March 15, 1989, the Veterans’ Adminis- tration was redesignated as the Department of Veterans Affairs and elevated to cabinet- level status as an executive department. At that time, two of the three VA components that administer veterans’ programs were also redesignated. The Department of Medi- cine and Surgery was redesignated as the Veterans Health Services and Research Ad- ministration (now the Veterans Health Ad- ministration) and the Department of Veter- ans’ Benefits was redesignated as the Veter- ans Benefits Administration. The designa- tion of the third program component, the National Cemetery System, was not changed. On October 9, 1992, the title of the Chief Medical Director, the head of the Veterans Health Administration, was redesignated as the Under Secretary for Health and the title of the Chief Benefits Director was redesig- nated as the Under Secretary for Benefits. The title of the Director of the National Cemetery System was not changed. The NCS was established on June 18, 1973, in accordance with the National Cemeteries Act of 1973, Pub. L. No. 93 43, 2(a), 87 Stat. 75. The fourfold mission of the NCS is: (1) to provide for the interment in national ceme- teries of the remains of deceased veterans, their spouses, and certain other dependents and to permanently maintain their graves; (2) to mark the graves of eligible persons buried in national, state, and private ceme- teries; (3) to administer the State Cemetery Grants Program to aid states in establishing, expanding, or improving state veterans’ cemeteries; and, (4) to administer the Presi- dential Memorial Certificate Program. NCS is the only one of the three VA com- ponents responsible for delivering benefits to veterans and their dependents that is re- ferred to as a ”System” rather than an ”Ad- ministration.” The proposed redesignation ”National Cemetery Administration” would more accurately recognize NCS’ status as a benefit-delivery administration. Section 307 of title 38, United States Code, establishes the position of Director of the National Cemetery System. The present po- sition title implies that the Director’s re- sponsibility is limited to management of the system of national cemeteries and does not adequately reflect the responsibilities asso- ciated with the fourfold mission of the NCS. The proposed redesignation ”Assistant Sec- retary for Memorial Affairs” would assure that the position receives the status com- mensurate with its responsibilities. The re- designation would not affect the duties and responsibilities of the position, which would remain the same. Section 308(a) of title 38, United States Code, provides that VA shall have no more than six Assistant Secretaries. Under the draft bill, the position of Assistant Secretary for Memorial Affairs, so designated in sec- tion 307, would not be counted as one of the six Assistant Secretary positions referred to in section 308(a). Currently, the salary level for the NCS Di- rector is set by statute at Executive Level IV. The salary level for the other VA Assist- ant Secretary positions is also set at Execu- tive Level IV. The proposed redesignation of the NCS Director as the Assistant Secretary for Memorial Affairs would not affect the salary level of the position, which would re- main at Executive Level IV. Although the proposed redesignation would require changes in some forms and publica- tions, we contemplate making these changes as the documents are reordered or revised. For this reason, and because the Director’s salary level would not change, no costs or savings are associated with this proposal. The Office of Management and Budget has advised that there is no objection to the sub- mission of this draft bill from the standpoint of the Administration’s program. Sincerely yours, JESSE BROWN. By Mr. MCCAIN (for himself, Mr. COATS, Mr. STEVENS, Mrs. HUTCHISON, Mr. ABRAHAM, Mr. ASHCROFT, and Mr. LOTT): S. 2013. A bill to amend title 31, Unit- ed States Code, to provide for continu- ing appropriations in the absence of regular appropriations; to the Commit- tee on Appropriations. THE GOVERNMENT SHUTDOWN PREVENTION ACT Mr. MCCAIN. Mr. President, today Senators COATS, STEVENS, HUTCHISON, ABRAHAM, ASHCROFT, and myself are introducing the Government Shutdown Prevention Act. This bill would statu- torily create what is in essence a per- manent backup CR. This special CR would govern if any appropriations acts do not become law. We all saw the effects of gridlock last year. The Government shut down and millions of people were affected. We want to ensure that another Govern- ment shutdown does not occur. Mr. President, this permanent backup CR would set spending at the lower of spending levels contained in: First, the previous year’s appro- priated levels; second, the House passed appropriations bill; third, the Senate passed appropriations bill; fourth, the President’s Budget request; or fifth, any levels established by an independ- ent CR passed by the Congress subse- quent to the passage of this Act. The bill specifically notes that enti- tlements such as Social Security\u2014as obligated by law\u2014will be paid regard- less of what appropriations bills are passed. I want to emphasize that enti- tlements are protected. This legislation does not erode the power of the appropriators and gives CONGRESSIONAL RECORD \u2014 SENATE S9435August 1, 1996 them ample opportunity to do their job. As a matter of fact, we hope that Senators will realize that if they load up appropriations bills with nonrelated riders\u2014which causes gridlock\u2014that this permanent CR will kick in. I want to especially note the support of my good friend Senator STEVENS. The Senator from Alaska is a senior member of the Appropriations Commit- tee. His support of this bill is crucial and I thank him for it. Mr. President, last year’s Govern- ment shutdown hurt many. Many need- ed social services could not be offered. We must prevent that from occurring. Additionally, it cost the Government a considerable amount of money. We cannot and should not waste the tax- payers dollars in that fashion. I want to raise one small example. During the last Government shutdown, I heard form people who work close to the Grand Canyon. These were not Gov- ernment employees. They were inde- pendent small businessmen and women. They told me that the shutdown was costing them thousands of dollars be- cause people couldn’t go the park. The shutdown was not fair to them\u2014 it was not fair to anyone. This legisla- tion would prevent a similar shutdown in the future. This bill will prevent gridlock, save money, and preserve needed Government services. I hope the Senate will soon act on this matter. I ask unanimous consent that the bill be printed in the RECORD. S. 2013 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE. This Act may be cited as the ”Government Shutdown Prevention Act”. SEC. 2. AMENDMENT TO TITLE 31. (a) IN GENERAL.\u2014Chapter 13 of title 31, United States Code, is amended by inserting after section 1310 the following new section: ” 1311. Continuing appropriations ”(a)(1) If any regular appropriation bill for a fiscal year does not become law prior to the beginning of such fiscal year or a joint resolution making continuing appropriations is not in effect, there is appropriated, out of any moneys in the Treasury not otherwise appropriated, and out of applicable corporate or other revenues, receipts, and funds, such sums as may be necessary to continue any project or activity for which funds were pro- vided in the preceding fiscal year\u2014 ”(A) in the corresponding regular appro- priation Act for such preceding fiscal year; or ”(B) if the corresponding regular appro- priation bill for such preceding fiscal year did not become law, then in a joint resolu- tion making continuing appropriations for such preceding fiscal year. ”(2) Appropriations and funds made avail- able, and authority granted, for a project or activity for any fiscal year pursuant to this section shall be at a rate of operations not in excess of the lower of\u2014 ”(A) the rate of operations provided for in the regular appropriation Act providing for such project or activity for the preceding fis- cal year, ”(B) in the absence of such an Act, the rate of operations provided for such project or ac- tivity pursuant to a joint resolution making continuing appropriations for such preceding fiscal year, ”(C) the rate of operations provided for in the House or Senate passed appropriation bill for the fiscal year in question, except that the lower of these two versions shall be ignored for any project or activity for which there is a budget request if no funding is pro- vided for that project or activity in either version, ”(D) the rate provided in the budget sub- mission of the President under section 1105(a) of title 31, United States Code, for the fiscal year in question, or ”(E) the annualized rate of operations pro- vided for in the most recently enacted joint resolution making continuing appropriations for part of that fiscal year or any funding levels established under the provisions of this Act. ”(3) Appropriations and funds made avail- able, and authority granted, for any fiscal year pursuant to this section for a project or activity shall be available for the period be- ginning with the first day of a lapse in ap- propriations and ending with the earlier of\u2014 ”(A) the date on which the applicable regu- lar appropriation bill for such fiscal year be- comes law (whether or not such law provides for such project or activity) or a continuing resolution making appropriations becomes law, as the case may be, or ”(B) the last day of such fiscal year. ”(b) An appropriation or funds made avail- able, or authority granted, for a project or activity for any fiscal year pursuant to this section shall be subject to the terms and conditions imposed with respect to the ap- propriation made or funds made available for the preceding fiscal year, or authority grant- ed for such project or activity under current law. ”(c) Appropriations and funds made avail- able, and authority granted, for any project or activity for any fiscal year pursuant to this section shall cover all obligations or ex- penditures incurred for such project or activ- ity during the portion of such fiscal year for which this section applies to such project or activity. ”(d) Expenditures made for a project or ac- tivity for any fiscal year pursuant to this section shall be charged to the applicable ap- propriation, fund, or authorization whenever a regular appropriation bill or a joint resolu- tion making continuing appropriations until the end of a fiscal year providing for such project or activity for such period becomes law. ”(e) This section shall not apply to a project or activity during a fiscal year if any other provision of law (other than an author- ization of appropriations)\u2014 ”(1) makes an appropriation, makes funds available, or grants authority for such project or activity to continue for such pe- riod, or ”(2) specifically provides that no appro- priation shall be made, no funds shall be made available, or no authority shall be granted for such project or activity to con- tinue for such period. ”(f) For purposes of this section, the term ‘regular appropriation bill’ means any an- nual appropriation bill making appropria- tions, otherwise making funds available, or granting authority, for any of the following categories of projects and activities: ”(1) Agriculture, rural development, and related agencies programs. ”(2) The Departments of Commerce, Jus- tice, and State, the judiciary, and related agencies. ”(3) The Department of Defense. ”(4) The government of the District of Co- lumbia and other activities chargeable in whole or in part against the revenues of the District. ”(5) The Departments of Labor, Health and Human Services, and Education, and related agencies. ”(6) The Department of Housing and Urban Development, and sundry independent agen- cies, boards, commissions, corporations, and offices. ”(7) Energy and water development. ”(8) Foreign assistance and related pro- grams. ”(9) The Department of the Interior and re- lated agencies. ”(10) Military construction. ”(11) The Department of Transportation and related agencies. ”(12) The Treasury Department, the U.S. Postal Service, the Executive Office of the President, and certain independent agencies. ”(13) The legislative branch.”. (b) CLERICAL AMENDMENT.\u2014The analysis of chapter 13 of title 31, United States Code, is amended by inserting after the item relating to section 1310 the following new item: ”1311. Continuing appropriations.”. (c) PROTECTION OF OTHER OBLIGATIONS.\u2014 Nothing in the amendments made by this section shall be construed to effect Govern- ment obligations mandated by other law, in- cluding obligations with respect to Social Security, Medicare, and Medicaid. SEC. 3. EFFECTIVE DATE AND SUNSET. (a) EFFECTIVE DATE.\u2014The amendments made by this Act shall apply with respect to fiscal years beginning with fiscal year 1997. (b) SUNSET.\u2014The amendments made by this Act shall sunset and have no force or ef- fect 6 years after the date of enactment of this Act. Mr. COATS. Mr. President, I rise today with my colleague and friend, Senator JOHN MCCAIN, to introduce The Government Shutdown Prevention Act. This legislation will create a stat- utory continuing resolution [CR] that will ensure that the Government will not shut down again\u2014ever. The lessons from last year are clear. The public expects us to debate our dif- ferences vigorously but they don’t want our differences to overwhelm our basic responsibility to govern. No one wins when the Government shuts down. Shutdowns only confirm the American people’s suspicions that we are more interested in political gain than doing the Nation’s business. People are tired of gridlock. They want the Government to work for them\u2014not against them. I believe the legislation we are intro- ducing today will go a long way toward ensuring that we do not once again dis- appoint the American people. Last year, the Republican Congress tried to do the right thing. We passed fiscally sound appropriations bills and the first balanced Federal budget in a genera- tion. Unfortunately, President Clinton was more interested in playing politics with the budget. President Clinton’s ir- responsible vetoes of numerous appro- priations bills and a continuing resolu- tion shut the Federal Government down. It is time to show the American people we can do better. Now, we all know that the fiscal year ends on September 30 and we also know that day is approaching very quickly. Although the appropriators are work- ing very diligently, the appropriations process is nowhere near complete. Not one of the appropriations bills has even CONGRESSIONAL RECORD \u2014 SENATES9436 August 1, 1996 been sent to the President. My fear is that we are rapidly approaching a po- litically sensitive deadline in a politi- cal year\u2014a virtual invitation for more budget gamesmanship on the part of the President. Our legislation preempts this games- manship by a safety net CR that will allow the Government to operate even if the appropriations process is not complete and even if negotiations on a larger CR are stalled. Neither party can afford another break of faith with the American peo- ple. Our constituents are tired of con- stantly being disappointed by the ac- tions of Congress and the President. They are tired of us not being prepared for what appears to be the inevitable. This is why Senator MCCAIN and I have introduced this legislation. We want the American people to know that there are some of us in Congress who are thinking ahead and who do not want a replay of last year. Both Senator MCCAIN and myself have been vigilant in our fight against wasting the taxpayers dollars. The leg- islation will save taxpayer dollars be- cause the Government programs will be funded at the lowest of the following spending levels: The previous year’s appropriation bill or CR; The House-passed level; The Senate-passed level; The President’s budget request; or The level outlined in the most recent CR. This legislation will restore the bias in appropriations negotiations toward saving the taxpayers money not spend- ing it. It is worth noting that last year every time Congress went to the nego- tiating table the President demanded more money. Although Congress saved the taxpayer nearly $19 billion last year, without President Clinton’s de- mands we could have saved $27 billion. Passage of this legislation will guaran- tee that we are not faced with a choice between a Government shut down and spending taxpayer dollars irrespon- sibly. Finally, the hammer of very low funding levels will keep pressure on both ends of Pennsylvania Avenue and both parties to get the appropriations work done. Again, this is a preventative measure to ensure that politics or stalled nego- tiations will not stop Government op- erations. The time has come to show the American people that we will not allow a Government shut down, or the threat of a Government shutdown, to be used for political gain. Time is running out. September 30 will be here in just 2 short months. We must be prepared in case election year politics get in the way of funding the Government. Senator MCCAIN and I will be offering this legislation as an amendment to the first appropriations bill the Senate turns to following the recess. Let’s not continue to disappoint an already disenchanted electorate. The time has come to take control and pass this legislation. By Mr. JOHNSTON (for himself and Mr. BREAUX): S. 2014. A bill to authorize the Sec- retary of the Interior to acquire prop- erty adjacent to the city of New Orle- ans, Orleans Parish, LA, for inclusion in the Bayou Sauvage National Wild- life Refuge, and for other purposes; to the Committee on Environment and Public Works. THE BAYOU SAUVAGE NATIONAL WILDLIFE REFUGE ACT OF 1996 \u2211 Mr. JOHNSTON. Mr. President, I in- troduce a measure that would be the culmination of many years of negotia- tion and effort on the part of a number of interested individuals in my State of Louisiana. Mr. President, the State of Louisiana is rich in wildlife and wildlife habitat, the flora and fauna of legend. The State is also home to numerous wild- life refuges, including the Bayou Sauvage National Wildlife Refuge, which is the subject of my statement today. Bayou Sauvage is located in east Or- leans Parish, LA, almost entirely with- in the corporate limits of the city of New Orleans and approximately 18 miles east of the central business dis- trict. It has the distinction of being the largest expanse of coastal wetlands in the United States that is easily acces- sible to city dwellers. The refuge was created in 1986 by leg- islation sponsored by then Congress- man JOHN BREAUX and Representative Lindy Boggs. The measure authorized the refuge at 19,000 acres. In 1993, fee title had been acquired on 18,397 acres. An additional 4,373 acres was under management lease from the Conserva- tion Fund and the city of New Orleans. After discussions with the city, the Conservation Fund and private individ- uals with interests in the additional acreage, I am pleased to report that a critical stage of acquisition is now ready to go forward. The acreage which is the subject of this legislation is key to the ability of the managers of Bayou Sauvage to achieve specific goals, in- cluding enhancing the population of migratory, shore, and wading birds; en- couraging natural diversity of fish and wildlife species; protecting endangered and threatened species; and providing opportunities for scientific research and environmental education on eco- logical and wetland values to the pub- lic. Mr. President, this is an important milestone for Bayou Sauvage National Wildlife Refuge, and I urge this body to support the completion of this long ef- fort to protect a wonderful treasure for the people of Louisiana, and the Na- tion. Mr. President, I ask unanimous con- sent that the text of the bill be printed in the RECORD. There being no objection, the bill was ordered to be printed in the RECORD, as follows: S. 2014 Be it enacted by the Senate and House of Rep- resentatives of the United States of America in Congress assembled, SECTION 1. REFUGE EXPANSION. Section 502 of the Emergency Wetlands Re- sources Act of 1986 (P.L. 99 645; 100 Stat. 3590), is amended by inserting following the first sentence in subsection (b)(1) the follow- ing sentence: ”In addition, the Secretary is authorized to acquire, within such period as may be nec- essary, an area of approximately 4,228 acres, consisting of approximately 3,928 acres lo- cated north of Interstate 10 between Little Woods and Pointe-aux-Herbes and approxi- mately 300 acres south of Interstate 10 be- tween the Maxent Canal and Michoud Boule- vard that contains the Big Oak Island ar- cheological site, as depicted upon a map en- titled ”Bayou Sauvage National Wildlife Refuge Expansion”, dated August, 1996 and on file with the United States Fish and Wild- life Service.” SEC. 2. NAME CHANGE. Section 502 of the Emergency Wetlands Re- sources Act of 1986 (P.L. 99 645; 100 Stat. 3590), is further amended by deleting the word ”Urban” wherever it appears in the sec- tion.\u2211 By Mr. DOMENICI: S. 2015. A bill to convey certain real property located within the Carlsbad project in New Mexico to the Carlsbad Irrigation District; to the Committee on Energy and Natural Resources. CARLSBAD PROJECT LEGISLATION Mr. DOMENICI. Mr. President, today I am introducing legislation that will convey tracts of land, referred to as ”acquired lands,” to the Carlsbad Irri- gation District in New Mexico. This bill is a culmination of over a year’s worth of work, addressing con- cerns that were raised over legislation that Senator CRAIG and I introduced early last year. That legislation used a generic ap- proach to direct the Secretary of the Interior to convey these acquired lands to the beneficiary districts, when those districts had completed their contrac- tual obligations to the United States for project construction. The administration is on record in support of the idea of transfer of facili- ties to the beneficiaries, ”where it makes sense,” but it opposed that leg- islation, in part because of the generic nature in which it was drafted. I hope that the legislation I am in- troducing today will address the ad- ministration’s concerns with the ear- lier bill. It is specific to the Carlsbad project in New Mexico, and directs the Carls- bad Irrigation District to continue to manage the lands as they have been in the past, for the purposes for which the project was constructed. This bill also protects the interests that the State of New Mexico has in some of those lands, and a companion bill introduced in the House by Con- gressman JOE SKEEN has the full sup- port of the Governor and the various Cabinet Secretaries who oversee those interests. Finally, this legislation will return project lands, which were at one time held by the beneficiaries of the Carls- bad project and its predecessor, to the Carlsbad Irrigation District. Mr. President, I encourage my col- leagues to support this legislation, and CONGRESSIONAL RECORD \u2014 SENATE S9437August 1, 1996 ask unanimous consent the text of the bill be printed in the RECORD. There being no objection, the bill was ordered to be printed in the RECORD, as follows: S. 2015 Be it enacted by the Senate and House of Rep- resentatives of the United State of America in Congress assembled, SECTION 1. CONVEYANCE. (a) OPERATION OF LAW.\u2014 (1) IN GENERAL.\u2014Except as provided in paragraph (2), and subject to the conditions set forth in subsection (c) and section 2(b), all right, title, and interest of the United States in and to the lands described in sub- section (b) (in this Act referred to as the ”ac- quired lands”) in addition to all interests the United States holds in the irrigation and drainage system of the Carlsbad Project and all related lands including ditch rider houses, maintenance shop and buildings, and Pecos River Flume are hereby conveyed by operation of law to the Carlsbad Irrigation District (a quasi-municipal corporation formed under the laws of the State of New Mexico and referred to in this Act as the ”District”). (2) LIMITATIONS.\u2014 (A) In case of a tract of acquired land on which is located any dam, or reservoir diver- sion structure, conveyance to the District is limited to the right, title, and interest of the United States in and to the mineral estate. (B) The United States shall retain storage and flow easements for any tracts located under the maximum spillway elevations of Avalon and Brantly Reservoirs. (b) ACQUIRED LANDS DESCRIBED.\u2014The lands referred to in subsection (a) are those lands (including the surface and mineral estate) in Eddy County, New Mexico, described as the acquired lands in section (7) of the ”Status of Lands and Title Report: Carlsbad Project” as reported by the Bureau of Reclamation in 1978. (c) TERMS AND CONDITIONS OF CONVEY- ANCE.\u2014Any conveyance of the acquired lands under this Act shall be subject to the follow- ing terms and conditions: (1) The acquired lands shall continue to be managed and used by the District for the purposes for which the Carlsbad Project was authorized, consistent with existing manage- ment of such lands. (2) Except as provided in paragraph (3), the District shall assume all rights and obliga- tions of the United States under\u2014 (A) the agreement dated July 28, 1994, be- tween the United States and the Director, New Mexico Department of Game and Fish (Document No. 2 LM 40 00640), relating to management of certain lands near Brantley Reservoir for fish and wildlife purposes, (B) the agreement dated March 9, 1977, be- tween the United States and the New Mexico Department of Energy, Minerals, and Natu- ral Resources (Contract No. 7 07 57 X0888) for the management and operation of Brantley Lake State Park. (3) EXCEPTIONS.\u2014 (A) The District shall not be obligated for any financial support associated with either agreement under paragraph (2). (B) The District shall not be entitled to any revenues generated by the operation of Brantley Lake State Park. SEC. 2. LEASE MANAGEMENT AND PAST REVE- NUES COLLECTED FROM THE AC- QUIRED LANDS. (a) IDENTIFICATION AND NOTIFICATION OF LEASEHOLDERS.\u2014Within 45 days after the date of enactment of this Act, the Secretary of the Interior shall provide to the District a written identification of all mineral and grazing leases in effect on the acquired lands on the date of enactment of this Act, and the Secretary of the Interior shall notify all leaseholders of the conveyance made by this Act. (b) MANAGEMENT OF MINERAL AND GRAZING LEASES.\u2014Upon conveyance, the District shall assume all rights and obligations of the United States for all mineral and grazing leases on the acquired lands, and shall be en- titled to any revenues from such leases ac- cruing after such date. The District shall continue to adhere to the current Bureau of Reclamation mineral leasing stipulations for the Carlsbad Project. (c) AVAILABILITY OF AMOUNTS PAID INTO RECLAMATION FUND.\u2014Receipts paid into the reclamation fund which now exist as credits to the Carlsbad Project under the Mineral Lands Leasing Act of 1920 (30 U.S.C. 181 et seq.), shall be made available to the District under the distribution scheme set forth in section (4)(I) of the Act of December 5, 1924 (43 U.S.C. 501; commonly referred to as the ”Fact Finders Act of 1924”). By Mr. DORGAN (for himself, Mr. BYRD, Mr. HEFLIN, Mr. CAMP- BELL, Mr. WELLSTONE, Mr. HOL- LINGS, Mr. INOUYE and Mr. D’AMATO): S. 2016. A bill to assess the impact of the NAFTA, to require further negotia- tion of certain provisions of the NAFTA, and to provide for the with- drawal from the NAFTA unless certain conditions are met; to the Committee on Finance. THE NAFTA ACCOUNTABILITY ACT Mr. DORGAN. Mr. President, the North American Free Trade Agreement has been a colossal failure. It epito- mizes what is wrong with our nation’s trade policies. This Nation has focused practically all of its efforts on achieving some the- oretical system of free trade, without giving any real attention to whether what is advanced also provides fair trade and fair competition. We open our borders and provide access to our markets, without ensuring that at the same time there will be reciprocal trading opportunities with our trading partners. NAFTA has not produced the results that were projected. It has not lived up to its promises. Since NAFTA took ef- fect our trade deficit with Canada and Mexico has ballooned by 368 percent. Today, Canada and Mexico are the third and fourth largest trade deficits for the United States. Rather than stopping the flight of American jobs, it has accelerated the loss of jobs to our closest trading partners. Today, I am reintroducing the NAFTA Accountability Act. This bill establishes benchmarks for measuring whether or not NAFTA has lived up to its promises. If it doesn’t then the bill outlines the procedure for withdrawing from NAFTA. In reintroducing this bill we are up- dating some of the information in the findings and we are adding a section on highway safety. In addition, we are adding a number of co-sponsors. Sen- ators D’AMATO, INOUYE, HOLLINGS, and WELLSTONE are joining the list of origi- nal co-sponsors, including Senators BYRD, HEFLIN, and CAMPBELL. The companion bill on the House side, sponsored by Representative MARCY KAPTUR now has 107 co-spon- sors. TRADE DEFICITS CONTINUE TO GROW One of the untold stories of NAFTA is the growing trade deficit with Can- ada. Prior to NAFTA, the merchandise trade deficit was over $10 billion in 1993. In 1994 it grew to $14 billion, and last year it hit a record of almost $19 billion. In the first 5 months of this year, our trade deficit with Canada is already at almost $9 billion. At this pace the trade deficit this year can be expected to be over $21 billion. The change in our trade position with Mexico is even more dramatic. Prior to NAFTA our trade surplus with Mexico peaked in 1992 at $5.4 billion. It then dropped to $1.6 billion in 1993. In the first year of NAFTA, the positive trade balance with Mexico dropped to $1.4 billion. In the second year of NAFTA, we ended up with a $15.4 bil- lion trade deficit. Much has been said about the role of the devaluation of the peso as the cause of this dramatic turn-around in trade flows with Mexico. The reality is that the problems of the overvalued Mexican peso were well known at the time of the passage of NAFTA. Yet, there was nothing in NAFTA that provided any means to address the question of rapid changes in currency values. Our bill would require the op- portunity for renegotiation in such cir- cumstances. This year the trade deficit with Mex- ico has already reached almost $7 bil- lion during the first 5 months. At this pace, it will be very close to last year’s record level of $15 billion. Since NAFTA took effect, the United States has recorded a $42 billion trade deficit with Canada in the 2 years and 5 months for which we have statistics. During that time we have recorded a $20 billion deficit with Mexico. We have accumulated a total trade deficit of $62 billion with these trading partners since NAFTA started regulat- ing these trade relationships. In other words our trade deficit with our NAFTA partners is draining over $2 bil- lion a month from our national econ- omy. These trade deficits have serious consequences for our country. U.S. JOB LOSSES DUE TO NAFTA Today a study by Rob Scott on the relationship between NAFTA and jobs was released by the Economic Policy Institute. This study reveals that the trade deficits we have had during the first 2 years of NAFTA has meant a loss of almost a half-million jobs and job opportunities for American work- ers. The study shows that as a result of our trade imbalance with Canada, we have lost 200,026 jobs during the past 2 years. In the same period the trade def- icit with Mexico has meant a loss of 283,607 jobs. The total loss of jobs and job opportunities is 483,633. When NAFTA was being debated, the predictions were that the United CONGRESSIONAL RECORD \u2014 SENATES9438 August 1, 1996 States would gain something between 120,000 and 220,000 jobs. Now 2 years later, the reality is that our trade rela- tionships under NAFTA have cost this country 484,000 jobs. JOBS MOVING TO MEXICO One week ago I co-chaired the Fami- lies First Forum here in the Nation’s Capitol. At that forum, a union worker in North Carolina told us about the up- coming closing of his plant. That plant closing was to be completed today and the jobs moved to Mexico. This is a plant that produces elec- trical transformers. These are the transformers that hang from electrical poles, sit on pads on the ground, and even some units that are made for use underground. They have been producing transform- ers at that plant for 40 years, and have been a profitable operation for most of those years. There are 343 hourly work- ers and 250 salaried workers who today no longer have a job. These workers will no longer be able to be employed using the skills they have learned and developed in building electrical transformers. Their jobs our moving to Monterrey, Mexico, to a fa- cility that pays workers less than a $1 per hour. There is another small industry in this country. It’s scattered around in rural communities in the heart of the corn belt. This industry is dominated by small family business operations which make the brooms that we use to sweep out our houses. The future of this industry is in doubt. Stan Koschnick, manager of the France Broom Co., told a news re- porter, ”I don’t want to worry my em- ployees too much when they open their newspapers, but I would guess if it was left unchecked, within 10 years there wouldn’t be any brooms made in the United States.” Kenneth Quinn, the retired president of the Quinn Broom Works, states, ”It’s hard to say you can compete with somebody when they’re paying 30 or 40 cents per hour. We can do everything better except for wages. We can’t com- pete on wages.” Since NAFTA became reality, more than 200 jobs have been lost in this in- dustry. These companies are paying in the neighborhood of $8 per hour to their workers. They are competing with Mexican workers who will be lucky to be paid $8 per day. The question is whether such wage competition is good for our country. There are those who would say we are raising our standard of living by being able to buy a couple of cheaper brooms every year. However, what are we gain- ing if at the same time our wages are being lowered and our jobs are being lost? This industry may get a second chance, because last Friday the Inter- national Trade Commission rec- ommended restoring a tariff on Mexi- can brooms. Earlier this month, the ITC determined that unfair competi- tion from Mexican factories posed a se- rious threat to the domestic broom in- dustry. The reason they are getting a second chance is that hidden away in the fine print of the NAFTA agreement was a provision that allowed tariffs to be re- stored if the U.S. broom industry got hurt. Other industries are not so lucky, and don’t have such provisions. They are being swept under. INDUSTRIES EXPERIENCING JOB LOSSES Let’s take a closer look at the indus- tries in which we are losing jobs and job opportunities under NAFTA. The study released today by the Economic Policy Institute provides some esti- mates of where we are losing jobs. Our exports to Mexico have been mostly capital goods and intermediate inputs which are used to build and sup- ply factories that assemble final prod- ucts for export back to the United States. With Mexico, we have lost over 85,000 jobs and job opportunities in auto, auto parts, and vehicles. Another 60,000 jobs were lost in electrical equipment, such as televisions and other electronic equipment. Over 26,000 jobs in nonelec- trical machinery and 20,000 jobs in sci- entific and professional equipment were lost to Mexico. In our trade with Canada, we have lost over 53,000 jobs and job opportuni- ties in the paper and allied products in- dustry. We have also lost jobs in autos, auto parts, and vehicles to Canada. This accounts for some 38,000 jobs. An- other industry where we have lost jobs and job opportunities to Canada has been in the production of primary metal products. That is a loss of 26,000 jobs. Now, these are not what is normally considered unskilled jobs. These are jobs that traditionally have paid good salaries and provided an industrial base for our country. The fact is that manufacturing jobs have been the hardest hit within the trade framework established by NAFTA. According to the Economic Policy Institute, 73 percent of the jobs lost to our NAFTA trading partners have been lost in the manufacturing sector. That should be of great concern to this country. Our manufacturing base has been what has provided good pay- ing jobs for the bulk of American fami- lies. As we shift to buying more and more of our manufactured goods from beyond our own borders, we are also ex- periencing both a shift in jobs and an overall loss in jobs. According to the EPI study, the Unit- ed States has had a net loss of 483,633 jobs to our NAFTA trading partners since NAFTA took effect. That reflects an total job loss of 883,717 jobs, while our trade with Canada and Mexico cre- ated 400,085 jobs. Since almost three- quarters of the net job losses were in the manufacturing sector, this further underscores that we are losing our bet- ter paying jobs. NAFTA BENCHMARKS As a nation we need to begin system- atically measuring how our trade agreements are doing. Are they living up to their promises? Are they providing mutually bene- ficial reciprocal opportunities that strengthen the economies of the par- ticipating countries? Are they helping to improve the standard of living in each of the countries or are they pit- ting one nation against another down to the lowest common denominator? Those are the type of questions we are asking within the NAFTA Account- ability Act. We are asking these ques- tions in nine specific areas. In three areas we are requiring some renegoti- ation of NAFTA so it can deal with is- sues of significant trade deficits, cur- rency exchange rates, and agricultural trade distortions. The other six areas are matters of en- suring that the results are measured and certified. These include certifi- cations in maintaining our manufac- turing base; highway safety; health and environmental standards; jobs, wages, and living standards; rights and free- doms; and, controlling drug traffick- ing. We need to make NAFTA account- able. If it doesn’t measure up then we need to withdraw from it. We need trade agreements that work. America can no longer afford trade agreements that work against our long-term eco- nomic interests. That is why I am pleased to be re- introducing this bill. I am also pleased that my colleagues, Senators BYRD, HEFLIN, CAMPBELL, WELLSTONE, HOL- LINGS, INOUYE, and D’AMATO are joining in this effort to make NAFTA account- able. f ADDITIONAL COSPONSORS S. 1014 At the request of Mr. NICKLES, the name of the Senator from New Mexico [Mr. BINGAMAN] was added as a cospon- sor of S. 1014, a bill to improve the management of royalties from Federal and Outer Continental Shelf oil and gas leases, and for other purposes. S. 1317 At the request of Mr. D’AMATO, the name of the Senator from Utah [Mr. BENNETT] was added as a cosponsor of S. 1317, a bill to repeal the Public Util- ity Holding Company Act of 1935, to enact the Public Utility Holding Com- pany Act of 1995, and for other pur- poses. S. 1493 At the request of Mr. LAUTENBERG, the name of the Senator from Washing- ton [Mrs. MURRAY] was added as a co- sponsor of S. 1493, a bill to amend title 18, United States Code, to prohibit cer- tain interstate conduct relating to ex- otic animals. S. 1540 At the request of Mr. BINGAMAN, his name was added as a cosponsor of S. 1540, a bill to amend chapter 14 of title 35, United States Code, to preserve the full term of patents. S. 1735 At the request of Mr. PRESSLER, the name of the Senator from Vermont CONGRESSIONAL RECORD \u2014 SENATE S9439August 1, 1996 [Mr. JEFFORDS] was added as a cospon- sor of S. 1735, a bill to establish the United States Tourism Organization as a nongovernmental entity for the pur- pose of promoting tourism in the Unit- ed States. S. 1737 At the request of Mr. BUMPERS, the name of the Senator from South Caro- lina [Mr. HOLLINGS] was added as a co- sponsor of S. 1737, a bill to protect Yel- lowstone National Park, the Clarks Fork of the Yellowstone National Wild and Scenic River and the Absaroka- Beartooth Wilderness Area, and for other purposes. S. 1908 At the request of Mrs. FEINSTEIN, the name of the Senator from Kentucky [Mr. FORD] was added as a cosponsor of S. 1908, a bill to amend title 18, United States Code, to prohibit the sale of per- sonal information about children with- out their parents’ consent, and for other purposes. S. 1954 At the request of Mr. HATCH, the name of the Senator from Kansas [Mrs. FRAHM] was added as a cosponsor of S. 1954, a bill to establish a uniform and more efficient Federal process for pro- tecting property owners’ rights guaran- teed by the fifth amendment. S. 1984 At the request of Mr. GRAHAM, the name of the Senator from Kentucky [Mr. FORD] was added as a cosponsor of S. 1984, a bill to amend title I of the Omnibus Crime Control and Safe Streets Act of 1968 to require a 10 per- cent reduction in certain assistance to a State under such title unless public safety officers who retire as a result of injuries sustained in the line of duty continue to receive health insurance benefits. S. 1999 At the request of Mr. NICKLES, the names of the Senator from Michigan [Mr. ABRAHAM] and the Senator from Colorado [Mr. BROWN] were added as cosponsors of S. 1999, a bill to define and protect the institution of mar- riage. S. 2008 At the request of Mr. DASCHLE, the name of the Senator from Illinois [Ms. MOSELEY-BRAUN] was added as a co- sponsor of S. 2008, a bill to amend title 38, United States Code, to provide bene- fits for certain children of Vietnam veterans who are born with spina bifida, and for other purposes. AMENDMENT NO. 5119 At the request of Mr. CHAFEE the names of the Senator from South Da- kota [Mr. PRESSLER] and the Senator from Ohio [Mr. DEWINE] were added as cosponsors of amendment No. 5119 pro- posed to H.R. 3754, a bill making appro- priations for the Legislative Branch for the fiscal year ending September 30, 1997, and for other purposes. SENATE RESOLUTION 286\u2014TO COMMEND OPERATION SAIL Mr. DODD (for himself, Mr. D’AMATO, Mr. LIEBERMAN, Mr. MOYNIHAN, Mr. WARNER, Mr. ROBB, Mr. BRADLEY, and Mr. LAUTENBERG) submitted the follow- ing resolution; which was referred to the Committee on the Judiciary: S. RES. 286 Whereas Operation Sail is a nonprofit cor- poration dedicated to building good will among nations and encouraging inter- national camaraderie; Whereas Operation Sail has represented and promoted the United States of America in the international tall ship community since 1964, organizing and participating in numerous tall ship events across the United States and around the world; Whereas Operation Sail has worked in partnership with every American President since President John F. Kennedy; Whereas Operation Sail has established a great tradition of celebrating major events and milestones in United States history with a gathering of the world’s tall ships, and will continue this great tradition with a gather- ing of ships in New York Harbor on July 3 through July 8, 2000, called OpSail 2000, to mark the 224th birthday of the United States of America and to welcome the new millen- nium; Whereas President Clinton has endorsed OpSail 2000, as Presidents Kennedy, Carter, Reagan, and Bush have endorsed Operation Sail in previous endeavors; Whereas OpSail 2000 promises to be the largest gathering in history of tall ships and other majestic vessels like those that have sailed the ocean for centuries; Whereas in conjunction with OpSail 2000, the United States Navy will conduct an International Naval Review; and Whereas the International Naval Review will include a naval aircraft carrier as a symbol of the international good will of the United States of America: Now, therefore, be it Resolved, That the Senate\u2014 (1) commends Operation Sail for its ad- vancement of brotherhood among nations, its continuing commemoration of the his- tory of the United States, and its nurturing of young cadets through training in seaman- ship; (2) encourages all Americans and citizens of nations around the world to join in the celebration of the 224th birthday of the Unit- ed States of America and the international camaraderie that Operation Sail and the International Naval Review will foster; and (3) encourages Operation Sail to continue into the next millennium to represent and promote the United States of America in the international tall ship community, and to continue organizing and participating in tall ship events across the United States and around the world. Mr. DODD. Mr. President, it is my pleasure to rise today to submit a very special resolution in anticipation of OpSail 2000 and in recognition of the Operation Sail organization that has made events such as OpSail 2000 pos- sible. Mr. President, I am sure that many of my colleagues remember the glori- ous New York Harbor gatherings of the world’s tall ships to mark several mile- stones in America’s history: OpSail ’76 celebrated the bicentennial of the Na- tion; OpSail ’86 marked the centennial of the Statue of Liberty; and OpSail ’92 commemorated the 500th anniversary of Columbus’ discovery of the ”new world.” In 2000, this grand tradition will con- tinue. America, and indeed the entire world, will again be treated to the spectacular display of international friendship that is OpSail. OpSail 2000 will take place July 3 July 8, 2000 in New York Harbor to mark the 224th birthday of the United States of Amer- ica and to welcome the new millen- nium. It is expected to be the largest gathering in history of the tall ships and other majestic vessels like those that have sailed the ocean for cen- turies. As a symbol of good will of the Unit- ed States of America, the U.S. Navy will conduct an International Naval Review, which will include a naval air- craft carrier. OpSail 2000 is endorsed by President Clinton, just as Presidents Kennedy, Carter, Reagan and Bush en- dorsed Operation Sail’s previous en- deavors. Much like the Olympic games our country is currently hosting, OpSail events and Operation Sail are dedi- cated to building good will among na- tions, encouraging international cama- raderie, and nurturing the leadership and athleticism of young people through training in seamanship. Fur- thermore, OpSail events and Operation Sail continually commemorate major events in the history of the United States, working in partnership with every American President since John F. Kennedy and representing and pro- moting the United States of America in the international tall ship commu- nity. Mr. President, this resolution honors the tradition of the OpSail events\u2014the advancement of international friend- ship and the celebration of milestones in U.S. history\u2014and I urge my col- leagues to embrace that tradition by supporting this resolution. f NOTICE OF HEARING COMMITTEE ON ENERGY AND NATURAL RESOURCES Mr. MURKOWSKI. Mr. President, I would like to announce for the infor- mation of the Senate and the public that a field hearing has been scheduled before the Committee on Energy and Natural Resources to receive testi- mony on the issue of competitive change in the electric power industry. The hearing will focus on regional is- sues associated with competitive change. The hearing will take place on Mon- day, September 9, beginning at 9 a.m. at the Champlain College Alumni Audi- torium, on Maple Street in Burlington, Vermont 05401. Those wishing to testify or submit written statements should write to the Committee on Energy and Natural Re- sources, United States Senate, Wash- ington, D.C. 20510. For further informa- tion, please contact Shawn Taylor or Howard Useem. CONGRESSIONAL RECORD \u2014 SENATES9440 August 1, 1996 AUTHORITY FOR COMMITTEES TO MEET COMMITTEE ON ARMED SERVICES Mr. BURNS. Mr. President, I ask unanimous consent that the Commit- tee on Armed Services be authorized to meet at 10 a.m. on Thursday, August 1, 1996, in open session, to receive an up- date on United States participation in implementation force mission in Bosnia. The PRESIDING OFFICER. Without objection, it is so ordered. COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION Mr. BURNS. Mr. President, I ask unanimous consent that the Commit- tee on Commerce, Science, and Trans- portation be allowed to meet during the Thursday, August 1, 1996, session of the Senate for the purpose of conduct- ing a hearing on aviation security chal- lenges. The PRESIDING OFFICER. Without objection, it is so ordered. COMMITTEE ON ENERGY AND NATURAL RESOURCES Mr. BURNS. Mr. President, I ask unanimous consent that the Commit- tee on Energy and Natural Resources be granted permission to meet during the session of the Senate on Thursday, August 1, 1996, for purposes of conduct- ing a full committee hearing which is scheduled to begin at 2 p.m. The pur- pose of this oversight hearing is to re- ceive testimony on the implementation of section 2001 of Public Law 104 19, the Emergency Timber Salvage Amend- ment. The PRESIDING OFFICER. Without objection, it is so ordered. COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS Mr. BURNS. Mr. President, I ask unanimous consent that the Commit- tee on Environment and Public Works be granted permission to meet Thurs- day, August 1, immediately following the first vote in The President’s Room, S 216, The Capitol, to consider the nominations of Nils J. Diaz and Edward McGaffigan, Jr., each nominated by the President to be a Member of the Nu- clear Regulatory Commission and a committee resolution on a GSA public building proposal. The PRESIDING OFFICER. Without objection, it is so ordered. COMMITTEE ON FOREIGN RELATIONS Mr. BURNS. Mr. President, I ask unanimous consent that the Commit- tee on Foreign Relations be authorized to meet during the session of the Sen- ate on Thursday, August 1, 1996, at 10 a.m. The PRESIDING OFFICER. Without objection, it is so ordered. COMMITTEE ON THE JUDICIARY Mr. BURNS. Mr. President, I ask unanimous consent that the Commit- tee on the Judiciary be authorized to meet during the session of the Senate on Thursday, August 1, 1996, at 10 a.m. to hold an executive business meeting. The PRESIDING OFFICER. Without objection, it is so ordered. SELECT COMMITTEE ON INTELLIGENCE Mr. BURNS. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be author- ized to meet during the session of the Senate on Thursday, August 1, 1996 at 9:30 a.m. to hold an open hearing on In- telligence Matters. The PRESIDING OFFICER. Without objection, it is so ordered. SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS Mr. BURNS. Mr. President, I ask unanimous consent that the Sub- committee on Oversight and Investiga- tions of the Committee on Energy and Natural Resources be granted permis- sion to meet during the session of the Senate on Thursday, August 1, 1996 for purposes of conducting a Subcommit- tee hearing which is scheduled to begin at 9:00 a.m. The purpose of the over- sight hearing is to consider the propri- ety of a commercial lease by the Bu- reau of Land Management at Lake Havasu, AZ, including its consistency with the Federal Land Policy and Man- agement Act and Department of the In- terior land use policies. The PRESIDING OFFICER. Without objection, it is so ordered. f ADDITIONAL STATEMENTS COMMEMORATING THE BRAVERY OF THE 168th ENGINEER COMBAT BATTALION \u2211 Ms. SNOWE. Mr. President, I rise today to pay tribute to the valor and courage of the 168th Engineer Combat Battalion, which celebrates the unveil- ing of its commemorative monument at Fort Devens, MA, later this month. During World War II, the 168th Engi- neer Combat Battalion was composed entirely of New Englanders, many of them residents of the State I have the good fortune to represent in this body: the great State of Maine. This brave group of soldiers defended freedom and democracy from the will of tyranny in the darkest days of World War II and the Vietnam conflict. As they reunite to remember their success and pay homage to their fallen comrades, I’d like to take a moment today to re- member the unit’s heroism. Mr. President, any retelling of the pivotal events of the Second World War in Europe must include the deeds of the 168th. They were there with General Patton in July 1944 when the Allies landed on the beaches of Normandy as part of the D-day Invasion. For 10 hard but glorious months thereafter, the 168th provided the American ground forces in Europe with invaluable logis- tic support and an iron will that was crucial in turning back the ruthless ad- vance of the Nazis across Europe. Perhaps no single mission depicts the heroism, bravery, and grit of the 168th more clearly than its performance in the Ardennes offensive, also known as the Battle of the Bulge. When the forces of Hitler launched their des- perate, last-ditch offensive into the heart of the Allied line during the win- ter of 1944, the 168th displayed the re- siliency and courage for which it has come to be known. In hopes of fractur- ing the Allied line into its American and British components, the Nazi Army focused all of its lethal energy on breaking through the Allied line in Belgium. However, in doing so, the Nazis ran into the 168th, and the 168th stood fast. With their defiant stand at St. Vith, Belgium, the 168th was able to slow the Nazi assault and then pro- vide the larger American force with the logistical support necessary to repel the Nazi war machine once and for all. In remaining at St. Vith, the 168th endured the loss of half its personnel to casualty or Nazi apprehension. Yet, with the loss of every comrade, the de- pleted 168th exhibited even firmer re- solve to drive the Nazis back across the line. They did so for each other, and they did so for America. But most of all, they refused to succumb to the Nazis because at that moment, the cause of freedom depended upon them. For its valor in battle and efficiency in duty, the 168th was deservingly award- ed the Distinguished Unit Citation by the U.S. Army. The 168th was also awarded the Belgian Croix de Guerre, which was given to foreign forces by the Belgian Government for the de- fense of its nation during World War II. As if the heroics of the 168th in World War II were not enough, it also served with distinction during the Vietnam conflict, 20 years later. Faced with the daunting task of establishing logistical lines of support in the harrowing jun- gles of Southeast Asia, the 168th again performed its tasks masterfully under heavy fire. For its repeated acts of bravery, the 168th received the Valor- ous Unit Citation and the Meritorious Unit Citation, and in doing so, re- affirmed its status as an elite unit of the U.S. Army Corps of Engineers. Mr. President, as the remaining members of the 168th gather to unveil their monument at Fort Devens, I think it is appropriate that we all re- member the intrepid nature displayed again and again by the members of the 168th when they were most needed. Whether they were ordered to forge roadways and cross rivers in the snowy countryside of Western Europe, or de- vise ways to destroy the vast tunnel systems underneath the steamy jungles of Southeast Asia, the 168th has per- formed its duties with honor and dis- tinction. It is due to the heroism and sacrifice of people like the members of the 168th Engineer Combat Battalion that Americans enjoy the fruits of free- dom today, and for that, we all owe them a deep and heartfelt debt of grati- tude. In honor of the contributions made by the 168th in the defense of freedom, I ask that the declarations honoring the 168th Engineer Combat Battalion made by the Governors of Maine and Massachusetts, as well as the Corps of Engineers poem be placed in the CONGRESSIONAL RECORD \u2014 SENATE S9441August 1, 1996 RECORD in their entirety to commemo- rate the unveiling of the 168th Engi- neer Combat Battalion later this month. The material follows: PROCLAMATION\u2014STATE OF MAINE Whereas, the 168th Engineer Combat Bat- talion was activated in 1943, consisting of a large number of New England residents, many from Maine and Massachusetts; and Whereas, since 1943, the 168th Engineer Combat Battalion has served with distinc- tion in both World War II and the Vietnam War, earning five distinguished battle hon- ors; and Whereas, during the Battle of the Bulge, the 168th Engineer Combat Battalion held its position at St. Vith, Belgium from December 16 through December 23, 1944, and stopped the German thrust through the Ardennes; and Whereas, following the Battle of the Bulge, the 168th Engineer Combat Battalion was awarded the Distinguished Unit Citation for extraordinary heroism against an armed enemy, and the Belgian Croix de Guerre for outstanding gallantry, heroic action, and bravery in the face of enemy action; and Whereas, during the Vietnam War, the 168th Engineer Combat Battalion again served with distinction and was awarded the Valorous Unit Citation for heroic combat ac- tion on or after August 3, 1963, the Meritori- ous Unit Citation for outstanding service during a period of combat, and the Republic of Vietnam Civil Award for meritorious serv- ice and outstanding accomplishments over and above the call of duty; and Whereas, it is appropriate that all Maine citizens recognize and honor the outstanding dedication, sacrifice, and tradition of the 168th Engineer Combat Battalion, Now, therefore, I, Angus S. King, Jr., Gov- ernor of the State of Maine, do hereby pro- claim the week of December 16 23, 1995 as the 168th Engineer Combat Battalion Days of Honor, throughout the State of Maine, and urge all citizens to recognize the many ac- complishments of the 168th Engineer Combat Battalion. PROCLAMATION\u2014COMMONWEALTH OF MASSACHUSETTS Whereas, the 168th Engineer Combat Bat- talion was activated in 1943, consisting of a large number of New England residents, many from Maine and Massachusetts; and Whereas, since 1943, the 168th Engineer Combat Battalion has served with distinc- tion in both World War II and the Vietnam War, earning five distinguished battle hon- ors; and Whereas, during the Battle of the Bulge, the 168th Engineer Combat Battalion held its position at St. Vith, Belgium from December 16 through December 23, 1944, and stopped the German thrust through the Ardennes; and Whereas, following the Battle of the Bulge, the 168th Engineer Combat Battalion was awarded the Distinguished Unit Citation for extraordinary heroism against an armed enemy, and the Belgian Croix de Guerre for outstanding gallantry, heroic action, and bravery in the face of enemy action; and Whereas, during the Vietnam War, the 168th Engineer Combat Battalion again served with distinction and was awarded the Valorous Unit Citation for heroic combat ac- tion on or after August 3, 1963, the Meritori- ous Unit Citation for outstanding service during a period of combat, and the Republic of Vietnam Civil Award for meritorious serv- ice and outstanding accomplishments over and above the call of duty; and Whereas, 1994 marks the fiftieth anniver- sary of the 168th Engineer Combat Battal- ion’s distinguished service during the Battle of the Bulge; and Whereas, it is appropriate that all Massa- chusetts citizens recognize and honor the outstanding dedication, sacrifice, and tradi- tion of the 168th Engineer Combat Battalion; Now, therefore, I, William F. Weld, Gov- ernor of the Commonwealth of Massachu- setts, do hereby proclaim December 16th through December 23rd, 1994, as the 168th En- gineer Combat Battalion Days of Honor, and urge all the citizens of the Commonwealth to take cognizance of this event and participate fittingly in its observance. CORPS OF ENGINEERS (Author unknown, Korea, 1951) They have a song about the Army, the Navy, and the Marines They’ve got one for the Air Force, in fact the whole darn works, it seems But they have never taken the trouble, though we have served them for years To every write a poem, for the Corps of Engi- neers We build the roads and airfields, their pipe lines and their camps From underground munition dumps to con- crete landing ramps Railroads, dams and bridges, electric power lines Canals, docks and harbors, even coal and iron mines But the engineers aren’t kicking, for when the Army is moving in: We know it’s just another place where we’ve already been Before the Army got there, we had to break the ground And build it all to suit their needs, solid safe, and sound If the Army and Navy ever look on heavens scenes They will find the streets guarded by the United States Marines Who will guard the streets up there, we aren’t disposed to say But we offer this suggestion, if they look at a thing that way When the Marines have taken over on the land that has no years They will find it was designed by the Corps of Engineers. f RETIREMENT OF JOHN J. SHEEHAN \u2211 Mr. DODD. Mr. President, I rise today to pay tribute to an outstanding labor leader and an outstanding Amer- ican. John J. ”Jack” Sheehan is retir- ing after 29 years as legislative director of the Steelworkers of America and a total of 45 years of service to his union and all working people. He has served as an assistant to three presidents of the Steelworkers: Lloyd McBride, Lynn Williams, and George Becker. During his 10 years in the Steel- workers’ Washington office, Jack Sheehan has been at the forefront of some of the most important legislative battles in our history, including the creation of the Occupational Safety and Health Act [OSHA], the Mine Safe- ty and Health Act, the Employee Re- tirement Income Security Act [ERISA], the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, and much more. Jack Sheehan was born and raised in the Bronx. He was the son of Irish im- migrants. His father drove a truck for the New York City Sanitation Depart- ment. Jack learned early in his life about the daily struggles of working men and women who worked hard, who toiled through the Great Depression of the 1930s, and who fought and won World War II in the 1940s. He saw the destructive effects of dis- crimination in our society and became a champion of the cause of civil rights and equal opportunity. He saw how poverty deprived people of their dignity and became an advo- cate for social and economic develop- ment programs that promised millions of Americans a better life. He knew how important a clean and healthy environment is to the lives and well-being of all Americans and became an environmental advocate. He understood that the labor move- ment is a progressive force for social and economic change that could better the lives of millions of Americans. Upon graduating from St. Joseph’s College in 1951, he joined the adminis- trative staff of the United Steel- workers of America. In 1952, he was ap- pointed auditor under the secretary- treasurer’s office and traveled exten- sively throughout the United States on behalf of the union. In 1959, Jack came to the Steelworkers’ Washington, DC, legislative office and launched a career as a labor lobbyist that has been noth- ing short of spectacular. Jack worked to ensure the passage of the Manpower Training and Develop- ment Act and the Area Redevelopment Act. He was one of the first labor lead- ers to stand with the environmental movement for clean air and clean water. He continues to serve as a board member of the Natural Resources De- fense Council. He is also one of the founding members of the Consumer Federation of America. Perhaps the single most important fight of Jack’s long and distinguished career was the fight to save the lives and health of workers on the job. Jack committed himself totally to securing the passage of OSHA, despite strong business opposition and even some op- position within the ranks of the labor movement. OSHA recently marked its 25th anniversary. It has been estimated that since the passage of OSHA, more than 150,000 workers’ lives have been saved because of this law. There prob- ably would not have been an OSHA law passed in 1970 had it not been for the steadfast leadership and determination of Jack Sheehan. ERISA was written in 1974 because thousands of American workers were losing their pensions and their right to retire with financial security when their employers went out of business. Jack worked tirelessly to see that Con- gress passed ERISA. America’s work- ing men and women are better off today because Jack Sheehan was here in the halls of Congress on their behalf. Mr. President, Jack Sheehan’s career is a tribute to his intelligence and de- termination. I know that my col- leagues in the Senate join me in ex- tending to Jack our very best wishes CONGRESSIONAL RECORD \u2014 SENATES9442 August 1, 1996 upon his retirement from the Steel- workers. Jack Sheehan has truly been a ”Man of Steel” for the Steelworkers and all American workers.\u2211 f S. 1729, THE INTERSTATE STALK- ING PUNISHMENT AND PREVEN- TION ACT OF 1996 Mr. FAIRCLOTH. Mr. President, I rise today in support of the Interstate Stalking Punishment and Prevention Act of 1996. For far too long, the vic- tims of stalkers have lived in fear and insecurity. This legislation, introduced by Senator HUTCHISON, will give them the protection they need and deserve. At this time, this bill is awaiting ac- tion in the Judiciary Committee. I urge my fellow Senators on both sides of the isle to support bringing it to the floor as quickly as possible. The safety of stalking victims can not be delayed. Experts estimate that there are close to 200,000 people who are currently stalking someone, and approximately 400,000 protective or restraining orders are issued each year. Currently, stalk- ers can follow their victims when they cross State lines, knowing full well that any restraining orders pertaining to them are rendered useless upon leav- ing the State that they were issued in. Common sense demands that this situ- ation needs to be fixed. This bill will make it a felony for a person to cross State lines in order to harass or injure their victim. We are not decreasing the power or role of the State authorities by making stalking a Federal crime. Stalking will remain a State crime. This legislation will allow local and State authorities to work with the Justice Department and apply all of their resources in the apprehen- sion and conviction of these criminals. A stalker convicted under this law will be subject to one of several penalties: 5 years if State lines are crossed, 10 years if the victim is seriously harmed, 20 years if the victim is permanently scarred, and life imprisonment if the victim is killed. I have and always will be an advocate of matching the punish- ment to the crime. The strong pen- alties within this bill are steps in the right direction in the war against crime. The Violence Against Women Act of 1993 defined a stalking victim as an ”intimate partner or spouse.” This bill will change that term to ”victim,” al- lowing protection for all people who are stalked, whether by strangers or otherwise. Again, common sense will prevail. Of course the protection of stalking victims should be universal and apply to all victims, whether they are a wife, a girlfriend, a coworker, or a total stranger. Mr. President, this is a law that will protect stalking victims and allow them to travel, without fear, as all citizens should, throughout our coun- try. With respect to family members, this bill will help ease their worries. I can only imagine the terror that fami- lies feel when one of their own is being stalked. With this thought, I urge my colleagues to stand with me in support of this bill and in support of all the vic- tims who have suffered at the hands of stalkers. f MUTUAL AID AGREEMENT \u2211 Mr. ROBB. Mr. President, I rise today to speak about House Joint Res- olution 166, a bill we passed late last night, to grant the consent of Congress to the Mutual Aid Agreement between the city of Bristol, VA, and the city of Bristol, TN. Specifically, this bill would allow law enforcement officers in the cities of Bristol, VA, and Bristol, TN, when requested by the adjoining city, to cross State lines in the per- formance of their duties and operate with full authorization in the adjoining city once there. Last May, I met with members of the Bristol Chamber of Commerce and dis- cussed the need to alleviate Federal hurdles that keep the two cities from working together to address a host of municipal issues. The Virginia-Ten- nessee State line cuts across State Street in Bristol, which is the cities’ main thoroughfare. Often, jurisdic- tional confusion and restrictions on law enforcement personnel caused by the location of the State line com- plicate anticrime activities on the bus- tling street. Under current law, the cities are prohibited from assisting each other in law enforcement efforts. To address the problem, the two cities adopted a mutual aid agreement to allow each city to provide law enforce- ment and emergency assistance to one another. Under the terms of the agree- ment, the responding city could pro- vide a maximum of 50 percent of avail- able personnel and resources to the re- questing city. The mutual aid agreement has been fashioned according to the cities’ re- spective State statutory requirements. Because the mutual aid agreement is an interstate compact, it requires con- gressional approval. Additionally, sec- tion 15.1 131 of the 1950 Code of Vir- ginia, as amended, also requires con- gressional approval for multi-state agreements to which Virginia or one of its localities is a party. I am pleased that the Senate was able to move this bill quickly. This could not have happened without the full cooperation of the Senators from both States. Representatives BOUCHER and QUILLEN should also be recognized for introducing this legislation and sheparding it through the House. The two cities of Bristol share com- mon interests and common problems, and now with passage of this bill, the two cities will be able to work more co- operatively for the betterment of all the citizens of Bristol.\u2211 f NEW HAMPSHIRE OLYMPIAN LYNN JENNINGS \u2211 Mr. SMITH. Mr. President, I rise today to pay tribute to Lynn Jennings of Newmarket, NH, for her competition in the 1996 Summer Olympic Games in Atlanta. Lynn competed in the 5,000- meter run Friday July 26 and was the first American to cross the finish line. New Hampshire is proud of her dedica- tion and commitment to training for such a competitive sport. At age 36, this is Lynn’s third time to compete with the U.S. Olympic track team. Lynn’s long career exemplifies marks of distinction and excellence. She competed in the 1988 Olympics in Seoul and in the 1992 Barcelona Olym- pics she became the only American woman to earn a distance medal when she took home the bronze in the 10,000- meter run. Previously, the greatest dis- tance in which an American woman had medaled was 800-meters and Lynn broke that record. Lynn has also been the World Cross Country Champion three times, holding the title from 1990 1992. She is an eight time National Cross Country Champion and holds American records in the 10,000-meter, indoor 3,000-meter, and the 8- and 10- kilometer road courses. Lynn’s distinguished record is the mark of an Olympian and a champion. She has pursued her sport with deter- mination, followed her dream, and em- bodied the Olympic spirit. New Hamp- shire has followed her career and she has made the Granite State proud. Many people from New Hampshire watched Lynn compete last Friday and join me in saluting her for representing them at the 1996 Summer Olympic Games. I commend her for her efforts in Atlanta and wish her other running successes at future competitions. Con- gratulations Lynn.\u2211 f THE 90TH ANNIVERSARY OF THE MUTUO CLUB OF BARRE, VT \u2211 Mr. LEAHY. Mutuo Soccorso. In Ital- ian, it means society of mutual aid. But for my Italian immigrant grand- father who worked in the granite quar- ries of Barre and South Ryegate, VT, it meant much, much more. It meant financial security in the days before Social Security and Medi- care. It meant affordable health care when they could not afford health in- surance. It meant they had a second family when their families were thou- sands of miles away in their homeland. To Peter and Vincenza Zambon, my grandparents, Mutuo Soccorso meant the Mutuo Club of Barre, VT. Mr. President, I am proud to cele- brate the 90th birthday of the Mutuo Club, the Italian-American club of central Vermont. Since 1906, the Mutuo Club has represented the finest values of our immigrant heritage\u2014a special sense of community and friendship. The Mutuo Club was first established as an offspring of the old society clubs in Italy during the 19th century. Mem- bers of the Mutuo paid so much a week into a common fund to help when they and their families got sick. The Mutuo fund helped pay the doctor and hospital CONGRESSIONAL RECORD \u2014 SENATE S9443August 1, 1996 bills. Members of the Mutuo pulled to- gether to help each other. Each mem- ber was in effect his brother’s keeper. When my grandfather came to Ver- mont from Italy, he went to the gran- ite quarries to earn a modest living. Life was not easy\u2014tough work, low pay, and health hazards. But in this foreign land, he had the Mutuo Club as a special community to share friend- ships in good times and a helping hand in bad times. I remember as a small child walking with my grandfather down the streets of downtown Barre. He would often stop in the street to visit with fellow Mutuo Club members. They would tell stories, plan to help each other, or just learn the latest joke. I remember sens- ing a special bond of community and friendship between my grandfather and the other Italian-Americans of the Mutuo Club. Now, the Mutuo Club is open to Americans of all nationalities. And that same special bond of community and friendship enjoyed by my grand- father is still shared by members of the Mutuo Club today. Mr. President, the Mutuo Club is a living tribute to that special bond. In celebrating the Mutuo Club’s 90th birthday, we celebrate that special sense of community and friendship shared by the Mutuo Club members of yesterday, today, and tomorrow.\u2211 f STEPHEN NORTH, NEW HAMP- SHIRE’S SECONDARY SCHOOL PRINCIPAL OF THE YEAR \u2211 Mr. SMITH. Mr. President, I rise today to pay tribute to Stephen North for being named New Hampshire’s Sec- ondary School Principal of the Year. Steve is the principal of Profile Junior and Senior High School in Bethlehem, NH, a position he has held since 1977. As a former teacher and school board chairman myself, I congratulate him for receiving this prestigious award. Steve celebrates a long and distin- guished career in education. He has been a teacher at Hanover High School, Curriculum Coordinator for the Dres- den-Hanover School Districts, and both principal and assistant principal at Frances C. Richmond Middle School in Hanover. Steve’s 18 years in education have been marked with success and leadership in this regional school dis- trict. He has built a reputation for ex- cellence and achievement in many areas, from teacher to administrator. An example of Steve’s achievement is the completion of much needed addi- tions and renovations for Profile Jun- ior and Senior School. This project, under his leadership, was completed in just 5 years. Steve’s achievements can be seen in more than new buildings, he has earned the respect and admiration of his col- leagues for his efforts. He is an excel- lent role model for his peers because of his professional activities, leadership abilities, and commitment to commu- nity. Steve is involved in various edu- cational organizations including the New England Association of Schools and Colleges, the New Hampshire Asso- ciation of School Principals, and the North Country Principals Association. Teachers and students alike admire Steve for what he has done for the school. He is known as someone who mentors new teachers, encourages in- novation, promotes professionalism, and creates a sound educational envi- ronment. Under his supervision, Profile Junior and Senior High won the 1995 Sportsmanship Banner for exemplify- ing the positive tenets of good sports- manship. This type of achievement re- flects the type of motivation Steve provides for his school. Our children are very important to our future and I am proud to see that they are in such capable hands. New Hampshire is fortunate to have such a talented educator and administrator like Steve North. I commend Steve for his outstanding career in the field of education.\u2211 f WEST VIRGINIAN RECEIVES VA 1996 EXCELLENCE IN NURSING AWARD \u2211 Mr. ROCKEFELLER. Mr. President, on June 6 of this year, the Department of Veterans Affairs presented four very prestigious awards recognizing excel- lence in nursing. I am proud to con- gratulate all of these nurses, but I am especially proud of a fellow West Vir- ginian, Sharon Shade, the recipient of VA’s 1996 LPN of the year award. Sharon’s performance in the nursing home care unit of the Martinsburg, VA Medical Center is truly outstanding. As a member of the Martinsburg commu- nity, she has made a great difference. Sharon has made many changes, both big and small, that have improved the lives of her patients. Because she works with the patients on a one-on- one basis, she learns about their inter- ests while determining their needs. For example, she found out that a reclusive patient had an interest in music. With her help and encouragement, he began to DJ at the noon meals and is now a thriving member of the high-level com- munication group. A bedridden patient now joins the noon dining group with the help of a walker, due to Sharon’s special attention. These are just a few examples of the changes Sharon has made in the lives of individual pa- tients. Sharon is truly creative and original in her approach to care, with ideas that benefit the entire program. One of her more innovative techniques includes an Adopt-A-Plant program. Here patients can adopt a plant to take care of, giv- ing them a sense of hope. Another pro- gram includes a reminiscence group in which the patients talk about days gone by. Sharon also arranged to move wheelchair-bound patients nearer to the windows in the dining hall where they can get a better view of the out- doors. These simple, yet thoughtful acts have made an enormous difference in the overall morale of both the resi- dents and staff. Sharon is known for her dedication to her profession. She is constantly working to make things better for her patients and for the staff. In addition to attending meetings and training seminars, she took initiative in devel- oping her own survey to evaluate the program. To lend support to her co- workers, she has implemented a monthly restorative LPN meeting where she shares ideas and literature. She is praised by fellow members of the staff, her patients, and their families for her tireless efforts. The human spir- it needs support and encouragement, both of which Sharon has generously given. I am proud to recognize Sharon Shade and her remarkable talent for making the lives of the veterans at Martinsburg better. It is clear that Sharon is a valuable asset to her staff, her profession, her patients, and our State of West Virginia. Her commit- ment to her profession and her commu- nity makes me enormously proud to say that she is a fellow West Vir- ginian.\u2211 f MICHAEL TOCCI, NEW HAMP- SHIRE’S ELEMENTARY SCHOOL PRINCIPAL OF THE YEAR \u2211 Mr. SMITH. Mr. President, I rise today to pay tribute to Michael Tocci for being named New Hampshire’s Sec- ondary School Principal of the Year. Mike is the principal of Gilford Ele- mentary School in Gilford, NH, a posi- tion he has held since 1964. As a former teacher and school board chairman in the Lakes Region myself, I congratu- late him for receiving this prestigious award. Mike celebrates a long and distin- guished career in education. He re- ceived his bachelors in education in 1967 his masters in public school ad- ministration and Supervision in 1973 from Plymouth State University. Mike has served as teaching principal at Danbury Elementary and supervising elementary principal for Newfound Area School District in Bristol. In his 30-year career, he has built a reputa- tion for excellence and achievement in many areas, from teacher to adminis- trator. Mike is known among his colleagues for his leadership, enthusiasm, dedica- tion, and contribution to children’s education. His honest and caring spirit is reflected in the school’s positive at- mosphere. As an individual of distinc- tion, Mike provides an excellent role model for his students and his teach- ers. He is admired by his school and his community for his concern and his commitment to community develop- ment. Granite State children are fortunate to have such a talented educator and administrator committed to their edu- cation. Gilford Elementary School’s success and achievement is reflective of the outstanding leadership Mike has CONGRESSIONAL RECORD \u2014 SENATES9444 August 1, 1996 provided. Our children are very impor- tant to our future and I am pleased to know that they are in such capable hands. I commend Mike for his out- standing career in the field of edu- cation and congratulate him for his dedication.\u2211 f SMITHSONIAN INSTITUTION NA- TIONAL AIR AND SPACE MU- SEUM EXTENSION \u2211 Mr. ROBB. Mr. President, I rise today to celebrate the Senate’s passage last night of S. 1995, legislation I co- sponsored to authorize construction of a Smithsonian Institution National Air and Space Museum extension at Wash- ington Dulles International Airport. This Dulles center, which will be built without any Federal funds, will provide crucial additional exhibit space for dis- playing national aviation treasures to the public. The current Air and Space Museum on the Mall is filled to capacity. There is no room to store any more of our large, invaluable aviation artifacts. These artifacts are currently stored in warehouses, hidden from the public, and some even stored outside, where they are exposed to the elements. The passage of S. 1995 places us on track to provide a safe and secure facility to house and preserve, for the public, these historical aircraft and spacecraft such as the B 29 Enola Gay, the Space Shuttle Enterprise, and the SR 71 Blackbird. This bill seeks to save these irreplaceable artifacts for our children and our future generations. Mr. President, in 1946, President Tru- man, believing in the importance of preserving our historical aircraft, signed Public Law 722 establishing the National Air Museum. Twenty years later, in 1966, President Johnson under- stood the importance of this museum and signed the law authorizing con- struction of a National Air and Space Museum, which expanded the muse- um’s collection efforts to include spacecraft and lunar artifacts. This museum was built on the National Mall here in Washington, opening its doors in 1976 and becoming the world’s most visited museum, averaging over 8 mil- lion visitors per year. In keeping with this tradition of preservation and planning for the fu- ture, the Senate has passed S. 1995. When it becomes law, we will be able to house historical air and spacecraft, un- derscoring the major advances we have developed and the contributions to his- tory we have made. Construction ef- forts for the Air and Space extension at Dulles, estimated to cost $200 million, represents exemplary coordination be- tween public funds from the Common- wealth of Virginia and private sources. It is expected that the Smithsonian In- stitution National Air and Space Mu- seum Dulles Center could be completed by 2003, in time for the 100 year anni- versary of the Wright Brothers’ first flight. This Dulles Center is an incred- ible, historical effort that will be a benefit to us now and for generations to come.\u2211 f NEW HAMPSHIRE OLYMPIAN, BARBARA MAROIS \u2211 Mr. SMITH. Mr. President, I rise today to pay tribute to Barbara Marois of Dover, NH for her competition in the 1996 summer Olympic games in At- lanta. Barb captained the women’s field hockey team in their impressive series of games. This year’s Olympic hockey team is the best team the Unit- ed States has ever fielded. New Hamp- shire is proud of Barb’s dedication and commitment to training for such a competitive sport. Barb competed with the 1988 U.S. Olympic field hockey team in Seoul and this year she led the team into competition on home turf. Her long sports career, beginning 10 years ago, bears the marks of distinction and ex- cellence. Barb has competed in 119 international contests and her team placed third in the 1994 World Cup. Field hockey has been gaining popu- larity over recent years, largely be- cause of outstanding athletes in the sport like her. The women’s field hockey team gave an outstanding performance at this year’s Olympic games. They defeated the No. 2 ranked South Korean team with a 3 2 victory and tied the well-re- spected Dutch team with a score of 1 1. Incidentally, the final point in the game with South Korea was scored by Barb from one of the penalty corners. She is known as a steady defensive force and a powerful weapon on penalty corners by her teammates. During the games she scored one goal and had 38 interceptions and 3 steals. Barb is arguably one of the keys to the field hockey team’s improvement over the last few years. This national team captain is the team mentor and maker of history in field hockey. She is a three time U.S. Field Hockey Asso- ciation Female Athlete of the Year and has been an assistant coach at her alma mater, the University of New Hampshire. Barb’s distinguished record is the mark of an Olympian and a champion. Her driving sprit has enabled her to pursue her sport with determination and follow her dream. New Hampshire has followed her career and she has made the Granite State proud. Many people watched Barb lead the women’s field hockey team. I join them in salut- ing her for representing them at the 1996 summer Olympic games and I com- mend her for her efforts in Atlanta. Congratulations Barb.\u2211 f NATIONAL SCHOOL NURSE OF THE YEAR \u2211 Mr. ROCKEFELLER. Mr. President, I rise today to pay tribute to a West Vir- ginian who serves as a model and inspi- ration for the entire Nation. On June 26, 1996, Denice Reese, of Hendricks, WV, was named ”National School Nurse of the Year” by the National As- sociation of School Nurses. Along with all the people of West Virginia, I am proud of the accomplishments of Denice Reese. She is an example of dedicated and skilled school nurses ev- erywhere, and especially of the 127 school nurses of West Virginia. I join her colleagues in recognition and praise for her service to the children and families of the Tucker County, WV, school system. Denice Reese is the first\u2014and only\u2014 school nurse for the 4 schools and 1,400 students of Tucker County, whom she has served for the past 8 years. By naming her the ”National School Nurse of the Year,” her peers have rec- ognized her outstanding work in this rural school district with many needs but few resources. Among her professional accomplish- ments, she helped get the Tucker Coun- ty system designated as a pilot area for the Healthy Schools project. She has been an innovative leader, and has cre- ated model student and faculty health education programs. She has collabo- rated with other professionals to opti- mize the use of school system resources for health promotion and disease pre- vention. At a time when health, nutrition, and education programs for our Nation’s children are in jeopardy, the work of the country’s school nurses stands as an inspiration and reminder that our children are our future. On behalf of all Americans who are working to ensure that the Nation maintains its invest- ment in the health and well-being of its children, I express gratitude for the partnership of our school nurses. Mr. President, I congratulate Denice Reese on her accomplishments, and wish her all the best as she continues her impor- tant work on behalf of the people of Tucker County.\u2211 f BARRY ALBERT, NEW HAMP- SHIRE’S MIDDLE SCHOOL PRIN- CIPAL OF THE YEAR \u2211 Mr. SMITH. Mr. President, I rise today to pay tribute to Barry Albert for receiving New Hampshire’s Middle School Principal of the Year award. Barry is principal of Franklin Middle School, a position he has held since 1990. As a former teacher and school board chairman myself, I congratulate him for receiving this prestigious rec- ognition. Barry has had a long and distin- guished career in education. He grad- uated from Plymouth State College in 1970 with a bachelors degree in second- ary education and earned a master’s in learning disabilities and special edu- cation from Rivier College in 1977. In addition, Barry was a teacher at Merrimack High School and the coordi- nator of Raymond Middle School. For over 20 years he has been serving the students of New Hampshire and pursu- ing excellence in education. He has built a reputation for achievement among his colleagues in many areas, from teaching to administration. CONGRESSIONAL RECORD \u2014 SENATE S9445August 1, 1996 Barry is known in his school for his leadership, initiative, and dedication to education. Among other achieve- ments, Barry re-started and re-orga- nized the Student Congress at Franklin Middle School. His first concern is al- ways for the students and he is unfail- ing in his commitment to support school activities while constantly seeking to ensure that students are re- ceiving the best possible education. Barry also created a positive action program at Franklin Middle School, just another of the many ways he serves his school and community. Barry is the personification of an ex- cellent middle school principal and the community can be certain that Barry is dedicated to his students. Franklin Middle School’s success and develop- ment attests to Barry’s outstanding leadership. The Granite State is fortu- nate to have such a talented educator and administrator devoted to the edu- cation of our children. I commend Barry for his exemplary career in edu- cation and congratulate him for his dedication.\u2211 f S. 1130\u2014THE FEDERAL FINANCIAL IMPROVEMENT ACT OF 1996 \u2211 Mr. GRASSLEY. Mr. President, I rise today to support the Federal Financial Improvement Act. I want to thank Senator BROWN, and our 11 cosponsors, for their individual efforts. I believe that the business of the people should be done as efficiently and effectively as possible. Finding a uniform standard of accounting for the executive branch agencies will be an important element of that efficiency and effectiveness. This bill will lead us to that uniform standard. It is impossible to measure the effi- ciency and effectiveness of the many Federal agencies when each may use a different accounting standard for mak- ing their records or books. For each to use a different standard is as if each speaks and writes in a different lan- guage that is foreign to the next. They cannot understand each other, and the story of their work cannot be written. Therefore, the legislative branch can- not measure their efficiency and effec- tiveness. We cannot reconcile the con- solidated Federal books. We cannot de- termine the presence of the relative fi- nancial failures or financial successes. This is why this legislation is so im- portant to the American people. The Federal Financial Management Im- provement Act is crucial to efficiently and effectively doing the people’s work, and it has my solid support.\u2211 f MAKING UP FOR LOST TIME \u2211 Mr. SIMON. Mr. President, a former staff member of mine, Alice Johnson, now with the National Institute for Literacy sent me a copy of an article by Richard Wolkomir that appeared in the Smithsonian magazine. It tells the story of Richard Wolkomir and another person teaching Ken Adams how to read at the age of 64. In some ways it is a sad story, look- ing at his background and looking at all the years that could have been en- riched. But it is a story that ought to inspire all of us to do better. We ought to have a national effort on literacy. Mr. President, I ask that this article from the Smithsonian be printed in the RECORD. The article follows: [From the Smithsonian, August, 1996] MAKING UP FOR LOST TIME: THE REWARDS OF READING AT LAST (By Richard Wolkomir) I decide simply to blurt out, ”Ken?” I ask. ”Why didn’t you learn to read?”Through the Marshfield community center’s window, I see snowy fields and the Vermont village’s clap- board houses. Beyond, mountains bulge. ”I was a slow learner,” Ken says. ”In school they just passed me along, and my folks told me I wasn’t worth anything and wouldn’t amount to anything. Ken Adams is 64, his hair white. He speaks Vermontese, turning ”I” into ”Oy,” and ”ice” into ”oyce.” His green Buckeye Feeds cap is blackened with engine grease from fix- ing his truck’s transmission, and pitch from chain-sawing pine logs. It is 2 degrees below zero outside on this December afternoon; he wears a green flannel shirt over a purple flannel shirt. He is unshaven, weather red- dened. He is not a tall man, but a lifetime of hoisting hay bales has thickened his shoul- ders. Through bifocals, Ken frowns at a chil- dren’s picture book, Pole Dog. He is studying a drawing: an old dog waits patiently by a telephone pole, where its owners abandoned it. He glares at the next pictures. Cars whiz- zing by. Cruel people tormenting the dog. ”Looks like they’re shootin’ at him, to me!” he announces. ”Nobody wants an old dog,” he says. Ken turns the page. ”He is still by the pole,” he says. ”But there’s that red car that went by with those kids, ain’t it?” He turns the page again. The red car has stopped to take the old dog in, to take him home. ”Somebody wants an old dog!” Ken says. ”Look at that!” This is my first meeting with Ken. It is also my first meeting with an adult who can- not read. I decided to volunteer as a tutor after a li- brarian told me that every day, on the side- walks of our prim little Vermont town. I walk by illiterate men and women. We are unaware of them because they can be clever at hiding their inability to read. At a post office counter, for instance, when given forms to fill out, they say, ”Could you help me with this? I left my glasses home.” Ken Adams is not alone in his plight. A 1993 U.S. Department of Education report on illiteracy said 21 23 percent of U.S. adults\u2014 about 40 million\u2014read minimally, enough to decipher an uncomplicated meeting an- nouncement. Another 25 28 percent read and write only slightly better. For instance, they can fill out a simple form. That means about half of all U.S. adults read haltingly. Mil- lions, like Ken Adams, hardly read at all. I wanted to meet nonreaders because I could not imagine being unable to decipher a street sign, or words printed on supermarket jars, or stories in a book. In fact, my own earliest memory is about reading. In this memory, in our little Hudson River town, my father is home for the evening from the wartime lifeboat factory where he is a fore- man. And he has opened a book. ”Do you want to hear from Peter Churchmouse?” my father asks. Of course! It is my favorite, from the little library down the street. My father reads me stories about children lost in forests. Cabbage-stealing hares. A fisherman who catches a talking perch. Buy my favorite is Peter Churchmouse, a small but plucky cheese ad- dict who befriends the rectory cat. Peter is also a poet, given to reciting original verse to his feline friend during their escapades. I cannot hear it enough. My father begins to read. I settle back. I am taking a first step toward becoming lit- erate\u2014I am being read to. And although I am only 2, I know that words can be woven into tales. Now, helping Ken Adams learn to read, I am re-entering that child’s land of chatty dogs and spats-wearing frogs. Children’s books\u2014simply worded, the sentences short\u2014 are perfect primers, even for 60-year-olds who turn the pages with labor-thickened fin- gers and who never had such books read to them when they were children. ”Do you remember what happened from last time?” asks Sherry Olson, of Central Vermont Adult Basic Education, who tutors Ken and hour and a half each week. I have volunteered as Sherry’s aide. My work requires too much travel for me to be a full-fledged tutor. But I am actually re- lieved, not having sole responsibility for teaching an adult to read. That is because\u2014 when I think about it\u2014I don’t know how I read myself. I scan a printed page; the let- ters magically reveal meaning. It is effort- less. I don’t know how I do it. As for teach- ing a man to read from scratch, how would I ever begin? Sherry, a former third-grade teacher, gives me hints, like helping Ken to learn words by sight so that he doesn’t have to sound out each letter. Also, we read stories so Ken can pick out words in context. Ken reads Dr. Seuss rhyming books and tales about young hippopotamuses helping on the family farm. At the moment, we are reading a picture book about Central American farmers who experience disaster when a volcano erupts. ”The people had to move out, and put handkerchiefs over their noses!” Ken says, staring at the pages. He starts to read: ”They . . . prayed? . . . for the . . . fire? . . .” ”Yes, that’s right, fire,” Sherry says. ”They prayed for the fire to . . . go out?” ”That word is ‘stop,”’ Sherry says. I listen carefully. A few sessions ahead, it will be my turn to try teaching. ”They prayed for the fire to stop,” Ken says, plac- ing a thick forefinger under each word. ”They watched from the s . . .” ”Remember we talked about those?” Sherry says. ”When a word ends in a silent e, what does that si- lent e do to the vowel?” ”It makes it say it- self,” Ken says. ”So what’s the vowel in s-i- d-e?” she asks. ”It’s i, and it would say its own name, i,” Ken says, pronouncing it ”oy.” ”So that would be ‘side.’ ” ”Good,” Sherry says. Ken reads the sentence: ”They watched from the side of the hill!” He sounds quietly triumphant. ”They-un,” he says, in backcountry Vermontese. ”That’s done it.” After the session, I stand a few minutes with Ken in the frozen driveway. He has one foot on the running board of his ancient truck, which he somehow keeps going. He tells me he was born in 1931 into a family eking out an existence on a hardscrabble farm. His trouble in school with reading is puzzling, because Ken is intelligent. For instance, he says he was late today be- cause he had to fix his truck. And now he launches into a detailed analysis of the transmission mechanisms of various species of trucks. Also, during the tutoring session, we played a game that required strewing CONGRESSIONAL RECORD \u2014 SENATES9446 August 1, 1996 word cards upside down on a table and re- membering their locations. Ken easily outscored both Sherry and me in this exer- cise. Ken described himself as a ”slow learner,” but clearly he is not slow. Sherry had told me he probably suffers from a learning dis- ability. People with these perceptual dis- orders experience difficulties such as seeing letters reversed. Although their intelligence may actually be above average, learning to read is difficult for them. they need individ- ual tutoring. ”It was a one-room school, with eight grades, so I didn’t get much attention there,” Ken tells me. ”It was just the same as the folks at home were doing when they kicked me along through the grades, and when you got to be 16, that’s when they kicked you out.” After he left school, he left home. ”Then you knock around, one farm to another,” he says. ”I’d get $15 a week, and room and board.” Besides farming, he worked in bob- bins mills and sawmills and granite quarries. ”Then I was at a veneer mill in Bradford,” he says. ” After that I was caretaker at a farm for six years until I had to give it up because I had heart attacks.” Now he subsists on a $400-a month Social Security disability pension plus $90 a month in food stamps. He lives alone in a farmhouse he built himself more than 25 years ago, five miles up a mountain dirt road. He earns money for his medicines by cutting firewood, haying, digging postholes with his tractor, snowplowing an cutting brush. ”I’m doing odds-and-ends jobs where you can take your time, because the doctor told me I have to stop whenever I fell I need to rest,” he says. He cannot afford electricity from the power company, but he gets what current he needs, mostly for lights by\u2014ingeniously\u2014 drawing it from car batteries. To recharge the batteries, he hooks them up in his truck for a day. He also can charge them with a diesel generator. He waits until prices dip to buy fuel for his generator and tractor. ”I’ve got a few maples around my house,” he tells me. ”I’ll find a rustedout evaporator, fix it up and make syrup\u2014there’s always a few things I can do, I guess.” I ask how he’s managed all these years, not reading. He says his bosses did the reading for him. And now a Marshfield couple, life- long friends, help him read his mail and bills and notices. But they are entering their 80s. ”Now I’ve got to learn to read myself, as a backup,” Ken says. To find out more about what illiteracy does to people like Ken, I telephoned the U.S. Department of Education and spoke with the Deputy Secretary, Madeleine Kunin. She told me that only 3 5 percent of adult Americans cannot read at all. ”But lit- eracy is a moving target,” she said. ”We fig- ure the 40 million who do read, but at the lowest proficiency levels, have difficulty handling some of the tasks they need hold a job today.” Kunin, a former Vermont gov- ernor, cited that state’s snowplow drivers: ”Now they have computers attached, and they need a high school degree just to drive a snowplow.” Ken arrives for his next session in a dark mood. It turns out his tape recorder, used for vocabulary practice, is broken, ”I can’t fix it because the money’s all gone for this month,” he says. ”I had to go to the doctor, and that’s $30, and it was $80 for the pills, and they keep going up.” He says one of his prescriptions jumped from $6.99 to $13 in two months. ”I don’t know if I’ll keep taking them,” he says. Illiteracy has condemned Ken to a lifetime of minimum-wage poverty. He brightens reading a story. It is about a dog, John Brown, who deeply resents his mistress’s new cat. Ken stumbles over a word. ”Milk?” Sherry and I nod. ”Go and give her some milk,” Ken reads, then pauses to give us a dispatch from the literacy front: ”I was trying to figure that out, and then I see it has an i,” he says. My own first attempt at solo tutoring fi- nally comes, and I am edgy. Sherry has wryly admonished Ken, ”You help Richard out.” I show him file cards, each imprinted with a word for Ken to learn by sight. He is supposed to decipher each word, then incor- porate it in a sentence. I write his sentence on the card to help him when he reviews at home. Ken peers at the first word.”All,” he says getting it easily. He makes up a sen- tence: ”We all went away.” ”That’s right,” I say. Maybe this won’t be so hard after all. I write Ken’s sentence on the card for him. Then I flip another card. Ken peers at it, his face working as he strug- gles with the sounds. ”As,” he says. During our last session, he confused ”as” and ”at.” Now he has it right. So he has been doing his homework. ”As we went down the road, we saw a moose,” Ken says, composing a sentence. That reminds him that the state recently al- lowed moose hunting, game officials arguing that moose have become so plentiful they cause highway accidents. ”Yesterday, I come around a turn and there was ten moose, a big male and female and young ones,” Ken says. ”They shouldn’t be shooting those moose\u2014 they ain’t hurting anyone, and it ain’t the moose’s fault if people don’t use their brakes.” I flip another card. ”At!” Ken says, tri- umphing over another of our last session’s troublemakers. ”We are at the school.” But the next word stumps him, It is ”be.” I put my finger under the first letter. ”What’s that sound?” I ask. When he stares in con- sternation, I make the sound ”buh.” But Ken is blocked. He can’t sound out the next let- ter, even though he has often done it before. ”Eeeee,” I say, trying to help. ”Now put the two sounds together.” Ken stares helplessly at the word. I am be- ginning to understand the deep patience needed to tutor a man like Ken, who began these sessions a year before, knowing the al- phabet but able to sound out only a few words. ”Buh . . . eeee,” I say, enunciating as carefully as I can. ”Buh . . . eeee,” Ken re- peats. Abruptly, his forehead unfurrows. ”Oh, that’s ‘be,’ ” he says. ”Be\u2014We should be splitting wood!” ”Was that what you were doing before the tutoring session?” I ask, to give us both a break. ”Nope, plowing snow with my tractor for my friend who broke off his ankle,” Ken says. That is arresting information. When I ask what happened, Ken says his octogenarian friend was chain-sawing cherry trees when a bent-back branch lashed out, smashing his lower leg. Ken, haying a field, saw his friend ease his tractor down from the mountainside woodlot, grimacing in agony, working the tractor’s pedals with his one good foot. Ken himself once lost his grip on a hay bale he was hoisting. A twig poking from the bale blinded his right eye. Now learning to read is doubly difficult because his remain- ing eye often tires and blurs. These grim country stories of Ken’s make my worries\u2014 delayed flights, missed appointments\u2014seem trivial. I flip another card: ”But.” ”Bat,” Ken says, cautiously. ”Buh . . . uh . . . tuh,” I prompt. ”But,” he finally says. ”I would do it, but I have to go somewhere else.” I write Ken’s sentence on the card and he reads it back. But he stumbles over his own words, unable to sound out ”would.” I push down rising impatience by remembering the old man in the woods, crawling toward his tractor, dragging that smashed leg. Finally, I put away the cards, glad to be done with them. Tutoring can be frustrating. Why are even easy words sometimes so hard to get? Now we look at a puzzle. On one side it has pictures of various automobile parts. On the other side are printed the parts’ names. The idea is to match the pictures and the names. Before I can start asking Ken to try sounding out big terms like ”connecting rod,” he points to one of the drawings. It looks to me like deer antlers. ”Carburetor?” I guess. ”Exhaust manifold,” Ken says. ”What’s this one?” I inquire. For all I know, it might be something Han Solo is pi- loting through hyperspace. ”Starter,” Ken says. It seems to me he is gloating a little. He points again. ”Camshaft?” I ask. Ken cor- rects me. ”Crankshaft,” he says, dryly. It is a standoff. I know the printed words. Ken knows the actual objects to which the words refer. ”When I was a kid,” he tells me, ”I bought an old ’35 truck. Sometimes it had brakes and sometimes it didn’t. I was prob- ably 17. It made lots of smoke, so mosquitos never bothered me. But one day I got sick of it. I put it under a pine tree and I hoisted the engine up into the tree to look at it. The pressure plate weren’t no good. And the fel- low showed me how to fix it. That reminds Ken of a later episode. ”One time we had to get the hay in, but the baler was jammed. We had the guys from the trac- tor place, but they could not fix it. Finally I asked the old guy for some wrenches and I adjusted it, and I kept on adjusting, and after that it worked perfectly. I just kept ad- justing it a hair until I had it. And then we were baling hay!” No wonder Ken’s bosses were happy to do his reading for him. Even so, in our late 20th-century wordscape, illit- eracy stymies people like him. And working with Ken has me puzzled: Why do so many people fail to learn to read? I telephoned an expert, Bob Caswell, head of Laubach Literacy International, a non- profit organization that trains tutors world- wide. He told me many nonreaders, like Ken Adams, suffer from perceptual reading dis- orders. But there are other reasons for illit- eracy, and it is by no means confined to any one part of the population. ”People think adult nonreaders are mainly poor, urban minorities, but 41 percent are English-speaking whites,” Caswell said, add- ing that 22 percent are English-speaking blacks, 22 percent are Spanish-speaking, and 15 percent are other non-English speakers. More than half of nonreading adults live in small towns and suburbs. Caswell cited U.S. Department of Labor figures that put illiter- acy’s annual national cost at $225 billion in workplace accidents, lost productivity, unre- alized tax revenues, welfare and crime. One big reason for this whopping problem is par- ents who read poorly. Well over a third of all kids now entering public schools have parents who read inad- equately, he said. ”Everywhere we find par- ents who want to read to their kids, but can’t,” he added. ”And a child with function- ally illiterate parents is twice as likely to grow up to be functionally illiterate.” But as I met some of Ken Adams’ fellow students, I discovered all sorts of causes for being unable to decipher an English sen- tence. For instance, I met a woman who had escaped from Laos to Connecticut knowing only Laotian. She learned enough English watching Sesame Street (”Big Bird and all that,” she told me), and later from being tu- tored, to become a citizen. I also met a man in his 30s who worked on a newspaper’s printing press. He could not spell the simplest words. He said it was be- cause, at age 10, he had begun bringing alco- hol to school in peanut-butter jars. After his son was born, he turned to Alcoholics Anony- mous and mustered the courage to seek tu- toring. CONGRESSIONAL RECORD \u2014 SENATE S9447August 1, 1996 I met another man who had dropped out of school in frustration. Not until he tried to enlist in the military did he discover he was nearly deaf. The operator of a creamery’s cheese-cutting machine told me he never learned to read because his family had been in a perpetual uproar, his mother leaving his father seven times in one year. And I met a farm wife, 59, who rarely left her mountain- top. But now, with tutoring, she was finally learning to read, devouring novels\u2014”enjoy- ment books,” she called them. In central Vermont, these struggling read- ers receive free tutoring from nonprofit Adult Basic Education offices, each employ- ing a few professionals, like Sherry Olson, but relying heavily on armies of volunteers, like me. Other states have their own sys- tems. Usually, the funding is a combination of federal and state money, sometimes aug- mented with donations. Mostly, budgets are bare bones. Many states also rely on nonprofit na- tional organizations, like Laubach Literacy Action (Laubach International’s U.S. divi- sion) and Literacy Volunteers of America, both headquartered in Syracuse, New York, to train volunteers. Laubach’s Bob Caswell told me that, nationwide, literacy services reach only 10 percent of adult nonreaders. ”Any effort is a help,” he said. Help has come late for Ken Adams. Review- ing his portfolio, I found the goals he set for himself when he began: ”To read and write better. And to get out and meet people and develop more trust.” Asked by Sherry to cite things that he does well, he had mentioned ”fixing equipment, going to school and learning to read, trying new things, telling stories, farming.” He remembered being in a Christmas play in second grade and feeling good about that. And he remembered playing football in school: ”They would pass it to me and I’d run across the goal to make a score.” He mentioned no fond family memories. But he had some good moments. ”I remember the first time I learned to drive a tractor,” he had said. ”We were working in the corn- fields. I was proud of that.” And a later nota- tion, after he had several months of tutor- ing, made me think of Ken living alone in his hand-built farmhouse on ten acres atop the mountain. ”I like to use recipes,” he said. ”I use them more as I learn to read and write better. I made Jell-O with fruit, and I make bean salad. I feel good I can do that.” In our tutoring sessions, between bouts with the vocabulary cards, Ken tells me he was the oldest of four children. When he was small, his father forced him to come along to roadside bars, and then made Ken sit alone in the car for hours. Ken remembers shiver- ing on subzero nights. ”He always said I’d never amount to nothing,” Ken says. I ask Ken, one day, if his inability to read has made life difficult. He tells me, ”My fa- ther said I’d never get a driver’s license, and he said nobody would ever help me.” Ken had to walk five miles down his mountain and then miles along highways to get to work. ”And,” he recalls, ”I was five years in the quarries in Graniteville\u2014that was a long way.” Sometimes he paid neighbors to drive him down the mountain. ”They said the same as my father, that I’d never get a li- cense,” he says. ”They wanted the money.” It was not until he was 40 years old that he applied for a license. He had memorized sign shapes and driving rules, and he passed eas- ily. ”After I got my license I’d give people a ride down myself,” he says. ”And they’d ask, ‘How much?’ And I’d always say, ‘Nothing, not a danged thing!’ ” To review the words he has learned, Ken maintains a notebook. On each page, in large block letters, he writes the new word, along with a sentence using the word. He also tapes to each page a picture illustrating the sen- tence, as a memory aid. To keep him sup- plied with pictures to snip, I bring him my old magazines. He is partial to animals. He points to one photograph, a black bear cub standing upright and looking back win- somely over its shoulder. ”That one there’s my favorite,” Ken says. And then he tells me, glowering, that he has seen drivers swerve to intentionally hit animals crossing the road. ”That rabbit or raccoon ain’t hurt- ing anyone,” he says. We start a new book, The Strawberry Dog. Ken picks out the word ”dog” in the title. ”That dog must eat strawberries,” he says. ”I used to have a dog like that. I was picking blackberries. Hey, where were those berries going? Into my dog!” We read these books to help Ken learn words by sight and context. But it seems odd, a white-haired man mesmerized by sto- ries about talkative beavers and foppish toads. Yet, I find myself mesmerized, too. The sessions are reteaching me the exhilara- tion I found in narrative as a child, listening to my father read about Peter Churchmouse. Our classes glide by, a succession of vocabu- lary words\u2014”house,” ”would,” ”see”\u2014inter- woven with stories about agrarian hippo- potamuses and lost dogs befriended. One afternoon it is my last session with Ken. We have wrestled with words through a Christmas and a March sugaring, a mid- summer haying, an October when Ken’s flan- nel shirts were specked with sawdust from chain-sawing stove logs. Now the fields out- side are snowy; it is Christmas again. My wife and I give Ken a present that she picked out. It is bottles of jam and honey and watermelon pickles, nicely wrapped. Ken quickly slides the package into his canvas tote bag with his homework. ”Aren’t you going to open it?” Sherry asks. ”I’ll open it Christmas day,” Ken says. ”It’s the only present I’ll get.” ”No it isn’t,” she says, and she hands him a present she has brought. And so we begin our last session with Ken looking pleased. I start with a vocabulary re- view. ”Ignition coil,” Ken says, getting the first card right off. He gets ”oil filter,” too. He peers at the next card. ”Have,” he says. And he reads the review sentence: ”Have you gone away?” He is cruising today. When I flip the next card, he says, ”There’s that ‘for.’ ” It is a word that used to stump him. I turn another card. He gets it instantly. ”But.” He gets ”at,” then another old nemesis, ”are.” I ask him to read the card’s review sentence. ”Are we going down . . . street?” he says. He catches himself. ”Nope. That’s downtown!” I am amazed at Ken’s proficiency. A while ago, I had complained to my wife that Ken’s progress seemed slow. She did some math: one and a half hours of tutoring a week, with time off for vacations and snowstorms and truck breakdowns, comes to about 70 hours a year. ”That’s like sending a first grader to school for only 12 days a year,” she said. And so I am doubly amazed at how well Ken is reading today. Besides, Sherry Olson has told me that he now sounds out\u2014or just knows\u2014words that he never could have deci- phered when he began. And this reticent man has recently read his own poems to a group of fellow tutees\u2014his new friends\u2014and their neighbors at a library get-together. But now we try something new, a real- world test: reading the supermarket adver- tising inserts from a local newspaper. Each insert is a hodge-podge of food pictures, product names and prices. I point to a word and Ken ponders. ”C” he says finally. ”And it’s got those two e’s\u2014so that would be ‘cof- fee’!” I point again. He gets ”Pepsi.” Si- lently, he sounds out the letters on a can’s label. ”So that’s ‘corn,’ ” he announces. He picks out ”brownies.” This is great. And then, even better he successfully sounds out the modifier: ”Fudge,” he says. ”They-uh!” We’re on a roll. But not I point to the page’s most tortuous word. Ken starts in the middle again. ”ta?” I point my finger at the first letters. ”Po,” he says, unsure. As al- ways when he reads, Ken seems like a begin- ning swimmer. He goes a few strokes. Floun- ders. ”Po-ta . . .,” Ken says. He’s swum another stroke. ”To,” he says, sounding out the last syllable. ”Po-ta-to, po-ta-to\u2014Hey, that’s po- tato!” He’s crossed the pond. ”Ken!” I say. ”Terrific!” He sticks out his chin. He almost smiles. ”Well, I done better this time,” he says. ”Yup, I did good.”\u2211 f THE PASSING OF MR. KENNETH KOHLI \u2211 Mr. KEMPTHORNE. Mr. President, I am deeply saddened at the tragic death of Ken Kohli, an outstanding individual with whom I have had the pleasure of working and knowing for years. Last Friday, the plane in which he and two others were flying crashed in the Cabi- net Mountains of Montana, claiming all three lives. It is a tragedy when one so talented, and with such a bright future, is lost at such a young age. Ken was only 35, and yet he had established himself as a leader in our State. He grew up in Coeur d’Alene, ID and attended North- ern Idaho College, serving as NIC stu- dent body president. He then went on to complete his education at Colorado College and Rutger’s University in New Jersey. When Ken returned to Coeur d’Alene, he put his passion for public policy to work for the Intermountain Forest In- dustry Association as its communica- tion director. Ken’s colleagues and friends will always remember him for the intelligence, energy, and positive attitude with which he approached his work and his life. Ken understood the basic nature of Idahoans and their love for the land, and he recognized the im- portant of our State’s natural re- sources to jobs and families. He had an appreciation for and a unique ability to work toward consen- sus and find that balance so that we were protecting our resources while at the same time making wise use of them for the benefit of all. Ken was a strong voice at the table, but he was always a reasonable voice. My thoughts and prayers are with his family, in particular with his wife, Susan, and their three children, Kyle, Lauren, and Luke.\u2211 f RECOGNIZING OUR FOREIGN SERVICE OFFICERS \u2211 Mr. AKAKA. Mr. President, I rise today to recognize two fine and out- standing foreign service officers sta- tioned in our Beijing, China, embassy who went beyond the call of duty to help an American citizen in time of need. Ms. Stephanie Fossan and Mr. Kai Ryssdale exemplify the ”can do” spirit that all our foreign service offi- cers provide for many of our overseas citizens. In a letter I received from a Hawaii constituent doing business in China, he CONGRESSIONAL RECORD \u2014 SENATES9448 August 1, 1996 describes an incident where he lost his passport a day before his departure from Beijing. Without his passport he knew he would most certainly have to miss his scheduled flight. Because this was peak travel season for many Asians and the airlines were solidly booked, it would also mean an indefi- nite stay in China. This delay would become very difficult for this person because of health concerns and the lack of his daily medication. Ms. Fossan and Mr. Ryssdale worked beyond normal working hours to en- sure that this Hawaii resident could se- cure a temporary passport. With tem- porary passport in hand, my constitu- ent went to the Chinese Security Office to get his visa stamped, and he was able to board his plane to Honolulu the next morning as scheduled. All too often the hard work and dedi- cation of our foreign service officers go overlooked. Many of these people live and work in very difficult conditions. The Secretary of State has testified be- fore a committee of the Senate about ”sewer gases” leaking into the em- bassy building in Beijing and the dif- ficult living conditions under which the Americans who work there must endure. Ms. Fossan and Mr. Ryssdale rep- resent the best in foreign service per- sonnel who serve and protect our citi- zens abroad. To all personnel serving in our embassies abroad and to the Honor- able James Sasser, Ambassador to the Peoples Republic of China, and his staff, I say thank you for your dedi- cated work for our country. \u2211 f THE PASSING OF MR. ALFRED HALL \u2211 Mr. KEMPTHORNE. Mr. President, among those tragically killed last Fri- day in a plane crash on Crowell Moun- tain southeast of Libby, MT, was Mr. Alfred (Al) Hall. Al Hall worked as the pilot for Idaho Forest Industries [IFI], and flew with his son Cody, as his co-pilot. I speak from personal experience that Al was a fine pilot, as I was able to fly with him several times. I have to tell you that I enjoyed flying with Al and his son Cody because of the enthusiasm they shared for their work. I remember one particular flight during which Al com- mented that he was the luckiest man he knew. When I asked him why, he re- sponded that it was because his co- pilot was his best friend, and also hap- pened to be his son. His supervisors at IFI were recently quoted as saying that Al ”probably had every rating that an aviator could have.” He was known as an experienced and safe pilot, gained from years of ex- perience beginning with his time as a Navy pilot, then as a pilot for the For- est Service, and for Empire Airlines be- fore he went on to work for IFI. Al leaves behind him his wife, Mary Mac Hall, and two adult children, his son, Cody, and his daughter, Laura. The thoughts and prayers of myself and my staff are with them all.\u2211 TRIBUTE TO PAUL DENSEN \u2211 Mr. LAUTENBERG. Mr. President, I rise today to recognize Paul Densen on his 80th birthday, which is on August 8. I want to honor Paul not simply be- cause he has reached a milestone, but because his life has been a model of public service and philanthropy. After fighting for his country in World War II, he headed a major pack- aging corporation until the 1970’s. His philosophy has always been that suc- cess obligates us to give something back to the society that enabled us to succeed. When we succeed, we owe something to our community and to those who may be less fortunate. Densen’s record of philanthropy and community service confirms that atti- tude. He is associate governor of the inter- national board of governors of the He- brew University of Jerusalem, and a member of the board of directors and a vice-president of the American Friends of Hebrew University. He also serves as a board member of the Suburban Com- munity Music Center in Madison, NJ. Paul has been a member of the board of directors of the National Conference of Christians and Jews, a member of the dialog committee on interreligious affairs at Seton Hall University, and a budget committee member for the Jew- ish Education Association. He was also president of the West Orange Charter Association and a member of the West Orange Economic Development Com- mittee. Given this record, it’s probably not surprising that it was public service which initially brought Paul and I to- gether. Our first meeting took place decades ago, when we met to discuss the Lautenberg Center for General and Tumor Immunology at the Hebrew Uni- versity of Jerusalem-Hadassah Medical School. Since 1976, Paul has been chairman of the center’s endowment committee, and he has been a driving force in its development and volunteer recruit- ment efforts. Without Paul’s dedica- tion and leadership, the Lautenberg Center could not have achieved the re- markable history of success of which we are all so proud. Mr. President, many people have ben- efited from Paul Densen’s work, and I have certainly benefited from our friendship. I congratulate Paul on his 80th birthday. Reaching this milestone is a cause for celebration. However, through his work, his public service and his civic involvement, Paul defi- nitely proves that what’s important isn’t simply the years in our life, but the life in our years.\u2211 f DEPARTMENT OF TRANSPOR- TATION APPROPRIATIONS BILL \u2211 Mr. MCCAIN. Mr. President, last night I voted against the Department of Transportation appropriations bill. I would like to take a minute of the Sen- ate’s time to explain my reasons for my vote. I had intended to give the fol- lowing remarks on the Senate floor last night. However, due to the late hour, I chose not to keep the Senate any longer than necessary and instead therefore ask unanimous consent that my statement appear in the RECORD at this time. First, Mr. President, let me commend the chairman and the ranking member of the subcommittee for all their hard work on this important bill. Their dili- gence in bringing this bill up and pass- ing it so quickly is ample evidence of their abilities. I wish I were able to state that I could support their bill\u2014unfortu- nately, I am not. As with other appro- priations bills which I have voted against, I believe that we must begin to stop the practice of earmarking funds. Earmarking is not fair and dis- proportionately effects where the tax- payer’s money is being spent. For example, Mr. President, the dis- cretionary grants account of the high- way trust fund earmarks hundreds of millions of dollars for fixed quideway systems. The bill goes on to list where the money should be spent. To no one’s surprise, the motherload of the funds goes to States represented by appropri- ators. I am also very concerned that the proviso noting that funds are available for fixed guideway modernization notes that such funds will be available not- withstanding any provision of law. This language was added as a Senate amendment. I would inquire why the Senate felt this proviso was necessary? I would hope that there was no inten- tion here to insulate items from the line item veto or any other budget cut- ting tools. I would hope the managers of the bill assure me that such a result was not their intention. Mr. President, I want to return to the subject of developing a system to de- termine national priorities. I have dis- cussed this issue before and would like to return to it now. In the area of mili- tary construction, Senator GLENN and I have worked with the Department of Defense to develop a system where the Pentagon prioritizes their construction needs. At the insistence of my good friends, Senator SHELBY, the courts have done the same. I want to point out that until Senator SHELBY took over the Treasury-Postal Subcommittee, court- house construction in the country was based on no rational plan and hundreds of millions of dollars were wasted. Thanks to Senator SHELBY, the courts\u2014against their will\u2014now prioritize which courthourses should be built. This enables the Congress to spend the taxpayer’s money in a more responsible manner. I would hope we could institute a similar process for the Department of Transportation and the many projects and other earmarks funded by this bill. Mr. President, such a system not only gives Members of Congress the in- formation needed to make better CONGRESSIONAL RECORD \u2014 SENATE S9449August 1, 1996 choices about how to spend appro- priated dollars, but will hopefully take some of the politics out of the spending process. I hope we will move in this di- rection in the future. Again, although I intend to vote against this bill, I want to thank the bill’s managers, especially the chair- man of the subcommittee, Senator HATFIELD.\u2211 f PRIVATE GAMBLING AND PUBLIC MORALITY \u2211 Mr. SIMON. Mr. President, Prof. George Anastaplo of Loyola University School of Law in Chicago recently spoke at a convention in Las Vegas, commenting about legalized gambling and where we are going as a nation. It is a thoughtful presentation that I am appending at the end of these re- marks. I have condensed his original paper somewhat. What is interesting to me particu- larly is to read a quotation from an 1850 U.S. Supreme Court decision, Phelan versus Virginia, in which the Court comments on lotteries as com- pared to private gambling. The Court said: The suppression of nuisances injurious to public health or morality is among the most important duties of government. Experience has shown common forms of gambling are comparatively innocuous when placed in contrast with the widespread pestilence of lotteries. The former are confined to a few persons and places, but the latter infests the whole community: it enters every dwelling; it reaches every class; it preys upon the hard earnings of the poor; it plunders the ignorant and simple. Mr. President, I ask that the con- densed version of Mr. Anastaplo’s re- marks be printed in the RECORD. The condensed version follows: ”PRIVATE” GAMBLING AND PUBLIC MORALITY (By George Anastaplo) Gambling is in evidence all around us. For example, Texas bingo halls took in $63,000,000 in 1994. The pervasiveness of gambling is evi- dent to anyone who follows sports: the ”point spread” helps make each encounter of even mismatched opponents ”interesting” and hence the occasion for wagering. Offi- cials of professional leagues used to worry about the influence of gambling. For exam- ple, it was once argued, ”The values of foot- ball are hard work, disappointment, and hon- est competition, which must exist in an hon- est environment.” Gambling, it was feared, would ”accentuate” the pressures on football players beyond a tolerable point, and change a sporting event into a gambling spectacle. Now, the officials of professional leagues co- operate with the gambling industry to make sure that games are not ”fixed.” But, it can be noticed, the sports contests that are gambled upon may often be intrinsi- cally interesting\u2014and can attract attention without any organized wagering. But lotter- ies, slot machines, and the like are far less interesting in themselves. Even so, they can be quite entertaining, even thrilling, for par- ticipants. Thus, it has been observed, ”Un- like narcotics, which creates droves of crimi- nals who prey on the generally poor black community, the numbers game seems to many people to be just a potent, daily titilla- tion for poor people seeking a rainbow’s end.” The head of an off track betting cor- poration, upon being accused of taking money from the poor, asked rather rhetori- cally, ”Who’s to say what’s gambling and what’s entertainment?” But then, nicotine, too, can be engaging for the addict, however deadly cigarette-smoking may be. We tend to be much more relaxed, as a community, about the damage done by gam- bling than were some of the earlier genera- tions in this country. Tolerance for lotteries, in the first quarter of the Nineteenth Cen- tury gave way, because of growing abuses, to efforts by state governments to put lotteries out of business. In 1895 Congress provided support for these states with its own legisla- tion, ”An Act for the Suppression of Lottery Traffic through National and Interstate Commerce and Postal Service, Subject to the Jurisdiction and Laws of the United States.” A constitutional inquiry into what was in- deed ”subject to the jurisdiction and laws of the United States” elicited this question from the United States Supreme Court in Champion v. Ames: (The Lottery Case), 188 U.S. 121, at 356 (1903): ”If a state, when considering legislation for the suppression of lotteries within its own limits, may properly take into view the evils that inhere in the raising of money, in that mode, why may not Congress, invested with the power to regulate commerce among the several states, provide that such com- merce shall not be polluted by the carrying of lottery tickets from one state to an- other?” Further on the Court argued (ibid., at 357 58): ”[B]ut surely it will not be said to be a part of anyone’s liberty, as recognized by the supreme law of the land, that he shall be al- lowed to introduce into commerce among the states an element that will be con- fessedly injurious to the public morals. . . . We should hesitate long before adjudging that an evil of such appalling character, car- ried on through interstate commerce, cannot be met and crushed by the only power com- petent to that end.” It is evident how people in authority in the first decade of this century were expected to speak about such gambling as the lottery. The dissenting opinion in Champion v. Ames made no defense of lotteries, arguing instead that the power to suppress such ”a harmful business” belong to the states, not to the na- tional government. The majority of the Supreme Court in Champion v. Ames insisted that Congress should be able to act: ”. . . to protect the country at large against a species of interstate commerce which, although in general use and some- what favored in both national and state leg- islation in the early history of the country, has grown into disrepute, and has become of- fensive to the entire people of the nation. It is a kind of traffic that no one can be enti- tled to pursue as a right.” I mention in passing the likelihood that the current indulgences in lotteries and the like will, because of emerging abuses and harmful consequences, eventually be subjected once again to severe restrictions, In fact, it is al- ready likely that lotteries would not be ap- proved in many of the states where they now operate, if put to a popular vote by referen- dum. No one on the 1903 Court doubted that state governments could try to suppress lot- teries if they wished. Phelan v. Virginia, 8 Howard (49 U.S.) 162 (1850) was cited to this effect. The opinion in that case, upholding an 1834 act of Virginia forbidding the sale of lottery tickets, includes this reminder of how lotteries were once regarded in this country: ”The suppression of nuisances injurious to public health or morality is among the most important duties of government. Experience has shown that the common forms of gam- bling are comparatively innocuous when placed in contrast with the widespread pes- tilence of lotteries. The former are confined to a few persons and places, but the latter in- fests the whole community: it enters every dwelling; it reaches every class; it preys upon the hard earnings of the poor; it plun- ders the ignorant and simple.” This, then, is the sort of public opinion, running back to 1850 and earlier, that the Su- preme Court could invoke in the opening years of this century. Now, at the end of the same century, not only are lotteries no longer spoken of in this fashion by officials, but the states of this Union are themselves in the business of running and vigorously promoting lotteries with ever-growing prizes. In Illinois, for example, the gambling industry contributed more than a million dollars to political candidates in 1995. Fur- thermore, it has been able to hire a former governor of the state and other former Illi- nois officials as paid lobbyists. This is not just an American phenomenon, of course. State lotteries are very much in evidence in Europe and elsewhere. The ”pools” have long been a feature of British life. And something is to be said for legaliz- ing (or at least decriminalizing) what is like- ly to be done anyway, thereby permitting both regulation and taxation. But is not the state’s doing it, and promoting it, something significantly different from toleration, tax- ation and regulation? Is it as if the state had gotten into the business of producing and selling firearms, prostitutes, alcoholic bev- erages, cigarettes, and other narcotics? The newest gambling rage in this country, however, is not lotteries but rather casinos. These are licensed by states which count on a hefty cut of the revenues. Respectable newspapers prod their legislatures to take measures to counter the competition from the casinos in neighboring states. Consider, for example, the opening and closing sen- tences of a recent Chicago Sun-Times edi- torial (”Casino Shutdown in East Dubuque, Illinois Forces Gambling Issue,” December 7, 1995): ”Two Illinois riverboat casino got no satis- faction from the Legislature last month when they asked for help in competing with Iowa boats across the Mississippi River. . . . While the Legislature fiddles, Illinois gam- ing revenue floats across the Mississippi to lucky Iowa.” It is the practice of the gambling industry, by the way, to refer to the ”entertainment” it offers as ”gaming,” not as ”gambling.” A recent Chicago Tribune editorial, sup- porting an effort to exact more revenues from riverboat casinos, begins with these ob- servations (”Bet on Edgar’s casino tax plan,” March 8, 1996): ”Who says gambling doesn’t pay? ”Last year the Empress Casino in Joliet hauled in $200 million, after paying off bet- tors. For Harrah’s, also in Joliet, the figure was more than $190 million. ”Gov. Jim Edgar’s proposed 1997 state budget would impose on those and other high-rolling casinos a graduated tax to tap some of the windfall for the state’s schools\u2014 and rightly so. ”Under current law, all casinos are taxed a flat 20 percent of their adjusted gross re- ceipts (that’s what they have left after they’ve paid out winnings), regardless of how much money they’re making. ”For a struggling operation (and there are some), 20 percent is too much; for the widely successful ones, it’s a bargain, and for the state it’s an inefficient approach to taxation of this protected industry.” Immediately following this Tribune editorial about how the state should take further ad- vantage of ”this protected industry” is an CONGRESSIONAL RECORD \u2014 SENATES9450 August 1, 1996 editorial, ”No more cosying up to gang- sters,” commenting upon the conviction of eight members of a gang for distributing nar- cotics in Chicago and the suburbs. There is much to be said, of course, for the decrimi- nalization of drug sales in this country, just as there has been for the decriminalization of gambling. But ”cosying up” to, and rely- ing upon, such activities, and even promot- ing them for their revenues pose questions that we seem to have lost sight of about the role of law in sustaining morality. Far from encouraging morality, we find ourselves catering to vices and trying to ex- ploit them. To some extent, as we have no- ticed, gambling is a form of self-chosen en- tertainment less harmful in many ways than some other forms of entertainment. It tends to be for most of the ”players” more self-cor- recting than several other forms of self- abuse, such as alcohol and drug addiction. But this sort of entertainment is not in- trinsically satisfying, requiring as it does constant intensification in order to maintain its interest for participants. Thus, it has been noticed by a Haverhill, Massachusetts newspaper (”Opinionline,” USA-Today, No- vember 13, 1995, p. 13A): ”We’ve gone from the Sweepstakes era, with a once-a-week, 50-cents-per-ticket drawing, to state-run and fostered gambling industry which is worth millions. The state government is addicted to gambling, as gov- ernment finds ways to avoid dealing with the issues of how much money it should spend and what tax it ought to levy. But something is drastically wrong when government be- comes increasingly dependent on the misfor- tunes of its people to finance its operations.” There is something ”realistic” in recogniz- ing that people will gamble, however much government attempts to suppress it. The considerable lure of gambling, sometimes with catastrophic consequences, has long been known. But what seems to be forgotten from time to time is the price paid, even in economic terms, for widespread gambling. The next decade should see the publication of more and more studies which expose to public view the hidden costs of the revenues that are derived from the gambling industry. These include the effects upon small busi- nesses as large sums of money are siphoned out of the community by casinos. These hid- den costs include, as well, the social services that have to be provided the families that are victims of gambling addictions. (The University of Chicago library has extensive entries under the catalogue heading: ”Ad- dictive disorders update: alcoholism, drug abuse, gambling.”) Even more important than the economic and social costs of intensified addiction is what has been happening (but not only be- cause of the gambling industry) to the au- thoritative opinions of the community. He- donism is encouraged along with the notion of getting ”something for nothing.” Self- centeredness is thereby legitimated, as may be seen in the growing scandal of the level of compensation these days for the chief execu- tive officers of our major corporations (espe- cially when their compensation is compared to that of their equally successful European and Japanese counterparts). It sometimes seems that shamelessness has become the order of the day. . . . A billboard recently on display in Chicago invited us to a Wisconsin Dells casino with the slogan, ”Come to the Land of Milk and Money.” (This advertise- ment was illustrated by the drawing of a slot-machine showing three cows lined up: a real winner!) That, we are thus told, is the new Promised Land. The public should be encouraged in these matters to face up to two sets of delusions. This can help us face up in turn to what we are doing and how best to accommodate our- selves to the vices that human beings are bound to have. The first set of delusions has to do with what organized gambling depends upon: the systematic fleecing of the ignorant by the informed. Professional gamblers do not be- lieve in gambling any more than professional panderers believe in love: gambling mag- nates are no more gamblers than casino riv- erboats are boats. The huge outlays that ca- sino operators are willing to devote to secur- ing licenses reveal what a treasure-trove the well-placed casino must be. The sooner that casino customers recognize that they are suckers, the sooner most of them are likely to entertain themselves some other way. The second set of delusions has to do with the notion that revenues derived from the gambling industry are a painless substitute for the taxation required for schools and other essential community services. Thus, it can be said that ”money raised through le- galized gambling is one of the few forms of taxation that people voluntarily and cheer- fully pay.” (Geis, Not the Law’s Business?, p. 237) But for an action to be truly voluntary a minimum of understanding is required. Consider, for example, these observations (”Take a Hard Look at Costs of Gambling,” Chicago Sun-Times, September 28, 1955: ”Some $330 billion was wagered legally in 1992, up 1,800 percent from 1976. In Mississippi last year, gamblers wagered $29.7 billion, whole total retail sales were only $27.6 bil- lion. Since casinos opened in Atlantic City in 1978, 100 of the 250 restaurants have closed, as have all the movie theaters.” ”Despite evidence that gambling may not be the panacea once thought, legislators con- tinue to legalize gambling as a way to bring money into state coffers. But what are its costs long-term?” The need for reliable information here, to which I have already referred, may well be served by the current efforts in Congress, by Senator Paul Simon and others, to inves- tigate gambling in this country. The thesis to be tested is that offered last year by a syndicated columnist (William Safire, ”New Evil Empire,” New York Times, September 28, 1995, p. A17): ”Gambling is a [massive] industry that is inherently immoral, corrupting public offi- cials, enriching criminals, addicting and im- poverishing the young and vulnerable. ”But the gambling racket\u2014whether in state-licensed casino, state-sponsored lotter- ies or on glitzy reservations of phony Indian tribes\u2014has been promoted by public officials as a great way of painlessly raising revenues, with state voters acting as suckers. As a re- sult officially endorsed and government-ad- vertised gambling now has America by the throat.” A report from Deadwood, South Dakota sums up the suicidal course we have followed in our delusions. A woman who has sup- ported the effort to legalize casinos in 1989 is now appalled upon seeing that the casinos ”have all but wiped out [her] town’s retail- ers” (James Sterngold, ”Spread of Gambling Prompts Calls for Federal Study of It,” New York Times, November 24, 1995, emphasis added): ”Strolling past storefront casinos that have replaced everything from the state so- cial services office to the insurance broker and department store, [she] commented, ‘I’m homesick all the time and I never left home. We were completely unrealistic.’ ” Perhaps the most troublesome feature of all this may be that we have drifted into a much-changed way of life without much seri- ous study or deliberate choice. This paper was prepared for the Law Pan- els at the American Culture Association Convention, Las Vegas, Nevada, March 25, 1996. George Anastaplo is Professor of Law at Loyola University of Chicago.\u2211 f THE FORMATION OF THE FINAN- CIAL INSTITUTION MODERNIZA- TION WORKING GROUP \u2211 Mr. GRAMS. Mr. President, I rise today to discuss something that prob- ably has not been debated much in the Senate since this body considered the FDIC Improvement Act back in 1991. I want to talk about the need to modern- ize the outdated laws that govern America’s financial services industry. The vital role that financial services play in our daily lives cannot be under- stated. We take out loans to go to col- lege, to buy a car, and to purchase a home. We buy insurance to provide greater security to ourselves and our families. We make investments throughout our life so that we may re- tire in comfort and dignity. Today, technological advancements and increased innovation in the deliv- ery of financial services make it easier than ever for consumers to get loans, purchase insurance, and invest their earnings. Unfortunately, our archaic and burdensome laws governing finan- cial institutions continue to discour- age, rather than encourage, such ad- vancement and innovation. The laws to which I am referring are not those governing the safety and soundness of financial institutions, such as setting minimum capital re- quirements or requiring periodic over- sight by Federal or State regulators. Safety and soundness laws and regula- tions are beneficial and necessary, as they enhance the security of the consumer whenever he or she deposits money in a bank or purchases an insur- ance policy. The outdated laws that I am refer- ring to are the laws that create bar- riers to competition by artificially compartmentalizing the three major sectors of financial services\u2014banking, securities, and insurance. For example, under the Banking Act of 1933, more commonly known as the Glass-Steagall Act, banks are generally barred from directly investing in corporate securi- ties, underwriting new corporate is- sues, or sponsoring mutual funds. Under the Bank Holding Company Act of 1956, securities underwriters, insur- ance underwriters, and nonfinancial companies are generally prohibited from owning banks or being owned by a bank holding company. These outdated financial institution laws hurt consumers by artificially in- creasing the costs of financial services, reducing the availability of financial products, and reducing the level of con- venience in the delivery of financial services. These outdated laws hurt small businesses\u2014an engine of job growth in the American economy\u2014by artificially limiting the amount of eq- uity capital available for expanded ac- tivity. And finally, these outdated laws weaken the international competitive- ness of America’s financial institutions CONGRESSIONAL RECORD \u2014 SENATE S9451August 1, 1996 by prohibiting them from offering the range of financial services that foreign financial institutions may offer. It should be noted that the Glass- Steagall Act\u2014which created the com- partmentalized structure of financial services that we have today\u2014was based upon the false premise that the mas- sive amount of bank failures that oc- curred during the Great Depression was caused by the securities activities that these banks conducted. However, just the opposite is true: Diversification in financial services actually increased the safety and soundness of the banks. Between 1929 and 1933, 26.3 percent of all national banks failed. However, the failure rate for those banks that con- ducted securities activities was lower. Of the national banks in 1929 that ei- ther had securities affiliates or had in- ternal bond departments, only 7.2 per- cent had failed by 1933. The message from these statistics is clear: We should encourage competition and di- versification, not discourage it. Earlier this year, Congress passed a bipartisan and comprehensive legisla- tive initiative to reform the Tele- communications Act and stimulate competition and innovation in the tele- communications industry. Similar ac- tion is needed to stimulate the growth and global competitiveness of our fi- nancial services industry. There are currently three financial institution modernization bills that have been proposed: S. 337, the Deposi- tory Institution Affiliation Act, spon- sored by Senator D’AMATO, Chairman of the Senate Banking Committee; H.R. 2520, the Financial Services Com- petitiveness and Regulatory Relief Act, sponsored by Representative LEACH, Chairman of the House Banking Com- mittee; and finally, a proposal submit- ted at the beginning of this year by the Alliance for Financial Modernization, which consists of various financial services industry organizations. It appears likely that next year, the Senate Banking Committee will con- sider the issue of financial institution modernization. So that Members of the Senate may have more information about the current compartmentalized structure of America’s financial insti- tutions, the three proposals for reform- ing this structure, and the issues that arise from these proposals, I am an- nouncing the formation of the Finan- cial Institution Modernization Work- ing Group. The purpose of the Financial Institu- tion Modernization Working Group is not to endorse any one of the currently proposed bills. Rather, it will engage in analyzing the merits of the current proposals and the current controversies surrounding these proposals. The Working Group will, however, endorse five principles that should be met by any financial institution mod- ernization legislation package that is presented to the Senate: First, the legislation should lower the costs to consumers for financial services by increasing competition in the provision of these services. Second, the legislation should main- tain the safety and soundness of the Federal deposit insurance system. Third, the legislation should not cre- ate a new structure that prevents cur- rent financial institutions from con- ducting any activities that they cur- rently conduct. Fourth, the legislation should create a Financial Services Holding Company structure to increase competitive equality among all financial service providers. And fifth, the legislation should de- finitively resolve the current concerns about the future of the Savings Asso- ciation Insurance Fund by merging the bank and thrift deposit insurance funds, unifying the bank and thrift charters, and consolidating the bank and thrift regulators. It is my hope that these five prin- ciples will provide a solid foundation for the Financial Institution Mod- ernization Working Group’s discussions in the coming months. In closing, I look forward to working with Senators who are both on and off of the Banking Committee to make the Financial Institution Modernization Working Group a useful source of infor- mation and ideas. It is my hope that 1997 will be the year that we join to- gether and create a bipartisan bill that will reform our financial institution laws so that America’s financial insti- tutions will be able to compete, inno- vate and grow to meet the challenges of the 21st century.\u2211 f THE 120TH ANNIVERSARY OF COLORADO STATEHOOD \u2211 Mr. CAMPBELL. Mr. President, I take this opportunity to recognize the 120th anniversary of Colorado state- hood. My home State has a rich and colorful history, having sustained itself as a mecca of cultural diversity, a geo- graphic wonder, and the birthplace of numerous great men and women. Colorado made several attempts at statehood, one in 1863 and another in 1866, before a convention was held in December 1875 to draft a third con- stitution for the people’s ratification. On August 1, 1876, Colorado was finally admitted to the Union as the 38th State. It was titled the Centennial State for gaining admittance during the centenary of our Nation’s inde- pendence. Colorado was a progressive young State, leading the race to erect institu- tions of higher education, develop ad- vances in mining and agriculture, and most notably, politics. In 1893, less than a generation after its admittance, Colorado became the second State to grant suffrage to women. Since its in- ception, the State of Colorado has con- tinued to welcome people of all origins and serve as a source of progress and equality. Colorado is home to two American Indian tribes, the Southern Ute and the Ute Mountain Tribes. The Ute Indians are Colorado’s chief representatives of Shoshonean ancestry, and are the only tribe indigenous to Colorado. The Southern Ute reservation, of more than 300,000 acres, has spanned the south- western corner of Colorado since 1868. The Ute Mountain Reservation occu- pies just under 600,000 acres in the far southwestern corner of the State, over- lapping its borders with Utah and New Mexico. Both tribes have laid their economic foundation on the land they inhabit, honoring it with memorials and sym- bolic events. While these tangible signs of reverence are a treasured part of Colorado’s identity, the traditions of trust, respect, and honor are the true gift of these tribes to Colorado. The geographic splendors of Colorado are simply breathtaking. I will never tire of the raw beauty of my State. From the mountains to the Grand Can- yon to the massive expanse of virgin forests, Colorado may well be one of the most beautiful places on Earth. I know my sense of pride is shared by Coloradans and others alike. While there is greatness in the his- tory, culture, and land of Colorado, there is a shared greatness in many in- dividuals hailing from the State. One woman is particular proved herself to be truly heroic to Colorado and the rest of the Nation. As a teacher, sci- entist, and humanitarian, Dr. Florence Rena Sabin was a pioneer for all women in the field of medicine, playing a critical role in the drafting and im- plementation of the Sabin Health Laws in the State. Her ground-breaking ac- complishments earned her one of Colo- rado’s two places in Statuary Hall in the U.S. Capitol, one of the Nation’s highest honors. Just this summer, the Colorado Gen- eral Assembly designated that a statue of the Honorable John L. ”Jack” Swigert, Jr., join Dr. Sabin in Statuary Hall. As a patriot to his country and a leader in the State, Jack Swigert is considered one of Colorado’s most cou- rageous and renowned citizens. As com- mand module pilot of the Apollo 13 Mission, Jack Swigert carried out a he- roic maneuver and saved the lives of his crew as he piloted the damaged spacecraft safely to Earth. The work of Jack Swigert has made a staggering contribution of Colorado’s 120 years of excellence, setting the State apart in space operations and planetary envi- ronmental technology. Aviation has been a field of contin- ued outstanding achievement for the State of Colorado. Six years ago, the Colorado Aviation Hall of Fame wel- comed another inductee, George ”Gib” Nesbitt, for his remarkable contribu- tion to improving aviation in Colorado and nationwide. His dedication to teaching people to fly safely spanned two decades and today serves as a benchmark by which all other flight in- structors are measured. Having begun his flying career as a teenager, he went on to serve as flight commander in World War II, where teaching young CONGRESSIONAL RECORD \u2014 SENATES9452 August 1, 1996 Army and Air Force cadets soon be- came his focus. He personally trans- formed two primitive air strips in rural Colorado into functional airports capa- ble of opening vast segments of the State to air travel. The residents, busi- nesses and visitors of Colorado will continue to benefit from his contribu- tions. The philanthropic efforts of one indi- vidual and his family have also left a lasting impression on Colorado’s busi- ness and arts communities, children, and troubled populations. Bill Coors, chairman and president of Adolph Coors Co., is the senior employee at Coors with over 57 years of service. His contributions to the industry range from the introduction of now widely consumed products, to innovations in the technology and production of nu- merous industry standards. Bill Coors has been touted as a visionary in the areas of employee wellness and health care. Businesses, organizations and communities within the State and across the Nation have looked to the work of Bill Coors as a model to follow, a standard to meet. Mr. Coors has lent his support in the areas of higher education, providing his expertise in business and community cooperatives. He has actively cul- tivated youth groups and associations accessed by children from across the country. His support of the arts, in a climate where the riches of our history and culture are considered an expense, has been instrumental to Colorado’s continued recognition of its proud her- itage. Bill Coors’ tremendous success makes his consistent contributions to the State of Colorado that much more honorable. He is truly a man of integ- rity, whose devotion to the citizens of Colorado will continue to serve the State for generations. I would be remiss if I did not mention the timely accomplishments of our Colorado Olympians. Although the games are still underway, there are two notable Colorado women who have touched our hearts and made us swell with pride. Amy Van Dyken will go down in the Olympic history books with her four gold medals in swim- ming. Susan DeMattei, competing in mountain biking, an event offered for the first time, won bronze after a grueling 22-mile trek. Mr. President, I have just skimmed the surface of the incredible achieve- ments made by Coloradans and their State. Even after 120 years, Colorado has not slowed in its accomplishments nor tarnished in its beauty. I want to thank you for allowing me to speak for my fellow Coloradans in celebrating our 120th anniversary.\u2211 f THE PASSING OF SETH DIAMOND \u2211 Mr. KEMPTHORNE. Mr. President, today I note the loss of a talented young man who’s contributions to tim- ber, wildlife, and natural resource man- agement will be sorely missed in may home State of Idaho. Mr. Seth Diamond was not from Idaho, but he was a strong advocate for balanced management of our natural resources, and the people of my State benefited from his thoughtful contribu- tions to the debate over land and wild- life resource management. Mr. Diamond was a skilled, experi- enced wildlife biologist. He studied at Duke University and Virginia Poly- technic Institute & State University before putting his interests in biology and wildlife management to work for the Forest Service. His later work with innovative management programs on the Lewis and Clark National Forest earned him recognition from the U.S. Department of Agriculture. The people of Idaho were among those who were lucky that Seth chose to apply his skills help us find the solu- tions that will protect wildlife and en- sure sustainable timber harvest into the future on Federal lands. His energy and dedication will be missed.\u2211 f UNANIMOUS-CONSENT REQUESTS Mr. LOTT. Mr. President, I have a se- ries of noncontroversial unanimous- consent requests that I thought maybe we could get done. One would be to name a post office in Chicago for Roger P. McAuliffe. Mr. FORD. Could the Senator do those tomorrow night or tomorrow sometime? Mr. LOTT. I did not think there was any controversy. There is one here that I thought the Senator might really be interested in. It is Senate Concurrent Resolution 554, which recognizes and encourages the convening of a ”Na- tional Silver Haired Congress.” Mr. FORD. Well, I will have to object to that because the Senator could not attend. Mr. LOTT. The Senator would be constrained to object to these? Mr. FORD. I would be constrained. The PRESIDING OFFICER. Objec- tion is heard. Mr. FORD. Not restrained but con- strained. f ORDERS FOR FRIDAY, AUGUST 2, 1996 Mr. LOTT. Mr. President, I ask unan- imous consent then that when the Sen- ate completes its business today, it stand in adjournment until the hour of 10:30 a.m. on Friday, August 2; further, that immediately following the prayer, the Journal of proceedings be deemed approved to date, the morning hour be deemed to have expired, and the time for the two leaders be reserved for their use later in the day. The PRESIDING OFFICER. Without objection, it is so ordered. f PROGRAM Mr. LOTT. For the information of all Senators, there are still a number of important matters the Senate will complete action on before the August recess\u2014the health insurance reform package, the safe drinking water con- ference report, the small business tax relief package, minimum wage. We are hopeful to have all those packages over in the morning so we can take them up early on Friday or Friday afternoon as well as the appropriations conference reports that are completed. Senators can expect the Senate to consider any of the following matters as they are ready for consideration: ap- propriations conference reports\u2014mili- tary construction appropriations con- ference report, D.C. appropriations con- ference report, the issues I already named, as well as an effort to go back to the Veterans and Housing and Urban Development appropriations bill, or any other legislative and Executive Calendar items that can be cleared for action. Senators can expect a busy session on Friday with rollcall votes through- out the day as we attempt to complete the Senate’s business. Just one further note. I have been re- minding Senators and urging Sen- ators\u2014I know the whip has been doing it on the other side\u2014that Friday, Au- gust 2, is a red letter day and that we should all plan on being here and being here until we get our work done. So I hope there will not be any pant- ing and hoping to leave at 4:30 tomor- row afternoon unless we have gotten these conference reports done as we have listed here. f ADJOURNMENT UNTIL 10:30 A.M. TOMORROW Mr. LOTT. If there is no further busi- ness to come before the Senate tonight, I now ask unanimous consent the Sen- ate stand in adjournment under the previous order. There being no objection, the Senate, at 9:13 p.m., adjourned until Friday, August 2, 1996, at 10:30 a.m. f NOMINATIONS Executive nominations received by the Senate August 1, 1996: DEPARTMENT OF HEALTH AND HUMAN SERVICES KEVIN L. THURM, OF NEW YORK, TO BE DEPUTY SEC- RETARY OF HEALTH AND HUMAN SERVICES, VICE WAL- TER D. BROADNAX, RESIGNED. NATIONAL FOUNDATION ON THE ARTS AND THE HUMANITIES ARTHUR I. BLAUSTEIN, OF CALIFORNIA, TO BE A MEM- BER OF THE NATIONAL COUNCIL ON THE HUMANITIES FOR A TERM EXPIRING JANUARY 26, 2002, VICE JON N. MO- LINE, TERM EXPIRED. DEPARTMENT OF LABOR IDA L. CASTRO, OF NEW YORK, TO BE DIRECTOR OF THE WOMEN’S BUREAU, DEPARTMENT OF LABOR, VICE KAREN BETH NUSSBAUM, RESIGNED. CORPORATION FOR NATIONAL AND COMMUNITY SERVICE DONNAL HOLT CUNNINGHAME, OF MARYLAND, TO BE CHIEF FINANCIAL OFFICER, CORPORATION FOR NA- TIONAL AND COMMUNITY SERVICE. (NEW POSITION) FEDERAL COMMUNICATIONS COMMISSION REGINA MARKEY KEENEY, OF VIRGINIA, TO BE A MEM- BER OF THE FEDERAL COMMUNICATIONS COMMISSION FOR A TERM OF 5 YEARS FROM JULY 1, 1995, VICE AN- DREW CAMP BARRETT, RESIGNED. MISSISSIPPI RIVER COMMISSION BRIGADIER GENERAL ROBERT BERNARD FLOWERS, U.S. ARMY, TO BE A MEMBER AND PRESIDENT OF THE CONGRESSIONAL RECORD \u2014 SENATE S9453August 1, 1996 MISSISSIPPI RIVER COMMISSION, UNDER THE PROVI- SIONS OF SECTION 2 OF AN ACT OF CONGRESS, AP- PROVED JUNE 1879 (21 STAT. 37) (33 U.S.C. 642). DEPARTMENT OF JUSTICE ROSE OCHI, OF CALIFORNIA, TO BE DIRECTOR, COMMU- NITY RELATIONS SERVICE, FOR A TERM OF 4 YEARS, VICE GRACE FLORES-HUGHES, TERM EXPIRED. WITHDRAWAL Executive message transmitted by the President to the Senate on August 1, 1996, withdrawing from further Sen- ate consideration the following nomi- nation. DEPARTMENT OF LABOR JOAQUIN F. OTERO, OF VIRGINIA, TO BE AN ASSISTANT SECRETARY OF LABOR, VICE MARTIN JOHN MANLEY, RE- SIGNED WHICH WAS SENT TO THE SENATE ON FEBRUARY 20, 1996. EXTENSIONS OF REMARKS \u2211 This ”bullet” symbol identifies statements or insertions which are not spoken by a Member of the Senate on the floor. Matter set in this typeface indicates words inserted or appended, rather than spoken, by a Member of the House on the floor. CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1423August 1, 1996 WATER RESOURCES DEVELOPMENT ACT OF 1996 SPEECH OF HON. JOE SCARBOROUGH OF FLORIDA IN THE HOUSE OF REPRESENTATIVES Tuesday, July 30, 1996 Mr. SCARBOROUGH. Mr. Speaker, I rise today in support of the Water Resources De- velopment Act of 1996 which is being consid- ered under suspension of the rules. It is my hope that my colleagues will support this bill and that it will be conferenced soon and sent to the President for his prompt signature. I would like to take this opportunity to com- mend Chairman SHUSTER and his staff for their work on behalf of a very important project in my district. As my colleagues are aware, last year’s hurricane season was especially rough on the beaches of the Florida Pan- handle. We took direct hits from two major storms, Hurricanes Opal and Erin. Major dam- age was inflicted on northwest Florida with the most severe destruction appearing along the beautiful beaches of the Gulf of Mexico. Panama City Beach sustained a consider- able amount of damage to structures along the beach as well as to the beach itself. Since before 1970, Panama City Beach has suffered damage due to storms and erosion, a signifi- cant portion due to federally sponsored activi- ties. In October 1995, Hurricane Opal aggra- vated the deterioration of the beach signifi- cantly by washing away millions of cubic yards of sand and destroying over 1,000 homes and exposing upland development to damage from future storms. The community has been seeking Federal help since 1970 but has yet to see a single dollar. It has, however, received the commit- ment of over $10 million from the State of Florida as well as the commitment of local funds. Unfortunately, as of yet, the Federal share has not been appropriated even though the project meets all the criteria for Federal assistance. However, through this bill, we were able to make this project eligible for Federal reim- bursement through project modification lan- guage. This will give the community a much- needed opportunity to proceed with the project without waiting any longer for the Federal share. The residents of this coastal community cannot afford to wait another year to begin this essential beach protection project. However, it is my sincerest wish that the Panama City Beach project will receive its Federal share as soon as possible to help the community’s ef- forts. On behalf of the people of Panama City and its surrounding communities, I would like to thank the chairman for his work on this very important piece of legislation. SPEAKING IN THE AFFIRMATIVE HON. CARDISS COLLINS OF ILLINOIS IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mrs. COLLINS of Illinois. Mr. Speaker, ac- cording to a recent report prepared by the American Council on Education [ACE], ”Stu- dents of color have posted significant gains in college enrollment and the number of degrees they earned in recent years.” However, the re- port warns that ”this progress is threatened by attacks on the use of affirmative action poli- cies in higher education.” Clearly, affirmative action policies that in- crease the opportunities to obtain secondary education for those who without them will re- main unprepared to meet out Nation’s chal- lenges must continue to play a key and signifi- cant role. Now there are those affirmative ac- tion opponents who take delight in pointing out the most inconsequential problems with such policies; but shamefully close their eyes to the great strides they have made toward better educating our national populace. Recalling for a moment may reference to the ACE report on affirmative action, we see that denying educational opportunities to the neediest is wrong. It is wrong morally. It is ethically wrong. It is the wrong path for this country to take if America is serious about re- maining one of the most enlightened and bet- ter educated societies on the planet Earth. Perhaps an economic illustration will better serve my arguments for affirmative action. It is empirically factual that denying educational opportunities negates potential economic ben- efits for the country. According to findings pre- pared by Dr. Andrew Sum, Northeastern Uni- versity, Center for Labor Market Studies, and the McIntosh Commission, personal economic benefits from obtaining a 4-year college de- gree has increased substantially over the past two decades. The fundamental shifts in the earnings ca- pacity of workers with varying years of formal schooling can be seen most starkly in the earnings experiences of young adult males 20 to 29 years old in the United States over the 1973 92 period. The year 1973 is an important year because it marks the great economic divide in the American post-World War II era. During that year the real, or the inflation-adjusted mean annual earnings of all 20 to 29-year-old men in the United States were equivalent to earn- ings totalling $23,522 in 1992; but, by the year 1992, the mean earnings of men in this age group had declined to $16,715\u2014a reduction of nearly 29 percent. While young men in each educational attain- ment subgroup, without diplomas, with diplo- mas, and the college graduates, experienced a deterioration in their real earnings position over this time period, the relative size of these declines varied widely by years of completed formal schooling, and cognate opportunities available for growth. When we look at the real annual earnings we see this more clearly: those who failed to obtain a high school diploma fell nearly 42 percent; for high school graduates by 32 per- cent, and by holders of a bachelor’s degree by just 5 percent. While the mean annual earn- ings advantage of young male college grad- uates over that of high school graduates was 15 percent in 1973, the relative size of this earnings advantage had risen to nearly 62 percent by 1992. This is significant on several levels, the least of which illustrates just how deeply divided economically the country has become when an imbalance of opportunities prevails. Both young black and white men with only high school diplomas have lost considerable economic ground during the past two dec- ades. As a consequence, the earnings advan- tages of young male college graduates wid- ened to a substantial degree, increasing from 15 percent in 1973 to 62 percent in 1992. This is precisely what must be understood. Denying individuals an opportunity to attend college or graduate school in the 1990’s has considerably greater personal economic con- sequences that it would have had two dec- ades ago. This is the threat alluded to by the American Council on Education. It is a real treat. It is a threat we should not treat likely. Now you may ask, ”just who are the bene- ficiaries of Affirmative Action?” I believe they are America’s poor, its forgotten, its disadvan- taged. I believe that it is America’s mosaic melting pot of people all linked by opportuni- ties denied. Therefore, instead of wasting our time un- dermining educational programs that have worked, we should be seeking ways in which to enhance them and thus grant greater op- portunities for educationally and economically disadvantaged Americans. My Republican col- leagues need to understand that the lack of educational opportunity, entrepreneurial and business growth, heavily contributes to the problems of crime, drug trafficking, hopeless- ness, and overall poverty. It is ironic that at the same time the Repub- licans in Congress are moving forward with their attack an affirmative action, they are also madly swinging their budget axe to chop down all of the programs that work to alleviate these crises, programs such as those for Head Start, child nutrition and school lunch, job training initiatives, student loans, COPS funding, public housing assistance, and so on. This is short- sightedness at its highest level. f CONTINUATION OF TRIBUTE TO HAMILTON FISH SPEECH OF HON. CAROLYN B. MALONEY OF NEW YORK IN THE HOUSE OF REPRESENTATIVES Thursday, July 25, 1996 Mrs. MALONEY. Mr. Speaker, I rise today to honor the memory of a beloved Congress- CONGRESSIONAL RECORD \u2014 Extensions of RemarksE1424 August 1, 1996 man from New York, Hamilton Fish. Congress- man Fish’s death is an extraordinary loss to a community he faithfully served for over 25 years, and to all of us in this House and around the world who knew him well. Although I only had the privilege of serving with Rep. Fish in the 103d Congress, I quickly saw his impact on this institution, and on me. His warmth and openness made a junior Member feel welcome and confident in an or- ganization that can be overwhelming. Even though Rep. Fish worked hard as one of the busiest members of Congress, he always had time to serve as a teacher and mentor to other Members. I will always remember him as the example of how to serve New York State and how to serve our country in a truly bipartisan manner. Hamilton Fish died on July 23d, but his service to the mid-Hudson Valley constituency will ensure that he has an everlasting memory to all. During the years he lived among us, Congressman Fish was a pioneer and sup- porter of Civil Rights legislation. He was the principal Republican sponsor of the Civil Rights Act of 1991, and also worked with Democrats to sponsor amendments to the Fair Housing Act and the Americans with Disabil- ities Act. However, his concern for others was not limited to the borders of this country. He was an outspoken advocate for human rights around the globe and worked on behalf of So- viet Jews who for years were battling to emi- grate from tyranny to freedom. As a member of the House Judiciary Committee, Represent- ative Fish worked to expand refugee assist- ance programs. He wanted to ensure that all people, no matter from what background, had an opportunity to fulfill the American dream. Rep. Fish was born to a family whose politi- cal legacy dates back to the Revolutionary War. One of his ancestors Nicholas Fish fought with George Washington during the birth of our nation. His great-grandfather, Hamilton fish, served as governor of New York before serving in the Senate and as Secretary of State to Ulysses S. Grant. His grandfather, of the same name, served in the 61st Congress after a long career in the New York Assembly. Congressman Fish’s fa- ther, Hamilton Fish, Sr. served in Congress from 1920 to 1945. Thus, Congressman Fish brought a legacy that was 200 years old the first day he sat in his seat in 1968. He received his B.A. from Harvard, and his LL.B. from the New York University School of Law. His college career was interrupted twice. Once in 1944 by World War II, and the second time by Fish’s enlistment to the Foreign Serv- ice. Despite these interruptions, Fish was ad- mitted to the New York Bar in 1958. Hamilton Fish’s dedication to seeking the truth can never be questioned. As a member of the Judiciary Committee during Watergate, Fish was one of the first Republicans to vote in favor of impeaching the President. His ac- tion went against the beliefs of many in his party, including his father, but Fish recognized that the need for truth and justice was greater than party and individual loyalties. This is the legacy of Hamilton Fish. The leg- acy of a man who carried the responsibility of representation with grace and dignity. He was a kind and gentle mentor I am proud to have served with in Congress. Always seeking the truth and compassion for those who were less fortunate, he will truly be missed. TRIBUTE TO LEONA BRADY WATSON HON. VICTOR O. FRAZER OF THE VIRGIN ISLANDS IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. FRAZER. Mr. Speaker, Leona Brady Watson was born on the north side of the is- land of St. Croix in Estate Two Friends. At the tender age of 3, she began her education, which involved walking from Estate Two Friends to Frederikdsted town where she at- tended St. Patrick’s School. After finishing the third grade, she journeyed to the United States, and completed her formal education there. Upon returning to St. Croix in the late 50’s, Mrs. Watson came home with a special yearn- ing for her culture. She spent many years learning about what was a dying art in the Vir- gin Islands\u2014the art of cariso. From the elders, particularly the ones on the north side of the island and the Frederiksted area. Leona was able to attain and maintain our delicate culture through their stories, soups, and music of days gone by. Leona continues to be honored by various cultural organizations as a tradition bearer for her untiring contribution to the cul- tural growth of the Virgin Islands, and the knowledge of the history of our beloved home- land. Some of Leona’s famed works include: Quoted in three published books; actress in the film ”The Story of Cariso” nationally ac- claimed; performance in numerous stage shows, on island and abroad; participated in the 24th Annual Festival of American Folklife\u2014the Virgin Islands; program spon- sored by the Smithsonian Institution and the Virgin Islands Government. Leona is also a highly respected herbologist who has been asked most recently to partici- pate in cultural exchange between Africa (Senegal), China and Switzerland. Mrs. Leona Watson resides at Estate Grove Place, St. Croix. f GORDON GUYER RETIRES\u2014AGAIN HON. JAMES A. BARCIA OF MICHIGAN IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. BARCIA. Mr. Speaker, few people are synonymous with the experiences we have in life, but there exists a rare and pleasant ex- ception: Dr. Gordon Guyer, who has an- nounced his resignation as director of the Michigan Department of Agriculture, and, at long last, another in a series of retirements. For those who know Gordon, they know that he bleeds green for Michigan State University, where over his distinguished career he served as professor of entomology, director of the co- operative extension service, vice president for government affairs at Michigan State Univer- sity, and finally interim president of the Univer- sity. He lives and breathes Michigan. He has served as a member of the commission on natural resources, director of the Michigan De- partment of Natural Resources under Gov- ernor Blanchard, and most recently director of the Michigan Department of Agriculture. His mind is always working like a combine, sepa- rating the less useful from the most useful, but always looking for ways to make what is left behind even more useful. Gordon has served as a skilled motivator. There is not a person he has ever touched that hasn’t come away feeling like the most important and most valuable person in the world. He has marshalled resources like no other individual, turning everyone around him into his informed advocates. Just ask any of our staff who have been privileged to partici- pate in one of the legislative staff agricultural seminars that he created. Or ask any current or recent member of our delegation who has always felt politely challenged an strongly in- vigorated by his careful encouragement. I can speak most directly to this point from my ex- periences of having worked with him while I served as chairman of the Senate agriculture committee during my days in the Michigan State Senate. And to top all of this Gordon has a wonder- ful family which he always promotes and com- pliments with equal vigor. His wife, Norma is both blessed to be with Gordon, and per- plexed to always keep up with his new ideas. His daughter, Dawn, learned the value of a caring father, and his son, Dan, has the chal- lenge in following in his father’s image as an assistant professor of MSU. Mr. Speaker, Gordon’s blood is green. He does live and breath Michigan. He dreams fishing, and he thrives on retirement parties. That’s why after retiring from extension, and DNR, and MSU\u2014twice, he now will retire from the formal position of director of agriculture, not from his continuing and devout interest in making our State the best one of all. I urge you and all of our colleagues to join me in wishing Gordon a long and happy retirement. f LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION AP- PROPRIATIONS BILL HON. PATSY T. MINK OF HAWAII IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mrs. MINK of Hawaii. Mr. Speaker, I rise to express my opposition to the Labor, Health and Human Services, and Education appro- priations bill. It is disheartening to come to the well today to oppose a bill that funds the most important investment our Federal Government makes in the basic human needs of our Na- tion\u2014health care, education, employment and training, and support services for families. Unfortunately, this bill falls far short of fulfill- ing our responsibility to the American people and reflects the majority’s continued policy to reduce Federal resources in some of the most significant aspects of our lives. Nothing should take precedence over the health and economic security of our people. Yet this bill makes clear that these goals are not a priority for the current congressional ma- jority. Sadly, education has been the area hardest hit, denying school districts around the country of desperately needed funds to improve or maintain the quality of education in their local schools. This bill sustains the $2.2 billion cuts in edu- cation made by the Republican majority last year. In addition, it targets several important CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1425August 1, 1996 areas of education for additional cuts, includ- ing the elimination of Goals 2000 and a $24 million cut in title I for disadvantaged children. The Eisenhower Professional Development Program which has a proven record of suc- cess in improving math and science education is eliminated under this bill. Safe and Drug Free Schools is cut by $25 million, bilingual support services and professional develop- ment are eliminated. No funds were provided in the original com- mittee bill for the Women’s Educational Equity Act which is the only program dedicated to promoting equity for women and girls in edu- cation. However, we were able to restore $2 million for this program in a floor amendment. The following is a more detailed chart which shows the deep cuts in education over the last 2 years: EDUCATION APPROPRIATIONS FY95 FY97 MAJOR ELEMENTARY AND SECONDARY PROGRAMS Program FY95 FY96 FY97 President budget FY97 House bill Difference FY95\/FY97 Title I (State Grants) ……………………………………………………………………………………………… $6.7 billion …………………… $6.7 billion …………………… $7.2 billion …………………… $6.7 billion …………………… \u00a524 million. Total Compensatory Education ………………………………………………………………………………… $7.2 billion …………………… $7.2 billion …………………… $7.6 billion …………………… $7.2 billion …………………… \u00a514 million. Goals 2000 …………………………………………………………………………………………………………… $361.8 million ………………. $350 million …………………. $491 million …………………. 0 ………………………………….. \u00a5361.8 million. School-to-Work ………………………………………………………………………………………………………. $122.5 million ………………. $180 million …………………. $200 million …………………. $175 million …………………. +52.5 million. Safe and Drug Free Schools …………………………………………………………………………………… $466 million …………………. $466 million …………………. $540 million …………………. $441 million …………………. \u00a525 million. Bilingual Education ……………………………………………………………………………………………….. $157 million …………………. $128 million …………………. $157 million …………………. $117 million …………………. \u00a540 million. Immigrant Education ……………………………………………………………………………………………… $50 million …………………… $50 million …………………… $100 million …………………. $50 million …………………… 0. Vocational Education ……………………………………………………………………………………………… $1.1 billion …………………… $1.1 billion …………………… $1.1 billion …………………… $1.0 billion …………………… \u00a527 million. Headstart ……………………………………………………………………………………………………………… $3.5 billion …………………… $3.5 billion …………………… $4.0 billion …………………… $3.6 billion …………………… +65.5 million. Special Education ………………………………………………………………………………………………….. $3.2 billion …………………… $3.2 billion …………………… $3.5 billion …………………… $3.2 billion …………………… \u00a56.5 thousand. Eisenhower Professional Development ……………………………………………………………………… $251 million …………………. $275 million …………………. $610 million …………………. 0 ………………………………….. \u00a5251 million. Impact Aid ……………………………………………………………………………………………………………. $728 million …………………. $693 million …………………. $617 million …………………. $728 million …………………. 0. Women’s Education Equity Act (WEEA) …………………………………………………………………….. $5 million …………………….. 0 ………………………………….. $4 million …………………….. 0 ………………………………….. \u00a55 million. Native Hawaiian Education Act ………………………………………………………………………………. $9 million …………………….. $12 million …………………… $6 million …………………….. $4 million …………………….. \u00a55 million. MAJOR HIGHER EDUCATION PROGRAMS Program FY95 FY96 FY97 Presidential budget FY97 House bill Difference FY95\/FY97 Work Study ……………………………………………………………………………………………………………. $616.5 million ………………. $616.5 million ………………. $679 million …………………. $685 million …………………. +68.5 million. Pell Grants ……………………………………………………………………………………………………………. $6.2 billion …………………… $4.9 billion …………………… $5.9 billion …………………… $5.3 billion …………………… \u00a5900 million. Perkins Loans: Capital Contributions …………………………………………………………………………………….. $158 million …………………. $93 million …………………… $158 million …………………. 0 ………………………………….. \u00a5158 million. Loan Forgiveness …………………………………………………………………………………………… $18 million …………………… $20 million …………………… $20 million …………………… $20 million …………………… +2 million. State Student Incentive Grants ……………………………………………………………………………….. $63.4 million ………………… $31.4 million ………………… 0 ………………………………….. 0 ………………………………….. \u00a563.4 million. Stafford Loan Administration ………………………………………………………………………………….. $62.1 million ………………… $30.0 million ………………… $46.5 million ………………… $29.9 million ………………… Loan volume 1 ……………………………………………………………………………………………….. $85.2 billion …………………. $71.4 billion …………………. $71.4 billion …………………. $71.4 billion …………………. \u00a532.2 million. Direct Loan Administration …………………………………………………………………………………….. $283 million …………………. $435 million …………………. $595 million …………………. $420 million …………………. Loan volume 1 ……………………………………………………………………………………………….. $5.3 billion …………………… $12.2 billion …………………. $12.2 billion …………………. $12.2 billion …………………. +137 million. Supplemental Educational Opportunity Grants ………………………………………………………….. $583.4 million ………………. $583.4 million ………………. $583.4 million ………………. $583.4 million ………………. 0. 1 Represents current loan volume. Stafford and Direct student loans are entitlements and not dependent on annual appropriations. TOTAL EDUCATION SPENDING FY95 FY96 FY97 Presidential budget FY97 House bill Difference FY95\/FY97 Total Education Department …………………………………………………………………………………… $27.4 billion …………………. $25.2 billion …………………. $28.0 billion …………………. $25.2 billion …………………. $2.2 billion. While many health programs have been spared the drastic cuts made to education, one area which continues to be devastated is our efforts on substance abuse prevention and treatment. As the drug epidemic in our country continues to hurt families and communities all across this Nation, the Republicans have de- cided to dramatically cut our investment in prevention and treatment efforts. Last year substance abuse prevention programs were cut an unbelievable 60 percent, treatment pro- gram cut 57 percent. As a result many programs around the country must now close. One in my district that I just visited last week has been cut off of Federal funding just as it was getting started. Hui Ho’ola O Na Nahulu O Hawaii was to be a 3-year project focusing on substance abuse intervention, treatment and recovery services in Puna, HI, a rural area that has been strug- gling with the influence of drugs. This unique program brought together a variety of sectors within the community to develop a holistic ap- proach to healing substance abusers, con- centrating not only on their abuse problem, but other related problems such as unemploy- ment, lack of education, domestic violence, and other problems. This bill does nothing to restore the re- sources needed for communities to deal with the burgeoning problem of substance abuse, but continues the 1996 policy of gutting our Federal programs in this important area. H.R. 3577 also eliminates all funding for title IV of the Older Americans Act, which is dedi- cated to research, training and special projects dedicated to understanding and addressing the needs of our elderly population. Funds under this program have been critical to the Asian Pacific Community and to support the work of The National Asian Pacific Center on Aging [NAPCA], the only organization dedi- cated to enhancing the quality of life of the 700,000 Asian Pacific American elders in our society. The NAPCA serves as an important link be- tween the Asian Pacific senior population and service providers and organizations at the local, State, and Federal levels. This Seattle- based organization performs an important function in helping to assure that Asian Pacific American seniors have access to critical serv- ices provided by all sectors of our community, and that the service providers and are sen- sitive to the specific needs of this culturally di- verse and rapidly growing population. The elimination of title IV funding will se- verely limit the ability of the NAPCA to serve the Asian Pacific American senior community. It will mean the end of critical research, dem- onstration and training activities, and innova- tive approaches to improve access for this special population. This bill also utilizes the appropriations proc- ess to enact legislative policies that the major- ity has not achieved through the normal legis- lative process. These policies will result in en- dangering the lives of children by weakening child labor laws to allow minors to load and unload dangerous compacting equipment in grocery and retails stores. The original com- mittee bill also would have prevented millions of workers from being protected from ergonomic-related illnesses by prohibiting the promulgation of OSHA’s rule on ergonomic standards. However, the Pelosi amendment adopted on the House floor eliminated this prohibition from the bill. Finally, Mr. Speaker I want to express my deep concern about the committee’s rec- ommendation regarding the Hansens’ disease program in Hawaii. While providing $2 million for Hansen’s disease patients in Hawaii\u2014(the same as fiscal year 1996), the committee re- port suggests that the Hansen’s disease pa- tients in Hawaii can be supported through in- surance or Medicaid, and that they should be encouraged to move from the current settle- ment at Kalaupapa, Molokai, and provided a stipend to live elsewhere. This proposal lacks a clear understanding of the history of Hansen’s disease patients in Ha- waii and the commitment made to the Han- sen’s disease patients by the Congress. The Hansen’s disease program in Hawaii supports slightly over 400 individuals with Hansen’s disease. Most are served through the Hale Mohalu Hospital in Honolulu and through an outpatient service. However, 66 in- dividuals reside at Kalaupapa, a remote penin- sula on the island of Molokai which was des- ignated in the mid-1800’s as a place of ban- ishment for individuals with Hansen’s disease. Until 1969 individuals with Hansen’s disease were forced to this isolated area, accessible only by boat, plane, or hiking its treacherous cliffs. Since 1954 the Federal Government has provided payments for health care and other support services for the Hansen’s disease pa- tients and Kalaupapa and additional outpatient services at other facilities in Hawaii. These payments were originally authorized under CONGRESSIONAL RECORD \u2014 Extensions of RemarksE1426 August 1, 1996 Public Law 82 411 and authorization contin- ues today under Public Law 99 117. Recognizing the historical significance of Kalaupapa, a National Historical Park was es- tablished under the National Park Service to preserve the legacy of Kalaupapa and the many individuals who lived out their lives in this remote settlement. Legislation establishing the park specifically states that the remaining patients would have the option of living at Kalaupapa for the rest of their lives. The average patient age at Kalaupapa is 70 years. Though once forced to live in this re- mote location away from their families, away from civilization, today those at Kalaupapa chose to remain there. It is the only home they’ve ever known and prefer the life they had led in this remote settlement. They are el- derly, many disabled and uncomfortable with outsiders or living in the outside world. It would be difficult and in some cases impos- sible for them to adjust to life away from Kalaupapa. What the committee suggests in moving these patients from Kalaupapa is forcing them to leave this home. This is unthinkable and contrary to the promises made to them by the Federal Government. I hope this idea will be rejected. f THE SMITHSONIAN INSTITUTION COMES TO ST. PAUL, MN HON. BRUCE F. VENTO OF MINNESOTA IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. VENTO. Mr. Speaker, I rise today to honor the 150th anniversary of the Smithso- nian Institution and to recognize my home city of St. Paul, MN, which has the honor of hosting the America’s Smithsonian Tour this fall. The Smithsonian Institution’s collection is the ultimate expression of the history, culture, creativity and abilities of America’s and the world’s people. The Smithsonian was founded in 1846 for the ”increase and diffusion of knowledge,” and the Smithsonian continues to achieve success in striving toward that great goal, educating America through its sixteen museums and galleries, the National Zoologi- cal Park and significant, innovative role in fa- cilities within the United States and abroad. The items restored, cared for and housed by the Smithsonian are important for science and research. These items have often become treasures that have not only contributed to America’s knowledge base, but are parts of our cultural and artistic legacy. They have helped shape and define the history of our Na- tion and the world. America should be justly proud of the Smithsonian’s collection and the hard work and dedication of its staff in bring- ing these treasures to our city. America’s Smithsonian is a special collec- tion of over 300 items acquired from sixteen Smithsonian Museums in Washington, DC. The tour is currently crossing the Nation so that people in all corners of the country can experience a sample of the Smithsonian’s leg- acy. The St. Paul Civic Center is the fifth stop on America’s Smithsonian Tour, hosting this magnificent experience as a monthlong exhibit beginning in mild-October. More than a celebration of the Smithsonian’s 150 year existence, America’s Smithsonian symbolizes America’s accom- plishments and fuels the fire of hope and opti- mism that drives our Nation even today to achieve even higher aspirations. The dynamic Smithsonian collection continues to grow, pre- serving the essence of America as an embroi- dery on the tapestry of the American heritage for future generations. Touring America’s Smithsonian is a unique opportunity to view some of the most signifi- cant pieces of America’s past. I hope that every Minnesotan has the opportunity to see the exhibit during the tour’s monthlong visit, and I join the entire St. Paul community in welcoming the Smithsonian Institution to Min- nesota. f THE POWER OF LOVE HON. ALBERT RUSSELL WYNN OF MARYLAND IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. WYNN. Mr. Speaker, a constituent of mine, Mr. John F. Flood, brought to my atten- tion a copy of Msgr. E. Carl Lyon’s homily in celebration of his 50th anniversary as a Catholic priest. The homily entitled, ”The Power of Love,” is fitting and I would ask that the Members of this body take the opportunity to read Monsignor Lyon’s message: THE POWER OF LOVE (Monsignor Lyon’s Homily) The discovery of fire thousands of years ago, is said to have saved the human race from extinction. Today, it is not the absence of fire, but the absence of love, that could bring about the extinction of the human race. This prediction is made despite what men and women have said about love. Love has been referred to as ”The religion of humanity!” I once listened to a priest talk for two hours on this one quotation: ”Love cannot endure indifference. It needs to be wanted.” And of course there’s the beautiful quotation of St. John of the Cross: ”When the evening of life comes, we shall be judged on love.” Environmental problems, nuclear capabil- ity, human inability, and the willingness to love one another are threatening the sur- vival of our planet. Unless we rediscover love and harness its energies to God’s plan, we may not make it through another century. It is feared that the human race will destroy the human race through hatred. But this need not be. In the place of ha- tred, there stands always love. Love is the most universal, the most tremendous, the most mysterious, the most persuasive force in the world. Because of these attributes, Jesus invites us to nothing more and nothing less, than a fundamental orientation of our life, of our love toward God. Jesus expects our total sur- render to Him. Love is so divine that we can say not only that God is love, but that love is God. As fol- lowers of Christ, we believe that love is ac- tion. We believe that love is the strongest force in the world\u2014stronger than hate, stronger than evil, stronger than death. We believe that as great as faith and hope are, love is still greater. We believe that faith without love is cold; hope without love is grim. As imitators of Christ, we forget what we have done for other people and remember what others have done for us; we ignore what the world owes us and think of what we owe the world. We put our rights in the background and our duties in the foreground; we see that every human being, regardless of creed, race or nationality, is just as real as we are, just as prone to mistakes as we are, just as nice as we are. To love we are willing: to consider the needs and desires of children; to remember the weaknesses and loneliness of people growing old; to stop asking how much our friends love us and ask ourselves whether we love them as Christ would have us love. We believe that love knows no limitations and stops at no boundaries; that it is the only cure for racism, the only solution to poverty, the only means to peace. Love knows not anger, nor revenge, nor wrath, nor jealousy. We believe that love accepts everyone, em- braces everyone, and that it is the only bond that can attach people to people and people to God. Love is the companion of compas- sion, reconciliation, forgiveness and contri- tion. What is real Christian love? It is more than a feeling of affection for others, more than benevolence. It has substance, strength, action and sacrifice. Christian love is ac- tion\u2014something we do. I would not want this day to go by without mentioning the wonderful people who are not of our faith\u2014who have done so much for the good of our parish. There are too many to name, but I am grateful to each of them. The priesthood has been a joy for me and the joy has been made possible because of you wonderful people. As a matter of fact your friendship has given me a glimpse of the eternal. We have gathered to celebrate the divine fact that God is in love with us. As we resume our journey\u2014 Don’t walk in front of me, I may not follow. Don’t walk behind me, I may not lead. Walk beside me and be my friend. f ”SWING LOW” HON. WILLIAM (BILL) CLAY OF MISSOURI IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. CLAY. Mr. Speaker, the following com- mentary written by Liz Brown recently ap- peared in the St. Louis American. It expresses some timely thoughts on the subject of affirm- ative action and Clarence Thomas’ mis- handling of the issue. I commend Ms. Brown’s commentary to our colleagues as evidence of the black community’s unwavering support for affirmative action and their irritation with Thomas’ position on the issue. SWING LOW It’s true confession time. I haven’t been to church in a while\u2014a good while. I’ve been busy. But God uses a number of different methods to herd his flock back into the fold. Sometimes it’s a gentle nudge, sometimes it’s a firm shove and sometimes it’s a solid kick in the behind. Well, I got a kick this week and I am going tomorrow as soon as the doors open up. Su- preme Court Justice Clarence Thomas, the Accidental Jurist, has announced that God told him to vote against Affirmative action. That’s right, Jesus came down from the mountain top and whispered into his ear, ”Clarence, if you type one word in your word processor in one opinion against whites, you are breaking God’s Law”. This God that CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1427August 1, 1996 reigns over the church of Clarence Thomas, told the jurist, turn your back to the dark side, ”sin no more” and make certain that the interest of white men are protected. Well, I must admit Clarence’s God has been doing a hell of a job. White males are 33% of the total American population. Yet they make up 80% of the US House of Representa- tives members, 92% of Forbes 400 richest peo- ple, 97% of school superintendents, 99.9% of professional athletic team owners and 100% of all US presidents. Yes indeed, the God that reigns over this church certainly looks out for the interest of his followers. And what a savvy being this God, to get a person with dark pigmentation and supreme power to preach the gospel ac- cording to the powerless white male. Who would ever question such a messenger? In choosing the Accidental Jurist, this God has certainly selected a worthy disciple. Mat- thew, Mark, Luke, John and Clarence. In June of last year Clarance Thomas voted with the majority on the Supreme Court to end affirmative action programs in- volving school desegregation and voting rights in three separate cases. Since those decisions, Thomas appeared publicly to ex- plain his vote. Thomas has stated, policies like affirmative action, which address the is- sues of equal access, are racist. If affirmative action policies are racist where is the proof? The class of people who are the victims of a racist affirmative action program according to Thomas are white males. And yet, white males, outnumber every other group combined in nearly every job category even though they make up only 33% of the population. It seems that the good justice is saying we need to eliminate affirmative action and re- turn to the days when the only policy in ef- fect was ”the good old boy policy.” Thomas appears to believe that we can and should trust those who benefit from the good old boy affirmative action program to do right by all of us. In Justice Thomas’ world, white men will make certain everyone will benefit. This type of thinking on the part of Jus- tice Thomas reminds me of stories of slaves and citizens who truly believe ”if I work really, really hard, someday those who bene- fit by my efforts will do right by me.” The trickle down theory. The trickle down theory didn’t end slav- ery\u2014it took a war and 10’s of thousands of dead bodies to do that. The trickle down the- ory didn’t end lawful segregation\u2014it took riots, marching and murder to do that. The trickle down theory did not make slaves into citizens or give women the right to vote\u2014it took a constitutional amendment to do that. And the trickle down theory will not elimi- nate the need for affirmative action no mat- ter how much Clarence Thomas believes his mean spirited god is telling him that. At a time when the discussion about af- firmative action is already muddied by some who believe that white males as a whole are truly suffering in the implementation of the policy, at a time when the debate is confused and inflamed by some with the use of the phrase ”preferential treatment”, it is insane to add to the discord the opinion of a man who imagines he hears voices from God about what he should type on his word proc- essor. f TRIBUTE TO MORRIS AND SYLVIA RUBIN HON. ROBERT G. TORRICELLI OF NEW JERSEY IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. TORRICELLI: Mr. Speaker, I rise today in order to congratulate Morris and Sylvia Rubin of Fort Lee, NJ, on their 50th wedding anniversary. This remarkable couple was mar- ried on July 14, 1946 at Lou G. Siegel’s res- taurant in Manhattan. They lived in the Bronx between 1946 and 1975 until they moved to Fort Lee, where they have lived ever since. Sylvia worked as a typist at the New York Public Service Commission for 18 years be- fore she retired in 1993. Prior to her work for the commission, she raised Barbara and Barry, two wonderful and loving children. Sylvia’s husband Morris was employed as a garment worker in the garment industry for 40 years and as a part-time postal worker as well. The Rubins have enjoyed the fruits of to- getherness for five decades. Their love and devotion to each other and their friends and loved ones has always been apparent. They have been wonderful parents and grand- parents to their only grandchild, Michael. In life, it is the special moments that should be cherished, and a 50th wedding anniversary is one of those times. I wish both of them an- other 50 years of wonderful matrimony. f TRIBUTE TO HELPING HAND REHABILITATION CENTER HON. WILLIAM O. LIPINSKI OF ILLINOIS IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. LIPINSKI. Mr. Speaker, today I salute an important organization that has been serv- ing developmentally disabled residents in my district and surrounding areas for more than 40 years, the Helping Hand Rehabilitation Center. The organization was started in the 1950’s, a time when citizens with developmental dis- abilities were often sent to facilities far outside of the mainstream of society. However, a group of dedicated individuals from La Grange, IL, and nearby communities envi- sioned something better for these citizens: an organization that would help them become in- tegrated into the mainstream of society as fully as possible. Helping Hand Rehabilitation Center was the end result of this vision. Helping Hand offers a wide range of services for the developmen- tally disabled and their families, from early intervention child developmental programs to vocational work training for adult residential community living facilities. The lives of more than 500 disabled individuals are touched by Helping Hand each year through these pro- grams. Now in its fifth decade of service, Helping Hand is about to embark on a new program with the grand opening of its SubCon Indus- tries Business Center. Unlike sheltered work- shops that Helping Hand has operated in the past, the new center will be a profit generat- ing, tax paying operation that will place dis- abled individuals with nondisabled workers. The disabled and nondisabled working to- gether have an opportunity to learn from each other, and this kind of professional environ- ment enables the disabled to become totally integrated into the work world, giving them a strong feeling of personal achievement and success. Mr. Speaker, I extend to Helping Hand my best wishes and congratulations on establish- ing the SubCon Industries Business Center and thank the organization for its many years of serving the developmentally disabled citi- zens in my district. f TRIBUTE TO JEFFREY GORDON ENSTROM HON. CARDISS COLLINS OF ILLINOIS IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mrs. COLLINS of Illinois. Mr. Speaker, I would like to take this opportunity to recognize Jeffrey Gordon Enstrom from the Seventh Dis- trict of Illinois in receiving the distinguished rank of Eagle Scout. Not every young American who joins the Boy Scout earns the prestigious rank of Eagle Scout. Only 2.5 percent of all Boy Scouts re- ceive this ranking. To earn the award, a Boy Scout must fulfill requirements in the area of leadership, service, and outdoor skills. He must earn 21 merit badges, 11 of which are required from areas such as citizenship in the community, citizenship in Nation, citizenship in world, safety, environmental science, and first aid. As a distinguished member of troop 40, Jef- frey Gordon Enstrom has received 43 merit badges and attended the World Jamboree in Korea and Hawaii. He has done work as a counselor with his church, and he participated in the ”Help Feed the Children” project in his community, as well as in New York. He has also developed a computer lab for unwed mothers. I hope that more young Americans follow his lead by becoming more involved in their communities. On June 28, 1996, Jeffrey Gordon Enstrom received this honor of Eagle Scout at a rec- ognition ceremony at the United Lutheran Church in Oak Park, IL. I ask that my col- leagues join me saluting Eagle Scout Jeffrey Gordon Enstrom in recognition of this tremen- dous honor. f TRIBUTE TO MICHAEL STERN, WAR CORRESPONDENT HON. CAROLYN B. MALONEY OF NEW YORK IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mrs. MALONEY. Mr. Speaker, I rise to pay tribute to Michael Stern, a renowned war cor- respondent who today celebrates his 86th birthday. Mr. Stern has led a distinguished ca- reer as an outstanding journalist who has also used his expertise as both a historian and an educator. He is deserving of special recogni- tion here today in honor of his vast contribu- tions to America’s understanding of the reali- ties of war. Mr. Stern, the author of seven books and the producer of five feature motion pictures, has written extensively about his wartime ex- periences. His story on the B 17 flying for- tress, Memphis Belle, America’s four-engine bomber, has served as the basis for motion pictures and was selected by the World Pub- lishing Company as one of the 100 best sto- ries of World War II. Additionally, his story ”Nuts,” written on the European front, has CONGRESSIONAL RECORD \u2014 Extensions of RemarksE1428 August 1, 1996 been an integral tool for historians writing about the Battle of the Bulge. To document his own vivid account as a war correspondent, he published his memoir, ”Into the Jaws of Death.” Mr. Stern has not only documented the events he has witnessed, but has also made every effort to educate Americans through his personal accounts of his wartime experiences. He has served as a lecturer at the Newhouse School of Communication at Syracuse Univer- sity and has made countless appearances on television to expose the American public to the realities of war. In addition to his role as edu- cator, Mr. Stern currently acts as a trustee of the Intrepid Museum Foundation, a trustee of the Fisher House Foundation, executive vice president and chief operating officer of the Fisher Center for Alzheimer’s Research at Rockefeller University, and the editor-in-chief of Fisher House Magazine. Mr. Speaker, it is my pleasure to rise today in honor of Michael Stern, who has dedicated his life to bringing the reality of war home for Americans to understand and appreciate. I ask that my colleagues join with me in this well-de- served tribute to Mr. Stern and in celebration of his 86 years of experience and dedication to wartime journalism and education. f GORDON MCALLISTER: A SPECIAL INDIVIDUAL HON. JAMES A. BARCIA OF MICHIGAN IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. BARCIA. Mr. Speaker, whenever people ask me what ever happened to people who care about their community and their neigh- bors, I have the good fortune to tell them about people like Gordon McAllister, a special individual who for many years has served his community professionally, personally, and has taken the time to help people remember valu- able lessons from our past. Gordon McAllister has served as a police of- ficial in several capacities ever since his grad- uation from high school. He served as an Air Police officer with the United States Air Force. He then worked as a security officer for Gen- eral Motors for 3 years, followed by another 3 years as a State Commissioned, Michigan State Railroad Police Detective. For the past 27 years, Gordon has served as a member of the Bay City Police Depart- ment. For 8 years he was a patrol officer, and for 19 a detective corporal. During this time he earned 14 department commendations and numerous letters of merit from citizens and businessmen. Even more notable is that while performing in an exemplary fashion he contin- ued to better himself by obtaining a bachelor of arts degree in Criminal Justice from Sagi- naw Valley State University. He has personally been involved in many charitable events. Most notably he has been the local chairman for the National Law En- forcement Torch Run for Special Olympics for several years. Most recently, Gordon earned the National Merit Award from the Sons of the Civil War for coordinating a salute to Civil War Veterans in- cluding songs and poems of the era, at the Vassar, Michigan, Riverside Cemetery. This program was a tribute to all veterans, particu- larly those from the Civil War, and marked the 100th anniversary of the dedication of a monu- ment which bears the names of more than 200 Civil War veterans at the cemetery, in- cluding his great, great-grandfather, William Bassett Stark, who served in the 34th Massa- chusetts Volunteer Infantry. With all of this public service, Gordon still believes his greatest success is investing in his family and their future\u2014his help with his three children Darren, Darneal, and Brandon, attaining their college degrees. Mr. Speaker, what happened to people who care about their community and their neigh- bors? One of them\u2014Gordon McAllister\u2014lives in Bay City, MI. I urge you and all of our col- leagues to join me in recognizing his wonder- ful contributions. f PERSONAL EXPLANATION HON. NORMAN SISISKY OF VIRGINIA IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. SISISKY. Mr. Speaker, yesterday I was unavoidably absent during tests related to my chemotherapy. Had I been present during con- sideration of H.R. 2391, the Compensatory Time Act, I would have voted against the bill. f AGENT ORANGE BENEFITS ACT OF 1996 HON. LANE EVANS OF ILLINOIS IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. EVANS. Mr. Speaker, today I am intro- ducing the Agent Orange Benefits Act of 1996. The legislation provides necessary medical care and compensation to a new class of citi- zens who have sacrificed their health in the defense of our Nation\u2014the children of agent orange-exposed Vietnam veterans who were born with Spina Bifida. The legislation, proposed by the administra- tion after close coordination with veterans services organizations and the disabilities community, is the result of a process set into place by the Agent Orange Act of 1991. The act established the process in which the Na- tional Academy of Sciences’ [NAS] Institute of Medicine [IOM] issues reports every 2 years on the existing scientific evidence relating to Vietnam veterans’ exposure to agent orange. The IOM’s latest report confirmed what Viet- nam veterans have known all along\u2014that agent orange has and will continue to exact a high price on themselves and their families. The report specifically found that there is lim- ited suggestive evidence of an association be- tween agent orange exposure to vets and the occurrence of spina bifida in their children. The bill I am introducing today is consistent with legislative action we have taken in the past with respect to veterans who suffered from conditions in the ”second tier” of the NAS report. As with previous legislative relief we have granted veterans, my bill ensures that the VA has the authority to provide health care and appropriate compensation. Specifi- cally, the bill gives the Secretary of the VA the authority to provide the extensive medical help needed by children suffering from spina bifida, including important case management serv- ices. The bill also gives the Secretary the flexi- bility to contract for care from private sources to ensure that appropriate medical services are provided. I applaud the administration’s quick and de- cisive movement on this issue. In particular, Secretary Brown should be congratulated for the strong action he took in ensuring that the administration proposed comprehensive legis- lation that guarantees that these children will be properly cared for and compensated. I hope that we can take quick action on this legislation. The bottom line is that we have sick children who have paid the price because of their father’s service to our Nation. They need and deserve the best that our nation can give them. I urge my colleagues to support this important legislation. f A TRIBUTE TO HISPANIC- AMERICAN VETERANS HON. ESTEBAN EDWARD TORRES OF CALIFORNIA IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. TORRES. Mr. Speaker, I rise today to salute our Hispanic-American veterans and to share with you a few of the experiences of these brave men and women. On August 23 and 24, 1996, the California Occupational Foundation, under the leadership of Gus Her- nandez, will be having a dinner and parade to recognize the contributions of our Hispanic- American veterans. It is important that we recognize our Na- tion’s Hispanic-American veterans, men and women who answered the call to defend free- dom and democracy. Since the American Rev- olution, Hispanic Americans have coura- geously served, and in many cases died for our country. During the Civil War, an esti- mated 10,000 Hispanic-American soldiers fought in either the Union or Confederate Ar- mies. Because of a language barrier, few His- panic Americans saw any combat during World War I. But by World War II, with the lan- guage barrier broken, approximately 500,000 Hispanic-American soldiers helped the Allies defeat the Axis powers. Hispanic Americans have also served in Korea, Vietnam, and in Operation Desert Shield\/Storm. Today, there are approximately 1 million living Hispanic- American veterans. Currently, Hispanic-Ameri- cans make up 5 percent of our Nation’s active duty armed forces personnel. Among these heroes is Marine PFC Guy Gabaldon, who with distinction captured more enemy soldiers than anyone else in the history of U.S. military conflicts. PFC Gabaldon cap- tured over 1,000 Japanese soldiers during World War II. Also included are eight men who selflessly gave their lives for our country, con- tinuing a tradition of honor rooted in a small street in Silvis, IL. Although the street is only large enough to accommodate 22 families, it has produced 84 brave men who fought in ei- ther World War II, Korea, or Vietnam. Once named Second Street, this small block has been renamed Hero Street U.S.A. and stands as a monument to these American heroes. Most notable are the 41 Hispanic Americans who have been awarded our Nation’s most prestigious and highest military decoration, the CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1429August 1, 1996 Congressional Medal of Honor. This is more than any other ethnic group of veterans. Among the recipients is Private Jose P. Mar- tinez who sacrificed his life by leaping forward and leading his platoon in attack after Japa- nese soldiers pinned down his unit during World War II. Another honoree is Master Sergeant Roy P. Benavidez, who after recovering from a wound during his first tour of duty in Vietnam, re- turned to the war and earned his way into the elite Army Special Forces. Upon his return, Benavidez assisted in the rescue of 12 men from his unit, and destroyed classified docu- ments so that they would not fall into enemy hands. These soldiers are the epitome of the valor and service that is found within every soldier. Mr. Speaker, I ask my colleagues to please join me in honoring our Hispanic-American military heroes and to recognize the tremen- dous contributions Hispanic-American veter- ans have made in defense of liberty and de- mocracy. f VETERANS’ HEALTH CARE ELIGI- BILITY REFORM ACT OF 1996 SPEECH OF HON. JAMES B. LONGLEY, JR. OF MAINE IN THE HOUSE OF REPRESENTATIVES Tuesday, July 30, 1996 Mr. LONGLEY. Mr. Speaker, I rise in strong support of H.R. 3118, the Veterans Health Care Eligibility Reform Act. It has become extremely clear that the question of health care eligibility has become extremely clouded as the result of a very com- plex and difficult to understand process of de- termining eligibility. In fact, as a country, we probably spend more time and money deter- mining who is eligible, as compared to provid- ing needed care. This must change. I think that H.R. 3118 is a giant first step in the direction of positive changes in the provi- sion of Veterans Administration health care. At the same time, I want to commend this committee and Chairman STUMP for the out- standing work on behalf of the Nation’s veter- ans. I hope that the committee will continue to be vigilant and aggressive in examining a sys- tem of veterans health care in order to ensure that it continues to provide quality care. This would include, I hope, careful examina- tion of the use of funds by the Veterans Ad- ministration. In the last two appropriations bills, this Congress has made careful provi- sions to increase funding for the provision of VA medical care. In the fiscal year 1997 budg- et, we increased funding by $504 million, from $16.6 billion to over $17 billion. In fiscal year 1996, the previous year, we increased funding an additional $400 million. Sadly, however, although we have in- creased annual funding by almost $1 billion in the last 2 years, it seems that those additional funds have not made their way to the grass roots. It has certainly not made it to the Veter- ans Hospital in my district located in Togus, ME. In fact, if anything, as we have increased funding from Washington, the limitations on services, including the discussion of cutbacks on existing services has continued unabated. It is not uncommon, for instance, to find a Maine veteran being forced to travel to a VA hospital in the Boston area and admit him or herself as an inpatient. He or she could re- main in Boston for days, if not weeks, to re- ceive needed medical treatment that could have been provided through a cooperative ar- rangement at a significantly lower cost with a Maine hospital. Mr. Speaker, H.R. 3118 is a significant first step in the direction of improving and reform- ing the delivery of medical care to our Nation’s veterans. I hope that, in the course of imple- menting H.R. 3118, we will see the committee continue to take a vigilant stance in oversee- ing the administration of the VA system and that it will take whatever action is necessary in order to protect provision of care at existing VA hospitals, such as that hospital located in Togus, ME. Our Nation’s veterans, Maine vet- erans, deserve no less. f TRIBUTE TO DOROTHY ”DOTSY” LOCKHART-ELSKOE HON. VICTOR O. FRAZER OF THE VIRGIN ISLANDS IN THE HOUSE OF REPRESENTATIVES Wednesday, July 31, 1996 Mr. FRAZER. Mr. Speaker, Dorothy ”Dotsy” Lockhart-Elskoe was born and raised on the island of St. Thomas and is the second child of Alfred and Elmira Lockhart. Dorothy was a graduate of the Charlotte Amalie High School Class of 1947. She attended on-island edu- cation programs for teachers that utilized pro- fessors from Puerto Rico and various main- land universities and colleges. In 1952, Mrs. Elskoe began her teaching ca- reer as an elementary school teacher; how- ever, after 8 years as a teacher, she devel- oped a throat condition which forced her early retirement from the classroom. Mrs. Elskoe worked at the Department of Education and the Department of Finance. Additionally, she held various positions in the government. She was Administrative Assistant for the Virgin Is- lands Urban Renewal Board, Director of Emer- gency Housing for the Department of Housing and Community Renewal, Director of Commu- nity Relations and Complaints for the Virgin Is- lands Legislature and retired in 1986 as Direc- tor of the Rotary Multipurpose Center for Sen- ior Citizens. Dorothy’s retirement gives her more time for community involvement. Her involvement in the community is both civic and political. She was president of the Democratic Party Wom- en’s Auxiliary for 8 years and a member of the Democratic Territorial Committee. Dotsy is still involved in politics\u2014her assistance is often so- licited by both senatorial and gubernatorial candidates. In addition to her past political in- volvements, Dotsy is a charter member of the League of Women Voters, member of St. Thomas is All of Us and the Welfare Rights Organization. Mrs. Elskoe chaired the Chil- dren’s Sub-Committee of the Carnival Commit- tee for 10 years and worked with Sam King and the late Halvor Hart, Jr. to bring children’s rides to Carnival\u2014began a children’s village and started the tradition of a Prince and Prin- cess float in the parade. Presently, Dotsy is a member of the Board of Governors for the Virgin Islands cultural Heritage Institute, United Way Board Member, member of the Downstreet People, Inc., Presi- dent of the Committee to Revive Our Culture, Co-Chairperson of the Merry Carolers, mem- ber of the Challenge of Carolers, Inc., Presi- dent of the Elskoe and Associates Carnival Floupe, founder and member of the St. Jude Prayer Group and a Red Cross volunteer. Mrs. Elskoe has given and continues to render assistance to schools, social and civic clubs whenever her services are requested. Mrs. Elskoe fosters her firm belief of pre- serving the traditional values and the indige- nous customs of the Virgin Islands because they are on the fringe of extinction. In the summer of 1990, Dotsy assisted the Smithso- nian Institute in Washington, DC, in preparing a mini-parade and a past and present living exhibit about the islands for the 24th annual festival of American Folklife. She has presented and organized many demonstrations in the culinary arts and other arts and crafts to the schools and other orga- nizations\u2014locally and abroad. In past sum- mers, the Committee to Revive Our Culture, of which Dotsy is President, organized youth summer programs for children between the ages of 12 and 17. They learned native cul- inary arts and additional handicrafts. With the aid of the Tourism Department, the Committee to Revive Our Culture held several successful cultural fairs in May and December at the Emancipation Garden. In the near future, Mrs. Elskoe will be embarking upon a project to or- ganize a cooperative where local crafts and articles made in the Virgin Islands can be pur- chased. Forty years ago, Dorothy Elskoe and master float builder\u2014Ector Roebuck gave life to the then Elskoe and Roebuck Carnival Floupe\u2014 now known to all as the Elskoe and Associ- ates Carnival Floupe. Dotsy and her floupe members have worked as ambassadors of the Virgin Islands, spreading the culture abroad to various areas in the Western Hemisphere. Elskoe and Associates have traveled to Puerto Rico, Miami, New York, Tortola, Washington, DC, St. Croix, St. John, Antigua, Toronto Can- ada and Atlanta\u2014winning numerous prizes along the way. At home, Elskoe and Associates has won numerous first place awards within the floupe category as well as within the King and Queen of the Bands competition. In 1972, the then Elskoe & Roebuck was the first floupe to con- struct queen and king of the band costumes on St. Thomas. Fayer Elskoe-Liburd\u2014Dotsy’s eldest daughter\u2014was the first Queen of the Band and the King of the Band was ”Ricardo”. One of the famous Elskoe and Associates floupe entries that was considered a master- piece was a float which displayed a twenty cent Danish coin\u2014built by the late Ector Roe- buck. This coin included three ladies who were very prominent in Virgin Islands History. The ladies who portrayed these historic indi- viduals where sprayed entirely in silver for au- thenticity. Mrs. Elskoe’s overwhelming urge to protect and preserve our culture and heritage has not gone unnoticed by a supportive community. She has received many civic certificates, awards and honorable mentions including the Wilbur Bill Lamotta Community Service Award, The Queen Cosiah Award, the 1974 and 1996 Virgin Islands Carnival Committee Outstanding Participation Awards, the 1993 Virgin Islands Carnival Committee’s V.I. Cultural Ambas- sador Award. Two calypsos were written in her honor by Glen ”Kwabena” Davis and the late Dana Orie CONGRESSIONAL RECORD \u2014 Extensions of RemarksE1430 August 1, 1996 in a Salute to Dorothy Elskoe by the Resident Calypsonians at the Reichhold Center for the Arts in 1984. Additionally, a resolution for her cultural and civic involvements in the commu- nity was presented to Mrs. Elskoe in 1994 by the 20th Legislature of the Virgin Islands. In July 1996, Dotsy was invited to Rio Grande, Puerto Rico by the Mayor of Rio Grande as the Grand Marshall of the Carnival Parade. She received a plaque in her honor for partici- pating and assisting with the carnival since 1977. Family unity is an important priority in Dotsy’s life. This is present from her marriage of 48 years to Winthrop T. Elskoe. Him along with their six successful children\u2014Faye Liburd, Karolyn Roebuck, Monica Rabsatt, Glen, Sandyl and Lori\u2014have been inspirations in all of Dotsy’s cultural and civic endeavors. If the preservation of culture is not instilled in anyone else, it is Dotsy’s hope that it will be fixed in the minds and hearts of her offsprings and their offsprings. Dorothy views the culture of these islands not as footprints on a beach washed away by every wave and forgotten . . . but as footprints made in wet cement and left to dry . . . engraved and preserved in the minds of our youth forever. f TRIBUTE TO HAMILTON FISH HON. BENJAMIN L. CARDIN OF MARYLAND IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. CARDIN. Mr. Speaker, as you well know, one of our great colleagues recently passed away, Hamilton Fish, Jr. During a me- morial service held in his behalf, Ralph Neas of the leadership conference on civil rights de- livered eloquent remarks which I am inserting into the RECORD at this point: REMARKS OF RALPH G. NEAS AT THE MEMO- RIAL SERVICE FOR CONGRESSMAN HAMILTON FISH. JR. Mary Ann, Hamilton, Alexa, Nicholas, Peter, others in the Fish family, Speaker Gingrich, Members of Congress, and distin- guished guests, I am profoundly grateful and deeply honored to have this opportunity to help celebrate the extraordinary life and leg- islative career of Congressman Hamilton Fish, Jr. As the Executive Director of the Leader- ship Conference on Civil Rights, the legisla- tive arm of the civil rights movement, I had the privilege of working with Ham Fish on nearly two dozen legislative campaigns be- tween 1981 and 1995. Hamilton Fish was a civil rights champion, a mentor, and a close friend. During the past week, the press coverage of Ham’s thirteen terms in Congress has ac- curately characterized his personal integ- rity, his principled leadership, and his coura- geous commitment to equal opportunity for all Americans. But, frankly, what I have read does not capture the sheer magnitude of Ham Fish’s legislative accomplishments or, very impor- tantly, the manner in which he achieved them. For a few minutes, I would like to share with you my perspective on this great man. First, let us look at Ham Fish’s civil rights record. It was legendary in its scope and breadth. Propelled by an awesome sense of justice and a determination not to rest until he had completed his mission, Ham Fish played an important role in virtuality every civil rights law enacted over the past two and a half decades. Even during the Reagan and Bush presi- dencies, when Ham often faced formidable odds, he helped shepherd through Congress nearly a score of civil rights laws. Indeed, during this remarkable era, Ham, along with Don Edwards, his Democratic partner in guarding the Constitution, actually strengthened all the major civil rights stat- utes. To sum up all these legislative successes would take up most of the morning. But I would like to mention specifically five land- mark laws where Ham Fish was either the House author or the lead Republican spon- sor. And, with respect to several of them. Ham was the legislator who fashioned the bi- partisan compromise that catapulted the bill toward passage. The 1982 Voting Rights Act Extension: Ex- tended the Voting Rights Act of twenty-five years, overturned an adverse Supreme Court decision, and extended for ten years bilin- gual ballot assistance for language minori- ties. The Civil Rights Restoration Act (1988): Overturned the notorious 1984 Grove City Su- preme Court decision and once again made it illegal to use Federal funds to discriminate against women, minorities, persons with dis- abilities, and older Americans. The Fair Housing Act Amendments of 1988: Provided at long last an effective enforce- ment mechanism for the 1968 Fair Housing Act. The 1988 Amendments also prohibited discrimination in housing against families with children and people with disabilities for the first time. The Civil Rights Act of 1991: Overturned eight Supreme Court decisions that had dra- matically weakened our nation’s equal em- ployment opportunity laws. And provides, for the first time, monetary damages for women and persons with disabilities who are victims of intentional discrimination. The Americans with Disabilities Act (1990): Prohibits discrimination against 49 million Americans with disabilities in employment, public accommodations, communications and transportation. These historic civil rights laws have bene- fitted, and will continue to benefit, millions of Americans. And let me state this as un- equivocally as possible: these laws would not have been enacted without Congressman Hamilton Fish. His leadership during the most challenging of times was absolutely in- dispensable. But it was not just the quantity and qual- ify of these civil rights laws, or the legisla- tive skills that made them possible, that made Hamilton Fish so special. In fact, his other attributes are what truly set him apart, providing standards of leadership that should serve as a model for everyone. First, Ham Fish always understood thor- oughly the need for bipartisanship. He knew how to build coalitions and forge a consen- sus. He knew the art of the timely com- promise, the good compromise made at the right time that will produce the requisite number of votes, either a simple majority or a super majority, that is needed to enact a law. The numerical results of the legislative victories I cited previously amply dem- onstrate this commitment to bipartisanship. The average final passage vote on these five laws was 90 percent of both Houses of Con- gress. Thanks to Ham Fish and his allies, he past decade and a half has been, legisla- tively, a bipartisan reaffirmation of civil rights laws and remedies. Second, while Ham Fish was passionate in his beliefs, civility characterized his every action. He treated everyone with dignity. Few in Washington have matched his ability to command both the respect and the love of his peers. Time and again he proved that a nice guy can finish first. Third, Ham Fish revered the institution in which he served. He enjoyed immensely being a member of the House of Representa- tives and always strove to make the House work. And while the House held his primary allegiance, he also respected the other insti- tutions that comprise the Federal Govern- ment. When the need arose, Ham Fish could be a fierce partisan. But he knew that bipartisan cooperation, not partisan confrontation, must ultimately prevail if government is to function at all. Finally, and perhaps most significantly, Ham Fish was courageous. Whether it was voting to impeach a President of his own party or standing firm on civil rights legisla- tion, Ham Fish did what he believed to be fair and just. Last week, Congressman Maurice Hinchey summarized eloquently how Ham carefully balanced loyalty and independence in order to further the national interest. He stated: ”Ham was very proud to be called a loyal Re- publican, but he knew that loyalty does not mean surrender of one’s own judgment and temperament * * * He believed that he served his party best when he served his country best, and that he served the country best by bringing the best of his own mind and heart to every issue he addressed.” After he retired from the House, Ham Fish continued to work on behalf of his favorite issues. Just last month the two of us visited Senator Nancy Kassebaum and Congressman Amo Houghton lobbying on behalf of affirm- ative action and legal services. As you can tell by now, I cherished my friendship with Ham. He was always there to help, performing any task with graceful en- thusiasm. I will miss so much his warm smile, his mischievous sense of humor, and his calm and gentle presence. As I sat praying at St. Albans chapel this morning, I thanked God for allowing Katy and me the opportunity to get to know Ham. And I was thankful that we all had the bene- fit of Ham’s leadership at critical moments during our nation’s past quarter of a cen- tury. As we leave the chapel shortly, let us all pray that God will bless America with a few more Ham Fishes. f IN HONOR OF THE SPONSORS OF PROJECT CHILDREN ’96 HON. ROBERT MENENDEZ OF NEW JERSEY IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. MENENDEZ. Mr. Speaker, I rise today to pay tribute to a special group of people, the sponsors of Project Children ’96 who have dis- tinguished themselves with selfless dedication to the promotion of peace in Northern Ireland. Project Children is an organization that pro- vides young people from the north of Ireland a respite from the violence which for too long has been a part of their lives. Through their generosity of spirit, the children’s sponsors serve as vivid illustrations of the best we, as Americans, have to offer: respect for individual freedom. Last year at this time, the children who came to visit us from Northern Ireland had a reason to be optimistic about their future. The ceasefire agreement signed in 1994 appeared to be having a positive effect on both sides in the ongoing struggle for freedom. Unfortu- nately, the past several months have seen a CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1431August 1, 1996 resumption of hostility. This makes the time shared by the 39 host families and the 46 chil- dren who are participating in Project Children ’96 even more significant. This year, the 39 families from my home State that have been kindhearted enough to open their lives to these young people include Rodney and Lynda Bialko, Michael and Eliza- beth Cancian, Brian and Patricia Carmen, Marc and Tina Marie Cleaver, Kevin and Patri- cia Comer, James and Patti Cunningham, An- thony and Marge DeSando, Louis and Nancy Dolloway, Al and Ellen Dorso, Arnold and Madeline Fatteross, Rick and Arlene Faustini, Ken and Arleen Ferguson, Patrick and Fiona Ferguson, David and Patricia Freed, Margaret Gilsenan, Raymond and Isabelle Kayal, Timo- thy and Renee Kelly, James and Iza McCosker-Keane, Michael and Doreen Mackin, Michael and Kathleen McBride, Rob- ert and Linda McGee, Brian and Lori McGorty, Peter and Nancy Midgley, Robert and Dyan Moore, Dennis and Meg O’Brien, Sean and Anne O’Neill, Paul and Julie Palminteri, Chris- topher and Barbara Pickell, John and Lori Rose, Hoby and Joyce Stager, Cheryl Stone, James and Louise Sweeney, Glenn and Diane Taylor, Michael and Anne Tizlo, Robert and Linda Toth, Joseph and Joyce Tricola, Joseph and Barbara Wells, John and Barbara White, and Craig and Barbara Yeske. The 46 children we are privileged to have visit New Jersey are Denise Coyle, David Mahony, Samantha Walker, Dearbhlagh Digney-McCann, Ryan Corbett, Elaine Coyle, Daniel Fearon, Shauna Scott, Claire McKinley, Lorraine Fitzpatrick, Aisling Leavey, Shauna O’Toole, Laura Deane, Krisoffer Gallagher, Laura McCambridge, Aaron McCay, Joseph Doak, Jennifer Slavin, Jaime Teresa Coyle, Lisa Beggs, Natalia McKeown, Lynsay Martin, Katrina O’Reilly, Seadhna Billings, Brian Anneslay, Stephen Connelly, Brigid Fitz- simmons, Karen Barnes, Ciara Doherty, Karen Rafferty, Jonathan Magennis, Joseph O’Neill, Barry Dobbin, David Goodall, Catrina McQuillan, Charlene Nellins, Kenneth Murphy, Darren Diamond, David Diamond, Richard Johnson, Conor Hunter, Claire Dunseath, Aine Duffy, Elaine Murray, Shauna O’Hagen, and Eamonn Porter. It is an honor to applaud the outstanding be- nevolence of the Project Children ’96 spon- sors. Their efforts to further the cause of peace will serve as a beacon of hope for countless others throughout Northern Ireland and the world. These compassionate individ- uals are truly local ambassadors of peace. f TRIBUTE TO THE AMERICAN AUTOMOBILE CENTENNIAL HON. SANDER M. LEVIN OF MICHIGAN IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. LEVIN. Mr. Speaker, on June 22, 1996, there was a celebration which was held in De- troit to mark the 100th anniversary of the auto- mobile. And what a celebration it was. There was a parade with hundreds of cars that reflected the development of automotive production\u2014from the 13 identical vehicles pro- duced by the Duryea Bros. in Springfield, MA, and in June of the same year, the miraculous machine that Henry Ford drove amidst the horse and buggies in Detroit. There followed a centennial gala. Thou- sands from all walks of life connected with the modern American automobile gathered to take note of the revolutionary impact of the auto- mobile on daily life, its key role in the Amer- ican economy, and its growth into a global in- dustry. The guiding spirit of the centennial, Keith Crain, presided over the gala’s program. His remarks set the tone for the entire evening. They should be widely read, so it is my pleas- ure to place in the CONGRESSIONAL RECORD the speech given that evening by Keith Crain, chairman of the board of trustees of the Amer- ican Automobile Centennial Commission and vice chairman of Crain Communications, Inc. INTRODUCTORY REMARKS AT THE AMERICAN AUTOMOBILE CENTENNIAL DINNER (By Keith Crain) Good evening, it’s my very pleasant duty to welcome you to Detroit, and this gala din- ner, honoring 100 years of the American automobile industry. As so many of you know, automobile pro- duction was bred, but not born, in Detroit. The Duryea Brothers manufactured 13 identical motor-wagons in 1896, according that honor to Springfield, Massachusetts. But it was also in June of that same year, at a site within walking distance of this Cobo Center that Henry Ford first drove what he called a quadri-cycle around the horse and buggy streets of this city and De- troit and the motor car became forever linked in history, and in the collective con- sciousness of people all around the world. Tonight we celebrate the American auto- mobile, and the heroic accomplishments of an industry whose business became the busi- ness of the century, the business of America. We celebrate not only the history and lore of that amazing industry this evening, but a victory of ideas, of national will, of genius and muscle, of sweat, and blood, a victory of men and women and organizations and cor- porations who bent the way of living of an entire planet, in much the same way they bent the steel, that they molded into the ve- hicles of the world’s dreams. It was my friend and publisher, Leon Man- del, who said, ”It is important to understand how important the automobile has been to our development as a country, whether we like the way we developed or not.” I think I speak for those of us in this room tonight, and for millions and millions more around a country connected by highways from coast to coast, in saying that we very much like the way America has developed over the past 100 years, and we thank the American automobile industry for giving us mobility and freedom and speed, and for making wheels the pivotal symbol of the 20th century. The names of those responsible for this wa- tershed accomplishment in the social evo- lution of mankind, are forever inscribed in the hearts of auto lovers. To list but a few is to risk omitting so many, but listen to the history, and the magic, those names inspire, Henry and Edsel Ford and the Duryea Broth- ers, Billy Durant, Walter Chrysler, Randson E. Olds, Maxim, Pope, Nash, Leland, the Dodge Brothers, Packard, Marmon, Stude- baker, Willys, Thomas, Jeffery, Pierce, Stan- ley, Flanders, Chapin, Kettering, Sloan, Earl, Reuther. We salute these pioneers, and so many of their fellows\u2014past and present\u2014in our cen- tennial observation tonight. And among them, the name Walter Reuther. For it can- not be forgotten, that the American auto- mobile industry was forged not just by cele- brated men with revered names, but built ve- hicle by vehicle, on the muscle and strength, the will and, yes, the courage, of those that toiled in their shops. It has been a wonderful business, developed by and nurtured by engineering geniuses, great designers, marketing powerhouses, manufacturing marvels and financial wiz- ards. That this business, our business, still ex- ists and thrives today, is testimony to the greatness of the American idea, and testi- mony to the contributions of all those\u2014 known and unknown\u2014that have sustained it for these 100 years. In honoring this most American of enter- prises, we must also take time this evening, to welcome and acknowledge our friends from overseas who join us here at the Cobo Center in this great celebration. There can be no question, that the global competition of the past quarter century, has been the most positive development in recent auto history. The buying public, the customer and the vehicles they purchase, have been the beneficiaries of this competition, and that is the ideal. It harkens back to the rivalries, and the pioneering spirit, of the original days of motor car production. Who knows\u2014were it not for this inter- national influence, we might all still be driv- ing 1950 Studebakers. So we also salute America’s newest manu- facturers, and we thank them for their con- tributions to this century of growth, and for joining us tonight. And finally, on a local note, we hope you out-of-towners will forgive us some parochial pride this evening in crowing about our motor capital of the world, this arsenal of democracy, this Detroit. Yes, it might have been Cleveland, it could have been Flint or Auburn, but to our town’s everlasting credit and fame, it was Detroit. And so we welcome you to a celebration that is both international and local at once, this 100th anniversary of the industry that has shaped America, and all of our lives. We thank those whose efforts over the decades have made this evening possible, those who have gone before us, and those who sustain this wonderful and world-changing business today. And we thank you in attendance, for joining us tonight in our centennial salute to the epic history, of the American auto- mobile. TOAST I’d like to propose a toast to the men and women who have made the motor car in America, to the industry that has changed all our lives, to a blessed and magical 100 years, and to another 100 years that will rival the achievements of the first. And finally, to the cars themselves, and the favorites we hold in our hearts; it’s been a wonderful ride. f ROGERS CITY 125TH ANNIVERSARY HON. BART STUPAK OF MICHIGAN IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. STUPAK. Mr. Speaker, it is an honor for me to bring to the attention of the House and the entire Nation the 125th anniversary of Rogers City. Rogers City, found in Presque Isle County in the northeast corner of Michi- gan, will be celebrating its 125th birthday this weekend in conjunction with its Nautical City Festival. CONGRESSIONAL RECORD \u2014 Extensions of RemarksE1432 August 1, 1996 Rogers City’s long and distinguished history began in the late 1860’s when William B. Rog- ers and his partner, Albert Moliter, hired Fred- erick Denny Larke to locate and land in north- ern Michigan for their company. The expedi- tion led Mr. Larke to a beautiful area in north- ern Michigan, known in the 1860’s as Alpena County. After returning to Detroit, Mr. Larke organized a number of German and Polish emigrants and returned to Alpena County in the spring of 1869. Rogers City was incor- porated in 1877, just 2 years after the Presque Isle area broke away from Alpena to become its own county. Although Frederick Larke was responsible for leading the settlers to the area, Albert Moliter is more often recognized as the found- er. Mr. Moliter was an educated man who had a lot of influence in the small town. He began many businesses, including a store, but was unpopular with his fellow citizens. The resent- ment toward Mr. Moliter, real or unreal, cul- minated in tragedy when an individual shot and killed him as he worked in his store. Albert Moliter was not the only educated man in Rogers City. The town’s first two may- ors were Charles Pfanneschmidt and Philip O’Farrell. Dr. Pfanneschmidt was one of two doctors in the area and the only dentist. Many other men made their marks and expanded Rogers City through business ventures which included Wendy’s Saloon, the Kitchen House, Larke’s Drugstore, and finally the county’s courthouse. With all of the distinguished men in Rogers City’s history, the men who the town was named after never set foot in the area. William Evan Rogers was instrumental in financing and organizing the expedition that led to Presque Isle County but as a prominent figure from the east coast he never found a desire to move to the remote land many miles north of Detroit. Surrounded by dense forests of white and Norway pine, white cedar, hemlock, and heavy hardwood, timber became Rogers City main industry. The town is located right on Lake Huron. By using its dock the town found an ef- ficient way to transport the timber downstate. No railway went as far north as Presque Isle County and the automobile had not yet been introduced. The community did all of its trad- ing by vessel. Eventually, too many people settled in the area. All of the trees were wiped out and no other industry appeared profitable in northern Michigan. Crawford’s Quarry, later renamed Calcite, was located just 21\u20442 miles from Rog- ers City. There was fierce competition be- tween these two towns especially since Quar- ry had attempted to become the county seat but Rogers City was awarded the honor. Crawford’s Quarry lost many of its citizens and the whole city seemed to shut down. Suddenly, in 1910, a demand for high-cal- cium limestone was created. Calcite, formerly known as Crawford’s Quarry, housed the larg- est limestone quarry in the world. Once again, Calcite was alive and booming. As jobs opened up more people moved to Rogers City. In 1912, Rogers City had a population of 600. By 1950, more that 4,000 people resided in the town. With the new industry came a renewed need for a railway that came all the way to Rogers City. On December 18, 1911, the resi- dents of Rogers City welcomed their first train. Every citizen was waiting at the depot with bated breath. A huge ”Welcome” sign hung above the tracks. When the train arrived the entire town broke out in cheers and laughter. One observer stated that the date December 18, 1911, means the same for Rogers City, as the date July 4, 1776, means for the United States. Mr. Speaker, today Rogers City is a proud community, just as it was on December 18, 1911, and in the spring of 1869 when it incor- porated. This small community has stayed to- gether through good times and bad. Many citi- zens can trace their roots back to one of the original 21 names signed on the original peti- tion for incorporation. It is this pride in their community that has kept Rogers City so strong for the last 125 years. On behalf of northern Michigan and the entire Nation, I would like to congratulate Rogers City on this, their 125th anniversary. f CONGRATULATIONS TO KOHLER AND CAROL MCINNIS ON THEIR 50TH ANNIVERSARY HON. SCOTT McINNIS OF COLORADO IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. MCINNIS. Mr. Speaker, I rise today in order to congratulate Kohler and Carol McInnis, my father and mother, on their Gold- en 50th Wedding Anniversary on August 27, 1996. They will celebrate the occasion by re- newing their vows during mass at St. Ste- phen’s Catholic Church in Glenwood Springs, CO. Glenwood Springs has been their home for more than 45 years, and they have many, many friends throughout the area. Kohler and Carol have six children, Michael McInnis of Boulder, Kohler McInnis II of Du- rango, Kathy Krey of Glenwood Springs, Patty McInnis-Cole of Evergreen, Carie McInnis- Raaum of Grand Junction, and Scott McInnis of Grand Junction. In addition, Kohler and Carol have 12 grandchildren, all of whom will be joining in the celebration. Mr. Speaker, I would like to take this oppor- tunity to share with my colleagues some back- ground on these two very special people. Originally from Walsenburg, CO, my parents moved to Glenwood Springs in 1952, where my father, a small businessman, owned and operated a hardwood store. While my mother was a dedicated and hardworking homemaker of six children all of whom were very well be- haved, my father became a member of the First Industrial Bank board, and later was part of the group which opened the Bank of Glen- wood. It is rare that a Congressman would profess love in the CONGRESSIONAL RECORD, but in this situation, it comes very easy. I extend my love and congratulations to them both on their Golden Anniversary. f THE ADMINISTRATION’S FOREIGN POLICY RECORD HON. LEE H. HAMILTON OF INDIANA IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. HAMILTON. Mr. Speaker, Secretary of State Christopher testified on July 31, 1996, before the International Relations Committee. It is an appropriate time to review the adminis- tration’s foreign policy, and I would like to sub- mit for inclusion in the CONGRESSIONAL RECORD my opening remarks. OPENING STATEMENT BEFORE THE HOUSE INTERNATIONAL RELATIONS COMMITTEE (By Lee H. Hamilton) Mr. Secretary, welcome to the Committee. I look forward to your testimony. Since this may be one of the last times you testify be- fore this committee during the 104th Con- gress, I also want to commend you person- ally for your efforts, and foreign policy ac- complishments. These have not been the easiest four years. We have had a difficult time defining our in- terests since the end of the Cold War. The single overwhelming threat from the Soviet Union is gone, replaced by any number of threats, including ethnic conflict, weapons proliferation, drugs, rogue states and terror- ism. Amidst this difficult environment, I be- lieve the Administration has achieved a number of important foreign policy suc- cesses. They include reform in Russia, and Middle East peace. On the most difficult question\u2014U.S. inter- vention\u2014the President has made the tough calls and achieved tangible results: in Haiti and Bosnia, and on the financial side, in Mexico. Let’s face it: Without U.S. leader- ship during the past four years, thugs would be ruling Haiti, Bosnia would still be at war, and the Mexican economy would be in a free fall. We all know these successes are fragile; in today’s world, no foreign policy achieve- ment is permanent. But so far, so good. The Administration has also had impor- tant success in arms control: the permanent extension of the Nuclear Nonproliferation Treaty; the removal of all nuclear weapons from Ukraine, Kazakhstan and Belarus; and a freeze on North Korea’s nuclear program. The economic record is also impressive. The President has tied together economic and foreign policy as well as any Administra- tion in memory. During the first three years of the Administration, U.S. exports grew 31%. The U.S. economy has created a net 9 million new jobs since the Administration took office: Europe has lost 3 million jobs. The trade agreements initiated or concluded by the Administration have kept the world trading system open and unlocked new mar- kets for U.S. products\u2014with direct benefits for American consumers. Most important of all, the United States is at peace. That is not small achievement. You have unfinished business and some dif- ficult tests ahead of you: relations with China; the Comprehensive Test-Ban talks; next steps in Bosnia; and keeping the Middle East peace process on track. I am sure these questions will come up today. What impresses me most is that the Presi- dent has decided that America must lead. He has decided that protecting and promoting our interests requires American leadership. This comes at a time when there are strong voices and actions by the Congress to cut re- sources and the American presence overseas. As he showed at the recent G 7 summit in France, the President is a skilled and highly respected world leader. Mr. Secretary, I com- mend you, and the President, for your record of accomplishment. CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1433August 1, 1996 TRIBUTE TO A FLIER HON. WILLIAM (BILL) CLAY OF MISSOURI IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. CLAY. Mr. Speaker, bustling in the skies overhead\u2014airplanes and helicopters\u2014sat- ellites and spaceships\u2014dirigibles and some- times even UFO’s\u2014orbit the Earth in voyages of commerce, missions of mercy, and war, flights of fantasy and excursions of adventure and leisure. For centuries our ancestors had no paths through the clouds. Once, most thought man would never fly; that only birds might soar the kingdom of clouds and rainbows. Today pilots steer passengers through the clouds and across the starry skies because dreamers and thinkers and inventors held to a faith that someday man would navigate the heavens. Those who keep faith in their missions open new worlds and inspire us all to reach new heights. I would like to take this opportunity to share a little bit of the story of one of our Nation’s first black commercial airline pilots. Perry Jones is one of those faithful whose hard work, spirit, and dedication chartered a new course to the future. He is a model for young people who are pursuing dreams of flying and he is a model for older people who are searching out new rainbows when they retire from their life’s work. Mr. Speaker, Capt. M. Perry Jones is one of our Nation’s high flying heroes. LIFE AFTER RETIREMENT FOR CAPT. M. PERRY JONES On 16 December 94, Perry retired from Delta Airlines. Perry flew with Pan Amer- ican World Airways for 26 years and Delta Air Lines for three. Not only was Perry Pan Am’s first Black pilot and Captain, he was captain of the last Pan Am flight to depart London. Perry has been a member of OBAP since 1977 and has served as NE regional Vice President, President, and presently as Chair- man of the Board. Perry’s aviation career started in October, 1959. He served until December, 1965 in the USAF, first as a navigator and then as a pilot. He achieved the rank of Captain, flew over 100 missions over Vietnam, and received the air medal for valor. He has received many recognitions and awards including ”Outstanding Service” awards from Delta Air Lines, the National Naval Officers Asso- ciation (Pensacola, Florida), and Berlin American High School (Berlin, Germany). Perry has served as an ”Expert in Resi- dence,” keynote speaker, panelist, workshop presenter, university lecturer and presented testimony to the U.S. Congress. Topics have included: Flying Safety; The Air War in Vietnam; The Responsibilities of Being an American; Race in America; What’s Wrong with America? Your Triple ”A” Plan to Success; Wines; The Rise and Fall of Pan Am; Civilian Avia- tion and Training Programs; Minorities in Aviation; The Red Cross in Vietnam; Bessie Coleman, An American Heroine; and Willa Brown-Aviatrix. Perry’s advice to those retiring is ”just enjoy every minute.” His retirement plans include some consultant work and skiing. However, Perry is as busy as ever flying again with Delta as flight engineer. Con- gratulations and Best Wishes to Captain M. Perry Jones. Enjoy your retirement. OBAP appreciates your hard work and dedication. TRIBUTE TO KEN MOFFETT HON. JANE HARMAN OF CALIFORNIA IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Ms. HARMAN. Mr. Speaker, as a product of K through 12 public schooling in Los Ange- les, I can testify it works. It certainly did for me. But virtually every school in the Los Angeles Unified School System\u2014including those I at- tended\u2014could work better. And they must, if every kid is to get every chance to succeed. An extraordinary public school administrator who transformed Lennox schools into safe, at- tractive, graffiti-free havens for some of Los Angeles County’s poorest children has just re- tired. I would like to share with my colleagues an excellent article about a visionary educator and friend, Ken Moffett, whose leadership will be sorely missed: [From the Daily Breeze, July 28, 1996] TO SIR, WITH LOVE\u2014LENNOX SCHOOLS SAY GOODBYE TO SUPERINTENDENT (By Marie Montgomery) The Ken Moffett era in the Lennox School District is drawing to a close this week. Not too many school superintendents qual- ity to have an era named after them. Then again, not too many have a school named after them while they’re still alive, and it’s unusual to find one who has worked in the same district for almost 20 years. Moffett, 61, has done all that and more since coming to Lennox in 1976. On Wednesday night, the Manhattan Beach resident will walk out the door of his district headquarters and leave his superintendent title behind him. He is retiring to become an education professor at Pepperdine University this fall. He’ll also head the university’s ad- ministrative training program. Bruce McDaniel, the district’s assistant su- perintendent for business who has worked with Moffett for more than 10 years,will take over the Lennox superintendent post this week. ”I wanted to leave on a positive note, and I’m doing that,” Moffett said, ”I’d like to leave without people’s hands pushing in the middle of my back.” That was hardly likely given that Moffett was named National Superintendent of the Year in 1994. But retiring now gives him a chance to pursue a second career in aca- demia\u2014one which may help create many more ”Moffett trainees” to go out and run California’s schools. ”Ken, for us exemplifies the outstanding qualities needed by a leader to take schools into the 21st century. . . . We’re very fortu- nate to get him,” said Terrence Cannings, associate dean for education at Pepperdine. ”He brings such a wealth of experience to anyone in today’s tumultuous educational environment, and he has the ability to com- municate that background to prospective teachers and administrators.” Among Moffett’s accomplishments at Len- nox: He transformed district campuses into safe, attractive, graffiti-free havens for some of Los Angeles County’s poorest children. He helped convince the state in 1985 to give his district $8.2 million to buy Lennox High School from the Centinela Valley Union High School District, refurbish it for $2.7 million provided by the state, and convert it to Lennox Middle School. He fought state and federal governments in the 1970s and 1980s for the right to build a new elementary school on land the district owned directly in the flight path of Los An- geles International Airport, and then got the state to kick in money to build the school underground and soundproof it. Kenneth Moffett Elementary School opened in 1990. The same year he won the national super- intendent’s title\u2014a first for a California su- perintendent\u2014he also was given the Marcus Foster Award, named for the Oakland schools chief assassinated by the Symbionese Liberation Army. Lennox School District was one of the first in the South Bay to join the computer revo- lution, with the district schools already wired for classroom use of the Internet. Teacher salaries in Lennox are the highest in the county, so the district can attract and keep qualified employees. Glowing accolades are about all anyone will hear about Moffett. His employees praise his enthusiasm and hard work. Colleagues in other South Bay districts stand in awe of his ability to com- municate with everyone in the Lennox com- munity, even gang members. And the direct beneficiaries of his work\u2014Lennox students\u2014 know their superintendent by name a rarity in most other districts. ”He’s Mr. Lennox to me,” said school board member Mary Davis who has worked with Moffett for 10 years. ”Before I got on the board, I said to myself, ‘Who is this man? They think of him like God.’ Then when I got to know him, I realized he can talk to anybody and associate wit anybody. Children come first for him. I can’t say anything bad about this man.” El Segundo Unified School District Super- intendent Bill Manahan said Moffett has al- ways been generous with a sympathetic ear and advice for other administrators. ”If there is anyone I could emulate, it would be Ken Moffett.” Manahan said. ”He just has such a sense of love for the commu- nity, for the kids. It goes beyond the kids\u2014 he cares about the families, too.” Moffett made a point of visiting every classroom in his district, every year. He ex- pected all his teachers and administrators to help give extra treats and incentives to stu- dents such as trips to a Dodgers game or a restaurant, and he pitched in with those du- ties too. About the only time in Moffett’s super- intendent career that wasn’t rosy was when he resigned briefly in 1986 to take the top job at the ABC Unified School District in east Los Angeles County. He had a frustrating 15 months, caught in the middle of district politics. When he de- cided to apply to return to Lennox because the school board still hadn’t filled his old post, he was criticized by some for missing the application deadline and getting rehire anyway. But Hector Carrio, a board member who initially voted against rehiring Moffett, is now one of his big fans. ”I feel he is one of the most outstanding human beings,” said Carrio, who worked with Moffett in 1970 at Monroe Junior High School in Inglewood when Moffett was a principal and Carrio was a teacher. ”Under his leadership, we have only one concern\u2014 the students. It’s our main concern and the rest doesn’t count for us.” Moffett came to Inglewood from Western Washington State College in 1957, originally intending to teach for one year and then at- tend law school. He never made it. After teaching English and physical education at Crozier Junior High School and working at a school for chil- dren of the U.S. military in Germany, he be- came an Inglewood administrator and then was hired by Lennox. Situated in one of the poorest inner-city areas in California, the Lennox district CONGRESSIONAL RECORD \u2014 Extensions of RemarksE1434 August 1, 1996 houses 6,000 mainly Latino students. The vast majority speak a language other than English at home. But the district is re- nowned because of its success in creating English-fluent students. ”The thing I’m most proud of is that we created an attitude that all kids could learn, that they all could get along,” Moffett said. ”We created a model where we showed it could happen.” Moffett now hopes to spend more time with his wife, who teaches in Torrance, and with his two grown children\u2014one at West Point and the other in Idaho, training in the ”fam- ily business” to become a teacher. And he wants to take a few more vacations and travel\u2014although his idea of a relaxing vacation is building a redwood deck on his cabin in the mountains. ”I like to be busy, and I’m going to stay busy,” he said. ”But I won’t be gone for home six nights a week.” f KOVATCH GROUP CELEBRATES 50 YEARS IN BUSINESS HON. PAUL E. KANJORSKI OF PENNSYLVANIA IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. KANJORSKI. Mr. Speaker, I rise today to pay tribute to my close personal friends, Mr. John J. ”Sonny” Kovatch and his brother, Jo- seph. This month, their success as business leaders will be celebrated along with the 50th anniversary of their company, the Kovatch Group. A 3-day celebration of the Kovatch Group will begin tomorrow, and I am proud to be able to participate in these festivities. In 1946, Sonny and Joseph began a small business dedicated to providing first-rate spe- ciality motor vehicles. Fifty years later, the Kovatch Group has grown into a network of 13 different companies which work together to manufacture and service speciality vehicles used all around the world. It is with great pride that I say that the inter- national headquarters for the Kovatch Group is located in Nesquehoning, PA, in my con- gressional district. The complex sprawls over 65 acres and has over one-half million square feet under roof. More than 700 employees uti- lize a state-of-the-art computerized and auto- mated assembly line to manufacture special- ized vehicles designed to meet very specific needs of the Federal Government, military or- ganizations, search and rescue crews, and heavy industry. Having established a reputation for first-rate vehicles of the highest caliber, the Kovatch business organization grew dramatically since its establishment 50 years ago. In the mid- 1980’s, Kovatch was selected to construct highly specialized vehicles for the U.S. mili- tary. When Kovatch completed the contract nearly 1 year ahead of schedule, the company became known worldwide, and orders for vehi- cles were regularly submitted to the company from every division of the U.S. military, numer- ous foreign governments, and private busi- nesses from around the world. Today, Kovatch is considered the manufacturer of choice for military refueling trucks and firefighting appa- ratus. Whether we realize it or not, most of us have seen the vehicles produced by the Kovatch Co. Chances are the brave men and women responding to local emergencies utilize the rescue trucks, ambulances, pumpers, tankers, and aerial ladder trucks manufactured by Kovatch employees. The company can boast of having provided specialized vehicles to government agencies, volunteer fire and rescue teams, and private businesses from Eastport, ME, to Fairbanks, AK. During the last decade, the Kovatch organi- zation has experienced tremendous success because it has sought to integrate qualified workers with innovative engineering and mod- ern manufacturing techniques. Together, Sonny and Joe have shown me that there really is no substitute for quality products de- signed and manufactured by American work- ers. Mr. Speaker, I am not alone in recognizing the leadership of Kovatch Group for its suc- cess. Last year, Sonny was selected as the 1995 Master Entrepreneur of the Year for central Pennsylvania by a consortium of lead- ing businesses including Ernst and Young, Sprint, and Merrill Lynch. Sonny was chosen for this award based on his ability to ensure continued success for the Kovatch Group over an extended period of time. Given that Sonny has been at the helm of the Kovatch Group since its founding 50 years ago, and has guid- ed the company through both good and bad economic times, he is truly deserving of this award and recognition. Mr. Speaker, I am proud to highlight the ac- complishments of my good friends, Sonny and Joe Kovatch. The work of these business leaders is an example of the true entre- preneurial spirit that has made our country the greatest Nation in the world. Sonny and Joe have proven that hard work and ingenuity are the key ingredients of success. I am proud to join with their families, friends, and the com- munity in congratulating the Kovatch brothers on their many successes. f IN HONOR OF LIAM BENSON: MAK- ING A DIFFERENCE TO HIS COM- MUNITY HON. ROBERT MENENDEZ OF NEW JERSEY IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. MENENDEZ. Mr. Speaker, I rise today to pay tribute to an outstanding individual, Mr. Liam Benson, who has distinguished himself through uncommon dedication to the children of Northern Ireland. Mr. Benson, along with his wife Margaret, are again donating their serv- ices to the annual luncheon I will be hosting for the adopted families of Project Children. Their restaurant, O’Donoghues, is located at 205 First Street, Hoboken, NJ. The word ”tradition” comes to mind when speaking of this truly dedicated person. For the past 3 years, Mr. Benson has graciously afforded the children who come to the United States from Northern Ireland, along with their host families, an opportunity to meet and share their experiences in the United States. While in our country, the children have the possibility to sample a life without the threat of violence prevalent in their homeland. Mr. Ben- son, through his Irish heritage, has an unique understanding of the true value of peace and freedom. Mr. Benson’s journey to become a commu- nity member of my district began with his birth in County Mayo, Ireland. This son of the Em- erald Isle traveled across the Atlantic Ocean 12 years ago in search of new horizons to ex- plore. Mr. Benson arrived on our shores in New York City where he went to work in a neighborhood bar. Two years later, Mr. Ben- son’s journey led him to Hoboken and the es- tablishment of his own place of business, O’Donoghue’s Bar and Restaurant. A genu- inely modest gentleman, Mr. Benson chose to name his new establishment after a famous bar with the same name located in Dublin, Ire- land. Major themes that have resonated in the life of Mr. Benson have been community and fam- ily. For the residents of Hoboken, O’Donoghue’s has become a friendly oasis in the life of this bustling urban center. The sense of community experienced by visitors who enter this local institution makes everyone feel like they are members of the Benson fam- ily. When it came time to think about starting a family, Mr. Benson married a women named Margaret who became his partner in life. In 1995, their joyful union produced a son, also named Liam, who will undoubtedly one day carry on the tradition of community service. It is an honor to have such an extraor- dinarily considerate individual operating a business in my district. Mr. Liam Benson ex- emplifies the tremendously positive influence one person can have on the lives of others. I am certain my colleagues will rise with me and honor this remarkable gentleman. f TRIBUTE TO THE AMERICAN AUTOMOBILE CENTENNIAL HON. SANDER M. LEVIN OF MICHIGAN IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. LEVIN. Mr. Speaker, this year is the Centennial of automobile production in Amer- ica. At a gala held on June 22, 1996, the Mayor of Detroit, Dennis Archer, spoke eloquently about the impact of the automotive industry, of the role of management and labor in its devel- opment, and of the place it carved out for De- troit in this Nation’s and the global economy. It is my pleasure to insert his prepared re- marks in the CONGRESSIONAL RECORD. AMERICAN AUTOMOBILE CENTENNIAL GALA, SATURDAY, JUNE 22, 1996 Thank you very much, distinguished head table guests, ladies and gentleman. I want to thank Keith Crain, who shortly after I be- came mayor, came by the office and said, ”In about two years, we’re going to be celebrat- ing 100 magnificent years of the automobile, and I think we ought to do something about it.” I said, ”Keith, you’re absolutely right. Thanks for being my next dollar-a-year guy. Would you please take charge of it, and by the way, I want you to work with my point person, Maud Lyon, who is the city’s direc- tor of the Historical Museum.” Keith, you and Maud came together with everybody to make this happen. It wasn’t just you that could create this beautiful room with all of these magnificent people who are here, but the sponsors\u2014those of you who gave and contributed generously, and to the committee, I want to say thank you very much. Second, I am pleased to bring a message from a friend that I was with earlier today in CONGRESSIONAL RECORD \u2014 Extensions of Remarks E1435August 1, 1996 Cleveland Ohio, as the United States Con- ference of Mayors was meeting. He writes: ”I am delighted to join my fellow Ameri- cans in observing June 16 23 as National American Automobile Centennial Week. More than any other invention in the past century, the automobile has shaped and de- fined America. Even as it has helped our na- tion to grow, the car has brought people closer together, advancing commerce and communication, and connecting our cities, suburbs and small towns on an intricate web of highways and roads. In the 100 years since the production of the first motor wagons, the automobile industry has become a source of pride for Americans and an inspiration for entrepreneurs around the globe. ”The car is now an inseparable part of our culture. Our poets, our songwriters speak of the joys of the open road. And for millions of us, the automobile embodies America’s free- doms of mobility and expression. This week offers us a special opportunity to honor the pioneers of automotive engineering and the automotive workers who helped build this remarkable industry and make the American dream of a better life come true. ”As we celebrate the remarkable auto- motive achievements of our past, let us sa- lute, as well, the work of the engineers who are developing the next generation of vehi- cles\u2014the cars we will be driving in the 21st century. These dreamers and doers are con- tinuing a legacy of progress: innovation, em- ployment and competitiveness that have marked America’s automobile industry since its birth 100 years ago. ”Best wishes to all for a wonderful Centen- nial Celebration and a memorial week.”\u2014 President Bill Clinton. Next, and finally, I would like to ask Rob- ert J. Eaton, Chief Executive Officer, Chrys- ler Corporation; Carolyn Forrest, Vice Presi- dent, International Union, UAW; John F. Smith, Jr., Chairman, CEO & President, Gen- eral Motors Corporation; and Alex Trotman, Chairman and CEO, Ford Motor Company, if you would join me here at the podium. The United States automobile industry celebrates its 100th anniversary this year, and it is only fitting that Detroit, the world’s motor capital, serves as a national headquarters for this historic event. From June 16 23, Detroit will showcase one of the largest gatherings of antique and classic automobiles ever, along with the most spec- tacular automotive parade in a half century. As the birthplace of the global automobile industry, Detroit acknowledges its legacy as a city that profoundly shaped the American lifestyle and changed the culture of the 20th century. Appropriately nicknamed ”The Motor City,” Detroit sparked a century-long love affair with the automobile. Detroit is also home to three of the largest employers in southeast Michigan. Ford Motor Com- pany, Chrysler Corporation, General Motors Corporation, and the UAW. This celebration is a tribute to the inven- tors, engineers, entrepreneurs and the work- ers who made the auto industry great. The strength of our society relies, in part, on the advances made in technology. From innova- tions in manufacturing to design and devel- opment of alternative fuels, the auto indus- try has enriched the lives of all Americans and made our fine city’s name synonymous with automobiles. As communities across the United States throughout 1996 are uniting to celebrate this milestone in our nation’s history, I salute the American Automobile Centennial Com- mission along with its four sponsors, Chrys- ler, Ford, General Motors, and the UAW for its efforts to create a year-long commemora- tion of this special occasion. The metropoli- tan Detroit area marks this historic anniver- sary with exhibits and displays, celebrity ap- pearances and ceremonies. Therefore, I Dennis Archer, Mayor of the City of Detroit, issue this proclamation in celebration of the 100th anniversary of the United States automobile industry. I urge all residents to embrace and celebrate this vital part of Detroit’s history. f SUOMI COLLEGE CENTENNIAL CELEBRATION HON. BART STUPAK OF MICHIGAN IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. STUPAK. Mr. Speaker, I want to bring to the attention of the U.S. House of Rep- resentatives and this Nation the 100th anniver- sary of Suomi College, located in Hancock, MI, a small community of about 4,000 people on the Keweenaw Peninsula in Michigan’s Upper Peninsula. The celebration of this event will occur this weekend, August 3 4, 1996. Named for its founders’ homeland and herit- age, Suomi College was an outgrowth of the need for higher education for the sons and daughters of the hardy Finnish immigrants that settled in Michigan’s Upper Peninsula, espe- cially Hancock. They were quick to realize that education was a key to improving quality of life in their adopted country and wanted to make this opportunity available to all young men and women. At the same time, there was a strong desire to retain the proud ethic herit- age that was brought with them, as well as the religious influence of the Lutheran Church. It was out of this framework that Suomi College was founded in 1896. Suomi College proved early on to be highly innovative by offering scholarships, work op- portunities, loans and other support services to students. It is a college that in its early years often saw gifts and tuition payments come, not as cash, but as contributions of food, firewood, books and building materials. The school struggled financially in the early 1900’s, but never lost sight of its stated mis- sion of providing a quality education. As money was raised in the 1930’s for expansion and to provide financial assistance, the Great Depression forced these funds to be rechan- neled to pay for daily operating expenses. In the 1940’s, enrollment and revenues started to significantly increase only to be halted again with the start of World War II. Regardless of these and other setbacks, leaders of the school, such as Viljo K. Mikander, who served as president of Suomi during their 50th anni- versary, provided the encouragement to con- tinue, even to the point of suggesting the school expand to a 4-year college of liberal arts. It is the belief in the institution and its mis- sion by its current and past administrations, faculty, students and supporters that have al- lowed it to get through the tough times and become the progressive, innovative and grow- ing college it is today. Suomi College is estab- lishing an outstanding record and providing excellent opportunities for its students. Today, thousands of Suomi alumni are present in every walk of life and in every area of the country with more than 1,600 area resi- dents alone having graduated or completed courses at Suomi. Suomi graduates are lead- ers in law, religion, medicine, administration and many other fields and all have as a basis of their education in their course work done at Suomi, nurtured in the Finnish heritage. Liberal arts and humanities serve as a mainstay for this small, personalized, church- related college. Math and science are also strongly encouraged in any curriculum. To date, Suomi has been a 2-year community college granting associate degrees. However, beginning this fall, a new 3-year baccalaureate degree will be offered, again demonstrating the innovative thought that Suomi is known for. A 3-year degree obtained over eight con- secutive semesters significantly reduces costs and provides greater efficiency and applicabil- ity of courses taken and quickly moves young people into the workforce. The Suomi College Centennial Celebration this weekend will be highlighted by several events including the groundbreaking ceremony for its new chapel and library expansion. In at- tendance for this event will be Archbishop John Vikstrom of the Evangelical Lutheran Church of Finland as well as Presiding Bishop H. George Anderson of the Evangelical Lu- theran Church of America and Bishop Dale Skogman of the Northern Great Lakes Synod. Mr. Speaker, the 100-year history of Suomi College will serve the institution well in its sec- ond century as it continues to serve the Upper Peninsula and this Nation. On behalf of the First Congressional District, the State of Michi- gan and the House of Representatives, I con- gratulate President Robert Ubbelohde, his staff, the faculty, the student body and the Hancock community on this momentous occa- sion. f TRADE FREE ZONE IN THE NORTH OF IRELAND HON. BENJAMIN A. GILMAN OF NEW YORK IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. GILMAN. Mr. Speaker, a bill (H.R. 3599) which aims to help address some of the eco- nomic deprivation in Northern Ireland and the Republic of Ireland’s six border countries was proposed here in the House on June 6, 1996. I was pleased to be an original cosponsor of this important proposal by my good friend\u2014 Representative THOMAS MANTON, of New York. In light of the current outbreak of turmoil in Northern Ireland the introduction of such a proposal aimed at economic improvement and change, has become even more crucial today. Our bill (H.R. 3599) concerns the potential establishment of a free trade agreement be- tween the United States and the United King- dom and the Republic of Ireland, which gov- erns the aforenamed areas. It provides author- ity for the President to negotiate such a treaty, consistent with the goals and policies of the European Union. Indeed, it is envisaged that a strengthened economy in Northern Ireland and the affected border countries would help facilitate the pre- carious peace process which has become most imperative in light of the recent outbreak of sectarian violence in Northern Ireland. The bill will not solve all of the region’s many difficult problems, but it can greatly con- tribute toward a long-term shared economic strategy, which will be of mutual benefit to workers in the North of Ireland and American CONGRESSIONAL RECORD \u2014 Extensions of RemarksE1436 August 1, 1996 companies as well. It would help create a shared economic development, greatly needed in the current times of turmoil. Most notably the proposals have been wel- comed by a diversity of groups both in Ireland and the United States. Dr. John Alderdice, leader of the Alliance Party believes that the bill could ”help underpin political agreement.” His voice is joined by Hon. Dr. Joe Hendron, MP, member of Social Democratic and Labour Party [SDLP], who stated that such an incen- tive could help ”bring a new day to Northern Ireland.” Hon. Cecil Walker, MP, member of the Ulster Unionist Party [UUP] has also lent his support, believing the bill to be ”one of the most promising economic development pro- posals on the horizon for my beleaguered part of Northern Ireland.” In addition, Fr. Sean McManus of the Irish National Caucus, Inc. in Washington, DC, Senator Sean Maloney and Senator Patrick McGowan of the Republic of Ireland, have all welcomed this trade free zone legislation. Importantly, the proposals are aimed at im- proving the most economically disadvantaged regions of the North of Ireland, through the condition that only articles grown, produced, or manufactured in such areas will qualify for this proposal duty-free treatment. Those employers who seek to take advantage of the incentive must also be in compliance with the principles of economic justice dealing with fair employ- ment, namely the MacBride Principles. The widespread enthusiasm for the trade free zone among the parties of Northern Ire- land and many others, is indeed proof that agreement can be reached, if the Government of the United States, Britain, and the Republic of Ireland are willing to take advantage of the opportunity H.R. 3599 provides. Although the arduous path of political compromise and solu- tion has yet to be forthcoming in Northern Ire- land today, increased economic prosperity in the region would help lay the foundation of goodwill and trust, which are required now more than ever. f UNITED STATES POLICY TOWARD SAUDI ARABIA HON. JIM KOLBE OF ARIZONA IN THE HOUSE OF REPRESENTATIVES Thursday, August 1, 1996 Mr. KOLBE. Mr. Speaker, I found this article by Mr. David Dunford in the Tucson Citizen to provide an illuminating analysis of the United States policy toward Saudi Arabia. I commend it to your attention: [From the Tucson Citizen, June 28, 1996] UNITED STATES ASKS TOO MUCH OF SAUDIS, WHO SACRIFICE PEACE AT HOME (By David J. Dunford) Tuesday’s terrorist bombing in the Eastern Province of Saudi Arabia, which killed 19 Americans and wounded hundreds of others, forces us to focus again on our critical rela- tionship with Saudi Arabia. It is critical because Saudi Arabia is the world’s largest oil producer and the United States is the world’s largest oil consumer. It is critical because Saudi Arabia is the most important of the Arabian peninsula monar- chies and provides the major platform from which we project our military forces to de- fend against Iraqi and Iranian threats to our interests. Since the successful end of the 1990 91 Gulf War, our policy toward this part of the world has been on automatic pilot. We look to Saudi Arabia to take a forthright stand in favor of the Middle East peace process and we look to Saudi Arabia to provide assist- ance to the Palestinians and the Bosnians which our Congress refuses to provide. We also look to Saudi Arabia to buy our civilian and military airplanes and our telecommuni- cations equipment. Although we pledged in 1990 that as soon as the crisis was over, we would leave, almost six years later we still have 5,000 U.S. Air Force personnel in Saudi Arabia. The Saudi government pays their ex- penses. What we have failed to recognize is that Saudi Arabia has changed and, as a result, the Saudi monarchy may no longer be able to respond to the multiple demands that we place on it. Gone are the days when Saudi Arabia had $150 billion in foreign exchange reserves and the ability to buy social peace by providing employment and subsidized government services for all. Saudi Arabia today, with its rapid popu- lation growth, educated but underemployed youth, and chronic budget deficits, provides fertile ground for Islamic militants. While we may not know for some time who was responsible for Tuesday’s bombing, it is likely that it was related to the bombing of the American military advisory compound in Riyadh in November, which killed five Amer- icans. The message the militants seek to send by this latest terrorist act is that the Saudi government’s beheading last month of four of their number convicted of involve- ment in the November incident has not weakened their strength or resolve. Ironically, it may well be that some of the militants are so-called ”Afghans”\u2014Arabs who trained to fight the Soviets in Afghani- stan in a program supported by both the Saudi and U.S. governments. The militants oppose modernization, Westernization and Arab reconciliation with Israel. They are particularly indignant that, despite tens of billions of dollars spent on sophisticated weaponry, the Saudi government was forced in 1990 to rely on ”infidel” troops to defend their land, which includes the two holiest places in Islam\u2014Mecca and Medina. The first step in fixing our Saudi policy is to confirm an ambassador and send him to Riyadh. King Fahd’s recent illness and his decision to relinquish power temporarily to Crown Prince Abdullah have raised uncer- tainty about who is really in charge. It is particularly important to have an ambas- sador on the ground to monitor this situa- tion. During my four years as deputy ambas- sador in Saudi Arabia, I was acting ambas- sador for 15 months. Since I left more than four years ago, there has been an ambassador in Riyadh for less than half of that time. It should hardly surprises us that there was no ambassador on the ground when the truck bomb exploded on Tuesday. Second, we should reduce our reliance on Saudi help financing our national security policy and we should be more judicious about pressing the Saudis to take public positions that incur the wrath of a substantial per- centage of Saudi citizens. The Saudi govern- ment needs a reprieve to turn its attention to domestic economic and political prior- ities. Third, we need to devise an end game for our Iraq policy. We must not withdraw our forces in Saudi Arabia under the duress of terrorism but, at the same time, policy drift is not a good reason to leave them there in- definitely. Finally, we need to be more proactive in our encouragement of needed economic and political change in Saudi Arabia and in neighboring monarchies. Change is hard and Gulf rulers will not always welcome our in- jection of internal issues into diplomatic ex- changes. That should not deter us. Their survival and the maintenance of our vital interests in the region depend on or- derly change. D857 Thursday, August 1, 1996 Daily Digest HIGHLIGHTS See Re\u0301sume\u0301 of Congressional Activity. Senate passed Personal Responsibility Act Conference Report. House agreed to Health Care Reform Conference Report. House agreed to Agriculture Appropriations Conference Report. House agreed to Military Construction Appropriations Conference Re- port. House agreed to DOD Authorization Conference Report. House agreed to District of Columbia Appropriations Conference Report. House agreed to Legislative Branch Appropriations Conference Report. House passed English Language Empowerment Act. Senate Chamber Action Routine Proceedings, pages S9321 S9453 Measures Introduced: Eight bills and one resolu- tion were introduced, as follows: S. 2009 2016, and S. Res. 286. Page S9428 Measures Reported: Reports were made as follows: Special Report on Revised Allocation to Sub- committees of Budget Totals from the Concurrent Resolution for Fiscal Year 1997. (S. Rept. No. 104 347) H.R. 2464, to amend Public Law 103 93 to pro- vide additional lands within the State of Utah for the Goshute Indian Reservation. (S. Rept. No. 104 348) S. 199, to repeal certain provisions of law relating to trading with Indians. (S. Rept. No. 104 349) S. 1952, to amend the Juvenile Justice and Delin- quency Prevention Act of 1974. Page S9428 Budget Reconciliation\/Personal Responsibility Act Conference Report: By 78 yeas to 21 nays (Vote No. 262), Senate agreed to the conference re- port on H.R. 3734, to provide for reconciliation pur- suant to section 201(a)(1) of the concurrent resolu- tion on the budget for fiscal year 1997. Pages S9322 34, S9337 41, S9344 47, S9352 S9415 Nominations Received: Senate received the follow- ing nominations: Kevin L. Thurm, of New York, to be Deputy Sec- retary of Health and Human Services. Arthur I. Blaustein, of California, to be a Member of the National Council on the Humanities for a term expiring January 26, 2002. Ida L. Castro, of New York, to be Director of the Women’s Bureau, Department of Labor. Donna Holt Cunninghame, of Maryland, to be Chief Financial Officer, Corporation for National and Community Service. Regina Markey Keeney, of Virginia, to be a Mem- ber of the Federal Communications Commission for a term of five years from July 1, 1995. Brigadier General Robert Bernard Flowers, United States Army, to be a Member and President of the Mississippi River Commission, under the provisions of Section 2 of an Act of Congress, approved June 1879 (21 Stat. 37) (33 USC 642). Rose Ochi, of California, to be Director, Commu- nity Relations Service, for a term of four years. Pages S9452 53 Nomination Withdrawn: Senate received notifica- tion of the withdrawal of the following nomination: Joaquin F. Otero, of Virginia, to be an Assistant Secretary of Labor, which was sent to the Senate on February 20, 1996. Page S9453 Messages From the House: Page S9426 Measures Referred: Page S9426 Measures Placed on Calendar: Page S9426 CONGRESSIONAL RECORD \u2014 DAILY DIGESTD858 August 1, 1996 Communications: Pages S9426 28 Executive Reports of Committees: Page S9428 Statements on Introduced Bills: Pages S9428 38 Additional Cosponsors: Pages S9438 39 Notices of Hearings: Page S9439 Authority for Committees: Page S9440 Additional Statements: Pages S9440 52 Record Votes: One record vote was taken today. (Total\u2014262) Page S9415 Adjournment: Senate convened at 9:30 a.m., and adjourned at 9:13 p.m., until 10:30 a.m., on Friday, August 2, 1996. (For Senate’s program, see the re- marks of the Majority Leader in today’s Record on page S9452.) Committee Meetings (Committees not listed did not meet) APPROPRIATIONS\u2014COMMERCE\/JUSTICE\/ STATE Committee on Appropriations: Committee ordered favor- ably reported, with amendments, H.R. 3814, mak- ing appropriations for the Departments of Com- merce, Justice, and State, the Judiciary, and related agencies for the fiscal year ending September 30, 1997. BOSNIA MISSION Committee on Armed Services: Committee held hearings to examine United States participation in the NATO Implementation Force Mission in Bosnia, receiving testimony from Walter B. Slocombe, Under Sec- retary of Defense for Policy; Rear Adm. Charles W. Moore, Jr., USN, Deputy Director of Operations, Joint Staff; and Lt. Gen. Patrick M. Hughes, USA, Director, Defense Intelligence Agency. Hearings were recessed subject to call. AVIATION SECURITY Committee on Commerce, Science, and Transportation: Committee held hearings on proposals to develop and implement aviation security measures, receiving testimony from Senators Cohen, Campbell, and Lau- tenberg, Representative Burton; Federico Pen\u0303a, Sec- retary, and David R. Hinson, Administrator, Federal Aviation Administration, both of the Department of Transportation; Keith O. Fultz, Assistant Comptrol- ler General, and John K. Harper, Assistant Director, both of the Resources Community and Economic Development Division, General Accounting Office; Edward A. Merlis, Air Transport Association, and David Plavin, Airports Council International North America, both of Washington, D.C.; Morris Busby, DGI Incorporated, Arlington, Virginia; and Richard Everitt, BAA plc, London, England. Hearings were recessed subject to call. EMERGENCY TIMBER SALVAGE Committee on Energy and Natural Resources: Committee held hearings to examine the Secretary of Agri- culture directive to the Forest Service concerning the implementation of the emergency timber salvage program, designed to respond to the widespread for- est fires of 1994, as authorized in section 2001 of Public Law 104 19, Omnibus Appropriations and Rescissions Act, receiving testimony from Daniel R. Glickman, Secretary, James R. Lyons, Under Sec- retary, and Jack Ward Thomas, Chief, Forest Service, all of the Department of Agriculture. Hearings were recessed subject to call. PROPRIETY OF A COMMERCIAL LEASE Committee on Energy and Natural Resources: Sub- committee on Oversight and Investigations con- cluded oversight hearings to review the propriety of a commercial lease issued by the Bureau of Land Management at Lake Havasu, Arizona, including its consistency with the Federal Land Policy and Man- agement Act and Department of the Interior land use management policies, after receiving testimony from Edward B. Cohen, Deputy Solicitor, Depart- ment of the Interior; and Mat Millenbach, Deputy Director, Joe Liebhauser, Havasu Resource Area Manager, and Rich Greenfield, Phoenix, Arizona Field Solicitor, all of the Department of the Interior. NOMINATIONS Committee on Environment and Public Works: Commit- tee ordered favorably reported the nominations of Nils J. Diaz, of Florida, and Edward McGaffigan, Jr., of Virginia, each to be a Member of the Nuclear Regulatory Commission. U.S. FOREIGN POLICY Committee on Foreign Relations: Committee concluded hearings to review the role for the United States in the world and other foreign policy issues, after re- ceiving testimony from Warren Christopher, Sec- retary of State. BUSINESS MEETING Committee on the Judiciary: Committee ordered favor- ably reported the following bills: S. 1952, authorizing funds for fiscal years 1997 through 2000 for programs of the Juvenile Justice and Delinquency Prevention Act; and S. 982, to develop safeguards to protect the na- tional information infrastructure, with an amend- ment in the nature of a substitute. CONGRESSIONAL RECORD \u2014 DAILY DIGEST D859August 1, 1996 TERRORISM Select Committee on Intelligence: Committee held hear- ings on the threat of terrorism in the United States, focusing on recent terrorist incidents, U.S. policy re- sponse to terrorism, and the role of the U.S. intel- ligence community, receiving testimony from Louis J. Freeh, Director, and Robert M. Bryant, Assistant Director, National Security Division, both of the Federal Bureau of Investigation, Department of Jus- tice; Caspar Weinberger, former Secretary of De- fense; and James R. Schlesinger, former Director of Central Intelligence. Committee recessed subject to call. h House of Representatives Chamber Action Bills Introduced: 13 public bills, H.R. 3936 3948; 1 private bill, H.R. 3949; and 5 resolutions, H. Con. Res. 206 207, and H. Res. 504 506 were introduced. Pages H9705 06 Reports Filed: Reports were filed as follows: Conference report on H.R. 3448, to provide tax relief for small businesses, to protect jobs, to create opportunities, and to increase the take home pay of workers (H. Rept. 104 737); H. Res. 502, waiving points of order against the conference report to accompany, H.R. 3103, to amend the Internal Revenue Code of 1986 to im- prove portability and continuity of health insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medi- cal savings accounts, to improve access to long-term care services and coverage, to simplify the adminis- tration of health insurance (H. Rept. 104 738); H. Res. 503, waiving points of order against the conference report to accompany H.R. 3448, to pro- vide tax relief for small businesses, to protect jobs, to create opportunities, to increase the take home pay of workers, to amend the Portal-to-Portal Act of 1947 relating to the payment of wages to employees who use employer owned vehicles, and to amend the Fair Labor Standards Act of 1938 to increase the minimum wage rate and to prevent job loss by pro- viding flexibility to employers in complying with minimum wage and overtime requirements under the Act (H. Rept. 104 739); Conference report on H.R. 3845, making appro- priations for the government of the District of Co- lumbia and other activities chargeable in whole or in part against revenues of said District for the fiscal year ending September 30, 1997 (H. Rept. 104 740); Conference report on S. 1316, to reauthorize and amend title XIV of the Public Health Service Act (commonly known as the ”Safe Drinking Water Act” (H. Rept. 104 741); H.R. 3378, to amend the Indian Health Care Im- provement Act to extend the demonstration program for direct billing of Medicare, Medicaid, and other third party payers (H. Rept. 104 742 Part I); and H. Res. 507, waiving points of order against the conference report to accompany S. 1316 to reauthor- ize and amend title XIV of the Public Health Serv- ice Act, commonly known as the ”Safe Drinking Water Act” (H. Rept. 104 743); and H. Res. 508, providing for consideration for a cer- tain motion to suspend the rules (H. Rept. 104 744). Pages H9568 H9703, H9704 05 Committees to Sit: The following committees and their subcommittees received permission to sit today during proceedings of the House under the 5-minute rule: Agriculture, Banking and Financial Services, Commerce, Economic and Educational Opportuni- ties, Government Reform and Oversight, Inter- national Relations, Judiciary, Resources, Science, Small Business, Transportation and Infrastructure, and Select Intelligence. (See next issue.) Order of Business: It was made in order that at any time to consider a conference report to accom- pany the bill H.R. 3754, that all points of order against the conference report and against its consid- eration be waived, and that the conference report be considered as read when called up. (See next issue.) Legislative Branch Appropriations: By a yea-and- nay vote of 397 yeas to 22 nays, Roll No. 386, the House agreed to the conference report on H.R. 3754, making appropriations for the Legislative Branch for the fiscal year ending September 30, 1997. (See next issue.) Agriculture Appropriations: By a yea-and-nay vote of 379 yeas to 42 nays, Roll No. 387, the House agreed to the conference report on H.R. 3603, mak- ing appropriations for Agriculture, Rural Develop- ment, Food and Drug Administration, and Related CONGRESSIONAL RECORD \u2014 DAILY DIGESTD860 August 1, 1996 Agencies programs for the fiscal year ending Septem- ber 30, 1997. (See next issue.) H. Res. 496, waiving points of order against the conference report to accompany H.R. 3603, was laid on the table. (See next issue.) English Language Empowerment: By a recorded vote of 259 ayes to 169 noes, Roll No. 391, the House passed H.R. 123, to amend title 4, United States Code, to declare English as the official lan- guage of the Government of the United States. (See next issue.) Rejected the Serrano motion to recommit the bill to the Committee on Economic and Educational Op- portunities with instructions to report the bill back forthwith with an amendment in the nature of a substitute that sought to include findings relating to English as the language of the United States, policies that promote English, and require Presidential cam- paigns and Federal elections to be conducted in Eng- lish (rejected by a recorded vote of 171 ayes to 257 noes, Roll No. 390). (See next issue.) Agreed to the amendment in the nature of a sub- stitute consisting of the text of H.R. 3898, as amended, made in order by the rule. (See next issue.) Agreed to the Cunningham amendment, as modi- fied by unanimous consent, that cites the title as the Bill Emerson Language Empowerment Act of 1996, clarifies that the bill does not affect Native Alaskan or Native American languages, the Individuals with Disabilities Act, or terms of art and phrases from foreign languages. (See next issue.) Rejected the Serrano amendment in the nature of a substitute that sought to include findings relating to English as the primary language of the United States and policies that promote English as the com- mon language (rejected by a recorded vote of 178 ayes to 250 noes, Roll No. 389) (See next issue.) H. Res. 499, the rule which provided for consid- eration of the bill was agreed to by a yea-and-nay vote of 236 yeas to 178 nays, Roll No. 388. (See next issue.) Employee Association Representation: The House agreed to the Senate amendment to H.R. 782, to amend title 18 of the United States Code to allow members of employee associations to represent their views before the United States Government\u2014clear- ing the measure for the President. (See next issue.) J. Phil Campbell Conservation Center: The House passed H.R. 3387, to designate the Southern Pied- mont Conservation Research Center located at 1420 Experimental Station Road in Watkinsville, Georgia, as the ”J. Phil Campbell, Senior Natural Resource Conservation Center”. (See next issue.) Iosco County, Michigan Property: The House passed H.R. 2670, to provide for the release of the reversionary interest held by the United States in certain property located in the County of Iosco, Michigan. (See next issue.) Agreed to the Committee amendment. (See next issue.) Mark Twain National Forest: The House passed H.R. 3464, to make a minor adjustment in the exte- rior boundary of the Devils Backbone Wilderness in the Mark Twain National Forest, Missouri, to ex- clude a small parcel of land containing improve- ments. (See next issue.) Agreed to the Committee amendment. (See next issue.) Health Care Reform: By a yea-and-nay vote of 421 yeas to 2 nays, Roll No. 393, the House agreed to the conference report on H.R. 3103, to amend the Internal Revenue Code of 1986 to improve port- ability and continuity of health insurance coverage in the group and individual markets, to combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medical savings ac- counts, to improve access to long-term care services and coverage, and to simplify the administration of health insurance. (See next issue.) Rejected the Stark motion to recommit the con- ference report to the committee on conference with instructions to the managers on the part of the House to do everything possible, within the scope of the conference, to modify section 305 of the Senate amendment relating to mental health insurance par- ity so as to improve mental health care insurance while minimizing any impact on the cost or avail- ability of health insurance plans, and to produce a conference report which confines itself to the dif- ferences between the bill as passed by the House and passed by the Senate (rejected by a yea-and-nay vote of 198 yeas to 228 nays, Roll No. 392). (See next issue.) H. Res. 502, the rule waiving points of order against consideration of the conference report was agreed to by a voice vote. Earlier, agreed to H. Res. 500, waiving a requirement requiring a two-thirds vote to consider a rule on the same day it is reported from the Committee on Rules. (See next issue.) Order of Business: It was made in order that at any time to consider conference reports to accom- pany the bills H.R. 3517 and H.R. 3845, that all points of order against both conference reports and against their consideration be waived, and that both conference reports be considered as read when called up. (See next issue.) Military Construction Appropriations: By a yea- and-nay vote of 396 yeas to 26 nays, Roll No. 394, the House agreed to the conference report on H.R. CONGRESSIONAL RECORD \u2014 DAILY DIGEST D861August 1, 1996 3517, making appropriations for military construc- tion, family housing, and base realignment and clo- sure for the Department of Defense for fiscal year ending September 30, 1997. (See next issue.) H. Res. 497, waiving points of order against the conference report to accompany H.R. 3517, was laid on the table. (See next issue.) District of Columbia Appropriations: By a yea- and-nay vote of 330 yeas to 91 nays, Roll No. 395, the House agreed to the conference report on H.R. 3845, making appropriations for the government of the District of Columbia and other activities charge- able in whole or in part against revenues of said Dis- trict for the fiscal year ending September 30, 1997. (See next issue.) Order of Business: It was made in order that not- withstanding clause 1 of rule XXVII the Speaker may entertain motions to suspend the rules on Wednesday, September 4, 1996. (See next issue.) Defense Authorization: By a yea-and-nay vote of 285 yeas to 132 nays, Roll No. 397, the House agreed to the conference report on H.R. 3230, to au- thorize appropriations for fiscal year 1997 for mili- tary activities of the Department of Defense, and to prescribe military personnel strengths for fiscal year 1997. (See next issue.) Rejected the Dellums motion to recommit the conference report with instructions to the managers on the part of the House to insist on section 367 of the House bill relating to impact aid assistance to local educational agencies for the benefit of depend- ents of members of the Armed Forces and civilian employees of the Department of Defense (rejected by a yea-and-nay vote of 181 yeas and 236 nays, Roll No. 396). (See next issue.) H. Res. 498 the rule providing for consideration of the bill was agreed to earlier by a voice vote. (See next issue.) House Page Board: The Chair announced the Speaker’s appointment of Representative Fowler to fill a vacancy on the House of Representatives Page Board. (See next issue.) Recess: The House recessed at 11:35 p.m. and re- convened at 12:49 a.m. on August 2. (See next issue.) Senate Messages: Messages received from the Senate today appear on page H9567. Quorum Calls\u2014Votes: Nine yea-and-nay votes and three recorded votes developed during the proceed- ings of the House today and appear in the next issue. There were no quorum calls. Adjournment: Met at 10 a.m. and adjourned at 12:50 a.m. on Friday, August 2. Committee Meetings FAMILY PET PROTECTION ACT, PET SAFETY AND PROTECTION ACT Committee on Agriculture: Subcommittee on Livestock, Dairy, and Poultry held a hearing on the following bills: H.R. 3393, Family Pet Protection Act of 1996; and H.R. 3398, Pet Safety and Protection Act of 1996. Testimony was heard from Michael Dunn, Assistant Secretary, Marketing and Regulatory Pro- grams, USDA; and public witnesses. OVERSIGHT\u2014FANNIE MAE AND FREDDIE MAC Committee on Banking and Financial Services: Sub- committee on Capital Markets, Securities and Gov- ernment Sponsored Enterprises concluded oversight hearings regarding Fannie Mae and Freddie Mac. Testimony was heard from Leland C. Brendsel, Chairman and CEO, Federal Home Loan Mortgage Corporation (Freddie Mac); and Robert B. Zoellick, Executive Vice-President, Federal National Mortgage Association (Fannie Mae). BUDGET PROCESS Committee on the Budget: Concluded hearings on ”How Did We Get Here From There?” A Discussion of the Evolution of the Budget Process from 1974 to the Present, Part III. Testimony was heard from Representatives Barton of Texas, Orton, Cox of Cali- fornia, Stenholm, Neumann, Smith of Michigan, Largent, Crapo, Castle, Visclosky, Cardin, Everett and Horn. REAUTHORIZATION\u2014PUBLIC HEALTH SERVICE ACT PROGRAMS Committee on Commerce: Subcommittee on Health and Environment held a hearing on reauthorization of Existing Public Health Service Act Programs. Testi- mony was heard from Philip R. Lee, M.D., Assistant Secretary, Health, Department of Health and Human Services; and public witnesses. MISCELLANEOUS MEASURES Committee on Economic and Educational Opportunities: Ordered reported the following measures: H.R. 3863, amended, Student Debt Reduction Act of 1996; and H. Res. 470, expressing the sense of the Congress that the Department of Education should play a more active role in monitoring and enforcing compliance with the provisions of the higher Edu- cation Act of 1965 related to campus crime. The Committee also began markup of H.R. 3876, Juvenile Crime Control and Delinquency Prevention Act. CONGRESSIONAL RECORD \u2014 DAILY DIGESTD862 August 1, 1996 FBI BACKGROUND FILES Committee on Government Reform and Oversight: Held a hearing on Security of FBI Background Files. Testi- mony was heard from the following officials of the FBI, Department of Justice: Howard M. Shapiro, General Counsel; Thomas A. Kelley, Inspector, Dep- uty General Counsel; and Peggy J. Larson, Super- visory Research Analyst; and a public witness. MISCELLANEOUS MEASURES Committee on International Relations: Favorably consid- ered and adopted a motion urging the Chairman to request that the following bills be considered on the Suspension Calendar: H. Con. Res. 120, amended, supporting the independence and sovereignty of Ukraine and the progress of its political and eco- nomic reforms; and H.R. 3916, to make available certain Voice of America and Radio Marti multi- lingual computer readable text and voice recordings. MISCELLANEOUS MEASURES Committee on the Judiciary: Ordered reported amended H.R. 3307, Regulatory Fair Warning Act. The Committee also continued markup of H.R. 3565, Violent Youth Crime Act of 1996. Will continue tomorrow. REFUGEE RESETTLEMENT Committee on the Judiciary: Subcommittee on Immi- gration and Claims held an oversight hearing regard- ing the possible shifting of refugee resettlement to private organizations. Testimony was heard from Representatives Obey and Condit; Lavinia Limon, Director, Office of Refugee Resettlement, Depart- ment of Health and Human Services; Edwin Silver- man, State Coordinator, Refugee Resettlement Pro- gram, Department of Public Aid, State of Illinois; and public witnesses. MISCELLANEOUS MEASURES Committee on Resources: Ordered reported the following bills: H.R. 3640, amended, Torres-Martinez Desert Cahuilla Indians Claims Settlement Act; H.R. 3642, California Indian Land Claims Transfer Act; H.R. 2512, amended, Crow Creek Sioux Tribe Infrastruc- ture Development Trust Fund Act of 1996; H.R. 2710, amended, Hoopa Valley Reservation South Boundary Correction Act; H.R. 3547, amended, to provide for the conveyance of a parcel of real prop- erty in the Apache National Forest in the State of Arizona to the Alpin Elementary School District 7 to be used for the construction of school facilities and related playing fields; H.R. 2693, to require the Secretary of Agriculture to make a minor adjustment in the exterior boundary of the Hells Canyon Wil- derness in the States of Oregon and Idaho to exclude an established Forest Service road inadvertently in- cluded in the wilderness; H.R. 1179, amended, His- torically Black Colleges and Universities Historic Building Restoration and Preservation Act; S. 1467, amended, Fort Peck Rural County Water Supply System Act of 1995; H.R. 3903, amended, to re- quire the Secretary of the Interior to sell the Sly Park Dam and Reservoir; H.R. 3910, amended, Emergency Drought Relief Act of 1996; S. 811, amended, Water Desalinization Research and Devel- opment Act of 1996; and H.R. 3828, Indian Child Welfare Act Amendments of 1996. The Committee failed to approve H.R. 3879, Northern Mariana Islands Delegate Act. NEW ENGLAND GROUNDFISH MANAGEMENT PLAN Committee on Resources: Subcommittee on Fisheries, Wildlife and Oceans held an oversight hearing on the economic effects of the New England Groundfish Management Plan. Testimony was heard from Rep- resentative Frank of Massachusetts; the following of- ficials of NOAA, Department of Commerce: Andrew Rosenberg, Northeast Regional Director, National Marine Fisheries Service; and John Bullard, Director, Office of Sustainable Development and Intergovern- mental Affairs; Robin Alden, Commissioner of Ma- rine Resources, State of Maine; and public witnesses. SANTEE SIOUX TRIBE OF NEBRASKA Committee on Resources: Subcommittee on Native American and Insular Affairs held a hearing on H.R. 3595, to make available to the Santee Sioux Tribe of Nebraska its proportionate share of funds awarded in Docket 74 A to the Sioux Indian Tribe. Testi- mony was heard from Representative Barrett of Ne- braska; Deborah Maddox, Director, Office of Tribal Services, Department of the Interior; and public wit- nesses. CONFERENCE REPORT\u2014HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT Committee on Rules: Granted, by voice vote, a rule waiving points of order against the conference report on H.R. 3103, Health Insurance Portability and Ac- countability Act of 1996, and against its consider- ation. The rule provides that the conference report shall be considered as read. Testimony was heard from Chairman Archer and Representatives Hastert and Stark. CONFERENCE REPORT\u2014SAFE DRINKING WATER ACT Committee on Rules: Granted, by voice vote, a rule waiving all points of order against the conference re- port on S. 1316, the Safe Drinking Water Act Amendments of 1996, and against its consideration. CONGRESSIONAL RECORD \u2014 DAILY DIGEST D863August 1, 1996 The rule provides that the conference report shall be considered as read. COMBATING TERRORISM Committee on Rules: Granted, by voice vote, a rule providing that at any time on the calendar day of Friday, August 2, 1996, the Speaker may entertain a motion offered by the majority leader or his des- ignee that the House suspend the rules and pass a bill or joint resolution relating to the subject of combating terrorism. CONFERENCE REPORT\u2014SMALL BUSINESS JOB PROTECTION ACT Committee on Rules: Granted, by voice vote, a rule waiving points of order against the conference report on H.R. 3448, Small Business Protection Act of 1996, and against its consideration. The rule pro- vides that the conference report shall be considered as read. Testimony was heard from Chairman Archer and Representatives Hastert and Stark. DEPARTMENT OF ENERGY RESEARCH AND DEVELOPMENT Committee on Science: Subcommittee on Energy and Environment held a hearing on funding Department of Energy Research and Development in a con- strained Budget Environment. Testimony was heard from the following officials of the Department of Energy: Gregory H. Friedman, Deputy Inspector General, Audits; and Roger A. Lewis, Senior Advi- sor, Office of Strategic Computing and Simulation; Allen Li, Associate Director, Energy, Resources and Science Issues, Resources, Community, and Eco- nomic Development Division, GAO; Daniel Hartley, Vice President, Laboratory Development, Sandia Na- tional Laboratory; Ron Cochran, Executive Office, Lawrence Livermore National Laboratory; Charles Gay, Director, National Renewable Energy Labora- tory; and a public witness. MISCELLANEOUS MEASURES; RESOLUTIONS Committee on Transportation and Infrastructure: Ordered reported the following bills: H.R. 3535, to redesig- nate a Federal building in Suitland, MD, as the ”W. Edwards Deming Federal Building”; H.R. 3576, amended, to designate the U.S. courthouse located at 401 South Michigan Street in South Bend, IN, as the ”Robert Kurtz Rodibaugh United States Court- house”; and H.R. 3710, amended, to designate a U.S. courthouse located in Tampa, FL, as the ”Sam M. Gibbons United States Courthouse”. The Committee also approved the following: 18 Repair and Alteration Resolutions; 1 Lease Resolu- tion; and 2 11(b) Resolutions. CHILD SAFETY RESTRAINT SYSTEMS ON COMMERCIAL AIRCRAFT Committee on Transportation and Infrastructure: Sub- committee on Aviation held a hearing on H.R. 1309, to amend title 49, United States Code, to re- quire the use of child safety restraint systems ap- proved by the Secretary of Transportation on com- mercial aircraft. Testimony was heard from Rep- resentative Lightfoot; the following officials of the FAA, Department of Transportation: Peggy Gilligan, Deputy Associate Administrator, Regulation and Certification; and Louise Maillett, Acting Assistant Administrator, Policy, Planning, and International Aviation; Barry Sweedler, Director, Office of Safety Recommendations, National Transportation Safety Board; and public witnesses. OVERSIGHT\u2014NEXCOM LEASE Committee on Transportation and Infrastructure: Sub- committee on Public Buildings and Economic De- velopment held a hearing on the oversight of NEXCOM Lease. Testimony was heard from the fol- lowing officials of the GSA: Hillary Peoples, Assist- ant Commissioner, Public Buildings Service; and Harmon Eggers, Associate General Counsel; and the following officials of the Department of Defense: El- eanor Hill, Inspector General; VAdm. James Fitzger- ald, USN, Inspector General and Steve Honigman, General Counsel, both with the Department of the Navy; and Robert Taylor, Deputy General Counsel. U.S. TRADE POLICY Committee on Ways and Means: Subcommittee on Trade continued hearings on the Status and Future Direction of U.S. Trade Policy, with emphasis on U.S. Trade with Sub-Saharan Africa. Testimony was heard from Representatives McDermott and Jeffer- son; Jeffrey M. Lang, Deputy U.S. Trade Representa- tive; George Moose, Assistant Secretary, African Af- fairs Bureau, Department of State; and public wit- nesses. BOSNIA\/IRAN ARMS Permanent Select Committee on Intelligence: Met in execu- tive session to hold a hearing on Bosnia\/Iran Arms. Testimony was heard from departmental witnesses. Joint Meetings HEALTH INSURANCE REFORM Conferees on Wednesday, July 31, agreed to file a conference report on the differences between the Senate- and House-passed versions of H.R. 3103, to amend the Internal Revenue Code of 1986 to im- prove portability and continuity of health insurance coverage in the group and individual markets, to CONGRESSIONAL RECORD \u2014 DAILY DIGESTD864 August 1, 1996 combat waste, fraud, and abuse in health insurance and health care delivery, to promote the use of medi- cal savings accounts, to improve access to long-term care services and coverage, and to simplify the ad- ministration of health insurance. SMALL BUSINESS JOB PROTECTION ACT Conferees agreed to file a conference report on H.R. 3448, to provide tax relief for small businesses, to protect jobs, to create opportunities, and to increase the take home pay of workers. APPROPRIATIONS\u2014DISTRICT OF COLUMBIA Conferees agreed to file a conference report on the dif- ferences between the Senate- and House-passed ver- sions of H.R. 3845, making appropriations for the government of the District of Columbia and other activities chargeable in whole or in part against reve- nues of said District for the fiscal year ending Sep- tember 30, 1997. f COMMITTEE MEETINGS FOR FRIDAY, AUGUST 2, 1996 (Committee meetings are open unless otherwise indicated) Senate Committee on Finance, Subcommittee on Social Security and Family Policy, to hold hearings to examine how to educate the public about the 1996 report of the Social Se- curity Board of Trustees, 10 a.m., SD 215. House Committee on the Judiciary, to continue mark up of H.R. 3565, Violent Youth Crime Act of 1996, 9:30 a.m., 2141 Rayburn. CONGRESSIONAL RECORD\u2014DAILY DIGEST D 865August 1, 1996 * These figures include all measures reported, even if there was no accom- panying report. A total of 143 reports have been filed in the Senate, a total of 292 reports have been filed in the House. Re\u0301sume\u0301 of Congressional Activity SECOND SESSION OF THE ONE HUNDRED FOURTH CONGRESS The first table gives a comprehensive re\u0301sume\u0301 of all legislative business transacted by the Senate and House. The second table accounts for all nominations submitted to the Senate by the President for Senate confirmation. DATA ON LEGISLATIVE ACTIVITY January 3 through July 31, 1996 Senate House Total Days in session ……………………………… 107 98 . . Time in session …………………………….. 804 hrs., 57\u2032 768 hrs., 38\u2032 . . Congressional Record: Pages of proceedings ………………. 9,320 9,566 . . Extensions of Remarks ……………. . . 1,421 . . Public bills enacted into law …………… 13 67 . . Private bills enacted into law ………….. 1 1 . . Bills in conference …………………………. 19 20 . . Measures passed, total ……………………. 273 328 . . Senate bills ……………………………. 100 15 . . House bills ……………………………. 80 165 . . Senate joint resolutions …………… 2 3 . . House joint resolutions …………… 8 11 . . Senate concurrent resolutions …… 14 7 . . House concurrent resolutions …… 16 26 . . Simple resolutions ………………….. 53 101 . . Measures reported, total …………………. *199 *266 . . Senate bills ……………………………. 140 3 . . House bills ……………………………. 45 175 . . Senate joint resolutions …………… 1 0 . . House joint resolutions …………… 0 4 . . Senate concurrent resolutions …… 4 0 . . House concurrent resolutions …… 1 5 . . Simple resolutions ………………….. 8 79 . . Special reports ………………………………. 12 7 . . Conference reports …………………………. 1 19 . . Measures pending on calendar …………. 272 80 . . Measures introduced, total ……………… 618 1,398 . . Bills ……………………………………… 496 1,095 . . Joint resolutions …………………….. 13 50 . . Concurrent resolutions ……………. 30 76 . . Simple resolutions ………………….. 79 177 . . Quorum calls ………………………………… 2 1 . . Yea-and-nay votes …………………………. 261 165 . . Recorded votes ……………………………… . . 219 . . Bills vetoed ………………………………….. 0 5 . . Vetoes overridden ………………………….. 0 0 . . DISPOSITION OF EXECUTIVE NOMINATIONS January 3 through July 31, 1996 Civilian nominations, totaling 295, (including 119 nominations car- ried over from the first session), disposed of as follows: Confirmed ………………………………………………………………………….. 137 Unconfirmed ………………………………………………………………………. 148 Withdrawn ………………………………………………………………………… 10 Civilian nominations (FS, PHS, CG, NOAA), totaling 1,337, (includ- ing 320 nominations carried over from the first session), disposed of as follows: Confirmed ………………………………………………………………………….. 1,335 Unconfirmed ………………………………………………………………………. 2 Air Force nominations, totaling 9,424, (including 4,952 nominations carried over from the first session), disposed of as follows: Confirmed ………………………………………………………………………….. 6,713 Unconfirmed ………………………………………………………………………. 2,711 Army nominations, totaling 10,857, (including 2,304 nominations carried over from the first session), disposed of as follows: Confirmed ………………………………………………………………………….. 8,557 Unconfirmed ………………………………………………………………………. 2,300 Navy nominations, totaling 3,553, (including 21 nominations carried over from the first session), disposed of as follows: Confirmed ………………………………………………………………………….. 2,062 Unconfirmed ………………………………………………………………………. 1,491 Marine Corps nominations, totaling 2,119, (including 8 nominations carried over from the first session), disposed of as follows: Confirmed ………………………………………………………………………….. 2,063 Unconfirmed ………………………………………………………………………. 56 Summary Total nominations carried over from the first session ………………………. 7,724 Total nominations received this session …………………………………………. 19,861 Total confirmed …………………………………………………………………………. 20,867 Total unconfirmed ……………………………………………………………………… 6,708 Total withdrawn ………………………………………………………………………… 10 CONGRESSIONAL RECORD \u2014 DAILY DIGEST Congressional Record The public proceedings of each House of Congress, as reported bythe Official Reporters thereof, are printed pursuant to directions of the Joint Committee on Printing as authorized by appropriate provisions of Title 44, United States Code, and published for each day that one or both Houses are in session, excepting very infrequent instances when two or more unusually small consecutive issues are printed at one time. \u00b6 Public access to the Congressional Record is available online through GPO Access, a service of the Government Printing Office, free of charge to the user. 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Remit check or money order, made payable to the Superintendent of Documents, directly to the Government Printing Office, Washington, D.C. 20402. \u00b6 Following each session of Congress, the daily Congressional Record is revised, printed, permanently bound and sold by the Superintendent of Documents in individual parts or by sets. \u00b6With the exception of copyrighted articles, there are no restrictions on the republication of material from the Congressional Record. UN UM E PLURIBUS D866 August 1, 1996 Next Meeting of the SENATE 10:30 a.m., Friday, August 2 Senate Chamber Program for Friday: Senate expects to consider con- ference reports on H.R. 3103, Health Insurance Reform, H.R. 3754, Legislative Branch, H.R. 3845, D.C. Appro- priations, H.R. 3517, Military Construction, H.R. 3448, Small Business Job Protection Act, further conference re- ports, when available, and any cleared legislative and ex- ecutive business. Next Meeting of the HOUSE OF REPRESENTATIVES 9 a.m., Friday, August 2 House Chamber Program for Friday: Consideration of the conference re- port on H.R. 3448, Minimum Wage (rule waiving points of order); Consideration of the conference report on S. 1316, Safe Drinking Water Act (rule waiving points of order); and One measure under suspension of the rules dealing with combating terrorism. Extensions of Remarks, as inserted in this issue HOUSE Barcia, James A., Mich., E1424, E1428 Cardin, Benjamin L., Md., E1430 Clay, William (Bill), Mo., E1426, E1433 Collins, Cardiss, Ill., E1423, E1427 Evans, Lane, Ill., E1428 Frazer, Victor O., The Virgin Islands, E1424, E1429 Gilman, Benjamin A., N.Y., E1435 Hamilton, Lee H., Ind., E1432 Harman, Jane, Calif., E1433 Kanjorski, Paul E., Pa., E1434 Kolbe, Jim, Ariz., E1436 Levin, Sander M., Mich., E1431, E1434 Lipinski, William O., Ill., E1427 Longley, James B., Jr., Maine, E1429 McInnis, Scott, Colo., E1432 Maloney, Carolyn B., N.Y., E1423, E1427 Menendez, Robert, N.J., E1430, E1434 Mink, Patsy T., Hawaii, E1424 Scarborough, Joe, Fla., E1423 Sisisky, Norman, Va., E1428 Stupak, Bart, Mich., E1431, E1435 Torres, Esteban Edward, Calif., E1428 Torricelli, Robert G., N.J., E1427 Vento, Bruce F., Minn., E1426 Wynn, Albert Russell, Md., E1426 Superintendent of Documents 2015-06-12T15:16:13-0400 US GPO, Washington, DC 20401 Superintendent of Documents GPO attests that this document has not been altered since it was disseminated by GPO ”